Tag Archive for Cyprus

European Debt is Not Germany’s Fault

I’m not German so I can only imagine what they feel like, as one after another Eurozone countries are falling into huge pits of debt.  Of course then comes the bail outs where the country in question comes cap in hand for money to bail out the mess that their economy has got into.  We are seeing it in real time now with the Cyprus Government where of course the remedy is even tougher than normal by forcing Cypriots to bail out their banks.

It’s the next bit that always annoys me, the Anti German banners, placards with pictures of Angela Merkel sporting a Hitler style moustache.  You’ll hear talk of bullying, of Germany imposing strict controls and trying to dominate smaller countries.  Of course Germany invaded Greece many years ago but the German taxpayer would much rather not be involved with Greece’s problems at the moment.

The problem is that Germany has to help, but it shouldn’t be forgotten that these bailouts are partly funded by taxpayers in Germany.  One by one the basket cases of Europe announce that they are about to go under, and expect loads of cash to solve their problems with no strings attached. It’s simply not going to happen, at least not until there is a central European taxation system.

The reality is that the reason the German economy is able to help is that it has practised for years the sort of austerity that is suddenly forced on these countries.  Germans did not retire in their mids 40s on fat Government pensions like many Greek citizens did, and thus they are able to finance rescue plans using surpluses.  The woes of the Eurozone were not inflicted on anyone by the Germans, although it has to be said they have benefited from a currency which is much more competitive than the German Mark would ever be in todays world.

If you look at German media and especially check in with some of the German TV stations that broadcast online you can see the growing resentment.  Check out some of the main German TV station and you’ll see for yourself – you can look at them online, you just need to invest in a German proxy such as this – http://thenewproxies.com/german-proxy/ to access some of this content.  This shields your real IP address to enable you to watch geo-restricted content using a German IP address instead.

You can see that patience is running thin with some of the abuse that Germany is getting whilst trying to help these economies survive.  It’s not something we see when you’re outside the country particularly being bombarded with Anti-German companies.

Cyprus – Debt Deals

It’s very tough to live in Cyprus at the moment, virtually all sectors are suffering from the austerity measures.  You might think it’s fairer that people with money are also being affected by the financial problems, but many of the people with high balances in Cyprus banks are people who have put their lifetime savings there.  The deal that is being put towards the stricken Cypriot government is bailout cash in exchange for austerity and a tax on peoples deposits.

Cyprus might not be the biggest country in Europe, and of course the sums are much smaller than Spain, Italy, Greece and Portugal.  However what happens in this smal island is important for Europe and the future of the Eurozone.  Their latest vote on accepting a new deal was won by only two votes in the Cyprus Parliament.  A loss would have probably involved an exit from the Euro and the establishment of the Cyprus pound as a currency again.

No-one denies that this would have been very painful to the economy, even the opposition parties.  However the idea of exiting the Euro is becoming more and more realistic for many countries.  Just think of the situation on a human level.  You go to live in a country with a reputation as a strong financial centre, you place your hard earned life savings in a Cyprus bank. Suddenly it all goes wrong and a huge portion of your savings are eradicated overnight – basically just removed without your consent from the bank.  The banking sector in that country is suddenly completely without value – would you put any money in a Cyprus bank?

Confidence is shattered in the banking sector, the financial community and in essence the whole economy overnight.  Which business can operate without a bank account?  Two votes have saved the Government from Euro exit, but it’s critics say that the effects will be far, far worse.  Small members like Cyprus will often suffer because they are forced to trade on the same terms as bigger and more efficient economies like Germany.  Different currencies gave countries some flexibility but the Euro means that a Cyprus factory has to compete with one from Hamburg directly.

There are many of us who believe that countries like Cyprus would be better out of at least the Eurozone.  Being able to control their own currency would mean at least Cypriots could compete by modifying their exchange rate.  If I sound emotional it’s because I spend a lot of my time in Cyprus, and worse I’ve found out about this decision via the BBC website – although I had to fiddle with an Ipad and a UK VPN – http://www.uktv-online.com/bbc-iplayer-on-the-ipad-abroad/ to view it!