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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.
  • aising the retirement age, making it easier to fire workers in downturns and preventing unions from clinging to boom-time wage deals.
  • reducing social- security payments
  • 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.”
  • 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.
  • The smaller trade imbalances really reflect a collapse in demand for imports as consumers and companies hunker down,
    • Gene Ellis
      Gene Ellis on 21 Mar 13
       
      An important point.
  • “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

Big trouble from little Cyprus - FT.com - 0 views

www.ft.com/...e5-11e2-ae9e-00144feabdc0.html

little cyprus trouble

shared by Gene Ellis on 20 Mar 13 - No Cached
  • The banks stand on the edge of collapse. But it is the European Central Bank that has pulled the plug by threatening not to accept Cypriot government debt as collateral against liquidity support.
  • A restructuring of public debt is still likely. As Hamlet advises: If it be not now, yet it will come.
  • Is there no alternative to the bail-ins? Yes: direct bank recapitalisation by the eurozone, for which the sum required is a small matter. If the banking union had been up and running, that would have happened. It is not, presumably because core countries do not want to bail out mismanaged banking systems,
  • ...6 more annotations...
  • A big question is why ordinary Cypriot taxpayers should rescue banks at all?
  • The first concern is the deal itself. The decision to impose losses on insured deposits is indeed a big error. (Yes, it is a default, not a tax.)
  • Banks have so little loss-absorbing capacity that they stand permanently on the edge of disaster.
    • Gene Ellis
      Gene Ellis on 20 Mar 13
       
      Very good point.  
  • The eurozone must either make the industry far more robust, by hugely increasing equity capital, or consolidate fiscal capacity and tighten regulation, to ensure adequate eurozone-wide oversight and fiscal support.
  • Banking is dangerous everywhere. But it still threatens the eurozone’s survival. This has to change – and very soon.
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

Cyprus: The next blunder | vox - 0 views

www.voxeu.org/...cyprus-next-blunder

shared by Gene Ellis on 18 Mar 13 - No Cached
  • What is new is that bank deposits will be 'taxed'. The proper term is 'confiscated'. Like everywhere in the EU, bank deposits in Cyprus are guaranteed up to €100,000.
  • A less benign scenario is that depositors in Cypriot banks come to fear another round of optimal, time-inconsistent levies. This is what theory predicts. After all, if policymakers found it optimal once, why not twice, or more?
  • Since bank assets amount to some 900% of GDP, there is no hope of any bailout by the Cypriot government.
  • ...2 more annotations...
  • Remember that the current version of the banking union explicitly leaves resolution authority in national hands. In Cyprus, as almost everywhere else, national authorities are deeply conflicted when it comes to their banking systems. Powerful special-interest groups become engaged when banks go bust and governments decide who pays the price. Thus, it is a good bet that Cyprus’s bank resolution will be deeply flawed. The risk to the ECB is real.
  • It will be individually rational to withdraw deposits from local banks to avoid the remote probability of a confiscatory tax. As depositors learn what others do and proceed to withdraw funds, a bank run will occur. The banking system will collapse, requiring a Cyprus-style programme that will tax whatever is left in deposits, thus justifying the withdrawals.
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