1 Greek default or not, prospects look grim (The
Guardian) As Greek prime minister Alexis Tsipras and his finance minister Yanis
Varoufakis have discovered the hard way, international financial deal-making is
a world away from the thrill of a barnstorming election campaign.
But with Varoufakis sidelined after a series of
less-than-helpful public interventions, Tsipras and his colleagues appear to be
in the final stages of agreeing a deal with the country’s eurozone creditors
and the International Monetary Fund – renamed the “Brussels Group” to assuage
the Greek public’s hatred of the “troika”.
If Tsipras pulls off a deal and skirts default, it
will be a political and personal triumph, in the face of extraordinary odds.
And if he can persuade Greek voters to back him in the messy compromises he
will inevitably have to make to win over the lenders – especially the IMF,
which is reportedly taking a particularly tough line – it will be close to
miraculous.
As Gabriel Sterne of Oxford Economics pointed out
last week, while two-thirds of the Greek public believe Syriza should be
willing to compromise, almost 60% thought that should not include pension
reform – likely to be a red line for creditors. Sterne believes there is now
almost a 50/50 chance that the country could be forced out of the single
currency.
The sad truth for the Greek people is that none of
the roads ahead of them looks anything but grindingly hard. This is a country
where GDP collapsed by a quarter in the aftermath of the crisis; where
unemployment remains above 25%; and where average wages fell by almost 18% in
real terms between 2008 and 2013.
If a deal is done, the country is likely to face
another bout of painful structural reforms and stringent spending cuts, to
satisfy the Brussels Group that it’s not throwing good money after bad. That
means Greece will still face hefty repayments, and the scrutiny of its
paymasters, for years to come. And if no deal is forthcoming by the 30 June
deadline both sides appear to have set, then Greece faces the risky and
uncertain prospect of defaulting on its debts and crashing out of the euro.
http://www.theguardian.com/world/2015/may/31/greece-deal-defaults-prospects-for-people-grim-eurozone
2 UK economy seen picking up (BBC) The speed at
which the British economy is growing is increasing, the Confederation of
British Industry says. Research by the CBI suggests business activity increased
markedly in the three months to May. Rain Newton-Smith, the CBI's director of
economics, said growth had "cranked up several gears".
In April official figures revealed the UK economy
grew by 0.3% in the first three months of 2015, which marked the slowest quarterly
growth for two years. The CBI said growth could be boosted further as things
improve economically in the Eurozone, which is the UK's largest trading
partner.
Earlier in the month the CBI urged businesses to
"speak out early" in favour of remaining in a reformed European
Union. Its president Sir Mike Rake said there were "no credible
alternatives" to EU membership.
3 No bubble, but get ready for ‘correction’, banker
warns (Joe Garofoli in San Francisco Chronicle) No, we’re not living in an
economic bubble. That’s what former Treasury Department official and investment
banker Roger Altman told a venture capitalist conference. However, Altman
predicted there will be a “correction.”
“But I don’t think we’re going to see a repeat of
the dotcom” bust, Altman said. “That was a broad correction across the tech
sector. I don’t think that’s likely to likely to repeat itself,” he said.
Altman is the executive chairman of Evercore, one of
the most active independent investment banks in the US. As evidence, Altman
pointed out that “some of the social media sector is very highly valued. Is it
probably going to be a fairly sharp correction? Usually corrections are fairly
sharp,” Altman said. “We’ll see a regression to the mean.”
Altman said we are living in a “golden moment” where
“the Ubers of the world” can be highly valued without going public, thus
avoiding the increased regulatory scrutiny that comes with being a public
company. “Remaining private is attractive because of the autonomy and control
factors. If I could achieve all of my business objectives while remaining
private, I would. I think it’s one of those golden moments. I don’t think it
will last very long, but I can understand why people are taking advantage of
it.”
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