Brussels will argue and try to convince itself, that it is good. There has been firmness with flexibility, the complex governance structure sustaining the single currency functioned, Cyprus is a worthy member of the Euro family, the future of the Euro is still assured.
Many onlookers think differently. They see a shambolic presentation of a new dimension in post crash verities. When badly managed banks crash, depositors are in line to lose, just as they did in the past. This is why, when banks accept your money without asking if it is yours or where it has come from and pay a rate of interest significantly higher than their stuffy competitors, you need to be cautious and accept a high degree of risk.
This is the best piece to come out of the unhappy event and will do more than regulation to regulate the banks. They will all find that depositors, now reminded that banks can and do go bust, even when in a sector eight times bigger than the national economy on which most of it depends, will seek to assure themselves that the banks they choose to put their money in are safe. To earn that trust the banks, all of them, will have to become safer. That will curb lunatic investment by the bankers in the likes of sub-prime mortgages and Greek bonds.
Yet the idea of a raid on bank deposits without the consent of depositors is repellent and likened by many to theft. This is why the ineptitude in presentation by the various Presidencies and other paraphernalia which in the Eurozone passes for a form of federal government, is at the heart of this crisis, more than the actual crisis itself. The simple truth is this. The two biggest banks in Cyprus are bust, as is the Cyprus government. The smaller banks would likely go under in the panic of such a collapse. Depositors would lose every cent of their money. The kindly Germans, working with their many friends in northern Europe have fixed a loan so that nobody with 100,000 euros or less will lose anything and those with big money will get 70% per cent of it. When the banks open. And in dribs and drabs. Thank you Auntie Angela. The problem is that the Cyprus economy has been laid waste and confidence in its financial institutions destroyed. The country will have to find another way to earn a living. There is hope of gas.
There is now brewing a much bigger problem with the Euro and if something is not done about it worse will come. It is not to do with what markets think. It is to do with what people think. The people of Southern Europe; of Spain and Portugal and Italy and Greece and the shattered Cyprus. They feel bullied and bludgeoned into penury and hopelessness. They are beginning to say to themselves, to each other and to the world at large what is to them a simple fact. A currency which brings this kind of havoc in its wake is not worth having. When they start to listen to each other they will start to speak with one voice.
That is when the Euro’s troubles will really begin.