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View Diary: Bank Run in Cyprus, Will it Spread to Southern Europe? (322 comments)

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  •  So... because Cyprus banks (1+ / 0-)
    Recommended by:
    upstate NY

    are doing so well with all that dirty mob money and the life savings of expats and Cypriots, they're being dinged to cover bailouts to other countries in worse shape?

    And if so, when can we expect German citizens to have 7-10% of their bank accounts confiscated to cover those bailouts? How about the rest of relatively 'rich' northern Europe?

    •  I might have misstated something. (0+ / 0-)

      The bailout is about the gov'ts guarantees to the banks, which sunk gov't finances. In other words, this is like Ireland. Cyprus USED TO BE a surplus country. Until the banking crisis.

      Spain and Ireland are similar in that they too had low dent to GDP. Spain even had a surplus as well.

      The bailout covers Cyprus's own bailout of its banks.

      The irony here is that the Cypriot banks have no senior paper. They simply aren't leveraged that way. They have 100% deposits for all loans that are out, and they don't sell much in bonds. They are clearly simply taking a small % of the outsized deposits, half of them from Russians.

      All I'm pointing out is that these banks are like the banks in Luxemborg. In that country, which is at the heart of the EU in more ways than one, people make an incredibly high average wage largely because the banks serve as recycling mechanisms for money looking to find a secret home.

      But the incentive here will also be to have wealthy people looking to deposit funds in core banks.

      There are two kinds of people in this world. The kind who divide the world into two kinds of people, and the kind who don't.

      by upstate NY on Tue Mar 19, 2013 at 07:18:44 AM PDT

      [ Parent ]

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