Opinion: Europe must be open to refugees fleeing persecution
LONDON (CNNMoney) Investors are scouring Europe for ways to make money from its tentative recovery, and one U.S. firm thinks it has found the answer — buy Greek government bonds. Japonica Partners said it believed Greek debt was “massively undervalued” and should be rated several notches above the junk status assigned by the big credit rating agencies. Greece has been shut out of international bond markets since 2010, when its government borrowing spiraled out of control. It has been rescued twice by the European Union and International Monetary Fund and was forced to restructure its debt in March 2012, imposing losses of more than 100 billion euros on private bondholders. Related: Europe’s recovery is weak, warns ECB But hedge funds — such as Dan Loeb’s Third Point — and other niche investors who bought into Greek debt since the restructuring have made a killing. Yields on Greek 10-year debt in the secondary market have plunged from around 44% in March 2012 to 9%. Japonica’s statement was greeted with derision by some investors Thursday, but the firm that made its name restructuring bankrupt Allegheny International in the early 1990s believes it has spotted an opportunity others may have missed. It claims to have become one of the larger, if not the largest, holder of Greek government bonds, and has hired a former senior executive from Norway’s oil fund — one of the world’s biggest investors — to help manage the portfolio. Related: Investors embrace European stocks “Greece is one of history’s most extraordinary sovereign rejuvenations hidden in plain sight by pervasive systemic misperceptions,” Japonica said, adding it expected yields should break below 5% in 2014. It’s a bold prediction but Japonica may have a point. Greece’s headline economic data and social crisis remain as depressing as ever, and it may yet need another 10 billion euros in support. Still, the government is on track to deliver a primary budget surplus — stripping out the cost of servicing its massive debt this year — and hopes to return to the bond market in the first half of 2014. And the first green shoots of growth may be emerging.
Difficult though it may be for us to comprehend, for refugees, paying smugglers and boarding these boats is a rational decision. The problem is compounded by the lack of safe, legal routes into Europe. The Refugee Convention — a legal framework which defines who refugees are, their rights and the legal obligations of countries — recognizes that people fleeing for their lives may have to resort to illegal entry. This drives refugees to take even greater risks to escape. European countries have a legal obligation to provide protection under the Refugee Convention but during the last decade the continent’s borders have become heavily securitized, with millions of pounds invested in Frontex, the agency established by the EU to strengthen Europe’s borders and protect the continent against unwanted illegal migrants. These measures should not apply to individuals escaping war and persecution — the theoretical beneficiaries of legally sanctioned protection and compassion — but refugees are often forced to resort to the same irregular channels to leave their country of origin and travel towards safety. Europe’s formidable migration control apparatus does not sufficiently differentiate between individuals who may be in need of international protection and other migrants. In the absence of safe, legal ways to reach European territories, refugees are forced into dangerous and abusive situations, and often obliged to embrace the perils of life-threatening journeys and the unscrupulous services of smugglers. Boarding an overcrowded boat bound for Italy would possibly have been the last stage in a long and dangerous journey for many of those on that voyage. Some of them possibly didn’t even know where they were headed. European governments must work in solidarity to ensure people fleeing human rights violations and persecution are given entry. When people are in need of our help, we must live up to our international obligations and offer it. Only then can we be sure we are doing all we can to prevent more deaths.
Europe’s tentative recovery spreads south in September
The main disappointment in Europe was Spain, where a rise in business activity during August – the first in more than two years – proved short-lived as firms slipped back into decline. Still, the data pointed to a broadening recovery across the euro zone, said Nick Matthews, senior European economist at Nomura, though that had yet to be borne out in official data. “The hard data so far for the third quarter has perhaps a bit more on the disappointing side – in particular industrial production …was very weak in July,” said Matthews. “We expect this to bounce back, but this suggests we could see a slightly slower pace of growth in the third quarter relative to the second quarter.” PMI compiler Markit said its surveys suggested the euro zone economy grew around 0.2 percent from July through September, a touch below the 0.3 percent registered in the second quarter. Nomura’s Matthews said they suggested a slightly stronger rate of growth for the final months of the year. STILL NOT ON SOLID GROUND Markit’s Eurozone Services PMI rose to 52.2 in September from August’s 50.7, little changed from a preliminary reading of 52.1. Readings above 50 signify growth. Businesses in No.1 economy Germany reported rising new orders and staffing levels, while France’s private sector grew for the first time in a year and a half. The upbeat mood was further bolstered by news that euro zone retail sales jumped 0.7 percent in August, month-on-month, hitting the top end of forecasts. Draghi said on Wednesday the euro zone economy still faced downside risks [ID:nL6N0HS2YP]. Chris Williamson, Markit’s chief economist, said the surveys pointed to slightly stronger growth towards the end of this year, even if the region was not out of the woods. “The political instability that has reared up in Italy is a reminder that there remains plenty of scope for recoveries to be derailed,” said Williamson. Italian Prime Minister Enrico Letta won a confidence vote in parliament on Wednesday after Silvio Berlusconi, facing revolt in his own party, backtracked on threats to bring down the government. The Italian services PMI topped the 50 growth threshold last month for the first time since May 2011, which could signal a timid recovery towards the end of the year. British business again showed the fastest pace of growth among Europe’s major economies last month.
If the superpower has no room to maneuver, it will have to shift burdens to foes and friends, he says, which will then create a wedge. “We already see it in security policy, Dr. Braml says, especially the waning US commitment to NATO and its focus on Asia. Europe and especially Germans have to think of how they take care of their own security . It’s not that Europe is a stranger to political crisis. Governments from Greece to Italy to Portugal have fallen since the start of the continent’s sovereign debt crisis. And as Europe has been clawing out of its recession, the US has pointed fingers at Brussels and Germany, which powers Europe, for focusing too much on austerity and not enough on growth. As a presidential candidate, Mitt Romney singled out Spain in presidential debates, saying he didn’t want to go down the path to Spain. But now Europe is on the other side, looking at the US as a political system it would not want to emulate. The French daily Le Monde on Tuesday ran the headline : Jefferson, Wake Up. They Have Become Fools! “It is incomprehension, says Arun Kapil, a political science professor at the Catholic University of Paris. And while he says the shutdown is an internal American affair, the tenor of Le Monde sums up the dominant mood. Italian parallels And yet, in some corners of Europe, there might be more understanding. This week, Italy’s prime minister, Enrico Letta, faced the collapse of his fragile coalition government after right-wing leader Silvio Berlusconi threatened that ministers from his People of Freedom party (PDL) would resign. Jacob Kirkegaard, a senior researcher at the Peterson Institute for International Economics in Washington, compared Italy to the US ahead of the shutdown in a recent piece : The neoclassical architecture of Washington, DC is not all that is evoking Rome these days. Regrettably, on the eve of a possible US government shutdown, the political scene in the nations capital increasingly looks like the fractured and malfunctioning politics of Italy, especially when it comes to right wing extremism,” Mr. Kirkegaard wrote. “Both Rome and Washington are succumbing to a revival of the medieval political strategy of hostage taking. US-Europe convergence The similarities don’t end with Rome and DC.