- lose 10% of your money

Allowing the haircut will lead to bank runs which will cause the banks to go bust anyway. There's a high change that it will also cause bank runs in other countries like Spain, Italy and Portugal. Spanish people are already in the streets protesting. "Trust" will be gone. Cyprus is systemic, whether they want to accept that or not.

I also think that there are two clear options: Cyprus gets a bailout under ECB terms or Cyprus doesn't get a bailout and faces insolvency. It seems that the government decided that the first option is preferable to the second one.

The second option would almost certainly lead to civil unrest, because it would probably mean that teachers, doctors and other public employees (also pensioners) wouldn't get payed next month. Of course, the first option might also lead to civil unrest ...

There's a large difference between "would" and "might."

Option 1: Make rational decisions and rely on everybody else being rational

Option 2: Panic and make rash decisions

Relying on everybody else being rational is irrational.

I guess that boils it down to one option :)

Option 3: Make rational decisions and rely on everybody else panicking? :)

Actually there's a third option: wire all your savings immediately to London.

The banks are closed and electronic transactions disabled.

Let me ask you this: would you deposit your rent and bill money into a bank you trust to not give it away 90% of the time?