26 March 2013

What did he think he was doing?

It may not exactly qualify as snatching defeat from the jaws of victory, but it comes pretty close.  The Guardian reports:

The good news for the eurozone was that the markets reacted well to the bailout deal for Cyprus. The bad news was that the rally lasted barely until lunchtime. By then investors were running scared at the prospect that the terms imposed on one of the single currency's smaller members would be the template for rescue packages for bigger countries.
Credit for the change of mood goes to Jeroen Dijsselbloem, who chairs meetings of eurozone finance ministers and who decided it would be a good idea to go public with the idea that Cyprus was not such a special case after all.
For the past week the message has gone out that there are no comparisons between a country that allowed itself to become the tax haven of choice for high-rolling Russians and other, better-managed, members of the eurozone.
Then, in a couple of interviews, Dijsselbloem said Cyprus would be used as the model for future bailouts.
The comments were an open invitation to any investor with more than €100,000 in a eurozone bank to remove it without delay, which some then did.
By the end of the day shares in Europe were tumbling, the euro was dropping against the dollar and the cost of insuring European banks against default was rising, forcing Dijsselbloem to issue a clarification of his earlier remarks. Confirming that European politicians could not organise a booze-up in a brewery, Cyprus was back to being a special case once again.


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