Finance ministers have turned Cypriot problem into a crisis
THERE was an insurance company at one time, which promised in its adverts not to turn a problem into a crisis. A pity they are not running the eurozone.
Its finance ministers have done just that: turned a problem – admittedly a tricky one – into a crisis. It is not yet a full-blown crisis of the kind we have seen several times since the Irish banking crash. Markets are spooked, not panicked. But it is a nasty crisis just the same, and it could get worse.
It is nasty because it is intensely political – and psychological. Cyprus is too small to matter financially. Its banking losses may be proportionately twice those of Ireland's, but its planned bailout was only a quarter as big.