Eurozone finance ministers are demanding a one-time levy on bank deposits of all sizes—even on insured accounts—as part of a bailout package for Cyprus, which is teetering on the brink of bankruptcy. Cypriots sprinted to banks and ATMs this weekend, waiting in long lines to withdraw cash after hearing about the plan on Saturday; if approved by Cyprus' parliament, it would mark the first time ordinary European depositors would be asked to take a haircut for a bailout plan. The levy would take 6.7 percent for deposits of less than 100,000 Euros and 9.9 percent for those above, and while more progressive plans have been floated, as it stands right now "[t]his is a conscious choice to make poorer people pay to help richer ones," The Financial Times writes. Why lean on the little guy? In all likelihood to preserve the island nation's status as an offshore haven for, in particular, Russian businessmen. Still, the tax is far from being assured: it's unclear whether President Nicos Anastasiades has the necessary majority to approve the plan, and the vote has been delayed until tomorrow. [Financial Times | NYT | Reuters | image via Getty/AFP]
When the banks got bailed out, people were reasonably upset — why should huge corporate banks be given public money to recover from the disaster of their own greed and incompetence? Others argued that letting those banks fail would send the economy into a further tailspin. Either way, it happened, and that was that. The banks weren't going to get even more public money, right? Not exactly.
A.I.G., the backbone that runs one inch beneath the surface of the global economy, has gotten itself millions of dollars worth of free PR today by just considering joining a lawsuit against the U.S. government. To sue, or not to sue? To be ungrateful bastards, or to potentially miss a payday? It's not a complicated question, really.
Rolling Stone's Tim Dickinson has a devastating story gutting one of Mitt Romney's origin myths as a "Turnaround Guy." Romney has always taken credit for rescuing Bain & Co., the consulting firm where he got his start (as distinct from Bain Capital, the private equity operation he later co-founded) from the clutches of bankruptcy by dint of fearless resolve, hard work, and common sense. The truth: He raided its coffers for executive bonuses even as it owed millions to the federal government, and used the resulting lack of cash as leverage to screw over the company's creditors.
Neil Barofsky was at the very center of the U.S. government's response to the 2008 economic collapse. He spent more than two years, until March of 2011, as Special Inspector General for the TARP program, overseeing and monitoring government bailout funds. Now, Barofsky has written a ferocious book detailing how, he says, "Washington abandoned Main Street While Rescuing Wall Street." And he's here to take questions from you, the Main Streeters.
Europe will apparently not fall apart after German chancellor Angela Merkel shepherded a deal early Thursday morning to write down Greek's debt. It's complicated, but basically she got a bunch of banks to take a 50% haircut on what Greece owes them. Click on the image on the right to see how one of the negotiators diagrammed it in the middle of the night.
Teetering teenage titty tableau titillator American Apparel has been wrestling this week with the question of how to get millions of dollars to keep itself alive while still being run by Dov Charney, a crazy person. They've done it! How? They found the minute handful of people in North America who A) have millions of dollars to invest, and B) do not think Dov Charney is a crazy person. What are the chances?
Fashion pimp of trendy hose American Apparel is in mortal financial peril at the moment; it needs an infusion of cash to stave off a possible bankruptcy. Investors have the cash, and the interest in the brand; what they don't have, in all likelihood, is an interest in handing a huge pile of cash over to the sole control of Dov Charney, who—despite his unshakeable confidence in himself—is the one who got the company in this situation in the first place.