Cyprus-Forum.com

[kurupetos]

So are we the TCs for the long haul.

Good, maybe we can join forces.

After 51 years and a hell of a lot of water under the bridge I think you know the answer to that.

[dinos]

Come August 2nd unless the US gets its act together the US Government may be unable to pay all of its debts

http://www.telegraph.co.uk/finance/econ ... -fail.html

At that point I think we are all at risk of going down the sh*tter

I would not be too concerned about this in the long term. There are ways for the president to enact 'emergency measures' in order to make good on the debt. The problem will be all the interim volatility while the buffoons involved kick and scream and generally do everything they can to avoid doing their jobs.

There are still issues with trade imbalances and rising government debt, which "emergancy measures" will not resolve: aall they are talking aboit is basically lifting the man-hole cover a bit higher to squeeze a bit more in - not draining the sewers.

You are right about the trade imbalances. But the talks recently broke down because of crap that's not related to raising the debt ceiling so there is a big picture view in play. Between Obama, Boehner and Cantor, there's plenty of stupidity and incompetence to really be concerned about. Eventually though, their talks about cutting spending, raising some taxes, etc will bear fruit. Right now, all the "leaders" in the discussion have allowed other elements to determine the course of the discussion. I'm confident that at some point they'll (each) grow a pair and fight the uphill battle past their colossal stupidity to get their jobs done.

[dinos]

The ho so brilliant Gc south is on the verge of an economic crisis which I predicted.

You predicted an economic collapse due to exposure to Greek debt. You were then, and remain, WRONG. You can't reasonably claim to be correct when the basis for your argument did not work out for you.

Not predicting Dino, hoping.

I know - it's really pathetic that some weasel could be made happy from the suffering of others, isn't it? Thankfully idiots like this are in the minority (whether TC or GC) but they sure do a hell of a job embarrassing themselves.

[74LB]

News channels in the UK are reporting that Cyrprus could be affected by the financial crisis in Europe.

Several websites reporting this, including the FT (need to be registered) -

http://www.ft.com/cms/s/5bce85e4-b82b-1 ... z1TLsTboba

and thisismoney -

http://www.thisismoney.co.uk/money/news ... l?ITO=1490

[74LB]

FT article -

Cyprus moved closer to becoming the fourth eurozone country to need a bail-out on Wednesday after Moody’s downgraded its bonds to just two notches above junk, saying the island’s recent political turmoil and exposure to Greek debt raised questions about its ability to service its own debt.

Senior European officials insisted there were no special talks under way with Nicosia, although they were monitoring the situation and did not believe a bail-out was imminent. But the Cypriot banks’ Greek debt exposure has raised concerns, particularly after last week’s eurozone deal, which will lead to defaults on some Greek bonds.

“It is not on my immediate radar screen,” François Baroin, France’s finance minister, told the Financial Times.

“We are monitoring the situation of the banking sector in Cyprus closely and are in contact with the authorities,” said one senior European official.

Cypriot banks are among the eurozone’s largest holders of Greek bonds. According to the European Banking Authority, Bank of Cyprus holds €2.4bn in Greek debt and Marfin Popular Bank holds €3.4bn.

Yields on Cyprus’s 10-year bonds maturing in 2014 jumped 0.85 percentage points to 10.18 per cent, well above the borrowing rates that forced Ireland and Portugal into bail-outs.

European officials have been closely monitoring Cyprus since the market turmoil surrounding Greek bail-out negotiations because of the dominance of the banking sector to its economy.

Concerns grew two weeks ago when the country’s largest power plant exploded, leading to rolling blackouts across the island. The economic effect of the accident could be substantial. Moody’s said it now believed there would be no growth in 2011.

The accident has led to significant political turmoil, as accusations and ministerial resignations over what the government knew about the risks to the power plant. The upheaval has stalled an austerity package that European Union officials believed was essential to restoring the country’s fiscal health.

Standard & Poor’s cut its rating on Greek sovereign debt from triple C to double C, the same level as Moody’s, in anticipation of a selective default on some Greek bonds.

The Moody’s decision means that everything that could possibly go wrong for Cyprus appears to have done so – in just a fortnight.

European officials have long been concerned about the country’s domestic banking sector, which has assets of more than seven times its annual economic output – giving it a disproportionate role in the island’s economy.

The banks weathered the global financial crisis and the initial stages of the eurozone’s debt crisis relatively well. But then came last week’s decision by European leaders to put pressure on Greek bond owners to accept losses on their holdings.

Even as European leaders were causing turmoil in the bond market as they dithered over the size and scope of Greek bondholder losses, another drama was unfolding in Nicosia: the Communist-led government was locked in a bitter fight with trade unions and rival parties over an austerity programme to get its deficits under control.

Just last month, the European Commission warned that without such modifications, Cyprus would not achieve its European Union-mandated budget targets.

Then, as if a banking crisis and a political crisis were not enough, another disaster struck.

The country’s largest power plant blew up after Iranian munitions confiscated by authorities exploded, killing 13 people.

The repurcussions of the disasters has plunged the island’s government into a kind of chaos that the head of its central bank likened to the 1974 Turkish invasion that split the island.

Ministers have resigned amid accusations that they may have known of the danger posed by the Iranian munitions. And the much-needed austerity programme has become a casualty of the fallout.

As a result of that strain, the government announced on Wednesday that Demetris Christofias, the president, was to ask for the resignation of all members of his cabinet on Thursday. This followed the junior party in the governing coalition, the Democratic party, urging its ministers to resign.

In its announcement downgrading Cypriot bonds on Wednesday, Moody’s Investors Service cited political upheaval as a primary reasons for its change in opinion. For the EU and other European leaders, however, it is the banking sector that has been the focus of concern.

“Moody’s is concerned that reforms may be watered down or delayed in the process of winning broad approval of them,” the rating agency said.

Nearly 40 per cent of all loans extended by Cyprus’s three largest lenders – which account for 55 per cent of the country’s total bank assets – are to customers in Greece.

In addition, stress tests released by the European Banking Authority this month showed that, among non-Greek banks, two Cypriot groups – Marfin Popular Bank and Bank of Cyprus – were the third-largest and seventh-largest holders of Greek bonds in Europe.

Constantinos Pittalis, head of investor relations for the Bank of Cyprus, said on Wednesday that the bank had reduced its exposure to Greek bonds by about €700m to €1.7bn since the EBA stress tests were held this month, as some of the debt matured and some was written down.

But the holdings still raised concerns at Moody’s, which said Nicosia would probably have to recapitalise the banks.

Although the potential Greek debt hole in Cyprus is not as large as the losses faced by banks in Ireland, it is still large for a country with a gross domestic product of €17bn.

“A period of prolonged macroeconomic stress would increase the likelihood that these contingent liabilities will crystallise on the Cypriot government’s balance sheet,” Moody’s said.

Additional reporting by Richard Milne and Ben Hall in London

[74LB]

And an FT editorial -

Cyprus awash in a tide of troubles

As Europe’s leaders strive to devise a solution to the sovereign debt crisis, they are understandably concentrating on the 17-nation eurozone as a whole, not the small corner represented by Cyprus. Yet the tide of troubles that has engulfed Greece, Ireland and Portugal is threatening to wash over the east Mediterranean island that for decades has been best known for incubating one of Europe’s oldest diplomatic disputes.

Athanasios Orphanides, Cyprus’s central bank governor, warned this week that the economy faced an emergency similar to that of 1974, when Turkish forces invaded the island after an abortive Greek-inspired coup aimed at uniting Cyprus with Greece. It was a somewhat over-the-top comparison. But he was closer to the mark when he suggested that, without a more determined effort to clean up the public finances and introduce structural reforms, Cyprus might need a financial rescue package similar to those negotiated for Greece, Ireland and Portugal over the past 14 months.

The governor’s comments illustrated how, in these dangerous times, a eurozone member state usually well out of the spotlight can easily succumb to a combination of extravagant budget deficits, contagion channelled through the banking system, government incompetence and sheer bad luck.

Cyprus does not face short-term funding difficulties, but its bond yields have risen sharply in recent months, pointing to investors’ concerns about the very high exposure to Greece of its commercial and financial sector. The communist-led government’s failure to keep public expenditure under control during the world financial crisis of the past three years has greatly exacerbated the problem.

Then, on July 11, came the explosion that destroyed Cyprus’s largest power station, killed 13 people, knocked out half the country’s power supply and disrupted the tourism industry on which the island’s economy heavily depends. The bill for this accident may rise to as much as €2.4bn, or 14 per cent of annual economic output.

Cyprus is sure to receive European Union aid to cope with the aftermath of the disaster. Its banks are flush with the deposits of non-residents, which could in theory be drawn upon in a funding crisis. The biggest problem is the government’s refusal or inability to undertake the fiscal and structural reforms essential for long-term survival in the eurozone. In this sense Cyprus is even more remiss than its struggling Mediterranean neighbours.

[kurupetos]

Those are old news old boy. Been posted here weeks ago.

[Viewpoint]

Predicted this weeks ago.

[Kikapu]

Predicted this weeks ago.

So what happens now, VP?

Come on, lets hear some predictions!

[Viewpoint]

Predicted this weeks ago.

So what happens now, VP?

Come on, lets hear some predictions!

The government in the south is about to crumble and strict economic reforms are in order, god moves in mysterious ways first electricity now economic reforms...werent you along with your arse lickers laughing at us a few weeks back?