Anorak | Finally, a sensible settlement in Cyprus

Finally, a sensible settlement in Cyprus

by | 25th, March 2013

Cyprus Financial Crisis

IN fact, the settlement in Cyprus is so sensible that it’s a wonder they didn’t just do this a week ago. Or even 6 months ago when it was obvious that the place needed help. For is was obvious that the banks were bust,. For what they were doing was taking all that lovely Russian money and then lending it to the Greek Government. Who, as you might recall, then decided not to pay 90% of the money they’d borrowed back. From which point on the Cypriot banks were bust no matter what else happened.

Given all of that what should have happened is that the shareholders and bondholders in the bust banks should lose all their money. Only then should depositors lose any of theirs. And among the depositors, those covered by deposit insurance shouldn’t lose any. Those who are not covered by deposit insurance should lose enough to solve the problem. As to why this, well, deposit insurance is the government just telling everyone that this is the way it will be. So, when it happens, this is the way

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Posted: 25th, March 2013 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink