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Gene Ellis

Ghana Says, Hey, Guess What? We're Not Poor Anymore! | Todd Moss | Global Development: ... - 0 views

blogs.cgdev.org/...2%80%99re-not-poor-anymore.php

ghana says guess poor todd moss development views center

shared by Gene Ellis on 19 Feb 13 - No Cached
  • Gene Ellis on 19 Feb 13
     
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Gene Ellis

No ordinary recession: There is much to fear beyond fear itself | vox - 0 views

www.voxeu.org/...e-much-fear-beyond-fear-itself

shared by Gene Ellis on 18 Jul 12 - No Cached
  • Richard Koo (2003) coined the term “balance sheet recession” to characterise the endless travail of Japan following the collapse of its real estate and stock market bubbles in 1990. The Japanese government did not act to repair the balance sheets of the private sector following the crash. Instead, it chose a policy of keeping bank rate near zero so as to reduce deposit rates and let the banks earn their way back into solvency. At the same time it supported the real sector by repeated large doses of Keynesian deficit spending. It took a decade and a half for these policies to bring the Japanese economy back to reasonable health.
  • At the time, a majority of forecasts predicted that the economy would slip back into depression once defence expenditures were terminated and the armed forces demobilised. The forecasts were wrong. This famous postwar “forecasting debacle” demonstrated how simple income-expenditure reasoning, ignoring the state of balance sheets, can lead one completely astray.
  • The lesson to be drawn from these two cases is that deficit spending will be absorbed into the financial sinkholes in private sector balance sheets and will not become effective until those holes have been filled.
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  • The present administration, like the last, would like to recapitalise the banks at least partly by attracting private capital. That can hardly be accomplished as long as the value of large chunks of the banks’ assets remains anybody’s guess.
  • When the entire private sector is bent on shortening its balance sheet and paying down debt, the public sector’s balance sheet must move in the opposite, offsetting direction. When the entire private sector is striving to save, the government must dis-save. The political obstacles to doing these things on a sufficient scale are formidable.
  • The Swedish policy following the 1992 crisis has been often referred to in recent months. Sweden acted quickly and decisively to close insolvent banks, and to quarantine their bad assets into a special fund.2 Eventually, all the assets, good and bad, ended up in the private banking sector again. The stockholders in the failed banks lost all their equity while the loss to taxpayers of the bad assets was minimal in the end. The operation was necessary to the recovery but what actually got the economy out of a very sharp and deep recession was the 25-30% devaluation of the krona which produced a long period of strong export-led growth.
  • So the private sector as a whole is bent on reducing debt.
  • Businesses will use depreciation charges and sell off inventories to do so. Households are trying once more to save. Less investment and more saving spell declining incomes.
  • now that they know how dangerous their leverage of yesteryear was.
  • Fiscal stimulus will not have much effect as long as the financial system is deleveraging.
  • er self-imposed constitutional balanced budget requirements and are consequently acting as powerful amplifiers of recession with respect to both income and employment.
  • Almost all American states now suffer und
Gene Ellis

Eurozone has crossed the Rubicon | DAWN.COM - 0 views

dawn.com/...rozone-has-crossed-the-rubicon

shared by Gene Ellis on 18 Jul 12 - No Cached
  • It is now a fair guess that the European Monetary Union (or the eurozone) has crossed the Rubicon and is heading towards breakup or collapse. In the periphery of Greece, Portugal, Ireland and Spain, there is despair at the ever-deepening recession. In France and Italy there is burgeoning opposition to long-term austerity. In Germany there is frustration at feckless southerners.
  • The disaster is likely to start in Greece. The country is in the midst of an unprecedented depression, made largely in Brussels.
  • Yet the EU is insisting that the country should stick with the failed programme by imposing huge cuts in public expenditure in 2012-14.
Gene Ellis

Tunisia's Government Mortgages Economic Future - Al-Monitor: the Pulse of the Middle East - 0 views

www.al-monitor.com/...onomy-crisis-foreign-debt.html

shared by Gene Ellis on 29 Oct 13 - No Cached
  • The average cost of Tunisia's external debt is nearly 4%, and is mainly denominated in euros and US dollars.
  • Today, Tunisia’s situation under the troika comes down to the fact that the country is borrowing to consume and not to invest.
  • Another fact that will render paying off the debt more difficult is that the redeemable portion of the foreign debt within 10 to 20 years or more is 81.3 % of all loans taken from abroad.
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  • But where has the money gone? The answer is not difficult to guess. The debts were neither used for investment nor infrastructure or the creation of job opportunities. Instead, they were partly spent on reabsorbing the trade deficit and artificially replenishing reserve currencies.
  • This plan of action has been negative at all levels, to the extent that international financial institutions have already cut off their monetary support to Tunisia.
Gene Ellis

France and Europe: More special pleading | The Economist - 0 views

www.economist.com/...be-italy-more-special-pleading

shared by Gene Ellis on 26 Apr 14 - No Cached
  • Bureaucratic France has 90 public-sector staff per 1,000 people compared to 50 in Germany. Most enjoy almost total job security.
  • France’s serial requests are treated as duplicitous by those who ask why big countries break rules that smaller ones have to obey (a game that first began when France and Germany bust the stability pact in 2002). The Hollande government has already been given one delay
  • The best guess is that France will yet again get its way,
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  • Another would mark the third time in seven years that France has missed targets.
  • France and Europe More special pleading
Gene Ellis

Shifting energy trends blunt Russia's natural-gas weapon - The Washington Post - 0 views

www.washingtonpost.com/...3-a050-dc3322a94fa7_story.html

shared by Gene Ellis on 03 Mar 14 - No Cached
  • As clunky Soviet-era factories and mines have become more efficient or gone out of business, Ukraine’s domestic gas consumption has dropped nearly 40 percent over the past five years, cutting its imports from Russia in half, according to a report by Sberbank Investment Research.
  • Domestic consumption might drop further if Ukraine trims the generous subsidies it gives households using natural gas, although so few households are paying their bills that it might not matter. “People will go from not paying the lower price to not paying the higher price,” said Thane Gustafson, senior director of Russian energy for the consulting firm IHS CERA.
  • Even if residential customers paid up, the Ukrainian state energy company, Naftogaz, would lose money on those sales
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  • “An inefficient and opaque energy sector continues to weigh heavily on public finances and the economy,” the International Monetary Fund said, noting that energy subsidies reached 7.5 percent of Ukraine’s GDP in 2012. “The very low tariffs for residential gas and district heating cover only a fraction of economic costs and encourage one of the highest energy consumption levels in Europe,” the IMF said in December.
  • Now, the upheaval of the past two weeks has thrown Ukraine’s gas strategy into greater confusion. “There is no government and there are no agencies to do business with,” said Simon Pirani, senior research fellow at the Oxford Institute for Energy Studies. “How high up the list of priorities it is is anyone’s guess.”
  • Even if the deals with foreign companies advance, Ukraine will need to import about half of its gas needs,
  • In 2012, many European industrial users and power plants switched to coal, and Russia agreed to renegotiate.
  • The link between gas and oil prices has been severed for about half of Russia’s gas sales.
  • Gazprom also agreed to eliminate contract clauses that said a country such as Germany could reship Russian gas only with Gazprom’s approval.
  • As a result, Ukraine ended up paying more than Gazprom’s customers in Germany, and last year Ukraine imported small quantities of natural gas from Germany and Hungary through pipelines in Slovakia and Poland, experts say. Germany buys gas from a variety of countries, but rerouted Russian gas has effectively been undercutting other Russian gas.
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