Salient to Investors:

Fareed Zakaria said:

  • The Economist says Connecticut bankrolls the weaker states in America: 5% of their GDP over the last 20 years has been net income transfers to states like Mississippi and Alabama.
  • Allen Cooperman says the nuclear deal will only take Iran from 2 months away from breakout to 3 months.
  • Bloomberg says the Shanghai index mirrors the Dow Jones near the beginning of the Great Depression.
  • The Shanghai index is still up 90% over the last year, despite the recent collapse.
  • Gavekal Dragonomics says 5% to 10% of China’s households have stocks vs. 50% percent in the US.
  • Economists say China’s intervention in its stock market screams of panic.
  • The Guardian sees a ridiculous government overreaction, and says there have been up to 1.4 million new investors per week, many of which are novices. Ruchir Sharma at Morgan Stanley says 2/3 of new investors in China’s stock market have no high school degree, and even rural farmers have established their own stock exchanges.
  • Italy has the most UNESCO world heritage sites, 51, followed by China with 48, and then Spain, France and Germany. The US is tenth with 23 sites.

Jonathan Powell said:

  • Historical conflicts like Afghanistan have ended only through negotiations and not military victory.
  • Terrorism reflects an underlying political problem that almost always needs to be addressed politically.
  • Governments usually wait too long to negotiate with terrorists because they wrongly believe that one last military push will put them on the defensive – little evidence to show this works.
  • ISIS is successful largely because it has attracted disempowered Sunnis in Iraq and Syria.

Ken Rogoff at Harvard said:

  • The Greek referendum, which Paul Krugman urged them to do, was very irresponsible and was spitting in the Germans’ face. Never default on a debt when somebody is still giving you money.
  • If you cancelled all Greek debt, they is still a need to close a 10% gap of GDP in their deficit. Greece cooked their books and lied about their debt and deficit. The necessary changes have to come from within Greece, which has shown little will in wanting to become a modern European state. Greece needs to write down the debt more.
  • Everybody made very optimistic projections of Greek growth, including the IMF and the Europeans.
  • Things are looking better because what doesn’t kill you makes you stronger. Europe could handle a Greek exit, though the political fallout is very unpredictable.

Rana Faroohar at TIME and CNN said:

  • The German public never believed the Greeks would reform and wants to let them go this time.
  • Greece is not a Lehman-like moment so we will not see major international dominos toppling. But it does threaten the political integrity of Europe, with questions next about Portugal, Spain, Italy, though not right away. China creates a new Greece every 6 weeks.
  • Europe’s core, with Germany at the center, is very strong. Germany is incredibly competitive. France could be more competitive by making relatively easy changes. Europe needs one integrative fiscal policy.
  • The European economy is looking a lot better than the politics. The concern is if other nations stir up more trouble in the periphery should Europe be perceived as being unable to get its own house in order.

Zanny Minton Beddoes at The Economist said:

  • The Greek problem has moved from the realm of economics into politics. Many people in northern Europe, not just the Germans, think a Greece exit is better, while France and Italy are very keen to keep the Greeks in. The German Finance Minister wants the Greeks out.  However Merkel will in the end want to keep them in because she does not want to be the chancellor who presides over the breakup of the euro.
  • The US has a much more fiscally integrated system than Europe. Europe created a single currency without creating the economic integration and the fiscal integration that was necessary for that to survive. Europeans are champions at kicking the can down the road.
  • Greece should have written the debt down in 2010 instead if kicking the can down the road. But Greece is no longer the systemic, immediate problem to Europe that it was a few years ago, so a Greek exit would not wreck the euro overnight, but would become a real problem again.
  • The US is looking stronger. The European economy is not great but not that bad, and in many ways improving. 

Joe Cirincione at Ploughshares Fund said:

  • A nuclear deal with Iran is almost certain, likely tomorrow. Most of the serious, big issues have been settled. The deal lengthens the breakout time to at least a year to make the material for at least for one weapon.
  • There will be inspections of Iranian military facilities. Prohibiting arms in or out won’t be lifted right away. Sanctions will remain on the ballistic missile program and for their terrorism and human rights violations. 

Karim Sadjadpour at the Carnegie Endowment for International Peace said:

  • A nuclear deal is likely.  Iran is experiencing a perfect storm economically, with sanctions on top of a collapse in oil prices on top of sustaining the Assad regime in Syria.
  • The Iranian supreme leader has control over the main institutions in Iran, but is not an absolute dictator like Mao was. 2500 years of Persian civilization makes the current isolated Iran an anomaly of history and geography, but 36 years of the Islamic Republic raises concern that a nuclear deal could empower hard-line forces in the short-term. 

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