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 zijn.

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.

Deze week zien we op VoxEU veel artikelen van economen over Brexit. Na zes weken contemplatie in een rustige periode is dat niets te vroeg. Maar de toon er van doet merkwaardig veel denken aan die van de artikelen er voor, die het idee van Brexit niet ernstig namen. Daarover heeft de site ook nog deze essaybundel (Pdf) in de aanbieding. Gratis. En die bevat enige politiek incorrecte observaties die je gezien de herkomst van deze publicatie niet direct verwacht.
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Could Inflation Break the Back of the Status Quo? – Charles Hugh Smith
5 augustus
Political resistance to the oligarchy’s financialization skimming operations will eventually cripple central bank giveaways to the financial sector and corporate oligarchs.
That inflation and interest rates will remain near-zero for a generation is accepted as “obvious” by virtually the entire mainstream media. The reasons for this are equally “obvious”: central banks have the power to suppress interest rates indefinitely by creating money out of thin air and using this new cash to buy bonds in unlimited quantities; and the commoditization/ globalization of labor, capital and production has generated a global backdrop of over-capacity and near-zero pricing power.
But suppose for a moment that this confidence in near-zero interest rates and inflation as far as the eye can see is wrong. As I have demonstrated this week, rising interest rates and inflation would break the back of the status quo.
What makes inflation difficult to grasp is its multi-faceted character. Inflation is a monetary dynamic, to be sure, as creating new fiat currency in excess of increasing production / productivity reduces the purchasing power of the currency.
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Waiting for growth – Carmen Elena Dorobăț
3 augustus
Every policy discussion, in the media or the political arena, touches inevitably on the sensitive issue of economic growth. Over the past year, these discussions have revolved primarily around the sluggish growth experienced by European economies, Japan, the U.S., and even China. A recent VOX article tries to identify some of the possible reasons for this slow growth, i.e. present eight existing theories for what it calls “the big puzzle in economics today”. Although some of these theories contain a grain of truth, the discussion is marred by several erroneous premises and incorrectly identified causes. To quote Samuel Beckett’s characters, these theories are a fruitful exercise in “blaming on [our] boots the faults of [our] feet.”
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Federalization of Labor – John H. Cochrane
2 augustus
We are getting a good hint that a centerpiece of economic policy in the Hillary Clinton administration will be an increase in Federal control over labor markets.
The news here is that serious economists are advocating these policies, not just to transfer income from one to another, reduce inequality, help specific groups, or enhance some sense of social justice, at the expense of dynamism and growth, but that more Federal control of the labor market will increase wages, productivity and economic growth for everyone!
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*** China’s Property Bubble Echoes Subprime Crisis – Harry Dent
2 juli
The menacing fury of economic triggers that began piling up after the Great Recession are only getting larger and we can’t do much but watch it unfold and stay alert.
I wrote about this in a letter late last year, but now here we are more than halfway through the year and it’s only getting worse. So much worse that the Chinese property bubble is now the catalyst that will reset markets – and will likely be one large event that cascades across the globe.
I’m convinced that what finally puts an end to central banker madness and the incessant stream of QE will be the Chinese real estate bubble.
Massive doesn’t even begin to describe the situation with China’s property market, but that’s somewhat expected with a population of 1.4 billion people.
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The full role of growth in accounting for changes in debt-to-GDP ratios – Paolo Mauro
7 augustus
Policymakers use a well established traditional accounting method to analyse past paths and predict future paths of debt ratios. But the traditional accounting exercises underemphasise the role of economic growth. This column proposes a simple, extended accounting framework to recognise the importance of growth more fully and explicitly. It quantifies the role of economic growth in debt-to-GDP measurement for Ireland and Italy, who were similarly placed in 2012 but whose paths diverged significantly in subsequent years.
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Deflation Is Always Good for the Economy – Frank Shostack
4 augustus
For most experts, deflation, which they define as a general decline in prices of goods and services, is bad news since it generates expectations for a further decline in prices.
As a result, they hold, consumers postpone their buying of goods at present since they expect to buy these goods at lower prices in the future. This weakens the overall flow of spending and in turn weakens the economy.
Hence, such commentators hold that policies that counter deflation will also counter the slump.
If deflation leads to an economic slump then policies that reverse deflation should be good for the economy.
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Junk Bond Issuance Collapses in the US and Europe – Wolf Richter
1 augustus
Standard and Poor’s default rate of US high-yield corporate bonds – the more appealing moniker for junk bonds – jumped to 4.5% in July, the worst since August 2010.
But no problem. The S&P Distressed High-Yield Corporate Bond Index – comprised of 470 bond issues so troubled that they’re trading at a yield that is at least 10 percentage points higher than the Treasury yield – has rallied 48% since February 12.
This includes the 2.5% swoon on Friday, when some of the hot air was let out.
Default rates blowing out to crisis proportions while institutional investors are piling into distressed junk bonds and drive up prices despite soaring defaults – these are the kinds of out-of-sync movements that our era of interest rate repression, QE, and the relentless search for yield is becoming famous for.
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Brexit: This backlash has been a long time coming – Kevin O’Rourke
7 augustus
After the Brexit vote, it is obvious to many that globalisation in general, and European integration in particular, can leave people behind – and that ignoring this for long enough can have severe political consequences. This column argues that this fact has long been obvious. As the historical record demonstrates plainly and repeatedly, too much market and too little state invites a backlash. Markets and states are political complements, not substitutes
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“Shockingly, Boards of Directors Encourage this”: Gallup CEO – Wolf Richter
4 augustus
Jim Clifton, Chairman and CEO at Gallup, which incessantly surveys what consumers and companies are up to every moment of the day, nailed it when he lashed out at his fellow CEOs, for their way of doing business.
Their companies are “failing to grow organically,” he said in a blog post. Instead of investing in growth-producing activities, CEOs go out and buy other companies, particularly their competitors.
Buying competitors – effectively getting rid of competition – takes pressure off these companies to innovate and perform, and they’re all hoping to gain some pricing power with these strategies. This has worked miracles in healthcare, where prices have shot up as consolidation has become a pandemic strategy, no matter how large and unwieldy the company, or how concentrated and monopolistic the sector.
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The Greek crisis: An autopsy – Pierre-Olivier Gourinchas, Thomas Philippon, Dimitri Vayanos
5 augustus
The Greek crisis is one of the worst in history, even in the context of recorded ‘trifecta’ crises – the combination of a sudden stop with output collapse, a sovereign debt crisis, and a lending boom/bust. This column quantifies the role of each of these factors to better understand the crisis and formulate appropriate policy responses. While fiscal consolidation was important in driving the drop in output, it accounted for only for half of that drop. Much of the remainder can be explained by the higher funding costs of the government and private sectors due to the sudden stop.
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Latest Jobs Data: The Worst Expansion in 30 Years Continues – Ryan McMaken
5 augustus
The U.S. Bureau of Labor Statistics released new employment data, with the BLS reporting 225,000 new jobs created, according to the Establishment Survey. A survey of economists by Bloomberg had predicted an increase of 180,000 jobs, so this report beats expectations. The press, not surprisingly, is gushing over the good economic news.
To get a better sense of the jobs situation in context, though, we need to look beyond the headline data and delve more deeply into what the BLS is reporting.
Moreover, it’s important to look beyond the government seasonal adjustments which can be employed to massage the numbers even more than the usually-employed methods.
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Revealing the Real Rate of Inflation Would Crash the System – Charles Hugh Smith
3 augustus
The grim reality is that real inflation is 7+% per year.
This week, I’ve noted that Consumer Prices Have Soared 160% Since 2001 while under-the-radar declines in value, quantity and quality are forms of Inflation Hidden in Plain Sight.
What would happen if the real rate of inflation was revealed? The entire status quo would immediately implode. Consider the immediate consequences to Social Security, interest rates and the cost of refinancing government debt.
Unbiased private-sector efforts to calculate the real rate of inflation have yielded a rate of around 7% to 13% per year, depending on the locale–many multiples of the official rate of around 1% per year.
So what happens if the status quo accepted the reality of 7+% inflation? Here are a few of the consequences:
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*** 5 Ways Corporate Power Increases Inequality – Paul Buchheit
2 augustus
Corporations are viewed as untouchable by big business media giants like the Wall Street Journal, which blurts out inanities like “Income inequality is simply not a significant problem” and “Middle-class Americans have more buying power than ever before.”
In the real world, inequality is destroying the middle class. The following four issues, all part of the cancer of corporatocracy, have grown in intensity and destructiveness in just the last few years. They should be campaign issues, given more than just lip service from candidate Hillary Clinton, and given more than just passing reference in the news reports of the mainstream media.
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UK-EU relations after Brexit: What is best for the UK economy? – Swati Dhingra, Thomas Sampson
6 augustus
Several models exist for the UK’s relationship with the EU following Brexit. This column argues that from an economic perspective, joining the European Economic Area and retaining access to the Single Market is the best available option. However, given the importance the new UK government – and at least part of the UK public – attaches to imposing controls on immigration from the EU, this option may not be politically viable. The question the UK must address as it debates the aftermath of Brexit is whether the costs of the alternative are a price worth paying.
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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.