Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Project Syndicate’

Europe’s Doom Loop in Reverse

Posted by hkarner - 16. Januar 2018

Unlike before the 2011-2012 crisis, the eurozone seems to be locked in a benign credit cycle, in which lower risk premia allow both banks and governments to refinance at lower rates, more credit is available for the real economy, and the resulting recovery increases government revenue. But how long can this cycle persist?

BRUSSELS – During the 2011-2012 euro crisis, the currency area became mired in a “doom loop,” in which weak banks in financially distressed countries rationed credit, causing a recession that intensified pressure on government finances, which were already burdened by the need to cover banks’ losses. But such self-reinforcing spirals can also operate in the opposite direction. Understanding these dynamics may be the key to determining the eurozone’s relative strength today.

In a doom loop, the expectations of default drive up risk premia until the economy reaches the brink of collapse, even if the underlying problems could be managed over time. At a certain point, when the gulf between financial-market pessimism and economic reality becomes too large, the market becomes ready for a reversal. Den Rest des Beitrags lesen »

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How Britain Could Change Its Mind About Brexit

Posted by hkarner - 16. Januar 2018

Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics. A former columnist at the Times of London, the International New York Times and the Financial Times, he is the author of Capitalism 4.0, The Birth of a New Economy, which anticipated many of the post-crisis transformations of the global economy. His 1985 book, Costs of Default, became an influential primer for Latin American and Asian governments negotiating debt defaults and restructurings with banks and the IMF.

Nigel Farage, the former UK Independence Party leader, now says that the June 2016 Brexit referendum could be overturned. He’s right, and the first requirement is to dispel the aura of inevitability surrounding Britain’s withdrawal from Europe.

LONDON – Will 2018 be the year when the United Kingdom changes its mind about leaving the European Union? Conventional wisdom says that stopping Brexit is impossible. But what did conventional wisdom say about Donald Trump? Or Emmanuel Macron? Or, for that matter, the original Brexit referendum? In revolutionary times, events can go from impossible to inevitable without ever passing through improbable. Brexit was such an event, and its reversal could be another.

Just ask Nigel Farage, the former UK Independence Party leader, who has suddenly said that the June 2016 Brexit referendum could be overturned. “The Remain side are making all the running,” Farage warned his fellow hardline Leavers this weekend. “They have a majority in parliament, and unless we get ourselves organized we could lose the historic victory that was Brexit.” Den Rest des Beitrags lesen »

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The Electoral Fate of Italy’s Banks

Posted by hkarner - 16. Januar 2018

Paola SubacchiPaola 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 .

To fix Italy’s banking system, the government that emerges from the general election in March will need a solid majority, a comprehensive strategy to boost economic growth, and a willingness to confront vested interests. But none of the parties has shown any indication that it can meet any of these criteria, much less all three.

LONDON – As Italy approaches what promises to be one of its most contentious general elections since 1945, banks are the elephant in the room. Too big and cumbersome to be ignored, they are a constant source of embarrassment for the parties that have been in government since the global financial crisis of 2008, especially for former Prime Minister Matteo Renzi, who hopes to rekindle his political career in March. They are also an inviting anti-establishment target for the populists of the Five Star Movement.

Indeed, Italy’s banks epitomize all the problems that the financial crisis brought to the country, and on which the populists are capitalizing: a double-dip recession followed by sluggish GDP growth, high unemployment, especially among the young, and a collapse of domestic demand. Banks also embody the tangle of vested interests, malpractice, and even corruption that, together with la dolce vita, have come to be associated with Italy. Den Rest des Beitrags lesen »

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Good Times at Last?

Posted by hkarner - 12. Januar 2018

Jim O’Neill, a former chairman of Goldman Sachs Asset Management and former Commercial Secretary to the UK Treasury, is Honorary Professor of Economics at Manchester University and former Chairman of the Review on Antimicrobial Resistance.

Despite today’s unprecedented political risks and large-scale geopolitical realignments, key economic indicators from around the world are looking better than they have in years. But whether global economic growth exceeds 4% this year will depend on central bankers‘ ability to strike the right monetary-policy balance.

LONDON – In February 2017, I wrote an optimistic commentary called “The Global Economy’s Surprising Resilience.” The piece came as a surprise to those who saw only bleak prospects for Western countries, not least the United States, where US President Donald Trump had just been inaugurated.

Now, nearly a year later, my three decades of experience in global financial markets leads me to believe that the economic situation is not quite as straightforward.

On the positive side, the half-dozen cyclical indicators I listed last February remain strong, and some have even strengthened further. One key indicator is South Korea’s monthly trade data. The country’s exports grew by 15.8% in 2017, the largest increase since 1956, when it began reporting these data. Moreover, export growth occurred even as Trump threatened to withdraw from the US-Korea Free Trade Agreement and stoked tensions with North Korea – a powerful rebuke to those who have predicted retrenchment of global trade. Den Rest des Beitrags lesen »

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Ready or Not for the Next Recession?

Posted by hkarner - 11. Januar 2018

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is Hall of Mirrors:The Great Depression, the Great Recession, and the Uses – and Misuses – of History.

Policymakers normally respond to recessions by cutting interest rates, reducing taxes, and boosting transfers to the unemployed and other casualties of the downturn. But, for a combination of economic and political reasons, the US, in particular, is singularly ill-prepared to respond normally.

COPENHAGEN – A sunny day is the best time to check whether the roof is watertight. For economic policymakers, the proverbial sunny day has arrived: with experts forecasting strong growth, now is the best time to check whether we are prepared for the next recession.

The answer, for the United States in particular, is a resounding no. Policymakers normally respond to recessions by cutting interest rates, reducing taxes, and boosting transfers to the unemployed and other casualties of the downturn. But the US is singularly ill-prepared, for a combination of economic and political reasons, to respond normally. Den Rest des Beitrags lesen »

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Can Trump Prove His Sanity?

Posted by hkarner - 10. Januar 2018

Raj Persaud

Raj Persaud is a psychiatrist based in London, and co-author of the forthcoming book The Street-wise Guide to Getting the Best Mental Health Care.

Peter Bruggen is a psychiatrist based in London, and co-author of the forthcoming book The Street-wise Guide to Getting the Best Mental Health Care.

Given a lack of definitive and objective psychiatric tests, questions about Donald Trump’s mental health may never go away. And a famous experiment from the 1970s suggests that even if he stops ranting on Twitter or speaking in convoluted and incoherent sentences, at best he will be viewed as being in remission.

LONDON – Since Donald Trump took over the United States presidency a year ago, doubts over his mental stability and his very sanity have been mounting. With the release of Michael Wolff’s book Fire and Fury: Inside the Trump White House, which claims to offer a behind-the-scenes look at the president’s dysfunctional administration, those doubts seem to have taken on a new salience and urgency. But, beyond claiming on Twitter that he is a “very stable genius,” what could Trump actually do to prove that he is psychologically fit for what, by some definitions, is the world’s highest office?

There is no clear physical test for mental illness. Even if Trump were subjected to a battery of blood tests and brain scans, the results would most likely prove nothing. The vast majority of people with psychosis would have normal results. Likewise, an abnormal test wouldn’t necessarily imply impaired mental capacity: a person can retain their intelligence, even after losing a significant amount of their brain. Den Rest des Beitrags lesen »

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In Defense of Economic Populism

Posted by hkarner - 10. Januar 2018

Dani Rodrik is Professor of International Political Economy at Harvard University’s John F. Kennedy School of Government. He is the author of The Globalization Paradox: Democracy and the Future of the World Economy, Economics Rules: The Rights and Wrongs of the Dismal Science, and, most recently, Straight Talk on Trade: Ideas for a Sane World Economy.

Populists’ aversion to institutional restraints extends to the economy, where they oppose obstacles placed in their way by autonomous regulatory agencies, independent central banks, and global trade rules. But while populism in the political domain is almost always harmful, economic populism can sometimes be justified.

CAMBRIDGE – Populists abhor restraints on the political executive. Since they claim to represent “the people” writ large, they regard limits on their exercise of power as necessarily undermining the popular will. Such constraints can only serve the “enemies of the people” – minorities and foreigners (for right-wing populists) or financial elites (in the case of left-wing populists).

This is a dangerous approach to politics, because it allows a majority to ride roughshod over the rights of minorities. Without separation of powers, an independent judiciary, or free media – which all populist autocrats, from Vladimir Putin and Recep Tayyip Erdoğan to Viktor Orbán and Donald Trump detest – democracy degenerates into the tyranny of whoever happens to be in power. Den Rest des Beitrags lesen »

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Breaking Bannon

Posted by hkarner - 8. Januar 2018

Elizabeth Drew

Elizabeth Drew is a contributing editor to The New Republic and the author, most recently, of Washington Journal: Reporting Watergate and Richard Nixon’s Downfall.

A new book on Donald Trump’s White House has brought matters to a head between the US president and his former chief strategist, Stephen Bannon. But the book mostly tells us what we already knew: that Trump is unqualified to be president and incapable of staffing his administration with competent aides.

WASHINGTON, DC – The just-released book about Donald Trump and his dysfunctional presidency (Fire and Fury: Inside the Trump White House) has left much of Washington reeling. Despite the White House’s constitutionally dubious threat to try to quash the book, the publication date was moved up four days. But the bulk of Fire and Fury’s disclosures, though deeply disquieting, aren’t all that surprising.1

It’s not yet clear how Michael Wolff, the book’s controversial author, obtained some of his information, but it must be assumed that he taped many of his interviews, particularly those used for the long conversations found throughout the book. What Wolff has achieved is to get attributed quotes from high officials about how the president functions, or doesn’t. 1 Den Rest des Beitrags lesen »

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Giving Democracy the Finger

Posted by hkarner - 4. Januar 2018

Christopher R. Hill, former US Assistant Secretary of State for East Asia, was US Ambassador to Iraq, South Korea, Macedonia, and Poland, a US special envoy for Kosovo, a negotiator of the Dayton Peace Accords, and the chief US negotiator with North Korea from 2005-2009. He is currently Dean of the Korbel School of International Studies, University of Denver, and the author of Outpost.

US President Donald Trump has used his first year in office to reverse America’s traditional role as a guarantor of security and democratic values around the world. And, in attacking those values at home, he either doesn’t realize or doesn’t care that America’s system of governance has been the main source of its global prestige.

DENVER – Some of the most iconic – and perhaps misleading – news images of the twenty-first century were of smiling Iraqis holding up their purple-ink-stained index fingers to show that they had voted in their country’s January 2005 election. For many, it was the first vote they had ever cast.

The purported story behind the images was that democracy had finally arrived in Iraq. A system without elections cannot claim to be a democracy. So, for many, seeing images of a well-run voting process (the ink stains prevented voters from casting more than one ballot) was proof enough that things had changed.

But democracy is an exceedingly complex system, and free elections are only one feature. An absence of elections certainly implies an absence of democracy. But it does not follow that the inverse is also true. Elections are a necessary but insufficient condition of democracy, which also requires durable institutions that embody democratic values. Den Rest des Beitrags lesen »

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