Monday, August 22, 2011
Downfall - Cyprus Hits Point of No Return
Cyprus has barely managed to sell Euro23.1M of government bonds.
It achieved a "bid to cover ratio" of 1 (ie there were only just enough "punters" prepared to buy them), at a yield of 7% (the last auction in June achieved a yield of 6.25%).
A yield of 7% is "the point of no return"; it is the level at which Greece, Portugal and Ireland went with their begging bowls to others asking for a bailout.
Why is Cyprus having problems?
Around 40% of its largest banks' exposures are to Greece.
Meanwhile, Chancellor Angela Merkel from deep within her bunker in Berlin issued a statement to ZDF (again rejecting Eurobonds):
"It will not be possible to solve the current crisis with euro bonds.
Politicians can’t and won’t simply run after the markets.
The markets want to force us to do certain things.
That we won’t do."
One can only conclude that she has either totally lost touch with reality, or is intent on deliberately destroying the Eurozone.