will switzerland end up like chechenia ?
viktor gref, russian economics minister has threatened the swiss government of retaliation if viktor vekselberg (VV) , a russian oligarch close to mr putin and his kgb acolytes, with fiscal domicile in switzerland, a priviledged plutocratic treatment not granted to common swiss and russian citizens,if VV is not allowed to take control of sulzer , an engineering company specialised in oil pipes , the ideal vehicle for the clever billionaire to expand its business in mother russia and hand to the kremlin state of the art technology . VV is not happy , business and corporate raids do not run smoothly as they do back home and he does not appreciate the subtleties of his guest country law system. the oligarch has called moscow after reaping extraordinary gains in Sulzer shares with the complicity of some Austrian buddies and managers of the zurich cantonal bank. bern did shut up untill then out of but the alarm bells started to ring when it became evident that take over strategies were based on legal loopholes and that the independence of industrial jewels was threatened and fooled by rapacity of a zurich domiciled ogre meant to rest peacefully in his tax heaven .
is fortress switzerland more open than ever and may turn soon into a mountainous state like chechenia bullied by the last land empire?. how will a country so proud of his acclaimed freedom and independence behave in front of putin emissary, a country so proud of freedom of speech in front of a regime suspected of having killed all its loudy opponents , not the last anna politovskia who defended till the end the truth on the genocide of a proud and disgraced population of mountaineers like the chechens ? also, will mr greff open fortress russia to the swiss industrial groups letting them take over rotten and inefficient companies and reorganise them for the profit of russian clients and shareholders?
From FUW
Sulzer sollte wichtige Rolle Vekselbergs akzeptieren
Von Manfred Rösch
Victor F. Vekselberg ist ein diskreter Mann. Nicht zuletzt deshalb mag er an der Schweiz als Basis für seine Aktivitäten Gefallen gefunden haben. Zu seinen Geschäften und Absichten lässt er sich nicht befragen - jedenfalls nicht von «Finanz und Wirtschaft» -, weshalb Mutmassungen angestellt werden müssen, aktuell umso mehr, als auch die «Gegenpartei», Sulzer, sich hartnäckig in Schweigen übt. Dass Vekselbergs Umfeld am letzten Sonntag in der Presse eine Propagandaoffensive konzertiert hat, ist immerhin weit mehr als nur eine Vermutung. Dem Investor aus Russland scheint die Geduld mit dem Verwaltungsrat von Sulzer auszugehen, nun erhöht er mit gütigem Sukkurs des Kreml den Druck. German Gref, soeben als Wirtschaftsminister zurückgetreten, hat Amtskollegin Doris Leuthard in anscheinend mitunter drohendem Ton wissen lassen, Vekselberg sei als Sulzer-Aktionär endlich einzutragen, sonst könnte Moskau Retorsionsmassnahmen ergreifen.
An der «gelegentlichen Grundskepsis», der Vekselberg in der Schweiz bisweilen begegnen will, wie er in der «Neuen Zürcher Zeitung» schreibt (Ausgabe vom 2. Oktober), wird dieses robuste Vorgehen gerade nichts ändern. Etwas lässt sich aus dem politischen Begleitgedröhne schliessen: Vekselberg steht offenbar in der Gunst des Kremls, obschon der Absender des bewussten Briefs nun nicht mehr in Amt und Würden ist; die entscheidende Figur, Putin, will ja weiterregieren. Dass Vekselberg an der Staatsspitze Fürsprecher findet, stützt sein Marketing-Argument, er könne hiesigen Unternehmen in Russland Türen öffnen, konkret: Sulzer als Zulieferer der Förderer und Verarbeiter von Öl und Gas dort besser etablieren. Was das in Franken heissen kann, lässt sich nicht verlässlich abschätzen. Sulzer würde sich kaum über Nacht eines massiven Zusatzwachstums erfreuen können, aber mit der Zeit mögen gute Kontakte zumindest nicht schaden. Wahr ist: Sulzer braucht Vekselberg nicht; Strategie, Unternehmensführung und Erfolgsnachweis überzeugen und die fundamentalen Aussichten des infrastrukturnahen Portfolios sprechen so oder so für Engagements. Wahr ist aber auch: An den realen Kräfteverhältnissen im Aktionariat ändert all das gar nichts.
Im Prinzip hat «VV» zudem mit seiner Feststellung recht, es gehe nicht an, dass Schweizer Unternehmen im Ausland Beteiligungen erwerben, aber nicht genehme ausländische Investoren hierzulande aussen vor gehalten würden. Lange, die Vorhersage sei gewagt, kann das ohnehin nicht mehr der Fall sein. Vekselberg hat seine österreichischen Kompagnons ausgekauft. Er besitzt nun 21% der Aktien Sulzer und kann über Optionen auf weitere 10,4% zugreifen. Sulzer kennt keine Eintragungs- und Stimmrechtsbeschränkung und dass Vekselberg der wirtschaftlich Berechtigte seines Pakets ist, lässt sich kaum in Zweifel ziehen; die statutarische Basis, ihn nicht zuzulassen, ist somit dünn.
Möglich - schlimmstenfalls sogar wünschenswert -, dass die Eidgenössische Bankenkommission wegen der Verletzung von Meldepflichten im Verlaufe des in der Tat allzu gut vernebelten Positionsaufbaus Geldbussen verhängen wird. Vekselbergs Kassa würde es überstehen, diejenige von Pecik und Stumpf wohl auch.
Spätestens dann wird sich der Verwaltungsrat von Sulzer wohl der «normativen Kraft des Faktischen» beugen und Vekselberg eintragen müssen. Lange Rechtsstreitereien nützen niemandem, im Gegenteil. Nebenbei: Es ist zu hoffen, dereinst entstehe nicht etwa der Eindruck, das Annehmen der Wirklichkeit geschehe auf Nötigung des Kreml. Einmal mehr drängt sich die lapidare Feststellung auf, dass eine Publikumsgesellschaft, gerade eine ohne Mehrheitsaktionär, per definitionem fünf Tage in der Woche zum Verkauf steht. Der Verwaltungsrat hat zwar die Interessen aller Aktionäre zu wahren, etwa wenn zu beklagen ist, ihnen sei wegen unsauberer Manöver während einer Paketbeschaffung eine Übernahmeprämie entgangen, doch es kann nicht seine Aufgabe sein, sich die Aktionäre (wie einst geschehen) auszusuchen.
Die Börse dürfte Vekselbergs Zulassung erwarten und in den Preis eingebaut haben. Deswegen rechnen wir nicht mit einer besonders ausgeprägten Kursreaktion am Tag X. Was der Markt nicht kennt, sind Vekselbergs Pläne. So fragt sich, ob er dereinst ein öffentliches Übernahmeangebot unterbreiten wird (worauf nicht spekuliert werden sollte), ob er Sulzer und Oerlikon näher zueinander führen möchte (wofür industriell wenig spricht) und inwieweit er in Winterthur Einfluss zu nehmen gedenkt (was, je nachdem, belebend oder belastend ausfallen kann). Jedenfalls scheint uns ausgeschlossen, dass Vekselberg sich nicht alsbald im Verwaltungsrat vertreten lassen und die Strategieentwicklung noch auf Jahre nicht mitprägen würde.
Die Annahme sei gewagt, dass Sulzer mit dem offenbar auf langfristige industrielle Engagements setzenden Investor Vekselberg besser fährt als mit den sprunghafter, finanztechnisch verwegener und intransparenter wirkenden Österreichern. Als gewiefter Kaufmann, der viel Geld in Sulzer investiert hat - 20% entsprechen etwa 1,1 Mrd. Fr., 30% rund 1,7 Mrd. Fr. - muss ihm daran gelegen sein, diese Substanz zu mehren. Das deckt sich mit den Interessen der Publikumsaktionäre.
From NZZ
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30. September 2007, NZZ am Sonntag
Moskau droht
Moskau droht
Sulzer will Viktor Vekselberg nicht als Aktionär mit Stimmrecht akzeptieren. Jetzt hat die russische Regierung deswegen bei Bundesrätin Leuthard interveniert
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Moskau droht
Sulzer will Viktor Vekselberg nicht als Aktionär mit Stimmrecht akzeptieren. Jetzt hat die russische Regierung deswegen bei Bundesrätin Leuthard interveniert
Sulzer hat das Aktienpaket von Viktor Vekselberg noch nicht ins Aktienbuch eingetragen. Der Industriekonzern stellt offenbar Anforderungen, die weit über das Übliche hinausgehen. ...
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Sulzer hat das Aktienpaket von Viktor Vekselberg noch nicht ins Aktienbuch eingetragen. Der Industriekonzern stellt offenbar Anforderungen, die weit über das Übliche hinausgehen.
Chanchal Biswas
Der Brief wurde am 23. Juli in Moskau abgeschickt, ist an Doris Leuthard adressiert und lässt an Deutlichkeit nichts zu wünschen übrig: German Gref – bis Montag Wirtschaftsminister der russischen Regierung – macht darin die Volkswirtschaftsministerin darauf aufmerksam, dass Investor Viktor Vekselberg im April eine grössere Beteiligung an der Firma Sulzer gekauft habe, jedoch immer noch nicht ins Aktienregister eingetragen worden sei. Dies sei stossend, weshalb Leuthard aufgefordert wird, zu einer raschen Lösung des Konflikts beizutragen.
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Und für den Fall, dass sie den Ernst der Situation falsch einschätzen sollte, weist ihr damaliger Amtskollege mit drohendem Unterton darauf hin, dass die russische Regierung bis jetzt ausländische Investitionen in die russische Wirtschaft grosszügig unterstützt habe. Sie erwarte deshalb Gegenrecht. Andernfalls könnte die russische Regierung die Investitionen und die Expansion von Schweizer Firmen in Russland unterminieren.
Evelyn Kobelt, Sprecherin des Volkswirtschaftsdepartementes, bestätigt den Eingang von Grefs Schreiben. «Wir haben auch darauf geantwortet», sagt sie, will sich aber zum Inhalt des Antwortschreibens nicht äussern.
Everest ist seit Ende April mit einer Beteiligung von 32% in Aktien und Optionen die grösste Aktionärin von Sulzer. Allein die Aktien sind heute 1,3 Mrd. Fr. wert. «Die Gespräche über die Eintragung laufen noch, und die beiden Parteien haben Stillschweigen über den Inhalt vereinbart», sagt Sulzer-Sprecherin Verena Gölkel.
Die Sulzer-Statuten regeln die Eintragung, wie es das Obligationenrecht vorschreibt: Sulzer anerkennt nur als Aktionär, wer im Aktienbuch eingetragen ist. Voraussetzung dafür ist die formrichtige Übertragung der Aktien. Sulzer kann verlangen, dass der Erwerber «ausdrücklich erklärt, dass er die Aktien im eigenen Namen und auf eigene Rechnung erworben hat und halten wird». Tut er dies nicht, darf Sulzer «die Eintragung in das Aktienbuch als Aktionär mit Stimmrecht verweigern». In den Statuten gibt es keine anderen Gründe für eine Nichteintragung.
Stillhalteabkommen
Sulzer hat am Dienstag eine Medienmitteilung verschickt, wonach Everest 21% der Sulzer-Aktien halte sowie Call-Optionen, die zum Erwerb von weiteren 10,4% berechtigen. Als wirtschaftlich Berechtigter von Everest wird Viktor Vekselberg genannt. Wenn die Dinge so klar liegen, warum ist dann der Milliardär nicht eingetragen und weiterhin ohne Stimmrecht?
Aus politischen Kreisen verlautet, dass Sulzer für die Eintragung des Everest-Pakets Forderungen stelle, die offenbar weit über das Übliche hinausgingen. Der von Ex-Konzernchef Ulf Berg präsidierte Verwaltungsrat verlange ein Stillhalteabkommen. Vekselberg solle sich verpflichten, während mehrerer Jahre die Strategie des Verwaltungsrates mitzutragen und bei Änderungen generell mit dem Gremium zu stimmen. «Ein Unternehmen kann versuchen, einem Grossaktionär auf informellem Weg solche Zugeständnisse abzuringen», sagt ein auf Übernahmen spezialisierter Wirtschaftsanwalt, «solche Vereinbarungen formell zu treffen oder die Eintragung ins Aktienregister davon abhängig zu machen, wäre aber widerrechtlich.»
Dass Sulzer Everest noch nicht als Aktionärin akzeptiert, hat sich Vekselberg selbst eingebrockt – weil er die Beteiligung gemeinsam mit den österreichischen Investoren Ronny Pecik und Georg Stumpf aufgebaut hat. Um Sulzer hatten seit Herbst 2006 Übernahmegerüchte kursiert, ohne dass ein Investor die tiefste meldepflichtige Schwelle von 5% überschritten hätte. Am 20. April teilte dann Vekselberg mit, dass Everest eine Beteiligung von knapp 32% an Sulzer erwerbe. Everest gehörte damals je zur Hälfte Vekselberg und der Beteiligungsgesellschaft Victory. Als wirtschaftlich Berechtigte von Victory wurden RPR und Millennium genannt, die Privatstiftungen von Pecik und Stumpf. Victory ist die bestimmende Aktionärin von OC Oerlikon und hielt Ende April 34% der Aktien des Technologiekonzerns, Vekselberg weitere 13,8%. Diese komplizierten Verflechtungen hinter Everest boten Sulzer grosse Angriffsflächen.
Wie konnte Everest in einem Tag eine Beteiligung von 32% aufbauen, ohne vorher das Überschreiten der Schwellen von 5%, 10% und 20% zu melden? Die Frage beschäftigt die Eidg. Bankenkommission (EBK).
Als Everest im Juni den Antrag auf Eintragung eingereicht habe, habe Sulzer ihr mitgeteilt, dass die Grossaktionärin das Ergebnis der EBK-Untersuchung abwarten müsse, sagen gut informierte Quellen. In Winterthur wollte man erklärt bekommen, wer genau die wirtschaftlich Berechtigten hinter den Privatstiftungen von Pecik und Stumpf sind. Everest sollte auch belegen, dass die Sulzer-Aktien effektiv in ihrem Depot liegen und nicht an Banken ausgeliehen sind. Zudem wurde sie aufgefordert, in mehreren Ländern abzuklären, ob es kartellrechtliche Schwierigkeiten gebe, weil Vekselberg und Victory gemeinsam Sulzer und OC Oerlikon faktisch kontrollieren könnten. Sulzer verlangte von Everest Klärung dieser Punkte. Andernfalls sei das Gesuch auf Eintragung zurückzuziehen oder als abgelehnt zu betrachten.
Viktor ohne Victory
Ende August schien Vekselberg der Befreiungsschlag zu gelingen. Der Oligarch kaufte Pecik und Stumpf den 50%-Anteil von Victory an Everest ab. Es wurde erwartet, dass der Eintragung der Beteiligung damit nichts mehr im Weg stünde, waren doch die Widerstände von Sulzer auf Victory und ihre Methoden zurückzuführen: Optionsgeschäfte, Securities Lending, Privatstiftungen. Mit der Trennung von Vekselberg und Victory bei Sulzer schienen auch mögliche kartellrechtliche Bedenken ausgeräumt.
Vekselbergs Pressesprecher Markus Blume will sich auf Anfrage nicht zu den Gründen äussern, warum Sulzer Everest nicht ins Aktienbuch einträgt. Die Frage, ob man rechtliche Schritte erwäge, will er «zum jetzigen Zeitpunkt» nicht beantworten. Man sei im Gespräch, prüfe aber alle Optionen.
Will Vekselberg beweisen, dass er wirklich unabhängig von Putins Regierung handelt, würde ihm der Gang ans Handelsgericht mehr nützen als weitere Korrespondenz auf Ministerebene.
Mehr Transparenz durch den Kapitalmarkt
Russische Beteiligungsgesellschaft Renova erhält Rating von S&P
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Mehr Transparenz durch den Kapitalmarkt
Russische Beteiligungsgesellschaft Renova erhält Rating von S&P
gho. Moskau, 21. September Russische Unternehmen gelten oft zu Recht als intransparent. Daran ist aber nicht nur die schlechte Verankerung des Corporate-Governance-Gedankens in Russland schuld, sondern auch der Umstand, dass viele Gesellschaften im Besitz von Einzelpersonen sind, die an Publizität ...
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gho. Moskau, 21. September
Russische Unternehmen gelten oft zu Recht als intransparent. Daran ist aber nicht nur die schlechte Verankerung des Corporate-Governance-Gedankens in Russland schuld, sondern auch der Umstand, dass viele Gesellschaften im Besitz von Einzelpersonen sind, die an Publizität kein grosses Interesse haben. Die Finanzierung erfolgt meist über einbehaltene Gewinne oder Kredite. In den vergangenen Jahren gewannen jedoch der Anleihenmarkt und die Kapitalaufnahme über einen Börsengang an Bedeutung. Private-Equity-Gesellschaften, die zwar selbst meist intransparent, aber als Aktionäre sehr aktiv sind, haben hingegen in Russland noch immer keine grosse Verbreitung.
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Vekselberg hält 100 Prozent
Eine besondere Kategorie intransparenter Gesellschaften sind die Finanzvehikel russischer Grossinvestoren, über die beispielsweise Oleg Deripaska (Basic Element), Michail Potanin (Interros) oder Viktor Vekselberg ( Renova ) ihre Beteiligungen verwalten. Um aber am Kapitalmarkt teilnehmen zu können, müssen auch diese Beteiligungsgesellschaften Zugeständnisse machen, wenn sie sich denn zu günstigen Konditionen mit Finanzkapital eindecken wollen. In dieser Woche erhielt die russische Renova Holding von Standard & Poor's (S&P) ein Rating (vgl. Kasten). Laut Auskunft der Rating-Agentur ist Renova, die auch an den Schweizer Unternehmen Sulzer und Oerlikon beteiligt ist, die erste derartige russische Holding, die ein Kreditrating bekommen hat.
Der Bericht von S&P zu Renova ist zwar nicht besonders detailliert, aber er ist ein erster Schritt zu mehr Transparenz, der durch die Anforderungen am Kapitalmarkt erzwungen wurde. So wird erläutert, dass Renova zu 100% Viktor Vekselberg gehört. Ende des vergangenen Jahres betrug der Wert des Portefeuilles von Renova etwa 12 Mrd. $, wovon 76% auf russische Beteiligungen entfallen. Die Filetstücke sind dabei der 12,5%-Anteil an der Erdölgesellschaft TNK-BP und das 7,7%-Aktienpaket am Aluminiumproduzenten UC Rusal. Diese Anteile werden direkt gehalten. Die übrigen Vermögenswerte gehören über den Intermediär Renova Industries, der zu 86% im Besitz der Renova Holding ist, zum Imperium von Vekselberg. Durch die Reinvestition der Dividenden aus diesen Kernbeteiligungen habe sich Renova in den vergangenen Jahren breit diversifiziert und sei schnell gewachsen.
Undurchsichtige Staatsunternehmen
Laut S&P haben sich in den vergangenen Jahren die Transparenz der Unternehmen und auch die Corporate Governance stark verbessert. Immer mehr Gesellschaften erstellten ihre Finanzrechnungen nach IFRS oder US GAAP, was vor fünf Jahren noch nicht der Fall gewesen sei. Ein wichtiger Anreiz sei der Wunsch gewesen, Zugang zu den Kapitalmärkten zu bekommen. Zugleich müsse aber betont werden, dass Russland im Vergleich mit den europäischen Staaten immer noch punkto Transparenz hinterherhinke. Diesen Befund teilen auch russische Ökonomen des Centre for Economic and Financial Research in einer jüngst erschienenen Studie. Die Wissenschafter führen zudem aus, dass die russische Wirtschaft hinsichtlich der Eigentümerschaft immer noch hoch konzentriert sei. Die derzeit grössten Probleme seien die mangelnde Rechtsdurchsetzung, der steigende Staatsinterventionismus und das Misstrauen der Öffentlichkeit gegenüber der Privatisierung.
Während sich private Unternehmen unter dem Druck der internationalen Kapitalmärkte immer mehr öffnen, hinken die mehrheitlich vom Staat kontrollierten Unternehmen hinterher, obwohl auch diese aufgrund der Ausgabe von Anleihen und Hinterlegungsscheinen Zugeständnisse machen müssen. Staatlich kontrollierte Unternehmen tätigen etwa 50% aller Investitionen in Russland. Dieser Umstand könnte die Anstrengungen für eine Verbesserung der Transparenz in Russland bremsen. So sagte gar in einem Interview Arkadi Dworkowitsch, der Wirtschaftsberater des russischen Präsidenten, dass die Vorgänge der Staatsgesellschaften teilweise undurchsichtig und ökonomisch nicht immer nachvollziehbar seien, und nannte als Beispiel den Verkauf von 50% an der Erdölgesellschaft Tomskneft. Der staatliche Erdölmulti Rosneft behauptet, die Beteiligung an die Staatsbank Vneschekonombank (VEB) veräussert zu haben, was VEB aber bestreitet.
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20. August 2007, 17:18, NZZ Online
Milliardär Vekselberg soll weiter pauschal besteuert werden
Milliardär Vekselberg soll weiter pauschal besteuert werden
Zürcher Kantonsrat lehnt «Basler Lösung» für Pauschalsteuer ab
Der russische Milliardär Viktor Vekselberg
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Der russische Milliardär Viktor Vekselberg (Bild: Reuters)
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Milliardär Vekselberg soll weiter pauschal besteuert werden
Zürcher Kantonsrat lehnt «Basler Lösung» für Pauschalsteuer ab
Der Milliardär Viktor Vekselberg soll im Kanton Zürich weiter pauschal besteuert werden. Der Zürcher Kantonsrat lehnte am Montag ein Postulat mit 110 zu 60 Stimmen ab, das den Begriff der Erwerbstätigkeit präzisieren wollte. ...
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Der Milliardär Viktor Vekselberg soll im Kanton Zürich weiter pauschal besteuert werden. Der Zürcher Kantonsrat lehnte am Montag ein Postulat mit 110 zu 60 Stimmen ab, das den Begriff der Erwerbstätigkeit präzisieren wollte.
(sda) Der Kanton Zürich bietet dem Milliardär Viktor Vekselberg weiterhin eine pauschale Beteuerung an. Der Kantonsrat hat einen Antrag zur Präzisierung des Begriffs der Erwerbstätigkeit mit 110 zu 60 Stimmen abgelehnt. Das dringliche Postulat von AL, SP und Grünen verlangte vom Regierungsrat, in der Weisung des Steueramtes den Begriff der Erwerbstätigkeit im Sinne der «Basler Regelung» zu definieren.
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Wenn der in Zürich lebende russische Milliardär Viktor Vekselberg trotz seinen namhaften Beteiligungen an schweizerischen Traditionsunternehmen als «nicht erwerbstätig» bezeichnet werde, sei dies ein «missbräuchlich anmutendes Steuerprivileg», sagte Postulant Kaspar Bütikofer (al., Zürich).
Mit einer Lösung wie im Kanton Basel-Stadt könne der Interpretationsspielraum verkleinert und ein Steuerschlupfloch gestopft werden. Danach soll jemand nicht pauschal besteuert werden können, wenn er im In- oder Ausland Einkünfte aus Erwerbstätigkeit erzielt.
Die Regelung sei allen Steuerpflichtigen gegenüber ungerecht, benachteilige aber auch die «guten Steuerzahler», sagte Postulantin Elisabeth Derisiotis (sp., Zollikon). Nur mit einer Klärung könne das Vertrauen in Behörden und Staat zurückgewonnen werden.
FDP: Keine «grosszügige Auslegung»
Die heutige Zürcher Praxis entspreche dem Bundesgesetz, denn ein Unternehmer wie Vekselberg sei in der Schweiz nicht erwerbstätig, wenn er keinen Lohn oder Tantiemen erhalte, sagte FDP-Sprecher Hans-Peter Portmann (Thalwil). Es gehe überhaupt nicht um eine besonders grosszügige Auslegung.
Portmann warf der linken Ratsseite vor, sie betreibe «Neidpolitik». Es sei ein «legitimer Wettbewerbsvorteil», wenn nicht erwerbstätige Unternehmer im Kanton Zürich pauschal besteuert würden. Vekselberg versteuere sein Einkommen in Russland. Und seine Investmentgesellschaft Renova schaffe in Zürich 30 Arbeitsplätze.
Das zürcherische Steueramt verhalte sich absolut korrekt, betonte Finanzdirektorin Ursula Gut (fdp.). Es wird sich gemäss der Kantonsregierung im Rahmen der Schweizerischen Steuerkonferenz, der Vereinigung der kantonalen Steuerämter und der Eidgenössischen Steuerverwaltung um eine einheitliche Umschreibung der Voraussetzung für die Pauschalbesteuerung bemühen.
Gegen die Überweisung des dringlichen Postulats an den Regierungsrat stimmten SVP, FDP, CVP, EDU, GLP und einige EVP-Mitglieder.
Wednesday, October 03, 2007
santa claus and the independence of the fed or when the saints go marching in
it is the end of a myth that the fed relies on quantitative objective scientific data to assess the state of the economy linked to markets turbulence. greenspan acknowledged the socratic dictum and hence his own wisdom, i know that i dont know , and proof has leaked out that bernake consulted several large players to assess the situation instead of relying on independent analysts. the fed governor is forced to give a qualitative judgment and given its poor qualitative background ( no philosophical , rethoric , argumentative, psychological skills and above all , unlike greenspan, no political background to assess the real nature of the human being and investors , mors tua vita mea, in this case life to wall street and death to america) we can but shiver on the outcome of his decisions, certainly biased and influenced.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ae21h4HAD6Ag&refer=home
in this article several names are mentioned. what were the criteria chosen for the selection of these people and why hedge fund and mutual fund managers were consulted to assess the state of the economy, clearly partisan actors heavily exposed to the markets. another doubt that may be raised is whether some circles could gauge the next move of the fed better than the normal and prudent investor working with public information and common sense .
When the Saints Go Marching In
We are trav'ling in the footsteps
Of those who've gone before,
And we'll all be reunited,
On a new and sunlit shore,
Oh, when the saints go marching in
Oh, when the saints go marching in
Lord, how I want to be in that number
When the saints go marching in
And when the sun refuse to shine
And when the sun refuse to shine
Lord, how I want to be in that number
When the sun refuse to shine
And when the moon turns red with blood
And when the moon turns red with blood
Lord, how I want to be in that number
When the moon turns red with blood
Oh, when the trumpet sounds its call
Oh, when the trumpet sounds its call
Lord, how I want to be in that number
When the trumpet sounds its call
Some say this world of trouble,
Is the only one we need,
But I'm waiting for that morning,
When the new world is revealed.
Bernanke Spoke With Rubin as Credit Crisis Worsened (Update1)
By Craig Torres
Enlarge Image/Details
Oct. 3 (Bloomberg) -- The Federal Reserve's Aug. 7 decision to keep interest rates unchanged set off a chain of high-level discussions with Wall Street executives, money managers and cabinet officials that culminated in Chairman Ben S. Bernanke's public about-face 10 days later, according to records of his schedule.
Starting with a phone call from former Treasury Secretary Robert Rubin the day after the August rate meeting, Bernanke's appointments included Lewis Ranieri, founder of Hyperion Capital Management Inc., and Raymond Dalio, president of Bridgewater Associates.
The information on Bernanke's calls and contacts was obtained under the Freedom of Information Act by Kenneth H. Thomas, a lecturer at the University of Pennsylvania's Wharton School in Philadelphia. The records depict a chairman who ``has made a very good effort to get up to date with what is going on,'' Thomas said.
David Skidmore, a Fed spokesman in Washington, confirmed the authenticity of the document provided by Thomas to Bloomberg News. He said he couldn't provide details of discussions that Bernanke, 53, had with Rubin and others.
The conversations came against the backdrop of the worst global credit rout in almost a decade. After $38 billion in cash injections into the banking system failed to boost liquidity, the Fed on Aug. 17 cut its discount rate by half a percentage point, to 5.75 percent, and signaled a September reduction in the benchmark federal funds rate. The Fed cut the key rate a half-percentage point to 4.75 percent on Sept. 18.
Rubin's Message
Rubin, 69, now chairman of the executive committee at Citigroup Inc. in New York, told Bernanke that the Fed made the right decision on Aug. 7, even as traders complained the central bank was oblivious to weakening markets, according to a person familiar with the conversation.
On Aug. 9, Bernanke met from 11 a.m. to noon with Ranieri, a former vice chairman of Salomon Brothers Inc. and a pioneer in the mortgage-backed securities market. Fed Governor Randall Kroszner and Community Affairs Director Sandra Braunstein, who also runs an enforcement team, joined the conversation with Ranieri. Ranieri, 60, wasn't available for comment.
Dalio visited Bernanke at 2 p.m. the same day. Bridgewater is the fourth-largest U.S. hedge fund firm, with $32.10 billion in assets under management as of July 1, according to HedgeFund Intelligence's Absolute Return magazine.
Dalio's office in Westport, Connecticut, didn't return telephone calls seeking comment.
Exchange With King
According to the Fed records, Bernanke consulted throughout the month with staff experts, investors, congressional officials, community groups and Bank of England Governor Mervyn King.
Bernanke and King spoke by telephone at 1:30 p.m. on Aug. 17, following the U.S. discount-rate cut that morning. Bernanke was also in frequent contact with Treasury Secretary Henry Paulson, who said in an interview last month that he meets the chairman regularly.
Bernanke's schedule lists 35 Fed conference calls from Aug. 9 to Aug. 31, including at least two during the central bank's summer retreat at Jackson Hole, Wyoming. During the first full day of the symposium, Bernanke said in a speech that he would do what was needed to keep the six-year economic expansion going.
On the eve of the Aug. 7 rate decision, Bernanke received a briefing from Fed staff on markets. He also spoke with Timothy Geithner, president of the Fed's New York branch and the central bank's chief liaison with Wall Street.
Adding Reserves
In the days after the rate meeting, as Bernanke touched base with executives and investors, credit costs climbed. The Fed added more reserves to the banking system than any time after the terrorist attacks of Sept. 11, 2001, in an attempt to increase liquidity.
Yield differences between high-grade debt and riskier credit widened, according to a macroeconomic risk index tracked by Citigroup Global Markets. The index rose to 0.98 on Aug. 17, with a reading of one being a measure of high risk aversion, up from 0.89 on the day before the rate decision.
Wayne Passmore, a Fed expert on mortgage finance, met with Bernanke at least four times in August, including before and during Bernanke's Aug. 2 meeting with Freddie Mac Chairman Richard Syron, the schedule shows.
``He is going up and down his staff,'' gathering information on markets, Thomas said, referring to Bernanke.
The chairman continued to get reports on market conditions from investors after cutting the discount rate.
On Aug. 23, the schedule says Bernanke took a call from John Brennan, 53, chief executive officer of Vanguard Group. Senior Fed economists Brian Madigan, now in charge of the Monetary Affairs Division, and Patrick Parkinson, a financial stability expert, participated.
Vanguard managed $1.1 trillion in mutual fund assets at the end of 2006, according to the company's Web site. Officials for the Valley Forge, Pennsylvania-based firm couldn't be reached for comment.
To contact the reporter on this story: Craig Torres in Washington at
Tuesday, October 02, 2007
greenspan on suprime and us economy
http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vl57PPe2RWlc.asf
Tuesday, September 25, 2007
when benni santa claus cuts the rates
wall street rejoices . 50 bps , thank you santa klaus, this is response from the street . we are richer , valuations are fine ,goldman sachs reports stronger than expected results and equities are rated a strong buy .
the suspicion may rise on the real role of the federal reserve , to steer the dynamics of economic growth and recession , ie to avoid a boom or bust economic cycle or to launch pre-emptive attacks on suspect developments paving the way to the most exuberant market players who few weeks before were reporting huge losses on their quantic funds ?
clearly it is difficult to argue that mr bernanke , a harvard professor , in concert with the former goldman sachs chairman mr paulson from the us treasury ,came to the rescue of genius hedge funds traders, probably their former students and business partners, positionned for the best case scenario in their trading strategies to get out of the doldrums . nonetheless the recent move speaks loudly about the delicate position in which the federal reserve finds itself, practically a hostage to wall street, betting that higher equity valuations coupled with an infusion of world economic growth will curtail a negative spill over of the us economy .
Not surprisingly the dollar has dropped heavily and the bet of Mr Bernanke is more open than ever . The question remains on the real role of the Fed , that of boosting the economy or to keep it going at a reasonable pace. Is the Fed indipendent or submitted to real pressure that eventually influences its own judgement on the state of the economic affairs? Similarly is the claim of economists to take decisions on scientific grounds still valid given the dynamics and the context of this last decision?
The motto never fight the fed is more true than ever but something else should be added , never fight wall street and its capacity of moving the levers of public power . Small investors should be awed by large and powerful firms and should wake up from the illusion of an independent Fed responsible for granting stability in the markets regardless of the power configuration . The first palpable sign of such an argument is the very weakness of the dollar and the exorbitant profits of the likes of Goldman Sachs positioned before hand in the fastest growing markets outside the US. The real losers, for the time being, are the American people.
Furthermore the current strike of general motor is another sign of unease and insecurity reigning in America. The working class is disappearing, hail China and the Investment bankers who are drawing profits from it.
Who said that a weak currency is good for the economy ? Those Europeans incapable of executing structural reforms . The onus before the euro adoption was high interest rates for small players without credit lines abroad.
Friday, September 21, 2007
trichet and central bank indipendence
http://www.bloomberg.com/apps/data?pid=avimage&iid=izblQEK4fZ6M
d timber of humanity, no straight thing was ever made
out of the crooked timber of humanity, no straight thing was ever made
Thursday, September 20, 2007
grillo/euronews
http://euronews.net/index.php?page=interview&article=443734&lng=4&option=1
http://mediacenter.corriere.it/MediaCenter/action/player?uuid=866d551c-673c-11dc-8226-0003ba99c53b
http://mediacenter.corriere.it/MediaCenter/action/player?uuid=77c38658-673c-11dc-8226-0003ba99c53b
http://mediacenter.corriere.it/MediaCenter/action/player?uuid=58439c14-673c-11dc-8226-0003ba99c53b
http://mediacenter.corriere.it/MediaCenter/action/player?uuid=676682d8-673c-11dc-8226-0003ba99c53b
http://mediacenter.corriere.it/MediaCenter/action/player?uuid=866d551c-673c-11dc-8226-0003ba99c53b
http://mediacenter.corriere.it/MediaCenter/action/player?uuid=77c38658-673c-11dc-8226-0003ba99c53b
http://mediacenter.corriere.it/MediaCenter/action/player?uuid=58439c14-673c-11dc-8226-0003ba99c53b
http://mediacenter.corriere.it/MediaCenter/action/player?uuid=676682d8-673c-11dc-8226-0003ba99c53b
Monday, September 17, 2007
germany divide , interactive map
http://media.ft.com/cms/ae2f6f8a-653f-11dc-bf89-0000779fd2ac.swf
http://www.ft.com/cms/s/0/798fc53e-6532-11dc-bf89-0000779fd2ac.html
Germany’s north-south split
By Bertrand Benoit in Berlin
Published: September 17 2007 18:38 | Last updated: September 17 2007 18:38
Holzminden, a town of 20,000 souls on the border between Lower Saxony and North Rhine-Westphalia, lies roughly at the centre of northern Germany. Yet Angela Schürzeberg, head of strategic planning for the district, maintains: “We are the east of the west,” as she sifts through a stack of depressing statistical reports.
In economic terms, her statement makes sense. Holzminden, whose slow decline has brought its standard of living close to that of depressed regions in the former Communist east, embodies a trend that is perplexing economists.
As recently as five years ago, a common assumption was that the east, helped by considerable subsidies, would develop and eventually match the living standards of the west. Well into the second year of the country’s robust economic recovery, however, it is catching up, but not in the expected way.
Instead of developing uniformly, eastern Germany is gradually taking on a long-standing feature of the west, with a wealthy and fast-growing south but a struggling north. Meanwhile the west’s own north-south divide, which a decade ago was thought to be vanishing, has instead deepened.
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If the trend persists, the mental map assuming a rich west and poor east – which has shaped policy-making and dictated the flow of domestic development aid since the country’s reunification 17 years ago – could soon be replaced by a new one, cut along a roughly latitudinal line from Cottbus, on the Polish border, to Aachen, Germany’s gateway to the low countries.
“There are still big differences between east and west,” says Peter Kaiser, project manager at Prognos, a Swiss economic consultancy. “But the north-south dichotomy is quite remarkable and very resilient.”
In June, Prognos published the latest edition of its German Future Atlas, the first since 2004, examining the economic prospects of 439 municipalities and districts. The study was a shocking read for politicians and business people in the north.
For a start, as a measure of research and development activity, it showed that more than 51 per cent of patents filed in 2005 and 2006 originated in Bavaria and Baden-Württemberg, Germany’s southernmost states, up from 47 per cent in 2000. Munich and Stuttgart, their respective capitals, were home to 15 per cent of the country’s total corporate research capacity.
The core macroeconomic data tell the same story. The unemployment rate in the southern states of Baden-Württemberg, Bavaria, Rhineland-Palatinate and Hessen last month stood at an average of 6 per cent. North of the Cottbus-Aachen line in North Rhine-Westphalia, Lower Saxony, Schleswig-Holstein, Hamburg and Bremen, it was 9.6 per cent.
The gap is increasing. Out of Germany’s 16 states, the southernmost four last year generated almost half the gross domestic product. Since reunification, their economies have grown by 48 per cent, compared with just 37 per cent for the north’s three largest states.
“The north-south divide has been there for some time,” says Eric Thode of the Bertelsmann foundation, whose study of German regional development published this month matched Mr Kaiser’s findings “What is preoccupying is that the two sides are diverging, not converging.”
In eastern Germany, a clear north-south divide has also emerged. Last month, Saxony and Thuringia in the south had 13.4 per cent unemployment against 15.3 per cent in the region’s four northern states, including Berlin. Saxony’s economy grew by 4.2 per cent last year, faster than any other German state.
Holzminden, just north of the Cottbus-Aachen line, offers sobering insights into the overwhelming power of history, geography and markets in shaping a country’s economic fortunes and the comparatively limited influence of economic policies.
Chain-smoking at his Volkswagen dealership, Michael Vatterott, president of the Holzminden chamber of commerce, is shocked by the Prognos study. Of all western municipalities surveyed, his town scored worst. “I hope this will be a trigger for action, not for despair,” he says. “Bad publicity can easily become a self-fulfilling prophecy.”
With its boarded-up stores, Holzminden’s main shopping street bears witness to the town’s slow descent. In the past four years, despite a high birth rate, the population has dropped by 3.4 per cent. Unemployment is high at 11 per cent, while economic growth from 2001 to 2004 was only half the German average.
The town boasts large and successful employers, including Symrise, a chemicals company, and Stiebel Eltron, which makes heating equipment. Yet the main weakness of the locality lies precisely in its economic monoculture. Holzminden’s employers need engineers and technicians, while Holzminden’s educational facilities train architects and social workers. The result is an unbalanced labour market and massive emigration of the young and well qualified.
“The big employers here have to go elsewhere to find the right people,” says Ms Schürzeberg. “Meanwhile, we are chronically missing about 3,000 jobs.” Michael Birke at Stiebel Eltron says the family-owned company is doing well thanks to its high market share and a booming export business, but he concedes that finding employees has become hard.
Holzminden’s poor transport infrastructure – it is an hour’s drive from the nearest autobahn – makes it unattractive for new businesses, especially in the fast-growing service industry, which is sorely underrepresented in the district. In a lethal vicious circle, the town’s shrinking population and dwindling public finances make it increasingly difficult to justify – and to afford – the type of infrastructure that would attract employers. “We cannot even get a decent broadband internet connection,” says Andreas Schrader, whose chemicals institute performs product tests for the cosmetics industry, which involve sending and receiving large amounts of electronic data.
For Mr Kaiser, the town lacks an essential ingredient in the recipe for economic success in 21st century Germany. “One decisive advantage of the south is diversification. North Rhine-Westphalia and Lower Saxony all have strong clusters. But Bavaria has clusters of clusters. In fact, it is a bit of a cluster magnet.”
In the south, upper Bavaria and Munich in particular are good examples. Their economic competence spans microelectronics, aerospace, carmaking and financial services. Baden-Württemberg is another, with a panoply of advanced engineering companies along with their constellations of suppliers and service providers.
This offers an important clue to the failure of Germany’s north – whether in the east or in the west – to catch up with the south. “Some regions in the north-east clearly lack the basis for endogenous development,” says Mr Kaiser, “But many others in the north have bright industrial and corporate spots – ‘lighthouses’. The problem is they lack critical mass. The layer is too thin.”
Radebeul, a suburb of Dresden, Saxony’s capital, is south of the line but deep in the east, a town of 30,000 which is the counterpoint to Holzminden, which lies 400km to the north-west.
Sibylle Thomas-Göbelbecker manages the Rolls-Royce dealership, the only one in eastern Germany. She bristles when the word “east” is mentioned. “Everywhere, not just in Germany, east has a negative connotation. East is poor, grey, Communist. But we Saxons are not easterners, we are southerners. We have so much in common with the Bavarians,” she says, listing the love of good beer, an earthy sense of humour and a fondness for baroque architecture.
From her palatial premises on the town’s outskirts, she supplies not only Rolls-Royces but Ferraris, Aston Martins and Maseratis to local nouveaux riches – whom she reckons make up 75 per cent of her client base – and the expatriate millionaires who dwell in the big villas on the hills.
With both a Ferrari and a Maserati in her garage at home, Ms Thomas-Göbelbecker may not be an average Radebeuler, but most of her fellow locals are not doing badly either. At 8.3 per cent, the town has among the lowest unemployment in the east and, rare for an east German town of this size, its population is increasing steadily.
Its economic fabric is more varied and dynamic than Holzminden’s. KBA, which makes printing equipment and employs 2,300 people, is its biggest employer, followed by Vodafone and Deutsche Telekom and a small pharmaceuticals cluster. Largely thanks to business, Radebeul’s tax revenues have risen by 50 per cent since 2001.
In a way, says Bert Wendsche, Radebeul’s mayor, the town has found a route back to its past. Starting at the end of the 19th century, when a first railway link was built, it developed rapidly to become an important centre for the printing and pharmaceuticals industries and popular as a weekend residence – dubbed the “Nice of the north” – for rich Dresden industrialists. It still benefits from its proximity to the Saxon capital, which headed a ranking by economic dynamism of Germany’s 50 largest cities just published by the Wirtschaftswoche weekly – Leipzig, Saxony’s biggest city, was ranked seventh.
Mr Wendsche has worked to attract companies and younger professionals, by investing in transport infrastructure and kindergartens. “I’ve had to fight to make this happen,” he says. “My argument was that we needed to invest first in those things that would bring tax revenue – then maybe we could talk about that new cycling path.”
The renaissance of Saxony is however, a broader tale of history and markets winning over politics. In eastern Germany, the north-south divide goes back to the beginning of the country’s industrialisation (it would have been referred to as Middle Germany at the time, when the east meant the regions of Prussia reaching as far as today’s Kaliningrad). After the second world war, the communist regime of the German Democratic Republic sought to promote a more uniform development, for instance setting up a large denim manufacturer in Rostock and a glass factory in the Lausitz region, both thinly industrialised areas.
Subject again to the laws of the market since reunification, eastern Germany has eased back into its former economic polarity. “Something of Saxony’s industrial tradition was maintained under the GDR. Dresden still had the country’s computer industry, for instance,” says Kurt Geppert, expert in regional development at Berlin’s DIW economic institute. “When western companies went east after reunification, they moved to those places where they could find expertise in their fields. The quality of a labour market is perhaps the most determining factor in such investment decisions.”
Back in the west, history played a determining role too in the rise of Bavaria, Hessen and Baden-Württemberg. The war and the subsequent partition of the country sent Berlin-based businesses on a frantic west- and southward trek.
Siemens, now Europe’s largest engineering group, moved to Munich – though it still has a nominal seat in the capital. So did Allianz, the insurance group, while all the big banks vacated Berlin for Frankfurt. This presence in turn attracted large foreign companies when they entered the country and most of them still have their German bases in the south.
These relocations were the initial trigger for the economic rise of southern Germany and especially Bavaria, now home to the country’s most technologically advanced industries. Largely agricultural beforehand, Bavaria did not have to grapple with the decline of heavy industry, unlike the Ruhr further north, which still bears the scars of this restructuring process.
“The second world war was a great boon for Bavaria. The move of modern industry and finance to the south planted the seed that gave the south today’s technological and economic lead. The only carmaker in the north is Volkswagen – and it is the only one that was created by political fiat,” says Mr Geppert.
In egalitarian Germany, the prospect of a country increasingly split between poor north and rich south is an uncomfortable one. It is also awkward for a political class that sees its central role as corrector of the market’s worst excesses. It is, finally, an indictment of the financial mechanisms that have for years channelled money from rich states to poorer ones, particularly those in the east.
However, Mr Thode of the Bertelsmann foundation refuses to accept the notion that a region’s future fortunes are cast in stone: “History plays a role but so do policies,” he says. “The lesson for regional politicians is that they should identify their region’s strengths and not distribute aid thinly over a large quantity of greenfield projects, as has often happened in the east’s least dynamic regions.”
The exceptional Hamburg gains ground in globalisation
Kaiserspeicher A, a disused warehouse at the tip of Hamburg’s historic inner-city port, seems nothing to brag about. Its gutted core surrounded by mounds of earth and its thin brick façade leaning on metal supports, it is as appealing as any other industrial ruin.
Things will look different in 2010, however, when Herzog and de Meuron, the star Swiss architects, lift the veil on the Elbe Philharmonic Hall. With a crested, translucent façade soaring 100 metres above the warehouse shell, it will be a landmark to rival the Sydney Opera House or Bilbao’s Guggenheim museum.
The concert hall, part of a gigantic docklands redevelopment that will increase the size of the city centre by 40 per cent, is the most powerful expression of Hamburg’s renaissance as one of the country’s most dynamic cities and a notable exception in the struggling northern half.
That the Elbe Philharmonic should have found its home in a former cocoa and tea warehouse is also fitting, for Hamburg’s role as Germany’s largest port is at the centre of this new dynamism. “Hamburg is the big winner of globalisation,” says Klaus Schrader, economist at the Institute for the World Economy in nearby Kiel. “The port is clearly the single biggest factor in the city’s booming economy.”
The city-state at the mouth of the Elbe has long been seen as Germany’s “gateway to the world” but soaring international trade and the country’s rise to become the world’s biggest exporter make that description more pertinent today than ever.
With 40,000 employees and 154,000 companies involved in shipping, ship financing and logistics, the modern container terminals north of the city centre are the biggest contributors to Hamburg’s gross domestic product. Nearly 9m containers passed through the docks last year, twice the level of 2001. Based on current trends, the figure could reach 18m by 2015. As transit hub for Scandinavia’s and eastern Europe’s overseas exports, Hamburg plays a pivotal role in the continental economy – one worthy of its past as a leading member of the Hanseatic league of trading cities.
With gross domestic product growth of 3.8 per cent last year, it was the second most dynamic of Germany’s 16 Länder, or states. Since 1991, its economy has grown by 53 per cent, twice as much as that of Berlin. No other state in Germany has created as many jobs since the beginning of the current economic upturn.
Though half as big as the federal capital, it is almost twice as rich. With a yearly disposable income per head of €23,000 ($41,630, £20,820) last year, Hamburg was Germany’s richest state and the fourth largest economic region in the European Union.
The harbour also accounts for the city’s economic structure, which is dominated by the services sector. Yet, like Munich and Stuttgart, it is also a cluster of clusters, with a broad range of activities. Industrial employers include Airbus, which has a large plant in the city, and Lufthansa Technik, the airline’s technical subsidiary. Hamburg is also home to some of the country’s largest publishers – Die Zeit and Der Spiegel weeklies, the Bild tabloid and Financial Times Deutschland, the FT’s sister newspaper, have their headquarters there.
A darker spot is the city’s unemployment rate – at 8.9 per cent last month, it was above the national average, though it is rapidly falling. Another is the failure of its vitality to benefit neighbouring, more rural regions, to the extent that could be expected. “There is definitely more work to be done in this area. Hamburg and [the surrounding state of] Schleswig-Holstein need to co-operate more on economic policy,” says Mr Schrader. “This would benefit the city, too, by lifting some of the strain on its capacity.”
Copyright The Financial Times Limited 2007
http://www.ft.com/cms/s/0/798fc53e-6532-11dc-bf89-0000779fd2ac.html
Germany’s north-south split
By Bertrand Benoit in Berlin
Published: September 17 2007 18:38 | Last updated: September 17 2007 18:38
Holzminden, a town of 20,000 souls on the border between Lower Saxony and North Rhine-Westphalia, lies roughly at the centre of northern Germany. Yet Angela Schürzeberg, head of strategic planning for the district, maintains: “We are the east of the west,” as she sifts through a stack of depressing statistical reports.
In economic terms, her statement makes sense. Holzminden, whose slow decline has brought its standard of living close to that of depressed regions in the former Communist east, embodies a trend that is perplexing economists.
As recently as five years ago, a common assumption was that the east, helped by considerable subsidies, would develop and eventually match the living standards of the west. Well into the second year of the country’s robust economic recovery, however, it is catching up, but not in the expected way.
Instead of developing uniformly, eastern Germany is gradually taking on a long-standing feature of the west, with a wealthy and fast-growing south but a struggling north. Meanwhile the west’s own north-south divide, which a decade ago was thought to be vanishing, has instead deepened.
Germany's economic divide: Launch interactive map
Adobe Macromedia LogoThis file requires Macromedia Flash Player 7 or higher
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If the trend persists, the mental map assuming a rich west and poor east – which has shaped policy-making and dictated the flow of domestic development aid since the country’s reunification 17 years ago – could soon be replaced by a new one, cut along a roughly latitudinal line from Cottbus, on the Polish border, to Aachen, Germany’s gateway to the low countries.
“There are still big differences between east and west,” says Peter Kaiser, project manager at Prognos, a Swiss economic consultancy. “But the north-south dichotomy is quite remarkable and very resilient.”
In June, Prognos published the latest edition of its German Future Atlas, the first since 2004, examining the economic prospects of 439 municipalities and districts. The study was a shocking read for politicians and business people in the north.
For a start, as a measure of research and development activity, it showed that more than 51 per cent of patents filed in 2005 and 2006 originated in Bavaria and Baden-Württemberg, Germany’s southernmost states, up from 47 per cent in 2000. Munich and Stuttgart, their respective capitals, were home to 15 per cent of the country’s total corporate research capacity.
The core macroeconomic data tell the same story. The unemployment rate in the southern states of Baden-Württemberg, Bavaria, Rhineland-Palatinate and Hessen last month stood at an average of 6 per cent. North of the Cottbus-Aachen line in North Rhine-Westphalia, Lower Saxony, Schleswig-Holstein, Hamburg and Bremen, it was 9.6 per cent.
The gap is increasing. Out of Germany’s 16 states, the southernmost four last year generated almost half the gross domestic product. Since reunification, their economies have grown by 48 per cent, compared with just 37 per cent for the north’s three largest states.
“The north-south divide has been there for some time,” says Eric Thode of the Bertelsmann foundation, whose study of German regional development published this month matched Mr Kaiser’s findings “What is preoccupying is that the two sides are diverging, not converging.”
In eastern Germany, a clear north-south divide has also emerged. Last month, Saxony and Thuringia in the south had 13.4 per cent unemployment against 15.3 per cent in the region’s four northern states, including Berlin. Saxony’s economy grew by 4.2 per cent last year, faster than any other German state.
Holzminden, just north of the Cottbus-Aachen line, offers sobering insights into the overwhelming power of history, geography and markets in shaping a country’s economic fortunes and the comparatively limited influence of economic policies.
Chain-smoking at his Volkswagen dealership, Michael Vatterott, president of the Holzminden chamber of commerce, is shocked by the Prognos study. Of all western municipalities surveyed, his town scored worst. “I hope this will be a trigger for action, not for despair,” he says. “Bad publicity can easily become a self-fulfilling prophecy.”
With its boarded-up stores, Holzminden’s main shopping street bears witness to the town’s slow descent. In the past four years, despite a high birth rate, the population has dropped by 3.4 per cent. Unemployment is high at 11 per cent, while economic growth from 2001 to 2004 was only half the German average.
The town boasts large and successful employers, including Symrise, a chemicals company, and Stiebel Eltron, which makes heating equipment. Yet the main weakness of the locality lies precisely in its economic monoculture. Holzminden’s employers need engineers and technicians, while Holzminden’s educational facilities train architects and social workers. The result is an unbalanced labour market and massive emigration of the young and well qualified.
“The big employers here have to go elsewhere to find the right people,” says Ms Schürzeberg. “Meanwhile, we are chronically missing about 3,000 jobs.” Michael Birke at Stiebel Eltron says the family-owned company is doing well thanks to its high market share and a booming export business, but he concedes that finding employees has become hard.
Holzminden’s poor transport infrastructure – it is an hour’s drive from the nearest autobahn – makes it unattractive for new businesses, especially in the fast-growing service industry, which is sorely underrepresented in the district. In a lethal vicious circle, the town’s shrinking population and dwindling public finances make it increasingly difficult to justify – and to afford – the type of infrastructure that would attract employers. “We cannot even get a decent broadband internet connection,” says Andreas Schrader, whose chemicals institute performs product tests for the cosmetics industry, which involve sending and receiving large amounts of electronic data.
For Mr Kaiser, the town lacks an essential ingredient in the recipe for economic success in 21st century Germany. “One decisive advantage of the south is diversification. North Rhine-Westphalia and Lower Saxony all have strong clusters. But Bavaria has clusters of clusters. In fact, it is a bit of a cluster magnet.”
In the south, upper Bavaria and Munich in particular are good examples. Their economic competence spans microelectronics, aerospace, carmaking and financial services. Baden-Württemberg is another, with a panoply of advanced engineering companies along with their constellations of suppliers and service providers.
This offers an important clue to the failure of Germany’s north – whether in the east or in the west – to catch up with the south. “Some regions in the north-east clearly lack the basis for endogenous development,” says Mr Kaiser, “But many others in the north have bright industrial and corporate spots – ‘lighthouses’. The problem is they lack critical mass. The layer is too thin.”
Radebeul, a suburb of Dresden, Saxony’s capital, is south of the line but deep in the east, a town of 30,000 which is the counterpoint to Holzminden, which lies 400km to the north-west.
Sibylle Thomas-Göbelbecker manages the Rolls-Royce dealership, the only one in eastern Germany. She bristles when the word “east” is mentioned. “Everywhere, not just in Germany, east has a negative connotation. East is poor, grey, Communist. But we Saxons are not easterners, we are southerners. We have so much in common with the Bavarians,” she says, listing the love of good beer, an earthy sense of humour and a fondness for baroque architecture.
From her palatial premises on the town’s outskirts, she supplies not only Rolls-Royces but Ferraris, Aston Martins and Maseratis to local nouveaux riches – whom she reckons make up 75 per cent of her client base – and the expatriate millionaires who dwell in the big villas on the hills.
With both a Ferrari and a Maserati in her garage at home, Ms Thomas-Göbelbecker may not be an average Radebeuler, but most of her fellow locals are not doing badly either. At 8.3 per cent, the town has among the lowest unemployment in the east and, rare for an east German town of this size, its population is increasing steadily.
Its economic fabric is more varied and dynamic than Holzminden’s. KBA, which makes printing equipment and employs 2,300 people, is its biggest employer, followed by Vodafone and Deutsche Telekom and a small pharmaceuticals cluster. Largely thanks to business, Radebeul’s tax revenues have risen by 50 per cent since 2001.
In a way, says Bert Wendsche, Radebeul’s mayor, the town has found a route back to its past. Starting at the end of the 19th century, when a first railway link was built, it developed rapidly to become an important centre for the printing and pharmaceuticals industries and popular as a weekend residence – dubbed the “Nice of the north” – for rich Dresden industrialists. It still benefits from its proximity to the Saxon capital, which headed a ranking by economic dynamism of Germany’s 50 largest cities just published by the Wirtschaftswoche weekly – Leipzig, Saxony’s biggest city, was ranked seventh.
Mr Wendsche has worked to attract companies and younger professionals, by investing in transport infrastructure and kindergartens. “I’ve had to fight to make this happen,” he says. “My argument was that we needed to invest first in those things that would bring tax revenue – then maybe we could talk about that new cycling path.”
The renaissance of Saxony is however, a broader tale of history and markets winning over politics. In eastern Germany, the north-south divide goes back to the beginning of the country’s industrialisation (it would have been referred to as Middle Germany at the time, when the east meant the regions of Prussia reaching as far as today’s Kaliningrad). After the second world war, the communist regime of the German Democratic Republic sought to promote a more uniform development, for instance setting up a large denim manufacturer in Rostock and a glass factory in the Lausitz region, both thinly industrialised areas.
Subject again to the laws of the market since reunification, eastern Germany has eased back into its former economic polarity. “Something of Saxony’s industrial tradition was maintained under the GDR. Dresden still had the country’s computer industry, for instance,” says Kurt Geppert, expert in regional development at Berlin’s DIW economic institute. “When western companies went east after reunification, they moved to those places where they could find expertise in their fields. The quality of a labour market is perhaps the most determining factor in such investment decisions.”
Back in the west, history played a determining role too in the rise of Bavaria, Hessen and Baden-Württemberg. The war and the subsequent partition of the country sent Berlin-based businesses on a frantic west- and southward trek.
Siemens, now Europe’s largest engineering group, moved to Munich – though it still has a nominal seat in the capital. So did Allianz, the insurance group, while all the big banks vacated Berlin for Frankfurt. This presence in turn attracted large foreign companies when they entered the country and most of them still have their German bases in the south.
These relocations were the initial trigger for the economic rise of southern Germany and especially Bavaria, now home to the country’s most technologically advanced industries. Largely agricultural beforehand, Bavaria did not have to grapple with the decline of heavy industry, unlike the Ruhr further north, which still bears the scars of this restructuring process.
“The second world war was a great boon for Bavaria. The move of modern industry and finance to the south planted the seed that gave the south today’s technological and economic lead. The only carmaker in the north is Volkswagen – and it is the only one that was created by political fiat,” says Mr Geppert.
In egalitarian Germany, the prospect of a country increasingly split between poor north and rich south is an uncomfortable one. It is also awkward for a political class that sees its central role as corrector of the market’s worst excesses. It is, finally, an indictment of the financial mechanisms that have for years channelled money from rich states to poorer ones, particularly those in the east.
However, Mr Thode of the Bertelsmann foundation refuses to accept the notion that a region’s future fortunes are cast in stone: “History plays a role but so do policies,” he says. “The lesson for regional politicians is that they should identify their region’s strengths and not distribute aid thinly over a large quantity of greenfield projects, as has often happened in the east’s least dynamic regions.”
The exceptional Hamburg gains ground in globalisation
Kaiserspeicher A, a disused warehouse at the tip of Hamburg’s historic inner-city port, seems nothing to brag about. Its gutted core surrounded by mounds of earth and its thin brick façade leaning on metal supports, it is as appealing as any other industrial ruin.
Things will look different in 2010, however, when Herzog and de Meuron, the star Swiss architects, lift the veil on the Elbe Philharmonic Hall. With a crested, translucent façade soaring 100 metres above the warehouse shell, it will be a landmark to rival the Sydney Opera House or Bilbao’s Guggenheim museum.
The concert hall, part of a gigantic docklands redevelopment that will increase the size of the city centre by 40 per cent, is the most powerful expression of Hamburg’s renaissance as one of the country’s most dynamic cities and a notable exception in the struggling northern half.
That the Elbe Philharmonic should have found its home in a former cocoa and tea warehouse is also fitting, for Hamburg’s role as Germany’s largest port is at the centre of this new dynamism. “Hamburg is the big winner of globalisation,” says Klaus Schrader, economist at the Institute for the World Economy in nearby Kiel. “The port is clearly the single biggest factor in the city’s booming economy.”
The city-state at the mouth of the Elbe has long been seen as Germany’s “gateway to the world” but soaring international trade and the country’s rise to become the world’s biggest exporter make that description more pertinent today than ever.
With 40,000 employees and 154,000 companies involved in shipping, ship financing and logistics, the modern container terminals north of the city centre are the biggest contributors to Hamburg’s gross domestic product. Nearly 9m containers passed through the docks last year, twice the level of 2001. Based on current trends, the figure could reach 18m by 2015. As transit hub for Scandinavia’s and eastern Europe’s overseas exports, Hamburg plays a pivotal role in the continental economy – one worthy of its past as a leading member of the Hanseatic league of trading cities.
With gross domestic product growth of 3.8 per cent last year, it was the second most dynamic of Germany’s 16 Länder, or states. Since 1991, its economy has grown by 53 per cent, twice as much as that of Berlin. No other state in Germany has created as many jobs since the beginning of the current economic upturn.
Though half as big as the federal capital, it is almost twice as rich. With a yearly disposable income per head of €23,000 ($41,630, £20,820) last year, Hamburg was Germany’s richest state and the fourth largest economic region in the European Union.
The harbour also accounts for the city’s economic structure, which is dominated by the services sector. Yet, like Munich and Stuttgart, it is also a cluster of clusters, with a broad range of activities. Industrial employers include Airbus, which has a large plant in the city, and Lufthansa Technik, the airline’s technical subsidiary. Hamburg is also home to some of the country’s largest publishers – Die Zeit and Der Spiegel weeklies, the Bild tabloid and Financial Times Deutschland, the FT’s sister newspaper, have their headquarters there.
A darker spot is the city’s unemployment rate – at 8.9 per cent last month, it was above the national average, though it is rapidly falling. Another is the failure of its vitality to benefit neighbouring, more rural regions, to the extent that could be expected. “There is definitely more work to be done in this area. Hamburg and [the surrounding state of] Schleswig-Holstein need to co-operate more on economic policy,” says Mr Schrader. “This would benefit the city, too, by lifting some of the strain on its capacity.”
Copyright The Financial Times Limited 2007
Wednesday, September 05, 2007
jp morgan and the credit crisis
When J. Pierpont Morgan, the founder of the great banking dynasty, was asked if commercial credit was based primarily upon money or property, he denied it. “No, sir. The first thing is character,” he said. “Before money or anything else. Money cannot buy it.”
.....
To paraphrase Morgan, whatever credit and equity markets say, the crisis of trust is not yet resolved, and it must be. Money cannot buy it.
.....
To paraphrase Morgan, whatever credit and equity markets say, the crisis of trust is not yet resolved, and it must be. Money cannot buy it.
Monday, September 03, 2007
on credit crisis spreading
Prepare for the credit crisis to spread
By Wolfgang Munchau
Published: September 2 2007 18:57 | Last updated: September 2 2007 18:57
“Financial operations do not lend themselves to innovation. What is recurrently so described and celebrated is, without exception, a small variation on an established design . . . The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version.”
A Short History of Financial Euphoria, John Kenneth Galbraith
The late John Kenneth Galbraith would have enjoyed this summer. He was no expert on modern credit markets but his analysis of historic bubbles fits our most recent boom and bust episode with uncanny precision.
All historic bubbles were accompanied by a sharp rise in leverage. A salient feature of modern bubbles is the emergence of innovative financial products. No matter whether we are talking about junk bonds or modern collateralised debt obligations (CDOs), as Galbraith has pointed out, such products boil down to variants of debt secured on a real asset.
By historic standards, our credit bubble is probably one of the largest ever, given the sheer size of the market itself and the degree of euphoria that was characteristic in the final stages of the boom. While the fallout was initially concentrated in the financial sector itself, it would be surprising if the ongoing problems did not trickle down into the real economy. The availability of credit affects house prices and numerous studies have demonstrated the interlinkages between US house prices and US economic growth.
So what should central banks do? I suspect that central banks are not going to be the main actors in any rescue operation, but rather governments. Central banks’ room for manoeuvre to cut interest rates is more constrained this time than during the most recent recession. But more important, this is not the kind of crisis that can easily be stopped by a few hasty rate cuts or bank bail-outs. If your subprime mortgage exceeds the value of your house by 10 per cent, and if the monthly payments exceed your income, no positive interest rate could bail you out. Your only hope is some serious debt relief.
The economists Dimitri Papadimitriou, Greg Hannsgen and Gennaro Zezza last week published a study* in which they demonstrated the danger to US economic growth posed by the present real estate crisis. Their policy recommendations go significantly beyond the usual bail-out calls. They argue that it is almost impossible for policymakers to stop the decline in real estate prices, but “if the Fed and Congress can work to stop any incipient recession, they will prevent job losses, which are one of the main contributors to foreclosures. An effective job-creation method could be some form of employer-of-last-resort programme that offers government jobs to all workers who ask for them”.
We should remember that the subprime market is not the only unstable subsection of the credit market. Once US consumption slows, we should prepare for a crisis in credit card and car finance CDOs. And once corporate bankruptcies start to rise again as the cycle turns down, both in the US and in Europe, we will probably hear about problems with collateralised loan obligations. The credit market is very deep and offers significant potential for contagion.
In this sense, the debate about whether this is a liquidity or a solvency crisis is beside the point. Banks may look at their CDO investments as a source of temporary illiquidity, but may sooner or later realise that they are sitting on a pile of junk. The fiscal and monetary authorities should therefore assume that they are confronted with a solvency crisis. Bailing out the odd bank, as the Germans did last month, is not going to be sufficient and perhaps not even necessary.
Instead, the monetary and fiscal authorities should stand ready to support the economy if and when needed. Lower interest rates will probably be part of any such deal, but a large part of the help will invariably come from fiscal policy. The US Federal Reserve will probably cut interest rates soon and the European Central Bank will almost certainly postpone the rate rise it unwisely preannounced only a few weeks ago. I am convinced the next interest rate movement both in the US and the eurozone will be downwards.
One of the problems the monetary authorities have to deal with is moral hazard. This is not a theoretical issue, as some suggest, but a far more immediate concern. Moral hazard is the result of asymmetric expectations, as markets expect the central bank to bail out the financial sector during a time of crisis. The problem of moral hazard is to some extent related to the monetary policy strategy of central banks, with their mechanistic focus on a single consumer price index. Such strategies often have no space for asset prices, but markets know fully well that central banks must invariably take account of asset prices during sharp downturns. One way out of this asymmetry is for central banks to include asset prices into their policy frameworks in some form or other.
This said, a bail-out of the financial system will probably become unavoidable, but it should be accompanied with structural policy changes. Tighter financial regulation is probable. The role of the ratings agencies is bound to change too. And central banks should reconsider their monetary policy frameworks. They are part of the problem.
*Cracks in the Foundations of Growth, Levy Institute
Send your comments to munchau@eurointelligence.co
By Wolfgang Munchau
Published: September 2 2007 18:57 | Last updated: September 2 2007 18:57
“Financial operations do not lend themselves to innovation. What is recurrently so described and celebrated is, without exception, a small variation on an established design . . . The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version.”
A Short History of Financial Euphoria, John Kenneth Galbraith
The late John Kenneth Galbraith would have enjoyed this summer. He was no expert on modern credit markets but his analysis of historic bubbles fits our most recent boom and bust episode with uncanny precision.
All historic bubbles were accompanied by a sharp rise in leverage. A salient feature of modern bubbles is the emergence of innovative financial products. No matter whether we are talking about junk bonds or modern collateralised debt obligations (CDOs), as Galbraith has pointed out, such products boil down to variants of debt secured on a real asset.
By historic standards, our credit bubble is probably one of the largest ever, given the sheer size of the market itself and the degree of euphoria that was characteristic in the final stages of the boom. While the fallout was initially concentrated in the financial sector itself, it would be surprising if the ongoing problems did not trickle down into the real economy. The availability of credit affects house prices and numerous studies have demonstrated the interlinkages between US house prices and US economic growth.
So what should central banks do? I suspect that central banks are not going to be the main actors in any rescue operation, but rather governments. Central banks’ room for manoeuvre to cut interest rates is more constrained this time than during the most recent recession. But more important, this is not the kind of crisis that can easily be stopped by a few hasty rate cuts or bank bail-outs. If your subprime mortgage exceeds the value of your house by 10 per cent, and if the monthly payments exceed your income, no positive interest rate could bail you out. Your only hope is some serious debt relief.
The economists Dimitri Papadimitriou, Greg Hannsgen and Gennaro Zezza last week published a study* in which they demonstrated the danger to US economic growth posed by the present real estate crisis. Their policy recommendations go significantly beyond the usual bail-out calls. They argue that it is almost impossible for policymakers to stop the decline in real estate prices, but “if the Fed and Congress can work to stop any incipient recession, they will prevent job losses, which are one of the main contributors to foreclosures. An effective job-creation method could be some form of employer-of-last-resort programme that offers government jobs to all workers who ask for them”.
We should remember that the subprime market is not the only unstable subsection of the credit market. Once US consumption slows, we should prepare for a crisis in credit card and car finance CDOs. And once corporate bankruptcies start to rise again as the cycle turns down, both in the US and in Europe, we will probably hear about problems with collateralised loan obligations. The credit market is very deep and offers significant potential for contagion.
In this sense, the debate about whether this is a liquidity or a solvency crisis is beside the point. Banks may look at their CDO investments as a source of temporary illiquidity, but may sooner or later realise that they are sitting on a pile of junk. The fiscal and monetary authorities should therefore assume that they are confronted with a solvency crisis. Bailing out the odd bank, as the Germans did last month, is not going to be sufficient and perhaps not even necessary.
Instead, the monetary and fiscal authorities should stand ready to support the economy if and when needed. Lower interest rates will probably be part of any such deal, but a large part of the help will invariably come from fiscal policy. The US Federal Reserve will probably cut interest rates soon and the European Central Bank will almost certainly postpone the rate rise it unwisely preannounced only a few weeks ago. I am convinced the next interest rate movement both in the US and the eurozone will be downwards.
One of the problems the monetary authorities have to deal with is moral hazard. This is not a theoretical issue, as some suggest, but a far more immediate concern. Moral hazard is the result of asymmetric expectations, as markets expect the central bank to bail out the financial sector during a time of crisis. The problem of moral hazard is to some extent related to the monetary policy strategy of central banks, with their mechanistic focus on a single consumer price index. Such strategies often have no space for asset prices, but markets know fully well that central banks must invariably take account of asset prices during sharp downturns. One way out of this asymmetry is for central banks to include asset prices into their policy frameworks in some form or other.
This said, a bail-out of the financial system will probably become unavoidable, but it should be accompanied with structural policy changes. Tighter financial regulation is probable. The role of the ratings agencies is bound to change too. And central banks should reconsider their monetary policy frameworks. They are part of the problem.
*Cracks in the Foundations of Growth, Levy Institute
Send your comments to munchau@eurointelligence.co
on credit crisis spreading
Prepare for the credit crisis to spread
By Wolfgang Munchau
Published: September 2 2007 18:57 | Last updated: September 2 2007 18:57
“Financial operations do not lend themselves to innovation. What is recurrently so described and celebrated is, without exception, a small variation on an established design . . . The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version.”
A Short History of Financial Euphoria, John Kenneth Galbraith
The late John Kenneth Galbraith would have enjoyed this summer. He was no expert on modern credit markets but his analysis of historic bubbles fits our most recent boom and bust episode with uncanny precision.
All historic bubbles were accompanied by a sharp rise in leverage. A salient feature of modern bubbles is the emergence of innovative financial products. No matter whether we are talking about junk bonds or modern collateralised debt obligations (CDOs), as Galbraith has pointed out, such products boil down to variants of debt secured on a real asset.
By historic standards, our credit bubble is probably one of the largest ever, given the sheer size of the market itself and the degree of euphoria that was characteristic in the final stages of the boom. While the fallout was initially concentrated in the financial sector itself, it would be surprising if the ongoing problems did not trickle down into the real economy. The availability of credit affects house prices and numerous studies have demonstrated the interlinkages between US house prices and US economic growth.
So what should central banks do? I suspect that central banks are not going to be the main actors in any rescue operation, but rather governments. Central banks’ room for manoeuvre to cut interest rates is more constrained this time than during the most recent recession. But more important, this is not the kind of crisis that can easily be stopped by a few hasty rate cuts or bank bail-outs. If your subprime mortgage exceeds the value of your house by 10 per cent, and if the monthly payments exceed your income, no positive interest rate could bail you out. Your only hope is some serious debt relief.
The economists Dimitri Papadimitriou, Greg Hannsgen and Gennaro Zezza last week published a study* in which they demonstrated the danger to US economic growth posed by the present real estate crisis. Their policy recommendations go significantly beyond the usual bail-out calls. They argue that it is almost impossible for policymakers to stop the decline in real estate prices, but “if the Fed and Congress can work to stop any incipient recession, they will prevent job losses, which are one of the main contributors to foreclosures. An effective job-creation method could be some form of employer-of-last-resort programme that offers government jobs to all workers who ask for them”.
We should remember that the subprime market is not the only unstable subsection of the credit market. Once US consumption slows, we should prepare for a crisis in credit card and car finance CDOs. And once corporate bankruptcies start to rise again as the cycle turns down, both in the US and in Europe, we will probably hear about problems with collateralised loan obligations. The credit market is very deep and offers significant potential for contagion.
In this sense, the debate about whether this is a liquidity or a solvency crisis is beside the point. Banks may look at their CDO investments as a source of temporary illiquidity, but may sooner or later realise that they are sitting on a pile of junk. The fiscal and monetary authorities should therefore assume that they are confronted with a solvency crisis. Bailing out the odd bank, as the Germans did last month, is not going to be sufficient and perhaps not even necessary.
Instead, the monetary and fiscal authorities should stand ready to support the economy if and when needed. Lower interest rates will probably be part of any such deal, but a large part of the help will invariably come from fiscal policy. The US Federal Reserve will probably cut interest rates soon and the European Central Bank will almost certainly postpone the rate rise it unwisely preannounced only a few weeks ago. I am convinced the next interest rate movement both in the US and the eurozone will be downwards.
One of the problems the monetary authorities have to deal with is moral hazard. This is not a theoretical issue, as some suggest, but a far more immediate concern. Moral hazard is the result of asymmetric expectations, as markets expect the central bank to bail out the financial sector during a time of crisis. The problem of moral hazard is to some extent related to the monetary policy strategy of central banks, with their mechanistic focus on a single consumer price index. Such strategies often have no space for asset prices, but markets know fully well that central banks must invariably take account of asset prices during sharp downturns. One way out of this asymmetry is for central banks to include asset prices into their policy frameworks in some form or other.
This said, a bail-out of the financial system will probably become unavoidable, but it should be accompanied with structural policy changes. Tighter financial regulation is probable. The role of the ratings agencies is bound to change too. And central banks should reconsider their monetary policy frameworks. They are part of the problem.
*Cracks in the Foundations of Growth, Levy Institute
Send your comments to munchau@eurointelligence.co
By Wolfgang Munchau
Published: September 2 2007 18:57 | Last updated: September 2 2007 18:57
“Financial operations do not lend themselves to innovation. What is recurrently so described and celebrated is, without exception, a small variation on an established design . . . The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version.”
A Short History of Financial Euphoria, John Kenneth Galbraith
The late John Kenneth Galbraith would have enjoyed this summer. He was no expert on modern credit markets but his analysis of historic bubbles fits our most recent boom and bust episode with uncanny precision.
All historic bubbles were accompanied by a sharp rise in leverage. A salient feature of modern bubbles is the emergence of innovative financial products. No matter whether we are talking about junk bonds or modern collateralised debt obligations (CDOs), as Galbraith has pointed out, such products boil down to variants of debt secured on a real asset.
By historic standards, our credit bubble is probably one of the largest ever, given the sheer size of the market itself and the degree of euphoria that was characteristic in the final stages of the boom. While the fallout was initially concentrated in the financial sector itself, it would be surprising if the ongoing problems did not trickle down into the real economy. The availability of credit affects house prices and numerous studies have demonstrated the interlinkages between US house prices and US economic growth.
So what should central banks do? I suspect that central banks are not going to be the main actors in any rescue operation, but rather governments. Central banks’ room for manoeuvre to cut interest rates is more constrained this time than during the most recent recession. But more important, this is not the kind of crisis that can easily be stopped by a few hasty rate cuts or bank bail-outs. If your subprime mortgage exceeds the value of your house by 10 per cent, and if the monthly payments exceed your income, no positive interest rate could bail you out. Your only hope is some serious debt relief.
The economists Dimitri Papadimitriou, Greg Hannsgen and Gennaro Zezza last week published a study* in which they demonstrated the danger to US economic growth posed by the present real estate crisis. Their policy recommendations go significantly beyond the usual bail-out calls. They argue that it is almost impossible for policymakers to stop the decline in real estate prices, but “if the Fed and Congress can work to stop any incipient recession, they will prevent job losses, which are one of the main contributors to foreclosures. An effective job-creation method could be some form of employer-of-last-resort programme that offers government jobs to all workers who ask for them”.
We should remember that the subprime market is not the only unstable subsection of the credit market. Once US consumption slows, we should prepare for a crisis in credit card and car finance CDOs. And once corporate bankruptcies start to rise again as the cycle turns down, both in the US and in Europe, we will probably hear about problems with collateralised loan obligations. The credit market is very deep and offers significant potential for contagion.
In this sense, the debate about whether this is a liquidity or a solvency crisis is beside the point. Banks may look at their CDO investments as a source of temporary illiquidity, but may sooner or later realise that they are sitting on a pile of junk. The fiscal and monetary authorities should therefore assume that they are confronted with a solvency crisis. Bailing out the odd bank, as the Germans did last month, is not going to be sufficient and perhaps not even necessary.
Instead, the monetary and fiscal authorities should stand ready to support the economy if and when needed. Lower interest rates will probably be part of any such deal, but a large part of the help will invariably come from fiscal policy. The US Federal Reserve will probably cut interest rates soon and the European Central Bank will almost certainly postpone the rate rise it unwisely preannounced only a few weeks ago. I am convinced the next interest rate movement both in the US and the eurozone will be downwards.
One of the problems the monetary authorities have to deal with is moral hazard. This is not a theoretical issue, as some suggest, but a far more immediate concern. Moral hazard is the result of asymmetric expectations, as markets expect the central bank to bail out the financial sector during a time of crisis. The problem of moral hazard is to some extent related to the monetary policy strategy of central banks, with their mechanistic focus on a single consumer price index. Such strategies often have no space for asset prices, but markets know fully well that central banks must invariably take account of asset prices during sharp downturns. One way out of this asymmetry is for central banks to include asset prices into their policy frameworks in some form or other.
This said, a bail-out of the financial system will probably become unavoidable, but it should be accompanied with structural policy changes. Tighter financial regulation is probable. The role of the ratings agencies is bound to change too. And central banks should reconsider their monetary policy frameworks. They are part of the problem.
*Cracks in the Foundations of Growth, Levy Institute
Send your comments to munchau@eurointelligence.co
Thursday, August 30, 2007
african invetsment
http://www.ft.com/cms/s/1/d9fa8136-5540-11dc-b971-0000779fd2ac.html
africa in the radar screen : standard chartered , jpmprgan, historical actors . renaissance capital stepping in from Russia with love . chinese intensifying their presence through commodity trading.
africa in the radar screen : standard chartered , jpmprgan, historical actors . renaissance capital stepping in from Russia with love . chinese intensifying their presence through commodity trading.
Friday, August 10, 2007
subprime forever : the art of selling your debts for nothing
europe takes it on the back , a big applause to mr trichet, former investigated executive of the bankrupt state owned credit lyonnais : vigilant on inflation , raising interest rates, strengthening the euro , the hawk is unaware of the credit lines of European commercial banks exposed to the us subprime mortgage . Americans have sold their subprime mortgage to greedy European regional banks , the masters of finance have been seduced by the American gurus who get rid of their garbage . one morning mr banker wakes up in a village in the Ruhr and finds out that its mortgage bonds portfolio is melting down while in paris executive manager call their buddy to announce they blew up a big chunck of the pension fund and they will it abide by the market rules .
check this , great interview to a great analyst / strategist , a fine connaisseur of economic matters
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/v.btSCKkH87g.asf
dR dOOM IS BACK : how much is he paid per interview. agree totally with him. he always makes sense . however that's the only yargument he puts forward boom and bust. it does not take a lot. he is a brand though. dr doom !!!
check this , great interview to a great analyst / strategist , a fine connaisseur of economic matters
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/v.btSCKkH87g.asf
dR dOOM IS BACK : how much is he paid per interview. agree totally with him. he always makes sense . however that's the only yargument he puts forward boom and bust. it does not take a lot. he is a brand though. dr doom !!!
Wednesday, August 01, 2007
Cdos , another nightmare not turing true?
see past gyrations, gas market collapse, oil prices, hezbollah, iraq , bird flu...did not materialise in any recession . what about now ?
on credit swaps , liquidity and price inefficiency
The Short View: Credit swaps
By John Authers, Investment Editor
Published: July 31 2007 18:12 | Last updated: July 31 2007 18:12
Did the risk of default on US investment grade bonds really triple over the last month? And having done so, did this risk really drop by a third over the ensuing 24 hours?
Of course not. But movements in the prices of credit default swaps, which allow investors to buy protection against defaults, suggested exactly that. So we now know that the market for credit derivatives, which did not exist even five years ago, is inefficient.
That is no surprise. Markets do not always trade in line with fundamentals. All asset classes show inefficiencies, and much money is made exploiting them.
But this latest spasm raises questions about the vast and unruly market for credit derivatives. How does it operate, and how to gauge fundamental value?
The way the price of default swaps has ricocheted in the last few days appears to reflect a market in which there are only a few ultimate “sellers” (at the big investment banks), who if they do not feel confident about their ability to hedge their exposures can simply mark prices up to unrealistic levels. This is much less efficient than the markets for stocks or bonds.
As for the fundamentals, moves in swaps prices have far outpaced moves in underlying bonds. Both should be tied to the the risk of default, which has been cyclical in the past. Corporate defaults are running at historic lows at present, so they are likely to increase.
However, cool-headed analysis suggests that the cost of default insurance went beyond anything rational. At the end of last week, George Bory at UBS produced calculations showing that credit insurance prices implied that defaults would rise by more than 6 per cent in a year. This is conceivable, but Mr Bory points out that this has not happened in 25 years.
Calculations like this helped buyers regain their nerve this week. But the inefficiency of the market did not go away: it would be unwise to assume that credit’s convulsions are over.
Copyright The Financial Times Limited 2007
By John Authers, Investment Editor
Published: July 31 2007 18:12 | Last updated: July 31 2007 18:12
Did the risk of default on US investment grade bonds really triple over the last month? And having done so, did this risk really drop by a third over the ensuing 24 hours?
Of course not. But movements in the prices of credit default swaps, which allow investors to buy protection against defaults, suggested exactly that. So we now know that the market for credit derivatives, which did not exist even five years ago, is inefficient.
That is no surprise. Markets do not always trade in line with fundamentals. All asset classes show inefficiencies, and much money is made exploiting them.
But this latest spasm raises questions about the vast and unruly market for credit derivatives. How does it operate, and how to gauge fundamental value?
The way the price of default swaps has ricocheted in the last few days appears to reflect a market in which there are only a few ultimate “sellers” (at the big investment banks), who if they do not feel confident about their ability to hedge their exposures can simply mark prices up to unrealistic levels. This is much less efficient than the markets for stocks or bonds.
As for the fundamentals, moves in swaps prices have far outpaced moves in underlying bonds. Both should be tied to the the risk of default, which has been cyclical in the past. Corporate defaults are running at historic lows at present, so they are likely to increase.
However, cool-headed analysis suggests that the cost of default insurance went beyond anything rational. At the end of last week, George Bory at UBS produced calculations showing that credit insurance prices implied that defaults would rise by more than 6 per cent in a year. This is conceivable, but Mr Bory points out that this has not happened in 25 years.
Calculations like this helped buyers regain their nerve this week. But the inefficiency of the market did not go away: it would be unwise to assume that credit’s convulsions are over.
Copyright The Financial Times Limited 2007
yardeni is back / intresting summary on t current situation ; it is neither black nor white , it is grey......global vs usa , cdos and chinese growth
Insight: Global boom faces first major stress test
By Dr Ed Yardeni, president of Yardeni Research
Published: July 31 2007 18:32 | Last updated: July 31 2007 18:32
The global economy is in the midst of the greatest boom of all times. It started when the cold war ended, leading to an unprecedented period of free trade. It really took off after China joined the World Trade Organisation on December 11, 2001.
Never before have so many people around the world experienced such a rapid increase in their standards of living and wealth. The previous great global boom occurred during the 1950s and 1960s and benefited about 300m people as Japan and Europe were rebuilt following the devastation of the second world war, and the US retooled from a wartime to a peacetime economy. The rest of the world was mostly left out of this postwar boom. Now, at least 3bn people are benefiting from globalisation – the rapid integration of national markets for goods and services, capital, and labour through free trade.
If we are experiencing the greatest global boom, aren’t we also witnessing the greatest global bubble of all times in almost all asset classes? Booms always stimulate speculative bubbles caused by a combination of easy credit and irrational exuberance. In the past, when these bubbles burst they often triggered a chain reaction of events that converted the booms into busts. So, is our present global prosperity just a cyclical phenomenon – the consequence of liquidity-inflated bubbles, which may be starting to burst? I don’t think so. I think it will be sustained for many years as globalisation continues to increase the wealth of nations, which should absorb the shock waves when bubbles inevitably burst along the way, as some are doing right now.
The Organisation for Economic Co-operation and Development’s industrial production index is up 10 per cent since the end of 2001. A broader index, which includes six big emerging economies, is up a whopping 30 per cent since then. Clearly, the emerging economies have emerged and continue to do so. Their growth has been fuelled by exports as free trade has proliferated. Of course, a significant portion of this trade has been in commodities. In turn, OECD economies and corporate profits have been boosted by the boom in their capital goods exports to emerging countries.
The OECD core consumer price inflation rate has remained remarkably stable at between 1 and 2 per cent since 2003. That’s because all those relatively scarce commodities have been converted into a glut of consumer goods. Manufacturers can’t raise their prices because of global competition. So they’ve been buying capital equipment to boost their productivity, which has mostly offset rising materials costs and maintained high profitability. If inflation remains subdued in spite of such cost pressures, then central banks are not likely to raise interest rates to levels that cause a global recession, which historically has been the main cause of boom/bust cycles.
The clear and present danger for the global boom is a credit crunch. “Tranche warfare” has broken out in the capital markets. Over the past couple of years, Wall Street’s alchemists discovered how to convert junk mortgages, bonds, and loans into AAA credits by packaging them as CDOs for the bonds and CLOs for the loans. These credit pools are divided into frontline tranches of pawns that defended the kings and queens. The pawns are getting killed by rising foreclosures in the subprime mortgage market, leaving the better credits exposed. Suddenly, private equity firms and their bankers can’t refinance their bridge loans using these pools. The market for “covenant-lite” bonds and loans has seized up.
This is really the first big stress test of the global boom. We are about to find out how much of it has been driven by financial alchemy. We are also about to find out the extent to which the global economy still depends on the US, and the extent to which the global economy has become more important to the US. In my opinion, the world economy has become less US-centric, and the global boom will help the US to overcome its severe housing recession without an economy-wide recession. I also expect that the bursting of the alchemy bubble in the credit markets won’t seriously disrupt the global boom. The enormous wealth of nations created by globalisation should act as a powerful shock absorber.
Copyright The Financial Times Limited 2007
By Dr Ed Yardeni, president of Yardeni Research
Published: July 31 2007 18:32 | Last updated: July 31 2007 18:32
The global economy is in the midst of the greatest boom of all times. It started when the cold war ended, leading to an unprecedented period of free trade. It really took off after China joined the World Trade Organisation on December 11, 2001.
Never before have so many people around the world experienced such a rapid increase in their standards of living and wealth. The previous great global boom occurred during the 1950s and 1960s and benefited about 300m people as Japan and Europe were rebuilt following the devastation of the second world war, and the US retooled from a wartime to a peacetime economy. The rest of the world was mostly left out of this postwar boom. Now, at least 3bn people are benefiting from globalisation – the rapid integration of national markets for goods and services, capital, and labour through free trade.
If we are experiencing the greatest global boom, aren’t we also witnessing the greatest global bubble of all times in almost all asset classes? Booms always stimulate speculative bubbles caused by a combination of easy credit and irrational exuberance. In the past, when these bubbles burst they often triggered a chain reaction of events that converted the booms into busts. So, is our present global prosperity just a cyclical phenomenon – the consequence of liquidity-inflated bubbles, which may be starting to burst? I don’t think so. I think it will be sustained for many years as globalisation continues to increase the wealth of nations, which should absorb the shock waves when bubbles inevitably burst along the way, as some are doing right now.
The Organisation for Economic Co-operation and Development’s industrial production index is up 10 per cent since the end of 2001. A broader index, which includes six big emerging economies, is up a whopping 30 per cent since then. Clearly, the emerging economies have emerged and continue to do so. Their growth has been fuelled by exports as free trade has proliferated. Of course, a significant portion of this trade has been in commodities. In turn, OECD economies and corporate profits have been boosted by the boom in their capital goods exports to emerging countries.
The OECD core consumer price inflation rate has remained remarkably stable at between 1 and 2 per cent since 2003. That’s because all those relatively scarce commodities have been converted into a glut of consumer goods. Manufacturers can’t raise their prices because of global competition. So they’ve been buying capital equipment to boost their productivity, which has mostly offset rising materials costs and maintained high profitability. If inflation remains subdued in spite of such cost pressures, then central banks are not likely to raise interest rates to levels that cause a global recession, which historically has been the main cause of boom/bust cycles.
The clear and present danger for the global boom is a credit crunch. “Tranche warfare” has broken out in the capital markets. Over the past couple of years, Wall Street’s alchemists discovered how to convert junk mortgages, bonds, and loans into AAA credits by packaging them as CDOs for the bonds and CLOs for the loans. These credit pools are divided into frontline tranches of pawns that defended the kings and queens. The pawns are getting killed by rising foreclosures in the subprime mortgage market, leaving the better credits exposed. Suddenly, private equity firms and their bankers can’t refinance their bridge loans using these pools. The market for “covenant-lite” bonds and loans has seized up.
This is really the first big stress test of the global boom. We are about to find out how much of it has been driven by financial alchemy. We are also about to find out the extent to which the global economy still depends on the US, and the extent to which the global economy has become more important to the US. In my opinion, the world economy has become less US-centric, and the global boom will help the US to overcome its severe housing recession without an economy-wide recession. I also expect that the bursting of the alchemy bubble in the credit markets won’t seriously disrupt the global boom. The enormous wealth of nations created by globalisation should act as a powerful shock absorber.
Copyright The Financial Times Limited 2007
Sunday, July 29, 2007
risks of the cdos . see article economy.com
http://www.economy.com/into-the-woods.asp?src=economy_hp
also fuw :
Sollte ein weiterer Hedge Fund in die Bedrouille geraten und einen Totalverlust erleiden, könnte dies zu einem Schock führen. Zandi sieht dabei vor allem die Liquidität als Gefahr.
the question is how will economy behave with a housing slump while the world economz is in a great shape. the world economz and not credit derivatives come to the rescue of the US ? but where does the ultimate risk ly in the credit derivative equation and who will bear the losses in this game without triggering the usual collateral damage , a domino effect ?
http://www.economy.com/into-the-woods.asp?src=economy_hp
also fuw :
Sollte ein weiterer Hedge Fund in die Bedrouille geraten und einen Totalverlust erleiden, könnte dies zu einem Schock führen. Zandi sieht dabei vor allem die Liquidität als Gefahr.
the question is how will economy behave with a housing slump while the world economz is in a great shape. the world economz and not credit derivatives come to the rescue of the US ? but where does the ultimate risk ly in the credit derivative equation and who will bear the losses in this game without triggering the usual collateral damage , a domino effect ?
Friday, July 20, 2007
week 13-20 July 07
relevant news /articles
FUW
François-Xavier de Mallmann, Leiter Investment Banking Schweiz von Goldman Sachs, über die Perspektiven im Markt für Übernahmen
«Der Druck der Finanzinvestoren nimmt zu»
Die doppelte Dividende der deutschen Ratspräsidentschaft der Europäischen Union im ersten Halbjahr Umwelttechnologien sind ein Riesenmarkt
Julius-Bär-Analyst Norbert Rücker gewichtet saubere Kohle gleich wie die alternativen, erneuerbaren Energien Sonne und Wind
«Schlüsseltechnologie im Kampf gegen den Klimawandel»
FUW
François-Xavier de Mallmann, Leiter Investment Banking Schweiz von Goldman Sachs, über die Perspektiven im Markt für Übernahmen
«Der Druck der Finanzinvestoren nimmt zu»
Die doppelte Dividende der deutschen Ratspräsidentschaft der Europäischen Union im ersten Halbjahr Umwelttechnologien sind ein Riesenmarkt
Julius-Bär-Analyst Norbert Rücker gewichtet saubere Kohle gleich wie die alternativen, erneuerbaren Energien Sonne und Wind
«Schlüsseltechnologie im Kampf gegen den Klimawandel»
complexity and transparency = diverstiy and chaos ?
"The bears also argue that CDOs and other innovative structures have, in fact, made the financial system less resilient because of their complexity and lack of transparency."
Tuesday, July 17, 2007
the suspicion is that usd will depreciate and asian countries will follow. focus in terms of action should be switched from europe to us where growth should be revived . so far depreciation is the best way out of any deficit and given the chinese economy the bet is that inflation will be kept at bay. depreciation is a liquidity measure making us goods cheaper , increasing therefore the economic growth and keeping the slowdown of the us consumption under the carpet .
Monday, July 16, 2007
Thursday, July 12, 2007
eur strength
what if eur weakens? france would not be a loser since its resort would allow it to have a STABLE HARD CURRENCY INFLOW through tourism while being more competitive in weak industries . Germany is not in the same position given its industry exporting state of the art products with an inherent technological advantage that make the demand inelastic but a strong eur necssary to stop any resurgence of increases in workers salary , ie inflation.
eur strength , a reason to stop structural reforms and make the region weaker ? given the usd weakness and all the asian currencies pegged to it , the question is whether Europe is not being penalized by profiting of a strong currency and stopping any structural reforms to cut its costs
eur strength , a reason to stop structural reforms and make the region weaker ? given the usd weakness and all the asian currencies pegged to it , the question is whether Europe is not being penalized by profiting of a strong currency and stopping any structural reforms to cut its costs
Tuesday, July 10, 2007
ahead of 2q earnigs volumes still low, market direction less , failing to break resistance of 8100 for Dax. Similar swings have beenm present throughout the past 4 weeks . eur all time high , 1.3720 eur/usd , does not help. excuse for reducing stock positions. us treasuries yield lower , spread gap with europe tightens : is this the interest rates conundrum ? first company reports lower than expected , retail sector hit by the slowing demand in building ; repercussions also fro consumption. see home depot and sears.
Sotchi next olympic games capital, thanx to Putin. Interesting to see that Mr Oleg Deripaska, russian tycoon of aluminium with Rusal is profiting with its new Strabag acquisition, austrian building company that soared 140% since the beginning of 2007. In Switzerland we assist to the same trend with Vekselberg snapping up crown jewels of the machine industry , promising lucrative deals thanx to his proximity to Putin. How is Mr Putin rewarded economically ? Curiously Rusal will soon be listed abroad in London and not Moscow. Yukos was one of the first companies to embrace western standards and capital showed how to export in an elegant and legal way cash company out of the country in the most discrete way. Unfortunately it was dismantled by public prosecutors with the accusation of having embezzled tax authorities. So, what about Rusal and the kremlin cronies ? More clues on the book of Anna Politkovskaya on Rusal ?
Sotchi next olympic games capital, thanx to Putin. Interesting to see that Mr Oleg Deripaska, russian tycoon of aluminium with Rusal is profiting with its new Strabag acquisition, austrian building company that soared 140% since the beginning of 2007. In Switzerland we assist to the same trend with Vekselberg snapping up crown jewels of the machine industry , promising lucrative deals thanx to his proximity to Putin. How is Mr Putin rewarded economically ? Curiously Rusal will soon be listed abroad in London and not Moscow. Yukos was one of the first companies to embrace western standards and capital showed how to export in an elegant and legal way cash company out of the country in the most discrete way. Unfortunately it was dismantled by public prosecutors with the accusation of having embezzled tax authorities. So, what about Rusal and the kremlin cronies ? More clues on the book of Anna Politkovskaya on Rusal ?
Friday, July 06, 2007
Thursday, July 05, 2007
a virtuoso of finance and the web
http://www.bionicturtle.com/
aware of his limits biut nonetheless curious and confident on the utility of statistical tools.
David Harper
http://www.investopedia.com/contributors/default.aspx?id=17
I quote :
"Before he started his own gig, he consulted for lots of public company boards, where he learned that companies look entirely different from the inside.
His first rule of investing? "Do lots of homework, dig deep or seriously consider not playing. But digging deep only earns you into ignorance, more or less. Don't forget: You'll never know what's really going on. Dragons be thar but, alas, nobody draws them on the map for you."
Some people are extraordinary , as Kissinger puts it, they are leading by the example .
http://www.bionicturtle.com/
aware of his limits biut nonetheless curious and confident on the utility of statistical tools.
David Harper
http://www.investopedia.com/contributors/default.aspx?id=17
I quote :
"Before he started his own gig, he consulted for lots of public company boards, where he learned that companies look entirely different from the inside.
His first rule of investing? "Do lots of homework, dig deep or seriously consider not playing. But digging deep only earns you into ignorance, more or less. Don't forget: You'll never know what's really going on. Dragons be thar but, alas, nobody draws them on the map for you."
Some people are extraordinary , as Kissinger puts it, they are leading by the example .
today what a day assembling the pc desktop table and exposed to all my stupidity. according to the brochure it should take only 30 min. it took me 4 hours to finish the work. trial and error approach since i could not figure out the drawings of the instructions. and here the waste of time .
back to markets :
main points, stock market hesitant , china corrects 5% , bulls put it in the right prospective given the exorbitant surge of the past 12 months but a lot of investors are cautious and don't rule out a correction. 2dq results start in a week. a lot of bullishness on oil stocks ( see total and rd), mechel keeps climbing following its excellent results that highlight its mining value but who has the highest target ? in france a lot of interest for carrefour ( domestic demand up ? ) but also eads ( global orders , renewal of airplane fleet, dubai investment?). Some interesting reports from UBS on Greek Banks ( Piraeus Bank) , Alphabank in Russia, an upgrade of Turkey by CS. Africa is in the radar screen, to play with South African Stocks and Multinationals. The name that stands out is Alstom ! China Mengnium Dairy skyrocketing , because of the milk price ? Everybody talking about food prices ( Cosan in Brasil) , water stocks . Pharma in crisis given the tight regulatory environment , credit rating worsening ! What about biotech , f.ex. Intercell, or medical technology , Medtronic or Phonak, not to mention the report om nanotechnology and its synergies with pharma? INTC always to be watched , technically interesting as the whole tech sector , Infineon benefiting from IPOD sales ?
Bond Yields , analysts forecasting a rate cut , even Dr Doom doing it , soft landing scenario taking over ? Lehman Brother strategist recommending Brasilioan Bonds given the 3% inflation rate.
Last but not least currencies , what to do with the weak dollar ? Oil , above $70 stopping the markets bulls. CMOs are away, private equity helps: Blackston is employing the cash it raised from its public listing to buy the hotel chain Hilton and REIT are in demand. No wonder rich are more sophisticated investors and they buy property, tangible assets. at the end of the day it is about how much land you control like in the good old times. So what about Swiss Real Estate ? PSP ( commercial surfaces not restrained by Lex Furgler ) and Allreal + Mobimo constrained but legislation will evolve.
back to markets :
main points, stock market hesitant , china corrects 5% , bulls put it in the right prospective given the exorbitant surge of the past 12 months but a lot of investors are cautious and don't rule out a correction. 2dq results start in a week. a lot of bullishness on oil stocks ( see total and rd), mechel keeps climbing following its excellent results that highlight its mining value but who has the highest target ? in france a lot of interest for carrefour ( domestic demand up ? ) but also eads ( global orders , renewal of airplane fleet, dubai investment?). Some interesting reports from UBS on Greek Banks ( Piraeus Bank) , Alphabank in Russia, an upgrade of Turkey by CS. Africa is in the radar screen, to play with South African Stocks and Multinationals. The name that stands out is Alstom ! China Mengnium Dairy skyrocketing , because of the milk price ? Everybody talking about food prices ( Cosan in Brasil) , water stocks . Pharma in crisis given the tight regulatory environment , credit rating worsening ! What about biotech , f.ex. Intercell, or medical technology , Medtronic or Phonak, not to mention the report om nanotechnology and its synergies with pharma? INTC always to be watched , technically interesting as the whole tech sector , Infineon benefiting from IPOD sales ?
Bond Yields , analysts forecasting a rate cut , even Dr Doom doing it , soft landing scenario taking over ? Lehman Brother strategist recommending Brasilioan Bonds given the 3% inflation rate.
Last but not least currencies , what to do with the weak dollar ? Oil , above $70 stopping the markets bulls. CMOs are away, private equity helps: Blackston is employing the cash it raised from its public listing to buy the hotel chain Hilton and REIT are in demand. No wonder rich are more sophisticated investors and they buy property, tangible assets. at the end of the day it is about how much land you control like in the good old times. So what about Swiss Real Estate ? PSP ( commercial surfaces not restrained by Lex Furgler ) and Allreal + Mobimo constrained but legislation will evolve.
Monday, July 02, 2007
USD weak , liquidity hgh . why ?
something to observe , the decline of the usd against pundits expectations . the best way out of crisis is to depreciate its currency . long term treasuries up , confirm no inflation risk perceived by markets and the fed. depreciation means also competitive advantage of china in cheap labor is intact while exports keep rising as attested by the strong figures of last gdp and reserves in usd are reinvested in treasuries supporting favorable liquidity for the us . this is how china has turned into an important rib of he american economy. what about europe, cant they play the same trick with other continents ? africa, asia ? loooks eur does not have the same clout as usd in the world economy, no wonder german bunds are more sensitive and euro rates are higher relative to the current growth . is this a dumping policy of china and usa together?
P/E low ? why
given high earnings the stock prices do not reflect high valuations of the 1997 in terms of p/e. yet some differences are worth pointing out, globalisation has affeced also the stock market with broader diversity and higher stock supply for investors willing to invest in no traditional markets .this has also a dampening effect on stock prices , deflating historically high equity prices for industrialised markets like diluted earnings for a new stock equity issue. what is the relationship of lower prices with equity premiums given the lost competitive advantage of former first movers ? ( see gordon growth model http://www.investopedia.com/articles/04/012104.asp). have the perceived earnings diminished given the global dilution ? the world is richer , printing new money and spurring high growth from china. however global resources are not enough to sustain former ratios previous to sept 11. has dollar depreciation lowered global stock purchasing power deflating its p/e ?
something to observe , the decline of the usd against pundits expectations . the best way out of crisis is to depreciate its currency . long term treasuries up , confirm no inflation risk perceived by markets and the fed. depreciation means also competitive advantage of china in cheap labor is intact while exports keep rising as attested by the strong figures of last gdp and reserves in usd are reinvested in treasuries supporting favorable liquidity for the us . this is how china has turned into an important rib of he american economy. what about europe, cant they play the same trick with other continents ? africa, asia ? loooks eur does not have the same clout as usd in the world economy, no wonder german bunds are more sensitive and euro rates are higher relative to the current growth . is this a dumping policy of china and usa together?
P/E low ? why
given high earnings the stock prices do not reflect high valuations of the 1997 in terms of p/e. yet some differences are worth pointing out, globalisation has affeced also the stock market with broader diversity and higher stock supply for investors willing to invest in no traditional markets .this has also a dampening effect on stock prices , deflating historically high equity prices for industrialised markets like diluted earnings for a new stock equity issue. what is the relationship of lower prices with equity premiums given the lost competitive advantage of former first movers ? ( see gordon growth model http://www.investopedia.com/articles/04/012104.asp). have the perceived earnings diminished given the global dilution ? the world is richer , printing new money and spurring high growth from china. however global resources are not enough to sustain former ratios previous to sept 11. has dollar depreciation lowered global stock purchasing power deflating its p/e ?
Wednesday, June 27, 2007
after the redundant market gyrations triggered by the triple witch options expiration day ( 16.6.07), markets are turing reasonable, falling back to gravity at a moderate pace. bear stearns hedge funds problems linked to mortgage collateral securities are raising questions on the valuation techniques of these instruments and on the impact on us consumption following the spectacular liquidity driven cycle after sept 11 that has benefited us home builders. Equity markets look to be at a juncture and best guess and wisest development fron now onwards is a slow landing of indexes at lower levels ( see dax, supoport 7800, head and shoulder ?) . Yet , one point where the market is losing focus , interest rates , treasuries are hiking given the flight to quality shift from junk paper . not anymore a sufficient reason to step in , markets on the sideline waiting for the response of the fed this evening.
http://www.ft.com/cms/s/2b7e102a-2401-11dc-8ee2-000b5df10621.html
The Bear Stearns hedge fund fiasco removes the paradox. Banks’ capital is about to be slashed, and with it excess liquidity in the global system. Look at mortgage-backed collateralised debt obligations -– pools of debt assets, in which investors take stakes with different levels of risk. Suppose the CDOs held by banks were valued at “market” rather than “model” levels (a fancy new euphemism for illusionary historic book values). Their capital would turn out to be lower. Preservation of capital ratios against loans would require fewer loans: liquidity would have imploded......A bunch of hedge funds may have problems, but that is the tip of the iceberg for “Titanic” Wall Street. Who holds the toxic tranches? Answer: the originating banks and syndicating investment banks for the most part.....As these lower-rated tranches retain the bulk of the credit risk in the mortgages, their retention by such banks means the much-trumpeted shifting of credit risk off balance sheets was less than met the eye. If the higher-rate stuff is worth 85-90 per cent of face value at best, what is the value of the $750bn of mortgage-backed securities said to be held in US commercial banks’ balance sheets
http://www.ft.com/cms/s/2b7e102a-2401-11dc-8ee2-000b5df10621.html
The Bear Stearns hedge fund fiasco removes the paradox. Banks’ capital is about to be slashed, and with it excess liquidity in the global system. Look at mortgage-backed collateralised debt obligations -– pools of debt assets, in which investors take stakes with different levels of risk. Suppose the CDOs held by banks were valued at “market” rather than “model” levels (a fancy new euphemism for illusionary historic book values). Their capital would turn out to be lower. Preservation of capital ratios against loans would require fewer loans: liquidity would have imploded......A bunch of hedge funds may have problems, but that is the tip of the iceberg for “Titanic” Wall Street. Who holds the toxic tranches? Answer: the originating banks and syndicating investment banks for the most part.....As these lower-rated tranches retain the bulk of the credit risk in the mortgages, their retention by such banks means the much-trumpeted shifting of credit risk off balance sheets was less than met the eye. If the higher-rate stuff is worth 85-90 per cent of face value at best, what is the value of the $750bn of mortgage-backed securities said to be held in US commercial banks’ balance sheets
Monday, May 21, 2007
Wednesday, May 16, 2007
vietnam abn amro
http://www.abnamromarkets.com/showpage.asp?frmCookiesErlaubt=true&strosl=Russia&locale=EN&N=0&strotl=Region&Ne=10100000+10120000+10130000&nav=1&pageid=10&certid=65492&R=101065492
Monday, March 26, 2007
gorton/lime/ propgram trading
http://www.iht.com/articles/2007/03/26/news/bxlime.php
Mark Gorton, the 'classic entrepreneur' behind Lime Group.
By Lisa KassenaarBloomberg News
Monday, March 26, 2007
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NEW YORK: Step off the elevator into Lime Group's offices atop an 11-story brick building in the Chinatown neighborhood of New York and into a crowd of more than 60 stone Buddhas and Asian lions, all handpicked by the company's founder, Mark Gorton.
To the right, down a staircase, is a metal door that leads to Lime Brokerage, which Gorton says trades stocks faster than any other company on Wall Street - as many as 6,000 orders a second. At the end of a long hall is LimeWire, maker of the world's most-popular Internet file-sharing software, with 50 million monthly users. The U.S. recording industry says the product is designed for infringing upon music copyrights - an accusation Gorton denies - and is suing for damages of at least $450 million.
Gorton himself sits at a corner desk with a group of mathematicians writing algorithms for Tower Research Capital, Lime Group's quantitative hedge fund, a firm with $117 million in assets. His next project, scheduled for this spring, is Lime Medical, which will sell software intended to help U.S. doctors reduce paperwork. He is also developing LimeSpot, Internet-based software to help people build and share Web sites. And he runs a nonprofit Web-based venture in urban planning, part of his pet project to reduce traffic in New York.
"He's a classic entrepreneur," said Fred von Lohmann, an intellectual property attorney at the Electronic Frontier Foundation, a nonprofit group based in San Francisco. "He has a lot of businesses going at the same time, and if they don't work out, he'll start three more."
Gorton agreed.
"My to-do list doesn't ever seem to end," he said. "The biggest problem is that I may not be able to keep the focus; I can get distracted."
Gorton, 40, is an electrical engineer and former bond trader who has degrees from Harvard, Stanford and Yale. The Lime companies are slices of Gorton's view of the digital future - one in which the right software will smooth almost any human interaction, from trading stocks to swapping songs, from recording a patient's medical diagnosis to placing speed bumps on city streets. His 140 employees are mostly computer scientists in their 20s and 30s who share his ideals, particularly that software should be open source - that it can be modified by any of its users.
"It's the ideas that push things forward for him," said Rob Hranac, who worked for Lime from 2001 to 2003 as a software developer in the charity wing and now heads business development at Berkeley Transportation Systems in Berkeley, California. "The money is a vehicle to get things out there."
Even though it is private, Lime Brokerage has attracted the notice of Scott Appleby, an analyst who follows publicly traded financial exchanges at Deutsche Bank Securities in New York. "Lime is a leader, and this is the future of part of the broker-dealer world," he said. "Their pipes are built in such a way that you can get a lot of orders done in a short time."
But Gorton has his eye on other goals.
"I've beaten the markets a half dozen times and will do it a half dozen more," he said. "As a personal challenge, it doesn't mean that much anymore."
What means more, he said, is traffic. Gorton, who cycles six miles, or 10 kilometers, to work down the Greenway on the West Side of the New York borough of Manhattan and dreams of his three children riding their bikes on a car-free Broadway, said he spent $2 million last year on projects to promote pedestrian traffic and cycling in New York.
Since September, he has more than doubled the staff to 27 people at The Open Planning Project, the nonprofit group known as TOPP, which is developing software for a wiki, or collaborative Web site, to let anyone add to the urban planning in a given locale.
Gorton traded bonds for almost five years on the proprietary fixed-income desk at the investment bank Credit Suisse First Boston. In February 1998, Gorton and Alistair Brown, a Credit Suisse colleague and fellow engineer, rented a small office in Manhattan and started Tower Research with money they had earned at the investment bank.
Brown, who has an engineering degree from the University of Strathclyde in Glasgow, and who used to build computer systems to execute trading strategies at Credit Suisse, now is chief executive of Lime Brokerage.
Its trading is carried out by a hundred computers at a facility in Jersey City, New Jersey, where more than 50 customers, mostly hedge funds, also have their equipment. Those computers are set to profit from market inefficiencies that would be lost if their orders had to travel across town on a telecommunications line, said the chief technology officer of Lime, Anthony Amicangioli, who holds an electrical engineering degree from the Massachusetts Institute of Technology and joined Lime in 2003 from Juniper Networks.
Lime's computers grab price quotes from exchanges like the Nasdaq Stock Market and the New York Stock Exchange in one-tenth of a millisecond. That is more than twice as fast as other companies offering so-called data delivery, Amicangioli said.
Once Lime grabs the price quotes, the system executes trades in less than a millisecond.
Brokers working to shave times are increasingly important as so-called program trading explodes, said Brian Hyndman, senior vice president of Nasdaq Transaction Services. That activity - by Lime and rivals accounts for about 40 percent of the roughly 2.3 billion shares traded every day on Nasdaq, Hyndman said. That is up from about 5 percent in 1999.
Mark Gorton, the 'classic entrepreneur' behind Lime Group.
By Lisa KassenaarBloomberg News
Monday, March 26, 2007
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NEW YORK: Step off the elevator into Lime Group's offices atop an 11-story brick building in the Chinatown neighborhood of New York and into a crowd of more than 60 stone Buddhas and Asian lions, all handpicked by the company's founder, Mark Gorton.
To the right, down a staircase, is a metal door that leads to Lime Brokerage, which Gorton says trades stocks faster than any other company on Wall Street - as many as 6,000 orders a second. At the end of a long hall is LimeWire, maker of the world's most-popular Internet file-sharing software, with 50 million monthly users. The U.S. recording industry says the product is designed for infringing upon music copyrights - an accusation Gorton denies - and is suing for damages of at least $450 million.
Gorton himself sits at a corner desk with a group of mathematicians writing algorithms for Tower Research Capital, Lime Group's quantitative hedge fund, a firm with $117 million in assets. His next project, scheduled for this spring, is Lime Medical, which will sell software intended to help U.S. doctors reduce paperwork. He is also developing LimeSpot, Internet-based software to help people build and share Web sites. And he runs a nonprofit Web-based venture in urban planning, part of his pet project to reduce traffic in New York.
"He's a classic entrepreneur," said Fred von Lohmann, an intellectual property attorney at the Electronic Frontier Foundation, a nonprofit group based in San Francisco. "He has a lot of businesses going at the same time, and if they don't work out, he'll start three more."
Gorton agreed.
"My to-do list doesn't ever seem to end," he said. "The biggest problem is that I may not be able to keep the focus; I can get distracted."
Gorton, 40, is an electrical engineer and former bond trader who has degrees from Harvard, Stanford and Yale. The Lime companies are slices of Gorton's view of the digital future - one in which the right software will smooth almost any human interaction, from trading stocks to swapping songs, from recording a patient's medical diagnosis to placing speed bumps on city streets. His 140 employees are mostly computer scientists in their 20s and 30s who share his ideals, particularly that software should be open source - that it can be modified by any of its users.
"It's the ideas that push things forward for him," said Rob Hranac, who worked for Lime from 2001 to 2003 as a software developer in the charity wing and now heads business development at Berkeley Transportation Systems in Berkeley, California. "The money is a vehicle to get things out there."
Even though it is private, Lime Brokerage has attracted the notice of Scott Appleby, an analyst who follows publicly traded financial exchanges at Deutsche Bank Securities in New York. "Lime is a leader, and this is the future of part of the broker-dealer world," he said. "Their pipes are built in such a way that you can get a lot of orders done in a short time."
But Gorton has his eye on other goals.
"I've beaten the markets a half dozen times and will do it a half dozen more," he said. "As a personal challenge, it doesn't mean that much anymore."
What means more, he said, is traffic. Gorton, who cycles six miles, or 10 kilometers, to work down the Greenway on the West Side of the New York borough of Manhattan and dreams of his three children riding their bikes on a car-free Broadway, said he spent $2 million last year on projects to promote pedestrian traffic and cycling in New York.
Since September, he has more than doubled the staff to 27 people at The Open Planning Project, the nonprofit group known as TOPP, which is developing software for a wiki, or collaborative Web site, to let anyone add to the urban planning in a given locale.
Gorton traded bonds for almost five years on the proprietary fixed-income desk at the investment bank Credit Suisse First Boston. In February 1998, Gorton and Alistair Brown, a Credit Suisse colleague and fellow engineer, rented a small office in Manhattan and started Tower Research with money they had earned at the investment bank.
Brown, who has an engineering degree from the University of Strathclyde in Glasgow, and who used to build computer systems to execute trading strategies at Credit Suisse, now is chief executive of Lime Brokerage.
Its trading is carried out by a hundred computers at a facility in Jersey City, New Jersey, where more than 50 customers, mostly hedge funds, also have their equipment. Those computers are set to profit from market inefficiencies that would be lost if their orders had to travel across town on a telecommunications line, said the chief technology officer of Lime, Anthony Amicangioli, who holds an electrical engineering degree from the Massachusetts Institute of Technology and joined Lime in 2003 from Juniper Networks.
Lime's computers grab price quotes from exchanges like the Nasdaq Stock Market and the New York Stock Exchange in one-tenth of a millisecond. That is more than twice as fast as other companies offering so-called data delivery, Amicangioli said.
Once Lime grabs the price quotes, the system executes trades in less than a millisecond.
Brokers working to shave times are increasingly important as so-called program trading explodes, said Brian Hyndman, senior vice president of Nasdaq Transaction Services. That activity - by Lime and rivals accounts for about 40 percent of the roughly 2.3 billion shares traded every day on Nasdaq, Hyndman said. That is up from about 5 percent in 1999.
Sunday, March 04, 2007
march 07
Gold and silver
Gibt es Parallelen zu Ereignissen in früheren Jahrzehnten, die mehr waren als eine lokale Erscheinung – die Saving-and-Loans-Krise in den USA oder der Zusammenbruch des Junk-Bond-Marktes – und wie lange hatte es damals gedauert, bis der Schaden behoben war?
Parallelen gibt es durchaus. In allen Fällen wurde dem Risikoaspekt zu wenig Rechnung getragen. Deshalb kam und kommt es zu schmerzhaften Korrekturen. Der Gesundungsprozess kann lange Zeit benötigen. So hatte es bis 1993 gedauert, bis die Saving-and-Loans-Krise von 1986 ausgestanden war. Der Einfluss auf die Börsen war jedoch unbedeutend. Von Anfang 1986 bis Ende 1993 ist die US-Börse immerhin um 300% gestiegen.
L'Europe tragique et magnifique - at 50Published: March 19 2007 02:00 | Last updated: March 19 2007 02:0http://www.ft.com/cms/s/9fab2078-d5be-11db-a5c6-000b5df10621.html
POSCO , Synthes, Burckhardt Compression,Axa, Allianz und Swiss Life , hsbc . MARCH OPTIONS DEADLINE .
eventually the correction came but I was not prepared , once again. the speed of the decline was faster than the last one in april 06 , the trigger was further away , china , and the reasons weaker but sufficient . I believe the market is going to jiggle but all in all will come back to challenge us again, the wildy , fiercy beast... funny enough to notice the comments of the press and the mass media , complacent with a smily happy face as per very recent , they are turning now into ugly screaming scared faces with in their front written I told you....rethoric works in finance too,and those believing in selffulfilling prophecies are trying to avert any major hysterical crisis by toning down the comments . one thing is clear , bernanke is out of control in his new position , incapable of playing the director in the symphonic orchestra , too much cacaphonies for the public , certainly he is less brilliant than his predecessor greenspan in managing and articulating the loudspeakers ...........he is a just a professor at harvard with no clue about life and the fucking public.
Monday, January 15, 2007
Saturday, January 13, 2007
JAN 07/ General Comments
JAN 07/ General Comments
do u want to make money . then try to short swiss small mid caps like sulzer . beta hiugher than smi
faber , inflation stagflation , buy gold , usd 480 possible if downturn in asset prices.
soft precious and industrial commodities
global warming , soft comm up, buy farmland in brazil/argentina very inexpensive in a world of inflated asset prices.
yen and asian currenciues undervalued. asian/ russian real estate
go long yen through call options . check singapore stock market real estate and stocks. thai market lower if foreigners out, wait couple of months.
2007 volatility would go up substantially.
In the meantime , rates scare , the fed does not cut ! oil dips down , nickel too, pharma and telecom are resilient . in china impressive utilities. dollar is up, short time ?
Amazing story , gas trader , 32 years old , usd 3 bio aum, 150% performance 06.
http://www.ft.com/cms/s/69b7daf0-9c26-11db-9c9b-0000779e2340.htmlUpdate 2
or warnnats on the emrging markets linked to gdp growth paying off stellar retirns, see rgentina and bosnia.
Historsy of stock markets
http://www.ft.com/cms/s/ef2bc4c2-91b7-11db-a945-0000779e2340.html
History repeats itself.....a bit too simple according to
Anatomy of the Bear: Lessons from Wall Street’s Four Great Bottoms PIC by Russell Napier (CLSA Books; December 2005) as the best investment-related read of the year.
Martin Dickson, deputy editor of the FT, says the investment book he most enjoyed reading this year was actually written 35 years ago.
He chose Do You Sincerely Want To Be Rich? Bernard Cornfeld and IOS: an international swindle by Charles Raw, Bruce Page and Godfrey Hodgson (Andre Deutsche; 1971)
Freud in the City PIC by David Freud (Bene Factum Publishing; May 2006) rated as the top choice of Jeremy Tighe, manager of the Foreign & Colonial investment trust. The book is a biographical account by former FT journalist, David Freud, of his work in the City throughout the mid to late 1980s and 1990s.
Hedge Hogging by Barton Biggs (John Wiley & Sons; January 2006).
Our Iceberg is Melting: Changing and Succeeding Under Any Conditions PiC by John Kotter and Holger Rathgeber (Pan; September 2006). This short story uses allegory to illustrate how to cope with change and show change as an opportunity not a threat.
One Up on Wall Street (Simon & Schuster; revised edition August 2000), Peter Lynch
WHAT TO SAY , MARKETS STAGE AN IMPRESSIVE BEGINNINg , valuations ought to be high claim the brokers , hence prices are bidding up. of course, news are good : it is a perfect world . financials up , they are going to cut interest rates, the stage is applauding, and the press reminds us the incoming buzz of M&A. champagne cork popping, the investment professionals are back pouring a small but significant slice of their bonuses on what keeps making them, rich, the markets , a virtuous cycle for mutual growth. or ratehr vicous? the audience applauds ,what a macabre spectacle??
you really don't get it, who is right ....http://www.bloomberg.com/apps/news?pid=20601109&sid=a3KQjbeQBK0c&refer=home
emerging markets up this year again ? and what about secular trends, they teach you not to follow the sirens and here they go, again , cfo's pulling out of their hat the magic wod, secular trend , it is infrastructure stupid !!!! Bharat Heavy Electricals Ltd. since 3 years heard about how the hell do you buy it in India?
looks there is a consoloation though : "The Middle East had nine of the 10 worst performing stock markets, imploding after a three-year, 267 percent surge in the Dow Jones DIFC Arabia Titans 50 Index. The Tadawul All-Share Index in Saudi Arabia, the region's biggest market, lost 53 percent, the steepest slide of 81 indexes tracked by Bloomberg" The question is WHY did this happen in the Middle East ???????? Cant u answer?
The miracle of liquidity after a continuous debacle over the past 40 years of the emerging stock markets gives some gloss to the shareholder value or capitalist ideals . u make business also with adrs not only with bribes and monopolies from commodities exports. the true revolution of capital markets is shining over truculent past fascist and comunist dictatorships .
back to serious stuff , very instructive report from cs, finally some pedagogical epistemological quality investment paper without recurring to the finacial metrical rethoric void of any sense employed by the overwhelmingly boring routinary analysts afflicted by a total disenchantment and existential angst early morning when they sit in front of their pc to punch in the data and chart their beautiful pictures , to eventually toss a coin to decide where their stocks are heading.
https://investor-circle.credit-suisse.ch/csfs/research/m/s/pdf/area_02/06/12/29/F06122900134.pdf
quite interesting given the history of mining industry , its evolution throughout the collapse of the soviet union and its renaissance with the emergence of the chinese claygiant, the chinese golem. the quest for raw amterials mainly driven by demand but also, and we hope so, by a better supply management and stronger consolidation , ie verticalisation. is it the sunset of agast heavy industry path ? quite preoccupying however the environment threat and the high consumption of energy that these colossal operations require. hence , electricity price it's up!!! uranium usage too, suez lyonaise and erw have skyrocketed !!!!!!! and where the hell do we dig in the radioactive waste.
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