Cyprus counterintuition part two: "Britain's next"

Are we heading down the same road?

I've already touched on one counterintuitive claim about Cyprus – that, far from being the Germans crushing the little guy, a wealth tax is actually the most progressive way out of the hole – but here's another one: Cyprus isn't that unique at all.

The Independent's Ben Chu turns against the prevailing trend, which is to argue that Cyprus, with its massive influx of questionable foreign funds, extended and deliberate exposure to Greek banks, tiny and inflexible economy, and a currency which it has no say in, is one-of-a-kind. Instead, Chu argues, there's someone who should be watching carefully: us.

We’ve nothing to be smug about here in Britain.

This chart (below) from Albert Gallo, an analyst at RBS, shows that we’re not that far behind. Despite all the deleveraging of recent years our banking sector still has assets and liabilities equal to 450% of our GDP.

Remember this next time you hear from one of the banking industry lobbyists how vital it is for the UK’s economic future to have a massive banking sector. Remember Cyprus.

Chu is slightly channeling Osborne, there (which isn't a nice thing to say of anyone, and I'm sorry). Our Chancellor made one of the earlier comments comparing Britain to Cyprus, and was pilloried for it. To be fair to Chu, Osborne's claim, that Cyprus is "what happens if you don’t show the world that you can pay your way" and is why Britain has "got to retain the confidence of world markets", is utter nonsense, while Chu's point is more interesting.

The problems in Cyprus have literally nothing to do with retaining the confidence of the world markets. Instead, have to do with buying a crapload of Greek debt in 2007, and then having a banking sector which owes billions in a currency Cyprus doesn't control.

On the face of it, that's not a circumstance which applies to Britain either. But the other aspect of the Cypriot problem is that the size of the country's banks is completely out of proportion two the size of the country's economy, and, yes, the UK's banking sector is similarly bloated – though still only half the size of Cyprus's as a proportion of GDP. I made a similar comparison in the heady days of 2011, pointing out that the UK is more similar to pre-crisis Iceland than Greece.

But the comparison just doesn't hold water beyond that. Because Cyprus's problem isn't just a bloated banking sector – it's also all those stupid moves its banking sector made, and the fact that Cyprus doesn't actually control the currency it now needs to recapitalise the banks into. (It's also, more technically, the fact that most of Cyprus's domestic law bonds are held by the Cypriot banks, which renders a partial default counter-productive). As a result, the real comparison between the UK and Cyprus is this one, from the FT's Joseph Cotterill:

That's the cost of fixing the banks' mistakes as a proportion of GDP. Cyprus is having to spend 60 per cent of its GDP on that. For comparison, that is roughly equal to America having to spend $9trn, almost 400 times the cost of TARP.

Cyprus is in a uniquely shitty situation. It's a cautionary tale for having banking debt's seven times higher than GDP, but it's more a cautionary tale about not being Cyprus.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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I am special and I am worthless: inside the mind of a narcissist

There's been a lot of discussion about narcissists this week. But what does the term actually mean?

Since the rise of Donald Trump, the term “narcissistic” has been cropping up with great regularity in certain sections of the media, including the pages of this journal. I wouldn’t want to comment about an individual I’ve never met, but I thought it would be interesting to look at the troubling psychological health problem of narcissistic personality disorder (NPD).

People with NPD (which is estimated to affect about 1 per cent of the population) have a characteristic set of personality traits. First, they have a deeply held sense of specialness and entitlement. Male NPD sufferers frequently present as highly egotistical, with an unshakeable sense of their superiority and importance; female sufferers commonly present as eternal victims on whom the world repeatedly inflicts terrible injustices. In both cases, the affected person believes he or she is deserving of privileged treatment, and expects it as a right from those around them.

Second, NPD sufferers have little or no capacity for empathy, and usually relate to other people as objects (as opposed to thinking, feeling beings) whose sole function is to meet the narcissist’s need for special treatment and admiration – known as “supply”. In order to recruit supply, NPD sufferers become highly skilled at manipulating people’s perceptions of them, acting out what is called a “false self” – the glittering high achiever, the indefatigable do-gooder, the pitiable victim.

The third characteristic is termed “splitting”, where the world is experienced in terms of two rigid categories – either Good or Bad – with no areas of grey. As long as others are meeting the narcissist’s need for supply, they are Good, and they find themselves idealised and showered with reciprocal positive affirmation – a process called “love-bombing”. However, if someone criticises or questions the narcissist’s false self, that person becomes Bad, and is subjected to implacable hostility.

It is not known for certain what triggers the disorder. There is likely to be a genetic component, but in many cases early life experiences are the primary cause. Narcissism is a natural phase of child development (as the parents of many teenagers will testify) and its persistence as adult NPD frequently reflects chronic trauma during childhood. Paradoxically for a condition that often manifests as apparent egotism, all NPD sufferers have virtually non-existent self-esteem. This may arise from ongoing emotional neglect on the part of parents or caregivers, or from sustained psychological or sexual abuse.

The common factor is a failure in the development of a healthy sense of self-worth. It is likely that narcissism becomes entrenched as a defence against the deep-seated shame associated with these experiences of being unworthy and valueless.

When surrounded by supply, the NPD sufferer can anaesthetise this horrible sense of shame with the waves of positive regard washing over them. Equally, when another person destabilises that supply (by criticising or questioning the narcissist’s false self) this is highly threatening, and the NPD sufferer will go to practically any lengths to prevent a destabiliser adversely influencing other people’s perceptions of the narcissist.

One of the many tragic aspects of NPD is the invariable lack of insight. A narcissist’s experience of the world is essentially: “I am special; some people love me for this, and are Good; some people hate me for it, and are Bad.” If people with NPD do present to health services, it is usually because of the negative impacts Bad people are having on their life, rather than because they are able to recognise that they have a psychological health problem.

Far more commonly, health professionals end up helping those who have had the misfortune to enter into a supply relationship with an NPD sufferer. Narcissism is one of the most frequent factors in intimate partner and child abuse, as well as workplace bullying. The narcissist depends on the positive affirmation of others to neutralise their own sense of unworthiness. They use others to shore themselves up, and lash out at those who threaten this precarious balance. And they leave a trail of damaged people in their wake. 

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times