Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Japan’

Japan’s Devaluation Warning for Europe

Posted by hkarner - 17. März 2015

Date: 17-03-2015
Source: The Wall Street Journal

Monetary easing without reform has reduced real wages.

Amid the excitement as the European Central Bank began sovereign bond buying last week, Europeans might have missed that real wages in Japan fell again in January. Japanese households earn 7.5% less in inflation-adjusted terms now than before the 2008 financial panic, and about half of that decline has come during Tokyo’s “quantitative easing” program. This is a warning for Europe.

The similarities between Japan in 2013 as Prime Minister Shinzo Abe took power and the eurozone now are striking. Japan was in deflation; Europe has appeared close to it. Japanese worried that the yen, which had risen to around ¥77 per dollar in 2012, was badly overvalued. European Central Bank President Mario Draghi warned in April last year, when the euro was about $1.38, that “a rise in the exchange rate, all else being equal, implies a tightening of monetary conditions, a downward impact on inflation and potentially a threat to the ongoing recovery.”

So the Bank of Japan and ECB have fired their monetary bazookas at the deflation threat. The main goal has been competitive devaluation. With loan demand and banks weak, the traditional mechanism of monetary stimulus—increased liquidity and lower interest rates stimulating more lending—wouldn’t work. But policy makers hope a weaker currency will boost exports, higher earnings for exporters will trigger stronger business investment and trickle down to higher wages, which will lead to more domestic consumption and growth. Den Rest des Beitrags lesen »

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Inequality in Japan: The secure v the poor

Posted by hkarner - 16. Februar 2015

Date: 15-02-2015

Source: The Economist

The problem is not the super-rich

IN THOMAS PIKETTY’S bestseller, “Capital in the Twenty-First Century”, Japan appears as another rich country in which wealth is becoming ever more concentrated. It is certainly another rich country in which the book is selling well. Mr Piketty visited Tokyo this month, to a rapturous reception. Yet Japan may be the place where his thesis holds up least well.

The bursting of Japan’s asset bubble in 1991 is one reason why the rich have amassed less than in America or many European countries. The share of wealth held by the richest tenth of Japanese is lower than in famously egalitarian spots such as Norway and Sweden. In fact, it is the second-lowest of the 46 economies surveyed by Credit Suisse Research Institute, above only Belgium. The share of income going to the wealthiest has been fairly stable too. Levels of executive pay are far less egregious than in America. According to an analysis prepared for the Wall Street Journal by Mr Piketty’s collaborators, the share of national income taken by the top 1% in Japan, excluding capital gains, fell from a high of 9.5% in 2008 to 9% in 2012. Den Rest des Beitrags lesen »

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Monetary policies and falling inflation are behind currency turmoil

Posted by hkarner - 7. Februar 2015

Date: 07-02-2015
Source: The Economist
Subject: Currencies: Money-changers at bay

Forex volatilityEARLY trade was conducted in whatever currency was available. Coins circulated across borders in a bewildering variety of forms, creating the need for middlemen to value one token against another. These were the “money-changers” whom Jesus threw out of the temple.

Two thousand years later the foreign-exchange markets are still in turmoil. In January the Swiss National Bank abandoned its policy of capping the Swiss franc against the euro, catching many traders and investors by surprise. As the franc rose by 30% in a few minutes, many foreign-exchange brokers lost money (one went bust) and a hedge-fund manager, Everest Capital, lost so much that it had to close its main fund. Eastern Europeans who had taken out mortgages in Swiss francs also suffered—so much so that Croatia voted to peg its currency, the kuna, against the franc.

Other currencies are also under pressure. The Russian rouble has plunged against the dollar in the face of a declining oil price and sanctions by the West. This week the Reserve Bank of Australia unveiled a surprise rate cut, sending the Aussie dollar down to its lowest level against the US dollar since May 2009. Denmark has had to cut interest rates three times, further and further into negative territory, in order to discourage capital inflows that were threatening its peg against the euro. Den Rest des Beitrags lesen »

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Two Cheers for the New Normal

Posted by hkarner - 5. Februar 2015

Date: 05-02-2015
Source: Project Syndicate

Jim O’Neill, a former chairman of Goldman Sachs Asset Management, is Honorary Professor of Economics at Manchester University, a visiting research fellow at the economic think tank Bruegel, and a fellow of the University of Cambridge’s Center for Rising Powers.

JAKARTA – The conventional wisdom about the state of the world economy goes something like this: Since the start of the 2007-2008 financial crisis, the developed world has struggled to recover, with only the United States able to adjust. Emerging countries have fared better, but they, too, have started to flounder lately. In a bleak economic climate, the argument goes, the only winners have been the wealthy, resulting in skyrocketing inequality.

That scenario sounds entirely right – until, on closer examination, it turns out to be completely wrong.

Start with economic growth. According to the International Monetary Fund, during the first decade of this century, annual global growth averaged 3.7%, compared to 3.3% in the 1980s and 1990s. In the last four years, growth has averaged 3.4%. This is far lower than what many had hoped; in 2010, I predicted that in the coming decade, the world could grow at a 4.1% annual rate. But 3.4% is hardly disastrous by historical standards. Den Rest des Beitrags lesen »

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The Sum of All Our Fears! The Outlook for 2015

Posted by hkarner - 5. Februar 2015

Author: Satyajit Das  ·  February 3rd, 2015  ·  RGE EconoMonitorDAS 2

In 2013, an asset management consultancy identified alien invasion as a risk for the global economy, albeit an unlikely one. An online reader wryly observed that even such an event would be an excuse for markets to rally further as businesses could look forward to the prospect of demand from new non-human customers. Since 2009, financial markets have largely ignored risk, constructing a favourable narrative around events and rallying on any information.

Risky Economics…

In 2014, growth in advanced economies disappointed. Europe flirted with recession. Even the fireworks of Abenomics could not prevent Japan sliding into its fourth technical recession in six year since 2008. The US and UK were the cleanest of the dirty shirts. But even they grew below trend.

Recovery in employment and income levels is lack lustre. Investment remains weak.  Growth in global trade, a driver of growth, has slowed. Low interest rates are driving speculative housing booms and investment in bio-tech and technology, especially the sharing economy.

Based on its most recent fund raising, Uber was valued at US$40 billion, more than doubling its value in six months. The ride locating service is valued at a multiple of traditional car hire firms such as Hertz and Avis. Uber’s value exceeds the market capitalisation of publicly listed transport companies such as Delta Air Lines, American Airlines and United Continental.

Compounding the problem is low inflation. In Japan and Europe, there is concern about deflation. Despite fears ofhyperinflation, abundant liquidity has not led to anticipated price increases. This reflects slow circulation of money, weaknesses in the bank sector, surplus capacity and lack of pricing power.

The combination of modest economic growth, low inflation or deflation and high debt levels is toxic. As income levels fall, the ability to service debt declines. A shrinking economy increases debt-to-GDP levels. Den Rest des Beitrags lesen »

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The Swiss Release the Kraken!

Posted by hkarner - 20. Januar 2015

By John Mauldin, January 19, 2015

His ancient, dreamless, uninvaded sleep
The Kraken sleepeth: faintest sunlights flee….

“There hath he lain for ages, and will lie
Battening upon huge sea-worms in his sleep,
Until the latter fire shall heat the deep;
Then once by man and angels to be seen,
In roaring he shall rise and on the surface die.”

– Alfred, Lord Tennyson, “The Kraken

“The exact contrary of what is generally believed is often the truth.”

– Jean De La Bruyère Den Rest des Beitrags lesen »

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Don’t Bet on a Stronger Dollar

Posted by hkarner - 14. Januar 2015

Date: 14-01-2015
Source: Project Syndicate


Barry Eichengreen is Professor of EconomicThe Wall Street Journalnstitutions at the University of Cambridge; and a former senior policy adviser at the International Monetary Fund. His newest book, Hall of Mirrors:The Great Depression, the Great Recession, and the Uses – and Misuses – of History, was just published by Oxford University Press.

NEW YORK – Economic pundits, almost without exception, are predicting a stronger dollar in 2015 – an expectation that is leading investors to place some very large bets. But that market strategy could turn out to be a very large mistake.

The consensus reflects the fact that the United States is currently the only major economy where growth prospects are improving. Most recently, the US Commerce Department revised upward its estimate of GDP growth for the third quarter of last year, to 5% – the highest rate in 11 years.

Moreover, the revision was based mainly on personal consumption and business investment – the most stable and persistent components of GDP. Consumer sentiment is at its highest level since 2007. Low oil prices, which reduce the cost of gas at the pump, provide an additional boost by giving US households more cash to spend at the mall. The unemployment rate is 5.6% and falling. Den Rest des Beitrags lesen »

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A Five-Year Global Financial Forecast: Tsunami Warning

Posted by hkarner - 12. Januar 2015

By John Mauldin, January 12, 2015

It is the time of the year for forecasts; but rather than do an annual forecast, which is as much a guessing game as anything else (and I am bad at guessing games), I’m going to do a five-year forecast to take us to the end of the decade, which I think may be useful for longer-term investors. We will focus on events and trends that I think have a high probability, and I’ll state what I think the probabilities are for my forecasts to actually happen. While I could provide several dozen items, I think there are seven major trends that are going to sweep over the globe and that as an investor you need to have on your radar screen. You will need to approach these trends with caution, but they will also provide significant opportunities.

There is a book in here somewhere, but I do not intend to write one today. In fact, my New Year’s resolution is to write shorter letters in 2015. Over the last decade and a half, the letter has tended to get longer. A little more here, a little more there, and pretty soon it just gets to be a bit too much to read in one sitting. That means I need to either be more concise, break up my topics into two sessions or, if further writing is necessary, post the additional work on the website for those interested.

So I’m writing today’s letter in that spirit. Each of the major topics we’ll be covering will show up in other letters over the next few months. I would appreciate your feedback and any links to articles and/or data points that you think I should know about regarding these topics. Den Rest des Beitrags lesen »

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The ‘Divergent’ World of 2015

Posted by hkarner - 3. Januar 2015

Date: 03-01-2015
Source: The Wall Street Journal By NIALL FERGUSONFerguson

Veronica Roth’s novel offers a useful way of viewing global politics and economics. Let’s hear it for Dauntless America.

In Veronica Roth ’s “Divergent”—a 2011 “young adult” novel set in a dystopian future not a thousand miles removed from “The Hunger Games”—humanity is divided into five factions according to their dominant character traits: Abnegation, Amity, Candor, Dauntless and Erudite. This being a post-apocalyptic Chicago, the last faction turns out to be the bad guys. People who fail the initiation tests are consigned to poverty as “factionless.” People with multiple traits are classified as “divergent” and persecuted.

If you were to sort the world’s countries into five factions, you would need a slightly modified classification scheme. The U.S., its economic recovery firmly established despite learned talk of secular stagnation, is looking Dauntless. Then there are the Erudite little countries, like Estonia and Singapore, that have the rare distinction of intelligent governance. But the other three factions would need different names. Den Rest des Beitrags lesen »

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The World Economy’s Shifting Challenges

Posted by hkarner - 2. Januar 2015

Date: 01-01-2015
Source: Project Syndicate

GEORGE SOROSsoros_lightbox

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, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means and The Tragedy of the European Union.

NEW YORK – As 2014 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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