A very helpful comparison from Kevin Drum:
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.
No country in the world has ready access to that kind of dough, which is why the original plan relied on taxing bank deposits. There just weren't a lot of other options.
Confused by all the talk of Cyprus? Don't be. Here's the situation in three sentences: The country's banks were using Russian deposits to buy Greek bonds. The Greek bonds went bad, and the Cypriot banks lost a bundle. They now need a bailout from their euro zone partners, but it's tough to convince German taxpayers to pony up if they think the money is really going to Russian oligarchs.
Some seemed genuinely shocked about the resurgence of Europe’s debt problems. “Wasn’t Europe Fixed?” asked CNBC. But experts say there’s nothing surprising about the recent turn of events, which has soured bond markets in Spain and Italy and set investors on edge, yet again, about the continent’s future.
U.S. industrial production has continued to rise in recent months, while Europe’s has plummeted, Thomson Reuters points out. This is not only in spite of the euro zone mess, but perhaps in part, because of it, as the U.S. has partly stepped up to meet global demand while Europe continues to flounder.
That said, the U.S. is hardly in the clear yet: while the blood-letting has been stopped for the moment, few are confident that the latest Greece deal will be a lasting solution to the euro debt crisis, and a real meltdown with global aftershocks could still be on the horizon. And even a more gradual decline in Europe could put a damper on the U.S. recovery.
(h/t Pragmatic Capitalism)