Economy

Greece gets new bailout with private sector help

2011-07-23T09:14:00.000-07:00

The deal resolves a political deadlock between Europe's top economic authorities over how to save Greece that had investors worried the debt crisis would spin out of control. Faced with the danger of big economies like Italy becoming unstable, the officials sought to outdo expectations at an emergency meeting in Brussels.

The eurozone countries and the International Monetary Fund said Thursday they will give Greece a second bailout worth —109 billion ($155 billion), on top of the —110 billion granted a year ago.

Banks and other private investors will contribute some —50 billion ($71 billion) to the rescue package until 2014 by either rolling over Greek bonds that they hold, swapping them for new ones with lower interest rates or selling the bonds back to Greece at a low price.

"For the first time since the beginning of this crisis, we can say that the politics and the markets are coming together," said European Commission President Jose Manuel Barroso.

Initial reaction from markets and analysts to Thursday's deal was cautiously positive. The euro, which had rallied sharply on expectation of the deal, gained 1.2 percent against the dollar.

The "summit conclusions surprise by their size and range," Marie Diron, senior economic adviser to the Ernst & Young, said in a note. "The measures imply significant private sector involvement and very large further support from the EU. All politically acceptable measures are being used."

The deal on involving private creditors is widely expected to be considered a "selective default" by the ratings agencies, making Greece the first euro country to ever be in default — if likely only for a short period of time.

Because of that, the eurozone will back up any new Greek bonds issued to the banks with guarantees. Those guarantees are necessary because Greek banks use Greek government debt as collateral for emergency support from the European Central Bank. Those bonds would no longer work as collateral if hit with a default rating, meaning Greek banks would lose the ECB support and quickly collapse.

In the case of bond rollovers or swaps, the new Greek bonds issued to the banks would have long maturities of up to 30 years and low interest rates, according to the Institute of International Finance, the group representing the private sector creditors. French President Nicolas Sarkozy estimated the rates would average 4.5 percent.

That will give Greece more time to get its struggling economy back in shape and cut some 21 percent of its future debt burden.

Leaders agreed to provide the new eurozone rescue loans to Greece at a 3.5 percent interest rate and with maturities of between 15 and 30 years. They will have an additional grace period of 10 years.

"I think this is extremely important to ensure the debt sustainability of Greece," Barroso said.

In addition to the new aid for Greece, the leaders also overhauled their bailout fund, giving it the power to intervene in countries before they are in full-blown crisis mode.

The changes to the fund are a big turnaround, especially for Germany, which had blocked any such move earlier this year. They show how worried the eurozone is that its debt crisis could spill over from small countries like Greece, Ireland and Portugal to big ones like Spain or Italy. Bailouts for those countries would likely overwhelm the eurozones financial capacity.

To avoid ever being in that position, the EFSF will be able to provide a "precautionary program," such as short-term credit lines, for struggling countries. Such credit lines could be very helpful for Italy and Spain if they ever experience a funding squeeze, showing investors that support is available if things get tight.

They could also make it easier for Ireland and Portugal to start raising money again on financial markets once their own rescue programs run out.

The EFSF will also be able to recapitalize banks in countries that haven't been bailed out, supporting them during a banking crisis without forcing them into a full program that usually requires massive cuts and economic reforms. That may make it easier for certain countries to request help before market panic has reached its peak.

On top of that, the eurozone can in certain circumstances use the EFSF to buy bonds on the secondary market, taking pressure off countries experiencing an investor sell-off. That was a role that the ECB had reluctantly fulfilled until a few months ago, when it abandoned its bond buying program amid growing frustration with leaders' slow efforts to contain the crisis.

Leaders said Portugal and Ireland will also get lower interest rates on their bailout loans, but stressed that there won't be any private sector involvement in their support programs.

"Private sector involvement will be limited to Greece, and Greece only," EU President Herman Van Rompuy said.

Greek Prime Minister George Papandreou greeted Thursday's deal. "The European Union has taken significant decisions for Greece and for the eurozone," he told reporters. "Today's decisions safeguard the viability of our national debt."

However, some analyst questioned whether the agreement was enough to make Greece's massive debts, some —350 billion or 160 percent of economic output, truly sustainable in the long-run.

"If successful, the program will bring a significant reduction of Greece's debt stock although, on its own, it is unlikely to be enough to bring Greek debt back to sustainable levels," Ernst & Young's Diron said.

Economy of Europe

2011-07-23T09:05:00.000-07:00

The economy of Europe comprises more than 731 million people in 48 different states.
Like other continents, the wealth of Europe's states varies, although the poorest are well above the poorest states of other continents in terms of GDP and living standards. The difference in wealth across Europe can be seen in a rough East-West divide. Whilst Western European states all have high GDPs and living standards, many of Eastern Europe's economies are still rising from the collapse of the communist Soviet Union and former Yugoslavia.
Throughout this article "Europe" and derivatives of the word are taken to include selected states whose territory is only partly in Europe – such as Turkey, Azerbaijan, and the Russian Federation – and states that are geographically in Asia, bordering Europe – such as Armenia and Cyprus.

Europe was the first continent to industrialize – led by the United Kingdom in the 18th century – and as a result, it has become the richest continent in the world today and the nominal GDP in 2010 is $19.920 trillion[1] (32.4% of the World).
Europe's largest national economy is that of Germany, which ranks fourth globally in nominal GDP, and fifth in purchasing power parity (PPP) GDP; followed by France, ranking fifth globally in nominal GDP, followed by the United Kingdom, ranking sixth globally in nominal GDP, followed by Italy, which ranks seventh globally in nominal GDP, then by Russia ranking tenth globally in nominal GDP.

These 5 countries are all ranking in the world's top 10, therefore European economies account for half of the 10 wealthiest ones. The end of World War II has since brought European countries closer together, culminating in the formation of the European Union (EU) and in 1999, the introduction of a unified currency – the euro. European Union as a whole is, by far, the wealthiest and largest economy in the world, topping the US by more than 2.000 billions at a time of great economic slowdown– see List of countries by GDP. In 2009 Europe remained the world's wealthiest region. Its $32,7 trillion in assets under management represented more than one-third of the world’s wealth. Unlike North America ($29,3 trillion) it was one of few regions where wealth surpassed its precrisis year-end peak.

Of the top 500 largest corporations measured by revenue (Fortune Global 500 in 2010), 184 have their headquarters in Europe. 161 are located in the EU, 15 in Switzerland, 6 in Russia, 1 in Turkey, 1 in Norway.

19 out of the top 26 nations in the world with the highest nominal GDP per capita are in Europe as of 2010.

== http://en.wikipedia.org=

Seed maker races for crops as climate changes

2011-07-23T09:00:00.000-07:00

(Reuters) - A changing climate that many scientists fear will hurt global crop production means seed makers must work harder to meet food needs as world population grows by 30 percent by 2050, a top world seed executive said.

"Agriculture production is moving to the north because those climates are becoming warmer. Some of those environments are also very conducive to some good agricultural production," Paul Schickler, president of Pioneer Hi-Bred, a unit of chemicals giant DuPont, told Reuters on Friday.

"But when you move north you've got less of a season, less sun, less heat units. Now you need to make hybrids and varieties that have shorter maturities but still generate the appropriate amount of yield," Schickler said when asked about the company's long-term growth strategy.

"Soils are also becoming more saline -- so you've got to have crops that can tolerate more saline," he added.

The need to increase crop yields is in the spotlight now across the globe. Food demand, always rising with population and wealth, has exploded in recent years as China and, to a lesser extent, India, speedily grow their economies. That has brought millions more hungry mouths with ample money to eat grain-fed beef, pork, poultry and dairy.

Worries about the shrinking "pie" of food supplies has led to a fresh spike in food prices, as seen in 2008. Corn and other grain prices are up at least 70 percent in the past year, according to the Food and Agricultural Organization.

Yet demand for more food grains has come as biofuels have cut into grain use. More ominous are shrinking amounts of arable land with soils to grow wheat, corn, rice, oilseeds and other major crops. Climate, scientists say, is a big cause.

The U.N. Intergovernmental Panel on Climate Change warned years ago mankind is likely facing a future of crop-growing perils, starting with tropical zones growing too hot and dry.

A typical study, published this month in the respected journal Science, concludes that climate change has trimmed potential global wheat production 5.5 percent and corn output 3.8 percent over the last three decades.

VOLATILITY, THE NEW NORMAL?

Extremes in weather -- fears of things to come -- tested world farmers in 2010 and this year looks little different. But Schickler said volatile weather is stock in trade for Pioneer.

"Clearly the volatility of climate is occurring at the same time climate is changing," Schickler said.

"That is emblematic of what we have to deal with all the time ... deliver better products that improve productivity," he added. "You need to bring in defensive traits -- whether it is for disease, insects, stalk strength, grain quality."

Pioneer launched a new conventionally bred drought-tolerant corn hybrid seed in the western U.S. Corn Belt this spring that has about 5 percent yield advantage over other varieties, which should help pave the way for expansion of the new molecular technology on other markets, such as Africa, Schickler said.

The next step will be a genetically modified (GMO) seed "to go after drought and heat tolerance, but that's probably something more in the later part of this decade," he said.

That GMO technology could be applied to other crops such as sorghum, soybeans or rice, he said, but added that it will be a decade or so before Pioneer has a GMO wheat seed for sale.

Both hybrids and GMO seed development are much further along in rice than wheat, Schickler said.

The first step in boosting rice has been hybridization through conventional plant cross-breeding. In China, about half the rice is grown from hybrids but in India only 2 to 3 percent, he said. Scientists are working to add transgenic genes to rice to fight insects or add resistance to herbicides or drought, but no GMO rice is yet in commercial use by farmers.

"That's why it is positioned as a strategic crop," said Schickler. "Not only is it a big crop in Asia but there is so much we can do with it from a productivity standpoint, insect standpoint and water utilization -- growers and consumers in Asia really need it."

Workshop “Writing is Easy”

2011-07-23T08:49:00.000-07:00

Writing serves as one of the primary skills required in the academic world. Nevertheless, both students and prospective researchers often do not understand where to start in terms of writing. This is why the Journal of Indonesia Economy and Business aims to tackle this problem by hosting the workshop: “Writing is Easy”. With its location in Phoenix Hotel Yogyakarta, 100 participants along with invited guests attended this event. The event had Prof. Mudrajad Kuncoro, Ph.D. and Tri Widodo, Ph.D. as the keynote speakers. An opening speech was made by BM. Purwanto, MBA., Ph.D. and which was followed by an interesting discussion with Arief Surya Irawan, M.Com. as the moderator.

The first session held the theme “Key Tips in Writing” and was presented by Prof. Mudrajad Kuncoro, Ph.D. The session focused on discussions concerning writing habits that must be shaped as early as possible and in whatever location or condition, for example when waiting for a delayed plane or for recreation. What becomes a current problem at the moment is that student papers display excessive use of language while displaying weak analysis. Conversely, papers from professors are frequently rejected since it’s marked with a thorough analysis but using language that is too difficult to understand. The starting point of writing is reading. Therefore frequent reading is a key to exploring ideas.

The second tip for writers is to hold a strong commitment to write. Such commitment must be planted by sparing time ach day to write about basically anything. Furthermore, in seeking for inspiration and selecting a topic, the writer can take advantage of a simple trick, namely Observe, Imitate and Modify (Amati, Tiru, dan Modifikasi- ATM). It is a common strategy for writers to write down all the thoughts on paper and decide the title later. The title represents the facade that promotes the theme. Therefore the writer must search the appropriate keywords in the paper that will result in the title. Finally, Mudrajad emphasized the importance of making effective sentences. Accordingly, sentences should be brief and requiring no more than 16 words.

In the second session Tri Widodo, Ph.D. of who has several writing experiences in international journals explains about the essentials in writing for international journals. He explains that writing in international journals requires that we as the authors pay and do not get paid. Usually the amount would be US $100 per article. Currently, international journals are risk averse where there are abundant amounts of articles that enter. Authors can predict the degree of their article’s acceptance in a journal by taking into account a number of aspects for instance, the congruence with the journals theme, correct writing format, and etc. The quality of fine researchers is also determined based on numerous factors: independence, motivation, communication abilities, organizational abilities, technology information abilities, intellectual abilities, and perseverance.

This event displayed enthusiast participation. More than eight participants delivered questions to the keynote speakers. The event which had presumed for around four hours was expected to grow the participants’ enthusiasm in writing.