Heterodox economics: Marginal revolutionaries | The Economist
...
The bygone and the marginalised always look strange. But would it not also be strange to imagine that, in 30 or 50 years, economic historians will look back on the current crisis and say that mainstream macroeconomics offered the best analysis and prescriptions that could have been conceived? If they agree that it did not, then there seems a chance that they will think perspectives outside the mainstream might have helped.
Decades ago macroeconomics resembled an “intellectual witch’s brew”, according to Olivier Blanchard, chief economist of the International Monetary Fund. It contained “many ingredients, some of them exotic—many insights, but also a great deal of confusion”. Things then became more rigorous and refined: disagreements remained, but within set limits. Now, on the blogs, the economic conversation boils and bubbles again. That ferment is surely spreading into the academy—and in time some new quintessence will be brought forth, perhaps from materials now considered base.
2011/12/30
2011/12/18
Económico-Financeiro: A criação da banca comercial
Económico-Financeiro: A criação da banca comercial: O Condado da Negralhada ainda é grandinho. Tem a capital e depois tem 8 aldeias retiradas uns 15 kilometros. A capital tem 200 habitantes e...
2011/12/14
A disastrous failure at the summit - FT.com
A disastrous failure at the summit - FT.com
Martin Wolf
Whom the gods wish to destroy they first make mad. That was my reaction to the outcome of last week’s meeting of the European Union’s Council...
The core decision was to strengthen fiscal discipline, so building what Angela Merkel, Germany’s chancellor, and Nicolas Sarkozy, the French president, last week called a “stability and growth union” – or, as I think of it, an “instability and stagnation union”...
.. the Commission – a body of unelected bureaucrats – would impose sanctions on elected governments, when the latter are under great pressure. What is the Commission going to do if they still fail to comply? Take them over? The answer, we now know, is: yes. This is a constitutional monstrosity.
Still more important, as professor Kevin O’Rourke of Oxford university argues on Project Syndicate, is that it is also an economic monstrosity. Let me make this point by turning last week’s analysis of the balance of payments into one of foreign, private and government financial balances in eurozone members (see charts). To remind readers: these have to add up to zero, by definition. But how they go about adding up is revealing.
As I noted last week, fiscal imbalances were modest before the crisis, but the current account imbalances were huge. Surplus private funds in some countries (notably Germany and the Netherlands) were intermediated by the financial system to fund private deficits in others (notably Greece, Ireland, Portugal and Spain). When crisis hit, these flows ceased. Deficits of private sectors collapsed (most turning into surpluses), while fiscal deficits exploded. Now, says Germany, the latter must be slashed.
...
The eurozone has no credible plan to fix the flaws of the eurozone, apart from greater fiscal austerity: there is to be no fiscal, financial or political union; and there is to be no balanced mechanism for economic adjustment on both sides of the creditor-debtor divide. The decision is, instead, to try still harder with a stability and growth pact whose failures have been both predictable and persistent. Yes, Mr Cameron made a blunder last week. But that of the eurozone looks far bigger.
Martin Wolf
Whom the gods wish to destroy they first make mad. That was my reaction to the outcome of last week’s meeting of the European Union’s Council...
The core decision was to strengthen fiscal discipline, so building what Angela Merkel, Germany’s chancellor, and Nicolas Sarkozy, the French president, last week called a “stability and growth union” – or, as I think of it, an “instability and stagnation union”...
.. the Commission – a body of unelected bureaucrats – would impose sanctions on elected governments, when the latter are under great pressure. What is the Commission going to do if they still fail to comply? Take them over? The answer, we now know, is: yes. This is a constitutional monstrosity.
Still more important, as professor Kevin O’Rourke of Oxford university argues on Project Syndicate, is that it is also an economic monstrosity. Let me make this point by turning last week’s analysis of the balance of payments into one of foreign, private and government financial balances in eurozone members (see charts). To remind readers: these have to add up to zero, by definition. But how they go about adding up is revealing.
As I noted last week, fiscal imbalances were modest before the crisis, but the current account imbalances were huge. Surplus private funds in some countries (notably Germany and the Netherlands) were intermediated by the financial system to fund private deficits in others (notably Greece, Ireland, Portugal and Spain). When crisis hit, these flows ceased. Deficits of private sectors collapsed (most turning into surpluses), while fiscal deficits exploded. Now, says Germany, the latter must be slashed.
...
The eurozone has no credible plan to fix the flaws of the eurozone, apart from greater fiscal austerity: there is to be no fiscal, financial or political union; and there is to be no balanced mechanism for economic adjustment on both sides of the creditor-debtor divide. The decision is, instead, to try still harder with a stability and growth pact whose failures have been both predictable and persistent. Yes, Mr Cameron made a blunder last week. But that of the eurozone looks far bigger.
2011/12/10
2011/12/09
The only way to save the eurozone is to destroy the EU – FT.com
The only way to save the eurozone is to destroy the EU – FT.com
...
The fiscal union likely to be agreed in March may not initially be very effective in resolving the crisis. It focuses on all the wrong issues, mostly fiscal discipline, which is not the real reason why the crisis has spread to Spain or Belgium, for example.
But the eurozone nevertheless made an important political statement. It will not allow outsiders to stand in the way when it needs to act...
Over time it will have to usurp central EU roles, especially in the internal market. I would expect it to create its own internal market inside the existing one. It will have to develop a highly integrated financial market with a single financial supervisor. In particular, I do not believe that the eurozone will allow a situation to persist where its main financial centre is located offshore. It will also want to set labour market rules and co-ordinate tax policies. In all of those areas, the eurozone and the EU will get into a permanent legal and political conflict, in which the EU acts as a brake on the eurozone’s development.
One way or the other, this conflict is bound to lead to an eventual split of the EU. ...
The EU with its current treaties and institutions has proved to be an insufficiently flexible framework to run a monetary union and a disastrous framework for a monetary union in crisis.
These latest developments have reaffirmed my conviction that the only way to save the eurozone is to destroy the EU. But European governments may, of course, end up destroying both. All they did in the early hours of Friday morning was to create a new crisis without resolving the existing one.
...
The fiscal union likely to be agreed in March may not initially be very effective in resolving the crisis. It focuses on all the wrong issues, mostly fiscal discipline, which is not the real reason why the crisis has spread to Spain or Belgium, for example.
But the eurozone nevertheless made an important political statement. It will not allow outsiders to stand in the way when it needs to act...
Over time it will have to usurp central EU roles, especially in the internal market. I would expect it to create its own internal market inside the existing one. It will have to develop a highly integrated financial market with a single financial supervisor. In particular, I do not believe that the eurozone will allow a situation to persist where its main financial centre is located offshore. It will also want to set labour market rules and co-ordinate tax policies. In all of those areas, the eurozone and the EU will get into a permanent legal and political conflict, in which the EU acts as a brake on the eurozone’s development.
One way or the other, this conflict is bound to lead to an eventual split of the EU. ...
The EU with its current treaties and institutions has proved to be an insufficiently flexible framework to run a monetary union and a disastrous framework for a monetary union in crisis.
These latest developments have reaffirmed my conviction that the only way to save the eurozone is to destroy the EU. But European governments may, of course, end up destroying both. All they did in the early hours of Friday morning was to create a new crisis without resolving the existing one.
2011/12/04
Económico-Financeiro: Vamos hoje à terra da pescada, o Chile
Económico-Financeiro: Vamos hoje à terra da pescada, o Chile: Quando eu escrevi que era contra o direito à greve na função pública e nas empresas públicas, um comentador, de forma simples e educada, fez...
2011/12/02
This time they may save the euro - FT.com
This time they may save the euro - FT.com
Take a deep breath. Here is a mad proposition: Europe is about to save the euro. Don’t bet the bank on it. European leaders have shown an unmatched talent for messing things up. But there has been a change in the political dynamics of the continent’s sovereign debt crisis. This time policymakers might just get it right.
Take a deep breath. Here is a mad proposition: Europe is about to save the euro. Don’t bet the bank on it. European leaders have shown an unmatched talent for messing things up. But there has been a change in the political dynamics of the continent’s sovereign debt crisis. This time policymakers might just get it right.
Prioridade do governo: manter a televisão pública « BLASFÉMIAS
Prioridade do governo: manter a televisão pública « BLASFÉMIAS
Os sucessivos governos entendem que para além do preço pago directamente pelos utentes directos de certos serviços, alguns, designados de «interesse público», deverão ser directamente subsidiados por todos os contribuintes (e não apenas pelos utentes), de modo a que o preço do serviço seja mais acessível. Tais verbas disponibilizadas a essas empresas (públicas e privadas), são as chamadas «indeminizações compensatórias».
De entre os vários serviços, qual será o serviço dito «público» que os sucessivos governos entendem como mais essencial, isto é, aquele para o qual os contribuintes vêem sacada maior fatia do seu rendimento?
Cultura? Transportes rodoviários? Transportes ferroviários? Passes sociais? Não: a televisão.
...
Os sucessivos governos entendem que para além do preço pago directamente pelos utentes directos de certos serviços, alguns, designados de «interesse público», deverão ser directamente subsidiados por todos os contribuintes (e não apenas pelos utentes), de modo a que o preço do serviço seja mais acessível. Tais verbas disponibilizadas a essas empresas (públicas e privadas), são as chamadas «indeminizações compensatórias».
De entre os vários serviços, qual será o serviço dito «público» que os sucessivos governos entendem como mais essencial, isto é, aquele para o qual os contribuintes vêem sacada maior fatia do seu rendimento?
Cultura? Transportes rodoviários? Transportes ferroviários? Passes sociais? Não: a televisão.
...
Sweden Is Safest as Crisis Upends Bond Market - Bloomberg
Sweden Is Safest as Crisis Upends Bond Market - Bloomberg: Sweden is enjoying its lowest borrowing cost ever relative to Germany as investors reward the biggest Scandinavian economy for cutting its debt to less than half Europe’s average and enforcing discipline at its banks.
2011/11/30
Does Europe Have a Korean Option? - Simon Johnson - Project Syndicate
Does Europe Have a Korean Option? - Simon Johnson - Project Syndicate:
...
While depreciation would never be eurozone officials’ stated policy, it currently looks like all roads lead in that direction.
Of course, currency depreciation is not a panacea. The South Korean situation also involved difficult steps, including a confrontation between the government and the largest chaebol, some of which had quite blatantly violated the law. After a series of showdowns, in which one company, Daewoo, threatened to default, and political forces rallied to its assistance, the government won; the hugely powerful Daewoo group underwent bankruptcy and restructuring. Overall, South Korea managed to curb its corporate sector’s excessive power (which holds lessons for dealing with today’s mega-banks).
Similarly, Europe needs to fix its deeper structural problems. It needs a fiscal center – much as the United States needed a federal authority to tax in 1787. Indeed, the Europeans need the equivalent of the US Constitutional Convention – and the difficult ratification debate that followed.
But some depreciation of the euro would provide a bridge to reach internal governance reform. And, like it or not, rising pressure on the euro is likely to force European officials to cross it.
...
While depreciation would never be eurozone officials’ stated policy, it currently looks like all roads lead in that direction.
Of course, currency depreciation is not a panacea. The South Korean situation also involved difficult steps, including a confrontation between the government and the largest chaebol, some of which had quite blatantly violated the law. After a series of showdowns, in which one company, Daewoo, threatened to default, and political forces rallied to its assistance, the government won; the hugely powerful Daewoo group underwent bankruptcy and restructuring. Overall, South Korea managed to curb its corporate sector’s excessive power (which holds lessons for dealing with today’s mega-banks).
Similarly, Europe needs to fix its deeper structural problems. It needs a fiscal center – much as the United States needed a federal authority to tax in 1787. Indeed, the Europeans need the equivalent of the US Constitutional Convention – and the difficult ratification debate that followed.
But some depreciation of the euro would provide a bridge to reach internal governance reform. And, like it or not, rising pressure on the euro is likely to force European officials to cross it.
2011/11/28
FT Alphaville » The legal aspects and abstractions of a euro redenomination
FT Alphaville » The legal aspects and abstractions of a euro redenomination
And so it came to pass, that everyone who worried about whether the euros which people owed them would stay euros for much longer…
…realised that this was not a drill.
Case in point — a note by Nomura analysts published over the weekend, which has ruffled a few feathers.
And so it came to pass, that everyone who worried about whether the euros which people owed them would stay euros for much longer…
…realised that this was not a drill.
Case in point — a note by Nomura analysts published over the weekend, which has ruffled a few feathers.
Eurozone is on the way to fiscal union | The A-List | Must-read views on today’s top news stories – FT.com – FT.com
Eurozone is on the way to fiscal union | The A-List | Must-read views on today’s top news stories – FT.com – FT.com
... the scheme for issuing eurozone bonds would ensure that in order to be attractive to overseas investors they are at least as safe as and more liquid than existing high-quality government bonds. It should also involve incentives to fiscal discipline so that participating governments contribute to keeping the new bonds on a sound footing. In view of these criteria, the incentives-focused ‘blue bond’ proposal by Jacques Delpla and Jakob von Weizsäcker remains the best on offer...
The German experts’ proposal addresses these concerns by proposing a temporary guarantee scheme covering current debt in excess of 60 per cent of gross domestic product. They envisage the creation of a temporary redemption fund that would benefit from joint and several liability and through which participating countries could issue debt in the next few years until they have reached their quota (namely, their current debt less 60 per cent). This debt would be paid off and gradually extinguished over time. To this end, each participating country would be required to earmark specific tax revenues...
First, the temporary possibility to issue new debt under joint and several liability would give breathing space to countries in trouble, leaving them time to adjust. Second, it would be an instrument to rebuild trust. For these two reasons, it deserves serious consideration.
... the scheme for issuing eurozone bonds would ensure that in order to be attractive to overseas investors they are at least as safe as and more liquid than existing high-quality government bonds. It should also involve incentives to fiscal discipline so that participating governments contribute to keeping the new bonds on a sound footing. In view of these criteria, the incentives-focused ‘blue bond’ proposal by Jacques Delpla and Jakob von Weizsäcker remains the best on offer...
The German experts’ proposal addresses these concerns by proposing a temporary guarantee scheme covering current debt in excess of 60 per cent of gross domestic product. They envisage the creation of a temporary redemption fund that would benefit from joint and several liability and through which participating countries could issue debt in the next few years until they have reached their quota (namely, their current debt less 60 per cent). This debt would be paid off and gradually extinguished over time. To this end, each participating country would be required to earmark specific tax revenues...
First, the temporary possibility to issue new debt under joint and several liability would give breathing space to countries in trouble, leaving them time to adjust. Second, it would be an instrument to rebuild trust. For these two reasons, it deserves serious consideration.
Thinking the unthinkable on a euro break-up | Gavyn Davies | Insight into macroeconomics and the financial markets from the Financial Times – FT.com
Thinking the unthinkable on a euro break-up | Gavyn Davies | Insight into macroeconomics and the financial markets from the Financial Times – FT.com
It has suddenly become respectable to ask the question: what would happen if the euro broke up? Last week’s rise in German bond yields signals that a euro break-up is being taken more seriously by investors. I am told that London law firms are allocating large amounts of time to examining the validity, following a break-up, of cross-border contracts written in euros. And, to judge from my own inbox, asset managers are beginning to ask about the economics of how it could occur.
…
… if the euro were to disappear altogether, the extra complication of how to handle all the contracts denominated in euros would be a legal morass which would take many years to resolve, and in the meantime the financing of international trade could collapse for an unknown period of time. (The extraordinary legal complications are discussed here.)
Once investors start to look over this precipice in earnest, the resulting stampede out of all euro-denominated assets could become self-fulfilling. And any disorderly break-up of the euro would, at the very least, result in a period of deep European recession, before the eventual economic recovery could begin.
So serious are the risks that Germany and France are today reported to be contemplating urgent steps to save the euro by adopting earlier fiscal union, and by increasing financial support for peripheral bond markets (Route 3). About time, too.
It has suddenly become respectable to ask the question: what would happen if the euro broke up? Last week’s rise in German bond yields signals that a euro break-up is being taken more seriously by investors. I am told that London law firms are allocating large amounts of time to examining the validity, following a break-up, of cross-border contracts written in euros. And, to judge from my own inbox, asset managers are beginning to ask about the economics of how it could occur.
…
… if the euro were to disappear altogether, the extra complication of how to handle all the contracts denominated in euros would be a legal morass which would take many years to resolve, and in the meantime the financing of international trade could collapse for an unknown period of time. (The extraordinary legal complications are discussed here.)
Once investors start to look over this precipice in earnest, the resulting stampede out of all euro-denominated assets could become self-fulfilling. And any disorderly break-up of the euro would, at the very least, result in a period of deep European recession, before the eventual economic recovery could begin.
So serious are the risks that Germany and France are today reported to be contemplating urgent steps to save the euro by adopting earlier fiscal union, and by increasing financial support for peripheral bond markets (Route 3). About time, too.
2011/11/25
O grande especulador nacional - Sócrates
http://quartarepublica.blogspot.com/2011/11/o-grande-especulador-nacional.html
Dívida Pública Directa do Estado- Fonte: Instituto Gestão do Crédito Público
Março de 2005- 92,7 mil milhões
2011( 30 de Junho)- 172,4 mil milhões
Sócrates cometeu a proeza inimaginável de praticamente duplicar a dívida nos seus seis anos e três meses de governação. 10,6 mil milhões por ano!... E, para coroar a façanha, só nos últimos 25 meses do reinado, endividou-nos em mais cerca de 40 mil milhões!...Claro que teve que começar a pedir emprestado até para pagar os juros.
A especulação tem um nome e é nacional. Mas agora fazem as greves contra o governo e os especuladores internacionais!...
2011/11/22
2011/11/21
What the eurozone crisis teaches us about the subprime crisis
TheMoneyIllusion
Consider the following:
Banks pour huge amounts of money into one particular asset class. They are encouraged to do this by public policymakers, although there is some dispute about whether that was the main reason for their decisions. These assets have a long tradition of doing well, although a close look at the evidence would have raised red flags. The asset market in question suddenly takes a big dive as default risk increases sharply. This drags down many large banks, forcing policymakers to provide assistance.
What have I just described? The sub-prime fiasco or the PIGS sovereign debt fiasco? I’d say both. I’d say these two crises are essentially identical...
Of course the sub-prime crisis came first, so let’s consider the dominant (progressive) narrative of the sub-prime crisis. If you read the mainstream media you will see it described as a sort of morality play; the evils of deregulation, which allowed the greedy big banks to take highly leveraged gambles with other people’s money, and then off-load the risk on to both taxpayers and unsuspecting buyers of MBSs. Or something like that.
Obviously it would be impossible to tell a similar story for the sovereign debt crisis. No regulator in his right mind would ever contemplate telling big banks not to buy European sovereign debt because it’s too risky. Indeed the previous attempt at regulation (Basel II) encouraged banks to put funds into those “safe investments.” Blaming the euro crisis on deregulation doesn’t even pass the laugh test. The criminals were the regulators themselves. Is the term ‘criminal’ hyperbole on my part? Not at all. Suppose Enron executives had used the same accounting techniques as the Greek government. They’d all be in jail.
...
Consider the following:
Banks pour huge amounts of money into one particular asset class. They are encouraged to do this by public policymakers, although there is some dispute about whether that was the main reason for their decisions. These assets have a long tradition of doing well, although a close look at the evidence would have raised red flags. The asset market in question suddenly takes a big dive as default risk increases sharply. This drags down many large banks, forcing policymakers to provide assistance.
What have I just described? The sub-prime fiasco or the PIGS sovereign debt fiasco? I’d say both. I’d say these two crises are essentially identical...
Of course the sub-prime crisis came first, so let’s consider the dominant (progressive) narrative of the sub-prime crisis. If you read the mainstream media you will see it described as a sort of morality play; the evils of deregulation, which allowed the greedy big banks to take highly leveraged gambles with other people’s money, and then off-load the risk on to both taxpayers and unsuspecting buyers of MBSs. Or something like that.
Obviously it would be impossible to tell a similar story for the sovereign debt crisis. No regulator in his right mind would ever contemplate telling big banks not to buy European sovereign debt because it’s too risky. Indeed the previous attempt at regulation (Basel II) encouraged banks to put funds into those “safe investments.” Blaming the euro crisis on deregulation doesn’t even pass the laugh test. The criminals were the regulators themselves. Is the term ‘criminal’ hyperbole on my part? Not at all. Suppose Enron executives had used the same accounting techniques as the Greek government. They’d all be in jail.
...
Niall Ferguson on 2021: The New Europe - WSJ.com
Niall Ferguson on 2021: The New Europe - WSJ.com
Welcome to Europe, 2021. Ten years have elapsed since the great crisis of 2010-11, which claimed the scalps of no fewer than 10 governments, including Spain and France. Some things have stayed the same, but a lot has changed...
...
Looking back on the previous 10 years, Mr. von Habsburg—still known to close associates by his royal title of Archduke Karl of Austria—could justly feel proud. Not only had the euro survived. Somehow, just a century after his grandfather's deposition, the Habsburg Empire had reconstituted itself as the United States of Europe.
Small wonder the British and the Scandinavians preferred to call it the Wholly German Empire.
Welcome to Europe, 2021. Ten years have elapsed since the great crisis of 2010-11, which claimed the scalps of no fewer than 10 governments, including Spain and France. Some things have stayed the same, but a lot has changed...
...
Looking back on the previous 10 years, Mr. von Habsburg—still known to close associates by his royal title of Archduke Karl of Austria—could justly feel proud. Not only had the euro survived. Somehow, just a century after his grandfather's deposition, the Habsburg Empire had reconstituted itself as the United States of Europe.
Small wonder the British and the Scandinavians preferred to call it the Wholly German Empire.
Johnson: Deutsche Bank Could Transfer Contagion - Bloomberg
Johnson: Deutsche Bank Could Transfer Contagion - Bloomberg
You’ve probably never heard of Taunus Corp., but according to the Federal Reserve, it’s the U.S.’s eighth-largest bank holding company. Taunus, it turns out, is the North American subsidiary of Germany’s Deutsche Bank AG (DBK), with assets of just over $380 billion...
Globally, Deutsche’s capital ratios are relatively healthy, judging by the banking industry’s standard measures. At the end of the third quarter, its Tier 1 capital ratio was 13.8 percent (up from 12.3 percent at the end of 2010) and its core Tier 1, which excludes hybrid debt that can convert into equity, was 10.1 percent.
How does such a highly leveraged bank become “well- capitalized”? The answer is that “risk-weighted assets” were 337.6 billion euros as of Sept. 30. But what is a low risk- weight asset in the European context today? Incredibly, it is sovereign debt, which of course is far from riskless at the moment. Perhaps Deutsche Bank holds mostly German government debt, which still has safe-haven value. But it’s likely that Deutsche also holds a significant amount of Italian and French government bonds.
Still, the bigger risks are probably in the U.S. Deutsche Bank is a significant trustee for mortgages, having been heavily involved in the issuance and distribution of mortgage-backed securities during the housing bubble. Yves Smith, writing on the nakedcapitalism.com blog, says Deutsche Bank is one of the U.S.’s four biggest securitization trustees.
Taunus Corp., named after a range of mountains outside the parent bank’s Frankfurt headquarters. The latest figures (from the Fed data, using the consolidated financial statement at the end of the third quarter) show Taunus with total equity capital of just $4.876 billion. This implies an eye-popping leverage ratio of around 78...
You’ve probably never heard of Taunus Corp., but according to the Federal Reserve, it’s the U.S.’s eighth-largest bank holding company. Taunus, it turns out, is the North American subsidiary of Germany’s Deutsche Bank AG (DBK), with assets of just over $380 billion...
Globally, Deutsche’s capital ratios are relatively healthy, judging by the banking industry’s standard measures. At the end of the third quarter, its Tier 1 capital ratio was 13.8 percent (up from 12.3 percent at the end of 2010) and its core Tier 1, which excludes hybrid debt that can convert into equity, was 10.1 percent.
How does such a highly leveraged bank become “well- capitalized”? The answer is that “risk-weighted assets” were 337.6 billion euros as of Sept. 30. But what is a low risk- weight asset in the European context today? Incredibly, it is sovereign debt, which of course is far from riskless at the moment. Perhaps Deutsche Bank holds mostly German government debt, which still has safe-haven value. But it’s likely that Deutsche also holds a significant amount of Italian and French government bonds.
Still, the bigger risks are probably in the U.S. Deutsche Bank is a significant trustee for mortgages, having been heavily involved in the issuance and distribution of mortgage-backed securities during the housing bubble. Yves Smith, writing on the nakedcapitalism.com blog, says Deutsche Bank is one of the U.S.’s four biggest securitization trustees.
Taunus Corp., named after a range of mountains outside the parent bank’s Frankfurt headquarters. The latest figures (from the Fed data, using the consolidated financial statement at the end of the third quarter) show Taunus with total equity capital of just $4.876 billion. This implies an eye-popping leverage ratio of around 78...
2011/11/17
Europe must not allow Rome to burn - FT.com
By Martin Wolf
Europe must not allow Rome to burn - FT.com:
What is at stake today is not only the stability of the European – perhaps the world’s – economy, but the survival of the most successful – and certainly most civilised – effort to unite Europe since the fall of the western Roman empire 1,535 years ago. As Walter Scheidel of Stanford University notes in a fascinating essay: “Two thousand years ago, perhaps half of the entire species had come under the control of just two powers, the Roman and Han empires.”* Both collapsed. But the Chinese empire was repeatedly restored and enlarged, while the Roman empire divided irretrievably. Yet the dream of reunification never died. It was apparent in the claims of popes and “holy Roman emperors”. It was carried by Napoleon’s eagles. It is the aspiration embedded in the European Union.
So, when Germany’s Angela Merkel, chancellor of Europe’s most powerful state, calls “for Europe to build a ‘political union’ to underpin the euro and help the continent emerge from its ‘toughest hour since the second world war’” I take her seriously. I have little doubt, too, that the majority of the German business and political elite believes that the survival of the euro and of a united Europe is in the country’s interest. The question is whether they are prepared to pay the price.
In the centuries after the fall of Rome, Europe became Babel. Uniting such diversity is a daunting challenge. Politics are local, not European, as are the politicians. This might not matter if decisions taken at the European level were of little import. But monetary and fiscal policies or labour market regulation are at the core of democratic politics. The greater the economic divergence within the eurozone, the greater the stresses. Unfortunately, divergences in competitiveness, before the crisis, and in the price of credit, after it, have been extreme (see charts).
This, then, is where the postwar European project itself has arrived. On its fate hangs the European economy, the global banking system and perhaps the world economy.
My interpretation of the actions of chancellor Merkel is that “just enough, just in time” is itself the strategy...
Just enough, just in time has been too little too late. What was once a crisis in small peripheral countries has become a conflagration. Spreads on sovereign credit have reached the stratosphere (see charts). Worse, sovereign spreads now include some risk of a break-up...
...The time for too little too late has passed. What is needed, instead, is “too much, right now”. Power brings responsibility. Germany alone has the power. It is up to it to exercise the responsibility.
Europe must not allow Rome to burn - FT.com:
What is at stake today is not only the stability of the European – perhaps the world’s – economy, but the survival of the most successful – and certainly most civilised – effort to unite Europe since the fall of the western Roman empire 1,535 years ago. As Walter Scheidel of Stanford University notes in a fascinating essay: “Two thousand years ago, perhaps half of the entire species had come under the control of just two powers, the Roman and Han empires.”* Both collapsed. But the Chinese empire was repeatedly restored and enlarged, while the Roman empire divided irretrievably. Yet the dream of reunification never died. It was apparent in the claims of popes and “holy Roman emperors”. It was carried by Napoleon’s eagles. It is the aspiration embedded in the European Union.
So, when Germany’s Angela Merkel, chancellor of Europe’s most powerful state, calls “for Europe to build a ‘political union’ to underpin the euro and help the continent emerge from its ‘toughest hour since the second world war’” I take her seriously. I have little doubt, too, that the majority of the German business and political elite believes that the survival of the euro and of a united Europe is in the country’s interest. The question is whether they are prepared to pay the price.
In the centuries after the fall of Rome, Europe became Babel. Uniting such diversity is a daunting challenge. Politics are local, not European, as are the politicians. This might not matter if decisions taken at the European level were of little import. But monetary and fiscal policies or labour market regulation are at the core of democratic politics. The greater the economic divergence within the eurozone, the greater the stresses. Unfortunately, divergences in competitiveness, before the crisis, and in the price of credit, after it, have been extreme (see charts).
This, then, is where the postwar European project itself has arrived. On its fate hangs the European economy, the global banking system and perhaps the world economy.
My interpretation of the actions of chancellor Merkel is that “just enough, just in time” is itself the strategy...
Just enough, just in time has been too little too late. What was once a crisis in small peripheral countries has become a conflagration. Spreads on sovereign credit have reached the stratosphere (see charts). Worse, sovereign spreads now include some risk of a break-up...
...The time for too little too late has passed. What is needed, instead, is “too much, right now”. Power brings responsibility. Germany alone has the power. It is up to it to exercise the responsibility.
2011/11/16
Jobs schemed Apple WiFi carrier plot for original iPhone - SlashGear
Jobs schemed Apple WiFi carrier plot for original iPhone - SlashGear
Steve Jobs explored establishing Apple as a WiFi-based carrier rival, wireless expert John Stanton has confirmed, aiming “to replace carriers” in the run-up to the launch of the original iPhone in 2007.
... Rumored plans to use an embedded SIM in future iPhone models, that would allow Apple to directly activate the smartphone for consumers and then switch them between networks with little to no contact with the actual carriers themselves were supposedly junked after operators revolted. Apple execs “have been sent back to the drawing board with their tails between their legs” shttp://www2.blogger.com/img/blank.gifources close to negotiations claimed, with the threat of subsidies being removed forcing them to reconsider.
Nonetheless, Apple’s iPhone arguably led the way in pushing data-centric services, a pattern which has been continued by Android, Windows Phone and other platforms. Carriers have responded with 4G network investment and many offer bundled WiFi hotspot access to try to offload traffic from their spectrum, though it’s a far cry from Apple’s own plans of eschewing cellular in favor of WiFi altogether.
More about this:
http://www.pcmag.com/article2/0,2817,2396482,00.asp#fbid=FeeO8Of-CjN
Steve Jobs explored establishing Apple as a WiFi-based carrier rival, wireless expert John Stanton has confirmed, aiming “to replace carriers” in the run-up to the launch of the original iPhone in 2007.
... Rumored plans to use an embedded SIM in future iPhone models, that would allow Apple to directly activate the smartphone for consumers and then switch them between networks with little to no contact with the actual carriers themselves were supposedly junked after operators revolted. Apple execs “have been sent back to the drawing board with their tails between their legs” shttp://www2.blogger.com/img/blank.gifources close to negotiations claimed, with the threat of subsidies being removed forcing them to reconsider.
Nonetheless, Apple’s iPhone arguably led the way in pushing data-centric services, a pattern which has been continued by Android, Windows Phone and other platforms. Carriers have responded with 4G network investment and many offer bundled WiFi hotspot access to try to offload traffic from their spectrum, though it’s a far cry from Apple’s own plans of eschewing cellular in favor of WiFi altogether.
More about this:
http://www.pcmag.com/article2/0,2817,2396482,00.asp#fbid=FeeO8Of-CjN
2011/11/14
FT Alphaville » Eurozone, why did we bother
FT Alphaville » Eurozone, why did we bother
Posted by Izabella Kaminska on Nov 14 11:15.
When you look at Eurozone bond spreads on a historical basis… you have to wonder:
Posted by Izabella Kaminska on Nov 14 11:15.
When you look at Eurozone bond spreads on a historical basis… you have to wonder:
Uma gordura chamada função pública « BLASFÉMIAS
Uma gordura chamada função pública « BLASFÉMIAS
...
Em suma, muita da contestação ao OE2012 tem a ver com as dores do sector não transaccionável por quem a crise até à data tinha passado ao lado, mas que agora foi atingido em cheio por ela. Todo o modelo concentracionário vigente no país desde sempre, agravado por um modelo económico que privilegiou os bens não transaccionáveis, potencia estes desequilíbrio regionais: em períodos de expansão o núcleo central beneficia e distancia-se do resto do país, em períodos recessivos e mantendo-se o modelo económico, tem maior imunidade à crise e continua a divergir. Não é por acaso que, desde a nossa integração na Europa, assistimos a um constante e persistente acentuar das desigualdades entre Lisboa e o resto do País. Independentemente de existir ou não convergência com a UE, a nível interno a divergência Lisboa / resto do país foi a regra.
Uma alteração do paradigma económico como este governo pretende efectuar (fundamentalmente por imposição externa, reconheça-se), irá naturalmente penalizar os beneficiários com o antigo modelo. Cavaco, um centralista militante e empedernido de agora e de sempre e, em grande medida, o “pai” do modelo que nos desgraçou, já antecipou estes efeitos. Ele e outros membros da “Corte”, quando denunciam a “falta de equidade”, estão certamente a pensar numa óptica regional. E admito que o próprio governo também o terá feito, ao deixar intocada a rubrica “Aquisição de bens e serviços”, para evitar uma maior recessão em Lisboa. Estamos a falar de qualquer coisa como 12 mil milhões de euros dos quais, quase 9 mil milhões correspondem aos Serviços e Fundos Autónomos, quase todos sedeados em Lisboa. Naquela rubrica, há ”gorduras” que permitem um potencial de poupança da ordem dos 20 a 30%, sem que daí decorram quebras significativas nos serviços aos cidadãos. Não haverá cortes em 2012, mas serão inevitáveis em 2013.
...
...
Em suma, muita da contestação ao OE2012 tem a ver com as dores do sector não transaccionável por quem a crise até à data tinha passado ao lado, mas que agora foi atingido em cheio por ela. Todo o modelo concentracionário vigente no país desde sempre, agravado por um modelo económico que privilegiou os bens não transaccionáveis, potencia estes desequilíbrio regionais: em períodos de expansão o núcleo central beneficia e distancia-se do resto do país, em períodos recessivos e mantendo-se o modelo económico, tem maior imunidade à crise e continua a divergir. Não é por acaso que, desde a nossa integração na Europa, assistimos a um constante e persistente acentuar das desigualdades entre Lisboa e o resto do País. Independentemente de existir ou não convergência com a UE, a nível interno a divergência Lisboa / resto do país foi a regra.
Uma alteração do paradigma económico como este governo pretende efectuar (fundamentalmente por imposição externa, reconheça-se), irá naturalmente penalizar os beneficiários com o antigo modelo. Cavaco, um centralista militante e empedernido de agora e de sempre e, em grande medida, o “pai” do modelo que nos desgraçou, já antecipou estes efeitos. Ele e outros membros da “Corte”, quando denunciam a “falta de equidade”, estão certamente a pensar numa óptica regional. E admito que o próprio governo também o terá feito, ao deixar intocada a rubrica “Aquisição de bens e serviços”, para evitar uma maior recessão em Lisboa. Estamos a falar de qualquer coisa como 12 mil milhões de euros dos quais, quase 9 mil milhões correspondem aos Serviços e Fundos Autónomos, quase todos sedeados em Lisboa. Naquela rubrica, há ”gorduras” que permitem um potencial de poupança da ordem dos 20 a 30%, sem que daí decorram quebras significativas nos serviços aos cidadãos. Não haverá cortes em 2012, mas serão inevitáveis em 2013.
...
2011/11/10
Sweden’s Tough Love of Banks is World Model - Bloomberg
Sweden’s Tough Love of Banks is World Model - Bloomberg
Sweden’s bank rescue model has protected taxpayers, turned a profit and left the Nordic country less indebted than when the financial crisis started in 2007.
Sweden’s bank rescue model has protected taxpayers, turned a profit and left the Nordic country less indebted than when the financial crisis started in 2007.
2011/11/08
FT Alphaville » The eurozone crisis as balance of payment problem
FT Alphaville » The eurozone crisis as balance of payment problem
And even if the eurozone manages to muddle through, in the medium term, sustainable solutions to this vexing current account issue are hard to come by. Remember when Geithner last year floated the idea of current account targets between the US and China only for it to be shot down as unworkable in practice? Would it be easier to impose binding targets of such nature within the EMU? We are not quite sure. And would Germany ever argue that surpluses were a bad thing? A consensus on this is surely needed before anything can de done about it. Just ask John Maynard Keynes.
Okay, say we agree now that this is a current account crisis. What are the options?
1. Fiscal transfers from Germany to the deficit nations.
2. Internal Latvia-style deflation that would require the write-off of sizeable amounts of public and private debt.
3. “The Latin countries could exert their influence over the ECB to pursue a monetary policy that leads to higher inflation in the Germanic countries,” DB note.
...And even if the eurozone manages to muddle through, in the medium term, sustainable solutions to this vexing current account issue are hard to come by. Remember when Geithner last year floated the idea of current account targets between the US and China only for it to be shot down as unworkable in practice? Would it be easier to impose binding targets of such nature within the EMU? We are not quite sure. And would Germany ever argue that surpluses were a bad thing? A consensus on this is surely needed before anything can de done about it. Just ask John Maynard Keynes.
2011/11/07
Greg Mankiw's Blog: Race Against the Machine
Greg Mankiw's Blog: Race Against the Machine
MIT economist Erik Brynjolfsson emails me:
I agree with your recent blog post that "the timing suggests that the two trends--the increasing value of education and the rising share of the top 1 percent--may be related." But how are they related? I think the biggest single factor is the digital revolution, which is boosting the economy and benefitting you, me and Paul Krugman, while leaving many people behind. The median worker's skills and our institutions aren't keeping up with accelerating technological change.
I discuss this in my very short new ebook (about 20,000 words) with Andrew McAfee called "Race Against the Machine: How the Digital Revolution Accelerates Innovation, Drives Productivity and Irreversibly Transforms Employment and the Economy". In it, we seek to reconcile the fact that the 2000s has been the best decade since the 1960s for productivity growth, better than the roaring 1990s even.
MIT economist Erik Brynjolfsson emails me:
I agree with your recent blog post that "the timing suggests that the two trends--the increasing value of education and the rising share of the top 1 percent--may be related." But how are they related? I think the biggest single factor is the digital revolution, which is boosting the economy and benefitting you, me and Paul Krugman, while leaving many people behind. The median worker's skills and our institutions aren't keeping up with accelerating technological change.
I discuss this in my very short new ebook (about 20,000 words) with Andrew McAfee called "Race Against the Machine: How the Digital Revolution Accelerates Innovation, Drives Productivity and Irreversibly Transforms Employment and the Economy". In it, we seek to reconcile the fact that the 2000s has been the best decade since the 1960s for productivity growth, better than the roaring 1990s even.
2011/11/03
The ECB’s Risky Business - Daniel Gros - Project Syndicate
The ECB’s Risky Business - Daniel Gros - Project Syndicate: A common money and a common monetary policy cannot work properly with a banking system that is segmented along national lines. The most urgent step to stabilize the euro is not to follow the chimera of “euro economic government,” but to create the underpinnings of a truly integrated banking market with a common supervisor, a form of “federal” deposit insurance, and a “euro bank rescue fund” for the large cross-border institutions.
2011/11/02
Referendo grego – notas « BLASFÉMIAS
Referendo grego – notas « BLASFÉMIAS
1. É o triunfo da política sobre a economia: os gregos vão poder escolher a forma pela qual querem empobrecer.
2. Papandreou força o povo a escolher entre a fome e a peste. Há quem considere isto um grande momento do democracia. É apenas um sintoma de fracasso. A democracia grega foi sempre capaz de votar mais despesa. Quando os custos batem à porta não é capaz de votar cortes. O referendo serve para forçar o povo a encarar a realidade que ignorou durante tantos anos. Só isso.
3. No dia seguinte ao referendo a Grécia continuará falida. As despesas do Estado grego continuam acima das receitas, mesmo descontando os juros pagos aos credores. Se ganhar o “sim” voltamos ao mesmo, se ganhar o “não” os gregos vão empobrecer muito rapidamente.
4. Se ganhar o “não” a Grécia continuará a dever dinheiro a credores poderosos que usarão todos os meios legais e políticos para forçar a Grécia a pagar.
5. Qualquer risco de o “não” ganhar fará com que os agentes económicos gregos antecipem as consequências. Os bancos terão que fechar.
1. É o triunfo da política sobre a economia: os gregos vão poder escolher a forma pela qual querem empobrecer.
2. Papandreou força o povo a escolher entre a fome e a peste. Há quem considere isto um grande momento do democracia. É apenas um sintoma de fracasso. A democracia grega foi sempre capaz de votar mais despesa. Quando os custos batem à porta não é capaz de votar cortes. O referendo serve para forçar o povo a encarar a realidade que ignorou durante tantos anos. Só isso.
3. No dia seguinte ao referendo a Grécia continuará falida. As despesas do Estado grego continuam acima das receitas, mesmo descontando os juros pagos aos credores. Se ganhar o “sim” voltamos ao mesmo, se ganhar o “não” os gregos vão empobrecer muito rapidamente.
4. Se ganhar o “não” a Grécia continuará a dever dinheiro a credores poderosos que usarão todos os meios legais e políticos para forçar a Grécia a pagar.
5. Qualquer risco de o “não” ganhar fará com que os agentes económicos gregos antecipem as consequências. Os bancos terão que fechar.
Capitalism need not be about greed and gambling - FT.com
Capitalism need not be about greed and gambling - FT.com
By John Kay, November 1, 2011
Capitalism “should be replaced by something nicer”, one group of demonstrators demanded. The slogan encapsulates the incoherence of the protests at Wall Street and the City of London.
...
Many of those who preach the doctrine of free enterprise loudest have succeeded by skills more akin to those of backroom politicians than of entrepreneurs. Mobile phone networks grew rapidly because a fortunate interlude of deregulatory fervour wrested a monopoly from incumbent fixed line operators. The inventors of social networking sites resemble the occupiers of St Paul’s Churchyard tents more than the occupants of boardrooms. The besuited Winkelvoss twins, lobbying and litigating for a share of Mark Zuckerberg’s business, embody the deformed view of market economics which confuses business interests with free enterprise.
Perhaps the “something nicer” which should replace capitalism is a more nuanced – and more accurate – account of capitalism itself.
By John Kay, November 1, 2011
Capitalism “should be replaced by something nicer”, one group of demonstrators demanded. The slogan encapsulates the incoherence of the protests at Wall Street and the City of London.
...
Many of those who preach the doctrine of free enterprise loudest have succeeded by skills more akin to those of backroom politicians than of entrepreneurs. Mobile phone networks grew rapidly because a fortunate interlude of deregulatory fervour wrested a monopoly from incumbent fixed line operators. The inventors of social networking sites resemble the occupiers of St Paul’s Churchyard tents more than the occupants of boardrooms. The besuited Winkelvoss twins, lobbying and litigating for a share of Mark Zuckerberg’s business, embody the deformed view of market economics which confuses business interests with free enterprise.
Perhaps the “something nicer” which should replace capitalism is a more nuanced – and more accurate – account of capitalism itself.
2011/11/01
Creditors can huff but they need debtors
As Greece seems about to prove, debtors are able to inflict a great deal of damage on everybody
Financial Times, 7:28 PM Tuesday 1st November 2011
By Martin Wolf
...
Do creditors rule the world? Not really. In the short run, they can threaten to turn off the credit. But their surpluses depend on the willingness and ability of others to run deficits. It would be more sensible to admit that there has been too much borrowing by the profligate because there was too much lending by the supposedly prudent. Once it is understood that both are at fault, both must adjust. Imposing one-sided adjustment on erstwhile debtors will not work. As little Greece seems about to prove, debtors are able to inflict a great deal of damage on everybody – as the US discovered in the Great Depression. It would be a good idea to rediscover that reciprocal interest urgently, right now. Creditors do not sell to Mars. We are all on the same planet. Agree to fix its messes, right now.
Financial Times, 7:28 PM Tuesday 1st November 2011
By Martin Wolf
...
Do creditors rule the world? Not really. In the short run, they can threaten to turn off the credit. But their surpluses depend on the willingness and ability of others to run deficits. It would be more sensible to admit that there has been too much borrowing by the profligate because there was too much lending by the supposedly prudent. Once it is understood that both are at fault, both must adjust. Imposing one-sided adjustment on erstwhile debtors will not work. As little Greece seems about to prove, debtors are able to inflict a great deal of damage on everybody – as the US discovered in the Great Depression. It would be a good idea to rediscover that reciprocal interest urgently, right now. Creditors do not sell to Mars. We are all on the same planet. Agree to fix its messes, right now.
2011/10/30
Success or failure of EU summit hinges on Italy - FT.com
Success or failure of EU summit hinges on Italy - FT.com
Basking in the glory of the soaring euro and euphoric equities on Thursday, it was easy for European leaders to think they had finally done enough. Perhaps, just perhaps, investor confidence in the eurozone could be restored.
Reality returned with a bump on Friday when Italy was forced to pay more than 6 per cent to borrow money for 10 years – against less than 4 per cent a year ago.
...
After two years of vilifying credit default swaps, the derivatives have been adopted as one of the ways to “leverage” the European financial stability facility, the eurozone bail-out fund.
In addition to that, after governments (correctly) put part of the blame for the original 2007 crisis on structured finance, the EFSF is to set up a special purpose vehicle with two tranches to attract money from China and other sovereign wealth funds. Some of the richest countries in the world are using the model that got them into trouble in the first place to persuade some of the poorest countries in the world to help them recover.
...
Basking in the glory of the soaring euro and euphoric equities on Thursday, it was easy for European leaders to think they had finally done enough. Perhaps, just perhaps, investor confidence in the eurozone could be restored.
Reality returned with a bump on Friday when Italy was forced to pay more than 6 per cent to borrow money for 10 years – against less than 4 per cent a year ago.
...
After two years of vilifying credit default swaps, the derivatives have been adopted as one of the ways to “leverage” the European financial stability facility, the eurozone bail-out fund.
In addition to that, after governments (correctly) put part of the blame for the original 2007 crisis on structured finance, the EFSF is to set up a special purpose vehicle with two tranches to attract money from China and other sovereign wealth funds. Some of the richest countries in the world are using the model that got them into trouble in the first place to persuade some of the poorest countries in the world to help them recover.
...
2011/10/29
How historians will look back on Euroland’s demise - FT.com
How historians will look back on Euroland’s demise - FT.com
By Norman Davies
If Sparta and Rome perished”, asked Rousseau in his Social Contract, “how can any state hope to live for ever? The Body Politick, like the body of a man, begins to die as soon as it is born; it contains the seeds of its own destruction.”...
Most recently, the demise of Euroland came into view. It is not a sovereign state, but it is a body politick of sorts and subject to the same vagaries of fortune afflicting everything else. Launched only a dozen years ago, it may join the long list of organisations that have died young. It lacks viable organs of fiscal management and political governance; by general consent, it must reconstruct itself rapidly or break up. “The eurozone is doomed”, its critics argue. Britain’s Foreign Secretary describes it as “a burning building with no exits”. George Soros warns of possible “meltdown”...
By Norman Davies
If Sparta and Rome perished”, asked Rousseau in his Social Contract, “how can any state hope to live for ever? The Body Politick, like the body of a man, begins to die as soon as it is born; it contains the seeds of its own destruction.”...
Most recently, the demise of Euroland came into view. It is not a sovereign state, but it is a body politick of sorts and subject to the same vagaries of fortune afflicting everything else. Launched only a dozen years ago, it may join the long list of organisations that have died young. It lacks viable organs of fiscal management and political governance; by general consent, it must reconstruct itself rapidly or break up. “The eurozone is doomed”, its critics argue. Britain’s Foreign Secretary describes it as “a burning building with no exits”. George Soros warns of possible “meltdown”...
2011/10/28
The big questions raised by anti-capitalist protests - FT.com
The big questions raised by anti-capitalist protests - FT.com
...
The response to the crisis among those in the pro-market camp is much on the lines of the 1930s. On one side are those who blame what has gone wrong entirely on government. The Tea Party, in the US, has taken that position, with some success. In the UK, this strand is weaker. But there, too, some argue that the crisis is the result of Gordon Brown’s fiscal incontinence, over-regulated markets or incompetent central banks. In this, they follow the Austrian economists, Ludwig von Mises and Friedrich Hayek, in the 1930s. Against them are those who, following John Maynard Keynes, argue for a managed capitalism.
...
It is impossible to define an acceptable level of inequality. Any inequality is corrosive if those with wealth are believed to have rigged the game rather than won in honest competition. As inequality rises, the sense that we are equal as citizens weakens. In the end, democracy is sold to the highest bidder. That has happened often before in the history of republics. Peaceful protest is the right of free people. More important, it is a way to bring issues to our attention. The left does not know how to replace the market. But pro-marketeers still need to take the protests seriously. All is not well.
...
The response to the crisis among those in the pro-market camp is much on the lines of the 1930s. On one side are those who blame what has gone wrong entirely on government. The Tea Party, in the US, has taken that position, with some success. In the UK, this strand is weaker. But there, too, some argue that the crisis is the result of Gordon Brown’s fiscal incontinence, over-regulated markets or incompetent central banks. In this, they follow the Austrian economists, Ludwig von Mises and Friedrich Hayek, in the 1930s. Against them are those who, following John Maynard Keynes, argue for a managed capitalism.
...
It is impossible to define an acceptable level of inequality. Any inequality is corrosive if those with wealth are believed to have rigged the game rather than won in honest competition. As inequality rises, the sense that we are equal as citizens weakens. In the end, democracy is sold to the highest bidder. That has happened often before in the history of republics. Peaceful protest is the right of free people. More important, it is a way to bring issues to our attention. The left does not know how to replace the market. But pro-marketeers still need to take the protests seriously. All is not well.
2011/10/27
Why the mad migration of parts for your iPhone matters - FT.com
Why the mad migration of parts for your iPhone matters - FT.com:
...One should imagine, he said, drilling 300,000 holes into a grain of Japanese rice, flipping it over and then doing the same on the other side.The point is that it’s not easy to make sophisticated components. The barriers to entry are high. Specialisation means that, once manufacturing has gone to Asia, it is very hard for US or European manufacturers to claw back...
Many Asian manufacturers simply make components. But some that supply parts to their branded competitors aspire to inventing the next breakthrough device. It’s certainly not easy. But so long as Asian companies are making many of the components inside everything we use, even Apple cannot relax.
...One should imagine, he said, drilling 300,000 holes into a grain of Japanese rice, flipping it over and then doing the same on the other side.The point is that it’s not easy to make sophisticated components. The barriers to entry are high. Specialisation means that, once manufacturing has gone to Asia, it is very hard for US or European manufacturers to claw back...
Many Asian manufacturers simply make components. But some that supply parts to their branded competitors aspire to inventing the next breakthrough device. It’s certainly not easy. But so long as Asian companies are making many of the components inside everything we use, even Apple cannot relax.
2011/10/26
Europe’s leaders must start making tough decisions | The A-List | Must-read views on today’s top news stories – FT.com – FT.com
Europe’s leaders must start making tough decisions | The A-List | Must-read views on today’s top news stories – FT.com – FT.com:
...There are several, partially compatible ways out of this. One is to make states individually safe by going far beyond the requirements of the Maastricht treaty and bringing public debts down to levels where solvency cannot be challenged anymore. It implies decades-long austerity. Another way is to make the financial system safe by putting limits to the banks’ exposure to their sovereigns and creating a eurozone-wide deposit insurance. It implies that states renounce the convenience of having ‘their’ banks. The third way is to change the mandate of the European Central Bank. This implies breaking with the Bundesbank’s heritage and giving the ECB a governance structure adequate to a new, quasi-fiscal role. A last option is to move towards fiscal union so that individual state solvency stops being a concern for markets. It means accepting both shared responsibility over public debts and ex-ante oversight of national budgetary decisions.
...There are several, partially compatible ways out of this. One is to make states individually safe by going far beyond the requirements of the Maastricht treaty and bringing public debts down to levels where solvency cannot be challenged anymore. It implies decades-long austerity. Another way is to make the financial system safe by putting limits to the banks’ exposure to their sovereigns and creating a eurozone-wide deposit insurance. It implies that states renounce the convenience of having ‘their’ banks. The third way is to change the mandate of the European Central Bank. This implies breaking with the Bundesbank’s heritage and giving the ECB a governance structure adequate to a new, quasi-fiscal role. A last option is to move towards fiscal union so that individual state solvency stops being a concern for markets. It means accepting both shared responsibility over public debts and ex-ante oversight of national budgetary decisions.
2011/10/24
Guest Post: The Paradox of Thrift — Debunked | ZeroHedge
Guest Post: The Paradox of Thrift — Debunked | ZeroHedge
...
This misconception that the paradox of thrift applies in normal markets has done immense harm to the economy and eroded the savings of the middle-class and retirees. For three generations, central bankers attacked savers by artificially reducing interest rates — in the belief that lower savings would boost demand and stimulate the economy. Low interest rates simply forced savers to assume more risk, in order to earn a return on their investment, and encouraged speculation.
The traditional work hard and save ethic that is the backbone of the capitalist system has been supplanted by the consume, borrow and speculate profligacy that got us into such a mess. High levels of public and private debt, inflation, volatile investment returns and rising income inequality are all consequences of the low-interest policy pursued by the Fed. Today’s giant casino is a far cry from the cautious, prudent investment outlook of our grandparents’ generation.
...
This misconception that the paradox of thrift applies in normal markets has done immense harm to the economy and eroded the savings of the middle-class and retirees. For three generations, central bankers attacked savers by artificially reducing interest rates — in the belief that lower savings would boost demand and stimulate the economy. Low interest rates simply forced savers to assume more risk, in order to earn a return on their investment, and encouraged speculation.
The traditional work hard and save ethic that is the backbone of the capitalist system has been supplanted by the consume, borrow and speculate profligacy that got us into such a mess. High levels of public and private debt, inflation, volatile investment returns and rising income inequality are all consequences of the low-interest policy pursued by the Fed. Today’s giant casino is a far cry from the cautious, prudent investment outlook of our grandparents’ generation.
2011/10/23
2011/10/22
2011/10/19
View: Hidden Utility of Paul’s Balanced Budget Plan - Bloomberg
View: Hidden Utility of Paul’s Balanced Budget Plan - Bloomberg
U.S. Representative Ron Paul, the libertarian seeking the Republican presidential nomination, performed a valuable public service this week when he unveiled a budget plan that shows exactly what balancing the $3.8 trillion budget through spending cuts would look like.
U.S. Representative Ron Paul, the libertarian seeking the Republican presidential nomination, performed a valuable public service this week when he unveiled a budget plan that shows exactly what balancing the $3.8 trillion budget through spending cuts would look like.
There is no sunlit future for the euro - FT.com
There is no sunlit future for the euro - FT.com
Inside the eurozone, adjustment of imbalances remains essential. But it is also vastly difficult, because the exchange rate has gone. In its place, comes adjustment via depression and default. A currency union with structural mercantilists in the core now threatens a permanent slump in the periphery. Solving that is the true cure. Can it be done? I wonder.
Inside the eurozone, adjustment of imbalances remains essential. But it is also vastly difficult, because the exchange rate has gone. In its place, comes adjustment via depression and default. A currency union with structural mercantilists in the core now threatens a permanent slump in the periphery. Solving that is the true cure. Can it be done? I wonder.
2011/10/18
Why big businesses are bad for business
I saw this article when using the Financial Times app and thought you might be interested:
Financial Times, 5:52 PM Tuesday 18th October 2011
Why big businesses are bad for business
--
By Luke Johnson
--
Large public companies have more in common with government than with entrepreneurs and start-ups – and frequently do not generate jobs, but destroy them
Read the full article at: http://www.ft.com/cms/09417d98-f969-11e0-8e7e-00144feab49a.html
2011/10/15
FT Column – Steve Jobs: fashion inspiration
I saw this article when using the Financial Times app and thought you might be interested:
Financial Times, 1:38 AM Saturday 15th October 2011
FT Column – Steve Jobs: fashion inspiration
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By Vanessa Friedman
--
I arrived home from the Paris fashion shows last week to hear the news that Steve Jobs had died. Strangely, in all the thousands of pages devoted to Jobs
Read the full article at: http://www.ft.com/cms/b36c6690-f336-11e0-8383-00144feab49a.html
2011/10/12
First aid is not a cure - FT.com
First aid is not a cure - FT.com
By Martin Wolf
...
But that would not be a solution if it merely led to indefinite financing of fundamentally uncompetitive economies. At the same time, one-sided and unduly hasty adjustment would exacerbate the downturns in the eurozone and world economies. What is needed is financing and adjustment. Unless and until that difficult combination is achieved, we are delivering first aid not a cure.
By Martin Wolf
...
But that would not be a solution if it merely led to indefinite financing of fundamentally uncompetitive economies. At the same time, one-sided and unduly hasty adjustment would exacerbate the downturns in the eurozone and world economies. What is needed is financing and adjustment. Unless and until that difficult combination is achieved, we are delivering first aid not a cure.
2011/09/28
2011/09/27
What do the banks’ target returns on equity tell us? | Martin Wolf's Exchange | Economic commentary from the Financial Times – FT.com
What do the banks’ target returns on equity tell us? | Martin Wolf's Exchange | Economic commentary from the Financial Times – FT.com: According to a FT article last week, Lloyds’ bank has a target return on equity of 14.5 per cent. Banks like to argue that this is the level of return on equity they need to earn, in order to gain funding from the markets. Naturally, remuneration is linked to achieving such objectives. The question, however, is whether such objectives make any sense. The brief answer is: no.
2011/09/21
What Comes After 'Europe'? - WSJ.com
A potential terrible future scenario for Europe:
What Comes After 'Europe'? - WSJ.com: BRET STEPHENS
The riots of Athens will become those of Milan, Madrid and Marseilles. Border checkpoints will return. Currencies will be resurrected, then devalued.
What Comes After 'Europe'? - WSJ.com: BRET STEPHENS
The riots of Athens will become those of Milan, Madrid and Marseilles. Border checkpoints will return. Currencies will be resurrected, then devalued.
Spain, not Greece, may be the biggest eurozone threat - FT.com
Spain, not Greece, may be the biggest eurozone threat - FT.com
By Charles Dumas - 20110921
Greek default is the high-profile threat to eurozone banks that hogs the headlines, and drives down the share prices of the region’s banks. But, aside from the Greek banking system itself, Greece is not a major threat to European banking solvency.
...
To get a fuller measure of the burden that may fall upon the state’s resources, we need to add a country’s household and net business debt to net government debt as these will have to be serviced in some fashion from that country’s income. By this broader definition, Italy comes off relatively well, with total debt a little over 200 per cent of gross domestic product. Greece at nearly 230 per cent is less bad than Spain, as well as Britain and Japan. Way out on their own, however, are Portugal at over 300 per cent, and Ireland at 330 per cent. Diana Choyleva and I in our latest book* explain why this means the credit of Portugal and Ireland, and probably Spain, could well become more threatened than Italy – though not as badly as Greece, which has particularly acute government debt and deficit problems.
...
In Portugal, non-financial companies (NFCs) have debt that is 16 times their pre-interest profit. An interest rate of little over 6 per cent would wipe that profit out. In Spain the numbers are 12 times and 8 per cent, respectively. So its entire NFC sectors are junk – a designation that kicks in at a ratio of about 10 times. The somewhat less dire Spanish ratio is exactly where Japan was in 1995-96. Japan had no real GDP growth between 1996 and 2002 – an ominous precedent – and finally emerged into growth again after a massive bank-debt write-off in spring 2003.
But Spain’s current situation is in several respects far worse than Japan’s back then. First, Japan had a currency, which devalued in real terms by 20 per cent over the six years to 2002, aiding adjustment. Spain is fixed in the euro.
...
By Charles Dumas - 20110921
Greek default is the high-profile threat to eurozone banks that hogs the headlines, and drives down the share prices of the region’s banks. But, aside from the Greek banking system itself, Greece is not a major threat to European banking solvency.
...
To get a fuller measure of the burden that may fall upon the state’s resources, we need to add a country’s household and net business debt to net government debt as these will have to be serviced in some fashion from that country’s income. By this broader definition, Italy comes off relatively well, with total debt a little over 200 per cent of gross domestic product. Greece at nearly 230 per cent is less bad than Spain, as well as Britain and Japan. Way out on their own, however, are Portugal at over 300 per cent, and Ireland at 330 per cent. Diana Choyleva and I in our latest book* explain why this means the credit of Portugal and Ireland, and probably Spain, could well become more threatened than Italy – though not as badly as Greece, which has particularly acute government debt and deficit problems.
...
In Portugal, non-financial companies (NFCs) have debt that is 16 times their pre-interest profit. An interest rate of little over 6 per cent would wipe that profit out. In Spain the numbers are 12 times and 8 per cent, respectively. So its entire NFC sectors are junk – a designation that kicks in at a ratio of about 10 times. The somewhat less dire Spanish ratio is exactly where Japan was in 1995-96. Japan had no real GDP growth between 1996 and 2002 – an ominous precedent – and finally emerged into growth again after a massive bank-debt write-off in spring 2003.
But Spain’s current situation is in several respects far worse than Japan’s back then. First, Japan had a currency, which devalued in real terms by 20 per cent over the six years to 2002, aiding adjustment. Spain is fixed in the euro.
...
2011/09/14
A national epidemic that hurts the young - FT.com
A national epidemic that hurts the young - FT.com
By Luke Johnson
A thirty-something Italian acquaintance moved to London a few years ago to run a technology start-up.
I asked: “Why did he leave such a beautiful country to live in our expensive, crowded city?” He explained that institutions and businesses in Italy are controlled by old men who refuse to surrender power to the next generation – with 74-year-old Silvio Berlusconi being a prime example.
By Luke Johnson
A thirty-something Italian acquaintance moved to London a few years ago to run a technology start-up.
I asked: “Why did he leave such a beautiful country to live in our expensive, crowded city?” He explained that institutions and businesses in Italy are controlled by old men who refuse to surrender power to the next generation – with 74-year-old Silvio Berlusconi being a prime example.
Risk Rises at ECB as Europe Banks Lose Deposits - Bloomberg
Risk Rises at ECB as Europe Banks Lose Deposits - Bloomberg
By Yalman Onaran - Sep 14, 2011 12:01 AM GMT
European banks are losing deposits as savers and money funds spooked by the region’s debt crisis search for havens, a trend that could worsen economic and financial conditions.
By Yalman Onaran - Sep 14, 2011 12:01 AM GMT
European banks are losing deposits as savers and money funds spooked by the region’s debt crisis search for havens, a trend that could worsen economic and financial conditions.
2011/09/07
Economics fails to resolve exceptions to the rule - FT.com
Economics fails to resolve exceptions to the rule - FT.com
By John Kay
As the financial crisis continues to evolve, the Queen’s question at the London School of Economics – why have academic economists so little to contribute to predicting the course of events – continues to be all too pertinent.
Robert Lucas, professor of economics at the University of Chicago and Nobel Prize winner for his seminal contributions to macroeconomics, proffered an answer in 2009. The crisis was not predicted, he explained, because economic theory predicts that such events cannot be predicted. Faced with that response, a wise sovereign will seek counsel elsewhere.
By John Kay
As the financial crisis continues to evolve, the Queen’s question at the London School of Economics – why have academic economists so little to contribute to predicting the course of events – continues to be all too pertinent.
Robert Lucas, professor of economics at the University of Chicago and Nobel Prize winner for his seminal contributions to macroeconomics, proffered an answer in 2009. The crisis was not predicted, he explained, because economic theory predicts that such events cannot be predicted. Faced with that response, a wise sovereign will seek counsel elsewhere.
We must listen to what bond markets are telling us - FT.com
We must listen to what bond markets are telling us - FT.com
By Martin Wolf
What is to be done? To find an answer, listen to the markets. They are saying: borrow and spend, please. Yet those who profess faith in the magic of the markets are most determined to ignore the cry. The fiscal skies are falling, they insist.
By Martin Wolf
What is to be done? To find an answer, listen to the markets. They are saying: borrow and spend, please. Yet those who profess faith in the magic of the markets are most determined to ignore the cry. The fiscal skies are falling, they insist.
2011/09/06
Euro crisis requires market solution
Euro crisis requires market solution
By Lee Robinson
Published: August 31 2011 15:38 | Last updated: August 31 2011 15:38
Ultimately the euro crisis remains a pressure cooker building up steam dehttp://www.blogger.com/img/blank.gifspite the protestations of the currency system being saved by multiple political interventionshttp://www.blogger.com/img/blank.gif. Yet after a half dozen supranational attempts to instil order within the sovereign nations of the EU, the markets are clearly not listening. Instead a market solution is now needed...
By Lee Robinson
Published: August 31 2011 15:38 | Last updated: August 31 2011 15:38
Ultimately the euro crisis remains a pressure cooker building up steam dehttp://www.blogger.com/img/blank.gifspite the protestations of the currency system being saved by multiple political interventionshttp://www.blogger.com/img/blank.gif. Yet after a half dozen supranational attempts to instil order within the sovereign nations of the EU, the markets are clearly not listening. Instead a market solution is now needed...
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