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Gene Ellis

Even Greece Exports Rise in Europe's 11% Jobless Recovery - Bloomberg - 0 views

www.bloomberg.com/...ope-s-11-jobless-recovery.html

undefined greece exports rise europe recovery bloomberg

shared by Gene Ellis on 21 Mar 13 - No Cached
  • “The current- account deficits of countries that have been under stress diminished over the last years considerably.”
  • Just two of 14 euro-zone government leaders have kept their posts in elections since late 2009 and extremists such as Golden Dawn in Greece are gaining support.
  • “The internal rebalancing in the euro area is progressing,” said Fels. “Some of them, especially Spain but also Portugal not to speak of Ireland, are regaining competitiveness.”
  • ...18 more annotations...
    • Gene Ellis
      Gene Ellis on 21 Mar 13
       
      This is the same sort of response which companies would have made to a depreciation in the local currency without the euro, but with the added problem of deflationary effects on the rest of the economy.
  • Ford Motor Co. (F) (F) said at the end of last year it will increase capacity near Valencia as it shuts plants in the U.K. and Belgium.
  • While a slide in imports accounts for some of the correction, Greece boosted its exports outside the EU by about 30 percent in the fourth quarter of 2012 from the previous year, while Italy’s rose 13 percent in January from a year ago, he said.
  • In Ireland, U.S. companies such as EBay Inc (EBAY) (EBAY)., Google Inc. (GOOG) (GOOG) and Facebook Inc (FB). all have expanded in the past two years, taking advantage of a corporate-tax rate of just 12.5 percent compared to Spain’s 30 percent.
    • Gene Ellis
      Gene Ellis on 21 Mar 13
       
      'Beggar thy neighbor' kinds of effects.
  • The metamorphosis is known as internal devaluation
  • Prevented by membership of the euro from driving down currencies, governments and companies are squeezing labor costs to spur productivity.
  • reducing social- security payments
  • aising the retirement age, making it easier to fire workers in downturns and preventing unions from clinging to boom-time wage deals.
  • On average, the periphery is about halfway to eliminating large structural current-account deficits, which allow for declines related to recession-driven weaker import demand, estimates Goldman Sachs (GS).
  • The OECD today published an index showing that relative labor costs in Spain and Portugal have now dropped below Germany’s for the first time since 2005.
  • “It’s potentially good for the economy but only if it results in faster investment,”
  • “If not then there’s a downward spiral risk.”
    • Gene Ellis
      Gene Ellis on 21 Mar 13
       
      An important point.
  • The smaller trade imbalances really reflect a collapse in demand for imports as consumers and companies hunker down,
  • It’s the mirror image of the euro’s first decade, when historically low interest rates in the periphery fueled inflationary spending booms, reflected in credit bubbles and deteriorating current accounts and government budgets.
  • “At this stage it is still demand destruction which has helped current-account deficit countries balance their accounts,” said Mayer. “It’s not a healthy situation.”
  • They also say countries will need to run even healthier current accounts than now if they are to stabilize the debts they owe abroad.
  • Gene Ellis on 21 Mar 13
     
    Good update article, as of March, 2013.
Gene Ellis

Solar Rises in Malaysia During Trade Wars Over Panels - NYTimes.com - 0 views

www.nytimes.com/...ng-trade-wars-over-panels.html

shared by Gene Ellis on 05 Feb 15 - No Cached
  • Solar Rises in Malaysia During Trade Wars Over Panels
Gene Ellis

How a Rising Dollar Is Creating Trouble for Emerging Economies - NYTimes.com - 0 views

www.nytimes.com/...le-for-emerging-economies.html

shared by Gene Ellis on 17 Mar 15 - No Cached
  • How a Rising Dollar Is Creating Trouble for Emerging Economies
Gene Ellis

Rise of the Robots - NYTimes.com - NYTimes.com - 0 views

krugman.blogs.nytimes.com/...rise-of-the-robots

shared by Gene Ellis on 19 Feb 15 - No Cached
  • Search Rise of the Robots
  • The most valuable part of each computer, a motherboard loaded with microprocessors and memory, is already largely made with robots, according to my colleague Quentin Hardy. People do things like fitting in batteries and snapping on screens.
  • Robots mean that labor costs don’t matter much, so you might as well locate in advanced countries with large markets and good infrastructure (which may soon not include us, but that’s another issue)
  • ...1 more annotation...
  • But the college premium hasn’t risen for a while. What has happened, on the other hand, is a notable shift in income away from labor:
Gene Ellis

Citi Cuts Costa Rica Growth Forecast After Firings - Bloomberg - 0 views

www.bloomberg.com/...-intel-fire-3-000-workers.html

shared by Gene Ellis on 25 Apr 14 - No Cached
  • Citi Cuts Costa Rica Growth Forecast After Firings
  • Hours later, BofA said it would be exiting operations in Costa Rica, Guadalajara, Mexico and Taguig, Philippines, without saying how many jobs would be lost. Costa Rica’s foreign investment agency said the BofA move would result in 1,500 layoffs.
  • “This is a strong call to the country to keeps tabs on things like the rising cost of electricity, telecommunications, wages and social guarantees.”
  • ...4 more annotations...
  • The country of 4.7 million people climbed seven spots to 102nd in the World Bank’s annual “Doing Business” report this year, lagging behind China, Vietnam and Namibia. Moody’s Investors Service lowered its outlook on Costa Rica to negative from neutral in September, citing a rising debt burden and widening budget deficit. Moody’s rates the country Baa3, putting it in the same category as Turkey and Iceland.
  • In a Bloomberg survey published last month, Costa Rica was ranked fourth behind Russia, Argentina and Ukraine on a list of countries confronting the biggest loss of investor confidence. The survey cited data including the rising cost of credit default swaps and the currency’s performance against the dollar.
  • California-based Intel, whose processors run more than 80 percent of personal computers shipped worldwide every year, originally chose to establish operations in Costa Rica after studying sites in Indonesia, Thailand, Brazil, Argentina, Chile and Mexico, according to a 2000 case study by Harvard University’s Center for International Development. The company’s $600 million investment at the time represented about 4.2 percent of GDP, prompting the company’s then-Vice President Bob Perlman to say Intel’s arrival was like “putting a whale in a swimming pool,” according to the study.
  • n 2013, about 21 percent of Costa Rica’s exports of goods came from Intel, according to investment promotion agency CINDE
Gene Ellis

Why Apple Got a 'Made in U.S.A.' Bug - NYTimes.com - 0 views

bits.blogs.nytimes.com/...-apple-got-a-made-in-u-s-a-bug

apple u s location economics mncs

shared by Gene Ellis on 11 Dec 12 - No Cached
  • Today, rising energy prices and a global market for computers are changing the way companies make their machines.
  • Hewlett-Packard, which turns out over 50 million computers a year through its own plants and subcontractors, makes many of its larger desktop personal computers in such higher-cost areas as Indianapolis and Tokyo to save on fuel costs and to serve business buyers rapidly.
  • “It’s important that they get an order in five days,
  • ...11 more annotations...
  • there is a pride for the local consumer to see a sticker that says ‘Made in Tokyo,’
  • Cook is looking to give Apple some good news.
  • In 1998, President Bill Clinton visited a Gateway Computer factory outside Dublin to cheer the role of American manufacturers in the rise of a “Celtic Tiger” in technology.That plant was shut in 2001, when Gateway elected to save costs by manufacturing in China
  • A Dell factory in Winston-Salem, N.C., for which Dell received $280 million in incentives from the government, was shut in 2010 (Dell had to repay some of the incentives).
  • More recent products, laptops and notebook computers, were in many cases originally assembled in China, and they are still largely made there. So are most smartphones and tablets. Every week, H.P. sends a group of cargo containers filled with notebooks to Europe.
  • The labor cost on a notebook, which is about 4 to 5 percent of the retail price, is only slightly higher than the cost of shipping by air. Soon even that is likely to change because of the twin forces of lower manufacturing costs from automation and higher transportation costs from rising global activity.
  • Intel, which makes most of the processors, has plants in Oregon, Arizona, New Mexico, Israel, Ireland and China.
  • Many other chip companies design their own products and have them made in giant factories, largely in Taiwan and China. Computer screens are made in Taiwan and South Korea, for the most part.
  • The special glass used for the touch screens of Apple’s iPhone and iPad, however, is an exception. It comes primarily from the United States.
  • As cheap as a Chinese assembly worker may be, an emerging trend in manufacturing, specialized robots, promises to be even cheaper. The most valuable part of the computer, a motherboard loaded with microprocessors and memory, is already largely made with robots. People do things like fitting in batteries and snapping on screens.
  • That plant was shut in 2001, when Gateway elected to save costs by manufacturing in China. Dell, which made its mark by developing lean manufacturing techniques in Texas, closed its showcase Austin factory in 2008 as part of a companywide move to manufacturing in China. A Dell factory in Winston-Salem, N.C., for which Dell received $280 million in incentives from the government, was shut in 2010 (Dell had to repay some of the incentives).
Gene Ellis

After Bangladesh, Seeking New Sources - NYTimes.com - 0 views

www.nytimes.com/...adesh-seeking-new-sources.html

shared by Gene Ellis on 16 May 13 - No Cached
  • Dozens of impoverished countries make T-shirts and other very basic clothing. But only a few countries — really just China, Bangladesh, Vietnam, Indonesia and to some extent Cambodia and Pakistan — have developed highly complex systems for producing and shipping tens of thousands or even hundreds of thousands of identical, high-quality shirts, blouses or trousers to a global retailer within several weeks of receiving an order.
  • The clothing needs to be labeled correctly so that it travels smoothly through a large retailer’s distribution centers
  • The process requires formidable numbers of skilled workers who can oversee quality control as well as labeling and shipping of garments.
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  • Big retailers and fashion companies have repeatedly tried and failed to develop alternatives, experimenting in India, Africa and Latin America, only to run into infrastructure bottlenecks and shortages of skilled managers or workers.
  • India was not organized for large-scale, timely production,
  • Africa did not have enough workers with the right skills for high-volume labeling and shipping,
  • and Latin America did not have enough workers interested in operating sewing machines.
  • In Guatemala, the quality was excellent, he said, but, “They can’t handle big orders and they’re slow on delivery.”
  • What may save Bangladesh from a sharp, immediate drop in export orders is simply that most Southeast Asian factories are already fully booked with orders from multinationals fleeing China’s ever-rising costs.
  • “For this year, it’s impossible — we’re already full,”
  • Indonesia’s national training center for seamstresses — women make up 98 percent of the students — is here in Semarang, producing 12,000 graduates a year. But even that isn’t enough. Four factories with a combined employment of 30,000 are to open in the next year in Semarang, and many more factories are being built nearby.
  • “It’s going to take time, but it’s going to eventually filter out all over the place,” he said. “It’ll take two or three years.”
  • Newly opened factories have started competing for scarce seamstresses by offering free meals and free health insurance
  • Dozens of impoverished countries make T-shirts and other very basic clothing. But only a few countries — really just China, Bangladesh, Vietnam, Indonesia and to some extent Cambodia and Pakistan — have developed highly complex systems for producing and shipping tens of thousands or even hundreds of thousands of identical, high-quality shirts, blouses or trousers to a global retailer within several weeks of receiving an order.
  • He said that he and a couple of other suppliers of elite retail chains always worried about Bangladesh’s reliance on high-rise factories,
Gene Ellis

Op-Ed Columnist - The Making of a Euromess - NYTimes.com - 0 views

www.nytimes.com/...15krugman.html

Krugman Euro Spain Greece economics

shared by Gene Ellis on 24 Apr 13 - Cached
  • No, the real story behind the euromess lies not in the profligacy of politicians but in the arrogance of elites — specifically, the policy elites who pushed Europe into adopting a single currency well before the continent was ready for such an experiment.
  • Consider the case of Spain, which on the eve of the crisis appeared to be a model fiscal citizen.
  • But with its warm weather and beaches, Spain was also the Florida of Europe — and like Florida, it experienced a huge housing boom. The financing for this boom came largely from outside the country: there were giant inflows of capital from the rest of Europe, Germany in particular.
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  • The result was rapid growth combined with significant inflation: between 2000 and 2008, the prices of goods and services produced in Spain rose by 35 percent, compared with a rise of only 10 percent in Germany. Thanks to rising costs, Spanish exports became increasingly uncompetitive, but job growth stayed strong thanks to the housing boom.
  • Then the bubble burst.
  • But the flood of red ink
  • was a result, not a cause, of Spain’s problems.
  • The nation’s core economic problem is that costs and prices have gotten out of line with those in the rest of Europe. If Spain still had its old currency, the peseta, it could remedy that problem quickly through devaluation — by, say, reducing the value of a peseta by 20 percent against other European currencies. But Spain no longer has its own money, which means that it can regain competitiveness only through a slow, grinding process of deflation.
  • Now, if Spain were an American state rather than a European country, things wouldn’t be so bad. For one thing, costs and prices wouldn’t have gotten so far out of line: Florida, which among other things was freely able to attract workers from other states and keep labor costs down, never experienced anything like Spain’s relative inflation. For another, Spain would be receiving a lot of automatic support in the crisis: Florida’s housing boom has gone bust, but Washington keeps sending the Social Security and Medicare checks. But Spain isn’t an American state, and as a result it’s in deep trouble.
  • None of this should come as a big surprise. Long before the euro came into being, economists warned that Europe wasn’t ready for a single currency.
  • What we’ll probably see over the next few years is a painful process of muddling through: bailouts accompanied by demands for savage austerity, all against a background of very high unemployment, perpetuated by the grinding deflation I already mentioned.
  • Yes, some governments were irresponsible; but the fundamental problem was hubris, the arrogant belief that Europe could make a single currency work despite strong reasons to believe that it wasn’t ready. More Articles in Opinion »
Gene Ellis

U.S. Pressure Rises to End Bangladesh Trade Status - NYTimes.com - 0 views

www.nytimes.com/...d-bangladesh-trade-status.html

u s pressure bangladesh trade status nytimes

shared by Gene Ellis on 10 Jan 14 - No Cached
  • Bangladesh’s garment sector represents roughly $19 billion in annual revenue and employs nearly four million workers, most of them women. It sells more than $4.5 billion worth of goods to the United States each year. 
Gene Ellis

Optimism about an end to the euro crisis is wrong - FT.com - 0 views

www.ft.com/...9a-11e3-86ef-00144feab7de.html

shared by Gene Ellis on 29 Oct 13 - No Cached
  • Adjustment is the key to ending the eurozone crisis. The optimists are saying that this process of regaining competitiveness is now taking place.
  • This judgment is profoundly wrong.
  • In other words, the eurozone is adjusting at the expense of the rest of the world.
  • ...6 more annotations...
  • But while the eurozone is a fixed-currency regime internally, it is nothing of the sort externally. The currency does exactly what textbooks say it should: it keeps on rising, thus offsetting the improvements in the current account. Last week the euro rose to more than $1.38 against the dollar.
  • The main problem with the rise in the euro’s external value is that it makes the internal adjustment harder. The crisis countries need to lower their export prices but the higher value of the euro raises the prices of exports to outside the eurozone.
  • It essentially says internal adjustment is not really happening.
  • Second, the prices of Spanish tradeable goods would have to fall against those of non-Spanish tradeable goods elsewhere in the eurozone.
  • Put bluntly: the scale of necessary adjustment is absolutely enormous. The IMF does not believe that this is going to happen.
  • In a monetary union adjustment is hard without any transfers and without a fiscal union.
Gene Ellis

The science of global warming has changed a lot in 25 years. The basic conclusions have... - 0 views

www.washingtonpost.com/...te-report-tell-us-anything-new

shared by Gene Ellis on 29 Oct 13 - No Cached
  • ack in 1990, the IPCC relied on just two relatively crude models. Today, the IPCC can take advantage of 45 different models that incorporate a wide range of features of the Earth's climate, from ocean biology to changes in soil. Their accuracy has improved considerably since 1990. But it's unclear if those models can keep improving significantly.
  • And even in its 2007 assessment report, the IPCC could only explain about 60 percent of the rise in sea-level that had already occurred in the previous half-century. Nowadays, however, climate scientists can account for virtually all of the past sea-level rise,
Gene Ellis

Eurozone crisis: can the centre hold? | Nouriel Roubini | Business | theguardian.com - 0 views

www.theguardian.com/...eurozone-crisis-euro-european

shared by Gene Ellis on 29 Oct 13 - No Cached
  • Several developments helped to restore calm. The European Central Bank (ECB) president, Mario Draghi, vowed to do "whatever it takes" to save the euro, and quickly institutionalised that pledge by establishing the ECB's "outright monetary transactions" programme to buy distressed eurozone members' sovereign bonds.
  • And, even if such adjustment is not occurring as fast as Germany and other core eurozone countries would like, they remain willing to provide financing, and governments committed to adjustment are still in power.
  • For starters, potential growth is still too low in most of the periphery, given ageing populations and low productivity growth, while actual growth – even once the periphery exits the recession, in 2014 – will remain below 1% for the next few years, implying that unemployment rates will remain very high.
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  • levels of private and public debt, domestic and foreign, are still too high, and continue to rise as a share of GDP, owing to slow or negative output growth. This means that the issue of medium-term sustainability remains unresolved.
  • At the same time, the loss of competitiveness has been only partly reversed, with most of the improvement in external balances being cyclical rather than structural.
  • The euro is still too strong, severely limiting the improvement in competitiveness that is needed to boost net exports in the face of weak domestic demand.
  • a continuing credit crunch, as undercapitalised banks deleverage by selling assets and shrinking their loan portfolios.
  • The larger problem, of course, is that progress toward banking, fiscal, economic and political union, all of which are essential to the eurozone's long-term viability, has been too slow.
  • all imply that banks will have to focus on raising capital at the expense of providing the financing needed for economic growth.
  • Moreover the ECB, in contrast to the Bank of England, is unwilling to be creative in pursuing policies that would ameliorate the credit crunch.
  • Meanwhile, austerity fatigue is rising in the eurozone periphery.
  • And bailout fatigue is emerging in the eurozone's core.
  • But the eurozone's political strains may soon reach a breaking point,
Gene Ellis

Amid Rows of Tin Shacks, a Luxury Hotel Rises - Slide Show - NYTimes.com - 0 views

www.nytimes.com/...20131209-KLIPTOWN.html

shared by Gene Ellis on 18 Dec 13 - No Cached
  • Amid Rows of Tin Shacks, a Luxury Hotel Rises
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.
  • ...12 more annotations...
  • 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.
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