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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The ECB’s Quantitative Easing Was a Failure — Here Is What It Actually Did – Daniel Lacalle
27 december
The main reason why the ECB quantitative easing program has failed is that it started from a wrong diagnosis of the eurozone’s problem. That the European problem was a demand and liquidity issue, not due to years of excess.
The ECB had been receiving tremendous pressure from banks and governments to implement a similar program to the US’ quantitative easing, forgetting that the eurozone had been under a chain of government stimuli since 2009 and that the problem of the euro-zone was not liquidity, but an interventionist model.
The day that the ECB launched its quantitative easing program, excess liquidity stood at 125 billion euro. Since then it has ballooned to 1.8 trillion euro.
“Only” after 2.6 trillion euro purchase program and ultra-low rates.
Eurozone PMIs are atrocious. The euro-zone index falls from 52.7 in November to 51.3 in December, well below the consensus forecast of 52.8. More importantly, France’s PMI plummeted from 54.2 in November to a 34-month low of 49.3.
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The Depression Of 2019-2021? – Brendan Brown
28 december
The profound question which transcends all this day-to-day market drama over the holidays is the nature of the economic slowdown now occurring globally. This slowdown can be seen both inside and outside the US. In reviewing the laboratory of history — especially those experiments featuring severe asset inflation, unaccompanied by high official estimates of consumer price inflation — three possible “echoes” deserve attention in coming weeks and months. (History echoes rather than repeats!)
Will We Learn from History — And What Will Soon Be History?
The behavioral finance theorists tell us that which echo sounds and which outcome occurs is more obvious in hindsight than to anyone in real time.
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ECB Ends Corporate Bond Buying, and Look What Happens – Don Quijones
27 december
Companies feel the pain as euro junk-bond yields more than doubled from a year ago.
To the white-knuckle end, 2018 has been a terrible roller coaster ride for Spanish supermarket chain Dia, once one of Europe’s biggest grocery chains. The firm’s shares, reduced to a penny stock — despite the 22% surge today to €0.44 — have plunged 90% since January. During the same period, the company has issued no fewer than three profit warnings. Its credit rating was slashed to junk in a matter of weeks. To top it all off, two weeks ago, Dia suffered the ultimate ignominy of being ejected from Spain’s benchmark index, the Ibex 35, for being worth too little, to be replaced by a pulp mill called Ence.
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How Liquidity Affects Changes in Prices — Including Stock Prices – Frank Shostak
27 december
In a market economy, a major service that money provides is that of the medium of exchange. Producers exchange their goods for money and then exchange money for other goods. As production of goods and services increases, this results in a greater demand for the services of the medium of exchange (the service that money provides). Conversely, as economic activity slows down the demand for the services of money follows suit.
The demand for the services of the medium of exchange is also affected by changes in prices. An increase in the prices of goods and services leads to an increase in the demand for the medium of exchange.
People now demand more money to facilitate more expensive goods and services. A fall in the prices of goods and services results in a decline in the demand for the medium of exchange.
Now, take the example where an increase in the supply of money for a given state of economic activity has taken place. Since there was not any change in the demand for the services of the medium of exchange this means that people now have a surplus of money or an increase in monetary liquidity.
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Equity capital inflows, corporate financing, and growth – Charles Calomiris, Mauricio Larrain, Sergio Schmukler
24 december
In emerging economies, studies of the relationship between foreign investor participation in public equity markets and aggregate economic activity find strong effects on productivity, investment, economic growth, and the price of publicly traded stocks. But it is not clear why. The column shows that equity capital inflows increase the supply of funding available to firms in emerging market economies, encouraging firms to obtain more equity financing to invest and expand. Large firms benefit most from those inflows.
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China’s Startup Bubble Runs Aground – Wolf Richter
27 december
Bike-share companies, among the hottest startups, are wiping out investors.
“It now appears bike sharing is the stupidest business, but the smartest brains of China all tried to get in,” Wu Shenghua, founder of 3Vbike, one of the many collapsed bike-sharing companies in China, told Reuters. “It really now seems ridiculous.”
Afterwards, a lot of the ingenious must-not-question stuff that happened during a bubble is considered “ridiculous.”
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Overflowing With Excess Inventory, US Companies Turn To Truck Trailers – Tyler Durden
29 december
While on the surface the latest Q3 GDP print of 3.4% was impressive, one quick look at its components revealed that the bulk of GDP growth came from inventories, which at 2.33% of the total number – the highest since Q4 2011, accounted for 69% of the annualized growth rate; in fact, stripping away the inventory contribution resulted in a concerningly low 1.1% GDP print, the lowest since Q4 2016.
As a result of this unprecedented buildup, the WSJ reports that U.S. companies are so flooded with excess inventory that some are renting truck trailers to use for storage space, parking them on warehouse lots or behind storefronts to hold goods until a surge in imports is cleared from crowded distribution hubs.
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Newcomer CEOs: Performing in times of crisis – Sharmin Sazedj, João Amador, José Tavares
24 december
When appointing a CEO, firms can choose a newcomer or someone who has been at the firm for a long time. Using data on Portuguese firms in the wake of the Global Crisis, this column finds no performance gap between newcomers and experienced CEOs in the period prior to the crisis. During the crisis, however, firms run by newcomer CEOs outperformed those run by experienced insiders. Newcomers attain higher productivity by making different decisions regarding personnel, expenditure, investment, and international trade.
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What States Are Doing to Offer More Currency Competition – Jp Cortez
29 december
The destruction of sound money over the past century stems from actions at the federal level, but there are steps which states can take —and even have already taken —to move toward real, sound, constitutional money.
As state legislatures reconvene in the next few weeks, let’s take a look at the current state of play…
Since 2016, sound money has made a splash on the state level. According to the 2018 Sound Money Index, a new ranking of all 50 states on the extent to which they have implemented the pro-sound money policies, there are currently 38 states with an exemption of sales and use tax on the purchase of gold and silver.
Since 2016, legislators in 10 different states have introduced bills, seven of which were signed into law, to restore sound money by eliminating taxes on gold and silver within their borders.
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When Certainty Frays, Capital Gets Skittish – Charles Hugh Smith
26 december
The net result is capital is impaired in eras of uncertainty.
As we look ahead to 2019, what can we be certain of? Maybe your list is long, but mine has only one item: certainty is fraying.
Confidence in financial policies intended to eliminate recessions is fraying, confidence in political processes that are supposed to actually solve problems rather than make them worse is fraying, confidence in the objectivity of the corporate media is fraying, and confidence in society’s ability to maintain any sort of level playing field is fraying.
When certainty frays, capital gets skittish. Predicting increased volatility is an easy call in this context, as capital will not want to stick around to see how the movie ends if things start unraveling. The move out of stocks into government bonds is indicative of how capital responds to uncertainty.
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***Homeless – John H. Cochrane
29 december
Christopher Rufo at the New York Post has an interesting article on homeless problems in Seattle. The analysis rings true of many other areas, especially San Francisco. It is also a good microcosm of how policy and law in so many social and economic areas stays so profoundly screwed up for so long.
The real battle isn’t being waged in the tents, under the bridges or in the corridors of City Hall, but in the realm of ideas, where, for now, four ideological power centers frame Seattle’s homelessness debate. I’ll identify them as the socialists, the compassion brigades, the homeless-industrial complex and the addiction evangelists.
My emphasis. And the political influence of groups organized around absurdly counterfactual narratives is the larger picture of this story.
Who are these people? “Socialist” is not an insult, it is how the new left-wing groups describe themselves:
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More Ban Paper Money – Tyler Durden
29 december
“Your cash is not wanted here”, a growing number of retailers and restaurants throughout the US and UK are telling customers. But are reasons being given by companies for the new “cashless” approach — speed, efficiency, and the safety of store employees — valid enough to require something as utterly and downright unAmerican as rejecting cash?
We think not, and unfortunately the trend of “cash not welcome here” establishments is growing, to the point that lawmakers are beginning to take note and could introduce legislation barring the practice, as Massachusetts has done already, and as the New Jersey State House could be set to do next. According to a Federal Reserve survey conducted in 2017 cited in The Wall Street Journal, cash represented 30% of all transactions in America, with 55% of those being under $10.
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***The Global Battle over Subsidies for Money-Losing Airlines – MC01
23 december
The US and EU slug it out with the United Arab Emirates and Qatar.
In March 2014, EU Transport Commissioner sought a mandate from EU members to open talks with unspecified “Persian Gulf States” over “unfair airline subsidies,” following a formal joint request by the Dutch, French, and German governments. This wasn’t granted until December 2015, when the Transport Commissioner was given a new mandate to “negotiate” with extra-EU governments “suspected” of having airline subsidies in place. And that was about it. Since then no meaningful process has been announced.
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Why Liechtenstein Works: Self-Determination and Market Governance – Andreas Kohl Martinez
24 december
Before we jump in, let’s have a show of hands. How many of you have ever been told that your conception of liberty sounds good in theory, on paper, but could never work in practice? How many of you have ever been called utopians? Good, I see this is most of you.
Well I am here to dispel this notion and to show all of you that you are nothing if not realists. After all the word utopia comes from the Greek words Ou and Topos. Ou means Not and Topos means Place. Utopia therefore literally means, “not a place.” In other words, those who call us utopians believe that our ideas have not been and cannot be implemented in any physical space in the real world.
I am about to tell you about a place where fundamental libertarian pillars of self-ownership and private property are never violated, a place of almost absolute, maximum individual liberty. A place where state coercion is nonexistent, or actually, as I will later argue, a place where there might be no state at all.
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This Is Exactly The Kind Of Behavior That You’d Expect During A Stock Market Implosion… – Michael Snyder
29 december
If a doctor tells you that his patient’s condition is swinging up and down wildly, is that a good sign or a bad sign? Of course the answer to that question is quite obvious.
And if a doctor tells you that his patient’s condition is “stable”, is that a good sign or a bad sign?
Just like in the medical world, instability is not something that is a desirable thing on Wall Street, and right now we are witnessing extreme volatility on an almost daily basis. On Thursday, the Dow was already down several hundred points when I went out to do some grocery shopping with my wife, and at the low point of the day it had fallen 611 points. But then a “miracle happened” and the Dow ended the day with an increase of 260 points. As I detailed yesterday, this is precisely the sort of behavior that you would expect during a chaotic bear market.
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