Sovereign debt bubble thread

[Zanza]

It's ironic as the aircraft used to air-freight them in were probably Russian made.

As it was flown in by Lufthansa, it's more likely that it was a MD-11. The whole amount apparently came from the vaults of Germany's Bundesbank.

[mongers]

It's ironic as the aircraft used to air-freight them in were probably Russian made.

As it was flown in by Lufthansa, it's more likely that it was a MD-11. The whole amount apparently came from the vaults of Germany's Bundesbank.

Has to be one of the very biggest peace time transfers.

I guessed an Antonov simple because I assumed, probably wrongly the container where shipped already loaded. But apparently that was done at the island airport.

[Zanza]

It must have been tempting for the pilots to just fly somewhere that doesn't have an extradition treaty.

[DGuller]

It must have been tempting for the pilots to just fly somewhere that doesn't have an extradition treaty.

Maybe they put timed bombs around the necks of everyone on the plane, and flown the key to disarm them on a separate flight.  That's what I would've done anyway.

[frunk]

It must have been tempting for the pilots to just fly somewhere that doesn't have an extradition treaty.

They could have kept the pilots in the dark about what they were carrying.

[Sheilbh]

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.

Apparently real estate and banking are around a third of the economy and their two largest banks are being restructured. I imagine that'll also have a hit on high-end tourism. Their biggest trading partner is Greece. And they'll be going through austerity. I can't imagine how severe the internal devaluation will have to be before they're competitive within the Eurozone, and that'll presumably be more or less based solely on tourism while the EU/ECB keeps enough money in the system to keep them alive. Apparently the Troika's predicting -8% GDP this year, but I think that might be optimistic.

I wonder if Krugman's right and the Cypriots should have left and devalued.

Edit: On the other hand it's apparently causing serious negotiations with the North and Turkey for the first time in ages so they can negotiate a deal on gas. Which is a good thing. Cyprus shouldn't have been let in after they rejected the Annan plan

[MadImmortalMan]

I wonder if Krugman's right and the Cypriots should have left and devalued.

Until somebody tries it, everyone will just keep wondering.

[Neil]

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.

Apparently real estate and banking are around a third of the economy and their two largest banks are being restructured. I imagine that'll also have a hit on high-end tourism. Their biggest trading partner is Greece. And they'll be going through austerity. I can't imagine how severe the internal devaluation will have to be before they're competitive within the Eurozone, and that'll presumably be more or less based solely on tourism while the EU/ECB keeps enough money in the system to keep them alive. Apparently the Troika's predicting -8% GDP this year, but I think that might be optimistic.

I wonder if Krugman's right and the Cypriots should have left and devalued.

But really, isn't this a correction?  Hasn't quality of life been far too high in Cyprus?

[The Minsky Moment]

High living standards?  Must put a stop that nonsense at once!

[Zanza]

If the Euro is the worst thing since unsliced bread, why does no one leave?

[Admiral Yi]

High living standards?  Must put a stop that nonsense at once!

No need to lift a finger.  High living standards built on borrowing tend to self-correct.

[Iormlund]

Jesus fucking Christ. What's with the moral outrage, the fixation with debt and "living beyond your means"? Cypriots were not borrowing shit. They went down because their banks were tightly coupled with Greece, and faced crippling losses after the haircut last year.

[Jacob]

Jesus fucking Christ. What's with the moral outrage, the fixation with debt and "living beyond your means"? Cypriots were not borrowing shit. They went down because their banks were tightly coupled with Greece, and faced crippling losses after the haircut last year.

If you construct a "it's their own fault" narrative you feel less guilty about enjoying other peoples' suffering while also feeling less likely that it will happen to you.

[Iormlund]

If the Euro is the worst thing since unsliced bread, why does no one leave?

It's not that hard to guess. For starters, it was specifically designed to punish any exit. Furthermore, those with the means of triggering such course of action would not benefit from it. Except maybe in Ireland (where it doesn't make sense) or Italy, exiting will certainly be followed by a lot of pain before any recovery. No one wants to be responsible for that. Better to do nothing and blame the current predicament on the previous guy. Finally the longer you stay, the less advantageous it seems, as private external creditors are replaced by local and governmental creditors (LTROs, bailouts, etc).

That being said, the successes of M5S and Berlusconi show that exit is not anywhere near taboo anymore (though as mentioned Italy is IMHO the perfect candidate for exit).

[Zanza]

It was designed to punish exit? That one is new to me.