National / International News

A matter for the folks in Scotland

BBC - Thu, 2014-06-05 08:46
Supporters of the Union delighted at Obama comments

When LeBron James Speaks, Do People Stop And Listen?

NPR News - Thu, 2014-06-05 08:44

NBA star player LeBron James and his Miami Heat take on the San Antonio Spurs in the finals today. But The New York Times columnist William Rhoden says James is also gaining influence off the court.

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Values Collide In Texas Over 'Open Carry' Protests

NPR News - Thu, 2014-06-05 08:43

Texan gun advocates have been visibly bringing guns into stores and restaurants as part of "open carry" protests, but some business owners are unhappy. What does this mean for Texas gun politics?

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Obama backs 'strong and united' UK

BBC - Thu, 2014-06-05 08:43
Barack Obama says the interest of the US in the Scottish independence referendum issue is to ensure it retains a "strong, robust, united and effective partner".

The number 2,000: Economic lessons from Brazil

Marketplace - American Public Media - Thu, 2014-06-05 08:35
Thursday, June 5, 2014 - 08:39 BRENDAN SMIALOWSKI/AFP/Getty Images

CAMP DAVID: President George W Bush waves while driving a golf cart with Brazil's President Luiz Inacio Lula da Silva in 2007 at Camp David, Maryland.

You know I'm a sovereign debt geek, so my number would be 2,000. That's the spread over Treasuries, in basis points, of Brazil's sovereign debt in 2002.

Which — OK! I know that's super-geeky and hard to explain. But let me try!

Back in 2002, Brazil had just elected a leftist president, Lula, and it was right next door to a bona fide basket case, Argentina. It had a lot of short-term debt maturing very soon, and no easy way to roll that debt over, since the capital markets were pretty much closed. (No one trusted Lula.) So in a self-fulfilling prophecy, the markets started pricing in a massive default on Brazilian debt.

What that meant in practice was that you could buy a Brazilian bond — any bond — and its yield would be more than 20 percentage points higher than the yield you could get on a U.S. Treasury bond with the same maturity. Not 20 percent higher, 20 percentage points higher. So if the Treasury bond was yielding 5 percent, the Brazilian bond wouldn't yield 6 percent, it would yield 25 percent.

At the time, no country had ever seen its debt trade at 2,000 basis points over Treasuries without defaulting, and it's easy to see why. At those levels, you can't refinance your debt as it comes due, which means that you have no choice but to default on it.

Except, Brazil proved the exception to the rule. Lula was fiscally conservative, and he appointed a George Soros aide, Arminio Fraga, to run the central bank. Between them, Lula and Fraga managed to muddle through the crisis and get Brazil's debt back onto a sustainable footing. And anybody who bought Brazilian debt in the summer of 2002 ended up making an absolute fortune. (The person who bought the most, and who made the biggest profits? Mohamed El-Erian, then of Pimco, later of Harvard, and later still of Pimco, again.)

I learned a huge amount from this episode. Firstly, and most importantly, just because something has never happened before, doesn't mean it's impossible. Secondly, sovereign debt can be even more volatile and risky than stocks — and provide even bigger profits. Thirdly, policymakers can make an enormous difference. And fourthly, markets aren't always rational, or correct: there's a wisdom of crowds, to be sure, but it has its limits.

So the next time you see a country's debt trading at 2,000 basis points over Treasuries, and you hear me saying that default is inevitable, remind me that I said exactly the same thing back in 2002. And I was wrong then.

by Felix SalmonStory Type BlogSyndication PMPApp Respond No

Pupils 'unprotected from extremism'

BBC - Thu, 2014-06-05 08:28
Pupils are not being protected from extremist views at a Birmingham school named in the Trojan Horse inquiry, a leaked Ofsted report reveals.

VIDEO: Cameron 'will sort out extremism row'

BBC - Thu, 2014-06-05 08:27
David Cameron has said he will "get to the bottom of who said what" in the row between the home secretary and education secretary over allegations of extremism in schools.

Does telling children fairytales make them irrational?

BBC - Thu, 2014-06-05 08:27
Parents tell their children that Santa Claus exists. Is that bad?

Couple 'shot and buried by daughter'

BBC - Thu, 2014-06-05 08:24
An elderly couple were killed by their daughter and her husband, who buried their bodies and tricked relatives into believing they were alive, a court hears.

Brooking to retire from FA role

BBC - Thu, 2014-06-05 08:13
Sir Trevor Brooking is to retire from his role as the Football Association's director of football development.

Cameron and Merkel in Juncker talks

BBC - Thu, 2014-06-05 08:09
David Cameron has a "candid" exchange of views with German Chancellor Angela Merkel over who should get the EU's top job.

PM to 'sort out' warring ministers

BBC - Thu, 2014-06-05 08:07
David Cameron vows to "sort out" a row between Michael Gove and Theresa May over the best way to deal with extremism.

Pope Replaces Financial Watchdog's Board

NPR News - Thu, 2014-06-05 08:06

The five Italians who were replaced were associated with the Vatican's discredited old guard. The new members are from four countries, and include a former Bush administration official.

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The ECB's toolbox

BBC - Thu, 2014-06-05 08:04
Can European Central Bank defeat the spectre of deflation?

Italy - beware the wounded beast

BBC - Thu, 2014-06-05 07:53
Italy have not won in seven games but England will dismiss their threat at its peril, warns James Horncastle.

At 'Pestaurant,' Grasshopper Burgers Win Over Eaters Who Say 'Yuck'

NPR News - Thu, 2014-06-05 07:53

A pest control company and a venerable Washington, D.C., grill teamed up to offer gourmet bugs to anyone who'd try them. The selection included roasted crickets, spiced mealworms and ant lollipops.

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Glitter charged with sex offences

BBC - Thu, 2014-06-05 07:47
Former pop star Gary Glitter is charged with eight counts of sexual offences against girls aged 12-14 between 1977 and 1980.

'Open Carry' Gun Laws Spark Texas Backlash

NPR News - Thu, 2014-06-05 07:46

The unnerving presence of young men carrying big guns in fast food restaurants and retail stores is causing consternation — even in firearm-friendly Texas.

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Manhunt Underway In Canada After 3 Police Officers Killed

NPR News - Thu, 2014-06-05 07:45

Residents have been asked to stay indoors as police search for the gunman. A 24-year-old suspect has been identified in shootings that took place Wednesday night in New Brunswick.

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Saudi Arabia To Test Camels And Livestock For MERS

NPR News - Thu, 2014-06-05 07:45

Now that it's clear that camels can infect humans with Middle East respiratory syndrome, Saudi Arabian officials are expanding testing of the animals in the country.

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