Britain scores badly for economic inclusivity - WEFChinese GDP set to miss target - presidentFTSE 100 hits new record highPound slumps on renewed fears of hard Brexit ahead of May speechBanking sector under pressure after agency cuts Italy’s credit rating 2.54pm GMT The pound has stabilised a little after its plunge to a three month low earlier in the day. But the fears of a hard Brexit, prompted by comments from the UK government ahead of prime minister Theresa May’s speech on Tuesday, mean that sterling is still down around 1% against the dollar.It is currently down 0.8% at $1.2078 against the dollar and 0.6% against the euro at €1.1384. 2.38pm GMT The UK Treasury has welcomed the upgrade to its forecasts by the IMF. It said:The fundamentals of the UK economy are strong, and today’s IMF forecasts confirm their view that the UK was the fastest-growing major advanced economy last year. We have reduced the deficit by almost two thirds, cut taxes for millions of working people, and employment is at a near-record high. The Autumn Statement reaffirmed the government’s commitment to return the public finances to balance as soon as practicable, while providing flexibility to support the economy as we exit the EU. Continue reading...
Germany’s powerful finance minister is praising conservative French presidential candidate Francois Fillon’s economic program as strong and says he hopes that far-right leader Marine Le Pen never becomes president in France.
Mexican President Peña Nieto accepted the abrupt resignation of his powerful Finance Minister, who was instrumental in setting up the controversial meeting with Donald Trump.
PARIS (Reuters) - Michel Sapin, a long-time political ally of President Francois Hollande who was his labor minister, was named to the powerful finance minister post on Wednesday.
A year which showed that central planning works (for the fifth year in a row and probably can continue to "work" at least a little longer - in the USSR it surprised everyone with its longevity before it all came crashing down), is drawing to a close. This is what has happened so far on the last trading session of 2013. As market participants head in to the New Year period, volumes are particularly thin with closures being observed across Europe with only the CAC, IBEX and FTSE 100 trading out of the major European indices, with German, Switzerland, Italy and the Nordic countries are already closed. The FTSE and CAC are both trading in the green with BP leading the way for the FTSE earlier in the session after reports the Co. have asked a federal appeals court to block economic loss payments in its settlement of the Gulf of Mexico oil spill. European stocks rise, with real estate, travel & leisure leading gains. Retail shares underperform as Debenhams slumps following its IMS. A number of major markets will close early today. The euro falls against the dollar. Fixed income market are particularly quiet with the Eurex being shut. Whilst Gilts are seen down this morning following on from yesterday’s short-covering gains. Market recap S&P 500 futures little changed at 1835.3 Stoxx 600 up 0.2% to 327.8 US 10Yr yield up 2bps to 2.99% German 10Yr yield little changed at 1.93% MSCI Asia Pacific up 0.1% to 141.3 Gold spot up 0.5% to $1202/oz EUROPE 18/19 sectors rise, led by real estate, travel & leisure Greek October Retail Sales Fall 1.9% y/y Gainers: CRH +1.9%, Taylor Wimpey +1.8%, Persimmon +1.8%, Berkeley Group +1.8%, Land Securities +1.6%, Endesa +1.7%, SBM Offshore +1.5%, Telenet Group +1.4% Decliners: Debenhams -10.1%, Banco Comercial Portugues -2.7%, International Personal Finance -2%, Essentra -1.9%, Petrofac -1.9%, Delta Lloyd -1.5%, Inchcape -1.5%, Lonmin -1.4% ASIA Asian stocks rise, with Chinese shares leading gains. Australian shares underperform. MSCI Asia Pacific up 0.1% to 141.3 Nikkei 225 up 0.7%, Hang Seng up 0.3%, Kospi up 0.5%, Shanghai Composite up 0.9%, ASX down 0.1%, Sensex up 0.1% All 10 sectors rise, led by energy, utilities Singapore Economy Grew 3.7% in 2013, Prime Minister Lee Says S. Korea’s Dec. Consumer Prices Rise 1.1% Y/y Gainers: BBMG Corp +6.6%, GOME Electrical Appliances +5.9%, Synnex Technology International +5.2%, China Gas Holdings +4.2%, Rural Electrification Corp +4.1%, Power Finance Corp +4.1%, Byd Co +4%, NWS Holdings +3.1% Decliners: Vangaurd International -3.9%, MMC Corp -3.4%, Parkson Holdings -2.8%, TSRC Corp -2.8%, Taiwan Mobile -2%, Newcrest Mining -1.9%, China Resources Cement -1.9%, Idea Cellular -1.9% Overnight news bulletin from Bloomberg Treasuries decline in the last trade day of the year, 10Y yield holding near 3%, closed at 1.757% on Dec. 31, 2012. Treasuries delivered a total return of -2.3% this year, according to BofAML’s U.S. Treasury Index, the first yearly loss since 2009 as Fed scales back bond buys U.S. investment-grade corporates lost 1.3% this year while high yield bonds returned 6.8%, also according to BofAML indexes; the S&P 500 rallied 29%, while the DJIA is headed toward its biggest annual gain since 1996 The yuan rose 2.9% this year, its fourth annual gain in Asia’s best performance for 2013; JPY has fallen 17.4% vs USD while EUR has gained 4.3% Gold is headed for the biggest slump in three decades and the first annual loss since 2000; silver is poised for the worst annual performance since 1981 Latvia becomes the 18th member of the euro area tomorrow even as opponents of the currency switch outnumber proponents two-to-one as public expectations for accelerating inflation mount, opinion polls show Fourteen pot shops are scheduled to open in Denver tomorrow, just over a year after Colorado and Washington voters made their states the first to legalize recreational use; Colorado expects $67m in tax revenue Sovereign yields mostly higher. Nikkei closed for holiday; Japan reopens Jan. 6. Shanghai +0.9%. U.S. equity-index futures little changed. WTI crude declines, copper little changed, gold rises Asian Headlines The PBoC said that China's economy and consumer prices are basically stable and reiterated it is to pursue prudent monetary policy, according to a statement on the Q4 monetary policy committee meeting. Nomura forecasts 2014 year-end Nikkei 225 average at 18000 and added that the Nikkei 225 could reach 25000 in 2018. EU & UK Headlines German Chancellor Merkel says that eliminating the budget deficit is a priority of her third four-year term. (Newswires) Separately, the German finance minister has said Latvia's joining of the Eurozone will structurally strengthen the monetary union. Liquidity in the Eurozone area has risen from EUR 200bln to EUR 274.8bln following yesterday's MRO and LTRO operations alongside the ECB's failure to sterilise the aimed quantity in the SMP programme. ESM has said that the Spain assistance program has expired with a successful exit. Barclays pan-Euro agg month-end extensions: +0.03y Barclays Sterling month-end extensions:+0.07y US Headlines Fed's Fisher said his votes on the central bank's policy panel in 2014 will reflect his concern that the Fed's bond buying risks stoking inflation and exposing the institution politically. Barclays US Tsys month-end extensions:+0.07y Equities The CAC and FTSE 100 are seen in the green albeit with thin volumes. In terms of stock specific news, BP have asked a federal appeals court to block economic loss payments in ITS USD 9.2bln settlement of the 2010 Gulf of Mexico oil spill unless they can be directly linked to the disaster. UK retailers are under pressure after Debenhams' profit warning, with the likes of Sainsburys and Marks and Spencers consequently seeing some downside. Elsewhere, pre-market it was reported for Sanofi that France may allow substitutes for Co.'s Doliprane, France's most prescribed medicine which led to EUR 276mln of health-system reimbursements in 2012. FX In FX markets, EUR is seeing some downside amid signs liquidity in the Eurozone area rising from EUR 200bln to EUR 274.8bln following yesterday's MRO and LTRO operations alongside the ECB's failure to sterilise the aimed quantity in the SMP programme. GBP has managed to benefit from GBP/USD holding above the 1.6500 level. Overnight, JPY continued to strengthen which saw USD/JPY test the 105 handle to the downside. USD/JPY has steadily fallen since yesterday after failing to test 105.50 to the upside where there are large option barriers and a key Fibonacci level. However, there has been little in the way of movement for the pair in the European session. Commodities Production resumes at Libya's 25,000 bpd Messla oil field, state-owned National Oil says on its website. China may buy more Iranian oil next year as a state trader is negotiating a new light crude contract that could raise imports from Tehran to levels not seen since tough Western sanctions were imposed in 2012. Residents of a small town in North Dakota were urged to evacuate after a BNSF train carrying crude oil collided with another train on Monday, setting off a series of explosions and fires, the latest in a string of incidents that have raised alarms over growing oil-by-rail traffic. Berkshire Hathaway Inc. will swap about USD 1.4bln in shares of Phillips 66 for full ownership of the energy firm's pipeline-services business, at billionaire Warren Buffett expands his bet on oil transportation. SPDR Gold Trust said its holdings fell 0.37% to 798.22 tonnes on Monday from 801.22 tonnes on Friday.
Former Italian prime minister says he will not give up leadership of centre-right despite expected expulsion from parliamentSilvio Berlusconi has vowed to stay at the centre of Italian politics despite his expected expulsion from parliament over a fraud conviction, and accused leftwing judges of plotting against him to pervert democracy.In a long-awaited television address shortly before a Senate committee is expected to take the first step in expelling him, the media magnate made no mention of his previous threats to bring down the left-right coalition government of Prime Minister Enrico Letta because of the conviction."I will always be with you, at your side, expelled from parliament or not. It is not the parliamentary seat that makes a leader," the 76-year-old billionaire said. He called for centre-right voters to rally behind the relaunched Forza Italia party, with which he first stormed into politics in 1994.The supreme court last month confirmed a four-year jail term, commuted to one year, on Berlusconi for a giant fraud at his Mediaset television empire. He is expected to go into house arrest or do community service instead of going to jail.He seemed to be resigned to being ejected from parliament but said he would not give up his leadership of the centre right, calling for freedom-loving Italians to "wake up … rebel, become indignant, react and make yourself heard".Berlusconi said he was "absolutely innocent" of tax fraud, and the judiciary had "transformed itself into a rival state power, capable of influencing the executive"."They want to get rid of me by judicial means because they have been unable to do so with democracy," said Berlusconi, who was also ordered by the supreme court on Tuesday to pay almost half a million euros to a business rival over a disputed takeover battle.Berlusconi wants to seize the initiative despite his conviction by replacing his current People of Freedom (PDL) party with Forza Italia to revitalise centre-right voters and appeal to young people.He promised "less state power, less public spending, less taxes. With the left in power it would be the opposite."Berlusconi did not mention the government, but PDL secretary Angelino Alfano has said his leader would make a final decision on its survival only after the vote in the Senate, where Letta's Democratic party (PD) says it will support his expulsion.The Senate committee is expected on Wednesday night to reject a recommendation by a senior PDL member of the panel, Andrea Augello, to confirm Berlusconi as a senator.It will then elect a leftwing replacement for Augello – there is an anti-Berlusconi majority in the committee – who will draw up a recommendation to expel him. That should be voted on by early October after which the case goes to the full Senate for a final decision expected by mid-October.Political sources say Berlusconi appears to have listened for now to PDL doves, business allies and members of his family who believe a crisis would badly rebound on the centre-right and would also damage his media empire financially.Italy is mired in its worst postwar recession and Berlusconi risks taking the blame for irresponsibly worsening the crisis if he provokes more instability over his legal problems. Opinion polls show a large majority of Italians against snap elections.The depth of Letta's problems was underlined on Wednesday when a government source said the finance ministry was considering delaying the target of a balanced structural budget from 2013 to 2014.The eurozone's third largest economy is lagging behind many of its peers in climbing out of recession, partly because Letta's government is too divided to pass vital reforms.Any of the Senate votes could still trigger a political crisis although Berlusconi may be waiting until November, when he can paint it as a battle against moves by the centre-left to raise taxes as part of next year's budget discussions.Berlusconi is also thought to be trying to find a way to blame the fractious PD, which is in turmoil in the runup to its party congress in the autumn, when charismatic Florence mayor Matteo Renzi is expected to be elected party leader.Silvio BerlusconiItalyEurope theguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
Making deals is a powerful way for executives to create value, and an important skill in any executive’s arsenal. To explore what goes on behind the scenes, I sat down with legendary deal maker Irv Rothman, who has made tens of thousands of deals with aggregate value of over $100 billion, many in tech finance. Rothman, who is CEO of HP Financial Services, a $4 billion company with 1,500 employees focused on doing deals, had a new concept I hadn’t heard of: Gutsball, which he outlines in his new book: OUT-EXECUTING THE COMPETITION: Building and Growing a Financial Services Company in Any Economy.
Last week’s news that Dallas Mavericks owner Mark Cuban put $450K into the $750K seed round of consulting startup HourlyNerd should make traditional consultants nervous. Founded only last year by a team of current MBA students, HourlyNerd is a prime example of the disruption in consulting that my co-authors and I discuss in our new article, “Consulting on the Cusp of Disruption” in HBR. HourlyNerd is an online marketplace that allows MBA students from the top 20 U.S. business schools and select international schools to bid on consulting projects that have been posted by prospective clients, mostly small business owners. The students charge as little as $10 per hour though participants with the loftiest consulting pedigrees can command upward of $100 per hour. HourlyNerd profits by taking a cut of the fees from both the client business and the student providing the service. Think of it as eLance for consultants instead of programmers, writers and designers, or as eBay for consulting problems. HourlyNerd represents one of the newest business models in consulting, the facilitated network business, which is structured to enable the exchange of services between clients and freelance consultants. These businesses have powerful disruptive potential because they can provide consulting at a fraction of the cost of traditional models, largely because they do not need to carry expensive fixed costs like recruiting, training, consultant “beach” time, and expensive real estate. HourlyNerd, by encouraging students to bid against each other, likely drives down the hourly cost of projects even more. Like so many disruptive businesses (think of the classic example of the steel minimills), HourlyNerd is entering at the basement door of the consulting industry by targeting small companies. These are clients for whom HourlyNerd is a godsend, because they want the consulting help but can’t afford hefty consulting fees of traditional firms. Even if they could afford the fees of say, a BCG or Bain, these small businesses are unlikely to garner the attention of consulting partners at these top firms. Those partners, incentivized to focus on the biggest clients, are more than happy to yield the small business segment to someone else. As such, HourlyNerd is essentially competing against non-consumption. Even if MBA student-consultants can’t provide the same breadth and depth of analyses and counseling that a traditional, highly resourced consulting team might, it doesn’t matter because what HourlyNerd consultants are doing is “good enough” for a client whose alternative is often not getting the work done at all due to a lack of talent, time or combination of both. And you could argue that in some ways, HourlyNerd actually fits the job that those small business clients need done better than a traditional firm because of their flexibility and the easy-to-use online platform that demystifies and democratizes the process of hiring a consultant. While HourlyNerd is making a lot of headlines today, it’s not necessarily a new idea. Eden McCallum, for example, is a U.K. based consulting firm started by a pair of McKinsey alumni. Their business assembles lean project teams consisting of pre-vetted freelance consultants (all alumni of top consulting firms) on an as-needed basis to serve large corporate clients. Business Talent Group is a similar business based in the U.S. that also incorporates former operating executives regularly in its project teams. Both firms have been very successful and are competing more and more with the incumbent consulting firms; Eden McCallum boasts a client list that includes the likes of Tesco, GSK and Lloyd’s. Yet, when Eden McCallum was founded in 2000, it targeted start-ups and small business client just like HourlyNerd. Over time will HourlyNerd, like many other disruptors across industries, want to move up-market to bigger and bigger clients, attracted by the greater profits those relationships promise? Will they have an extendable core that allows their disruptive business model to scale without replicating the cost structure of more traditional competitors? Will they need to expand the schools they recruit MBA consultants from to keep up with growth and possibly dilute their brand and value proposition as a result? These are all important questions for the founders of HourlyNerd to consider, but for now, they probably want to celebrate their successful first round of financing (not to mention, get ready for the start of their second year at business school).
If there was one deal that epitomized the last credit bubble, aside from the Blackstone IPO of course, it was the ginormous, $45 billion 2007 LBO of TXU, now Energy Future Holdings. And while the tide for the New Abnormal credit bubble has yet to expose its megalevered monoliths swimming fully naked, as for now corporations have opted for graduated semi-MBOs in the form of ever larger stock buybacks (although as rates rise this too day of reckoning is coming), the time to pay the piper for the last credit-fuelled binge has arrived and inevitable bankruptcy of this landmark deal is now just days away. From the WSJ: "Energy Future Holdings Corp. has begun sounding out banks for financing to help it operate during expected bankruptcy proceedings, which could come as soon as November for the Texas power producer." The losers (in addition to the thousands of company employees who were and are about to be laid off): all those who invested equity in hopes nat gas prices would rise, and even looser credit would mean a quick and profitable flip in the next 3-5 years, namely KKR, TPG, as well as Lehman (RIP), Citigroup, and Morgan Stanley. These banks were also instrumental in underwriting (and holding on to) the loans and bonds that would fund this monster deal, which ultimately led to unprecedented writedowns for all those involved. The irony: the same companies that provided the LBO financing, will also now serve as the source of the company's $2+ billion DIP loan, so all is well with the world. The Dallas-based company—formerly called TXU Corp. and once at the center of the largest-ever private-equity buyout—within the last week or so started discussions with Citigroup Inc., J.P. Morgan Chase & Co. and other banks in pursuit of more than $2 billion in so-called debtor-in-possession financing, said people close to the deliberations. The discussions are in early stages, and the size and the structure of the loan could change, these people said. Such loans give companies under bankruptcy protection additional money to fund operations and other obligations and are usually negotiated about four to six weeks before a Chapter 11 filing. The company, whose org chart was a 5 by 7 foot nightmare for many a analyst, will first see its TCEH subsidiary which sells power in the wholesale market file its $32 billion in debt first. As for Energy Future, which carries more than $40 billion in debt, the WSJ says it is "racing to negotiate a prepackaged bankruptcy plan with creditors at that subsidiary and another one in an effort to avoid a prolonged stay under Chapter 11 protection. If successful, the creditors would agree to a reorganization plan ahead of a bankruptcy filing, setting Energy Future up for a speedier trip through bankruptcy court. Without a prepackaged deal, the company would have to negotiate a restructuring plan after seeking bankruptcy protection, a process that could lengthen its stay in court." The successful resolution of a prepack depends on the various stakeholder entities, most of which will be equitized, ultimately agreeing on just where they see the industry, and the price of nat gas going. After all, it was the plunge in natural gas prices after the LBO to record lows that led to $18 billion in losses in the five years following the LBO, and coupled with unprecedented leverage, resulted in what now appears to be the inevitable largest bankruptcy filing since 1980. Luckily, the investing community has learned from its past mistakes and is no longer loading up quality companies with epic amounts of debt. Actually... ... Nevermind. But who cares: after all it is all other people's money.
Editor's Note: Welcome to Crash Week! This week marks five years since the bankruptcy of Lehman Brothers and the financial crisis that followed. A lot has happened since then, but how much has changed? All week long we will be exploring this question from a variety of economic angles. Below is the second piece from Institute for New Economic Thinking Senior Fellow Adair Turner. You can also check out the first entry from Institute for New Economic Thinking President Rob Johnson. Stay tuned for contributions from our grantees, community members, leaders, and other prominent economic thinkers! Five years after the collapse of the U.S. investment bank Lehman Brothers, the world has still not addressed the fundamental cause of the subsequent financial crisis – an excess of debt. And that is why economic recovery has progressed much more slowly than anyone expected (in some countries, it has not come at all). Most economists, central bankers, and regulators not only failed to foresee the crisis, but also believed that financial stability was assured so long as inflation was low and stable. And, once the immediate crisis had been contained, we failed to foresee how painful its consequences would be. Official forecasts in the spring of 2009 anticipated neither a slow recovery nor that the initial crisis, which was essentially confined to the United States and the United Kingdom, would soon fuel a knock-on crisis in the euro zone. And market forces did not come close to predicting near-zero interest rates for five years (and counting). One reason for this lack of foresight was uncritical admiration of financial innovation; another was the inherently flawed structure of the euro zone. But the fundamental reason was the failure to understand that high debt burdens, relentlessly rising for several decades – in the private sector even more than in the public sector – were a major threat to economic stability. In 1960, U.K. household debt amounted to less than 15% of GDP; by 2008, the ratio was over 90%. In the U.S., total private credit grew from around 70% of GDP in 1945 to well over 200% in 2008. As long as the debt was in the private sector, most policymakers assumed that its impact was either neutral or benign. Indeed, as former Bank of England Governor Mervyn King has noted, “money, credit, and banks play no meaningful role” in much of modern macroeconomics. That assumption was dangerous, because debt contracts have important implications for economic stability. They are often created in excess, because in the upswing of economic cycles, risky loans look risk-free. And, once created, they introduce the rigidities of default and bankruptcy processes, with their potential for fire sales and business disruptions. Moreover, debt can drive cycles of over-investment, as described by Friedrich von Hayek. The Irish and Spanish property booms are prime examples of this. And debt can drive booms and busts in the price of existing assets: the U.K. housing market over the past few decades is a case in point. When times are good, rising leverage can make underlying problems seem to disappear. Indeed, subprime mortgage lending delivered illusory wealth increases to Americans at a time when they were suffering from stagnant or falling real wages. But in the post-crisis downswing, accumulated debts have a powerful depressive effect, because over-leveraged businesses and consumers cut investment and consumption in an attempt to pay down their debts. Japan’s lost decades after 1990 were the direct and inevitable consequence of the excessive leverage built up in the 1980’s. Faced with depressed private investment and consumption, rising fiscal deficits can play a useful role, offsetting the deflationary effects. But that simply shifts leverage to the public sector, with any reduction in the ratio of private debt to GDP more than matched by an increase in the public-debt ratio: witness the Irish and Spanish governments’ high and rising debt burdens. Private leverage levels, as much as the public-debt burden, must therefore be treated as crucial economic variables. Ignoring them before the crisis was a profound failure of economic science and policy, one for which many countries’ citizens have suffered dearly. Two questions follow. The first is how to navigate out of the current overhang of both private and public debt. There are no easy options. Paying down private and public debt simultaneously depresses growth. Rapid fiscal consolidation thus can be self-defeating. But offsetting fiscal austerity with ultra-easy monetary policies risks fueling a resurgence of private leverage in advanced economies and already has produced the dangerous spillover of rising leverage in emerging economies. Both realism and imaginative policy are required. It is obvious that Greece cannot pay back all of its debt. But it should also be obvious that Japan will never be able to generate a primary fiscal surplus large enough to repay its government debt in the normal sense of the word “repay.” Some combination of debt restructuring and permanent debt monetization (quantitative easing that is never reversed) will in some countries be unavoidable and appropriate. The second question is how to constrain leveraged growth in the future. Achieving this goal requires reforms with a different focus from those pursued so far. Fixing the “too big to fail” problem is certainly important, but the direct taxpayer costs of bank rescues were small change compared to the damage wreaked by the financial crisis. And a banking system that never received a taxpayer subsidy could still support excessive private-sector leverage. What is required is a wide-ranging policy response that combines more powerful countercyclical capital tools than currently planned under Basel 3, the restoration of quantitative reserve requirements to advanced-country central banks’ policy toolkits, and direct borrower constraints, such as maximum loan-to-income or loan-to-value limits, in residential and commercial real-estate lending. These policies would amount to a rejection of the pre-crisis orthodoxy that free markets are as valuable in finance as they are in other economic sectors. That orthodoxy failed. If we do not address the fundamental fact that free financial markets can generate harmful levels of private-sector leverage, we will not have learned the most important lesson of the 2008 crisis. Originally appeared on Project Syndicate
After saying "nein" to a grand black-red CDU/CSU + SPD coalition led by CDU (Angela Merkel), SPD party candidate Peer Steinbrück changed his mind and said he was willing to form such a coalition. Political Poker Revisited I discussed the reasons for the switch in Political Poker in Germany. Was Steinbrück lying then, or now? Or both? Is this a game to win votes? Or a real change of heart? Or no change of heart, just a lie the entire time? Quite frankly, I do not know. What I do know is that, in general, politicians will lie cheat and steal to stay in power. Should the opportunity present itself, would Steinbrück enter a coalition with Die Linke even though he said he wouldn't? Why not? He said he would not enter one with CDU/CSU and changed his mind. Might not he do so again? Might this all be a game of political poker? Grand Coalition or Grand Opposition? Today, Der Spiegel discussed the power play in Possible SPD coalition with Merkel: Gabriel's power issue. The translation is particularly difficult, but this is what I have. Here Steinbrück, There Steinbrück, Everywhere Steinbrück In the last days before the election, the SPD chancellor candidate has switched to ubiquity. Radio, market places, and the "Halli Galli circus". The point is to organize as many votes as possible for his party. Then Steinbrück will be gone. What's next falls on SPD Chairman Sigmar Gabriel. "We fight for red-green, nothing else," Gabriel says. however, some party members think, recognize a certain sympathy for a black-red alliance with him to. Not Quite So Simple Gabriel is facing difficult weeks. After the election, the SPD leader may need to lead his party into a grand coalition. But this variant is hated by many party members. How will this all go well? In many parts of the SPD-Black Red is hated. Gabriel knows this, he has a good feel for the party spirit. Internally, SPD announced it will involve members in some form on a decision on the next coalition. But how? Gabriel runs the risk that the party makes him a spanner in the works. [Mish note: a spanner is a German instrument for widening springs]. No less complicated is the question of how a new edition of the grand coalition would actually look like four years later. A grand coalition would shift the center of power of the SPD to a cabinet post in Merkel's administration, but the Chancellor outshines everything. How does a puppet role help the party in the next election? And what talents does Gabriel have? He is not qualified for finance minister and does not find Merkel's stance on many issues appealing in the first place. So it's foreign minister? In the the Foreign Office, he's out of the domestic political debate. Germans might be able to sleep a little quieter, but the party without him would have more difficulty distinguishing themselves from the Union. No optimal conditions for the next election. Everything Complicated In general, a grand coalition would make the next election problematic with a Red-Red-Green (SPD + Greens + Left) coalition even less conceivable than now. Can Gabriel afford that? Grand Coalition or Grand Discontent, Mistrust and Disrespect? Reader Bernd, who sent me the above link wrote... Hello Mish, An interesting article by "Der Spiegel" about the possible power struggle within SPD regarding a Grand Coalition (CDU/CSU/SPD). Der Spiegel is usually extremely well informed about SPD and the parties' inner feelings and structure. Der Spiegel article finds it difficult to fathom a Grand Coalition, because the majority of SPD leaders, members and Parlamentarians dislike the possibilty immensely and dislike Mm Merkel so intensely. The article does not show a way out, but tells the reader: if a grand coalition comes about at all, it will be one of discontent, mistrust and disrespect. Not a good omen for the work that lies ahead in Europe. Bernd Grand Coalition More Complicated Than It Looks Everything is more complicated than it looks. If a "Grand Coalition" is in the works, don't expect it to be very stable. And this is why CDU/CSU hopes to attain a majority without depending on any alliances. If AfD and FDP do not make the 5% threshold, CDU/CSU can get an outright majority. But if AfD totals 7% or more it is going to be very difficult if not impossible. CDU/CSU will then have to form a coalition with someone. What poison will it be? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
With a year to go before the referendum, Yes Scotland and Alex Salmond's SNP are confident of winning over sceptical ScotsThis Saturday, campaigners for Scotland's independence will be on the march. Central Edinburgh will be awash with the blue and white St Andrew's cross, the dramatic yellow and red of the erect lion rampant and Yes Scotland placards from the Highlands, urban Glasgow and the prosperous farmlands of Moray and Aberdeenshire.The organisers of the event, which closes with a rally on the crest of Calton Hill with its panoramas of the Scottish capital, are being coy about the numbers they expect. But many thousands are due, dwarfing last year's inaugural independence march of perhaps 10,000 activists that passed through the city centre.The march will mark "a year to go" – the 12 months of increasingly frenetic and intense campaigning until Scotland holds its first and perhaps only referendum on independence on 18 September 2014.Its keynote speaker will be Alex Salmond, the first minister and Scottish National party leader whose landslide victory two years ago in the Scottish parliament elections delivered the referendum that had been, until now, an 80-year-old dream for his party.Key to that result is a far more significant event in the nationalist calendar. In November, perhaps close to St Andrew's day at the month's endSalmond will publish his government's white paper on independence.That thick document, perhaps 500 pages long, will be his prospectus for independence, his campaigner's bible, covering an independent Scotland's options on its currency and taxation, welfare and pensions, the role of North Sea oil, defence and the EU, and its economic and social choices.Salmond has spoken of wanting a great Scottish literary figure to write for it, to sketch out a vision of his newly revitalised nation. But critical to next September's result is the document's credibility and honesty on factual detail, particularly on the economy.Over the past seven months, his government has faced a series of detailed questions on currency, welfare, oil and pensions from Westminster's Scotland Analysis project, led by the Treasury. Whitehall officials say the SNP white paper willface forensic scrutiny.They assert that Salmond's model of independence – an "indy lite" brew where Scotland would have a currency union with the UK, use the Bank of England in London, share welfare services and need hefty UK subsidies to help his renewable energy revolution, would leave Scotland highly dependent on goodwill and collaboration with the rest of the UK and mean painfully strict controls over its public finances.And despite the 80-year quest by the SNP to convince them, opinion polls suggest Scotland's 4 million voters remain as sceptical or as opposed as ever. A series of recent surveys suggest as many as 65% of voters would say no next September, with a gap of around 20-30% between no and yes.Yet behind those headline figures are more subtle trends that are emboldening the pro-independence campaigners of Yes Scotland and the SNP. They show that perhaps 40-50% of voters are genuinely undecided, floating or willing to switch sides.Blair Jenkins, chief executive of Yes Scotland, believes this shows his side are within reach of a win. Voters are being won over by the prospects of change. "We're very confident that the race is very close now and such movement is towards yes and at some point, the polls will catch up with yes," he said.Here the SNP and Yes Scotland are happily exploiting public discontent with the Tory-led government in London, particularly over welfare cuts such as the bedroom tax, and are building up support amongst leftwing, working-class voters and political activists.Equally, Salmond's government has produced convincing evidence that Scotland's economy is as healthy as the UK's, and quite capable of prospering independently – if the challenging questions about taxation and spending are answered.It is here where Salmond and Yes Scotland are able to find leverage, suggesting that the Tories' "austerity fetish" and spending cuts are alien to Scotland's more inclusive, socially liberal values. So the potential for another Tory victory at the 2015 general election will be an influential factor in next September's vote.That adds to the pressure on Ed Miliband and the Scottish Labour party – which despite Salmond's successes at Holyrood still commands a million votes in UK elections, the most of any party – to counter Salmond's proposals and offer Scotland a convincing alternative vision.Repeated opinion polls show Scottish voters want the Holyrood parliament to have more powers but Labour's moves to answer those demands are halting and undermined by internal political disputes. Its launch of an early draft of that alternative plan was badly bungled.It too needs a convincing alternative, and likely one agreed in advance of the referendum with the Tories and Liberal Democrats. Labour seems more intent on attacking Salmond on domestic Scottish issues, not on the far greater challenge of independence.That is in large part why Alistair Darling, the former Labour chancellor and chairman of the cross-party pro-UK campaign Better Together, warned in a Guardian interview last week that complacency was his campaign's greatest enemy. The anti-independence movement, he said, "has a fight on its hands".Scottish independenceScotlandAlex SalmondScottish politicsSeverin Carrell theguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
Many hospitals, including the Cleveland Clinic, are implementing a variety of strategies to improve the patient experience —an issue that’s rapidly becoming a top priority in health care. The Accountable Care Act now links performance related to patient-experience metrics to reimbursement. For the first time, the pay of hospitals and eventually individual providers will be partly based on how they are rated by patients. Few disagree on the importance and the need to be more patient centric, but what exactly is the “patient experience”? A 2012 industry survey asked top hospital leaders (CEOs, COOs, and others) what was necessary to improve the patient experience. The top six recommendations included: new facilities, private rooms, food on demand, bedside-interactive computers, unrestricted visiting hours, and more quiet time so patients could rest. There was one problem with them: They were not based on a systematic examination of what most patients really wanted. In other words, hospital executives wanted to focus on what they felt were important drivers of the patient experience but didn’t know for sure. To truly improve the patient experience, it is important to get the patient’s perspective. National trends in data on the U.S. patient experience suggest that some groups of patients regularly score their experiences higher than others. For example, surgical patients tend to give hospitals higher ratings than patients admitted with chronic medical conditions. Surgical patients may view or interpret their experience differently. Consider a patient who underwent surgery for a broken leg. If the patient receives high-quality health care (her leg was fixed, her questions were answered, she feels better, and she understood what was being done to her), she may not care whether she believed her providers were treating her with courtesy or respect or showed her compassion. Now consider a patient who consistently uses the health care system — someone with multiple, chronic medical conditions that remain incurable and are only treatable from a maintenance standpoint. If he doesn’t feel that his caregivers are compassionate, that may heavily influence his overall perception of the experience. Since his relationship with health care givers is more prolonged (or permanent), he may need more of the “human side” of caring. Why is it important for caregivers to know the drivers of patient experience? First, not being clear about the drivers can often be a significant barrier to launching a patient-experience initiative. Second, knowing the drivers helps leaders identify the most effective ways to achieve quick victories. Third, the economics of the levers is quite different. Improving some of these dimensions (such as providing private rooms) would be cost prohibitive for most hospitals. Others (such as improving communication between patients and caregivers) could reduce the overall cost of providing health care and also improve medical outcomes. Faced with the task of understanding the drivers of patient experience, health care organizations have taken — and can take — multiple approaches to discerning the drivers of patient experience. Below, we review briefly some of the innovative approaches to better understand patient needs that have been tried in various organizations, including the UCLA Medical Center in Los Angeles, Methodist Hospital in Houston, St. Joseph’s Hospital in Phoenix, and the Cleveland Clinic. Create patient advisory councils. A very simple but effective approach in many contexts is to identify a group of patients that can act as the customers’ “voice” within the organizations. It is easy for an organization to lose touch with its customers’ evolving needs. Today, Voice of the Patient Advisory Councils are used at the Cleveland Clinic to ensure that the organization does not lose track of patients’ needs. Councils have assisted with redesigning waiting rooms, providing advice on improving the admission guide, and helping managers better understand communication needs in the hospital. Dig deeper into patients’ experiences. Hospitals can use data from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) — the patient-satisfaction surveys conducted for the Centers for Medicare and Medicaid Services — to compare how their performance compares with that of other U.S. hospitals. Hospitals can leverage the HCAHPS data better by both digging deeper into the data and paying attention to anecdotal comments and complaints. This allows hospitals to understand not only how their patients feel about their experience but also why they felt the way they did. Using such a process, the Cleveland Clinic found that patients were more satisfied when they had caregivers who smiled more. But when the Clinic dug deeper, it discovered that patients were not concerned about whether about their caregivers had happy expressions per se; rather, they were concerned when doctors’ and nurses’ had stern expressions because they interpreted them to mean that caregivers were concealing problems from them. This caused anxiety and, as a result, adversely affected patient satisfaction. Have leaders make regular rounds. At UCLA Medical Center, as well as other hospitals across the country, senior leaders (both clinical and non-clinical) make a habit of wandering throughout the hospital and talking to patients, their families, and caregivers (including physicians, nurses, food-service workers who deliver the meals, and environmental-service workers who clean the rooms. These rounds need to be done on a regular basis and at least once a month. Such direct contact provides leaders with a firsthand understanding of patient needs. This is important for two reasons. One, it is easy for leaders — even clinical leaders in hospitals who have direct patient contact in the normal course of performing their jobs — to lose touch with patient needs. Two, leadership rounds are an important means of exposing non-medical leaders in finance, operations, and other areas of the hospitals to the front lines of patient care. Finally, by regularly seeing and hearing with their own eyes and ears what’s happening on the front lines of patient care, leaders can help identify problems and opportunities for improvement. Tell stories. There is nothing more moving than the incredible stories that patients relay about their experiences in the hospital. Sharing these stories — both good and bad — is important to employees. The good stories highlight the importance of their roles and demonstrate the incredible gratitude that patients have for their work. The bad stories often help explain the negative feelings about the hospital that some patients have. (At the Methodist Hospital in Houston, CEO Marc Bloom opens every meeting of the board of trustees by relaying a patient’s account of his or her stay. Sometimes it was good and sometimes bad. At the end, he reminds everyone that “this is what we do.”) We are big fans of analyzing data to understand and improve patient experience. However, presentations that rely on excessive amounts of data can be dry and uninspiring. Conveying the same message through a well-told story can be powerful and inspirational. Also, storytelling can help strengthen caregivers’ emotional bonds with the organization and their jobs, which, in turn, can make it easier to engage employees in the organization’s mission to deliver world-class care to patients. Leaders of health care organizations in recent years have focused primarily on delivering superior medical outcomes at lower costs. In addition, they also need to focus on improving the patient experience. A poor experience compromises a hospital’s reputation among patients and other physicians and adversely affects employees’ engagement levels. Moreover, with the changes in the reimbursement policies in many countries, it can have a negative impact on a hospital’s economics. But improving the patient experience will be hard to do without a better understanding of what patients really want. We hope others will offer comments and share what they’ve learned from their own efforts to understand what drives patient satisfaction. Follow the Leading Health Care Innovation insight center on Twitter @HBRhealth. E-mail us at [email protected], and sign up to receive updates here. Leading Health Care Innovation From the Editors of Harvard Business Review and The New England Journal of Medicine Leading Health Care Innovation: Editor’s Welcome Why Health Care Is Stuck — And How to Fix It Getting Real About Health Care Value
china_man_silhouette.jpg Home Page News Page What's behind China's "Trial Of The Century"? Photo Credit: ChameleonsEye / Shutterstock.com In the United States, Bo Xilai’s “trial of the century” was reported as a spicy cocktail of sex, power and violence. The real story however is about the pitfalls of rapid economic development, generational change in politics, and the progress of the rule of law in China. In the United States, Bo Xilai’s “trial of the century” was reported as a spicy cocktail of sex, power and violence. The real story however is about the pitfalls of rapid economic development, generational change in politics, and the progress of the rule of law in China. See Also links url: http://www.economywatch.com/economy-business-and-finance-news/chinas-obsession-with-stability.29-03.html Title: China’s Obsession With Stability: Stephen Roach See Also type: Reference Featured Report That You Might Like: Country Analysis Report: China, In-depth PESTLE Insights read more
Deputy prime minister wins controversial motion saying party was right to back public spending cuts to reduce deficitNick Clegg has persuaded his party to stick to the path of austerity after promising he would argue for higher taxes on the rich and reject Conservative plans for spending cuts going into the next election.The deputy prime minister won a controversial motion saying the Liberal Democrats were right to sign up to reduce the deficit through cuts to public spending.After two hours of intense debate at the party's conference in Glasgow, members backed Clegg and rejected an amendment that proposed relaxing the "fiscal mandate" – the coalition's plan to reduce Britain's debts and deficit.A string of Lib Dem heavyweights lined up in favour of the leadership's position, including Vince Cable, the business secretary. He had been expected to stay away from the debate, but decided to turn up at the last minute after his absence was interpreted as a failure to back Clegg over the economy.The party leader appeared to win round a sceptical audience by promising that Lib Dems would argue in 2015 for "more fair taxes" and reject any Conservative argument for reducing the deficit purely through spending cuts.Summing up the debate, Clegg urged his members to "be brave" and "stick to the plan"."None of that ties our hands on tax and spend," he said. "I am against 100% spending cuts. We will go into the next election in favour of more fair taxes … Nothing prevents us from having independent policies."He added: "Please be careful with what you wish for. If we start messing about with the big goalposts stuck in the ground that set the frame … we will destroy jobs and decrease prosperity. The only people who will welcome what we do today if we adopt these amendments are George Osborne and Ed Balls."Clegg's motion recognised Britain's "difficult financial position" and "the dangers of failing to bring the public finances under control".It is part of a Lib Dem strategy to "own the recovery" and stop the Tories taking all the credit for the economy starting to improve.However, the Social Liberal Forum, a group on the left of the party, challenged Clegg's argument by tabling two amendments. One called for the economy to be "rebalanced", which would mean borrowing more money. Another wanted a total removal of borrowing limits for councils to boost social housing and a wider remit for the Bank of England to boost employment and incomes.Naomi Smith, an activist from the Social Liberal Forum, said the party leadership was guilty of an "ideological merger" with the Tories on economic policy.She was cheered as she told members that the Lib Dems should not "collude" with Osborne on cuts to public services.Moving one amendment, Smith said the "heart and soul" of the Lib Dems knew that neither the Tories nor Labour offered the best economic policy."Unamended, this motion commits us to Osborne's fiscal mandate," she said. "But what does that fiscal mandate actually mean? It doesn't simply mean reducing the deficit. It also means we collude and condone Osborne's plan under which the deficit is reduced 100% by cuts to vital public services and capital spending, and nothing at all from tax."We must not vote for an ideological merger with the Conservative party's economic policies. We make policy and then we, conference, empower our leaders to broker compromises in coalition."Speaking for the motion, Steve Webb, a pensions minister, said the amendments could not be acceptable because they amounted to rewriting the coalition's economic plans."We have the risk of a famous Liberal Democrat trait of snatching defeat from the jaws of victory. We stuck with it 12 months ago, when we were in difficult times; we stuck to our guns. We have been proven right. We have suffered the political pain of austerity."Tim Farron, the Lib Dem president, made a forceful speech urging members not to retreat from austerity "at the 11th hour".He said it would be a "huge irony" if the party backed away from its "staggeringly tough decisions" just as economic recovery is starting to take hold.Farron said there was "nothing progressive about bottling out of hard decisions to save our finances".Sir Malcolm Bruce, the party's former Treasury spokesman, said the amendments supporting a relaxation of the fiscal mandate were "dangerous and irresponsible", while Sharon Bowles, a Lib Dem MEP, argued that loosening fiscal rules would be like "going on a binge in the middle of a diet"."Every cookie means more time in the gym. Now is not the time to say change the fiscal envelope," she said.However, dozens of grassroots members argued that the unamended motion would mean the Lib Dems going into the next election backing the economic arguments of the Tories and Osborne.Summing up, David Howarth, a former MP, said the amendments were not "leftwing and Trotskyist" in tone but "centrist" and moderate. He called on the party to reject the economics of Osborne.Paul Holmes, another former MP, also urged the party to support social housing and write its own manifesto, not "a coalition manifesto".However, members rejected all amendments that were not backed by the leadership, including those on council borrowing limits and the Bank of England.The leadership's motion agrees to look at pooling council borrowing powers and to examine ways of encouraging the construction of more social housing.Later on Monday, the Lib Dems were due to launch a fresh attempt to kickstart the social housing market. Don Foster, the communities minister, will say people or groups who want to build their own homes can apply for cash from a £65m fund if they build "mini-estates" that include social housing as well.Liberal Democrat conference 2013Nick CleggLiberal DemocratsLiberal Democrat conferenceLiberal-Conservative coalitionConservativesEconomic policyEconomicsAusterityVince CableRowena MasonPatrick Wintour theguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
An increasing cacophony of prognosticators are of the status-quo sustaining belief that stock and bond prices will rally next week when the Fed announces the taper. As Scotiabank's Guy Haselmann notes, the thinking goes that alleviation of the uncertainty will cause a "relief rally." However, as Haselmann notes, since the Fed has provided 5 years’ worth of massive stimulus that has launched asset prices to record highs, the commencement of the withdrawal process is significant... and any relief rally that ensues next Wednesday should be sold. His thoughts extend from Indonesian central bank's dilemma to European political instability, and the next stage of the Syrian crisis... Via Scotiabank's Guy Haselmann, I find it quite interesting that so many people I speak with believe that stocks and bonds prices will rally next week when the Fed tapers. Many believe that the alleviation of the uncertainty will cause a “relief rally”. Some mentioned that the Fed will still be buying $60 to 75 billion of assets which is aggressive given that the economy seems plodding along. Most mentioned how they believe the Fed’s message will emphasize the modest amount of the reduction and the fact that rates will not be raised “for a considerable period”. I believe that since the Fed has provided 5 years’ worth of massive stimulus that has launched asset prices to record highs, the commencement of the withdrawal process is significant. We are slowly headed toward a period where asset prices will have to trade at prices justified by their fundamentals and those prices are lower than current levels. I believe that any relief rally that ensues next Wednesday should be sold. Random Thoughts As many as 1/2 million Catalans participated in mass rallies in support of breaking with Spain to create an independent Catalan state. Polls now indicate that more than half the regional population supports such a move. There are renewed calls for a referendum on the matter. Obviously, Madrid is firmly opposed. Catalons seem so “fed up” that proposals centered-around keeping more tax revenues will likely be insufficient to halt the momentum. France’s government admitted that it will overshoot its budget deficit target this year by a large margin. Finance Minister Moscovici lowered the government’s growth forecast from 1.2% to 0.9%. The government said it will increase spending cuts while easing the tax burden to try to ease finances back toward EU-mandated objectives. In his annual State of the EU address, European Commission President Barroso, warned that political instability is the biggest threat to Europe’s recovery. He also said that governments were still at risk of punishment by the financial markets if they veered from economic reforms recommended by Brussels. With these comments in mind, it should be noted that both Portugal and Greece have had defections from government coalitions by Parliamentarians objecting to continued austerity measures. The European Commission plans to question Ireland, the Netherlands, and Luxembourg about their tax relationship with individual companies (such as Apple). The move will add political pressure on countries already under pressure from international efforts to tackle tax avoidance. The schemes involve complex structures that exploit loopholes in tax laws. Basically, subsidiary companies are set up in tax friendly countries, but with parent companies that are tax-resident in havens such as Bermuda. The Netherlands for example has 23,000 “letterbox companies”, companies that have little or no real business activities in the country. These ‘companies’ are managed by 176 licensed trust firms. In 2011, these companies made €8 trillion worth of transactions – 13x Dutch GDP. Brazilian President Rousseff has demanded an explanation directly from Obama on suspicions of spying by the NSA. She believes that the NSA spied not only on Brazilian telecoms and Petrobras, but also on her and her staff. She has threatened to cancel an October State visit if not addressed. The Indonesian central bank raised rates for the second time in a fortnight and for the 4th time since June in an attempt to support the plummeting rupiah. The country is faced with additional problems such as decelerating growth, rising inflation, and nervousness surrounding next year’s presidential election which is the first transfer of power in a decade. Indonesia is one of many emerging market countries (with a current account deficit) impacted by capital flight flows when ‘taper-talk’ began. The Syrian situation is a diplomatic mess with few if any good outcomes. Markets believe a US military strike will not happen, but the Russian plan to secure and destroy Syrian chemical weapons is – shall I be so emphatic and use the word – impossible. They possess 1000 tons in 50 locations. The Pentagon estimates that it would take 70,000 troops to secure them. What happened to “no boots on the ground”? Estimates range from 3 to 10 years to destroy them. Do we trust Assad to cooperate? Is this all possible in the midst of a raging civil war whose battles lines look like a patchwork of warring fiefdoms? “I have come to the conclusion that politics are too serious a matter to be left to the politicians.” – Charles DeGaulle