“A man sees in the world what he carries in his heart.”So here's one guy's take on things.
From Bloomberg:
The writer is Bloomberg Businessweek's economics editor.Is taxing depositors in the banks of Cyprus to finance a bailout a dangerous precedent? Yes. But the real scandal is how Europe let the Cypriot banks get into such deep trouble that there were no good ways out and the tax on depositors came to be seen (by some, anyway) as the least bad option.Even though Cyprus is a poor, militarily and ethnically divided country with a history of banking secrecy, it was allowed to become a member of the European Union in 2004 and a member of the inner sanctum—the euro currency zone—in 2008. Under the nose of the European Union, Cyprus developed a banking system that’s too big for the national government to support, with assets of seven or eight times the nation’s annual gross domestic product.
Cypriot banks took in billions of euros in deposits, including from Russian oligarchs who’ve set up business on the Mediterranean island nation. Naturally, they had to put all that money to work somewhere. Reaching for attractive returns, they invested depositors’ money heavily in Greek loans and bonds—and took a beating when Greece’s economy skidded. The Cypriot banks also invested heavily in the sovereign debt of Cyprus itself, a fatal embrace in which any losses forced on the holders of government debt would wipe out the banks.
All this happened under the supervision—clearly too lax, in retrospect—of the European Union, the European Central Bank, and the International Monetary Fund. Cyprus did bring itself into compliance with bank secrecy laws, but according to the German newspaper Spiegel, German officials, in particular, have argued that what’s true on paper may not be true in practice....MORE
