Lee C. Buchheit published a paper on walking back from Cyprus, found interesting to share some his thoughts:
Cyprus imposes losses –euphemistically dubbed a “solidarity levy” — on insured depositors with Cypriot banks as a condition to receiving EU/IMF bailout assistance.
They have 4 options on last Friday March 15th 2013:
(i) Give Cyprus a complete bailout (estimated to cost €18 billion).
(ii) Restructure the outstanding Cypriot bonds, €4.4 billion of which are governed by Cypriot law and €3.8 billion by English law.
(iii) Haircut excess deposits in the Cypriot banking system; that is, deposits in excess of the €100,000 minimum covered by the local deposit insurance scheme. These represent about half of the total deposit base. Continue reading “CYPRUS – Bailout and Alternatives”
EU to Cyprus: “all animals are equal, but some animals are more equal than others“…Sunday night markets will tell if this is Lehman II 🙂
So it turns out that those who noted that the Cyprus bailout took place ahead of a local bank holiday on Monday were onto something. The terms of the bailout deal represent a huge leap in how the EU is tackling the crisis. Time will tell whether this leap is over or into the chasm.
This is a quick reaction post. I will focus on likely market reaction because that is what I know about – and why you’re likely reading my ramblings – and leave meditations on justice and democracy to people closer to the action.
Continue reading “CYPRUS Bailout Fair or Unfair”