One additional thought about the Cyprus situation and the agreement to let the Cyprus Popular Bank be shuttered is of keen interest. While depositors of 100,000 EUR or more will feel like they have been robbed, perhaps we have seen an actual decision by a government body to allow businesses to fail when they can no longer meet required mandates and regulations.
If the E.U. were to practice the endeavor of allowing businesses to fail when it is legally possible at all times, in essence they actually may be doing the world of capitalism a good thing. Depositors of 100,000 EUR and more did not have their money insured and without this stipulation are suffering the vagaries of failure and a fair market it could be argued.
If the E.U. can continue to keep this policy alive it will be of interest, but too it may cause widespread ire among wealthier individuals and companies. Having said that part of the ‘big debate’ in the States during the fall of Bear Stearns and Lehman Brothers is what merited ‘too big to fail’ and who gets to choose when and where this type of decision is made.
It would be hard to argue for free markets and the ability to find success in the marketplace, but that failure should not be allowed. As the worm turns during this financial crisis, this weekend’s decision and results from Europe and Cyprus could prove to be a sign that capitalism is actually alive and working. Time will tell what all the implications mean.
Unfortunately it is not easy to read what complexities will now develop because of the Cyprus actions. If it were a clean-cut case of capitalism being practiced and a simple failure of business being achieved that would be one thing, but the truth of the matter is that this story is not about only one bank’s failures and instead represents the whole of the Cyprus government and its past actions along with those of the European Union’s. This past weekend’s decisions may offer some clarity for the time being, but they do not close the matter, and the financial crisis that Europe faces is still a Goliath of a problem. Last week’s sputtering PMI results from Germany and France only reemphasized that Europe is suffering from the dregs of a massive recession.
In trading thus far today, the EUR has gained some value. Gold is still in a fairly consolidated range and is near 1608.00 USD as of this writing. Data will light today from Europe and the States, but Cyprus and all of its meanings are sure to be interpreted in a myriad of ways by traders. Tomorrow the U.S. will release Core Durable Goods, New Home Sales figures, and the CB Consumer Confidence reading.