Friday, April 12, 2013

Cyprus: A Continuing Saga

Most people watching the entire Cyprus banking episode, and the rescue situation....had this idea that things by this point would be neatly tied up, and only the blame game left.

This week, it was kind of noted.....that whatever was loaned to fill this void....wasn't enough.

The EU loan deal....which really brought a harsh reality to the Cypriot public, centered around ten billion Euro.  Everyone at that point, felt it was enough.  The truth this week?  They likely needed roughly 23 billion Euro to survive.  So the ten billion was mostly just to soften the situation and just give them breathing room for a few weeks to a few months.

I'm not an EU expert, but I'm guessing that they really feel foolish now, and doubting that anything can save Cyprus at this point.

Where would thirteen additional billion come from?  It won't be the EU or Russia.  I'm guessing most of the top level of current Cypriot government are sitting there in amazement at the mess that they were handed at the beginning of 2013 by the previous government.  Blame is likely being discussed on a hour-by-hour basis.

From the French....came a nifty new expression..."a casino economy", in describing how the Cyprus banking system worked.  Bankers were acting more as gambling bosses, than actual bankers.  The high-stakes table was surrounded by rich Russians, and Cyprus simply played into the casino mindset....there are winners and there are losers.

With island unemployment hovering around fifteen percent (from the Cyprus Mail statistics), there's various efforts underway to find just about any work....even seasonal tourism requirements....just to get people working in some fashion.

The German angle to the mess now?  If there was a slacking of faith in any positive outcome....I'd say the Germans are pushing it at full speed now.  If the ten billion in the rescue effort is simply flushed down the toilet, Germans will end up being fairly negative and unwilling to help just about anyone in a near-future episode.  This could easily turn into a top topic for the fall election.

No comments: