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February 05, 2009
JUST SAY "NO!" TO JIM RAMSTAD AS OBAMA'S "DRUG CZAR"
Ramstad’s Positions on Syringe Exchange, Medical Marijuana and other Issues, Backwards and Harmful Say Experts
Nation’s Largest Drug Policy Reform Organization Lays Out Five Criteria Obama Should Use to Choose a Drug Czar
A growing number of organizations are expressing concern about reports in the media that President-elect Obama may be considering appointing Republican Congressman Jim Ramstad (R-MN) to be his “Drug Czar”, citing Ramstad’s positions on syringe exchange programs, medical marijuana, and other issues. In a letter to President-elect Obama released today, the National Black Police Association, the Latino Commission on AIDS, the National AIDS Fund and more than three dozen other public health, criminal justice and drug treatment organizations warn that Ramstad’s positions are backwards and at odds with science and human rights. Rep. Ramstad is well known in the substance abuse treatment community for successfully fighting to pass legislation designed to make health insurance companies cover drug treatment and mental health services like any other medical conditions. He is notably recovering from alcohol misuse and, if appointed, would be the nation’s first Drug Czar to be in recovery from a drug problem. Still, some charge that he is too wedded to faith-based 12-Step treatment programs and not open to more evidence-based treatment programs, like methadone maintenance therapy. In 1998 Ramstad voted in favor of making permanent the federal funding ban on syringe exchanges, despite decades of research showing that syringe exchange programs reduce the spread of HIV/AIDS and hepatitis C without increasing drug use. He voted in 2000 to prohibit the District of Columbia from spending its own locally raised, non-federal funds on syringe exchange programs and voted last year against repealing the same D.C. ban. Rep. Ramstad has also consistently opposed congressional efforts to stop the arrest of patients suffering from HIV/AIDS, cancer and illnesses who use medical marijuana to ease their pain and suffering in states where it is legal. These positions clearly conflict with President-elect Obama’s stated positions on the issues. With controversy around Ramstad growing, the Drug Policy Alliance recently released five criteria that President-elect Obama should use when choosing a Drug Czar. Rep. Ramstad meets none of these criteria, which include: 1. Is s/he committed to enacting and supporting evidence-based policies? ONDCP should make decisions based on science, not politics or ideology. 2. Is s/he committed to reducing the harms associated with both drugs and punitive drug laws? 3. Does s/he think drug use should be treated as a health issue not a criminal justice issue? 4. Does s/he welcome and encourage debate and research? We need a Drug Czar who is open-minded and willing to consider every alternative. 5. Is s/he committed to reducing the number of nonviolent offenders behind bars? “Former Baltimore Mayor Kurt Schmoke once said that the Drug Czar should be more of a surgeon general than a military general or police officer,” said Bill Piper, director of national affairs for the Drug Policy Alliance. “Ramstad is just not right for the position. His opposition to repealing the federal syringe ban is reason enough to exclude him.”
Posted by Doug Ireland at 01:57 AM | Permalink
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raivo pommer-eesti-www.google.ee
raimo1@hot.ee
Schwedische Börse profitiert von kompetitiver Abwertung und billiger kroner
Kaum ist der „großartige“ G-20-Gipfel vorbei, so fallen an den internationalen Finanzmärkten die Tarnkappen. Nachdem die makroökonomischen Ungleichgewichte und Währungen offensichtlich bei den Diskussionen kaum eine Rollen spielten, kehren die Anleger im Rahmen des in den vergangenen Tagen aufgekommenen Wirtschaftsoptimismus zu altbewährten Strategien zurück.
Sie lassen am Devisenmarkt mit den Yen und dem Schweizer Franken die üblichen Verdächtigen abwerten. Denn erstens haben diese Staaten ihre Zinsen schon immer tief gehalten. Zudem machen sie inzwischen mit „unkonventionellen geldpolitischen Maßnahmen“ deutlich, dass sie unbedingt schwache Währungen haben wollen, um den kompetitiven Status ihrer Exportbereiche zu wahren oder gar im Vergleich mit konkurrierenden Staaten zu verbessern.
Schweden macht vor, wie das gehen kann. Der reale effektive Wechselkurs des Landes läuft schon seit Jahren im Trend nach unten. Und in den vergangenen Wochen haben sie auf die globale Wirtschaftsschwäche, die sich im kleinen, stark am Export orientierten Land deutlich bemerkbar macht, mit massiven Zinssenkungen reagiert. Die schwedische Zentralbank hat den Leitzins mit massiven Schritten von 4,75 Prozent noch im Oktober des vergangenen Jahres auf zuletzt ein Prozent gesenkt. Genau das ließ die schwedische Krone gegen den Dollar um 30 und gegen den Euro um bis zu 20 Prozent abwerten
Posted by: raivo pommer-eesti-www.google.ee | Apr 4, 2009 12:53:03 PM
raivo pommer-eesti-www.google.ee
raimo1@hot.ee
G-20
Tag eins also. Tag eins nach der Grundsteinlegung für eine neue Welt. "Das denke ich. Ja", hatte die Kanzlerin nach dem Londoner Weltfinanzgipfel geantwortet auf die Frage, ob nun die Basis geschaffen sei für eine neue Weltfinanzordnung. Auf dem Gebiet der Regulierung der Finanzmärkte, erläuterte Merkel, seien "Riesenfortschritte gemacht worden gegenüber Washington". Gegenüber Washington.
Das klingt unbestimmt, unpersönlich. Gar nicht nach Charme, Durchsetzungskraft und Charisma. Nicht nach Barack Obama also, einem, den sich angeblich 76 Prozent der Deutschen auch für ihr Land wünschen. Nicht nach dem Mann, den die Bundeskanzlerin später an diesem Tag in Baden-Baden mit militärischen Ehren empfängt. Beim Dinner in London hatten die Deutsche und der Amerikaner schon nebeneinander gesessen. Es ging freundlich zu, natürlich. Aber wenn Merkel von Erfolgen schwärmt und Obama in offensichtlichem Understatement sagt: "Nun, ich denke meine Arbeit war o.k." - dann wird klar, dass die beiden zusammen spielen, aber nicht immer in einer Mannschaft.
Posted by: raivo pommer | Apr 3, 2009 2:27:29 PM
Raivo Pommer-eesti-www.google.ee
raimo1@hot.ee
Witschaftkrise 2008-2015-Pensionkrise u.a.
Im Kampf gegen die Wirtschafts- und Finanzkrise hat die Europäische Zentralbank (EZB) den Leitzins im Euro-Raum auf ein Rekordtief gesenkt. Der wichtigste Zins zur Versorgung der Kreditwirtschaft mit Zentralbankgeld verringert sich um weitere 0,25 Prozentpunkte auf 1,25 Prozent.
Das teilte die EZB nach ihrer Ratssitzung in Frankfurt mit. Das ist der niedrigste Stand in der Geschichte der Notenbank. Experten hatten mit einer deutlicheren Senkung auf 1,0 Prozent gerechnet.
EZB-Präsident Jean-Claude Trichet hatte Anfang dieser Woche auf eine weitere Verschlechterung der konjunkturellen Lage hingewiesen. Niedrigere Zinsen verbilligen Kredite für Unternehmen und Verbraucher und können so Investitionen und das Wirtschaftswachstum insgesamt anschieben. Seit Oktober hatte die EZB den Leitzins damit bereits um insgesamt 3,0 Punkte verringert. Eine Null-Zins-Politik wie sie etwa in den USA derzeit gilt, lehnt die EZB bislang ab.
Mit Spannung wird erwartet, wie sich Trichet bei der EZB- Pressekonferenz am Nachmittag zu einem möglichen Kauf von Staats- und Unternehmensanleihen äußern wird. Die US-Notenbank Fed und die Bank of England nutzen dieses Instrument bereits mit dem Ziel, das Zinsniveau direkt zu drücken.
Posted by: raivo pommer-eesti.www.google.ee. | Apr 2, 2009 11:16:58 AM
Raivo Pommer-eesti-www.google.ee
raimo1@hot.ee
HECTOR RUIZ amerikaner
Nachdenklich, aber auch entschlossen wirkt Hector Ruiz gestern Nachmittag in Dresden. „Es gibt keinen Platz wie diesen in Europa“, sagt der Amerikaner gelassen. Nur zwei Stunden zuvor hatte der Aufsichstratschef von Globalfoundries (GloFO), dem noch jungen Joint Venture des Prozessor-Herstellers AMD und dem Technologieunternehmen ATIC aus Abu Dhabi, Sachsens Ministerpräsident Stanislaw Tillich (CDU) aufgesucht.
„Wir wollten uns einfach mal beim Freistaat bedanken“, sagt Ruiz. „Denn diese Firma existiert nur, weil Dresden ein so starker Standort ist.“ Knapp sei es gewesen, damals zur Jahreswende, erinnert sich Ruiz an die dramatischen Verhandlungen. Eng wurde es damals. Und nicht auszudenken, was geschehen wäre, wenn der Mega-Deal mit Abu Dhabi damals nicht zustande gekommen wäre, der neue Milliarden Dollar in die klamme AMD-Kasse gebracht hatte.
2600 Mitarbeiter beschäftigt der Auftragsfertiger GloFo in Dresden. Alle sind zwar zurzeit in Kurzarbeit, doch mit guter Perspektive. „Wir werden in den nächsten Jahren unsere Kapazitäten in Dresden voll ausbauen. Und dazu brauchen wir gute Leute“, sagt GloFo-Chef Doug Grose. Bei 2600 Mitarbeitern werde es bleiben, versichert er.
Posted by: raivo pommer-eesti-www.google.ee | Apr 1, 2009 4:05:59 PM
Raivo Pommer-estonia-www.google.ee
raimo1@hot.ee
Cyberspione
Ein Spionagenetzwerk mit dem Namen GhostNet hat weltweit mehrere hundert Computer infiltriert und deren Nutzer beobachtet. Kanadische Forscher haben dieses Geisternetz entdeckt, das innerhalb von weniger als zwei Jahren aufgebaut worden sein soll und noch aktiv ist. Der Betreiber sei unbekannt, wie die New York Times berichtet.
Die Forscher am Munk Center for International Studies in Toronto gehen davon aus, dass mindestens 1295 Rechner in 103 Staaten infiltriert worden seien. Dazu sollen Computer von Botschaften, Außenministerien, der Nato und des Dalai Lama gehören. Die infizierten Rechner stehen dem Bericht zufolge unter anderem in Brüssel, London und New York. Betroffen waren die Außenministerien von Iran, Bangladesch, Lettland, Indonesien, den Philippinen, Brunei, Barbados und Bhutan. Außerdem seien Systeme in Botschaften von Deutschland, Indien, Südkorea, Indonesien, Rumänien, Zypern, Malta, Thailand, Taiwan, Portugal und Pakistan gehackt worden. Dabei hätten die Hacker Malware installiert und Daten von den befallenen Computern empfangen sowie versendet.
Exiltibeter wollten es wissen
Die Systemeinbrüche wurden dem Blatt zufolge entdeckt, nachdem Mitarbeiter des Dalai Lama die Kanadier gebeten hatte, ihre Rechner auf schädliche Programme wie Viren zu untersuchen. Das geistliche Oberhaupt der Tibeter, das im Exil lebt, wollte damit sicherstellen, dass seine Rechner nicht von der chinesischen Behörden überwacht werden.
Posted by: raivo pommer-estonia-www.google.ee. | Mar 29, 2009 12:30:17 PM
Raivo Pommer
raimo1@hot.ee
Die Bank von England krise
Die Bank von England hat in dieser Woche als erste große Notenbank mit einer Politik der direkten Ausweitung der Geldmenge (quantitative Lockerung) begonnen. Ihre erste Auktion, in der sie für 2 Milliarden Pfund britische Anleihen (Gilts) von Investoren kaufte, wurde am Markt als voller Erfolg gewertet. So wurden der Bank von England Gilts im Wert von 10,5 Milliarden Pfund offeriert, also weit mehr, als die Notenbank kaufen wollte.
Gleichzeitig sind die Anleiherenditen britischer Staatspapiere seit Ankündigung der Politik der Mengenlockerung um mehr als einen halben Prozentpunkt gefallen - genau diesen Effekt wollte die Bank von England mit ihren Maßnahmen erreichen. Nach der Auktion lag die Rendite zehnjähriger Gilts mit 3,08 Prozent gleichauf mit der Rendite entsprechender Bundesanleihen (3,07 Prozent).
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raivo pommer
raimo1@hot.ee
Ostgeld krisis
Länder vor der Pleite: Der ungarische Forint, der polnische Zloty, die tschechische Krone und der rumänische Lei stehen massiv unter Druck. EU-Währungskommissar Almunia warnt bereits vor dem Schlimmsten.
Die Europäische Union wappnet sich gegen mögliche Staatsbankrotte in einzelnen Mitgliedsländern. "Wir sind politisch und wirtschaftlich darauf eingerichtet, uns diesem Krisenszenario zu stellen", sagte EU-Währungskommissar Joaquin Almunia am Dienstag in Brüssel. Die Kommission plant kein generelles Hilfspaket, sondern will von Fall zu Fall entscheiden.
Posted by: jol story | Mar 3, 2009 7:30:55 PM
raivo pommer
raimo1@hot.ee
Ostgeld krisis
Länder vor der Pleite: Der ungarische Forint, der polnische Zloty, die tschechische Krone und der rumänische Lei stehen massiv unter Druck. EU-Währungskommissar Almunia warnt bereits vor dem Schlimmsten.
Die Europäische Union wappnet sich gegen mögliche Staatsbankrotte in einzelnen Mitgliedsländern. "Wir sind politisch und wirtschaftlich darauf eingerichtet, uns diesem Krisenszenario zu stellen", sagte EU-Währungskommissar Joaquin Almunia am Dienstag in Brüssel. Die Kommission plant kein generelles Hilfspaket, sondern will von Fall zu Fall entscheiden.
Posted by: jol story | Mar 3, 2009 7:30:55 PM
Dividendenkatastrofe
von Raivo Pommer-raimo1@hot.ee
Viele große deutsche Konzerne werden ihre Aktionäre auch in diesem Jahr noch einmal mit einer hohen Ausschüttung für ihre Treue belohnen, obwohl sich ihre Geschäftslage in den vergangenen Monaten rasch verschlechtert hat und die Aussichten für 2009 höchst unsicher sind. Nach Schätzung der Landesbank Baden-Württemberg wird die gesamte Dividendensumme aller Konzerne aus dem Deutschen Aktienindex (Dax-30) in diesem Jahr nur um 16,5 Prozent auf knapp 23,38 Milliarden Euro sinken. Für 2007 hatten die Dax-Konzerne die Rekordsumme von 28,1 Milliarden Euro ausgeschüttet.
Die Aufforderung des Bundesfinanzministers Peer Steinbrück, angesichts der Wirtschaftskrise auf Dividenden vollständig zu verzichten, wird in vielen Unternehmen und an den Finanzmärkten abgelehnt. Das sei der blanke Populismus im Wahljahr, erklärte Ulrich Hocker, der Hauptgeschäftsführer der Aktionärsschutzgemeinschaft DSW. An den zum Teil noch sehr guten Geschäftsergebnissen des Jahres 2008 sollten die Anteilseigner auch angemessen beteiligt werden, forderte er.
Posted by: fredy | Mar 1, 2009 4:55:51 PM
Dividendenkatastrofe
von Raivo Pommer-raimo1@hot.ee
Viele große deutsche Konzerne werden ihre Aktionäre auch in diesem Jahr noch einmal mit einer hohen Ausschüttung für ihre Treue belohnen, obwohl sich ihre Geschäftslage in den vergangenen Monaten rasch verschlechtert hat und die Aussichten für 2009 höchst unsicher sind. Nach Schätzung der Landesbank Baden-Württemberg wird die gesamte Dividendensumme aller Konzerne aus dem Deutschen Aktienindex (Dax-30) in diesem Jahr nur um 16,5 Prozent auf knapp 23,38 Milliarden Euro sinken. Für 2007 hatten die Dax-Konzerne die Rekordsumme von 28,1 Milliarden Euro ausgeschüttet.
Die Aufforderung des Bundesfinanzministers Peer Steinbrück, angesichts der Wirtschaftskrise auf Dividenden vollständig zu verzichten, wird in vielen Unternehmen und an den Finanzmärkten abgelehnt. Das sei der blanke Populismus im Wahljahr, erklärte Ulrich Hocker, der Hauptgeschäftsführer der Aktionärsschutzgemeinschaft DSW. An den zum Teil noch sehr guten Geschäftsergebnissen des Jahres 2008 sollten die Anteilseigner auch angemessen beteiligt werden, forderte er.
Posted by: fredy | Mar 1, 2009 4:55:51 PM
Catastrophe Eastern
von Raivo Pommer-Eesti-raimo1@hot.ee
Eastern Europe’s woes are not unmanageable. But they are not being managed. The result could be catastrophe
AMID the wreckage of Latvia’s retailing industry, which has declined 17% year on year according to the latest figures, one item is selling well: T-shirts with seemingly mysterious slogans such as “Nasing spesal”. Latvians are glad to have something to laugh about, even if it is only their finance minister, Atis Slakteris. In an ill-judged foreign television interview, using heavily accented and idiosyncratic English worthy of the film character Borat, he described his country’s economic problems as “nothing special”.
Put mildly, that was an original interpretation. Fuelled by reckless bank lending, particularly in construction and consumer loans, Latvia had enjoyed a colossal boom, with double-digit economic growth and a current-account deficit that peaked at over 20% of GDP. Conventional wisdom would have suggested applying the brakes hard, by tightening the budget and curbing borrowing. But the country’s rulers, a lightweight lot with close ties to business, rejected that. Fast economic growth made voters feel that European Union membership was at last producing practical benefits, after a disappointing start when tens of thousands of Latvians went abroad in search of work, leaving rural villages and small towns depopulated.
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The central assumption, in Latvia and many other countries in or near the EU, was that convergence with rich Europe’s living standards and other comforts was inevitable. Lending in foreign currency went from 60% of the total in 2004 to 90% in 2008. Why pay high interest rates in the local currency, the lat, when the cost of a euro loan was so much cheaper? In a few years Latvia would surely join the euro anyway. Similarly, worries about financing the inflows were dismissed: Swedish banks would no more abandon their subsidiaries in Latvia than they would pull out of, say, southern Sweden.
Last year tested those assumptions nearly to breaking point. First, Latvia’s housing bubble popped. Then the main locally owned bank, Parex, went bust and had to be nationalised, amid fears that it could not pay two syndicated loans due this year. In December Latvia accepted a humiliating €7.5 billion ($9.56 billion) bail-out led by the IMF.
The big cuts in social spending that the package entailed led to vigorous public protests. Now the government has resigned. At a time when strong leadership and public trust are needed more than ever, the country’s squabbling and discredited politicians look hopelessly out of their depth. Latvia is an economic pipsqueak, with just 2.4m people. But the rest of the region is watching nervously, fearful that more bad news from the Baltics could bring others crashing down too.
It is easy to be pessimistic. This is indeed the worst economic crisis since the collapse of the communist planned economies and the wrenching process of privatisation, liberalisation and stabilisation that followed. The main ex-communist economies are likely to contract by 3% this year, according to Capital Economics, a consultancy. Yet the picture is not uniform. Only a few countries have needed an IMF bail-out. One is Latvia, whose economy is set to contract by at least 12% this year, and whose credit rating has just been downgraded by Standard & Poor’s to junk. Another is Hungary, burdened with a larger debt-to-GDP ratio than almost any other new EU member. It received $25 billion in October and faces a contraction of up to 6%. A third is Ukraine—chaotically run, corrupt and badly hit by the slowdown in its main export market, Russia. Ukraine’s IMF deal brought it $4.5 billion in November. But a second tranche of $1.9 billion is stuck; the deal is unravelling as politicians squabble over spending cuts. Its economy is likely to shrink by 10% this year. Other countries with IMF packages agreed or pending include Belarus (a Russian ally which is still expected to see growth this year), Georgia (which was bailed out after last year’s war with Russia) and Serbia.
Most other countries in the region are faring much better, though. Poland—by far the largest economy of the new EU members—is nowhere near collapse. Unlike its central European neighbours, it is big enough not to depend chiefly on exports to the rest of the EU. By European standards, its public finances are in fairly good shape. Its debt-to-GDP ratio is below 50%. Growth will be negligible, or slightly negative, but nobody is forecasting a big decline. Some Polish firms and households have taken out foreign-currency loans—but the figure is around 30% of all private-sector lending, compared with twice that in Hungary.
The second-biggest economy, the Czech Republic, is in good shape too. Its economy may shrink by 2%, but it has a solid banking system and low debt. Its neighbour Slovakia is in better shape still: it managed to join the euro zone this year. Like Slovenia, which joined two years ago, Slovakia can enjoy the full protection of rich Europe’s currency union, rather than just the indirect benefit of being due to join it some day.
Farther afield, the picture is very different. For the poorest ex-communist economies, the problem is not financial meltdown. They lack much to melt. Their exports are raw materials, agricultural products and people. In six countries, money sent home by foreign workers counts for more than 10% of GDP (in Tajikistan and Moldova it is more than 30%). Outsiders who agonise over the Latvian lat or Hungarian forint are rarely bothered with worries about the somoni (Tajikistan), leu (Moldova) or manat (Turkmenistan).
That highlights an important problem. Outsiders tend to lump “the ex-communist world” or “eastern Europe” together, as though a shared history of totalitarian captivity was the main determinant of economic fortune, two decades after the evil empire collapsed. Though many problems are shared, the differences between the ex-communist countries are often greater than those that distinguish them from the countries of “old Europe” (see table).
They range from distant, dirt-poor despotic places to countries in the EU that are not just richer than some of the old ones, but have better credit ratings, sounder public finances and stronger public institutions. In almost any contest for good government, stability or prosperity, Slovenia (under a sort of communism until 1991) looks better than Greece, which invented democracy and was never communist.
The thirst for capital
Historical and geographical quibbles aside, what the ex-communist countries have shared over the past decade is a mighty thirst for capital. Having missed out on decades of growth and integration with the outside world, almost all (a few oddballs in Central Asia aside) are trying to catch up. Money from abroad has come in from borrowing on the bond market, from foreign direct investment or from selling shares. Most often it has come through bank loans.
At one extreme is Russia, which enjoyed huge external surpluses thanks to its wealth of raw materials. But its big companies borrowed lavishly on the strength of that, creating a potential short-term debt problem. Russian corporate borrowers have to pay back around $100 billion this year. At the other extreme lie countries such as Slovakia. They attracted billions from foreign car manufacturers, drawn by a skilled workforce, low taxes and decent roads in the heart of high-cost Europe.
Countries that relied chiefly on foreign direct investment are the least vulnerable now. The new factories may shut down. But it is harder for that capital to flee. Those that rely on foreign investors buying their bonds, such as Hungary, are the most vulnerable: their fortunes vary with every twitch of a trader’s fingers. In the middle are those that rely on lending from foreign banks to their local subsidiaries. That looked solid in the boom years, as Western banks scrambled to win market share by offering good terms to borrowers and lenders in the fastest-growing bit of Europe. It is still highly unlikely that any Western bank will pull the plug on a subsidiary anywhere—even in troubled Ukraine.
But nerves are jangling. The ex-communist countries have survived the first phase of the crisis, thanks to their own policies and some external support. The second phase, in which the rich world is turning stingier and possibly more protectionist and lenders are scurrying to safety, may be harder. The ex-communist economies must repay or roll over a whopping $400 billion-odd in short-term borrowings this year. Coupled with the lazy but easy lumping of nearly three dozen countries together, that creates the region’s biggest danger: contagion (see article). In other words, failure in one place sparks a disaster in another, even though it may be far away and have the same problem in a far more manageable form.
Contagion could happen in many ways. One is if depositors lose confidence that their savings are safe. So far, Western-owned banks have enjoyed rock-solid credibility: more so, in many cases, than governments or other public institutions. But that confidence could be undermined. If only one foreign bank pulls the rug from under one local subsidiary, leaving depositors stranded, it will cloud perceptions of banks’ reliability across the region. The most dangerous kinds of bank runs would be those in which depositors try to pull out either their foreign currency, or local currency which they would then attempt to convert into hard currency. In some countries that could overwhelm the ability of the central bank to support the financial system.
Another weak point is where shareholders take fright. If a foreign bank with big exposure to the region—Swedish, Austrian or Italian—needs to raise more capital but finds that outsiders think its loan book is too risky, what happens? The price of rescue may be that it sheds a troubled foreign subsidiary. Signs of shareholder twitchiness are growing (see chart).
For now, the most likely source of contagion is collapsing currencies. The paradox is that for countries with floating exchange rates, an orderly depreciation would in normal circumstances be a good way of cushioning an external shock, such as the slump in export markets now hitting the ex-communist economies. It stokes competitiveness and, along with lower interest rates, it lays the foundations for a return to growth. Governments with sound public finances might also consider running a looser fiscal policy to counteract the downturn.
Propping up the currency
For most of the countries in the region, such a textbook response is out of the question. Some have currency boards, or pegged exchange rates. In the Baltic states these have been the centrepiece of economic policy for more than 15 years. Abandoning them would not only bankrupt big chunks of the economy that have borrowed in euros. It would also be a huge psychological blow to public confidence in the whole idea of independent statehood. These countries have suffered the most painful part of being in the euro zone—the inability to devalue and regain competitiveness—without getting all the benefits.
Countries with floating exchange rates have a bit more room for manoeuvre. Their problem (a big one in Hungary, a lesser one in Romania and Poland) is that falling exchange rates may bankrupt the firms and households which have, in past years, taken out unwise loans in foreign currencies, chiefly euros and Swiss francs. That was, in effect, a convergence play. If you believed your country was heading for the euro zone some time in the next few years, then why not take advantage of the low interest rates there, rather than suffer the higher ones in your domestic currency?
What seemed a minor risk back then now looks painfully mistaken. For those earning forints or Polish zloty, the big swings in exchange rates in recent weeks have sent the size of both loans and repayments spiralling upwards. The zloty has dropped 28% and the forint 22% against the euro since the middle of last year. If the East Asian crisis of 1997 is any guide, these and other currencies may yet have further to fall.
This risk of a currency collapse will limit these countries’ options. So far many big central European countries have cut interest rates heavily to try to boost their economies—Poland’s central bank cut its policy rate again this week. But currency weakness will limit their room for manoeuvre. The Czech, Hungarian and Polish central banks issued a co-ordinated statement this week hinting they might intervene to support their exchange rates. But that route is tricky. Russia has blown half its reserves in a series of unsuccessful attempts to try to prop up the rouble.
Spending and tax policies would be another way of dealing with a downturn. But these are constrained, too. Those countries with a chance of joining the euro are scrambling to cut their budget deficits to get them in line with the 3% of GDP target set by the EU’s Maastricht treaty. Yet that aggravates the problem. The danger for Latvia and Ukraine is a downward spiral, where cuts in public spending damage the economy in a way that helps to entrench the deficit.
So far, the economic crisis has not translated into populist or protectionist politics. It is the east European countries that have been demanding that the rest of the EU stick by the rules of the single market. Their development over the past decades has been thanks to the free movement of capital, goods and labour. They would like a lot more of it: in a contest to subsidise industries, rich countries always win.
But that stance will not hold indefinitely if things get worse. Willem Buiter, a prominent economist, believes it is only a matter of time before some of the ex-communist countries introduce capital controls. That, in theory, would allow them to concentrate on stabilising their economies without worrying so much about the external value of their currency. If voters find the economic pain of adjustment unbearable, politicians can pass laws that will make foreign-currency borrowings repayable in local currency. That would be met with fury by the foreign banks, who would in effect see their loan books expropriated. But it could happen.
Against that background, what can be done? The east European countries are, belatedly, co-ordinating their approach within the EU, holding their own mini-summit on March 1st. They want to embarrass countries such as France for what they see as its protectionist approach to the crisis. They are supporting each other: the Czech Republic and Estonia were among those contributing to the Latvian bail-out.
But even co-ordinated local efforts are unlikely to make much difference, given the scale of the problem. The real lead, and the real money, must come from outside the region. That brings into play a slew of political problems. Having trumpeted their free-market principles in past years, and dismissed the stodgy approach of countries such as Germany and France, the new EU members from eastern Europe are now turning to old Europe in the hope that it can hurry up the flow of EU structural funds to counteract the downturn, bail out or prop up over-exposed banks in places like Austria, and stretch the rules of the European Central Bank to let it provide support to countries outside the euro zone. The case for such measures is strong, and it is in the interest of all Europe that contagion is contained. But that does not mean that it will happen.
Posted by: Aitis Livings story | Feb 27, 2009 7:29:13 PM
Catastrophe Eastern
von Raivo Pommer-Eesti-raimo1@hot.ee
Eastern Europe’s woes are not unmanageable. But they are not being managed. The result could be catastrophe
AMID the wreckage of Latvia’s retailing industry, which has declined 17% year on year according to the latest figures, one item is selling well: T-shirts with seemingly mysterious slogans such as “Nasing spesal”. Latvians are glad to have something to laugh about, even if it is only their finance minister, Atis Slakteris. In an ill-judged foreign television interview, using heavily accented and idiosyncratic English worthy of the film character Borat, he described his country’s economic problems as “nothing special”.
Put mildly, that was an original interpretation. Fuelled by reckless bank lending, particularly in construction and consumer loans, Latvia had enjoyed a colossal boom, with double-digit economic growth and a current-account deficit that peaked at over 20% of GDP. Conventional wisdom would have suggested applying the brakes hard, by tightening the budget and curbing borrowing. But the country’s rulers, a lightweight lot with close ties to business, rejected that. Fast economic growth made voters feel that European Union membership was at last producing practical benefits, after a disappointing start when tens of thousands of Latvians went abroad in search of work, leaving rural villages and small towns depopulated.
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The central assumption, in Latvia and many other countries in or near the EU, was that convergence with rich Europe’s living standards and other comforts was inevitable. Lending in foreign currency went from 60% of the total in 2004 to 90% in 2008. Why pay high interest rates in the local currency, the lat, when the cost of a euro loan was so much cheaper? In a few years Latvia would surely join the euro anyway. Similarly, worries about financing the inflows were dismissed: Swedish banks would no more abandon their subsidiaries in Latvia than they would pull out of, say, southern Sweden.
Last year tested those assumptions nearly to breaking point. First, Latvia’s housing bubble popped. Then the main locally owned bank, Parex, went bust and had to be nationalised, amid fears that it could not pay two syndicated loans due this year. In December Latvia accepted a humiliating €7.5 billion ($9.56 billion) bail-out led by the IMF.
The big cuts in social spending that the package entailed led to vigorous public protests. Now the government has resigned. At a time when strong leadership and public trust are needed more than ever, the country’s squabbling and discredited politicians look hopelessly out of their depth. Latvia is an economic pipsqueak, with just 2.4m people. But the rest of the region is watching nervously, fearful that more bad news from the Baltics could bring others crashing down too.
It is easy to be pessimistic. This is indeed the worst economic crisis since the collapse of the communist planned economies and the wrenching process of privatisation, liberalisation and stabilisation that followed. The main ex-communist economies are likely to contract by 3% this year, according to Capital Economics, a consultancy. Yet the picture is not uniform. Only a few countries have needed an IMF bail-out. One is Latvia, whose economy is set to contract by at least 12% this year, and whose credit rating has just been downgraded by Standard & Poor’s to junk. Another is Hungary, burdened with a larger debt-to-GDP ratio than almost any other new EU member. It received $25 billion in October and faces a contraction of up to 6%. A third is Ukraine—chaotically run, corrupt and badly hit by the slowdown in its main export market, Russia. Ukraine’s IMF deal brought it $4.5 billion in November. But a second tranche of $1.9 billion is stuck; the deal is unravelling as politicians squabble over spending cuts. Its economy is likely to shrink by 10% this year. Other countries with IMF packages agreed or pending include Belarus (a Russian ally which is still expected to see growth this year), Georgia (which was bailed out after last year’s war with Russia) and Serbia.
Most other countries in the region are faring much better, though. Poland—by far the largest economy of the new EU members—is nowhere near collapse. Unlike its central European neighbours, it is big enough not to depend chiefly on exports to the rest of the EU. By European standards, its public finances are in fairly good shape. Its debt-to-GDP ratio is below 50%. Growth will be negligible, or slightly negative, but nobody is forecasting a big decline. Some Polish firms and households have taken out foreign-currency loans—but the figure is around 30% of all private-sector lending, compared with twice that in Hungary.
The second-biggest economy, the Czech Republic, is in good shape too. Its economy may shrink by 2%, but it has a solid banking system and low debt. Its neighbour Slovakia is in better shape still: it managed to join the euro zone this year. Like Slovenia, which joined two years ago, Slovakia can enjoy the full protection of rich Europe’s currency union, rather than just the indirect benefit of being due to join it some day.
Farther afield, the picture is very different. For the poorest ex-communist economies, the problem is not financial meltdown. They lack much to melt. Their exports are raw materials, agricultural products and people. In six countries, money sent home by foreign workers counts for more than 10% of GDP (in Tajikistan and Moldova it is more than 30%). Outsiders who agonise over the Latvian lat or Hungarian forint are rarely bothered with worries about the somoni (Tajikistan), leu (Moldova) or manat (Turkmenistan).
That highlights an important problem. Outsiders tend to lump “the ex-communist world” or “eastern Europe” together, as though a shared history of totalitarian captivity was the main determinant of economic fortune, two decades after the evil empire collapsed. Though many problems are shared, the differences between the ex-communist countries are often greater than those that distinguish them from the countries of “old Europe” (see table).
They range from distant, dirt-poor despotic places to countries in the EU that are not just richer than some of the old ones, but have better credit ratings, sounder public finances and stronger public institutions. In almost any contest for good government, stability or prosperity, Slovenia (under a sort of communism until 1991) looks better than Greece, which invented democracy and was never communist.
The thirst for capital
Historical and geographical quibbles aside, what the ex-communist countries have shared over the past decade is a mighty thirst for capital. Having missed out on decades of growth and integration with the outside world, almost all (a few oddballs in Central Asia aside) are trying to catch up. Money from abroad has come in from borrowing on the bond market, from foreign direct investment or from selling shares. Most often it has come through bank loans.
At one extreme is Russia, which enjoyed huge external surpluses thanks to its wealth of raw materials. But its big companies borrowed lavishly on the strength of that, creating a potential short-term debt problem. Russian corporate borrowers have to pay back around $100 billion this year. At the other extreme lie countries such as Slovakia. They attracted billions from foreign car manufacturers, drawn by a skilled workforce, low taxes and decent roads in the heart of high-cost Europe.
Countries that relied chiefly on foreign direct investment are the least vulnerable now. The new factories may shut down. But it is harder for that capital to flee. Those that rely on foreign investors buying their bonds, such as Hungary, are the most vulnerable: their fortunes vary with every twitch of a trader’s fingers. In the middle are those that rely on lending from foreign banks to their local subsidiaries. That looked solid in the boom years, as Western banks scrambled to win market share by offering good terms to borrowers and lenders in the fastest-growing bit of Europe. It is still highly unlikely that any Western bank will pull the plug on a subsidiary anywhere—even in troubled Ukraine.
But nerves are jangling. The ex-communist countries have survived the first phase of the crisis, thanks to their own policies and some external support. The second phase, in which the rich world is turning stingier and possibly more protectionist and lenders are scurrying to safety, may be harder. The ex-communist economies must repay or roll over a whopping $400 billion-odd in short-term borrowings this year. Coupled with the lazy but easy lumping of nearly three dozen countries together, that creates the region’s biggest danger: contagion (see article). In other words, failure in one place sparks a disaster in another, even though it may be far away and have the same problem in a far more manageable form.
Contagion could happen in many ways. One is if depositors lose confidence that their savings are safe. So far, Western-owned banks have enjoyed rock-solid credibility: more so, in many cases, than governments or other public institutions. But that confidence could be undermined. If only one foreign bank pulls the rug from under one local subsidiary, leaving depositors stranded, it will cloud perceptions of banks’ reliability across the region. The most dangerous kinds of bank runs would be those in which depositors try to pull out either their foreign currency, or local currency which they would then attempt to convert into hard currency. In some countries that could overwhelm the ability of the central bank to support the financial system.
Another weak point is where shareholders take fright. If a foreign bank with big exposure to the region—Swedish, Austrian or Italian—needs to raise more capital but finds that outsiders think its loan book is too risky, what happens? The price of rescue may be that it sheds a troubled foreign subsidiary. Signs of shareholder twitchiness are growing (see chart).
For now, the most likely source of contagion is collapsing currencies. The paradox is that for countries with floating exchange rates, an orderly depreciation would in normal circumstances be a good way of cushioning an external shock, such as the slump in export markets now hitting the ex-communist economies. It stokes competitiveness and, along with lower interest rates, it lays the foundations for a return to growth. Governments with sound public finances might also consider running a looser fiscal policy to counteract the downturn.
Propping up the currency
For most of the countries in the region, such a textbook response is out of the question. Some have currency boards, or pegged exchange rates. In the Baltic states these have been the centrepiece of economic policy for more than 15 years. Abandoning them would not only bankrupt big chunks of the economy that have borrowed in euros. It would also be a huge psychological blow to public confidence in the whole idea of independent statehood. These countries have suffered the most painful part of being in the euro zone—the inability to devalue and regain competitiveness—without getting all the benefits.
Countries with floating exchange rates have a bit more room for manoeuvre. Their problem (a big one in Hungary, a lesser one in Romania and Poland) is that falling exchange rates may bankrupt the firms and households which have, in past years, taken out unwise loans in foreign currencies, chiefly euros and Swiss francs. That was, in effect, a convergence play. If you believed your country was heading for the euro zone some time in the next few years, then why not take advantage of the low interest rates there, rather than suffer the higher ones in your domestic currency?
What seemed a minor risk back then now looks painfully mistaken. For those earning forints or Polish zloty, the big swings in exchange rates in recent weeks have sent the size of both loans and repayments spiralling upwards. The zloty has dropped 28% and the forint 22% against the euro since the middle of last year. If the East Asian crisis of 1997 is any guide, these and other currencies may yet have further to fall.
This risk of a currency collapse will limit these countries’ options. So far many big central European countries have cut interest rates heavily to try to boost their economies—Poland’s central bank cut its policy rate again this week. But currency weakness will limit their room for manoeuvre. The Czech, Hungarian and Polish central banks issued a co-ordinated statement this week hinting they might intervene to support their exchange rates. But that route is tricky. Russia has blown half its reserves in a series of unsuccessful attempts to try to prop up the rouble.
Spending and tax policies would be another way of dealing with a downturn. But these are constrained, too. Those countries with a chance of joining the euro are scrambling to cut their budget deficits to get them in line with the 3% of GDP target set by the EU’s Maastricht treaty. Yet that aggravates the problem. The danger for Latvia and Ukraine is a downward spiral, where cuts in public spending damage the economy in a way that helps to entrench the deficit.
So far, the economic crisis has not translated into populist or protectionist politics. It is the east European countries that have been demanding that the rest of the EU stick by the rules of the single market. Their development over the past decades has been thanks to the free movement of capital, goods and labour. They would like a lot more of it: in a contest to subsidise industries, rich countries always win.
But that stance will not hold indefinitely if things get worse. Willem Buiter, a prominent economist, believes it is only a matter of time before some of the ex-communist countries introduce capital controls. That, in theory, would allow them to concentrate on stabilising their economies without worrying so much about the external value of their currency. If voters find the economic pain of adjustment unbearable, politicians can pass laws that will make foreign-currency borrowings repayable in local currency. That would be met with fury by the foreign banks, who would in effect see their loan books expropriated. But it could happen.
Against that background, what can be done? The east European countries are, belatedly, co-ordinating their approach within the EU, holding their own mini-summit on March 1st. They want to embarrass countries such as France for what they see as its protectionist approach to the crisis. They are supporting each other: the Czech Republic and Estonia were among those contributing to the Latvian bail-out.
But even co-ordinated local efforts are unlikely to make much difference, given the scale of the problem. The real lead, and the real money, must come from outside the region. That brings into play a slew of political problems. Having trumpeted their free-market principles in past years, and dismissed the stodgy approach of countries such as Germany and France, the new EU members from eastern Europe are now turning to old Europe in the hope that it can hurry up the flow of EU structural funds to counteract the downturn, bail out or prop up over-exposed banks in places like Austria, and stretch the rules of the European Central Bank to let it provide support to countries outside the euro zone. The case for such measures is strong, and it is in the interest of all Europe that contagion is contained. But that does not mean that it will happen.
Posted by: Aitis Livings story | Feb 27, 2009 7:29:13 PM
Eurokrize
Eesti-von Raivo Pommer--raimo1@hot.ee
L'euro poursuit son repli ce mardi face au dollar. Vers 18h45, un euro s'échangeait ainsi contre 1,32 dollar, après voir touché 1,3168 dollar, au plus bas depuis le 11 décembre. Lundi soir, un euro valait 1,3362 dollar. Les cambistes spéculent sur une probable baisse des taux européens à l'issue de la réunion du Conseil des gouverneurs de la Banque centrale européenne (BCE), ce jeudi à Francfort.
Face au ralentissement économique, l'institution présidée par Jean-Claude Trichet devrait opter pour un nouvel assouplissement monétaire. La majorité des économistes parient sur une baisse de 50 points de base du taux directeur européen, qui serait ainsi ramené à 2%.
La tendance baissière de la devise européenne est par ailleurs renforcée par les craintes sur la dette de plusieurs gouvernements de la zone euro après que l'agence de notation Standard & Poor's a placé la note de la dette à long terme de l'Etat espagnol sous surveillance négative. Cette dernière pourrait ainsi perdre son rang "AAA".
De son côté, le billet vert a été soutenu par les propos de, Ben Bernanke. Le président de la Réserve fédérale américaine qui a estimé mardi que son institution disposait encore "d'outils puissants" contre la crise.
Posted by: raivo pommer-eesti | Feb 26, 2009 9:27:30 PM
USA Grosbank IN KRIZE
von Raivo Pommer -Eesti
Die bisher in der Finanzkrise stets profitable US-Großbank J.P. Morgan Chase streicht ihre Dividende drastisch zusammen. Die Quartalsausschüttung werde um fast 90 Prozent auf lediglich noch 0,05 Dollar je Aktie gekürzt, teilte der Konzern mit.
Der Bank blieben so pro Jahr fünf Milliarden Dollar (4 Mrd Euro) mehr in der Kasse. Im laufenden ersten Quartal sieht sich J.P. Morgan weiter in der Gewinnzone. Die Reserven etwa für faule Kredite hätten allerdings nochmals aufgestockt werden müssen, hieß es am Montagabend (Ortszeit) nach US-Börsenschluss in New York. Mit ihren Zahlen sieht sich die Bank derzeit im Rahmen der Analystenerwartungen. Experten gehen bisher von einem Ergebnis je Aktie von 0,35 Dollar aus im Vergleich zu noch 0,68 Dollar ein Jahr zuvor.
Posted by: raivo pommer | Feb 24, 2009 5:35:26 PM
Scotland Bank ist krisis
von Raivo Pommer
Die verstaatlichte britische Großbank Royal Bank of Scotland (RBS) will sich Medienberichten zufolge von zahlreichen Unternehmensteilen trennen und bis zu 20 000 Jobs abbauen.
Der neue RBS-Chef Stephen Hester will sich künftig auf das Kerngeschäft der Bank konzentrieren und die übrigen Geschäfte für einen späteren Verkauf zunächst in eine Unterabteilung der Bank auslagern, wie mehrere britische Medien am Wochenende berichteten. Zuvor war war bereits spekuliert worden, dass RBS bis zu 20 000 Stellen abbauen werde. Das wären etwa 10 Prozent der weltweit Beschäftigten.
Zu den ausgelagerten RBS-Sparten sollen die Geschäfte in Asien und Australien gehören. Außerdem will sich RBS den Berichten zufolge aus der Hälfte der 60 Länder zurückziehen, in denen die Bank derzeit Geschäfte betreibt. Zudem werde erwartet, dass RBS ein neues Rettungsprogramm der Regierung in Anspruch nimmt und faule Kredite in Höhe von mindestens 200 Milliarden Pfund (225 Mrd Euro) auf Kosten der Steuerzahler gegen Zahlungsausfälle versichert.
Die Pläne sollen am Donnerstag vorgestellt werden, wenn RBS seine Zahlen für das abgelaufene Geschäftsjahr präsentiert, hieß es in den Berichten weiter. RBS hatte bereits einen Rekordverlust in der britischen Unternehmensgeschichte von 28 Milliarden Pfund in Aussicht gestellt. Die Bank war im Strudel der Finanzkrise ins Schlingern geraten, auch weil 2007 Teile der niederländischen Bank ABN Amro übernommen worden waren. Mittlerweile befindet sich RBS zu 68 Prozent in Staatsbesitz.
Posted by: raivo pommer | Feb 23, 2009 3:21:56 PM
Euro geht langsam
von Raivo Pommer
Ulrich Nußbaum wird neuer Finanzsenator
Der frühere Bremer Finanzsenator Ulrich Nußbaum (parteilos) wird neuer Finanzsenator in Berlin. Das gab der Regierende Bürgermeister Klaus Wowereit (SPD) bekannt. Der 51 Jahre alte Jurist war von 2003 bis 2007 Finanzsenator in Bremen. Er war außerdem als Rechtsanwalt tätig und ist Vizepräsident der Handelskammer Bremerhaven. Er folgt Thilo Sarrazin nach, der zum 1. Mai in den Vorstand der Bundesbank in Frankfurt/Main wechselt.
Sarrazin war sieben Jahre Finanzsenator in Berlin. Der Regierende Bürgermeister Wowereit sagte, Nußbaum kenne sichals früherer Finanzsenator von Bremen mit Problemen wie Verschuldungund Länderfinanzausgleich bestens aus.
Posted by: ulrich nusbaum story | Feb 19, 2009 8:23:49 AM
Obama went with Gil Kerlikowske.
http://www.reason.com/blog/show/131662.html
Posted by: Peter K. | Feb 12, 2009 8:39:19 PM
yeah they slipped in a 'health bill' into this raping of the american people they call a stimulus. guess what that 'health bill' does... it gives the government the authority to create a bureaucracy that tells doctors which procedures they can and can't perform on patients. we will soon have government cronies with no medical experience telling doctors how they may treat patients. that will go very nicely with socialized health care. i am sure we can all trust the feds with this kind of power... i mean its not like they have ever abused their power before...
Posted by: ceanf | Feb 11, 2009 4:56:50 PM
I don't think that the Obama administration is interested in actually changing the current drug rehab situation. They just slipped a health bill into the stimulus package, so that nobody would hopefully take a closer look at it. So even though Ramstad might not be my cup of tea, Obama and the gang are not really any better.
Mike
Posted by: Drug Rehab Videos | Feb 11, 2009 5:27:09 AM
Gute Pfund
Die britische Großbank Barclays hat trotz Finanzkrise das Jahr 2008 mit einem Milliardengewinn abgeschlossen.
Zwar brach der Vorsteuergewinn im Vergleich zum Vorjahr um 14 Prozent auf 6,1 Milliarden Pfund (knapp 7 Mrd Euro) ein, Analysten waren aber von einem niedrigeren Ergebnis ausgegangen.
2,4 Milliarden Pfund der Gewinne stammen aus Übernahmen, vor allem aus dem Nordamerika- Geschäft der zusammengebrochenen US-Investmentbank Lehman Brothers. 2009 werde erneut eine Herausforderung, sagte Unternehmenschef John Varley am Montag in London. Trotzdem wolle die Bank in der zweiten Jahreshälfte ihre Dividendenzahlungen wieder aufnehmen.
Der Barclays-Chef kündigte an, dass die Banken-Vorstände für das vergangene Jahr keine Bonus-Zahlungen erhalten sollten und die Ausschüttungen für die übrigen Beschäftigten deutlich geringer als 2007 ausfallen werde. Nach unbestätigten Medienberichten soll sich die Höhe der Boni auf 600 Millionen Pfund belaufen
Posted by: raivo pommer | Feb 9, 2009 9:07:53 AM
The position of Drug Czar should be abolished.
Posted by: libhomo | Feb 8, 2009 12:41:31 PM
