Economische aanraders 18-12-2016
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.
Trump Picks Fiscal Conservative Hawk Mulvaney As Budget Director – Tyler Durden
Hinting at a substantial clampdown on government spending over the next four years, this morning President-elect Trump announced the selection of South Carolina Rep. Mick Mulvaney to be his first budget director, a nomination which would put a “fiscal conservative hawk” in charge of managing the federal budget and the logistics of government affairs.
As director of the Office of the Management and Budget, replacing Obama appointee Shaun Donovan, Mulvaney would have broad responsibility for government operations, and for avoiding the government shutdowns that the Freedom Caucus countenanced several times.
The move, which will raise eyebrows among those who expect an unprecedented fiscal expansion under Trump, pits Mulvaney, a true fiscal conservative, in charge of government spending, following repeated alarms about the long-term trajectory of the debt, even as annual deficits have fallen in recent years despite a recent sharp spike during the final months of the Obama administration. He has criticized the use of special war funds to get around caps on defense spending and in past years has suggested that tax increases might be necessary to stabilize the debt, a stance anathema to many conservatives.
Foreigners are Dumping US Treasurys as Never Before – Wolt Richter
Bloodletting in one of the most conservative investments.
All kinds of things are now happening in the world of bonds that haven’t happened before. For example, authorities in China today halted trading for the first time ever in futures contracts of government bonds, after prices had swooned, with the 10-year yield hitting 3.4%. Trading didn’t resume until after the People’s Bank of China injected $22 billion into the short-term money market.
What does this turmoil have to do with US Treasurys? China has been dumping them to stave off problems in its own house….
Public policy in a zero-growth scenario – Enrico Perotti
Per-capita income in developed countries has stagnated, which most economists regard as a departure from the long-run trend. This column argues that zero long-term growth will be the new normal. In this zero-growth world, spending increases must always be balanced against spending reductions elsewhere or in the future, which creates a further problem: no politician could implement policy changes with such bleak outcomes.
British Press in a Tizzy that the EU Will Be Mean to the City of London in Brexit – Yves Smith
A raft of stories at the Financial Times verge on funny, in that they affect consternation that EU bureaucrats are intent on taking a big chunk out of the City’s business. It was obvious that this would happen and we said so repeatedly over the summer. Yet it’s been astonishing to see Brexit boosters, the few that wander into Naked Capitalism and the ones who are well represented in Fleet Street, act as if the UK somehow has the upper hand. As we’ve written, Brexit fans have chosen to ignore repeated, crystal clear, and surprisingly unified warnings from EU leaders that they will give the UK no quarter if it really does go through with a Brexit.
The current cause celebre is that France and the ECB are working to expedite a plan to move Euroclearing from the UK to the Continent in the event of a Brexit. This was an obvious target: the ECB had already tried to extract Euroclearing from London. Britain fought back and the European Court of Justice ruled that the ECB could not discriminate against the UK because it was an EU member.
Brexit the French way: Regulation, tax, and politics – Laurence Boone, Ano Kuhanathan
A recent Vox eBook examined the potential issues facing various EU members when it comes to negotiating with the UK over Brexit. This column, taken from the ebook, suggests that France is likely to seek to include the UK in a comprehensive free trade zone to maintain easy access to the UK markets, but with a view to safeguarding its own competitiveness.
How Inflation and Unemployment Are Related – Frank Shostak
A fall in the US unemployment rate to 4.6% in November from 4.9% in the month before, and 5% in November last year, has prompted some commentators to suggest that we are almost at the so-called natural rate, which is believed to be at around 4.5%.
It is held that once the unemployment rate falls below an “optimal” rate — called the Non-Accelerating Inflation Rate of Unemployment (NAIRU) — it sets off an inflationary spiral.
***Here Are the Multinationals whose Bonds the ECB is Discreetly Buying – Don Quijone
In June 2016, the ECB activated its corporate bond buying program, ostensibly to revive the Eurozone’s stalled economy. The program has been shrouded in secrecy, as the ECB has refused to reveal the identity of most of the companies, divulging only the International Securities Identification Number (ISIN) of the bonds, but not the amounts.
The ECB coordinates the overall effort, but the actual buying is done by the national central banks.
Why macropru can end up being procyclical – Jon Danielsson, Robert Macrae, Dimitri Tsomocos, Jean-Pierre Zigrand
Discretionary macroprudential policies aim to be countercyclical by adjusting risk-taking across the financial cycle. This column argues that the opposite effect may happen in certain cases. Depending on how regulators measure risk and how they react, the eventual outcome may well be procyclical, with serious unintended consequences.
Greece and Creditors in Showdown Again – Yves Smith
Sadly, we’ve seen this movie before. The creditors have the means to crush Greece and have no compunctions about inflicting pain.
Greece had struck a deal with its creditors, which in this iteration includes the European Stability Mechanism (ESM). The agreement on December 5 included an interest rate reduction on the country’s over €300 billion of borrowings.
Three days later, prime minister Alex Tsipras announced that he would give a special Christmas bonus to the poorest pensioners, those receiving less than €800 a month, and would not put through a scheduled increase in the VAT for the outermost Greek islands that had been hard hit by dealing with migrants from the Middle East. The ESM reacted harshly, saying the debt relief agreement was off.
Bail-in: Limits and work in progress – Giorgio Barba Navaretti, Giacomo Calzolari, Alberto Pozzolo
In the years since the Global Crisis, there has been substantial public opposition to taxpayer-funded bailouts of financial institutions. Reflecting this sentiment, a cornerstone of the EU’s post-crisis resolution framework is that losses be borne by private investors and creditors. This column surveys some of the details that need to be worked out before such bail-in measures can work. Effective implementation requires clear identification of the limits to bail-in. In particular, for such measures to be successful, bailout cannot be ruled out by assumption.
Has “Market Failure” Caused High Health-Care Prices? – Dale Steinreich
With premiums rising an average of 22 percent and as high as 116 percent on Obamacare’s 2017 government exchanges, it seems surreal to read journalists attributing the economic pathologies of US health care to market failure. Yet that is essentially the perspective being driven by the Associated Press and NBC with approving input from industry economists and consultants.
While not a new narrative, the most recent version begins with the observation that patient co-payments and deductibles have failed to control costs. According to a Mercer consultant, “It’s not human nature to be rational thinkers about health care cost decisions. … It will never be just like buying a lawnmower.”
***Why the Peso Crisis Won’t be “Contained” to Mexico – Don Quijones
Mexico’s economy has excelled at two key things over the past two decades: opening itself to global capital and attracting foreign direct investment, in particular from American businesses. But those two things could soon become its Achilles heel, especially with Donald Trump seemingly determined to renegotiate, if not scrap altogether, the document most responsible for transforming Mexico into an industrial powerhouse and one of the world’s most open economies, the North American Free Trade Agreement (NAFTA).
*** Economic Science Has Been Hijacked – Alice Salles
In Principles of Economics, Carl Menger corrected the theoretical mistakes made by the old classical school. At the time, the founder of the Austrian school of economics seemed to want to make economics accessible to everyday people, which may explain why he exemplified the nature of economic value in his book, making sure readers understood that economics revolves around the actions of individuals.
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.