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.

——————————————————————————————————
Economic Stats Won’t Tell Us What Really Causes Recessions – Frank Shostak31 december
Most economists are of the view that by means of economic indicators it is possible to identify early signs of an upcoming recession or prosperity. What is the rationale behind this opinion?
The National Bureau of Economic Research (NBER) introduced the economic indicators approach in the 1930s. A research team led by W. C. Mitchell and Arthur F. Burns studied about 487 economic data to ascertain the mystery of the business cycle. According to Mitchell and Burns,
Business cycles are a type of fluctuation found in the aggregate economic activity of nations. … a cycle consists of expansion occurring at about the same time in many economic activities, followed by similarly general recessions, contractions, and revivals which merge into the expansion phase of the next cycle; this sequence of changes is recurrent but not periodic.
——————————————————————————————————
Wealth and taxes, part I – John Cochrane
2 januari
Last November I had the pleasure of discussing “Top Wealth in the United States: New Estimates and Implications for Taxing the Rich” a very nice paper by Matthew Smith, Owen Zidar and Eric Zwick at the NBER asset pricing meetings, presented by Eric. The paper prompts a series of blog posts on wealth distribution and wealth taxes. I’ll try to stick to points that haven’t been made a hundred times already.
The paper mostly examines Saez and Zucman’s 2016 QJE paper on wealth inequality. As many others have found, the Saez Zucman numbers are, … let’s say somewhat overstated.
To be continued here in part 2.
——————————————————————————————————
Central Banks Are The Biggest Risk To The Economy In 2020 – Jim Bianco
3 januari
The Fed’s reaction to the disruption in repo markets shows how hard it will be for policy makers to reverse their ‘money printing’…
The U.S. economic recovery that began in June 2009 is now in its 127th month, which is a record. Even more impressive is that for the first time since the signing of the Declaration of Independence in 1776, the U.S. just completed the first calendar decade without even one day of a recession. There are a few key reasons why this is happening, and one clear risk that could bring the expansion to an end.
Fed’s Evans Says U.S. Economy Resilient Despite Manufacturing Data
The natural trend for an economy is to grow. A recession only occurs when something “breaks.” So, this record expansion is happening because nothing has broken. The primary reason is new technology that gives businesses more flexibility to adapt to changing conditions.
——————————————————————————————————
Status of US Dollar as Global Reserve Currency v. Euro, Yen, Chinese Renminbi, & Others – Wolf Richter
2 januari
Latest data is out. Folks who hoped the Renminbi would break the dollar hegemony have to be very patient.
The US economy and financial system – including being able to maintain and fund the gargantuan trade deficits and fiscal deficits – has become reliant on the dollar being the dominant global reserve currency. And the IMF just released its next installment on how this status has been changing.
Total foreign exchange reserves in all currencies combined declined 0.6% in the third quarter from the second quarter to $11.66 trillion, according to the IMF’s quarterly COFER data. US-dollar-denominated exchange reserves – such as Treasury securities, US corporate bonds, etc. held by foreign central banks – ticked down 0.4% to $6.51 trillion. But holdings denominated in other currencies fell faster, and the share of dollar-denominated reserves edged up to 61.8% of total exchange reserves. The dollar’s status has declined from a share of 66% in 2014 to a share of 61.8% in Q3 2019
——————————————————————————————————
Is Greater Productivity a Danger? – David Gordon
1 januari
It is bad enough that opponents of the free market wrongly blame capitalism for environmental pollution, depressions, and wars. Whatever the failings of their causal theories, at least they are focused on undoubtedly bad things. We have really gone beyond the pale, though, when the market is blamed for something good.
Tim Jackson, a professor of sustainable development at the University of Surrey, does just that in his article. “Let’s Be Less Productive,” which appeared in the New York Times on May 26, 2012.
Jackson suggests that greater productivity may have reached its “natural limits.” By productivity he means “the amount of output delivered per hour of work in the economy.” He acknowledges that as work has become more efficient, substantial benefits have resulted: “our ability to generate more output with fewer people has lifted our lives out of drudgery and delivered us a cornucopia of material wealth.”
——————————————————————————————————
Credit cycles and asset returns – Josh Davis, Alan Taylor
2 januari
Investor experience and academic research since the Global Crisis reflects a growing realisation that credit conditions can affect future macroeconomic outcomes. This column investigates whether credit booms throughout history have had any explanatory power to account for future asset class returns. It finds that credit booms tend to systematically predict poor returns in the near future for equities in absolute terms, and relative to bonds. An investor who had tilted their portfolio allocations based on a credit boom signal would have been able to improve portfolio performance. The contribution of the credit boom signal is meaningful when compared to other well-established signals such as momentum and value.
——————————————————————————————————
The 20’s Will Be An Explosive Decade for Gold – Peter Schiff
2 januari
In 2019, gold had its best year since 2010. Peter Schiff appeared on the RT Dec. 31 and said he thinks the yellow metal should have done even better. And given the current economic conditions, he believes the 20’s will be an explosive decade for gold.
You know, the reason the US stock market went up this year is because the Fed surprised everybody by doing exactly what I had been predicting they would do. They aborted their feigned attempt to normalize their interest rates and shrink their balance sheet. They went back to rate cuts and quantitative easing. This is extremely bullish for gold.”
Peter emphasized that gold should have been up a lot more in 2019, but he thinks it will catch up over the next several years — probably next year in particular.
——————————————————————————————————
The Two Charts You Need to Ignore or Rationalize Away in 2020 (Unless You’re a Bear) – Charles Hugh Smith
3 januari
If you believe you’ve front-run the herd, you’re now in mid-air along with the rest of the herd that has thundered off the cliff.
We’re awash in financial charts, but only a few crystallize an entire year. Here are the two charts that sum up everything you need to know about the stock market in 2020.
Put another way–these are the two charts you need to ignore or rationalize away–unless you’re a Bear, of course, in which case you’ll want to tape a printed copy next to your wall of curled Post-It notes for future reference.
These charts show that all the potential gains from a thee-year advance (2019-2021) in P-E multiples and stock valuations have already been front-run in a mere three months. This is a key dynamic in the diminishing returns on Federal Reserve stimulus. This is an important point that few seem to observe.
——————————————————————————————————
The Fed’s Monetary Magic – David Robertson
3 januari
Given the strong performance of stocks over the past year and the past decade, investors might be forgiven for enjoying a sense of calm. Regardless of what one might believe about underlying fundamentals and valuation, it is hard to dispute that whenever markets have run into trouble, central banks have provided ample liquidity to get them back on track. Although maintaining exposure to risk assets in such an environment can hardly be called investing in any conventional sense, it has been profitable to do so.
The main problem with such a benign outlook is that it rests on the assumption that central bankers will be both willing and able to protect markets by way of monetary policy. The bad news is that when all the ongoing challenges are considered together, it becomes clear just how complicated and difficult the task will be to keep markets afloat with monetary magic. The good news is that it is easy to identify those challenges by just reflecting on the last year and a half or so.
——————————————————————————————————
Three Ways to Increase Workers’ Wages – Gor Mkrtchian
1 januari
Free marketeers have rightly written many refutations of the minimum wage. However, it’s difficult to beat something with nothing, and so this article will outline major ways in which wages actually rise: through capital accumulation and the honing of skills that others value.
What Determines Wages?
Before looking at how wages can increase, what determines them in the first place? Wages tend to equal the productivity of the worker. If Jones the chef can bring in thirty dollars an hour for Smith, the restaurant owner, Smith will have to pay Jones almost thirty dollars an hour, or else another restaurant can snag Jones away along with the revenue he offers.
——————————————————————————————————
More ECB Bond Holdings Get in Trouble: Infrastructure Giant Atlantia, Infamous for Collapsed Genoa Bridge, Could Lose its Core Business – Nick Corbishley
4 januari
Italy could be on the verge of approving rules that would make it much easier and cheaper to revoke highway concessions. And that could be very bad news for Autostrade per l’Italia (ASPI), the private toll road operator that controls more than half of Italy’s aging toll roads and which is blamed for the collapse of the Morandi Bridge in Genoa in 2018 that resulted in 43 fatalities and left 600 people homeless. The regulatory uncertainty sent shares of ASPI’s parent company, Atlantia, down 10% to eleven-month lows this week.
——————————————————————————————————
Why the Minimum Wage Is so Bad for Young Workers – Mitch Nemeth
2 januari
In today’s political discourse, the minimum wage is frequently mentioned by the more progressive members of Congress. On a basic level, raising the minimum wage appears to be a sympathetic policy for low-income wage earners. Often kept out of the conversation, however, are the downstream effects of this proposal. The consensus among economists has always been that a price floor on “low-skilled labor” leads to unemployment “among the very people minimum wage legislation allegedly helps.” Surely those who retain their employment will reap the higher hourly pay but not without consequence to the rest of the “low-skilled” labor market.
——————————————————————————————————
Services trade policies and economic integration: New evidence for developing countries – Bernard Hoekman, Ben Shepherd
3 januari
Data weaknesses hamper analysis of how policies towards imports and exports of services, foreign direct investment and, more generally, regulation affects the operation of services sectors. Based on recently released regulatory policy data for 2016, this column uses machine learning methods to recreate to a high degree of accuracy the OECD’s Services Trade Restrictiveness Index to generate new estimates of services trade barriers for 23 developing countries. The analysis confirms that services policies are typically much more restrictive than tariffs on imports of goods, in particular in professional services and telecommunications. Developing countries tend to have higher services trade restrictions, but less so than has been found in research using data for the late 2000s.
——————————————————————————————————
The Seen and the Unseen of “Waste” – Jim Fedako
4 januari
Our goats love this time of year. The neighboring fields have been harvested, but not completely. Around the border and in odd spots throughout the field that adjoins our property are fugitives from the combine — soybean plants laden with browned, dried pods. We tug the goats toward the gate separating pasture from field, and then, once they realize their passage is safe, they tug us to their awaiting meal.
And while they glean, I glean.
Recently, I had a Facebook discussion with someone lamenting food waste. He recited some statistic that claimed that somewhere around 50 percent of food (a term he was unable to adequately define) was wasted, with waste having a moral implication. I challenged him to clarify his use of waste, noting the soybeans our neighbor sowed but never reaped. Were those wasted?
——————————————————————————————————
Manufacturing Employment, New Orders & Production Fall Fastest Since Apr-Aug 2009 – Wolf Richter
3 januari
An ugly report – how will it impact the overall economy?
US manufacturing took a turn from lousy to worse in December, according to the Manufacturing ISM Report On Business, released today, with employment, new orders and new export orders, production, backlog of orders, and inventories all contracting.
The overall Purchasing Managers Index (PMI) dropped 0.9 percentage points from November to 47.2% in December 2019, the fifth month in a row of contraction, and the fastest contraction since June 2009. Values below the 50% mark signify contraction, values above it signify growth
——————————————————————————————————
***“Rules of Origin” Show Why Trade Agreements Aren’t Free Trade – Robert P. Murphy
1 december
Ludwig von Mises famously argued that people must choose between outright socialism and unfettered capitalism, because there is no coherent “middle ground” between the two. The allegedly reasonable compromise of a highly interventionist state — where the authorities retain nominal private property but issue edicts regulating how legal owners may use their property — is unstable. Mises argued that one round of interventionism invites consequences that are even worse than the original problem, leading to yet more interventionism.
During the debates over Obamacare, I pointed out just how relevant Mises’s lesson was: we couldn’t get the “good parts” of Obamacare (such as universal coverage) without the “bad parts” (such as the individual mandate and massive tax hikes). When it comes to today’s controversies over trade with China, once again Mises’s insights are valuable. You can’t levy punitive tariffs on China but leave other trading routes relatively free, because then the Chinese will simply ship their exports via a more circuitous route. China hawks need to decide if they are going to abandon attempts to coercively manage trade, or if they are prepared for even more extensive top-down planning of global commerce.
——————————————————————————————————
Beware of tech bubbles: Long-term earnings of the dot-com bubble generation – Johan Hombert, Adrien Matray
5 januari
High salaries and the opportunity to work with exciting new technologies attract many graduates to jobs in the tech sector. This column examines the long-term earnings of French high-skilled workers who started their career during the last tech boom in the late 1990s. The results point to an ‘ICT boom cohort discount’, with high-skilled workers who started in the sector ending up earning almost 7% less than workers who started careers outside of ICT. One potential explanation for this is that human capital accumulated by high-skilled workers in a booming tech sector depreciates faster than usual because of accelerating technological change.
——————————————————————————————————
***The Fed’s “Not-QE” and the $33 Trillion Stock Market in Three Charts – Charles Hugh Smith
2 januari
One day the stock market ‘falcon’ will no longer hear the Fed ‘falconer’, and the Pavlovian magical thinking will break down as the market goes bidless.
The past decade has shown that when the Federal Reserve creates trillions of dollars out of thin air (QE), U.S. stocks rise accordingly. The correlation is very nearly perfect.
This has given rise to the belief that buyers of stocks will always be rewarded because “the Fed has our backs.” The evidence for this belief is the near-perfect correlation of Fed money-printing and stocks soaring.
——————————————————————————————————

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.

Eerdere afleveringen van dit wekelijkse overzicht vindt u hier.