Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Finanzkrise’

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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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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What Should We Be Preparing For?

Posted by hkarner - 30. Mai 2020

Date: 29‑05‑2020

Source: Project Syndicate by Ricardo Hausmann

Ricardo Hausmann, a former minister of planning of Venezuela and former Chief Economist at the Inter‑American Development Bank, is a professor at Harvard’s John F. Kennedy School of Government and Director of the Harvard Growth Lab. 

In most emerging and developing countries, COVID‑19 is causing an economic hurricane. It looks increasingly like a Category 5, but the international community and many national governments prepared for a tropical storm.

CAMBRIDGE – Suppose you knew that a hurricane was coming, but meteorologists were uncertain if it would make landfall as a Category 2 or a Category 5 storm. Which scenario should you prepare for?

The problem you face reflects the costs of assuming that it is a Category 5 when it is only a Category 2 and vice versa. The latter scenario implies deaths and destruction that could have been avoided through evacuations, well‑supplied shelters, and precautionary shutdowns. The first scenario implies unnecessary preventive costs. In the case of hurricanes, we all agree that it makes sense to err on the side of caution for the same reason that it is better to be five minutes early when catching a train than five minutes late. Den Rest des Beitrags lesen »

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FMA: Krise wird auch „Schock für Finanzwirtschaft“

Posted by hkarner - 14. Mai 2020

12.05.2020 um 13:30, diepresse

Die Coronakrise wird auch an den Finanzunternehmen nicht spurlos vorübergehen. „Wir müssen uns darauf vorbereiten, dass das auch ein großer Schock für die Finanzwirtschaft sein wird“, sagte der Vorstand der Finanzmarktaufsicht, Helmut Ettl, am Dienstag. Allerdings sei der Sektor aktuell deutlich besser aufgestellt als noch bei der Finanzkrise.

Der Krisenpolster der heimischen Banken sei mittlerweile doppelt so hoch wie im Jahr 2008 und das Volumen fauler Kredite (non-performing loans/NPL) mit 2 Prozent deutlich geringer. Was seit 2008 an Regulierung aufgebaut wurde, sei gut gewesen und habe die Situation für jetzt klar stabilisiert, so der Co-Vorstand Eduard Müller. Das mache den Finanzsektor in der aktuellen Krise zu einem Teil der Lösung anstatt des Problems, wie es in der Finanzkrise der Fall war, so die beiden Vorstände.

Das niedrige NPL-Niveau wird sich aber nicht halten lassen. „Wenn wir 7 Prozent Wirtschaftseinbruch haben, wird es auch zu Zahlungsunfähigkeiten kommen“, so Ettl. Die Banken werden schon auf Basis der Konjunkturprognosen Rückstellungen bilden, noch bevor die faulen Kredite wieder mehr werden. Derzeit gebe es noch keine Ausfälle zu sehen, auch weil der Staat gerade massiv mit Hilfsmaßnahmen einspringe, so der FMA-Vorstand.

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In many ways, stockmarkets have been extraordinary in 2020

Posted by hkarner - 6. Mai 2020

Date: 05‑05‑2020

Source: The Economist

How this year’s crash differs from bear markets of the past

WHEN A BEAR growls, it is natural to be frightened. Ditto in finance, where bear markets can mean rapid losses of wealth. The coronavirus pandemic led to the fastest equity bear market in history: the S&P 500 index, America’s main benchmark, took just 16 days in February to fall by 20%, the standard definition.

The bear also seems to have been an unusually short‑lived member of its species. Although economic data have continued to deteriorate, share prices have staged a remarkable recovery. April was the S&P 500’s best month since January 1987. Having bottomed at 2,237 on March 23rd, it rallied by 27% by May 1st. Technically, that has put shares back into a bull market, even though they have yet to regain all their pre‑pandemic losses. Den Rest des Beitrags lesen »

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The Coming Greater Depression of the 2020s

Posted by hkarner - 29. April 2020

Date: 28‑04‑2020

Source: Project Syndicate by Nouriel Roubini

Nouriel Roubini, Professor of Economics at New York University’s Stern School of Business and Chairman of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is NourielRoubini.com. 

While there is never a good time for a pandemic, the COVID‑19 crisis has arrived at a particularly bad moment for the global economy. The world has long been drifting into a perfect storm of financial, political, socioeconomic, and environmental risks, all of which are now growing even more acute.

NEW YORK – After the 2007‑09 financial crisis, the imbalances and risks pervading the global economy were exacerbated by policy mistakes. So, rather than address the structural problems that the financial collapse and ensuing recession revealed, governments mostly kicked the can down the road, creating major downside risks that made another crisis inevitable. And now that it has arrived, the risks are growing even more acute. Unfortunately, even if the Greater Recession leads to a lackluster U‑shaped recovery this year, an L‑shaped “Greater Depression” will follow later in this decade, owing to ten ominous and risky trends.

The first trend concerns deficits and their corollary risks: debts and defaults. The policy response to the COVID‑19 crisis entails a massive increase in fiscal deficits – on the order of 10% of GDP or more – at a time when public debt levels in many countries were already high, if not unsustainable. Den Rest des Beitrags lesen »

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Don’t Try to Prepare for the Next Black Swan. You Can’t.

Posted by hkarner - 27. April 2020

Date: 26‑04‑2020

Source: The Wall Street Journal

In the age of Covid‑19, companies that amassed cash buffers and investors who insured against a market drop are looking smart. The risk is they start believing they can predict the unpredictable.

Covid‑19 has posed a mind‑bending question for companies, investors and policy makers: How to protect against the next extreme “black swan” event? The temptation to find a concrete answer is best resisted.

This is the financial teaser at the heart of political questions such as whether airlines are victims of the pandemic or undeserving recipients of taxpayer money. Last week, U.S. carriers reached an agreement to receive $25 billion in grants from the federal government despite the fact that, over the past decade, they have returned to shareholders essentially all of the free cash flow they earned—rather than investing or saving it.

Detractors say that carriers should have been forced to file for bankruptcy. Some analysts, such as UBS’s Victoria Kalb, have warned that regulators and socially minded fund managers may penalize buybacks and dividends, even after the Covid‑19 crisis is over. Den Rest des Beitrags lesen »

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Europe Suffers Record Collapse in Economic Activity

Posted by hkarner - 24. April 2020

Date: 23‑04‑2020

Source: The Wall Street Journal By Paul Hannon

Surveys suggest it is almost certain the global economy has entered a recession

In the U.K., the composite Purchasing Managers Index fell to an all‑time low in April.

Business activity in Europe and Japan collapsed in April as governments tightened restrictions on movement and social interaction aimed at limiting the spread of the coronavirus, according to surveys of purchasing managers.

The surveys, out Thursday, suggest governments have effectively closed parts of the economy where face‑to‑face interaction is unavoidable—such as restaurants and barbers—and activity has tumbled in parts of the economy less directly affected.

The drop in services sector activity is unprecedented in the history of the surveys, even in the wake of the global financial crisis. Manufacturing activity has been less severely affected. Den Rest des Beitrags lesen »

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Europe’s New Defining Moment

Posted by hkarner - 12. April 2020

Date: 12‑04‑2020

Source: Project Syndicate by Xavier Vives

Xavier Vives is Professor of Economics and Finance at IESE Business School and the author of Competition and Stability in Banking. 

The COVID‑19 pandemic represents a major opportunity for the European Union and the eurozone to act decisively on a common problem, thereby strengthening the bloc’s solidarity and integration. So far, however, European leaders have failed to seize it.

BARCELONA – The European Union and the eurozone are approaching their second defining moment in a decade. The first was the debt crisis that started in 2010 and was quelled by European Central Bank President Mario Draghi’s July 2012 pledge that the ECB was ready to do “whatever it takes” to preserve the euro. The ECB backed up Draghi’s declaration by introducing the outright monetary transactions (OMT) scheme, an emergency sovereign‑bond‑purchasing program that fortunately never had to be used.

The EU then established a banking union, with the ECB assuming the role of bank supervisor and a common resolution mechanism dealing with failing institutions. But this union is still incomplete, because the resolution backstop is insufficient for a major crisis and there is no common deposit‑insurance scheme. Den Rest des Beitrags lesen »

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How sick might banks get?

Posted by hkarner - 11. April 2020

Date: 08‑04‑2020

Source: The Economist

They have entered this crisis in better health than the previous one

From ebenezer scrooge to Gru in “Despicable Me”, the villain redeemed is a time‑honoured trope in fiction. There has been much talk lately of bankers enjoying a similar rehabilitation. Reckless overextension by lenders was the root cause of the financial crisis of 2007‑09. This time the blame lies with a microbe, not moneymen, and banks are seen as potentially part of the solution, not least as conduits for massive state support for stricken firms and households.

The corona‑crisis does indeed give banks a chance to improve their image. But it also presents them with some painful dilemmas and, worse, may ravage their bottom lines. Michael Corbat, boss of Citigroup, has warned that banks like his have to tread a “fine line” between supporting clients and undermining financial stability. They must conserve capital while also keeping dividend‑dependent investors sweet. However they handle such choices, the risk of hefty losses looms: bank shares have fallen by twice as much as the stockmarket this year on fears of rising defaults.

The industry went into the crunch in decent shape. Capital cushions, depleted going into the last crisis, have since been plumped up. Banks have also been made less vulnerable to funding runs. This time the system has creaked but not buckled. Early evidence suggests that post‑2009 efforts to push liquidity risk from banks into capital markets have worked, and to the extent that risk has rebounded it has been largely absorbed by central banks through their market‑support programmes, not by commercial banks, says Huw van Steenis of ubs, a Swiss lender.

Under those schemes, and their own steam, banks have increased lending dramatically, especially in America (see chart). In March public companies there drew down $191bn from bank credit lines, after taking next to nothing in January and February. The odd one out is China, where loan growth is similar to last year’s rate. In 2008‑09 officials arm‑twisted lenders into leading stimulus efforts. They may fear that another such push could break them. Chinese banks’ assets have ballooned to 285% of gdp, from 195% in 2007.

To encourage banks to lend more and offer forbearance, regulators in the West have rushed to relax or delay rules brought in after the financial crisis. These cover everything from loan‑loss accounting to the thickness of capital buffers (see chart). By one estimate, such (presumably temporary) regulatory forbearance has created $5trn of lending capacity. Den Rest des Beitrags lesen »

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