The second biggest problem - my opinion - is the class / education system in the UK suppressed the possibility of the type of talent you need in upper and middle management to enable companies to scale. You need professionals that worked their way up on the basis of merit and ability and are used to self-learning and growth. Unfortunately a degree from Oxford or Cambridge was (is still?) pre-requisite for many forms of success in the UK, from business to entertainment. For UK manufacturing this led to a situation of “amateur entrepreneurs” at the top of companies and could get a company off the ground but would eventually fail to make the business sustainable, as they lacked professional support to guide them.
Ultimately he ended up with George Kosmetzky, the dean of the business school, as a board member, so I guess there were no long-term hard feelings. But still, this episode showed where the school's priorities really were.
Should the business school give preference to applicants who say they have a real business in their hands?
Yes, when the student's business grosses $73 million in its first year of operation and he come backs to you, hat in hand, asking for more training, that should count for something.
The business school, like the rest of UT, is there to serve the public interest. If a former student needs help with a fast-growing company that would eventually spend 25 years on the Fortune 500 list, the matter of his previous grades could have been overlooked, and should have been. Finding a way to accommodate him would have been the right thing to do.
I still remember all the trade shows with vendors on Food Export. Is not that we don't want to buy British Food, it is simply the Pound make it uncompetitive, ( Not to mention their inexperience with export makes things 10x more difficult ). But ever since the pound drop ( after the announcement of Brexit ), the British brand and flag makes suddenly makes things interesting, at least it had a fighting chance on the International Market. Cheddar Cheese were constantly sold out, and Diary are now a possibility. ( Still a some way off from NZ and Australian though ).
I asked if Brexit had any impact on them and if they would rise price in the near future, and all the answer I had is that they don't see any part of the business being dependent on import, unless there is a huge spike in salary they could even sign a contract for two years, so to speak.
Does this inevitably lead to less domestic manufacturing? I think that's the outcome, yes.
This is the case for a global reserve currency that isn't controlled by any single country.
As Botswanna’s economy expands, it needs to print more money to conduct all the transactions and take advantage of the increased resources provided by an increasingly-skilled workforce. As that country’s central bank prints more money, it tries to acquire more GBP or UK treasury bills to hold in reserve. In order to do that, Botswana spends its own currency in Britain. Britons can trade this Botswanan currency in exchange for the right to receive some amount of goods/services from the people of Botswana. So britons have gained some goods as a result of Botswana’s economic expansion.
... in exchange for the possibility of needing to give someone goods whenever GBP stops being a reserve currency.
Or have I completely misunderstood international monetary policy interactions?
If you are a net exporter, you are essentially giving away your own output to a foreign nation in exchange for bits of paper. The reason you can't spend that paper is that it would destroy your exports (your own currency would go sky high as the system tried to eliminate the imbalance) and you'd have to find something else for the people working in exports to do, or you'd get a Dutch Disease problem internally (and likely end up in a situation like Venezuela)
So Botswana sells its natural assets to the US in exchange for US dollars. Those US dollars find their way into the bowels of the financial system and are discounted into the local currency. Either directly - like the Chinese do, or indirectly via some fancy financial system (normally a Sovereign Wealth fund, or Pension schemes with compulsory contributions). They then sit there (the Norwegian fund for example cannot spend anything - ever) - largely to avoid a Dutch disease in the country and to stop the local currency appreciating against the export target.
The result is that the rich countries get stuff essentially for free from the poorer countries so that the poorer countries can issue their own money without people getting agitated.
The whole thing is a conjuring trick. The poorer country would be better putting people to work creating domestic infrastructure straight away and only exporting what is necessary to get needed goods and services required to create that infrastructure. But to do that requires you to operate the central bank in a way that appears 'wrong'. You have to issue liabilities against 'Other Assets' rather than 'US Treasuries' and that upsets people who don't understand how banks actually work.
The GBP/USD gets 'locked' in the financial system. Because it is being used to discount to the scrip used locally you can never get rid of it. To do so would reveal the central bank illusion and explain how the trick is done. Then people might start asking question like: why don't we use our own money in our own circulation to ensure everybody has a job and solve unemployment permanently and forever? And that would never do ;-)
The poor countries more or less have to spend the dollars because they need to buy fuel and high tech. It's the rare exceptions that stockpile it, China and Norway, and they can afford to do that because they're oil-producing.
> The poorer country would be better putting people to work creating domestic infrastructure straight away and only exporting what is necessary to get needed goods and services required to create that infrastructure
Generally true, but harder to achieve than it sounds. Worked in east Asian countries, but not in Africa, largely due to corruption. And the amount that has to be imported is high.
> You have to issue liabilities against 'Other Assets' rather than 'US Treasuries'
I can't even work out what this is referring to.
You have to GIVE a currency value. What that means is that you must give people a reason to use that currency. Now internally in a country this is done through taxes and the bank system. Externally however this has to be done differently. It must be "guaranteed" to be exchangeable ... to the global reserve currency (so that anyone can buy what they want with it). How do you guarantee that exchange rate ? By having an instrument that's guaranteed to be exchangeable for the reserve currency. A lot of US treasuries, a little gold, a little EU sovereign bonds, ...
So instead you'd have to issue currency and make it exchangeable for local assets. So you'd loan that to local people to build roads, harbors, bridges, buildings, ... That doesn't work, because sovereignty means that you can't exchange those things for the global reserve currency anywhere near as well as you can US treasuries. Because investors are acutely aware that the government could just immediately impound their money (and there's lot of historical precedent of that actually happening), whether it's local currency or local assets. Investors would have to accept that they can bring money in, but not take it out. And good luck with that one.
Not only does the US get to print the currency that oil is traded in willy-nilly. US also gets to export the resulting inflation (from excessive printing) to the rest of the world.
1. The US never has to produce anything to buy oil. They can just print dollars and import oil. Another country, say Bostwana, has to produce something else, sell it to another country in exchange for USD and then they can buy oil. This is a significant crutch
2. The US will never have a shortage of oil before other countries do
3. The US can import anything it wants, whenever it wants. Say a year with bad weather caused low corn production. That will not take down companies dependent on corn. US can always print USD and buy corn from somewhere. Compare that to Brazil, who would just have to suck it up since they don't have enough USD in reserves to go import corn.
First, I didn't say it would be better if Britain was in control of Euro. Obviously it would be better if the Euro was controlled to the interests of all the Eurozone, not particular to the interests of some top-dog states. Which might even need a "two/three zone" currency.
Second, if you ask whether it be better for Britain to control its own currency, that's a given. EU aside, that's what any economist will tell you: a country is better off when it controls its own currency. Denying that is as kooky as being an anti-vaxxer.
Please note that I am not taking any position, I just want to get more informed about the internal EU problems.
The facts show that GB had way more rights and power to decide than Germany (exlusions from certain EU rules everyone else accepted etc.)
Germany is also by far the single biggest financial contributer to the EU.
The GB politicians used to blame the EU for all their own problems. There will be a hard awakening coming at the end of the year, but I‘m sure the EU will still be their scapegoat somehow.
Seriously, nobody in Britain, Remainer or Brexiteer, is arguing for us to join the Euro. That argument is not currently live.
The ECB does not have to balance interests. It‘s independent and it‘s job is monetary stability, not economic interests.
It‘s also not widely accepted that it‘s in Germanys interest. In fact it is against it. Germans hold most of their wealth in cash. They received interest for it. That‘s hundereds of billions now gone. Germans are poorer than most other Europeans (even than Spaniards and Italians) At the same time the southern countries have so high debt loads that they would be bankrupt without QE.
The Euro is too weak for North Europe and to strong for the South.
er, citation needed? Or is this due to the former DDR?
https://jakubmarian.com/wealth-per-capita-by-country-in-euro...
It's describing the median wealth based on a Credit Suisse Wealth Report
You can also find these results in the ING research ("Surprising differences between countries", page 14ff): https://www.ezonomics.com/pdf/Household-wealth-in-Europe.pdf
"When dividing the Eurozone into a group of countries often labeled as ‘core’11and a group of Southern-European12countries, it turns out that Southern-European households are more capable of keeping up their standard of living compared with those living in the core countries (see figure 18)"
"It is striking that German households have fewer assets than Eurozone households have on average. They not only own relatively little real estate(see figure 20)but also hold less financial assets than is common in the Eurozone(see figure 21)."
You get to read some things here that you don't know whether to laugh or cry.
Median wealth (USD) per adult:
#13 Spain 87,188
..
#15 Italy 79,239
..
#29 Germany 35,169
#30 Slovenia 34,043
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...
"poor" is simply a generic term, personally I think it's income what defines if you live a poor's life or a rich's life.
Wealth is worth much more than income.
That's the version one would teach to high schoolers, not the real political/historical truth by any margin. In fact it's so naive I don't even know where to start addressing it.
You can follow the power plays in the ECB in all kinds of outlets, if leftist ones are not your thing, even Le Monde, Die Zeit, Frankfurter Allgemeine Zeitung, Corriere della sera, The Economist and co will do.
>It‘s also not widely accepted that it‘s in Germanys interest. In fact it is against it. Germans hold most of their wealth in cash. They received interest for it. That‘s hundereds of billions now gone.
When Germany has control over EU/ECB policies, it could not give less ducks about the German people. It's about German banks and elites doing good.
Historical experience, including recent historical experience. Naively, most discussions of EU power balances resolve in the nominal voting system, and the vote count allotted to each country. Germany uses its economic and political might to push around smaller nation states, secure satellite votes, and do as it pleases within the EU, far more than its allotted voting power (besides a lot of the serious decisions are taken in backroom deals, and informal bodies like the "Eurogroup", through raw power, bypassing voting altogether).
Here's a good take: https://www.opendemocracy.net/en/can-europe-make-it/germany-...
Even this Spiegel article simultaneously downplays and confirms that Germany runs Europe:
"When Angela Merkel travels to Brussels, she does so as the leader of by far the strongest economy in the euro zone. Policies she doesn't agree with don't get passed. Power as such isn't a bad thing when those that have it use it wisely. But do they? There is a new tone in Germany. It is one that no longer abides by the noble customs of diplomacy. Whispering, suggesting and hinting have been replaced by ranting and blustering. (...) The economically powerful Germany got its way. In order to put the struggling countries on the right track -- on the German track, that is -- Merkel brought in the International Monetary Fund so as to free Germany from having to play the strict overseer. Still, it has not escaped notice that Berlin is in charge. (...) German sociologist Ulrich Beck, who has since passed away, referred to the pressure being exerted on Europe from Berlin as "Merkiavellismus." [2]
As a matter of fact, one of the stated goals of the bureaucrats that created EEC was (and remains) to contain Germany.
"The German question produced the Europe of today, as well as the
transatlantic relationship of the past seven-plus decades. Germany’s
unification in 1871 created a new nation in the heart of Europe that was
too large, too populous, too rich, and too powerful to be effectively
balanced by the other European powers, including the United Kingdom. The
breakdown of the European balance of power helped produce two world wars
and brought more than ten million U.S. soldiers across the Atlantic to
fight and die in those wars. Americans and Europeans established NATO
after World War II at least as much to settle the German problem as to
meet the Soviet challenge, a fact now forgotten by today’s realists—to
“keep the Soviet Union out, the Americans in, and the Germans down,” as
Lord Ismay, the alliance’s first secretary-general, put it. This was also
the purpose of the series of integrative European institutions, beginning
with the European Steel and Coal Community, that eventually became the
European Union. As the diplomat George Kennan put it, some form of
European unification was “the only conceivable solution for the problem of
Germany’s relation to the rest of Europe,”
So in essence it was taking money from Northern taxpayers to give to Northern banks to save them from illiquidity.
People in the South and their country budgets haven't seen a cent of these money.
1) QE did not transfer money with any caveat to pay bondholders. QE is not like giving cash to a country. The ECB buys up bonds on the open market (thus mostly from banks, which supports your point).
2) The buying up of bonds drastically reduces interest rates, because artifical demand is created.
3) The South can now borrow money for pretty low interest rates on high debt-loads. Italy wouldn't be able to afford high interest rates very long.
4) Northern banks holding higher paying bonds in their portfolio profited because the high-coupon bonds values increase.
I'll give you a BIG counterexample: China
Strengthening Yuan makes little difference to manufacturers:
1. Say a factory imports $100 components for widgets
2. Adds $10 value in logistics and labour
3. Exports the widget at still competitive price of $120