Banks reopen in Cyprus and media jostle to get the best view – posted by Joe Parkinson (@JoeWSJ)
Good Morning!!
The banks have opened in Cyprus with controls on how much depositors can withdraw.
Joe Weisenthal posted updates at his Business Insider blog:
At 6:00 AM ET, banks in Cyprus reopened their doors for the first time since March 16.
Wall Street Journal’s Joe Parkinson reports that only eight people are being allowed in at a time at one Bank of Cyprus branch.
However, the crowds have been orderly.
Everyone is wondering whether there will be a huge run on the banks.
So far? Not yet.
This is likely due to a set of capital controls that have been imposed on the banks. Specifically, Cypriot depositors cannot withdraw more than 300 euros per day from any one bank. Also, checks cannot be cashed.
These controls will be in place for seven days.
See more Twitter updates and photos at the link. International Business Times has some details about the capital controls that are supposed to prevent bank runs. In addition to the withdrawal limit, depositors can’t cash checks unless they come from another country.
In the meantime, non-cash payments or money transfers are banned unless they are related to a number of conditions.
These conditions include commercial transactions, payroll, living expenses and tuition fees.
If commercials transactions are less than €5,000, there are no restrictions, but payments above this amount and up to €200,000 will be subject to a 24-hour decision making process, in order to determine whether the liquidity of the bank would be able to incur such a withdrawal.
Transfers for paying employees will also still be allowed but relevant documents would have to be presented in order to prove the money is being used to pay staff.
Transactions on credit or debit cards are also capped at €5,000 euros per month.
According to the Wall Street Journal, some large depositors seemingly had advance knowledge of what was going to happen in Cyprus and moved their money out of the country weeks before the crisis.
The chairman of the Committee for Institutions in the Cypriot Parliament, Deputy Dimitris Syllouris, said he had submitted a letter to the Central Bank of Cyprus demanding an investigation into account holders who moved large sums of cash out of the country in the weeks ahead of Cyprus’s chaotic bailout talks…
He said he had received information about individuals and businesses moving money out of Cyprus weeks ahead of the bailout deal—a move that wouldn’t be illegal but could imply that some depositors had warning that negotiations for a bailout could, for the first time in the financial crisis that has rattled the euro zone, take a cut out of regular bank deposits.
Asked whether his suspicions focused on one specific group of depositors, he said “politicians, all sorts of people, and bankers themselves are no better.”
That figures…
Outflows from Cyprus were increasing from moderate levels from January until March 15, the officials said. Last week—especially after March 19, when the Cypriot Parliament rejected the first bailout deal that would have imposed a one-time levy on large deposits—the outflows under the central bank’s exemptions went up significantly, they said.
Several hundred million euros, but less than a billion euros, left the country despite the bank closures, according to one official.
At Bloomberg, Clive Crook says Cyprus’ Plan B is Still a Disaster.
The new deal has removed the craziest part of the agreement reached March 16 — the plan to default on deposit insurance. Let’s not dwell any further on that insanity. But the new plan still has features that, seen in any other context, would surely arouse surprise.
For instance, the so-called troika of the European Commission, the European Central Bank and the International Monetary Fund wanted to be sure that the new debt Cyprus is about to take on will be sustainable — meaning, presumably, that Cyprus will be able to repay it. Yet, by writing down high- value deposits, the revised plan will also cause a sudden contraction of the Cypriot banking system, and thus of the whole Cypriot economy, which depends on banking to an unusual degree.
He concludes that,
Bailout fatigue says: “The Cypriots got themselves into this mess, and they should get themselves out. We’ll lend them a bit more, but only if we’re sure they’ll pay us back.” Cyprus didn’t get itself into this mess. It joined the euro system in 2008 with low public debt and a clean bill of health from EU governments (back then, not a word was said about shady Russians). Its banks are in trouble not because they accepted too many overseas deposits but because they bought too many Greek bonds — an investment sanctified by international banking rules (which called such investments riskless) that was destroyed by the EU’s ham-fisted resolution of Greece’s threatened default.
Europe’s sense of “we’re all in this together” seems to have evaporated entirely. Now one has to ask not merely what the euro is for, but what the EU itself is for.
Back in the U.S.A.,
Simon Johnson has an interesting post at the NYT’ “Explaining the Science of Everyday Life” blog: The Debate on Bank Size Is Over.
While bank lobbyists and some commentators are suddenly taken with the idea that an active debate is under way about whether to limit bank size in the United States, they are wrong. The debate is over; the decision to cap the size of the largest banks has been made. All that remains is to work out the details.
To grasp the new reality, think about the Cyprus debacle this month, the Senate budget resolution last week and Ben Bernanke’s revelation that — on too big to fail — “I agree with Elizabeth Warren 100 percent that it’s a real problem.”
Policy is rarely changed by ideas alone and, in isolation, even stunning events can sometimes have surprisingly little effect. What really moves the needle in terms of consensus among policy makers and the broader public opinion is when events combine with a new understanding of how the world works. Thanks to Senator Sherrod Brown, Democrat of Ohio; Senator Warren, Democrat of Massachusetts, and many other people who have worked hard over the last four years, we are ready to understand what finally defeated the argument that bank size does not matter: Cyprus.
I can’t briefly summarize the gist of Johnson’s piece, so if you’re following this story, please read the whole thing. Could he really be right about limits on “to big to fail or prosecute banks.” I sure hope so!
In other news,
There is talk of forcing passengers to be weighed before they can board an airplane and for their fares to be determined by body weight, according to CNN.
An economics scholar in Norway has recommended that air ticket costs be calculated according to a passenger’s weight.
Dr. Bharat P. Bhatta, associate professor of economics at Sogn og Fjordane University College, Norway, is proposing three models that he says, “may provide significant benefits to airlines, passengers and society at large.” [....]
He offers three possible methods for determining the fare.
Total weight: A passenger’s luggage and body weight is calculated, with the fare comprising a per kilo cost. In this scenario a passenger weighing 100 kilos with 20 kilos of luggage (120 kilos total) would pay twice that of a passenger of 50 kilos with 10 kilos of luggage (60 kilos total).
Base fare +/- extra: A base fare is set, with a per-kilo discount applying for “underweight” passengers and a per-kilo surcharge applying to “overweight” passengers.
High/Average/Low: A base fare is set, with a predetermined discount applying for those below a certain weight threshold and a predetermined surcharge applying for those above a certain weight threshold.
Bhatta prefers the third of these options. He goes on to say that weight could be ascertained through passenger self-declaration, with one in five passengers randomly selected and weighed to dissuade cheats (with penalties for cheaters) or by weighing all passengers at check in.
This latter option however would “incur huge transaction costs” and “would require a passenger to arrive a couple of hours early to have time to get through weigh-in, security and passport control.”
Combined with the horror of dealing with the TSA, this would certainly cut down on number of airline passengers. Imagine having to either announce your weight to a clerk or actually having to be weighed in front of other passengers and crew? As if air travel isn’t already torture…
I’m not seeing much new news on the two SCOTUS cases on marriage equality, but this is sort of interesting at The Hill: Conservatives wary of Chief Justice Roberts in same-sex marriage cases. Apparently the right wing nuts are worried that Roberts is going to be more concerned about his legacy as Chief Justice than his standing among the Neo-Confederate community.
“I certainly think his credentials were tarnished with the ObamaCare decision,” said Tony Perkins, president of the Family Research Council. “Does he care about his standing with conservatives? I don’t know.”
Gary Bauer, president of American Values and a former president of the Family Research Council, said Roberts shouldn’t be considered a conservative if he sides with the proponents of same-sex marriage after casting the deciding vote on healthcare.
If Roberts breaks with conservatives “on another major issue … then I think the whole understanding of the current makeup of the Supreme Court would be in question,” Bauer said.
He said the court would have to be seen as having a liberal majority, at least on hot-button political and social issues.
Why should Roberts care what these “conservatives” think? He has a lifetime appointment. He’ll have to decide how he wants to appear in the history books–as a justice who made tough choices based on the Constitution or as a reactionary who sacrificed his reputation in order to satisfy a bunch of insane “Mayberry Machiavellis.”
Oh dear . . . Raw Story reports that a tenth-grade science teacher named Tim McDaniel is be investigated because of parents’ complaints about his use of the word “vagina” in explaining the “biology behind female orgasm” in class.
“I teach straight out of the textbook, I don’t include anything that the textbook doesn’t mention,” McDaniel remarked. “But I give every student the option not attend this class when I teach on the reproductive system if they don’t feel comfortable with the material.”
McDaniel said that he had never before received a complaint in the 18 years that he had taught science class at Dietrich School.
According to students who have set up a Facebook page to “SAVE THE SCIENCE TEACHER!!” certain parents may have had a political agenda in going after McDaniel. Sixty-six percent of church goers in Lincoln County, where Dietrich is located, are affiliated with the Mormon LDS Church, according to 2002 Glenmary Research Center data.
“[T]here are a couple people in the community that are trying to get Mr. McDaniel fired for teaching the reproductive system, climate change, and several other science subjects,” students wrote. “All these subjects were taught from the book and in good taste. He cares for each of his students and goes the extra mile to help them all. Now is the time for us to help by supporting him!”
If those kids haven’t heard the word “vagina” by the tenth grade, it’s their parents who should be investigated. /s
Finally, what’s the deal with right wing nuts attacking Sasha and Malia Obama? I don’t read Breitbart or Drudge, but on Tuesday I read a column by Joan Walsh at Salon called How not to seem like a racist, in which she writes about attacks by right wingers on the Obama girls for having Secret Service protection and even daring to take vacations. The latest attacks are about a trip to the Bahamas. The latest attacks apparently were set off by a post at Breitbart by Matthew Boyle (the same guy who wrote the fake Menendez prostitution story at The Daily Caller). Walsh:
…along comes the brave Matthew Boyle, fresh off his Menendez humiliation, to tell Breitbart readers about the Obama girls’ vacation. The news hook seems to be that it’s a waste of money.
“It is unclear how long the first daughters will be staying in the Bahamas, or what the cost will be to taxpayers,” Boyle harrumphs. “Earlier this month, the White House canceled public tours as a result of the recent budget sequester, citing Secret Service staffing costs.”
Esquire’s Charlie Pierce put it better than I can:
What possible interest does this serve, except to titillate the dark and envious nether parts of Boyle’s 22 readers? (No link, because fk that pudgy little monster.) There is no possible news value to this. Sooner or later, the frolicks of what my pal [Eric] Boehlert calls the “rightwing entertainment complex” are going to get someone killed.
The theme of most right-wing stories on Sasha, Malia and Michelle Obama’s vacations and leisure-time activities seems to be that they’re entitled princesses, when they do exactly the same kinds of things other presidents’ families have done throughout history. There’s only one difference I can see.
Drudge is also hyping the president’s vacation with the blaring headline “A vacation a month.” That’s another racially tinged trope on the right, that our first black president seems to be a little, well, lazy, because he can’t stop taking vacations. Of course, Obama is on track to take about a fifth of the vacation days George W. Bush did over his two terms. Obama took 131 vacation days in his first term – which would amount to 262 if he kept that pace in his second term. Bush took a staggering 1,060 vacation days over eight years, by far the most vacation in history (he also took the longest single presidential vacation in the modern era, a full five weeks.) Can someone explain why Obama is supposedly the vacation-hog?
And check out this comment on the Breitbart story:
They will indeed grow up to be monsters. Very, very, angry and vengeful monsters. Just like momma…
Especially after they are forced to visit their obamination of a father in a federal penitentiary following his impeachment and conviction for Treason…
Although I’d far prefer they visit his plot occasionally following his hanging for treason.
Iowa’s Steve King also got into the act, via Think Progress, Fox News “launch[ed] an inexplicable 8-Minute attack” on Joan Walsh, according to Mediaite’s Tommy Christopher, and Walsh responded to right wing claims that she’s a hypocrite because she previously wrote about the Bush twins’ drinking.
So…what are you hearing and reading? Please post your favored links in the comments. I’m not going anywhere this morning, so I plan to click on every one.
Have a great Thursday!
