Economische aanraders 18-03-2018
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.
Sinds december 2015 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.
***Unintended consequences – John H. Cochrane
Unintended consequences of well-intentioned policies, unexpected behavioral changes in response to ignored incentives, unusual supply (or demand) responses to demand (or supply) interventions, and clever new pathways for changes to happen are the sorts of mechanisms that make economics fun, and I hope useful to cause-and-effect understanding of human affairs.
A case in point is an Atlantic article from 2012 that a friend pointed me to last week, by Richard Sander and Stuart Taylor Jr.
Cryptocurrencies challenge the status quo – Ousmène Jacques Mandeng, Piroska Nagy-Mohacsi
Cryptocurrencies have been the subject of recent attacks by official sector representatives, and the G20 finance ministers will consider regulatory proposals at their next meeting in Buenos Aires. This column argues that while cryptocurrencies present certain risks, they also represent an important innovation that promises to enhance choice and efficiency in monetary transactions. A proportionate, risk-based regulatory approach is required to accommodate differential attitudes and experiences and to avoid stifling innovation and competition. This implies having an open debate before sweeping regulatory action.
***Trump’s Order Stops ALL Foreign Takeovers of Large US Tech Companies – Wolf Richter
“Any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited.”
President Trump signed a far-ranging executive order late Monday that blocked the $117-billion hostile takeover of Qualcomm by Broadcom, a Singapore-based company, on concerns over national security. This crushed any hopes that remained in some corners of seeing what would have been the largest tech deal ever. But the order was far broader: It blocked all such deals.
Socialism: The Calculation Problem Is Not the Knowledge Problem – Robert P. Murphy
At the Mises Institute’s upcoming Austrian Economics Research Conference (AERC), there will be a panel commemorating the 30th anniversary of the second debate over socialist calculation. This second debate began with Israel Kirzner’s 1988 Review of Austrian Economics article that analyzed the original debate between Mises, Hayek, and the market socialists, in order to draw lessons for modern Austrians. Kirzner’s article prompted responses from Joe Salerno and other economists associated with the Mises Institute, some of whom will be at the AERC on a panel discussing their role in the second debate.
***How Much Longer Can We Get Away With It? – Charles Hugh Smith
Alas, fakery isn’t actually a solution to fiscal/financial crisis..
This chart of “debt securities and loans”–i.e. total debt in the U.S. economy–is also a chart of the creation and distribution of new money, as the issuance of new debt is the mechanism in our financial system for creating (or “emitting” in economic jargon) new currency: when a bank issues a new home mortgage, for example, the loan amount is new currency created out of the magical air of fractional reserve banking.
Central banks also create new currency at will, and emitting newly created money is how they’ve bought $21 trillion in assets such as bonds, mortgages and stocks since 2009. Is there an easier way to push asset valuations higher than creating “money” out of thin air and using it to buy assets, regardless of the price? If there is an easier way, I haven’t heard of it.
Despite Years of ECB’s QE (Ending Soon), Italy’s “Doom Loop” Still Threatens Eurozone Financial System – Don Quijones
Even banks outside Italy have an absurdly out-sized exposure to Italian sovereign debt.
The dreaded “Doom Loop” — when shaky banks hold too much shaky government debt, raising the fear of contagion across the financial system if one of them stumbles — is still very much alive in Italy despite Mario Draghi’s best efforts to transfer ownership of Italian debt from banks to the ECB, according to Eric Dor, the director of Economic Studies at IESEG School of Management, who has collated the full extent of individual bank exposures to Italian sovereign debt.
Sovereign GDP-linked bonds: Rationale and design – Robert Shiller, Jonathan D. Ostry, James Benford, Mark Joy
While the idea of governments issuing debt instruments whose repayments are indexed to GDP is not new, the current global backdrop of high government debt suggests the case for doing so might be especially strong now. This column introduces a new eBook in which leading economists, lawyers, and investors examine the case for issuing GDP-linked bonds, the obstacles to market development, ways of overcoming them, and what such a security might look like in practice.
The Truth About Aramco’s $2 Trillion Valuation – Irina Slav
Two trillion dollars: this was the price tag Riyadh put on the jewel in its crown, state oil and gas giant Aramco.
This is how much the company was worth, officials said, if you multiplied its proven reserves by a factor of US$8, which is the figure used to value oil and gas reserves.
There were doubts about that valuation from the start, and now these are deepening as the company crawls closer to the initial public offering.
For starters Aramco’s opacity was very likely to make potential investors suspicious.
The economics of supranational bank supervision – Thorsten Beck, Consuelo Silva-Buston, Wolf Wagner
International cooperation on bank supervision is still rare. This column analyses data on supervisory cooperation among a global sample of countries between 1995 and 2013 to show that cooperation among bank supervisors is not always optimal. Country pairs with higher cross-border externalities and lower heterogeneity are more likely to cooperate, and in more intense ways, but for some country pairs the costs of cooperation outweigh the benefits.
Waiting for the Chinese Bear Stearns – Daniela Gabor
This post is one way of pointing out that the rush of self-congratulatory articles of the “Ten years since Bear Steans, crises are a thing of the past,” sounds an awful lot like the confidence about the unsinkability of the Titanic.
And while so many people have warned of a coming credit crunch in China, the fact that China has managed to hold its financial system together through various interventions does not mean the underlying risks are not real and even growing.
Recall that Steve Keen, one of the few economists who predicted the 2008 meltdown, put China at the top of his list of potential credit crisis countries due to its rapid growth of private debt in an economy that already has a high debt burden. His model shows that merely having debt growth stop will lead to an implosion.
I hope to have more on this general topic in due course.
LEAKED: Trump’s Next Shoe to Drop on US-China Trade – Wolf Richter
This is the big one. It makes steel and aluminum tariffs look like a game.
If this is true – it was leaked by a “source familiar with international trade” to the Nikkei Asian Review and isn’t based on a White House announcement – then it’s going to add a lot of fuel to the already heated trade dispute between the US and China, and may ultimately make the steel and aluminum tariffs look like a game.
***What’s the “Social Cost of Carbon? – Shawn Ritenour
When President Barack Obama wanted to curtail carbon dioxide emissions, he instructed his economic advisors to construct a way to calculate the emissions’ effect on society. The metric thus adopted by the EPA is called the “social cost of carbon” (SCC).
Right from the start we should note an important distinction: Carbon is an element; carbon dioxide a compound. Carbon is a solid; carbon dioxide a gas. Carbon, in the form of (for example) fly ash, dust, fine particulate matter, can harm health; carbon dioxide is harmless except at very high concentrations (above 10,000 parts per million), and even then only after long, uninterrupted exposure. Unlike carbon, carbon dioxide is odorless, colorless, and, except under conditions just described, nontoxic — indeed, indispensable to photosynthesis and thereby to all life. “Carbon” makes people think of black soot, smoke, smoggy skies; “carbon dioxide” doesn’t.
Trade cold wars and the value of agreements during crises – Jerónimo Carballo, Kyle Handley, Nuno Limão
Economic downturns can be both a cause and an effect of uncertainty. This column argues that uncertainty has international spillovers that can be mitigated via credible international trade agreements such as NAFTA, which provided US firms with valuable insurance against the widespread threat of a global trade war during the 2008 crisis. However, the credibility and insurance value of these agreements is being trumped by events such as Brexit, the renegotiation of NAFTA, and US threats of a trade war, which mark the start of a ‘trade cold war’.
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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