Sovereign debt bubble thread

[Iormlund]

Reuters says the Euro FinMin are freaking out after the Cypriots wouldn't even answer their conference call.

[Richard Hakluyt]

One thing does surprise me about Germany and the Euro, namely that Germany had recent experience of the pitfalls of currency unions with their reunification. There were huge transfers of money (something like $100bn a year IIRC) from the West to the former DDR, these were necessary because the East's businesses were simply not competitive with the rate 1 Ostmark = 1 Dm. These transfers caused some tensions between Ossis and Wessis, even though they were all Germans and citizens of the same state. I'm wondering how many German politicians and opinion-makers picked up on this while the plans for the euro were being made?

I think I would be correct in saying that many (a majority?) of the ordinary German citizens were very nervous and concerned about losing the Dm. Events have proven them to be wiser than their political leaders.

[Richard Hakluyt]

Reuters says the Euro FinMin are freaking out after the Cypriots wouldn't even answer their conference call.

They have dumped the EU and are dating Russia 

[Zanza]

One thing does surprise me about Germany and the Euro, namely that Germany had recent experience of the pitfalls of currency unions with their reunification. There were huge transfers of money (something like $100bn a year IIRC) from the West to the former DDR, these were necessary because the East's businesses were simply not competitive with the rate 1 Ostmark = 1 Dm. These transfers caused some tensions between Ossis and Wessis, even though they were all Germans and citizens of the same state. I'm wondering how many German politicians and opinion-makers picked up on this while the plans for the euro were being made?

I think I would be correct in saying that many (a majority?) of the ordinary German citizens were very nervous and concerned about losing the Dm. Events have proven them to be wiser than their political leaders.

That's why Germany demanded both the Stability & Growth Pact and the no-bailout clause.

[CountDeMoney]

"Systemic risk" never sounds good.

[The Larch]

That's why Germany demanded both the Stability & Growth Pact and the no-bailout clause.

So why was the SGP so ignored afterwards? 

[Iormlund]

All the cool kids were doing it.

[Zanza]

That's why Germany demanded both the Stability & Growth Pact and the no-bailout clause.

So why was the SGP so ignored afterwards? 

Convenience, negligence, realpolitik.

[Legbiter]

Reuters says the Euro FinMin are freaking out after the Cypriots wouldn't even answer their conference call.

They have dumped the EU and are dating Russia 

The Cypriot finance minister has come back, but unfortunatly, Russia refused to put out.

I think the Cypriots are in denial, their offshore model is now as dead as disco, this is now a question of restarting a basic banking system for the locals without indebting the state too much. Smash & grab the Russian oligarch money, resign and go into hiding, that'd be my advice. Tourism and gas is what will give Cyprus an economy from now on.

[Iormlund]

Seeing how their banking system is dead, it would make sense to take advantage of captive funds. Instead of 15% go for 50% tax of big deposits and you don't need a bailout anymore. Only good life insurance.

[Zanza]

The Troika has rejected their proposal with a solidarity fund and the ECB has said it would stop funding Cypriot banks on Monday.

[Admiral Yi]

What does "with a solidarity fund" mean Zanza?

[Ed Anger]

C'mon silver prices. CLIMB.

[Iormlund]

@Yi: A fund made of several things like Church property or gas futures. But most importantly, a raid on pension schemes, which Germany has rejected outright.

[mongers]

Reuters says the Euro FinMin are freaking out after the Cypriots wouldn't even answer their conference call.

They have dumped the EU and are dating Russia 

The Cypriot finance minister has come back, but unfortunatly, Russia refused to put out.

I think the Cypriots are in denial, their offshore model is now as dead as disco, this is now a question of restarting a basic banking system for the locals without indebting the state too much. Smash & grab the Russian oligarch money, resign and go into hiding, that'd be my advice. Tourism and gas is what will give Cyprus an economy from now on.

Sounds like a workable possibility. 

Yesterday channel 4 news interview a successful Cypriot business man and he said of the four strands of the Cypriot economy; tourism, banking, financial services and real estate, this crisis has killed off three, leaving them with just tourism.