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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What The Looming Bear Market Might Look Like – Tyler Durden
3 november
Reuters wants you to assume the stock market correction on Wall Street has entered into a full-blown bear market.
Their equity analyst then asks: What kind of bear market can we expect?
As shown below, all bear markets are not equal, they come in different shapes and sizes, but are less frequent than bull markets and, on average, much shorter. They can be very damaging if counter-cyclical buffers via the government or central banks are not properly deployed.
“The stock market is not the economy and the economy is not the stock market, but every U.S. recession over the last half century has been accompanied by major lurches lower on Wall Street.Will history repeat itself next year or 2020?,” asks Reuters.
Dana Anspach, an independent financial advisor, said since the early 1900s, the S&P has undergone 32 bear markets, which basic arithmetic would tell us that they occur once every three and a half years.
Strategists at First Trust Portfolio estimate since 1926 the average bear market lasted 1.4 years, with an average market loss of 41%.
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Forex intervention and reserve management in Switzerland and Israel since the financial crisis: Comparison and policy lessons – Alex Cukierman
2 november2018
The size and nature of an economy have a crucial influence on the measures that can be taken in response to major shocks. This column investigates the forex interventions taken by Switzerland and Israel – two small, open economies – in the wake of the Global Crisis. While discretionary interventions are shown to be preferable when policy rates are strictly positive, this is no longer valid when the effective lower bound is reached and unconventional monetary policy is called for. The transfer of reserve management to a sovereign wealth fund is also discussed.
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***What’s the Real Meaning of the Stock Market Swoon? – Charles Hugh Smith
29 oktober
Nobody dares discuss it openly for fear of triggering a panic, but there aren’t enough lifeboats for everyone.
There’s no shortage of explanations on the whys and wherefores of the US stock market’s recent swoon / swan-dive / plummet. Here’s a few of the many credible explanations:
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Sovereign money: A challenge for science – Hans Gersbach
31 oktober
There has been an intense academic and policy debate on what monetary architecture is the most appropriate recently, but many issues are still unresolved. This column looks at the circumstances under which the current system and the sovereign money system yield the same outcomes, the core arguments in favour of the current system, and what advantages a sovereign money architecture might offer.
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The Fed’s QE Unwind Hits $321 Billion – Wolf Richter
1 november
The “up to” exacts its pound of flesh.
Over the four-week period from October 3 through October 31, the Federal Reserve shed $35 billion in assets, according to the Fed’s weekly balance sheet released Thursday afternoon. This brought the balance sheet to $4,140 billion, the lowest since February 12, 2014. Since October 2017, when the Fed began its QE unwind, or “balance sheet normalization,” it has now shed $321 billion
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Cross subsidies and monopolization, explained – John H. Cochrane
1 november
I found a beautiful, clear, detailed, fact-based, and devastating explanation of how forced cross-subsidies, monopolized markets, and lack of competition conspire to strangle the American health care system.
No, this was not on some goofy libertarian website. It was in the official Voter Information Guide, for the ultra-progressive state of California, authored by “the legislative analyst.” Whether the analyst is a secret libertarian struggling to get the word out, or simply that this is so much the way of doing things in California that nobody notices the scandal of it all, I do not know.
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***Publishing and promotion in economics: The tyranny of the Top Five – James Heckman, Sidharth Moktan
1 november
Anecdotal evidence suggests that the ‘Top Five’ economics journals have a strong influence on tenure and promotion decisions, but actual evidence on their influence is sparse. This column uses data on employment and publication histories for tenure-track faculty hired by the top US economics departments between 1996 and 2010 to show that the impact of the Top Five on tenure decisions dwarfs that of non-Top Five journals. A survey of US economics department faculties confirms the Top Five’s outsized influence.
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Pushing Past The Breaking Point – MN Gordon
2 november
Man’s willful determination to resist the natural order are in vain. Still, he pushes onward, always grasping for the big breakthrough. The allure of something for nothing is too enticing to pass up.
Systems of elaborate folly have been erected with the most impossible of promises. That prosperity can be attained without labor. That benefits can be paid without taxes. That cheap credit can make everyone rich.
Central to these promises are the central government and central planning authorities. They take your money and, in return, they make you a dependent. They promise you a secure retirement, and free drugs, while running a scheme that’s well beyond anything Charles Ponzi ever dreamed of.
According to the government’s statistics, the economy has never been better. By the official numbers, we’re living in a magical world of full employment, 2.3 percent price inflation, and the second-longest growth period in the post-World War II era. Agreeable reports like these are broadcast each month without question.
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In a Bubble Economy, Capital Goods Aren’t Always a Good Thing – Frank Shostak
2 november
The annual rate for US non-military capital goods orders excluding aircraft fell to 1.9% in September from 7.8% in August to stand at $69.6 billion.
Observe that after closing at $60.2 billion in December 2015 capital goods orders have been trending up.
Most commentators regard a strengthening in capital goods orders as evidence that companies are investing both in the replacement of existing capital goods and in new capital goods in order to expand their growth.
There is no doubt that an increase in the quality and the quantity of tools and machinery, i.e. capital goods, is the key for the expansion of goods and services. However, is it always good for the wealth generation process?
Consider the case when the central bank is engaged in loose monetary policy, i.e. monetary pumping, and an artificial lowering of the interest rate structure. Such policy sets the platform for various non-productive or bubble activities. In order to survive, these activities require real funding, which is diverted to them by means of loose monetary policy. (Once loose monetary policy is set in motion this allows the emergence of various bubble activities).
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Euro area interbank market fragmentation: New evidence on the roles of bad banks versus bad sovereigns – Silvia Gabrieli, Claire Labonne
2 november
By affecting the funding capacity of banks, interbank market fragmentation can hinder the smooth transmission of monetary policy and thus impair the provision of credit to the real economy. This column examines the fragmentation of the euro area interbank market in 2011-15, and finds that the size and quality of banks’ exposures to peripheral countries impaired banks’ access to, and increased the price paid for, interbank funding. This important channel of fragmentation risk was stopped by the ECB’s announcement of possible Outright Monetary Transactions in secondary government bonds markets.
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Why Bad Economics Makes Such Good Politics – Ryan McMaken
2 november
As the election nears, politicians will more and more frantically point out what wonderful favors they’ve done for the voters — or what favors they will do for the voters, if elected.
Of course, they never mean all the voters. They mean groups or individuals within the voting population who believe they benefit from laws, taxes, regulations, and spending programs supported by the politician in question.
Two such examples of these sorts of favors are tariffs and minimum wage laws. Both impose costs on both producers and consumers overall, while benefiting a small sliver of the population that is able to take advantage of the government mandate.
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I Was Asked: “How & When Will the Next Financial Crisis Happen?” – Wolf Richter
31 oktober
China has a lot of balls in the air at the moment.
FocusEconomics asked me and a bunch of other illustrious luminaries, “How and when will the next financial crisis happen?”
First things first. A “financial crisis” is somewhat of a latex-term that can be defined in many ways and stretched in many directions. For our purposes, a recession or a stock-market crash is by itself not a financial crisis. They’re more or less normal parts of the credit cycle – or the business cycle as it used to be called.
A financial crisis is decidedly not a normal part of the credit cycle – though in some countries such as Argentina, it appears to be part of the normal cycle. A normal recession in the US is over after a few quarters. It cleans out the cobwebs from the business environment. It pushes zombie companies into default and allows bankruptcy courts to clean up after them. This process has a cleansing quality that allows businesses to shed stifling debts at investor expense.
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China’s monetary policy must change – Alasdair Mcleod
1 november
The next credit crisis poses a major challenge to China’s manufacturing-based economy, because higher global and yuan interest rates are bound to have a devastating effect on Chinese business models and foreign consumer demand. Dealing with it is likely to be the biggest challenge faced by the Chinese Government since the ending of the Maoist era. However, China does have an escape route by stabilising both interest rates and the yuan by linking it to gold.
But will the Chinese have the gumption to take it? This article examines the challenges and the possible solution. It concludes there is a reasonable chance China will embrace sound money, because it is in a position to do so and the dangers of not doing so could destroy the State.
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Trump is Right: The Fed is a Big Problem – Thorsten Polleit
29 oktober
President Donald J. Trump has taken on the Federal Reserve (Fed), saying that Fed chairman Jerome H. Powell is threatening US economic growth by further raising interest rates. Mainstream economists, the financial press and even some politicians react with indignation: the president’s comments undermine the Fed’s political independence, potentially endangering the confidence in the US dollar. Such a public reaction is, at first glance, understandable – as mainstream economists have declared the political independence of the central bank a “golden calf” issue.
Monetary theorists argue that a politically independent central bank is best for the currency and the economy. As a result, most central banks around the world, including the Fed, have been made politically independent. But is this so? Well, if the economy thrives, politicians leave the Fed alone. If the economy stumbles, or if the Fed pursues unpopular measures, it runs the risk that Congress or the president may revise the Federal Reserve At of 1913, stripping it of its power. In fact, the Fed’s monetary policy cannot deviate too much from the Congress’ and the president’s political agenda.
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“The Real Economic Shock Is Yet To Come” – Trade War Deepens Across Asia – Tyler Durden
3 november
The last chance to avoid a full-blown 2019 trade war may come later this month when President Trump is scheduled to meet with Chinese President Xi Jinping at the G-20 Buenos Aires summit in the city of Buenos Aires, Argentina. It will be the first-ever G-20 summit to be hosted in South America and could be one of the most significant meetings in quite some time — as both leaders will try to resolve trade disputes.
Right now, the economic impact of the escalating trade war between Washington and Beijing seemed to deepen last month as factory activity and export orders dove across Asia, with some analyst warning Reuters that the worst has yet to come.
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Recent Brexit Trade Drama Shows that Europe Doesn’t Really Want Free Trade – Carmen Elena Dorobăț
2 november
As Brexit negotiations approach their initial deadline, U.K.’s plans to renegotiate a quick trade deal with WTO members once it leaves the EU bloc has been met with disdain by some of their trading partners. U.K.’s shortcut deal proposed “essentially copying the same trade deal that the EU and WTO has and then use the same wording in a document covering the U.K.’s new membership”. Russia, U.S., New Zealand, Japan, and Moldova, among others, have raised serious concerns about this since late 2017, and thus did not offer their approval of the fast-track deal last week. They also blocked U.K.’s access to WTO’s Government Procurement Agreement, an accord that would open and smooth out access to government procurement contracts for the signing parties.
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***Whiff of Panic After Mexico Voted to Scrap Mega-Airport & Corruption Project – Don Quijones
29 oktober
Now everything is up in the air, so to speak.
The results are finally in from one of the most controversial voting exercises ever held in Mexico. The people — albeit a tiny fraction of the whole electorate — have voted to scrap a new $13-billion airport for the capital that is almost one-third finished, at least $4 billion over budget, and mired in allegations of corruption and lack of transparency, dealing a hefty blow to some of Mexico’s richest business leaders, foreign construction companies, and the global lenders that have helped finance the project.
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Paul Volcker’s New Memoir: A Broadside Against his Successors? – Jeff Deist
30 oktober
Paul Volcker, the cigar smoking former Chairman of the Federal Reserve Bank, literally and figuratively towers over his successors (he is reportedly 6’7″). Mr. Volcker is the the last Chair under whose tenure American savers could earn a decent rate of interest, the last Chair who demonstrated any meaningful political independence (clashing with presidents Carter and Reagan), the last Chair who really hated inflation, and the last Chair who eschewed the technocratic management of monetary policy. He’s the last of the old-guard central bankers who saw monetary policy as a regulator and not a stimulus machine. As bad as he was on gold—as an undersecretary in Nixon’s Treasury department he advocated the suspension of gold convertibility— Volcker was a gut-level banker who understood complex markets but also the concerns of average people. He was never a policy wonk with his head in the clouds.
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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.

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