Economische aanraders: 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.

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Credit-Card Debt Slaves Move to Top of Fed’s Bank Worries – Wolf Richter
23 juni
Projected losses at the top 34 banks in a “severely adverse scenario.”
The comforting news in the results from the Federal Reserve’s annual stress test is that the largest 34 bank holding companies would all survive a recession.
Based on this glorious accomplishment, the clamoring has already started for regulators to allow these banks to pay bigger dividends and to blow more money on share buybacks, and for these regulators to slash regulation on these banks and make their life easier and riskier in general. We don’t want these banks to survive a recession in too good a condition apparently.
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Price manipulation in the Bitcoin ecosystem – Neil Gandal, JT Hamrick, Tyler Moore, Tali Oberman
22 juni
The cryptocurrency Bitcoin has attracted widespread interest, in large part due to wild swings in its valuation. This column considers an earlier rise in the Bitcoin price to investigate what is driving the currency’s price spikes. The 2013 rise was caused by fraudulent trades taking place at the largest Bitcoin currency exchange at the time. This finding has implications for policymakers as they weigh what, if anything, to do about regulating cryptocurrencies in light of the record high Bitcoin valuation that many fear is a bubble.
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Waiting for Godot or Does Anyone Really Know What Is Going on with Eurozone Banks? – Yves Smith, Michael J. Schussele
21 juni
Yves here. Another sighting on the sorry state of Eurozone banks. Keep in mind that the Eurozone banking system is a prescription for bank runs, although they have mainly been the slow motion kind. First, the deposit guarantee schemes are national, not Eurozone-wide, and are typically very much underfunded. Second, even before the January 2016 effective date of the Bank Recovery and Resolution Directive, the Eurozone had made clear its fondness for bail-ins via the ones it forces on the two biggest banks in Cyprus in 2013, as well as encouraging banks to issue “co-co” bonds, as in bonds that were convertible into equity in a crisis. Their performance when Deutsche Bank looked wobbly in late 2016 confirmed what a bad idea they were.
Moreover, the predilection of bank regulators in Europe is to keep visibly sick banks functioning, which also encourages deposit flight. The extreme example was Greek banks, which were clearly bust but the ECB continued to deem solvent so as to provide support under Target2. That meant the authorities could put the banks under at any time by yanking the drip feed. Not a place anyone who feels exposed and has options would like to be in.
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The EU Macroeconomic Imbalance Procedure: Some impact and no sanctions – Jean-Charles Bricongne, Alessandro Turrini
22 juni
Since 2011, EU macroeconomic surveillance has aimed at preventing or correcting the type of imbalances that were responsible for the Global Crisis. Surveillance under the Macroeconomic Imbalance Procedure implies regular reports and policy recommendations monitored by the Commission, and the possible activation of economic sanctions. This column shows that, despite the procedure not having been used to its full extent so far and the sanctions stage not having been reached yet, the surveillance and recommendations have had an impact on policies in the first years of implementation.
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Rising Wages Scare the Fed: “We Need to Get on with This” – Wolf Richter
21 juni
QE-Unwind may start in September.
“We need to get on with this,” said Philadelphia Fed President Patrick Harker, a voting member of the policy-setting Federal Open Market Committee. He was talking about the Fed’s plan, detailed at the last meeting, to unwind QE. A possible moment to begin the process, he said, is the meeting in September.
His reasons: Complaints by his business contacts about rising wages.
Rising wages – regardless of what Fed Chair Yellen says publicly to soothe the nerves of the many underpaid workers – set off alarm bells at the Fed and push it into action. Not that all wages are rising. But average wages are rising faster than inflation, and in a number of sectors there are significant wage pressures. Businesses gripe. The Fed listens.
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Why The Next Recession Will Morph into a Decades Long Depressionary Event…Or Worse – Chris Hamilton
19 juni
Economists spend inordinate time gauging the business cycle that they believe drives the US economy. However, the real engine running in the background (and nearly entirely forgotten) is the population cycle. The positive population cycle is such a long running macro trend thousands of years in the offing that it’s taken for granted. It is wrongly assumed that upon every business cycle downturn, accommodative monetary and fiscal policies will ultimately spur greater demand and restart the business cycle once the excess capacity and inventories are drawn down. However, I contend that the population cycle has been the primary factor in ending each recession…and this most macro of cycles is now rolling over. Without this, America (nor the world) will truly emerge from the next recession…instead it will morph into an unending downward cycle of partial recoveries…contrary to all contemporary human experience.
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The optimal inflation rate – John H. Cochrane
21 juni
Anthony Diercks has a very useful review of the the academic literature on the question, what is the optimal inflation rate? He includes 150 papers, ordered from low to high inflation.
Broadly speaking, we start with the Friedman result that the optimal nominal interest rate is zero, so the optimal inflation rate is the negative of the real rate of interest. The optimal nominal interest rate is zero, so people feel no incentive to economize on money holdings, or devote effort to cash management, paying bills late and collecting early. Many sticky price models suggest an optimal inflation rate of zero, so you don’t have to change sticky prices. Then,
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After Brexit: Germany and the EU Will Look to Asia – Alasdair Macleod
19 juni
Britain’s general election went horribly wrong, with the Conservatives forced into a putative coalition with the Democratic Ulster Party. Theresa May’s failure to secure a clear majority has provoked indignation, bitterness, and widespread pessimism. The purpose of this article is not to contribute to this outcry, but to take a more measured view of the situation faced by the British government with regards to Brexit, and the consequences for Europe. In the interests of an international readership, this article will only summarise briefly the current situation in the UK before looking at the broader European and geopolitical consequences.
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Financial constraints and nominal rigidities – Almut Balleer, Nikolay Hristov, Dominik Menno
24 juni
Research into the aggregate effects of financial frictions in the economy generally assume that they do not affect whether (and which) firms adjust prices, something this column argues that should be taken into account. In particular, financial frictions change the composition of firms that reset prices and cause the degree of nominal price rigidity to vary over the business cycle, which has important consequences for how inflation and output respond to aggregate shocks.
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***German Politicians Hammer the ECB, But Only to Get Votes – Don Quijones
18 juni
These days it’s easy to tell when general elections are approaching in Germany: members of the ruling government begin bewailing, in perfect unison, the ECB’s ultra-loose monetary policy. Leading the charge this time was Finance Minister Wolfgang Schaeuble, who on Tuesday urged the ECB to change its policy “in a timely manner”, warning that very low interest rates had caused problems in “some parts of the world.”
Werner Bahlsen, the head of the economic council of Merkel’s CDU conservatives, was next to take the baton. “The ongoing purchase of government bonds has already cost the European project a great deal of credibility and has damaged it,” he said. “The ECB can only regain trust with the return to a sound monetary policy.”
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***What Is the Market Telling Us? – Charles Hugh Smith
20 juni
The entire global economy now depends on this stripped-of-information “market” for its stability.
Ho-hum, another day, another record high in the S&P 500 (SPX). What is this market telling us? If you’re long, the market is screaming “you’re a genius!”:
But other than that, what else is the market telling us? Is it telling us anything about the real-world economy and the open market for equities based in that real-world economy?
Before we can answer “what is the market telling us?” we must first ask, “what can the market tell us?” That is, what is the current market capable of communicating?
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W. Arthur Lewis and the tradeoffs of economics and economists – Ravi Kanbur
25 juni
Political economy discourses in areas such as the nature of market failure, the case for government intervention on grounds of efficiency and equity, and the interplay between economic and political forces have run for generations. This column provides an overview of the life of Nobel Prize-winning economist W Arthur Lewis, who was a critic of laissez-faire economic policies, but who also acted as a check on extreme statist interventions, arguing against heavy state subsidy to industry on purely economic grounds.
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Reis on the state of macro – John H Cochrane
20 juni
Ricardo Reis has an excellent essay on the state of macroeconomics. “Is something really wrong with macroeconomics?”

In substantive debates about actual economic policies, it is frustrating to have good economic thinking on macro topics being dismissed with a four-letter insult: it is a DSGE. It is worrying to see the practice of rigorously stating logic in precise mathematical terms described as a flaw instead of a virtue. It is perplexing to read arguments being boxed into macroeconomic theory (bad) as opposed to microeconomic empirical work (good), as if there was such a strong distinction. It is dangerous to see public grant awards become strictly tied to some methodological directions to deal with the crisis in macroeconomics.

There have been lots of essays lately bemoaning the state of macroeconomics. Most of these essays are written by people not actively involved in research, or by older members of the profession who seem tired when faced with the difficulty of understanding what the young whippersnappers are up to, or by economic journalists who don’t really understand the models they are criticizing. I am old enough to feel this temptation and have to fight it.

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***Draghi Doesn’t See “Bubbles” — Let Me Show You Some – Daniel Lacalle
23 juni
Mario Draghi has again missed an exceptional opportunity to adjust monetary policy. By ignoring the huge risks that are being created from the brutal inflation of financial assets, saying that “there are no signs of a bubble,” the European Central Bank (ECB) remains adamantly focused on creating inflation by decree, denying the effects of technology, demography, and overcapacity.
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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.