Scaling Cyprus up to American Size

Cypriot empoyees of the Laiki Bank cries during a protest outside the Parliament on March 21, 2013 in Nicosia.

Photo by PATRICK BAZ/AFP/Getty Images

Here’s a useful Kevin Drum point about Cyprus:

Just to give you an idea of what all the numbers mean, the EU/IMF plan requires Cyprus to come up with about $7.5 billion as its share of the bailout. That’s roughly a third of their GDP. To put that into local terms, it would be as if the United States were being asked to pony up $5 trillion. This is about equal to all government spending—federal, state, and local—for an entire year.

Very true. That said, recall that the Cypriot banking system has deposits worth 8 times Cyprus’ GDP. That’s as if our banks had $120 trillion. And imagine that the vast majority of that $120 trillion was held by Russians. You can see why outsiders we were begging for money would have “why don’t you take it from the Russians” as their first instinct.