Cyprus's parliament overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout on Tuesday, throwing euro zone efforts to rescue the latest casualty of the currency area's debt crisis into disarray.

The vote by the small state's legislature was a stunning setback for the 17-nation euro zone, after lawmakers in Greece, Portugal, Ireland, Spain and Italy had repeatedly accepted unpopular austerity measures over the last three years to secure European aid.


The rejection, with 36 votes against, 19 abstentions and one absence, brought the east Mediterranean island, one of the smallest European states, to the brink of financial meltdown.

EU countries said before the vote that they would withhold €10-billion ($12.9-billion U.S.) in bailout loans unless depositors in Cyprus shared the cost of the rescue, and the European Central Bank has threatened to end emergency lending assistance for teetering Cypriot banks.

But jubilant crowds outside parliament broke into applause, chanting: "Cyprus belongs to its people."

The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English's favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank's bail out.

"Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand - a solution that will see small depositors lose some of their savings to fund big bank bailouts," said Green Party Co-leader Dr Russel Norman.

"The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

"Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

"While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.

The behaviour of green NGOs in the developing word resembles foreign adventurism: arrogant, reckless, and exploitative.

Just in time for Earth Hour this coming Saturday - that annual feel-good, accomplish-little World Wildlife Fund (WWF) event - a news story in the Jakarta Globe quotes Firman Subagyo, the head of the forestry commission for that country's House of Representatives:

Foreign NGOs like the WWF are like thieves visiting our homes to steal our treasures without us realizing it. The NGO's arrogance has impacted our weakened industrial competitiveness overseas, which will [in the] end worsen Indonesia's economy. [bold added, backed up here]

It seems the WWF took responsibility for helping to slow deforestation in a particular part of that country, but matters haven't gone according to plan. The article quotes Ir. Darori, the director general for forest protection:

We will evaluate [the WWF's work]. If it proves to have no benefit, we will terminate the partnership.

The willful blindness of groups such as the WWF and Greenpeace toward economically struggling nations around the globe is breathtaking. Their own, narrow agenda is the only thing that matters to these activists. The welfare of ordinary people who reside in those countries doesn't make it onto their radar (see a discussion of Mexico and Poland in this context).

Steve Brill's massive Time article focused national attention on the price of health-care services in the United States. Sarah Kliff got further data showing an MRI can cost anywhere from $400 to $1,861 in Washington, DC alone. But as startling as the price difference between one hospital and another, or one insurer and another, can be in America, the difference between America and other countries is even more extraordinary. I wrote this piece in March 2012. But it's worth revisiting now.

There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.

That may sound obvious. But it is, in fact, key to understanding one of the most pressing problems facing our economy. In 2009, Americans spent $7,960 per person on health care. Our neighbors in Canada spent $4,808. The Germans spent $4,218. The French, $3,978. If we had the per-person costs of any of those countries, America's deficits would vanish. Workers would have much more money in their pockets. Our economy would grow more quickly, as our exports would be more competitive.

There are many possible explanations for why Americans pay so much more. It could be that we're sicker. Or that we go to the doctor more frequently. But health researchers have largely discarded these theories. As Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan put it in the title of their influential 2003 study on international health-care costs, "it's the prices, stupid."

If the US stops Genie Energy from going ahead with oil contract, it invites the wrath of myriad pro-Israel groups.

The schedule for President Barack Obama's first visit to Israel and the Palestinian territories next week has just been released and it is no surprise that the occupied Syrian Golan Heights is not on his travel agenda.

And yet Israel put it on the international agenda less than a month ago with its award of a licence to a US energy firm to explore for oil in the Golan Heights. Oil drilling by the New Jersey-based Genie Energy Ltd in the occupied Golan Heights could well result in a lawsuit claiming that Israel is engaged in an illegal act of pillage as defined in the Hague Convention. Perhaps Israel is now so used to living off the fat of other people's land - Palestinian and Syrian soil and water, among other resources - it has seemingly thrown caution to the wind.

The award puts the US on the spot. If the Obama administration tries to stop Genie from going ahead with the contract, it invites the wrath of myriad pro-Israel groups and their neocon allies, whose strength was most recently on display in the battle to confirm Chuck Hagel as Secretary of Defense.

And if the administration ignores the oil deal, it leaves US corporations exposed to potential lawsuits for profiteering from Israel's violations of human rights and international law.

Angry mobs lower the German flag and draw swastikas in anti-EU demonstrations


They're robbing us, they want our savings, they want to humiliate us, to destroy our dignity - and all this for the EU and IMF," said 45-year-old Maro Pashali, one of hundreds of protesters who gathered outside the Cypriot parliament in Nicosia yesterday in protest at the country's bailout deal. Demonstrators showed their anger by climbing a pole outside the building to lower the German flag, while others brandished placards bearing a European Union insignia with the stars drawn in the shape of swastikas. Some called for a referendum - the right to decide on their future independently of "German diktats" - as young men with scarves hid their faces and chanted anti-German slogans.

As their politicians were attempting to renegotiate the EU/IMF deal to make the terms more favourable to smaller savers, many in the crowd were wondering whether there was not a better way.

Former Foreign Minister and politician Giorgos Lilikas, who attended the protest, told The Independent: "There was another solution which was to offer our natural resources in exchange for help from Europe. If we have to put our banks as a warranty, we don't need the Troika, we can do it on our own."

An arcane change to the way Social Security's annual Cost of Living Adjustments, or COLAs, are calculated may be part of a deficit reduction deal between President Barack Obama and Congress. The revision, known as the "chained CPI," could cut the size of Social Security recipients' benefits starting in 2014.

You could feel a financial pinch if COLAs get tweaked this way, especially if you're fortunate enough to live for decades in retirement.

The Chained CPI and the Deficit

Deficit cutters like the idea of switching to the chained CPI because it would save the government an estimated $200 billion or so over 10 years.

In addition to reducing the growth in Social Security, the new math also would slow spending increases for many other federal outlays linked to inflation, like veterans benefits and government salaries, and bring in additional tax revenue because tax brackets are adjusted for inflation annually.

Former Central Bank of Cyprus chief Anthanasios Orphanides was on Tom Keene's show on BloombergTV this morning.

In his interview, he goes off on the EU for its treatment of Cyprus, and says the European project is dying.

You can watch the full video here.

Below is a partial transcript provided to us by Bloomberg TV.

Orphanides on Cyprus bailout:

"We are witnessing historic times. What we are witnessing is the slow death of the European Project. We are in a situation that some European governments are essentially taking actions that are telling citizens of other member states that they are not equal under the law."

"What we have seen in the last few days is a very serious blunder by European governments that are essentially blackmailing the government of Cyprus to confiscate the money that belongs rightfully to depositors in the banking sector in Cyprus. It is not clear how this can affect in a positive matter the European project going forward."

Russian banks and companies exposed to Cyprus risk losing billions of dollars should the island's government default on its debt obligations, Moody's credit-rating agency said on Wednesday.

Cyprus is been negotiating with the European Union and Russia on a 17 billion euros aid package that would recapitalise its oversized banking sector, but also service debt and government expenses.

Euro zone finance ministers have pledged to agree a bailout for Cyprus by the end of March and have set a meeting for Friday, but there are still no details on financing the rescue attempt.

Moody's said there is a high probability of Cyprus defaulting, or at least the authorities being forced by the size of the debt to "pursue every avenue for debt reduction, including private-sector losses on Cypriot debt."

It is a bad day to have your money deposited in a bank in the Mediterranean island nation of Cyprus. And it may just mean some bad days ahead for the rest of us.

Early Saturday, the nation reached an agreement with international lenders for bailout help. Part of the agreement: Bank depositors with more than 100,000 euros ($131,000) in their accounts will take a 9.9 percent haircut. Even those with less in savings will see their accounts reduced by 6.75 percent. That's right: Anyone with money in a Cypriot bank will have significantly less money when the banks open for business Tuesday than they did on Friday. Cypriots have reacted with this perfectly rational reaction: lining up at ATM machines to try to get as much money out in the form of cash before the money they have in their accounts is reduced.

What makes this important for people who couldn't locate Cyprus on a map is this: It is one of the 17 nations using the euro currency, the fact that it's a lot closer to Beirut than to Paris notwithstanding. European officials have spent the past six years moving heaven and earth to ensure that no depositors with the continent's banks suffer a loss despite the financial strains the banks have been under.

Most dramatically, the Irish government in the fall of 2008 backstopped its banks, putting its public finances through a wringer. Even as the Greek economy has fallen into depression and Spanish bank losses on real estate have reached dangerous levels, the European Central Bank and the continent's government have ensured that bank deposits were safe. They have feared that if depositors in any country were forced to take losses, it would spark a destructive cascade of withdrawals across Europe.

So is Cyprus different?