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Gene Ellis

Learning about global value chains by looking beyond official trade data: Part 1 | vox - 0 views

www.voxeu.org/...ond-official-trade-data-part-1

shared by Gene Ellis on 25 Apr 14 - No Cached
  • Gross trade accounting: A transparent method to discover global value chain-related information behind official trade data: Part 1
  • With the rapid increase in intermediate trade flows, trade economists and policymakers have reached a near consensus that official trade statistics based on gross terms are deficient, often hiding the extent of global value chains. There is also widespread recognition among the official international statistics agencies that fragmentation of global production requires a new approach to measure trade, in particular the need to measure trade in value-added. This led the WTO and the OECD to launch a joint “Measuring Trade in Value-Added” initiative on 15 March 2012, which is designed to mainstream the production of trade in value-added statistics and make them a permanent part of the statistical landscape.
  • All the estimation methods used in recent efforts to measure trade in value-added are rooted in Leontief (1936). His work demonstrated that the amount and type of intermediate inputs needed in the production of one unit of output can be estimated based on the input-output structures across countries and industries.
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  • If one is only interested in estimating the domestic value-added embedded in a country’s or sector’s gross exports, applying Leontief’s insight is sufficient. However, for many economic and policy applications, one also needs to quantify other components in gross exports and their structures. In such circumstances Leontief’s original insight is not sufficient, as it does not provide a way to decompose intermediate trade flows across countries into various value-added terms according to their final absorption,
  • Our gross trade accounting framework in fact allows one to further decompose each of the four major parts of gross exports above into finer components with economic interpretations
  • By the gross statistics, presented in column 1 of Table 1, the trade is highly imbalanced – Chinese exports to the US ($176.9 billion in 2011) are five times that of US exports to China ($35.1 billion in 2011). If we separate exports of final goods and of intermediate goods (reported in columns 2a and 2b of Table 1), we see that most of the Chinese exports consist of final goods, whereas most of the US exports consist of intermediate goods.
  • In other words, the US exports rely overwhelmingly on its own value-added (only 2.1% from China and 5.8% from other countries in 2011), whereas the Chinese exports use more foreign value-added, especially value-added from third countries (with 3.2% from the US and 23.1% from Japan, Korea, and all other countries).
  • As a consequence of these differences in the structure of value-added composition, the China–US trade balance in this sector looks much smaller when computed in terms of domestic value-added than in terms of gross exports.
  • By identifying which parts of the official data are double counted and the sources of the double counting, our gross trade accounting method provides a transparent way to bridge official trade statistics (in gross terms) and national accounts (in value-added terms) consistent with the System of National Accounts standard.
Gene Ellis

What If We Never Run Out of Oil? - Charles C. Mann - The Atlantic - 0 views

www.theatlantic.com/...4

oil

shared by Gene Ellis on 15 Jan 14 - No Cached
  • In most cases, mining tar sands involves drilling two horizontal wells, one above the other, into the bitumen layer; injecting massive gouts of high-pressure steam and solvents into the top well, liquefying the bitumen; sucking up the melted bitumen as it drips into the sand around the lower well; and then refining the bitumen into “synthetic crude oil.”
  • Economists sometimes describe a fuel in terms of its energy return on energy invested (EROEI), a measure of how much energy must be used up to acquire, process, and deliver the fuel in a useful form. OPEC oil, for example, is typically estimated to have an EROEI of 12 to 18, which means that 12 to 18 barrels of oil are produced at the wellhead for every barrel of oil consumed during their production. In this calculation, tar sands look awful: they have an EROEI of 4 to 7. (Steaming out the bitumen also requires a lot of water. Environmentalists ask, with some justification, where it all is going to come from.)
  • To obtain shale gas, companies first dig wells that reach down thousands of feet. Then, with the absurd agility of anime characters, the drills wriggle sideways to bore thousands of feet more through methane-bearing shale. Once in place, the well injects high-pressure water into the stone, creating hairline cracks. The water is mixed with chemicals and “proppant,” particles of sand or ceramic that help keep the cracks open once they have formed. Gas trapped between layers of shale seeps past the proppant and rises through the well to be collected.
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  • Several researchers told me that the current towel-snapping between Beijing and Tokyo over islands in the East China Sea is due less to nationalistic posturing than to nearby petroleum deposits.)
  • Today, a fifth of U.S. energy consumption is fueled by coal, mainly from Appalachia and the West, a long-term energy source that has provided jobs for millions, a century-old way of life
  • and pollution that kills more than 10,000 Americans a year (that estimate is from a 2010 National Research Council study).
  • Roughly speaking, burning coal produces twice as much carbon dioxide as burning the equivalent amount of natural gas. Almost all domestic coal is used to generate electricity—it produces 38 percent of the U.S. power supply. Fracking is swiftly changing this: in 2011, utilities reported plans to shut down 57 of the nation’s 1,287 coal-fired generators the following year. Largely in consequence, U.S. energy-related carbon-dioxide emissions have dropped to figures last seen in 1995. Since 2006, they have fallen more than those from any other nation in the world.
  • In the sort of development that irresistibly attracts descriptors like ironic, Germany, often touted as an environmental model for its commitment to solar and wind power, has expanded its use of coal, and as a result is steadily increasing its carbon-dioxide output. Unlike Americans, Europeans can’t readily switch to natural gas; Continental nations, which import most of their natural gas, agreed to long-term contracts that tie its price to the price of oil, now quite high.
  • Water-assisted fracturing has been in use since the late 1940s, but it became “fracking” only recently, when it was married with horizontal drilling and the advanced sensing techniques that let it be used deep underground. Energy costs are surprisingly small; a Swiss-American research team calculated in 2011 that the average EROEI for fracked gas in a representative Pennsylvania county was about 87—about six times better than for Persian Gulf oil and 16 times better than for tar sands. (Fracking uses a lot of water, though, and activists charge that the chemicals contaminate underground water supplies.)
  • In mid-March, Japan’s Chikyu test ended a week early, after sand got in the well mechanism. But by then the researchers had already retrieved about 4 million cubic feet of natural gas from methane hydrate, at double the expected rate.
  • What is known, says Timothy Collett, the energy-research director for the USGS program, is that some of the gulf’s more than 3,500 oil and gas wells are in gas-hydrate areas.
  • In Dutch-disease scenarios, oil weakens all the pillars but one—the petroleum industry, which bloats steroidally.
  • Because the national petroleum company, with its gush of oil revenues, is the center of national economic power, “the ruler typically puts a loyalist in charge,” says Michael Ross, a UCLA political scientist and the author of The Oil Curse (2012). “The possibilities for corruption are endless.” Governments dip into the oil kitty to reward friends and buy off enemies. Sometimes the money goes to simple bribes; in the early 1990s, hundreds of millions of euros from France’s state oil company, Elf Aquitaine, lined the pockets of businessmen and politicians at home and abroad.
  • How much of Venezuela’s oil wealth Hugo Chávez hijacked for his own political purposes is unknown, because his government stopped publishing the relevant income and expenditure figures. Similarly, Ross points out, Saddam Hussein allocated more than half the government’s funds to the Iraq National Oil Company; nobody has any idea what happened to the stash, though, because INOC never released a budget. (Saddam personally directed the nationalization of Iraqi oil in 1972, then leveraged his control of petroleum revenues to seize power from his rivals.)
  • “How will the royal family contain both the mullahs and the unemployed youth without a slush fund?”
  • It seems fair to say that if autocrats in these places were toppled, most Americans would not mourn. But it seems equally fair to say that they would not necessarily be enthusiastic about their replacements.
Gene Ellis

Companies Quietly Apply Biofuel Tools to Household Products - NYTimes.com - 0 views

www.nytimes.com/...pplied-to-household-soaps.html

shared by Gene Ellis on 01 Jun 14 - No Cached
  • Companies Quietly Apply Biofuel Tools to Household Products
  • A liquid laundry detergent made by Ecover, a Belgian company that makes “green” household products including the Method line, contains an oil produced by algae whose genetic code was altered using synthetic biology. The algae’s DNA sequence was changed in a lab, according to Tom Domen, the company’s manager for long-term innovation.
  • Unilever recently announced that it was using algae oil made by a company called Solazyme in Lux, a popular soap
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  • An ingredient crucial to malaria drugs, artemisinin, is already being produced from a yeast altered through synthetic biology. Specific brands have not been disclosed.
  • Solazyme points to substances like rennet, a key processing aid in cheese-making that requires an enzyme called chymosin to promote clotting. Traditionally, calves’ stomachs were used to provide that enzyme to curdle milk for cheese. But since the late 1990s, rennet has been generated by a microbe whose genetic code was altered with the insertion of a single bovine gene, and that process is the one most widely in use now in the United States.
  • Solazyme describes the organism that produces the oil as “an optimized strain” of single-cell algae “that have been in existence longer than we have.”
  • Ecover buys the ingredient, algal oil from Solazyme, which used to describe itself as a synthetic biology company but has taken the term off its website.
  • Solazyme pointed to the environmental benefits of its processes and noted that the World Wildlife Fund, Rainforest Alliance and other environmental groups support its work. “We use molecular biology and standard industrial fermentation to produce renewable, sustainable algal oils that help alleviate pressures on the fragile ecosystems around the Equator that are frequently subject to deforestation and habitat destruction,”
  • The groups acknowledge that the Solazyme oil itself — in the Ecover detergent — does not contain genetically engineered ingredients in the conventional meaning of the term. Rather, the organism producing the oil has been genetically altered.
  • Some of the same companies are now busily churning out vanillin, resveratrol and citrus flavorings from yeast and other microorganisms that are a product of synthetic biology for use in foods.
Gene Ellis

The problem with TTIP | vox - 0 views

www.voxeu.org/...problem-ttip

shared by Gene Ellis on 05 Feb 15 - No Cached
  • The problem with TTIP
  • The TPP is a deep international integration arrangement between the US and 11 other Pacific states, which would cover 40% of world GDP and over 30% of world trade. It seeks to address as series of issues that 21st century commerce, but arguably its most obvious feature is that it excludes China – the world’s largest international trader and before long the world’s largest economy. There are, of course, the ritual genuflections towards ‘open regionalism’ – China can join if only it will agree to the necessary policy requirements – but this is about as much use as saying the Chief Rabbi can dine with you while insisting that the menu contains pork.
  • By signing TTIP Europe would be tying itself to a static rather than a dynamic part of the world economy and substantially reinforcing the US’s exclusionary policies.
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  • In the areas that are sound, it is mainly that TPP members will probably have to approach the US norms faster than desirable, and possibly faster than they can effectively administer. But there are also areas in which the TPP is not in the interests of most non-US members.
  • However, it is generally accepted that TTIP is more important to Europe than to the US, which greatly strengthens the US’s hand in negotiations.
  • it is widely accepted that the deeper intra-European integration fostered by the Single Market initiative was a major contributor to European prosperity between 1992 and 2007
  • he US has strongly promoted Investor-State Dispute Arbitration in which foreign-owned private firms can seek settlements against governments for taking actions that are not prohibited by the agreements but which reduce the value of investments that the firms have made in member countries.
  • For states that do not have a lot of, say, social or environmental legislation at the time TPP is signed, Investor-State Arbitration threatens to make progress in these dimensions difficult.
  • f China, India or Brazil felt that these disciplines were too arduous or just did not fit, the world trading system would be effectively be split with arguably the most dynamic areas excluded. And given that the TPP would be attractive to smaller economies and that the latter would probably be offered quite accommodating terms, the split would probably deepen rather than the opposite.
  • This reads very much like an agreement to cooperate to make sure that outcomes in the trading system are as the US and EU want them – and with around half of world GDP between them and a further 15% in the rest of TPP, it suggests that the choice facing other will be capitulation vs. exclusion. I fear the latter.
  • Champions of the multilateral system must be much more explicit about its virtues and value – and among these I include Europe (middle-sized countries with a strong belief in negotiated outcomes and order) and China (which has been a massive beneficiary of open markets and non-discrimination to date).
  • urope had better get on with an internally driven liberalisation, especially of services and utilities markets, to stimulate the recovery quite independent of the outside pressures of a trade negotiation;
Gene Ellis

A Fracking Good Story by Bjørn Lomborg - Project Syndicate - 0 views

www.project-syndicate.org/...ng-good-story-by-bj-rn-lomborg

shared by Gene Ellis on 22 Jan 13 - No Cached
  • Carbon-dioxide emissions in the United States have dropped to their lowest level in 20 years.
  • this year’s expected CO2 emissions have declined by more than 800 million tons, or 14%, from their peak in 2007.
  • The cause is an unprecedented switch to natural gas, which emits 45% less carbon per energy unit. The US used to generate about half its electricity from coal, and roughly 20% from gas. Over the past five years, those numbers have changed, first slowly and now dramatically: in April of this year, coal’s share in power generation plummeted to just 32%, on par with gas.
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  • For starters, fracking has caused gas prices to drop dramatically.
  • Indeed, US carbon emissions have dropped some 20% per capita, and are now at their lowest level since Dwight D. Eisenhower left the White House in 1961.
  • the shift from coal to natural gas has reduced US emissions by 400-500 megatonnes (Mt) of CO2 per year. To put that number in perspective, it is about twice the total effect of the Kyoto Protocol on carbon emissions in the rest of the world, including the European Union.
  • America’s 30,000 wind turbines reduce emissions by just one-tenth the amount that natural gas does. Biofuels reduce emissions by only ten Mt, and solar panels by a paltry three Mt.
  • Since 1990, the EU has heavily subsidized solar and wind energy at a cost of more than $20 billion annually. Yet its per capita CO2 emissions have fallen by less than half of the reduction achieved in the US – even in percentage terms, the US is now doing better.
  • Along with the closure of German nuclear power stations, this has led, ironically, to a resurgence of coal.
Gene Ellis

Multinationals beach tax bills in Spanish shells - FT.com - 0 views

www.ft.com/...98-11e3-98a1-00144feab7de.html

shared by Gene Ellis on 29 Oct 13 - No Cached
  • From here a single employee presided over a company that from 2009 to 2011 made €9.9bn of net profits, all while earning an annual salary of only €55,000.
  • Exxon’s Spanish subsidiary was structured as a so-called ETVE, a type of holding company used by many multinationals, including Hewlett-Packard, Pepsi, Eli Lilly, Anheuser-Busch InBev and Vodafone.
  • According to the ETVE’s 2009 accounts, Exxon was able to transfer €3.6bn of dividends from its unit in Luxembourg to Spain. A dividend of €2.26bn was then paid on to its US parent without incurring withholding taxes that it would typically have to pay when moving money outside of the EU.
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  • ransfers from a Luxembourg company to the US would have typically been subject to a withholding tax. Last year, after attracting the attention of Spanish tax authorities, Exxon quietly closed down the operation.
  • “Normally you would have to pay a 10 per cent withholding tax at source to send profits to the US,
  • Spain introduced the ETVE in the mid-1990s to encourage foreign investment, and better compete with Luxembourg and Holland for international companies seeking tax-efficient European holding structures. It also allowed for foreign companies to take advantage of Spain’s strong network of bilateral tax treaties with countries in Latin America, such as Argentina, Brazil and Mexico, which can offer more favourable tax rates than other countries. Once the ETVE has been established all overseas dividends that are paid into it are exempt from tax in Spain, and can be easily moved on to a final destination, providing a small number of conditions have been met. Most importantly, corporation tax must have been paid in the country of origin on the dividends being transferred, and companies using ETVEs to house shareholdings in foreign subsidiaries must not be resident in any country identified by Spain as a tax haven.
  • In fact, Linthal is an ETVE used by Ambev, a subsidiary of Anheuser-Busch InBev, the Belgian-based brewer, to distribute dividends from several Latin American beer brands, such as Argentina’s Quilmes and Cervecería Boliviana Nacional, to its holding company in Brazil.
Gene Ellis

Global Coal Use Predicted to Keep Growing - NYTimes.com - 0 views

www.nytimes.com/...predicted-to-keep-growing.html

coal

shared by Gene Ellis on 16 Dec 13 - No Cached
  • Global Coal Use Predicted to Keep Growing
  • Gene Ellis on 16 Dec 13
     
    Global Coal Use Predicted to Keep Growing
  • Gene Ellis on 09 Jan 14
     
    Global Coal Use Predicted to Keep Growing
Gene Ellis

Bringer of Prosperity or Bottomless Pit?: Top German Economists Debate the Euro - SPIEG... - 0 views

www.spiegel.de/...-debate-the-euro-a-685018.html

shared by Gene Ellis on 09 Jul 12 - No Cached
  • No, of course not. Today, we live in a currency zone that, despite everything, is significantly more stable than where the dollar or yen are used. The euro has brought growth and prosperity to Europe.
  • Actually, the euro was a mistake with particularly serious consequences. A monetary union requires its members to pursue the same policies and be similarly productive. The so-called convergence criteria were meant to ensure that this would happen. But -- as the dramatic developments in Greece are now showing -- they didn't.
  • Unfortunately, our fears have become a reality. The monetary union was launched with real self-deception.
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  • The euro was sold to us as a modernization program for Europe, and we were also told that it would push the Community toward stability. But, in reality, it has drifted apart and become a truly unstable entity.
  • The euro was sold to us as a modernization program for Europe, and we were also told that it would push the Community toward stability. But, in reality, it has drifted apart and become a truly unstable entity.
  • There is no reason why the euro should be coming under pressure. The decision to introduce it was smart and far-sighted.
  • thanks to the common currency, it's no longer possible, for example, to wage speculative attacks on individual currencies. This eliminates a key disruptive factor that massively destabilized markets in the past.
  • Still, thanks to the common currency, it's no longer possible, for example, to wage speculative attacks on individual currencies. This eliminates a key disruptive factor that massively destabilized markets in the past.
  • Today, there are two blocs within the monetary union: a strong currency bloc in the north and a weak one in the south.
  • Starbatty: But that's exactly the problem! In the past, exchange rates served as a valve. Individual countries could control their economies by allowing their currencies to gain or lose value.
  • But that's exactly the problem! In the past, exchange rates served as a valve.
  • SPIEGEL: What would happen if the old currencies were reintroduced in the euro zone tomorrow? Bofinger: It would be a catastrophe. The German mark would have to appreciate significantly -- I'd say by 10 percent to 20 percent. Everything that we've worked so hard to attain in terms of competitiveness would vanish overnight.
  • What would happen if the old currencies were reintroduced in the euro zone tomorrow? Bofinger: It would be a catastrophe. The German mark would have to appreciate significantly -- I'd say by 10 percent to 20 percent. Everything that we've worked so hard to attain in terms of competitiveness would vanish overnight.
  • SPIEGEL: Would it have been better if all countries in Europe had kept their own currencies? Starbatty: Yes. A community can't function when it's made up of unequal partners who are supposed to behave as equals. With the euro, Germany has created an artificial competitive advantage for itself, which has enabled us to conquer markets all over the world.
  • Starbatty: Yes. A community can't function when it's made up of unequal partners who are supposed to behave as equals. With the euro, Germany has created an artificial competitive advantage for itself, which has enabled us to conquer markets all over the world.
  • Since 1995, there have been almost no appreciable wage increases in Germany, partly as a result of pressure brought on from increases in subcontracted labor. Politicians have done everything to relieve employers of the burden of paying social security contributions because we fell into this strange panic, believing we weren't globally competitive. With our economic policies, we placed too much of a lopsided emphasis on exports.
  • Politicians have done everything to relieve employers of the burden of paying social security contributions because we fell into this strange panic, believing we weren't globally competitive.
Gene Ellis

Tracing Germs Through the Aisles - NYTimes.com - 0 views

www.nytimes.com/...-germs-through-the-aisles.html

antibiotic animals

shared by Gene Ellis on 10 Jan 14 - No Cached
  • More than 70 percent of all the antibiotics used in the United States are given to animals.
  • Agribusiness groups disagree and say the main problem is overuse of antibiotic treatments for people. Bugs rarely migrate from animals to people, and even when they do, the risk they pose to human health is negligible, the industry contends.
  • He is comparing the genetic sequences of E. coli germs resistant to multiple antibiotics found in the meat samples to the ones that have caused urinary tract infections in people (mostly women).
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  • Urinary infections were chosen because they are so common. American women get more than eight million of them a year. In rare cases the infections enter the bloodstream and are fatal.
  • A new strain of the antibiotic-resistant bug MRSA, for example, was first detected in people in Holland in 2003, and now represents 40 percent of the MRSA infections in humans in that country, according to Jan Kluytmans, a Dutch researcher. That same strain was common in pigs on farms before it was found in people, scientists say.
  • He thinks the Food and Drug Administration’s efforts to limit antibiotic use on farms have been weak. In 1977, the F.D.A. said it would begin to ban some agricultural uses of antibiotics. But the House and Senate appropriations committees — dominated by agricultural interests — passed resolutions against the ban, and the agency retreated. More recently, the agency has limited the use of two important classes of antibiotics in animals. But advocates say it needs to go further and ban use of all antibiotics for growth promotion. Sweden and Denmark have already done so.
  • Ms. Slaughter said aggressive lobbying by agribusiness interests has played a major role in blocking passage of legislation.
  • But the economics of food presents perhaps the biggest obstacle. On large industrial farms, animals are raised in close contact with one another and with big concentrations of bacteria-laden feces and urine. Antibiotics keep infections at bay but also create drug resistance.
Gene Ellis

U.S. Ports Seek to Lure Big Ships After Panama Canal Expands - NYTimes.com - 0 views

www.nytimes.com/...fter-panama-canal-expands.html

panamax

shared by Gene Ellis on 10 Apr 13 - No Cached
  • The big ships — known as “Post-Panamax” and even “Super-Post-Panamax” — are already in heavy use worldwide, making up 16 percent of the container fleet but accounting for 45 percent of its capacity, according to a July report by the Army Corps of Engineers.
  • The Port of Virginia, in Norfolk, is ready to receive the big ships today. And New York is also prepared, thanks to a massive dredging project that began 13 years ago.
  • But nearly every port in the game still faces major challenges and expenses —
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  • Baltimore, which already has a 50-foot channel, has a bottleneck on the land side: the Howard Street tunnel, through which trains have to pass to reach the port, and which is too small to accommodate the double-stacked container cars that are increasingly the standard for rail shipping. The rail line CSX has announced a workaround that could cost hundreds of millions, involving a new yard beyond the tunnel filled with containers brought by truck; the port will load the trains with a single container to get through the tunnel, and the trains can be completed at the yard.
  • The big ships will also come via places beyond Panama: many are expected to come from Southeast Asia through the Suez Canal, and from South America’s eastern ports.
Gene Ellis

"Which Eurobonds?" by Jeffrey Frankel | Project Syndicate - 0 views

www.project-syndicate.org/...which-eurobonds-

jeffrey project syndicate

shared by Gene Ellis on 16 Jun 12 - No Cached
  • Any solution to the eurozone crisis must meet a short-run objective and a long-run goal. Unfortunately, the two tend to conflict.Illustration by Paul LachineCommentsView/Create comment on this paragraphThe short-run objective is to return Greece, Portugal, and other troubled countries to a sustainable debt path (that is, a declining debt/GDP ratio). Austerity has raised debt/GDP ratios, but a debt write-down or bigger bailouts would undermine the long-term goal of minimizing the risk of similar debt crises in the future.CommentsView/Create comment on this paragraph
  • it is hard to commit today to practice fiscal rectitude tomorrow. Official debt caps, such as the Maastricht fiscal criteria and the Stability and Growth Pact (SGP), failed because they were unenforceable.
  • The introduction of Eurobonds – joint, aggregate eurozone liabilities – could be part of the solution, if designed properly. There is certainly demand for them in China and other major emerging countries, which are desperate for an alternative to low-yielding US government securities.
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  • But Germany remains opposed on moral-hazard grounds: a joint guarantee of Eurozone members’ liabilities would strengthen individual national governments’ incentive to spend beyond their means.
  • The German Council of Economic Experts has proposed a European Redemption Fund (ERF). The plan would convert into de facto 25-year Eurobonds the existing sovereign debt of member countries in excess of 60% of GDP, the threshold specified by the Maastricht criteria and the SGP.
  • But this seems upside down.
  • it offers absolution precisely on the 60%-of-GDP margin where countries will have the most trouble resisting temptation.
  • the main explanation for the absence of US moral hazard is that the right precedent was set in 1841, when the federal government let eight states and the Territory of Florida default.
  • Ever since 1841, the market requires that US states running up questionable levels of debt pay an interest-rate premium to compensate for the default risk.
  • Had the ECB operated from the outset under a rule prohibiting it from accepting SGP-noncompliant countries’ debt as collateral, the entire eurozone sovereign-debt problem might have been avoided.
  • the expansion in the US took place at the federal level, where spending today amounts to 24% of GDP, compared to just 1.2% of GDP for the European Union budget.
  • The version of Eurobonds that might work as the missing long-term enforcement mechanism is almost the reverse of the Germans’ ERF proposal: the “blue bonds” proposed two years ago by Jacques Delpla and Jakob von Weizsäcker. Under this plan, only debt issued by national authorities below the 60%-of-GDP threshold could receive eurozone backing and seniority. When a country issued debt above the threshold, the resulting “red bonds” would lose this status.
  • The point is that the enforcement mechanism would be truly automatic: market interest rates would provide the discipline that bureaucrats in Brussels cannot.
  • Of course, the eurozone cannot establish a blue-bond regime without first solving the problems of debt overhang and troubled banks. Otherwise, the plan itself would be destabilizing, because almost all countries would immediately be in the red.
  • But one thing seems clear. German taxpayers, whose longstanding suspicion of profligate Mediterranean euro members has been vindicated, will not be happy when asked to pay still more for the cause of European integration. At a minimum, they will need some credible reason to believe that 20 years of false assurances have come to an end – that this is the last bailout.
Gene Ellis

How Jean Tirole's Work Helps Explain the Internet Economy - NYTimes.com - 0 views

www.nytimes.com/...lain-the-internet-economy.html

shared by Gene Ellis on 15 Oct 14 - No Cached
  • How Jean Tirole’s Work Helps Explain the Internet Economy
  • He also said that industries should be regulated differently depending on their distinct characteristics.
    • Gene Ellis
      Gene Ellis on 15 Oct 14
       
      excellent point!
  • ...9 more annotations...
  • Many Internet companies, for instance, give their products away free, which means that antitrust law built on pricing is irrelevant. But a result is they grow so fast that they can quickly become monopolies.
  • “He’s helping us think about what is one of the greatest challenges of our time, how to deal with what feel like friendly monopolists,” said Tim Wu, a Columbia Law School professor who studies Internet policy and antitrust. “Amazon, Google and the others give us all this stuff for free or lower prices, so we love them, but are they dangerous in ways we don’t always see?”
  • In the 2002 paper with Jean-Charles Rochet, Mr. Tirole defined two-sided markets, or markets that “get both sides on board” by charging more to one set of customers in order to increase demand by others.
  • In the tech industry, it explains why Google, Facebook and Twitter offer their services free – the more people who use them, the more advertisers they can attract. Likewise, Amazon lowered the price of its new phone to 99 cents in part because smartphones succeed when they have a lot of apps – and developers won’t want to build apps for Amazon’s phone unless a lot of people are using it.
    • Gene Ellis
      Gene Ellis on 15 Oct 14
       
      nice example...
  • For regulators, tech companies have been a riddle in part because they do not follow the behavior of typical monopolies: Many do not charge for their products, and companies that offer entirely different products are nonetheless competitors. For instance, Google’s chairman, Eric Schmidt, argued in a speech on Monday that Google’s biggest competitor in search is Amazon and in mobile is Facebook — even though neither one is a search engine.
  • “Inspired by him and others like him, our effort was to try to move beyond the traditional understanding of something like an aluminum cartel who just raised their prices on aluminum and everything got more expensive,” said Mr. Wu, who was a senior adviser to the Federal Trade Commission on antitrust matters.
  • For consumers, the costs include absorbing advertisers’ ad spending by paying more for their products, being tracked and shown personalized ads, and giving up privacy.
  • our end-users do not internalize the impact of their purchase on the other side of the market.”
Gene Ellis

IEA - December:- Coal's share of global energy mix to continue rising, with coal closin... - 0 views

www.iea.org/...name,34908,en.html

coal

shared by Gene Ellis on 09 Jan 14 - No Cached
  • Although the growth rate of coal slows from the breakneck pace of the last decade, global coal consumption by 2017 stands at 4.32 billion tonnes of oil equivalent (btoe), versus around 4.40 btoe for oil, based on IEA medium-term projections. The IEA expects that coal demand will increase in every region of the world except in the United States, where coal is being pushed out by natural gas.
  • “This report sees that trend continuing. In fact, the world will burn around 1.2 billion more tonnes of coal per year by 2017 compared to today – equivalent to the current coal consumption of Russia and the United States combined. Coal’s share of the global energy mix continues to grow each year, and if no changes are made to current policies, coal will catch oil within a decade.” 
  • The report notes that in the absence of a high carbon price, only fierce competition from low-priced gas can effectively reduce coal demand. “The US experience suggests that a more efficient gas market, marked by flexible pricing and fueled by indigenous unconventional resources that are produced sustainably, can reduce coal use, CO
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  • As US coal demand declines, more US coal is going to Europe, where low CO2 prices and high gas prices are increasing the competitiveness of coal in the power generation system.
Gene Ellis

The Eurozone's Delayed Reckoning by Nouriel Roubini - Project Syndicate - 0 views

www.project-syndicate.org/...pe-s-crisis-by-nouriel-roubini

shared by Gene Ellis on 19 Dec 12 - No Cached
  • For starters, the European Central Bank’s “outright monetary transactions” program has been incredibly effective: interest-rate spreads for Spain and Italy have fallen by about 250 basis points, even before a single euro has been spent to purchase government bonds.
  • The introduction of the European Stability Mechanism (ESM), which provides another €500 billion ($650 billion) to be used to backstop banks and sovereigns, has also helped, as has European leaders’ recognition that a monetary union alone is unstable and incomplete, requiring deeper banking, fiscal, economic, and political integration.
  • But, perhaps most important, Germany’s attitude toward the eurozone in general, and Greece in particular, has changed. German officials now understand that, given extensive trade and financial links, a disorderly eurozone hurts not just the periphery but the core.
  • ...10 more annotations...
  • GDP continues to shrink,
  • Moreover, balkanization of economic activity, banking systems, and public-debt markets continues, as foreign investors flee the eurozone periphery and seek safety in the core.
  • Likewise, competitiveness losses have been partly reversed as wages have lagged productivity growth, thus reducing unit labor costs, and some structural reforms are ongoing.
    • Gene Ellis
      Gene Ellis on 19 Dec 12
       
      This, indeed, is the crux of the matter.
  • either the eurozone moves toward fuller integration (capped by political union to provide democratic legitimacy to the loss of national sovereignty on banking, fiscal, and economic affairs), or it will undergo disunion, dis-integration, fragmentation, and eventual breakup.
  • but countries like Germany, which were over-saving and running external surpluses, have not been forced to adjust by increasing domestic demand, so their trade surpluses have remained large.
  • German leaders fear that the risk-sharing elements of deeper integration
  • imply a politically unacceptable transfer union whereby Germany and the core unilaterally and permanently subsidize the periphery.
  • Of course, Germany fails to recognize that successful monetary unions like the United States have a full banking union with significant risk-sharing elements, and a fiscal union whereby idiosyncratic shocks to specific states’ output are absorbed by the federal budget. The US is also a large transfer union, in which richer states permanently subsidize the poorer ones.
    • Gene Ellis
      Gene Ellis on 19 Dec 12
       
      These are key features, built into the over-representation of the poorer, smaller, more agricultural, states; as well as in the central institutions.
  • But the fundamental crisis of the eurozone has not been resolved, and another year of muddling through could revive these risks in a more virulent form in 2014 and beyond. Unfortunately, the eurozone crisis is likely to remain with us for years to come, sustaining the likelihood of coercive debt restructurings and eurozone exits.
  • Gene Ellis on 19 Dec 12
     
    Late 2012 reading
Gene Ellis

PORTFOLIO.HU | Blanchard: Eurozone integration needs to go forward or go back, but it c... - 0 views

www.portfolio.hu/...it_cant_stay_here.24931-2.html

shared by Gene Ellis on 04 Oct 12 - No Cached
  • There is no question that, when it was introduced, inflation targeting represented progress. But we have learnt that it has serious limitations. You can have an economy in which inflation is stable and low, but behind the scenes the composition of the output is wrong, and the financial system accumulates risks. It’s very clear that, to deal with all these issues, just using the policy rate is not enough.
  • The way to think about monetary policy in the future is that the central bank has in effect two sets of tools. One is a traditional one, the policy interest rate. The other is the set of macro prudential tools, from loan to value ratios, to cyclical capital ratios, etc. If there is a housing boom, you do not want to kill it through an increase in the policy rate which would affect the whole economy. You want to use measures that will limit mortgage lending to households.
  • I think that it has either to go forward or to go back, but it cannot stay where it is. I think nobody really wants to go back, so it has to go forward.
  • ...2 more annotations...
  • I suspect that, in order to limit country specific shocks, euro members may have to actively use macro prudential tools such as rules on the amount of liquidity that banks should hold, or upper limit to loans to value ratios, much more so that they have in the past.
  • If the U.S. and a number of other advanced countries are going to decrease their current account deficits, then some countries will have to decrease their current account surpluses. And for this to happen, there has to be, among other changes, an adjustment of the exchange rates. Put more bluntly, most emerging markets have to accept an appreciation.
Gene Ellis

German and French banks call the shots - European, Business - Independent.ie - 0 views

www.independent.ie/...ks-call-the-shots-2607577.html

german french banks ireland debt

shared by Gene Ellis on 11 Jul 12 - No Cached
  • German and French banks call the shots Print Email  NormalLargeExtra Large ShareNew  0  0   Also in European Debt crisis: European shares edge lower and growth worries persist Bank of England's Tucker 'wasn't encouraged to lean on Barclays' Draghi keeps door open to further interest rate cuts Marks and Spencers sales hit by summer deluge Spain's debt tops 7pc danger level as Madrid gets more time European Home "Shocking" 2012 HoroscopeWhat Does 2012 Have In Store For You? Shockingly Accurate. See Free!www.PremiumAstrology.comExpat Health InsuranceQuick, Compare, Trusted Website Expatriate Health Insurance Quoteswww.ExpatFinder.com/Instant-Quoteshttp://www.googleadservices.com/pagead/aclk?sa=L&ai=BMEejVeb8T8fDKoSG_QaAhrTCB-q_1OYBmoqphxvAjbcB0NkREAMYAyDgw6kIKAU4AFD4gumFAmCpsL6AzAGgAairsfEDsgESd3d3LmluZGVwZW5kZW50LmllyAEB2gFfaHR0cDovL3d3dy5pbmRlcGVuZGVudC5pZS9idXNpbmVzcy9ldXJvcGVhbi9nZX
  • d, for reasons best
  • known to itself, the ECB -- in clear contravention of both previous market precedent and financial logic -- has insisted that the senior bondholders be repaid in full and has lent the Irish banks, institutions which it must have known were hopelessly insolvent, €70bn to do so.
  • ...1 more annotation...
  • Top of the list are German banks, to whom we owe €92bn with a further €38bn of other exposures. Does the fact that Irish banks potentially owe their counterparts up to €146bn explain the German government's implacable opposition to any write-down of the Irish banks' debts? After the British and the Germans, it is the French banks -- with total Irish bank loans of almost €32bn and a further €23bn of other exposures -- who have the biggest exposure to Ireland. Does this provide at least a partial explanation for French president Nicolas Sarkozy's truculence when faced with Irish requests that senior bondholders be forced to accept a haircut?
Gene Ellis

U.S. Ports Seek to Lure Big Ships After Panama Canal Expands - NYTimes.com - 0 views

www.nytimes.com/...fter-panama-canal-expands.html

u s ports ships panama canal nytimes nytimes com com

shared by Gene Ellis on 21 Aug 12 - No Cached
  • But, he said, containers loaded on the West Coast, which has built up its container yards and highway and rail infrastructure, can outrun those that travel to the East Coast by water, and that can make the difference when speed and dependability are more important than cost alone
  • Besides, he added, costs and fees can shift; Panama can be expected to raise rates for canal passage, and “the railroads are not going to sit idly by” and let the water route undercut their business.
  • After Hurricane Katrina, Gov. Haley Barbour of Mississippi trumpeted plans for a “port of the future” at Gulfport with a 50-foot-deep channel, redirecting some $600 million in federal housing disaster funds on a project he pledged would spur the economy and create bountiful jobs.
  • ...1 more annotation...
  • To Robert Puentes, a transportation expert at the Brookings Institution, the problem of whether the ports are overbuilding for a Panama payoff is one of planning. “We are the only industrialized country on the planet that doesn’t have a comprehensive freight policy,” he said.
Gene Ellis

Has the U.S. Economy Been Permanently Damaged? : The New Yorker - 0 views

www.newyorker.com/...ad-news-and-the-good-news.html

damage us economy

shared by Gene Ellis on 09 Jan 14 - No Cached
  • Although the study uses some sophisticated statistical methods, its basic point is straightforward: in the long term, economic output (G.D.P.) is constrained by the quantity and the quality of economic inputs (labor, capital, and technology). If the growth rate and quality of these inputs decline, the potential growth rate of G.D.P. will fall, too—it’s just a matter of arithmetic.
  • With hiring rates down, many workers have given up searching for jobs and have dropped out of the labor force.
  • With budgets tight, corporations and government departments have cut back on investments in new plants and machinery, computer hardware and software, and research and development.
  • ...7 more annotations...
  • The authors come up with a variety of numbers, including one that has received a lot of attention: potential G.D.P.—broadly speaking, the level of G.D.P. consistent with stable inflation—“is currently about 7 percent below the trajectory it appeared to be on prior to 2007.” According to the latest figures from the Commerce Department, the G.D.P. is now close to seventeen trillion dollars, and seven per cent of that figure is $1.2 trillion. This is a lot of money to have gone missing, especially if it will never be recovered. Hence Krugman’s dire conclusion: “By tolerating high unemployment we have inflicted huge damage on our long-run prospects …. What passes these days for sound policy is in fact a form of economic self-mutilation, which will cripple America for many years to come.”
  • As well as figuring out the current level of potential G.D.P., the authors estimate its growth rate. This is the more important figure, because it’s what determines living standards over the long term
  • In the period from 2000 to 2007, the paper says the average potential growth rate of G.D.P. was 2.6 per cent.
  • For 2012, the authors estimate the potential growth rate at only 1.3 per cent.
  • In the nineteen-eighties, Larry Summers and Olivier Blanchard, who is now the chief economist of the I.M.F., resurrected the idea and gave it a new name, which they borrowed from engineering: hysteresis. Blanchard and Summers examined hysteresis in Europe, where high rates of unemployment have long been a problem.
  • The good news is that things aren’t quite as bad as the figures in the Fed paper might suggest. If we can get policy right and sharply increase the level of over-all demand in the economy, most of the damage done in the past five years is reversible.
  • At the moment, sadly, there is no prospect of any more fiscal stimulus, let alone a war-sized one, and the onus is falling on the Fed to gee up the economy.
Gene Ellis

Should You Eat Chicken? - NYTimes.com - 0 views

www.nytimes.com/...an-should-you-eat-chicken.html

us technology

shared by Gene Ellis on 09 Jan 14 - No Cached
  • U.S.D.A. does not stand alone. The Food and Drug Administration (F.D.A.), knowing that manufacturers grow animals under conditions virtually guaranteed to breed disease, allows them to attempt to ward off disease by feeding them antibiotics from birth until death. (This despite the stated intention of the agency to change that, and a court order requiring it to.)
  • About a quarter of all chicken parts are contaminated,
  • The F.D.A. must disallow the use of prophylactic antibiotics in animal production.
  • ...1 more annotation...
  • The U.S.D.A. must consider salmonella that’s been linked to illness an “adulterant” (as it does strains of E. coli), which would mean that its very presence on foods would be sufficient to take them off the market. Again, it’s almost as simple as that. (Sweden produces chicken with zero levels of salmonella. Are they that much smarter than us?)
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