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.

In verband met de situatie rond Deutsche bank, vandaag extra aandacht met toegevoegde artikelen die naar komende dagen kijken.

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De kop is de link naar het oorspronkelijke artikel, waarvan de samenvatting of de eerste (twee) alinea’s hier gegeven worden.

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.

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According To JPMorgan, This Is The Biggest Risk Facing Deutsche Bank At This Point – Tyler Durden
1 oktober
Deutsche Bank uncertainties were added to concerns about BoJ tapering spooking global equity markets over the past week. Widespread press reports about Deutsche Bank clients and counterparties reducing their financial exposure to the bank, including their derivatives exposures, alarmed market participants.
At the same time, JPMorgan warns, the amount borrowed by euro-area banks at the ECB’s USD auction this week spiked to $6.35bn raising fears about funding.
We need to wait for next week to see if this elevated dollar borrowing by euro area banks persists beyond quarter-end. But as JPMorgan’s Nikolaos Panigirtoglou warns,
In our opinion it is not so much funding issues but rather derivatives exposures that more likely to trouble markets going forward if Deutsche Bank concerns continue.
This is especially true if these concerns propagate into a confidence crisis inducing more rapid unwinding of derivative contracts.
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German Media Says Merkel Can Not Afford To Bail Out Deutsche Bank – Tyler Durden
1 oktober
Having kept mostly silent during the past week when Deutsche Bank stock was crashing, its default risk soaring, and only a spurious rumor by French AFP, based on a Twitter report, prevented the bank’s stock from going into a three day weekend at all time lows , on Saturday the German press woke up to the ongoing local banking crisis, reiterating what stoked the crisis in the first place, namely Angela Merkel’s statement last weekend that it won’t bail out Deutsche Bank.
Repeating not only what Merkel herself said last week – a statement which first prompted this week’s plunge in DB stock – but what we have said all along, namely that a bailout of Deutsche Bank would be political suicide for the Chancellor due to pressure from AfD, and may lead to the collapse of Europe, where other nations, namely Italy, have been pushing for a similar bailout of their own banking systems only to be met with stern denials by German, Reuters reports that according to much of the German media, Angela Merkel cannot afford to bail out Deutsche Bank given the hard line Berlin has taken against state aid in other European nations and the risk of a political backlash at home.
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Deutsche Bank Charged By Italy For Market Manipulation, Creating False Accounts – Tyler Durden
1 oktober
For Deutsche Bank, when it rains, it pours, even when everyone tries to come to its rescue.
One day after its stock soared from all time lows, following what so far appears to have been a fabricated report sourced by AFP which relied on Twitter as a source that the DOJ would reduce its RMBS settlement amount with Deutsche Bank from $14 billion to below $6 billion (and which neither the DOJ nor Deutsche Bank have confirmed for obvious reasons), moments ago Bloomberg reported that six current and former managers of Deutsche Bank, including Michele Faissola, Michele Foresti and Ivor Dunbar, were charged in Milan for colluding to falsify the accounts of Italy’s third-biggest bank, Monte Paschi (which itself is so insolvent it is currently scrambling to finalize a private sector bailout) and manipulate the market. Two former executives at Nomura Holdings Inc. and five at Banca Monte dei Paschi di Siena were also charged.
The news comes in a time of heated relations between Italy and Germany, when the former has been pushing to get German “permission” for a state bailout of its insolvent banks only to be met by stiff resistance by the latter as Merkel and Schauble have demanded a bail-in of private investors instead, even as – ironically – it has been Deutsche Bank’s woeful financial state that has been in the Wall Street spotlight this past week.
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The Stinky Japanese Bond – Mark Thornton
28 september
Central banks have been engaging in nontraditional, radical, and unprecedented policies in recent years. Policies such as zero interest rates, quantitative easing, a war on cash, and even negative interest rates on bank deposits are now the norm. There has even been talk of helicopter money. This is not money falling out of the sky for you and me. It means central banks simply print money and give it to the government. The latest installment of monetary insanity comes from Japan where the new monetary policy will target the 10-year Japanese government bond at 0% interest rate.
The Bank of Japan, like the European Central Bank and the Federal Reserve, have all been buying government bonds in order to keep the cost of financing national debt low. They claim to be stimulating the economy, but that has not worked and is probably not their real intention. Thus far, it has worked to keep the interest rates on government bonds very low even in Italy, while pushing rates negative in Switzerland and Germany!
Japan’s policy of zero interest rates on government bonds means that you lend Japan $10,000 and 10 years later they return your money to you. Sounds like quite a deal for the Japanese government, but a stinky deal for bond buyers. What does this policy mean for the economy in general?
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***Why a banking crisis in China seems unavoidable – Edoardo Campanella, Daniel Vernazza
27 september
China’s debt – in particular its corporate debt – is large by historical and international standards. This column argues that of greater concern is the sharp increase in recent years, and that the vulnerability is heightened by the concentration of this debt in old industries that suffer from overcapacity and weak competitiveness. The authorities appear to be only now taking steps to halt the rise in corporate debt, but as prior episodes of banking crises show, this is unlikely to be enough to avert either a prolonged period of slowing growth or a financial crisis in the medium term.
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***“Thar’s Gold in Them Mountains” – Joseph T. Salerno
30 september
It is no secret that secret Swiss bank accounts are not so secret anymore, as political elites throughout the world led by the U.S. government wage an all-out war against financial privacy, even to the point of scheming to stamp out cash. But Swiss financial innovation knows no bounds. To meet the intensifying demand for financial privacy and for protection against unstable banks, negative interest rates and other “unconventional” monetary policies, Swiss entrepreneurs have purchased and refurbished former military bunkers hidden deep in the bowels of the Swiss Alps and transformed them into huge warehouses for storing gold. Unlike banks, these warehousing firms are not obliged to report suspicious activities to Swiss federal authorities, nor are U.S. citizens storing gold abroad outside of financial institutions legally required to report such holdings under the U.S. Foreign Account Tax Compliance Act. There are currently 10 gold storage firms operating out of submontane bunkers. One Alpine company is so marvelously secretive that the owner refuses to publicly disclose his name or even the name of his company. Evidently business is booming. According to Swiss customs records, In the first half of 2016, Switzerland imported 1,357 metric tons of gold valued at about $40 billion.
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How Do We Create Value When Knowledge Is Almost Free? – Charles Hugh Smith
1 oktober
Credentials are increasingly in over-supply; problem-solving skills are scarce.
How do we create value in an economy that is increasingly dependent on knowledge? The answer is complicated by the reality that knowledge is increasingly digital and “unownable” and therefore almost free.
Financialization as a substitute for creating value has run its course.
The crony-capitalist answer is always the same, of course: bribe the government to create and enforce private monopolies. This process has many variations, but a favored one is to deepen the regulatory moat around an industry to the point that competition is virtually eliminated and innovation is shackled.
Businesses protected by the regulatory moat can charge whatever they wish, becoming monopolistic rentiers that are parasites on the consumer and economy.
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The objectives of financial stability policy – Paul Tucker
28 september
The objective of financial stability policy is unclear. Is it the resilience of the financial system, avoiding the costs of systemic collapse, or managing the credit cycle, containing the costs of resource misallocation and over-indebtedness? This column argues that the answers have serious implications for what can decently be delegated to independent ‘macroprudential authorities’, but have barely been debated in those terms.
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You Want to Fix the Economy? Then First Fix Healthcare – Charles Hugh Smith
29 september
We don’t just deserve an affordable, sustainable healthcare system–we’re doomed to bankruptcy without one.
What is blindingly obvious to employers but apparently invisible to the average zero-business-experience mainstream pundit is this: if you want to fix the economy, you must first fix healthcare. If you want to pinpoint a primary reason why U.S. enterprises shift jobs overseas, you have to start with skyrocketing healthcare costs.
According to a report by the St. Louis Federal Reserve, real (adjusted for official inflation) wages have risen a mere 3% since 1970. (No wonder wage earners don’t feel wealthier; if we use a more realistic measure of inflation, we haven’t gained 3%–we’ve lost ground.)
But if we look at total compensation costs paid by the employer (health insurance, workers’ compensation, employer’s share of Social Security, etc.) we find that these costs have soared 60%. In other words, if these labor overhead costs had remained stable (i.e. gone up only as much as inflation), employers could have distributed the difference as raises to employees.
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Economic Growth Requires More Than Low Interest Rates – Frank Shostak, Peter Stellios
26 september
Many commentators and economic experts are of the view that the Federal Reserve is running out of tools to keep the economy going given the very low level of interest rates. It is also argued that despite a steep downtrend in the policy rate since 1980, the underlying growth of the US economy has been following a down trend.
This must be contrasted with the previous period when the underlying trend in the federal funds rate was heading up while the underlying growth of economic activity followed a rising trend.
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Democracy does not cause growth– Julia Ruiz Pozuelo, Amy Slipowitz, Guillermo Vuletin
30 september
The debate over whether democracy causes economic prosperity and growth dates back millennia. Recent empirical results suggest that democratisation has a sizable positive effect on economic growth, but endogeneity and reverse causality may be driving these results. This column uses new data from surveys of democracy experts to solve the endogeneity puzzle. The positive association between democracy and economic growth is a reflection of economic turmoil causing the emergence of democratic rule, rather than democracy causing more economic growth.
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Conceptual challenges in international finance – Stefan Avdjiev, Robert McCauley, Hyun Song Shin
28 september
Working with the wrong accounting classifications can lead to wrong conclusions in any area of economics. But it is especially treacherous in international finance, due to the importance of key currencies and the operations of multinational firms, especially global banks. Much of the analysis in international finance is still conducted under the assumption that the GDP area, decision-making unit and the currency area coincide – the so-called ‘triple coincidence’. This column illustrates the common analytical missteps that can arise by reviewing three examples from the recent past, and argues that a proper analysis of capital flows necessitates paying greater attention to basic accounting building blocks.
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(Pdf)The State of Advanced Economies and Related Policy Debates: A Fall 2016 Assesment – Olivier Blanchard
september 2016
Perhaps the most striking macroeconomic fact about advanced economies today is how anemic demand remains
in the face of zero interest rates. In the wake of the global financial crisis, we had a plausible explanation why demand was persistently weak: Legacies of the crisis, from deleveraging by banks, to fiscal
austerity by governments, to lasting anxiety by consumers and firms, could all explain why, despite low rates, demand remained depressed.
This explanation is steadily becoming less convincing. Banks have largely deleveraged, credit supply has loosened, fiscal consolidation has been largely put on hold, and the financial crisis is farther in the rearview mirror. Demand should have steadily strengthened. Yet, demand growth has remained low.
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90 Days Later: Still No Signs Of Brexit ‘Doom & Gloom’ – Tyler Durden
1 oktober
For the first half of the year, we were warned early and often by authorities that the Brexit vote could be a calamity for the ages.
For example, the IMF claimed that a “Leave” result would threaten to “cause severe damage”, while Standard and Poor’s said that it would “paralyze” investment in the UK.
But, as Visual Capitalist’s Jeff Desjardins notes, it turns out that the real Brexit casualty isn’t the UK economy – instead it is the reputation of the many professional economists who wrongly predicted doom and gloom as the likely aftermath.
Today’s chart looks at the three months before and after the Brexit vote, which took place on June 23, 2016.
The two charts tracked are the GBP/EUR and the FTSE 100. The former is the price of the British pound in terms of euros, and the latter is a major stock index that includes the largest companies listed in London, such as Barclays, Glencore, HSBC, Royal Dutch Shell, or Sainsbury’s.
As expected, both markets have seen some action in the aftermath of the vote to leave. The pound has depreciated in terms of euros, but it is still higher now than it was from 2009-2011 in the post-crisis period. Against the ultra-strong USD, the pound is at decade-lows – but many other currencies are in similar territory as well.
The FTSE 100 is another story. It’s relatively close to all-time highs – and even despite the fears of a potential collapse of Deutsche Bank, it’s climbed over 12% since the initial Brexit slump.
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Roll Call: ‘The Deficit Debate Has Disappeared’ – Ryan Mcmaken
28 september
It’s long been apparent that the Republican party has no interest in making any significant cuts to government spending.
In fact, looking at GOP presidents since Nixon, it seems that Republicans like to increase government spending more than Democrats.
Nor does it seem there is any salvation to be found in “gridlock.” The DC consensus is strongly in favor of unimpeded federal spending.
Nevertheless, the Republicans have long kept up the ruse that they’re in favor of balancing the budget, cutting the deficit and engaging in “limited” government. Some have kept up the spending even while cutting taxes. This has only led to back-door tax increases.
But that has changed this election. Don’t worry, the Republicans haven’t decided to actually start cutting the budget after years of lying about it. No, what’s different this year is that the Party’s presidential nominee — and hence, much of the Party — isn’t even pretending to be in favor of any real budget cutting or budget balancing.
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This is Why US Gov. Deficit Numbers are a BIG Lie – Wolf Richter
1 oktober
But where did the money go? Fume and gnash your teeth.
The US gross national debt – after having been successfully disappeared from public discussion – has jumped by $1.38 trillion in fiscal 2016, which ended Friday. Ironically, this is not one of my infamous typos.
So OK, there were some timing issues with the debt ceiling and so forth a year ago, after which the debt jumped $340 billion in one day.
To smoothen out those factors, we look at fiscal 2016 and 2015 combined: the gross national debt ballooned by $1.71 trillion over those two years, $850 billion on average each year. There were only four years in the history of the US, when deficits exceeded this average: 2009-2012.
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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.