Archive for November, 2015

Coal is king in India. Some say there’s little alternative. So how can this country, the world’s third-largest polluter, provide energy and lift millions from poverty while trying to become “greener”?

via Economy : NPR http://ift.tt/1XCCTXj

UK Only Article: 
standard article

Issue: 

Clear thinking needed

Fly Title: 

Italy’s bad debts

Rubric: 

The government tries to relieve banks of non-performing loans

Location: 

Milan

BANKS in Italy fared better during the financial crisis than many of their peers, sparing Italian taxpayers the bail-outs their counterparts in other countries had to shoulder. But although they stuck to their cautious business models and avoided fuelling a big housing boom and bust, Italy’s protracted recession has enfeebled them. It has caused bad loans to soar, which in turn has prevented them from supporting a still weak recovery with new lending.
The burden of non-performing loans (NPLs) in Italy is now immense: they amount to €350 billion ($370 billion), the equivalent of 21% of GDP. With these unproductive assets tying up their capital, Italian banks are unable to extend new credit to businesses. In fact, they are lending out less in an effort to shore up their balance-sheets (see chart).

The government would …

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 THE joke is not new but it is a good one. How do we know that economists have a sense of humour? They put decimal points in their forecasts. Yesterday, Britain's Office for Budget Responsibility published its analysis of the government's spending package. The big news was that the OBR revised up its assumption on the tax revenues the government could raise, giving chancellor George Osborne the leeway to retreat from some (but not all) unpopular spending cuts. But for the purposes of this blog let us focus on its economic assumptions.The OBR revised up its forecast for 2016 and 2017 growth by a tenth of a percentage point in each year, from 2.4% to 2.5%. That is amazingly precise. The average error in estimating UK GDP growth in the official statistics, after the year has actually ended, is half a percentage point. The OBR's forecasts for GDP growth in successive years are 2015 (2.4%), 2016 (2.4%), 2017 (2.5%), 2018 (2.4%), 2019 (2.3%), 2020 (2.3%). That is an amazingly smooth pattern. Here are the annual numbers for GDP growth since 1948. There has never been a five-year run of steady growth in the 2-3% range; the longest such run was 2004-2006. After a while, growth tends to accelerate and then collapse. Since 1955, there have been seven recessions (defined as two successive quarters of falling output) or one every 8-9 years. Given the current recovery began …

via Economic Crisis http://ift.tt/1NQxGWI

THE euro-zone crisis has transitioned from an acute phase to a chronic one. At just this moment the fear that market panic might force one or several economies out of the single currency is low. Yet few analysts believe the euro zone has solved its fundamental problems. In a piece published at Vox EU last week, a cadre of prominent economists made the very sensible point that unless euro-area leaders can agree on the fundamental causes of the crisis, they will struggle to craft long-run fixes. The authors set out their view of the crisis, in hopes that it will prove a foundation for consensus building.Their explanation, which strikes me as the right one, is that the euro-area crisis was not a sovereign-debt crisis. If it had been, one would have expected Belgium and Italy, which entered the crisis with extraordinarily high debts, to have landed in serious trouble. As it turned out, they made it through without troika programmes, while Ireland and Spain, which entered the crisis with low levels of sovereign debt, needed bail-outs. The problem, instead, was one of massive capital flows across borders, which encouraged high levels of private borrowing in the economies that eventually got into trouble. When the global financial crisis generated a reversal in those flows, private borrowers and banks got into big trouble. That trouble translated into serious economic downturns …

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UK Only Article: 
standard article

Issue: 

How to fight back

Fly Title: 

Fannie Mae and Freddie Mac

Rubric: 

The government may soon need to rescue America’s mortgage giants again

Location: 

Washington, DC

TEMPORARY solutions have a way of becoming permanent. The fate of Fannie Mae and Freddie Mac, the two “government-sponsored enterprises” (GSEs) that stand behind much of America’s housing market, is a case in point. The GSEs, which buy American mortgages from banks and other originators, bundle them into securities and resell them to investors with a guarantee, are stuck in a technocratic no-man’s land. Their status has not yet been normalised after their first bail-out, but they may soon require a second. If they do, the administration of Barack Obama, which has been running them since 2009, will be largely responsible.
Fannie and Freddie were tethered to America’s housing market when it fell off a cliff in 2008. The GSEs faced a double impact: they had to cough up to honour their guarantees, …

via Economic Crisis http://ift.tt/1LomK0w

LIKE the sub-prime mortgage crisis in America and the sovereign debt crisis in Europe, emerging markets could be on the cusp of their own debt reckoning

20151117 18:16:11

Comment Expiry Date: 

Wed, 2015-12-02

via Economic Crisis http://ift.tt/1Pysrkh

Lydia Smith, 87, is one of the 2.6 million women aged 65 and over living at or below the poverty line. Older women are more than twice as likely as men to live in poverty.

via Economy : NPR http://ift.tt/1HVk769