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Cyprus Has Not Yet Seen Bottom: Self-Interest, Collusion and Ignorance

Posted by (Guest Contributor) on October 9th, 2013 - 19 Comments
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Was Adam Smith wrong when he claimed that the actions of self-interested actors lead to the collective good? This has certainly not been the experience in Cyprus. To be fair to Adam Smith, he assumed that the self-interested actions took place in a competitive environment by competent and knowledgeable optimizing actors. The Cyprus experience instead differs in that the environment is non-competitive and collusive and key actors are too often incompetent or not real experts, besides been self-interested or loyal to party interests and personal ambitions.

Self interest

Self-interest motives start at the top of the Cyprus political establishment and run down through the ranks. Take the recent economic crisis leading to the troika intervention, for example. The specific tough memorandum on Cyprus was the result of pursuing self-interested political agendas by both large political parties on both sides of the spectrum. The previous government deliberately exaggerated the financing needs of the banking sector in order to shift the blame away from its own overspending and mismanagement of public finances, leading to the debt burden being judged unsustainable and bringing about the strict and damaging provisions in the final memorandum, with catastrophic effects for businesses, (un)employment and growth. The above is rather obvious and clear to everybody so no further elaboration is needed.

The current government´s contribution to getting a memorandum with unduly tough terms for Cyprus was more subtle but no less pivotal. The government deliberately avoided using in its memorandum negotiations with troika the non-trivial value of undeveloped gas reserves (of the order of 500 Billion Euro) or any future income deriving from it, possibly because another candidate in the presidential elections campaign argued that they are of value. The Energy minister stated subsequently that he was proud to manage to keep the gas reserves prospects out of the negotiation with troika. In this way the current government is equally responsible with the previous one for the funding gap that arose (between the 15 Billion Euro estimated total funding needs and the 10 Billion contribution by European lenders and the IMF). Had they negotiated better loan terms tying the loan interest rate to the growth of the economy and/or given an option on future quantities of natural gas production (a GDP-loan convertible into natural gas), for example, they would have narrowed or closed the funding gap, avoided the tough memorandum terms that strangled the economy and would have created more incentives leading to future growth and economic development, by tying the incentives of the lenders and the country together with its future growth prospects.

It should not go unnoticed that the current President out of self-interest tipped relatives (that manage own funds) and clients of his law firm to move large funds out of the country before the impending haircut. If a manager did this kind of “insider trading” in the US, they would be forced to resign and be prosecuted. The same thing of course would happen to a president for the stupid political decision to keep explosives in a naval base next to the country´s main power station, leading to the death of innocent citizens and the handicapping of the country´s energy supply and economy.

Collusion

The Cyprus economy has been suffering from serious structural inefficiencies: public employees have been getting paid more than they produce, benefits have been excessive, effective monopolies and professional cartels keep up prices and sustain inefficiencies. Politicians, banks, the media and the enforcement system have interlinked and collusive interests. Banks selectively make and forgive loans to public officials, political parties and influential members of the media; politicians give generous subsidies and bail out inefficient and corrupt banks (with taxpayers´ money); and the media and enforcement system routinely cover up or let go any scandals and suspects that occasionally might surface.

Self-interest and collusion appear to be at the core of the main policies of main political parties and many public officials in Cyprus. It is usually covered up by populist rhetoric in the interest of the common or working people. Take the issue of privatization of public entities, like the electricity authority (EAC), the telephone authority (CYTA), the national airways company or the Ports Authority. These are in fact monopolistic vehicles for exploiting the common citizens through excessive charging for common utilities (the EAC charges the highest electricity rates in the entire EU while the Ports Authority charges extortionate fees) causing further increase in the cost of living by passing rip-off charges to the Cypriot consumer. The administration and employee unions of these entities usurp and benefit from the excess profits made on the back of the citizens. After covering for significant waste and operating inefficiencies and generous allowances and benefits to the management and employees of these organizations (driving and lunch allowances, risk-free loans to send their children to university, subsidized holidays etc.), there are still hundreds of Millions of Euro in cumulated excess profits and pension funds that the government can borrow from and political parties can usurp in the form of party contributions to get any normal business done. These semi-governmental organizations (SGO) are a convenient vehicle for political parties and certain public officials to implement their corrupt practices.

No wonder almost all political parties in Cyprus have been against privatization of these SGO entities. They don´t recognize that their favored policies of keeping local monopolies in place in effect lead to exploitation of the poorest strata of society, digging the grave of national competitiveness in the name of protecting future generations? Political parties and public officials actually are in collusion taking cuts from the excess profits made on the back of the working people and sharing bribery profits. The recent scandal regarding the sale of Turkish Cypriot property to the telecom authority´s pension plan reveals extensive involvement by all layers of the establishment, including the secret service, the police, union bosses, boards of directors, political party members etc. Some political parties have been so overconfident with this routine process that they accept checks deposited in their bank accounts (rather than only trace-less cash) and even issued a receipt. Yet the justice system ordered the immediate release of the captured suspects on the grounds that the only evidence found in the last week was just one receipt for accepting money by a political party, beyond the statements of the person who admitted he gave the bribes! How ridiculous this theatre of the absurd can get in this country? What else do you need (to order the detention of accused suspects) besides eyewitnesses admitting they gave the bribes, bank accounts proving so, and even a receipt issued for receiving money?

The 1 million Euro allegedly received by the Chairman of the telecom authority in the above scandal or the 1 million received in an account controlled by an ex Governor of the Central Bank of Cyprus (allegedly a down-payment for providing future consulting services in the next decade… an unheard of excuse) may actually pale compared to other more subtle deals or potential deals.

Last March the Cyprus government agreed to sell the interests of the Greek branches of the two main Cypriot banks to Pireaus Bank of Greece “with the most beneficial terms under the circumstances and with an important benefit for the Cypriot side.” The sale included 300 branches and their portfolio of about €15 Billion of deposits and €20 Billion of loans–exceeding Cyprus’ annual GDP of €18 Billion. The sale followed moves that sunk in €1.8 Billion of Cypriot taxpayers’ money in Laiki Bank last year and over €10 Billion of emergency liquidity funds since then. Piraeus shares closed up 20% on that the day giving more than €50 Million one-day bonus to its shareholders. Over the two days this represented a 37% increase or over a €100 Million bonus from the Cyprus Government (people) to Pireaus Bank. The previous day the shares were at an annual low. The annualized return might make the Guiness records. All this in the name of “saving” the Cyprus economy. As an incentive to “accept” this bonus, Cyprus was even supposed to pay Piraeus Bank €717 Million on top. The €817 Million difference could have been used to help close the €6 Billion gap facing the nation (as a result of the selfish, vote-fishing policies of both main political parties).

Some other situations might appear to belong to the sphere of the unimaginable. A wealthy Cypriot businessman called me from Australia recently and explained that at the end of last year he visited Cyprus officials in an effort to bring more than €20 Billion of foreign pension funds under his influence in exchange for some energy rights in an effort to avoid the tough troika memorandum. He claimed that the leaders of the two main political parties asked for 5% commission. The deal did not go through and the tough memorandum terms are an everyday reality. If true, that commission would dwarf any previous deals. I am not in a position to ascertain the validity of the above claims.

Ignorance

The above is not meant to defend the investigative committee on the economy. Its main conclusion that the ex President bears much of the responsibility for our current economic mess is correct, but self evident. But what were the other contributing forces and actors? Who has taken advantage of the public trust and exploited situations? Who should be further investigated or prosecuted? What is the responsibility of the current president for funds leaving the country before the haircut, for example? It seemed from the very start the committee was set up with senior lawyers with no knowledge of economics more to cover than uncover the true underlying causes and culprits of our ailing economic system. And the appointment of advisors to the committee who are either themselves ignorant of the workings of economic forces and interactions or are part of the corrupt system itself (as an ex Governor of the Central Bank quietly attending the committee hearings who is accused of opening the doors for branding our nation as one of money laundering) did not help.

Despite the appointment of wise men, advisors and national economic councils by this government, we have not yet seen a single economic proposal that makes genuine economic sense. A proposal to train locals for the hotel industry and pass the bill to the taxpayers is subsidizing the hotel owners, not benefiting the people. Reluctance to go after big non-performing loans continues to subsidize the big developers at the expense of the taxpayer. Plans to develop casinos and golf courses to supposedly boost the tourist product are masking more serious structural problems of our non-competitive tourism sector that we fail to face. Proposals like expediting the formation of companies and conducting of business are not going very far when the political parties (regardless of who is in power) are extracting commissions for business to get done.

Natural gas discoveries might have been a prospect for development, but in this environment our wise political leaders will assure through unwise development decisions and wealth appropriations through commissions all around that not much is left for the broader public and future generations. Our political leaders have little understanding of how to make contingent decisions under uncertainty and that future economic (or political) decisions should be staged based on future scenarios. Already, even though the quantity recently discovered at Aphrodite was below expectations and below the critical viable quantity needed to justify building a big liquefaction plant on the ground at Vassiliko, later on the same day the Minister of Energy announced that the government is going ahead with its plans to build the LNG plant. Just put the whole thing on autopilot, regardless of basic economics or regional developments. These public officials make strategic economic decisions based on political considerations. Our wise politicians in the National Council can solve all problems. They can´t even think right what is best for us on the national political problem (which might be the exact opposite of what they think and repeat as mantra for four decades), but they still want to make economic and energy decisions as well.

The previous government thought that they know it all and took no advice from anyone. The current government appoints experts and advisors as ignorant as themselves. The established political forces are in fact in collusion, simply playing musical chairs, alternating who is going to sit in a chair of power, to take a bigger cut. But they diversify, such that regardless of who is in the government they all take their quota of appointing employees in the government sector, boards of directors in the Bank of Cyprus or semi-governmental organizations, semi-governmental organization related deals, forgiven bank loan money etc. And the smaller political parties in the middle habitually flex their principles (if any) to be power brokers so as to ensure their cut in this musical chairs expropriation game. What is equally amazing is that the Cypriot public takes all this passively, hands down, and keeps voting for the same (or similar) individuals. One wonders, after all, perhaps they deserve what they get?

It seems that self interest, entrenched collusive forces all around, ignorance and incompetence at all levels guarantee that we have not yet seen the bottom in Cyprus.

 Lenos Trigeorgis holds a PhD (DBA) from Harvard University and is the Bank of Cyprus Chair Professor of Finance at the University of Cyprus and President of the Real Options Group. He has been a Visiting Professor of Finance at the London Business School. He is the author of Real Options (MIT Press, 1996), Strategic Investment (Princeton University Press, 2004) and Competitive Strategy (MIT Press, 2011).

Categories → Οικονομία

19 Comments
  1. avatar
    ... on October 9, 2013 - (permalink)

    An excellent analysis of what is going wrong in Cyprus. The question for you prof is the following:

    If you are right that in Cypriot society egotistical behavior, collusion and ignorance shape policy, then how can an international aid program deal with this?

    How can international creditors break up the corruption trap Cyprus finds itself in?

  2. avatar
    Anonymous on October 9, 2013 - (permalink)

    WELL DONE.

    This article has been one of the best I have read in the past six months.

    Its time for the people to face reality. Mr TRIGEORGIS is blunt and to the point.

  3. avatar
    Sancho Panza on October 9, 2013 - (permalink)

    Excellent article.
    The problems on this island can be summed up in two large categories
    1. Lack of foresight
    2. Lack of punishment.

    In the first instance we are governed by small groups who feel that they are protecting their interests where they are in fact destroying themselves. Employee unions fought the battle of their lives for the COLA adjustment avoiding the signing of the memorandum last August, the result is that a large number of thoese’ protected’ will lose their job and the rest will take a serious pay reduction. The bank employees destroyed any chance of a national health plan and maintained the costs of the banks at unrealistic levels and the rest now have to pay their mismanaged pensions

    In the second instance we have no punishment whatsoever. It is tragic that the first example of going after a crooked politician in Cyprus had to come from Greece (and we like to joke about how corrupt they are). Any serious fines from the competition committee were expunged soon after, for the plane crash we say that the victims were to blame and the Greeks actually found blame outside the plane!

    These two issues are self supporting. If you have no immediately visible repercussion there is no real reason to think about anything before acting. The fact that these decision-makers are short sighted makes them blind to the true repercussions of their actions and the vicious circle continues….

    As for the inexplicable inaction of voters and their continued support for persons they know are no good, this is a result of the voting system. No one can get elected unless they go through a party and they cannot get on the ballot-sheet unless ‘they play the game’. No vote is as good as voting so we are in another dead-end.

    Unfortunately I feel that the only way out is to use the legal armoury of the EU to go after persons and organisations that are abusing their power. I dont really know if this is possible, I just feel that it cannot be done from within.

  4. avatar
    Bohr on October 9, 2013 - (permalink)

    This article will win you no friends in the political , Professor, but thank you for writing it. It is quite wide-ranging and does a good job of highlighting many of the flaws in our political system.

    I have two comments:

    You mention that: “The government deliberately avoided using in its memorandum negotiations with troika the non-trivial value of undeveloped gas reserves (of the order of 500 Billion Euro) or any future income deriving from it, primarily because another candidate in the presidential elections campaign argued that they are of value.”

    I’m not sure I follow your train of thought here: Do you mean that the government would’ve been seen as using promoting the other candidate’s idea during these negotiations if they had tried to incorporate some agreement regarding future income from gas reserves? And that they thus knowingly refused to discussed the issue, even though it would lead to bad terms in the memorandum?

    That’s quite a claim. And it’s not as if the other candidate you’re referring to was going to be relevant after the elections.

    In addition, regarding your “businessman from Australia” claim, we have heard this type of comment many, many times in the last year, please DO try to validate such a claim before including it in your article next time.

    Otherwise, I pretty much agree about both the incompetence and self-interest of the parties across the political spectrum, and do not see light at the end of the tunnel just yet.

  5. avatar
    Anonymous on October 9, 2013 - (permalink)

    Δάσκαλε,
    Σας λέω έσι γιατί ήμουν φοιτητής σας πριν από μερικά χρόνια. Γράψε το στα ελληνικά το άρθρο και πήγαινε και τρίψε το τους στα μούτρα μπας και καταλάβουν τι κάνουν ή τι πρέπει επιτέλους να κάνουν έστω και μια φορά σωστά.

  6. avatar
    Παντελής Παντελή on October 9, 2013 - (permalink)

    Finally, someone has been allowed to give a clearer picture, of the mess we have created.
    Pointing fingers on who is to be blamed, while continuing with the same tactics and corrupt mentality, would not fix the situation.
    Radical change, is necessary, in the ways we govern, work and contact business.

  7. avatar
    Michael M on October 9, 2013 - (permalink)

    Mr. Lenos,

    Perfectly stated. Thank God Troika is here otherwise no changes would be taking place.

  8. avatar
    Ανδρέας Μακρής on October 9, 2013 - (permalink)

    Κ. Τριγεώργη, δεν διαφωνώ με τα γενικά συμπεράσματα του άρθρου σας, όμως επιτρέψτε μου να πω πως η προσέγγιση σας είναι υπερβολικά απλουστευμένη και ισοπεδωτική.

    Αρχίζω με την εξίσωση ευθυνών της προηγούμενης κυβέρνησης με την υφιστάμενη, την οποία θεωρώ τουλάχιστο άστοχη. Δεν θα προχωρήσω σε περαιτέρω σχολιασμό. Ο καθένας έχει κρίση.

    Συνεχίζω με το θέμα της διασύνδεσης του φυσικού αερίου (ΦΑ) με το μνημόνιο. Δεν γνωρίζω που ανακαλύψατε πως η αξία των αποθεμάτων ΦΑ είναι της τάξεως των 500 δισεκατομμυρίων ευρώ. Αν μπορείτε παρακαλώ όπως παραθέσετε τα στοιχεία σας. Προσωπικά, χωρίς να είμαι εμπειρογνώμονας σε θέματα ΦΑ, αντιλαμβάνομαι ότι ο βαθμός αβεβαιότητας στο συγκεκριμένο τομέα είναι υπερβολικά υψηλός, με αποτέλεσμα η εισήγηση σας για προσφορά options να είναι αμφισβητήσιμη. Αν υπάρχουν παραδείγματα ανά το παγκόσμιο όπου, πριν την οποιαδήποτε επιβεβαιωτική γεώτρηση, να έχει γίνει προπώληση ΦΑ, σε τιμές κοντά στην πραγματική αξία πώλησης, παρακαλώ όπως τα παραθέσετε. Τέλος σχετικά με το συγκεκριμένο θέμα, βρίσκω τουλάχιστο απλοϊκή την προσέγγιση ότι η κυβέρνηση δεν προχώρησε στην προπώληση ΦΑ μόνο και μόνο για τον λόγο ότι ήταν στο προεκλογικό πρόγραμμα ενός άλλου υποψηφίου. Για πόσα θέματα δεσμεύτηκε ο νυν ΠτΔ προεκλογικά και αμέσως μετά τις εκλογές έπραξε τα ακριβώς αντίθετα;

    Για το θέμα των εκροών καταθέσεων, θα πω ότι είπα και πιο πάνω. Ο καθένας έχει κρίση και μπορεί να κρίνει, χωρίς αυτό να σημαίνει ότι υπερασπίζομαι τον ΠτΔ.

    Για τα θέματα των ημικρατικών οργανισμών και την εμπλοκή των κομμάτων στη λειτουργία τους θα συμφωνήσω απόλυτα. Πολύ ορθά αναφέρετε ότι στους συγκεκριμένους οργανισμούς δίνονται υψηλοί μισθοί και επιδόματα σε υπαλλήλους που προσφέρουν λιγότερα απ’ όσα αμείβονται. Δεν βλέπω όμως οποιαδήποτε αναφορά σας στα Κυπριακά Κρατικά Πανεπιστήμια και στους παχυλούς μισθούς, τα επιδόματα, τις λιμουζίνες και τους οδηγούς των καθηγητών και των πρυτάνεων.

    Συνεχίζετε με το σκάνδαλο του ταμείου συντάξεων των υπαλλήλων της cyta, αναφέροντας ότι αφέθηκαν ελεύθεροι οι βασικοί κατηγορούμενοι. Φαίνεται ότι δεν γνωρίζετε καλά την Κυπριακή νομοθεσία. Στην Κύπρο δεν υπάρχει η έννοια της προφυλάκισης κ. Τριγεώργη. Στην Κύπρο κάποιος συλλαμβάνεται και τίθεται υπό κράτηση μόνο σε περίπτωση που αν κυκλοφορεί ελεύθερος μπορεί να επηρεάσει την πορεία των ερευνών. Γι αυτό και ακούμε για οχταήμερες κρατήσεις. Η κράτηση μπορεί να ανανεωθεί μόνο αν υφίστανται ειδικές συνθήκες. Με τον τερματισμό της κράτησης δεν σημαίνει ότι η υπόθεση έχει λήξει. Οι συγκεκριμένη κατηγορούμενοι θα οδηγηθούν ενώπιον δικαστηρίου όπου αν κριθούν ένοχοι θα φυλακιστούν.

    Τέλος όσο αφορά την αναφορά σας στον Υπουργό Ενέργειας, ό οποίος όπως μόνο εσείς καταλάβατε δήλωσε ότι η Κυβέρνηση προχωρά με την υλοποίηση τερματικού, παρόλο που βάσει των ανευρεθέντων ποσοτήτων αυτή η επιλογή δεν είναι βιώσιμη, βάζοντας, όπως λέτε, τον προγραμματισμό στον αυτόματο πιλότο, αγνοώντας βασικές οικονομικές θεωρίες, ουδέν αναληθέστερον τούτου. Ο Υπουργός Ενέργειας, κ. Λακκοτρύπης, στις 6-Οκτωβρίου ανέφερε σε δηλώσεις του ότι η Κυβέρνηση προχωρά με προσεκτικούς χειρισμούς στο σχεδιασμό της απαραίτητης υποδομής για την αξιοποίηση των γηγενών αποθεμάτων φυσικού αερίου, συμπεριλαμβανομένου του τερματικού υγροποίησης για σκοπούς εξαγωγών.

    Δεν γνωρίζω κ. Τριγεώργη αν υποστηρίζετε οποιαδήποτε πολιτική γραμμή και προσπαθείτε με τα άρθρα σας να δημιουργήσετε κάποιες εντυπώσεις. Θεωρώ όμως πως πρέπει να είσαστε λίγο πιο προσεκτικός με αυτά που γράφετε διότι με τις πολλές ανακρίβειες το μόνο που επιτυγχάνετε είναι να κάνετε ζημιά στην εικόνα σας ως ενός σοβαρού ακαδημαϊκού.

    • avatar
      Anonymous on October 10, 2013 - (permalink)

      profanos diafonis me to oti exi na kami me tin simerini kivernisi fiati ise ke opados tis

      Auto mas katastrepse. Ta dika mas dika mas ta dika sas pale dika mas.

  9. avatar
    Serious Question on October 9, 2013 - (permalink)

    This article touches on some very important issues.
    In my mind the big question for the future is this:
    “What should the role of the Government be, and how should decisions be made?”

  10. avatar
    ARGYRIA on October 9, 2013 - (permalink)

    True, Blunt and to the point. However, I would like to hear a proposed strategy on how to motivate people to act in their self-interest and not in the interest of their political parties.

    What do you propose professor?
    Create a forum where adversely affected citizens can voice their grievances and push for radical change. Maybe this way this present administration will start paying more attention. We need a critical mass to bring about a change.

    So, we agree with you, but it is not enough! Make real suggestions for real solutions to a real economic reforms and ways to have the establishment execute them!

  11. avatar
    A.Yiangou on October 9, 2013 - (permalink)

    Ο κύριοσ Τριγέώργης μασ παρέθεσε τα κατά την κρίση του κακώς έχοντα της Κυπριακής οικονομίας, γεγονότα γνωστά σε όλους. Ολα όσα αναφέρει τα είδαμε στον τύπο, τα ακούσαμε στα ραδιοφωνα και τισ τηλεοράσεις. Στό κύριο σημείο της εξόδου από την δύσκολη θέση που βρισκόμαστε αναφέρθηκε στον Ελληνοαυστραλό που θα έφερνε 20δισ δολλάρια και την πρωπόληση του αερίου του οποίου η αξία είναι κατά τους υπολογισμούς του 500δισ.!!! Ξέχασε και τον Ελληνοαμερικανό που θα χάριζε σε Κύπρο και Ελλάδα 600δισ για να έχουμε να πετάσσουμε και λίγα. Παρέλειψε τον Νίκο Λυγερό τον πιό έξυπνο Ελληνα και ίσως τον πιό έξυπνο του κόσμου (όπως ισχυρίζεται) που θα μας έλυνε και το κυπριακό με μαζικές προσφυγές στο ΕΔΑΔ εναντίον της Τουρκίας.
    Αδέλφια εξ Ελλάδος αφήστε μας ήσυχους και προφανώς μπορούμε να χειριστούμε τα προβλήματα μας καλύτερα από σας.

  12. avatar
    KKyriacou on October 10, 2013 - (permalink)

    Good job Mr Trigeorgi! You forgot to mention the president of Synergatiki who approved a huge loan for himself, but not to worry he said, he “will pay it back”. Or the Attorney General who forgave his son for drunk driving, and then he went on TV to argue that it was OK to do so. (I, too, heard of similar situations from reliable sources of politicians bluntly asking for a cut, as a precondition to getting large deals done for the country.) Off course, the pinnacle of our recent history of decadence is when The President of the Republic appointed a committee to investigate Mari, and then refused to accept its findings because it found him accountable. Even worse was that even after that, and despite the harsh economic conditions that followed, AKEL’s standing as a party hardly changed. And there lays the root of our problem as a society; the inability, ignorance or maybe laziness, of a large no of individuals to think for themselves. The tolerance of the society for incompetence, lack of accountability, favoritism and nepotism (It is no accident that the richest people in Cyprus are the ones closest to the government.) Part of this problem may just be the “smallness of Cyprus” or just good old Cypriot forgiving loyalty; blind loyalty to friends, soccer teams, political parties. But that just explains it, it does not excuse it.
    Mr. T may have simplified certain facts and exaggerated others in order to make his point, but if there’s still anyone that disagrees with his main thesis then there’s little hope for a better future. Granted some people are more to blame than others, especially the previous government, but what happened has been brewing for decades.

    I read this blog often, and I see how upset people are. Everyone is looking for a “silver bullet” that that will solve all problems. But the weakness of our system is not only with our leaders. The weakness is also with our social fiber. Cyprus will need some sort of a cultural revolution in order to overcome its shortcomings. Let’s hope that all this anger is the beginning of one. Either way … it will take time.

  13. avatar
    αθηνα on October 10, 2013 - (permalink)

    Εμένα πάλι,γιατί αυτή η προσέγγιση της προπώλησης ΦΑ, μου θυμίζει το ψαρά που προσπαθούσε να πουλήσει τη ψαριά που δεν είχε ακόμα αλιεύσει; ”Ψάρι στο γιαλό”,που λέμε.

  14. avatar
    Stelios on October 10, 2013 - (permalink)

    Θεωρούσα σοβαρό το άρθρο του καθηγητή μέχρι που διάβασα το σημείο για την προμήθεια 5% στους αρχηγούς των δύο μεγάλων κομμάτων. Δεν λέω ότι δεν λαδώνονται οι κομματάρχες μας αλλά ήταν σύμπτωση να ζητήσουν 5% και οι δύο; Ένα ποσοστό που μεταφράζεται σε 1 δις? Αν έγραφε μερικά (η δεκάδες) εκατομμύρια θα γινόταν πιο πιστευτός. Αν έχει στοιχεία γιατί δεν πήγε να καταγγείλει την υπόθεση;
    Συμφωνώ σε πολλά σημεία με τις διαπιστώσεις του καθηγητή αλλα δεν έχω εμπιστοσύνη σε θεωρητικούς που κάθονται σε μια ακριβοπληρωμένη καρέκλα καθηγητή, σχολιάζουν και επικρίνουν εκ του ασφαλούς.

    Υ.Γ. Το ότι η μετοχή της τράπεζας Πειραιώς έκαμε άλμα αποδεικνύει κάτι; Να υπενθυμίσω στον κύριο καθηγητή ότι μετοχές κάμνουν άλματα (σε Κύπρο και Ελλάδα) ακόμα και με την ανακοίνωση σπλιτ; Λέγοντας αυτά δεν ισχυρίζομαι ότι η πράξη ήταν συμφέρουσα για την Κύπρο

  15. avatar
    ashamed on October 10, 2013 - (permalink)

    Dear Leno thanks for your effort to write this article. Thanks also to the rest for their comments.

    As a general comment, the fact that someone disagrees with the prior government does not automatically mean that he/she agrees with the current government.

    It is only when technocrats and the smartest that would govern that we may hope for a change in mentality. Sad to see that politicians are neither of the two.

  16. avatar
    Anonymous on October 10, 2013 - (permalink)

    Although politics has played a big role in the current crisis, the article is far too simplistic.

    Take, for example, the claim that the previous government exaggerated the financing needs of the banking sector. How did they do that? The capital needs were estimated by PIMCO, one of the worlds leading financial sector companies, that was appointed by a steering committee in which the troika, the EBA and the ESM had a majority. The conspiracy theory in which PIMCO exaggerated the capital needs to satisfy the ex government is to say the least ludicrous, to say the least and only serves the interests of the failed bankers. It is a shame to see. A serious academic falling into this trap.
    The banking sector problems were very real and the failure of the ex- government was to work with the previous CBC governor to mitigate the very large banking risks that were evident to all the rating agencies from 2009.

    • avatar
      Ashamed on October 11, 2013 - (permalink)

      PIMCO used the macro economic forecasts provided by ~the central bank. As we all hear these forecasts reflected the desire of Mr genious ex president to shift the blame to the banks. Unfortunately is a self fulfilling prophecy and we cannot prove it; if the CPB things of the worse, the worse will very likely take place.

      Please go back and check what PIMCO said when it was asked about the forecasts. If i am not mistake they said we were provided these from the central bank. As such Mr Anonymous PIMCO did not come up with its own projections about the cyprus economy. We simply told them use % and % and % and they put these variables in their models.

      It might be that Dimitriadis is playing the independence card time after time, however, the Central Bank, as we all know, is not at all times independent of politics.

      Dimitriadis is simply a good academic but is he ready for such a role? I do not know, and the same applies to all the governors we had.

  17. avatar
    Michalis on October 11, 2013 - (permalink)

    The comments/analyses by the Dr Trigeorgis are in my opinion is a very

    good description of the financial/political/apathy state of the Cyprus problems.

    The politicians feed the bankers the bankers (with peoples` money) feed

    who ever is in power this being politicians or high ranking officers

    placed in their chairs by politicians .The political system in Cyprus

    must change or there will be no progress in any aspect.

    The 22 million dollar question is HOW do you change it?

    What really annoys me is the APATHY of the everyday person

    We lost 38% of country ,we lost a lot of monies in the scandal of

    stock exchange, we have invited Troica to take steal our savings

    one scandal follows the other and apathy fully prevails.

    The Pikis commission with its conclusion achieved what ?

    In my opinion not much.I really expected more and the experts attached

    to the Pikis commission should react.

    In Iceland the commission with their experts worked quietly for seven

    months and politicians and bankers ended up in jail and paid to the state everything they owned.

    The people have REACTED and thus the results.

    We need to REACT and very quickly because the worst are still to come

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