It still seems disproportionate to me

Okay, you manage to recoup something from the Russian investors, but you still hit the average Cypriot in the pocket hard and immediately. Like I say, it's a carpet bombing approach. In any case, the Russian investors were only taking advantage of favourable rates being offered by Cypriot banks - in that sense they're no more liable for the damage.

FWIW my reading of the situation is that Northern European Eurozone leaders have decided to attach a deposit tax condition on bailouts as a way of disincentivising further reliance on the ESM. But I think it'll prove to be miscalculation given the negative effect it will have upon confidence in all Eurozone banks, not to mention the political fallout. The fact is this kind of situation can only be avoided by full fiscal union in the Eurozone but clearly that's a long way off.

Posted By: King on March 16th 2013 at 20:19:27


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