A troubled union

There’s something wrong with Europe. No one can agree what

May 17th 2014

The Economist

IS THE euro crisis over? To judge from how often the words appear in global media (down by three-quarters between early 2012 and early 2014), the answer is yes. Markets have calmed since July 2012, when the president of the European Central Bank (ECB), Mario Draghi, promised to do “whatever it takes” to save the euro. Ireland and now Portugal are climbing out of their bail-out programmes. Even Greece, where the crisis began, has just sold debt.

Yet, as these books all argue, the crisis was always about more than whether financial markets would buy government debt. It raised broad worries over how countries with widely differing levels of prosperity, competitiveness, public spending and taxes, and regulation of labour and product markets, could share a currency without economic shocks blowing them apart. And it was about whether euro-zone voters would accept low growth, high unemployment and a permanent loss of sovereignty to the centre. None of these concerns has been fully dealt with.

Peripheral bonds deepen losses amid Greek tax and political fears

BY JOHN GEDDIE

LONDON Fri May 16, 2014 4:56am EDT

May 16 (Reuters) - Lower-rated euro zone bond prices slipped on Friday, deepening sharp falls on Thursday triggered by nervousness about the stability of the Greek government, a tax on foreign holders of Greek bonds, and weak growth.

Greek bailout is no success story, EU candidate Tsipras says

Thu May 15, 2014 8:04pm EDT

* Greek EU Commission candidate wants end to austerity

* Tsipras appears for first time in televised debates

* Opposes sanctions against Russia over Ukraine

By Harry Papachristou

Greece: Tax on Foreign Holders of Bonds Won't Be Imposed Retroactively

Greek 10-Year Yields Spiked By More Than Half a Percentage Point to 6.72%, Highest in Seven Weeks

The Wall Street Journal

By MATINA STEVIS

May 15, 2014 11:45 a.m. ET

LONDON—The Greek finance ministry said Thursday a tax on foreign holders of Greek bonds that had caught investors' attention wasn't being imposed retroactively.

Out of Office, Geithner’s View on U.S. Exposure to the Euro Crisis Shifts

 The Wall Street Journal

By  IAN TALLEY

Don’t panic. There’s nothing to worry about.

That’s essentially what former U.S. Treasury Secretary Timothy Geithner said in 2011, when asked if Europe’s crisis threatened the U.S. financial system. “No, absolutely no,” Mr. Geithner told House lawmakers in an October 7 hearing. “The overall picture is very limited direct exposure,” he said.

That’s contrary to the narrative presented Wednesday by Mark Sobel, who had a front row seat to the crisis as a top Treasury diplomat and is now the administration’s nominee to represent the U.S. on the International Monetary Fund’s executive board.

“Had Greece defaulted or left the euro at the time, I feel there would have been potentially massive contagion also within the euro zone,” Mr. Sobel told a Senate nomination hearing Wednesday. “This would have had a tremendously detrimental impact not only on the — not only on the world but particularly in the U.S.,” he said.

When Did IMF Change Its Mind?

The Wall Street Journal

By  STEPHEN FIDLER

Cast your mind back to the spring meetings of the International Monetary Fund in Washington in April 2011. Nervousness about Greece’s debt travails was reaching fever pitch, and on April 16, we ran this story.

By Costas Paris and Ian Talley

WASHINGTON — The International Monetary Fund believes Greece’s debt is unsustainable and has told European government and central bank officials that Athens should consider restructuring by next year, three people familiar with the situation said Saturday.

“The IMF believes the debt situation in Greece is unsustainable,” one of those people, who has direct knowledge of the matter, told Dow Jones Newswires. “Senior (IMF) officials have told the parties involved that restructuring should be considered soon,” including the European Commission and euro-zone governments.

IMF spokesman William Murray denied the IMF was recommending a restructuring of all Greek debt including that held by private holders, but the IMF has said the fund has considered extending the loan repayment schedule for Athens, a form of restructuring.

As we reported, the IMF denied this highly sensitive article in a very comprehensive manner. Mr. Murray, whom we cited above, told Bloomberg News “there is absolutely no truth” to the story. Other senior officials made similar comments.

Is China No. 1?

The Washington Post

By Robert J. Samuelson, Published: May 14

It’s probable that the U.S. economy is no longer the world’s largest. New World Bank figures, notes economist Arvind Subramanian of the Peterson Institute, suggest that sometime in 2014 China will overtake the United States in gross domestic product — the production of goods and services.

We knew this day was coming, but if the World Bank figures are correct, it has arrived sooner than many experts predicted. Using those figures — which stop at 2011 — I estimate that China’s GDP in 2014 will hit $16.8 trillion compared with $16.1 trillion for the United States. (All these figures are in “constant” 2011 dollars.)

In Ukraine talks, finger-pointing and little sign of progress

The Washington Post

By Anthony Faiola and Fredrick Kunkle, Published: May 14 E-mail the writers

KIEV, Ukraine — The first round of talks on Ukrainian national unity descended into grandstanding and accusations Wednesday, offering no sign of a diplomatic breakthrough in the region’s tensest standoff since the Cold War.

Although strongly backed by the West and ostensibly by Russia, the negotiations as they are currently cast are unlikely to have an immediate effect on the escalating violence in eastern Ukraine. During the talks, Prime Minister Arseniy Yatsenyuk pressed an offer to give more powers to Ukraine’s regions. But he and other members of the interim government in Kiev have ruled out a seat at the negotiating table for the pro-Russian separatists who have captured administrative buildings and are confronting Ukrainian military forces in deadly skirmishes in the east.

“We will conduct a dialogue only with all those who do not shoot and do not kill citizens,” he said.

The World's Resources Aren't Running Out

Ecologists worry that the world's resources come in fixed amounts that will run out, but we have broken through such limits again and again

The Wall Street Journal

How many times have you heard that we humans are "using up" the world's resources, "running out" of oil, "reaching the limits" of the atmosphere's capacity to cope with pollution or "approaching the carrying capacity" of the land's ability to support a greater population? The assumption behind all such statements is that there is a fixed amount of stuff—metals, oil, clean air, land—and that we risk exhausting it through our consumption.

"We are using 50% more resources than the Earth can sustainably produce, and unless we change course, that number will grow fast—by 2030, even two planets will not be enough," says Jim Leape, director general of the World Wide Fund for Nature International (formerly the World Wildlife Fund).

But here's a peculiar feature of human history: We burst through such limits again and again.

The Questionable Link Between Saturated Fat and Heart Disease

Are butter, cheese and steak really bad for you? The dubious science behind the anti-fat crusade

The Wall Street Journal

By NINA TEICHOLZ

Updated May 6, 2014 10:25 a.m. ET

"Saturated fat does not cause heart disease"—or so concluded a big study published in March in the journal Annals of Internal Medicine. How could this be? The very cornerstone of dietary advice for generations has been that the saturated fats in butter, cheese and red meat should be avoided because they clog our arteries. For many diet-conscious Americans, it is simply second nature to opt for chicken over sirloin, canola oil over butter.

Timothy Geithner Book 'Stress Test' Defends Financial-Crisis Decisions

Former Treasury Secretary Recounts Difficult Period; A Few Regrets

By DEBORAH SOLOMON

May 10, 2014 4:34 p.m. ET

The Wall Street Journal

WASHINGTON—Former Treasury Secretary Timothy Geithner, whose time in Washington was often colored by accusations he was too close to Wall Street and did little to help Main Street, uses his 538-page book "Stress Test" to largely defend and explain the decisions he made during the financial crisis.

"The inconvenient truth of financial-crisis response is that the actions that feel right are often wrong," he writes.

Mr. Geithner, who was tapped by President Barack Obama to lead the Treasury and before that was president of the Federal Reserve Bank of New York, says he was right to avoid the populist push for blood, including refusing to upend bonus payments to employees of American International Group Inc. AIG +1.09%  And he says there was little reason to take a tougher approach to the big banks by nationalizing them and handing the reins to the government.

At the same time, Mr. Geithner says the U.S. should have done more to save Lehman Brothers and criticizes members of Congress for polluting the 2010 Dodd-Frank law with unwise provisions.

Greece sells 1.3 bln euros of 3-month T-bills, yield falls

ATHENS Tue May 13, 2014 5:25am EDT

May 13 (Reuters) - Greece sold 1.3 billion euros ($1.78 billion) of three-month treasury bills on Tuesday to roll over a maturing issue, the country's debt agency PDMA said.

The T-bills were priced to yield 2.13 percent, down 32 basis points from 2.45 percent in a previous sale in April - the lowest funding cost since January 2010 when the debt agency sold three-month treasury paper at 1.67 percent.

The sale's bid-cover ratio was 2.80, up from 2.73 in the previous sale.

The amount raised included 300 million euros in non-competitive bids. The settlement date for Tuesday's auction will be May 16. Athens has a stock of about 15 billion euros of T-bills, which it regularly refinances. ($1 = 0.7270 Euros) (Reporting by George Georgiopoulos; Editing by Karolina Tagaris)

As Ukrainian separatists claim victory in self-rule vote, fears of all-out civil war mount

The Washington Post

By Simon Denyer, Michael Birnbaum and Fredrick Kunkle, Published: May 12 E-mail the writers

DONETSK, Ukraine — Separatists in eastern Ukraine proclaimed the birth of two new “sovereign” republics Monday after asserting victory in controversial self-rule referendums, and one of the regions promptly asked to join Russia.

Leaders of the self-declared Donetsk People’s Republic also demanded that Ukrainian security forces leave the separatists’ territory.

The statements represented a hardening of positions that could drag Ukraine closer to all-out civil war and is likely to intensify tensions between Russia and the West.

Why May 9 will be a date to watch in Ukraine

BY ADAM TAYLOR

May 7 at 1:20 pm

The Washington Post

It'd be tough to overstate how much World War II still resonates in Russia. Take its naming: It's no "Second World War" in Russia, it's The Great Patriotic War. Then consider the death toll: 27 million Soviet citizens dead, according to one estimate. Horrifying events that took place on Russian soil, such as the Siege of Leningrad and the Battle of Stalingrad, are not forgotten.

This week, that's especially important. Remember that in Russia, May 9 is Victory Day: the anniversary of the day that the Soviet Union announced that Nazi Germany had surrendered. And Victory Day isn't just a big day for Russia. It's a big day for all former members of the Soviet Union who fought together in the war. This year, it may be an exceptionally complicated day for one country in particular: Ukraine.

In the past, Ukraine and Russia have celebrated Victory Day together on May 9 – for example, on May 9, 2010, Russian and Ukrainian sailors in Sevastopol marched in a joint parade to commemorate the 65th anniversary of the day on the orders of then-President Viktor Yanukovych.

Πρωτογενές πλεόνασμα

Της Μιράντας Ξαφά

Από τον ιστότοπο protagon.gr

Σε πρόσφατο άρθρο του στο Protagon, («Πρωτογενές Έλλειμμα», 24/4) ο κ. Βαρουφάκης αμφισβητεί την επίτευξη πρωτογενούς πλεονάσματος το 2013: «Από τα επίσημα στοιχεία προκύπτει ότι η Γενική Κυβέρνηση παρουσίασε έλλειμμα 2,1% του ΑΕΠ, χωρίς να λαμβάνεται υπ' όψη η «ενίσχυση» των τραπεζών (και 12,7% αν ληφθεί υπ’ όψη)». Μέχρι εδώ σωστά. Συνεχίζει όμως: «Επί πλέον, το δημόσιο έχει και ληξιπρόθεσμα χρέη σε προμηθευτές του, που έπρεπε να έχουν καταβληθεί εντός του 2013. Με άλλα λόγια, το 2013, το ελληνικό κράτος δεν θα μπορούσε να καλύψει μισθούς, συντάξεις και αποπληρωμές προμηθευτών. Όπερ μεθερμηνευόμενο, το ελληνικό κράτος είχε πρωτογενές έλλειμμα [...] Η ΕΛΣΤΑΤ μας λέει ότι, για το 2013, κατέγραψε «λευκές τρύπες» 770 εκ. ευρώ στην Τοπική Αυτοδιοίκηση και 4,7 δις ευρώ στα ασφαλιστικά ταμεία (από έλλειμμα 2,2 δις το 2012). Πιστεύει πράγματι κανείς ότι τα πτωχευμένα ασφαλιστικά ταμεία, και οι εξαθλιωμένοι δήμοι, έχουν τέτοια πλεονάσματα τα οποία να μπορούσε, έστω και εν δυνάμει, να χρησιμοποιήσει η κυβέρνηση για να πληρώνει μισθούς, συντάξεις και προμηθευτές; Σε καμία περίπτωση.»

Ukraine Crisis: Heavy Fighting in Pro-Russian Separatist Stronghold

Deaths Reported on Both Sides From Sustained Fighting in Slovyansk

The Wall Street Journal

By LUKAS I. ALPERT and ANDREA THOMAS

Updated May 5, 2014 12:32 p.m. ET

Heavy fighting erupted Monday around a pro-Russian separatist stronghold in eastern Ukraine, with dozens of casualties reported as the standoff between insurgents and the government entered a more dangerous phase.

The fighting was the most sustained since acting President Oleksandr Turchynov first sent troops to eastern Ukraine about three weeks ago, in what he called an antiterrorist operation. Accounts from both sides suggested the military was pushing further into the volatile, heavily defended city of Slovyansk, following days of intermittent clashes focused there.

Mr. Turchynov reiterated Monday that the government was prepared to negotiate with the pro-Russian protesters, who are seeking greater autonomy for eastern Ukraine.

U.S. to banks: 'No such thing as too big to jail'

CNN

Kevin Johnson, USA TODAY 6:40 p.m. EDT May 5, 2014

WASHINGTON — Foreshadowing possible criminal charges against banking giants Credit Suisse and BNP Paribas, Attorney General Eric Holder offered an ominous warning Monday, saying, "There is no such thing as too big to jail.''

Greece seeks to open debt relief talks with creditors

Finance minister to raise subject with eurozone counterparts on Monday in further sign Europe's economic crisis is receding

Helena Smith in Athens

The Guardian, Sunday 4 May 2014 19.08 BST

In a step likely to be hailed as further proof of Europe's receding economic crisis, Greece is poised to formally open debt relief talks with its creditors.

The Greek finance minister, Yannis Stournaras, will raise the once off-limits topic with his eurozone counterparts in Brussels on Monday, almost four years to the day after Athens received its first slice of international aid.

Why India Will Soon Outpace China

FORBES ASIA 5/04/2014 @ 11:00AM

By James Gruber

On the face of it, the title of this article will seem absurd to many. While China’s economic growth has slowed, it’s still running at a brisk 7.4% annual rate. Moreover, the Chinese government seems to be successfully slowing credit in order to rein in a burgeoning debt issue. And it’s implementing a plethora of reforms which should propel the next phase of growth.

Meanwhile, India’s a mess. This fiscal year’s GDP will be below 5% and near decade lows, government and corporate debt is high, the current account deficit has been out of control until recently, inflation reached double-digits late last year, business confidence and investment are at extreme lows and corruption remains rampant.

Greek conservatives regain lead in polls ahead of EU election

ATHENS Sat May 3, 2014 2:02pm EDT

(Reuters) - Greece's co-ruling conservatives have regained a narrow lead over the main, anti-bailout opposition three weeks before a European Parliament election, two polls showed.

The election, which coincides with a key local vote, is seen as a test for Prime Minister Antonis Samaras' fragile coalition in a country still reeling from the debt crisis and banking on loans from the European Union and International Monetary Fund.

Samaras' New Democracy - which leads the coalition with the Socialist PASOK party - and its rival, the leftist Syriza party, have been running neck-and-neck in polls for months, with voters often swinging in favor of one or the other party.