1 The New York Times on the dire possibility of Greece leaving the Euro. The danger that Greece or some other deeply damaged country in the euro zone could leave the single-currency union can no longer be ruled out. And it was largely this prospect that drove leaders last week to agree to adopt strict fiscal rules that they hope will wrap the 17 European Union nations that use the euro into an even tighter embrace. Officially, the guardians of monetary union have refused to discuss in public the possibility of member states abandoning the euro. But as the truth dawns in Greece and other weak euro zone economies that the price for remaining bound to the single currency will be more hardship and sacrifice, a growing number of legal and financial experts are examining in detail what would happen if Greece abandoned the euro.
“We should be under no false pretenses that we are not currently on the drachma train,” said Jason Manolopoulos, a Greek hedge fund executive. “That does not mean we will end up there, but that is our present course.” Over the last year, Greeks have withdrawn almost 40 billion euros, or nearly $53 billion, in deposits from their banking system, equal to about 17% of the nation’s gross domestic product.
Investment banks, academics and lawyers are digging deep into what a euro exit would look like. Nomura forecast a 60% devaluation of the new drachma. UBS went further, warning of hyperinflation, military coups and possible civil war that could afflict a departing country.
One of the more detailed studies comes from Eric Dor, an economist at the Iéseg School of Management in Lille, France. In “Leaving the Eurozone: A User’s Guide”, Dor starts with the obvious: any return to the drachma would have to be preceded by an immediate freeze on bank deposits. To prevent panicked Greeks from sending the rest of their deposits abroad, transfers to countries outside of Greece would be halted. As the new currency inevitably lost value, new drachma accounts would remain frozen. Shops would be required to accept scrip or devalued euros circulating only within Greece until the country’s bank note printer, operated by the central bank, could churn out enough drachmas to replace the 200 billion euros in cash and deposits currently in Greece. Meanwhile, Greece would become a financial pariah. “I hope it does not happen,” Dor said. “But one has to be prepared.”
2 The Guardian on gender equality in toys. In the 70s, guns were for boys and dolls were for girls. Animals, transport and building-simulation were unisex. Our hippy parents did not know they were born. The form for children now is a gender essentialism so extreme that feminist mothers spend their whole lives (ironically) pink with fury. And the world of boys' toys is more than just blue, it is spiky and obnoxious, more likely to flash and to be designed to throw at people; there is an altogether darker, more nightclubby atmosphere to their hardware, and everything is prefixed or suffixed with the word "monster". This is why even parents who aren't that interested in gender politics still object: it's the narrowness of it all, the very extreme versions of masculinity and femininity that this consumer world represents. In respect of that, Hamleys has just axed its girls’ and boys’ floors following focus groups and customer feedback.
Inescapably, though, there is this idea underpinning the toy industry that male and female children are fundamentally different, that their interests stem from and reveal a difference in their brains. According to Dr Anne Moir, neuropsychologist and author of Brain Sex, "The brain is undifferentiated, but we are born with a tilt of interest. Little girls come into the world with a brain that is much more interested and gets much more pleasure from the social context of the world. Little boys come into the world and they take much more pleasure from the physical world; he's exercising his brain in that physical dimension, she's exercising her brain in that social dimension. The big differences are in what gives us pleasure, what motivates us, and that's why men choose some jobs and women choose other jobs."
The fascinating debate, between neuroscientific gender determinism and the sociological rebuttal, took place at the Battle of Ideas festival in London this year. To drag this back to the layperson's level, let's call it the parental level, the main argument against the separation of the sexes is that it's rubbish. One minute a kid might furiously identify himself with his sex. The next minute he will be dressed as Bo Peep. The market doesn't have much room for nuance, especially at Christmas. But Hamleys has taken a tiny step back from the brink of gender essentialism, and for that, as well as the late opening hours, I guess we should be grateful.
3 The Guardian on the secret of drawing up healthy-looking bank balance sheets. Banks use accounting loop holes to inflate their profits and bolster staff bonuses, according to a paper by the Adam Smith Institute. It says banks are able to use complex financial products such as credit default swaps to report profits that they might not otherwise be able to. Gordon Kerr, a former banker who wrote the report, said the blame lies with the International Financial Reporting Standards (IFRS) rules that allow banks to recognise their expectations of future income as current profits.
"The accounting regulation system needs radical reform so that banks are not encouraged to invest in risky assets to make themselves seem more profitable than they really are. Honest balance sheets are the cornerstone of a healthy financial system – right now, we don't have the transparency we desperately need to avoid a repeat of 2008," Kerr said. He outlined a number of ways banks can boost profits, for instance by buying a CDS – a credit default swap or type of insurance policy against a counterparty defaulting – as this allows them to provide certainty to cash flows that might otherwise be uncertain, even though the CDS is unlikely to pay out.
"Accurate accounting is at the root of the legal and scrutiny framework; without accurate accounts basic laws are incapable of enforcement. As this report shows, banks have been using loopholes in these rules to inflate their accounts and create false profits to pay for bonuses and short-term gains for their shareholders," Kerr said.
4 The Wall Street Journal on commodities’ future linked to China’s fortunes. You want to know where the global commodities markets are heading in the coming years? Then it's probably best that you remember a single word: China. As the biggest and one of the fastest-growing of the world's developing economies, China has become a voracious consumer of industrial and agricultural commodities. Its shifting needs are now the most important driver in the prices of many of those goods. That's why no single factor is likely to have a more far-reaching impact on commodities markets over the next few years than how Chinese demand changes as the country's economy evolves.
The consensus is that China is headed for slower economic growth than it experienced from 2001 to 2010, when its annual rate of expansion ranged from 8.3% to 14.2% and reached double digits six times, according to the World Bank. Demand for steel, copper and other industrial metals could drop significantly if China does stall, because those materials are heavily used in construction—which would be at risk from weakness in the Chinese real-estate market—and because China often accounts for some 40% of global demand for those materials. Coal demand could also tumble because the fuel is heavily used in China to generate power.
5 The Financial Times on ‘Call of Duty: Modern Warfare 3’ video game sales outstripping blockbuster movies. Call of Duty: Modern Warfare 3, the latest instalment in Activision Blizzard’s hit war-game franchise, has realised $1bn-worth of sales in 16 days, outpacing blockbuster movies including Avatar and Harry Potter, but marking a slowdown after its record-breaking first week. MW3 outsold Activision’s two previous Call of Duty instalments, Black Ops and Modern Warfare 2, demonstrating the growing importance of a Hollywood-style opening weekend sales and marketing blitz.
Activision is claiming a new high-water mark for video games in the entertainment wars by reaching $1bn in sales one day faster than 20th Century Fox’s Avatar, an indication of the ever-wider appeal of gaming beyond its teenage-boy origins. James Cameron’s 3D sci-fi epic set the previous record for reaching that milestone in 17 days in 2009, before going on to overtake Titanic as the biggest-grossing movie of all time, with total takings of $2.78bn, according to Box Office Mojo, the film website.
6 The Deepika reporting that across 200 battalions of the Central Reserve Police Force, 5,504 are nursing various illnesses including depression. Federal junior minister Jitender Singh said they were being provided counseling.
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