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News Link • European Union

Cyprus secures bailout, avoids bankruptcy

• AP
Cyprus secured a 10 billion euro ($13 billion) package of rescue loans in tense, last-ditch negotiations early Monday, saving the country from a banking system collapse and bankruptcy.

"We've put an end to the uncertainty that has affected Cyprus and the euro area over the past week," said Jeroen Dijsselbloem, who chairs the meetings of the 17-nation eurozone's finance ministers.

In return for the bailout, Cyprus must drastically shrink its outsized banking sector, cut its budget, implement structural reforms and privatize state assets, he said.


2 Comments in Response to

Comment by Ed Price
Entered on:

The alternative to the comedy? All-out war. Nobody - especially not the bankers - wants another WWII style war. Too much damage. Too much loss. So, enjoy the comedy. And be thankful for it.

Comment by Paulthecabdriver Farah
Entered on:

I'm laughing my ass off at this whole Cyprus mess, and I know I should be concerned instead!  But I find it hilarious.  The Cyprus banks played it fast & loose. All the secrecy of Switzerland, and all the regulatory controls of the old BCCI. They became safe havens for Russian mob money. Then they invested heavily in Greek bonds (well SOMEONE had to buy them!) and lost their shirts.  Leveraged 26-1 or higher, they suddenly saw collapse staring them in the face, so they went begging to the ECB.  ECB said we will give you 10bbl Euros but y'all have to come up with the rest.  So, they decided to give all the bank account holders a "haircut"--a one time theft of 6.75% to 10% of the funds in the bank accounts depending on how much was in the accounts.  Surprise!  Everyone in Cyprus raced to pull their money out of the banks, pushing them into immediate insolvency.  So, the Cyprus government closed the banks.  And the Cyprus Parliament voted down the EU deal.  That left the Cyprus government to go hat in hand to the Russians who wanted a naval base and rights to the natural gas fields off the coast of Cyprus in exchange for the bailout.  (Did I mention these gas fields are also claimed by Turkey, the long-time enemy of Russia?)  So the Cypriot government goes BACK to the EU, who then approves a deal if the banks give the Russian mob a 40% haircut...  The Russian mafia is not going to be pleased.

You can't write better comedy than this!  

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