In Brief – N.18 – July 26, 2015

Clearly, the longer the euro area talks on Greece’s debt the more the Brexit – the exit of the UK from the European Union (EU) – earns credibility. According to London’s City-based sources, the effects of the Greek crisis on the UK public opinion about the EU have been disastrous.

If the unprecedented outage of the New York Stock Exchange (NYSE) on July 9, 2015 didn’t result from a cyber-attack according to law enforcement officials, this incident has shown the growing and fallible dependence of the world finance infrastructure on computerized systems.

China‘s economic growth held steady at 7 percent in the Q2 2015, its weakest level since the global crisis, but better retail sales and factory output in June 2015 suggest government efforts to reverse the slump might be gaining traction, said AP.

It’s time to raise incomes for hard-working Americans. In a speech in New York, Democratic presidential candidate for 2016 Hilllary Clinton laid out her vision for a strong, growing economy that works for everyone. America needs strong, fair, long-term growth, she said.

A New Versailles Treaty is haunting Europe, wrote former Greek Finance Minister Yanis Varoufakis in his first assessment of the legislation that is part of the recent Euro Summit agreement on Greece. The project of European integration has, indeed, been fatally wounded over the past few days, Varoufakis pointed out.

“We fought until the end to achieve the best possible outcome, an agreement that will enable the country to get back on its feet, and for the Greek people to be able to continue to fight,” said Greek PM Alexis Tsipras following the conclusion of the Eurozone Summit.

The Euro summit agreed to start negotiations on a support program for Greece under the European Stability Mechanism (ESM), subject to strict conditions and accompanied by support for growth and employment in the order of €35 billion.

Greece’s public debt has become highly unsustainable, wrote the IMF. The financing need through end-2018 is now estimated at €80 billion and debt is expected to peak at close to 200 percent of GDP in the next two years, provided that there is an early agreement on a program, it read.

“The comprehensive, long-term deal that we achieved with our allies and partners to prevent Iran from obtaining a nuclear weapon represents a powerful display of American leadership and diplomacy,” said President Barack Obama in a press conference that provided further details about the “historic” deal reached between Iran and the P5+1.

According to the Italian Export Credit Agency (SACE), the greatest business opportunities following the agreement on Iran’s nuclear program will be in the oil & gas, automotive, defense, transport and construction sectors. China, India, Russia and Brazil will likely be fiercest competitors for Italian exports which could amount to €3 billion over the next 4 years.

Simultaneously with the delivery of the latest Beige Book, Fed Chair Janet Yellen told the Congress “the economy has made further progress toward the Federal Reserve’s objective of maximum employment, while inflation has continued to run below the level that the FOMC judges to be most consistent over the longer run.”

The Asian Development Bank (ADB) has cut its 2015 growth forecast for Developing Asia to 6.1% from 6.3%, amidst slower-than-expected economic activity in the United States (US) and the People’s Republic of China (PRC), according to a new report.

While lower oil prices can mean significant losses in revenue for some oil exporting countries, consumers should be paying less for fuel and have more money to spend. IMF’s Aasim Husain said in a podcast the higher spending will be good for global growth.

Euro area quarterly real GDP growth was confirmed at 0.4% in the Q1 2015, said Mario Draghi, President of the ECB in a press conference. “Looking ahead, we expect the economic recovery to broaden further. Domestic demand should be further supported by our monetary policy measures and their favorable impact on financial conditions,” Draghi added.

Greece will reimburse the ECB just after the latter increased emergency liquidity assistance to Greek banks by €900 million over one week. This is the approval of a €7 billion bridging loan by Eurogroup finance ministers that made it possible.

Press articles published in recent days are confirming the assessment Cyceon has made for months. Debtcorporate debt particularly – would be threatening to derail China’s economy. While it is uncertain Beijing successfully halted its stock markets’ crash, the $16.1 trillion worth debt is a much greater issue.

Online retailer eBay and payment company PayPal are splitting their operations into two individual companies, having traded together since eBay bought PayPal in 2002. PayPal will continue to be used as eBay’s main payment provider.

Yahoo announced final step to spin off the company’s remaining holdings in Alibaba Group Holding Limited into a newly formed independent, publicly traded, registered investment company. The name selected for the new public company is Aabaco Holdings, Inc.

The foreclosure crisis in the US is dying a very slow death, wrote USA Today. However the good news is foreclosure starts (a first notice of loan default or notice that a lawsuit has been filed regarding the ownership of a property) are at a 10-year low.

Hackers – allegedly The Impact Team – have threatened to expose private data from 37 million cheating spouses and customers of the website Ashley Madison. Hacked data would include name, credit card information, photographs and messages.

The IMF needed to look a bit more like the USG. The IMF named as its new chief economist Maurice Obstfeld, an academic and White House economic adviser known for his work on money flows and international finance.

“A tool such as sanctions should no longer be a part of international economic relations, or international relations in general. It should not be used in the global economy,” said Russian President Vladimir Putin following the BRICS and SCO summits.

The Iranian nuclear issue was tackled during a meeting of Russia’s Security Council. “The participants noted again that the leading role and constructive position taken by the United States played a big part in making it possible to finalize the agreements” between Iran and the P5+1, read a communiqué.

“There is no better friend to the state of Israel that the US. Israel’s security and military edge are a top priority to America, our military and for me. Make no mistake the Iran deal changes nothing for the DOD. Our pledge to defend Israel is rock solid,” said US Defense Secretary Ash Carter in Israel.