The madness of this decision about Cyprus is unfathomable. Readers can check the news flow for details.
Essentially, the European finance leadership has confiscated depositor funds in order to bail out the banks that the depositors use. The leadership used a counter factual argument to justify it. “If we hadn’t done this, it would have been worse.”
We expect runs on Cypriot banks when they open on Tuesday. No sensible foreign depositor would continue to keep money in a banking system that just took nearly 10% of his deposit without any notice.
We expect other banking systems in peripheral euro zone countries to experience a market imposed additional risk premium. Europe has found a new way to shoot itself in the foot. We will be discussing this development in Paris on Monday after our arrival.
As one of my partners said “you can’t make this stuff up.”
BY David R. Kotok
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Cypriot Banks
Published 03/17/2013, 02:42 AM
Updated 05/14/2017, 06:45 AM
Cypriot Banks
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