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Archive for 16. Dezember 2017

The Santa clause

Posted by hkarner - 16. Dezember 2017

Date: 14-12-2017
Source: The Economist: Schumpeter

A festive memo from one of America’s leading chief executives to his lieutenants

DEAR Team, I trust you are looking forward to your vacations and that the spirit of love and generosity infuses your family gatherings. I also hope that this spirit will be left next to the Christmas tree when you return to work at this incredible company on January 2nd. Because 2018 is going to be the year when America Inc loses its head after a decade of iron financial self-control. And I am not going to make that mistake. Let me drop some festive wisdom: when everyone else is throwing money around like Santa, it is best to behave like Scrooge.

During my workout at 5.10am this morning my trainer played U2. I love Bono for his personal advice on charitable giving, but he is also a perceptive lyricist. “It’s a beautiful day” captures the mood in business. Third-quarter results blew the roof off. Earnings per share for the S&P 500 are 23% above the last peak in 2007. The world economy is rocking. At this week’s digital town halls our sales teams in Houston and Guangzhou reported record industrial orders. President Macron—whom I first met in 2008 when he was a junior spreadsheet guy at Rothschild—tells me that even the Europeans are doing high fives. Den Rest des Beitrags lesen »

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The dogs that didn’t bark

Posted by hkarner - 16. Dezember 2017

Date: 14-12-2017
Source: The Economist

Why are Brexiteers so quiet about Theresa May’s concessions to Brussels?

Despite a big exit bill and concessions on European judges and the Irish border, Brexit hardliners have kept mum

IT HAS been an up and down week for Theresa May. On December 11th the prime minister basked as pro- and anti-Brexit Tories alike cheered the deal that she had secured on the first phase of Britain’s Article 50 divorce from the European Union. But two days later, as she prepared to head back to Brussels to get an EU summit to approve the deal, Mrs May suffered her first big parliamentary defeat, when 11 of her own MPs joined the opposition to amend the EU withdrawal bill.

Mrs May deserved praise for pushing the Article 50 process forward. Yet it is surprising that Brexiteers were so loud in their approval of the deal. Mrs May has blurred many of their red lines. She accepted a bigger exit bill than they originally envisaged. The agreement on the future rights of EU citizens in Britain gives the European Court of Justice (ECJ) a say for eight years after Brexit. The agreement to avoid a hard border in Ireland implies full alignment with most single market rules. And Brussels insists that transition entails accepting all EU laws plus the ECJ. Den Rest des Beitrags lesen »

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Surveying the Damage of Low Interest Rates

Posted by hkarner - 16. Dezember 2017

Anders Åslund

Anders Åslund is a senior fellow at the Atlantic Council in Washington, DC. He is the author of Ukraine: What Went Wrong and How to Fix It and, most recently, Europe’s Growth Challenge (with Simeon Djankov). He is currently writing a book on Russia’s crony capitalism.

Few would disagree that it was necessary to slash interest rates in the immediate aftermath of the 2008 global financial crisis. But after a decade of ultra-loose monetary policies across advanced economies, growth remains tepid, financial risks have proliferated, and middle-class savers have lost out.

WASHINGTON, DC – For years after the 2008 financial crisis, policymakers congratulated themselves for having averted a second Great Depression. They had responded to the global recession with the kind of Keynesian fiscal and monetary stimulus that the moment required.

But nine years have passed, and official interest rates are still hovering around zero, while growth has been mediocre. Since 2008, the European Union has grown at a dismal average annual rate of just 0.9%.

The broad Keynesian consensus that emerged immediately after the crisis has become today’s prevailing economic dogma: as long as growth remains substandard and annual inflation remains below 2%, more stimulus is deemed not just appropriate, but necessary.

The arguments underlying this dogma do not hold water. For starters, measures of inflation are so poor as to be arbitrary. As Harvard’s Martin Feldstein notes, governments have no good way to measure price inflation for services and new technologies, which account for an ever greater share of advanced economies’ GDP, because quality in these sectors varies substantially over time. Moreover, real estate and other assets are not even included in the accounting. Den Rest des Beitrags lesen »

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The Baumgarten effect

Posted by hkarner - 16. Dezember 2017

Date: 14-12-2017
Source: The Economist

Oil and gas supply disruptions ripple around the world

Tight markets and wintry weather exacerbate the problem

CALL it the hydrocarbon equivalent of the butterfly effect. As oil and gas supplies tighten during the northern winter, disruptions as remote as a hairline fracture on a piece of Scottish pipeline, and an explosion in an Austrian natural-gas plant, have repercussions felt around the world.

Start with the pipeline. After Ineos, a chemicals company, detected a growing crack on a piece of pipe near Aberdeen, on December 11th it said it would shut the main Forties pipeline carrying North Sea oil and gas to Britain for weeks. The suspension of a pipeline carrying 450,000 barrels a day (b/d) of crude, in a global market of almost 98m b/d, would not normally be disruptive. Yet Brent crude, the benchmark for pricing much of the world’s seaborne crude, is itself partly priced on the flow of crude from 80 fields that feed the Forties pipeline, magnifying the impact.

Futures prices for Brent crude delivered in February and March surged to two-year highs, above $65 a barrel, before falling back. That emphasised how little slack the market has, after the extension last month of a production cut by OPEC, the producers’ cartel, Russia and other petrostates. Ann-Louise Hittle of Wood Mackenzie, a consultancy, says some European refineries rely on Brent crude to produce heating oil for sale in Germany and elsewhere. “Suddenly half a million barrels are out of action at a delicate time going into winter,” she says. Those refineries may now receive some shipments of American crude.

The mishap also highlighted the fragility of the Brent benchmark, which is priced based on demand for four types of crude produced in ageing North Sea fields running through pipelines dating from the 1970s. Earlier this year S&P Global Platts, an agency that assesses the Brent price, said it would incorporate from January a fifth crude from a Norwegian field, to ensure a more stable mix of production. Den Rest des Beitrags lesen »

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As Fed Tightens, Europe Hangs Loose

Posted by hkarner - 16. Dezember 2017

Date: 15-12-2017
Source: The Wall Street Journal

Region’s banks in no rush to follow the Fed in raising rates

Central banks in Europe showed continued caution about the region’s economic recovery on Thursday, signaling that they are in no rush to follow the Federal Reserve in steadily raising interest rates despite a rare synchronized expansion across the world economy.

The European Central Bank left its interest rates unchanged, even as its new economic projections forecast strong growth for the 19-nation eurozone through 2020.

“The incoming information indicates a strong pace of economic expansion and a significant improvement in the growth outlook,” said Mario Draghi, the ECB’s president, in a news conference.

The ECB’s economists now expect the eurozone’s economy will grow by 2.3% in 2018, a big increase from the 1.8% growth projected as recently as September. They continue to expect this year to be the currency area’s best since 2007. Den Rest des Beitrags lesen »

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A fresh approach to complete the banking union in the Eurozone

Posted by hkarner - 16. Dezember 2017

Stefano Micossi 11 December 2017, vox.eu

Director General, ASSONIME; Honorary Professor College of Europe; Member of the Board of CEPS and of Cassa Depositi e Prestiti; Chairman of the School of European Political Economy, LUISS

Tackling legacy risks Den Rest des Beitrags lesen »

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