Spain's banks hold billions of euros in properties that will be tough to sell

The Real Threat Facing Spanish Lenders

Spain's banks hold billions of euros in properties that will be tough to sell

One analyst estimates it could take 40 years for banks to unload their holdings Denis Doyle/Bloomberg

While Europe’s sovereign debt crisis grabs all the headlines, distressed real estate may pose a bigger threat to the Spanish banking system. The country’s lenders hold about £30 billion ($41 billion) of unfinished homes and land that’s “unsellable,” according to Pablo Cantos, managing partner of MaC Group in Madrid. MaC Group is a risk adviser to several leading Spanish banks. “I’m really worried about the small and medium-size banks whose business is 100 percent in Spain and based on real estate growth,” says Cantos. He adds that only bigger, more diversified lenders such asBanco Santander (STD), Banco Bilbao Vizcaya Argentaria (BBVA), La Caixa, and Bankia are strong enough to survive their real estate losses: “I foresee Spain will be left with just four large banks.”

Spain’s central bank tightened rules last year to force lenders to set aside more reserves against property seized in exchange for unpaid debts and is pressing them to sell assets rather than wait for the market to recover from its four-year decline. Yet unloading the real estate may be difficult or impossible. Bank-owned land “in the middle of nowhere” and unfinished residential units will take as long as 40 years to sell, Cantos predicts. Fernando Rodríguez de Acuña Martínez, a consultant at Madrid-based adviser RR de Acuña & Asociados, has a more dire view. About 43 percent of unsold new homes are in exurbs far from city centers, he says, and “if you take into account population growth for these areas, there’s no demand for them. Not now or in 10 years.”

Dozens of Spanish banks have failed or been absorbed since the economic crisis ended a debt-fueled property boom in 2008. The cost to taxpayers of cleaning up the industry’s books has come to £17.7 billion so far. Banks may face increased pressure following Nov. 20 national elections that propelled the conservative People’s Party to power. Its leader, Mariano Rajoy, has said the “cleanup and restructuring” of the banking system is his top priority.

“Stricter provisioning rules for land need to be implemented,” says Luis de Guindos, director of PricewaterhouseCoopers and IE Business School Center for Finance. De Guindos has been named by newspapers as a contender for finance minister in a Rajoy government. “Many banks will be able to deal with it, but others won’t.”

Idealista, Spain’s largest real estate website, currently advertises 45,912 bank-owned homes there, up from 29,334 in November 2010. In 2008 it didn’t list any.

Spanish home prices have fallen 28 percent, on average, from their peak in April 2007, according to a Nov. 2 joint report by Fotocasa.es, a real estate website, and the IESE Business School. Land values fell 33 percent nationwide. Fernando Acuña Ruiz, managing partner of Taurus Iberica Asset Management, a Spanish mortgage servicer, expects the slide in home prices to continue. “Spain has 1 million new homes that won’t be completely absorbed by the market until the middle of 2017,” he says. “Prices will fall a further 15 percent to 20 percent in the next two to three years.”

Banks are reluctant to acknowledge the size of the declines. There is an “enormous” gap between prices offered by lenders and what investors are willing to pay, preventing sales of large property portfolios, MaC Group’s Cantos says. He estimates that prime assets can be sold at a 30 percent discount, while portfolios comprising land, residential, and commercial real estate may sell only after 70 percent discounts. “Therein lies the problem,” he says. “Banks have already provisioned for a 30 percent loss, but if you are selling at 70 percent discount, you have to take another 40 percent loss. Which small and medium-size banks can take such a hit?”

The bottom line: With home prices down 28 percent from the peak, real estate losses may swamp smaller lenders, leaving Spain with four big banks.

Smyth is a reporter for Bloomberg News.

Investment outlook: For a brighter investment forecast, look long term

Despite the recent market volatility, opportunities to grow your nest egg are out there

4:22PM GMT 25 Nov 2011

Doom and gloom might be the order of the day – as politicians struggle to control the EuroZone debt crisis, plus a worsening UK economic outlook – but the medium- to longer-term forecasts remain much brighter. In particular, leading fund managers agree that future market conditions appear more favourable for investors, providing your money is in the right place.

2011 will certainly be remembered as a year of global market volatility, kicking off with unrest in the Middle East and North Africa, followed by devastating earthquakes in Japan and New Zealand. More recently, the EuroZone has taken centre stage.

All of these events have contributed to a climate of uncertainty, where even the smallest piece of economic news can send markets into a spin.

Yet the fundamentals of stocks and shares equities themselves offer greater encouragement. That’s because the present stock market issues are mainly due to a lack of confidence over the inaction of European politicians in tackling the EuroZone difficulties. The balance sheets of the corporate companies themselves – particularly large blue chip companies – look strong.

While share prices are currently low, the FTSE 100TM has already grown by 10pc since the lows of early October. Many industry experts agree that the medium- to longer-term prospects look encouraging, here’s why:

Dividends to reach a three-year high

Dividend yield payments – a share of the profits companies pay to investors on a regular basis – are on the increase, and 2011 looks set to see the fastest growth in dividends since 2008. This is particularly the case for the UK dividend market, with Capita Registrars reporting that some companies were increasing payments to investors by as much as 100pc mid-way through 2011.

Even allowing for the subsequent market volatility, dividend payments still rose by 16pc between July and September, compared to dividend payments over the same period a year earlier.

Dividends have always been an important part of equity returns. While equities can rise and fall in value, dividends are generally more stable. This means they can prove a valuable way of providing an income or supporting growth in the value of your investments.

It’s ‘time in’ the markets, not ‘timing’

Investing your money should always be viewed as a medium- to longer-term commitment. Sadly, many investors make the mistake of encashing their investments after only a short-term, especially when the markets suffer a downturn. Having originally agreed a longer-term investment horizon, this about-turn in strategy often results in losses.

While past performance should not be considered a guide to future returns, historically markets have recovered strongly, over time, from significant crashes. According to Hindsight statistics, in 1987, ‘Black Monday’ saw the FTSE 100TM (total return including dividends) fall 31pc – but five years later it had grown by 120pc. After the devastating 9/11 attacks in 2001, the FTSE 100TM dropped 11pc; by September 2006 it had risen by 57pc.

Time – not timing – is the key to a successful investment strategy. Generally the longer you are able or prepared to retain your investments, the greater the potential return.

A balanced approach

Not that investing has to be solely about stocks and shares assets. Essentially there are four other types of assets that can feature in your overall portfolio: cash (deposit-based savings), fixed interest (loans to the Government or companies), property and commodities (e.g. gold).

Each asset class has its own positives and negatives. By placing your money into an investment fund that contains a range of asset classes, you can reduce the overall risk to your capital. That’s because when one type of investment is performing less well – such as property recently – others may produce higher returns.

Receive no-obligation financial advice

The medium- to longer-term outlook for growing your money might appear encouraging, but is your nest egg suitably positioned to take advantage of potential market opportunities?

http://www.telegraph.co.uk/financialservices/investing/Telegraph-Investment-service/8916213/Investment-outlook-For-a-brighter-investment-forecast-look-long-term.html

Can the euro be saved?

If Chancellor Angela Merkel, above, agrees to a massive bail-out, that should buy enough time for agreement on the second, long-term step to euro salvation 

By Damian Reece

8:27PM GMT 01 Dec 2011

The clock is ticking for the euro. After 11 years circulating in shops and bars from Athens to Zeebrugge, there are, it is said, just 10 days left to save it – or perhaps eight, since it was on Wednesday that Olli Rehn, Europe’s Economic and Monetary Affairs Commissioner, made his startling prediction of the euro’s imminent demise.

The fact that Rehn, an official at the heart of the euro project, came out with such a stark assessment has brought what many thought was unthinkable into the realm of the thinkable. So thinkable, in fact, that governments (including our own), central banks, lawyers, financial institutions and investors are making contingency plans for what is assumed will be an economic event of cataclysmic proportions.

But can the euro be saved? And if it does break up, what are the implications for the UK, a country that has stubbornly stayed out of the euro, but which can’t escape the consequences of events in the next week, culminating in another crunch meeting in Brussels next Friday? Sadly, a financial Flash Gordon doesn’t exist. There is no comic book hero to appear at the last minute to save the euro. To do that, the eurozone’s leaders must overcome entrenched political differences over how a rescue is mounted.

Scepticism that Germany, France and Italy can bury their differences, agree the measures necessary and bring the other 14 squabbling euro members to the table has left markets deeply unconvinced. After all, we have been here before.

There are two steps to saving the single currency. The first is a short-term bail-out of continental proportions, probably costing up to 1 trillion euros (£856 billion), for countries such as Greece and Italy which are about to run out of cash to pay their bills. By the eurozone governments agreeing to provide unlimited support for near-broke colleagues, the cost of borrowing for these stricken countries would fall, enabling them to borrow again and pay their IOUs to the region’s increasingly shaky banks.

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It was the parlous state of these mainly European lenders that prompted Wednesday’s intervention by central banks, led by the US Federal Reserve. However, their action – to let loose an ocean of cheap dollars – was first and foremost about saving banks that are wobbling because of the euro, not to save the euro itself.

Anyway, assuming the inflation-phobic Angela Merkel and her German colleagues can agree to a massive bail-out, that should buy enough time for agreement on the second, long-term step to euro salvation. That is, an agreement for EU treaty changes, or possibly a series of bilateral agreements, that will bind the 17 member countries in closer financial union. The upshot would be a dilution of national sovereignty, submitting each parliament’s tax and spend policies to Brussels for approval under the watchful eye of the Frankfurt-based European Central Bank (ECB). But it would, in theory, stabilise the political system the euro relies on.

The arguments raging between Berlin, Paris, Rome and Brussels are over how all this is to be achieved in ways that are politically acceptable to everyone. The ECB’s president, Mario Draghi, has already refused to be the eurozone’s lender of last resort; anyway, the EU treaty bans it from lending to governments. Mrs Merkel again repeated her opposition to bail-outs yesterday.

On Wednesday, European finance ministers all but admitted they had failed to agree on ways to bolster the increasingly discredited European Financial Stability Facility (EFSF) and are turning to the International Monetary Fund (IMF) to step in and help overcome Europe’s political and legal barriers to delivering the short-term “big bazooka”. But if that is delivered then politicians such as Mrs Merkel will want to make sure Europe never goes through this again. She will want a clear understanding by the end of next week that fiscal union – in effect, much closer political union – is the quid pro quo for a bail-out. German voters are sick of seeing their prudence support the profligacy of southern Europe, be it Greece, Spain, Portugal or Italy.

This really is a defining moment. And not just for the eurozone countries. Preserving the euro, and convincing markets that there is a meaningful plan for the future, is central to the UK’s interests, too. Europe is our biggest trading partner and our wish for a more balanced, less City-dependent and more export-led economy relies on stability and growth on the Continent.

But politics moves at a snail’s pace, while markets are lightning quick to sense any weakness in a financial system. If there is no concrete and convincing action by the end of next week, it seems inevitable that the previously unthinkable will happen. The euro will start to unravel and any break-up in the short term would inevitably be disorderly.

Markets know that the combination of recession and austerity plans is leaving governments such as Italy and Greece short of cash to pay their debts. Between now and the middle of 2014, Italy must find 651 billion euros to roll over its liabilities, which stand at 2.4 trillion euros and growing. Without the massive cash support of a bail-out, Italy risks being unable to pay its bills and default would follow.

That doesn’t necessarily mean it would leave the euro, but countries that have suffered the catastrophic event of welching on their debts, such as Argentina, have devalued to restore competitiveness and, ultimately, credibility to their economies. The only way for an Italy or Greece to do that is to leave the euro. Markets may soon force their hand anyway, by instigating a run on their banks and repatriating euros into safer havens such as Germany, leaving these countries unable, and politically unwilling, to function within the eurozone.

Once out, according to economists, it would take a matter of days, rather than weeks, for a country to replace euros with another denomination bank note. Ideally, it would have a stock already prepared. In the interim, it could issue small denomination IOUs that would become a new form of cash, exchangeable for goods and services.

Leaving the euro would almost certainly see a country imposing capital controls. If Greece left, then a Briton with a holiday home on Kos, and presumably a bank account there, wouldn’t be able to liquidate assets and get cash out. That trapped cash would also be forcibly converted into new drachmas and would lose a chunk of its value as the new currency devalued. The same would happen to any financial or business contract struck in euros with a Greek counterparty. The break-up of the euro would keep lawyers busy for years.

Stinging investors also risks a country acquiring pariah status in capital markets, which might become reluctant to lend any more. But the advantage of adopting a much devalued drachma would be to make exports cheaper and the economy far more competitive, which could mean its fortunes start to look up. With a smile back on its face, Greece might become an advert for leaving the single currency, making it even harder to keep the euro together. Once one goes, others will follow.

In the short term, this would be bad for Britain, too. A disorderly break-up involving a large sovereign default would hit our banks. Credit would become more expensive, if available at all, and trade would shrink. David Cameron summed it up yesterday: “If the euro fell apart, what you would see is a very steep decline in the GDP, the economic growth, of all countries in Europe, including Britain.”

But then again, a country, or countries, free to set their own interest rates, and enjoying a cheaper currency, would make for potentially stronger export markets for us.

An alternative would be for Germany to exit the euro, perhaps with other relatively strong nations, including France, Finland and the Netherlands. This would leave the more stable economies with the problem of adopting a new currency and the weaker, peripheral members with the old euro. It would be worth less than a new “northern euro” but some of the worst disruption would be avoided.

Probably the best we can hope for is that next week ends with real action on a eurozone bail-out that buys sufficient time for its 17 members to agree, and plan, an orderly restructuring over the next two to three years. That way will allow some countries to leave – and the euro diehards to continue their perilous monetary adventure alone.

http://www.telegraph.co.uk/news/worldnews/europe/eu/8929042/Can-the-euro-be-saved.html

Profit Distribution Policy and Dividend Policy: IF ONLY more companies can emulate this example.

It is refreshing to note that TDM states its profit distribution policy and dividend policy so very clearly in the front pages of its annual report.  It would be a great example to emulate by other listed companies too.

From Page 5 of TDM 2010 Annual Report:

Profit Distribution Policy

TDM Group’s annual consolidated distributable profits shall be appropriated as follows:
(i) one third for dividends to shareholders;
(ii) one third for capital expenditure of the Group; and
(iii) one third for the reserves of the Group.

This policy was approved by the Board of Directors of TDM Berhad on 13 August 2009

Dividend Policy

TDM Berhad will endeavour to payout dividends of at least 30% of its consolidated annual net profi t after taxation and minority interest, subject to availability of distributable reserves.

Dividends will only be paid if approved by the Board of Directors and the shareholders of the Company.

The actual amount and timing of dividend payments will be dependent upon TDM Berhad’s cash flow position, returns from operations, business prospects, current and expected obligations, funding needs for future growth, maintenance of an efficient capital structure and such other factors which the Board of Directors of TDM Berhad may deem relevant.

The Company will take every effort to grow its businesses and it should be reflected in growth in the dividend rate.

The objective of this dividend policy is to provide sustainable dividends to shareholders consistent with the Company’s earnings growth.

This policy was approved by the Board of Directors of TDM Berhad on 12 April 2009


2010 Annual Report of TDM
http://announcements.bursamalaysia.com/EDMS/subweb.nsf/7f04516f8098680348256c6f0017a6bf/3d7153ea4b2a666f4825787f002ca198/$FILE/TDM-AnnualReport2010%20(2MB).pdf

Mervyn King: “The crisis in the euro area is one of solvency and not liquidity.”

'Systemic' crisis looms for Europe's banks

 December 2, 2011 - 7:59AM

Bank of England Governor Mervyn King urged banks to enhance efforts to bolster their defences against the euro area’s debt turmoil, which now looks like a “systemic crisis”.

“An erosion of confidence, lower asset prices and tighter credit conditions are further damaging the prospects for economic activity and will affect the ability of companies, households and governments to repay their debts,” threatening banks’ balance sheets, King told reporters in London.

“This spiral is characteristic of a systemic crisis.”

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The US Federal Reserve cut the cost of dollar funding for European financial institutions yesterday in a coordinated move with other central banks. That measure came two days after King said there are “early signs” of a credit crunch in the euro region, where leaders face increasing pressure to resolve intensifying turmoil.

“Sovereign and banking risks emanating from the euro area have intensified and remain the most significant and immediate threat to UK financial stability,” the central bank said in its Financial Stability Report. It said that if banks’ earnings aren’t enough to build capital, they should limit payments of bonuses and dividends and “give serious consideration” to raising external capital.

Credit squeeze

The central bank’s Monetary Policy Committee restarted bond purchases in October to aid the recovery and cut its growth forecasts this month. Officials warned today that the strains in interbank markets could threaten economic growth.

“Against a backdrop of slowing global growth prospects, concerns about the sustainability of government debt positions of smaller economies have broadened to larger euro-area economies,” the central bank said. “The current funding pressures facing banks could lead to a renewed tightening in credit conditions for real economy borrowers.”

The central bank also published the recommendations of its Financial Policy Committee, which met on November 23. The panel said the Financial Services Authority should encourage banks to disclose leverage ratios to investors by the start of 2013, two years earlier than Basel rules originally required.

The Bank of England said in the FSR that UK banks have 140 billion pounds ($215 billion) of term funding due to mature in 2012, concentrated in the first half of the year. It said short-term money market funding conditions have “been fragile over the past few months, with banks finding it harder to roll over all of their maturing funding and tenors shortening.”

Contingency plans

UK authorities are working on “a wide range of contingency plans” to deal with a further intensification of the crisis, including a possible breakup of the euro, King said. The central bank is working with the Financial Services Authority and the government on plans, he said.

After a series of stop-gap accords failed to protect Italy and Spain from surging bond yields, Europe is under growing pressure from US leaders and international financial markets. European leaders will meet next week to discuss the next steps in resolving the debt crisis.

The cost for European banks to borrow in dollars fell for a second day after the coordinated central bank action. The three-month cross-currency basis swap, the rate banks pay to convert euro payments into dollars, was 118 basis points below the euro interbank offered rate in London. The gap had widened to 162.5 below Euribor yesterday, the most in three years, before the Fed move.

Underlying problems

King said the central bank measure was “designed to deal with clear evidence that there were problems in banks around the world finding difficulty in accessing dollar funding in particular.” Still, he added it can only provide “temporary relief” and is not a “solution to the underlying problems.”

He also said that said resolving the wider problems of global financial imbalances are beyond the UK authorities to deal with on their own and “only the governments directly involved can find a way out of this crisis,” referring to the euro-area debt turmoil.

“The crisis in the euro area is one of solvency and not liquidity,” he said. “Here in the UK we must try and find a way to bolster the resilience” of the financial system.

While Britain’s banks have 15 billion pounds of exposure to sovereign debt in the most vulnerable euro-area economies, they have “significant” exposures to the private sectors of Ireland, Spain and Italy, the Bank of England said. This amounts to about 160 billion pounds, or 80 per cent of their core Tier 1 capital.

“UK banks have made significant progress in improving their capital and funding resilience,” the bank said. “But progress has been set back recently and they have been affected by strains in bank funding markets.”

Bloomberg

Read more: http://www.smh.com.au/business/world-business/systemic-crisis-looms-for-europes-banks-20111202-1o9s3.html#ixzz1fKaV6Jr2

Hedge fund legend Paulson has lost out heavily by backing a booming economic recovery which has not materialised.

Recovery hopes painful for hedge fund legend Paulson
John Paulson, the hedge fund manager who made billions betting on a collapse in US house prices, has lost out heavily by backing a booming economic recovery which has not materialised.

President Obama has been accused of not doing enough for the US economy 

By Emma Rowley

10:27PM BST 08 Oct 2011

5 Comments

Wagers that the US economy and housing market would bounce back strongly have helped leave one of his flagship funds almost 50pc down for the year so far, which will fuel talk that he has lost his "magic touch".

Paulson & Co, his New York-based hedge fund with $30bn (£19bn) under management, has informed clients its Advantage Plus fund dropped almost 20pc in September, leaving it off 46.73pc for the year, sources told Reuters.

In comparison, the average hedge fund lost 2.81pc last month leaving it down 4.74pc for the year, according to data from Hedge Fund Research.

Paulson, who reports the performance of his funds to investors on a monthly basis, will make a conference call to clients on Tuesday to explain his career's biggest loss.

"I don't think I need to listen to his excuses, it would be like rubbing salt in the wounds," one said.

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Paulson's famous bet on a US housing crash helped him generate a personal fortune that the Forbes Rich List puts at $15.5bn (£10bn).

But after well-placed bets on a downturn, his optimism about the US and the wider economic recovery has proved expensive. He invested heavily in America's banking sector, where share prices have slumped in recent months.

Earlier this year he suffered heavy losses over a stake in Sino-Forest, a Chinese timber company, when fraud allegations caused its share price to collapse.

Some suggest Paulson's problem is partly one of size.

Industry watchers say large hedge funds can be unwieldy to manage, with one study looking at thousands of funds finding younger, more nimble funds offered better returns.

http://www.telegraph.co.uk/finance/globalbusiness/8816004/Recovery-hopes-painful-for-hedge-fund-legend-Paulson.html

A common Euro currency defies common sense

Martin Feldstein

December 2, 2011

The politicians who introduced the euro ignored warnings that it would create serious problems.

EUROPE is now struggling with the inevitable adverse consequences of imposing a single currency on a very heterogeneous collection of countries. But the budget crisis in Greece and the risk of insolvency in Italy and Spain are just part of the problem caused by the single currency.

The fragility of the major European banks, high unemployment rates, and the large intra-European trade imbalance (Germany's $US200 billion current-account surplus versus the combined $US300 billion current-account deficit in the rest of the euro zone) also reflect the use of the euro.

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European politicians who insisted on introducing the euro in 1999 ignored the warnings of economists who predicted that a single currency for all of Europe would create serious problems.

The euro's advocates were focused on the goal of European political integration, and saw the single currency as part of the process of creating a sense of political community in Europe.

They rallied popular support with the slogan "One Market, One Money", arguing that the free-trade area created by the European Union would succeed only with a single currency.

Neither history nor economic logic supported that view. Indeed, EU trade functions well, despite the fact that only 17 of the union's 27 members use the euro.

But the key argument made by European officials and other defenders of the euro has been that, because a single currency works well in the US, it should also work well in Europe.

After all, both are large, continental, and diverse economies. But that argument overlooks three important differences between the US and Europe.

First, the US is effectively a single labour market, with workers moving from areas of high and rising unemployment to places where jobs are more plentiful. In Europe, national labour markets are effectively separated by barriers of language, culture, religion, union membership, and social-insurance systems.

To be sure, some workers in Europe do migrate. In the absence of the high degree of mobility seen in the US, however, overall unemployment can be lowered only if high-unemployment countries can ease monetary policy, an option precluded by the single currency.

A second important difference is that the US has a centralised fiscal system. Individuals and businesses pay the majority of their taxes to the federal government in Washington, rather than to their state (or local) authorities.

When a US state's economic activity slows relative to the rest of the country, the taxes that its individuals and businesses pay to the federal government decline, and the funds that it receives from the federal government (for unemployment benefits and other transfer programs) increase.

Roughly speaking, each dollar of gross domestic product decline in a state such as Massachusetts or Ohio triggers changes in taxes and transfers that offset about 40¢ of that drop, providing a substantial fiscal stimulus.

There is no comparable offset in Europe, where taxes are almost exclusively paid to, and transfers received from, national governments.

The EU's Maastricht Treaty specifically reserves this tax-and-transfer authority to the member states, a reflection of Europeans' unwillingness to transfer funds to other countries' people in the way that Americans are willing to do among people in different states.

The third important difference is that all US states are required by their constitutions to balance their annual operating budgets. While "rainy day" funds that accumulate in boom years are used to deal with temporary revenue shortfalls, the states' "general obligation" borrowing is limited to capital projects such as roads and schools.

Even a state like California, seen by many as a poster child for fiscal profligacy, now has an annual budget deficit of just 1 per cent of its GDP and a general obligation debt of just 4 per cent of GDP.

These limits on state-level budget deficits are a logical implication of the fact that US states cannot create money to fill fiscal gaps.

These constitutional rules prevent the kind of deficit and debt problems that have beset the euro zone, where capital markets ignored individual countries' lack of monetary independence.

None of these features of the US economy would develop in Europe even if the euro zone evolved into a more explicitly political union.

Although the form of political union advocated by Germany and others remains vague, it would not involve centralised revenue collection, as in the US, because that would place a greater burden on German taxpayers to finance government programs in other countries. Nor would political union enhance labour mobility within the euro zone, overcome the problems caused by imposing a common monetary policy on countries with different cyclical conditions, or improve the trade performance of countries that cannot devalue their exchange rates to regain competitiveness.

The most likely effect of strengthening political union in the euro zone would be to give Germany the power to control the other members' budgets and prescribe changes in their taxes and spending.

This formal transfer of sovereignty would only increase the tensions and conflicts that already exist between Germany and other EU countries.

Martin Feldstein, professor of economics at Harvard University, was chairman of Ronald Reagan's council of economic advisers and is a former president of the National Bureau for Economic Research.

Read more: http://www.smh.com.au/business/a-common-currency-defies-common-sense-20111201-1o940.html#ixzz1fKXkPP7N