Cyprus bank disaster: small victims, big contagion risk

If past history is anything to go by, Cyprus' really big depositors and alleged crooks and money launderers will have got wind of the coming changes and shifted before the Argentina-style "corralito". I should certainly not like to be a Cypriot banker or politician trying to explain to a Russian mafioso why his money has gone.

Now the Daily Telegraph, quoting Reuters, explains the new arrangements. Depositors in Laiki Bank "stand to lose up to 80pc of their money" and those with the Bank of Cyprus "will receive shares in the lender worth 37.5pc of any savings over €100,000, while the rest may never be paid back... Of the 62.5pc of uninsured deposits not converted to bank shares, about 40pc will continue to accrue interest but will not be repaid unless the bank does well, while the final 22.5pc will cease to attract interest."

That Telegraph headline, though: "Big depositors..." Let's illustrate "big" with a little hypothetical situation. Assume you've been dutifully caring for a loved relative who has recently passed on, leaving you her flat in Streatham (SW16), where I used to live. The average sold price for a residence in one of the streets there is £247,362 according to NetHousePrices. That would convert to €293,064.

So you decide it's time for your place in the sun in your declining years. You sell your house, swapping it for a place in Cyprus, and the proceeds of Aunty's flat are banked to create an income.

And now... only €100,000 (34%) is accessible. Of the rest, €72,400 has become "bank shares" (shares in an all-but-bankrupt enterprise, so don't expect dividends), €72,400 is inaccessible AND earning no interest, and €48,266 is inaccessible but interest-earning.

Assuming that any interest at all is being paid (how? from what profits?), in the above example only €148,266 is earning it. That is, only 50.6% of your original capital is yielding any income (however derisory).

You have also lost control of 66% of your capital, and may turn out to have lost the lion's share of that portion altogether. Quite possibly all your shares are worth is some part of the buildings, fixtures and fittings of the bank branches, assuming they haven't been looted and burned. For I cannot see how anyone in their right mind would deposit another cent in these banks, or how they could be persuaded not to get everything they can out of their accounts, as fast as humanly possible.

I think these banks are dead, if still twitching.

The question of contagion remains - will those in charge stop a Europe-wide series of bank runs? I'm no longer even sure about keeping what we have in sterling in a British bank. And I'm constitutionally sanguine and cautious.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Bank of England "loses" 20 years of data

Until recently, BoE data for M4 was available online going back as early as 1963. Now the series starts at 1982. Why? Is this to avoid a potentially embarrassing examination of the connexion between M4 growth and price inflation in the 1970s?

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

The Colours Of Venus

A palette of colours from Sandro Botticelli's "The Birth of Venus" (1485-86) in homage to David Everitt-Carlson's ITOMB Project (2011- ). The hues are from the goddess' hair, body and the surrounding air.

A ghost

My wife does voluntary work at the city hospital on a Wednesday, in the Bereavement Office. One of the employees there told her yesterday about a conversation she'd had with a doctor on site, a couple of weeks ago.

The new hospital - which looks like three packets of those mints with a hole, side by side, and is the type to win a design award while being less fit for purpose than what it replaced - is connected to the old one by an aerial corridor. The doctor received a crash call - a drop-everything-and-run emergency - and as he was running through this bridge he met a woman coming the other way who asked him directions to the mortuary. He said he couldn't stop but when he got to the ward the patient, the woman he'd spoken to, had died.

The most interesting thing about this story is how you and I react to it. It's certainly true that my wife told it to me this morning, and that she knows the woman who told it to her; and I have no reason to doubt that the woman did speak to a doctor who related his experience to her.

But we fit new experiences into the framework of our old ones, so some will say urban myth, others that it was a lie or a delusion, others will say of course there are ghosts. We think we're being rational when we're merely explaining things by reference to our world view.

Thomas Kuhn said that major changes in science are not brought about by falsification, even though the received wisdom may be fundamentally wrong. If we say there no black swans and are then shown one, we can answer that it's not really a swan. What causes the revolution in thinking is a phenomenon that cannot be explained using the existing theoretical structure.

Perhaps there are also personal revolutions that we resist as long as possible.

Are we explaining, or trying to explain away?

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

App -etite control...

See how New Girl in New York used new technology to get a new shape, on World Voices here.

USA: Dieting in a nutshell

We are all individual and how we lose weight successfully will be different for everyone. In the past I have tried many different diets and read many books on how to lose weight. However, for me, it came down to calorie counting and keeping a food diary.

I thought my diet was pretty healthy, but once I started writing down everything I ate each day and worked out my calorie consumption, I discovered I was completely underestimating my intake.

I downloaded this great app onto my iPod called 'MyNetDiary' which was key to my food tracking and calorie counting. It allows you to input your details and then calculates how many calories you can eat each day in order to lose weight in a healthy way. It contains a huge database of foods, and remembers your favourite things, which makes it very easy to use. The barcode scanner allows you to add new foods and the recipe builder is a great way to work out how many calories are in your meals. I found it invaluable and continue to use it everyday to help maintain my current weight.

Living in New York, or anywhere you have access to an abundance of restaurants, makes it very tempting to eat out or get take away. It is also pretty cheap to eat here, add to that my tiny kitchen, I became very lazy when it came to cooking at home. However, I invested in some decent cook books and took the time to make my own meals. It turns out I love cooking and, with practice, have become quite competent in the kitchen. I cook dinner 6 nights a week now and when we do go out I really appreciate and enjoy the experience. By cooking at home I know exactly what I am eating and how it was prepared. I weigh everything and ensure I control my portion sizes.

I have always exercised, but as I was eating too much it wasn't having much of an impact on my weight loss. Although exercise was a key part of my weight loss, it was as basic fact that I was putting in more than I was working out! I want to discuss exercise in more detail as it is such an important part of a healthy life style, so look our for upcoming posts.

Finally, I didn't deprive myself of anything. I didn't cut out any food groups and made sure that I ate a healthy well-balanced diet. If I really wanted chocolate I would have a small piece and I often enjoyed a glass on wine with my dinner. If I stopped myself eating chocolate I would constantly think about it, but knowing that I could have a small piece now and again stopped me obsessing about it.

The weight came off steadily and I lost about a pound a week. I hit a plateau that took a while to beat, more about that later, but eventually I made it down to my goal weight.

So, there you have it, that's what worked for me and enabled me to lose weight. I would love to hear your stories and how you lost/are losing weight, so please let me know how you are getting on!
 

This piece by New Girl in New York originally appeared here; her other blog is here. All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

A box full of love

Read Dani's post on World Voices here.