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Reply #6


Response to Demeter (Reply #5)

Mon Mar 25, 2013, 06:38 AM

6. Will Cyprus Become Creditanstalt 2.0?

The cheery view that Europe had moveD past its crisis now looks to have been a tad premature. The astonishing weekend revelation that Cyprus had struck a deal for a Eurozone rescue of the island nationís banks that hinged on a deposit grab, um, tax, of 6.75% of deposits below Ä100,000 and 9.9% for those above Ä100,000, sends a message that anyone in a weak bank in a periphery country, particularly a large deposit holder, is at risk. The one thing that America learned in the Great Depression is that to prevent debilitating bank runs, depositors need to be sure their holdings are safe. And if you need to extend government guarantees to provide that reassurance, then government bloody well better keep the banks on a short leash to make sure you donít have to pay out on those guarantees all that often. The recklessness of letting financiers talk governments out of constraining bank activities is coming home to roost.

Creditanstalt, an Austrian bank that collapsed in 1931, precipitated a financial panic that led to a series of bank failures and a currency crisis, a classic combination of contagion worsened by poor official responses. The Cyprus deposit-seizure scheme has the potential to kick off a similar broad-based financial unraveling, but whether it does depends on both customer and official reactions...

The Greek blog Clockwork Project (hat tip George P) says, per Google Translate:

An angry phone call from Russian President Vladimir Putin received early Sunday morning, Nikos Anastasiadis.

The Putin reportedly said verbatim in-Cypriot President

-Better to put the German flag at the Presidential Palace. Do not you understand that this decision destroy your country?


Read more at http://www.nakedcapitalism.com/2013/03/will-cyprus-become-creditanstalt-2-0.html#VpuHBXhgH9svFVIc.99

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