Sovereign debt bubble thread

[Admiral Yi]

Agree that calling it a tax is weaselific.

[Neil]

Unless the biggest influence is a couple millions of average joe.

Not the case here. Most of the deposits are over the €100k mark, and most of those from Russia. That's likely why they stupidly tried to spread the pain to the little guy.

That's not stupid.  The people will vote them out.  The Russians would kill them.

[mongers]

Channel 4 news reporter Faisal Islam is now in Cyrus and is treating some interesting stuff, this one part of a longer exchange/conversation :

& no moral hazard dealt with by EU/ Berlin becoming responsible for confiscating people's savings for crime of sharing a bank with oligarch

[Admiral Yi]

Guess Faisal didn't get the memo about Germany being opposed.

[Iormlund]

Even if Schauble/Merkel were opposed they agreed to the damned thing, and unlike some others they can't excuse themselves behind being under pressure since they are the ones holding the purse strings. So it is gross negligence at best.

[Sheilbh]

That would be my concern as well, Monday morning dawns with queues of anxious Spanish and Italian savers outside their banks........

It's madness. They've spent a year trying to calm down the banking sector in the periphery precisely, including planning deposit insurance and now, as a condition of a bailout, they can make governments seize part of your savings too.

Apparently the Eurozone FinMins had an emergency video conference today and are considering letting the Cypriots only take money from people with more than €20 000 deposited. But it still looks chaotic.

I don't really have an opinion. I understand the theory. But in reality, after so many years of crisis, are the holders government institutions and insolvent institutions backed by governments (basically, other banks)?

Yeah. My understanding is Cyprus was doing fine until the Greek haircut which wiped out their banks.

Even if Schauble/Merkel were opposed they agreed to the damned thing, and unlike some others they can't excuse themselves behind being under pressure since they are the ones holding the purse strings. So it is gross negligence at best.

They've the pressure of an election and the SPD making hay of bailing out Russian oligarchs.

[Zanza]

 Draghi holds the purse strings, but blaming Germany for every bad decision taken in Europe is good for your peace of mind, I guess...

[Sheilbh]

Daghi's room for manoeuvre is limited, he's done a lot that's helped though. But so far it's just words. His bluff hasn't been called yet.

I love the Cypriot central banker's called Panicos.

Also I wonder how this'll affect the debate or any future election in Italy. They're big savers after all.

[Richard Hakluyt]

Just for the record I don't blame Germany directly for any of this. It is fashionable to regard Germany as an economic powerhouse but after reunification they had a pretty tough couple of decades. They started a reform program about 10 years ago and are now reaping the benefits; it is only natural that they don't want yet more German money wasted bailing out southern Europeans.

The fault lies with the euro and the EU, the program of ever greater union has moved way beyond what most EU citizens want (at the moment). It is a case of more haste leading to less speed, European integration is receding into the far distance as all these resentments build up.

[Legbiter]

The Cypriot finance minister is flying to Moscow for "talks". 

Maybe he can sucker the Russians into bailing Cyprus out. Or at least play them and the EU against each other for better bailout conditions.

[Iormlund]

I don't just blame the Germans. Pierre Moscovici, for example, echoed today Schäuble's idiotic statement that how to distribute the levy is an internal matter. It is definitely not. Not when it violates deposit insurance and sets a precedent for all future bailouts.

How these complete dumb asses are in charge of a continent is something I'll never understand.

[Neil]

Isn't deposit insurance also an internal matter?

[Tamas]

The Cypriot finance minister is flying to Moscow for "talks". 

Maybe he can sucker the Russians into bailing Cyprus out. Or at least play them and the EU against each other for better bailout conditions.

Its crazy to get into business with Russians.

[Iormlund]

Isn't deposit insurance also an internal matter?

Sort of. It was harmonized via EU directive IIRC.

[Iormlund]

The Cypriot finance minister is flying to Moscow for "talks". 

Maybe he can sucker the Russians into bailing Cyprus out. Or at least play them and the EU against each other for better bailout conditions.

Its crazy to get into business with Russians.

I hope he's got a good Geiger counter at hand.