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That would mean risking letting Cyprus drop out of the Euro. They lacked the balls for that either. Hence a compromise that combines all of the disadvantages of the various options with none of the advantages.
The ECB is hiding the results of a study about the distribution of financial wealth in the eurozone until after the decision about an aid programme for Cyprus, Frankfurter Allgemeine reports this morning, quoting unnamed central bankers. The intention of the delay is to prevent the data being used to question the programme. The ECB has been running these polls since 2006. Some of the national central banks, including those of Italy, Austria, Luxembourg and Spain, have published their own national results, but others have not. The article says the data contain "politically explosive material". For example, Italy's financial wealth, at a median value of 164,000, lies above that of Austria, at 76,000. While the Bundesbank has not published the data, the German median value is thought to be in a similar range - in other words way below that of Italy.
And from Zervos in Business Insider (quoted by ARGeezer)
All of us should really take a moment to consider what the governments of Europe have done. To be clear, they initiated a surprise assault on the precautionary savings of their own people. Such a move should send shock waves across the entire population of the developed world.
What this is doing is, at least in Cyprus, sending people on an "all cash" position (and I mean cash under the mattress, not cash in the bank as "all cash" would be understood by "investors") if not entirely off the Euro, into gold or other currencies. I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
In "less developed" parts of the world—and I think nobody will be offended if it's pointed out that the rule of law is probably more reliable in Germany than in Cyprus, and that the country is wealthier—people need much smallerlarger "precautionary savings".
This is mainly for historical reasons. There is a huge historic antipathy towards renting, because it was always about an Irish tenant class paying rents to a British landed gentry - even during the famine when most people were starving. Owning your own property, be in house or farm, became a key symbol of national and class independence from Britain and the British ruling class.
In more recent times the inadequacy of public pensions and the rapaciousness of the private pensions industry meant that a key way of providing for your old age was to own your own house/farm and perhaps one or two other properties as well from which you could draw a small "pension" or income.
My point is that all of this makes it look like Irish people are relatively wealthy when in fact they are heavily leveraged and reliant on property ownership to provide basic income security. In Germany, I suspect, by way of contrast, there is no comparable insecurity about the reliability and adequacy of public pensions/health provision and thus no need to build up a comparable equity base in property or other assets.
I would be interested in whether a similar phenomenon is at work in Mediterranean countries, and on whether anyone has any hard data on this. Index of Frank's Diaries
It is also a tenant law thing. Strong laws protecting tenants give them stability and less desire to own. That said with their low homeownership rate germany is rather the exception in europe.
But of course all of this is well known and I see no direcht relation with the cyprus bailout.
And the russian money in Cyprus is real enough.
Also, as an aside, it is easy to grasp at a narrative alleging vaguely illicit Russian "grey" money when we don't know much about how this is different from trillions of other "investment" money looking for a home all over the world. If the Russians had put their money in senior bonds (like German banks?) rather than into deposits, would this have made it less grey? Is Russian or German money in Swiss banks any less grey?
It seems to me that individuals with some but not a huge amount of wealth are more likely to put their money into deposits rather than bank bonds - which are more the preserve of the seriously rich - but what do I know... this is a different world to the one which I inhabit. Index of Frank's Diaries
The ECB is hiding the results of a study about the distribution of financial wealth in the eurozone until after the decision about an aid programme for Cyprus, Frankfurter Allgemeine reports this morning, quoting unnamed central bankers. The intention of the delay is to prevent the data being used to question the programme.
In any case, it might be true that releasing the report int he middle of the Cyprus bailout debate mught have short term political implications. Media narratives, news cycles and all that.
What's extraordinary is that they had been "monitoring the effect of Cyprus on the markets" over 90 days and decided Cyprus posed no contagion risk, while at the same time making decisions about the release of unsurprising economic data based on diffuse fears of BILD Zeitung. I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
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