Fixing Cyprus – A modest suggestion

Musings from the Chiefio

OK, we saw that the financial crisis in Cyprus it being handled as badly as possible.

But is there a way to “fix it”?

The reason the banks in Cyprus are ‘underwater’ is that they hold a lot of Greek Dept that they had to write down under EU rules; since Greece doesn’t have enough Euros. Greece is stuck since they can’t just print more Euros. Italy and Spain? Same thing… So…

Some collection of them band together. Greece issues the “New Drachma” (set to the same value as the Euro to start) AND announces that all prior Greek Bonds are now denominated in that currency. Since they can ‘print money’ they can buy back any bond, even the ones in Cyprus. (Yes, it breaks a load of EU rules, laws, etc. As New Greece would be sovereign it would not be bound by them…) Now Cyprus, and any other…

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