Föhrenbergkreis Finanzwirtschaft

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Archive for 5. November 2018

Banken in Europa taumeln in die nächste Finanzkrise

Posted by hkarner - 5. November 2018

Dank an J.G. Wie immer, eine ganz scharfe Analyse von R. Barazon (hfk)

DWN, Roland Barazon, 5/11/2018

Banken in Europa taumeln in die nächste Finanz-Krise – DWN

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Auf Wiedersehen, and Good Riddance

Posted by hkarner - 5. November 2018

Philippe Legrain, a former economic adviser to the president of the European Commission, is a visiting senior fellow at the London School of Economics’ European Institute and the founder of Open Political Economy Network (OPEN), an international think-tank whose mission is to advance open, liberal societies. His most recent book is European Spring: Why Our Economies and Politics are in a Mess – and How to Put Them Right .

Although German Chancellor Angela Merkel’s decision not to seek reelection in the next federal election has come as a surprise, it was long overdue. Merkel’s „steady hand on the tiller“ has guided the German and European ship of state directly into the populists‘ line of fire.

LONDON – She has been dubbed the Queen of Europe and, since US President Donald Trump’s election, the leader of the free world. As the European Union has lurched from crisis to crisis over the past decade, German Chancellor Angela Merkel’s steady hand has helped hold the bloc together. According to the conventional wisdom, when she hands over the chancellorship after Germany’s next federal election in 2021 – and perhaps much sooner if her grand coalition collapses – she will be sorely missed.

Den Rest des Beitrags lesen »

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Blame the Economists?

Posted by hkarner - 5. November 2018

J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

Ever since the 2008 financial crash and subsequent recession, economists have been pilloried for failing to foresee the crisis, and for not convincing policymakers of what needed to be done to address it. But the upheavals of the past decade were more a product of historical contingency than technocratic failure.

BERKELEY – Now that we are witnessing what looks like the historic decline of the West, it is worth asking what role economists might have played in the disasters of the past decade.

From the end of World War II until 2007, Western political leaders at least acted as if they were interested in achieving full employment, price stability, an acceptably fair distribution of income and wealth, and an open international order in which all countries would benefit from trade and finance. True, these goals were always in tension, such that we sometimes put growth incentives before income equality, and openness before the interests of specific workers or industries. Nevertheless, the general thrust of policymaking was toward all four objectives. Den Rest des Beitrags lesen »

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Italy’s Dangerous Budget Showdown With Europe

Posted by hkarner - 5. November 2018

Date: 04-11-2018
Source: Foreign Affairs By Erik Jones

Brussels and Rome Are Playing a Game of Chicken

In late October, Italy’s populist government finally got its showdown with Brussels. In September, Italy’s powerful deputy prime ministers, Lega leader Matteo Salvini and Five Star Movement leader Luigi Di Maio, agreed on a draft budget calling for tax cuts and a minimum income for the unemployed, both of which would increase Italy’s deficits at a time when Brussels is pressuring Rome to reduce its debt load. Now Salvini and Di Maio expect European institutions to make concessions instead. It is hard not to imagine that this was their plan all along.

Salvini and Di Maio know that the European institutions will have to push back on any attempt to break the rules for macroeconomic policy coordination across countries—and specifically those rules that force Italy to rein in its debts and deficits. In turn, Salvini and Di Maio plan to argue that Brussels is preventing them from fulfilling their democratic mandate.

This kind of rallying cry will play well in the run-up to the May 2019 elections to the European Parliament. The danger is that it will play badly in financial markets. If market participants start to worry that Italian public debts will begin growing again, they will become less willing to lend to the Italian government, and every Italian will find it more expensive to borrow. This could create a self-fulfilling dynamic leading Italy back into crisis, particularly if the government’s policies undermine confidence in the country’s banks. Hence the European Commission (EC) must seek to enforce the rules—not just for their own sake but to safeguard the European economy as a whole.

The showdown between Brussels and Rome began in earnest on October 18, when European Commissioners Valdis Dombrovskis and Pierre Moscovici sent a strongly worded note to the Italian government making clear their “serious concern” about the budget’s “significant deviation” from Italy’s prior commitments to lower its debt and deficits. Usually, such a letter would prompt the start of negotiations between the EC and the national government in question. Instead of offering to make concessions, however, Italian Economics and Finance Minister Giovanni Tria responded on October 22 that although Italy’s budget is “outside the norms” for European policy coordination, the Italian government does not believe that its proposal constitutes a financial risk. In fairness, Tria initially wanted to go the usual route of negotiating concessions. But Salvini and Di Maio would have none of it. Den Rest des Beitrags lesen »

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How Angela Merkel Foiled a Backroom Coup in One Late Display of Clout

Posted by hkarner - 5. November 2018

Date: 04-11-2018
Source: The Wall Street Journal

By taking herself out of the running to lead the ruling party, the German chancellor dragged its succession process into the light for the first time in decades

German Chancellor Angela Merkel in October.

BERLIN—The era of Angela Merkel was clearly coming to an end a week ago, and Wolfgang Schäuble was prepared to jump in. An elder statesman and veteran of German political battles, he had been secretly developing a succession plan, typical of changes-of-guard in the ruling party.

Then last Monday, Ms. Merkel dragged the party’s succession process into the light for the first time in decades.

By taking herself out of the running for her post as party chairwoman, she pulled the rug out from under the small group of men engineering the post-Merkel era, and cued up a rare public race for her crown—an open contest that looks set to redraw the political contours of the country and Europe in ways few anticipated.

Ms. Merkel had managed to pull off one late coup even in her moment of weakness, with a maneuver that leaves her with more control of the outcome—and of the terms of her departure—than if she had left the succession to her party. Den Rest des Beitrags lesen »

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