Corruption is causing trouble for elites from Sao Paulo to Virginia and Santiago to London. Inequality can be a tolerable byproduct of free-market capitalism, but not when the winners are profiting from a rigged system. As a new book argues, such gains encourage radicalism.
This week’s federal budget is likely to put a squeeze on public spending. But it also needs to strike a strongly pro-business note. Investor enthusiasm for Prime Minister Narendra Modi’s policies is starting to wane. Big-ticket reforms could give “Modinomics” a credibility boost.
The new Greek PM has crossed a Rubicon in asking for an extension to the country’s hated bailout programme while abandoning many election promises. Tsipras should realise there is no turning back. But he can snatch victory from defeat if he embraces radical reforms with vigour.
Forget the crisis. The euro is almost irrelevant to the serious developing economy issues which face Athens: weak institutions, dysfunctional politics and excessive capital flows. As Greece shows, outsiders can help or hurt, but these problems are ultimately domestic.
Time is running short. A deal is needed in the next few days to stop Athens going bust. That will be, at best, a short-term patch-up while a long-term programme is worked out. Compromise is needed by both Greece and its euro zone creditors to avoid a disaster. It won’t be easy.
It’s an irony bordering on conflict of interest that Harry Wilson, who helped Uncle Sam convert debt to equity in bankruptcy, is pressing the carmaker to reduce its cash cushion. Yet absent externally imposed fiscal discipline, GM runs the risk of repeating mistakes of the past.
After Greek PM Alexis Tsipras’ defiant speech to parliament, it is difficult to see how Athens can avoid running out of money and imposing capital controls within a few weeks. Unless that perspective provokes a change of heart, Greece may soon have to bring back the drachma.
Investors this week applauded the abrupt exits of bosses at Ally and Petrobras, whose market value surged by $8 bln. Ousters at McDonald’s recently and Microsoft in 2013 earned similar welcomes. The common thread seems to be relief after a CEO becomes entrenched and inflexible.
The new Athens government wants a deal with its reluctant creditors. The debate is poisoned by false claims about writedowns and moral obligation. Everyone twists the truth about how debt works and how economic pain is shared. Such fictions were helpful once – but no more.
If the Greek prime minister is backed into a corner, the chances of Grexit and contagion will rise. If he is given time, there’s less risk of Athens quitting the euro. And even if Greece leaves, delay will make it easier to contain the political and financial backlash.