Monthly Archives: March 2013

Cypriot SME Cash Holdings and the “corralito”

Data on these are hard to get. The best and its not very good, is the Amadeus Database by Bureau Van Djik. 

Looking throught this this AM, I extracted the “cash and cash equivalent” balance sheet item for 2011 (the latest year for which there are accounts) for a set of Cypriot companies. These were non-financial non-state corporations, independent (as in not subsidiaries) and SME’s as per the european classification. 

Remember that all deposits up to 100k are safe; remember also that even the most financiallly unaware Cypriot SME must have been thinking about the safety of their cash since 2011.

Average Cash – €487 ; Median Cash €66k 

A lot of Cypriot SME’s if the distribution is similar now as it was then (which is imho still probable – who would think that the bank deposits would be in play, right?) will be badly hurt. 

Remember : “its all hot russian money”….

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A song for europe…and cyprus

To some a song for Europe will always be Ted and Dougal…. but for the modern generation the superb Gavin Kostik has, following from his 10 Commandments, a new one.

There’s a hole in the system, dear Draghi, dear Draghi,
There’s a hole in the system, dear Draghi: a hole.

Then fill it dear Olli, dear Olli, dear Olli,
Then fill it dear Olli, dear Olli: fix it.

With what shall I fill it, dear Draghi, dear Draghi,
With what shall I fill it, dear Draghi: with what?

With taxes dear Olli, dear Olli, dear Olli,
With taxes dear Olli, dear Olli: try tax!

But the tax take is falling, dear Draghi, dear Draghi,
But the tax take is falling, dear Draghi: it falls!

Increase them dear Olli, dear Olli, dear Olli,
Increase them dear Olli, dear Olli: whack’em on!

But tax take falls more now, dear Draghi, dear Draghi,
But the tax falls more now, dear Draghi: it fell!

Squeeze the sovereigns, dear Olli, dear Olli, dear Olli,
Squeeze the sovereigns dear Olli, dear Olli: squeeze them!

But the sovereigns are bursting, they’re bursting, they’re bursting,
But the sovereigns are bursting, they’re bursting: some burst!

Try the savers, dear Olli, dear Olli, dear Olli,
Try the savers dear Olli, dear Olli: try them!

The hole just got bigger, got bigger, got bigger,
The hole just got bigger, got bigger: it grew!

Then the bondies, dear Olli, dear Olli, dear Olli,
If you must it’s the bondies, it’s the bondies: burn them!

Now the system is creaking, is creaking, is creaking,
Now the whole system is dear, dear Draghi: it creaks!

[female voice]

Inflate it dear Draghi, dear Draghi, dear Draghi,
Inflate the system it dear Draghi, dear Draghi: inflate!

But I don’t have a mandate dear Christine, dear Christine,
But I don’t have a mandate dear Christine: don’t ask!

Well then print it, dear Draghi, dear Draghi, dear Draghi,
Well then print it dear Draghi, dear Draghi: please print.

But we don’t have a printer, dear Christine, dear Christine,
We don’t have a printer, dear Christine: there’s no ink!

Well who make money, dear Draghi, dear Draghi?
Well who can make money, dear Draghi: who can?!

Well the banks are supposed to, dear Christine, dear Christine,
Well the banks are that system, the banks: that’s who!

[All together now]

But there’s a hole in the system, dear Draghi, dear Draghi,
There’s a hole in the system, dear Draghi – a hole!

a (deliberately provocative ) post by Namawinelake on How Ireland can benefit from Cyprus woes….

NAMA Wine Lake

We’ve seen over the past fortnight how the Cypriots are a deeply stupid people that have allowed their economy to collapse, and consigned their society to immiseration and decline for a long period ahead. Well, too bad for Cyprus, how can Ireland benefit from their self-inflicted fiasco?

(1) Cyprus’s corporate tax brand is destroyed. The original Cyprus bailout plan included a term compelling Cyprus to raise its headline corporate tax rate from 10% to 12.5%, there is no mention of that term being dropped in the latest version of the bailout, so it seems the change still stands. Now a 25% increase is still just an additional 2.5% but it has destroyed the Cypriot brand. Businesses now considering basing themselves in Cyprus might appreciate the 12.5% corporate tax rate as relatively low, but they know that it has been changed, and apparently without much resistance from the Cypriots. On…

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Some more thoughts on that awful Cypriot Business Model

I wrote yesterday on the “dead” cypriot business model.

Some more thoughts and data below on this.

First Cyprus is not that different to many many other countries in terms of the % of its GDP derived from the financial sector.

Screen Shot 2013-03-24 at 13.01.41

Second, Cyprus was not that out of line in terms of its percentage of employment (full time equivalent, hours worked) in the financial sector. It was the highest but…

Screen Shot 2013-03-24 at 13.09.38

Third, as a % of the total wage bill it was quite highly dependent on the financial sector – it was a well paid sector in the cypriot economy, a well paid sector now dead. Is it any wonder the hole is now beginning to get bigger – as of pixel time 1320h sunday the Toika have decided that Cyprus needs 2b more…

Screen Shot 2013-03-24 at 13.13.29

Finally, as a % of total employment in Financial Services,  Cyprus is not that out of line with the rest

Screen Shot 2013-03-24 at 13.30.55

The Ten Commandments of Eurozone Membership (for small states)

The quite wonderful Gavin Kostick of Fishamble Theatre has a comment on Irish Economy which is too good to linger there… It's super.

 

And Draghi came down from the mountain with two tablets of stone.

(1) Thou shall love the god of the market. Thou shall have no other god before it.

(2) Thou shall have no other engraved image except the Euro. There shall be no other image on thy coin, for I run a jealous central bank

(3) Thou shall not take the name of the Euro in vain or speak slightingly thereof, for those who seek to destroy confidence will not be held guiltless.

(4) Thou shall work all of the days, excepting none, for this is the will of the free market. And you shall remember that you are a debt slave as you once were in Egypt.

(5) Honour Germany and France and the contract they made in their betrothal at the altar of the European Coal and Steel Community: for these are your mother and father to whom you must be obedient.

(6) Thou shalt not kill the bondholders.

(7) Thou shalt not commit adultery with other nations, neither the Russians nor the Chinese, nor any other nation against which we set our face.

(8) Thou shalt not steal deposits with high interest, low tax or any other wiles against which we set our face.

(9) Thou shalt not falsely accuse the ECB of running a tyranny, or threatening to implode your banks, being subservient to German interest, nor any other false witness against them.

(10) Thou shalt not covet a living possessed by your neighbours, but rejoice in the purification of your impoverishment.