Emerging countries must be able to control capital flows: study

By Pedro Nicolaci da Costa

JACKSON HOLE, Wyoming | Sat Aug 24, 2013 12:31pm EDT

JACKSON HOLE, Wyoming (Reuters) - Emerging market nations can be adversely affected by large swings in investment and, therefore, must develop tools to control credit flows or risk relinquishing any independent monetary policy, a study shows.

These findings were presented at the Kansas City Federal Reserve's monetary policy symposium at Jackson Hole, which highlighted the global impact of the unconventional monetary policy of the United States and other major central banks.

Many countries, including India and Brazil, have recently experienced steep sell-offs in their currencies, linked in part to the prospect that the Fed might soon dial down the pace of its bond-buying monetary stimulus.

The Jackson Hole study highlights a shift in conventional economic thinking, which used to champion an open flow of money between countries, regardless of the consequences.

"Macroprudential policies are necessary to restore monetary policy independence for the non-central countries," wrote Helene Rey, professor at the London Business School. "They can substitute for capital controls, although if they are not sufficient, capital controls must also be considered."

That, said the study, is because countries with floating exchange rates, the dominant global practice, would be abdicating their control over interest rates and credit creation from sources outside their control.

"Independent monetary policies are possible if - and only if - the capital account is managed, directly or indirectly, via macroprudential policies," Rey said. These can take many forms, including efforts to restrain credit growth in particular areas of the economy.

"Since, for a country, the most dangerous outcome of inappropriately loose global financial conditions is excessive credit growth, a sensible policy option is to monitor directly credit growth and leverage in each market," she said.

Terrence Checki, executive vice president of the Federal Reserve Bank of New York, charged with commenting on the paper, pushed back against the notion that rich-country central banks should start paying more attention to the international effects of their policies.

He said that, in keeping with conventional wisdom at the Fed, monetary policy should be aimed at domestic objectives.

"It's not clear we can control the financial cycle very well with monetary policy," Checki said.

(Editing by Vicki Allen and Gunna Dickson)

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Emerging countries must be able to control capital flows: study

By Pedro Nicolaci da Costa

JACKSON HOLE, Wyoming | Sat Aug 24, 2013 12:31pm EDT

JACKSON HOLE, Wyoming (Reuters) - Emerging market nations can be adversely affected by large swings in investment and, therefore, must develop tools to control credit flows or risk relinquishing any independent monetary policy, a study shows.

These findings were presented at the Kansas City Federal Reserve's monetary policy symposium at Jackson Hole, which highlighted the global impact of the unconventional monetary policy of the United States and other major central banks.

Many countries, including India and Brazil, have recently experienced steep sell-offs in their currencies, linked in part to the prospect that the Fed might soon dial down the pace of its bond-buying monetary stimulus.

The Jackson Hole study highlights a shift in conventional economic thinking, which used to champion an open flow of money between countries, regardless of the consequences.

"Macroprudential policies are necessary to restore monetary policy independence for the non-central countries," wrote Helene Rey, professor at the London Business School. "They can substitute for capital controls, although if they are not sufficient, capital controls must also be considered."

That, said the study, is because countries with floating exchange rates, the dominant global practice, would be abdicating their control over interest rates and credit creation from sources outside their control.

"Independent monetary policies are possible if - and only if - the capital account is managed, directly or indirectly, via macroprudential policies," Rey said. These can take many forms, including efforts to restrain credit growth in particular areas of the economy.

"Since, for a country, the most dangerous outcome of inappropriately loose global financial conditions is excessive credit growth, a sensible policy option is to monitor directly credit growth and leverage in each market," she said.

Terrence Checki, executive vice president of the Federal Reserve Bank of New York, charged with commenting on the paper, pushed back against the notion that rich-country central banks should start paying more attention to the international effects of their policies.

He said that, in keeping with conventional wisdom at the Fed, monetary policy should be aimed at domestic objectives.

"It's not clear we can control the financial cycle very well with monetary policy," Checki said.

(Editing by Vicki Allen and Gunna Dickson)

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Emerging countries must be able to control capital flows - study

By Pedro Nicolaci da Costa

JACKSON HOLE, Wyoming | Sat Aug 24, 2013 5:29pm BST

JACKSON HOLE, Wyoming (Reuters) - Emerging market nations can be adversely affected by large swings in investment and, therefore, must develop tools to control credit flows or risk relinquishing any independent monetary policy, a study shows.

These findings were presented at the Kansas City Federal Reserve's monetary policy symposium at Jackson Hole, which highlighted the global impact of the unconventional monetary policy of the United States and other major central banks.

Many countries, including India and Brazil, have recently experienced steep sell-offs in their currencies, linked in part to the prospect that the Fed might soon dial down the pace of its bond-buying monetary stimulus.

The Jackson Hole study highlights a shift in conventional economic thinking, which used to champion an open flow of money between countries, regardless of the consequences.

"Macroprudential policies are necessary to restore monetary policy independence for the non-central countries," wrote Helene Rey, professor at the London Business School. "They can substitute for capital controls, although if they are not sufficient, capital controls must also be considered."

That, said the study, is because countries with floating exchange rates, the dominant global practice, would be abdicating their control over interest rates and credit creation from sources outside their control.

"Independent monetary policies are possible if - and only if - the capital account is managed, directly or indirectly, via macroprudential policies," Rey said. These can take many forms, including efforts to restrain credit growth in particular areas of the economy.

"Since, for a country, the most dangerous outcome of inappropriately loose global financial conditions is excessive credit growth, a sensible policy option is to monitor directly credit growth and leverage in each market," she said.

Terrence Checki, executive vice president of the Federal Reserve Bank of New York, charged with commenting on the paper, pushed back against the notion that rich-country central banks should start paying more attention to the international effects of their policies.

He said that, in keeping with conventional wisdom at the Fed, monetary policy should be aimed at domestic objectives.

"It's not clear we can control the financial cycle very well with monetary policy," Checki said.

(Editing by Vicki Allen and Gunna Dickson)

View the original article here

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Emerging countries must be able to control capital flows: study

By Pedro Nicolaci da Costa

JACKSON HOLE, Wyoming | Sat Aug 24, 2013 12:31pm EDT

JACKSON HOLE, Wyoming (Reuters) - Emerging market nations can be adversely affected by large swings in investment and, therefore, must develop tools to control credit flows or risk relinquishing any independent monetary policy, a study shows.

These findings were presented at the Kansas City Federal Reserve's monetary policy symposium at Jackson Hole, which highlighted the global impact of the unconventional monetary policy of the United States and other major central banks.

Many countries, including India and Brazil, have recently experienced steep sell-offs in their currencies, linked in part to the prospect that the Fed might soon dial down the pace of its bond-buying monetary stimulus.

The Jackson Hole study highlights a shift in conventional economic thinking, which used to champion an open flow of money between countries, regardless of the consequences.

"Macroprudential policies are necessary to restore monetary policy independence for the non-central countries," wrote Helene Rey, professor at the London Business School. "They can substitute for capital controls, although if they are not sufficient, capital controls must also be considered."

That, said the study, is because countries with floating exchange rates, the dominant global practice, would be abdicating their control over interest rates and credit creation from sources outside their control.

"Independent monetary policies are possible if - and only if - the capital account is managed, directly or indirectly, via macroprudential policies," Rey said. These can take many forms, including efforts to restrain credit growth in particular areas of the economy.

"Since, for a country, the most dangerous outcome of inappropriately loose global financial conditions is excessive credit growth, a sensible policy option is to monitor directly credit growth and leverage in each market," she said.

Terrence Checki, executive vice president of the Federal Reserve Bank of New York, charged with commenting on the paper, pushed back against the notion that rich-country central banks should start paying more attention to the international effects of their policies.

He said that, in keeping with conventional wisdom at the Fed, monetary policy should be aimed at domestic objectives.

"It's not clear we can control the financial cycle very well with monetary policy," Checki said.

(Editing by Vicki Allen and Gunna Dickson)

View the original article here

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Emerging countries must be able to control capital flows - study

JACKSON HOLE, Wyoming | Sat Aug 24, 2013 4:01pm BST

JACKSON HOLE, Wyoming (Reuters) - Emerging market nations can be adversely affected by large swings in investment, and must therefore develop tools to control credit flows or risk relinquishing any independent monetary policy.

That was the finding of a paper presented at the Kansas City Federal Reserve's monetary policy symposium at Jackson Hole, which highlighted the global impact of the unconventional monetary policy of the United States and other major central banks.

Many countries including India and Brazil have recently suffered steep sell-offs in their currencies, linked in part to the prospect that the Fed might soon dial down the pace of its bond-buying monetary stimulus.

The Jackson Hole study highlights a shift in conventional economic thinking, which used to champion open flows of money between countries regardless of the consequences.

"Macroprudential policies are necessary to restore monetary policy independence for the non-central countries," wrote Helene Rey, professor at the London Business School.

"They can substitute for capital controls, although if they are not sufficient, capital controls must also be considered."

That is because countries with floating exchange rates, the dominant global practice, would be abdicating their control over interests rates and credit creation from sources outside their control, the paper said.

"Independent monetary policies are possible if and only if the capital account is managed, directly or indirectly via macroprudential policies," Rey said.

(Reporting by Pedro Nicolaci da Costa; Editing by Vicki Allen)

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Maersk raises outlook as cost control improve profits

The Carsten Maersk, the first container ship to sail from Japan to Rotterdam since the nuclear disaster at Fukushima, enters Europe's largest port, Rotterdam April 14, 2011.

Credit: Reuters/Jerry Lampen

By Mette Fraende

COPENHAGEN | Fri Aug 16, 2013 6:47am EDT

COPENHAGEN (Reuters) - A.P. Moller-Maersk (MAERSKb.CO) operator of the world's biggest container shipping fleet, raised its annual profit forecast for the business on Friday, helped by tighter cost controls and lower fuel prices.

Maersk shares jumped 6 percent to their highest in 1-1/2 years as investors welcomed a near-doubling of second-quarter earnings at container arm Maersk Line, which generates nearly half of group revenue and is helping counter weakness in the company's oil business.

"The biggest swing factor in Maersk's result is always Maersk Line, and the unit's result today nearly knocks you off your chair," said Sydbank analyst Jacob Pedersen.

"The earnings potential of the shipping unit has surprised many investors today and the share jump certainly does not make the investment any less interesting," Pedersen said.

The Danish company's second-quarter group net profit fell 11 percent to $856 million, against a forecast for a 30 percent drop to $667 million in a Reuters poll of analysts.

While advising caution in calling an end to a shipping sector slump that has weighed heavily on the industry since the 2008 financial crisis, Chief Executive Nils Smedegaard Andersen predicted a measure of stability.

"It is currently our expectation that we can maintain freight rates at the level we have reached now, for the rest of the year," Smedegaard said on a conference call.

Demand for containers has grown as the global economy strengthens gradually but, until recently, container price increases were limited by an influx of new and bigger vessels.

Container rates were under pressure both in the first and second quarters. Maersk pushed up rates on the Asia to Europe route, the world's busiest, by 174 percent on June 28, matching similar increases by rivals such as Germany's Hapag-Lloyd HPLG.UL and China's Cosco Container Lines.

Maersk trimmed its forecast for growth in demand for global seaborne containers this year to 2-3 percent from previously 2-4 percent.

PUSH ON COSTS

Maersk Line, whose vessels make up around 15 percent of the world's container shipping capacity, made a second-quarter net profit of $439 million, significantly exceeding an average analyst forecast of $99 million.

"The very strong cost control program at Maersk Line is helping the company to a large profit and guidance increase," said Alm Brand Markets analyst Jesper Christensen.

Maersk shares traded up 6.3 percent by 0510 ET at 47,560 Danish crowns, against a 0.7 percent increase in the Copenhagen stock exchange's benchmark index .OMXC20CAP.

A 15 percent decline in the average bunker fuel price per tonne and lower bunker consumption in the quarter for Maersk Line helped offset a 13 percent decline in the average container freight rate compared with the same quarter last year.

Total costs for a forty-foot equivalent container unit were cut by nearly 13 percent in the period, mainly driven by vessel network efficiencies, the company said.

Results for the container shipping unit are now seen significantly above those in 2012, against a previous forecast for the results to exceed last year's $461 million, Maersk said.

Net profit for Maersk Oil, the company's second-biggest business unit, tumbled by around 50 percent to $249 million, hit by a lower average oil price and lower production.

Maersk Oil expects a result significantly below 2012, when it made a one-off gain of $1.0 billion from an Algerian tax dispute and divestment gains.

Maersk raised its forecast for group net profit excluding impairment losses and divestment gains to around $3.5 billion from a previous forecast of $2.9 billion. Its kept its forecast for net profit unchanged at $3.3 billion, below last year's $4.0 billion.

(Additional reporting by Ole Mikkelsen; editing by Jason Neely and Tom Pfeiffer)

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Maersk raises outlook as cost control improve profits

The Carsten Maersk, the first container ship to sail from Japan to Rotterdam since the nuclear disaster at Fukushima, enters Europe's largest port, Rotterdam April 14, 2011.

Credit: Reuters/Jerry Lampen

By Mette Fraende

COPENHAGEN | Fri Aug 16, 2013 6:47am EDT

COPENHAGEN (Reuters) - A.P. Moller-Maersk (MAERSKb.CO) operator of the world's biggest container shipping fleet, raised its annual profit forecast for the business on Friday, helped by tighter cost controls and lower fuel prices.

Maersk shares jumped 6 percent to their highest in 1-1/2 years as investors welcomed a near-doubling of second-quarter earnings at container arm Maersk Line, which generates nearly half of group revenue and is helping counter weakness in the company's oil business.

"The biggest swing factor in Maersk's result is always Maersk Line, and the unit's result today nearly knocks you off your chair," said Sydbank analyst Jacob Pedersen.

"The earnings potential of the shipping unit has surprised many investors today and the share jump certainly does not make the investment any less interesting," Pedersen said.

The Danish company's second-quarter group net profit fell 11 percent to $856 million, against a forecast for a 30 percent drop to $667 million in a Reuters poll of analysts.

While advising caution in calling an end to a shipping sector slump that has weighed heavily on the industry since the 2008 financial crisis, Chief Executive Nils Smedegaard Andersen predicted a measure of stability.

"It is currently our expectation that we can maintain freight rates at the level we have reached now, for the rest of the year," Smedegaard said on a conference call.

Demand for containers has grown as the global economy strengthens gradually but, until recently, container price increases were limited by an influx of new and bigger vessels.

Container rates were under pressure both in the first and second quarters. Maersk pushed up rates on the Asia to Europe route, the world's busiest, by 174 percent on June 28, matching similar increases by rivals such as Germany's Hapag-Lloyd HPLG.UL and China's Cosco Container Lines.

Maersk trimmed its forecast for growth in demand for global seaborne containers this year to 2-3 percent from previously 2-4 percent.

PUSH ON COSTS

Maersk Line, whose vessels make up around 15 percent of the world's container shipping capacity, made a second-quarter net profit of $439 million, significantly exceeding an average analyst forecast of $99 million.

"The very strong cost control program at Maersk Line is helping the company to a large profit and guidance increase," said Alm Brand Markets analyst Jesper Christensen.

Maersk shares traded up 6.3 percent by 0510 ET at 47,560 Danish crowns, against a 0.7 percent increase in the Copenhagen stock exchange's benchmark index .OMXC20CAP.

A 15 percent decline in the average bunker fuel price per tonne and lower bunker consumption in the quarter for Maersk Line helped offset a 13 percent decline in the average container freight rate compared with the same quarter last year.

Total costs for a forty-foot equivalent container unit were cut by nearly 13 percent in the period, mainly driven by vessel network efficiencies, the company said.

Results for the container shipping unit are now seen significantly above those in 2012, against a previous forecast for the results to exceed last year's $461 million, Maersk said.

Net profit for Maersk Oil, the company's second-biggest business unit, tumbled by around 50 percent to $249 million, hit by a lower average oil price and lower production.

Maersk Oil expects a result significantly below 2012, when it made a one-off gain of $1.0 billion from an Algerian tax dispute and divestment gains.

Maersk raised its forecast for group net profit excluding impairment losses and divestment gains to around $3.5 billion from a previous forecast of $2.9 billion. Its kept its forecast for net profit unchanged at $3.3 billion, below last year's $4.0 billion.

(Additional reporting by Ole Mikkelsen; editing by Jason Neely and Tom Pfeiffer)

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FAA seeks $2.75 million quality control penalty for Boeing unit

By Alwyn Scott and Doug Palmer

WASHINGTON (Reuters) - The Federal Aviation Administration on Friday said it proposed penalizing Boeing's commercial airplane unit $2.75 million for taking nearly two years to fix a problem with fasteners on its 777 widebody airplanes.

The penalty was unusual in its size and for the fact that it comes nearly three years after Boeing said it addressed the FAA's concerns, which stem from 2008. The FAA regularly imposes smaller penalties for rule violations, but multimillion-dollar amounts are far less frequent.

The action came as Boeing's 787 Dreamliner aircraft has suffered a series of mishaps in recent weeks, including a spontaneous fire on an Ethiopian Airlines-owned 787 that was parked at a remote stand at London's Heathrow Airport.

"Safety is our top priority and a robust quality control system is a vital part of maintaining the world's safest air transportation system," U.S. Transportation Secretary Anthony Foxx said in a statement announcing the action.

"Airplane manufacturers must take prompt and thorough steps to correct safety and compliance problems once they become aware of them," Foxx said.

Boeing said it took corrective action and closed the matter in November 2010 and is working with the FAA to "understand and address any remaining concerns."

Boeing said its actions included greater management oversight, a database for tracking issues and regular meetings with the FAA to ensure any open cases were closed on time.

STEMS FROM 2008

The FAA said Boeing discovered in September 2008 it had been installing non-conforming fasteners on its 777 airplanes, but then took more than two years to implement a plan to correct the problem, which violated regulations by failing to maintain its quality control system.

Boeing stopped using the bad fasteners after the problem was discovered, but some manufacturing issues continued until after the corrective action plan was in place, the FAA said.

"Manufacturers must make it a priority to identify and correct quality problems in a timely manner," FAA Administrator Michael Huerta said in the statement.

The violation carries a penalty of $25,000 a day, but the FAA said it would be willing to settle for $2.75 million and gave Boeing 30 days to respond.

Industry experts said the proposed penalty appeared unusual, not least because it came years after Boeing came into compliance. Some suggested that the FAA may be toughening its stance after being criticized for lax oversight of the 787 by the National Transportation Safety Board earlier this year.

"The headline is so out of sync with the size of the penalty, I'm inclined to view this as muscle flexing by the FAA," said Carter Leake, an investment banker with BB&T Capital Markets/Windsor Group.

The NTSB raised concerns after lithium-ion batteries burned on two 787 jets within two weeks in January. The FAA and other regulators grounded the global fleet of 50 Dreamliners for 3-1/2 months while Boeing redesigned the battery system.

"That's a pretty big fine for the FAA," said Mary Schiavo, a former Department of Transportation Inspector General. She said fasteners were a concern when she was inspector general in the 1990s, and were difficult to police because the parts don't have serial numbers.

"In this case, Boeing was cited for quality control, which suggests bad fasteners were coming in and they didn't have a system in place to catch them," she said.

The FAA's most recent large proposed penalty was a $4 million civil penalty against United Parcel Service for alleged improper maintenance of four cargo aircraft. That case stemmed from 2008 and 2009. In 2012, it proposed a $1 million penalty against Horizon Air for allegedly operating planes that were not in compliance with regulations. The violations spanned 2007 to 2011.

(Reporting by Alwyn Scott and Doug Palmer; Editing by Bill Trott, Carol Bishopric and Bernard Orr)

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Challenges for regional innovation policies in CEE countries: Spatial concentration and foreign control of US patenting. (arXiv:1301.1757v2 [cs.DL] UPDATED)

Subjects: Digital Libraries (cs.DL) Sorry, I could not read the content fromt this page.

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