Greek Prime Minister Alexis Tsipras on Monday reshuffled his team handling talks with European and IMF lenders, a move widely seen as an effort to relegate embattled Finance Minister Yanis Varoufakis to a less active role in negotiations.

An anti-austerity economist who has angered peers with his brash style, Varoufakis is facing calls to quit after returning from a meeting of euro zone finance ministers in Riga isolated and empty-handed while Athens scrambles to avoid bankruptcy.

Deputy Foreign Minister Euclid Tsakalotos – a close Tsipras ally and soft-spoken economist liked by officials representing creditors – was appointed coordinator of the group, the official said. This would elevate him from his current position and give him a more active role in the negotiations, pushing Varoufakis to the sidelines.

The latest developments suggested Tsipras was ramping up efforts to ease tensions with lenders and strike a deal to unlock aid so Greece can avoid defaulting on payments, which could force it out of the 19-nation euro zone.

The news spurred a rally in Greek stocks and bonds. Greek two-year bond yields fell 250 basis points to a two-week low of 23.55 percent, reversing an earlier rise. Athens stocks rose 4 percent while Greek bank shares jumped 9 percent.

Later on Monday, the government said it was preparing a bill to legislate reforms already presented to the lenders, in an effort to inject new momentum into the slow negotiations.

Euro zone officials welcomed the reshuffle and the apparent effort to reduce Varoufakis’ role in negotiations with them.  “The way he behaved made him an additional obstacle in the negotiations,” said a euro zone official.

Another euro zone official questioned whether the move would bring about the substantive change lenders have been demanding.

Varoufakis was later taken to task by the media after he failed to appear at a state dinner after the meeting. He responded by tweeting a quotation by former U.S. president Franklin Roosevelt which read: “They are unanimous in their hate for me; and I welcome their hatred.”

In another move hinting at a less prominent role for Varoufakis, his general secretary, Nikos Theocharakis, who had been leading technical-level talks with the so-called Brussels Group of lenders, will now focus on drawing up a plan for growth to be the basis for a new deal with lenders in June.

George Chouliarakis, considered close to powerful deputy Prime Minister Yannis Dragasakis, will take over responsibility for talks with the Brussels group.

In an effort to show that Athens is serious about giving lenders access to data, a new team was also set up to support EU and IMF officials gathering information in the Greek capital.

Economists from the Atlanta Federal Reserve write:  Almost a decade has passed since the peak of the housing boom, and a handful of economics papers have emerged as fundamental influences on the way that economists think about the boom – and the ensuing bust. One example is a paper by Atif Mian and Amir Sufi that appeared in the Quarterly Journal of Economics in 2009 (MS2009 hereafter). A key part of this paper is an analysis of income of growth and mortgage-credit growth in individual U.S. ZIP codes. The authors find that from 2002 to 2005, ZIP codes with relatively low growth in incomes experienced high growth in mortgage credit; that is, income growth and credit growth were negatively correlated during this period.  Income Growth and Credit Growth Correlation

Tim Boersma writes:  Policies on trade and competition have become a new field of international conflict and the European Commission (EC) has shown its willingness to use them as a weapon. Yesterday, the EC sent a Statement of Objections to Russian state-owned gas company Gazprom for its alleged abuse of market power in Central and Eastern European gas markets. It is the next step in an antitrust case that was first opened in August 2012. In an initial response, Gazprom states that the claims of the EC are unsubstantiated. Of course, in the current political climate it is difficult to see this as a regular antitrust case, but that is exactly how it should be assessed.

The case:

• Gazprom might be hindering cross-border gas sales, by imposing export ban clauses, destination clauses (stipulating that natural gas can only be consumed in a certain country, or sold to a limited number of customers within that country), or requiring wholesalers to obtain Gazprom’s approval for exports. According to the EC, Gazprom has included territorial restrictions in its supply agreements with eight EU member states: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, and Slovakia. Territorial restrictions on gas sales are anticompetitive, as for example ruled by the EC in 2009 when it fined France’s EDF and Germany’s E.ON for making agreements not to sell gas from the MEGAL pipeline in each other’s markets.
• Gazprom allegedly has an unfair pricing policy. The EC is investigating whether the prices that wholesalers and industrial customers pay are unfair, and how Gazprom’s price formulae—which are based on oil price indexes—have contributed to the unfairness. The EC has preliminarily concluded that Gazprom has charged unfair prices in five EU member states, Bulgaria, Estonia, Latvia, Lithuania, and Poland.
• Concerns on gas transport infrastructure. According to the EC, Gazprom leveraged its market dominance in Bulgaria and Poland by making gas supplies conditional upon obtaining certain infrastructure commitments from wholesalers. In Bulgaria, for instance, this iinvolved the South Stream pipeline, which Gazprom cancelled in December 2014.  EU and Gazprom

Greece is willing to make compromises to reach a deal on its debt, Finance Minister Yanis Varoufakis said after tense talks with his euro zone peers on this issue.

“We want an agreement and we are willing to make compromises to achieve this,” Varoufakis told reporters. “The cost of not having a solution would be huge for all of us, Greece and the euro zone.”

Varoufakis said the process to achieve to a deal was difficult but that “we will have a solution in the end.”

Angus Nicholson writes:   In 1987, a young man quit his job at the Hebei Oil Pipeline Bureau and went to seek his fortune in the nascent private property market of Hainan province’s Special Economic Zone. He was Pan Shiyi, now chairman of SOHO China, and one of China’s first private property developers. But he also experienced modern China’s first big real estate bust, when Hainan property prices crashed back to reality prices following a 1992 bull market inspired by Deng Xiaoping’s Southern Tour promoting his ‘reform and opening up’ policy platform.

Hainan is again at the forefront of a Chinese property slowdown.

Hainan may be an extreme case, but China’s property market will not return to its glory days of unrestrained growth.

The March figures from China’s National Bureau of Statistics (NBS) suggests that China’s property market slowdown will continue through 2015.

Construction starts that saw the most dramatic drop. Starts have dropped to their lowest level since October 2009, just before the Chinese government’s enormous 2009 stimulus package. This points to where the property slowdown is being felt most acutely, in new investment. Developers are now far less willing to invest in new projects and believe the market environment has shifted dramatically.Yu Liang president of major Chinese property developer Vanke Group, states that while government policies will help support the market, he is not expecting a major rebound. Yu thinks we have seen the end of the ‘Golden Age’ of the Chinese property market.

As if in unison, as the property market began its outright decline in the second half of 2014, China’s equity market sparked into life.

While the Chinese government does not control China’s stock markets, they are highly driven by policy changes. The share of bank financing in China’s financial sector and the associated concentration of risk has been a major concern for Chinese policymakers. The need to diversify risk across the financial system has driven the Chinese government’s support of corporations pursuing direct financing through China’s financial markets.

What the Chinese government really has little influence over is Chinese investors’ hunger for capital growth. With limited avenues for investment, Chinese investors often pile into asset classes all at once.

New brokerage account registrations and margin financing have exploded.

These are figures that would strike fear into the hearts of most central banks. But the People’s Bank of China (PBOC) is already battling on a number of fronts. The slowing economy, steady capital outflows and the disinflationary trend has tightened domestic liquidity.

This has lead the PBOC to begin, in the words of ANZ’s Liu Ligang, ‘an aggressive easing cycle’ with the weekend announcement of a 100 basis point cut to banks’ reserve requirement ratio (RRR).

How the government manages the equity market boom without precipitating a dramatic crash will be one of the most important stories for China in 2015. In the current environment one can sympathise with investors like Pan Shiyi who are diversifying into overseas assets.