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The 3 Critical Errors That Lead Cyprus to a Recession

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By Edited Nov 13, 2013 0 0

As most of you are aware, recently there has been a debate on how Cyprus is going to cover its' debts by the Cypriot committee because troika's suggested method of haircut was rejected. Basically troika's plan was to take nearly 7% of all bank deposits less than €100,000 and nearly 10% of those who deposited more than 100,000. There are some problems with that. First of all it is like a legal theft and second, it’s like turning our backs to all the depositors overnight. Especially the Russian people who deposited about 15 billion euro total in Cypriot banks. The Russians are a strong cause for the development of the Cypriot economy. Cypriots cannot just turn their backs on them like that. However, the biggest problem which is the root cause for the recession in Cyprus is political corruption and greedy bankers. There are several consequences which I have observed as I was growing up in this island.

 Pride & Consumer Culture

 The citizens of the Roman Empire were once proud of all their material possessions and fame. They had a great sense of grandiosity and they paid for it dearly in the end. This is what happened to the Cypriot citizens also. In the past, during the Turkish invasion and other previous wars, the local people were proud of the fact that they survived and helped each other even though the economy has hit rock bottom. However, after all those years of gaining more and more wealth, people started being proud of their material possessions; who’s got the best mobile phone, lap top and cars etc. Material possessions were suddenly marked as status symbols and replaced the importance of adaptiveness by hard and clever work in harsh situations. People are now grounded in reality and they simply don’t care about unnecessary luxury products. The banks do not approve loans that people cannot repay so there is no way in hell that people can buy things they don’t need to have.

 Division of People

 About 2 months ago all I saw, heard and breathed was discussions about politics because of the presidential elections. The most common argument of course, was who has done the worst decisions or came up with the worst ideas. In short, it was all hate wars and what people were voting wasn’t ideas but personalities. Who appears to be the best.  When people keep arguing all day about those things they will inevitably divide and fight between themselves instead of uniting to solve all the problems that this country is facing. Moreover politicians are arguing between themselves over unimportant matters instead of new ideas and plans to implement them so that the country can get out of its mess.

 Too Many People Working for the Government Sector

 This is a fact and it’s most probably something that infuriates a lot of people who don’t work for the government. Everybody knows that government employees don’t work a lot of hours and get paid too much for their little work. To make matters worse, the government was employing more of people than the necessary amount and used loaned money to cover the huge costs of those employees. That means more expensive electricity bills coming from nationalized electricity companies because they have more employees working for them and a big minus on government budget.

A possible reason could be the fact that politicians promise to reduce unemployment not through methods of encouraging private businesses to expand but promising people that they will be employed by the government sector just so they can get some extra votes in the presidential elections.


Some of those reasons apply for America as well during the great depression. All they did was buy buy buy and then buy some more needless goods. Obviously the 21st century Americans haven’t learnt their lesson since every American now owns a very expensive smart phone, tablet and many other useless goods. In conclusion, just like the circle of life exists there is the circle of economy which booms and then falls apart again. Unfortunately Cypriots, Americans or any other nation in the world will never learn from their ancestor’s history. 



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