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Monday, May 13, 2013

No growth trajectory without foreign investments!

I draw attention to this editorial from the Ekathimerini which states that 'without cash, in the form of  foreign investments, the debt-wracked economy will never manage to enter a growth trajectory'.

All I can say is --- SPREAD THAT MESSAGE!!! It's not only the cash from foreign investments which is needed. Equally needed is the know-how transfer in all areas that comes with foreign investors (provided than one choses the 'right' foreign investors)! If you want an example, just look at the Cosco investments!

A case for foreign investments

5 comments:

  1. Good day Sir,

    i have an off-topic question. What do you think about this? http://blog.zeit.de/herdentrieb/2013/05/13/entmachtet-die-bundesbank-2_6036/comment-page-3#comments

    It looks like some new ideas are coming out about how can we fight and stop the eurozone crisis.

    I'll be glad to read your thought about this Mr. Kastner.
    Have a nice day!

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    1. I try to stay away from discussions about Central Banks, monetary theory, etc. because I understand far too little about it. Offhand, I would say that the arguments listed for doing away with national Central Banks sound quite presuasive but I am sure that there are good counterarguments to each point and I would be interested in seeing those as well.

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    2. Why this sudden upsurge of interest in Foreign Investment, McKinseys etc. Any ideas what's driving it, is it a smokescreen - lets hope it isn't.

      I downloaded the GTYA executive summary in Dec 2011, the Greek government and other sponsors must have the detailed reports much earlier. In fact they had some of the detail long before McK's even got their commission. From Greek public servants and private sector execs who presented papers at various conferences in the prior decade - including an Asia Development Bank conference in Washington DC!


      @anonymous via your link I found the following excellent PDF Target Loans, Capital Flows, and Current Account Imbalances: The ECB’s Hidden Rescue Facility, CESifo H.-W. Sinn und T. Wollmershäuser (2011)

      Amongst much else it describes the similarities and differences between the ECB's TARGET-2 and the US Fed equivalent - Fedwire, which is something I have long sought. Quote:-

      The major difference is that the Interdistrict Settlement Accounts must be settled each year in April. The debts are paid with gold certificates and then cancelled. Gold certificates are securities collateralised by gold, issued by the US Treasury, that bear the right to be exchanged for gold on demand. They are safe, marketable securities that cannot be created by the district Fed itself.

      To do something similar in the Eurozone, would seem to require that Eurozone member states transfer their gold to a central Eurozone Treasury. Would Eurozone heads of government be prepared to tell voters - "we are going give our gold to the Eurozone Treasury". Not any time soon I venture, even if such a thing existed.

      I'm sure the creation of the US Fed districts was appropriate 100 years ago, when communications were primitive (telegraph, that's why its called Fedwire), and there was a much smaller population. But if the Fed were being created today, would districts even exist or would each state have a its own branch of the US Fed. I have no idea, but I'd be surprised if it was the same structure as it is today.

      I would have thought, for many reasons, it would be more appropriate to have a Eurozone system that operated like the US Fed, rather than just looked like the US Fed, where each member state had its own equivalent of US Fed district office. But it isn't going to happen any time soon, if ever.

      One other quote from the PDF - TARGET is a catchy term with several meanings that are not all connected with each other at first glance. To which I would add, nor with the meaning of the word itself. It then goes on to talk about Target balances, I contrast this with the US term for what is essentially the same thing Interdistrict Settlement Accounts :sigh:

      CK

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    3. CK
      If I recall correctly, the McKinsey report was first published in September 2011.

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    4. Thank you very much both for your replies !!

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