The Situation In Cyprus

Mar 22 2013 @ 1:45pm

CYPRUS - FINANCE-PUBLIC-DEBT-EU-EUROZONE-DEMO

Ezra zooms out from it:

A half dozen [EU] countries have unemployment in the 15 to 25 percent range, with youth unemployment in the 30 to 60 percent range. Politics isn’t stable amidst that sort of pain — particularly when there’s a perception that some of the pain is being forced upon the country by richer, wealthier outsiders.

That’s what’s happening now. Christopher Pissarides, a Cypriot economist, won the Nobel prize in economics in 2010. But in an interview with BusinessWeek, his fury at the more powerful countries in the euro zone was sparklingly clear. “Small countries, be warned when joining the euro zone,” he said. “You could be bullied any time by your big brothers if it suits their political objectives.”

And that, again, is the view from Cyprus’s Nobel-prize-in-economics contingent. The man on the street, it’s safe to say, is even angrier.

Drum puts the Cyprus negotiations in perspective:

[T]he EU/IMF plan requires Cyprus to come up with about $7.5 billion as its share of the bailout. That’s roughly a third of their GDP. To put that into local terms, it would be as if the United States were being asked to pony up $5 trillion. This is about equal to all government spending—federal, state, and local—for an entire year.

Yglesias adds his two cents.

(Photo: An employee of Cyprus Laiki (Popular) Bank reacts as he takes part in a protest outside the parliament in Nicosia on March 22, 2013. Cyprus is locked in ‘hard negotiations’ with a troika of lenders to save the eurozone member’s banking system and economy in general from ruin, government spokesman Christos Stylianides said. By Patrick Baz/AFP/Getty Images)