Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Debt’

China Shifts Gears to Support Economic Growth Amid Trade Conflict With U.S.

Posted by hkarner - 18. Juli 2018

Date: 17-07-2018
Source: The Wall Street Journal

Quarterly GDP expanded 6.7%, still within Beijing leaders’ comfort zone

Beijing is encouraging commercial banks to ramp up lending for subway and other railway projects.

BEIJING—Fall-offs in factory output and investment in buildings, machinery and such are weighing on China’s growth, complicating Beijing’s task in managing the world’s second-largest economy amid a trade conflict with the U.S.

The Chinese economy clocked a 6.7% expansion rate in the second quarter from a year earlier, down slightly from 6.8% in the January-March period, the statistics bureau reported Monday. While that rate is within Chinese leaders’ comfort zone, some economists said more troubling are the drop-offs in business activity and domestic demand.

Industrial output rose 6% in June from a year earlier, markedly down from a pace of 6.8% in May. Meanwhile, investment in fixed assets grew 6% in the first half of the year—a notch down from the 6.1% rate in the first five months and a level not seen since the late 1990s.

The slack is partly due to a government campaign against debt that has made businesses skittish about spending. While Beijing is already shifting gears to support growth—and fend off any ill-effects from the escalating trade fight with the U.S.—some economists expect the slowdown to worsen in coming months before the lingering effects of the credit-tightening dissipate. Den Rest des Beitrags lesen »

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Österreich profitiert einmal mehr von sehr niedrigen Zinsen

Posted by hkarner - 3. Juli 2018

Österreichs Schuldenverwalter haben 60 Prozent des für heuer geplanten Emissionsvolumens bereits erledigt.

Die Republik Österreich konnte bei der heutigen Auktion von Bundesanleihen wieder von sehr günstigen Zinsen profitieren. Die Aufstockung der zehnjährigen Staatsanleihe erfolgte mit einer durchschnittlichen Rendite von 0,554 Prozent. Das ist der niedrigste Wert seit der Erst-Emission im Jänner dieses Jahres, die noch bei 0,788 Prozent über die Bühne ging, so OeBFA-Chef Markus Stix zur APA.

Auch die Aufstockung einer noch rund 20 Jahre laufenden Emission erfolgte zum bisher niedrigsten Zinssatz von 1,047 Prozent. Zuletzt wurde sie im April mit 1,093 Prozent aufgestockt. Am Sekundärmarkt rentierte sie im Sommer 2016 allerdings schon mit 0,65 Prozent. „Da war die Nachfrage nicht gegeben“, so Stix dazu, warum damals von Seiten der OeBFA nicht aufgestockt wurde.

In einem von geopolitischen Risiken und Handelskonflikten geprägten Umfeld habe Österreich wieder von der Funktion als sicherer Hafen für Anleger profitiert. Bereits nach der letzten Sitzung der Europäischen Zentralbank (EZB) Mitte Juni habe sich das Marktumfeld deutlich verändert. Durch die Ankündigung, dass sie die Leitzinsen nicht vor dem Sommer 2019 erhöhen werde, sei das Zinsniveau gesunken und auch das lange Ende tiefer geworden. Zudem profitierte Österreich auch davon, dass sowohl IHS als auch Wifo ihre Wirtschaftswachstumsprognosen bestätigt haben. „Das führt zu sehr niedrigen Zinsen“, sagte Stix. Den Rest des Beitrags lesen »

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Unfunded Promises

Posted by hkarner - 2. Juli 2018

June 29, 2018

A debt occurs when you receive something now in exchange for a promise to give something back later. It doesn’t have to be cash. If you borrow your neighbor’s lawn mower and promise to return it next Tuesday, that’s a kind of debt. You receive something (use of the lawn mower) and agree to repayment terms – in this case, your promise to return it on time and in working order.

One reason you try to get that lawnmower back on time and in the proper condition is that you might want to borrow it again in the future. In the same way that not paying your bank debt will make it difficult to get a bank loan in the future, not returning that lawnmower may make your neighbor a tad bit reluctant to lend it again.

Debt can be less specific, too. Maybe, while taking your family on a beach vacation, you notice a wedding taking place. Your 12-year-old daughter goes crazy about how romantic it is. In a moment of whimsy, you tell her you will pay for her tropical island beach wedding when she finds the right guy. That “debt,” made as a loving father to delight your daughter, gets seared into her brain. A decade later, she does find Mr. Right, and reminds you of your offer. Is it a legally enforceable debt? Probably not, but it’s at least a (now) moral obligation. You’ll either pay up or face unpleasant consequences. What is that, if not a debt? Den Rest des Beitrags lesen »

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Adam Leaver – Intangible concerns: Goodwill and the risk of pro-cyclicality in corporate America

Posted by hkarner - 23. Juni 2018

Thanks to M.R.

Much has been written about the growth of debt since the Great Financial Crisis. But whilst leverage is a worry, much less has been written about the problem of asset quality.

At first reading this appears to be a very difficult piece, however when you get into it, it becomes more accessible. Since the collapse of Carillion, a British multinational facilities management and construction services company, a few months ago, it became apparent that companies and accountants are egregiously misusing “goodwill” (what an acquiring firm records on its balance sheet when it pays more for a target company than the value of that firm’s book price). This piece finds that this is an increasing problem and risk for the economy.

Adam Leaver, Professor in Accounting and Society and co-director of SPERI

Cross-posted from the website of Sheffield Political Economy Research Institute (SPERI)

 

As someone writing about derivatives as the last crisis hit in 2007 (or 2008 depending on your markers), I always try to keep track of those markets which have both the opacity and scale to become systemically destabilising. People are already staking their claims on what will be the next ‘CDO crisis’, whether its sub-prime car loan asset-backed security markets (which are not large enough to cause systemic problems, in my opinion) or exchange-traded funds (which probably are). But there is a possibility the next crisis may start somewhere unexpected: within the non-financial sector; or at least interactions between the non-financial and financial sector. Den Rest des Beitrags lesen »

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Are We in a Corporate-Debt Bubble?

Posted by hkarner - 20. Juni 2018

Susan Lund

Susan Lund is a partner of McKinsey & Company and a leader at the McKinsey Global Institute.

In the decade since the global financial crisis, the value of nonfinancial companies‘ outstanding bonds has nearly tripled, owing not least to growth in corporate debt in emerging markets. But while a correction seems likely as defaults rise, the broad shift toward bond financing is actually a welcome development.

WASHINGTON, DC – Is growing corporate debt a bubble waiting to burst? In the ten years since the global financial crisis, the debt held by nonfinancial corporations has grown by $29 trillion – almost as much as government debt – according to new research by the McKinsey Global Institute. A market correction is likely in store. Yet the growth of corporate debt is not as ominous as it first appears – and, indeed, in some ways even points to a positive economic outcome. Den Rest des Beitrags lesen »

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The Pension Train Has No Seat Belts

Posted by hkarner - 19. Juni 2018

June 15, 2018

Unlike actual trains, we as individuals don’t have the option of choosing a different economy. We’re stuck with the one we have, and it’s barreling forward in a decidedly unsafe manner, on tracks designed and built a century ago. Today, we’ll review yet another way this train will probably veer off the tracks as we discuss the numerous public pension defaults I think are coming.

Last week, I described the massive global debt problem. As you read on, remember promises are a kind of debt, too. Public worker pension plans are massive promises. They don’t always show up on the state and local balance sheets correctly (or directly!), but they have a similar effect. Governments worldwide promised to pay certain workers certain benefits at certain times. That is debt, for all practical purposes. Den Rest des Beitrags lesen »

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The Anatomy of Global Debt

Posted by hkarner - 17. Juni 2018

Howard Davies, the first chairman of the United Kingdom’s Financial Services Authority (1997-2003), is Chairman of the Royal Bank of Scotland. He was Director of the London School of Economics (2003-11) and served as Deputy Governor of the Bank of England and Director-General of the Confederation of British Industry.

The IMF’s new Global Debt Database is an impressive piece of work. And the numbers suggest that the so-called debt intensity of growth has increased: we seem to need higher levels of debt to support a given rate of economic than we did before.

LONDON – At the end of May, the International Monetary Fund launched its new Global Debt Database. For the first time, IMF statisticians have compiled a comprehensive set of calculations of both public and private debt, country by country, constructing a time series stretching back to the end of World War II. It is an impressive piece of work.

The headline figure is striking. Global debt has hit a new high of 225% of world GDP, exceeding the previous record of 213% in 2009. So, as the IMF points out, there has been no deleveraging at all at the global level since the 2007-2008 financial crisis. In some countries, the composition of debt changed, as public debt replaced private debt in the post-crisis recession, but that shift has now mostly stopped.

Are these large figures alarming? In aggregate terms, perhaps not. At a time when economic growth is robust almost everywhere, financial markets are relaxed about debt sustainability. Long-term interest rates remain remarkably low. But the numbers do tend to support the hypothesis that the so-called debt intensity of growth has increased: we seem to need higher levels of debt to support a given rate of economic growth than we did before. Den Rest des Beitrags lesen »

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Debt Clock Ticking

Posted by hkarner - 11. Juni 2018

June 8, 2018

—Benjamin Franklin

What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?

—Adam Smith

There are no shortcuts when it comes to getting out of debt.

—Dave Ramsey

Modern slaves are not in chains, they are in debt.

—Anonymous

Debt isn’t always a form of slavery, but those old sayings didn’t come from nowhere. You can find hundreds of quotes on the Internet discussing the problems of debt. Debt traps borrowers, lenders, and innocent bystanders, too. If debt were a drug, we would demand it be outlawed.

The advantage of debt is it lets you bring the future into the present, buying things you couldn’t afford if you had to pay full price now. This can be good or bad, depending on what you buy. Going into debt for education that will raise your income, or for factory equipment that will increase your output, can be positive. Debt for a tropical vacation, probably not.

And that’s our core economic problem. The entire world went into debt for the equivalent of tropical vacations and, having now enjoyed them, realizes it must pay the bill. The resources to do so do not yet exist. So, in the time-honored tradition of lenders everywhere, we extend and pretend. But with our ability to pretend almost gone, we’re heading to the Great Reset. Den Rest des Beitrags lesen »

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Der lange, heiße italienische Sommer

Posted by hkarner - 4. Juni 2018

Carmen M. Reinhart is Professor of the International Financial System at Harvard University’s Kennedy School of Government.

STOCKHOLM – Das politische Chaos und die sozialen Unruhen, die die aktuelle Krise in Italien antreiben, sollten niemanden überraschen. Im Gegenteil: Unklar war lediglich der genaue Zeitpunkt, an dem sich die Lage zuspitzen würde. Dies ist jetzt geschehen.

Das italienische Pro-Kopf-BIP liegt etwa 8% unterhalb des Niveaus von 2007, dem Jahr vor der weltweiten Finanzkrise, die die Große Rezession auslöste. Und die Vorhersagen des Internationalen Währungsfonds für 2023 lassen erwarten, dass sich Italien selbst dann noch nicht von den kumulierten Leistungseinbußen des letzten Jahrzehnts erholt haben wird.

Von den elf hoch entwickelten Volkswirtschaften, die von der schweren Finanzkrise der Jahre 2007-2009 betroffen waren, ist nur Griechenland in eine tiefere und langwierigere Depression gestürzt. Dabei waren Griechenland und Italien zu Beginn der Krise die beiden Länder mit der höchsten Schuldenlast (109% bzw. 102% des BIP) – und entsprechend schlecht dafür gerüstet, auf große Wirtschaftsschocks reagieren zu können. Seit dem Ausbruch der Krise vor zehn Jahren führten wirtschaftliche Stagnation und teure Bankprobleme dazu, dass die Schulden trotz der außergewöhnlich niedrigen Zinsen der letzten Zeit sogar noch stiegen. Den Rest des Beitrags lesen »

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The Italian Trigger

Posted by hkarner - 4. Juni 2018

June 1, 2018

This letter is chapter 4 in my Train Crash series. If you’re just joining us, here are links to help you catch up.

Briefly, my thesis is that over the next decade, we will endure increasingly damaging debt crises that culminate in a coordinated global default—“The Great Reset,” as I call it. There are limits in how much leverage the world can handle, and I think we are already beyond them. And that is before we have a global recession. The only question now is how we will manage the collapse.

I previously quoted former BIS Chief Economist William White on how this will all unfold. Here’s his key point again. Den Rest des Beitrags lesen »

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