There's a short story out there from yesterday....over the terrible woes of a Swiss youth group on a holiday trip in Germany.
They'd taken the option of traveling by German rail. So they arrive at the station, and frankly....they are in pretty bad shape....flu-like symptoms....to the extreme.
Based on commentary....they were all in need of constant toilet seats and puking. Yeah, that particular cabin was in rough shape as it pulled into Mannheim.
Happily, for everyone....including the regular passengers....the Bahn guys took a leadership role and just said enough....calling for ambulances.
Now, as you read the story...it's an odd mix of facts. This came out of the Local.de. Seventeen ambulances were called out to the bahnhof, with fifteen medical personnel. I read this several times....trying to figure the mathematical statement and how you could drag seventeen vehicles to a site with fifteen drivers. Eventually, I came to realize that the ambulance crews were totally separate and just there to toss the kids onto the vehicle and go. The medical team were totally separate.
Then you came to the last part of this story.....the seventeen ambulances would transport fourteen young folks to the local hospital. Again, mathematically it doesn't make much sense. Then you realize that the whole emergency plan was mostly chaotic and they probably sent every single ambulance in the local area that was manned that evening.
Sometimes, you have to think long and hard through these stories.
As for the coach area after this mess? All the Bahn guys will say is that it was taken off the line and disinfected. In the flu season, riding the train is probably one of the top five ways of getting a flu-like virus....so it's pretty practical to use alcohol hand-rub when you sit on such a train or exit it.
As for the fourteen kids? I'm guessing they have a pretty good story to tell the rest of their life, and they probably won't be traveling by train ever again.
Tuesday, March 26, 2013
Cyprus: Day Nine (Tuesday)
Monday came and went.....with the script for an ending still mostly unknown.
The banks now say that they will be closed until Thursday morning. So the ATM mechanism is the only thing keeping the isle alive. According to various news sources....cash is the only thing keeping any hint of civilization alive right now.
The government has announced that they are appointing some investigators to find out who did what, and apparently bring a few folks to a "show-trial" (my term for whatever comes out of this). Someone will ask some questions over who authorized the purchase of the Greek bonds, and why such a massive amount of investment money was spent on these. My humble guess is that the bankers will point back to some governmental pressure (maybe the former Communist president of Cyprus who left the government in the last couple of months). The end result is someone going through a public court forum, and then being carried off to three or four years of prison. At best, you won't see more than a couple of individuals tried.
The Russians? They've been a bit more careful in the words over the past twenty-four hours. The problem is that when things finally settle....every Russian with money still left will want to remove the cash, and they don't want a bunch of stumbling blocks in their way. The idea is to have a friendly EU deal, and maybe even find another European country with decent banking situations to move the cash into.
Long-term survival of Cyprus? It may take a year.....maybe even two years....but every Russian will likely remove the cash they have left and just depart the island. Whatever big growth they had....is gone for the foreseeable future.
There's a comment or two from the Cyprus Mail over the social media connection with this crisis. Cypriots have used the forum to voice feelings.
The Cyprus Mail even mentions the church folks are also on the losing end of the mess....with at least 100 million Euro lost as the big accounts are taxed.
As for Tuesday? I think you can see the end of the tunnel here. Banks ought to open on Thursday, with some drastic limits in effect. A common citizen probably will be able to walk in and ask for 500 Euro and easily get it. If you wanted to close your account? Forget it.....I don't think anyone will be allowed to do this. On the positive side, at least you will be able to back to credit cards, and pay for fuel and groceries with this method.
By Saturday, most of the international media on the isle will have packed up and been ordered to go back home because the story is mostly finished.
The banks now say that they will be closed until Thursday morning. So the ATM mechanism is the only thing keeping the isle alive. According to various news sources....cash is the only thing keeping any hint of civilization alive right now.
The government has announced that they are appointing some investigators to find out who did what, and apparently bring a few folks to a "show-trial" (my term for whatever comes out of this). Someone will ask some questions over who authorized the purchase of the Greek bonds, and why such a massive amount of investment money was spent on these. My humble guess is that the bankers will point back to some governmental pressure (maybe the former Communist president of Cyprus who left the government in the last couple of months). The end result is someone going through a public court forum, and then being carried off to three or four years of prison. At best, you won't see more than a couple of individuals tried.
The Russians? They've been a bit more careful in the words over the past twenty-four hours. The problem is that when things finally settle....every Russian with money still left will want to remove the cash, and they don't want a bunch of stumbling blocks in their way. The idea is to have a friendly EU deal, and maybe even find another European country with decent banking situations to move the cash into.
Long-term survival of Cyprus? It may take a year.....maybe even two years....but every Russian will likely remove the cash they have left and just depart the island. Whatever big growth they had....is gone for the foreseeable future.
There's a comment or two from the Cyprus Mail over the social media connection with this crisis. Cypriots have used the forum to voice feelings.
The Cyprus Mail even mentions the church folks are also on the losing end of the mess....with at least 100 million Euro lost as the big accounts are taxed.
As for Tuesday? I think you can see the end of the tunnel here. Banks ought to open on Thursday, with some drastic limits in effect. A common citizen probably will be able to walk in and ask for 500 Euro and easily get it. If you wanted to close your account? Forget it.....I don't think anyone will be allowed to do this. On the positive side, at least you will be able to back to credit cards, and pay for fuel and groceries with this method.
By Saturday, most of the international media on the isle will have packed up and been ordered to go back home because the story is mostly finished.
Monday, March 25, 2013
How the Russians Fell into the Pit
It's a curious story over Cyprus, the bank problem, and the Russian billionaires.
The Russians had been around Cyprus for at least a decade, ease of entry, warm climate, and a safe place to relax.
When January of 2008 rolled around, the new currency of Cyprus...was the Euro. The Russians brought their money and deposited significant sums immediately
You see, there's really no trust in Moscow with the Russian banking sector. So they wanted a European spot to park their money and to feel some trust. Cyprus made sense.
There's a strange at this point. Cyprus, as of 2008....was run by a President from the Communist Party on the island. Most of the cabinet officers....were generally of the same persuasion. The finance minister? You can figure that he was mostly a friend of the party or better.
What the banking sector did, with any clear understanding by the Russian billionaires ...was to immediately take the cash and flush it into Greek bonds. If you had to pick the worst possible time to do something like this....this was it.
Did the Russians grasp what they were signing up to? I seriously doubt it. I imagine that the banking folks simply sat through meetings with their government counterparts, and eventually came to feel that helping Greece with these bonds....made sense. If you'd brought this up with a French banker, a German banker, or even a Japanese banker.....they would have laughed and suggested to go put the money into a safer environment.
So weeks pass. Months pass. The money just plain evaporated into thin air. Greece and it's bonds were going to ever be a positive investment.
I would imagine by the spring of 2012....the bankers were aware of the mess, and just worried over how to explain massive losses. If the Russians had never come or invested the billions....none of this would have occurred. Instead, there's nothing much left now.
The EU folks understood the mess, but didn't have any compassion for the Russians. This was a money pit with no rules. The Cyprus banking atmosphere was a joke. And the lack of any taxation on the Russians bothered most everyone. No one wants to hand European cash over to the Cyprus banks...which would then hand it straight to the Russians.
The Russians should have hired one smart economic expert, and then listened to him. They could have diversified their money into a thousand different ventures, and settled for some fairly safe bets. Instead, they listened to a couple of communist political hacks who talked up Greek bonds.
For pity? Well....yeah, it's sad that you had a billion Euro today, and tomorrow....it's just half-a-billion probably.
The Russians had been around Cyprus for at least a decade, ease of entry, warm climate, and a safe place to relax.
When January of 2008 rolled around, the new currency of Cyprus...was the Euro. The Russians brought their money and deposited significant sums immediately
You see, there's really no trust in Moscow with the Russian banking sector. So they wanted a European spot to park their money and to feel some trust. Cyprus made sense.
There's a strange at this point. Cyprus, as of 2008....was run by a President from the Communist Party on the island. Most of the cabinet officers....were generally of the same persuasion. The finance minister? You can figure that he was mostly a friend of the party or better.
What the banking sector did, with any clear understanding by the Russian billionaires ...was to immediately take the cash and flush it into Greek bonds. If you had to pick the worst possible time to do something like this....this was it.
Did the Russians grasp what they were signing up to? I seriously doubt it. I imagine that the banking folks simply sat through meetings with their government counterparts, and eventually came to feel that helping Greece with these bonds....made sense. If you'd brought this up with a French banker, a German banker, or even a Japanese banker.....they would have laughed and suggested to go put the money into a safer environment.
So weeks pass. Months pass. The money just plain evaporated into thin air. Greece and it's bonds were going to ever be a positive investment.
I would imagine by the spring of 2012....the bankers were aware of the mess, and just worried over how to explain massive losses. If the Russians had never come or invested the billions....none of this would have occurred. Instead, there's nothing much left now.
The EU folks understood the mess, but didn't have any compassion for the Russians. This was a money pit with no rules. The Cyprus banking atmosphere was a joke. And the lack of any taxation on the Russians bothered most everyone. No one wants to hand European cash over to the Cyprus banks...which would then hand it straight to the Russians.
The Russians should have hired one smart economic expert, and then listened to him. They could have diversified their money into a thousand different ventures, and settled for some fairly safe bets. Instead, they listened to a couple of communist political hacks who talked up Greek bonds.
For pity? Well....yeah, it's sad that you had a billion Euro today, and tomorrow....it's just half-a-billion probably.
Cyprus: Day Eight (Monday)
The deal is done, and it's all downhill from this point on.
If you were a regular citizen on Cyprus, with a bank account of 100k Euro or less....you survive with no taxation on your account. Otherwise? You are screwed. You guys with the bigger accounts won't be able to reach in and close out your accounts immediately (as you would expect), and your taxation might be as high as forty percent (it's not clear about how the taxes will work on the bigger accounts).
The EU deal was agreed upon at the last minute, and there's to be a minimum of 10 billion Euro dropped to Cyprus to cover the operations.
As for Monday? Well, there is some bad news in that ATM machines are now limiting folks to roughly 100 Euro per day. Some might go as high as 120 Euro. It's a one-day limitation, at least on appearance. One would expect Tuesday's operations to start back to a more normal state....maybe back to 260 Euro. Perhaps by Thursday....back to a norm.
Based on commentary in several news sources....the state came to an agreement....there's to be a temporary restriction to cash withdrawals, with no specified date to end this. There's a ban on bank transfers put into effect, again with no specified date to end it. There's a general limit put on credit cards and debit cards. And there appears to be a new rule to stop sudden interruption of CD-type bank accounts.
The losers in all of this? The Russian billionaires. I suspect that they will be fairly displeased over the answer, and lock their sights onto the politicians, bankers and EU aristocrats who engineered this rescue. I'd personally suggest they look over at the Russian government who said they didn't have a desire to get into this Cyprus mess or help rescue them. It'll be weeks....if not months....before the billionaires will be allowed to touch and move their money. They won't be happy about this.
As for Monday? No bank openings....just a moment for the dust to settle, and for everyone to eye Tuesday carefully. Food and gas appear to be the number one issues on everyone's mind. Had this gone on for another five to seven days....the isle would have been in utter chaos. The European markets ought to be one to two percent higher today by closure.
If you were a regular citizen on Cyprus, with a bank account of 100k Euro or less....you survive with no taxation on your account. Otherwise? You are screwed. You guys with the bigger accounts won't be able to reach in and close out your accounts immediately (as you would expect), and your taxation might be as high as forty percent (it's not clear about how the taxes will work on the bigger accounts).
The EU deal was agreed upon at the last minute, and there's to be a minimum of 10 billion Euro dropped to Cyprus to cover the operations.
As for Monday? Well, there is some bad news in that ATM machines are now limiting folks to roughly 100 Euro per day. Some might go as high as 120 Euro. It's a one-day limitation, at least on appearance. One would expect Tuesday's operations to start back to a more normal state....maybe back to 260 Euro. Perhaps by Thursday....back to a norm.
Based on commentary in several news sources....the state came to an agreement....there's to be a temporary restriction to cash withdrawals, with no specified date to end this. There's a ban on bank transfers put into effect, again with no specified date to end it. There's a general limit put on credit cards and debit cards. And there appears to be a new rule to stop sudden interruption of CD-type bank accounts.
The losers in all of this? The Russian billionaires. I suspect that they will be fairly displeased over the answer, and lock their sights onto the politicians, bankers and EU aristocrats who engineered this rescue. I'd personally suggest they look over at the Russian government who said they didn't have a desire to get into this Cyprus mess or help rescue them. It'll be weeks....if not months....before the billionaires will be allowed to touch and move their money. They won't be happy about this.
As for Monday? No bank openings....just a moment for the dust to settle, and for everyone to eye Tuesday carefully. Food and gas appear to be the number one issues on everyone's mind. Had this gone on for another five to seven days....the isle would have been in utter chaos. The European markets ought to be one to two percent higher today by closure.
Sunday, March 24, 2013
Cyprus: Day Seven (Sunday)
Saturday has come and gone.
The best of Saturday was this realization around the island that a tax of some type....will occur on account holders, period. The numbers might be tossed around in some minor way but there is nothing much left of a alternate deal.
It appears that individuals with accounts of 100k Euro or less....will survive on. Accounts above that level....will be in a special status. You probably won't be able to relieve your money or do much of anything with it. Bad loans will affect the bigger accounts....with money simply taken off the top of those banks. The method? Yet to be decided.
Sunday ends up being the day that meetings at the EU occur with Cyprus officials and the final details are put into place.
Monday is another off day for the banks....but it's also a day that all bank officials can run up the final details and be prepared for Tuesday.
Sometime on Tuesday morning....the banks ought to open, and do regular business. Whether or not anything can ever be 'regular' again....might be open to debate.
The best of Saturday was this realization around the island that a tax of some type....will occur on account holders, period. The numbers might be tossed around in some minor way but there is nothing much left of a alternate deal.
It appears that individuals with accounts of 100k Euro or less....will survive on. Accounts above that level....will be in a special status. You probably won't be able to relieve your money or do much of anything with it. Bad loans will affect the bigger accounts....with money simply taken off the top of those banks. The method? Yet to be decided.
Sunday ends up being the day that meetings at the EU occur with Cyprus officials and the final details are put into place.
Monday is another off day for the banks....but it's also a day that all bank officials can run up the final details and be prepared for Tuesday.
Sometime on Tuesday morning....the banks ought to open, and do regular business. Whether or not anything can ever be 'regular' again....might be open to debate.
Saturday, March 23, 2013
A Little Hospital Story
What the experts will admit....even in public forums....is that German hospitals are in a over-abundant quantity. Because of this, there's an ongoing battle with costs and how the system will survive.
This past week....the German government came to a temporary solution. They will inject two different payments out into the public hospitals of Germany. It didn't matter if you were running a fairly profitable hospital or a very financially weak hospital....you got a chunk of money out of the magic bucket. The amounts? For 2013, it's around 300 million Euro ($390 million dollars roughly). For 2014, it's to be around 580 million Euro (figure around $800 million dollars). (Numbers from the Local.de).
There are around 2,000 public hospitals in Germany. Some are major significant operations, and a fair number are simply small operations in the middle of nowhere. The experts tend to believe that over fifty percent are in financial trouble and could fail within the next four years.
The issues? There's a limit on profit, and a limit on almost every single item which the doctor or the hospital might prescribe for a person. Toss in pay-raises which are being continually demanded by nurses and doctors, and you've got a fairly difficult situation. Changes which dropped facility management from the state's budget, and put it directly onto the back of the hospital....means that they have to now pay for maintenance, construction, heating, and general repair.
The general gut feeling by the insiders (doctors).....is that there's going to have to be a cut on the 2,000 public hospitals. We aren't talking about a mere 100 or 200 hospitals either. You might find yourself in a rural community in the Eifel region one day, and the nearest hospital is now sixty minutes away, instead of the twenty minutes you were used to in the old days.
The general solution? Somehow, the government will have to invent another method to tax people for medical situations....without anyone noticing it's another tax. Then pass this onto the hospital program without making this obvious that it's a payment to keep them in operation.
This past week....the German government came to a temporary solution. They will inject two different payments out into the public hospitals of Germany. It didn't matter if you were running a fairly profitable hospital or a very financially weak hospital....you got a chunk of money out of the magic bucket. The amounts? For 2013, it's around 300 million Euro ($390 million dollars roughly). For 2014, it's to be around 580 million Euro (figure around $800 million dollars). (Numbers from the Local.de).
There are around 2,000 public hospitals in Germany. Some are major significant operations, and a fair number are simply small operations in the middle of nowhere. The experts tend to believe that over fifty percent are in financial trouble and could fail within the next four years.
The issues? There's a limit on profit, and a limit on almost every single item which the doctor or the hospital might prescribe for a person. Toss in pay-raises which are being continually demanded by nurses and doctors, and you've got a fairly difficult situation. Changes which dropped facility management from the state's budget, and put it directly onto the back of the hospital....means that they have to now pay for maintenance, construction, heating, and general repair.
The general gut feeling by the insiders (doctors).....is that there's going to have to be a cut on the 2,000 public hospitals. We aren't talking about a mere 100 or 200 hospitals either. You might find yourself in a rural community in the Eifel region one day, and the nearest hospital is now sixty minutes away, instead of the twenty minutes you were used to in the old days.
The general solution? Somehow, the government will have to invent another method to tax people for medical situations....without anyone noticing it's another tax. Then pass this onto the hospital program without making this obvious that it's a payment to keep them in operation.
Cyprus: Day Six (Saturday)
Friday has come and gone.
It was a day of talk and discussion. The idea of the tax on account holders? It's back to the front, and probably the ultimate solution now. The Russians and their loan deal is off the table....period, no discussion.
The new talk? Well....this is mostly around the idea of the tax, but starting to center on the idea that anyone with a small account (100 Euro or less) might skip out of the tax entirely, and those with bulky accounts....end up with a twenty-percent tax. You can imagine the hostile nature of the Russian billionaires but since Russia wasn't going to help in the loan business....they aren't exactly a good buddy of Cyprus now. No love lost....would be a good term to use.
After almost a week, there's a number of signs being reported by various media groups that grocery stores and pharmacy operations are starting to suffer. You can buy anything....unless you show cash. In a modern society, you can't run a business operation on cash only....it just doesn't work.
From the Cyprus Mail (the better of sources for news on the isle)....the reports indicate Fridays chief accomplishment of splitting bank operations off into good banks (with small investors, 100k Euro or less) and bad banks (over 100k Euro). You as the customer....had no say in the matter, after they passed the bill into law.
The German angle today? There's a fair amount of hostility brewing within the public sector, with feelings that Germany is the stumbling block to achieving any solution. One of the comments came out of the bank employees at one location....talking up their point....."We are not Germany's slaves". It's hard to judge how this motivates everyone on the island about Germans and the amount of tourism that occurs.
In a normal year, there's around 2.1 million tourists to arrive on Cyprus (statistics used from the 2011 World Economic Forum). From this group....roughly 131k German visit the island for at least a week. The UK carries the bulk of the tours, with almost a million Brits coming to Cyprus. If you figure a couple flying in, staying at a beachfront hotel, consuming a fair amount of beverage, and eating out for each meal, then riding tour buses or rent cars....there's probably around 1,500 Euro spent by each guest for their visit.
Getting upset and dumping onto the Germans for the long-term....probably isn't smart. But if you've been living for the past week on minimal cash and worried over your future....well, you've got some reason to whine.
What's left for this weekend? I suspect the big investors are screwed when a tax is implemented. They've lost their cash and will be determined to yank what they can out....within the next couple of weeks. Cyprus will save Cyprus, and it's citizens....but damn the Russians. It's a simple solution in the end, if you think about it.
It was a day of talk and discussion. The idea of the tax on account holders? It's back to the front, and probably the ultimate solution now. The Russians and their loan deal is off the table....period, no discussion.
The new talk? Well....this is mostly around the idea of the tax, but starting to center on the idea that anyone with a small account (100 Euro or less) might skip out of the tax entirely, and those with bulky accounts....end up with a twenty-percent tax. You can imagine the hostile nature of the Russian billionaires but since Russia wasn't going to help in the loan business....they aren't exactly a good buddy of Cyprus now. No love lost....would be a good term to use.
After almost a week, there's a number of signs being reported by various media groups that grocery stores and pharmacy operations are starting to suffer. You can buy anything....unless you show cash. In a modern society, you can't run a business operation on cash only....it just doesn't work.
From the Cyprus Mail (the better of sources for news on the isle)....the reports indicate Fridays chief accomplishment of splitting bank operations off into good banks (with small investors, 100k Euro or less) and bad banks (over 100k Euro). You as the customer....had no say in the matter, after they passed the bill into law.
The German angle today? There's a fair amount of hostility brewing within the public sector, with feelings that Germany is the stumbling block to achieving any solution. One of the comments came out of the bank employees at one location....talking up their point....."We are not Germany's slaves". It's hard to judge how this motivates everyone on the island about Germans and the amount of tourism that occurs.
In a normal year, there's around 2.1 million tourists to arrive on Cyprus (statistics used from the 2011 World Economic Forum). From this group....roughly 131k German visit the island for at least a week. The UK carries the bulk of the tours, with almost a million Brits coming to Cyprus. If you figure a couple flying in, staying at a beachfront hotel, consuming a fair amount of beverage, and eating out for each meal, then riding tour buses or rent cars....there's probably around 1,500 Euro spent by each guest for their visit.
Getting upset and dumping onto the Germans for the long-term....probably isn't smart. But if you've been living for the past week on minimal cash and worried over your future....well, you've got some reason to whine.
What's left for this weekend? I suspect the big investors are screwed when a tax is implemented. They've lost their cash and will be determined to yank what they can out....within the next couple of weeks. Cyprus will save Cyprus, and it's citizens....but damn the Russians. It's a simple solution in the end, if you think about it.
Thursday, March 21, 2013
Cyprus: Day Five (Friday)
Thursday has been mostly a day of limited accomplishments over the whole Cyprus affair.
The EU is basically saying that a decision has to be made, and that there's no real time left to wait this out. The dire warning? Basically four days....come to an agreement or just walk away from the EU Central Bank. For days now....they've flown in some cash and helped to keep the ATM systems operational on the isle.
Cyprus did agree today to restructure their number two bank. It would have probably dissolved next week, but this deal helps in some minor ways to delay their issues. On the flip side....if you had an account with them....you can only remove 260 Euro a day, max. Figure around $320 for an average American.
The odd thing about this restructure? Well....it looks like it's going to be two banks in operation. The one bank will handle the ensured accounts (everything below 100k Euro), and the other? The exposed folks who have no guaranteeing structure. It would allow the EU solution to fall into place and help the little guy in Cyprus to survive. The Russians? Well....you can guess their consequences here (lose, lose, lose).
There's a better and more in-depth report out there on natural gas discoveries. It's not a huge find, but there's billionaires to be made off it. The odd thing, after I spent five minutes reading the whole article.....it's not even going to be productive for another seven years. On top of that....you need someone with real cash to come in....take charge....build with easy access (no environmentalists in the middle)....and direct the whole operation. My impression from the whole article...is that Cyprus would like the billionaire a year rolling into their nation, but they really don't have the expertise to run this. You can sense that they'd like to keep this money on the island.
Oddly enough, there's a Dutch finance minister who came forward and kind of admitted he's the person who dreamed up the tax on accounts idea. It helps relieve the Germans of some heat, but it's still a nasty shock for folks on Cyprus.
Then there's this oddball idea....grab everyone's accounts....perhaps over a certain size, and just say they are now ten-year CD accounts and you can't really touch the bulk of your money. There would have to be some rules and some ways to remove part of your money, but it's a fairly interesting idea. Course, you'd be smart enough to ask if anything could get fixed in ten years or if any profit would ever come out of this ten-year forced CD deal.
For the German side? Just more speculation, more suggestions, more time passing by. The market is in a deep pit right now. The DAX was down around one percent for the day. It could have been a worse day, but for the whole week so far (up to Thursday)....the numbers are not great.
Finally, I have to mention this situation. On the isle, there's one slim border which splits the Greek Cypriots and the Turk Cypriots from each other. The Turks operate their side with about forty percent of the isle....the flat part of the territory. Some folks would argue, but the Turks probably got the better farming area when the border was established (mostly by threat of violence from both sides).
They may all be Cypriots, but each see themselves with a bloodline which leads either to Greece or Turkey. Each will claim a sacred view of the island.
For the last decade, there's been this amusing attempt to forge a united island. There's have to be various guarantees and issues to be worked out. The EU would like to see a united Cyprus. For the Turks, it'd help to bring them closer to being accepted into the EU, if an agreement could be worked out.
Today, a somewhat clever but limited plan was put on the table by the Turk Cypriots ....who have no banking issue. Turkey would step into this mess and hand the Greek Cypriot banking sector....seven billion Euro. The expectations? Pretty simple...come back to the 2004 unite-Cyprus plan, agree to pay back the seven billion (it's not a gift), and agree not to object to Turkey coming into the EU (a long desired thing).
This is a fresh new deal that most wouldn't have expected. The question is....of all the evil people at the table (in the minds of the Cypriot people)....who is the least evil....the Germans, the EU, the Russians, or the Turks?
For those who might be wondering how the split occurred? A Greek Cypriot will try to spend four hours telling you some long story of woe. The simple truth is that some Greek political folks got all peppy in the early 1970s. Seizing power on a united island seemed simple. Ordinary elections couldn't achieve what they wanted....so there was to be a coup. Word got out....the Turks (not the Turks on the island, but the country of Turkey)....just plain said they would not accept a coup and possible deaths of Turk citizens on the island. So Turkey brought in real military forces.....pushed Greek Cypriots back from the north, and created a line. Neither group can sit at the same table without telling a long story which is a fair bit of fiction. The truth is simple....the rest, well, you can guess.
For Friday? The Russians need to conclude their deal on the natural gas and put real money on the table. If nothing comes out of that....then the tax deal on accounts might come back or the Turk deal might be discussed. Come Sunday, the EU is expecting a final resolution, period. If you had to pick seven days to rock Europe....this has turned into a fairly interesting history and economics class.
The EU is basically saying that a decision has to be made, and that there's no real time left to wait this out. The dire warning? Basically four days....come to an agreement or just walk away from the EU Central Bank. For days now....they've flown in some cash and helped to keep the ATM systems operational on the isle.
Cyprus did agree today to restructure their number two bank. It would have probably dissolved next week, but this deal helps in some minor ways to delay their issues. On the flip side....if you had an account with them....you can only remove 260 Euro a day, max. Figure around $320 for an average American.
The odd thing about this restructure? Well....it looks like it's going to be two banks in operation. The one bank will handle the ensured accounts (everything below 100k Euro), and the other? The exposed folks who have no guaranteeing structure. It would allow the EU solution to fall into place and help the little guy in Cyprus to survive. The Russians? Well....you can guess their consequences here (lose, lose, lose).
There's a better and more in-depth report out there on natural gas discoveries. It's not a huge find, but there's billionaires to be made off it. The odd thing, after I spent five minutes reading the whole article.....it's not even going to be productive for another seven years. On top of that....you need someone with real cash to come in....take charge....build with easy access (no environmentalists in the middle)....and direct the whole operation. My impression from the whole article...is that Cyprus would like the billionaire a year rolling into their nation, but they really don't have the expertise to run this. You can sense that they'd like to keep this money on the island.
Oddly enough, there's a Dutch finance minister who came forward and kind of admitted he's the person who dreamed up the tax on accounts idea. It helps relieve the Germans of some heat, but it's still a nasty shock for folks on Cyprus.
Then there's this oddball idea....grab everyone's accounts....perhaps over a certain size, and just say they are now ten-year CD accounts and you can't really touch the bulk of your money. There would have to be some rules and some ways to remove part of your money, but it's a fairly interesting idea. Course, you'd be smart enough to ask if anything could get fixed in ten years or if any profit would ever come out of this ten-year forced CD deal.
For the German side? Just more speculation, more suggestions, more time passing by. The market is in a deep pit right now. The DAX was down around one percent for the day. It could have been a worse day, but for the whole week so far (up to Thursday)....the numbers are not great.
Finally, I have to mention this situation. On the isle, there's one slim border which splits the Greek Cypriots and the Turk Cypriots from each other. The Turks operate their side with about forty percent of the isle....the flat part of the territory. Some folks would argue, but the Turks probably got the better farming area when the border was established (mostly by threat of violence from both sides).
They may all be Cypriots, but each see themselves with a bloodline which leads either to Greece or Turkey. Each will claim a sacred view of the island.
For the last decade, there's been this amusing attempt to forge a united island. There's have to be various guarantees and issues to be worked out. The EU would like to see a united Cyprus. For the Turks, it'd help to bring them closer to being accepted into the EU, if an agreement could be worked out.
Today, a somewhat clever but limited plan was put on the table by the Turk Cypriots ....who have no banking issue. Turkey would step into this mess and hand the Greek Cypriot banking sector....seven billion Euro. The expectations? Pretty simple...come back to the 2004 unite-Cyprus plan, agree to pay back the seven billion (it's not a gift), and agree not to object to Turkey coming into the EU (a long desired thing).
This is a fresh new deal that most wouldn't have expected. The question is....of all the evil people at the table (in the minds of the Cypriot people)....who is the least evil....the Germans, the EU, the Russians, or the Turks?
For those who might be wondering how the split occurred? A Greek Cypriot will try to spend four hours telling you some long story of woe. The simple truth is that some Greek political folks got all peppy in the early 1970s. Seizing power on a united island seemed simple. Ordinary elections couldn't achieve what they wanted....so there was to be a coup. Word got out....the Turks (not the Turks on the island, but the country of Turkey)....just plain said they would not accept a coup and possible deaths of Turk citizens on the island. So Turkey brought in real military forces.....pushed Greek Cypriots back from the north, and created a line. Neither group can sit at the same table without telling a long story which is a fair bit of fiction. The truth is simple....the rest, well, you can guess.
For Friday? The Russians need to conclude their deal on the natural gas and put real money on the table. If nothing comes out of that....then the tax deal on accounts might come back or the Turk deal might be discussed. Come Sunday, the EU is expecting a final resolution, period. If you had to pick seven days to rock Europe....this has turned into a fairly interesting history and economics class.
Wednesday, March 20, 2013
Cyprus: Day Four? (Thursday)
It'd be safe to say that a whole lot of nothing occurred here today (Wednesday). The finance minister for Cyprus is still in Moscow and trying to hammer out some deal for cash. The political folks back in Cyprus say they might come to run another bill up tomorrow....to test the waters on taxation again.....maybe this time with a lesser rate for those folks with limited cash in the bank (maybe a three-percent deal for those under a 100k....but it's all talk and no substance mostly).
What is now guaranteed....the banks simply will not open on Thursday or Friday. Monday is a off-day. So they've bought almost five more days to argue over a solution.
Meanwhile....almost daily now, there are flights bringing in cash from the EU....to stock up the ATM machines around the island. There aren't numbers, but I'd be guessing at two thousand such machines around the island of one million residents. Once you load a machine....it's probably empty within two to four hours. Folks are trying to be orderly about this, but the whole mess has changed lives in a matter of hours and days.
It's reported that grocery shops are requiring as much as possible to pay in cash. They don't want your credit card or ATM card used. They need hard cash to pay for bills now. If you were trying as a businessman to leave the island and get airline arrangements.....you'd likely have to show some cash to get the ticket at the airport.
Oddly enough, Cyprus got around to admitting that the energy minister for the country is in Moscow. The original comment was that he was simply there to talk on tourism (a long forecasted trip). The story doesn't match up with comments. So the thinking is that they are very serious on the topic of allowing a strong Russian deal on natural gas and oil.
One of the alternate ideas being tossed around is that the government would create a vehicle where they could assume partial or full control of some of the independent-but-government-controlled pension funds. There's some belief this would roll up a loan to the gov't.....maybe with no interest attached.....and they'd pay it back. The amount here? It's questionable because different groups see this as being as low as one billion Euro and some suggest up to three billion Euro. My humble guess is that folks on pensions in Cyprus would be sitting there with a very hostile feeling of what was taken away, and only promised a return one day.
The biggest shock to some Cyprus residents are the number of foreign journalists who have shown up....with cash in their pockets.....and reporting what amounts to the wide array of information that basically fits onto a 3 x 5" card. Somehow, each is getting their three minutes to broadcast to the world, and then spend the rest of the day begging for something to happen to get another on-the-spot telecast. The locals, as I would speculate, probably caution these guys....nothing ever happens at a fast pace in Cyprus.
The German angle today? There's a bit more emphasis on Chancellor Merkel being the 'evil character' in this whole matter. You get the impression that "kick-the-Germans" will be a prevailing attitude until this matter is closed off and solved. Deserving of any of the bad press? It's hard to say. Some comments from the leadership might have been soften more over the last weekend. But this isn't a situation that you anticipate or can easily grasp.
More soap opera to be anticipated.
What is now guaranteed....the banks simply will not open on Thursday or Friday. Monday is a off-day. So they've bought almost five more days to argue over a solution.
Meanwhile....almost daily now, there are flights bringing in cash from the EU....to stock up the ATM machines around the island. There aren't numbers, but I'd be guessing at two thousand such machines around the island of one million residents. Once you load a machine....it's probably empty within two to four hours. Folks are trying to be orderly about this, but the whole mess has changed lives in a matter of hours and days.
It's reported that grocery shops are requiring as much as possible to pay in cash. They don't want your credit card or ATM card used. They need hard cash to pay for bills now. If you were trying as a businessman to leave the island and get airline arrangements.....you'd likely have to show some cash to get the ticket at the airport.
Oddly enough, Cyprus got around to admitting that the energy minister for the country is in Moscow. The original comment was that he was simply there to talk on tourism (a long forecasted trip). The story doesn't match up with comments. So the thinking is that they are very serious on the topic of allowing a strong Russian deal on natural gas and oil.
One of the alternate ideas being tossed around is that the government would create a vehicle where they could assume partial or full control of some of the independent-but-government-controlled pension funds. There's some belief this would roll up a loan to the gov't.....maybe with no interest attached.....and they'd pay it back. The amount here? It's questionable because different groups see this as being as low as one billion Euro and some suggest up to three billion Euro. My humble guess is that folks on pensions in Cyprus would be sitting there with a very hostile feeling of what was taken away, and only promised a return one day.
The biggest shock to some Cyprus residents are the number of foreign journalists who have shown up....with cash in their pockets.....and reporting what amounts to the wide array of information that basically fits onto a 3 x 5" card. Somehow, each is getting their three minutes to broadcast to the world, and then spend the rest of the day begging for something to happen to get another on-the-spot telecast. The locals, as I would speculate, probably caution these guys....nothing ever happens at a fast pace in Cyprus.
The German angle today? There's a bit more emphasis on Chancellor Merkel being the 'evil character' in this whole matter. You get the impression that "kick-the-Germans" will be a prevailing attitude until this matter is closed off and solved. Deserving of any of the bad press? It's hard to say. Some comments from the leadership might have been soften more over the last weekend. But this isn't a situation that you anticipate or can easily grasp.
More soap opera to be anticipated.
Tuesday, March 19, 2013
Cyprus: Day Three?
Tuesday came out to be an odd day in Europe. The Parliament met and convened to vote over the EU offer of cash to settle up the bank crisis. This would have involved taxing every single bank account in the country. The vote of the Parliament? Well....thirty-six votes against the offer, no votes for it, and nineteen absentee members.
The next action? The finance minister of Cyprus is in Moscow having talks. There is a deal on the table where Russia would float an enormous loan to Cyprus, with the hook being that they'd get all natural gas and oil rights around the island. Something of value? If values hold up and fracking continues on.....it might actually be worth the deal.
In the business sector....the term "trojan donkey" has been brought up. The relationship here is that Cyprus was this odd cousin of Europe and the Russians found a weak system to walk in and utilize to move money around. In a sense, Cyprus has developed itself over the last decade as a Russian billionaire holding tank. No one talks much over taxes or how money arrives....nor do they discuss how it leaves the island.
I was sitting there today and reading commentary that one Russian bank (Alfa).....simply guessed that around seventy billion dollars might actually be sitting in Cyprus currently via the Russians....which is way over the generally accepted number of thirty billion dollars.
Wednesday events? I'm guessing another round of deposit tax will be discussed. The finance minister will likely fly back by late Wednesday and offer up advice on what came out of the Russian talks. The Thursday opening of Cyprus banks? I wouldn't bet on it....there's likely to be at least one more day tossed onto the closed period.
You have to imagine this....you've got this goose who lays golden eggs sitting on your doorstep the last ten to twenty years. I doubt if any of the Parliament members can imagine the Russians all picking up and leaving the country entirely. They've gotten use to the whole Russians-in-your-backyard thing. Some have grown up and regularly dine with their business partners from the north. None of them had ever imagined that the EU would just dump them there with no escape from a serious mess.
Presently, my humble bet is on the Russians sensing more to gain with oil and natural gas rights.....and the Cyprus government simply giving up on any ownership forever. It's the only answer that makes the bulk of Cyprus residents happy.
Oh, and those Turks living on the north side of the island and unaffected by all of this? They haven't really said much. And I doubt that they'd readily accept the Russians anywhere near their oil or natural gas deposits. It's best not to bring up future problems.
As for the German and EU business markets? Tuesday was a mixed day...mostly on the negative but not terribly bad. The best description is people sitting on the sidelines and waiting for the smoke to clear. The Euro is simply stalled and waiting.
The best we can all say? The soap opera simply continues on. As bad off as Greece looked....Cyprus looks twice that bad, but might actually pull off some kind of solution that has nothing to do with the EU.
The next action? The finance minister of Cyprus is in Moscow having talks. There is a deal on the table where Russia would float an enormous loan to Cyprus, with the hook being that they'd get all natural gas and oil rights around the island. Something of value? If values hold up and fracking continues on.....it might actually be worth the deal.
In the business sector....the term "trojan donkey" has been brought up. The relationship here is that Cyprus was this odd cousin of Europe and the Russians found a weak system to walk in and utilize to move money around. In a sense, Cyprus has developed itself over the last decade as a Russian billionaire holding tank. No one talks much over taxes or how money arrives....nor do they discuss how it leaves the island.
I was sitting there today and reading commentary that one Russian bank (Alfa).....simply guessed that around seventy billion dollars might actually be sitting in Cyprus currently via the Russians....which is way over the generally accepted number of thirty billion dollars.
Wednesday events? I'm guessing another round of deposit tax will be discussed. The finance minister will likely fly back by late Wednesday and offer up advice on what came out of the Russian talks. The Thursday opening of Cyprus banks? I wouldn't bet on it....there's likely to be at least one more day tossed onto the closed period.
You have to imagine this....you've got this goose who lays golden eggs sitting on your doorstep the last ten to twenty years. I doubt if any of the Parliament members can imagine the Russians all picking up and leaving the country entirely. They've gotten use to the whole Russians-in-your-backyard thing. Some have grown up and regularly dine with their business partners from the north. None of them had ever imagined that the EU would just dump them there with no escape from a serious mess.
Presently, my humble bet is on the Russians sensing more to gain with oil and natural gas rights.....and the Cyprus government simply giving up on any ownership forever. It's the only answer that makes the bulk of Cyprus residents happy.
Oh, and those Turks living on the north side of the island and unaffected by all of this? They haven't really said much. And I doubt that they'd readily accept the Russians anywhere near their oil or natural gas deposits. It's best not to bring up future problems.
As for the German and EU business markets? Tuesday was a mixed day...mostly on the negative but not terribly bad. The best description is people sitting on the sidelines and waiting for the smoke to clear. The Euro is simply stalled and waiting.
The best we can all say? The soap opera simply continues on. As bad off as Greece looked....Cyprus looks twice that bad, but might actually pull off some kind of solution that has nothing to do with the EU.
Monday, March 18, 2013
Cyprus: Day Two? (Tuesday)
Cyprus will end up being page one news for the entire week in Germany.
The current timeline? Pause for a bank holiday, and don't expect anything to open until Thursday at the earliest. They might even make it Friday before the banks open.
The current tax theme? The Cypriots are thinking over a deal where the little guy with 100k Euro or less....would only pay around 6.5 percent, those with an account of 100k Euro to 500k Euro....would pay around nine percent, and those with 500k Euro or more....would pay out close to fifteen percent. This would be greatly different from the EU proposal....mostly to help the little guys in Cyprus survive.
The Russians? Well, this becomes an interesting episode. There's several numbers floating around now about how much the Russians actually have in Cypriot banks. The numbers go from $19 billion to $30 billion. The banks won't say precisely, and the Russians are very careful not to say anything in public. They would be the big losers out of this invented tax deal.
The legal implications? This got brought up today in several cases. The EU has never used a tax like this before, and it's a newly invented thing, with no legal basis. Some think that a court case will erupt and that the EU might be forced to pay the money back eventually (figure five years for any case to conclude in an EU court).
Mafia involvement? Well, this got brought up too. There's enough hostility by the Russians....that they might want to bring some heavy mafia folks into the picture to intimidate Cypriot political folks or bankers on the island. I myself....might go as far as suggesting some mafia folks showing up in Brussels and intimidating some EU folks. To lose three to four billion Euro....just won't sit well with anyone.
How the banks survive now? Don't expect any national bank to survive with clients. The Russians will pack and go. It's already suggested that they are preparing to move into Switzerland, Luxembourg, and the Baltic states.
As for pay-back? This is the more curious part of the bigger story. I imagine a number of Russians are looking straight at German political figures and gauging the fall election. You could see a fair amount of money thrown at the Alternative Party and the Linke Party. There could be some direct comments tossed at the CDU.
For Tuesday? I'd expect another one percent loss in stocks, and a continual trend on the Euro weakening.....maybe with the dollar improving.
The Russian deal on the table to loan money to fix the issue....but they want all the gas rights for Cyprus (to include off-the-coast). Fracking to an unlimited state? Maybe, you just don't know.
Finally, there has to be some Italians sitting and wondering if their assets might be under threat in a year or two. Thoughts of removing their safely deposited money? You just don't know.
The current timeline? Pause for a bank holiday, and don't expect anything to open until Thursday at the earliest. They might even make it Friday before the banks open.
The current tax theme? The Cypriots are thinking over a deal where the little guy with 100k Euro or less....would only pay around 6.5 percent, those with an account of 100k Euro to 500k Euro....would pay around nine percent, and those with 500k Euro or more....would pay out close to fifteen percent. This would be greatly different from the EU proposal....mostly to help the little guys in Cyprus survive.
The Russians? Well, this becomes an interesting episode. There's several numbers floating around now about how much the Russians actually have in Cypriot banks. The numbers go from $19 billion to $30 billion. The banks won't say precisely, and the Russians are very careful not to say anything in public. They would be the big losers out of this invented tax deal.
The legal implications? This got brought up today in several cases. The EU has never used a tax like this before, and it's a newly invented thing, with no legal basis. Some think that a court case will erupt and that the EU might be forced to pay the money back eventually (figure five years for any case to conclude in an EU court).
Mafia involvement? Well, this got brought up too. There's enough hostility by the Russians....that they might want to bring some heavy mafia folks into the picture to intimidate Cypriot political folks or bankers on the island. I myself....might go as far as suggesting some mafia folks showing up in Brussels and intimidating some EU folks. To lose three to four billion Euro....just won't sit well with anyone.
How the banks survive now? Don't expect any national bank to survive with clients. The Russians will pack and go. It's already suggested that they are preparing to move into Switzerland, Luxembourg, and the Baltic states.
As for pay-back? This is the more curious part of the bigger story. I imagine a number of Russians are looking straight at German political figures and gauging the fall election. You could see a fair amount of money thrown at the Alternative Party and the Linke Party. There could be some direct comments tossed at the CDU.
For Tuesday? I'd expect another one percent loss in stocks, and a continual trend on the Euro weakening.....maybe with the dollar improving.
The Russian deal on the table to loan money to fix the issue....but they want all the gas rights for Cyprus (to include off-the-coast). Fracking to an unlimited state? Maybe, you just don't know.
Finally, there has to be some Italians sitting and wondering if their assets might be under threat in a year or two. Thoughts of removing their safely deposited money? You just don't know.
Sunday, March 17, 2013
The Money Problem in Cyprus
Monday will be one of the biggest days in European history (at least for the last fifty years). All because of Cyprus.
Cyprus and it's national bank is in pretty dire straits. They need an immedate loan....of which we aren't talking about a lousy one billion Euro. This is more of ten billion Euro....to help them survive. Most of the words for the loan with the EU are already written. There is a funny stipulation in this deal. Every single bank account (savings and credit), must be taxed immediately to a tune of 6.75 percent to 9.9 percent. No waivers.
The Cyprus Parliament were supposed to meet over the weekend and vote to make this happen before Monday morning. It appears that they refused to meet.
You can guess the reaction on Monday morning.....as every single citizen of the country walks in to remove their money before the tax can be passed. My humble bet is that this discussion in the Parliament will go for at least six hours, and practically every single bank will be empty by that point.
This whole talk started on Saturday morning, and by lunch....most all banks had used up what reserves they had in their hands.
If the Parliament refuses the deal? The two largest banks in Cyprus will likely be shut down within days. They won't be able to survive without the ten billion Euro loan from the EU.
The percentage deal? Well....if you are over 100k Euro in your account....you get the 9.9 percent contribution to the government. If under 100k Euro.....it's 6.75 percent. Even the little guy on a pension is hurt in the end.
The acceptance of the deal? Most journalists reporting on this....are split. They mostly report the facts, and can't get any real comments out of the political side. There's bound to be various party discussions today, and by tonight....there's supposed to be a short comment by the government to the public over the mess.
My prediction is that they waste most of Monday with no decision made. This gives everyone a chance to move what capital they have left. Then they pass it late Monday or into Tuesday. By Tuesday, as the tax falls into place....less than ten percent of what was there a month ago....will still exist.
Some reports indicate that banks have now been instructed not to move any cash via electronic means, period. If true, this would prevent the locals from moving cash over to Greek banks, which don't fall under this mess.
As for the economic trend of Monday across Europe? A down-day....maybe somewhere between one and two percent down. I would hate to predict it going into the three percent range, but anything is possible.
Cyprus in the coming weeks? No one is going to trust the banking sector for a while. expect most folks to hide their money in the home or in their business.
Tourists arriving there? You'd best plan to have all the cash you needed on you before you get off their plane.
Does this all fall into the German political chat and the fall election? Yes, sadly, this might end up being one of the biggest topics of discussion.
Cyprus and it's national bank is in pretty dire straits. They need an immedate loan....of which we aren't talking about a lousy one billion Euro. This is more of ten billion Euro....to help them survive. Most of the words for the loan with the EU are already written. There is a funny stipulation in this deal. Every single bank account (savings and credit), must be taxed immediately to a tune of 6.75 percent to 9.9 percent. No waivers.
The Cyprus Parliament were supposed to meet over the weekend and vote to make this happen before Monday morning. It appears that they refused to meet.
You can guess the reaction on Monday morning.....as every single citizen of the country walks in to remove their money before the tax can be passed. My humble bet is that this discussion in the Parliament will go for at least six hours, and practically every single bank will be empty by that point.
This whole talk started on Saturday morning, and by lunch....most all banks had used up what reserves they had in their hands.
If the Parliament refuses the deal? The two largest banks in Cyprus will likely be shut down within days. They won't be able to survive without the ten billion Euro loan from the EU.
The percentage deal? Well....if you are over 100k Euro in your account....you get the 9.9 percent contribution to the government. If under 100k Euro.....it's 6.75 percent. Even the little guy on a pension is hurt in the end.
The acceptance of the deal? Most journalists reporting on this....are split. They mostly report the facts, and can't get any real comments out of the political side. There's bound to be various party discussions today, and by tonight....there's supposed to be a short comment by the government to the public over the mess.
My prediction is that they waste most of Monday with no decision made. This gives everyone a chance to move what capital they have left. Then they pass it late Monday or into Tuesday. By Tuesday, as the tax falls into place....less than ten percent of what was there a month ago....will still exist.
Some reports indicate that banks have now been instructed not to move any cash via electronic means, period. If true, this would prevent the locals from moving cash over to Greek banks, which don't fall under this mess.
As for the economic trend of Monday across Europe? A down-day....maybe somewhere between one and two percent down. I would hate to predict it going into the three percent range, but anything is possible.
Cyprus in the coming weeks? No one is going to trust the banking sector for a while. expect most folks to hide their money in the home or in their business.
Tourists arriving there? You'd best plan to have all the cash you needed on you before you get off their plane.
Does this all fall into the German political chat and the fall election? Yes, sadly, this might end up being one of the biggest topics of discussion.
Saturday, March 16, 2013
The Solidarity Tax
To explain the Solidarity Tax to an American.....it takes a minute or two.
Back as the Berlin Wall came down, and West Germans came to drive through East Germany.....it was obvious that things were a bit old, under-developed, and in some cases....bridges were in dire need of replacement.
So the Chancellor at the time....Helmet Kohl....made a major decision and sold the Bundestag on this simple taxation deal. They would take the current sales tax and pump it from 13.5 percent, to 19 percent (5.5 percent rise). For most folks in West Germany at the time....it was a tough episode and I would imagine that over half the population wasn't sold at on this idea at all.
As you look back over three decades now, most folks will admit there's a ton of construction that has been done in East Germany. Roads have been paved. Street fixed nicely. Government buildings renovated. Bridges repaired or replaced. Schools looking almost brand-new. The list goes on and on.
The question is....is it finally enough?
The FDP part is discussing this move of allowing the Solidarity tax to finally end in 2019. They think it's time for Germany lower the taxes and let the public breathe a sigh of relief. Most Germans would be in agreement with them, and this interesting recommendation might help in the recovery of votes for the FDP. Currently....it's questionable if they will get five percent of the national vote in the fall election.
The feeling of the German government? I doubt if they really want to discuss this or allow the tax to end. But you can't really say this in a public forum. The truth is....every cent of that money is likely still poured into East German construction projects, and the German government probably never thought about the idea that these projects would come to an end one day. The construction theme....is a major part of German government funding, and to some degree....corruption.
My gut feeling? The FDP will talk about this and might even get ten percent of German votes in the fall election. But I just don't see the Solidarity Tax ending. It's a major funding vehicle for the government, and they can probably still find enough things to fix in East Germany for another sixty years. Just my humble opinion.
Back as the Berlin Wall came down, and West Germans came to drive through East Germany.....it was obvious that things were a bit old, under-developed, and in some cases....bridges were in dire need of replacement.
So the Chancellor at the time....Helmet Kohl....made a major decision and sold the Bundestag on this simple taxation deal. They would take the current sales tax and pump it from 13.5 percent, to 19 percent (5.5 percent rise). For most folks in West Germany at the time....it was a tough episode and I would imagine that over half the population wasn't sold at on this idea at all.
As you look back over three decades now, most folks will admit there's a ton of construction that has been done in East Germany. Roads have been paved. Street fixed nicely. Government buildings renovated. Bridges repaired or replaced. Schools looking almost brand-new. The list goes on and on.
The question is....is it finally enough?
The FDP part is discussing this move of allowing the Solidarity tax to finally end in 2019. They think it's time for Germany lower the taxes and let the public breathe a sigh of relief. Most Germans would be in agreement with them, and this interesting recommendation might help in the recovery of votes for the FDP. Currently....it's questionable if they will get five percent of the national vote in the fall election.
The feeling of the German government? I doubt if they really want to discuss this or allow the tax to end. But you can't really say this in a public forum. The truth is....every cent of that money is likely still poured into East German construction projects, and the German government probably never thought about the idea that these projects would come to an end one day. The construction theme....is a major part of German government funding, and to some degree....corruption.
My gut feeling? The FDP will talk about this and might even get ten percent of German votes in the fall election. But I just don't see the Solidarity Tax ending. It's a major funding vehicle for the government, and they can probably still find enough things to fix in East Germany for another sixty years. Just my humble opinion.
Friday, March 15, 2013
English
I've spent a number of years in Germany, and traveled around a number of European countries. There are a number of observations I can generally make over the use of English.
First, if you run into a couple of young Germans....say fifteen to twenty-five years old.....the odds are that most can converse with decent but marginal English. The over-forty crowd? If they deal with Americans (in a local base environment)....you tend to find maybe half the population can flip over and use the English language to some degree.
Second, the only country in Europe that continually surprised me with the ability to use English....was Denmark. It didn't matter if I stepped into a bakery, or into a pharmacy....most all Danes speak at least marginal English. The reason? After a while, I came to realize that they put US movies onto the Danish state-run TV network....without the dubbing process, and simply put sub-titles at the bottom. I think Danes have simply progressed with some English in school, and the movie situation improved their ability.
Third, the worst country to go into and find no ability to communicate in English? I'd rate Spain as number one. Oh, not islands where English tourists roam and most all Spaniards there speak some decent English.....but locations like Barcelona. You have to roam around and look for mostly teens or college kids....if you find yourself in a situation where you need to ask a question and no ability to speak Spanish.
So you are left with this situation....you'd best arm yourself with a phrase book for that country's language. Figure that you needs at least ten good phrases and build off that. I will admit...the most popular phrases you ought to study on.....are "where is hotel such and such" and "have you a rest room nearby".
Luckily for everyone....GPS technology has taken one of the biggest problems out of international travel....that of getting lost and asking stupid questions and getting stupid answers....and made it into a simple task to getting from point A to point B.
Europeans learning more languages than Americans? Most German schools will utilize one to two language classes. English is typically one of the two taught. The expectations aren't dramatic or that high. I would make the comment that the instructions booklets are laid out better than what an American kid might expect on a foreign language.
So I will end this commentary with this view. If visiting any European country for a week or two....you'd best have some small phrase book that fits into your backpack or purse. If you need an English speaker....always look for a younger individual (better odds of communication). And if you stay around for a while....you will eventually need a thousand word vocabulary to survive. Finally, I will admit that watching TV probably does help in the very beginning....to pick up on phrases and pronunciation
First, if you run into a couple of young Germans....say fifteen to twenty-five years old.....the odds are that most can converse with decent but marginal English. The over-forty crowd? If they deal with Americans (in a local base environment)....you tend to find maybe half the population can flip over and use the English language to some degree.
Second, the only country in Europe that continually surprised me with the ability to use English....was Denmark. It didn't matter if I stepped into a bakery, or into a pharmacy....most all Danes speak at least marginal English. The reason? After a while, I came to realize that they put US movies onto the Danish state-run TV network....without the dubbing process, and simply put sub-titles at the bottom. I think Danes have simply progressed with some English in school, and the movie situation improved their ability.
Third, the worst country to go into and find no ability to communicate in English? I'd rate Spain as number one. Oh, not islands where English tourists roam and most all Spaniards there speak some decent English.....but locations like Barcelona. You have to roam around and look for mostly teens or college kids....if you find yourself in a situation where you need to ask a question and no ability to speak Spanish.
So you are left with this situation....you'd best arm yourself with a phrase book for that country's language. Figure that you needs at least ten good phrases and build off that. I will admit...the most popular phrases you ought to study on.....are "where is hotel such and such" and "have you a rest room nearby".
Luckily for everyone....GPS technology has taken one of the biggest problems out of international travel....that of getting lost and asking stupid questions and getting stupid answers....and made it into a simple task to getting from point A to point B.
Europeans learning more languages than Americans? Most German schools will utilize one to two language classes. English is typically one of the two taught. The expectations aren't dramatic or that high. I would make the comment that the instructions booklets are laid out better than what an American kid might expect on a foreign language.
So I will end this commentary with this view. If visiting any European country for a week or two....you'd best have some small phrase book that fits into your backpack or purse. If you need an English speaker....always look for a younger individual (better odds of communication). And if you stay around for a while....you will eventually need a thousand word vocabulary to survive. Finally, I will admit that watching TV probably does help in the very beginning....to pick up on phrases and pronunciation
Thursday, March 14, 2013
Schuldenbremse
For an American, there are occasions that you marvel over what Germans quietly create and don't brag much about. One of those odd things....is Schuldenbremse....otherwise known as the debt-brake (in German).
Back in 2009, the Germans decided to alter their Constitution. They wanted a mechanism which would force everyone in the Bundestag to respect financial responsibility The intention? You had to have a balanced budget, and then maintain it. They were wise enough at the time to direct it at both the federal government, and even the state government apparatus.
So there was a timing device built into this. You had to accomplish a balanced budget by 2015....which they currently are on track to accomplish. I know....most Americans would be shocked by such a device.
After 2015? That's the curious part of this mechanism. The German federal government is then forbidden from going past .35 of the German GDP. The state government apparatus is given a few more years but they are locked into place by 2020.
The Bundestag swore an oath at that point. Unless there is a certified national emergency....like earthquakes or massive floating or French folks invading.....they can't get off the hook for this. I should add....they also wrote up an exception for a national economic crisis.....which probably will be tested a time or two over the next decade.
Why does this topic come up now? Well....the French are a bit sour about this entire austerity business and think it hurts more than it helps. The German balanced budget is not that agreeable with half the countries in the EU presently....who have kinda spent themselves into fairly big mess.
An American can look at this tool and be fairly shocked at the extent and noble goal in mind. Economic experts wrote the German standard and wrote enough exceptions to get out of it.....if necessary. But Germans are pressuring themselves to stick with the goal and look for constant reasons to skip balanced budgets.
Sequestration is about the only tool that we can create, and it's more of a bulldozer than a fine steak knife when it comes to talking budgets.
So when you hear a German discussing matters, and he tosses out schuldenbremse....it literally means debt-brake, and it's a significant part of German national budget planning.
Back in 2009, the Germans decided to alter their Constitution. They wanted a mechanism which would force everyone in the Bundestag to respect financial responsibility The intention? You had to have a balanced budget, and then maintain it. They were wise enough at the time to direct it at both the federal government, and even the state government apparatus.
So there was a timing device built into this. You had to accomplish a balanced budget by 2015....which they currently are on track to accomplish. I know....most Americans would be shocked by such a device.
After 2015? That's the curious part of this mechanism. The German federal government is then forbidden from going past .35 of the German GDP. The state government apparatus is given a few more years but they are locked into place by 2020.
The Bundestag swore an oath at that point. Unless there is a certified national emergency....like earthquakes or massive floating or French folks invading.....they can't get off the hook for this. I should add....they also wrote up an exception for a national economic crisis.....which probably will be tested a time or two over the next decade.
Why does this topic come up now? Well....the French are a bit sour about this entire austerity business and think it hurts more than it helps. The German balanced budget is not that agreeable with half the countries in the EU presently....who have kinda spent themselves into fairly big mess.
An American can look at this tool and be fairly shocked at the extent and noble goal in mind. Economic experts wrote the German standard and wrote enough exceptions to get out of it.....if necessary. But Germans are pressuring themselves to stick with the goal and look for constant reasons to skip balanced budgets.
Sequestration is about the only tool that we can create, and it's more of a bulldozer than a fine steak knife when it comes to talking budgets.
So when you hear a German discussing matters, and he tosses out schuldenbremse....it literally means debt-brake, and it's a significant part of German national budget planning.
Monday, March 11, 2013
Another Political Party
Some German folks met up, and in the last week....forged a new German political party: Alternative for Germany. I know....it's an odd name.
The basis of the group? Well....they'd like to end the Euro, which is pretty big business, and return to the old Deutsche Mark.
Added to the small list....they'd like to get rid of aid payments to countries like Greece, and potentially Cyprus. And they are for dumping this EU bailout fund that has been created.
The problem right now is that they aren't officially recognized nationally. Germany has this interesting method.....you have to go to each of the sixteen German states, and get two thousand signatures in each. For a party just starting out...it's a bit difficult.
What the party says is that they will have their folks out in April, and they intend to get the signatures in each state. I'm guessing that large segment of this effort will center on youthful voters, and the internet might be used a good bit to interest people.
The interest here? I'd say from observations that there is a small group of Germans....maybe ten percent of society....that have a anti-Euro philosophy, and really don't want to loan any other country funding to get out of their mess. Oddly enough....there are a number of economical experts who typically appear on TV, who have made common statements that would put them into the middle of this philosophy.
What happens if they meet the 2k signature deal in each state? They get on the ballot for the fall election (the national one). At this point, CDU's Chancellor Merkel has to recalculate the impact of voting.
Two new parties are meeting this fall (maybe). The Pirate Party will likely get no more than three percent of the national vote (mostly all teen voting), and not fall into this picture of worry. The Alternate guys? Well....I would speculate that they could carry five percent of the national vote.
For Merkel currently....she knows that she'll carry around thirty-eight to forty percent of the national vote. She'll have to partner up with someone. If the alternate party takes votes away from the FDP....they may not be a partner. And the options start to become very cloudy. A CDU/CSU arrangement with the Green Party? It could happen. Would Merkel team up with the alternate party? I seriously doubt that.
I think the biggest worry is that some of the chat this fall will be over quitting the Euro....which Merkel really would prefer it not be brought up in any televised conversation. That's probably the biggest pain for her.....defending the Euro, in the midst of a political election.
The basis of the group? Well....they'd like to end the Euro, which is pretty big business, and return to the old Deutsche Mark.
Added to the small list....they'd like to get rid of aid payments to countries like Greece, and potentially Cyprus. And they are for dumping this EU bailout fund that has been created.
The problem right now is that they aren't officially recognized nationally. Germany has this interesting method.....you have to go to each of the sixteen German states, and get two thousand signatures in each. For a party just starting out...it's a bit difficult.
What the party says is that they will have their folks out in April, and they intend to get the signatures in each state. I'm guessing that large segment of this effort will center on youthful voters, and the internet might be used a good bit to interest people.
The interest here? I'd say from observations that there is a small group of Germans....maybe ten percent of society....that have a anti-Euro philosophy, and really don't want to loan any other country funding to get out of their mess. Oddly enough....there are a number of economical experts who typically appear on TV, who have made common statements that would put them into the middle of this philosophy.
What happens if they meet the 2k signature deal in each state? They get on the ballot for the fall election (the national one). At this point, CDU's Chancellor Merkel has to recalculate the impact of voting.
Two new parties are meeting this fall (maybe). The Pirate Party will likely get no more than three percent of the national vote (mostly all teen voting), and not fall into this picture of worry. The Alternate guys? Well....I would speculate that they could carry five percent of the national vote.
For Merkel currently....she knows that she'll carry around thirty-eight to forty percent of the national vote. She'll have to partner up with someone. If the alternate party takes votes away from the FDP....they may not be a partner. And the options start to become very cloudy. A CDU/CSU arrangement with the Green Party? It could happen. Would Merkel team up with the alternate party? I seriously doubt that.
I think the biggest worry is that some of the chat this fall will be over quitting the Euro....which Merkel really would prefer it not be brought up in any televised conversation. That's probably the biggest pain for her.....defending the Euro, in the midst of a political election.
Sunday, March 10, 2013
If You Ran The Country
After this recent Swiss episode with a national referendum over wages for CEOs....there's a German discussion underway if they ought to allow the public to jump into major topics and let them vote "pass or fail".
Before I run off to discuss the German situation.....let's step back and view what the direct vote in Swizterland leads to. A company now in Switzerland must allow the shareholders to vote on pay-raise for the CEO and board. Those special hand-shake deals which allow for massive packages when a CEO leaves? Mostly all forbidden now. Try to sneak around the rules? You as the boss of the company....will go off to a Swiss prison for simply attempting to get around the rules.
What happens in Switzerland now? If you had the company headquarters located in the country....it's fairly good odds that they will make a decision and at least move the top level of the company out....probably to Austria....maybe even Prague. Some companies will stall the decision for a year or two....but spend time and money reviewing the movement option.
Some companies may elect to stay, but realize in a decade that they can't attract any top managers to their companies....and generally accept the second tier of good but not great managers.
Now to the German discussion....allowing direct participation by the public in national affairs. Generally, it leads to stupidity down the road.
What you ask is to take what is typically a very difficult topic to understand....relating to health care, business, taxes, or the budget-process. Instead of letting a small number of intelligent law-makers review the entire episode and come to a rational decision ...you instead turn this into a referendum. Out of a hundred people on the street....who has time to sit and review the whole problem and can make a rational decision out of something.
So the catch to this whole decision by direct participation....is that you get some folks on TV to talk over the topic and after an hour.....you think you are smart enough because of the production crew choice of 'smart-folks'.
Slanted discussions on TV? You should bet on that. Rational decisions coming from slanted discussions? Only if you went further and read up on the entire topic. But again....out of a hundred people....only a few would be competent enough to say they can make a wise decision for the nation.
At the state-level.....there might be a huge amount of support for doing this....because you could press down each year for two or three major changes, and suddenly over five years....have a drastically different German state in front of you. They might convince the public to offer incentives and bring more business to their state....squeezing out business from other states. They might convince the public to offer free land to companies that want to move into the state.
What happens in this case? It's hard to predict the German reaction on the street. Some might say that they'd like to run Germany instead of the stupid politicians in Berlin. Some might say that they are much wiser than the current folks in charge. And some might admit publicly ....this is not what they'd be capable of.
In my own conventional wisdom? It's management-by-the-front-page-of-Bild. And if you like that type of government....go for it.
Before I run off to discuss the German situation.....let's step back and view what the direct vote in Swizterland leads to. A company now in Switzerland must allow the shareholders to vote on pay-raise for the CEO and board. Those special hand-shake deals which allow for massive packages when a CEO leaves? Mostly all forbidden now. Try to sneak around the rules? You as the boss of the company....will go off to a Swiss prison for simply attempting to get around the rules.
What happens in Switzerland now? If you had the company headquarters located in the country....it's fairly good odds that they will make a decision and at least move the top level of the company out....probably to Austria....maybe even Prague. Some companies will stall the decision for a year or two....but spend time and money reviewing the movement option.
Some companies may elect to stay, but realize in a decade that they can't attract any top managers to their companies....and generally accept the second tier of good but not great managers.
Now to the German discussion....allowing direct participation by the public in national affairs. Generally, it leads to stupidity down the road.
What you ask is to take what is typically a very difficult topic to understand....relating to health care, business, taxes, or the budget-process. Instead of letting a small number of intelligent law-makers review the entire episode and come to a rational decision ...you instead turn this into a referendum. Out of a hundred people on the street....who has time to sit and review the whole problem and can make a rational decision out of something.
So the catch to this whole decision by direct participation....is that you get some folks on TV to talk over the topic and after an hour.....you think you are smart enough because of the production crew choice of 'smart-folks'.
Slanted discussions on TV? You should bet on that. Rational decisions coming from slanted discussions? Only if you went further and read up on the entire topic. But again....out of a hundred people....only a few would be competent enough to say they can make a wise decision for the nation.
At the state-level.....there might be a huge amount of support for doing this....because you could press down each year for two or three major changes, and suddenly over five years....have a drastically different German state in front of you. They might convince the public to offer incentives and bring more business to their state....squeezing out business from other states. They might convince the public to offer free land to companies that want to move into the state.
What happens in this case? It's hard to predict the German reaction on the street. Some might say that they'd like to run Germany instead of the stupid politicians in Berlin. Some might say that they are much wiser than the current folks in charge. And some might admit publicly ....this is not what they'd be capable of.
In my own conventional wisdom? It's management-by-the-front-page-of-Bild. And if you like that type of government....go for it.
Sunday, March 3, 2013
The Italy-Germany Problem
This past week....after elections in Italy....there's an uneasy feeling in Germany.
What the elections said....was that Italians are not that happy over austerity measures, and willing to vote for some radical political groups.
Among these groups....there's the Five Star Movement. One of the themes that this group is pushing....is to dump the Euro, and retreat back to the Lira. Then they'd rewrite the loans....to their own agreeable situation, and reinvent the entire Italian economy.
German economic experts are mostly sitting there in disbelief. I imagine their common response would be: you'd have to be an idiot to think this would all work out OK, and put Italy back into a great condition.
As an American watching this infighting over economic politics.....you reach a point of asking the stupid question....what if? If Italy dumps the Euro, then what? A number of folks in Greece and Cyprus would immediately demand the same game-plan That's probably going to be the next step in Spain as well.
I believe the German economic experts are starting to imagine a scenario where over a hundred-day period....the unthinkable starts to occur.
The value of the Euro then? It would have to rise up against the dollar, and a number of big-spenders would be dumping the Euro in a hurry....hoping to find stability either in the dollar, or in gold (my pick would be gold). You could easily see the Euro being questioned....even in Germany at this point. And the US strategy of playing always weak and using the weak dollar to their advantage? Down the toilet and flushed away.
It's a pretty harsh scenario, and I'm guessing dozens of German economic experts are now sitting around a table and discussing how this would work, and how Germany ought to react. It's inviting a big huge mess....in an election year.....and even Chancellor Merkel has to shake her head over implications. Never in her life....did she have to debate the wisdom of the Euro over the old Deutsche Mark.
And the sad thing? At the head of this Italian movement....is a former Italian comedian-turned-political activist (an Italian Tea Party kind of guy, by my own terms). Beppe Grillo will readily admit....at best....he only has a dozen odd platform themes. He has no interest in grouping his folks with a national political team. He sees everything about the Five Star Movement....as simply pushing a couple of common themes that the public generally appreciates (term limits, no political office for anyone convicted of a crime, and dissolving county government levels where so much corruption resides).
For a serious German political expert....having an Italian comedian in the midst of serious business....is a joke. You can just imagine where this is going toward, and how the public will react.
What the elections said....was that Italians are not that happy over austerity measures, and willing to vote for some radical political groups.
Among these groups....there's the Five Star Movement. One of the themes that this group is pushing....is to dump the Euro, and retreat back to the Lira. Then they'd rewrite the loans....to their own agreeable situation, and reinvent the entire Italian economy.
German economic experts are mostly sitting there in disbelief. I imagine their common response would be: you'd have to be an idiot to think this would all work out OK, and put Italy back into a great condition.
As an American watching this infighting over economic politics.....you reach a point of asking the stupid question....what if? If Italy dumps the Euro, then what? A number of folks in Greece and Cyprus would immediately demand the same game-plan That's probably going to be the next step in Spain as well.
I believe the German economic experts are starting to imagine a scenario where over a hundred-day period....the unthinkable starts to occur.
The value of the Euro then? It would have to rise up against the dollar, and a number of big-spenders would be dumping the Euro in a hurry....hoping to find stability either in the dollar, or in gold (my pick would be gold). You could easily see the Euro being questioned....even in Germany at this point. And the US strategy of playing always weak and using the weak dollar to their advantage? Down the toilet and flushed away.
It's a pretty harsh scenario, and I'm guessing dozens of German economic experts are now sitting around a table and discussing how this would work, and how Germany ought to react. It's inviting a big huge mess....in an election year.....and even Chancellor Merkel has to shake her head over implications. Never in her life....did she have to debate the wisdom of the Euro over the old Deutsche Mark.
And the sad thing? At the head of this Italian movement....is a former Italian comedian-turned-political activist (an Italian Tea Party kind of guy, by my own terms). Beppe Grillo will readily admit....at best....he only has a dozen odd platform themes. He has no interest in grouping his folks with a national political team. He sees everything about the Five Star Movement....as simply pushing a couple of common themes that the public generally appreciates (term limits, no political office for anyone convicted of a crime, and dissolving county government levels where so much corruption resides).
For a serious German political expert....having an Italian comedian in the midst of serious business....is a joke. You can just imagine where this is going toward, and how the public will react.
Saturday, March 2, 2013
The Robbery Story
The regional newspaper.....the Westfalen Blatt....reported this odd story. I sat over for a while, and for an American...it's a pretty odd adventure.
Huns, the driver of a big rig truck....is driving down the autobahn, when this one vehicle comes up and places themselves in front of his rig....slowing him slightly. Huns doesn't pay attention, but another vehicle....likely a car...moves up from the rear. Some nut climbs out on the hood of vehicle, and somehow, they get close enough for this idiot to open the rear door of the truck, and then jumps into the truck.
The robber now picks out boxes and throws them to an associate in the following vehicle.
All of this is happening at speeds of sixty miles per hour or more.
The cops say.....it's a gang of thieves, and there's been roughly fifty of these robberies committed so far. Values? Upwards to 250k Euro.
So you sit and ponder over this. All of this occurs in the evening hours. Imagine finding some nutcase who is willing to climb on the hood of your vehicle....in the darkness...with just a light focused on the back of this truck. You are speeding along at sixty mph. You reach out and just hope that the trucker doesn't hit his brakes. You grab the door handle, and flip the door open. Then you hope inside, and do your business. At the end....you climb on the edge and wait for your buddy to get close enough to jump.
Madness? Yes.
I just can't think of many people who would attempt this.
A group of circus folks? It has to involve at least one person who has spent time with a circus. Frankly, someone will end up dead from this business eventually. My humble guess is that some truckers will eventually put a camera on the rear of the truck and catch the thieves in the act....calling the cops and finishing off a very creative gang.
Huns, the driver of a big rig truck....is driving down the autobahn, when this one vehicle comes up and places themselves in front of his rig....slowing him slightly. Huns doesn't pay attention, but another vehicle....likely a car...moves up from the rear. Some nut climbs out on the hood of vehicle, and somehow, they get close enough for this idiot to open the rear door of the truck, and then jumps into the truck.
The robber now picks out boxes and throws them to an associate in the following vehicle.
All of this is happening at speeds of sixty miles per hour or more.
The cops say.....it's a gang of thieves, and there's been roughly fifty of these robberies committed so far. Values? Upwards to 250k Euro.
So you sit and ponder over this. All of this occurs in the evening hours. Imagine finding some nutcase who is willing to climb on the hood of your vehicle....in the darkness...with just a light focused on the back of this truck. You are speeding along at sixty mph. You reach out and just hope that the trucker doesn't hit his brakes. You grab the door handle, and flip the door open. Then you hope inside, and do your business. At the end....you climb on the edge and wait for your buddy to get close enough to jump.
Madness? Yes.
I just can't think of many people who would attempt this.
A group of circus folks? It has to involve at least one person who has spent time with a circus. Frankly, someone will end up dead from this business eventually. My humble guess is that some truckers will eventually put a camera on the rear of the truck and catch the thieves in the act....calling the cops and finishing off a very creative gang.
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