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Sunday, March 24, 2013

Hugo Dixon: Cypriots keep making mistakes

Hugo Dixon at Reuters Breakingviews is censoring the Cypriot political elite for:

  1. Overestimating their negotiating position,
  2. "The last Communist government was also criminal in its failure to act as the crisis in Greece threatened to swamp Cyprus." ss. Narrow-mindedness on the part of AKEL put precedence to the political cycle in Cyprus as compared to the one in Germany.
  3. "Nicos Anastasiades, has managed to turn a crisis into a disaster by initially backing a plan to impose a 6.75 percent tax on insured depositors."...." There was an alternative: tax the uninsured depositors at 15.5 percent and leave the insured ones untouched. Anastasiades didn’t want to do this as it would have angered Russia and undermined Cyprus as an offshore financial centre. But both of these have happened anyway."

He goes on to conclude that
 Last week, (Cyprus) had a chance of salvaging most of its
financial centre. Now that will be largely destroyed.  Last week
it was staring at a middling recessio. Now, with confidence crushed, its economy faces a slump.
He also comes to the conclusion that last week's figures are already out of date.



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