Cypress Expected to Veto Levy… Waddle Closer to Default (Reuters)
European investors awoke to another cold slap in the face, Cypriot style, as the tiny island-nation’s parliament is expected to veto the European Union’s (EU) proposed bank levy today. Unfortunately, rather than have fellow Cypriots pay the 6.75 percent tax on accounts under 100,000 euros and 9.95 percent on those over that level, Cypress’ government would rather nudge the island closer to default and banking collapse. Should the island not impose the bank deposit tax, the EU will not release bailout funds to keep banks alive another day, pay government wages, or dole out welfare. While Cypress gets high marks for protecting their own, they could fail the big test, if/when the island’s economy collapses. With the vote scheduled for today at 12:00 EDT, we’ll know soon enough.
Russians Consider Icing Germany over Cypriot Bailout (CNBC)
Even though Germany insists it isn’t responsible for the proposed levy on Cypriot bank deposits, Russia isn’t buying that story. In fact, because super-wealthy Russian oligarchs have parked so much money on the island — some 20 percent of the island’s total deposits — they stand to lose billions of dollars should the levy become law. And that situation doesn’t sit well with oil barons who are used to getting their way. Some analysts predict that Russia will respond by turning off the gas nozzle to Germany until the threat of the levy is lifted, just as it did in 2009 when Gazprom cut off Europe over a Ukrainian energy company dispute. What happens to global markets if two heavyweights square off over Cypress is anyone’s guess right now. But it’s sure to be one hell of a bout.
More U.S. Home Owners Pop to the Surface in 2012 (YahooFinance)
According to CoreLogic (a leading provider of consumer, financial and property information), there was some good news for the U.S. real estate market last year. More than 1.7 million U.S. properties popped above the surface in 2012, returning to positive equity. The “less-good” news — for these homeowners and investors alike — is that 21.5 percent of all mortgages, or 10.4 million homes, are still underwater (home owners owe more than the house is worth). And of the 38.1 million homes with positive equity, approximately 11.3 million of them are considered “under-equitized,” reflecting less than 20 percent equity. Still, Anand Nallathambi, CEO of CoreLogic, insists the situation continues to improve, “The scourge of negative equity continues to recede across the country.” Let’s hope Anand is right… If he’s not, you may want to start looking for a good “scourge” insurance policy.
