Economische aanraders 06-11-2016
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.
The New View of fiscal policy and its application – Jason Furman
The landscape of the fiscal policy debate has changed over the past decade, with academics and international organisations moving away from an ‘Old View’ of fiscal policy as ineffective. This column uses examples from the US and Europe to highlight the five principles of a ‘New View’ of fiscal policy, which increasingly appreciates that expansionary fiscal policy is effective in a world of persistently low interest rates, low growth, and strong international linkages.
***Blame Government, Not Markets for Monopoly – Ron Paul
When Time-Warner announced it planned to merge with another major communications firm, many feared the new company would exercise near-total monopoly power. These concerns led some to call for government action to block the merger in order to protect both Time-Warner’s competitors and consumers.
No, I am not talking about Time-Warner’s recent announced plan to merge with AT&T, but the reaction to Time-Warner’s merger with (then) Internet giant AOL in 2000. Far from creating an untouchable leviathan crushing all competitors, the AOL-Time-Warner merger fell apart in under a decade.
Class 8 Truck Orders Continue To Plummet Posting 20th Consecutive Monthly YoY Decline – Tyler Durden
For months now we have been writing about the massive collapse of class 8 truck orders. Just a few days ago we pointed out that order declines are coming just as large public trucking companies around the country are being forced to slash fleets amid slumping demand and slack capacity. According to the Wall Street Journal, several U.S. trucking companies, including Swift, Werner and Covenant, have all been forced to cut 1,000s of trucks from their fleets as “overcapacity has driven down pricing.” Of course, all this means that class 8 truck manufactures are unlikely to see an uptick in new orders anytime in the near future with Werner promising it won’t add trucks “until they see meaningful improvement in the freight and rate markets.”
The Global Trade Slowdown is both True and Non-trivial – Jack Gao
Economists offer widely different explanations for the decline in trade between nations, in a debate that remains unresolved but is increasingly urgent.
Challenged by mathematician Stanislaw Ulam to name one idea in economics that was both true and non-trivial, Nobel economics laureate Paul Samuelson famously nominated comparative advantage — the notion that even a country less productive in producing everything, could still benefit from international trade by specializing in the commodity it faces the least disadvantages in producing. But comparative advantage fails to explain why international trade, which has underpinned the global economy for much its modern history, is showing signs of a slowdown.
***Come on Moody’s, Spare us these Falsehoods: That $1.3 Trillion “Overseas Cash” is Already in the US – Wolf Richter
Moody’s turns into tax lobbyist for its biggest corporate clients.
Some falsehoods simply refuse to die. No matter how many times they get stabbed in the heart, and no matter who stabs them, they rise again in their full glory.
The falsehood that a vast amount of US corporate cash, including much of Apple’s $250 billion, is “locked away overseas” is one of them. We’ve known since May 2013 from the Senate subcommittee investigation and hearings into Apple’s tax-dodge practices that a big part of corporate “overseas cash” is actually invested in the US.
As the global disinflation shock turns – Bruce Kasman, Joseph Lupton
Over the past two years, a significant disinflationary impulse has dampened nominal activity around the world. As this disinflationary impulse fades, however, both nominal and real growth should normalise. Indeed, as this column highlights, the latest signs show inflation and inflation expectations rising, profits stabilising, and capital expenditure inching up.
Central Banks Have Robbed Us Of the Benefits of Free Trade – Patrick Trombly
The term “globalization” — in the sphere of economics — describes an increase in trade, and greater movement of capital and labor across national and regional boundaries.
Free trade has long been among the driving factors behind economic globalization, and for centuries, economists have generally agreed that free trade is an important force in building wealth and economic growth. Even economists who disagree on almost everything else, can often agree that lowering barriers to trade is a good thing.
Another European Bank Becomes a Penny Stock – Don Quijones
Despite receiving some of the most generous public subsidies in recorded history, Europe’s financial sector continues to hemorrhage. In Italy, the total market value of Monte dei Paschi di Siena, the world’s oldest bank and Italy’s third largest, is a fraction over €500 million, as its shares hover just 23 European cents above zero.
In the EU’s largest economy, Germany, the country’s only G-SIB (Global Systemically Important Bank), Deutsche Bank, has seen its stock plummet close to 90% in the last 10 years,from €117 to €12.30. This year alone it’s down well over 40%.
Take a quick glance at many of Europe’s smaller big banks and things look even grimmer. Four of Europe’s 29 “biggest” banks now share the dubious distinction of being penny stocks: Spain’s Bankia (€0.79), Italy’s Monte dei Paschi (€0.23), the National Bank of Greece (€0.21) and Bank of Ireland (€0.20).
Government Pension Plans Are Headed for Disaster – Robert Fellner
The combined debt held by U.S. public pension plans will top $1.7 trillion next year, according to a just-released report from Moody’s Investors Services.
This “pension tsunami” has already forced towns like Stockton, California and Detroit, Michigan into bankruptcy. Perhaps no government mismanaged their pension as badly as Puerto Rico, where a $43 billion pension debt forced the commonwealth to seek protection from the federal government after having defaulted on its obligations to bondholders — a default which is expected to spread to retirees in the form of benefit cuts.
While the disastrous outcome of Puerto Rico’s pension plan — which is projected to completely run out of assets by 2019 — represents the worst-case scenario, the same series of events that led to its demise can be found in most public pension plans nationwide.
Yellen Questions – John H. Cochrane
Fed chair Janet Yellen gave a remarkable speech at a Fed conference in Boston. I have long wanted to ask her, “what are the questions most on your mind that you would like academics to answer?” That’s pretty much the speech.
Some commenters characterized this speech as searching for reasons to keep interest rates low forever. One can see the logic of this charge. However, the arguments are thoughtful and honest. If she’s right, she’s right.
The last, and I think most important and revealing point, first:
Public debt and private investment in China – Yi Huang, Marco Pagano, Ugo Panizza
High levels of public debt are correlated with lower economic growth across countries, but questions remain about whether this relationship is causal. Using Chinese data, this column explores whether increasing public debt crowds out private investment. City-level investment ratios are found to be negatively correlated with local government debt for private manufacturing firms, but not for state-owned or foreign-owned manufacturers. This suggests that as well as the short-term benefits of fiscal stimulus, there might also be negative longer-term effects, such as the crowding out of more efficient firms.
The Obamacare Tipping Point – Richard Kocur
It’s that time of year again. Time for vibrant fall colors, cool crisp morning air, and open enrollment in the Affordable Care Act (ACA) insurance exchanges—the government-regulated, state-based healthcare plans set up as part of the act. Since the ACA’s first open enrollment period in the fall of 2013, millions of Americans have opted-in to the government healthcare plan otherwise known as Obamacare. This year, however, represents a tipping point for the future direction of socialized healthcare in the United States.
***Done in by Overcapacity, Stagnant World Trade, and China, Korean Shipbuilders Collapse on Top of Taxpayers – Wolf Richter
Orders plunge 87% from an already terrible 2015.
The ravaged shipbuilding industry in South Korea, deemed too big to fail, is getting its largest taxpayer bailout yet, totaling $9.6 billion, on top of the bailout funds already handed out last year, and on top of another $9.6 billion this year to bail out state-owned banks that were getting slammed by defaulting loans extended to the shipping industry.
Their problem: according to trade ministry, cited by the Wall Street Journal, orders for new ships to be built in South Korea have collapsed by 87% over the past nine months from the already terrible 9-month period last year, to almost nothing.
Whom to trust: Why we persistently get it wrong – Jeffrey Butler, Paola Giuliano, Luigi Guiso
The economic consequences of individuals being persistently mistaken in their trust beliefs can be as large as those from not going to college. This column sheds light on how trust assessments are made. It documents a large role for moral considerations, which may ultimately contribute to the persistence of mistakes in trusting behaviour.
These Blast Points on Hillary’s Campaign… Only The Deep State Is So Precise – Charles Hugh Smith
Back in August, I asked Could the Deep State Be Sabotaging Hillary? I think we now have a definitive answer: “These blast points on Hillary’s campaign… too accurate for the Mainstream Media. Only the forces of the Imperial Deep State are so precise.”
The Mainstream Media is presenting the FBI investigation as a “lose-lose” situation for embattled FBI Director Comey. If Comey remained quiet until after the election, he would be accused of colluding with the Clinton campaign and its allies in the Department of Justice (sic).
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.