Former maoist Barroso has not lost his sense of humor

The former maoist has not lost his sense of humor.

Joke of the week:

"The Commission stands by the Cypriot people."

Former maoist José Manuel Durão Barroso,  President of the European Commission
on March 25, 2013. 

Hooray - the euro is saved, once again

The future for Cyprus does not look very promising, when one looks at the Cyprus deal agreed in the morning hours today. But the holy euro is once again saved, and Brussels is celebrating:

Nobody doubts that, after such a severe blow to its lucrative banking sector, Cyprus will be pushed into a harsh recession. Some sources in the troika tentatively estimate that GDP will shrink by about 10% before any hope of recovery.

Perhaps the biggest question is this: once the banks have been cleaned up and shrunk, where will Cyprus find economic growth? The promise of offshore gas deposits is still too uncertain, and tourism may well decline if Russians suddenly find the island to be less hospitable to their money.

Whether the euro zone has gained any credibility for this round of clear-eyed decision-making is a different matter altogether.

Unfortunately president Nicos Anastasiades did not have the courage to follow the advice of his archbishop and opt for leaving the sinking euro ship. 

The head of the Cypriot Orthodox Church on the euro: "with the brains they have in Brussels, it is certain that it will not last in the long term"

Chrysostomos II
(image wikipedia)

Archbishop Chrysostomos II, the head of the Orthodox Church, seems to be the only major figure in Cyprus, who understands where the future for the islands state lies. He also has a realistic understanding of the leadership capabilities of the current EU leaders: 

The head of the powerful Orthodox Church in Cyprus said in an interview published on Saturday that he favoured the debt-ridden island nation leaving the euro.

“It’s not easy, but we should devote to this as much time as was spent on entering the eurozone,” Archbishop Chrysostomos II said in an interview with the Greek daily Realnews.

“The euro cannot last,” said Chrysostomos, who this week offered to help bail the country out of its financial crisis by putting the church’s considerable assets at the government’s disposal.

“I’m not saying that it will crumble tomorrow, but with the brains that they have in Brussels, it is certain that it will not last in the long term, and the best is to think about how to escape it,” he said.

The Orthodox church is the largest landowner on the island and also has stakes in a wide range of businesses, including in the country’s Hellenic Bank, with total assets estimated to run into tens of millions of euros.

On Wednesday, Chrysostomos met with Cypriot President Nicos Anastasiades, offering to mortgage the church’s vast property holdings to buy government bonds.

The archbishop has a famous predecessor, Makarios III, who also served as the country's influential president. Maybe Chrysostomos should consider doing the same?

Wolfgang Schäuble on the Cyprus bailout mess

Wolfgang Schäuble, German finance minister, last night said that “nobody other than Cyprus is to blame for this” (the Cyprus bailout mess)

“Cyprus is living with a banking sector with low taxes and favourable laws that is completely overdrawn and that makes Cyprus bankrupt. This business model is not sustainable.”

Schäuble is, of course, right. But what he "forgot" to mention, is that without the euro, neither he, nor any of his other eurogroup colleagues would have the slightest reason to worry about massive bailout packages and possible repercussions on the eurozone financial markets. 

The eurozone´s northern paymasters increasingly frustrated by bailouts

One after one, the eurozone´s southern member countries are joining the club of beggars. Yesterday Cyprus was the fifth country to request financial aid from its eurozone partners. Italy is still missing, but it cannot take long before it also applies for "membership" in this less and less exclusive club. However, there are clear signs that some of the few remaining northern paymasters are beginning ask whether it is worth to continue pretending that the current bailout policies are working: 

Although the Netherlands was one of the six founder members of the European Economic Community in 1957, the Dutch have soured towards EU integration over the last decade and voted down a European Union constitution in a 2005 referendum.

Taxpayers who pride themselves on frugality and clean government have been outraged by having to pay for fellow euro zone countries' perceived overspending and sleaze.

They are particularly allergic to the idea, driven by Germany and France, that the best and possibly the only way to save the euro is through much closer fiscal and political union.

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A Maurice de Hond poll published on June 10 found that 64 percent were against Merkel's proposal to gradually move towards political union, and just 20 percent felt the only way to overcome the crisis was to transfer more power to Brussels.

About four-fifths, or 82 percent, said the issue of Europe would play a major role in the coming election, while 70 percent wanted to see less saving and more economic stimulus next year.

RETURN TO THE GUILDER?

Previous polls have found that a substantial minority hanker for a return to the guilder. That has fuelled the populists.

The Netherlands is going through its own economic crisis, and has been in recession since the middle of last year.

The Dutch are nowhere near as badly off as the Greeks or Spanish, but many are feeling the pinch and this is hurting consumer confidence and spending.

Read the entire article here

Last week Finland´s finance minister ruled out a full financial union: 

Finance Minister Jutta Urpilainen says Finland cannot support the idea of a full financial union to save the euro as put forward by the head of the IMF Christine Lagarde.

“Our view is that we cannot share common responsibility for existing southern European debts,” Urpilainen affirmed.