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tag:blogger.com,1999:blog-87645418740436941592014-11-29T07:42:34.027ZCoppola CommentFinance, economics and musicFrances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-90753728437106913392014-11-17T17:10:00.002Z2014-11-17T17:15:24.708ZReflections on Rochester and Strood

In the post this morning: three communications from UKIP, two from the Conservatives, one from Labour. This is a pretty typical day. Every day brings more confetti through the letterbox, most of it from UKIP and the Conservatives. All of it goes straight in the bin.

I also get emails from the Conservatives, phone calls from the Conservatives, visits from the Conservatives.....I told an opinion pollster who rang recently (yes, I get lots of those too) that the Conservatives look desperate to me. I'm utterly sick of their flood tactics. But now UKIP have adopted the same tactics. Spam, spam, spam. They are nearly as bad as the PPI leeches.

Spamming my letterbox, mailbox and voicemail merely annoys me. I don't need more information. I know what all of the main candidates are offering. Heaven knows, they've told me enough times.

I've read Kelly Tolhurst's six-point plan, headed up by the biggest non-issue of this by-election - immigration. I've read Mark Reckless's insane claim that a party that has no plan for reducing the deficit is somehow more likely to achieve it than one that has spelled it out in gory detail. I've also read Naushabah Khan's sensible local plans which have been unfortunately hijacked by her party's insistence that she must fight the other parties on their own ground.

I'm much less clear about what the other parties are offering. I think during this campaign I have had one leaflet from the Lib Dems, occasional leaflets from independent candidates and none at all from the Greens. Maybe it's because of where I live - the outskirts of Strood are not where the main battle lies. Or maybe it is just that the other parties have all given up prematurely. Whatever. I'm bored with it all anyway. Roll on Thursday.

Oddly enough, given it is only three days until the vote, the media have gone a bit quiet this week. Maybe they are bored with it too. A week ago, the BBC was busy promoting the idea that this by-election was all about immigration. Here is Louise Stewart, in an article promisingly named "Issues Beyond Immigration":

Perhaps the Rochester and Strood by-election campaign could also be summed up in three words - Immigration, Immigration, Immigration.

It was always going to be a big issue, given this vote was triggered by the local MP's defection from the Conservatives to UKIP.
And the headline for BBC South East's televised "Rochester and Strood Debate" announced that although local issues did feature, the debate "really heated up" when immigration was discussed. Apparently this "proved" that this by-election is about immigration, really.

I was in the audience for that debate (if you want to watch it, the iPlayer link is here). Immigration was indeed discussed, and there was a heated debate between Kelly Tolhurst and Naushabah Khan about the Coalition's record on controlling immigration. But as they were arguing, the audience went quiet. I looked around. They were mostly disengaged. The energy from the audience had dissipated. Suddenly what had been a lively discussion of local issues had become a national media circus.

I thought maybe it was just the impression I gained at the time, so I watched the broadcast as well. The same impression remained. Politicians were arguing about the issues their head offices had told them to discuss (and the media liked) while local voters looked on, disengaged and unimpressed.

A few days later I discussed the programme with one of my students who had been in the row behind me in the debate.

"Was it just me, or was the audience really bored during the discussion of immigration?" I asked.

"Not bored, exactly," said my student. "It just seemed pointless. It's not what we are interested in".

Other people I spoke to echoed this. And the lady who asked the question in the broadcast itself summed it up:

"I don't think immigration is the big issue it is being made out to be", she said. "And I think the real concerns of local people are not being heard".

Indeed they are not. Recent reports on the by-election have focused entirely on how awful it will be for David Cameron if UKIP wins. The Telegraph wrote a piece called "Rochester and Strood by-election explained" which completely omitted any mention of local concerns in Rochester and Strood. And a nice piece in the Guardian about a local shop's straw (or rather sweet) poll degenerated into party politics. No wonder people in Rochester and Strood are cross.

To her credit, Louise Stewart did say that her own impression was that immigration wasn't the main issue:

And it's not a scientific poll, but when I've spoken to voters on the streets of Rochester and Strood the crisis which has engulfed the Medway Maritime Hospital (which was taken into special measures over a year ago) seems to be the area of most concern for residents.

Slightly further out residents in Hoo are worried about plans to build 5,000 homes at Lodge Hill - on a Site of Special Scientific Interest - and the Green Party and Liberal Democrats have made fighting it one of their key policies.

The other big bugbear seems to be traffic management - businesses say they're suffering due to the long-standing traffic hold-ups on Medway's biggest trading estate, worsened by what they describe as "incompetent" highways management of roadworks nearby.
Yup, that's more like it. Medway Hospital, the Lodge Hill development and traffic jams. Had this by-election been six months earlier, the list would have included the Estuary Airport proposal, which was - and remains - unbelievably unpopular with local people. It's not about immigration. Really, it isn't. It's about this area being a dumping ground for all sorts of political pet projects that can't go anywhere else because of the insane London greenbelt. It's about stupid political ideology that deprives schools and hospitals of resources, squeezes people's incomes and hurts the poor. It's about failure to reform the banks, failure to mend the roads, failure to fix the health service. It is, in short, about the everyday things that affect the lives of ordinary people.

Although I'm not going to vote for him, I have to say that Mark Reckless actually addresses these local concerns well. And if he wins it will be more because of this than the ridiculous UKIP policies. As a Westminster politician he has been something of a joke, but he has been a good constituency MP. He has more personal support than perhaps the media appreciate.

But one thing that came across clearly in the BBC debate was how close Tolhurst and Reckless are. As far as policies are concerned, they are almost indistinguishable. And the Labour candidate wants to play them at their own game. Three parties, all offering pretty much the same menu. Do we vote for posh Mark, chavvy Kelly or clever Naushabah, or waste our votes on a fringe party?

In the end it all comes down to this.We, the voters of Rochester and Strood, are being drowned out by the noise from the media circus and the political Punch and Judy show. If we kick the main parties by re-electing Mark Reckless, it will not be because we are a bunch of racist, sexist xenophobes. It will be because we are angry that what really concerns us is apparently of so little importance to the Westminster elite. They should take note.

 Related reading:

Rochester and Strood: it's not about UKIP

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-27185234569966477152014-11-17T13:49:00.000Z2014-11-17T13:49:41.873ZThe land of the setting sun

"So tief im Abendrot, wie sind wir wandermüde.....is das etwa der Tod?"
- R. Strauss, Four Last Songs, no. 4 "Im Abendrot"

Japan is in recession. Will it ever escape from its deflationary trap? Indeed, should it even try to? Or would it be better for it simply to accept that its future is gentle decline into a comfortable (and highly automated) old age? Is it becoming the land of the setting sun?

My thoughts on this are at Pieria.

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-17341000321687813942014-11-11T04:25:00.001Z2014-11-11T04:25:44.013ZThe central bank of Russia is regaining control - but for how long?

At Forbes, more on Russia's currency problems:

After the Central Bank of Russia (CBR) established free float with the condition that it would intervene to protect domestic financial stability, the ruble immediately rallied, but then fell again. Many people forecast dire consequences. I admit I was a little worried, but I thought the ruble would stabilize once markets became used to the lack of routine intervention from the CBR. After all, the whole point of allowing a free float is to enable the currency to find its own level – and more importantly, restore control of monetary policy to the central bank.

When a country operates a fixed exchange rate system, it de facto adopts the monetary policy of whichever country issues the currency to which it pegs its own currency. In the case of the ruble, that is the United States. And as I have noted before, because China has large US$ reserves and a currency peg to the US$, the Fed's policy is to a degree determined by the People's Bank of China (PBOC). After all, a currency peg has two sides. It is unusual for the pegging country to influence the monetary policy of the country to which it pegs: usually a smaller, weaker country pegs its currency to a the currency of a larger, stronger country, and the larger country simply ignores the smaller one. But the US and China are now sufficiently close in size and strength to influence each other. Both also influence the oil price, and as Russia is an oil exporter, that has significant effects on the Russian economy. In effect, Russia's monetary policy has until now been jointly determined by the Fed and the PBOC.

 This means that the CBR has never really been in control of either the ruble or monetary policy.....
So how is it regaining control - and what might make it lose it again? Read on here.

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-45367957416911284022014-11-11T02:00:00.000Z2014-11-11T02:00:30.380ZThe foolishness of the old

Older people tend to want their pensions and benefits protected and the burden of cuts to be borne by the young. Of course, this is only natural:

Most people want government to spend more money on them than on anyone else. This applies regardless of their tax contributions (those who don't pay tax often demand more than those who do). And it is completely understandable. After all, charity begins (and when times are hard, ends) at home.
But it is also foolish. In my latest post at Pieria, I explain why older people should be demanding that governments invest in the young.

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-53948926609596503022014-11-09T15:11:00.000Z2014-11-09T16:52:49.600ZA Strange Memorial

Poppies, at the Tower of London, turning the moat blood-red. A wonderful memorial to the British and Commonwealth servicemen who died in the First World War.

One of them was my great-uncle, Henry Dodson Noon. We've always referred to him as "Uncle Dodson", so Dodson is the name I shall use in this post.

Dodson was born in 1894 in Eastwood, Nottinghamshire, the son of George Henry Noon and his wife Mary Catherine Noon, my great-grandparents, who were farmers. In 1911, at the age of 17, he emigrated to Australia. My mother always said it was "because there was no money in farming in Britain". Indeed, farming was at that time in long-term decline: Dodson was not the only farmer's son to emigrate. Nonetheless, he doesn't seem to have become a farmer in Australia either. His Australian Army papers show his occupation as "butcher".

In 1914 he joined the 16th Battalion AIF. After training near Perth and Melbourne, he embarked with the rest of the 4th Australian Infantry Brigade to join the Anzac force in Egypt. He fought and was wounded at the battle of Gallipoli in 1915, receiving a bullet through the nose. The wound became infected and he was invalided home to England.

He later returned to his battalion. At some point he was promoted, since his embarkation papers for Egypt show his rank as "Private", but his war grave records show his rank as "Sergeant". He fought at Mouquet Farm on the Somme, where he disappeared and was listed as "missing" on August 31st 1916. After extensive enquiries on behalf of his mother and the Rector of Eastwood, his death was finally confirmed six months later. The exact circumstances were not established until May 1917, when Sergeant-Major Blimman in the 16th Battalion wrote this:

Sgt. Noon was killed on the night of 29th-30th August 1916. He was not buried in a soldier's cemetery. His body could not be found, but it was buried by shell fire in a German trench. I knew Sgt. Noon well and I think I was the last person to speak to him before his death.

Although Dodson's body was never found, he is remembered both on the Australian war memorial at Villiers-Bretonneux in France, and on the Northumberland Road war memorial in his home village of Eastwood, where he is listed as "H. Dodson Noon" (third from the bottom).

Dodson was George & Mary Catherine Noon's only son, and with his death the name Noon died out in Eastwood. But in a strange way, it lives on - and not just on war memorials or in the memories of his family. For this, we have to thank Eastwood's most famous son - the writer D.H. Lawrence.

D.H. Lawrence knew the Noons. Indeed there seems to have been some animosity between them. Family legend has it that when they were children, my great-aunt Maggie (Dodson's older sister) was not allowed to play with Lawrence because her mother thought he was a "nasty little boy".

In 1920-1, D.H. Lawrence wrote a short story called "Mr. Noon", which was published posthumously in 1934. But his work on "Mr. Noon" didn't end there: he gradually developed the story into a novel, though he never completed it. The unfinished novel was eventually published in 1984 in a critical edition compiled by Lindeth Vasay. The chief protagonist of Lawrence's story is Gilbert Noon, a twenty-six year old mathematics teacher with musical talent. On the basis of the initials G.N. and the character's behaviour, Vasay concluded that Gilbert Noon was modelled on Lawrence's friend George Neville. And indeed there are obvious similarities, although in many ways Gilbert Noon is also Lawrence's own alter ego. "Mr. Noon" is widely recognised as Lawrence's most autobiographical work.

But Vasay seems to have made no attempt to identify the provenance of the name Noon. For me, this is a grave omission. G.N. are the initials not just of George Neville, but also of Dodson's father, George Noon. George Noon, as an independent farmer, was a small businessman with money - like Gilbert Noon's father. And Dodson, had he lived, would have been twenty-six in 1920, the year Lawrence started work on "Mr. Noon". The Noons were a musically talented family: we do not know if Dodson had musical talent, but his sister Maggie was a professional pianist and other girls in the family sang and played the piano to a high standard. Indeed, I owe my own musical talent to my Noon ancestry.

So despite the untimely death of Henry Dodson Noon, the name lives on - in literature. Lawrence's unfinished autobiographical work is perhaps my great-uncle's strangest memorial.

Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-27990854473719541632014-11-09T01:21:00.002Z2014-11-09T01:21:35.614ZA tangled web of fraud

Bulgaria's Corporate Commercial Bank. Again. Oh dear.

There is some good news:

The Bulgaria National Bank (BNB) has now – belatedly – revoked the banking license of the failed Corporate Commercial Bank (KTB) and commenced bankruptcy proceedings. This will come as a huge relief to insured depositors, who will get their money back in time for Christmas. It also means that the attempt by a consortium of investors to rescue the bank has failed.
But what a mess has been left behind:

The BNB's disclosures about KTB reveal the desperate measures that were taken to preserve the illusion of solvency in the months before its failure. This statement from the BNB's website explains how the bank self-funded its own Tier2 capital with a complex web of circular lending transactions involving an investment company called TC-IME and a host of smaller intermediary companies. The ownership of the components of this tangled web requires some explanation.
Indeed it does. Read on here.

Related reading:

Bulgarian Stalemate
The Bulgarian Banking Disaster
The Bulgarian Game of Thrones
The curious case of the Bulgarian bank runs
What on earth is going on in Bulgaria?
 Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-2479676781735525442014-11-09T01:08:00.001Z2014-11-09T01:23:32.390ZRussia's desperate defence of the rubleTwo pieces (so far) at Forbes on the Russian central bank's desperate defence of the ruble. Well, it appears desperate, anyway. But is it, really?

Firstly, I explain why the Russian central bank can't defend the ruble and shouldn't try to:

When a currency is rising in value due to capital inflows, the central bank can cap its rise by buying assets and foreign currency. This is what the Swiss central bank has been doing for a few years now. Its purchases of Euros amount to possibly the largest QE program in the world relative to the size of its economy. Since it can create infinite amounts of Swiss francs, it is unquestionably the most powerful player in the Swiss franc market, and no market participant will oppose it. Instead, market participants will happily co-operate with it by selling Euros at the price that it sets.

Similarly, when a currency is falling sharply in value, the central bank can support it by selling assets, including foreign currencies. But in this case it does not have infinite quantities of assets. Central banks can create their own currencies at will, but they can't create foreign currencies or assets. So the ability of a central bank to prevent sharp devaluation of its currency is limited by its asset and foreign exchange holdings. It is not all-powerful – and markets know it.
So what should central banks do? Read the post to find out.

Shortly after I wrote that post, the Russian central bank abandoned any attempt to maintain the ruble within its trading bands:

The Central Bank of Russia (CBR) seems to have decided that it can't beat the markets. On Wednesday November 5th, it announced an end to unlimited currency support interventions. It said it would spend a maximum $350m per day smoothing out fluctuations as the ruble approached the edge of a trading band. Once that limit was reached, the ruble would be allowed to fall out of the band. The final sentence of the CBR's press release spells it out:

As a result of the implementation of this decision, the ruble exchange rate will be determined predominantly by the market factors.
Game, set and match to the markets, apparently.
Or is it? Perhaps not. As I explain in this post, it looks more like "game on" to me.

As this game plays out, I shall write more posts about it.

Related reading:

Russia is facing a full-blown currency crisis - Tomas Hirst, Business Insider
Plunging rouble raises spectre of fresh financial crisis for Russia - FT
Rouble rebounds as central bank says it could take action - BBC
Has the Japanese central bank started another round of central bank wargames? - Forbes

Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-73040434819536239792014-11-09T00:51:00.000Z2014-11-09T00:51:14.306ZHas the Bank of Japan started another round of central bank wargames?

Never pick a fight with a central bank. The only one who gets hurt is you. Unless, of course, you are another central bank.

Central banks routinely intervene in the markets to influence the prices of assets, commodities and currencies. That's the way monetary policy is conducted. It's the principle behind QE.

 Generally, everyone co-operates.....
Have you ever wondered why they do? In this piece at Forbes I use a game theory explanation for the ability of central banks to manipulate markets, and apply it specifically to the Bank of Japan's exorbitant QE commitments.

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-12895153913964248872014-11-09T00:40:00.000Z2014-11-09T00:40:19.035ZA terrible stability

My Pieria post on EU unemployment and inflation:

One of the things that struck me about the EU's stress tests was the high levels of unemployment in the baseline conditions for the tests. Levels were elevated across not only the Eurozone, but the entire EU: the aggregate baseline unemployment level for the Eurozone was 12%, largely because of very high unemployment in some Eurozone periphery countries, but that for the entire EU was not far behind at 10.7%.

 The baseline conditions did assume that unemployment would reduce. But the forecast was for a drop of less than one percentage point in three years: in the Eurozone it would drop to 11.3% and in the EU to 10.4%. If these baselines are at all realistic, then unemployment is a HUGE problem in the EU.
But inflation, or rather disinflation, is also a problem. In fact the two combine to create a terrible stability. Read about it here. Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-83967506818205745292014-11-08T22:18:00.000Z2014-11-09T00:26:12.831ZLessons for China from JapanThe Economist has an interesting graphic. Here are the world's 10 biggest banks year by year since 2004, apparently:

Umm, not quite. This graphic actually shows the banks with the largest amount of shareholders' equity (Tier1 capital) in US$. It says nothing at all about the absolute size of these banks in assets, and since the Tier1 capital is expressed in dollars rather than as a percentage of assets, it says absolutely nothing about the safety of these banks either.

Cross-checking the figures for 2013 against other metrics gives interesting results. Relbank reports that by assets, Britain's HSBC is the second largest bank in the world, but The Economist's list has HSBC in fifth place by Tier 1 capital. So it appears that its capital is deficient relative to China Construction Bank, JP Morgan and Bank of America. But the accounting treatment affects the definition of assets. In particular, there are significant differences between US GAAP and IFRS regarding the treatment of derivatives. The result is that US banks using US GAAP appear to have smaller asset bases than HSBC (and other European banks) that use IFRS. HSBC is apparently larger than JP Morgan - and has lower capital - because of differences in accounting treatment.Would that difference disappear if both banks were using the same accounting treatment? We don't know.

There are also differences in definition of Tier 1 capital. America's definition of capital is not the same as the UK's, and who knows how China defines "shareholders' equity". The treatment of preferred stock is particularly controversial.

So The Economist's chart should be treated with some care. Nonetheless, it shows how much the Tier 1 capital of the global banking system has increased in the last 10 years. The size of the circle indicates the size of the capital base of the bank concerned. In 2007 the largest bank in the world by capital was the British bank RBS, which was also at the time the largest bank in the world by assets. But the banks that have replaced it are much larger. The RBS of 2007 wouldn't feature on the list at all now. Indeed, European banks generally feature highly in the earlier years of the chart: French banks, and even Spanish banks, were in the top 10 banks in the world by Tier 1 capital. All have now disappeared from the list.

What has replaced them? Chinese banks. In 2004, Chinese banks were nowhere to be seen. Now, four of the largest banks in the world both by Tier 1 capital and by assets are Chinese. In fact of the largest 50 banks in the world, 17 are Chinese.

On Twitter, The Economist's chart was accompanied by a tweet that asked "How long before all the top 10 are Chinese?" It seems a reasonable question. After all, the Chinese economy will soon be the largest in the world, so it should have the largest banks - shouldn't it?

But we have played this scene before. Roll back the years to 1989, and we find this from the Chicago Tribune:

For the first time, the 10 largest banks in the world are all Japanese as Citicorp, the biggest U.S. bank, has fallen out of the top ranks, according to American Banker. Dai-Ichi Kangyo Bank Ltd. is Japan`s and the world`s biggest banking company, with assets of $387 billion at the end of March.
The remarkable growth of Dai-Ichi Kangyo Bank (DKB) came from increasingly risky real estate and construction loans made on the assumption that land prices would continue to rise. Yet by 1989, land prices were already falling in Tokyo - a sign of trouble to come. When the Japanese real estate bubble burst in 1991, DKB found itself with high levels of non-performing loans. Nor was it alone. Almost all of the large Japanese banks ended up with disastrously high levels of non-performing loans, mostly real estate, after the 1991 crash. They limped along until 1997, hiding the true state of their balance sheets, until the Asian crisis hit in 1997. That was enough to cause the failure of the most vulnerable banks, notably Hokkaido Tagushoku Bank, Long Term Capital Bank, and Nippon Credit, along with securities companies Sanyo Securities and Yamaichi Securities and a number of smaller institutions. The rest, including DKB, were forcibly restructured by the Japanese authorities. DKB eventually merged with Fuji Bank and Industrial Bank of Japan to form Mizuho Banking Corporation.

There are other disturbing similarities between the Japan of the late 1980s and China today. The Japan of the 1970s and 80s was an export powerhouse, with a large trade surplus which the US claimed was due to artificial repression of the yen. Sound familiar? The Plaza Accord of 1985 forced the yen to appreciate against the dollar. But although that caused a short recession in Japan, it didn't end its trade dominance. The US's trade deficit remained stubbornly high and Japan continued to "fund the US deficit" by buying USTs - just as China does today. In fact Japan's purchases of USTs were an inevitable consequence of its trade surplus, just as China's are today. Neither country is remotely interested in funding the US's fiscal deficit - but they do like to have plentiful dollar liquidity.

As a young MBA student, I remember being told that Japanese businesses were going to take over the world. Western businesses would have to become more like Japanese businesses in order to survive. So we were taught "Japanese business". We went on trips to Japan to learn how Japanese businesses work and to gain an understanding of Japanese culture. Some of us even learned Japanese.

But Japan's growth came to an abrupt end with the bursting of the asset bubble in 1991 and the collapse of its banking system in 1997. Now, after more than two decades of stagnation, no-one is interested in learning about Japanese business. China is the new powerhouse. Chinese businesses are taking over the world. MBA students are taught about Chinese business. Some of them even learn Mandarin. Hmm.

Size, in banking, is not an indicator of health. We know that the growth of Chinese banks is being driven by property and construction lending - just as the growth of the Japanese banks was. And like the Japanese banks, they are rapidly becoming the largest in the world. To be sure, this is partly because of the retrenchment of banks in Europe. But to me, the Chinese banks look uncomfortably like the pre-1991 Japanese banks. Property prices are falling as the economy slows, undermining the value of collateral, and bad loans are rising rapidly. Yes, they claim to be well capitalised - but so did the Japanese banks.

What makes us think this time will be different?

Related reading:

What happened to Japanese banks? - Takeo Hoshi
The financial crisis in Japan in the 1990s - Hiroshi Nakaso, BIS
The Japanese banking crisis of the 1990s - IMF

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-50440631380411905732014-10-31T16:43:00.001Z2014-11-01T09:19:35.221ZGoodbye QE, hello rate rises? Not so fast.....

 A Landmark - L.S. Lowry

My latest at Pieria debunks the notion - heavily promoted by hawkish analysts and impatient journalists - that the FOMC's announcement that QE has ended means that interest rate rises are imminent. And it raises a worrying question. The FOMC -and others - talk about "normalising" policy. But what does "normal" even mean? Is there such a thing as a "normal" setting for interest rates? We do not know.....

Read the post here.

Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-57459190835341952442014-10-30T15:14:00.002Z2014-10-30T15:30:32.315ZGermany's dark futureInflation is falling fast in Germany. Today's figures show a fall in annualised CPI growth to 0.7%. And this is in the supposedly powerful core of the Eurozone. Out in the periphery, things are much worse.

But whereas disinflation or even outright deflation in periphery countries has little effect on Eurozone aggregate inflation, German disinflation is an entirely different matter. Thomson Reuters has helpfully produced a chart showing the relationship between German and Eurozone inflation:

Nicely correlated. In fact it is so well correlated that it is probably fair to say that ECB monetary policy is really determined by inflation expectations in Germany.

In the last year there has been some divergence because of the awful performance of Spain and Italy and the stagnation of France, which has led the ECB to attempt to introduce a credit easing programme against the wishes not only of the Bundesbank, but of German politicians. But although disinflation in Germany doesn't seem worry its politicians or its central bankers despite the consequences for the rest of the Eurozone, the threat of recession should:

Germany's exports to Russia have collapsed due to sanctions. This may of course only be a temporary problem: the German export machine is not going to be derailed by a few Russian difficulties. A much bigger problem is the slowdown in China, to which Germany is a major exporter of intermediate goods. Whatever the cause, Germany's exports have suffered a substantial drop:

More worryingly, industrial production figures for August showed a fall of 4%:

And factory orders fell off a cliff:

Ouch. No wonder investor confidence is falling:

But this is very bad news for a country where investment is already shockingly low and government is ideologically averse to spending money. The IMF's call for Germany to invest should be seen in the light of these awful figures. The wheels are coming off Germany's export-led, demand-deficient economy - and that is very bad news not only for Germany, but for Europe and indeed for the world.

The ECB has been accused of putting the interests of "profligate periphery countries" ahead of prudent German savers. But in fact it is trying to reflate the German economy through monetary stimulus. It is utter madness for German politicians and Bundesbankers to oppose this. They should back off and let the ECB do its job.

But it will take more than credit easing to sort out this mess. Germany desperately needs a change of stance from its fiscal authorities, too. Unless it invests in its own future, dark days lie ahead.

Related reading:

Should the UK be more like Germany? - Pieria
Fear the fear

Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-65602768854481720242014-10-29T02:05:00.002Z2014-10-29T02:05:35.749ZTwo very stressful postsAt Pieria, I deliver my verdict on the EU's stress tests. The ECB did a good job with the AQR, but the EBA's stress tests were not stressful enough.

And then I turn my attention to the UK's forthcoming stress tests. On Forbes, I complain that despite the Bank of England's intention to make its stress tests both more severe and more realistic, it fails on both counts. The UK's stress tests are just as flawed as the EU's.

Oh dear.

Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-59185119209815623212014-10-25T11:54:00.000+01:002014-10-25T17:04:02.609+01:00Financial hurricanes

I recently wrote a post on Pieria about the (sizeable) role of the Eurodollar market in the 2007-8 financial crisis, or rather in the credit boom that led to the crisis. In order to explain the vast increase in transatlantic two-way flows (round-trips) from 1997 to 2007, I used this diagram from Hyung Song Shin's 2011 paper on the "global banking glut":

But there's a problem. This diagram appears to show that all money lent by both US and European banks came from US households. Where did they get their money? It wasn't wages. We know that US wages have been stagnating for two decades. No doubt some will suggest it came from Asian savers - the "global saving glut" that is apparently caused by thrifty Chinese households. But how could thrifty Chinese households provide US households with money? Most Chinese households save in yuan. It is Chinese government and corporations that lend to the US, and it is not households they lend to. Mainly, it is the US government. No, the "Asian savers" argument won't wash either. Where US households obtained the extraordinary amounts of money that crossed the Atlantic in the decade before the financial crisis is a mystery. It grew on trees, perhaps?

No it didn't. It came from banks. To show this, I've produced a diagram of my own:

Shin's diagram is a "loanable funds" model, whereas mine is endogenous money. Note the two-way flows. Property (and derived securities) flow clockwise: money flows anti-clockwise. The red lines are the two regulatory boundaries: US (Basel I) and Europe (Basel II). The gap between them contained not only the Atlantic, but most of the shadow banking sector.

In my diagram the flows can start anywhere. All actors in this diagram should properly be regarded as part of the "pump" that maintained the two-way flow. In my earlier post I suggested that the principal driver of the pump was regulatory arbitrage by banks between the Basel I and Basel II regimes, with the shadow banking sector and money market funds facilitating. But the desire of borrowers for loans and households & corporations (particularly construction companies) for property sales are important too. Without these, the US banks would have lent much less and the European banks would have had much less funding.

However, although this is a circular flow, the quantities of money and property/securities circulating are not constant. As the money flows around this model, it expands: and correspondingly, property and securities also expand.

Money was created by US banks when they lent. The "Loans" arrow at the left hand side is always new money. Similarly, money was created by European banks when they purchased securities. The "Payment" arrow at the top right hand side is also new money.

Lending against property created not only new money, but also new securities. The loans were sold by US banks to securitizers, who pooled them, tranched them and created new securities, which they sold into the capital markets. In the "shadow banking" box is not only the securitization process itself, but also rehypothecation and leveraging of the ensuing RMBS products. The value of the securities that came out of the other side of that box was far higher than the value of the loans that went into it. The "Payment" arrow was enlarged both by the ability of European banks to create new money AND the ability of the shadow banking sector to leverage up property-backed securities.*

So the Eurodollar transatlantic flows grew enormously in the decade before the financial crisis, both money and property-backed securities. US lending against property expanded enormously, and there was as a result a construction bubble - the "Property" arrow at the bottom left-hand side itself expanded. But it expanded less than the other arrows. Most of the expansion of money was absorbed in price rises.

Normally, we would expect such a massive expansion of credit to have caused consumer price inflation to rise significantly. But it didn't. This period is known as the "Great Moderation", when consumer price inflation remained low and stable. For me, this is where the "Asian savers" theory gains traction. But the "savers" were not thrifty Chinese households. They were Asian governments, scarred by the Asian financial crisis of 1997 and anxious to protect themselves from damaging flows of capital by building up foreign exchange reserves. Instead of borrowing from Western countries, as they have done in the past - and suffered for it - they exported to them. I have observed before that the "Great Moderation" in the West is paralleled by the "Great Expansion" in the East. I would go further: I think it was caused by it. The massive expansion of low-cost imports to the West depressed consumer price inflation even though spending was increasing as a result of the credit bubble. I would venture to suggest that had there not been a credit bubble, this would actually have been a period of deflation. The stagnation of wages in many Western countries supports this line of argument.

Having said that, it is also clear that spending didn't increase as much as might have been expected. Spending would be a "leak" from the two-way flow in the diagram, reducing the flow and dampening the leverage. But most of the money seems to have stayed within the flow, driving up house prices to an unsustainable level.

Toxic cross-border feedback loops come in many kinds. This was a property-based one. The yen carry trade was a currency-based one, and once again, when it abruptly reversed the consequences were disastrous - although I don't think it was the sole cause of the financial crisis, it was certainly a significant contributor. Capital flows into Eurozone periphery countries prior to 2012 were a similar leveraging cross-border flow system that failed disastrously. So were the capital flows into Asian economies that reversed abruptly in 1997, causing the Asian crisis: I think QE-driven capital flows into emerging markets exhibit similar characteristics, and policy makers should be on their guard. Nor are these flow systems a new phenomenon: going back further, the Latin American debt crisis of the 1980s was the disastrous consequence of the failure of an enormous oil-based leveraging cross-border flow system.

It is difficult to see how conventional monetary policy could have dampened this leveraging cross-border flow without causing outright deflation in domestic consumer prices. And I would add that attempting to interrupt the flow once the system was fully developed - for example, by imposing capital controls - would have been dangerous. All the players in this game depended on the flow continuing. When it was suddenly interrupted, first in 2007 with the freezing of the ABCP market (top RH corner "Funding" and "Securities (collateral) arrows) and secondly in 2008 with the fall of Lehman (collapse of "shadow banking" box) followed by Reserve Primary breaking the buck (failure of "money market funds" box), the results were disastrous. All the players suffered, and many of them failed.

Policy makers need to watch for the formation of cross-border leveraging flow systems and act EARLY to dampen them. This requires international cooperation, of course: it is depressing that so far the only central banker who seems to have recognised the importance of global monetary policy coordination is India's Raghuram Rajan. It is also unfortunate that there is still no internationally-agreed approach to regulation of the financial system. But worst of all, fiscal authorities don't seem to see any need at all for coordination of national objectives. These flow systems are driven as much by competitive and nationalistic fiscal policy as they are by uncoordinated monetary policy and regulatory arbitrage.

Cross-border leveraging flow systems of the kind I have illustrated above are the storms and hurricanes of the financial system. We ignore them at our peril.

Related reading:

When the Nile floods fail
European banks and the global banking glut - Pieria
Currency wars and the fall of empires - Pieria

* I should emphasise that this diagram ONLY shows the Eurodollar flow. European banks were not the only purchasers of US RMBS and derivative products.

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-72231034359117386872014-10-24T23:38:00.000+01:002014-10-24T23:38:05.421+01:00Bulgarian Stalemate

The latest in the Bulgarian bank saga. The audit report on Corporate Commercial Bank is out. It's very grim reading, but does that mean the bank will be closed down? Not necessarily.....

Find out more here. (Forbes)

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-12543063419872468002014-10-22T00:35:00.000+01:002014-10-24T23:38:43.953+01:00Hypo Alpe Adria: the small bank at the centre of some very big storms

Two posts that centre on the troubled Austrian bank Hypo Alpe Adria. For a small bank in a small country, it is causing an AWFUL lot of trouble.

Firstly, the ongoing saga of HAA's Balkan network, which the Austrian government is attempting to sell. As the bidding enters its final stages, it becomes apparent that the eventual owner will be determined more by politics than money:

The present tension between the EU and Russia creates a difficult dilemma for the Austrian authorities. On the one hand, they should get the best deal for Austrian taxpayers, which would imply that they should accept the higher bid even though it involves a sanctioned Russian bank. On the other hand, allowing a sanctioned Russian bank to buy financial companies in the Balkans would seem contrary to the spirit if not the letter of EU sanctions....
Despite my earlier warning, a consortium backed by a sanctioned Russian bank is still in the running to buy HAA's Balkan network. Read about it here.

Secondly, there is the little problem of HAA's subordinated debt and those Carinthian guarantees, about which I have previously written. Let the lawsuits begin! Oh wait, they already have:

So we now have two BayernLB-HAA lawsuits, not one: a petition to the Austrian Constitutional Court regarding the expropriation of 800m Euros of Carinthian-guaranteed loans, and a case in the Munich District Court regarding the non-payment of about 1.5bn Euros. Together, these amounts make up the 2.35bn Euros BayernLB was seeking to recover in the earlier lawsuit.
But BayernLB isn't the only actor in this drama. Dear me, no. We have the World Bank involved in a pari passu saga that could rival Argentina, a lovely spat between Germany and the EU over state aid rules, and the possibility that Germany may have to throw BayernLB to the Austrian wolves in order to recapitalize other Landesbanken after the ECB's stress tests. All documented in my latest post at Forbes.

Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-46630417553587752952014-10-17T21:07:00.000+01:002014-10-17T21:07:16.930+01:00European banks and the global banking glut

My latest post at Pieria considers the sizeable role of the Eurodollar market in the unsustainable growth of credit that led to the 2007-8 financial crisis.

In a lecture presented at the 2011 IMF Annual Research Conference, Hyun Song Shin of Princeton University argued that the driver of the 2007-8 financial crisis was not a global saving glut so much as a global banking glut. He highlighted the role of the European banks in inflating the credit bubble that abruptly burst at the height of the crisis, causing a string of failures of banks and other financial institutions, and economic distress around the globe. European banks borrowed large amounts of US dollars through the money markets and invested them in US asset-backed securities via the US's shadow banking system. In effect, they acted as if they were US banks, but in Europe and therefore beyond the reach of US bank regulation......
What was it that drove the expansion of the Eurodollar market and encouraged European banks to leverage up with US mortgage-backed securities?

Read the post here.

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-91225571501787844952014-10-12T22:00:00.000+01:002014-10-13T02:22:53.359+01:00Rochester & Strood: it's not about UKIP

 Rochester High Street. The shop that has become UKIP's campaign HQ is (appropriately) on the far right-hand side. Photo: Mabbs

This is not my usual sort of post. It is overtly political, completely biased and very angry. I can no longer simply comment dispassionately upon dysfunctional UK political parties and rapacious sensation-seeking media. They have come to my home town and are intent on destroying it.

The decision by UKIP to set up their campaign in a quaint building on Rochester High Street was calculated to attract the maximum media attention. Surrounded by Dickensian shops and olde-worlde buildings, and within walking distance of a picturesque ruined castle and a lovely Norman cathedral, it was photographers' heaven. And the BBC fell for it. Every report so far on the Rochester & Strood by-election campaign has used either Rochester High Street or Rochester Castle as a backdrop. Well, the Castle is beautiful:

Rochester Castle. Photo: Survation

The result is that the media are giving the impression that Rochester & Strood is a an affluent upper-middle-class area similar to Windsor. And indeed, central Rochester, with its big houses, its expensive restaurants and its private schools, is exactly that. But the rest of the Rochester & Strood constituency is very different. Strood, on the other side of the Medway, is far poorer, as is evident from these pictures of Strood that I took today.

This picture is looking towards Rochester Bridge from Angel Corner. If you are wondering why "Angel", it is because there used to be a pub on the corner called the Angel. It is now an estate agent.

This picture is looking from Angel Corner east towards Frindsbury. On the right is the entrance to the new Aldi superstore. On the left is the entrance to Asda's car park. A quarter of a mile away is the largest Morrison's superstore in the South East, plus a sizeable Tesco. On the high street is an Iceland and a Wilkinson. Strood is, to be frank, Supermarket City. Or Closed Pub City. Yes, that is a closed pub - one of many in this area. Supermarkets selling cheap booze have crowded out pubs.

You can't see them in these photographs, but Strood also has a very good Asian supermarket, several Asian restaurants of various kinds and a lovely sari shop. It is, you see, ethnically diverse. I wonder if Mr Farage knows this?

But Strood itself is no more typical of the Rochester & Strood constituency than Rochester. By far the largest part of the Rochester & Strood constituency looks like this:

This is farmland on the Hoo Peninsula. The Rochester & Strood constituency is really very rural. Admittedly, the rural areas of this constituency have far fewer voters than the towns. But they extend a very long way. Rochester & Strood constituency covers a large area.

The villages are very different from the towns. Here's the centre of Hoo St. Werbergh, one of the larger villages:

And this is the little village of All Hallows, that would have disappeared under one of the runways of either the Cliffe or the Grain airport proposals:

You can just about see the weather vane on top of the little church. Some of these village churches have been converted into dwellings, like this one at St. Mary Hoo, just visible in the distance across the farmland in this picture:

Village churches aren't all Church of England, either. This, in Lower Stoke, is a Methodist chapel:

Nonconformist chapels can also be found in Strood and Frindsbury.

But although the area is very rural, it has an industrial dimension. This is the Isle of Grain:

More oil and gas than grain production these days. And the surrounding area is marshland. The northern tips of the Isle of Grain and the Hoo peninsula border the Thames estuary and are home to thousands of wading birds. There are several nature reserves and bird sanctuaries in this area. How anyone ever thought building a major airport here was a good idea is beyond me. Birds are fatal to jet engines.

There is still a working power station at Grain - it's the building with the high chimney in the picture above. But until recently there was also a working power station at Kingsnorth, near Hoo St. Werburgh. You can see it at the right hand side of this photograph, taken from Grain:

Kingsnorth was a dirty coal-fired power station which was closed down in 2012 and is now being demolished. Nigel Farage complained today that it was closed down "by EU edict". Indeed it was. But he only tells part of the story. Plans by Kingsnorth's owners E.ON to extend it met with opposition from environmental campaigners, wildlife campaigners and even from Christian Aid and the World Development Movement. It was environmentally unsound. The Hoo peninsula may need jobs, but not that badly. Anyway, where were Mr. Farage's objections when first the Cliffe then the Grain airport proposals were ruled out, at least partly on environmental grounds? They would have brought far more jobs to the area - but the EU was not involved in the decision. Hmm. Special pleading by Mr. Farage, it seems.

If he really wants to complain about something, he could do worse than complain about the behaviour of the Army. This is the former Army village of Chattenden:

And this is what the Army left behind:

They also left this - the Lodge Hill Camp. It is part of a large area of former Defence estates enveloping Chattenden. The whole area is earmarked for 5000 dwellings, which will engulf and swamp Chattenden - a massive distortion to a tiny village in a very rural area. It amounts to a new town on the Hoo Peninsula. This is possible because 1) the area is not greenbelt 2) as these are ex-Defence lands they are brownfield, not greenfield.

I suspect the reason why this area is scheduled for so many dwellings is the fact that it is within easy commuting reach of London (since HS1 now goes through Strood station, cutting the journey time to London to 35 minutes from over an hour) AND is not greenbelt. Just about everywhere else that is both undeveloped and less than an hour from London is greenbelt. It's obvious, really. Just cover the entire Strood area and most of the Hoo Peninsula with houses. Instantly relieve London housing pressure without encroaching on greenbelt. Now the airport proposal has been dropped (again), there is no further obstacle to this - is there?

Well, there is. The same people who opposed the Grain and Cliffe airports and the extension of Kingsnorth also oppose carpet housebuilding. The Lodge Hill development, in particular, encompasses several environmentally sensitive areas. I would argue that its rural nature is also socially important, at least to the people who live there. Do they really want this turned into another commuter suburb of London?

I don't know what UKIP think they can offer the people of Strood and the Hoo peninsula. Most of the issues that affect us have more to do with London than the EU. When the Conservatives rang me the other day, they asked me what I thought were the three biggest local issues. My answers were:

The NHS. Medway Hospital is in special measures, and well deserved. It's a disaster. Among other things, it nearly killed my mother with a morphine overdose last year.

Overdevelopment. I have no objection to a reasonable number of houses being built locally. But it is not ok to relieve London housing pressure by dumping people here in their thousands, placing strain on local services and destroying the character of the area, simply to preserve those areas that have been designated as greenbelt. Apart from anything else, such a strategy will push up house prices here (historically they have been well below the South East average) pricing our young people out.

Local jobs. This area has a tradition of agriculture and small business. If it is to avoid becoming simply a large commuter ghost town, we need local jobs. We need to encourage businesses to take root and grow here.

So I challenge ALL the parties in this by-election. What can you offer the people of Strood and the Hoo Peninsula? How will you address our concerns?

And I challenge the media, too. This by-election is not about UKIP versus the Conservatives. It is about the people of Rochester & Strood. It is about our lives and our future. Do some proper journalism, for goodness sake, rather than feeding UKIP the publicity they crave. Find out what this place is really like. Talk to real people, not just the well-heeled folk of Rochester but the Asian community of Strood, the small businesspeople, the farmers out in the rural areas. Find out what people are really concerned about - and talk about that, not about Nigel Farage's hopes of world domination or David Cameron's worries about re-election. They don't matter. We do.

-

Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-31107978792411048442014-10-10T09:30:00.000+01:002014-10-10T10:34:37.337+01:00Anti-nationalismThe resounding victory of Douglas Carswell in the Clacton by-election has caused something of a stir. Carswell, formerly a Conservative MP, resigned his seat after defecting to the UK Independence Party (UKIP), then stood as UKIP's candidate in the ensuing by-election. His success at the polls gained UKIP their first Westminster seat.

It is far from clear how much of Carswell's victory was due to his personal popularity - by all accounts he had 15,000 personal pledges of support - and how much was due to support for UKIP. But another by-election on the same day, in the Heywood & Middleton constituency in Rochdale, suggests that rising support for UKIP, or perhaps more accurately falling support for the main parties, might have been a considerable factor. In Heywood & Middleton, Labour barely scraped back in. They won with a margin of only 617 votes - with UKIP in second place. Both the Conservatives and Lib Dems were trounced.

Meanwhile, across the Thames from Clacton, the constituency of Rochester & Strood - where I live - is preparing for its own by-election after the defection of Mark Reckless to UKIP. Like Carswell, Reckless has resigned his Westminster seat and is standing for UKIP in the by-election: the candidate selected by UKIP to stand in the 2015 general election, Dr. Mark Hanson, generously stood aside to make way for Reckless. Reckless does not have the personal popularity of Carswell, but North Kent is among the most Eurosceptic places in Britain:

(heat map h/t @MineForNothing)

It is therefore quite possible that Reckless will win. A recent Survation poll showed UKIP support up by 40% at the expense of the other main parties;

Survation for Mail on Sunday. Rochester & Strood Headline voting: CON 31% (-18), LAB 25% (-3), LD 2% (-14), UKIP 40% (+40), OTHER 1% (-5)
— Survation (@Survation) October 4, 2014
 The local Conservatives in Rochester & Strood are worried. They are already on the campaign trail. Yesterday, they rang me. Ostensibly this was to find out about the local and national issues that most concerned me, but really it was to find out my voting intentions both for this by-election and for the general election. I refused to be drawn on my voting intentions for the main parties. But I did say I would not be voting for UKIP. And in this post, I want to explain why.

Firstly, let me make it clear that my refusal to vote for UKIP does not indicate support for the main parties. I am unimpressed with all of them, and utterly sick of the deficit mania that is gripping politicians and media. The Conservatives need to realise that their figures don't add up: the Liberal Democrats need to be reminded that the deficit is not the economy: and Ed Balls needs to remember that he once knew some economics. The tax and spending proposals of all three parties demonstrate either total ignorance of the reasons why the UK's fiscal deficit is not reducing as planned, or - more likely - wilful ignoring of the truth for political reasons.

Gavin Kelly of the Resolution Foundation, a rare voice of sanity, reminds us that what politicians say before an election and what they do afterwards are often - thankfully - very different things:

 And let's not forget that fiscal timetables tend to be malleable. Regardless of anything that gets pledged pre-election, don't be surprised if greater pragmatism emerges afterwards.
And he suggests that the bleak picture painted by all three parties in response to the deficit panic may, after the election, give way to something rather rosier:

It's possible to sketch out a picture of the next Parliament that is less gruesome than we might think. Steady, job-rich GDP growth. The eventual resumption of pay rises as unemployment continues to fall. A very slow and gradual path of interest rate increases following rises in living standards, assisted by stable inflation and a housing market tamed by tougher regulation rather than the need for higher mortgage rates. And a timetable for chipping away at the deficit that extends over the parliament.
I'd buy that. But sadly no party is offering it. Until one of them does, I am firmly on the fence. For the first time in my adult life, I am faced with the prospect of being disenfranchised at the forthcoming election because I cannot agree with the policies of any of the main political parties.

And this brings me to UKIP. Many people are fleeing to UKIP (and to a lesser extent the Greens) because they reject the policies of the main political parties. But this is like a rebound relationship: it is founded on disappointment in old love rather than discovery of new love. Many of them would return to the main parties if the policies were changed. The problem is HOW they would need to be changed in order to attract them back.

One of the less welcome effects of prolonged economic difficulties is the rise of nationalism. We are seeing it all across Europe at the moment. You would think it would be most prevalent in the most deeply depressed countries. But that's not the case. The most vociferous nationalist movements are actually in countries that are not (yet) depressed. And this is because people resort to nationalism as a way of hanging on to what they have when they feel it is under threat.

UKIP is a nationalist party. It appeals to people who want "Britain for the British". People who, like my partner, resent the fact that national utilities and large businesses are owned by "foreigners". People who, like the friend who came to see me yesterday, believe that people are coming into this country to freeload on the NHS (but forget about the Club Med Britons, many of them elderly, who "freeload" on the health services of Southern European countries). People who believe that immigrants are costing the country money in benefits, when in fact immigrants are net contributors to the fiscal purse. People who believe that we should "shut the doors" to prevent "foreigners" coming in, taking our jobs and our houses, sponging off our benefits and our health service, breeding like rabbits and crowding out the "indigenous British". Where I live, a lot of people think like this. And since the financial crisis, more people have turned to this sort of nationalistic thinking. UKIP's message is reassuring for people who feel threatened: "This country is ours and we aren't going to share it with anyone". I sympathise, but I believe they are wrong.

Balkanisation doesn't create prosperity (if you don't believe this, just look at the Balkan economies). Sharing is what makes the world prosperous. Immigration benefits both the immigrants and the country that receives them: it may also benefit the sending country, if migrants remit funds to their families left behind. It is an effective way of improving the prosperity of everyone. The UK's high immigration level has, on balance, benefited it. Yes, there are always people who lose out: it is no accident that the most anti-immigration parts of the UK are areas with high unemployment and areas where local services have been put under strain by high levels of immigration. But this is a matter for fiscal policy to resolve. It is not a reason to close the doors.

UKIP is not only anti-immigration, it is also anti-EU. But membership of the EU has, on balance, benefited the UK. Just as I felt the Scots were wrong to seek to leave a successful union, I feel equally strongly that Britain would be wrong to leave the EU, even though by many measures it is less successful a union than the UK and is seriously threatened by the sheer idiocy of European politicians. The EU needs reform, not rejection. The UK has been instrumental in reforming the EU before and it can, and in my view should, do it again. Counting ourselves out, when we have such extensive trade and business links with the rest of the EU, would be madness.

In any sharing arrangement, however mutually beneficial, people tend to notice what they have to give up more than what they gain. When times are good, they tolerate this, though they may grumble. But when times are hard, people become resentful of giving up to others what they consider to be rightfully theirs. And they start to blame those others for their current difficulties. This is what drives nationalism. At its extreme, it destroys families, friendships and communities. It sets neighbour against neighbour, community against community, country against country. It is fundamentally destructive and it should be resisted, not welcomed.

This is why I will not vote for UKIP.
 Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-26407881650375575272014-10-08T22:54:00.000+01:002014-10-08T22:54:01.818+01:00QE has (nearly) ended, but how will the Fed unwind it?This post is about the US, obviously - though the same considerations apply in the UK as well.

The Fed's large-scale asset purchases (LSAPs, popularly known as QE) have been tapering off for some time now and are expected to end this month. But even though the Fed won't be making any new purchases, it will still have the largest balance sheet in history. All the securities it has purchased in three rounds of QE and Operation Twist are sitting on its balance sheet. And the banking system is awash with the excess reserves created as a consequence of those purchases.

 It is clear now that monetary base creation on this scale does not cause runaway inflation, as was feared by many. And it does appear to have prevented the US from experiencing severe deflation in the aftermath of the financial crisis. But as the US economy recovers, the question arises whether the Fed should start shrinking its balance sheet – unwinding QE.
So should it unwind QE, and if so - how?

Read on here.

Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-91512492272931019002014-10-07T05:24:00.000+01:002014-10-07T09:15:13.748+01:00When the Nile floods fail

I recently watched a BBC documentary on the fall of the Egyptian Old Kingdom. A thousand years of stability and prosperity came to an abrupt and chaotic end, apparently out of the blue. Most Egyptologists blamed dynastic change and political unrest. But something didn't quite add up. The end of the Old Kingdom coincided with terrible famines. To be sure, conflict can cause famines. But these were exceptional: thousands of deaths for years on end, people resorting to cannibalism, whole cities being abandoned.

New research cast doubt on the "political change" theory for the collapse of the Old Kingdom. Sudden catastrophic climate change occurred at that time, causing a mini Ice Age in Europe and widespread famine around the world. In Egypt it resulted in the total failure of the annual Nile floods, upon which the Egyptian economy critically depended. No wonder it collapsed. But it took archeological research over 4000 years later to identify the massive exogenous shock that caused the sudden collapse of a great civilisation. People at the time would not have known the cause. And they certainly would not have expected the Nile floods to fail. They had not done so for a thousand years.

The financial crisis of 2008 was certainly not a disaster of that magnitude. But it displays some similarities. The US housing market had been stable for 70 years. And because of its stability, the US economy had become critically dependent on it. Indeed not only the US economy, but since the advent of securitization also the global economy, had become dependent on the US housing market. Like the Nile in Ancient Egypt, it was the safe, familiar, predictable source of prosperity. Via its derivatives, the world bought into its safety and stability.

Then it failed suddenly and catastrophically. We still don't know exactly why, but the work of Mian & Sufi on the huge increase in debt backed by housing is important, and Steven Gjerstad & Vernon Smith's analysis of the root causes of the failure of the US housing market is impressive. Interestingly, among other things, Gjerstad & Smith show that there has been a housing market collapse of that magnitude before. Just as failure of the Nile floods had no doubt happened occasionally before the fall of the Old Kingdom (it has happened once or twice since), but had disappeared from memory, so Gjerstad & Smith show that failure of the housing market was a primary cause of the 1930s Great Depression. But we have forgotten about this. Time and wishful thinking create amnesia.

The people of the Egyptian Old Kingdom and the people of the modern global economy made the same mistake. They believed that something was predictable when it was in fact unpredictable, safe when it was risky, certain when it was uncertain. Nile floods vary in magnitude from year to year, and from time to time there are transient agricultural failures when the volume is too low. Small shocks of this kind can be accommodated within a stochastic model: there is short-term disruption but the economy soon returns to "normal". But total failure of what has previously been considered "safe" is traumatic. The Egyptian economy did not return to "normal". It entered a dark age that lasted perhaps a hundred years. And we, too, are now in a dark age: we do not yet know how long it will last.

Despite the clever models of modern economists, we are no better at predicting extreme events than our ancestors. We make the same mistakes, and frankly with much less justification. It took a thousand years of prosperity to lull the Egyptians into a false sense of security. But less than a hundred years ago we were living through the greatest destruction of physical, financial and human capital in recorded history. You would think we would be alive to the possibility of extreme events. But instead, we convinced ourselves that we had had fixed all the problems and there would never be extreme events again. We thought we could control (human) nature. How wrong we were. As ever, Hubris invites Nemesis.

Here's Olivier Blanchard of the IMF describing the hubris of mainstream US economics:

Until the 2008 global financial crisis, mainstream US macroeconomics had taken an increasingly benign view of economic fluctuations in output and employment......The benign view reflected both factors internal to economics and an external economic environment that for years seemed indeed increasingly benign.
The priests believed their own oracles because the Nile floods didn't fail.

Blanchard goes on to describe the limitations of economic oracles models and the unrealistic beliefs of economists:

The techniques were best suited to a worldview in which economic fluctuations occurred but were regular, and essentially self-correcting. The problem is that we came to believe that this was indeed the way the world worked......We in the field did think of the economy as roughly linear, constantly subject to different shocks, constantly fluctuating, but naturally returning to its steady state over time. Instead of talking about fluctuations, we increasingly used the term 'business cycle'. Even when we later developed techniques to deal with nonlinearities, this generally benign view of fluctuations remained dominant.

That small shocks could sometimes have large effects and, as a result, that things could turn really bad, was not completely ignored by economists. But such an outcome was thought to be a thing of the past that would not happen again, or at least not in advanced economies thanks to their sound economic policies.
The Nile floods can never fail because 1) our models haven't considered that they might (and we don't know how to model such an event) 2) sound economic policies will ensure that the Nile floods never fail.

You couldn't make it up.

The trouble is that economists are using essentially linear models to explain and predict a non-linear world. Hahn's description of Blanchard's models as "Mickey Mouse" is all too accurate. Economic models that only work as long as nothing goes seriously wrong are about as useful as a windsock in a typhoon. Something goes seriously wrong somewhere in the world quite a lot of the time. Nassim Taleb's criticism of statistical models used by economists is cutting:

The simple argument that Black Swans and tail events run the socioeconomic world - and those events cannot be predicted - is sufficient to invalidate their statistics.

 (Antifragile, p.305)

Blanchard admits that omitting the financial system from economic models was a major error. I totally agree. But incorporating it into existing models, or developing new systemic risk models to run alongside existing macroeconomic models as Blanchard suggests, won't solve the problem. As the story of the Egyptian Old Kingdom shows, tail events pose the biggest threat to our civilisation. But we can't model them. We can only model things we know about. Now we know about the systemic risks that the financial system poses, we can model them. And we can stay away from the dark corners where those systemic risks lurk. But those are not the only dark corners, and the problem is that we can be so focused on avoiding yesterday's dark corner that we fail to notice tomorrow's bigger and darker one.

We stumbled into the financial crisis because we were focusing on inflation control to the exclusion of all else. That was a reaction to the inflation of the 1970s, which we walked into because we were focusing on full employment to the exclusion of all else. That in turn was a response to the terrible unemployment of the 1930s, which we walked into because we were focusing on restoring historic value after a disastrous war. We walk blindly into crises because we are looking backwards, not forwards. Now we are focusing on systemic risks so much that we are in danger of wandering into another crisis. I have no idea what that crisis will be - maybe a war, maybe a global pandemic, maybe a catastrophic natural disaster. But of one thing I am certain: there will not be another major financial crisis until we have completely forgotten about this one.

And therein lies the problem with Blanchard's recommendation that we should "stay away from dark corners". The dark corners we really need to stay away from are those we don't know about. And modern economics has no credible way of modelling those, any more than the priests of Ancient Egypt did. Who in the Old Kingdom would have predicted the failure of the Nile floods? Would they have been believed? What changes could the Egyptians have made to their economy to enable them to survive such a disaster?

In fact Blanchard's argument is deeply flawed. He acknowledges that existing economic models are fundamentally inadequate, but then calls upon policy makers to set policy in such a way that existing economic models can still be used. This amounts to saying that policy makers can prevent tail events and Black Swans from happening. Sound economic policies will still prevent the Nile floods from failing......

It seems that Blanchard still believes that the economy can be made to work linearly if only policy makers get it right. I suppose it is hard for someone who has spent his life developing linear models of the economy to accept that the economy is fundamentally non-linear and the models are not fit for purpose. But economic models that are not fit for purpose should not be used. Because they lull people into a false sense of security, they are not only inadequate, they are dangerous. Better no model at all than one which steers you on to the rocks.

Our best guide to managing the disasters of the future is the experience of the past. Anthropology, archeology and ancient history, as well as the natural sciences, have much to teach us about how our world really works. It would help if mainstream economists were more aware of the limitations of their mathematical models and more willing to embrace heterodox thinking. But it would be better still if, as Piketty says, they gave up their "childish obsession with mathematics". The proper study of economists is not mathematics. It is natural and social history.

We need to learn from the past, but look to the future.

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-66497354406025724472014-10-05T22:56:00.002+01:002014-10-05T22:56:47.312+01:00Cameron's fiscal briberyThe Conservatives are promising to eliminate the entire deficit by 2018 and run an absolute surplus thereafter. And when the deficit is gone, they are promising widespread tax cuts. All of this if they are re-elected, of course.

But in this post at Pieria I look at what they would have to do to deliver these promises, and conclude that it's not at all clear how they can eliminate the deficit in that timeframe, let alone deliver tax cuts. There's a very large hole in their fiscal plans.

Frances Coppolahttp://firstname.lastname@example.com:blogger.com,1999:blog-8764541874043694159.post-90329858802365311542014-10-05T17:25:00.001+01:002014-10-05T17:25:19.001+01:00What's gone wrong at Wonga?Oh dear, Wonga.....

The UK's biggest payday lender, Wonga, is in trouble. Its profits  have fallen by 53%. But that is the least of its worries.
 Actually its biggest headache is the FCA. And Wonga is not the only payday lender in trouble. The whole industry is disintegrating. Find out why here.

Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-38191724776344521912014-09-30T18:02:00.000+01:002014-10-01T09:22:46.590+01:00Debt hysteriaI have been reading the Geneva 16 report, which came out yesterday. It's scary stuff. If you thought the world was reducing its debt pile - forget it:

The debt is still growing, but the world's GDP growth is slowing. Indeed as aggregate debt figures are usually quoted versus GDP, the two are connected. The debt pile grows faster as growth slows, simply because the denominator is falling.

The report looks at total debt/GDP - not just sovereign debt. This is refreshing: unrelenting media focus on sovereign debt as the principal problem misses the fact that in many countries the bigger burden is PRIVATE debt. However, it makes the figures even worse. Global debt, it seems, is a terrible problem.

None of this will come as a surprise to anyone, except perhaps the news that the world as a whole is actually accumulating debt rather than deleveraging. The deleveraging efforts by developed countries are being more than offset by the increasing debt of emerging markets, particularly China.

But as I read the report, I found myself wondering why there was no discussion of the other side of all this. Who are the owners of all this debt?

There is a simple answer to this. Households and corporations own this debt. It is the savings of households and the uninvested profits of corporations. Since the financial crisis, developed-country governments also own some of this debt, via their central banks. And in emerging markets, where governments, corporations and households can be very closely related, exactly who owns the debt can be unclear.

The global debt glut described in this report, and the global saving glut described by Bernanke, are the same thing. The authors note that growth has been slowing in developed countries since 1980. Indeed it has - and during that time capital ownership and indebtedness have been increasing in tandem, as we might expect since they are opposite sides of the same coin. The report cites numerous analyses that show high debt levels - public AND private sector - tending to impede growth as resources that could have been turned to productive investment are spent on debt service. Secular stagnation is as much a consequence of over-indebtedness as it is of excess capital.

The owners of debt think they have saved prudently and accumulated safe financial assets to insure them against an uncertain future. They believe that their savings are PAST income, stored. Bonds and bank accounts are simply their own money in another form. How very dare anyone suggest that their hard-earned savings should be lost in order to relieve the debt burden on others? Let the profligate debtors sort out their own problems. Prudent savers must be protected from loss.

But debt assets are not stored past income. They are actually claims on the FUTURE income of other people. When you buy bonds, you are spending, not saving. Your money goes to someone else and you have no right to its return. In return, you receive a promise. In a simple vanilla bond, the promise has two parts:

the promise that you will at some point in the future recover a nominal sum of money equal to the amount that you paid for the bond (note that this is not protected against inflation)

the promise of a stream of coupon payments that may or may not include compensation for expected inflation

There are huge variations on this theme, but they all boil down to the same thing. You spend money in the present in return for a promise of more money in the future.

The price of the bond is the value of that promise, and it depends on the trustworthiness of the borrower. If the borrower is regarded as trustworthy, the price is high. But if the borrower is regarded as untrustworthy - say they have recently failed to honour a payment promise - the price is low.

Similarly, bank accounts are not "your money, stored". They are a loan to the bank. You give the bank your money in return for a promise of future income (interest payments), and possibly other services such as safe storage and payments. You don't have any right to return of that money: what you have is a promise that if you ask for it back, the bank will honour your request if it can.

Risk of loss due to default is a intrinsic part of lending. When you lend money - whether by buying bonds, putting money in a bank account, or lending directly to someone - you accept the risk that the borrower will fail either to make the promised payments or return your money. Your judgement of someone's creditworthiness governs the amount you will charge them for this risk: the interest rate on an unsecured loan to someone with a good credit history is typically far lower than on a loan to someone with a recent history of payment default. A good credit history is a very valuable intangible asset for a borrower. Destruction of trustworthiness as a result of default amounts to a serious loss of net worth.

You may insure against risk of default by demanding that the borrower pledge some of their assets as surety: this of course what pawnbrokers do, but it is also the foundation of all property lending and most lending in financial markets. A mortgage is a loan on which the lender has the right to seize an associated asset (property) in the event of default. A repurchase agreement (repo) is a loan on which the lender has the right to seize a certain amount of securities in the event of default. Since the financial crisis, secured lending has become far more widespread due to loss of trust. The world runs on pawnbroking.

The problem with this, of course, is that the assets pledged as surety may fall in value, as we saw in the subprime crisis. When this happens, the risk of default may or may not rise, but the risk of losses in the event of default rises. Suddenly the loan or the bond is not worth as much. And insurance policies such as CDS aren't foolproof either: insurers can go bankrupt if there are too many claims, as AIG and the monoline insurers discovered. Nor is deposit insurance wholly trustworthy: Iceland legally defaulted on deposit insurance obligations to overseas customers of its banks. There is no such thing as a completely safe debt asset.

Nevertheless, the world's savings are largely held in the form of the world's debt, and people like to believe that their savings are safe. Because too high a debt burden increases the likelihood of default, many people - including the authors of the Geneva 16 report - think that governments should reduce sovereign debt. There are four principal ways of doing this:

by running persistent budget surpluses.

by reducing the real value of the debt through inflation

by reducing the debt/GDP ratio through higher growth.

by outright confiscation of savings (financial repression)

The authors dismiss the third of these as there is no evidence that higher growth can eliminate a persistent debt overhang. Historically, they note, the second (inflation) has most frequently been used to reduce post-war sovereign debt burdens, often in combination with the fourth (financial repression). The first is the preferred choice of governments such as Germany and the UK, but in practice running sustained budget surpluses is extraordinarily difficult to do and arguably pointless if the private sector is also highly indebted.

For a government to run a persistent budget surplus requires that it takes in tax more than it spends. In the absence of a trade surplus, this means extracting money from the domestic private sector, which understandably does not want to give it up.* Running a sustained budget surplus when there is a trade deficit amounts to financial repression. But even if there is a trade surplus, a government surplus means lower saving for the private sector than it might desire. The Geneva 16 report points to substantial debt overhangs in the private sector. When the private sector is highly indebted, saving can take the form of paying off debt. If the government runs a surplus, therefore, it impedes deleveraging in the private sector, and may even force some sectors (typically the poor) to increase debt. Reducing the sovereign debt not only reduces saving in the private sector, it comes at the price of continued and possibly rising indebtedness. The report rightly notes that transferring debt from the private to the public sector, as the US has done, isn't deleveraging. But transferring it back again isn't deleveraging either. And as transferring it back again is likely only to be possible with extensive sovereign guarantees (the UK's Help to Buy, for example), whose debt is it really, anyway?

Reports such as this, that look on debt as a problem and ignore the associated savings, fail to address the real issue. The fact is that households, corporations and governments like to have savings and are terrified of loss. Writing down the debt in which people invest their savings means that people must lose their savings. THIS is the real "shock, horror". This is what people fear when they worry about a catastrophic debt default. This is what the world went to great lengths to prevent in 2008. The problem is not the debt, it is the savings.

If we really wish to reduce the global debt pile, we must either accept that the households, corporations and governments that currently own that debt must take losses, or find alternative investment vehicles. The problem, of course, is that potential replacements are either illiquid (property), risky (equities) or volatile (commodities).

I don't think that trying to find substitutes among existing asset classes in any way solves the problem of "too much debt". Debt is dysfunctional. It places debtors in a one-down position in relation to creditors and creates moral hazard for both - creditors because they can claim their due even at the price of severe hardship for the other, and debtors because they believe creditors will balk at enforcing the terms of the contract. This dilemma is centuries old: in The Merchant of Venice, Shylock's "pound of flesh" was his rightful due when Antonio defaulted on his loan, but enforcing that right would have killed Antonio and made Shylock a murderer. Shakespeare rightly lampooned such a destructive relationship, but four hundred years later nothing has fundamentally changed: we might not murder defaulters, but we certainly make their lives extremely difficult. We need a fundamentally different way of viewing the investments that households, corporations and governments make.

I think the world is inching its way towards a model that replaces most debt with equity. We have already seen debt for equity swaps in distressed banks. Perhaps we need debt for equity swaps for sovereigns, too. Why not replace USTs with shares in USA Inc.? Let's stop calling it "sovereign debt". It's share capital. It's our collective investment in our own futures.**

Debt for equity swaps are also possible for households that have both assets and debt - an over-mortgaged homeowner, for example. Though I wouldn't want to take this too far. Someone whose net worth is less than their debts cannot offer a debt for equity swap. They are insolvent, and their debt needs to be written off, not restructured. We do not want to see a return of debt peonage. But there are other shared-equity models that could replace current debt-based ones: imagine, for example, well-off elderly sponsoring the tertiary education of young people and mentoring them during their studies and in the early part of their careers. Or, for that matter, young people investing in the care of the elderly in return for a share in their housing wealth.

Clearly there are limits to the equity-savings model: there would still be a role for some debt, and some losses will have to be accepted. But equity is (pardon the pun) a far more equitable investment than debt, since issuers and investors are equally responsible for the success of the investment. Yes, an equity investment is ostensibly higher risk than lending: but haven't we yet learned that the safety of debt is an illusion?

Indeed, is it not time we stopped trying to buy the illusion of safety to comfort ourselves at the expense of others? There is a world of opportunity out there. Let's stop cowering in the dark, get out into the sunshine and sow the seeds of the next Golden Age.

Related reading:

Deleveraging, what deleveraging? - Geneva 16 (CEPR)
The deadly quest for safety
Government debt isn't what you think it is
On risk and safety
The other side of debt

* To show this, here is the familiar sectoral balances equation:

(S-I) = (G-T) + (X-M)

where S = private sector saving, I = private sector investment, G = government spending, T = tax revenues, X = exports and M = imports. S-I is usually positive because not all saving is invested in the private sector: the residual is private sector holdings of government debt and money ("net financial assets"). At the present time, the excess of S over I is considerable.

Let's assume for the moment that trade is balanced, i.e. X-M = 0. It is easy to see that if the government runs a surplus, i.e. G-T < 0, S-I must decrease. In other words, the private sector's overall saving must reduce. If X-M > 0, then clearly S-I may not actually reduce. However, even with a positive trade balance, the government's surplus means lower saving for the private sector than would have been the case with a deficit. Therefore it is fair to say that the government's surplus is confiscation of the private sector's actual or intended savings - i.e. financial repression.

** I have to caveat this proposal. Issuing share capital to replace debt is not a solution to the Eurozone crisis. Since sovereign share capital is really only a version of currency, members of the Eurozone do not have the capacity or the authority to issue shares to replace debt. But there is no federal-level institution that could or would do this either. The denial of the right of sovereigns to issue their own share capital is one of the most poisonous aspects of the Euro project.

Frances Coppolahttp://email@example.com:blogger.com,1999:blog-8764541874043694159.post-69451988567524179452014-09-29T18:33:00.000+01:002014-09-29T18:33:26.838+01:00George Osborne's message to UK business: Pay People More! Though I'm not sure that's quite what he meant. And I don't think his audience understood it either. But it's the implication of his latest freeze on working-age benefits.......

"The UK's Conservative Party, like its Labour Party and most of the media, is obsessed with deficit and – ultimately – public debt reduction. Never mind dreadful productivity, falling real incomes, high private sector debt burdens, under-employment and inadequate investment: public sector borrowing is THE economic problem of our time. The deficit is TOO HIGH. Public spending MUST BE CUT. And George is the man to do it.

"Osborne informed the Conservative Party Conference that, if re-elected, he would freeze working-age benefits for two years. Assuming inflation remains positive, this means a real-terms cut in benefits not only for the unemployed, but also for those in work who are receiving a range of benefits including earned-income tax credits, housing benefit and child benefit. It's a further squeeze on real incomes for low- to middle-income earners. This went down very well with his predominantly grey-haired, well-heeled audience, the vast majority of whom would not be affected. Austerity is always popular when it affects somebody else......

Enter the hapless John Cridland of the CBI, who (unintentionally) lifted the lid on what this plan would mean for UK businesses. More than his job's worth to say so, though....

Read on at Forbes. Such fun.

Frances Coppolahttp://firstname.lastname@example.com


text:
Photos and Description of this 1 bedroom holiday apartment in Moldova - Apartment
Rent 1+1 apartment in Odessa
Location: The historic city center, Grecheskaya st., near the legendary Theatre of Opera and Ballet, which perform their work and singing stars such as Tchaikovsky, Rimsky-Korsakov, Rachmaninoff, Chaliapin, Sobinov, Utyosov, and many others.
Description: A stylish apartment for rent with magnificent contemporary design studio layout with built-in bar, the new model with Italian furniture and a full range of home appliances from leading manufacturers. (for 4 people)
The apartment is equipped with expensive appliances
Modern furniture and the apartment has two air conditioners
Cable TV, Wi-Fi.

subset: commoncrawl


text:
not primary but secondary but very far south - any questions you have more then happy to answer them
I know thats a lot of critera to meet but we'd like to contact a school who has been using it for while and are willing to give honest feedback.
I wont be making the call personally, it'll be the Office ladies who have been put in charge. So if any one is willing for them to ring and speak to someone who uses the system your end let me know or PM me.
Probaby could considered secondary but we'd prefer Primary.
not primary but secondary but very far south - any questions you have more then happy to answer them
Little-Miss (9th November 2010)
Same here, Secondary too. Have PM'ed you our phone number.
Secondary here too but happy to help if needed
Not at the school anymore but we had Cunningham's if you want a chat about it hun.
SIMS/Cunninghams, but secondary. I think you could do a lot better than a cunninghams solutions personally... given the amount of babysitting our cashless system needs.
Anyone want to send me their feedback of this system and tell me a little more about the setup of it? You can drop me a PM if you prefer!
Anyone want to post their feedback in public?
Ours is on hold at the moment (waiting for new budgets etc) but i think we will be going with Nationwide. Will update when we get further on.
Any update to this as I am looking for something similar for our primary school. But we are looking towards a cash
loader solution with pin or card.
There are currently 1 users browsing this thread. (0 members and 1 guests)


text:
Beating Boko Haram
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Isobel Coleman and Sigrid von Wendel explain why Boko Haram has targeted Nigeria's schools and offer recommendations for how the Nigerian government can more effectively fight the rising insurgency.
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Gayle Tzemach Lemmon says controversy surrounding Greg Mortenson, the builder of of girls schools in Afghanistan, threatens to overshadow and even discredit the heroines at the heart of his work.
See more in Education; Afghanistan; Women
An international education study showed the United States falling behind in reading, science, and math; Karen Kornbluh analyzes those findings along with other research about the state of American education.
See more in Education; United States
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See more in Education
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See more in Globalization; Education; United States
The authors argue that it is essential to begin working now to expand and establish rules and norms governing armed drones, thereby creating standards of behavior that other countries will be more likely to follow.
The author examines Pakistan's complex role in U.S. foreign policy and advocates for a two-pronged approach that works to quarantine threats while integrating Pakistan into the broader U.S. agenda in Asia.
The authors assess the political, security, and economic challenges facing U.S. policymakers in Afghanistan and evaluate a range of policy options.
Maximalist finds lessons in the past that anticipate and clarify our chaotic present, revealing the history of U.S. foreign policy in an unexpected new light. More
This clear and authoritative book presents a sweeping account of China's global resource quest and the unrivaled expansion of its economy. More
The story of the tragic and often tormented relationship between the United States and Pakistan, and a call to prepare for the worst, aim for the best, and avoid past mistakes. More
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