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Tag Archive: Cyprus


Exclusive: EU executive sees personal savings used to plug long-term financing gap

LONDON Wed Feb 12, 2014 6:00pm EST

A picture illustration taken with the multiple exposure function of the camera shows a one Euro coin and a map of Europe, January 9, 2013. REUTERS/Kai Pfaffenbach

A picture illustration taken with the multiple exposure function of the camera shows a one Euro coin and a map of Europe, January 9, 2013.

Credit: Reuters/Kai Pfaffenbach

(Reuters) – The savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says.

The EU is looking for ways to wean the 28-country bloc from its heavy reliance on bank financing and find other means of funding small companies, infrastructure projects and other investment.

“The economic and financial crisis has impaired the ability of the financial sector to channel funds to the real economy, in particular long-term investment,” said the document, seen by Reuters.

The Commission will ask the bloc’s insurance watchdog in the second half of this year for advice on a possible draft law “to mobilize more personal pension savings for long-term financing”, the document said.

Banks have complained they are hindered from lending to the economy by post-crisis rules forcing them to hold much larger safety cushions of capital and liquidity.

Read More Here

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ZeroHedge

Europe Considers Wholesale Savings Confiscation, Enforced Redistribution

At first we thought Reuters had been punk’d in its article titled “EU executive sees personal savings used to plug long-term financing gap” which disclosed the latest leaked proposal by the European Commission, but after several hours without a retraction, we realized that the story is sadly true. Sadly, because everything that we warned about in “There May Be Only Painful Ways Out Of The Crisis” back in September of 2011, and everything that the depositors and citizens of Cyprus had to live through, seems on the verge of going continental. In a nutshell, and in Reuters’ own words, “the savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says.” What is left unsaid is that the “usage” will be on a purely involuntary basis, at the discretion of the “union”, and can thus best be described as confiscation.

The source of this stunner is a document seen be Reuters, which describes how the EU is looking for ways to “wean” the 28-country bloc from its heavy reliance on bank financing and find other means of funding small companies, infrastructure projects and other investment. So as Europe finally admits that the ECB has failed to unclog its broken monetary pipelines for the past five years – something we highlight every month (most recently in No Waking From Draghi’s Monetary Nightmare: Eurozone Credit Creation Tumbles To New All Time Low), the commissions report finally admits that “the economic and financial crisis has impaired the ability of the financial sector to channel funds to the real economy, in particular long-term investment.”

The solution? “The Commission will ask the bloc’s insurance watchdog in the second half of this year for advice on a possible draft law “to mobilize more personal pension savings for long-term financing“, the document said.”

Mobilize, once again, is a more palatable word than, say, confiscate.

And yet this is precisely what Europe is contemplating:

Read More Here

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Britain told social inequality has created ‘public health timebomb’

Child poverty

In Britain one child in four lives in poverty, the report says. Photograph: Christopher Furlong/Getty Images

Women and children in the UK would have longer and healthier lives if they lived in Cyprus, Italy or Spain, and Britain is facing “a public health timebomb”, according to a study by an expert on inequality and health.

Sir Michael Marmot, who is known worldwide for his work on the social determinants of health, says much of the rest of Europe takes better care of its families. Life expectancy for women and death rates among the under-fives are worse in the UK, where there is also more child poverty.

The public health time bomb Marmot describes is caused by the large number of so-called Neets – young adults who are not in education, employment or training.

Women in the UK can expect to live to 83, but those born in a number of other European countries will live to a riper old age: in Germany and Cyprus, their life expectancy is 84, while in Italy, France and Spain it is 85.

And while child mortality rates in global terms are low in the UK, at 5.4 deaths per 1,000 among the under-fives, many countries do better. Some of those are in eastern Europe, such as the Czech Republic, with 3.4 deaths per 1,000 births, and Slovenia with three. Most countries in western Europe do better than the UK. Greece has four deaths per 1,000 births and Luxembourg has three. Iceland has the lowest child mortality, at 2.2 deaths per 1,000 live births, and Finland is next best, with 2.9.

Read More Here

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World Health Organization: unemployed youth in Britain are a public health time bomb

Young people, children and women in the UK are being failed by Government health policies, an international review finds

“Unemployment may be falling in the UK, but persistent high levels of the number of young people over 18 not in employment, education or training is storing up a public health time bomb waiting to explode,” said Professor Sir Michael Marmont, who chaired the study.

“We are failing too many of our children, women and young people on a grand scale.

 

Read More Here

 

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How long  before it  affects  you too ?????

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Cyprus-Style Wealth Confiscation Is Now Starting To Happen All Over The Globe

The EarthNow that “bail-ins” have become accepted practice all over the planet, no bank account and no pension fund will ever be 100% safe again.  In fact, Cyprus-style wealth confiscation is already starting to happen all around the world.  As you will read about below, private pension funds were just raided by the government in Poland, and a “bail-in” is being organized for one of the largest banks in Italy.  Unfortunately, this is just the beginning.  The precedent that was set in Cyprus is being used as a template for establishing bail-in procedures in New Zealand, Canada and all over Europe.  It is only a matter of time before we see this exact same type of thing happen in the United States as well.  From now on, anyone that keeps a large amount of money in any single bank account or retirement fund is being incredibly foolish.

Let’s take a look at a few of the examples of how Cyprus-style wealth confiscation is now moving forward all over the globe…

Poland

For years, there have been rumors that someday the U.S. government would raid private pension funds.

Well, in Poland it just happened.

According to Reuters, private pension funds were raided in order to reduce the size of the government debt…

Poland said on Wednesday it will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, many of them foreign-owned.

The Polish government is doing the best that it can to make this sound like some sort of complicated legal maneuver, but the truth is that what they have done is stolen private assets without giving any compensation in return…

The Polish pension funds’ organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.

Announcing the long-awaited overhaul of state-guaranteed pensions, Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings.

He said that what remained in citizens’ pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.

Iceland

For years, Iceland has been applauded for how they handled the last financial crisis.  But now it is being proposed that the “blanket guarantee” that currently applies to all bank accounts should be reduced to 100,000 euros.  Will this open the door for “haircuts” to be applied to bank account balances above that amount?…

Following the crisis in October 2008, Iceland’s government declared all deposits in domestic financial institutions were ‘blanket’ guaranteed – an Emergency Act that was reafrmed twice since. However, according to RUV, the finance minister is proposing to restrict this guarantee to only deposits less-than-EUR100,000. While some might see the removal of an ’emergency’ measure as a positive, it is of course sadly reminiscent of the European Union “template” to haircut large depositors. This is coincidental (threatening) timing given the current stagnation of talks between Iceland bank creditors and the government over haircuts and lifting capital controls – which have restricted the outflows of around $8 billion.

Europe

European finance ministers have agreed to a plan that would make “bail-ins” the standard procedure for rescuing “too big to fail” banks in the future.  The following is how CNN described this plan…

European Union finance ministers approved a plan Thursday for dealing with future bank bailouts, forcing bondholders and shareholders to take the hit for bank rescues ahead of taxpayers.

The new framework requires bondholders, shareholders and large depositors with over 100,000 euros to be first to suffer losses when banks fail. Depositors with less than 100,000 euros will be protected. Taxpayer funds would be used only as a last resort.

What this means is that if you have over 100,000 euros in a bank account in Europe, you could lose every single bit of the unprotected amount if your bank collapses.

Italy

As Zero Hedge reported on Tuesday, a “bail-in” is now being organized for the oldest bank in Italy…

Read More Here

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 photo AngelaMerkelandBrazilianWax_zpsf46e9b3d.jpg

Copyright  :  Desert Rose Creations / Family Survival Protocol  2013

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ZeroHedge

 

Once upon a time (in April), a few weeks after reversing its initial disastrous decision to haircut all deposits (including insured ones) the Troika slammed large Cypriot depositors (read evil Russian oligarchs) with a “bail-in” template, soon coming to all insolvent European nations, that included not only a forced assignment of equity in broke Cypriot banks, but far more importantly a haircut that amounted to 37.5% of deposits over €100,000. Since then a few things have happened in Cyprus, neither of them good, i.e., an a record collapse in bank deposits despite capital controls and a record crash in the local real estate market.

The confluence of both these events meant that as bank liabilities shrank (deposits), asset fair values (home mortgages) collapsed even faster. Which, as we warned in March, would entail bigger and more aggressive deposit haircuts, and ultimately: another bailout of Cyprus (something the president floated but promptly denied upon rejection by Merkel ahead of her September elections). Today, we learn that while the inevitable next bailout of Cyprus is still on the table, the deposit “haircut” just upgraded to an aggravated Brazilian wax, as the 37.5% gentle trim initially proposed was revised to 47.5%.

InCyprus reports:

The Finance Ministry and the Troika appeared to be converging on an agreement on the haircut of uninsured deposits over 100,000 euros in the Bank of Cyprus at 47.5%.

After marathon negotiations at the Finance Ministry further talks continued at Central Bank until late into the night with Finance Minister Haris Georgiades focussing on the technical issues that had arisen.

 

Read More Here

 

 

 

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Evacuation signals growing concern in Moscow about conflict between ally Bashar al-Assad’s regime and rebels

Russian deputy foreign minister Mikhail Bogdanov

Russia’s deputy foreign minister, Mikhail Bogdanov, said the defence ministry ‘does not have a single person in Syria’. Photograph: Denis Balibouse/Reuters

Russia has evacuated the last of its personnel from Syria, including from its Mediterranean naval base in Tartus, in a move that appears to underline Moscow’s mounting concerns about the escalating crisis.

Russian media reported on Wednesday that they had confirmed the evacuation with officials in the country’s military and foreign ministry. But there was no official confirmation of a claim from rebel Free Syrian Army sources that a Russian plane had been shot down and its pilot captured in the western Aleppo area.

The effective closure of the Tartus base would be a significant loss, though a 16-ship naval task force is still in the eastern Mediterranean. The base is Russia’s only foothold in the Middle East.

Neighbouring Cyprus has, however, made its ports available to the Russian fleet. Cypriot media have reported that the government may allow Russia to use its base at Paphos to host military aircraft.

News that Russian forces had pulled out of Syria came in an interview with Mikhail Bogdanov, the deputy foreign minister, in an interview with the newspaper al-Hayat last week.

“Today, the Russian defence ministry does not have a single person in Syria,” he said. He described Tartus as a “technical facility for maintaining ships sailing in the Mediterranean.”

 

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MARC FABER: Not Even Gold Will Save You From What Is Coming

Marc Faber, who authors the Gloom Boom & Doom newsletter, is usually pretty bearish on stocks and bullish on gold.

Lately, though, gold doesn’t seem like it can catch a bid.

 

“Despite the continued reverberations regarding the Cyprus bailout and its involvement of bank deposits, gold struggled to maintain the positive momentum created in the first two weeks of March and instead now looks very likely to move lower, towards $1580/oz,” wrote Deutsche Bank commodities analyst Xiao Fu in a note this morning.

 

So, what does Faber have to say about it?

 

This morning, on Bloomberg Surveillance with Tom Keene and Alix Steel, Dr. Doom was asked why gold wasn’t holding up.

 

Here’s his explanation:

 

When you print money, the money does not flow evenly into the economic system. It stays essentially in the financial service industry and among people that have access to these funds, mostly well-to-do people. It does not go to the worker. I just mentioned that it doesn’t flow evenly into the system.

 

Now from time to time it will lift the NASDAQ like between 1997 and March 2000. Then it lifted home prices in the U.S. until 2007. Then it lifted the commodity prices in 2008 until July 2008 when the global economy was already in recession. More recently it has lifted selected emerging economies, stock markets in Indonesia, Philippines, Thailand, up four times from 2009 lows and now the U.S.

 

So we are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide. Even in gold, it will be difficult to hide.

 

Faber is, of course, still bearish on U.S. stocks. He told Bloomberg that he sees “considerable downside risk” in the market.

Read more: Business Insider

 

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    Image Source                           Angela Merkel, Chancelière allemande.

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Proper analysis of Mario Draghi’s figures suggests Germany is a major cause of the crisis – not a wage productivity paragon

Mario Draghi, president of the European Central Bank: his analysis of the euzozone crisis is flawed, argues Andrew Watt. Photograph: Lisi Niesner/Reuters

Over the course of the last week’s tense negotiations over a Cyprus bailout deal, much of the commentary has focused on the role of Europe’s finance ministers. But perhaps closer attention should be paid to Mario Draghi, the president of the European Central Bank. On 14 March Draghi made a presentation to heads of state and government on the economic situation in the euro area. His intent was to show the real reasons for the crisis and the counter-measures needed. In this he succeeded – although not in the way he intended.

Draghi presented two graphs that encapsulate his central argument: productivity growth in the surplus countries (Austria, Belgium, Germany, Luxembourg, Netherlands) was higher than in the deficit countries (France, Greece, Ireland, Italy, Portugal, Spain). But wage growth was much faster in the latter group. Structural reforms and wage moderation lead to success; structural rigidities and greedy trade unions lead to failure. QED.

According to the Frankfurter Allgemeine Zeitung, which reported the affair approvingly, the impact of Draghi’s intervention was devastating. François Hollande, the French president, who had earlier been calling for an end to austerity and for growth impulses, was, according to the newspaper, completely silenced after the ECB president had so clearly demonstrated, with incontrovertible evidence, what was wrong in Europe – or rather in certain countries in the eurozone – and what must be done.

Things are not as they seem, however. Draghi’s presentation contains a simple but fatal error – or should that be misrepresentation? As the note to the graphs indicates, the productivity measure is expressed in real terms. In other words, it shows how much more output an average worker produced in 2012 compared with 2000. So far so good. However, the wage measure that he uses, compensation per employee, is expressed in nominal terms (even if, interestingly, this is not expressly indicated on the slides). In other words, the productivity measure includes inflation, but the wage measure does not.

 

Read Full Article  Here

 

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Cyprus Salvaged After EU Deal Shuts Bank to Get $13B

By Rebecca Christie, James G. Neuger & Patrick Donahue – Mar 25, 2013 10:24 AM CT

Cyprus dodged a disorderly sovereign default and unprecedented exit from the euro by bowing to demands from creditors to shrink its banking system in exchange for 10 billion euros ($13 billion) of aid.

Cypriot President Nicos Anastasiades agreed to shut the country’s second-largest bank under pressure from a German-led bloc in an overnight negotiating melodrama that threatened to rekindle the European debt crisis and rattle markets.

“It’s been yet another hard day’s night,” European Union Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels early today. “There were no optimal solutions available, only hard choices.”

It was the second time in nine days that Cyprus struck a deal with its euro partners and the International Monetary Fund, capping a tumultuous week that underscored the contradictions of euro-crisis management that has dominated European policy making for more than three years. Cyprus, the euro area’s third- smallest economy, is the fifth country to tap international aid since the crisis broke out in Greece in 2009.

The first Cypriot accord, reached March 16, fell apart three days later when the parliament in Nicosia rejected a key plank, a tax on all bank accounts that sparked the indignation of smaller depositors. Efforts to win an alternative bailout from Russia, which loaned Cyprus 2.5 billion euros in 2011 when the nation was shut out of international markets, failed.

‘Playing Games’

“Nobody knows where we are heading,” said Epifanos Epifaniou, 50, who used to drive a delivery truck in Nicosia and has been unemployed for six months. “People are playing games with Cyprus. We are alone. Nobody is supporting us.”

The euro retreated 0.4 percent, trading at $1.2935 at 2:33 p.m. in Frankfurt, after initially rising as much as 0.5 percent. Stocks gained, with the Stoxx Europe 600 Index rising 0.5 percent. Italian 10-year bonds erased their decline since last month’s inconclusive election.

German Chancellor Angela Merkel lauded the agreement as lawmakers in her coalition embraced the package, which should go to a vote in Berlin in the coming weeks. The agreement goes a “long way” toward satisfying Germany’s Bundestag, Christian Democratic lawmaker Norbert Barthle said in an interview.

Bartering

The breakthrough came after Anastasiades bartered with officials including EU President Herman Van Rompuy, European Central Bank President Mario Draghi and IMF Managing Director Christine Lagarde. It was then sealed by the finance ministers, some of whom went out to dinner while the talks were ongoing.

With the ECB threatening to cut off emergency financing for tottering banks as soon as today, Cyprus’s leaders engineered another way of shrinking the island’s financial system.

The revised accord spares bank accounts below the insured limit of 100,000 euros. It imposes losses that two EU officials said would be no more than 40 percent on uninsured depositors at Bank of Cyprus Plc, the largest bank, which will take over the viable assets of Cyprus Popular Bank Pcl (CPB), the second biggest.

Cyprus Popular Bank, 84 percent owned by the government, will be wound down. Those who will be largely wiped out include uninsured depositors and bondholders, including senior creditors. Senior bondholders will also contribute to the recapitalization of Bank of Cyprus.

Debt Doubts

The squeezed banking industry will likely lead to a “sharp drop” in Cyprus’s gross domestic product this year and next, according to Reinhard Cluse, a London-based economist at UBS AG. As a result, the euro group’s debt-to-GDP ratio target of 100 percent by 2020 “must be doubted,” he said.

The Cypriot Finance Ministry said in a January presentation that bailing out the country may push debt to a peak of about 140 percent of GDP next year.

“Cyprus’s sovereign debt problems will remain an issue of concern — for European policy makers and for the markets,” Cluse wrote in a note to clients today.

Banks in Cyprus, which have been shut for the past week, will remain closed until further notice. Lawmakers in Cyprus voted last week to impose capital controls to prevent a run on deposits when they reopen.

The union representing Cypriot banking workers said today the Mediterranean island is faced with a “painful compromise,” according to a statement posted on its website. It urged employees to be ready to return to work when banks reopen.

Better Solution

“This solution we reached tonight doesn’t have the downsides that the solution of last week did,” said Dutch Finance Minister Jeroen Dijsselbloem, chairman of the euro ministers’ panel. He said the deal was beyond the range of “political possibilities” a week ago.

The Cypriot parliament won’t have to vote again because it has already passed laws on bank restructuring, officials said. On the creditors’ side, legislatures in Germany, Finland and the Netherlands may hold votes to approve loans to Cyprus from the European Stability Mechanism, the 500 billion-euro rescue fund.

Klaus Regling, managing director of the rescue fund, said approval by creditor governments in mid-April will pave the way for the first payouts to Cyprus in early May.

Lagarde said she will recommend that the IMF provide loans, without giving a figure. “There might have been a bit of friction here and there,” she said of the talks.

Solvent Banks

The next step lies with the ECB, which needs to keep funds flowing to solvent Cypriot banks to enable them to open. While Draghi and Executive Board member Joerg Asmussen left Brussels without commenting to reporters, a statement by the ministers said the bank will channel liquidity to Bank of Cyprus “in line with applicable rules.”

The seizure of larger deposits may spark tensions with Russia, the source of an estimated $31 billion in holdings in Cypriot banks according to Moody’s Investors Service. A Cypriot mission to Moscow last week failed to yield an alternative to the European-sponsored bailout.

Still, Russian President Vladimir Putin ordered his government to discuss restructuring a 2011 loan to Cyprus, Russian news service RIA Novosti cited a spokesman as saying.

The effort to go after insured deposits, while abandoned, may have harmful repercussions, said Moody’s in a note early today. “Policy makers’ recent decisions raise the risk of deposit outflows, capital flight, increased bank and sovereign funding costs and broader financial-market dislocation throughout the euro area in the future,” Moody’s said.

Nine Months

In a replay of tensions over aid for Greece at the outset of the crisis, European governments had wrangled over aid for Cyprus for nine months, exposing holes in the revamped economic management system that was built in three years of emergency policymaking, often at all-night summits.

A tightening of Europe’s budget-deficit restrictions and new rules to penalize countries with unbalanced economies or asset bubbles failed to stop the rot in Cyprus, which makes up less than 0.2 percent of euro-region output.

Hundreds of protesters massed outside the floodlit presidential palace in Nicosia late yesterday, one group brandishing a banner that said: “It’s capitalism, stupid.”

Source  Bloomberg

 

Related Articles

Protesters during an anti- bailout rally in Nicosia, Cyprus, on March 24, 2013. Photographer: Petros Karadjias/AP Photo

Lagarde Says Troika `Doing Fine' After Cyprus Deal

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March 25 (Bloomberg) — International Monetary Fund Managing Director Christine Lagarde says the so-called troika of the European Central Bank, European Commission and IMF is “doing fine” when asked by reporters about its future backing of bailouts. She spoke earlier today alongside Olli Rehn in Brussels following an emergency meeting of euro-area finance ministers, who agreed to a 10 billion-euro ($13 billion) bailout for Cyprus. (Source: Bloomberg)

March 22 (Bloomberg) — Bloomberg Television’s Ryan Chilcote reports on how the Russian population living and banking in Cyprus could be affected by the current crisis. He speaks from Limassol, Cyprus, on Bloomberg’s “The Pulse.” (Source: Bloomberg)

Getting Cash in Cyprus Is a Problem Amid Bailout

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March 25 (Bloomberg) — As Cyprus dodges a disorderly default and unprecedented exit from the euro currency by winning a 10 billion-euro ($13 billion) bailout, Cypriots are finding cash hard to come by. Bloomberg Television’s Ryan Chilcote reports from Nicosia. (Source: Bloomberg)

Pissarides Sees `Disastrous' Implications in Cyprus

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March 25 (Bloomberg) — Christopher Pissarides, the head of Cyprus’s economic policy council, talks about the island nation’s bailout package and the outlook for its future membership of the euro zone. He speaks from Nicosia with Guy Johnson and Francine Lacqua on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)

Cyprus Aid Package Seen to Set `Worrying' Precedent

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March 25 (Bloomberg) — Stelios Platis, managing director of MAP S.Platis, talks about Cyprus’s deal with the European Union to shrink its banking system in exchange for a 10 billion-euro ($13 billion) bailout. He speaks from Cyprus on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

MP Says Cyprus Must Assess Benefits of Euro Exit

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March 25 (Bloomberg) — Nicholas Papadopoulos, Cypriot lawmaker and chairman of the parliamentary finance committee, discusses the consequences of the nation’s 10 billion-euro ($13 billion) bailout. He speaks in Nicosia with Ryan Chilcote on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)

Europe Debt Crisis Needs `Pan-European' Solution

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March 26 (Bloomberg) — Philippe D’Arvisenet, chief global economist at BNP Paribas SA, talks about Europe’s sovereign debt crisis and the outlook for the euro. Cyprus dodged a disorderly sovereign default and unprecedented exit from the euro by bowing to demands from creditors to shrink its banking system in exchange for 10 billion euros ($13 billion) of aid. D’Arvisenet speaks in Singapore with Haslinda Amin on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

Jeroen Dijsselbloem, the Netherlands’s finance minister and president of the Eurogroup, center, speaks as Christine Lagarde, managing director of the International Monetary Fund, left, and Olli Rehn, economic and monetary affairs commissioner for the European Union, listen during a news conference following the Eurogroup meeting in Brussels on March 25, 2013. Photographer: Jock Fistick/Bloomberg

Cyprus Popular Bank, 84 percent owned by the government, will be wound down. Photographer: Simon Dawson/Bloomberg

The revised accord spares bank accounts below the insured limit of 100,000 euros. It imposes losses that two EU officials said would be no more than 40 percent on uninsured depositors at Bank of Cyprus Plc, the largest bank, which will take over the viable assets of Cyprus Popular Bank Pcl, the second biggest. Photographer: Simon Dawson/Bloomberg

Cyprus bailout: Dijsselbloem’s U-turn creates chaos in the markets

 

Jeroen Dijsselbloem

Dutch finance minister Jeroen Dijsselbloem has rowed back on his statement that future bailouts would follow the Cypriot model. Photograph: John Thys/AFP/Getty

The good news for the eurozone was that the markets reacted well to the bailout deal for Cyprus. The bad news was that the rally lasted barely until lunchtime. By then investors were running scared at the prospect that the terms imposed on one of the single currency’s smaller members would be the template for rescue packages for bigger countries.

Credit for the change of mood goes to Jeroen Dijsselbloem, who chairs meetings of eurozone finance ministers and who decided it would be a good idea to go public with the idea that Cyprus was not such a special case after all.

For the past week the message has gone out that there are no comparisons between a country that allowed itself to become the tax haven of choice for high-rolling Russians and other, better-managed, members of the eurozone.

Then, in a couple of interviews, Dijsselbloem said Cyprus would be used as the model for future bailouts.

The comments were an open invitation to any investor with more than €100,000 in a eurozone bank to remove it without delay, which some then did.

 

Read Full Article Here

Jackson and the Bank of the United States

Click Here to Enlarge –  Andrew Jackson hated the idea of the Bank of the United States. He thought it wasn’t fair to the poor people. He wanted to destroy it. The many-headed monster is the states, who are fighting Jackson to keep the bank. Jackson raises a cane that says “veto.”

“The proverb, ‘What you don’t know can’t hurt you”, originated in 1576 as, ‘So long as I know it not, it hurteth mee not.’ But the opposite is true.  Unpleasant hidden truths do the most harm.  The best way to fight corruption is to expose it.  Think of the World Bank as ENRON.” … Karen Hudes

by Karen Hudes (with Jim Fetzer)

Veterans Today

Karen Hudes

When, thanks to Mark Novitsky, a federal whistleblower, I learned that Karen Hudes, who earned her J.D. at Yale, our most distinguished School of Law, and an M.Phil. in economics at the University of Amsterdam, which is also a formidable institution, had been removed from her position as Senior Counsel for the World Bank because of her efforts to expose corruption and reaffirm the rule of law in the form of appropriate standards of accounting, I was dumbfounded.  

What initially appear to be obscure issues of international finance, moreover, have the potential to sever ties between us and our NATO allies and weaken the national security of the United States.  The stakes involved are therefore extremely high for every American citizen.

During the World Bank and IMF Annual Meetings last October, with her encouragement, the Development Committee informed President Jim Yong Kim of the need for “a more open, transparent and accountable World Bank Group.”  The reasons that motivated that request included the following series of disturbing developments:

The Crisis in Cyprus as a Mini-Model

The threat by EU bankers to loot savings accounts held in Cyprus has raised red flags all over the world. As The New York Times (25 March 2013) has reported,

LIMASSOL, CYPRUS — It is not just about rich Russians and Cypriot retirees. Also vitally at stake in this island country’s banking crisis is Cyprus’s credibility as a place for international companies to continue doing business.

Take Avid Life Media, the Canadian-owned operator of some of the world’s biggest online dating sites. Only a few weeks ago it set up an office here as a base for its international operations, attracted to Cyprus — as hundreds of other foreign businesses have been — because of its reputation for financial stability, a low corporate tax rate, a friendly banking environment and most of all, a strong rule of law.

Now imagine that was the case for the most important bank of all, which affects the world’s economy.  Imagine that bank accounts were being looted world-wide and you will begin to appreciate the dimensions of the problem.

When I discovered that Karen Hudes’ reinstatement, which was being supported by the finance ministers of the nations of the world, was being blocked by its recently appointed president, Jim Yong Kim, who was formerly President of Dartmouth, I was further astonished, because I had encountered Kim before.  He had supported the publication for an article by a member of the computer science faculty, Hany Farid, who claimed that the backyard photographs used to convict Lee Harvey Oswald in the public mind were authentic, which was profoundly disturbing.

Hany Farid and “the backyard photographs”

That is a claim that others had long since proven false.  Jack White, the legendary JFK photo analyst, had testified to the House Select Committee on Assassinations (HSCA) when it had reinvestigated the deaths of JFK and of MLK in 1976-77 and had pointed out a dozen features that disqualify them.  Oswald himself had told Capt. Will Fritz, the Dallas Homicide detective who interrogated him, that the photo he was shown had his face pasted on someone else’s body.  Like other claims Oswald made at the time, subsequent research has proven that he was right.

The chin is not Lee Oswald’s chin, which was somewhat pointed, but a block chin; there is an insert line between the chin and his lower lip; and the  finger tips of his right hand are cut off, for example.  Even more interestingly, he realized that the two communist newspapers that Oswald was holding–The Militant and The Worker–had known dimensions and could serve as an internal rule to determine the height of the person who was holding them.  Using that method, he was able to establish that he was about 5’6″ tall, when Oswald was about 5’10″–which meant that either someone who was too short to be Oswald had posed for the photos or that they had been introduced too large when they were faked.  Either way, they could not possibly be authentic.

When I discovered that Hany Farid, who has a lab funded by the FBI, had published the claim that he had proven them to be authentic by showing that it was possible to replicate the shadow cast by the nose in one of them, I knew he was perpetrating a fraud on the public, because (1) there are four poses taken in different positions at different times, where it would have been virtually impossible for the nose shadow to remain constant from one to another; and (2) there are many other indications of fakery besides the shadow cast by the nose that prove fakery, where even if he had been right about the nose shadow, his conclusion of authenticity would have been wrong. He was violating a basic precept of science by not basing his reasoning upon all the available relevant evidence

So I wrote to President Kim to explain why Darmouth was committing a blunder in supporting Hany Farid’s claim, which I substantiated with multiple lines of proof.  Dartmouth stood pat, however, and never took steps to correct the record, even though it was a matter of immense public interest and concern.  I published an article about my experience with Kim in an article co-authored with Jim Marrs in OpEdNews, “The Dartmouth JFK-Photo Fiasco” (20 November 2009) and followed up by publishing my correspondence in “Blowing the Whistle on Dartmouth: Hany Farid in the nation’s service” (26 January 2010), which I regarded as a professional obligation.

It now appears to me that Kim may have been rewarded for his contribution to the public deception about the death of JFK by being appointed to the World Bank, just as Paul Wolfowitz appears to have been appointed by George W. Bush for his contributions to 9/11 and the “war on terror”.  I have long believed that, in Washington, D.C., the bigger the liar, the further you go.  I now believe that, when it comes to acting contrary to the public interest, the presidency of the World Bank may be another sign of compliance with corruption, as the experiences of Karen Hudes reflects.  I regard us as kindred spirits insofar as “whistle blowing” seems to be coursing through our veins.

Credit Ratings, NATO and Democracy: Too Big for Transparency?

by Karen Hudes

The World Bank and its next door neighbor, the International Monetary Fund (IMF), stand at the crossroads of the international financial system.  Both organizations are referred to as the “Bretton Woods” institutions, named for the site in New Hampshire where the founding conference of 44 countries was held in 1944.  The Bretton Woods institutions were created to prevent the “beggar thy neighbor” policies responsible for World Wars I and II.

The World Bank’s membership has now grown to 188 countries.  The World Bank and IMF share a Board of Governors comprising the Ministers of Finance of member countries.  They each have resident Boards of 24 Directors; seven Directors are appointed by 7 countries with the largest economies and 17 Directors are appointed by groups or “constituencies” of the remaining member countries.

Because of its crucial role at the heart of the world’s financial system, problems at the World Bank are going to have consequences for the world’s financial system.  I know “up close and personal” because I served as Senior Counsel for the World Bank for 21 years.  My qualifications included a J.D. from Yale Law School and M.Phil. in economics from the University of Amsterdam.  I know the institution inside and out.  And I have been blowing the whistle on improper practices at the World Bank that threaten the world’s fiscal integrity.
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Reporting Corruption up the Chain of Command

I worked in the Legal Department of the World Bank from 1986-2007.  But in 2007, I was fired in retaliation for reporting corruption at the Bretton Woods institutions up the chain of command at the World Bank, through the US Treasury Department, and to the US Congress.  My report was quite specific, namely:  that the World Bank is out of compliance with the law, because its financial statements to the holders of its $135 billion in bonds, which are denominated in 52 currencies, are not in accord with Generally Acceptable Accounting Principles and Auditing Standards.

I never imagined how intractable the corruption at the World Bank was. A reliable stakeholder analysis, based on game theory modeling, shows that failure to adhere to the rule of law by the World Bank will bring about a world-wide currency war that will make what we lived through in 2008 pale by comparison.  The stakeholder analysis began predicting success in bringing the World Bank into compliance after the European Parliament invited me to testify on May 25, 2011. My testimony included a chronology of the cover-up. President Kim has already prompted Germany to repatriate the equivalent of $36 billion in gold.  As I told Sen. Harry Reid in 2008, “the greatest security risk to the US is in alienating its partners by acting as a hegemon”.

The Failure of Press Coverage

One reason it is so difficult to end the corrupt regime at the World Bank is because there has been virtually no press coverage.  It is possible to conclude from this that democracy in the United States has been weakened by the reduction in the number of corporations who own the bulk of US media outlets (from 50 to 5 in less than twenty years.)  Barclays Bank, JPMorgan Chase & Co, The Goldman Sachs Group along with a few others use interlocking corporate ownership to control 40 percent of total wealth and 60 percent of global revenues.

This concentration of power rests on disproportionate corporate investments of one percent of all corporations.  Theorists at the Swiss Federal Institute of Technology in Zurich, using natural systems mathematical modeling and comprehensive data on the actual corporate ownership of 43,000 transnational corporations, discovered this concentration of power.  When questions are raised about “who controls the world”, this one percent looks like a very promising candidate. The crux of the matter is that the corporations control the mass media and, through the mass media, control the politicians.

Although there have been occasional articles about these issues, where some of my commentaries about them have appeared in print, for the most part, interest in these questions from the public has been few and far between, where recent interviews with Deanna Spingola and with Jim Fetzer, who are alternative media radio hosts, have been the exception. Here are some links to our recent interviews:

  1. “Spingola Speaks” with Karen Hudes, 22 January 2013, HOUR 1
  2. “Spingola Speaks” with Karen Hudes, 22 January 2013, HOUR 2,
  3. “The Real Deal” with Karen Hudes, 6 March 2013, 1.5 HOURS,
  4. “The Real Deal” with Karen Hudes, 20 March 2013, .5 HOUR,

[NOTE: Both interviews are followed by discussion with Mark Novitzky.]

The Early Years of the World Bank

The longest-serving General Counsel of the World Bank, Aaron Broches, helped to write the charters of the World Bank and IMF at the Bretton Woods conference in 1944. According to Broches, corruption intensified during former Secretary of Defense Robert McNamara’s presidency of the World Bank from 1968-81.  In 2007, the Board fired another president from the Pentagon, Paul Wolfowitz, after Wolfowitz gave a 35% salary increase to his girlfriend at the World Bank, Shaha Riza.

The Europeans asked for an inquiry. The investigation headed by Paul Volcker, unfortunately, did not address the corruption. The Europeans reacted by calling for an end to the 66 years’ “Gentlemen’s Agreement” that the US appoints the President of the World Bank and the Europeans appoint the Managing Director of the IMF.  Had the press reported my warnings to the authorities about the corruption, the US could have avoided substantial tarnish to its reputation and the loss of the Gentlemen’s Agreement.

My efforts to expose and correct the failure of the World Bank to adhere to standard accounting procedures has been enduring.  In 2005, for example, the Dutch Government asked the Audit Committee to end a campaign of retaliation against me for reporting to the Executive Board about an inaccurate evaluation on a failed Banking Sector project in the Philippines.  Then Senator Richard Lugar (R-IN) and the Senate Committee on Foreign Relations have written three letters to the World Bank on my behalf, asking for an end to the ongoing cover-up.

My Efforts to Expose Corruption

In 2007, I also met with Chris Armstrong in Senate Finance, Jayme Roth in Senator Bayh’s office, and Nicole Willet in Senator Clinton’s office.  Senators Lugar, Leahy and Bayh began asking GAO to investigate the World Bank in 2008, and the Audit Committee is requiring an independent audit of the World Bank’s internal controls. The Audit Committee also referred my case to the Bank’s Institutional Integrity Department (INT).  INT, which reports to the President of the World Bank, is used to intimidate staff.  Paul Volcker ignored INT’s sinister role and simply recommended that whistleblower retaliation cases should be removed from INT’s mandate.

I met with the Ministry of Foreign Affairs of the Dutch Government on 24 September 2007. The Dutch are not happy with the Volcker Report and the ongoing cover-up.  Moreover, previous Dutch Executive Directors, Herman Wijffels and Ad Melkert, disclosed that ‘third parties’ attempted to intimidate them and other members of the World Bank’s Board through shocking invasions of their private lives. The US violation of the safe-conduct normally accorded to diplomats is an egregious breach of honor.  Article VII, Section 8 of the World Bank’s Articles provides immunities to Executive Directors, officers and staff.

Ben Heineman (who was a member of the Volcker Panel) spoke at the Yale Law School on October 5, 2007.  On October 8, 2007, at the suggestion of minority staff on the Senate Foreign Relations Committee, I contacted Kenneth Peel at Treasury, to encourage the Bush Administration to end the cover-up on the Philippines Banking Sector Reform Loan and restore the rule of law to the Bank.  But the upshot of my efforts to correct improper procedures was to have me removed from my position as Senior Counsel, which has had an intimidating effect.

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Corruption/WorldBank/Whistleblower.mp4

Karen Hudes·

Uploaded on Apr 12, 2011

Senior Counsel for the World Bank legal department reports corruption to US Congress, the World Bank’s other member countries, and the public.