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Archive for 16. Juli 2016

Britain’s new prime minister will regret appointing Boris Johnson

Posted by hkarner - 16. Juli 2016

Date: 16-07-2016
Source: The Economist BAGEHOT
Subject: The May delusion

Johnson cc3IT WAS sweeping, ruthless and decisive. “Brutal reshuffle, prime minister?” shouted reporters as Theresa May arrived back in Downing Street after a morning going through Cameroons like a hot knife through butter. A smile dashed across the new prime minister’s face as she strode into her new house.

What to make of it? Overall Mrs May has tilted the government to the right. But the picture is also more complicated. It helps to divide her appointments into two sorts: those related to Brexit and those not. Into every role that has lots to do with Britain’s exit negotiations, she has slotted someone who campaigned to make that happen. Boris Johnson is foreign secretary, Liam Fox international trade secretary (a new cabinet-level role), David Davis the minister for Brexit (ditto) and Andrea Leadsom secretary of state for the environment, food and rural affairs (a role that will involve dealing lots with farmers who stand to lose European subsidies). The thinking, it seems, is that putting Brexiteers in these posts will make up for Mrs May’s own anti-Brexit stance before the referendum and help her to sell the inevitable concessions that Britain will have to reach to a public whose expectations of any deal seem far to outstrip the likely reality. Den Rest des Beitrags lesen »

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Deutsche Bank: In a rut

Posted by hkarner - 16. Juli 2016

Date: 14-07-2016
Source: The Economist

Brexit is merely one more worry for Germany’s leading lender

THE biggest bank in Europe’s most robust economy may seem an unlikely victim of Brexit. Yet in the fortnight after Britons voted to quit the European Union Deutsche Bank’s share price tumbled by 27%—putting Germany’s biggest lender in the unexalted company of British and Italian banks. On July 7th it slid to €11.36 ($12.58), a record low.

The price has since clambered back towards €13. But Deutsche still trades at only a quarter of the supposed net value of its assets—far behind its peers (see chart). Its shares fetch half of what they did a year ago and an eighth of what they did in 2007. It lost a staggering €6.8 billion in 2015. The newish chief executive, John Cryan, is carrying out an overdue spring-clean: he has told investors to expect no profit or dividend this year (and scrapped last year’s too). Brexit makes the job a little harder.

Mr Cryan is overhauling Deutsche’s rickety computer systems, closing offices and shedding 9,000 jobs. But his most pressing task is to thicken Deutsche’s capital cushion. The bank is not in mortal danger, but in these post-buccaneering days regulators insist that lenders have ample means to withstand big losses. European “stress tests” this month may not flatter Deutsche, partly because they take no account of its capital-boosting plans. Den Rest des Beitrags lesen »

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IF ECONOMISTS REFORMED THEMSELVES

Posted by hkarner - 16. Juli 2016

Date: 14-07-2016

Source: The Economist

A LESS DISMAL SCIENCE

Reforming economists’ tools, temperament and training could help to mitigate, if not to prevent, the next crisis. BASHING economists is scarcely out of fashion.

They are accused of being blinkered by mathematical models, of overestimating their predictive powers and churning out narrow-minded graduates. Some folk see them, rather than bankers, as the real villains behind the global financial crisis, asking, as Queen Elizabeth is said to have done at the London School of Economics, why no one had seen the credit crunch coming.

John Maynard Keynes once said that “if economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.” How could they achieve that? Through a strong dose of what they (and this newspaper) often prescribe for others: structural reforms. Den Rest des Beitrags lesen »

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Britain’s new prime minister: May time

Posted by hkarner - 16. Juli 2016

Date: 14-07-2016
Source: The Economist

May cc 1A no-nonsense conservative has taken Britain’s helm. She should make the case for a minimalist Brexit

THEY campaigned to Leave, and they were as good as their word. Three weeks on from their referendum triumph, the politicians who led the charge for Britain to quit the European Union have fallen by the wayside in the race to replace David Cameron as prime minister. This week the last of the prominent Leavers, Andrea Leadsom, withdrew her candidacy after a few days’ media scrutiny revealed her to be fantastically ill-prepared. The job of steering Britain towards the EU’s exit doors has thus fallen to the only candidate left in the race: Theresa May, who campaigned to Remain.

Mrs May’s path to power was easier than that of most prime ministers, but her time in office will be the hardest stint in decades. Extricating Britain from the EU will be the diciest diplomatic undertaking in half a century. The wrangling at home will be no easier: whatever divorce settlement Britain ends up with is likely to be deeply unsatisfactory even to those who voted to Leave. Popular anger will not be soothed by the recession into which the country is probably heading. It will take a gifted politician to lead Britain through this turbulent period.

Is Mrs May up to it? The gormlessness of her rivals flatters her. But she has real qualities: a Merkelian calm, well suited to counter the chaos of the moment, and a track record of competence that increases the likelihood of an orderly withdrawal from the EU. Her first speech as prime minister—in which she promised to fight the burning injustice” faced by the poor—suggests she has correctly read the mood of those who voted against the establishment and for Brexit, and is preparing to seize the centre ground vacated by the Labour opposition. Den Rest des Beitrags lesen »

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