So much for existing statutes
The Cyprus model has three key features, which highlight the effective elimination of many of bondholders supposed protections:
Hasty implementation under national legislation: the rapid passage of new national laws effectively re-writes existing bankruptcy legislation, reducing bondholders rights in the process. Even if bonds have been issued under UK or US law, this emphasis on the bankruptcy regime itself effectively dilutes or negates many of their protections.
Application to all bonds by statute: Cyprus again demonstrates that, when backed into a corner, the authorities are willing to impose losses by statute on all bonds, even at senior level. This contrasts with the previous official EU line of more or less waiting until 2018 to issue new, bail-inable senior bonds, with their bail-inability set in contract rather than established by statute.
Extremely low recoveries: the decision to move bonds to the bad bank, together with uninsured depositors and equity, is likely to result in extremely large losses. Even if bonds are not actually converted outright into equity, as seems possible, the decision to protect not only insured deposits but also 9bn in ELA (both of which are going to what is effectively the good bank) is likely to result in near-zero recoveries.
(Reuters) - Cypriot politicians and bankers were so swept up in the short term benefits of the Mediterranean island's adoption of the euro that they ignored warnings over the resulting lending boom.
When Cyprus joined the single European currency, Greek and other euro area deposits were reclassified as domestic, leading to billions more local lending, Pambos Papageorgiou, a member of Cyprus's parliament and a former central bank board member said.
At the time, Bank of Cyprus's 2.4 billion euros of Greek debt was enough to wipe out 75 percent of the bank's total capital, while Laiki's 3.4 billion euros exposure outstripped its 3.2 billion euros of total capital.
The banks sold down some of their Greek holdings, but then got back into the market as yields rose. "When the Germans were selling, they were buying," said Apostolides, referring to the German banks' 2011 dumping of Greek debt.
The "haircut" ultimately agreed by European leaders, including Cyprus' president Demetris Christofias, was more than 70 percent, heaping losses of 4.5 billion euros on the banks.
(CNN) -- A 3-year-old adopted boy -- whose death in West Texas has drawn stern criticism from Russia -- had more than 30 bruises, cuts and other marks on his body soon after he was pronounced dead, according to a report from a Texas medical examiner obtained by CNN.
Along with his 2-year-old brother, Max Shatto arrived in the United States with his adoptive parents in November 2011. Just more than two months later, his adoptive mother told authorities that she found him unresponsive in the family's Gardendale, Texas, backyard. He was pronounced dead shortly after arriving at a nearby hospital.
Soon after Max's death on January 21, Russia's top child rights advocate tweeted that the boy had been "killed" or "murdered." Children's Rights Commissioner Pavel Astakhov later acknowledged he might have spoken too soon -- though he has remained highly critical of the U.S. handling of the case.
The documents were obtained Thursday from the medical examiner's offices for Ector County and Tarrant County. They offered more details from the account by Laura and Alan Shatto about the boy's time in America as well as the condition of his body at the time of his death.
Poor little guy...
Banks have been closed and accounts frozen in Cyprus recently. Nevertheless, large amounts were moved out of the country's crippled financial institutions on the eve of the bailout package. Lawmakers are suspicious and are investigating both the government and the Cypriot central bank.
Most of all, though, the central bank head has been harshly criticized due to suspicious capital flight from Laiki and the Bank of Cyprus, the two institutions that have been hit hardest by the Cypriot banking crisis. There are indications that large sums flowed out of the two banks just before the first bailout package was signed in the early morning hours of March 16. At the end of January, some 40 percent of all savings held in Cypriot accounts were on the books of those two banks. Since then, however, much of it has been transferred elsewhere, despite orders from the central bank that accounts at the two institutions be frozen.
The Cypriot central bank has defended itself by saying that it was impossible to completely prevent all transactions, despite the account freeze. Much of the money was withdrawn from overseas, where Cyprus had no authority. Branches of Cypriot banks in non-euro-zone countries such as Russia and Britain do not answer to the European Central Bank. Their liquidity is controlled by central banks in those countries.
Such a defense is nothing less than a voluntary admission of impotence. Holders of smaller savings accounts have been unable to access much of their money for almost two weeks, companies have been unable to pay their suppliers and across the country people are concerned that their salaries will not arrive on schedule on the first of the month. Meanwhile, rich businesspeople and those with connections overseas have been able to transfer their money into foreign accounts.
Some people purchasing new insurance policies for themselves this fall could see premiums rise because of requirements in the health-care law, Health and Human Services Secretary Kathleen Sebelius told reporters Tuesday.
Ms. Sebeliuss remarks come weeks before insurers are expected to begin releasing rates for plans that start on Jan. 1, 2014, when key provisions of the health law kick in. Premiums have been a sensitive subject for the Obama administration, which is counting on elements in the health law designed to increase competition among insurers to keep rates in check. The administration has pointed to subsidies that will be available for many lower-income Americans to help them with the cost of coverage.
The secretarys remarks are among the first direct statements from federal officials that people who have skimpy health plans right now could face higher premiums for plans that are more generous. She noted that the law requires plans to provide better benefits and treat all customers equally regardless of their medical claims.
These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market, she said. But we feel pretty strongly that with subsidies available to a lot of that population that they are really going to see much better benefit for the money that theyre spending.
On the west side of Manhattan, a strange sight greets the tourists and natives who happen to be walking, running or cycling by Pier 90. Pearly and serene amid the beeping and bustle of highway traffic, a 536ft, bulletproof yacht called the Eclipse has been anchored in the freezing water of the Hudson for over a month. It is the world's largest yacht, owned by Roman Abramovich, a secretive Russian oligarch whose net worth, at Forbes' last count, was about $10.2bn.
It's no coincidence that Abramovich's glistening ship is anchored in New York. The city has been a haven for wealthy Russians for at least three years, as oligarchs and demi-oligarchs moored their money far away from the political whims of Vladimir Putin or the growing fiscal fiasco of the eurozone. "In Russia, whether you're friendly with the government is a very important thing, and that changes like the wind changes," said David Newman, a partner with Day Pitney who has represented the ex-wife of former potash magnate Dmitry Rybolovlev in a prominent divorce case. Evidence of Russian wealth has been everywhere.
"They have boats, they have cars; you go buy a plane for $40m, it's not a big deal any more," said Newman. Rybolovlev's 2012 acquisition of an $88m Central Park apartment once owned by Citigroup chief Sandy Weill still stands as one of the biggest real estate deals in New York history, and a soaring example of Russian influence and ostentation in high-end New York real estate. "How many Maybachs can you have, how many Maseratis can you have?" Newman recently learned of an extravagantly priced crocodile-skin T-shirt for sale. "I thought right away, 'there's going to be a Russian at Hermes buying that $100,000 t-shirt."
The shirt is still sitting in the Hermes store. As Newman notes, Russians have sought assets that stick around a little longer. The wealthiest Russians knew months ago that the Cypriot economy was failing and hurried their money out into other investments.
"With one or two exceptions, comment and 'analysis' of the Cyprus situation have had a theme that authorities are 'stupid' and 'have shot themselves in the foot'," writes Porter.
But Porter isn't buying it.
"An immediate corollary of ruling out the stupidity assumption is that if we can see something, the authorities can see it too," says Porter. "We try to be quicker, and they might not all see it at once. But we have to assume they see it."
Here is the key point, from Porter, though: "And what we see (the difference from the authorities is we can also say it) is a situation well short of its defining moment ... we still see a banking system in deep disequilibrium, with a large number of banks making no money and with no prospect of doing so. We see the Cyprus bank holiday as a foreshock."
What does that mean? It means more bail-ins for Europe. It means everybody knows it has to be done in the long run, but nobody wants to say it in the short run.
Dutch Finance Minister Jeroen Dijsselbloem, who committed taxpayer funds to take over SNS Reaal NV (SR) last month, said troubled lenders in the euro area must now fend for themselves as part of future regional rescues.
Dijsselbloem, who leads the group of 17 euro finance ministers, said imposing losses on depositors and bondholders can be part of the bailout toolkit after such measures were taken to avoid default in Cyprus.
We are looking for a way to place risks where they are taken, Dijsselbloem said on Dutch television program Pauw & Witteman late yesterday. Banks should strengthen their balances -- they have to ensure they can be unwound when they get in trouble. Next, it should be possible to make shareholders and bond holders contribute to a rescue. Thats how we move along. And then eventually you may get to a government contribution. That order was reversed in the last years.
Dijsselbloem said earlier yesterday that if ailing banks cant raise funds, then well talk to the shareholders and the bondholders, well ask them to contribute in recapitalizing the bank, and if necessary the uninsured deposit holders. Those comments, to Reuters and the Financial Times, were confirmed yesterday by Dijsselbloems spokeswoman, Simone Boitelle.
WASHINGTON (AP) -- An unusual and widely felt 5.6-magnitude quake in Oklahoma in 2011 was probably caused when oil drilling waste was pushed deep underground, a team of university and federal scientists concluded.
That would make it the most powerful quake to be blamed on deep injections of wastewater, according to a study published Tuesday by the journal Geology. The waste was from traditional drilling, not from the hydraulic fracturing technique, or fracking.
Not everyone agrees, though, with the scientists' conclusion: Oklahoma's state seismologists say the quake was natural.
The Nov. 6 earthquake near Prague, Okla., injured two people, damaged 14 houses and was felt for hundreds of miles in 14 states, according to the U.S. Geological Survey. It was the largest quake in the central part of the country in decades and largest in Oklahoma records, experts said.
LONDON (Reuters) - Got a tech idea and want to make a fortune before you're out of your teens? Just do it, is the advice of the London schoolboy who's just sold his smartphone news app to Yahoo for a reported $30 million.
The money is there, just waiting for clever new moves, said 17-year-old Nick D'Aloisio, who can point to a roster of early backers for his Summly app that includes Yoko Ono and Rupert Murdoch.
"If you have a good idea, or you think there's a gap in the market, just go out and launch it because there are investors across the world right now looking for companies to invest in," he told Reuters in a telephone interview late on Monday.
The terms of the sale, four months after Summly was launched for the iPhone, have not been disclosed and D'Aloisio, who is still studying for school exams while joining Yahoo as its youngest employee, was not saying. But technology blog AllThingsD said Yahoo paid roughly $30 million.
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