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View Diary: Cyprus: Trial Balloon of the Plutocracy (47 comments)

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  •  Are The Banks Failing? (0+ / 0-)

    I thought the banks were just fine, it's the government that's failing.  You're saying "If the banks had been allowed to fail..."

    They could put a much higher floor on the income to be taxed without having a significant impact on the amount of money they collect.  Maybe make the rates progressive and start the tax at whatever approximates $20k US (I'm only picking that because I think if you have that in your savings account you're probably financially in pretty good shape).

    Too Folk For You. - Schmidting in the Punch Bowl - verb - Committing an unexpected and underhanded political act intended to "spoil the party."

    by TooFolkGR on Tue Mar 19, 2013 at 08:53:30 AM PDT

    •  Short answer yes, long answer below (1+ / 0-)
      Recommended by:

      So what went wrong?

      During the good years Cyprus did build up what the IMF calls "vulnerabilities". There was rapid growth in credit, the banks made many loans to Greece and there was a property market boom.
      The banks are central to this story. They grew rapidly. By 2011, the IMF reported that their assets - which include all the loans they have made - were equivalent to 835% of annual national income, or GDP. A chunk of that is down to foreign-owned banks, but those that are Cypriot had made loans to Greek borrowers worth 160% of Cypriot GDP. There have been losses on the loans to private borrowers because of the depression that has hit the Greek economy. And the value of the debts owed by the Greek government was cut in a debt relief exercise undertaken last year. It might have helped Greece, but the Cypriot banks were hit.

      "Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing." Arundhati Roy

      by LaFeminista on Tue Mar 19, 2013 at 10:26:45 AM PDT

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