Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Japan’

Trillions in Debt—but for Now, No Reason to Worry

Posted by hkarner - 27. Mai 2016

Date: 26-05-2016
Source: The Wall Street Journal

U.S. household borrowing nears precrisis peaks; global debt has already topped 2008 levels

Student loans in the U.S. now account for 10% of household debt, double the level in 2008.

If current trends persist through the end of the year, U.S. households will owe as much as they did at the peak of borrowing in 2008.

Global debt has already topped 2008 levels and keeps rising. That’s pretty astonishing so soon after debt-driven crises in the U.S. and Europe and endless worries about too much borrowing in Japan, China and emerging markets.

But for all the hand-wringing, a near-term debt crisis is unlikely. Lower interest rates mean debt payments are far lower than they were before the crisis. In the U.S., household debt compared with the overall economy is way down. And overseas, loans can easily be rolled over. Den Rest des Beitrags lesen »

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A Debt Agenda for the G7

Posted by hkarner - 24. Mai 2016

Photo of Martin Feldstein

Martin Feldstein

Martin Feldstein, Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research, chaired President Ronald Reagan’s Council of Economic Advisers from 1982 to 1984. In 2006, he was appointed to President Bush’s Foreign Intelligence Advisory Board, and, in 2009, was appointed to President Obama’s Economic Recovery Advisory Board. Currently, he is on the board of directors of the Council on Foreign Relations, the Trilateral Commission, and the Group of 30, a non-profit, international body that seeks greater understanding of global economic issues.

MAY 23, 2016, Project Syndicate

CAMBRIDGE – On May 26-27, the heads of the Group of Seven leading industrial countries will gather in Japan to discuss common security and economic problems. A major common problem that deserves their attention is the unsustainable increase in the major developed countries’ national debt. Failure to address the explosion of government borrowing will have adverse effects on the global economy and on debt-burdened countries themselves.

The problem is bad and getting worse almost everywhere. In the United States, the Congressional Budget Office estimates that the federal government debt doubled over the past decade, from 36% of GDP to 74% of GDP. It also predicts that, under favorable economic assumptions and with no new programs to increase spending or reduce revenue, the debt ratio ten years from now will be 86% of GDP. Even more worrying, the annual deficit ratio will double in the next decade to 4.9% of GDP, putting the debt on track to exceed 100% of GDP. Den Rest des Beitrags lesen »

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Helicopters on a Leash

Posted by hkarner - 10. Mai 2016

Photo of Adair Turner

Adair Turner

Adair Turner, a former chairman of the United Kingdom’s Financial Services Authority and former member of the UK’s Financial Policy Committee, is Chairman of the Institute for New Economic Thinking. His latest book is Between Debt and the Devil.

MAY 9, 2016, Project Syndicate

PARIS – Faced with a slowing global economy, a number of observers – including former US Federal Reserve Chair Ben Bernanke and Berkeley economist Brad DeLong – have argued that money-financed fiscal expansion should not be excluded from the policy toolkit. But talk of such “helicopter drops” of newly printed money has produced a strong counterattack, including from Michael Heise, the chief economist of Allianz, and Koichi Hamada, the chief economic adviser to Prime Minister Shinzo Abe and one of the architects of Japan’s “Abenomics” economic-recovery program.

I disagree with Heise and Hamada, but they rightly focus on the central issue – the risk that allowing any monetary finance will invite excessive use. The crucial question is whether we can devise rules and responsibilities to guard against that danger. I believe we can and must, and that in some countries the alternative will not be no monetary finance, but monetary finance implemented without discipline. Den Rest des Beitrags lesen »

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The Deflation Bogeyman

Posted by hkarner - 10. April 2016

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Daniel Gros

Daniel Gros is Director of the Brussels-based Center for European Policy Studies. He has worked for the International Monetary Fund, and served as an economic adviser to the European Commission, the European Parliament, and the French prime minister and finance minister. He is the editor of Economie Internationale and International Finance.

APR 8, 2016, Project Syndicate

BRUSSELS – Central banks throughout the developed world have been overwhelmed by the fear of deflation. They shouldn’t be: The fear is unfounded, and the obsession with it is damaging.

Japan is a poster child for the fear. In 2013, decades of (gently) falling prices prompted the Bank of Japan to embark on an unprecedented monetary offensive. But while headline inflation increased for a while, the factors driving that increase – a competitive depreciation of the yen and a tax increase – did not last long. Now, the country is slipping back into near-deflation – a point that panicked headlines underscore.

But, contrary to the impression created by media reports, the Japanese economy is far from moribund. Unemployment has virtually disappeared; the employment rate continues to reach new highs; and disposable income per capita is rising steadily. In fact, even during Japan’s so-called “lost decades,” per capita income grew by as much as it did in the United States and Europe, and the employment rate rose, suggesting that deflation may not be quite as nefarious as central bankers seem to believe. Den Rest des Beitrags lesen »

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Europe’s Emerging Bubbles

Posted by hkarner - 29. März 2016

Photo of Hans-Werner Sinn

Hans-Werner Sinn

Hans-Werner Sinn, Professor of Economics and Public Finance at the University of Munich, is President of the Ifo Institute for Economic Research and serves on the German economy ministry’s Advisory Council. He is the author, most recently, of The Euro Trap: On Bursting Bubbles, Budgets, and Beliefs.

MAR 28, 2016, Project Syndicate

MUNICH – The European Central Bank’s latest policy moves have shocked many observers. While the goal – to prevent deflation and spur growth – is clear, the policies themselves are setting the stage for severe instability.

The policies in question include setting the interest rate on the ECB’s main refinancing operations to zero; raising monthly asset purchases by €20 billion ($22.3 billion) to €80 billion; and pushing the interest rate on money that banks deposit with the ECB further into negative territory – to -0.40%. Moreover, the ECB has launched a new series of four targeted longer-term refinancing operations, which also carry negative interest rates. Banks receive up to 0.4% interest on ECB credit that they take themselves, provided they lend it out to private businesses. Den Rest des Beitrags lesen »

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The Markets Have a Message: Don’t Believe This Rally

Posted by hkarner - 29. März 2016

Date: 29-03-2016
Source: The Wall Street Journal

As risky assets have rebounded since mid-February, the havens to which investors rushed during the earlier panic haven’t had an equivalent selloff

Amid the epic recovery in risky assets since mid-February, one thing has been missing: an equivalent selloff of the havens to which investors rushed during the earlier panic. Instead of the usual reckless rally, this has been a very cautious comeback.

Some of the highest-risk assets chalked?up spectacular gains?during the recovery. The J.P. Morgan Emerging Markets Currency Index rose 8%, a gain matched in such a short time only once since the index was created in 2000. U.S. junk bonds leaped 8% in price, the biggest jump in the Bank of America Merrill Lynch benchmark over such a short period since the summer of 2009, when the country was just emerging from recession.

U.S. shares didn’t miss out. From its February low, the S&P 500 recorded its biggest gain over an equivalent period since late 2011, rising more than 12% by the middle of last week; it is still up 11%. Den Rest des Beitrags lesen »

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Bravo! Zwei IWF-Ökonomen sagen, wie wir überfällige Lohnerhöhungen durchsetzen

Posted by hkarner - 21. März 2016

Naja! (hfk)

21. März 2016 l l Flassbeck Economics

Mit einer Anmerkung von Heiner Flassbeck

Endlich! Zwei Ökonomen des IWF haben begriffen, dass der Weg zum Wirtschaftswachstum letztlich über Lohnerhöhungen führt. Ihr 4-Punkte-Programm ist nicht nur für Japan wegweisend.

Alle reden von Helikoptergeld. Die beiden IMF Ökonomen Luc Everaert und Giovanni Ganelli haben eine viel bessere Idee. In ihrem Paper unter dem Titel „Japan: Time to Load a Fourth Arrow-Wage Increases“ kommen sie gleich zum Kern des Problems: die stagnierenden Löhne. Seit 1995 sind die Löhne für Vollzeitstellen in Japan nur gerade mal um 0,55 Prozent gestiegen! Um diesem Missstand abzuhelfen, schlagen sie vier konkrete Massnahmen vor:

  1. Profitable Unternehmen sollen entweder die Löhne jedes Jahr um mindestens 2 Prozent plus nationale Rate der Produktivitätssteigerung erhöhen. Oder sie müssen erklären, warum sie nicht tun und ihre Lohnpolitik offenlegen. Dieser Offenlegungspflicht lehnt sich an entsprechende Regelungen im Deutschen Corporate Governance Kodex an. Stichwort: Comply or Explain.
  2. Die Regierung soll Massnahmen ergreifen, um Lohnerhöhungen steuerlich zu begünstigen.
  3. Firmen, die steigende Profite nicht an die Arbeitnehmer weiter geben sollten mit Strafsteuern belebt werden.
  4. Der Staat muss mit Lohnerhöhungen voran gehen. Den Rest des Beitrags lesen »

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Japanese Policy Failure Means Disaster For Us All

Posted by hkarner - 11. März 2016

John Mauldin, March 9, 2016Mauldin Video

This week’s Outside the Box is a little bit different. I’m going to start with a selection from Mohamed El-Erian’s latest note. Mohamed himself is soft-spoken and calm, and I tell you that because the piece that follows is as close to capitals, underlining, and bolding with lots of exclamation points as Mohamed can get. He continues to get more concerned about the direction of central bank policy around the world and its unknown and unintended potential consequences. I will just cut and paste part of Mohamed’s essay into this introduction.

I want to follow up with a presentation by Kevin Wilson at Blue Water Capital on Japan. Basically, this piece illustrates the potential problems created by the current philosophical direction that the Bank of Japan is taking in their country. Essentially, Kevin is talking about the policy failure of Abenomics and the unintended consequences of negative interest rate policies (NIRP). A major economic disruption in Japan would have significant effects on the global economy. His summary sentence?

Given Japan’s massive debt and demographic headwinds, the oncoming recession may trigger an endgame that would involve a possible depression and eventual default and devaluation.

That speculation sounds a lot like what I was writing in Endgame and Code Red. While I see a little bit different outcome than Kevin does (in terms of what a default might look like), I think he has properly highlighted the concerns we should all have.

Now let’s look at Mohammed’s note: Den Rest des Beitrags lesen »

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G-20 Says Economic Risks Have Risen Globally

Posted by hkarner - 29. Februar 2016

Date: 28-02-2016
Source: The Wall Street Journal

Finance ministers say all tools are needed to sustain growth, but don’t call for coordinated spending

SHANGHAI—Citing mounting threats to the global economy, world financial chiefs vowed to accelerate long-promised economic overhauls to ease the burden on the easy-money stimulus policies that are fast running out of steam.

Finance ministers and central bankers from the Group of 20 largest economies meeting in Shanghai during the weekend sought to allay growing concerns that fissures in the global economy—including the potential for a sharp deceleration in the Chinese economy—could pitch the world back into recession.

“We will use all policy tools—monetary, fiscal and structural” to strengthen growth, boost investment and ensure stability in financial markets, the G-20 said in its official communiqué issued Saturday after two days of intense talks.

Global markets have shuddered in recent months amid a souring growth outlook, overall weak demand and anxieties that China’s economy may be falling faster than Beijing acknowledges and might potentially undermine an increasingly fragile global economy. The International Monetary Fund earlier this week said it likely would downgrade its forecast in coming months, calling for a coordinated program to boost demand. Den Rest des Beitrags lesen »

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