Nobody has much sympathy for the oligarchs caught in this trap, but there’s been a lot of publicity about the poor, innocent Cypriots who will be taking a haircut. Via Meadia is not as sympathetic as we’d like to be. Any sentient depositor in a Cypriot bank had to know that things weren’t right. The dubious nature of the Cypriot banking system has been a notorious fact for almost a generation; during all this time Cypriots seemed perfectly happy that their country was running an offshore money laundry for some of the nastiest people around.
Furthermore, the Germans have made no secret of their hatred and loathing of the idea of bailing out kleptocrats with public funds. Smart Cypriots took their money out of these casinos months if not years ago; there is no right to make stupid decisions and have the world bail you out. It’s harsh, and we would rather see people spared such pain, but ten percent seems like a reasonable tuition payment for some very important life lessons: don’t let your country’s financial system turn into a notorious international sinkhole, and don’t sit passively as disaster approaches, trusting as Blanche DuBois would say to the kindness of strangers.