Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘QE’

As ECB Contemplates Rate Move, Storm Clouds Gather Over Eurozone

Posted by hkarner - 26. April 2018

Date: 25-04-2018
Source: The Wall Street Journal

Bloc’s economy appears to have slowed, coinciding with mounting tensions over trade and the strength of the euro

A general view of the European Central Bank under dark clouds in Frankfurt, Germany. Analysts have in recent weeks dialed back their forecasts for when the ECB might increase short-term interest rate.

FRANKFURT—Trade disputes and a stronger currency are threatening a hard-fought economic recovery in the 19-nation eurozone, potentially delaying a move by the European Central Bank to follow the Federal Reserve in increasing short-term interest rates.

Trade conflicts are a particular concern for the ECB because the region escaped the lingering effects of its debt crisis in part due to the strength of its export sector. Den Rest des Beitrags lesen »


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Top ECB Officials Give Different Takes on the Economy

Posted by hkarner - 23. April 2018

Date: 21-04-2018
Source: The Wall Street Journal

Mario Draghi warns of a peak in the growth cycle, while Jens Weidmann says Germany ‘is still booming’

European Central Bank President Mario Draghi, left, Deutsche Bundesbank President Jens Weidmann right

WASHINGTON—Two of the European Central Bank’s most influential officials offered differing interpretations of an apparent slowdown in the eurozone economy, highlighting the thorny decisions facing the bank as it prepares to draw a line under a decade of easy money just as growth softens.

Speaking at a gathering of finance ministers and central bankers here Friday, ECB President Mario Draghi warned that the eurozone’s growth cycle may have peaked, and suggested his bank would move only slowly to phase out its large monetary stimulus.

Across town, Jens Weidmann, president of Germany’s central bank, acknowledged signs of a slowdown in Europe’s largest economy in the first quarter. But Mr. Weidmann played down the change, suggesting he would continue to press the ECB to phase out easy money soon.

“There’s no reason to see a turning point in growth—Germany’s economy is still booming,” said Mr. Weidmann, who also sits on the ECB’s 25-member rate-setting committee. Den Rest des Beitrags lesen »

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A Plan for Europe’s Great Unwinding

Posted by hkarner - 13. April 2018

Date: 12-04-2018
Source: The Wall Street Journal

Mario Draghi has less than two years to devise an exit strategy from today’s extraordinary monetary policy.

The economic crisis in Europe is finally fading, and Mario Draghi and his colleagues at the European Central Bank can breathe a sigh of relief. Their strategy of negative interest rates and asset purchases is paying dividends. But now the recovery brings fresh headaches for Mr. Draghi. It will soon be time to start the complex task of unwinding the extraordinary and unconventional monetary stimulus that has resuscitated the economy.

The immediate problem facing Mr. Draghi is how to phase out the ECB’s asset-purchase program, known as quantitative easing or QE, and then gradually return interest rates to more normal levels. And that is only the beginning.

The ECB’s balance sheet has doubled in size over the past three years. This is partly as a result of QE. But it is also reflects the €750 billion of cheap fixed-rate, long-term funding that the ECB has lent to banks. In some respects those loans, known as TLTROs, are an indirect form of QE, with the ECB lending the banks cash and the banks buying bonds. Either way the ECB is printing money and its balance sheet is increasing. That balance sheet will eventually have to shrink back to more normal levels. Den Rest des Beitrags lesen »

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ECB’s Weidmann Signals Openness to Succeeding Draghi as President

Posted by hkarner - 28. Februar 2018

Date: 27-02-2018
Source: The Wall Street Journal

Jens Weidmann has cautiously toned down his criticism of ECB policies in recent months as the economy has picked up

Jens Weidmann, president of the Bundesbank, said Tuesday that ending the ECB’s easy-money policies will “take quite some time.”

FRANKFURT—German Bundesbank President Jens Weidmann gave the clearest sign yet that he hopes to succeed Mario Draghi as president of the European Central Bank next year, suggesting he won’t be held back from applying for the job by reservations over the bank’s bond-buying program.

A candidacy from Mr. Weidmann, a 49-year-old former adviser to Chancellor Angela Merkel, would likely be supported by Berlin but opposed by some governments in Southern Europe, who have chafed at the German’s criticism of their spending habits and opposition to key ECB stimulus programs.

Mr. Weidmann’s predecessor as president of Germany’s central bank, Axel Weber, was the favorite to take over the ECB’s top job until he resigned unexpectedly in early 2011, clearing the way for Mr. Draghi to take the helm. Mr. Weber said at the time that he was worried about having to represent views he didn’t agree with on important ECB policies, including its government-bond purchases. Den Rest des Beitrags lesen »

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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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The China syndrome: What 2018 has in store for the markets

Posted by hkarner - 20. Dezember 2017

Date: 18-12-2017
Source: The Economist

Investors are very optimistic. But two analysts think they may be ignoring a big risk

WHAT is in store for economies and markets in 2018? Around this time of year, a large number of analysts and fund managers are giving their views. Among the most interesting and thoughtful approaches can be found at Absolute Strategy Research (ASR), an independent group founded by David Bowers and Ian Harnett.

ASR adds extra depth to its analysis by contrasting its own views with those of the consensus. To do so, the group polled 229 asset allocators, managing around $6trn of assets, for their views on the outlook for economies and markets. They found a groundswell of optimism; the probability of equities being higher by the end of 2018 was 61%, and that shares will beat bonds is 70%. The allocators think there is only a 27% chance of a global recession. And they are not worried about the prospect of the Federal Reserve pushing up interest rates.

There are some disconnects within the consensus view. The first is that investors expect volatility (as measured by the Vix) to rise next year. Usually, equities struggle in such circumstances. The second disconnect is between their views on the business cycle and those on the stockmarket; since last year, their optimism about the former has reduced while their bullishness about the latter has increased. A third disconnect is between their views on high-yield or junk bonds and equities. Normally, the two asset classes perform well at the same time. But investors are unenthusiastic about junk, preferring the debt issued by emerging market governments. Den Rest des Beitrags lesen »

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Surveying the Damage of Low Interest Rates

Posted by hkarner - 16. Dezember 2017

Anders Åslund

Anders Åslund is a senior fellow at the Atlantic Council in Washington, DC. He is the author of Ukraine: What Went Wrong and How to Fix It and, most recently, Europe’s Growth Challenge (with Simeon Djankov). He is currently writing a book on Russia’s crony capitalism.

Few would disagree that it was necessary to slash interest rates in the immediate aftermath of the 2008 global financial crisis. But after a decade of ultra-loose monetary policies across advanced economies, growth remains tepid, financial risks have proliferated, and middle-class savers have lost out.

WASHINGTON, DC – For years after the 2008 financial crisis, policymakers congratulated themselves for having averted a second Great Depression. They had responded to the global recession with the kind of Keynesian fiscal and monetary stimulus that the moment required.

But nine years have passed, and official interest rates are still hovering around zero, while growth has been mediocre. Since 2008, the European Union has grown at a dismal average annual rate of just 0.9%.

The broad Keynesian consensus that emerged immediately after the crisis has become today’s prevailing economic dogma: as long as growth remains substandard and annual inflation remains below 2%, more stimulus is deemed not just appropriate, but necessary.

The arguments underlying this dogma do not hold water. For starters, measures of inflation are so poor as to be arbitrary. As Harvard’s Martin Feldstein notes, governments have no good way to measure price inflation for services and new technologies, which account for an ever greater share of advanced economies’ GDP, because quality in these sectors varies substantially over time. Moreover, real estate and other assets are not even included in the accounting. Den Rest des Beitrags lesen »

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Today’s Rational Exuberance

Posted by hkarner - 28. November 2017

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.

What many analysts still see as a temporary bubble, pumped up by artificial and unsustainable monetary stimulus, is maturing into a structural expansion of economic activity, profits, and employment that probably has many more years to run. There are at least four reasons for such optimism.
LONDON – With share prices around the world setting new records almost daily, it is tempting to ask whether markets have entered a period of “irrational exuberance” and are heading for a fall. The answer is probably no.

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Deutsche Wirtschafts-Optimisten

Posted by hkarner - 8. November 2017

Konjunktur. Der deutsche Expertenrat fordert angesichts des „lang anhaltenden Aufschwungs“ von der Europäischen Zentralbank endlich eine Zinswende.

Berlin. Die deutschen Wirtschaftsweisen setzen sich an die Spitze der Konjunkturoptimisten. Für das kommende Jahr sagen sie der deutschen Wirtschaft ein Wachstum von 2,2 Prozent voraus. Das geht aus dem am Mittwoch veröffentlichten Jahresgutachten des Sachverständigenrates hervor, das Bundeskanzlerin Angela Merkel übergeben wurde. Die Bundesregierung erwartet lediglich 1,9 Prozent, die führenden Institute zwei Prozent. Für das laufende Jahr hob das Expertengremium seine Prognose von 1,4 auf 2,0 Prozent an. „Die deutsche Wirtschaft befindet sich in einem kräftigen und lang anhaltenden Aufschwung“, heißt es in dem Gutachten mit dem Titel „Für eine zukunftsorientierte Wirtschaftspolitik“.

Den Aufschwung sehen die fünf Professoren auf einem immer breiter werdenden Fundament. „Der private Konsum, die Staatsausgaben und die Bauinvestitionen steigen bereits seit längerem robust“, betonen sie. Zusätzlich investieren inzwischen die Unternehmen wieder stärker in Ausrüstungen sowie in Forschung und Entwicklung.Außerdem entwickelten sich wichtige Exportmärkte, insbesondere die Euro-Zone, zuletzt sehr dynamisch. Den Rest des Beitrags lesen »

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Wird ein Deutscher Europas nächster Währungshüter?

Posted by hkarner - 3. November 2017

In Frankfurt mehren sich die Gerüchte, dass EZB-Chef Mario Draghi in zwei Jahren einem Deutschen weichen soll.

Frankfurt/Paris. Der deutsche Bundesbankpräsident, Jens Weidmann, hält sich bedeckt. Die Debatte über die Nachfolge von EZB-Chef Mario Draghi sei zu früh, sagte er am Freitag der französischen Wirtschaftszeitung „Les Echo“. Weidmann wird seit Monaten als einer der möglichen nächsten Euro-Zentralbank-Chefs gehandelt. Mit ihm würde sich die Währungspolitik der EZB deutlich ändern, denn Weidmann drängt seit Längerem, den Aufkauf von Staatsanleihen zu stoppen und zu einem normalen währungspolitischen Kurs zurückzukehren.

Die Amtszeit des Italieners, der weiterhin einen Antikrisenkurs bei der Europäischen Zentralbank (EZB) fährt, endet in etwa zwei Jahren. Weidmann verneinte die Frage der Zeitung, ob er sich im Draghi-Nachfolgerennen befinde. Er sei ein Zentralbanker, kein Politiker. „Ich bin sehr glücklich, an der Spitze der Bundesbank zu sein.“  Den Rest des Beitrags lesen »

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