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IM, the problem is that the victims in Cyprus had almost no agency in creating the problem. That was done by a political elite who probably had little understanding of what they were doing, but those who voted for them mostly had none. My understanding is the reason the bond holders are being exempt is that they are largely banks in core EMU countries, chiefly Germany. It is for that reason that I would like to see Cyprus reject the bailout. If Russia wants to make German and French bankers whole in return for sparing the Cypriots misery and if the Cypriots agree that would seem fair.

My own preference would be for Russia to not only give tax avoiders hiding in Cypriot banks a huge haircut but also to wipe out the bond holders. If the ECB objected, Russia could offer Cyprus solvency in rubles as a stepping stone to reintroduction of their own currency. But if the ECB isn't coming up with any money what authority do they have to dictate how the banking insolvency is resolved. Converting bond holders to stock holders is traditional. Perhaps Russia could offer the new stock holders rubles for their stock.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 18th, 2013 at 05:54:21 PM EST
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