Corruption and the Eurozone Crisis - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 23 March 2013
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- By Asad Dossani, Author, The Lucrative Derivative Report


Asad Dossani
The Eurozone crisis has taken a new peculiar turn. Cyprus, a small island with around 1 million people, requires a bailout to save their banking system from collapse. Talks are going on as this article is written, so there is a chance deal will be reached by the time this is read.

In India, we talk about corruption a lot. It is a big issue, and often no surprise that many politicians take money that does not belong to them. What the Eurozone crisis has revealed is that corruption is not just a feature of lower income and developing economies. The crisis has revealed huge amounts of corruption in many EU countries.

It is shocking because most of us assume that high levels of corruption do not exist in developed economies. But this is plain false. Earlier this week, the government in Cyprus hatched a plan to take a percentage of everyone's bank deposits to raise the necessary bailout funds.

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When individuals save in a bank in Europe, their funds are legally protected up to 100,000 euros. A plan to take part of these deposits is no different to a government stealing from its own citizens. It breaks this contract, creates panic, and is a great example of corruption.

It turns out that many of the large deposits in Cyprus' banks come from wealthy Russian oligarchs. Many of them have parked their money in Cyprus in order to evade taxes in their own country. At the same time, government officials in Cyprus are worried about upsetting Russian depositors. Why exactly should a government take from its own citizens to protect the interests of wealthy tax evaders? More corruption it seems.

The Greek debt crisis earlier also exposed high levels of corruption. In order to join the EU and the euro, Greece had falsified its own economic statistics. This was not found out until during the crisis, but it was obviously too late then. Surely false statistics is not something we expect from a developed economy like Greece.

Many of the crises we see are occurring a result of governments trying to cover up their own corrupt activities. When the crisis hits, things get exposed like they are now. This is a stark reminder of the dangers of corruption, and how it really hurts the citizens of a country. We certainly know the ill effects of corruption here in India; and now we see that just because a country is rich and developed, doesn't mean that corruption is not a problem.

is a financial analyst and columnist. He actively trades his own and others' funds, investing primarily in currency, commodity, and stock index derivative products. Prior to this, he worked at Deutsche Bank as an analyst in the FX derivatives team. He is a graduate of the London School of Economics. Asad is a keen observer of macroeconomic trends and their effects on global financial markets. He is deeply passionate about educating investors, and encouraging individuals to take part in and profit from financial markets. To put it colloquially, he wishes to take Wall Street products and turn them into Main Street profits!

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4 Responses to "Corruption and the Eurozone Crisis"

Gunasekhar

Mar 25, 2013

Hold on a second. Are you comparing corruption in India to corruption in developed countries? You lack some perspective here. In most of the developed countries corruption is at high levels. That doesn't necessarily affect a common man's daily life. In India it's rampant at the grass root level. Any simple job done from govt. needs a bribe which is affecting the daily peaceful life of a common man.

Never compare apples with oranges...

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Arvind

Mar 24, 2013

I fully agree with you that the corruption level is not just a feature of lower income and developing economies. But Corruption does exit in developed country as well. Not only that but they are the originator of all such non senses.They are more than hypocrites. We imports all such things from them just like now we are trying to import liberty for SEX.The only good point about developed country is that they do all such things in more sophisticated way.They will not render middle class people without food & health facilities so that nobody will shout for inflation like we Indian people do.I am 65 & my father was telling me that we were getting PURE deshi ghee hardly Re 10 a kg & gold at re 50 per tola(11 gms)in Angrej 's time.They were not knowing what Angrej were doing in their time.The same practice is being maintained now by them in their own country. I have seen well educated person with suit & tie stilling a chewing gum from my shop.I have seen international repute companies deploying unethical practice in business. Not only that we ,the middle class people, also want a nice car & bungalow better than our neighbor or nearer ones. We also want all sorts of luxuries like AC,spa, swimming pool in house. This is so called growth & development .So we have also accepted all these evil in our life in the similar way by not paying tax & corrupting ourselves.We are also not free from this because we also want such so called progress.At the fag end of our life,We realize that we did not sleep well despite luxurious bed. We did not have adequate lunch with our family. Sorry no solution Except,"ONLY CORRECT YOURSELF"
" GOD BLESS THIS WORLD"
Regards
Arvind

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N Nagaraja rao

Mar 24, 2013

The meaning of a developed country means they are advanced in all respects. However we are wrongly calling the west as the developed country when they are morally undeveloped.

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Nikhil Shah

Mar 23, 2013

Corruption is a universal problem. Crows are black everywhere and India is no exception.

However, in "developed" countries, the corruption is at top level and not at grass root level. The common man do not have to bribe anybody for anything, unlike in India, you have to bribe everybody and for everything when it comes to getting a job done from government.

The immigrants from developing countries are able to live a happy and peaceful life in "developed" countries unlike in India where you being a "citizen" would not be able to have that happiness and peace of mind.

Sad, but true.

Nikhil shah


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