Economische aanraders 21-08-2016
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 begin 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.
The glass is still half-empty: Eurozone stability under threat of a ‘bad shock’ – Stefano Micossi
Some economists are approaching a consensus that the Eurozone’s financial architecture is now resilient enough to withstand another shock similar to that of 2010-11. This column argues that such a view may be overly optimistic. Economic and financial instability persists in member states and the banking sector, and institutions to tackle a shock remain incomplete. While the Eurozone remains vulnerable to a bad shock, the blanket application of burden sharing without consideration of current economic and financial conditions is unwise.
Inflation: It’s a Wealth Redistribution Scheme – Russell Lamberti
Many central banks around the world aim to achieve some “inflation target” either as a single explicit policy goal — as in the case of the South African Reserve Bank — or part of a set of policy goals as pursued by the US Federal Reserve. But far from maintaining economic stability and fostering prosperity, consumer price inflation targeting practically guarantees a pernicious wealth transfer year in and year out, a perpetual duping of unsuspecting employees and companies, and a permanent blind spot to hidden inflation.
What the Fed Hasn’t Fixed (and Actually Made Worse) – Charles Hugh Smith
The Federal Reserve claims its monetary interventions saved America from economic ruin in 2009, and have bolstered growth ever since. Don’t hurt yourself patting your own backs, Fed governors past and present: it’s bad enough that the Fed can’t fix the economy’s real problems–its policies actively make them worse.
Rethinking the oil market in the aftermath of the 2014–16 price slump – Rabah Arezki
The dramatic and largely unexpected collapse in oil prices has sparked intense debate over the causes and consequences. This column argues that a broader energy perspective is now needed to comprehend oil’s long-term outlook, and provides answers to several questions about the oil market in the global economy.
Why China’s Multi-Decade Manufacturing Miracle is Over – Wolf Richter
The German government said today that it won’t get in the way of the $5-billion acquisition by Chinese appliance maker Midea of Germany’s high-tech-industrial darling, Kuka Robotics Corporation. Midea, which promised up and down that Kuka would remain independent, has secured 95% of Kuka’s shares. Kuka executives have backed the deal. The German government’s efforts to find a more palatable – that is, European – acquirer have flopped. So this deal, the largest Chinese acquisition in Germany, is going to fly.
With €3 billion in revenues in 2015, Kuka is a significant player in “articulated robots” that can perform different tasks, such as arc welding or assembling. They’re used widely, from automakers to big bakeries. The deal gives the Chinese cutting-edge technologies and is another step forward in China’s efforts to modernize its manufacturing industry.
We Can’t Live on Borrowed Time and Borrowed Money Forever – Jeff Deist
The problem with presidential candidates is not so much what they say and believe, but rather what they don’t say and believe. Behind the lying and dissembling and obfuscation there is a palpable suspension of disbelief. Our would-be political rulers simply ignore — or fail to grasp — the gravity of our economic situation.
We are preoccupied with terrible shootings, bathroom wars, and the petty intrigue of political campaigns. We debate trivialities. But the bigger story, the gradual but grinding reality behind how western governments operate, doesn’t hold our attention.
This is a time of unprecedented economic hedonism, engineered and encouraged by western governments and their central banks. It is sold to us as banal public policy and technical tinkering, when in fact a radical and anti-human ideology underpins it. The arc of human progress, marked by capital accum
Brexit stress test – Stephen Cecchetti, Kim Schoenholtz
The UK’s Brexit referendum is providing us with the first significant test of the new regulatory system. This column asks whether banks have sufficient capital and liquidity to withstand the ‘shock’. Unless the global financial system as a whole is well capitalised, it remains only as strong as its weakest link. And while the UK authorities have done a reasonable job of strengthening their banks and financial system, a number of large European banks are seriously undercapitalised.
Finance is not the economy – Dirk Bezemer and Michael Hudson
3 september (publicatie in Journal of ECONOMIC ISSUES)
Abstract: Conflation of real capital with finance capital is at the heart of current misunderstandings of economic crisis and recession. We ground this distinction in the classical analysis of rent and the difference between productive and unproductive credit. We then apply it to current conditions, in which household credit — especially mortgage credit — is the premier form of unproductive credit. This is supported by an institutional analysis of postwar U.S. development and a review of quantitative empirical research across many countries. Finally, we discuss contemporary consequences of the financial sector’s malformation and overdevelopment.
Business Loan Delinquencies Rock Past Lehman Moment Level – Wolf Richter
This afternoon, somewhat obscured by the Fed’s media-savvy and endless flip-flopping about rate hikes, the Board of Governors of the Federal Reserve released its second quarter delinquencies and charge-off data for all commercial banks. It shows that if the Fed wanted to raise rates before serious signs of trouble emerged, it might have missed the train.
Consumer loans are still doing well, though delinquencies have ticked up 10% from a year ago to $26.8 billion. Loans are considered “delinquent” when they’re 30 days or more past due. Credit card loans are also still doing well, though delinquencies have jumped 11% from a year ago to $13.8 billion.
Delinquencies of all real estate loans are low and still falling. Which is logical: commercial and residential real estate prices have been soaring for years. If borrowers get in trouble, they might be able to refinance and cure the delinquency, a form of “extend and pretend.” Or they might be able to sell the property and pay off the loan. Delinquencies in real estate don’t rise until property values are falling. That is now happening in some cities, but it hasn’t yet budged the national averages.
5 Reasons Why Austrian Economics Is Better than the Mainstream – Jonathan Newman
Noah Smith has acknowledged the failings of mainstream macroeconomics, but he says that none of the “outside ideas” offer a better replacement. He failed to mention the Austrian school, but we can still show how the Austrian tradition parries his criticisms with ease.
What Do US Wages Tell Us About the Business Cycle? – David Llewellyn-Smith
Yves here. For what it’s worth, George Soros disagrees, having increased his short on the US stock market as it moved higher earlier this week. Given how strained valuations are and how little prices have to do with fundamentals, the Soros bear bet may be the result of his reading of political risk and adverse market reaction to a Fed tightening at super-low rates (where the effect on bonds are amplified), as witness the market shock of early this year, which looks to have bee a delayed reaction to the December Fed rate increase.
Evidence continues to mount in our proprietary analysis of 131 sub-industries that headline wage growth (average hourly earnings) is on the cusp of further acceleration and new jobs are of high quality. Our work shows wage growth has broadened significantly across sub-industries in recent months. In the past two cycles, this foreshadowed accelerating headline wage growth. As of June, nearly 50% of sub-industries had YoY wage growth greater than 3.0%, showing a dramatic broadening in 2016 (Fig 1). Similarly, our median sub-industry measure reached a cycle high of 2.9% (Fig 2).
*** Managers are miscalibrated – Itzhak Ben-David, John Graham, Campbell Harvey
Experiments have revealed that humans often suffer from overconfidence in the accuracy of their information, or ‘miscalibration’. This column uses data from surveys of CFOs to assess their ability to make financial predictions. The results suggest not only that CFOs are miscalibrated, but also that firms with miscalibrated executives appear to be more aggressive in their corporate policies. In other words, the overconfidence of the executive shows up in the company’s policies.
*** How Can Stock Market Jockeys Be This Stupid? – Wolf Richter
How stock market jockeys could be this stupid has boggled our minds for years. One thing we know: it doesn’t matter as long as stocks soar.
But when a stock suddenly dies, after having dutifully contributed to Ben Bernanke’s “Wealth Effect” miracle, the occasional regulator might step in and tell these folks: “How could you?!” And this is what happened today.
The SEC announced that it “temporarily suspended trading in the securities of NERO,” the ticker symbol for NeuroMama, whose shares are traded over-the-counter in the Wild West of US stocks, where just about anything goes, even more so than normally.
The outfit had no sales in 2012 and 2013, the last two years for which it filed “financial statements” – in quotes because there’s practically nothing financial in them. Maybe a mailbox company.
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.