Cyprus bailout not catastrophic - Economist

CYPRUS BAILOUT NOT CATASTROPHIC - ECONOMIST Cypriots and investors anxiously wait to find out how the Parliament will vote on the radical savings tax plan that could set a precedent for future Euro Zone bailouts. Commerzbank's Peter Dixon says that even though there's a chance other Euro Zone governments could follow suit, the situation in Cyprus is not catastrophic at this point. SHOWS: LONDON, ENGLAND, UK (REUTERS - ACCESS ALL) (MARCH 18, 2013) 1. COMMERZBANK, GLOBAL FINANCIAL ECONOMIST, SAYING: " (QUESTION: Government default by another name, some are saying. How dangerous a precedent has this set?) I think it's pretty dangerous because for all the wise words to say, well, this is a one-off tax, it won't be repeated, how many times have we heard that? And if I were a saver in, certainly Spain, maybe Italy, I think I'd be looking askance at these measures and thinking well, this could yet happen to me. So I don't think we should take at face value this notion that it's a one-off. I mean it may well be but the rational response would be to treat it as perhaps the thin end of a big wedge. (QUESTION: And we've seen the market reaction so far this morning, we are down 1% on the equities. Introducing this sort of risk at this point in Europe, how catastrophic could it be?) Well I mean I think the general view is that Cyprus is still too small to matter. I mean that's the bottom line here and I think that were this a larger economy, the EU wouldn't have inflicted this kind of pain because that would have been seriously catastrophic. And I think that the Eurozone will ride this one out. I can certainly understand the views of those investors who feel that there are ethical questions surrounding this particular move but it's a bitter pill but I think for the wider Eurozone, probably not the end of the world. (QUESTION: Do you think we'll see a backtracking on renegotiation of the levy today? How likely is a different outcome?) I think there's a very strong chance because as you pointed out, there's no over...