Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Archive for 28. April 2012

Death of a Fairy Tale

Posted by hkarner - 28. April 2012

Date: 27-04-2012


This was the month the confidence fairy died.

For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets. 

Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the “austerians” insisted that the reverse would happen. Why? Confidence!

“Confidence-inspiring policies will foster and not hamper economic recovery,” declared Jean-Claude Trichet, the former president of the European Central Bank — a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.  Den Rest des Beitrags lesen »


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How Long Will Hollande’s Party Go On?

Posted by hkarner - 28. April 2012

Date: 27-04-2012

French presidential candidate François Hollande doesn’t appear to have learned much from the economic crises of past decades.

François Hollande is predicted to win France’s presidential election, but his victory could endanger the euro zone’s carefully negotiated fiscal pact. He also wants to water down the European Central Bank’s statutes, forcing it to lend more to promote economic growth. But his plans would do little more than borrow time — and they could be very dangerous for Germany.

The whole ghastly process is now set in motion. Not just for Chancellor Angela Merkel, but also for anyone who still had a modicum of hope that the worst of Europe’s debt crisis had already been overcome.

The opinion pollsters were right — François Hollande won the first round of the French presidential election last Sunday. According to all the polls, he will also win the runoff vote on May 6. If he wins, he would become the second Socialist president of the Fifth Republic, following in the footsteps of François Mitterrand. Den Rest des Beitrags lesen »

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Slowing Growth Stirs Recovery Fears

Posted by hkarner - 28. April 2012

Date: 28-04-2012
Source: The Wall Street Journal

Weaker Business Investment Weighs on Economy in First Quarter Despite Brisk Consumer Spending

The economy lost steam in the first quarter, as onetime engines of growth sputtered and robust consumer spending was unable to propel the recovery on its own.

Gross domestic product, the broadest measure of all goods and services produced in the economy, grew at an annualized rate of 2.2% in the first quarter, down from 3% at the end of 2011, the Commerce Department said Friday. The deceleration reflected sharp cutbacks in government spending and weaker business investment and came despite an unusually warm winter, which many economists said likely provided a mild economic boost.

The report did reveal a few areas of strength. Consumer spending, by far the biggest piece of the economy, accelerated in the first quarter, and the moribund housing sector also showed signs of improvement. Overall economic growth, though modest, was far stronger than at the start of last year, when the U.S. teetered on the brink of recession. Den Rest des Beitrags lesen »

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Spain Is Still Awaiting the Payoff From Austerity

Posted by hkarner - 28. April 2012

Date: 28-04-2012
Source: The New York Times

LONDON — Since the beginning of the debt crisis in Europe more than two years ago, defenders of the euro currency union have stuck to a basic argument: if the euro zone’s weaker economies would only keep pursuing policies of austerity, even as growth collapsed and job losses mounted, they would be rewarded by investors more willing to buy their bonds.

Yes, the social cost would be high, but over the long term economies would benefit from the lower interest rates that can come with the seal of approval from global bond investors. Or so goes the argument.

That approach, though, has failed in Greece, Ireland and Portugal. And now it is being severely tested in Spain, where the more the government promises to cut its budget deficit, the more foreigners are unloading their Spanish bond holdings. Den Rest des Beitrags lesen »

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