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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The Poverty of GDP – Carmen Elena Dorobăț
14 mei
The Economist recently ran a piece criticizing the suitability of GDP as a measure of economic development and material progress. In the past, the publication has touched on various other weaknesses of this aggregate measure—including the fact that it is not a timely and reliable indicator that can guide economic policy—as well as suggesting new measures for prosperity.
As expected, none of these articles discuss one main drawback of the GDP aggregate—the inclusion of government spending.
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Managing sudden stops – Barry Eichengreen, Poonam Gupta
13 mei
The recent reversal of capital flows to emerging markets has pointed to the continuing relevance of the sudden stop problem. This column analyses the sudden stops in capital flows to emerging markets since 1991. It shows that the frequency and duration of sudden stops have remained largely unchanged, but that global factors have become more important in their incidence. Stronger macroeconomic and financial frameworks have allowed policymakers to respond more flexibly, but these more flexible responses have not guaranteed insulation or significantly mitigated the impact.
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*** Who’s Really Most Afraid of Brexit? And Why? – Don Quijones
11 mei
One of the glaring but oft-overlooked ironies of the Brexit debate is the fact that the UK has been one of the biggest beneficiaries of the creation of the euro, despite not being a member of the Eurozone and holding the single currency in rampant disregard. The UK economy has certainly benefited more than most Eurozone economies.
Since 2001 Britain’s share of key financial markets has exploded. London is now home to almost one-half of the entire global interest-rate OTC derivatives market, compared to 35% in 2001. Its share of global forex turnover increased from 33% to 41% between 2001 and 2014. And its share of global hedge fund assets doubled, from 9% to 18%.
Almost 2.2 million people work in financial and related services such as accounting and law, two-thirds of them outside London, reports a study by the financial services lobby group CityUK. They produce nearly 12% of the UK’s GDP, 11% of its tax take, and a net trade surplus of £72 billion ($104 billion).
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Stress testing and macroprudential regulation: A transatlantic assessment – Ron Anderson
9 mei
Since the onset of the Global Crisis in 2007-08, stress testing has emerged as a major component of the supervisory toolkit. This column introduces a new CEPR Press eBook that presents the perspectives of policymakers, stress test designers and academics on the remarkable development of a tool which ten years ago was little known.
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Why not repudiate the National Debt – Murray N. Rothbard
[This article first ran in the June 1992 issue of Chronicles (pp. 49–52)]
In the spring of 1981, conservative Republicans in the House of Representatives cried. They cried because, in the first flush of the Reagan Revolution that was supposed to bring drastic cuts in taxes and government spending, as well as a balanced budget, they were being asked by the White House and their own leadership to vote for an increase in the statutory limit on the federal public debt, which was then scraping the legal ceiling of $1 trillion. They cried because all of their lives they had voted against an increase in public debt, and now they were being asked, by their own party and their own movement, to violate their lifelong principles. The White House and its leadership assured them that this breach in principle would be their last: that it was necessary for one last increase in the debt limit to give President Reagan a chance to bring about a balanced budget and to begin to reduce the debt. Many of these Republicans tearfully announced that they were taking this fateful step because they deeply trusted their president, who would not let them down.
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Of Course the US Government Will Default on Its Debt -Tho Bishop
9 mei
Last week Donald Trump set the financial punditry class aflame with his suggestion that the United States may end up asking lenders to take a haircut on its debt obligations. The resulting firestorm created a race to see who could come up with the strongest condemnation of Trump, David Ader of CRT Capital Group told Bloomberg the comments were “stupid and ridiculous,” while Business Insider’s Josh Borro labeled them “insane.” Vox’s Matt Yglesias described the proposal as a threat to “incinerate the world economy.”
While Yglesias is correct that a US default would have major ramifications for the global economy, lost in all this hand wringing is the fact that the damage has largely already been done. As Jim Grant noted in his Time cover article this month, the United States debt situation is far more serious than most “experts” would like to believe. By accumulating a debt that now towers over $19 trillion, the United States government has written a check it will not be able to cash.
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The ECB grants debt relief to all Eurozone nations except Greece – Paul de Grauwe
13 mei
Greece may be about to get some debt relief, although there is still resistance to the idea. This column argues that the ECB has been providing other Eurozone countries with debt relief since early 2015 through its programme of quantitative easing. The reason given for excluding Greece from the QE programme – the ‘quality’ of its government bonds – can easily be overcome if the political will exists to do so. It is time to start treating a country struggling under the burden of immense debt in the same way as the other Eurozone countries are treated.
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Greece in a monetary union: Lessons from 100 years of exchange rate experience, 1841-1939 – Matthias Morys
10 mei
The first century of modern Greek monetary history has striking parallels to the country’s current crisis, from repeated cycles of entry and exit from the dominant fixed exchange rate system, to government debt built-up and default, to financial supervision by West European countries. This column compares these two episodes in Greece’s monetary history and concludes that lasting monetary union membership can only be achieved if both monetary and fiscal policies are effectively delegated abroad. Understandable public resentment against ‘foreign intrusion’ might need to be weighed against their potential to secure the long-term political and economic objective of exchange rate stabilisation.
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Money and Banking Part 14: Financial Crises – Eric Tymoigne
11 mei
While visiting the London School of Economics at the end of 2008, the Queen of England wondered “why did nobody notice it?” In doing so, she echoed a narrative that had been promoted among some prominent economists: the Great Recession (“it”) was an accident, a random extreme event and no one so it coming. This narrative is false. Quite of few economists saw it coming and it was not an accident. A previous post showed how different theoretical framework about financial crises lead to different regulatory responses. This post studies more carefully the mechanics of financial crises and how an economy gets there.
Debt Deflation
Definitions of financial crises can be more or less broad. Some economists restrict the definition to banking crises, others may use a statistical definition that takes a specific percentage fall in a financial index. In any case, financial instability has increased since the 1980s.
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Lost Jobs in Recessions – John H. Cochrane
12 mei
The WSJ has a nice article showing just how hard it has been for many people who lost jobs in the recession to get back to work. Their profile is typical of what I have read and not the typical picture of unemployment: Middle age middle managers. The paper by Steve Davis and Till von Wachter is here. They present the fact largely as a puzzle, which it is: “losses in the model vary little with aggregate conditions at the time of displacement, unlike the pattern in the data.”
As the story makes clear, the problem is really not unemployment. There are lots of jobs available. The jobs just don’t pay much, and don’t use the specialized skills that the workers have to offer. The problem is wages at the jobs they can get.
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The Coming War of Central Banks – Charles Hugh Smith
11 mei
Welcome to a currency war in which victory depends on your perspective.
History has shifted, and we’re leaving the era of central bank convergence and entering the era of central bank divergence, i.e. open conflict. In the good old days circa 2009-2014, central banks acted in concert to flood the global banking system with easy low-cost credit and push the U.S. dollar down, effectively boosting China (whose currency the RMB/yuan is pegged to the USD), commodities, emerging markets and global risk appetite.
That convergence trade blew up in mid-2014, and the global central banks have been unable to reverse history. In a mere seven months, the U.S. dollar soared from 80 to 100 on the USD Index (DXY), a gain of 25%–an enormous move in foreign exchange markets in which gains and losses are typically registered in 100ths of a percent.
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*** Possible Immediate Effects of the €500 Note’s Abolition – Paul-Martin Foss
12 mei
The ECB officially decided to end production of the €500 note yesterday, with production winding down at the end of 2018. Ostensibly this was done to prohibit the use of the €500 note by criminals and terrorists. While this is just one step in the long-term War on Cash, what might some of the more immediate effects be?
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*** How Wall-Street Hocus-Pocus Inflates S&P 500 Revenues – Wolf Richter
9 mei
Despite what you might think, there’s a difference between our financial markets and casinos in Las Vegas: casinos aren’t rigged.
In a casino, the odds are officially against you. You know what they are, and you subject yourself to them – statistically speaking – to lose money … while having a blast.
Wall Street on the other hand has become an ingenious hocus-pocus machine where even the most taken-for-granted and often-cited data points are systematically inflated. Yet this particular trick – one of many – is perfectly legal. It’s how it is supposed to be done. And that makes it even more insidious.
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Tax-Dodging Corporate Inversions Accelerating – Roger Bybee
12 mei
Corporate “inversions”—the fast-accelerating phenomenon of major U.S. firms moving their official headquarters to low-tax nations through complex legal maneuvers—are causing an annual loss of about $100 billion in federal tax revenues.
But new rules imposed in early April by the U.S. Treasury Department scuttled the mammoth $162 billion deal between pharmaceutical giant Pfizer and Allergan, based on relocating the official headquarters to low-tax Ireland. The Treasury rules are designed to inhibit “serial inverters”—corporations that repeatedly shift their official headquarters to cut U.S. taxes—and to discourage “earnings stripping,” where firms use loans between their American units and foreign partners to reduce U.S. profits subject to federal taxation. The collapse of the Pfizer-Allergan inversion suggests that the Treasury regulations may constitute a major barrier to some future inversions. However, with firms like Johnson Controls and Tyco moving ahead with their inversion plans, stronger measures will clearly be needed to halt the tide.
U.S. corporations have pulled off about 60 inversions over the last two decades, according to Fortune. In the last five years alone, corporations have executed 40 inversions, the New York Times stated.
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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.