Perspectives on the global economic changes

[nandakumar]

Thomas Piketty on Greek debt crisis in an interview with the German newspaper Die Zeit. He makes two points. It doesn't lie in German mouth to preach austerity to others when it had obtained debt waiver both after the First World War and the Second. Two, Greek exit runs the risk of completely unravelling the efforts of the last few decades to have a unfied Europe and slide back to the extreme nationalism of the 19th centrury.
https://medium.com/@gavinschalliol/thom ... 5e7add6fff

[amit]

^Finland is in doo-doo actually....Nokia, Russia sanctions, paper industry all dragging it down.

Do you have data to back this up?

Last I checked Finland had a healthy debt to GDP raio of 59.3 per cent in 2014, one of the healthiest in the Euro zone, well below the Euro zone average of 86.8 per cent.

Nokia, in its new avatar as Nokia Networks under Rajiv Suri is doing quite well as a telco equipment services provider. FYI in 2013 Nokia completed the acquisition of the Siemens stake in the erstwhile Nokia Siemens Network to become Nokia Networks and is now one of the biggest telecom equipment suppliers in the world.

Finland is one of the better off countries in the Euro zone despite its small size and proximity to Russia.

[amit]

Thomas Piketty on Greek debt crisis in an interview with the German newspaper Die Zeit. He makes two points. It doesn't lie in German mouth to preach austerity to others when it had obtained debt waiver both after the First World War and the Second. Two, Greek exit runs the risk of completely unravelling the efforts of the last few decades to have a unfied Europe and slide back to the extreme nationalism of the 19th centrury.
https://medium.com/@gavinschalliol/thom ... 5e7add6fff

IMO Piketty is being too clever by half. The circumstances of the debt waiver that Germany got was not because they spent more than they earned but because of the war. And in terms of value of money as a percentage of the population it was peanuts compared to Greece.

As somebody wrote 11 million people over spent more than 320 billion Euro, blood hell!

[Arjun]

Do you have data to back this up?

Last I checked Finland had a healthy debt to GDP raio of 59.3 per cent in 2014, one of the healthiest in the Euro zone, well below the Euro zone average of 86.8 per cent.

Nokia, in its new avatar as Nokia Networks under Rajiv Suri is doing quite well as a telco equipment services provider. FYI in 2013 Nokia completed the acquisition of the Siemens stake in the erstwhile Nokia Siemens Network to become Nokia Networks and is now one of the biggest telecom equipment suppliers in the world.

Finland is one of the better off countries in the Euro zone despite its small size and proximity to Russia.

http://www.theguardian.com/world/2015/a ... mber-nokia

http://www.reuters.com/article/2015/04/ ... JK20150412

Debt-GDP ratio may not be too bad...but its been in a long recession and unemployment rates are high.

[panduranghari]

Will Britishistan be going to go out of the Euro zone?

They are part of European Union. Not part of Eurozone.

[amit]

Do you have data to back this up?

Last I checked Finland had a healthy debt to GDP raio of 59.3 per cent in 2014, one of the healthiest in the Euro zone, well below the Euro zone average of 86.8 per cent.

Nokia, in its new avatar as Nokia Networks under Rajiv Suri is doing quite well as a telco equipment services provider. FYI in 2013 Nokia completed the acquisition of the Siemens stake in the erstwhile Nokia Siemens Network to become Nokia Networks and is now one of the biggest telecom equipment suppliers in the world.

Finland is one of the better off countries in the Euro zone despite its small size and proximity to Russia.

http://www.theguardian.com/world/2015/a ... mber-nokia

http://www.reuters.com/article/2015/04/ ... JK20150412

Debt-GDP ratio may not be too bad...but its been in a long recession and unemployment rates are high.

I suggest you don't go by newspaper reports especially a leftist rag like The Guardian. There are plenty of stats available. I suggest you go through them and then draw your own conclusions.

As an FYI the Euro zone unemployment was 11.1 percent in May this year. Finland's 17 percent isn't that bad by comparison. More important the Finns have a consensus on frugality that should tide them over. They have been taking a haircut which is why they are mad at Greece.

[amit]

Will Britishistan be going to go out of the Euro zone?

They are part of European Union. Not part of Eurozone.

My bad. I meant the EU not Euro zone

[Arjun]

I suggest you don't go by newspaper reports especially a leftist rag like The Guardian. There are plenty of stats available. I suggest you go through them and then draw your own conclusions.

As an FYI the Euro zone unemployment was 11.1 percent in May this year. Finland's 17 percent isn't that bad by comparison. More important the Finns have a consensus on frugality that should tide them over. They have been taking a haircut which is why they are mad at Greece.

I know the stats, Amit. The articles were meant to give you the context.

Finland is probably the only non-Southern Europe EU member whose economy continues to be in trouble. To hold it out as a shining example of North European performance is very far from the truth.

You are concentrating on their debt levels, I am focused on economic performance which is far more basic. If the income statement of a firm continues to be poor, you know it is eventually going to affect the Balance Sheet. Same philosophy...

Finland continues to be #1 in Europe (&the world) on quality of institutions on all rankings - but all that institutional quality doesn't seem to have contributed much to diversifying their economy.

[amit]

You did not read properly. I wrote North European FRUGALITY not performance.

[Arjun]

Agreed then. It may be a good example of North European frugality but not the best example of North European economic performance at the current juncture..

[Theo_Fidel]

Finland made a huge bet on Nokia that has imploded. The other thing damaging their budget is the staggering cost over-runs on that Nuclear power plant. They are not growing but otherwise stable. They are highly productive and have better demographics. They will be just fine long term.

Greece is not financially viable the way it is set up at present. GDP continues shrinking. Budget deficits are 15% of GDP and rising. Half the country is soon going to be on the Government pension program and there is no wealth source that can feed this.

Germans are mad that greeks won't cut their entitlements, rather they cut jobs and spending on education , infrastructure, etc. Greeks should raise retirement to 70 years, cut benefits to 1/2 the present level and overnight they will be solvent.

[Satya_anveshi]

better demographics? - Finland's youth unemployment is 35+%;
3 years of recession and not expected to see any good growth for the next 3 years.
Finland's central bank governor, says the country will need stamina if it is to dig its way out of its "grave" situation

[Theo_Fidel]

WRT Greece more numbers.

USA average SS payout : $1200 pm.
Greece average pension payout prior to cuts : $1,400 pm
After cuts average payout : $1,000 pm

Greece, per capita income is 32% of the USA.

I’m reading a report that Greek elderly are still broke because the entire family came to depend on that pension payment. Sons, Daughters, Neice’s, Nephews, Cousins, etc. Everyone living off the government. What happened to kicking your kids out to begin their life. What happened to tough talk with your kids and relatives to stop mooching. The elderly should have made tough decisions when times were flush. Instead they succumbed to the temptation of acting like the cash cow and now despite the heavy payments they have zero savings and are essentially broke.

During the flush times Greek pension payment should never have exceeded $300 pm. This is reality. This where the pension payments need to fall.

I think there is a lesson in this for all countries. Kick your young out there and make them productive or else….

[Vayutuvan]

India also will face this problem as I see that lots of young are dependent on parents' pensions. Most of them do not want to dirty their hands in the fields, mines, or in factories.

IT, softpower projection type work (bolly/kolly/tolly woods, art, music, entertainment) will take one only so far in terms job creation.

[TSJones]

WRT Greece more numbers.

USA average SS payout : $1200 pm.
Greece average pension payout prior to cuts : $1,400 pm
After cuts average payout : $1,000 pm

Greece, per capita income is 32% of the USA.

I’m reading a report that Greek elderly are still broke because the entire family came to depend on that pension payment. Sons, Daughters, Neice’s, Nephews, Cousins, etc. Everyone living off the government. What happened to kicking your kids out to begin their life. What happened to tough talk with your kids and relatives to stop mooching. The elderly should have made tough decisions when times were flush. Instead they succumbed to the temptation of acting like the cash cow and now despite the heavy payments they have zero savings and are essentially broke.

During the flush times Greek pension payment should never have exceeded $300 pm. This is reality. This where the pension payments need to fall.

I think there is a lesson in this for all countries. Kick your young out there and make them productive or else….

This is not a hi-tech, STEM education above all else, country.

It is a country of sun and sea, grape and olive, and....tradition.

And they have paid the price for it with enormous emigration to the new world because there are *no* jobs.

They have lost generations of young people who have left and sought a living somewhere else.

Are there entrepreneurs? Yes, but mainly in the basic stuff, restaurants, tourism and personal services.

There is the sea and shipping. A lot of Greeks are commercial shipping sea captains and officers.

And some Greeks are famous as shipping magnates.

However, there are just no natural resources to speak of other than the sun and sea.

Thus, their dilemma.

[TSJones]

Finland made a huge bet on Nokia that has imploded. The other thing damaging their budget is the staggering cost over-runs on that Nuclear power plant. They are not growing but otherwise stable. They are highly productive and have better demographics. They will be just fine long term.

Greece is not financially viable the way it is set up at present. GDP continues shrinking. Budget deficits are 15% of GDP and rising. Half the country is soon going to be on the Government pension program and there is no wealth source that can feed this.

Germans are mad that greeks won't cut their entitlements, rather they cut jobs and spending on education , infrastructure, etc. Greeks should raise retirement to 70 years, cut benefits to 1/2 the present level and overnight they will be solvent.

the Finns like to make things and they make good workers. they like their alcohol too, but that's a different story. the weather can be absolutely miserable up there.

[panduranghari]

IMF has more to loose if Greece goes into arrears (IMF has already clarified Greece's failure to meet its $1.6b payment is not default, but arrears ). It will set a precedence that will loose IMF even more credibility. It will perhaps make thE OTHER developing countries to think - Hmm if a so called developed European country can f**k over the IMF and Washington is still doing nothing, what have we got to loose. Who can fault that logic. I think Greece will make the payment at the very last minute. Political solutions for economic problems will lead to catastrophic contagion. I do not think IMF would want that, as it will undermine their credibility even more. Greece and IMF will come to an agreement that will permit economic solutions for the current political impasse.

[UlanBatori]

How did Greece live pre WW-2?

Post-WW2, they went through a series of military juntas. What kept the nation going then?
Also, their universities are were fairly well-reputed - lots of Greek engg grads have made it big in the US. True, I can't think of any Greek-engineered products since the Trojan Horse.

But hey, this whole Greece thing is a joke compared to what is happening in China. USA Today likens the situation today to USA 1929. Why aren't BRFis worried?

[ramana]

Grexit is more exciting.

Some of BRF on Twitter are following the China stumble.

Almost 150% of Indian GDP was lost in Chinese stock market!!!!

[TSJones]

How did Greece live pre WW-2?

Post-WW2, they went through a series of military juntas. What kept the nation going then?
Also, their universities are were fairly well-reputed - lots of Greek engg grads have made it big in the US. True, I can't think of any Greek-engineered products since the Trojan Horse.

But hey, this whole Greece thing is a joke compared to what is happening in China. USA Today likens the situation today to USA 1929. Why aren't BRFis worried?

the Chinese financial system is highly regulated and the yuan is limited in convertibility. Thus, the global impact may not be so great. Whut? The Chinese consumers aren't buying so much gold, oil, commodities? Ow, they're killing me with the drop in prices! And they're still desperate to make things for the US? Just awful. Somebody make them stop. I would point out that India is a big customer of China too. Ride the wave India!

But really, yeah there could be a crash. But I'm just not sure what the effect will be globally. I suppose we will soon find out.

[amit]

Agreed then. It may be a good example of North European frugality but not the best example of North European economic performance at the current juncture..

Sorry my earlier replies were brief as I was on the move. Let me expand a bit on my replies.

First off I don't know where The Guardian report got a 17 per cent unemployment rate for Finland. As I say, it's always better to go to the data source rather than depend on third party data.

This is what Eurostat has to say about unemployment data.

Finland unemployment rate in May 2015 was 8.6 % to 9.4 %.

Interestingly France's unemployment rate during the same period was 10.1 % to 10.3 %.

Do you think France is in a bigger doo-doo than Finland?

Theo was right youth unemployment rates are higher but that's a trend through out the Euro zone.

As for the rate for the total population, the youth unemployment rate in the EU-28 sharply declined between 2005 and 2007, reaching its minimum value (15.1 %) in the first quarter 2008. The economic crisis, however, severely hit the young. From the second quarter of 2008, the youth unemployment rate has taken an upward trend peaking in 23.6 % in the first quarter 2013, before receding to 23.1 % at the end of the year. The EU-28 youth unemployment rate was systematically higher than in the euro area between 2000 and mid-2007. Since then and until the third quarter 2010 these two rates were very close. Afterwards the indicator moved more sharply in the EA-18 than in the EU-28, first downwards until mid-2011, then upwards until the end of 2012 . In the middle of 2012 the euro area youth unemployment rate overtook the EU-28 rate, and the gap increased until the end of the year. The gap became even larger in the second part of 2013, when the rate for the euro area went down less than the rate for the EU-28.

But the report also says this:

High youth unemployment rates do reflect the difficulties faced by young people in finding jobs. However, this does not necessarily mean that the group of unemployed persons aged between 15 and 24 is large, as many young people are studying full-time and are therefore neither working nor looking for a job (so they are not part of the labour force which is used as the denominator for calculating the unemployment rate). For this reason, youth unemployment ratios are also calculated, according to a somewhat different concept: the unemployment ratio calculates the share of unemployed for the whole population. Table 1 shows that youth unemployment ratios in the EU are much lower than youth unemployment rates; they have however also risen since 2008 due to the effects of the crisis on the labour market.

Point is the Euro zone is in deep trouble and it's going to take a long while before it gets out of the rut. It is in this context that I said the Northern European nations are better positioned to ride this out than the more profligate Southern European nations. Finland for example with a low Debt to GDP ratio is certainly better positioned than say a Portugal with its 130 per cent Debt to GDP ratio. At the most basic level, Finland would be able to borrow money at much lower rates than Portugal on account of a far better credit rating.

Hope this explains things.

PS: Don't go by all the stuff that's appearing in the Press. This is a hot topic and there is all manner of kite flying going on by both people who are ignorant as well a folks who want to use this incident to further their own agenda. There is a big leftist rump in Europe, for example. Also, there's huge right-wing groupings (just look at who all got voted to the European Parliament) who want to either break up the Euro zone or impose severe restrictions on cross country immigration. All these interest groups are out in full force trying to take advantage of the Greek situation.

[amit]

IMF has more to loose if Greece goes into arrears (IMF has already clarified Greece's failure to meet its $1.6b payment is not default, but arrears ). It will set a precedence that will loose IMF even more credibility. It will perhaps make thE OTHER developing countries to think - Hmm if a so called developed European country can f**k over the IMF and Washington is still doing nothing, what have we got to loose. Who can fault that logic. I think Greece will make the payment at the very last minute. Political solutions for economic problems will lead to catastrophic contagion. I do not think IMF would want that, as it will undermine their credibility even more. Greece and IMF will come to an agreement that will permit economic solutions for the current political impasse.

Call this a CT if you will but I find it very curious that the Chinese stock markets stumbles just when Greece is looking for other options for money and who has the biggest purse in the world nowadays? Who wants to use money to buy influence around the world? Was Putin meeting Alexis Tsipras on behalf of China? Russia doesn't have enough money for itself, let along Greece.

With the stock market mess in its backyard would China use its development bank to bail out Greece?

IMO the Chinese have a lot to learn...

[UlanBatori]

If Greece leaves the EU their only other bailout source is PeeAllSee. In exchange for a small consideration, Greece might allow a small Chinese fleet of aircraft carriers and submarines to establish a base or two in the Mediterranean, and some production facilities to shorten the logistics chain to customers in North Africa and Oirope. Maybe they will produce Euros with a massive printing press. Think about it: a Made By China notation at the bottom of every Euro note.

[amit]

If Greece leaves the EU their only other bailout source is PeeAllSee. In exchange for a small consideration, Greece might allow a small Chinese fleet of aircraft carriers and submarines to establish a base or two in the Mediterranean, and some production facilities to shorten the logistics chain to customers in North Africa and Oirope. Maybe they will produce Euros with a massive printing press. Think about it: a Made By China notation at the bottom of every Euro note.

Yak's milk makes Yak herders sharp and the pungent taste gives them the ability to smell out stuff. What you say is quite plausible given the Leftist leaning, Olympos-hating Tsipras. However, the all knowing father Zeus is a cunning old devil who has seen it and done it many times.

Before Tsipras can run to Hades in his Han avatar (with some help from the Northern Bear) for succour and protection from the German version of the Greek goddess of war Enyo, old man Zeus has set Hades realms on fire using his Bhramastra - the big boys of finance. It chewed up $3.5 trillion on just margin calls!

Han Hades will be too busy dousing those fires over the next month or so, enough time to coerce the Greeks back to the righteous path. You see the Greeks like the good lifestyle - coffee, short work hours, plenty of pension and yes big fat Greek wedding, especially because others pay for them. When banks run out of Euros and payments, including government salaries, are made with IoUs, that's when it will become interesting.

[panduranghari]

If Greece leaves the EU their only other bailout source is PeeAllSee. In exchange for a small consideration, Greece might allow a small Chinese fleet of aircraft carriers and submarines to establish a base or two in the Mediterranean, and some production facilities to shorten the logistics chain to customers in North Africa and Oirope. Maybe they will produce Euros with a massive printing press. Think about it: a Made By China notation at the bottom of every Euro note.

Who will bail out China?

[TSJones]

No, the question should be, "Who wants to bail out China?".

[UlanBatori]

The difference between the US stock market and the Chinese stock market is that the former is central to the national economy and operation of the whole nation, while the latter is just a novelty. In America, people might say:

There goes Vernon Wannamaker-Pates IV, CEO of CoffeeGrounds Inc, a $40B startup.

as if that makes Him almighty.

In the Gobi desert they MAY glance up for a moment from the ditch-digging and say:

There goes Wong Wei, the son of General Wei Wong, Member of the Politburo. And oh! That wretch being led along in the wooden neckbraceand black-painted face is the former CEO of Fiery Dragon who USED to own equivalent of $100B until yesterday. Pah!

[UlanBatori]

As for Greece, the only thing I can think of that is indispensable from Greece is Ouzo.

[Theo_Fidel]

..and the olympic flame.

[vinod]

Doesn't china have 3trillions! Bailout itself!

[Suraj]

Call this a CT if you will but I find it very curious that the Chinese stock markets stumbles just when Greece is looking for other options for money and who has the biggest purse in the world nowadays? Who wants to use money to buy influence around the world? Was Putin meeting Alexis Tsipras on behalf of China? Russia doesn't have enough money for itself, let along Greece.

With the stock market mess in its backyard would China use its development bank to bail out Greece?

IMO the Chinese have a lot to learn...

The official cheerleading of the PRC stockmarket was part of an attempt to convince the IMF to grant the yuan greater reserve currency status. "See, we have a vibrant equity market too!" was part of the planned push. They probably figured it was as straightforward to cheer it up as to cool it down later by fiat. Turns out it doesn't quite work that way. Who knew ? They went from pushing for reserve currency status but got the status of others having reservations about their currency.

[Prem]

[q
The official cheerleading of the PRC stockmarket was part of an attempt to convince the IMF to grant the yuan greater reserve currency status. "See, we have a vibrant equity market too!" was part of the planned push. They probably figured it was as straightforward to cheer it up as to cool it down later by fiat. Turns out it doesn't quite work that way. Who knew ? They went from pushing for reserve currency status but got the status of others having reservations about their currency.

1,2, 3. This is the first engineered crash of China's dream to challenge the cream o cream of financial bosses of WEST. Two more pushes and China become Japan , put to Vishram for long ,to grow old before becoming too bold to hold their perennial cold. IMHO, right now they are deer in headlight mode wondering about who picked their pocket ,Ancient Highway Robbers or Modern Market Raiders. Market denial will be the next logical step to check Chinese Chicanery in international dealing among civilised nations.

[ramana]

Could be MS.

[UlanBatori]

Why do ppl say that the Chinese crash was engineered from outside? Their market had shot up like 150% in a couple of years, a steep correction is just a fact of life. Indian stock market also went through this. Makes the market stronger. A lot of the major crashers were manipulated stocks where the rise and the underlying value were all bogus. Tough lesson in need for better controls - I predict that there will be a few public executions and some cattle trains going out to the Gobi LeEducation Coopelative.
Maybe CNN and Yahoo! have invaded China and the little Maos are reading the news about EU, MidEast US etc. and decided to sell their stocks high? Note that even now if they sell they are selling at a big profit.

[chanakyaa]

The media/news orgy around Greeze, its potential default/Grexit etc. is nothing more than well orchestrated drama. It is sad to see people of Greeze suffer from financial mismanagement, in part its own doing. What is even more troubling is how small irrelevant country is being made a joke of by the international cartel. There are so many competing interest in the Greece saga that it is tough to say with certainty who benefits from whose demise. Greeks are not talking about selling national assets to meets its debt obligation. They would love to expunge their debt without selling anything. As long as they think that Euro member do not want to throw a member country out and create cracks in its one currency experiment, Greezes have some wiggle room to extort maximum benefit from Europeans. What Ooropeans don't realize that someone is using Greyce to crack/create doubts in the common currency system, because elimination/weakness of one rezerve currenshi helps prop up other rezerve curreshi. And the there is Eye-mf trying to transfer the burden of debt write off to developing nations. Is it possible that Greeze is being used as an experiment on how excessive debts of developed country could unfold?

[chanakyaa]

Why do ppl say that the Chinese crash was engineered from outside? Their market had shot up like 150% in a couple of years, a steep correction is just a fact of life.

+1
Hope you are sitting on some dry powder (i.e. fiat cash). Wait for the artificially created purrrrfect storm to calm down, and then buy at the bottom. Looking at the tone of the paid media, occurrence of a Lehman like situation will be sold to aam aadmi so they can sell everything they got.

[habal]

Indian stock market also went through this. Makes the market stronger. A lot of the major crashoers were manipulated stocks where the rise and the underlying value were all bogus. Tough lesson in need for better controls - I predict that there will be a few public executions and some cattle trains going out to the Gobi LeEducation Coopelative.
Maybe CNN and Yahoo! have invaded China and the little Maos are reading the news about EU, MidEast US etc. and decided to sell their stocks high? Note that even now if they sell they are selling at a big profit.

and did u do any follow ups of what happened then ?
http://m.rediff.com/money/2005/may/17sebi1.htm

[chanakyaa]

In the meantime, Eye-mf's Ookrane project is going ahead full steam

eyemf-staff-approve-1-7-billion-loan-disbursal-for-ukraine

[Satya_anveshi]

Today's US market move was craziest as it can ever get. Down went down 300+ points with major downward pressure coinciding with european market closure, as it was getting whacked too. But right after european market closed, market went up 300+ points to actually close higher by 90+ points. It was clear case of manipulation by HFT. every last trade across whole bunch of stocks was higher than the asking price.

Chinese market is getting clobbered again...it was a historic day..already down ~5% today; Pretty much half the stocks aren't trading.

[panduranghari]

1,2, 3. This is the first engineered crash of China's dream to challenge the cream o cream of financial bosses of WEST. Two more pushes and China become Japan , put to Vishram for long ,to grow old before becoming too bold to hold their perennial cold. IMHO, right now they are deer in headlight mode wondering about who picked their pocket ,Ancient Highway Robbers or Modern Market Raiders. Market denial will be the next logical step to check Chinese Chicanery in international dealing among civilised nations.

http://forums.bharat-rakshak.com/viewto ... 6#p1848906

China wont become Japan for at least 50 years. By then it will be certainly very rich. CPC wants financial parity with US by 2023 and military parity by 2049. Either China has to re emerge very rapidly or US has to fall. Both are equally likely. But 11 has all the powers concentrated with him. In 2017 they will be even more so. He might unleash a war somewhere for distraction.