(CNN) – From Hong Kong to New York, investors are watching the events unfold in Greece with a dreaded sense of déjà vu.
The reality gap looming in Athens between what ordinary Greeks want and what their politicians can realistically achieve has ramifications that could ripple far beyond the Aegean shores.
The only thing that is certain for now is that the longer the impasse lasts, the more devastating its consequences will be – not just for Greece- but for other cash strapped countries that share the euro as well as Europe’s trading partners further afield.
As the IMF prepares to hand out yet another eye-watering chunk of bailout funds to Greece, it may appear to some like a parent handing cash to a spoiled child - even if they haven’t done their homework.
However the Greeks protesting from the Parthenon to the Parliament this week are not children. They are men and women coping with the most precipitous decline in living standards their generation has known.
(CNN) – Part of the backlash against this week's austerity measures in Athens stems from a breakdown in trust between the Greek people and its elected politicians.
But what the Greek government says and does now has little bearing on the country's financial future. As current Creditor-in-Chief the International Monetary Fund is the one setting the terms.
This begs the question: how much support does the Greek bailout have inside the IMF?
Singapore (CNN) – The airline industry is tough. No doubt about it. Between 2000-2010 the group of 230 airlines that make up the International Air Transport Association (IATA) managed to post just three profitable years as a group. In 2006, 2007 and 2010 they collectively earned $39 billion dollars. In the other seven years they racked up losses of $68 billion dollars, according to IATA figures. Yes, billion.
Yet during that time only a handful of well-known carriers - Swissair, Varig, Ansett, Sabena, Mexicana and Aloha among others - disappeared. How did the others manage to survive?
There are still about 1000 carriers worldwide, says IATA. The question is why.
(CNN) – When it comes to tech stocks, are we partying like it’s 1999—again?
I spoke with Tiernan Ray, Senior Editor of Barrons.com and asked him that very question. He says no. This is certainly a party, but it’s different than the tech bubble that burst. Why? Valuations, plain and simple.
Right now we have a slew of high-flying IPO’s. Just look at LinkedIn. The internet darling’s shares more than doubled on the first trading day and have stayed in the stratosphere even after settling down in a rough trading week.
China’s tech boom is just beginning. Recently we’ve watched Ren Ren hit the market, along with Russia’s Yandex, and of course, just days ago, Groupon. Tiernan Ray says the hyped-up IPO’s may very well be over-priced, but to him, almost everything else looks beaten down.
Some major Groupon and LinkedIn investors spoke out last week saying the same thing: No bubble, no way. Hugh Grieves, manager of the Herald Worldwide fund was quoted online as saying, “It only becomes a bubble when you see your grandmother invest,” a great line and a reminder of the “unnatural investors” we saw buying tech stocks at random in 1999 looking to day-trade for a quick buck.
However, other analysts insist a bubble in tech is inevitable with so many IPO’s flying off the shelves, believing that the tech market remains full of lemons just waiting to die spectacular deaths, and that the continuing U.S. economic slowdown complicates the landscape considerably.
It has the makings of an economic tragedy of epic proportions.
As Brussels battles to prevent Greece from becoming the Eurozone’s first member to default, the country’s crisis is talk of the town among Greek communities thousands of miles from Athens.
One year after Greece received a $158 billion bail out from the International Monetary Fund, talks have started on potential second package.
Money is still pouring out of the country while authorities fret about a brain drain – factors that are having a surprising impact on London’s estimated 400,000-strong Greek population.
Hong Kong, China (CNN) – The property boom in Hong Kong is pricing out small investors. Real estate prices have risen nearly 70% in the past two years. With interest rates at a measly .001%, it seems silly to leave your savings sitting in the bank. So where can you park your cash?
Some investors are looking to alternative investments like taxi licenses. It doesn't seem very sexy and 25-year old Kin Yin Shek says that's just fine with him. He bought four licenses in January for HK$3 million each (US $387,000). Since then, the value of the licenses has increased about 10%. It's a matter of limited supply and increased demand. The Hong Kong government has issued 18,138 taxi licenses. Don't count on any more being issued any time soon. The last time that happened was 14 years ago – and only 10 were issued.
Shek says he opted for taxi licenses over buying an apartment because it was "cheaper." In order to buy a taxi license, he made a 20% down payment on a loan. If he had purchased an apartment of the same value, he would have had to put down 30%, pay a large stamp duty and attorney fees. "It's very hard to get a good tenant, you can get a really bad tenant who doesn't pay,” Shek says. “I don't have much headaches with taxis. They run by themselves. There are eight drivers working for me."
There have been many books written about the financial crisis: What caused it, who’s to blame and how it could have – and should have – been prevented.
This new one, “Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon,” lives up to its lengthy title and gets deep into the weeds of who did what, when and how. In short, Gretchen Morgenson and Joshua Rosner name names and connect the dots.
Singled out for particular criticism, James Johnson, former CEO of Fannie Mae, who the authors say built the U.S. backer of mortgages into “the largest and most powerful financial institution in the world.” And that’s not a good thing—not in this case. The authors paint a painstaking portrait of the way they allege Johnson, and so many others, used money and political influence to get around the rules, get rich, and create a catastrophe.
Hong Kong, China (CNN) – So the gloves are off.
The four BRIC countries plus South Africa have joined forces to oppose the automatic choice of a European as head of the IMF.
This is significant step.
For the first time there is a unified voice from the emerging world to match the voice of Europe, now rallying behind French Finance Minister Christine Lagarde.
From a gaggle of un-coordinated statements from emerging economies over the past two weeks, comes a crystal clear - and powerful - voice.
A message jointly signed by China, India, Brazil, Russia and South Africa. They wrote: "We believe that, if the Fund is to have credibility and legitimacy, its Managing Director should be selected after broad consultation with the membership. It should result in the most competent person being appointed as Managing Director, regardless of his or her nationality. We also believe that adequate representation of emerging market and developing members in the Fund's management is critical to its legitimacy and effectiveness."
But the ball is still in their court. The next step is a candidate the emerging economies can rally behind.
(CNN) – As the International Monetary Fund (IMF) prepares to replace its disgraced former managing director Dominique Strauss-Kahn, e-mails obtained exclusively by CNN offer a unique insight into the mood among staff. (See below)
While Strauss-Kahn was busy penning a heartfelt goodbye letter sent out on Sunday, documents reveal some of the fund's female employees had already been calling for change: namely, for a woman to run the IMF.
Strauss-Kahn resigned last week as head of the fund in the face of sexual assault charges. In a note to staff, obtained by CNN, the economist said he is confident of being exonerated of accusations that he attacked a hotel maid in New York, but he could not "accept that the Fund - and you dear colleagues - should in any way have to share my own personal nightmare. So, I had to go."
The fund is scheduled to begin accepting nominations for his replacement, with a battle shaping up between Europe and the developing world. The United Kingdom said over the weekend it would back French Finance Minister Christine Lagarde for the position; a move that will likely appeal to women at staff at the IMF, who complained in e-mails obtained by CNN of the male culture at the global economic organization.
New York (CNN) – There was a lot of cheering in the New York offices of LinkedIn – with good reason. On its first day of trading shares of the social networking site for professionals soared over 100%. That kind of price action raises a lot of questions.
Can the company like up to the hype? Do people only use Linkedin when they are looking for a job? Did they leave too much money on the table by not pricing the IPO higher?
I put some of these concerns to Jeff Weiner the CEO. He wouldn’t address the valuation directly but he did tell me they were very focused on finding investors who were focused on the long-term. It was his primary concern in this IPO. Weiner is very clear that he and his team are planning on plowing most of their profits back into the company. They may not even be profitable next year.
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