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Friday, March 22, 2013

Cyprus Brings Euro Project Crashing To Earth

The former Governor of the Central Bank of Cyprus (Athanasios Orphanides) has vented his spleen against the Eurozone and the ECB over the handling of the Cyprus bailout farce.

Mr Orphanides told the FT that the EU has been condemned to economic disintegration as a result of top policy makers’ “bullying” of Cyprus and “cavalier attitude” towards the expropriation of property:
The European project is crashing to earth.

This is a fundamental change in the dynamics of Europe towards disintegration and I don’t see how this can be reversed.”
He bemoaned the lack of "fraternal" support from fellow Eurozone members:

I would have expected them to support the European project. I would have expected them to protect the citizens of the smallest and weakest member states against discrimination. We have seen a cavalier attitude towards the expropriation of property and the bullying of a people.”
He noted that:
It suggests that in Europe not all people are equal under the law.”
He quite rightly notes that the outcome of this ongoing farce has yet to be fully felt in the global financial markets:
I don’t think that the full extent of the shattering of the trust that we have seen in this case . . . has been seen fully yet.

Banks’ funding costs in the [southern eurozone] periphery will rise further – there is no way we will avoid that. This in turn will make the recession in the periphery deeper, adding to the misery that the mishandling of the crisis has caused so far.”
Were one a cynic one might wonder whether this farce has been deliberately engineered in order to force the "peripheral" countries out of the Eurozone, or to give Germany the excuse it needs to leave it.

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