A couple of years ago, the journalist Nicholas Shaxson published
a fascinating, chilling book titled “Treasure Islands,” which explained how
international tax havens — which are also, as the author pointed out, “secrecy
jurisdictions” where many rules don’t apply — undermine economies around the
world. Not only do they bleed revenues from cash-strapped governments and
enable corruption; they distort the flow of capital, helping to feed
ever-bigger financial crises.
One question Mr. Shaxson didn’t get into much, however, is
what happens when a secrecy jurisdiction itself goes bust. That’s the story of
Cyprus right now. And whatever the outcome for Cyprus itself (hint: it’s not
likely to be happy), the Cyprus mess shows just how unreformed the world
banking system remains, almost five years after the global financial crisis
began….
Read all about it at http://www.nytimes.com/2013/03/22/opinion/krugman-treasure-island-trauma.html?ref=paulkrugman&_r=1&
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