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 zijn.

Sinds begin 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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***Cash banned, freedom gone – Thorsten Polleit
5 april
Some politicians want to ban cash, arguing that cash is helping criminals. The first steps in that direction are the withdrawal of big denomination notes and the limits imposed on cash payments.
Proponents of a ban on cash claim that this will help fight criminal transactions — involved in money laundering, terrorism, and tax evasion. These promises of salvation are used to get the general public to agree to a society without cash. But there is no convincing proof for the claim that the world without cash will be a better one. Even if undesirable behavior is indeed financed by cash, you still need to answer the question: will the undesirable behavior disappear without cash? Or will those who commit the undesirable acts take to new ways and means to reach their goal?
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The Global Bubble Has Burst – “Will Tear At The Threads Of Society” – Doug Noland
9 april
From my analytical perspective, unsustainability is a fundamental feature of “Bubble Economies.” They are sustained only so long as sufficient monetary fuel is forthcoming. Over time, such economies are characterized by deep structural maladjustment, the consequence of years of underlying monetary inflation. Excessive issuance of money and Credit are always at the root of distortions in investment and spending patterns. Asset inflation and price Bubbles invariably play central roles in latent fragility. Risk intermediation is instrumental, especially late in the cycle as the quantity of Credit expands and quality deteriorates. Prolonged Credit booms – the type associated with Bubble Economies – invariably have a major government component.
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China “Could Push Whole World into Fresh Economic Crisis” – Wolf Richter
9 april
After years of big wage increases in China, the supply of cheap labor is coming to an end. The migration of rural populations to cities, which in practically no time created over 250 cities with over 2 million inhabitants, is also coming to an end.
As the cost of labor has soared, the manufacturing base is now migrating to cheap-labor countries like Vietnam, leaving less work in Chinese cities for migrant laborers. With few options left, they’ve started to return to their villages. This leaves China with massive challenges, just when its debt-burdened economy can least afford them.
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Fixing a sovereignless currency – Agnès Bénassy-Quéré
8 april
The euro is unique in that it is a currency without a sovereign. Since the crisis, there have been major developments towards making the Eurozone more resilient, including the banking union and the European Stability Mechanism (ESM). This column, originally published 12 February 2016, explores whether further normalisation is required to make the Eurozone function properly. It argues that the Eurozone, unlike existing federations, lacks the ability to deliver counter-cyclical fiscal policies while complying with fiscal discipline. Macroeconomic coordination will thus require rules, a strong and independent European Fiscal Board, and the strengthening of the ESM.
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***Debt Spiral Grips Both, Pemex and Mexico – Don Quijones
5 april
It was just a matter of time before Pemex, Mexico’s chronically indebted state-owned oil giant, began dragging down the national economy it had almost single handedly sustained for over 75 years.
The company has been bleeding losses for 13 straight quarters. As of December 31, it had $114.3 billion in assets and $180.6 billion in liabilities, a good chunk of it denominated in dollars, leaving a gaping hole of $66.3 billion (negative equity), after having been strip-mined over the decades by its owner, the government. And given these losses and the equity hole, new credit is becoming harder to come by.
Now it seems that Mexico’s worst nightmare is beginning to come true, thanks in no small part to Moody’s Investors Service. The credit rating agency last week downgraded Pemex’s credit rating from Baa1 to Baa3. In November Pemex had a perfectly respectable credit rating of Aa3; now, just six months later, it’s perilously perched just one notch above junk.
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Government intervention reduces banking globalisation – Anya Kleymenova, Andrew K Rose, Tomasz Wieladek
5 april
Post-crisis banking is in trouble, with cross-border bank lending significantly slower than before. Many economists think that this is down to complications from government ownership. This column argues that although government ownership is not the only possible friction or reason for cross-border bank lending, it is an inhibitor of cross-border bank activity in both the UK and the US. If the same mechanism applies to other countries around the world, then global banking intermediation may rebound once again, once banks are privatised.
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The future of money – Charles Hugh Smith
4 april
To say that the future of money is blockchain-based crypto-currencies and payment platforms is to state the obvious nowadays. If this wasn’t the case, then why are Goldman Sachs et al. (i.e. the global too big to fail banks) rushing to patent their own proprietary versions of blockchain technologies? Why are banks investing heavily in companies that are trying to establish a global blockchain platform for banks?
The reason is that banks understand their core reason to exist is threatened by peer-to-peer, decentralized payment platforms and currencies. If payments no longer need to be routed through a centralized trusted institution, then one core function of banks disappears.
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Returns to German savings invested abroad – Matthias Busse, Daniel Gros
4 april
Through the Eurozone rescue mechanisms, Germany provided the periphery with hundreds of billions in debt at very low rates. There is a widely held notion that these savings would have been better used at home. This column challenges this notion, presenting evidence that Germany’s net asset position held up well, remaining much higher than domestic returns. The main reason is that Germany’s part in the rescue operations was actually much smaller than its claims towards the periphery.
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Triffin’s Paradox Revisited: Crunch-Time for the U.S. Dollar and the Global Economy – Charles Hugh Smith
5 april
The reality is that we’re one panic away from foreign-exchange markets ripping free of central bank manipulation.
While all eyes on fixated on global stock markets as the measure of “prosperity” and “growth” (or is it hubris?), the larger force at work beneath the dovish cooing of central bankers is foreign exchange: the relative value of nations’ currencies, which are influenced (like everything else) by supply and demand, which is in turn influenced by interest rates, perceived risk, asset purchases and sales by central banks and capital flows seeking the lowest possible risk and the highest possible return.
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Ireland: a recovery build on sand – Cillian Doyle
7 april
Well, the latest national growth stats are in and, despite all appearances, the poster boy for European austerity is hands down the fastest growing economy in the Eurozone. With GDP supposedly running at 7.8%, we’re even outpacing the global titans of India and China.
The US media outlet CNN claimed that once again ‘Ireland is booming’. Yes, there it was: the dreaded b-word. It’s not that an uptick in economic activity is unwelcome thing; it’s more that in an Irish context, owing largely to the weak nature of indigenous Irish capitalism, the word “boom” is usually synonymous with bubble, and it seems another bubble could be building, but more on that later.
For now, let’s focus on where this seemingly robust growth is coming from. It’s true there has been a slight uptick in genuine economic activity place here with growth in things like personal consumption and construction, but this certainly cannot account for our current level of GDP, which suggests the place is absolutely abuzz with economic activity.
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Next Steps for FTPL – John H. Cochrane
5 april
Last Friday April 1, Eric Leeper Tom Coleman and I organized a conference at the Becker-Friedman Institute, “Next Steps for the Fiscal Theory of the Price Level.” Follow the link for the whole agenda, slides, and papers.
The theoretical controversies are behind us. But how do we use the fiscal theory, to understand historical episodes, data, policy, and policy regimes? The idea of the conference was to get together and help each other to map out this the agenda. The day started with history, moved on to monetary policy, and then to international issues.
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Colombia Pays the Steep Cost of So-Called “Free” Trade – Don Quijones
7 april
International arbitration lawyers have a soft spot for Latin America, for a reason: over the last ten years, the region has been one of the primary sources of their exorbitant fees, which can range from $375 to $700 per hour depending on where the arbitration takes place.
By 2008, more than half of all registered claims at the International Centre for Settlement of Investment Disputes (ICSID) were pending against Latin American countries. In 2012, around one-quarter of all new ICSID disputes involved a Latin American state.
Today the region faces a fresh deluge of ISDS claims. The countries most affected include Uruguay, whose anti-tobacco legislation has been challenged by Philip Morris at an international arbitration panel; Argentina, Ecuador and Colombia, which until a few years ago had never been on the receiving end of an investor-state dispute settlement (ISDS). Now it is the target of multiple suits that could end up setting its government back billions of dollars.
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The Network Effect, Jobs and Entrepreneurial Vitality – Charles Hugh Smith
7 april
We have all experienced The Network Effect: the more people who start using a service, the more valuable that service becomes to every user. Examples include the telephone, the Internet, and social media sites.
Each new user is only seeking to add value to their own life, but in joining the network, they add value to every user and the network.
As the network adds participants, it become more attractive to new users, and this increase in network value generates a positive feedback loop.
This automatic maximization of mutual benefit is at the heart of Adam Smith’s Invisible Hand of transparent markets (as opposed to exploitive markets controlled by rapacious monopolies, cartels and central states).
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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.