Friday, May 3, 2013

Germany's choice: Eurobonds or Euro-exit; Eurozone interest rates at record low; Austerity, and the story of our time; Google Glass app to take photos with a wink; Cameras to protect a widow in India


1 Germany’s choice: Eurobonds or Euro-exit (George Soros in The Guardian) I have argued that the current state of integration within the eurozone is inadequate: the euro will work only if the bulk of the national debts are financed by eurobonds and the banking system is regulated by institutions that create a level playing field within the eurozone.

Allowing the bulk of outstanding national debts to be converted into eurobonds would work wonders. It would greatly facilitate the creation of an effective banking union, and it would allow member states to undertake their own structural reforms in a more benign environment. Countries that fail to implement the necessary reforms would become permanent pockets of poverty and dependency, much like Italy's Mezzogiorno region today.

If Germany and other creditor countries are unwilling to accept the contingent liabilities that eurobonds entail, as they are today, they should step aside, leave the euro by amicable agreement, and allow the rest of the eurozone to issue eurobonds. The bonds would compare favourably with the government bonds of countries like the US, the UK, and Japan, because the euro would depreciate, the shrunken eurozone would become competitive even with Germany, and its debt burden would fall as its economy grew.

But Germany would be ill-advised to leave the euro. The liabilities that it would incur by agreeing to eurobonds are contingent on a default – the probability of which would be eliminated by the introduction of eurobonds. Germany would actually benefit from the so-called periphery countries' recovery. By contrast, were Germany to leave the eurozone, it would suffer from an overvalued currency and from losses on its euro-denominated assets.

Whether Germany agrees to eurobonds or leaves the euro, either choice would be infinitely preferable to the current state of affairs. The current arrangements allow Germany to pursue its narrowly conceived national interests but are pushing the eurozone as a whole into a long-lasting depression that will affect Germany as well.

2 Eurozone interest rates at record low (Heather Stewart in The Guardian) The European Central Bank has delivered an emergency quarter-point cut in interest rates – but its president, Mario Draghi, has cautioned governments in the recession-hit eurozone against "unravelling" their austerity policies.

The ECB's governing council on Wednesday announced the first cut in borrowing costs since July 2012, reducing interest rates to a record low of 0.5%. The bank's policy meeting in Bratislava came to its decision against a backdrop of weak economic data, including unemployment across the 17 member countries of the single currency hitting a record high of more than 12%.

The ECB's deposit rate already stands at zero. Explaining the bank's decision to cut rates, Draghi pointed out that GDP across the eurozone has now declined for five consecutive quarters, and that "weak economic sentiment has extended into spring of this year". German chancellor Angela Merkel, who is running for re-election in September, recently cast doubt on the need for a reduction in rates, saying German savers would benefit from a higher rate instead.

3 Austerity, and the story of our time (Paul Krugman in The New York Times) Families earn what they can, and spend as much as they think prudent; spending and earning opportunities are two different things. In the economy as a whole, however, income and spending are interdependent: my spending is your income, and your spending is my income. If both of us slash spending at the same time, both of our incomes will fall too. And that’s what happened after the financial crisis of 2008.
 Many people suddenly cut spending, either because they chose to or because their creditors forced them to. The result was a plunge in incomes that also caused a plunge in employment, creating the depression that persists to this day.

So what could we do to reduce unemployment? The answer is, this is a time for above-normal government spending, to sustain the economy until the private sector is willing to spend again. The crucial point is that under current conditions, the government is not, repeat not, in competition with the private sector. Government spending doesn’t divert resources away from private uses; it puts unemployed resources to work. Government borrowing doesn’t crowd out private investment; it mobilizes funds that would otherwise go unused.

Now, just to be clear, this is not a case for more government spending and larger budget deficits under all circumstances — and the claim that people like me always want bigger deficits is just false. For the economy isn’t always like this — in fact, situations like the one we’re in are fairly rare. By all means let’s try to reduce deficits and bring down government indebtedness once normal conditions return and the economy is no longer depressed. But right now we’re still dealing with the aftermath of a once-in-three-generations financial crisis. This is no time for austerity.

Is the story really that simple, and would it really be that easy to end the scourge of unemployment? Yes — but powerful people don’t want to believe it. Some of them have a visceral sense that suffering is good, that we must pay a price for past sins (even if the sinners then and the sufferers now are very different groups of people). Some of them see the crisis as an opportunity to dismantle the social safety net. And just about everyone in the policy elite takes cues from a wealthy minority that isn’t actually feeling much pain.

What has happened now, however, is that the drive for austerity has lost its intellectual fig leaf, and stands exposed as the expression of prejudice, opportunism and class interest it always was. And maybe, just maybe, that sudden exposure will give us a chance to start doing something about the depression we’re in.

4 Google Glass app to take photos with a wink (Megan Rose Dickey in San Francisco Chronicle) There's little incentive for developers to create apps for Glass. Google prohibits developers from charging for their apps, and they can't integrate ads, either. But that's not discouraging developers from tinkering with device.

Developer Mike DiGiovanni just created an app called Winky. It lets you wake Glass from standby and take a picture with the wink of an eye. "Winking really changes things," DiGiovanni writes. "You might not think it's hard to say "Ok, Glass Take a Picture" or even just tap a button. But it's a context switch that takes you out of the moment, even if just for a second. Winking lets you lifelog with little to no effort. I've taken more pictures today than I have the past 5 days thanks to this. Sure, they are mostly silly, but my timeline has now truly become a timeline of where I've been." DiGiovanni has released the source code.

5 Cameras to protect a widow in India (Narayan Bareth on BBC) A court in India has ordered the installation of CCTV cameras inside the home of a widow after she complained of mistreatment by her son and daughter-in-law. The court in Rajasthan state directed the police to watch the footage regularly to "monitor" their behaviour. Vimla Dhariwal says her son assaulted her and was trying to evict her from her home, a charge which he has denied. 

Disputes over property are common in extended families in India. Many extended families - comprising several generations - live in shared homes and violent disagreements are regularly reported. But this is believed to be one of the first times that a court in the country has taken the highly unusual step of ordering the installation of CCTV cameras in a house to prevent such disputes.

Analysts say that it is unclear whether the case will set a precedent. The court also ordered Ms Dhariwal's son to deposit in a bank 8,000 rupees ($149) to help his mother "lead a life with dignity".

6 In the valley of the Guptas in South Africa (Johannesburg Times)
http://www.timeslive.co.za/thetimes/2013/05/03/in-the-valley-of-the-guptas

No comments:

Post a Comment