Posted by hkarner - 25. Oktober 2013
Excellent, typical Economist thoughfulness! This is what we were saying all the time! (hfk)
Source: The Economist
It’s not just sovereign borrowing; there are too many zombie firms and overindebted households
FIFTEEN months ago, in July 2012, Mario Draghi, the president of the European Central Bank (ECB), promised to do “whatever it takes” to preserve the single currency. Although the bond-buying scheme set up to fulfil that pledge has never been tested, yields on sovereign bonds have fallen. The euro mess has morphed from an acute crisis into a chronic one.
This week Mr Draghi launched what could become the second big turning-point in the euro saga: an inspection of the balance-sheets of the region’s 128 biggest banks which the ECB will supervise from late 2014. As part of its “asset-quality review”, ECB officials, along with outside experts, will start peering into the banks’ balance-sheets and impose common standards for loan quality. This process is supposed to find out which banks are viable now, which will need more capital and which should just be closed down.
Mr Draghi should be tough. The euro zone’s politicians, even in supposedly prudent Germany, have been reluctant to look too deeply into banks’ balance-sheets, let alone to force them to clean themselves up. There are certainly questions to be asked about all the government bonds that the banks have bought in recent years. But the main dodgy assets that have been swept under the European carpet are private: bad loans made to households and companies. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Banken, Debt, Economist, Finanzkrise, PIIGS | Leave a Comment »
Posted by hkarner - 2. Oktober 2013
Source: The Wall Street Journal
Spreads have widened on debt issued by Portugal, which isn’t viewed as systemically important.
Euro-zone bond investors have learned a valuable lesson from the financial crisis:
Betting on countries seen as too big to fail is a sound strategy.
The common currency’s biggest, most systemically important countries have been big winners for sovereign-debt investors. That streak is likely to continue.
Bonds of countries such as Spain and even Italy—notwithstanding its current political crisis—have delivered solid returns relative to their peers: For instance, in the third quarter through the close of trading Friday, the Italian iShares government bond ETF gained 1.35% while the Spanish equivalent picked up 3.09%, compared with a 0.03% decline on the German government bond ETF.
There has been a rush by investors back into European government bonds. Mutual funds, for example, sold €12 billion ($16.2 billion) of them in 2010 and another €25.5 billion in 2011, according to Lipper, a mutual-fund research firm. Last year, funds started dipping their toes back in the market, increasing their holdings by €50 million. That trickle became a rush in the first seven months of 2013, with investors picking up another €2 billion.
The starting gun was European Central Bank President Mario Draghi’s promise in July 2012 to do whatever it took to ensure the currency’s survival.
Simon Penn, a multiasset sales analyst at UBS, said Mr. Draghi’s speech encouraged clients to turn more optimistic on Europe’s prospects. But they also said, “I own [German] bunds already, I own them because it’s Germany.” Seeing little further upside on core euro-zone sovereign debt, they then started to buy what they didn’t already own. “And what they hadn’t owned for the entire crisis is peripheral Europe,” Mr. Penn said. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Bonds, Debt, Euro, Finanzkrise, PIIGS, WSJ | Leave a Comment »
Posted by hkarner - 31. August 2013
29.08.2013 | 18:30 | MATTHIAS AUER (Die Presse)
Die Zentralbank finanziere Staaten mit der Notenpresse, sagt Manfred Neumann, Doktorvater von Bundesbank-Chef Jens Weidmann. Griechenland empfiehlt er den Austritt aus dem Euro. Auch andere Staaten sollten gehen.
Die Presse: Herr Neumann, Sie sind der Doktorvater von Jens Weidmann, dem Präsidenten der Deutschen Bundesbank. Er gilt als scharfer Kritiker des Kurses der EZB. Sind Sie stolz auf ihn?
Manfred Neumann: Natürlich. Die Europäische Zentralbank hat sehr große Fehler gemacht. Ich bin nicht sicher, ob sie nicht eine neue Machtposition in der EU anstrebt, indem sie fiskalpolitische Aufgaben übernimmt, die nicht ihre Sache sind. Sie hat da ganz bewusst über die Bande gespielt, indem sie begonnen hat, Staatsanleihen zu kaufen. Das ist nicht akzeptabel. Die EZB muss gestoppt werden, und ich hoffe, dass das deutsche Verfassungsgericht hier einen Punkt setzen wird.
Sie reden von der Ankündigung von EZB-Chef Mario Draghi, wonach er alles tun werde, um den Euro zu schützen.
Seine Worte waren: Glauben Sie mir, es wird genug sein. Das heißt, er will unbegrenzt Staatsanleihen kaufen. Bis heute hat er das nicht getan, aber die Drohung allein hat die Finanzmärkte zu der Einsicht gebracht, dass es vorübergehend nicht so tragisch ist, wie sie dachten. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: ECB, Euro, Finanzkrise, Germany, Greece, Haircut, Hyperinflation, Neumann, Nowotny, PIIGS, Presse, Weidmann | Leave a Comment »
Posted by hkarner - 28. August 2013
Chancellor Angela Merkel has been forced to concede that Greece will require additional aid — an admission that has dented her reputation as a crisis manager ahead of the election. But she still hasn’t revealed the true scope of the costs facing Germany.
When a politician is planning a campaign lie, he has to be able to rely on one thing: No one in his own party must come out with the truth prematurely. The Social Democrats adhered to this rule in the 1976 election, when then Chancellor Helmut Schmidt promised higher pensions and then announced sharp cuts after the election. And the center-right Christian Democratic Union (CDU) also closed ranks in 1990, the year of German reunification, when then Chancellor Helmut Kohl appeared on market squares throughout the country to announce that taxes would not be raised. It was a promise that, as we now know, was followed by the strongest postwar increase in taxes and other charges.
Current Chancellor Angela Merkel was still an up-and-coming member of the eastern German CDU and Kohl’s eager pupil, so it came as no surprise that she urged her party’s executive committee to stay the course on Greece at all costs last week. “There is too much talk in Europe about debt haircuts,” the chancellor told her party’s executive committee at a meeting last Monday.
But after SPIEGEL had reported two weeks ago that the Bundesbank, Germany’s central bank, had new doubts about Greece’s bailout program, the debate over additional aid packages or debt forgiveness was reignited. This would be extremely dangerous, the chancellor told CDU MPs, as it would create “uncertainty in the markets.” In other words, she was saying, it was critical to maintain discipline in the debate.
Less than 24 hours later, Finance Minister Wolfgang Schäuble appeared on a campaign stage in Ahrensburg, a town in the northern state of Schleswig-Holstein, and said: “There will have to be another (bailout) program in Greece.” Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Banking Union, campaign lie, Euro, Finanzkrise, Germany, Greece, Merkel, PIIGS, Spiegel | Leave a Comment »
Posted by hkarner - 26. August 2013
An excellent analysis and prediction (hfk)
By John Mauldin | Aug 25, 2013
France: On the Edge of the Periphery
“No: France Is Not Bankrupt” – Really?
So What Is the Catalyst for a French Crisis?
France Cannot Be France Without Greatness
“The emotional side of me tends to imagine France, like the princess in the fairy stories or the Madonna in the frescoes, as dedicated to an exalted and exceptional destiny. Instinctively I have the feeling that Providence has created her either for complete successes or for exemplary misfortunes. Our country, as it is, surrounded by the others as they are, must aim high and hold itself straight, on pain of mortal danger. In short, to my mind, France cannot be France without greatness.
– Charles de Gaulle, from his memoirs
Recently there have been a spate of horrific train wrecks in the news. Almost inevitably we find out there was human error involved. Almost four years ago I began writing about the coming train wreck that was Europe and specifically Greece. It was clear from the numbers that Greece would have to default, and I thought at the time that Portugal would not be too far behind. Spain and Italy clearly needed massive restructuring. Part of the problem I highlighted was the significant imbalance between exports and imports in all of the above countries. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Banken, ECB, Euro, Finanzkrise, fiscal pact, France, Germany, Greece, Haircut, Mauldin, PIIGS | Leave a Comment »
Posted by hkarner - 22. August 2013
Griechenland soll ein neues Hilfspaket bekommen. Ökonomen bezweifeln aber, dass ein weiterer Schuldenschnitt erspart bleibt
Der deutsche Finanzminister Wolfgang Schäuble hat am Dienstag vermeintlich die Katze aus dem Sack gelassen. Griechenland werde ein drittes Hilfspaket brauchen, so Schäuble. Es gehe aber um deutlich weniger Geld als bisher. “Schäuble redet aber nur von dem Loch, das kurzfristig da ist”, sagt Jonathan Loynes vom Londoner Institut Capital Economics im Gespräch mit derStandard.at. “Das zweite Hilfspaket deckt nicht alles ab. Darum geht es jetzt”. Nach Berichten der Süddeutschen Zeitung wird in deutschen Regierungskreisen darüber diskutiert, das Geld aus dem Haushalt der EU oder Partnerländern heranzuziehen.
Dass Griechenland aber keinen weiteren Schuldenschnitt braucht, so wie es führende EU-Politiker und auch Schäuble behaupten, hält Loynes für sehr unrealistisch. “Ohne wird es nicht gehen. Griechenland müsste drastisch weiter kürzen und das Wirtschaftswachstum viel höher sein als üblich”, so Loynes. Beides sei unrealistisch. Die Kürzungen würden auf politische und ökonomische Grenzen stoßen. Damit Griechenland innerhalb von 20 Jahren auf einen Schuldenstand von 90 Prozent kommt (derzeit 183,7 Prozent), müsste es jährlich um 5,4 Prozent wachsen, rechnet Loynes vor. Im Schnitt sei Griechenland seit dem Jahr 1999 aber nur um 1,1 Prozent jährlich gewachsen. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Debt, Euro, Finanzkrise, Germany, Greece, Growth, PIIGS, Standard | Leave a Comment »
Posted by hkarner - 9. August 2013
Source: The Economist
Euro-zone rescues have left sovereign debt too high to be sustainable
AN ORCHESTRATED hush has descended over the euro area as Angela Merkel, the German chancellor who conducts its troubled band of 17 states, campaigns for a third term in the election on September 22nd. The calm also stems from signs that the euro-zone economy may gradually be emerging from recession. But discord will reappear after the poll as it becomes clear that Europe’s bail-out programmes won’t be unwound harmoniously and that more big bills are on their way.
Of the first three rescued euro-zone countries—Greece in the spring of 2010, Ireland at the end of that year and Portugal in mid-2011—only one should be able to leave its bail-out programme as planned. Helped by its resilient economy, Ireland, whose rescue amounted to €67.5 billion ($90 billion), looks set to bow out at the end of this year. In practice, however, it will be only a partial departure.
Ireland will then rely on private markets to meet its financing needs rather than on official loans. It will no longer have to comply with harsh fiscal and economic conditions set and monitored by the European authorities and the IMF. But although Ireland has made some successful forays into the capital markets this year it is rightly nervous about standing alone again. This year’s budget deficit remains high, at 7.5% of GDP. Government debt, swollen by a massive injection of public money into Ireland’s banks, has reached 125% of GDP (see chart). The actual burden is higher because a big chunk of GDP comprises lightly-taxed profits made by foreign multinationals; debt as a share of GNP, the part of GDP that goes to Irish residents and the main tax base, is over 150%.
Conscious of its vulnerability, Ireland wants its borrowing to be shielded from bond vigilantes by the European Central Bank (ECB) through its pledge to make potentially unlimited purchases of debt in secondary markets. But the country will be eligible only if it signs up for a precautionary programme with the euro zone’s rescue fund, which will provide a credit line. Although the conditions for this will be lighter than those for a full bail-out, Ireland will still have to be monitored. Moreover, the ECB has said that the IMF should be involved. In short, Ireland will exit from one bail-out programme and enter another. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Debt, Economist, Euro, Finanzkrise, Germany, Merkel, PIIGS | Leave a Comment »
Posted by hkarner - 30. Juli 2013
Source: Die Welt
Vor einem Jahr hat EZB-Chef Draghi mit starken Worten den Euro gerettet. Mit erheblichen Erfolgen: Es gibt eine Milliarden Euro schwere Umverteilung vom Kern in die Peripherie der Euro-Zone.
Portugal-Bonds plus 42 Prozent, deutsche Bundesanleihen minus fünf Prozent. Deutlicher lässt sich der Vermögenstransfer kaum versinnbildlichen, der sich in Europa abspielt. Vor einem Jahr ist etwas passiert, das die Kapitalströme umgekehrt hat. Seit einem Jahr strömt das Geld der Finanzinvestoren nach Portugal und in andere Randländer, es fließt im großen Stil aus dem Kern in die Peripherie. Es ist einer der größten Vermögenstransfers der Geschichte. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Banken, Draghi, ECB, Euro, Finanzkrise, PIIGS, Welt | Leave a Comment »
Posted by hkarner - 17. Juli 2013
Source: Datastream/Eurostat/Natixis Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Mauldin, PIIGS, Williams | Leave a Comment »
Posted by hkarner - 17. Juli 2013
Since last summer, the euro crisis has apparently abated. Optimists have believed that it has finally been laid to rest.
The more cynical among us have thought this particular parrot was merely sleeping. All along, despite the markets’ quiescence, the fundamental economic problems which underlay the crisis have failed to improve.
And then last week the crisis flared into life again. Portugal‘s finance minister resigned, citing, among other things, a decline in public support for the austerity policies the government has adopted in return for its bail-out. He was followed by the foreign minister.
While the coalition government will probably hold together, the latest developments have highlighted growing rifts over austerity policies. The chances of the government lasting until the end of its term (October 2015) seem pretty slim. More importantly, these events reduce the chances of the government successfully exiting its bail-out.
Meanwhile, it has become clear that Greece is in trouble again. Actually, the economic numbers have recently improved. The reduction in the budget deficit even appears to be running a bit ahead of schedule. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: PIIGS, Telegraph | Leave a Comment »