Emerging Markets 29 Jun 2015 by Tojo Jose

Greek crisis and injured Euro zone may cause capital outflows from India

Greek crisis and injured Euro zone may cause capital outflows from India

The Greek crisis whatever turn it may take in the coming days will start adversely affecting India.  Much of the Greek effect will be on the stock market –producing turbulence. European institutional investors may exit from even profit scenarios in the EMEs including India to cover up liquidity shortage in their home countries. It is estimated that many European investors may undergo liquidity squeeze out from a worst case scenario of a Greek default. Similarly, a rise in yield in EU bonds may attract more speculative capital away from the EMEs to the Eurozone. Even if Athens doesn’t default, the liquidity shortage and rise in the yield of Euro zone bonds may

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US and Europe 28 Jun 2015 by Tojo Jose

ECB to continue the supply of emergency funds to Greek banks

ECB to continue the supply of emergency funds to Greek banks

Lender of last resort of the Eurozone, the European Central Bank, has told that it will continue to provide liquidity to Greek banks. At the same time, the currency union’s apex authority declared that it will not increase the lending.  ECB’s soothing stand came after the Greek government’s decision to conduct a referendum on July 5th on austerity measures to be adopted by Greece. Analysts observe that Greek banks may be running out of the money, especially in the context of panic withdrawals and failed talks. How Athens can avoid a Black Monday depends upon the sentiments among the public. Reports by Bloomberg news agency said that there are indirect

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Global Economy 27 Jun 2015 by Tojo Jose

World is slipping into another Great Depression, new laws are needed- warns Raghuram Rajan

World is slipping into another Great Depression, new laws are needed- warns Raghuram Rajan

Ace forecaster, the RBI Governor, Raghuram Rajan has warned that too much use of monetary easing will push the world economy into Great Depression of the 1930s variety. He called for international consensus on policy making to escape from the present crisis. The global economy is "slowly slipping" into Great Depression-like problems of 1930s. He asked central banks to define "rules of the game" to find a solution. The RBI governor was speaking at seminar at London Business School on Thursday. Indirectly, he criticized the one sided policy stances of advanced central banks without considering its impact on the world economy. Already, the competitive monetary easing by the advan

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US and Europe 27 Jun 2015 by Tojo Jose

Greece and Eurozone in the conflict zone over referendum

Greece and Eurozone in the conflict zone over referendum

Europe’s ailing but defiant economy Greece and Eruozone are in the course of a devastating conflict over the referendum announced by the Greek PM Alexis Tsipras. The Greek PM has announced a rather surprising referendum for July 5th about the austerity plan suggested by its mainly European creditors. The time cosnusming referendum shows that Greece is not politically willing to offer any commitment like austerity. Reacting to the Greek referendum move, Eurozone leaders have said that Athens has violated the negotiation process unilaterally. For the first time, the Eurozone leaders also made hints that they are thinking a European Monetary Union without Greece. Solidari

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China & East Asia 25 Jun 2015 by Tojo Jose

For China, AIIB is the superstar while the NDB is not shining

For China, AIIB is the superstar while the NDB is not shining

Within no time, two global institutions will start functioning in China’s Shanghai and Beijing. First is the BRICS managed New Development Bank (NDB). Second is the keenly watched development magnet that is attracting even advanced countries– the Asian Infrastructure Investment Bank (AIIB). The NDB’s (or the previously announced BRICS Bank) President nominee, KV Kamath has told that the bank will start functioning from second half of 2015. If it happens, Shanghai will host the first international organization that China hosts. But there is strong perception that China is more interested in the AIIB than the NDB. This is because of the probability of high Chine

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US and Europe 19 Jun 2015 by Tojo Jose

Greek bailout talk fails; EU calls an emergency meeting of state heads to find a political solution

Greek bailout talk fails; EU calls an emergency meeting of state heads to find a political solution

Greece and its creditors of Euro Zone have failed to reach on any agreement in the most important talk to prevent a Greek default. The EU has called an emergency meeting of the EU state heads on the issue on Monday just eight days remaining for the Greek repayment of 1.6 billion Euros to IMF. The European Council President Donald Tusk revealed that the heads of state meeting has to find a political solution to the crisis. The President told that it is now time to “urgently discuss” the Greek crisis “at the highest political level”. Greece was demanding for a political solution while ruling out austerity measures. The Financial Times of London quoted m

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US and Europe 19 Jun 2015 by Tojo Jose

Greece can’t wait till Monday; panic withdrawals are hitting the banking system

Greece can’t wait till Monday; panic withdrawals are hitting the banking system

Panic withdrawals of bank deposits associated with economic crisis are engulfing Greek economy like a financial tsunami. Early hours after the failure of the Luxembourg meeting indicate that people are withdrawing deposits from banks quickly. According to the Greek central bank, depositors pulled out more than 1 billion Euros on Thursday from the country’s four large banks.  This means that the total withdrawal for the week is 3 billion Euros which is three times the average weekly withdrawal over the past two months. Greece’s debt commitment to IMF for this month is 1.6 billion Euros. Since the nature of the crisis has percolated into the banking system, the

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US and Europe 18 Jun 2015 by Tojo Jose

Greece need money, but not ready for austerity

Greece need money, but not ready for austerity

Important events on the Greek crisis are coming quickly. An anti austerity rally is taking place in Athens just before the decisive Euro zone Finance Ministers meeting at Luxembourg on June 18th. At Luxembourg, Greece and its bailout financers of the Euro zone are about to start an important and final phase of discussion for extending financial help to Athens. This phase may extend for the next one month, within which both parties should come to a consensus. In the absence of such a consensus Greece have to make default and exit from the Euro zone. Such an outcome will add uncertainty for Euro zone as well as for the global economy. Greece has to make an immediate payment of

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US and Europe 17 Jun 2015 by Tojo Jose

Why creditors are under pressure against Greece?

Why creditors are under pressure against Greece?

The war of words between, Europe’s potential defaulter –Greece and its creditors goes unending. After heated exchanges of words, both parties are meeting in Luxembourg on Thursday to find a way out of the problem. Greece immediately needs 7.2 billion Euros to repay its debt to the IMF. Already, the IMF has pulled out from the present talk after Athens declined to undertake some serious expenditure cutting suggested by the Fund. If the remaining creditors in the field, - the European Council and the ECB, are not extending new loans, Greece will default. Then, a Greek exit from the Eurozone becomes unavoidable. Here, Greece will become the first country to exit fro

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China & East Asia 14 Jun 2015 by Tojo Jose

China makes calculated risk on Myanmar

China makes calculated risk on Myanmar

During the first ten days of this month, China has made some ultra speed moves on Myanmar. Two important moves happened during the first two weeks of June. First was the visit made by the former human right activist and pro democracy leader, Aung Sann Suu Kyi’s to China. Second was the PLA’s military exercise - land and air mode, near Myanmar border. Myanmar is very important for China, in its dreamt reach to the Indian Ocean. An easy look into the map will show that there are only two land route options for China to put its leg into the Indian Ocean- Pakistan and Myanmar. The other option – the risky route through Pakistan has less attraction because of sec

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