As Greece is going through a referendum on the bailout terms suggested by its creditors, the world economy is waiting anxious. What will happen to Greece, the Euro zone and to the world economy if the Greek people say no to the reform measures? Opinion polls indicated that Greeks appear strongly divided over bailout decision. This is despite the hard-line campaign for ‘no’ made by the radical ruling leftist Syriza. Reports are that as the voting hours reaches, there is rising ‘yes’ and a photo finish possibility. This shows that Greek people are quickly losing belief in the economy management capability of the Syriza team. The effects of a no vote wil
The Greek crisis is moving towards a decisive face with more suspense. Fresh opinion polls for Sunday’s referendum indicate people airing ‘yes’ to bailout and Euro is increasing. This is despite Prime Minister Alexis Tsipras’ call for ‘No’ to the EU Plan and his description of EU creditors as blackmailers. A victory for ‘yes’ will be interpreted as a vote of no- confidence in the ruling Syriza party’s ability to manage the economy. In another development, the IMF has warned that Greece’s debt over the next three years is bigger and Athens need around €60 bn to overcome its debt problem. The IMF who uses the gen
China has introduced a new security law that adds internet under the sovereign control of the state. As per the law, internet is a matter of sovereignty and security and they should be “secure and controllable”. The new law becomes a model for state controlled internet. The National security law of China, passed by the top legislature on Wednesday extends from military to economy. It also brings space exploration and cyber security under the concern of security establishment. The new policy comes at the time of China’s increased aggressiveness in the East China Sea. In the internet world, many secretive hacking and invasions into the US military sites were
The fifty founding members of the AIIB have signed a historical Articles of Agreement (AoA) on important functional aspects, including the governing structure of the Asian Infrastructure Investment Bank. Articles of Agreement of the AIIB looks close to that of the twenty-four Articles of Agreement of the IMF that was signed seventy years back. China, the lead state has a veto power and 26% vote and 30 % capital contribution to the AIIB. It seems that China in the AIIB, is like the US in the IMF. India expectedly got the second largest voting power and capital share. India’s shareholding is 8.52% with a voting right of 7.5%. It was estimated that India’s vot
Greek PM Alexis Tsipras has announced a holiday for banks on the much anxious Monday and put capital controls. Announcing the decision on the TV, the Socialist Party leader has blamed EU for the current confusion in his economy. Capital control means restriction of taking away money to outside the country. Greek problems are now graduated to the next phase where banks may face liquidity crisis. Panic withdrawal will dry resources of the banks. Most importantly, the problem will get worsened from minute to minute. The issue of debt repayment to IMF and EU can be solved through discussion and Athens will get even weeks for it. On the other hand, the liquidity crisis in the ban
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
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
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
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
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
Dictionary on Indian Economy
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- Japan’s first trade deficit in 30 years is part of the Global Shift
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