Europe Should Be Thrilled By The Week It Just Had
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From a Cypriot perspective, this week will likely been seen as an incredibly damaging one.
Had Cyprus passed some kind of deposit levy early in the week, it might still have a future as a banking/tax haven, albeit one that was weakened.
However, now that it's imposing capital controls and closing banks and limiting ATM withdrawals, the scars will likely last for much longer.
But actually the rest of Europe should be pretty thrilled with how it went down.
In another great post, the pseudonymous fund manager @pawelmorski points out how well markets took all this, and how Europe's confidence seemed to grow throughout the week:
First thing to get straight – from a Eurogroup point of view, this week has been if not a triumph, a respectable success. Markets held extremely well. Probably best generic Eurorisk indicators are the BTP future – since the CDS Ban, one of the few vehicles for shorting Eurozone credit – and the Eurozone financials stocks index. BTPs hit their low for the week within a couple of hours of Monday’s open and closed the week flat; financials did worse, but far from a panic.
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