Sunday, September 25, 2011

Why Greece is so Important - Bailouts and Haircuts

Discussion of Greece proposing the possibility of 50 percent haircut on debt is a very important news item. For a Christian blogger to speak so much about economics might seem strange to some but consider 20th Century Europe's history of financial meltdowns.

First, I think Europe needs to take action to allow peripheral countries an orderly default. The longer the global community waits the greater the risk. My understanding of an orderly default is basically an agreed upon haircut. Banks holding Greek debt agree to write the value down and Greece agrees to pay the new payments on the new debt levels. Though a 50pc haircut seems drastic think about the options of more austerity.

Populations like Greece at some point will rebel against further austerity. Political unrest in Europe is the worst case scenario. Unrest will likely lead to a populist call for a disorderly default. The contagion of such action is completely unpredictable and likely to be more catastrophic than Lehman.

Why is this important? 1. Good policy and orderly cooperative action can avoid total catastrophe. It is vital to realize that while a natural catastrophe like a Tsunami cannot be avoided Financial Tsunamis can be avoided. The math can be done to make a balanced bailout and haircut options that equally effects banks and public services but protects all of us from wholesale disaster. As Christians, we ought to call for balanced sacrifice and wise solutions to avoid undue suffering. This is the compassionate and wise thing to do. 2. Human nature and the realities of life can cause suffering people to do horrible things. Poverty and economic collapse can lead to political instability. These things have happened before and it is unwise to believe that the 21st century is any different than the 20th.

Friday, September 02, 2011

India's Identity Project

With National Database, India Tries to Reach the Poor -

This is a great article about the India Identity Project. This is a project to register all Indians. India is notorious for leaving its despertely poor behind as it "develops". This project is an aim to monitor and measure the lives of the poor and be able to get these suffering people into the benefits process. The aim is to lower significantly corruption and the cost of India's bearocracy. This is great use of technology to move development forward.

It is also headed by the author of Imagining India, Nandan M. Nilekani. Imagining India is on my bed stand waiting to be read.

Thursday, September 01, 2011

Currently Reading @ 21st Century Reformation

My current reading list on the side bar is a bit outdated I need to update BUT here is what I am reading:

1. I just finished    
The Bottom Billion - Paul Collier

2. I am now reading 
Development as Freedom - Amartya Sen

Both are fantastic...highly recommended.