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Posts Tagged ‘Europe’

Es ist Zeit für einen grünen EU-Deal

Posted by hkarner - 19. April 2019

Michel Barnier

Michel Barnier is a former vice president of the European Commission and French Minister of Foreign Affairs. He is currently EU chief negotiator for Brexit.

BRÜSSEL – In vielen Hauptstädten der Welt ist ein „Green New Deal” zum Thema geworden. Die Idee, die kürzlich in den Vereinigten Staaten entstanden ist, ist angelehnt an das visionäre Programm zur wirtschaftlichen Erholung, das Präsident Franklin D. Roosevelt 1933 ins Leben rief. Aber Europa kann – und muss – es auch leisten.

Europa engagiert sich seit langem für die Umwelt und hat bereits 1972 sein erstes gemeinsames Programm eingeführt. Im Jahr 2005 hat die Europäische Union das erste Emissionshandelssystem eingeführt, das nach wie vor der größte Kohlenstoffmarkt der Welt ist. Und im Jahr 2015 übernahm die EU bei den Verhandlungen über das Pariser Klimaabkommen die Führung und verpflichtete sich, ihre eigenen Treibhausgasemissionen gegenüber 1990 um 40 Prozent zu senken. Den Rest des Beitrags lesen »

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Neue Spitze für EZB und EU-Kommission – wer wie im Kurs steht

Posted by hkarner - 15. April 2019

Andreas Schnauder aus Washington, 14. April 2019, 17:36 derstandard.at

Erstmals wird ein Deutscher für die Spitze der Europäischen Zentralbank gehandelt. In dem Fall würde ein Franzose die EU-Kommission anführen.

Am Drehbuch für die Besetzung der neuen Topjobs in der EU wird derzeit eifrig geschrieben. Finalisiert werden kann es erst nach den Wahlen zum Europaparlament Ende Mai, doch erste Entwürfe versprechen einige Dramatik. In der Rolle des tragischen Helden: Manfred Weber. Der deutsche CSU-Mann und Spitzenkandidat der Europäischen Volkspartei werde – so erzählen es derzeit ausgewiesene EU-Kenner – auch im Falle eines Wahlsiegs nicht die Nachfolge von Kommissionspräsident Jean-Claude Juncker antreten. Der Grund: Kanzlerin Angela Merkel sähe lieber erstmals einen Deutschen an der Spitze der Europäischen Zentralbank. Gut in dieses Bild passen in Paris gestreute Gerüchte, wonach Präsident Emmanuel Macron einen Franzosen an die Kommissionsspitze hieven wolle. Ein deutscher EZB-Präsident, ein Franzose an der Spitze der EU-Behörde – das klingt nach einer massiven Stärkung der Achse Berlin-Paris, die zuletzt recht brüchig gewirkt hatte.

Der logische Anwärter, EZB-Direktoriumsmitglied Jens Weidmann, verliert im Rennen um die Spitze der Europäischen Zentralbank Plätze… Die Autoren der Drehbücher haben auch schon ein paar Namen für die wichtigen Rollen parat. Der logische französische Kandidat hieße Michel Barnier, der sich als Brexit-Verhandler – wieder einmal – einen Namen gemacht hat und die EU als früherer Kommissar bestens kennt. Er scheint aber Konkurrenz zu erhalten. Mit der Chefin des Internationalen Währungsfonds, Christine Lagarde, soll sich derzeit eine international renommierte Spitzenkandidatin in Stellung bringen. Die frühere französische Wirtschafts- und Finanzministerin und Rechtsanwältin hielt sich in letzter Zeit auffällig oft in Europa auf und intensivierte Kontakte zu diversen Strippenziehern, heißt es aus ihrem Umfeld am Rande der IWF-Frühjahrstagung in Washington.  …während der Euroretter Klaus Regling Auftrieb hat. Das Skript ist auch bei den personellen Vorlieben Deutschlands unvollständig. Bundesbank-Präsident Jens Weidmann wäre der eigentlich erwartbare Nachfolger von Mario Draghi an der EZB-Spitze. Doch der Ökonom könnte sich mit seinem Widerstand gegen eine allzu lockere Geldpolitik um den Topjob gebracht haben, wird gemunkelt. Vor allem in Südeuropa sei Weidmann schwer durchzubringen. Selbst in Berlin soll es sich der frühere Merkel-Berater mit Kritik an Staatsanleihenkäufen durch die Euro-Zentralbanken verscherzt haben. Es sieht nicht allzu gut aus für Weidmann.

Aus dem Rettungsschirm

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EU Prepares Tariffs Against U.S. Amid WTO Battle

Posted by hkarner - 14. April 2019

Date: 13-04-2019
Source: The Wall Street Journal

EU, U.S. nearing the end of a battle over plane-maker subsidies after 15 years of WTO litigation

BRUSSELS—The European Union is preparing tariffs on $12 billion of U.S. products over subsidies to Boeing Co., raising the stakes on the Trump administration’s plan for punishing the EU’s support to rival plane maker Airbus SE .

Europe’s move came after a U.S. said on Monday it intended to impose tariffs on $11.2 billion of imports from the EU. Brussels’s swift response highlights its resolve to go blow-for-blow with Washington over the matter.

Both are salvos in the two sides’ long-running fight at the World Trade Organization over government subsidies to the jet makers, which dominate the large commercial airplane market. Both the U.S. and EU are starting the process to impose the tariffs, but essentially are staking out what they believe is the appropriate penalty for the other’s trade transgressions. Den Rest des Beitrags lesen »

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Matteo Salvini’s improbable dream of a pan-European nationalist alliance

Posted by hkarner - 13. April 2019

Date: 12-04-2019
Source: The Economist

Nationalists tend not to agree with each other

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An italian nationalist joining forces with a German one to promise “a new European dream”, as Matteo Salvini termed it, is bound to stir the odd qualm. But oblivious, or indifferent, to historical echoes, Mr Salvini, the leader of Italy’s Northern League, on April 8th sat cheerfully alongside Jörg Meuthen of the Alternative for Germany (afd) on a platform in Milan as he announced the formation of a new, nativist bloc in the next European Parliament. Mr Meuthen said it would be called the European Alliance for People and Nations. And, said Mr Salvini, the aim was “to take in groups with which we have never collaborated before”.

Gail McElroy, a political scientist at Trinity College, Dublin, who has made a study of the European Parliament, said it was likely that the radical right will make some gains at the European elections on May 23rd-26th. “But there is a long history of populist parties forming groups that then fall apart.” Ominously for Mr Salvini, none of the party leaders he had hoped to attract to his new band bothered to show up in Milan.

Movements created to protect national interests and exalt national identities tend to make awkward bedfellows, after all. Jaroslaw Kaczynski’s government in Poland and Viktor Orban’s in Hungary have long turned a deaf ear to Italy’s pleas for a redistribution within the eu of asylum-seekers arriving from Africa. That problem has now been skirted: the new mantra of the populist right is that the answer is to seal Europe’s frontiers. But agreeing on economic policy will be more difficult. The afd and other hard-right northern European groups support precisely the kind of fiscal austerity Mr Salvini claims is holding back the Italian economy. Den Rest des Beitrags lesen »

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Von Flugzeug bis Wein: USA drohen der EU mit Vergeltungszöllen

Posted by hkarner - 10. April 2019

9. April 2019, 12:28 derstandard.at

Im Streit über illegale Subventionen für ihre jeweiligen Flugzeugbauer drohen die USA mit weiteren Zöllen

San Francisco/Toulouse/Washington – Im Streit über die Beihilfen für ihre jeweiligen Flugzeugbauer legen die USA nach und gehen wegen der Subventionen für den europäischen Flugzeugbauer Airbus auf Konfrontationskurs mit der Europäischen Union. Und das wenige Tage, nachdem die in Genf ansässige WTO letztinstanzlich festgestellt hat, dass auch der US-Flugzeugbauer Boeing illegale Subventionen vom Staat erhalten hat. Im Fall des Flugzeugbauers Airbus, an dem Frankreich, Deutschland, Spanien und Großbritannien beteiligt sind, fiel das endgültige Urteil im Vorjahr. Im Fall von Boeing stand das Langstreckenflugzeug Boeing 787. Die EU hat eine illegale Förderung durch staatliche Stellen moniert, zum Beispiel Gelder der Weltraumbehörde Nasa, die in Forschung und Entwicklung von Boeing in Seattle geflossen sind, oder Steuervergünstigungen, die die US-Regierung dem Unternehmen gewährt hat.

Vergeltung

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How Western Economies Can Avoid the Japan Trap

Posted by hkarner - 9. April 2019

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-Chief Investment Officer, was Chairman of US President Barack Obama’s Global Development Council. He previously served as CEO of the Harvard Management Company and Deputy Director at the International Monetary Fund. He was named one of Foreign Policy’s Top 100 Global Thinkers in 2009, 2010, 2011, and 2012. He is the author, most recently, of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

With the return of Europe’s economic doldrums and signs of a coming growth slowdown in the United States, advanced economies could be at risk of falling into the same kind of long-term rut that has captured Japan. To avoid that outcome, policymakers must recognize and address the deeper structural forces at work.

NEW YORK – Not too long ago, the conventional wisdom held that “Japanification” could never happen in Western economies. Leading US economists argued that if the combined threat of weak growth, disinflation, and perpetually low interest rates ever materialized, policymakers would have the tools to deal with it. They had no problem lecturing the Japanese about the need for bold measures to pull their country out of a decades-old rut. Japanification was regarded as the avoidable consequence of poor policymaking, not as an inevitability.

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Fixing Europe’s zombie banks

Posted by hkarner - 6. April 2019

Date: 04-04-2019
Source: The Economist

How to deal with poor performance, defeatism and complacency

Is there any more miserable spectacle in global business than that of Europe’s lenders? A decade after the crisis they are stumbling around in a fog of bad performance, defeatism and complacency. European bank shares have sunk by 22% in the past 12 months. Deutsche Bank and Commerzbank are conducting merger talks with all the skill and clarity of purpose of Britain’s Brexit negotiators. Two Nordic lenders, Danske Bank and Swedbank, are embroiled in a giant money-laundering scandal. The industry makes a puny return on equity of 6.5% and investors think it is worth less than its liquidation value. Amazingly, many European banks and regulators are resigned to this state of affairs. In fact it is a danger to investors and to Europe’s faltering economy.

The banks make two excuses, both of which are largely rubbish. One is that it is not their fault. Unlike America, where banks have a return on equity of 12%, Europe does not have strongly positive government-bond yields, or a pool of investment-banking profits like that on Wall Street, or a vast, integrated home market. All this is true, but European banks have been lamentably slow at cutting their costs, something which is well within their control. As a rough rule of thumb, efficient banks report cost-to-income ratios below 50%. Yet almost three-quarters of European lenders have ratios above 60%. Redundant property, inefficient technology and bloated executive perks are the order of the day.

The banks’ second excuse is that their lousy profitability does not really matter. Their capital buffers have been boosted, they argue, so why should regulators and taxpayers care about the bottom line? And shareholders, the banks hint, have learned to live with the idea that European lenders are unable to make a return of 10%, the hurdle rate investors demand from American banks and most other sectors (see article).

This is bunkum, too. Profits do matter. They make banks safer: they can be used to absorb bad-debt costs or rebuild capital buffers when recession strikes. Depressed valuations show that far from tolerating European banks, most investors eschew them. As a result many lenders, including Deutsche, have too few blue-chip long-term institutional shareholders who are prepared to hold serially incompetent managers to account. And when the next downturn comes and banks need to raise capital, which investor would be foolish enough to give even more money to firms that do not regard allocating resources profitably as one of their responsibilities?

Rather than accept this miserable situation, European banks need to do two things. First, embrace an efficiency and digitisation drive. Costs are falling at an annual rate of about 4%, according to analysts at ubs. This is not enough. As consumers switch to banking on their phones there are big opportunities to cut legacy it spending and back-office and branch expenses. Lloyds, in Britain, has cut its cost-income ratio to 49% and expects to get to close to 40% by 2020. The digital German arm of ing, a Dutch bank, boasts a return on equity of over 20% in a country that is supposedly a bankers’ graveyard. If other banks do not do this they will soon find that they have lost market share to new digital finance and payments competitors—both fintech firms and the Silicon Valley giants such as Amazon—that can operate with a fraction of their costs and which treat customers better.

Second, banks need to push for consolidation. The evidence from America and Asia suggests that scale is becoming a bigger advantage in banking than ever before, allowing the huge investments in technology platforms and data-analysis to take place. Europe has too many lenders—48 firms are considered important enough to be subject to regular “stress tests”. The banks complain that the reason for this is that Europe has not harmonised its rules and regulations. But this is only half the story. Most big banks are loth to cede their independence, and their bosses love the status that comes with running a big lender. And banks’ failure to get their own houses in order means that investors doubt that managers can handle integrating two big firms.

European banks face two paths. The one they are on promises financial and economic instability when the next recession strikes, and long-term decline. The other path is to get fit for the digital age and subject themselves to the financial disciplines that American banks, and almost all other industries, accept as a fact of life. It should not be a hard decision.

Date: 04-04-2019
Source: The Economist
Subject: How to fix Europe’s lenders

Europe needs its banks to perform better

It’s not all bad. In 2008 Lloyds, a large British bank, took over hbos, a rival that was being sucked beneath the rising waters of the global financial crisis. hbos nearly dragged Lloyds under with it; £20.3bn (then about $30bn) of public money was needed to keep the combined group afloat. But these days Lloyds is doing all right.

Under António Horta-Osório, its chief executive since 2011, Lloyds has ditched almost all its foreign operations, narrowed its product range and (like many other banks) poured money into digitisation. The state sold its last shares in 2017. Last year the bank’s return on tangible equity (rote), a measure of profitability, was a decent 11.7%. This year Mr Horta-Osório is aiming for 14-15%, Brexit notwithstanding.

Some other European banks also have good stories to tell. The Netherlands’ ing is also a refurbished state-aid case. Its online German bank, ing-DiBa, claims to return over 20%. Spain’s Santander, the euro area’s biggest bank by market capitalisation, sailed through its homeland’s financial storm without a single loss-making quarter. On April 3rd it set out plans to lift its rote from 11.7% last year to 13-15% by cutting costs and exploiting digitisation. Nordic banks make bonny returns—although both Danske Bank and Swedbank, beset by money-laundering scandals, have sacked their chief executives recently.

But the overall picture is glum. In a quarterly survey published on March 29th, the European Banking Authority (eba), a supervisor, found that in the last three months of 2018 the weighted average return on equity (roe) of 190 European Union banks was 6.5%. (roe is a little lower than rote because goodwill and other intangible assets are deducted from the denominator of the latter.) Over the past four years the average roe in the eba’s report has fluctuated between 3.3% and 7.3% (see chart).

That is not enough to keep shareholders happy. They want 10% or so. At a recent conference hosted by Morgan Stanley, 70% of attendees estimated European banks’ cost of equity (coe)—the minimum roe shareholders consider acceptable—to be between 9% and 11%. Twice a year the eba also asks banks to estimate their coes. Last December two-thirds put their benchmarks at 8-10% and another one-sixth said 10-12%. Only 55% said that they were earning more than their coe.

That 6.5% is also well below the returns enjoyed by investors on the other side of the Atlantic. Among America’s biggest banks, only Citigroup reported an roe of below 10% last year, and, at 9.4%, not by much. us Bancorp, the seventh-biggest by assets, weighed in with 15.4%. The Europeans underperform on whatever measure you care to choose—for example, rote or return on assets (roa), which strips out the effect of gearing (the share of assets funded by equity). Figures supplied by Stuart Graham of Autonomous Research indicate that the average roa of nine big American banks was double that of 24 leading European lenders.

All this is reflected in stockmarkets’ assessment of the relative worth of European banks. Markets value most big American banks at more than the net book value of their equity; but the shares of most leading European lenders trade below that mark. The price-to-book ratio of Deutsche Bank, Germany’s largest bank, which squeaked into profit in 2018 (with an roe of 0.4%) after three years of losses, languishes at a feeble 25%. Deutsche is in merger talks with its neighbour, Commerzbank, which is rated little better, with a ratio of 31%. Unicredit, Italy’s biggest bank, is rumoured to be considering a bid for Commerzbank if the talks with Deutsche stall.

Explanations for European banks’ poor performance start with the aftermath of the financial crisis of 2007-08. American banks were swiftly and forcibly recapitalised through the Troubled Asset Relief Programme, whether they needed it or not (“They got tarped,” in the words of one European banker). Most European countries (though not Britain, the Netherlands and Switzerland) were slow to act. The euro area lacked a single supervisor and a common authority for resolving failed banks. Both were established several years later—and only after the euro area’s sovereign-debt crises had compounded the troubles of many lenders.

Banks complain that policymakers have since made their lives hard. In the euro area net interest income, which makes up the bulk of banks’ revenues, has been ground down by slow growth and years of ultra-low, even negative, interest rates—banks must pay the European Central Bank (ecb) 0.4% a year to deposit money. In the past three years, reports the eba, net interest margins have fallen from 1.57% to 1.47%. Mario Draghi, the president of the ecb, said on March 27th that “low bank profitability is not an inevitable consequence of negative rates”, although he admitted that the central bank would consider “mitigating the side-effects”. In March the ecb announced further operations to provide banks with cheap long-term finance.

Bankers also complain about capital requirements. Not only have these been tightened since the financial crisis, but the new rules, known as Basel 3, were finalised only at the end of 2017. Banks are having to raise billions in debt that would be able to absorb losses, should some catastrophe wipe out their equity. Magdalena Stoklosa of Morgan Stanley says that resolution regulation is obliging banks to finance themselves by fairly expensive means when deposits cost them nothing and margins are wafer-thin.

European banks also lack the scale of America’s biggest. Differences among national markets and the eu’s failure to complete its “banking union” thwart cross-border mergers that might create continent-spanning giants. Peer more closely at specific countries, and further burdens on profitability become visible. Banks in Cyprus, Greece, Italy and Portugal are still weighed down by bad loans, even if the load is getting lighter. Overcrowding is common; so is competition from publicly owned and co-operative banks, which have other goals besides profit. Germany is the harshest environment on both counts. Even combined, Deutsche and Commerzbank would struggle for elbow room.

But struggling banks cannot simply blame history, officialdom and market structure for their troubles. They could do a lot more to help themselves. The eba’s new survey finds, for instance, that at almost three-quarters of European banks, costs consume more than 60% of income. The average cost-income ratio, 64.6%, is higher than it was four years ago.

Europe’s most successful banks show what can be done. A study by five ecb economists published last November—and commended to banks by Mr Draghi—found that euro-zone banks which have cut costs, spent heavily on information technology, are geographically diverse (like ing, Santander and bbva, another Spanish bank) and rely less on interest income tend to be more profitable. Banks that carry lower credit risks (ie, that are safer) also do better.

None of this will transform European banking into a magic money tree. Banking everywhere is less lucrative than it was before the crisis. Banks can take some comfort from evidence in the ecb economists’ study and the eba’s survey that coes are coming down, largely as a by-product of persistently low official rates. But bank bosses would be foolish to rely on that—or to suppose that they are not ultimately responsible for their own fates.

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Manufacturing blame

Posted by hkarner - 6. April 2019

Date: 04-04-2019
Source: The Economist

The gloom hanging over the world economy is confined to manufacturing
Service industries have defied the sinking mood

Pessimism about the world economy has grown throughout 2019. Disappointing data, tumbling bond yields, the trade war between China and America and political crisis in Britain have all played a part. The only bright spot has been mostly buoyant stockmarkets. On April 9th the imf will probably report a downgrade to its forecast for global growth this year, which in January stood at 3.5%. But there has so far been only a deceleration, not a downturn, because economic weakness has been contained mostly to manufacturing, rather than afflicting the service sector (see chart). And a manufacturing rebound might soon lift the global mood.

Manufacturing’s woes can be blamed primarily on falling global trade growth. That is down partly to the trade war, and partly to Chinese policymakers’ attempts to reduce leverage, which slowed domestic growth late last year, curtailing demand for imports. The pain has been felt most in Europe, which is more exposed than America to emerging markets. It has been particularly acute in Germany. On April 1st a survey of German manufacturers, a preview of which buffeted bond markets in March, turned out even worse than expected. Industrial production has slowed even more sharply in Germany than in Italy, which is in recession, note economists at Goldman Sachs, a bank. Yet Germany’s service sector appears to be growing strongly, as does that of the euro zone as a whole. Den Rest des Beitrags lesen »

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The Transatlantic Regulation Rift

Posted by hkarner - 5. April 2019

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.

European governments have seemingly concluded that hosting large, risky, and volatile financial firms and markets is not worth it, while the US administration still regards the financial sector as a comparative advantage for New York. Which side has made the wiser choice?

LONDON – US President Donald Trump made his intentions on financial regulation clear from the very start of his administration. He issued an executive order requiring that, for every new regulation imposed, at least two should be targeted for repeal. No such deregulatory zeal is evident in Europe.

The Economic Growth, Regulatory Relief, and Consumer Protection Act, signed by Trump in May 2018, has, in practice, emphasized the second part of its title over the third. According to a set of regulatory principles issued by the administration, regulators must consider the competitiveness of US firms and advance American interests in international financial forums. The Treasury was instructed to produce four reports, covering banks, capital markets, asset management and insurance, and non-banks and fintech, to show how the principles could be realized through a variety of deregulatory initiatives. All four reports have now been issued. Den Rest des Beitrags lesen »

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What Happens When Europe Comes Apart?

Posted by hkarner - 4. April 2019

Date: 03-04-2019
Source: Foreign Affairs By Robert Kagan
Subject: The New German Question

Many have been lamenting the dark path that Europe and the transatlantic relationship are currently on, but there hasn’t been much discussion of where that path leads. European weakness and division, a strategic “decoupling” from the United States, the fraying of the European Union, “after Europe,” “the end of Europe”—these are the grim scenarios, but there is a comforting vagueness to them. They suggest failed dreams, not nightmares. Yet the failure of the European project, if it occurs, could be a nightmare, and not only for Europe. It will, among other things, bring back what used to be known as “the German question.”

The German question produced the Europe of today, as well as the transatlantic relationship of the past seven-plus decades. Germany’s unification in 1871 created a new nation in the heart of Europe that was too large, too populous, too rich, and too powerful to be effectively balanced by the other European powers, including the United Kingdom. The breakdown of the European balance of power helped produce two world wars and brought more than ten million U.S. soldiers across the Atlantic to fight and die in those wars. Americans and Europeans established NATO after World War II at least as much to settle the German problem as to meet the Soviet challenge, a fact now forgotten by today’s realists—to “keep the Soviet Union out, the Americans in, and the Germans down,” as Lord Ismay, the alliance’s first secretary-general, put it. This was also the purpose of the series of integrative European institutions, beginning with the European Steel and Coal Community, that eventually became the European Union. As the diplomat George Kennan put it, some form of European unification was “the only conceivable solution for the problem of Germany’s relation to the rest of Europe,” and that unification could occur only under the umbrella of a U.S. security commitment. Den Rest des Beitrags lesen »

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