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Foreign investors make up only 7% of Russia's domestic bond market compared to 30% for similiarly rated Mexico. Russia is rated BBB by Standard & Poor's. Moody's Investors Services rating is one notch higher. The yield on Russia's 10 year government bond is about 7%, compared to 4.35% for Italy and 1.8% for U.S. Treasurys. Russia's deputy finance minister, Alexei Moiseyev, says he hopes changes will raise the foreign holdings to about 33%. Martin Gilman, a former IMF representative to Russia in 1998, and now a professor at Moscow's Higher School of Economics, says rates will go higher because of appreciation in the ruble and large monetary easing in Europe and the U.S. The situation has changed completely from the 1998 Russian default on debt payments of $160 billion. The IMF estimate is for overall debt to be about 11% of GDP by the end of 2014.

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Philipp Rosler, head of the FDP party and Germany's Economy minister, says he opposes further involvement by German taxpayers or the ECB in the debt restructuring for Greece. He pointed out that the current negotiations between Greece and the bondholders (mostly French and German banks) were about private sector involvement. Tax payers of Germany and other European countries are already making a contribution he said. The IMF is pushing for the ECB to take a haircut or writedown on the $40 billion of Greek bonds it holds to supplement the haircut taken by bondholders of over 50%. Rosler said in an interview with the Journal that Athens should keep its side of the bargain by implementing reforms and not letting them just be on paper. On Germany or the EU directly taking responsibility over the Greek budget, Rosler said this should be the responsibility of the Greek parliament. At the same time he pointed out that its important to have a specific and rigorous montiroing process just to be fair to taxpayers in the EU....

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A report from Roubini Global Economics says state and local government financial problems are not of a systemic nature and should not affect the U.S. financial system. The report sees defaults as isolated events. Still it says reforms will be needed only some of which have been made, and preventing a crisis will require real austerity. The report predicts $100 billion in muni-bond defaults over 5 years.

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BBC News shows how Pam Bondi, former Attorney General of Florida, handled questions from Senators at her confirmation hearings for Attorney General. With a calm demeanor Pam Bondi comes as a relief after the withdrawal of Matt Gaetz.  She said- people want safe streets, people want "America to be safe again. Of course they want the good economy and cost of living. And that will make America Great Again, and I don't see how that has become a bad word."

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Efforts by BNP Paribas to get bondholders to take a 50% loss on Greek bonds, and exchange their old bonds for new ones that mature in 50 years. BNP Paribas is working for the Greek government to get other banks and bondholders to accept this exchange so that Greece can tackle its debt load and interest payments on debt. Some arm twisting by BNP Paribas to get bondholders who have insurance through CDS to accept the exchange. This is being done on the grounds that the I.S.D.A. committe would declare the restructuring in Greece as being "voluntary" and not a default, so that bondholders who do not accept this deal would not get paid through CDS insurance.

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The Bank of Cyprus and the Cyprus Popular Bank (Laiki Bank), passed stress tests given by the EU in 2010 and 2011. By the end of 2010- even as other banks such as Barclays were cutting their Greece government bonds by over 50%- the two banks held 5.8 billion euros of Greece bonds, over $1 billion euros larger exposure to Greece than nine months earlier, according to European regulators. Regulatory supervision failed to alert the banks and the banks risk management failed to see the warning signs in Greece. The Laiki Bank Risk Officer went in the opposite direction actually increasing exposure to Greece, saying in a conference call in August 2010, that he had used the bank's capital position "to deepen selectively some highly profitable client relationships." What went wrong with the stress tests by the EU regulators in July 2010 of these two banks, was that the tests looked at what would happen if economic conditions deteriorated, but did not consider the possibility that government bonds could produce losses. The two banks suffered total booked losses of 4.3 billion euros in 2013 from holdings of Greece bonds. The EU stress tests of July 2010 showed the two banks having total of 572 million in surplus capital. The two banks then went on to issue dividends in 2010-2011 totalling 141 million euros. By March 2013 the Laiki Bank was "on respirator" for a few months, according to the Central Bank of Cyprus, until the 10 billion euro EU bailout in March 2013 with the closing of Laiki Bank and the sharp downsizing of Bank of Cyprus....

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Thomas Kleine-Brockhoff, a senior transatlantic fellow at the German Marshall Fund of the United States, leads the EuroFuture Project. Here he offers his ideas of the dilemmas facing German leaders in agreeing to letting the European Central Bank take a larger role of supporting the bonds of Italy, Portugal and Spain. He says Germans are seeing a contradiction between European demands for German leadership and not wanting to be led by Germany or perceiving Germany as a hegemon. Brockhoff says Germans have never in the postwar period wanted to or learned to exercize continental leadership. He recounts the postwar period when Germans were content with the deutsche mark, and limited their expression of national pride to the deutsche mark. Giving up the deutsche mark was part of the deal for reunification of the two Germanys, a surrender of economic sovereignty for the sake of a larger integration into Europe. He says that even though the arguments are framed in terms of orthodox economics, economic nationalists who never really wanted to give up the deutsche mark are the core of the opposition to the common issue of eurozone bonds. The German position is to go back to the framework of principles for economic and monetary union and tighten the rules for spending and taxes, something that is good in the long run, but does not work in the short run with shrinking economies from austerity programs and nervous markets. The Merkel government's resolution of this crisis is to set new fiscal rules for the eurozone, and either move in the direction of letting the ECB play a larger role, or support such a move. What is not clear is whether the government will survive the next election taking on this leadership role in Europe, or a revolt in the Christian Democratic party....

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Malkiel says both sides in the investor debate are right. Those saying the CAPE ratio in the U.S. at 25, well above long run average of 15, are right to point this out. So are the others in the debate who point to the lack of alternatives for investors when the 10 year Treasury bond is at 2.4% and short term rates essentially at zero. Stock prices reflect the discounted present value of future cash flows from dividends and capital gains. This discount rate in 2014 has to take into acount the rate on low risk securities such as 10 year U.S. Treasury bonds and and a premium for riskiness of the stock market. Add three or four percentage points to this and one gets a low discount rate for future earnings that helps support reasoning for higher stock prices, says Malkiel. On the issue of low interest rates Malkiel's view is that they will be around for a long period because the unutilized productive labor capacity and low growth are likely to persist for a long period. Here he supports Fed chairwoman Yellen's view based on the U6 labor utilization. He also sees the long run equity returns from today's prices to be much lower than the 10% long run average. By accomodating both sides Malkiel supports a broadly diversified portfolio with adequate room for emerging markets and international stocks....

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Proposals for using a plan in the euro-zone, such as the Brady Plan. The Brady plan arranged for bondholders for Latin American debt to take losses of 30% in return for longer term debt instruments with lower rates, and backed by 30 year US zero coupon bonds. This helped restructure Latin American debt in the late 80's and early 90's, and helped countries in Latin America forge an economic recovery. At this time Angela Merkel from the German side is pushing for bondholders to take losses for having made risky loans, which was made part of the EU bailout plan in late November 2010. However investors in financial markets continued to push up bond yields for Belgium, Portugal, and also for Germany. There is the sense that something is needed that would require bondholders to take losses, with some compensating mechanism such as the Brady bonds. Also needed is a restructuring of debt without which euro-zone countries cannot stage an economic recovery. Ireland, Portugal and Spain can no longer devalue their national currencies as a way out of the financial crisis. This increases the urgency for coming up with a solution. Mr. Brady was asked about this at a financial markets conference recently. He said what is needed for such a plan to work, is to have a unified decision. In the Brady plan the US took the lead and agreement was arranged bringing together the bondholders and the sovereign countries. Nicholas Brady was Treasury Secretary of the US in the 1980's. Argentina, Brazil, Mexico and other countries restructured their debt, and commercal banks were able to reduce their exposure at a discount. The principal benefit to the lending banks was that they were able to exchange their claims on developing countries into tradeable instruments, and were able to get this debt off their balance sheets. The negotiations for the Brady bonds involved some form of "haircut" - meaning that the value of the bonds resulting from the restructurings was less than the face value of the bonds. All of the Brady bonds were eventually retired. By Mexico in 2003, and also by Brazil, Colombia and Venezuela....

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Wall Street Journal reporters Walker in Berlin, Forelle in Brussels, and Meichtry in Rome, reconstruct the events during critical days after the indecision and failure to reach agreement during the July summit of eurozone countries. This took the form of intervews with leading players and over 25 policy makers. What emerges are accounts of how Germany's Angela Merkel, daughter of a Lutheran pastor, and protege of Eurozone founder, former German chancellor Helmut Kohl, handled the crisis. Merkel was widely criticized in the media for indecision. What emerges is an account of a leader who took decisive action at key moments in the crisis- leading to the formation of new governments in Greece and Italy taking action to improve finances, and negotiations with banks represented by the International Finance Corporation leading to acceptance by banks of a 50% loss on loans to Greece to reduce Greece's unsustainable debt burden. Merkel also worked with the European Central Bank's departing president Frenchman Claude Trichet and new president Italian Mario Draghi to resist French president Sarkozy's efforts to have the ECB assume responsibility for the crisis through large scale buying of Italian and Spanish bonds; which was opposed by German public opinion as a backdoor way of having German taxpayers assume responsibility for European debt. Shown are three critical moments when Merkel intervened. In October 2011, after Italian prime minister Berlusconi reneged on promises to make pension and other reforms to improve Italian finances because of political resistance. He survived a parliamentary no-confidence vote by one vote. Merkel took the lead on October 20, by directly calling Italian President Georgio Napolitano on the phone, to urge him to take action for forming a new government in Italy. The result was Napolitano talking with all political parties to form a new government, leading to the formation of a government by a non-political figure respected in Italy, former EU commissioner Mario Monti. A day earlier, on October 19, French President Sarkozy met ECB president, Trichet, at an event honoring him as departing ECB president in Frankfurt's Alte Oper concert hall. Trichet, Merkel and Sarkozy met in a side room. Sarkozy asked for decisive help from the ECB for large scale buying of Italian and Spanish bonds to lower yields, which had reached 7% on Italian bonds. Trichet responded that the ECB's charter did not allow it to finance governments, with the meeting ending in a shouting match between the two leaders. On October 21, EU and IMF inspectors warned that Greece's debt was reaching unsustainable proportions and austerity measures alone would not work, unless the bondholders, the European banks, took losses of 60% on their excessive lending to Greece. At this point France agreed to the German position arguing for this level of bondholder haircuts or losses, fearing the prospect of large future bailouts that would jeopardize France's triple AAA credit rating. The July 2011 summit accord had only provided for 10% in losses for bondholders. On October 27, at a meeting that went past midnight, Merkel and Sarkozy called IIF head Charles Dallara, who headed negotiating for the banks, to EU headquarters in Brussels. Merkel handed Dallara an agreement containing the 50% bondholder loss demand, and told Dallara- "This is the last offer." Merkel was saying banks would be left with nothing if they rejected it and Greece defaulted. Dallara called bankers and the IIF accepted Merkel's agreement. The final moment that October came on October 31, when Greece's prime minister Papandreou said he would call a referendum on the bailout provisions and austerity measures demanded by the IMF, the EU and the ECB. Bond markets reacted negatively to the announcement fearing a rejection and a Greek default. The Group of 20 leaders was meeting in Cannes, France on Nov. 2, 2011. Papandreou was asked to come to Cannes for a pre-summit meeting. Here Merkel told Papandreou- "the real question" for the referendum was, "Do you want to be in the euro, or not?" Days later Papandreou, lacking support in Greece from political parties and opposition inside his party, submitted his resignation. A non-political figure respected in Greece, former ECB vice president, Lucas Papademos, was appointed prime minister to head a Unity government. Polls after the appointment showed three fourths of Greeks said that this was "a positive step for Greece," with Papandreou's party getting only 11% support and the opposition led by Samaras about 20%. The criticism leveled at Merkel is that Germany should take responsibility for debt throughout the euro area through the issuance of eurozone bonds or the ECB buying large amount of bonds of Spain and Italy. Merkel faced strong opposition inside Germany and from the Bundesbank to this idea. The other criticism was based on austerity measures worsening the finances of Greece because of a lack of growth in the economy, which is true; yet Germany may see the situation in Greece as taking a long time to be resolved in any event because of excessive and faulty financial management. For Italy and Spain putting finances in order was a necessity, and austerity measures should lead to short term sacrifice but improve prospects for the long term by returning the economies to growth. Another criticism is the installation of governments that lack popular or electoral support. As the polls in Greece showed the Unity government there has far greater support and public opinion blames the politicians for the huge mess. In Italy, Berlusconi was widely seen as losing popular support when he resigned. And in Spain Mariano Rajoy, the newly elected prime minister, was elected with a huge majority in parliament following winning in local government elections. Merkel also held her own party, the Chrisitian Democrats together at the recent Leipzig convention. Mario Draghi, was elected with German support to head the European Central Bank. He has long argued for better management of Italian finances as head of Italy's central bank. Draghi was able to support Merkel with carefully planned and managed actions. First to reduce interest rates to support economic growth in a slowing eurozone. Following this with the ECB's Long Term Financing Operation in late December 2011, to provide unlimited loans to European banks at 1% interest for three years in exchange for a broadened list of collateral deposited at the ECB. In a final twist in this drama, Charles Dallara, who was a key negotiator for the U.S. Treasury in setting up the Brady Bonds- that converted bad Latin American government debt owed to U.S. banks in the 1980's into long term debt with large reductions in principal owed and lower interest rates. This was in exchange for guaranteed repayment with 30 year U.S. zero coupon bonds. Dallara was now a negotiator for the banks to reduce the chance of the very same bondholder haircuts that he had negotiated in an earlier period to solve the Latin American debt crisis. Other players in the drama were Axel Weber, head of the Bundesbank, Germany's central bank, who resigned after strong and outspoken opposition to the ECB's large scale purchase of bonds of Greece, Italy and Spain. Jens Weidmann, his protege, who replaced him. And Jurgen Stark, German representative at the ECB, who also resigned in opposition to Germany assuming responsibility for eurozone debt. ...

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Alexandra Stevenson provides this exceptional account of how the debt deal between Argentina and the hedge funds was negotiated. A decade long deadlock was broken for the first time when Argentina's finance secretary in the newly elected government of Mauricio Macri met Jonathan Pollock and Jay Newman of Elliott Management on Dec. 7, 2015, at the Waldorf Astoria hotel in New York. It is based on 8 intervews with the participants in the negotiations, court filings and emails. Critical to the settlement was the work of Dan Pollack, a trial lawyer with the McCarter & English law firm who acted as the mediator and made some rules including no pen and paper allowed, building trust through open discussion. Back channels helped including one setup through Marcos Mindlin of energy firm Pampa Energia in Argentina, who helped the hedge funds communicate with the Argentine negotiators. Mindlin met the hedge fund representatives at the World Economic Forum in Davos. Argentine president Macri insisted on making the terms he offered public on Feb. 1, 2016 of $6.5 billion because this is a sensitive issue in Argentina. Pollack pushed for a simple business transaction to close the issue and not the complex debt structuring the hedge funds favored. On Feb. 19, Judge Griesa of Federal District Court in Manhattan, who presided over the legal settlement, agreed to lift an injunction that would prevent Argentina from making bond payments and raising new money, and set a deadline of Feb. 29 for the settlement. On Feb. 28 the deal was signed by all the hedge funds. Argentina paid all holdout hedgefunds $9.3 billion, according to the Economy ministry, Elliott getting $2.4 billion....

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Japan's new prime minister told the Japanese Parliament in a policy speech, that a crisis like that in Greece was possible in Japan, if trust in national bonds was lost and the policy of public spending to lift the economy was not reversed. This speech followed the resignation of Shizuka Kamei, as banking minister. Kamei was seen as an advocate of continued public spending. He cautioned that a policy of relying heavily on issuing debt could not be sustained for long. Japan has government debt of $9.7 trillion, which is close to twice its gross national product in 2009. Much of this debt is held by the public in Japan, but analysts have cautioned that with the aging population, it is possible that people who retire will need the cash from bonds, requiring the government to turn to the debt markets for financing. Among the proposals Kan suggested is raising the 5% sales tax to pay for rising social welfare costs for an aging population. Satoshi Arai, the new national strategy minister, says the government will draft a plan by June 22 to address the public debt. He said the government would not exceed $500 billion in bond issuance for fiscal year ending March 2012....

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The MIT Economics Department helped shape the thinking of influential central bank governors, Mervyn King of the Bank of England, Ben Bernanke of the U.S. Federal Reserve, and Mario Draghi of the European Central Bank. Bernanke (1979) and Draghi (1977) received their Ph.D.s in economics from MIT in the late 1970's, with Prof. Stanley Fischer (1973-94) as their advisor. Charles Bean, deputy governor of the Bank of England followed them a few years later. Mervyn King was a visiting professor at MIT (1983-84). King and Bernanke shared an office as professors at MIT. The MIT school came up with a pragmatic and activist approach which argued there was a role for government when markets and the economy stumbled. This followed a period when economists from the universities at Chicago, Minnesota and Rochester were influential, making the case for efficient markets and businesses holding rational future expectations which were ahead of government planners; saying government should play a minimal role. The MIT trained central bankers have made shaping public and market expectations an important part of policy actions. Draghi's July 23, 2012 remark- "Believe me this will be enough," was an effort to shape expectations after the European Central Bank's July 2012 bond buying actions in the eurozone. Germany has a competing version based in Bonn. Germany's former Bundesbank president, Axel Weber, was the tutor at Bonn University for current Bundesbank president, Jens Weidmann. Both Weber and Weidmann supported austerity measures, inflation fighting efforts of former ECB head Claude Trichet, and opposed Draghi's monetary easing and bond buying efforts to reduce excessive yields of Italy and Spain....

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Ireland is paying close to 6% for the cash it is getting while European authorites are paying 3% to issue bonds in January 2011. With the rate at 3.5% over German bond yields, J.P. Morgan estimates that Ireland would have to generate a primary surplus, excluding interest costs, of 2.3% in 2015. This is what it would take to stabilize debt against GDP. Borrowing at one percent lower Ireland would need a primary deficit of 0.2%. Ireland is in its third year of fiscal austerity, and this unjustly penalizes Ireland. An interest rate reduction would be contingent on Ireland achieving fiscal targets and monitoring by the European authorites.

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ECB president Mario Draghi describes the problem of financial fragmentation in the EU, as each country's national supervisors ask their banks to withdraw their activities to within national boundaries. This ringfencing of liquidity positions means the interbank market is not functioning. Draghi says this financial fragmentation is within the mandate of the ECB to correct. He points to the risk of convertibility that has more and more to do with the premia being charged for Spain's and Italy's government bonds, not just the perception that the counter party can fail.-"To the extent that these premia have to do with factors inherent to my counterparty, they come into our mandate, they come within our remit." Draghi's effort to define the issues of financial fragmentation, and sovereign premia "hampering the functioning of the monetary policy transmission channels," is critical because the ECB sees it important to act within its mandate. The final point he makes is a political one about the future of the euro: "When people talk about the fragility of the euro, and the increasing fragility of the euro, and perhaps the crisis of the euro, very often non-euro area member states or leaders underestimate the amount of political capital that's been invested in the euro. We view this, and we are not unbiased observers in Frankfurt. We think the euro is irreversible. And its not an empty word now, because it preceded saying exactly what actions we are making that would make it irreversible." On the progress made, the acceptance of one financial and banking supervisor by member countries of the EU is seen as part of the idea of shared sovereignty necessary to put meaningful supervision across national boundaries in place. And on the structural reforms and deficit controls needed to be put in place he sees "the pace has been set, and all the signals that we get are they don't stop reforming themselves."...

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The 6 km Congee to Bondi walk along the coast, and the 10 km Manly Scenic Walk, Sydney Harbour National Park trails, and  the Greater Blue Mountains Heritage Area, are shown here in BBC Travel, parts of Sydney that can be explored on foot.

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Kylian Mbappe is from Bondy, one of the northern suburbs of Paris. Ayoub Simour and Angelique Chrisafis give this report from Bondy and the Banlieu immigrant communities of France that have been wrongly stigmatized. Mbappe grew up here, with a Cameroonian father who was a soccer coach and Algerian mother who was a professional handball player. This is one of the poorest areas of France and one of the youngest. Both parents were youth workers. Football has put a smile on every face here after the troubles of the pandemic. Mbappe says "our neighborhood is an incredible melting pot of different cultures." Mbappe tells Sports Illustrated that he learned "values" and "respect" in the banlieu.

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Italy has 1.5 trillion euros of debt outstanding and this is the third largest behind USA and Japan. About 241 billion euros worth of Italian government bonds are expected to be issued in 2010, with 171 billon euros of this in redemptions. Interest rates need to be low to not widen its deficit. Italian debt is expected to go up to 118% of GDp in 2011 from 103% in 2007 according to Moody's Investors Service.By contrast Spain's debt s expected to go up by 38% in the same period. Italy's households are less burdened with debt than Spain's. still Italian bonds are affected, as yields widened between Italian and German government bonds to 1.58% compared to before the euro-zone rescue plan of 750 billion euros.

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The European Stability Mechanism made its first short term debt auction Jan. 8, 2013, by selling 1.927 billion euros of treasury bills. Japan remains a key investor. Japanese finance minister, Taro Aso, said Japan plans to to be an active investor in the ESM bond sales. He told a news conference: "Japan will purchase some ESM bonds using its foreign exchange reserves as it monitors progress in efforts to stabilize the European situation." Japan holds $1.27 trillion in foreign exchange reserves. The move pushed the yen lower. Investors pay the ESM to keep cash for three months- the ESM treasury bills had an average yield of minus 0.0324%. The ESM fund will be used for aid to Spain's banking sector, Greece, Ireland and Portugal. Plans are for the ESM to issue three month and six month bills twice a month to reach 18.5 billion euros by the end of 1st quarter 2013. The ESM fund rating is Aa1 by Moody's Investors Service, and AAA by Fitch Ratings.

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While Italy's budget deficit of 5.3% of GDP in 2009 is relatively healthy, its public debt as a percentage of GDP is rising and forecast to be 118%. The growth in tax revenues is negligible because Italy has seen only 0.54% annual average growth in GDP in the past decade, so its much harder to manage the debt. As the interest on debt exceeds the rate of growth, debt keeps rising all the time, say experts. This makes it harder for Italy to borrow in capital markets, a 9.5 billion bond offer in April 2010 drew onlly 9.78 billion euros in bids. The debt financing is helped by the Italian households having a high savings rate of 15%, and holding 25% of Italy's bonds.

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Problems with the old 4% rule for withdrawal from savings for retirees in 2013 include- the decreasing income from bonds, the high P/E 10 ratio of 23 for the stock market in the U.S. in 2013, the timing of entry into retirement and the economic conditions, inflation and unforeseen expenses. The 4% rule needs to be modified in today's conditions.

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The bleak situation for Americans facing retirement as most people age 65 are likely to outlive their savings. The median financial net worth of an American household is $10,890, according to work done by Edward Wolff, an economics professor at New York University. This estimate is based on 2010 Federal Reserve data updated for the movement in market indexes. Even the ten percent of Americans who have saved $1 million will have difficulty as a 2% withdrawal rate would provide only $20,000 to supplement Social Security income. Earlier generations of Americans could depend on income from bonds. In today's low interest rate environment, the benchmark 10 year Treasury note is at 2.2% in 2013, bonds will provide only a fraction of the income generated in earlier periods. Stock markets are volatile and pose additional risks for seniors in retirement.

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Proposed ideas being considered at the EU headquarters in Brussels include the European bailout fund, the European Financial Stability Facility (EFSF), being made a bank with funding from the European Central Bank. The EFSF would be able to buy the bonds of Spain and Italy in primary and secondary markets alongside private buyers. As an alternative the ECB would be able to buy Spanish and Italian bonds directly. Here the problem is keeping private investors in the market given the large financial needs of Spain and Italy. In the restructuring of Greece's government bonds the ECB took the position that it would subordinate the claims of private investors in Greece's government bonds and not take loss. Concerns of private investors could be addressed by the eurozone governments giving an explicit indemnity to the ECB to cover any losses suffered in the purchase of Spanish and Italian bonds. Both steps, the direct purchase of Spain's and Italy's bonds by the ECB or through the EFSF would mean doing something that is not in the ECB's charter- the financing of government debt- and would be done cautiously and only in a crisis situation. The caution would also be motivated by the need to ensure there is action to improve the competitiveness of Spain, Italy and other eurozone countries through specific measures, and no backtracking bygovernments....