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.”

Read it all.

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?

Read it all.

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.

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.

Read it all.

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.

Read it all 9requires subscription).

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.”

Read it all (requires subsciption).

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.

Read it all.

…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.

Read it all.

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.

Read it all.

In the past few days, Prime Minister Alexis Tsipras of Greece has blown up negotiations with European creditors on staving off default, then retreated and accepted more or less the same terms, only to have European leaders tell him the offer had expired.

Greeks are supposed to vote on a referendum this weekend, but no one there or elsewhere seems sure what they will be asked, or what the consequences will be for voting yes or no.

And European leaders here and in Berlin and Paris have been saying distinct ”” sometimes directly contradictory ”” things about whether there is a bailout deal for Greece still on the table, and whether they want Greece to hold its referendum before they can renew discussions about it.

Read it all.

The danger now is that, just as Greece was once a trailblazer in linking a democratic transition to the European project, so it may become an emblem of a new and dangerous process: the disintegration of the EU. The current crisis could easily lead to the country leaving the euro and eventually the union itself. That would undermine the fundamental EU proposition: that joining the European club is the best guarantee of future prosperity and stability.

Even if an angry and impoverished Greece ultimately remains inside the tent, the link between the EU and prosperity will have been ruptured. For the horrible truth is dawning that it is not just that the EU has failed to deliver on its promises of prosperity and unity. By locking Greece and other EU countries into a failed economic experiment ”” the euro ”” it is now actively destroying wealth, stability and European solidarity.

The dangers of that process are all the more pronounced because Greece is in a highly strategic location. To the south lies the chaos and bloodshed of Libya; to the north lies the instability of the Balkans; to the east, an angry and resurgent Russia.

Read it all.

Inevitably fragilities remain. Europe is deep in debt and dependent on exports. Japan cannot get inflation to take hold. Wage growth could quickly dent corporate earnings and valuations in America. Emerging economies, which accounted for the bulk of growth in the post-crisis years, have seen better days. The economies of both Brazil and Russia are expected to shrink this year. Poor trade data suggest that Chinese growth may be slowing faster than the government wishes.

If any of these worries causes a downturn the world will be in a rotten position to do much about it. Rarely have so many large economies been so ill-equipped to manage a recession, whatever its provenance, as our “wriggle-room” ranking makes clear…. Rich countries’ average debt-to-GDP ratio has risen by about 50% since 2007. In Britain and Spain debt has more than doubled. Nobody knows where the ceiling is, but governments that want to splurge will have to win over jumpy electorates as well as nervous creditors. Countries with only tenuous access to bond markets, as in the euro zone’s periphery, may be unable to launch a big fiscal stimulus.

Read it all.

Opponents of payday lending have a new ally in the fight against predatory lenders: Leaders from the 15.7-million member Southern Baptist Convention (SBC).

“We cannot sit by idly while some of the poorest among us are preyed on by people simply looking for a quick buck with no regard for the devastation they cause in the lives of others,” said Barrett Duke, vice president for public policy and research at the SBC’s Ethics and Religious Liberty Commission (ERLC).

The ERLC is one of the founding members of the newly-formed Faith for Just Lending coalition, which launched earlier this month. Among other members are the Cooperative Baptist Fellowship, the National Baptist Convention USA, the National Association of Evangelicals (NAE), the National Latino Evangelical Coalition, and the PICO National Network.

“While representing distinct institutions with different histories and practices, these faith organizations hold a shared conviction that Scripture speaks to the problem of predatory lending””condemning usury and teaching us to respect the God-given dignity of each person and to love our neighbors rather than exploit their financial vulnerability,” the group stated in a press release. “They believe that just lending is a matter of biblical morality and religious concern.”

Read it all.

Archbishop Justin Welby said: “Helping people to get out of debt, and freeing them from the anxiety and exploitation that often goes with being in debt, is part of the Church’s commitment to human flourishing.

“I welcome this new training resource to help local churches play a vital role in encouraging people to seek assistance earlier and to make use of the many free debt advice services that are available.”

Read it all and take a look at the video.

Ever since the “big bang” deregulation of Britain’s financial markets enacted by Margaret Thatcher in 1986, the UK has followed a liberalising trajectory that was accompanied by a public enthusiasm for wealth more commonly associated with the US.

During that time, London grew into a global financial centre that has become the favoured residence of the world’s super rich. By a wide margin, it now boasts more billionaires per head than any city in the world. But this election has raised the question of whether British attitudes towards wealth and the wealthy are now shifting.

The campaign has aired popular frustration over inequality and affordable housing, the bashing of bankers and growing resentment towards a London that other Brits regard as a distant haven of rapacious hedge funds. The common thread seems to be a suspicion that what is good for the rich may not be so good for everyone else.

“There is no doubt the political rhetoric has changed ”” above all from the Labour leadership,” said Ben Rogers, director of the Centre for London think-tank.

Read it all.

The management board of the debt-ridden Anglican Diocese of Bathurst in western New South Wales has admitted huge loans weren’t properly examined before being approved.

The Commonwealth Bank is suing the Anglican Diocese of Bathurst for outstanding debts of $40 million dating back to 2007.

The diocese is being sued in the Supreme Court in Sydney and is responsible for roughly a third of all Anglican parishes across the state ranging from Bathurst to Bourke.

The actions of three governing groups within the diocese are being examined about their roles in the massive debt.

Read it all.

The World Bank is teaming up with global religious leaders in a 15-year effort to end extreme poverty by 2030.

About 35 religious groups worldwide, including Bread for the World, Islamic Relief International, the Religious Action Center of Reform Judaism and Sojourners, endorsed the call to action. Supporters include Christians, Jews, Muslims, Baha’is and others.

“Our approach to this staggering need must be holistic, rooted in the spiritual visions of our respective faiths, and built on a shared recognition of the intrinsic dignity and value of every life on Earth,” the call said.

Read it all.

As our economy continues to improve, there is a crushing weight holding many back: payday loans. While state and local leaders have taken up the cause in certain jurisdictions, this is a national problem that requires Congress to act. Unscrupulous lenders lure those who are already facing financial hardship into a debt trap from which it is very difficult to escape.

Drawn by slick marketing, desperate borrowers are induced to accept unfavorable terms they may not fully understand. The cost of a typical payday loan exceeds 300 percent annual percentage rate. By requiring full repayment from the next paycheck, payday lenders virtually guarantee that the borrower will be forced to ask for a new loan, with additional fees and interest, to pay back the old one.

This violates the underwriting standards applied to virtually every other type of loan. Payday loans perpetuate a cycle of debt, poverty and misery.

Three quarters of the fees payday lenders bring in come from borrowers, mostly low income, who have taken out 10 or more loans in a single year. More than half of all payday loans are renewed or rolled over so many times that consumers wind up repaying at least twice the amount they originally borrowed.

Read it all, another from the long queue of should-have-already-been-posted material.

The Revd Antony MacRow-Wood has been announced as the new Archdeacon of Dorset, succeeding Stephen Waine who has gone to be Dean of Chichester.

Antony is the Team Rector of the North Poole Ecumenical Team, involving Methodist, United Reformed Church and Baptist, as well as Church of England input; and parish priest at St George’s, Oakdale, in the town.

Speaking on the announcement of his appointment, Antony said, “It is an immense privilege to be asked to become the next Archdeacon of Dorset and rather like the Disciples in this Sunday’s Gospel I’m still a little ”˜disbelieving with joy’. I’m really looking forward to getting to know the people and clergy of the Archdeaconry and continuing to serve this Diocese. These are exciting times for the Church and mission will be a particular priority for me.”

Read it all.

Mario Draghi said the euro area was better equipped than it had been in the past to deal with a new Greek crisis but warned of “uncharted waters” if the situation were to deteriorate badly.

The European Central Bank president called for the resumption of detailed discussions aimed at resolving the country’s debt woes and urged the Greek authorities to bring forward proposals that ensured fairness, growth, fiscal stability, financial stability.

Read it all.

Tumbling interest rates in Europe have put some banks in an inconceivable position: owing money on loans to borrowers.

At least one Spanish bank, Bankinter SA, the country’s seventh-largest lender by market value, has been paying some customers interest on mortgages by deducting that amount from the principal the borrower owes.

The problem is just one of many challenges caused by interest rates falling below zero, known as a negative interest rate. All over Europe, banks are being compelled to rebuild computer programs, update legal documents and redo spreadsheets to account for negative rates.

Read it all.

The western church typically criticises the eastern view for having a “free lunch” view of salvation. No pain, no gain, insists Anselm. The eastern church says that the west fetishises suffering and is more committed to some iron logic of cosmic necessity than to God for whom all things are possible.

Atheists such as Alexis Tsipras, the Greek leader, may think both of these are fantasies. But for present purposes that’s beside the point. It’s worth recognising that these two completely different stories support two contrasting moral worldviews and different attitudes towards economics in general and capitalism in particular. Tsipras ”“ like me ”“ is very much more in the Greek Orthodox camp when it comes to salvation. And the Lutheran minister’s daughter Angela Merkel is very much in the western one. He wants to leap free from death-dealing debt. She believes it must be paid back, no matter how much blood and pain is involved.

Read it all.

Raghuram Rajan got it started. On Jan. 15, the governor of the Reserve Bank of India jolted traders on Mumbai’s Dalal Street by cutting interest rates. The surprise was the timing of the announcement: Rajan wasn’t supposed to deliver a policy statement for another 19 days.

The weirdness continued that same day””in Switzerland, of all places. For three years, the Swiss National Bank had steadily bought euros on currency markets to keep the country’s franc from surging in value relative to the euro, and thereby choking off growth. Unorthodox, yes; but global financial markets had grown accustomed to the regular renewal of the bank’s stance. Without warning, however, the Swiss cut the franc’s tether. Swiss National Bank chairman Thomas Jordan also set the benchmark Swiss lending rate at negative 0.75%. In theory, a lower rate should put downward pressure on the franc; not enough in this case, as the franc’s value shot up by 18% in the days that followed. Many hedge funds bled red.

And on it went. The Danes cut interest rates four times in the span of a few weeks. As this issue of the magazine neared deadline, China’s central bank cut rates by a quarter of a percentage point and Poland slashed them by a half point. In the first 60 days of 2015, some 20 central banks had executed stimulus measures.

Read it all.

Rarely have investors lavished so much attention on a single word. After a two-day meeting, the Federal Reserve dropped the word “patient” from its monetary-policy statement. Why the fuss over this single word?

“Patient”, in Fed-speak, indicates that it will hold off increasing interest rates for at least two meetings. Now the word has been ditched, at subsequent meetings (most probably in June) we could see rates move off from rock-bottom for the first time since 2008.

The last rate-tightening cycle began over a decade ago. The Fed feels comfortable, it seems, with raising interest rates now that unemployment has moved towards 5.5%. The latest forecasts from the Fed show that it expects the economy to expand by 2.3%-2.7%, a slight fall from the projections in December but still one of the strongest in the OECD, a club of mostly rich countries.

Read it all.

[At the]International Bankers’ banquet on Wednesday night…the evening’s highlight was the speech by (old Etonian) Archbishop of Canterbury, a former school friend of livery master Mark Seligman. Justin Welby mused that “we all inherit baggage from our predecessors” and reassured the audience: “We [the Church] know more about losing the plot than any of you”. Banks should “change the way they operate and interact.” The impact was immediate. One top banker in the audience, who won a sweepstake on the length of the Archbishop’s speech (16m 21s), was about to pocket the winnings. He then thought better of it. And offered the money to charity.

Read it all.

…look where Greece has ended up after five years of crisis resolution. It has had one of the worst performances in economic history; yet we have just concluded an extension of the same policy.

Can this be sustainable? The pragmatists in Europe’s chancelleries say they can roll over loans indefinitely at very low interest rates. Economically, this is the equivalent of a debt writedown; yet politically it is easier to deliver because you do not need to recognise losses. The equivalent statement in a military conflict would be: if you renew a ceasefire often enough, you end up with peace.

This type of argument is not only immoral and dishonest. It also does not work. While you play this game of ex­tend-and-pretend, the real economy implodes: austerity has caused a meltdown in income and employment. Monetary policy mistakes caused a fall in eurozone-wide inflation rates that made it impossible for Greece and other periphery countries to improve the competitiveness they lost in the early years of monetary union.

If the EU deals with Ukraine in the same way it dealt with Greece, you can expect to see a parallel development in a few years.

Read it all.

At first, Eva Christiansen barely noticed the number. Her bank called to say that Ms. Christiansen, a 36-year-old entrepreneur here, had been approved for a small business loan. She whooped. She danced. A friend took pictures.

“I think I was so happy I got the loan, I didn’t hear everything he said,” she recalled.

And then she was told again about her interest rate. It was -0.0172 percent ”” less than zero. While there would be fees to pay, the bank would also pay interest to her. It was just a little over $1 a month. But still.

These are strange times for European borrowers, as if a wormhole has opened up to a parallel universe where the usual rules of financial gravity are suspended.

Read it all from the NYTimes Dealbook.

After analyzing the record to find that TEC had waived any right to claim that there were separate funds in the single account, the Court observed:

During the argument on these issues, TEC argued that it did not freeze the account, PNC did. To say this argument lacks merit would be charitable. While TEC, in a very literal sense, is correct on “who” froze the account, the “why” is the more important issue. PNC froze the account because it received a letter from counsel for TEC which threatened to hold PNC liable if funds were disbursed.

The court finds, based upon this record, that the continued threat made to PNC Bank to hold it accountable if funds were disbursed and the continued attempt to collaterally attack the clear order of this court dated October 9, 2013 even after this case had run its course through the appellate process constitutes bad faith, is not grounded in fact or existing law and has resulted in needless, ongoing and expensive litigation.

Accordingly, the court grants the request of the Plaintiffs for fees incurred from December 30, 2014 onward pursuant to Supreme Court Rule 137.

There is much more to savor in the Court’s order. It is gratifying to have a trial judge (not the one who rendered the original Quincy decision) see so clearly through TEC’s bullying tactics, and to deal with them accordingly.

Read it all and make sure to follow the link to the full order.

About a year and a half ago, [Nina} McCarthy took out another, different kind of loan. She went to her pastor, Rodney Hunter, at Wesley Memorial United Methodist Church in Richmond. Hunter helped her borrow $700 so she could make a dent in paying off her mounting credit card debt, then about $8,000.

Here’s how it worked: McCarthy’s church offered funds as collateral so she could qualify for a loan through the Virginia United Methodist Credit Union. McCarthy agreed to repay the loan at an annualized interest rate of about 6 percent ”“ meaning monthly payments of $25 for about 2 1/2 years, drawn right out of her bank account.

McCarthy is one month behind on the church loan, but she’s confident she’ll catch up this month. “I’m real grateful for it,” she said.

The program is called the Jubilee Assistance Fund. In 7 1/2 years, it has helped parishioners of the United Methodist Church secure 14 loans ”“ from $500 to $8,800 ”“ according to Carol Mathis, chief executive of the credit union.

Read it all.

The Conservative party and HSBC are not the only organisations wondering about possible reputational damage from an association with Stephen Green. For the Church of England, whose General Synod met in London this week, he has become a cause of controversy.

Lord Green, an ordained Anglican priest, chaired a report on leadership training for senior clergy that has proved unpopular with some church members, who voiced their concerns at the synod.

“Talent Management for Future Leaders and Leadership Development for Bishops and Deans: A New Approach”, published late last year, has been criticised for its heavily corporate language and for failing to include ordained women or theology academics on its 12-strong panel.

Canon Giles Fraser, priest-in-charge at St Mary’s, Newington, south London, called the report “theologically inept and an insult to the way I work as a parish priest”.

Read it all.