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Did the Referendum Give Greeks a Choice?

 4 min read / 

The economy is like a human being: its born, stumbles, and learns to stay on its feet … It has basic needs … It feels trust, anger, despair and it doesn’t the wrongs done … Sometimes, it is obligated to make life changing decisions.

When an individual gets depressed they take antidepressants, seek counselling and ultimately, takes an individual decision for its future. Every medical practitioner will tell you that the best cure for a patient is positive expectations. Every economist will tell you that self-fulfilling expectations shape the economy.  In an economy, what the individual expects, is bound to happen. Why not expect the best?

Greece got accepted into the European Union in 2001, a time in which the Greek economy demonstrated higher GDP growth than the European average but faced rising unemployment levels, tax evasion, corruption and low global competitiveness.

The gravity of inter-European asymmetry in competitiveness and balance of payments disequilibria meant Greece began to struggle. As the Greeks began to import more, the country pursued to finance its current account deficit through foreign investments instead of redefining its infrastructure in compliance with a sustainable economy.

In the meantime, the US-originated credit crunch spread to the entire world via the stoppage of interbank operations, causing the global economy’s need for liquidity to soar. Although Greek inflows were falling, it continued to hoard vast amounts of foreign reserves financed by raising new debt or selling assets. At some point, however, raising new debt and/or selling assets became infeasible, resulting in default risk.

The European individual got cognisant of the grand asymmetry within the euro territory and speculation that Greece will have to abandon Euro and go back to drachma at a depreciated value got faddish, inserting the exchange rate risk back into Europe. Mistakes were made by Greece. Nevertheless, mistakes were also made by the governments of Europe, the economic theorists, the architects of the Eurozone in structuring, running and funding of Europe.

Perhaps, the decision to admit Greece into the Eurozone was a mistake by Western Europeans. Greece failed to meet the second criteria of Maastricht Treaty – a member country should have national budget deficit at or below 3% of GDP. Greeks would agree with the judgment that they would be much better off being denominated in drachma, free to devalue and restore foregone competitiveness.

Furthermore, after its admittance, Greece was able to borrow as easy as Germany. Blame here is not that of Greece, but of international investors who underestimated the risk of the variety of assets, rating agencies that hadn’t been reflecting the true troubles of the economy and that of the ECB which accepted Greek debt as collateral on a par with that of German debt.

Did the referendum present a genuine choice for Greeks ?

As of July 1st, the help that Brussels has offered to Greece is €7.2 billion, which wouldn’t even cover the government’s debt repayments until the end of August, and promise a mere two months’ liquidity. Notwithstanding , 90% of the aggregate Eurozone and IMF lending to the Greek government since 2010 has gone to the banks and other lenders – not to Greece to assist their recovery.

According to columnist Martin Sandbu:

“Further austerity isn’t even in the creditors’ interests […] it would demand even more cuts and depress the economy another 5% and raise the ratio of debt GDP by another 9%, eventually depressing the economy by 12.5 percent, and increasing the ratio of debt to GDP by around 22.5 percentage points. ”

In light of the referendum and the current Greek position, perhaps the following can summarise the sentiment of Greece:

A young Greek man visits the Australian consulate in Athens and asks for a work visa. “Why do you want to leave Greece?” asks the official. 

“For two reasons,” replies the Greek. “First, I am worried that Greece will leave the EU, which will lead to new poverty and chaos in the country . . .” 

But,” interrupts the official, “this is pure nonsense: Greece will remain in the EU and submit to financial discipline!” “Well,” responds the Greek calmly, this is my second reason.”

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Financing for Green Sustainable Development

 3 min read / 

Green Sustainable Development

Green sustainable development has been on multiple discussions channels. Talks, seminars, workshops, you name it. However, financing it has not been thoroughly discussed. How do we finance sustainable green development? Is it profitable for companies who do so? Is the rate of return high enough to cover the cost of investing in green technologies?

No doubt, green sustainable technology is an expensive technology with no clear ROI. Venturing into green technologies may be a blind-man guided only by a voice in his head. Yes, green sustainable technology yields a significant Marginal Social Benefit (MSB). But often, MSB is non-quantifiable.

Leading this social-technology movement, Jeffrey Sachs, with the support of foundations such as the Jeffrey Cheah Institute, established the Sustainable Development Goals (SDG) centre in the backdrop of academics – Sunway University.

The aim is to directly address the issues for SDGs and to ensure the goal set in the Paris Climate Agreement is able to be achieved successfully.

Now, as mentioned, private firms are both afraid and pessimistic about green sustainable development. Many do not see the outcome of this initiative and are not concerned about the environment. The technology is costly, and some firms are even struggling to break-even at their current costs. Lack of momentum from firms involved in similar industries and lack of financial support has made venturing into green technology unattractive.

On 14th of January 2018, pioneers and advocates from across the globe were invited to join a workshop at Sunway University. The idea was to bring together a group of academics, from the Asian Development Bank Institute to representatives from New Zealand and Austria, to discuss how to finance green sustainable developments. It attracted a number of firms involved or who wanted to be involved in this movement.

Financing models such as the SIB model and the Yozma model were introduced by Dr Hee Jin Noh. Papers on the theoretical relationships between a firm, a bank, and households were presented by Dr Maria Teresa Punzi. And the outcome of these series of workshops will be a book, which aims to provide a better insight and guideline for green financing, written by Dr Hee.

Also presented was a case study, comparing different countries. Associate Professor Ivan Diaz-Rainey had made comparisons on some successful countries, looking at European countries versus New Zealand and Australia. In the case study, countries were compared, and recommendations were made on how to make green financing successful. Though the definition and KPIs of a successful green development country are still vague, countries from Europe are exemplary on the ‘theory to practice’ phase.

While there is a significant increase in awareness and wanting to be involved by private firms, it needs to be supported by the government more. Regulators need to provide sufficient information to assist private firms venturing into green technology or green development. A healthy government support will increase the chance of a firm venturing into green development being successful. And these are the baby steps needed in order for transformation at city-scale or nationwide-scale.

Keep reading |  3 min read

Global Affairs

Smart Cities Take Off

Smart cities

Big tech deals took off in 2017 as big tech firms strived to make smart cities a reality. 

Editor’s Remarks: In 2017, 35 agreements were reached between various cities around the world and big tech companies – a huge increase from the eight that were agreed in 2016. Alphabet has launched a project to develop a miniature smart city in 12 acres of land it purchased in Toronto. Meanwhile, Alibaba is leveraging digital infrastructure in Macau, where its smart transport systems will hopefully improve efficiency for the municipal government. Saudi Arabia has also announced a plan to build a new city, to be named NEOM, which will rely fully on renewable energy as well as self-driving vehicles and drones.

Read more on Big Tech:

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Bayeux Tapestry on Loan

Bayeux Tapestry UK

Emmanuel Macron has offered to loan the famous tapestry to the UK in an effort to improve relations.

Editor’s Remarks: The offer is expected to be announced this Thursday, when Macron will meet UK officials at the Anglo-French summit at Sandhurst. The Bayeux Tapestry was commission by William the Conquerer’s brother to celebrate his 1066 conquest of England and depicts the Norman king defeating the Anglo-Saxon ruler King Harold. Although it was made in England, the piece – which measures about 35 square metres – has remained in France for the past 940 years. At the upcoming summit, Macron is also expected to petition the UK to join his combined European military initiative – a move many expect Britain’s new defence secretary Gavin Williamson to push back on.

Read more on Europe:

Keep reading |  1 min read


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