As forecasted in my previous post there is a new economy derailing in Europe and it is Cyprus.
Today the Central Bank of Cyprus has clearly outlined that they will go and ask for a bailout to the EU.
A portion of the statement today:
The Bank of Cyprus, the island’s largest financial institution, on Monday urged government action to prevent the eurozone country from having to seek a bailout from the European Union.
“With our inaction we are risking the ability of refinancing the state and the consequences will be instant and serious,” a statement from the commercial bank said.
“There is an immediate threat of the country entering the European Union’s support mechanism with everything bad that entails.”
On Monday, the Bank of Cyprus said: “Time has run out. We are at that turning point at which history will judge us. It’s time for immediate and effective action.”
“Each day of inaction accelerates the problem and the risks, so we must act today and not tomorrow,” the bank said.
“Markets move rapidly; indecision, disagreements or simply talking without taking action are punished, while courageous decisions are rewarded,” it said.
In economic terms Cyprus is a nothing. 2010 GDP was only $25b but it is certainly another blow to the EU and the Euro even if the catalyst of this latest bailout is the explosion that destroyed the main power plant of Cyprus and 60% of its energy output, a lethal blow to a country who was already strongly indebted and exposed to the Greek tragedy.