First on Cyprus: The bank holiday has been extended through Thursday. Negotiations are ongoing on changes to the depositor levy.
From Izabella Kaminska at Alphaville: First they came for the deposits …. She starts:
This won’t be popular.
But it’s an important alternative to the “it’s expropriation” view on Cyprus.
While the decision to force a bank levy on depositors creates an important precedent, it also represents something much more complex than pure confiscation or forfeiture. …
And she concludes:
The moral of the story being: if you hold money in a weak bank — especially one with no hope of nationalization — better to withdraw your money and spend it on longer lasting durable options instead. That includes everything from durable goods to equities of companies that make durable, long-lasting or innovative goods which are likely to be needed by you and the population in the future …
Deposit insurance doesn’t work for a country without their own currency that would be bankrupt if certain banks failed (like Cyprus). Clearly the eurozone needs to have eurozone wide deposit insurance (and eurozone wide bank supervision). Another reason the euro is flawed.
On the lighter side, I suppose the European crisis has been good for geography teachers and many Americans can now find Cyprus on a map.
Tuesday economic releases:
• At 8:30 AM, The Census Bureau will release Housing Starts for February. The consensus is for total housing starts to increase to 919 thousand (SAAR) in February, up from 890 thousand in January and up 28% from the 718 thousand SAAR in February 2012.