Cyprus crisis: What are capital controls and why does it need them?

By Laurence Knight Business reporter, BBC News

Most of us assume the money in our bank account is always available to us

"Neither a borrower, nor a lender be."
 

That was the recommendation given by the rather creepy Polonius to his son Laertes, who was about to head off to the temptations of Paris in the play Hamlet.
 

Sage advice as it may appear, the truth is that each and every one of us is a lender - often without even realising it - and our economy would not function nearly so well if that were not the case.
 

That's because your bank account is a loan, from you to your bank.
 

You may think of it as money - akin to cash, one cash-machine trip away from banknotes - but it is nonetheless a loan.
 

And, as most of us are well aware by now, the bank takes this borrowed money and re-lends it to businesses and homebuyers.
 

Inherent flaw
 

But while you have the right to withdraw your money from the bank at a moment's notice, the bank, of course, does not have the right to demand that mortgage borrowers and companies repay the loans it has made at the drop of a hat.
 

And this makes all banks vulnerable to a sudden collapse. Because if everyone turned up one day and tried to empty their bank account - in other words, asks for their loans to be repaid - the money would not be there to repay them.
 

It is an inherent vulnerability.
 

Even a solvent bank - one that has made sensible loans and investments that will eventually be repaid in full - does not have the cash readily available to pay out even a fraction of its deposits.
 

All banks are inherently vulnerable
 

Fortunately, people don't normally do that. Indeed, a bank's very business is predicated on the fact that only a fairly predictable minority of its many depositors ask to withdraw their money from one day to the next.
 

But occasionally, people do queue up outside the bank - or empty their accounts electronically - if they suddenly become afraid that the money in their bank account is no longer safe. It is what is known as a bank run.
 

If the bank is solvent - which, during a crisis, can be near-impossible to judge - then in most countries, the central bank will throw it a lifeline - an emergency loan that will provide the requisite cash until the depositor panic subsides. That way the cash machines of a healthy bank are guaranteed never to run empty.
 

Precisely such fears over Cyprus' banks have already led them to borrow some 9bn euros of so-called Emergency Liquidity Assistance from their central bank, to replace money withdrawn by more savvy depositors in recent months.
 

Hot potato
 

But what if the bank is not solvent? What, for instance, if it has lent a bunch of money to the Greek government that will never be repaid in full?
 

In that case - as the European Central Bank made clear last week - the bank could no longer rely on largesse from the central bank to keep its doors open.    The central bank has no interest in making a loss on its emergency lending, or in propping up banks that have no future.
 

And that is where capital controls come in.
 

A capital control is when the government tells you that you are no longer allowed to move your money around freely.
 

Normal service will be resumed within "a matter of weeks"
 

In this sense, Cyprus has already had capital controls in place for over a week. Because, for over a week, the government has declared special "bank holidays", during which the country's banks have been shuttered, and there have been strict limits on how much people can withdraw each day from cash machines.
 

The island's two biggest banks - Laiki Bank and Bank of Cyprus - had made such big losses on the loans they made, that they probably no longer had enough money to repay all their depositors - not now, not ever.
 

And somebody would ultimately have to bear those losses.

How secure do you believe the stock market is today?  After the housing bubble burst the DOW dropped below 7000.  Now it is over 18,000 with the S&P hitting records and the Nasdaq being pushed to old highs.  Can you honestly believe this growth is attributed to "direct wealth production"?  TRILLIONS of dollars have been BORROWED by the government to stimulate our economy and to what reward?  They imprudently contaminate our economy with debt to which there is no way out.

The question...are you going to be dragged down into the abyss designed specifically for financial destruction which will ensue?  Or...will you be smarter than the government thinks you are. 

Give us a call to help protect your assets.  1 800 375 4188

Lynch clears committee with three GOP votes

By SEUNG MIN KIM

Loretta Lynch cleared a key vote in the Senate Judiciary Committee Thursday in her bid to become the nation's next attorney general, picking up support from three Republicans on the panel in favor of her confirmation.

The vote was 12-8.

 The three Republicans who backed her nomination, along with all committee Democrats, were Orrin Hatch of Utah, Lindsey Graham of South Carolina and Jeff Flake of Arizona.

The next battle is on the Senate floor, where the federal prosecutor from Brooklyn is still expected to have enough GOP backing to be confirmed. But the controversy over President Barack Obama's executive actions on immigration have overshadowed her nomination - particularly after her confirmation hearing last month, where she testified that those unilateral moves are legal.

Most GOP senators on the committee stressed that they could not support someone to be the nation's chief law enforcement official who believes that the executive actions - which Republicans uniformly oppose and say are unconstitutional - are legal.

"Ms. Lynch pledged to support executive amnesty ... but it just doesn't stop at that," said Sen. Ted Cruz (R-Texas), citing a range of issues from drone strikes to the Internal Revenue Service. "She has told us her views. Those views are radical. Those views undermine the rule of law."

The committee's chairman, Sen. Chuck Grassley (R-Iowa), announced Thursday that he would oppose Lynch because he believes she would not be sufficiently independent from Obama and the administration's policies.

"I remain unconvinced she will lead the [Department of Justice] in a different direction," he said. "Now, I'm confident that if she had demonstrated a little more independence from the president, she would've garnered a lot of support today."

Democrats, meanwhile, have long demanded that the controversy over Obama's executive actions - which could stop deportations for more than 4 million immigrants here illegally and grant them work permits - stay out of the attorney general battle.

Those sweeping executive actions have been blocked by a federal judge in Texas. In a letter this week, Lynch told Flake, Hatch and Graham that she would abide by the current injunction on Obama's executive actions "unless and until" they are lifted, Flake said.

Read more: http://www.politico.com/story/2015/02/loretta-lynch-attorney-general-committee-vote-115539.html#ixzz3Ss6gAZRz 

Republican claims document shows administration preparations for health care law defeat

By ALAN FRAM

(AP:WASHINGTON) WASHINGTON (AP) - A leading House Republican claimed Thursday that he's been told of a 100-page document showing the Obama administration is preparing contingency plans in case the Supreme Court invalidates federal subsidies that help millions of Americans afford health care coverage.

Rep. Joseph Pitts, R-Pa., provided no details about the paper and did not say if he has actually seen it. At a hearing of a House health subcommittee that he chairs, Pitts said he had received information about it from "a source" in the Health and Human Services Department.Sylvia Burwell, the Health and Human Services Secretary, told Pitts at the hearing that she was unaware of such a document.

Congressional Republicans have been angered for weeks as administration officials have not directly answered whether they are planning for a possible loss in the court case. Burwell has said the administration believes it will win the case and that no administrative actions could solve the problems that would result should it lose.

Such responses have not helped the GOP-controlled Congress. Should the court nullify the subsidies, many lawmakers will feel pressure to propose a way to help the millions of voters who could suddenly find their health care unaffordable.

***the damage is already done....do you think insurance companies will give back premium to those of us who had oue rates increased to pay for those subsidies???  My rates went up $300 a month and I believe as a direct result of this.

ATLANTIC CITY, N.J. (AP) - Atlantic City's Hard Rock Cafe is shutting down in April. The restaurant and bar filed a warning notice late Wednesday with the New Jersey Labor Department that it would close on April 22, putting 73 people out of work. The nightspot operates inside the Trump Taj Mahal Casino Resort, which is trying to emerge from bankruptcy. A manager at the business had no immediate comment Thursday. The Taj Mahal has been struggling to retain customers through the slow winter months, after repeated threats it was closing late last year.

Atlantic City will probably have some nice beach front property for sale at pretty cheap prices here in the near future.

According to a newly released report from Bankrate, 24 percent of Americans have more credit card debt than emergency savings, and 13 percent are not much better off-they don't have credit card debt but they don't have emergency savings either. Put another way, more than a third of Americans are living at risk of a financial crisis.

"Americans are woefully undersaved for emergencies," said Greg McBride, chief financial analyst at Bankrate. "

Generation X is the group shortest on emergency savings, Bankrate found, largely because they are in an expensive stage of life. Some 32 percent of respondents aged 30 to 49 had more credit card debt than emergency savings.

"They've got the two kids, the dog, the car payments, the mortgage payments, the tuition payments," McBride said. "They are the poster children for stretched budgets."

Millennials are in relatively better shape, with just 21 percent of respondents between 18 and 29 having more credit card debt than emergency savings. Perhaps that is because they have not hit the high-spending years and perhaps, as McBride said, "

Retirees were the most prepared for emergencies, with just 14 percent saying their credit card debt was bigger than their emergency savings.

Bankrate's figures released Monday do show some improvement from a year earlier. Only 58 percent of Americans have more emergency savings than credit card debt, Bankrate found, but a year ago that figure was 51 percent. Respondents in the new survey also feel better about their finances than the respondents a year earlier.

According to the Employee Benefit Research Institute's 2014 Retirement Confidence Survey, 60 percent of workers have less than $25,000 in savings and investments, and 36 percent have less than $1,000-up from 28 percent in 2013.

Millennials actually have a negative 2 percent savings rate, according to Moody's Analytics, possibly because of high student loan debt.

"Americans are still woefully undersaved for emergencies and retirement, and that's not something that's going to change overnight," McBride said.

(AP:HELSINKI) HELSINKI (AP) - Apple is investing 1.7 billion euros ($1.92 billion) in high-tech data centers in Denmark and Ireland that will be powered by renewable energy, in its largest such project in Europe to date, the company said Monday.

The hubs, to begin operations in 2017, will power data for Apple Inc.'s online services, including iTunes Store, App Store, iMessage, Maps and Siri voice services.

Apple said it has increased operations in Europe, spending more than 7.8 billion euros on European companies and suppliers last year and supporting some 670,000 jobs in the region. Its own employees grew by 2,000 and number 18,300 people in 19 European countries.

The technology giant joins Microsoft, Google and Facebook in building data centers in northern Europe, where the colder climate helps save on equipment cooling costs.Apple CEO Tim Cook described the centers as "some of our most advanced green building designs yet." They will use renewable energy, including wind power.

In Ireland, Apple will recover land previously used for growing and harvesting non-native trees and restore native trees to a local forest, providing an outdoor education site for local schools and a walking trail.

The Danish center will be located next to one of the country's largest electrical substations, designed to capture excess heat from equipment in the data hub and conduct it into the district heating system to warm homes in the area.

The data centers will be based in central Denmark's Jutland and Athenry, County Galway, in Ireland.

But this is not just a case of Apple exceptionalism. It turns out that Apple is hardly the only IT company sitting atop that mountain of riches. Four of the six richest companies (also by market cap) on the planet are Silicon Valley giants. They are, in order, Apple, Microsoft, IBM, and Google. Chevron, that other oil giant, is No. 5, sitting between IBM and Google. Look a little further and you'll notice that Cisco Systems, Intel, and Oracle are among the 20 richest companies.

US home sales drop 4.9 pct. in January; job growth and low mortgage rates fail to spur buying

By JOSH BOAK

(AP:WASHINGTON) WASHINGTON (AP) - U.S. home sales struck a snow drift in January, plunging to the slowest pace in nine months.

The National Association of Realtors said Monday that sales of existing homes tumbled 4.9 percent last month to a seasonally adjusted annual rate of 4.82 million.

That brings sales down to their lowest level since April 2014.Relatively low mortgage rates and steady job growth have yet to spur more activity from buyers and sellers, raising the possibility of either a spring sales rush or a second straight year of numbness in the real estate market.

 Few properties are being listed for sale, would-be buyers are holding off on purchases and snowstorms are cutting into traffic at open houses.Weak sales in 2014 had set up expectations of a strong rebound in 2015, yet signs of that resurgence have yet to appear.

The addition of roughly 1 million new jobs over the past three months has failed to make much of a dent in home-buying.

Homes did sell at a rate 3.2 percent faster than January 2014, but that increase largely reflects the brutal winter weather at the beginning of last year that depressed home-buying and caused the entire U.S. economy to briefly shrink.

The noticeably more robust U.S. economy coming into 2015 was supposed to buoy sales, but the market has barely stirred so far."

The weather hit is nothing like the scale of the damage seen last winter, but we would not now be surprised to see a further decline in activity in February," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "The underlying trend in sales is more or less flat."

Few properties are coming onto the market. Just 4.7 months of supply were listed for sale at the end of December, compared with an average of 5.2 months during 2014, according to the Realtors.

Nor have builders ramped up construction. Housing starts slid 2 percent in January, according to a report from the Commerce Department last week.

The limited supply of homes can lift prices to higher levels, which may then lead would-be buyers to wait until they have more choices. Weekly mortgage applications fell 13.2 percent, the Mortgage Bankers Association reported last Wednesday.

Affordability has become a problem as prices have climbed at a faster clip than incomes. The national median home price rose 6.2 percent over the past 12 months to $199,600. That has priced out many first-time buyers, who represented just 28 percent of sales compared to their historic share of 40 percent.

Mother Nature is also beginning to take its toll. Nasty snowstorms in the Midwest and Northeast likely kept would-be buyers away, further crimping sales heading into March and beginning of the spring buying season.

Buyer traffic for newly built homes slowed in February, according to the National Association of Home Builders/Wells Fargo sentiment index.The Realtors said previously in a separate report that the number of signed contracts in December fell 3.7 percent, suggesting that sales will remain under pressure in the coming months.Sales slid in all four major geographical regions last month: dropping 6 percent in the Northeast, 2.7 percent in the Midwest, 4.6 percent in the South and 7.1 percent in the West.Possibly hurting sales further, mortgage rates have crept upward for the past two weeks, ending what has previously been a yearlong slide.Average 30-year fixed rates were 3.76 percent last week, according to the mortgage giant Freddie Mac. The average has risen from 3.59 percent at the start of February.The current levels remain below the 4.33 percent average from a year ago, but the previous lows might keep current homeowners from upgrading since it would mean abandoning their current mortgage for a loan with possibly a higher rate and larger monthly payments.

No More Talk - Parking lot time for radical Islam in all its 'names'

BY ADMIN, LAURIE ROTH ON FEBRUARY 19TH, 2015

We must do more than stand strong against radical Islam - ISIS and its murderous relatives. We must use our Intelligence and combine real efforts with Israel, Egypt, Jordan and Libya to strike ISIS businesses, training camps, arms facilities, leaders and everything related to them and their support...now.   Their burning cages, knives, guns and Mosques need to be turned into parking lots.

As it is now, we don't even have a President who will stand and as the New York Post cover says in loud neon, Obama just doesn't see Islamic terror. Instead we see a President in the face of people being burned alive and Christians getting their heads chopped off, at an Islamic conference - once again insisting on separating Terror from Islam. That is only after he made sure he got several days of golfing in Palm Springs.

Jordan, Libya and Egypt have been bombing ISIS to pieces and flying fighter jets everywhere attacking Islamic terrorists where they find them, but America is AWOL.

If we had a real President who wasn't siding with Islam, funding terror and not corrupt, we would have had an immediate and bold confrontation statement with a swift action plan in response when ISIS ramped up burning dozens of victims alive in cages, then beheading 21 Coptic Christians. As Obama has played, dozens more are continuously kidnapped, children are sitting in a cage ready to be torched and more torture and beheadings are planned. Naturally, it will all be video taped and spread around the world.

ISIS and its Islamic relatives are emboldened and gaining power and strength as the ruthlessly torture and murder more and more 'infidels.'

It is morbidly impeachable that Obama does nothing but barely speak (always too late) with empty words. It is obvious he doesn't have the will, desire or plans to lead or act in time that makes a 'hill of beans' difference. What if the beheadings had been reversed and Christians had done this to 21 Muslims? Rev. Franklin Gramn asked this question as well. The world would have been on fire if this had been a reverse scenario. 9/11's would be in every major city in America over and over.

I demand and call on Congress, our Generals and anyone in leadership, who cares to keep their head on, do something now! Coordinate our awesome intelligence with Israel and Egypt and start wiping ISIS and Boko Haram out for starters. Then make a clear message around the world with the Islamic Caliphate building in full force supported and funded by most Muslim groups that your turn is coming.

Obama has made it most clear whose side he is on and it isn't America, God or freedom. Leaders - House and Senate...demand Obama be made accountable and demand a bold and real response to the growing danger of radical Islam before children are thrown in cages in America and burned alive. I wonder if Obama would stop his golf game for that???

America must lead and stand against this growing evil not watch from afar.

Join me at my new time for my national radio shows 10:00 AM to 1:00 PM PST Mon-Friday. Very soon you will be able to listen live through my web site again at www.therothshow.com or on a talk station near you. Stay tuned.