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GreekReporter.comAustraliaFinancial Analyst Das Sees Prolonged Recession

Financial Analyst Das Sees Prolonged Recession

4587562-16x9-340x191Sydney based financial analyst and author Satyajit Das, published an article on his blog The Drum of the Australian broadcasting network ABC, relating to the “clumsy” crisis management of Europe for both Greece and Cyprus.

According to Das, the crisis of the Cypriot economy has been incorrectly considered minor from a systemic perspective, given that the danger of increasing the deposit haircuts within the entire Eurozone and beyond, now becomes more visible.

Das explains that “the crippled financial system as well as the effect of capital controls and uncertainty on tourism will mean, at best, a prolonged recession. As with Greece, this will make it impossible for Cyprus to meet targets and repay the bailout debt, necessitating further assistance and/or future debt restructuring.” He also added that “Small depositors are also affected by temporary capital controls, which may need to be in place for some time (in Iceland they are still in place over five years after introduction). Residents cannot withdraw more than 300 euros in cash per day.”

Das also noted that ” Alternatives such as Cyprus leaving the euro and restructuring its bank and sovereign debt were ignored to avoid losses to the ECB on its 9-10 billion euro exposure to Cypriot banks and to European banks on holdings of Cypriot government bonds.”

Finally, Das highlighted that “the accusations of Cypriot money laundering and tax evasion to justify the structure of the package merely expose the EU’s politically expedient hypocrisy. It is puzzling how Cyprus could have been admitted to the Eurozone if it encourages such heinous and odious financial practices as implied.”

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