Links: 2013-03-24

Just a reminder, even though I am posting here, I will be in Germany for the Easter holidays over the next two weeks and will not post to the site on a regular basis.

News links for 24 Mar 2013

Shocking treatment of Cyprus has exposed eurozone’s inherent flaws –

“The essential design flaw in the eurozone is that it is not really a monetary union; it is just a common currency area, lacking the essential feature that ensures financial integration, namely a banking union. The latest piece of mismanagement over Cyprus makes the attainment of a banking union, on which progress has been negligible, even more difficult.
The Eurogroup decision on Cyprus, taken (yet again) at 3am on a Saturday morning, has rendered meaningless the repeated assertions that deposits in eurozone banks are guaranteed up to €100,000. The ‘guarantee’ has never been a joint eurozone undertaking, since it is the responsibility of each individual government, several of which are bust and would be unable to meet large claims. Unlike the deposit guarantee system in the United States, the eurozone countries collectively do not have an actual deposit guarantee fund in place, and the volume of deposits in many eurozone countries, not just those already in financial distress, is large relative to the fiscal capacity of the state. Bank runs by retail depositors are a serious risk, particularly in those countries whose governments lack financial credibility.”

El 89% de los españoles está preocupado por el corralito de Chipre – laSexta

89% of Spaniards are worried about the crisis in Cyprus according to polls. Only one third of Spaniards feel safe about their money in banks. 62% see a danger to their savings.

Central African Republic rebels in capital, France sends troops | Reuters

“Central African Republic rebels clashed with government forces inside the capital on Saturday as they sought to topple President Francois Bozize, prompting France to send in more troops to secure the international airport.”

Kremlin ‘could punish Europe’ in reprisal for Cyprus bailout’s bank levy | World news | The Observer

“Fears mount that Russia could act against European companies if charge on deposits hits €30bn Russian investments”

A favor de la tasa por encima de 100.000 | Internacional | EL PAÍS

Spaniards were polled on whether they would accept a tax on uninsured deposits over 100,000 euros. 51% said yes while 43% said no. | Schaeuble: Nicosia did not want bank shareholders to shoulder lenders’ losses

“Nicosia is reportedly upset by the latest statement of German Finance Minister Wolfgang Schaeuble, who told Welt Am Sonntag that Germany wanted to shareholders of Cypriot banks to shoulder their lenders’ losses, but the Cypriot government refused to accept that.
In his interview with the German Sunday newspaper, Schaeuble left open the possibility of failure in the negotiations between Cyprus and the eurozone and stressed that rules will have to be obeyed.”

Cyprus dreams left in tatters – Telegraph

“After a week of financial turmoil, Colin Freeman in Limassol finds that Cypriots want out of the euro, and British expats want out of Cyprus”

Ukip urges Brits to withdraw their money from Spanish banks – Telegraph

“Nigel Farage has urged British expatriates in Spain to pull their money out of the country’s banks.”

Wealthy Germany – and even more wealthy Italy and Spain | Nordea Markets Research

“Private households in Spain and Italy are much more wealthy than German households. This is one of the results of a study that the Bundesbank published yesterday. Interesting finding and interesting timing given all the discussions about who should and who can bear the burden of adjustment in Europe.”

Cyprus in American terms: Huge debts, huger bank accounts.

“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”

Yahoo Hits a 52-Week High – Liz Gannes – News – AllThingsD

“Shares of Yahoo closed on Friday at $23.26 — the highest mark the stock has reached in the past year.
That’s a gain of 55 percent since CEO Marissa Mayer took over in July.”

Cyprus: an island pawn in a game of geopolitical chess – Telegraph

“This cocktail of politics, geopolitics and potential contagion means the eventual outcome of the crisis in Cyprus will resonate far beyond its borders. But the root cause is far simpler – and is one that will continue to haunt the eurozone even if the Cypriot crisis is solved: political hubris.”

BBC News – Farage looks to Canada for inspiration

“Key fact: Stephen Harper, the Conservative prime minister of Canada, was first elected to the Canadian parliament in 1993. As a young MP for the Reform party.” | Golden Dawn stage ‘solidarity rally’ for Cypriots

“A group of around 500 members and supporters of the ultra-rightwing Golden Dawn staged a rally outside the German Embassy in Athens on Saturday in what organizers described as an expression of solidarity with the people of Cyprus where government and troika officials are trying to hammer out an economic rescue package for Nicosia.”

Factbox: The Cyprus banks that have transfixed the world | Reuters

“All eyes in global banking have been fixated on Cyprus’s two largest banks for the last week, as their near collapse, and the dramatic steps taken to avoid it, threaten the cornerstones of banking and the EU’s single currency. Here are profiles of both banks.”

Perverse incentives drive the money tribe –

“Three years ago, this column wrongly advised speculators that betting against eurozone policy was a dangerous game; profitable in the short term, perhaps, but not a business for the long term. Bad call on my part. These days, one of the remaining healthy European industries is debt speculation. You get a dream combination of price volatility (everyone acts as if the current crisis could be the last one), liquidity (there’s an awful lot of paper out there), and transferability (Frankfurt and Brussels don’t want to give up reserve currency status just yet).
Also, the speculators’ targets, that is, the large banks and institutions, just stand there and wait to be shot at, like wild game on some uninhabited island. Unlike, say, Argentina, much of the data are real, and, unlike emerging markets in the old days, if you get sick while on the road, you can get good medical care. In commodities speculation, you will get crushed by insiders’ unexpected moves, usually within a few months, but that doesn’t seem to happen much in European debt.”

‘Banco de Mattress’ looms for Cypriots –

“For the rest of Europe, and the investment world, the lesson is that next time the smart move is to be one of the first to take your money out, rather than wait. Deposits are stickier things in troubled countries than even professionals or the more sophisticated observers expect.
But through their bumbling and stumbling, the European authorities have shown that you better think ahead and prepare, since it’s clear that they don’t.”

No: 83, 23 March 2013, Statement Regarding the Claims of the GCASC on Hydrocarbon Resources in the Eastern Mediterranean / Rep. of Turkey Ministry of Foreign Affairs

“The idea of the Greek Cypriot Administration of Southern Cyprus (GCASC) to offer the natural resources of the island as collateral for a solidarity investment fund or any other borrowing scheme to be established due to its current economic crisis, ignoring the inherent rights of the Turkish Cypriots who are co-owners of the Island, is a dangerous manifestation of the illusion of being the sole owner of the Island, which may lead to a new crisis in the region.
It is not acceptable that the Greek Cypriot side uses the economic crisis it is facing as an opportunity to create new fait accomplis.
It is not our preference that the problem we are facing should lead to a crisis. We sincerely believe that it should constitute an opportunity and a new beginning for peace and a lasting settlement.
The Turkish Cypriots will never become a minority in a Greek Cypriot state. Turkey will not allow this in any way. However, Turkey will respect the preferences of the two peoples on the Island.”

Fears grow as banks reveal exposure to Cyprus euro crisis – Telegraph

“Britain’s largest banks have a combined exposure to Cyprus of more than £1bn, raising the prospect of new losses for the lenders.”

Obama Has Lost Advantage Over G.O.P. on Economy –

“During the debate over the so-called fiscal cliff in December, public opinion surveys showed more Americans trusted President Obama than trusted Republicans in Congress when it came to handling the nation’s economy. The New Year’s Day deal to avoid going over the cliff, which included higher marginal tax rates on high earners — something Mr. Obama had campaigned on and lobbied for — was largely seen as a victory for the president.
But with more budget battles approaching, over raising the nation’s borrowing limit and perhaps reaching a grand bargain, Mr. Obama’s advantage over Congressional Republicans has all but vanished. Public approval of his handling of the economy has slipped, according to polls, and surveys now show that a roughly equal number of Americans favor Mr. Obama as favor Congressional Republicans on economic matters.”

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