The promise of green jobs arising from eco-innovation and upgrading Europe's building stock offers small firms some hope for economic recovery. EurActiv's media network surveys the green economic landscape across Europe. Around €40 billion is being injected into the European economy by the EU executive in a bid to stimulate green job creation. Another €3.9 billion of the European economic recovery plan has been ring-fenced for green R&D and infrastructure projects. Adding in investments by national governments brings the total to around €90 billion. However, critics say this is a fraction of the €150 billion invested by China and the funds have yet to trickle down to SMEs.
Around €40 billion is being injected into the European economy by the EU executive in a bid to stimulate green job creation. Another €3.9 billion of the European economic recovery plan has been ring-fenced for green R&D and infrastructure projects.
Adding in investments by national governments brings the total to around €90 billion. However, critics say this is a fraction of the €150 billion invested by China and the funds have yet to trickle down to SMEs.
U.S. consumers spent significantly less per person at the start of the holiday season this weekend, dimming hopes for a retail comeback that would help propel the economy early in 2010. The lackluster spending could pressure retail stocks on Monday as some investors were looking for a stronger showing compared with a year earlier, when consumers were being hammered by the recession and credit crunch. "There may be a bit of a pullback, a little disappointment," said Patricia Edwards, chief investment officer at Storehouse Partners.
The lackluster spending could pressure retail stocks on Monday as some investors were looking for a stronger showing compared with a year earlier, when consumers were being hammered by the recession and credit crunch.
"There may be a bit of a pullback, a little disappointment," said Patricia Edwards, chief investment officer at Storehouse Partners.
Nov. 29 (Bloomberg) -- Black Friday sales advanced 0.5 percent from a year earlier as discounts on televisions, toys and computers drew budget-conscious crowds across the U.S., according to ShopperTrak RCT Corp.
We Don't Know How Black Friday Sales Were Yet | The Big Picture
Today, the WSJ ran this patently incorrect headline (which many TV stations dutifully (mis)reported: Black Friday Spending Rose Slightly Preliminary sales data showed shoppers spent $10.66 billion on Black Friday. That's 0.5% more than last year. The figures were compiled by ShopperTrak RCT Corp., a Chicago research firm that tracks sales at more than 50,000 stores That's simply wrong. We don't have a clue yet as to how Black Friday sales were. Not even a remotely wild guess. What the WSJ should have written were words to the effect of: "An analysis of mall foot traffic suggests that Black Friday saw a slight increase in shoppers. Since we did not analyze actual sales, or even credit card transaction, we actually have no idea how sales did. ShopperTrak's guessed that sales might have been up as much as a half a percentage, but that's just spitballing it. Every year, various groups -- NPD, Retail Federation, Shopper Track, and others -- release this weak ass data that is almost never correct. And each year, the press laps it up like manna from heaven.
Black Friday Spending Rose Slightly Preliminary sales data showed shoppers spent $10.66 billion on Black Friday. That's 0.5% more than last year. The figures were compiled by ShopperTrak RCT Corp., a Chicago research firm that tracks sales at more than 50,000 stores
Black Friday Spending Rose Slightly
Preliminary sales data showed shoppers spent $10.66 billion on Black Friday. That's 0.5% more than last year. The figures were compiled by ShopperTrak RCT Corp., a Chicago research firm that tracks sales at more than 50,000 stores
That's simply wrong. We don't have a clue yet as to how Black Friday sales were. Not even a remotely wild guess.
What the WSJ should have written were words to the effect of:
"An analysis of mall foot traffic suggests that Black Friday saw a slight increase in shoppers. Since we did not analyze actual sales, or even credit card transaction, we actually have no idea how sales did. ShopperTrak's guessed that sales might have been up as much as a half a percentage, but that's just spitballing it.
Every year, various groups -- NPD, Retail Federation, Shopper Track, and others -- release this weak ass data that is almost never correct. And each year, the press laps it up like manna from heaven.
This leads to a broad overestimation of US economic strength in the press because first impressions weigh heavier.
But I might be wrong!
The government of Dubai does not guarantee the debt of Dubai World, a senior finance department official said on Monday, effectively washing its hands of the woes facing the embattled conglomerate. "It is true that the government is the owner, but as the firm has several activities and exposed to different sorts of risks, the decision was from the day of its establishment that the company would not be guaranteed by the government," head of the Dubai Department of Finance Abdulrahman al-Saleh said in an interview with state-owned Dubai Television.
"It is true that the government is the owner, but as the firm has several activities and exposed to different sorts of risks, the decision was from the day of its establishment that the company would not be guaranteed by the government," head of the Dubai Department of Finance Abdulrahman al-Saleh said in an interview with state-owned Dubai Television.
When Qatar's biggest natural gas shipment to the U.S. arrived this month, it signaled to Barclays Capital Inc. and PFC Energy that this year's worst performing commodity investment won't recover in 2010. Murwab, a Qatari liquefied natural gas tanker, carried the first shipment to the U.S. from the Persian Gulf nation since June 2008. Its cargo, enough to heat about 9 million homes for a day, added to the largest gas inventories for this time of year since at least 1994, Energy Department data show. Rising supplies threaten to hurt the record-large $4.2 billion bet in the U.S. Natural Gas Fund LP, while traders hold 51 percent more options contracts to buy gas than they do to sell. The International Energy Agency warned of a glut that Qatar's energy minister said may last until 2012.
Murwab, a Qatari liquefied natural gas tanker, carried the first shipment to the U.S. from the Persian Gulf nation since June 2008. Its cargo, enough to heat about 9 million homes for a day, added to the largest gas inventories for this time of year since at least 1994, Energy Department data show.
Rising supplies threaten to hurt the record-large $4.2 billion bet in the U.S. Natural Gas Fund LP, while traders hold 51 percent more options contracts to buy gas than they do to sell. The International Energy Agency warned of a glut that Qatar's energy minister said may last until 2012.
Thirty global financial institutions make up a list that regulators are earmarking for cross-border supervision exercises, the Financial Times has learnt.The list includes six insurance companies - Axa, Aegon, Allianz, Aviva, Zurich and Swiss Re - which sit alongside 24 banks from the UK, continental Europe, North America and Japan.The list has been drawn up by regulators under the auspices of the Financial Stability Board, in an effort to pre-empt systemic risks from spreading around the world in any future financial crisis....The list, which is not public, contains many of the multinational bank names that would be widely expected. The exercise follows the establishment of the FSB in the summer and is principally designed to address the issue of systemically important cross-border financial institutions through the setting up of supervisory colleges.... As a spin-off from that process, the groups on the list will also be asked to start drawing up so-called living wills - documents outlining how each bank could be wound up in the event of a crisis.
The list includes six insurance companies - Axa, Aegon, Allianz, Aviva, Zurich and Swiss Re - which sit alongside 24 banks from the UK, continental Europe, North America and Japan.
The list has been drawn up by regulators under the auspices of the Financial Stability Board, in an effort to pre-empt systemic risks from spreading around the world in any future financial crisis....The list, which is not public, contains many of the multinational bank names that would be widely expected.
The exercise follows the establishment of the FSB in the summer and is principally designed to address the issue of systemically important cross-border financial institutions through the setting up of supervisory colleges....
As a spin-off from that process, the groups on the list will also be asked to start drawing up so-called living wills - documents outlining how each bank could be wound up in the event of a crisis.
Strong manufacturing and services helped India's economy shatter growth forecasts in the three months to the end of September, raising the prospect of an early rise in interest rates.The economy grew by 7.9 per cent year on year, according to official figures released on Monday, well above expectations of 6.3 per cent. The robust performance was driven by the government's fiscal stimulus measures to counter the effects of the global financial crisis.... Manufacturing output rose 9.2 cent and services 9.3 per cent, the government data showed. Agricultural production, yet to reflect the effects of a poor monsoon, rose 0.9 per cent.
The economy grew by 7.9 per cent year on year, according to official figures released on Monday, well above expectations of 6.3 per cent. The robust performance was driven by the government's fiscal stimulus measures to counter the effects of the global financial crisis.... Manufacturing output rose 9.2 cent and services 9.3 per cent, the government data showed. Agricultural production, yet to reflect the effects of a poor monsoon, rose 0.9 per cent.
After Dubai, will Greece be next? This question is technically a category error, since Dubai World is not a state but a state-owned company. But many investors rightly do not care about the difference. Last week investors started to fret about sovereign default in earnest. So what about Greece?... The speculation is now back, but there is one difference. The eurozone will not come to the rescue this time, verbally or otherwise, unless Greece meets a number of conditions the European Union is likely to impose in the coming months. The EU's authorities, rightly or wrongly, are more afraid of the moral hazard of a bail-out than the possible spillover effect of a hypothetical Greek default to other eurozone countries. If faced with a choice between preserving the integrity of the stability pact and the integrity of Greece, they are currently minded to choose the former. To safeguard what is left of the stability pact, they are determined to link any help to a country's willingness to comply. Otherwise the EU fears it might lose all leverage over budgetary processes elsewhere in the eurozone. And no country in the eurozone has flouted the pact more than Greece.
The EU's authorities, rightly or wrongly, are more afraid of the moral hazard of a bail-out than the possible spillover effect of a hypothetical Greek default to other eurozone countries. If faced with a choice between preserving the integrity of the stability pact and the integrity of Greece, they are currently minded to choose the former. To safeguard what is left of the stability pact, they are determined to link any help to a country's willingness to comply. Otherwise the EU fears it might lose all leverage over budgetary processes elsewhere in the eurozone. And no country in the eurozone has flouted the pact more than Greece.
What I am seeing and hearing on the news -- the reappointment of Bernanke -- is too hard for me to bear. I cannot believe that we, in the 21st century, can accept living in such a society. I am not blaming Bernanke (he doesn't even know he doesn't understand how things work or that the tools he uses are not empirical); it is the Senators appointing him who are totally irresponsible -- as if we promoted every doctor who caused malpractice. The world has never, never been as fragile. Economics make homeopath and alternative healers look empirical and scientific. No news, no press, no Davos, no suit-and-tie fraudsters, no fools. I need to withdraw as immediately as possible into the Platonic quiet of my library, work on my next book, find solace in science and philosophy, and mull the next step. I will also structure trades with my Universa friends to bet on the next mistake by Bernanke, Summers, and Geithner. I will only (briefly) emerge from my hiatus when the publishers force me to do so upon the publication of the paperback edition of The Black Swan.
No news, no press, no Davos, no suit-and-tie fraudsters, no fools. I need to withdraw as immediately as possible into the Platonic quiet of my library, work on my next book, find solace in science and philosophy, and mull the next step. I will also structure trades with my Universa friends to bet on the next mistake by Bernanke, Summers, and Geithner. I will only (briefly) emerge from my hiatus when the publishers force me to do so upon the publication of the paperback edition of The Black Swan.
No news, no press, no Davos, no suit-and-tie fraudsters, no fools. I need to withdraw as immediately as possible into the Platonic quiet of my library, work on my next book, find solace in science and philosophy, and mull the next step.
De Vita Beata En un viejo país ineficiente, algo así como España entre dos guerras civiles, en un pueblo junto al mar, poseer una casa y poca hacienda y memoria ninguna. No leer, no sufrir, no escribir, no pagar cuentas, y vivir como un noble arruinado entre las ruinas de mi inteligencia.
En un viejo país ineficiente, algo así como España entre dos guerras civiles, en un pueblo junto al mar, poseer una casa y poca hacienda y memoria ninguna. No leer, no sufrir, no escribir, no pagar cuentas, y vivir como un noble arruinado entre las ruinas de mi inteligencia.
Of blissful life In an old inefficient country, something like Spain between two civil wars, in a village by the sea, to possess a house and little wealth and no memory. Not to read, not to suffer, nor to write, not to pay accounts, and to live like a ruined noble among the ruins of my intelligence.
In an old inefficient country, something like Spain between two civil wars, in a village by the sea, to possess a house and little wealth and no memory. Not to read, not to suffer, nor to write, not to pay accounts, and to live like a ruined noble among the ruins of my intelligence.
Nov. 30 (Bloomberg) -- John Maynard Keynes proposed a tax on financial transactions in the middle of the Great Depression, and another economist, James Tobin, revived the idea in the 1970s as a way to counter currency market speculation. Neither effort gained much acceptance. Now, a growing number of economists and politicians argue that it's time for a levy on trading stocks, bonds, currencies and derivatives. U.K. Prime Minister Gordon Brown said on Nov. 7 that a transaction tax might compensate for the billions of dollars that the public has spent on bank bailouts. Government officials in France, Germany and Austria have voiced their backing. U.S. Treasury Secretary Timothy Geithner answered Brown a day later, saying the tax was not something the U.S. would support. House Speaker Nancy Pelosi, on the other hand, says the idea has "substantial currency" among congressional Democrats. Even if political consensus on a transaction tax is lacking -- and Brown and Pelosi both say it would need to be implemented everywhere or not at all -- the idea is attracting supporters worldwide. "It's akin to a gambling tax on socially negative activities," says Andrew Sheng, a former chairman of the Hong Kong Securities and Futures Commission who now advises Chinese bank regulators. Trades that created big risks to the financial system, with the fewest benefits to the economy, might be taxed out of existence, Sheng says. That's because the tax would boost the cost of complex financial products, such as collateralized-debt obligations, that have several layers of transactions -- and slim profit margins, he says. $76 Billion The funds raised would be substantial: With stock and currency markets ringing up about $900 trillion in turnover each year and derivatives another $625 trillion, a tax of 0.005 percent might raise $76 billion annually, Sheng estimates.
U.K. Prime Minister Gordon Brown said on Nov. 7 that a transaction tax might compensate for the billions of dollars that the public has spent on bank bailouts. Government officials in France, Germany and Austria have voiced their backing. U.S. Treasury Secretary Timothy Geithner answered Brown a day later, saying the tax was not something the U.S. would support. House Speaker Nancy Pelosi, on the other hand, says the idea has "substantial currency" among congressional Democrats.
Even if political consensus on a transaction tax is lacking -- and Brown and Pelosi both say it would need to be implemented everywhere or not at all -- the idea is attracting supporters worldwide.
"It's akin to a gambling tax on socially negative activities," says Andrew Sheng, a former chairman of the Hong Kong Securities and Futures Commission who now advises Chinese bank regulators. Trades that created big risks to the financial system, with the fewest benefits to the economy, might be taxed out of existence, Sheng says. That's because the tax would boost the cost of complex financial products, such as collateralized-debt obligations, that have several layers of transactions -- and slim profit margins, he says.
$76 Billion
The funds raised would be substantial: With stock and currency markets ringing up about $900 trillion in turnover each year and derivatives another $625 trillion, a tax of 0.005 percent might raise $76 billion annually, Sheng estimates.
a tax of 0.005 percent might raise $76 billion annually
Interesting how that number scales.
A confiscatory and appallingly onerous 0.5% 'might raise' $7.6 trillion?
Of late, the Treasury, House, and Senate have put forward proposals for how to resolve large financial institutions. The problem is that none of them seem to deal with the elephant in the room, namely, how the responsible grownups are going to deal with particular creditors and counterparties. For better or worse, bankruptcy procedures are well established, even if they do not fit large complex financial firms very well. The key element is that either freezing counterparty positions or forcing them to take large haircuts could be highly disruptive, which is what a resolution process is supposed to avoid. The lack of attention to mechanics is troubling and suggests that these efforts in the end will amount to window-dressing. But Dan Arondoff offers an appealing, streamlined alternative : There was another way to resolve the collapse of Bear and AIG without having to bail out their bondholders. The impetus and justification for the intervention, recall, was to prevent a default on contracts to counter parties that might have a devastating systemic impact. But the very same funds that were injected into the firms as equity to be used by the firms to pay its counterparties, could have been made available directly to those same counterparties if the Fed or Treasury had announced a willingness to purchase the contracts directly from the counterparties. Let's take AIG. The Fed purchased $85 billion of stock -for 80% of the equity -that was immediately used to pay off CDS counterparties like Goldman Sachs. Once having injected the funds, the Fed became an equity holder in AIG, with a claim junior to all bondholders, both secured and unsecured. If the Fed had paid Goldman directly for its CDS contract (assuming Goldman was interested in selling), then the Fed would have averted a possible collapse of Goldman and acquired a claim on AIG - the Goldman CDS contract -that was senior to the equity holders and possibly senior to some debt holders and equal to some others. The Fed would have achieved a superior collateral position. AIG could have then undergone a normal bankruptcy. The Fed could have reduced taxpayer exposure further by setting its purchase offer for AIG claims at lower than 100% face value if it deemed that a lower payout would not risk financial meltdown,,,,The same principle would have seen the Fed offer to purchase Repo contracts from Bears' counterparties. Government does not need resolution authority over investment banks or bank holding companies. All that is required is authority (if it does not already exist) to offer to purchase contracts from counterparties of failing banks. It can then pursue collection of its claims in a normal bankruptcy process. This will resolve much of the moral hazard issue, as equity holders and bondholders will not be bailed out. It will reduce taxpayer exposure and the policy is credible.
But Dan Arondoff offers an appealing, streamlined alternative :
There was another way to resolve the collapse of Bear and AIG without having to bail out their bondholders. The impetus and justification for the intervention, recall, was to prevent a default on contracts to counter parties that might have a devastating systemic impact. But the very same funds that were injected into the firms as equity to be used by the firms to pay its counterparties, could have been made available directly to those same counterparties if the Fed or Treasury had announced a willingness to purchase the contracts directly from the counterparties. Let's take AIG. The Fed purchased $85 billion of stock -for 80% of the equity -that was immediately used to pay off CDS counterparties like Goldman Sachs. Once having injected the funds, the Fed became an equity holder in AIG, with a claim junior to all bondholders, both secured and unsecured. If the Fed had paid Goldman directly for its CDS contract (assuming Goldman was interested in selling), then the Fed would have averted a possible collapse of Goldman and acquired a claim on AIG - the Goldman CDS contract -that was senior to the equity holders and possibly senior to some debt holders and equal to some others. The Fed would have achieved a superior collateral position. AIG could have then undergone a normal bankruptcy. The Fed could have reduced taxpayer exposure further by setting its purchase offer for AIG claims at lower than 100% face value if it deemed that a lower payout would not risk financial meltdown,,,,The same principle would have seen the Fed offer to purchase Repo contracts from Bears' counterparties. Government does not need resolution authority over investment banks or bank holding companies. All that is required is authority (if it does not already exist) to offer to purchase contracts from counterparties of failing banks. It can then pursue collection of its claims in a normal bankruptcy process. This will resolve much of the moral hazard issue, as equity holders and bondholders will not be bailed out. It will reduce taxpayer exposure and the policy is credible.
Government does not need resolution authority over investment banks or bank holding companies. All that is required is authority (if it does not already exist) to offer to purchase contracts from counterparties of failing banks. It can then pursue collection of its claims in a normal bankruptcy process. This will resolve much of the moral hazard issue, as equity holders and bondholders will not be bailed out. It will reduce taxpayer exposure and the policy is credible.
From June 2008 to June 2009, reserves held by commercial banks with their central bank doubled in the eurozone, and increased by an even greater percentage in the UK and US, yet bank deposits and total bank assets barely changed, so the multiplier collapsed to zero. Banks, in aggregate, just absorbed the additional reserves by allowing their ratio of reserves to deposits to balloon, without any attempt to use their greater liquidity/reserves to expand their balance sheet. Why?This may appear to have been a purely passive response to cash injection, but nevertheless commercial bank treasurers will have consciously decided that accumulating vast cash reserves was preferable to using them in any other way. This may be partly insurance against uncertain future needs to roll-over wholesale funding. At a time of tightening bank capital requirements, and rising prospective defaults, the limitations on lending to private sector borrowers, except on most favourable terms, are obvious. But why not buy safe public sector debt? Lower yields on short-dated government bonds, pushed down by QE, as well as interest rate risk, enhanced by rising debt ratios, may make public sector debt appear less attractive compared to the safe remuneration on deposits at the central bank. This is a condition for a typical liquidity trap; hence my proposal for applying a negative return, a charge, on such deposits.
This may appear to have been a purely passive response to cash injection, but nevertheless commercial bank treasurers will have consciously decided that accumulating vast cash reserves was preferable to using them in any other way. This may be partly insurance against uncertain future needs to roll-over wholesale funding. At a time of tightening bank capital requirements, and rising prospective defaults, the limitations on lending to private sector borrowers, except on most favourable terms, are obvious.
But why not buy safe public sector debt? Lower yields on short-dated government bonds, pushed down by QE, as well as interest rate risk, enhanced by rising debt ratios, may make public sector debt appear less attractive compared to the safe remuneration on deposits at the central bank. This is a condition for a typical liquidity trap; hence my proposal for applying a negative return, a charge, on such deposits.
But why not buy safe public sector debt?
Here's one way to think about the liquidity trap -- a situation in which conventional monetary policy loses all traction. When short-term interest rates are close to zero, open-market operations in which the central bank prints money and buys government debt don't do anything, because you're just swapping one more or less zero-interest rate asset for another. Alternatively, you can say that there's no incentive to lend out any increase in the monetary base, because the interest rate you get isn't enough to make it worth bothering.
Jan Hatzius of Goldman Sachs has a very interesting short paper (no link, sorry) that makes it clear just how serious the zero lower bound on interest rates, aka the liquidity trap, is likely to be.
The banks are accummulating cash reserves because they need them to compensate for realised or expected losses from loans made during the bubble and gone bad. Quantitative Easing is an Central Bank operation of repair of the balance sheets of the banking sectors. This is appropriately done through the discount window and not through open-market operations which, in a liquidity trap, don't work anyway.
Quantitative Easing, though necessary, validates the credit practices of the previous bubble unless financial regulation is reformed to outlaw or at least constrain the credit instruments at the centre of the crisis. Securitisation needs to be reined in, off-balance sheet "special purpose vehicles" with lines of credit need to come onto the balance sheet. CDS need to be supplemented with the requirement to present a defaulted bond in order to collect the pay-off, making them akin to a repo and therefore relatively tame.
That's on the financial sector side. Fiscal policy is another barrel of fish and the central banks need to be accommodating by buying as much government debt as needed to fund the fiscal stimulus. Assuming, that is, that the government comes up with a sensible stimulus.
Why the above is not part of the standard discourse about the crisis is beyond me. Don't economists learn anything in school? En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
This is a condition for a typical liquidity trap; hence my proposal for applying a negative return, a charge, on such deposits.
I agree with Greg Mankiw[1] that it is time for central banks to stop pretending that zero is the floor for nominal interest rates. There is no theoretical or practical reason for not having the Federal Funds target rate and market rates at, say, minus five percent, if that is what your Taylor rule, or whatever heuristic guides your official policy rate, suggests.
Unemployment in the eurozone reached its highest level in more than a decade in October, as employers continued to cut jobs despite tentative signs of economic recovery.The uninterrupted rise in the number of jobless since February 2008 has pushed the unemployment rate to 9.8 per cent, the same as September figures, which on Tuesday were revised upwards from 9.7 per cent on a seasonally-adjusted basis.Countries in the eurozone now have 15.6m unemployed, the most since the European Commission started compiling data in the mid-1980s, and up 3m on a year ago.The headline figure hides considerable divergence in joblessness at national level. Dutch unemployed remains well below 4 per cent, whereas nearly one in five workers in Spain are looking for a job.The rise in joblessness is also uneven across the 16 countries that use the euro. Unemployment in Germany is at the same level as it was at the start of the economic crisis, and actually fell last month, to 7.5 per cent. France and Italy are still shedding jobs, however.
The uninterrupted rise in the number of jobless since February 2008 has pushed the unemployment rate to 9.8 per cent, the same as September figures, which on Tuesday were revised upwards from 9.7 per cent on a seasonally-adjusted basis.
Countries in the eurozone now have 15.6m unemployed, the most since the European Commission started compiling data in the mid-1980s, and up 3m on a year ago.
The headline figure hides considerable divergence in joblessness at national level. Dutch unemployed remains well below 4 per cent, whereas nearly one in five workers in Spain are looking for a job.
The rise in joblessness is also uneven across the 16 countries that use the euro. Unemployment in Germany is at the same level as it was at the start of the economic crisis, and actually fell last month, to 7.5 per cent. France and Italy are still shedding jobs, however.
