March 23, 2013 archive

Cyprus: No Good Deed Goes Unpunished

Cross posted from The Stars Hollow Gazette

Up Date 3.23.2013 0100 AM EDT: The Cyprus Parliament has passed part of a bailout plan but has delayed voting on a tax for unsecured deposits:

One of the provisions Parliament approved Friday would impose new restrictions on withdrawing cash or moving money out of the country when the banks reopen. These new capital controls would prohibit or restrict check-cashing and bar “premature” account closings or any other transaction the authorities deemed unwarranted.

Lawmakers also voted to restructure the nation’s largest and most troubled bank, Laiki Bank, by splitting off its troubled assets into a so-called bad bank. Accounts with no problem would be transferred to the nation’s largest financial institution, the Bank of Cyprus. Lawmakers also voted to require that any bank on the verge of bankruptcy be split apart in the same way. [..]

Still to be voted on is the measure to impose a tax of 22 to 25 percent on uninsured deposits at the Bank of Cyprus. That proposal was made after lawmakers rejected a plan earlier in the week to tax insured deposits to help raise the amount needed to secure the bailout. The Parliament appears to be trying to make up the difference in part by shifting the burden to large account holders.

Cyprus Finance Minister Michael Sarris returned empty handed from Russia after the Russians ruled  out helping until after a deal is struck with European Union. Yesterday, German Chancellor Angela Merkel rejected the proposal to nationalize pension funds and insisting that depositors, especially large savings accounts, be taxed to raise the needed €5.8 billion of the €10 billion bailout deal. Part of the reason for the refusal to accept nationalization of pensions as part of the deal is that Germany did just that to finance both world wars. Germans also face an election in six months and have been reluctant to give up on the bank levy since it protects them from accusations of using European taxpayers money to bail out big Russian investors in Cyprus.

In a nut shell, Cyprus got into this mess because the country’s banks were using Russian deposits to buy Greek bonds to help forestall the collapse of the Greek banks. The Greek bonds went bad, and the Cypriot banks lost a bundle. No good deed goes unpunished.

So where is Cyprus now? At this time, the Parliament is going over a series of bills that would consolidate its ailing banks and the creation of a fund that pools state and church assets, i.e. real estate and pensions, against which they would issue bonds. The deputy leader of he ruling Democratic Rally party, Averof Neophytou, cleared the way for the reconsideration of tax levy on savings accounts which had been flatly reject ted on Tuesday.

The other monkey wrench in all of this is Turkey’s challenge of the any move by Cyprus to speed up offshore natural gas exploration as a way of attracting desperately needed investment to save the economy.  

“This resource belongs to two communities and the future of this resource can’t be subject to the will of southern Cyprus alone. (We) may act against such initiatives if necessary,” one of the Turkish officials told Reuters.

“The exclusive use of this resource … by Southern Cyprus is out of question … and unacceptable.”

Cyprus has been divided between the Greek Cypriot south and Turkish north since a Greek coup d’etat followed by a Turkish army invasion in 1974. Efforts to reunite the island have repeatedly failed and Turkey is the only nation to recognise the self-declared Turkish Republic of Northern Cyprus.

At the Washington Post‘s “Wonkblog”, Dylan Matthews predicted two possible scenarios if Cyprus accepts the EU bailout terms:

What’s the best case scenario from a bailout?

The best we can hope for is that Cyprus takes the hit, gets some money, recapitalizes its banks, and recovers from there. It had a fairly conservative banking sector before the crisis, with deposits far outstripping loans, and its government was actually running surpluses, so it doesn’t have to engage in the kinds of fundamental structural reforms that appear necessary in Greece. So if the Greek losses were just a temporary shock, the rescue money should get the country back on its feet.

And the worst-case scenario?

The worst-case scenario under a plan with a haircut is that the plan triggers a run on banks not just in Cyprus (that appears to already be happening) but in other vulnerable countries like Spain and Italy as customers worry that the E.U. will try to impose similar conditions there. That would exacerbate an already bad situation as it would increase bank shortfalls; fewer deposits, after all, mean a worse deposit-to-liability ratio. Those kinds of runs could lead to a continent-wide crisis of the kind observers have been fearing since the euro zone started its slow-motion collapse back in 2009.

However, the failure of the initial haircut plan renders this outcome less likely. It does render a Cypriot exit from the monetary union quite a bit more likely. That would trigger bank runs in Cyprus as people try to get their money out before the Cypriot pound falls dramatically in value relative to the Euro, and could trigger further runs in Spain and Italy. That’s bad for the same reason haircut-inspired bank runs are bad.

Truthfully, it’s all bad and there is no reason for this since as Ezra Klein points out that the solution is to just give Cyprus the money:

Seriously. €15.8 billion ($20.5 billion) is not a lot of money in the scheme of European finance. It is trivially easy for the European Central Bank, or the IMF, or the Federal Reserve, or really any central bank of any consequence to just hand it over. That the troika is already committing €10 billion ($13 billion) is evidence enough. All the troubles in the negotiations are linked to the demand that €5.8 billion ($7.5 billion) come from Cyprus’ own coffers. Dropping that requirement could solve everything.

The Germans will never allow that until they are in the same boat. This is also why the euro will eventually fail.  

Random Japan

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HUH?

Osaka’s last remaining streetcar company introduced a tram line whose color scheme is meant to evoke “traditional Japanese aesthetic philosophy.”

Lawmakers have enacted measures to combat a fraud scheme known as oshigai, which involves bullying unsuspecting people into selling “precious metal jewelry and other items for unreasonably low prices.”

Police in Fukuoka say an employee at a work center for people with mental disabilities put a disabled man in a chair, placed a cardboard target above his head, and “threw an awl from about three meters away like he was playing darts.”

Headline of the Week: “Researchers Find Chemical in Male Mouse Urine that Attracts Females” (via Mainichi Japan)

Health and Fitness News

Welcome to the Health and Fitness News, a weekly diary which is cross-posted from The Stars Hollow Gazette. It is open for discussion about health related issues including diet, exercise, health and health care issues, as well as, tips on what you can do when there is a medical emergency. Also an opportunity to share and exchange your favorite healthy recipes.

Questions are encouraged and I will answer to the best of my ability. If I can’t, I will try to steer you in the right direction. Naturally, I cannot give individual medical advice for personal health issues. I can give you information about medical conditions and the current treatments available.

You can now find past Health and Fitness News diaries here and on the right hand side of the Front Page.

Cutting Down on the Meat, but Not the Taste

Mushroom Burgers photo 11recipehealth-articleLarge_zps27b76110.jpg

There are many ways to cut down your meat intake and increase your vegetable consumption without becoming a vegetarian. Culinary traditions around the world are filled with dishes in which meat is used sparingly, for flavor and substance, but is not at the center of the plate. Think stir-fries, and some of your favorite pastas that have a little bit of pancetta but are really all about the tomatoes.

Some of America’s biggest food service companies are committed to increasing vegetable consumption, but they don’t want to lose their meat-loving customers, so they are figuring out ways to create dishes with less meat that are still appealing. You may face this challenge in your own family; you want everybody to cut down on meat consumption, but they love their burgers.

Chef Scott Samuel’s Roasted Mushroom Base and Mushroom Burgers

This is the mushroom base that Scott Samuel, a chef instructor at the Culinary Institute of America, uses in conjunction with beef in his burgers. I have cut the amount of olive oil that Scott uses from 1/2 cup to 1/4 cup.

Mushroom and Turkey Burgers

Let’s face it: turkey burgers can be boring. I spiced these up with a Middle Eastern spice blend, called baharat, that is great to have on hand.

Mushroom and Beef Meatballs

The mushroom base renders a flavor that is more vegetal than meaty. The recipe is easy to double and the meatballs freeze well.

Mushroom, Bulgur, Spinach and Turkey Fritters With Yogurt Sauce

These are smaller than burgers and are served without buns, with a pungent garlic sauce.

Rainbow Beef

In this version of a stir-fry classic I am using less beef than a typical recipe would call for and adding in some shiitake mushrooms and extra peppers.

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