Cyprus bail out deal

pipie

K-9 wrote: »

A few Russian private jets parked in Nicosia Airport according to C4 news.



Well we got pretty draconian laws passed for the IBRC so I'd assume there are exceptions to competition law.

Nicosia airport and has be closed since 1974.

Scofflaw

K-9 wrote: »

This is the problem they have, and why anybody saying the Cypriots have achieved anything is a false dawn, way too quick to call it.

The Cypriots are looking for bailout money from the Russians, who they already did that with a couple of years ago, in a bid to stave of a Troika bailout. 2 years later, here we are. The Russians will want their pound of flesh too, regardless of influential deposit holders, it will come at a high price.

The EU has some interest in this, as seen in not suggesting a tax on deposit holders under 100k. The Cypriot PM wanted that, and here we are.

Problem with a Russian loan is that it puts the Cypriot debt:GDP over what the IMF will lend to. No IMF loan means no bailout, which means they either need the full amount from the Russians - who will have their own ideas on what they'd like in exchange, possibly including banking transparency to their government - or they have to come back to the troika again.

I can't see that they've a lot of options at all - they're in a cleft stick of their own making, but that won't stop people bleeding all over their keyboards about how they're being "bullied".

cordially,
Scofflaw

Amberman

Just in from the Saxo bank CEO

Boston Consulting Group suggested in a recent report that about 29 percent of ALL private wealth, not just deposits, will eventually be likely to be confiscated to cover the debts already incurred.

This is also pertinent...and explains the massive spike in Bitcoin prices. Sorry Scofflaw, but this is totally relevant to the discussion. It shows real world what people are doing in reponse to the crisis.

Several Bitcoin-related apps started spiking on the Spanish iPhone market over the weekend. Bitcoin Gold shot up in the Spanish iPhone Finance category from 498 to 72, and another app called Bitcoin Ticker zoomed from 526 to 52 in just one day.


Confusion reigns supreme in the Cyprus bailout. So it is fairly risky to stick out your neck commenting on an unknown outcome that could leave you exposed to ridicule in hours if things change. And this blog is not intended to be a daily or even weekly commentary as I am not providing short-term trading advice, meaning that it is tempting to just wait and see what the outcome will be.

However, as this is so far the most important macroeconomic event of 2013 and it is continuously developing in new and perplexing ways, I feel it is necessary to try to make some sense out of what we are observing and hearing.

What we know now is that the Cypriot parliament has rejected the bailout package after a poker game with the Troika, trying to deal many different hands varying from zero percent deposit tax for the smaller depositors to 15 percent on the larger ones. None of the combinations have proved sufficiently appetising to secure a deal so far.

We also know that France has categorically ruled out that a plan B will be made available. This sounds plausible as we are already at least at plan D or plan E. We also know that the Russians are now heavily involved behind the scenes, despite being understandably ticked off about the whole process. We know that this is now turning into a geopolitical chess game, where important European oil and gas reserves may actually find their way into Russian control, in spite of all the ambitions of the past decades to achieve the exact opposite with regard to the European energy supply. We know that Merkel cares more about positioning for the upcoming domestic election than the future fate of Cyprus.

Furthermore, we know that Cyprus banks are closed until at least Thursday [ZH: Now Monday], but also that they will not open until some kind of deal is in place - or the issue of a deposit levy will be irrelevant, as there will not be a penny left in Cyprus, certainly not of foreign money.

We know that the Cyprus finance minister may unsuccesfully have tried to submit his resignation and that the British are flying in cash Euros to their 3,000 military personel.

We know that a consortium of banks has offered a private solution to the crisis, but apparently not been seriously considered.

On a lighter note, we now also know that the first name of the Cyprus central bank governor is Panicos, indicating that the old saying, "Your name is your destiny" may indeed hold some truth... sorry, excuse the pun, but I could not help myself. Actually, I feel for the man who may well hold one of the least desirable jobs in the world right now.

That is a lot to take in after just 72 hours of action. Where will it all end? What have we learned from this?

A number of things. We have seen again that the Eurozone is unable to deal rationally with its problems. This has got to be the most incompetent handling of a Euro crisis event so far, but underlines the hopeless situation the 17 countries that share the common currency are in. The panic is so great that no step is too extreme to preserve the doomed project and to defend the political capital invested in this monumental failure. That we have already come to a stage where politicians blatantly attempt to confiscate innocent and weak citizens' savings is a new low that was somewhat unexpected already at this point. It bodes ill for what can happen when the crisis deepens in the future - which it will.

The idea of a one-off wealth tax, however, is not new. Several research reports have pointed in recent years to the fact that the desperate need for funding in the public sector could - and probably will - eventually lead to confiscation of wealth in a monumental scale. Boston Consulting Group suggested in a recent report that about 29 percent of ALL private wealth, not just deposits, will eventually be likely to be confiscated to cover the debts already incurred. (Read the article on Zerohedge.com). So we had better get used to seeing our money being appropriated by money-hungry politicians. This is just the beginning. The cat is out of the bag, no matter if this particular deal should fall apart.

What astonishes me is that such an important and extreme move is risked for such a modest prize. The slow realisation that confiscating our money will be the next move in the debt crisis has been made very acute by this blatant move. The most important game changer in years and the most frightening tool in the tool box has been pulled out in the open for a mere USD 5.8 billion. The impact could trigger massive asset capital flows and asset devaluations to the tune of hundreds of billions. The loss of trust will be detrimental to all weak economies. Why on earth did the Troika not save this shocker for a substantial occasion, say a bailout of Spain or Italy? Incompetence? Lack of market understanding? Or even more frighteningly - perhaps because of a wish to introduce this new tax tool to get the voter populations used to new ideas for milking the rich in the future?

This is intriguing and fascinating - it is just a great shame that the population of Cyprus needs to go through such heartache for problems they did largely not create themselves, and have no way to avoid.

Who will be next to find themselves in such a situation is the prudent question to ask?

Be safe out there.

Scofflaw

Amberman wrote:

This is intriguing and fascinating - it is just a great shame that the population of Cyprus needs to go through such heartache for problems they did largely not create themselves, and have no way to avoid.

Who will be next to find themselves in such a situation is the prudent question to ask?

Hmm. Well, who's the next small economy running a banking sector they can't afford to save because they thought it was a good idea to become a financial services centre for Russian oligarchs?

But of course they couldn't help themselves...

amused,
Scofflaw

jank

Scofflaw wrote: »

Hmm. Well, who's the next small economy running a banking sector they can't afford to save because they thought it was a good idea to become a financial services centre for Russian oligarchs?

But of course they couldn't help themselves...

amused,
Scofflaw

We talking about Iceland here?

Amberman

ATM withdrawals limited to e260 per day.

[MOD]Edited post. Seriously, this is a not a Bitcoin discussion/promotion forum.[/MOD]

pipie

Amberman wrote: »

ATM withdrawals limited to e260 per day.

[MOD]Edited post. Seriously, this is a not a Bitcoin discussion/promotion forum.[/MOD]

Get it straight.... its only one bank that has the 260 lower limit.
You are over dramatic...(for what reason?)

Amberman

I didnt realise that. Let's give it a day or two and see if others follow suit.

Socfflaw, it's your world boss.

Damien360

Scofflaw wrote: »

Hmm. Well, who's the next small economy running a banking sector they can't afford to save because they thought it was a good idea to become a financial services centre for Russian oligarchs?

But of course they couldn't help themselves...

amused,
Scofflaw

Is the isle of man and jersey in this same boat ?

Rightwing

Scofflaw wrote: »

Hmm. Well, who's the next small economy running a banking sector they can't afford to save because they thought it was a good idea to become a financial services centre for Russian oligarchs?

But of course they couldn't help themselves...

amused,
Scofflaw

Maybe we should ask Trichet.

18/01/2008, Trichet: "For a small, open economy like Cyprus, Euro adoption provides protection from international financial turmoil."

carpejugulum

Rightwing wrote: »

Maybe we should ask Trichet.

18/01/2008, Trichet: "For a small, open economy like Cyprus, Euro adoption provides protection from international financial turmoil."

Did he think the country was run by responsible adults?

ardmacha

Did he think the country was run by responsible adults?

Do Cypriots think Trichet was a responsible adult?

Scofflaw

Rightwing wrote: »

Maybe we should ask Trichet.

18/01/2008, Trichet: "For a small, open economy like Cyprus, Euro adoption provides protection from international financial turmoil."

And so it does - the one thing the Cypriots don't have is a currency collapse, which is handy, because it would either drive foreign depositors away even faster than a levy if their accounts were CYP£ denominated, or massively increase the bill for the banks if the foreign accounts were denominated in other currencies.

cordially,
Scofflaw

clairefontaine

They are going to leave the EU aren't they?

maquiladora

Unbelievable stuff being reported in the WSJ.

By evening, European officials in Brussels had received no detailed information on two of three key bills that were being discussed in the Cypriot parliament and that Nicosia said represent an alternative to a controversial tax on bank deposits, according to three officials involved in the talks. Officials instead had to seek information from news outlets, several of which received leaked copies of the three bills.

Cypriot Finance Minister Michalis Sarris, who was in Moscow trying to get support from Russia, didn't join an emergency telephone conference with his euro-zone counterparts Thursday night, according to a senior European official on the call. Instead, Cypriot Labor Minister Haris Georgiadis dialed into the conference, but presented only a vague outline of the government's plans, promising to deliver a written proposal soon, the official said.

"This has never happened," the senior official said, comparing the difficulties euro-zone officials have encountered getting information from Nicosia with previous bailout negotiations with other countries.

Based on what they could glean from new reports, officials weren't optimistic that the Cypriot government's latest plans would fulfill the conditions set by the euro zone and the International Monetary Fund—that their financial support would be limited to €10 billion ($13 billion) and that Nicosia couldn't take on extra debts beyond that.

"The guys should start acting responsibly and send us their draft, pronto," the senior European official said. "And we will tell them that their draft is not good enough."

http://online.wsj.com/article/SB10001424127887324557804578374953022978028.html?mod=googlenews_wsj

Amberman

pipie wrote: »

Get it straight.... its only one bank that has the 260 lower limit.
You are over dramatic...(for what reason?)

Telegraph reports "Cypriot government has submitted a bill to parliament which would enact strict capital controls for when banks open next Tuesday".

Who could possibly have seen that coming?

Edited: also reporting under 100k will be untouched in the bill, over 100k to get haircuts up to....40%...yikes!

There won't be many bank accounts with more than 100k in them in the Euro periphery in a month or two I'd say.

hmmm

Amberman wrote: »

Edited: also reporting under 100k will be untouched in the bill, over 100k to get haircuts up to....40%...yikes!

There won't be many bank accounts with more than 100k in them in the Euro periphery in a month or two I'd say.

The 40% option is the Iceland option of good and bad banks and bankrupting the existing banks. Once they refused the initial offer, it has become an increasingly likely prospect as they have backed themselves into the stupid corner.

Sponge Bob

The eurogroup conference calls with Cyprus this week are notably leaky. WSJ Bloomberg FT and Reuters nearly seem to be getting a transcript as soon as the call is over.

The only message is that:

a) it is and has been up to Cyprus since last week
b) If the Cypriots cannot formulate a final package within parameters that is entirely their fault.
c) They are on their own after monday and no further political or economic capital will be invested in them.

Cyprus has been on the skids, quietly, since late 2011 after the Greek Bonds forming much of the Cypriot banks top tier capital was trashed in that deal so the problem has not been unknown, even if it was studiously ignored until the last minute deal was thrashed out last weekend.

Equally notably nobody has gone to a Troika meeting and agreed a final deal on a saturday only to have NOBODY in his parliament, not even his own party, vote in favour of any of it the following monday.

A unique mess, even by Club Med standards.

Jonny7

Statement from gov spokesman in Cyprus

The President of the Republic and the Government are in hard negotiations with Troika in order to conclude to solutions that will save the banking system, the economy in general and will bring back calmness in the country. During these really critical hours, everyone must demonstrate the highest level of responsibility.

The President of the Republic, as he mentioned during his address to the nation, assumed a high political cost and accepted the deal with the Eurogroup for the stability levy, despite his disagreements, bearing in mind the social misery that a possible rejection of the proposal would cause.

In a few hours we will be called upon to take the big decisions and reply to the hard dilemmas.

The Government has already submitted the bills. The philosophy through which it is trying to find the best possible solution, under the given circumstances, is already known.The House of Representatives will soon be called upon to take the big decisions.Undoubtedly, there will also be painful aspects in any decision taken, but the country must be saved.

The political leadership must, despite the different ideological and political approaches,provide the way out. The President of the Republic as the guardian of unity kept the political leadership constantly briefed and respected the decision of the House of Representatives. Through the continuous meetings with the party leaders he aimed at collective wisdom.
The next few hours will determine the future of this country. We must all assume our responsibility.

Needs to add "and may God have mercy on our souls" at the end

Scofflaw

Cyprus has been on the skids, quietly, since late 2011 after the Greek Bonds forming much of the Cypriot banks top tier capital was trashed in that deal so the problem has not been unknown, even if it was studiously ignored until the last minute deal was thrashed out last weekend.

The previous Cypriot government wouldn't make a deal at all, apparently.

cordially,
Scofflaw

Amberman

hmmm wrote: »

The 40% option is the Iceland option of good and bad banks and bankrupting the existing banks. Once they refused the initial offer, it has become an increasingly likely prospect as they have backed themselves into the stupid corner.

If they balked at 10%' its hard to see up to 40% haircuts getting through by Monday. It's like watching someone shag you're wife Id imagine....you're horrified, but you just can't take your eyes of it.

Scofflaw

Next mention of Bitcoin earns a free ban.

moderately,
Scofflaw

Sponge Bob

The broad plan is split certain banks into good and bad and 'Anglocise' the bads into a single Resolution corporation.

EVERY deposit over €100k ( uninsured) goes to the bad bank with EVERY bad loan and Good loans and EVERY deposit under €100k goes to the Good bank if a bank is not to continue as is.

Seemingly only 20,000 out of 400,000 deposits are over €100k so most deposits as measured by individuals affected go to the good banks.

I'm not sure how many banks will not be split. In order to do this and prevent a run on the bad banks and unsplit banks some legislation on money transferring is part of the package.

However it appears that a lot of Russian Government money is tied down in the 20,000 deposits to be bad banked and resolved.

http://english.pravda.ru/russia/economics/21-03-2013/124127-eu_cyprus-0/

Russian Prime Minister Dmitry Medvedev said that the amount of so-called "gray deposits" of Russian citizens in Cyprus banks was exaggerated. According to him, "a large number of government agencies of the Russian Federation work through Cyprus, as it is convenient jurisdiction for transactions."
"They have their money blocked now for unknown reason, because the source of this money is obvious." "That's why - he added, - Russia has to take such a strong position regarding the events around Cyprus and debt settlement of Cyprus."

Jonny7

The Russian response is gold.

"Oh we didn't think Cyprus was a rule-free laundering ground for dirty money - we just, got along well with them.. yes"

JOB93

I doubt there are many law abiding Russian citizens with deposits of €100,000 or more held in a country like Cyprus. This 40% on large deposits seems like a good idea, protect the regular citizen, be they Russian or Cyprian, at the expense of money launderers and criminals.

carpejugulum

ardmacha wrote: »

Do Cypriots think Trichet was a responsible adult?

Who cares?
The euro was a huge help to them as it was to Ireland and others. It also allowed irresponsible/stupid governments to end up bankrupt in a way their own currency would probably not allow them. But blaming the euro is like blaming the gun instead of the shooter.

Rightwing

carpejugulum wrote: »

Who cares?
The euro was a huge help to them as it was to Ireland and others. It also allowed irresponsible/stupid governments to end up bankrupt in a way their own currency would probably not allow them. But blaming the euro is like blaming the gun instead of the shooter.

The euro made economies like greece wholly uncompetitive. That's part of the problem.

Good loser

Rightwing wrote: »

The euro made economies like greece wholly uncompetitive. That's part of the problem.

Seems to me they had no appreciation of the constraints membership of the euro zone entailed. Governments indulged their electorates - with the electorates' unthinking connivance.

makeorbrake

Good loser wrote: »

Seems to me they had no appreciation of the constraints membership of the euro zone entailed. Governments indulged their electorates - with the electorates' unthinking connivance.

+1 - and i never remember any debate about these constraints around the time of us joining the euro. Clearly joe public didnt know anything about this - but there would have been people in responsible positions who would have...

Scofflaw

makeorbrake wrote: »

+1 - and i never remember any debate about these constraints around the time of us joining the euro. Clearly joe public didnt know anything about this - but there would have been people in responsible positions who would have...

The run up to euro membership was characterised pretty publicly by those constraints. Once we were in, of course, there was rather less mention of them, but then we didn't have quite the same problems as Greece.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

The run up to euro membership was characterised pretty publicly by those constraints. Once we were in, of course, there was rather less mention of them, but then we didn't have quite the same problems as Greece.

Ok, fair enough. I was living in ze Fatherland at the time of the euro switchover. I guess they didn't have the same concerns as we would have done(and should have done as it transpired).

View

Rightwing wrote: »

The euro made economies like greece wholly uncompetitive. That's part of the problem.

Economic mismanagement is what makes you uncompetitive. Currencies are "neutral", they don't go round beating economies up.

amacca

View wrote: »

Economic mismanagement is what makes you uncompetitive. Currencies are "neutral", they don't go round beating economies up.

Not having control of interest rates due to joining a currency union allows that economic mismanagement to be much more likelier to happen and harder to rectify imo

interest rates set by the core for the core were not suitable long term for application to the periphery - once size fits all solutions rarely work

Scofflaw

View wrote: »

Economic mismanagement is what makes you uncompetitive. Currencies are "neutral", they don't go round beating economies up.

I can understand how the euro could have made somewhere like Greece uncompetitive, to be fair - it seems logical that their competitiveness in exports might be based pretty much on having a weak currency.

But, as ever, check the stats - Greek exports as a % of GDP from the OECD:

Year|1993|1994|1995|1996|1997|1998|1999|2000|2001|2002|2003|2004|2005|2006|2007|2008|2009|2010|2011
Greece|17|18|18|18|20|20|23|26|25|22|21|23|23|23|24|24|19|22|25
Cyprus|47|48|50|51|52|50|52|55|56|51|47|48|48|48|48|45|40|40|

There is a fall around 2000-2001, but it's hard to say that's necessarily the euro given there was a mild recession at that time, and it also looks like lost ground was made up again. Cyprus has a very similar fall in 2001-2, but it didn't join the euro until 2008.

cordially,
Scofflaw

Hotblack Desiato

Scofflaw wrote: »

I can understand how the euro could have made somewhere like Greece uncompetitive, to be fair - it seems logical that their competitiveness in exports might be based pretty much on having a weak currency.

It's more political than economic - if/when their governments screwed up, they could always devalue and the savers who got screwed rarely held them accountable. Greece and Italy were fond of this, and for a time in the 80s a weak currency we could let fall further at will suited us too.

Isn't it funny though that all the people who speak ill of currency union and interest rates set abroad, don't remember or don't know that we were in a currency union with sterling from independence until 1979. We've only had a notionally free floating currency for a small portion of our state's history.

osheen

All euro countries still have their own central banks and banking regulators. It was not the euros fault that these regulators allowed the banks to lend irresponsibly .
10million to buy a field in leitrim ? No problem sir !
125% mortgage- no problem sir !
Time we stopped blaming the germans the euro or little geen men from mars. It was all down to the individual States and their politicians/civil servants .

makeorbrake

osheen wrote: »

Time we stopped blaming the germans the euro or little geen men from mars. It was all down to the individual States and their politicians/civil servants .

With the exception of the ECB's own responsibilities, I'm not - and NOTHING has been learnt - it will happen again (that's the really sad thing)...along with all the other mistakes.

osheen wrote:

Time we stopped blaming the germans the euro or little geen men from mars. It was all down to the individual States and their politicians/civil servants .

I don't think anyone is disputing that. However, using a currency that's not our own is presenting us with a financial straightjacket is it not?

KyussBishop

osheen wrote: »

All euro countries still have their own central banks and banking regulators. It was not the euros fault that these regulators allowed the banks to lend irresponsibly .
10million to buy a field in leitrim ? No problem sir !
125% mortgage- no problem sir !
Time we stopped blaming the germans the euro or little geen men from mars. It was all down to the individual States and their politicians/civil servants .

Setting up the Euro in the configuration it was launched with, was going to blow up the moment there was a financial crisis, and there was a total failure to adequately setup strict centralized regulations (among much else), which were a requirement for the stability of the currency and EU economies.

That is a total collective failure of all EU nations who negotiated the Euro, and we're living the results of that failure now.

Sponge Bob

KyussBishop wrote: »

That is a total collective failure of all EU nations who negotiated the Euro, and we're living the results of that failure now.

Very true, Germany and France no sooner negotiated the Maastricht guidelines on converging economies to the Euro 20 years back than they serially broke the rule on the 3% annual budget deficit themselves.

The Euro is the softest hard currency in currency history and Cyprus only joined it about 5 years ago which was, in hindsight, totally daft of them.

Malta joined around the same time, I have a horrible sinking feeling about Malta too although they don't have as bloated a banking system as Cyprus.

Luxembourg is the eurozone country most like Cyprus to my mind, with a stupendously oversized banking sector dominated by deposit taking rather than property lending as was the case in Spain and Ireland.

Rightwing

View wrote: »

Economic mismanagement is what makes you uncompetitive. Currencies are "neutral", they don't go round beating economies up.

Well explain to us then why practically every country in the world is trying to 'devalue' it's currency, which has lead to the currency wars.

Rightwing

Rightwing wrote: »

Well explain to us then why practically every country in the world is trying to 'devalue' it's currency, which has lead to the currency wars.

What's the difference between say Britain devaluing the Pound by 5%, and a country like country like Cyprus going in and taking 5% of savings instead?

The depositor has lost 5% in real terms in both cases. Of course, we could say that British exports would become more attractive as an added bonus - but then we could also ask why Britain is so sluggish and slow to recover, seeing as it has the use of the magical currency devaluing button which, according to some people around here, should fix everything in a jiffy.

clairefontaine

Rojomcdojo wrote: »

What's the difference between say Britain devaluing the Pound by 5%, and a country like country like Cyprus going in and taking 5% of savings instead?

The depositor has lost 5% in real terms in both cases. Of course, we could say that British exports would become more attractive as an added bonus - but then we could also ask why Britain is so sluggish and slow to recover, seeing as it has the use of the magical currency devaluing button which, according to some people around here, should fix everything in a jiffy.

I've heard one of the reasons Germany is so adamant not to let the Euro fail is that if it did, they would be left with a very strong mark, and then no one around them would be able to afford to buy their products.

Rightwing

Rojomcdojo wrote: »

What's the difference between say Britain devaluing the Pound by 5%, and a country like country like Cyprus going in and taking 5% of savings instead?

The depositor has lost 5% in real terms in both cases. Of course, we could say that British exports would become more attractive as an added bonus - but then we could also ask why Britain is so sluggish and slow to recover, seeing as it has the use of the magical currency devaluing button which, according to some people around here, should fix everything in a jiffy.

Devaluing a currency is a sign of major problems, any country that's doing that has big, big problems. It's trying to slow the problems as opposed to fiixing them.

As for the savings v the devaluing, it's not comparing like with like. Most of these currencies fluctuate, £ is weak this year, strong next year, but with savings, as the ad goes, once it's..it's gone.

snaps

so they've agreed a 20% levy on deposits over 100k. So just imagine you've sold property, had money in bank to by another property etc, then puff, 20% of its gone. Tough luck hey. Still think there will be a run on the banks, seems nothing is safe anymore, doesn't transmit good feelings around Europe?

JOB93

snaps wrote: »

so they've agreed a 20% levy on deposits over 100k. So just imagine you've sold property, had money in bank to by another property etc, then puff, 20% of its gone. Tough luck hey. Still think there will be a run on the banks, seems nothing is safe anymore, doesn't transmit good feelings around Europe?

Most people would pay off their mortgage on that house first and if you didn't have one then you can afford to take a hit. May not be nice but better that person than a young family taking a hit. I'm sure property prices will drop now so anyone with a spare 80k will still be able to afford somewhere decent.

murphaph

clairefontaine wrote: »

I've heard one of the reasons Germany is so adamant not to let the Euro fail is that if it did, they would be left with a very strong mark, and then no one around them would be able to afford to buy their products.

I've heard this a lot and on the face of it it makes sense BUT it ignores the fact that the Deutsche Mark was a strong currency throughout many years of German economic supremacy. It also ignores the fact that it was the French who pushed Kohl into the Euro in exchange for giving the green light for German reunification. It wasn't high or possibly even on Germany's agenda.

Germany is primarily economically successful because of the strong reputation their goods have around the world. It has a lot less to do with currency tricks to be honest.

uberalles

Has anything been agreed? TV is on the blink here.

Rightwing

murphaph wrote: »

I've heard this a lot and on the face of it it makes sense BUT it ignores the fact that the Deutsche Mark was a strong currency throughout many years of German economic supremacy. It also ignores the fact that it was the French who pushed Kohl into the Euro in exchange for giving the green light for German reunification. It wasn't high or possibly even on Germany's agenda.

Germany is primarily economically successful because of the strong reputation their goods have around the world. It has a lot less to do with currency tricks to be honest.

Whilst all that is true, that's not what the poster was referring to.

How can weak cuntries like spain/Greece/Cyprus compete with the Germans ? simple... They can't.

They need either lower costs or/and a weaker currency.

pipie

JOB93 wrote: »

Most people would pay off their mortgage on that house first and if you didn't have one then you can afford to take a hit. May not be nice but better that person than a young family taking a hit. I'm sure property prices will drop now so anyone with a spare 80k will still be able to afford somewhere decent.

There are very few areas in Cyprus where 80k will buy even a one bed apartment.
It’s many years market is hugely over inflated and stagnant, partly due to the title deed scandal , partly due to speculation by large developers and also rising unemployment.
Also - there are many many, unsold and ghost estate/apartment blocks in Cyprus.

handlemaster

Rightwing wrote: »

Whilst all that is true, that's not what the poster was referring to.

How can weak cuntries like spain/Greece/Cyprus compete with the Germans ? simple... They can't.

They need either lower costs or/and a weaker currency.

germany.could leabe the euro thereby devaluing he euro for the remaining members making their exports cheaper