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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How a Fragile Euro May Not Survive the Next Crisis – Brendan Brown
23 november
A big US monetary inflation bang brought the euro into existence. Here’s a prediction: It’s death will occur in response to a different type of US monetary bang — the sudden emergence of a “deflationary interlude.” And this could come sooner than many expect.
The explanation of this sphynx-like puzzle starts with Paul Volcker’s abandonment of the road to sound money in 1985/6. The defining moment came when the then Fed Chief joined with President Reagan’s new Treasury Secretary, James Baker, in a campaign to devalue the dollar. The so-called “Plaza Accord” of 1985 launched the offensive.
Volcker, the once notorious devaluation warrior of the Nixon Administration (as its Treasury under-secretary), never changed his spots, seeing large US trade deficits as dangerous. The alternative diagnosis — that in the early mid-1980s these were a transitory counterpart to increased US economic dynamism and a resurgent global demand for a now apparently hard dollar — just did not register with this top official.
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Pockets of risk in European housing markets – Jane Kelly, Julia Le Blanc, Reamonn Lydon
25 november
Loan-to-value limits and other borrower-based macroprudential measures are now used in two-thirds of advanced economies. This column uses survey data to document changes in credit standards in a cross-section of countries in the run-up to, and aftermath of, the financial crisis. There is clear evidence of laxer credit standards in countries that experienced a real estate boom-bust, and a significant tightening after the bust. The results imply that compared to earlier years, younger and lower-income borrowers have to save for longer before buying.
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Credit “Death Spiral” Begins As Loan ETF Sees Massive Outflows, Liquidates Quality Paper – Tyler Durden
23 november
One week after even the IMF joined the chorus of warnings sounding the alarm over the unconstrained, unregulated growth of leveraged loans, and which as of November included the Fed, BIS, JPMorgan, Guggenheim, Jeff Gundlach, Howard Marks and countless others, it appears that investors have finally also joined the bandwagon and are now fleeing an ETF tracking an index of low-grade debt as credit spreads blow out and cracks appear across virtually all credit products.
Not only has the $6.4 billion BKLN Senior Loan ETF seen seven straight days of outflows, with investors pulling $129 million on Wednesday alone and reducing the fund’s assets by 2% to the lowest level in more than two years, but over 800 million has been pulled in last current month, the biggest monthly outflow ever as investors are packing it in.
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The ECB’s measures of underlying inflation for the euro area – Christiane Nickel, Derry O’Brien
20 november
Just like other central banks, the ECB generally monitors a range of measures of underlying inflation to help distinguish noise from signal in headline inflation. This column describes measures of underlying inflation that are routinely used at the ECB for measuring euro area headline inflation and provides some insights on their interpretation. Each of the measures has merits and shortcomings and they should be taken together in arriving at a first-pass assessment of developments in headline inflation. At the same time, the measures need to be complemented by a more structural examination of their driving forces in order to better understand the inflation process.
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Why I Think this Sell-Off is Just One Step in Methodical Unwind of Stock Prices – Wolf Richter
23 november
One after the other, individual stocks are getting crushed.
It was an ugly Monday and Tuesday followed by a Wednesday that at first look like a real bounce but ended with the indices giving up their gains. This was followed, mercifully, by Thursday when markets were closed, which was followed unmercifully by Friday, during which the whole schmear came unglued again.
The S&P 500 index dropped 0.7% on Friday to 2,632 and 3.8% for Thanksgiving week, though this week is usually – by calendar black-magic – a good week, according to the Wall Street Journal: During Thanksgiving weeks going back a decade, the S&P 500 rose on average 1.3%.
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A Rising Money Supply Doesn’t Necessarily Lead to Rising Prices – Frank Shostak
24 november
According to many mainstream economists, a lack of good correlation between the monetary growth and the growth rate of various price indexes casts doubt on the commonly held view that the key source of inflation is increases in money supply.
It is also argued that before the 1990, the relationship between money supply and inflation was positively correlated. However, from 1990 onwards in the US and other major economies this correlation ceased to exist.
Some commentators have concluded that while in the past the increase in money supply had an effect on inflation this is not the case at present.
We suggest that the lack of correlation between the growth rate of money supply and the inflation rate does not prove that money has nothing to do with inflation.
The main issue here is not about the strength of the statistical correlation but about the definition of what inflation is all about.
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Financial supervisory architecture since the Global Crisis: Supervisory models remain diverse, but more powers for central banks – Daniel Calvo, Juan Carlos Crisanto, Stefan Hohl
23 november
A well designed financial supervisory architecture is essential for the effective functioning of any financial system. Using a survey of 82 jurisdictions, this column describes the state of financial supervisory models around the world and highlights the key institutional changes after the Global Crisis. It finds that the prevailing financial supervisory model continues to be sectoral, but that there have been incremental but important changes within existing models. Central banks have acquired more financial oversight responsibilities after the Global Crisis, and many jurisdictions have enhanced or are in the process of enhancing their consumer/investor protection supervision.
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No! Falling Crude Oil Prices Are Not Good For Emerging Markets Like India – Ritesh Jain
23 november
Indian media and Portfolio managers always like to spin a bullish story and the current bullishness stems from the collapse in oil price. Afterall rising oil prices for a country which imports almost all of its oil requirement is bad for discretionary consumption and its currency . Conversely, lower oil prices are good for the Indian economy as trade deficit comes down giving stability to the currency,retail oil prices come down giving breathing space to household budgets. But Nedbank breaks this Myth and their strategist Mehul Daya and Neels Heyneke writes …”Many market commentators are indicating that it is time to look for a bottom in the relative performance between EMs and DMs. History, as a guide, suggests that EM vs DM performance is still way above the 1988 and 1998 lows ( in short the bottom is far off)
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***Mining Sector in Mexico Next Target of “AMLO Effect,” Shares Plunge – Don Quijones
23 november
Mexico is #1 silver producer in the world, #2 gold producer in Latin America, and a major copper producer.
For a president who hasn’t taken office yet and whose government is still in waiting, Mexico’s Andres Manual Lopez Obrador (AMLO) has managed to ruffle a lot of very important feathers. First, he scrapped the country’s most lucrative infrastructure project, a partly built airport for the capital that was expected to generate billions of dollars for many of the country’s richest companies, banks and families. Then, two weeks ago, his National Regeneration Movement (MORENA) party proposed a bill that directly threatens one of the banks’ core businesses: fee gouging. Since then, billions of dollars have been wiped off the banks’ market value.
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Does the Market Need a Heimlich Maneuver? – Charles Hugh Smith
21 november
For all we know, the panic selling is Wall Street’s way of forcing the Fed’s hand: stop with the rates increases already or Mr. Market expires.
Markets everywhere are gagging on something: they’re sagging, crashing, imploding, blowing up, dropping and generally exhibiting signs of distress.
Does the market need a Heimlich Maneuver? Is there some way to expel whatever’s choking the market?
So what’s choking the market? There are a number of possibilities: somewhere near the top of most observers’ lists are: rising interest rates, weakening credit growth in China, the slowing of China’s economy, trade wars, European uncertainties, currently centered around Italy but by no means restricted to Italy, Japan’s slowing economy, an over-supply of oil, the rolling over of global real estate markets, geopolitical tensions and various technical signals that suggest the 10-year Bull market in just about everything financial is ending.
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The True Costs (and Unseen Benefits) of Bitcoin Mining – Stephan Livera
20 november
Mainstream opinion writers have opined that Bitcoin mining is too energy intensive. They say it contributes to climate change, or that it simply takes more energy than a monetary system is justified in taking, and is a “potentially catastrophic energy guzzler.” Bitcoin and other cryptocurrencies are often admittedly energy-intensive in the computing involved. After all, cryptocurrencies, in part, have value to owners because they are scarce, and there is a cost involved in producing them. This cost, however, has been pointed out by critics of cryptos as evidence of a lack of true value for the currencies.——————————————————————————————————
The Assassination Of Bitcoin – Dan Denning
23 november
As Bill reported last week, central banks are toying with the idea of launching a bank-backed cryptocurrency. Dan believes that outcome is all but assured. Only one thing stands in the way… bitcoin.
The collapse of bitcoin – down 68% year to date and 78% from its all-time high of $20,000, set in December 2017, when it traded at $4,200.22 earlier this week – may have a perfectly normal explanation.
It’s a bubble that popped. Or it’s happened before and is nothing to worry about. As my colleagues have shown their readers in the last week, bitcoin dropped 94% in 2010, 94% in 2011, 85% from 2013 to 2015, and 76% in a three-month period alone in 2013.
Big price declines are great buying opportunities, according to the bull case. In bitcoin’s case, any time the issue of a “hard fork” comes up – where a blockchain has two paths forward and goes in both directions at once – you’ve seen big price declines.
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Aircraft Leasing Bubble in Trouble? – MC01
24 november
Alarming signals are coming from an unlikely place, the market that the industry long touted as an engine of infinite growth.
In 1990, leased aircraft accounted for 15% of airline fleets. By 2017, the overall fleet of aircraft had ballooned, and within this much larger overall fleet size, the share of leased aircraft had surged to 40%.
There are three general reasons why companies lease aircraft: To operate without the financial burden of buying them, a particularly important factor for the rapidly expanding fleets of airlines in the emerging markets; to provide extra capacity for a limited time; or to temporarily replace part of their fleet which may have become unavailable.
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Thoughts From The Precipice – Chris Martenson
23 november
As you already know, things are unraveling. The narratives of the past are being revealed as false and fraudulent — even harmful.
For example, the fallacy of pursuing “ever more” growth. Growth up to a point is beneficial, but it turns self-destructive when it exceeds what available resources can sustain.
As it is practiced, economic growth as pursued around the world today is now destructive. If we continue on our current trajectory, it will become fatal.
It already has for an increasing scope of the natural world. Beauty is being ruined. The complex web of life is being shredded. Species loss is accelerating.
This kind of damage is essentially permanent.
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***Subprime Rises: Credit Card Delinquencies Blow Through Financial-Crisis Peak at the 4,705 Smaller US Banks – Wolf Richter
20 november
So what’s going on here?
In the third quarter, the “delinquency rate” on credit-card loan balances at commercial banks other than the largest 100 banks – so the delinquency rate at the 4,705 smaller banks in the US – spiked to 6.2%. This exceeds the peak during the Financial Crisis for these banks (5.9%).
The credit-card “charge-off rate” at these banks, at 7.4% in the third quarter, has now been above 7% for five quarters in a row. During the peak of the Financial Crisis, the charge-off rate for these banks was above 7% four quarters, and not in a row, with a peak of 8.9%
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Regulatory cost disease – John H. Cochrane
19 november
A post on Marginal Revolution is so good, I have to quote in its entirety before commenting.
From my time in both the military and healthcare I can say that the biggest problem are the compliance costs.
For example, I have a phone app that allows me to send texts. We pay very good money to have said app. It does nothing that my phone cannot innately do – except be HIPAA compliant. EMR software is clunky, an active time suck, and adds little or no value … but we are required by law to use it. In each case there are scads of less specific programs out there which are insanely cheaper and more functional, but those programs cannot justify the costs of becoming compliant for a small niche of their business.
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