As the details of the so-called bailout of Cyprus are finalized, and the banks get to open (with heavy capital controls) one has to wonder just what Europe’s economists are thinking. Certainly they are not thinking that what they propose will support a recovery of the Cypriot banking community of the Cypriot economy.
For example, deposits of less than 100,000 Euros are protected, well sort of. But any one whose IQ is greater than that of a fool is going to get their money the hell out of there.
Beyond the challenge of dealing with the large depositors is the question of what to do with about 27 billion euros in deposits in accounts under 100,000 euros that now carry the Cypriot government’s full backing, following last weekend’s reversal of the decision to tax those deposits, too. That figure alone exceeds
annual gross domestic product of 18 billion euros. Cyprus
If the banks reopen on Thursday, as planned,
’s shellshocked citizens will
have access to their insured deposits for the first time in more than a week.
With their bills and fears mounting, it is widely expected that many will
immediately seek to remove these funds from the banks. Cyprus
And with a banking system in ruin the economy of
Horror stories abound here of flourishing local businesses that, because their deposits were kept at Bank of
or Laiki, are now on the
verge of collapsing. It has all heightened anger toward decision makers in Cyprus . Brussels
“We are facing an even deeper recession than the worst scenarios had predicted,” said Nicholas Papadopoulos, a member of the Cypriot Parliament and the chairman of the body’s financial committee. “We have become the Lehman Brothers of
Well at least one mystery is solved, we now know where those men and women who fail basic economics and have to drop out of college go. They go to
where they devise economic policy for the continent. Thanks people, Europe
cannot self destruct without you.