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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European Government Expansion Did Not Expand the Job Markets – Daniel Lacalle
15 februari
For the past two years, governments in the European Union have engaged in contradictory actions by both suppressing economic growth through lockdowns and other covid-19 restrictions and simultaneously trying to “stimulate” their economies through monetary expansion by the European Central Bank. The results, not surprisingly, have fallen far short of hopes and expectations by central bankers.
The unemployment rate in the euro area fell to 7 percent in December and 6.4 percent in the European Union, compared to the rate of unemployment in the United States of 3.9 percent. However, these unemployment rates do not include furloughed jobs covered by unemployment retention schemes, which account for another five million workers waiting to return to normal activity.
After a fiscal stimulus plan of more than 5 percent of gross domestic product (GDP) in 2020 and another 4 percent in 2021 and the European Central Bank purchasing 100 percent of net issuances from most sovereign debt instruments, the recovery is very weak. Furloughed jobs are rising again, working hours are still below the prepandemic level, and real wages are falling as inflation eats into gains made during the recovery.
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***Juggling Sticks of Dynamite: Our Fatally Distorted Sense of Risk – Charles Hugh Smith
16 februari
So when the gambler ends up juggling lit sticks of dynamite, he’s confident nothing bad can happen because nothing bad has ever happened, no matter how much risk he takes on.
The problem with constantly being saved from the consequences of our actions is this fatally distorts our sense of risk. The foundation of the ability to accurately assess risk is the experience of real-world consequences: hardship and losses.
If you are sloppy about positioning the ladder securely, the ladder falls and so do you. If you survive the fall, you’ve learned that risk is real and that precautions must be taken to minimize risk. Precaution requires thinking through all the components of risk and taking steps to remediate or avoid each specific source of risk.
If you’ve never really been pushed to your limit of endurance, you lack the experience needed to realize you’re dehydrated and in danger of succumbing to heat stroke. So when you run out of water on a shadeless climb exposed to the blazing sun, you fall into magical thinking: if we just push on, push harder, power through this, then we’ll be fine. But powering on is the worst possible choice, and so the inexperienced hiker passes out and expires.
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What are Vacant Office Towers Worth? Foreclosure Sales Show How Values of 1980s Office Towers in Houston Have Collapsed, Dishing out Huge Losses for CMBS – Wolf Richter
17 februari
The loans were securitized into CMBS in 2014. From hype to heck in 7 years. Other markets with office busts have something to stew over.
We’re now seeing some of the results of the Houston office bust percolate through Commercial Mortgage Backed Securities (CMBS). Houston’s office market got hit by a triple-whammy.
First there was an office construction boom riding on high oil prices. Then there was the collapse of high oil prices – WTI plunged from over $100 a barrel in mid-2014 to about $25 a barrel in 2016 – that sent a slew of oil-and-gas companies into bankruptcy and caused an industry-wide wave of layoffs, including of office workers, cost cutting, and debt restructuring. Then came working from home, which reduced the need for office space further.
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Money and Savings Are Not the Same Thing – Frank Shostak
16 februari
In the National Income and Product Accounts (NIPA), savings are established as the difference between disposable money income and monetary outlays. Disposable income is defined as the summation of all personal money income less tax payments to the government. Personal income includes wages and salaries, transfer payments, income from interest and dividends, and rental income.
The NIPA framework is based on the Keynesian view that spending by one individual becomes part of the income of another individual. The spending of the purchaser is the income of the seller. From this, it follows that spending equals income.
So if people maintain their spending, this keeps overall income coming in. Now, an increase in the supply of money affects the total amount of money spent. Consequently, the greater the expansion in the money supply, all other things being equal, the more money is going to be spent and therefore the greater the national income is going to be. Therefore, for a given outlay, an increase in money supply will result in an increase in savings.
Note again that in the NIPA’s framework increases in the money supply are an important factor in savings increases. However, does it make sense that increases in the money supply are associated with increases in savings? If this is so, then the central bank can be seen as instrumental to savings formation. Savings are not about money but about the consumer goods that are required to support individuals’ lives and well-being.
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***Inequalities in student to degree match – Stuart Campbell, Lindsey Macmillan, Richard Murphy, Gill Wyness
13 februari
Many governments have tried to increase the number of young people attending university, raising the question of how well ‘matched’ students are to their degrees. This column follows an entire cohort of 140,000 students in the UK from school to university to discover the types of students that tend to ‘undermatch’. Students with a lower socioeconomic status background are more likely to be undermatched to their degrees both academically and in terms of earnings potential, and women are more likely to undermatch than men when it comes to earnings potential.
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Who Bought the $6.5 Trillion in Treasuries Piled on the Incredibly Spiking US Debt in 22 Months? Who Holds the $30 Trillion? – Wolf Richter
17 februari
The question is particularly hot because Treasuries are now ugly instruments with the worst punishment yields ever.
In face of the incredibly spiking US gross national debt that just hit $30 trillion after having spiked by a mind-boggling $6.5 trillion since March 2020, the steamy-hot question is this: Who the heck is buying and holding all these Treasury securities?
The question is particularly hot because these are very unattractive instruments: Yields are still well below 1% for most short-term Treasury bills, and even the 10-year Treasury maturity yields only around 2%, while CPI inflation has blasted off and hit 7.5%, creating the worst punishment yields ever. To top it off, the most reckless Fed ever is still repressing interest rates and is still, though at a much slower pace, printing money.
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The European Central Bank Is Trapped Like the Fed – André Marques
19 februari
The eurozone’s annual price inflation rate hit 5 percent in December 2021 and (as of this writing) the consensus is for 5.1 percent in January 2022. Eurozone industrial producer prices were up 26.2 percent in 2021.
This has been pressuring the European Central Bank (ECB) to adopt a tight monetary policy (or at least a less loose one). On February 3, the ECB announced its monetary policy decisions regarding the Pandemic Emergency Purchase Program (PEPP) and the Asset Purchase Program (APP), its asset purchase programs, and interest rates, with no major changes compared to the previous announcement in December.
In the Q1 2022, the ECB intends to carry out net asset purchases through the PEPP at a slower pace than in Q4 2021 and should discontinue net asset purchases at the end of March 2022.
The Governing Council (the equivalent of the Fed’s Federal Open Market Committee) stated that under conditions of economic stress, flexibility will remain an element of monetary policy whenever there are threats to the ECB’s monetary policy objective—the “symmetric” price inflation target of 2 percent. For example, in the event of a pandemic-related market complication, PEPP reinvestments can be flexibly adjusted over time. This adjustment could include purchases of Greek government bonds over and above redemption rollovers in order to avoid an interruption of purchases, which could be detrimental to the Greek economy. Net purchases under the PEPP can also be resumed to counteract negative shocks related to the pandemic if necessary.
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Drowning in paperwork – John H. Cochrane
18 februari
The US, and New York State in particular, are embarked on a decarbonization agenda. Canada has a lot of hydropower to spare, which emits no CO2. (Though large hydropower is rather hilariously not deemed “renewable” by California, among others.) All we need is a big extension cord from Canada down to NYC, and we can save the climate, right? How long can that take?
More than 17 years, as The Wall Street Journal reports.
By late 2025, a 339-mile high-voltage transmission line is expected to deliver enough hydropower from Quebec’s remote forests to supply about 20% of New York City’s needs. The first electricity will finally flow 17 years after developers set out to bury a power line along the bottoms of Lake Champlain and the Hudson River, assuming they clear one last regulatory hurdle and encounter no further challenges.
Well, I’m glad climate is not a “crisis,” “emergency” or “catastrophe” needing quick attention.
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The Covid Panic Brought Even More Economic Zombification – Daniel Fernández Méndez
14 februari
More and more economists and finance specialists are warning of the potential arrival of a new “Minsky moment.” The last time this term was used with such conviction was in 2008 at the onset of the Great Recession. It seems that 2021–22 could have some parallels with the world’s last severe recession.
Up to now, the twenty-first century could be called the century of debt, and if things continue the way they are, it could well be called the century of the great debt default. At the beginning of the century, the extremely low interest rates promoted by central banks in practically the entire developed world caused a frenzy of private credit creation and a gigantic financial and real estate bubble that exploded in 2008 with dire consequences for the world economy.
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Let’s Talk “Fed Policy Error,” Pushers and Addiction – Charles Hugh Smith
14 februari
Addiction is deadly, and no amount of artifice can obscure that this monetary addiction and collapse is the result of one Pusher: the Federal Reserve.
To talk about the Federal Reserve raising rates and reducing “easing” as a policy error is like saying the fentanyl addict who reduces his daily dose is making a policy error. In today’s absurd extreme of denial, pundits never talk about starting the addiction as a policy error; only ending the addiction is a policy error.
In other words, that the American economy is addicted to monetary smack is just fine; it’s the withdrawal from addiction that terrifies all the addicts. The financial punditry is beside itself with terror at the prospect that the staggering amount of monetary fentanyl being injected into the addiction-addled financial system might decline a tiny bit; oh please, Mr. Pusher (the Fed), give us a bit more smack every day, every week, every month, so we can feel the wonderful high of asset bubbles forever and ever.
Alas, just as the addict’s shattered body eventually gives out as the Pusher increases the daily dose, the American economy is collapsing under the addiction stoked by the system’s Pusher, the Federal Reserve. Whether the system is nominally “capitalist,” “socialist” or “theocratic,” capital must earn a yield above the rate of inflation.
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Optimal minimum wages – Gabriel Ahlfeldt, Duncan Roth, Tobias Seidel
16 februari
Ambitious minimum wages of 60% or more of the national mean wage are currently being debated in many countries. This column discusses the trade-off policymakers face when setting minimum wages. A quantitative spatial general equilibrium model predicts that the welfare-maximising minimum wage is higher than the employment-maximising minimum wage. Beyond 50% of the mean wage, increases in the minimum wage reduce employment at an increasing rate. Therefore, the optimal minimum wage depends on the social welfare function.
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The New Antieconomics – Jeff Deist
16 februari
Economics is about human action and choice within the context of scarcity. The problem facing economists is how to understand and explain human betterment, which is another way of saying production. The critical question, posed correctly by economist Per Bylund, starts with scarcity as the default point for understanding purposive human behavior.
Antieconomics, by contrast, starts with abundance and works backward. It emphasizes redistribution, not production, as its central focus. At the heart of any antieconomics is a positivist worldview, the assumption that individuals and economies can be commanded by legislative fiat. Markets, which happen without centralized organization, give way to planning in the same way common law gives way to statutory law. This view is especially prevalent among left intellectuals, who view economics not as a science at all, but rather a pseudointellectual exercise to justify capital and wealthy business interests.
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More infrastructure snafu – John H. Cochrnne
19 februari
Just as I hit publish on my last post, the Wall Street Journal publishes a much better essay by Ted Nordhaus on the impossibility of building infrastructure in the US, even if it is green alternative energy climate-change infrastructure.
In Nevada’s Black Rock Desert, local environmentalists and devotees of the Burning Man festival are using the National Environmental Policy Act (NEPA) to oppose a geothermal energy plant. Further south, the Sierra Club has joined with all-terrain vehicle enthusiasts to stop development of what would be the nation’s largest solar farm, which it says threatens endangered tortoises. … proposals to develop wind energy in American coastal regions have also faced a constant barrage of NEPA and Endangered Species Act (ESA) lawsuits designed to stop them.
The Nantucket wind farms are the classic example. Wind farms, yes, but not if it spoils the view of uber-wealthy greens. Sue! On whale-disturbance grounds.
…In California, environmentalists have used a state law designed to protect fish eggs as a pretext to close the Diablo Canyon Nuclear Power Plant, the state’s largest source of clean energy, while the California Environmental Quality Act has hobbled efforts to build both high-speed rail and high-voltage transmission lines that the state is counting on to meet its climate commitments. ..over the last decade, the U.S. hasn’t constructed a single major new transmission line.
High speed rail, billions over budget, the prize of the 2009 shovel-ready stimulus programs, has not laid a single mile of track. It will probably be ready at gold-plated cost, just as the last car and truck on I-5 is electric.
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Financial education is effective and efficient – Tim Kaiser, Annamaria Lusardi, Lukas Menkhoff, Carly Urban
17 februari
Financial education programmes are sometimes dismissed by critics claiming ‘mixed evidence’ on their effectiveness. This column analyses a full set of available randomised controlled trials evaluating the causal impact of financial education around the world to show that this claim is misleading. Financial education is effective in improving both knowledge and behaviour, even adjusting for publication selection bias. Moreover, available estimates indicate these improvements come at relatively low costs.
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Now on the Fed’s Table: Sell Bonds Outright to Push Up Long-Term Yields, Steepen the Yield Curve, and Get Rid of MBS – Wolf Richter
14 februari
“It could be a bumpy time”: Kansas City Fed President.
Quantitative Tightening, the opposite of QE, is now part of the Fed’s plan. Likely to start this year, it’s going to be more and faster than last time, according to the last FOMC meeting: The Fed would be “significantly reducing” the assets on its balance sheet, and over the longer term get rid of its $2.66 trillion in mortgage-backed securities (MBS). The rhetoric has focused on just letting maturing securities roll off the balance sheet without replacement.
Turns out there is a discussion underway at the Fed to sell securities outright in order to steepen the yield curve and get rid of the MBS entirely – unlike during the last episode of QT in 2017-2019, when the Fed just let maturing securities roll off passively.
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***Female time use and structural transformation in Africa – Taryn Dinkelman, Liwa Rachel Ngai
17 februari
The entry of women into the labour force is central to the ongoing structural transformation of African economies. This column uses detailed time-use data to document the scale and nature of female participation in both unpaid work in the home and paid work in the market. While female labour force participation is high, most hours continue to be worked in the home, on tasks such as cooking and cleaning, rather than in the market. This suggests an important role for policy to address both technological and cultural barriers to paid market work for women.
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Should Government Be Your Stockbroker? Maybe So, Says Bloomberg – Joakim Book
17 februari
The government and its supporting lackeys would like us to believe they are our knights in shining armor protecting us against the unexpected evils of the world. We supposedly can trust that they’ll show up and keep us safe.
If the food we eat doesn’t qualify for the well-intended and carefully balanced (i.e., politically infested and poorly researched) “Dietary Guidelines for Americans” put out by the US Department of Agriculture, they gladly tax and subsidize our food until it does. We have popular magazines publishing obnoxious and error-prone information about how meat hurts us and how saturated fat causes heart disease. There are schools instigating corrupting campaigns to strip away even the little nutritious food they may once have served—and then the chattering classes celebrate it. All while we pave the way for, in Saifedean Ammous’s words from The Fiat Standard, the “high-margin, nutrient-light industrial sludge” that is vegetable oil, corn, and refined sugar.
If the fuels we use to drive our cars around, heat our homes, or power our devices don’t live up to the newest climate-obsessed fads, our kind Don Quixotes mandate that you replace them with fuels that don’t work, overload and underpower our electricity grids, and, of course, place heavy taxes and regulatory obstacles on things which they don’t like. They are, you see, here to look after our best interests—a task we are wholly incapable of doing on our own.
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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.

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