Economische aanraders: 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 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.

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Why The Fed Should Only Own Treasuries – Charles I. Plosser
10 juni
One of the most important guiding principles of sound central banking is the independence of monetary policy decision-making. History teaches us that unless governments are constrained constitutionally or by statute, they often resort to the “printing press” to avoid making tough fiscal decisions. But in a democracy, independence must come with limitations on the central bank’s authorities and discretionary powers. Otherwise, central bankers can use their powers to venture into policy realms unrelated to monetary policy, especially fiscal policy, which more appropriately rests with elected officials. If a central bank has the power and willingness to conduct fiscal policy, it undermines the integrity of fiscal choices by Congress and the checks and balances on the distributional effects of fiscal actions. Engaging in such actions also undermines the central bank’s legitimacy and the case for independence.
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Why “Suddenly Hawkish” Yellen Brushed off the Dip in Inflation – Wolf Richter
15 juni
She did her homework. And consumers got a temporary gift.
A “suddenly hawkish” Yellen, as she is now being prefaced by some voices, brushed off the dip in inflation when she spoke after the FOMC meeting yesterday.
Inflation backtracked a tiny bit. The Consumer Price Index rose “only” 1.9% year-over-year in May, and the core CPI without food and energy rose “only” 1.7%. “Only” in quotes because there is still enough inflation to whittle away at the purchasing power of wage earners who have to make do with stagnant wages and retirees who have to live off their near-zero-yield savings.
But Yellen looked at the details of the inflation reports and discovered that there were some one-time or short-term factors that brought inflation down a bit – and none of them are going to last.
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Offshore profits and domestic productivity – Fatih Guvenen, Raymond Mataloni, Dylan Rassier, Kim Ruhl
14 juni
US multinational enterprises may legally shift profits from high tax countries (like the US) to low tax countries (like Bermuda). This column uses unpublished survey data to show how this causes part of the US economic activity generated by these multinational enterprises to be attributed to their overseas affiliates, leading to an understatement of measured US GDP and, in turn, productivity. Profit-shifting activity has increased significantly since the mid-1990s, resulting in an understatement of the growth rate of US productivity.
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EU Firms Up Brexit Bill Negotiation Position: Ask of €99.6 Billion Gross Liabilities – Yves Smith
16 juni
The Financial Times provided an update on the state of the first item that the EU wants settled in the Brexit talks, that of the UK’s exit tab. The UK has been whinging that it wants to address the movement of people first, but it doesn’t have any more leverage on the shape of the table than it does on other issues.
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Living Trusts for Banking – John H. Cochrane
12 juni
One of the core problems of financial reform is how to “resolve,” AKA bankrupt, a big bank — how can equity holders be wiped out, and debt holders carve up the remaining assets. Big banks are supposed to craft “living wills,” really living vivisection guides, but that effort is clearly in trouble. This blog post expands on a different idea for bank resolution; let’s call it “living trusts” by a similar analogy to estates.
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***One Fed President Says The Rate Hike Decision Was A Choice “Between Faith And Data” – Tyler Durden
16 juni
Over the years many have accused central banking of being the world’s latest (and most profitable) religion, with central bankers the only modern day priests left that still matter (to the tune of $75 trillion, the market cap of all stocks in the world).
Today, in a blog post from Minneapolis Fed president Neel Kashkari explaining why he dissented from the latest Fed rate hike decision, he admits as much when he says “for me, deciding whether to raise rates or hold steady came down to a tension between faith and data. On one hand, intuitively, I am inclined to believe in the logic of the Phillips curve: A tight labor market should lead to competition for workers, which should lead to higher wages. Eventually, firms will have to pass some of those costs on to their customers, which should lead to higher inflation. That makes intuitive sense. That’s the faith part.”
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What Happens When the Machines Start Selling? – Wolf Richtr
15 juni
The death of fundamental analysis.
The infamous FAANG stocks – Facebook, Apple, Amazon, Netflix, and Google’s parent Alphabet – along with other “tech” stocks have been getting “hammered,” to use a term that for now exaggerates their “plight.” The FAANG stocks are down between 1.7% and 2.5% at the moment and between 5.5% and 11% since their peak on June 8. Given how far these stocks have soared over the past few years, this selloff is just a barely visible dip.
But fundamental analysis has long been helpless in explaining the surge in stocks. The shares of Amazon now sport a Price-Earnings ratio of 180, when classic fundamental analyses might lose interest at a PE ratio of 18 for the profit-challenged growth company that has been around for over two decades. For them, the stock price might have to come down 90% before it makes sense.
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The World Bank in the Era of Trump – Ravi Kanbur
13 juni
With the World Bank now far from the only game in town in providing development finance, this column argues that it should focus on issues which are truly global in scope, but questions the suitability of the World Bank’s signature instrument, the sovereign loan. The international community does rely on the Word Bank for one global public good – global consensus building – but the current situation of veto power in the hands of a US government which does not acknowledge global public good issues, as evidenced by its withdrawal from the Paris accord, is potentially lethal for perceived and actual independence in consensus building.
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Deutsche Bank: The Market’s Current “Metastability” Will Lead To “Cataclysmic Events” – Tyler Durden
17 juni
With the VIX slammed at the close of trading on “quad-witch” Friday, sending it just shy of single-digits once again and pushing stocks back in the green in the last seconds of trading, the much discussed topic of (near) record low volatility simply refuses to go away, which means even more attempts to i) explain it, ii) predict what ends the current regime of “endemic complacency” and iii) forecast the “catastrophic” damage to markets when it does finally end as JPM’s Kolanovic did earlier this week, when he set the bogey on a modest increase in the VIX from 10 to just 15.
Overnight, applying his typical James Joycean, stream-of-consciousness approach to capital markets, Deutche Bank’s derivatives analyst Aleksandar Kocic penned his latest metaphysical essay on this topic, which covered most of the above bases, and which postulates that far from “stable” the current market equilibrium is one which can be described as “metastable”, the result of widespread complacency, and which he compares to an avalanche:”a totally innocuous event can trigger a cataclysmic event (e.g. a skier’s scream, or simply continued snowfall until the snow cover is so massive that its own weight triggers an avalanche.”
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Central Banks Are Driving Many to Cryptocurrencies – Demelza Hays
16 juni
Two years ago, Bitcoin was considered a fringe technology for libertarians and computer geeks. Now, Bitcoin and other cryptocurrencies, such as Ethereum, are gaining mainstream adoption. However, mainstream adoption has been propelled by financial speculation instead of by demand for a privately minted and deflationary medium of exchange. After the Fed’s rate hike this week, Bitcoin and alternative cryptocurrencies, such as Ethereum and Dash dropped in value instantly. Bitcoin, for example, dropped by approximately 16% in value while other coins dropped by approximately 25%. However, Bitcoin’s price recovered to the previous high within 18 hours.
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Trends and priority shifts in artificial intelligence technology invention: A global patent analysis – Hidemichi Fujii, Shunsuke Managi
16 juni
Patent applications are a good indicator of the nature of technological progress. This column compares trends in applications for artificial intelligence patents in Japan and the US. One finding is that the Japanese market appears to be less attractive for artificial intelligence technology application, perhaps due to its stricter regulations on the collection and use of data.
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***When the System Thwarts Sincere, Hard-Working People, the System Has Failed – Charles Hugh Smith
15 juni
The net result is the organization fails its mission even as it adds employees and expands its budget and regulatory powers.
One of the most painfully visible symptoms of profound failure is the way our systems now thwart and frustrate sincere, hard-working people who labor within them. If you work within any of the institutions at the heart of our system–healthcare, education, governance, the armed forces, insurance, finance, and so on–or know people who work in these fields, you know most people are honest and hard-working, and trying to do a good job.
Sadly, the systems actively thwart the efforts of sincere, hard-working people and grind them down. This is true not just of employees in the lower echelons–it’s equally true of top administrators.
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Why Some Hedge Funds Believe The Shale Boom Is Coming To An End (Again) – Tyler Durden
16 juni
Today’s Baker Hughes report confirmed that the US shale miracle continues, as another 6 oil rigs were added bringing the total to 747, the highest since mid-2015, with domestic producers seemingly oblivious – or perfectly well hedged – to the ongoing decline in crude prices which is once again set to crippled the Saudi budget.
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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.