Is the 'Demographic Carry-trade' putting human capital at risk in Europe?
German Parliament today voted to back the Greek bailout package…do you have Greek bailout burnout? Well, if you do, you are lucky, because we will be talking about the Emerald Isle today, that's right…Ireland, remember them? Today, the executive board of the IMF discussed whether or not to approve the latest tranche of bailout money for Ireland. Since the emerald isle has been super diligent in passing austerity measures and budget cuts, the country is fully expected to qualify for the next tranche. But can we really compare Ireland to the other countries in the Eurozone? In many ways, Ireland has things going for it that the other countries don't have. It has a lower median age and lower dependency ratio than the other PIIGS (portage, Italy, Greece and Spain), so it has more in common with Argentina, a country heralded as a default success by the media. We ask our guest Constantine Gurdgiev, if he things these demographics can hold for Ireland, or if human flight will company capital fight, as the economies in the west struggle to hold on to their youngest and smartest people amidst an uncertain economic future full of more austerity and more deflationary zombie banks.
And UK banks Lloyds and RBS may take advantage of the cheap money the ECB is doling out through its LTRO program this week, according to reports. The last time we had a 3-year LTRO much of that money returned to the ECB's deposit facility, as banks whose balance sheets were impaired were more interested in borrowing the money to meet liquidity demands and to conduct "blood transfusions" in the face of deposit flight. What will be the verdict this time? We ask Constantine Gurdgiev this question as well, but he isn't the only one who has an opinion. That one percent interest rate may be just too enticing to pass up. It's no secret that banks love that easy money, but it looks like some don't think the banks should be getting off so easy. One Brit in particular, Mark McGowan, thinks that instead of rewarding bankers from Lloyds, RBS, etc., that we should be sending in the bailiffs and pounding their heads in. We'll hear more from him.And, remember that movie Wall Street? Michael Douglas' character, the infamous Gordon Gekko is back, but not where you may think. The FBI has commissioned him to send a different message to wall street, one that tries to convince bankers not to engage in insider trading through a friendly public service announcement. Really?? Instead of arresting those "bloody, bald-headed bankers" as Mark McGowan calls them, the FBI wants to use propaganda to convince them not to steal? Maybe if our regulators had some balls we wouldn't need to pay for worthless advertising to convince a cohort of kleptocrats to stop extracting wealth from our bank account so that they could pay for their weekend getaways in the Hamptons and ski trips to Davos?
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