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Economische aanraders 05-03-2017

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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***Russ Roberts on Economic Humility – John H. Cochrane
3 maart

Russ Roberts has an excellent essay, What do economists know? on economic humility. (HT Marginal Revolution)
A journalist once asked me how many jobs NAFTA had created or destroyed. I told him I had no reliable idea. …
The journalist got annoyed. “You’re a professional economist. You’re ducking my question.” I disgreed. I am answering your question, I told him. You just don’t like the answer.
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“What Has Kept The Rally Going”: Some Thoughts From Deutsche Bank – Tyler Durden
4 maart

The relentless, steady, monotonous levitation to all time highs keeps chugging along: while last week saw the S&P experience its first 1% intraday move in nearly two months, there has yet to be a comparable move on the downside. As Deutsche Bank notes, pull backs of 3-5% in the S&P 500 are typical every 2 to 3 months historically. The last such pull back occurred just prior to the US presidential election. The 4 month uninterrupted rally since is now well above average and if it continues for another 2 weeks will put it in the top 10% of rallies by duration. At 14%, the size of the rally is also somewhat larger than the historical average between such pullbacks (+10%).
Incidentally, sell-offs of 5% or more occurred on average every 5 to 6 months. With the last one occurring after the Brexit vote, the 8 months since is also well above the historical average. If the rally continues past mid-April it will be in the top 10% by duration. In size, the 19% rally since then is also well above the 14% historical average
So while it is clear that the recent move is an outlier, the next question is what factors have kept the rally going. Here, Deutsche Bank offers several possible answers:
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This is Worse than Before the Last Three Crashes – Wolf Richter
4 maart

How long can this surge in stocks go on? That’s what everyone wants to know. Projections range from “forever” – these projections have become increasingly common – to “it’s already finished.” That’s a fairly wide range.
Everyone has their own reasons for their boundless optimism or their doom-and-gloom outlooks. But there are some factors – boundless optimists should push them aside assiduously – that, from a historical point of view, would trigger tsunami sirens. Because in the end, it’s not different this time. And the cycle of “multiple expansion” and “multiple compression” is one of those factors.
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The effect of exchange rates on the utilisation of free trade agreements – Kazunobu Hayakawa, HanSung Kim, Taiyo Yoshimi
5 maart

Some exporters prefer to use most-favoured nation rates even when exporting to a fellow member of a free trade agreement. This column analyses the effect of exchange rates on the utilisation of free trade agreements, focusing on the ASEAN-Korea agreement. A depreciation of an (ASEAN) exporter’s currency against the (Korean) importer’s currency enhances utilisation rates of the trade agreement’s tariffs, with implications for the design of rules of origin.
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Neoliberalism Was Supposed to Make Us Richer: Three Reasons Why It Didn’t – Chris Dillow
2 maart

Chris Edwards says the privatizations started by Thatcher “transformed the British economy” and boosted productivity. This raises an under-appreciated paradox.
The thing is that privatization isn’t the only thing to have happened since the 1980s which should have raised productivity, according to (what I’ll loosely call) neoliberal ideology. Trades unions have weakened, which should have reduced “restrictive practices”. Managers have become better paid, which should have attracted more skilful ones, and better incentivized them to increase productivity. And the workforce has more human capital: since the mid-80s, the proportion of workers with a degree has quadrupled from 8% to one-third.
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Euro Breakup Rattles Investors Once Again, Only this time, the ECB is already doing “whatever it takes.” – Don Quijones
1 maart

With hotly contested general elections coming up in France, Germany, and Holland – where yet another upset could be on the cards – 2017 was always going to be a nail-biter for the Eurozone. That was before former Italian PM Matteo Renzi raised the prospects of fresh elections in the home of electoral chaos, Italy.
And investors’ nerves are fraying. The spread between the 10-year yields of French government debt and German government debt has already widened from 0.28% in October to 0.81% today in anticipation of French elections, to be held in April. According to Frankfurt-based Sentix research group, the probability that France could fracture the euro is also rising, reaching 8.4% in its latest survey of investor sentiment as concerns about Marine Le Pen’s threat to the French and European establishment continue to rise. It’s the highest level registered to date.
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***More than family matters: Apprenticeship and the rise of Europe – David de la Croix, Matthias Doepke, Joel Mokyr
2 maart

The role of specific institutions was important in giving Europe a technological advantage well before the Industrial Revolution. This column argues that apprenticeships were crucial to Europe’s rise. Unlike in the extended families or clans in other parts of the world, apprentices in Europe’s guild systems could learn from any master. New techniques and innovations could thus spread rapidly across the continent, without being constrained by family lines.
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Those Systems That Aren’t Busy Being Born Are Busy Dying – Charles Hugh Smith
27 februari

What we have is a bunch of sclerotic, dying institutions and systems resisting anything and everything that threatens to disrupt the status quo.
One way to understand the rising sense of disintegration and discord around the globe is to realize that those systems that aren’t busy being born are busy dying–and virtually none of our primary systems are busy being born.
The line is from Bob Dylan’s song It’s Alright, Ma (I’m Only Bleeding): “he not busy being born is busy dying.”
What does busy being born mean? For both individuals and systems, it means adapting by advancing understanding, flexibility and capabilities.
Systems that are dying are rigid, mal-adapted, resistant to change, obsessed with obscuring their failure and retaining their grip on cronyist privilege and power. Big Pharma: dying. Banking: dying. Governance, a.k.a. political processes: dying. Enforced consensus: dying.
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Understanding the global role of the US economy – M. Ayhan Kose, Csilla Lakatos, Franziska Ohnsorge, Marc Stocker
27 februari

A growth surge in the world’s largest economy could provide a significant boost to global activity. In contrast, uncertainty about the direction of US policies could have the opposite effect. This column investigates spillover channels linking the US and the global economy. An acceleration in US growth would have positive effects for the rest of the world if not counterbalanced by increased trade barriers. However, policy uncertainty could hamper global growth, and could have particularly bad effects on investment growth in emerging and developing economies.
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Debt Boom in China Could Lead to “Financial Crisis,” But Maybe Not Yet: New York Fed – Wolf Richter
27 februari

China’s debt boom, or “credit boom” in more palatable terms – whose true extent remains purposefully obscure – and what it might do to the Chinese economy and by extension to the global economy is starting to worry some folks at the New York Fed. This is how their article starts out:
Debt in China has increased dramatically in recent years, accounting for roughly one-half of all new credit created globally since 2005. The country’s share of total global credit is nearly 25 percent, up from 5 percent ten years ago. By some measures (as documented below), China’s credit boom has reached the point where countries typically encounter financial stress, which could spill over to international markets given the size of the Chinese economy.
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The Fed’s Dependence on the Consumer Will Backfire – C.Jay Engel
28 februari

The story is that it is consumers that are going “to push the economy to grow more than 2 percent this year.” That’s Dallas Fed President Robert Kaplan’s recently expressed view. It’s the old fallacy of spending — rather than saving — our way into growth. It’s remarkable that no one talks about the fact that the economy since 2008 was built on little but cheap debt, and therefore depends on the continued flow of such debt.
To raise interest rates in that environment, will lead to the very conditions that the Fed fears the most. Of course, Austrians would praise such a blessed blow to the artificial boom. However, since the Fed, operating through a Keynesian lens, sees no inherent instability in such an economic environment. They don’t see how much this would severely undermine the alleged stability they think they’ve achieved.
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***Waarom een van de belangrijkste economische wetten al lang niet meer werkt – Ben Ligteringen
3 maart

De afgeketste acquisitie van Unilever door de combinatie van branchegenoot Kraft Heinz en private-equityfonds 3G is volgens Ben Ligteringen een sprekend voorbeeld van het soort overname dat louter wordt gedreven door de beginselen van de financiële economie. Het is deze financiële economie die de kern vormt van de globalisering. De grote econoom David Ricardo, ‘poster child’ van de mondiale vrijhandel, had het graag anders gezien.
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Why Is the Cost of Living so Unaffordable? – Charles Hugh Smith
3 maart

Strip away the centralized power that protects and funds cartels, and prices would plummet.
The mainstream narrative is “the problem is low wages.” Actually, the problem is the soaring cost of living. If essentials such as healthcare, housing, higher education and government services were as cheap as they once were, a wage of $10 or $12 an hour would be more than enough to maintain a decent everyday life.
Here are some examples from the real world. In 1952, it cost $30 to have a baby in an excellent hospital. If we adjust that by official inflation as measured by the Bureau of Labor Statistic’s inflation calculator to 2017, the cost would be $275. ($1 in 1952 = $9.16 in 2017).
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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.