The latest news out of Cyprus is that the Cyrpiot government has delayed the vote on a bank bailout and savers tax by one day to Monday and that it has also extended the bank holiday from just Monday to Tuesday as well. In my view, the news flow suggests that the bailout in Cyprus is not going well and I fear there will be severe negative consequences for the euro zone as a result. As to the economics and politics of the matter, the bailout terms were driven by unavoidable politics in Germany and I want to explain why.
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Some thoughts on German politics and the saver’s tax in Cyprus originally appeared on Credit Writedowns