Cyprus slips on Greece

It's all about Greece and in the meantime the Greek part of Cyprus is also feeling the pain. Moodys downgraded the Greek Cypriot republic to one notch above junk this week on the exposure of its banks to Greek sovereign debt. Over 70% of Cypriot bank tier 1 capital is exposed to the sovereign, so with a 50% write off a big chunk of capital goes up in smoke. Government will have to step in as we've seen in other peripherals. Looking at the numbers, it's highly improbable that Greece's debt to GDP ratio would fall anywhere near as low as 120% with the 50% write-off as estimated in the big Eurozone deal last week. Greece would have to grow at 2% plus and run large primary budget surpluses for many years, as well as sell of a bunch of state assets. Brazil did it, you say. And maybe Greece could do it but it looks a bit fanciful right now. Cyprus will likely see further downgrades before this is over. Its own debt to GDP is nothing like it's neighbour's but rising fast - looks like it'll clock up 70% next year. The QSL is from the Cyprus Broadcasting Corporation heard on shortwave 49mb in Kent in 2001. We've also had a couple of good holidays in Paphos.