Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Nixon’

What’s Really Behind the Eurozone’s Economic Turnaround

Posted by hkarner - 15. August 2017

Date: 14-08-2017
Source: The Wall Street Journal By Simon Nixon

Many economists may have underestimated the role of improvements to the supply side of the eurozone economy

It is now four years since the start of the remarkable Spanish economic recovery. Yet at the time, few saw it coming. Back in July 2013, the International Monetary Fund forecast that it would take until 2018 for Spanish economic growth to barely scrape above 1% while unemployment would remain above 25% for five years.

In fact, the Spanish turnaround had already begun: Growth exceeded 1% in 2014 and has been above 3% ever since. In that time, Spain has created more than two million jobs, bringing the unemployment rate down from a peak of 26.2% to an eight-year low of 17.2% today. Den Rest des Beitrags lesen »

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Ten Years Later, Younger Workers Still Endure Costs of the Crisis

Posted by hkarner - 11. August 2017

Date: 10-08-2017
Source: The Wall Street Journal By Simon Nixon

Policy makers’ decisions at the time to spare older generations has led to a rise in intergenerational inequality

All of the £2.7 trillion of wealth created in the U.K. since 2007 has been harvested by those over 45, Bank of England chief economist Andrew Haldane said last year. Above, a view of Canary Wharf district in London.

Ten years on from the start of the global financial crisis, it is conventional wisdom that no one saw it coming. But this isn’t quite right.

Everyone saw it coming, or at least saw something coming. Nobody working in—or writing about—finance in the run-up to Aug. 9, 2007, was in any doubt that markets were running red-hot and that a crash seemed imminent.

There had been a series of market tremors in the preceding years that traders feared could be the start of something bigger before fizzling out—prompting Chuck Prince, the then-chief executive of Citigroup Inc., to utter his immortal advice that “while the music is playing, you have to keep dancing.” Den Rest des Beitrags lesen »

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Britain’s Unreal Brexit Transition Debate

Posted by hkarner - 4. August 2017

Date: 03-08-2017
Source: The Wall Street Journal By Simon Nixon

Theresa May and her party will have a hard time negotiating with the EU when they can’t figure out precisely what they want

British Prime Minister Theresa May has talked about a wide range of possibilities for the U.K.’s future relationship with the European Union.

There is an air of unreality about the debate that has been raging this summer over a Brexit transition deal. The mere fact that this debate is taking place at all is unreal. It was never remotely plausible that the U.K. and European Union could negotiate and ratify both a divorce agreement and a new free-trade deal in the two years allowed under the Article 50 timetable, let alone the 21 months remaining after Prime Minister Theresa May squandered the first three months on a snap general election.

So the fact that it has taken until now for the cabinet to accept that a transitional deal will be essential—even if official government policy is still that a new Brexit trade deal can be agreed by March 2019—is alarming. Den Rest des Beitrags lesen »

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Don’t Expect the EU to Ride to the U.K.’s Rescue

Posted by hkarner - 20. Juli 2017

Date: 20-07-2017
Source: The Wall Street Journal By Simon Nixon

The bloc is neither equipped nor disposed to toss Britain the post-Brexit lifeline the country hopes for

The rest of Europe can be forgiven a little schadenfreude as it looks across the English Channel. So far, the decision to quit the European Union appears to have bought little but political instability and economic uncertainty to Britain—while the eurozone economy appears to go from strength to strength. But is the EU being too complacent about the risks it could face from a botched Brexit?

The EU already faces increasingly conflictual relations with two of its biggest neighbors, Russia and Turkey. Some in the U.K. government fear the EU is underestimating the risk that Brexit creates an increasingly conflictual relationship with a third. Den Rest des Beitrags lesen »

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ECB Taper Talk Puts Spotlight on Italy

Posted by hkarner - 11. Juli 2017

Date: 10-07-2017
Source: The Wall Street Journal By Simon Nixon

Any sharp rise in borrowing costs risks reviving questions over the sustainability of Italian debt.

The ECB is standing firm on its policy that its task is to set monetary policy conditions for the whole eurozone, not an individual country. Above, ECB President Mario Draghi.

The recent volatility in bond markets has stirred up old fears in Europe. Investors have long been concerned about the possible impact of the end of the European Central Bank’s quantitative easing program on the eurozone’s periphery, not least Italy—the country long-regarded as too big to save. Now with markets abuzz with talk of central bank monetary policy “normalization,” those concerns are once again front of mind: Without the fire blanket of ECB government bond-buying, will Italian borrowing costs soar once again, plunging the eurozone back into crisis? Den Rest des Beitrags lesen »

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European Central Banks Face Added Political Constraints

Posted by hkarner - 4. Juli 2017

Date: 03-07-2017

Source: The Wall Street Journal By Simon Nixon

The banks’ own rules, along with wider political trends and mixed economic signals complicate any move to tighten policy

Central bankers around the world are grappling with a common problem: when and how to normalize monetary policy at a time of normal levels of economic growth, normal levels of unemployment but abnormal levels of wage growth that is keeping inflation lower than their economic models predict.

Policy makers at the European Central Bank and Bank of England are facing political challenges that are making their task even harder.

At the ECB, the political constraint is its own self-imposed rules setting limits on the size and scale of its quantitative easing program. Den Rest des Beitrags lesen »

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Britain Still Believes in Fantasies on Brexit

Posted by hkarner - 23. Juni 2017

Date: 22-06-2017
Source: The Wall Street Journal By Simon Nixon

The government of Theresa May has far less leverage in the talks than it is willing to acknowledge

Prime Minister Theresa May and her husband Philip departing 10 Downing Street on Wednesday for the opening of Parliament.

No one should have been surprised that the Brexit talks began this week with an immediate capitulation by the U.K. government over the sequence of topics to be treated. Brexit minister David Davis had boasted during the recent campaign that the European Union’s refusal to discuss a trade deal until sufficient progress had been made on settling Britain’s outstanding budget obligations and securing the rights of EU and British citizens would launch “the fight of the summer.” That was revealed to be empty bravado, given that the U.K. needs a deal far more than the EU does. Yet even now that Britain’s lack of leverage has been laid bare, an air of unreality remains about much of the Brexit debate.

One fantasy that refuses to die is the notion that the EU might somehow be persuaded to water down the principle of free movement of citizens, thus allowing the U.K. to restrict EU migration while retaining its membership in the single market. This idea first surfaced during David Cameron’s doomed attempt to rewrite the free-movement rules before the Brexit referendum. It reappeared this week in a new campaign by more than 50 Labour politicians who want the U.K. to remain inside a “reformed single market.” Yet it should be obvious by now that there is no appetite in the EU to water down the right of free movement, a point even Prime Minister Theresa May has conceded. Den Rest des Beitrags lesen »

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Now Britain, Not France, Risks Being ‘Sick Man’ of Europe

Posted by hkarner - 16. Juni 2017

Date: 15-06-2017
Source: The Wall Street Journal By Simon Nixon

Despite the triumphalism of Brexit advocates, the U.K.’s cross-Channel rival is better placed for growth

It is often underappreciated just how quickly a country’s fortunes can change. In 2004, Germany was considered the sick man of Europe. Five years later, after some judicious reforms to its labor market, it was Europe’s economic powerhouse. Four years ago, Spain was widely dismissed as an economic basket case, one step away from national bankruptcy and euro exit. Yet since mid-2013, it has been growing at around 3% a year and created two million jobs.

That points to a second aspect to economic turnarounds: They are rarely obvious at the time, even to the economists, policy makers and pundits paid to spot these things. Famously, 364 distinguished economists—among them Mervyn King, who later became governor of the Bank of England—wrote to the Times in 1981 to warn that Prime Minister Margaret Thatcher’s policies were doomed to fail. Yet history shows that Britain’s recovery began at almost exactly that moment, and five years later its economy was booming. Den Rest des Beitrags lesen »

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U.K. Election Sows More Doubt Than Hope

Posted by hkarner - 9. Juni 2017

Date: 08-06-2017
Source: The Wall Street Journal By Simon Nixon

Whether Theresa May has the skills to reach a good deal with the EU seems less clear than two months ago

It seems strange to recall now, but when Theresa May announced her plan in April for a snap general election in June, the markets reacted with relief. The pound rallied and stocks rose. The expectation was that the British prime minister would secure a landslide victory over Labour, giving her a mandate to face down hard-line Brexiters prepared to risk the U.K. crashing out of the European Union if no deal is reached in the next two years.

The market’s optimism was shared in Brussels and other European capitals, where there were concerns that Mrs. May lacked the political capital to make the concessions they believed necessary to reach the “deep and special partnership” she has said she seeks with the EU.

Seven weeks later, it is hard to be so optimistic about Britain’s outlook. Though the polls have tightened dramatically over the course of the campaign, Mrs. May is still widely expected to win with an increased majority and the pound remains above its level when the election was called. But the campaign has altered the political landscape in unexpected ways that could have profound consequences for the economy. Den Rest des Beitrags lesen »

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Post-Brexit EU Unity May Not Hold

Posted by hkarner - 26. Mai 2017

Date: 25-05-2017
Source: The Wall Street Journal By Simon Nixon

The biggest surprise of Brexit has been the remarkable cohesion of the remaining 27 EU members. But it may not last.

The biggest surprise of Brexit so far has been the remarkable cohesion of the remaining 27 members of the European Union. In fact, no one has been more surprised by this unity, which manifested itself immediately after the referendum and has solidified since, than the EU itself.

The 27 nations have resisted the British government’s diplomatic efforts to pry them apart. Even a whistle-stop tour of European capitals by Prince William’s wife, the Duchess of Cambridge, couldn’t stop EU leaders from agreeing to their hardline Brexit negotiating guidelines in just four minutes.

The bad news for the U.K. is that this unity is likely to hold when formal negotiations begin. That’s partly because the interests of the EU27 really are aligned. Den Rest des Beitrags lesen »

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