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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We’ve Entered an Era of Rising Instability and Uncertainty – Charles Hugh Smith
18 juli
And there you have our future, visible in the 13th, 16th and 18th century price-revolution waves which preceded ours.
That we have entered an era of rising instability and uncertainty is self-evident. There will always be areas of instability in any era, but instability and uncertainty are now the norm globally.
There is a template for global instability, one that has been repeated throughout history. Historian David Hackett Fischer described the dynamics that generate periods of rising instability in his book The Great Wave: Price Revolutions and the Rhythm of History (sent to me a number of years ago by correspondent Cheryl A.)
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Why A Brexit Crisis Is Not A Bust – Carmen Elena Dorobăț
21 juli
A recent survey of UK firms conducted by Deloitte has revealed that the referendum decision to leave the EU has battered business confidence, as “82 percent of chief financial officers from FTSE 350 and large private companies expect to cut capital spending in the next year, the biggest proportion on record.” The accountancy firm’s warnings of the expected economic downturn have reignited the push for further interest rate cuts. The Bank of England—although its own monthly report rather contradicts the findings of the Deloitte survey—is now nevertheless preparing for a “material easing of policy… [in August] to help cushion the expected slowdown.” It is not surprising that central banks would jump on any opportunity to further extend their mandate and play the role of market maker of first resort, intervening into the market at the slightest sign of trouble. But in this particular case, the BoE would be responding to an event that, in itself, could never bring about a business cycle.
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***US Credit Conditions Drop to Worst Level since Q3 2009, Markets Soar – Wolf Richter
20 juli
You wouldn’t know it from the boom in stocks that hit new highs after tottering for over a year, and from the surge in junk bonds, even the riskiest ones, whose prices have soared and whose yields have plunged: At the riskiest end of the spectrum, the average yield of CCC-and-below rated junk bonds went from 21.5% on February 12 to 14.2% now, as if all credit problems, defaults, and bankruptcies had suddenly disappeared after the latest Fed flip-flop or whatever.
But in reality, companies are buckling under their load of debts in an environment of slack demand and declining sales. The Standard & Poor’s default rate has been rising relentlessly, and in June, following a number of new defaults, hit 4.3%, the highest rate since the Financial Crisis.
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Creditor participation clauses: Making orderly sovereign debt restructuring feasible in the Eurozone – Jochen Andritzky, Lars Feld, Christoph Schmidt, Isabel Schnabel, Volker Wieland
21 juli
To make the no-bailout clause credible and to enhance the effectiveness of crisis assistance, private creditors should contribute to crisis resolution in the Eurozone. This column proposes a mechanism to allow for orderly restructuring of sovereign debt as part of ESM programmes. If debt exceeds certain thresholds, the mechanism triggers an immediate maturity extension. In a second stage, a deeper debt restructuring could follow, depending on the solvency of a country. The mechanism could be easily implemented by amending ESM guidelines.
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Don’t Reform the Fed: Exit the Fed – Ron Paul
18 juli
Opponents of a central bank should take advantage of the post-Brexit vote revival of secessionist sentiments to promote a secession from central banking, or “Fed-exit.” Ending the Federal Reserve’s monopoly on money is the key to restoring and maintaining our liberty and prosperity.
By manipulating the money supply to fix interest rates, the Federal Reserve engages in price fixing. After all, interest rates are nothing more than the price of money. Like all prices, they communicate information about economic conditions to market actors. Federal Reserve attempts to override the market rate of interest with a Fed-favored rate distort the price signals sent to businesses, investors, and consumers. The result of this distortion is a Fed-created boom, followed by a Fed-created bust.
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America Needs a Good, Old-Fashioned Economic Depression – Jay Zawatsky
21 juli
Describing what he called the “crack-up boom,” Ludwig von Mises, the great Austrian economist, said:
The boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation — which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system.
Or the banks stop before this point is reached, voluntarily renounce further credit expansion, and thus bring about the crisis. The depression follows in both instances. (emphasis added)
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Another Nail in the Brexit Fantasy Coffin: Germany’s Car Makers Are Not Cowed – Yves Smith
22 juli
One argument that surfaces regularly in the comment section, and echoes views voiced often by British pundits and politicians, is that the UK has considerable bargaining leverage against the EU because the EU won’t want to lose access to UK demand. The example routinely cited is the auto industry, that Germany can’t possibly stand the loss.
We’ve argued against that regularly because, among other things, many of the “exports” to the UK are in fact intermediate parts where the UK provides additional value added or final assembly for goods that will be sold in Europe. The reason for locating production in the UK is that it is still in the EU, but it has more permissive labor laws than other EU members.
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***Global Trade meets ugly reality – Wolf Richter
22 juli
Something funny happened when I didn’t look: the global trade numbers were adjusted down. By a lot. The post-Financial Crisis recovery in trade is suddenly a heck of a lot less vibrant than it looked. And it has completely stalled out over the past two years.
The CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs, just released its Merchandise World Trade Monitor for May. It was, in its own right, not very uplifting.
World trade volume shrank 0.4% in May, after shrinking 0.3% in April. The index fell to 133.0, the lowest level since May 2015. It’s back where it had first been in September 2014.
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Japanese industrial cluster policy and inter-firm transaction networks – Toshihiro Okubo, Tetsuji Okazaki, Eiichi Tomiura
19 juli
In the context of increased global trade and accompanying competition, firms are increasingly engaged in industrial clusters. This column uses firm-level transaction data to analyse the impact of firms’ relationships with financial institutions on their networking within clusters. Firms participating in government-supported cluster programmes increase their transaction networks significantly faster than those not in clusters. The column also finds that firms with expanding networks are mainly financed by regional banks, not national or global ones.
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***Was the Financial Crisis Anticipated? – Ozlem Akin, José M Marín, José-Luis Peydró
21 juli
Banking crises are recurrent phenomena that often trigger deep and long-lasting recessions with enormous economic and political costs. Yet the empirical evidence is now overwhelming that banking crises do not come as bolts from the blue – they come after periods of strong bank credit growth and risk-taking, often associated with real-estate bubbles. The crisis of 2008 was no different: it is clear that banks took on more and more risk as bubbles swelled in many countries.
A key research question is why banks take such excessive risks. Many defenders of finance in the recent crisis suggest that the giant institutions were really taken by surprise when the bubble popped. Otherwise, runs the argument, why wouldn’t they have sold off all the junk? The implication of this “behavioral” view is that banks take on high risks because, for example, they neglect unlikely tail risks and have over-optimistic beliefs about the economy.
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An econophysics perspective of trade liberalisation – Yuichi Ikeda, Hideaki Aoyama, Hiroshi Iyetomi, Takayuki Mizuno, Takaaki Ohnishi, Sakamoto Yohei , Tsutomu Watanabe
22 juli
Econophysics is an emerging field applying theories and methods from physics to economic problems and data. This column explores the collective motions of trade and the effects of trade liberalisation, using global data from the past two decades. Econophysics methods reveal how business cycles synchronise, and how economic risk propagates throughout the global economic network. The results also highlight inherent problems of structural controllability that are induced during economic crises.
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Here’s What’s so Crazy about this Stock Market – Wolf Richter
20 juli
Microsoft, one of the aging tech elephants out there big enough to move the needle, had beaten analysts’ estimates, and markets were ecstatic.
Tuesday evening, CNBC raved that Microsoft reported quarterly earnings and revenue “that easily topped analysts’ expectations, as its key cloud product, Azure, saw revenue grow 102%.”
On Yahoo Finance, we read, “Microsoft crushes on earnings and revenue, stock pops.” And there’s some detail about the part that performed miracles in the quarter:
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Wage inequality: The spatial dimension – Erling Barth, Alex Bryson, James Davis, Richard Freeman
18 juli
Income inequality has risen throughout the advanced world. Various explanations have been suggested for this, but these tend to focus on who you are. This column shifts the focus to where you work. Data from the US reveal that over the period 1992-2007, two-thirds of the rise in earnings dispersion was due to increased variation across establishments. Moreover, almost 80% of the increase in earnings dispersion among workers who remained at the same establishment from year to year was due to a widening of wages across establishments rather than within establishments.
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Britain’s Minimum Wage Short-Changes Young Workers – Chris Shaw
21 juli
The national minimum wage introduced in 1999 by the Blair government was seen as one of the best policies to tackle exploitative work and the conditions of low pay. What better than to create a floor under which no one can fall? Well it seems that floor was not so stable, as young people have borne the brunt of this misguided policy. Effects as serious as rising youth unemployment, significant underemployment and a range of masking effects have led to a situation of under-saturated labour markets and the continual need for young adults to seek other activities such as university education and government-based training schemes, or simply drop out of the labour market altogether. It has also had the effect of de-skilling young people and making them reliant on the welfare state and low-skill, low-pay employment through Jobcentres and Jobseekers Allowance schemes.
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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.