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The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 11:53:54 AM EST
Spain Unpaid Bills May Haunt Rajoy as States Crave Liquidity - Bloomberg

Spanish Prime Minister-electMariano Rajoy is set to inherit billions of euros of unpaid bills along with the euro region's third-largest budget deficit.

Spain's 8,000 municipalities and 17 semi-autonomous regions are suffering from a cash squeeze as many are shut out of markets, prompting them to delay paying suppliers. Regions' debt rose 1.5 percent to 135 billion euros ($176 billion) in the third quarter the Bank of Spain said today. Catalonia had the highest debt, at 39.3 billion euros.

Companies are being paid 157 days late on average, about three times the legal payment delay, according to the Platform Against Late Payment, a federation of employer groups, and pharmaceutical companies say they are owed 5.83 billion euros by public hospitals. While Rajoy has pledged to help local administrations pay suppliers, that may add to the state's debt burden and undermine efforts to lower sovereign borrowing costs.

"Rising commercial debt means there is more deficit and that the risk of missing deficit targets increases," said Marisol Blazquez, an analyst at the ratings company Moody's Investors Service in Madrid. "Apart from the Basque country, the Madrid region and Galicia, all the regions we rate are having liquidity issues."



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 12:03:47 PM EST
[ Parent ]
See Selective sovereign default, 4 months ago.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 04:17:47 AM EST
[ Parent ]
Spain's 8,000 municipalities and 17 semi-autonomous regions

I wonder where they got the "semi-autonomous regions" given that the Spanish name for these entities is Comunidades Autónomas.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 04:23:51 AM EST
[ Parent ]
Autonomous regions can be many things.

Autonomous area - Wikipedia, the free encyclopedia

An autonomous area or autonomous entity is an area of a country that has a degree of autonomy, or freedom from an external authority. Typically it is either geographically distinct from the rest of the country or populated by a national minority. Countries that include autonomous areas are often federacies. Autonomous areas can be divided into territorial autonomies, subregional territorial autonomies and local autonomies.

Of course, nothing is solved by using semi-autonomous.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Mon Dec 19th, 2011 at 07:24:41 AM EST
[ Parent ]
Iran, Russia's Tatneft Sign $1 Billion Accord to Develop Zagheh Oil Field - Bloomberg

Russia's OAO Tatneft (TATN) signed an accord valued at $1 billion with Iran to develop the Zagheh oil field in the Persian Gulf nation, where many energy projects face delays due to intensified sanctions by Western countries.

A preliminary deal was signed in Tehran earlier today between Tatneft, which is based in Russia's Tatarstan region, and Iran's Petroleum and Engineering Development Co., the Iranian Oil Ministry said on its news website Shana today.

Russia, which has opposed the latest financial and energy sanctions on Iran, is helping restart the dormant Zagheh field and seeking more local ventures as western companies curb their investment in Iran, the second-largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia. Western countries have been increasing pressure on Iran over its controversial nuclear program.

"If Iran is keen, Tatarstan is ready to increase cooperation in the oil and gas sectors," Tatneft Chairman and Tatarstan President Rustam Minnikhanov said in the Shana report. "The scope and diversity of Iran's gas and petrochemical projects is unbelievable."



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 12:03:57 PM EST
[ Parent ]
Banks Wooing Wealthy Women CEOs Say This Time Is Different - Bloomberg

About 75 women executives streamed up the marble staircase of the Harold Pratt House on Park Avenue in New York last month to a ballroom with cathedral ceilings and antique chandeliers.

They were attending "Women Unscripted," the second in a series of events put on by San Francisco-based Wells Fargo & Co. (WFC) aimed at attracting and retaining women executives as clients. Instead of focusing on financial planning or products for women, there was a presentation by Saj-nicole Joni, who advises chief executive officers as president of Cambridge International Group. After the discussion there was a chance to mingle at a wine tasting in the adjacent library.

While banks have courted women clients in the past, Wells Fargo, Citigroup Inc. (C), Barclays Plc (BARC) and others are increasingly focused on getting the assets of high-earning women executives, said Sylvia Ann Hewlett, founding president of the New York- based Center for Work-Life Policy.



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Sun Dec 18th, 2011 at 12:06:27 PM EST
[ Parent ]
and they can't promote from within because.....?

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Mon Dec 19th, 2011 at 03:26:41 AM EST
[ Parent ]
They're not in the business of generating new wealth. Their role is limited to exploiting wealth (and poverty).
by Andhakari on Mon Dec 19th, 2011 at 03:53:26 AM EST
[ Parent ]
This slump won't end until 2031  Market Watch,  (H/T Illargi at TAE)

Commentary: Our predicament parallels Long Depression of 1870s

LONDON (MarketWatch) -- In retrospect, it wasn't hard to see that the markets were becoming dangerously unstable. Germany had just adopted a new monetary system, and Europe was being flooded with cheap German money. Greece had signed up to a monetary union with Italy and France but was struggling to hold it together.

Financial markets had been deregulated. New technologies were transforming production and communications, allowing money to move across borders at lightening speed. And a massive new industrial power was flooding the world with cheap manufactured goods, blowing apart old industries.

When it all fell apart in an almighty crash, it was only to be expected.

A prophesy for London, New York or Berlin in 2012? Not exactly. It is a description of Vienna in 1873. In that year, in one of the great crashes of all time, the Austrian markets triggered collapses across Europe, swiftly followed by an equally spectacular collapse in New York. It was the start of what economic historians call the Long Depression, a prolonged period of volatility, unemployment and slumps that lasted an epic 23 years, only coming to an end in 1896.



"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Dec 19th, 2011 at 12:12:27 AM EST
[ Parent ]
Parallels and Peril  Market Watch

True, historical parallels are never precise. We won't replay the Long Depression of 1873 to 1896 exactly, nor will this slump necessarily last as long. It is, however, a far more instructive episode than the Great Depression of the 1930s. And there are five key lessons we should learn from it.

First, depressions can last a very long time, and when their origins are in a debt bubble they should be measured in decades not years. For a century or more, depressions have been relatively short, sharp episodes. They are like having a tooth pulled, rather than a chronic sickness -- painful, but over quite quickly. But it doesn't have to be that way. In the U.K., for example, this is already the longest recession since records began -- in the sense that output is still below its 2008 peak. It is more enduring than the depression of the 1930s. That is true of many other countries, as well. If, as seems likely, Europe, and perhaps the U.S., slips back into recession in 2012, it will be clear to everyone we are witnessing something far longer than the conventional economic textbooks allow for.

Second, this depression is structural. The Long Depression of the 19th century had its roots in financial speculation, technological change, and the arrival of a massive new player in the global economy. Our current depression likewise has its roots in three huge crises coming together at the same time. We have a debt bubble that had been building up over three decade and which burst spectacularly in 2008. The dollar is in long-term decline as a reserve currency, and as the anchor for the global monetary system, but there is still not much sign of what will replace it. And in the euro, the biggest single economic bloc has created the most dysfunctional monetary system in human history, threatening financial collapses on an unprecedented scale. Think of it as the world economy's suffering a heart attack, then a stroke, then getting picked up by an ambulance that crashes on the way to the hospital -- it is hardly surprising the patient isn't in good shape.

Three, it's uneven. The Long Depression of the 19th century was a sustained period of lower growth compared with what came before and what came afterward. Germany, for example, grew 4.3% annually between 1850 and 1873 and then at 4.1% between 1896 and 1913. But in the Long Depression years, it only managed a growth rate of just over 2% a year. It was similar in other countries. The markets remained volatile, with repeated booms and busts, regularly collapsing back into recession. They did grow occasionally, just as Japan has sometimes grown in what is now its second decade of slump. But the growth is never sustained.

....

Five, it won't be fixed easily. The parallel with the 1930s is dangerous, because it has convinced bankers and policy makers that if you can just pump up demand, everything will be OK. It won't.


For starters, just how long will it take before The Serious People accept that the business cycle is not going to save them this time?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Dec 19th, 2011 at 12:20:36 AM EST
[ Parent ]
Your "starters" is precisely the point.
this won't be over until all three structural problems get fixed. Debt needs to be paid down to manageable levels, a new reserve currency needs to be created, and the euro needs to be put out of its misery. None of these are simple tasks, and none will be done quickly.


tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 04:16:03 AM EST
[ Parent ]
GRRRRRRRR

This makes me so angry.
More Austrian economics rubbish.

The parallel with the 1930s is dangerous, because it has convinced bankers and policy makers that if you can just pump up demand, everything will be OK. It won't.

More learned helplessness.

The first correct lesson is:

If you don't pump up demand, you will have a LONG depression.

The second lesson of the 30s is: if you work hard on the politics, you can reform the banking system and start to put things right. There is no inevitability.

Finally, the technological change parallel is once again being snuck in. But the destabilising factor this time is mostly the injection of new labour forces - and we likewise know how to address this. It's a long road to forcing politicians to taking labour issues seriously, but it's not some "natural force" that cannot be addressed.

by Metatone (metatone [a|t] gmail (dot) com) on Mon Dec 19th, 2011 at 06:24:20 AM EST
[ Parent ]
  1. Putting "2031" in the headline demonstrates stupid illiteracy. Why should the new depression last exactly the same number of years as the previous one?

  2. How about starting the clock in 1971 or 1974? From my perspective of watching the news, we've been in economic crisis all my life, except the odd boom years here and there, with mass unemployment most of that period in a lot of countries.

  3. oddly enough, it's when you're near the bottom that things feel gloomiest and that, in fact, you're closest to moving our of it. Here's to an optimistic take...


Wind power
by Jerome a Paris (etg@eurotrib.com) on Mon Dec 19th, 2011 at 06:16:07 AM EST
[ Parent ]
Your think things are at their gloomiest now?
by Colman (colman at eurotrib.com) on Mon Dec 19th, 2011 at 06:40:57 AM EST
[ Parent ]
Well, a lot of people feel that there cannot be improvement, so that's one definition of gloomiest - lack of hope, rather than "worst"

Not saying it's right, but it's one way to see things.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon Dec 19th, 2011 at 07:09:23 AM EST
[ Parent ]
Veblen, writing in 1904 and motivated by the Long Depression that had recently ended, did argue that "depression" is in fact a psychological phenomenon of the business class.

Lots of people (myself included) feel that they could be improvement if only the people in positions of influence decided to do the right thing. The hopelessness comes from the political nature of the problem - we need to put on hold "what needs to be done" and concentrate first on winning power for who knows what on the vague hope that they will do what needs to be done, 10 years too late.

Just look at the Jürgen Stark interview elsewhere on this thread.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 07:13:01 AM EST
[ Parent ]
power for who knows whatwhom

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 07:18:03 AM EST
[ Parent ]
If one of the 'scare' youtube videos currently circulating on FB about the proposed legal powers of the proposed ESM has any basis in fact then 'for whom' would clearly be those in and benefiting from the financial sector, as proposals include allowing the ESM to sue governments that do not comply with requirements while making the same ESM immune to suits by governments.

Fortunately EU institutions are no less likely to do this than are US institutions likely to seek powers to arrest and hold citizens without warrant.  OH --- wait.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Dec 19th, 2011 at 04:48:48 PM EST
[ Parent ]
On 2, 2007/8 is a convenient starting point because of the banking panic. The 1970's crisis didn't have the characteristics of a panic.

On the other hand, David Graeber in Debt: the First 5000 years does set 1971 (Nixon abandons the gold standard) as the start of something new.

As for 3, there's this:

Four, good things are still happening. It isn't all doom and gloom. In the Long Depression, some countries were largely unscathed. New technologies and industries were being created. The telephone was invented, and the foundations of new industries based on the petrol engine and electricity were put into place. The people who got it right still made huge fortunes, and the workers in the right industries prospered. Overall, however, times were hard. And you had to position yourself carefully.
You have positioned yourself "correctly" in renewable energy finance, so...

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 06:41:15 AM EST
[ Parent ]
"I positioned myself correctly on the right side of the median - why can't everybody do the same?"

Wind power
by Jerome a Paris (etg@eurotrib.com) on Mon Dec 19th, 2011 at 07:11:42 AM EST
[ Parent ]
On the other hand, David Graeber in Debt: the First 5000 years does set 1971 (Nixon abandons the gold standard) as the start of something new.

The abandonment of the Bretton Woods system is a consequence as much as it is a cause of the changes: The combination of Lower 48 Peak Oil, the recovery of the German and Japanese industrial plants and unprofitable colonial engagements in Indochina conspired to turn the US from a structural CA surplus country into a structural CA deficit country. This in turn forced the US to abandon the Bretton Woods system, since the BW system requires the structural CA surplus country or countries to recycle their surpluses into capital investment in the deficit countries. And the new CA surplus countries lacked the institutional capabilities, geopolitical incentives and occasionally, as we have seen in the German case, sufficient grasp of the economics of international trade to take on that role.

The following forty years of European exchange rate policy can be seen without great loss of generality as an attempt to recreate the BW system without the realisation (let alone the political will) by the incumbent surplus countries to recycle their surpluses into productive investments.

That these attempts have collapsed three times in four decades should not, in retrospect, have been a major surprise.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Dec 19th, 2011 at 10:33:29 AM EST
[ Parent ]
I am optimistic that the problem CAN be fixed. I am pessimistic that it WILL be fixed any time soon. A fix depends on the time it takes to change the popular perception about how our societies can and should be run, and that seems to be moving in the wrong direction just now.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Dec 19th, 2011 at 06:52:50 AM EST
[ Parent ]
Putting "2031" in the headline demonstrates stupid illiteracy. Why should the new depression last exactly the same number of years as the previous one?

The point is that the public is not aware that a depression could last 23 years, because they don't know their economic history. They also don't know that the Long Depression used to be called the Great Depression until the 1930's rolled along with a deeper (but shorter) crisis. Just like the Great War, also known as The War to End All Wars was followed by WWII.

One of the biggest problems we face is that political leadership is in the hands of a generation born around 1950. All they know about hardship is from what their parents told them about WWII or their grandparents about the Depression, and their formative years were in the 1960s. The post-WWII system was set up by people who had lived the Great Depression as (young) adults and they were determined not to let a repeat happen.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Dec 19th, 2011 at 09:08:37 AM EST
[ Parent ]
Revealed: how City fees are eating into our pensions | Business | The Observer

The presentation revealed how savings and pension pots were being chipped away as they were moved around by traders. A simple stocks and shares Isa can be top-sliced up to 16 times as it is traded around, it was claimed.

And while this practice and the costs were not noticeable when the market was on the up, the economic downturn was highlighting how much was being taken.

The average equity fund manager makes explicit that they are charging about 1.5% a year of the sum invested for their services, but additional hidden expenses average 0.3% a year and trading costs cut a further 1.4% off an investment. And the situation is getting worse, according to the analysis, which found that charges had increased by 9% in the last decade. The presentation added: "If the trend of diminishing returns and increasing costs continues we could soon expect negative returns on average."

During the presentation, which was later shared with the Department for Work and Pensions, the point was illustrated by the example of a saver who made £70,000 in contributions between 1994 and 2009, only to see the £46,000 in profit from the rise in the value of the FTSE 100 being consumed in its entirety by the financial services industry.

this is the 'cream of british industry', cameron's base. nicer bunch of guys you'll never meet...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Dec 19th, 2011 at 03:01:25 AM EST
[ Parent ]
It's ironic - proof that private pensions are in a bigger crisis than public ones...
by Metatone (metatone [a|t] gmail (dot) com) on Mon Dec 19th, 2011 at 06:25:24 AM EST
[ Parent ]
Sort of like the "Medicare crisis" here, which is systemic crisis in which Medicare comes out looking a hell of a lot better than the private sector.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon Dec 19th, 2011 at 07:15:12 AM EST
[ Parent ]

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