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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The Eurozone Is in a Danger Zone – Alasdair Macleod
5 januari
It is easy to conclude the EU, and the Eurozone in particular, is a financial and systemic time-bomb waiting to happen. Most commentary has focused on problems that are routinely patched over, such as Greece, Italy, or the impending rescue of Deutsche Bank. This is a mistake. The European Central Bank and the EU machine are adept in dealing with issues of this sort, mostly by brazening them out, while buying everything off. As Mario Draghi famously said, “whatever it takes.”
There is a precondition for this legerdemain to work. Money must continue to flow into the financial system faster than the demand for it expands, because the maintenance of asset values is the key. And the ECB has done just that, with negative deposit rates and its €2.5 trillion asset purchase program. But that program ends this month, making it the likely turning point, whereby it all starts to go wrong.
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Volatility – John H. Cochrane
31 december
What’s causing the big drop in the stock market and the bout of enormous volatility we’re seeing at the end of the year?
The biggest worry is that this is the beginning of the end — a recession is on its way, with a consequent big stock market rout. Is this early 2008 all over again, a signal of the big drop to come?
Maybe. But maybe not. Maybe it’s 2010, 2011, 2016 or even 1987. “The stock market forecast nine of the last five recessions,” the economist Paul Samuelson once rightly said.
The stock market does fall in recessions, but it also corrects occasionally during expansions. Each of these drops was accompanied by similar bouts of volatility. Each is likely a period in which people worried about a recession or crash to come, but in the end it did not come.
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Leverage over the lifecycle and implications for firm growth and shock responsiveness – Emin Dinlersoz, Henry Hyatt, Sebnem Kalemli-Ozcan, Veronika Penciakova
6 januari
The financing behaviour of private US firms has been somewhat neglected in the firm dynamics literature. This column presents a new dataset for studying these firms’ behaviour and explores how the Great Recession affected their growth. The results show substantial heterogeneity in leverage by firm age and size among private firms, but not among public firms.
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Global Housing Markets From Hong Kong To Sydney Join Global Rout – Tyler Durden
5 januari
It’s not just stocks: the global housing market is in for a rough patch, which has turned ugly for many homeowners and investors from Vancouver to London, with markets in Singapore, Hong Kong, and Australia already showing increased signs of softening.
Macro factors have triggered a global economic slowdown that is unraveling luxury marketplaces worldwide, according to Bloomberg. As a result, a turning point has been reached, with home prices globally now under pressure, and rising mortgage rates leading to depressed consumer optimism, while also triggering a housing affordability crisis, S&P Global Ratings said in a December report. To make matters worse, a simultaneous drop in house prices globally could lead to “financial and macroeconomic instability,” the IMF warned in a report last April.
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iPhone Sales Croak, China’s Economy Deteriorating Faster than Expected, Apple Warns. Shares Plunge – Wolf Richter
2 januari
“We did not foresee the magnitude of the economic deceleration.” Oh dude, starting the year out on the right foot.
On Wednesday after the market closed, Apple released a letter to shareholders in which it said that revenues are going to be a lot worse in the quarter ended December 29 than its guidance two months ago, that iPhone revenues have dropped year-over-year, that China’s economic problems are deeper than expected, and that iPhone revenues are hurting elsewhere too. This confirms a series of revenue warnings from Apple suppliers.
Shares plunged 7.5% after hours to $146. If shares close at this level on Thursday, it would be the lowest close since November 7, 2017. Shares have plunged 38% in three months.
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****Why Epistemology Is Important (in Economics and Everything Else) – Jim Fedako
3 jnuari
Ketones are everywhere. And so are associated high fat, low carbohydrate diets, as well as eating patterns that include intermittent fasting – all championed as solutions to obesity, Alzheimer’s, diabetes, etc. While the diets have existed for some time, the addition of intermittent fasting is new, though ubiquitous. So much so that I took notice and considered modifying my eating patterns. Then it hit me …
Thirty years ago, when I was racing bicycles, a new diet and book were the rage, at least for athletes. Robert Haas, the author of the book, Eat to Win, claimed his diet had rejuvenated the tennis career of Martina Navratilova, with Navratilova adamantly agreeing her stamina had improved immensely. The key to her enhanced performance was high-quality carbohydrates. Lots of them. Fats were the energy robbing evil and were eliminated as much as possible. So were simple sugars.
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The dark side of decision-making in groups: Nastiness to outsiders – Michal Bauer, Jana Cahlíková, Dagmara Celik Katreniak, Julie Chytilová, Lubomír Cingl, Tomáš Želinský
5 januari
The economic consensus is that groups behave in a more self-regarding way than individuals, which affects their members’ decision-making. This column describes new evidence from experiments in Slovakia and Uganda that supports an alternative hypothesis from social psychology that simply being a member of a group makes us more anti-social to outsiders. Within-group cohesion in organisations may also have a dark side, fostering hostility to outsiders.
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Boom-Bust Cycles and Easy Money – Frank Shostak
2 januari
Only a few months ago most economic commentators were sanguine about prospects for the US economy. Most of them did not expect an imminent downturn. Now all that has changed with most experts expecting the economy to enter a downward phase of the economic cycle by 2019. According to experts, the key factor behind the emerging downturn is the policies of the US President Trump in particular the imposition of tariffs on imports. Very few analysts however attribute the possible downturn to the decline in the annual growth rate of money supply. The exception here are the monetarists (i.e., the followers of Milton Friedman).
According to Friedman, the root of the business cycle is the fluctuations in the growth rate of money supply.
Friedman held that what is required for the elimination of these cycles is for central bank policy makers to aim at a fixed rate of growth of money supply:
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Commoditization = Deflation – Charles Hugh Smith
4 januari
The other deflationary pressure is the stagnation of wages for the bottom 90%.
Apple’s slumping sales growth in China re-energized discussions on the commoditization of smart phones: the basic idea is that once devices, services, goods, platforms, etc. are interchangeable and can be produced/generated anywhere, they are effectively commodities and their value declines accordingly.
In the case of Apple’s iPhone, many observers see diminishing returns on the latest model’s features as the price point (around $1,000) now exceeds what many customers are willing to pay for the status of owning an Apple product and the declining differentiation of the iPhone when compared to other smart phones available at a fraction of the iPhone’s price.
Commoditization doesn’t just affect the top tier of the food chain; it affects the entire food chain. The commodity $400 smart phone has diminishing returns over the commodity $200 smart phone, and the $200 smart phone has diminishing returns over the commodity $100 smart phone.
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***Mexico Kicks Off War on its Vast Black Market for Oil – Don Quijones
1 januari
“We’re not just talking about the theft of oil, but about a plan involving government insiders and a complex distribution system. It’s not easy to distribute and sell the pilfered contents of 600 pipelines each and every day.”
Mexico’s new government has launched a multi-pronged offensive against the rampant oil theft that is costing state-owned oil company Petroleos Mexicanos (Pemex) billions of dollars a year and destabilizing entire swaths of the country. Upon its orders, around 4,000 federal police agents, soldiers, and marines will be posted to protect 58 Pemex facilities, six refineries, 39 supply terminals, and 12 pumping stations.
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Chinese Professor Censored After Admitting Real GDP Growth Is Below 2% – Tyler Durden
5 januari
Stirring up unpleasant echoes of the market chaos that swept the world in the opening days of 2016, Apple’s decision to cut its quarterly revenue guidance for the first time in 16 years – citing slowing iPhone sales in China as the primary culprit – reinforced concerns about slowing growth in the world’s second-largest economy that could have wide-ranging repercussions for global markets.
This wasn’t the only factor prompting fears over slowing Chinese economic growth: a batch of soft economic data including consumption, manufacturing surveys and retail sales indicators has undoubtedly helped contribute to the paranoia. As we argued on Friday, when prognosticating the direction of global markets in 2019, all eyes will be on the USA’s largest trading partner.
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Why Capital Needs Entrepreneurs – Antony P. Mueller
31 december
The productivity theory of capital dominates the popular view and public discussions. It presumes that capital generates the yield like a tree begets its fruits. In this view, more savings imply more investment, and more investment generates a higher capital stock, which in turn raises future yields. The belief is widespread that monetary assets grow and render automatically the returns. Yet already at the end of the 19 th century the Austrian economist von Eugen von Böhm-Bawerk exploded the productivity theory of capital. He showed that without entrepreneurial action, capital is stale and useless.
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***Trucking Boom Ends, Next Phase in Cycle Starts – Wolf Richter
5 januari
This is a very cyclical business.
In December, orders for new Class-8 trucks — the heavy trucks that haul the products of the goods-based economy across the US — plunged by 43% from a year ago, to just 21,000 orders, the lowest since August 2017, and down by 60% from August 2018. The chart shows the percent change of Class-8 truck orders for each month compared to the same month a year earlier, which eliminates the effects of seasonality (data via transportation data provider FTR):
In the chart above, there are some standouts that show just how cyclical this business is:
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Deregulation – John H. Cochrane
4 januari
Many of us free-market types bemoan how poorly designed regulation hurts economic growth. But unlike “stimulus,” regulation is a death by a thousand knives. Each one seems innocuous, but they add up. It’s hard to tell the story without details. There is no handy government statistic on “impact of regulations.” We tend to talk about what we can easily measure. Likewise, there is a general sense that the current deregulation effort may be helping, but again without details it’s hard to know if this is truth or spin.
In this context, I just learned of an interesting new website at the Brookings Institution that tracks Trump Administration deregulation efforts (HT Daniel Henninger at WSJ). I get the general sense that Brookings isn’t too happy with it and wants to expose removal of useful regulations. But they’ve done a nice job, so you can read it both ways.
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Repayment flexibility and risk taking: Evidence from credit contract – Marianna Battaglia, Selim Gulesci, Andreas Madestam
6 januari
Small firms in developing countries are commonly thought to be prevented from making profitable investments by lack of access to credit and insurance markets. This column uses evidence from an experiment in Bangladesh to show that repayment flexibility leads to substantial improvements in business outcomes and socioeconomic status, as well as lower default rates. The results are driven by an increase in entrepreneurial risk taking, suggesting that lack of insurance is an important constraint for small firms but that a simple financial product that increases repayment flexibility can be an effective tool for enabling growth.
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***How China Colonized An Entire Continent Without Firing A Single Shot – Tyler Durden
5 januari
Back in 1885, to much fanfare, the General Act of the Berlin Conference launched the Scramble for Africa which saw the partition of the continent, formerly a loose aggregation of various tribes, into the countries that currently make up the southern continent, by the dominant superpowers (all of them European) of the day. Subsequently Africa was pillaged, plundered, and in most places, left for dead. The fact that a credit system reliant on petrodollars never managed to take hold only precipitated the “developed world” disappointment with Africa, no matter what various enlightened, humanitarian singer/writer/poet/visionaries claimed otherwise.
And so the continent languished…. until 2012 when what we then dubbed as the “Beijing Conference” quietly took place, and to which only Goldman Sachs, which too has been quietly but very aggressively expanding in Africa, was invited.
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