Krisis Ekonomi, Ribuan Pabrik Tutup Dalam 4 Tahun
Penguatan mata uang Euro menjadi penghalang.
Senin, 11 Februari 2013, 06:07 Iwan Kurniawan
VIVAnews – Krisis ekonomi global telah menyandera Perancis. Tingkat penurunan sektor industri di negara salah satu pendiri Uni Eropa ini terus terjadi.
Laporan analis data perusahaan, Trendeo, seperti dilansir laman The Local menunjukkan sekitar 1.000 pabrik tutup sejak Januari 2009. Pada 2012 saja, 266 pabrik bangkrut. Angka tersebut meningkat 42 persen dibanding tahun sebelumnya.
Tutupnya berbagai pabrik ini berimbas pada pekerjaan. Trendeo melaporkan 24.000 orang kehilangan pekerjaan pada 2012 dan 120 ribu orang di PHK sejak Januari 2009.
Analis Trendeo, David Cousquer, menjelaskan penguatan mata uang Euro menjadi penghalang bagi Perancis untuk bangkit. Euro mempengaruhi daya saing perusahaan Perancis untuk mengekspor barang-barang produksi.
“Euro telah menguat 10 persen sejak Juli 2012 dan itu merugikan perusahaan Perancis,” katanya.
Industri manufaktur dan otomotif terkena dampak paling besar. Sekitar setengah dari 24.000 orang yang dipecat sepanjang 2012 berasal dari pabrik otomotif.
PSA Peugeot Citroen, berniat mengurangi 8 ribu pe kerjanya. Proyek restrukturisasi pabrik tersebutsalah satu pabrik bersejarah di utara Perancis.
Menteri Pemulihan Industri Perancis, Arnaud Montebourg, menjelaskan penutupan pabrik-pabrik di Perancis tidak dapat dihindari. “Kami belum menemukan solusi lain. Kami tidak tahu apa lagi yang bisa kami lakukan,” katanya.
Produsen otomotif kebanggan Perancis, Renault, baru-baru ini mengumumkan akan memotong 7.500 pekerja. Pabrikan ban, Goodyear, juga mengumumkan akan menutup pabriknya di Amiens, Perancis. (umi)
China Passes U.S. to Become the World’s Biggest Trading Nation
By Bloomberg News – Feb 9, 2013
China surpassed the U.S. to become the world’s biggest trading nation last year as measured by the sum of exports and imports, ending the U.S. supremacy in global commerce that emerged after the end of World War II in 1945.
U.S. exports and imports last year totaled $3.82 trillion, the U.S. Commerce Department said yesterday. China’s customs administration reported last month that the country’s total trade in 2012 amounted to $3.87 trillion. China had a $231.1 billion annual trade surplus while the U.S. had a trade deficit of $727.9 billion.
China’s emergence as the biggest global trading nation gives it increasing influence, threatening to disrupt regional trading blocs as it becomes the most important commercial partner for countries including Germany, which will export twice as much to China by the end of the decade as it does to neighboring France, said Goldman Sachs Group Inc.’s Jim O’Neill.
“For so many countries around the world, China is becoming rapidly the most important bilateral trade partner,” O’Neill, chairman of Goldman Sachs’s asset management division and the economist who bound Brazil to Russia, India and China to form the BRIC investing strategy, said in a telephone interview. “At this kind of pace by the end of the decade many European countries will be doing more individual trade with China than with bilateral partners in Europe.”
The U.S. emerged as the preeminent trading power following World War II as it spearheaded the creation of the global trade and financial architecture and the U.K. began dismantling its colonial empire. China began focusing on trade and foreign investment to boost its economy after decades of isolation under Chairman Mao Zedong. Economic growth averaged 9.9 percent a year from 1978 through 2012.
China became the world’s biggest exporter in 2009, while the U.S. remains the biggest importer, taking in $2.28 trillion in goods last year compared with China’s $1.82 trillion of imports. HSBC Holdings Plc forecast last year that China would overtake the U.S. as the top trading nation by 2016.
China was last considered the leading economy during the height of the Qing dynasty. The difference is that in the 18th century, the Qing Empire — unlike rising Britain — didn’t focus on trade. The Emperor Qianlong told King George III in a 1793 letter that “we possess all things. I set no value on objects strange or ingenious, and I have no use for your country’s manufactures.”
Now China is the biggest energy user, has the world’s biggest car market and has the world’s largest foreign currency reserves. The trade figures underscore the need to draw China further into the global financial and trading architecture that the U.S. helped create, O’Neill said.
“One way or another we have to get China more involved in the global organizations of today and the future despite some of their own reluctance,” said O’Neill said, mentioning China’s inclusion in the International Monetary Fund’s Special Drawing Rights currency basket. “To not have China more symbolically and more importantly actually central to all these things is just increasingly silly.”
Last month China’s trade expanded more than estimated, with exports rising 25 percent from a year earlier and imports increasing 28.8 percent, government data released yesterday showed. China’s trade figures in January and February are distorted by the week-long Lunar New Year holiday that fell in January of last year and started today.
Eaton CEO Says China GDP Report Overstates Growth Rate
By Thomas Black – Feb 5, 2013
China’s official 7.8 percent economic growth for 2012 may have overstated expansion by twice the real rate, and is only now headed for a “legitimate” 8 percent gain, Eaton Corp. Chief Executive Officer Sandy Cutler said.
Based on indicators such as consumer consumption and electric power usage, China’s gross domestic product probably grew 3 percent to 4 percent last year, Cutler said yesterday in a telephone interview. Growth is accelerating now that China is past the distractions from its leadership change, he said.
“That’s what we and so many multinational companies have been feeling there in China for the last year and a half, the economy really hasn’t been growing at 7 or 8 percent,” Cutler said. “If we could get back to an 8 percent growth rate in China for 2013, that would be a pretty darn good year.”
His skepticism about the data echoes complaints from economists such as Li Wei of Standard Chartered Plc in Shanghai that China had inflated third-quarter growth before the November congress where the ruling Communist Party had its decennial transfer of power. Cutler runs a manufacturer that got more than half its 2012 revenue of $16.3 billion from outside the U.S.
Mark Williams and Qinwei Wang, economists with Capital Economics Ltd. in London, wrote in October that China’s third- quarter economic growth of 7.4 percent was “implausible.” Standard Chartered said in October its analysis indicated the economy expanded 6.5 percent in the quarter.
China’s government reported that GDP growth decelerated from 9.3 percent in 2011 and 10.4 percent in 2010. Xi Jinping became Communist Party general secretary in November.
China tended to “tamp down” reported GDP expansion as it ran at 12 percent or more in 2006 and 2007, Cutler said. The government boosted the official tally after slowing growth to quell inflation, said Cutler, 61, whose businesses at Eaton include hydraulic equipment, aerospace parts and drive trains for trucks.
“Coming out of the 2008 recession when they had this huge stimulus program, the economy got really hot and they had to cool it off,” Cutler said in an interview following Eaton’s quarterly earnings report. “Now that the new government has been seated, you’re more likely to see the preconditions for more growth in China.”
China’s economy is likely to gain strength as the year unfolds, Cutler said. Orders for hydraulic parts from construction-equipment makers are beginning to pick up, he said.
In the U.S., housing and non-residential construction will help drive economic growth of about 2 percent, Cutler said. Eaton, which completed the purchase of Cooper Industries Plc on Nov. 30, sells electrical equipment for home and commercial construction, giving it a good glimpse into future demand, Cutler said.
The next supermodel
Politicians from both right and left could learn from the Nordic countries
Feb 2nd 2013 |From the print edition
SMALLISH countries are often in the vanguard when it comes to reforming government. In the 1980s Britain was out in the lead, thanks to Thatcherism and privatisation. Tiny Singapore has long been a role model for many reformers. Now the Nordic countries are likely to assume a similar role.
That is partly because the four main Nordics—Sweden, Denmark, Norway and Finland—are doing rather well. If you had to be reborn anywhere in the world as a person with average talents and income, you would want to be a Viking. The Nordics cluster at the top of league tables of everything from economic competitiveness to social health to happiness. They have avoided both southern Europe’s economic sclerosis and America’s extreme inequality. Development theorists have taken to calling successful modernisation “getting to Denmark”. Meanwhile a region that was once synonymous with do-it-yourself furniture and Abba has even become a cultural haven, home to “The Killing”, Noma and “Angry Birds”.
As our special report this week explains, some of this is down to lucky timing: the Nordics cleverly managed to have their debt crisis in the 1990s. But the second reason why the Nordic model is in vogue is more interesting. To politicians around the world—especially in the debt-ridden West—they offer a blueprint of how to reform the public sector, making the state far more efficient and responsive.
From Pippi Longstocking to private schools
The idea of lean Nordic government will come as a shock both to French leftists who dream of socialist Scandinavia and to American conservatives who fear that Barack Obama is bent on “Swedenisation”. They are out of date. In the 1970s and 1980s the Nordics were indeed tax-and-spend countries. Sweden’s public spending reached 67% of GDP in 1993. Astrid Lindgren, the inventor of Pippi Longstocking, was forced to pay more than 100% of her income in taxes. But tax-and-spend did not work: Sweden fell from being the fourth-richest country in the world in 1970 to the 14th in 1993.
Since then the Nordics have changed course—mainly to the right. Government’s share of GDP in Sweden, which has dropped by around 18 percentage points, is lower than France’s and could soon be lower than Britain’s. Taxes have been cut: the corporate rate is 22%, far lower than America’s. The Nordics have focused on balancing the books. While Mr Obama and Congress dither over entitlement reform, Sweden has reformed its pension system (see Free exchange). Its budget deficit is 0.3% of GDP; America’s is 7%.
On public services the Nordics have been similarly pragmatic. So long as public services work, they do not mind who provides them. Denmark and Norway allow private firms to run public hospitals. Sweden has a universal system of school vouchers, with private for-profit schools competing with public schools. Denmark also has vouchers—but ones that you can top up. When it comes to choice, Milton Friedman would be more at home in Stockholm than in Washington, DC.
All Western politicians claim to promote transparency and technology. The Nordics can do so with more justification than most. The performance of all schools and hospitals is measured. Governments are forced to operate in the harsh light of day: Sweden gives everyone access to official records. Politicians are vilified if they get off their bicycles and into official limousines. The home of Skype and Spotify is also a leader in e-government: you can pay your taxes with an SMS message.
This may sound like enhanced Thatcherism, but the Nordics also offer something for the progressive left by proving that it is possible to combine competitive capitalism with a large state: they employ 30% of their workforce in the public sector, compared with an OECD average of 15%. They are stout free-traders who resist the temptation to intervene even to protect iconic companies: Sweden let Saab go bankrupt and Volvo is now owned by China’s Geely. But they also focus on the long term—most obviously through Norway’s $600 billion sovereign-wealth fund—and they look for ways to temper capitalism’s harsher effects. Denmark, for instance, has a system of “flexicurity” that makes it easier for employers to sack people but provides support and training for the unemployed, and Finland organises venture-capital networks.
The sour part of the smorgasbord
The new Nordic model is not perfect. Public spending as a proportion of GDP in these countries is still higher than this newspaper would like, or indeed than will be sustainable. Their levels of taxation still encourage entrepreneurs to move abroad: London is full of clever young Swedes. Too many people—especially immigrants—live off benefits. The pressures that have forced their governments to cut spending, such as growing global competition, will force more change. The Nordics are bloated compared with Singapore, and they have not focused enough on means-testing benefits.
All the same, ever more countries should look to the Nordics. Western countries will hit the limits of big government, as Sweden did. When Angela Merkel worries that the European Union has 7% of the world’s population but half of its social spending, the Nordics are part of the answer. They also show that EU countries can be genuine economic successes. And as the Asians introduce welfare states they too will look to the Nordics: Norway is a particular focus of the Chinese.
The main lesson to learn from the Nordics is not ideological but practical. The state is popular not because it is big but because it works. A Swede pays tax more willingly than a Californian because he gets decent schools and free health care. The Nordics have pushed far-reaching reforms past unions and business lobbies. The proof is there. You can inject market mechanisms into the welfare state to sharpen its performance. You can put entitlement programmes on sound foundations to avoid beggaring future generations. But you need to be willing to root out corruption and vested interests. And you must be ready to abandon tired orthodoxies of the left and right and forage for good ideas across the political spectrum. The world will be studying the Nordic model for years to come.
IMF: Kondisi Ekonomi Global Berangsur Normal
Hendra Kusuma – Okezone
Rabu, 23 Januari 2013 14:12 wib
JAKARTA – Risiko krisis nampaknya mulai mereda, pertumbuhan ekonomi global pun diperkirakan dapat mencapai 3,5 persen dari 3,2 persen pada 2012. Prediksi ini sejalan dengan membaiknya ekonomi Amerika serikat (AS) serta negara-negara berkembang yang menjadi sumber utama pertumbuhan.
“Tapi pemulihannya pun lambat, jadi harus ada kebijakan yang dapat mengatasi risiko penurunan untuk meningkatkan pertumbuhan ekonomi,” demikian diungkapkan Dana Moneter Internasional (International Monetery Fund/IMF) dalam updatenya ke World Economic Outlook (WEO), Rabu (23/1/2013).
Menurut IMF, kebijakan yang efektif diperlukan untuk mendukung kenaikan dalam pertumbuhan yang moderat pada beberapa negara berkembang (emerging market). Dia menilai pertumbuhan global bisa lebih kuat dari perkiraan.
Meski demikian, IMF menilai risiko penurunan ekonomi masih tetap signifikan. Pasalnya, stagnasi yang berkepanjangan di wilayah euro dan pengetatan fiskal di AS masih terjadi.
Di sisi lain, rencana stimulus Jepang akan membantu meningkatkan pertumbuhan dalam jangka pendek, dan hanya menarik negara tersebut keluar dari resesi dalam jangka pendek.
IMF memperkirakan pertumbuhan ekonomi global akan menguat secara bertahap sejak 2013. Oleh karena itu, pasar saham seluruh dunia naik, serta aktivitas di kawasan euro dan sekitarnya bergerak lebih dari yang diharapkan.
Selain itu, IMF juga memperkirakan dalam jangka pendek kawasan Euro diperkirakan mengalami sedikit kontraksi. Meskipun kebijakan pinjaman telah mengurangi risiko dan kondisi keuangan, baik untuk pemerintah dan bank di negara sekitarnya, karena menunjang sektor swasta.
Sementara ketidakpastian tentang resolusi akhir dari krisis keuangan global belum mengalami kemajuan. Dalam reformasi kebijakan dan prospek jangka pendek Jepang tidak berubah, meskipun negara tersebut berpotensi masuk dalam jurang resesi. (mrt)
China Economic Growth Picks Up for First Time in Two Years
By Bloomberg News – Jan 18, 2013 9:09 AM GMT+0700
China’s economic growth accelerated for the first time in two years, with industrial output picking up, after the government implemented policies to revive domestic demand as export growth slumped.
Gross domestic product rose 7.9 percent in the fourth quarter from a year earlier, the National Bureau of Statistics said in Beijing today. That compared with the 7.8 percent median estimate in a Bloomberg News survey and 7.4 percent in the previous period. Industrial output in December rose a more-than- expected 10.3 percent and fixed-asset investment for the year gained 20.6 percent.
Enlarge image China’s Economy Grew 7.9% in Fourth Quarter Vs 7.8% Estimate
Pedestrians and shoppers walk past Chinese national flags displayed outside a department store in Beijing, China. Photographer: Tomohiro Ohsumi/Bloomberg
The rebound may gather pace in the first half as infrastructure projects are rolled out and the housing market picks up, a boost for new leaders who are set to take office in March. Incoming Premier Li Keqiang may face a tougher second half as stimulus effects fade, a likely acceleration in inflation encourages monetary tightening and regulators grapple with shadow-banking risks.
“China is in a cyclical recovery and we can see that the recovery will continue into the first and second quarters, but what happens after that is quite uncertain,” Yao Wei, China economist with Societe Generale SA, said before the report. “What happens to the property market is the biggest upside and downside risk, while the rise in non-bank financing may lead regulators to tighten — we can’t simply assume policy will get easier from now on.”
Hong Kong-based Yao, ranked by Bloomberg as the most accurate forecaster for quarterly GDP, had forecast 7.9 percent for the quarter. She raised her estimate for expansion in the first three months of 2013 to 8.2 percent from 7.8 percent and for the second quarter to 7.9 percent from 7.5 percent, according to a note released yesterday. She expects momentum to fade in the second half, with growth slowing to 7.4 percent in the fourth quarter.
The economy expanded 7.8 percent for the full year, the least in 13 years, according to statistics bureau data, compared with the 7.7 percent median estimate in a Bloomberg survey of 32 economists. Growth may pick up to 8.1 percent this year, according to analysts polled by Bloomberg in December.
Outgoing Premier Wen Jiabao set a 2012 target of 7.5 percent in March, the lowest goal since 2004. The government will keep the target at 7.5 percent this year, Bloomberg News reported on Dec. 18, citing two bank executives and a regulatory official briefed on the matter.
Improving investor confidence in China’s outlook has lifted mainland stocks and the currency. The Shanghai Composite Index (SHCOMP), the nation’s benchmark gauge, has advanced 17 percent as of yesterday from an almost four-year low on Dec. 3. It was 0.7 percent higher at 10:02 a.m. local time today.
The yuan has appreciated 0.23 percent against the dollar this year as of yesterday, the best start since 2009, on signs China’s growth is accelerating. The currency touched 6.2124 per dollar on Jan. 14, the strongest level since the government unified the official and market exchange rates at the end of 1993.
The increase in industrial production compared with the 10.2 percent median forecast in a Bloomberg survey of 44 analysts and was the fastest pace since March. Retail sales climbed 15.2 percent from a year earlier, compared with the median analyst estimate of 15.1 percent and a 14.9 percent increase the previous month.
Fixed-asset investment excluding rural households for the January-to-December period compared with a 20.7 percent gain in the first 11 months of the year.
The central bank has paused from its monetary easing since July after two interest-rate cuts and three reductions in lenders’ reserve requirements starting in November 2011. At the same time, the government has accelerated investment-project approvals, trimmed fees for exporters and increased spending on infrastructure.
The investment is helping companies including China Railway Group Ltd., which said this week that it won 11 contracts valued at 29.8 billion yuan ($4.8 billion) to build urban railways, bridges and other infrastructure.
The growth rebound may support China’s new leadership headed by Xi Jinping as it tries to balance the need to create jobs and maintain social stability with a pledge to overhaul the economy and spread the benefits of the nation’s growth more equally. Xi and Communist Party No. 2 Li Keqiang, set to become premier in March, have signaled a shift in priorities for the world’s second-biggest economy that will entail higher “quality and efficiency” of expansion.
The cost of average annual expansion of more than 10 percent over the past decade was exposed this month when smog engulfed a swath of northern China, including the capital, Beijing, prompting calls from official media for government action to improve the environment.
Li called for the nation’s citizens to have patience as authorities work to reduce pollution and said that “solving this problem will also be a long-term process.”
–Nerys Avery, Zheng Lifei. With assistance from Ailing Tan in Singapore, Fion Li in Hong Kong, Zhang Dingmin in Beijing and Sunil Jagtiani in New Delhi. Editors: Scott Lanman, Paul Panckhurst
Jan. 17, 2013, 9:14 p.m. EST
China’s economy grows 7.9%, beating expectations
SYDNEY (MarketWatch) — The Chinese economy grew 7.9% year-on-year in the fourth quarter of 2012, beating forecasts for growth of 7.8% compiled by Dow Jones Newswires and Reuters. The fourth-quarter figure represented an increase from the 7.4% GDP growth posted by the Chinese economy in the third quarter of 2012. December retail sales were up 15.2% compared to a year ago. Industrial output in December rose 10.3% on year, in line with economist expectations, while 2012 non-rural fixed-asset investment climbed 20.6% year-on-year, also in line with expectations.
January 15, 2013
Global Economy Brightens With Modest Growth Ahead, World Bank Says
By ANNIE LOWREY
WASHINGTON — Some of the darkest clouds threatening the global economy have started to lift, according to the World Bank’s periodic update to its economic forecasts.
The latest version of the twice-yearly Global Economic Prospects report is one of the development bank’s least pessimistic in recent years, but hardly an exercise in optimism. It describes a “dramatic” easing of financial conditions around the world, stemming in part from policy changes to soothe the bond markets in Europe. Still, it warns that global growth will continue to be sluggish for years to come.
In the report, the World Bank estimates the world economy grew just 2.3 percent in 2012. It expects growth to pick up only modestly in the coming years, from 2.4 percent in 2013 to 3.3 percent in 2015.
Developing countries were responsible for more than half of global growth in 2012, the report said, and they will continue to be an engine of growth. The report estimates that developing countries grew 5.1 percent in 2012, and that the pace of growth will accelerate to 5.8 percent in 2015.
“Four years after the crisis, high-income countries are still struggling,” Andrew Burns, the report’s lead author, said in an interview. “Developing countries need to respond to that difficult environment not through fiscal and monetary stimulus, but rather by looking to reinforce their underlying growth potential in order to have sustainably stronger growth going forward.”
For the last four years, developing countries have remained in something of a defensive crouch, World Bank experts said. Their central banks and finance ministries have intently focused on managing the volatile financial and economic conditions emanating from the United States and Europe, and their policy making has focused on the short term.
But credit conditions have eased significantly in Europe, particularly since the European Central Bank, led by Mario Draghi, embarked on a major bond-buying program last year.
Growth has started to pick up in the United States, after taking a hit in the second half of 2012 because of uncertainty stemming from the presidential election and the so-called fiscal cliff, a series of automatic spending cuts and tax increases that Congress mostly averted this month.
Now, developing economies need to focus more on their domestic economic troubles, bank economists said. That might mean making long-term investments in infrastructure, education, public health or regulation, rather than focusing on short-term stimulus measures to counteract economic fluctuations from elsewhere around the globe.
“They have spent the past four years reacting to what’s going on in high-income countries,” said Mr. Burns, noting that different developing countries faced significantly different development challenges. “As a result, almost necessarily, they’ve been paying less attention to some of these long-term growth-enhancing reforms that are so necessary.”
The report says that significant downside risks to global growth persist, including stalled progress in solving the European debt crisis, fiscal uncertainty in the United States, a decline in investment in China and spiking oil prices. However, the report said, “the likelihood of these risks and their potential impacts has diminished, and the possibility of a stronger-than-anticipated recovery in high-income countries has increased.”
Developing countries may start to reorient away from a crisis mind-set, the bank said.
“The whole discussion has been dominated by the global crisis,” said Hans Timmer, the director of the development prospects group at the World Bank. “It’s logical that you are distracted, but there are several problems with that: If you don’t go back to the reform agenda, you don’t have that growth in the future.”
Weakness in large, wealthy countries continues to weigh on growth in the developing world, the report notes, hitting big exporters in South Asia, for instance. Political turmoil continues to rack the Middle East and North Africa, it said. But economic activity in East Asia has rebounded because of increasing regional trade and domestic demand in China.
In contrast, developed countries, like Germany, Japan and the United States, had growth of only 1.3 percent in 2012. The bank expects that growth to pick up starting in 2014, reaching 2.3 percent by 2015. The bank projects that the euro zone will continue to contract in 2013, reaching sluggish growth of 1.4 percent by 2015.
Global trade in goods and services is a bright spot in the report. Over all, such trade grew just 3.5 percent in 2012. The bank expects trade to jump 6 percent in 2013 and 7 percent by 2015, in no small part because of accelerating demand from new consumers in big developing countries.
“From hopes for a U-shaped recovery, through a W-shaped one, the prognosis for global growth is getting alphabetically challenged,” Kaushik Basu, the World Bank chief economist, said in a statement. “With governments in high-income countries struggling to make fiscal policies more sustainable, developing countries should resist trying to anticipate every fluctuation in developed countries and instead ensure that their fiscal and monetary polices are robust and responsive to domestic conditions.”
The year ahead in the euro zone: Lower risks, same problems
January 14, 2013 @ 9:50 am
By Nouriel Roubini
Financial conditions in the euro zone have significantly improved since the summer, when euro zone risks peaked because of German policymakers’ open consideration of a Greek exit, and the sovereign spreads of Italy and Spain reached new heights. The day before European Central Bank President Mario Draghi’s famous speech in London in which he announced that the ECB would do “whatever it takes” to save the euro, bond yields in Spain and Italy were at 7.75 percent and 6.75 percent, respectively, and rising. When the ECB announced its outright monetary transactions (OMT) bond-buying program, the euro zone was at risk of a collapse.
Since then, risks have abated significantly, thanks to a number of factors:
The ECB’s OMT has been incredibly successful in reducing the risks of breakup, redenomination and a liquidity/rollover crisis in the public debt markets of Spain and Italy. Although the ECB has yet to spend a single additional euro to buy the bonds of Spain and Italy, both short-term and longer-term sovereign spreads against German bonds have fallen substantially.
Following a number of political and legal hurdles, the successful operational start of the European Stability Mechanism (ESM) rescue fund provides the euro zone with another €500 billion of official resources to backstop banks and sovereigns in the euro zone periphery, on top of the leftover funds of its predecessor, the European Financial Stability Facility (EFSF).
Realizing that a monetary union is not viable without deeper integration, euro zone leaders have proposed a banking union, a fiscal union, an economic union and, eventually, a political union. The last is necessary to resolve any issue of democratic legitimacy that might result from national states transferring power from national governments to EU- or euro zone-wide institutions. This transfer of power also would have to involve the creation of such institutions to ensure solidarity and risk-sharing are developed in the banking, fiscal and economic unions.
The open talk in the summer by some German authorities about an exit option for Greece has turned into a tentative willingness to prevent and postpone such an exit. There are several reasons for this. First, Greece has done some austerity and reforms in spite of a deepening recession, and the current coalition is holding up. Second, an orderly exit of Greece is impossible until Spain and Italy are successfully isolated. Such an exit would lead to massive contagion, which would hurt not only the euro zone periphery but also the core, given extensive trade and financial links. Third, an economic disaster in Greece would be damaging to the CDU Party’s chances of winning the German elections. Thus, even when Greece inevitably underperforms on its policy commitments, Germany and the troika (the IMF, EU and ECB) will hold their noses and keep the funds flowing as long as the current coalition holds up.
Given these developments, the risk of a Greek exit in 2013 has been significantly reduced, even if the risk of an eventual Greek exit from the euro zone is still high, close to 50 percent by my estimation. Meanwhile, the narrowing of Spanish and Italian sovereign spreads has significantly diminished the risk that either country will fully lose market access and be forced to undergo a full troika bailout like Greece, Portugal and Ireland. Both Spain and Italy may in 2013 opt for a memorandum of understanding (MoU) that opens the taps of ESM and OMT support, but such official financing would inspire confidence as it would not be associated with rising, unsustainable spreads and a loss of market access.
While there is a much lower likelihood of disorderly events in the euro zone, there are still significant obstacles to deeper integration, as well as country-specific economic and political vulnerabilities. The biggest obstacle to the formation of a banking, fiscal, economic and political union is that Germany is pushing back against the time line for action, with the initial skirmish on ECB supervision of euro zone banks. This backpedaling reflects deep German skepticism on whether the resolution of the euro zone crisis requires a move toward greater union. Without a more credible commitment to austerity and reforms from euro zone periphery countries, lurching forward would imply that risk-sharing will turn into a large, long-term transfer union, which is unacceptable to Germany and the core. Thus, Germany will do whatever is necessary to delay the integration process, at least until after elections in fall 2013.
Meanwhile, there is a deep recession in the euro zone periphery that is spreading even to parts of the core: France will experience a recession in 2013, and even Germany is sharply decelerating as two of its main export markets, the euro zone periphery and China, contract and slow, respectively. The balkanization of economic activity between the euro zone core and the periphery persists. The balkanization of banking is ongoing as cross-border flows, interbank flows and smart money have left the periphery banks and found shelter in the core; in the case of public debt markets, balkanization and domestication continue as cross-border investors have left the periphery public debt markets, in spite of reduced yields, on top of abandoning periphery banks and corporates.
The euro zone periphery recession will continue in 2013: Fiscal austerity is ongoing; the euro is still too strong; periphery banks have capital shortages and liquidity concerns, and thus are achieving required capital ratios by contracting credit and selling assets; and consumer and business confidence is still depressed given falling output and employment. Moreover, private and/or public debts are still very high and possibly unsustainable over the medium term in a number of periphery countries, while the lack of growth adds to the debt sustainability risks. Potential growth is still very low in most of the periphery as demographic aging is ongoing, while structural reforms are occurring too slowly and only affect productivity growth after long lags.
Underlying all this is the issue of the loss of external competitiveness associated with external current account deficits that private foreign investors are unwilling to finance. Some internal devaluation is ongoing, leading to a reduction in unit labor costs, but that process is recessionary and occurring too slowly. Thus, though financial conditions have improved and tail risks have lessened, the fundamental problems of the euro zone remain.
Jan. 14, 2013, 4:01 a.m. EST
Western governments may soon borrow in renminbi
Commentary: Panda bonds could be good for China, Europe, U.S.
By David Marsh, MarketWatch
BEIJING (MarketWatch) — One of the most hotly discussed questions in world finance concerns the timing of the expected take-off of the Chinese renminbi as a worldwide financial transaction and reserve currency. International banks all over the world are preparing for a further wave of renminbi activity in coming years as the Chinese authorities gradually release the shackles on the international use of the currency.
Behind the scenes, differences of opinion are building up between China-domiciled banks and securities houses, which wish the Beijing authorities to act more aggressively on liberalization, and top Chinese financial officials, who take a cautious line because of worries about the possible disruptive monetary effect of extended deregulation.
An employee counts renminbi notes at a branch of China Post Bank in Baokang, Hubei Province.
One way of reconciling these opposing views would be to encourage governments in Europe, including the ESM and EFSF bailout funds set up to protect weaker euro members, to use the renminbi in sovereign borrowing on the onshore or mainland renminbi market.
This so-called Panda bond sector, which is most used by Chinese borrowers rather than foreign issuers, dwarfs the offshore Hong Kong renminbi bond market — so-called Dim Sum issues — which has attracted significant international attention.
The British Treasury has toyed with issuing Panda bonds but has turned down the idea so far.
The Panda market is far more important than the Dim Sum sector for China’s long march to establish the renminbi as a genuine international currency. Central banks will invest substantially in a reserve currency only if it is fully convertible and also offers deep and liquid domestic financial markets.
The renminbi at present does not match these criteria, but is encountering heavy demand from reserve managers around the world because of its growing use in international trade settlements and investment transactions. Deepening China’s financial markets would help meet this demand, which one international banker at a closed-door Chinese-European monetary symposium in Beijing at the weekend described as “insatiable.”
One Chinese economist at the symposium said that China and other Asian countries should build up a fully effective trade settlement infrastructure for local Asian currencies to rival the dollar-denominated SWIFT system.
Local currency Asian bond settlement should be added to this system. “Full capital-market liberalization may not be a prerequisite for internationalizing currencies,” the economist said. “Renminbi trade settlement is restrictive and controlled but can still contribute to reducing dollar dependence and diversification of settlement currencies.”
Already, some European governments have been making discreet soundings about tapping the mainland renminbi bond market, where total outstanding issuance of around 24 trillion renminbi is about 60 times the cumulative figure for Dim Sum bonds.
Of the total, 7 trillion renminbi represents corporate bond issues by China’s non-bank sector. The rest is made up of issues by the Chinese Finance Ministry and banks.
So far, Western governments have been dissuaded from raising renminbi because of the relatively low cost of borrowing in euros, the dollar or sterling, the difficulty of “swapping” renminbi raised through bond issues into local currencies, and the expectation (now dimmed) that the renminbi will appreciate further in coming years. In addition, debtor governments may fear the stigma of borrowing in anything else except their own national currencies.
However, the attractiveness of renminbi borrowing could rise in future as European interest rates rise with gradual withdrawal of central banks’ ultra-easy monetary policies and international demand for renminbi grows.
Landmark issues in mainland renminbi by high-quality European sovereigns, in substantially higher volumes than that commonly seen in Hong Kong, would find immediate favor among central bank asset managers around the world, who are showing increasing appetite for renminbi reserve holdings.
Europe’s week ahead: Global growth, Carrefour
European investors will look for signs of global growth in data from the U.S. and China. There are concerns over French supermarket retailer Carrefour, which reports fourth-quarter sales and luxury brand Burberry will give further clues on how the luxury sector is faring.
This demand for renminbi among official institutions would bring about several mutually reinforcing advantages. It would lower the cost of borrowing by cash-strapped Western governments, give them a new source of stable longer-term finance, and help fulfill the Chinese authorities’ desire to see a greater role for the renminbi in official reserve holdings.
Experts say top quality European governments could raise 10-year bonds in renminbi at 2% to 3%, similar to yields on the most stable euro members’ debt in euros.
In addition, by promoting the renminbi’s borrowing use by heavily indebted governments, the Chinese authorities would be arguably promoting worldwide monetary and financial stability. Siphoning off renminbi from the mainland Chinese market into stable long-term reserve holdings would offset Beijing’s concerns that renminbi inflows onto China would lead to destabilizing currency appreciation that would constrain exports and growth.
Furthermore, Western Panda bond issuers would have a natural interest in protecting their currency from depreciating against the renminbi, to lower the cost of debt-service payments.
The constraint of borrowing in renminbi could therefore act as a disciplinary influence on profligate Western governments, backing up general efforts to bring more order into a new worldwide monetary constellation. This would be an intriguing rerun of the position at the end of the 1970s, when the parlous state of the dollar forced the U.S administration under President Jimmy Carter to issue bonds in the D-mark and Swiss franc to stabilize the dollar — the so-called “Carter bonds”.
The Chinese authorities say they wish the renminbi to gain greater prominence to facilitate financing of cross-border trade and investment and lower China’s dependence on the dollar. However, they are worried that accelerated financial liberalization could lead to an over-rapid buildup of offshore renminbi, which could complicate exchange rate and monetary policy management and bring damaging volatility outflows and inflows.
Because of the only slow renminbi move towards attaining full reserve currency status, Chinese officials say the world is still a long way from a genuine multi-currency reserve system where the dollar shares its role with other countries in a framework of mutual “policy discipline.”
They also believe that alternatives for leading reserve currency status, such as an enhanced special drawing right or a new international currency, are not practicable.
They term the set-up that is emerging the “1 plus 4” system in which the dollar, as the dominant currency, co-exists with the euro, yen, sterling and renminbi.
In a significant signal of confidence towards the British authorities, a leading Chinese participant said, “The British pound will continue to be an important player with very special vitality and unique importance. The British empire no longer exists. But London, being located in the middle of east and west time zones, is still the most important financial center comparable to New York in many aspects. London has the advantage of financial freedom and openness, in foreign exchange trading , international bond issuance and financial derivatives. Ironically the benchmark rate for the U.S. dollar is determinate in London rather than New York, we have Libor not Nibor.”
Ekonomi China Diprediksi Rebound di 2013
Ade Hapsari Lestarini – Okezone
Minggu, 13 Januari 2013 16:29 wib
BEIJING – Perekonomian China siap bangkit kembali dan bangun dari tidur panjangnya pada 2013 ini. Ekonomi China sepanjang 2012 diketahui melandai akibat krisis ekonomi di Amerika Serikat (AS) dan Eropa.
Para ekonom yang telah disurvei AFP mengatakan, karena pimpinan komunis mereka telah disumpah, China siap kembali berinvestasi dengan mengusung model pembangunan bangsa serta mempromosikan “hidup bahagia” untuk semua.
Dilansir dari AFP, Minggu (13/1/2013), kendati demikian, ekonomi terbesar kedua di dunia ini diperkirakan tidak akan kembali ke pertumbuhan dua digit. Namun, prediksi para ekonom disambut baik di sektor keuangan yang diserang oleh krisis utang zona euro dan dan pemulihan ekonomi di AS.
Adapun setelah pertumbuhan ekonomi melambat selama tujuh kuartal berturut-turut, diperkirakan produk domestik bruto China (PDB) akan meningkat sebesar 8,0 persen pada 2013. Prediksi tersebut menurut perkiraan median dari 15 ekonom yang disurvei oleh AFP. Jajak pendapat juga memproyeksikan pertumbuhan 7,7 persen untuk 2012.
Selain itu, angka-angka tersebut juga akan melebihi target pemerintah sebesar 7,5 persen untuk 2012. Kendati angka tersebut jauh di bawah ekspektasi sebesar 9,3 persen pada 2011 dan 10,4 persen pada 2010. (ade)
Lew Taking Over at Treasury Puts Perennial Aide at Head
By Julianna Goldman – Jan 10, 2013
With his penchant for thinking several steps ahead, his organizational drive and his budget expertise, Lew, 57, has been Obama’s consummate aide. Now, as the president’s choice for Treasury secretary, Lew faces the prospect of becoming a leader at a critical juncture in the U.S.’s economic and fiscal future.
“As chief of staff you are staff and as Treasury secretary, you are principal — Jack has to make that transition,” said Ken Duberstein, a chief of staff to former President Ronald Reagan who first met Lew in the 1980s. “It’s not the invisible hand, it is the visible hand.”
If confirmed, Lew may need to play that hand as soon as next month, when the administration squares off with Congress over the U.S. debt ceiling. Lew’s job will be all the more difficult because his relations with House Republicans soured during the 2011 battle over the government’s borrowing limit.
Over the last three decades, when the country’s leaders have met to resolve vexing fiscal problems, Lew has had a seat in the room, albeit behind the scenes. He was an adviser to House Speaker Tip O’Neill during the 1983 Social Security overhaul, President Bill Clinton’s deputy budget chief during the tax-and-spending standoffs of the mid-1990s, and Obama’s budget director during the 2011 debt-ceiling talks.
Watch: What Would Jack Lew’s First Priority Be?
At Treasury, he’d be at the head of the table.
He’d oversee a staff of more than 100,000 around the world and his looping signature would be scribbled on the nation’s currency.
Obama today called Lew a “master of policy” and a person of integrity in tapping him to succeed Treasury Secretary Timothy F. Geithner.
In his new post, Lew would need to strengthen his ties to the business community — he has spent only about two and a half years of his four-decade professional career in that world –and cultivate relationships around the globe.
Cultivating relations with Republicans may be even more challenging.
When he confronts them over the debt limit, he’ll also seek to avoid $1.2 trillion in potentially crippling automatic spending cuts over the next nine years while keeping the U.S. government running when the current funding agreement expires.
In more than a dozen interviews with current and former colleagues as well as friends, some of whom requested anonymity to speak about events that weren’t public, Lew was described as someone ready for the challenge. He declined to be interviewed for this story.
Lew isn’t one to back down, as he showed during the last fight over the debt ceiling.
During the final hours of talks in the summer of 2011, Senate Republican aides offered the White House a proposal: They wanted the Medicaid insurance program for the poor to be included in hundreds of billions of dollars of spending cuts that would be triggered if lawmakers failed to reach a broader deficit-reduction deal in the coming year.
“No!” Lew, who had barely slept in weeks, yelled into the speaker phone in his office. “We’re not doing that.”
The call abruptly ended and Medicaid wasn’t touched, yet aides were startled by the rare display of anger. Lew himself was embarrassed over the outburst, people familiar with the incident said, asking for anonymity.
For some Republicans, Lew’s reaction spoke to what they see as his intransigence on behalf of the president.
House Republican aides said that during those talks, Lew preferred to explain to his opponents why they were wrong instead of negotiating. House Speaker John Boehner and Majority Leader Eric Cantor even asked to negotiate instead with National Economic Council Director Gene Sperling or Geithner, according to the people familiar with the discussions.
“If they could get away with it, they’d make Jack Lew a persona non grata on Capitol Hill,” Jim Manley, a former aide to Senate Majority Leader Harry Reid, said of Republicans.
Lew’s defenders say his confidence stems from knowing more about the budget than those with whom he’s negotiating and his unwillingness to capitulate on the president’s platform, particularly when Republicans resist compromise.
While Geithner came to the job with experience in U.S. and world financial markets, Lew has been mostly steeped in the domestic budget process.
He doesn’t carry the international prestige or experience the U.S. may need to work with Europe as it struggles through a debt crisis, or to manage trade relations with China. And administration officials have been advised by business leaders that Lew would need a strong deputy, someone to make up for the knowledge and clout that he lacks in international finance, according to people familiar with the process.
“He will have to introduce himself to the European leaders,” said Ted Truman, senior fellow at the Peterson Institute for International Economics in Washington.
“That he probably will be dealing heavily with U.S. fiscal issues in one form or another will give him an advantage,” said Truman, a former assistant Treasury secretary for international affairs under Clinton. “He can speak with authority on that from the U.S. standpoint.”
Lew graduated from Harvard College in 1978 and got his law degree from Georgetown University Law Center in 1983. Before Obama tapped him in 2010 to reprise his role as head of the Office of Management and Budget, Lew worked under Secretary of State Hillary Clinton as her deputy for Management and Resources, serving as the department’s chief operating officer.
Prior to that, he worked briefly in private industry — serving as managing director and chief operating officer of Citi Global Wealth Management and then at Citi Alternative Investments until 2009. After leaving Bill Clinton’s budget office in 2001, he became executive vice president and chief operating officer at New York University until 2006, overseeing budget, finance and operations.
Lew’s first boss at Citigroup, Todd Thomson, head of the global wealth management unit, said he hired him on the recommendation of Robert Rubin, a former Treasury secretary in the Clinton administration who led the New York-based firm’s executive committee.
Lew helped Thomson manage the unit’s thousands of brokers and financial advisers as the bank, then the biggest in the U.S., sought to better integrate divisions. The unit ran more smoothly once Lew joined, said Thomson, a former Citigroup chief financial officer who left in January 2007.
“I think of Jack as a very smart, devoid of politics, fact-based person who’s simply trying to get the job accomplished,” Thomson, who’s now chairman of Dynasty Financial Partners, said in an interview.
Lew moved in 2008 to Citi Alternative Investments, which managed billions of dollars in private-equity and hedge-fund investments, some of which were under pressure as the financial crisis neared. A group of the unit’s municipal bond funds also lost most of their value that year, placing the bank at the center of a regulatory probe and a wave of litigation from investors. Lew also helped oversee the closure of Old Lane Partners LP, a hedge fund that the bank bought for $800 million about a year previously.
His short stint at Citigroup doesn’t provide the same business experience as some of the other candidates Obama was considering for the Treasury job, including Evercore Partners Inc. (EVR) Chairman Roger Altman or American Express Chief Executive Officer Kenneth Chenault.
“The business community doesn’t know him too well,” said Jim Tisch, CEO of Loews Corp. (L) who met Lew at the end of his tenure as Clinton’s budget chief. “They may not like him based on what comes out with respect to corporate taxes, but he is really smart. He’s got a lot of miles under the hood.”
Tisch, whose family has been a long-time benefactor of NYU, connected Lew with the “powers that be” at the university when he was looking for nonprofit work in the private sector because of his “enormous bandwidth,” he said.
As Obama’s chief of staff, Lew has been a hard negotiator, deliberative and prepared. He’ll often ask legislative affairs director Rob Nabors for specific answers to possible questions that may come up at meetings. Sometimes it takes five minutes to get Lew the information, and sometimes five hours.
“More often than not, the information becomes incredibly relevant to the conversation — sometimes you can’t piece that together until two steps down the road,” said Nabors, who was Lew’s deputy at OMB. “He really is playing chess at a different level.”
With the exception of the Sabbath — he’s an orthodox Jew – – Lew is always on the clock. Still, he’s mindful of his employees’ needs. Before one conference call in November on the fiscal cliff — the more than $600 billion in tax increases and spending cuts that were scheduled to take place at the end of the year — Lew worked to set up the time to accommodate the personal schedules of some 25 aides.
“It’s nice to be important, but more important to be nice,” Lew often says, quoting O’Neill — his former boss and mentor.
Lew’s wife lives at their Riverdale, New York, home and he commutes on weekends, catching a train on Friday to make sure he arrives before sundown. That personal sacrifice was a consideration for him as he weighed whether he wanted the Treasury job.
His daughter lives in Washington and his son, who lives in New York, just had a second child. It’s common for Lew to pull out his iPad before and after meetings to show off videos of his grandchildren.
Yet when it comes to his job, “There’s a quiet ferocity to him,” said senior adviser David Plouffe. “He knows this inside and out. He’s not just making sure that we run a good process. He’s a contributor, but not with a heavy hand.”
He held daily fiscal cliff meetings around his desk at the White House to coordinate what the political, economic and communications teams were doing. A numbers guy and someone who has been around Washington for decades, Lew can stick to substance while gaming out the demands of Republicans and Democrats in Congress as well as the public response.
That knowledge comes from his decades of service in the nation’s capital. Lew came to Washington in 1973 and worked for the firebrand former New York Congresswoman Bella Abzug, before joining O’Neill’s team, where he eventually became a principal domestic policy adviser. He was O’Neill’s liaison to the 1983 National Commission on Social Security Reform headed by Alan Greenspan.
O’Neill, in meetings with House minority leader Bob Michel, made clear the authority he entrusted in his 30-year-old aide, saying, “Jack’s my man,” recalled Billy Pitts, who worked for Michel.
Even then, he was a tough negotiator, doctrinaire on behalf of his boss, yet pragmatic on a final agreement and good on his word, said Pitts, now a Republican strategist.
“At times, he would denigrate his own intellect just to flush me out on where the Republicans were on an issue,” said Pitts. “He wouldn’t give much, but if Tip were to say, ‘On this area we really have to seriously negotiate,’ he would. But the boundaries were clearly set and the cards very close to the chest.”
Lew’s worldview was informed by his Jewish faith as well as the battles O’Neill waged during the Reagan era and the compromises he forged to preserve Social Security, Medicare and Medicaid against steep cuts.
He has “the ability to combine an appreciation for the larger picture and implication with a knowledge and patience for the detail,” said Ari Weiss, who worked with Lew under O’Neill. The two were housemates when they moved to Washington after responding to a notice of someone looking for a kosher roommate.
Weiss and Lew made names for themselves as two key Jewish aides to the powerful Irish-American House speaker. Lew’s parents emigrated to the U.S. from Eastern Europe before the end of World War I and settled in New York, where Lew grew up.
“I was raised in a family that placed high importance on preserving our Jewish values and promoting our shared American values,” Lew said in a speech to the American Jewish Committee Global Forum in May.
Behind his wire-rimmed glasses, budget wonkiness and understated demeanor is someone who jokes around, slaps aides on the back to tell them they’ve done a great job and isn’t afraid to poke fun of himself, particularly when it comes to conceding his limited knowledge of pop culture.
Unlike most of the men who inhabit Obama’s inner orbit, Lew isn’t a sports guy. Aides even joked that they needed to give him a basketball tutorial before he went with Obama and U.K. Prime Minister David Cameron to Dayton, Ohio, in March for the first game of the men’s college tournament.
“He doesn’t have that grand savant political patina that you think most of these types of people would have,” said attorney Stan Brand, who supervised O’Neill’s interns, of which Lew was one. “He’s got a big brain, not a big head.”