Cyprus?....

I am a confessed Europhile.  I spend a disproportionate amount of online media time checking-up on the Old World.  I don't know why.  But at least it's a harmless hobby.

By and large I resist the temptation to bore my blog readers with my musings regarding the current state of European affairs.  Still, there are times when one simply cannot resist.

Cyprus.  A small island in the eastern Mediterranean.  Sadly, the island is currently partitioned between the Greek speaking south and the Turkish north. But that is another story...

The current news regards the Greek speaking bit of the island which amazingly enough is a sovereign member state of the European Union and also a member of the currency union. The currency of Cyprus, the Euro, is the same as the currency of Germany, France, Italy, Spain and twelve other European nation states.

Cyprus is currently experiencing technical difficulties due to a huge faltering banking sector.  It turns out that the bankers in Cyprus have proved themselves to be just as incompetent, crooked and greedy as bankers on Wall Street and elsewhere in the West.  Cypriot banks have been tippling heavily on Greek sovereign debt - and the recent European Union settlement with Greece included a big haircut (loss) on Greek bonds held by the Cypriot banks.

More interestingly, about 40% of the deposits in Cypriot banks are owned by foreigners.  Lots and lots of Russians - klepto capitalists and pals of President Putin - have taken advantage of the less than stringent Cypriot banking regulations to stash the cash they trousered from various endeavors in Russia.  Most economists seem to assume that a majority of these Russian deposits represent money looted from Russian business if not from the Russian government itself.

For a couple of days it sounded like the Russian government might offer the Cypriots a loan.  Of course.  Use Russian government loans to help keep the billions in loot held by Russians in Cyprus from disappearing in a Cypriot bank collapse.  It was a natural - but oddly enough it didn't happen.

As of this evening Cypriot government officials are in Brussels for urgent meetings to avoid a collapse of the Cypriot banking system which will likely occur the moment the banks open on Tuesday morning without support from the European Central Bank.

And if the financial system collapses in Cyprus what will happen?  Well, errr, gee, hmmmm - seems nobody knows.  Maybe nothing.  Or maybe the contagion will immediately spread to Italy and Spain.  And then....

My guess is that the Cypriot drama will end with a whimper one way or another.  On the other hand, World War I began in the obscure middle-European city of Sarajevo.  The current crop of European statesmen from countries both big and small do not inspire confidence.

In other news, a fairly busy and quite enjoyable week.  Hosting supper on Tuesday for Amanda, Kira and Enrique was quite fun.

On Saturday night, I joined Laura, Alison, and Doug for supper at the Island Pub.  Afterward we went to Perseverance Theater to see 'Seminar' - very enjoyable and starring my house guest Mr. Bravo.  Enrique has got some talent.  Here's the review from the Juneau Empire.

Tonight I hosted mom and auntie for a halibut supper.  They were in good spirits and seemed to enjoy themselves.

And the cold spell broke today!

UPDATE:  Hit the "publish" button and five minutes later the latest BBC news.  Sounds like Cyprus has been granted a stay of execution.  But stay tuned...the European drama WILL continue!