Cyprus bailout package plan gets farcical
This looks more and more like a lesson in how not to manage a crisis. It's a case of incompetence across the board
I wrote yesterday (here) about the almost unimaginable stupidity of the eurozone's bailout plan for Cyprus. But as if it wasn't bad enough to have come up with the most irresponsible and, for the banks, potentially destabilising concept in international economics for decades, they couldn't even come up with a coherent plan for putting it into practice.
We know that because for the second day in a row today, the Cypriot parliament has had to postpone a vote approving it. In other words, it hadn't even occurred to the finance ministers, central bankers and political leaders who thought up the plan to pilfer people's bank savings that the savers in question were going to be upset about it.
Plainly, they hadn't thought the implications through either in terms of the potential effects that such a reckless move could have on the banking system, or in terms of the practicalities of implementing the policy itself.
Parliament hasn't yet been persuaded to approve it. The Germans who are stumping up most of the cash are being vilified as heartless oppressors, even though it is not clear that early rumours it was Berlin that came up with the savers' tax plan are true. The federal project is yet again doing exactly what its critics always said it would do -- it is exacerbating national enmity rather than mollifying it.
There are rumours swirling that the plan may actually be changed but only by excluding savers with up to 20,000 euros. In other words, it still sends out the message that depositors can never again be sure that their savings are safe. It's even being mooted that the Russians may chip in with some money, though as with everything else it is totally unclear what that would mean.
In other words, it's a mess: incompetence across the board. And that should worry everybody, because the people who made this mess are the people who claim to be able to save the single currency and repair the European economy.
I wonder why I'm not convinced...
UPDATE: Cyprus has now announced that its banks will remain closed until Thursday. Imagine being a resident and you haven't been able to get into your bank account for 5 days! Total and utter chaos.
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