""Many German workers believe, as one trade unionist recently lamented, that takeovers are being driven by a philosophy of "buy it, strip it and flip it"." Merkel, the PM of Germany, born in East Germany is dedicated to rightist principles. (She even - unwisely - backed a flat-rate tax.) This woman has NO delusions whatsoever about what the left promises (pap to the masses) and then fails to deliver (eyes bigger than their stomachs and ensuing government Debt Mountains). But, she did not win an outright plurality in the election that voted her into office (which she had to fight tooth and nail with machos from both the right and the left to obtain). She is walking a tightrope between her instincts that tell her that economies need continuous supervision but moderate regulation and the leftists in both France and Germany who are complaining about capitalist hedge-fund "vultures". The fact of the matter is that hedge-funds employ new management that, yes, does shuck jobs, restore financial balance ... but does inevitably rehire. still, they never rehire at the same salary levels and never the same number who lost their jobs. OTH, they save businesses from total closure ... and dead European smokestacks are a sorry sight everywhere. In fact, what disturbs most the Germans is the same pain and anguish that bothers the French. After forty odd years of living in a cocoon, they cannot possibly fathom that the paradigm has changed forever. Ask any Doctor/Economist; until patients/economies realize that they are sick, there is little hope that administering a remedy will be effective. The US and Europe have the same complaint, but different reasons. Unions in Germany cannot understand that the featherbedding and over regulation of employment is a thing of the past. American unions cannot understand that high-pay low-skilled jobs are going to the Far East (far more quickly than high-paying high-skilled jobs). Neither do politicians yet understand that in a liberal globalized economy governments no longer make the rules of the game, but must learn to obey them. Just this week, the French female candidate for President met with Merkel to suggest that the present crisis at Airbus be resolved by a government recapitalization of the company. Again the idiot-left thinks the state should come to the rescue. (They did the same in the 1970s & 1980s when successive administrations dumped billions into saving Honeywell-Bull, the national champion of French computer manufacturers, which finally went belly up.) I am not saying that Airbus will die. But, certainly, the problem with the company is NOT refinancing inefficient production lines (shared between Germany and France) but rationalizing those lines. That means redundancies. People cannot understand the VERY profound change in employment that the doubling of global manpower (in China, Russia and East Europe) has effected. It is a very bitter pill to swallow and there is NO QUICK FIX." |
| Betting with the house's money by Kenneth Rogoff Many people have been asking why the dollar hasn't crashed yet. Will the United States ever face a bill for the string of massive trade deficits...? ...[S]taggeringly, US borrowing now soaks up more than two-thirds of the combined excess savings of all the surplus countries in the world... Foreigners are hardly reaping great returns on investing in the US. On the contrary, they typically get significantly lower returns than Americans get on their investments abroad. ...[T]he central banks of Japan and China are holding almost two trillion dollars worth of low-interest bonds. A very large share of these are US treasury bonds and mortgages. This enormous subsidy to American taxpayers is, in many ways, the world's largest foreign aid program. ... Most sober analysts have long been projecting a steady trend decline in the dollar... So why hasn't more adjustment taken place already? The first answer, of course, is that the trade-weighted dollar has fallen - by more than 15% in real terms since its peak in early 2002. Yet the US deficits have persisted, and even risen, since then. The real driving force has been two-fold. First and foremost, America's government and consumers have been engaged in a never-ending consumption binge. On the consumer side, this is quite understandable. ... Overall, after almost 25 years of stunning prosperity, punctuated by only two mild recessions, most Americans feel pretty confident about their economic situation. ... So it is not surprising that private consumption continues to hold up... People have enjoyed such huge capital gains over the past decade that most feel like gamblers on a long winning streak. By now, they see themselves as playing with the house's (or their houses') money. (voir en bas du billet...) It is less easy to rationalise why the US government is continuing to run budget deficits despite a cyclical boom. When a fiscally responsible government launches a war, it typically cuts back on other domestic expenditures and raises taxes. The Bush administration did the opposite. It may not be good economics, but the strategy proved to be good politics, for a time. Unfortunately, it is unlikely the new Democratic majority in Congress will do much about it. Of course, it takes two to tango. In order for the US economy to run deficits with the world, other countries must be willing to ... supply ... savings. Ben Bernanke ... once famously pinned the whole US current account deficit on a "global savings glut". But it would be more accurate to say that there is global investment shortfall, with investment trending downwards despite the upward trend in global growth. This investment shortfall is due to many factors, but perhaps the main one is ... substantial medium-term institutional roadblocks to investment in many developing countries, where long-term returns now seem to be by far the highest. The net result is that money is being parked temporarily in low-yield investments in the US, although this cannot be the long-run trend. What then is future of the dollar? As long as the status quo persists, with strong global growth and stunning macroeconomic stability, the US can continue to borrow and run trade deficits without immediate consequence. Over time, the dollar will still decline, but perhaps by no more than a couple of percent a year. Nevertheless, it is not hard to imagine scenarios in which the dollar collapses. Nuclear terrorism, a slowdown in China, or a sharp escalation of violence in the Middle East could all blow the lid off the current economic dynamic. ... In sum, the fact that the US trade balance has defied gravity for so many years has made it possible for the dollar to do so, too. But some day, the US may well have to pay the bill for its spendthrift ways. When that day arrives, Americans had better pray that their creditors will be as happy to accept dollars as they are now. |
mm.de: Also waren die Notenbanken zu lange Cheerleader des Booms? Rogoff: Auch wenn die wichtigen Notenbanken heute politisch unabhängig sind (???) - was eine hervorragende Entwicklung ist -, sie sind nicht unbeeinflusst von der politischen Großwetterlage. Die Fed ist letztlich ein Political Animal. Gerade vor der Präsidentschaftswahl 2004 musste sie sehr vorsichtig sein mit Zinsanhebungen, George Bush wollte schließlich wiedergewählt werden. mm.de: Das Weiße Haus diktiert die Zinsen? Rogoff: Nein, so direkt läuft das nicht. Aber die Fed hat Wahlen immer im Blick - der Präsident ernennt die Mitglieder des Gouverneursrats. (Jeder weiss doch dass Herr Greenspans Verhalten sich den verschiedenen politischen Begebenheiten, vor und nach den Wahlen, durch eine subtil-laxere oder subtil-haertere Geldpolitik unterschieden hat...oder?) |
mm.de: Wird der Euro Chart zeigen den Dollar als Weltwährung ersetzen? Rogoff: Kaum. Dazu sind die Unsicherheiten über die Zukunft des europäischen Projekts zu groß. Viele Notenbanken auf der Welt hatten den Plan, ihre Devisenreserven allmählich zu diversifizieren, sodass sie bis 2020 etwa zu gleichen Teilen Dollar und Euro in ihren Portfolios gehabt hätten. Dieser Prozess ist vorbei, seit im vergangenen Jahr die Franzosen gegen die EU-Verfassung stimmten.(Rome wasn't built in one day...das muss auf alle Faelle anders gehen...) mm.de: Die Verfassung hat doch nur am Rande etwas mit der Währungsunion zu tun. Rogoff: Nun ja, der Euro war immer ein politisches Projekt. Die ökonomische Logik dahinter ist nicht so überzeugend.(Doch, denn es geht darum die 'politische Einheit' durch die zuerst 'wirtschaftliche Vereinigung' zu erzwingen...) Offen gesagt: Ich glaube, Deutschland ginge es besser, wenn es seine eigene Währung hätte. Ihr hättet niedrigere Zinsen, wenn Ihr nicht in einer Währungsunion mit Ländern wie Spanien und Italien wärt.(Das stimmt, aber das waere eine auf kurze Dauer bestehende Verbesserung, die im nachhinein wahrscheinlich auf schlimmere Weise zugrunde gehen wuerde...) |
mm.de: Inflation und Zinsen sind niedrig, auch in Deutschland. Der Euro funktioniert doch. Rogoff: Der Euro hat in einem bislang freundlichen weltwirtschaftlichen Umfeld funktioniert. Er hat noch keinen Stresstest bestehen müssen. Argentinien funktioniert momentan auch.(Also Argentinien kann man wirklich ueberhaupt nicht mit Laender aus dem Euroraum vergleichen...OUCH!!!) |
mm.de: Das klingt ganz nach Katastrophenalarm. Zeichnen Sie da nicht ein arg pessimistisches Szenario? Rogoff: Meinen Sie? Der Sinn des Projekts war doch, die Integration Europas voranzutreiben. Wenn es diese politische Dynamik nicht mehr gibt - warum am Euro festhalten? Man wird dann feststellen, dass er aus ökonomischer Sicht keine so großartige Idee war.(Schwachsinn, diese politische Dynamik kommt gerade erst jetzt so langsam in Fahrt...und P.-V. wiederholt hier das was er schon immer gesagt hat, was die politische Dynamik im Euroraum angeht 'Il faut laisser le temps au temps...') |
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