Category - Economics

Eurozone crosses Rubicon as Portugal’s anti-euro Left banned from power

Constitutional crisis looms after anti-austerity Left is denied parliamentary prerogative to form a majority government

The Telegraph, By Ambrose Evans-Pritchard, October 23

Portugal has entered dangerous political waters. For the first time since the creation of Europe’s monetary union, a member state has taken the explicit step of forbidding eurosceptic parties from taking office on the grounds of national interest.

Anibal Cavaco Silva, Portugal’s constitutional president, has refused to appoint a Left-wing coalition government even though it secured an absolute majority in the Portuguese parliament and won a mandate to smash the austerity regime bequeathed by the EU-IMF Troika.

He deemed it too risky to let the Left Bloc or the Communists come close to power, insisting that conservatives should soldier on as a minority in order to satisfy Brussels and appease foreign financial markets.

Democracy must take second place to the higher imperative of euro rules and membership.

Novara Media: 4 Things You Need to Know About Portugal’s Political Crisis

The New China Syndrome

American business meets its new master

Harpers, By Barry C. Lynn, November 2015

It’s May Day, and a rambunctious crowd of well-dressed people, many carrying blue and yellow parasols, has pushed into a Ford dealership just north of Chongqing, China. Mist from a car wash catches the sun, and I watch a man in a striped shirt poke at the gleaming engine of a midsize Mondeo while his wife sits in the driver’s seat and turns the wheel. Overhead, a giant banner of a Mustang painted Communist Party red ripples in the spring breeze.

At the showroom door, I am greeted by three saleswomen who smile and stare, clearly shocked to see a Westerner. Finally, a manager leads me over to a young man, the resident expert in English. Other than the Ford logo and the corporate mantra of the moment, go further, the front of his card is entirely in Mandarin. He carefully pronounces his name for me: Yi Xuanbo. Then he leads me past a potted rubber plant to a small aluminum table and hands me a paper cup of tea.

Yi places a luxurious brochure on the table and flips to a picture of a silver Mondeo hovering over the Manhattan skyline. He then turns to a page extolling the interior and the sound system — in English, the accompanying text describes the car as “a sensory palace.” Yi tells me how much a basic Mondeo costs before taxes: 179,800 yuan, or about $28,000. I ask him whether he owns a Ford and he shakes his head, but with a smile. “I think maybe next year, I can buy one, too.”

Business Insider: China is making a new 5-Year Plan — and it’ll decide the fate of the global economy

Greece Votes In Its Second Election Of 2015

Polls indicate a tight race going into the vote.

The Huffington Post, By Nick Robins-Early, September 20

Greek voters may be feeling déjà vu Sunday as they head to the polls to cast their ballots in the country’s second election and third national vote of this year.

The two previous votes, the first of which brought former Prime Minister Alexis Tsipras’ left-wing Syriza party to power in January and the second of which rejected a proposed bailout deal, cast long shadows over today’s election.

Tsipras’ Syriza party is vying for reelection after a rebellion from members opposing the international bailout split the party in July. Tsipras resigned in August to pave the way for snap elections, hoping to consolidate his power after the schism with a new victory.

There were reports of low turnout in the early hours of the election. At one polling station in Athens, the pace was slow, and some who came out to vote there voiced a general sense of fatigue with the state of Greek politics.

The Telegraph Live Blog: Greek elections live: Tsipras vows to form new government as Syriza on course for narrow electoral win
Voter turnout set to be lowest in history with Syriza predicted to gain 30-34pc of the vote. Follow for latest updates from Athens

Syriza rule out Grand Coalition

Nikos Pappas, close aide of Alexis Tsipras, has told Greek media the party will not form a coalition with New Democracy. That maintains the line they’ve held throughout the campaign, despite ND’s insistence they can work with the Leftist party.

The Guardian’s Live Blog: Exit polls put Syriza on course for victory – live updates

Delighted – and mightily relieved – Syriza supporters stood, cheered and burst into applause as the first exit polls flashed up on the big screen in the party’s marquee on Korai square in central Athens.

Aristotelis Poulai, a commercials producer, said the result was “probably the best that Greece could do at the moment. I am more of the radical left so forgive me for not being completely thrilled – Syriza will have to make alliances. But it’s the best result possible right now.”

Updated exit poll confirms Syriza’s lead

Here you go. New exit polling data has just been released, and it confirms that Alexis Tsipras’s party is in poll [sic – and/or very punny] position.

The latest projection from Mega TV suggests Syriza could scoop as many as 145 seats.

That’s only a few shy of January’s election, when it got 149.

China stuns financial markets by devaluing yuan for second day running

Stocks, currencies and commodities fall sharply across region as investors fear a stalling China economy and possible currency war despite Beijing’s assurances.

The Guardian, By Martin Farrer & Fergus Ryan, August 11

Beijing – China stunned the world’s financial markets on Wednesday by devaluing the yuan for the second consecutive day, triggering fears the world’s second largest economy is in worse shape than investors believed.

The move sent fresh shockwaves through global markets, pushing shares sharply lower and sending commodity prices further into reverse as traders feared the move could ignite a currency war that would destabilise the world economy.

There were widespread losses in Asia, and in Europe stock markets suffered falls of about 1%, with the FTSE 100 tumbling almost 2% at one stage.


The unexpected yuan devaluation saw Chinese stocks slump in Hong Kong, with the Hang Seng China Enterprises Index sliding 2.6%, extending its loss this quarter to 15%. The Shanghai Composite Index lost 1% to 3,886.32 and the CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 1.2% to 4,016.13 points.

TPP talks make progress but no deal on Pacific trade

BBC, August 1

Negotiators from 12 Pacific nations have finished a week of talks without agreement on a regional trade deal.

But the US trade representative Michael Froman said ministers were more confident than ever that a deal on the proposed Trans-Pacific Partnership was within reach.

He said it would support jobs and economic growth.

Among the sticking points were issues relating to the automobile sector and access to dairy markets.

No date has been set for the next round of talks.

So the Greeks are holding a vote tomorrow. Paul Craig Roberts thinks it’s a big deal.

Sunday’s Vote Will Determine Liberty Or Serfdom — Paul Craig Roberts

According to history books, democracy originated in Greece. Of course, historians could be mistaken, but this is the prevailing view among Western populations with enough awareness to be interested to know.

What we are witnessing today, July 2, 2015, is that after 2,500 years in the Western World only the current Greek government is interested in democracy. The Greek government, to the surprise and consternation of every other European government, has called a referendum for the Greek people to decide the fate of Greece. For resorting to democracy, the Greek government has been universally denounced in the Western World.

So much for Western democracy.

The greatest and most successful propaganda scam in history is the one that convinces the world that they are nobody if they are not part of The West, the indispensable peoples, the exceptional peoples. If you are not part of The West you are nobody, nonexistent, a nothing.

This prevailing propaganda might prevail in Greece on Sunday, in which case a fearful and intimidated Greek population might vote against the only government that, instead of accepting a payoff from Greece’s enemies, fought for the welfare of the Greek people.

If the Greeks vote for their oppressors and against their own government, democracy in the EU will cease to exist.

2,500 years ago Greeks saved their independence from the Persian Empire. Sunday’s vote will tell us whether Greeks have again served liberty or whether they have succumbed to Washington’s Empire.

The fate of all Europeans and of Americans themselves will be settled on Sunday.

Zero Hedge: Greeks Split On Greferendum As Credit Suisse Says “No” Vote Defies “Rationality”
Zero Hedge: Massive “No” Demonstration Floods Athens’ Syntagma Square As Tsipras Speaks – Live Webcast
The Automatic Earth: The Troika Turns Europe Into A Warzone
Ian Welsh: How to Create a Viable Ideology

Jobs Report Disappoints, Participation Rate Falls to Lowest Since 1977

Bloomberg Business, By Sho Chandra, July 2

The U.S. labor market took one step forward and one back in June as job creation advanced while wages stagnated and the size of the labor force receded.

The addition of 223,000 jobs followed a 254,000 increase in the prior month that was less than previously estimated, a Labor Department report showed Thursday in Washington. The jobless rate fell to a seven-year low of 5.3 percent as more people left the workforce.

The figures indicate corporate managers are confident they can temper hiring and meet demand against a backdrop of stronger consumer spending and feeble overseas markets. At the same time, more moderate job gains may still be enough to reduce the unemployment rate, consistent with the Federal Reserve’s perceived timetable to raise borrowing costs by year-end.

“One month’s low number wouldn’t shake our optimism,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “The job market still has a ways to go but we’re making progress.”

Defiant Varoufakis Says He’ll Quit If Greeks Endorse Austerity

Bloomberg Business, By Matthew Campbell & Guy Johnson, July 2

Yanis Varoufakis said Greece won’t “extend and pretend” that it can pay its debts, vowing to quit as finance minister if voters don’t support him in Sunday’s referendum.

With banks shuttered and Greece’s economy hobbled by capital controls, Varoufakis said in a Bloomberg Television interview in Athens that he would “rather cut my arm off” than sign a deal that fails to restructure Greece’s debt. The 54-year-old economics professor said he “will not” continue in his post if Greece endorses austerity in the plebiscite.

The minister’s comments illustrate the gulf between Greece’s government, which swept into office on a wave of discontent about budget cuts, and the creditors who are threatening to push it out of the euro. European governments led by Germany have condemned last weekend’s decision by Prime Minister Alexis Tsipras to pull out of talks and call a snap referendum on the conditions for financial aid. Polls suggest it’s too close to call.

“Maybe we’ll change the configuration of the government”

“We desperately want to stay in the euro,” Varoufakis said. “We are going to win on Sunday.”

Short video interview with Varoufakis at the link.

Via Zero Hedge: Varoufakis Will Resign If Referendum Passes, Says Would Rather “Cut Off Arm” Than Sign

Puerto Rico’s Governor Says Island’s Debts Are ‘Not Payable’

New York Times, By Michael Corkery & Mary Williams Walsh, June 28

Puerto Rico’s governor, saying he needs to pull the island out of a “death spiral,” has concluded that the commonwealth cannot pay its roughly $72 billion in debts, an admission that will probably have wide-reaching financial repercussions.

The governor, Alejandro García Padilla, and senior members of his staff said in an interview last week that they would probably seek significant concessions from as many as all of the island’s creditors, which could include deferring some debt payments for as long as five years or extending the timetable for repayment.

“The debt is not payable,” Mr. García Padilla said. “There is no other option. I would love to have an easier option. This is not politics, this is math.”

It is a startling admission from the governor of an island of 3.6 million people, which has piled on more municipal bond debt per capita than any American state.

Greece debt crisis: ECB ‘to end’ bank emergency lending

The European Central Bank is expected to end emergency lending to Greece’s banks on Sunday, the BBC understands.

BBC, June 28

Well-placed sources told BBC economics editor Robert Peston a decision to end the Emergency Liquidity Assistance (ELA) would be made by the ECB’s governing council later on Sunday.

Greek banks depend on ELA funds daily.

Greek Finance Minister Yanis Varoufakis said his government would consider overnight what measures to take “to minimise the burden on our people”.

Cutting the ECB lifeline could push Greece out of the euro.

Such an ECB cut would mean “Europe has failed”, Mr Varoufakis told the BBC’s World this Weekend.

Via Naked Capitalism: BBC: ECB to Stop Emergency Support of Greek Banks on Monday; Bank Holiday Likely

The Guardian: Greek crisis: Banks shut for a week as capital controls imposed – live updates

Greek banks will not open until July 7 in an attempt to avoid financial panic, after ECB capped the emergency funds keeping them running