No miracles in southern Eurozone without resource reallocation
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http://siteresources.worldbank.org/ICPINT/resources/270056-1255977007108/110428_ICP-PRE... - 0 views
Debt and debt ceiling issues: Research roundup - Journalist's Resource: Research for Re... - 0 views
journalistsresource.org/...public-debt-ceiling-studies
research roundup journalist resource reporting harvard center
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Commanding Heights: Resources | on PBS - 0 views
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Why China will not buy the world - FT.com - 0 views
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At the heart of the new global economy are what Prof Nolan calls “systems integrator” companies – businesses with dominant brands and superior technologies, which are at the apex of value chains that serve the global middle classes. These global businesses, in turn, exert enormous pressure on their supply chains, creating ever-rising consolidation there, as well.
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Using data from 2006-09, Prof Nolan concludes that the number of globally dominant businesses in the manufacture of large commercial aircraft and carbonated drinks was two; of mobile telecommunications infrastructure and smart phones, just three; of beer, elevators, heavy-duty trucks and personal computers, four; of digital cameras, six; and of motor vehicles and pharmaceuticals, 10. In these cases, dominant businesses supplied between half and all of the world market. Similar degrees of concentration have emerged, after consolidation, in many industries
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Such a business “typically possesses some combination of a number of key attributes, among them the capability to raise finance for large new projects and the resources necessary to fund a high level of research and development spending to sustain technological leadership, to develop a global brand, to invest in state-of-the-art information technology and to attract the best human resources”.
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Moreover, “one hundred giant firms, all from the high-income countries, account for over three-fifths of the total R&D expenditure among the world’s top 1,400 companies. They are the foundation of the world’s technical progress in the era of capitalist globalisation”.
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Europe's Two-Speed Future by Jean-Claude Piris - Project Syndicate - 0 views
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But the eurozone’s architecture – in which monetary policy is centralized, but budgetary and economic policies are left up to individual governments – is not viable in the long term
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establishing a “two-speed Europe” – in which a core group of countries pursues deeper integration more quickly than the rest – is the EU’s best option for reaching the level of cooperation needed to escape the crisis intact.
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Pursuing this option would require that the decision-making process be legitimate. In the Council, as in all cases of “enhanced cooperation,” only participating members have the right to vote. In the European Parliament, by contrast, all 27 EU members participate in the decision-making process, even concerning measures that will affect only the 23 “eurozone plus” countries (the 17 eurozone members and the six that have agreed to the Euro Plus Pact) – a method that could pose a political problem.
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Mastering business management studies online - 0 views
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The free online mini MBA is a condensed version of a full fledged MBA & is aimed at providing a solid foundation in current business theory and practices.
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Online video lectures and case studies by top management faculty will cover subjects like Fundamentals of Accounting, Principles of Marketing, Managing Human Resource, Essentials of Business Communication and Business Strategy.
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“The pedagogy involves pre-recorded video learning modules with fully interactive and collaborative features like the discussion forums, online chats, quizzes and live virtual classrooms. The entire course content will be made available on an anytime, anywhere learning mode using the “portable classroom” model.
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Europe's Irrelevant Austerity Debate by Daniel Gros - Project Syndicate - 0 views
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But the debate about austerity and the cost of high public-debt levels misses a key point: Public debt owed to foreigners is different from debt owed to residents.
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If foreign debt matters more than public debt, the key variable requiring adjustment is the external deficit, not the fiscal deficit. A country that has a balanced current account does not need any additional foreign capital. That is why risk premiums are continuing to fall in the eurozone, despite high political uncertainty in Italy and continuing large fiscal deficits elsewhere. The peripheral countries’ external deficits are falling rapidly, thus diminishing the need for foreign financing.
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And the evidence confirms that the euro crisis is not really about sovereign debt, but about foreign debt.
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Second, if foreign debt is the real problem, the escalating debate about the Reinhart/Rogoff results is irrelevant for the euro crisis. Countries that have their own currency, like the United Kingdom – and especially the United States, which can borrow from foreigners in dollars – do not face a direct financing constraint.
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But austerity can never be self-defeating for the external adjustment. On the contrary, the larger the fall in domestic demand in response to a cut in government expenditure, the more imports will fall and the stronger the improvement in the current account – and thus ultimately the reduction in the risk premium – will be.
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By contrast, in the case of debt owed to foreigners, higher interest rates lead to a welfare loss for the country as a whole, because the government must transfer resources abroad, which usually requires a combination of exchange-rate depreciation and a reduction in domestic expenditure.
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But the eurozone’s peripheral countries simply did not have a choice: they had to reduce their deficits, because the foreign capital on which their economies were so dependent was no longer available.
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Kenen on the euro | vox - 0 views
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Early work on optimum currency areas by Robert Mundell had emphasised the symmetry or asymmetry of disturbances hitting different regional economies as a key criterion on which to gauge their suitability for sharing a common currency.
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Peter took this insight further by arguing that disturbances were often sector specific and that the diversification of regional economies was therefore a key consideration in gauging their suitability for monetary union (the better diversified an economy was, the less likely it was to be badly destabilised by a sector-specific shock). (Kenen 1969).
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We now know that Kenen flagged a problem for which the Eurozone could have been better prepared. With an outsized capital-goods producing sector, Germany benefitted from a strong positive shock as a result of China’s emergence onto the global stage, given the Chinese economy’s voracious appetite for capital goods.
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Portugal and Italy, on the other hand, specialised much more heavily in consumer-goods producing sectors and felt the brunt of Chinese competition. No Eurozone member was sufficiently well diversified to shrug off this kind of shock, something that should have made the euro’s architects think twice.
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Specifically, they should have thought again, Kenen argued, about the coordination of national fiscal policies, the need for a common Eurozone budget, and mechanisms for transferring fiscal resources from booming to depressed regions.
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More than any other economist, Peter understood that monetary union was a legal as well as an economic construct. His careful parsing of the Maastricht Treaty explained to the economics profession exactly what the treaty did and did not allow (Kenen 1992).
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Peter even anticipated the debate over TARGET2 imbalances, observing in 1999 that it was possible to “easily conceive of conditions…in which one [national central bank] would be reluctant to build up claims indefinitely on some other national central bank.” (Kenen 1999).
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Finally, Peter observed that the possibility of a member state exiting from the Eurozone could not be ruled out but warned that European officials should be cautious in bandying about the idea (Kenen 1999). “The costs of defecting,” he wrote back in 1999, “could be very high.”
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The Eurozone's Narrowing Window by Ashoka Mody - Project Syndicate - 0 views
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Ireland’s authorities have conducted similar recent operations, exchanging short-maturity paper for longer-term debt.
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This strategy’s success presupposes that, in the interim, economic growth will strengthen the capacity to repay debt down the line.
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Private investors are acknowledging the reality that repayments will likely be drawn out, because insisting on existing terms could cause an untenable bunching of debt-service payments, with possibly unpleasant consequences.
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Moreover, Irish GNP (the income accruing to its nationals, as distinct from foreign firms operating in Ireland) continues to shrink.
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Crucially for Europe, world trade has been virtually stagnant in recent months. Global trade and economic performance in the eurozone appear to be dragging each other down.
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Thus, the eurozone faces three choices: even more austerity for the heavily-indebted countries, socialization of the debt across Europe, or a creative re-profiling of debt, with investors forced to accept losses sooner or later.
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Special European facilities, along with the IMF, lend money at below-market interest rates, which reduces the extent of austerity required. But the facilities’ resources are dwindling, and they certainly would not be sufficient if Spain and Italy were to seek support.
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More ambitious pan-European efforts are embodied in various Eurobond proposals. These schemes imply socialization of debt – taxpayers elsewhere in Europe would share a country’s debt burden. These proposals, once in great vogue, have receded. Not surprisingly, the political opposition to such debt mutualization was intense.
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A Declining Euro Can't Cure All Ills - WSJ.com - 0 views
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Before the crisis, actions such as the European Central Bank rate cuts two weeks ago would have had a twofold effect in reviving the economy: Banks would have passed the lower rate on to their clients, while foreign-exchange markets would have marked the currency down, giving exporters better chances to sell their products abroad.
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In today's polarized euro zone, it isn't that simple. For one thing, tThere is no certainty that euro-zone banks will pass on the cut in borrowing costs.
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Even if they did, he explained, the euro zone's problems are now so acute that few companies seem to want to borrow.
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Mario Boselli, chairman of the Italian Chamber of Fashion, frets that larger emerging economies still account for only 10% of total Italian exports. "This is not enough" to offset the weakness in developed economies, he says.
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Both Mr. Boselli and Philip Halpin, an adviser to the Irish Exporters' Association, say the euro would have to fall as low as $1.10 (from about $1.23 currently), to produce a robust export-led recovery.
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Ludovic Subran, chief economist at French trade-credit insurer Euler Hermes, warns that might not be enough. Such a depreciation would have little effect in France because high taxes and rigid labor costs reduce the potential benefits, he says.
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Any euro-zone economy would benefit from a drop in the euro to the extent that it can redirect more resources to external markets. But the willingness and ability of businesses to do that differs across the region. Nadio Delai, chairman of Italian research and consultancy firm Ermeneia, say a host of smaller, less prestigious Italian shoe and textile companies have started to export to emerging markets, riding the coattails of more famous names.
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Crippled eurozone to face fresh debt crisis this year, warns ex-ECB strongman Axel Webe... - 0 views
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Harvard professor Kenneth Rogoff said the launch of the euro had been a "giant historic mistake, done to soon" that now requires a degree of fiscal union and a common bank resolution fund to make it work, but EMU leaders are still refusing to take these steps.
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"People are no longer talking about the euro falling apart but youth unemployment is really horrific. They can't leave this twisting in wind for another five years," he said.
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Mr Rogoff said Europe is squandering the "scarce resource" of its youth, badly needed to fortify an ageing society as the demographic crunch sets in.
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"If these latent technologies are not realised, Europe will wake up like Rip Van Winkel from a long Japan-like slumber to find itself a much smaller part of the world economy, and a lot less important."
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Mr Rogoff said debt write-downs across the EMU periphery "will eventually happen" but the longer leaders let the crisis fester with half-measures, the worse damage this will do to European society in the end.
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Mr Weber, who resigned from the Bundesbank and the ECB in a dispute over euro debt crisis strategy, said new "bail-in" rules for bond-holders of eurozone banks will cause investors to act pre-emptively, aiming to avoid large losses before the ECB issues its test verdicts. "We may see that speculators do not wait until November, but bet on winners and losers before that," he said.
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Sir Martin said the eurozone is pursuing a reverse "Phillips Curve" - the trade off between jobs and inflation - as if it were testing "what level of unemployment it is prepared to tolerate for zero inflation".
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Pierre Nanterme, chairman and chief executive officer of Accenture, said Europe is losing the great battle for competitiveness, and risks a perma-slump where debt burdens of 100pc of GDP prevent governments breaking free by investing in skills and technology.
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He said Europe is falling further behind as the US basks in cheap energy and pours funds into cutting-edge technology. "A lot is at stake. If in 12 to 24 months no radical steps are taken to break the curse, we might have not just five, ten, but twenty years of a low-growth sluggish situation in Europe," he said.
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"People are no longer talking about the euro falling apart but youth unemployment is really horrific. They can't leave this twisting in wind for another five years," he said
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Why Is Zambia So Poor? And Will Things Ever Get Better? - 0 views
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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.
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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.
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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.
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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.
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Many of the mining companies pay just 0.6 percent royalties to Zambia, far below the already-meager industry standard of three percent.
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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.
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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.
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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.
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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.
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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).
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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“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.”
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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?
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Europe Haggles Over New Rules Aimed at Saving Fish Stocks - WSJ.com - 0 views
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Fishermen currently discard nearly a quarter of Europe's total catch on average, and as much as 70% of the hauls in some areas, European Commission data show
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"The law has been made by someone who doesn't know fisheries," said fisherman Geert Luickx as he painted his boat here in this North Sea port. Without financial assistance, more crew, and a bigger boat, he said, he won't be able to comply with the new law.
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Commission data show 80% of stocks in the Mediterranean, including swordfish, and 47% of stocks in the Atlantic, including whiting off Scotland's western coast, are being exploited at levels that will lead to extinction.
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Much of this unwanted catch will likely be sold to fish farmers to feed high-value fish like salmon.
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How to enforce the new discards law is also under debate. Installing video cameras on all vessels or employing observers to ensure fisherman follow the law has been proposed, but nothing yet has been settled. "We do not have the resources for this kind of enforcement,
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Organizations notes that Norway—which, along with Iceland, is one of two non-EU nations to ban discards—took 20 years to eliminate them.
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Coming Full Circle in Energy, to Nuclear - NYTimes.com - 0 views
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In a typical day, Mr. Durgin tells me, 21 trains depart the mine, pulling 135 cars each. Each car bears 120 tons of coal. At this pace, he says, there is more than 20 years’ worth of coal ready to mine under my feet.
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North Antelope Rochelle is among the biggest coal mines in the world. It produced 108 million tons last year — about 10 percent of all the coal burned by the nation’s power plants.
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North Antelope Rochelle and the other vast strip mines cutting through the plains of Wyoming’s Powder River Basin — whose low-sulfur carbon met standards imposed by the Clean Air Act — were the result
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Today renewable energy supplies only about 6 percent of American demand. And most of that comes from water flowing through dams. Solar energy contributes next to nothing.
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The arithmetic is merciless. To make it likely that the world’s temperature will rise no more than 2 degrees Celsius above the average of the preindustrial era — a target agreed to by the world’s governments in 2010 — humanity must spew no more than 900 billion more tons of carbon dioxide into the air from now through 2050 and only 75 billion tons after that, according to an authoritative new study in Britain.
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The United States Energy Information Administration forecasts that global energy consumption will grow 56 percent between now and 2040.
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“We have trillions of tons of coal resources in the world,” Vic Svec, spokesman for Peabody Energy, told me. “You can expect the world to use them all.”
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The only way around this is to put something in coal’s place, at a reasonably competitive price. Neither the warm glow of the sun nor the restless power of the wind is going to do the trick, at least not soon enough to make a difference in the battle to prevent climate change.
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Robert J. Shiller attributes Japan's incipient recovery - and weak growth elsewhere - t... - 0 views
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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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Think of the story of the real-estate boom in the United States and other countries in the first half of the 2000’s. This was a story not of a “bubble”; rather, the boom was a triumph of capitalist enterprise in a new millennium.
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These stories were so powerful because a huge number of people were psychologically – and financially – invested in them
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To understand why economic recovery (if not that of the stock market) has remained so weak since 2009, we need to identify which stories have been affecting popular psychology.
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Education standards: Best and brightest | The Economist - 0 views
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Pupils in Finland, Korea, Japan and Canada consistently score much higher than their peers in Germany, Britain, America and France.
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In each country, the Americans are startled by how hard their new peers work and how seriously they take their studies. Maths classes tend to be more sophisticated, with lessons that show the often fascinating ways that geometry, trigonometry and calculus work together in the real world.
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Classrooms tend to be understated, free of the high-tech gadgetry of their schools back home. And teachers in every subject exhibit the authority of professionals held in high regard.
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When teachers demand rigorous work, students often rise to the occasion, whereas tracking students at different cognitive levels tends to “diminish learning and boost inequality”. Low expectations are often duly rewarded.
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America’s classrooms do not fare well in this book. Against these examples of academic achievement, the country’s expensive mistakes look all the more foolish. For example, unlike the schools in Finland, which channel more resources to the neediest kids, America funds its schools through property taxes, ensuring the most disadvantaged students are warehoused together in the worst schools.
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A European Energy Executive's Delicate Dance Over Ukraine - NYTimes.com - 0 views
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Major Western oil companies like BP and Exxon Mobil have extensive exploration deals in Russia that they fear could be jeopardized if the United States and European Union impose stiffer sanctions on the Putin regime.
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“This is by far the toughest time for European energy security that I have seen,” said Mr. Scaroni. “This issue might stop the supply of Russian gas.”
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The goal is to be able to ship gas to Ukraine at an annual rate of more than three billion cubic meters by the time the heating season begins in the autumn, increasing the flow to up to 10 billion cubic meters annually by next spring. Last year Ukraine imported nearly 30 billion cubic meters of gas, according to a recent report by the Oxford Institute for Energy Studies.
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Part of his message is that, even though gas demand in Europe has been weak because of sluggish economies, imports from Russia actually rose last year by about 16 percent as other sources of supply including Norway and Algeria declined. Europe, he warned, is simply not prepared to do without gas from Russia.
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But with the gradual introduction of more competitive pricing in the European markets, the gas business has become much less attractive for ENI and other big gas middlemen. They are stuck with high-priced long-term contracts to a handful of suppliers like Gazprom and Sonatrach, the Algerian state-owned company, while their customers are able to secure gas at often lower spot market prices — assuming the gas is flowing.
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The pipeline would be a major new source of Russian gas for energy-hungry Europe. But European Union authorities have become deeply skeptical about the South Stream plan, seeing it as just another way of making Europe more dependent on Russian energy.
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Given the balance of interests, tighter sanctions by Western governments might more likely aim to stem the technology that Russia needs to increase its future production, rather than to cut off gas supplies to Europe,
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hose outages in 2006 and 2009 are a top reason that the European Union had already been trying to chip away at Europe’s dependence on Russia even before the Crimea annexation.
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One of the most acrimonious battles is between the bloc’s antitrust authorities and Gazprom. That standoff began in 2011 when the European Commission carried out surprise raids on natural gas companies across Europe, including Gazprom affiliates, seeking evidence of blocking access to networks, charging excessive prices and raising barriers to diversification of supplies.
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That is partly because powerful Eastern European countries like Poland argue that such clean-energy policies would impede their ability to reduce Russian dependence by mining more coal or developing their own shale gas resources.
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nd this month, the European Commission issued rules aimed at reducing the subsidies that governments use to support the wind and solar industries,