Links: 2013-03-19

Sorry for the number of links today. It is a bit overkill. But there is just a huge amount of information pouring out about Cyprus which is very relevant to anyone interested in the EU, which should be anyone that cares about investing or the global economy.

News links for 19 Mar 2013

Banks ‘capital’ requirements. What’s the beef? « PRIME ECONOMICS

“So when banks squeal about ‘capital requirements’ – they are really squealing about any attempt by regulators to limit their ability to borrow recklessly and with little of their own equity.
Not that regulators are trying to do that.
Like ships that pass in the night, bankers and regulators speak at cross purposes.
For when e.g. Basel regulators drone on about ‘capital requirements’ – they’re invariably talking about ensuring that banks hold a ‘fractional reserve’ of capital against their lending.
Both these conversations are confusing. One, that of the regulators, because of a profound misunderstanding of the nature of private bank credit creation, and a false belief in ‘fractional reserve banking’.  The other conversation – led by the bankers –  is designed to confuse.
One final thought on ‘capital requirements’: before 1988, there were no requirements on private banks to hold ‘capital’, as Bernard Vallageas points out in Basel III and the Strengthening of Capital Requirement.   Yet, despite the fact that the banks did not ‘hold capital’ – there were no financial crises between 1945 and the 1970s.”

Cyprus Deposit Levy: No Panic Yet But Scary Long-Term Consequences – Forbes

“So no panic on the streets today but the Cyprus levy lets a genie out a bottle that seems likely to cause severe problems for Europe’s banks in the future.
A final observation for now: How foolish must Ireland’s citizens be feeling today? After being reassured time and again that all depositors and senior bond creditors of the now-defunct Anglo Irish Bank must be saved in the name of European financial stability, now they find out that Europe’s leaders now believe hair-cutting depositors is fine and fair and doesn’t cause contagion.  The moral grounds for a retrospective compensation deal for Ireland have increased substantially with this new development.”

Apple cash hoard could hit $170 billion this year

“Moody’s Investors Services noted in a report today that Apple’s cash pile could reach $170 billion this year if the company doesn’t change its policies regarding dividends and stock buybacks. “

Elizabeth Warren: Minimum Wage Would Be $22 An Hour If It Had Kept Up With Productivity

“”If we started in 1960 and we said that as productivity goes up, that is as workers are producing more, then the minimum wage is going to go up the same. And if that were the case then the minimum wage today would be about $22 an hour,” she said, speaking to Dr. Arindrajit Dube, a University of Massachusetts Amherst professor who has studied the economic impacts of minimum wage. “So my question is Mr. Dube, with a minimum wage of $7.25 an hour, what happened to the other $14.75? It sure didn’t go to the worker.””

Blackstone German Housing Sale Signals Peak: Real Estate – Bloomberg

“Blackstone Group LP (BX) and Goldman Sachs Group Inc. (GS) are among private-equity investors selling the most German housing assets since they plowed into the market in 2005, a sign that price gains may have peaked.
Investors plan to sell at least 5 billion euros ($6.5 billion) of apartments and shares of property companies this year, according to company statements and people with knowledge of the deals. Private-equity firms divested about 3.8 billion euros of housing in 2007, when there were no share sales, data from broker Jones Lang LaSalle Inc. show.”

Rand Paul endorses immigrant path to citizenship

“Republican Sen. Rand Paul of Kentucky is endorsing a pathway to citizenship for the nation’s 11 million illegal immigrants, a significant move for a favorite of tea party Republicans who are sometimes hostile to such an approach.
In a speech to be delivered Tuesday morning to the U.S. Hispanic Chamber of Commerce, the potential 2016 presidential candidate declares, “If you wish to live and work in America, then we will find a place for you.” A copy of the speech was obtained in advance by The Associated Press.”

ECB role in bailout comes under scrutiny –

“The question facing the ECB after Saturday’s deal had turned sour was whether it should be so closely associated with a politically contentious rescue package. “

Euro Area Ruins Its Progress With Cyprus Deal – Bloomberg

“Raiding deposits seemed the most expedient way to shrink the size of the bailout, but in reality this just ensures that additional money will have to be stumped up for Cyprus, or that Cyprus will have to restructure its debt, or both.
Cyprus’s banks are already a mess. Cypriots reacted to the deposit levy over the weekend by lining up at disabled ATMs in the hopes of withdrawing money. If there is a run, the banks will need far more than the estimated 10 billion euros estimated to be recapitalized. The European Central Bank could plug the gap with emergency liquidity assistance, but bank lending would continue to contract sharply. Private consumption would also fall as unemployment continued to rise and Cypriots worried that they may be subject to future tax increases — on bank deposits among other things.”

A much better alternative for Cyprus | Felix Salmon

“Here’s the short, three-page paper: it’s called Walking Back from Cyprus, and it’s authored by Buchheit and his frequent collaborator, Mitu Gulati of Duke University. Their plan is simple:
First, leave all deposits under €100,000 untouched. Hitting those deposits was by far the biggest mistake of the Cyprus plan as originally envisaged, and everybody would be extremely happy if guaranteed depositors could be kept whole.
Second, term out everybody else by five years, or ten if they prefer.
That’s it! That’s the whole plan”

India Cuts Rates for Second Time This Year to Revive Growth – Bloomberg

“The Dravida Munnetra Kazhagam, the largest ally, said today it would stop support for Prime Minister Manmohan Singh’s administration. The Reserve Bank of India in Mumbai lowered the repurchase rate to 7.5 percent from 7.75 percent, as predicted by 30 of 35 analysts in a Bloomberg News survey.”

La Laguna, la nueva Ciudad Juárez de México – BBC Mundo – Noticias

La Laguna is becoming the new epicentre of the drug cartel war in Mexico. This BBC report gives details

Deauville Zombie Strikes as Cyprus Tax Inflames Crisis – Bloomberg

““We of course would have respected the deposit insurance that guarantees accounts up to 100,000 but those who opposed a bail-in — the Cypriot government, also the European Commission and the ECB — they decided on this solution and now they have to explain it to the Cypriot people,” Schaeuble said.
What he neglected to say, on ARD television March 17, was that Germany favored an even more radical “bail-in” that would have exploded Cyprus’s banking system and propelled the country toward a euro exit, potentially making for a bigger mess than the one that unfolded on the markets.
Schaeuble drew criticism from the Cypriot side for heavy- handed tactics. At one point, a Cypriot official said under cover of anonymity, he demanded a 40 percent depositor tax. A Schaeuble aide contacted by Bloomberg didn’t immediately respond to that observation.”

Russia’s Cyprus problem | beyondbrics

“Now as EU leaders prepare to meet and discuss the bailout this Friday, Moody’s raises two equally important questions: How at risk are Russian banks and companies to problems in the Cypriot banking sector? And how likely are Russian depositors and creditors to get their money back after an EU-managed bailout?
Much of the Russian money that travels to Cyprus ends up coming right back to Russia, with many Cyprus-based companies of Russian origin borrowing from Russian banks and using the funds to reinvest back into Russia.
The problem for these companies would arise if as part of an EU bailout Cyprus introduced restrictions on external payments, potentially causing those Cypriot-based holdings “to enter into technical defaults, increasing risks for lenders”, warns Moody’s in a new report.”

Fitch Places Cypriot Banks’ Ratings on Rating Watch Negative | Reuters

“Fitch Ratings has placed the ratings of Bank of Cyprus (BOC), Cyprus Popular Bank (CPB) and Hellenic Bank (HB) on Rating Watch Negative to reflect downside rating risks arising from the deliberations to impose losses onto the banks’ depositors. Such losses would be part of an agreement the Eurogroup (European Union finance ministers) reached with Cypriot authorities on Saturday March 16, 2013 as a precondition to provide EUR10 billion in financial assistance to Cyprus. Initially, Cyprus agreed to impose ‘levies’ of 9.99% on all deposits over EUR100,000 and of 6.75% on deposits below that level, although subsequent newsflow suggests that these thresholds may be subject to change, with a view to protect smaller deposits. The Negative Watches will be resolved after a decision by the Cypriot parliament on the above extraordinary measures, which could come as early as today. The crystallisation of such significant losses on depositors would constitute a restricted default (RD) under Fitch’s rating definitions, in which case the IDRs would be downgraded to ‘RD’.”

Samsung Confirms It Will Build A Smart Watch As Speculation About Apple’s iWatch Continues | TechCrunch

“Samsung is indeed working on a smart watch, the company’s Executive Vice President of Mobile told Bloomberg in an interview today. “We are preparing products for the future, and the watch is definitely one of them,,” Hee told the publication in no uncertain terms, adding that between itself and Apple, the “issue here is who will first commercialize it so consumers can use it meaningfully.”” | Cyprus: It’s not about the numbers

“Cyprus’s new but already beleaguered President Nicos Anastasiades is proposing that bank customers with deposits under 20,000 euros should not be taxed at all, while keeping the levy the same for the remaining depositors. Cypriot MPs have already shown a reluctance to approve the tax, mindful of the impact on depositors but also the long-term damage it could do to the island’s banking system and economy.
However, what’s happened over the past few days and what’s likely to happen in the days and weeks to come has little to do with numbers. It is much more about perceptions. Even if a financial meltdown is averted in Cyprus this week, the decision to tax depositors there in order to reduce the eurozone and International Monetary Fund contribution to the island’s bailout has sown the seeds for a future eruption.”

In Memoriam – Australia’s inverted yield curve | FT Alphaville

“In fact there was a positive sloping curve last week following the release of stronger than expected economic data.
Now, this is a development that will have left the Reserve Bank of Australia feeling very pleased with itself.”

Argentines catch gold bug as inflation eats away at peso –

“While Goldman Sachs Group called for gold prices to peak last month and billionaire George Soros cut his stake by more than half, Banco de la Ciudad de Buenos Aires, Argentina’s only gold trader, is talking with mining companies to buy the metal directly as surging demand exhausts its supply of scrap.
The bank began marketing gold to individuals after the nation tightened currency controls in October 2011.
Argentines are turning to the precious metal to preserve the value of their savings as economists forecast the peso will lose more value than any currency in the world and President Cristina Fernandez de Kirchner bans most dollar purchases.
The nation’s estimated inflation rate of 26pc is also eroding the value of fixed-income securities, causing Argentina’s peso-denominated bonds to lose 5.5pc this year versus a 2.2pc gain in emerging markets, according Barclays.”

Risk and loss, Cyprus edition | FT Long Short

These thoughts can apply to foreign depositors only. But domestic ones have fewer options. It is true, however, that they were catching a good bid compared to, say, a German savings account.
“It is just wrong that depositors, even large Russian tax-avoiders, are suffering while other senior bank creditors are excluded. It is wrong that Greek depositors in Cypriot banks are excluded, even though it was the Greek assets bought in large part with those deposits which caused a lot of the problems. And it is particularly wrong that small depositors are being hit, making a mockery of the deposit guarantee scheme.
Yet, there is risk in everything, and depositors were being compensated for the riskiness of Cypriot banks through higher interest rates. This chart shows the deposit rates paid on fixed-term deposits of less than a year (much of Cypriot deposits are fixed term, although even overnight deposits pay more interest than the rest of the eurozone).”

Bronte Capital: Verizon-Vodafone: it is time to go hostile

“The Wall Street Journal is again suggesting that Verizon may buy Verizon Wireless from Vodafone. As noted in the previous post this is insane. It incurs a completely unnecessary twenty billion dollar tax bill.
The only deal that makes sense is for Verizon to buy Vodafone in its entirety.
If Vodafone will not sell there is a solution for Verizon: go hostile.”

Brad DeLong : DeLong (and Krugman) Smackdown Watch: Bill Black, Stephanie Kelton, and Randy Wray Are Justifiably Irate Modern Monetary Theory How Do Deficits Matter?: Monday Hoisted from Comments Weblogging

BetterBatteryStats Tells You Exactly Which Apps Are Draining Your Android’s Battery

“If your phone’s battery is draining a little faster than you’d like, BetterBatteryStats will tell you absolutely everything you need to know about what’s killing it.
We’ve shared lots of ways to get better battery life on your phone, and Android’s built-in settings can tell you a lot about which apps are using the battery. BetterBatteryStats, however, is a bit more detailed.”

DER SPIEGEL 25/1997 – Vom Euro gejagt

This is a 1997 account of how the Bundesbank told Kohl, Waigel and Schaeuble not to get into the euro. They did it anyway. It should be remembered that Schauble was at the heart of much of what has transpired in German and European politics over the last twenty years.

Cyprus bailout: how Nicos walked straight into a German sucker punch | World news |

“The atmosphere was not pleasant,” he said. “A few countries like Luxembourg supported us and we got help from Olli Rehn. Other than that no one came to our defence.”

The newsonomics of a news company of the future » Nieman Journalism Lab

“That future is coming into focus. While many publishers’ vision is still quite blurry, it’s the Financial Times that is clearest-eyed about its roadmap and its future. The FT’s clarity first struck me when I sat down for an introductory talk with managing director Rob Grimshaw in London in fall 2009. His office, just off Southwark Bridge, offered a view of the Thames that forced you to think about the long history of newspapering in that city, a business then in a deep, deep recession along with the rest of the global economy.”

Monetary easing alone will not fix Japan –

“The unveiling by Shinzo Abe, Japan’s new prime minister, of “Abenomics” – with its pillars of monetary easing, fiscal stimulus and structural reform – has apparently impressed the markets so much that the yen has fallen against leading currencies and Japanese stocks have moved sharply higher.
Of the three pillars, expectations are high that aggressive monetary easing by the Bank of Japan will pull the economy out of its deflationary spiral.
But the fact that the market has moved so much without a single shot being fired by either the central bank or the government raises the question: how much of this is hype and how much is justified?”

Cyprus Could Default Even With Bailout – MarketBeat – WSJ

“If history is any guide, global investors need to be high alert to the possibility that Cyprus may default on its debt even with a bailout.
A report generated by Tortus Capital,  a New York-based hedge fund, showed that there have been 22 instances of deposit freezes in the past 30 years, and 20 of them resulted in a sovereign debt restructuring.”

Must investors be on Twitter? | Felix Salmon

“More generally, if you’re an investor who wants to avoid being blindsided by something huge you were utterly unaware of, Twitter is a great tool for minimizing that risk. That’s thanks in large part to its short attention span: by its nature it flits randomly from topic to topic, making it a fantastically good serendipity engine, better than any other source at showing you stuff you didn’t know you wanted to know.”

Meredith Whitney: This Is the Most Bullish I’ve Been In My Career – MarketBeat – WSJ

Is this a contrarian indicator though?
“Another one-time bear has turned bullish on U.S. stocks.”

First they came for the deposits… | FT Alphaville

“I’d argue that what it really represents is the inevitable shift away from a debt funded economy to an equity funded one.
That’s not to say the shift has been managed fairly or logically. I’m with Willem Buiter on the point that it would have been better if small island depositors had been spared. But I’m also with him on the point that this is ultimately a step in the right direction.
It all comes down to the need to capitalise failing banks with equity, and to get creditors taking responsibility for their bad investments.
I’m going to write now in general terms, and not about Cyprus specifically.”

Mind the sovereign, too | FT Alphaville

“The government has a €1.415 bn bond falling due this June. That bond is an international bond and so cannot be easily restructured in the same way as Greece’s. If the Cypriot government cannot gain access to sufficient funds then there is a risk of a disorderly default on that bond. But having imposed pain on deposits, we tend to think the Eurozone governments will now be more willing to support the government.
If there is a clear message that should be taken from this latest bailout it is possibly that investors should be wary of relying on a more constructive stance from Germany in the run up to elections in that country. Although it is interesting to note that the Eurogroup of finance ministers released a statement on Portugal and Ireland at the same time as they announced the Cyprus bailout stating their determination: “to support Ireland’s and Portugal’s efforts to regain full market access and successfully exit their well-performing programmes, in the context of continued strong programme implementation and compliance”.”

The Cyprus Solution Is a Dangerous One – Room for Debate –

“Yes, deposit insurance creates a moral hazard for bankers. But this can be mitigated if the bankrupt banks’ resolution scheme is sufficiently painful for the shareholders and the management. If a bank goes bankrupt, its shareholders should be wiped out. And if the government needs to finance a bailout, bank managers should be fired. The next in line to take a hit should be unsecured creditors and uninsured depositors. But if the insured deposits are expropriated, this creates strong incentives for runs on other banks, which certainly goes against all previous efforts of euro policymakers to reinstall trust in the E.U.’s banking system.”

The E.U.’s Mistake: Reacting Only When and as Necessary – Room for Debate –

This is my take on Cyprus.
“The right thing to have done would have been to determine exactly which banks were insolvent and only bail in the uninsured depositors of those institutions by swapping enough deposits for equity capital in each bank to reach a safe capitalization level. But, for whatever reason, the Cypriot government didn’t do this. Instead, it is reaching into the pockets of insured depositors as well. And now everyone is aghast. Why have a deposit guarantee if government can expropriate your deposits? It makes no sense whatsoever. “

The Really Real Economy…: A letter to the Federal Reserve asking about the…

“A letter to the Federal Reserve asking about the wisdom of imposing a tax on bank deposits. And the Fed’s reply. From 1941”

Goldman Sachs Upgrades Economic Forecast – Real Time Economics – WSJ

“Citing “solid” reports on employment, manufacturing and retail sales, Goldman Sachs says the U.S. has shown notable resilience amid higher taxes.
The company nudged up its near-term growth forecasts, seeing 2.9% this quarter and 2% next.
For Goldman, that was enough to shorten their estimated lifespan on the Federal Reserve‘s bond-buying program. It sees the Fed concluding these purchases by the third quarter of 2014, three months ahead of its previous projection.”

Teaching a lesson, lesson learned | FT Alphaville

“Sometimes German doesn’t translate very well. Citi’s FX guru Steven Englander summarises the divergences between the intended and the interpreted as we leave a tumultuous weekend behind, and begin what could be a suspenseful couple of days”

TEXT-Eurogroup statement on Cyprus | Reuters

“The Eurogroup continues to be of the view that small depositors should be treated differently from large depositors and reaffirms the importance of fully guaranteeing deposits below EUR 100.000. The Cypriot authorities will introduce more progressivity in the one-off levy compared to what was agreed on 16 March, provided that it continues yielding the targeted reduction of the financing envelope and, hence, not impact the overall amount of financial assistance up to EUR 10bn.”

Insight: How Europe stumbled into scheme to punish Cyprus savers | Reuters

“From the outset, the Cypriot delegation seems to have misunderstood the determination of Merkel and other leaders to force Cypriot depositors to pay.
Merkel’s Finance Minister Wolfgang Schaeuble had gone to Brussels with a firm mandate from Berlin: “no bail-in, no bailout”, said a member of her government. That meant: unless depositors took a hit, there would be no agreement and Germany would not contribute towards a package for Cyprus.
European officials set on a figure of 5.8 billion euros to come from depositors, and refused to budge. What they had not decided in advance was how much of that should come from big, uninsured depositors, and how much from ordinary savers”

Cyprus scrambles to renegotiate bailout –

“Anton Siluanov, the Russian finance minister, said the decision to impose a levy had forced Moscow to reconsider easing terms of a €2.5bn loan to Cyprus that has kept the government afloat for the last two years. Brussels and Nicosia had been in talks with Moscow to extend the loan’s repayment schedule and lower its interest rate.
“The EU took action to levy a tax on deposits without consulting Russia, and for this reason we will further consider the issue of our participation from the point of view of restructuring the earlier loan,” Mr Siluanov said. Dmitry Medvedev, the Russian prime minister, compared it to Soviet-era confiscation of private property.” | Eurogroup agrees to allow Cyprus to tweak deposit tax as long as agreed target is met

“Cyprus will still have to meet the target of raising 5.8 billion euros, Eurogroup President Jeroen Dijsselbloem indicated in a statement.
“The Eurogroup continues to be of the view that small depositors should be treated differently from large depositors and reaffirms the importance of fully guaranteeing deposits below 100,000 euros,” the joint statement said.”

Cyprus shows German line is hardening –

“Both SPD and Greens declared that Cyprus must abandon its current “business model” of providing a tax haven for wealthy Russian depositors, in particular, before they would approve any rescue.
The idea of a “haircut” for uninsured depositors came from the SPD. It also insisted that corporation tax should be increased from the minimal rate of 10 per cent, and Cyprus should join Germany, France and other eurozone countries in introducing a financial transaction tax.
On Monday, Sigmar Gabriel, SPD chairman, ruled out once again any use of the €500m European Stability Mechanism to recapitalise Cypriot banks directly – the only real alternative to the levy on deposits. It would be “illegal” according to the ESM law approved in the Bundestag, he said. Only once a fully-fledged banking union was in effect, with strict common banking supervision, might any change in the law be contemplated.
It is electioneering, up to a point. Previously, Ms Merkel has won broad popular support by combining a pro-European stance with strict insistence on bailout conditions to protect German taxpayers: solidarity in exchange for solidity. It has left no room for manoeuvre for the SPD.” | Report: Anastasiades tells Rehn: ‘I told you tax wouldn’t pass. Regards to Mrs Merkel’

“Cypriot President Nicos Anastasiades held a telephone conversation with European Economic and Monetary Affairs Commissioner Olli Rehn on Monday night to inform him that there might not be enough parliamentary support for a deposit tax on the island.
Cypriot MPs were due to debate on Tuesday a tax on deposits but it looks like Anastasiades will not be able to get enough votes to approve the one-off levy, which was decided at Eurogroup meeting in the early hours of Saturday.”

Buiter: ‘Get in there, Cyprus!’ | FT Alphaville

“by involving insured deposits and also contrasts with previous protestations about protecting depositors. Investors may see a lack of predictability in some aspects of the approach of EA policymakers to resolve the crisis, which may, at the margin, hurt their appetite for investment, until more clarity emerges.
In our view, more bank debt and sovereign debt restructuring are needed in the EA. To make that process as speedy and orderly as possible, institutional progress is needed. “

The Washington Post to charge frequent users of its Web site – The Washington Post

“This summer, The Washington Post will start charging frequent users of its Web site, asking those who look at more than 20 articles or multimedia features a month to pay a fee, although the company has not yet decided how much it will charge.
The paper said, however, that it would exempt large parts of its audience from having to pay the fees. Its home-delivery subscribers will continue to have free access to all of The Post’s digital products. And students, teachers, school administrators, government employees and military personnel will have unlimited access to The Post while in their schools and workplaces.
Access to The Post’s home page, section front pages and classified ads will not be limited.”

Russia Adopts Texas Drilling to Revive Soviet Oil Fields – Bloomberg

“Fracking isn’t just for shale. In Russia, producers are importing techniques from the U.S. to squeeze billions of dollars of extra oil from Soviet-era fields.
TNK-BP, Russia’s third-largest producer, will use hydraulic fracturing combined with horizontal drilling in almost half the wells it sinks this year, a sixfold increase in just two years, the company said. OAO Rosneft (ROSN), OAO Lukoil (LKOH) and OAO Gazprom Neft have similar plans.”

Cyprus bailout deal: Behind the scenes in bank tax decision | Economy | News | Financial Post

Outcry over Cyprus bailout taxing bank accounts – SPIEGEL ONLINE

“The decision to tax ordinary savings accounts at Cypriot banks as part of a €10 billion EU bailout package has been met with sharp backlash at home and abroad. The measure signifies a new level of escalation and could be too risky, German commentators say on Monday.”

Un juez de Mataró anula el canje de deuda subordinada de Caixa Laietana | Cataluña | EL PAÍS

This could have serious implications for the Spanish bank rescues because a judge in the Barcelona suburb of Mataro has ruled that it was illegal for Bankia to covert a woman’s deposits into preferred and ordered the bank to repay her 33,000 euros. If this ruling stands and gets extended, it will mean a lot of money the state must cough up to make good on the fraud which caused depositors to buy preferreds.

Cyprus bailout set to thwart EFSF funding | Capital City | IFRe

“A spokesperson for the European Stability Mechanism (ESM), the permanent successor to the EFSF, confirmed on Monday that if Cyprus steps out as a guarantor for future EFSF bonds, the fund will no longer be able to tap its outstanding bonds because the guarantor contributions would have changed.”

Daylight robbery in Cyprus will come to haunt EMU – Telegraph Blogs

“One’s first reflex is to gasp at the stupidity of the EU policy elites, but truth is that most EU officials handling the Cyprus crisis know perfectly well that their masters have just set the slow fuse on a powder keg – and they can only pray that it is slow.
The decision to expropriate Cypriot savers – even the poorest – was imposed by Germany, Holland, Finland, Austria, and Slovakia, whose only care at this stage is to assuage bail-out fatigue at home and avoid their own political crises.”

The Cyprus depositor pain-distribution ratio | FT Alphaville

“Changing the ratios would be significantly more progressive, obviously. We’ll find out soon whether such a change will indeed be made, and (just as important) whether it would still get enough votes to pass the Cypriot parliament.
Incidentally, the percentage needed to get the sub-€100,000 deposits to zero is 15.5 per cent, in case you’re curious”

NSA Whistleblower Thomas Drake on the US Secrecy State as Predator of the First Amendment | The Dissenter

““I can make an argument that government increasingly prefers to operate in the shadows and finds the First Amendment a constraint on its activities,” Drake states. “And yet, taking off the veil of government secrecy has more often than not turned truth-tellers and whistleblowers into turncoats and traitors, who are then often criminally burned and blacklisted and broken by the government on the stake of national security.””

Charles Krauthammer’s false statement about the US Constitution | Glenn Greenwald | Comment is free |

“To justify the president’s War on Terror policies, the Washington Post columnist spreads a demonstrable myth”

Lyndon Johnson: White House tapes reveal he knew about Richard Nixon’s ‘treason’ | Mail Online

“President Lyndon Johnson knew of a plan by Richard Nixon to disrupt Vietnam War peace talks through ‘treason,’ but ultimately decided not to speak out about it, White House recordings have revealed.
The tapes, dating back to Johnson’s last months in office between May 1968 and January 1969, show that Johnson was onto Nixon, who at the time was the Republican nominee for president.
According to the tapes, Johnson learned through FBI wiretaps that Nixon had played a role in getting South Vietnam to withdraw from peace talks in Paris that would effectively end the Vietnam War, and was therefore guilty of treason.”

Tomorrow, Cyprus could vote to leave the euro. This is political dynamite – Telegraph Blogs

“What happens next? Well, the Cypriot parliament will vote on the deal tomorrow (conveniently, a bank holiday in Cyprus). This will be a nail-biter. The parties which supported Cypriot president Nicos Anastasiades only hold 28 out of 56 MP, so not a majority. Yesterday, Anastasiades issued a stark warning: accept the bailout deal or face “a complete collapse with a possible exit from the euro”. Given the huge stakes, I reckon that MPs will approve the deal, but it could be close – current voting arithmetic suggests 30 in favour and 26 against, but this is incredibly fluid. Even if the parliament does reject the package, there could still be room for further negotiation.
The bailout format is therefore a gamble on several levels. Most importantly, massive questions still linger over the precedent this sets. If Cypriot depositors are forced to pay today, why not Spanish ones tomorrow? “

Cyprus: The next blunder | vox

“The Cyprus bailout package contains a tax on bank deposits. This column argues that the tax is a deeply dangerous policy that creates a new situation, more perilous than ever. It is a radical change that potentially undermines a perfectly reasonable deposit guarantee and the euro itself. Historians will one day explore the dark political motives behind this move. Meanwhile, we can only hope that the bad equilibrium that has just been created will not be chosen by anguished depositors in Spain and Italy.”

The stupid idea, and the system | FT Alphaville

“just to be clear on this at the outset: if Cyprus were to tax larger uninsured depositors to the hilt to make up the numbers instead — a levy well into double digits, for example — there’d be no complaints here. Burn ‘em to a crisp. The problem isn’t depositor bail-in itself. The problem of Cyprus was that some depositor bail-in had eventually become unavoidable: the chart via Barclays below helps show the scale of this problem. It is the injustice of how it is being meted out. There are also arguably longer-term dangers of meting it out below €100k”

Russia attacks Cyprus bailout plan –

“Mr Putin, at a meeting with economic advisers, was among several Russian leaders to criticise the bailout, which came without consultation with Moscow and could cost Russian depositors up to €2bn, according to Nicosia bankers.
“While assessing the proposed additional levy on bank accounts in Cyprus, Mr Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous,” the president’s spokesman said of the meeting.
Anton Siluanov, Russia’s finance minister, also criticised the move, stressing the EU’s failure to discuss the proposal with Russia in advance.
“The decision on the tax on deposits, in our opinion, is not fair because the problems of the banking supervision and regulation are passed on to investors,””

The Cyprus File – Why it Matters, Even to Americans! | The Big Picture

“The unprecedented write down of bank deposits expected to raise around Euro 5.8 billion is motivated by a number of factors.
Firstly, International Monetary Fund (“IMF”) participation requires the debt level to be sustainable. The write off of depositors reduces debt and also the size of the required bailout package to Cyprus to Euro 10 billion.
Secondly, Cypriot banks have limited amounts of subordinated or senior unsecured debt. This means that a write down of bondholders would only raise between Euro 1 and 2 billion, below the required amount.
Thirdly, the European Central Bank (“ECB”) has major exposures to Cypriot banks via its Emergency Lending Assistance (“ELA”) Program whereby it provides funding to Euro-Zone Central Banks. Based on the accounts of the Cypriot central bank, the ECB may have provided as much as Euro 10 billion, a very high levels relative to the size of the Cypriot economy. As in the case of the 2012 Greek debt restructuring, the ECB and other official lenders are unwilling to take losses on their exposure, requiring the depositors to take a haircut.
Fourthly, restructuring the sovereign debt of Cyprus is risky because many of the bonds are governed by English law. Any attempt to restructure these whilst insulating official creditors from losses would invite litigation. Cypriot domestic-law sovereign debt is held by local banks. So write downs would aggravate their problems, requiring the sovereign to intervene in any case.
Fifthly, Germany, Finland and Holland are increasingly concerned about losses on bailout loans. German Chancellor Angela Merkel does not want concern about actual cash losses to German taxpayers to affect her prospects in September 2013 elections. She also does not want the ECB to take losses which might trigger the need for Germany to inject additional capital.
Sixthly, Germany wants to prevent any bailout fund flowing to Russian depositors”

Moody’s Sees Defaults as PBOC Warns on Local Risks – Bloomberg

“Moody’s Investor Services said China’s local-government financing vehicles face greater risk of default, as regulators warn 20 percent of their loans are risky.”

Sweden Laments ‘Crazy’ Devaluations Amid Krona Strength – Bloomberg

“Sweden took another step to distance itself from policies targeting competitive devaluations as exporters were told a strong krona provides opportunities to make their businesses more efficient.
“It’s good for companies that they need to understand that they have to compete with real tools rather than the imaginary tool that the exchange rate is,” Financial Markets Minister Peter Norman said in a March 15 interview in the Swedish town of Karlstad, where his Moderate Party laid out the foundations for its 2014 election campaign.
While Swedish exporters have warned that continued krona appreciation will force them to cut jobs, the government and central bank have repeatedly rejected talk of boosting trade competitiveness through the exchange rate. And while policy makers from France to Japan argue in favor of weaker currencies, the Swedes have praised their krona’s strength. Central bank governor Stefan Ingves in an interview last month said he was “happy” with the currency’s gains.”

S&P warns of socially explosive situation in euro zone | Reuters

“Standard and Poor’s sees a high risk that Spain, Italy, Portugal and France will not be able to carry through necessary reforms as the unemployed become less willing to put up with austerity, S&P’s Germany head Torsten Hinrichs told a newspaper.”

German Bonds Jump as Cyprus Tax on Deposits Boosts Safety Demand – Bloomberg

“German government bonds advanced, sending two-year note yields below zero for the first time since Jan. 2, after an unprecedented levy on bank deposits in Cyprus threated to reignite Europe’s debt crisis.
Benchmark 10-year bunds climbed for a third day. Cypriot President Nicos Anastasiades appealed to lawmakers in Nicosia to ratify the levy today in order to raise 5.8 billion euros ($7.5 billion). Austrian 10-year yields fell to a record, while Italian and Spanish bonds slid. France and the Netherlands are scheduled to sell bills today.
German two-year note yields fell as much as five basis points, or 0.05 percentage point, to minus 0.003 percent, and were at 0.01 percent as of 7:09 a.m. London time. The 0.25 percent security maturing in March 2015 climbed 0.07, or 70 euro cents per 1,000-face amount, to 100.475. The 10-year bund yield dropped eight basis points to 1.37 percent.”

Plouffe: Clinton ‘strongest’ candidate for 2016 – The Hill’s Video

“Former White House adviser and 2008 Obama campaign manager David Plouffe on Sunday praised Hillary Clinton as the “strongest candidate” for 2016 from either party. “

Radical rescue proposed for Cyprus –

This is from February 10. Karl Whelan pointed it out on Twitter, saying the bail-in was well-known.
“The proposal for a “bail-in” of investors and depositors, and drastic shrinking of the Cypriot banking sector, is one of three options put forward as alternatives to a full-scale bailout. The ministers are trying to agree a rescue plan by March, to follow the presidential elections in Cyprus later this month.
The new plan has not been endorsed by its authors in the European Commission or by individual eurozone members. The memo warns that “the risks associated with this option are significant”, including a renewed danger of contagion in eurozone financial markets, and premature collapse in the Cypriot banking sector.
The radical proposal is intended to produce a more sustainable debt solution for the country, cutting the size of Cyprus’s bailout by two-thirds – from €16.7bn to only €5.5bn – by involving more foreign depositors and bond holders.”

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