Monday, May 13, 2013

Impact of the Cyprus bailout on people there

The terms of the Cyprus bailout were unprecedented. In exchange for a €10 billion emergency aid package, Cyprus in March agreed to E.U. demands to effectively confiscate up to 60 percent of any depositor’s holdings above €100,000 held in two of the country’s largest banks, Bank of Cyprus and Laiki Bank. Now Germany claimed that this was to penalize the money launderers who had contributed to the crisis (itself questionable). As a result of this, many businesses have been plunged into immediate bankruptcy. They cannot pay suppliers, salaries, rents or running costs. Schools and hospitals are running out of money, farms cannot buy feed for animals and the country is being plunged into misery and a financial situation that will take up to ten years to recover from. Private citizens had wired money in to close on houses, only to see most of it disappear before the sale could close. Lawyers holding money in escrow have seen the money vanish while still being liable to pay their clients.

There has never been a bailout like this, and had the terms been applied to a larger country, it could have led to global chaos. It is as much of a "punish the innocent and uninvolved" plan as one that hits the mark of hurting the guilty.

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