The Great Debate UK
–Kathleen Brooks is research director at forex.com. The opinions expressed are her own.–
The French President has been in the press a lot recently. Firstly, there was the triumph in Mali. “Vive le France!” could be heard in the streets and the swift removal of the Taliban from Northern parts of the country is to be lauded. But after a rousing welcome in Timbuktu, Hollande might find he has a chillier welcome closer to home.
This week Hollande spoke out against the level of the euro. Not only did he do that, but he questioned why the ECB is the only authority in the euro zone who has power over the currency and said that governments’ should have some say on FX policy. This is brave stuff. Hollande is questioning the notion of a free-floating currency, something that the euro zone is fully signed up to and advocates along with other countries in the G20.
Sure, there are some rogue G20-ers who manipulate their currencies. The Swiss and the Japanese do it openly, others adopt more covert measures, but for a head of a member state in the currency bloc this is a political hot potato that could leave him with some explaining to do at the ECB and also at the next G20 meeting.
St Maarten Princess Juliana International Airport boasts the world’s most visually appealing landing, according to respondents of a survey.
Private jet bookers PrivateFly.com asked travellers and an expert judging panel for their bucket list of global descents.
It is clear Britain got a ‘bounce’ from the Olympics, but much more is needed to secure long-term economic legacy
–Andrew Hammond is an Associate Partner at ReputationInc. He was formerly a UK Government Special Adviser, and a Senior Consultant at Oxford Analytica. The opinions expressed are his own.–
Six months since the London 2012 games began, a flurry of research has indicated that the UK’s international image has received a boost from hosting the Olympics and Paralympics. Most recently, the latest Anholt GfK Roper Nation Brands Index, released on January 17, showed that the United Kingdom edged up from fifth to fourth place since July 2012 in the survey’s overall country reputation rankings; only the United States, Germany and France currently have a more favourable nation brand.
from The Great Debate:
In 2005, Nicholas Negroponte announced an audacious goal: He was going to put a laptop in the hands of every child in developing countries. With his "One Laptop Per Child" project, the futurist and marquee Wired magazine columnist was looking to close the widening gap between the world’s haves and have-nots. His underlying premise: In the computer age, there should be none of the latter, because the PC was the ultimate equalizer.
OLPC was greeted with great acclaim among the Internet's 1 percent, many of who were highly motivated to empower the other 99. It was backed by a host of blue-ribbon tech companies and got the perfect coming-out party at the 2006 World Economic Forum in Davos, where the UN Development Program announced it too would support the project. OLPC's machine, the XO, was tailor-made for the developing world: It had a hard plastic shell to survive outdoors, where it would see a lot of use, and a screen that could be read in direct sunlight. It used 1/10th the power of contemporary laptops and could be recharged with solar energy. And at $200, it was incredibly cheap by laptop standards back then.
–Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own.–
In the welter of comment on President Obama’s second term, one remarkable feature seems to have slipped under the radar. This has been a presidency blessedly free of scandal. When last did the White House remain more or less scandal-free for as long as four years? His predecessor, George W., had the average scandal quotient (Halliburton contracts, the Abramoff affair among others). Before him, there was Clinton, who seemed to clock up a scandal a week – we all remember the sex, but there was also Whitewater, which involved money, allegations of graft and ultimately suicide. Under Bush Senior and Reagan we had the Iran contra affair. As for Nixon, the less said the better. Even the saintly Jimmy Carter had a problem brother and some rather loose cannons among the pals he shipped in from Georgia to staff his administration.
This infographic, supplied by the Americas Incentive, Business Travel & Meetings Exhibition (AIBTM), aims to show that the travel sector is critical to economic growth in the U.S.
AIBTM’s exhibition director Mike Lyons says of the figures: “Despite recessionary economic periods, businesses recognise the continued importance and value of face-to-face meetings that current research shows accelerate business results and shorten the sales cycle. With every planned meeting, there’s a ‘cascade effect’ into local economies across the nation, feeding jobs, local spending, and fuelling the success of local business.”
from The Great Debate:
Four years ago world leaders, meeting in the G20 crisis session, agreed they would all work to move from recession to growth and prosperity. They agreed to a global growth compact to be delivered by combining national growth targets with coordinated global interventions. It didn’t happen. After the $1 trillion stimulus of 2009, fiscal consolidation became the established order of the day, and so year after year millions have continued to endure unemployment and lower living standards.
Only now are there signs that the long-overdue shift in national macro-economic policies may be taking place. The new Japanese government is backing up a "minimum inflation target" with a multi-billion-dollar stimulus designed to create 600,000 jobs. In what some call the “reverse Volcker moment,” Ben Bernanke has become the first head of a central bank for decades to announce he will target a 6 percent level of unemployment alongside his inflation objective. And the new governor of the Bank of England, Mark Carney, has told us that "when policy rates are stuck at the zero lower bound, there could not be a more favorable case for Nominal GDP targeting.” Side by side with this shift in policy, in every area but the Euro, there is also policy progress in China. It may look from the outside as if November’s Communist Party Congress simply re-announced their all-too-familiar but undelivered wish to re-balance the economy from exports to domestic consumption, but this time the promise has been accompanied by a time-specific commitment: to double average domestic income per head by 2020.
While coverage of health care has increased considerably since the international community defined its millennium development goals to improve health around the world, health gains remain stubbornly elusive, especially in developing countries, and poor quality of care may be the reason why.
–Darren Williams is Senior European Economist at AllianceBernstein. The opinions expressed are his own.–
Bank of England governor-elect, Mark Carney, has raised hopes that the central bank may soon switch to a nominal GDP target. Although the costs seem to outweigh the benefits, the attractions of a radical new approach will grow if the economy remains stuck in the doldrums.
from The Great Debate:
Financial conditions in the euro zone have significantly improved since the summer, when euro zone risks peaked because of German policymakers’ open consideration of a Greek exit, and the sovereign spreads of Italy and Spain reached new heights. The day before European Central Bank President Mario Draghi’s famous speech in London in which he announced that the ECB would do “whatever it takes” to save the euro, bond yields in Spain and Italy were at 7.75 percent and 6.75 percent, respectively, and rising. When the ECB announced its outright monetary transactions (OMT) bond-buying program, the euro zone was at risk of a collapse.
Since then, risks have abated significantly, thanks to a number of factors:
The ECB’s OMT has been incredibly successful in reducing the risks of breakup, redenomination and a liquidity/rollover crisis in the public debt markets of Spain and Italy. Although the ECB has yet to spend a single additional euro to buy the bonds of Spain and Italy, both short-term and longer-term sovereign spreads against German bonds have fallen substantially.
Following a number of political and legal hurdles, the successful operational start of the European Stability Mechanism (ESM) rescue fund provides the euro zone with another €500 billion of official resources to backstop banks and sovereigns in the euro zone periphery, on top of the leftover funds of its predecessor, the European Financial Stability Facility (EFSF).
Realizing that a monetary union is not viable without deeper integration, euro zone leaders have proposed a banking union, a fiscal union, an economic union and, eventually, a political union. The last is necessary to resolve any issue of democratic legitimacy that might result from national states transferring power from national governments to EU- or euro zone-wide institutions. This transfer of power also would have to involve the creation of such institutions to ensure solidarity and risk-sharing are developed in the banking, fiscal and economic unions.
The open talk in the summer by some German authorities about an exit option for Greece has turned into a tentative willingness to prevent and postpone such an exit. There are several reasons for this. First, Greece has done some austerity and reforms in spite of a deepening recession, and the current coalition is holding up. Second, an orderly exit of Greece is impossible until Spain and Italy are successfully isolated. Such an exit would lead to massive contagion, which would hurt not only the euro zone periphery but also the core, given extensive trade and financial links. Third, an economic disaster in Greece would be damaging to the CDU Party’s chances of winning the German elections. Thus, even when Greece inevitably underperforms on its policy commitments, Germany and the troika (the IMF, EU and ECB) will hold their noses and keep the funds flowing as long as the current coalition holds up.
Given these developments, the risk of a Greek exit in 2013 has been significantly reduced, even if the risk of an eventual Greek exit from the euro zone is still high, close to 50 percent by my estimation. Meanwhile, the narrowing of Spanish and Italian sovereign spreads has significantly diminished the risk that either country will fully lose market access and be forced to undergo a full troika bailout like Greece, Portugal and Ireland. Both Spain and Italy may in 2013 opt for a memorandum of understanding (MoU) that opens the taps of ESM and OMT support, but such official financing would inspire confidence as it would not be associated with rising, unsustainable spreads and a loss of market access.