euro-exit

Last week, we asked if Cyprus should implement an emergency levy on all bank savings in order to a) stave off the collapse of its banking system and b) remain part of the eurozone. Ultimately, the Cypriot Parliament believed this was too high a price to pay and the levy was voted down last week. For a time, it looked possible that Cyprus might become the first country to leave the euro.

However, a bailout deal has now been agreed by European leaders that will see Cyprus’s largest bank, Bank of Cyprus, shrunk down and restructured, with its second-largest bank, Laiki Bank, allowed to fail and close down altogether. Whilst small depositors with savings under €100,000 will be protected under the new bailout terms, those with more than that amount stand to lose a substantial part of their savings (possibly even having them wiped out altogether).

The European Commissioner for Economic and Monetary Affairs and the Euro, Olli Rehn, spoke at a press conference earlier today, warning that – despite the successful bailout deal – there will be tough times ahead for Cyprus:

It’s clear that the depth of the financial crisis in Cyprus means that the near-future will be very difficult for the country and its people. The Commission will do everything possible to alleviate the social consequences of this economic shock and help to protect the most vulnerable people. Cyprus is part of the European family, and Europe will stand by the Cypriot people.

Recently, Debating Europe had the chance to interview Commissioner Olli Rehn and take some of your comments and questions to him for his reaction.

We started with a comment sent in by James, who was critical of the tough conditions attached to these eurozone bailouts: “The speed and ferocity of austerity is unnecessarily savage and we should be trying to find ways of reducing the burden and not force the kind of cuts we wouldn’t countenance in our own countries.

How would Olli Rehn respond?

rehn-speaks

I agree with James in that it is very important how you reduce the debt burden. For instance, we need to take a very close look at whether public money is being well spent, or if it is wasted. It is also a question of fairness: more groups should contribute, and the burden should not fall on the weakest in society.

It’s also clear that levels of public debt are very high and investors are not easily providing the money for this anymore. In some countries, that money then has to come from other countries, like in the case of Greece, Ireland, or the banking sector in Spain. And the creditor countries expect that debtor countries will spend this money wisely.

Yes, the pace of bringing the public house in order should reflect country-specific circumstances. This is our policy, and if you have a fierce growth downfall it is more important to have a credible medium-term plan of fiscal consolidation than to do immediate rapid cuts. But if we undertake the necessary structural reforms to create conditions for growth, this will help public finances as well. That’s why I believe structural reforms to boost growth and aid job creation are of paramount importance, but it does also require fiscal consolidation to be consistently pursued.

Next, we had a suggestion from Christos, who believes it would be easier for countries like Cyprus (along with several others) to just leave the eurozone: “Let Greece, Portugal, Spain, Ireland and perhaps Italy leave the common currency, devalue their new national currencies and be independent from Germany and the rest of the rich states for a few years. When they stabilize their economies and fix their finances they can rejoin.

Greece joined the euro by democratic choice, and it has decided to stay in the euro by treaty commitment and by democratic choice. An exit by Greece from the euro would have very negative consequences with dramatic social ramifications for the Greek people. That’s why the eurozone has supported Greece in order to overcome its economic difficulties in order to remain a member of the euro.

We have, last year, succeeded in the stabilisation of the financial markets, largely because the perceived risk of a euro-breakup has virtually, or in fact completely, disappeared. We will continue to do whatever it takes to safeguard financial stability in Europe.

The next comment came from Jovan, who argues that eurozone countries will be forced to sacrifice greater fiscal sovereignty if they want to keep the eurozone together: “Ask any economist and they will tell you that having a single monetary policy with 17 different fiscal policies is a recipe for disaster… A single fiscal policy (or coordination of them) for eurozone members is the only thing that will prevent disaster.”

I’d respond to Jovan by saying he is right to point out that, in the past, this combination has not worked well. Especially during the good times, fiscal policy was not sufficiently rigorous, which has reduced the room for manoeuvre in the bad times. In some countries, fiscal policies were not brought under control, deficit and debt levels were high when the crisis got started.

On the other hand, we have recently reinforced economic governance and made the Stability and Growth Pact both smarter and more biting. By smarter, I mean that it focuses on the structural sustainability of public finances over the medium term. By more biting, I mean the possibility of preventive sanctions. This is very important in order to pave way for the stability of public finances in Europe which is a precondition for growth and jobs.

Next up is a comment from Stanislav, who argues that devaluing the euro could ease some of the pressure on periphery economies. Stanislav writes: “I believe that the eurozone could work even without a fiscal union if it is accompanied by a weaker euro.”

The exchange rate is not a policy target, but of course it has an impact on both economic growth and price stability. In the context of international policy coordination at the G20, we have agreed, and we have in fact pursued the line which others have agreed, that we all refrain from competitive devaluations in order to prevent a repeat of the disastrous currency wars of the 1930s.

The euro is on its long-term average in terms of its real exchange rate, but I can say the Commission has studied the matter, and in one of our reports last December September we concluded that a strong appreciation of the euro would have a detrimental impact on the rebalancing of the eurozone economy which is under way.

Finally, we had a question sent in from Rémi, asking why EU countries are so dependent on financial markets: “The main problem of the euro is the strong dependence on financial markets. Why can’t the ECB lend money directly to states?

Firstly, there is a constitutional consideration: the treaty on European Union forbids monetary financing for the sake of ensuring price stability. Thus, Rémi’s proposal is not in line with the EU treaty.

Concerning the problems of dependence on financial markets, I agree with Rémi that market panic can be very damaging. That’s why we have created the financial firewalls, and now the permanent European Stability Mechanism. These financial firewalls increase stability and improve market confidence.

What do YOU think? Are the austerity conditions attached to eurozone bailouts unnecessarily savage? Or is it right that creditor nations should seek guarantees that their taxpayers’ money will be spent wisely? Would Cyprus and other countries be better off simply leaving the euro? Or should Europe do whatever it takes to preserve the Single Currency? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions.



106 comments Post a commentcomment


  1. avatar
    André Miranda

    If a US state like Alabama, Iowa, Indiana (etc) ever runs into financial trouble should they leave the US Dollar?

  2. avatar
    Cem Ozan

    seems that its not bail-out its just simply execution order by E.U againts Cyprus…

  3. avatar
    Kurt Koenig

    No. It would not. See that is what people are speculating. Betting against the euro…
    All EU states should have it without exception.
    Why, if one after the other falls into crisis?
    As the crisis has NOTHING to do with the euro. Russian money laundering money in Cyprus was in Roubles….
    The UK has also problems (and no Euro).

    So the EU should defend the EURO. That is OK.

  4. avatar
    Tiago Mouta

    Living in Portugal, no job, no 100 000 in the bank… Bailouts are just billionaire loans with enormous interest rates… Plain and simple robbery!

  5. avatar
    Tony Westfallen

    Andre….you should stick to music, especially as you are funded by the EU…. As for the question in hand, The change this “theft” has introduced in Europe and European banking, has thrown away the rules set out in Maastrict treaty, the way it has been handled by the EU has cost over 100 billion Euro’s (TAX-PAYERS MONEY), has ruined the lives of 100,000s of Cypriots and has done nothing to help either the country or the EU as a whole. Was it too tough…no it was just downright offensive and stupid! But hey! That is the EU!

  6. avatar
    Daniel Pintilie

    When I read comments signed by bankers, I think twice about their support for the citizens. Cyprus has a lot of money from Russia and German taxpayers are not willing to save Russians.That’s why Eurogroup wanted plan A. But plan A was a disaster because there is a EU directive that protect deposits to 100,000 euros. So they came up with Plan B because the shareholders and the insured deposit owners that risked more on the high interest should lose more than the others. It seems only fair.

  7. avatar
    Γιώργος Εμμανουήλ

    EU funds should go to the real economy of EU countries in order to enhance the derived demand, innovation, entrepreneurship and sustainable development and not only to save the bank system, that should be merged and consolidated on EU level. Furthemore it is needed a unification of progressive taxation framework on EU level. More EU solidarity and confederation steps is the answer to crisis in EU. Cyprus needs real solidarity!

  8. avatar
    João Camacho

    I think the EC is making all the efforts to surpasse this crisis and it’s all well done when you hear all the partners involved. Anyway, it should be created economic conditions to surpasse this crisis. Every country should have special programs for unemployed people and peolple that are not receiving any money at all. There are families, children, parents, people alone that have no conditions to survive. Before we had different mentality that could be achieved by some other ways. Today we need money for the rent or paying the bank, electricity, water, internet, cell phones, transportation and food. Not to talk about credit cards, cars, bank lones, etc. How can anyone invest in a so depressive state of mind? Socialy there’s no way out has emmigration. But then what is going to happen when those countries will close the door?
    Polititians are not making themselves heard because they just have no ideas! What happen, are ideas sold out to chinese and russians?

  9. avatar
    George Emmanuel

    EU funds should go to the real economy of EU countries in order to enhance the derived demand, innovation, entrepreneurship and sustainable development and not only to save the bank system, that should be merged and consolidated on EU level. Furthemore it is needed a unification of progressive taxation framework on EU level. More EU solidarity and confederation steps is the answer to crisis in EU!
    Cyprus is needed real Solidarity!

  10. avatar
    Andreas

    Out of the Eurozone is the best solution. If you had let Cyprus go bankrupt that would have been much better for them (in the long-term) than with the bailout and the frequent visits-to-come by the troika which will start the blood-draining of the people of Cyprus just like they did in allt he places they have stepped in (i.e. Greece, Spain et al).

  11. avatar
    Nikolaos Sotirelis

    You are putting things in the wrong base. The wright question should be “would Germany leave Europe? Or Europe would become a German colony?”

  12. avatar
    Christos Tzavaras

    I respect the views that EU leadership has sacrificed a lot to save the banking system but we have to understand that there can actually be no real freedom in the movement of capital, goods and persons without a healthy banking system, based on uniform rules of self-adequacy and transparency. The era of subsidization of weaker member-states has gone for good; in the last 4 years we have just been experiencing the difficult test of uniformity. The problem of this test is that the victims are people and EU’s challenge is to palliate their losses.

  13. avatar
    Christos Mouzeviris

    I will agree that we need to keep the euro but only if the eurozone becomes more transparent and democratic… Why have a super powerful ECB that will answer to no elected acountable politician? A European “Ministry” of finance would a solution, thus further unification… Otherwise let’s forget the whole thing as it does not work…. For the people… We have set up the euro while having no single government or economy in Europe…. How do we expect it to work?

  14. avatar
    David Fuzzey

    Yes it would…the euro is…was…and always will be a stupid idea…I hope this will help to bring an end to the whole rotten eu/euro.

  15. avatar
    Elena

    Be ready for euroscepticism to spread all over the island and it will only grow stronger. Is this the Europe we have joined?
    This is theft extortion and unbelievable insecurity.
    EU is condemning its Cypriot citizens to unemployment and poverty.
    Is this OUR Europe?
    Power / political games condemn 2 generations. what a terrible mistake!!

  16. avatar
    catherine benning

    Come off it. This is a shambles. But it didn’t start in Cyprus and won’t finnish there either.

    It started with those at the top being allowed to rob the citizens of Europe and get away with it.

    Off shore tax avoidance, the hedge fund game and banking robbery, which alarmingly, continues as lawful. No one European banker, hedge fund maniac or robber, who awards himself £18m a year as a bonus has faced jail or even really paid the price for the duplicity and the devastation he joined in creating

    Those who are leading this continent are out of their depth and have no idea of the job they are doing or where they are taking us. So, the merde has hit the fan. Unless we get rid of those at the top who have allowed his to happen it will only repeat itself.

    Freeze all off shore accounts. Find the laundered and hidden slush funds, make those who are the big players pay for their role in all of this. And take the stolen money back.

    Voila, the return of growth and a balanced economy where the Eurpean people can live a civilised lifestyle. What has taken place here is what has been going on for centuries in third world countries. And when you imported that principle you imported poverty of the masses. Political correctness stopped us from addressing it.

    http://www.youtube.com/watch?v=SXROU3-k71w

    And there is no such thing as a one off dip. Once they get away with it, they will return again and again. Just the way a blackmailer does.

    http://www.youtube.com/watch?v=bv-TfBXEOAc

  17. avatar
    Paul Galbally

    I think the Euro is in principal a very good idea, and it will succeed; however, it was rushed in 2002 and a banking union should have been created first. The EZ should, and will do everything to make sure all current members can remain within the currency union, but for Greece and Cyprus its going to be difficult, there’s no doubt of that.

  18. avatar
    Nikolaos Sotirelis

    You are putting things in the wrong base. The wright question should be “would Germany leave Europe? Or Europe would become a German colony?”

  19. avatar
    Bastian

    A recent study of the German Bundesbank is showing that private property of a median houshold in Italy or Spain is about three times higher than that of a German median houshold.
    Property of the median German houshold 51 400 €
    Property of the median Italian houshold 163 900 €
    (the median Spanish houshold owns over 170 000 €)
    Tax payers in €uro members like Estonia and Slovakia own even less than
    the already modest Germans.
    Now, the EU expects that the poorer housholds in Germany, Slovakia, Estonia etc. to show “solidarity” with the richer housholds in the south.
    I wonder how this will work out politically.

  20. avatar
    Nick Nedelchev

    Well, the more relevant issue, I think, is this: if you’re going to willingly turn yourself into a massive laundry machine for Russian mob money, then why the big surprise/outrage at the EU measures? Cyprus should abide by the same banking rules and regulations as the rest of the Eurozone – or the Union, for that matter.

  21. avatar
    Stefanos Poulimenos

    The austerity conditions are too savage…everyone looks those like a try from EU to save eurozone and the countries like Greece/Cyprus/Portugal/Spain…I have to assume that in cases like Spain and Portugal the economies are too great and EU afraids the results if not help them..In case of Greece and Cyprus tho i have to assume there are bigger plans behind those conditions..Like the gas now in Cyprus waters..The same for Greece with oil..Everything is for sale now in Greece…Those austerity conditions made a hole generation to leave their countries…Have no hope for the future.I would love a EU like the US model with one currency and one main goverment and local ones.But EU is out of control from most their members..Germany is ruling and has all the countries under her control..EU debates about the meters should have againt the crisis and Germany decides..So i believe that every country that cant take the meters and feels they are cruel should leave euroze and go back to their currensy. they might get hope back to their people! and thats come from someone that decide to leave his country to go to australia for some hope..

  22. avatar
    Christos Mouzeviris

    Bastian I am sorry, I usually agree with you but this time you are wrong… The property prices in those countries have nothing to do with the real economy.. Their income is.. And Germans are getting paid more than the Spaniards and Italians.. The high prices in these countries are actually because of the rich British, German and other rich Europeans going there like crazy and buying off property because they want a place in the sun… It is a market for the rich… So the rich Germans, British, Dutch, and so on are raising the prices so much, that sometimes the locals can not afford anymore…

  23. avatar
    Christos Mouzeviris

    I heard Slovenia is in potential crisis… I will place my bets in that country to go bust next and make lots of money from its people’s misery and struggles.. Now do not say you heard it from me… Nice way of thinking yes?

  24. avatar
    Luly Nurediny

    In my opinion these curbing measures have not given result, we should not blame euro currency, but here are too many other factors. These factors should be resolved by the EU before implementing such restrictive measures.

  25. avatar
    James Taylor

    I’m glad that small savers have been protected, if there is one group that needs protecting in this mess its ordinary Cypriots. It’s hardly their fault that the banking sector is Cyprus was allowed to set itself up as an off-shore tax haven. Take the haircut from foreign non-residents taking advantage of the system to hide their money. Basically anyone who lives, works, retires etc in Cyprus contributes positively to the economy there and they should be protected whether they’re Cypriots or retired Brits, Germans, Greeks or whatever.

    I do find it passing strange that Putin is so vocal about protecting is fellow countrymen who are dodging his taxes, but I suppose he’s in-hock to them as well as being one of them…

  26. avatar
    Bastian

    @ Christos
    “The property prices in those countries have nothing to do with the real economy.. ”

    Yes, there are some arguments against this study of the Bundesbank here too, but bad feelings about German tax payers financing and taking risks for not really poor citizens of Italy, Spain etc. remain. Don’t forget, German housholds had to tighten their belts already in 2003, because of the economic imbalances the €uro has created. I remember that year sitting together with colleagues from Spain who were on the one hand surprised but on the hand excited about the low interest rates in their country, interests lower than inflation.

    The German economy that time would have needed even lower interest rates, instead we got austerity (Agenda 2010) which we are told makes Germany competive today.
    The German political establishment (Merkel, Green, SPD, Liberals) will probably defend the €uro to its own demise. But this policy is loosing legitimacy among Germans. There is a new party in the making, “Alternative für Deutschland”, which suggests a less dogmatic policy to keep the EU together. Almost all its founding proponents are distinguished professors of economics. The outcome could be a return to the Deutschmark, but not necessarily. We will see …

    My own conviction is, that the EU has only a future with strong members, that excludes the transfer union. Here you and me probably differ.

  27. avatar
    Bastian

    @ Christos

    About Slovenia: Of course, the policy of “solidarity” on EU level attracts all kinds of national political classes to transfer economic responsibility for their nations to the supranational level, that is to the tax payers of still solvent member states.
    As most of the troubled countries, Slovenia suffers under the greed of its corrupt political class. But on the ground Slovenia is different. Its banks balance sheet total is not much more than Slovenia’s GDP, EU average is three to four times of GDP. The problem arise from Slovenia’s badly managed companies. Here the EU could help to restructure.

  28. avatar
    Nikolay Petrov Petrov

    Are common Bulgarians SLAVES to combined local-western monopolists? When most monthly pensions in Bulgaria are 70 > 100 euros, most things cost the same as in western EU, especially if you want to buy things like a laptop, a car. Winter electricity bills sometimes exceed a monthly income, while income tax for the monopolists is one of the lowest in EU (10%) and salaries monopolists pay are times lower than in the western EU states – average monthly salary in Bulgaria is 150 – 250 euros. Bulgaria was forced by EU to privatize its economy, shut down nuclear power plants. Then western EU state companies, like the Austrian EVN (electricity provider), came as a private company in Bulgaria only to increase electricity prices several times, provide poor quality service, with many power outages. Big shopping centres like the German Kaufland and Lidle sell mostly products not made in Bulgaria, meaning there is no money for the Bulgarian manufacturer and the profit also leaves Bulgaria, enriching the already too ricj western EU states. This is EXPLOITATION. Not only that common Bulgarians are EXPLOITED but western colonists are DISCRIMINATING Bulgarians and Romanians now by trying to create endless obstacles in front of Bulgarians and Romanians to limit our access to work (labour) and social assistance. Having said all that, DO YOU THINK IT IS GOOD TO HELP STATES LIKE CYPRESS WITH BILLIONS SO THAT THEY GO ON HAVING THEIR HIGHER STANDART OF LIVING AND AT THE SAME TIME DISREGARDING COMMON BULGARIANS WHO HAVE BEEN TURNED BY LOCAL MAFIA AND WESTERN COLONISTS INTO SLAVES WITH PENSIONS OF 70 EUROS AND SALARIES OG 150 EUROS MONTHLY!!!??? Shame on EU!!! DISGRACE!!!

  29. avatar
    Nuno Magalhães Pequito

    oli rehn and barroso and other burocrats are just destroying europe as puppets of mrs merkel and shauble. Perhaps they should be reminded of the german debt relief agreement that germany had back im 53. Is this a fricken iv reich ?

  30. avatar
    Anne Wareham

    It’s not about tough. It’s about illegality and undermining the security of all bank deposits. How long will we put up with this?

  31. avatar
    Maro Kouris

    Cyprus has been brought to this catastrophic economic situation due to the lack of leadership led by the French and Germans on defending the sovereignty of EU member states against the sovereign violations of Turkey on Greece and Cyprus since 1974. Now this was excusable until 1999- until the arrival of the Euro currency. But it is not excusable after 1999, since the Euro is a superpower currency . Where has there being European Solidarity with Greece and Cyprus as well as European Protection for Greece and Cyprus against Turkeys continual sovereign violations in Greece and Cyprus over the past 38 years.The Europeans have only themselves to blame for this financial crises in Cyprus, that is entirely made, primarily in London and Ankara, with Berlin and Brussels hiding behind the anti European behaviour of both Britain and Turkey. Bring on a EU Defense Force to protect the Euro, because as can be seen at present , Turkey and Britain are doing a great job at demolishing the foundations of the Euro. The Crisis in Cyprus is a result of the flawed policies of the European Union. This crises has been brought about by the absence of an EU Defense Force and the the absence of an effective economic transfer union endorsed by the Swiss like Germans and perpertrated by the terrible Turks. How much longer will the European Union maintain a Swiss stance towards the violating Turkish military.

  32. avatar
    effie

    Money

    Money is precious money is power
    Money is a devil cunning and evil
    Source of war destruction of nations

    Money causes hatred money unites
    Money is lovely it attracts like a magnet
    Cupboard love is given for money

    Money is a master, it instructs we surrender
    Money has rules we follow blindly
    Cheating and stealing are done for money

    Money gives power money gives respect
    Money can earn you a stay in a coffin
    Root of evil, source of happiness

    Money is wonderful, money is Eden
    Money is a murderer it kills like a cobra
    Rejoice with money, cry for money

    Money is a stinging bee, money is delicious
    Money is sweet as sweet as honey
    Once you lick it you’ll die for money.

    Money is war, money is peace
    Money’s path is deception, cheating and enmity
    People kill and get killed for money.

    Money is attractive, money glitters
    Money does make one act like a dummy
    Petrified can’t move, like Egyptian mummy.

    Money and power are closely related
    Money is power, power is money
    Too much money may mean power and misery.
    Saudatu Kabir

  33. avatar
    Nikolaos Sotirelis

    @Nikolay Petrov: Dear Nikolay generally I agree with your complains. But I don’t believe that you believe that with a destructive policy against Cyprus the EU shall increase the living standards in Bulgaria. Contrary the Germans will have to choose among more poor countries cheap labour, or cheap first materials, or cheap vacation. That’ll make things worst for all the other colonial countries. THE SOLUTION IS SIMPLY APLICATION OF THE FUNDAMENTAL PRINCIPLES OF EU. HERE AND NOW.

  34. avatar
    James Stevens

    The Euro serves the interests of Germany alone, and keeps her exports cheap. The Euro is a disaster for most countires as is the EU, both act against National interests and democracy they are fuelling Nationalism across all European countries as populations tire of the Totalitarianism of the EUSSR. With the exception of Germany, every other country is better off without the Euro.

  35. avatar
    niemand

    First and foremost, my compliments to Ms Benning.

    Secondly, there can be no comparison between the U.S. and the E.U. No State abandons the USD, however in the U.S. surpluses are being re-distributed by a central government. The same happens with investment. Companies are given incentives to transfer activities to a State in need. None of this happens within the E.U.

    The “poor south” absorbs “northern” excess production since the export markets for industrial products started shrinking back in 2008. Money was cheap, so southerners borrowed to support northern industries. Then money became expensive, but the EU did not change its “monetary financing” clause to add liquidity to the system. The south drowned in a sea of debt. The companies of the north stopped giving credit lines to southern importers. They wanted cash as the south was now not a credible trading partner. Then Europe stepped in again to lend money to the south to generate “growth” i.e. demand (you see the revival of the export markets took a little longer than expected). No they did not build factories in Greece or Cyprus, Spain or Portugal to create growth, in fact they closed them down and instead lent money (at a price) securing those loans with the borrower’s infrastructure, resources and so on.

    Yes the price is lower than the price the south would pay in the markets. However, the north did create the conditions for the south to be denied market access, so the north commands any price and this is in any case better than nothing.

    Should you choose to leave (and print your own money) they tell you any solution has to be found within the Eurozone. Hell awaits you if you ever choose to step out. Partly because they will loose the money they’ve given you, partly because they themselves have not got a clue what will happen if one member leaves the Eurozone. Since indebted countries have no agriculture, no industry, no banking sector (the EU policies have taken care of that years ago), the argument seems plausible.

    Anyway this is a very simplistic approach of the vicious circle we’re all in. I sympathize the newcomers (states that joined recently, like Bulgaria) because they fell for the same advertisement the rest of us have years ago.

    “Come join the Eurozone, where the sun is shining 24/7 and move freely to wherever you want, deposit your money in the safest banks, ensure your country’s safety and follow us to prosperity”. All I can say after all these years is that the countries that would have prospered anyway, have prospered. Some continue to do so in the expense of others, that is the problem.

    Good to see you here Ms Benning.

  36. avatar
    Daniel Punga

    Germany should leave the euro because the others are in the same ………………..

  37. avatar
    Eoin McCarthy

    When Cyprus joined the European Union in May 2044, it had a strong vibrant economy and low unemployment. Due to its economic success prior to 2004 the European Commission called it [Cyprus’s membership] “an historic opportunity” and a “moral imperative.” As part of the accession process a European Commission report on its readiness mentioned no problem with the Cypriot banking system. Neither did the European Central Bank mention that anything was wrong with their banks or their business model – based on their funding from deposits, although thirty per cent of deposits were Russian nationals – when it evaluated whether Cyprus was fit to join the euro zone euro in a 2007 report. However, a Commission report May 2012 highlighted that the size and business model of the Cypriot banking sector might encounter problems. This report was prepared under the newly agreed procedure to detect macroeconomic imbalances. Was it a case of the EU Commission shutting the stable door after the horse had bolted? Has the European Commission a lot to answer for regarding the current situation in Cyprus & its examination of Cypriot banks before 2004? Luxembourg has a banking sector 24 times the size of its economy while Malta has one 7.8 times bigger than it’s GDP. We all saw the direr economic problems in Ireland when our banking system became eight times the size of our economy and collapsed. What will happen if there is a repeat of what has just happened in Cyprus in either of these countries? On the Debating Europe we (EU citizens) can watch a leading EU Official described the EU as “sexy”. What is “sexy” about having you life’s savings for ordinary people wiped out as is currently the case in Cyprus? Meanwhile, comments made yesterday by a leading Euro group official about a change in euro-zone banking policy caused a storm on markets. Are comments made by EU Official in positions of power simply misinterpreted by the media?

  38. avatar
    Ștefan Bădiță

    leave euro!!!!en new countries wich want euro is not a good idea. this is my advice for Romania, Bulgaria, Croatia (E.U. candidate), etc….. And in the future you will see, Spain, Germany, Italy will quit from euro…. Is good to have this currency in the same time with each national currency….

  39. avatar
    Ali Pourbozorgi

    it’s been 12-13 years already. the system of euro does not and will not work mainly due to cultural diversity. better off countries / union can keep pumping money which will just throw more dust over the fire underneath. to have a US like system (as i believe was the intention) you need to have a general and overall system which would grow into the nation (the whole of Europe). this , if ever works, would require many many years and as i mentioned cultural diversity will work , with full power, against it. hence …

  40. avatar
    Gina Stodinetchi

    This smell like communism when were nationalized houses, factories, plants but belonged to the state. There no rich, poor and middle class , only poor class. Now money are confiscated and are given banks which will play will play with them and loose them. Worse than communism. And if it works in Cyprus could expand to the whole world. Today from our national bank make a recommendation if we have more than 100.000 euros, to spread in more banks. This EU is destroyed by banks and their bad policy.

  41. avatar
    Christos Mouzeviris

    @ Bastian…. But even the strong members need the resources of the weaker ones.. That is why all “strong” countries are in favor for further expansion and yes, even Germany. They only disagree on Turkey…

    So how do we make the weaker states strong in order to keep them in the union? No, transfer of funds and bail outs are not wanted by anyone, believe me, we do not need loans, but industries and jobs… Or we make the EU an elitist lobby of 6-7 rich countries only?

    As for the tightening of the belt of Germany, well it is suggested that not Germany will need to overspend and raise salaries if it wants the euro-zone to heal.. It is Germany’s choice though not to do so.. Because it will make the euro stronger thus harming Germany’s economy.

    The weaker states had to overspend to keep up with a strong Germany economy, thus raise their salaries and help spending.. With the agreement of Germany.. But now they refuse to do the same, to help those who helped them in the past..

    As for Slovenia, I was just joking… It was a joke… ;o)

  42. avatar
    Christos Mouzeviris

    Sorry where “well it is suggested that not Germany” put “well it is suggested that NOW Germany”…. Why don’t we STILL have an edit button?

  43. avatar
    George Agrafiotis

    fifa and uefa can’t give an answer suppose too, all fc ‘s of europe too if vote euro or not, the ball is be playin once to politicians and once to the people we lost the ball now where is the ball thank you OLLI REHN…!

  44. avatar
    Vicente Silva Tavares

    Let’s finish the euro with the help of Angela and, I say, finish with the EU and start again. The fact is rules are not the same for all. Germany saw many of the war compensations being forgiven and given 60 years to pay the balance. Why these countries in financial danger have to solve their problems in 5 years? At huge interest rates when banks finance themselves at 0.25% and lending at 5%. How can a country pay 5% in a depressed economy?

  45. avatar
    Santiago M. Leon Luis

    In the case of Spain, there are three culprits very clear and defined. Spain had a banking regulatory system that prevented banks borrowing beyond their means.
    In 1998, when it is confirmed that in the year 2000, Spain adopted the Euro single currency, there is internal movement, all the hidden money, money that had not been declared, looking for placement.
    You can find reviews and statements by staff of the Ministry of finance, commenting that they not forgive money “black” output to the market, unless the owners pay the corresponding taxes and fines.
    In a previous era, during the last Government of Felipe Gonzalez, “black” money bag was used to revive domestic markets, offering Treasury bills and bonds at a price and reasonable interest. In ads as referred to can be read: “Will not ask the source of the money”. Logically, this output of a good part of “black” money bag, allowed to revive the economy in part, enough to win the next election.
    Then, in the change of the Peseta to Euro, happened something similar, but not announced. Simply the Ministry of finance looked elsewhere and not investigated nor one single investors or buyers. “Black” money bags surfaced in all its splendour between the second half of 1999 and 2000.
    All this in a world convulsed by a crisis which had begun in 1998. Como obviously, those who invested their money “black” wanted your investment safe, therefore construction offered as a good goal, since it had been benefited by the reduction of the mortgage interest, which had grown the activity in this sector in an interesting way.
    Adds another phenomenon, councils, avid consumers of money, they de-emphasize soil, putting at the disposal of the construction. This makes their coffers to enter by: Taxes solar, more licenses for construction costs, more, real estate taxes. Presented a large collection to the municipal coffers. All this, gathered in an amalgam of political speculative interests of “legalization of capital” (we could call it legalized money-laundering), made that market fling in a maelstrom of investment.
    Banks and foreign investors, plunged into the crisis that had in the rest of Europe, see an opportunity in the Spanish market. They want to invest, but the Spanish banks have a rigid legislation that prevents them from borrowing beyond their means and must always have a deposit of money by each credit granting, in reserve and prevention of any contingency.
    These European and American banks mainly, pressuring the Spanish Government politicians for rescission the regulation of the Bank of Spain, in such a way that they could lend money to Spanish banks still far above their means and to allocating investment money that was previously the contingency reserve.
    Despite the warnings of the technicians of the Bank of Spain, one of whose releases a few weeks ago came to public light, of what might happen, the Government has deaf ears. The expression at that time was: “Spain is going well”.
    And when the problem arose in Spain, i.e., money stopped flowing, the recession came. Closed companies, dismissed staff, that are unable to pay mortgages, foreclosures, and more plant closings and more unemployment. In consequences, as the “privileged intelligences” of Spanish politicians saw as their income could undermine, they increase taxes.
    Most unfortunately, banks pressure them to their investors nonsense, to be paid them to which they have access. (I don’t know if what happened to Andrew Jackson, Abraham Lincoln and J.F. Kennedy induction or by their own economic future.) Article in Spanish: http://www.loquepasaentenerife.com/blog/santiagomleonluis/24-11-2011/querelacinhayentreabrahamlincolnjfkennedyylaactualcrisis ).
    The perpetrators, both in this country, in a very clear manner, can be mentioned in: Politicians of Governments from José Maria Aznar to the current of Mariano Rajoy, who have failed to put in place, selling out to banking and allowing power factual give them orders and rule; banks and, again, the politicians, to sacrifice their own citizens before the ambition of banks and financiers; Finally, the “brilliant mind” of European politicians.

  46. avatar
    Yiannos Paraskeva

    EUROGROUP is a banch of thieves..with suits!!! i believe that even by saying too much i will not be able to show the dissapointment-the frustration and fear that this decision has brought out to people of Cyprus and furthermore Europe..it’s illegal,unconstitunional and it will certainly be spread out …yes we made mistakes .. yes we lost a lot of money into wrong bank and politicala decisions within the last 3 years.. does that mean we r not Human anymore?? this reminds me of when we were doing History at school and we were talking about fasist and communist and dictotor based countries.. Well here we are.. and for those who believe that Imperialistic Germany is your friend..well U R NEXT..Good morning from Cyprus!!

  47. avatar
    Makis Mjt

    maybe and a world war begining and for the third time again from europe if the politicians not look forward and playing games with the people the history cames again

  48. avatar
    Roberta Gogos

    @Andre Miranda but Europe is not a “United States” of Europe – in the US, states can afford to be (and are) impoverished – its quite a different thing when entire countries are impoverished to preserve others!

  49. avatar
    catherine benning

    @Niemand:

    So, we meet again. How charming of you to remember.

    Now, lets listen to this guy telling it as it is. And from there, pointing to a way we can collectively get ourselves out of this mess. Deamnd we get out of this mess. No European deserves this nonsense.

    http://www.youtube.com/watch?v=rog4U_EwZ_g

  50. avatar
    David Fuzzey

    Cyprus: The EU Kicks it when it is down

    Not content with destroying the country?s reputation and banking sector, the EU has now announced that it is set to impose daily fines on the beleaguered country

    ?These fines, of 11,400 a day are for non-compliance with the ruinous renewable energy directive?, said Roger Helmer MEP, the UKIP energy spokesman. ?and they are a deliberate kick in the teeth for a country that is already being brought tpo its knees due to its involvement in the European Union.

    That they can launch these fines now, when feelings are so raw shows the lack of empathy, or even common sense at the heart of the Brussels elite establishment.

    If Cyprus refuses to pay? What then? Will they steal it from private depositors bank accounts?? said Helmer.

    Cyprus and Poland are in the process of being fined after the European Commission recommended the action to the European Court of Justice.

  51. avatar
    Maro Kouris

    The Eurozone, is a flawed and handicapped currency union, flying on one engine instead of 4. Accident or intentional??? The Eurozone currency system needs to be completely overhauled to operate smoothly.

  52. avatar
    ancamurat

    EU: we confiscate bank deposits!

    Who said that? Even the president of the eurozone finance ministers, the Dutch Minister Jeroen Dijsselbloem. So it will definitely make!
    When did he say? Yesterday.
    Why do they do this? Because they are desperate. Because I do not have money. If Europe is bankrupt: and France, and Spain, and Italy, and Romania, and Greece, and Portugal. Even Germany announced recession in 2013.

  53. avatar
    Bastian

    @ Christos

    “No, transfer of funds and bail outs are not wanted by anyone, believe me, we do not need loans, but industries and jobs…”

    Interestingly, industries and jobs don’t go to the southern states, also not to the Balkan, but to China and other places outside the EU. It seems that the Common Market is disfunctional with respect to industrial policy.

    About the Bundesbank study, I did not mention that according to this study 80 % of Spanyards live in personally owned property, whereas most German live in rented appartments. Although your argument about distorted prices might be right but greater ownership in Spain seems to be a fact.

    With respect to Slovenia, I do not exclude this country turning to the ESM sooner or later, but the reasons will be different than in Cyprus.

    My main complaint about the EU is that it broke the Maastricht bailout ban. Its current policy is more or less illigitimate, if not illegal, and this reminds on Germany in 1933: the EU as an emergency government.

  54. avatar
    Christos Mouzeviris

    @ Bastian ….I agree on your last paragraph… As for the property differences, well it is a cultural thing as well… In Ireland too, most of people own their own houses.. And I mean houses, not apartments.. While in Greece people are renting apartments.. That is the norm… The Irish love to have their own house.. It is in their culture.. While the Greek city dwellers do not mind renting….

  55. avatar
    Maria Helena Neto

    The eurozone interests Germany only. All the southern European countries would be better out of euro, and being able to define their own currency rules .

  56. avatar
    Pedro Celestino

    If you work, you are taxed, if you buy you pay VAT, if you save you get robed… I can imagine waht happens to smaller business what happens when they take a 30-40% hit on their economies… More costumers for the really big ones.

    Meanwhile the big corporations and banks are better than ever… Funny thing their power arent really the money but the ability to generate money by stocks, patents, natural resources, things people cant avoid (energy, medicine, communications, software…) and those can make all the profit they want and accumulate as much money as they want, they could get striped of 95% of their money and in a few years would still be as powerful as they are today!

  57. avatar
    George Vakos

    The imposed to Cyprus and elsewhere bailout-bailin “sanctions” strongly refer to very strong USA-EU centers with geopolitical, economic even cultural motives aiming to implement their new globalization policy. Such an assumption concludes that the Eurozone maintenance iis one way ticket.

  58. avatar
    Ντορέτα Πέππα

    ?????? ?? ???? ????? ??????????? ???? ??? ??? ?? ? ?????? ????? ?????? ??? ???? ??? ?? ????????. ?? ????? ? ?????? ??? ????????, ?? ???????????. ? ?. ??? ??? ????? ???????? ??? ??????? ??? ????????. ??? ??? ?????? ?? ?? ?’ ????? ??? ?????. ???? ??? ?? ??? ?????? ??? ????????, ???????. ?? ????? ?????? ?? ?????? ? ??????? ???? ?????…

  59. avatar
    Valeriu Iovan

    Bravo ciprio?i! Se vede c? intelectualii vo?tri nu au fost omor?i nc? de ru?i. Ave?i grij?!

  60. avatar
    Lazaros Lazarou

    YES ! CYPRUS SUFFERS NOW FROM THAT POLICIES! THE AMOUNT OF CYPRUS ECONOMY IS ONLY 0.2% OF TOTAL EUROPE ECONOMY. THATS WHY THEY BEHAVE CYPRUS LIKE GANGSTERS AND NOT AS AN EQUAL STATE MEMBER OF THE EUROPEAN UNION! I STRONGLY BELIEVE THAT CYPRUS SHOULD PAY BACK EUROPE BY LEAVING THE EUROZONE IMMEDIATELY AND RETURN IN DEVELOPMENT OF THE ECONOMY WITH CYPRIOT LIRA AND NOT THE FAIL STRATEGIES OF THE BAIL OUT!

  61. avatar
    Nikolaos Sotirelis

    @?????? ?????: Contrary in your opinion Luxembourgian, Maltese, Irish, Londoners, Latvian, Swiss and others I presume are hard working people and of course in no case German Trojan Horse!!! Interesting trolling…

  62. avatar
    Borislav Valkov

    UK always looks for it’s own interests and the politics in Swiss is non existent! All the rest have no oppinion nor power.

  63. avatar
    Nikolay Petrov Petrov

    Nikolaos Sotirelis, if one can live on 100 euros monthly in bulgaria, greeks and cypriots could do the same, i guess. you worry about one but fully disregard the other.

  64. avatar
    Nikolaos Sotirelis

    Dear Nikolay first of all I’m telling you again that I generally agree with you. Secondly if Bulgarians can live with 100 Euros then yes Greeks and Cypriots can also do. So does the Germans too I guess? Or they must be excluded? But can a Bulgarian live with a salary of 100 Euros while they’ll make him owe 200? So finally that what I’m saying is that we became a Union for the goodness of all of us. Not just for our Northern partners, while the rest of us will live in misery. If you’re a partner then you share the winnings and the losings. You don’t make profits against your partner. That makes you a common crook!

  65. avatar
    Ruth Obadia

    We’ve bought into the idea that education is about training and “success”, defined monetarily, rather than learning to think critically and to challenge. We should not forget that the true purpose of education is to make minds, not careers. A culture that does not grasp the vital interplay between morality and power, which mistakes management techniques for wisdom, which fails to understand that the measure of a civilization is its compassion , not its speed or ability to consume, condemns itself to death.
    Chris Hedges
    http://www.facebook.com/photo.php?fbid=468581506549181&set=a.380461428694523.86380.348301561910510&type=1&theater

  66. avatar
    Christos Mouzeviris

    Nikolay you got to be joking!! Are the prices the same in Bulgaria and Greece? No!! You may be earning less, but you are paying less too… Greece is in the euro-zone and that means that we pay the same as a German, or a Luxembourgian for our milk, bread and cheese, our clothing etc…. How can you justify that a German can be paid double as that of a Greek yet a Greek will have to pay the same prices as a German… When Bulgaria joins the euro you will understand what I mean… Meanwhile, why should all our salaries come down to the level of Bulgaria, and not go up to the level of Germany? And I include Bulgaria in this, once you join the euro… Do we have to go backwards…?? Salary harmonization in the euro-zone now!!! http://eblanademocraticmove.blogspot.ie/2011/01/harmonization-of-slaries-and-pensions.html

  67. avatar
    Vicente Silva Tavares

    Kikolaos, things cannot be compared like that. Christo is right, the cost of life in Greece is much higher. I heard an expresso in Greece cost ? 5. How much it is in Bulgaria? In my country is just 60/65 cents.

  68. avatar
    Vicente Silva Tavares

    After using 700.000 million euros saving the German and Dutch banks, Germany says it is enough and do not has 5 billions euros to help the Cyprus banks. I am sure, the final target is catching the deposits in Cyprus, since now they will be running away. After destroying the banking system in Cyprus, in a country that only leaves from tourism and banking, Cyprus will be left to live a life of misery. Next targets wil be Portugal, Slovenia and of course Greece. Congratulations Angela, you got your place in History as the gravedigger of EU.

  69. avatar
    Nikolaos Sotirelis

    Dear Ruth with all the respect I have to correct Mr Hedge. The measure of a civilization isn’t its compassion. It’s its ability to solve social problems (like poorness, health, education etc) by a well organised welfare state.

  70. avatar
    Vicente Silva Tavares

    Yesterday, I saw again Captain Corelli with Nicolas Cage. Nothing like reviewing the films about the second WW, to remember how Germans can be evil.

  71. avatar
    Nikolaos Sotirelis

    I’d like to propose to the host of this page to put a question to its guests “whether they like to live in a German Europe, or with a European Germany?” I believe this is the main issue and the biggest dilemma in EU right now!

  72. avatar
    Nikolaos Sotirelis

    Of course dear Ronaldo decades now, money flows from South to North by the markets. Even now North still sells money to the South with very heavy and unfair interest and cost. Maybe this is your idea for solidarity!!!

  73. avatar
    Vicente Silva Tavares

    Yes, Hypo bank in Germany was saved with EU money by ECB with interest rate of 0.25% and then to Southern countries the German banks lend the money at 5%. What a help! Now, let me quote the British newspaper The independent: ” Ben Chou: Germany is not bailing out Europe, it is rescuing itself. Huge transfers are still required. Without more honesty from Germany this crisis will not end well…..How does this work? German households and businesses deposited their financial surpluses at German banks and fund managers. Those institutions then used these savings to buy assets abroad. Most of them were invested across the eurozone. These included all manner of assets, ranging from the debt of Irish banks, to Spanish real estate firms, to Greek equities. That’s correct: German banks helped inflate the bubbles that have now exploded across the eurozone with such disastrous consequences. I recommend to read the full article: http://www.independent.co.uk/news/business/comment/ben-chu-germany-is-not-bailing-out-europe-it-is-rescuing-itself-7912743.html

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