Tag: Politics

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Dean Baker: Senate Unanimously Votes Against Cuts to Social Security, Media Don’t Notice

There are few areas where the corruption of the national media is more apparent than in its treatment of Social Security. Most of the elite media have made it clear in both their opinion and news pages that they want to see benefits cut. In keeping with this position they highlight the views of political figures who push cuts to the program, treating them as responsible, while those who oppose cuts are ignored or mocked.

This pattern of coverage was clearly on display last weekend. Both the New York Times and Washington Post decided to ignore the Senate’s passage by voice vote of the Sanders Amendment. This was an amendment to the budget put forward by Vermont Senator Bernie Sanders that puts the Senate on record as opposing the switch to the chained CPI as the basis for the annual Social Security cost-of-living adjustment (COLA).

RobertReich: The Morality Brigade

We’re still legislating and regulating private morality, while at the same time ignoring the much larger crisis of public morality in America. [..]

The morality brigade worries about fetuses, but not what happens to children after they’re born. They and other conservatives have been cutting funding for child nutrition, healthcare for infants and their mothers, and schools.

The new House Republican budget gets a big chunk of its savings from programs designed to help poor kids. The budget sequester already in effect takes aim at programs like Head Start, designed to improve the life chances of poor kids.

Meanwhile, the morality brigade continues to battle same-sex marriage.

In the aftermath of 9/11 and the run up to the invasion of Iraq, the world was glued to television news, especially cable. Here in the US the news is dominated by three networks. CBS, ABC, and NBC and three major cable channels, CNN, Fox News and MSNBC. Most of the them spewed the Bush administration spin that Sadaam Hussein had weapons of mass destruction, was building a nuclear weapon and had ties to Osama bin Laden, Al Qaeda and 9/11, all lies and they knew it. This war was about the control of the oil reserves in Iraq, it always from the moment that the neocons got their hooks into the White House with Ronald Reagan’s election. It was under Reagan that the free press started to die with the end of the Fairness Doctrine and the loosening of regulation that allowed the likes of Rupert Murdoch to gobble up the airways, Fox news, and print media. It culminated in the 90’s with the corporate acquisition of NBC by General Electric and CBS by Viacom and CNN by Time Warner.

During the lead up to Iraq there was one voice on the airways that stood out against the hype, Phil Donahue, whose liberal voice focused on issues that divide liberals and conservatives in the United States, such as abortion, consumer protection, civil rights and war issues. His feud with another MSNBC host, Chris Matthews over the Iraq War led to the cancellation of Donahue’s popular show. Matthew’s involvement in the outing of CIA operative Valerie Plame is never mentioned.

I am not sure exactly when the death of television news took place. The descent was gradual-a slide into the tawdry, the trivial and the inane, into the charade on cable news channels such as Fox and MSNBC in which hosts hold up corporate political puppets to laud or ridicule, and treat celebrity foibles as legitimate news. But if I had to pick a date when commercial television decided amassing corporate money and providing entertainment were its central mission, when it consciously chose to become a carnival act, it would probably be Feb. 25, 2003, when MSNBC took Phil Donahue off the air because of his opposition to the calls for war in Iraq.

Donahue and Bill Moyers, the last honest men on national television, were the only two major TV news personalities who presented the viewpoints of those of us who challenged the rush to war in Iraq. General Electric and Microsoft-MSNBC’s founders and defense contractors that went on to make tremendous profits from the war-were not about to tolerate a dissenting voice. Donahue was fired, and at PBS Moyers was subjected to tremendous pressure. An internal MSNBC memo leaked to the press stated that Donahue was hurting the image of the network. He would be a “difficult public face for NBC in a time of war,” the memo read. Donahue never returned to the airwaves.

In 2003, the legendary television host Phil Donahue was fired from his prime-time MSNBC talk show during the run-up to the U.S. invasion of Iraq. The problem was not Donahue’s ratings, but rather his views: An internal MSNBC memo warned Donahue was a “difficult public face for NBC in a time of war,” providing “a home for the liberal antiwar agenda at the same time that our competitors are waving the flag at every opportunity.” Donahue joins us to look back on his firing 10 years later. “They were terrified of the antiwar voice,” Donahue says.

Transcript here

Democracy Now! host Amy Goodman confronted Matthews on Donahue’s firing outside NBC headquarters in New York City on the 10th anniversary of the invasion.

Buzzfeed unearthed the videos of the vitriolic exchanges between Matthew and Donahue revealing how much they despised each other. Matthews was the driving force that got Donahue fired and MSNBC was not eager to promote the anti-war point of view. Thank the internet for You Tube, here are the videos of the episode from Donahue’s show with guest Matthews:

As the dust of enthusiasm settles over this morning’s Cyprus deal with the European Union that closed the country’s second-largest bank and created a set of capital controls to prevent a run on the remaining banks, the financial world is taking a closer look and they aren’t happy. The agreement adheres to the law protecting insured accounts less than 100,000 euros. Supposedly, this deal prevented the immediate collapse of the Cyprus economy and its exit from the euro and, possibly, the European Union. Several economic analysts discuss the ramifications on the global banking and economy.

The Prodigal Greek has the simplest explanation of what capital controls entail (h/t Yves Smith):

Here is what a cash economy looks like:      

• Restrictions in daily withdrawals
• Ban on premature termination of time savings deposits
• Compulsory renewal of all time savings deposits upon maturity
• Conversion of current accounts to time deposits
• Ban or restrictions on non cash transactions
• Restrictions on use of debit, credit or prepaid debit cards
• Ban or restriction on cashing in checks
• Restrictions on domestic interbank transfers or transfers within the same bank
• Restrictions on the interactions/transactions of the public with credit institutions
• Restrictions on movements of capital, payments, transfers
• Any other measure which the Finance Minister or the Govern or of Cyprus Central Bank see necessary for reasons of public order and safety

In other words, Cyprus euros can only be spent in Cyprus and cannot be taken out of Cyprus to any other country; checks, debit and credit cards are useless. It is a strictly cash and carry local economy since Cypriots will not be able to make internet purchases. It will restrict travel into and out of the island, as well. The agreement has isolated the tiny island from the rest of the EU. Economics and financial analyst, Frances Coppola explains the ramifications of these restrictions:

From Tuesday, Cyprus becomes a black hole in the Eurozone: any money that goes into it stays there, and no money can leave……From a safe distance, it will appear frozen in time, a small cash-based economy, isolated from the rest of the EU. While inside, invisible to all except those who actually go there – or live there – its social fabric is torn apart as its economy collapses. Note the final clause in the capital control bill:

   Any other measure which the Finance Minister or the Governor of Cyprus Central Bank see necessary for reasons of public order and safety

So as people’s livelihoods are destroyed and their standard of living crashes, other measures may be introduced to ensure that they can’t take matters into their own hands.

From Yves Smith at naked capitalism is her summation of the attempt to contain Cyprus:

First, confiscating bank deposits is now on the table in any future crisis. That’s toothpaste that’s not going back in the tube. Commerzbank chief economist Jörg Krämer has already suggested (Google translates) “a one-time property tax levy” for Italy and “a tax rate of 15 percent on financial assets.” And adding fuel to the fire, the Leader of the UK Independence Party has urged expats in the periphery countries, in particular the 750,000 British in Spain to “Get your money out of there while you’ve still got a chance.”

Second, capital controls in Cyprus mean that there are now two Euros in effect: The Euro that you can use only in Cyprus, and the Euro you can use elsewhere in the so-called “monetary union.” So from the perspective of people in Cyprus, the results are in some ways worst that a breakup: rather than having depreciated dough, you have dough that has been impounded, particularly in terms of using it outside Cyprus. [..]

Third, these concerns may be amplified by how rapidly and visibly the Cypriot economy craters. The “rapidly” is due to the fact, as discussed in greater detail in the post from Cyprus.com below, that the Cyprus economy will suffer a one-two punch: the loss of a big chunk of wealth, plus the disappearance of much of the financial services sector, which was 45% of GDP.

The capital controls have isolated Cyprus from the rest of the EU without actually expelling the country.

The deal may have stayed the immediate crisis but it hasn’t stopped the eventual collapse of the Cyprus economy or its future exit from the euro. Not only that, it is the shot across the bow for other economically troubled EU countries of things to come.  

Gaius Publius of Americablog succinctly defined one of those vague terms that we heard so often since the banking crisis began in 2007, Credit Default Swaps (CDS) :

Credit default swaps are pure casino bets. They were originally designed as a form of insurance against bond and other credit defaults (“I’ll pay you a monthly fee and you pay me my losses if these bonds default.”)

It’s a simple concept, but CDSs soon evolved. Turns out you don’t have to actually hold the bonds to insure them. This means that one guy can sit at a table with a bunch of bonds (or bundles of mortgages), while another guy can insure them. Meanwhile, at 50 other tables, 50 more guys can buy the same “insurance” on the same bonds from anyone who will sell it to them. Keep in mind, only the first guy actually holds the bonds. The other guys just know they exist.

That’s 50 side-bets on one set of bonds. Placing side-bets on someone else’s property is like betting on a ball game you’re just watching. Like I said, pure casino money.

Do you see the problem? One guy’s bonds default and suddenly 51 guys in that room, everyone who sold “insurance,” they’re all wiped out. Why? Because the dirty secret of derivatives bets is that the people offering the “insurance” rarely have the money. They’re betting that they can collect “insurance” fees forever and the defaults will never come. That’s what happened with mortgage-backed bets in 2007, and that’s what’s happening today.

In 2010, the Democratic held Congress passed the Dodd-Frank Wall St. Reform and Consumer Protection Act to rein in the worst practices of the banks and Wall St. Needless to say, it is overly complicated, inadequate and has yet to be fully implemented.

That has not stopped the now Republican held House, along with some Democrats, to end some of the regulations. Less that week after Sen. Carl Levin released a scathing report on the $6.7 billion loss (pdf) of JP Morgan Chase in the infamous “London Whale” deal, the House Agriculture Committee, go figure that logic, approved seven bills that would gut regulation of the derivatives market and once again, if the banks lose, the tax payer makes good the losses. Sound familiar? Does TARP ring a bell? The housing market crash?

In his Salon article David Dayen asks if JP Morgan is a farmer?

It turns out that the Agriculture Committees have held jurisdiction over derivatives since the mid-19th century, when farmers used derivatives to achieve stability over future prices. Traders still use derivatives for corn and other commodities, but the world of derivatives has grown far more sophisticated over the decades. Nevertheless, congressional committees zealously guard their jurisdictions, and so a bunch of lawmakers from rural states get to determine a major aspect of financial policy. [..]

To see how this all works, just look at the hearing on these derivatives bills, held last week. When Ag Committee chairman Frank Lucas wasn’t openly parroting industry scare tactics about energy price spikes from regulation, he called on a list of witnesses that included four industry trade group representatives and one public advocate from Americans for Financial Reform, Wallace Turbeville. (He did great (pdf).) Or for an even clearer indication, read these PowerPoint slides created for Ag Committee staff by the Coalition for Derivatives End-Users, an industry-backed lobbyist organization. This extremely one-sided perspective on the issue simply becomes the default position for committee members and their staffs, an example of the “cognitive capture” in D.C. that sidelines alternative voices. And it all happens under the radar.

One of the Democratic House members who is sponsoring these bills, is Rep. Jim Himes, a former Goldman Sachs vice president who represents the Connecticut bedroom communities of Wall Street traders. It’s not hard to imagine why he defended his support of these bills when asked by the press. The Democratic members of the committee who voted with the 25 Republicans to send these bills to the House floor are: Pete Gallego (TX-23); Ann Kuster (NH-2); Sean Patrick Maloney (NY-18); Mike McIntyre (NC-07); David Scott (GA-13); and Juan Vargas (CA-51).

These are the bills that were passed by the committee:

H.R. 634 (pdf), the Business Risk Mitigation and Price Stabilization Act of 2013

·       H.R. 677 (pdf), the Inter-Affiliate Swap Clarification Act

·       H.R. 742 (pdf), the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013

·       H.R. 992 (pdf), the Swaps Regulatory Improvement Act

·       H.R. 1003 (pdf), To improve consideration by the Commodity Futures Trading Commission of the costs and benefits of its regulations and orders.

·       H.R. 1038 (pdf), the Public Power Risk Management Act of 2013

·       H.R. 1256 (pdf), the Swap Jurisdiction Certainty Act

Even if these bills all get passed, they will never see the light of day in the Senate.

Sheila Bair, the longtime Republican who served as chair of the Federal Deposit Insurance Corporation (FDIC) during the fiscal meltdown five years ago, joins Bill to talk about American banks’ continuing risky and manipulative practices, their seeming immunity from prosecution, and growing anger from Congress and the public.

“I think the system’s a little bit safer, but nothing like the dramatic reforms that we really need to see to tame these large banks, and to give us a stable financial system that supports the real economy, not just trading profits of large financial institutions,” Bair tells Bill.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Paul Krugman: Hot Money Blues

Whatever the final outcome in the Cyprus crisis – we know it’s going to be ugly; we just don’t know exactly what form the ugliness will take – one thing seems certain: for the time being, and probably for years to come, the island nation will have to maintain fairly draconian controls on the movement of capital in and out of the country. In fact, controls may well be in place by the time you read this. And that’s not all: Depending on exactly how this plays out, Cypriot capital controls may well have the blessing of the International Monetary Fund, which has already supported such controls in Iceland.

That’s quite a remarkable development. It will mark the end of an era for Cyprus, which has in effect spent the past decade advertising itself as a place where wealthy individuals who want to avoid taxes and scrutiny can safely park their money, no questions asked. But it may also mark at least the beginning of the end for something much bigger: the era when unrestricted movement of capital was taken as a desirable norm around the world.

David Dayen: Banks Are Too Big to Fail Say … Conservatives?

Intellectuals on the right are coming around to the idea that our biggest financial institutions could use a little regulation.

Members of the Federal Reserve don’t usually make the rounds at partisan gatherings. But amid the tri-cornered hats and “#StandWithRand” buttons of last week’s Conservative Political Action Conference (CPAC)-the largest annual gathering of conservatives in the country-was Richard Fisher, president of the Dallas Federal Reserve Bank. In a Saturday morning speech, Fisher quoted Revolutionary War hero Patrick Henry, who once said that while “Different men often see the same subject in different lights,” such quibbling had to be set aside in a time of “awful moment to this country.”

Fisher described the current time as an era of economic injustice in which the nation’s largest banks threaten our financial stability and act with immunity. He said that the Dodd-Frank financial reform law did not go nearly far enough to fix the problem, and that mega-banks still profited from being “Too Big to Fail.” His solutions included a proposal to limit the total assets held by the biggest financial institutions, keeping them at a size that would make them “small enough to save.” And he called on citizens of all political stripes to join him in this cause. “The American people will be grateful to whoever liberates them from a recurrence of taxpayer bailouts,” Fisher concluded. It was an indication of just how bipartisan the support for breaking up the big banks has become.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

The Sunday Talking Heads:

Up with Chris Hayes: Joining Chris are: Melissa Murray, professor of law at University of California Berkeley Law School; Urvashi Vaid (@urvashivaid), director of Engaging Tradition Project at Columbia Law School’s Center for Gender & Sexuality Law; Camilla Taylor, Marriage Project Director for Lambda Legal; Dean Hara, widower of Representative Gerry Studds who was the first openly gay member of Congress, plaintiff in Gill et al. v. Office of Personnel Management et al.; Dan Savage (@fakedansavage), editorial director of The Stranger, host of Savage Love podcast, columnist of Savage Love; John Liu (@JohnLiu2013), comptroller of New York City and 2013 NYC Mayoral candidate; Bill Thompson (@BillThompsonNYC), served as comptroller of New York City from 2002-2009, 2013 NYC Mayoral candidate; Sal Albanese (@SalAlbanese2013), served as a New York City councilman from 1983-1997, 2013 NYC Mayoral candidate; and Bill De Blasio (@BilldeBlasio), New York City public advocate, 2013 NYC Mayoral candidate.

This Week with George Stephanopolis: The guests this week are former Obama 2012 campaign manager Jim Messina faces off with former Bush deputy chief of staff Karl Rove with the political roundtable guests “Nightline” co-anchor Terry Moran, who covers the Supreme Court for ABC News; Democratic strategist and ABC News contributor Donna Brazile; and Wall Street Journal columnist Peggy Noonan.

A special foreign policy roundtable discusses the president’s trip to the Middle East with panleists  ABC News global affairs anchor Christiane Amanpour; Atlantic national correspondent Jeffrey Goldberg; former Romney campaign senior adviser Dan Senor, co-founder of the Foreign Policy Initiative.; and Time Magazine assistant managing editor Rana Foroohar.

In the spotlight,  director Alexandra Pelosi and former New Jersey Gov. Jim McGreevey discuss their new HBO film “Fall to Grace” about McGreevey’s life and work since his controversial exit from office.  

Face the Nation with Bob Schieffer: Mr. Schieffer’s guests are Rep. Mike Rodgers (R-MI), Chairman of the House Intelligence Committee; New York Times columnist Tom Friedman, CBS News’ Clarissa Ward and Time Magazine‘s Bobby Ghosh for a panel discussion on the Middle East.

Baltimore Ravens Linebacker Brendon Ayanbadejo and Pro-Proposition 8 lawyer Austin Nimcocks will talk about the argument before the Supreme Court on same sex marriage.  

The Chris Matthews Show: Guests this week are David Ignatius, The Washington Post Columnist; Kathleen Parker, The Washington Post Columnist: Helene Cooper; The New York Times White House Correspondent; and Michael Crowley, TIME senior correspondent.

Meet the Press with David Gregory: On MTP this week the guests are  New York City’s Independent Mayor Michael Bloomberg and Executive Vice President of the National Rifle Association Wayne LaPierre.

NBC News Chief Foreign Correspondent Richard Engel, who just returned from the region, for a live report on the president’s trip to the Middle East.

Then insights and analysis from the roundtable: Chairman of the Faith and Freedom Coalition Ralph Reed; Democratic strategist Hilary Rosen; Washington Post columnist EJ Dionne; and the New York Times’ David Brooks.

State of the Union with Candy Crowley: This Sunday, Ms. Crowley will have an exclusive interview with Veteran Affairs Secretary Eric Shinseki on the growing backlog of veterans claims. Governor John Hickenlooper (D-CO) joins her to discuss his signing of two landmark bills, as Colorado becomes the sixth state to legalize civil unions, and the second state to enact gun control bills in the wake of the Newtown, Connecticut shootings.

California Attorney General Kamala Harris, Austin Nimocks from Alliance Defending Freedom, Republican Strategist Ana Navarro and CNN Senior Political Analyst Ron Brownstein on the Supreme Court’s decision to hear oral arguments in the challenges to the federal Defense of Marriage Act and California’s Proposition 8.

This week on Up with Chris Hayes we learned about the extreme impact climate change on our coastal cities. New research show storm surges like the one from Hurricane Katrina could become ten times more frequent. Host Chris Hayes and his guests Rashid Khalidi, professor of modern Arab studies at Columbia University; Noura Erakat, adjunct professor at Georgetown University; Matt Duss, policy analyst at American Progress; and Ann Lewis, former advisor to Secretary of State Hillary Clinton discuss what they have learned this week.

More hurricane surges in the future

by Aslak Grinsted, Nils Bohr Institute

By examining the frequency of extreme storm surges in the past, previous research has shown that there was an increasing tendency for storm hurricane surges when the climate was warmer. But how much worse will it get as temperatures rise in the future? How many extreme storm surges like that from Hurricane Katrina, which hit the U.S. coast in 2005, will there be as a result of global warming? New research from the Niels Bohr Institute show that there will be a tenfold increase in frequency if the climate becomes two degrees Celcius warmer. The results are published in the scientific journal, Proceedings of the National Academy of Science, PNAS.

NFL passes new helmet rule, eliminates ‘Tuck Rule’

by Jim Corbett, USA Today

The most controversial rules change passed at these now-concluded owners meetings will ban players from delivering forcible blows with the crown of the helmet. It was the biggest step aimed at making the game safer, particularly in regards to concussion prevention in these meetings that approved three new rules related to player safety. [..]

Wednesday’s other changes included passing a rule to fix the Thanksgiving Day challenge faux pas when Detroit Lions coach Jim Schwartz tried to challenge a Justin Forsett 81-yard touchdown run and his challenge negated the official’s ability to review the scoring play. Now a challenge of a play like that will result in a 15-yard penalty with the original play getting reviewed.

The other notable change? The infamous “Tuck Rule” is no more. The New England Patriots abstained from voting, as did Washington Redskins general manager Bruce Allen, who was an Oakland Raiders executive in January 2002 when Patriots quarterback Tom Brady’s seeming fumble when his throwing arm came forward was ruled an incompletion. The Patriots went on to win that playoff game and eventually the Super Bowl.

No More Drones for CIA

by Daniel Klaidman, The Daily Beast

At a time when controversy over the Obama administration’s drone program seems to be cresting, the CIA is close to taking a major step toward getting out of the targeted killing business. Three senior U.S. officials tell The Daily Beast that the White House is poised to sign off on a plan to shift the CIA’s lethal targeting program to the Defense Department.

The move could potentially toughen the criteria for drone strikes, strengthen the program’s accountability, and increase transparency. Currently, the government maintains parallel drone programs, one housed in the CIA and the other run by the Department of Defense. The proposed plan would unify the command and control structure of targeted killings and create a uniform set of rules and procedures. The CIA would maintain a role, but the military would have operational control over targeting. Lethal missions would take place under Title 10 of the U.S. Code, which governs military operations, rather than Title 50, which sets out the legal authorities for intelligence activities and covert operations. “This is a big deal,” says one senior administration official who has been briefed on the plan. “It would be a pretty strong statement.”

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Eugene Robinson: Denying Victims a Vote

Shame on Harry Reid for killing any prospect of an assault weapons ban. I understand why he did it, but that doesn’t make it right.

In his State of the Union address, President Obama spoke with fiery eloquence about the cost of gun violence in shattered lives. “They deserve a vote,” the president said of the victims, challenging Congress to take a stand on reasonable legislation to keep deadly weapons out of the hands of killers.

Reid obviously disagrees. The Senate majority leader decided Tuesday to abandon a proposal by Sen. Dianne Feinstein, D-Calif., that would have banned the sale of some military-style firearms-weapons designed not for sport or self-defense, but for killing enemy soldiers in battle. Reid said he was dropping the measure-without a vote-because it would surely fail.

John R. MacArthur: Obama’s Real Political Program

You have to hand it to Barack Obama when it comes to having it both ways: He never stops serving the ruling class, yet the mainstream media, from right to left, continues to pretend that he’s some sort of reincarnation of Franklin D. Roosevelt, fully committed to the downtrodden and deeply hostile to the privileged and the rich.

The president’s double game was never more adroit than during his most recent State of the Union address. Reacting to the speech, the right-wing columnist Charles Krauthammer spoke on Fox News of Obama’s “activist government” beliefs and his penchant for “painting the Republicans as the party of the rich” while portraying himself as the defender of the “middle class, Medicare and all this other stuff.” Meanwhile, the “liberal” New York Times praised his “broad second-term agenda” as “impressive” and blamed the GOP for “standing in the way” of the many liberal reforms that the president supposedly wants to enact to help the poor and the middle class.

Yet the address contained hardly anything progressive: [..]

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.  

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Paul Krugman: Treasure Island Trauma

A couple of years ago, the journalist Nicholas Shaxson published a fascinating, chilling book titled “Treasure Islands,” which explained how international tax havens – which are also, as the author pointed out, “secrecy jurisdictions” where many rules don’t apply – undermine economies around the world. Not only do they bleed revenues from cash-strapped governments and enable corruption; they distort the flow of capital, helping to feed ever-bigger financial crises. [..]

So, about Cyprus: You might wonder why anyone cares about a tiny nation with an economy not much bigger than that of metropolitan Scranton, Pa. Cyprus is, however, a member of the euro zone, so events there could trigger contagion (for example, bank runs) in larger nations. And there’s something else: While the Cypriot economy may be tiny, it’s a surprisingly large financial player, with a banking sector four or five times as big as you might expect given the size of its economy.

Mary L. Dudziak: Obama’s Nixonian Precedent

ON March 17, 1969, President Richard M. Nixon began a secret bombing campaign in Cambodia, sending B-52 bombers over the border from South Vietnam. This episode, largely buried in history, resurfaced recently in an unexpected place: the Obama administration’s “white paper” justifying targeted killings of Americans suspected of involvement in terrorism.

President Obama is reportedly considering moving control of the drone program from the Central Intelligence Agency to the Defense Department, as questions about the program’s legality continue to be asked. But this shift would do nothing to confer legitimacy to the drone strikes. The legitimacy problem comes from the secrecy itself – not which entity secretly does the killing. Secrecy has been used to hide presidential overreach – as the Cambodia example shows.