Friday, August 14, 2015

Greece secures third bailout; Eurozone economy grows 0.3%; India's independence ennui

1 Greece secures third bailout (Ian Traynor & Jon Henley in The Guardian) Greece clinched a three-year bailout worth €86bn after parliamentarians in Athens backed the deal, and Germany backed down on its opposition to the third rescue of the bankrupt country in five years.

A meeting of eurozone finance ministers in Brussels representing the country’s main creditors agreed to launch the new bailout with €26bn being disbursed next week following six months of bitter recrimination that almost saw the country, under the leftwing government of Alexis Tsipras, becoming the first to exit the single currency.

The meeting was upbeat about finalising the bailout terms after Tsipras, secured approval from MPs for a huge package of legislation on Friday morning. The vote committed the indebted country to radical economic and fiscal reforms needed to secure the rescue money.

Over the past week, Berlin has consistently argued against being rushed into a new bailout, preferring to award Greece a new bridging loan to pay off a debt payment of €3.2bn due to the European Central Bank next week. But the temporary loans scenario was barely mentioned by finance ministers.

In an abrupt change of tone, the leaders paid tribute to Tsipras, who could only win the vote on the new bailout with the support of the opposition and by splitting his leftwing Syriza movement. It is now likely that Tsipras will call early elections and trigger a realignment of Greek politics.

Christine Legarde, the IMF managing director, told the meeting that it hoped to take part in the bailout and that a decision would be made in October, but she could not commit. The terms for the bailout detail a radical overhaul of the Greek economy, stipulating major reforms of health, welfare, pensions and taxation systems, alongside more ambitious privatisation schemes. It also gives the troika decisive influence over reforms of the country’s struggling banking sector.

2 Eurozone economy grows 0.3% (BBC) The economies of the 19 countries that use the euro grew by about 0.3% between April and June, according to official figures. The first estimate from Eurostat marks a slight slowdown from the 0.4% registered in the first quarter.

The statistics agency also announced that inflation in the eurozone was 0.2% in July, unchanged from June's figure. In the wider 28-member EU, GDP grew 0.4%, which was unchanged from the previous quarter, while inflation was 0.1% in July, unchanged from June.

Eleven member states reported deflation in the month, with Cyprus recording the biggest drop at -2.4%. Malta reported the most inflation at 1.2%. Finland's economy recorded a second quarter of contraction, down 0.4% having recorded negative growth of 0.1% in the first quarter.

On Thursday, preliminary figures from Greece suggested its economy grew a considerably better-than-expected 0.8% in the second quarter, while the first quarter's figure was revised from a 0.2% contraction to zero growth.

3 India’s independence ennui (Pratap Bhanu Mehta in Indian Express) India approaches another Independence Day with a sense of political ennui. Never before was such immense possibility held hostage to mightier pettiness, great historical hope stymied by little men.

The ramifications of what happened in Parliament cannot be underestimated. India’s credibility has again been dented. With the delay in legislation, we lose precious time in implementing reforms that could affect millions. Time is not a free good. Each year’s delay wastes the prospects of another generation, squanders another possibility.

What is going on in India displays a deeply disfigured psychology. Begin with the Congress. The party of India’s Independence is also the source of its deepest corruption and monumental stupidities.  The BJP’s own psychological baggage is also damaging. Two things became clear. Whatever the prime minister’s politics and psychological makeup is, it is not parliamentary. The PM is incapable of handling an assembly, with its rough and tumble questions.

The BJP’s second psychological baggage is hate. Its contempt for the Gandhi family borders on the visceral. It may be entitled to this. But it also seriously disfigures political judgement. It will prevent them from reaching out. The Congress has sensible proposals on the GST. The BJP could have presented the U-turn on the land bill as an example of political consensus on farmers. But you almost get the sense that there are insuperable psychological obstacles in dealing with the Opposition.

It has been India’s peculiar fate that its political system has shown great resilience. Its ruling classes always manage to withstand the costs of their abdication. They also have the peculiar ability to domesticate and corrupt challengers. India seems to chug along, finding artful ways around, invoking stoic accommodations and taking violent pathology in its stride.

There is always hope, but the shadows of foreboding loom larger. Our system will probably do enough to avoid a deep crisis. But the republic is still a long distance away from redeeming its pledges. For a brief moment we will enjoy that marvellous spectacle that a Parliament lit up for Independence Day presents. But we will also wonder whether the glitter is there to deceive.

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