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> "I envy Estonia and Cyprus, they both in a critical time, took bold decisions that both required great effort and persistence to accomplish their goals." I d

> "I envy Estonia and Cyprus, they both in a critical time, took bold decisions that both required great effort and persistence to accomplish their goals." I don't know about Estonia, but if I remember correctly Cyprus' solution was a 'bail in' (i.e. using the private savings of its citizens to bail out the banks). Couldn't they have found a better solution than that, like, for instance, guaranteeing the savings of their citizens with an asset freeze and letting the failing companies fail?

pjc50 11y ago
private savings of its citizens Quite a lot of the people who had savings in Cyprus over the €100,000 uninsured threshold were not citizens, but foreigners parking their money in Cyprus as a tax haven. It's still a tax haven: http://qz.com/178114/what-russian-money-sloshing-back-to-cyprus-teaches-us-about-tax-havens/ http://qz.com/178114/what-russian-money-sloshing-back-to-cyp... (Not all of them though, some of it was business working capital!) Asset freeze would not have helped; the whole problem is that a bank with e.g. €1bn in deposits (liabilities) whose loan business collapses ends up with less than €1bn in assets. There is no way to 'pay all the depositors and let the company fail' other than injecting money from outside. In the case of Cyprus having domestic taxpayers pay for non-domestic non-taxpayers to be made whole would be .. unpopular.
kbody 11y ago
I'm not saying it was painless. Citizens were affected and probably still are affected, my envy was about the decisiveness of their political parties, that at those grave times didn't resort to popularism to rise to power, but instead almost all the parties agreed and now are free from IMF et al. About the savings of their citizens, you're right, I would do that as well, and wonder why they didn't do it, like just "print" an IOU or something for the citizens that got the haircut up to some limit. On the other hand Greece went through everything but the traditional haircut of the savings. Continuously new increased and "temporary/emergency" taxes, enforced capital controls and we are way longer in crisis. All this time and sacrifices and still only two of the minor socialist parties (one of which wasn't even in the parliament) joined forces (probably for survival reasons and not for the "good" of the country). I personally have some hope which was reduced from the last elections' results. But the problem is the people that keep choosing to blame everyone else and take the seemingly easy way out. What do you do then? Pray for a Messiah starts to look like the more realistic option. /f

pjc50 11y ago

private savings of its citizens Quite a lot of the people who had savings in Cyprus over the €100,000 uninsured threshold were not citizens, but foreigners parking their money in Cyprus as a tax haven. It's still a tax haven: http://qz.com/178114/what-russian-money-sloshing-back-to-cyprus-teaches-us-about-tax-havens/ http://qz.com/178114/what-russian-money-sloshing-back-to-cyp... (Not all of them though, some of it was business working capital!) Asset freeze would not have helped; the whole problem is that a bank with e.g. €1bn in deposits (liabilities) whose loan business collapses ends up with less than €1bn in assets. There is no way to 'pay all the depositors and let the company fail' other than injecting money from outside. In the case of Cyprus having domestic taxpayers pay for non-domestic non-taxpayers to be made whole would be .. unpopular.

kbody 11y ago

I'm not saying it was painless. Citizens were affected and probably still are affected, my envy was about the decisiveness of their political parties, that at those grave times didn't resort to popularism to rise to power, but instead almost all the parties agreed and now are free from IMF et al. About the savings of their citizens, you're right, I would do that as well, and wonder why they didn't do it, like just "print" an IOU or something for the citizens that got the haircut up to some limit. On the other hand Greece went through everything but the traditional haircut of the savings. Continuously new increased and "temporary/emergency" taxes, enforced capital controls and we are way longer in crisis. All this time and sacrifices and still only two of the minor socialist parties (one of which wasn't even in the parliament) joined forces (probably for survival reasons and not for the "good" of the country). I personally have some hope which was reduced from the last elections' results. But the problem is the people that keep choosing to blame everyone else and take the seemingly easy way out. What do you do then? Pray for a Messiah starts to look like the more realistic option. /f