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.
The revolutionary ideals of Black Panther’s profound and complex villain have been twisted into a desire for hegemony.
The following article contains major spoilers.
Black Panther is a love letter to people of African descent all over the world. Its actors, its costume design, its music, and countless other facets of the film are drawn from all over the continent and its diaspora, in a science-fiction celebration of the imaginary country of Wakanda, a high-tech utopia that is a fictive manifestation of African potential unfettered by slavery and colonialism.
But it is first and foremost an African American love letter, and as such it is consumed with The Void, the psychic and cultural wound caused by the Trans-Atlantic slave trade, the loss of life, culture, language, and history that could never be restored. It is the attempt to penetrate The Void that brought us Alex Haley’s Roots, that draws thousands of African Americans across the ocean to visit West Africa every year, that left me crumpled on the rocks outside the Door of No Return at Gorée Island’s slave house as I stared out over a horizon that my ancestors might have traversed once and forever. Because all they have was lost to The Void, I can never know who they were, and neither can anyone else.
In Cyprus, Estonia, the United Arab Emirates, and elsewhere, passports can now be bought and sold.
“If you believe you are a citizen of the world, you are a citizen of nowhere. You don’t understand what citizenship means,” the British prime minister, Theresa May, declared in October 2016. Not long after, at his first postelection rally, Donald Trump asserted, “There is no global anthem. No global currency. No certificate of global citizenship. We pledge allegiance to one flag and that flag is the American flag.” And in Hungary, Prime Minister Viktor Orbán has increased his national-conservative party’s popularity with statements like “all the terrorists are basically migrants” and “the best migrant is the migrant who does not come.”
Citizenship and its varying legal definition has become one of the key battlegrounds of the 21st century, as nations attempt to stake out their power in a G-Zero, globalized world, one increasingly defined by transnational, borderless trade and liquid, virtual finance. In a climate of pervasive nationalism, jingoism, xenophobia, and ever-building resentment toward those who move, it’s tempting to think that doing so would become more difficult. But alongside the rise of populist, identitarian movements across the globe, identity itself is being virtualized, too. It no longer needs to be tied to place or nation to function in the global marketplace.
Deputy Attorney General Ron Rosenstein flew to Seattle for a press conference at which he announced little, but may have said a great deal.
Back in the fall of 2001, exactly one month after the 9/11 attacks, a lawyer in Seattle named Tom Wales was murdered as he worked alone at his home computer at night. Someone walked into the yard of Wales’s house in the Queen Anne Hill neighborhood of Seattle, careful to avoid sensors that would have set off flood lights in the yard, and fired several times through a basement window, hitting Wales as he sat at his desk. Wales survived long enough to make a call to 911 and died soon afterwards. He was 49, divorced, with two children in their 20s.
The crime was huge and dismaying news in Seattle, where Wales was a prominent, respected, and widely liked figure. As a young lawyer in the early 1980s he had left a potentially lucrative path with a New York law firm to come to Seattle and work as an assistant U.S. attorney, or federal prosecutor. That role, which he was still performing at the time of his death, mainly involved prosecuting fraud cases. In his off-duty hours, Wales had become a prominent gun-control advocate. From the time of his death onward, the circumstances of the killing—deliberate, planned, nothing like a robbery or a random tragedy—and the prominence of his official crime-fighting record and unofficial advocacy role led to widespread assumption that his death was a retaliatory “hit.” The Justice Department considers him the first and only U.S. prosecutor to have been killed in the line of duty.
A week after 17 people were murdered in a mass shooting at Marjory Stoneman Douglas High School in Parkland, Florida, teenagers across South Florida, in areas near Washington, D.C., and in other parts of the United States walked out of their classrooms to stage protests against the horror of school shootings and to advocate for gun law reforms.
A week after 17 people were murdered in a mass shooting at Marjory Stoneman Douglas High School in Parkland, Florida, teenagers across South Florida, in areas near Washington, D.C., and in other parts of the United States walked out of their classrooms to stage protests against the horror of school shootings and to advocate for gun law reforms. Student survivors of the attack at Marjory Stoneman Douglas High School traveled to their state Capitol to attend a rally, meet with legislators, and urge them to do anything they can to make their lives safer. These teenagers are speaking clearly for themselves on social media, speaking loudly to the media, and they are speaking straight to those in power—challenging lawmakers to end the bloodshed with their “#NeverAgain” movement.
Why the ingrained expectation that women should desire to become parents is unhealthy
In 2008, Nebraska decriminalized child abandonment. The move was part of a “safe haven” law designed to address increased rates of infanticide in the state. Like other safe-haven laws, parents in Nebraska who felt unprepared to care for their babies could drop them off in a designated location without fear of arrest and prosecution. But legislators made a major logistical error: They failed to implement an age limitation for dropped-off children.
Within just weeks of the law passing, parents started dropping off their kids. But here's the rub: None of them were infants. A couple of months in, 36 children had been left in state hospitals and police stations. Twenty-two of the children were over 13 years old. A 51-year-old grandmother dropped off a 12-year-old boy. One father dropped off his entire family—nine children from ages one to 17. Others drove from neighboring states to drop off their children once they heard that they could abandon them without repercussion.
Here are some readers with extra elements on this discussion—political, cultural, international. First, an American reader on the interaction of current concepts of masculinity and the nearly all-male population of mass gun murderers:
The path to its revival lies in self-sacrifice, and in placing collective interests ahead of the narrowly personal.
The death of liberalism constitutes the publishing world’s biggest mass funeral since the death of God half a century ago. Some authors, like conservative philosopher Patrick Deneen, of Why Liberalism Failed, have come to bury yesterday’s dogma. Others, like Edward Luce (The Retreat of Western Liberalism), Mark Lilla (The Once and Future Liberal), and Steven Levitsky and Daniel Ziblatt (How Democracies Die) come rather to praise. I’m in the latter group; the title-in-my-head of the book I’m now writing is What Was Liberalism.
But perhaps, like God, liberalism has been buried prematurely. Maybe the question that we should be asking is not what killed liberalism, but rather, what can we learn from liberalism’s long story of persistence—and how can we apply those insights in order to help liberalism write a new story for our own time.
A new study explores a strange paradox: In countries that empower women, they are less likely to choose math and science professions.
Though their numbers are growing, only 27 percent of all students taking the AP Computer Science exam in the United States are female. The gender gap only grows worse from there: Just 18 percent of American computer-science college degrees go to women. This is in the United States, where many college men proudly describe themselves as “male feminists” and girls are taught they can be anything they want to be.
Meanwhile, in Algeria, 41 percent of college graduates in the fields of science, technology, engineering, and math—or “STEM,” as it’s known—are female. There, employment discrimination against women is rife and women are often pressured to make amends with their abusive husbands.
According to a report I covered a few years ago, Jordan, Qatar, and the United Arab Emirates were the only three countries in which boys are significantly less likely to feel comfortable working on math problems than girls are. In all of the other nations surveyed, girls were more likely to say they feel “helpless while performing a math problem.”
The president’s son is selling luxury condos and making a foreign-policy speech.
Who does Donald Trump Jr. speak for?
Does the president’s son speak for the Trump Organization as he promotes luxury apartments in India? Does he speak for himself when he dines with investors in the projects? Does he speak for the Trump administration as he makes a foreign-policy speech in Mumbai on Friday?
“When these sons go around all over the world talking about, one, Trump business deals and, two, … apparently giving speeches on some United States government foreign policy, they are strongly suggesting a linkage between the two,” Richard Painter, President George W. Bush’s chief ethics lawyer who is a professor of law at the University of Minnesota, told me. “Somebody, somewhere is going to cross the line into suggesting a quid pro quo.”