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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Fed’s Actions Have Obliterated True Price Discovery Mechanism – Bruce Wilds
20 juni
The Federal Reserve continues to destroy true price discovery in this market by executing short squeeze after short squeeze. Moral hazard be damned, the Fed’s desire to support the market has overruled common sense. We have seen this time after time with well-timed announcements being made simply to fire up bullish enthusiasm and spark a rally. We recently observed this when a Fed announcement resulted in a dramatic intraday reversal causing the S&P500 to surge more than 100 points from session lows and closing above its 200-day moving average.
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Even if COVID-19 Goes Away, the Economy Isn’t Going Back to “Normal” – Brendan Brown
18 juni
Speculative frenzy in the midst of recession is not a new phenomenon. Yet the extent of the “madness” this time might well beat records in the small sample size available from the history laboratory. The combination of extreme monetary radicalism and a receding supply shock has proved to be a potent toxic, impairing mental processes in ways described by the behavioral finance theorists. The pandemic stock “bubble” and resumed hectic demand for risky credit paper provide illustrations.
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What price to pay for monetary financing of budget deficits in the euro area – Paul De Grauwe, Sebastian Diessner
18 juni
There is growing acceptance that some form of monetary finance is needed, if not inevitable, in light of the severity of the downturn in the euro area. This column argues that while a monetisation of the deficits induced by the COVID-19 crisis would eventually increase the price level so that, after a return to economic normalcy, inflation would rise for a couple of years, this is a price worth paying to avoid future sovereign debt crises in the euro area. Moreover, the ECB, as the most independent central bank in the world, would be well equipped to prevent the inflationary upsurge from becoming permanent.
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Why the New Economics Just Boils Down to Printing More Money – Jörg Guido Hülsmann
15 juni
The essential fallacy of John Maynard Keynes and his early disciples was to cultivate the monetary equivalent of alchemy. They believed that paper money was a suitable means to alleviate the fundamental economic problem of scarcity. The printing press was, at any rate, under certain plausible conditions of duress, a substitute for hard work, savings, and cutting prices (Hazlitt 1959, 1960).
The self-styled new Keynesians have not at all abandoned this fallacy, and they therefore do not differ in any essential respect from the old Keynesians, in spite of the pains they take to distinguish themselves from the latter. The new Keynesian recommendation for monetary policy is to “stabilize the growth of aggregate demand.” In plain language this means that the monetary authorities should never stop flooding the economy with paper money. This is recognizably the core tenet of the old Keynesian monetary program, which in itself had been nothing but even older fallacies clothed in the new language of aggregate analysis.
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The Fed’s Grand Bargain Has Finally Imploded – Charles Hugh Smith
16 juni
The Fed has backed itself not into a corner but to the edge of a precipice.
Though the Federal Reserve never stated its Grand Bargain explicitly, their actions have spoken louder than their predictably self-serving, obfuscatory public pronouncements. Here’s the Grand Bargain they offered institutional investors and speculators alike:
We’re taking away your low-risk, high-yield investments by slashing interest rates to near-zero, but we’re giving you endless asset bubbles as a new way to notch reliable gains. This trade-off has worked for 20 years as the Fed hyper-inflated one asset bubble after another until they finally inflated everything to precarious extremes: The Everything Bubble of 2019 that started unraveling in September 2019, long before the pandemic.
The Everything Bubble includes: stocks, housing, commercial real estate, corporate debt, junk bonds, CDOs, CLOs, bankrupt companies, phantom companies, etc. The Fed inflated all these assets bubbles as a “can’t lose” proposition for yield-starved institutions that can’t survive on low-risk 1% Treasury yields.
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Firm age, productivity, and intangible capital – Kaoru Hosono, Miho Takizawa, Kenta Yamanouchi
21 juni
How do firms grow as they age after establishment? What drives high growth rates for young firms? Using a large dataset from Japan for the period from 1995 to 2015, this column argues that the accumulation of intangible capital plays a significant role in the growth of physical productivity, which, in turn, accounts for a major part of sales growth as firms age. Of the three types of intangible capital – organisational capital, software, and R&D stocks – organisational capital explains a large part of the sales growth.
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Commercial Real Estate Sellers Expecting Pre-Virus Prices “Are Smoking Dope,” Says UK Fund Manager – Nick Corbishley
15 juni
Capital values across all segments (retail, office, industrial) already fell by 6.1% over the three months from March to May.
If you’re a commercial property fund manager in the UK and you think you’ll be able to fetch pre-lockdown prices for properties you need to sell, you’re “smoking dope”, according to Schroder Real Estate fund manager Duncan Owen. Owen believes that valuations of UK commercial property have at least another 10% to fall. His comments come as close to a dozen open-end mutual property funds, with roughly £12 billion in assets, remain suspended after gating en masse in March, leaving hundreds of thousands of retail investors unable to access their money.
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The Crisis Goes Up A Gear: Is This The Beginning Of The End For The Dollar? – Alasdair MacLeod
20 juni
Dollar-denominated financial markets appeared to suffer a dramatic change on or about the 23 March. This article examines the possibility that it marks the beginning of the end for the Fed’s dollar.
At this stage of an evolving economic and financial crisis, such thoughts are necessarily speculative. But an imminent banking crisis is now a near certainty, with most global systemically important banks in a weaker position than at the time of the Lehman crisis. US markets appear oblivious to this risk, though the ratings of G-SIBs in other jurisdictions do reflect specific banking risks rather than a systemic one at this stage.
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The bank business model in the post-Covid-19 world – Elena Carletti, Stijn Claessens, Antonio Fatás, Xavier Vives
18 juni
The Covid-19 pandemic has induced a deep global economic crisis. While so far banks have shown their resilience, partly thanks to major reforms after the crisis of 2007-2009, the crisis will put them under stress. Moreover, the traditional banking model was already being challenged pre-Covid by three trends: persistently low interest rates, enhanced regulation, and increased competition from shadow banks and digital entrants. This column introduces the second report in the Future of Banking series from the IESE Business School and CEPR, which provides a perspective on how the current crisis and these trends will shape the future of the banking sector.
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Is Reality About To Knock On The Door Of These Liquidity-Soaked Markets? – Sven Henrich
20 juni
What I really like about our Straight Talk episodes is that it they are completely agenda free, there are no restrictions, it’s just the 3 of us talking and discussing the issues on our minds. What you see is what you get. Our honest opinions. You may not agree with us and that’s completely fine, but these discussions are meant to highlight fact based topics that we care about discussing them in a hopefully intelligently and digestible manner, make others think as well and hopefully educate in a setting that permits us to go into a bit more depth.
Many market discussions are agenda driven or constrained by time. Speaking for myself I also learn things during these discussions and I very much enjoy the banter we have going.
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Services trade policy since the Great Recession – Ingo Borchert, Joscelyn Magdeleine, Juan Marchetti, Aaditya Mattoo
20 juni
Despite the growing importance of services in output and trade, there has been relatively little information on how services policies have evolved over the past decades. This column presents evidence on services trade policies from a new database created by the World Bank and WTO. It reveals that higher income economies are more open on average than developing economies, but the chronology of reform varies across sectors. In addition, while explicit restrictions are being lowered, regulatory scrutiny is increasing in most sectors, especially in higher income economies.
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“A Staggering Number”: Over $18 Trillion In Global Stimulus In 2020, 21% Of World GDP – Tyler Durden
20 juni
On Friday, we relayed the latest observations from BofA chief investment officer, Michael Hartnett who concluded that there is just one bull market to short – namely credit – “and the Fed won’t let you” by which he means all central banks. As the following table shows, the balance sheet of the G-6 central banks has exploded, with the Fed’s total asset expected to double in 2020 amid an avalanche of money printing.
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The Global Weakness Index: Reading the economy’s vital signs during the COVID-19 crisis – Danilo Leiva-León, Gabriel Pérez-Quirós, Eyno Rots
21 juni
The Global Weakness Index (GWI) is a real-time measure of how weak the global economy is. This column uses GWI to assess the repercussions of the coronavirus (COVID-19) crisis in real time. It finds that, after the release of certain soft indicators on 2 March 2020, the GWI increased sharply – much faster than in the 2008 crisis. Moreover, the index remained at a record high at the time of writing, 14 May 2020.
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Update on the WTF Collapse of Demand for Gasoline, Jet Fuel, and Diesel – Wolf Richter
17 juni
No “V-shaped recovery back to normal.”
Demand for gasoline collapsed in a stunning and historic manner, starting in mid-March when the measures to slow down the spread of the pandemic took effect, when working from home became the new thing, and when millions of people lost their jobs on a weekly basis and stopped driving to work. Gasoline consumption, after bottoming out in the week ended April 3 with a year-over-year plunge of -48%, to 6.7 million barrels per day, the lowest in the EIA’s data going back to 1991, the great recovery began – and fizzled.
Gasoline consumption in the week ended June 12, at 7.87 million barrels per day, was still down 20.7% year-over-year, according to data reported by the EIA today.
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***Inequality: What has happened, why care, and what can be done about it – Ken Mayhew, Samuel Wills
18 juni
Inequality within most developed countries is higher today than it was 30 years ago. Growth in emerging economies has reduced inequality between nations, but the benefits have been unevenly spread within those economies. This column analyses what has happened, why we should care, and what can be done about inequality. Governments have not focused enough on pre-market policies that prevent inequality arising in the first place. Post-market interventions should be seen as too little, too late. Instead, we need a call-to-arms for governments to re-focus on the deep underlying drivers of inequality.
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***Dear Junkies Addicted to Fed Smack: The Monkey on Your Back Is Now a Gorilla – Charles Hugh Smith
20 juni
You thought that monkey on your back was light as a feather, but now it transmogrified overnight into a crushing gorilla.
Dear junkies addicted to the Federal Reserve’s free-money smack: like all addicts, you firmly believe you’re not addicted. Never mind those tracks, you can stop any time. Yeah, sure, but we all know you’re going to buy the dip and max out your margin account because the craving cannot be denied.
Speaking of denial: you don’t realize you’re the dealers’ chumps, the bagholders who bought at the top who the dealers are counting on to cling on to the bitter end because those Fed speedballs have inspired a euphoric faith in your god-like trading powers.
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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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