EU purportedly guarantees deposits of 100,000 Euro or less against default. How does this “tax” square with such a guarantee? It doesn’t.
How does the EU hope to ever retain large foreign depositors when they’ve hung them out to dry in an EU member state? They won’t.
This has been a tremendous game of chicken and the EU just blinked. They’ll quietly find some face-saving means of a full bailout. The consequences across the EU are too great to allow this.
What really s*cks is, it’ll probably be the Federal Reserve that ultimately bankrolls the whole thing. They’ve been recapitalizing the EU all along since 2008.
Actually they will probably get more foreign depositors in solvent states now that they know they won’T be required to carry as much of the load for those who are insolvent. I don’T really understand the pity for Cyprus who is being required to give something back in return for a bailout. This will cut back on cries for bailouts in future. I don’T see this as a bad thing.