Global stocks climb as Brexit, Grexit risks ease

Wed May 25, 2016 5:26am EDT

LONDON | BY PATRICK GRAHAM
Reuters

Easing concerns over several major global risks helped stock markets rise robustly for a second day on Wednesday, underpinned by gains in oil and metals prices and data showing the U.S. economy can deal with a hike in interest rates.

Traders say several polls showing Britain will vote strongly to stay in the European Union in a referendum in June have done more than just support sterling, up 5 percent in trade-weighted terms from lows hit in April.

A new debt deal for Greece also looked to have headed off the risk of another round of uncertainty over its finances and even its future in the euro zone after a funding crisis a year ago, pushing European stock markets higher across the board.

Greece Needs Debt Relief More Than Ever

COMMENTARY by  Remy Davison
MAY 24, 2016, 1:00 AM

Fortune

It would be short-sighted to challenge aid.

As Eurozone finance ministers on Tuesday prepare to gather for a meeting to discuss Greece’s bailout, some officials are once again holding out on approving much needed funds to help the financially-troubled country pay off its debts. Regardless of their reasons, the idea of limiting aid to Greece is different today and shouldn’t even be an issue, given how increasingly vulnerable Europe’s economy has become.

Greece bailout: MPs approve new cuts to unblock bailout funds
22 May 2016

BBC

The Greek parliament has passed new budget cuts and tax rises two days before a eurozone meeting expected to unblock much-needed bailout funds.
The government led by the leftist Syriza coalition passed the widely unpopular bill by 153 votes to 145.
Greece agreed to a third bailout worth €86bn (£67bn; $96bn) last year.
Demonstrators gathered outside parliament on Sunday to protest against the new legislation. Eurozone finance ministers meet in Brussels on Tuesday.

Now or later? Euro zone, IMF at odds over when Greece should get debt relief

Thu May 19, 2016 6:50am EDT Related: GREECE
BRUSSELS | BY JAN STRUPCZEWSKI
Reuters


The euro zone and International Monetary are struggling with Greece's debt crisis - not with Athens this time, but with each other over when to give Greece a break on its future massive debt repayments.

The euro zone has begun talks on debt relief for Greece but wants to postpone the final decision until 2018; the IMF insists Greek debt repayment is unsustainable and investors need clarity now.

Euro zone finance ministers are likely to forge a tentative plan when they meet next Tuesday - what in Brussels-speak is known as a political agreement. But their offer is unlikely to be anything but highly conditional, euro zone officials preparing the talks said.

IMF Wants Eurozone Debt Relief for Greece Until 2040

Interest rate on eurozone loans would be fixed for 30 to 40 years, say people familiar with IMF proposal

By MARCUS WALKER
Updated May 17, 2016 3:28 a.m. ET
3 COMMENTS
BERLIN—The International Monetary Fund is pressing the eurozone to let Greece skip paying interest or principal on bailout loans until 2040, say officials familiar with the talks.

The IMF wants the loans to Greece to fall due gradually in the following decades, and as late as 2080, according to the IMF’s proposal.

Greece’s interest rate on eurozone loans would be fixed for 30 to 40 years at its current average level of 1.5%, with all interest payments postponed until loans start falling due, under the IMF proposal.

Why Greece Still Needs Debt Relief

FORTUNE

COMMENTARY by  Barry Eichengreen  @b_eichengreen  MAY 11, 2016, 3:29 PM EDT

The Greek debt crisis is the crisis that never stops giving. More than six years have now passed since the crisis broke, and the country is still struggling to get its finances under control. In the latest installment, Greek lawmakers agreed early Monday morning to a new set of pension and tax reforms.

Unfortunately, the new package will not be enough, by itself, to prevent the crisis from blowing up again. Its higher marginal tax rates for top earners, lower tax-free thresholds, and additional pension cuts are designed to reduce the budget deficit by 1.5% to 3% of GDP. This is an expression of good faith intended to reassure German finance minister Wolfgang Schauble and his constituents.

Migrant Crisis Alters E.U. Calculations for Greece as Its Debt Struggle Continues

By LIZ ALDERMANMARCH 4, 2016
The New York Times

ATHENS — When Greece’s debt crisis threatened to sink the European Union’s single currency last summer, the rest of Europe, led by Chancellor Angela Merkel of Germany, ganged up to deliver the Greek government a stern message: Overcome your domestic political problems and do what is necessary to hold the Continent together.

Eight months after Greece agreed to do its part, it is the rest of Europe that is failing to muster the will to address a threat to the bloc’s unity, this time the continued influx of migrants from the Middle East and beyond. And Greece, the main entry route for asylum seekers, has been largely left to fend for itself.

“We are now in the situation where Greece is essentially becoming a holding pen for refugees and is being asked to solve a problem created by other countries,” said Jens Bastian, an economics consultant based in Athens and a former member of the European Commission’s task force on Greece. “You are basically putting the management of Europe’s migrant crisis at the doorstep of Greece.”

These 5 Facts Explain Why Turkey Is in Deep Trouble

Ian Bremmer @ianbremmer  Feb. 19, 2016

TIME

As Turkey ramps up its involvement in the war in Syria, it risks being hit by serious international blowback
It’s been a bad week for Turkey. As the country intensifies its military campaign in Syria, a bomb ripped through Ankara in apparent retaliation on Feb. 17, killing 28 people and injuring 61 others. Sadly, it’s an all too familiar sight. These five facts explain the mounting threats Turkey faces from Syria’s war next door.

Next Up for Greece: How to Shrink the Debt

Political talks to begin after first bailout review is done

The Wall Street Journal

By VIKTORIA DENDRINOU

Jan. 14, 2016 1:44 p.m. ET

Greece’s creditors are expected to start talking soon over an issue that has been looming over the eurozone since 2010: cutting the country’s mountainous debt burden.

Greece already sliced its debts to private lenders through a bond swap in 2012. But that wasn’t enough. Now, most of its debt is owed to other eurozone governments, which have conceded Athens needs more relief.

What China Can Learn From Greece

By SERGEI GURIEVDEC. 9, 2015

The New  York Times

As a political economist, I make my living studying the impact of politics on economics. My friends and co-authors who are political scientists focus on how economics affects politics. Which is more relevant in real life? Do countries with bad politics suffer from poor economic outcomes because bad economic policies are driven by bad politics? Or because persistent economic difficulties make reasonable politics hard to sustain?

Every year offers examples of both kinds. The year 2015 was no exception, producing two very important stories: Greece and China. Both are dramatic and multifaceted.

Greece aims for debt relief deal in Feb 2016 after reforms done

Mon Nov 30, 2015 12:11pm EST

ATHENS | BY LEFTERIS PAPADIMAS AND PAUL TAYLOR

Reuters

Greece wants a deal on debt relief with its euro zone creditors in February to remove financial uncertainty and spur economic recovery, its finance minister said, but euro zone officials said that timetable was very ambitious and likely to slip.

Addressing a conference of investors, Finance Minister Euclid Tsakalotos said on Monday that making the ailing euro zone country's debt sustainable was the key to liberating the economy and restoring confidence among depositors and companies.

A disagreement in Europe

The euro crisis was not a government-debt crisis

Nov 23rd 2015, 9:43 BY R.A. | LONDON

The Economist

THE euro-zone crisis has transitioned from an acute phase to a chronic one. At just this moment the fear that market panic might force one or several economies out of the single currency is low. Yet few analysts believe the euro zone has solved its fundamental problems. In a piece published at Vox EU last week, a cadre of prominent economists made the very sensible point that unless euro-area leaders can agree on the fundamental causes of the crisis, they will struggle to craft long-run fixes. The authors set out their view of the crisis, in hopes that it will prove a foundation for consensus building.

Eurozone Finance Ministers Won’t Release $2.15 billion Loan to Greece

Disagreements over new foreclosure rules continue, two European officials say

The Wall Street Journal

By GABRIELE STEINHAUSER and  VIKTORIA DENDRINOU

Updated Nov. 9, 2015 4:05 a.m. ET

BRUSSELS—Eurozone finance ministers won’t release €2 billion ($2.15 billion) of funding for Greece at their meeting here Monday amid continued disagreements over new foreclosure rules, two European officials said.

Senior officials from the currency union’s finance ministries were updated on Greece’s implementation of around 50 promised overhauls, known as milestones, during a conference call Sunday afternoon. While progress has been made on some issues—including measures to substitute a tax on private education, the governance of the country’s bailed-out banks and the treatment of overdue loans—Athens and its creditors will need more time to sign off on all overhauls, the officials said.

The Hidden Debt Burden of Emerging Markets

OCT 9, 2015 8

Carmen Reinhart

Carmen Reinhart is Professor of the International Financial System at Harvard University's Kennedy School of Government.

Read more at https://www.project-syndicate.org/commentary/hidden-debt-burden-emerging-markets-by-carmen-reinhart-2015-10#FXJpvBLv1lmqBq1A.99

LIMA – As central bankers and finance ministers from around the globe gather for the International Monetary Fund’s annual meetings here in Peru, the emerging world is rife with symptoms of increasing economic vulnerability. Gone are the days when IMF meetings were monopolized by the problems of the advanced economies struggling to recover from the 2008 financial crisis. Now, the discussion has shifted back toward emerging economies, which face the risk of financial crises of their own.

EU to Assess Greek Debt Burden, Servicing Costs After Review

 Rebecca Christie

Bloomberg

The European Commission said it will assess Greece’s debt burden and servicing costs once Prime Minister Alexis Tsipras shows his nation will meet the commitments under its new bailout program.

For debt relief talks to proceed, Greece needs to implement the reforms it has already passed, enact further required measures and pass its first program review, European Union Economic Affairs Commissioner Pierre Moscovici told reporters Monday in Brussels. At that point, he said, authorities can review “under what conditions the Greek debt will be sustainable” and how to “reduce the servicing of the debt.”

Once Unthinkable, Economists Now Say Debt Relief for Greece Is a Given

A new Bloomberg survey shows a sea-change in how economists view Greece

Bloomberg

By Andre Tartar

September 15, 2015 — 9:51 AM EEST

What a difference two months make.

Back in July, things looked so bad for Greece that 71 percent of 31 economists polled by Bloomberg could see the country out of the euro by the end of 2016. Debt relief was a pipe dream for the EU's most indebted nation.

Fast forward to September, a similar survey shows that 94 percent of respondents think it's not only possible, but very likely. The sample of 36 economists was interviewed Sept. 4-11.

Greece's Debt May Not Be So Daunting

11 JUL 20, 2015 3:13 PM EDT

By Leonid Bershidsky

Bloomberg

Greece's debt burden has taken on mythological attributes and questions about the dominant narrative have become a form of heresy. I, too, have repeated the line that "even the IMF considers Greece's debt unsustainable." Yet that is a half-truth and it has the potential to distort policy.

The assertion comes from a June 26 International Monetary Fund document that Greece's former finance minister, Yanis Varoufakis, called a "fascinating read." In his bombastic style, he went on to assert: "Never before has a veritable institution advocated policies that clashed so mercilessly with its own research. Never before has the IMF agreed, on economic analysis, with a government it sought to devastate."

The Greek Austerity Myth

FEB 10, 2015 23

Daniel Gros

BRUSSELS – Since the anti-austerity Syriza party's victory in Greece's recent general election, the “Greek problem" is again preoccupying markets and policymakers throughout Europe. Some fear a return to the uncertainty of 2012, when many thought that a Greek default and exit from the eurozone were imminent. Then as now, many worry that a Greek debt crisis could destabilize – and perhaps even bring down – Europe's monetary union. But this time really is different.

 One critical difference lies in economic fundamentals. Over the last two years, the eurozone's other peripheral countries have proven their capacity for adjustment, by reducing their fiscal deficits, expanding exports, and moving to current-account surpluses, thereby negating the need for financing. Indeed, Greece is the only one that has consistently dragged its feet on reforms and sustained abysmal export performance.

Europe’s Greek Test

JAN. 30, 2015

Paul Krugman

The New York Times

In the five years (!) that have passed since the euro crisis began, clear thinking has been in notably short supply. But that fuzziness must now end. Recent events in Greece pose a fundamental challenge for Europe: Can it get past the myths and the moralizing, and deal with reality in a way that respects the Continent’s core values? If not, the whole European project — the attempt to build peace and democracy through shared prosperity — will suffer a terrible, perhaps mortal blow.

A major step towards a Greek compromise

- Finance Minister Varoufakis’s proposal provides a good basis to start discussions

by Zsolt Darvas on 3rd February 2015

 Bruegel.org

Following a week of fright after the Greek elections, during which various statements by the new Greek government have raised the spectre of Grexit, Finance Minister Varoufakis made a surprising proposal yesterday: the government will no longer call for a headline write-off of Greece’s public debt, but instead proposes to change the terms of current European loans to Greece, to aim for a primary surplus (much) smaller than the Trokia target and fight against tax evasion.