Economische aanraders 26-01-2020
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.
Exchange rate reconnect – Andrew Lilley, Matteo Maggiori, Brent Neiman, Jesse Schreger
The ‘exchange rate disconnect’ describes the difficulty of explaining exchange rate movements using classical models and fundamentals. This column presents evidence of an ‘exchange rate reconnect’ – a substantial co-movement of the US dollar with global risk premia and US foreign bond purchases since the Global Crisis. Though short-lived, this relationship between these factors could shed new light on the nature of financial crises and risk.
***The Future of What’s Called “Capitalism” – Chalres Hugh Smith
The psychotic instability will resolve itself when the illusory officially sanctioned “capitalism” implodes.
Whatever definition of capitalism you use, the current system isn’t it so let’s call it “capitalism” in quotes to indicate it’s called “capitalism” but isn’t actually classical capitalism.
Try a few conventional definitions on for size:
Capitalism allocates capital to its most productive uses. Does the current system actually do this? You must be joking.
Capitalism is based on private labor and capital freely choosing where to invest time/assets. Does the current system actually do this? You must be joking.
Capitalism enables comparative advantages which enrich everyone. Does the current system actually do this? You must be joking.
The ‘Golden Age Of Plastic’? Banks Are Quietly Raising Credit Limits For Freespending Borrowers – Tyler Durden
Credit-card lenders are calling it the ‘Golden Age of Plastic’. But that’s mostly because they’re the ones hoarding all the gold.
Gloom-and-doom economists who have portended the imminent collapse of the American consumer (we don’t want to name names) might have a reason to put off their calls for a downturn of epic proportions just a little bit longer. Because at a time when the American consumer is already leveraged to the hilt, and when credit data suggests some are finally biting the bullet and curbing spending to pay it down, lenders have hit on a novel strategy to boost growth.
Why Bad GDP Metrics Lead to Bad Policy – Bradley Thomas
On the eve of the Great Recession, former President George W. Bush in a 2007 speech urged people to “go shopping more” in order to keep “our economy growing.”
Indeed, the business press scarcely completes a report on the US economy without informing us that “consumer spending makes up 70 percent of the economy.”
If the politicians and business media are to be believed, consumption is king. Consumer spending drives the economy.
But does it?
The laser-like focus on consumer spending as the driver of economic health is largely the result of the government’s premiere measure of the economy: the Gross Domestic Product (GDP).
Digital Currency: What Do The Global Banking Elite Want? – Steven Guinness
Amidst the annual spectacle of the World Economic Forum in Davos, the Bank for International Settlements this week announced that multiple central banks have created a group that will ‘assess potential cases for central bank digital currencies‘.
Learning about fiscal multipliers during the European sovereign debt crisis – Lucyna Gornicka, Christophe Kamps, Gerrit Koester, Nadine Leiner-Killinger
Recent studies have highlighted that the fiscal multipliers used by institutional forecasters were gradually adjusted upwards as the European sovereign debt crisis developed. This column confirms this finding, using a new dataset compiled from European Commission forecasts under the Excessive Deficit Procedure of the Stability and Growth Pact. In contrast to previous claims that the fiscal multiplier rose well above one at the height of the crisis, however, the authors argue that the ‘true’ ex-post multiplier remained below one.
How to Avoid Secular Stagnation – Frank Shostak
In his January 10 interview on Bloomberg TV, former US Treasury secretary Larry Summers expressed concern that despite the aggressive lowering of interest rates by major central banks, economic activity does not appear to be responding.
Summers suggested that something is not quite right. He is of the view that the Alvin Hansen’s secular stagnation theory might explain the present economic climate.
***Tesla’s Global Deliveries Compared to the Top 10: Volkswagen, Toyota, GM, Ford, Honda, FCA, Mercedes… Here’s the Chart – Wolf Richter
Tesla’s Stock Makes it the Second Most Valuable Automaker in the World. But How About its Size?
Tesla shares took a little dip today, but no biggie. They still produce an astounding market capitalization of $102 billion, “astounding” not because the market cap per se is huge – there are now some trillion-dollar companies out there – but because the business Tesla is in: auto manufacturing and solar panels.
Goodman on health insurance – John J. Cochrane
John Goodman and Devon Herrick have a good essay on where we are with health insurance.
The central impetus of Obamacare was not to insure more people.
…About 95% of those who vote already have insurance, Schumer noted. So Obamacare was promising to spend a great deal of money on people who don’t vote.
Instead, their message focused on protecting sick people from abuses by insurance companies. More often than not, that meant protecting people who migrated from an employer plan to the individual market with a preexisting condition.
Virtually every Republican proposal to reform Obamacare has been attacked by opponents as weakening protections for those with preexisting conditions.
And Republicans from the President on down have, so far and in public, committed that they will continue to address this problem with the sledgehammer of forcing insurance companies to charge the same premium to everyone who shows up, sick or not. From this Adam and Eve apple the rest of the mess follows. For now insurance is outrageously expensive for healthy people. And both the government and insurance companies work hard to ration and limit how well they serve sick people.
The paradox of stagnant real wages yet rising ‘living standards’ in the UK – Jennifer Castle, David Hendry, Andrew Martinez
Real wages and productivity in the UK have stagnated since 2007, whereas employment has risen considerably. Many commentators lament the consequent failure of `living standards’ to rise at historical rates. But real GDP per capita has grown by more than 20% since 2000 despite the Great Recession, so aggregate living standards have in fact risen. This column resolves the apparent paradox.
How China Overtook The US As The World’s Major Trading Partner – Iman Ghosh
In 2018, trade accounted for 59% of global GDP, up nearly 1.5 times since 1980.
Over this timeframe, international trade has transformed significantly – not just in terms of volume and composition, but also in terms of the countries that the rest of the world leans on for their most important trade relationships.
Now, a critical shift is occurring in the landscape, and it may surprise you to learn that China has already usurped the U.S. as the world’s most dominant trading partner.
What We Really Mean When We Talk About Values and Prices in the Marketplace – Frank Shostak
In the popular way of thinking, people are characterized as if a scale of preferences is hardwired in their heads. Regardless of anything else, this scale remains the same all the time. This thinking does not characterize human beings but robots. The humanoid robot chooses goods because the valuation scale has told him to. The valuation scale somehow knows which good offers the best utility without letting us know how it knows that.
If the valuation scale is part of the human mind, then it makes a lot of sense to attempt to extract this scale by means of either questionnaires or various psychological tests and laboratory experiments. Once the valuation scale is extracted, social scientists can establish how to allocate scarce resources in the most efficient way.
Guggenheim: 10 Macro Themes To Watch In 2020 – Scott Minerd
, Chairman of Investments and Global CIO, and Guggenheim’s Macroeconomic and Investment Research Group analyze the 10 macroeconomic trends likely to shape monetary policy and investment performance this year.
1. Household net worth gains will continue to support consumption, the main driver of growth for the U.S. economy, even with business investment contracting and the manufacturing sector experiencing a recession.
What to Do with Malls? Teetering UK Mall Giant Intu Asks Investors for £1 Billion. Shares Drop to Near-Nothing – Nick Corbishley
Brick & Mortar melts down on mall owners. So “repurpose” malls into housing?
After a weekend of fevered speculation, struggling UK mall owner Intu Properties confirmed on Monday that it plans to raise £1 billion of fresh capital to buttress its shaky finances. The company’s shares reacted in time-honored fashion, plunging 8% to a historic low of 21 pence before ending the day down just 1%. Intu’s share price is now 80% lower than it was a year ago and 95% lower than five years ago, leaving the group valued at just £306 million.
Davos Man – Misbegotten Progeny Of Keynesian Central Bankers – David Stockman
There were a reported 119 billionaires attending the Davos confab this year – plus the Donald, who took a day off from Impeachment to address this august gathering of the world’s movers and shakers.
There was also 1500 private jets crowding the surrounding airports – plus the notable train-traveling 17-year old expert on planetary climate science, Greta Thunberg.
Also, among the 10 billionaires in attendance from communist China is Ren Zhenfei, founder of Huawei and father of its CFO, Meng Wanzhou. Even as dad courts the rich and famous on the slopes, daughter languishes in a Canadian jail waiting extradition to the US because she had the audacity to do business with Iran against Washington’s instructions and Trump’s latest fatwa against the Tehran government.
Peaceful Market Exchange—Not Politics—Harnesses the Value of Diversity – Gary Galles
That there are inherent benefits in diversity is a common article of faith in our democratic/populist times. We hear it in and about universities, businesses, politics, entertainment, etc. Typically, though, we hear about it in terms of forcing more diversity on those whose diversity in a particular dimension doesn’t measure up to someone else’s arbitrary standard.
A Green Deal will not work without refocusing productivity – Karl Aiginger
The new president of the European Commission, Ursula von der Leyen, has announced a ‘European Green Deal’ and the Commission has asserted Europe’s need to develop a new growth model to achieve climate neutrality. However, the Commission’s limited view of ‘productivity’ ignores the fact that raising labour productivity can raise emissions and accelerate climate change. Instead, this column argues that a welfare-oriented Green Deal needs to focus on resource and energy productivity, not raising labour productivity.
***Fertility Rates, Births, & Eventually Depopulation – Chris Hamilton 25 januari
Nations with 56% of world GDP have declining annual births and childbearing populations, nations with 35% of GDP have declining births but still rising/flat childbearing populations, nations with less than 9% of world GDP have rising births and childbearing populations.
Detailed below are 1950 through 2040 annual births, female childbearing, and female post-childbearing populations of worlds largest economies. Utilizing UN World Population Prospects 2019 data.
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