CHINA ON THE VERGE OF A DEBT CRISES

China facing possible ‘debt crisis’ http://flip.it/n4PH0h

Russian Debt Crises: Russia’s in the red - by Sean Guillory

On 5 April, in the town of Iskitim in Novosibirsk oblast, four masked debt collectors broke into the home of Natalia Gorbunova, beat her husband and 17-year-old son, and then raped her in front of them.

Gorbunova had taken a 5,000 rouble ($75) microloan from two companies, Money Now and Money Quickly, in 2014. She couldn’t make the payments.

But how could she? According to them, Gorbunova now owned them 240,000 roubles ($3,586). The beating and rape weren’t the loan sharks’ first resort. They’d been threatening her family on the phone for two years. A week before the collectors raided Gorbunova’s home, they tried to assault her son, but he managed to get away. The identity of the assailants is still unknown. The cops are scrambling to find them.

Many in the foreign press have noted that revelations of Vladimir Putin’s connections to the Panama Papers weren’t reported in Russia’s federal media. But the reality is that for most Russians who are struggling to stave off constant harassment, threats, and outright violence from predatory lenders,

Putin’s alleged two billion dollars matters far less in their immediate daily life. It’s a reminder of the old Russian adage that “God is high above and the Tsar is far away.”

Nevertheless, federal media did report the crime against Gorbunova and her family. National broadcaster NTV even has a topic page devoted to debt collector violence. Indeed, there is growing public concern — in 2015, the amount of outstanding personal debt rose by 25% to 870 billion roubles ($13 billion).

Collector violence is even getting the attention of the Tsar and his minions. For example, Investigative Committee head Aleksandr Bastrikin has taken the Gorbunova case under his personal control.


Russia’s usually lackadaisical politicians have also been jolted into some action. Several have spoken out about the need to reign in debt collectors, and in Kemerovo oblast, Governor Aman Tuleev and his regional legislature banned collectors outright. (Collection agencies quickly denounced the move as “populism” and the Justice Ministry said that the law was a blow to “economic freedom”.)

The Duma has passed the first reading of a bill that restricts debt collectors’ activities and their interactions with debtors, prohibits harassment, threats and violence, and raises fines by ten times to two million rubles.

A week ago, even Putin spoke out and demanded an end to the lawlessness, threats, and psychological and physical abuse by “quasi-collectors”.

Read more: Russia’s in the red | openDemocracy

Greece debt crisis (2): Greek MPs debate controversial reforms plan

Greek MPs are debating new proposals sent to the country's creditors with the aim of getting a third bailout and averting a possible exit from the euro.

The plans contain elements, including pension reforms and tax rises, that were rejected in a referendum called by Prime Minister Alexis Tsipras.

The EU and other creditors are studying the plans before a summit on Sunday.

France and Italy welcomed the proposals but Germany, Greece's biggest creditor, warned of little room for compromise.

Read more: Greece debt crisis: Greek MPs debate controversial reforms plan - BBC News

Thank You Greece! - by Maria Helena dos Santos André

In a time when in Paris Marine Le Pen is “Ante Portas”, when xenophobic populists are marching through the streets of Dresden, when in London the UKIP sets the tone for an ever more anti-European hysteria, and when in Helsinki the Finnish government becomes the most ardent proponent of more austerity for Greece, for no other reason but the fear of a success of the “Real Finns” at the next ballot box, the Greek people have given a clear signal, voting against more austerity and for the European values of democracy, the welfare state, tolerance and inclusive societies.

They have rejected the ruling by European and international technocrats. They have said no to their national oligarchic establishment that has led the country into the current situation. But they also resisted the siren calls of Golden Dawn. They have given their confidence to an untested party, with no experience in government, a party that has presented an electoral programme proposing better governance, more democracy, greater social justice and an end of austerity policies that have destroyed the economy and created unprecedented hardship while the public (and private) debt continued to increase. The Greek voters have sent a clear message to the rest of Europe: they want to be part of Europe, they can’t bear more austerity; they need a sustainable solution to their debt problem; they want to be a respected partner in the European Union and play an active role in the common search for a Greek and European recovery.

Europe should not see the victory of Syriza as a threat. Instead, it should be seen as a clear signal from the people and as an opportunity for Europe as a whole to reconsider its crisis response, which has already lead the continent into what may become a decade of deflationary stagnation, even with the last intervention of the ECB. There is no easy solution to the deep crisis in Europe but one thing is certain:  continuing with policies that do not work, because they concentrate exclusively on fiscal prudence, is the opposite of what must be done. We must give priority to growth, investment, employment and redistributive policies.

Anyone guided by realism will recognize that Greece cannot, at the same time, serve its tremendous debt burden and recover economically and socially. Insisting on servicing the debt without a strong economic recovery might be popular in some European capitals but it will just not work. Debts that cannot be paid remain un-payable even if creditors continue to insist that it should be paid.

The debt crises in Germany in the last century offer great lessons in this respect. After World War I, the victorious powers insisted that Germany should pay reparations independently of its economic performance. The results are well known: hyperinflation in the twenties, brutal austerity in the early thirties resulting in the rise of Hitler who immediately stopped servicing any foreign debt when he came to power.

After World War II, the Allies recognized that Germany had to become prosperous first and should pay afterwards. That reasoning lies behind one of the most generous debt restructuring agreements in history in 1953, when more than 50% of the German debt was written off, repayment was stretched out over more than half a century and debt payments were made conditional on the existence of a trade surplus. The last payment of debt from World War I was actually made as late as in 2010 and payments at no time exceeded 5% of German export earnings.

Read more: Thank You Greece!

Eurozone turning a corner as recession set to end -by Pan Pylas

The recession that’s gripped the eurozone since late 2011 is likely over.

On Wednesday official figures are expected to show that economic growth among the 17 countries that use the euro inched up 0.2 percent in the April-June quarter compared with the previous quarter.

The increase is slight. But it would end six straight quarters of a debilitating recession — the longest to afflict the single-currency bloc since its creation in 1999.

And it would represent an encouraging sign for other economies, including the United States, the world’s largest, because the eurozone is the world’s biggest trading bloc. The eurozone’s recession held back growth in the United States, Japan and elsewhere as European consumers and businesses spent less on goods from those nations.

‘‘Concerns about the eurozone were causing a lot of companies to put investment on hold,’’ said David Owen, chief European economist at Jefferies International.

The eurozone’s recession was a byproduct of the US debt crisis that engulfed the currency union in 2010. The crisis forced debt-laden governments to impose painful cuts, spooked investors and raised doubts about the viability of the eurozone. Shrunken government spending and higher taxes devastated living standards in much of the eurozone, slowed economies and drove the bloc’s unemployment rate to a record 12.1 percent.

Read more: Eurozone turning a corner as recession set to end - Europe news - Boston.com

I.M.F. Says Europe Has Made Progress in Addressing Economic Crisis

The European Union has made progress in addressing its financial crisis, the International Monetary Fund said Thursday, but warned that member states would have to follow through on their commitments to end uncertainty about the future of the euro and of the bloc itself. 

“Significant progress has been made in recent months in laying the groundwork for strengthening the E.U.’s financial sector,” the fund said, summarizing the results of a new study, adding: “the details of the agreed frameworks need to be put in place to avoid delays in reaching consensus on key issues.” 

The sovereign debt crisis, which began in late 2009 with Greece’s acknowledgement that it had been fabricating data on its public finances, has cost Europe billions of euros in lost growth and has devastated labor markets in some countries. Soaring financing costs have led Greece, Ireland and Portugal to seek bailouts. Spain and Italy had appeared to be reaching their own crisis points this year before the European Central Bank calmed the market by promising to do whatever was necessary to defend the euro. 

At the national level, the response has been to cut spending and to raise taxes. At the European level, member states have begun steps toward greater integration, including through a banking union administered by the E.C.B., with common rules for large institutions. The banking plan, though receiving only lukewarm support from Britain and Sweden, appears to be going forward, at least for members of the 17-nation euro zone.

The agreement last week by European leaders on a single supervisory mechanism for banks under the E.C.B. “is a strong achievement,” the I.M.F. said. “It needs to be followed up with a structure that has as few gaps as possible,” especially with regard to harmonizing national rules with the new regulations.

Read more: I.M.F. Says Europe Has Made Progress in Addressing Crisis - NYTimes.com

Europe must inject money into banks- says Obama - but is that what the voter wants?

US President Barack Obama has urged European leaders to prevent a looming overseas debt crisis from dragging down the rest of the world. He said Europeans must inject money into the banking system.'The solutions to these problems are hard, but there are solutions,' he said.

The president spoke on Friday after several days of difficult turns for his re-election prospects, including last Friday's report that the unemployment rate had risen slightly to 8.2 per cent in May as job creation had slowed, and new signs that the European debt crisis was hurting the US economy.

Market attention is focused on Spain, whose banks need billions of euros in bailout funds and where unemployment is at a eurozone high of 24 per cent and the economy is stretched to breaking point.

The Spanish government appears to have resigned itself to banks needing a bailout.

Note EU-Digest: Every poll held these days shows that the taxpayers does not want to bail out the banks anymore and that they do want unprofitable banks to fail.When will politicians start to listen to what the voters wants?   

Read more: Sky News: Europe must inject money into bank-Obamas

Eurozone: "Worst is over in debt crisis and key indicators better than in the US", says ECB president Mario Draghi

Mario Draghi

Mario Draghi European Central Bank President said today that the worst of the eurozone‘s debt crisis is over, warning however that "risks" remain.

"The situation has stabilized," Draghi said in an interview with German daily Bild.

"The key eurozone indicators such as inflation, current account and above all the budget deficits, are better than, for example, in the United States."

EU-Digest

Europe’s debt crisis easing, Lagarde tells CBC

Europe's debt crisis is easing, Christine Lagarde, Managing Director of the International Monetary Fund, tells the CBC’s The Lang & O’Leary Exchange in an exclusive Canadian interview.

In the first of a two-part interview in Mexico City with Amanda Lang during the recent G20 finance ministers’ meeting, Lagarde says the prospect of resolving the problems of high debt burdens is “a little bit more comfortable than it was three months ago and we have not had a derailment that we were fearing at the time.”

Lagarde credits policies adopted by eurozone governments, moves by the European Central Bank to avoid tight credit conditions and economic reforms adopted by Italy and Spain.

For more: Europe’s debt crisis easing, Lagarde tells CBC - Business - CBC News

EU Rehn Expects Greek Private Debt Deal By "End Of This Week"

A deal to restructure Greece's private-sector debt should be completed "by the end of this week," the European Union's economics chief said today.

Completion of the deal, aimed at halving EUR206 billion of privately held Greek debt, was a precondition for the country to receive a second bailout, Olli Rehn, EU commissioner for economic and monetary affairs, said in comments to the Dutch parliament. Talks to restructure Greek debt with private-sector representatives are dragging into a fifth week, with signs of progress from Athens, though a final announcement is still elusive.

"An agreement on substantial involvement of the private sector to reduce Greek public debt is a key condition for a second EU financial assistance program for Greece," Rehn said.

EU Rehn Expects Greek Private Debt Deal By "End Of This Week" - WSJ.com

Europe ready to end crises and legislate on deficits

Heads of state and government from the 27 European Union states gather from today from 3:00 pm (1400 GMT) in Brussels, with Belgium on strike against further spending cuts envisaged after yet another credit rating downgrade.

For once, there is no need for "crisis" adjectives -- the rhetoric on Europe has changed much in the two years since the scale of the problems in Athens threw the eurozone into political chaos. "Imminent, very, very soon," was how senior EU sources described on Sunday night the prospect of agreement on the conditions required to underpin a fresh willingness to fix a new international bailout.

At the summit, leaders want to focus on new treaty obligations for minimal deficits -- in theory, ending ever-rising government debt -- plus the legal framework for a rescue fund dubbed a financial "firewall."

EU-Digest

EU Leaders to Argue Europe Is Doing Its Part With Debt Crisis—Is U.S? - by George E. Condon Jr.

President Obama can’t seem to get his fill of summits. Monday he hosts yet another one, capping a month in which he has attended seven summits on four continents. This time, he gets to stay in the White House and the leaders he will meet aren’t exactly household names. But the topics – the European debt crisis, China, Syria, and Egypt – are the same that headlined the earlier summits.

The occasion is the annual U.S.-EU summit and representing the European Union’s 27 countries are European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso and EU High Representative Catherine Ashton. The leaders will meet for about two hours in the Roosevelt Room before continuing talks over lunch in the Cabinet Room and a concluding press conference. The meeting also comes at an unfortunate time for Obama who at the G-20 summit in Cannes pressed the Europeans to take bolder steps to deal with their debt crisis. But with last week’s very-public collapse of the super committee’s work here, Obama is certain to face questions from the Europeans about whether Washington is capable of similarly bold action to confront American debt.

The central message they will take to the Oval Office, said the ambassador, is “Europe is doing its homework. Individual countries are doing their homework. They are painfully implementing measures that are not politically easy.”

In return, of course, the president can expect the visiting leaders to ask him what he is doing on this side of the Atlantic to match the European actions. Many of them were dismayed at the debt ceiling debacle. And nothing that occurred with the supercommittee did anything to allay their concerns.

For more: EU Leaders to Argue Europe Is Doing Its Part With Debt Crisis—Is U.S? - George E. Condon Jr. - NationalJournal.com

Sarkozy comes to Berlin to shore up Europe's banks

German Chancellor Angela Merkel and French President Nicolas Sarkozy, the leaders of the eurozone's most powerful economies, are meeting in the German capital on Sunday to thrash out differences over how to use Europe's newly approved financial tools to fix the bloc's broken financial system.

With the turmoil of the ongoing debt crisis threatening to spiral into eurozone-wide financial meltdown, Merkel and Sarkozy will be focusing on how to deal with Greece, how to prevent contagion from spreading to the rest of Europe, and how to recapitalize overexposed banks that have taken a recent beating on financial markets.

A report in German weekly Welt am Sonntag said a compromise was being worked out between the French and German positions: in exchange for Berlin's demand for a bigger cut in Greek debt, France would obtain agreement that the EFSF could be refinanced by the European Central Bank.

For more: Sarkozy comes to Berlin to shore up Europe's banks | Europe | Deutsche Welle | 09.10.2011

Europe’s debt crisis: Fudge, the final frontier

The brief period of calm brought about by the European Central Bank (ECB) wading into the bond markets from early August to buy Italian and Spanish government debt is over. That intervention at first lowered Italian ten-year bond yields down from over 6% to around 5%. But yields have been creeping up since late August, and jumped above 5.5% on September 5th.

A more fundamental step towards a fiscal union may be needed. One way forward is to introduce Eurobonds, which would pledge “joint and several” liability. In theory that could mean that a small state is on the line for such debt; in practice it would mean Germany. Advocates of Eurobonds point out that the public finances of the euro area, taken as a whole, compare favorably with other big economies such as America and Britain, whose governments are currently able to borrow at record low yields. If the euro area were able to borrow as a whole, it too should benefit from low borrowing costs, helped by the liquidity advantage of creating what could become a vast government-bond market.

For more: Europe’s debt crisis: Fudge, the final frontier | The Economist

Greece - Dutch, Finnish, German finance ministers to meet next week

The finance ministers of the Netherlands, Germany and Finland are to meet next Tuesday to discuss the European debt crisis, website nu.nl reported on Thursday.

The controversial question of Finland's demand for collateral from Greece in return for its support of the bail-out will be on the agenda but is not central, nu.nl said, quoting finance minister Jan Kees de Jager.

Finland surprised the other eurozone countries two weeks ago by signing a bilateral deal with Greece which would enable Finland to receive collateral in return for its participation in the €109bn international bail-out.


For more: DutchNews.nl - Dutch, Finnish, German finance ministers to meet next week