Friday, 18 November 2011

Old comments... But like many other warnings, none listened.....

It was not just me who was warning that things would reach a crisis in Cyprus, but sadly no one listened. I was requested to repost the comments I made previously to the crisis and i take the opportunity to do so in this post.

Here is the Article on "The Economist" warning on the potential problems published on December the 2010. The interview was extensive but looking back the journalist was right to focus on this:

"Alexander Apostolides of the European University of Cyprus laments the lack of urgency. “There is not a feeling that we are on a slippery slope.”

On an non-related issue this is the comment I made and it was published on "The Economist" the real ideological debate within the ECB back in March 2009. This debate between Keynesian and Monetarist principles is now the focus point of the whole EURO project. If the ECB just accepted the principle of last resort or supporting the the EFSF then the Euro crisis would cease to threaten the fragile global economic recovery. Note that if the ECB believes in the ability to influence the real economy then it knows it can provide a solution (even if it is short term in nature). I finish with a quote back in 2009:

"While there might be a definite disagreement on what the monetarist solution is for Europe, both parties within the ECB accept that the ECB holds the answer and fiscal policies of the respective European countries are at best complimentary but at worst unhelpful."
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sofroniou said...

In my opinion, whether the cypriot parliament approves the "cut" of the cypriot bond by the ECB, it will be a national betrayal. The next step to a such decision is only nationalising Marfin and BoCy and paying all the screwed debts!
Whats your opinion?

Alexander Apostolides said...

Dear Sophroniou, Actually from the moment we agreed to be part of the Eurozone we have surrendered such rights to the ECB. The whole point of the EU in general and of the Eurozone specifically is the surrender of national rights in order to benefit from the economics of size and scale.
I actually think this is our fault and not an ECB issue. When we were being downgraded the government took no action to stop it, and hence we reached levels where a cut in necessary for accounting principles. The onus was on us but we failed to act in time.