Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Primary Budget Deficit’

Economists reconsider how much governments can borrow

Posted by hkarner - 19. Januar 2019

Date: 17-01-2019
Source: The Economist: Free exchange
Subject:The profession is becoming less debt-averse

In the last three months of 2018 America’s federal government borrowed $317bn, or about 6% of quarterly gdp. The deficit was 1.5 percentage points higher than in the same quarter the year earlier, despite the fact that the unemployment rate fell below 4% in the intervening period. In cash terms America borrowed in a single quarter as much as it did in all of 2006, towards the peak of the previous economic cycle.

Such figures might once have sent the country’s deficit scolds into conniptions. But scolds are in short supply, at least within the halls of Congress. Republicans were the architects of President Donald Trump’s budget-busting tax plan. Some Democrats are less content than ever to tie their hands with the fiscal rules that Republicans routinely flout. Early this year progressive Democrats urged Nancy Pelosi, the speaker of the House of Representatives, to abandon “paygo” rules, which require that new spending be paid for with matching tax increases or offsetting spending cuts.
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Italy’s Old New Populism

Posted by hkarner - 8. Oktober 2018

Paola Subacchi

Paola Subacchi is a senior fellow at Chatham House and visiting professor at the University of Bologna. She is the author, most recently, of The People’s Money: How China Is Building a Global Currency .

Long-term economic and social considerations almost inevitably collide with short-term political objectives. This is all the more true for populists like those in Italy’s coalition government, which recently unveiled an imprudent and even dangerous draft budget.

CANBERRA – Italy’s coalition government, comprising the anti-establishment Five Star Movement (M5S) and the far-right League party, made headlines recently for its new draft budget, which violates European Union rules. But this is hardly the first Italian government to make over-the-top promises and squander public money to pay for them. In fact, when all is said and done, Italy’s new populism is not new at all.

The government’s proposed budget promises to increase borrowing to finance a 2.4%-of-GDP deficit in 2019 and the following two years. While this would not cross the EU’s 3%-of-GDP ceiling on budget deficits, it is considerably more than the 1.6% that the finance minister informally agreed with the EU over the summer. Den Rest des Beitrags lesen »

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America’s Exploding Deficit

Posted by hkarner - 26. Juli 2016

Photo of Martin Feldstein

Martin Feldstein

Martin Feldstein, Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research, chaired President Ronald Reagan’s Council of Economic Advisers from 1982 to 1984. In 2006, he was appointed to President Bush’s Foreign Intelligence Advisory Board, and, in 2009, was appointed to President Obama’s Economic Recovery Advisory Board. Currently, he is on the board of directors of the Council on Foreign Relations, the Trilateral Commission, and the Group of 30, a non-profit, international body that seeks greater understanding of global economic issues.

JUL 25, 2016, Project Syndicate

CAMBRIDGE – Two recent pieces of budget news are a grim reminder of the perilous state of fiscal policy in the United States. President Barack Obama’s Office of Management and Budget announced that the federal government’s deficit this fiscal year will be about $600 billion, up by $162 billion from 2015, an increase of more than 35%. And the annual Long-Term Budget Outlook produced by the Congressional Budget Office (CBO) predicts that, with no change in fiscal policy, federal government debt will rise from 75% of GDP to 86% a decade from now, and then to a record 141% in 2046, near levels in Italy, Portugal, and Greece. Den Rest des Beitrags lesen »

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Greece’s Primary Surplus

Posted by hkarner - 1. Juni 2016

Tuesday, May 31, 2016, Observing GreeceKastner
One finds innumerable postings when looking for articles on Greece’s primary surplus. The debate about whether it should be 3,5% or 1,5% by 2018 seems endless. Some say that 3,5% is achievable and that’s why the target should be set there. Others say that, at best, 1,5% is achievable. There is hardly any explanation for the uninitiated as to why there should be a primary surplus in the first place. The assumption seems to be that a primary surplus is good (because a primary deficit would suggest that there is no ‚living beyond one’s means‘), and the greater the surplus, the better.

The primary surplus represents the amount of money available for debt service (i. e. interest expense). If the primary surplus is 1,5% of GDP and the interest expense is 3,5% of GDP, Greece needs fresh funding from its creditors to the tune of 2% of GDP in order to pay interest to those very same creditors. If the primary surplus were, instead, 3,5%, Greece could pay all of the interest without any need for fresh funding. Den Rest des Beitrags lesen »

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Procyclical Fiscal Policy in Greece and America: Two Charts that Tell the Story

Posted by hkarner - 15. Januar 2015

Author: Ed Dolan  ·  January 6th, 2015  ·  RGE EconoMonitor

The snap election in Greece is shaping up as a referendum on five years of austerity that many Greeks view as a disaster. The US economy is much healthier, but that has not stopped many American economists from arguing that fiscal policy here has been little better than that of Greece (see this post by Paul Krugman, for example).

In both countries, critics charge that fiscal policies have been procyclical. By this, they mean that overly expansionary policy set up the crisis by amplifying the boom, while ill-timed deficit cutting since has deepended the recession and slowed the recovery. Are they right? The following charts tell the story.

The first indicator in each chart is the output gap. The gap is the amount by which real GDP is above or below a long-run trend, known as potential real output, that is estimated to be consistent with full employment and price stability.

The second indicator is the underlying primary budget balance (UPB). The UPB is the surplus or deficit of the budget that is adjusted for the effects of the business cycle on tax revenues and cyclically sensitive spending like unemployment benefits. It also omits interest payments on government debt, and one-off measures like privatization or tax amnesties. (Without the adjustment for one-off measures, the UPB is called the cyclicaly adjusted primary balance or structural primary balance. One-off measures are insignificant for the United States but important for Greece.) Den Rest des Beitrags lesen »

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Italy: When Hope Is a Strategy

Posted by hkarner - 23. Juni 2014

By John Mauldinmauldin

June 22, 2014

It is a land of numerous countries and cultures, where the average person might just enjoy a little peace and quiet but where their leaders are seemingly always ready to go at one another, dragging their armies behind them, whether at the hint of an insult or the prospect of the ultimate prize. The series is utterly unpredictable, as Martin seems to routinely to kill off both protagonist and antagonist alike with unexpected finality. You have to be careful not to become too involved with any of the characters, as fate (i.e., the author) can pluck them from the scene all too quickly. Plot twists abound in every chapter, and seemingly minor characters can become major players as time unfolds.

In other words it’s a place not unlike Europe.

After spending a few days in Rome trying to deepen my understanding of the situation in Italy – which of late has seemed as convoluted as the plot from Game of Thrones, mercifully minus the swordplay but with about the same level of spectacle (who could come up with this cast of characters?), I think I have perceived what might become a significant plot twist in the offing.

So let’s look this week at what I uncovered in Italy, which rather surprised me, and think through some of the implications that the new developments suggest for the ultimate outcome of the euro project.

(I want to acknowledge up front the significant help of Christian Menegatti and Brunello Rosa of Roubini Global Economics in setting up key meetings with politicians, bureaucrats, and the Italian central bank. I am also grateful for the candid conversations we had after the meetings, as we tried to work through what we had heard. While this letter will not present a consensus view of our meetings and conversations, I did learn a great deal more than if I had simply gone on my own. Thanks, guys. (They of course are not responsible for any mistakes or inaccurate predictions herein. I can make enough of those on my own.) Den Rest des Beitrags lesen »

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Die Schmähführer – lassen sich das die „unbedarften“ Bürger gefallen???

Posted by hkarner - 13. November 2013

von Helmut F. Karner, 13/11

Der Sand in die Augen der „unmündigen“ Bürger:

  1. die von Faymann/Spindelegger eben kolportierten 18,44 Mrd.€ („Budgetloch“)  sind nur strukturelles Defizit, also konjunkturunabhängig und ohne Einmaleffekte, 1381508692857-grafiksparbedarfund das zu 85% bis 2016 (die „Prognoseabweichung“  des gesamtstaatlichen, strukturellen Defizits  bis 2018)
    • erfahrungsgemäss ist in Zeiten schwacher Konjunktur das strukturelle Defizit um vieles geringer als das wahre Defizit (z.B. 2012: 1,4 vs. 2,5 %). Wenn die kolportierten 12 Mrd € über konjunkturabhängige Steuerausfälle und höhere Kosten (Arbeitslosigkeit etc.) der Expertenprognose gestimmt haben, dann darf man die natürlich dazurechnen, weil mit dem nun ausgeblendeten „Konjunkturzyklus“ kann man ja gut schwindeln
    • Einmaleffekte (genannt werden optimistische zusätzliche 5,8 Mrd. für Bankenhilfe – das wird sich um vieles erhöhen) müssen dazugerechnet werden
    • die Verpflichtungen ab 2017 aus dem Staatsvertrag mit der EU („Fiscal Pact“, vulgo Schuldenbremse) von 1/20 p.a. der Schulden, die über die Maastricht Grenze von 60% hinausgeht sind da auch nicht eingerechnet, weil nicht strukturell. Das macht unserer Rechnung nach etwa 7 Mrd pro Jahr, und das auf 20 Jahre. Die 7 Mrd beinhalten auch zusätzliche Schulden nach unserem Szenario (Haircut für einige Schuldnerländer, weitere Bankenhilfe aus CEE Engagements. Die „Koalabären“ (copyright Fleischhacker/Thurnher) Traummännlein rechnen natürlich nicht damit, weil … ja Staaten nicht in Konkurs gehen, unsere Banken doch so gut aufgestellt sind etc. Wenn man allerdings die vom Chef der Statistik Austria schon bestätigte Anrechnung von (ausgelagerten) BIG, SCHIG etc. Schulden in die Staatsschuld ab 2014 dazu rechnet, dann ergibt sich halt aus der (unrealistisch) optimistischen Darstellung der Koalitionsverhandler halt dann „nur“ ein Betrag von 4 Mrd jährlich (1% des BIP, weil Schuldenstand 2017 dann etwa 80% des BIP – geschönt!)
  2. wer also rechnen kann, kommt optimistisch (= Regierung) auf einen Konsolidierungsbedarf von 18,44 + 12? + 5,8 + 8 Mrd €, also gesamt auf 44,24 Mrd € (also schon mehr als das „Horrorszenario“ der „Experten“ von 40 Mrd
  3. realistisch hingegen ist 18,44 + 12 + 12 + 14 = 56 Mrd €. Und dies noch ohne irgendwelche Ausfälle von Staatsanleihen, schlagend werdenden ESM Garantien, neue Bankenhilfen über Hypo, Kommunalkredit und ÖVAG hinausgehend, neue  „Überraschungen“ von Eurostat zu weiteren Einrechnungen von ausgelagerten Schulden bzw. Garantien (Bad Bank Hypo?, …) 
  4. damit kommt man unserer ursprünglichen Schätzung aus 12/2011 mit 84 Mrd 2012 bis 2018  schon sehr nahe, weil im „Sparpaket Februar 2012“ der Regierung sind ja etw 26 Mrd 2012 bis 2016 vorgesehen (vorerst ohne echte Strukturreformen, also unglaubwürdig) Den Rest des Beitrags lesen »

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Greece Continues Love Affair With the Euro

Posted by hkarner - 5. November 2013

Date: 04-11-2013
Source: The Wall Street Journal

Even After Six Years of Recession, the Greek Government and 69% of the Public Support the Euro

Across Europe, there is now a broad consensus that the decision to allow Greece to join the euro was a mistake. Yet ironically, the one place where this view is not widely shared is Greece itself.

Even after six years of recession, a 26% slump in output and unemployment of 27%, the Greek government considers membership of the single currency an article of faith, while 69% of the public supports the euro, according to a recent poll by the Pew Research Center.

Perhaps this isn’t so surprising. The crisis did not come out of a clear blue sky. Greece missed multiple opportunities over many decades to fix a broken political and economic model marked by cronyism, corruption, bureaucracy and excessive borrowing: following the overthrow of the military dictatorship in the 1970s, when Greece joined the European Union in the 1980s and in the run-up to joining the euro in the early 2000s.

The current crisis may be Greece’s last opportunity to turn itself into an effective modern state. Den Rest des Beitrags lesen »

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Der Staat Österreich machte 2012 einen „operativen Verlust“

Posted by hkarner - 1. Oktober 2013

30.09.2013 | 18:31 | von Josef Urschitz (Die Presse)

Selbst ohne Zinszahlungen für die Staatsschuld hätten die (stark gestiegenen) Staatseinnahmen nicht gereicht, um im Vorjahr ein Milliardenloch in der Staatskasse zu verhindern.

Es ist eine jährliche Pflichtübung – und doch enthält der gestern vom Rechnungshof veröffentlichte Bundesrechnungsabschluss für das Jahr 2012 einige „Bomben“, die nicht gerade für nachhaltiges Wirtschaften des Staates sprechen.

Eine davon: Trotz deutlich (nämlich um 4,4 Prozent) gestiegener Steuereinnahmen weist der Bund für 2012 (ganz nebenbei: im Gegensatz zu Griechenland) einen negativen Primärsaldo von insgesamt 1,9 Mrd. Euro auf.

Der Primärsaldo errechnet sich, vereinfacht gesagt, aus der Differenz von Einnahmen und Ausgaben ohne Berücksichtigung der Zinsen für die Staatsschuld und ohne Vermögensveränderungen (also etwa Privatisierungserlösen oder Schuldenrückzahlungen). Er ist also so etwas wie das operative Ergebnis bei einem Unternehmen. In einem „echten“ Unternehmen wären Vorstand und Aufsichtsrat in so einem Fall freilich in höchster Aufregung und würden Sparmaßnahmen überlegen. Denn ein negativer Primärsaldo von 1,9 Mrd. Euro heißt nichts anderes, als dass selbst dann noch ein Milliardenloch im Staatshaushalt geklafft hätte, wenn die Gläubiger der Republik auf alle Zinsenzahlungen (immerhin rund 8 Mrd. Euro) verzichtet hätten.

Weil solche Löcher nun einmal per Schuldenaufnahme gestopft werden müssen, ist klarerweise auch der Schuldenstand der Republik kräftig gestiegen. Exakt um 9,4 Mrd. Euro auf 227,2 Mrd. Euro. Die Staatsschuldenquote erhöhte sich dadurch von 72,8 auf 74 Prozent des BIPs. Den Rest des Beitrags lesen »

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The ECB and the Austerity Trap

Posted by hkarner - 5. April 2013

March 31, 2013, Krugman Blog

Simon Wren-Lewis tries to show some sympathy for the devil: he tries to get into the mindset of European officials who defend austerity. And he gets at an important point in the process, although he may let the austerians off too lightly.

As he suggests, the crucial place to start is with why Wren-Lewis, Brad DeLong, Martin Wolf, Larry Summers (at this point, anyway), yours truly, and more are against austerity now. We’re not always and everywhere against fiscal consolidation; give me the right economic circumstances and I’ll turn at least modestly deficit hawk. We are, instead, against austerity when the interest rate is against the zero lower bound, because when the economy is in a liquidity trap the contractionary effects of fiscal tightening can’t be offset by monetary expansion.

So do the austerians reject this argument? No — they basically fail even to acknowledge that it exists.

Actually, before I get there, let me offer a real-world example to illustrate what I’m talking about. Ladies and gentlemen, let me present the Canadian austerity zombie.

What? Or, rather, eh? Well, Canada in the 1990s keeps coming up as an alleged example of expansionary austerity. And it’s true that Canada did a lot of fiscal consolidation in the 90s, while experiencing a strong recovery from the decade’s early slump. Here’s the IMF’s estimate of the fiscal stance:

And here’s the unemployment rate: Den Rest des Beitrags lesen »

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