Good morning

The headlines:

  1. Some more Cyprus Articles.

    Links: the news article, the special case opinion piece, and why it won’t hurt the Russians.

    The Dutch finance minister was causing waves yesterday, after he called the Cyprus situation a “template” for future bailouts. If you were watching Bloomberg/CNBC/the business news on any channel, it was the line-drop of the day. Everything came back to the “investor panic caused by the statement of the Dutch finance minister…”.

    What was he really saying though? He was really saying that there is an order of bailout. When you look at a bank, there are a number of interested stakeholders*: shareholders (holding equity), bondholders (lending money to the bank directly), depositors (lending money to the bank as part of operations), and taxpayers (who will suffer if the banking system collapses).

    Up until now, depositors and certain bondholders have been left out of the direct bailout burden. Cyprus has been forced to change that**. And the thrust of the Troika argument is: Cypriot banks hold assets more than 8 times the size of the Cypriot GDP. Some estimates place the amount of Russian capital alone as a third larger than said GDP. How then do you ask the Cypriot taxpayer to take on the liability for foreign capital?

    Here are some relevant questions: who gets to benefit from the foreign capital? And who loses if the foreign capital leaves?

    Regardless: calling Cyprus “a special case” is laughable. Estonia, Luxembourg, Malta… Also small countries with large deposits of foreign capital. Will those too have their deposit-holders wiped out in a crisis?

    *ie. persons with a financial interest in the bank’s wellbeing.

    **and contrary to what I said yesterday, it seems that the depositor losses are not limited to the Cyprus Popular Bank.

  2. Summly.

    Link: the Yahoo purchase.

    Summly is an app designed by a 15 year old. And it was awesome. It took news articles and condensed them into 140 words or less – and it worked really well most of the time.

    Isn’t that what’s needed in a world of information overload? Something that takes what’s out there, and summarises it into bite-sized chunks of general gist.

    Yahoo have now purchased it for an unknown sum. And they’re “killing the app”. So we should expect to see it in other Yahoo mobile offerings. And as long as it’s not too replicable, it might give us a reason to use Yahoo again.

That’s all for now.

Have a good day.