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Habemus Referendum: The sad case of Cyprus
We are witnessing finance history ladies and gentlemen: It is the first time in history where risk-free assets (i.e. cash) will be traded with risk-bearing ones (i.e. shares); and this appears to be a...
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5 Unanswered Questions on the Deposits Haircut
The Cypriot Parliament was to convene today concerning the issue of the deposits levy, yet sources state that they have postponed the issue until tomorrow. I am not a Member of the Parliament (not a...
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Cyprus: the bail-out, the bail-in and the laundering
For those who haven't heard, the latest Eurogroup summit on Friday (or better Saturday morning) ended with an agreement for Cyprus to impose a one-off deposit tax of 6.75% on deposits up to €100,000...
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Why Small Countries Have Large Banking Sectors (and why it makes sense)
On a size-to-GDP ratio, the Cypriot banking sector is the 4th largest in Europe, following Luxemburg, Malta and Ireland. Total assets in the economy are about €134 billion euros with GDP amounting to...
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How Pulling the Plug on ELA makes Cyprus Systemic
A bank run in 1933We cannot possibly know whether Germany (or the ECB for that matter) had threatened to pull the plug on Cyprus`s Laiki Bank Emergency Liquidity Assistance (ELA) if the island did not...
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Why Plan B/C is bad and the only two options for Cyprus
From what we have learned over the past few days is that Jeroen Dijsselbloemhas been put at the dock for not believing in any alternatives for Cyprus during last Saturday's Eurogroup meeting, the ECB...
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A Review of the Legislation Passed in Cyprus
Source. www.philenews.comAlthough I unfortunately could not get my hands on the actual bill proposed and passed at the Cypriot Parliament yesterday, a description of the measures is the following:1....
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Cyprus, the next day
Yesterday, the Cypriot Parliament passed 9 bills in its intention to reduce the recapitalization funds the island needs as part of its restructuring process (for a review of the legislation this...
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Defunct Plans, Lame Policies and Rationale for Euro Exit: Cyprus Redux
Source: Wall Street JournalDesperate times call for desperate solutions. This could be Cyprus`s motto during the current period as one problem seems to follow another. On Monday morning, the Eurogroup...
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Troika Wrong? Estimates of the Cyprus Debt
Source: IIF publication "Cyprus:Just the Facts"According to an IIF publication of about a week ago, Cyprus had about €15.6bn of government debt, or about 87% of GDP. Of it, €6.6bn were held by...
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Contagion, Capital Controls and Too Big To Fail: Outcomes of the Cyprus...
Corralito Protests in Buenos AiresJust when I thought that nothing more would have to be said about the Cyprus experiment, a literature over capital controls, whether Cyprus should leave the Eurozone...
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What (German) Taxpayer Money at Risk?
It is not that anyone expected small countries to receive the same treatment as larger ones. Nor that everyone would be treated equally in the EU. Other than proclaiming "solidarity, friendship,...
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The Economic Consequences of a CY-Exit
Ever since the latest Cyprus fiasco, many have been wondering whether a country exiting the Eurozone could be a possibility. The fact is that the Eurozone cannot evacuate a country as it will set a...
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Reinhart, Rogoff and Persistence on Austerity
Big news online yesterday were that researchers were finally able to replicate Reinhart and Rogoff''s (henceforth R&R) results on debt-to-GDP ratios and growth. As it appears, the authors did some...
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Economic Stories: The Tale of Austerity
Joe was an average man. Medium build, medium weight, dark hair and eyes. Not married yet, but wanting to settle down. He had a steady job and a steady, average salary; he was a government employee at...
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Are Keynesianism and Monetarism the same?
Note: The author would like to thank Frances Coppola for reviewing earlier drafts of this article and and providing excellent insight on modern monetary theory (of course any mistakes are mine). It is...
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We could have seen this coming. Or couldn't we?
A Black Swan in "Petra tou Romiou" in CyprusThe handling of Cyprus's troubles will go down as one of the worst in economic history. Not only is one systemic bank forced to liquidation but the other has...
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Are labour costs all that matters in reducing prices?
A month ago, Eurostat published the 2012 data concerning labour costs in the EU. Attention should be drawn to the following graph:(Click to Enlarge)As the reader may observe, of the crisis-ridden...
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The Real Money Multiplier
Conventional economic theory states that banks are bounded by their reserve requirements when it comes to creating new money. In the conventional way, if just one bank exists in the economy, the money...
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Is QE deflationary? A Conjecture
On Monday, a very interesting post came to my attention: Frances Coppola commented that the possibility of Quantitative Easing (QE - the process by which the Central Bank buys back government bonds and...
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