Merkel is in a corner...she wont win her election in September, which in itself would put in place a German government opposed to bailouts....the greens who are here only saviour in a coalition along with a bunch of rebellious folks in her own party were not going to bail our Russian organised crime (1/4-1/3 of cypriot deposits are alledgedly dodgy ruski money). Now be this true or not it makes great newspaper / opinion poll melarkie in Germany.
So she had to go tough handed with the bailout deal for Cyprus. However Cyprus have rejected it. Germany will NOT agree to a full bailout without some input (6bill out of 16bill) coming from the Cyprus itself.
The real painpoints here are the catch 22 the 'grab peoples savings plan' has put the Euro in. If Cyprus yields (likely they will be asked to vote again as the only viable Plan B) then a terrible rule has been established....when your government overspends...we will steal a portion of your savings...ironically punishing the few who are NOT in debt.
If Cyprus stands its ground and no viable alternative source for money is found then it will most likely loose its largest two banks.
There is talk the move by the Euro Bank on Cyprus is a predicator to the North of Europe fundamentally cutting the rope on the south of Europe.
Impact on FX...there is almost no good news thats easy to predict for the Euro. Spain is already wobbling as a result....maybe the saviour couple be Russia coming to the table with some money as they stand to loose several billion in Cypriot investments.
So she had to go tough handed with the bailout deal for Cyprus. However Cyprus have rejected it. Germany will NOT agree to a full bailout without some input (6bill out of 16bill) coming from the Cyprus itself.
The real painpoints here are the catch 22 the 'grab peoples savings plan' has put the Euro in. If Cyprus yields (likely they will be asked to vote again as the only viable Plan B) then a terrible rule has been established....when your government overspends...we will steal a portion of your savings...ironically punishing the few who are NOT in debt.
If Cyprus stands its ground and no viable alternative source for money is found then it will most likely loose its largest two banks.
There is talk the move by the Euro Bank on Cyprus is a predicator to the North of Europe fundamentally cutting the rope on the south of Europe.
Impact on FX...there is almost no good news thats easy to predict for the Euro. Spain is already wobbling as a result....maybe the saviour couple be Russia coming to the table with some money as they stand to loose several billion in Cypriot investments.
