When leaders of the 11 nations that agreed to combine their currencies gathered in January 1999,
they predicted great things: the single currency would shift global portfolios to euro assets,
depressing the value of the dollar relative to the euro, and the new eurozone would be a strong
player in the global economy, reflecting the size of an integrated European market. Instead the
euro plummeted, Europes economy remains weak, and unemployment is more than twice the
U.S. level.
Europe Can't Handle the Euro - 0 views
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The ECB will eventually be judged not by its words but by whether it achieves low inflation and does so without increasing cyclical unemployment. I am not optimistic about either part of this goal.
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The ECB must make monetary policy for "Europe as a whole," which in practice means doing what is appropriate for Germany, France and Italy, the eurozones three largest countries. Last year demand conditions in those countries were relatively weak, while demand conditions in Spain and Ireland were very strong. That meant a monetary policy that was too expansionary for Spain and Ireland, causing a substantial acceleration of their inflation and threatening their competitiveness.
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IMF's Blanchard: Global Economy Gripped By Meta-Uncertainty - WSJ.com - 0 views
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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.
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This is still true. If global output goes down by 1%, global trade goes down by 3% to 4%.
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What Europe needs to do:
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Spain to Test Bond Markets as Economy Minister Warns on Debt - NYTimes.com - 0 views
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the country’s economy minister, Luis de Guindos, warned Tuesday that European debt markets were not working properly because foreign investors were being deterred by the euro zone’s slow and complex decision-making procedures.
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In recent weeks the interest demanded by investors on longer-term debt has crept up around 6 percent for Italy and 7 percent for Spain, close to the level that analysts say could make government finances unsustainable in the medium term.
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In an interview in the Spanish daily La Vanguardia, Mr. de Guindos said that foreign investors were increasingly staying away from bond auctions, leaving only domestic buyers.
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Investors Seek Yields in Europe, but Analysts Warn of Risk - NYTimes.com - 0 views
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Investors Seek Yields in Europe, but Analysts Warn of Risk
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Once again, foreign investors are piling into the government bonds of Ireland, Spain and Portugal — countries that got into such debt trouble that they required bailouts. Now these countries are able to sell their bonds at lower interest rates than they have seen in years, renewing hope that Europe has turned a corner.
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Claus Vistesen, the head of research at Variant Perception, a London-based economic research group, sees the ratio of debt to economic output as a continuing threat to a euro zone recovery.“People think growth is coming back,” Mr. Vistesen said, “but at the end of the day, debt is still going up.”
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Tennessee Valley Authority to close 8 coal-fired power units - The Washington Post - 0 views
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The Tennessee Valley Authority, one of the nation’s five biggest users of coal for electricity generation, said Thursday it would close down eight coal-fired power units with 3,300 megawatts of capacity.
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Many of the plants were more than 50 years old, and under a consent decree between the TVA, four state governments and the Sierra Club, the authority was required to install additional pollution control equipment known as scrubbers or shut down the plants
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Johnson said that electricity demand has dropped nearly 10 percent over the past five years., half of that because one company, USEC, which produced and sold enriched uranium for commercial nuclear power plants, ceased its energy-intensive operations.
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Utilities Switch Off Investment in Fossil Fuel Plants - NYTimes.com - 0 views
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workers at the large power station known as Keadby 1 are preparing to shut it down at the end of the summer, with the loss of about 40 jobs.
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fluctuations in global energy markets have made the natural gas power plant unprofitable
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BBC News - Battle of the knowledge superpowers - 0 views
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Instead of basking in the reflected glory of a prize winner funded by European grants, she said she had to listen to a speech attacking the red-tape and bureaucracy - and "generally embarrassing the hell out of me".
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But the knowledge economy does not always scatter its seed widely. When the US is talked about as an innovation powerhouse, much of this activity is based in narrow strips on the east and west coasts. A map of Europe measuring the number of patent applications shows a similar pattern - with high concentrations in pockets of England, France, Germany and Finland.
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Jan Muehlfeit, chairman of Microsoft Europe, explained what was profoundly different about these new digital industries - that they expand at a speed and scale that would have been impossible in the traditional manufacturing industries. Governments trying to respond to such quicksilver businesses needed to ensure that young people were well-educated, creative and adaptable, he said.
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Talking Troubled Turkey - NYTimes.com - 0 views
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Talking Troubled Turkey
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probably because most countries placed restrictions on cross-border capital flows, so that international borrowing and lending were limited.
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a bigger version of the same story unfolded in Asia: Huge money inflows followed by a sudden stop and economic implosion.
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Ukraine's Economy: Europe-Russia Tug of War Hampers Solutions - Businessweek - 0 views
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Ukraine Is Caught in a Tug of War
Nouriel Roubini explains why many previously fast-growing economies suddenly find thems... - 0 views
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Nonetheless, the threat of a full-fledged currency, sovereign-debt, and banking crisis remains low, even in the Fragile Five, for several reasons
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Many also have sounder banking systems, while their public and private debt ratios, though rising, are still low
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a large war chest of reserves
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The tragedy of Argentina: A century of decline | The Economist - 0 views
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The tragedy of Argentina A century of decline
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In the 43 years leading up to 1914, GDP had grown at an annual rate of 6%, the fastest recorded in the world.
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The country ranked among the ten richest in the world, after the likes of Australia, Britain and the United States, but ahead of France, Germany and Italy.
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Our Schumpeter columnist: What exactly is an entrepreneur? | The Economist - 0 views
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What exactly is an entrepreneur?
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Schumpeterians distinguish between “replicative” entrepreneurs (who set up small businesses much like other small businesses) and “innovative” entrepreneurs (who upset and disorganise the existing way of doing things). They also distinguish between “small businesses” and “high-growth businesses” (most small businesses stay small). Both sorts have an important role in a successful economy
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In a new paper Magnus Henrekson and Tino Sanandaji argue that the number of self-made billionaires a country produces provides a much better measure of its entrepreneurial vigour than the number of small businesses.
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Robert J. Shiller attributes Japan's incipient recovery - and weak growth elsewhere - t... - 0 views
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The Global Economy’s Tale Risks
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Fluctuations in the world’s economies are largely due to the stories we hear and tell about them. These popular, emotionally relevant narratives sometimes inspire us to go out and spend, start businesses, build new factories and office buildings, and hire employees; at other times, they put fear in our hearts and impel us to sit tight, save our resources, curtail spending, and reduce risk. They either stimulate our “animal spirits” or muffle them.
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The output gap for the world’s major advanced economies, as calculated by the IMF, remains disappointing, at -3.2% in 2013, which is less than half-way back to normal from 2009, the worst year of the global financial crisis, when the gap was -5.3%.
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Do not kid yourself that the eurozone is recovering - FT.com - 0 views
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Comparing the first half of 2007 and the first half of 2013, real GDP contracted by an accumulated 1.3 per cent in the eurozone, 5.3 per cent in Spain and 8.4 per cent in Italy.
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In the same period investment was down by an accumulated 19 per cent in the eurozone – and 38 per cent in Spain and 27 per cent in Italy. Between the first quarter of 2007 and the first quarter of 2013, employment fell 17 per cent in Spain and 2 per cent in Italy.
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Italy is stuck with a combination of an unsustainable high level of public debt and no productivity growth. It has essentially two options to adjust – become like Germany, or leave the eurozone. The country is unable to do the first, and unwilling to do the latter
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Silicon Valley Tries to Remake the Idea Machine - NYTimes.com - 0 views
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Silicon Valley Tries to Remake the Idea Machine
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The federal government now spends $126 billion a year on R. and D., according to the National Science Foundation. (It’s pocket change compared with the $267 billion that the private sector spends.) Asian economies now account for 34 percent of global spending; America’s share is 30 percent.
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“It’s the unique ingredient of the U.S. business model — not just smart scientists in universities, but a critical mass of very smart scientists working in the neighborhood of commercial businesses,
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Shipping Costs Start to Crimp Globalization - NYTimes.com - 0 views
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The cost of shipping a 40-foot container from Shanghai to the United States has risen to $8,000, compared with $3,000 early in the decade, according to a recent study of transportation costs. Big container ships, the pack mules of the 21st-century economy, have shaved their top speed by nearly 20 percent to save on fuel costs, substantially slowing shipping times.
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Jeffrey E. Garten, the author of “World View: Global Strategies for the New Economy” and a former dean of the Yale School of Management, said that companies “cannot take a risk that the just-in-time system won’t function, because the whole global trading system is based on that notion.” As a result, he said, “they are going to have to have redundancies in the supply chain, like more warehousing and multiple sources of supply and even production.”
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In a more regionalized trading world, economists say, China would probably end up buying more of the iron ore it needs from Australia and less from Brazil, and farming out an even greater proportion of its manufacturing work to places like Vietnam and Thailand.
China Exports Pollution to U.S., Study Finds - NYTimes.com - 0 views
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“We’re focusing on the trade impact,” said Mr. Lin, a professor in the department of atmospheric and oceanic sciences at Peking University’s School of Physics. “Trade changes the location of production and thus affects emissions.”
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“Dust, ozone and carbon can accumulate in valleys and basins in California and other Western states,” the statement said.Black carbon is a particular problem because rain does not wash it out of the atmosphere, so it persists across long distances, the statement said. Black carbon is linked to asthma, cancer, emphysema, and heart and lung disease.
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The study’s scientists also looked at the impact of China’s export industries on its own air quality. They estimated that in 2006, China’s exporting of goods to the United States was responsible for 7.4 percent of production-based Chinese emissions for sulfur dioxide, 5.7 percent for nitrogen oxides, 3.6 percent for black carbon and 4.6 percent for carbon monoxide.
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Homeowners in Poland Borrowed in Swiss Francs, and Now Pay Dearly - NYTimes.com - 0 views
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Homeowners in Poland Borrowed in Swiss Francs, and Now Pay Dearly
China's Hurdle to Fast Action on Climate Change - NYTimes.com - 0 views
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China’s Hurdle to Fast Action on Climate Change
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Any hopes that American commitments to cut carbon emissions will have a decisive impact on climate change rely on the assumption that China will reciprocate and deliver aggressive emission cuts of its own.
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Fast economic growth in China and India is projected to fuel a substantial increase in carbon pollution over coming decades, despite big improvements in energy efficiency and the decarbonization of their energy supply
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