Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Euro’

Can Eurozone Reform Help Contain Trump?

Posted by hkarner - 15. Oktober 2018

Jochen Andritzky

Jochen Andritzky, a former Secretary-General of the German Council of Economic Experts, is a visiting fellow at Bruegel, a Brussels-based think tank.

The Trump administration knows that a key source of US economic leverage is the dollar’s role as the world’s dominant reserve currency. Countering America’s disproportionate power to destabilize the global economy thus requires reducing the share of international trade conducted in dollars.

BRUSSELS – US President Donald Trump is using economic warfare to pursue his foreign-policy objectives. In August, his administration announced that it would double tariffs on steel and aluminum imports from Turkey, in order to pressure the Turkish authorities to release an American pastor detained for two years on espionage charges. At the beginning of next month, the United States will also ratchet up unilateral sanctions against Iran.

The Trump administration knows that a key source of US economic leverage is the dollar’s role as the world’s dominant reserve currency. Countering America’s disproportionate power to destabilize the global economy thus requires reducing the share of international trade conducted in dollars. Can the euro serve as a credible alternative? Den Rest des Beitrags lesen »

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Italy Issues a Euro Dare to Germany

Posted by hkarner - 13. Oktober 2018

Date: 12-10-2018
Source: The Wall Street Journal

Rome would be foolish to leave the currency, but it could accidentally goad Berlin to push it out.

Italian Minister of Economy and Finance Giovanni Tria

There Italy goes, threatening to blow up the euro again. The uproar over the budget proposal put forward by the new left-right insurgent government has reignited fears that the eurozone’s third-largest economy is on the path to fiscal ruin and will drag the rest of the currency bloc down with it. It could happen, although not in the way or for the reason you may think.

The numbers look bad. The coalition of the right-wing League and sort-of-left-wing 5 Star Movement is proposing to overspend revenues by 2.4% of gross domestic product for the next few years—and that’s if GDP growth meets their rosy assumptions. This is a crisis, we’re led to believe, compared with the 1.6% of GDP deficit Brussels might otherwise have accepted from technocratic Economy Minister Giovanni Tria.

If a 0.8-point difference in budget projections sounds to you like a flimsy reed on which to hang a currency crisis, you’re not alone. The strongest case for the degree of upset this budget is causing is that it’s clear Rome’s new leaders have no plan for paying down a national debt equal to 130% of GDP. Italy is probably too big to be saved by other eurozone countries—and were it to renege on its debts, it could well bring down a smattering of French and German banks with it. Den Rest des Beitrags lesen »

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The Achilles’ Heel for Italy’s Populists: Weak Banks

Posted by hkarner - 7. Oktober 2018

Date: 05-10-2018
Source: The Wall Street Journal

New government’s plans for higher deficit unsettle investors as much as they do Italy’s European partners

ROME—As Italy’s populist government approaches a showdown with the European Union over its budget, financial-market tremors are hurting the country’s banking system and threatening the economic growth Rome wants to stimulate.

Italian bank shares and bonds have suffered sharp selloffs in the past week as Italy’s government stumbled toward a budget that looks set to break EU rules on fiscal discipline. Rome’s new, EU-skeptic governing coalition between the antiestablishment 5 Star Movement and the nativist League has said it aims for a budget deficit of 2.4% of gross domestic product next year, three times what the previous, pro-EU government planned.

Rome’s optimistic forecasts for growth and tax revenues are expected to draw tough scrutiny from EU authorities, who fear the true deficit could end up dangerously high for a country with an already worrisome national debt. The 5 Star and League’s fiery rhetoric against EU officials have further spooked foreign investors, who fear the European Central Bank—the ultimate guarantor of bond-market stability in the eurozone—is unlikely to support a government that defies the bloc’s economic orthodoxy.

Despite some stabilization in markets since Wednesday, after the government promised slightly smaller deficits in the medium term, Italian bonds and banks remain under heavy pressure.

“It is almost killing the recovery of the banking sector. And this will be a shock for the economy,” said Nicola Nobile, a Milan-based economist for forecasting company Oxford Economics. The danger, he said, is a return of the credit crunch that choked off Italy’s recovery after the eurozone crisis earlier this decade. Den Rest des Beitrags lesen »

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Italy Sets Lower Budget-Deficit Targets

Posted by hkarner - 5. Oktober 2018

Date: 04-10-2018
Source: The Wall Street Journal

The government said it targeted for 2020 a budget deficit of 2.1% of gross domestic product and 1.8% of GDP for the following year.

ROME—Italy’s government set its budget-deficit targets for 2020 and 2021 at lower levels than previously envisaged, after initial government plans had unnerved financial markets and European authorities.

The government on Wednesday said it targeted a budget deficit of 2.1% of gross domestic product for 2020 and 1.8% of GDP for the following year. The government had initially planned to target a deficit of 2.4% for both years.

It added it will stick to a deficit of 2.4% for next year, triple what the previous government had planned.

With these lower targets, the government appears to have adopted a more pragmatic stance after investors sold off Italian assets following news of the government plans to widen the deficit and keep it at 2.4% of GDP for the next three years. Den Rest des Beitrags lesen »

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Fiscal Freedom in the Eurozone?

Posted by hkarner - 2. Oktober 2018

Lucrezia Reichlin, a former director of research at the European Central Bank, is Professor of Economics at the London Business School.

Italy’s draft budget is the latest evidence that the EU fiscal framework, according to which national budgets are supposed to comply with common rules, is broken. To prevent an eventual disorderly breakup of the eurozone, a new framework must be devised.

LONDON – Italy’s government has approved a draft budget that would fund its expensive election promises by violating European Union fiscal rules for at least the next three years. With that, the populist coalition – comprising the anti-establishment Five Star Movement (M5S) and the far-right League party – has seemingly confirmed fears of populist-fueled instability in Europe.

The budget represents the victory of Italy’s two deputy prime ministers – M5S’s Luigi Di Maio and the League’s Matteo Salvini – over the country’s independent, technocratic finance minister, Giovanni Tria, who had presented a more conservative proposal. Any illusion that the populist coalition could be kept in check by moderate cabinet members has now been destroyed. Italy’s new “government of change,” which has been in power less than four months, is clearly both willing and able to challenge the EU. Den Rest des Beitrags lesen »

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EZB-Chefökonom dämpft Spekulation auf straffere Linie

Posted by hkarner - 26. September 2018

EZB-Chef Draghi hatte mit seinem Verweis auf eine „relativ starke“ Zunahme des Preisdrucks unter Analysten Erwartungen auf eine Zinsanhebung ausgelöst.

EZB-Chefvolkswirt Peter Praet cc

EZB-Chefvolkswirt Peter Praet hat Spekulationen auf eine straffere Geldpolitik der EZB gedämpft, die nach Äußerungen von Zentralbankpräsident Mario Draghi aufgekommen waren. Praet sagte am Dienstag auf einer Konferenz in London, in der Rede des Italieners vom Vortag sei „nichts Neues“ zu finden gewesen. Lohnsteigerungen würden sich erst innerhalb von Monaten auf die Inflation auswirken. Der Euro bröckelt nach den Aussagen Praets etwas ab.

Draghi hatte bei seiner Anhörung vor dem Europäischen Parlament am Montag auf eine „relativ starke“ Zunahme des Preisdrucks hingewiesen. Hiermit befeuerte er laut Analysten Markterwartungen, dass sich die EZB auf eine raschere Straffung ihrer Geldpolitik vorbereiten könnte. Draghi hatte im Parlament die gängige Sprachregelung der EZB wiederholt, wonach der Leitzins „über den Sommer“ 2019 hinaus auf dem aktuellen Niveau von null Prozent bleiben werde.

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ECB Succession Race Tests German Faith in Bundesbank Model

Posted by hkarner - 20. September 2018

Date: 18-09-2018
Source: The Wall Street Journal

With jockeying under way for top posts in central bank and EU posts, Berlin debates whether to lobby for inflation hawk Jens Weidmann

Bundesbank President Jens Weidmann, left, is a leading candidate to replace European Central Bank President Mario Draghi, at right.

FRANKFURT—The race to succeed Mario Draghi as European Central Bank president presents Germany with a stark choice: Back the country’s own candidate, a foe of Mr. Draghi’s 2.5-trillion-euro bond-buying program, or concede that once-unorthodox monetary tools are here to stay.

Germany’s central bank, long a powerful voice in the global fight against inflation, has grown out of sync in the postfinancial crisis era of stagnant prices and wages, with its greatly expanded role for central banks and outside-the-box policies.

“Perhaps the sands have shifted,” said Stefan Gerlach, former deputy governor of Ireland’s central bank. “Having been on the wrong side of history, at least as it appears now, has not helped the Germans.” Den Rest des Beitrags lesen »

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Italy Faces Crunch Time on Budget

Posted by hkarner - 20. September 2018

Date: 19-09-2018
Source: The Wall Street Journal

Markets and EU press Rome to curb expensive promises to voters

Luigi Di Maio, leader of Italy’s 5 Star Movement, said last week that universal basic income must be in the government’s budget. The deputy prime minister is shown here in Rome earlier this month.

ROME—Italy’s new populist government is facing a difficult decision: How to reconcile its expensive election promises with the reality of the country’s fragile finances.

It is a test of whether Europe’s rising antiestablishment parties can bring change to countries still bearing the scars of the Continent’s long economic downturn—or whether the constraints of life in the eurozone will force them to follow policies they long denounced.

The coalition in Rome, joining the antiestablishment 5 Star Movement with the nativist League, wants to slash taxes and raise social benefits to keep its voters happy. It also wants to avoid a clash with the European Union that could further spook financial markets. Den Rest des Beitrags lesen »

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Warum die Google-Steuer in der EU plötzlich auf Widerstand stößt

Posted by hkarner - 12. September 2018

András Szigetvari, 11. September 2018, 06:00 derstandard.at

Die EU wollte dafür sorgen, dass die großen IT-Konzerne in Europa ihre Gewinne versteuern, eine rasche Einigung galt als sicher. Nun wackelt das Projekt

Es war nur eine kurze Erklärung vom Bund der deutschen Industrie (BDI). Vergangene Woche teilte der BDI mit, dass er sich gegen die „Einführung einer Digitalsteuer“ in Europa ausspricht. Die Steuer würde „mehr Schaden als Nutzen“ bringen, Deutschland solle das Vorhaben nicht länger unterstützen. Mit der Digitalsteuer sollen große IT-Unternehmen wie Google, Facebook, Airbnb und Uber in Europa künftig effektiver besteuert werden. In vielen EU-Ländern zahlen die genannten Konzerne keine oder so gut wie keine Abgaben auf ihre Gewinne. Legendär ist der Steuersatz von 0,0005 Prozent, den Apple jahrelang auf seine Profite in der EU berappt hat.

Berlin skeptisch

Deutsche Industrieunternehmen sprechen sich also gegen die Digitalsteuer aus, obwohl diese gar nicht für sie gedacht ist. Die Skepsis hat inzwischen auch die Bundesregierung in Berlin ergriffen. Das wurde beim Treffen der EU-Finanzminister vergangene Woche in Wien offensichtlich. Neben den kleinen Staaten wie Irland und Malta, deren Modelle darauf aufbauen, sich für global tätige Konzerne als Niedrigsteuerländer anzubieten, wirkte auch Deutschland plötzlich wenig begeistert von der Digitalsteuer. Finanzminister Olaf Scholz (SPD) warnte in Wien vor Schnellschüssen und betonte ansonsten nur, wie komplex das ganze Thema sei. Was aber fürchten die Deutschen, deren Wort in den europäischen Debatten so viel Gewicht hat? Die Antwort auf diese Frage verrät viel darüber, warum es in Europa schwierig wird, bei einer Digitalsteuer voranzukommen. Den Rest des Beitrags lesen »

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What Will Trigger the Next Crisis?

Posted by hkarner - 9. September 2018

Date: 08-09-2018
Source: The Wall Street Journal

Potential threats include bad loans, a euro exodus, China’s debt levels, earthquakes

Italy Dumps the Euro

The recovery of the eurozone from the 2012 bond crisis has been predicated on Italy, Spain and Portugal pledging to meet the European Union’s budget rules, and Germany overlooking the fact they haven’t. As long as countries stick with the project, markets have rightly ignored debts and deficits.

But Italy may be wavering. Italian bond yields spiked in May after two parties with anti-euro leanings tried to form a new government. The crisis could escalate again once politicians return from holidays. Some 59% of Italians want to keep the common currency, official surveys show—the slimmest majority in the eurozone.

If Italy left the euro, Italian banks would face runs on their deposits and would be crushed—sovereign debt accounts for 9% of their assets.// This would paralyze lending and the economy. The shock waves would ripple abroad: Foreigners own 36% of Italian government debt. Markets would lose faith in Spain and Portugal’s debt and eurozone banks outside of Italy, which own $140 billion of Italian debt. This would weigh on the eurozone, one of the world’s three main economic engines.

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