Föhrenbergkreis Finanzwirtschaft

Nach den kristallklaren Aussagen des Föhrenbergkreises zur Finanzwirtschaft aus dem Jahr 1999 gibt es jetzt einen neuen Arbeitskreis zum Thema.

Mit ‘Japan’ getaggte Beiträge

Why hasn’t Japan’s massive government debt wreaked havoc (yet)?

Geschrieben von hkarner - 21. Januar 2014

Charles Yuji Horioka, Takaaki Nomoto, Akiko Terada-Hagiwara, 21 January 2014, voxeu

Japan’s sovereign debt-to-GDP ratio is higher than any country in Europe and more than twice the OECD average. This column explains why Japan’s massive government debt did not wreak havoc in the past. Robust domestic saving and a temporary inflow of foreign capital caused by the Global Crisis have prevented a crisis thus far. As both of these factors become less applicable the government faces pressure to reduce debt-to-GDP ratio can be brought under control quickly.

The potential sovereign debt crisis in Japan looks even grimmer than those in the Eurozone economies if one looks only at the gross general government debt-to-GDP ratio. According to the OECD, this ratio ranged from 90 to 166% in some developed economies in 2012 (“only” 166% in Greece, 140% in Italy, 139% in Portugal, 123% in Ireland, and 91% in Spain—collectively referred to as the PIIGS economies) but was a full 219% in Japan in the same year. Thus, Japan’s gross general government debt-to-GDP ratio is more than twice the OECD-wide average (109 percent) and by far the highest in the developed world. Moreover, the OECD projects that Japan’s gross general government debt-to-GDP ratio will increase even further to 231% in 2014.

What makes Japan different?

Why has Japan been able to avoid the fiscal crises of the magnitude faced by the PIIGS economies even though her gross general government debt-to-GDP ratio is much higher? What is different about Japan? The most commonly given answer is that domestic saving is much higher (relative to domestic investment) and home bias is much stronger in Japan, as a result of which a much higher proportion of her massive government debt could be absorbed domestically without having to rely on foreign investors.

However, Reinhart and Rogoff (2008) have argued that domestic sovereign debt is just as important as external sovereign debt and that it is the total amount of sovereign debt that is of paramount importance. Why then has Japan’s massive government debt not wreaked havoc – at least not yet? This column tries to answer to this question. Den Rest des Beitrags lesen »

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Euro Zone Must Defeat Deflation Ogre

Geschrieben von hkarner - 21. Januar 2014

Date: 20-01-2014

Source: The Wall Street Journal By SIMON NIXON

Critics warn that the ECB risks repeating Japan’s errors, but this focus misses a crucial aspect of the Japanese phenomenon

Is the euro zone really “turning Japanese?”

Europe’s low inflation rate has become the new focal point for those who believe the euro zone is doomed to disaster. Inflation in the zone fell to just 0.8% in December, well below the European Central Bank target of “close to but below 2%.”

In Greece, inflation is already negative, while in Spain, Portugal and Ireland it ranges between 0.2% and 0.3%. That is fueling fears the currency area could tip into outright deflation, as Japan did in the 1990s when falling prices led to prolonged stagnation. Consumers held off purchases as they waited for goods to become cheaper, causing growth to stall and the debt burdens to rise.

The latest to lend its voice to the chorus of anxiety is the International Monetary Fund. Last week, IMF chief Christine Lagarde warned that deflation was a rising risk for the global economy, which could be disastrous for the recovery. “If inflation is the genie, then deflation is the ogre that must be fought decisively,” she said. Den Rest des Beitrags lesen »

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Advanced Malaise

Geschrieben von hkarner - 13. Januar 2014

Date: 13-01-2014Stiglitz
Source: Project Syndicate

JOSEPH E. STIGLITZ

Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, was Chairman of President Bill Clinton’s Council of Economic Advisers and served as Senior Vice President and Chief Economist of the World Bank. His most recent book is The Price of Inequality: How Today’s Divided Society Endangers our Future.

NEW YORK – Economics is often called the dismal science, and for the last half-decade it has come by its reputation honestly in the advanced economies. Unfortunately, the year ahead will bring little relief.

Real (inflation-adjusted) per capita GDP in France, Greece, Italy, Spain, the United Kingdom, and the United States is lower today than before the Great Recession hit. Indeed, Greece’s per capita GDP has shrunk nearly 25% since 2008.

There are a few exceptions: After more than two decades, Japan’s economy appears to be turning a corner under Prime Minister Shinzo Abe’s government; but, with a legacy of deflation stretching back to the 1990’s, it will be a long road back. And Germany’s real per capita GDP was higher in 2012 than it was in 2007 – though an increase of 3.9% in five years is not much to boast about. Den Rest des Beitrags lesen »

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The Global Economy in 2014

Geschrieben von hkarner - 7. Januar 2014

Date: 06-01-2014
Source: Project Syndicate
Schwab CC
KLAUS SCHWAB

Klaus Schwab is Founder and Executive Chairman, World Economic Forum.

GENEVA – At the dawn of a new year, the world is in the midst of several epic transitions. Economic growth patterns, the geopolitical landscape, the social contract that binds people together, and our planet’s ecosystem are all undergoing radical, simultaneous transformations, generating anxiety and, in many places, turmoil.

From an economic standpoint, we are entering an era of diminished expectations and increased uncertainty. In terms of growth, the world will have to live with less. To understand the implications of this, consider the following: If the global economy grew at its pre-crisis pace (more than 5% per year) for the foreseeable future, its size would double in less than 15 years; at 3%, doubling world GDP would take about 25 years.

This makes a significant difference to the speed at which wealth creation occurs, with profound effects on expectations. We ignore the power of compound growth to our detriment. Den Rest des Beitrags lesen »

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The World Economy’s Shifting Challenges

Geschrieben von hkarner - 5. Januar 2014

Date: 03-01-2014Soros CC
Source: Project Syndicate

GEORGE SOROS

George Soros is Chairman of Soros Fund Management and Chairman of the Open Society Foundations. A pioneer of the hedge-fund industry, he is the author of many books, including The Alchemy of Finance and The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means.

NEW YORK – As 2013 comes to a close, efforts to revive growth in the world’s most influential economies – with the exception of the eurozone – are having a beneficial effect worldwide. All of the looming problems for the global economy are political in character.

After 25 years of stagnation, Japan is attempting to reinvigorate its economy by engaging in quantitative easing on an unprecedented scale. It is a risky experiment: faster growth could drive up interest rates, making debt-servicing costs unsustainable. But Prime Minister Shinzo Abe would rather take that risk than condemn Japan to a slow death. And, judging from the public’s enthusiastic support, so would ordinary Japanese.

By contrast, the European Union is heading toward the type of long-lasting stagnation from which Japan is desperate to escape. The stakes are high: Nation-states can survive a lost decade or more; but the EU, an incomplete association of nation-states, could easily be destroyed by it. Den Rest des Beitrags lesen »

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2014 Outlook: Annus Not-So-Horribilis

Geschrieben von hkarner - 1. Januar 2014

Author: Marc Chandler  ·  December 26th, 2013  RGE EconoMonitor· 

Overview:

US: The broad characteristics of the investment climate are unlikely to change very much in the first part of next year.  The largest policy change is the  beginning of the long awaited slowing of the Federal Reserve’s long-term asset purchases.  The process will likely be gradual and may take the better part of 2014 to come to a complete stop.  The drag from fiscal policy will likely lessen. The roughly 1.7% annual growth in employment since 2009 is set to continue and underpin a continued expansion of the world’s largest economy.

EUROZONE: The ordo-liberalism as articulated by Germany, embodied in treaty agreements, and enshrined by the European Central Bank condemns the euro area, and by implication, many of the countries that move in its orbit, to a protracted period of slow growth and low inflation.    The institutional evolution in Europe continues and the pieces of an imperfect banking union are being established.   The ECB is likely to respond to the adverse monetary developments, but unless the perceived threat of deflation increases, it is likely to refrain from extreme measures, such as a negative deposit rate or outright purchase of bonds.
CHINA: The Chinese economy may slow modestly in the coming quarters, though officials will likely respond to evidence that growth is falling below 7.0%. The focus has shifted toward the implementation of reforms announced by the Third Plenum.   These entail financial and governing reforms.  The special economic zone in Shanghai will be viewed as a test case of the ability of the reformers to implement their program over the obstacles posed by inertia, corruption, and outright opposition.
JAPAN: The first year of Abenomics has seen growth strengthen, deflation pressures ease, the yen weaken and Japanese equities advance smartly.  The early turbulence of Japanese government bonds has eased and nominal yields remain low (real rates negative).  The second year is bound to be more challenging, as the economy has lost momentum in the second half of 2013. Den Rest des Beitrags lesen »

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Wie man eine Wirtschaftskrise ganz sicher nicht beseitigt

Geschrieben von hkarner - 27. Dezember 2013

26.12.2013 | 18:23 | JOSEF URSCHITZ (Die Presse)

Das Beispiel Japans zeigt: Geld drucken und Schulden machen allein sind keine tauglichen Instrumente gegen eine Krise. Ohne Reformen läuft nichts.

Als Shinzo Abe vor einem Jahr versprach, Japan mithilfe seiner Abenomics aus der lähmenden Deflationsspirale zu führen, hatte sich das „verlorene Jahrzehnt“ für den Inselstaat schon beinahe zum „verlorenen Vierteljahrhundert“ ausgewachsen: Seit dem Platzen einer gigantischen Immobilien- und Aktienblase zu Beginn der Neunzigerjahre ist die Wirtschaft des Landes nicht mehr in die Gänge gekommen, regelmäßige Startversuche durch staatliche Ankurbelungsprogramme haben die dritttgrößte Volkswirtschaft dieses Planeten zum mit Abstand höchstverschuldeten Industrieland gemacht – weit vor Griechenland.

Mit Abenomics sollte sich das ändern, wenngleich die Rezepte eher altbekannt als revolutionär wirkten: Forciertes Gelddrucken sollte ein bisschen Inflation erzeugen, staatliche Multimilliarden-Investionsprogramme sollten der Wirtschaft den entscheidenden Kick für den folgenden Selbstaufschwung verpassen, und mit umfassenden Strukturreformen sollte das Ganze abgesichert werden. Den Rest des Beitrags lesen »

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The Monster That Is Europe

Geschrieben von hkarner - 17. Dezember 2013

By John Mauldin

December 16, 2013

The Complacency of Consensus
The Sick (German) Banks of Europe
Where There Is One Cockroach…
It’s Quiet Out There. Maybe Too Quiet…

Here is this week’s letter, which will give you a head’s-up on a brewing banking crisis in Europe.

This week, Geert Wilders and his Party for Freedom in the Netherlands and Marine Le Pen of the Front National (FN) of France held a press conference in The Hague to announce that they will be cooperating in the elections for the European Parliament next spring and hope to form a new eurosceptic bloc. Their aim, as Mr. Wilders put it, is to “fight this monster called Europe,” while Ms. Le Pen spoke of a system that “has enslaved our various peoples.” They want to end the common currency, remove the authority of Brussels over national budgets, and undo the project of integration driven with so much idealism by two generations of European politicians. (My thought about Marine Le Pen after looking at her policies is that if Marine Le Pen is the answer for France, they are asking the wrong question.)

For now, Le Pen and Wilders are in a decided, if growing, minority (think Beppe Grillo, who got 25% in Italy in the last election). But as the graphic below suggests, the stitching that is holding the Frankenstein of Europe together seems to be getting a little frayed. And my new worry is that the real monster, one likely to pop many more of the tenuous stitches that hold things together, could be lurking in German banks. This week’s letter explores a problem as “hidden” as subprime was back in 2006. Den Rest des Beitrags lesen »

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Investors Bet Against the Yen

Geschrieben von hkarner - 30. November 2013

Date: 29-11-2013
Source: The Wall Street Journal

Money Managers Expect Bank of Japan to Ease Policy, Fed to Scale Back Stimulus

Investors are piling into bets against the yen, taking another run at a trade that proved lucrative for some of the industry’s biggest money managers earlier this year.

Wagers that the Japanese currency will slide against the U.S. dollar have surged to the highest amount this year and are within striking distance of levels not seen since 2007, according to the latest data from the Commodity Futures Trading Commission, which tracks positions of some hedge funds and other speculators.

Betting on a Yen fallThe bets are already paying off, with the yen slumping to its lowest in six months against the dollar this week, and falling almost 4% this month. It echoes a slide one year ago when the yen tumbled 22% from late October 2012 to the end of April, which resulted in big payoffs for high-profile investors including George Soros.

Those betting against the yen are anticipating that the U.S. Federal Reserve will soon reduce its $85 billion-a-month bond-buying program, helping bolster the dollar against major currencies. The yen may suffer in particular, they believe, because the Bank of Japan will also be forced to step up efforts to stimulate its economy, putting pressure on its currency.

Paul Lambert, head of currencies at Insight Investment in London, which manages around $435 billion of assets, said he has held an underweight position in the yen relative to his benchmark for most of this year, and added to that negative bet on the yen this month. Den Rest des Beitrags lesen »

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The Problem of Japan

Geschrieben von hkarner - 26. November 2013

Things that make you go hmmm… 25/11 Grant Williams

Japan is one of the most heavily indebted developed countries. Its total debt to GDP
is over 500%, compared to the US’s 370%. Japanese gross sovereign debt is around 240% of GDP, while its net debt is around 135%, substantially higher than most developed
countries. The government borrows to finance over 50% of its spending.
Then there’s that magic number that Japan breached this past summer when its public debt hit
¥1 quadrillion.
That number, hard to picture, looks like this:

¥1,000,000,000,000,000

Or, as I pointed out in a recent presentation, if you wanted to count to a quadrillion … it would
take you 31,709,792 years.
That’s a hell of an IOU to run up.
So the reason why Abe desperately needs inflation is clear; but let’s face it, 2% ain’t gonna do the trick. Den Rest des Beitrags lesen »

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