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Tom Davies' blog on student life, economics, education etc.

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Video: Young Londoners face housing crisis

Average house prices in London are expected to reach £600,000 by 2018. Is help-to-buy making things easier for young people or have rising rents priced new buyers out of the market?


Cypriot finance minister: “We have exited the danger zone.”

Cyprus Airport Sits Abandoned in UN Buffer Zone
BRIEF: Write a news story of about 200 words for the FT based on this material (sources at bottom of page). Today is 31 July 2013.

Time: 45 minutes including research. 

Cyprus’ banking sector appears to be entering recovery, as latest figures show better than expected progress in light of the country’s recent financial crisis.

The troubled state is expected to struggle with austerity measures aimed at reaching a budget surplus of 4 per cent of GDP in 2018. Estimates suggest that Cypriot GDP will fall 13 per cent over the next two years but initial progress is positive according to the finance minister Harris Georgiades.

“The worst is behind us as far as the banking system is concerned, we have exited the danger zone and we are into a stabilization zone.”

In March, Cyprus received an emergency €10bn loan from the Troika (EU, ECB and IMF) to help recapitalize the banking sector.

As part of the deal, the nation’s second largest bank, Laiki, was shut down whilst the largest bank, Bank of Cyprus, forced a 47.5 per cent haircut on uninsured depositors. The bailout fund was also conditional on improvements to anti-money laundering measures and fiscal discipline.

The IMF is currently in the process of publishing its first review of the bailout programme. Delia Velculescu, mission chief for Cyprus said: “This review found the programme to be on track, with authorities having made good progress towards meeting their objectives.”



This is from the official Cyprus News Agency.

“The worst is behind us as far as the banking system is concerned, we have exited the danger zone and we are into a stabilization zone,” Cyprus Finance Minister Harris Georgiades said at a workshop on hydrocarbons and sustainable development in Nicosia today.

And …

“This review found the programme to be on track, with authorities having made good progress towards meeting their objectives,” IMF mission chief Delia Velculescu said today during a conference call at the end of a mission to Cyprus.

Greek coalition locked in austerity talks

Read the text below (see bottom of page) and write a news story as if the news has just broken. Bring in key background and improve the language. 100 words, 20 minutes. Date is Friday, 21 September 2012.

“Greek coalition locked in austerity talks”
-by Tom Davies

Greece’s Finance Minister Yannis Stournaras is still engaged with party leaders over final changes to the country’s proposed spending cuts.

The coalition government is required to reduce the budget deficit by an additional 2.0-2.5 billion euros before the proposals will be accepted by the Troika (European Commission, European Central Bank and the International Monetary Fund).

There are still lingering concerns that further cuts will have a considerable effect on welfare. The Finance Minister said that “negotiations were difficult” and he was looking to minimize the social costs inflicted on the “poorer strata”.



‘Negotiations continuing’, Finmin says after coalition leaders meet

Friday, 21 September 2012 – Emerging from a meeting between the three party leaders supporting the coalition government, Finance Minister Yannis Stournaras on Thursday confirmed that negotiations with Greece’s creditors are continuing.

Stournaras said that a large part of the austerity package demanded of Greece had been agreed but there were still reservations surrounding certain of the proposed measures, chiefly to do with modernising the state, that had not yet been resolved.
“The negotiation is difficult. We are doing everything possible to minimise the social cost, especially for the poorer strata,” the minister said, expressing hope that the package of measures will soon be finalised.
(Previously the same day)

FinMin briefs PM ahead of coalition leaders’ meeting

Finance Minister Yannis Stournaras opined on Thursday that discussions for the finalization of the government’s package of austerity measures would continue for a few more days before final agreement is reached on the package 11.9 billion euro cuts in state spending, and estimated the shortfall between the measures proposed and those demanded by the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) Troika at 2.0-2.5 billion euros.

Stournaras was speaking to reporters after he and the government’s economic staff briefed prime minister Antonis Samaras of the finance minister’s talks with the Troika on Wednesday, ahead of a scheduled meeting of the leaders of the three parties — PM and New Democracy (ND) leader Samaras, PASOK leader Evangelos Venizelos and Democratic Left (DIMAR) leader Fotis Kouvelis — for continued talks for the finalization of the measures.
The finance minister is due to meet later at the ministry with main opposition SYRIZA officials Yiannis Dragassakis and Efklides Tsakalotos to brief them on the ongoing negotiations with the Troika.

Banking reform- is the tail wagging the dog?

When it comes to the Basel III banking reforms, the Eurozone and the US are dragging their feet. Some of the more sheltered economies have already begun enforcing changes to bank balance sheets. By comparison, the European arrangement still needs to be ratified by financial ministers before rules can come into full effect. In the US, it is a similar story.

Earlier in the year, the Basel committee amended the terms of the original agreement in what was seen as a major coup for global banks. Under new rules, they now have until 2019 to make adjustments to their balance sheets. This is an additional 4 years over the previously proposed deadline. Furthermore, capital requirements have also been made more lenient and banks can now hold a greater proportion of risky assets.

The politicization of banking reforms makes a mockery of the problem at hand. Regulators at all levels should have unchecked power to the impose reforms as they see fit. This is the very purpose of an independent supervisory body. At present, the tail is wagging the dog.

Any fall-out from imposing a tougher regulatory regime should be viewed as part-and-parcel of restoring stability to the system. If the appropriate reforms lead to a tightening of lending conditions, then so be it. If this has a knock-on effect on GDP figures then it must simply be concluded that the economy is being propped up by easy credit.

Those adopting a less interventionist stance will point to the importance of the banking sector in UK GDP figures. This zero-sum approach to global regulation is dangerous. If we are to learn one thing from the current financial crisis, it should be that a race-to-the-bottom is of benefit to no one in the long-run.

Given that the Basel committee consists of the industrial powerhouses that account for over 50% of world GDP, fears of losing domestic competitiveness might well be misplaced anyway.

Is the City on it’s last legs? Will compliance in 2019 be the straw that broke the camel’s back? I suspect not and, with all that’s gone on over the last 4 years, UK based banks might well consider the one-size fits all Basel III restrictions as a light touch. When it comes to regulation, the Basel committee should not be making concessions to the private sector whatsoever.

Policy makers should be prioritizing financial integrity in their home economy before even turning an eye to international competitiveness. Across the world, tougher capital requirements should just be the tip of the iceberg. Anything less and Basel III risks becoming systemic failure mark II.

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