Economische aanraders 04-10-2015
Veren of Lood biedt u op zondag wekelijks een inkijkje in 10 belangrijke of informatieve artikelen en interviews die de voorafgaande 7 dagen op economisch terrein verschenen.
De kop is de link naar het oorspronkelijke artikel, waarvan de eerste (twee) alinea’s hier gegeven zijn.
The London Float And PBOC Gold Purchases – Koos Jansen
This week I listened to an interview with a Swiss refiner which promptly reminded me of an interview I conducted with Alex Stanczyk (currently Managing Director of Physical Gold Fund SP) on 9 September 2013 about what he was hearing from industry insiders on Chinese gold demand. Back then we knew very little about the Chinese gold market and how physical gold across the globe was flowing towards China. This started to change on 18 September 2013 when I published my first analysis on the structure of the Chinese gold market with the Shanghai Gold Exchange (SGE) at its core; a topic that since then has been discussed by researchers at investment banks, in the blogosphere and in the mainstream media.
The Coming Corporate “Crime Wave” – William L. Anderson
In a recent appearance before Congress, Deputy Attorney General Sally Quillian Yates declared that the US Department of Justice is going to ratchet up its prosecution of individuals employed in corporations as part of a larger push against “white collar crime.” There is no doubt that such prosecutions will be very popular to a large section of voters, given that presidential candidates like Bernie Sanders, Hillary Clinton, and Martin O’Malley, along with Massachusetts Senator Elizabeth Warren pretty much have declared that nearly all American businesses are part of a massive criminal conspiracy that must be brought down by federal authorities.
The Dangerous Illusion That Risk Can Be Offloaded Onto Others – Charles Hugh Smith
This confidence in central banks raises a pernicious systemic risk.
Do you drive carelessly because your auto is equipped with airbags? Perhaps not. But would you drive more cautiously if you were perched on the front bumper? If even the slightest collision would crush the driver’s legs to pulp, I think it is safe to say we would all drive with a higher awareness of risk and with greater caution.
The faith that airbags and dashboards protect us in all conditions and times is misplaced. If vehicles were truly safe, how is it that 32,700 people lose their lives in vehicle accidents every year in the U.S. and hundreds of thousands of others are injured?
US Manufacturing Recession Draws Eerie References to 2009 – Wolf Richter
“The Chicago Business Barometer declined 5.7 points to 48.7 in September as Production growth collapsed and New Orders fell sharply.”
These are the propitious words with which the Chicago Business Barometer by MNI Indicators started out this morning. And it wasn’t the first of the regional manufacturing reports to have conniptions about the sudden deterioration in manufacturing.
Argentina Forces “Pesofication” of Dollar Assets – to Avoid Bond Payment due Monday? – Biance Fernet
Last Tuesday, Argentina’s securities regulator, the CNV, shocked markets by announcing Resolution 646 requiring that mutual funds price dollar-denominated assets in pesos at the official government rate rather than the market rate that is closer to the parallel or blue dollar. Despite efforts from banks and industry organizations to organize a longer time period in which to react to this change, Economy Minister Axel Kicillof refused to meet with representatives, and the law came into force on Friday.
The Reality Behind the Numbers in China’s Boom-Bust Economy – Yonathan Amselem
Last year, the world was stunned by an IMF report which found the Chinese economy larger and more productive than that of the United States, both in terms of raw GDP and purchasing power parity (PPP). The Chinese people created more goods and had more purchasing power with which to obtain them — a classic sign of prosperity. At the same time, the Shanghai Stock Exchange Composite more than doubled in value since October of 2014. This explosion in growth was accompanied by a post-recession construction boom that rivals anything the world has ever seen. In fact, in the three years from 2011 – 2013, the Chinese economy consumed more cement than the United States had in the entire twentieth century. Across the political spectrum, the narrative for the last fifteen years has been that of a rising Chinese hyperpower to rival American economic and cultural influence around the globe. China’s state-led “red capitalism” was a model to be admired and even emulated.
China’s Leadership: Brilliant or Clueless? – Charles Hugh Smith
What worked in the post-global financial meltdown era of 2008-2014 will not work the same magic in the next seven years.
I am often amused by the Western media’s readiness to attribute godlike powers of long-term planning and Sun-Tzu-like strategic brilliance to China’s leadership. A well-known anecdote illustrates the point.
Japan Deflation – John Cochrane
Deflation returns to Japan. Tyler Cowen has a thoughtful Marginal Revolution post, expressing puzzlment. Scott Sumner discussion here, and Financial Times coverage.
Let’s look at the bigger picture. Here is the discount rate, 10 year government bond rate and core CPI for Japan. (CPI data here if you want to dig.)
If you parachute down from Mars and all you remember from economics is the Fisher equation, this looks utterly sensible. Expected inflation = nominal interest rate – real interest rate. So, if you peg the nominal interest rate, inflation shocks will slowly melt away. Most inflation shocks are individual prices that go up or down, and then it takes some time for the overall price level to work itself out.
Following in Ancient Rome’s Footsteps: Moral Decay, Rising Wealth Inequality – Charles Hugh Smith
If you want to understand why Rome declined, look no further than the moral decay of ruling Elites.
There are many reasons why Imperial Rome declined, but two primary causes that get relatively little attention are moral decay and soaring wealth inequality. The two are of course intimately connected: once the morals of the ruling Elites degrade, what’s mine is mine and what’s yours is mine, too.
I’ve previously covered two other key characteristics of an empire in terminal decline: complacency and intellectual sclerosis, what I have termed a failure of imagination.
The Great Yield Divergence – Frances Coppola
When a former Bank of England deputy governor gives a presentation entitled “Are Low Interest Rates Natural?” to a extraordinarily high-powered audience of academics and monetary policymakers, you can bet he will come up with some great charts. Charlie Bean’s historical analysis of long-term real and nominal yields in the UK is amazing:
It is very evident that for most of the last 200 years, nominal and real consol yields have been pretty much pinned together. Charlie said that the gold standard prevented rates deviating by keeping the price level under control. But I am unconvinced by this.
Disclaimer: De VoL-redactie selecteert deze artikelen op interessante inzichten, of naar wij denken nuttige informatie. Wij kunnen echter geen enkele aansprakelijkheid aanvaarden voor de gevolgen van beslissingen die op grond hiervan door lezers zijn genomen, zakelijk zomin als privé.