Turkey Faces Threat of Financial Crisis after Lira Plunges against Dollar

THE GUARDIAN: Central bank forced to defend currency as traders respond to interest rate cut with sharp selloff

A customer at a bureau de change in Istanbul over the weekend. The lira was trading at almost 15 to the dollar at one point on Monday. Photograph: Serkan Senturk/Zuma Press Wire/Rex/Shutterstock
Fears that Turkey is on course for a full-scale financial crisis have intensified after the lira plunged to fresh lows against the US dollar.

Turkey’s central bank was forced to step in to defend the ailing currency – selling US dollars for lira – after the latest sharp selloff.

The lira was at one stage trading at almost 15 to the dollar as currency dealers contemplated the prospect of the latest in a series of interest rates cuts demanded of the central bank by the country’s president, Recep Tayyip Erdoğan.

Erdoğan’s insistence that the central bank should keep reducing the cost of borrowing despite annual inflation running at 20% has led to the value of the lira halving during 2021. » | Larry Elliott, Economics editor | Monday, December 13, 2021

World Economy Is Sleepwalking into a New Financial Crisis, Warns Mervyn King

THE GUARDIAN: Past crashes spawned new thinking and reform but nothing has changed since 2008 banking meltdown, says former Bank of England boss

The world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences for the democratic market system, according to the former Bank of England governor Mervyn King.

Lord King, who was in charge at Threadneedle Street during the near-death of the global banking system and deep economic slump a decade ago, said the resistance to new thinking meant a repeat of the chaos of the 2008-09 period was looming.

Giving a lecture in Washington at the annual meeting of the International Monetary Fund, King said there had been no fundamental questioning of the ideas that led to the crisis of a decade ago.

“Another economic and financial crisis would be devastating to the legitimacy of a democratic market system,” he said. “By sticking to the new orthodoxy of monetary policy and pretending that we have made the banking system safe, we are sleepwalking towards that crisis.” » | Larry Elliott, Economics editor | Sunday, October 20, 2019

The Developed World Is On The Brink of a Financial, Economic, Social and Political Crisis

Donald Amstad from Aberdeen Standard Investments delivers a sobering assessment on the state of developed market economies.

US Debt Clock.org »

Can Venezuela Recover from Its Financial Crisis? | Inside Story

Inflation has skyrocketed, prices are at an all-time high and the national currency, the Bolivar, has lost much of its value, The financial devastation has led to mass migration, starvation and political unrest.

President Nicolás Maduro blames it on what he calls an “economic war” against his country. His critics say widespread corruption and the government's mismanagement are responsible.

In an attempt to solve the problem, the government has introduced a plan to curb hyperinflation. There's a new currency, the 'SOVEREIGN BOLIVAR', which will remove five zeroes from banknotes. It's backed by a crypto-currency, the Petro, that's pegged to the price of oil. The government is also raising the minimum wage by 3000 percent, raising taxes and increasing petrol prices for some drivers.

How are Venezuelans reacting to the new measures?

Presenter: Mohammed Jamjoom | Guests: Paul Dobson, journalist; Sonia Schott, Latin America analyst; Charles Shapiro, Former US Ambassador to Venezuela

Is There Another Financial Crisis in the Works?

In this regulatory environment banks borrow more and make riskier loans and "no one is watching them" says, professor Gerald Epstein

Steve Keen – Financial Crisis, Trump 2018 - 2019, Crash Is Now

Steve Keen is an Australian-born, British-based economist and author. He considers himself a post-Keynesian, criticising neoclassical economics as inconsistent, unscientific and empirically unsupported. Keen was formerly an associate professor of economics at University of Western Sydney, until he applied for voluntary redundancy in 2013, due to the closure of the economics program at the university. In autumn 2014 he became a professor and Head of the School of Economics, History and Politics at Kingston University in London. He is also a fellow at the Centre for Policy Development. He is the author of Can We Avoid Another Financial Crisis? (The Future of Capitalism).

Overdose: The Next Financial Crisis | Trailer

UK Household Debt Has Reached Unsustainable Levels

Consumer and student debt in the UK have reached unprecedented levels and are a warning that austerity could lead to a new financial crisis, explains Edward Smythe of Positive Money

Lord Mervyn King: 'I'm Not Terribly Impressed' by Brexit Negotiations - BBC Newsnight

Lord Mervyn King was governor of the Bank of England at the time of the financial crisis. He joins Evan Davis from New York to discuss its long-term ramifications, and how he thinks the government is handling Brexit.

The Financial Crisis: A Decade of Debt

Ten years on from the global financial crisis the world continues to reap the consequences. David McWilliams connects the financial, economic, social and political dots to reveal the true impact of the worst financial crash since the Great Depression.

Richard Wolff: Has the Economy Hit a New Crisis Milestone?

On tonight’s Big Picture, Thom discusses the status of subprime auto loans and whether we’re headed towards a financial crisis with economist and professor Dr. Richard Wolff. Then, Thom talks to Ted Goodman of the Daily Caller and Isaiah Poole of People’s Action about Trump’s Afghanistan strategy and Trump considering a pardon for former sheriff Joe Arpaio.

The Next Financial Crisis – Documentary

Ioannis Kasoulides: Cracking Cyprus
Following the furore over the EU bailout, the Cypriot foreign affairs minister discusses the island's financial future.

Cyprus President Plans to Lift Casino Ban
Nicos Anastasiades risks Orthodox Christian Church's wrath in gamble to revive broken economy.

Cyprus Facing Ruin Regardless of Deal, Islanders Warn
THE SUNDAY TELEGRAPH: Cyprus may be on the verge of hammering out a deal to address its chronic debt crisis but many Cypriots fear that the island’s economy is destined for ruin regardless.


Nicos Anastasiades, the Cypriot president, and Michalis Sarris, his finance minister, are on their way to Brussels for emergency talks over a deal under which deposits of more than 100,000 euros in the Bank of Cyprus will be hit by a 20 per cent levy.

Deposits of more than 100,000 euros in other banks will be targeted by a four per cent forced levy.

Cyprus’s leaders are expected to submit to the drastic plan - which critics call daylight robbery - in return for a 10 billion euro bail-out loan to save the country from bankruptcy. While the deal may stave off immediate disaster, many Cypriots said the measures will shatter confidence in the island’s hugely profitable banking and financial services industry and lead to a massive exodus of investors, among them Russian tycoons and British retirees.

Islanders also fear that as the bank levies bite, businesses and big investors will have to start laying off staff, heralding high levels of unemployment.

Around 70 per cent of Cypriots are employed in the financial services and banking sector, a number that dwarfs the 20 per cent working in tourism.

“People are worried not just because they could lose their savings but because they could lose their jobs too,” said Ioanna Constantinou, 24, who works in the financial services industry in Nicosia, the Cypriot capital. » | Nick Squires, Nicosia | Sunday, March 24, 2013

Cyprus Eyes 25 Percent Levy on Big Savers
THE DAILY TELEGRAPH: Cyprus was threatening to seize up to a quarter of the value of wealthy savers' bank accounts as part of a desperate bid to stave off financial meltdown.

As talks continued to prevent Europe's finance chiefs from pulling the plug on the country's stricken banks, the Cypriot government said it was considering a levy of 25 per cent on deposits of more than €100,000 held in accounts at the Bank of Cyprus, one of the island's most troubled lenders.

The fate of similar high-value deposits in other Cypriot banks has yet to be decided.

The move was among a package of measures designed to persuade eurozone officials to agree to a €10 billion bail-out deal over the weekend. The European Central Bank has said unless an agreement is reached, it will remove financial support for country's banks when they re-open this week, leaving them facing imminent collapse.

Late on Friday night, the Cypriot parliament also backed a revenue-raising levy of less than one per cent on bank deposits below €100,000 - a rate seen as fairer than the 6.75 per cent levy rejected by legislators last Tuesday.

However, the 25 per cent rate on high-value accounts at the Bank of Cyprus is likely to cause further ructions on the island, which has seen widespread protests in the last week. It is expected to particularly hit Russian investors, who make up the bulk of the Cypriot financial sector's high-value clients. » | Colin Freeman, in Nicosia, Graham Ruddick and agencies | Saturday, March 23, 2013

Eurozone's Mistakes Could Destroy Cyprus, Warns Former President
THE GUARDIAN: Widely respected ex-leader George Vassiliou says whole European system may suffer if corrective measures not taken


When George Vassiliou is worried that is a worrying thing. Widely seen as Cyprus's most effective president in modern times, the 82-year-old is now viewed, even by his enemies, as the voice of common sense.

Today, Vassiliou is so anxious about the state of the country he governed between 1988 and 1993 that he is worried saying anything at all will only make matters worse.

It's not just the partitioned island's membership of the European Union, which Vasilliou deftly negotiated back in 2004, that is now at stake, or the imminent threat of national bankruptcy. It's what happens next if Cyprus is to have a scintilla of a hope of restoring confidence in the financial services sector that, alongside tourism, underpins the tiny nation's economy.

"Cyprus is not just an island in the sun. We have developed a unique service sector which was based on confidence in the banking system," he told the Guardian.

"If that confidence is lost then you have nothing left. Everything that has been created will be destroyed, with formidable repercussions." » | Helena Smith in Nicosia | Friday, March 22, 2013

Emergency Legislation Looms as Moscow Refuses Aid to Cyprus
RT.COM: Cyprus was left face to face with its grave financial crisis and is due to adopt new emergency legislation to secure the EU bailout after Russia said it would not help.

Nicosia introduced emergency legislation in the parliament late on Thursday to secure a bailout deal with international creditors as the island state faces an ultimatum from the ECB to agree on the bailout by next week.

The parliament is to debate on the emergency legislation on Friday, as MPs say they needed time to consider the new legislation.

The bills presented include plans to recapitalize its banking sector, eight times the size of Cyprus’ €17 billion economy, and lay losses on big depositors. The finance minister and Cyprus Central Bank are granted emergency powers to introduce any restrictive measures on banking activities to stop money flooding out of the Cypriot banks when they reopen next week after 10 days’ holiday.

Cyprus Central Bank governor Panicos Demetriades told reporters Thursday that “the banking system needs restructuring otherwise it will go bankrupt and it needs to be done immediately.” » | Friday, March 21, 2013

VIDEO: Protests outside government building »

End of an Era: Cypriot Financial Sector Faces Collapse
SPIEGEL ONLINE INTERNATIONAL: The disastrous financial situation in Cyprus is largely a result of the country's crumbling banks. For years, the island nation profited from its bloated financial sector, but now it will likely have to liquidate its two largest banks. In Nicosia, government leaders fear that could decimate the economy.

If Cyprus doesn't receive billions in foreign aid within a few weeks, the country will default by June at the very latest. But insolvency could come even sooner for the country's two largest banks. The Bank of Cyprus and Laiki Bank are only able to survive at the moment through emergency aid from the European Central Bank, which on Thursday threatened to cut off all liquidity on Monday if terms of a European Union bailout deal aren't finalized with the government in Nicosia.

The banks are actually the very core of Cyprus' problems at the moment. They are bloated, pumped full of Greek sovereign bonds and more or less already bankrupt. Without these banks, Cyprus wouldn't need to seek aid from the permanent euro bailout fund, the European Stability Mechanism (ESM). The banks' difficulties have destroyed Cyprus' reputation on the international financial markets and investors are no longer willing to lend to the country. » | Stefan Kaiser | Thursday, March 21, 2013

Whatever the Outcome in Cyprus, Crisis Raises Fear of Eurozone Flight
THE AUSTRALIAN: ATTEMPTS by the EU and the European Central Bank to resolve the debt crisis have repeatedly become the problem rather than a solution.

Cyprus needs up to about €18 billion ($22.5bn) to recapitalise its banks and for general operations including debt servicing. While small in nominal terms and well within the EU's resources, the amount is large relative to the country's gross domestic product of €18bn. The package proposed by the EU but rejected by Cyprus' parliament incorporates: privatisation of state assets, increases in corporate taxes (from 10 per cent to 12.5 per cent), withholding taxes on capital income (to 28 per cent ) and restructuring of existing bank or sovereign debt.

Most controversially, ordinary depositors will face a "tax" on bank deposits, amounting to a permanent writedown in the nominal value of their deposits. The levy will be 6.75 per cent on deposits of less than €100,000 and 9.9 per cent for those above that.

Labelled "a stupid idea whose time has come" by commentator Karl Whelan, the unprecedented writedown of bank deposits is expected to raise about €5.8bn.

The write-off reduces debt as well as the size of the required bailout package to €10bn to comply with the International Monetary Fund requirement of a sustainable debt level.

As in the case of last year's Greek debt restructuring, the ECB and other official lenders are unwilling to take losses on their exposure, requiring the depositors to take a haircut as Cypriot banks have limited amounts of subordinated or senior unsecured debt that could be written down.

Restructuring the sovereign debt of Cyprus is risky because under governing English law any attempt to restructure these while insulating official creditors from losses would invite litigation. » | Satyajit Das | The Australian | Friday, March 22, 2013

FINANCIAL TIMES: Cyprus targets big depositors in bank plan » | Michael Steen, Kerin Hope, Andreas Hadjipapas, Peter Spiegel and Charles Clover | Thursday, March 22, 2013

THE NEW YORK TIMES: Mood Darkens in Cyprus as Deadline Is Set for Bailout: NICOSIA — Under a European Central Bank threat to shut off crucial financing for banks in Cyprus without a rapid accord, members of Parliament gathered to vote Thursday on yet another revamped formula for securing an international bailout. » | Liz Alderman | Thursday, March 21, 2013

DIE PRESSE: Brüssel stellt Finanzdamm für Zypern auf: Die EU empfiehlt der Insel die Aufhebung des freien Geldverkehrs. Die Europäische Zentralbank will Nikosia nur noch bis Montag finanzieren. » | Michael Laczynski | Donnerstag, 21. März 2013