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Showing posts from June, 2015

Averting a Greek Collapse?

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Joseph. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, wrote an op-ed for the Guardian, How I would vote in the Greek referendum:
The rising crescendo of bickering and acrimony within Europe might seem to outsiders to be the inevitable result of the bitter endgame playing out between Greece and its creditors. In fact, European leaders are finally beginning to reveal the true nature of the ongoing debt dispute, and the answer is not pleasant: it is about power and democracy much more than money and economics.

Of course, the economics behind the programme that the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has been abysmal, resulting in a 25% decline in the country’s GDP. I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%.

It is startling th…

Greece's Metaxas Moment?

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“There’s a dark night going on in Europe, a dark and foggy night where bad things come out of trees and bite you. It’s a pretty scary place.”

 -- Michael Sabia (2013), CEO of the Caisse de dépôt et placement du Québec Kathimerini reports, Closed banks and capital controls until referendum:
Greece heads to a referendum on Sunday that could decide whether its future lies in or out of the eurozone, with its banks closed and capital controls in place after the European Central Bank decided not to further increase the emergency liquidity it supplies to local lenders.

The decision to impose the extended bank holiday was taken during a meeting of Greece’s financial stability council, which included Finance Minister Yanis Varoufakis and Bank of Greece Governor Yannis Stournaras.

The official announcement had not been made at the time of going to press but sources said that ATM withdrawals would be limited to 60 euros per day per account and that banks would remain closed for at least the next…

CalPERS' Fiduciaries Breach Their Duties?

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Alexandra Stevenson of the New York Times reports, Calpers’s Disclosure on Fees Brings Surprise, and Scrutiny:
Earlier this year, a senior executive of the California Public Employees’ Retirement System, the country’s biggest state pension fund, made a surprising statement: The fund did not know what it was paying some of its Wall Street managers.

Wylie A. Tollette, the chief operating investment officer, told an investment committee in April that the fees Calpers paid to private equity firms were “not explicitly disclosed or accounted for. We can’t track it today.” It was an unusual disclosure. In the world of public pension funds, Calpers is a big fish. It manages $300 billion in retirement funds for 1.6 million teachers, firefighters, police officers and other state employees and is generally credited with being the most sophisticated investor in the pension world.

For J. J. Jelincic, a member of the Calpers board, the disclosure raised a red flag. “I am disturbed that we don’t…

OECD's Dire Warning on Pensions?

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Alistair Gray and Josephine Columbo of the Financial Times report, OECD warns over pension scheme solvency as low rates bite:
Retirement funds and life assurers are in danger of being unable to keep their promises to pensioners and policyholders because of rock-bottom interest rates, the Organisation for Economic Co-operation and Development has warned.

Ultraloose monetary policy poses “serious problems to the solvency” of pension schemes and insurers as they struggle to produce enough income to fund their obligations, the group of rich nations said on Wednesday.

The warning from the Paris-based body is among the starkest yet about how institutions from Germany to the US can generate sufficient returns to meet their obligations without taking on extra risks.

In its inaugural annual business and finance outlook, the OECD identified the impact of cheap money from central banks on insurers and pension schemes as one of the biggest challenges facing economic policy makers.

“The current low…

No Deal For Greece?

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Catherine Boyle of CNBC reports, Greek crisis: Tsipras says 'no deal' with creditors:
International creditors on Wednesday rejected the Greek government's plan to end its financial crisis, but they have submitted counterproposals.

News of the rejection, announced by Greek Prime Minister Alexis Tsipras, dashed hopes of an imminent deal between the embattled Mediterranean country and its creditors. Greece needs additional financial aid to prevent it from defaulting on its 1.6 billion euro debt at the end of the month, but its lenders have refused to release funds without the implementation of more reforms.

The International Monetary Fund is believed to be the most skeptical of the troika of bodies overseeing Greece's bailout. Its creditors have now put forward a new set of counterproposals, sources close to the talks told Reuters.

European markets turned lower on news of the rejection, with Germany's Dax falling 1.2 percent and the Athens stock exchange down 3.3 perc…