Pawelmorski (pseudonym for a london-based fund manager) gives this opinion of the EU ‘rescue’ of Cyprus :
How bad is the damage?
Bloody appalling…… Take a moment to realise the scale of what’s been done here. No human agency has achieved so much economic destruction in such a short time without the use of weapons. The combination of laying waste to the financial sector and tearing up the savings of thousands of residents means that Cyprus won’t return to current levels of output for a decade, a funeral pyre which bears comparison only with Greece. There are four shocks happening at once; the bog-standard austerity shock; the trauma of bank withdrawal controls; the wealth shock; and the structural shock of wiping out the financial sector. The bailout bill is certainly going to get a lot higher too, as a larger amount of debt is piled onto a smaller economy.
Read more at Cyprus: The Operation Was a Success. Shame the Patient Died. | Some of it was true….
Is it possible to identify those who created the Cypriot debt? Who profited during the period of debt accumulation? Are those who profited back then & created the debt now bearing the cost? Who benefits most from the bailout?
Just where do the large bond holders fit into this? They took on risk when buying bonds. Having taken a risk they should be prepared to lose.
Did the ordinary Cypriot citizens contribute to the debt? Is the price they will have to pay over the next decade proportionate with their complicity?
Do they deserve to pay the price of job losses and business failures that are still to come?
I am struggling to understand what is happening in the E.U. Can someone provide me with some clues.
Cypriot banks were buying Greek government bonds. The Greek government was running deficits which caused them to default. The default caused a banking crisis in Cyprus. So the primary beneficiaries were Greek taxpayers, who would have paid additional taxes, and Greek welfare recipients and government employees, who would not have received the same level of payments if there was no deficit.
It remain a partial mystery who is the financier of origin in this ponzi scheme. What has so far unravelled is borrowers not and or unable to repay debt. But who are the underwriters, who are the savers who will either initiate a run on banks, take their pensions home in a wheel barrow (or both)?
If savers are the big losers then saver countries will likely suffer most, Germany Switzerland Japan and China.
But that could be such a long time coming….
In essence it is the end game of democratic socialism