Crunch time in Cyprus

Cyprus has until Monday to figure out a way to raise the $5.8 billion they’ll need in exchange for the $10 billion bailout package the EU and IMF has put on the table to save their flailing banks and guard against a sudden exit from the eurozone — and although the legislature rejected the idea of imposing a one-off ‘tax’ on deposits earlier this week because of the vociferous public outcry, the bottom fell out of their Russian Plan B and they’re getting seriously desperate. Via Reuters:

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Cyprus said on Saturday it would tax big savers at its largest bank in a dramatic U-turn as it raced to satisfy European partners and seal an 11th-hour bailout deal to avert financial collapse. …

His counterparts in Europe’s 17-nation currency union scheduled talks in Brussels for Sunday evening to see if the numbers add up, taking the crisis down to the wire. …

Government officials held talks through the day at the finance ministry with Cyprus’s ‘troika’ of lenders – the EU, ECB and IMF. Angry demonstrators outside chanted “resign, resign!” …

Rebuffed by the Kremlin, Sarris said on Saturday talks with the troika were centered on a possibly levy of around 25 percent on savings over and above 100,000 euros at failing No. 1 lender Bank of Cyprus. …

Racing to placate its European partners, Cypriot lawmakers voted in late-night session on Friday to nationalize state pensions and split failing lenders into good and bad banks – a measure likely to be applied to No.2 lender Cyprus Popular Bank, also known as Laiki.

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Oof. Germany probably isn’t going to go for that nationalizing-pensions plan, and I’d wager that Cypriots probably have something to say about it, too. That’s the pesky thing about debt crises, though: They reliably do not end well, for anybody. They’re going to have to pay for this somehow, and one way or another, it’s going to hurt. Take heed, planet Earth.

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Beege Welborn 5:00 PM | December 24, 2024
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