The Organisation for Economic Cooperation and Development has a new report out summarising data from its “social expenditure database,” which tracks government spending on public health, pensions, and other forms of welfare, as well as private forms of social spending such as group health insurance and non-government pensions. (Thanks to Sky’s Ed Conway for pointing it out to us.)
The first thing that struck us is that we can’t think of anything that explains why some OECD countries (excluding the poorer ones) spend a larger share of GDP on welfare than others. Contrary to stereotypes, the US consistently spends more than Canada, while Germany spends more than Greece and the Norwegian government is stingier than most of Europe. Iceland’s ranking also surprised us. On the other hand, it should surprise no one that France, Belgium, Finland, and Denmark are in the top spots: Read more
Not too clever, comes the answer (unless, strangely, you are in South Africa or Indonesia)…
As part of its worthy attempt to herd the tax authorities of the world towards some form of global coordination on the taxation of multinational companies, the OECD offers us some examples of tax planning structures currently in use.
Skip to page 73 of this document. Can you guess who might be using an “E-commerce structure using a two-tiered structure and transfer of intangibles under a cost-contribution arrangement“? Read more
International transfer pricing might not win any awards for sexy topic of the year, but it is what’s at the heart of the debate around low corporate tax payments by the likes of Starbucks, Google, and Amazon.
To explain why, consider Mr Potato Head… Read more
Chart from a new OECD report estimating the value of implicit sovereign guarantees for reducing the cost of bank debt…
Here’s 158 pages on angel investment across the world. Yes, it’s a very important source of seed funding across the US and much of Europe. H/T @pkedrosky
Markets and governments face an uphill struggle to fund themselves next year amid extreme uncertainty over the eurozone and the global economy, as new figures reveal that the borrowing of industrialised governments has surged beyond $10tn this year and is forecast to grow further in 2012, according to an OECD report. The FT reports the OECD will warn in its latest borrowing outlook, due to be published this month, that financial stresses are likely to continue with the “animal spirits” of the markets – their unpredictable nature – a threat to the stability of many governments that need to refinance debt. Hans Blommestein, head of public debt management at the OECD, said for the foreseeable future it would be a “great challenge” for a wide range of OECD countries to raise large volumes in the private markets, with so-called rollover risk a big problem for the stability of many governments and economies.
Germany is the only country in Europe that can act to save the eurozone and the wider EU from “a crisis of apocalyptic proportions”, the Polish foreign minister warned on Monday in a passionate call for more drastic action to prevent the collapse of the European monetary union, reports the FT. The extraordinary appeal by Radoslaw Sikorski, delivered in the shadow of the Brandenburg Gate in the German capital, came as the Organisation for Economic Co-operation and Development called on European leaders to provide “credible and large enough firepower” to halt the sell-off in the eurozone sovereign debt market, or risk a severe recession. However Wolfgang Schäuble, German finance minister, reiterated his rejection of calls for the ECB to act as a “lender of last resort” in the eurozone, and for the introduction of jointly guaranteed eurozone bonds to relieve the pressure on the most debt-strapped members of the common currency such as Greece and Italy.
Government guarantees for financial institutions are a financial crisis thing, right?
Wrong. Read more
The Federal Reserve and the Bank of England should follow the European Central Bank and implement “early” rises in interest rates, the Organisation for Economic Co-operation and Development said on Wednesday, as it urged central banks to respond to evidence of self-sustaining growth, reports the FT. Celebrating its 50th birthday, the Paris-based international organisation had an upbeat message on the global economy, which allowed fiscal and monetary policies to move towards more normal settings. “We are in a phase of strongish recovery with some good signs that [the recovery] is becoming less policy driven and more self-sustained,” Pier Carlo Padoan, the OECD’s chief economist, told the Financial Times. The economic forecasts of the OECD are little changed and show steady but unspectacular growth across the OECD’s advanced member economies in the years ahead.
A chart from the OECD’s latest economic outlook:
Investors in eurozone bond markets stand accused of letting “animal spirits” affect their judgment on the risk of a European debt default, creating a situation where financial markets could force weaker countries into excessive budget cutting, the FT reports. A senior official at the Organisation for Economic Co-operation and Development criticised the behaviour of some investors that has led to sharp swings in the yields on government bonds issued by Greece, Ireland, Portugal and Spain. Hans Blommestein, head of bond markets and public debt management at the OECD, told the Financial Times: “The psychology of the markets is very negative and not necessarily based on facts, but rather on animal instincts and spirits that trigger far greater selling in bond markets than is often justified by the data.”
Unemployment levels worldwide are set to remain high amid increasing fears that some elements of joblessness could become entrenched and even more difficult to solve, the Organisation for Economic Cooperation and Development warned on Wednesday. As the FT reports, although unemployment levels have probably peaked, the OECD says in its annual employment outlook that the strength of the current economic recovery is unlikely to be strong enough to absorb the millions of workers who are now jobless.
Public spending cuts and tax rises in advanced economies are required by next year at the latest to deal with “very unfavourable government debt dynamics”, the OECD warned on Wednesday. The organization also saw the need for interest rates in the US, UK and Canada to start rising by the end of the year. But as FT Alphaville pointed out, the report also contained something for the bulls.
Here’s something for stock market bulls to latch on to — the latest OECD Economic Outlook report.
In spite of the turmoil in the eurozone, the OECD has actually revised GDP forecasts for its 31 member countries upwards: Read more
The Organization for Economic Cooperation and Development is counting on China to help deliver stronger global expansion in 2010 and 2011, Bloomberg reports, as the Paris-based group predicted the world economy will grow 4.5 per cent this year on the back of emerging market strength. The outlook for the OECD’s 30 developed world members is 2.7 per cent growth in 2010.
A pat on the back from themselves, that is.
A statement out of the OECD in Paris on Wednesday: Read more
Okay. When the OECD starts making this kind of comparison, it might be tin-hat time.
Via Bloomberg, the OECD’s Director General Angel Gurria presented the Greek crisis as, er, the ebola virus: Read more
Here’s some nice big-picture graphs to pore over on Thursday, courtesy of the OECD’s interim assessment of the recovery in developed economies.
Well, perhaps not so nice for Germany. Read more
Britain is on track to have the fastest economic expansion in the first half of this year of any of the world’s large industrialised economies, bar that of Canada, according to a forecast from the Organisation for Economic Co-operation and Development, the FT reports. According to the think-tank, UK output is likely to expand at an annualised rate of 2 per cent in the first quarter and at an annualised rate of 3.1 per cent in the second quarter of 2010.
From Andrew Garthwaite and his team at Credit Suisse, a scorecard of OECD countries most likely to face government debt funding problems.
Click to enlarge: Read more
The Organisation of Petroleum Exporting Countries meeting in Luanda, Angola, agreed on Tuesday to leave oil output curbs unchanged, while calling for greater compliance with existing output targets — a signal the cartel currently believes the market to be well supplied.
One of the big debate points in Luanda, however, focused on how quick demand recovery in OECD countries would be in 2010. Remarks from Opec’s opening address highlighted the main issues as follows (our emphasis): Read more
The World Bank on Monday warned the recession will be deeper than previously forecast:
June 22 (Bloomberg) — The World Bank said the global recession this year will be deeper than it predicted in March and warned that a flight of capital from developing nations will swell the ranks of the poor and the unemployed. Read more
Bumping along the bottom, according to the latest OECD’s Economic Outlook published on Wednesday.
Fom Reuters. Emphasis ours; Read more
No surprise, really, in news that Bloomberg has had a Freedom of Information request to find out the results of the banking stress tests in the UK turned down.
This is Britain, after all. Read more
The OECD has published its latest set of leading indicators. They’re not great. But you don’t need us to tell you that. Here’s Albert Edwards:
The OECD have just released their latest leading indicators. Amid mounting optimism of investors that the global economy is bottoming, these data suggest no such thing is occurring. Indeed they are catastrophically weak. Of particular interest in this context is the leading indicator for China (chart included, but also see website). It is suffering one of the biggest collapses of all the lead indictors that the OECD monitor. This suggests no imminent recovery is at hand there . Indeed as per my recent note, and despite the hopes of many in the markets the data confirms the prospects of continued recession.
Lax monetary policy in countries such as China and Japan is fuelling the boom in private equity buy-outs that is worrying regulators and unions across the world, according to a report published today, writes Martin Arnold in the FT on Monday.
The report says “distortions” in the global financial system – similar to those created by the Louvre Accord to shore up the US dollar in the late 1980s – are being exploited by the use of new derivatives products. The resulting excess liquidity is pushing up asset prices, increasing the risk of over-leveraged deals. Read more
The recent decline in global equity prices is a minor correction and not a significant fall-out, the Organisation for Economic Co-operation and Development says in a report published on Tuesday. In an interim assessment, issued between the OECD’s November and May reviews of the world economy, the Paris-based body said that although equity prices had been volatile, “to some extent this may reflect a measure of normalisation in the pricing of risk”.
Jean-Philippe Cotis, OECD chief economist, said that after a long period of appreciation in asset prices, “you finish up with corrections which are more or less strong; the one we’ve just seen was not major.” He declined to say whether share prices were overvalued, declaring the OECD “agnostic” on the issue. Read more