Thursday, March 21, 2013

Thursday’s Cyprus News

  • The Telegraph (an English newspaper) is reporting tweets about the crisis in real time.
  • Market Monetarist reports that Bitcoin prices are up 50% since the tax on deposits was announced.*
  • The banks are going to be shut down in Cyprus until at least Tuesday (Monday is a regularly scheduled holiday). Marginal Revolution has dug out that there have been instances of a complete shutdown of a country’s banking system once before: four times in 20th century, bankers in Ireland went on (labor) strike. Clearly, Ireland survived. On the other hand, at the time of those strikes, Ireland was generally regarded as a 3rd world country, so it’s not clear there was as much development to be lost as in the Cyprus of today.
  • Cyprus still needs to come up with its part of the contribution: the Eurozone has indicated it will cut off lender-of-last-resort funding to Cypriot banks if their government doesn’t pony up some cash. The latest is that the government is considering nationalizing public and semi-public pensions instead of bank deposits (I don’t know what they mean by semi-public either).
  • Most shocking, at least to the bureaucrats who tend to think they’re masters of the universe, the Eurogroup held a conference call with the government of Cyprus Wednesday night — and the government of Cyprus refused to participate:

    The call was among members of the Eurogroup Working Group, which consists of deputy finance ministers or senior treasury officials from the 17 euro zone countries as well as representatives from the European Central Bank and the European Commission. The group is chaired by Austria's Thomas Wieser.

    Cyprus decided not to take part in the call, a decision that several participants described as troubling and reflecting the wider confusion surrounding the island's predicament.

    "The (Cypriot) parliament is obviously too emotional and will not decide on anything, if Cyprus does not even feel that they can attend the call it is a big problem for us," the French representative said, according to the notes seen by Reuters.

    "We have never seen this."

* Bitcoins are a completely virtual currency, unattached to any government. They are frequently used for internet transactions where … hmmm … someone’s not sure everything is on the level.

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