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Archive for 29. Juli 2019

Boris’s Brexit

Posted by hkarner - 29. Juli 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 in the Aftermath of Crisis, 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.

Political betting markets now put the chance of a no-deal Brexit at roughly one-third. But, regardless of the reckless promises to Conservative Europhobes that made Boris Johnson prime minister, an orderly, negotiated Brexit will be the favored option for a political libertine whose only consistent principle has been inconsistency.

LONDON – Now that Boris Johnson has achieved his lifetime ambition to become the United Kingdom’s prime minister, the tragicomedy of Brexit is approaching its climax. While the rest of the European Union has viewed this with barely disguised horror, there is good news and bad news in Johnson’s apotheosis. 

The bad news is that the “no-deal” withdrawal from the European Union that Johnson advocated to win the leadership of the Europhobic Conservative Party could cause a sudden stop in economic activity comparable to the disaster that followed the failure of Lehman Brothers in 2008. Although this business breakdown might initially affect only trade-related businesses in Britain, and produce some kind of UK-EU compromise within a few weeks or months, we learned in the 2008 financial crisis that even a brief interruption of normal commercial relations in one part of the economy can reverberate for many years. The good news is that Johnson is a far cleverer and more adroit politician than his predecessor, Theresa May. Den Rest des Beitrags lesen »

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Which Way Now for the EU?

Posted by hkarner - 29. Juli 2019

Kemal Derviş, former Minister of Economic Affairs of Turkey and former Administrator for the United Nations Development Program (UNDP), is Senior Fellow at the Brookings Institution.

Calls for Europe to strengthen its “strategic sovereignty” often imply that a more integrated European Union should become the third pillar of a “G3” world alongside the United States and China. But if the EU tries to become a pure power player in a transactional game of realpolitik, Europe’s soft power will weaken.

WASHINGTON, DC – With the main European Union institutions preparing for a change of leadership this autumn, now is a good time to reflect on the EU’s priorities for the coming years.

The EU’s new top team is all but confirmed. Ursula von der Leyen, the former German defense minister, will be the next president of the European Commission, while Christine Lagarde, the outgoing managing director of the International Monetary Fund, will take over at the European Central Bank. Belgian Prime Minister Charles Michel will be the next president of the European Council, and Spanish Foreign Minister Josep Borrell is poised to become the EU’s new High Representative of the Union for Foreign Affairs and Security Policy.Several commentators say the EU’s new leaders should seek to strengthen Europe’s “” through greater pooling of member states’ resources and much closer policy coordination. This is certainly much needed, not least on . Den Rest des Beitrags lesen »

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Lagarde’s ECB Checklist

Posted by hkarner - 29. Juli 2019

Stefan Gerlach

Stefan Gerlach is Chief Economist at EFG Bank in Zurich and a former deputy governor of the Central Bank of Ireland. He is also a former Executive Director and Chief Economist of the Hong Kong Monetary Authority and Secretary to the Committee on the Global Financial System at the BIS.

After years in which the European Council acted as if there were no qualified women to lead the European Central Bank, it has finally abandoned that ludicrous excuse and appointed Christine Lagarde to the position. Lagarde is an eminently qualified and promising president-designate; but to have a successful tenure, she will need to head off her critics‘ concerns.

ZURICH – The surprise nomination of Christine Lagarde to serve as the next president of the European Central Bank has many observers, including me, and disappointed others. Those who are pleased feel that Lagarde’s eight-year term as Managing Director of the International Monetary Fund makes her uniquely qualified to forge agreement within the ECB’s Governing Council on many of the contentious issues it faces.

Chief among these are the eurozone’s current downturn and the potential review of its monetary-policy framework that has been proposed by Olli Rehn, Governor of the Bank of Finland. Considering that the ECB’s most influential members appear to have different views about the framework and how it might be changed, reaching a consensus will not be easy.Nonetheless, those who support Lagarde’s nomination believe that her time serving as France’s finance minister has left her ideally suited to work with the eurozone member states’ governments – and to convince them to marshal a collective fiscal response in the event of a severe downturn. Den Rest des Beitrags lesen »

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The G-Minus-2 Threat

Posted by hkarner - 29. Juli 2019

Arvind Subramanian, a former chief economic adviser to the government of India, is a senior fellow at the Peterson Institute for International Economics and a visiting lecturer at Harvard’s Kennedy School of Government. He is the author of Eclipse: Living in the Shadow of China’s Economic Dominance.

The US-dominated G1 world is long gone, and the G2 system in which America and China shared hegemonic responsibilities is now fading into memory. In today’s G-minus-2 world, US and Chinese policies threaten to have devastating consequences for the global economy.

CAMBRIDGE – For an all-too-brief period between the late 1980s and the late 2000s, the world was characterized by convergence, both ideological and economic. The West and the Rest agreed that an open liberal order was the best way to increase prosperity. Now, however, this ideological order threatens to unravel, with adverse consequences for the world economy.

The two-decade-long “golden age” was one of trade hyper-globalization, reflected in an unprecedented increase in the ratio of world exports to GDP. It was also an era of economic convergence: for the first time in centuries, living standards in a broad cross-section of developing countries started catching up with advanced-economy indicators. Moreover, globalization and convergence were handmaidens: open markets enabled developing countries to prosper by building up modern, efficient, export-based industries. Den Rest des Beitrags lesen »

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