EU-China relations

Very good article in The Economist by Charlemagne (as usual)

… At a recent Wilton Park conference in Britain, a Chinese academic called the EU a weak power, unprepared to challenge American hegemony: China was not about to work with it on a new world order…

full article

War der Euro ein Fehler?

Paul Krugman hier auszugsweise. Beginnend mit dem bekannt guten Sozialsystem geht es dann zur Sache.

The only thing working in Europe’s favor is the very thing for which it takes the most criticism — the size and generosity of its welfare states, which are cushioning the impact of the economic slump.

This is no small matter. Guaranteed health insurance and generous unemployment benefits ensure that, at least so far, there isn’t as much sheer human suffering in Europe as there is in America. And these programs will also help sustain spending in the slump.

But such “automatic stabilizers” are no substitute for positive action.

Why is Europe falling short? Poor leadership is part of the story. European banking officials, who completely missed the depth of the crisis, still seem weirdly complacent. And to hear anything in America comparable to the know-nothing diatribes of Germany’s finance minister you have to listen to, well, Republicans.

But there’s a deeper problem: Europe’s economic and monetary integration has run too far ahead of its political institutions. The economies of Europe’s many nations are almost as tightly linked as the economies of America’s many states — and most of Europe shares a common currency. But unlike America, Europe doesn’t have the kind of continentwide institutions needed to deal with a continentwide crisis.

This is a major reason for the lack of fiscal action: there’s no government in a position to take responsibility for the European economy as a whole. What Europe has, instead, are national governments, each of which is reluctant to run up large debts to finance a stimulus that will convey many if not most of its benefits to voters in other countries.

You might expect monetary policy to be more forceful. After all, while there isn’t a European government, there is a European Central Bank. But the E.C.B. isn’t like the Fed, which can afford to be adventurous because it’s backed by a unitary national government — a government that has already moved to share the risks of the Fed’s boldness, and will surely cover the Fed’s losses if its efforts to unfreeze financial markets go bad. The E.C.B., which must answer to 16 often-quarreling governments, can’t count on the same level of support.

Europe, in other words, is turning out to be structurally weak in a time of crisis.

The biggest question is what will happen to those European economies that boomed in the easy-money environment of a few years ago, Spain in particular.

For much of the past decade Spain was Europe’s Florida, its economy buoyed by a huge speculative housing boom. As in Florida, boom has now turned to bust. Now Spain needs to find new sources of income and employment to replace the lost jobs in construction.

In the past, Spain would have sought improved competitiveness by devaluing its currency. But now it’s on the euro — and the only way forward seems to be a grinding process of wage cuts. This process would have been difficult in the best of times; it will be almost inconceivably painful if, as seems all too likely, the European economy as a whole is depressed and tending toward deflation for years to come.

Does all this mean that Europe was wrong to let itself become so tightly integrated? Does it mean, in particular, that the creation of the euro was a mistake? Maybe.

But Europe can still prove the skeptics wrong, if its politicians start showing more leadership. Will they?

Das ‘L’ und der Drogensüchtige Deutschland

Wenn man nicht gerade eine Agenda im Wahlkampfjahr verfolgt oder JCT heisst, dann drängt sich einem beim Blick auf die Wirtschaftsdaten, dem Derivatehandel, den CDS Spreads der Verdacht einer Wirtschaftsentwicklungskurve in der Form eines ‘L’. Und zwar ein L beginnend mit einer langen Senkrechten …

Wolfgang Münchau von der FT hat wieder einmal ein paar triftige Gedankensplitter.

From the Financial Times:

The US is dragging its feet over the financial sector. The European Union is doing the same, as well as failing to adopt policies that could shield it from an increasingly probable speculative attack. And judging by the state of preparations, the forthcoming Group of 20 summit is going to be a disaster.

So it looks like it is going to be an L – not a V or a U. I mean an L-shaped recession, one that starts with a steep decline, followed by very low growth for many years… This looks like Japan all over. Without financial restructuring, the economy is not going to recover. And Japan was lucky. It was surrounded by a booming global economy.

The best way to fight such a disaster is to restructure the banking system and provide short-term economic stimulus through monetary and fiscal policy. …the current stimulus package is woefully inadequate. In other words: we are looking at an L.

An L-shaped recession will make the adjustment of balance sheets even more painful. Unemployment will continue to rise. House prices will keep on falling. US consumers and banks will spend the next five or more years deleveraging, getting their respective balance sheets back in order. In that period, the US current-account deficit will fall sharply, as will that of the UK, Spain and several central and eastern European countries. This process can take a long time, and in an L-shaped recession it takes longer.

But the effect is also brutal on the rest of the world. The fall in current-account deficits will be partially compensated for by lower surpluses from oil and gas exporters, such as Middle Eastern countries and Russia. But the bulk of the adjustment would be borne by the world’s largest exporters: Germany, China and Japan….

If we had a simple U-shaped recession, we would still have a painful recession in Germany and Japan, for example. But under a U-shaped scenario, both countries would be among the first to benefit from the recovery.

In an L-shaped recession, however, recession gives way to depression, despite the fact that both countries thought they had done their “homework”. If nobody can afford to run a large deficit for a long time – which is what an L recession effectively implies – the economic models of Germany and Japan will no longer work. Germany had a current-account surplus of more than 7 per cent last year. It is the world’s largest exporter. Exports constitute about 41 per cent of national gross domestic product – an extraordinary number, given the size of the country.

So what should these countries do? The right policy response would be to reduce the dependency on exports and undertake structural reforms that facilitate the shift towards non-tradable goods…

Unfortunately, the opposite is happening. Germany is clinging to its export model like a drug addict. An example is the debate about the future of Opel, the European car manufacturing subsidiary of General Motors. Opel is unlikely to survive without help from the government. The proponents of a state bail-out of Opel argue that the company is systemically relevant. This argument is obviously wrong. There can be systemically relevant banks, but there can be no systemically relevant carmakers. But the answer is also revealing. What it means is that Opel is systemically relevant for the country’s export-oriented model. The bail-out adherents are clinging to an industrial structure that has no hope of survival in an L-shaped world…

We are nowhere near a solution to the crisis. After committing errors of omission, global leaders are now producing errors of commission. The Americans dream about a return to a world of credit finance consumption while the Germans dream about assembly lines. In an L-shaped world, these are nightmares.

Deutschlands Exportabhängigkeit – auf die das Land kurioserweise auch noch stolz ist – ist nicht haltbar in der gegenwärtigen Lage und wird auch nicht bestehen können gegenüber dem weiteren wirtschaftlichen Machtanstieg Chinas und – bedingt – Indien (wenn es denn endlich mal die katastrophale Korruption eindämmen kann, besser will). Wenn D-Land nicht den Binnenkonsum stark steigert, dann sieht die Zukunft nicht rosig aus. Aber, Lohnsteigerungen würden das Land in der Konkurrenzfähigkeit in Nachteil bringen. Damit gibts nur eins: drastische Steuersenkungen. Und die wirds nicht geben.

Hinzu kommt noch die lächerliche Auto-Drogensucht des Landes. Hier sind etlich Firmen überflüssig. China und Indien wird hier big time kommen.

Rumänien: Welcome to the Club

Let’s give Rumania a big hand.

Willkommen im elitären IMF Club.

oder: die Freude der Vereinten Staaten von Europa unter der Ägide des IWF

Die Relevanz von Europa

Hillary Clinton tritt zur ersten grossen Auslandsreise in ihrer Funktion als Sec. of State an. Traditionell führte die immer nach Europa. Diesmal reist die Clinton nach Asien. Es zeigt, wo die wirtschaftliche Macht und die zunehmende politische Bedeutung liegt. Ms Clinton hat eine sehr gute Entscheidung getroffen.

In der Zwischenzeit hat Europa Gelegenheit, Zwischenbilanz zu ziehen und seine IMF-Patienten näher anzusehen. Und sich vielleicht noch weiter Richtung Mongolei zu vereinen.

PIGS? Nein, PIIGS

EUROPA

Nein, nichts mehr über den Osten des Kunstgebildes Europa, die Borat Länder. Jeder kennt die PIGS. Die Länder, die immer Schwierigkeiten haben mit dem Maastricht Vertrag klar zu kommen: Port u gal, It a lien, Griechen land und Spa nien.

Die Chancen stehen blendend, dass Irrrr land dazu kommt. Und ev. die IMF.

Man muss dieses EU Ding einfach lieben.

Europas Osten, oh Mutti.

Jeder Gegenstand, jedes Lebewesen hat eine vorteilhafte und nicht ganz so … Seite. Das Kunstgebilde ‘Europa’ hat Letztere ohne Zweifel im Osten. IMF bailout in Latvia, Ungarn. Bulgarien und Rumänien (beim Lesen besser hinsetzen), und dann noch die sich immer anbiedernde Ukraine und die jüngtste Gassperre durch Russland. Und nicht vergessen, in allen Ländern sind deutsche und österreichische Banken bis zum Kinn in Krediten engagiert! Dies wird, wie in D-Land üblich in 2009 so häppchenweise serviert werden. You have been warned.

Hier eine Grafik der Industrieproduktion in der Ukraine in den letzten Monaten.

 

 

 

 

 

 

Hier im Vergleich der PMI für D-Land

 

 

 

 

 

 

und MO

alle Grafiken und weitere über Staaten im Osten

 

 

 

 

 

Crying Fire, Fire in Noah’s flood

1931 version.

2008 version:

Germany’s finance minister told AFP in an interview that cutting interest rates too low in an effort to counter the global recession could create what he called a dangerous “growth bubble.”

 

Man kann FM Steinbrück nicht gerade des logischen Denkens beschuldigen. Wo, bitte, ist Growth in D-Land?

“There is a burgeoning economic crisis in the European periphery,” Krugman said on the ABC network Dec. 14. “The money has dried up. That’s the new center, the center of this crisis has moved from the U.S. housing market to the European periphery.”

Zinsen gesenkt. Let’s party!

Bevor’s in die Blue Suede Shoes geht, hier ein paar nette, wirklich nette Daten aus Europa.

Zunächst Italien, was sonst? Aber halt, da ist auch noch die Türkei. Der Reihe nach:

Zitat eines italienischen Politikers: „[Italy’s debt] will be in competition with growing issues of government’s bonds by other European countries.“ Und die folgende Grafik lässt sich nur nach einem dreifachen Daiquiri geniessen. Yeehah.

 (FT Alpahaville)

 

Und wenn das noch nicht den Unterhaltungsfaktor stärkt, dann dies.

Das erhebende Gefühl des Europas im Osten

Für die Amerikaner spräche viel dafür es den Europäern gleichzumachen: eine vereintes NoMi-Amerika. Also von Canada bis hinunter etwa zu Nicaragua alles vereint und mit der starken Währung des Amero.

Das Europa des Ostens hat beeindruckende Zahlen zu vermitteln: Latvia startet Gespräche mit dem IMF, das korrupte Bulgarien verliert aus eben diesem Grund von der EU versprochene 220 Millionen €, die European Bank for Reconstruction and Development verringert die Wachstumsvorhersage, Polen erhält eine 10 Milliarden € Kreditlinie von der EU, Ungarn eine Hilfe von 25 Milliarden €, Rumänien besticht durch Korruption und Internetattacken der feinsten Art. Es spricht also alles dafür, mehr Borat Countries in die EU aufzunehmen. (Daten: The Economist)

Wirtschaftsminister Glos: CDS Spreads beachten!

Glos: „Ich habe nachdrücklich darauf hingewiesen, die CDU, eh, ich meine die CDS Schpreds zu beobachten.“

„Zis iss Inglisch, right?“

The eurozone is also suffering. The Markit Flash Eurozone PMI for November, released earlier today, showed output in the region contracting at a record rate. Both manufacturing and services were in retreat, though the former sector posted by far the biggest decline. The survey also showed output prices falling at their sharpest rate since July 2003, consistent with signs of deflation in the US and UK.

One look at the CDS Index Movements table below shows the impact of the dire economic outlook on CDS spreads. The indices are now pricing in default rates well in excess of anything seen in the past 25 years. Though the recession is likely to be a severe one, it is doubtful whether the rate of defaults will be in line with those implied by current spread levels. Other factors have contributed to this week’s sell-off.