Krugman on the broader implications of the Cypriot haircut

Paul Krugman made a pretty strong indictment against international finance today. Anyone disagree? (I don’t.)

Let me make a broader point: we’ve now seen three island nations around Europe become huge international banking hubs relative to their GDPs, then get into crisis because their domestic economies don’t have the resources to bail out those metastasized banking systems if something goes wrong. This strongly suggests, to me at least, that we have a fundamental problem with the whole architecture (to use the preferred fancy word) of international finance.

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