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Posts Tagged ‘Economist’

Why Greece is in trouble (again)

Posted by hkarner - 8. Juni 2015

Date: 08-06-2015
Source: The Economist

Why is the euro zone still arguing about Greece?

Greece cannot pay its own bills and debts, and is locked out of capital markets. It therefore needs financial support from “official” lenders: the euro zone and the IMF. But before coughing up bail-out funds, these creditors demand reforms and budget cuts to place the Greek economy on a sounder long-term footing. Some of these conditions have proved very difficult for successive Greek governments to meet.

This has been the choreography ever since the first Greek bail-out five years ago. But in January, brutalised by an economic depression that saw output drop by one quarter of GDP, Greece’s voters elected a government led by the radical left-wing party Syriza. Armed with a mandate to tear up the hated “memorandum” (the creditor-imposed conditions for assistance), the government, led by Alexis Tsipras, set about trying to change the terms of Greece’s second bail-out, which has €7.2 billion remaining in the kitty. But Greece’s creditors, including the other euro-zone governments, held firm. In February the two sides agreed to extend the bail-out by four months, until June 30th. But very little progress has been made since then. Den Rest des Beitrags lesen »

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Economic and social justice: Mind the gap

Posted by hkarner - 6. Juni 2015

Date: 05-06-2015
Source: The Economist

Anthony Atkinson, the godfather of inequality research, on a growing problem
Inequality: What Can Be Done? By Anthony Atkinson. Harvard University Press; 384 pages; $29.95 and £19.95.

CONTEMPORARY books on inequality are divided into those published “BC”, or before “Capital in the Twenty-First Century” by Thomas Piketty, or “AP”, for after Piketty. The 44-year-old French economic historian’s study of rising wealth and income inequality, which first came out in French in August 2013, caused a storm when it was published in English seven months later and became an international bestseller. The book did an excellent job of focusing people’s minds on the subject. It also set the lines of empirical battle and even offered a possible remedy: a global tax on wealth. If Mr Piketty whetted the public’s appetite for discussions of inequality, he also made it far more difficult for subsequent authors to say something new and original about it. Den Rest des Beitrags lesen »

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African energy: The leapfrog continent

Posted by hkarner - 5. Juni 2015

Date: 05-06-2015
Source: The Economist

The falling cost of renewable energy may allow Africa to bypass the carbon-intensive sort—up to a point

BRIGHTLY POLISHED mirrors flash light across the dusty khaki scrubland of South Africa’s inhospitable Northern Cape province as they rotate slowly to follow the sun, producing electricity for 80,000 homes. The inauguration in March of this concentrated solar power (CSP) plant costing 7.8 billion rand ($640m) is but the crest of a wave of renewable energy projects sweeping across Africa.

Projects such as these cannot come quickly enough for a continent starved of energy. In South Africa, where four more CSP plants are already being set up, the economy has staggered to a crawl in the first quarter of 2015 because of crippling power shortages. Across sub-Saharan Africa shortages of electricity are holding back economic growth by as much as 4% a year, reckons the World Bank. Businesses are forced to buy generators, paying 50 cents or more per kilowatt-hour, which is many times the cost of grid power. Den Rest des Beitrags lesen »

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European business and climate change: Walking the walk

Posted by hkarner - 5. Juni 2015

Date: 04-06-2015
Source: The Economist

Firms increasingly believe that saving the planet is good for business

SIX big European oil and gas firms called on June 1st for a globally co-ordinated price on carbon-dioxide emissions, to restrain the impact on the climate of burning fossil fuels. It was a bombshell, in its way. Five years ago no one would have expected the move: as producers of much of the world’s dirty fuels, their industry was disinclined to join forces and advocate accelerating the switch to cleaner ones. “It is a sort of revolution,” says Patrick Pouyanné, the boss of one of the six, Total. And it is not just the energy firms. As world leaders prepare to meet in Paris in December to produce an agreement on reducing greenhouse-gas emissions, attitudes towards climate change have altered profoundly among businesses of all kinds. Den Rest des Beitrags lesen »

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The IMF changes its tune on China’s currency

Posted by hkarner - 1. Juni 2015

Date: 31-05-2015
Source: The Economist
Subject: The yuan: Feeling valuedyuan $
THERE was a time when virtually all the ills of the world economy were blamed on the yuan. Critics charged that China’s intervention to suppress its currency had led to anaemic imports from Europe and America, to a savings glut that flooded America with cheap credit and even to the global financial crisis, since the cheap credit enabled irresponsible lending. The allegations were exaggerations. But it was evident that China had held its exchange rate down, boosting its companies at the expense of others. So it was a notable shift when the International Monetary Fund declared this week that the yuan was “no longer undervalued”. Den Rest des Beitrags lesen »

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South Africa’s economy: Dark days ahead

Posted by hkarner - 29. Mai 2015

Date: 28-05-2015
Source: The Economist

Africa’s second-largest economy is in a huge mess

S.A. EconomyTHERE is little in the way of bright news about South Africa’s economy—and not just because power cuts are plunging neighbourhoods into darkness several times a week. According to figures released on May 26th, annual GDP grew by a mere 1.3% in the first three months of this year, a crawl compared with the 4.1% achieved in the fourth quarter of 2014. Unemployment is soaring. Even using a narrow definition, it stands at 26.4%, the highest since 2003.

“The numbers are saying ‘something has to be done, and done quickly’,” says Pali Lehohla, South Africa’s statistician-general. But where to begin? Power shortages under Eskom, the failing state utility, have dampened manufacturing, drought has hit agriculture and tourism, a rare boon, has been hampered by much-criticised new visa requirements. Rating agencies have warned that South Africa is dancing dangerously close to junk status, though no immediate downgrade is likely.

Joblessness is particularly worrying. The expanded rate, which includes “discouraged” workers who have simply given up trying to find a job, rose to 36.1% in the first quarter of 2015. Cees Bruggemans, an economist, says South Africans are doomed to “a life of discouragement”. Den Rest des Beitrags lesen »

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Basically unaffordable

Posted by hkarner - 25. Mai 2015

Date: 24-05-2015
Source: The Economist: Free exchange

Replacing welfare payments with a “basic income” for all is alluring, but expensive

WITH cash-strapped governments around the world looking for ways to cut welfare bills and reduce deficits, it might seem an odd time to consider a generous new universal benefit. Yet the basic income—a guaranteed government payment to all citizens, whatever their private wealth—is creeping onto the policy agenda. The Swiss will soon vote on a proposal for a basic income of 2,500 francs ($2,700) per month, following the success of a national petition. Amid turmoil in Greece, Yanis Varoufakis, its finance minister, has hinted that he is a fan. Britain’s Green Party has adopted a version of the policy. Turning it into a substitute for all welfare payments would be prohibitively expensive. But it might work as one element of the safety net.

The idea has a long intellectual heritage. In 1797 Thomas Paine, one of America’s founders, penned a pamphlet arguing that every person is entitled to share in the returns on the common property of humanity: the earth’s land and natural resources (today, you might include radio spectrum or the profits of central banks). Den Rest des Beitrags lesen »

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Investors are caught between weak growth and central-bank policy

Posted by hkarner - 25. Mai 2015

Date: 24-05-2015
Source: The Economist: Buttonwood
Subject: Reversal of fortune

German Bond yieldFOR a while, it seemed that two market trends were inexorable. The euro was falling towards parity with the dollar and yields on German ten-year government bonds were on their way to zero. Both reversed in April (see chart).

The shift was so dramatic that it seems likely investors were caught napping. Dhaval Joshi of BCA, a research group, says that the European Central Bank’s bond-buying created a degree of “groupthink” among investors, with everyone convinced that yields were headed lower. When the trend changed, there was a stampede for the exits.

In the currency markets, investors were bullish on the dollar at the start of the year in the belief that the American economy was strengthening and that the Federal Reserve would push up interest rates, perhaps as soon as June. But the economic data have been disappointing: revisions may show that GDP declined in the first quarter and the Atlanta Fed’s GDPNow model suggests the second quarter is only on target for annualised growth of 0.7%. Meanwhile, economic data in the euro zone were generally better than expected—hence a pattern of selling the dollar and buying euros. Den Rest des Beitrags lesen »

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Modi’s rule: India’s one-man band

Posted by hkarner - 22. Mai 2015

Date: 21-05-2015
Source: The Economist

The country has a golden opportunity to transform itself. Narendra Modi risks missing it

A YEAR ago Narendra Modi came to office promising to bring India “good times”, by which he meant jobs, prosperity and international renown. His progress has been frustratingly slow. The problem is hardly a lack of opportunity. Voters gave his Bharatiya Janata Party (BJP) the biggest parliamentary mandate for change in 30 years. Mr Modi has concentrated more power in his own hands than any prime minister in recent memory. The problem is that India needs a transformation—and the task is too much for a one-man band.

There is no doubting Mr Modi’s conviction that India is about to achieve greatness, and he may well be right. Within a generation, it will become the planet’s most populous nation. It could be one of the world’s three largest economies. And it could wield more influence in international relations than at any time in its history. But, in his heart, the prime minister believes that only one man is destined to lead India down this path: Narendra Damodardas Modi. Den Rest des Beitrags lesen »

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Running out of steam: the American economy

Posted by hkarner - 20. Mai 2015

Date: 20-05-2015
Source: The Economist

US BoomLess than a year ago economists described America as the “lonely locomotive” of the world economy. How times change. The initial estimate of first-quarter GDP growth was just 0.2%, at an annualised rate—and it is likely to be revised downwards. Confounding wonks’ predictions, cheap oil seems to have delivered no boost: retail sales have stalled in recent months. Some states, such as Texas, may be entering recession. All this suggests that the minutes of the April meeting of the Federal Reserve’s monetary-policy committee, released today, will be doveish. A couple of months back, investors were expecting the Fed to raise interest rates in June from their current rock-bottom levels. Most economists now think that an increase in September is most likely. For the time being, America needs all the monetary support it can get.

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