This document summarizes a research paper that analyzes how the weaker economies in the Eurozone known as the PIIGS (Portugal, Italy, Ireland, Greece, Spain) have benefited German exports by keeping the value of the Euro relatively low. It discusses how Germany has leveraged this "forex steroid" effect to become the second largest exporter in the world. The document provides background on the formation of the Eurozone and differences between northern and southern European economies. It also examines the Swiss Franc as a proxy for what an independent Deutsche Mark currency may have looked like and how it appreciated sharply against the Euro after certain events.
- A report prepared for an upcoming EU summit proposes creating a closer fiscal and banking union that would give Brussels powers over countries' budgets if they breach debt rules.
- Finance ministers from France, Germany, Italy and Spain will meet on Tuesday to try to narrow differences on the eurozone's future.
- Spain saw its short-term borrowing costs almost triple at an auction as concerns remain over its request for a €100bn bank rescue package.
2009 APTEA Congress Belgrade SBrovko economic review.pptSerge Brovko
The document discusses several topics related to the global economy including:
1) There have been four major revolutions in world communication over time, with the current era bringing electronic data transfer and new technologies.
2) Serbia/Yugoslavia experienced two major events in the 20th century - World War 1 and US bombing of Serbia in 1999. These events contributed to economic crises and a "New World Order".
3) Past forecasts from the 1990s-2000s predicted high rates of growth that did not come to pass due to the global economic crisis.
4) The future of the globalized world is uncertain, with some arguing for a "de-globalized" world with regionalization of
- The economic crisis is controlled by a combination of factors including global economic powers like the US, China, and Europe seeking to influence growth trends and the development of new economic models.
- Rating agencies and some government policies prolong the crisis by pressuring Europe to maintain the status quo economic configuration and limiting recovery.
- The crisis will likely be sustained until issues around currency exchange rates and trade imbalances between economic powers are resolved, and countries take steps to reindustrialize and regain competitiveness.
Toscafund Discussion Paper- 1992 It will be deja-vu all over againsavvas savouri
- The document discusses how leaving the EU in 1992 through the UK's exit from the ERM (European Exchange Rate Mechanism) led to a weaker pound, stronger GDP growth, and rising stock markets, and argues a similar outcome will occur again.
- It argues the UK economy is stronger now than in 1992, with higher employment and a more service-oriented economy. Global conditions also favor the UK, with emerging markets like China now major trading partners.
- The author believes inflation will remain stable, predicted GDP growth of 1.8-2.2% in 2017, and that the UK will see the strongest economic growth in the EU after leaving the bloc.
The document discusses the debt crisis facing peripheral Eurozone countries like Greece, Ireland, Portugal, and Spain. While each country had different economic issues before the crisis, all are now dealing with large public debt burdens. The document analyzes whether the Eurozone constitutes an optimal currency area and concludes it does not fully meet the criteria. Monetary policy favored Germany over converging countries, exacerbating internal economic imbalances. For debt levels to stabilize, peripheral countries will need better fiscal discipline and time, as sudden austerity could be counterproductive.
Germany has experienced significant political and economic changes throughout its history. It transitioned from independent states to unification in 1871 under Prussian leadership. Germany became a powerful nation but lost World Wars I and II, after which it was divided until 1990. Germany is now a highly developed economy and is the largest in the European Union. It plays an important leadership role in the EU and organizations like the G7 and G20. Germany has a skilled workforce and remains one of the top global exporters and traders.
This document is a newsletter from the Centre For European Studies providing updates on actions taken in response to the financial crisis by EU member states and worldwide. It includes a foreword discussing the downsides of stimulus packages, including hidden protectionism. It then provides brief summaries of recent financial crisis-related news and actions in several EU member states, including Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Estonia, and France. Upcoming events are also listed.
The document discusses several economic and political issues:
1) European authorities have struggled to effectively address the escalating sovereign debt crisis, providing only temporary solutions while the problems get worse.
2) The US debt level has risen significantly due to tax cuts, spending increases, and the financial crisis, reaching nearly 100% of GDP.
3) Emerging markets saw large declines as investors fled to safe havens like US treasuries, though some emerging countries remain attractive long-term investments due to growth and demographics.
4) South Africa faces economic challenges including slowing growth compared to other emerging markets, while political risks also loom over policy and foreign investment.
- A report prepared for an upcoming EU summit proposes creating a closer fiscal and banking union that would give Brussels powers over countries' budgets if they breach debt rules.
- Finance ministers from France, Germany, Italy and Spain will meet on Tuesday to try to narrow differences on the eurozone's future.
- Spain saw its short-term borrowing costs almost triple at an auction as concerns remain over its request for a €100bn bank rescue package.
2009 APTEA Congress Belgrade SBrovko economic review.pptSerge Brovko
The document discusses several topics related to the global economy including:
1) There have been four major revolutions in world communication over time, with the current era bringing electronic data transfer and new technologies.
2) Serbia/Yugoslavia experienced two major events in the 20th century - World War 1 and US bombing of Serbia in 1999. These events contributed to economic crises and a "New World Order".
3) Past forecasts from the 1990s-2000s predicted high rates of growth that did not come to pass due to the global economic crisis.
4) The future of the globalized world is uncertain, with some arguing for a "de-globalized" world with regionalization of
- The economic crisis is controlled by a combination of factors including global economic powers like the US, China, and Europe seeking to influence growth trends and the development of new economic models.
- Rating agencies and some government policies prolong the crisis by pressuring Europe to maintain the status quo economic configuration and limiting recovery.
- The crisis will likely be sustained until issues around currency exchange rates and trade imbalances between economic powers are resolved, and countries take steps to reindustrialize and regain competitiveness.
Toscafund Discussion Paper- 1992 It will be deja-vu all over againsavvas savouri
- The document discusses how leaving the EU in 1992 through the UK's exit from the ERM (European Exchange Rate Mechanism) led to a weaker pound, stronger GDP growth, and rising stock markets, and argues a similar outcome will occur again.
- It argues the UK economy is stronger now than in 1992, with higher employment and a more service-oriented economy. Global conditions also favor the UK, with emerging markets like China now major trading partners.
- The author believes inflation will remain stable, predicted GDP growth of 1.8-2.2% in 2017, and that the UK will see the strongest economic growth in the EU after leaving the bloc.
The document discusses the debt crisis facing peripheral Eurozone countries like Greece, Ireland, Portugal, and Spain. While each country had different economic issues before the crisis, all are now dealing with large public debt burdens. The document analyzes whether the Eurozone constitutes an optimal currency area and concludes it does not fully meet the criteria. Monetary policy favored Germany over converging countries, exacerbating internal economic imbalances. For debt levels to stabilize, peripheral countries will need better fiscal discipline and time, as sudden austerity could be counterproductive.
Germany has experienced significant political and economic changes throughout its history. It transitioned from independent states to unification in 1871 under Prussian leadership. Germany became a powerful nation but lost World Wars I and II, after which it was divided until 1990. Germany is now a highly developed economy and is the largest in the European Union. It plays an important leadership role in the EU and organizations like the G7 and G20. Germany has a skilled workforce and remains one of the top global exporters and traders.
This document is a newsletter from the Centre For European Studies providing updates on actions taken in response to the financial crisis by EU member states and worldwide. It includes a foreword discussing the downsides of stimulus packages, including hidden protectionism. It then provides brief summaries of recent financial crisis-related news and actions in several EU member states, including Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Estonia, and France. Upcoming events are also listed.
The document discusses several economic and political issues:
1) European authorities have struggled to effectively address the escalating sovereign debt crisis, providing only temporary solutions while the problems get worse.
2) The US debt level has risen significantly due to tax cuts, spending increases, and the financial crisis, reaching nearly 100% of GDP.
3) Emerging markets saw large declines as investors fled to safe havens like US treasuries, though some emerging countries remain attractive long-term investments due to growth and demographics.
4) South Africa faces economic challenges including slowing growth compared to other emerging markets, while political risks also loom over policy and foreign investment.
This document is a financial crisis watch report from the Centre For European Studies that provides summaries of actions taken by EU member states and globally to address the financial crisis. It includes summaries of stimulus measures and bailouts in countries like Bulgaria, the Czech Republic, France, Germany, Greece, Hungary, and Italy. It also discusses criticism of stimulus plans from some EU leaders and debates around the appropriate size and timing of stimulus efforts within the EU.
1) Greece experienced divergence in growth after joining the EU due to deteriorating macroeconomics and structural problems. It had a trade deficit that increased after adopting the euro due to losing monetary policy control and competitiveness issues.
2) Tax evasion was common in Greece, costing the government billions in lost revenue. Shipping, which accounted for a large part of the economy, was negatively impacted by a rising euro/dollar exchange rate and oil prices.
3) High speculation on credit default swaps exacerbated Greece's external debt and caused interest rates to rise, making default more likely despite austerity measures. Greece had accumulated large imbalances like a growing trade deficit and debt as it tried to compensate through government borrowing.
This document summarizes and analyzes the debate around fiscal responsibility and debt in European countries. It argues that the narrative of "frugal" northern countries versus "lax" southern countries is misleading. While southern countries have higher government debt levels, northern countries have higher household debt levels. It also examines the economic roots of imbalances in the Eurozone, such as differences in industrial complexity between core and periphery countries. The document argues for further European integration and fiscal burden sharing to address these imbalances and ensure the long-term survival of the Eurozone.
Money Deficits and Inflation Evidence and Policy Issues of Euro Zone during D...paperpublications3
Abstract: An important lesson from the euro area sovereign debt crisis is that the need for sound economic policies does not end once a country has adopted the euro. There are no automatic mechanisms to ensure that the process of nominal convergence which occurs before adoption of the euro produces sustainable real convergence there after. The global financial crisis that started in 2008 has showed that some countries participating in Economic and Monetary Union (EMU) had severe weaknesses in their structural and institutional set-up. This has resulted in a large and protracted fall in real per capita income levels in these countries since 2008. While there has been real convergence in the European Union (EU) as a whole since 1999 owing to the catching up of central and eastern European (CEE) economies, there has been no process of real convergence among the 12 countries that adopted the euro in 1999 and 2001. This lack of convergence is related to several factors, notably weak institutions, structural rigidities, weak productivity growth and in sufficient policies to address asset price booms. Against this background, several factors appear crucial for ensuring real convergence in EMU: macroeconomic stability, and sound fiscal policy in particular; a high degree of flexibility in product and labor markets; favorable conditions for an efficient use of capital and labor in the economy, supporting total factor productivity (TFP) growth; economic integration within the euro area; and a more active use of national policy tools to prevent asset price and credit boom-bust cycles.
Keywords: Money Deficits, Inflation, Policy, Euro Zone,Sustainability, Monetary Policy, Investments.
Jel codes: H62, H68, H6, E41, E42
Title: Money Deficits and Inflation Evidence and Policy Issues of Euro Zone during Debt Crisis
Author: Dr. Stamatis Kontsas
ISSN 2349-7807
International Journal of Recent Research in Commerce Economics and Management (IJRRCEM)
Paper Publications
The document provides an overview of the Eurozone crisis, including important dates, statistics on the crisis' impact, details on Greece's debt crisis, the theory behind the Eurozone, and factors that contributed to the crisis. It discusses how Greece did not meet the criteria to join the Eurozone, its growing debt levels, credit downgrades, austerity measures, and the €110 billion bailout package provided. The structure of the Eurozone is identified as a cause due to issues like excessive borrowing, conflicting responsibilities for bank bailouts, and differences in macroeconomic policies across countries.
This document provides a summary of market risks in Portugal as of November 2011. It finds:
1) Volatility in European and Portuguese markets remains high, requiring close monitoring.
2) The Portuguese economy is in recession, government debt is increasing, and credit costs have risen substantially.
3) Sovereign credit risk is increasing in the euro area, as evidenced by widening sovereign CDS spreads and inverted yield curves in Portugal, Ireland, and Greece. Stock markets declined sharply in 2011, especially in Portugal.
Ivo Pezzuto on the EU integration Process: "More Catalonias to Come. Spain a ...Dr. Ivo Pezzuto
It is a system that rewards the most competitive countries such The Eurozone is an economic area and its closer integration rewards the stronger and more competitive economies while it penalizes the weaker ones without mechanism of stronger integration, risk sharing, social cohesion, fiscal transfer, and the effective implementation of structural reforms to boost the weaker countries level of productivity and competitiveness.
Eurozone falling chickens choice internal or external devaluationMarkets Beyond
The political and economic backround in Europe is awful and no good choice is left to solve the huge imbalances between countries: external or internal devalutation.
Whatever the route followed it will translate into a fall in standard of living of Europeans. The path followed by European politicians for the past 4 years has led to a dead end and they will soon have to decide which of two tough routes to follow..
The global economy is expanding more slowly than expected, with problems including slumping markets, high sovereign debt, and public bond defaults. While Europe's recovery is also facing headwinds, the region has seen unexpectedly strong earnings growth from companies. Momentum in Europe is being driven by a declining euro boosting exports, lower oil prices fueling consumer spending, and stimulus from the European Central Bank. However, structural issues like high unemployment and debt levels remain challenges. The document examines opportunities in specific European companies and warns that some municipal bonds like Puerto Rico's appropriation bonds are riskier than others due to their repayment structure being subject to political discretion over funding.
The document compares several major financial crises from 1929 to present day. It summarizes the key causes and impacts of each crisis, including the Great Depression, Black Monday, the European Exchange Rate Mechanism crisis, the Global Financial Crisis, the Greece crisis, Japan's debt crisis, and Brexit. It analyzes factors like leverage, liquidity issues, and policy failures that led to the crises. Economic indicators like GDP, unemployment, inflation, and stock market losses are compared across the different crises. Overall lessons on regulation, coordination, and stability of exchange rate mechanisms are discussed.
The Eurozone crisis began in 2009 as a debt crisis in Greece and has evolved into a broader economic and political crisis. The Eurozone faces high debt levels, weaknesses in banking systems, economic recession and unemployment, and trade imbalances. Disagreements among European leaders over crisis responses have exacerbated market anxiety. Recent developments include a Greek debt restructuring, new bailout packages, and elections empowering leaders critical of austerity, raising questions about the Eurozone's future.
Eurozone, macro economic imbalances and the bailoutMarkets Beyond
The document discusses macroeconomic imbalances within the eurozone that led to sovereign debt crises. It notes that budget deficits and public debt levels had been deteriorating in many European countries. The document analyzes debt levels relative to tax revenues, finding that Greece and Ireland in particular have debt exceeding 2-3 years of tax revenues and over 20% of tax revenues for 2011. It concludes that Greece will likely have to restructure its debt significantly as other countries like Dubai have done to manage high debt loads.
This document discusses the economic impacts of the COVID-19 pandemic. It notes that this crisis is different from previous ones due to its global scale and the simultaneous supply and demand shocks. Entire populations are on lockdown, causing a steep decline in production and surge in unemployment (supply shock). Demand is also dropping significantly due to loss of income and consumption postponed by lockdowns. Central banks have acted to increase liquidity but more fiscal support is needed. In the long run, countries may seek to reduce economic dependencies created by globalization and relocate some production domestically or regionally for security of supply.
This document provides an overview of several topics related to Anglo-American culture and history, including:
1) Demographic trends and population movements in Europe, America, and the colonization period from pre-Columbian times through the 18th century.
2) The establishment of governments and political systems in the early United States, including the Declaration of Independence, Constitution, and consolidation of federal structures.
3) Key figures and political developments in the early US, including Thomas Jefferson, Alexander Hamilton, and the Federalist vs. Democratic-Republican debate over the role of the federal government.
4) Westward expansion in the 19th century and doctrines like Manifest Destiny, as well as slavery and
Ryan Van Wagenen - 2018 European Private Equity Sector UpdateRyan Van Wagenen
The European private equity market showed strong growth in 2017, with deal volume up 6.9% and value increasing 14.4% to post-crisis highs. Buyout activity also increased, driven by a surge in mega-deals valued over $1 billion. Exits grew as well, with value rising 18.4% due to several large transactions. Going forward, steady dealmaking is expected to continue due to favorable economic conditions, though political uncertainty could impact the market.
The global economic downturn will negatively impact Egypt's economy in 2009, with growth expected to decrease to 5% from over 6% in 2008. Several sectors are especially vulnerable, including tourism, transportation, finance and real estate. However, Egypt is better insulated than other countries due to limited exposure to global financial markets and a strong banking system. Policymakers have an opportunity to take steps to lessen the recession's impact and position Egypt for future growth by implementing fiscal and monetary stimulus, supporting vulnerable sectors, and expanding social safety nets. Maintaining economic reforms will help Egypt's economy once the global situation improves.
This presentation considers the possibility of a second recession in the face of the ongoing European Debt Crisis, misguided attempts to address the crisis through austerity and struggling world economies. It also reflects on the impact of the probable break-up of EU’s currency union, measures to avert the scenario and vulnerable positions of the economies of the USA, China and India to more trouble in the Euro-zone.
The doomsday scenario has been summarized by Martin Wolf of Financial Times (May 17, 2012):
“The mechanisms at work would be powerful: bank runs; the imposition of (illegal) exchange controls; legal uncertainties; asset price collapses; unpredictable shifts in balance sheets; freezing of the financial system; disruption of central banking; collapse in spending and trade; and enormous shifts in the exchange rates of new currencies.
.
This document outlines a study on the impact of the Euro-zone crisis on India's current account deficit. The study has three objectives: 1) examine the impact of the crisis on the current account deficit, 2) analyze the European zone as a major trading partner of India, and 3) analyze the correlation between the Indian rupee and Euro exchange rates to evaluate the crisis's effect. The document provides background on the Euro-zone, crisis, current account deficit, and reviews literature on factors influencing current account balances. It describes the study's methodology, expected outcomes to indicate how the crisis impacted Indian exports and currencies, and lists references.
1) The IMF faces many challenges as global economic and political power shifts, including rising populism, protectionism, and great power rivalry. It must adapt to remain relevant.
2) Key changes needed are rebalancing voting shares to reflect economic weights, increasing financial resources, and making the top leadership truly global and merit-based.
3) Ultimately, the IMF relies on countries cooperating in a rules-based global system. If that cooperation breaks down, the IMF's role will be difficult to maintain.
The document summarizes Justin Lin's remarks on preparing for the next global food price crisis. Some key points:
1) The recent food crisis had severe impacts on global poverty and development goals.
2) The World Bank has worked closely with partners to effectively respond through policy advice, funding, and other measures.
3) Long-term solutions require addressing the root causes, including market failures from speculation and collapsed confidence in grain markets.
4) Innovative coordination of national stockpiles and commitments could help restore market functioning and confidence to prevent future crises.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive function. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms.
Маркетинг-тур "Байкал 2016" пройдет 9-19 сентября. Мы побываем в одних из самых красивых мест Байкала, Прибайкалья и Забайкалья, расположенных в Иркутской области и Республике Бурятия: Иволгинском и Ацагатском дацанах, селе Тарбагатай, поселке Листвянка, Тункинской долине, термальных курортных поселках Нилова Пустынь и Жемчуг, горном курорте Аршан, водопадах на реке Кынгарга, реках Ангара, Иркут и Селенга, культовом острове Ольхон и двух столицах Байкала – городах Улан-Удэ и Иркутск. Кроме того, мы проведем 2 дня на озере Хубсугул – жемчужине Монголии и "младшем брате" Байкала.
This document is a financial crisis watch report from the Centre For European Studies that provides summaries of actions taken by EU member states and globally to address the financial crisis. It includes summaries of stimulus measures and bailouts in countries like Bulgaria, the Czech Republic, France, Germany, Greece, Hungary, and Italy. It also discusses criticism of stimulus plans from some EU leaders and debates around the appropriate size and timing of stimulus efforts within the EU.
1) Greece experienced divergence in growth after joining the EU due to deteriorating macroeconomics and structural problems. It had a trade deficit that increased after adopting the euro due to losing monetary policy control and competitiveness issues.
2) Tax evasion was common in Greece, costing the government billions in lost revenue. Shipping, which accounted for a large part of the economy, was negatively impacted by a rising euro/dollar exchange rate and oil prices.
3) High speculation on credit default swaps exacerbated Greece's external debt and caused interest rates to rise, making default more likely despite austerity measures. Greece had accumulated large imbalances like a growing trade deficit and debt as it tried to compensate through government borrowing.
This document summarizes and analyzes the debate around fiscal responsibility and debt in European countries. It argues that the narrative of "frugal" northern countries versus "lax" southern countries is misleading. While southern countries have higher government debt levels, northern countries have higher household debt levels. It also examines the economic roots of imbalances in the Eurozone, such as differences in industrial complexity between core and periphery countries. The document argues for further European integration and fiscal burden sharing to address these imbalances and ensure the long-term survival of the Eurozone.
Money Deficits and Inflation Evidence and Policy Issues of Euro Zone during D...paperpublications3
Abstract: An important lesson from the euro area sovereign debt crisis is that the need for sound economic policies does not end once a country has adopted the euro. There are no automatic mechanisms to ensure that the process of nominal convergence which occurs before adoption of the euro produces sustainable real convergence there after. The global financial crisis that started in 2008 has showed that some countries participating in Economic and Monetary Union (EMU) had severe weaknesses in their structural and institutional set-up. This has resulted in a large and protracted fall in real per capita income levels in these countries since 2008. While there has been real convergence in the European Union (EU) as a whole since 1999 owing to the catching up of central and eastern European (CEE) economies, there has been no process of real convergence among the 12 countries that adopted the euro in 1999 and 2001. This lack of convergence is related to several factors, notably weak institutions, structural rigidities, weak productivity growth and in sufficient policies to address asset price booms. Against this background, several factors appear crucial for ensuring real convergence in EMU: macroeconomic stability, and sound fiscal policy in particular; a high degree of flexibility in product and labor markets; favorable conditions for an efficient use of capital and labor in the economy, supporting total factor productivity (TFP) growth; economic integration within the euro area; and a more active use of national policy tools to prevent asset price and credit boom-bust cycles.
Keywords: Money Deficits, Inflation, Policy, Euro Zone,Sustainability, Monetary Policy, Investments.
Jel codes: H62, H68, H6, E41, E42
Title: Money Deficits and Inflation Evidence and Policy Issues of Euro Zone during Debt Crisis
Author: Dr. Stamatis Kontsas
ISSN 2349-7807
International Journal of Recent Research in Commerce Economics and Management (IJRRCEM)
Paper Publications
The document provides an overview of the Eurozone crisis, including important dates, statistics on the crisis' impact, details on Greece's debt crisis, the theory behind the Eurozone, and factors that contributed to the crisis. It discusses how Greece did not meet the criteria to join the Eurozone, its growing debt levels, credit downgrades, austerity measures, and the €110 billion bailout package provided. The structure of the Eurozone is identified as a cause due to issues like excessive borrowing, conflicting responsibilities for bank bailouts, and differences in macroeconomic policies across countries.
This document provides a summary of market risks in Portugal as of November 2011. It finds:
1) Volatility in European and Portuguese markets remains high, requiring close monitoring.
2) The Portuguese economy is in recession, government debt is increasing, and credit costs have risen substantially.
3) Sovereign credit risk is increasing in the euro area, as evidenced by widening sovereign CDS spreads and inverted yield curves in Portugal, Ireland, and Greece. Stock markets declined sharply in 2011, especially in Portugal.
Ivo Pezzuto on the EU integration Process: "More Catalonias to Come. Spain a ...Dr. Ivo Pezzuto
It is a system that rewards the most competitive countries such The Eurozone is an economic area and its closer integration rewards the stronger and more competitive economies while it penalizes the weaker ones without mechanism of stronger integration, risk sharing, social cohesion, fiscal transfer, and the effective implementation of structural reforms to boost the weaker countries level of productivity and competitiveness.
Eurozone falling chickens choice internal or external devaluationMarkets Beyond
The political and economic backround in Europe is awful and no good choice is left to solve the huge imbalances between countries: external or internal devalutation.
Whatever the route followed it will translate into a fall in standard of living of Europeans. The path followed by European politicians for the past 4 years has led to a dead end and they will soon have to decide which of two tough routes to follow..
The global economy is expanding more slowly than expected, with problems including slumping markets, high sovereign debt, and public bond defaults. While Europe's recovery is also facing headwinds, the region has seen unexpectedly strong earnings growth from companies. Momentum in Europe is being driven by a declining euro boosting exports, lower oil prices fueling consumer spending, and stimulus from the European Central Bank. However, structural issues like high unemployment and debt levels remain challenges. The document examines opportunities in specific European companies and warns that some municipal bonds like Puerto Rico's appropriation bonds are riskier than others due to their repayment structure being subject to political discretion over funding.
The document compares several major financial crises from 1929 to present day. It summarizes the key causes and impacts of each crisis, including the Great Depression, Black Monday, the European Exchange Rate Mechanism crisis, the Global Financial Crisis, the Greece crisis, Japan's debt crisis, and Brexit. It analyzes factors like leverage, liquidity issues, and policy failures that led to the crises. Economic indicators like GDP, unemployment, inflation, and stock market losses are compared across the different crises. Overall lessons on regulation, coordination, and stability of exchange rate mechanisms are discussed.
The Eurozone crisis began in 2009 as a debt crisis in Greece and has evolved into a broader economic and political crisis. The Eurozone faces high debt levels, weaknesses in banking systems, economic recession and unemployment, and trade imbalances. Disagreements among European leaders over crisis responses have exacerbated market anxiety. Recent developments include a Greek debt restructuring, new bailout packages, and elections empowering leaders critical of austerity, raising questions about the Eurozone's future.
Eurozone, macro economic imbalances and the bailoutMarkets Beyond
The document discusses macroeconomic imbalances within the eurozone that led to sovereign debt crises. It notes that budget deficits and public debt levels had been deteriorating in many European countries. The document analyzes debt levels relative to tax revenues, finding that Greece and Ireland in particular have debt exceeding 2-3 years of tax revenues and over 20% of tax revenues for 2011. It concludes that Greece will likely have to restructure its debt significantly as other countries like Dubai have done to manage high debt loads.
This document discusses the economic impacts of the COVID-19 pandemic. It notes that this crisis is different from previous ones due to its global scale and the simultaneous supply and demand shocks. Entire populations are on lockdown, causing a steep decline in production and surge in unemployment (supply shock). Demand is also dropping significantly due to loss of income and consumption postponed by lockdowns. Central banks have acted to increase liquidity but more fiscal support is needed. In the long run, countries may seek to reduce economic dependencies created by globalization and relocate some production domestically or regionally for security of supply.
This document provides an overview of several topics related to Anglo-American culture and history, including:
1) Demographic trends and population movements in Europe, America, and the colonization period from pre-Columbian times through the 18th century.
2) The establishment of governments and political systems in the early United States, including the Declaration of Independence, Constitution, and consolidation of federal structures.
3) Key figures and political developments in the early US, including Thomas Jefferson, Alexander Hamilton, and the Federalist vs. Democratic-Republican debate over the role of the federal government.
4) Westward expansion in the 19th century and doctrines like Manifest Destiny, as well as slavery and
Ryan Van Wagenen - 2018 European Private Equity Sector UpdateRyan Van Wagenen
The European private equity market showed strong growth in 2017, with deal volume up 6.9% and value increasing 14.4% to post-crisis highs. Buyout activity also increased, driven by a surge in mega-deals valued over $1 billion. Exits grew as well, with value rising 18.4% due to several large transactions. Going forward, steady dealmaking is expected to continue due to favorable economic conditions, though political uncertainty could impact the market.
The global economic downturn will negatively impact Egypt's economy in 2009, with growth expected to decrease to 5% from over 6% in 2008. Several sectors are especially vulnerable, including tourism, transportation, finance and real estate. However, Egypt is better insulated than other countries due to limited exposure to global financial markets and a strong banking system. Policymakers have an opportunity to take steps to lessen the recession's impact and position Egypt for future growth by implementing fiscal and monetary stimulus, supporting vulnerable sectors, and expanding social safety nets. Maintaining economic reforms will help Egypt's economy once the global situation improves.
This presentation considers the possibility of a second recession in the face of the ongoing European Debt Crisis, misguided attempts to address the crisis through austerity and struggling world economies. It also reflects on the impact of the probable break-up of EU’s currency union, measures to avert the scenario and vulnerable positions of the economies of the USA, China and India to more trouble in the Euro-zone.
The doomsday scenario has been summarized by Martin Wolf of Financial Times (May 17, 2012):
“The mechanisms at work would be powerful: bank runs; the imposition of (illegal) exchange controls; legal uncertainties; asset price collapses; unpredictable shifts in balance sheets; freezing of the financial system; disruption of central banking; collapse in spending and trade; and enormous shifts in the exchange rates of new currencies.
.
This document outlines a study on the impact of the Euro-zone crisis on India's current account deficit. The study has three objectives: 1) examine the impact of the crisis on the current account deficit, 2) analyze the European zone as a major trading partner of India, and 3) analyze the correlation between the Indian rupee and Euro exchange rates to evaluate the crisis's effect. The document provides background on the Euro-zone, crisis, current account deficit, and reviews literature on factors influencing current account balances. It describes the study's methodology, expected outcomes to indicate how the crisis impacted Indian exports and currencies, and lists references.
1) The IMF faces many challenges as global economic and political power shifts, including rising populism, protectionism, and great power rivalry. It must adapt to remain relevant.
2) Key changes needed are rebalancing voting shares to reflect economic weights, increasing financial resources, and making the top leadership truly global and merit-based.
3) Ultimately, the IMF relies on countries cooperating in a rules-based global system. If that cooperation breaks down, the IMF's role will be difficult to maintain.
The document summarizes Justin Lin's remarks on preparing for the next global food price crisis. Some key points:
1) The recent food crisis had severe impacts on global poverty and development goals.
2) The World Bank has worked closely with partners to effectively respond through policy advice, funding, and other measures.
3) Long-term solutions require addressing the root causes, including market failures from speculation and collapsed confidence in grain markets.
4) Innovative coordination of national stockpiles and commitments could help restore market functioning and confidence to prevent future crises.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive function. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms.
Маркетинг-тур "Байкал 2016" пройдет 9-19 сентября. Мы побываем в одних из самых красивых мест Байкала, Прибайкалья и Забайкалья, расположенных в Иркутской области и Республике Бурятия: Иволгинском и Ацагатском дацанах, селе Тарбагатай, поселке Листвянка, Тункинской долине, термальных курортных поселках Нилова Пустынь и Жемчуг, горном курорте Аршан, водопадах на реке Кынгарга, реках Ангара, Иркут и Селенга, культовом острове Ольхон и двух столицах Байкала – городах Улан-Удэ и Иркутск. Кроме того, мы проведем 2 дня на озере Хубсугул – жемчужине Монголии и "младшем брате" Байкала.
OCEAN: Modeling the linkages between marine ecology, fishing economy and coas...Ecotrust
This document summarizes the OCEAN model developed by Ecotrust to analyze linkages between marine ecology, fishing economies, and coastal communities. The model uses GIS to combine data from multiple sources on species distributions, fishing activity, habitats, and communities. It has been applied to issues like the groundfish crisis on the west coast to assess the impacts of fishery closures and aim to balance ecology, economy, and equity. The model provides a way to understand how changes in the ocean affect coastal communities to help with marine management and policy decisions.
El documento presenta una demanda de aumento de alimentos. El demandante solicita un aumento de alimentos provisional contra el demandado, acompañando documentos que respaldan la demanda y solicitando una forma especial de notificación y asociación al sistema SITFA debido a su situación económica.
This document discusses using social media as a recruitment tool. It begins by defining social media and providing statistics on social media usage. It then outlines how companies can use various social media platforms like Twitter, Facebook, LinkedIn, YouTube, and blogs in their recruitment strategies. For example, companies can advertise jobs, engage in conversations to build their employer brand, and find potential candidates on these channels. The document also notes some challenges in using social media for recruitment, such as legal issues, being overwhelmed by the volume of content, and needing to overcome fears of ceding control. It emphasizes that social media should complement, not replace, a company's careers website. Overall, the document explores how recruiters can leverage different social media platforms and
Analysis of Spatial and Socioeconomic Baseline Information and Fishing Profil...Ecotrust
This document summarizes an analysis of spatial and socioeconomic data from commercial fisheries in support of a Joint Management Plan Review for three National Marine Sanctuaries. It outlines using fishermen's local knowledge to create profiles of fisheries in the study area and analyzing data from the California Department of Fish and Game on species caught, gear used, landings, and locations. Interviews with 25 local fishermen were also conducted to identify and rank critical fishing grounds. Next steps included finalizing a report and developing an online GIS tool to interact with the data.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms for those who already suffer from conditions like depression and anxiety.
E-Posta Kullanımının Temelleri ve @bil.omu.edu.tr Posta Servisinin KullanımıSalih Özdemir
Eylül 2012'de Ondokuz Mayıs Üniversitesi Bilgisayar Müh. Bölümü Oryantasyon Etkinliği çerçevesinde yaptığım sunum.
İçerik:
E-Posta Nasıl yazılır?
@bil.omu.edu.tr Nedir?
Giriş
Terimler
Gönderirken
Okurken
Yanıtlarken
Listeler
bilen@bil.omu.edu.tr
forum@bil.omu.edu.tr
bildim@bil.omu.edu.tr
The National Audit Office of Lithuania as an Independent Fiscal Institution.....OECD Governance
The National Audit Office of Lithuania fulfills three roles: Supreme Audit Institution, Audit Authority, and Independent Fiscal Institution. As an Independent Fiscal Institution, the National Audit Office endorses and assesses macroeconomic and budgetary forecasts, monitors fiscal policy and budget execution, and promotes fiscal transparency. It has independence and non-partisanship, and resources of 200,000 Euros annually. The office submits opinions to Parliament and responds to parliamentary questions to contribute to legislative debate.
Tugas ini membahas inheritance pada pemrograman berorientasi objek dengan:
1. Mengjelaskan istilah inheritance sebagai pewarisan kelas dimana subclass mewarisi atribut dan fungsi dari superclass
2. Memberikan contoh deklarasi inheritance dengan keyword "extends"
3. Menggambarkan konsep inheritance dalam diagram kelas UML dimana subclass mewarisi semua atribut dan fungsi dari superclass
The document provides instructions for various skills including proper hand washing technique, applying and removing gloves, using a fire extinguisher, calling 911, and moving objects with good body alignment by keeping the back straight, bending at the knees, and using the whole body to lift rather than just the back.
The document provides background information on Greece's economic crisis. It discusses how Greece accumulated large amounts of debt over time due to high government spending, a large public sector workforce, complex taxation systems that encouraged widespread tax evasion, and a culture where citizens did not feel obligated to pay high taxes due to inefficient public services. Entering the EU and adopting the euro exacerbated economic issues, as Greece could no longer use currency devaluation to promote competitiveness. Austerity measures imposed in response to debt crisis further worsened the economy.
The document discusses Greece and its relationship with the Eurozone. It provides a brief history of Greece and reviews the modern problems that could force Greece to leave the Eurozone. This would have uncharted consequences for both Greece and the Eurozone. The document cautions that economic and political unification can have both advantages and disadvantages, such as giving up sovereign rights to a common cause, and difficulties from cultural differences in solving mutual problems.
The document summarizes the road to the euro, the introduction and adoption of the euro as a common currency for European countries, and the impacts of establishing the euro. Key events included establishing the European Monetary Union and European Central Bank in 1998. The euro was introduced in 1999 and replaced national currencies by 2002. It increased trade and investment within the eurozone while reducing exchange rate risks and interest rates. However, Greece's debt crisis from 2008-2010 exposed weaknesses in the eurozone.
The European Union is an economic and political union of 27 member states located primarily in Europe. It began as a coal and steel community between six countries in 1950 and has since expanded to include most countries in Europe. The EU operates as a single market with free movement of goods, capital, services and people between member states. It aims to promote peace, prosperity and solidarity among its members. Key aspects of the EU include its single currency, the euro; economic cooperation and trade between members; and shared values around human rights, democracy and rule of law.
EUECF13A-1401 - Update of 3 publications_LEAFLET_ENGuillaume Frison
The document provides information about the history and purpose of the euro. It began as a "virtual currency" in 1999 and was introduced as banknotes and coins in 2002. The goals of the euro and Economic and Monetary Union were to allow European economies to function more efficiently and offer greater prosperity and jobs to citizens. Adopting the euro meant some loss of national sovereignty but also economic benefits like price stability, lower interest rates, and increased trade and investment across Europe.
The Euro Crisis & New Jersey Business (2012)Marissa Pié
This document discusses the Euro Crisis and opportunities it presents for New Jersey businesses. It provides background on the formation of the European Union and adoption of the Euro currency. It then explains the causes and effects of the current Euro Crisis, including high unemployment across Europe. It argues the Crisis creates opportunities for New Jersey businesses to increase exports to Europe, especially if a new Transatlantic Trade and Investment Partnership is enacted to reduce trade barriers between the US and EU.
This presentation explores the causes of the European debt crisis, timeline of the crisis, its extent, how it is being addressed, who is to blamed for the crisis and how it affects us.
The euro was adopted on January 1, 1999 by 12 of the 15 member states of the European Union as a single unified currency to replace individual national currencies like the French franc and German mark. On January 1, 2002, euro banknotes and coins were introduced and citizens exchanged their legacy currencies for euros, with the goals of creating a more stable economy, improving economic growth, and further integrating European financial markets and politics. While the euro has brought some economic benefits, issues around differing economic performance among countries and inability to independently adjust interest rates remain challenges.
The document discusses the state of European economies in January 2009 and August 2010. It summarizes that the European Commission raised its 2010 GDP growth forecasts for the EU and eurozone to 1.8% and 1.7% respectively, driven by strong export growth in Germany. However, growth is expected to slow in the second half of the year as the global economy hits a soft patch. Unemployment rates remain elevated across Europe.
1. Secondary Source Article Your Textbook Author, Dr. C. Brooks.docxjeremylockett77
1. Secondary Source Article: Your Textbook Author, Dr. C. Brooks on The European Union, pp 265-267
The European Union. As of this writing, Britain is poised to exit the EU in the near future.
At the start of the postwar boom, most of the nations of western Europe entered into various international groups that sought to improve economic relations and trade between the member nations. Those culminated in the creation of the European Community (EC) in 1967, essentially an economic alliance and trade zone between most of the nations of non-communist Europe. Despite various setbacks, not the least the enmity between French and British politicians that achieved almost comic levels at times, the EC steadily added new members into the 1980s. Its leadership also began to discuss the possibility of moving toward an even more
inclusive model for Europe, one in which not just trade but currency, law, and policy might be more closely aligned between countries. That vision of a united Europe was originally conceived in large part in hopes of creating a power-bloc to rival the two superpowers of the Cold War, but it also encompassed a moral vision of an advanced, rational economic and political system, in contrast to the conflicts that had so often characterized Europe in the past.
The EC officially became the European Union in 1993, and various member nations of the former EC voted (sometimes barely) to join in the following years. Over time, passport controls at borders between the member states of the EU were eliminated entirely. The member nations agreed to policies meant to ensure civil rights throughout the Union, as well as economic stipulations (e.g. limitations on national debt) meant to foster overall prosperity. Most spectacularly, at the start of 2002, the Euro became the official currency of the entire EU except for Great Britain, which clung tenaciously to the venerable British Pound.
The period between 2002 and 2008 was one of relative success for the architects of the EU. The economies of Eastern European countries in particular accelerated, along with a few unexpected western countries like Ireland (called the “Celtic Tiger” at the time for its success in bringing in outside investment by slashing corporate tax rates). Loans from wealthier members to poorer ones, the latter generally clustered along the Mediterranean, meant that none of the countries of the “Eurozone” lagged too far behind. While the end of passport controls at borders worried some, there was no general immigration crisis to speak of.
Unfortunately, especially since the financial crisis of 2008, the EU has been fraught with economic problems. The major issue is that the member nations cannot control their own economies past a certain point – they cannot devalue currency to deal with inflation, they are nominally prevented from allowing their own national debts to exceed a certain level of their Gross Domestic Product (3%, at least in theory), and ...
The debt crisis began in Greece in late 2009 when the new government revealed the budget deficit was much higher than previously reported. This undermined market confidence in Greece and caused borrowing rates to rise sharply. The crisis spread to other European nations like Portugal, Ireland, Spain and Italy who had taken on large debts. A bailout package was created by the IMF and Eurozone nations to help Greece, but long term solutions are still needed to restore confidence and prevent the crisis from worsening or spreading further. National austerity measures are being implemented but more fiscal coordination between European states may be required to contain the problem.
Politicians and experts made bold predictions that remaining outside the Eurozone would hurt the British economy through less investment, trade barriers, and relative economic decline compared to Eurozone members. They argued inward investment and jobs would decline as international companies preferred locating in Eurozone countries. Some said joining the Euro would help save the City of London from permanent decline and bring economic benefits by fully participating in the EU single market. Others predicted over time public opinion would change as people saw the success of the Euro on the continent.
The eurozone crisis began in 2007-2008 as a result of the global financial crisis. Countries like Greece, Portugal, Ireland, and Spain were hit especially hard due to fiscal deficits and housing bubbles. The crisis exposed flaws in the eurozone system like lack of coordination, supervision, and a centralized budget. To address the crisis, the European Financial Stability Facility was created to provide loans to struggling countries. Austerity measures have been implemented but long-term solutions are still needed like greater political and economic integration among eurozone members.
The document discusses the introduction of the euro currency in Europe in 1999 and its effects. Key points include removing exchange rate risks which makes cross-border investment easier, removing currency conversion fees for electronic payments between eurozone countries, and creating deeper financial markets in Europe. The euro also aims to increase price transparency and competition across borders. Adopting the euro helps provide macroeconomic stability for European countries under the European Central Bank.
This document discusses the structural defects and ineffective policies that have contributed to the Euro crisis. It argues that the Eurozone fails to meet many of the criteria for an optimal currency union, specifically lacking high labor mobility, risk sharing mechanisms across countries, and synchronized business cycles. While capital mobility is strong within the Eurozone, austerity policies have failed to curb high debts and struggling countries lack a unified monetary policy response. The Eurozone faces an existential crisis of whether it can reform to become a more optimal currency zone or if it can survive in its current form.
This document discusses the structural defects and ineffective policies that have contributed to the ongoing Euro crisis. It argues that the Eurozone fails to meet many of the criteria for an optimal currency union, specifically lacking sufficient labor mobility, risk sharing mechanisms across countries, and synchronized business cycles. While capital mobility is high within the Eurozone, austerity policies have failed to curb high debts and the lack of unified monetary policies have hampered struggling economies. The Eurozone must address these issues to become a more optimal currency zone and determine if it can survive in its current form.
The document provides an analysis of the ongoing banking crisis in Europe. It discusses how the crisis originated from the introduction of the euro and global credit expansion in the early 2000s, which inflated housing bubbles. European banks also engaged in risky lending practices like "carry trades" that left them exposed. The banking systems remain fragmented along national lines due to "capital nationalism," preventing a unified EU response. With banks distrusting each other, they now rely heavily on emergency liquidity from the European Central Bank. The interlinked banking and sovereign debt crises could further destabilize the region if not resolved.
1. 1
“The Steroid of Forex Leverage---How the
PIIGS Propel the German Export Juggernaut”
Prof. Ian Wise
Dr. Donald Crooks
Prof. Edward Strafaci
Dr. Cathyann Tully
Wagner College
2. 2
“The Steroid of Forex Leverage---How the
PIIGS Propel the German Export Juggernaut”
Abstract
The formation of the Eurozoneand adoption of the Euro as a unifying currency
has gone a long way in solidifying the economic prowess of the post-world war II
continent. The standardization of passports and onesingle currency has resulted
in the unprecedented and unimpeded movement of populations across the
countries in the Eurozone. The single currency has cut transactions costs and
added fluidity to all forms of intra zone trading. The thrustof this research will
focus on the impact that the weaker, mostly southern rim countries known as the
PIIGS—Portugal, Italy, Ireland, Greeceand Spain—upon the export strength of the
German economy, currently the second largest exporter in the world, with a
population less than one third of the sizeof the United States and 5% of that of
China. How does Germany do this? is it getting unparalleled leverage fromthe
weakened PIIGS economies in the formof more favorableforeign exchange rates
vis a vis the dollar and other substantial currencies, including the Yen? Can the
export dynamo continue its dominance should the value of the Euro show
substantialpotential strengthening? Will an increasein the value of the Euro vs.
the Dollar and the Yen could cut into the bottom line revenue flow of German
exports? The study will also compareVolkswagon (VW) and Toyota as potential
investment possibilities based solely upon the leverage of the Forex steroid.
Additional investigation will comparethe growth of the German economy over
the pasttwo decades with the economic prowess of the Japaneseexport machine
3. 3
over the past40 years as evidence of the relationship between economic growth
and export challenges. If the Deutsche Mark (DM) was a freely traded currency
outside of the Euro whatindeed would be its value. We will endeavor to utilize
the Swiss Franc as a surrogatefor the DMand examine how it reacted once the
linkage of the Swiss Franc and the Euro was extinguished by the Swiss
government.
Introduction
The Euro was launched on January 1st, 1999, when itbecame the currency for
more than 300 million people in Europe, which is comparableto the size of the
population of the United States. For the first three years it was an invisible
currency, only used for accounting purposes, i.e. electronic payments. Euro cash
was not introduced until January 1, 2002, when it replaced, at fixed conversion
rates the banknotes and coins of the national currencies like the Belgian Franc
and the German DeutscheMark.
Today, Euro banknotes and coins arelegal tender in 19 of the 28 Member States
of the European Union, including the overseas departments, territories and
islands which are either part of or associated with, Euro area countries. These
countries formthe Euro area. Micro states of Andorra, Monaco, San Marino, and
Vatican City also usethe Euro, on the basis of a formal arrangementwith the
European Community. Montenegro and Kosovo likewiseuse the euro, but
without a formalagreement.
4. 4
The institution of the European Union made perfect sensein a hyper connected
world. The ability to move freely fromone country to another with one passport
made travel fromone end of the zone to the other a much simpler process. An
even bigger advantagewas the smoothing of the wheels of commerce as one
currency was accepted fromthe Atlantic to the eastern reaches of Europe. It was
once mentioned that before the introduction of the Euro, consumers would lose
so much buying power as they proceeded fromone end of the continent to the
other that they would wind up with no money at the end of the journey simply
due to conversion fromone currency to another.
National currencies weresurrendered and converted at a fixed rate in 1999; this
helped stabilize the monetary zone but would sow the seeds of imbalance as we
moved early into the 21st
century.
Prior to the introduction of the Euro, member countries foreign exchange rates
acted as the competitive leveling of the field as the stronger economies would
normally see their currency risein value therefore blunting some of the
comparativeadvantage. The greater the export volumes the more demand for
the exporters’ currency thus driving up the costof the currency and therefore
making the cost in the importer’s currency greater. Conversely the weaker
economies would normally experience a weakening currency which would in
effect make their exports cheaper and thereby preferred by the stronger
economies and their currency. By locking the Euro zonecountries in at a fixed
rate in 1999 thatvery comparativerelationship was frozen in time. Stronger
economies with superior products would benefit froma smoothing effect of the
weaker economies on the foreign exchange rate of the Euro vs non Euro
5. 5
currencies such as the dollar and the yen. The Deutsche Mark as a stand-alone
currency would mostlikely riseconsiderably againstother countries thereby
making German exports more expensive versus other countries with weaker
currencies. This research will investigate the appreciation of the yen over the past
40 years and morerecently the Swiss Franc when it decoupled itself fromthe
Euro January 15, 2015 and has seen its monetary unit soar in relative value and
putting a severe dent in its export market. Weak countries within the Eurozone
can no longer devalue their way out of their economic woes, as would be the
normal courseof events for a pre EU Greece. The paper will cover how exactly
the PIIGS do indeed power the German Export machine by impacting the value of
the Euro with their inherent economic weakness. A casein point will be the
comparison of a VW Passatand a Toyota Camry as an example of the significance
of currency weakness/strength as a key componentto the competitive superiority
of an individual productand economy.
Finally the investigation will also delve into the investment attractiveness of
individual corporations and the countries within which they reside.
Background
The European Economic Community (EEC) originated in the Treaty of Rome (1957)
signed by Belgium, France, Italy, Luxembourg, the Netherlands and West
Germany. All these countries at that time wererecovering fromthe Second World
War, although WestGermany was benefitting disproportionally fromthe US
funded MarshalPlan. The UK, Ireland and Denmark joined in 1979 followed by the
firstdirect elections to the European Parliament. Greece joined in 1981 followed
6. 6
by Spain and Portugalin 1986. TheMaastrichtTreaty of 1993 transformed the
organization into the European Union, which currently has 28 Member States.
11 Member States who had met the economic criteria for convergence
established the Euro in 1998. Greecequalified in 2001 and physicalnotes and
coins were issued in 2002. Currently 19 Member States have joined the Euro.
The EU and the Eurozone are a significant part of the world’s economy rivaling
the United States as an economic unit. But the sizeof the economy conceals
significant differences between member states.
Data 2015 EU
(28
Member
states)
Eurozone
(19
Member
states)
United
States
(50
states)
Japan China
Area
(Million Sq
Km)
4.3 2.6 9.8 0.4 9.6
Population
(Millions)
508 339 321 127 1,367
GDP
($ Trillions)
$18.6 $11 $17.5 $4.8 $18.1
Shareof
World GDP
20.6% 12.2% 15.9% 4.4% 16.6%
GDP/Capita
Euro
thousand
40.6 29.8 42.1 28.2 9.2
"ECB: Structureof the euro area economy".
The World Factbook - CIA (Data for 2015)
By the time the Euro was established the economies of member states had begun
to diverge.
7. 7
Germany, benefitted fromUS postwar investment under the Marshalplan,
developed their manufacturing base, established a reputation for quality goods
specialized in high value services like banking and insurance and, despite the
economic strains of reunification in 1990 had and still has a strong economy.
Northern European countries tended to follow the German model.
By contrast, southern European countries relied more heavily on agriculture and
tourism. The economic crisis of 2008 was particularly devastating for these
countries – in particular Portugal, Italy, Ireland, Greeceand Spain – which
together would be referred to as the PIIGS.
Data 2015 Germany Greece European Union
Agriculture 0.7% 3.9% 1.6%
Industry 30.2% 13.3% 24.3%
Services 69.1% 82.8% 71.2%
The World Factbook - CIA (Data for 2015)
Since the valuation of the Euro depends on the collective economic health of the
Eurozone– the struggles of the PIIGS resulted in a lower valuation for the Euro.
The Euro also suffers fromseveralstructuraldifferences fromthe US dollar, which
adds to its instability. The US dollar economy is centrally controlled – the Federal
Governmentis the major taxing authority and has the ability to redistribute
wealth from“rich” states to “poor” states. In the EU there is no central taxing
authority and states negotiate how much to contribute to the EU. The bailout of
Greece by Germany was a tactical measurenot part of the regular political
process.
8. 8
In addition, mostmember states accept responsibility for services such as
universalsocialized health care, free higher education and generous
unemployment and pension payments which are not provided by the United
States Government. Such payments are funded frominternal taxes within the
member states so there is no standard subsidy from“rich” countries – like
Germany to “poor” countries – like Greece without IMF-likeausterity
requirements.
Where would the DM be today?
The Deutsche Mark had a relatively shortlife. Itwas the official currency of West
Germany from1948 to 1990 and of the unified Germany from1990 until the
introduction of the Euro in 2000. Itwas thesuccessor to various other Marks most
notably the Papiermark introduced in 1914 when Germany abandoned the
Goldmark at the startof World War I. The Papiermark experienced dramatic
hyperinflation in 1922-23, which led to fiscal conservatismin Germany, which
never again wanted to suffer fromsuch a ruinous devaluation of their currency.
The Deutsche Mark became a reservecurrency and indeed became the second
largest componentof reservecurrencies after the US Dollar.
When currencies join the Euro their exchange rate becomes fixed. The official
exchange rate for the Deutsche Mark, fixed on December 31, 1988 was 1.95583
to the Euro.
Itis therefore possibleto show whatthe effective exchange rate for the DMhas
been since the introduction of the Euro by simply applying this exchange rate to
the Euro.
9. 9
Fromclose to parity with the USD in 2000 the Euro roseto closeto $1.60 prior to
the financial crisis of 2008. Fromthere is has trended down to approximately
$1.10 in 2015 a loss in value of almost35%. http://fxtop.com/en/historical-
exchange-rates.php downloaded Jun 8, 2016
In the sametime period the effective value of the DM (based on the fixed
exchange rate at date of accession) has gone from$0.5 in 2000 to above $0.8
prior to 2008 to $0.55 today, as a resultof the decline in the value of the Euro.
http://fxtop.com/en/historical-exchange-rates.php downloaded Jun 8, 2016
The 35% drop in value of the DM against the USD from2000 to 2016 has
accompanied a 5-fold increasein the monthly trade balance fromunder 5 billion
Euros in 2000 to 25 billion Euros in July 2015.
http://www.tradingeconomics.com/germany/balance-of-tradedownloaded Jun
8, 2016
However this derived valuation of the DM is dependant on the overall valuation
of the Euro. We haveargued that the value of the Euro has fallen largely as a
result of the economic problems of the PIIGS. Theboomin German exports,
which would likely have increased the value of an independent DM, has instead
been assisted by the decline in value of the Euro.
(Itis not possibleto observedirectly what the true value of an independent DM
would have been post 2000, thereforethe authors haveestablished the Swiss
Franc as a surrogatecurrency.)
The Swiss Franc as a surrogate for DM
The Swiss Franc was introduced as the official currency of the Swiss Confederation
10. 10
in 1850. The Swiss Franc is a reservecurrency butonly represented 0.3% of
official foreign exchange reserves in 1998 compared to 13.8% for theDM.
Nevertheless the Swiss Franc has long been considered a “safehaven currency”
since Switzerland had low inflation and, until it was terminated in 2000, theSwiss
Franc was also backed by 40% gold Reserves.
Gold.org, Declaration of the Swiss Government, through theFederal Finance and
Customs Department, and the National Bank of Switzerland regarding the
purchaseand sale of gold, in Monetary History of Gold: volume 3 — After the Gold
Standard
The Swiss National Bank (SNB) is located in Zurich while the Bank for International
Settlements (the organization of Central Banks) is located in Basel, both in the
German speaking parts of Switzerland.
Switzerland, like Germany, has enjoyed an increasing positive balance of balance
of trade, which has grown steadily since1990. Both are northern European
industrial and financial economies vastly different from the PIIGS, which are
predominately agrarian and tourismbased.
Switzerland is landlocked by the EU and has thereforehad to manageits
exchange rate to make exports to surrounding EUcountries competitive, using
monetary policy to their advantage, which has resulted in negative interest rates.
Nevertheless, The Swiss Franc has appreciated substantially againstthe DM (or
the DMcomponent of the Euro) in particular after the financial crisis of 2008. The
financial crisis had a severeimpact on the PIIGS dragging theEuro down against
other major currencies.
11. 11
The parallel decrease in interest rates in the Euro zone has done little to abate the
relative strength of the Swiss Franc.
Case study – the Swiss Franc
Perhaps the most elegant way to view a German economy Post–Euro is to purport
how that economy would function Pre–Euro. In order to do that wemust
somehow calibrate how an independent Deutschmark would behavegiven the
currenteconomic environment. In order to attempt this, we will link the German
currency with a similar independent currency. In thatregard we chosethe Swiss
Franc. According to the CIA fact book, Germany had an approximate $ 3.8 Trillion
GDP with 1.6% growth as of 2014. The Swiss Economy, by comparison, had a GDP
of $ 473 billon with growth of 1.9 % during that same period. Adjustments must
be considered regarding the different economic drivers of both economies. The
Germans enjoy near legendary status in the Engineering field. Switzerland, of
course, is a banking giant. What wefound was, that adjusting for size, both
economies are parallel. Perhaps that is becauseof their proximity and cultural
resemblance to each other.
To that end, Germany‘s GDP is comprised of over 30 % in Industry and 68 % in
Services, generating $1.49 Trillion in exports. The Swiss by comparison is smaller
yet closely aligned with 26 % of GDP driven by Industry and 73 % by Services. The
greatest difference is Switzerland’s relative sizewith the Swiss exporting at a rate
of $327 Billion. In many respects both economies seen through this prismseem
quite compatible.
12. 12
In light of this simulation we focused on a seminal moment in the Franc’s history,
the dramatic unpegging of the Swiss Franc to the Euro in January of 2015 by the
Swiss National Bank (SNB).
From“The Economist”:
“The SNB introduced the exchange-rate peg in 2011, whilefinancial markets
around the world werein turmoil. Investors consider theSwiss franc as a “safe
haven” asset, along with American governmentbonds: buy them and you know
your money will not be at risk. Investors likethe franc because they think the
Swiss governmentis a safe pair of hands: it runs a balanced budget, for instance.
But as investors flocked to the franc, they dramatically pushed up its value. An
expensive franc hurts Switzerland becausethe economy is heavily reliant on
selling things abroad: exports of goods and services areworth over 70% of GDP.
To bring down the franc’s value, the SNB created new francs and used them to
buy Euros. Increasing thesupply of francs relative to Euros on foreign-exchange
markets caused the franc’s valueto fall (thereby ensuring a Euro was worth 1.2
francs). Thanks to this policy, by 2014 theSNB had amassed about $480 billion-
worth of foreign currency, a sum equal to about 70% of Swiss GDP.
The SNB suddenly dropped the cap last week (Jan 15, 2015) for severalreasons.
First, many Swiss areangry that the SNB has built up such large foreign-exchange
reserves. Printing all those francs, they say, will eventually lead to hyperinflation.
Those fears are probably unfounded: Swiss inflation is too low, not too high. But it
is a hot political issue. In November there was a referendum, which, had it passed,
would have made it difficult for the SNB to increase its reserves. Second, the SNB
risked irritating its critics even more, thanks to something that is happening this
13. 13
Thursday: many expect the European Central Bank to introduce “quantitative
easing”. This entails the creation of money to buy the government debt of Euro-
zone countries. That will push down the value of the Euro, which might have
required the SNB to print lots more francs to maintain the cap. But there is also a
third reason behind the SNB’s decision. During 2014 the Euro depreciated against
other major currencies. As a result, the franc (being pegged to the Euro) has
depreciated too: in 2014 it lost about 12% of its value againstthe dollar and 10%
against the rupee (though it appreciated against both currencies following the
SNB's decision). A cheaper franc boosts exports to America and India, which
together make up about 20% of Swiss exports. If theSwiss franc is not so
overvalued, the SNB argues, then it has no reason to continue trying to weaken
it.”
The Economist explains “Why the Swiss unpegged the franc” The Economist
1/18/2015
http://www.economist.com/blogs/economist-explains/2015/01/economist-
explains-13
For many years the Swiss had pegged the Franc to the Euro in an effortto keep
their equity marketand foreign bank holdings free fromvolatility, thus insuring a
steady conversion ratio to the Euro. This policy had the unintended effect of
dampening the Swiss exportposition. Italso created a situation, similar to the
United States in the 1970’s when the dollar was linked to gold reserves, (look for
references here- Frank /Dan) wherespeculators, mainly hedge funds, could freely
wager against a known Swiss Centralbank policy. The Nixon Administration
famously took the dollar off the gold standard, whilecoupling the policy with
stringent tariffs on foreign imports. While viewed as extremely protectionist at
14. 14
the time it helped cure the Economic and Inflation issues of the 1970’s U.S.
Economy. The Swiss Euro peg abolition achieved comparablegoals. In theory,
and fact, Swiss exports become more desirable economically. The other desirable
effect is that by driving out speculative interests, the Swiss currency is more
fundamentally driven. Yet another related gain correlating with the U.S. Nixonian
policy.
Ironically Germany’s ties to the Euro achieve the sameaim. The German economy
enjoys a devalued currency supporting a vastexport position while giving nothing
up in terms of branding and goodwill that is usually associated with a weak
currency. The German Economy is still seen as an industrial power tied to a
currency that is being pulled down by its weaker brethren, namely the PIIG
countries. One has to wonder that given the Swiss scenario would the Germans
have followed a like devaluation of the Deutschmark? This would be a sound
tactic if Germany was independent of the European Union in order to compete in
the currentglobal economic malaise.
Lastly one other potential bright spot of a non-EUGermany might have been the
better protection of its major banks. Deutsch Bank has suffered massivelosses
due to the fact that it had turned into more investment bank than bank. As
reported in “Foreign Policy”, in regard to its recent financial afflictions:
“For most of its history, Deutsche Bank was the most typical, most representative,
and mostprestigious German bank. Founded in 1870, beforethere was even a
German state, its very name seemed chosen to signal a highly ambitious program
— both political and economic — for the future. Its original mission was largely
15. 15
trade finance, helping to promote the German export machine, and it rapidly
required a network of foreign branches.
But the bank’s focus almostimmediately turned to industrialfinance. Deutsche
Bank developed a unique business model, in which it became the key player, a
sortof planning center, in the development of German industry. Germany was
quite poor at the time and, as a consequence, lacked functioning capital markets.
Rather than attempt to correctthat deficit, DeutscheBank exploited it. The bank
lent to industrial customers, and at a propitious moment would convertits short-
term lending into long-term securities — bonds or equity shares. Sometimes it
would sell thosesecurities to retail customers. But often the bank used them to
seek proxy-voting rights, so thatthe bank’s managementcould continue to guide
the firms to which it had lent. Bankers fromDeutsche routinely came to sit on the
boards of the companies with which they were engaged. They often restructured
these businesses, and arranged mergers and takeovers.
The modern structureof the German automobile industry is, for instance, in large
part a result of the efforts of DeutscheBank, which pushed Daimler and Benz into
a merger in the 1920s, and in the 1950s tried a similar exercise with Daimler-Benz
and BMW (but failed). In the 1960s, Deutschemanaged the privatization of
Volkswagen, in a complicated transaction that still maintained a substantial
amount of state control (through the state of Lower Saxony). For large stretches
of postwar history, DeutscheBank owned a substantialstake in Daimler.”
“DeutscheBank Isn’tDeutsch Anymore” FP 2/24/2016 by Harold James
http://foreignpolicy.com/2016/02/24/deutsche-bank-uber-alles/
16. 16
Perhaps as an independent Germany, their policy makers would have been more
circumspectin regard to the aggressivedealings of one of its major financial
institutions. Thus we can conclude that independent of the Euro, and given the
currentweak economic environment, the Germans would have benefitted froma
Swiss currency strategy of a weakened Deutschmark. Furthermorethebanking
sector would be less stressed, as German central bankers would havebeen
reluctant to exposeits financial institutions to aggressivetrading and banking
schemes.
Overallwe can see that despite monetary policies and an exchange rate ceiling
designed to slow the growth of the Swiss Franc againstthe Euro it was ultimately
a futile endeavor. This strongly suggests thatwerethe DM still an independent
currency; its value would be higher than that implied by the valuation of the Euro
– driven by the German Export juggernaut.
Performance of Yen versus Deutsch Mark and USD
The foreign exchange rate between a pair of currencies is essentially a zero sum
game. The strengthening of one currency againstanother is the sameas the
weakening of the second currency againstthe first.
The rate depends on relative supply and demand, which in turn is dependent on
external drivers i.e. relative trade surplus or deficit as well as internal measures
i.e. monetary policy, relative interest rates, money supply and political stability.
However, the US dollar represents 87% of currency trades and as such it is
plausible to look at the relative performanceof currencies versus theUS dollar to
estimate their relative performance. Note that since each currency trade involves
17. 17
two currencies this is 87% out of a total of 200%. Bank for International
Settlements (BIS). TriennialCentral Bank Survey. Foreign exchangeturnover April
2013 preliminary global results Monetary and Economic DepartmentSeptember
2013. http://www.bis.org/publ/rpfx13fx.pdf
Prior 1973 the Yen traded at 360 to the Dollar. Since then the Yen has greatly
appreciated hitting highs of approximately 76 to the Dollar in 1995 and 2013.
However by the end of 2015 ithad fallen to 120.5. This is a result of the rapid
industrialization of Japan following the Second World War and the success of
“Japan Inc” in world trade.
Againstthe DM, the Yen hit a low of 145 in 1981 buthas greatly appreciated since
then reaching a high of 45 in 2001 and 49 in 2013. By the end of 2015 it had fallen
again to 67.
This relative gain in value of the Yen against the DMmade Japanese exports
relatively more expensive than German exports, meaning that in order to offer
comparativepricing on foreign markets, the Japanesewould have to cut their
prices to stay competitive and thus absorb lower margins. Alternatively they could
maintain their margins but the higher prices would resultin fewer sales and
therefore less revenue. In generalinternational companies will prefer to maintain
their market sharein countries like the US even if it means reduced margins.
Implications for International Investment
If a US investor wishes to invest in a foreign market he needs to look at his total
return. This is composed of the rate of return achieved in the foreign market plus
or minus any appreciation or depreciation achieved in foreign currency invested.
18. 18
Thus if the foreign currency depreciates againstthe USD the investor will be able
to buy fewer USD with the proceeds fromhis investment.
The investor can of coursehedge his foreign currency exposureby buying a
forward foreign currency contractor a foreign currency call option.
However, the general downward trend in the Euro since 2008 and the failure to
implement structuralchanges to the Eurozonemakes it likely that the investor
will look for higher returns fromhis Eurozoneinvestmentmaking foreign
investment harder to obtain.
A US investor into Japan would also have to take into account a decline in
USD/YEN exchange rate (from75 in 2012 to 125 in 2015). However predicting
future exchange rates is largely dependent on the economic performanceof
Japan, which is estimable. The risk of a catastrophic collapse of the Euro due to
the debts of the PIIGS makes thefuture of the Euro much less predictable.
Conclusion
Fromthe financial crisis in 2008, theEuro has seen a rapid depreciation, which
appears to be primarily due to the weakened economies of the PIIGS. Atthe same
time German exports have surged – something that would likely have been
slowed by an appreciation of an independent DM.
The 35% drop in value of the DMagainst the USD from2000 to 2016 has
accompanied a 5-fold increasein the monthly trade balance fromunder 5 billion
Euros in 2000 to 25 billion Euros in July 2015.
19. 19
Had the DM remained independent of the Euro the strong trade balance would
likely have caused an upward revaluation of the DM, which would have had a
negative impact on exports.
To take justone example, the 2016 VW Passathad a Manufacturer’s Suggested
Retail Price (MSRP) of $22, 440, which madeit competitive with the MSRP of the
2016 Toyota Camry of $23, 070. For example, had the DM remained independent
and its exchange rate with the dollar increased by 15% compared to an actual
decline of 35% the implied MSRP of the Passatin the US would have been 50%
higher.
A MSRP of $33,660 for thePassat (at an exchange rate of USD/EUR of 1.65)
would make it difficult to compete with the $23,070for the Camry leading to
reduced exports.
Itis therefore our conclusion that the economies of the PIIGS haveplayed a major
role in the devaluation of the Euro enabling the German export juggernautto
continue, enhanced by the favorableEuro foreign exchange rates.
Future research opportunities post- Brexit
On 28th June 1914 a group of Serb and Bosnian separatists assassinated theheir
to the Austro-Hungarian Empire, ArchdukeFranz Ferdinand. This singleevent
ushered in a period of 40 years of turmoil in Europe, which included two World
Wars, millions of deaths and massivedestruction of economies and
infrastructure.
The 1951 Treaty of Paris established the European Coal and Steel Community
(ECSC) with the objectivenot only of facilitating the post-war economic recovery
20. 20
of Europebut also of ensuring a lasting peace. The ECSC would lead to the EEC
and ultimately the EU. Membership would increase from6 to 28 member states
including 9 countries that had previously been within the Sovietsphere.
In 2000 theEuro was established creating a common currency, which currently
encompasses 19 members of the EU. The UK declined to participate in the Euro.
In 1967 theUK attempted to join the EEC but French PresidentDe Gaulle vetoed
their application. The UK succeeded in joining the EEC in 1973 a decision that was
ratified by a referendumin 1975.
On 23rd June 2016 the UK voted in a referendumto leave the EU (Brexit). The
referendumwas contentious with much focus on eliminating immigration and
redirecting funds sent to the EU to UK institutions.
Following the referendumthe UK PrimeMinister, David Cameron, who had
campaigned to remain in the EU, resigned. One of the leaders of the exit
movement, Boris Johnson admitted that he had no plan to implement Brexit and
declined to run for Prime Minister. Another leader of the leave campaign Nigel
Farage, admitted that the claims that Brexit would lead to more money being
invested in the National Health Serviceand that immigration would be
significantly curtailed werefalse and resigned his leadership of the UK
IndependenceParty saying his job was done.
In the immediate aftermath of the referendumstock markets around the world
crashed as investors moved to perceived less risky investments such as bonds and
precious metals. Both the Pound and the Euro dropped precipitously in value as
investors moved to the safety of the US Dollar.
21. 21
No one knows whatthe ultimate ramifications of Brexit will be. Itcould lead to
changes in how the EU is organized, leading to greater or lesser centralized
government. Itcould lead to the break up of the EU or the breakup of the UK if
Scotland wereto secede. For the UK, negotiations could lead to the Norwegian
model, which essentially would mean effectively remaining within the EU,
retaining free movement of people and capital and financial obligations to
Brussels butwithout any say in how EU policies are decided. At the other end of
spectrumof possibleoutcomes, total disengagement fromthe EU could lead to
significant trade barriers with the UK’s largesttrading partners.
The Euro is entering a new phase. When the EU looses the fifth largest economy
in the world, it will havea major impact on the Euro. The referendummarks a
watershed in European and international relations. We will follow with interest
how this plays out. While European cooperation has not been all plain sailing it
has led to 65 years of peace and relative prosperity. We hope events of 2016 will
be far less disastrous than those of 1914.
22. 22
References
"ECB: Structure of the euro area economy". Ecb.europa.eu.
The World Factbook – CIA
https://www.cia.gov/library/publications/the-world-
factbook/rankorder/2147rank.html
Gold.org, Declaration of the Swiss Government, through theFederal Finance and
Customs Department, and the National Bank of Switzerland regarding the
purchaseand sale of gold, in Monetary History of Gold: volume 3 — After the Gold
Standard
The Economist explains “Why the Swiss unpegged the franc” The Economist
1/18/2015
http://www.economist.com/blogs/economist-explains/2015/01/economist-
explains-13
“DeutscheBank Isn’tDeutsch Anymore” FP 2/24/2016 by Harold James
http://foreignpolicy.com/2016/02/24/deutsche-bank-uber-alles/
Bank for InternationalSettlements (BIS). TriennialCentral Bank Survey. Foreign
exchange turnover April 2013 preliminary globalresults Monetary and Economic
Department September 2013. http://www.bis.org/publ/rpfx13fx.pdf
http://www.tradingeconomics.com/germany/balance-of-tradedownloaded Jun
8, 2016
http://fxtop.com/en/historical-exchange-rates.php downloaded Jun 8, 2016
23. 23
Authors
Ian Wiseis an AssistantProfessor atWagner College, where his focus is on
international accounting and finance.
He received a B.Sc, fromthe University of Glasgow, Scotland, an MBA fromNYU
Stern Schoolof Business, and participated in the Advanced Management Program
at INSEAD in Fontainebleau, France. In addition he is a CPA and a Chartered
Accountant.
Prior to Wagner, he was a senior executive with severalinternational banks and
CEO of a consulting company.
He has lived, worked and studied in three countries, has travelled to over 100 and
is a citizen of both the UK and USA.
Donald Crooks PhD is an Associate Professor atWagner College, Chair of the
Business Departmentand Director of the Executive and Accelerated MBA
Programs.
He received his PhD fromCalifornia Western University, MBA and BS from
Wagner College and is Certified Black Belt/Lean Six Sigma.
For 30 years prior to his role at Wagner Dr Crooks held global management
positions at major investment banks.
Edward Strafaciis a Visiting Professor of Finance at Wagner College and Director
of Experiential Learning.
He received his M.B.A in Finance, and BS in Accounting and Economics fromSaint
John’s University.
Prior to Wagner College Ed served as a Senior Executive in the Finance Sector.
24. 24
Cathyann Tully is a Professor of Financeand Director of UndergraduateBusiness
Programat Wagner College. Her teaching focuses primarily on financial
management. She received her B.S .in Accounting fromthe Seton Hall University
Stillman Schoolof Business, M.B.A. in Finance fromPace University Lubin School
and D.P.S. in Finance and InternationalBusiness fromPace University Lubin
School. Prior to her academic career, Dr. Tully was a risk management officer for
a major financial institution in New York. Dr. Tully has presented and published
her research nationally and internationally on topics including European Union
formation and effects, corporate financial management and business school
pedagogy.