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 worden.

Sinds 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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Will Trump Administration Let the IMF Escape from the Next Greek Bailout? – Yves Smith
8 februari
Greece continues to suffer horribly on the austerity rack as its European creditors pretend that its unsustainable debts can be paid. The IMF wrote in its latest Greek debt sustainability memo, released this month, that even if Greece does everything asked of it, its growth will be too low for it to be able to manage its debt burden in the long term. That means the IMF under its own rules should not provide further funds unless some of the debt is written off. However, as we explain below, that is something the European lenders, which constitute the bulk of the funding, will never accept.
Normally, regardless of the degree of IMF unhappiness, one would expect, as in the past, the organization would eventually fall into line and participate. But with Trump in, the IMF may be able to wriggle free.
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Why shocks to large banks cause big GDP swings – Mary Amiti, David Weinstein
12 februari
We are living in a world in which banks are large relative to the economies they serve. This column uses comprehensive data on Japanese banks from 1990 to 2010 to examine how the fates of individual banks matter for aggregate performance. Much of the fluctuation in Japanese aggregate investment appears to be driven by the idiosyncratic successes and failures of a limited number of institutions, and there is good reason to believe that the situation is similar in many developed countries.
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***The Growth Industry in 2017? Debt Restructuring & Bankruptcy! – Wolf Richter
6 februari
The US “restructuring industry” – the advisories, law firms, investment banks, lenders, private equity firms, hedge funds, and others that deal with troubled companies when they’re restructuring their debts either in bankruptcy our outside of bankruptcy – had been through some very lean years as the Fed’s easy money and yield-desperate investors were floating even the leakiest boats.
But in 2015, the industry began licking its chops. And in 2016, total commercial bankruptcy filings jumped 26% from a year earlier, according to the American Bankruptcy Institute. It was the first rise since 2010.
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Carbon compromise? – John H. Cochrane
8 februari
In a remarkable and clear oped “A Conservative Answer to Climate Change” James Baker and George Shultz lay out the case for a carbon tax in place of the complex, cronyist and ineffective regulatory approach to controlling carbon emissions.
A plea to commenters. Don’t fall in to the trap of arguing whether climate change is real or whether carbon (and methane) contribute to it. That’s 5% of the debate. The real debate is how much economic damage does climate change actually do. Science might tell us that the temperature will warm 2 degrees in a century, with a band of uncertainty. But the band of uncertainty of the economic, social and political consequences of 2 degrees is much bigger. Moreover, the band of relative uncertainty is bigger still. Does “science,” as the IPCC claims, really tell us that climate change is the greatest danger facing us — above nuclear war, pandemic, state failure, and so on?
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Double diversification – Thorvaldur Gylfason, Per Wijkman
6 februari
There is a cross-country relationship between economic performance and both economic and political diversification. This column presents global evidence that between 1962 and 2012, both types of diversification were closely related to economic performance. This period included the spread of democracy, the global liberalisation of trade, and the termination of the Cold War. The recent retreat of democracy, the popular reaction to trade liberalisation in key countries, and a new cold war appear likely to reduce economic efficiency and growth.
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The Colonization of Local-Business Main Street by Corporate America – Charles Hugh Smith
9 februari
This is what our mode of production optimizes: ugliness, debt-serfdom, and servitude to politically dominant corporations.
An insightful correspondent recently remarked on the striking transition of American neighborhoods from commercial districts dominated by locally owned businesses to streets lined with look-alike outlets of Corporate America. This transition is so obvious that few even comment on it, much less ask if this wholesale replacement is in the best interests of residents and consumers.
I have long suggested starting any inquiry with a simple question: cui bono– to whose benefit? Let’s add a second essential question: what does the system optimize?
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Dodd-Frank Reform – John H. Cochrane
6 februari
Dodd-Frank reform seems to be back on the front burner, according to the latest Presidential executive order. At last.
But let us hope it can be done right. Simply pulling down regulations in ways demanded by big banks will lead, I am afraid, to lower capital standards, more debt implicitly guaranteed by the government, and just enough regulation to keep the big end of the banking industry protected from competition and disruptive innovation.
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Why Not Replace Dodd-Frank With Glass-Steagall? – Tho Bishop
8 februari
Last week President Trump started moving forward with his campaign promise to repeal the disastrous Dodd-Frank Act, taking steps to walk back some of the rules and regulations the bill spawned. While these are promising first steps, the larger provisions of the bill will have to be met with legislative action.
For those not familiar with the Dodd-Frank Act, it was the Obama Administration’s response to the financial crisis that increased costs on consumers while further undermining the stability of the banking sector by making the “Too Big to Fail” banks bigger. America faces dangerous Bank consolidation due to the mountains of red tape Dodd-Frank has created for lenders, forcing many small and community banks to merge with larger financial institutions. Since Dodd-Frank has passed, only three banks have been chartered in the US.
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This Is How Out-Of-Whack US Trade Relationships Really Are – Wolf Richter
7 februari
2016 marked another banner year for US trade, a banner year largely for other countries that at the initiative of Corporate America, whose supply chains weave all over the world, managed to load the US up with their merchandise. According to the Commerce Department’s report today, the US trade deficit in goods and services rose to $502.3 billion in 2016, the highest in four years.
Exports of goods and services fell $52 billion in 2016 year-over-year to $2.21 trillion, and imports fell $50 billion to $2.71 trillion. That both exports and Republicans replacing Obamacare, beware. It has a certain logic. Much of it patches up unintended consequences of previous regulations. If we just roll back and patch once again, we will end up right back where we started.
It’s wiser to start with a vision of the destination. In an ideal America, health insurance is individual, portable, and guaranteed renewable — it includes the right to continue coverage, with no increase in cost. It even includes the right to transfer to a comparable plan at any other insurer. Insurance companies pay each other for these transfers, and then compete for sick as well as healthy patients. The right to continue coverage is separate from the coverage itself. You can get the right to buy gold coverage with a silver plan.
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Healthcare repair on “The Hill” – John H Cochrane
10 februari
Republicans replacing Obamacare, beware. It has a certain logic. Much of it patches up unintended consequences of previous regulations. If we just roll back and patch once again, we will end up right back where we started.
It’s wiser to start with a vision of the destination. In an ideal America, health insurance is individual, portable, and guaranteed renewable — it includes the right to continue coverage, with no increase in cost. It even includes the right to transfer to a comparable plan at any other insurer. Insurance companies pay each other for these transfers, and then compete for sick as well as healthy patients. The right to continue coverage is separate from the coverage itself. You can get the right to buy gold coverage with a silver plan.
Most Americans sign up as they graduate from high school, get a drivers’ license, register to vote, or start a first job. Young healthy people might choose bare-bones catastrophic coverage, but the right to step up to a more generous plan later. Nobody’s premiums subsidize others, so such insurance is cheap.
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***Price Controls and Propaganda – Alasdair Macleod
9 februari
Most economists agree on one thing; price controls do not work. Many go on to say they create shortages of goods, which inevitably drives black market prices even higher than they would otherwise be. Price controls were last tried in the 1970s, and everyone swore, never again. The suggestion that they could return is laughed at today, even taken as madness. Only in Venezuela and Zimbabwe.
However, the likelihood of their reintroduction is greater than generally realized, and is increasing all the time now that there are signs of rising prices. So far, central bankers are claiming that an increase towards their inflation targets of two per cent in the CPI (already achieved in the US) is a sign that economic normality is returning. They are also confident they can manage the rate of price inflation, so it should not present a risk. But in all previous credit-driven business cycles, the rate at which prices increase has always been beyond the control of central banks. This article explains why, and highlights the central role of statistical propaganda, of which its promoters are hardly aware. It also suggests how inflation outcomes are likely to evolve. We shall start by looking at officially-recorded prices.
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***What Would it Cost a Country to Leave the Euro? That’s What Everyone Suddenly Wants to Know – Wolf Richter
7 februari
It’s the closest the Eurozone has come to falling apart.
Marine Le Pen, the leader of the National Front, will get enough votes in April during the first round of the French presidential election but will be defeated in the second-round runoff in May, according to the polls. So at least hopes the French political class, and by extension the European establishment.
They’re hoping Le Pen would be defeated because she is campaigning on taking France out of the euro (after holding a referendum) and re-denominating the entire €2.4 trillion pile of French government debt into new franc. Then the government can just print the money it wants to spend
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Expropriation and Impoverishment: “Capitalist” Greece and “Socialist” Venezuela – Charles Hugh Smith
7 februari
Yesterday I noted that not all assets will make it through the inevitable financial re-set. ( Which Assets Are Most Likely to Survive the Inevitable “System Re-Set”?)
Those that are easy to expropriate will be expropriated, and those assets vulnerable to soaring taxes, inflation and currency devaluation will also be hollowed out.
There are two real-time examples of these dynamics we can profitably study: “capitalist” Greece and “socialist” Venezuela. Both nations have impoverished their citizenry to preserve an oligarchy and its cronies.
I hope it won’t be too great a shock that crony-capitalism and crony-socialism function in much the same fashion and generate the same result: the wealth of the nation is funneled (or expropriated) into the ruling Elites, impoverishing the non-elites.
The mechanisms differ in appearance but they produce the same results: expropriation and impoverishment. In Greece, two Ruling Elites stripmined the nation: the big European banks and the domestic oligarchs and their functionaries in the state.
Having flooded Greece with “cheap” credit denominated in euros, the EU’s big banks demanded “austerity” so the Greek government could continue servicing its massive debt. The Greek oligarchs dodged “austerity” in the usual way: by buying political influence.
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Chinese Mortgages Tighten Fast – David Llewellyn-Smith
11 februari
That was fast. A year ago China was in the middle of a roaring housing bubble, one that was starting to spread into second-tier cities. Credit growth was strong as well, but mortgage lending made up a large amount of credit growth, more than 100 percent in July. Fast forward to today. After about 4 months of intensifying buying and credit restrictions, plus a Spring Festival bookended by rate hikes, credit conditions have gone from loose to very tight. So tight that some Chinese banks are encouraging borrowers to repay their debt ahead of schedule.
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The backhaul problem and trade policy – Jota Ishikawa, Nori Tarui
11 februari
For models of international trade to accurately represent the real-world costs, transport costs cannot be ignored. This column argues that, additionally, we cannot assume that transport costs are symmetrical, because of a backhaul capacity problem that constrains international shipping. Domestic tariffs, which benefit the domestic import sector and harm the foreign export sector in standard models of international trade, can also harm the domestic export sector and benefit the foreign import sector.
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What Form Will The Great Confiscation Take — And How Can We Prepare? – John Rubino
11 februari
For what seems like decades, people have been warning that the next time some over-leveraged corner of the financial system implodes, bank and brokerage accounts will be either confiscated by desperate governments or lost during the resulting chaos.
Here, from 2012, is a representative warning from gold mining eminence grise Jim Sinclair:
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Zero Interest Rates in EU: The Myth of the Poor German Saver – Thomas Fricke
09 februari
We’re featuring this post primarily to highlight how little wealth most Germans have, despite Germany’s status as an export powerhouse. On the one hand, this may not seem as big a deal in the US, since in Germany most people rent, tenants have strong rights, and rentals are low by Anglo-Saxon standards. Germans also have better social safety nets than Americans. While bona fide jobs are more secure than here, although Germany is also seeing growth in temporary and short-term employment.
The reason for pointing this out is that is not as widely recognized as it should be that ordinary Germany workers have been badly squeezed. Real wage fell in the early 2000s, reducing purchasing power. As Josh Rosner pointed out, it represented a transfer of income to domestic exporters and banks. German taxes also hit consumers and let corporations off easy.
Thus the logic for German politicians regularly blaming Eurozone problems on lazy Latins rather than the inherent flaws of the project and Germany’s refusal to address its own contradictory wishes, namely running large trade surpluses while not wanting to fund their export partners, becomes obvious. Germany’s leaders need an external enemy to blame for how German workers have been squeezed for so long, well before the crisis took hold.
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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.