EU, IMF to Cyprus: So, sorry to be the bearer of bad news, but…

posted at 9:21 pm on September 19, 2013 by Erika Johnsen

Larch March, there was an almighty uproar in Europe and around the world when the small island nation of Cyprus suddenly found themselves on the brink of exiting the eurozone and floated a teeny, tiny, involuntarily “deposit haircut” off of people’s life savings as a nifty method to quickly raise the money they’d need in order to convince Europe’s finance ministers to administer them the fifth in the series of euro-bailouts. The final bailout proposal included a levy on ‘only’ uninsured deposits over 100,000 euros, plus other measures that would force Cyprus to cut their budget, shrink their outsized banking sector, and privatize state assets.

Their rescuing creditors, however, are now warning Cypriots that they probably shouldn’t get too comfortable, via the WSJ:

Cyprus’s banking sector should brace for further turbulence as deposits continue to shrink and bad loans look set to multiply, the country’s international creditors warned Wednesday.

The European Commission, in its first review of Cyprus’s €10 billion euro ($13.36 billion) bailout, said the Cypriot government was doing what it should in terms of cutting public spending.

But the radical shake-up of the banking sector coupled with unprecedented restrictions on the movement of capital in and out of the tiny island have left it exposed to deep economic pitfalls.

The International Monetary Fund, which contributes one-tenth of the bailout, said in its own report also released Wednesday that the effects of the banking crisis on the real economy could be worse than expected. …

European experts stood by their spring forecast that the Cypriot economy would shrink 8.7% in 2013 and a further 3.9% in 2014, but raised their unemployment forecasts sharply. They said that 17% of the Cypriot workforce would be out of a job this year, up from an original projection of 15.5%, while unemployment will hit 19.6% in 2014, not 16.9% as previously thought.

“Worse than expected.” Always.

There is not and never was going to be an easy way out of this, for neither Cyprus nor the eurozone at large. Once you’ve allowed systemic fiscal, structural, and debt problems to go on too long unaddressed, grinding material hardship is reliably what’s in store.


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Once you’ve allowed systemic fiscal, structural, and debt problems to go on too long unaddressed, grinding material hardship is reliably what’s in store

And there we have the definitive explanation of the Consolidated Affordable Care Act.

Wino on September 19, 2013 at 9:25 PM

The end of the Congressional fairy tale, “…and they spent happily ever after.”

Wino on September 19, 2013 at 9:27 PM

Overheard at the last Obama cabinet meeting, “Well, it worked in Cyprus, didn’t it?”

Wino on September 19, 2013 at 9:28 PM

…Cypriot economy would shrink 8.7% in 2013 and a further 3.9% in 2014, but raised their unemployment forecasts sharply.

So? Just remove several million people from the pool, and the numbers will get better. It works for Obama and company.

Wino on September 19, 2013 at 9:29 PM

bailout

You keep using that word. I do not think it means what you think it means.

Wino on September 19, 2013 at 9:31 PM

Meh, Turkey is waiting in the wings until the time is ripe to pick up the pieces and offer peace, protection and economic stability.

Hegemony!

Huzzah!

///

Logus on September 19, 2013 at 9:33 PM

From the tags:

European debt drisis,

Similar to a debt crisis, just later?

Wino on September 19, 2013 at 9:33 PM

EU, IMF to Cyprus: So, sorry to be the bearer of bad news, but…

Ladies and Gentlemen…COMING SOON to an America near YOU…the CHILLS…the SPILLS…the THRILLS

Dr. ZhivBlago on September 19, 2013 at 9:34 PM

It seems as though it is getting harder by the day to find a secure hideout for one’s money.

OldEnglish on September 19, 2013 at 9:36 PM

It seems as though it is getting harder by the day to find a secure hideout for one’s money.

OldEnglish on September 19, 2013 at 9:36 PM

Getting to the point where one realizes that whatever you have, in whatever tangible and intangible form they can take it from you.

But We the People sat back and let them do the Federal Reserve scam, the Income Tax scam, and the property tax scam. As long as we had a car in the garage and could watch I Love Lucy all the way up to Survivor, hell, we were content.

It’s as if General Zod has landed on earth and is taking over.

Dr. ZhivBlago on September 19, 2013 at 9:42 PM

When you live beyond your means, you are destined to live beneath your means.

-Ron Paul

JohnGalt23 on September 19, 2013 at 9:43 PM

Wino on September 19, 2013 at 9:25 PM

I see what you did there…CACA!

funny!

OldWeaselKeeper on September 19, 2013 at 9:46 PM

I think I’ve figured this out.

Look — let’s start over.

What we’ll do is build three big spaceships, arks if you will, the A ark, the B ark, and the C ark. We’ll put the thinkers, the people that work mostly with their minds, like scientists and doctors, in the A ark. We’ll put the people that work mostly with their bodies, like carpenters and machinists, in the C ark. And in the B ark, we’ll put everyone else.

And we’ll launch the B ark first.

Axe on September 19, 2013 at 9:46 PM

But…but…but all that “FREE” stuff?

GarandFan on September 19, 2013 at 9:47 PM

JohnGalt23 on September 19, 2013 at 9:43 PM

Unfortunately, more often than not, it is someone else who has to live beneath their means – in paying back the excesses of their predecessors.

OldEnglish on September 19, 2013 at 9:47 PM

I see what you did there…CACA!

funny!

OldWeaselKeeper on September 19, 2013 at 9:46 PM

It’s a much more appropriate acronym.

Wino on September 19, 2013 at 9:50 PM

And we’ll launch the B ark first.

Axe on September 19, 2013 at 9:46 PM

It was tried before, but after launching all of the telephone sanitizers, those remaining on the planet were wiped out by a telephone-borne epidemic.

42!

Wino on September 19, 2013 at 9:52 PM

Axe on September 19, 2013 at 9:46 PM

Now that’s just funny!…and it’s a good start…

OldWeaselKeeper on September 19, 2013 at 9:53 PM

When you live beyond your means, you are destined to live beneath your means.

-Ron Paul

JohnGalt23 on September 19, 2013 at 9:43 PM

Sure. But what’s even better is when others live beyond their means and make the rest of us pay to cover their losses, and then try to make those they’re robbing feel guilty about bringing about insolvency as if it were their fault.

Hey, it’s your civic duty to pay your taxes, vote for one of the two criminal syndicates, entrust your money (what’s left) to their bookies and shut up and quit complaining you racist, selfish scum.

The evil genius of all this is truly astounding. So far the only country I’m aware of that has told them (crony banker crooks) to Fluke off is Iceland.

Dr. ZhivBlago on September 19, 2013 at 9:53 PM

Balderdash and poppycock.

Simply employ the barack obama method of economics. First, borrow and print more euros. Second, raise the debt ceiling. It’s not like it’s adding anymore debt you know.

rightside on September 19, 2013 at 9:54 PM

I think I’ve figured this out.

Look — let’s start over.

What we’ll do is build three big spaceships, arks if you will, the A ark, the B ark, and the C ark. We’ll put the thinkers, the people that work mostly with their minds, like scientists and doctors, in the A ark. We’ll put the people that work mostly with their bodies, like carpenters and machinists, in the C ark. And in the B ark, we’ll put everyone else.

And we’ll launch the B ark first.

Axe on September 19, 2013 at 9:46 PM

You know the politicians (“Thought Workers”) will insist on being on the A ark.

By themselves. And they’ll insist on taking off first.

And then they’ll nuke the planet from space. It’s the only way to be sure.

clear ether

eon

eon on September 19, 2013 at 9:54 PM

It’s not like it’s adding anymore debt you know.

rightside on September 19, 2013 at 9:54 PM

The actual Obumbler quote:

“…raising the debt ceiling, which has been done over a hundred times, does not increase our debt; it does not somehow promote profligacy.”

My response: “OK. Then don’t raise the debt ceiling.”

Wino on September 19, 2013 at 9:57 PM

“For a small, open economy like Cyprus, euro adoption provides protection from international financial turmoil.”

European Central Bank President Jean-Claude Trichet, welcoming Cyprus into the European single currency in 2008.

FLASHBACK: Broken Cyprus Bows To Its New EuroZone Masters

Resist We Much on September 19, 2013 at 9:59 PM

Now that’s just funny!…and it’s a good start…

OldWeaselKeeper on September 19, 2013 at 9:53 PM

HT/Douglas Adams, The Hitchhiker’s Guide to the Galaxy. :)

And then they’ll nuke the planet from space. It’s the only way to be sure.

eon on September 19, 2013 at 9:54 PM

HT/Aliens, 1986, James Cameron.

. . . good grief. :)

Anyway — Maybe the EU thinks, ultimately, after the regional governors have direct control over their territories, that fear will keep the local systems in line.

Axe on September 19, 2013 at 10:01 PM

Miley Cyprus?

Lanceman on September 19, 2013 at 10:02 PM

European Death Panels

faraway on September 19, 2013 at 10:03 PM

Miley Cyprus?

Lanceman on September 19, 2013 at 10:02 PM

Twerkonomics

faraway on September 19, 2013 at 10:03 PM

The actual Obumbler quote:

“…raising the debt ceiling, which has been done over a hundred times, does not increase our debt; it does not somehow promote profligacy.”

My response: “OK. Then don’t raise the debt ceiling.”

Wino on September 19, 2013 at 9:57 PM

…profligacy!

KOOLAID2 on September 19, 2013 at 10:04 PM

Twerkonomics

faraway on September 19, 2013 at 10:03 PM

BWAHAHAHAHAHAHAAAAA!!!!!!

Lanceman on September 19, 2013 at 10:06 PM

Anyway — Maybe the EU thinks, ultimately, after the regional governors have direct control over their territories, that fear will keep the local systems in line.

Axe on September 19, 2013 at 10:01 PM

Yes. That worked so well for the last two guys that tried it. They called their governors “intendants” and “gauleiters”, respectively.

;-|

clear ether

eon

eon on September 19, 2013 at 10:25 PM

There is not and never was going to be an easy way out of this, for neither Cyprus nor the eurozone at large. Once you’ve allowed systemic fiscal, structural, and debt problems to go on too long unaddressed, grinding material hardship is reliably what’s in store.

You mean like continuing to raise the debt ceiling instead of engaging in fiscal responsibility. You mean like creating massive entitlement programs based on unrealistic revenue projections? You mean like a political party that screams over a 5% cut in food stamps despite the rampant fraud in the program that could more than pay for any such “draconian” cut.

Wake up America. Cyprus is us in just a few years.

Happy Nomad on September 19, 2013 at 10:41 PM

…profligacy!

KOOLAID2 on September 19, 2013 at 10:04 PM

I think it’s a new form of government. You know:

Democracy
Autocracy
Theocracy
Profligacy

Wino on September 19, 2013 at 11:20 PM

I think I clicked on that twitter link but there were no tweets about possums to be found so naturally, I bailed.

Go Cruz! If the RINO fossils and country clubbers are POed and nervous the natives are finally getting restless and fed up it’s a good thing.

viking01 on September 19, 2013 at 11:23 PM

“Worse than expected.” Always.

There is not and never was going to be an easy way out of this, for neither Cyprus nor the eurozone at large. Once you’ve allowed systemic fiscal, structural, and debt problems to go on too long unaddressed, grinding material hardship is reliably what’s in store

Erika, it’s only hardship if you’re still submissive to the overall structure that led you there in the first place. There’s a way to fix it, fast – like pulling a BandAid quickly…

Iceland

But that takes balls they don’t have… And that is why thy floated the trial balloon of bail-in’s there. Happy Nomad is right, just off on the timing. It will be a couple, not few.

SkinnerVic on September 19, 2013 at 11:24 PM

Happy Nomad is right, just off on the timing. It will be a couple, not few.

SkinnerVic on September 19, 2013 at 11:24 PM

I’m not as well-versed in fiscal and financial policy as some, so I’m a terrible prognosticator, but I really do believe that shit will hit the fan big-time between now and the 2016 presidential election. It hurts to see all my fellow patriots who are naive enough to believe we have that long.

gryphon202 on September 19, 2013 at 11:53 PM

Once you’ve allowed systemic fiscal, structural, and debt problems to go on too long unaddressed, grinding material hardship is reliably what’s in store.

This is really about the U.S. right?

chemman on September 20, 2013 at 12:49 AM

Why can’t they just print money like Obama?

pat on September 20, 2013 at 2:50 AM