Friday, March 22, 2013

Morning Brief: Day of decision in Cyprus; Chicago school district to close 54 schools; Scottish Newspaper Society comes out against proposed press regulations

Cyprus today finds itself with a gun held to its head. The question is who is holding it, the European community, Russia, or themselves?

Word is that legislation that will be brought up in parliament today will include the tax levy on bank deposits, rejected in a different form earlier this week. Depositors with less than €100,000 in their bank would be spared the tax, but those with more than that amount could face a 15 percent haircut.

Representatives of the Cypriot government have been rebuffed, according to Reuters, in their efforts to get bailout assistance from Russia. The assumption was that Russia would be eager to help since those with the most to lose are foreign nations, mostly Russian oligarch, who use Cyprus as a tax haven for their riches. But without Russian assistance Cyprus might feel it is forced to reintroduce the levy on deposits – this in turn would all but destroy Cyprus as a banking haven for the rich.

Cypriots have been protesting the proposed levy, but how they would feel if €100,000 of deposits were protected is unknown. The Bank of Cyprus has come out in favor of the tax as a way of saving the banks and avoid default, but the act of taxing deposits would itself be injurious to the banking community.

"The next few hours will determine the future of the country," Reuters quoted a government spokesman. "We must all assume our share of the responsibility."

Paul Krugman, on his blog this morning, reminds us that Cyprus also has an issue of overvalued real estate – a bubble, in other words. He argues that pulling an Iceland – letting the banks fail and reintroducing the currency – would work for Cyprus. But he knows as well as anyone that this will not happen. Just like in Greece, the natives are too enamored with the idea of being part of the Eurozone. Until that changes nothing really can prevent them from being victimized by their European partners.

"For too long children in certain parts of Chicago have been cheated out of the resources they need to succeed because they are in underutilized, under-resourced schools," announced the chief executive of the Chicago Public Schools yesterday in a statement.

What followed, however, was not a pledge of added funding, but the announcement that 54 public schools would be closed.

"They are moving people around on spreadsheets," said the president of the Chicago Teachers Union. "And children are not spreadsheets."

No, they are not spreadsheets. They are numbers on spreadsheets.

The Scottish Newspaper Society has come out officially against the proposed UK press regulation that resulted from the Leveson Report.

“The Scottish Newspaper Society has serious concerns about the Expert Panel report and the considerable extensions over and above the Leveson proposals," the society said in a letter.

"Our main issue with what is proposed is the impact on regional and local newspapers, who were praised and exonerated in the Leveson report but now face a more expensive and extensive regulatory system at a time of economic recession and migration of revenues to the internet."

The Huffington Post this morning posted their own guide to Britain's new media regulation regime.