"We anticipate the banking resolution mechanism for the Cypriot banking sector to result in a significant downsizing of banks' activities and therefore to severely affect the economic performance of the island from 2013 onwards. We expect an acceleration in the contraction of the Cypriot economy in 2013, with a negative real growth rate in the low double-digits and no return to positive growth before 2016. Our view is further supported by the negative feedback loop that expenditure cuts may have on the economy given the importance of public services, hence potentially challenging future consensus on fiscal strategy. We note that large uncertainties remain regarding the magnitude of further recapitalization needs for the financial sector given the expected sharp deterioration in the operating environment which will erode asset quality, as well as the behavioural responses of all economic actors to the shocks experienced by the financial sector (including risks of financial disruption related to the timing and approach for lifting of capital controls). In light of all the downside risks and the limited number of upsides, we view Cyprus as likely to default again in the coming years, as reflected by the rating level and negative outlook. Although it is not its central scenario, Moody's also sees a material risk of a Cypriot exit from the euro area which is captured in the Caa2 country ceiling. As a result of the immediate downsizing of the banking sector and the expected spillovers to rest of the economy, especially in terms of weakened consumer and investor confidence, we forecast that the economy will contract by 12% this year and another 6.4% next year."
--Moody's, 15 July 2013
The purpose of EMU is to reduce the occupied states to penury in order to make them more like Germany, or Ethiopia. Ultimately the question is is: how low can per capita income decline until "Europe" becomes a dirty word, and "liberty" becomes the popular desideratum. Cyprus is the laboratory of this experiment, along with Greece and Portugal. Here is the experiment: How many people must eat out of garbage cans before the euro elites understand that EMU is destroying lives.
It must be pleasing to be ingesting a nice Brussels dinner while discussing how subhumans the Cypiots are, and how they must be "taught a valuable lesson". That was how Stalin felt about the "rich peasants" of the Ukraine: surplus empty mouths to feed. Wouldn't the world be a better place without so many peasants?
Perhaps, in a perfect world, Cypriots wouldn't exist, like the kulaks and the Crimean Tatars. All Cypriots do is enable Russian plutocrats. Why should they exist? Liquidate them. Indeed, liquidate all of the parasite states of the Eurozone.
So we now know that the purpose of EMU is not to enrich the vassal states, but to occupy them and to make them penurious colonies of the hegemon. Peripheral Europe is Germany's Latin America. But there is a crucial difference: the US has not forced its Latin American colonies to join the dollar zone. Latin America, despite its colonial status, retains monetary sovereignty. Aside from the Bolshevik laboratories of Argentina and Venezuela, Latin America is outperforming its colonial parents. Portugal and Spain should have monetary union with Brazil and Mexico, instead of Finland and Germany.
What Germany is doing to Cyprus is a crime. The Germans lack empathy and revel in schadenfreude. That's sick. Germans cannot learn.