6 ms·

It appears that they are no shortcuts, or getting rich with banking by becoming a low tax banking center (see Ireland, Iceland and now Cyprus). And that will w

It appears that they are no shortcuts, or getting rich with banking by becoming a low tax banking center (see Ireland, Iceland and now Cyprus). And that will work against you when you need help from "normal" countries. Cyprus got absolutely no mercy from them, take it or leave the EU. They cannot leave EU so they must do anything else asked.

Volpe 14y ago
Why can't they leave the EU?
- OGinparadise 14y ago
  Number 1 reason: Turkey http://en.wikipedia.org/wiki/Turkish_invasion_of_Cyprus http://en.wikipedia.org/wiki/Turkish_invasion_of_Cyprus ! Being in EU offers them protection from Turkey and bragging rights ("we're Europeans...a civilized country..." Turkey occupies roughly half of the country and has more soldiers than Cyprus has inhabitants. If they left EU, in addition to the huge mess created, they would lose whatever protection EU membership offers them. A tiny country, in a strategic location and surrounded by enemies needs a big brother. Just this week: "“The idea of the Greek Cypriot Administration of Southern Cyprus (GCASC) to offer the natural resources of the island as collateral for a solidarity investment fund or any other borrowing scheme to be established due to its current economic crisis, ignoring the inherent rights of the Turkish Cypriots who are co-owners of the Island, is a dangerous manifestation of the illusion of being the sole owner of the Island, which may lead to a new crisis in the region,” the Foreign Ministry said in a statement on Saturday." http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_24/03/2013_489666 http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_24/03... Number 2 reason: Integration with EU, such as travel, bank deposits, pensions etc etc. decoupling would mean a huge mess. Number 3: If the left, their banks and econ would collapse anyway, so they still lose with no possible upshot.
  - deleted 14y ago
    [deleted]
  - seanhandley 14y ago
    It's more like a third than a half. And letting the banks fail would do the island more of a favour in the long run since continued propping up just facilitates more wealth redistribution through huge, unmanageable debts to the IMF. Not the first (or last) time the tiny nation of Cyprus has been given the shakedown by the big boys :(
lkrubner 14y ago
"They cannot leave EU so they must do anything else asked." Good lord, do you ever read the news? In case you missed it, the last 2 weeks have involved non-stop negotiations with various parties as the people Cyprus pressured the Parliament of Cyprus into rejecting the original deal, with had largely been designed by the Germans. And the deal now being considered does not resemble any deal that was suggested by the Germans or the Russians, so clearly Cyprus can say "No", at least enough to gain some flexibility. And Cyprus can certainly leave the euro, thus endangering the long run health of the European project -- and considering how much Germany has benefited by having no restrictions on its exports to the rest of Europe, this would be bad news for Germany. But even more crucially, there is the question, has Cyprus already, de-facto, left the euro? http://economistsview.typepad.com/economistsview/2013/03/fed-watch-do-capital-controls-mean-cyprus-has-already-left-the-eurozone.html http://economistsview.typepad.com/economistsview/2013/03/fed...
- OGinparadise 14y ago
  They said no and ran to Russia to try to pressure the Northern Europeans. And they came back crying... The new deal, AFAIK, confiscates all money over 100K euros in the second largest bank, the other one was a 10% tax on all. Either way, Greece had some leverage and used it to its advantage. Despite the huge cuts they were forced to make, they never met the goals set and they were lowered or extended. Cyprus it seems, has very little to no leverage. They can surely leave the Euro, like I can leave my wife, drop the lease and quit the job at the same time with nothing else waiting.
  - masklinn 14y ago
    > The new deal, AFAIK, confiscates all money over 100K euros in the second largest bank, the other one was a 10% tax on all. It's not a confiscation of all the money. Accounts are frozen, but the final levy (solely on accounts >€100k rather than across the board) are expected to be around 30%: > Asked about the level of losses on uninsured depositors in Bank of Cyprus, he told state radio: "The assessment is that it will be under or around 30 percent."
    - 14y ago
trotsky 14y ago
Were Cyprus banks really in trouble before they were forced to mark down their greek 5 and 10 year by 40%? If anything the lesson here is a responsible bank can't hold debt that's backed (directly or indirectly, like laiki) by the ECB unless it's german.
- j-g-faustus 14y ago
  The lesson is presumably that a bank should spread its bets. Here's the Central Bank of Cyprus in December 2012: When one invests over 100% of one’s capital in a single financial instrument – even if that instrument is considered low risk – it is indicative of poor risk management. [..]When bankers do the same with investors’ money – because their bonuses are linked to short-term income while the losses are underwritten by the taxpayer – the same behaviour is more than just poor risk management – it is ‘casino banking’. [1] So it looks more like Lehman Brothers. [1] http://www.centralbank.gov.cy/nqcontent.cfm?a_id=12472&lang=en http://www.centralbank.gov.cy/nqcontent.cfm?a_id=12472&l...
- Gmo 14y ago
  The problem is that there is apparently no such thing as a responsible bank in Cyprus.

Volpe 14y ago

Why can't they leave the EU?

OGinparadise 14y ago
Number 1 reason: Turkey http://en.wikipedia.org/wiki/Turkish_invasion_of_Cyprus http://en.wikipedia.org/wiki/Turkish_invasion_of_Cyprus ! Being in EU offers them protection from Turkey and bragging rights ("we're Europeans...a civilized country..." Turkey occupies roughly half of the country and has more soldiers than Cyprus has inhabitants. If they left EU, in addition to the huge mess created, they would lose whatever protection EU membership offers them. A tiny country, in a strategic location and surrounded by enemies needs a big brother. Just this week: "“The idea of the Greek Cypriot Administration of Southern Cyprus (GCASC) to offer the natural resources of the island as collateral for a solidarity investment fund or any other borrowing scheme to be established due to its current economic crisis, ignoring the inherent rights of the Turkish Cypriots who are co-owners of the Island, is a dangerous manifestation of the illusion of being the sole owner of the Island, which may lead to a new crisis in the region,” the Foreign Ministry said in a statement on Saturday." http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_24/03/2013_489666 http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_24/03... Number 2 reason: Integration with EU, such as travel, bank deposits, pensions etc etc. decoupling would mean a huge mess. Number 3: If the left, their banks and econ would collapse anyway, so they still lose with no possible upshot.
- deleted 14y ago
  [deleted]
- seanhandley 14y ago
  It's more like a third than a half. And letting the banks fail would do the island more of a favour in the long run since continued propping up just facilitates more wealth redistribution through huge, unmanageable debts to the IMF. Not the first (or last) time the tiny nation of Cyprus has been given the shakedown by the big boys :(

lkrubner 14y ago

"They cannot leave EU so they must do anything else asked." Good lord, do you ever read the news? In case you missed it, the last 2 weeks have involved non-stop negotiations with various parties as the people Cyprus pressured the Parliament of Cyprus into rejecting the original deal, with had largely been designed by the Germans. And the deal now being considered does not resemble any deal that was suggested by the Germans or the Russians, so clearly Cyprus can say "No", at least enough to gain some flexibility. And Cyprus can certainly leave the euro, thus endangering the long run health of the European project -- and considering how much Germany has benefited by having no restrictions on its exports to the rest of Europe, this would be bad news for Germany. But even more crucially, there is the question, has Cyprus already, de-facto, left the euro? http://economistsview.typepad.com/economistsview/2013/03/fed-watch-do-capital-controls-mean-cyprus-has-already-left-the-eurozone.html http://economistsview.typepad.com/economistsview/2013/03/fed...

OGinparadise 14y ago
They said no and ran to Russia to try to pressure the Northern Europeans. And they came back crying... The new deal, AFAIK, confiscates all money over 100K euros in the second largest bank, the other one was a 10% tax on all. Either way, Greece had some leverage and used it to its advantage. Despite the huge cuts they were forced to make, they never met the goals set and they were lowered or extended. Cyprus it seems, has very little to no leverage. They can surely leave the Euro, like I can leave my wife, drop the lease and quit the job at the same time with nothing else waiting.
- masklinn 14y ago
  > The new deal, AFAIK, confiscates all money over 100K euros in the second largest bank, the other one was a 10% tax on all. It's not a confiscation of all the money. Accounts are frozen, but the final levy (solely on accounts >€100k rather than across the board) are expected to be around 30%: > Asked about the level of losses on uninsured depositors in Bank of Cyprus, he told state radio: "The assessment is that it will be under or around 30 percent."
  - 14y ago

trotsky 14y ago

Were Cyprus banks really in trouble before they were forced to mark down their greek 5 and 10 year by 40%? If anything the lesson here is a responsible bank can't hold debt that's backed (directly or indirectly, like laiki) by the ECB unless it's german.

j-g-faustus 14y ago
The lesson is presumably that a bank should spread its bets. Here's the Central Bank of Cyprus in December 2012: When one invests over 100% of one’s capital in a single financial instrument – even if that instrument is considered low risk – it is indicative of poor risk management. [..]When bankers do the same with investors’ money – because their bonuses are linked to short-term income while the losses are underwritten by the taxpayer – the same behaviour is more than just poor risk management – it is ‘casino banking’. [1] So it looks more like Lehman Brothers. [1] http://www.centralbank.gov.cy/nqcontent.cfm?a_id=12472&lang=en http://www.centralbank.gov.cy/nqcontent.cfm?a_id=12472&l...
Gmo 14y ago
The problem is that there is apparently no such thing as a responsible bank in Cyprus.