Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Risk’

The Global Economy Confronts Four Geopolitical Risks

Posted by hkarner - 29. Dezember 2015

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.

DEC 28, 2015, Project Syndicate

CAMBRIDGE – The end of the year is a good time to consider the risks that lie ahead of us. There are of course important economic risks, including the mispricing of assets caused by a decade of ultra-low interest rates, the shifts in demand caused by the Chinese economy’s changing structure, and European economies’ persistent weakness. But the main longer-term risks are geopolitical, stemming from four sources: Russia, China, the Middle East, and cyberspace. Den Rest des Beitrags lesen »

Posted in Artikel | Getaggt mit: , , , | Leave a Comment »

The Middle East Meltdown and Global Risk

Posted by hkarner - 1. Oktober 2015

Photo of Nouriel Roubini

Nouriel Roubini

Nouriel Roubini, a professor at NYU’s Stern School of Business and Chairman of Roubini Global Economics, 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.

OCT 1, 2015, Project Syndicate

NEW YORK – Among today’s geopolitical risks, none is greater than the long arc of instability stretching from the Maghreb to the Afghanistan-Pakistan border. With the Arab Spring an increasingly distant memory, the instability along this arc is deepening. Indeed, of the three initial Arab Spring countries, Libya has become a failed state, Egypt has returned to authoritarian rule, and Tunisia is being economically and politically destabilized by terrorist attacks.

The violence and instability of North Africa is now spreading into Sub-Saharan Africa, with the Sahel – one of the world’s poorest and most environmentally damaged regions – now gripped by jihadism, which is also seeping into the Horn of Africa to its east. And, as in Libya, civil wars are raging in Iraq, Syria, Yemen, and Somalia, all of which increasingly look like failed states. Den Rest des Beitrags lesen »

Posted in Artikel | Getaggt mit: , , , | Leave a Comment »

Risk tolerance of men and women

Posted by hkarner - 21. September 2015

Francesco D’Acunto 20 September 2015, voxeu

Assistant Professor of Finance at the R.H.Smith School of Business, University of Maryland

Den Rest des Beitrags lesen »

Posted in Artikel | Getaggt mit: , , | Leave a Comment »

Shock-Resistant Eurozone Appears Far Off

Posted by hkarner - 20. September 2015

Date: 19-09-2015
Source: The Wall Street Journal

With disparate proposals to cut risk in the currency union, Europe’s finance chiefs have raised a high bar to progress

After ignoring the question of how to make the eurozone more shock-resistant for the better part of a year, the currency union’s finance chiefs seem to have found a new way of avoiding progress: pushing so many different ideas at once that gridlock is unavoidable.

First out the gate was French Economy Minister Emmanuel Macron, who wants the eurozone to set up an economic government, with its own budget and parliament, as well as a finance minister to distribute investments and steer labor-market policies. “The status quo will lead to self-destruction,” Mr. Macron warned in a recent interview with German daily Süddeutsche Zeitung.

A few days later, Jeroen Dijsselbloem, the Dutch finance minister who also presides over the meetings of his eurozone colleagues, suggested that what the currency union needs is more “convergence,” or streamlining, of national economic policies—but no new institutions to enforce, incentivize or legitimize them. If governments want their citizens’ support for the euro, they have to ensure it leads to prosperity and prevent one country’s bad tax rules from creating problems for its neighbors, said Mr. Dijsselbloem.

Next up was Jean-Claude Juncker, the president of the European Commission, who in his “State of the European Union” speech promised to present proposals for a European deposit-guarantee system in the coming year and, further down the line, a European treasury.

Many economists see a common system for insuring deposits as a logical—and necessary—part of the eurozone’s “banking union,” complementing the centralized supervisor and the resolution authority that were created to prevent failing banks from bankrupting their governments. In other words, once a broken lender has been identified and the cost of resolving it has been shared among its shareholders and creditors, what is needed is a big pot of money to compensate savers with less than EUR100,000 in their accounts.

The commission proposal is likely to be less ambitious. Instead of having one fund for all 19 euro countries, the proposed system is expected to supplement national funds running low on their own resources with credit lines from their eurozone counterparts.

Even this scaled-down reinsurance system is too much for Germany, the leading opponent of mutualizing risks in the currency union. Yet, rather than ruling it out from the get-go, Finance Minister Wolfgang Schäuble is pursuing a new strategy.

“One has to be careful not to put the cart before the horse,” he told reporters after discussing the issue with his eurozone colleagues on Saturday.

Before teaming up to protect savers, Mr. Schäuble argued, the bloc has to take a host of other steps. Among them are obvious ones—such as requiring all countries to actually implement the agreed rules on imposing losses on bank investors—but also some that are clearly designed to delay progress. These include requirements for banks to build up capital buffers for government bonds and a system to restructure excessive government debts. (Finland, a traditional ally of Germany, has already convened its own expert group to look at how best to restructure sovereign bonds).

Even a eurozone finance minister isn’t unthinkable, Mr. Schäuble said, but before going there, the decision on whether national budgets are in line with EU rules should be taken out of the hands of the European Commission. Instead of the EU executive, which he said is less strict with large countries such as Germany or France, an independent “fiscal board” should be given the power to strike down national spending plans.

With this wish list Mr. Schäuble pulled a classic divide-and-rule move. Obvious supporters for a common deposit-insurance system and a centralized budget such as Italy or Portugal are bound to block any initiatives that would make their own large debts seem less safe. The European Central Bank, which favors a strong banking union, meanwhile, doesn’t want to get rid of the zero-risk labeling for government bonds in the eurozone unless others around the globe do the same for their own debts.

There are some ways to unblock the logjam. Rather than immediately force banks to hold significant capital on their holdings of government bonds, European regulators could set limits for how many bonds from one country a bank can hold, suggests Christian Odendahl, chief economist at the London-based Centre for European reform. That, he says, could help overcome German resistance to a limited deposit reinsurance system.

But officials involved in the discussions among ministers aren’t overly optimistic. “There’s no pressure,” says one of them. With policy makers’ attention focused on dealing with the refugee crisis and no imminent threat to the eurozone, progress on reinforcing Europe’s monetary union is bound to be slow.

“Improving EMU can only happen if we move in parallel on all fronts,” Benoît Cœuré, the French member of the ECB’s executive board, said after ministers’ deliberations last week.

Posted in Artikel | Getaggt mit: , , | Leave a Comment »

Risk taking and firm growth

Posted by hkarner - 4. August 2015

Peng Xu 03 August 2015, voxeu

Professor and Director, Institute of Comparative Economic Studies, Hosei University

According to Hofstede’s analysis, Japan is one of the most uncertainty-avoiding countries. Indeed, Japanese firms exhibit the lowest level of risk taking in the cross-country analysis of John et al. (2008). Den Rest des Beitrags lesen »

Posted in Artikel | Getaggt mit: , , , , | Leave a Comment »

Reinsurance: Compacts of god

Posted by hkarner - 30. Mai 2015

Date: 28-05-2015
Source: The Economist

The market for risk is changing

Let’s hope they issued cat bonds

INSURANCE only works if reinsurance works, those in the business say. An insurer that would face crippling losses if, say, a hurricane struck an island where it had covered lots of property against extreme weather, would typically insure itself against such an event with a reinsurer. But the $425 billion industry is under threat as insurers increasingly offload risk directly to capital markets instead. This month Warren Buffett, who has investments in reinsurance, dismissed it as a “fashionable asset class” whose prospects have “turned for the worse”. Den Rest des Beitrags lesen »

Posted in Artikel | Getaggt mit: , | Leave a Comment »

Ten Take Aways from the “Rethinking Macro Policy: Progress or Confusion?”

Posted by hkarner - 2. Mai 2015

An excellent report on the current thinking (hfk)

Posted on by iMFdirect

blanchBy Olivier Blanchard

On April 15-16, the IMF organized the third conference on “Rethinking Macro Policy.

Here are my personal take aways.

1. What will be the “new normal”? 

I had asked the panelists to concentrate not on current policy challenges, but on challenges in the “new normal.” I had implicitly assumed that this new normal would be very much like the old normal, one of decent growth and positive equilibrium interest rates. The assumption was challenged at the conference.

On the one hand, Ken Rogoff argued that what we were in the adjustment phase of the “debt supercycle.” Such financial cycles, he argued, end up with debt overhang, which in turn slows down the recovery and requires low interest rates for some time to maintain sufficient demand.  Under that view, while it may take a while for the overhang to go away, more so in the Euro zone than in the United States, we should eventually return to something like the old normal.

On the other hand, Larry Summers argued that, while debt overhang was clearly relevant, more was going on.  He expanded on his secular stagnation hypothesis, arguing that, in the context of a chronic excess of saving over investment, keeping the economy at potential may well require very low or even negative real interest rates.  He pointed out that real interest rates had started declining long before the crisis, and pointed also to the further decline in long rates since he first stated this hypothesis at an IMF conference last year. If he is right, the new normal will not be like the old normal. Den Rest des Beitrags lesen »

Posted in Artikel | Getaggt mit: , , , , , , , , , , | Leave a Comment »

Challenges ahead: Managing spillovers

Posted by hkarner - 3. Dezember 2014

Olivier Blanchard, Luc Laeven, Esteban R Vesperoni 03 December 2014, voxeu

Chief economist, IMF

Deputy Division Chief in the Research Department of the International Monetary Fund and CEPR Research Fellow

Esteban R Vesperoni

Senior Economist, IMF

 

The events of the last five years have been a forceful reminder of the interconnections among nations. There has been renewed debate on the optimal way to combine fiscal, monetary, and financial policies to deal with international spillovers, and on the scope for coordination of such policies. This column discusses the highlights of a recent IMF conference on “Cross-Border Spillovers”, and applies the lessons to the challenges of the US and the Eurozone exiting from their unconventional monetary policies.

Events of the last five years have forcefully reminded the global community of the risks present in the global economy and the interconnections among nations. Intense discussions have arisen on the optimal way to combine fiscal, monetary, and financial policies to deal with spillovers across nations, and on the scope for coordination of such policies. In this context, the theme chosen for the IMF’s 15th Jacques Polak Annual Research Conference was “Cross-Border Spillovers”.1 This column discusses the conference highlights. Den Rest des Beitrags lesen »

Posted in Artikel | Getaggt mit: , , , , , | Leave a Comment »

Global Solutions for Globalization’s Problems

Posted by hkarner - 28. November 2014

Date: 27-11-2014
Source: Project Syndicate
IAN GOLDINGoldin

Ian Goldin, Director of the Oxford Martin School, Professor of Globalization and Development at the University of Oxford, and Vice-Chair of the Oxford Martin Commission for Future Generations, is the co-author of The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do about It.

OXFORD – The last few decades of globalization and innovation have resulted in the most rapid progress that the world has ever known. Poverty has been reduced. Life expectancy has increased. Wealth has been created at a scale that our ancestors could not have imagined. But the news is not all good. In fact, the achievements brought about by globalization are now under threat.

The world has simultaneously benefited from globalization and failed to manage the inherent complications resulting from the increased integration of our societies, our economies, and the infrastructure of modern life. As a result, we have become dangerously exposed to systemic risks that transcend borders.

These threats spill across national boundaries and cross the traditional divides between industries and organizations. An integrated financial system propagates economic crises. International air travel spreads pandemics. Interconnected computers provide rich hunting grounds for cybercriminals. Middle Eastern jihadis use the Internet to recruit young Europeans. Living standards rise – and greenhouse-gas emissions follow, accelerating climate change. Den Rest des Beitrags lesen »

Posted in weitere Artikel | Getaggt mit: , , , | Leave a Comment »

Investors in Europe Hungry for Riskier Debt

Posted by hkarner - 18. April 2014

What a crazy, greedy world! Lesson not learned! (hfk)

Date: 18-04-2014
Source: The Wall Street Journal

Amid the Search for Yield, Issuers are Able to Negotiate Favorable Terms

Investors in Europe are buying up riskier debt at a record pace. They are also giving up many of the usual safeguards they would normally seek when lending companies cash.

High-yield corporate debt issuers have sold €18.5 billion ($26 billion) of euro-denominated bonds since January, according to Dealogic. That is a record, and roughly 17% more than at this point a year ago.

Amid persistent low interest rates, issuers have been able to negotiate favorable pricing. The average yield on euro-denominated junk bonds hit 4% last week, according to a Markit index, down more than two percentage points in the past year.

Corporate Junk BondsBond issuers are demanding looser terms too and yield-hungry investors say they are willing to oblige.

The market has seen “a race to the bottom in terms of covenant standards,” said David Fancourt, a fund manager at M&G Investments, which manages £244 billion ($411 billion).

For instance, the terms of Belgian fast-food chain Quick Restaurants SA’s €595 million two-part bond sold earlier this month say the company can change owners without recourse to bondholders so long as certain leverage ratios are met. Traditionally, investors in similar bonds could force the company to buy its debt back if there is a change in ownership.

Some issuers have also negotiated looser terms around early repayment of the bonds or whether they can increase dividend payments.

The trend toward weaker protection for debtholders mirrors a shift in Europe’s corporate lending market, where there has been a rise in covenant-lite deals recently. Almost €3 billion of the €25 billion of euro-denominated leveraged loans issued this year have been covenant-lite, the highest year-to-date figure since Dealogic started tracking such deals in 2006. Den Rest des Beitrags lesen »

Posted in Artikel | Getaggt mit: , , , | Leave a Comment »

 
Folgen

Erhalte jeden neuen Beitrag in deinen Posteingang.

Schließe dich 471 Followern an