Category : The Banking System/Sector

(NYT The Upshot) In 83 Million Eviction Records, a Sweeping and Intimate New Look at Housing in America

Before the first hearings on the morning docket, the line starts to clog the lobby of the John Marshall Courthouse. No cellphones are allowed inside, but many of the people who’ve been summoned don’t learn that until they arrive. “Put it in your car,” the sheriff’s deputies suggest at the metal detector. That advice is no help to renters who have come by bus. To make it inside, some tuck their phones in the bushes nearby.

This courthouse handles every eviction in Richmond, a city with one of the highest eviction rates in the country, according to new data covering dozens of states and compiled by a team led by the Princeton sociologist Matthew Desmond.

Two years ago, Mr. Desmond turned eviction into a national topic of conversation with “Evicted,” a book that chronicled how poor families who lost their homes in Milwaukee sank ever deeper into poverty. It became a favorite among civic groups and on college campuses, some here in Richmond. Bill Gates and former President Obama named it among the best books they had read in 2017, and it was awarded a Pulitzer Prize.

But for all the attention the problem began to draw, even Mr. Desmond could not say how widespread it was. Surveys of renters have tried to gauge displacement, but there is no government data tracking all eviction cases in America. Now that Mr. Desmond has been mining court records across the country to build a database of millions of evictions, it’s clear even in his incomplete national picture that they are more rampant in many places than what he saw in Milwaukee.

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Posted in Books, City Government, Economy, Ethics / Moral Theology, Housing/Real Estate Market, Law & Legal Issues, Politics in General, The Banking System/Sector

(Guardian) Archbishop Welby's prayers answered as payday loan firms brought to book

In 2013 the Archbishop of Canterbury, Justin Welby, declared war on Wonga and other payday lenders crucifying borrowers with 5,000% interest loans. Three years later it looks as if his prayers may have been answered.

CFO Lending, which was fined £34m this week by the Financial Conduct Authority, is just the latest operator brought to its knees by regulators punishing bad lending behaviour. CFO, which traded under brand names Payday First, Money Resolve and Flexible First, will have to hand money back to nearly 100,000 victims of its unfair practices.

Citizens Advice said complaints about payday loans have collapsed by 86% between 2013 and 2016. But campaigners warn that the industry is reinventing itself with still “eye-watering” interest rates on three-month loans aimed at people earning less than £20,000 a year on insecure work contracts.

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Posted in * Anglican - Episcopal, * Culture-Watch, * Economics, Politics, * International News & Commentary, --Justin Welby, Archbishop of Canterbury, Consumer/consumer spending, Corporations/Corporate Life, Economy, England / UK, Ethics / Moral Theology, Personal Finance, Religion & Culture, The Banking System/Sector, Theology

(Independent) Forget Brexit ”” Italy is poised to tear Europe apart

All eyes have turned to Britain’s vote to leave the European Union as having the most drastic political and economic impact onto the 28-nation state but if you look at the country’s economic data, bank issues, and the impending constitutional referendum coming up, Italy is like a bomb waiting to explode.

The Italian financial system, which to put it gently, is in a major state of flux right now. While Britain’s EU referendum in June was seismic in terms of having economic and political repercussions across the bloc, there is another referendum of equal importance, coming up in Italy in October, and the result could fundamentally alter the state of the already delicate Italian economy.

Italians will have a say on reforms to its Senate, the upper house of parliament, in October. The proposed reforms are widespread, and if approved could improve the stability of Italy’s political set up and allow Prime Minister Matteo Renzi to push through laws aimed at improving the country’s economic competitiveness.

Read it all and make sure to take a careful look at the productivity graph.

Posted in * Economics, Politics, * International News & Commentary, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Italy, Politics in General, The Banking System/Sector, Theology

Ambrose Evans-Pritchard–Was Brexit fear a giant hoax or is this the calm before the next storm?

What we have learnt from the market moves since Brexit is that Europe is just as vulnerable as Britain. The vote has already triggered a banking crisis in Italy, where the government is struggling to put together a €40bn (£33bn) rescue but is paralysed by the constraints of euro membership.

The eurozone authorities never sorted out the structural failings of EMU. There is still no fiscal union or banking union worth the name. The North-South chasm remains, worsened by a deflationary bias. The pathologies fester.

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Posted in * Economics, Politics, * International News & Commentary, Economy, England / UK, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Politics in General, The Banking System/Sector, Theology

(NYT Beliefs) Full Faith and Credit: Christian Groups Unite Against Predatory Lending

Jason Carrier, a pastor at Southgate Baptist Church, which, like Mr. Drewery’s church, is in Springfield, Ohio, is trying to help his church start a “grace-based lending” program that worshipers can use in place of payday lending. The program would direct any fees charged above the principal into savings accounts for the borrower, not into lenders’ pockets.

“In conjunction with a credit union, the money ”” for lack of a better word, we’ll call it interest ”” goes into a savings account, so they are learning to save money,” Mr. Carrier said. “To use the service, you have to take some classes, and you have a financial coach that will help you and walk with you along the way.”

Mr. Carrier’s church has already tested its program with several needy members. Ultimately, he said, he would like to directly challenge the payday lenders. “We’d like to have a storefront, just like your Check ’n Gos, but with space in the back for classes and financial coaching.”

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Posted in * Christian Life / Church Life, * Culture-Watch, * Economics, Politics, Adult Education, Anthropology, Economy, Ethics / Moral Theology, Ministry of the Laity, Ministry of the Ordained, Parish Ministry, Personal Finance, Religion & Culture, The Banking System/Sector, Theology

(CEN) Church’s network of credit champions goes national

The Just Finance Network, formerly known as the Church Credit Champions Network (CCCN), has proposed a nationwide roll out of ”˜credit champions’ to help people manage money and debt.

The scheme has already been piloted in churches in London, Southwark and Liverpool and has trained more than 260 volunteers. Organisers believe it is now ready to go nationwide.

Of the Church Credit Champions Network, the Bishop of Liverpool, the Rt Rev Paul Bayes, said that desperate people had been exploited by unscrupulous credit providers locking them into a crippling spiral of debt.

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Posted in * Anglican - Episcopal, * Culture-Watch, * Economics, Politics, * International News & Commentary, Anglican Provinces, Church of England (CoE), Economy, England / UK, Ethics / Moral Theology, Personal Finance, Religion & Culture, The Banking System/Sector, Theology

(CEN) Church Film series gives money perspective

”˜To Your Credit’, the local churches’ grassroots movement and the Archbishop’s initiative to create a fairer financial system, has released the first of a series of four 10-minute films on ”˜Money, Debt and Salvation.’ Six theologians will offer reflections on money and debt.

The Archbishop features in the first of the series, in a call to ”˜challenge the sovereignty of money’.

“Credit and debt is one of the key issues that people face because it’s pervasive, it’s everywhere”¦ The reason it’s so important is because the knock-on effect of credit and debt going wrong is so destructive. People’s lives are torn apart, their families are damaged.

“It’s a prophetic thing to get stuck into these issues because we have to challenge the sovereignty of money and finance over every aspect of our life. And to say in quite a revolutionary way, no you’re not in charge, human beings are the ultimate value.

Read it all (requires subscription).

Posted in * Anglican - Episcopal, * Christian Life / Church Life, * Culture-Watch, * Economics, Politics, * International News & Commentary, --Justin Welby, Anthropology, Archbishop of Canterbury, Economy, England / UK, Ethics / Moral Theology, Movies & Television, Parish Ministry, Politics in General, Religion & Culture, Stewardship, The Banking System/Sector, Theology

(Guardian) The unique role of the church in the battle for financial inclusion

Justin Welby captured the attention of the nation in 2013 when he declared war on Wonga and pledged the support of the church in the fight for financial inclusion. And yet, alongside the positive headlines, a common question emerged in response: what does the church really have to offer to people struggling on low incomes and preyed on by exploitative lenders, except perhaps a some spiritual support and comfort?

The answer has come in the form of the Church Credit Champions Network, a project funded by Lloyds Banking Group that has been piloting in London and Liverpool since the spring of 2014. It helps equip local churches to engage with money and debt issues, and has formed a key part of the task group set up by the archbishop of Canterbury and chaired by former City regulator Sir Hector Sants.

The church has both an unmatched “branch network”, with a presence in every community in the country, and a range of different resources, such as people, money, skills and buildings, which are all potentially of value to credit unions and others seeking to increase access to savings and affordable credit in their communities. The network helps churches to listen and reflect on what is happening within their local community in terms of money and debt, and then trains up clergy and church members as ”credit champions”, ready to take practical action.

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Posted in * Anglican - Episcopal, * Culture-Watch, * Economics, Politics, --Justin Welby, Anglican Provinces, Archbishop of Canterbury, Church of England (CoE), Economy, Ethics / Moral Theology, Personal Finance, Religion & Culture, The Banking System/Sector, Theology

Deep in debt? Birmingham Alabama Church pays off payday loans for 48 of its members

The Worship Center Christian Church in Birmingham announced during services on Sunday morning that it will pay off the payday loans of 48 people struggling with debt.

Those whose loans are being paid off owe a combined total of more than $41,000 and are paying high interest rates of 36 percent and much higher. Payday loans are unsecured cash advances that people use to make it through to the next payday. Payday loan centers proliferate throughout Alabama.

“It’s kind of a ticking time bomb with high interest rates,” Senior Pastor Van Moody said in an interview after the service. “That’s why many people never get out.”

Those having their loans paid off will be required to undergo financial counseling and attend financial workshops so they don’t get in the same fix again, Moody said.

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Posted in * Christian Life / Church Life, * Culture-Watch, * Economics, Politics, Economy, Ethics / Moral Theology, Parish Ministry, Pastoral Theology, Personal Finance, Religion & Culture, Stewardship, The Banking System/Sector, Theology

([London] Times) Banker Sir Jeremy Morse, the inspiration for Colin Dexter's Inspector Morse, RIP

Sir Jeremy Morse was one of the most intellectually gifted London bankers of the postwar era. He led Lloyds Bank through the challenges of Big Bang, the reorganisation of stock exchange practices and the third world debt crisis, and saw it emerge as one of the strongest of Britain’s retail banking groups.

With the air of a don rather than a City banker, he was skilled at crosswords and brain-teaser puzzles and was even acknowledged as the inspiration for Inspector Morse. The detective’s creator, Colin Dexter, named the character after him because he said that he had never encountered a finer problem-solving mind.

Knowing he had inspired Inspector Morse gave him great pleasure. He was introduced to Dexter in the 1950s at dinners hosted by The Observer for those who had solved their Ximenes crossword. Unlike his fictional alter-ego, Morse said, “I am distressingly unmelancholy.” He drank wine, albeit in moderation, and listened to Bach rather than wallowing in Wagner.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Books, Economy, England / UK, History, Marriage & Family, The Banking System/Sector

(C of E) Churches' Mutual Credit Union approaches its first anniversary

Would people join? When the idea of a Church Credit Union was first mooted (some eight years ago), the feedback was positive, but would that general level of interest translate into real live members? The answer to that one is ”˜yes it has’. It was with great excitement we watched our first applications come through. We operate an online system that sends us an email every time someone joins and it was marvellous to open the mailbox and see twenty new applicants just on the first day and it is rare a day goes by without at least one new member. And yes, we do have a lot of members who are ordained ministers but we also have PCC members, and Elders, and Office staff and a membership that is as diverse as our churches.

The second question was ”˜will people save?’ On the 11th February 2015 the credit union had an empty balance sheet but since then 200 people have become Founder Members of the credit union, investing an amazing £910,000 to add to the £386,000 in deferred shares invested by our denominational partners big and small. We also gained 350 regular savers depositing an average of £40 a month into their accounts.

The next step was would people borrow? Not guaranteed in our perceived debt adverse client base. Again since May, credit union loans have purchased 83 cars, two caravans and a motorbike, we have improved seven homes and furnished two others and helped to pay for one wedding. We’ve also walked alongside 11 households in helping to turn unmanageable debt into affordable credit.

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Posted in * Anglican - Episcopal, * Economics, Politics, Anglican Provinces, Church of England (CoE), Economy, Ethics / Moral Theology, Personal Finance, The Banking System/Sector, Theology

(Telegraph) Ambrose Evans-Pritchard: the Fed will have to reverse gears fast if anything goes wrong

[The data in the economic background paints]…a very murky picture. This is the first time the Fed has ever embarked on tightening cycle when the ISM gauge of manufacturing is below the boom-bust line of 50. Nominal GDP growth in the US has been trending down from 5pc in mid-2014 to barely 3pc.

Danny Blanchflower, a Dartmouth professor and a former UK rate-setter, said the US labour market is not as tight as it looks. Inflation is nowhere near its 2pc target and the world economy is still gasping for air. He sees a 50/50 chance that the Fed will have to pirouette and go back to the drawing board.

“All it will take is one shock,” said Lars Christensen, from Markets and Money Advisory. “It is really weird that they are raising rates at all. Capacity utilization in industry has been falling for five months.”

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Posted in * Culture-Watch, * Economics, Politics, Anthropology, Consumer/consumer spending, Corporations/Corporate Life, Economy, Ethics / Moral Theology, Federal Reserve, Foreign Relations, Globalization, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Personal Finance, Politics in General, The Banking System/Sector, The U.S. Government, Theology

David Ould–The Diocese of Bathurst Loses Major Court Case and Faces Possible Bankruptcy

The court found that the Bank had a contract with the Diocese, as represented by the Bishop in Council and that there was a real guarantee made to honour the loan. Further, the court found that the BiC has an obligation to promote the necessary ordinances to levy the funds required (i.e. general diocesan assets including, if necessary, church buildings and properties should be sold to make good the debt).

This obviously puts the diocese in a dire position. It is widely acknowledged that it will be unable to meet these debts and continue to function in any general sense as it currently does. So where to from here?

It’s less than 24 hours since the judgement was passed down but I’ve been able to canvas a range of responses from senior and informed figures in the Anglican Church of Australia.

Amongst many there is a genuine sorrow for the diocese which is now facing a major crisis, and also for Bishop Ian Palmer who is not in perfect health. But options are limited. This will now be a test of the national church’s understanding of its own mutuality. To what extent should other dioceses get involved to help out? What role should the Primate or the General Synod take? When the crisis first developed a financial advisory group went to meet with then Bishop Hurford. They were, it’s fair to say, sent packing. More recently at a General Synod Standing Committee meeting one member urged the Standing Committee to “either send a condolence card or stand shoulder to shoulder”. But which will it be?

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Posted in * Anglican - Episcopal, * Christian Life / Church Life, * Culture-Watch, * Economics, Politics, * International News & Commentary, Anglican Church of Australia, Anglican Provinces, Australia / NZ, Economy, Ethics / Moral Theology, Law & Legal Issues, Parish Ministry, Religion & Culture, Stewardship, The Banking System/Sector, Theology

(FT) US banks build defences against economic downturn

Wall Street’s biggest banks are beginning to build their defences against downturns, signalling an end to the steady thinning of reserves that has helped boost profits in the past five years.

Tapping into reserves set aside for bad loans has become a reliable source of income for the banks in the post-crisis environment, allowing them to offset the effects of weak demand and ultra-low interest rates. Regulators let lenders dip into reserves in this way if they can argue that an improving outlook makes losses less likely.

But the practice is expected to have a limited impact on the banks’ third-quarter profits, which begin to be presented this week, because reserves have been run down about as far as they can go.

While some banks with plump cushions of reserves could still make net reductions, others are at an “inflection point,” said Jennifer Thompson, an analyst at Portales Partners in New York. Lenders with big exposures to energy could see “dramatic” increases in reserves, she said, while related sectors such as materials, commodities and industrials also look vulnerable to rises.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, America/U.S.A., Consumer/consumer spending, Corporations/Corporate Life, Economy, Ethics / Moral Theology, Globalization, History, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Personal Finance, The Banking System/Sector, Theology

Archbishop Justin Welby's sermon at commissioning of Church Credit Champions

Those of you who are shortly going to be commissioned as Church Credit Champions have heard God’s call, as the whole church has in recent years, to be a church of the poor for the poor; to seek justice and the common good for all in our society.

You have set up credit union access points in your churches, brought new people onto the boards of local credit unions, supported people struggling with debt through signposting them to debt advice resources.

You have seen the need, and you have met it with love, grace and hope.

We all know that the Christian relationship with money is, at best, slightly ambivalent. We recognise when it’s got the wrong place, but we find it quite hard to find the right place.

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Posted in * Anglican - Episcopal, * Christian Life / Church Life, * Culture-Watch, * Economics, Politics, * International News & Commentary, --Justin Welby, Archbishop of Canterbury, Economy, England / UK, Ethics / Moral Theology, Ministry of the Ordained, Parish Ministry, Personal Finance, Preaching / Homiletics, Religion & Culture, The Banking System/Sector, Theology

Archbishop Welby commissions Credit Champions to help churches support people struggling with money

The church has heard a fresh call to be “a church of the poor for the poor” in recent years, the Archbishop of Canterbury said last night as he commissioned volunteers to help churches engage with issues of credit and debt in their communities.

Speaking during a special service at St George-in-the-East in Shadwell, London, the Archbishop told more than 50 volunteers ”“ who have taken part in a pilot scheme in London, Southwark and Liverpool dioceses ”“ that they had “seen the need, and met it with love, grace and hope.”

The first phase of the Archbishop of Canterbury’s Church Credit Champions Network is on course to secure benefits worth over £2million for local communities.

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Posted in * Anglican - Episcopal, * Culture-Watch, * Economics, Politics, * International News & Commentary, --Justin Welby, Archbishop of Canterbury, Consumer/consumer spending, Economy, England / UK, Ethics / Moral Theology, Personal Finance, Religion & Culture, The Banking System/Sector, Theology

More Foreclosures, this time by Hedge Funds

Private equity and hedge fund firms have bought more than 100,000 troubled mortgages at a discount from banks and federal housing agencies, emerging as aggressive liquidators for the remains of the mortgage crisis that erupted nearly a decade ago.

As the housing market nationwide recovers, this is a dark corner from which banks, stung by hefty penalties for bungling mortgage modifications and foreclosures, have retreated. Federal housing officials, for the most part, have welcomed the new financial players as being more nimble and creative than banks with terms for delinquent borrowers.

But the firms are now drawing fire. Housing advocates and lawyers for borrowers contend that the private equity firms and hedge funds are too quick to push homes into foreclosure and are even less helpful than the banks had been in negotiating loan modifications with borrowers. Federal and state lawmakers are taking up the issue, questioning why federal agencies are selling loans at a discount of as much as 30 percent to such firms.

Read it all from the front page of today’s New York Times.

Posted in * Culture-Watch, * Economics, Politics, Corporations/Corporate Life, Economy, Ethics / Moral Theology, History, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Law & Legal Issues, Personal Finance, Stock Market, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, Theology

Head of Church of England’s task force on credit unions urges wealthy to lend to the poor

Sir Hector Sants is calling upon the wealthy to lend to credit unions and help run co-operatives in an attempt to raise their profile and fill the vast gap left by the shrinking payday lending sector.

The former chief executive of the City watchdog was appointed by the Archbishop of Canterbury last year to lead the Church of England’s task force on credit unions, but said they need greater support to help borrowers seeking short-term loans.

In an interview with FT Money, Sir Hector said: “Join a credit union ”” it doesn’t have to be your sole bank ”” and deposit money, which can then be lent out. There are often good terms if you need a loan.”

Read it all from the FT.

Posted in * Anglican - Episcopal, * Culture-Watch, * Economics, Politics, * International News & Commentary, --Justin Welby, Anglican Provinces, Anthropology, Archbishop of Canterbury, Church of England (CoE), Economy, England / UK, Ethics / Moral Theology, Pastoral Theology, Personal Finance, Poverty, Religion & Culture, The Banking System/Sector, Theology

(FT) Sheffield sets up finance broker backed by the C of E to take on high interest lenders

Sheffield Money will vet companies offering loans of up to £7,500, credit for white goods, savings and bank accounts and provide independent money and debt advice.
It is backed by the Church of England, which is setting up its own credit union, business leaders and companies such as Frees, which offers basic bank accounts to people with poor credit history.
Rev Peter Bradley, dean of Sheffield cathedral and chairman of Sheffield Money, said: “Sheffield Money is a bold and innovative solution to the problem of high-cost credit in our city.
“More people are struggling to make ends meet and for many, trapped in a cycle of borrowing more to cover extortionate loan repayments, this becomes a living nightmare.”

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Posted in * Anglican - Episcopal, * Culture-Watch, * Economics, Politics, Anglican Provinces, Anthropology, Church of England (CoE), Consumer/consumer spending, Economy, Ethics / Moral Theology, Personal Finance, Religion & Culture, The Banking System/Sector, Theology

(Bloomberg) France’s Hollande Proposes Creation of Euro-Zone Government

French President Francois Hollande said that the 19 countries using the euro need their own government complete with a budget and parliament to cooperate better and overcome the Greek crisis.

“Circumstances are leading us to accelerate,” Hollande said in an opinion piece published by the Journal du Dimanche on Sunday. “What threatens us is not too much Europe, but a lack of it.”

While the euro zone has a common currency, fiscal and economic policies remain mostly in the hands of each member state. European Central Bank President Mario Draghi made a plea this week for deeper cooperation between the euro members after political squabbles over Greece almost led to a rupture in the single currency.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, History, Politics in General, The Banking System/Sector, Theology

(Economist Erasmus Blog) The euro, theology and values–The meaning of redemption

When big questions, like the future of Europe, hang in the balance, it can be tempting to toy with grand theories about the ways in which religion affects culture and economics. A famous one was put forward by Max Weber (pictured), who posited a link between capitalism and Protestant ideas of guilt and salvation. Such theories usually contain a grain of truth, but religious determinism shouldn’t be pushed too far because there are always exceptions.

Still, as religious-determinist theories go, an interesting one was put forward by Giles Fraser, a well-known left-wing priest of the Church of England, in a recent radio broadcast. He suggested that behind the financial standoff between Greece and Germany, there was a theological difference (between western and eastern Christians) in the understanding of how humans are reconciled with God.

As Mr Fraser recalled, traditional Protestant and Catholic teaching has presented the self-sacrifice of Christ as the payment of a debt to God the Father. In this view, human sinfulness created a debt which simply had to be settled, but could not be repaid by humanity because of its fallen state; so the Son of God stepped in and took care of that vast obligation. For Orthodox theologians, this wrongly portrays God the Father as a sort of heavenly debt-collector who is himself constrained by some iron necessity; they prefer to see the passion story as an act of mercy by a God who is free. Over-simplifying only a little, Mr Fraser observed: “the idea that the cross is some sort of cosmic pay-back for human sin [reflects] a no-pain-no-gain obsession with suffering,” from an eastern Christian viewpoint.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Christology, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, G20, Germany, Greece, Politics in General, Religion & Culture, Soteriology, The Banking System/Sector, Theology

(Globe and Mail) Greece bailout deal keeps country in the euro, but for how long?

Greece has received a tentative reprieve from exiting the euro, but the harsh austerity demands piled onto the recession-damaged country may still ultimately force it out the door, economists say.

Some of them think the chances of a Greek exit form the euro ”“ Grexit ”“ have not in any way diminished now that Greece and its creditors have tentatively approved a three-year, €86-billion bailout package that will boost Greece’s debt, increase taxes and trigger privatizations at what will likely be fire-sale prices.

In a note published Monday, Manulife chief economist Megan Greene said the deal, if approved by both sides and the national parliaments of the euro zone countries “will almost certainly be a failure for both political and economic reasons. The immediate risk of Grexit may be slightly lower following the summit conclusions this weekend, but the overall risk of Grexit is materially higher.”

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Posted in * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Greece, Politics in General, The Banking System/Sector, Theology

(FT) Wolfgang Münchau–Greece’s brutal creditors have demolished the eurozone project

The fact that a formal Grexit may have been avoided for the moment is immaterial. Grexit will be back on the table when you have the slightest political accident ”” and there are still many things that could go wrong, both in Greece and in other eurozone parliaments. Any other country that in future might challenge German economic orthodoxy will face similar problems.

This brings us back to a more toxic version of the old exchange-rate mechanism of the 1990s that left countries trapped in a system run primarily for the benefit of Germany, which led to the exit of the British pound and the temporary departure of the Italian lira. What was left was a coalition of countries willing to adjust their economies to Germany’s. Britain had to leave because it was not.

What should the Greeks do now? Forget for a moment the economic debate of the last few months, over issues such as the impact of austerity or economic reforms on growth, and ask yourself this simple question: do you really think that an economic reform programme, for which a government has no political mandate, which has been explicitly rejected in a referendum, that has been forced through by sheer political blackmail, can conceivably work?

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Germany, Globalization, Greece, History, Politics in General, The Banking System/Sector, Theology

(AP) Greece reaches deal with creditors, avoids euro exit

Greece reached a deal with its European creditors Monday, pledging stringent austerity to avoid an exit from the euro and the global financial chaos that could have followed.

The deal calls for Greeks, already reeling from harsh measures and economic decline, to cut back even further in exchange for more loans without which its financial system would surely collapse. The deal, which still needs approval from Greece’s parliament, will be the country’s third bailout in five years.

To get to a deal, Greek Prime Minister Alexis Tsipras had to overcome the fundamental mistrust of many of his allies among the 18 other countries that use the euro, known as the eurozone. Just a week earlier, at his urging, Greeks had voted in a referendum to reject many of the measures he agreed to Monday, and the deal forced him to renege on many of his election promises.

“We managed to avoid the most extreme measures,” Tsipras said. “Greece will fight to return to growth and to reclaim its lost sovereignty.”

Read it all.

Update: Politico also has a summary article on the deal there.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Globalization, Greece, Politics in General, The Banking System/Sector, Theology

(Telegraph) Greek deal in sight as Germany bows to huge global pressure for debt relief

The contours of a deal on Sunday are starting to emerge.

Syriza has requested a three-year package of loans from the eurozone bail-out fund (ESM) – perhaps worth as much as €60bn ”“ and is reportedly ready give ground on tax rises and pension cuts.

Germany’s subtle shift in position comes as the United States, France, and Italy joined in a united call for debt relief, buttressed by a crescendo of emphatic statements by Christine Lagarde, the head of the International Monetary Fund.

“Greece is clearly in a situation of acute crisis, which needs to be addressed seriously and promptly. We remain fully engaged in order to find a solution to restore stability, growth and debt sustainability,” said Ms Lagarde.

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Posted in * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Germany, Greece, Politics in General, The Banking System/Sector, Theology

([London] Times) Merkel faces rebellion in Berlin over Greek bailout

More than 100 MPs in Angela Merkel’s conservative party group have already written Greece out of the euro, even as its government scrambles to cobble together a plan acceptable to creditors.

The size of the rebellion in her own ranks ”” the Christian Democratic Union and Christian Social Union faction ”” limits the German chancellor’s ability to soften her position against Greece and all but kills off its hope of a huge debt write-off as part of the new bailout plan it needs to prevent a banking collapse.

Alexis Tsipras, the Greek prime minister, has been given until midnight tonight to submit plans justifying another multibillion-euro loan deal to keep Greece afloat or face a future outside the euro, with the EU already preparing humanitarian aid for the Greek people.

Announcing its intention yesterday to seek a three-year bailout, Greece said it wanted to make its €323 billion debt mountain “sustainable and viable over the long term”, code for the cut of 30 per cent demanded by Mr Tsipras.

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Posted in * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Germany, Greece, Politics in General, The Banking System/Sector, Theology

(London Times) Make concessions by tomorrow or you’re out, Greece told

The German Red Cross said today it was willing to rush medical and other humanitarian aid to Greece as the country’s economy teetered on the brink of collapse.

“We are ready in every respect,” spokesman Dieter Schutz told Leipziger Volkszeitung newspaper. “Pensioners, the poor, the sick and refugees” have been hit hardest, he said.

Donald Tusk, the president of the European Council, who will chair the summit said: “I have no doubt that this is the most critical moment in the history of the EU. This will affect all Europe also in the geopolitical sense.”

President Hollande of France, the most optimistic of eurozone leaders on finding a solution, said: “What is at stake is the place of Greece within the EU and therefore the eurozone.”

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(AI) Walter Russell Mead–After The “No” Vote, Soft Grexit Landing Now EU’s Best Option

There are, as many European and American writers have been commenting lately, sound geopolitical reasons to prevent the worst from happening in Greece. Migration issues, NATO issues, energy issues, terrorism, Russia: an angry, inflamed, suffering and radicalized Greece on a kind of Venezuelan path to national destruction could make life much more difficult for Europeans and Americans both. These considerations should be enough to command some attention and resources from policymakers on both sides of the Atlantic sufficient to avert worst case scenarios for the Greek people.

For Grexit to be a step forward rather than a step back, Western and Greek leaders need to become more creative and forward-looking. Washington needs to stop bleating platitudes about the evils of austerity and to start thinking hard about bolstering an alliance that remains critical to its global position; Brussels and Berlin need to move beyond anger at Greek tactics to a sober calculation of Europe’s interests; the Greeks need to reflect on the cost of being represented at a grave hour of national crisis by inexperienced politicians who none of their counterparts in Europe trust or respect.

But Brussels and Berlin (and Paris, Rome and Madrid) need to realize something else. Greece’s problems under the euro have been worse than anyone else’s, but Greece is not totally unique. There are deep design flaws in the euro and the common currency has not worked nearly as well as any of its proponents hoped. The discussion over the future of Greece needs to be delinked from the discussion over the future of the euro””but that doesn’t mean that the future of the euro doesn’t need to be discussed.

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(PS) Mark Roe–Europe and Greece on the Brink

…the risks have not been eliminated. The margin for error for the major banks and other financial institutions is narrow. Because they are still not strongly capitalized, modest losses from direct defaults and indirect losses from companies with business in Greece can threaten bank equity, causing bankers to cut back on lending. A few miscalculations in a major institution could have substantial repercussions. Making matters worse, central bankers have only a limited capacity to buoy the economy, as interest rates are still near zero.

The second channel through which risk and loss can spread from Greece is other heavily indebted countries, like Spain and Italy. So far, the financial markets have not panicked over the ability of these countries to repay their bonds. But a shift in the political situation ”“ especially in Spain, where the left-wing Podemos party is doing well in the polls ”“ could change that in an instant.

Finally, a Greek default and exit from the eurozone could unleash unpredictable political forces with a knock-on effect on the European economy. After all, it was the first wave of austerity in Greece that led to the election of Syriza, a left-wing party that few had expected would ever govern.

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(NPR) Hours From Greek Bailout Vote, 2 Sides Evenly Divided

Greece’s prime minister has put his political clout behind the “no” camp in a referendum to decide whether the country should accept the terms of an international bailout. But the people appear to be evenly split on the issue, according to two new opinion polls.

One survey, conducted by the respected ALCO institute just 48 hours before the referendum that could decide Greece’s economic fate and future in the eurozone, gives the “yes” camp 44.8 percent against 43.4 percent for the “no” side, according to Reuters.

But a second poll, conducted by Public Issue and published in the ruling party’s newspaper, reports a 0.5-percentage-point lead for those opposed to the bailout.

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