World economy is sleepwalking into a new financial crisis, warns Mervyn King

Date: 21-10-2019
Source: The Guardian Larry Elliott in Washington

Past crashes spawned new thinking and reform but nothing has changed since 2008 banking meltdown, says former Bank of England boss

Lord King said resistance to new thinking meant a repeat of the financial chaos of the 2008-09 period was looming.

The world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences for the democratic market system, according to the former Bank of England governor Mervyn King.

Lord King, who was in charge at Threadneedle Street during the near-death of the global banking system and deep economic slump a decade ago, said the resistance to new thinking meant a repeat of the chaos of the 2008-09 period was looming.

She Fined Tech Giants Billions of Dollars. Now She Wants Sharper Tools.

Date: 15-10-2019
Source: The Wall Street Journal

Margrethe Vestager is pivoting away from blockbuster fines against Silicon Valley titans toward preventing market abuses in the first place

European Competition Commissioner Margrethe Vestager thinks fines against U.S. tech giants aren’t having the desired effect.

BRUSSELS—Margrethe Vestager made a name for herself as Europe’s top antitrust enforcer by slapping record fines on U.S. tech companies. Now she says those fines don’t work.

As she prepares to start an unprecedented second term as the European Union’s competition commissioner, this time with added powers as the EU’s digital-economy policy maker, Ms. Vestager is shifting her focus from fining giants to preventing market abuses.

Fines are “not doing the trick,” she told EU lawmakers recently, despite having hit Alphabet Inc.’s Google with penalties totaling $9.4 billion in recent years. “We have to consider remedies that are much more far-reaching.”

Ms. Vestager already has the power to break up companies as a last resort, a step some Democratic presidential candidates including Sen. Elizabeth Warren have advocated. Ms. Vestager said that isn’t her intent. “My obligation is to do the least-intrusive thing in order to make competition come back,” she said.

Europe has so many issues with Big Tech it hardly knows where to begin

Date: 03-10-2019
Source: The Economist

Its efforts to regulate it are as inchoate as America’s

Ask a european politician about Silicon Valley and you get a tirade about les fake news, tax dodging, cultural imperialism, privacy violations and then some. This litany inevitably ends with a gripe that Europe needs to do much more to foster such companies at home.

Europe’s version of techlash often looks like sour grapes. With the possible exception of Spotify, no internet firm successful enough for regulators to worry about was founded there (and the Swedish music-streaming business is listed in New York). sap, a German software-maker, is big but hails from the pre-internet era. Unicorns, worth $1bn-plus, remain as rare on the old continent as the term suggests they ought to be. Forget Euro-Facebook or Le Google.

Still, much European tech-angst is universally shared. French officials pooh-poohed plans by Facebook to launch its own currency, as have people on Capitol Hill and at the Federal Reserve. Uber is in the cross-hairs of regulators in London, who on September 24th extended its licence for only two months. The gig-economy has also discomfited lawmakers in its home state of California. Antitrust concerns first raised in Europe are now echoed across the Atlantic. Even privacy worries, long a European preserve, are infecting America.

No Relief for Big Tech Under New EU Leadership

Date: 02-09-2019
Source: The Wall Street Journal

Incoming EU Commission president plans new laws on artificial intelligence and the use of big data as earlier investigations by the bloc’s antitrust enforcer continue

European Union Commission’s President-elect Ursula von der Leyen has promised tighter regulation of artificial intelligence when she takes office in November.

BRUSSELS—The leadership of the European Union is changing over the next few months, but the organization’s scrutiny of U.S. tech companies likely isn’t.

The incoming head of the EU executive arm is promising new laws on artificial intelligence and the use of big data within 100 days of taking office on Nov. 1, as the bloc’s antitrust enforcer gathers evidence in its probes into the practices of companies including Facebook Inc. and Amazon.com Inc.

Lagarde’s ECB Checklist

Jul 26, 2019 Stefan Gerlach, Project Syndicate

Stefan Gerlach is Chief Economist at EFG Bank in Zurich and a former deputy governor of the Central Bank of Ireland. He is also a former Executive Director and Chief Economist of the Hong Kong Monetary Authority and Secretary to the Committee on the Global Financial System at the BIS.

After years in which the European Council acted as if there were no qualified women to lead the European Central Bank, it has finally abandoned that ludicrous excuse and appointed Christine Lagarde to the position. Lagarde is an eminently qualified and promising president-designate; but to have a successful tenure, she will need to head off her critics‘ concerns.

ZURICH – The surprise nomination of Christine Lagarde to serve as the next president of the European Central Bank has pleased many observers, including me, and disappointed others. Those who are pleased feel that Lagarde’s eight-year term as Managing Director of the International Monetary Fund makes her uniquely qualified to forge agreement within the ECB’s Governing Council on many of the contentious issues it faces.

Chief among these are the eurozone’s current downturn and the potential review of its monetary-policy framework that has been proposed by Olli Rehn, Governor of the Bank of Finland. Considering that the ECB’s most influential members appear to have different views about the framework and how it might be changed, reaching a consensus will not be easy.Nonetheless, those who support Lagarde’s nomination believe that her time serving as France’s finance minister has left her ideally suited to work with the eurozone member states’ governments – and to convince them to marshal a collective fiscal response in the event of a severe downturn.

The regulatory woes of Big Tech multiply

Date: 25-07-2019
Source: The Economist

But the titans may yet emerge unscathed

“How did you go bankrupt?…Gradually and then suddenly.” Many technology entrepreneurs know this quote, from a novel by Ernest Hemingway—and often, from experience. The words have, of late, taken on new meaning. After years during which tech’s titans could do no wrong, they are now being pulled into a vortex of regulatory woes that make headlines almost daily. Big Tech is not about to implode. But will it come out intact?

The latest burst of antitrust activity came on July 24th, when Facebook said that the Federal Trade Commission (ftc), an American regulatory agency, had launched an investigation into the company. The news came soon after the ftc released details of a much-anticipated privacy settlement with the firm.

The social network will pay a $5bn fine for violating a previous privacy deal with the ftc. But Facebook also agreed to formalise its privacy processes, for instance by creating a special committee on its board and by designating compliance officers. Its boss, Mark Zuckerberg, will also have to certify the firm’s compliance—which could make him personally liable should Facebook fail to get its act together.

A day earlier, America’s Department of Justice announced that it would look into how big online platforms have achieved market power and whether they abuse it. The doj did not say which firms it had in mind, but Google is likely to be one. The department’s lawyers are reportedly already preparing to investigate it.

Trustbusters on the other side of the Atlantic—who have already fined Google more than €8.2bn ($9.3bn) in recent years—are not resting on their laurels. On July 17th Margrethe Vestager, the European Union’s competition regulator, announced that her department had opened an investigation into whether Amazon uses the data it collects from merchants’ sales on its sites to push its own products. Insiders expect the eu’s next target will be Apple, which stands accused of using its control of the app store on its iPhones to favour its own services, mainly Apple Music.

The Great Crypto Heist

Jul 16, 2019 Nouriel Roubini, Project Syndicate

Nouriel Roubini, a professor at NYU’s Stern School of Business and CEO of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank.

Cryptocurrencies have given rise to an entire new criminal industry, comprising unregulated offshore exchanges, paid propagandists, and an army of scammers looking to fleece retail investors. Yet, despite the overwhelming evidence of rampant fraud and abuse, financial regulators and law-enforcement agencies remain asleep at the wheel.

NEW YORK – There is a good reason why every civilized country in the world tightly regulates its financial system. The 2008 global financial crisis, after all, was largely the result of rolling back financial regulation. Crooks, criminals, and grifters are a fact of life, and no financial system can serve its proper purpose unless investors are protected from them.

If capitalism is broken, maybe it’s fixable

Date: 10-07-2019
Source: The Economist

A book excerpt and interview with Joseph Stiglitz, a Nobel laureate in economics and author of “People, Power and Profits”

FOR DECADES Joseph Stiglitz has argued that globalisation only works for a few, and government needs to reassert itself in terms of redistribution and regulation. Today the sources of his ire have grown more dire. Wealth inequality has become a hot-button political issue just as populists are on the march.

In Mr Sitglitz’s latest book, “People, Power, and Profits: Progressive Capitalism for an Age of Discontent,” he expands on his left-of-centre economic prescriptions. He believes that capitalism’s excesses can be tamed by the state providing a “public option” in areas like health care or mortgages when the market flounders.

As part of The Economist’s Open Future initiative, we conducted a short, written interview with Mr Stiglitz about his ideas. It is followed by an excerpt from his book, on what he calls “the transition to a postindustrial world.”

* * *

The Economist: You argue that right-wing populists aren’t wrong—capitalism is indeed rigged. How so?

ZEHN JAHRE DANACH: WENIGER WÄRE MEHR!

Wilfried Stadler, Bankarchiv 7/2019

Eine kritische Zwischenbilanz zu Fragen der Bankenregulierung und Finanzmarktstabilität

Am Montag, dem 15. September 2008 stürzte die Pleite der Investmentbank Lehman Brothers das internationale Bankensystem in seine tiefste Krise seit den Dreißigerjahren. Die Zahlungsunfähigkeit des noch am Freitag davor als unsinkbares Schiff geltenden Finanz-Kolosses löste eine Kaskade von drastischen Folgewirkungen aus. Das ominöse Datum hat sich auch deshalb tief im kollektiven Gedächtnis eingenistet, weil sich die Finanzkrise gerade in Europa in der Folge zu einer handfesten politischen Krise ausgewachsen hat. Ein gutes Jahrzehnt danach scheint die Bankenwelt bei oberflächlicher Betrachtung wieder weitgehend in Ordnung zu sein. Dennoch liegt eine neue Normalität wohl noch in weiter Ferne.

Eine Überfülle an seit damals in die Welt gekommenen Regulierungen bietet vermeintlichen Schutz vor neuerlichen Blitzgewittern. Die permanente Vermessung des Handelns aller Mitwirkenden erweckt den Anschein der Messbarkeit ihres Tuns. Doch weder das Regulierungsausmaß noch die Treffsicherheit der seit der Finanzkrise ins Uferlose angestiegenen Anforderungen können überzeugen. In beiden Bereichen besteht hoher und durchaus dringender Handlungsbedarf.

Zwei Beispiele seien stellvertretend für zahlreiche andere genannt:

BRETTON WOODS UND DIE G20

FURCHE-Kolumne 270 Wilfried Stadler,

Dass globale Probleme nur dann lösbar sind, wenn die gewichtigsten Spieler der Weltwirtschaft nach gemeinsamen Regeln suchen, hat die Finanzkrise 2008 höchst unsanft in Erinnerung gerufen. Seit damals treffen deshalb die Spitzen von 19 führenden Wirtschaftsnationen, ergänzt um den Präsidenten der EU-Kommission, regelmäßig zusammen. Sie repräsentieren nicht weniger als 85 Prozent der globalen Wirtschaftsleistung.

US-Präsident Trump nützte den jüngsten G20-Gipfel in Japan zu einer weiteren Demonstration jener Taktik des „divide et impera“, die seinem Narzissmus so entgegenkommt. Bilaterale Treffen mit Xi Jiping, Angela Merkel oder Wladimir Putin sollten wieder einmal alles in den Schatten stellen, was sonst noch am gemeinsamen Konferenztisch besprochen wurde. Der Abstecher nach Nordkorea war die Draufgabe zur Ego-Show.

Ob ihn wohl irgendjemand darauf aufmerksam gemacht hat, dass das Treffen in Osaka mit dem 75. Jahrestag des Abschlusses der Konferenz von Bretton Woods im US-Bundesstaat New Hampshire zusammenfiel – und wie anders die Rolle der Vereinigten Staaten damals war?
Im Sommer 1944 glückte den Vertretern von 44 Ländern nach dreiwöchigen Verhandlungen ein Schlussdokument, in dem die Eckpfeiler der Nachkriegs-Wirtschaftsordnung fixiert wurden. Das Ende des Weltkrieges war damals trotz der erst kurz zuvor geglückten Landung der Alliierten in der Normandie noch nicht endgültig absehbar. Den Vorsitz über die meist bis tief in die Nacht andauernden Gespräche führte John Maynard Keynes, der renommierteste Ökonom seiner Zeit.