l’allemagne et la france face à la crise: aspects économiques · conseil d‘analyseeconomique...
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Conseil d‘Analyse Economique franco-allemand (CEPII, Paris, 12 Janvier 2009)„Crise et restructuration de la finance mondiale : points de vue franco-allemands“
L’Allemagne et la France face à la crise: Aspects économiques
Dr. Stefan KoothsAbteilung Konjunktur (Département Analyse macroéconomique et Prévisions)
CAEFACrise financière:
Aspects économiques
Outline
Damage done and repair work (so far)
Financial industry as producing unit
- Financial losses and domestic income
- Banking sector’s business model after the crisis
Banking sector as financial intermediary
- Lending capacity
Money multiplier
Equity ratios
- Risk premiums and credit cost
- Interbank market turbulence
Coping with the crisis and fighting recession
CAEFACrise financière:
Aspects économiques
Outline
Damage done and repair work (so far)
Financial industry as producing unit
- Financial losses and domestic income
- Banking sector’s business model after the crisis
Banking sector as financial intermediary
- Lending capacity
Money multiplier
Equity ratios
- Risk premiums and credit cost
- Interbank market turbulence
Coping with the crisis and fighting recession
CAEFACrise financière:
Aspects économiques
Global write-offs and losses: 732 bn US-DollarSource: Bloomberg; period from beginning of 2007 to end-2008
4
France4%
Germany10%
other Eurozone4%
other EU10%
RoW72%
CAEFACrise financière:
Aspects économiques
Capital raised world-wide: 789 bn US-DollarSource: Bloomberg; period from mid-2007 to end-2008
5
France5% Germany
7%
other Eurozone7%
other EU21%
RoW60%
CAEFACrise financière:
Aspects économiques
Write-offs and capital raised in France, GermanyBn Euro; Source: Bloomberg
60
10
20
30
40
50
60
France Germany
Writedown & Loss Capital Raised
1 Percent of GDP
2 Percent of GDP
CAEFACrise financière:
Aspects économiques
Outline
Damage done and repair work (so far)
Financial industry as producing unit
- Financial losses and domestic income
- Banking sector’s business model after the crisis
Banking sector as financial intermediary
- Lending capacity
Money multiplier
Equity ratios
- Risk premiums and credit cost
- Interbank market turbulence
Coping with the crisis and fighting recession
CAEFACrise financière:
Aspects économiques
Impact on income and value-added
Are financial losses lost in the National Accounts?
- Theoretically plausible (income as consumption possibility) as foreign financial assets are involved from the European perspective
- Conceptually, revaluations of financial assets are out of the production-based income-creation system of National Accounts (“value added = production of financial services” not affected)
Write-offs within the financial sector do not directly matter for GDP or GNI (revaluations are recorded in the financial accounts)
But: Second-round effects (reduced interest payments on financial assets) do matter for GNI in upcoming years
Expected production-side effect less pronounced in France and Germany than in the Anglo-Saxon economies8
CAEFACrise financière:
Aspects économiques
Financial industry’s share in total value added
9 0
2
4
6
8
10
12
14
2000 2001 2002 2003 2004 2005 2006
France Germany Switzerland UK USA
CAEFACrise financière:
Aspects économiques
Outline
Damage done and repair work (so far)
Financial industry as producing unit
- Financial losses and domestic income
- Banking sector’s business model after the crisis
Banking sector as financial intermediary
- Lending capacity
Money multiplier
Equity ratios
- Risk premiums and credit cost
- Interbank market turbulence
Coping with the crisis and fighting recession
CAEFACrise financière:
Aspects économiques
MFI capital base and balance sheet ratiosBill. Euro (left scale), percentage points (right scale)
11
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
0
50
100
150
200
250
300
350
400
450
Capital and reserves (FRA) Capital and reserves (GER)
Equity ratio (FRA) Equity ratio (GER)
Domestic lending to equity ratio (FRA) Domestic lending to equity ratio (GER)
CAEFACrise financière:
Aspects économiques
Monetary base and money multiplierBn Euro (left scale), money multiplier (right scale)
12
0
2
4
6
8
10
12
14
0
100
200
300
400
500
600
700
800
900
1000
Monetary Base Money Multiplier
CAEFACrise financière:
Aspects économiques
Lending to non-financial corporationsCredit volume in bn Euro (left scale), interest rates in percent (right scale)
13
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
0
100
200
300
400
500
600
700
800
900
1000Lending (FRA) Lending (GER)
Interest Rate (FRA) Interest Rate (GER)
ECB (Main Financing) EURIBOR (3 Months)
Average annual growth: + 6 % (FRA) 1 % (GER)
+ 13 % (FRA)+ 8 % (GER)
CAEFACrise financière:
Aspects économiques
Risk (and liquidity) premiumsYield spreads of German securities vis-à-vis German federal bonds
14
-0,5
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
Mortgage bonds Bank debt securities Corporate bonds
CAEFACrise financière:
Aspects économiques
Lending to consumersCredit volume in bn Euro (left scale), interest rates in percent (right scale)
15
0,00
2,00
4,00
6,00
8,00
10,00
12,00
0
100
200
300
400
500
600Lending (FRA) Lending (GER)
Interest Rate (FRA) Interest Rate (GER)
ECB (Main Financing) EURIBOR (3 Months)
CAEFACrise financière:
Aspects économiques
Lending for house purchaseCredit volume in bn Euro (left scale), interest rates in percent (right scale)
16
0
1
2
3
4
5
6
7
0
200
400
600
800
1000
1200Lending (FRA) Lending (GER)
Interest rate (FRA) Interest rate (GER)
ECB (Main Financing) EURIBOR (3 Months)
CAEFACrise financière:
Aspects économiques
Interbank lending (Eurozone)Credit volume in bn Euro
17
0
500
1000
1500
2000
2500
Over 2 years Over 1 and up to 2 years Up to 1 year
CAEFACrise financière:
Aspects économiques
EURIBOR-EUREPO spread (Eurozone)in basis points, 3-months maturity
18
0
20
40
60
80
100
120
140
160
180
200
CAEFACrise financière:
Aspects économiques
Banking system’s liquidity position (Eurozone)Bn Euro
19
-100
-50
0
50
100
150
200
250
300
350
400
450
Deposit facility Current account Excess reserves
CAEFACrise financière:
Aspects économiques
Outline
Damage done and repair work (so far)
Financial industry as producing unit
- Financial losses and domestic income
- Banking sector’s business model after the crisis
Banking sector as financial intermediary
- Lending capacity
Money multiplier
Equity ratios
- Risk premiums and credit cost
- Interbank market turbulence
Coping with the crisis and fighting recession
CAEFACrise financière:
Aspects économiques
General response to the financial crisis
The world won’t be the same as the one before the crisis:
“… the one thing we can be almost certain of is when the next crisis comes, it won’t involve AAA-rated subprime mortgage CDOs” (A. K. Kashyap et al., 2008)
Need for forward-looking regulation
21
CAEFACrise financière:
Aspects économiques
Self-healing/-stabilizing market mechanisms
Crisis is revealing/clearing unsustainable structures
Fighting overshooting, not market correction per se
Resurrection of risk-awareness
Pre-crisis levels not a reliable benchmark
Lowered “reservation” return on capital
Reduction of opportunity cost of real investment projects
Final return on financial assets not detached from real investment
Global credit crunch less likely
22
CAEFACrise financière:
Aspects économiques
France and Germany in recent years
Quite different structures …
… but equally successful(to our mutual astonishment)
Some diverging trends might explain the alternative approaches to anti-recession programs in the recent past (see following 3 slides)
23
CAEFACrise financière:
Aspects économiques
Foreign tradeExports (lines, left scale) and trade surplus (bars, right scale) as percent of GDP
24
-8
-6
-4
-2
0
2
4
6
8
20
25
30
35
40
45
50
1991 1995 1999 2003 2007
France Germany
CAEFACrise financière:
Aspects économiques
Importance of the public sectorPublic spending ratio in percent
25
42
44
46
48
50
52
54
56
58
1991 1995 1999 2003 2007
France Germany
CAEFACrise financière:
Aspects économiques
Fiscal deficitsIn percent of GDP
26-7
-6
-5
-4
-3
-2
-1
0
1
2
1991 1995 1999 2003 2007
France Germany
(former) Maastricht limit
balanced budget
CAEFACrise financière:
Aspects économiques
Economic Outlook: Real GDP growthSeasonally adjusted annualized quarter-on-quarter growth in percent; Source: Eurostat, Global Insight, DIW Berlin
27
-3
-2
-1
0
1
2
3
4
5
6
7
I2005
II III IV I2006
II III IV I2007
II III IV I2008
II III IV I2009
II III IV I2010
II III IV
France Germany
CAEFACrise financière:
Aspects économiques
Business cycle stabilization 1
Impact on real economy not as clear as it seems
- Wealth effects from financial losses cannot be global(US should benefit, obviously they don’t)
- Extinction of asset illusions: decent policy response?
Let automatic stabilizers work(accept “endogenous” fiscal deficits)
Massive exogenous relief due to lower energy prices(e.g. German annual energy import bill lowered by 35 bn Euro)
Germany: facing an “imported” recession
- Export orientation with strong focus on M&E
- Domestic stimuli come with major production shift effects
28
CAEFACrise financière:
Aspects économiques
Impact on value added: Consumption vs. exportsGrowth contribution by sector in percent
29
-0,1 -0,05 0 0,05 0,1 0,15 0,2
Agriculture, mining
Food, textiles, wood, printing
Chemicals
Metal-working
Mechanical engineering
Electrical engineering, furniture
Vehicles
Energy, water supply
Construction
Trade, repair work, restaurants
Transportation
Financial services
Housing, leasing
Software, R&D
Enterprise services
Public administration
Education, health care
Other services
Domestic production
Value added
CAEFACrise financière:
Aspects économiques
Impact on value added: Construction vs. exportsGrowth contribution by sector in percent
30
-0,1 -0,05 0 0,05 0,1 0,15 0,2
Agriculture, mining
Food, textiles, wood, printing
Chemicals
Metal -working
Mechanical engineering
Electrical engineering, furniture
Vehicles
Energy, water supply
Construction
Trade, repair work, restaurants
Transportation
Financial services
Housing, leasing
Software, R&D
Enterprise services
Public administration
Education, health care
Other services
Domestic production
Value added
CAEFACrise financière:
Aspects économiques
Business cycle stabilization 2
Making employment less volatile than production
- Strengthening enterprises to keep their permanent workforces
- Cutting social security contributions for part-time workers
- Taking general, not sector-specific actions
Fiscal deficits do not allow for trial and error
- Few shots only
- Market confidence in government bonds is not god-given(Country = sum of enterprises and private households)
Case for coordinated European programs
- Average national GDP import share of EU member states: 40 %
- EU-wide GDP import share: 20 %
31
CAEFACrise financière:
Aspects économiques
Coherent policy approach: Preventing parallel/competing public actions
Banking sector: Quantitative monetary easing vs. governmental rescue programs
Focusing public interventions on core fields: financial system stabilization vs. commercial rescue programs
Parallel incentives: saving (strengthening private pension schemes) vs. consumption
Leaving room for corrective positive effects of the crisis: Macro stabilization (“total demand”) vs. industry-specific subsidies
Flash in the pan effects of intra-recession demand shifts (e.g. car scrapping discounts) are costly but ineffective
32