NICOSIA, CYPRUS — Cyprus is expected to make a dramatic U-turn Saturday to avert the imminent threat of a financial meltdown, having signaled that it is willing to tax big savers in its stricken banks to clinch a bailout from the European Union.http://www.washingtonpost.com/...
The island’s partners in the 17-nation euro zone scheduled a meeting for Sunday in Brussels, in a strong sign that they believe a solution is near.
As hundreds of demonstrators faced off with riot police outside parliament late into Friday, lawmakers inside voted to nationalize pension funds, pool state assets for a bond issue and peel good assets from bad in stricken banks.
In the end Cyprus has no choice.
Their credit is junk. No one but the EU will loan to them. The EU lifeline of some $13 billion now seems generous.
In the absence of the bank levy, Nicosia turned to Russia, whose citizens have billions of euros at stake in Cyprus’s outsize banking sector. But Finance Minister Michael Sarris returned from Moscow empty-handed. On Friday he said the bank levy was back “on the table.”Even Russia won't help them now.
The last decision they have to make is how much to levy small vs large depositors.
Much of the banks’ capital was wiped out by investments in Greece.Even the bankers are wiped out of capital.