Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Deleveraging, What Deleveraging? The 16th Geneva Report on the World Economy

Posted by hkarner - 30. September 2014

Luigi Buttiglione, Philip Lane, Lucrezia Reichlin, Vincent Reinhart 29 September 2014, voxeu

The Lehman Brothers bankruptcy tipped the world into its worst economic crisis since the Great Depression. The recovery has been slow and weak – even in those economies such as the US that emerged first from the acute phase of the Global Crisis. Emerging markets did better during the Crisis, but have recently slowed down. Some, such as China, are seeing marked increases in leverage that raise the odds that they will experience home-grown crises in the future.

To understand the length and depth of the Crisis – as well as the weak recovery – it is essential to analyse the role of debt dynamics.1 In the 16th Geneva Report on the World Economy, we conduct a deep dive into the details of global debt dynamics over the past decade. This includes consistent comparisons across regions and sectors and an emphasis on the interaction of debt and income. We provide a multi-dimensional perspective on leverage for both advanced and emerging economies. Our comprehensive approach includes both public and private debt, with the latter broken down on sectoral lines (households, non-financial corporates, financial sector). Moreover, we take into account national adding-up constraints by relating sectoral debt levels to the overall international investment position. Den Rest des Beitrags lesen »

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Fringe Parties Unleash a Political Earthquake

Posted by hkarner - 30. September 2014

Date: 29-09-2014
Source: The Wall Street Journal By SIMON NIXON

Populist Rebellion Accelerating in Europe

Le Pen ccA recent poll suggested Marine Le Pen, the leader of France’s far-right Front National  would beat President François Hollande in a two-way contest.

Something extraordinary is going on in European politics. The populist rebellion that saw fringe parties secure almost 25% of the seats in the European Parliament in May elections appears to be accelerating, rather than abating as some had predicted.

In the U.K., where the political class is reeling from the Scottish referendum— which saw 45% of Scots vote for independence—the ruling Conservative party has just been hit by the defection of a second parliamentarian to the anti-European Union U.K. Independence Party. In Sweden, the far-right Sweden Democrats took 13% of the votes in this month’s general election and now holds the balance of power in parliament. In Germany, the anti-euro Alternative for Germany showed it is now an electoral force by winning 12.2% and 10.6% of the vote in Brandenburg and Thuringia, respectively.

A recent poll suggested Marine Le Pen, the leader of France’s far-right Front National, would beat President François Hollande in a two-way contest. In Greece, radical left-wing Syriza is leading in the polls and pushing hard for early elections. In Spain, one recent poll showed 20% of voters backing Podemos, a left-wing party formed earlier this year.

Across Europe, mainstream parties of both left and right are seeing their electoral base fragmenting, forcing them to compete for a shrinking center ground. Confusingly, the nature of the rebellion varies from country to country and lacks the coherent ideological underpinning identifiable in previous European revolutionary episodes or even in the U.S. Tea Party movement.

In some countries, particularly in Northern Europe, the threat has come from parties clearly on the far right. In others, such as Greece and Spain, the biggest challenge comes from the radical left. Some populist groups, such as France’s Front National and Italy’s Five Star Movement, are harder to pigeonhole, combining elements of both traditional left- and right-wing politics. Den Rest des Beitrags lesen »

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Gloom Gathers Over Eurozone Outlook

Posted by hkarner - 29. September 2014

Date: 29-09-2014
Source: The Wall Street Journal

Weak Confidence Data Suggest ECB Measures Have So Far Failed to Convince That Economic Outlook Will Improve

storm clouds ccStorm clouds . A decline in eurozone confidence suggests households and businesses are unlikely to raise their spending in the coming months.

Businesses and consumers across the 18 countries that share the euro were more downbeat about their prospects in September than at any time since the end of 2013, likely reflecting disappointment with the pace of the eurozone’s economic recovery and the conflict in Ukraine.

The decline in confidence also indicates that new stimulus measures announced by the European Central Bank in early September have so far failed to convince households and business leaders that the economic outlook will improve.

Indeed, businesses reported they expect their selling prices to be weaker than they did before the measures were announced, while consumers also lowered their expectations for inflation. The ECB’s measures are intended to end a period of very low inflation.

The European Commission Monday said its Economic Sentiment Indicator—a measure of consumer and business confidence—fell to 99.9 in September from 100.6 in August. Economists had expected a decline to 100.0.

That brought the ESI below its long-term average, going back to 1990, for the first time since November 2013. Den Rest des Beitrags lesen »

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The End of Monetary Policy

Posted by hkarner - 29. September 2014

By John Mauldin September 28, 2014Mauldin Video

We are the stuffed men
Leaning together
Headpiece filled with straw. Alas!
Our dried voices, when
We whisper together
Are quiet and meaningless
As wind in dry grass
Or rats’ feet over broken glass
In our dry cellar…

This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but a whimper.

–  T. S. Eliot, “The Hollow Men

What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of postwar history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government. This is not to say that there will no longer be events to fill the pages of Foreign Affair’s yearly summaries of international relations, for the victory of liberalism has occurred primarily in the realm of ideas or consciousness and is as yet incomplete in the real or material world. But there are powerful reasons for believing that it is the ideal that will govern the material world in the long run.

– Francis Fukuyama, The End of History and the Last Man Den Rest des Beitrags lesen »

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It Pays to Be Putin’s Friend

Posted by hkarner - 29. September 2014

Date: 28-09-2014
Source: The New York Times

President Vladimir V. Putin has moved to prop up Bank Rossiya, owned by close friends, in the face of Western sanctions.

ST. PETERSBURG, Russia — Weeks after President Vladimir V. Putin annexed Crimea in March, an obscure regulatory board in Moscow known as the Market Council convened inside an office tower not far from the Kremlin to discuss the country’s wholesale electricity market. It is a colossal business, worth 2 percent of Russia’s gross domestic product, and a rich source of fees for the bank that had long held the exclusive right to service it.

With no advance notice or public debate, though, the board voted that day in April to shift that business to Bank Rossiya, a smaller institution that lacked the ability to immediately absorb the work. For Bank Rossiya, it was a tidy coup set to yield an estimated $100 million or more in annual commissions, yet it was hardly the only new business coming in. State corporations, local governments and even the Black Sea Fleet in Crimea were suddenly shifting their accounts to the bank, too.

In a matter of days, Bank Rossiya had received an enormous windfall, nearly all from different branches of the Russian state, which was delivering a pointed message. In late March, the United States had made Bank Rossiya a primary target of sanctions, effectively ostracizing it from the global financial system. Now the Kremlin was pushing back, steering lucrative accounts its way to reduce the pain. Den Rest des Beitrags lesen »

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An ASEAN Economic Community by 2015?

Posted by hkarner - 28. September 2014

Jayant Menon (Asian Development Bank) 27 September 2014, voxeu

The Association of Southeast Asian Nations (ASEAN) is the most successful regional grouping in the developing would.  Born as a politico-security pact in the aftermath of the Viet Nam War in 1967, it started with five countries: Indonesia, Malaysia, the Philippines, Singapore and Thailand.  Brunei Darussalam joined in 1984, followed by Viet Nam in 1995, Lao PDR and Myanmar in 1997, and finally Cambodia in 1999, bringing the total to 10 countries. Apart from expanding its membership, ASEAN has evolved to embrace an ambitious economic agenda. Its latest project is to establish an ASEAN Community by 31 December, 2015, consisting of three components: Economic, Political-Security, and Social Cultural.  If ASEAN were one economy, as the ASEAN Economic Community intends it to be, it would be seventh largest in the world with a combined GDP of $2.4 trillion in 2013. With over 600 million people, ASEAN’s potential market is larger than the EU, and has the world’s third largest workforce (Hill and Menon 2012).

The following three questions are fundamental to the ASEAN Economic Community, and are addressed in turn, below: (i) What are the achievements to date in terms of realising an ASEAN Economic Community?; (ii) What are the remaining challenges; and (iii) Is the deadline likely to be met, and will it matter? Den Rest des Beitrags lesen »

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What macroeconomic policies for the Eurozone?

Posted by hkarner - 28. September 2014

Francesco Giavazzi, Guido Tabellini (both from Bocconi University) 25 September 2014, voxeu

In his recent article on Vox, Roberto Perotti takes issue with the proposal of coordinating a monetary and fiscal expansion in the Eurozone through a money-financed temporary tax cut, which we advocated in a column on 21 August (see Perotti 2014, Giavazzi and Tabellini 2014). He does not question the effectiveness of the proposal in stimulating aggregate demand. But he argues that a temporary expansion of the budget deficit of the order of 5% of GDP cannot be credibly reversed through future spending cuts, and that reversing the temporary tax cut through future tax increases would also be destabilising, economically and politically.

Counter-cyclical fiscal policies: Stabilising or destabilising?

The policies enacted in the US and in the UK during the Great Recession flatly contradict the second part of Perotti’s argument, as shown in Tables 1a to c below. The US let its budget deficit expand by almost 7% of GDP in a single year, through a combination of higher spending and lower revenues (Table 1a). Less than half of this change was due to the effect of fiscal stabilisers, the rest reflected deliberate policy decisions. The changes on both sides of the budget were later reversed. This was in part because the increase in the deficit due to the actions taken to bail out financial institutions was a one-off; in part automatically, as the economy recovered; and in part, through deliberate shifts in fiscal stance, such as the 2013 Sequester. Net of the effect of automatic stabilisers, federal outlays were reduced by more than 2.5% of GDP between the trough of the business cycle and now, while federal revenues net of automatic stabilisers increased by about 3% of GDP during the same period (source: Congressional Budget Office). Den Rest des Beitrags lesen »

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The Show-Off Society

Posted by hkarner - 28. September 2014

Date: 26-09-2014
Source: Paul Krugman

Liberals talk about circumstances; conservatives talk about character.

This intellectual divide is most obvious when the subject is the persistence of poverty in a wealthy nation. Liberals focus on the stagnation of real wages and the disappearance of jobs offering middle-class incomes, as well as the constant insecurity that comes with not having reliable jobs or assets. For conservatives, however, it’s all about not trying hard enough. The House speaker, John Boehner, says that people have gotten the idea that they “really don’t have to work.” Mitt Romney chides lower-income Americans as being unwilling to “take personal responsibility.” Even as he declares that he really does care about the poor, Representative Paul Ryan attributes persistent poverty to lack of “productive habits.”

Let us, however, be fair: some conservatives are willing to censure the rich, too. Running through much recent conservative writing is the theme that America’s elite has also fallen down on the job, that it has lost the seriousness and restraint of an earlier era. Peggy Noonan writes about our “decadent elites,” who make jokes about how they are profiting at the expense of the little people. Charles Murray, whose book “Coming Apart” is mainly about the alleged decay of values among the white working class, also denounces the “unseemliness” of the very rich, with their lavish lifestyles and gigantic houses.

But has there really been an explosion of elite ostentation? And, if there has, does it reflect moral decline, or a change in circumstances?

I’ve just reread a remarkable article titled “How top executives live,” originally published in Fortune in 1955 and reprinted a couple of years ago. It’s a portrait of America’s business elite two generations ago, and it turns out that the lives of an earlier generation’s elite were, indeed, far more restrained, more seemly if you like, than those of today’s Masters of the Universe. Den Rest des Beitrags lesen »

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Steuerstrategie produziert Verlierer

Posted by hkarner - 27. September 2014

27. September 2014, 14:46, derstandard.at

SPÖ und ÖVP hätten mehr als das Entlastungsvolumen fixieren müssen

Jetzt ist die Katze also aus dem Sack: Die Steuerreform soll fünf Milliarden Euro umfassen – “mindestens”, wie der Kanzler hinzufügt. Endlich Klarheit, könnte man meinen. Gelöst ist das Steuerproblem der Regierung damit aber noch lange nicht. Im Gegenteil: Die Vorgangsweise von Rot-Schwarz wird dazu führen, dass am Ende mindestens eine, wahrscheinlich aber beide Seiten als Verlierer dastehen.

Warum? Bis jetzt gibt es nur die Zahl 5, alles andere ist genauso offen wie noch unter ÖVP-Chef Michael Spindelegger. Wird es vermögensbezogene Steuern wie Erbschafts- oder Schenkungssteuern geben? Die SPÖ sagt Ja, die ÖVP sagt Nein. Soll die Gegenfinanzierung ausschließlich über die Ausgabenseite erfolgen? Die ÖVP sagt Ja, die SPÖ sagt Nein. Wird ein Teil der Reform bereits 2015 in Kraft treten? Die SPÖ sagt Ja, die ÖVP sagt Nein.

Beide Seiten haben sich eingemauert

Beide Seiten haben sich also bei symbolisch wichtigen Fragen eingemauert. Werner Faymann will sich vor dem Parteitag im November nicht bewegen. Reinhold Mitterlehner möchte nicht gleich nach der Übernahme der Parteispitze vom Njet zu Vermögenssteuern abgehen. Den Rest des Beitrags lesen »

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Europe’s Austerity Zombies

Posted by hkarner - 27. September 2014

Date: 27-09-2014
Source: Project Syndicate


Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, was Chairman of President Bill Clinton’s Council of Economic Advisers and served as Senior Vice President and Chief Economist of the World Bank. His most recent book, co-authored with Bruce Greenwald, is Creating a Learning Society: A New Approach to Growth, Development, and Social Progress.

NEW YORK – “If the facts don’t fit the theory, change the theory,” goes the old adage. But too often it is easier to keep the theory and change the facts – or so German Chancellor Angela Merkel and other pro-austerity European leaders appear to believe. Though facts keep staring them in the face, they continue to deny reality.

Austerity has failed. But its defenders are willing to claim victory on the basis of the weakest possible evidence: the economy is no longer collapsing, so austerity must be working! But if that is the benchmark, we could say that jumping off a cliff is the best way to get down from a mountain; after all, the descent has been stopped.

But every downturn comes to an end. Success should not be measured by the fact that recovery eventually occurs, but by how quickly it takes hold and how extensive the damage caused by the slump.

Viewed in these terms, austerity has been an utter and unmitigated disaster, which has become increasingly apparent as European Union economies once again face stagnation, if not a triple-dip recession, with unemployment persisting at record highs and per capita real (inflation-adjusted) GDP in many countries remaining below pre-recession levels. In even the best-performing economies, such as Germany, growth since the 2008 crisis has been so slow that, in any other circumstance, it would be rated as dismal. Den Rest des Beitrags lesen »

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