Transcript Folie 1

Die Billionen
Schuldenbombe
Dr. Daniel Stelter
Debt levels clearly not sustainable
Long-term asset values around 4 times GDP
Debt (% of GDP)
500
450
419
400
391
350
76
300
250
273
119
283
81
101
89
200
150
50
102
259
67
77
82
251
210
106
105
109
88
51
77
87
123
241
69
133
63
233
100
348
309
60
78
400% historical
average wealth
to GDP
88
191
71
132
89
63
109
260
109
114
100
0
1
Private households
Non-financial institutions
1. Total for Euro zone countries
Note: Debt data as of 2011; non-consolidated total liabilities of governments, households, and non-financial corporations (loans only) at market prices
Source: Eurostat; Federal Reserve; Thomson Reuters Datastream; bto analysis
2
Government
Not to talk about hidden liabilities …
Public gross debt/GDP prediction
Germany
France
No change in fiscal policy and
age-related spending
600
Small gradual adjustment
(fiscal balance improves by 1 percentage
point of GDP over the next 5 years)
400
200
Small gradual adjustment with
age-related spending held constant
at level of 2011 (in % of GDP)
0
1980
2000
2020
2040
1980
US
2000
2020
2040
Japan
UK
600
400
200
0
1980
2000
2020
2040
1980
2000
Source: Source: "The future of public debt: prospects and implications", BIS Working Paper, March 2010
3
2020
2040
1980
2000
2020
2040
How to deal with too much debt?
Austerity
4
Austerity at work
Greece in numbers
2
Even a 30% debt relief
does not really help
in billion €
400
1
3
Two bailouts have
already been necessary
-11
Shrinking GDP makes debt repayment even more difficult
300
-47
356
Debt
relief
107
Public revenues shrink
faster than expenditures
5
A significant part of the economy is
not counted in official statistics and
does not bring tax revenues
240
233
186
200
4
345
Second
130
6
-20
108
100
88
65
First
110
0
Nominal
GDP
(2008)
Nominal
GDP
(2011)
Public
debt
(2011)1
Public
debt
(2012)2
Bailouts
(so far)
The population tries to
rescue their savings
42
Public
expenditures
(2011)
Public
revenue
(2011)
Black
market
(2009)
Deposit flight
(Aug 2011—
Jul 202)
1. Forecasted nominal value (market value is used in all other analyses) 2. Before repurchase of government bonds in January 2013
Source: National Statistical Service of Greece; Eurostat; Greek Ministry of Finance (Public Debt Bulletin June 2012); Eurostat; Transparency International; Wall Street Journal; Bloomberg; bto analysis
5
How to deal with too much debt?
Austerity
Growing out of the problem
6
The growth formula is broken
Economic growth = workforce × productivity
Population evolution …
… GDP growth per capita
Percent p.a.
World population in million
10,000 BC–2100 AD–2100 AD
3.0
Actual US
+0.9%
2.5
10,000
Highest growth from
1950–2000 of
~1.75% p.a.
2.0
1.5
5,000
1.0
+0.5%
+0.1%
0.5
Actual UK
CAGR
0
10000 1
400 600 800 100012001400160018002000
0.0
1300 1400 1500 1600 1700 1800 1900 2000 2100
Note: Historical estimates of World Population estimates reflect "lower estimates" of US Census Bureau. Data by 2009 from US Census Bureau, starting 2010 from UN World Population Prospects
Source: US. Census Bureau, Historical Estimates of World Population, 2012; United Nations, Department of Economic and Social Affairs, Population Division (2011). World Population Prospects: The 2010 Revision;
Robert Gordon, "Is U.S. economic growth over? Faltering innovation confronts the six headwinds", NBER Working Paper 18315, http://www.nber.org/papers/w18315
7
Headwinds for further productivity gain
Innovation with less impact on
productivity than in the past
Percent per year
3.0
The West is falling behind on
education
2.5
Hypothetical
path
Intensified international competition
labor cost pressure
Source: Robert Gordon, "Is U.S. economic growth over? increases
Faltering innovation
confronts the six
2.0
1.5
headwinds", NBER Working Paper 18315, http://www.nber.org/papers/w18315
Efforts to reduce CO2/the end of
Actual
US
1.0
Actual UK
0.5
0.0
1300 1400 1500 1600 1700 1800 1900 2000 2100
cheap resources
Underinvestment in assets by public
and private sector
Increased income inequality
Source: Robert Gordon, "Is U.S. economic growth over? Faltering innovation confronts the six headwinds", NBER Working Paper 18315, http://www.nber.org/papers/w18315
8
Debt above 90% of GDP leads to lower growth rates
GOV
NFC
Source: Robert Gordon, "Is U.S. economic growth over? Faltering innovation confronts the six
headwinds", NBER Working Paper 18315, http://www.nber.org/papers/w18315
HH
0–70% debt/GDP
71–100% debt/GDP
Total
1. GOV = public debt (gross liabilities) 2. NFC = Non financial corporations (total liabilities less shares and other equity) 3. HH = household debt (gross liabilities)
Note: All data as of 2011S
Source: BIS; Eurostat; national central banks; Thomson Reuters Datastream; bto analysis
9
>100% debt/GDP
How to deal with too much debt?
Austerity
Growing out of the problem
Back to Mesopotamia
10
Back to Mesopotamia?
Including
haircut
Debt (% of GDP)
500
450
380
287
1,367
1,568
1,122
127
766
7,388 10,810 9,936
419
391
400
350
1,861
119
348
76
309
300
102
88
250
259
251
260
241
273
283
81
101
89
210 Faltering
51
67 economic
71
Source: Robert Gordon, "Is U.S.
growth
over?
innovation
confronts
the six
69
191
200
180%
headwinds",
NBER Working Paper 18315, http://www.nber.org/papers/w18315
60
132
133
150
82
77
63
100
50
109
114
88
109
123
109
78
89
233
63
87
77
threshold
106
100
105
0
1
Private households
Non -financial institutions
1. Total for Euro zone
Note: Debt data as of 2011
Non-consolidated total liabilities of governments, households, and non-financial corporations (loans only) at market prices
Source: Eurostat; Federal Reserve; Thomson Reuters Datastream; bto analysis
11
Government
Debt overhang (B€)
Significant hit for savers
Including
haircut
Necessary debt reduction and remaining HH financial assets (%)
125
380
287
1,367
1,568
1,122
127
766
7,388 10,810 9,936
1,861
100
16
75
39
31
52
28
39
47
Japan's and
74
81
Ireland's
100
100
50
household
84 Faltering innovation confrontsfinancial
Source: Robert Gordon, "Is U.S. economic growth over?
the six
72
69
61
61
headwinds", NBER Working
Paper 18315, http://www.nber.org/papers/w18315
53 assets less
25
48
than
26
19
necessary
0
for debt
reduction
-22
-23
-25
1
Household financial assets needed for debt reduction
1. Total for Euro zone
Note: Debt data as of 2011
Non-consolidated total liabilities of governments, households, and non-financial corporations (loans only) at market prices
Source: Eurostat; Federal Reserve; Thomson Reuters Datastream; bto analysis
12
Remaining household financial assets
Debt overhang (B€)
Cyprus = Mesopotamia
Source: Robert Gordon, "Is U.S. economic growth over? Faltering innovation confronts the six
headwinds", NBER Working Paper 18315, http://www.nber.org/papers/w18315
Source: Financial Times, 26 March 2013, Economist "The Cypriot deal: Second time unlucky", 30 March 2013
13
How to deal with too much debt?
Austerity
Growing out of the problem
Back to Mesopotamia
Inflation
14
Financial repression?
Number of years to reach 180% threshold
100
Interest rate – GDP growth = -1
Interest rate – GDP growth = -5
80
60
Source:40Robert Gordon, "Is U.S. economic growth over? Faltering innovation confronts the six
headwinds", NBER Working Paper 18315, http://www.nber.org/papers/w18315
20
0
Actual 2011
Interest rate
– GDP growth
-0.6
0.3
-0.6
Note: 2011 data, Portugal interest paid as of 2010
Non-consolidated total liabilities of governments, households, and non-financial corporations (loans only) at market prices
Source: OECD; bto analysis
15
-0.6
-0.9
2.1
1.4
1.0
5.9
The idea of helicopter money is gaining popularity
Let us suppose
that one
I willover?
argue for
a
… in
some extreme
Source: Robert
Gordon,
"Is U.S. economicToday
growth
Faltering
innovation
confronts
the six
day a helicopter flies
different approach and
circumstances— those in
headwinds", NBER Working Paper 18315, http://www.nber.org/papers/w18315
over this community and drops an
additional $1000 in bills from the
sky, which is, of course hastily
collected by members of the
community …
suggest that the Bank of Japan
cooperate temporarily with the
government to create an
environment of combined monetary
and fiscal ease to end deflation and
help restart economic growth in
Japan.
which there is a simultaneous and
significant fall in both the price level
and real output—it is unambiguously
clear that OMF would be the best
policy, and in some circumstances
may be the only policy available to
prevent continual deflation.
Milton Friedman
The Optimum Quantity of Money,
Chapter 1
1969
Ben Bernanke
Speech before the Japan Society of
Monetary Economics
Tokyo, May 31, 2003
Adair Turner
Financial Services Authority Chairman,
Lecture at the Cass Business School,
London, February 6, 2013
Source: The Economist; Financial Times; Irish Times; bto analysis
16
Just retire the QE debt?
After buying £325B of debt from the market, the public
sector (the Treasury) is paying interest to itself (the
BoE) on debt that it owes to itself.
Instead of selling the debt back into the market, the
BoE can retire the debt. At a stroke, £325bn of UK
government
debt disappears.
If the US
follows suit,
about $1.5T
Source: Robert Gordon, "Is U.S. economic
growth
over? Faltering
innovation
confronts
the of
six
USPaper
government
will be retired.
headwinds", NBER Working
18315,debt
http://www.nber.org/papers/w18315
The main obstacle to retiring the debt lies with the
markets and credit rating agencies. They may see this as
a slide towards Weimar Republic economics: monetary financing of
government debt by printing money. Consequently, both the BoE and
the Treasury cannot be seen to advocate
retiring QE-acquired debt at this stage.
Source: Financial Times, 11 March 2012, page 9
17
How to deal with too much debt?
Austerity
Growing out of the problem
Back to Mesopotamia
Inflation
18
Die BillionenSchuldenbombe
Wie die Krise begann und
warum sie noch lange nicht
zu Ende ist