As a result of we’re all fats with straightforward cash, apparently.
Are we getting nearer to the decision of the multi-year Greek drama?
Fast abstract: On Sunday, Greek voters rejected the phrases of a proposed European bailout plan. However on the finish of this week, the left-wing authorities went over the heads of its voters and agreed to abide by a lot of the phrases of the proposal. The markets went up. The concession might stop a eurozone disaster, if everybody indicators up.
Final week, Simon Constable described all of the financial political turmoil as “ripples touring throughout the floor of a pond.” What’s behind the Greek disaster, and the stream in all types of capital markets, is an excessive amount of straightforward cash, he argues. Particularly, cuts in rates of interest by central banks made easy loans low-cost and, consequently, Greece went into extra debt. You’ll be able to learn Constable on Greece and Puerto Rico right here. And for one more impact of straightforward lending on massive markets, check out Steve Butler’s profile of Beijing-based economist Michael Pettis. He is been warning of the identical factor in China for years, and the previous few weeks appear to have justified it. Study extra in regards to the “China Market Crash and the Man Who Noticed It Coming” right here.
For a little bit of geopolitical context, take a look at Sean Braswell’s e-book piece this week in regards to the attainable penalties of a Grexit. He argues that Greece’s rising estrangement from Europe might pave the best way for a broader strategic alliance with Russia. The truth is, our favourite bare-chested dictator phoned Greek Prime Minister Alexis Tsipras after Greece’s unfavorable vote, and the latter has visited Russia twice previously two months.
Do not neglect the historic context both. For a lot of Greeks, the eurozone drama is paying homage to a German-dominated previous, and never fortunately. Right now, Greeks should certainly marvel how Germany in the present day has nearly full management over Greek financial coverage. In spite of everything, becoming a member of the eurozone was purported to strengthen Greek democracy and independence, not undermine it. Learn how “Germany devastated the Greek drachma” right here.