A somewhat irreverent look at state, government, and politics with a bit of econ thrown in as well since the two are inseparably linked in modern society and politicians and bankers are invariably at the coffers of the other, at least when not dipping their greedy hands into taxpayer pockets. Be forewarned the blog will have a decidedly libertarian slant.

 

The Cyprus Bailout in One Picture
Cypriots in shock at finding government had seized up to 10% of their savings – despite promise deposits would be safe. This speaks to the true value of government promises everywhere and at all times.
 

In a rare move, Cyprus is trying to raise around 5.8 billion euros ($7.5 billion) from a one-time bank charge on local deposits. Unlike in other European countries, local banks only have a small amount of outstanding bonds, which have their own set of legal complications. So the Cypriot government was unable to require the banks’ creditors to take major losses to finance the bailout.
“Authorities have taken a calculated risk. If the problem escalates, the entire euro zone banking system could implode,” said Cormac Leech, a banking analyst at Liberum Capital, in London. The deposit levy “shows that it’s O.K. to break the rules. Politicians are betting that they won’t have to do this again.”
In other struggling countries, bondholders would likely be the first to feel the pain.
Read full article.

The Cyprus Bailout in One Picture

Cypriots in shock at finding government had seized up to 10% of their savings – despite promise deposits would be safe. This speaks to the true value of government promises everywhere and at all times.

 

In a rare move, Cyprus is trying to raise around 5.8 billion euros ($7.5 billion) from a one-time bank charge on local deposits. Unlike in other European countries, local banks only have a small amount of outstanding bonds, which have their own set of legal complications. So the Cypriot government was unable to require the banks’ creditors to take major losses to finance the bailout.

“Authorities have taken a calculated risk. If the problem escalates, the entire euro zone banking system could implode,” said Cormac Leech, a banking analyst at Liberum Capital, in London. The deposit levy “shows that it’s O.K. to break the rules. Politicians are betting that they won’t have to do this again.”

In other struggling countries, bondholders would likely be the first to feel the pain.

Read full article.

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    The Cyprus Bailout in One Picture
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