Sudden death of a business model

Cyprus and the euro group have finally agreed on a rescue package. But after this „rescue“ Europe will not be the same. With a bail-in,  compulsory levies, an ECB ultimatum and capital controls arbitrariness is drawn into the monetary union. And the German dominance is stronger than ever.

The „rescue“ of Cyprus was meant to set an example. The only question is which. According to the new German reading it is about an unsustainable  „business model“ that has to die. Money laundering, tax fraud and financial casinos should be put to an end.

German Finance minister Schäuble took a very hard stance, because he is driven by the SPD and Greens. You know, in the election campaign in Germany, everyone wants to play the schoolmaster, even the opposition.

The real example though is not set to Cyprus, but to all of Europe. It shows what happens when the Euro bosses rise to rule over politics and economy of entire countries.

The attempted expropriation of Cyprus savers was only the beginning. No sooner had the attack on savings from Berlin been repulsed on, the next attack was started, this time from Frankfurt.

The European Central Bank put the gun to Cyprus and issued an ultimatum: Nicosia must relent, otherwise the money tap will be turned off. They also called for capital controls on the island.

In practice, the euro in Cyprus is worthless now, the island is cut off from payments of the euro zone. In addition, the ECB has betrayed its own maxim to do everything to save the euro and its members.

And this without any need: for since the support of the bankrupt island was abducted by nine months (the first claim came in in June 2012), time did not really matter any more.

This shows that the Euro bosses act arbitrarily. Arbitrary are the sums they demand as „contribution“ or „bail-in“. Arbitrary is the intervention in the Cypriot economy structure. Even Luxembourg feels aggressed now.

The Eurogroup also distracts from the fact that they had sworn to break the vicious circle between banking crisis and sovereign debt crisis. This has even been agreed at EU summits – and forgotten since.

The consequences of this arbitrariness are likely to haunt Europe for quite some time. The euro rescuers have become completely unpredictable. What they said yesterday, is no longer true today. In the future, everything seems possible.

Although Cyprus was still „saved“ at the last minute, now everyone knows: on law and order you can no longer rely. In the end will be decided only what Berlin wants – and what Frankfurt allows.

The monetary union has become a reign of terror. And not just for the people in Cyprus. Who ever needs to be „rescued“ next time should  prepare for the worst.

If Europe were a „business model“, the customer would now run away in droves. But the bizarre comparison does not work out – nor in Brussels neither for Nicosia.

Cyprus is not in crisis because of its banking sector  – but because of the failure of the Greece „rescue“. Schäuble’s haircut in Greece has ruined Cypriot banks that were heavily exposed there.

But  the German Michel must not be confronted with this simple truth – it’s an election year!