Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Nixon’

French Election Puts Possibility of ‘Frexit’ on the Agenda

Posted by hkarner - 17. Februar 2017

Date: 16-02-2017
Source: The Wall Street Journal By SIMON NIXON

Two front-runners agree that the defining issue is France’s membership of the eurozone

PARIS—What’s striking about the French presidential election is the extent to which the two front-runners share a basic analysis of the choice facing the country. Marine Le Pen, the leader of the right-wing National Front, and Emmanuel Macron, the 39-year-old former economy minister who quit François Hollande’s government to stand as an independent, are poles apart politically. But both agree that the defining issue is France’s membership of the eurozone.

Both point to the widening divergence between Germany and France’s economic performance during the past decade as evidence that the status quo isn’t sustainable. The National Front points to a recent International Monetary Fund study that suggested the euro is up to 15% undervalued in Germany and 6% overvalued in France as proof that France is at a competitive disadvantage. It argues that the only way France can remain a member of what one party official calls the “fixed eurozone exchange-rate regime” is to pursue an internal devaluation by cutting back on social protections and driving down wages. The alternative is to quit the eurozone. Den Rest des Beitrags lesen »

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In Trump, Poland Finds Reason to Reset EU Relations

Posted by hkarner - 6. Februar 2017

Date: 06-02-2017
Source: The Wall Street Journal By SIMON NIXON

It is in Warsaw’s interests to mend fences with European allies better placed to exercise leverage on the U.S. president and his Russia policy, Simon Nixon writes

WARSAW—German Chancellor Angela Merkel’s trip to Poland this week is an important moment for both sides—and for all of Europe. Since Poland’s conservative Law and Justice party took office in October 2015, the Polish government has been a persistent thorn in the side of the European Union.

Whereas its predecessor prioritized building a network of alliances across the continent and establishing a reputation as a reliable partner, the current government has adopted a more confrontational approach, not least over the question of EU asylum reform, where it has blocked proposals for the mandatory redistribution of refugees across the European bloc. Den Rest des Beitrags lesen »

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Italy Tries to Skirt a Populist Revolt

Posted by hkarner - 31. Januar 2017

Date: 30-01-2017
Source: The Wall Street Journal By SIMON NIXON

Country has taken steps to insulate itself, but long-term risks remain

grillo-ccBeppe Grillo, leader of 5-Star Movement

Never underestimate Italy’s capacity to muddle through.

Following Prime Minister Matteo Renzi’s defeat in last December’s constitutional reform referendum, the country didn’t collapse into turmoil, as many had feared. There was no political crisis leading to a snap election that might have brought the anti-euro 5 Star Movement to power; nor did the fragile banking system implode.

Instead, a new prime minister was swiftly installed at the head of a largely unchanged government, which acted promptly to stabilize the banks.

Now, the Italian establishment has taken further steps to insulate itself against the risk of a future populist government: A constitutional court ruling last week struck down a proposed change to the country’s electoral law, which would have created a two-stage process for electing the lower house of parliament, with the second-round winner automatically receiving bonus seats to give it an absolute majority. Den Rest des Beitrags lesen »

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Don’t Bet Against the Eurozone Just Yet

Posted by hkarner - 13. Januar 2017

Date: 12-01-2017
Source: The Wall Street Journal By SIMON NIXONnixon-twitter

The eurozone has managed to muddle through seven years of crisis. It’s likely to do so again in 2017, Simon Nixon writes

No one seems much interested in good economic news from Europe these days. Among investors and policy makers, all the talk is of political risks and how these might reignite the eurozone debt crisis. In British political circles, where the imminent demise of the eurozone has been an article of faith since the moment of its inception, discussion of the eurozone’s political risks have acquired an added dimension of excitement in the wake of the Brexit referendum. Among Brexiters, it is widely assumed that the worse the state of the eurozone, the more willing it will be to compromise with the U.K. in the divorce negotiations.

The logic of this argument is hard to follow and may, in any case, be based upon wishful thinking. Certainly, the political risks facing Europe are real and well-rehearsed. A victory for a populist anti-EU party in any one of the countries facing elections this year—the Netherlands, France, Germany and possibly Italy—would undoubtedly plunge European politics into turmoil. Den Rest des Beitrags lesen »

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Governing, not Elections, Is Europe’s Big 2017 Challenge

Posted by hkarner - 9. Januar 2017

Date: 09-01-2017
Source: The Wall Street Journal By SIMON NIXON

In the eyes of many, the EU is now seen as an agent of insecurity rather than security, Simon Nixon writes

To those of a glass-half-full disposition, Europe’s prospects haven’t looked this promising in years. The recovery is gathering pace, helped by an improving global outlook, low interest rates, a weak euro and the end of austerity. Surveys show manufacturing activity and economic sentiment at their highest levels since 2011. Unemployment is falling everywhere: In Germany at 4.1%, it is the lowest since reunification; Spain has just recorded its sharpest increase in jobs since 2008. In Italy, where real household disposable income is rising at its fastest pace since 2001, an overdue cleanup of the banking system is under way, addressing one of the biggest risks to the European economy.

Of course, this good economic news is overshadowed by political risks. After the events of 2016, including the surprise election of Donald Trump and the Brexit vote, few are willing to bet against further revolts against the established political and economic order. Looming elections in the Netherlands, France, Germany and possibly Italy will provide further opportunities for voters in major Western democracies to register their disillusionment with globalization in general and the European Union in particular by handing power to anti-EU populist parties. Den Rest des Beitrags lesen »

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The Many Hurdles to an Orderly Brexit

Posted by hkarner - 23. Dezember 2016

Date: 22-12-2016
Source: The Wall Street Journal by Simon Nixon

Businesses should be preparing for the scenario that the U.K. crashes out of the EU without a deal, Simon Nixon writes

It was like pulling teeth, but Theresa May did eventually admit to a parliamentary committee this week that her government was preparing for all Brexit scenarios, including the possibility that the U.K. crashes out of the European Union in 2019 without securing any deal with the bloc at all. This should hardly come as a surprise. Not only is it a standard principle of deal-making to identify your Best Alternative To a Negotiated Agreement, but the possibility that the U.K. might be forced to fall back on its Brexit BATNA is alarmingly high. Perhaps the U.K. and EU will be unable to agree on a deal, or the EU unable to ratify what has been agreed upon.

Businesses should be preparing for this worst-case scenario, too—but there is scant evidence this is happening, judging by the output of the various industry lobby groups. Their submissions to the government invariably focus solely on their ideal negotiated outcome. In almost every case, this amounts to a plea to preserve the status quo—or as much of it as possible. After 43 years of EU membership, most sectors in Britain are deeply integrated into pan-European supply chains and are broadly content with EU regulation, which is seen as high quality, predictable and trusted by customers and consumers. Den Rest des Beitrags lesen »

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The Risky Business of the Bank of England’s Brexit Warnings

Posted by hkarner - 16. Dezember 2016

Date: 15-12-2016
Source: The Wall Street Journal By SIMON NIXON

In recent weeks, the BOE has at times sounded like an arm of the Treasury, if not a branch of the British Bankers‘ Association, Simon Nixon writes.

Both the Bank of England and some quarters of the U.K. government have argued for transitional arrangements after Brexit to allow banks to adjust to any new settlement between the U.K. and the EU.

It is nearly 20 years since the Bank of England was relieved of its responsibility for the “sponsorship of the City.” When the central bank was handed its independence from political control in 1997, the government took the view that the BOE should focus solely on maintaining monetary and financial stability, leaving others to cheerlead for the U.K.’s financial-services industry. Yet in recent weeks, the BOE has at times sounded again like an arm of the Treasury, if not a branch of the British Bankers‘ Association.

In a series of interventions, BOE officials have warned of risks to European financial stability from a so-called hard Brexit, arguing for transition periods to allow banks to adjust to any new settlement between the U.K. and the EU. Den Rest des Beitrags lesen »

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European Central Bank’s Mario Draghi Learns the Limits of ‘Whatever It Takes’

Posted by hkarner - 12. Dezember 2016

Date: 12-12-2016
Source: The Wall Street Journal By SIMON NIXON

Political opposition to what the ECB has been doing has become too vocal to ignore, Simon Nixon writes

When the history of the eurozone is written, the events of last week may come to be seen as pivotal.

European Central Bank President Mario Draghi insists the package of measures he announced Thursday didn’t amount to a tapering of the ECB’s quantitative-easing program—at least not in the strict sense of starting a process of reducing bond purchases to zero. Indeed, the ECB could even be said to have loosened monetary policy further: By opting to buy €60 billion ($63.4 billion) of government bonds a month for nine more months rather than €80 billion for six months, the ECB has committed to injecting €60 billion more cash into the eurozone economy than the market had been expecting. The ECB’s decision to start buying government bonds with a maturity of just one year and to buy bonds yielding below its own deposit rate has also led to a steepening of yield curves, delivering a boost to bank margins that should feed through to credit supply. Den Rest des Beitrags lesen »

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Greece, not Italy, Still Poses Biggest Challenge to Eurozone

Posted by hkarner - 8. Dezember 2016

Date: 08-12-2016
Source: The Wall Street Journal By SIMON NIXON

A crisis in one country only becomes a crisis for the whole eurozone when a collective European response is required, Simon Nixon writes

Not for the first time this year, the doom-mongers have been confounded. The Italian referendum over the weekend resulted in a resounding defeat for Prime Minister Matteo Renzi, who promptly announced his resignation. Yet the sky didn’t fall in, the euro dipped and then rallied, and Italian bonds and bank stocks barely budged. Other European assets were also largely unmoved.

Why didn’t markets react how some had feared—and those who dream of the failure of the European project had hoped? One answer is that Mr. Renzi’s defeat was in the price: Markets had anticipated it. Another explanation is that the referendum, like the Brexit vote and the election of Donald Trump, doesn’t in itself change anything. Political consequences can and will follow from the decision, but it is too early to say what these will be and the markets will wait to assess them. Den Rest des Beitrags lesen »

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Greece and Its Creditors Get Back on a Collision Course

Posted by hkarner - 6. Dezember 2016

Date: 05-12-2016
Source: The Wall Street Journal By SIMON NIXON

Greece’s woes oblige the eurozone to do something it has rarely appeared capable of doing: take a collective political decision, Simon Nixon writes.

In a continent beset by multiple crises, Greece remains the cradle of European dysfunction. The country may have dropped out of the headlines in recent months, its multiple challenges seemingly buried under a tide of bailout cash. Yet it still presents the greatest risk to the survival of the eurozone. That is because Greece’s circumstances oblige the eurozone to do something it has so far appeared incapable of doing, except under conditions of extreme financial stress: take a collective political decision.

The first test of the eurozone’s decision-making capacity will come at a meeting of eurozone finance ministers in Brussels on Monday. On the face of it, the decision facing them appears straightforward: They need to complete the second review of Greece’s bailout, which will set the targets for the remaining two years of the program. That decision, in turn, will unlock the next tranche of funding. The outlines of this deal are already in place: Greece has more or less reached an agreement with its creditors—the International Monetary Fund, the European Commission and the European Central Bank—on what it must do to get the cash. Den Rest des Beitrags lesen »

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