Krugman battles the Austerians. A little light infotainment for those becoming increasingly frustrated at the counterproductive policies pushed by partisan economists and more disturbingly by whole governments. [more inside]
On stage that day, Iglesias declared that Podemos would take back power from self-serving elites and hand it over to the people. To do that, the new party needs votes. If that means arousing emotions and being accused of populism, so be it. And, as the party’s founders have already shown, if they have to renounce some of their ideas in order to broaden their appeal, or risk upsetting some in their grassroots movement by tightening central control, they are ready to do that, too. The aim, after all, is to win. [more inside]
In a functional market economy, the classic couple in a posh restaurant are young and close in age. In my travels through the eurocrisis – from Dublin to Athens – I have noticed that the classic couple in a dysfunctional economy is a grey-haired man with a twentysomething woman. It becomes a story of old men with oligarchic power flaunting their wealth and influence without opprobrium. [more inside]
Lee Buchheit, fairy godmother to finance ministers in distress
Lee Buchheit, a lawyer at US firm Cleary Gottlieb, has been present at all the major debt crises of the past three decades. His reputation among investors is as a fearsome and aggressive litigator, but finance ministers in distress see him as something of a fairy godmother.[more inside]
On Saturday the EU mandated that all bank deposits in Cyprus pay a 6.75% "stability levy" on the first €100,000 and 9.9% on the excess to help pay for €6 billion of the €10 billion bank bailout. This is despite opposition from the Cyprus finance minister, who stated earlier this month that "there really couldn't be a more stupid idea" and more recently that "I wish I was not the minister to do this". The scale of the bailout is nearly 50% of Cyprus' entire GPD, and many officials are concerned that the money will go to Russian gangsters and oligarchs. The Saturday announcement lead to a run on the ATMs, which caused banks to restrict electronic transfers and set a €400 withdrawal limit. Most ATMs were out of money by the end of the day and a frustrated man threatened one bank with a bulldozer. The plan was scheduled to be voted on by parliament on Sunday, but it has been delayed to Monday and might not be passed by politicians who have heard complaints from their Cypriot constituents all weekend. The Cyprus President warned of total financial collapse and euro exit if it is not approved.
Greece gains another €130bn in bailout funds. It's a nice headline, but the reports suggest it still isn't enough and Newsnight paint a picture of a fracturing Greek society.
BBC News asks independent trader Alessio Rastani "what would keep investors happy, make them feel more confident?" and gets a surprisingly honest answer: "Personally, it doesn't matter. See, I'm a trader. I don't really care about that kind of stuff. If I see an opportunity to make money, I go with that. So, for most traders, we don't really care that much about how they're going to fix the economy, about how they're going to fix the whole situation; our job is to make money from it. And, personally, I've been dreaming of this moment for three years. I have a confession which is I go to bed every night and dream of another recession, I dream of another moment like this." [SLYT]
Greek Crisis Exacts the Cruelest Toll. 'Two years into Greece's debt crisis, its citizens are reeling from austerity measures imposed to prevent a government debt default that could cause havoc throughout Europe.' 'The most dramatic sign of Greece's pain, however, is a surge in suicides.' 'Recorded suicides have roughly doubled since before the crisis to about six per 100,000 residents annually, according to the Greek health ministry and a charitable organization called Klimaka. About 40% more Greeks killed themselves in the first five months of this year than in the same period last year, the health ministry says.' [more inside]
Yields of 2-year Greek government bonds have been skyrocketing today, and are currently at 76%. Credit default swaps show Greece with a 98% chance of default. Confidence in the Eurozone as a whole has been tanking recently after a series of setbacks that leave a political solution looking increasingly unlikely. There was a timely, gloomy discussion on RT yesterday on European and worldwide political/economic prospects
Starting last month, the French daily Le Monde has been publishing an economic thriller in series, called Terminus pour L' Euro (in French) (The End of the Line for the Euro). The series is behind a subscription wall, but Presseurope has started republishing the series in ten languages, including English... The story narrates the events of summer 2012, as Germany decides to leave the Euro and what follows. It has caused a stir in France, as rumors about the true identity of the author (who signs the series as Philae, after an island in Egypt apparently) continue to circulate, and some think he is the French agriculture minister Bruno Le Maire. Some say that the rumors that led to the precipitous fall in French banks' stock a few days ago, were due to misunderstanding the fictional character of the story... Real rumors that Germany threatened to leave the Euro last year, were dismissed by its Chancellor, yet as the eurozone crisis develops, no one is certain any more that the series is simply fiction and not a possible, real scenario, advocated by many...