1 Greek default or not, prospects look grim (The Guardian) As Greek prime minister Alexis Tsipras and his finance minister Yanis Varoufakis have discovered the hard way, international financial deal-making is a world away from the thrill of a barnstorming election campaign.
But with Varoufakis sidelined after a series of less-than-helpful public interventions, Tsipras and his colleagues appear to be in the final stages of agreeing a deal with the country’s eurozone creditors and the International Monetary Fund – renamed the “Brussels Group” to assuage the Greek public’s hatred of the “troika”.
If Tsipras pulls off a deal and skirts default, it will be a political and personal triumph, in the face of extraordinary odds. And if he can persuade Greek voters to back him in the messy compromises he will inevitably have to make to win over the lenders – especially the IMF, which is reportedly taking a particularly tough line – it will be close to miraculous.
As Gabriel Sterne of Oxford Economics pointed out last week, while two-thirds of the Greek public believe Syriza should be willing to compromise, almost 60% thought that should not include pension reform – likely to be a red line for creditors. Sterne believes there is now almost a 50/50 chance that the country could be forced out of the single currency.
The sad truth for the Greek people is that none of the roads ahead of them looks anything but grindingly hard. This is a country where GDP collapsed by a quarter in the aftermath of the crisis; where unemployment remains above 25%; and where average wages fell by almost 18% in real terms between 2008 and 2013.
If a deal is done, the country is likely to face another bout of painful structural reforms and stringent spending cuts, to satisfy the Brussels Group that it’s not throwing good money after bad. That means Greece will still face hefty repayments, and the scrutiny of its paymasters, for years to come. And if no deal is forthcoming by the 30 June deadline both sides appear to have set, then Greece faces the risky and uncertain prospect of defaulting on its debts and crashing out of the euro.
2 UK economy seen picking up (BBC) The speed at which the British economy is growing is increasing, the Confederation of British Industry says. Research by the CBI suggests business activity increased markedly in the three months to May. Rain Newton-Smith, the CBI’s director of economics, said growth had “cranked up several gears”.
In April official figures revealed the UK economy grew by 0.3% in the first three months of 2015, which marked the slowest quarterly growth for two years. The CBI said growth could be boosted further as things improve economically in the Eurozone, which is the UK’s largest trading partner.
Earlier in the month the CBI urged businesses to “speak out early” in favour of remaining in a reformed European Union. Its president Sir Mike Rake said there were “no credible alternatives” to EU membership.
3 No bubble, but get ready for ‘correction’, banker warns (Joe Garofoli in San Francisco Chronicle) No, we’re not living in an economic bubble. That’s what former Treasury Department official and investment banker Roger
Altman told a venture capitalist conference. However, Altman predicted there will be a “correction.”
“But I don’t think we’re going to see a repeat of the dotcom” bust, Altman said. “That was a broad correction across the tech sector. I don’t think that’s likely to likely to repeat itself,” he said.
Altman is the executive chairman of Evercore, one of the most active independent investment banks in the US. As evidence, Altman pointed out that “some of the social media sector is very highly valued. Is it probably going to be a fairly sharp correction? Usually corrections are fairly sharp,” Altman said. “We’ll see a regression to the mean.”
Altman said we are living in a “golden moment” where “the Ubers of the world” can be highly valued without going public, thus avoiding the increased regulatory scrutiny that comes with being a public company. “Remaining private is attractive because of the autonomy and control factors. If I could achieve all of my business objectives while remaining private, I would. I think it’s one of those golden moments. I don’t think it will last very long, but I can understand why people are taking advantage of it.”