Friday, January 18, 2013

Small Cyprus May Trigger Heap Big Trouble in Europe

Yellow Alert from cnbc: Cyprus may seem too small for markets to care. But UBS has warned that the Mediterranean island is big enough to cause trouble in the euro zone after seeking a bailout from the troika, made up of the International Monetary Fund, the European Commission and the European Central Bank.

After all, this is not the first time a relatively small economy has threatened to trigger a pan-European domino effect ranging from Ireland, to Greece and Portugal.

"The Cypriot case has all the ingredients to raise questions about the consistency of the euro project again, comparable to -albeit possibly less dangerous than - the Grexit hysteria less than a year ago," said economist Martin Lueck from UBS.  The country desperately needs 17.5 billion euros in bailout funding to recapitalize its troubled banks and pay its bills on time after taking a hit from its large exposure to the Greek economy…..

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