Laiki was living on borrowed credit 29/03/2013

Καλημέρα σε όλους.

 

A selection of articles from today’s international press, including an interview with The Economist of Mr. Orphanides, ex. Governor of the CBCy.

Also an interview with Kris Pavlou, BOD member of Laiki who recently resigned. Finally, some ideas in foreign press about the emergence of a parallel market for “cypriot” euros.

 

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Η καλύτερη παρομοίωση για τη Λαϊκή που δίαβασα...

 

Συνέντευξη με Κρίς Παύλου – Γιατί χρεωκόπησε η Λαϊκή;

http://www.stockwatch.com.cy/nqcontent.cfm?a_name=news_view&ann_id=170678

 

Άφησε να εννοηθεί ότι κυριάρχησε από τη νέα διοίκηση αλαζονεία και λαϊκισμός καθώς λέγανε ότι «η Λαϊκή Τράπεζα θα γίνει η μεγαλύτερη τράπεζα στην νοτιοανατολική Ευρώπη και τότε όλοι χειροκροτούσαμε και έγινε αυτό το πανηγύρι λες και πηγαίναμε διακοπές. Πήγαμε διακοπές για τέσσερα, πέντε χρόνια. Φάγαμε, ήπιαμε και μετά ήρθε ο λογαριασμός της πιστωτικής κάρτας. Και όταν είδαμε αυτό το λογαριασμό πανικοβληθήκαμε. Και πήγαμε στους πιστωτές και τους είπαμε ότι, ξέρετε, είχαμε ένα ωραίο πάρτι αλλά ο λογαριασμός που μας ήρθε είναι ένας ετήσιος μισθός. Και ζητήσαμε να μας δανείσουν λεφτά για να πληρώσουμε το λογαριασμό. Και ως καλοί φίλοι μας είπανε: Nα σας πληρώσουμε τα 2/3 αλλά να δώσετε και εσείς το 1/3 και δεν μας άρεσε. Και σήμερα κατηγορούμε αυτούς τους φίλους μας ότι προσπαθούν να μας καταστρέψουν». 

 

 

The Cyprus debt crisis: Capital Flows and Debt Restructuring

http://blog.stockwatch.com.cy/?p=1694
Written by University of Cyprus academics

 

 

An interview with Athanasios Orphanides

What happened in Cyprus

http://www.economist.com/blogs/freeexchange/2013/03/interview-athanasios-orphanides?fsrc=scn/tw_ec/what_happened_in_cyprus

 

 

Parallel market for Cyprus Euro?

http://www.businessinsider.com/tyler-cowen-cyprus-has-basically-just-left-the-euro-2013-3

If I want to buy house in Cyprus: send €100k? Or offer to pay Cypriot (say) €90k in London, he pays €100k from cap controlled account.

 

 

Cyprus shambles - by Hugo Dixon

http://www.breakingviews.com/hugo-dixon-cyprus-controls-an-omnishambles/21077052.article

Cyprus shambolic capital controls could spawn bribery, spread contagion + lead to #Cyprexit

 

Open the Cyprus banks already! 28/03/2013

Καλημέρα σε όλους.

Το σημερινό μεγάλο στοίχημα είναι το ομαλό άνοιγμα των τραπεζών. Πιο κάτω παραθέτω το επίσημο διάταγμα του Υπ.Οικ. για τα περιοριστικά μέτρα (μεταφρασμένο στα Αγγλικά - ίσως να είναι χρήσιμο για τους πελάτες μας). 

Έχω βρεί επίσης τη ψεσινή συνέντευξη (27/03/2013) του Βγενόπουλου στο ΣΚΑΙ Ελλάδος, που είμαι σίγουρος ενδιαφέρει όλους. Η άποψη μου, στη Κυπριακή: απ'όν αντρέπεται, ο κόσμος εν δικός του..... 

Ενδιαφέρον επίσης τα επιχειρήματα των ακαδημαικών μας για παραμονή στο ευρώ, καθώς και οι πίνακες του Pawel Morski για τα % ανασφάλιστων καταθέσεων στην Ευρώπη. Στην Κύπρο, το 63% μόνο είναι κάτω απο 100χιλιάδες, σε σχέση με 72% για Ευρώπη.

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Το διάταγμα για τα περιοριστικά μέτρα  - Υπουργείο Οικονομικών (translated to English)

http://www.mof.gov.cy/mof/mof.nsf/All/C1643C6FB6082E43C2257B3B00743B25/$file/Decree%20EN127%2003%202013.pdf

Η ψεσινή συνέντευξη Βγενόπουλου στο ΣΚΑΙ Ελλάδος - τα βίντεο στο τέλος

http://www.newsit.com.cy/default.php?pname=Article&art_id=111367&catid=31

Continuing on the arguments against CYPexit from leading Cypriot academics:

Should Cyprus exit the Euro zone?

Posted by Lenos Trigeorgis

http://blog.stockwatch.com.cy/?p=1670

Cyprus Exit of the Euro and what happened on the 25th March 2013: Both were VERY BAD IDEAS

Academic presentation by Alexander Apostolides

https://docs.google.com/presentation/d/1Xue3hCYQrd_EWd7FR-_QIoRqvGh8iPV3nro4sWJgyag/edit#slide=id.p13

The Cyprus Debt: Perfect Crisis and a Way Forward - Stavros Zenios

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2233239

Europe: No Need To Worry, The Fire’s Downstairs

http://pawelmorski.wordpress.com/2013/03/27/europe-no-need-to-worry-the-fires-downstairs/

Includes tables with % of insured deposits below 100k EUR in the whole of Europe. 

Cyprus: 63% below 100k by amount 

EU average: 72% by amount

Cyprus has higher % >100k, therefore was the perfect candidate for the current bail-in

"Κόντρα ξύρισμα" - διαφήμιση της Τράπεζας Κύπρου στην Ελλάδα!!

http://www.youtube.com/watch?v=NWWQdO27n0I

Για να ευθυμίσουμε και λίγο!

Arguments for and against the return to the Cyprus Pound 27/03/2013

Καλημέρα σε όλους.

 

A brief selection of articles this morning, focusing on recent arguments regarding the return to the Cyprus pound by NYTimes Krugman, as well as the counter arguments by Michalis Persianis of Kathimerini CY.

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Cyprus, Seriously

Article by Krugman of the NYTimes regarding return to CYP

http://krugman.blogs.nytimes.com/2013/03/26/cyprus-seriously/?smid=fb-share

 

Cyprus- Why Krugman got it wrong

Article by Michalis Persianis responding to Krugman with arguments why CYP option is wrong

http://fortheisland.wordpress.com/2013/03/27/cyprus-why-krugman-got-it-wrong/

 
Should Cyprus exit the Euro zone? Prof. Lenos Trigeorgis
http://t.co/hq7E4F9tSI 

 

Η επόμενη ημέρα της Κύπρου

Τι χάθηκε, τι σώθηκε, τι θα συμβεί με τις τράπεζες και τι θα χάσει η μεσαία τάξη

http://www.tanea.gr/opinions/all-opinions/article/5008106/h-epomenh-hmera-ths-kyproy/

 

 

The Dijsselbloem Principle

http://blogs.reuters.com/felix-salmon/2013/03/25/the-dijsselbloem-principle/

 

Cyprus Crisis: Pain Is Yet To Be Felt

http://news.sky.com/story/1070015/cyprus-crisis-pain-is-yet-to-be-felt

The people of Cyprus seem ill-prepared for the financial turmoil ahead - because no-one knows how much they have lost yet.

Πρώτες σκέψεις για το Eurogroup 26/03/2013

Φίλοι,

Οι πιο κάτω είναι κάποιες πρώτες σκέψεις μου για τις εξελίξεις της Κυριακής, for what is worth….

Προσωπικά, αν ήθελα να συγκεντρωθώ στα χίλια κακά, θα άνοιγα απλά την τηλεόραση. Δόξα το θεώ, οι πολιτικοί μας καταφέρνουν πολλά καλά να παίζουν το λόγο της μοιρολογίστρας τις τελευταίες μέρες.

Γι’αυτό και αποφεύγω να βλέπω Κυπριακά κανάλια, μόνο πολύ επιλεκτικά.

Επιλέγω συνειδητά να συγκεντρωθώ στα 3 θετικά:

1) Παραμένουμε στο ευρώ. Δεν επιστρέψαμε στη λίρα με άτακτη χρεοκοπία σήμερα

2) Έχουν γίνει οι απαραίτητες ενέργειες να ανακεφαλαιοποιηθούν οι δύο «άρρωστες» τράπεζες, χωρίς να αυξηθούν δυσβάσταχτα οι φόροι του απλού κόσμου (πχ. Χαράτσι στο ρεύμα στην Ελλάδα)

3) Οι τράπεζες θα ανοίξουν την Πέμπτη και τα λεφτά του κόσμου θα είναι ακόμα εκεί.

Λούκας

News update 26/03/2013

News update 26/03/2013


Καλημέρα σε όλους

Hugo Dixon, Editor at large at Reuters, has been doing an excellent coverage of the recent days’ events. Yesterday he wrote an excellent article and summary on his Twitter stream about some key issues and key questions, which are summarized below, regarding our position and going forward.

I decided to focus on these today.

A very good list-summary of our current situation following Sunday's Eurogroup decision

By Hugo Dixon 

Editor-at-large at Reuters

@hugodixon on Twitter

The article: Cyprus deal-best of a very bad job

http://blogs.reuters.com/hugo-dixon/2013/03/25/cyprus-deal-best-of-a-very-bad-job/

The summary:

Key considerations of the bailout

1 Cyprus deal makes best of a really bad job

2 Three important principles: 

- no haircuts on insured deposits; 

- bail in not bailout troubled banks; 

- countries can't run big money laundries.

3 Two doubts: 

- unclear what happening on capital controls; 

- unclear whether debt really sustainable given Cyprus economy will be clobbered

Key questions going forward:

1. What will �10bn be used for since not for banks? Deficit and rollover of maturing debt? Does anybody have the split?

Overall program targets have shifted massively. new funding gap is way beyond 5.8bio given new imf forecasts.  hence more revenue

New IMF forecasts not yet public, surely open ended bail-in gives scope to close any funding gap through recourse to further uninsured loss.

2. Do we know the size of uninsured deposits at Bank of #Cyprus? My back of envelope suggests e10bn.

3. Eurogroup says Bank of Cyprus shareholders and bondholders will make a "full contribution". Is this euphemism for wiped out?

4. Do we know size of bondholders in both Laiki and Bank of #Cyprus?

5. Will there be capital controls beyond freezing uninsured deposits of Bank of Cyprus after banks reopen? i really hope not.

6. bank of Cypru will have 9% capital ratio after recap. Is that Basel 3 fully-loaded or some other measure?

7. Will the Cypriot banking system will have enough collateral to fund a run when banks open?

ALSO READ by same author:

Cyprus must avoid capital controls - with specific suggestions

http://www.breakingviews.com/hugo-dixon-cyprus-must-avoid-capital-controls/21076210.article

Cyprus: It’s not over yet

http://blogs.reuters.com/felix-salmon/2013/03/25/cyprus-its-not-over-yet/

Κλείστε την τηλεόραση

Τα κανάλια σπέρνουν πανικό μέσα απο τη ψυχολογία της μάζας

 

Κλείστε την τηλεόραση, διαβάστε επιλεκτικά νέα απο το ίντερνετ, παίξτε με τα παιδιά σας, πηγαίνετε μια βόλτα.

Δε θα αλλάξουν τα νέα αν λείψετε και καμιά ώρα, σας το υπόσχομαι...

#cyprus Το 1999 ήταν όλοι χρηματιστές, το 2006 developers, σήμερα οικονομολόγοι. 

Βγαίνουν στην TV for 5 mins of fame και σπέρνουν πανικό. Crowd psychology in action.

Βρέστε 3-4 άτομα που εμπιστεύεστε, που είναι ήρεμα και έχουν νηφαλιότητα και καθαρό μυαλό, και ακούστε τους μόνο εκέινους. Τους υπόλοιπους στα panel discussions μήν τους ακούτε κάν, θα σας συγχίσουν.

The 5 stages of grief - Kubler Ross

The 5 stages of grief

The Kubler Ross model

People follow the below 5 stages of grief, after g a strong shock like death of family member, illness, or a sudden life shock like the economic shock we are living now.

Wikipedia: the Kubler-Ross_model

From: http://houseforkim.com/2013/02/06/5-stages-grief/

The stages an individual goes through following a strong shock like death of family member, illness,  or the current strong financial shock.

(1) Denial — "I feel fine."; "This can't be happening, not to me."

(2) Anger — "Why me? It's not fair!"; "How can this happen to me?"; '"Who is to blame?"

(3) Bargaining — "I'll do anything for a few more years."; "I will give my life savings if..."

(4) Depression — "I'm so sad, why bother with anything?"; "I'm going to die soon so what's the point?"; "I am broke" 

(5) Acceptance — "It's going to be okay."; "This is my current reality, I may as well work through it."

I believe that Cyprus society is somewhere between (2) and (3) right now.

(2) Severe anger with those who caused all this

(3) Search for alternative solutions, possible impossible at this stage, which might take us out of the pain we are in regardless of the cost - for example a fire-sale of Natural Gas to Chinese, Russians, Americans or return to the pound, not considering the real costs of a disorderly default.

News update 25/03/2013

News update 25/03/2013


Καλημέρα σας.

I attach a very brief selection of news below about last night's events. The dust has not settled yet, so it's too early to make conclusions.

I have also taken the liberty to include the psychological theory of Kubler Ross, which addresses the 5 stages of grief, following the loss of a loved one or a strong life shock, this case economic. 

Cyprus society, including ourselves, will be going through these stages, and I believe it's important to find coping mechanisms to address these as well as help those around us.

Regards,

Loukas

==============

Detail of EU/IMF bailout agreement with Cyprus

http://mobile.reuters.com/article/idUSBRE92O02920130325?irpc=932

Following is the detail of the deal in a statement from euro zone finance ministers.

1. Laiki will be resolved immediately - with full contribution of equity shareholders, bond holders and uninsured depositors - based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework.

2. Laiki will be split into a good bank and a bad bank. The bad bank will be run down over time.

3. The good bank will be folded into Bank of Cyprus (BoC), using the Bank Resolution Framework, after having heard the Boards of Directors of BoC and Laiki. It will take 9 billion Euros of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalization has been effected, and may subsequently be subject to appropriate conditions.

4. The Governing Council of the ECB will provide liquidity to the BoC in line with applicable rules.

5. BoC will be recapitalized through a deposit/equity conversion of uninsured deposits with full contribution of equity shareholders and bond holders.

6. The conversion will be such that a capital ratio of 9 % is secured by the end of the program.

7. All insured depositors in all banks will be fully protected in accordance with the relevant EU legislation.

8. The program money (up to 10 billion Euros) will not be used to recapitalize Laiki and Bank of Cyprus.

Discussion paper on the debt write-down tool – bail-in

http://ec.europa.eu/internal_market/bank/docs/crisis-management/discussion_paper_bail_in_en.pdf

An paper from the EU which outlines the basic thinking of EU behind bailing in deposits in banks in order not to rely on tax payers to save the banking systems.

Last-minute Cyprus deal to close bank, force losses

http://uk.reuters.com/article/2013/03/25/uk-eurozone-cyprus-idUKBRE92F07R20130325

Cyprus clinched a last-ditch deal with international lenders to shut down its second-largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians, in return for a 10 billion euro (8 billion pounds) bailout.

Cyprus: It’s not over yet

http://blogs.reuters.com/felix-salmon/2013/03/25/cyprus-its-not-over-yet/

Kubler Ross - The 5 stages of grief

http://en.wikipedia.org/wiki/K%C3%BCbler-Ross_model

The stages an individual goes through following a strong shock like death of family member, illness,  or the current strong financial shock.

(1) Denial — "I feel fine."; "This can't be happening, not to me."

(2) Anger — "Why me? It's not fair!"; "How can this happen to me?"; '"Who is to blame?"

(3) Bargaining — "I'll do anything for a few more years."; "I will give my life savings if..."

(4) Depression — "I'm so sad, why bother with anything?"; "I'm going to die soon so what's the point?"; "I am broke" 

(5) Acceptance — "It's going to be okay."; "This is my current reality, I may as well work through it."

I believe that Cyprus society is somewhere between (2) and (3) right now.

(2) Severe anger with those who caused all this

(3) Search for alternative solutions, possible impossible at this stage, which might take us out of the pain we are in regardless of the cost - for example a fire-sale of Natural Gas to Chinese, Russians, Americans or return to the pound, not considering the real costs of a disorderly default.

News 25/03/2013 2:00 am - a bitter sweet victory

 News 25/03/2013 2:00 am - a bitter sweet victory

Eurogroup has reached an agreement with Cyprus. The details that are available as of this time are as follows:

1)     Restructure Laiki bank, safeguarding deposits < 100k

2)     Bank of Cyprus is not restructured but a levy on deposits > 100k of 30% will take place

3)     ELA from Laiki is “iced” (no further details at this time)

4)     Possible further small haircut on remaining banks to safeguard provident funds.

Tough measures following a very difficult negotiation. Troika got what they wanted…

I will let you know when further information is available.