Prepare for gold prices to plunge...as low as $350 - CNN

July 31, 2015 at 4:00pm

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http://money.cnn.com/2015/07/30/investing/gold-prices-could-drop-to-350/index.html?sr=twmoney073115gold130story


Prepare for gold prices to plunge...as low as $350

By Matt Egan @mattmegan5

Gold is no longer glittering. Here's why
Gold's big plunge may have only just begun.
A prominent gold forecaster predicts the yellow metal will drop to a mere $350 an ounce, a level unseen since 2003. It's dramatically lower than what most experts are currently calling for.

But Claude Erb's prediction might have merit. Back in 2012, Erb, a former commodities trader at TCW Group, co-authored a landmark research paper with Duke University professor Campbell Harvey that was early to predict gold's downfall. At the time, gold was fetching north of $1,600 an ounce. Now it's trading below $1,100.
The paper used historical analysis to show that if gold is an inflation hedge -- as many people believe -- then it's extremely expensive at current levels.
"Gold is no more or less volatile than stocks or anything else. It can be wildly overvalued, and it's very overvalued right now," Erb told CNNMoney.
Related: What's behind the plunging price of gold, copper and oil
Gold could crash more: Erb and Harvey's research suggests that gold's fair value is about $825 an ounce. That would represent about a 25% decline from today's price.
But gold tends to move to extremes before reverting back to its fair value. Gold prices, like stock and bond prices, are influenced by excessive levels of investor optimism and pessimism.
"Markets rarely trade at 'fair value,' rather they tend to overshoot," Erb said.
Their research suggests gold could tumble to about $350 an ounce before it goes back to fair values. Plunging that low would translate to an 80% crash from gold's peak price in late 2011. That's big losses for investors.
gold plunges 350
Related: Gold suffers longest slump Derek Jeter's rookie year
Gold as an inflation hedge: Erb and Harvey's research is not concrete. Even if they're right that gold is overvalued, no one can say for sure when prices will correct. They could surge even higher before reversing course. In the past, the peak-to-trough cycle has lasted as long as 20 years.
It's a long-term view based on the following hypothesis: Gold prices are driven by inflation, just like stocks are driven mainly by corporate profits.
That belief in gold as the ultimate store of value is why prices spiked after the Great Recession. Investors feared the Federal Reserve's extremely low interest rates would unleash a wave of inflation and gold would protect them.
Erb and Harvey argue that if gold maintains its purchasing power over time, it stands to reason that its fair value, or inflation-adjusted price, should be constant in the long run. The authors used historical prices and a common measure of inflation -- the consumer price index -- to determine where that fair value lies.
Related: Oil prices have gotten crushed this month
Of course, some believe that prices are driven by the amount of gold purchased by people in emerging markets like China and India. Gold plummeted earlier in July after a report indicated China has been consuming less gold than believed. Others argue gold prices are fueled by the cost of production incurred by mining companies.
Erb sees little evidence supporting either of those theories, calling the latter "pretty close to ludicrous."
'Pretty far-fetched' But many others will see calls for $350 gold as ludicrous as well.
Bob Alderman, head of wealth management at Gold Bullion International, a provider of precious metals, believes it's "pretty far fetched." Alderman called Erb and Harvey "smart guys with a theory," but said it's important to remember that not long ago, some observers were calling for gold to hit $5,000
"Clearly, it didn't go there," Alderman said.
Related: Mining stocks are getting killed
Wall Street turns bearish: There are signs that the smart money may be moving closer towards Erb and Harvey's view.
Big Wall Street banks are slashing their gold price targets. Goldman Sachs (GS), one of the biggest cheerleaders of the commodities super cycle, recently predicted gold could tumble below $1,000 for the first time since 2009.

How Germany Prevailed in the Greek Bailout - New York times

http://www.nytimes.com/2015/07/30/world/europe/how-germany-prevailed-in-the-greek-bailout.html?emc=edit_th_20150730&nl=todaysheadlines&nlid=56381892&_r=0

How Germany Prevailed in the Greek Bailout
By NEIL IRWINJULY 29, 2015

BERLIN — At the height of crucial negotiations over the latest bailout of Greece this month, Germany circulated a proposal that undercut decades of promises about the march toward deeper European unity: Greece, it said, could be offered a temporary exit from the euro.

The proposal reflected some muscle-flexing by hard-liners in Berlin. But it was first broached privately not by the Germans, but by Slovenia, a tiny eurozone member whose finance minister demanded a “Plan B” for a leftist Greek government he compared to the former Yugoslavia’s Communists.

Slovenia’s proposal was a double triumph for Germany. Greece’s economic crisis not only has done nothing to soften Germany’s insistence on adherence to rules, fiscal austerity and dire consequences for countries that fail to live up to their obligations, but it has also actually reinforced the willingness of Germany’s allies in Europe to impose even harsher conditions on Athens.



Prime Minister Alexis Tsipras of Greece said that securing a new bailout deal was a priority.Tsipras Seeks to Avert Party Split as Greece’s Creditors Arrive for TalksJULY 29, 2015

Yanis Varoufakis, Greece’s former finance minister, wrote in a blog post Monday that the country would have “been remiss had it made no attempt to draw up contingency plans.”Greece Made Preparations to Exit EuroJULY 27, 2015
Alexis Tsipras with Panos Skourletis, the energy minister, at a parliamentary session in Athens.Greece Approves Second Set of Changes Needed for BailoutJULY 22, 2015
Once seen as an idealistic radical, Alexis Tsipras, Greece's leader, is emerging as something else entirely.Alexis Tsipras, Greek Prime Minister, Sheds His Identity as a RadicalJULY 21, 2015
The European Central Bank effectively forced Greece's banks to close on June 29, when it capped the emergency cash it provides to them at €89 billion. That limit will now be €89.9 billion.European Finance Officials Agree ‘in Principle’ on New Greek BailoutJULY 16, 2015
From Lisbon to Latvia, from creditor countries to debtors, among some left-wing leaders as well as conservative governments, the response to Greece reflected a deep aversion to government spending as a tool to fight economic slumps and faith in deregulated labor markets. It is a vision of austere, market-based policies that are a break with Europe’s past.


Germany persuaded European leaders to rally more firmly around what might be called the Berlin consensus by a combination of patient diplomacy and clever brinkmanship and by exploiting alarm over the antics of Greece’s leaders, numerous participants in the crisis talks recounted in interviews.

It was a victory, many of those participants acknowledge, that reflected the politics of today’s Europe rather than a viable plan to help Greece’s economy in the short run. Despite forecasts that recovery would follow the bitter medicine Germany and lenders like the International Monetary Fund have been prescribing for Greece for five years, the country is stuck in a depression-like slump. The latest package tightens austerity rather than relieving it.

In the view of many economists, particularly in the United States and Britain, the continued imposition of a budget-cutting-first approach during an extended downturn is holding back recovery not just in Greece but also across the Continent, which continues to suffer from towering unemployment and tepid growth years after the United States began recovering from the financial crisis that started in 2008.

The eurozone unemployment rate is above 11 percent, more than double that of the United States. Its economic output in 2014 was lower than in 2007, before the global crisis.

Youth unemployment is particularly high, raising the possibility of long-lasting damage to the Continent’s economic potential as young people are idle at a time when they would normally be developing key skills. Nationalist and populist political movements on both the left and the right, drawing strength from economic dislocation, are undermining support for European unity.


“The belief that the euro can be used to bring about the economic ‘re-education’ of Europe’s south will prove a dangerous fallacy — and not just in Greece,” Joschka Fischer, a left-leaning former German foreign minister, wrote this week.

The rising influence of the Berlin consensus despite these trends has much to do with the political backlash in Europe to the Greek government under Prime Minister Alexis Tsipras and his radical-left Syriza party. Mr. Tsipras’s heated arguments against austerity, however much they reflected the views of many economists, were undermined at least in part by his government’s inconsistent policies and frontal challenges to German leadership.

But previous efforts by the current governments of France and Italy to encourage more flexibility in imposing austerity have also made little headway.

Like Greece, they have run up against a combination of subtle German diplomacy by its seasoned center-right leaders, Chancellor Angela Merkel and her finance minister, Wolfgang Schäuble; German credibility and power derived from a strong domestic economy; and, perhaps most important, domestic political considerations in countries across Europe that are encouraging their leaders to express greater devotion to the German way of doing things.

That philosophy, as applied since the financial crisis began upending global economies in 2008, transcends typical lines of right versus left (one of the chief engineers of the latest Greek bailout, which demands new austerity and major reforms, was the Dutch finance minister, who is from his country’s Labour Party). And it is not simply a matter of creditor versus debtor (Portugal, among other debtor countries that signed on, insisted Greece make the same difficult reforms it has).

In the end, in a crucial debate that set up Europe’s position against Greece in negotiations the week of July 12, 15 nations embraced the hard-line position with only three, France, Italy and Cyprus, isolated as preferring a more generous approach open to debt forgiveness.

“Yes, certainly Germany has been in the driver’s seat through this process, there’s no denying it,” said Alexander Stubb, the Finnish finance minister and one of Berlin’s hard-line allies. “Part of it is personalities. Part of it is Germany’s economic track record. But it’s also that they know their stuff. They go into negotiations well prepared and with a determination to stick to the rules we’ve agreed on.”


Germany has long been known as Europe’s “reluctant hegemon,” for its reluctance to be too assertive in diplomacy given its history of militarism. But the unique circumstances of the Greek crisis, especially since the start of this year, have helped make it a country that is both a little less reluctant and a little more of a hegemon.

Merkel’s Deft Touch

There is a common thread in Ms. Merkel’s uniquely influential role guiding the politics of Europe throughout the financial crisis and its aftermath. At the same time that she has been the leading voice for the principle that countries must follow the rules and pay the consequences if they do not, she has also embodied the strong German instinct to keep knitting Europe closer together.


To do so, she has applied a deft diplomatic touch. The German government maintains a fleet of Airbus planes marked “Bundesrepublik Deutschland” for its high officials, and Ms. Merkel has made full use of them in her decade at the head of Western Europe’s largest economy.

She had visited what were then all 27 nations of the European Union by the end of her first four-year term in office. She will often visit a country and return home the same day, much the way an American president makes the rounds to various states. She also cultivates foreign leaders at home, hosting them in Berlin with grand welcome ceremonies with military honors.

Within meetings of the European Council, she is almost uncannily immersed in the details of whatever is under discussion, crossing out lines and replacing words with a focus that might be expected of a former engineer.

Meanwhile, Mr. Schäuble, Ms. Merkel’s finance minister, is a hard-nosed politician who was paralyzed from the chest down by an assassination attempt in 1990, and he is more popular in Germany (70 percent approval in a recent ARD-DeutschlandTrend poll) even than Ms. Merkel (67 percent).

Ms. Merkel and Mr. Schäuble both bring long experience to the negotiating table that few can match. Mr. Schäuble has been in the German Parliament since 1972, two years before Mr. Tsipras was born.

When Mr. Schäuble circulated the proposal raising the prospect of a temporary Greek exit from the euro, he was able to do so knowing he had support from a number of other countries, like Slovenia, which first put forward the idea in April during a closed-door meeting in Latvia.

Ms. Merkel and Mr. Schäuble regularly mix forceful advocacy of German positions with a willingness to pull back in the interest of maintaining unity, above all with the other great power of the eurozone, France (Ms. Merkel and President François Hollande of France speak on the phone almost daily).

Mr. Hollande played the role of intermediary between Greece and its European creditors during the July negotiations. After Germany broached the notion of Greece’s temporarily leaving the eurozone, Ms. Merkel set aside the idea after objections from France and Italy.

And while Mr. Schäuble — known as tough and competitive — has a reputation as a hard-liner, he, too, knows the diplomatic art of using deference. In meetings of the European finance ministers, Mr. Schäuble rarely speaks first, generally leaving that role to a smaller country, before coming in with his own comments on the subject at issue later.


Greece’s Debt Crisis Explained
Behind the efforts to resolve the country’s debt problems and keep it in the eurozone.



“Mr. Schäuble has his vision, his point of view, that he puts on the table,” said Johan Van Overtveldt, the Belgian finance minister. “But he never says, ‘Take this or leave it.’ He has been very democratic. I can’t remember one point in time where there was a diktat.”

Indeed, while from an American or British vantage point the Germans often seem like the heavies in negotiations over the Greeks, they have actually been restrained by the standards of German voters and some Eastern European countries.


“Mrs. Merkel has behaved in an incredibly modest way,” said Marcel Fratscher, president of the D.I.W. Berlin think tank. “You couldn’t find her saying a bad word about Greece or anything populist, and even though German public opinion was very strongly in favor of a Grexit and no bailout deal,” he said, using shorthand for a Greek exit from the eurozone, “they secured a deal with no Grexit.”

The Greek government often took a rather different approach.

Conflicting Greek Signals

When Mr. Tsipras’s Syriza party won the Greek elections in January, it was determined to change the entire playing field for European economic policy.

But rather than rallying the opponents of austerity to their cause, the Greeks sent so many conflicting signals that even potentially sympathetic governments became exasperated, never more so than when Mr. Tsipras abruptly decided in late June to subject European demands for a new bailout package to a national referendum.

A dynamic that might otherwise have been debtor countries versus creditor countries or North versus South instead became Everybody versus Greece.

The Greek economy had been devastated by a series of spending cuts and tax increases demanded since 2010 by the “troika” of the European Commission, the International Monetary Fund and the European Central Bank (or “the institutions,” as Mr. Tsipras’s government asked that they be called to avoid the negative connotations that had built in Greece around the term “troika”).

When elected, Mr. Tsipras pledged to force Europe to focus on spending money to encourage growth, writing down unmanageable debts, and helping Greece and other troubled economies like Italy and Ireland get back on their feet. He tried to rally support among Europe’s left-wing parties in hopes of generating a mass democratic uprising.

“The issue of Greece does not only concern Greece,” Mr. Tsipras wrote in the French newspaper Le Monde in May. “Rather, it is the very epicenter of conflict between two diametrically opposing strategies concerning the future of European unification.”

But while Mr. Tsipras attracted allies like Podemos, a similarly inclined left-wing party in Spain, the mainstream governing parties of Europe viewed Syriza’s ideology as more of a threat than a way forward. They feared that making major concessions to Greece would only strengthen their own domestic opponents when many European electorates were flirting with anti-European populist movements.



A job fair in Spain, where the unemployment rate has been above 20 percent for five consecutive years. Youth unemployment in the eurozone is particularly high. Credit Samuel Aranda for The New York Times
“Calling the referendum was the moment when 95 percent of the creditor countries said: ‘That’s it. I don’t want to be blackmailed by Greece, and don’t want to live in a union with a country that blackmails me,’ ” said Guntram Wolff, the director of the Bruegel think tank in Brussels.

At a crucial moment in late June, the finance ministers met and excluded Yanis Varoufakis, then Greece’s finance minister, from the room, a symbol of how isolated the country had become.

After the decision, the European Central Bank president, Mario Draghi, said in the closed-door meeting, “I guess we can go back to calling it the troika.”



Mr. Tsipras was not the first European leader to try to push the Continent’s politics away from austerity. Mr. Hollande did the same after his election in France in 2012, as did Matteo Renzi when he became Italian prime minister last year.

But they have had little more success than the Greeks in altering policy or even shifting the terms of the debate. Mr. Hollande, for example, has advocated, so far unsuccessfully, “Eurobonds” in which European countries borrow money collectively that could be used to fund infrastructure projects or other growth-spurring investments without exposing any individual country to the risk of excessive debt.

Part of the reason is the rise of domestic political constraints on anything that could put taxpayers in one country at risk for economic mismanagement in another. Just as the unpopular United States bank bailouts of 2008 and 2009 helped usher the Tea Party’s small government philosophy into prominence in American politics, the use of billions of euros in European taxpayers’ money to aid Greece has been a boon for the populist right.

In Slovakia, a coalition government fell because of its support for a previous Greek bailout. In Finland, a right-wing populist party now known as the Finns is part of the governing coalition and opposes concessions to Greece.

In particular, the nations allied against the Tsipras government fear that writing down Greek debts further would only encourage other countries with high debt burdens — particularly Italy, with debt of 132 percent of its gross domestic product.

The leaders of the debtor countries themselves, meanwhile — especially Ireland, Portugal and Spain — have complex incentives of their own.

Those economies have suffered from years of misery amid the imposition of fiscal austerity, including a Spanish unemployment rate that has been above 20 percent for five consecutive years.

There are modest flickers of hope; the Spanish economy grew 1.4 percent in 2014, for example, after contracting for the three previous years. So leaders of Spain and the other debtor countries can point to that progress as evidence that they were right all along to acquiesce to painful cuts and reforms.

“We must appreciate the difference between serious policies and unserious policies that lead to situations such as those in Greece, where people can’t access their own money,” said Prime Minister Mariano Rajoy of Spain in a recent news conference.

For now, the core of Europe remains 19 countries with very different economies, their own budgets, and yet a single currency. That means when some countries are persistent debtors and others persistent creditors, it becomes hard — as the last five years has shown — to fix the imbalance.

“Debtors and creditors in the end never have a good relationship,” said Hans-Werner Sinn, a leading German economist. “It is like between friends. If you have a friend you don’t give him a loan, you give him a gift. You make a gift and don’t expect to get it back. But when you become his creditor he stops being your friend.”

Reporting was contributed by Alison Smale and Melissa Eddy from Berlin, James Kanter and Andrew Higgins from Brussels, and Jack Ewing from Frankfurt.

Yanis Varoufakis defends ‘Plan B’ tax hack - Financial Times

July 29, 2015 at 4:03pm

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http://www.ft.com/intl/cms/s/0/d44a92c0-3454-11e5-bdbb-35e55cbae175.html#axzz3hG0x0eUR


Last updated: July 27, 2015 7:18 pm
Yanis Varoufakis defends ‘Plan B’ tax hack
Peter Spiegel in Brussels and Kerin Hope in Athens


 Greek Finance Minister Yanis Varoufakis announced his resignation on July 6, 2015, a day after Greeks delivered a resounding 'No' to the conditions of a rescue package. In a statement, Varoufakis said he had been "made aware" that some members of the euro zone considered him unwelcome at meetings of finance ministers, "an idea the prime minister judged to be potentially helpful to him in reaching an agreement."
Yanis Varoufakis has insisted he did nothing improper as part of a five-month clandestine project he ran as Greek finance minister that prepared for his country’s possible exit from the euro.
The scheme, which was almost completed but not fully implemented, involved hacking into Greece’s independent tax service to set up a parallel payment system — accessing individuals’ private identification numbers and copying them on to a computer controlled by a “childhood friend” of Mr Varoufakis.

Greece's finance minister Yanis Varoufakis
We’ve had a listen to the entire call, and transcribed most of it
It would have allowed transactions to continue in case of a prolonged bank holiday and the imposition of capital controls.
Mr Varoufakis described the project in a 25-minute teleconference with private investors on July 16.
A tape of the call was released on Monday by the London-based Official Monetary and Financial Institutions Forum, which hosted the session, after portions were published at the weekend by the Greek newspaper Kathimerini.

“We decided to hack into my minister’s own software programme in order to be able to bring it all, to just copy, just copy the codes of the tax systems’ website on to a large computer in his office, so he can work out how to design and implement this parallel payment system,” Mr Varoufakis said on the call.
“We were ready to get the green light from the prime minister when the banks closed in order to move into the general secretariat of public revenues, which was not controlled by us but is controlled by Brussels, and to plug this laptop in and to energise the system.”
Political opponents expressed outrage at the plan. Greek media reported that 24 MPs from New Democracy, the largest opposition party, had asked Alexis Tsipras, prime minister, whether Mr Varoufakis should face a judicial inquiry.
In a statement, Mr Varoufakis’s office said the project was conducted by a working group he was authorised to establish in order to prepare contingency plans in case Greece was forced out of the eurozone by creditors. The working group broke no laws, the statement said.
“The ministry of finance’s working group worked exclusively within the framework of government policy and its recommendations were always aimed at serving the public interest, at respecting the laws of the land, and at keeping the country in the eurozone,” said Mr Varoufakis’s office.

The disclosures about Mr Varoufakis’s “Plan B” come on the heels of revelations by the Financial Times and other media organisations that far-left members of the governing Syriza party were contemplating a far more radical plan to seize government reserves and take over the country’s central bank in a transition to a new currency.
James K Galbraith, the University of Texas economist and a longtime Varoufakis associate who worked on the finance ministry plan, issued his own statement saying their efforts never overlapped with the more radical efforts other than an “inconclusive” phone call he had with an MP from the Left Platform.
“We had no co-ordination with the Left Platform and our working group’s ideas had little in common with theirs,” said Mr Galbraith.
In his taped remarks, Mr Varoufakis said Mr Tsipras authorised him to prepare for a possible “Grexit”, even before Syriza won January’s parliamentary elections.
Audio


Former Greek finance minister tells delegates at an Official Monetary and Financial Institutions Forum event about proposals to set up a parallel payments system in the case of an exit from the euro
“I assembled a very able team, a small team, as it had to be, because that had to be kept completely under wraps, for obvious reasons,” said Mr Varoufakis.
“The difficulty was going from the five people who planned it to the 1,000 that would be implementing it. For that, I had to receive another authorisation that never came.”
The revelations were shrugged off by government officials, who said Mr Tsipras never gave Mr Varoufakis the go-ahead to activate his plan.
“I can’t imagine this [happened],” said Dimitris Mardas, the deputy finance minister in charge of revenues. “But what a government minister’s team proposes doesn’t constitute government policy.”
Mr Tsipras is known to have grown wary of some of Mr Varoufakis’s ideas, a concern that contributed to his decision to replace the outspoken finance minister with Euclid Tsakalotos, a more low-key loyalist, earlier this month.
Mr Varoufakis’s Plan B involved creating reserve accounts “surreptitiously” attached to every taxpayer’s ID that could be used to make payments to other taxpayers when the European Central Bank forced the shutdown of Greece’s banking system, as it did last month.
“That would have created a parallel banking system while the banks were shut as a result of the ECB’s aggressive action, to give us some breathing space,” said Mr Varoufakis.
That would have created a parallel banking system while the banks were shut as a result of the ECB’s aggressive action, to give us some breathing space
- Yanis Varoufakis
He insisted the hacking became necessary because the general secretariat of public revenues in Greece was under the control of the creditor institutions.
“The general secretariat of public revenues, within my ministry, is controlled fully and directly by the troika [creditors]. It was not under control of my ministry. . . It was controlled by Brussels,” he said.
The independent revenue office (IRO) was set up as part of Greece’s second bailout in an attempt to eliminate political interference that had helped vested interest groups with close connections to government to avoid meeting their tax obligations.
One person with knowledge of the government computer systems said it would “probably have been possible to hack into the IRO computer, but it would have destroyed the credibility of the revenue office and its mission”.

9 myths about the Greece crisis - The Independent

July 28, 2015 at 1:27pm

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http://i100.independent.co.uk/article/9-myths-about-the-greece-crisis--Z1CvIGFLMg

9 myths about the Greece crisis
 by Alasdair Lane in news


This was the week Greece made history by defaulting on its €1.55bn debt to the International Monetary Fund (IMF), becoming the first developed economy to miss a repayment.

Its banks closed, the Athens stock exchange was shut, and cash machine withdrawals were capped at €60.

A snap referendum was called by prime minister Alexis Tsipras to let the Greek people determine the country's fate – accept a bailout deal from their international creditors, or reject it in a move widely seen as a vote for Eurozone withdrawal.

Greek voters have a stark decision to make on Sunday, but their crisis is a murky one in which myths abound...

1. Grexit is now inevitable

Unable to repay its IMF debt, Greece is now in default – something which assures the country's exit from Europe. Or so it has been argued.

While the situation is perilously close to the point of no return, a Grexit is still not a sure thing.

From a legal standpoint, Greece's default does not entail automatic Eurozone expulsion. Addressing the European Parliament in April, Victor Constancio – VP of the European Central Bank (ECB) – said he was "convinced" a Greek exit would not result from a missed repayment, adding: "The treaty doesn't foresee that a country can be formally legally expelled from the euro."

However, a 'No' vote in Sunday's referendum on whether Greece should accept fresh bailout proposals would, it is widely believed, be the death knell for the country's Eurozone membership.

greeceVia Statista

2. Greece alone is to blame for the debt crisis

It is easy to point the finger of blame in situations as desperate as this one, but it would be wrong to say Greece is solely responsible.

As vulnerable to market forces as any country in the world economy, Greece was crippled by the global financial meltdown in 2008. Fiscal mismanagement followed, veering the state toward bankruptcy.

While bailouts from the IMF – alongside the other Troika organisations – averted catastrophe in the short term, a series of dismal misjudgements made the default almost inevitable.

From failing to restructure Greek debt to its catastrophic imposition of public sector budget cuts, the IMF must bear a significant portion of the blame for the current situation. As put by The Independent's economics editor Ben Chu:

"It has been one of the biggest economic disasters since the Second World War."

greece

3. Grexit will be catastrophic for Greece, as will its re-adoption of the drachma

Euroscepticism may be soaring at the moment, but it is conventional wisdom that Eurozone withdrawal would be an unmitigated disaster for the Greeks.

This may not be the case, however.

One of the easiest ways for a nation to gain international competiveness is to depreciate its currency – exactly what would happen if Greece readopts the Drachma. While expensive consumer items may become more expensive, food prices and the cost of other essentials could fall.

Eurozone expert Professor Stergios Skaperda has argued the financial benefits of a Grexit.

"Tailoring liquidity and exchange rate policy to the economy's needs and being responsive to levels of unemployment are some benefits that countries with their own currencies take for granted but are now sorely missed by Greece," he told i100.co.uk.

Departure from the euro could also boost Greece's democratic legitimacy and national sovereignty.

greece

4. Eurozone countries will be hit hard if Greece leaves

Interconnected, interdependent – member states of the Eurozone currency union fear the waves of a Greek departure. These concerns are not unfounded, fiscal disruption is a near certainty if Greece does go it alone. It would, after all, be an unprecedented event – there is the risk of contagion, and even other countries following suit.

The euro may well be strengthened by a Greek withdrawal, however. As summarised by IMF chief economist Olivier Blanchard:

"If it were to happen, I think the way to reassure markets and make progress is actually go further, use the opportunity to make progress in terms of the fiscal union and the political union. This would be clearly the right moment to do it."

In a Darwinian sense removing the weakest economy will consolidate the union's strength, and could increase its prosperity in the long-term.

greece
5. Outside the Eurozone, Britain is sheltered from Grexit repercussions

It's the biggest external economic risk to the UK, chancellor George Osborne has warned of the crisis.

While Greek banks have only a tiny footprint in the UK economy, our exposure to the Eurozone as a whole is considerable. We are vulnerable, therefore, to any repercussions Grexit may have for the monetary union.

"The outlook has worsened," said Bank of England governor Mark Carney, speaking in the wake of Greece's default.

greeceVia Statista

6. A Greek holiday is now impossible

In the throes of a worsening economic crisis, surely that Greek getaway is now off the cards?

Well no, actually.

Cash concerns are the obvious worry, but with a bit of preparation holidaymakers should be fine. As it stands, the €60 cap on cash machine withdrawals does not apply to international bank cards.

And if the country does leave the euro, the process will not be overnight. "We do not anticipate that there will be any need for tour operators to rebook their customers to a different destination," said an Association of British Travel Agents (ABTA) spokesperson, though the organisation does recommend those travelling to Greece take plenty of cash.

greece
7. A referendum is the most democratic way forward

A national plebiscite on whether Greece should accept proposals made by its international creditors – in effect a referendum on the country's Eurozone membership – might seem like the most democratic solution to the crisis. This may not be the case, though.

Quite apart from the vague wording of the question – which critics argue is a government ploy to win the desired 'No' vote – there have been claims that the snap referendum falls short of international standards.

Guidelines drawn up by the Council of Europe (COE) recommend that voters have a minimum of two weeks before a national vote; PM Alexis Tsipras has given his citizens just nine days to make up their minds.

COE also recommends that its observers monitor the vote, something which will not happen on Sunday.

"This isn't possible [given the short notice] and the secretary general confirmed that the COE had not been asked to observe," said Council spokesman Daniel Holtgen.

greece

8. Greece can recover without reform

Grexit or no Grexit, Greece has to change. A typically clientelist state – one in which material offerings are made for electoral support – allegations of bribery and political corruption have persisted throughout the Greek crisis. A bloated, inefficient public sector has hindered economic convalescence, critics argue.

For Professor Nicholas Economides, an international authority on network economics and public policy, internal restructuring is vital.

"For Greece to recover, [its public sector] needs to be cut drastically. Unfortunately civil servants are the backbone of Syriza and therefore the present government is totally against reducing the size of the state sector," he told i100.co.uk.

greece

9. Things can't get worse for Greece

Sadly, they can. Things will almost certainly get worse before they get better. The gravity of the crisis should not be underestimated – the road to recovery, be it within the Eurozone or outside it, will be a long one indeed.

10 Questions to Ask When Negotiating Your Starting Salary - Recruiter.com

July 20, 2015 at 8:33pm

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10 Questions to Ask When Negotiating Your Starting Salary
Kazim Ladimeji / Recruiter.com @RecruiterDotCom July 17, 2015  
 
Would you be prepared to offer a signing bonus?

It would be naïve to think that an employer will automatically offer you the best possible salary as their first offer. Sure, on some occasions a very lucky candidate may find themselves with a salary offer they can’t refuse, but this is a rare thing.

Studies show that most employers will actually leave some bargaining room in their initial salary offers, as they fully expect you to ask for more. If you don’t negotiate, you are leaving money on the table.

If you move passively through the salary negotiation, there is a good chance you could end up working alongside coworkers who have bargained better and harder — coworkers who are earning $5,000 a year more than you. Ouch.

All of this is to say that it usually makes sense to resist the first salary offer and negotiate instead. One of the most effective ways to negotiate fairly is by asking appropriate exploratory and clarifying questions that gently persuade the employer to meet your salary expectations. To help you, here are ten such questions to ask when negotiating your salary:

1. Are you open to a salary discussion?

I like this more than the classic query, “Is this salary up for negotiation?” This version is a little less direct and confrontational; upon hearing it, the employer may be less defensive and guarded, more open. Also, this question sets a more relaxed tone for what will be a sensitive conversation.

2. Is there any wiggle room in the current salary?

You can either lead with this question or use it to follow up if you get a positive response to question No. 1. What’s good about this question is that it may soften the employer’s stance; it implies you are looking for something small – even though you might not be.

3. When would my pay be reviewed next?

If thee employer can’t give you a clear and precise picture of when your next pay review or raise might be, there’s a chance you could be stuck with your starting salary for some time. In light of this uncertainty about your next raise, you might be justified in wanting to drive a harder bargain with your starting salary.

4. What was the average annual percentage raise last year?

The employer might not be prepared to divulge this figure, but it’s a bonus if the employer is. This figure can give you an idea of the kind of annual raise you might expect. If it’s healthy, you might not need to bargain quite so hard, as a good pay raise could be right around the corner; if it’s not very healthy, you may need to negotiate harder.

5. What percentage raise did your highest performers enjoy last year?

Asking this question shows the employer that you associate yourself with winners, and it can also give you an idea of how high performance and success are rewarded at the company. If there’s a strong positive link between performance and reward, you might settle for a lower starting salary, knowing that once you get in and prove yourself, your salary will be boosted.

6. Is there a bonus scheme? If so, what was the average payout for someone of my grade last year?

Don’t be taken in by a delicious-sounding potential bonus of 20 percent of salary or more. Concern yourself with the reality: ask for the average actual bonus payout for people in your pay grade last year. If the realities of bonuses turn out to be much lower than the advertised potential of bonuses, you may need to do some harder bargaining.

7. Would you be prepared to build in a six-month raise based on my ability to meet certain performance goals?

Save this question for situations where the employer is really not prepared to budge on salary. In such a case, the employer may be prepared to offer a deferred raise subject to future performance as an alternative to a higher starting salary. A deferred raise is not as good as a higher starting salary, but it’s better than nothing.

8. Would you be prepared to increase my bonus pot as a way to increase my total compensation?

This can be a backdoor approach to a higher salary. Employers may be more likely to give away bonus potential than actual salary, because bonuses are linked to your performance. Employers see it as a win-win situation: you earn more pay by delivering better results.

9. Would you be prepared to offer a signing bonus?

This is useful in situations where the company simply can’t afford to pay you more because doing so would bust its pay structure. The employer can give you a one-time golden handshake for signing on the dotted line without disrupting the internal pay structure.

10. Would you be prepared to offer something else in lieu of a higher starting salary? (E.g., higher benefit contributions, more PTO, flexible work options, etc.)

If the employer can’t offer you a higher starting salary, you may still be able to negotiate better benefits. When you have them on the ropes, they may be more likely to make concessions in this area.

Just to be clear, you don’t need to ask all of these questions when negotiating your salary. See this list as more of a toolkit: it’s about picking and choosing the right questions to help you achieve your objective of a higher starting salary.

This article originally appeared on Recruiter.com

10 CEOs Who Prove Your Liberal Arts Degree Isn’t Worthless - TIME

July 24, 2015 at 3:49pm

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10 CEOs Who Prove Your Liberal Arts Degree Isn’t Worthless
Jack Linshi @jacklinshi July 23, 2015   
HBO, Starbucks, and Disney's CEOs were once disgruntled liberal arts majors, too

Hearing a son or daughter say they’re majoring in the liberal arts has never made more parents’ hearts sink into their stomachs. STEM degrees appear atop nearly every ‘best majors’ list, President Barack Obama has made jabs at the usefulness of a humanities degree, and college dropouts have colonized the Fortune 500. So when unemployed English majors joke that no degree would be better than one in liberal arts—they might actually not be kidding.

But there is life after liberal arts — just ask these 10 CEOs. From a self-proclaimed “completely unemployable” history major, to a B-average communications student at a No. 91-ranked state school, to a hippie philosophy dropout who wanted to fix capitalism, here’s how these formerly disgruntled liberal arts majors beat everyone else to the helms of some top companies.

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Howard Schultz, Starbucks CEO

Howard Schultz Starbucks CEO
Stephen Brashear—Getty Images
Howard Schultz speaks during an annual shareholders meeting March 18, 2015, in Seattle, Wash.
Degree: B.S. in Communications, Northern Michigan University, 1975

On worrying about his post-college job prospects: A first-generation college student, Schultz grew up in a working-class family in the Projects of Canarsie in Brooklyn, and later attended NMU on a football scholarship. “During senior year, I also picked up a few business classes, because I was starting to worry about what I would do after graduation. I maintained a B average, applying myself only when I had to take a test or make a presentation,” Schultz wrote in his 1999 business memoir, Pour Your Heart Into It. “To my parents, I had attained the big prize: a diploma. But I had no direction. No one ever helped me see the value in the knowledge I was gaining.”

On getting his start in business: “After graduating from college in 1975, like a lot of kids, I didn’t know what to do next… I took some time to think, but still no inspiration came,” Schultz wrote in his memoir. “After a year, I went back to New York and got a job with Xerox, in the sales training program. I learned more there than in college about the worlds of work and business.” After three years, Schultz joined a Swedish drip coffee maker manufacturer before moving to Starbucks as director of marketing in 1982. He has served as CEO since 2008.

On success: “It took years before I found my passion in life,” the coffee exec wrote. “But getting out of Brooklyn and earning a college degree gave me the courage to keep on dreaming.” Schultz added: “I can’t give you any secret recipe for success. But my own experience suggests that it is possible to start from nothing and achieve even beyond your dreams.”

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Andrea Jung, Former Avon CEO

Andrea Jung, CEO of Avon Products Inc., accepts the Leadership in the Corporate Sector award during the Clinton Global Citizen Award ceremony marking the culmination of the Clinton Global Initiative in New York
Lucas Jackson— Reuters
Andrea Jung accepts the Leadership in the Corporate Sector award at the Clinton Global Citizen in New York on Sept. 23, 2010.
Degree: B.A. in English Literature, Princeton University, 1979

On whether she had ever imagined being a Fortune 500 CEO: A trailblazer for female CEOs, Jung finds it hard to believe how a Princeton bookworm came to lead the world’s largest direct cosmetics seller, where she was chief from 1999 to 2012. “What I find myself doing [now] was pretty unimaginable for me in 1979, after I finished my much-loved thesis on Katherine Mansfeld and my junior papers on Virginia Woolf,” Jung told students in a 2012 speech at her alma mater. “To be standing here, and saying, ‘I now run a $10 billion global company’—I would’ve said, ‘Couldn’t be possible, that is not an imagined career path, not an imagined journey.’ Things have certainly taken a wonderful, but different, path.”

On being an English major: “Because I was an English major, I loved journalism, I thought perhaps I’d go back to journalism school or law school,” Jung said during her speech. But her friends told her about a training program at Bloomingdale’s to gain experience in marketing and merchandising before hitting the books once more. “I fell in love with the business and the consumer,” Jung recalled. So she ditched her grad school plans, and dove into the women’s apparel, accessories and cosmetics industry. “The rest is history.”



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Michael Eisner, Former Walt Disney Company CEO

Disney CEO Michael Eisner
Hector Mata—AFP/Getty Images
Disney CEO Michael Eisner (R) and his hand-picked successor Robert Iger pose for a photograph in Disneyland in Anaheim, Calif., on July 17, 2005.
Degree: B.A. in English Literature and Theater, Denison University, 1964

On the importance of liberal arts: “Literature is unbelievably helpful, because no matter what business you are in, you are dealing with interpersonal relationships. It gives you an appreciation of what makes people tick,” argued Eisner, who served as Disney CEO from 1984 to 2005, in a 2001 interview with USA Today.

On failed dreams and unemployment after college: “After graduating from Denison, I set off on the ocean liner Mauritania for Paris, figuring that I’d find some café to write in, live the bohemian life for several years, and turn out plays that would eventually find their way to Broadway,” Eisner recalled in his 1999 autobiography, Work in Progress. Realizing quickly that he didn’t have the talent to become the “next great American playwright,” Eisner moved to New York to find a steady job. “The only problem,” he recalled, “was that I couldn’t get a job… My inability to land a job left me feeling lonely, dislocated and slightly frantic.”

On starting off at a $65/week job: A few months later, in late 1964, Eisner received his first job offer, an NBC clerk where he logged the times each commercial appeared on air, and whether they were black-and-white—for just $65 per week. “It was far better than being unemployed,” he wrote in his autobiography. Later, he quickly scaled the corporate ladder at ABC and Paramount Pictures, before serving as Disney’s chief from 1984 to 2005. As the New York Times said of Eisner’s skill set in a 1998 article: “Eisner is unusual among entertainment moguls because he has had both creative and corporate experience. He knows how you put a show together and avoid going broke doing it.”





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Richard Plepler, HBO CEO

Richard Plepler HBO CEO
Frederick M. Brown—Getty Images
Richard Plepler speaks during the 2011 Summer TCA Tour on July 28, 2011, in Beverly Hills, Calif.
Degree: B.A. in Government, Franklin & Marshall College, 1981

On drawing inspiration from his liberal arts studies: HBO’s chief since 2013, Plepler recalled in a commencement speech this year at his alma mater that, when trying to land his first job, he turned to Ralph Waldo Emerson’s writings. “I believed, with Emerson, that if a man planted himself on his convictions and hopes that, ‘the huge world will come ’round to him.’ I always felt that, and all these years later, still do,” he said. “I decided to do everything in my power to secure a job, however lowly, in the nation’s capital. I got in my little Honda, and I drove to Washington, used all my energy and power of persuasion to try to talk my way onto the staff of a young U.S. Senator from my home state of Connecticut, Christopher Dodd.”

On the chance encounter that led to his HBO career: After four years in D.C., Plepler moved to New York City in 1987 and started a one-man consultancy. One night, at a Chinese restaurant, he looked up and saw Benjamin Netanyahu, then the Israeli ambassador to the United Nations. That year had marked the first Palestinian uprising against Israeli occupation, a topic familiar to Plepler, who then decided—on the spot—to pitch to him a documentary film about the conflict. “He barely looked up from his dumpling,” Plepler admitted. “He finally asked me to sit down, he listened, nodded and after a variety of happy accidents in the coming weeks and months, I produced a film… The film captured the imagination of the then Chairman of HBO, who invited me to join the company.”

On what young grads can learn from reading Game of Thrones: As Plepler said during his speech: “While the road ahead, to quote from Game of Thrones, is ‘dark and full of terrors,’ it is hardly insurmountable.”

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Carly Fiorina, Former Hewlett-Packard CEO

Carly Fiorina HP CEO
John G. Mabanglo—AFP/Getty Images
Carly Fiorina responds to media questions after an HP shareholders meeting in Cupertino, Calif., on March 19, 2002.
Degree: B.A. in Medieval History and Philosophy, Stanford University, 1976

On becoming CEO of a leading computer company: Armed with a Stanford history degree yet still “completely unemployable,” Fiorina worked short stints as a receptionist, English teacher and secretary. At 25, she landed a sales rep job at AT&T, and quickly rose up in the IT and tech industry, eventually becoming HP’s chief from 1999 to 2005. When asked in a 2001 USA Today interview whether her degree was of any use, Fiorina said how studying the transformation from the Middle Ages to the Renaissance helped her approach the ongoing technological revolution: “We have, in fact, seen nothing yet.”

On being proud of her liberal arts background: “While I joke that my medieval history and philosophy degree prepared me not for the job market, I must tell you it did prepare me for life,” the 2016 Republican presidential candidate said in March, speaking of education policy. “I learned how to condense a whole lot of information down to the essence. That thought process has served me my whole life… I’m one of these people who believes we should be teaching people music, philosophy, history, art.”

(Fiorina also earned an MBA from the Smith School of Business at the University of Maryland, College Park, in 1980; and an MS from the MIT Sloan School of Management in 1989.)



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John Mackey, Whole Foods Co-CEO

John Mackey Whole Foods CEO
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John Mackey speaks at the World Health Care Congress in Washington, D.C., on April 6, 2011.
Degree (dropped out): B.A. in Philosophy and Religion, The University of Texas at Austin, 1977

On the benefits of being a literary hippie and college dropout: “I accumulated about 120 hours of electives, primarily in philosophy, religion, history, world literature, and other humanities. I only took classes I was interested in, and if a class bored me, I quickly dropped it,” Mackey wrote in his 2013 book, Conscious Capitalism. Mackey, a shaggy-haired yogi, meditator and vegetarian living in a commune, ended up not taking a single business class: “I actually think that has worked to my advantage in business over the years. As an entrepreneur, I had nothing to unlearn and new possibilities for innovation.”

On philosophy and founding Whole Foods: During his college years, Mackey drifted into a progressive political philosophy that taught him “both business and capitalism were fundamentally based on greed, selfishness, and exploitation,” the self-described “classical liberal” wrote in his book. That, he said, was the motivation for his girlfriend and him to open a natural foods store, Safer Way, in 1978. In two years, they renamed it Whole Foods Market.

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Susan Wojcicki, YouTube CEO

Susan Wojcicki YouTube CEO
Kimberly White—Getty Images for Vanity Fair
Susan Wojcicki speaks at the Vanity Fair New Establishment Summit on Oct. 9, 2014 in San Francisco, Calif.
Degree: B.A. in History and Literature, Harvard University, 1990

On majoring in the humanities: Wojcicki, an early Google employee who became YouTube’s CEO in 2014, credits her parents — both of whom were teachers — with encouraging her broad interests: “Their goal wasn’t to become famous or make money… They found something interesting, and they cared about it. I mean, it could be ants, or it could be math, or it could be earthquakes or classical Latin literature,” the California native told Fast Company in 2014. “No one in my family had ever worked in business beforehand. So there was the expectation that I would just go into academics.”

On becoming one of the most powerful women in tech: Wojcicki had originally planned on getting a PhD after graduation, but her career path changed when she discovered the power of technology her senior year at Harvard, when she took the school’s popular intro computer science class. “CS50 changed my life,” she recalled in a video encouraging students to take the class. “When I graduated from Harvard in 1990, I went to Silicon Valley, and I got a job, and I’ve been working in tech ever since.”

(Wojcicki also earned an MS in Economics from University of California, Santa Cruz, in 1993; and an MBA from the UCLA Anderson School of Management in 1998.)

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Steve Ells, Chipotle Co-CEO

Steve ells chipotle CEO
Victor J. Blue—Bloomberg via Getty Images
Steve Ells on a Bloomberg Television interview in New York on June 27, 2014.
Degree: B.A. in Art History, University of Colorado Boulder, 1988

On his liberal arts education: “In college, I had no idea what I wanted to do. I studied art history and had a great time, but I didn’t have any sort of career aspirations,” recalled Ells in a 2004 interview with Westword. “I never took business classes in school. I never really thought about the economics of a restaurant — only the food and the experience,” Ells added in a 2011 video interview about Chipotle’s beginnings.

On founding the now-$20 billion burrito chain: After college, Ells, who had always been passionate about cooking, attended the Culinary Institute of America, graduating in 1990. When he launched Chipotle three years later, he had to play catch-up with his business smarts. “Raising money for Chipotle was really my MBA,” Ells said in a 2009 Wall Street Journal interview. “People asked a lot of questions about the business that forced me to take a critical look at how it ran.”

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Alexa Hirschfeld, Paperless Post Co-Founder

Alexa Hirschfeld Paperless Post Ceo
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Alexa Hirschfeld speaks at the Empowered Entrepreneur Conference in New York on Oct. 18, 2011.
Degree: B.A. in Classics, Harvard University, 2006

On quitting her first job to co-found Paperless Post with her brother: The e-vite service was conceived in 2007 by her younger brother, James, while the Harvard undergrad was planning his 21st birthday party. He then called his sister, who had planned to leave her first job as an editorial assistant at CBS, where she was often stuck opening mail. “I wanted to be in something that was not figured out yet,” Alexa said in a 2011 interview with Cosmopolitan. “I imagined that if I were, there would be more room for creativity.”

On developing Paperless Post: “[James and I were] really focused on not having lives that were really awful and conventional,” Alexa told the Harvard Crimson in a 2011 interview. But starting out wasn’t exactly easy, she said: “The gestation period was really painful. It felt like, ‘Is this ever going to be real?’ We sat in my parents’ living room and we didn’t celebrate any holidays for two years — we both lost a lot of weight.”

On how her non-technical skills helped her in the tech field: “We’re very contrary to the Internet,” Hirschfeld said in a 2013 interview with The Huffington Post. “So these people who were the scions of the Internet did not get it. They were like, ‘Why would you care what it looks like? Wouldn’t you just want a calendar invite? Why would you want to have an image?’ Like, you know, the Internet’s not about that — we left those formalities back in the real world.”

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Jack Ma, Alibaba Chairman

Jack Ma Alibaba CEO
Andrew Burton—Getty Images
Jack Ma poses for a photo outside the NYSE prior to Alibaba's IPO on Sept. 19, 2014 in New York City.
Degree: B.A. in English, Hangzhou Normal University (Hangzhou Teacher’s Institute), 1988

On struggling to put his English degree to use: After graduating from college — it took Ma three tries to even pass China’s college entrance exam — Ma faced a string of over 30 job rejections, including a rejection from Kentucky Fried Chicken. He was eventually was hired to teach English at a local college for $20 a month, while also running a small translation company and peddling flowers, books and clothes to support himself on the side. Ma’s English skills later caught the attention of some entrepreneurs, through whom he learned about the Internet. In 1999, he and 17 friends founded Alibaba.com, the global wholesale online marketplace. Its $25 billion IPO in 2014 was the largest ever.

On why liberal arts education matters, especially for China: With entrepreneurship and innovation critical for China’s future, Ma has emphasized repeatedly why Chinese education needs to be less pre-professional. As Ma shared in an internal speech to his Alibaba employees: “I told my son, ‘You don’t need to be in the top three in your class. Being in the middle is fine, so long as your grades aren’t too bad.’ Only this kind of person has enough free time to learn other skills.”

Chart that tells a story — Gold - Financial Times

July 25, 2015 at 5:09pm

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http://www.ft.com/intl/cms/s/2/62b4f1a2-2fbb-11e5-91ac-a5e17d9b4cff.html?segid=0100320#axzz3gstqSK00



July 24, 2015 10:29 am
Chart that tells a story — Gold
By Lucy Warwick-Ching


The price ogold hit a five-year low of $1,088 a troy ounce on 20 July, falling 4 per cent in just a few minutes after the Shanghai gold exchange opened. The immediate cause of the drop was a surprise five-tonne sell order placed on the exchange by traders overnight.

This triggered “stop-loss” orders, which traders put in place to limit their losses by automatically selling when the price reaches a predetermined level. This caused the price to drop even more sharply.
Why is gold out of favour?
One of the reasons behind the decline has been the stronger US dollar. The value of the greenback typically has an inverse relationship with gold. Like other commodities, it is priced in dollars on international markets, which means when the dollar rises investors have less buying power and the commodity becomes more expensive.
Another factor is the prospect of an interest rate rise in the US after the Federal Reserve said it may increase the base rate from 0.25 per cent sooner rather than later, and possibly this year. That diminishes the attraction of non-yielding assets, such as gold.
One other factor may have been Friday’s news from the People’s Bank of China that it owns around 1,658 tonnes of bullion — far less than the 3,500 tonnes analysts had expected. This news prompted a $10 per ounce price drop on Friday.
Adrian Lowcock, head of investing at Axa Wealth, said: “Gold has traditionally been seen as a hedge against inflation and a weaker US dollar. Neither inflation or the US dollar have been an issue, with the latter remaining strong and the former low.”



In the small hours of Sunday morning, when most traders in London were asleep, one gold broker who was suffering a restless night said he happened to check the price of the precious metal on his phone. What he saw was one of the biggest and fastest moves in the recent history of the gold market.
Continue reading
He adds that the Greek bailout negotiations and a 30 per cent fall in Chinese stock markets should have been cause for concern among investors, resulting in a flight to safe haven assets. However, investors have been quite relaxed about both events and have not sold off riskier assets such as equities and bonds.
Why has it been a hit with investors over the years?
The precious metal has traditionally been seen as a haven and hedge against inflation and a weaker dollar, but with the US economy showing signs of recovery and the dollar strengthening, its attractiveness has waned.
Since it provides neither a dividend nor an income, there is an opportunity cost in holding it. That may be worth paying in bad times, when interest rates are low and the price is likely to be rising. But, with borrowing costs set to rise, commodities are losing favour with investors, as higher returns can start to be generated elsewhere.
What are the prospects?
Over the long term the price could fall much lower. Analysts once predicted prices would surge to $5,000 an ounce, but many are now saying it could fall back through the $1,000 mark this year. Some think the inflation-adjusted price is even lower than $1,000, so it is not out of the question that prices could continue to fall.
Mr Lowcock added: “In the short term gold could be volatile as investors digest the recent swings. However as the US economy continues its recovery and looks to raise interest rates supporting the strong dollar we could continue to see pressure on the gold price.”

6 Reasons Richard Branson Is the Most Popular Entrepreneur in the World - TIME

July 23, 2015 at 11:34am

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http://time.com/3966542/richard-branson-popular-entrepreneur/

6 Reasons Richard Branson Is the Most Popular Entrepreneur in the World
Justin Bariso / Inc. 8:00 PM ET   






Richard Branson may be the most popular businessperson alive. Employees, peers, and even strangers seem to love him. With more than eight million followers, he is by far the most popular Influencer on LinkedIn-almost doubling the next figure (Bill Gates’s 4.4 million followers).

I’ll admit, I had never heard of Branson before I started working for myself some years ago. I quickly found out that his status among entrepreneurs is legendary.

So what makes Sir Richard so darned likable?

In a 2007 interview at the famous TED conference, conducted with curator Chris Anderson, Branson spoke about the ups and downs of his career:


Here are some traits and quotes from the interview that I feel help explain his extreme popularity.

1. He smiles and laughs. A lot.

Generally speaking, we like people who smile and laugh. Their joyful spirit is contagious, and they make us feel better about ourselves.

Add to that the fact that Branson appears totally unpretentious, humble, and unable to take himself seriously. Beginning at the 16:00 mark, you’ll find a potentially awkward exchange in which Anderson makes a joke at Branson’s expense. Branson simply laughs it off and keeps going.

Watch Sir Richard for a few minutes, and it’s hard not to like the guy.

2. He touches others.

Not just figuratively. Literally. (Check out point 1:34 in the video.)

Fellow Inc. columnist Dr. Travis Bradberry points out that when you touch someone while conversing, you release specific neurotransmitters in the person’s brain that make him or her associate you with trust and other positive feelings. (Of course, unwanted or inappropriate touching will produce the opposite effect.)

It’s safe to say that Sir Richard hasn’t given us any literal pats on the back lately. But watching how he deals with others makes him appear down-to-earth and relatable.

It’s almost like a subliminal message flashes across the screen, telling your subconscious: I’m trustworthy and genuine, and I sincerely like people. Now follow me on LinkedIn.

3. He values his employees. Really.

In his opening comments, Sir Richard opines: “I learned early on that if you can run one company, you can really run any company. I mean, companies are all about finding the right people, inspiring those people, you know, drawing out the best in people.”

That attitude has led to a reputation as a leader who puts employees first.

How can you not love that?

4. He’s not afraid to try new things. In fact, he thrives on it.

On coming up with the idea for Virgin Airlines: “If I fly on somebody else’s airline and find the experience is not a pleasant one, which it wasn’t 21 years ago, then I think, ‘Well, you know, maybe I can create the kind of airline that I’d like to fly on.’ And so … got one secondhand 747 from Boeing and gave it a go.”


 
Sir Richard has been known to try his hand at, well, almost anything. The Virgin Group has current or past companies in the music, hospitality, and space-exploration industries, among many more.

Not every venture has been a success. But as hockey great Wayne Gretzky famously said: “You miss 100 percent of the shots you don’t take.”

5. He hated school.

Branson states in the interview that he suffers from dyslexia and as a child had “no understanding of schoolwork whatsoever.” He left school when he was 15 years old, and never pursued a university degree.

But that doesn’t mean he hasn’t continued the learning process. As he puts it: “I just love learning … I’m terribly inquisitive … I’ve seen life as one long learning process.”

Branson’s alternative road to billionaire-ship holds out hope for dreamers and individualists everywhere.

6. He’s the anti-typical business hero.

In a world where people generally get rich by stepping on others as they climb the corporate ladder, Sir Richard seems different. His philosophy:

“I think if you treat people well, people will come back for more … All you have in life is your reputation and it’s a very small world. I actually think that the best way of becoming a successful business leader is dealing with people fairly and well. And I like to think that’s how we run Virgin.”

***

At the end of the interview, Anderson sums up how most people feel about Branson after a few minutes of observation:

“When I was starting off in business, I knew nothing about it … I thought that business people were supposed to just be ruthless and that was the only way you could have a chance of succeeding. And you actually did inspire me. I looked at you and thought, ‘Well, he’s made it. Maybe there’s a different way.'”

This post is in partnership with Inc., which offers useful advice, resources and insights to entrepreneurs and business owners. The article above was originally published at Inc.com.

Why buying a car makes no sense - Financial Times

July 23, 2015 at 4:19pm

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High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/4de21c14-2f93-11e5-8873-775ba7c2ea3d.html#ixzz3gh0eBYmR

July 22, 2015 12:12 pm
Why buying a car makes no sense
Michael SkapinkerMichael Skapinker


In most cities, driving is horrible — there are greener, less stressful and cheaper alternatives
This picture taken on May 9, 2013 shows motorists commuting on a road during a traffic jam in Jakarta. The chronic jams cause losses of 1.8 billion USD (17.2 trillion rupiah) a year, according to official figures that take into account working hours lost, fuel wasted and health care costs for illnesses caused by noxious exhaust fumes. AFP PHOTO / Bay ISMOYO (Photo credit should read BAY ISMOYO/AFP/Getty Images)©AFP
The news this week that James Hind, 28, has raised £5.9m to launch Carwow, an online vehicle marketplace, took me back to the day when I bought a new car over the internet.
It was 2003, when Mr Hind was still a schoolboy, but, even then, Sir Richard Branson was declaring the whole business of going to a dealership and haggling with a salesman outdated.

By reimporting UK-assembled cars that had previously been exported to Cyprus, Virgin Cars was able to undercut the dealers. You chose a car online, made a payment and picked up your vehicle at an out-of-town garage.
The catch? There wasn’t one. When the car alarm went off for no reason, Virgin Cars sent someone around to fix it. And the Honda Civic, still running, if a little chipped and bumped, has not given a moment’s trouble since then.
So when it finally dies, will I buy a new car online? No. Virgin Cars is no longer around. Shortly after I bought mine, Sir Richard decided to get out of the business. Only 7,000 people were buying his vehicles annually, compared with hoped-for figures of over 50,000.
Carwow, which comes after US online sites such as CarsDirect, works differently from Virgin Cars. The company sends your online car preferences to 1,000 dealers, who contact you with their best offers, pay Carwow a commission and then sell to you directly.
I won’t be using them either. I can no longer see a reason to buy a car. It makes no sense. There are greener, less stressful and cheaper alternatives.
Start with the stress. In most cities, driving is horrible. It is stop-start, boring and bad-tempered.
Many people say they drive because they do not like being crushed against other sweaty, disagreeable commuters. I have driven and I have commuted. Fellow passengers are a great deal more civilised than other drivers — and their odours are less offensive than the emissions you inhale in a car.
In many cities today, there really is no need for a car. Public transport and walking can get you almost everywhere you need to go. It is healthier and it is greener. In London, I don’t drive for weeks, or sometimes months, at a time. (Others have taken to bicycles. I do not regard them as healthier — certainly not in London.)
Do not listen to anyone who tells you London’s transport is unreliable. I have taken the Northern Line, London Underground’s supposed “misery line”, twice every working day for 24 years. It lets me down two or three times a year.


Compare that to the hours drivers spent trapped by roadworks, diversions, or other cars. There is nothing convenient about driving.
In most European and many Asian and US cities, it is far quicker and easier to get around without a car. There are apps to tell you when the trains and buses are leaving. And there are apps to get you a car when you really need one.
In a blog post last year, Kyle Hill, chief executive of HomeHero, which provides carers for the elderly, explained why he had sold his Lexus and decided to do without a car — in Los Angeles.
He said he cycled on journeys up to five miles. For anything longer he used Uber. He calculated it was cheaper than running a car, with its purchase payments, interest, depreciation, insurance, petrol, maintenance and taxes.
And do not, he said, forget parking. At a recent dinner in New York, someone told me he paid $500 a month to park in his apartment building. When I expressed astonishment, everyone else chipped in that that was cheap.
A New York Times article in September said that the average residential parking space in Manhattan cost $136,052 to buy, and that some were selling for up to $1m. A secure underground parking space in Knightsbridge, London cost £350,000, the paper said.
Those are extreme prices, but all parking is a hassle, as are parking tickets.
There may be people who really cannot manage without a car: those who live in the country, for example, where there are no good bus services.
But the majority of us are city dwellers, and even in those places without good public transport, there will soon be online taxi services, if there aren’t already.
Some will say that none of this matters because cars will soon be self-driving. If so, that is another reason not to buy one you have to drive yourself, whether from a dealer or online.
michael.skapinker@ft.com
Twitter: @Skapinker

Australia’s banks told to boost mortgage capital - Financial Times

July 21, 2015 at 2:13pm

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Last updated: July 20, 2015 10:16 am
Australia’s banks told to boost mortgage capital
Jennifer Hughes in Hong Kong


Australia’s biggest banks will have to find about $9bn in fresh capital in the next year, in the latest threat to the profitability of one of the developed world’s most richly valued financial sectors.
The capital requirement comes as a result of regulations detailed on Monday demanding that the biggest lenders hold more capital against their home mortgage books — their most profitable product.

A parliamentary inquiry last year called for Australian banks to be “unquestionably strong” with capital reserves that would put them in the top quartile globally.
Globally the average core tier one equity capital ratio — the standard measure of a bank’s capital strength — is 11.7 per cent, according to the Australian Prudential Regulation Authority. Over time, Australian banks will need to raise their ratios by about 200 bps to hit the top quartile.
While those targets will require banks to raise some A$27bn ($20bn) combined over the medium term, the latest rules focus on the average risk weighting that Australia’s biggest banks are required to apply to home mortgages, which will increase from 16 per cent to about 25 per cent, APRA said on Monday.
The banks affected are ANZ, Commonwealth Bank of Australia, Macquarie, National Australia Bank and Westpac.
The changes are based on narrowing the difference between capital held under standardised risk weighting, and the lower levels held by larger lenders allowed to use their own internal models.
Analysts estimated that Commonwealth Bank and Westpac would need to find about A$4bn ($3bn) apiece, with ANZ Bank and NAB each needing roughly half that.
Bank stocks closed slightly higher in line with the broader mood, although ANZ, which has the smallest domestic mortgage book of the big four, beat the market and added 1.3 per cent. Analysts said the latest regulatory demands were already priced in and were expected to be delivered via retained earnings and scrip dividends.
However, the need for more capital comes as Australia’s banks face an ageing population more interested in saving than in borrowing, and high house prices. The country’s lenders also serve a household sector that is more highly geared than either the US or UK were at their pre-crisis 2007 peaks, according to Goldman Sachs.
Mortgages were banks’ most profitable product in 2014, delivering a return on tangible equity of about 35 per cent. If the effect of the entire A$27bn were applied to last year’s earnings, ROTE would have fallen to 24 per cent, according to Goldman estimates. Overall bank returns would have dropped to 16.3 per cent from the 18.9 per cent reported.
Australia’s banks trade on price-to-book ratios of almost two, compared with European and US banks which trade much closer to their actual book values.