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Comment by ameister14 | Hacker News Reader

This makes me extremely uncomfortable and I don't understand how anyone could think this was a good idea.

We have high unemployment across Europe, Catalunya is attempting to become independent and there is open talk in the press about a military coup if that goes through. Meanwhile, Greece elected a bunch of fascist mps, and now this?

Imagine if you woke up tomorrow and 10% of your savings were gone. What would you do? Take your money out of the bank, sure, but also immediately attempt to remove your government.

Not exactly a move towards stability here.

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The traditional answer in this situation would have been to devalue the currency. Cyprus is not capable of doing this because they do not control the Euro.

It's important to note that 10% haircut is much, much less than what would have happened if Cyprus was not under the Euro and had devalued. Just a few years ago, everyone in Iceland lost more than 50%.

Iceland lost 50%, but they put their corrupt bankers and government ministers on trial. Cyprus lost 10% and they still have the exact same cancer.

Some of them. Don't think that Iceland's problems are all resolved. It's still unsure if the new constitution will pass, lots of people in power do not want change.

Iceland is already a growing economy, while Greece, Spain and all the other troubled euro countries aren't.

At the end of the day you have two camps: debtors and savers. You can't force a tractor factory to make a factory once it has closed down ie: you can't force a debtor to pay debt they want to default on. The only way to rebalance the system is to screw the savers. It was always going to happen, the question is whether by stealth via inflation or overtly. It looks like they are taking the overt path. The problem is the savers saving in the instrument of debt: currency.

I'd like to add one thing, that those people weren't just hoarding that money. What happens now is that Cyrpus is losing out on some badly needed investment.

On German TV someone joked, that Merkel found a way to have tough reforms without hurting voters. So it makes really a lot of sense, it is just not aimed at helping Cyprus.

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