The Cypriot Government continues to debate how it can avoid political suicide by getting a bailout and not stealing bank savings to pay for it.
The most likely answer is they will take the bailout and hand over up to 30 percent of bank savings accounts over. At least there's a chance that they can blame the theft on the European Polictical elite and the ECB, they can argue that they had no other choice. It wasn't our fault, it was the ECB and Germany who did it... please vote for us again.
However it could be the pantomime being played out is a way of threatening the rest of Europe. For instance, what would happen if Cyprus didn't take the bailout?
They would probably drop out of the Euro and go back to the Cypriot pound, they would then regain mastery of their financial affairs, no longer shackled to Europe and their heinous demands.
Sure, savings in Cypriot banks would effectively devalue and the risk is they may devalue by the same amount the bailout would take. But then again, it may not.
The thing is, removed from the shackles of the Euro, Cyprus would be able to plan its own recovery, free from the demands of the Euro zone.
The danger for the Euro zone is that Cyprus recovers quicker and stronger than would have been the case had it stayed in the Euro.
But we all know that will never happen because the corrupting lure of the European Political elite, all the junkets, all the showmanship, is too addictive for them to ever contemplate leaving the Euro.
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3 months ago