Financial crisis

By Gideon Rachman
Watching the Greek crisis unfold, I found myself torn between two equal and opposite thoughts. First, the euro cannot survive. Second, everything must be done to save the euro.

Are Europe’s politicians ready to contemplate Grexit?
Gideon Rachman is joined by Ferdinando Giugliano and Stefan Wagstyl to discuss the growing stand-off between Greece and its eurozone creditors as the language becomes more uncompromising on both sides. What would happen if Greece left the eurozone and are politicians prepared to contemplate such an outcome?

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  • Greece’s privatisation programme, ordered under the terms of its international bailout, was falling far short of targets even before the country’s new left-wing government vowed to scrap further sales of state assets
  • Following Isis’ brutal execution by immolation of captured Jordanian pilot Muath al-Kasaesbeh, many in the country have called for a deeper military commitment against the jihadist group
  • Foreigners are leaving Russia in unprecedented numbers, reflecting a worsening economic outlook as western sanctions bite
  • The west’s inability to comprehend how Vladimir Putin sees the world means it has trouble thinking constructively about how to deal with him (The American Interest)
  • A convicted al-Qaeda operative has claimed that more than a dozen prominent Saudi figures were donors to the terror group and that a Saudi diplomat discussed with him a plot to shoot down Air Force One (NYT)

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A former colleague on the FT (no names, but he now runs the UK’s Office for Budget Responsibility) used to muse that a useful all-purpose headline for any story about an emerging market economy was “[Insert Name Of Country Here]: Structural Reform?”

Putting “Greece” into that formula after Syriza’s resounding victory in Sunday’s election, where do we stand? Every pundit in Europe is retailing some version of the insightful observation that it is all about whether Syriza — and its leader, Alexis Tsipras, Greece’s new prime minister (above) — can be induced to do enough structural reform to buy the fiscal leeway and debt relief it wants.

The problem with this view is that “structural reform” is a crude and unhelpful term. Read more

By Gideon Rachman
Syriza have won the Greek election. But, perhaps just as startling, the “far left” party is making considerable headway in the struggle to win over elite opinion in the west.

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Most euro area governments and investors are breathing a sigh of relief after Wednesday’s preliminary judgment from the EU’s highest court in favour of the European Central Bank’s sovereign bond-buying programme – the 2012 initiative that helped to bring the euro crisis under control.

But governments and investors, in and outside Europe, should keep in mind that the danger of a bitter, protracted struggle over EU constitutional law will now go up. This would pit Germany against other power centres in the EU. Read more

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  • Large-scale intervention in the FX markets, limiting liquidity, further interest rate rises and capital controls are among the options that Russia’s central bank has to stem the rout in the rouble
  • Jeb Bush, the scion of a political dynasty who has declared his interest in running for president, faces a gulf between what the Republican base wants and what US floating voters will tolerate
  • Pope Francis was essential to breaking the deadlock between Cuba and the US that has lasted 50 years, initiating a discussion that led to the secret diplomacy behind the rapprochement
  • The brutal attacks in Peshawar have already backfired against the Pakistani Taliban (Foreign Policy)
  • Saudi cleric wants genders to mix and women to drive – but he is being attacked for it (Your Middle East)

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  • Bahrain’s royal family has built up vast private wealth, including a $900m portfolio of UK real estate, after embarking on development projects on disputed reclaimed land in the Gulf kingdom, an FT investigation reveals
  • The prospect of Greece’s self-styled “radical left” Syriza party coming to power has sown panic among investors, but its leader has softened his rhetoric and is changing tactics to reassure the business community
  • Beneath the surface of gridlock and hyper-partisanship in US political life is a national security establishment whose influence endures administrations and constantly seems to evade constraints
  • Narendra Modi has not made many sweeping reforms since he stormed to India’s premiership in May. But he has made some reforms about sweeping – showing his feel for the issues that affect the masses outside the Delhi beltway
  • The extent of the UK’s military and political catastrophe in Afghanistan is hard to overstate. It was doomed to fail before it began, and fail it did, at a terrible cost in lives and money, writes James Meek in the London Review of Books

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People wait in line at a government employment office in Madrid – Getty

A strong, broadly based economic recovery in the eurozone is nowhere in sight – as will become clear on Friday, when Eurostat, the EU agency, and several national statistical offices publish estimates for gross domestic product growth in the third quarter of this year. Read more

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  • Hungary’s introduction of the world’s first internet tax is just the latest in a batch of unorthodox uneconomic policies, dubbed ‘Orbanomics‘, that some say are leading to increased government control over the economy
  • Through their alliances with jihadis and actions that flout the democratic will, Libya’s Islamists are courting disaster for themselves and their country
  • The disappearance of 43 students has brought attention back to Mexico’s security woes and away from its economic reforms, threatening to tarnish President Enrique Peña Nieto’s record of success
  • Quantitative easing in the US has kicked back into gear Wall Street’s securitisation machine – providing a supply of risky assets that bundle together car loans, corporate debt and mortgages
  • The forgotten Yazidi refugees who once captured the world’s attention now sit outside the spotlight, wondering how they will survive the winter, reports Foreign Policy

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