When you cross the Cypriot Rubicon

I wake up on Saturday morning (okay, maybe midday) in a Warsaw hotel to the news that the people of Cyprus have been unceremoniously sacrificed as part of a 10bn bailout agreed in Brussels. The BBC reports that one man has parked his massive bulldozer(!) outside a Cypriot bank. Well, if 10% of your money was suddenly seized from you without any warning to “bail out” the banks, and the remaining 90% was completely inaccessible, it does seem somewhat logical to park your bulldozer in front of any one of the said banks.

The troika meeting where the above decision was taken started one hour after American markets closed for the weekend.  In the wee hours of the morning, the troika came to a conclusion and announced their idiotic plan to recoup cash directly from all bank deposits in Cyprus.
Specifically, Cyprus is imposing a levy of 6.75% on deposits of less than €100,000 - the ceiling for European Union account insurance, which is now effectively gone - and 9.9% above that. The measures will apparently raise €5.8 billion.
I heard various rumours about this previously, but never believed for one second that anyone would actually be foolish enough to implement what has been the biggest taboo in European bailouts to date - the  impairment of depositors.

They’ve crossed the Rubicon. So here is what I think will happen on the short term:
1. EUR/USD tanks. US treasuries sky rocket. Good thing I’m positioned the right way.
2. Cypriots empty all ATMs and banks in Cyprus. Yes the 10% might be gone but there is nothing stopping anyone taking out the remaining 90% now. A quick search found that the loan to deposit ratio for Marfin Laiki bank stood at 156%. Bad news.
3. Half of Cypriot bank tellers take a sick day on Tuesday.
4. Berlusconi and Grillo open bottles of champagne to celebrate being given the biggest piece of ammo they could have hoped for. They start running new campaigns telling voters their bank accounts will be empty if they don’t jump ship from the EU.
5. I can’t quite predict Russia’s reaction but undoubtedly not just Russians but very wealthy, and very trigger-happy Russians will be absolutely FURIOUS.

On a longer term:
Cyprus will NOT have a sustainable debt load of 100% by 2020. There is NO way. We know all too well that outrageously optimistic forecasts are being used once again to make it appear that this bailout will lead to sustainability. Even my 80 year old grandma can hear the unmistakable sound of the Cypriot can being kicked down the road.

Faces of Ferentari

I had no idea what to expect when Alex and Raluca took me to Ferentari. It’s supposedly one of the roughest places in Eastern Europe, the infamous base of drug dealers, prostitution and mob operations in Bucharest. More than 80% of its inhabitants illegally tap into the city’s electric/water/gas grid. When quizzed about the imaginary scenario where the police could start severing the illegal connections to the grid, the local residents said that violence would be their main weapon.

Despite all of that I went to Ferentari to see a children’s dance group on a rainy weekend. They all gathered in a place called the alternative education club, founded by Valeriu Nicolae, and ran by a network of extremely poorly paid but brilliant staff and volunteers. The children were phenomenal, they managed to stand on their heads, spin at furious speeds, freeze in mid air, and they did a variety of other unbelievable things with their tiny bodies. I was mesmerised. The kids were taught and choreographed by two professional dance instructors Laur and Andrei who had been volunteering at the club for years, spending countless hours helping their little prodigies perfect every routine.

I took pictures of everyone, zooming in on all the little faces that lit up when they performed. I doubt that I’d ever pressed the shutter in such rapid succession before. It was so heart warming and heart breaking at the same time, for I knew that behind all the bright smiles stood broken families, drug addicted parents, siblings locked up behind bars as well as the drudgery and hopelessness of living life in a ghetto.

 

A little reminder of spring

When I was rummaging through the photos, I came across these so I thought I'd post them. Just a little break from the winter doldrums.

Another inch of snow!

We've been hit by another EXTREMELY severe HALF of inch of snow and London is grinding to a halt. It's time to buy 10 loaves of bread, 20 litres of milk, batten down the hatches and take a week off just in case:).

A very belated happy new year

It's almost embarrassing how sparsely updated this blog has been. Apologies for the long silence and a very belated happy new year, so belated that January already seems to be trotting past in a twinkle of snow storms.