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The comfort of tried and tested

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  • Cyprus is reverting to comforting and familiar pattern. Gone is the incalculably damaging idea of raiding guaranteed bank deposits. In its place comes smoke and mirrors and optimistic privatisation projections. It is just like the good old days in Greece.
  • A deal is needed this weekend because the ECB (whose president, let us not forget, promised to do "whatever it takes" to save the Euro) plans to withdraw liquidity from Cypriot banks on Monday absent a deal. Quite how this can be categorised as doing "whatever it takes" is not entirely clear.
  • The two questions for investors are: 1) is there a bank run in Cyprus regardless of any deal, when banks reopen?, and 2) will events in Cyprus make future Euro crises more difficult or costly to resolve. The answers appear to be 1) don't know and 2) yes.
  • The data calendar is eerily quiet today. There is the German ifo index of business sentiment, in the wake of weak data yesterday. There is also the French Insee survey of business sentiment, in the wake of weak data yesterday. Otherwise, attention is likely to remain on politics.

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