Cyprus Parliament To Vote On Bailout This Afternoon
It appears the Eurozone Stockholm Syndrome of absolutely (mutual, but ignore that) Assured Destruction has once again bloomed in tiny Cyprus, where capital controls have now had their one month birthday despite promises for a "very short duration" by the IMF's Lagarde, yet where people - all of whom far poorer and with nothing but a catastrophic depression to look forward to - just don't want to leave the Euro and the Belgian neofeudal kingdom. Because today, Cyprus actually has the power to say no to Europe when its parliament decides whether to back the EU bail-in out imposed on its by its EU "partners." However, as Reuters reports, it most likely will not "with approval likely from a thin majority against mounting calls for the island to exit the euro." Which means that Iceland's miraculous growth case study aside, Cyprus will only have itself and its politicians to blame next year when everyone's standard of living is reduced by 20%, then 20% the year after and so on. All in the name of making sure Deutsche Bank's spring clip loaded €55.6 trillion in notional derivatives never snaps shut.
Lawmakers were due to meet in an extraordinary session to ratify the terms of the aid, which is conditional on Cyprus winding down its second-largest bank and imposing heavy losses on uninsured depositors in another. Voting was expected on Tuesday afternoon.
No single party has a majority in the 56-member parliament, and the government is counting on support from members of its three-party centre-right coalition which has 30 seats in total. It needs 29 votes for the bill to pass.
Shut out of financial markets for two years, Cyprus will fall into chaotic default if lawmakers vote down the bill, government officials have warned.
"We have had enough of delusions. We don't have another choice. Whoever has one should tell us what it is," Cypriot government spokesman Christos Stylianides told state radio.
You don't? The choice seems pretty clear. Then again, Mr. Stylianides will likely not remain in power if Plan B were voted through, and yes, it would mean immediate pain, but at least some hope of future growth as the Cypriot pounds returns and makes the island nation's economy competitive again. Instead, it will have to suffer 40%+ unemployment for years as it seeks to rebalance internally to be competitive with Germany. At least someone gets it. Ironically, it's the communists:
Communist AKEL, in government until it lost presidential elections in February, said it planned to vote against the bill. It has 19 seats in parliament. The socialist Edek party, with 5 seats, also said it would reject it.
AKEL, which had made the initial application for financial aid in June 2012, said onerous terms offered by Cyprus's EU partners were compelling enough for the island to seek alternative sources of funding.
"Cyprus's only option is a solution outside the loan agreement and the Memorandum of Understanding. Seeking such a solution is possibly tantamount to a decision to exit the euro," it said in a statement.
Naturally, since Germany and DB senior management have allowed it to come to a vote, the proability of an adverse outcome is zero. But at least the theatrics for the population will be enjoyable as now, instead of Europe, the people have their own politicians to thank for betraying them when the full cost of the "bailout" becomes apparent in a few months.
It also means that having had the choice to exit and not taking it, Cyprus will be on its own and will get no sympathy from anyone.
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