Saturday, 16 March 2013

Good Morning Cyprus

Cypriots today received the best wakeup call ever today. The Eurozone has put a one off levy on all savings of 6.75% for any one with less than €100,000 and for anything exceeding that 9.9%. What a great day for the people of Cyprus.

Cyprus is broke, the country has a debt of €15,000,000,000, 74% of GDP. Cyprus has received a loan from the ECB as a bail out and a team of finance ministers with the President, who was elected recently 'to deal with the countries debt', are carrying out a levy on all savings on Tuesday to help pay off the debt. The Euro Team and Cypriot Government have judged that the banking crisis is over so it is safe for this to happen.

If we disregard the whole taxation and surprise thing about this levy, which is bad enough (I hope you have been filled with disgust from the start), there is one big problem. Firstly Cypriot banks are really not that safe this month the two largest on the island posted a €4.5 Billion loss, almost 25% of GDP in the country. Banking has never been in a worse shape, the officials have great timing.

Now it is even worse as everyone is withdrawing money. People are fighting through queues to avoid this 'robbery'. There would have been a run on the Banks if it were not for many of them closing their doors to stop the money from leaving. People can now only use ATMs and those few banks that remain open. And do you think people will use Cypriot banks again? Unlikely. Anyone with €100,000 will definitely be looking for a foreign bank in the future. Who's to say this won't happen again? So now Cyprus has a capital crisis. It's all going down over there.

And guess who these Banks have lent to massively, our good old friends the Greeks. So it's going to go wrong for them even more now. What is more Greece, and any other indebted country, should watch out. This great policy may come to your shores too.

And now for the icing on the cake. Cyprus is about to raise its corporation tax, clearly the best way to get businesses to grow. Who runs this country, the Labour Party? Oh no wait it's the Eurozone and they're just as bad. This is just a prime example of what's wrong with European economics. But I'm not surprised, half of all left wing politicians are ex-Euro Communists.

1 comment:

  1. If ever there was a good reason to leave the EU - this is it.
    The ex-communists who run this authoritarian monolith, once again show their ignorance of how economics works. Over the years they have made the economies of the EU moribund with their overzealous micromanagement and red tape, they have continued to interfere with every successful sphere of business with the end result that the rest of the world is leaving us behind. Now they seem to think that the key to solving the banking crisis in Cyprus is to steal the depositors money - get real, this will not only lead to the destruction of whatever institutions the Cypriots think of as banks and a flight of capital, but will also leave investors and depositors in other EU banks feeling vulnerable. And we know what investors do when they feel vulnerable don't we - they ship out!! It can only be the unelected bureaucrats in the EU who would do such a stupid thing - I doubt if the "real" communist states like China would ever consider robbing their citizens in such a flagrant way. The world is topsy turvy - communists are acting like capitalists and the so called free economies of the EU are acting like marxist-leninists!

    The sooner we leave the EU and re-awaken our free market roots the better - for the sake of our children, and our bank balances!