THE CYPRUS CRISIS—THE WORLD’S BIGGEST “POKER GAME”.

THE CYPRUS CRISIS—THE WORLD’S BIGGEST “POKER GAME”. I had been planning to post today on a family reminiscence about butter, but at five this morning I woke up and decided to look in on the Cyprus financial crisis. The Cyprus crisis is really important, although it seemed not to get much attention from the American media yesterday. I posted a lot in 2012 about the Greek financial crisis considered as a chicken game. The simplified model: Greece needed a bailout from the countries in the European Union. The European Union wanted Greece to make reforms as a condition to the bailout. Greece argued that the European Union was bluffing, that a Greek exit (a “Grexit”) might blow up the Euro and the Euro members would never take that risk. Substitute Cyprus for Greece. Cyprus is much smaller than Greece—and the Cyprus banks have enormous deposits that are thought to be from Russian oligarchs.

For the pessimistic (and always entertaining) view of the risks, I turned to Tyler Durden (not the Fight Club Tyler Durden) at Zero Hedge. Here is Durden’s post on a RBS (Royal Bank of Scotland) analysis of what RBS calls the Cyprus “poker game”. To get your attention, the RBS analysts conclude that “the deal to effectively haircut Cypriot deposits is an unprecedented move in the Euro crisis and … is also the most dangerous gambit that EMU leaders have made to date.” They also conclude: “Big picture: This is toxic and a policy error.”

I posted two days ago about the value of the internet. Without the internet, I would have no way of following this crisis at 5:30 in the morning.