Tuesday, September 2, 2014

Investors Returning to Greece's Real Estate Market

by Stelios Bouras

Wall Street Journal

September 2, 2014

Since the European debt crisis erupted in 2009, foreign investors have mostly ignored Greek real estate even as they have jumped back into Spain, Italy and Ireland.

But now buyers are returning to Greece amid signs that Europe's hardest-hit economy is starting to recover.

Toronto's Fairfax Financial Holdings Ltd. FFH.T -0.33% , Colony Capital LLC of Los Angeles, Invel Real Estate Partners of the U.K. and Jermyn Street, an Arab-Turkish real-estate fund, are among those that have been buying commercial-property assets from distressed financial institutions, the Greek government and others.

In the past 18 months, investors have purchased €1.2 billion ($1.58 billion) of properties, primarily from banks and the Greek agency charged with privatizing state-owned assets, the Hellenic Republic Asset Development Fund, according to commercial real-state company Cushman & Wakefield. That compares with about €900 million in deals from 2008 to 2012.

New players such as international real-estate firm Hines, which controls assets valued at more than $25 billion, also are shopping around. "Hines believes that Greece is transforming and that the real-estate sector will require significant foreign investment," Michael J.G. Topham, chief executive of Europe for Hines, said in an email. "It's a difficult market but we feel that there are opportunities worth pursuing."

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Monday, September 1, 2014

Greece seeks tax cut from troika after years of belt-tightening

by Kerin Hope

Financial Times

September 1, 2014

Greece is seeking to persuade its international creditors that it is entitled to a 2015 tax cut after years of wrenching austerity since the country is now on track to outperform its fiscal targets by a comfortable margin this year.

Gikas Hardouvelis, a technocrat who took over in July as finance minister, will make that argument during meetings in Paris on Tuesday with officials from the troika of lenders – the European Central Bank, the European Commission and the International Monetary Fund – overseeing the country’s bailout.

Mr Hardouvelis says Greece’s primary budget surplus, before debt repayments, will exceed this year’s target of 1.5 per cent of national output – although he has not revealed by how much.

A series of tax reductions – in value added tax, a special levy on heating fuel and the so-called “solidarity tax” paid on annual incomes above €12,000 – are among the measures Mr Hardouvelis is expected to propose to the troika.

Cuts to any of those levies would offer much-needed relief to Greek taxpayers burdened by unprecedented property taxes and other special measures to help pay for the bailout. It would also reinforce the message that Greece has at last emerged from a historic crisis.

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Friday, August 29, 2014

Η Κρίση των Θεσμών

του Αριστείδη Χατζή

Τα Νέα

29 Αυγούστου 2014

Η ελληνική κρίση ξέσπασε στις αρχές του 2010 και συνδέθηκε αμέσως με τα δύο μεγάλα ελλείμματα, το δημοσιονομικό και του εμπορικού ισοζυγίου. Όμως, από την αρχή της κρίσης ήταν φανερό ότι αυτά τα δύο ελλείμματα αποτελούσαν συμπτώματα των αλληλένδετων γενεσιουργών αιτίων: της θεσμικής ανεπάρκειας και της κλειστής οικονομίας. Η κρίση της ευρωζώνης ήταν απλώς η αφορμή και, ταυτόχρονα, μια χρήσιμη υπεκφυγή για όσους δεν ήθελαν να δουν τα πραγματικά αίτια.

Αλλά για να αντιμετωπιστούν τα αίτια αυτής της κρίσης δεν αρκούσαν τα δάνεια, τα κουρέματα, οι επιμηκύνσεις και οι οριζόντιες άδικες περικοπές. Απαραίτητη προϋπόθεση επιτυχίας ήταν μια φιλόδοξη θεσμική μεταρρύθμιση και το άνοιγμα της αγοράς. Αρχικά, φάνηκε ότι αυτή η ανάγκη έγινε αντιληπτή από την τρόικα και τις ελληνικές κυβερνήσεις. Όμως πολύ γρήγορα σχηματίστηκε μια πανίσχυρη αντιμεταρρυθμιστική συμμαχία που μέχρι τώρα έχει καταφέρει να κερδίσει τις περισσότερες μάχες, ίσως και τον πόλεμο.

Το γεγονός αυτό έχει οδηγήσει σε ένα πολιτικό αδιέξοδο. Τις απαραίτητες μεταρρυθμίσεις έχουν αναλάβει να φέρουν εις πέρας τα δύο κόμματα που ευθύνονται σχεδόν αποκλειστικά για την κατάσταση στην οποία βρέθηκε η Ελλάδα το 2010. Η συμπεριφορά της πλειονότητας όμως αυτών που έχουν αναλάβει να φέρουν εις πέρας τις μεταρρυθμίσεις παραμένει οπορτουνιστική και κοντόφθαλμη καθώς προέχει η πολιτική επιβίωσή τους. Το αδιέξοδο όμως επιδεινώνεται από μια αντιπολίτευση που ουσιαστικά υπόσχεται ανενδοίαστα την επιστροφή στο παρελθόν, έχοντας αναλάβει εργολαβικά την εκπροσώπηση του αντιμεταρρυθμιστικού μπλοκ. Το ερώτημα είναι αν υπάρχει τρόπος να ξεπεραστεί αυτό το αδιέξοδο, αν υπάρχει δηλαδή τρόπος να ξεπεραστούν οι πολιτικές και οικονομικές ελίτ που αποτελούν εμπόδιο στη θεσμική μεταρρύθμιση.

Στις αρχές Σεπτεμβρίου θα υποδεχθούμε στην Ελλάδα έναν πολύ σημαντικό κοινωνικό επιστήμονα, τον Daron Acemoglu, καθηγητή οικονομικών στο MIT. Ο Acemoglu προσπαθεί να απαντήσει σ’ αυτό το ερώτημα εδώ και πολλά χρόνια με το πλούσιο έργο του το οποίο συμπυκνώθηκε σε ένα εξαιρετικά επιτυχημένο βιβλίο που κυκλοφόρησε το 2012 με τίτλο Γιατί αποτυγχάνουν τα έθνη: Οι καταβολές της ισχύος, της ευημερίας και της φτώχειας. Στο βιβλίο αυτό (το συνέγραψε με τον οικονομολόγο, καθηγητή στο Πανεπιστήμιο Χάρβαρντ James Robinson) οι συγγραφείς αναρωτούνται σε τι οφείλεται η οικονομική επιτυχία ή αποτυχία των εθνών; Είναι η γεωγραφία, οι πόροι, το κλίμα, η κουλτούρα; Όχι! Όλα αυτά παίζουν βέβαια ρόλο αλλά αυτό που έχει τη μεγαλύτερη σημασία είναι οι πολιτικοί και οικονομικοί θεσμοί.

Το ποιοι θεσμοί εξασφαλίζουν ταυτόχρονα πολιτική ελευθερία και οικονομική ανάπτυξη είναι γνωστό. Όχι μόνο υπάρχει πλήθος ιστορικών παραδειγμάτων (που οι συγγραφείς καταγράφουν) αλλά είναι εύκολο να το διαπιστώσει κανείς αν δει σήμερα ποιες χώρες ευημερούν: τα κράτη δικαίου με ώριμο θεσμικό πλαίσιο και ανοικτές, αποτελεσματικά ρυθμισμένες, αγορές.

Τότε γιατί δεν τις μιμούνται τα υπόλοιπα κράτη; Τι εμποδίζει χώρες όπως η Ελλάδα να μεταφυτεύσουν αυτούς τους θεσμούς, προσαρμοσμένους στις τοπικές ιδιαιτερότητες; Η απάντηση είναι εύλογη: οι πολιτικές ελίτ αποφεύγουν να υιοθετήσουν «ανοικτούς θεσμούς» που θα θέσουν σε κίνδυνο την κυριαρχία τους. Προτιμούν τους «κλειστούς θεσμούς» που εξασφαλίζουν την επιβίωσή τους. Ανοικτοί θεσμοί είναι αυτοί που εξασφαλίζουν τον πλουραλισμό, την κοινωνική κινητικότητα, την καινοτομία, τις ανοικτές αγορές και την ανταγωνιστικότητα σε οικονομικό και πολιτικό επίπεδο, τον πλουραλισμό και τη λογοδοσία. Κλειστοί είναι εκείνοι που έχουν σκοπό τη διατήρηση του status quo και την αναδιανομή προς όφελος των ισχυρών ομάδων σε ένα παίγνιο μηδενικού αθροίσματος.

Το μεγάλο ερώτημα παραμένει: πώς να ξεφύγει μια κοινωνία από τη μέγγενη των ισχυρών πολιτικών και οικονομικών ελίτ και των θεσμών που αυτές σχεδίασαν για να διαιωνίζεται η ισχύς τους; Ένας τρόπος είναι η αργή, βαθμιαία υιοθέτηση «ανοικτών θεσμών» όχι μόνο συνταγματικών αλλά και μεταρρύθμισης της δημόσιας διοίκησης και της παιδείας. Όμως αυτό προϋποθέτει και μια ωρίμαση της κοινωνίας που θα απαιτήσει αυτούς τους θεσμούς, θα πιέσει πολιτικά, ακόμα και θα απειλήσει.

Ο Acemoglu θα συμμετάσχει σε ένα από τα μεγαλύτερα διεθνή συνέδρια οικονομικών, φιλοσοφίας και θεωρίας θεσμών που θα λάβει χώρα στην Αθήνα 2-5 Σεπτεμβρίου. Συμμετέχουν επίσης διάσημοι κορυφαίοι επιστήμονες όπως ο νομπελίστας οικονομολόγος Amartya Sen (Πανεπιστήμιο Χάρβαρντ), η καθηγήτρια Ηθικής Φιλοσοφίας Martha Nussbaum (Πανεπιστήμιο του Σικάγο), ο Καθηγητής Πολιτικής Φιλοσοφίας Philip Pettit (Πανεπιστήμιο Πρίνστον) και πολλοί άλλοι κορυφαίοι επιστήμονες απ’ όλον τον κόσμο. Μην χάσετε την ευκαιρία να τους ακούσετε.

* Ο Αριστείδης Χατζής είναι αναπληρωτής καθηγητής Φιλοσοφίας Δικαίου και Θεωρίας Θεσμών στο Πανεπιστήμιο Αθηνών. Είναι μέλος της οργανωτικής επιτροπής του συνεδρίου για το οποίο θα βρείτε περισσότερες πληροφορίες εδώ.

Εδώ θα βρείτε το άρθρο (όπως δημοσιεύθηκε στα Νέα)

Εδώ θα βρείτε το άρθρο στην ιστοσελίδα των Νέων

Εδώ θα βρείτε ένα σχετικό δικό μου κείμενο (με τίτλο "Το Θεσμικό Έλλειμμα")

Εδώ θα βρείτε τα πάντα για το μεγάλο συνέδριο και τις παράλληλες εκδηλώσεις (αναγορεύσεις στο Πανεπιστήμιο Αθηνών)

Εδώ θα βρείτε την ιστοσελίδα του Daron Acemoglu

Το βιβλίο του Acemoglu κυκλοφορεί στα ελληνικά από τις εκδόσεις Λιβάνη. Θα βρείτε περισσότερες πληροφορίες εδώ.

Εδώ θα βρείτε την αγγλική έκδοση του βιβλίου, την οποία συνιστώ ειδικά στις φοιτήτριες και τους φοιτητές μου:

Thursday, August 28, 2014

New framework for sovereign defaults

Financial Times
August 28, 2014

More than 400 of the world’s largest banks, investors and debt issuers have agreed a plan for dealing with financially stricken countries and their creditors, in a bid to prevent a repeat of the wrangling that has pushed Argentina into default.

After months of talks convened by the US Treasury in the wake of Greece’s restructuring, global debt experts will on Friday unveil a new framework that could transform the relationship between critically indebted nations and lenders.

Lawsuits filed by creditors against defaulting governments have doubled over the last decade and the changes come at a time when levels of sovereign debt have risen to record highs around the world in the wake of the financial crisis.

The fallout from recent defaults reignited calls for an international bankruptcy court, but market participants and Washington authorities favour a voluntary response rather than new statutory mechanisms.

The International Capital Market Association, whose members include banks, investors and debt issuers, has created fresh clauses for inclusion in sovereign debt contracts that will give countries the option to bind all investors to decisions agreed by the majority.

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Tuesday, August 19, 2014

Greek Stock Recovery Fades as Europe Turmoil Flattens ASE

Bloomberg
August 19, 2014

The curtain is coming down on Greece’s star turn with international equity investors.

Among the best-performing Europe gauges in 2013 after the government carried out the world’s biggest-ever debt restructuring, Greece’s ASE Index has become one of the worst, slumping 21 percent as lenders from Piraeus Bank SA to Eurobank Ergasias SA tumbled. Drops are trimming returns that approached 200 percent starting in June 2012 amid investments from hedge funds such as Paulson & Co. and Third Point LLC.

Equities with valuations triple the rest of Europe have come too far to be justified by an economy that is poised to emerge from a six-year recession, says Peter Garnry, head of equity strategy at Saxo Bank A/S. Investors are looking elsewhere in emerging markets for bargains as sanctions hitting Russia, Greece’s biggest trading partner, disrupt businesses.

“Greece was the trade last year, but I don’t think it’ll be the trade next year,” Garnry said in a phone interview from Hellerup, Denmark. “Investors looking for good returns should look elsewhere.”

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Wednesday, August 13, 2014

Greece's Recession Eases in Second Quarter

by Stelios Bouras & Alkman Granitsas

Wall Street Journal

August 13, 2014

Greece's battered economy is poised to emerge from a six-year recession in coming months after data released Wednesday suggested that the economy grew on a quarterly basis for the first time since the start of the European debt crisis in early 2010.

Figures from the Hellenic Statistical Authority showed the recession eased sharply in the second quarter of the year with gross domestic product contracting at an annual pace of 0.2%, down sharply from a revised 1.1% drop in the January to March period.

The figure was better than expected, with most economists forecasting a drop of around 0.5% in the second quarter.

"We are seeing some indicators that the domestic demand is stabilizing faster than expected. Also net exports, particularly, tourism helped as well," said Nikos Magginas, senior economist at National Bank of Greece. "In any case, the trend is clear, the economy is stabilizing."

On a seasonally-adjusted quarterly basis, the second quarter data indicates that the economy expanded by between 0.4% to 0.7% compared with the first three months of the year—marking the first growth in 17 consecutive quarters—according to estimates put together by economists. The Greek statistics office doesn't provide quarterly data.

It is a significant step for an economy that has shrunk roughly 25% since its peak in mid-2008 on austerity measures demanded by international creditors in exchange for financial aid worth €240 billion ($320.74 billion).

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Tuesday, August 12, 2014

Christoph Paulus, "A Debt Restructuring Mechanism for Sovereigns: Do we need a legal procedure?"

C.H. Beck / Hart / Nomos
July 2014

The Eurozone crisis which started in spring 2010 as a Greek budget crisis has alerted Europeans that the issue of defaulting sovereigns is not one reserved just for the poor and poorest countries on this globe. The crisis painfully amplified that developed countries, too, might be hit by this phenomenon. To be sure, this insight is far from novel - the history of defaulting states reaches back into history for at least two millennia. And yet, lawyers have surprisingly abstained more or less completely from discussing this subject and developing possible solutions. Beginning with the Argentina crisis in 2001, this neglect began to vanish to a certain degree and this movement got some momentum in 2010 by the Eurozone crisis.

The present book collects contributions from authors most of whom have participated in a conference on this issue in January 2012 at the Humboldt-Universität zu Berlin. The presentations, thus, provide a unique overview of the present discussion both from an economic and legal perspective.

Dr Christoph Paulus is professor at the Humboldt-Universität, Berlin. The authors are internationally reputed experts in their fields and are globally renowned for their expertise particularly in the field of defaulting sovereigns.

Saturday, August 9, 2014

Greece's Older Men May Never Work Again

by Matina Stevis

Wall Street Journal

August 8, 2014

Most weekdays, Thanassis Tziombras, a 50-year-old worker at the shipbuilding zone here at the main Greek port of Piraeus, is up before dawn and out looking for work by 6 a.m.

Some 40 minutes away, in the posh Athens suburb of Psychico, Constantinos Tsimas, a 54-year-old U.S.-educated marketing consultant, wakes up to another day of working the phones and emails seeking clients.

There is a social gulf between these two men, but they are united in one thing: the financial and psychological struggle that comes with being older and unemployed in a country where the economy has shrunk by almost a quarter in six years.

Greece's economy has taken such a brutal beating that it is in a category apart from other European countries suffering through the recession. Where Greece lost some 25% of its economic output, Spain lost about 6%. Experts say that, even as the Greek economy begins to recover, the shock has been so severe that older workers are unlikely to ever hold full-time jobs again.

Unlike in other parts of Europe, Greek reforms have largely removed provisions that protected older workers. In Spain and Italy labor-market regulations favoring baby-boomers over their children are still largely in place, entrenching the so-called two-tier labor market. But in Greece, everyone seeking work largely faces similarly poor odds, said Raymond Torres, head of research at the International Labor Organization, the United Nations labor agency.

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Monday, July 28, 2014

Euro crisis is sleeping, not dead

by Hugo Dixon

Reuters

July 28, 2014

Euro zone policymakers may feel they can afford to relax this summer. That would be a terrible error. The euro crisis is sleeping, not dead.

The region is suffering from stagnation, low inflation, unemployment and debt. The crisis could easily rear its ugly head because the euro zone is not well placed to withstand a shock.

What’s more, it’s not hard to see from where such a blow could come. Relations with Russia have rapidly deteriorated following the downing of the Malaysia Airlines flight over Ukraine. If Europe imposes sanctions that make Moscow think again, these will hurt it too.

The euro zone needs to take measures to insure itself against disaster: looser monetary policy by the European Central Bank to boost inflation; a new drive for structural reform, especially in France and Italy but also in Germany; and some loosening of budgetary straitjackets.

First, though, look at the problem. Financial markets have been calm for the last two years since Mario Draghi, the ECB’s president, said he would do “whatever it takes” to preserve the euro. But the euro zone is barely growing. The International Monetary Fund last week predicted it would notch up just 1.1 percent growth this year. That’s a pathetic rebound given the recession’s severity.

There are, admittedly, some bright spots. Spain is enjoying a moderate recovery, largely as a result of effectively implementing root-and-branch reform of its labour market and banking system. Even Greece seems to be on the road back from Hades.

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Saturday, July 26, 2014

Greece’s bail-out: Still tightly monitored

Economist
July 26, 2014

Tourists dived for cover beneath restaurant tables as shooting broke out in Monastiraki, a crowded neighbourhood in Athens, on July 16th. Greek anti-terrorist police had trailed Nikos Maziotis, one of the country’s most wanted fugitives, to a shop selling camping equipment. As he fled, Mr Maziotis opened fire with a handgun. He was arrested after being shot in the shoulder by a police officer.

Appearing before an investigating judge, Mr Maziotis said his job was “being a revolutionary”. He is accused of belonging to Revolutionary Struggle, a leftist extremist group that claimed responsibility for staging a rocket attack against the American embassy in Athens in 2007 and for several car-bomb explosions. The most recent, outside the IMF office in Athens in April, came at a time when Greece took another step towards recovery, issuing its first sovereign bond since 2010.

Athens is enjoying its best year for tourism since it staged the summer Olympics in 2004. Fortunately, the shoot-out in Monastiraki was quickly over. “If there had been serious casualties, bookings would have been cancelled across the board. It goes to show how fragile the tourist industry is,” says Panos Asimacopoulos, a travel agent in Athens.

The Greek recovery is similarly frail. After a record 24 quarters of negative growth, the economy is forecast to grow by almost 1% this year. About 20,000 new jobs will be added over the summer, according to the National Bank of Greece, reversing six years of declining employment.

Business-confidence indicators are at a six-year high and consumers are again flocking to Athens’s shopping malls. The finance ministry says Greece is on track to hit this year’s target of a budget surplus, before interest payments, of 1.5% of GDP.

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Thursday, July 24, 2014

Greece: A fragile calm

by Ralph Atkins and Kerin Hope

Financial Times

July 24, 2014

The white marble steps of the Grande Bretagne hotel on the edge of Syntagma square in Athens sparkle in the summer sun. Stone ripped out by protesters during riots at the height of the eurozone crisis in which Greece defaulted in 2012 has been replaced. The square heaves with tourists.

Greece seems back to normal. After contracting 25 per cent since early 2008, the economy has stabilised; this year it might even return to growth. Greece has also cleaned up its image in global capital markets. The government raised €3bn in five-year bonds at an interest rate of just 4.95 per cent in April, and a further €1.5bn in three-year debt this month.

Beneath the calm, however, fears remain about the future of the country, which two years ago threatened the collapse of Europe’s monetary union. “Risks have diminished substantially but a new constellation of economic and political risks may threaten reform implementation and economic recovery,” warns Lucas Papademos, prime minister from November 2011 until April 2012.

Sharp falls in incomes and “extraordinarily high” unemployment “have provided support to political forces on the extreme right and radical left”, he adds. “The greatly improved capital market conditions are not yet reflected in the Greek economy.”

One senior Greek businessman admits: “I was amazed that the government could issue bonds. How short are memories?”

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Facing Grexit Again?

by Theodore Pelagidis

Brookings Institution

July 24, 2014

According to BlackRock’s quarterly Sovereign Risk Index Greece is among the countries most likely to go bankrupt That follows the relatively recent statement of the German finance minister Wolfgang Schäuble that Greece “..would have to continue to meet the troika's demands for reforms or risk leaving the eurozone.” The statement reflects disquiet among creditors to recent efforts by the Greek government to relax fiscal austerity measures to calm voter anger, following the defeat of the coalition government in the recent European elections (interpreted by many as increasing political/country risk--the radical left “Syriza” could possibly take power in the next elections). The use of such strong language is not just surprising; it also brings us back to the 2012 ‘Grexit talks’, a time in which the country was facing the real possibility of leaving the eurozone. Last week, Focus magazine reported that Nonperforming Loans (NPLs) in Greek Banks pose a serious threat to the “Grecovery” prospects, currently at the sky-high level of 33.5 percent, up from 31.9 percent at the end of 2013.

Much has been said about the results of the austerity program implemented in Greece by the ‘Troika’. Heavy taxation during 2010-2012 resulted in a cumulative inflation rate of almost 10 percent which substantially hit exports and competitiveness, undermining the internal devaluation target of increasing competitiveness at the same time.

In the meantime, the repeated postponement of hardcore structural reforms and privatizations let the burden fall almost entirely on the private sector through a storm of heavy taxation and huge wage cuts. As for the extraordinarily high level of wages in particular, these were mainly nested in the clientelistic, partitocratic state, notorious for excessive spending and corruption, and not in the productive sector of the economy. Wages were never the main problem of the productive private sector; red tape, legal ambiguity and state-sponsored monopolies were the problem.

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Read the BlackRock's Report (PDF)

Sunday, July 20, 2014

"Populism and Crisis Politics in Greece" by Takis S. Pappas

Palgrave
July 2014

The 1970's witnessed the institution of political liberalism in Greece, which went hand in hand with significant social and economic advancement. Four decades later, the same country is a latter-day 'sick man of Europe'. What went wrong? And why did the more recent global crisis plunge Greece into abject misery? This study provides compelling and original answers to these questions through putting populism at center stage. By introducing new concepts, focusing on micro-mechanisms, and empirically analyzing a large variety of sources, the author shows how populism became predominant in Greek politics and contaminated all major political parties, eventually causing a major polity crisis. Besides its particular interest in the specific case of Greece, the text offers new insights about how states may fail, how populism develops at single-nation level, and what could happen when it reigns supreme. It also makes a strong statement about the corrosive power of populism on modern liberal democracy.

Takis S. Pappas is Associate Professor of Comparative Politics at the University of Macedonia, Greece, and a Fellow at the European University Institute, Florence, Italy. He is the author of two previous books and many articles on party politics and political leadership, among others. He currently lives in Strasbourg, France, working on a new book project about Europe's populist voters.

Friday, June 27, 2014

Renewed Optimism About Greece Is Well Overdone

by Desmond Lachman

Real Clear Markets

June 27, 2014

Judging by the renewed optimism in the Greek sovereign debt market, one could be forgiven for thinking that the worst of the Greek economic crisis was behind us. After all, Greek sovereign bond yields have now declined toward levels last seen immediately before the onset of the European sovereign crisis some five years ago. However, it would be a grave mistake for Greek policymakers to allow currently buoyant market sentiment to blind them to Greece's still very large economic and political challenges. If left untreated, the country's poor fundamentals threaten to undermine Greece's prospects for digging itself out of its present depressed economic situation when global liquidity conditions become less favorable than they are today.

A popular adage on Wall Street is that when the winds are strong even turkeys fly. By this it is meant that when liquidity is ample, investors do not discriminate between different credits but rather invest blindly in anything that offers an attractive yield. If ever global liquidity conditions have been highly favorable, it has to have been in the past year and a half. For not only was the Federal Reserve expanding its balance sheet at an unprecedented rate but so too was the Bank of Japan in an effort to rid Japan of deflation.

In the context of ample global liquidity, Europe has now regained the market's favor despite the threat that a move to deflation poses towards the European economy and despite dismal European parliamentary election results, which suggested a crumbling of the European political center. As a result, the Italian government today can borrow at rates as low as those paid by the U.S. government despite the fact that Italy's debt to GDP ratio now exceeds 135 percent. Similarly, the French government now borrows at rates very similar to those of the German government despite the clearest of signs of domestic political fragmentation and despite the country's many structural economic difficulties. Meanwhile, countries like Cyprus and Portugal, which were not too long ago viewed as countries with unsustainable debt dynamics, have now been able to re-access the global capital market.

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Thursday, June 26, 2014

Greek Bonds Beat Lottery as Funds Surge on Smashed Glass

Bloomberg
June 26, 2014

The woman who died in a burning Athens bank still smiles at Giorgos Mastorakos on his way to the delicatessen he owns around the corner.

The wreaths and tributes no longer cascade onto the road to mark the spot where she and her two colleagues were killed in violence in May 2010 after the country’s unsustainable debts and ensuing financial decline resulted in the first depression since World War II. At the makeshift memorial that fewer people visit on the anniversary of the deaths, the photo of the woman’s face is framed by an anarchist sign and withering bouquets.

Mastorakos, 64, and his employees helped those who escaped the burning building. “And that’s when the questions began: Did so-and-so get out? Have you seen that person?” he said.

The anger against austerity, reflected in the broken windows of hundreds of Athens storefronts, led to political turmoil in 2011, the world’s biggest debt restructuring the following year and chaos as elections forced Greeks to choose between the euro and the drachma. Now, halfway through his term, Prime Minister Antonis Samaras sees recovery and redemption after Greece came to the brink of bankruptcy and sparked a contagion that engulfed Ireland and Portugal.

The economy will expand this year after the worst downturn in peacetime, the highest unemployment in the region has peaked and investors are buyers of Greek bonds again. The yield on benchmark 10-year government debt is 5.79 percent, down from the high of 44.2 percent in March 2012 -- a return better than most winning lottery tickets.

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Wednesday, June 25, 2014

Lessons from the 2012 Greek debt restructuring

by Miranda Xafa

Vox

June 25, 2014

The 2012 Greek debt restructuring was the largest one in the history of sovereign defaults. This column discusses the lessons from this historically unprecedented episode. Delaying the restructuring implied that externally held debt remained higher than it would have been otherwise. Supportive crisis management is necessary for smooth restructuring to take place in a currency union.

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Τι βάθυνε την κρίση και τι καθυστερεί την ανάπτυξη

Το Βήμα
25 Ιουνίου 2014

Η ομηρία των ελληνικών πολιτικών ελίτ στο πελατειακό σύστημα που οι ίδιες εξέθρεψαν τις τελευταίες δεκαετίες, η εμμονή στην εσωτερική υποτίμηση και στην περικοπή του κόστους εργασίας και η καθυστέρηση στην υλοποίηση των διαρθρωτικών μεταρρυθμίσεων ήταν τα τρία βασικά στοιχεία που βάθυναν την κρίση στην Ελλάδα και καθυστερούν την ανάκαμψή της. Πλέον, πρέπει να δοθεί έμφαση στην έρευνα, στην ανάπτυξη και στην τεχνολογία ώστε η χώρα να σταθεί ανταγωνιστικά στο διεθνή οικονομικό στίβο.

Αυτό συμπεραίνουν στο βιβλίο τους με τίτλο Greece: From Exit to Recovery? («Ελλάδα: Από την έξοδο στην ανάκαμψη;») οι Μιχάλης Πελαγίδης, καθηγητής Οικονομικών στο πανεπιστήμιο Πειραιά και Μιχάλης Μητσόπουλος, οικονομολόγος στον Σύνδεσμο Επιχειρήσεων και Βιομηχανιών, το οποίο παρουσιάστηκε την Τρίτη σε εκδήλωση που οργάνωσαν το Ίδρυμα «Σταύρος Νιάρχος» που χρηματοδότησε τη μελέτη, σε συνεργασία με το γνωστό αμερικανικό ινστιτούτο Brookings, στο πλαίσιο του European Growth Project.

Το παρών στην παρουσίαση έδωσε ο γνωστός και στην Ελλάδα τούρκος οικονομολόγος Κεμάλ Ντερβίς, σήμερα αντιπρόεδρος του Brookings και θεωρούμενος ως ο αρχιτέκτονας της εξόδου της Τουρκίας από τη δική της βαθιά οικονομική κρίση στις αρχές της δεκαετίας του 2000, καθώς και ο Χοσέπ Μπορέλ, ισπανός σοσιαλιστής πολιτικός, πρώην πρόεδρος του Ευρωπαϊκού Κοινοβουλίου (2004 – 2007).

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