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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Are financial crises demand or supply shocks? – Felipe Benguria, Alan M. Taylor
3 maart
A perennial and fundamental macroeconomic question is whether financial crises are negative demand or supply shocks. This column discusses how the response of international trade flows and prices to financial crises can shed light on the debate. Evidence based on a new dataset of two centuries of financial crises and trade suggests financial crises are clearly negative shocks to demand.
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Corona-virus: Central Banks Stand Ready with More “Stimulus” – Brendan Brown
3 maart
The nearest example in modern history to the present medical emergency supply shock is the Organization of the Petroleum Exporting Countries (OPEC) oil embargo of autumn and winter 1973. That earlier shock was the catalyst to the Federal Reserve leading the world (except for Germany) along the path of intensified monetary inflation. Now, in response to the COVID-19 (coronavirus disease 2019) shock, the US is set to take the world into a new severe phase of fiat money degradation. All of this is subject to the normal proviso that history echoes but does not repeat itself.
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Artificial intelligence as a central banker – Jon Danielsson, Robert Macrae, Andreas Uthemann
6 maart
Artificial intelligence, such as the Bank of England Bot, is set to take over an increasing number of central bank functions. This column argues that the increased use of AI in central banking will bring significant cost and efficiency benefits, but also raise important concerns that are so far unresolved.
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Could China’s Overlapping Crises Spiral Out of Control? – Charles Hugh Smith
4 maart
Threats, propaganda and the Orwellian dissolution of social trust cannot stop a withdrawal from the status quo.
Longtime readers know I’ve had an active interest in what differentiates empires/nations that survive crises and those that collapse. There is a lively academic literature on this topic, and it boils down to three general views:
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How Government Spending Destroys Wealth – Frank Shostak
2 maart
The US budget had a deficit of $32.6 billion in January compared with a deficit of $13.3 billion in December and a surplus of $8.7 billion in January 2019. The yearly growth rate of government outlays rose by 22.2 percent in January from 7 percent in the month before and 6.7 percent in January of last year.
The yearly growth rate of government revenues climbed to 9.5 percent last month from 7.4 percent in December and –5.8 percent in January the year before. Note that the twelve-month moving average (12mma) of the budget displays a visible widening in the deficit (see chart).
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***Tourism is 10% of GDP in France, 13% in Italy, 15% in Spain. And Now it’s in Free Fall – Nick Corbishley
7 maart
“If the situation of generalized panic continues, thousands of businesses, especially small ones, will first enter a liquidity crisis, then close their doors.”
This is all happening just weeks before high season is about to get under way. But with millions and millions of tourists voting with their feet by staying at home, one of Europe’s most important and (until four weeks ago) fastest growing industries is taking a hammering.
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Christine Lagarde’s New Vision for the ECB – Claudio Grass
4 maart
On December 12, Christine Lagarde introduced her goals and vision in her first rate-setting meeting as the new president of the European Central Bank (ECB). On the actual policy front, there were no surprises. She remained committed to the path set by her predecessor, Mario Draghi, and kept the current monetary stimulus unchanged. The central bank kept its deposit rate at the present record-low –0.5 percent and pledged to continue its €20 billion bond purchases every month, to the chagrin of its many critics, who have repeatedly and loudly expressed serious concerns over the policy’s impact on the banking sector, on the insurance industry, and on everyday savers and pensioners. This was all widely expected, as the new president had so far only praised Draghi’s leadership and his “whatever it takes” campaign to save the eurozone and the euro.
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The fundamentals of safe assets – Maurizio Michael Habib, Livio Stracca, Fabrizio Venditti
2 maart
What makes government bonds a safe asset? This column shows that the low political and institutional risk of issuing countries and the relative size of the debt market foster a safe asset status, with the latter factor – size – reflecting the special role of the US in providing a large, deep and liquid market for government bonds. Inertia – whether the bond behaved as a safe asset in the past – is also important. Notably, the drivers of safe asset status are heterogeneous within advanced and emerging markets, with external sustainability in particular being relevant for the latter group of countries.
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Politically allocated (aka “affordable”) housing – John H. Cochrane
5 maart
I’ve long been curious about politically allocated housing. (It’s called “affordable,” and “below market rate,” but why should we let the left make up all the buzzwords?) A free market economist smells a rat of inefficient subsidies, and huge inequality-increasing implicit tax rates.
If it’s “below market rate” then ipso facto more people want it than can have it, so it has to be allocated by standing in line, lotteries, and/or extensive qualifications. That means it’s going to go to people who have been around a long time, not to newcomers who want to get jobs. Once you get an “affordable” unit, I would figure, getting a better job or a raise is going to cost you rent, or getting kicked out of your apartment. Moving across town to get a better job is out of the question — there is a long line for those apartments. The “affordable” deals all seem to be worked out on a case by case basis, making it very hard for an economist (or voter) to figure out what’s going on.
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What Sequoia Capital’s “Black Swan” Memo Means for Unicorn-Hotspots Like San Francisco, Silicon Valley & Others – Wolf Richter
6 maart
“False optimism can easily lead you astray and prevent you from making contingency plans or taking bold action.”
Sequoia Capital — one of the most prominent and most experienced venture capital firms that has seen its share of blowups — sent a “Black Swan” memo to the founders and CEOs of the startups it is funding. Back in 2008, as the Financial Crisis was starting to take stuff down, it had put the founders and CEOs of its portfolio companies through a presentation, titled “R.I.P. Good Times,” with the purpose of preparing the leaders of these startup companies for what was to come so that their companies could survive. This time, the memo, published on Medium, is titled: “Coronavirus: The Black Swan of 2020.”
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The Limits of Force: A Bayonet in the Back Will Not Restore China’s Economy – Charles Hugh Smith
2 maart
Force cannot restore legitimacy, trust or confidence, nor can it magically erase the consequences of a still-unfolding national trauma.
The Chinese authorities threatening to punish workers who refuse to return to work are getting a lesson in the limits of force in an unprecedented national trauma: a bayonet in the back will not restore the legitimacy and confidence that have been lost.
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All Major US Banks Have Begun Contingency Plans – Splitting Trading, Sales Groups In Virus Response – Tyler Durden
6 maart
On the heels of JPMorgan’s decision to begin its resilience plan, a number of the rest of US’ majors have also started their own contingency plans:
Citi is sending hundreds of traders and salespeople to its backup site in Rutherford, NJ starting Monday as part of its coronavirus planning, CNBC’s Hugh Son reported in tweet, citing a source. To view the source of this information click here To contact the reporter on this story
Bank of America is splitting its trading force, sending some employees to its back-up office in Stamford, Connecticut, Business Insider reports, citing an internal memo.
Morgan Stanley is moving about half of its institutional securities traders to its disaster recovery site in Westchester, New York, Business Insider reported, citing a memo it saw.
Plans for trading desk came days after non-essential travel outside the U.S. was halted; additional changes may be made
Additionally, Morgan Stanley is beginning to shift London-based sales and trading staff to Heathrow site as part of its coronavirus contingency plans, Reuters reports, citing sources.
Would all these banks be doing this if the risk from this virus was, as we are being told, low?
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The Potential Economic And Societal Impacts Of Covid-19 – Samantha Biggers
6 maart
There are many different ways that COVID-19 is going to affect the world. To quote the CDC “The disruption of daily life might be severe.” They are talking about the USA but this applies to the world as well. They should know because they totally failed the public on many levels at this point and increased the threat and danger to every person residing in the USA.
In this article, I am going to concentrate on some of the things that at this point are either starting to occur or very likely to occur over the next few months.
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The effect of bank capital requirements on the real economy and their interaction with monetary policy – Gabriele Cozzi, Matthieu Darracq Pariès, Peter Karadi, Jenny Körner, Christoffer Kok, Falk Mazelis, Kalin Nikolov, Elena Rancoita, Alejandro Van der Ghote, Julien Weber
3 maart
Following the financial crisis, central banks and regulatory authorities assumed new powers to set macroprudential bank capital requirements. This column describes a number of macro models used by the ECB to measure the real impact of capital requirements and their interactions with monetary policy. It warns that a weaker banking system amplifies the impact of monetary policy and contributes to economic instability. Banks’ capital buffers are best augmented during times of affluence, when looser monetary policy can mitigate the costs of increasing capital requirements.
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“Political Anarchy” Is How the West Got Rich – Ryan McMaken
4 maart
It is not uncommon to encounter political theorists and pundits who insist that political centralization is a boon to economic growth. In both cases, it is claimed the presence of a unifying central regime—whether in Brussels or in Washington, DC, for example—is essential in ensuring the efficient and free flow of goods throughout a large jurisdiction. This, we are told, will greatly accelerate economic growth.
In many ways, the model is the United States, inside of which there are virtually no barriers to trade or migration at all between member states. In the EU, barriers have been falling rapidly in recent decades.
The historical evidence, however, suggests that political unity is not actually a catalyst to economic growth or innovation over the long term. In fact, the European experience suggests that the opposite is true.
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China’s Non-Manufacturing & Manufacturing PMIs Show to What Unfathomable Extent the Economy Has Collapsed – Wolf Richter
1 maart
The charts are brutal.
Purchasing Managers’ Indices (PMIs) are a tally of how executives see their own company – whether business activity at their company rose or fell compared to the prior month, whether new orders rose or fell, whether they added or shed staff, etc. Executives and their companies remain unnamed. A value above 50 means expansion; a value below 50 means contraction. PMIs are an early indication of business conditions – and by extension, of the economy.
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Public interventions in the banking sector: Follow the taxpayers’ money – Giovanni Dell’Ariccia, Deniz Igan, Paolo Mauro, Hala Moussawi, Alexander F. Tieman, Aleksandra Zdzienicka
4 maart
During the Global Crisis, governments rescued banks with capital injections, asset purchases, and guarantees. Until now, we have had no clear idea what happened to that taxpayer money. This column uses bank-level data to compile a comprehensive accounting of the costs of, and returns on, these interventions. While initial public support cost $1.6 trillion, the total fiscal impact has been $250 billion – on average less than 1% of GDP.
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***Why Deflation Can Be a Good Thing – Antony P. Mueller
6 maart
[André de Godoy, a Brazilian journalist from the Mackenzie University of São Paulo, interviews economics professor and Mises scholar Antony Mueller about the causes and consequences of credit expansion and the relations between credit, money, and price inflation.]
André de Godoy: Please explain the relationship between the money supply, the price level, and economic activity.
Antony Mueller: The supply of money determines the price level in the long run. Whether prices will rise or fall depends on the relative variation of the money in circulation compared to the relative variation of the supply of goods. However, one must take into account that the process from the creation of money by the central bank, the so-called monetary base, and the impact on the economy in terms of demand is long and contains a series of variables.
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Some borrowers are more equal than others: Bank funding shocks and credit reallocation – Olivier De Jonghe, Hans Dewachter, Klaas Mulier, Steven Ongena, Glenn Schepens
6 maart
Banks in Belgium made strategic lending decisions after the freeze of the interbank funding market in September 2008. This column uses bank-firm combinations to show that banks reallocated credit to sectors where they can more easily extract rents or in which they have an information advantage, or to low-risk firms.
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