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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Riding through the storm: Lessons and policy implications for policymaking in EMU – Marco Buti
12 januari
In December 2019, Marco Buti left the position of Director General for Economic and Financial Affairs at the European Commission at the end of a rough journey through the crisis and its aftermath. In this column, he draws the main lessons out of five key moments in the crisis for the completion of EMU and the appropriate policy mix in the euro area.
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Wealth and taxes — Overview – John Cochrane
11 januari
I thought that “wealth and taxes” would be a short blog post. It turned in to a 5 part series. Here’s an overview, or table of contents in case the whole thing looks a bit indimidating. The most important one, really I think is Part V, “it’s all political.” The others build bit by bit, well, this can’t be the answer and that can’t be the answer, so what is the answer, and Part V finds it.
In Part I we met the fact that “wealth” is measured as “capitalized income,” Y/r. But only some kinds of income Y and with discount rate choices r that blew up measured wealth inequality. I review the Smith, Zidar and Zwick paper that finds huge overstatements of inequality because wealthy people have a higher r than you and me.
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Banks and government bonds: A love story – Orkun Saka
6 januari
European banks have been criticised for holding too much domestic government debt during the recent euro area crisis, intensifying the doom loop between sovereign and bank credit risks. This column deviates from previous research that focused on ‘bad’ reasons for holding sovereign debt, and points to a ‘good’ reason: an informational advantage that particular banks have regarding sovereigns. This seems to have had a role in the fragmentation of European government bond markets.
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How To Return To Sound Money – Alasdair Macleod
11 januari
Given the current fiat money system is on a path towards its own destruction it is not surprising that there has been increasing talk of a monetary reset. Without a completely different approach and by retaining the same institutions and macroeconomic concepts, any such reset is bound to fail.
This article provides a template for an enduring sound money solution that will deliver economic progress while eliminating destructive credit cycles. It posits that a properly constructed gold and gold substitute monetary system, which also includes the removal of bank credit inflation as a means of providing investment capital, is the only way that lasting stability and prosperity can be achieved. As well as the establishment of an incorruptible monetary system, the state’s role in the economy must be curtailed, budgets always balanced, banking reformed, and the private sector allowed to accumulate the wealth necessary to provide the investment for producers to produce.
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It’s Time to Pay Attention to Commercial & Industrial Loans – Wolf Richter
11 januari
This solid recession indicator is starting to concern me again.
Commercial and industrial loans (C&I loans) at all commercial banks fell to $2.33 trillion as of January 1, the lowest since March 2019, according to Federal Reserve data on commercial banks, released on Friday. C&I loans peaked in August last year at $2.38 trillion and have since fallen 1.7%. This has occurred despite three rate cuts by the Fed over the period.
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The Fed Can’t Reverse the Decline of Financialization and Globalization – Charles Hugh Smith
10 januari
The global economy and financial system are both running on the last toxic fumes of financialization and globalization.
For two generations, globalization and financialization have been the two engines of global growth and soaring assets. Globalization can mean many things, but its beating heart is the arbitraging of the labor of the powerless, and commodity, environmental and tax costs by the powerful to increase their profits and wealth.
In other words, globalization is the result of those at the top of the wealth-power pyramid shifting capital around the world to exploit lower costs of labor, commodities, environmental regulations and taxes.
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Believing In Illusions – Our Five Favorite Financial Myths – Bruce Wilds
9 januari
It is far easier to believe the five favorite financial myths of our time when you are rolling in dough and flush with cash. Due to a slug of freshly printed liquidity being pumped into the global financial system stock markets are making new highs and asset bubbles continue to expand. An increase in liquidity results in people feeling comfortable to take on more risk and this tends to swell leverage. During such a time true price discovery has a way of being diminished.
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The End Of The “Chinese Miracle” – Tuomas Malinen
10 januari
We have been following China closely for nearly four years. We first warned about the unsustainability of China’s growth in March 2017 and have continued to issue warnings ever since (see, e.g., this, this and this).
Now, China is reaching the end of its debt-driven economic model, and thus well-along in the end-game of the ‘Chinese Miracle’. This will bring drastic changes to the world economy, which will fuel the global economic collapse of 2020-2023.
Let’s examine why.
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Beware The Ghosts Of Artificial Liquidity-Fueled Melt-Ups Past – Sven Henrich
10 januari
Finally. A glimmer of cognition. An admission. A sense that the Fed knows, but is largely unwilling to admit it.
But Dallas Fed president Kaplan let it slip, the truth everybody already knows: It’s the Fed’s pumping of its balance sheet that has brought about this party like it’s 1999.
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Retail Apocalypse Surges Into 2020: No End In Sight – Mac Slavo
9 januari
The retail apocalypse was particularly bad in 2019, and only days into 2020, Macy’s has announced it’ll begin closing stores, following a trend in the industry. Macy’s will close a minimum of 28 stores, and one Bloomingdale’s as problems in retail continue.
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Everything You Need To Know About Recessions (But Were Afraid To Ask) – Nicholas LePan
9 januari
Just like in life, markets go through peaks and valleys. The good news for investors is that often the peaks ascend to far greater heights than the depths of the valleys.
Today’s post helps to put recessions into perspective. It draws information from Capital Group to break down the frequency of economic expansions and recessions in modern U.S. history, while also showing their typical impact.
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***How Rent Seeking Impoverishes Nations – Jose Orellana
8 januari
One of the fundamental questions in development economics is how an economy grows. As the reader may know, an economy grows by means of economic freedom, which implies property rights and the emergence of markets and exchange ratios (prices). Further, such chains of events bring about economic calculation. However, are such conditions enough for economic development? That is, does a nation need only property rights to develop?
The answer is no. So long as there is a state — government — there need to be constraints with respect to the actions of politicians. That is, there must be rules to the game, namely rules to the political process. So long as there is discretion — the ability to break rules of the game, rent seeking, which is a form of value (or wealth) destruction, will impoverish a nation.
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How Much Money Have Folks Already Lost Who Bought that Negative-Yielding 30-Year German Government Bond last August? – Wolf Richter
9 januari
Something funny’s happening in NIRP land: long-term yields are rising, negative yields are turning positive, and investors are getting punished for having handed their brains to central banks.
So how much can you lose in a little over four months buying one of the most conservative investments, the German government 30-year bond, during peak-hype of the negative-interest-rate era?
At peak-hype of the negative-interest-rate era, in mid-August 2019, the German government was able to squeak by selling €869 million of 30-year bonds (ISIN DE0001102481) that it had the temerity offer with a 0% coupon, meaning no interest payments ever, and that it was able to sell above face value, giving the bond a negative yield of -0.11% at issuance.
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Central Bankers Are Quietly Freaking Out About How To Fight The Next Recession – Pedro Nicolai da Costavia
10 januari
The world’s top central bank officials are rightly concerned that politicians in rich economies missed one key lesson of the last recession: Interest rate cuts can help to moderate a downturn, but aggressive fiscal policy is key to a healthy recovery.
It was a pro-austerity stance both in the United States, and even more saliently in the euro zone, that arguably prolonged the period of high unemployment and low wage growth that plagued most of the decade-long recovery from the 2007-2009 U.S. Great Recession.
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Trade from space: Shipping networks and the global implications of local shocks – Inga Heiland, Andreas Moxnes, Karen-Helene Ulltveit-Moe, Yuan Zi
7 januari
Evidence on the structure of the global container shipping network, an essential determinant of the costs of trade, is scarce. This column uses satellite data to document salient features of the network, and the expansion of the Panama Canal as a natural experiment to examine the impact this improvement to one link of the network had on worldwide trade. The analysis suggests that the expansion of the canal increased world real income by $20 billion.
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Bitcoin Can Gain 100% In 2020 – Halving Not Priced In – William Suberg
11 januari
Bitcoin (BTC) can deliver 100% returns to investors in 2020 and may rise significantly in the five months until May’s block reward halving, a new report claims.
In its forthcoming 2020 Crypto Outlook, market research firm Fundstrat Global Advisors said it believed that the halving was not yet “priced into” the Bitcoin price.
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Was Marx Right about Capitalism Destroying Itself from Within? – Charles Hugh Smith
8 januari
What are the internal contradictions that could unravel capitalism from within?
One of the core tenets of Marx’s work is that capitalism will be undone by internal contradictions that would manifest as ever-greater crises that would eventually destroy the system from within.
As the global economy continues to unravel beneath the surface, it’s a good time to re-examine Marx’s claim. If if turns out the current version of global capitalism is indeed unraveling due to its internal contradictions, it would be valuable to understand this now rather than later.
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A Fearful Fed Keeps Pouring Money into the Repo Market – Ryan McMaken
9 januari
The Fed announced on Thursday it is adding another $83 billion in “in temporary liquidity to financial markets.” And, in a development that will surprise no cynic anywhere, the Fed also noted that it “may keep adding temporary money to markets for longer than policy makers had expected in September.”
Specifically, this was another move to shore up and bail out the repo market, which has required the Fed’s ongoing revival of quantitative easing (but don’t call it that!), which has been going on since September. Thursday’s move adds even more to the Fed’s balance sheet. The Fed’s total assets had been falling since early 2015, but last September the Federal Reserve again began buying assets in an effort to funnel money to the repo market.
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***2020, Already the Year of Zombie Airlines – MC01
5 januari
And the year has just started. In South Korea:
Hyundai Development Company (HDC) and Mirae Asset Daewoo (MAD) were “selected” in November by the Korean government as “preferred bidders” to purchase a large share in the country’s second largest airline, Asiana, whose financial troubles we have previously covered.
Asiana’s financial situation has been steadily deteriorating: Total debt at the end of the first half of 2019 ballooned to 9.6 trillion won, or over $8.2 billion, and passenger numbers to the once profitable Korea to Japan routes have been reduced to a mere trickle. These are terrible numbers that should have long sent Asiana into bankruptcy protection and executives in damage control mode, as Asiana is apparently underreporting lease costs as well.
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“Low” Tax Rates Often Mask Much Larger Tax Burdens – Gary Galles
9 januari
Discussions about the incentive effects of taxes can be misleading. The focus is usually on the tax rates imposed. But one’s incentives are not best measured by tax rates, but by how much value created for others (reflected in consumers’ willingness to pay) is retained by the creator, which I refer to as take-home income.
These two variables — tax rates and take-home income — are reciprocal in the sense that the higher the marginal tax rate, the smaller the take-home income relative to the value created. But the latter is a more precise tool, because it reveals how much incentives change as a result of a tax change.
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