Posted by hkarner - 7. Mai 2016
Source: The Economist
Subject: Emerging markets: The unloved bounce
IT IS not easy to have faith in the rally in emerging-market currencies that has taken place since February. The ones that have risen most in recent weeks are typically those—the rouble, the real and the rand—that had lost most ground since May 2013, when the emerging-market sell-off began in earnest (see chart 1).
What is there to like about Russia, Brazil and South Africa, with their wilting economies and dysfunctional politics?
The proximate causes of the rally are clear. One was the fading of fears for China’s economy. At the start of 2016 capital appeared to be fleeing China at a rapid rate, in a vote of no confidence. The yuan seemed in danger of losing its moorings against the dollar, raising fears of a round of competitive devaluations across Asia and beyond. Views changed around the time of the meeting of the G20, a club of big economies, in Shanghai in February. Informal pledges by the Chinese authorities not to let the economy slide were backed up by stimulus policies, including a big budget deficit and faster credit growth. Tighter capital controls stemmed the outflows from China. Prices of scorned commodities, such as iron ore, surged at the prospect of Chinese construction. Currencies of raw-material exporters rose too.
A second trigger was a change of heart by the Federal Reserve. In December it raised its main interest rate for the first time in a decade and suggested four further increases were likely in 2016. It has since backed away from these hawkish forecasts. Real interest rates, measured by the yield on inflation-proof bonds, have fallen to 0.14%. The dollar has slumped against even rich-world currencies. No wonder the high yields on offer in Brazil, Russia and other emerging markets are so tempting to rich-world investors, says Kit Juckes of Société Générale, a French bank.
The improved conditions for emerging markets may prevail for a while, but not indefinitely. China’s policy of loose credit only adds to its alarming debt pile. The Fed will eventually resume tightening. Even so, there is a bit more to the emerging-market rally than just a favourable backdrop.
To understand why, go back to May 2013, the start of the “taper tantrum”, when hints from the Fed that its bond-buying would soon tail off prompted a stampede out of emerging markets. Before the Fed’s shift their trade deficits had been growing, leaving them more reliant on foreign borrowing to fill the gap. So when the exodus got going, the hardest hit were economies that depended most on foreign capital. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Brazil, china, currency, Economist, Emerging Markets, Fed, Russia, South Africa | Leave a Comment »
Posted by hkarner - 6. Mai 2016
Source: The Economist
It is a question of when, not if, real trouble will hit in China
CHINA was right to turn on the credit taps to prop up growth after the global financial crisis. It was wrong not to turn them off again. The country’s debt has increased just as quickly over the past two years as in the two years after the 2008 crunch. Its debt-to-GDP ratio has soared from 150% to nearly 260% over a decade, the kind of surge that is usually followed by a financial bust or an abrupt slowdown.
China will not be an exception to that rule. Problem loans have doubled in two years and, officially, are already 5.5% of banks’ total lending. The reality is grimmer. Roughly two-fifths of new debt is swallowed by interest on existing loans; in 2014, 16% of the 1,000 biggest Chinese firms owed more in interest than they earned before tax. China requires more and more credit to generate less and less growth: it now takes nearly four yuan of new borrowing to generate one yuan of additional GDP, up from just over one yuan of credit before the financial crisis. With the government’s connivance, debt levels can probably keep climbing for a while, perhaps even for a few more years. But not for ever. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: china, Debt, Economist, Finanzkrise, NPL | Leave a Comment »
Posted by hkarner - 6. Mai 2016
Source: The Economist
Brinkmanship over emergency loans resumes again
THE tagline of the film “My Big Fat Greek Wedding 2”, which was released in March, is “People change. Greeks don’t.” Whether any euro-zone finance ministers have seen the film, let alone detected any resemblance to their ongoing talks with the Greek government over its third bail-out, is unknown. But the renewed bickering about whether Greece is keeping to its end of the bargain, complete with threats of a snap election if its creditors don’t give more ground, has the air of a duff sequel.
Greece badly needs the next dollop of the €86 billion ($99 billion) bail-out creditors promised it last summer, in exchange for promises of austerity and reform. But it will not get the money until the creditors complete a review of its progress, which has been dragging on since November. The government has scraped together enough cash (by raiding independent public agencies) to pay salaries and pensions in May, perhaps even in June. But by July 20th, when a bond worth more than €2 billion matures, the country once again faces default and perhaps a forced exit from the euro zone. The threat of Grexit is not exactly back; it never really went away.
With a referendum on Britain’s EU membership in June and a possible flare-up of the refugee crisis as summer approaches, the last thing Europe needs is another Greek drama. The European Commission is thus in a mood for compromise. It emphasises that negotiations are “99%’’ complete. But the other creditor, the IMF, is less forgiving. With tax arrears in Greece rising and reforms constantly delayed, the fund has little faith that the programme’s target of a 3.5% primary budget surplus by 2018 can be achieved. It wants Greece to make a contingency plan to raise more money or cut spending further before it approves the next instalment of the bail-out. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Economist, Euro, Finanzkrise, Greece, IMF | Leave a Comment »
Posted by hkarner - 30. April 2016
Source: The Economist
Subject: Northern Europe’s angry savers: Mario battles the Wutsparer
THIS week millions of people in the Netherlands celebrated the national holiday by getting up at dawn, staking out a patch of pavement and selling off their junk. The traditional King’s Day flea market gives the Dutch a chance to indulge in their favourite pastime: bargain-hunting. Their eastern neighbours are just as frugal. “Germans love saving. They think there’s something morally inferior about people who borrow,” says Reint Gropp, a German economist. In both Dutch and German, the word for debt also means “guilt”.
Their taste for saving and aversion to borrowing helps to explain why both countries’ citizens have lots of money in their saving accounts. This seemed to serve them well when interest rates were high. But in recent years, as rates hovered near zero, Europe’s best savers grew angry that their thrift was not rewarded. Now they have found a scapegoat: the European Central Bank and its suspiciously Italian chairman, Mario Draghi. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Debt, Draghi, ECB, Economist, Fratzscher, Germany, Saving, Sinn | Leave a Comment »
Posted by hkarner - 30. April 2016
Source: The Economist
Gross domestic product (GDP) is increasingly a poor measure of prosperity. It is not even a reliable gauge of production
ONE of Albert Einstein’s greatest insights was that no matter how, where, when or by whom it is measured, the speed of light in a vacuum is constant. Measurements of light’s price, though, are a different matter: they can tell completely different stories depending on when and how they are made.
In the mid 1990s William Nordhaus, an economist at Yale University, looked at two ways of measuring the price of light over the past two centuries. You could do it the way someone calculating GDP would do: by adding up the change over time in the prices of the things people bought to make light. On this basis, he reckoned, the price of light rose by a factor of between three and five between 1800 and 1992. But each innovation in lighting, from candles to tungsten light bulbs, was far more efficient than the last. If you measured the price of light in the way a cost-conscious physicist might, in cents per lumen-hour, it plummeted more than a hundredfold.
Mr Nordhaus intended this example to illuminate a general point about how flawed economists’ attempts to measure changes in living standards are. Any true reckoning of real incomes must somehow account for the vast changes in the quality of things we consume, he wrote. In the case of light, a measurement of inflation based on the cost of things that generated light and one based on a quality-adjusted measure of light itself would have differed by 3.6% a year. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Economist, Economy, GDP, Technology | Leave a Comment »
Posted by hkarner - 22. April 2016
Source: The Economist: Free exchange
To get out of a slump, the world’s central banks consider handing out cash
“HELICOPTER money” sounds like an item on an expense claim at a hedge fund. In fact, it is shorthand for a daring approach to monetary policy: printing money to fund government spending or to give people cash. Some central bankers seem to be preparing their whirlybirds (and their printing presses). In March Mario Draghi, the president of the European Central Bank, described helicopter money as a “very interesting concept”. Ardent supporters see it as a foolproof way to perk up slumping economies. Yet helicopter money is a less radical departure from the norm than it sounds. What is more, it fails to remove the political constraints that have been the biggest drag on recovery.
The evocative concept of helicopter money comes from Milton Friedman, the father of monetarism, who mused in 1969 that central bankers could never fail to boost the money supply since they could always drop newly printed bills from the sky onto the cash-starved economy below. The idea cropped up again in the early 2000s, as economists puzzled over how to spring the Japanese economy from its deflationary trap. Ben Bernanke, at the time a new governor at the Federal Reserve, made reference to Friedman’s conceit in speeches about dispelling deflation, earning himself the nickname “Helicopter Ben”. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Bernanke, Central Banks, Deflation, Economist, Friedman, Growth, Helicopter Money | Leave a Comment »
Posted by hkarner - 13. April 2016
Vernünftig, bis auf den letzten Absatz! (hfk)
Kommentar der anderen 11. April 2016, 21:33
Die Schulbuch-Debatte offenbart die Versäumnisse der Wirtschaftswissenschaften
Eine Gruppe universitärer Ökonomen will den Attac-Aktivisten Felber aus einem Lehrbuch für Gymnasien entfernen. Einerseits ein Sturm im Wasserglas. Andererseits Anlass für ein paar historische Reminiszenzen. Betrachtet man die Geschichte der letzten zweihundert Jahre, so zeigt sich, dass alle wichtigen kulturellen und intellektuellen Anstöße nicht aus der Universität gekommen sind. Darwin, Marx und Freud haben das Selbstverständnis unserer Gesellschaften nachhaltig geprägt, und alle waren außerhalb der Universität aktiv. Und auch Kant wäre nach heutigen Kriterien über die Stelle eines Assistenzprofessors nicht hinausgekommen, da er – mangels Publikationstätigkeit – nicht als hoffnungsvolle Nachwuchskraft gegolten hätte.
Es geht nicht darum, Herrn Felber in die Kategorie dieser Geistesheroen einzuordnen. Es geht auch eine Nummer kleiner. Universitäten sind strukturell konservative Einrichtungen, auch wenn die derzeitige Rhetorik Innovation als neues Schlagwort propagiert. Die Aufgabe der Universität ist die kumulative Entwicklung der sogenannten Normal Science – in Forschung und Lehre. Gesichertes Wissen soll verwaltet und an die nachfolgende Generation vermittelt werden. Neues kann nur in sehr kleinen Schritten und nur mit gehöriger Zeitverzögerung verarbeitet und in den Kanon aufgenommen werden. Epochale Durchbrüche in den verschiedenen Disziplinen werden selten an Universitäten erzielt. Den Rest des Beitrags lesen »
Posted in weitere Artikel | Verschlagwortet mit: Economist, Felber, Kreissl, Standard | Leave a Comment »
Posted by hkarner - 11. April 2016
11.04.2016 | 18:15 | Josef Urschitz (Die Presse)
Theorien aus früheren Jahrhunderten passen nicht zur aktuellen Krise.
Dass der österreichische Attac-Mitbegründer Christian Felber in einem Wirtschaftskundeschulbuch in einer Reihe mit den Wirtschaftstheoretikern Marx, von Hayek, Keynes und Friedman (Letzterer noch dazu falsch geschrieben) genannt und der Schrott auch noch vom Ministerium approbiert wird, zeigt, wie weit oben im System die Bildungsmisere schon angekommen ist.
Das ist aber heute nicht der Punkt. Dieser ist viel mehr: Wen setzen wir an die Stelle von Felber, wenn das Schulbuch, wie angekündigt, korrigiert wird? Uni-Professoren haben unter anderem die Nobelpreisträger Stiglitz und Krugman sowie den Bestsellerökonomen Piketty vorgeschlagen.
Wirklich schlüssig ist das nicht. Die drei genannten sind großartige Wissenschaftler, aber Stiglitz und Krugman sind keynesianisch angehaucht, Piketty kommt ziemlich neoklassisch daher. Die Genannten haben großartige theoretische Werke in Teilbereichen abgeliefert. Aber die umfassende, revolutionierende ökonomische Weltsicht der Herren Marx, Keynes und von Hayek ist schon eine andere Liga. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Economist, Felber, Presse, Urschitz | Leave a Comment »
Posted by hkarner - 4. April 2016
Source: The Economist
THE fallout from a huge leak of financial documents, dubbed “The Panama Papers”, looks set to grow, with more revelations expected in the coming week. A group of journalists from 78 countries has begun publishing stories exposing the hidden wealth of national leaders, state officials, celebrities and others, based on emails and other documents from the database of a Panamanian law firm, Mossack Fonseca. These contain details of secretive offshore structures used by Mossack’s clients. The British Virgin Islands is the most popular domicile for their anonymous shell companies (firms which exist on paper only, with no real employees or offices), with Panama in second place.
The activities these anonymous firms are used for appear to range from the perfectly legitimate, to tax evasion, to the deeply dodgy, including the looting of public wealth. (Mossack says it has never been charged with wrongdoing and conducts thorough due diligence.) Around 140 political figures, among them Russia’s president, Vladimir Putin, and his Chinese counterpart, Xi Jinping, are alleged to have links to the holders of the offshore accounts through family members or associates. Iceland’s prime minister is under pressure to resign: the files show that he transferred shares in an offshore company to his wife for a token sum. Several countries, including Sweden and Australia, have already opened investigations.
The papers suggest that the number of active offshore entities on Mossack’s books exploded between 1990 and 2008, but has since fallen back a bit. The decrease is likely due to the global financial crisis and the resulting increase in regulatory scrutiny.
Posted in Artikel | Verschlagwortet mit: Economist, Panama Papers, Tax Evasion | Leave a Comment »
Posted by hkarner - 2. April 2016
Source: The Economist: Schumpeter
IN 1998 Peter Mandelson, a leading member of Britain’s then Labour government, said he was “intensely relaxed about people getting filthy rich as long as they pay their taxes.” Today Lord Mandelson is more uptight; he worries about the rising inequality and stagnating middle-class incomes brought about by globalisation. His volte-face is typical of the global elite. The head of the IMF, Christine Lagarde, says that rising inequality casts a “dark shadow” over the global economy. A recent OECD report warns that rising inequality will be a “major policy challenge” for all countries.
In a new study, “Rich People, Poor Countries: The Rise of Emerging-Market Tycoons and their Mega Firms”, Caroline Freund of the Peterson Institute in Washington, DC, makes an important contribution to understanding this challenge. She draws a distinction between rich-world billionaires and those of the emerging economies, whose numbers have been rising at a faster rate. In 2004 the emerging world accounted for 20% of the 587 billionaires in Forbes magazine’s annual survey. By 2014 it accounted for 43% of the 1,645 billionaires on the list. In the rich world the share who were self-made, rather than heirs to a fortune, was fairly stable between 2001 and 2014, at about 60%. In the emerging world the self-made proportion rose from 56% to 79%. Den Rest des Beitrags lesen »
Posted in Artikel | Verschlagwortet mit: Economist, Emerging Markets, Freund, Globalization, IMF, Peterson | Leave a Comment »