Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Economist’

Some unlikely economies are poised to do well

Posted by hkarner - 12. November 2016

Date: 10-11-2016
Source: The Economist
Subject: The world economy: Coming up Trumps

THOUGH many outside America are dismayed at the prospect of Donald Trump as president, not everyone is despondent. When the news of Mr Trump’s victory reached the floor of the Duma, Russia’s lower house of parliament, the assembled politicians burst into applause. Such enthusiasm in Russia is in part a reflection of the bromance between Mr Trump and Vladimir Putin, Russia’s president. But it is also because Russia may be one of the few economies that might benefit from—or at least, be indifferent to—a Trump presidency.

It helps that Russia’s economy has endured a rough time recently and that some kind of rebound is probably due. Its GDP fell by 3.7% last year and will shrink again this year, according to the IMF. Russia has one of the cheapest currencies in The Economist’s Big Mac Index, which compares the relative cost of burgers across the globe. By this measure, the rouble is around 60% undervalued against the dollar. Inflation, which rose to over 16% in early 2015 after a big fall in the rouble, has fallen to around 6%. That has allowed Russia’s central bank gradually to reduce interest rates from a peak of 17% to 10%. Mr Trump’s victory raises the chances that economic sanctions imposed by the West, following Russian interference in Ukraine, will be lifted. That will give the economy an extra fillip. Den Rest des Beitrags lesen »

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Our election, your problem

Posted by hkarner - 11. November 2016

Date: 10-11-2016
Source: The Economist

A Trump presidency will be bad for the world economy and worse for places outside America

IT IS not clear precisely how Donald Trump will govern, the extent to which he will carry out some of his scarier promises on trade and immigration, and who will be his economics top brass at the Treasury and in the White House. But a decent first guess is that President Trump will be bad for the world economy in aggregate; and a second is that his actions are likely to do more harm, in the short term at least, to economies outside America.

When America has in the past stepped aside from its role at the centre of the global economic system, the damage has spread well beyond its borders. In 1971, when Richard Nixon ended the post-war system of fixed exchange-rates that had America at its centre, his Treasury secretary, John Connally, told European leaders, “The dollar is our currency, but your problem.” This election result, to paraphrase Connally, belongs to America but is potentially a bigger economic problem for everyone else.

The scale and nature of that problem depend on the interplay of the two main elements of Mr Trump’s economic populism. The first is action to boost aggregate demand. Mr Trump favours tax cuts and extra public spending on infrastructure. The second element is trade protectionism. He has pledged to slap tariffs on Chinese imports and to renegotiate the North American Free-Trade Agreement (NAFTA) with Mexico and Canada. To the extent that he leans more on the first element and less on the second, the immediate damage to America’s economy will be limited. But even in that event, the net effect of a Trump presidency on economies outside America is still likely to be harmful. Den Rest des Beitrags lesen »

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After Trump, Italy could be the next anti-establishment revolt

Posted by hkarner - 10. November 2016

Date: 10-11-2016
Source: The Economist

Soon eyes will turn to a new European vote that is poised to go against the elite

BEFORE American voters—especially white, male, rural and older ones—carried Donald Trump to victory in America’s presidential election, aggrieved British voters with a similar profile voted to leave the European Union. Equally surly voters in France have been flocking to Marine Le Pen of the far-right National Front for months; she is tipped to make the run-off in next year’s presidential election. Alternative for Germany, an anti-immigrant party, is picking up support ahead of a federal election in Germany, also in 2017. Large parts of electorates across the West are fed up with traditional political parties that have in recent years presided over rising inequality and slow economic growth.

Renzi ccThe next big test of the establishment, however, will come in Italy on December 4th. Matteo Renzi (pictured), the prime minister, has called a referendum asking voters to approve proposed changes to the constitution. The idea is to reform the Senate—making the lower chamber decisively more powerful than the upper one—and to bring back many decision-making powers from the regions to the central government. The effect, if he wins, would be to create a more powerful central government and to encourage those in favour of liberal economic reforms.

The bosses of Italy’s biggest companies and the heads of its business associations love the idea of the constitutional changes and back the referendum. A stronger central government would be expected to be pro-business and bring about further reforms, such as speeding up the civil judiciary, cutting bureaucracy and unleashing more competition into Italian markets so that productive capital can flow in. Mr Renzi’s referendum thus looks like a call for Italy to open up for more globalisation—just when a backlash against such ideas is in full swing. Den Rest des Beitrags lesen »

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Horrible Poland

Posted by hkarner - 4. November 2016

Date: 04-11-2016
Source: The Economist: Charlemagne
Subject: For our freedom and yours

Poland’s illiberal turn poses a wicked dilemma for the European Union

IF EUROPEAN history once seemed to have arrived at its terminus in 1989, it has sped off in a new direction in Poland. After winning the country’s first post-1989 outright majority in elections one year ago, the populist Law and Justice party (PiS) immediately set about undermining independent checks on its power, from the constitutional court to public media. Such antics would disqualify an aspirant from membership of the European Union, but it is harder to punish miscreants once they are inside. Surrounded by problems outside its borders, from Russia to Turkey to Libya, the EU now confronts a particularly chewy one within.

Outsiders sometimes lump Poland’s government in with the other populists making the running in much of western Europe. But while it shares their hostility to outsiders and taste for economic statism, PiS is a very Polish phenomenon. Its chairman, Jaroslaw Kaczynski, who runs the country from the party’s headquarters (the prime minister, Beata Szydlo, is a cipher who does her leader’s bidding), is fixed on completing what he considers an unfinished revolution. Mr Kaczynski believes the Polish state was captured by a cosy, treacherous elite after 1989, with the connivance of the EU. His aim is to overturn and replace it. Den Rest des Beitrags lesen »

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Rebooting: Both revered and reviled, Goldman Sachs struggles to stay relevant

Posted by hkarner - 31. Oktober 2016

Date: 30-10-2016
Source: The Economist

JUST outside Stanford University’s campus sits the headquarters of Symphony, one of the myriad tech companies that sprout like weeds in Silicon Valley. After a lunch break exercising in a nearby park, a dozen fit-looking employees, still in workout clothes, help themselves from buckets of fruit, energy bars and the food of the day (Indian), before plopping themselves in front of monitors in an airy room bathed in natural light. For the sought-after engineers making up most of the company’s 200-strong workforce, this sort of environment is the norm. Work is supposed to be healthy and relaxed—a far cry from the terrors of a New York bank with its incessant pressure to sell and complex internal politics, not to mention often unappetising, pricey food.

Across the continent, in a newly opened tower within the World Trade Centre, Kensho, a three-year-old company, has a similar feel. Like Symphony but a bit smaller, it is stuffed with talented engineers. In a New York approximation of the West Coast, it boasts “vertical gardens”—rectangular patches of vegetation like framed paintings—and a pool table. Den Rest des Beitrags lesen »

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Brexit and the City: From Big Bang to Brexit

Posted by hkarner - 31. Oktober 2016

Date: 30-10-2016
Source: The Economist

The financial-services industry considers its future outside the European Union

THE City of London is fretting about Brexit, especially about talk of a “hard Brexit” that takes Britain out of the European Union’s single market. That raises doubts about the future of passporting, which allows financial-services providers to trade across the EU without separate regulatory or capital requirements. Another concern is that the government’s plan to start the formal process for Brexit by the end of March will mean that Britain may be out of the EU as early as 2019, yet banks must plan two or three years ahead. Hence the latest warning from Anthony Browne, chief executive of the British Bankers’ Association, that banks may start shifting jobs to Europe early next year.

It is a nice irony that such jumpiness should coincide with this week’s 30th anniversary of Big Bang, the deregulatory step that largely created today’s City (hugely helped by the expansion of Canary Wharf). Before Big Bang, says one financier, the City was backward and parochial, and there were real fears that it might lose out not just to New York but to continental Europe. It was Big Bang that underpinned London’s dominance of European finance. And it is Brexit that may now challenge it. Den Rest des Beitrags lesen »

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Inequality in the euro zone

Posted by hkarner - 29. Oktober 2016

Date: 27-10-2016
Source: The Economist

The gap between poor and rich regions in Europe is widening

Austerity is partly to blame

inequality-euTHE beautiful but rubbish-strewn streets of Catania, Sicily’s second-biggest city, are a world away from swanky Trento, in the country’s richer north. About a quarter of Sicilians are “severely materially deprived”—meaning that they cannot afford things like a car, or to heat their home sufficiently—compared with just 5% in Trento. Italy is not unique. In many places, the divide within countries appears to be getting worse.

According to an analysis by The Economist, the gap between richer and poorer regions of euro-zone countries has increased since the financial crisis. Our measure of regional inequality looks at the average income per head of a country’s poorest region, expressed as a percentage of the income of that country’s richest part. The weighted average for 12 countries shows that regional inequality was declining in the years leading up to the financial crisis of 2007-08, but has increased since then (see chart).

The poorest area in Slovakia, the euro zone’s most geographically unequal economy, now has an income per person of just 28% of the richest, a slight fall from before the crisis. In Calabria, Italy’s poorest region, income per person as a share of the country’s best-off part, the province of Bolzano, was 45% in 2007 but is only 40% now. Elsewhere poor regions of the euro zone have seen income falling in both relative and absolute terms.

An exception is Germany: in its once-communist east, excluding Berlin, GDP per person reached 67% of that in former West Germany last year. (Most of the catch-up took place in the early 1990s, but continues more slowly.) Den Rest des Beitrags lesen »

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Europe’s single currency: France v Germany

Posted by hkarner - 29. Oktober 2016

Date: 27-10-2016
Source: The Economist

The founders of the euro have fundamentally different ideas about how the single currency should be managed

euro-bookThe Euro and the Battle of Ideas. By Markus Brunnermeier, Harold James and Jean-Pierre Landau. Princeton University Press; 440 pages; $35 and £24.95.

THE euro crisis that first blew up in late 2009 has revealed deep flaws in the single currency’s design. Yet in part because it began with the bail-out of Greece, many politicians, especially German ones, think the main culprits were not these design flaws but fiscal profligacy and excessive public debt. That meant the only cure was fiscal austerity. In fact, that has often needlessly prolonged the pain. Later bail-outs of countries like Ireland and Spain showed that excessive private debt, property bubbles and over-exuberant banks can cause even bigger problems for financial stability.

That is one early conclusion of “The Euro and the Battle of Ideas”, by three academics from Germany, Britain and France. They describe thoroughly the watershed moments of the crisis, how power shifted to national governments (especially in Berlin) and the roles played by the IMF and the European Central Bank (ECB). They blame euro-zone governments for failing to sort out troubled banks more quickly, for not realising that current-account deficits matter when public debts are in effect denominated in a foreign currency, for not making the ECB into a lender of last resort and for not pushing through structural reforms in good times. Den Rest des Beitrags lesen »

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African economies are growing at very different speeds

Posted by hkarner - 26. Oktober 2016

Date: 26-10-2016
Source: The Economist

New numbers from the IMF tell a tale of two Africas

HOW are sub-Saharan African economies doing? It depends on where you look, says the IMF in its latest survey of the continent, which is published today. Regional growth will slow to just 1.4% this year, the most sluggish pace for two decades.

Things look grim in Nigeria, which is mired in recession. But Ivory Coast, a short flight away, is thundering along at a growth rate of 8%. Similar contrasts are found across the continent. Better to talk of two Africas, says the IMF, moving at different speeds.

growth-african-statesThe big divider is resources. As commodity prices have slumped, so too have the fortunes of big exporters. As a group, resource-rich countries will grow on average by 0.3% of GDP, says the IMF. Take oil-rich Angola, once the fastest-growing country on the continent: it will not grow at all this year, and is wrestling with inflation of 38%. Commodity-exporting countries saw the value of their exports to China almost halve in 2015. Public debt is rising sharply. Exchange rates are falling. Private consumption has collapsed.

Things look very different in countries which are less resource-dependent. They will grow at 5.5% this year. They have been helped, of course, by falling oil prices, which makes their imports cheaper. But they are stronger in other ways too. In east Africa, for example, a wave of public investment in infrastructure has boosted demand.

Governments cannot set commodity prices. Nor can they stop drought, which has hit agriculture in countries such as Ethiopia and Malawi. But their decisions do make a difference. Nigeria’s disastrous attempt to prop up its exchange rate hurt far more than it helped. Investors in Mozambique were unimpressed when the country revealed hidden debts in April. Growth in South Africa has slowed to almost zero amid political wrangles and an energy crisis. Now is the time to get the policies right, urges the IMF.
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Private Equity: The barbarian establishment

Posted by hkarner - 25. Oktober 2016

Date: 24-10-2016
Source: The Economist

Private equity has prospered while almost every other approach to business has stumbled. That is both good and disturbing

THIS year Henry Kravis and George Roberts, the second “K” and the “R” of KKR, celebrated their 72nd and 73rd birthdays, respectively. Steve Schwarzman, their equivalent at Blackstone, turned 69; his number two, Hamilton James, 65. In the past few months David Rubenstein, William Conway and Daniel D’Aniello, the trio behind and atop Carlyle, turned 67, 67 and 70. Leon Black, founder and head of Apollo, is just 65.

These men run the world’s four largest private-equity firms. Billionaires all, they are at or well past the age when chief executives of public companies move on, either by choice or force. Apple, founded the same year as KKR (1976), has had seven bosses; Microsoft, founded the year before, has had three. On average, public companies replace their leaders once or twice a decade. In finance executives begin bowing out in their 40s, flush with wealth and drained by stress. Den Rest des Beitrags lesen »

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