Thursday Reads: Crisis in Cyprus, The End of the “Creative Class” Dream, the Grand Betrayal, and Other News

coffee break

Good Morning!!

There’s quite a bit of news on the Cyprus crisis this morning. But first, last night Joe Weisenthal posted this assessment of how bad things had already gotten: In Just Days A Modern Economy Has Been Set Back 50 Years, And It May Never Be The Same Again. That’s a quote from Ciaran O’Hagan of Société Générale in Paris. Weisenthal writes:

According to reports, Cyprus will try again tomorrow to cobble together some kind of bank bailout bill that can pass parliament.

Cyprus needs to raise another 5.8 billion euros, which it could do from some combination of deposit taxes, Russian money, and pension nationalization.

None of the options are good, but until it’s done, banks will likely have to remain closed, a situation that can’t go on much longer.

This is a stunning turn of events for a modern Eurozone nation.

This morning, the news broke that the European Central Bank (ECB) has given Cyprus an ultimatum. Bloomberg reports:

The European Central Bank said it will cut Cypriot banks off from emergency funds after March 25 unless the Mediterranean island agrees on a bailout with the European Union and International Monetary Fund.

“The Governing Council of the European Central Bank decided to maintain the current level of Emergency Liquidity Assistance, ELA, until Monday, 25 March 2013,” the Frankfurt- based ECB said in an e-mailed statement today. “Thereafter, ELA could only be considered if an EU/IMF program is in place that would ensure the solvency of the concerned banks.”

The Cypriot parliament this week rejected a proposed levy on bank deposits to raise 5.8 billion euros ($7.5 billion), which euro-area finance ministers backed as a condition for the country’s bailout. A bank holiday in Cyprus has been extended to March 25, giving policy makers until Monday to find a compromise to prevent a collapse of the country’s banks.

“With this statement, the ECB put even more pressure on European finance ministers and the Cypriot government to come up with a deal,” said Juergen Michels, chief euro-area economist at Citigroup Inc. in London. “But we’ll have to see whether they’ll actually follow through with their threat if there’s no deal by Monday and policy makers decide to further extend the bank holiday.”

Read the rest of this entry »


New Stage in Eurozone Crisis: Cyprus Forced to Cover Bailout from Individual Bank Deposits

Lines formed at ATMs in Cyprus after news of bank levy broke

Lines formed at ATMs in Cyprus after news of bank levy broke

This is a topic on which I know very little, but I thought we should have a thread on it anyway.

On Saturday morning, news broke that the terms of a bailout of banks in Cyprus would require a levy on individual depositors–including those holding small accounts. People immediately rushed to ATMs to withdraw as much cash as possible before the deal was voted on. The most accessible article I found on this is by Edward Harrison of Credit Writedowns blog, posted at Alternet: Hell Breaks Loose in Europe as Banking Crisis Unfolds: Depositors’ Money May Be Seized.

Saturday morning we learned that after hours of tense negotiation, Europe has hammered out a 10bn euro “bailout” of Cyprus. I put the term bailout in quotes because the key feature of this deal is the bail-in of Cypriot depositors to the tune of 5.8bn euros, about a third of Cyprus’ GDP. This means that depositors went to sleep on Friday night and woke up Saturday to find that their money, deposited safely in Cypriot banks, had been seized and used to “bail out” the country. While the bail-in became official EU bank rescue policy during the Spanish crisis last summer, bank depositors were never mentioned at that time. I see this as an extreme measure which, if the European banking crisis continues elsewhere, will have very negative implications for bank depositor confidence in other European periphery countries.

There has since been a revision in the amounts to be deducted–I’ll get to that later on.

Back to Harrison:

Cyprus’ finance minister Michalis Sarris said large deposit withdrawals would be banned. Jörg Asmussen, a German member of the ECB board and a key ally of Angela Merkel, added that the part of the deposit base equivalent to the actual bail-in levies would be frozen immediately so the funds could be used to pay for the “bailout”….

Some of the bailout lenders like the IMF had actually been calling for Cyprus to seize all deposits larger than 100,000 euros. So this falls well short of those demands. Nonetheless, a rubicon has been crossed. Not only are senior bank debt lenders now on the hook before a single penny of European Union loans or guarantees flow to busted eurozone countries, but so are subordinated debt holders and so are even depositors. As an EU citizen, you must now believe that any lending exposure you have to a bank whether as a bond lender or deposit lender can be seized and confiscated by government, no matter how small the exposure. The FT notes that “[e]ven Ireland, whose banking sector was about as large relative to its economy as Cyprus’ when it was forced into a bailout in 2010, never considered such a measure.

Read much more at the Alternet link.

Here’s an FAQ on the crisis published at Fortune earlier tonight. The scary introductory paragraphs after the jump:

Read the rest of this entry »


Saturday Late Morning Reads

groucho reading newspaper

Good Morning!!

Last night I watched an old Marx Brothers movie–Monkey Business. It’s been years since I’ve watched one of their movies, and I’d forgotten how much fun it can be. Laughter really is the best medicine. Wouldn’t it be great if we could see a movie with the Marx Brothers making people like Mitch McConnell, Paul Ryan, and David Gregory look like complete idiots?

Not that Republicans need Groucho, Chico, or Harpo to highlight their idiocy, as you can see from this story at TPM: CPAC Event On Racial Tolerance Turns To Chaos As ‘Disenfranchised’ Whites Arrive

The session, entitled “Trump The Race Card: Are You Sick And Tired Of Being Called A Racist When You Know You’re Not One?” was led by K. Carl Smith, a black conservative who mostly urged attendees to deflect racism charges by calling themselves “Frederick Douglass Republicans.”

Disruptions began when he started accusing Democrats of still being the party of the Confederacy — a common talking point on the right….Disruptions began when he started accusing Democrats of still being the party of the Confederacy — a common talking point on the right.

But “things really went off the rails” in the question and answer session.

Scott Terry of North Carolina, accompanied by a Confederate-flag-clad attendee, Matthew Heimbach, rose to say he took offense to the event’s take on slavery. (Heimbach founded the White Students Union at Towson University and is described as a “white nationalist” by the Southern Poverty Law Center.)

“It seems to be that you’re reaching out to voters at the expense of young white Southern males,” Terry said, adding he “came to love my people and culture” who were “being systematically disenfranchised.”

Smith responded that Douglass forgave his slavemaster.

“For giving him shelter? And food?” Terry said.

At this point the event devolved into a mess of shouting.

It sounds just like a Marx Brothers movie, without the jokes. There’s much more at the link–you have to read it to believe it.

More on CPAC from Gay activist and talk radio host Michaelangelo Signorile: Brian Brown, NOM Leader, At CPAC: Prop 8 Challenge Is ‘Biggest Strategic Mistake’ of Gay Rights Movement

A day before GOP Sen. Rob Portman of Ohio reversed his position and came out for marriage equality, Brian Brown, president of the National Organization for Marriage (NOM), insisted conservatives are rallying against gay marriage and that “if the Republican Party abandons traditional marriage, there is no Republican Party.” He also predicted that California’s Proposition 8 will be upheld by the Supreme Court, which is hearing arguments on the case later this month, calling the decision by gay advocates to challenge Prop 8 “the biggest strategic mistake the supporters of same-sex marriage ever have made.”

“I think people are excited [about traditional marriage],” Brown said in an interview on my SiriusXM OutQ radio program, speaking at the Conservative Political Action Conference in National Harbor, Md., on Thursday. “[Florida Senator] Marco Rubio just stood up there and said, ‘Just because I’m for traditional marriage doesn’t make me a bigot.’ And everyone stood up and cheered. The grass roots of conservatism are absolutely united behind traditional marriage. Folks I’m seeing here are absolutely committed.”

You can listen to the whole interview at the HuffPo link.

marx bros reading1

I liked TBogg’s rude comment on Portman’s overnight conversion: Honey, I’m Homo.

If you think the rapidity with which a Republican politician, who was previously against equal rights for gays, suddenly switches sides once he discovers that Teh Ghey has invaded his happy All-American home is impressive, you should see how quickly they embrace abortion as a God-given right the moment their daughter announces that she has been knocked up.

By a black guy.

Jonathan Chait has a longer, more carefully reasoned discussion of Portman’s hypocrisy. Here’s the conclusion:

It’s pretty simple. Portman went along with his party’s opposition to gay marriage because it didn’t affect him. He thought about gay rights the way Paul Ryan thinks about health care. And he still obviously thinks about most issues the way Paul Ryan thinks about health care.

That Portman turns out to have a gay son is convenient for the gay-rights cause. But why should any of us come away from his conversion trusting that Portman is thinking on any issue about what’s good for all of us, rather than what’s good for himself and the people he knows?

Exactly.

As for Paul Ryan, he claims that “Democrats’ budget puts US on path ‘straight into debt crisis.'” From The Hill:

Ryan used the weekly GOP address to promote the budget plan bearing his name, saying it will benefit Americans worried about jobs and the cost of living, those trying to keep up with the cost of healthcare and younger workers hoping for a secure retirement. “And for taxpayers fed up with the status quo, we will cut wasteful spending,” he said….

Ryan took aim at President Obama and Senate Democrats, saying the tax increases in a proposal from Sen. Patty Murray (D-Wash.) only “fuel more spending.”

“We know where this path leads—straight into a debt crisis, and along the way, fewer jobs, fewer opportunities, and less security,” Ryan said, painting a desperate image of rising interest rates and inflating debt payments.

“Our finances will collapse,” he warned. “You think this can’t happen here? Just look at Europe.”

harpo-gookie

WTF?! Europe’s problems are being exacerbated by austerity! Is this guy for real? Here’s what the Tax Policy Center has to say about Mr. Ryan’s “budget.”

House GOP Would Need $5.7 Trillion in Tax Hikes to Offset Ryan Rate Cuts

House Budget Committee Chair Paul Ryan’s (R-WI) fiscal plan promises to balance the federal budget in 10 years, make major cuts in income tax rates for both individuals and corporations, and raise the same amount of revenue as current law. If House Republicans want to do all three, they will have to eliminate trillions of dollars in popular tax preferences.

The Tax Policy Center estimates that cutting individual rates to 10 percent and 25 percent, repealing the Alternative Minimum Tax and the tax increases included in the Affordable Care Act, and cutting the corporate rate from 35 percent to 25 percent would add $5.7 trillion to the deficit over the next decade. Thus, if House Republicans want to cut these taxes and still collect the revenues they promise, they’d have to raise other taxes by $5.7 trillion.

The tax cuts described in Ryan’s budget would generate a huge windfall for high-income taxpayers. On average, households would get a cut of $3,000. But those in the top 0.1 percent of income, who make $3.3 million or more, would get a whopping $1.2 million on average–a 20 percent increase in their after-tax income.

By contrast, middle-income households would get an average tax cut of about $900. Those in the bottom 20 percent (who make $22,000 or less) would get $40 and one-third of them would get no tax cut at all.

Some important caveats here: TPC did not estimate the revenue effects of a Ryan tax proposal since the budget does not include an actual plan. Rather, it modeled generic tax cuts that follow the outline of what his budget describes. And because his plan does not identify any tax increases, TPC modeled only the tax cuts.

Some budget. Here’s Matthew O’Brien at The Atlantic: Paul Ryan’s $5.7 Trillion Magic Trick

I’m not really a fan of magic, but I’m even less of one when it’s politicians doing the tricks.

That’s why I’ve had some less-than-nice things to say about Paul Ryan’s latest budget. Like its previous iterations, it explicitly says how he wants to cut taxes, but says nothing about how he wants to pay for it. Instead, Ryan uses a magic asterisk. He merely waves his hand, and says he’ll cut enough tax expenditures to pay for all of his tax cuts. He just can’t tell us what any of these tax expenditures are. Not a single one.

This is some pretty expensive hand-waving….this magic asterisk is worth about $1 trillion more than before. Ryan keeps the same tax cuts he had last year, but he assumes these same cuts will raise an extra 0.5 percent of GDP in revenue. In other words, it’s the same magical budgeting we’ve come to know from Ryan — but now with even more magic!

It’s particularly magical for the top 1 percent of households. The chart below from the Tax Policy Center shows the percent change in after-tax incomes for each income group from Ryan’s tax cuts. That’s what comforting the comfortable looks like.

There’s much more (with charts) at the link.

Now here’s some good news–if it holds up: Federal Judge Finds National Security Letters Unconstitutional, Bans Them. From Wired:

Ultra-secret national security letters that come with a gag order on the recipient are an unconstitutional impingement on free speech, a federal judge in California ruled in a decision released Friday.

U.S. District Judge Susan Illston ordered the government to stop issuing so-called NSLs across the board, in a stunning defeat for the Obama administration’s surveillance practices. She also ordered the government to cease enforcing the gag provision in any other cases. However, she stayed her order for 90 days to give the government a chance to appeal to the Ninth Circuit Court of Appeals.

“We are very pleased that the Court recognized the fatal constitutional shortcomings of the NSL statute,” said Matt Zimmerman, senior staff attorney for the Electronic Frontier Foundation, which filed a challenge to NSLs on behalf of an unknown telecom that received an NSL in 2011. “The government’s gags have truncated the public debate on these controversial surveillance tools. Our client looks forward to the day when it can publicly discuss its experience.”

The telecommunications company received the ultra-secret demand letter in 2011 from the FBI seeking information about a customer or customers. The company took the extraordinary and rare step of challenging the underlying authority of the National Security Letter, as well as the legitimacy of the gag order that came with it.

The national security letters are one of those holdovers from Bush that the Obama administration has defended in court. Please read the whole article if you have time–there’s a lot of good background info. Here’s the press release from the EFF. Who knows what will happen on appeal or if the case makes it to the Supreme Court, but this is very good news.

chico marx reading

Finally, we can look forward to some more insanity from the CPAC crowd today–Ted Cruz will be closing out the conference with his keynote speech–and before that there’ll be a whole assortment of mixed Republican nuts. From NPR:

It’s the last day of the annual Conservative Political Action Conference in Maryland, which will culminate in a keynote address by up-and-coming Sen. Ted Cruz of Texas. As NPR’s David Welna reports,

“Though he’s only been a senator since January, this will be the third year Texas Republican Sen. Ted Cruz is addressing CPAC. This former Texas solicitor general and Tea Party favorite got top billing at the conference after aggressively questioning former GOP senator Chuck Hagel during Hagel’s confirmation hearing to be secretary of defense.”

Also scheduled to speak are Wisconsin Gov. Scott Walker, Newt Gingrich, Rep. Michele Bachmann and Sarah Palin. (CPAC has the full schedule on its website.)

Sorry this post is so late–I hope everyone hasn’t given up on me already. If anyone is out there, please share your recommended links in the comments. I look forward to clicking on them!

Have a great weekend!


Paul Ryan Makes Major Freudian Slip

Hilarious! While introducing his budget plan today, Paul Ryan unconsciously revealed his true purpose.

From The Hill:

During the unveiling of his new budget proposal, House Budget Committee Chairman Paul Ryan (R-Wis.) made a slip of the tongue while railing against President Obama’s healthcare law.

“This is something we will not give up on because we are not going to give up on destroying the healthcare system for the American people,” Ryan accidentally said.

Here’s the clip, courtesy of DailyKos:

Bwwwwwwaaaaaahahahahahahaha!!!

That put me in mind of another great Freudian slip by the master of Freudian slips, George W. Bush.

This is psychoanalytic open thread. Just kidding–it’s wide open. What are you hearing?


Tuesday Reads: A Mashup of Recent Stories I Liked

morning paper cat dog

Good Morning!!

Over the weekend, I came across this amazing story in The Daily Beast, and I just had to share it: An Auschwitz Survivor Searches for His Twin on Facebook. It’s the story of Menachem Bodner who was just four years old when the Nazi prison camp was liberated. He is now 72 and is now trying to find his twin brother whom he last saw when they were being used as experimental subjects by the infamous Josef Mengele.

It’s most likely that Menachem Bodner last saw his identical twin in 1945, in Dr. Josef Mengele’s gruesome Auschwitz laboratory. He was 4 then and doesn’t remember his time in the notorious death camp. But in the 68 years that have followed, Bodner says he’s “always” been certain he was one of a pair. He just didn’t have any proof until this past year. Now, he’s searching for Jeno, a man who probably looks just like him, and who has a distinctive “A-7734” tattoo on his forearm. And 1 million Facebook users are helping him look.

Mengele, known among prisoners as “the Angel of Death,” was deeply fascinated with twins and used them for research experiments in his macabre Auschwitz lab. Thankfully, Bodner, now 72, has no recollection of the cruelty he most certainly endured while undergoing experiments, though he can remember a sense of paralyzing fear. Unfortunately he also has few impressions of his family’s prewar life in a small town east of Munkacs, Hungary, which is now in the Ukraine. But despite the lack of memories from a war-marred childhood, Bodner says that throughout his life he’s felt a deep connection with his twin—and is positive he’s still alive and out there. But where?

Until last May, Bodner didn’t even know that his own name was once Elias Gottesmann. Now he knows that. And he knows for certain that he has a twin—thanks to the Nazis’ dogged, pathological documentation of their crimes. Ayana KimRon, a professional genealogist in Israel, found the evidence, clearly written in a record put together by the organization Candles, of twins who were “identified as having been liberated at Auschwitz or from a subcamp”:

A-7733, Gottesmann, Elias, 4
A-7734, Gottesmann, Jeno, 4

Incredible! As a result of his search, Bodner has already found family members that he never knew were looking for him, but his dream is to find his brother. What a story it would be if they could be reunited!

I don’t know if you have been following the latest episode in the ongoing battle between Joe Scarborough and Paul Krugman. Scarborough somehow got together with Jeffrey Sachs of The Earth Institute at Columbia University to publish an op-ed in the Washington Post last Friday: Deficits Do Matter. In the op-ed, they attacked Paul Krugman by setting up a series of straw men and then knocking them down–mainly the false claim that Krugman thinks deficits are never a problem for governments. Here’s the introductory paragraph:

Dick Cheney and Paul Krugman have declared from opposite sides of the ideological divide that deficits don’t matter, but they simply have it wrong. Reasonable liberals and conservatives can disagree on what role the federal government should play yet still believe that government should resume paying its way.

It has become part of Keynesian lore in recent years that public debt is essentially free, that we needn’t worry about its buildup and that we should devote all of our attention to short-term concerns since, as John Maynard Keynes wrote, “in the long run, we are all dead.” But that crude interpretation of Keynesian economics is deeply misguided; Keynes himself disagreed with it.

However, if you read Krugman piece that Sachs and Scarborough link to, you’ll see that it doesn’t say what they pretend it does. It says that deficits don’t matter in the short term, but it’s not true that they never matter. Krugman in the quoted column from March 2011:

Right now, deficits don’t matter — a point borne out by all the evidence. But there’s a school of thought — the modern monetary theory people — who say that deficits never matter, as long as you have your own currency.

I wish I could agree with that view — and it’s not a fight I especially want, since the clear and present policy danger is from the deficit peacocks of the right. But for the record, it’s just not right.

The key thing to remember is that current conditions — lots of excess capacity in the economy, and a liquidity trap in which short-term government debt carries a roughly zero interest rate — won’t always prevail. As long as those conditions DO prevail, it doesn’t matter how much the Fed increases the monetary base, and it therefore doesn’t matter how much of the deficit is monetized. But this too shall pass, and when it does, things will be very different.

I guess Sachs and Scarborough assumed their WaPo readers wouldn’t bother to click on the link. Anyway, Mark Thoma wrote an epic takedown of the Sachs-Scarborough op-ed at his Economist’s View blog: Crude Sachsism.

Frankly, I doubt that Scarborough had anything to do with writing the op-ed, and I think it would be really hilarious if someone would ask him to explain it on his show. Why is Scarborough so obsessed with proving Krugman wrong? As for Jeffrey Sachs, he is a follower of Milton Friedman and The Chicago School of Economics who is famous for his failedMillennium Villages” project and his so-called “shock therapy” in Latin America, Russia, and Eastern Europe. Judge for yourself whether you want to buy into his neoliberal, modified supply-side arguments.

I know I’m kind of a weirdo, but I had a blast reading all this stuff over the weekend, including this post by Ryan Coooper (filling in for Ed Kilgore at The Washington Monthly) questioning why Sachs doesn’t even know what was in the stimulus.

Jeff Sachs has long been known as the celebrity-hobnobbing economist with the seriously flawed “shock therapy” plan for economic development. Lately he’s taken a weird turn in the public debate, coauthoring an op-ed piece with Joe Scarborough of all people, attacking Paul Krugman.

Today he’s back with one of the most bizarre pieces of economic analysis I’ve seen, arguing among other things that 1) the stimulus was too focused on short-term stuff like tax cuts which 2) aren’t effective stimulus anyway (huh?) and 3) should have had much more long-term investment.

Wrong again! Read all about it at the link.

The back and forth quieted down yesterday, but today Cooper–who is filling in for Ed Kilgore at The Washington Monthly–brought it up again with this post: How Does Jeffrey Sachs Explain The Great Recession?

I need to read it carefully and follow the links and responses to today–my idea of fun! I guess it’s partly the psychologist in me–I’m fascinated by these human interactions and the verbal battles over important issues of the day.

Continuing the economics theme, Alex Pareene has a great piece at Salon on The competitive advantage of deficit hacks. It’s all about how the media helps the false Village memes and tries to marginalize people like Paul Krugman who actually know something about economics. The gist:

I think a lot about contemporary political debates makes a great deal more sense when you realize that hacks, especially hacks shilling for awful ideas, have a competitive advantage over non-hacks: They do not care if they constantly repeat themselves, even if what they are constantly repeating is wrong.

For a writer or pundit who actually feels some sort of responsibility to inform and/or entertain his or her readers, writing the same damn thing over and over again seems wrong (it is also boring). But bad ideas are constantly being repeated by people who feel absolutely no shame about saying the same things over and over and over again. Indeed, “shamelessness” is in general a defining characteristic of hacks. Also, frequently, people are being paid to repeat the same awful ideas over and over again, and unfortunately usually there’s more money to be made repeating bad ideas than good ones. (Hence: Lanny Davis.)

Arguably, American conservatives are better at sticking to their pet causes in general, as liberals move from fight to fight. Look at how contraception “suddenly” became a matter of national public debate last year, years after liberals thought it a well-settled question. Or look at how long the movement spent trying to roll back the majority of the New Deal, a project that continues to this day!

And on the question of the deficit and the “grand bargain,” Pete Peterson and a few others have spent hundreds of millions of dollars and decades of their lives making the exact same argument, and setting up organizations that pay others to make the exact same argument, until a majority of Beltway centrists internalized the argument and began making it themselves, over and over again. When it comes to centrist pundits, the unsophisticated brainwashing technique that has utterly failed to move the public at large over the last 25 years has worked perfectly. (Because centrist pundits are simple, credulous people, by and large, and also because they will not rely on “entitlements” to survive, when they retire from their very well-compensated jobs.)

Plus— another must read from Alex Pareene: The undead, unnecessary, unhelpful Grand Bargain.

Washington has Grand Bargain fever, again. Thanks to the sequestration, Republican government-shrinking mania and Barack Obama’s apparently sincere desire to get some sort of huge long-term debt deal done, the Grand Bargain is looking more possible than at any point since the heady days of the National Commission on Fiscal Responsibility.

For some reason, the options for dealing with sequestration — a self-inflicted made-up austerity crisis — are being purposefully and pointlessly limited to a) spending cuts, either those in sequestration or different ones, or b) spending cuts and tax increases. “Let’s just not do this, everyone” is rarely presented as a viable option. Instead, the single best end result, according to lots of pundits, Democrats and even Republicans, is tthe Mythical Grand Bargain.

This is awful news, for most people. A “grand bargain” is not going to be good. But after Barack Obama had fancy dinners with some Republicans last week, everyone is again hopeful. The president is hopeful. John Boehner is hopeful. David Gergen is probably hopeful. They can all taste the Bargain. Ooh, it’ll be so great when we get that Bargain!

Read it, and you’ll laugh and cry at the same time!

Now a few more reads that tickled my fancy–in link dump fashion:

LA Times: Harvard faculty outraged after administration spies on emails

WBZ Boston: Harvard University Issues Explanation Of Resident Deans Email Search

The Guardian: World’s top 100 universities 2013: their reputations ranked by Times Higher Education

The Daily Mail: Meet the former Harvard University admin assistant who built up a multimillion-dollar empire… selling sex toys

Cleveland Plain Dealer: Steubenville rape trial will center on issue of consent

New York Daily News: Mike Bloomberg’s supersized ego does in planned soda ban

Now it’s your turn. What’s on your reading list today? Please share your links in the comments.

Have a fabulous Tuesday!!