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 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.

NB: Zie voor de Amerikaanse presidentsverkiezingen zowel de column van Larry Summers als de vernietigende bespreking van Clintons’s economische plan door John H. Cochrane helemaal boven aan de lijst deze week.

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*** The Clinton Plan – John H. Cochrane
12 augustus
The WSJ asked me to review the Hillary Clinton economic plan, motivated by her August 11 speech introducing it. The Op-Ed is here.
I read a good deal of the “plan” on hillaryclinton.com. What I discovered is that there is so much plan that there really isn’t any plan at all.
For example, follow me down to the Fact sheet at the bottom of the website to figure out just what the “infrastructure” plan is about. Some snippets:
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Brexit: This backlash has been a long time coming – Kevin O’Rourke
7 augustus
After the Brexit vote, it is obvious to many that globalisation in general, and European integration in particular, can leave people behind – and that ignoring this for long enough can have severe political consequences. This column argues that this fact has long been obvious. As the historical record demonstrates plainly and repeatedly, too much market and too little state invites a backlash. Markets and states are political complements, not substitutes.
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*** Get Ready for More OPEC Rumors this Month, Oil Soars as Saudi Energy Minister Uses Oldest Trick: Talking his Book – Martin Tiller
13 augustus
In financial markets, very few things are predictable; if they were we would all be fabulously wealthy. Some things, though, definitely fall in the category of “extremely likely”. A couple of weeks ago, in a regular webinar for Energy Trader Team members, I said that, while the fundamentals for oil still looked terrible, I expected something to happen over the next few weeks that would push oil higher, maybe even back to the $50 level.
Sure enough, that thing happened yesterday and triggered a roughly 5 percent one day spike in WTI, a move up that is continuing so far today. It was not anything concrete like a dramatic fall in inventories: in fact the big red bar for two days ago indicates the release of that data, which showed another larger than expected build. No, what set the market ablaze was a prominent OPEC member using the oldest trick there is: talking his book.
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The progressive case for championing pro-growth policies – Larry H. Summers
8 augustus
Issues of inequality, fairness, middle-class living standards and job creation have been central to the US presidential campaign.
Rightly so. For many years, the incomes of all groups tended to move together. Indeed, as a graduate student in the late 1970s, I was taught that it was a “stylised fact” that the shares of US total income going to profits and to wages, and to the rich and to the poor, was constant.
All of this has changed. It is totally appropriate that widening inequality and the associated stalling of middle-class living standards should become an urgent political issue.
What is unfortunate is that many people, in their eagerness to focus on fairness, neglect the single most important determinant of almost every aspect of economic performance: the rate of growth of total income, as reflected in the gross domestic product.
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The (Impossible) Repo Trinity – By Daniela Gabor
12 augustus
ince the 1980s, central banks have been increasingly freed from fiscal dominance, the obligation to monetize government debt. The new regime of monetary dominance celebrated the (price) stability benefits of insulating scientific monetary policy from poorly theorized, highly politicized fiscal policy. Yet the growing dominance of the ‘monetary science, fiscal alchemy’ view in both academia and policy circles played a critical role in the rapid rise of shadow banking. The untold story of shadow banking is the story of (failed) attempts to separate monetary from fiscal policy, and of the bordeland that connects them, mapped onto the repo market.
While the state withdrew from economic life, privatizing state-owned enterprises or state banks, and putting macroeconomic governance in the hands of independent central banks, its role in financial life grew bigger. Sovereign debt evolved into the cornerstone of modern financial systems, used as benchmark for pricing private assets, for hedging and as base asset for credit creation via shadow banking. The state’s role as debt issuer, passive and systemic at once, has been reliant, beyond the arithmetic of budget deficits, on the intricate workings of the repo trinity.
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This is When the Jobs “Recovery” Goes KABOOM – Wolf Richter
9 augustus
This cannot be good for jobs: In the second quarter, nonfarm business sector labor productivity – defined as output per hour worked – fell by an annual rate of 0.5% from the first quarter, the Bureau of Labor Statistics reported today. The third quarterly decline in a row.
The last time it dropped for three quarters in a row was from Q3 1973 through Q3 1974 (5 quarters). Alas, in November 1973, the economy entered a recession. Several quarters in a row of declining productivity is not kind to the economy.
The productivity decline in the second quarter this year was the result of output edging up at a seasonally adjusted annual rate of 1.2% while hours worked to obtain this output rose 1.8%. Year-over-year, productivity fell 0.4%.
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Negotiating Britain’s new trade policy – Jim Rollo, Alan Winters
9 augustus
For over four decades, the EU has managed most international trade policy on behalf of the UK. After Brexit, the UK government will have to reconstitute trade links with EU, with third nations while disentangling the UK from the commitments that the EU made on its behalf in the WTO. This chapter suggests some strategies for the UK government to follow in reconstituting its trade policy. The watch words should be simplicity and cooperation. Maintaining the goodwill of trading partners will be a very high diplomatic priority.
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Manipulation: The Phony Job Recovery – Ron Paul
11 augustus
Last Friday saw the release of a bombshell jobs report, with headlines exclaiming that the US economy added over 250,000 jobs in July, far in excess of any forecasts. The reality was far more grim. Those “jobs” weren’t actually created by businesses – they were created by the statisticians who compiled the numbers, through the process of “seasonal adjustment.” That’s a bit of statistical magic that the government likes to pull out of its hat when the real data isn’t very flattering. It’s done with GDP, it’s done with job numbers, and similar manipulation is done with government inflation figures to keep them lower than actual price increases. In reality there are a million fewer people with jobs this month than last month, but the magic of seasonal adjustment turns that into a gain of 255,000.
Delving further into the jobs report, we see that many of the jobs that were supposedly created were jobs in government and health care. Government jobs, of course, are paid for by siphoning money away from taxpayers. And health care jobs are increasingly created solely because of the ever-growing mandates of Obamacare. Other major sources of job growth were temp jobs and leisure & hospitality (i.e. waiters and bartenders). These aren’t long-lasting jobs that will contribute to economic growth, they are mostly just jobs that cater to the tastes of the well-to-do who continue to benefit from the Federal Reserve’s easy monetary policy.
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When Will the Record Corporate “Debt Binge” Collapse? – Wolf Richter
10 augustus
After a historic “debt binge,” leverage levels among the 2,200 largest US corporations, excluding financial institutions, have reached “record highs,” Standard and Poor’s warns. It blamed the Fed-fueled “excessive liquidity and low borrowing costs in the capital markets,” along with declining profits.
Now these companies, and “particularly those at the lower end of the credit spectrum,” of which there are more and more, “are as vulnerable to downgrades and defaults as they were in the period leading up to the Great Recession – and perhaps more so.”
S&P Global Ratings sees a clear cause for concern as aggregate debt levels and leverage components that we use to help determine the financial profile of rated companies now exceeds that which we saw just prior to the most recent economic and financial crisis.
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Consumer Optimism Is Not the Key to Economic Growth – Frank Shostak
11 agustus
Most experts regard consumer’s psychological disposition as the driving force of an economy. If consumers are optimistic and happy with the economy, no recession can occur — so it is believed. According to the popular way of thinking, if consumers are active, this is said to be a good sign for economic health. If consumers do not spend enough then it is seen as bad news. Indeed surveys of business activity show that during a recession, businesses emphasize a lack of consumer demand as the major factor behind their poor performances.
In the real world, consumer optimism is important, but by itself it will achieve nothing. Production must precede consumption. It is necessary to produce useful goods that can be exchanged for other goods.
When a baker produces bread, he doesn’t produce everything for his own consumption. Most of the bread he produces is exchanged for the goods and services of other producers, implying that through the production of bread, the baker exercises his demand for other goods.
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The Mainstream Has Failed – Charles Hugh Smith
11 augustus
The good news is there is a way to avoid failure and stagnation: avoid the mainstream like the plague.
The mainstream became mainstream because it worked: the mainstream advice to “go to college and you’ll get a good job” worked, the mainstream financial plan of buying a house to build equity to pass on to your children worked, the mainstream of government regulation worked to the public’s advantage at modest cost to taxpayers and the mainstream media, despite being cozy with government agencies such as the C.I.A. and operating as a profit machine for the families that owned the newspapers, radio stations, etc., functioned as a basically honest broker of information and reporting.
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*** Nightmare at the Mall: Brick-and-Mortar Retail Totally Loses it – Wolf Richter
12 augustus
On the surface, it was the same lackadaisical data we’ve become inured to in this wondrous economy. But beneath the surface, there lurked a nightmare for the already struggling brick-and-mortar retailers.
Total retail sales in July, at $457.7 billion, remained stubbornly flat from June, and ticked up a measly 2.3% from a year ago, adjusted for seasonal variation and holiday and trading day differences, but not inflation, according to the Commerce Department.
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The Real Reason Brazil Can Still Be “the Country of the Future” – Tho Bishop
12 augustus
Writing this week for Bloomberg, Tyler Cowan made the case that Brazil is “still the country of the future.” While I share Cowan’s optimism for the nation’s future, his focus on the country’s diversity, size, and vaguely federalized political structure overlooks the real story – that Austrian economics and libertarianism is winning the battle of ideas within the country.
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Big Wall Street Firms Make Lame Excuse for Volcker Rule Non-Compliance, Ask for Additional Five Year Extension – Yves Smith
12 augustus
Because it’s become so routine, it’s hard to get outraged about brazen behavior by the Wall Street heavyweights, but this incident is a noteworthy exception. Major Wall Street firms are asking a clearly-in-the-tank-for-them Fed to delay Volcker Rule implementation an astonishing additional five years. And what’s the excuse? That they have some “illiquid” positions that they need more time to sell. This is after implementation of the Volcker Rule having first been pushed back by four years and the banks having obtained an additional three years of extensions.
Anyone who knows bupkis about finance knows if you can’t sell a financial asset in three years (or more accurately, seven), particularly with public and private market valuations at record levels, the problem is not liquidity. It’s valuation. These banks are carrying these holdings on their books at inflated marks and don’t want to recognize losses.
As we discuss below, the Fed has repeatedly behaved in an intransigent manner regarding the Volcker Rule, effectively thumbing its nose at Congress.
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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.