Early Headlines: New Low for Gold, Writing Off Greek Debt, Germany Should Leave Euro, Schauble Repeats Old Mistakes,China Seeks 'Malicious' Short-sellers and More

July 20th, 2015
in News, econ_news, syndication

Early Bird Headlines 20 July 2015

Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.


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  • JPMorgan reaches $388 million settlement in mortgage securities case (Reuters) JPMorgan is still making new settlement payments. On Friday it was announced that a group of investors would receive $388 million to compensate for losses of $10 billion of MBS (mortgage backed securities) that ended up worth at most 62 cents on the dollar. Econintersect: Let's see, the investors loss about $3.8 billion through misrepresentation and now they will receive 1/10 of that? Sounds like a pretty cheap out for JPM. Of course, the bank maintains the securities would have been just fine if the economy had not collapsed.


  • France’s Hollande Proposes Creation of Euro-Zone Government (Bloomberg Business) French President Francois Hollande said that the 19 countries using the euro need their own government complete with a budget and parliament to cooperate better and overcome the Greek crisis. This follows the plea by European Central Bank President Mario Draghi last week for deeper cooperation between the euro members. What is being called for here is a move from the existing Eurozone to a United States of Europe, much the same as the failing Articles of Confederation were replaced by the U.S. Constitution in the early days of the U.S.
  • Poor old Europe (The Conversation) What is striking is that the views of supposedly impartial technocrats and economists are being ignored once again. While the economic goals this time around may seem as inappropriate as they did when the eurozone was established, their architects cannot even pretend to be motivated by noble, far-sighted political leadership. On the contrary, it is hard to escape the suspicion that the Greeks are being collectively punished for their fecklessness and inability to implement reform. We ought to acknowledge that the economists were right at the start of the euro experiment and they - in the form of the IMF - may be right this time, too. It may be politically awkward to acknowledge that the undeserving Greeks need to be bailed out and let off the fiscal hook yet again. The alternative could be the end of the political unified European project.



Greece's public debt has become highly unsustainable. This is due to the easing of policies during the last year, with the recent deterioration in the domestic macroeconomic and financial environment because of the closure of the banking system adding significantly to the adverse dynamics. The financing need through end-2018 is now estimated at Euro 85 billion and debt is expected to peak at close to 200 percent of GDP in the next two years, provided that there is an early agreement on a program. Greece's debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far.




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