Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘vulnerability’

How deep will downturns in rich countries be?

Posted by hkarner - 20. April 2020

Date: 16‑04‑2020

Source: The Economist

Those in central and southern Europe seem most vulnerable

As the virus upends productive activity across the world, the question now is how bad things will get. On April 14th the imf warned that the global recession would be the deepest for the best part of a century. But the severity of the pandemic and the uncertainty around the duration of lockdowns are such that economists’ models, trained on business cycles in the post‑war era, are of little use. Some companies, such as Starbucks and Dell, have pulled their guidance on annual earnings, declining even to hazard a guess about the future. Amid the fog, however, one thing seems certain: some economies will suffer much more than others.

Economic crises expose and exacerbate structural weaknesses. Analysis by The Economist of five decades of gdp data finds that growth rates in rich countries tend to converge during expansions, as even the weakest economies are pulled along. Yet during downturns performance diverges markedly. In the first half of the 2000s the average annual gap between the gdp growth rates of the best‑ and worst‑performing rich countries was five percentage points. In 2008‑12, in the recession that followed the global financial crisis, the gap widened to ten points. Den Rest des Beitrags lesen »

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Mapping the World’s Financial Weak Spots

Posted by hkarner - 21. Juni 2019

By IMFBlog

Where will the next financial crisis come from? The short answer is: We don’t know. We can, however, look for vulnerabilities in the system that, if left untreated, can develop into problems.

What do we mean by a vulnerability? It is an area of weakness that can amplify and spread an unexpected economic shock, increasing the level of risk to the financial system. Imagine the impact of an earthquake on a house built on sand, as opposed to bedrock. In the financial world, cracks in the bedrock can arise from high levels of debt and mismatches of institutions’ risk factors such as currencies or the maturities of their exposures.

Government debt in the euro area remains one of the most serious vulnerabilities.

One such weak spot is the debt level in US corporations and the risks investors in their securities take. Lending to heavily indebted companies with weak credit ratings is on the rise and may be a widening crack in the system. Den Rest des Beitrags lesen »

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Weak Spots in Global Financial System Could Amplify Shocks

Posted by hkarner - 11. April 2019

By Tobias Adrian and Fabio Natalucci

In the United States, the ratio of corporate debt to GDP is at record-high levels. In several European countries, banks are overloaded with government bonds. In China, bank profitability is declining, and capital levels remain low at small and medium-size lenders.

Vulnerabilities like these are on the rise across advanced and emerging market economies, according to the IMF’s latest Global Financial Stability Report. They aren’t all setting off alarm bells just yet. But if they continue to build, especially with still-easy financial conditions, they could amplify shocks to the global economy, raising the odds of a severe economic downturn a few years down the road.

With the right mix of policies, countries can sustain growth while keeping vulnerabilities in check.

This poses a dilemma for policymakers seeking to counter a slowing global economy, as discussed in the World Economic Outlook. By taking a patient approach to monetary policy, central banks can accommodate growing downside risks to the economy. But if financial conditions remain easy for too long, vulnerabilities will continue to build, and the odds of a sharp drop in economic growth at some later point will be higher. Den Rest des Beitrags lesen »

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US-Geopolitiker Friedman: Deutschland ist sehr verwundbar geworden

Posted by hkarner - 1. Februar 2016

Deutsche Wirtschafts Nachrichten  | 

Der US-Geopolitiker George Friedman sieht Deutschland in Europa unter Druck. Die Export-Nation braucht die anderen Staaten und wird daher für die Schulden der anderen haften müssen. Außenpolitisch hat Deutschland wenige Optionen: Die USA, Frankreich und Polen werden eine Annäherung an Russland unter keinen Umständen akzeptieren.

Deutsche Wirtschafts Nachrichten: Bundeskanzlerin Angela Merkel steht sowohl im In- als auch im Ausland in der Kritik. Welche Rolle spielt sie in der EU-Krise?

George Friedman: Merkels Persönlichkeit ist nicht entscheidend. Deutschland ist eine der größten Exportnationen der Welt. Etwa 50 Prozent seiner Exporte werden in der Euro-Zone abgesetzt. Hier steht Deutschland vor einer entscheidenden Frage: Wollen wir Verantwortung für Europa übernehmen oder wollen wir abhängig sein von Europa? Deutschland wird Griechenland auf keinen Fall aus der Euro-Zone austreten lassen. Das gilt auch für andere Staaten wie Italien. Deutschland haftet als größter Staat in der Euro-Zone. Den Rest des Beitrags lesen »

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