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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***Brexit versus Grexit: Why you might call a referendum and then reject its outcome – Lubos Pastor
4 juli
Britain voted for Brexit, but many seek ways to avoid it. This draws comparison with the events of almost exactly a year ago when the Greek government ignored the outcome of the Greek bailout referendum. This column argues that the Greek government hoped the result would crash the EU’s stock markets and thus strengthen its bargaining power. When this failed to materialise, the government ignored the plebiscite and signed the bailout extension. In the Brexit case, the observed market drops do not qualify as a collapse and so the referendum’s outcome is likely to be implemented.
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The Brexit Surprise and emerging markets – Barry Eichengreen, Poonam Gupta, Anderson Ospino
4 juli
The surprise outcome of the UK’s EU membership referendum is in some ways analogous to the ‘Taper Tantrum’ (the correction in financial markets following Ben Bernanke’s May 2013 suggestion that the US central bank was contemplating reducing its rate of security purchases). This column looks at whether the Brexit Surprise has had analogous effects on emerging markets. Emerging economies felt a strong negative impact that was larger and more widespread than in the case of the Taper Tantrum. Where the Taper Tantrum was mainly a financial shock, the Brexit Surprise is evidently perceived as having real as well as financial consequences.
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The Big Unravel: US Commercial Bankruptcies Skyrocket – Wolf Richter
6 juli
Instead of that promised “escape velocity.”
This year through June, there have been 91 corporate defaults globally, the highest first-half total since 2009, according to Standard and Poor’s. Of them, 60 occurred in the US. Some of them are going to end up in bankruptcy. Others are restructuring their debts outside of bankruptcy court by holding the bankruptcy gun to creditors’ heads. In the process, stockholders will often get wiped out.
These are credit fiascos at larger corporations – those that pay Standard and Poor’s to rate their credit so that they can sell bonds in the credit markets.
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Institutional investors and corporate political activism – Rui Albuquerque, Zicheng Lei, Jörg Rocholl, Chendi Zhang
9 juli
As US states amass control of business through public pension funds, important questions about potential agency conflicts are raised. This column uses a landmark ruling, which in effect created a new channel of corporate political activism, to investigate this agency conflict. Firms with high institutional ownership have seen lower returns following the ruling. The findings suggest that political connections are an important mechanism of political activism by corporations with state public pension fund ownership.
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Keep an Eye on the Dollar: It’s More Important than Ever – Martin Tiller
9 juli
I have, on many occasions in the past in these pages, touched on the relationship between oil and the U.S. Dollar. The basics of that relationship are obvious: oil is priced in dollars on the global market, so from a logical perspective a strong dollar must put pressure on oil prices and vice versa.
If the currency is worth more generally then anything priced in it is, relatively speaking, worth less…the price of that commodity goes down. This is not a tick for tick relationship, but over time and when broader trends emerge it generally holds true. That is reason enough for those who trade and invest in the energy sector to keep an eye on the dollar, but right now it may be even more important than ever.
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Elizabeth Warren Turns a Blind Eye to the Central Bank – Patrick Trombly
4 juli
Senator Elizabeth Warren is perhaps best known for advancing the narrative that the 2000s housing bubble, collapse, and Great Recession, from which much of the US and the world have yet to fully recover, were the result of “unfettered Wall Street bankers tanking the economy” by “tricking borrowers” into bigger homes and debts than they could afford. This, she asserts, was helped along by the banks’ dramatically increasing lending to “subprime” borrowers, thereby fueling a real estate bubble and then ushering in a “subprime foreclosure crisis” that “spread to” the rest of the economy.
Based on this thesis, she has proposed numerous new regulations, some of which happen to address other legitimate concerns, but none of which address the root cause of the housing and foreclosure crises in the US and around the world. Nor does she address the massive leveraging-up of most developed countries’ household sectors, whose debts continue to weigh upon the world economy.
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***A Precarious State – Charles Hugh Smith
8 juli
The global political/economic state feels precarious for a good reason: it is precarious.
That the global economy is in a precarious state seems self-evident. Take your pick of the systemic risks: debt bubble and slowdown in China, banking/political crisis in Europe, negative interest rates and stagnation in Japan, ongoing meltdown in emerging markets and currencies, oil prices that threaten mayhem if they go up and if they go down, and a downturn in global trade that is usually associated with recession.
Other than that, everything’s great. How about those summer Olympics? Seriously, what isn’t in a precarious state?
If the global financial sector isn’t precarious, then why is capital flooding into negative interest bonds? Why are money managers willing to accept a guaranteed loss of capital if things are going great and opportunities for low-risk profits are abundant?
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Insensitivity to group size when benefits for a few are traded off against costs for many – Heiner Schumacher, Iris Kesternich, Michael Kosfeld, Joachim Winter
6 juli
Evidence shows that individuals often do not act in a completely selfish manner, but rather take into account the welfare of other parties when making decisions. But how decision-makers trade off costs and benefits when the costs are dispersed among many individuals is unclear. This column discusses new experimental evidence showing that a large fraction of individuals are ‘insensitive to group size’, attaching similar weights to small and large groups. These findings provide a new explanation for a number of empirical patterns, including political and medical decision-making, lobbying, tax evasion, and charity donations.
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China Destabilizes Global Economy by Exporting Deflation Through Currency Devaluation – Yves Smith
8 juli
If Brexit and wobbly Italian banks weren’t enough to worry about, another major economic risk, that of deflation, is only getting worse. The Telegraph’s Ambrose Evans-Pritchard has warned for some time that if China were to devalue the renminbi, it would add considerably to already dangerous deflationary pressures.
It’s not surprising that China would reduce the value of the renminbi vin the wake of the Brexit vote as the pound has plunged and the euro has weakened. in 2013, the EU was China’s biggest export market but by 2015, it had fallen to its second largest market, which could make Chinese officials concerned about further erosion of their position. As Evans-Pritchard stresses, the Chinese are presumably using the furore over Brexit to execute this move when officials are distracted.
But the rationale for this measure is to shore up an unsustainable mercantilist growth model. As many analysts have stressed, China has for years has had investments and exports consist of an unheard of level of over 50% of GDP. China desperately needs instead to have a much larger consumption share of GDP. But in the wake of the criss, it instead ramped up investments that have been mainly funded by borrowing, with the boost in GDP from each dollar of borrowing falling over time. So the investment-driven model is nearing its sell-by date, yet the economic mandarins are doubling down.
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***Here We Go Again: An August 2007 Redux – David Stockman
8 juli
Nearly everywhere on the planet the giant financial bubbles created by the central banks during the last two decades are fracturing. The latest examples are the crashing bank stocks in Italy and elsewhere in Europe and the sudden trading suspensions by three UK commercial property funds.
If this is beginning to sound like August 2007 that’s because it is. And the denials from the casino operators are coming in just as thick and fast.
Back then, the perma-bulls were out in full force peddling what can be called the “one-off” bromide. That is, evidence of a brewing storm was spun as just a few isolated mistakes that had no bearing on the broad market trends because the “goldilocks” economy was purportedly rock solid.
Thus, the unexpected collapse of Countrywide Financial was blamed on the empire building excesses of the Orange Man (Angelo Mozillo) and the collapse of the Bear Stearns mortgage funds was purportedly owing to a lapse in supervision.
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Economics in a Different Key – Thomas Ferguson
1 juli
The famous scene in Gabriel García Márquez’s One Hundred Years of Solitude epitomizes Magical Realism: army troops machine gun striking banana workers and their families in the town square and toss the bodies into railway cars for disposal. But José Arcadio Segundo is only lightly wounded and jumps from the train when he comes to. When he finally picks his way back to his hometown of Macondo, a surprise awaits: everyone flatly denies any massacre took place. At night the authorities hunt for rebels from house to house; by day, they deny everything. Eventually, an extraordinary proclamation is made to the nation, repeated until finally accepted: “there were no dead [and] the satisfied workers had gone back to their families.”
Contemporary Economics has more than one Magical Realist moment like this – just look at how the basic building block of the Keynesian Revolution – the decisive role of the principle of effective demand – all but vanished from sight after the late nineteen seventies. But there is another, almost equally fateful: the Cambridge Capital Controversy, which came to consummate expression in a memorable issue of the Quarterly Journal of Economics in 1966.
Probably no summary of the issues at stake in this giant dust up has much hope of gaining assent from all the stakeholders. The issues are so complex and the background so ideological that one can easily understand how one commentator on an early contribution by Robert Solow exclaimed that “perhaps the whole problem is too complicated for adequate reflection in a formal model.”
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Collateral damage: The impact of the Russia sanctions on sanctioning countries’ exports – Matthieu Crozet, Julian Hinz
5 juli
Economic sanctions serve as a foreign policy tool, but they can also hurt domestic firms doing business in the target country. This column looks at the effects of sanctions imposed by 37 countries on Russia over the conflict in Ukraine. The estimated loss of exports to Russia totalled $3.2 billion per month between December 2013 and June 2015. This loss was mostly incurred by European economies and in products not targeted by retaliations. French firm-level data points to a deterioration of trade finance services as the dominant mechanism.
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Brexit Shows Why Central Planning Won’t Work – Jason Morgan
7 juli
For months before the Brexit referendum on June 23rd, entire industries were hard at work attempting to predict how the UK electorate would vote.
Polling companies canvassed neighborhoods, made phone calls, sent surveys by e-mail, monitored websites, and spoke with people on busy city streets, in the process assembling a trove of data which the companies then analyzed and distilled down to probabilities for and against.
The media in virtually every country around the world built on this polling — and on the reams of op-eds by pundits with (and without) vast expertise in banking, finance, politics, and diplomacy — to forecast the referendum results. Handicapping the election became the responsibility of whole sections of newsrooms.
Hedge fund managers and investment bankers ran numbers and sought desperately to figure out which way the political winds in the UK would blow. Billions — trillions — of dollars hung in the balance as firms and brokers tried to find a leverageable position amidst swirls of soothsaying.
By a week before the election, booking agencies were fixing the odds at roughly three-to-one against a leave vote. As it turns out, those odds, and the predictions that came before them, were wrong.
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Why Profitability Matters, and Market Forces Are Not Random – Frank Shostak
6 juli
It is widely held that financial asset markets always fully reflect all available and relevant information, and that adjustment to new information is virtually instantaneous. This way of thinking which is known as the Efficient Market Hypothesis (EMH) is closely linked with the modern portfolio theory (MPT), which postulates that market participants are at least as good at price forecasting as is any model that a financial market scholar can come up with, given the available information. The view that everyone is as good a forecaster as any model implies that their forecasts do not display systematic biases. In other words, their forecasts are right on average. According to the MPT, by using available information, all market participants arrive at “rational expectations” forecasts of future security returns, and these forecasts become fully reflected in the prices that are observed in financial markets.
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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.