Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Nixon’

The Eurozone’s Challenge: Don’t Waste the Recovery

Posted by hkarner - 17. Oktober 2017

Date: 16-10-2017
Source: The Wall Street Journal By Simon Nixon

The bloc’s robust recovery is an opportunity to strengthen its resilience to future shocks—but will governments grasp it?

French President Emmanuel Macron, and German Chancellor Angela Merkel have different priorities when it comes to reforming the eurozone’s architecture.

The International Monetary Fund had a clear message for economic policy makers gathered in Washington for its annual meetings last week: don’t waste a recovery. The global economy is enjoying a robust upswing, so governments should fix the roof while the sun is shining.

It was a message directed particularly at the eurozone. The strength of the currency bloc’s recovery has taken almost everyone by surprise, not least the IMF, which upgraded its forecast for eurozone growth in 2018 by 0.2 percentage point to 2.1% compared with its July forecast, putting it on a par with the U.S. This recovery is both broad-based, spanning all countries and sectors, and well-balanced—with household spending, exports and investment all playing their part. Den Rest des Beitrags lesen »


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Brexit Poses Risk to U.K.’s Existing Economic Order

Posted by hkarner - 10. Oktober 2017

Date: 09-10-2017
Source: The Wall Street Journal By Simon Nixon

At last week’s Conservative Party conference, there was growing concern at where the process is heading

British Prime Minister Theresa May

The British people didn’t vote for a revolution. They simply voted to leave the European Union. But senior figures across the political spectrum believe that a revolution is what Britain is getting.

Contrary to what Brexiters said during last year’s referendum—and continued to insist until recently—Britain’s departure from the EU is going to be anything but easy. It is increasingly clear that Brexit was an act of violence against the existing economic order.

There is scarcely a corner of the U.K. economy that is unaffected by the decision to reverse 43 years of European integration. At last week’s conference of the ruling Conservative Party, there was growing concern at where this process is heading and how it might end.

What makes Brexit so destabilizing is that it shares two features common to revolutions. First, it has created a parallel legitimacy, pitching the supposed “will of the people” expressed in the referendum against the traditional sovereignty of Parliament, thereby constraining the ability of elected representatives to exercise their own judgment.

Second, it has created a power vacuum. Brexiters campaigned under the slogan “Take Back Control,” but they never agreed who should take control of the powers currently held by Brussels. They shook the economic order but without a coherent plan as to what to put in its place. Den Rest des Beitrags lesen »

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The European Union’s Neoliberal Dilemma

Posted by hkarner - 6. Oktober 2017

Date: 05-10-2017
Source: The Wall Street Journal By Simon Nixon

The free flow of capital and people seemed to deliver only winners until the economic crisis revealed competition’s downside in many countries

Those who say the European Union is a neoliberal plot are, of course, largely right. Any single market that allows free movement of capital and people by its very nature pits country against country, region against region and town against town in a competition to attract investment and productive people. The rewards flow to those that offer the best business environment, high-quality infrastructure and the right mix of skills. Those that get it wrong face stagnation or decline.

Until the global financial crisis, the EU’s free movement of capital and people appeared to deliver only winners. Countries in Northern and Western Europe that had plenty of capital benefited from the flow of people to plug gaps in their growing job markets, boosting growth and living standards. And countries in Eastern Europe that had large pools of low-wage workers benefited from the free movement of capital as companies looked to outsource manufacturing. Meanwhile, those countries, primarily in Southern Europe, that weren’t particularly attractive to people or corporate capital were at least able to tap booming financial markets to finance lavish government spending. The result was rising and converging living standards across the EU. Den Rest des Beitrags lesen »

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U.K.’s Theresa May Buys Time Over Brexit—but Maybe Not Much

Posted by hkarner - 26. September 2017

Date: 25-09-2017
Source: The Wall Street Journal By Simon Nixon

In speech, prime minister abandons many core Brexiter nostrums in effort to jumpstart stalled talks

British Prime Minister Theresa May delivers a speech in Florence, Italy.

Theresa May had two objectives when she summoned members of her cabinet and the British press corp to the Italian city of Florence to hear her make a major speech on Brexit last week.

She needed to say enough to unblock a stalled Brexit negotiation ahead of the next round of talks that start Monday in Brussels—essential to reassure increasingly anxious United Kingdom-based businesses—without blowing apart the unity of her government just ahead of next Sunday’s Conservative party conference in Manchester.

What made this task so complicated was that to secure the first objective, she had to abandon many core Brexiter nostrums that have formed the basis of official Brexit policy until now. Gone were the bullish claims that negotiating a free-trade pact with the EU would be the easiest deal in history; that an agreement could be reached in two years while simultaneously negotiating ambitious free-trade deals with other major economies; that by March 2019, the U.K. would be free of all EU jurisdiction; that this could be done without paying vast sums to Brussels; or that Britain would emerge as well, if not better off, than before. Den Rest des Beitrags lesen »

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A Portuguese Lesson for Britain’s Euroskeptics

Posted by hkarner - 22. September 2017

Date: 21-09-2017

Source: The WSJ By Simon Nixon

The turnaround in Lisbon shows that British conservatives aren’t, in fact, as conservative as they imagine

British euroskeptics have been predicting the demise of the euro since before the single currency was even launched. For 25 years, they have been warning that it is doomed to failure, that it is a “burning building with no exits.”

Its supposed imminent collapse was one reason why some Brexiters said it was essential that Britain quit the European Union. Others argued that the only way for the eurozone to save itself was to turn itself into the superstate of euroskeptic nightmares, complete with mutualized debt and fiscal transfers, riding roughshod over national sovereignty. Den Rest des Beitrags lesen »

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The ‘Norway Option’ Won’t Help the U.K. Avoid Brexit Risks

Posted by hkarner - 8. September 2017

Date: 07-09-2017
Source: The Wall Street Journal By Simon Nixon

The idea that the U.K. should join the European Economic Area persists even though it shouldn’t

The political obstacles to British membership in the EEA are immense, and the idea runs counter to why the U.K. is leaving the EU in the first place.

A depressing feature of the Brexit debate is the way that it goes round in circles. No sooner has an argument apparently been settled than it reopens again.

One example is the persistence of the idea that the U.K. should join the European Economic Area as a way to avoid the inevitable Brexit cliff edges. The so-called Norway option—which would see the U.K. join an outer tier of countries alongside Norway, Iceland and Liechtenstein that are inside the single market, but outside the European Union’s customs union—continues to hold sway over a significant segment of both Brexiter and Remainer opinion. Indeed, the idea has gained fresh currency following recent comments by the president of the European Free Trade Association court, which oversees disputes between the three non-EU EEA countries and the EU, and Iceland’s foreign minister who say they would welcome the U.K. as an EEA member. Brexit minister David Davis further fanned the flames last week by refusing to rule out the idea. Den Rest des Beitrags lesen »

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What Britain’s Brexit Negotiations Can Learn From Greece

Posted by hkarner - 1. September 2017

Date: 31-08-2017
Source: The Wall Street Journal By Simon Nixon

To succeed with talks, the U.K. needs to prepare public opinion for inevitable trade-offs, costs

Former Greek finance minister Yanis Varoufakis has become an unlikely hero to many in the U.K.

If the Brexit negotiations have got off to a tempestuous start after the summer break, blame Yanis Varoufakis.

It appears that top of the summer reading list for some senior British ministers was the former Greek finance minister’s book “Adults in the Room”—his account of the Greek debt crisis in which he played a starring role in the first half of 2015.

Mr. Varoufakis has become an unlikely hero to many in the U.K.: To those on the left, he is feted as a leader of the global antiausterity resistance; to the euroskeptic right, he is championed as the man who came close to delivering their dream of destroying the euro. Now his book is being trawled at the highest levels of the British government for insights into how to handle Brexit.

For many directly involved in the Greek crisis—not least in Greece itself—this lionizing of Mr. Varoufakis is surreal. They regard his portrayal of plucky Greece bought to its knees by an inflexible Brussels bureaucracy, while supposed allies stood aside terrified of alienating their German paymasters as seriously distorted.

In essence, many claim that what actually happened in Greece is this: a populist government was elected on the basis that it could persuade the rest of the eurozone to write off its debts with no strings attached. When the eurozone rejected this “have-your-cake-and-eat-it” proposal, Mr. Varoufakis engaged in six months of brinkmanship, convinced that the EU would ultimately capitulate to prevent wider damage to the eurozone—until Athens itself capitulated, signing up the deal that was on the table all along, having achieved nothing but to damage its own economy.

There are indeed lessons for the U.K. from the Greek crisis but the risk is that it draws the wrong ones. The government published a series of Brexit position papers this month which Prime Minister Theresa May and Brexit minister David Davis say shows that the U.K.—in contrast to Greece —is coming up with constructive proposals to advance the negotiations. Yet many of these papers are as threadbare as the papers Mr. Varoufakis circulated when similarly seeking to win in the court of public opinion. Den Rest des Beitrags lesen »

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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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