Archive for arnold

Is Economics a Masculine Subject

It sounds a strange question, yet it is in fact a very relevant one.  We’ve probably all heard of the shortages of women in subjects like maths, science and technology but the surprising fact is that there are even less women in the fields of economics.   For instance if you take academic economics posts in the US, only about 12% are help by women.  It’s not particularly a geographic thing either, the UK has only 15% women in similar posts.

If you look at other measures, perhaps the lists for potential noble prizes for economics – there is not a single woman on the last list won by economist Richard Thaler.  In fact, there has only ever been one woman who has won this prize – Elinor Ostrom in 2009.  What could be causing this, why such a huge imbalance in what is an important field of study?

When I think back to my undergraduate days, it’s probably at a very similar level.  Sure the culture on economic courses was definitely male orientated and at least in my experience focused on a significant amount of alcohol and political discussion.  Yet there were plenty of females on other courses who fitted into to much more masculine environment.  It was very similar to other sciences like maths and Physics, it was just a subject that women didn’t seem that interested in.

Some people say it’s just a natural choice, and to put it in economic terms women are acting ‘rationally’.  The implication being that other subjects are more suited to women’s temperament and skills – again that’s hard to comprehend.  There is little in the subject matter on most undergraduate economic courses that should mean it’s  more suited to men than women.  In fact broader degree subjects like PPE (Politics, Philosophy and Economic degrees in Oxford are extremely popular with female students.

So if it’s not the content and courses themselves what else can be responsible for this huge imbalance?   Also why does no-one really talk about this issue, as it’s potentially a very serious issue.   After all having a wholly masculine viewpoint in a large, important subject like economics can have enormous impact on our everyday lives.  It means that few women will end up in economic posts and influencing factors which potentially could affect all our lives.  It’s almost certain that women would have a slightly different approach to the subject than men, and very likely would be a much fairer one!

Some studies have suggested that there might be an inherent bias in the subject itself and how the subject is portrayed.  One study found that language in economic focused forums could be more sexist that is average.  It’s sad to think that it may be the economists themselves who may be responsible for this bias.  It should be said that this is not a mainstream view and one that most economists would disagree with completely.

There are other studies though which suggest some sexism in the sector.  One found that if a male economist published a paper he was 8% more likely to get a tenured post as opposed to only a 2% increase for women.  Obviously such studies should be approached with caution as the sheer numeric imbalance could also explain some of these findings.

yet other studies are slightly more difficult to dismiss.  Why should a female economist’s paper take on average six months longer to peer review than a mans?  Why do women in economics tend to receive less in salary for similar jobs than men.  If an employment sector is perceived to be sexist it is unlikely to attract enough female applicants.

It’s an interesting and contentious subject which should be a real worry for economists everywhere.  The fact is that it doesn’t seem to be improving either, if you look at UK Universities the proportion of women on economics related courses was about 30% and now it’s fallen to nearly 25% – a significant downward trend.

Further Reading: BBC News Site

(Accessible by VPN check this story)

The Rise of the Eastern Euro Nations

The beginning of 2017 has seen some impressive growth in the eastern economies of the European Union. These countries have benefited from development money and an increase in demand in the Eurozone economies has helped too.

The leading economy is definitely Romania, their growth has risen to nearly 6% more than forecasted.The Polish economy, the largest economy in the Eastern sector of the EU grew by 4%.Even the slowest performing Eastern economy – the Czech Republic posted growth figures of 2.9% still outpacing the Euro area.

Much of the increased activity can be predicted from a growth in construction which has increased across Europe.Although this has been created by a improvement in the economic conditions across the Eurozone.

These former socialist nations are in some senses rising the growth of their western neighbours. The relative weaknesses in their economies are more easily stimulated by demand across the Eurozone.Even unemployment which has often been the problem for these nations has fallen to record lows. Hungary’s currency in particular and the other Eastern European currencies are all performing strongly.  There is a sense of optimism in these countries not seen before, you can see by investing in a VPN or Smart DNS service and watching their local TV and radio broadcasts online.

The growth figures are impressive almost across the board, places like Hungary and Bulgaria have exceed all forecasts in their growth. Some of the growth is not entirely unexpected, the previous years had seen cutbacks in public investment in many of these countries. There had been much pressure to get rid of these reductions and for Governments to start investing more – it seems that resulted in increased growth.The predictions for the developing European nations look good too, the IMF forecast that Eastern European countries will grow double the rate of the developed Euro countries.

Although the Western countries are lagging behind their Eastern neighbours these figures represent great news for all the EU nations. The investment and development funds which have been spent in these countries was intended to advance their economies quickly. It was a long term strategy for the EU designed to build strength across the member nations, investing in the developing nations has not always been popular. In places like France, Italy and the UK there was some resentment at European money being diverted to these nations in times of struggling.

 

Americans Start Borrowing Again

Debt can be a scary concept, although if you spend time with economists they’re certainly generally a little more accepting.  Financial shocks though tend to make people much more wary and over the last decade Americans have severely reduced the levels of debt they incur.

That’s seems to be changing, there are many signs that with memories of the recession fading they are starting to borrow again.  The numbers in the US are as always somewhat frightening, US consumers now owe nearly $13 trillion on things like mortgages, loans and credit cards.  The number is large and in fact exceeds the total that preceded the last financial meltdown.

Our economists look at increased borrowing as a sign of economic growth, of a confident financial future and there is some merit in that opinion.  Yet consumer debt can quickly change from being a positive economic indicator to being deemed unsustainable just as before the housing crash.

Debt at a push can be seen as a short term indicator of a recover but it’s not something to build a healthy economy on. You can see the change on US mainstream TV, consumerism and credit is growing.  Check out the adverts and feelings on local stations, international viewers can buy a US proxy to view the channels online.

Debt undoubtedly is not something which you want in the long term, healthy economies are rarely built on high levels of debt. One of the issues is the lack of stability, you might think a certain level of debt is manageable but if interest rates rise or economic circumstances alter that might change very quickly indeed.

One of the best ways to assess debt is to consider what it has been incurred for.  Credit card debt built up simply on consumerism might boost short term economic indicators but the benefits are short lived.  Mortgages and things like student loans are perhaps more positive, with people actively improving their lives.

This doesn’t mean they are safe either though, as we saw with the mortgage crisis in the US which precipitated the financial crash. This time it is perhaps student loans which are the worry for the US economy.  US students have risen markedly as college costs have gone up and now stands at an amazing $1.34 trillion. What’s more, over 10% of that is more than 90 days past due – a rate that has almost doubled in the last decade.

Debt is safest when you have a stable job and a decent income, but many factors can alter this very quickly. Job loss, economic changes or something like ill health can cause chaos to even a high earner who has high levels of debt.  It doesn’t have to be something this dramatic, interest rates are starting to rise and this can increase the cost of servicing debt very quickly.

Consumers may get use to maintaining high levels of debt to purchase cars, own bigger homes, electronic goods, US Netflix subscriptions and other luxuries yet if these are bought on credit there could be problems in the future.

Safe from ‘Frexit’ but is Italy Next?

You can almost hear the huge Eurozone sigh of relief as the possibilities of Frexit seem to be diminishing.  The reason is of course, the predicted outcome of the French Presidential elections with most polls suggesting Emmanuel Macron is almost certain to win.  Of course it would be foolish to completely rule out Marine Le Pen, it wouldn’t take much to swing opinion towards the anti-euro party.  Many French voters dislike both candidates which is normally a recipe for a shock.

The next big Euro worry is likely to be from Italy where anti-Euro sentiment is much stronger that France.  Italy has also suffered more than most in the recent financial storms, look at the performance of the various Euro-bonds and you’ll find that Italy’s are among the very worst performing out of all the Eurozone countries.

Take for example an Italian 10 year old bond yield and compare it with a German equivalent and you’ll see a huge spread in the relative values. The Italian bond is rated significantly lower in value than the German ones which represent the political and economic risk the country faces.

This situation is made worse by the potential result in the forthcoming Italian election.  Dubbed by many to be the most dangerous event in Europe, the markets are scared that Italy could vote to leave the Eurozone.  The ant-Euro party, 5-Star are now the highest rated party in Italian opinion polls.  You can see the sort of populist support by merely watching Italian TV for a few hours, try the method in this post entitled – RAI Streaming esturo for a cross section.

They are not alone in Italy many of the other Eurosceptic parties are also doing well which doesn’t bode well if any referendum was help.  It is widely believed that if there was an election in Italy now – the 5 Star party would almost certainly win.

Would this create the ‘QuItaly’ situation that European leaders dread is difficult to guess?  There is no doubt that political populism is on the rise in many European countries and Italy is simply one of many.  There is also the feeling that the Italians are much less pro-Euro than the French.

Even without this actually happening, the political and financial damage of uncertainty is bound to effect the markets.  Italian debt is being downgraded which further decreases the value of Government bonds.  The ultimate effect is that the huge Italian debt becomes more and more expensive to service.

John Francisco

 

South Africa’s Debt Downgrade

There seems to be little that can stop the momentum which is propelling South Africa towards the lowest credit rating possible on the international markets.  The latest setback involves S&P (Standard and Poor) reported by the BBC (use a VPN for access) who have downgraded the country’s credit rating to junk status after the finance minister was dismissed suddenly.

The global ratings department of S&P brought South Africa’s sovereign debt rating down because it considered the sacking of the respected finance minister, Pravin Gordhan a risk to the implementation of the country’s fiscal policy.

Needless to say this had a negative effect on the markets as the Rand plummeted by nearly 2% against the dollar while the value of Government bonds dropped sharply too.   The depreciation fall was the worse in nearly two years and came in response to the sacking of the finance minister and also other cabinet members.

The credit rating is important to all countries as it has a serious effect on the interest rates the country pays when borrowing on the international markets.   It has surprised many that the President risked this turmoil when he knew that the agency was going to be announcing an assessment on his country’s prospects.

The country has not reached the ‘junk’ status that most countries fear but currently are only two points above that rating.  However there is a real possibility that the other major agencies will similarly cut their ratings too for the country.  If South Africa does end up with ‘junk’ ratings there will be profound effects for the economy as a whole.  Many pension and investment funds for example will automatically sell their bonds if they reach this status which will cause further pressure on their value.  This will mean that the government’s borrowing costs will rise sharply which as they are running a large deficit will be substantial.

This is not the first of the emerging economies to suffer such a downgrade, Russia and Brazil both were downgraded to junk status in 2015 due to their struggling economies.   It will certainly add to the pressure on President Zuma and you can see on the local TV broadcasts that this is rising substantially.  You may need to use a good vpn service like this to access some of the African only broadcasts on local Television channels.

Germany’s Credit Surplus Rises Again

Donald Trump doesn’t like surpluses, specifically those trade surpluses that many countries run with America.  The US has huge trade deficits with many countries including China, Mexico and Germany – something he seeks to change.

Germany is no stranger to surpluses of many sort, this year they announced another huge current account surplus of 9% of GDP, higher than even the South Koreans of 7%. It is unlikely that this is a problem to the countries themselves but how about the global economy.

Where does all this surplus go?  Well the vast majority of it exists in global financial assets which will be owned by countries like Germany and the others running large credit surpluses.  These are of course simply investments and may rise or fall in value just like anything else.  It is useful for countries to have these assets especially in a time of aging populations and growing demands on care and health costs.

The simple fact with trade surpluses is that by definition they have to be balanced by deficits in other countries.   The huge trade surplus or balance in one country will be matched by similar deficits in other countries, hence President trump’s wrath  – America is funding these surpluses in many places.

Having a huge imbalance is not sustainable in the long run for any country and is basically not good for international or global trade.  These are not just numbers on a balance sheet though, surpluses and deficits represent people’s jobs and livelihoods o(or lack of them).

Unemployment can be the result of running large trade deficits but this is not always the case.  Both the UK and the US run substantial trade deficits alongside relatively low levels of unemployment.   The problem really is where this money ends up, the amounts of money that are taken out of the global economy due to unneeded current account surpluses.

The German’s often have a reputation for being spendthrift or careful savers, however that’s not supported completely by the figures.  In fact if you watch global TV which many Germans do – check out German’s who watch BBC iPlayer through VPNS for instance.   However the question is what happens to that money the German’s simply don’t need, is it all diverted into valuable infrastructure projects around the world?  Some is but more often it gets related into property speculation schemes or high return financial projects which bring little benefit to ordinary economies around the world.. Sometimes this money can be traced to events which cause even more financial chaos such as when American housing bubble which ended up causing the 2008 financial crises.

James Heritage

Author of the Italian – Rai Streaming Estero

International Debt Burden of Africa

The path to prosperity doesn’t lie amidst countries building even bigger international debt states Akinwumi Adesina, the head of the African Development Bank.   He is quite clear when he urges the continent’s governments to try and boost tax revenue not grab yet more international loans.  The statement comes whilst Africa, once again grapples with an economic slump.

money-1604921_640

Mr Adesina is reported with an interview in the Financial Times to be expecting yet another downturn in the economy of Africa largely being triggered by a slump in commodity prices.  This issue greatly affects Africa as well as the slow down in Chinese economic growth.  Yet as always Africa is one of the first to suffer from external economic slowdown, largely because of it’s relative financial weakness, in other words it’s large levels of debt.

The phrase ‘fiscal consolidation’ is often used to describe Africa’s position and potential solution.  The reality is that decades of borrowing have had only limited success in delivering long term growth in the region.  Sure when economic booms are happening in other places, Africa is dragged along through a demand for it’s commodities but the weakness is evident as soon as this demand drops.  Nigeria has plunged into yet another recession simply due to the oil price fall, although to be fair this is the first for nearly twenty years.

The pattern will be repeated across sub-Saharan Africa, with GDP falling from it’s 3.5% level in 2015.  Many nations are suffering from dwindling government revenues, and the wide budget deficits mean that governments have little monetary options available to them.  The temptation of increasing debt is always there but this is precisely the reason why African economies are so vulnerable, billions of dollars of debt taken up in the ‘good years’ reduce the capacity of these governments to respond in a slump.

These debts have to be repaid and the costs of servicing them often rocket in poor economic conditions simply because of the weakness of most African currencies.  The scarcity of foreign currencies also impacts African countries and businesses to invest.

Borrowing overseas with a weak domestic currency is a recipe for disaster,  investment funds should ideally be sourced locally.  For example there are huge African investment and pension funds which ideally could be used to support the African economy.  Too often this money is invested in Western countries and businesses to the detriment of African businesses.  It’s often depressing to sit in the presentations of these Pension and investment funds produced by some anonymous company who conducts most of their business through a residential VPN (see here) to be extolling the virtues of some international company with minimal links to the African continent when local companies are starved of investment and the potential for growth.

Frank Ifield

Irish Economy Leads the Eurozone

Ireland has had it’s economic problems in past years, much of it documented in these pages. However Ireland’s recovery still continues and is showing the lead for other debt laden Eurozone countries to follow.  It’s a template which perhaps countries like Greece, Spain and Italy should look to follow.  For the fourth year the small republic has produced the highest growth rates of an country in the Eurozone and it looks likely to continue with some forecasts suggesting that 2017 will produce a growth percentage of nearly 3.5%.

Ireland instigated some pretty tough measure to pull itself out of the previous crisis and has been rewarded with rises in foreign investment and soaring levels of employment.  This has already filtered in to the general economy with strong retailing figures supporting the recovery.

Some economists are even predicting higher growth figures with mentions of 4% becoming more common.  Yet there is a huge black economic cloud circling which will restrict this growth and nobody quite knows by how much.

Of course, it’s Britain’s decision to leave the EU and as by far Ireland’s biggest trading partner the impact is bound to be large.  The general consensus is that the impact of Brexit will initially be fairly negative even to the extent that it is bound to cause some disruption and uncertainty.  However no-one is quite sure when this will happen and what the impact will be on the irish economy.

No other Eurozone member will be impacted as much as Ireland however and most economists are unclear of what the long term impacts will be.  The agricultural sector is the most important sector likely to be affected as the country’s farmers send over half their exports to the UK.  It is a large, convenient and essential market which is not easily replaced if it ends up falling into a mass of tariffs and controls.

Still much of this is pretty much out of the Irish government’s control and a a strong economy at least allows it the maximum possibilities or riding out any economic impact when the UK leaves.   As such Irish businessmen and politicians will be pleased that they can watch BBC in Ireland using a VPN to keep up with the developments.  It is likely that the UK government will also seek to restrict any changes made in the two countries trading agreements as well, the UK is likely to need a friend in Europe and difficulties with borders will only cause problems for both countries.