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Gene Ellis

IMF's Blanchard: Global Economy Gripped By Meta-Uncertainty - WSJ.com - 0 views

stream.wsj.com/...SS-2-33475

shared by Gene Ellis on 17 Jul 12 - No Cached
  • In 2008-09, there was a collapse of global trade. We were all very surprised. Output was not doing well, but the collapse in global trade was enormous. We realized at the time that the elasticity of trade with respect to global output was not 1, as you might think, but more like 3 to 4. So this explained it. And then it recovered like crazy.
  • This is still true. If global output goes down by 1%, global trade goes down by 3% to 4%.
  • What Europe needs to do:
  • ...14 more annotations...
  • These countries have to do what they need to do. There’s no question there has to be fiscal consolidation. We can discuss the pace, but it has to happen. The other is competitiveness, which I see as much tougher of the two.
  • It has to be through a combination of structural reforms, hoping they will work, and nominal wage adjustments, although one cannot be incredibly optimistic about the scope there. We know that that’s going to take a while.
  • Take the big two, Italy and Spain. You can always dream of more, but I think they’re serious about doing it, both on the fiscal front and the structural-reforms front. I think it may well be that even if they do everything they can, and do it right, it’s still not enough. They have to have help — I would say when needed rather than if needed.
  • The banks have to be recapped, and they have to be recapped not using sovereign money. I think that is really very, very high on the agenda. I don’t think they can make it without help to the banks.
  • If the banks were healthier, I think they would lend at lower rates
  • And the sovereigns have to be able to borrow at reasonable rates. As long as they behave and they do all the things they’re asked to do, they have to be able to borrow at lower rates than they currently do. Some way has to be found to do it.
  • It’s not that I don’t care about the way it’s done. But I care about the result. These countries, if they’re doing the right things, they have to be able to finance themselves.
  • Some people say a euro depreciation would help Europe a lot. I think there is an argument for it, even in a multilateral context. You have to depreciate vis-a-vis somebody, so somebody has to appreciate. My sense is we would like most of the depreciation to be vis-a-vis emerging-market countries. Even if there was a depreciation vis-a-vis the dollar, I still think it would be a good thing.
  • We’ve done simulations. Other people have done simulations as well. 10% real depreciation would lead to a 1.4% increase in growth for a year — which at this stage, given the numbers, would be nice. The footnote, and it’s a very big footnote, is that … how much you benefit depends on how big your exports are related to your GDP and where you export — whether you export in the euro zone or outside. Unfortunately the countries that benefit the most are the countries that really don’t need it — Germany, the Netherlands. The countries that benefit the least are Greece, Portugal, Italy, Spain
  • There’s no question, the periphery countries have to improve their competitiveness. That’s not something even monetary policy at the level of the euro or fiscal policy can do. This they have to do through productivity improvements or nominal wage adjustments.
  • It is no secret that they have tended to respond to crises rather than be much more proactive.
  • And now there’s a sense in which they’re thinking about the full architecture.
  • At this stage I think there is a genuine commitment to thinking about the whole beast. That’s why these words — fiscal union, banking union — have come in.
  • Where I think there is still a problem is that all these things will take a lot of time. And some of these things may not happen because they’re unpopular. And meanwhile, there is a fire in the house. So they have to be willing to do more in the short term.
Gene Ellis

The German locomotive has become Europe's liability - FT.com - 0 views

www.ft.com/...4e-11e4-8105-00144feabdc0.html

shared by Gene Ellis on 05 Feb 15 - No Cached
  • It is true German exports to Russia and eastern Europe have declined since the beginning of the year. But, given that they never accounted for more than 4 per cent of total exports, this does little to explain the country’s lacklustre performance.
  • The main problem is not weak export demand or the reluctance of consumers to spend money but the fact that companies are unwilling to invest in new productive assets. Investment now accounts for a smaller portion of output in Germany than in most other industrialised countries.
  • Germany’s public investment in transport infrastructure and education has long been among the lowest in Europe.
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  • The country should also use its political clout to convince its partners and Brussels to implement a European reform agenda that targets investment and growth.
Gene Ellis

IBM Wants to Invent the Chips of the Future, Not Make Them - NYTimes.com - 0 views

bits.blogs.nytimes.com/...ps-of-the-future-not-make-them

shared by Gene Ellis on 18 Feb 15 - No Cached
  • For several months, IBM has been seeking to sell its chip-manufacturing operations
  • The most likely buyer is GlobalFoundries, a large contract chip manufacturer, the person said, for a price of probably less than $2 billion.
  • Ms. Rometty stated that while IBM’s priorities were in fields like data analytics and cloud computing, and it had agreed to sell its industry-standard computer server business to Lenovo of China for $2.3 billion, she added: “But let me be clear — we are not exiting hardware.”
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  • Selling its semiconductor-manufacturing operations would mesh with IBM’s well-established course of shedding hardware businesses with lower profit margins. Over the years, the company has retreated from printers, personal computers and disk drives, as well as its pending sale of smaller server computers. Designing chips and licensing technology, without manufacturing, can be lucrative. Qualcomm, a maker of chips for mobile devices, is the showcase example.
  • IBM’s research agenda is a recognition that the end of the silicon era of computing, using complementary metal-oxide semiconductor technology, or CMOS, is finally on the horizon.
  • “IBM is not giving up on silicon, but it is saying it’s time to place an array of bets, and to move beyond silicon.”
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