Monday, July 06, 2015

Monday Forum - Greece, productivity, the internet in community development and TAS goes coed

Today's Monday Forum is a ramble.

The Greek results are in. The Greek economy had begun to grow again before these troubles broke. Now its back to basket case, What happens or should happen now?

In our continuing discussion on productivity, Winton Bates pointed to this post he wrote in 2011, Was the industrial revolution mainly about the growth of manufacturing industry?. I think that answer is clearly no.You had the agrarian revolution, the colonisation process. Real income for many English people actually declined during the first stages in the process.

Saturday we had a new state lunch in Sydney, something I described in New England New State Sydney discussion group formed. The next day I wrote a follow up post on the idea of a New England fringe festival.

The internet is a remarkable thing. I have been involved in community activity for a long time. When I started, the key tools were the post, the telephone and face to face meetings. Everything took just so much time. Now responses are far quicker.

This is not always good, Still, there is something satisfying in immediate responses, at least when they are positive!

The lead up to to the lunch took several years. Those who came had existing links with each other. They already knew or had been talking to each other. That's the longer lead time part, especially when you are dealing with a cause that does not have immediate grab power. However, the lunch itself had immediate results. There were only seven of us. Within forty eight hours, it reached over 1,000 people, drawing immediate support.

Obviously that's satisfying from my viewpoint, But I also wondered from a professional viewpoint about other people's experiences in using the internet for community purposes. What works? What doesn't work? And specifically on the idea of a fringe festival, what do you think might be included?

This is one of the images I included in the festival fringe story.

The decision by my old school to go co-educational has finally made the main stream media. The interest lies partly in the fact that TAS will be the only co-educational school in the all boys NSW Greater Public School Association. While driven by economic and demographic change in the school's main feeder areas, the change has not been without controversy.

This leads me to ask whether same sex schools still have a place? My impression is that the popular argument had moved from support for co-education to growing recognition of the advantages of same sex education, especially among girls schools who have been making this a major marketing pitch.

Creation of a co-ed TAS is not going to be easy, for it requires major changes in the structure of the school. Co-curricular activities are likely to be a particular problem. Do you integrate the cadet corp? How do you create sporting activities, especially when the early numbers of girls is small? How do you integrate the girls into the existing house system?

These are not easy questions. There is likely to be a considerable transition period while solutions are tested.

Finally, and as always, feel free to go in whatever direction you like on this Forum.  


I should have mentioned the latest manifestation of the nanny state in NSW, the new anti-smoking restrictions. As it happens, I tend to move away to have a cigarette if I'm with a non-smoker, but this is silly in the ambit of application. Ironic. I used to support the Cancer Council financially, but they have become another vested pressure group.

On Greece, I thought that this piece by Stephen Grenville was interesting.

And on the meeting of indigenous leaders with Messrs Abbott and Shorten.  .



Anonymous said...

On the use of "same sex" in your post: maybe "single sex" is more appropriate?

On your "fringe festival": your photo depicts a bald guy (I can say that as I'm approaching the same state) bookended by two guys, plus maybe a third, with straggly beards. That what you mean by 'fringe'?

On Greece: Swiss effective interest rate is negative 0.75% - probably due to depositors' confidence that they will actually get their capital back. Greece's effective interest rate is about 3.6%. So, what about treating Greece like the Swiss; i.e. you will get your capital back if you pay a premium of (say) 0.5%

This would provide creditors with the option of:

(1) Foregoing sufficient of the debt such that their present interest charge is actually sustainable, or
(2) Getting their capital back


(removes tongue from cheek, but notes that present IMF cost of funds is something like 0.9% while they charge Greece 3.6)

2 tanners said...

The attitudes being demonstrated, the punishment being meted, the language being used and the involvement of outside bodies reminds me of nothing so much as the Treaty of Versailles. And we know how that turned out.

Jim Belshaw said...

On same sex, see your point! Bald guy indeed! Certainly my guests were a tad younger. Did laugh at the fringe comment. Actually, your idea on interest rates is not a bad one.

2t, that's an uncomfortable analogy! I see Yanis Varoufakis has resigned.

2 tanners said...

Varoufakis took one for the team. By removing himself he could take his unvarnished opinions and allow the rest of Team Greece some room to compromise. He isn't compromised by this, and nor are they.

Interesting that the centre and right wing media (shorthand, Jim, just shorthand) were predicting and publishing polls demonstrating everything from a knife-edge result to a solid win for the Yes vote in what could be seen as an attempt to influence the vote. Perhaps the actual outcome will administer a dose of reality to them. Once again, I'm not holding my breath.

Anonymous said...

"On the other side of it, we watch closely credit default swaps and EU bond yields for signs of contagion effects, and they have been relaxed."

- from a talking head here who is talking through his head - which is what he's paid to do.

Now, Winton - care to rethink your comment that this event likely wouldn't affect the wider CDS market?


Jim Belshaw said...

I agree that Varoufakis did take one for the team. On the polls etc, I think that one part of the media did hold a very particular view. However, I also suspect that there was a very solid shift in Greek popular views over the last few days of the campaign that could not be seen because of the Greek electoral laws.

Mmm, kvd. If the figures I referred to in another post on the size of Greek CDS are correct, you can see why the market might take a relaxed view.

That article was interesting though. I certainly wouldn't assume a Grexit at the moment in the way some of those commentators are. This article by the BBC's Robert Preston sets out his perspectives - I don't thinks that I agree with him so far as the costs to the Eurozone as compared the Greece are concerned.

For what it's worth, and I'll stick my neck out, my best guess is that the ECB will advance emergency finance possibly on Tuesday on the basis that a deal is possible. The Greek government will agree to structural reform. The question of debt restructuring will be pushed to the right, but will ultimately involve some combination of lower rates, perhaps a haircut, but more extended terms.

One of the interesting questions is the extent to which, say, Spain might seek changes following the election later this year. I might be very wrong, and this view is counter to conventional wisdom, but the Greek troubles are likely to strengthen the Euro. If I was, say, a Spanish poli, I would be damn careful of placing Spain in such a chaotic position. That's not to say there won't be negotiations and re-balancing.

I think that I commented before on the comparison with Lang and Australia during the depression. I stil think that it's not a bad analogy.

Winton Bates said...

kvd: I hope I don't have to rethink too far.

I hope we see the other EU countries help Greece to engineer a temporary exit from the Euro. It would make a great deal of sense to have provisions enabling countries to leave, implent home-grown reforms, negotiate a settlement with creditors and then return.

2 tanners said...

I think your Lang comparison is good, particularly with Christine Laguard (sp?) cast as Sir Otto Niemeyer, with the same conflicts of interest. But with 25% unemployment the employers' threat to shut the factory gates on a Labor re-election will carry relatively little weight, I suspect. In that respect the Lang comparison fails.

Winton, I think you are both right and are living in cloud cuckoo land at the same time to think that the major creditors will allow themselves to lose the lot and then let them back in. It may make economic sense but in political terms it's a no-go.

Anonymous said...

Greece again: what I can't get my head around is the talk of some form of bankruptcy. In the real world if a debtor is made bankrupt his assets are seized, sold, and distributed proportionally among his creditors (see Bond, Alan) and then he starts over with a reduced reputation, but a clean slate.

It seems to me that the only assets 'securing' these advances to Greece are that country's goodwill and sense of honour. It is not as if the creditor nations can march in and sell the Acropolis, or take over a couple of islands - is it? What actual, physical, assets are securing those defaulted loans - apart from a Greece promise to repay?


Jim Belshaw said...

Hi 2t. At the time of the furor over the Lang Plan, the Australian Federation was very different with much more power resting with the states. Lang rejected the Premiers' Plan that had been agreed between the other states and Commonwealth and tried to go it alone. NSW ran out of money and Lang was forced to capitulate. It's more complex than that, of course, but you can see the similarities.

kvd, consider the Argentine case. If I understand the position correctly, bond owners gained a US court decision allowing them to seize Argentine government assets located in US jurisdiction. Still, I agree that "bankruptcy" is not a good description applied to countries. Not sure what other term to use, however.

Anonymous said...

Yes, am aware of Argentine bonds being bought up for cents in the dollar by various traders, then those traders obtaining orders for full face value settlement.

I had assumed that such had already been undertaken by the traders with Greece, and all we are left with is what has not been picked over by the traders.


Evan said...

I went to an all boys state school (high school). At the time it was a not bad experience of schooling. I hope they disappear off the face of the earth very soon. I don't think I'd object as much to earlier schooling being segregaged.

Jim Belshaw said...

The Greek debt is predominantly now official. In that sense the position is different, although some of the remedies might theoretically be the same.

There is an interesting difference here between attitudes to girls and boys education, Evan. Coed is seen as good for boys, single sex for girls.

Winton Bates said...

kvd: This looks right to me:
"Greece is not the real issue for Europe. The entire Greek debt market is about €345 billion in size. So we’re not talking about a massive amount of collateral… though the turmoil this country has caused in the last three years gives a sense of the importance of the issue.

Spain, by comparison has over €1.0 trillion in debt outstanding… and Italy has €2.6 trillion. These bonds are backstopping tens of trillions of Euros’ worth of derivatives trades. A haircut on them would trigger systemic failure in Europe.

In short, the EU’s worst nightmare is a debt haircut or debt forgiveness for Greece because it opens the door to Spain or Italy asking for similar deals down the road. "


Anonymous said...

Agree Winton, and it was that sort of analysis that prompted my comment about the ramifications for the derivates markets. My understanding is that Euro banks operate on average at about 16 times sovereign debt held. Even the e345 you note makes for a significant amount of derivatives activity - none of which actually affects Greece - but does affect the operations of those markets should it be subject to forgiveness to any great extent, or more importantly, provokes renegotiations in other members' arrangements.

I'm filing it in the too hard basket, and pulling the blankets over my head until someone with a better understanding provides some reassurance :)


Jim Belshaw said...

kvd, I'm not going to tell you to take your head from under the blanket, but that Capital Markets Research piece struck me as confused. We will all be ruined, Hanrahan, so pay us for advice now!

It appears to confuse stock with flow. The value quoted is not, I think, the value of transactions (potential liabilities) outstanding at any one time, but the value of trades in a period. Further, it's not (I think) just the value of either trades or outstanding derivatives contracts but the the way that government securities are counted in determining banks' capital and liquidity requirements. That, to my mind, is a more significant risk.

Now before you put your head back under the blanket again, that report's analysis on Italy/Spain does not seem to me to make make a great deal of sense. It's not going to happen. Both the political and economic dynamics are against it.