Smart Reads 4 February 2015

| Feb 04 14:24 | Comments |

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Tsipras pulls strings as Varoufakis performs policy somersaults

| Feb 03 17:08 | Comments |

Less than a week into his new job, Greece’s finance minister is already performing the kolotoumbes, or policy somersaults, anticipated by several Athens commentators.

Yanis Varoufakis, an eloquent economics professor, has removed a key plank of the leftwing Syriza party’s pre-election platform: its longstanding demand that creditors should write off at least one-third of Greece’s huge public debt, which last year amounted to 175 per cent of national output.

Visiting London on Monday, the second stop of a tour of European capitals, Mr Varoufakis told the Financial Times that Athens would restructure its entire public debt by swapping bailout loans for new growth-linked bonds and issuing what he called “perpetual” bonds to replace Greek bonds owned by the European central bank.

The U-turn on the debt issue was so abrupt that some observers wondered whether Mr Varoufakis went off-message as he tried to reassure Greece’s eurozone partners and City investors that the Syriza-led government was serious about meeting its obligations to the EU and International Monetary Fund. Read more

Smart Reads 3 February 2015

| Feb 03 11:33 | Comments |

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From FT.com February 2, 2015

By Gideon Rachman
There are three crises afflicting Europe. Two are on the borders of the EU: a warlike Russia and an imploding Middle East. The third emergency is taking place inside the EU itself — where political, economic and diplomatic tensions are mounting.

Smart Reads 2 February 2015

| Feb 02 11:38 | Comments |

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Israelis transfixed by ‘bottlegate’

| Jan 30 14:30 | Comments |

Benjamin Netanyahu with his wife Sara, May 2014.

Did she or didn’t she? Israel’s chattering classes have been distracted this week by claims that Sara Netanyahu, wife of prime minister Benjamin Netanyahu, pocketed thousands of dollars collected from the return of drinks bottles from their official residence over several years. Read more

Thai general delivers tin-eared masterclass

| Jan 30 04:58 | Comments |

 

Gen Prayuth Chan-ocha

Gen Prayuth Chan-ocha Copyright: Getty

Thailand’s military junta is delivering an Asian masterclass in the kind of tin-eared elitism that is galvanising support for new anti-establishment parties across Europe, writes Michael Peel in Bangkok. While tensions linked to the country’s class system, political representation and the division of economic spoils are simmering in the pot, the ruling generals seem to have chosen to screw the lid still more firmly on. Read more

FT podcast: World Weekly with Gideon Rachman

| Jan 29 22:50 | Comments |

How stable is Saudi Arabia?
Saudi Arabia’s new monarch King Salman takes over at a time of unprecedented challenges in the shape of regional chaos as well as a sharply falling oil price. Gideon Rachman is joined by Roula Khalaf and Simeon Kerr to discuss how stable the kingdom is.

Syriza and voodoo economics

| Jan 29 12:45 | Comments |

The term “voodoo” economics was originally aimed at the Reaganite right – and, specifically, their belief that cuts in taxes would pay for themselves through the higher growth they generated. Now, in Greece, the new Syriza government has come up with a left-wing version of voodoo economics: the belief that a spending splurge will pay for itself, if it is just pushed with enough energy and determination. Unfortunately, given that Greece’s starting point is immeasurably weaker than that of the US in 1980, the Greek experiment with voodoo economics is likely to come crashing down – and quickly. Read more

Smart Reads 29 January 2015

| Jan 29 11:29 | Comments |

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What if Europe’s problem isn’t a lack of liquidity?

| Jan 29 09:00 | Comments |

Since the onset of the global financial crisis, the European Central Bank has been desperate to funnel cash into the eurozone’s financial system, in the hope this would boost investment and growth.

Yet, despite steep cuts to interest rates and several rounds of cheap loans to banks, the eurozone is still struggling to get enough investment projects off the ground. Last week, the ECB launched an ambitious programme of quantitative easing aimed at prompting banks to lend more by lowering the interest they receive on government bonds.

But what if Europe’s investment problem was not the result of a shortage of liquidity? Read more

Smart Reads 28 January 2014

| Jan 28 15:20 | Comments |

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Smart Reads 27 January 2015

| Jan 27 15:03 | Comments |
  • Following Syriza’s election triumph in Greece, the coalition that will confront international creditors is an unholy alliance of two parties that couldn’t be further apart
  • The case of a former kebab restaurant owner accused of fraud said to be worth as much as $34bn has rocked Iran amid revelations of widespread corruption
  • Muslims account for more than half of France’s prison population and since the terror attacks in Paris there are calls to prevent jails from serving as recruitment centres for Islamists
  • A write-off of Greece’s debt would cause more problems in Europe than it would solve, strengthening radical parties and breaking down trust between members of the EU, argues Gideon Rachman
  • Saudi Arabia is expanding its regional power in the Middle East as others falter, but its ascendance is the result of the near-collapse of many nearby states (New York Times)

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Greece: the case against ‘structural reform’

| Jan 27 13:43 | Comments |

A former colleague on the FT (no names, but he now runs the UK’s Office for Budget Responsibility) used to muse that a useful all-purpose headline for any story about an emerging market economy was “[Insert Name Of Country Here]: Structural Reform?”

Putting “Greece” into that formula after Syriza’s resounding victory in Sunday’s election, where do we stand? Every pundit in Europe is retailing some version of the insightful observation that it is all about whether Syriza — and its leader, Alexis Tsipras, Greece’s new prime minister (above) — can be induced to do enough structural reform to buy the fiscal leeway and debt relief it wants.

The problem with this view is that “structural reform” is a crude and unhelpful term. Read more

From FT.com January 26, 2015

By Gideon Rachman
Syriza have won the Greek election. But, perhaps just as startling, the “far left” party is making considerable headway in the struggle to win over elite opinion in the west.

Is Greek government debt really 177% of GDP?

| Jan 26 13:34 | Comments |

The triumph of the anti-austerity Syriza party in Greece’s general election has put back on the table the vexed question of what to do with Athens’ debt. Economists tend to disagree over how sustainable this burden really is: some point to the sheer size of the liabilities, saying Athens will never be able to pay them back. Others emphasise the favourable conditions which the Greek government has secured on official sector loans in two rounds of restructuring: these include heavily subsidised interest rates and a lengthening of the average maturity of the debt, which now stands at 16.5 years, double Italy’s or Germany’s.

One figure on which everyone tends to agree, however, is that Greece’s public debt is 177 per cent of gross domestic product, the highest level in the eurozone. Well, everyone but a private equity group and a number of accountants, who think the relevant figure could be as low as 68 per cent. Read more

Abbott attracts controversy over knighting of Prince Philip

| Jan 26 05:20 | Comments |

Australia Day is typically when prime ministers attract positive headlines by doling out honours to people promoting good causes. But Tony Abbott, the gaffe-prone holder of the office, provoked a storm of controversy on Monday by awarding the country’s highest honour – knight of the order of Australia – to Prince Philip, the Duke of Edinburgh.

“I don’t get the priority the government had in nominating him,” said Bill Shorten, Labor leader. “It’s a time warp where we’re giving knighthoods to English royalty.” Read more

“Apocalyptic cold” gatecrashes Davos

| Jan 25 11:34 | Comments |

Davos is full of security barriers and screening to keep out intruders who might threaten the world’s leaders of governments and companies, but one managed to sneak through without a badge – the common cold.

By the end of the week of events at the World Economic Forum, many of the attendees were complaining of a streaming nose, a cough, and a nasty headache. The “Davos apocalyptic cold” was how one sufferer described it darkly. Read more

Uber and Kodak: ghosts at disruption feast

| Jan 24 14:00 | Comments |

Uber screengrab

You cannot book an Uber car in Davos. That is no surprise, given that most World Economic Forum delegates prefer to take their own chauffeured limousines or the WEF’s free shuttle service. More surprising is the absence of Uber the company. I have heard it cited constantly this week – both in formal sessions and in informal conversations between participants – as an example of disruptive innovation. Uber also seems to have fielded a representative for every conference I’ve attended over the past past year. Not this one.

 

 

 

 

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Debate on shareholder value maximisation offers surprises

| Jan 24 13:59 | Comments |
I moderated a fascinating debate on corporate governance on Saturday on the following question: Has shareholder value maximisation failed as a source of long-term wealth creation and social benefit? Before starting the debate, I asked for a vote on the question. At that stage 70 per cent voted “Yes” and 30 per cent voted “No”. So the overwhelming majority voted that shareholder value maximisation had indeed failed. This was astonishing, I thought, given the nature of the participants in Davos.

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