Announcement

Collapse
No announcement yet.

Greece sink Cyprus

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Franker65
    replied
    I agree with Odysseus. The Cypriot economy was very successful in recent years. The Aphrodite gas field will prove to be a major asset in the future. Whenever the general worldwide downturn picks up, Cyprus is sure to rebound strongly.

    Leave a comment:


  • Odysseus
    replied
    Cyprus had a healthy economy. It has achieved all the goals to enter the euro zone and its deficit was under 3%.
    The Greek bonds are a big problem for the banks. But let us not forget that Cyprus has natural gas.
    I dont think a future Natural Gas provider to the EU has a lot to fear in terms of economy.
    I dont think there would be a country in the world that wouldnt lend Cyprus.

    Leave a comment:


  • dave lukins
    replied
    Originally posted by Odysseus View Post
    Cyprus economy is not sinking due to Greece.
    Even if Greek bonds held by Cyprus banks are a part of the problem.

    A short extract from the Cypriot Economy Profile

    "Two of Cyprus's biggest banks are among the largest holders of Greek bonds in Europe and have a substantial presence in Greece through bank branches and subsidiaries. A liquidity squeeze is choking the financial sector and the real economy as many global investors doubt the Cypriot economy can weather the EU crisis. Cyprus's borrowing costs have risen steadily because of its exposure to Greek debt".

    Leave a comment:


  • Odysseus
    replied
    Cyprus economy is not sinking due to Greece.
    Even if Greek bonds held by Cyprus banks are a part of the problem.
    The main reason for the problem is bad managment of the economy. From +3% Cyprus has gone to -6% deficit the last 4-5 years.
    Tragic mistakes from the current goverment have caused the economy to blow up, adding up to the blow up of the energy station in limasol.
    That has caused deaths damages and a 4billion dollar bill, that came in the worst of times.

    In the long run Cyprus economy has nothing to fear.

    Nice to meet you all.
    I just registered

    Leave a comment:


  • chakos
    replied
    Cyprus, both my patriarchal and maternal homeland has always been seriously expensive. It was the only one of the smaller (and possibly of all) European countries that actually experienced price drops when the Euro came online. The Cypriot pound was anywhere between 1.5 and 2 pounds sterling. When i visited as a child the exchange rate was $3AUD for 1 Cyprus Pound.

    Leave a comment:


  • FluffyThoughts
    replied
    Cyprus - my patriarchal homeland - is seriously expensive. As they are Euro members they have no means to devalue their currency.

    The only choice that they have left is drastic austerity (and the pain that will involve upon the electorate, not the elected). Sounds like the medicine that my maternal homeland suffered - Ireland. [Alternatively they could join a Sterling zone! :red: )

    Leave a comment:


  • snapper
    replied
    Due to other work commitments I have not had my eye on the euro tragedy of late. The Cypriot banks were bound to face losses on Greece; many of the banks have shares in each other. It would make more sense for southern Cyprus to be a part of Greece 'propper' in any case and be an 'offshore tax haven' where all the rich Greeks who don't pay tax anyway could do it legaly and at least provide some income for the mainland. Of course of what they euphemistically call 'conditionality' will hurt Cyprus badly - particularly if they are forced to raise their business taxes. This would force out the rich Russians (one of whom owns a well know football club) who register their companies there. The Russian oligarchs love Cyprus as they can appear legitimate in the west having escaped the mafia wars and neo-Czarist court payments. We are now going to spend tax payers money essentialy saving the bolt hole of the exiled Russian oligarchs. It matters little; 7-10bln euros of our money is small fry for these clowns.

    There's some new euro-terminology going around it seems: The Spanish call them the "men in black", in Greece they are called the "troika" and in Berlin it 'translates' as "conditionality". What it means is you, Greece/Ireland etc, get your spending levels set for you by your creditor 'partners'; in real terms it means 'control of your budget' . The other word that often crops up in response, and often in reply, is "solidarity". To translate this you have understand that we are European 'partners' so showing 'solidarity' means helping your 'partner'. Of course Spain demands 'solidarity' from its 'partners' in solving its banking problems which they can't solve themselves and so in real language terms 'solidarity' means money. We then have insane conversations in these euphemenism such that: "there can be no solidarity without conditionality", which I believe Merkel actualy said. Presumably this 'eurospeak' is done to avoid causing offence but it may also confuse the public for while (which never hurts).

    So it seems the latest (apparently the 19th) EU 'crisis summit' has been a 'success' and we are all very happy and 'progress has been made' etc blah blah... Sorry but heard it too many times and remember when the first Greek bailout was a celebration time. Of course this is also a fault in having so many 'summits' at which one has to report some sort of 'progress'. The trouble is that the more you lie about 'progress' the less people believe you.

    Anyway lets look at what has been agreed at this latest 'success meeting'. The EFSF, which will be merged with ESM this in September (or was planned to be - may have changed), will be alowed to buy up Spanish bank debt, although it's not legaly alowed to. It will not be repayed - which it also has a legal requirement to ensure because it cannot be legaly repayed by a bank - only by a soveriegn, a la Greek bailouts. Well the law seems a small price to pay for a headline. That the EFSF will NOT have 'seniority', which you will hear, means that if/when the Spanish banks go broke and a 'haircut' or in English 'debt write off' is needed the EFSF also has to take a cut in it's losses. This is different to the second Greek bailout as 'troika' money was exempted from cutting it losses/haircut. However when the ESM becomes the permanent bailout fund it by law is required to have 'seniority' as the EFSF will merge with the ESM what they buy today without senority they will enjoy seniority with tomorrow, also when the ESM takes over 'conditionality' will be required. This is a con in normal terms.

    Neither does the EFSF have the 100bln euros needed to buy Spanish debts; all it's money has been loaned out already to Greece, Portugal etc. The EFSF will either need refinancing itself before it buys the Spanish banks and this can only be done by sovereigns as it can't possibly borrow itself; you can't borrow to buy bad debt with no way to get a return. If new funding is given then it devalues the status of the EFSF/ESM as it holds bad debt and no collateral other than the sovereigns - Germany in reality. To quote a tweet by Queen_Europe Angela Merkel (not); "A decisive solution: using a fund that doesn't exist to buy debt that won't be repaid via a mechanism that hasn't been agreed."

    They have also apparently agreed to alow some fund, it's not clear which, to buy Italian bonds and re-examine the Irish deal. This of course begs the question of what you do in the Greek renegotiation.

    Well that's my preliminary view of this latest 'success'. Nobody, even I suspect, the politicians who have agreed this understand the full implications. They will say that Merkel has 'caved in' etc and on the EFSF she has but come the ESM ratification, which is democraticly dangerous (see EU: Treaty of debt (ESM) - stop it now! - YouTube), all debtor countries will lose any say. It's a very clever stitch. The problem Germany will eventualy have cope with is sinking with their 'partners' and paying for them for the next 5-10 years with 'conditionality' or ad infinitum without 'conditionality'... sinking with them. The latter prevents civil conflicts longer but if a 'political union' is imposed where this is no single 'polis', an undemocratric 'demos' as it were, they would asking for democracy ad baculis; a 'debacle' (if you will forgive my Latin pun) of the supposed purpose of the whole European project.
    Last edited by snapper; 29 Jun 12,, 16:12.

    Leave a comment:


  • tantalus
    replied
    Originally posted by gunnut View Post
    Seems like they have a spending problem...
    Well now they do because there economy is contracting, but the main problem has been their exposure to Greece ,especially cypriot bank exposure to greek banks. These are private companies after all (our were, I presume they are or will become state owned), but the cypriot government is the one who bails them out, which in turn ofcourse has to come from elsewhere, previously its been the russians, but there turning to the eurozone bailout funds now. Ultimately, it all becomes state debt though.
    Originally posted by Doktor View Post
    Their banks hold (or used to hold) a lot of Serbian and Russian cash. I am confused they only need $1.8bn
    Thats only to meet the needs of 1 bank. It may rise to 10 billion and I believe that excludes the loans the russians have provided over the last 2 years.

    Leave a comment:


  • Doktor
    replied
    Originally posted by tantalus View Post
    Cyprus applies for EU bailout to allay fears over risk to financial sector posed by Greek exposure - RT News

    That makes 5.

    Cyprus is a small country with a small economy so this doesnt carry a great deal of significance in affecting the available bailout funds. More importantly, it's further poor PR for the eurozone, another psychological blow.
    Their banks hold (or used to hold) a lot of Serbian and Russian cash. I am confused they only need $1.8bn

    Leave a comment:


  • gunnut
    replied
    ...shows no appetite for the stringent spending cuts that any EU funding would tie it to.
    Seems like they have a spending problem...

    Leave a comment:


  • tantalus
    started a topic Greece sink Cyprus

    Greece sink Cyprus

    Cyprus today became the fifth eurozone country to seek financial assistance from the EU's rescue funds.
    "The purpose of the required assistance is to contain the risks to the Cypriot economy, notably those arising from the negative spill over effects through its financial sector, due to its large exposure in the Greek economy," a government announcement said.
    Cyprus is fiercely protective of a corporate tax rate that is one of the lowest in the EU and eight months before a general election shows no appetite for the stringent spending cuts that any EU funding would tie it to.
    Moscow already provided Cyprus with €2.5bn in a bilateral loan last year and has an interest in maintaining Cyprus as an offshore financial centre with low tax rates for Russian businessmen, who use it as a base to reinvest in Russia.

    However, seeking such large sums from Moscow or Beijing is controversial in Cyprus, where EU membership is a matter of national pride.
    Cyprus applies for EU bailout to allay fears over risk to financial sector posed by Greek exposure - RT News

    That makes 5.

    Cyprus is a small country with a small economy so this doesnt carry a great deal of significance in affecting the available bailout funds. More importantly, it's further poor PR for the eurozone, another psychological blow.
Working...
X