Another mostly-sane but completely off-the-table alternative:
The actual deal is both worse and better:
Do Capital Controls Mean Cyprus Has Already Left the Eurozone?
no, cyprus has not left the eurozone.
one has to know, that very much like the icelandic banks cypris' banks offered dear interest rates; and that the money stored on these banks was 8 times the BIP (on iceland it was 10 times)
afaik the current solutions is that every account over 100keuro is reduced by 10%, and one of the two banks are shutdown afterwards.
now the russians are screaming bank robbery - much like some of the british and dutch citizens did, when icelands banks told them they wouldn't get back _ANY_ money.
The dutch and the british goverment way then took the bill to pay those citizens, and tried to get the money back via an international financial court - they lost this battle recently.
we will see how this works out.
afaik the current solutions is that every account over 100keuro is
reduced by 10%, and one of the two banks are shutdown afterwards.
Actually much, much more than 10% in the case of the worst bank.
Mar 27 2013 7:53am from dothebart
no, cyprus has not left the eurozone.
Did you read the article? Here's another one:
These capital controls are most likely to be (a) very repressive towards the ordinary Cypriot, and (b) in practical terms, very difficult to unwind, as long as Cyprus remains *nominally* in the Eurozone..
The point was that Cyprus is already off the Euro IN A SENSE: a Euro in Cyprus, or in a Cyprus bank, does not have the same value as a Euro anywhere else in the world, as long as capital controls remain in place.
It's a very important sense. Imagine if you couldn't leave Cyprus to find a better job elsewhere, because the ATM will only give you 100EUR/day of *your* money, wire transfers are banned, and you are banned from taking a suitcase full of cash with you on the plane. Kinda sucks, no?
It's not even clear that the controls are fully legal. The comparison to Iceland is apt; their "temporary" controls have been in place for years.
It's possible for Cyprus to be off the Euro in another de facto sense: a secondary market may develop to exchange Cypriot deposits for non-Cypriot deposits, a de-facto floating exchange rate. This has happened before, so it's not outside the realm of plausibility.
Bill Gates argues that nuclear is the only economic power option to also mitigate climate risks
More details of Cyprus' capital controls:
What's not clear is - how do you buy a house, especially if it's out of the country? How do you pay your rent, especially if it's out of the country?
Why the *fuck* are they so worried about a run on supposedly insured deposits, when the uninsured are already completely frozen? Other than that they destroyed their credibility by threatening to tax insured deposits, so now the trust is gone. Idiocy.
"...The US bond market agrees with me. Since 1975, the nominal annual
premium on the 30-year Treasury bill has averaged 2.2%: in other words,
over its lifespan, the 30-year nominal T-bill yields are 2.2 percentage
points more than the expected average of future short-term nominal
T-bill rates. The current 30-year T-bill yields 3.2% annually, which
means that, unless the marginal bond buyer today is unusually averse to
holding 30-year Treasuries, she anticipates that short-term nominal
T-bill rates will average 1% per year over the next generation."
DeLong surely knows better than this. After all, he was the same guy who
"And I mus tsay [sic] that I do find it difficult to believe that the
breakeven 10-year inflation number of 2.46%/year is an expected-value
market forecast rather than a reflection of the fact that the marginal
players in the TIPS market on the buy side are willing to pay heavily to
lay nominal risk off while the marginal players on the sell side require
a substantial premium to take nominal risk on."
and wrote elsewhere , in a complicated argument that implies that the
shape of the assumed underlying probability distribution can completely
change the interpretation of the market inflation breakeven expectation:
"THE SPREAD BETWEEN THE 30-YEAR TREASURY BOND RATE AND THE 30-YEAR TIPS
RATE IS NOW 2.22%/YEAR
Suppose that we assume the two states of the world are permanent
liquidity trap, with inflation at 1%/year indefinitely, and inflationary
blowout with inflation at 10%/year starting ten years from now.
Then the 30-year-TIPS breakeven probability--the chance that we will get
an inflationary blowout starting ten years from now that would make the
expected returns from investing
in TIPS and nominal bonds equal--is
Cypriot banks bet big on Greek bonds... but passed Europe's bank stress tests
Because when your regulatory system's credibility is in tatters, you can always flog depositors.
already /de facto/ off the Euro:
"The means [of circumventing capital controls] are not hard to find. Cypriots planning a holiday abroad
with friends abroad planning a holiday in Cyprus could make mutually advantageous and effectively
untraceable currency swaps ... The ad-hoc, pair-wise matching of buyers and sellers of onshore euros and
eurodenominated instruments will, if the controls remain in place, rapidly evolve into a still informal
and unofficial, but much more organised and efficient ‘curb market’, involving specialized market makers
[all at a non-unitary exchange rate]
Bill Gates argues that nuclear is the only economic power option to
also mitigate climate risks
Let's see ... +100 for promoting nuclear power, -10 for promoting a type of nuclear power in which he has invested, -1000 for believing there is a climate crisis, and -1000000 for being Bill Gates.
Better fire up those nuke plants. When my electric bill goes down I'll award more points.
complexity. Also, it was a bad idea to come out of the trees in the
Thank you Mr. Adams