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Gene Ellis

Will bank supervision in Ohio and Austria be similar? A transatlantic view of the Singl... - 0 views

www.voxeu.org/...w-single-supervisory-mechanism

bank supervision ohio austria single mechanism

shared by Gene Ellis on 25 Mar 13 - No Cached
  • At the inception of the euro, it was thought possible to have a centralised monetary authority and decentralised bank supervision, but the inability to separate sovereign-debt problems from those of bank stability has led the leaders of the member states of the EU to agree to centralise supervision in the Single Supervisory Mechanism.
  • The states retained their powers to supervise the small number of state-chartered banks that seemed little threat to the stability of the new more tightly regulated national system.
  • What was not anticipated was that the more stable national banks would fail to adequately supply credit to the economy.
  • ...9 more annotations...
  • States, not the federal government, regulated securities markets and insurance, leaving little oversight for interstate business.
  • The 1930s New Deal reforms added more agencies, including the Securities Exchange Commission and the Federal Deposit Insurance Corporation, complicating political oversight by giving them distinctive missions,
  • Yet, it was the trust companies, lacking access to emergency liquidity that caused the 1907 crisis to erupt and spread to the banks.
  • Consequently, when onerous rules, such as the prohibition on branch banking prevented banks from financing the emerging giant corporations, markets, assisted by more lightly regulated trust and insurance companies, stepped in.
  • To remedy these defects, the Federal Reserve System, established in 1913, was to act as a lender of last resort, bringing all systemically important institutions – national banks , large state banks and trust companies – under the federal supervision of the Office of the Comptroller of the Currency or the Federal Reserve banks.
  • But, they have not converged, especially with regard to state banks that often pressure state regulators.
  • Surveillance of a bank is not dependent on the geographic scope of its operations, as in the US, but on its systemic significance measured in several dimensions and whether it receives financial assistance from the European Stability Mechanism.
  • the ECB’s direct authority is more encompassing.
  • The ECB will not be directly involved in crisis management and bank resolution, which will be the responsibility of the national authorities. This autonomy will not be incentive compatible until EU directives are adopted for a unified deposit insurance system and a funded single resolution authority.
Gene Ellis

Efforts to Revive the Economy Lead to Worries of a Bubble - NYTimes.com - 0 views

dealbook.nytimes.com/...my-lead-to-worries-of-a-bubble

shared by Gene Ellis on 18 Apr 13 - No Cached
  • The Federal Reserve is well into its third round of “quantitative easing,” in which it buys longer-term assets to bring down long-term lending rates.
  • In March, a smaller percentage of working-age people were actually working than at any other time since 1979.
  • In March, a smaller percentage of working-age people were actually working than at any other time since 1979.
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  • Ben S. Bernanke and company would also like to kindle inflation expectations, spurring people to buy and companies to invest today instead of waiting until tomorrow. Supposedly, all of this will drive a self-sustaining economic recovery.
  • Alternatively, many investors look at something called the Q, devised by the economist James Tobin, which compares stock prices with corporate net worth. The nonfinancial companies are overpriced by 57 percent.
  • Investors are desperate for yield and are paying up for riskier assets.
  • There are more reliable measures of stock market value, and they look frothy. One gauge, the price of stocks based on the past decade of earnings, is named after the Yale economist Robert J. Shiller. Using that, stocks are too expensive by 65 percent.
  • Instead, the Fed has kindled speculation.
  • Last month, investors were paying more for such loans than at any time in the last five years. They are snapping up billions of dollars in securities made up of subprime auto loans.
Gene Ellis

U.S. Example Offers Hope for Cutting Carbon Emissions - NYTimes.com - 0 views

www.nytimes.com/...-cutting-carbon-emissions.html

shared by Gene Ellis on 20 Mar 13 - No Cached
  • Fatih Birol, chief economist of the International Energy Agency in Paris, points out that if civilization is to avoid catastrophic climate change, only about one third of the 3,000 gigatons of CO2 contained in the world’s known reserves of oil, gas and coal can be released into the atmosphere.
Gene Ellis

ECB Resisting Calls to Cheapen Euro as Currency War Rages - SPIEGEL ONLINE - 0 views

www.spiegel.de/...rrency-war-rages-a-882462.html

shared by Gene Ellis on 21 Feb 13 - No Cached
  • The central bank chief is coming under increasing pressure because he can't quite bring himself to embrace the concept of quantitative easing, the latest fashion in the world of finance. It involves central bankers engaging in the large-scale purchase of bonds issued by their governments and other securities, thereby injecting huge sums of money into the financial system. In this way, they hope to stimulate the domestic economy and keep their own currencies cheap, thereby strengthening exports.
  • The US central bank, the Federal Reserve Bank, has also been printing money to a previously unimaginable extent since the financial crisis. Calling its efforts QE 1 and QE 2, the Fed has pumped more than a trillion dollars into the US economy.
  • The country is in the process of "boldly rebuilding" monetary policy, Prime Minister Shinzo Abe declared. Indeed, the Japanese yen has lost 12 percent of its value against the dollar in the last two months.
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  • For years, China has defended its currency by pegging the exchange rate to the dollar, and the Swiss National Bank now only permits appreciation of the franc up to a certain limit, because investors have viewed the Swiss currency as one of the last safe currencies since the outbreak of the sovereign debt crisis in Europe.
Gene Ellis

'Run For Your Lives': Printing Money with the IMF - SPIEGEL ONLINE - 0 views

www.spiegel.de/...of-last-resort-a-796280-3.html

shared by Gene Ellis on 21 Feb 13 - No Cached
  • Most European leaders have nothing against using the central bank's reserves as a source of financing, as became evident at the Cannes summit. Important politicians like European Council President Herman Van Rompuy and French President Sarkozy proposed making IMF "special drawing rights" available
  • It appears that the euro crisis is approaching its endgame. Many promises made when the common currency was introduced have already been broken. The initial stipulation that only stable countries be allowed in, for example, quickly proved illusory once Italy and Greece were accepted.
  • German taxpayers were also promised that they would never be held liable for the debts of other countries in the euro zone. But then came the first and second bailout packages for Greece and the European bailout fund.
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  • The question the German government now faces is whether to preserve the monetary union or have a stable currency.
Gene Ellis

Tourists Also Tell Greece No: Drop in Summer Bookings - WSJ.com - 0 views

online.wsj.com/...4065704577424310175114578.html

tourists greece summer bookings wsj com

shared by Gene Ellis on 29 May 12 - No Cached
  • Greek-vacation bookings from Germany and the rest of Europe are down sharply, as would-be tourists take fright at the prospect of strikes and street protests.
  • Early reservations for this summer's tourist season are down by around 15% from a year ago. Last year's record total of 16.4 million visitors is already out of reach, he says.
  • The industry accounts for about one-sixth of economic activity and nearly one in five jobs.
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  • If the decline in bookings continues, it would mean about 1.5 million fewer tourists coming to Greece this year compared to last, shaving more than a percentage point off gross domestic product and jeopardizing 100,000 summertime jobs.
  • Greece is one of the world's top 20 tourist destinations, traditionally drawing about half of its visitors from other European Union countries—especially from Germany and the U.K.
  • Prices are down some 15% from last year, according to SETE, following a 10% cut in rates charged by hotel and tour operators in 2011.
  • Leading German tour operator TUI AG says its Greek vacation bookings were down 30% up to March. European travel agency Thomas Cook TCG.LN +0.23% said German bookings for Greece so far are also down by 30% compared with 2011, despite discounts of as much as 20%.
Gene Ellis

PIMCO | - ​​TARGET2: A Channel for Europe's Capital Flight - 0 views

www.pimco.com/...or-Europes-Capital-Flight.aspx

shared by Gene Ellis on 09 Jul 12 - No Cached
  • Its full name is more than a mouthful. Trans-European Automated Real-time Gross Settlement System is better known as TARGET2 for short. It is the behind-the-scene payments system that conveniently enables citizens across the euro area to settle electronic transactions in euro. And at just over €500 billion, its TARGET2 claim on the Eurosystem is also the largest and fastest growing item on the Bundesbank’s balance sheet, as well as a source of much misunderstanding and debate.
  • The allocation of TARGET2 balances among the seventeen national central banks, which together with the ECB make up the Eurosystem, reflects where the market allocates the money created by the ECB. The fact that the Bundesbank has a large TARGET2 claim (asset) on the Eurosystem, while national central banks in southern Europe and Ireland together have an equally large TARGET2 liability, simply reflects that a lot of the ECB’s newly created money has ended up in Germany. Why? Because of capital flight.
  • Since the euro eliminated exchange rate risk among its member states, Germany has invested a substantial portion of its savings in Europe’s current account deficit countries. Some of those savings are now returning home. That’s the capital flight.
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  • The ECB stepped into the void left by foreign investors pulling their savings out of these current account deficit countries by lending their banks more money.
  • When large capital flight to Germany occurred before the euro’s introduction, the deutschemark would appreciate against other European currencies. While pegged against the deutschemark, these exchange rates were still flexible. That flexibility disappeared with the euro. When capital flight occurs today, the Bundesbank effectively ends up with loans to the other national central banks that are reflected in the TARGET2 claims on the Eurosystem. 
  • Debt overhangs persist, growth is mediocre and the governance structure – a common monetary policy without a centralized fiscal policy – is a challenge.
  • The ECB has allowed banks to borrow as much money as they want for up to three years. Indeed, at the end of February banks were borrowing €1.2 trillion from the ECB, twelve times the amount of their required reserves. With so much excess liquidity in the money markets, further capital flight is likely to cause a disproportionable share of this money to end up in Germany
  • Concerned about the stability of the euro, Germany’s savers are shifting their money into real estate. German residential house prices and rents rose by 4.7% last year, the fastest increase since 1993’s reunification boom. So far, Germans are not leveraging to buy houses. Growth in German mortgages is paltry at just 1.2% per annum according to the ECB as of December 2011, but in our view all ingredients for a debt-financed house price boom are there. Distrust in the euro is rising,
  • The ECB’s generous monetary policy will delay the internal devaluation adjustment of the eurozone’s current account deficit countries.
  • Mexico’s current account deficit fell by 5.3% of GDP in 1995, according to Haver Analytics, in the wake of capital flight following the government’s decision to float the peso in 1994, while its recession lasted only one year.
Gene Ellis

Why Is Zambia So Poor? And Will Things Ever Get Better? - 0 views

www.psmag.com/...zation-mining-corruption-66080

Zambia Why so poor?

shared by Gene Ellis on 09 Jan 14 - No Cached
  • Sixty-four percent of the population lives on less than $1 per day, 14 percent have HIV, 40 percent don’t have access to clean drinking water. Almost 90 percent of women in rural areas cannot read or write. Name a category—schools, health care, environment—and I’ll give you statistics that will depress the shit out of you.
  • For more than 150 years, the only reason to come to Kitwe—to Zambia, really—was the copper.
  • Most of the buildings in Kitwe, the roads, the health clinics, the schools, were built by the national mining company
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  • At its peak, the Zambia Consolidated Copper Mines company employed more than 65,000 Zambians and carried out services like water delivery and waste collection for five cities in the Copper Belt Province.
  • Mining employment has dropped to just 30,000, half of its glory-days peak, and the job of maintaining all that company housing and infrastructure has reverted back to the government.
  • The stats identify Switzerland as Zambia’s primary export market. This is not an indicator that Zambia hosts a thriving chocolate and suspenders sector, but rather that its copper trades are booked in the jurisdiction where they are least likely to be taxed.
  • Many of the mining companies pay just 0.6 percent royalties to Zambia, far below the already-meager industry standard of three percent.
  • And then there’s the Chinese. They arrived like a well-packed picnic, everything in shipping crates ready to be unpacked. Their own materials, their own equipment, their own workers, their own fences. If you were designing a foreign investment not to benefit the host community, this is what it would look like.
  • This is Namwile Uzondile, the director of a rural health education project.
  • Last year Namwile conducted a survey of prostitutes here in Kitwe, and found that at least half of them had education certificates, but couldn’t find work. Most had been married off early, 15 or 16, and since then had either left their husbands or lost them to AIDS.
  • First, you go to the tribal chief. Ninety-four percent of the land in Zambia is customary or traditional, no one has a title to it. It’s not just sitting there, people are living on it, farming, grazing animals, it’s just technically under the control of a chief.
  • In Zambia most of the chiefs require a gift just to get a meeting. This might mean taking them lunch at a restaurant in Lusaka, or it could mean buying their daughter a car—it’s up to them.
  • Another reason Zambia lacks skills is that some parts of the workforce operate as cartels. Take lawyers. Zambia only has 1,000 of them, and they’re concentrated where the money is: Lusaka (government), Copper Belt (mining) and Livingstone (safari tourists).
  • Last year, only six lawyers were admitted to the bar out of 164 who took the exam. The year before that, it was 16 out of 145. Keep in mind, these aren’t people coming in off the streets. These are people who have a law degree.
  • More than 60 percent of Zambia’s government revenue comes from the copper mines.
  • Taxing all this informal activity would be costly in both resources and voter goodwill. In 2012, Zambia collected just $2.3 million in income taxes from its citizens.
  • It goes as high up as you want to follow it. Michael Sata, the president of Zambia, appointed his uncle the finance minister, his nephew the deputy finance minister, his niece the local government minister, and cousins as ambassador to Japan and chief justice.
  • Zambia’s cabinet has ballooned to 20 ministers and 47 deputy ministers, the largest in Africa. With salaries three to four times higher than opposition MPs and each ministerial post bundled with perks like a company car, free fuel, house servants, and mobile phone talk-time, you get the feeling politicians aren’t jumping from opposition into government on moral sentiment alone.
  • But even if Zambia was run by a coalition of charitable technocrats and Mormon philanthropists, that wouldn’t solve the most fundamental problem of all: There simply isn’t that much money to go around.
  • In 2011, Zambia spent a total of $4.3 billion running itself. Stretch that to cover every man, woman, and child, and it amounts to just $325 per person per year. That amount—less than a dollar per person per day—has to cover education, health care, infrastructure, law enforcement, foreign debt … everything.
  • Now she goes all NGO. “Little government capacity,” she says, is the nicest way to put it. “There are simply no systems for routine government services,” she says. Getting a license, a permit, certificates, approvals to start work, visas for expats to fly down here—nothing is in one place, nothing is fast or easy.
  • And that’s just the bureaucracy. Then there are the cops that pull you over to ask for 50 kwacha ($10); the schools with slots reserved for paying parents; the hospitals that swear the earliest appointment, the only available medicine, is six months away until you reach into your pocket.
  • “Sometimes we have to pay for the inspectors to come to our mines,” Jane says.
  • The conversation goes like this: Jane tells the local certification body that she needs an inspector to sign off for a permit. The local certification body tells her that they would be happy to come out to the site, but they don’t have fuel for their cars, or enough petty cash to pay per diems. Jane offers to pay their costs, but only their costs, and the payments aren’t related to clearing the inspection.
  • The company has even paid the police to follow up on complaints or to investigate thefts. “They say, ‘We don’t have this in our budget’ or ‘We’ll need you to pay for it,’” Jane says. So the company fixes the police cars, covers their travel expenses, treats them to lunch.
  • “We tell them, ‘The company I work for, we’re not going to pay up.’ But at the end of the day, they know you’re on a short timeline, and they aren’t.”
  • Thomas’ family told him his nephews didn’t need to be in school. From their perspective, that’s not totally irrational. In a country with so few formal jobs and so much competition for getting them, I can see how spending hundreds of hours, thousands of kwachas, on education would seem superfluous. Thomas’ daughter wants to become a lawyer. You could almost forgive Thomas if he told her that the bar exam failure rate is more than 90 percent, so what’s the use?
  • International investors pledged $750 million last year to build infrastructure.
Gene Ellis

Talking Troubled Turkey - NYTimes.com - 0 views

www.nytimes.com/...n-talking-troubled-turkey.html

shared by Gene Ellis on 31 Jan 14 - No Cached
  • Talking Troubled Turkey
  • probably because most countries placed restrictions on cross-border capital flows, so that international borrowing and lending were limited.
  • a bigger version of the same story unfolded in Asia: Huge money inflows followed by a sudden stop and economic implosion.
  • ...2 more annotations...
  • And the same forces that sent money sloshing into Turkey also make the world economy as a whole highly vulnerable.
  • If this is a good description of our situation, and I believe it is, we now have a world economy destined to seesaw between bubbles and depression
Gene Ellis

Nouriel Roubini explains why many previously fast-growing economies suddenly find thems... - 0 views

www.project-syndicate.org/...selves-facing-strong-headwinds

shared by Gene Ellis on 05 Feb 14 - No Cached
  • Nonetheless, the threat of a full-fledged currency, sovereign-debt, and banking crisis remains low, even in the Fragile Five, for several reasons
  • All have flexible exchange rates,
  • a large war chest of reserves
  • ...5 more annotations...
  • and fewer currency mismatches
  • Many also have sounder banking systems, while their public and private debt ratios, though rising, are still low
  • But the short-run policy tradeoffs that many of these countries face – damned if they tighten monetary and fiscal policy fast enough, and damned if they do not – remain ugly.
  • As it is widely known, transfer pricing is the major tool for corporate tax avoidance, and it creates current account deficit when a multinational company receives from its own branch
  • abroad, the previously transferred own profit, as a debt.
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

New Hurdle for Resolving Euro Crisis: Constitutions - WSJ.com - 0 views

online.wsj.com/...3864604579069350790061202.html

shared by Gene Ellis on 29 Oct 13 - No Cached
  • In the latest example, Portugal's Constitutional Court on Thursday shot down the government's attempts to improve the country's competitiveness by making it easier for companies to shed workers—as demanded under the terms of the country's international bailout. The court ruled against the measures because, it said, they went against the principle of firing workers only when there was just cause.
  • Courts have been able to thwart some attempts to shrink the state bureaucracy or make the labor force more flexible.
  • Portugal's 1976 constitution calls for "opening the path to a socialist society." It obliges the state to promote employment, move toward free health and education services and even develop "centers of rest and holiday" for workers.
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  • So perhaps it comes as little surprise that, in the last five months, the country's Constitutional Court has struck down four government measures, including a tax on unemployment benefits and temporary trims in wages and pensions that the judges said were unfairly targeted at civil servants.
  • Last month the court ruled against a plan to steer redundant public employees into a retraining program and lay off those who aren't placed in new jobs after 12 months
  • "To fulfill what the [judges] want, we need to leave the euro," said Medina Carreira, an economist and former Portuguese finance minister.
  • Under the terms of its 2011 bailout, the government has until the end of this year to move 25,000 civil servants into a labor reserve—at reduced pay—that many view as a prelude to layoffs.
  • "In several cases, local political norms seem incompatible with euro-area membership in the long term," said J.P. Morgan Chase economist Alex White.
  • Unlike the U.S. Constitution, which has seven articles and 27 amendments, Europe's national charters tend to be lengthy and prescriptive, limiting the space for judicial interpretation. Portugal's has 296 articles, Italy's has 139 and Greece's has 120.
  • "The constitution can't set a series of obligations for a state that simply has no money to fulfill them,"
Gene Ellis

RealTime Economic Issues Watch | Transatlantic Economic Sanctions Against Russia - 0 views

blogs.piie.com/realtime

shared by Gene Ellis on 25 Apr 14 - No Cached
  • Transatlantic Economic Sanctions Against Russia
  • First, I have recommended to government officials that US and EU negotiators give priority to energy cooperation and promotion of US exports of liquefied natural gas to Europe during the fourth round of talks on the Transatlantic Trade and Investment Partnership (TTIP) that start on March 10 in Brussels. Efforts should be made to conclude this part of the agreement quickly and immediately implement the obligations on a provisional basis
  • Second, the United States and the European Union should call for special consultations in the International Energy Agency (IEA) to review current oil and gas supply arrangements and reserves in Europe. The IEA should also be called on to assess the implications of the crisis in Ukraine for member and nonmember countries and their options for dealing with potential supply disruptions. Ukraine participates in consultations with IEA members on a regular basis anyway and clearly should be doing so now.
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  • they would help inoculate European economies against the adverse effects of energy disruptions in the medium term.
  • Consideration should be given to invoking GATT Article XXI, which provides exceptions for national security reasons from rights and obligations under the World Trade Organization (WTO), for example. Invoking this WTO exception would allow across-the-board actions against Russia without prior notification or even justification. The national security exception of Article XXI is that broad. In brief, the United States and the European Union could remove in one step all the WTO benefits they accorded Russia when it acceded to the WTO in August 2012. Doing so would disrupt bilateral trade and investment, possibly kicking tariffs back up to Smoot-Hawley levels of the 1930s.
Gene Ellis

Chevron and Ukraine Set Shale Gas Deal - NYTimes.com - 0 views

www.nytimes.com/...ne-sign-deal-on-shale-gas.html

shared by Gene Ellis on 06 Nov 13 - No Cached
  • Last year Ukraine consumed about 50 billion cubic meters of natural gas, most of it imported from Russia, while producing about 19 billion cubic meters, according to the BP Statistical Review of World Energy.
  • Shale gas technologies are altering the geopolitics of energy from Russia to the Middle East. Three territories — Russia, Iran and Qatar — hold about half the conventional reserves of natural gas. But shale is found in many other places, including India, China, Australia and in Eastern Europe, undercutting the power of the oil sheikhs and the Kremlin.
  • Ukraine, despite producing some domestic gas by conventional extraction, remains highly dependent on Russia’s Gazprom, which cut off its supplies in 2006 and 2009 in pricing disputes. As a result, Ukraine pays exceptionally high prices for natural gas,
  • ...2 more annotations...
  • Europe depends on Russia for about 40 percent of its imported gas, most transmitted through Ukraine.
  • The appearance of imported cheap liquefied natural gas on the European market from Qatar and reduced demand have already led Gazprom to negotiate cuts of about 10 percent in contracts with Western European utilities,
Gene Ellis

How Putin Forged a Pipeline Deal That Derailed - NYTimes.com - 0 views

www.nytimes.com/...eline-deal-that-derailed-.html

shared by Gene Ellis on 05 Feb 15 - No Cached
  • How Putin Forged a Pipeline Deal That Derailed
  • The pipeline, known as South Stream, was Mr. Putin’s most important European project, a tool of economic and geopolitical power critical to twin goals: keeping Europe hooked on Russian gas, and further entrenching Russian influence in fragile former Soviet satellite states as part of a broader effort to undermine European unity.
  • The bill that Parliament took up on April 4 was arcane. But it swept aside a host of European regulations — rules that Mr. Putin did not want to abide by — for a pipeline that would deliver gas throughout southern Europe. Continue reading the main story Related Coverage In Diplomatic Defeat, Putin Diverts Pipeline to TurkeyDEC. 1, 2014
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  • In France, the leader of the far-right National Front, Marine Le Pen, recently acknowledged that her party had received a loan for 9 million euros, or about $11 million, from a Kremlin-linked bank.
  • Faced with punishing sanctions, a petro-economy pushed to the brink by plunging oil prices and the wildly gyrating value of the ruble, Mr. Putin this month halted the project.
  • Geological surveys suggested that Bulgaria could be sitting atop an underground ocean of natural gas, enough to be self-sufficient for years, enough to eclipse the advantages of South Stream.
  • On April 4, 2014, soon after Mr. Putin annexed Crimea, Bulgaria’s Parliament gave initial passage to a bill that effectively exempted South Stream from a number of European Union regulations, most important, the one that would have forced Gazprom to allow non-Russian gas to flow through the pipeline.
  • “If I hear one more word about competition, I’m going to freeze your you-know-whats off,” Mr. Putin reportedly shouted.
  • The anti-fracking movement became so broad that in January 2012, Parliament banned not only the extraction of shale gas, but even exploration that would quantify the country’s reserves.
  • When the Bulgarian government refused, the European Union cut off tens of millions of euros in regional development funds.
  • In desperate need of the European funds, the prime minister announced the next day that South Stream would be halted until it had full European Union approval.
  • While “he overreached, and he underestimated the response” to his intervention in Ukraine, said Mr. Gray, the former American diplomat, the Russian leader has been “quite effective” in countries like Bulgaria.“He won a great deal by getting Nabucco stopped,” Mr. Gray said. “Ultimately, his goal is to keep as much control over the former parts of the Soviet empire as possible.”
Gene Ellis

Productivity: Technology isn't working | The Economist - 0 views

www.economist.com/...higher-productivity-and-better

shared by Gene Ellis on 05 Feb 15 - No Cached
  • Technology isn’t working
  • Technology isn’t working
  • n the 1970s the blistering growth after the second world war vanished in both Europe and America. In the early 1990s Japan joined the slump, entering a prolonged period of economic stagnation.
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  • Between 1991 and 2012 the average annual increase in real wages in Britain was 1.5% and in America 1%, according to the Organisation for Economic Co-operation and Development, a club of mostly rich countries.
  • Real wage growth in Germany from 1992 to 2012 was just 0.6%; Italy and Japan saw hardly any increase at all.
  • And the dramatic dip in productivity growth after 2000 seems to have coincided with an apparent acceleration in technological advances as the web and smartphones spread everywhere and machine intelligence and robotics made rapid progress.
  • A second explanation for the Solow paradox, put forward by Erik Brynjolfsson and Andrew McAfee (as well as plenty of techno-optimists in Silicon Valley), is that technological advances increase productivity only after a long lag.
  • John Fernald, an economist at the Federal Reserve Bank of San Francisco and perhaps the foremost authority on American productivity figures, earlier this year published a study of productivity growth over the past decade. He found that its slowness had nothing to do with the housing boom and bust, the financial crisis or the recession. Instead, it was concentrated in ICT industries and those that use ICT intensively.
  • Once an online course has been developed, it can be offered to unlimited numbers of extra students at little extra cost.
  • For example, new techniques and technologies in medical care appear to be slowing the rise in health-care costs in America. Machine intelligence could aid diagnosis, allowing a given doctor or nurse to diagnose more patients more effectively at lower cost. The use of mobile technology to monitor chronically ill patients at home could also produce huge savings.
  • Health care and education are expensive, in large part, because expansion involves putting up new buildings and filling them with costly employees. Rising productivity in those sectors would probably cut employment.
  • The integration of large emerging markets into the global economy added a large pool of relatively low-skilled labour which many workers in rich countries had to compete with. That meant firms were able to keep workers’ pay low.
  • By creating a labour glut, new technologies have trapped rich economies in a cycle of self-limiting productivity growth.
  • Productivity growth has always meant cutting down on labour. In 1900 some 40% of Americans worked in agriculture, and just over 40% of the typical household budget was spent on food. Over the next century automation reduced agricultural employment in most rich countries to below 5%,
  • A new paper by Peter Cappelli, of the University of Pennsylvania, concludes that in recent years over-education has been a consistent problem in most developed economies, which do not produce enough suitable jobs to absorb the growing number of college-educated workers.
Gene Ellis

Europe's dangerous addiction to Russian gas needs radical cure - FT.com - 0 views

www.ft.com/...64-11e3-8b15-00144feabdc0.html

shared by Gene Ellis on 25 Apr 14 - No Cached
  • Europe’s dangerous addiction to Russian gas needs radical cure
  • “It really boils down to this: no nation should use energy to stymie a people’s aspirations,” Mr Kerry said in Brussels, just as Russia’s Gazprom raised the price it charges Ukraine for gas.
  • Bernstein Research has calculated that to do so, Europe needs to eliminate 15 bcm of residential and industrial gas demand, invest $215bn and incur $37bn of annual costs in the form of higher-priced energy. That works out as $160 for every single person in Europe.
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  • A new energy corridor has just been sanctioned that will bring Caspian gas being developed by a BP-led consortium into the heart of Europe.
  • Import terminals are being built to receive liquefied natural gas (LNG) from places such as Qatar and Nigeria.
  • And countries such as the UK are moving ahead with developing their substantial reserves of shale gas.
  • There are 20 operational LNG regasification plants in the EU, with a combined import capacity of about 198 bcm of gas per year. A further 30 bcm/y are under construction. But Europe’s terminals are conspicuously underused. Imports of LNG have fallen sharply, partly because of the 2011 Fukushima nuclear disaster, which prompted Japan to switch to gas-fired generation and diverted LNG cargoes from Europe.
  • The question is: are European customers prepared to pay Japanese prices for LNG?” says one Brussels-based European gas industry official.
  • Arguably a more urgent task is to improve energy security by unifying the EU market – in particular, linking up the countries of eastern Europe.
  • If Europe is serious about reducing its dependence on Russian gas, it will have to take radical measures. Bernstein’s Mr Clint lists some: switching from gas to diesel power, closing gas-intensive industries such as oil refining, reducing gas consumption in heating and adding more coal-fired generation – which would inevitably increase carbon emissions.
  • Added to that, Europe is contractually obliged to continue taking delivery of Russian gas. Bernstein makes the point that Gazprom has about 120 bcm of take-or-pay contracts – with companies such as ENI, Edison and RWE – that require Europe to continue paying about $50bn for Russian gas. Many of these stretch way beyond 2020.
  • Europe accounts for half of Gazprom’s gas revenues, according to the company, and 71 per cent of Russia’s crude oil exports, according to the International Energy Agency.
  • “Gazprom has heard it all before,” said Jonathan Stern, director of gas research at the Oxford Institute of Energy Studies. “For the past 20 years Europe has been trying to diversify away from Russian gas and failed.”
  • A growing share of oil, largely from Rosneft, is flowing directly to China by pipeline. Lukoil last week started commercial production at its enormous West Qurna field in Iraq – much of whose production is likely to be sold in Asian markets, analysts say. And Novatek, together with CNPC of China, is building an LNG terminal that will help shift gas exports towards Asia.
  • Any reduction in imports from Russia thanks to Europe’s diversification strategy “is not a prospect for the next few years,” he said. “And by that time I think Russia will find alternative gas export markets, especially in an environment of strong Asian demand for gas.”
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