Economics

Se debe tomar en serio el crecimiento de la eurozona

May 16, 2017 Jim O'Neill

LONDRES – He estado fuera del mundo de los pronósticos económicos y las finanzas internacionales económicas durante más de cuatro años, pero gran parte de lo que aprendí durante mis 30 años trabajando a tiempo completo en ese campo aún influye la forma cómo veo el mundo. Una lección aprendida es medir el desempeño económico y financiero de una entidad según la forma como se compara con el potencial subyacente de dicha entidad y con la valoración de mercado de su desempeño. La aplicación de este enfoque a las principales economías da lugar a algunas puntualizaciones – y posibilidades – sorprendentes.

Para empezar, contrariamente a la creencia popular, el crecimiento mundial no ha sido especialmente decepcionante hasta ahora en esta década. Desde el año 2010 al 2016, la producción mundial aumentó a una tasa anual promedio del 3,4%, según el Fondo Monetario Internacional. Puede que esta tasa sea inferior al promedio del período 2000-2010, pero es más alta que la tasa de crecimiento en las décadas de los ochenta y los noventa – décadas que no suelen considerarse como económicamente decepcionantes.

Una mirada más detallada al desempeño de determinados países ofrece mayor información. A pesar de atravesar por traumas políticos significativos, Estados Unidos y el Reino Unido se han desempeñado como se esperaba. China, India y Japón también han crecido en niveles cercanos a su potencial. Como evento raro se debe puntualizar que ninguna de las principales economías ha superado drásticamente su potencial.

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0 Comments on this paragraph, 18 Comments on this article

Henk Crop May 22, 2017

You think, assimilated, refugees could compensate for the declining population.
Indeed, many EU countries have a birthrate that is far below the 2,1 child per woman to maintain a constant population.
However assimilation is not easy. Most refugees are moslims and they do not want to assimilate. But if non-western immigrants are willing to integrate It will cost, on average, about Euro 100.000 per person.
That raises the question would it not be more logic to give this Euro 100.000 to young families ? So they will have early in life a stable basis to support children ? You also save on all the cultural frictions that come along with integration.
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Mauricio Duran-Loriga May 22, 2017

Jim, you have earned a referral to a mental health institution. A single specialist would not cope with you. Email me for the details.

What you purposefully call refugees are nothing but illegal migrants, even if they come from war zones, I am afraid.

Sadly enough, Syrians for example are trying to reach out to countries that are directly responsible for their horrendous fate.

Europe as we know it is unsustainable for its own citizens. Adding more population means less cake for everyone. Unless we break up the Euro. In that case, some member countries could welcome large amounts of foreigners.

If Merkel is re-elected, it may be her last election due to age. She even looks totally bored and absent in public appearances. Dont expect she will ask Germans to transfer their savings to the PIIGS anytime soon.
If Schulz is elected, it will be a fiscal bloodbath that will sink Germany and precipitate outlandish money printing, savage tax appropriation, for no output growth and for a historic contraction in internal aggregate demand.

Macron. Poor little man. I wish him well. France has had fiscal deficits for 50 years in a row. History tells us that French politicians are champions at spending with both hands and no remorse. France ranks 7th position as worldwide serial defaulter.

If you truly expect a sufficient majority at the Assemblée in next June elections for Macron, I could recommend a good wine. Macron was elected President only on a reject vote to Le Pen.

Beware French political divide (as Spanish look like following the same path) can end up in a political mess like Italy 1980-2000.

France and USA latest Presidential elections have one thing in common. Big Cities vote one candidate. The other candidate is voted by the rest of the country. Nobody seems to care.
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CH R May 21, 2017

The easier answer for European growth and demographic problems seems to be: many more children.
Children cause more demand for physical goods and services, should thus shift the mix of output away from financial products (bought to cope with unbalanced pension-demographics), they give joy and meaning (and a lot of short nights, admittedly) and can help turn around 'unbalanced' social systems (well with a lag of roughly two generations since the beginning of the 70s). That would require more child-friendly policies as in the Scandinavian contries and more disposable income for the future parents-to-be. So either more net transfer income and / or lower average tax rates and / or increased net incomes at purchasing power parity.

Increased income could be helped by increased innovation per se and reduction of constraints to innovation and 'production'. More children should also give a better outlook for the future and thus also make innovation more worthwhile. Seems like a no-brainer.
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Per Kurowski May 21, 2017

There are two economic growths. One is the autonomous real growth. The other is the growth that has been brought forward by having been financed by means of net public debt and ECB’s QEs and that will have to be repaid in the future. Take away the last growth, and Europe’s growth looks awful.

http://subprimeregulations.blogspot.com/2016/12/must-one-go-on-hunger-strike-to-have.html
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B Wilds May 19, 2017

Time may be running out for the Euro-zone, is it time to throw in the towel? For years this poorly constructed union has been criticized for being unable to resolve difficult issues but rather kicking the can down the road, postponing and delay have become the standard operation procedure for which they are known.

Euro-zone banks are neither "fixed" or the system healthy. The Greek economy remains an issue. Italy is deeply in debt, unemployment is high in many countries especially among the youth, and refugees continue to flood in adding more stress to an overburdened social system. Now the people of both France and Germany are indicating they may of had enough. The article below delves into these problems.

http://brucewilds.blogspot.com/2017/02/euro-zone-woes-continue-enshrouded-by.html
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Alistair Newton May 18, 2017

Surely this must be winner of the competition to write the most outlandish spoof essay. Either that or the writer has managed to don several pairs of rose tinted spectacles at the same time.

It is true that Macron might be able to gain control of the French Assembly, particularly with the help of the centre right, but actually implementing sufficient reforms to satisfy Frau Doktor Merkel is quite another matter.

Unemployment in France, particularly amongst the young, is already extremely high, and the recession which would be initiated by the necessary austerity measures would only make this much worse, and would likely lead to a complete shutdown of rail and major road transport by the CGT and other unions.

I very much doubt that Macron has back bone of Mrs T, and even she would likely have balked at a complete country wide shutdown.

But of course, I was forgetting, Macron could just resort to the banlieu to fill the gaps and keep the country moving!
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Steve Hurst May 17, 2017

http://www.independent.co.uk/news/world/europe/refugee-crisis-migrants-bangladesh-libya-italy-numbers-smuggling-dhaka-dubai-turkey-detained-a7713911.html

Bangladesh is now the main country of origin for EU bound migrants, nothing to do with refugees. Some estimates put the bona fide refugee numbers at 3% of the total turning up in Italy. Italy the appear to be incapable of returning the majority. If importing Bangladeshis is the answer to the EU's economic problem why not import them direct
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Peter Lintner May 17, 2017

"With refugees – many of them young – continuing to pour into Europe ..."

They are not refugees, but illegal economic migrants, and yes most of them are young, and also uneducated and unskilled. How a young unskilled, uneducated african or afghan illegal migrant is going to boost european economy is beyond me to comprehend. Maybe author could give us a little bit of more details how this miracle is going to happen.
- Peter Lintner May 17, 2017
  
  There are 60 thousand of so called refugess in Greece, how does it help the greek economy? 200k africans are camping in Italy, any boost for italian economy from this?
  
  The whole idea of mass immigration of unskilled, uneducated africans and asians boosting european economy is laughable. Only intelectually challenged can come up with the idea like this, and apparently ex GS bankers are precisely that. Just think of another intellectulally challanged ex-GS banker, Mario Draghi, who comes up with the idea that wealth can be printed, and so he does printing 2 trillion EUROS out of thin air.
  
  Both of these experiments, the forced migration and money printing are about to fail, and miserably so. Wait and see.
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Peter Schaeffer May 16, 2017

The economic arguments against MENA (Middle-East, North Africa) immigration to Europe are overwhelming to be sure. However, even without the disastrous economics, mass immigration to Europe would still be a catastrophe. The immigrants coming to Europe have brought devastating social problems with them. Immigrant crime is rampant. Immigrant slums are (now) commonplace. Assimilation is marginal at best. Of course, welfare state exploitation utilization is near universal.

For better or worse, the typical European criminal is now an immigrant (or the offspring of immigrants). Apparently, a majority of serious crimes in Europe are now committed by first and second generation immigrants. Because of liberal/left-wing cover-ups, actual statistics are hard to come by. However, Muslims are (apparently) a majority of prison inmates in most European countries. Given that prison inmates have typically committed the worst crimes, that should tell you something.

Of course, as bad as the actual crimes are, the cover-ups are even worse. Repressive political correctness has presented any honest discussion of immigrant crime throughout Europe. In the UK, the Rotherham rapes, kidnappings, and sexual slavery of children went on for 16 years before they were revealed. Apparently, protecting the fantasy PC worldview is more important than protecting children. Quote

“The Rotherham, England, child sex scandal offers a powerful example. An official inquiry found that for sixteen years, 1997-2013, a ring of Muslim men sexually exploited – through abduction, rape, gang rape, trafficking, prostitution, torture – at least 1,400 non-Muslim girls as young as 11. The police received voluminous complaints from the girls' parents but did nothing; they could have acted, but chose not to.”

In Germany, the Cologne attacks were completely covered up until the story broke out into social media. Without social media, the Cologne attacks would have been totally unreported by Germany’s lugenpresse (Lying Press). Germany’s media specially refused to report the murder of Maria Ladenburger after she was killed by an Afghan “refugee”.

However, imported crime is just one of woes immigrants bring with them. For better or worse, mass immigration has brought Europe massive racial/ethnic slums. Europe didn’t have racial/ethnic slums a generation ago. Now it does. They are just one of the bitter fruits of mass immigration. How bad are these slums? Take a look at the articles below.

“Molenbeek broke my heart - A former resident reflects on his struggles with Brussels’ most notorious neighborhood” by Teun Voeten (in Politico)

“Does Europe Have No-go Zones?” by Richard Pipes

The truth is that mass immigration has brought Europe a tsunami of crime. Does Europe really need to import criminals? Mass immigration has brought Europe racial/ethnic slums that have little or no precedent in European history. Does Europe really need imported slums? The sane answer to all of these questions is no.
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Peter Schaeffer May 16, 2017

"Of course, tapping the potential of refugees requires assimilating them to European societies and economies"

Actually, Europe has done a great job of assimilating refugees... They have enthusiastically embraced the welfare state and radicalism of all kinds.
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Peter Schaeffer May 16, 2017

The idea that refugees could aid European growth is so absurd that only someone from Goldman Sachs could believe such errant nonsense. Europe has decades of experience with migrants from MENA (Middle-East, North Africa). The results after several decades are poor. They aren't going to change now (for the better that is, they may well get worse).

See “Sweden’s ugly immigration problem” by Margaret Wente

“So how are things working out in the most immigration-friendly country on the planet?

Not so well, says Tino Sanandaji. Mr. Sanandaji is himself an immigrant, a Kurdish-Swedish economist who was born in Iran and moved to Sweden when he was 10. He has a doctorate in economics from the University of Chicago and specializes in immigration issues. This week I spoke with him by Skype.

“There has been a lack of integration among non-European refugees,” he told me. Forty-eight per cent of immigrants of working age don’t work, he said. Even after 15 years in Sweden, their employment rates reach only about 60 per cent. Sweden has the biggest employment gap in Europe between natives and non-natives.

In Sweden, where equality is revered, inequality is now entrenched. Forty-two per cent of the long-term unemployed are immigrants, Mr. Sanandaji said. Fifty-eight per cent of welfare payments go to immigrants. Forty-five per cent of children with low test scores are immigrants. Immigrants on average earn less than 40 per cent of Swedes. The majority of people charged with murder, rape and robbery are either first- or second-generation immigrants. “Since the 1980s, Sweden has had the largest increase in inequality of any country in the OECD,” Mr. Sanandaji said.

It’s not for lack of trying. Sweden is tops in Europe for its immigration efforts. Nor is it the newcomers’ fault. Sweden’s labour market is highly skills-intensive, and even low-skilled Swedes can’t get work. “So what chance is there for a 40-year-old woman from Africa?” Mr. Sandaji wondered.”

Like it or not, but stopping mass migration/invasion is the core challenge facing Europe and Jim O'Neill is on the wrong side.
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Karl Barber May 16, 2017

"Three economies have, however, genuinely disappointed: Brazil, Russia, and the Eurozone."

We've read about the latter, but not about Brazil and Russia. Remember the BRIC?
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jagjeet sinha May 16, 2017

THE RUBICON THAT MACRON CANNOT CROSS
The mastery with which Chancellor Merkel has manouvred The Euro - would have made Bismarck proud.
Unless President Macron can marshal The Euro to advantage - Napoleon is watching out for another Waterloo.
The revolt in Greece over Austerity and the revolt in Great Britain over Unlimited Migration will be soon forgotten.
If Macron Mandate believes that The Third Revolt in Germany over Transfer Union is warranted - as Wisdom@Paris is suggesting.
Yet the keys to growth across Europe - especially its bottom half - are seemingly intertwined with Transfer Union.
The alternative of Multiple Currencies perhaps the better tool than One Currency - but One Currency is perhaps The Rubicon.
That Julius Caesar carved in stone - that Macron May just not cross.
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Sandy Raus May 16, 2017

..."but also to convince German Chancellor Angela Merkel, [...], to move toward greater fiscal integration" Ha, ha, ha... Don't kidding us! Along Euro crisis, Germany had moved on just when had been pushed to the edge of breakup. Throwing kids to the Baal doesn't make sense. A better approach is to manage a reinforced cooperation between countries that want to fix the eurozone to challenge Germany approach, like Draghi at the BCE.
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Bernhard Kopp May 16, 2017

Before we need an Eurozone-finance minister, we need a constitutional order within which such a post should function. And, we need to establish real, democratically legitimate parliamentary control of any such function. The least the EU/Eurozone needs is a continuation of 'executive tyranny' without any accountability, as it has been predominantly the case since 2010.
- Henk Crop May 16, 2017
  
  Bernhard. I fully agree.
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Steve Hurst May 16, 2017

Hoping that mass migration will sort the EZ demographic is to say the least very hopeful and counter to the facts. Migrant assimilation is poor, language barriers exist, cultural problems exist, and there are very definitely skills problems. Furthermore, with the established fertility rate even with the current influx the levels of migration needed are way way short of the necessary level, wildly short. The idea the EZ citizens would accept levels of migration a multiple of what has occurred is far out and beyond comprehension. Further the idea migrants are needed as workers is contrary to the seriously elevated levels of youth unemployment in the EZ, particularly in some locations (where it is 75%). Quite how importing worker redundant before they arrive solves anything is difficult to see

Take a look at Japan, fertility rate 1.4 - by no means out of the ordinary now in part of the EZ.
August 16, 3766 - According to a countdown clock put together by researchers at Tohoku University, that's the date Japan's population will dwindle to one due to demographics.

Then there is the UK - fertility rate 1.83; below population sustainability despite European free movement migration. Does this need a boost, you would think so but the response of the UK guvnt has been to cut the child benefit for a 3rd child. Perhaps policy could up the level. well no actually at least that is not the experience in China. Following the 1 child strategy China decided to promote a higher birthrate. Unfortunately the young Chinese have not responded and enjoy the low birthrate, something to do with affluence.

'With refugees – many of them young – continuing to pour into Europe from troubled parts of the Middle East and Africa, that may not be an altogether fanciful prospect.'J O'N
It is a remarkably fanciful prospect

The place where fertility is high is Africa at 6+, but quite how they will cope with all those people is another thing entirely. If the idea is migration North I can see the EU becoming a gated community, Spains's Ceuta and Melilla come to mind

Its life Jim but not as we know it
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