Cypriot Bailout Chaos

There is chaos all across the small island nation tonight as the Cypriot Parliament delayed the vote on the €10 billion bailout of the country. As in all the previous cases, the bailout comes with harsh austerity on the Cypriot people. The austerity most angering civilians is the savings tax, if you have less than €100,000 in deposits, then you will be pay 6.75% in tax and 9.9% if you have deposits in excess of €100,000. The previous bailouts to Greece, Ireland and Portugal were all very harsh, but none put the burden so directly on civilians. The savings tax will hit elderly, who depend on their savings, the hardest. Naturally this has infuriated Cypriot civilians who are already facing tough economic woes.

As per usual, it’s the banks that have caused this crisis. They took a very big hit from the debt write off in Greece. There are serious worries in the financial markets that Cyprus will never pay back the €10 billion bailout, after all its GDP is only €18 billion

This has caused a bit of angst in Britain as well, due to the presence of two British military bases (Akrotiri and Dhekelia) there are several thousand British military personnel with deposits in Cypriot banks. The new tax would take a considerable proportion of their money, as a result the British government has promised to repay the soldiers, what the Cypriot government takes from them. That is assuming that the bailout passes.

It has been proven time and time again that austerity simply does not work, look at Greece. It was the first country to get a bailout and it had to get another one and a debt write off. Look at the UK, we’ve embarked on austerity and we’re looking likely to enter a triple dip recession. Great. When European leaders finally reach the conclusion that austerity is not working, then maybe this continent will be saved from this diabolical financial situation. We cannot continue like this, we must change course and change from Plan A to Plan B.