January 24, 2022

Euro Official, in New Role, Aims to Mend Rift Over Austerity

BRUSSELS — Jeroen Dijsselbloem, the newly elected president of the group of ministers overseeing the euro, said on Monday he wanted to heal the rift over austerity policies that had bred mistrust between southern and northern nations using the currency.

Mr. Dijsselbloem, 46, the Dutch finance minister, also said he wanted to improve the stature of the group, and the image of the currency, after three years of near-constant crises and moments of deep division.

The only opposition during the vote to elect Mr. Dijsselbloem, held late Monday, came from Luis de Guindos, the Spanish economy minister. Mr. Dijsselbloem, whose term lasts two-and-a-half years, told a news conference that Mr. de Guindos offered no explanation for the decision but he said the Spanish move should not “lead to dramatic consequences.”

Spain is among the countries in southern Europe to have been hardest hit by the austerity policies that northern nations like Finland, Germany and the Netherlands have insisted on as an important solution to the euro crisis.

Spanish officials have been irritated by the preponderance of representatives from so-called Triple-A rated countries, which pay less to borrow than countries with weaker ratings, in top economy jobs in Europe. Spanish officials were particularly angered by a decision last year not to select a Spaniard for a seat on the executive board of the European Central Bank.

In a sign of his concern about fractures in the euro zone, Mr. Dijsselbloem pledged to do what he could to assuage those tensions in his new role coordinating meetings of finance ministers when they make decisions like giving political approval for bailouts and pressing governments to shore up their finances.

“If we are going to approach the euro zone and the euro area as a zone with a harsh line in the middle between Triple-A and non-Triple-A, between the north and the south, there’s no way we’re going to move forward and no way are we going to reach decisions that are so much needed,” Mr. Dijsselbloem said. “So that will definitely not be my approach,” he said.

The French also had concerns about putting a representative from the Netherlands in charge of the group and they insisted that Mr. Dijsselbloem explain to the other 16 finance ministers in the Eurogroup how he intended to carry out the job before the vote was held.

But the French finance minister, Pierre Moscovici, told a news conference that he was satisfied with the outcome because he expected Mr. Dijsselbloem to act fairly. “It’s a Dutchman who is president; it’s not a Dutch presidency,” Mr. Moscovici said.

Mr. Moscovici said he expected other top finance jobs, including the job of overseeing a new banking supervisor based at the European Central Bank, would be allocated to French candidates. But he insisted that was not a reason he voted in favor of Mr. Dijsselbloem’s appointment.

Allies of Mr. Dijsselbloem also have sought to ease fears that his presidency would be divisive, saying that his membership of a left-leaning social democratic party could help him mediate between nations like France with different views to many in the Netherlands on how to stabilize the euro.

“Jeroen should be able, within financial sound limits, to bridge the debate between those who criticize budget cuts and those who emphasize the need to enforce the treaties on budgetary controls,” Thijs Berman, the leader of the Dutch social democrats in the European Parliament, said Monday.

Another goal of Mr. Dijsselbloem is to reform the way the group operates to cut down on the need for emergency sessions and all-night meetings.

In a letter sent to ministers on the eve of the vote, Mr. Dijsselbloem suggested that the group hash out their views in “discussion papers” to make decision-making smoother. He also said he wanted a “clear mandate” to represent the Eurogroup “on an international stage,” including at Group of 20 meetings and in international financial institutions.

“Our focus needs to shift from crisis management to delivering and implementing sound medium-term policies,” Mr. Dijsselbloem said in his letter to ministers.

Article source: http://www.nytimes.com/2013/01/22/business/global/a-call-to-raise-stature-of-euro-overseers.html?partner=rss&emc=rss

Young Women Go Back to School Instead of Work

“I was working part-time at Starbucks for a year and a half,” said Laura Baker, 24, who started a master’s program in strategic communications this fall at the University of Denver. “I wasn’t willing to just stay there. I had to do something.”

Many economists initially thought that the shrinking labor force — which drove down November’s unemployment rate — was caused primarily by discouraged older workers giving up on the job market. Instead, many of the workers on the sidelines are young people upgrading their skills, which could portend something like the postwar economic boom, when millions of World War II veterans went to college through the G.I. Bill instead of immediately entering, and overwhelming, the job market.

Now, as was the case then, one sex is the primary beneficiary. Though young women in their late teens and early 20’s view today’s economic lull as an opportunity to upgrade their skills, their male counterparts are more likely to take whatever job they can find. The longer-term consequences, economists say, are that the next generation of women may have a significant advantage over their male counterparts, whose career options are already becoming constrained.

For now at least, many young women still feel that the deck is stacked against them.

“Almost everyone in my program is female,” said Ms. Baker, who hopes a master’s degree will help her get a job running communications at a nonprofit group. “That’s partly because of the program, but also because as women we feel like we have to be more educated to be able to compete in really any field.”

Women still earn significantly less than men. And in the two and a half years since the recovery officially began, men age 16 to 24 have gained 178,000 jobs, while their female counterparts have lost 255,000 positions, according to the Labor Department.

Apparently discouraged by scant openings, 412,000 young women have dropped out of the labor force entirely in the last two and a half years, meaning they are not looking for work.

Among young men, the labor force fell during the recession but has been flat since the recovery began. Today, across all age groups, an unemployed female worker is 35 percent more likely to drop out of the labor force in the next month than an unemployed male worker.

Some studies suggest that women are pickier about their job choices than men. Already earning lower pay, women are less willing to work when wages fall further, especially if they are able to rely on an employed (and these days, often newly re-employed) husband. Women are also more reluctant to work night or weekend shifts, according to government data on how Americans spend their time, partly because they have more family responsibilities.

“The jobs out there just aren’t very good, and men seem more willing to take them for whatever reason,” said Jonathan L. Willis, an economist at the Federal Reserve Bank of Kansas City. “The women are looking at those same jobs and saying, ‘I’ll be more productive elsewhere.’ ”

Then there are societal influences that affect a person’s willingness to take a lesser job or return to school.

“There is still this heavy cultural message that men should be out there earning money and supporting themselves, and they feel more distressed by losing their breadwinner role,” said Stephanie Coontz, director of research at the Council on Contemporary Families. “We’ve made much more progress overcoming the ‘feminine mystique’ than this masculine mystique.”

While these roles evolve, community colleges are reporting record enrollment.

Both men and women are going back to school, but the growth in enrollment is significantly larger for women (who dominated college campuses even before the financial crisis). In the last two years, the number of women ages 18 to 24 in school rose by 130,000, compared with a gain of 53,000 for young men.

The education gap aside, in some ways young women will already have an advantage over men in the coming decade. Many of the occupations expected to have the most growth, like home health aides and dental hygienists, have traditionally been filled by women. That is not to say that men cannot take those positions, but they may not want to.

“Today young girls are told they can do anything, go into any occupation. But if boys express any interest in traditionally female occupations, they get teased and bullied,” Ms. Coontz said. “Lots of guys are not understanding what’s happening to traditional low-income or middle-income male jobs.”

Jobs in the male-dominated manufacturing industry and in other sectors involving manual labor have been, and still are, in structural decline. These careers can also be hard to maintain indefinitely because youthful strength eventually fades. And now many manufacturing workers do not have pensions to carry them through when their bodies do break down.

“It doesn’t surprise me that in a poor economy women are ramping up their schooling,” said Heather Boushey, an economist at the Center for American Progress, a left-leaning research organization. “The real question is: Why aren’t more men doing that too?”

The main risk in going back to school is the accompanying student loan debt. Tuition increases have been outpacing inflation for years, a trend accelerated by state budget cuts.

“Our funding per student has been cut 25 percent in the last three years,” said Stephen Scott, the president of Wake Technical Community College in Raleigh, N.C., which is one of the fastest-growing community colleges in the country. Consequently, class sizes have risen, and so has tuition. But the students — again, mostly women — still pour in.

“We now have 6,000 students on a waiting list because we didn’t have the resources to offer more classes,” he said.

Those attending more expensive private schools, like Ms. Baker, will have an even tougher time guaranteeing that their educational investment pays off. Including the loans that financed her undergraduate education at Wartburg College in Waverly, Iowa, she will complete her master’s program next year owing about $200,000 in debt.

“I have to have faith that I will eventually get a good job that pays enough to pay my living expenses and pay back my loans,” she said, “and hopefully make me happy in the process.”

Article source: http://feeds.nytimes.com/click.phdo?i=2482af17ea36d9602c9569814151d97d

Grübel Resigns at UBS After Adoboli Rogue Trading Scandal

The resignation was a dramatic fall for Mr. Grübel, who came to be known as “Saint Ossie” for reviving Credit Suisse, another Swiss banking giant, before he was hired out of retirement two and a half years ago to do the same at UBS.

Mr. Grübel decided that the $2.3 billion loss as a result of unauthorized trades by a midlevel employee had made it impossible to run a bank that has lurched from crisis to crisis in recent years and desperately needs to repair its reputation.

“I did not take the step of resigning lightly,” he wrote in an e-mail to staff on Saturday. “I am convinced that it is in the best interests of UBS to approach the future with a new leader.”

He also said the trading scandal had “worldwide repercussions, including political ones.”

The case has added to a global debate about whether there should be more stringent regulations for banks that are so big or interconnected — like UBS — that their problems can spread distress throughout the financial system. In 2008, for instance, UBS required a bailout from Swiss taxpayers after sustaining billions of dollars in losses.

UBS is one of Europe’s biggest banks, and the trading scandal provided another shock to a financial system that is already in a fragile state. European banks have been facing increasing difficulty maintaining the trust of investors and international lenders, making it difficult for them to raise the money they need to do business.

UBS reiterated on Saturday that it had enough capital to cover the trading loss not to seriously threaten the overall health of the bank.

If anything, the UBS episode strengthens the hand of regulators who have called for tighter regulation and insisted that Switzerland’s two biggest banks, UBS and Credit Suisse — whose combined assets are four times the size of the Swiss economy — be required to keep more capital in reserve than smaller banks.

The biggest banks, advocates of tighter regulation maintain, still do not have their risks under control and have not learned the lessons of the 2008 financial crisis.

The chairman of UBS, Kaspar Villiger, said the top priority for the bank was to overhaul its investment banking operation, which has been troubled for years. UBS plans to scale back the unit, which is run by Carsten Kengeter, by cutting parts of the business that require more capital, like credit.

UBS named Sergio P. Ermotti, head of Europe, the Middle East and Africa, as the interim chief executive.

The search for a new chief executive could take up to six months, Mr. Villiger said.

Initially, after a 31-year-old trader in the bank’s London office, Kweku M. Adoboli, was arrested on Sept. 15 and accused of making billions of dollars in unauthorized trades dating to 2008, Mr. Grübel seemed to hold out the possibility of staying at UBS.

“If you ask me whether I feel guilty, I would say no,” he told Der Sonntag, a Swiss newspaper, in the days after Mr. Adoboli’s arrest.

But when the board started one of its annual meetings in Singapore on Wednesday, he began to consider resigning. Mr. Villiger said that in a string of discussions and chats in the days that followed he tried to persuade Mr. Grübel to stay, but he added that Mr. Grübel ultimately felt that resigning was the right thing to do.

The board members then flew back to Zurich from Singapore and the decision to accept Mr. Grübel’s resignation was made on a conference call, Mr. Villiger said.

Mr. Grübel, 67, will not receive a severance payment and there is a six-month notice period, Mr. Villiger said.

During his tenure, Mr. Grübel managed to return UBS to profit by reversing client money outflows at its private banking business and by reducing costs by cutting thousands of jobs.

Julia Werdigier reported from London and Jack Ewing from Frankfurt, and Susanne Craig contributed reporting from New York.

Article source: http://www.nytimes.com/2011/09/25/business/ubs-chief-oswald-grubel-resigns-over-trading-scandal.html?partner=rss&emc=rss

Beck Uses Last Show on Fox to Allude to His New Venture

Mr. Beck, 47, who reached an agreement with Fox to leave half a year before his three-year contract expired, evidently was not permitted to mention GBTV by name, but he was allowed to mention his personal Web site, GlennBeck.com, so on his last broadcast on Thursday he repeatedly encouraged his viewers to go there to “find out where I’m going.” His personal Web site redirected visitors to GBTV.

Then, half an hour after the broadcast, Mr. Beck left Fox’s studio in Midtown Manhattan and headed to a theater nearby where he hosted a webcast on GBTV.com. The webcast was part of an effort by his production company, Mercury Radio Arts, to sign up paying customers for the site before the debut of his new daily show in September.

Speaking through the television set to the members of the media that he said were “celebrating” the end of his Fox show, Mr. Beck said, “You will pray for the time when I was only on the air for one hour every day.”

His forthcoming show on the Web will be two hours long.

Although Mr. Beck’s daily ratings have diminished somewhat this year, he remains a remarkably influential figure, making his departure from Fox after two and a half years all the more interesting. He and his staff repeatedly clashed with Fox executives, but during the last hour of the show that bore his name Mr. Beck thanked the Fox News chief, Roger Ailes, and the News Corporation chief, Rupert Murdoch, “and everybody at this network for their trust.”

In spite of his sometimes rocky relationship with Fox News, Mr. Beck’s ratings success will be difficult to repeat. He often attracted more than two million viewers to the 5 p.m. time slot, a rating that no cable news channel had ever seen regularly at that hour before. He was less successful with advertisers. For two years an advertising boycott has been waged against Mr. Beck, and it has had a visible effect on the 5 p.m. hour, as several hundred advertisers have chosen not to place ads on the show.

About two hours before Mr. Beck’s finale, Fox News announced the temporary replacement for him, “The Five,” a talk show with a rotating panel of opinionated people.

A Fox news release said “The Five” would feature a “roundtable ensemble of five rotating Fox personalities who will discuss, debate and at times debunk the hot news stories, controversies and issues of the day.”

Among the people involved in “The Five” are Greg Gutfeld, who is host of an overnight talk show for Fox; Juan Williams, a Democratic analyst who is a regular on Fox’s “The O’Reilly Factor”; Dana Perino, a former spokeswoman for the Bush White House; and Andrew Napolitano, the host of a libertarian talk show on the Fox Business Network. For the week of July 3, Fox will repeat some of Mr. Beck’s shows.

“The Five” will start on July 11. Fox indicated that it would be shown only this summer, prompting speculation that the channel will devote the hour to one person in the fall.

By then, Mr. Beck will be hosting his new show on GBTV.com at 5 p.m., making him a competitor. But he did not bring that up Thursday. Clutching a microphone that he had on his set at Fox and at HLN, the channel where he worked before, Mr. Beck said, “From New York, good night America,” and left the studio.

Article source: http://feeds.nytimes.com/click.phdo?i=cccc77a66099973553e3077d148d3ee8

Economix: Economics in an Imperfect World

Today's Economist

Edward L. Glaeser is an economics professor at Harvard and the author of “Triumph of the City.”

All good things must come to an end, and after more than two and a half years of producing an Economix post every week, it is time for me to move on. I have greatly enjoyed writing these posts, and I am grateful for the opportunity.

Economix began during a period of great popular interest in economics, spurred on, in part, by the tremendous success of Freakonomics, by Steven Levitt and Stephen Dubner. Initially, many of us thought the blog would be quirky and fun and would focus on the application of economics to the issues of everyday life.

But with the recession, the blog, like the economics profession as a whole, had to focus more on the basics, like unemployment and housing prices and the stimulus plan. While interest in economics remains high, the popular view of economists now seems to be shaped more by “Inside Job” than by the sparkling brilliance of Professor Levitt, and I think that makes the value of Economix greater than ever.

Economics has plenty to contribute to the war of ideas, and I’m grateful that The Times has allowed me and other economists to share the insights of our discipline. John Neville Keynes, the father of John Maynard Keynes, promulgated the distinction between positive and normative economics. Milton Friedman later made that division canonical.

Positive economics attempts to understand the world as it is; normative economics describes how the world should be. Most economists spend most of their time doing positive economics, but most economics columns advocate particular policies, which is implicitly normative economics.

One reason that I’ve enjoyed writing and reading Economix is its emphasis on the positive economics that is the real heart of the discipline, rather than the policy prescriptions that are the more usual fare of the blogosphere and the media.

Positive economics, as usually practiced today, combines formal, mathematical models and lots of quantitative, statistical work. That’s not what economists did before World War II; Keynes’s General Theory is short on both formal models and statistics. But formal theory and statistics have triumphed, and that’s a good thing.

In the wake of the recent crash and recession, it has become fashionable to deride the quants, whether on Wall Street or in the academy. After all, few of them saw it coming. The critics may be right to criticize excessive overconfidence, but they are wrong to suggest that the fault lies in either formal models or statistical work.

Hubris has been part of the human condition, with or without math, long before the Black-Scholes asset-pricing formula. Mathematical models create discipline. They ensure that we specify our assumption and that our conclusions then follow from our assumptions. Statistics then provide us with indispensable tests of our theories.

But we need to always remember that data and statistical tests never prove a theory. Typically, many different theories can explain almost any observed phenomenon. Data  allows us only to reject a theory. The theories that survive are those that haven’t been rejected yet, and that’s a good reason for humility.

Normative economics also has a distinctive approach that deserves to be part of the electronic agora. At its best, normative economics draws heavily on positive economics: scores of studies have shown the ways in which rent control can screw up a housing market, with too little supply and misallocation of housing units, and that helps formulate policy prescriptions.

Yet the economic approach to public policy is distinguished by attributes beyond an attention to evidence.

There is a strong predisposition within economics to emphasize individual freedom. Our theories start with the assumption that giving individuals more choices is a good thing — and that assumption leads to the view that people benefit from having more money or lower prices for the goods that they buy.

That assumption doesn’t mean that all regulation is bad or even that, in some cases, people are better off facing fewer soups on a supermarket shelf. Even though people value more choices, they also value information, and an overload of choices can make it hard to figure out which soup is really best. But our assumptions do put freedom first, and that’s an important perspective.

Economics marries a predilection for personal freedom with a longstanding tendency to view the interests of the government as being distinct from the welfare of the people. Adam Smith’s “Wealth of Nations,” modern economics’ founding document, emphasized that point.

In the 18th century, it seemed clear that what was good for King George III was not necessarily good for Britain and certainly was not necessarily good for his American subjects.

Democratic revolutions muddied the waters and made it possible for some to think that the government was a faultless servant of the people’s will, but a healthy skepticism about the benevolence (and competence) of the state continued within economics.

Both markets and governments are quite imperfect, and it is important to weigh their failures against each other.

The world isn’t and shouldn’t be run by economists — many perspectives need to be at the table. But economists have plenty to add: formal models, statistical evidence, a focus on freedom and a sophisticated centuries-old approach to public policy. I am grateful to have been part of The New York Times’s effort to provide a stream of economic commentary.

Article source: http://feeds.nytimes.com/click.phdo?i=ee39205f0c67a35d862fecd62346377d

Week in Review: The Budget Debate, Revealed

The battle ahead “is the big one, and goes to the very major questions about the role of government,” said G. William Hoagland, a former Republican staff director of the Senate Budget Committee. “This is going to be a very fundamental clash of ideologies.”

The Democratic and Republican Parties have their own internal tensions to address as the debate goes forward in Congress and on the presidential campaign trail. But in its early stages at least, it is liberals who are on the defensive.

The aging of the baby boom generation and the costs of maintaining Medicare and Social Security have put the two pillars of the social welfare system on the table for re-examination. The growing weight of the national debt has given urgency to the question of whether the government has become too big and expensive.

The tepid nature of the current economic recovery, following big stimulus packages, has provided an opening to challenge the effectiveness of Keynesianism as the default policy option for government. And the revived energy of grass-roots conservatives has given electoral clout to the movement’s intellectual and constitutional arguments.

Arthur Brooks, president of the American Enterprise Institute, the conservative research organization, said, “The optimistic view is that we have a confluence of the business cycle, of the demography and of the politics that makes it not just possible to achieve real change, but impossible that we not deal with these things if we want this country to continue on the path envisioned by the founders.” So just two and a half years after a presidential election that was in part a repudiation of conservative governance, and with the nation still smarting from the aftereffects of a financial crisis that grew out of failures of markets and regulation, President Obama finds himself in a somewhat surprising position: forced to articulate and sell a vision of how liberalism and the institutions it built in the 20th century can be updated for the constraints of the 21st. 

The speech he delivered Wednesday at George Washington University in Washington was his most ambitious effort so far to do so. In it, he harnessed the language of both left and right to argue against the extremes on both sides while suggesting that many of their core principles were not mutually exclusive — in other words, that Great Society values can endure in a Tea Party moment.

He defined “patriotism” as a shared sense of responsibility for the vulnerable and less fortunate. Basic standards of security for the elderly and poor and government investment in a more prosperous future, he said, can not only coexist with a tradition of “rugged individualists with a healthy skepticism of too much government,” but are also a vital part of what makes America exceptional.

“We are a better country because of these commitments,” he said. “I’ll go further — we would not be a great country without those commitments.”

Republicans in Congress, he suggested, would shred that tradition under cover of a debate that is only nominally about the budget. “The fact is,” he said, “their vision is less about reducing the deficit than it is about changing the basic social compact in America.”

Conservatives would and did object to his implication of heartlessness, but not necessarily to his assessment of their ambition.

The Republican plan put forward by Representative Paul Ryan of Wisconsin, the chairman of the Budget Committee, and adopted by the House on Friday as its policy blueprint for the next decade contains a substantial dose of deficit reduction but is really a manifesto for limited government.

Article source: http://feeds.nytimes.com/click.phdo?i=4502f269b76d86d01ae54532e839677a