So, what unintended consequences do you see happening here?

[draco664]

From what I understand, Cyprus was the Mediterranean equivalent to the Cayman Islands. Quite a few of those depositors were shady--either they were people looking for a tax dodge, or Russian Mafia-types. Because they're seen as "criminals" (at least according to CNBC), that's why there's a backlash over a bailout. Why should criminal enterprises get bailouts?

More to the point, why would banks that get billions of euros in deposits fuck things up so badly that they need a bailout?

[draco664]

In the 'So who didn't see this coming' files...?

An update - it turns out that during the week when ordinary Cypriots had 100 euro daily limits at ATMs and no other banking services, the big Russian depositors they wanted to hit have all withdrawn their cash at subsidiary banks in Russia and London - subsidiary banks that remained open and had no withdrawal limits.

So, congrats to those who negotiated the bailout deal. You've left Cyprus in immeasurably worse off. And the real kicker is that they actually think that they've done good - that the deal is going to be a template for future deals.

[D_Yeti_Esquire]

Yea, I pretty much expected that. Template for future deals is a designation you'd expect to see at this point since every country outside of Cyprus essentially got what they wanted. When people watch what happens to Cyprus, they'll see why bailouts actually occur and why the time to deal with the crooks is any time BEFORE the bailout. It's a political winner to the voters of France and Germany today though.

As it stands, I wonder what effect this will have individual countries choosing to stay part of the Eurozone. We have now just watched the Eurozone voluntarily choose a course of action with a member state that any amount of economic history will tell you will lead to a depression in that state. Perhaps it will move the other way though and the EU will move towards political union which would also have fixed the problem. As it stands though, aside from loss of imports/exports from Cyprus (if there were any), it looks like Europe just insulated itself at the expense of a member. If you're a less economically influential state like Romania for example, is the loss of currency autonomy worth it when you derive no further economic safeguards?

[s_stabeler]

predictable. look at the crap when the EU budgets are agreed- there is always a demand for the removal of the UK's rebate ( it's there because we don't get as much benefit from EU spending as other countries. Without it, we are the single biggest net contributor to the EU. With it, we are something like 4th biggest net contributor) and always debate on reforming the CAP. What usually happens is the rebate is cut, while the CAP stays unreformed.

For that matter, look at fishing policy. Most fish caught in the EU is caught in the UK. Recently, EU policy was changed to ban ( or at least severely limit) 'discards'- that is, tossing back (dead) fish that were either over quota, outside quota, or not commercially viable. When setting the limit on how much fish can be discarded, there was a clause added. it says that vessels longer than a certain distance from their home port get a more generous % of catch in discards. ( ships within a certain distance from port get to discard up to 5% of their catch, others can discard 9%.) Have a guess at which countries' fishing fleets will always be in the more generous limits, and which country's fleets will always be in the stricter limit? I'll give you two clues- the first has a president, the second has it's own currency.

Yes, you could say I've sympathy for euroskeptics.