Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘PIIGS’

Needed in Europe: More Inflation

Posted by hkarner - 27. Januar 2014

Date: 26-01-2014
Source: The Wall Street Journal

Stagnant Prices Restrains Recovery in Weaker ‘Peripheral’ Countries Such as Spain, Italy

As Europe’s economy recovers from its crisis, afflicted countries such as Spain and Italy are trying to pare their debts while also becoming more internationally competitive.

The trouble is, it’s hard to do both at once. And the euro zone’s weak inflation is making it even harder.

So, even as the world’s economic elite welcomed a strengthening global recovery at last week’s gabfest in Davos, Switzerland, the euro zone’s wounds are likely to heal only very slowly—and might even reopen.

Here’s why:

Until the crisis, the euro zone’s “periphery” countries, mostly in Southern Europe, had higher inflation than the region’s “core” economies around Germany. The periphery countries’ products became too expensive, often leading to unsustainably large trade deficits paid for by borrowing from abroad. Den Rest des Beitrags lesen »

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Why hasn’t Japan’s massive government debt wreaked havoc (yet)?

Posted by hkarner - 21. Januar 2014

Charles Yuji Horioka, Takaaki Nomoto, Akiko Terada-Hagiwara, 21 January 2014, voxeu

Japan’s sovereign debt-to-GDP ratio is higher than any country in Europe and more than twice the OECD average. This column explains why Japan’s massive government debt did not wreak havoc in the past. Robust domestic saving and a temporary inflow of foreign capital caused by the Global Crisis have prevented a crisis thus far. As both of these factors become less applicable the government faces pressure to reduce debt-to-GDP ratio can be brought under control quickly.

The potential sovereign debt crisis in Japan looks even grimmer than those in the Eurozone economies if one looks only at the gross general government debt-to-GDP ratio. According to the OECD, this ratio ranged from 90 to 166% in some developed economies in 2012 (“only” 166% in Greece, 140% in Italy, 139% in Portugal, 123% in Ireland, and 91% in Spain—collectively referred to as the PIIGS economies) but was a full 219% in Japan in the same year. Thus, Japan’s gross general government debt-to-GDP ratio is more than twice the OECD-wide average (109 percent) and by far the highest in the developed world. Moreover, the OECD projects that Japan’s gross general government debt-to-GDP ratio will increase even further to 231% in 2014.

What makes Japan different?

Why has Japan been able to avoid the fiscal crises of the magnitude faced by the PIIGS economies even though her gross general government debt-to-GDP ratio is much higher? What is different about Japan? The most commonly given answer is that domestic saving is much higher (relative to domestic investment) and home bias is much stronger in Japan, as a result of which a much higher proportion of her massive government debt could be absorbed domestically without having to rely on foreign investors.

However, Reinhart and Rogoff (2008) have argued that domestic sovereign debt is just as important as external sovereign debt and that it is the total amount of sovereign debt that is of paramount importance. Why then has Japan’s massive government debt not wreaked havoc – at least not yet? This column tries to answer to this question. Den Rest des Beitrags lesen »

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Euro Zone Rode the Shock Waves in 2013

Posted by hkarner - 31. Dezember 2013

Date: 30-12-2013

Source: The Wall Street Journal By SIMON NIXON

The euro zone in 2013 proved remarkably resilient to a series of shocks in Cyprus, Greece, Italy and Portugal.

For the euro zone, the real story of 2013 has been what didn’t happen rather than what did.

Confronted by a series of shocks that in previous years might have reignited concerns over the survival of the currency bloc, the euro has proved remarkably resilient.

The decision to force uninsured depositors in the two biggest banks in Cyprus to take losses didn’t lead to bank runs across the periphery as many had feared. Unemployment remained painfully high in much of Southern Europe, yet there was little evidence of the social unrest that the doomsayers had predicted. There were political crises in Italy, Greece and Portugal. But on each occasion, the outcome was a stable government committed to reforms designed to make the economy more productive and competitive.  Den Rest des Beitrags lesen »

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Beraterfirmen verdienen an Troika Millionen

Posted by hkarner - 17. Dezember 2013

Und wen beschäftigen die Berater als Subcontractors? Die grossen Wirtschaftsprüfungskonzerne (KPMG, PWC, …)! Und wer prüft die Banken, die die Staatsschulden finanzieren? Die grossen Wirtsschaftsprüfungsunternehmen! Keine Unvereinbarkeit, oder ? (hfk)

16.12.2013 | 18:56 |  (Die Presse)

Krisengeldgeber engagierten Consultants für Reformprogramme.

Wien/Brüssel. In den Euro-Krisenländern erfreute sich die Troika noch nie großer Beliebtheit. Nun aber muss sich das internationale Kontrollgremium aus EU-Kommission, Internationalem Währungsfonds (IWF) und Europäischer Zentralbank (EZB) selbst mit dem Vorwurf auseinandersetzen, nicht ordentlich zu haushalten: Die Geldgeber haben zur Evaluierung der Hilfsprogramme für Portugal, Griechenland, Irland, Spanien und Zypern private Finanzberater engagiert, die sich an den Aufträgen eine goldene Nase verdient haben sollen. Das schreibt der „Euobserver“. Recherchearbeiten von Journalisten aus mehreren Ländern brachten die Vorwürfe ans Licht.

Es sind nur einige wenige Unternehmen, die stets zum Zug kamen: Alvarez & Marsal, BlackRock, Oliver Wyman und Pimco. Insgesamt sollen sie an der Arbeit für die bisherigen Rettungsaktionen über 80 Millionen Euro verdient haben. Dass die Troika die Expertise von Beratungsfirmen in Anspruch nimmt, war bisher nicht bekannt. Dass die Aufträge in vielen Fällen ohne öffentliche Ausschreibung vergeben wurden, macht die Sache noch brisanter. Etwaige Interessenkonflikte aufgrund eines bestehenden Naheverhältnisses zu einem Finanzdienstleister oder Investmentfonds spielten bei der Vergabe keine Rolle, schreibt der „euobserver“. Den Rest des Beitrags lesen »

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Eurozone: A Story of Stability in 2013, but Aggressive Action Awaits

Posted by hkarner - 11. Dezember 2013

Author: Ronan Keenan  ·  December 9th, 2013  · RGE EconoMonitor 

It all started in October 2009 when George Papandreou’s new Greek government revealed a black hole in their accounts that was vastly underestimated by the previous administration. Several years of tumult followed, bringing the eurozone project to the brink of failure. But 2013 proved to be a lucky year for the 17-nation group. Relatively few economic surprises and heightened attention on events elsewhere brought a welcome calm to European financial markets. 

This year the eurozone emerged from six quarters of economic contraction and the weaker nations enjoyed a strong rally in asset prices. Stock markets in the so-called PIIGS (Portugal, Ireland, Italy, Greece, Spain) have all rallied more than double figures year-to-date, while demand for each nation’s sovereign bonds has risen strongly, resulting in a significant decline in their borrowing costs.  Den Rest des Beitrags lesen »

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The euro zone: Europe’s other debt crisis

Posted by hkarner - 25. Oktober 2013

 Excellent, typical Economist thoughfulness! This is what we were saying all the time! (hfk)

Date: 24-10-2013
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 »

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Too Big Is Just Right in Euro Debt: Italian, Spanish Bonds Are on a Roll

Posted by hkarner - 2. Oktober 2013

Date: 01-10-2013
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.

Bond spread P 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 »

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Manfred Neumann: “EZB muss gestoppt werden”

Posted by hkarner - 31. August 2013

29.08.2013 | 18:30 | MATTHIAS AUER (Die Presse)

neumann unipageDie 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 »

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Bitter Euro Truths: Crisis Could Damage Merkel’s Campaign

Posted by hkarner - 28. August 2013

Date: 27-08-2013
Source: SPIEGEL

Merkel ccChancellor 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.

German RisksCurrent 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 »

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