Early in the crisis, a wise ex-colleague wrote to say that "Savers will pay for the mess. They are the only ones that have any money left."That comment was relayed by Buttonwood in the Economist yesterday.
Aditya Chakrabortty also quotes the words of a friend:
A friend of mine has a mid-level job at the European Commission. Over the past few years, through Greece and Ireland and Portugal and Spain, he has kept up a resolutely chipper air. This weekend, as details of the Cyprus deal came out, he sent me this email: "Is this what the European financial system has come down to? A direct appropriation of savings because it cannot cure its systemic problems. It is not just the banks that are bankrupt. It is the whole bloody model that has run its course and we are in denial."It was a bad idea too far. They hit savings, not income. They were punishing virtue with theft. The Cypriot Parliament looked out and saw their own angry citizens, then they scanned the horizon and saw Greece, Spain, Italy, Portugal and Ireland. And what else could they say, but 'no'.
Who knows what will happen next. The fear of contagion for the EU, especially after the Italian elections, is not economic. Instead, they must worry about how disobedience might become a habit now that a precedent has been set.
This is a long running saga, going way back into the 19th Century to the ideas of the people that I write about. There were contrasting views amongst reformers and radicals. On the one hand there was an eclectic bunch of mutualists, cooperators, radical liberals and democratic socialists. On the other sat the Fabianism of the Webbs with their belief in the benign rule of a technocratic elite. The Fabians had social science and rationality on their side. They were meritocratic elitists, managerialists one and all. The others believed in self-determination, liberty, devolution and democracy. In the struggle between coherence and the disparate messiness of the libertarian left, coherence won out. Later, the EU enshrined technocracy at its heart. It has one major flaw. What if the technocrats are idiots?
The democrats bit back today, not through the election of anti-political clowns, but through a simple act of denial. The consequences are uncertain, but we have just had a reminder that democracy is present only when people have the power to refuse.