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Archive for 17. August 2019

Italy’s would-be strongman suddenly looks more vulnerable

Posted by hkarner - 17. August 2019

Date: 15-08-2019
Source: The Economist

Salvini stumbles

But nothing is predictable about Italian politics

Hubris is an occupational hazard for political leaders. Two of Italy’s recent prime ministers, Silvio Berlusconi and Matteo Renzi, stumbled just when it seemed they could do whatever they wanted. (Mr Renzi wanted to change the constitution; Mr Berlusconi wanted to hold “bunga bunga” sex parties. In both cases, voters objected.)

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Now Matteo Salvini, the leader of the populist Northern League, wants to ditch his coalition partners in the anti-establishment Five Star Movement (m5s), bring down the government that is led by Giuseppe Conte, an independent, and hustle the country into a snap election so as to give himself what he has termed “full powers”. This would enable him to impose, among other things, a radically expansionist budget for 2020. Mr Salvini claims that a “fiscal shock” is needed to jolt the moribund Italian economy back to life. Critics fear it could instead pitch the country, which has debts of over 130% of gdp, into a new financial crisis, along with the rest of the euro zone.

So the stakes were high when, on August 9th, the League tabled a Senate motion of no confidence in Mr Conte. Mr Salvini, a deputy prime minister, did not, however, withdraw either himself or his ministers from the cabinet—a move that would have made the fall of the government inevitable. And on August 13th, a hastily reconvened upper house rejected the League’s demand for a confidence debate to be held the very next day.

The luckless Mr Conte will still have to go to parliament to explain a crisis that is not of his making. But he will start his visit to the two chambers on August 20th, this date having been set by a majority that for the first time united the m5s with the opposition, centre-left Democratic Party (pd) and a handful of regionalists and independents. That raised the possibility that Mr Conte, who belongs to neither party in his coalition, might not get the thumbs-down, or that, if he resigned, a new government could even be formed, backed by the Five Stars and the pd. Den Rest des Beitrags lesen »

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Countries most exposed to climate change face higher costs of capital

Posted by hkarner - 17. August 2019

Date: 15-08-2019
Source: The Economist

Poor countries find themselves trapped in a vicious cycle

In east africa millions of people are suffering from a prolonged drought. Deadly typhoons are wreaking havoc in Vietnam. Honduran coffee-farmers are seeing their crops wither in the heat. Poor countries have less capacity than rich ones to adapt to changing weather patterns, and tend to be closer to the equator, where weather patterns are becoming most volatile. As the world heats up, they will suffer most.

By 2030 poor countries will need to spend $140bn-300bn each year on adaptive measures, such as coastal defences, if they want to avoid the harm caused by climate change. That estimate, from the un Environment Programme, assumes that global temperatures will be only 2°C above pre-industrial levels by the end of the century, which seems unlikely. Adding to the costs, research suggests that these countries face higher interest rates than similar countries less exposed to climate risks. This raises the prospect of a vicious cycle, in which the most vulnerable countries pay more to borrow, making adaptation harder and them even more exposed. Den Rest des Beitrags lesen »

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Rise of Electric Cars Threatens to Drain German Growth

Posted by hkarner - 17. August 2019

Date: 16-08-2019
Source: The Wall Street Journal

Industry executives worry that a transition away from fuel-powered vehicles threatens jobs, tax revenue

Workers assemble sports cars at a Porsche factory in Stuttgart-Zuffenhausen, Germany.

STUTTGART, Germany—Concern is rising in Europe’s automobile heartland about the economic impact of the industry’s move to electric vehicles from gasoline-powered cars.

Officials and executives in Germany fear the country’s big car companies and rich ecosystem of suppliers and service providers are insufficiently prepared for the transition, and that their leadership may not be assured in an electric-car world, threatening jobs, tax revenue and even growth.

Assembling electric cars isn’t as complex or labor intensive as making traditional vehicles and relies partly on imported technology. At the same time, China has made rapid forays in electrification and is shaping up as a potentially formidable competitor in the field. Den Rest des Beitrags lesen »

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Eurocrats know Boris Johnson well, making no-deal Brexit more likely

Posted by hkarner - 17. August 2019

Date: 15-08-2019
Source: The Economist: Charlemagne

Familiarity breeds contempt

The last time continental Europeans felt they were dealing with an easily readable, straightforward British prime minister was in the late 1990s. Tony Blair charmed his continental colleagues. He wooed the French in their own language, led fellow heads of government on a bike ride through Amsterdam during a Dutch-led summit and made common cause with fellow “third way” social democrats like Gerhard Schröder, Germany’s then chancellor. Set against the backdrop of the “Cool Britannia” popularity of British music and fashion, this all suggested that Britain had finally cast off its conflicted post-imperial garb and was embracing a modern, European identity.

The glow faded when the Iraq war sundered Mr Blair from the French and the Germans. Then came Gordon Brown, David Cameron and Theresa May, who were all harder to place. All three made nice at European summits but flirted with the Eurosceptic tabloids at home. Mrs May took office in July 2016 after the country had voted for Brexit. But who was she? She ruled out a second referendum—then considered the most likely outcome in some continental capitals—but did not seem to be “of” the Brexiteers. At times she posed as a Thatcher-style Iron Lady; at others as a sensible Christian democrat. Buffeted by events, she was hard to define and left little lasting impression.

Boris Johnson is a different matter. Unlike his predecessors, Britain’s new prime minister is a familiar personality on the continent. Many in Brussels know him, by reputation or in person, from his time as a reporter there in the 1990s, when he spun highly exaggerated stories about the eu and helped pioneer the outraged Eurosceptic style in the British press. Continentals also know him from the London Olympics in 2012, when his performances as the capital’s buffoonish, zip-wire-riding cheerleader-in-chief caught the attention of the foreign press. Most of all they know him as the villain of the Brexit campaign; the man with a lie about the cost of eu membership on the side of his big red campaign bus who achieved the sort of victory of which nationalist populists on the mainland could only dream. Den Rest des Beitrags lesen »

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Trump’s Assault on the Global Trading System

Posted by hkarner - 17. August 2019

Date: 16-08-2019
Source: Foreign Affairs By Chad P. Bown And Douglas A. Irwin

And Why Decoupling From China Will Change Everything 

Donald Trump has been true to his word. After excoriating free trade while campaigning for the U.S. presidency, he has made economic nationalism a centerpiece of his agenda in office. His administration has pulled out of some trade deals, including the Trans-Pacific Partnership (TPP), and renegotiated others, including the North American Free Trade Agreement (NAFTA) and the U.S.-Korea Free Trade Agreement. Many of Trump’s actions, such as the tariffs he has imposed on steel and aluminum, amount to overt protectionism and have hurt the U.S. economy. Others have had less obvious, but no less damaging, effects. By flouting international trade rules, the administration has diminished the country’s standing in the world and led other governments to consider using the same tools to limit trade arbitrarily. It has taken deliberate steps to weaken the World Trade Organization (WTO)—some of which will permanently damage the multilateral trading system. And in its boldest move, it is trying to use trade policy to decouple the U.S. and Chinese economies. Den Rest des Beitrags lesen »

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