Be Scared of China's Debt, Not Its Stocks

107 JAN 7, 2016 5:34 PM EST

By Noah Smith

Bloomberg

China’s stock market is crashing again. After two days this week with big and rapid declines -- the latest of which shut off trading only a few minutes after the open -- Chinese stocks are back in the neighborhood of their mid-2015 lows. The raft of administrative measures that the Chinese government has used to prop up its markets since the big plunge last year seems to only have postponed further declines, rather than prevented them.

Greece Deserves a Break on Pension Reform

25 JAN 7, 2016 4:38 AM EST

By Mark Gilbert

Bloomberg

After teetering on the brink of exiting the euro for much of last year, Greece has started 2016 looking much more likely to hang on to its common-currency membership card. Now, after clearing several reform hurdles set by its creditors, the nation deserves some leeway on the thorny issue of pension reform.

How ISIS runs its economy

By Financial Times

From the site of the World Economic Forum

Dec 16 2015

This article is published in collaboration with The Financial Times.

Even under jihadi rule, death and taxes remain the two great certainties of life. Some learn that the hard way.

As Isis officials announced a religious tithe known as zakat last summer, Mansour, a 26-year-old grocery storekeeper in eastern Syria, stalled payment while he tried to cook his books.

EU enters brave new world of bank bail­ins

By Hugo Dixon

January 4, 2016

Reuters

The author is a Reuters Breakingviews guest columnist. The opinions expressed are his own.

The European Union entered a brave new world of bank “bail­ins” at the start of 2016. Europe has wasted so much taxpayers’ money on bailing out bust banks in recent years that it is right to try to get investors to help foot the bills in future. However, the tough new regime carries big political risks. The key new rule is that no bank can be bailed out with public money until creditors accounting for at least 8 percent of the lender’s liabilities have stumped up. So­called bail­ins typically mean wiping out creditors’ investments, slashing their value or converting them into shares in the bank. Uninsured depositors could get caught along with professional investors.

Stocks Fall Sharply on China Slowdown Worries

Stoxx Europe 600 falls 2.2%, led by 3.3% drop in Frankfurt’s exporter-heavy DAX index

The Wall Street Journal

By RIVA GOLD

Jan. 4, 2016 4:20 a.m. ET

1 COMMENTS

Global stocks sold off sharply on the first trading day of 2016 following fresh signs of an economic slowdown in China.

Weaker-than-expected manufacturing data and a falling currency triggered declines in mainland Chinese stocks so steep that authorities halted trading there for the rest of the day.

European stocks also fell sharply, with the Stoxx Europe 600 down 2.2% in early trade, led by a 3.3% drop in Germany’s exporter-heavy DAX index.

China Lands Test Flight in Disputed Island Chain

Vietnam, Philippines unhappy about flight to new airfield in the South China Sea’s Spratlys

 The Wall Street Journal

By TE-PING CHEN

Updated Jan. 3, 2016 3:54 p.m. ET

105 COMMENTS

BEIJING—China said it landed a test flight on a newly completed airfield in the disputed Spratly Islands in the South China Sea, a sign of its growing military capabilities in the region.

The flight drew a quick protest from Vietnam, which said China had “seriously violated” its sovereignty. A Philippines foreign ministry spokesman said Manila, another claimant in the Spratlys, also planned to lodge a protest with the Chinese.

Greek central banker urges government on bailout reforms

Sat Jan 2, 2016 6:01pm GMT

ATHENS | BY GEORGE GEORGIOPOULOS

Greece's central bank chief has urged the leftist-led government to implement bailout reforms agreed with the country's lenders, warning that backtracking would entail risks the economy could not withstand.

Prime Minister Alexis Tsipras' ruling coalition, which has a majority of just three seats in parliament, faces tough pension reforms that will test his resolve to carry out measures demanded by international creditors.

Fed and Greece Could Defy the 2016 Bears

18 DEC 22, 2015 2:00 AM EST

By Mark Gilbert

Bloomberg

One of the pitfalls of market-watching, whether for professional strategists or journalistic scribblers, is a tendency to accentuate the negative. (I'm ignoring sell-side equity analysts, whose preordained bullishness is largely indifferent to the economic backdrop.) Gloom, doom and misfortune are more interesting than cheerful optimism. And I'm as guilty as the next financial soothsayer.

But it's often a good idea to try to take an opposing view, no matter how compelling the evidence for pessimism is (here's an excellent roundup of worries from Dave Collum, who combines a passion for markets with his day job as professor of organic chemistry at Cornell University). So here are my two outside bets on what could go right on the biggest financial issues that we're carrying into 2016:

Turkey Moves to Clamp Down on Border, Long a Revolving Door

By TIM ARANGODEC. 22, 2015

The New York Times

IZMIR, Turkey — The Turkish Coast Guard has stepped up nighttime patrols on the choppy, wintry waters of the Aegean Sea, seizing rafts full of refugees fleeing war for Europe and sending them back to Turkey.

Down south, at the border with Syria, Turkey is building a concrete wall, digging trenches, laying razor wire and at night illuminating vast stretches of land in an effort to cut off the flow of supplies and foreign fighters to the Islamic State.

Tighter Borders in Europe Create Migrant Bottleneck in Greece

Athens struggles to cope with thousands of new arrivals blocked from moving north

The Wall Street Journal

By NEKTARIA STAMOULI and  STELIOS BOURAS

Dec. 22, 2015 4:04 p.m. ET

5 COMMENTS

ATHENS—Greece is steadily shifting from being the main gateway for migrants into Europe to becoming the continent’s bottleneck, as new arrivals run up against tightened borders to the north.

Already struggling with its long debt crisis and economic depression, Greece risks finding itself unable to cope with the tens of thousands of migrants at risk of being marooned here this winter. Some are staying in temporary government shelters, others are sleeping rough.

Understanding Greece's Year In Crisis

A new film takes a close look at the first few months under the country's new leader.

 12/21/2015 01:02 pm ET | Updated 14 hours ago

Angeliki Kougiannou

HuffPost Greece

ATHENS, Greece -- According to filmmakers Paul Mason and Theopi Skarlatos, Jan. 25 marked the start of a financial war. That day, Greeks handed a massive election victory to Alexis Tsipras, the young and charismatic leader of the left-wing Syriza coalition.

In the months that followed, Greece went through a crippling financial crisis that brought the country to the brink of bankruptcy and close to an exit from the eurozone. After months of tense negotiations, the Greek government and its troika of lenders -- the European Commission, the European Central Bank and the International Monetary Fund -- finally agreed to a third international bailout for the country in exchange for economic reforms and a tough new round of austerity.

Is Russia still a key world power?

By James Nixey

Russia and Eurasia Programme head, Chatham House

BBC

Whether Russia, one of 15 successor states to the USSR, which broke up in 1991, is still a genuine world power in 2015 is open to question.

It remains the world's largest country and the largest oil producer

It retains its permanent seat on the UN Security Council (one among five)

Its nuclear arsenal (in Cold War times one of five countries, but now one of nine) has been progressively modernised

Sustained increases in defence spending have brought it close to its goal of escalation dominance in local and regional war

Greece Suspends Legislative Package After Concerns From Creditors

Law aimed at mitigating effects of austerity won’t be voted on by lawmakers until after Christmas

The Wall Street Journal

By NEKTARIA STAMOULI and  VIKTORIA DENDRINOU

Dec. 17, 2015 11:53 a.m. ET

1 COMMENTS

ATHENS—Greece suspended a legislation package on Thursday with social benefits aimed at mitigating the effects of the financial crisis on the most vulnerable following concerns by the country’s international creditors, according to Greek government officials.

The government was hoping that the bill would sweeten the pill for the Greeks who have suffered the most from the successive waves of austerity and appease its lawmakers, who were forced to approve another round of unpopular economic measures on Dec. 15.

What I learned about Greece’s year from hell

POLITICO gets an exclusive look at a new documentary that charts Syriza’s journey from election euphoria to grim austerity.

By  JAMES BLOODWORTH  12/16/15, 5:30 AM CET

Greece’s radical left party Syriza swept to power in January on a fiercely anti-austerity ticket. Hordes of left-wing activists from across Europe booked cheap flights and descended on Greece in order to show solidarity with the new government.

Less than nine months later, the foreign leftists had returned home and the anti-austerity euphoria had dissipated. Meanwhile, Greek Prime Minister Alexis Tspras, leader of Syriza, had gone from being the face of hope to yet another harbinger of grim austerity.

So what happened in the interim? Quite a lot, actually.

Greece Scores Another Bitter Victory

Analysis DECEMBER 16, 2015 | 18:38 GMT

STRATFOR

Editor's Note: Greece is a country in crisis. Facing financial, political and social uncertainty, Greece's ruling Syriza party has cut a deal with the European Union that should keep the Greek economy afloat at least for the time being. However, further measures to appease Athens' creditors could create political discord, if not violence, in Greece. The situation is precarious, and it is very possible that the agreement will collapse. Stratfor is logging the latest developments in this crisis update.

Late Dec. 15, the Greek Parliament approved a package of measures that will allow the country to receive 1 billion euros (about $1.1 billion) in bailout funds. The measures include legislation authorizing the sale of bad business loans from local banks to foreign investors and a new pay scale for civil servants. It was another bitter victory for the government of Prime Minister Alexis Tsipras, probably the last in a year in which the ruling Syriza party had to approve a series of controversial policies to secure funding from the country's creditors.

Tsipras did manage to preserve his thin majority, as the 153 lawmakers from the ruling party and its junior coalition partner voted in favor of the package. In addition, the reforms were not particularly controversial, and the Eurogroup will probably decide in the coming hours that Greece deserves to receive the next tranche of the bailout. But unfortunately for the Greek leader, his government will have to pass even more controversial measures in January.

The most important aspect of the Dec. 15 package is what was not included. Plans to partially privatize the national power grid operator, the Independent Power Transmission Operator, were postponed until 2016. A controversial plan to eliminate subsidies for farmers has also been repeatedly postponed since Greece first signed a bailout agreement with the Eurogroup in July, both out of fear of massive protests from a particularly noisy sector of the population and because many representatives in the legislature hail from agricultural regions.

More important, in January the Greek Parliament will have to vote on a plan to overhaul the country's pension system to cut spending by almost 2 billion euros next year. Because pensions are one of the last safety nets remaining in Greece, this is far from a minor issue. In a country where unemployment affects at least a quarter of the active population (the figures are twice as high among the youth), entire families depend on pensions from their parents or grandparents. In November, the Greek Parliament passed legislation making it easier for banks to evict families that are behind on mortgage payments. The new regulations still protect a significant number of households and will probably not be fully enforced, but they represent even further erosion of Greece's already weak safety nets.

Finally, Greece is facing an increasingly complex migration crisis. There was a significant spike in the arrival of asylum seekers from the Middle East in 2015, which forced Athens to spend extra funds to provide food and shelter for some of the migrants. For most of the year, Athens benefited from the fact that these men and women wanted to move on to Northern Europe rather than stay in Greece. The situation began to change in recent weeks, when several countries along the Balkan route started building fences and bolstering border controls to reduce the influx of immigrants. Making matters worse, Brussels forced Athens to accept a Frontex (the European Union's border agency) operation on Greece's northern border.

The European Union recently signed a deal with Turkey to prevent people from entering Greece, but the impact of the agreement has yet to be seen. Greece's main fear in the coming weeks is that people will still try to enter the country but will have a harder time leaving. This would not only increase Athens' financial burden but, more important, increase the likelihood of anti-immigrant violence in the country.

In principle, a Grexit will be less likely in 2016 than it was in 2015 because Athens is already in a bailout program and does not face a particularly pressing calendar of debt maturities. Capital controls are already in place, and parliaments in the eurozone do not have to hold any votes related to Greece. However, Greece's ruling Syriza party controls a tenuous majority of only three seats in the Parliament, meaning that even a small rebellion among the lawmakers could topple the government. In addition, because the recession, high unemployment and the immigration crisis are far from over, street protests and episodes of violence — which have been relatively rare since Syriza won the election in January — will become more frequent.

Greece mounts late push to assure EU before migration summit

Tue Dec 15, 2015 3:08pm EST Related: WORLD, GREECE

ATHENS | BY RENEE MALTEZOU

Reuters

In a last-minute drive to assure European Union partners that it is getting to grips with a mass influx of refugees, Greece released aerial photographs on Tuesday of new registration centers for migrants on its northern Aegean islands.

The move is part of Athens' efforts, ahead of an EU summit starting on Thursday, to rebuff criticism by Germany and other EU governments that it has done too little to manage the flow of hundreds of thousands of people arriving on its shores.

14 Airports in Greece to Be Privatized in $1.3 Billion Deal

By NIKI KITSANTONIS

DEC. 14, 2015

The New York Times

ATHENS — Greece’s leftist-led government on Monday signed its first major privatization deal, granting a German company the right to lease and manage more than a dozen regional airports.

The contract, worth 1.2 billion euros, or $1.3 billion, is part of an effort to privatize state assets and adopt economic changes demanded by international creditors under Greece’s €86 billion bailout program. Some other measures are under debate in the Greek Parliament and are scheduled for a vote Tuesday night.

Greece, lenders strike deal to unlock further bailout funds

Fri Dec 11, 2015 8:34pm GMT Related: BUSINESS

ATHENS | BY ANGELIKI KOUTANTOU AND LEFTERIS PAPADIMAS

Reuters

Greece and its international lenders have struck a deal on the latest set of reforms needed for Athens to receive 1 billion euros (£722 million) in further bailout aid, Finance Minister Euclid Tsakalotos said on Friday.

The reforms relate to a new privatisation fund, a shake-up of the power sector, and how to open up the market for non-performing loans. Parliament will vote on the bill next week, Tsakalotos said.

Greece signs major privatisation deal with Germany's Fraport

Mon Dec 14, 2015 11:15am GMT Related: BUSINESS

ATHENS/BERLIN

Reuters

Greece's leftist government on Monday signed its first big privatisation deal with German airport operator Fraport (FRAG.DE), awarding it a 1.2 billion euro (£868 million)contract to lease and manage 14 regional airports.

Privatisations have been a key condition of Greece's international bailouts since 2010. But Athens has raised only about 3.5 billion euros from state asset sales so far versus an original target of 50 billion euros due to bureaucratic delays and lack of political will.

Greece expected to push through remaining reforms on Tuesday: euro zone

Sun Dec 13, 2015 11:15pm GMT

BRUSSELS

Reuters

Greece has accomplished more than half of the reforms agreed with euro zone creditors to get the next, 1 billion-euro tranche of bailout loans and is to legislate the remaining steps on Tuesday, a senior euro zone official said on Sunday.