Monday, March 25, 2013

THE START - Bailing out Cyprus on 16/03/2013

About

Setting the stage:

The idea for this blog arose on 16 March 2013, when Troika along with Eurogroup and the Cyprus Government reached an unprecedented agreement to bail-out Cyprus, through a haircut on deposits on all banks on the island - including those protected by the Depositors' Protection Scheme below 100.000 euro.

The terms of the bailout, although irrelevant now, were as follows:

  • a one-off levy of 6.75% on deposits below 100.000 euro on all banks in Cyprus
  • a one-off levy of 9.90% on deposits over 100.000 euro on all banks in Cyprus
The idiocy of affecting deposits below 100.000 euro will be explained in a future post. Suffice to say, in a fractional reserve banking system, if depositors lose faith in the safety of their deposits, then bank runs ensue and the system collapses.

My intention: 

1) Discuss current events on the financial crisis in Cyprus

My intention, from the beginning, was to provide my friends with information and analysis of the current events, as they were / are happening, in order to help them understand the complex financial issues that were involved in the bailout of Cyprus.

Having access to appropriate information is power. It allows you to:
  • maintain an objective view, 
  • make rational analyses, and 
  • provides you with the ability to differentiate your views from crowd psychology in difficult times, avoiding panic.
I believe in the motto: "Readers lead and leaders read"

2) Dealing with the crisis

Eventually, I would also like to offer practical ideas on how to move forward, such as for example dealing with personal finances issues (debt, redundancy, loss of deposits, safety of funds, asset allocation and diversification including deposits, etc) as well as general thoughts on the Cyprus economy going forward. These will probably be ideas I will be implementing in my personal life as well, as we are all directly affected by all that's happening.

Of course, these are my personal thoughts. And, as they say, I am an expert on my opinion... :-)

Hope you find the information here useful.

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