The Cyprus Bailout crisis

[offshoreoildude]

Well the news isn't getting better/ Maybe 40% losses min for those with > Euro100k.

And watch how only now the EU will furiously attempt to dissociate itself from Cyprus; over which it has had total financial regulatory oversight, for 15 years

There are a few articles around claiming Russia will go to war (economically, contractually, gas supply wise) with the EU over this....

I've heard this both and the opposite. Basically Russia doesn't care too much because a lot of those people who are putting their money in Cypress don't want it in Russia for various reasons, and aren't on friendly terms with Putin.

Putin just ordered 7000 troops into a surprise Naval exercise in the black sea....

It's not like he's going to invade Cyprus. Just a bunch of posturing.

Posturing leads to brinkmanship which can accidentally lead to war.

[sundaymorningstaple]

Are we talking about Cyprus or North Korea, re: brinkmanship?

[offshoreoildude]

I did not know until this happened that if you buy a home worth over Euro 300,000 you can obtain Euro PR in Cyprus. Apparently lots of cashed up PRC's taking advantage of this.

[JR8]

I did not know until this happened that if you buy a home worth over Euro 300,000 you can obtain Euro PR in Cyprus. Apparently lots of cashed up PRC's taking advantage of this.

You can do same same in Malaysia, by making bank deposit of RM300,000. That gets you a renewable 10 year MM2H visa.

I'm unsure what you mean by 'Euro PR'. You can become a PR of an EU country, but this doesn't get you a passport. For example I have a Malaysian friend who is PR in London, her husband is a born+bred Brit. When they travel in the EU, at immigration, formalities-wise she might as well have just flown in from the kampung, whereas at 'Schengen'* borders, he does not even have to show his passport at all.

* http://en.wikipedia.org/wiki/Schengen_Agreement

[JR8]

An insightful article on Poland seeking to join the Euro.


'[i]Like all eurozone aspirants, Mr Tusk expects Poland to become not Greece, Cyprus, Portugal or Spain, but Germany, the Netherlands, Finland or Austria. He’s a poster child for Angela Merkel’s vision of the new euro as a federation of German lookalikes.

Good luck to him. His foreign minister, Radek Sikorski, is even bolder in his ambitions. Once in the euro, he said a few months ago, Poland would quickly displace Britain as one of the three most influential countries in Europe. This is what the European “projectâ€Â

[rajagainstthemachine]

this website is pretty pretty nice

http://demonocracy.info/infographics/eu ... piigs.html

These info-graphics shows how much banks borrowed to Portugal, Ireland, Italy, Greece & Spain (PIIGS) - the countries least likely to pay it back.

[Strong Eagle]

It's pretty clear that those in control on the Euro and EU economic policy are really sitting at the Mad Hatter's tea party. There are a few facts (my facts, anyway) that really need to be considered in dealing with these situations.

a) No country will decrease its debt by any sizable amount. The political will is not there to actually make a dent, and even if the will were there, the austerity required makes debt reduction not only unpalatable but impossible to achieve. The very act of cutting spending only makes things worse... higher unemployment, reduced tax revenues and even higher deficits.

b) No country can sustain interest payments to banks and other investors that exceed 25 percent and more of the total budget. In fact, banks and investors who buy/bought government bonds will be seen over time to be bloodsucking leeches, sucking the life out of an economy.

c) Countries that have already collapsed (Greece, Cyprus) are fools to remain with the Euro. This only ensures long term pain and quite possibly makes it impossible for a real recovery to occur. Returning to a local currency that is essentially immediately devalued means that labor rates cheapen while locally produced products become increasingly attractive over imports. Yes, anyone holding debt in the new currency is going to get a haircut, but who in the hell ever said any investment is risk free? And actually, isn't all the machines of the central bank all about trying to make Euro based investments risk free?

d) We are fortunate at the moment that the world is flooded with cash looking for a place to invest (one of the few positive aspects of the wealth transfer to the very rich). Therefore, solvent governments can continue to borrow cheaply (US debt service amounts to around 4.6% of revenues). Analysts estimate that this amount will severely increase as total debt rises and interest rates rise as well.

e) 60% of US debt is now held by foreign sovereign funds or foreign private investors. Critics of foreign investment note that they could all become lemmings and sell off their debt, creating a crisis for the US. More accurately, foreign investors would cease rolling over their notes, creating a financial crisis for the US.

f) There is nothing more stable than the US dollar (and economy) and to a lesser extent, the Euro. Investors need to put money somewhere, if not under the mattress, and these currencies will continue to be supported because there is nothing else, and because investors can ill afford to kill the economies that support the bonds in which they are invested.

g) Therefore, we will see a reversal of thinking in policy about interest rates and inflation. Instead of interest rate rises to control inflation (an interesting concept in and of itself), countries will be far more interested in keeping a lid on interest rates to control the damage being done by interest payments on the national debt.

h) Inflation will become the norm, and all countries will practice it to keep up with each other, relatively speaking, and to keep their own borrowing costs low... lots of money means lower rates... even if lenders attempt to price in the costs of inflation.

i) Investors will keep investing in US treasuries and Euro denominated bonds and other sovereign investments because there is nothing else except putting your money in a mattress... and that won't work because all countries will inflate their currencies to reduce interest rates and cut the real value of the debt.

j) Those who hold cash and bonds get hurt in this scenario. But short of actually paying it back, inflation is the only way for a country to reduce its debt obligation.

[JR8]

Absolutely cracking post!

Can I highlight just one thing?

c) Countries that have already collapsed (Greece, Cyprus) are fools to remain with the Euro. This only ensures long term pain and quite possibly makes it impossible for a real recovery to occur.

... This, IMHO, is why the people of the PIIGS, are being totally hung out to dry. The vanity/ego of the centre power block, will not allow those at the fringe, who should never have been there in the first place, to leave.

You can't leave, you have to totally implode instead.

[Addadude]

To be fair one of the Is in PIIGS has been working their collective arses off to play the game according to the EU's rules.

You might enjoy this clip of veteran Irish journalist Vincent Browne tearing one of these bland eurocrats a new one...

http://www.liveleak.com/view?i=2be_1358641797

[JR8]

Nah, bollocks mate.



I'd suggest this....

[JR8]

Sham 69 - Hurry up Harry

[offshoreoildude]

Posted 4/1/2013 3:37 pm A company owned by in-laws of Cypriot President Nicos Anastasiades withdrew dozens of millions from Laiki Bank on March 12 and 13, according to an article published in Cypriot newspaper Haravgi.

The newspaper, which is affiliated to the communist-rooted AKEL party, reports that three days before the Eurogroup meeting the company took five promissory notes worth 21m from Laiki Bank and transferred the money to London.

Responding to the allegations, Anastasiades said: The attempt to defame companies or people linked to my family... is nothing but an attempt to distract people from the liability of those who led the country to a state of bankruptcy.

http://www.enetenglish.gr/?i=news.en.economy&id=481

[x9200]

[quote="JR8"]Good luck to him. His foreign minister, Radek Sikorski, is even bolder in his ambitions. Once in the euro, he said a few months ago, Poland would quickly displace Britain as one of the three most influential countries in Europe. This is what the European “projectâ€Â

[JR8]

[quote="x9200"][quote="JR8"]Good luck to him. His foreign minister, Radek Sikorski, is even bolder in his ambitions. Once in the euro, he said a few months ago, Poland would quickly displace Britain as one of the three most influential countries in Europe. This is what the European “projectâ€Â

[x9200]

Fortunately it is far from it but still it is beyond me how can the government make such statements having no support in the nation. I takes generations to breed a mature class of the politicians and it clearly shows. The Telegraph's diagnosis is pretty accurate.