Who’s Nexit?

Which will be the next eurozone domino to fall? With Greece enjoying a temporary lull in its apparently permanent crisis, we can take a moment to look around its neighborhood at other candidates for trouble. There are several — and the euro’s future looks far from bright.

Greece ran into trouble mainly because it should never have been in the eurozone in the first place. Its governments couldn’t balance their budgets, and its economic cycle was far out of sync with those of the eurozone’s leading lights. When Germany grew, Greece shrank, and vice versa. Using the same monetary policy in both countries made no sense at all.

Quantum Geopolitics

Forecasting the shape the world will take in several years or decades is an audacious undertaking. There are no images to observe or precise data points to anchor us. We can only create a picture, and a fuzzy one at best. This is, after all, our basic human empirical instinct: to draw effortlessly from the vivid imagery of our present world and past experiences while we squint and hesitate before faint, blobby images of the future.

Greek foreign policy: The next ruin?

The economic consequences of Greece leaving the eurozone would be serious for the Greek people and the rest of the EU. The foreign policy implications could be equally bad. Russia policy aside, the Syriza-led coalition has been part of the European mainstream. If a post-Grexit Greece lurched from left-wing populist to right-wing nationalist government, its foreign policy could be an even bigger problem for Europe. 

The EU and Greece have finally agreed on a bail-out deal. But, as Christian Odendahl and John Springford have written recently (‘The Greek bailout deal resolves nothing’, July 13th), its flaws are so serious that it is likely to fail eventually. Before EU leaders steel themselves to expel Greece from the eurozone, they should think about Greece’s geopolitical importance (and not just its flirtation with Russia). 

Collapsing currency signals need for reform in Colombia

The Colombian economy is faltering after years of oil-driven economic bonanza. Now, more than ever, a government-led national discussion to restructure and strengthen strategic import-competing industries is necessary.

In a span of twelve months, the Colombian economy has been rocked. On July 24, 2014, the Colombian peso (COP) was trading at 1,848 COP to the U.S. dollar (USD). Exactly one year later, the peso was trading at 2,861 to the dollar—a 36% depreciation. The massive depreciation of the peso is caused by both external and internal factors and exemplifies the broader structural problems hindering Colombian potential for growth.

Δανείζοντας στην Αθήνα έναν κουβά με χρυσό

Διαδηλωτής ανεμίζει την ιρλανδική σημαία σε διαδήλωση ενάντια στις πολιτικές λιτότητας στο κέντρο του Δουβλίνου, στις 31 Ιανουαρίου 2015. CATHAL MCNAUGHTON / REUTERS

Μετά από τρεις μακρές εβδομάδες που ήταν κλειστές, οι τράπεζες στην Ελλάδα έχουν αρχίσει να ανοίγουν τις πόρτες τους σε ένα ανυπόμονο κοινό. Μετά από εντατικές διαπραγματεύσεις διάσωσης, η Ελλάδα έλαβε ένα ενδιάμεσο δάνειο 7 δισ. ευρώ για να πληρώσει τα 6,8 δισ. ευρώ του χρέους που χρωστούσε την περασμένη εβδομάδα στους επίσημους πιστωτές της. Ουσιαστικά, πρόκειται για ένα νέο δάνειο για να ξεπληρώσει το παλιό. Ή ακριβέστερα, ξεχρεώνει το παλιό δάνειο πληρώνοντας κι άλλους τόκους. Αλλά το τέλος του αδιεξόδου έχει τουλάχιστον φέρει ξανά κάποια ομαλότητα στην Ελλάδα. Οι επιταγές μπορούν τώρα να εξαργυρωθούν. Περιορισμένες μεταφορές χρημάτων είναι και πάλι δυνατές. Οι αναλήψεις περιορίζονται πλέον στα 60 ευρώ ανά άτομο ανά ημέρα, αν και οι έλεγχοι κεφαλαίων παραμένουν στην θέση τους και θα είναι έτσι για κάποιο χρονικό διάστημα. Προς το παρόν, η μέγιστη ανάληψη είναι 420 ευρώ ανά ημέρα, και τα χρήματα δεν μπορούν ακόμη να βγουν από την χώρα χωρίς έγκριση από το Υπουργείο Οικονομικών. Αυτό έχει το κόστος της ακόμη περισσότερης δημοσιονομικής πειθαρχίας για τους Έλληνες, παρ’όλο που συνολικά η χώρα έχει ήδη υπομείνει ένα επίπεδο λιτότητας ανάλογο μόνο σε περιόδους πολέμου ή βαριάς ύφεσης.

How the US Outplayed China in the South China Sea

What separates the aggressive move from the modest one?  Or the unnecessarily risky move from the prudent one?  Context.  Last week, the recently appointed commander of the U.S. Pacific Fleet, Admiral Scott Swift, joined a routine surveillance mission in the South China Sea conducted by a U.S. P-8 aircraft.  Four-star admirals don’t routinely join such frontline missions, of course, which may lead some to view the move as confrontational and risky.  To the Chinese, it was “irresponsible and dangerous.”

Image Credit: U.S. Navy Photo

But this was a single well-played move in an iterative and indirect competition with high stakes.  The Chinese are understandably upset because it shifts the terms of the next move in their disfavor, creating a circumstance that requires them to adapt expectations.  Moves like the one taken last week, putting a high-level U.S. commander in harm’s way but in a highly anodyne way, help (temporarily at least) stack the deck in favor of the United States and the status quo.

Has The E&P Industry Lost Touch With Reality?

The U.S. rig count increased by 19 this week as oil prices dropped below $48 per barrel–the latest sign that the E&P industry is out of touch with reality.

Getty Images from The New York Times (July 26, 2015)

The last time the rig count increased this much was the week ending August 8, 2014 when WTI was $98 and Brent was $103 per barrel.

Requiem for the Macrosaurus: The beginning of the end of the Jurassic Period of economics.

This summer’s biggest movie is Jurassic World. Apparently, people have an endless appetite for dinosaurs, which could also explain much about the popularity of Flintstones vitamins or, for that matter, Vladimir Putin. Fortunately for these people, there remain dinosaurs among us who are producing mayhem on a scale unimagined by even Hollywood’s CGI wizards.

Could eurozone integration damage the single market?

Can Britain be at ease in a European Union that is increasingly focused on the euro and its troubles? Britain’s eurosceptics think not. The eurozone’s many problems require it to integrate more closely, and that will be bad for Britain, they say, since the euro countries will start to act as a bloc and manipulate EU institutions for their own benefit. Therefore Britain should quit this euro-centric club and negotiate a new and looser bilateral relationship with the EU.

David Cameron’s government has begun technical talks with its partners on reforms to the EU, prior to an in-or-out referendum. His officials say that though arguments over EU migrants’ access to benefits will generate more political heat, the relationship between the eurozone and the wider EU is the most important substantive problem. Both George Osborne, the chancellor, and many business leaders see this issue as a priority.

Greece and Turkey should build on "low politics"

Two of the major allies in NATO and the wider Mediterranean region, Greece and Turkey have long being faced with huge dilemmas of stability and security in the Middle East and North Africa. Under the current pivotal shifts of global and regional influence, these two countries have a lot to win by cooperating closely and consistently.

The unfolding of the Greek financial crisis has been heightened up during the last six months. Even after the first agreement at the latest Euro Summit over a third bailout deal, economic conditions and the future of Greece inside Eurozone are not yet secured. And not that much because the Greek government does not look for it, but because the financial deal has nothing to incite hopeful thoughts over growth development. The bailout deal is not investment-oriented  nor addresses the major macroeconomic burdens of the Greek economy.