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Archive for März 2019

Brexit Fever is Breaking

Posted by hkarner - 31. März 2019

Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics. A former columnist at the Times of London, the International New York Times and the Financial Times, he is the author of Capitalism 4.0, The Birth of a New Economy, which anticipated many of the post-crisis transformations of the global economy. His 1985 book, Costs of Default, became an influential primer for Latin American and Asian governments negotiating debt defaults and restructurings with banks and the IMF.

A no-deal disaster is still theoretically possible when the next Brexit deadline arrives on April 12. But a much longer extension is almost certain, now that the principle of a potentially endless negotiation has prevailed.

LONDON – By removing the for completing negotiations on the United Kingdom’s withdrawal from the European Union, the EU has avoided the disaster of a 2008-style sudden stop in business with its second-largest trading partner. This decision dramatically improves the economic and political outlook for the UK and all of Europe.

For Britain, the prospects are suddenly much clearer and better than at any time since June 2016. While the likelihood that Prime Minister Theresa May will soon be ousted could create the impression of a constitutional crisis, the reality is that political conditions are sure to stabilize once the period for renegotiating the UK-EU relationship is extended again from the new, very soft, April 12 deadline until the end of the year or beyond. How this extension comes about – whether because of a new prime minister or a general election or a second referendum or a vote in Parliament to erase all of May’s “red lines” which prevented her negotiating a Norwegian-style associate membership of the EU – is impossible to predict. It is also not very important. Den Rest des Beitrags lesen »

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It’s Anyone’s Brexit Now

Posted by hkarner - 31. März 2019

Date: 30-03-2019
Source: The Wall Street Journal By The Editorial Board

May loses for a third time, so no deal or no Brexit are possible.

British Prime Minister Theresa May .

British lawmakers on Friday rejected Prime Minister Theresa May’s Brexit deal for the third time, and the process has descended into such chaos it’s easy to lose sight of how extraordinary this is. A majority of lawmakers claim they want a Brexit that’s minimally disruptive. Yet they’re on track to deliver either the most disruptive form of Brexit possible, or no Brexit at all.

Mrs. May’s divorce agreement would smooth over short-term economic disruptions while Britain and the EU negotiate a permanent trade pact. But Britain missed its March 29 deadline to leave with that deal, and then Friday’s deadline to assent to the deal in exchange for a short Brexit delay to May 22.

The EU’s remaining 27 members warned last week that, absent such an agreement, a hard Brexit with no deal for temporary trade links would automatically happen on April 12. EU leaders are anxious to avoid a no-deal Brexit if they can, but without any progress in London they may conclude it’s best to put Britain out of the EU’s misery once and for all.

That prospect terrifies many U.K. lawmakers, who realize Britain isn’t ready. London hasn’t replicated most of the trade deals Britain currently has with other countries as an EU member, and businesses would struggle at least at first to cope with new customs requirements and the like. Den Rest des Beitrags lesen »

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Posted by hkarner - 31. März 2019

Date: 30-03-2019
Source: The Wall Street Journal By Yaroslav Trofimov
Subject: The Culture War Dividing Europe

Historically Catholic Poland and Ireland offer divergent visions of the continent’s future

When Pope John Paul II visited Ireland and his native Poland in 1979, these two redoubts of Catholic faith seemed to be on a similar path. Millions gathered to listen to the pontiff in Dublin and in Warsaw.

In Poland, the wave of religious fervor after the trip catalyzed resistance, spurring the Solidarity movement the following year and helping to precipitate the chain of events that led to Communism’s collapse. In Ireland, the Catholic Church’s power also appeared to grow in the aftermath of the papal visit, the first in the nation’s history. In a 1983 referendum, some two-thirds of Irish voters backed a constitutional amendment to prohibit abortion. In another referendum three years later, a similar majority followed the church’s guidance and voted against legalizing divorce.

Today, these two European Union member-states—where the Catholic Church once played a vital role in resisting foreign rule and fostering the very sense of national identity—seem to be following divergent trajectories. It is a symptom of a wider split that could threaten the entire European project. Den Rest des Beitrags lesen »

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The Brexit Hour Has Come

Posted by hkarner - 31. März 2019

Chris Patten, the last British governor of Hong Kong and a former EU commissioner for external affairs, is Chancellor of the University of Oxford.

With Brexit possibly just two weeks away, most British voters and members of Parliament are still in the dark. Sadly, the national interest has taken a back seat to ideological obsession and the leadership ambitions of some of Prime Minister Theresa May’s cabinet colleagues.

LONDON – Do you want to know what is happening in British politics today in the great debate about the United Kingdom’s departure from the European Union?

Join the club. With Brexit possibly just two weeks away, most British voters are in the dark. So are members of Parliament. So are the million people, including three of my daughters and three of my older grandchildren, who recently marched in London to protest against Brexit. And so are the six million who have signed a petition calling on the government to remain in the EU.

It’s not surprising, therefore, that during my travels this month from the United States to Ireland to Southeast Asia and then Tokyo, everyone seemed so bemused about how Britain had plunged itself into such a damaging crisis. Den Rest des Beitrags lesen »

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What if Zero Interest Rates Are the New Normal?

Posted by hkarner - 31. März 2019

Adair Turner, a former chairman of the United Kingdom’s Financial Services Authority and former member of the UK’s Financial Policy Committee, is Chairman of the Institute for New Economic Thinking. His latest book is Between Debt and the Devil.

The valid insight behind „modern monetary theory“ – that governments and central banks together can always create nominal demand – was explained by Milton Friedman in 1948. But it is vital also to understand that excessive monetary finance is hugely harmful, and it is dangerous to view it as a costless way to solve long-term challenges.

TOKYO – Ever since major central banks cut short-term interest rates close to zero in autumn 2008, and subsequently purchased huge volumes of bonds as part of their quantitative easing operations, economists have debated about when and how fast the “exit” from these unorthodox monetary policies would be.

But, a decade later, developed-economy interest rates are stuck far below pre-crisis levels and likely to remain so. Germany’s ten-year bond yield of -0.02% (as of March 23) signals market expectations that the European Central Bank will maintain zero policy rates not just until 2020 (the official ECB forward guidance) but to 2030. Japanese bond yields imply zero or negative interest rates for even longer. And while ten-year yields in the United States and the United Kingdom are just above 1% and 2.4%, respectively, both of these suggest minimal or no increases in policy rates for another decade. Den Rest des Beitrags lesen »

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Europe’s economy is more worrying than America’s yield-curve inversion

Posted by hkarner - 30. März 2019

Date: 28-03-2019
Source: The Economist

Bond markets are sounding warnings on both sides of the Atlantic. But the message is much worse in Europe

On march 22nd  Germany’s worst manufacturing survey in seven years sent investors rushing to buy bonds. For the first time in three years yields on German ten-year government debt fell below zero, meaning that investors are willing to pay to hold it. And later that day in America the yield on ten-year Treasury bonds fell beneath that on the three-month variety. The last time that happened was 2007, one of the “inversions” in bond-market yields that preceded each of the past seven American recessions.

These bond-market blues are fuelling concern that the global upswing in 2017 and 2018 is making way for a slump. There are reasons to worry. Tax cuts have boosted demand in America but will not be repeated; China has slowed; the trade war grinds on. However, indiscriminate global gloom is a mistake. America and Europe are in vastly different positions. Only Europe should be a cause of deep concern.

America’s inverted yield curve suggests that the Federal Reserve’s interest-rate rise in December, its ninth in three years, will be its last for now. But that does not mean recession is imminent. The Fed has recognised—belatedly—that the risks to growth have risen, as Jerome Powell, its chairman, confirmed on March 20th. And America is in a position of relative strength. Unemployment is low; consumers are flush with cash; and underlying inflation is close to the Fed’s 2% target (see article). Den Rest des Beitrags lesen »

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Federal Reserve: Ohne permanente Interventionen kommt der Crash

Posted by hkarner - 30. März 2019

Dank an H.G.!

Deutsche Wirtschafts Nachrichten | Veröffentlicht: 21.03.19 09:44 Uhr

Die Federal Reserve bricht die Normalisierung ihrer Geldpolitik ab. Das marode Finanzsystem kann offenbar keine dauerhaft steigenden Zinsen mehr vertragen. Für die Weltwirtschaft sind schwere Zeiten angebrochen.

Angesichts der unsicheren Konjunkturaussichten will die US-Notenbank Fed dieses Jahr die Füße stillhalten und die Ära der schrittweisen Zinserhöhungen beenden. Die Währungshüter um Fed-Chef Jerome Powell planen nach neun Erhöhungen binnen drei Jahren für 2019 eine Pause, wie sie am Mittwoch signalisierten. Erst 2020 könnte noch eine Anhebung kommen.

Der Leitzins ist nun in der Spanne von 2,25 bis 2,5 Prozent in etwa auf einem Niveau, das die Wirtschaft laut Powell weder anschiebt noch bremst. „Jetzt ist eine großartige Zeit, um geduldig zu sein“, betonte er. Aus den Konjunkturdaten lasse sich kein Grund ableiten, Zinsen zu erhöhen oder zu senken.

Die Entscheidung der Zentralbank hat massive Auswirkungen. Praktisch gesteht sie damit ein, dass die Weltwirtschaft vor schwierigen Zeiten steht und eine Rezession nicht mehr ausgeschlossen ist. Es ist außerdem ein Eingeständnis, dass das auf Schuldgeld basierende Finanzsystem nicht mehr ohne dauerhafte Eingriffe durch die Zentralbanken bestehen kann. Den Rest des Beitrags lesen »

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The end of Theresa May

Posted by hkarner - 29. März 2019

Date: 28-03-2019
Source: The Economist: Bagehot

The prime minister promises MPs that she won’t be around for much longer

Europe has taken the head of a fourth Tory prime minister in a row. At a meeting of the 1922 committee of Conservative mps on March 27th Theresa May promised that she would not preside over the next stage of the Brexit negotiations and that she would resign if she got her deal through Parliament. She did not go so far as to name a date for her departure, but she might as well have done, given the reaction of the political nation. Those who had been demanding that she quit for months whooped with joy, while those who had been plotting to succeed her intensified their plotting.

Mrs May is trying to make the best of her miserable situation by using her promise to resign as a lever to get mps to back her deal. Several leading Brexiteers had hinted that they might offer their votes in return for her departure (their great fear was that Mrs May would treat a victory for her deal as vindication and an excuse to stay in power). Boris Johnson, for one, has announced that he has decided to vote for her deal. John Bercow, the Speaker of the Commons, is refusing to allow Mrs May to put her deal back to mps for another vote unless it is significantly changed. Now she may try to claim that her deal comes with her head on a platter.

In reality she is bowing to the inevitable. Over the past few weeks Mrs May has been confronted with one disaster after another. On March 20th she infuriated mps from all political parties by accusing them, in effect, of being enemies of the people. On March 24th the papers were full of rumours about cabinet ministers discussing appointing a caretaker prime minister. And on March 25th the House of Commons voted for the first time since 1906 to seize control of parliamentary business from the government and hold a series of indicative votes on where they thought Brexit should go.

Parliament’s seizure of the initiative was the culmination of a long process of disempowerment of the prime minister. Mrs May arguably lost control of her party with the general election of June 2017. The European Research Group of hardline Brexiteers increasingly acted like a party within a party—and a bullying, swaggering, bloviating party at that—while more moderate mps, such as Nick Boles, chomped at the bit. Then she lost control of her cabinet. The past month has seen ministers voting against a three-line whip without losing their jobs and various factions threatening mass resignations in return for concessions. Den Rest des Beitrags lesen »

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Zinsen: Draghi kann länger warten

Posted by hkarner - 29. März 2019

Die Zinswende könne hinausgeschoben werden, sagt EZB-Chef Draghi. Er deutet Mittel an, um die Belastung für die Banken zu mildern.

Frankfurt. Die EZB will die Zinswende bei einer stärkeren Konjunktureintrübung notfalls länger hinausschieben. Die Euro-Hüter würden sicherstellen, dass die Geldpolitik die Wirtschaft weiter unterstütze, indem sie den Zinsausblick anpassen, sagte EZB-Chef Mario Draghi am Mittwoch auf einer Notenbank-Konferenz in Frankfurt. „Wir haben keinen Mangel an Instrumenten, um unser Mandat zu erfüllen.“

Eine erneute Verschiebung der Zinswende würde gerade die Banken treffen. Sie klagen seit Längerem, dass die anhaltend tiefen Sätze an den Gewinnen zehren. Besonders die Negativzinsen sind vielen ein Dorn im Auge. Die Institute müssen seit einigen Jahren Strafzinsen zahlen, wenn sie über Nacht überschüssige Liquidität bei der Notenbank parken: Der Einlagensatz steht seit März 2016 bei minus 0,4 Prozent. Falls notwendig, werde die EZB prüfen, wie mögliche Nebenwirkungen abgemildert werden könnten. Die Ertragsschwäche von Banken sei aber keine unvermeidbare Folge der Negativzinsen. Vor allem im Norden der Eurozone hatten sich Institute für einen gestaffelten Einlagensatz ausgesprochen – Draghis Kommentar wurde an der Börse als eine Überlegung in diese Richtung gewertet. Den Rest des Beitrags lesen »

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The Brexit Breakup Gets Messier

Posted by hkarner - 29. März 2019

Date: 28-03-2019
Source: Foreign Affairs By Amanda Sloat

The United Kingdom and the EU Will Be Tied to Each Other for Years to Come

Divorce is painful, especially when a marriage has lasted for more than 40 years and lives and finances are deeply intertwined. Emotions run high, assets are contested, and countless details need to be addressed. The June 2016 decision by the United Kingdom to leave the European Union has been no different: divorce negotiations have set off a heated debate about the United Kingdom’s future relationship with the European Union and strained arrangements with Northern Ireland and Scotland.

The British government has been an ambivalent member of the EU family from the beginning. In 1957, the United Kingdom opted out of early membership in the European Coal and Steel Community, reluctant to cede sovereignty to a supranational institution and concerned about damaging ties to the Commonwealth. In 1973, the British government joined the European Economic Community. But over the years, it negotiated a rebate that reduced its financial contributions and opted out of several flagship policies, including the euro and the Schengen travel area. Den Rest des Beitrags lesen »

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