Monday, 25 March 2013

Is Cyprus story over?

Yeah they came to an agreement on the Cyprus bailout but the story is far from over.  Expect to continue seeing some burning as time goes on.

However, I think Cyprus brought this on themselves somewhat.  Did they really expect to continue making an economy out of hiding Russian (likely illegal) money?  It was hardly a sustainable economy.  While that sort of model has worked for Switzerland, not everyone can become that.

As per Bloomberg:

Hundreds of protesters massed outside the floodlit presidential palace in Nicosia late yesterday, shouting for the bailout “troika” of the EU, European Central Bank and IMF to leave Cyprus, a country of 862,000 people.

The deal imposes losses that two EU officials said would be no more than 40 percent on uninsured depositors at Bank of Cyprus Plc, the largest bank, which will take over the viable assets of Cyprus Popular Bank (CPB) as it’s wound down.

Bank assets in Cyprus swelled to 126.4 billion euros at the end of January, seven times the size of the 18 billion-euro economy, from 78 billion euros in 2007, data from the ECB and the EU’s statistics office show.

A poll this month by Prime Consulting for Sigmalive TV found 67.3 percent of Cypriots said the country should leave the euro and tighten relations with Russia. The survey of 686 people on March 19-20 found 91 percent of respondents supported the parliament’s decision to reject the initial bailout deal with the proposed losses for depositors.
“Our lives are going to be terrible,” said Philippou, the civil servant in the Cypriot capital. “My husband works at a computer company that does business with the financial sector so I’m worried what will happen to him.”
The Cypriot economy contracted 3.4 percent in the fourth quarter of 2012 from a year earlier. The budget for this year had projected it will shrink 3.5 percent this year.

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