Методические рекомендации стр. Образцы экзаменационных материалов стр. 9

Text 6 Finance And Economics: Squaring the circle; Buttonwood

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Text 6

Finance And Economics: Squaring the circle; Buttonwood

The Economist Oct.24,2009

Making sense of asset prices

GAMBLERS dream of achieving a trifecta: picking the first three horses, in the right order, in a given race. The payout is huge but so are the odds against success.

The same could be said, in financial markets, of a strategy that backed equities, gold and government bonds. The three asset classes do not tend to perform well at the same time. Both gold and equities can be classed as inflation hedges but government bonds are hard hit by higher consumer prices. Both gold and government bonds could be bracketed as havens for risk-averse investors but equities are definitely classed as risky assets.

The bet has paid off this year, however. According to Dhaval Joshi of RAB Capital, a fund-management firm, the three asset classes have all produced double-digit returns over the past three months. That has occurred only twice before in the past 50 years.

So what can explain this odd combination? One possibility could be that investor opinion is divided, with those who fear deflation buying government bonds and those who fear inflation buying gold.

But while opinion has veered away from believing in efficient markets, can they really be that inefficient? After all, the inflation camp should not just be buying gold, it should be shorting government bonds (ie, betting on a falling price). Either the deflationists or the inflationists should win the argument and force the other asset class into line.

A more plausible version of this theory is that bond yields are being held down by central banks, which are buying their own governments' debt as part of quantitative-easing programmes. In other words the market is being distorted and yields do not reflect the views of private-sector investors.

An alternative explanation is based on tolerance for risk. Last year stockmarkets fell and the dollar rose as risk-averse (often dollar-based) investors moved out of paper assets and into cash. Now investors realise the Depression will not be repeated. They are buying equities and selling the dollar again. Since gold is seen as an alternative currency, it tends to rise when the greenback falls.

All this fundamental analysis may, however, be missing the point. The real reason why all three asset classes have been rising is simply down to liquidity. Low interest rates are driving investors out of cash and into anything that offers either the prospect of capital gain or a yield that is higher than zero. Investors used to talk about a "Greenspan put" that supported the stockmarket. This time there is a "Bernanke put" supporting all asset prices.

How long can this last? The authorities are inflating the value of "financial wealth" relative to "real wealth"--goods, services and the businesses that produce them. Real wealth has undoubtedly taken a hit. Industrial production in most OECD countries is still showing a double-digit percentage decline year on year.

A policy of bolstering asset prices can work for a while but eventually it leads to tensions and distortions. The problem could show up in the currency markets, where America has been getting a free ride, running a big fiscal deficit with zero interest rates and a depreciating currency. Other countries are feeling the pressure. Brazil is imposing a 2% tax on portfolio inflows in an effort to slow the real's rise. An adviser to the French president describes a rate of $1.50 to the euro as a "disaster".

Another possibility is that the authorities see the market rally as evidence of success and withdraw their fiscal-stimulus packages too quickly. The shift is already under way in Europe.

If the trifecta does break down, then the consensus favours government bonds as the asset class to suffer. But is that the right call? After all, 20 years into their crisis, and with gross government debt heading for 200% of GDP, Japanese bonds yield just 1.3%. Perhaps ten-year Treasury bond yields of 3.4% are reasonable after all. Headline inflation is still negative, so in real terms yields are strongly positive. In addition bond yields can be seen as the weighted average expectation for the future level of short rates. Since the Federal Reserve has made it clear that short rates will be kept low for a considerable period, that drags bond yields down. Market expectations for bond yields in five years' time are around 4.5%, within the range in which bonds traded for much of this decade.

The only other times the three-way bet worked were back in the early 1980s. On each occasion when it broke down, the casualties were equities and the gold price as the economy slipped into a double-dip recession. It could happen again.

Text 7

Finance And Economics: Invasive surgery; Nigeria’s banking clean-up

The Economist Oct.24,2009

A dramatic stocktaking at some of Nigeria's biggest banks LAMIDO SANUSI, the wry and diminutive governor of Nigeria's central bank, has a simple enough goal: to use the country's banks to make its economy bigger and better. This month he completed the first leg of what promises to be a long journey.

On taking office in June, Mr Sanusi pledged to clean up an industry in which a round of consolidation earlier this decade and subsequent euphoric expansion had given way, in many cases, to mountains of bad debt, mistrust and malpractice. So far he has stuck to his guns, as did the armed police who briefly surrounded some banks' headquarters in Lagos one dramatic Friday afternoon in August, just after the results of the first wave of Mr Sanusi's emergency audits were released.

Those audits revealed that five banks holding 30% of Nigeria's deposits--Afribank, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank--were on the brink of collapse thanks to reckless lending. This month a second and final round of audits deemed that four more, among them Bank PHB, whose directors include President Umaru Yar'Adua's nephew, were in "a grave situation". Yet another was short of capital. The remaining 14 banks to be audited, including foreign-owned Standard Bank, Standard Chartered and Citigroup, were unscathed. The central bank has so far injected $3.9 billion into the nine troubled groups. Opinions are split on whether to expect top-ups.

Much has been made of Mr Sanusi's tough approach. Executives have been turfed out at eight of the fallen banks, among them members of powerful dynasties such as the Ibru family, which owns Oceanic Bank. Some are awaiting trial on charges ranging from share-price manipulation to fraud.

The central bank has also named the banks' biggest debtors, releasing lists of alleged borrowers who owe about $8 billion in total and ordering them to pay up. The lists include companies owned by Aliko Dangote, president of Nigeria's stock exchange and one of Africa's richest men (though he has disproved some claims over sums that were allegedly owed) and Atiku Abubakar, a former Nigerian vice-president. The Economic and Financial Crimes Commission, an anti-corruption agency, is chasing debtors hard and has collected over $900m of unpaid dues.

The governor's ultimate aim is a system in which well-managed banks increase lending to small manufacturers and farmers in sub-Saharan Africa's most populous nation. Nigeria has long needed to diversify away from the oil that accounts for over 90% of its export earnings. But the recent upheaval--or wahala, as Nigerians call it--is actually crimping credit flows to the businesses that were meant to benefit. Government-bond yields are falling fast, as banks that still have cash seek safety. Some of the country's remaining healthy banks, such as First Bank of Nigeria and United Bank for Africa, have announced plans to raise new debt. But they are still shying away from lending to smaller borrowers. "Banks will never turn on the taps after a bad day," Mr Sanusi admitted between the first and second audits.

Some argue that the treatment is proving harsher than the disease, and take little comfort from the chances of eventual improvement. "If these [smaller borrowers] are like patients, well, in the long term, all patients are dead," says Bismarck Rewane, a prominent financial analyst in Lagos. "Economists need to think in the short term." Plans are afoot to create an asset-management company to absorb wounded banks' bad assets. But Mr Sanusi's other task is to persuade the remaining healthy banks to start lending again.

Text 8

Finance And Economics: Denial or acceptance; Dollar depreciation

The Economist Oct.24.2009

The dollar's slide is complicating life for countries with floating exchange rates

IN ONE sense, a weak dollar is good news for the world. Behind the global economy's current revival is a returning appetite for risky investments, such as equities and corporate bonds. At their most panicky investors shunned all but the safest and most liquid assets: American Treasuries were a favoured comfort blanket. That demand for safe assets prompted a rally in the dollar in the months after the collapse of Lehman Brothers last September.

Now that stockmarkets and economies have bounced back, dollar weakness has returned, causing a headache for countries with floating exchange rates (see chart). That has prompted three responses: direct measures to stop currencies rising; attempts to talk them down; or acceptance of a weak dollar as a fact of life.

Brazil has gone for the direct approach. Foreign capital has flooded in, attracted by the healthy prospects for economic growth and high short-term interest rates. That has pushed up local stock prices, as well as the real, Brazil's currency. To stem the tide, the government this week reintroduced a tax on foreign purchases of equities and bonds. Though many doubt the long-term efficacy of such measures, it had an immediate effect. The real, which had risen by more than one-third since March, fell by 2% (before regaining some ground). Brazil's main stockmarket dropped by almost 3%.

Others have resorted to talking their currencies down. In a statement released after its monetary-policy meeting on October 20th, Canada's central bank said the strength of the Canadian dollar would more than offset all the good news on the economy in the past three months. The currency's strength would weigh on exports, said the bank's rate-setters, and mean that inflation would return to its 2% target a bit later than previously forecast. Foreign-exchange markets took the hint: the Canadian dollar fell by 2% against the American one after the bank's statement.

Europe's efforts to contain the dollar's weakness have had rather less impact. This week the dollar slid to $1.50 to the euro, just as Henri Guaino, an adviser to Nicolas Sarkozy, the French president, described such a rate as a "disaster" for Europe's economy. Mr Sarkozy has often moaned about the harm done to exporters by a muscular euro.

Other euro-zone countries are less rattled. "A strong euro reflects the strength of the European economy," shrugged Walter Bos, the Dutch finance minister. Germany, Europe's export powerhouse, feels that its firms can just about live with a euro worth $1.50. Its exporters still flourished when the euro last surged to that level, because demand from Asia and the Middle East for its specialist capital goods proved insensitive to price. France, however, struggled. A report earlier this year by the European Commission showed that French exporters lost market share in the euro's first decade. Other euro-area countries such as Greece, Ireland, Italy and Spain have at least benefited from the recent revival of risk appetite through lower premiums on their debt.

Even so, there is palpable concern that the dollar's decline might get out of hand. Jean-Claude Trichet, head of the European Central Bank (ECB), has repeated his line that policymakers across the Atlantic say a strong dollar is in America's interests. That is meant to signal a shared interest in avoiding a dollar rout. In fact America needs a weak dollar to help revive its economy and reorient it towards exports and away from consumer spending. Since China and some other Asian countries track the dollar, the burden of exchange-rate adjustment falls on the euro. Mr Trichet, Joaquin Almunia, the European Union's economics commissioner, and Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, will visit China later this year to press for a stronger yuan.

Some think part of the solution is in the gift of the ECB: if it lowered its interest rates it would weaken the euro against the dollar. Yet the monetary-policy setting in the euro area has scarcely been different from that in America. The ECB's main policy rate, at 1%, is higher than the Federal Reserve's, but it has been so liberal with its provision of long-term cash loans to banks that excess money has pushed market interest rates close to those of other rich economies. A strong euro may even help by allowing the ECB to maintain a loose monetary stance for longer, says Stephen Jen of BlueGold Capital, a hedge fund.

The ECB will eventually face a problem that some central banks are already encountering. As long as America keeps its interest rates low, attempts by others to tighten policy (even stealthy ones that leave benchmark rates unchanged) are likely to mean a stronger currency. That is a price that Australia's central bank seems prepared to pay. The minutes of its policy meeting on October 6th, at which it raised its main interest rate, revealed the exchange rate was not a consideration. The bank's rate-setters ascribed the Australian dollar's rise to the economy's resilience and strong commodity prices. In New Zealand, similarly, the central-bank governor, Alan Bollard, told politicians that the kiwi dollar's strength would not stand in the way of higher rates.

When the global economy was in free fall, all countries looked to stimulate their economies at the same time. "What looked like co-ordination was really coincidence," says David Woo of Barclays Capital. Recovery is more uneven. Countries with greater exposure to buoyant emerging Asia, such as Australia, are sanguine about a weak greenback. Even Japan seems relatively unfazed. But elsewhere, an ailing dollar feels much more threatening.

Text 9

Finance And Economics: Penance for their sins; State aid for banks

The Economist Oct.24,2009

Competition watchdogs are the new masters of European banking

RESCUE first, ask questions later. Over the past year bank supervisors, central bankers and national treasuries have queued up to bail out European banks' shareholders and bondholders in a bid to avert panic. That has left the European Commission's competition watchdogs in Brussels with more responsibility for ensuring that yesterday's rescues do not encourage tomorrow's risk-taking.

The commission's competition officials make unlikely taskmasters for bankers. Their paths usually cross only during big takeovers (or, in Germany's case, when the commission outlawed government guarantees on the borrowing of its state-owned Landesbanken in 2005). Some governments deliberately sidelined their own competition authorities during the crisis in order to crunch ailing banks together. In Britain the government ignored the worries of its antitrust watchdog over the merger of two of the country's biggest banks, Lloyds TSB and HBOS.

Now the trustbusters in Brussels are having the last laugh. Since the start of the crisis, the commission has allowed governments to guarantee EUR 2.9 trillion ($3.9 trillion) of bank borrowing and approved recapitalisation plans worth EUR 313 billion. On October 7th it approved more aid for Germany's WestLB to enable the lender to set up a bad bank. This vast outpouring of government support now leaves many banks at the mercy of the commission. Its writ can trump that of national governments when the single market is thought to be at risk.

In normal state-aid cases, governments that bail out failing firms have six months to submit "restructuring plans" detailing how companies will be restored to profitability (often by closing or selling those bits that drain cash). Regulators often force government-backed firms to shrink to mollify rivals. But the scale of the problem this time is different. Almost the entire banking industry has had to be bailed out in some way during this crisis. Forcing significant disposals on firms may undermine still-fragile confidence in the banks.

More striking still is an apparent change in the thinking that underpins the commission's decisions. The trustbusters appear to be stretching the usual definition of their role into areas of financial stability. In a speech earlier this year Neelie Kroes, the EU's competition commissioner, spoke of how her officials were "doing the work that banking regulators should be doing" and warned that "this must be the last time banks are allowed to create this kind of mess." That kind of rhetoric implies a more punitive approach to the problem of oversize banks than might be suggested by narrow metrics such as market share.

The commission is still mulling over most of the bank-restructuring plans that have been submitted to it since April, but the few decisions it has made suggest its mercies will be anything but tender. German recipients of government help such as Commerzbank, Hypo Real Estate and Landesbank Baden-Wurttemberg have, in effect, been told to cut their balance-sheets by half. In Britain Lloyds Banking Group is expected to be told this month to reduce its share of the market for personal bank accounts to about a quarter of the total, from almost a third now. Royal Bank of Scotland is also expected to have to make large disposals. Bureaucrats in Brussels may yet inject more discipline into the banks than the free market ever did.

Text 10

Business: Sinking together; Italy’s business clusters

The Economist Oct.17, 2009

Italian manufacturing hubs have not withstood the recession as hoped

LORRIES no longer come and go along the rough road beside the olive trees at La Martella, in the rolling countryside a few miles from Matera, in southern Italy. The blue gates of the Nicoletti factory, where sofas and easy chairs were made, are locked. Once one of the most prominent firms in a big manufacturing cluster, it ran into difficulties last year and was put into liquidation in July.

When Nicoletti closed, 430 workers joined the cluster's unemployed. At the height of the region's success, in 2002, some 500 firms in and around Matera were involved in the manufacture of sofas and easy chairs; their combined turnover was EUR 2.2 billion ($2.1 billion at the time) and they employed about 14,000 workers. At its peak Matera's cluster accounted for 55% of Italian production of sofas and easy chairs and 11% of world production. About 80% of its output was sold abroad. But by 2007, buffeted by cheap foreign competition, the number of workers in the cluster had fallen to 8,000, and in the crisis of the past two years it has continued to slide.

Matera's cluster is not alone in its problems. Prato, near Florence, was once a thriving centre for recycled wool, a business that India now dominates. Chinese immigrants have tried to revive the cluster, but it is shrinking and struggling: 2,000 firms have closed and 10,000 jobs have been lost since 2001. Last month the government started offering grants to slow its decline. In the Marches region, where around 25,000 workers in 3,000 firms make footwear, take-up of a state scheme to preserve endangered jobs has doubled over the past year.

A cluster for higher-quality woollens, centred on Biella in the north-west, is also struggling, as are the textile firms of Varese and the silk producers of Como. Indeed, Emma Marcegaglia, president of Confindustria, Italy's main business lobby, says that more than 90 of Italy's 104 officially recognised clusters, the bedrock of the country's industry, are in difficulty.

It was not meant to be this way. Italian firms had hoped that being organised into clusters would help protect them from low-cost foreign rivals. Grouping together in the same place is supposed to help small firms remain competitive, as management gurus such as Michael Porter have argued, since they can tap the deep local pools of skilled workers, finance and suppliers. In some cases, collective purchasing of raw materials can help reduce costs. And the concentration of so many firms working in the same industry is thought to spark creative ferment. All this is particularly important in Italy, where firms are generally makers of traditional consumer goods, small or medium-sized, family-owned, dependent--directly or indirectly--on exports and, for reasons of geography and history, clustered together.

According to Giacomo Vaciago of the Catholic University of Milan, survival depends on the ability of Italy's clusters to transform themselves into districts where new ideas are dreamed up, designs developed and goods finished, with most production taking place in cheaper spots abroad. Ms Marcegaglia agrees: "Traditional industries have been hurt most. Being technologically advanced and well diversified in export markets is a defence."

Italian firms that have embraced such ideas have indeed been better able to fend off competition from low-cost foreign producers. Benetton, whose headquarters and design centre are located amid a clothing cluster in the Veneto region, has long outsourced most of its manufacturing. Geox, a casual-footwear brand, is based in the sports-shoe cluster in Montebelluna but manufactures abroad.

But some firms are too small or ill-equipped to look beyond Italy's borders. Others are suppliers which find themselves without work when their clients turn to lower-cost manufacturers abroad. "We are not so much a cluster," says Tito Di Maggio, the head of Matera's industrial zone, "as a grouping of competitors faced with an economic crisis, fierce competition, high labour costs and a weak dollar." If the gloomiest projections are correct, that sort of predicament will lead to the loss of 1m jobs across Italy this year.


    1. Программа-минимум кандидатского экзамена по общенаучной дисциплине «Иностранный язык» (http://vak.ed.gov.ru)

    2. The Economist

    3. The Financial Times

Каталог: data -> 2009
2009 -> Психология индивидуальности
2009 -> Глоссарий
2009 -> []
2009 -> Целью курса является усвоение студентами современных представлений об \\реформ в экономике
2009 -> Серп «социальная история россии XX века»
2009 -> Методические рекомендации стр. образцы экзаменационных материалов стр. 6- 7
2009 -> Программа дисциплины «История западной культуры»
2009 -> Эта мысль о собственной мысли, понимание своего собственного непонимания есть самое неотразимое доказательство моей причастности чему-то такому, что во сто крат больше меня, и значит, доказательство моего бессмертия…
2009 -> Программа дисциплины «История западной культуры»

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