1 Market turmoil likely as Greek radical left wins
(San Francisco Chronicle) A radical left-wing party vowing to end Greece's
painful austerity program won a historic victory in Sunday's parliamentary
elections, setting up a showdown with the country's international creditors
that could shake the eurozone.
Alexis Tsipras, leader of the communist-rooted
Syriza party, immediately promised to end the "five years of humiliation
and pain" that Greece has endured since an international bailout saved it
from bankruptcy in 2010. If Tsipras, 40, can put together a government, he will
be Greece's youngest prime minister in 150 years, while Syriza would be the
first radical left party to ever govern the country.
The prospect of an anti-bailout government coming to
power in Greece has sent jitters through the financial world, reviving fears of
a Greek bankruptcy that could reverberate across the eurozone. He won on
promises to demand debt forgiveness and renegotiate the terms of Greece's 240
billion euro ($270 billion) bailout, which has kept the debt-ridden country
afloat since mid-2010.
To qualify for the cash, Greece has had to impose
deep and bitterly resented cuts in public spending, wages and pensions, along
with public sector layoffs and repeated tax increases. Greece's creditors
insist the country must abide by previous commitments to continue receiving
support.
Syriza's anti-bailout rhetoric appealed to many in a
country that, in the past five years, has seen a quarter of its economy wiped
out, unemployment above 25 percent and average income losses of at least 30
percent. But Syriza's victory has renewed doubts over Greece's ability to
emerge from the crisis, and generated fears that the country's finances could
once again send shockwaves through global markets and undermine the euro, the
currency shared by 19 European countries.
2 UK recovery losing steam (Katie Allen in The
Guardian) The UK’s economic recovery lost steam at the close of 2014, official
figures are expected to confirm this week. Growth is forecast to have slowed to
0.6% in the fourth quarter, from 0.7% in the third, according to a poll of
economists by Reuters.
However, Chancellor George Osborne will be able to
claim credit for the strongest annual performance since the financial crisis if
the latest quarterly GDP data comes in as expected on Tuesday. If predictions
of a 0.6% rise are correct, it would mean the economy expanded 2.6% for the year
as a whole, the best performance since 2007 and faster growth than other
advanced economies.
Recent reports have pointed to a slowdown at the end
of 2014 for both industry and construction while consumer spending appears to
have held up. The latest figures from the high street last week showed sales
rose in December as motorists rushed to fill up cars with cheaper petrol and
food shopping was strong ahead of Christmas.
Analysts see little chance of that pattern changing
in coming months as continued troubles among the UK’s key trading partner, the
eurozone, and a slowdown in China weigh on exports. But manufacturing should
get some support from lower oil prices. Household spending is expected to
remain the key driver for the UK economy as households get some relief from low
inflation, rising employment and signs of the long-awaited return of wage
growth.
3 US and India ‘rebalance Asia’ against China’s rise
(Dawn) US President Barack Obama’s presence as chief guest at India's 66th
Republic Day celebrations. just four months after Indian Prime Minister
Narendra Modi's visit to the US, is highly symbolic. The visit is also expected
to ramp up bilateral cooperation on economic growth, energy and climate change
as well as address important differences such as intellectual property rights
and civil nuclear liability law that pose a hindrance to taking the cooperation
to the next level.
However, the larger goal that the US would be
pursuing here is to convince India to join a coalition of democracies to
balance China's rise. Although it won't be publicized, this topic will likely
be ever-present in their private conversations. Deng Xiaoping's opening up of
China's economy in 1978 began China's full integration into the global economy
and normalized its diplomatic relations with other countries.
The resulting transformation of China's economy
allowed it to ultimately challenge the supremacy of the US. China seeks to be
the preeminent power in the Western Pacific and consolidate Asia into an
exclusive bloc. In 2012, the Obama administration announced that it was going
to be intensifying its focus to the Asia-Pacific in a policy popularly known as
the “rebalance to Asia”.
This “concert of democracies” strategy involved
courting democracies in the region to manage the uncertainties caused by a
rising China. What is clear is the bilateral relations between Asia's maritime
democracies – India, the US, Australia and Japan – are stronger than ever.
These four countries interact regularly at a military-to-military level as well
share intelligence regularly.
There is no denial that the US presence in Asia
provides stability and certainty to India. There is also increasingly less
doubt that India finds comfort in a US-centric world order. It is unclear if
India has the capacity or the resources to address challenges posed by a rising
China on its own or with the cooperation of its other allies.
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