Tuesday 16 January 2024
Friday 12 January 2024
It was a sunny Saturday morning. I woke up and went on my weekly shopping route. Before that I went to withdraw some money from the ATM but my transaction was declined. It was really awkward, I knew that there were enough funds in my account, so I tried one more time. Transaction was again rejected. People in nearby ATMs faced a similar situation, as I could now observe.
Suddenly my mobile phone rang. Sylvia Papamakariou, my Cyprus Green Party main liaison, informed me that Cyprus was bankrupt, banks were shut down and I had to go to our headquarters for a brainstorming meeting regarding the next day. It was the moment I could see in real time that “IT” happened once again, as Hyman Minsky wrote a few decades earlier. Unfortunately, in Cyprus nobody wanted to listen and nobody wanted to speak, even after it was too late.. That was the rule then, that is the rule now..
As the rest of the population were celebrating the Carnival period, mostly in Limassol, that first and then during the second weekend a team of experts were trying to develop scenarios of what to do, what to avoid and what to save. We then had no idea of the real corruption levels of Cyprus, we just assumed that something would and should change. Illusions as we realised later..
The corruption levels in Cyprus are huge and unfortunately almost everybody is involved. The huge benefits of the public sector and the politicians that form each administration were always coming from a financial alchemy. The savings of the Cyprus Social Security pot were immediately transferred to serve the Government expenses so every new expenditure and pay rise meant that there will not be any kind of safety pillow in case of any emergency. That means also that in case we needed to cover any kind of emergency like saving our Banks would be achieved only if our European partners were willing to lend us more money. And they had no reason for that since our Banking system ws another alchemy ; giving higher interest rates in order to attract more deposits and create new bonuses for the Bankers..
So, in a simplified analysis, if Cyprus were still having the national currency of the Cyprus pounds and each Cyprus pound was equal to 1 euro, that weekend we could agree to devalue our pound so possibly 1 euro could buy 10 Cyprus pounds or even 50. In such a period that the national economics are just reckless, the evaluation of the national currency is defined by the markets. Luckily, Cyprus was already in the Eurozone. That meant that our government was able to steal as much as they wanted, since the people would pay the debt in a future period.
That’s a flaw of monetary unions that lead to their collapse sooner or later. Just to make it more relevant to the recent period, both Turkey and Argentina, two countries that have their own currency, observe the continuous devaluation of their national currency against others.
Tuesday 9 January 2024
The most common question I am repeatedly being asked, since I moved my base to England is :
“Why does a Cypriot decide to leave Cyprus for England? “
We all agree that Cyprus is an amazing place for vacations. Good weather, amazing food, quality amenities.. But how about living permanently and working there? Is it as good as England? For sure, it's not.. Let's see why..
Cyprus gained a very bad reputation during the recent years. What all investigations show is that Cyprus is linked to illegal activities like money-laundering and supporting financial crime..
I have no reason to disagree with those publications, at all. On the contrary, I was observing the pattern, at least fifteen years earlier. I started investigations, I verified what was happening and, even worse, I verified that what was happening couldn't change because of the corruption inside the core of the governance.
Let's observe a few details. Cyprus got bankrupt during 2013. The public treasury was empty, the two core banks collapsed and the third, most healthy financial institution went bust a few years later. Would we agree that it doesn’t sound like normal practice for anyone, anywhere?
Let's get a little bit more specific. The public service was paid by funds transferred from the social security pot. The social security pot was permanently empty so there was no safety pillow for last resort purposes. Public sector was paid by Ponzi financing practices.
Same period , both Bank of Cyprus and Laiki Bank heavily invested in Greece, the rest of the Balkan peninsula, Ukraine and Russia. All those investments collapsed so both institutions needed recapitalisation. That was part of another Ponzi financing practice but unfortunately nobody dares to talk about Ponzi financing practices in Cyprus..
Since the problems were well known at least one year earlier, we were asked to make scenarios for the next day. Who were “we” ? During that period I was a member of the Cyprus Green Party, acting as Commissioner for Finance, what in the UK is called shadow minister. The exact same time I was studying my Master’s degree so I had access to all similar cases, worldwide. I personally developed a scenario where both banks were split to smaller pieces and sold to healthy institutions, more or less what the UK did during 2008 when they faced a similar situation.
I was amazed by the fact that nobody paid attention to my proposal so I developed my personal scenario for the next day ; a bank account with emergency funds that could be used in order to move to the UK when nothing could be saved..
End of part I