Early Headlines: Draining Greece Dry, Sandra Brand's Arrest, Eurozone Borrowing at Record, Reform and Austerity, China Selling Treasuries and More
Early Bird Headlines 23 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.
- Sandra Bland told Texas jail officers about past suicide attempt (The Guardian) Sandra Bland was arrested in Texas for resting arrest and assaulting a police officer after a routine traffic stop. The legal assessment of what transpired is covered in the next article. After the arrest Ms. Bland was detained in a county jail for three days until she reportedly hanged herself. A video cam record of what happened has been made public.
- Assessing the Legality of Sandra Bland’s Arrest (The New York Times) The legality of the arrest and what transpired during detention of Ms. Bland is reviewed by attorneys. A short video shot by a bystander is included in this article.
- Eurozone borrowing rises to record as recovery remains weak (Financial Times) Debt in the eurozone has reached a record high despite an incipient economic recovery, underlining the challenges governments face in tackling the legacy of the sovereign debt crisis. The high growth rate for government debt is attributed to the low interest rates that accompanied the QE program of the ECB (European Central Bank). Steven Major, head of fixed income research at HSBC, said the increase was due to "opportunistic borrowing at current low rates by some countries, less austerity by others."
- Opinion: The Great Ceausescu Plan for Greece (Sigma Live) Hat tips to Laurentiu Ginghina and Roger Erickson. Greece of the 21st century is compared to the late 20th century regime of Romanian Communist dictator Nicolae Ceausescu who drained Romania dry with austerity in the 1980s until overthrown and executed in 1989. This column distinguishes between austerity and reform:
Austerity is based on culling public investment that is vital for the economy to produce value in the future. It means raising taxes, which in and of themselves reduce competitiveness even according to neoliberal dogma. It also calls for severe cuts in wages and pensions, a severe dose of which has not only failed to restore external competitiveness in recent years, but gone the other way, leading to increased poverty and a missing demand in the economy leading to high unemployment.
Reforms are meant to release the value creating potential of business. They would mean a comprehensive, meritocratic overhaul of bureaucracy and state functions, based on a nuanced review of capacities and competencies in a very long list of policy areas. No such process has been launched or is foreseen.
- Greek parliament approves next phase in bailout reforms (The Guardian) Large majority of MPs including Yanis Varoufakis, the renegade former finance minister, approves further measures required to qualify for €86bn in loans. Econintersect: Since when is a man of logic and reason a renegade? When he disagrees with those lacking logic? And why is the media calling what has happened and is continuing to happen in Greece reform? It seems to us "reforms" is a typo where the word should be "deforms". (See previous article.) Calling what is being done to Greece "reform" is like calling blood-letting "nourishment".
- The Iran Nuke Deal Could End Any Hope of Israeli-Palestinian Peace (Foreign Policy) And six other reasons why there's a long, long way to go before we can celebrate what a "new" Tehran means for the Middle East.
- A Greek lesson for China (China Spectator) This article does a great job of reviewing all the challenges China has to address and then makes an entirely inappropriate comparison to Greece. The correct comparison for what China needs to avoid is Japan. This author has revealed ignorance of how global financial systems work. Unfortunately many others also share this confusion.
- China's Record Dumping Of US Treasuries Leaves Goldman Speechless (Zero Hedge) Something big is going on with China. It appears that China may have been forced into liquidating U.S. Treasury positions over the past 15 months because of record capital outflows. Since first quarter 2014 China's Forex reserves have declined from about $4 trillion to about $3.4 trillion. That has been partially offset by a decline in U.S. Treasury securities from $1.65 trillion to $1.47 trillion. The net cumulative capital outflow from China over this period is estimated by JP Morgan at more than half a trillion dollars ($520 billion). Note: In addition to the U.S. Treasury holdings China has other assets included in its current account balance. These can be estimated by difference to be of the order for other inflows of $100 billion over the 15 months (-$600 billion Forex outflows +$180 billion from sale of U.S. Treasuries -$100 billion acquisition cost of other assets). Note: In the graph below the total for Treasuries is China plus Belgium because Belgium has been a surrogate buyer of U.S. Treasuries for China.
- The Forgotten, Mysterious Death of Cuba’s Top Dissident (Foreign Policy) Exactly three years ago, prominent Cuban dissident Oswaldo Payá was traveling in a Hyundai sedan from Havana to Santiago de Cuba along with three other people when the car struck a patch of gravel and veered off the road, striking a tree and killing him and one other passenger. At least that's the Cuban government's official version of events, and it's one that Payá's family and the driver of the car have never accepted. They believe the Hyundai was rammed by a government car and forced off the road. See next article.
- The Case of Oswaldo Paya (Human Rights Foundation) Evidence in the case of the death of Cuban dissident Oswaldo Payá is reviewed and the HRF report concludes that the official court records in Cuba consist of coerced testimony and do not include suppressed testimony and information that contradicted the verdict in the case.
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