Regular readers will note I hastily added a blog entry on Cyprus at the
beginning of January as I'd inadvertently left it out of my analyses
Cyprus has been regularly hailed as a great place to buy a holiday or
retirement home. You can take it from me that it's not. I did warn that
the whole island is in turmoil due to the presence of alleged Russian
mafia money, and that the local banks are not solvent, and that the
government is in a hopeless mess.
Scarcely two weeks after my article we have news that Cyprus has asked
the EU for a bailout, and Germany has put it's foot down and refused to
deal under present circumstances.
The bailout needed (€17 billion) is roughly equivalent to a year's
budget for the Cyprus government. It would take the Cyprus economy into
the same league as the Greek economy, and we all know what that is like.
Once again, Cyprus, like Greece, is a country that should never have
been allowed to join the eurozone. The links with Russian mafia were
well known as the country has been used for money laundering purposes
for some considerable time.
Now Germany is asking Russia to step in and help with the bailout as
Russian dirty money is at the centre of the banking scandal. That
doesn't sound like a story that is going to have a happy ending. I cant
see Russian president Putin agreeing to bankroll the illegal exit of
roubles. And I cant see why German tax payers should subsidise Russian
crooks. It has the makings of yet another awful mess.
The last thing you want is to be stuck with real estate in the wretched
island. Steer well clear. Whatever deal is thrown at you, dont even
look. It would be madness to invest there. Things can only get worse,
The big problem Cyprus has to cope with is that it's prosperity rests
upon two main forms of income: tourist money which includes continuing
sales of apartments; and the financial centre, which is now imploding
just as the housing market has already imploded. That leaves Cyprus
with a crashed economy. Scratch it from the list.