Economische aanraders: Veren of Lood biedt u op zondag wekelijks een inkijkje in (minstens) 15 belangrijke of informatieve artikelen en interviews die vooral 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. Er zijn in deze rubriek altijd verschillende economische scholen vertegenwoordigd, en we streven er naar die diversiteit te handhaven.

We nemen wekelijks 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.

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Perpetual bonds are not the best way to finance the European Recovery Fund – Giancarlo Corsetti, Aitor Erce, Antonio Garcia Pascual
14 mei
Prominent voices propose financing the European Recovery Fund using joint perpetual debt. This column argues that there are gains from using European borrowing and lending as two separate policy levers. In a world of ultra-accommodative monetary policy, financing the Fund issuing debt at shorter maturities and passing those low interest rates onto member states through loans with low margin and with very long maturities is financially cheaper. Supporting the recovery through this maturity transformation would reinforce debt sustainability across the EU.
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Here’s What Would Happen If The Fed Launched Negative Rates – Tyler Durden
16 mei
On Thursday, May 7, an unprecedented event took place: after a violent repricing in Eurodollar contracts as near as November 2020, for the first time ever the market was pricing in that negative interest rates are not only coming to the US, but would arrive sometime around the presidential election.
This move prompted a barrage of Fed speakers, including the Fed chair, to remind the public that the Fed really, really, really does not believe in negative rates (but never say never), even though one could say the same thing for the BOJ, the ECB and the SNB… and look at them now. In fact, in a world where growth is only possible with trillions in new debt injections – and with debt already at crushing levels, interest rates have to be as close to zero if not below it – the Fed has emerged as the “rational” outlier that refuses to take rates negative.
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How Central Banks and Lockdowns Are Making the Crisis Worse – Frank Shostak
16 mei
What typifies the phenomenon of the boom-bust cycle is that it is recurrent. What is the reason for this?
Loose monetary policies set the platform for various activities that would not emerge without the easy monetary stance. What loose monetary policy does here is to engineer the transfer of real savings from wealth generating activities to artificially stimulated activities, which we can label as bubble activities.
Over time, these loose monetary policies begin to manifest as increases in price inflation (consumer prices, producer prices, and/or asset prices) and various forms of distortions that economists call overheating.
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***Machine learning against accounting fraud – Satoshi Kondo, Daisuke Miyakawa, Kengo Shiraki, Miki Suga, Teppei Usuki
13 mei
Detecting and preventing accounting fraud is a concern for many policymakers around the world. This column presents a framework that incorporates machine learning techniques to detect and forecast fraudulent behaviour by firms when reporting financial information. The framework relies on a larger set of firm information to achieve better detection performance and, unlike previous frameworks, provides forecasts for potential future accounting fraud.
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Globalization and Financialization Are Dead, and so Is Everything That Depended on Them – Charles Hugh Smith
15 mei
Financialization was never sustainable, and neither was the destructive globalization it enabled.
All the happy-story analogies to past pandemics being mere bumps in the road miss the mark. A popular claim is that the 1918-1919 flu pandemic killed millions but no biggie, the Roaring 20s started the following year. It’s onward and upward, baby, once we toss the masks.
Wrong. Completely, totally, dead wrong. The drivers of the past 75 years of growth– globalization and financialization–are dead, and so is everything that depended on them for “growth”. (Growth is in quotes because once external costs and currency arbitrage are factored in, most of what’s been glorified as “growth” is nothing but losses covered by accounting trickery.)
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Goldman Spots A Huge Problem For The Fed – Tyler Durden
16 mei
Last week, the Treasury shocked the world when it announced that in the current quarter (the 3rd of the fiscal year), the US will need to sell a mindblowing, record $3 trillion (pardon, $2.999 trillion) in Treasurys to finance the US money helicopter.
This, after selling $807 billion in the first half of the fiscal year, and another $677 billion in the quarter ending Sept 30.
And since it is just a matter of time before Congress has to pass yet another fiscal package which will be at least another trillion dollars, and up to $3 trillion if the Democrats get their wish, one can say that Guggenheim’s projection of over $5 trillion in debt issuance this calendar year will be wildly conservative.
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A Word About the Current Chaos in Prices and Inflation – Wolf Richter
12 mei
Some prices collapsed, others skyrocketed, and the Consumer Price Index went haywire. Here’s what I’m seeing beyond the near term — and it’s not “deflation.”
Amid soaring prices of meat, beverages, fruit, veggies, and other food at home, and surging costs of personal goods, medical care services, and household furnishings, and amid a collapse in prices of gasoline, car rentals, public transportation, car insurance, lodging away from home, and other things – amid these diametrically opposed price movements, the Consumer Price Index went, as expected, haywire today. And we’re going to look at some of those gyrations beyond it.
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Why Has There Been So Little Consumer Price Inflation? – Karl-Friedrich Israel
11 mei
Every once in a while economists want to go out on a limb with their models and publicly make forecasts on what the future rate of price inflation will be. The current COVID-19 lockdown is no exception. Many economists have warned us of potentially very high rates of price inflation, because monetary stimulus on a massive scale meets a negative supply shock. Others are afraid that the monetary and fiscal stimuli won’t be strong enough to compensate for the drop in private spending, resulting in a deflationary spiral. More often than not, both parties are wrong.
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Can Monopoly Money Save the Stock Market? Or Will It Buy Stagnation? – Amanda Howard
2 mei
After eleven years of nearly uninterrupted advancement, the record-long, QE-spawned bull market is on life support, facing the effects of pandemic lockdown and a massively leveraged global financial system. The sheer scale of the equities super-rally (larger than the dotcom and housing bubbles combined) is dwarfed by the magnitude of the monetary policy experimentation that was its foundation.
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The Fed Is Fueling a Revolt That It Cannot Control – Charles Hugh Smith
11 mei
It’s not that hard to forecast a populist revolt against the parasitic class that’s grown obscenely wealthy as a direct result of Fed policies.
Under the tender care of the Federal Reserve, America’s wealth inequality has skyrocketed to new heights of obscenity as America’s billionaires feasted off the Fed’s recent stock market rally. By some accounts, billionaire Jeff Bezos added $24 billion to his personal wealth in the past week or two as the Fed’s master game plan–push stocks higher, no matter what–has further enriched the few who own most of America’s wealth.
To get a handle on the wealth of the stock market’s billionaires, please scroll through this site: Wealth, shown to scale (via Maoxian). You’ll find that America’s private tech fortunes dwarf entire nations’ GDP (gross domestic product).
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Venture capital-backed innovation and recessions – Sabrina Howell, Josh Lerner, Ramana Nanda, Richard Townsend
14 mei
Governments worldwide have taken steps to bolster their venture capital sectors in response to the COVID-19 crisis. This column questions whether venture-backed innovation is particularly vulnerable to economic downturns, and finds that early-stage venture investment falls sharply during recessions. The quantity and quality of venture-backed innovation declines particularly for early-stage firms, underscoring the concerns that motivate such policy initiatives. Still, questions remain about the optimal design and public return of these expenditures.
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More Protectionism and Regulation Won’t Fix the Economy – Tyler Curtis
13 mei
In the wake of the COVID-19 pandemic and its attendant economic strains, some protectionists and anti-immigration ideologues are trying to take advantage of this opportunity to advance their nationalist agenda. They argue that if the United States had restricted international trade and immigration more thoroughly in the past, as President Trump had fought to achieve, the public health crisis could have been curtailed. Some are also arguing that imposing further restrictions will strengthen the economy and protect Americans from the coronavirus.
Both of these assertions are demonstrably incorrect.
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Non-Paying Tenants Trip Up Land Securities, Once UK’s Largest Commercial Property REIT. Stock Plunges – Nick Corbishley
14 mei
The industry exhorts the government to call out “can pay, won’t pay” retailers, many of them global brands that avoid paying rent despite their cash reserves.
Until two years ago, Land Securities was the UK’s largest listed commercial real estate company by market cap. It owns and manages more than 26.5 million square foot of property on the British Isles. The problem is that much of that property is in the worst possible sector — brick-and-mortar retail — at the worst possible time: now. And it’s showing. In its results for its last fiscal year, ended March 31, Landsec posted an £837 million loss — roughly seven times the £127 million loss it posted in the previous year.
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***Autonomy – not rules – may be the government’s best weapon in the fight against corruption – Katie Parry, Oriana Bandiera, Michael Best, Adnan Khan, Andrea Prat
13 mei
Weak procurement systems can lead to high wastefulness and reduce the amount of resources government have for vital expenditures. This column examines the behaviour of 600 procurement officers in Pakistan and finds that the savings realised through giving them greater autonomy were considerably greater than from pay-for-performance incentive schemes, though this result did depend on the relative efficiency of the procurement officers and their monitors. This finding indicates that, counter-intuitively, the appropriate response to inefficiency and corruption may sometimes be less monitoring, not more.
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Negative Interest Rates: Rewarding Profligacy – Dwayne Barney, Paul A. Cleveland
12 mei
Presently there are trillions of dollars of bonds throughout the world with negative interest rates. This is an unprecedented turn of events, and one that has many nonprofessional investors confused. Savers are understandably puzzled as to how it is possible for bonds to carry negative interest rates. After all, would an intelligent person really lend $1,000 to someone only to be paid back $950 one year from now?
Economists historically have taken it as a given that people prefer current consumption over the promise of an equivalent amount of consumption at some specified date in the distant future. If you ask anyone whether they would like $1,000 today or $1,000 in ten years, or even in a year, the choice is uniformly for the immediate cash. The future is uncertain, and the preference is always for the immediate reward. Indeed, this preference for current over future consumption is why interest rates exist: people need to be compensated for postponing consumption to a future point in time.
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The persistence of a COVID-induced global recession – Valerie Cerra, Antonio Fatás, Sweta C. Saxena
14 mei
As many countries enter deep economic downturns, many wonder about the shape and length of the recession, as well as the steepness of the recovery. Past recessions have left permanent scars on long-term growth, known as hysteresis. This column reviews the hysteresis academic literature to gain insights on the current crisis and the policies that should be put in place to minimise its long-term effects. Continued macroeconomic stimulus, where policy space exists, is needed using an array of instruments. Now is not the time to err on the side of caution when it comes to expansionary economic policies.
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Three Reasons Why the Eurozone Recovery Will Be Poor – Daniel Lacalle
11 mei
The eurozone economy is expected to collapse in 2020. In countries such as Spain and Italy, the decline, more than 9 percent, will likely be much larger than in emerging market economies. However, the key is to understand how and when the eurozone economies will recover.
There are three reasons why we should be concerned:
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