10 July 2015   Leave a comment

Greek Prime Minister Tsipras has submitted another proposal to the troika to prevent a Greek default.  It is remarkably close to the proposal that Greek voters rejected in the referendum, although there are some changes.  Bloomberg summarizes the differences between the June and the July proposals.  Whether the new proposal is viewed as a capitulation or as a concession to reality will be something for the Greek people to decide.  The key omission is that there does not seem to be any provision for writing off some of the debt.  I continue to be amazed that serious people continue to believe that the entire debt is repayable without some outside stimulus.

 

The onus is now actually on Germany, and, more specifically,  Chancellor Merkel.  Writing in the Financial Times, Stefan Wagstyl argues that Merkel is in a “lose-lose” situation:

“She must decide whether to back a new loan programme and keep a troubled country in the common currency — or save the money and face the unpredictable consequences of Grexit and the ignominy of a first-ever reversal in the long history of EU integration.

“For the chancellor, a rescue risks widespread complaints from German taxpayers, who have already borne the brunt of two Greek bailouts. It could also provoke a large revolt in her conservative CDU/CSU bloc where MPs are fuming not only at the demands by Greek prime minister Alexis Tsipras but also his seeming contempt for the country’s creditors.

“But, given her stature, a Grexit would leave her carrying much of the international criticism for a manifest failure of EU solidarity.”

Indeed, the former Finance Minister of Greece, Yanis Varoufakis, makes the argument that the German Finance Minister, Wolfgang Schäuble, wants to force Greece out of the eurozone in order to “discipline” France:

“What do I mean by that? Based on months of negotiation, my conviction is that the German finance minister [Schäuble] wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.”

The price Germany would pay for appearing to be the “bully” in the European Union would be the long-run dissolution of the Union, hardly something that Merkel could desire.   But the short-run costs of alienating her Party’s base would be the loss of effectiveness and even power in Germany.

 

An article in the most recent issue of Science suggests that we may have already passed the tipping point for a significant rise in sea levels because of global warming.   The new study looked at three previous periods of warming and found that the 2 degree Celsius limit that most use as an overall tipping point for the planet as a whole has led to significant sea level increases due to polar ice melting.  The study projects a 6 meter increase in sea levels by the year 2100 given the current levels of greenhouse gas emissions.   To get an idea of how this would affect the world, here is a list of the major cities in the world that would be inundated by such an increase.  Unfortunately, all the cities are in Asia because they are ranked by population.  In the US, for example, Miami, New York, Philadelphia, and Boston would also be seriously affected.   The chart comes from Climate Central which has some incredible information based on the projected increase.

Top 20 Megacities Below the Line
MEGACITY


POPULATION AFFECTED


% OF CURRENT POPULATION


1.  Shanghai, China
2.  Hong Kong, China
3.  Taizhou, China
4.  Mumbai, India
5.  Calcutta, India
6.  Tianjin, China
7.  Jakarta, Indonesia
8.  Nantong, China
9.  Ho Chi Minh City, Vietnam
10.  Osaka, Japan
11.  Chittagong, Bangladesh
12.  Tokya, Japan
13.  Hanoi, Vietnam
14.  Huaiyin, China
15.  Shantou, China
16.  Nam Dinh, Vietnam
17.  Jiagmen, China
18.  Khulna, Bangledesh
19.  Barisal, Bangladesh
20.  Lianyungang, China
11,500,000
6,200,000
6,100,000
5,900,000
5,800,000
5,100,000
4,900,000
4,700,000
4,400,000
4,100,000
4,000,000
3,800,000
3,800,000
3,400,000
3,100,000
3,100,000
3,000,000
2,900,000
2,800,000
2,800,000
39%
28%
67%
27%
25%
12%
11%
72%
44%
25%
44%
15%
30%
43%
23%
74%
51%
22%
40%
92%
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Posted July 10, 2015 by vferraro1971 in World Politics

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