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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Expensive Markets Are More Dangerous Than You Think – Daniel Lacalle
6 december
According to JP Morgan, equity markets have not been this expensive so early into an economic recovery phase in the last twenty years. The Greed vs Fear Index also shows extreme optimism, while the Call to Put ratio in derivatives, that reflects the derivative exposure to a rising market, is also at multi-year highs. Meanwhile, the amount of negative-yielding bonds globally has risen to $18 trillion and the High Yield Index has risen to pre-crisis levels.
Many factors explain this level of optimism in markets. The news about vaccines and estimates of a rapid economic recovery accelerated investors’ bullish bets.
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No Privacy, No Property: The World in 2030 According to the WEF – Antony P. Mueller
8 december
The World Economic Forum (WEF) was founded fifty years ago. It has gained more and more prominence over the decades and has become one of the leading platforms of futuristic thinking and planning. As a meeting place of the global elite, the WEF brings together the leaders in business and politics along with a few selected intellectuals. The main thrust of the forum is global control. Free markets and individual choice do not stand as the top values, but state interventionism and collectivism. Individual liberty and private property are to disappear from this planet by 2030 according to the projections and scenarios coming from the World Economic Forum.
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Debt denial – John H. Cochrane, Casey Mulligan
9 december
Does debt matter? As the Biden administration and its economic cheerleaders prepare ambitious spending plans, a radical new idea is spreading: Maybe debt doesn’t matter. Maybe the U.S. can keep borrowing even after the COVID-19 recession is over, to fund “investments” in renewable energy, electric cars, trains and subways, unionized public schools, housing, health care, child care, “community development” schemes, universal incomes, bailouts of student debt, state and local governments, pensions, and many, many more checks to voters.
The argument is straightforward. Bond investors are willing to lend money to the U.S. at extremely low interest rates. Suppose Washington borrows and spends, say, $10 trillion, raising the debt-to-GDP ratio from the current 100 percent to 150 percent. Suppose Washington just leaves the debt there, borrowing new money to pay interest on the old money. At 1 percent interest rates, the debt then grows by 1 percent per year. But if GDP grows at 2 percent, then the ratio of debt to GDP slowly falls 1 percent per year, and in a few decades it’s back to where it was before the debt binge started.
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Central Bank Digital Currencies and the War on (Physical) Cash – Kristoffer Mousten Hansen
7 december
Twenty twenty is a year dominated by bad news. While governments around the world have imposed extremely destructive restrictions on economic life and promise a “Great Reset” that amounts to a great leap forward into the socialist future, central bankers have advanced plans for implementing central bank digital currencies (CBDCs). These may arrive as early as next year. Yet what is the motivation behind this innovation? Reports recently published by the Bank for International Settlements1 and the European Central Bank2 provide part of the answer. These publications provide fascinating insight into the theories and ideologies driving central bankers in their pursuit of CBDCs.
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How Many Renters Face Eviction when the Eviction Bans End? How Much Worse is it, Compared to the Good Times? – Wolf Richter
8 december
Rent collection data from 11.5 million rental apartments.
About 44 million households (107 million people) rent their home: 33% a single-family house; 62% an apartment; and 4% a mobile home. Even before the Pandemic, a large number of renters paid their rent late, or made partial payments, or were a month or more behind and faced evictions. That’s the business of being a landlord, even during the Good Times. But how much worse is it now, on the eve of the expiration of the CDC eviction ban?
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The “Great Reset” and Plans for a Global War on Savings – Daniel Lacalle
7 december
Global debt is expected to soar to a record $277 trillion by the end of the year, according to the Institute of International Finance. Developed markets’ total debt—government, corporate, and households—jumped to 432 percent of GDP in the third quarter. Emerging market debt-to-GDP hit nearly 250 percent in the third quarter, with China reaching 335 percent, and for the year the ratio is expected to reach about 365 percent of global GDP. Most of this massive increase of $15 trillion in one year comes from government and corporates’ response to the pandemic. However, we must remember that the total debt figure had already reached record highs in 2019, before any pandemic and in a period of growth.
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2020 Is Ending With 93% Of Global Economies Contracting… And With Markets At All Time Highs – Tyler Durden
12 december
As BofA’s European credit strategist, Barnaby Martin, puts it in one of the final issues of his European Credit Strategist report for the year, “2020 is ending with one of the most predictable and potent themes of the last decade: central bank activism.”
Case in point: on Thursday the ECB doubled down on more of the same as it delivered more PEPP, longer PEPP, further reinvestments and an extension of favourable TLTRO conditions. According to Martin, “while not as novel as some of the ECB meetings gone by, the aim of Thursday’s package was to maintain “favorable” funding conditions across all markets (to ensure the swift return of business and consumer confidence).”
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Free Market Vaccines – John H. Cochrane
7 decmber
Part 1: Who should get the vaccine first? Sell to the highest bidder. The disease and recession go away faster.
Part 2: The cost of perfection. The vaccine was invented in a weekend, available in February. In free market land, we would not have had a pandemic, or a recession. 284 thousand people would be alive today. That is the cost of FDA “protection.”
Part 1: Who should get the vaccine first?
Absolutely nobody has mentioned in public the free market answer: Sell to the highest bidder. (Or just allow some sales to the highest bidder. Don’t put people in jail for selling some to the highest bidder,)
(..)
Part 2: The cost of perfection
We had the vaccine the whole time, documents David Wallace-Wells in New York’s intelligencer, documenting and popularizing a known but overlooked fact.
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Global value chain responses to previous health shocks: Lessons for Covid-19 – Anirudh Shingal, Prachi Agarwal
8 december
International health crises have the ability to send shockwaves through global value chains. This column examines how value chains have responded to two previous health shocks – SARS and MERS – in order to draw lessons for the current pandemic. There is evidence of geographical diversification within value chains, as well as of an overall non-resilience to the SARS epidemic in particular. The effects are driven by lower-middle-income importers that were more integrated in global value chains, received more investment, were more competitive, and were more reliant on the severely affected partners. Similar disruptions are likely to follow Covid-19.
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Covid Is Toppling America’s “Points of Failure” Dominoes – Charles Hugh Smith
7 december
Sorry Fed, it’s too late. The dominoes are already toppling, and every point of failure is being exploited by the catalyzing effects of Covid.
America’s many points of failure–leverage points where a break brings down the entire system–are falling like dominoes, a process catalyzed by Covid. These systemic points of failure have been masked for the past 20 years by the widespread distribution of trillions of dollars, either printed or borrowed.
There’s no point of failure that can’t be glued together or covered up a bit longer with fountains of cash. That’s the American way of solving problems: just throw more money at it.
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For HSBC, Life Gets Very Complicated in Hong Kong & China, its Number One Market, as China Tightens the Screws – Nick Corbishley
11 december
Amid concerns China’s authorities are using the account seizures to crack down on dissent.
HSBC has once again shown that it will do just about anything to secure continued access to China’s huge market. That includes freezing the assets of pro-democracy politicians and protesters.
The bank was one of three lenders that were accused this past weekend of freezing the bank accounts of former Hong Kong lawmaker Ted Hui and his family, who fled to the UK late last week. Hui was one of 19 pro-democracy lawmakers to resign following Beijing’s decision in November to disqualify HK lawmakers who weren’t deemed sufficiently loyal. He faces nine criminal charges in Hong Kong, including money laundering offenses, and is suspected of breaching Hong Kong’s recently imposed national security law.
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The Weirdest, Most Distorted Economy Ever – Doug French
12 december
Between the Federal Reserve, Congress, and covid, navigating the business cycle is equivalent to sneaking through a house of mirrors. The stock market is making new highs as unemployment rates do the same. Thousands line up for free food and soon will do the same to be vaccinated. The nation’s governors tighten restrictions by the day while the Federal Reserve remains loose in its monetary operations.
Wolf Richter of Wolf Street has split the US economy into “the weirdest economy ever” when writing about the trucking boom and Online sales and “the most distorted economy ever” when addressing the record low junk bond yields.
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***New Lockdowns And More Rigidity Are Disastrous For U.S. Jobs – Daniel Lacalle
29 November
New Lockdowns And More Rigidity Are Disastrous For U.S. JobsPicture of Gerd Altmann Pixabay
United States jobless claims have picked up since the elections and the second wave of coronavirus have slowed down the economic recovery. Uncertainty about tax increases and changes in labor laws including an increase in minimum wage add to the fear of new lockdowns as employers see the devastating effect of these lockdowns in European employment.
While the United States has been able to recover fast and reduce unemployment to 6.8%, the Eurozone jobless rate rose to 8.3% before we consider the large figure of furloughed jobs that remain idle. The second wave of coronavirus in Europe has seen new government-imposed lockdowns and the impact on the economy is already severe Estimates for the fourth quarter gross domestic product assume a double-dip recession and another increase in unemployment.
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If You Thought 2020 Was Bad, Watch What Happens In 2021 – Brandon Smith
9 december
In terms of the economy and the American social situation, 2020 is definitely one of the ugliest years on record, there’s really no way around it. That said, I get the impression that many in the public are operating under the assumption that we are about to cross over the peak of the mountain and it will be all downhill from here on. Unfortunately, this is not the case.
All eyes have been focused on the pandemic event, and the thinking is that once the pandemic is “over”, the crisis will be over and everything will go back to normal.
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***Cycles, Systems and Seats in the Coliseum – CHarles Hugh Smith
10 december
The idea that debt, leverage, speculation, greed, exploitation and parasitic elites can expand exponentially forever is magical thinking.
Contrary to first impressions, I am not a doom-and-gloomer; I’m a systems-cycles-er, meaning I’m interested in where systems and cycles are heading.
Cycles work because we’re still running Wetware 1.0 which entered beta testing around 200,000 years ago and was released, bugs and all, around 50,000 years ago. Since the processes and inputs haven’t changed, neither do the outputs.
Nature is a mix of dynamic, semi-chaotic systems (fractals, etc.) and cyclical patterns which tend to operate within predictable parameters. Why should human nature and human constructs (societies, economies and political realms) be any different?
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***Consumers Finally Getting Smart? Credit Card Balances in Steepest Drop Ever – Wolf Richter
7 december
Stimulus and huge shifts in spending, wiping out entire industries and fattening up others.
American consumers – let’s face it, consuming is the number one top job during these trying times – have paid down their credit cards again.
In October, credit card balances and other revolving credit ticked down again from the prior month, and plunged by 10.3% from October last year, the steepest year-over-year drop ever, eking past the peak year-over-year drop during the Financial Crisis (-9.9% in January and February 2010)
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Central Banks Put Wind at Bitcoin’s Back – Doug French
10december
“Russia, Russia, Russia,” the current president used to sarcastically chastise opponents for wondering about 2016 election tinkering from Putin’s principality. Recent MAGA rallies featured “Covid, covid, covid,” with President Trump complaining that the press could think of nothing else.
In investmentland, it’s “Bitcoin, bitcoin, bitcoin,” again knocking on dollar door number twenty thousand, where it ventured in late 2017. Bloomberg’s November 21 edition features this flashy headline sure to inspire FOMO (fear of missing out), the predecessor of the more quaint Keynesian animal spirits: “Bitcoin Revival Unleashes Animal Spirits and $300,000 Forecast.” Imagine if I could retrieve the bitcoin I lost years ago when my phone went dark.
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Why automation in Spanish firms did not cause reshoring – Katherine Stapleton, Michael Webb
12 december
There has been much speculation that automation in high-income countries will lead to reshoring of production from lower-income countries or further reduce offshoring. Using rich data on Spanish manufacturing firms between 1990 and 2016, this column studies how automation in Spanish firms affected imports and multinational activity involving lower-income countries. It shows that, contrary to the typical assumption, the deployment of robots in Spanish manufacturing firms actually caused them to increase offshoring to lower-income countries. This effect was mainly caused by firms starting to newly offshore as a consequence of automation.
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***Colonialism Doesn’t Explain the Developing World’s Problems – Lipton Matthews
11 december
There is an abundance of studies postulating that colonialism explains the character of the developing world. For instance, in their seminal paper aptly titled “The Colonial Origins of Development: An Empirical Investigation” (2000), Daron Acemoglu, Simon Johnson, and James A. Robinson advance the audacious claim that in regions where the environment was conducive to settlement, Europeans built inclusive institutions promoting property rights, innovations, and long-term development. This was unlike settler colonies in places where the climate was inhospitable to large-scale settlements, where extractive institutions were established to achieve short-term gains. Imposing rent-seeking institutions to extract resources for personal enrichment was deemed a practical alternative to maneuvering the harshness of an unwelcoming environment. Many have raised objections to this thesis on methodological grounds. But even critics assume that colonialism has immense explanatory power. Research, however, is more fruitful when scholars assess development over a longer period. Prior to colonial rule, countries already had institutions of their own, so it is appropriate to suggest that precolonial institutions are a channel through which we can understand challenges in the developing world.
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***Narrative monetary policy surprises and the media: How central banks reach the general public – Saskia ter Ellen, Vegard H. Larsen, Leif Anders Thorsrud
8 december
Though the transmission channels of central bank communication to financial institutions are well researched, less is known about how they relay information to the public at large. This column shows how central bank communication indirectly reaches the general public by affecting news media coverage on topics of particular relevance for monetary policy decisions. The findings suggest that the media, and how it acts as an information intermediary, can have a sizeable effect on economic outcomes.
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