Economische aanraders 13-12-2015
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 eerste (twee) alinea’s hier gegeven zijn. Aangezien Engels de taal van het economisch verkeer is, ontkomen we er niet aan vrijwel alleen artikelen in die taal op te nemen.
Sinds begin december nemen we ook een paar extra links op naar artikelen die minder specialistische kennis vereisen. Deze met *** gemerkte artikelen zijn ons inziens ook interessant voor lezers met weinig basiskennis van economie.
*** It Starts: Junk-Bond Fund Implodes, Investors Stuck – Wolf Richter
We have warned about “open-end” bond mutual funds, particularly those with a lot of high-yield bonds. We know some folks who got burned when Charles Schwab’s $13-billion bond fund SWYSX blew up during the financial crisis and lost 60% or so of its value before its data went offline.
Schwab settled all kinds of class-action and individual lawsuits for cents on the dollar. It got in trouble over other bond funds. And other purveyors of bond funds got in trouble too.
Government Debt Is Not Like Private Debt – Simon Wilson
As the Labour Party fights with Tories over the need to slightly rein in government spending in the UK, opponents of even the slightest bit of austerity have turned out to claim that there is no virtue in “living within your means.”
In a recent article in The Guardian, Ha-Joon Chang, attacked even the Tory government’s timid claim that it wasn’t a great idea to spend more than the government collects in tax revenues. But for the new radical left Labour Party on whose behalf Chang’s article was written, this notion is as quaint as it is “simply wrong.”
Piketty Is Wrong: Markets Don’t Concentrate Wealth – Louis Rouanet
The old Marxist apocalyptical fear of ever-rising inequality in capitalist societies is growing. The capitalist elite, it is said, benefit from a dynamic of infinite accumulation of wealth and will be able soon to buy everything and everybody, including the government. This fear of unlimited accumulation of wealth by a few was the main theme of Thomas Piketty’s Capital in the Twenty-First Century, published in French in 2013.
International macroeconomic policy coordination – Jeffrey Frankel
Calls for coordination of macroeconomic policy have made a comeback since the Global Crisis. This column reviews this return of international policy coordination, both in terms of fiscal and monetary policy. It discusses recent developments and considerations in fiscal and monetary policy games, and cautions that most but not all calls for coordination are useful.
*** The Fallacy that Weakening Your Currency Generates Prosperity – Charles Hugh Smith
Those demanding that the purchasing power of the currency be devalued are impoverishing everyone who holds the currency.
Of the many economic policies that are accepted as true yet are absolute nonsense, perhaps none is more achingly nonsensical than the notion that weakening a nation’s currency will magically make that nation prosperous.
Like the equally nonsensical Keynesian Cargo Cult’s misplaced obsession with “aggregate demand” driving “growth,” the idea that devaluing one’s money makes one more prosperous does not make even rudimentary sense.
Credit Suisse Warns On China: “Some Companies Are Having To Borrow To Pay Staff Salaries” – Tyler Durden
During October, the credit impulse in China rolled over and died.
To be sure, the writing was on the wall before the data was released. Early in November, MNI suggested that according to discussions with bank personnel in China, data on lending for October was likely to come in exceptionally weak. As we noted at the time, that would mark a reversal from September when the credit impulse looked particularly strong and the numbers topped estimates handily. “One source familiar with the data said new loans by the Big Four state-owned commercial banks in October plunged to a level that hasn’t been seen for many years,” MNI added.
Brazil Faces Disastrous Downgrade Debacle: Here’s What You Need To Know – Tyler Durden
Back on September 9, S&P threw Brazil in the junk bin.
“We anticipate that within the next year [another] downgrade could stem in particular from a further deterioration of Brazil’s fiscal position, or from potential key policy reversals given the fluid political dynamics, including a further lack of cohesion within the cabinet,” the ratings agency noted, explaining its negative outlook. “A downgrade could also result from greater economic turmoil than we currently expect either due to governability issues or the weakened external environment.”
Suffice to say that the political “dynamics” have not become more favorable despite some observers’ contention that the further we move down the road to a Rousseff impeachment, the happier the market will be given her track record.
The Flaws in Basic Income for Everyone – Charles Hugh Smith
Proponents claim Basic Income can be paid by redirecting existing welfare programs, but a quick review reveals this as nonsense.
Finland made the news recently by proposing a pilot program of guaranteed income for all, also known as Universal Basic Income: Desperate Finland Set To Unleash Helicopter Money Drop To All Citizens.
The goal is two-fold: by providing every household with a minimum income, regardless of what other income the individuals might earn, the program does two things: it provides everyone enough money to get by and it removes the disincentive to work inherent in the conventional welfare model: in the current model, recipients who earn money lose their benefits, leaving them no better off if their earnings are modest.
China’s Steel Industry Bleeds, Prices Collapse, Losses Mount, and Now the Government Gets Gloomy – Wolf Richter
Steel, which goes into nearly everything from skyscrapers to cookware, has become symbolic for what ails China, the world’s largest consumer of it. After years of colossal manufacturing and building booms, soaring demand for steel, and ballooning steel-making capacity, everything has curdled.
The average price of steel in China has collapsed 30.6% so far this year, after having already fallen four years in a row: 7.8% in 2011, 11.6% in 2012, 7.6% in 2013, and 16% in 2014, according to data from Beijing Lange Steel Information Research Center, cited by the People’s Daily, the official newspaper of the Chinese Communist Party.
No, “Big Data” Can’t Predict the Future – Per Bylund
With Google’s dominance in the online search engine market we entered the Age of Free. Indeed, services offered online are nowadays expected to be offered at no cost. Which, of course, does not mean that there is no cost to it, only that the consumer doesn’t pay it. Early attempts financed the services with ads, but we soon saw a move toward making the consumer the product. Today, free and unfree services alike compete for “users” and then make money off the data they collect.
Data has always been used, but what’s new for our time is the very low (or even zero) marginal cost for collecting and analyzing huge amounts of data. The concept of “Big Data” is taking over and is predicted to be “the future” of business.
The coming wave: Where emerging market investors will put their money – George Andrew Karolyi, David Ng, Eswar Prasad
Few economists understate the importance of emerging market economies in terms of world GDP and global growth prospects. This column asks where the future of emerging markets’ investments lie. Where investors have focused in the past and institutional path dependency are important determinants of emerging markets’ allocation of international investment portfolios. This has implications for the geographical distribution of emerging markets’ portfolio investments, a force to reckon with in international financial markets.
China Exports Most Deflation To The US Since The Financial Crisis – Tyler Durden
Today’s import price index report from the BLS showed a modest improvement at the headline level: declining by 0.40% this was half the expected decline of -0.80% and a modest pick up from last month’s -0.50%. A big reason for this continues to be oil, which saw a -2.5% drop in November after a 0.1% increase the prior month, with import prices for non-fuel products down -0.2%, the highest since June.
Annually, the pace of declines also picked up modestly dropping “only” -9.4% from a year ago, higher than the -10.50% slide in October. Import prices have now seen an annual decline for 16 consecutive months starting in July 2014.
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.