Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Europe’

The pandemic revives ultra‑safe European bonds

Posted by hkarner - 13. Juli 2020

Date: 09‑07‑2020

Source: The Economist

The European Commission could soon become a big player in capital markets

The euro zone has not been a hospitable place for investors seeking safety in recent years. The currency area’s pool of super‑safe, aaa‑rated sovereign securities shrank by 40% between 2007 and 2018. Rating agencies downgraded some of its members during the debt crisis of 2010‑12. Two of its remaining top‑rated issuers—Germany and the Netherlands—have energetically hacked away at their debt piles.

The pandemic might help alleviate the shortage. Germany, once fixated on its “black zero”, or balanced budget, will go deeply into the red. It may run a fiscal deficit of as much as 7.5% of gdp this year, reckons the Bundesbank. A raft of issuance may also come from an unusual source: the European Commission. If plans for it to finance the eu’s recovery spending go ahead, it could become a big influence in global capital markets.

The commission already issues a modest amount of bonds on behalf of the European Union, which it mostly lends on to member states. Its debt stock amounts to €52bn ($59bn, or 0.4% of eu gdp in 2019). Plans to fund the recovery from the pandemic will take this much higher. From September it will raise €100bn, which it will in turn lend to countries in order to finance temporary‑employment schemes. Den Rest des Beitrags lesen »

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Europe’s Good Crisis

Posted by hkarner - 8. Juli 2020

Date: 07‑07‑2020

Source: Project Syndicate by Daniel Gros

Daniel Gros is Director of the Centre for European Policy Studies. 

The COVID‑19 crisis has shown that the European Union is much more than an assemblage of incessantly bickering small to medium‑size countries. The evolution of key economic and epidemiological indicators is remarkably similar across EU countries, owing to a unity of perspectives that is glaringly absent in the United States.

BRUSSELS – A few months ago, the COVID‑19 pandemic, coupled with the economic and financial crisis it has caused, looked like it might break the European Union. Member states had closed their national borders and rejected all coordination, with some even halting the export of urgently needed medical equipment to their EU partners. Today, however, internal EU borders have been re‑opened, medical equipment is moving freely, and member countries have agreed on unprecedented measures to deal with the pandemic’s economic fallout. What accounts for this remarkable turnaround?

The EU is often depicted as a motley crew of small to medium‑size countries that are unable to agree on anything. But the evolution of key economic and epidemiological indicators during the COVID‑19 crisis is remarkably similar across countries, suggesting that, when it comes to fundamental policy choices, they aren’t so different, after all. Den Rest des Beitrags lesen »

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Germany is doomed to lead Europe

Posted by hkarner - 29. Juni 2020

Date: 25‑06‑2020

Source: The Economist: Charlemagne

The EU’s biggest member is in charge, whether Germans like it or not

Walk into any meeting in Brussels and, most likely, a German will be leading it. In the European Commission, Ursula von der Leyen, the former German defence minister, is in charge. For the next six months, German ministers will be cajoling their peers into signing off legislation as the country takes over the eu’s rotating presidency. In the European Council, where the bloc’s leaders butt heads, it might technically be Charles Michel, the former prime minister of Belgium, heading it. But it is Angela Merkel—longer in post than the leaders of France, Spain, Italy and Poland combined—who is the undisputed top dog. The eu’s main response to the covid‑19 crisis—a flagship €750bn recovery fund paid for with debt issued collectively by the eu—is based on a plan cooked up in Berlin and Paris. The Germans are running the show.

Usually, German power in Brussels is the political equivalent of dark matter: invisible, difficult to measure and yet everywhere. Now the Germans are stars, shining so bright as to be impossible to ignore. There was no devious Teutonic plot to grab power. Mrs von der Leyen owes her position to Emmanuel Macron, the French president, rather than patronage from Berlin. (Mr Macron pushed Mrs von der Leyen because he could not bear the thought of Manfred Weber, also a German, getting the job.) It is not Mrs Merkel’s fault that no French president has won a second term since she came to power, or that most Italian prime ministers fail to complete their first. A quirk of the calendar left Germany holding the rotating presidency. Whether they want it or not, German hands now grip the eu’s levers of power, just as the bloc overhauls itself to cope with the covid‑19 crisis. Den Rest des Beitrags lesen »

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The Triple Crisis Shaking the World

Posted by hkarner - 29. Juni 2020

Date: 27‑06‑2020

Source: Project Syndicate by Joschka Fischer

Joschka Fischer was German Foreign Minister and Vice Chancellor from 1998‑2005, a term marked by Germany’s strong support for NATO’s intervention in Kosovo in 1999, followed by its opposition to the war in Iraq. Fischer entered electoral politics after participating in the anti‑establishment protests of the 1960s and 1970s, and played a key role in founding Germany’s Green Party, which he led for almost two decades.

 More than just a public‑health disaster, the COVID‑19 pandemic is a history‑defining event with far‑reaching implications for the global distribution of wealth and power. With economies in free‑fall and geopolitical tensions rising, there can be no return to normal: the past is passed, and only the future counts now.

BERLIN – The COVID‑19 pandemic is entering its second phase as countries gradually reopen their economies and loosen or even revoke strict social‑distancing measures. Yet, barring the arrival of an effective, universally available therapy or vaccine, the transition back to “normal” will be more aspirational than real. Worse, it risks triggering a second wave of infections at the local and regional level, and possibly on a much larger scale.

Den Rest des Beitrags lesen »

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The euro area’s stimulus is less stingy than in past crises

Posted by hkarner - 22. Juni 2020

Date: 18‑06‑2020

Source: The Economist

Even so, more stimulus will be needed this year

Those struggling to break bad habits should take inspiration from the euro zone. During the global financial and sovereign‑debt crises it did too little to shore up growth; at times monetary and fiscal policy were tightened precisely when they should have been loosened. By contrast, its response to the covid‑19 pandemic has been less flat‑footed. Consider the events of the first three weeks of June alone. Germany’s government, usually tight‑fisted, announced a stimulus package of at least €130bn ($146bn). The European Central Bank (ecb) said it would buy another €600bn in bonds. And as The Economist went to press, national leaders were due to discuss setting up an eu‑wide “recovery fund” of €750bn, an idea first floated in April.

The question is whether policy can remedy a grave weakness: that countries facing the greatest economic damage are also those with the least fiscal space. Germany’s outbreak was relatively less severe, and its lockdowns less stringent. Its new programme takes its total fiscal stimulus this year to 9% of gdp, according to economists at ubs, a bank (see chart). That is bigger than America’s. But France, Italy and Spain, which have had worse outbreaks and stricter lockdowns, and risk losing valuable tourism revenues over the summer, also have higher government‑debt ratios. Fiscal support has been stingier there.  Den Rest des Beitrags lesen »

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Trump Moves Have Damaged Trans‑Atlantic Ties, Says EU Foreign Policy Chief

Posted by hkarner - 20. Juni 2020

Date: 20‑06‑2020

Source: The Wall Street Journal

Josep Borrell says the U.S. stance means Europe is more determined than ever to forge its own path in confronting global challenges

Josep Borrell, the European Union’s foreign policy chief, said that the bloc wouldn’t follow the U.S.’s call to adopt a more confrontational approach to Beijing.

BRUSSELS—President Trump’s attacks on the European Union have materially damaged the trans‑Atlantic relationship and strengthened European determination to pursue an independent path on emerging challenges such as China’s growing assertiveness, Europe’s foreign policy chief has said.

Amid an expanding list of differences—over Iran, the Middle East peace process, trade, military spending and Washington’s exit from international institutions and treaties—Josep Borrell said Europe wouldn’t follow U.S. calls to adopt a more confrontational approach to Beijing. Den Rest des Beitrags lesen »

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Posted by hkarner - 15. Juni 2020

Date: 13‑06‑2020

Source: DER SPIEGEL Interview Conducted by Tim Bartz

Subject: Interview with Economist Nouriel Roubini

„The Stock Market Is Deluding Itself“

Prominent American economist Nouriel Roubini does not believe the global economy will recover quickly. He believes that the dire situation will produce a summer of protest in the U.S. and years of difficulties in Europe as well.

DER SPIEGEL: Mr. Roubini, the pandemic has brought the global economy to its knees, and millions of people have lost their jobs. Is the crisis as severe as the Great Depression of the 1930s?

Roubini: The crash is even greater than it was then. It took years from 1929 until the full extent of the crisis became visible. Compared to today, it was like a slow‑motion train wreck. Now the world economy has collapsed within weeks, and in the U.S. alone, more than 40 million people are unemployed. Many believe that the economy will pick up again just as quickly, but that is a fallacy.

DER SPIEGEL: You don’t believe in a V‑shaped recovery despite the huge economic stimulus packages? After all, 2.5 million new jobs were created again in the U.S. in May.

Roubini: Of course, we will see an upswing in the second half of the year. But it will not be a real one, but a delusion. The economy has fallen so steeply that it is practically inevitable that it will pick up again at some point. But that won’t compensate for the crash in any way. Even at the end of 2021, the U.S. economy will still be below the level of early 2020; too much has broken down. And the unemployment rate will level off at 16 or 17 percent ‑ during the financial crisis it was only 10 percent. The job creation in May was only 2.4 million after 42 million lost their jobs in the last few months. And the actual unemployment rate is much higher than officially measured. Den Rest des Beitrags lesen »

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Posted by hkarner - 10. Juni 2020


Selten hat sich uns ein so gespaltenes Amerika-Bild geboten wie in diesen letzten Tagen. Die schier unbegrenzten Unmöglichkeiten eines irrlichternden Präsidenten, der in Krisen vor allem die Chance auf narzisstische Selbstinszenierung sieht, stehen in grellem Kontrast zu Blitzlichtern eines Landes der immer noch unbegrenzten Möglichkeiten.

Dass es etwa dem eigenwilligen Elon Musk gelingen konnte, eine bemannte Rakete zur Weltraumstation ISS zu entsenden, erscheint mindestens so erstaunlich wie die Tatsache, dass sein Elektroauto-Konzern Tesla trotz Verlusten zuletzt einen Börsenwert erreicht hat, der höher ist als jener der hoch profitablen Traditionsmarken VW, BMW und Daimler zusammen.

Zwar setzen die USA auf ein finanzkapitalistisch geprägtes Wirtschaftsmodell, das für uns Europäer in entscheidenden Bereichen nicht nachahmenswert ist. Wegen völlig unzureichender Abfederungen im Gesundheits-, Bildungs- und Pensionssystem stellt es in Kombination mit drastischer Ungleichheit jedenfalls kein Vorbild dar. Das uns vertraute Alternativmodell einer sozialen Marktwirtschaft ist ohne Zweifel ungleich attraktiver. Den Rest des Beitrags lesen »

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Europe’s Non-Hamiltonian Muddle

Posted by hkarner - 2. Juni 2020

Brunello Rosa

Brunello Rosa, CEO and Head of Research at Rosa & Roubini Associates, is a visiting professor at Bocconi University.

Although any joint EU action should be welcomed, the current COVID-19 response plan hardly amounts to a radical break with business as usual. Far from a long-awaited embrace of debt mutualization, the newly proposed European recovery fund risks being both politically unpalatable and economically inadequate.

NEW YORK – This past week, the European Commission unveiled a plan to help European countries manage the Great Depression-scale shock from COVID-19. Building on a recent Franco-German proposal, the Commission is calling for a €750 billion ($834 billion) recovery fund (€500 billion of which would be distributed as grants, and €250 billion as loans).

The money issued through this so-called “Next Generation EU” plan will flow through European Union programs, in order to achieve the Commission’s goals, including its green and digital economy agenda. The Commission will raise funds in the market by issuing long-term bonds, and their efforts will be backed by a suggested increase in new taxes, such as those on greenhouse-gas emissions, digital services, and other areas of supranational commerce.Though we are among the few commentators who anticipated that the EU would offer a plan much larger than what most market participants and pundits expected, we also would advise European policymakers to remain realistic about what can be achieved at the moment. Den Rest des Beitrags lesen »

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The End of Europe’s Chinese Dream

Posted by hkarner - 28. Mai 2020

Date: 26‑05‑2020

Source: Project Syndicate by Mark Leonard

Mark Leonard is Director of the European Council on Foreign Relations. 

The COVID‑19 crisis has pushed Europeans‘ strategic thinking about China – already shifting because of three developments – past the tipping point. After years of pursuing closer bilateral economic ties, Europeans suddenly realize that they have become dangerously dependent on Chinese trade and investment.

BERLIN – A paradigm shift is taking place in relations between the European Union and China. The COVID‑19 crisis has triggered a new debate within Europe about the need for greater supply‑chain “diversification,” and thus for a managed disengagement from China. That will not be easy, and it won’t happen quickly. But, clearly, Europe has abandoned its previous ambition for a more closely integrated bilateral economic relationship with China.

In the past, when Europeans sought trade, economic‑, and foreign‑policy reforms vis‑à‑vis China, their hope was always to increase contact with the country while making the relationship fairer and more reciprocal. The basic goal was to expand bilateral trade and pry open the Chinese market for European investments. Even when the European Union toughened its approach toward China, its objective was still to deepen economic ties with the country. The creation of new EU instruments to screen investments and enforce antitrust measures were presented as regrettable but necessary measures to create the political conditions for closer cooperation. Den Rest des Beitrags lesen »

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