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100e aflevering!! Economische aanraders 06-08-2017

Economische aanraders 0

Economische aanraders: Veren of Lood biedt u op zondag wekelijks een inkijkje in (minstens) 10 belangrijke of informatieve artikelen en interviews die de voorafgaande 7 dagen op economisch terrein verschenen op onafhankelijke sites.

De kop is de link naar het oorspronkelijke artikel, waarvan de samenvatting of de eerste (twee) alinea’s hier gegeven worden.

Vandaag is de 100e aflevering van deze rubriek. Kijk nog eens terug naar de oudere overzichten, zoek op steekwoorden die uw interessegebied bestrijken. Het is het waard te zien hoe verder voortschrijdende inzichten soms reikten.

De met *** gemerkte artikelen zijn ons inziens ook interessant voor lezers met weinig basiskennis van economie.

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On the economics of currency competition (Cryptocurrencies) – Jesús Fernández-Villaverde
3 augustus

If the share of payments made by cryptocurrencies increases, government-issued money will face market competition from private issuers. The column argues that, even if this system could maintain price stability in an economy, the market would not provide the socially optimum amount of money. A government could still, however, maximise social welfare using monetary policy in response to peg the real value of money. The threat of competition from private monies may therefore impose welcome market discipline on any government that issues currency.
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European Periphery: Unsafe at Any Speed? – Gene Frieda
25 juli

Five years ago this week, Mario Draghi’s landmark “whatever it takes” speech turned the tide of the euro crisis, the president effectively clarifying the European Central Bank’s role as a conditional lender of last resort to eurozone sovereign borrowers. Having bought time for countries and the wider region to address structural vulnerabilities, how much progress has been made? From our perspective as an investor, the conclusion is: not nearly enough.
Despite Emmanuel Macron’s election as president of France, prospects for deepening monetary union remain poor. Without a mutualised debt instrument or a “supranationalised” banking system, periphery sovereigns such as Italy and Spain remain prone to act more like corporate bonds in periods of cyclical weakness.
What makes the bonds of “periphery” countries act like credit rather than “risk-free” debt? They face a fundamental contradiction: Their economies need to grow fast to reduce debt, but growth must stay weak if competitiveness is to be regained through internal devaluation. As long as surplus savings economies like Germany and the Netherlands fail to deliver more domestic demand, this contradiction will persist.
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The Fed Gave Wall Street a Bomb, and the Taxpayers are Paying Ransom – Tho Bishop
2 augustus

When Janet Yellen testified before the House Financial Services Committee last month, she faced grilling on a topic that hasn’t received enough mainstream attention: the interest being paid on excess reserves at the Fed. While the topic has come up occasionally since the program began in 2008, it is worth noting that Yellen was pushed by both Jeb Hensarling, the committee chairman, and Andy Barr, the chairman of the Monetary Policy Subcommittee. While ending this taxpayer subsidy to Wall Street is important, it’s also important to understand the dangers posed by allowing these excess reserves to be lent out of major financial institutions.
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The US Antitrust Counter-Revolution – The US Antitrust Counter-Revolution
31 juli

Plenty of recent research has highlighted a rise in concentration in the US economy, across different sectors. Economists are now wondering to what extent this is attributable to a shift in the antitrust enforcement philosophy. We review contributions to this debate.
Plenty of recent research has highlighted a rise in concentration in the US economy, across different sectors. Economists are now wondering to what extent this is attributable to a shift in the antitrust enforcement philosophy. We review contributions to this debate.
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Mega-Banks Blow 100% of Earnings on Share-Buybacks & Dividends, Crimp Lending, Constrain Economy – Wolf Richter
2 augustus

“The real economy has little to gain, and much to lose.”
When tighter regulations were imposed on the banks after the Financial Crisis, the largest among them, the very ones that threatened to bring down the financial system, began squealing. Those voices are now being heard by Congress, which is considering deregulating the banks again. In particular, they claim that current capital requirements force banks to curtail their lending to businesses and consumers, and thus hurt the economy.
Nonsense! That’s in essence what FDIC Vice Chairman Thomas Hoenig told Senate Banking Committee Chairman Mike Crapo and the committee’s senior Democrat, Sherrod Brown, in a letter dated Tuesday, according to Reuters. The senators are trying to find a compromise on bank deregulation.
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***Let’s Face It: Monetary Policy Is Failing – Yves Smith
4 augustus

Yves here. This post does a fine job of explaining, in a layperson-friendly manner, why one of the key tenets of mainstream economics, the loanable funds theory, is bunk. It’s nevertheless incorporated in models widely used by central bankers and Serious Economists like Paul Krugman.
The post shows how it has failed in practice. But what is more revealing is it was shown to be incorrect long ago yet orthodox economists refuse to give it up. From an earlier post, which explains the conventional argument first and then why it is wrong:
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Reviving investment in Europe: How to explain (and overcome) continuing business reticence – Jacques Bughin, Jan Mischke
4 augustus

The economic narrative of the EU since the Global Crisis has focused on successive debt crises and persistent stagnation. This column addresses the accompanying, but less well studied, investment slump that occurred over the last decade, using evidence from an extensive survey of business decisionmakers across Europe. Business sentiment towards increased investment is affected not just by historic cash flows and expected future demand, but also the growth of digital economies as well as political concerns such as anti-Europe sentiment.
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***Fake Unicorns: Study Finds Average 49% Valuation Overstatement; Over Half Lose “Unicorn” Status When Corrected – Yves Smith
3 augustus

We’ve written regularly about how private equity firms are widely acknowledged to lie about their portfolio company valuations, inflating them when they are raising new funds, in crappy equity markets, and late in the life of funds, when the most of the remaining holdings are valued at their purchase price but typically sold at a loss.
But their go-go cousins in venture capital tell much bigger whoppers, and with much more visible companies.
A recent paper by Will Gornall of the Sauder School of Business and Ilya A. Strebulaev of Stanford Business School, with the understated title Squaring Venture Capital Valuations with Reality, deflates the myth of the widely-touted tech “unicorn”. I’d always thought VCs were subconsciously telling investors these companies weren’t on the up and up via their campaign to brand high-fliers with valuations over $1 billion as “unicorns” when unicorns don’t exist in reality. But that was no deterrent to carnival barkers would often try to pass off horses and goats with carefully appended forehead ornaments as these storybook beasts. The Silicon Valley money men have indeed emulated them with valuation chicanery.
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***The Dark Underbelly of Spain’s Jobs Recovery – Don Quijones
1 augustus

Where did all the workers go?
Two years ago, the total number of unemployed in Spain, officially speaking, was 5.5 million — the equivalent of 23.2% of the country’s active population. It was the second-highest unemployment rate in the EU, far worse than third-place Hungary (18.5%) but not quite as terrible as Greece (26%).
At that time, Spain was also proud home to the five European regions with the worst levels of unemployment. At the top of the heap was the southern province of Andalusia whose unemployment rate was close to 35%! Even fifth place, Castilla-la Mancha, had an unemployment rate of 29%.
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Why Robots Won’t Cause Mass Unemployment – Jonathan Newman
2 augustus

I made a small note in a previous article about how we shouldn’t worry about technology that displaces human workers:
The lamenters don’t seem to understand that increased productivity in one industry frees up resources and laborers for other industries, and, since increased productivity means increased real wages, demand for goods and services will increase as well. They seem to have a nonsensical apocalyptic view of a fully automated future with piles and piles of valuable goods everywhere, but nobody can enjoy them because nobody has a job. I invite the worriers to check out simple supply and demand analysis and Say’s Law.
Say’s Law of markets is a particularly potent antidote to worries about automation, displaced workers, and the so-called “economic singularity.” Jean-Baptiste Say explained how over-production is never a problem for a market economy. This is because all acts of production result in the producer having an increased ability to purchase other goods. In other words, supplying goods on the market allows you to demand goods on the market.
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10 studies that show how and why ESG investing works – TruValue Labs
10 juli

Earlier this year, we laid out the top 10 reasons Wealth Advisers and Managers are following investor demand to ESG.
The next question: how do ESG, or environment, social, and governance investments, perform? When do these strategies work, and why?
Here’s a look at the circumstances under which ESG-related investing works the best, across different asset classes such as stocks and bonds.
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One Of These 3 Black Swans Will Likely Trigger A Global Recession By End Of 2018 – John Mauldin
28 juli

Exactly 10 years ago, we were months way from a world-shaking financial crisis.
By late 2006, we had an inverted yield curve steep to be a high-probability indicator of recession. I estimated at that time that the losses would be $400 billion at a minimum. Yet, most of my readers and fellow analysts told me I was way too bearish.
Turned out the losses topped well over $2 trillion and triggered the financial crisis and Great Recession.
Conditions in the financial markets needed only a spark from the subprime crisis to start a firestorm all over the world. Plenty of things were waiting to go wrong, and it seemed like they all did at the same time.
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The Bank of Japan’s monetary easing and portfolio rebalancing channel – Sayuri Shirai
31 juli

Portfolio rebalancing through large-scale asset purchases is one of the major transmission channels under the zero lower bound. This column assesses whether the channel has been effective in Japan, focusing in turn on financial institutions, firms, and households. Japanese firms and households are notoriously risk averse, limiting the effectiveness of the portfolio rebalancing channel. These results suggest that more drastic structural reforms and growth strategies are needed.
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On Climate Change – John H. Cochrane
31 juli

As economists, we have a healthy skepticism of large computer based forecasting models. The famous 1972 club of Rome forecast that we would run out of resources, and the grand failure of large scale Keynesian models in the late 1970s are two humbling examples. The “climate” models also feature a lot of questionable economics. A crucial question — how much carbon will the world’s economies add on their own, without Paris-accord policies? That’s economics, very questionable economics, and not meteorology.
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***The First Economics Lesson – Henry Hazlitt
3 augustus

Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics, or medicine — the special pleading of selfish interests.
While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.
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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.

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