Comments on: A much better alternative for Cyprus A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: SLO-CHO Thu, 21 Mar 2013 23:29:38 +0000 NEVER THOUGHT I WOULLD SAY THIS BUT MERKEL – SUCK YOUR DICK….

By: Global_Citizen Tue, 19 Mar 2013 20:27:47 +0000 What this means is the situation breaks one of two ways.

If Russia chooses they could act as a white knight and refinance their 2.5BN to say 20BN so Cyprus does not need any EU money as long as Cyprus leave private Russian money untouched and give Gasprom the gas exploration rights.

The rationale being that Cyprus is far too useful as a tax haven within the Eurozone for Russian money to be allowed to fail, and there is also a strategic advantage in securing the gas rights.

In this scenario there would be no haircuts to private deposits, and while there would probably be some short term capital controls to limit volatility there would be no losses. Also as the russians would want their set up operating asap, it would be stable pretty quickly, as the oligarchs would fall into line if the Russian Gov’t are backing cypriot economy.


Cyprus can cut all ties with Russians, meaning they would give a haircut to the Russian HNW, and also need to repay the 2.5BN EURO to the Russian Govt.

In this instance they still have to guarantee all 100k EURO deposits in order to get a vote through their own parliament, so give a haircut of prob 25% on 100k+ deposits, no longer operate as a banking haven for Russians and pay out 2.5BN loan to Russians in process

In this scenario there would be a big freeze probably between the EU & Russia and the Cypriot economy would take a hammering, and the capital controls would probably be more severe as there is little else in the cypriot economy, probably lasting years until the gas proceeds can start to kickstart the economy.

By: ytwod3621 Tue, 19 Mar 2013 18:06:21 +0000 The bankers blew the money, but since bankers are still in control at all levels they’re going to try to make somebody else restore it. It could be in the form of bailouts from the taxpayers of rich countries – for which it would probably be a drop in the bucket – or by having Cyprus devote its GDP to restoring it. Not only may Cypriots reject this in favor of default, but others may not have perfect confidence in the ability or actual willingness of Cyprus to make up the money.

By: ytwod3621 Tue, 19 Mar 2013 17:55:32 +0000 The CD plan is apparently just abandoning the bailout and putting the obligations over 100k euros on hold. It’s just a postponement – the same thing would be accomplished by saying that those big deposits just won’t be returned for five or ten years. The assumption is that Cyprus will somehow straighten things out in the meantime, despite the fact that they don’t actually have anywhere near that much money now. In order to straighten things out, that is accumulate the money to pay off the depositors, they will have to devote their income from gas – and probably anything else – to the banks for that period of time rather than to Cypriots. This may look good to Buchheit, but if Cypriots understand it they will certainly reject being slaves to the banks for the next 5-10 years. This is apparently another trick to make it look like the vanished money is really there.

By: Urban_Guerilla Tue, 19 Mar 2013 16:20:47 +0000 Agree with the respecting of th guarantee to €100k.

Everything else should be wiped out. Shareholders, bondholders, depositors with more than that.

Eventually cyprus must default. But so, evenetually must UK, US, Japan.

If you look at the Landesbanken, much of the German financial system is also insolvent.

By: nixonfan Tue, 19 Mar 2013 15:43:08 +0000 Cyprus will ultimately be forced to default, repudiate and redenominate. The rest is theater.

By: Kostas74 Tue, 19 Mar 2013 14:54:48 +0000 What is it about english law that prevents them from restructuring? Becoming the next Argentina? Argentina has been doing great, thank you, since refusing to pay. Cyprus could, too. The reason they cant default is that the issue here is not sovereign debt, because the Cyprus government is not too heavily indebted, it is the banks. I would say, do not mistake Ireland made, screw the bank creditors, and so what if in this case it means depositors (russian or whoever), but once again, the government should step in and honor the guarantee up to 100K euros. This guarantee is, by the way, legally required under EU rules. So if 50% haircaut is required for big depositors so be it, it is legally and logically the only possible outcome.

By: PeterPrinciple Tue, 19 Mar 2013 13:51:29 +0000 “Why is the government’s promise to foreign hedge funds more important than its promise to its own citizens? Sorkin never attempts an answer to that one.”

That one’s easy: Because small depositors don’t hang out at Davos with Andrew, and hedge fund managers do.

By: GQJFTW Tue, 19 Mar 2013 13:25:15 +0000 “The Buchheit/Gulati plan would cost Germany no more than the current plan, so the Germans would have no good reason to veto.”

Sadly there is still a large incentive to veto. Merkel and Schäuble wanted to show strength. Out of fear of moral hazard and shortly before the election, with a anti-Euro-party emerging, no German party wants to bail out “Russian oligarchs”. Merkel does not have an own majority when it comes to bail-outs. So she would depend on the oposition, who clearly stated that they would only agree if there is a deposit hair cut.

So eventhough I think the plan is excellent (thanks for sharing) Merkel would veto it. The following scenarios are sadly more likely: s-wyplosz-presents-scenarios-how.html

By: ViEm Tue, 19 Mar 2013 13:24:28 +0000 Excellent. Disregard the naysayers, they have an agenda.