There's a simple enough way to resolve the mess in Cyprus. It doesn't even involve asking the Germans to pay more or the Cypriots to tax bank deposits. It's called printing money.
A quick recap. Cyprus needs to raise €5.8 billion ($7.4 billion) to rescue its insolvent banks or the European Central Bank (ECB) says it will cut off the "emergency liquidity assistance" (ELA) loans keeping those zombie banks afloat. It's not so easy to come up with €5.8 billion in just a €19 billion economy. So Germany has told Cyprus to tax bank deposits, including supposedly insured amounts below €100,000, to get what it needs. The Cypriot parliament hated that idea and voted in unison to reject the bank-deposit tax on Tuesday.
There are three players here -- Germany, Cyprus, and the ECB -- and each comes with a big hurdle. First, Germany insists it won't hand over any more than the €10 billion it's already committed. Angela Merkel doesn't want to fully bail out the less-than-reputable Russian oligarchs who use the island as a tax haven, particularly in an election year. Second, Cyprus doesn't want to cripple its future as an offshore financial center (although it's too late for that) with any kind of deposit tax. Third, the ECB has to sign off on any agreement.
This is what we call an impasse. Germany doesn't want to pay more, Cyprus doesn't to tax more, and the ECB doesn't want to print more. It's a game of chicken with the future of the euro potentially at stake (again). The question is who moves first. With Germany and Cyprus still quite far apart, it's up to the ECB. After all, the magic of the printing-press would make the Cyprus banking disaster much easier to solve.
Here's how Cyprus could save itself in three, easy steps -- with the ECB's tacit support.
1. Merge Cyprus' Big Banks and then Spin Off a Bad Bank
The best way to deal with the losses in Cypriot banks is to isolate them. This just means putting all the good assets from its biggest banks into a good bank pile. The rest goes into the "bad bank" pile. But how does this improve things? Well, for one, it gives the government an idea of the size of the black hole in bank balance sheets. For another, it replaces two zombie banks that won't lend with one dead bank that won't and one healthy one that will. In other words, it should, albeit slightly, increase the amount of credit in the economy.
2. Convert Uninsured Deposits to Bank CDs
Deposit tax or not, the Cypriot financial system is doomed. Its business model of giving rich Russians a place to park (perhaps ill-gotten) cash and avoid taxes is finished. Just the specter of the deposit tax will be enough to spur deposit flight from abroad.
This capital exodus will only hasten the next bailout. Cypriot banks can afford to lose a bit of their deposit base, but losing too much will turn their balance sheets even more upside down -- and make them even more dependent on ELA funding. It won't be long before the banks need more capital from the Germans.
What is to be done? As Felix Salmon points out, sovereign debt guru Lee Buchheit and Mitu Gulati of Duke University have come up with an elegantly simple solution: Convert uninsured deposit amounts above €100,000 into bank certificates of deposit, or CDs. Now, this wouldn't solve the banks' capital problems now, but it would reduce the banks' capital problems in the future. Banks would give uninsured depositors the choice of accepting either a five- or ten-year bank CD, with the latter offering either a higher interest rate or some kind of natural gas bond as a sweetener. The government would also extend the maturity on its sovereign debt by five years -- which Buchhet and Gulati estimate would save €6.6 billion.
3. Recapitalize the Bad Bank with Government-Guaranteed Natural Gas Bonds
This is where things get tricky. Even if the Cypriot government did all of the above, it would still need to recapitalize the bad bank. And that's still not easy for Cyprus to do. But with a little legerdemain, Cyprus can get the ECB to print what it needs. That is, after all, what Ireland recently did.
There's a wildcard in all of this. Cyprus might have huge natural gas reserves. Upper-end estimates value the hoped-for-reserves at €300 billion, but that's all they are for now: hoped for. Almost none of the reserves have been proved yet. And besides, even if they do exist, it would still be another decade before they came on line. But this could be enough to save Cyprus now. Here's how it would work.
First, securitize future natural gas revenue into long-term bonds. These bonds would have maturities between 25 and 40 years, and the senior-most tranche would go exclusively towards recapping the bad bank. Depositors who term out their accounts could get junior tranches if they prefer the upside risk to a lower interest rate on their CD.
Second, the government guarantees the senior-most tranche of these natural gas bonds. In other words, the government will cover the difference between what these bonds are supposed to pay, and what they do if it turns out there isn't much (or any) natural gas. Now, this looks like a pretty daunting contingent liability for a government with a €19 billion economy, but it's much more manageable over 25 to 40 years.
Third, backload the payments on the bonds.
Fourth, give these government-guaranteed bonds to the bad bank to use as collateral for ELA loans. Let's be clear what this means. These bonds would almost certainly trade far below par, but that's not what the Cypriot government cares about. It cares about giving the bad bank safe-ish assets it can use as collateral for ELA money from the Central Bank of Cyprus. The bad bank gets the capital it needs now, and the government doesn't have to pay much until much later. It's money-printing in disguise. Of course, the ECB Governing Council could overrule this extension of ELA by a two-thirds vote ... but would it would really push Cyprus out of the euro zone if crisis had been averted? Probably not.
I know this sounds incredibly fanciful. Gimmicky, even. A government driven into bankruptcy by its banks can save them, and itself, by issuing some new long-term debt to give them? Really? Well, yes. This kind of alchemy is precisely what Ireland has done.
Like Cyprus, Ireland has an outsized financial sector that made some outsized bets that went bad. Financial bankruptcy turned to national bankruptcy and then bailout after the Irish government guaranteed losses it couldn't possibly guarantee. So far, so bad. But here's where things get interesting. The Irish government nationalized its biggest problem bank, and recapitalized it with promissory notes -- basically, front-loaded government debt instruments. The now-nationalized bank then used these promissory notes as collateral for ELA funding, which allowed it to slowly wind itself down. (Irish economist Karl Whelan has the best explanation of all this, if you want the full wonk).
Then they had a revelation. Wouldn't it be great if they could exchange these promissory notes with their upfront repayments for back-loaded, longer-term bonds? Yes, yes it would. The Irish government ripped up the promissory notes and issued 25-to-40-year bonds to use as collateral instead. (For legal reasons, they also closed down the nationalized bank, and transferred its remaining assets to a bad bank). The ECB could have vetoed this, but it chose not to.
Again, the benefit of all this financial sleight-of-hand was the central bank printed money for Ireland today, and Ireland didn't have to pay it back for many years. As Wolfgang Münchau of the Financial Times explains, it was a deliberately convoluted way of printing money for the government to hide that they were printing money for the government.
Cyprus should pull an Ireland, and force the ECB to make a decision. Either the ECB refuses to accept guaranteed natural gas bonds as collateral, and Cyprus gets booted from the euro, or the ECB relents, and the panic subsides.
In other words, make the ECB decide whether the euro is worth printing 5.8 billion euros.
The president’s business tells lawmakers it is too difficult to track all its foreign revenue in accordance with constitutional requirements, and it hasn’t asked Congress for a permission slip.
Days before taking office, Donald Trump said his company would donate all profits from foreign governments to the U.S. Treasury, part of an effort to avoid even the appearance of a conflict with the Constitution’s emoluments clause.
Now, however, the Trump Organization is telling Congress that determining exactly how much of its profits come from foreign governments is simply more trouble than it’s worth.
In response to a document request from the House Oversight Committee, Trump’s company sent a copy of an eight-page pamphlet detailing how it plans to track payments it receives from foreign governments at the firm’s many hotels, golf courses, and restaurants across the globe. But while the Trump Organization said it would set aside all money it collects from customers that identify themselves as representing a foreign government, it would not undertake a more intensive effort to determine if a payment would violate the Constitution’s prohibition on public office holders accepting an “emolument” from a foreign state.
She lived with us for 56 years. She raised me and my siblings without pay. I was 11, a typical American kid, before I realized who she was.
The ashes filled a black plastic box about the size of a toaster. It weighed three and a half pounds. I put it in a canvas tote bag and packed it in my suitcase this past July for the transpacific flight to Manila. From there I would travel by car to a rural village. When I arrived, I would hand over all that was left of the woman who had spent 56 years as a slave in my family’s household.
The condition has long been considered untreatable. Experts can spot it in a child as young as 3 or 4. But a new clinical approach offers hope.
This is a good day, Samantha tells me: 10 on a scale of 10. We’re sitting in a conference room at the San Marcos Treatment Center, just south of Austin, Texas, a space that has witnessed countless difficult conversations between troubled children, their worried parents, and clinical therapists. But today promises unalloyed joy. Samantha’s mother is visiting from Idaho, as she does every six weeks, which means lunch off campus and an excursion to Target. The girl needs supplies: new jeans, yoga pants, nail polish.
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At 11, Samantha is just over 5 feet tall and has wavy black hair and a steady gaze. She flashes a smile when I ask about her favorite subject (history), and grimaces when I ask about her least favorite (math). She seems poised and cheerful, a normal preteen. But when we steer into uncomfortable territory—the events that led her to this juvenile-treatment facility nearly 2,000 miles from her family—Samantha hesitates and looks down at her hands. “I wanted the whole world to myself,” she says. “So I made a whole entire book about how to hurt people.”
Manchester police say they will stop sharing information about the investigation with their American counterparts.
U.K. authorities seemed to suggest they won’t share information about the Manchester attack with their U.S. counterparts after several leaks to the American media that British authorities say compromise the integrity of the investigation.
Manchester Mayor Ian Burnham tweeted:
Complained to acting US Ambassador about leaks out of US & was assured they would stop. They haven't. Arrogant, wrong & disrespectful to GM. https://t.co/teHhVGwYsh
U.S media, citing U.S. officials, first reported that the Manchester attacker was a suicide bomber and subsequently identified him by his name, Salman Abedi, well before U.K. authorities said they were prepared to do so. Amber Rudd, the U.K. home secretary, said the leaks were “irritating,” adding she had conveyed her displeasure to her U.S. counterparts who, she said, assured her the leaks would stop.
Witnesses say a Guardian reporter was attacked by Greg Gianforte, the Republican candidate for a hotly contested House seat, following a question about the American Health Care Act.
Greg Gianforte, a Republican candidate in the closely watched race for Montana’s House seat, was cited for misdemeanor assault just hours before polls were scheduled to open. Multiple witnesses said that Ben Jacobs, a political reporter for The Guardian, was attacked by Gianforte on Wednesday afternoon after asking the candidate a question regarding the Republican health-care plan.
In a 911 call, Jacobs reported that Gianforte “body slammed” him to the ground, breaking his glasses in the process:
Greg Gianforte just body slammed me and broke my glasses
The alleged assault took place at Gianforte’s campaign headquarters in Bozeman, Montana. Gianforte was in a side room with a local news crew, The Guardianreports, when Jacobs entered and attempted to ask him a question. According to the Bozeman Daily Chronicle, Gianforte spoke with deputies from the Gallatin County Sheriff’s Office following the incident, but left the scene without speaking to reporters.
The office was, until a few decades ago, the last stronghold of fashion formality. Silicon Valley changed that.
Americans began the 20th century in bustles and bowler hats and ended it in velour sweatsuits and flannel shirts—the most radical shift in dress standards in human history. At the center of this sartorial revolution was business casual, a genre of dress that broke the last bastion of formality—office attire—to redefine the American wardrobe.
Born in Silicon Valley in the early 1980s, business casual consists of khaki pants, sensible shoes, and button-down collared shirts. By the time it was mainstream, in the 1990s, it flummoxed HR managers and employees alike. “Welcome to the confusing world of business casual,” declared a fashion writer for the Chicago Tribune in 1995. With time and some coaching, people caught on. Today, though, the term “business casual” is nearly obsolete for describing the clothing of a workforce that includes many who work from home in yoga pants, put on a clean T-shirt for a Skype meeting, and don’t always go into the office.
A recent push for diversity has been blamed for weak print sales, but the company’s decades-old business practices are the true culprit.
Marvel Comics has been having a rough time lately. Readers and critics met last year’s Civil War 2—a blockbuster crossover event (and aspiritual tie-in to the year’s big Marvel movie)—with disinterest and scorn. Two years of plummeting print comics sales culminated in a February during which only one ongoing super title managed to sell over 50,000 copies. Three crossover events designed to pump up excitement came and went with little fanfare, while the lead-up to 2017’s blockbuster crossover Secret Empire—where a fascist Captain America subverts and conquers the United States—sparked such a negative response that the company later put out a statement imploring readers to buy the whole thing before judging it. On March 30, a battered Marvel decided to try and get to the bottom of the problem with a retailer summit—and promptly stuck its foot in its mouth.
The national park wouldn’t let him collect rocks for research.
“How did the Grand Canyon form?” is a question so commonly pondered that YouTube is rife with explanations. Go down into the long tail of Grand Canyon videos, and you’ll eventually find a two-part, 35-minute lecture by Andrew Snelling. The first sign this isn’t a typical geology lecture comes about a minute in, when Snelling proclaims, “The Grand Canyon does provide a testament to the biblical account of Earth’s history.”
Snelling is a prominent young-Earth creationist. For years, he has given lectures, guided biblical-themed Grand Canyon rafting tours, and worked for the nonprofit Answers in Genesis. (The CEO of Answers in Genesis, Ken Ham, is also behind the Creation Museum and the Ark Encounter theme park.) Young-Earth creationism, in contrast to other forms of creationism, specifically holds that the Earth is only thousands of years old. Snelling believes that the Grand Canyon formed after Noah’s flood—and he now claims the U.S. government is blocking his research in the canyon because of his religious views.
Inside ABC’s tonally bizarro update of the seminal 1987 romantic drama Dirty Dancing are about four different projects trying to get out. There’s the most obvious one, a frame-by-frame remake of the original that’s as awkward and ill-conceived as Gus Van Sant’s 1997 carbon copy of Psycho. There’s the one Abigail Breslin’s starring in, an emotionally textured and realistic coming-of-age story about a clumsy but engaging wallflower. There’s a musical, in which Breslin and Nicole Scherzinger mime along to their own singing voices in a strange dance rehearsal while half-heartedly exploring the idea that power emanates from the vagina. And there’s the most compelling story, a Wide Sargasso Sea-inspired spinoff starring Debra Messing as a lonely housewife coming to terms with the turbulent depths of her own desire.
Republican candidate Greg Gianforte has been cited for misdemeanor assault after a journalist accused Gianforte of “body slamming” him in response to a question about GOP health-care legislation in Congress.
The closely watched Montana special election on Thursday has been highly anticipated as a potential referendum on Donald Trump’s presidency and a test of whether Democrats can win back congressional seats in conservative and rural parts of the country.
But the race was thrown into turmoil Wednesday evening into early Thursday morning, when a Montana sheriff’s office cited GOP candidate Greg Gianforte for misdemeanor assault, after journalist Ben Jacobs accused Gianforte of “body slamming” him after he asked the Montana Republican about the recently passed GOP health-care bill.
The Sheriff’s Office in Gallatin County, which opened up an investigation into the allegations on Wednesday, announced early Thursday morning that it had found “probable cause to issue a citation to Greg Gianforte for misdemeanor assault” and that Gianforte must appear in Gallatin County Justice Court prior to June 7, 2017.