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Marenne M

Companies with foreign debt likely to feel the heat when US hikes rate - 0 views

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    This article describes how the strengthening of the USD will cause problem for the countries which are in debt with the US. As the value of the US dollar rises, the countries in debt will have to compensate for a larger amount of money due to the increase in value of the USD. As a result, their debt increases.
Haydn W

Greece's leader warns Merkel of 'impossible' debt payments - FT.com - 0 views

  • Greece’s leader warns Merkel of ‘impossible’ debt payments
  • Alexis Tsipras, the Greek prime minister, has warned Angela Merkel that it will be “impossible” for Athens to service debt obligations
  • The warning, contained in a letter sent by Mr Tsipras to the German chancellor and obtained by the Financial Times, comes as concerns mount that Athens will struggle to make pension and wage payments at the end of this month and could run out of cash before the end of April.
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  • just before Ms Merkel agreed to meet Mr Tsipras on the sidelines of an EU summit last Thursday and invited him for a one-on-one session in Berlin
  • Mr Tsipras warns that his government will be forced to choose between paying off loans, owed primarily to the International Monetary Fund, or continue social spending.
  • He blames European Central Bank limits
  • “Given that Greece has no access to money markets, and also in view of the ‘spikes’ in our debt repayment obligations during the spring and summer . . . it ought to be clear that the ECB’s special restrictions when combined with disbursement delays would make it impossible for any government to service its debt,” Mr Tsipras wrote.
  • He said servicing the debts would lead to a “sharp deterioration in the already depressed Greek social economy
  • Mr Tsipras was rebuffed in efforts to secure quick financing from either the ECB or eurozone lenders at Thursday’s Brussels meeting
  • In an interview, Luis de Guindos, Spanish finance minister, said his eurozone counterparts would not sign off on any new bailout funding until a full set of approved reforms was passed
  • Mr Tsipras’s five-page letter is particularly critical of the ECB
  • The Greek prime minister insisted the ECB should have returned to “the terms of finance of the Greek banks”
  • Far from going easier on Athens, the ECB is considering whether to give its guidance to Greek banks more authority by making it a legally binding requirement not to add to their T-bill holdings.
  • He also criticised the ECB for only increasing the amount of emergency central bank loans to Greek lenders “at shorter intervals than normal and at rather small increments”
  • Mr Tsipras wrote that Athens was “committed to fulfilling its obligations in good faith and close co-operation with its partners”, he also warned Ms Merkel that a failure to find short-term funding could lead to much bigger problems.
Clemence Lafeuille

Does Debt Forgiveness Work? Ask Africa - 0 views

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    This article discusses the debt problems in Africa, and how these could potentially be solved. It explains how the loans were misused through issues such as corruption, and then it explains how African economies could still potentially manage to pay them off, through getting involved more in the global community
Marenne M

Rice Subsidy in Thailand causes Debt - 0 views

  • drop its multibillion-dollar rice subsidy program and scale back
  • make room for spending on projects that enhance growth
  • stimulate spending in rural areas and support Thai farmers
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  • government buys rice from local farmers for a set price above market rates
  • isplacing Thailand from its perch as the world’s biggest rice exporter
  • The subsidy program left Ms. Yingluck’s administration with a big bill and millions of tons of unsold rice
  • egan buying rice at premiums of 35%-50% above market rates
  • “It is inevitable for the government to incur losses as long as the scheme remains unchanged,” the IMF said.
  • eopardize a government commitment to balance the budget by 2017 and keep public debt below 50% of GDP
  • Thai authorities said the subsidy aims to address economic inequality and help poor farmers improve productivity
  • suggested that a reduction in the pledging prices or limits on the amount of purchase might be needed to ensure the sustainability of the policy
  • For the third subsidy year, which began last month, the government made some minor moves to scale back the subsidy
  • ay around $8.6 billion on the subsidy for 2013-‘14
  • hat losses from the subsidy could threaten Thailand’s credit rating
  • 5 million tons of rice in its stockpiles
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    This article describes how the government is trying to stimulate the rice market in Thailand by buying rice and placing subsidies on it. These major investments, however, are causing debt for the government, and prevent the government from investing in other projects.
Pip Dop

Judy Asks: Time for Greece to Leave the Euro? - 0 views

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    Debt forgiveness is not exclusively reserved for developing nations: this article discusses whether Greece should leave the Euro. It mentions the fact the Germany and other EU nations have avoided outright debt forgiveness because the terms are conditional, and Greece is not willing to commit itself to the policies it is required to introduce in return for debt relief.
Haydn W

France's Fiscal Policy Targets Very Challenging Says IMF - NASDAQ.com - 0 views

  • PARIS--French President Francois Hollande has chosen the right path to repair the country's economy and finances, but its fiscal targets are very challenging, the International Monetary Fund said Thursday.
  • At the start of the year, the socialist leader switched from a policy of tax increases to spending cuts to bring down the budget deficit.
  • The planned reduction in taxes mean that the cutbacks to spending relative to trend will need to be very large if public finances are to be brought back to balance
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  • If the government delivers the EUR50 billion ($68.5 billion) of savings over 2015 to 2017 that would be "remarkable by historical standards," the IMF said.
  • data on Thursday showed the French economy remained weak at the start of this year, while Germany posted better-than-expected growth. France escaped the wider euro-zone recession that followed the bloc's debt crisis, but it has failed to post strong growth for the last two years and the government has repeatedly missed its targets for bringing down the deficit.
  • Mr. Hollande launched a Responsibility Pact, under which payroll taxes on businesses would be cut in an effort to boost investment and recruitment
  • The IMF said the measures in the Responsibility Pact would only slowly boost growth to around 1% this year and 1.5% in 2015. It also warned there are risks of a weaker rebound and that inflation would remain around 1% with the economy operating well below capacity.
  • The IMF said the European Central Bank--which indicated last week it may launch stimulus measures in June--could do more to help France meet its targets.
  • "More accommodative monetary conditions would help with the implementation of the fiscal program and bring forward the benefits of structural reforms," the fund said.
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    This article details France's success in it's road to recovery following the Eurozone sovereign debt crisis. This week the IMF has hailed president François Hollande's cutback path to repair the countries economy but commented that his targets may be 'very challenging.' This comes after the French government has delivered vast savings through austerity measures whilst retaining general stability despite the rise of far-right groups like The Front National. In my opinion for a country in the eurozone Hollande's France seems to be doing well for itself on the road to recovery and could set an example for other Eurozone countries, like Greece and Portugal.
Haydn W

IMF warns UK of lingering housing and mortgage market risks - Business News - Business ... - 3 views

  • IMF warns UK of lingering housing and mortgage market risks
  • The UK faces lingering risks from housing and mortgage markets despite remaining on track for the fastest growth among the world’s leading economies this year, the International Monetary Fund said today.
  • has pencilled in growth of 3.2% this year — unchanged from its last July update despite a slew of downgrades for several members of the stagnating eurozone.
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  • This is the highest rate forecast among advanced economies, although the IMF has trimmed global forecasts amid fears over a “weak and uneven” recovery in Europe and parts of Asia.
  • The body, led by Christine Lagarde, said the “US and the UK in particular are leaving the financial crisis behind”
  • The Bank of England has identified the housing market as a “blinking warning light” on the economy’s dashboard following the introduction of the Help to Buy scheme last year
  • In June it introduced limits on high loan-to-income home loans to prevent borrowers over-extending themselves, while tighter mortgage lending criteria are slowing runaway prices.
  • The Bank’s latest credit conditions survey found a “significant” fall in the availability of home loans in the past three months after eight successive quarters of expansion.
  • The IMF also warned that more measures such as tax incentives and freeing up land were necessary to improve the rate of housebuilding and keep a lid on runaway house prices.
  • “Supply-side measures are crucial to safeguard housing affordability and mitigate financial stability risks,” it added.
  • Household debt levels remain high at 140% of GDP and, if the Bank’s limits on the lending market fail to gain traction, it may be forced to raise interest rates instead
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    This article from the London Evening Standard details how the IMF have warned the UK government over remaining household debt and the dangers it poses to the economy. The IMF have also called for 'supply side measures... to safeguard housing affordability' - a growing problem in both London and the UK as a whole.
Aleksi B

Spain unemployment to take 10 years to recover - report - RT Business - 1 views

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    In this article stated that Spain's largest bank made a claim saying the unemployment will take over a decade just to fix. Spain are in a large amount of debt as they rose from last year and the Spanish research and development spending is 70% below the EU level
Amanda Anna G

Macroeconomic challenges no longer constitute risks - Finance Ministry - The Malta Inde... - 2 views

  • The Ministry for Finance notes with satisfaction that the European Commission considers that, compared to the last year, the macroeconomic challenges in Malta no longer constitute macroeconomic risks.
  • “the macroeconomic challenges in Malta no longer constitute substantial macroeconomic risks and are no longer identified as imbalances in the sense of the Macroeconomic Imbalance Procedure (MIP). It further notes that “risks to the sustainability of private and public sector debt and the stability of the financial sector appear contained. “
  • The Ministry also welcomes the Commission’s conclusions that “as regards public finances, Malta is expected to meet its nominal deficit targets in 2013 and 2014.”
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  • “the housing market has stabilised and thus risks arising from over-exposure to property are limited”; that “private debt is on the decrease”; that “the corporate deleveraging is taking place in an orderly manner and credit market pressures are limited.”
  • “trade performance has been positive” and that “the current account balance is in surplus." In particular the Commission also noted that "the export performance of the Maltese economy has been successful".
  • “The report, unlike the one published last year, is confirming that across various fronts, the Maltese economy and public finances are getting in good shape and are meeting the ambitious targets set by the Maltese Government,”
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    This article is about the economy in Malta. The macroeconomic challenges Malta have been facing are now no longer risks and imbalances in the economy. This is due to, among others, that the housing market has stabilized and the private dept is on the decrease. 
Marenne M

Dutch Economy Emerging From Two-Year Recession - WSJ.com - 1 views

  • he Dutch economy is emerging from a two-year long recession
  • The country's gross domestic product will expand by 0.75% in 2014, slightly higher than a previous forecast of 0.5% growth
  • The economy will grow by 1.25% in 2015, it added
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  • CPB said the government's budget shortfall will narrow to 2.9% of GDP in 2014 and 2.1% in 2015
  • it was hit by the sovereign debt crisis in the euro zone and deep problems at home
  • A slump in the housing market has hit highly indebted households
  • he recovery will largely be driven by a pickup in exports as a result of the improving global and European economy
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    This article discusses how the Netherlands are finally picking up after a 2 year long recession. One of the main problems during the recession was that the Dutch citizens became afraid to spend money because they were unsure of their financial state in the near future. This caused a sort of glitch in the macroeconomic cycle of Holland, because people stopped spending and the companies stopped making as much income, therefore people got fired, and the cycle continues on. The economy in Holland is finally picking up and the GDP is said to rise by 0.75% this year.
Amanda Anna G

U.S. be warned: Default would cause global crisis - CNN.com - 0 views

  • The impact of default could be catastrophic, and not just economically. As Secretary of State John Kerry asserts, this would send a message "of political silliness" that we "can't get our own act together" so we need to "get back on a track the world will respect."
  • As the U.S. partial government shutdown continues into almost a third week, the stakes are growing
  • This builds on earlier studies by the organization, including in 2011-12 which highlighted "intensified speculation about America's long-term stability," partly as a result of the downgrade by Standard & Poor's of the country's credit rating. This was prompted by the last near debt default of Washington in 2011.
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  • Then, as now, however, the country retains attractive qualities for many foreigners, including its popular culture and economic innovation.
  • And the fact remains that, in times of major urgency, Washington can transcend partisan divisions and work in the national interest.
  • This was demonstrated, for instance, during the 2008-9 financial crisis when Congress and the administration acted more swiftly and comprehensively than many other countries to counteract the worst economic turmoil since at least the 1930s. This has been key in enabling the country to recover more quickly from recession than some other areas of the world. While current problems should therefore be put into context, the situation is nonetheless troubling. And this is not the first time this year that a Washington political impasse has threatened negative economic repercussions
  • Only at the 11th hour did Congress in January agree a deal to prevent the U.S. falling off the "fiscal cliff." It is estimated that the automatic tax increases and spending cuts might well have taken the U.S. economy back into recession.
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    This article relates to equilibrium and price mechanism because it describes changes in impacts of the market. Stakes are growing, there are "intensified speculation about America's long-term stability" due to a downgrade in the country's credit rating, and an unstable state at the "fiscal cliff". These worries and a political impasse in Washington are some impacts that has threatened negative economic repercussions in the US, moving the market equilibrium. In response to changes in price, resources are allocated and re-allocated. However, profits are still able to be made making the equilibrium more stable without excess demand and supply, due to that the US has its popular culture and economic innovation, helping the country to retain attractive qualities for many foreigners.
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    I think this is a very serious matter, that could affect the world's over all economy if it goes on for a while. We can see that obviously a majority of the world's largest companies are american and based in america. If this effects any of those companies, the market they operate at will see a big change, both in the good way and the bad one.
Haydn W

ECB's Draghi says euro zone must 'complete' monetary union | Reuters - 0 views

  • ECB's Draghi says euro zone must 'complete' monetary union
  • (Reuters) - Euro zone countries must "complete" their monetary union by integrating economic policies further and working towards a capital markets union, European Central Bank President Mario Draghi said.
  • Draghi said structural reforms were needed to "ensure that each country is better off permanently belonging to the euro area".
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  • He said the lack of reforms "raises the threat of an exit (from the euro) whose consequences would ultimately hit all members"
  • He said an economic union would make markets more confident about future growth prospects -- essential for reducing high debt levels -- and so less likely to react negatively to setbacks such as a temporary increase in budget deficits.
  • Unifying capital markets to follow this year's banking union would also make the bloc more resilient.
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    This article, from news agency Reuters, outlines Mario Draghi's, head of the European Central Bank (ECB), statement in Italy this week, regarding the Eurozone, a form of monetary integration. Draghi outlined the need for European countries to complete the monetary union and integrate policy to avert another crash. 
Haydn W

The return of the US dollar | Mohamed El-Erian | Business | theguardian.com - 4 views

  • The return of the US dollar The resurgence of the US currency could be the first promising step in steering the world economy away from crisis
  • The US dollar is on the move. In the last four months alone, it has soared by more than 7% compared with a basket of more than a dozen global currencies, and by even more against the euro and the Japanese yen.
  • Two major factors are currently working in the dollar’s favour
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  • Second, after a period of alignment, the monetary policies of these three large and systemically important economies are diverging, taking the world economy from a multi-speed trajectory to a multi-track one.
  • First, the United States is consistently outperforming Europe and Japan in terms of economic growth and dynamism – and will likely continue to do so – owing not only to its economic flexibility and entrepreneurial energy, but also to its more decisive policy action since the start of the global financial crisis.
  • With higher US market interest rates attracting additional capital inflows and pushing the dollar even higher, the currency’s revaluation would appear to be just what the doctor ordered when it comes to catalysing a long-awaited global rebalancing – one that promotes stronger growth and mitigates deflation risk in Europe and Japan.
  • ECB President Mario Draghi signalled a willingness to expand his institution’s balance sheet by a massive €1 trillion ($1.25 trillion).
  • Furthermore, sudden large currency moves tend to translate into financial-market instability.
  • There is also the risk that, given the role of the ECB and the Bank of Japan in shaping their currencies’ performance, such a shift could be characterized as a “currency war” in the US Congress, prompting a retaliatory policy response.
  • Today, many of these countries have adopted more flexible exchange-rate regimes, and quite a few retain adequate reserve holdings.
  • an appreciating dollar improves the price competitiveness of European and Japanese companies in the US and other markets
  • But a new issue risks bringing about a similarly problematic outcome: By repeatedly repressing financial-market volatility over the last few years, central-bank policies have inadvertently encouraged excessive risk-taking, which has pushed many financial-asset prices higher than economic fundamentals warrant.
  • This is not to say that the currency re-alignment that is currently underway is necessarily a problematic development; on the contrary, it has the potential to boost the global economy by supporting the recovery of some of its most challenged components. But the only way to take advantage of the re-alignment’s benefits, without experiencing serious economic disruptions and financial-market volatility, is to introduce complementary growth-enhancing policy adjustments, such as accelerating structural reforms, balancing aggregate demand, and reducing or eliminating debt overhangs.
  • The US dollar’s resurgence, while promising, is only a first step. It is up to governments to ensure that the ongoing currency re-alignment supports a balanced, stable, and sustainable economic recovery. Otherwise, they may find themselves again in the unpleasant business of mitigating financial instability.
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    This article details the so called resurgence of the US dollar, in terms of currency value. The currency itself has risen by around 7% against other currencies but Guardian economist Mohamed El-Erian warns that without the appropriate accompanying central bank policies, the rise of the dollar could cause further market volatility and at worst a new crash. El-Erian calls for governments to enact policy to support balance the current currency realignment. 
Daniel Soto Aggard

Student Loan Forgiveness: Too Good to Be True? - 0 views

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    Student loans in the United States have been known to be financially crippling, however there is now an act set in motion that will benefit the students to take loans to complete their higher education. Taking a step in the right direction as education should be a privilege granted to everyone.
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