Economische aanraders 10-01-2021
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.
***Why Mainstream Economic Forecasts Are So Often Wrong – Daniel Lacalle
Every end of the year, by the end of the year, we receive numerous estimates of global GDP growth and inflation for the following year. Historically, almost in all cases, expectations of inflation and growth are too optimistic in December for the following year.
If we look at the track record of central banks, it is particularly poor in predicting inflation, while large supranational entities tend to err on the side of optimism in GDP estimates. The international Monetary Fund or the Organisation for Economic Co-operation and Development, for example, have been particularly poor at estimating recessions, but mostly accurate at making long-term trend estimates. Contrary to popular belief, it seems that most forecasts are better at identifying long-term economic dynamics than short-term ones.
The Fed Is A “Clear And Present Danger” – Sven Henrich
The Federal Reserve and other central banks represent a clear and present danger to future financial stability.
I’ve been saying for a while central banks are fueling an asset bubble and as global market distortions keep expanding week after week there’s no reason to back to walk away from that assertion but rather to stand up and scream the message from the rooftops especially now that central bankers are casually letting some key truths slip (intended or not).
Subjective Value Is Not the Same as Arbitrary Value – Frank Shostak
Why do individuals pay much higher prices for some goods versus other goods? To provide an answer to this question economists refer to the law of diminishing marginal utility. Mainstream economics explains the law of diminishing marginal utility in terms of the satisfaction that one derives from consuming a particular good. For instance, an individual may derive vast satisfaction from consuming one cone of ice cream. However, the satisfaction he will derive from consuming a second cone might also be large but not as large as the satisfaction derived from the first cone. The satisfaction from the consumption of a third cone is likely to diminish further, and so on.
From this, mainstream economics concludes that the more of any good we consume in a given period, the less satisfaction, or utility, we derive out of each additional, or marginal, unit. It is also establishes that because the utility of a good declines as we consume more and more of it, the price that we are willing to pay per unit of the good also declines.
Risk, resilience, and recalibration in global value chains – Adnan Seric, Holger Görg, Wan-Hsin Liu, Michael Windisch
The Covid-19 pandemic has exposed the fragility of the global trade network underpinning global value chains. Initial disruptions in the supply chains for key medical goods due to surges in demand and newly erected trade barriers have prompted policymakers around the world to question their country’s reliance on foreign suppliers and international production networks. This column takes a closer look at China’s post-pandemic recovery and argues that its response may hold clues to the future of global value chains.
National Currencies’ Tragic Race to the Bottom – Pascal Hügli
Money—the magical power it has over people is almost universal. But whether we earn it, spend it, or save it, we hardly ever think about the following questions: What is money, why does it exist, and what will money look like in the future? Why should we? Our money works. Day in, day out we use it without much effort. So what’s the problem?
Well, let me explain. As August Friedrich von Hayek pointed out, we humans constantly use things we don’t know anything about. It’s this very fact that makes us such a successful species. It’s no different with money. That we don’t have to think about money but can still use it successfully is a big win and a witness to how well our market and knowledge society functions.
“The Price Will Be High”: Biden Calls For “Trillions” In Fiscal Stimulus – Tyler Durden
Having swooned earlier on the whole Joe Manchin “insert foot in mouth”, stocks jerked back higher and closed near record highs after Joe Biden on Friday called for trillions of dollars in immediate further fiscal support, including increased direct payments, to kickstart the economy from the Covid shutdowns which will expand under his administration.
“The price tag will be high,” Biden said of his planned package in Wilmington, Delaware. He promised to lay out his proposals next Thursday, before taking office on Jan. 20. “It will be in the trillions of dollars.”
Why the 2020s Won’t Be like the Roaring 20s – Brendan Brown
Reincarnation of the Roaring Twenties—one century on from the 1920s—is the lead speculative narrative this new year on Wall Street, it seems.
The storytellers, well aware of how interest income–famine investors seek “justification” to load up on ever-higher-priced equities and risky credit paper, turn to the history lab with its notoriously small sample sizes. They have spotted that 2021 marks the hundredth birthday of a postwar decade famed for rapid prosperity growth in the US. Bingo: translate postwar into postpandemic.
The narrative deserves to encounter rational skepticism on at least four counts.
The Coming War on Wealth and the Wealthy – Charles Hugh Smith
Here’s looking at you, Federal Reserve–thanks for perfecting ‘legalized looting’ and neofeudalism in America.
The problem with pushing a pendulum to its maximum extreme on one end is that it will swing back to the other extreme minus a tiny bit of friction.
America has pushed wealth/income inequality, unfairness and legalized looting to the maximum extreme. Now it will experience the swing back to the other extreme. This will manifest in a number of ways, one of which is a self-organizing populist war on wealth and the wealthy.
To say the system is rigged to benefit the already-wealthy and powerful is a gross understatement. Take the tax code as an example–thousands of pages of arcane tax breaks and giveaways passed by a thoroughly corrupted Congress and thousands more pages of arcane regulations and legal precedents.
Food Price Inflation Accelerates For Seventh Consecutive Month – Tyler Durden
Is it time to worry about food inflation?
The Food and Agriculture Organization’s Food Price Index rose for a seventh consecutive month in December, led by dairy products and vegetable oils.
The FAO Food Price Index averaged 107.5 points last month versus 105.2 points in November.
The benchmark, which tracks global food prices of cereals, oilseeds, dairy products, meat, and sugar, averaged 97.9 points for 2020, a three-year high, and a 3.1% rise from 2019 levels.
How Will This Unwind? Amid Stimulus, Forbearance, Eviction Bans, Consumer Bankruptcies Dropped to Lowest in Decades. Commercial Chapter 11 Bankruptcies Highest in Years – Wolf Richter
Weirdest Economy Ever, as 20 million people still claim unemployment benefits.
Total bankruptcy filings by consumers and businesses in the US in 2020, across all chapters of bankruptcies, plunged by 30% from 2019, to just 529,000 filings, according to legal-services provider Epiq Systems. This was the lowest number of total bankruptcy filings since 1986.
The plunge in filings was largely driven by consumers, who account for 94% of total bankruptcy filings, and who were awash with stimulus money and extra unemployment benefits.
Stop The Real Steal! – David Stockman
The Donald would almost surely have bankrupted the nation by 2024, perhaps only a tad later than is likely to be the case under Sleepy Joe and/or the Kamala Harris Regency.
But, after this week’s certification, the question of which claimant to the Oval Office will do the most damage in the next four years is now moot.
The cardinal matter is that the Washington-based Democrat party is now intellectually and politically bankrupt. It has absolutely nothing to offer the American electorate except Woke virtue-signaling and collectivist rhetoric about the lie that America needs a unifier and that we are all in this together against a handful of billionaires, except for (most of) those who support the Dem agenda.
Effective pandemic management that minimises economic harm – Klaus Prettner, Simiao Chen, Michael Kuhn, David Bloom
Proponents of the ‘herd immunity’ approach to COVID-19 argue for a largely uncontrolled outbreak in the low-risk population, while protecting the vulnerable, to achieve natural immunisation at minimal economic cost. In contrast, others favour fighting COVID-19 with all possible means, including lockdowns. This column describes simple, effective, and low-cost policy measures designed to fight the spread of COVID-19 that should be amenable to both camps.
***Having Already Dropped for Years, US Auto Sales Plunged to 1970s Level in 2020 – Wolf Richter
GM, Toyota, Ford sales down 5th year in a row. Nissan in a death spiral. The Pandemic accelerated what had started in 2016. Long-term view on auto sales.
During the infamous year 2020, with all its distortions and shifts, automakers delivered 14.46 million new vehicles in the US, retail and fleet combined, down 15.4% from 2019, the largest year-over-year percentage decline since 2008 (-18%). Topping off years of declines, 2020 took auto sales back to levels first seen in the 1970s.
Every recession has left a deep scar on auto sales. But over the past 20 years, it has taken many years to get back to the prior highs, only to then watch sales plunging again. The last high was in 2016, which had barely eked past the prior high of 2000
Who’s Hiring And Who’s Firing: 372,000 Waiters And Bartenders Lost Their Jobs In December – Tyler Durden
As we have been warning for quite some time – and again overnight – the (largely irrelevant) December jobs report was a bomb, with nonfarm payrolls tumbling 140k in December, well below consensus and its first decline since April, as a result of the widespread covid lockdowns at the end of 2020.
That said, the composition of the establishment survey was firmer however, with job gains in 61% of industries. Indeed, excluding the 498k drop in the virus-sensitive leisure sector, payrolls rose 358k. As Goldman notes, school closures may have also weighed on the report (public and private education -83k), and the virus-sensitive “other services” category was also soft (-22k). Elsewhere, job growth surprisingly accelerated in professional and business services (+161k), retail (+121k) and construction (+51k). Manufacturing payrolls (+38k) increased for the eighth consecutive month.
Human capital in OECD countries: A new measure and its policy drivers – Jarmila Botev, Balázs Égert, Zuzana Smidova, David Turner
Human capital is widely regarded in the theoretical literature as fundamental for economic growth. Yet, quantifying the macroeconomic effects of human capital on growth has produced only mixed results. This column introduces a new measure of human capital which exhibits a strong and robust positive correlation with economic growth. The measure is built on recent findings on U-shaped returns to years of education and allows for variation across countries and over time. Empirical analysis shows the importance of pre-primary education, teaching resources as well as school autonomy for this measure of human capital.
***“Keeping a Business Alive that’s Generating No Revenues is an Uphill Struggle”: Friend and Hostel Owner in Barcelona. An Industry Collapses – Nick Corbishley
Bankruptcies, glut of hotels for sale, few buyers, prices plunge. Nobu, de Niro, and Teper take big loss on sale of luxury hotel Nobu Barcelona that was open for only six months.
“Keeping a business alive that is generating no revenues is an uphill struggle,” Pol told me. He and two partners own Hostal Live Barcelona, a small two-floor hostel in the center of Barcelona that has been closed since March. “The only reason we are still going is that we qualified for the emergency loan in March. As our bank manager told us at the time, the only reason we qualified for that loan is that we had no debt and some savings, which we had planned to spend on expanding the business. Now those savings are being used just to keep the business alive.”
The Covid Depression and “Food Insecurity” – Alice Salles
Americans are going hungry because of coronavirus, and they are turning to theft to survive—at least that’s what we’re supposed to believe.
Nearly 26 million Americans did not have enough food through the month of November, according to survey data reported by the Washington Post. Covid-19 was solely to blame, until the article’s ending when government policies earned a mention. Under these conditions, many people were left with only one option: shoplift.
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.Economische aanraders