The riddle of Europe’s single currency with many values; The euro is not worth the same across the region – Spain and Germany have different currencies

April 14, 2013 6:36 pm

The riddle of Europe’s single currency with many values

By Wolfgang Münchau

The euro is not worth the same across the region – Spain and Germany have different currencies

AEuropean Central Bank survey shows that households in northern Europe have a much lower net wealth than those in southern Europe. Average German net assets per household are just under €200,000, while they are €300,000 in Spain and €670,000 in Cyprus. No, this not a typo.

German newspapers screamed that poor Germans are bailing out rich Cypriots. This interpretation is wrong but the truth behind these counter-intuitive findings is even more disturbing. What the survey shows is not wealth differentials but the de facto exchange rates between the eurozone economies. They are not measures of net wealth but of imbalances. And they are enormous. Read more of this post

Surging price of food blamed for anxiety disorder; Families with a household income of less than HK$10,000 a month are eight times more likely than others to suffer from inflation-linked anxiety

Surging price of food blamed for anxiety disorder

Winnie Chong

Monday, April 15, 2013

Families with a household income of less than HK$10,000 a month are eight times more likely than others to suffer from inflation-linked anxiety.

The finding by the Chinese University of Hong Kong points to food prices as the main worry among 84.8percent of 5,000 respondents to a survey who believe varying degrees of anxiety are set off by inflation.

One out of five with a family income of less than HK$10,000 month experience anxiety. And the risk of “generalized anxiety disorder” in those affected significantly by inflation is 7.9 times higher than for other income groups. Read more of this post

China’s smallest province – Hainan – became the first to defy the central government by declaring it has no intention to impose curbs on the property sector; “Our real estate market will fall apart if new cooling policies are implemented”

Hainan throws cold water on home curbs

Monday, April 15, 2013

China’s smallest province – Hainan – became the first to defy the central government by declaring it has no intention to impose curbs on the property sector.

“Our real estate market will fall apart if new cooling policies are implemented,” a local official told Shanghai Xinmin Evening News yesterday. Read more of this post

Singapore property market: From boom, to blowing bubbles

From boom, to blowing bubbles

Singapore’s property market has been framed as a success story. Prices have moved inexorably up since 2005 despite several rounds of cooling measures.

8 HOURS 45 MIN AGO

Singapore’s property market has been framed as a success story. Prices have moved inexorably up since 2005 despite several rounds of cooling measures.

The intervention of cooling measures is indicative that the Government has concerns that the market may be overheating, but also reflects political considerations from Singaporeans who feel they are being priced out of the “Singapore Dream”.

Property forms the largest asset within each household balance sheet. Judging by news reports of packed showrooms, it would seem that most Singaporeans feel positive about the future of the property market. Is the optimism justified or are they headed for a fall? Read more of this post

German ‘Wise Men’ push for wealth seizure to fund EMU bail-outs, marking a radical new departure for EMU crisis strategy

German ‘Wise Men’ push for wealth seizure to fund EMU bail-outs

Two top advisers to German Chancellor Angela Merkel have called for a tax on private wealth and property in eurozone debtor states to force the rich to fund rescue costs, marking a radical new departure for EMU crisis strategy.

Prof Bofinger told Spiegel Magazine that it was a mistake to target deposit holders in banks, the formula used in the EU-IMF Troika bail-out for Cyprus where those with savings above €100,000 at Laiki and Bank of Cyprus face huge losses

By Ambrose Evans-Pritchard

7:55PM BST 14 Apr 2013

Professors Lars Feld and Peter Bofinger said states in trouble must pay more for their own salvation, said arguing that there is enough wealth in homes and private assets across the Mediterranean to cover bail-out costs. “The rich must give up part of their wealth over the next ten years,” said Prof Bofinger. The two economist are members of the Germany’s Council of Economic Experts or “Five Wise Men”, a body that advises the Chancellor on major issues. There is no formal plan to launch a wealth tax but the council is often used to fly kites for new policies.

Prof Bofinger told Spiegel Magazine that it was a mistake to target deposit holders in banks, the formula used in the EU-IMF Troika bail-out for Cyprus where those with savings above €100,000 at Laiki and Bank of Cyprus face huge losses. “The canny rich in southern Europe just shift their money to banks in Northern Europe to escape seizure,” he said. Read more of this post

The Secret To Sweden’s Brilliant Economic Comeback

The Secret To Sweden’s Brilliant Economic Comeback

Michael Moran, GlobalPost | Apr. 13, 2013, 9:20 AM | 8,250 | 49

STOCKHOLM, Sweden — As recently as the early 1990s, the idea that Sweden could be a model of anything except socialism gone awry would have been laughable.

Sweden’s debt-to-GDP was staggering when compared to other advanced industrial nations, topping 70 percent in 1992 and headed ever upward. Nearly 60 percent of all economic activity was generated by either government or government-owned enterprises. Meanwhile, the full employment mantra of its socialist model was coming apart at the seams as government simply could not borrow or print enough money to bridge the gap. The Swedish jobless rate shot from less than 2 percent in 1988 to more than 10 percent in 1993. Even renowned global brands — Saab, Volvo and Electrolux — were failing. By 1993, Sweden’s banks were effectively bankrupt.

But Sweden today barely resembles its former self. As the Economist magazine wrote last year, “The streets of Stockholm are awash in the blood of sacred cows.” A century of pursuing political neutrality and aggressive egalitarian socialism has more recently been leavened by economic reforms and market liberalizations, lighting a fire under the economy. After a modest dip during 2008, the economy has outperformed the US and even Germany since. Most importantly, the growth has not led to the kind of spike in income inequality that accompanied growth spurts in many other western countries since the 1980s. Sweden’s reforms caused inequality of income to grow over the past 20 years. As measured by the Gini coefficient, the world’s standard measure of household equality, Sweden went from a .21 to a .25 – still the best in the developed world. For the US, the numbers are staggering. From a Gini rating of .31 in 1975, the current ranking (adjusted for taxes and benefits) is .38.

How did Sweden do it? The answer is a mix of carefully introduced competitive pressures on services previously run by government, from schools to health to pensions, and an intelligent and forceful response to a banking crisis in the early 1990s that had a lot in common with the one that followed the collapse of Lehman Brothers. Read more of this post

‘Every excuse in the book’: When insurance companies don’t pay up

‘Every excuse in the book’: When insurance companies don’t pay up

Garry Marr | 13/04/13 | Last Updated: 13/04/12 2:12 PM ET
It’s the fear every consumer has buying insurance. When it comes time to make a claim, your insurer will have some reason not to pay out.

Garry Marr: In Canada, the dependence on this expensive source of credit is a closely guarded secret

The doomsday scenario isn’t just fantasy, it’s reality, say many people who fight insurance companies on a regular basis.

The issue was highlighted this week when a Saskatchewan judge awarded Luciano Branco $5-million, saying the actions of his insurance companies established “a pattern of abuse” — Justice Murray Acton noting he wanted to send a message to the industry.

The case could be a template for anyone paranoid about getting his or her claim cashed out. Read more of this post

Venture capitalists rethink big bets on China amid dismal returns

Venture capitalists rethink big bets on China

By Peter Delevett, San Jose Mercury News

Posted:   04/14/2013 09:32:20 AM PDT

Two years ago, it was one of the hottest areas in tech investing. Venture capitalists were lining up to throw money at it. But now, after disappointing IPOs, investors are fleeing. Social networking? Nope. China. In the past few years, virtually every venture shop worth its salt set up operations in the Middle Kingdom, home to one of the world’s fastest-growing economies and a billion-strong consumer marketplace. Defying the decades-old maxim that venture capitalists wouldn’t invest outside a 30-minute drive of Menlo Park’s Sand Hill Road, firms here and elsewhere rushed to join Chinese venture houses or send homegrown partners to China. But last year, venture capitalists largely abandoned China, in large part because of underwhelming stock offerings by Chinese firms on both domestic and U.S. exchanges. Read more of this post