This week the world watched as Greece continued its fight for economic survival. Armed with the Greek people's resounding "no" vote on yet another round of economy-killing austerity measures, Prime Minister Tsipras went back to the negotiating table with EU negotiators. But the rescue package he presented to the Greek Parliament on Friday was a mixed bag: while it includes fresh loans, it also comes with the kind of destructive elements -- like regressive taxes and pension cuts -- that already tanked the Greek economy. As the 28 EU leaders meet today, it's clear that Greece isn't fighting mindless austerity just for Greece, but also for the rest of Europe. The Greek public's bold stance has galvanized anti-austerity groups across Europe. It's like a proxy fight in a new cold war -- but this one isn't East vs. West, it's the failed past vs. a sustainable future.
The world was rattled this week by the busted stock market bubble in China and by the "no" vote in Greece last Sunday against austerity policies aimed at reducing the country's unpayable debt. Yet, by week's end, Prime Minister Alexis Tsipras appeared to cave in and say "yes" to the very austerity measures voters had rejected in return for a fresh $59 billion bailout package. After $3.2 trillion of value was wiped out by midweek, the uncharacteristically uncertain hand of the Chinese authorities intervened to stop the crash in a stock market they had cheered to ever greater heights over previous months. Meanwhile, the leaders of the BRICS countries met in Russia to bolster plans for their New Development Bank -- which rivals the World Bank -- and declared they would coordinate policies to keep their economies stable amid all the turmoil. Mohamed El-Erian, one of the most influential voices in the global bond market, writes that the link between the Chinese and Greek crises is the stimulative policies of central banks around the world that have led to a debt buildup and created a gap between the inflated value of financial assets and the real economy. (continued)