Föhrenbergkreis Finanzwirtschaft

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Archive for 28. März 2011

The Shadow Cast by US Debt

Posted by hkarner - 28. März 2011

Carmen Reinhart and Steve Weisman, Mar 17, 2011 6:15PM, Peterson Institute 
Carmen M. Reinhart discusses how history teaches that large public and private debt impedes economic growth, a lesson that the United States must heed in the years ahead.

Edited transcript, recorded February 18, 2011. © Peterson Institute for International Economics.

 Steve Weisman: It’s budget season, and Washington is dealing with steps to curb the American overhang of debt. This is Steve Weisman at the Peterson Institute for International Economics and with pleasure I welcome Carmen Reinhart, new senior fellow here at the Institute, for her first Peterson Perspectives interview. Thanks for joining me, Carmen.

Carmen Reinhart: Thank you for having me.

Steve Weisman: Carmen, there’s a lot of talk in Washington about the dangers of mounting US debt, especially after the financial crisis, but also driven by the commonly understood demographic and spending factors. How would you characterize how precarious the United States’ situation is now? How are global markets perceiving it?

Carmen Reinhart: I think that there is ample reason to be concerned about the level of indebtedness in the United States, both public and private. Let me say something as background. Going into the crisis, private debts — notably that of households and financial firms — had surpassed any historic markers that we could point to, by a huge margin. And significant debt overhangs still exist notably in the household sector but also in the financial industry. So right now the only sector that isn’t weighed down by that overhang is in financial businesses. Den Rest des Beitrags lesen »


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Japan to ease monetary policy further: Roubini

Posted by hkarner - 28. März 2011

Sat, Mar 19 2011

BEIJING (Reuters) – Nouriel Roubini, best known for predicting the U.S. housing meltdown, said he expects Japan’s central bank to ease monetary policy further by buying more government debt in the wake of the earthquake.

Roubini, one of Wall Street’s most closely followed economists, said the Bank of Japan (BoJ) would have to set aside more money to buy bonds from the government to help pay for Japan’s reconstruction works.

The BoJ’s future purchases of government bonds, also known as quantitative easing (QE), are likely to be larger than the amount that was unveiled this week, Roubini said on the sidelines of a conference in Beijing.

„They have already done QE I, QE II, now there will be a third round, and the third round might be larger than the smaller amount of quantitative easing that they have done so far,“ he told Reuters. Den Rest des Beitrags lesen »

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Unintended Consequences

Posted by hkarner - 28. März 2011

Samstag, 26. März 2011, 20:12:00 | John Mauldin

In This Issue:

Loose Monetary Policies and Emerging Markets
Bubbles in Emerging Markets
Difficult Choices

The central banks of the developed world are printing money and are engaged in a very-low-interest-rate regime. What does that mean for emerging markets? It is more than just a dilemma, it is a tri-lemma – they have problems not just coming and going but also sitting still! Loose Monetary Policies and Emerging Markets

So far we have focused on the United States and other mature, developed economies that have far too much debt. With Japan, the United States, the United Kingdom, and Switzerland at close to zero percent interest rates, it seemed like a good idea to stimulate the economy. However, emerging markets that maintain pegged currencies or that shadow the dollar are essentially reduced to importing excessively loose monetary policies. Reserve growth across many emerging countries has been very strong over the last year. Emerging Asian countries account for almost 50 percent of global foreign exchange reserves. Huge Asian reserve growth since early last year is a result of mimicking loose monetary policies in the developed world to keep their currencies competitive. China has accumulated the most reserves of any emerging market country. This is directly related to its currency peg and its need to recycle the dollars it gets from its exports. Den Rest des Beitrags lesen »

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