The country's slow-motion bank run could end the euro -- if the ECB lets it.
Bank runs usually have one speed: all-out-sprinting. But today, the Greeks are jogging.
There's been a quiet bank run in Greece the past three years. Since 2009, Greek banks have lost somewhere between 25 and 30 percent of their deposits. That's actually surprisingly low considering that a euro in a Greek bank doesn't look like it's worth as much as a euro in a German bank. The calculus is simple. Greece might turn its euros into cheaper drachmas and Germany won't. Why wouldn't more Greek people move their money to be safe?
Increasingly, they are. On Monday and Tuesday alone, Greeks withdrew over €1.2 billion ($1.53 billion). That's roughly 0.75 percent of remaining Greek deposits. This still-gradual bank run -- what FT Alphaville's Joseph Cotterill calls a "bank jog" -- is accelerating because Greek politics is making a Greek exit look more imminent.
It is a classic case of self-fulfilling economic expectations. Greeks are nervous about leaving the euro. The nervousness leads to a bank run. A bank run increases the chance that Greece will have to leave the euro. Which makes people more nervous. And around we go.
GOOD NIGHT, EURO
As Greek banks lose deposits, they need new sources of funding. But they can't raise money from markets. That leaves the ECB. The ECB has so far been a reluctant lender-of-last-resort, but it has been a lender-of-last-resort -- for banks, if not countries. The Cliff Notes version is that the ECB has kept Greek banks afloat by giving them money in exchange for collateral.* Warning bells might be going off. If Greek banks have good collateral, why can't they use it to get private loans? The answer is that they don't have good collateral. In other words, if Greece defaults and exits, the ECB will be stuck holding a bag of mostly worthless pieces of paper.
How big is the problem? Let's take a look under the hood of the ECB. The below chart courtesy of Scotty Barber shows so-called TARGET2 balances. It's a bit technical, but TARGET2 shows how much countries owe or are owed by the ECB. That's more or less a decent proxy for where deposits are moving from and to within the euro zone.
A Greek default would effectively cost the ECB roughly €100 billion ($127 billion), to be split between the remaining euro zone members.
Here's how this could push Greek out of the euro zone. Greek banks are running out of collateral. Even bad collateral. All they have is really bad collateral. As the bank jog speeds up, they need to get more and more money from the ECB. But they might not have good enough collateral to get it. The ECB can change its rules and accept dodgier collateral -- but that would open the ECB up to even bigger losses down the line, assuming a Greek exit is inevitable.
If the ECB says no, then the jig would be up for Greece. Its banks would run out of money. That's when the bank jog would turn into a full-fledged run and then a sprint -- if it hadn't already. Of course, when banks don't have money, nobody has money. The Greek government wouldn't have a choice: It would have to start printing new drachmas. Good night, euro.
AFTER GREECE ...
The damage won't stop there. Take a look at the TARGET2 balances again. Italian and Spanish banks are even more dependent on ECB funding than Greece. Already, there are signs of a bank racewalk going on among them. If the ECB cut the cord on Greece, Italian and Spanish depositors would frantically move their euros to German banks to protect themselves against the same fate. This deposit drain would eventually push them into the same collateral bind. The ECB would have to dramatically reverse itself to save the common currency.
Let's take a step back for a minute. The world of TARGET2 balances can be something of a rabbit hole, but there are two big takeaways here. First, the Greek bank jog will put more pressure on the ECB to do more. It will have to decide again whether or not to boot Greece from the euro zone. And second, a Greek exit would be a mess for Italy and Spain regardless of whether Greek politicians or the ECB makes the move.
It's hard to imagine the ECB pulling the plug on Greece anytime soon. Europe doesn't have anywhere near the bailout fund it needs ready, nor a consensus on euro bonds, nor on more aggressive ECB action. But the longer the ECB keeps Greek, Italian, and Spanish banks on life support, the greater the final cost if one of them exits -- and the greater the panic will hit the other countries in that event. The danger is that the ECB will lose its nerve -- that it will worry about potential future losses. That's what Bundesbank chief Jens Weidmann fretted over a few months back. That could become a self-fulfilling prophesy.
The biggest thing Europe has to fear is ECB fear of a euro breakup.
* It's a bit more complicated than that. There are two ways banks effectively get money from the ECB. They can either pledge collateral to the ECB directly, or pledge collateral to their national central banks. The benefit of the latter option -- so-called Emergency Liquidity Assistance (ELA) -- is that banks can use worse collateral. Still, the ECB has to okay the collateral. ELA are technically liabilities of each individual country, but if a country defaulted and left the euro zone, the ECB would be on the hook. Joseph Cotterill has a good summary of ECB versus ELA liquidity in Greece.
Trump’s supporters backed a time-honored American political tradition, disavowing racism while promising to enact a broad agenda of discrimination.
THIRTY YEARS AGO, nearly half of Louisiana voted for a Klansman, and the media struggled to explain why.
It was 1990 and David Duke, the former grand wizard of the Ku Klux Klan, astonished political observers when he came within striking distance of defeating incumbent Democratic U.S. Senator J. Bennett Johnston, earning 43 percent of the vote. If Johnston’s Republican rival hadn’t dropped out of the race and endorsed him at the last minute, the outcome might have been different.
Was it economic anxiety? The Washington Post reported that the state had “a large working class that has suffered through a long recession.” Was it a blow against the state’s hated political establishment? An editorial from United Press International explained, “Louisianans showed the nation by voting for Duke that they were mad as hell and not going to take it any more.” Was it anti-Washington rage? A Loyola University pollster argued, “There were the voters who liked Duke, those who hated J. Bennett Johnston, and those who just wanted to send a message to Washington.”
In a presidency defined by its unpredictability, one of the few constants is the president’s eagerness to attack black people for failing to show deference.
When, in a game last Sunday in Mexico City versus the New England Patriots, the Oakland Raiders running back Marshawn Lynch chose to sit during the “Star Spangled-Banner,” and then stood during the Mexican National Anthem, the idea of the multiverse—multiple realities and infinite branching probabilities—suddenly seemed inadequate. As soon as the cameras focused on Lynch, this plane of existence narrowed to a single undeniable probability: that President Donald Trump was going to tweet about it sometime soon.
Trump happily obliged fate. On Monday morning at 6:25am, in the block of time reserved for blasting people and things he’s seen on cable news that he doesn’t like, the president tweeted that “next time [the] NFL should suspend him for remainder of season.” Utilizing the extra 140 extra characters Twitter recently bestowed, Trump was also able to imply that Lynch was a factor in the the NFL’s sinking ratings. With that, Lynch became just the latest in a line of outspoken black people that Trump has attacked. It’s kind of a thing for him.
The post-Weinstein moment isn’t a war on sex. It’s a long-overdue revolution.
One of the principal pleasures of Mad Men, on rich display beginning with the pilot episode, was looking at all of the crazy things people used to be able to do in offices: smoke, drink, and—if they were male—grope and corner and sexually humiliate the women, who could either put up with it or quit.
It’s just about impossible to imagine someone lighting a cigarette in today’s hyper-sanitized workplace; anyone with liquor on his or her breath at midday is usually targeted as a massive loser or frog-marched to human resources. But to look at the shocking and ever-growing list of prominent men recently and credibly accused of acts ranging from sexual harassment to violent rape is to realize that abhorrent treatment of women is alive and well in many American workplaces.
Lena Dunham’s defense of a Girls writer accused of sexual assault highlights how frequently allegations from women of color are dismissed.
As America’s very public reckoning with sexual harassment and assault continues, the conversation around “believe women” and #MeToo, inevitably, also becomes more complicated and fractured—in particular when it comes to society’s decisions aboutwhich allegations are taken seriously, and which should be subject to deeper scrutiny.
Last Friday, Lena Dunham and Jenni Konner, co-showrunners for the series Girls, issued a statement defending Murray Miller, a friend and writer on the show, against allegations that he had sexually assaulted the actress Aurora Perrineau when she was 17. (Miller has denied the allegations.) “During every time of change there are also incidences of the culture, in its enthusiasm and zeal, taking down the wrong targets. We believe … that this is the case with Murray Miller,” they wrote in a statement. “While our first instinct is to listen to every woman’s story, our insider knowledge of Murray’s situation makes us confident that sadly this accusation is one of the 3 percent of assault cases that are misreported every year.” After a wave of criticism that her statement was in direct opposition to the feminist beliefs she espouses, Dunham issued another statement apologizing for her remarks; it acknowledged that, regardless of her closeness to the situation, she had used her considerable influence to unduly put “our thumb on the scale.”
After laboring for years to close the gender gap, GOP strategists are suddenly facing a gender chasm.
It turns out those pink kitty-cat hats weren’t just for show after all.
Among its many electrifying aspects, the early Trump era has had a politically galvanizing effect on women. They are organizing in the streets and on social media, running for office in record numbers, training to enter future races, and volunteering on campaigns. And on November 7, they flocked to the polls to officially have their voices heard.
What they had to say more or less boiled down to: Things around here have got to change. Now. Which has many folks in the Republican Party reaching for the Xanax.
By now, you’ve likely heard some of the Election Day stats and stories. In Virginia, women went from holding 17 seats in the House of Delegates to holding 27. Winners include Danica Roem, who became the state’s first transgender delegate-elect by beating an incumbent who bragged of being the state’s “chief homophobe.” In the gubernatorial contest, women favored Democrat Ralph Northam by 22 points—5 points more than Hillary Clinton’s margin among them last fall. Particularly concerning for Republicans: Fifty-eight percent of white college-educated women went for Northam vs. only 50 percent for Hillary.
How did Andrew Anglin go from being an antiracist vegan to the alt-right’s most vicious troll and propagandist—and how might he be stopped?
On December 16, 2016, Tanya Gersh answered her phone and heard gunshots. Startled, she hung up. Gersh, a real-estate agent who lives in Whitefish, Montana, assumed it was a prank call. But the phone rang again. More gunshots. Again, she hung up. Another call. This time, she heard a man’s voice: “This is how we can keep the Holocaust alive,” he said. “We can bury you without touching you.”
When Gersh put down the phone, her hands were shaking. She was one of only about 100 Jews in Whitefish and the surrounding Flathead Valley, and she knew there were white nationalists and “sovereign citizens” in the area. But Gersh had lived in Whitefish for more than 20 years, since just after college, and had always considered the scenic ski town an idyllic place. She didn’t even have a key to her house—she’d never felt the need to lock her door. Now that sense of security was about to be shattered.
An entire industry has been built on the premise that creating gourmet meals at home is simple and effortless. But it isn’t true.
I write about food for a living. Because of this, I spend more time than the average American surrounded by cooking advice and recipes. I’m also a mother, which means more often than not, when I return from work 15 minutes before bedtime, I end up feeding my 1-year-old son squares of peanut-butter toast because there was nothing in the fridge capable of being transformed into a wholesome, homemade toddler meal in a matter of minutes. Every day, when I head to my office after a nourishing breakfast of smashed blueberries or oatmeal I found stuck to the pan, and open a glossy new cookbook, check my RSS feed, or page through a stack of magazines, I’m confronted by an impenetrable wall of unimaginable cooking projects, just sitting there pretending to be totally reasonable meals. Homemade beef barbacoa tacos. Short-rib potpie. “Weekday” French toast. Make-ahead coconut cake. They might as well be skyscraper blueprints, so improbable is the possibility that I will begin making my own nut butters, baking my own sandwich bread, or turning that fall farmer’s market bounty into jars of homemade applesauce.
More comfortable online than out partying, post-Millennials are safer, physically, than adolescents have ever been. But they’re on the brink of a mental-health crisis.
One day last summer, around noon, I called Athena, a 13-year-old who lives in Houston, Texas. She answered her phone—she’s had an iPhone since she was 11—sounding as if she’d just woken up. We chatted about her favorite songs and TV shows, and I asked her what she likes to do with her friends. “We go to the mall,” she said. “Do your parents drop you off?,” I asked, recalling my own middle-school days, in the 1980s, when I’d enjoy a few parent-free hours shopping with my friends. “No—I go with my family,” she replied. “We’ll go with my mom and brothers and walk a little behind them. I just have to tell my mom where we’re going. I have to check in every hour or every 30 minutes.”
Those mall trips are infrequent—about once a month. More often, Athena and her friends spend time together on their phones, unchaperoned. Unlike the teens of my generation, who might have spent an evening tying up the family landline with gossip, they talk on Snapchat, the smartphone app that allows users to send pictures and videos that quickly disappear. They make sure to keep up their Snapstreaks, which show how many days in a row they have Snapchatted with each other. Sometimes they save screenshots of particularly ridiculous pictures of friends. “It’s good blackmail,” Athena said. (Because she’s a minor, I’m not using her real name.) She told me she’d spent most of the summer hanging out alone in her room with her phone. That’s just the way her generation is, she said. “We didn’t have a choice to know any life without iPads or iPhones. I think we like our phones more than we like actual people.”
“Well, you’re just special. You’re American,” remarked my colleague, smirking from across the coffee table. My other Finnish coworkers, from the school in Helsinki where I teach, nodded in agreement. They had just finished critiquing one of my habits, and they could see that I was on the defensive.
I threw my hands up and snapped, “You’re accusing me of being too friendly? Is that really such a bad thing?”
“Well, when I greet a colleague, I keep track,” she retorted, “so I don’t greet them again during the day!” Another chimed in, “That’s the same for me, too!”
Unbelievable, I thought. According to them, I’m too generous with my hellos.
When I told them I would do my best to greet them just once every day, they told me not to change my ways. They said they understood me. But the thing is, now that I’ve viewed myself from their perspective, I’m not sure I want to remain the same. Change isn’t a bad thing. And since moving to Finland two years ago, I’ve kicked a few bad American habits.
When leaving the service, women are often faced with a slew of challenges as they try to assimilate into civilian life.
I happen to be a woman. This is often inconvenient. It was inconvenient for the military and, now that I’m out of the military, it’s still inconvenient. In multiple surveys and anecdotes, both women who are serving and women who have served repeatedly list gender bias as an issue, though the way it manifests itself differs during and after their time in the military.
The military doesn’t just urge women, it requires them—especially if they want to succeed—to view themselves on the same playing field as their male counterparts. They are also expected to behave and perform in traditionally masculine ways—demonstrating strength, displaying confidence in their abilities, expecting to be judged on their merits and performance, and taking on levels of authority and responsibility that few women get to experience. The uniform and grooming standards work to downplay their physical female characteristics. Additionally, the expectation—explicit or implicit—is that they also downplay other attributes that are traditionally considered feminine, such as open displays of emotion. That’s not to say that gender isn’t going to be noticed or that others aren’t going to make it an issue—they will. But highlighting female characteristics is undesirable. As General Lori J. Robinson, the U.S. military’s first female combatant commander, put it: “I’m a general, a commander, an airman. And I happen to be a woman.”