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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Are Central Banks Nationalising the Economy? – Daniel Lacalle
24 augustus
The FT recently ran an article that states that “leading central banks now own a fifth of their governments’ total debt.”
The figures are staggering.
Without any recession or crisis, major central banks are purchasing more than $200 billion a month in government and private debt, led by the ECB and the Bank of Japan.
The Federal Reserve owns more than 14% of the US total public debt.
The ECB and BOJ balance sheets exceed 35% and 70% of their GDP.
The Bank of Japan is now a top 10 shareholder in 90% of the Nikkei.
The ECB owns 9.2% of the European corporate bond market and more than 10% of the main European countries’ total sovereign debt.
The Bank of England owns between 25% and 30% of the UK’s sovereign debt.
A recent report by Nick Smith, an analyst at CLSA, warns of what he calls ”the nationalization of the secondary market.”
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Did the Economy Just Stumble Off a Cliff? – Charles Hugh Smith
24 augustus
The signs are everywhere for those willing to look: something has changed beneath the surface of complacent faith in permanent growth.
This is more intuitive than quantitative, but my gut feeling is that the economy just stumbled off a cliff. Neither the cliff edge nor the fatal misstep are visible yet; both remain in the shadows of the intangible foundation of the economy: trust, animal spirits, faith in authorities’ management, etc.
Since credit expansion is the lifeblood of the global economy, let’s look at credit expansion. Courtesy of Market Daily Briefing, here is a chart of total credit in the U.S. and a chart of the percentage increase of credit.
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*** US Gross National Debt to Spike by $800 Billion in October? – Wolf Richter
21 augustus
“There is zero chance, no chance we won’t raise the debt ceiling,” swore Senate Majority Leader Mitch McConnell (R., Ky.) at an event in Louisville, Kentucky, on Monday.
He who couldn’t get his Republican ducks all lined up in a row to get any major legislation passed this year was confident that the Senate would pass a bill that would raise the debt ceiling so that the government could continue to pay for things that Congress told the Government to pay for, and so that the government could service its debts, rather than default on them.
Treasury Secretary Steven Mnuchin was there with him, pleading once again for a “clean” debt-ceiling increase, according to the Wall Street Journal. His “magic super Treasury powers” that allow the government to conserve cash to avoid having to issue more debt will expire at the end of September, he said.
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The Chinese Economy’s Fatal Flaws – William Hongsong Wang
21 augustus
Dr. Per Bylund’s recently published article poignantly states one of the core problems in the Chinese economy and its the state-manipulated Keynesian foundation. I do agree with his opinion. And if we dig deeper into the exact situation of Chinese economy, we will find that it’s a typical failing of the Keynesian, cronyist system.
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The US economy is not yet back to its potential – Olivier Coibion, Yuriy Gorodnichenko, Mauricio Ulate
24 augustus
Estimates of potential output around the world have been systematically revised downward since the Great Recession. This column argues that the methods used to create these estimates do not distinguish between transitory and permanent shocks, or demand and supply shocks. Taking these differences into account suggests US output is almost 10 percentage points below potential output. This has important immediate implications for policymakers, and raises questions for those who estimate potential output.
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Next Stop, Recession: The Financial Meteor Storm Is Headed Our Way – Charles Hugh Smith
25 augustus
Many of those about to be vaporized did not grasp the fragility of the “prosperity” they assumed was both solid and permanent.
Business-cycle recessions are not just inevitable, they are necessary to flush bad debt and marginal investments/projects from the system.
The next recession–which I suggested yesterday has just begun–will be more than a business-cycle downturn; it will be a devastating meteor storm that destroys huge chunks of the economy while leaving other sectors virtually untouched.
The dynamic that’s about to play out is simple: wages for the bottom 95% have gone nowhere for 17 years, while costs have soared far above official inflation for everyone exposed to real-world costs.
We have filled the widening gap between stagnant household income and rising expenses with debt. This stop-gap works for a while, but eventually the cost of servicing debt consumes the entire budget, leaving little to nothing to save or invest.
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Austrian Monetary Theory vs. Federal Reserve Inflation Targeting – Richard M. Ebeling
22 augustus
One of the leading policy guideposts for central banks and many monetary policy proponents nowadays is the idea of “inflation targeting.” Several major central banks around the world, including the Federal Reserve in the United States, have set a goal of two percent price inflation. The problem is, what central bankers are targeting is a phantom that does not exist.
Perhaps we can best approach an understanding of this through an appreciation of some of the writings by members of the Austrian School of Economics on matters of monetary theory and policy. Carl Menger (1840-1921), the founder of the Austrian School in the 1870s, had explained in his Principles of Economics (1871) and his monograph on “Money” (1892), that money is not a creation of the State.
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The Complete Debt Ceiling Decision Tree: “An Alarmingly High Probability Of A Very Bad Outcome” – Tyler Durden
26 augustus
For all the breathless newsflow over the past 7 days, the single most consequential event of last week was the sudden jump in debt ceiling/government shutdown odds following Donald Trump’s confrontational Phoenix speech, which laid out a problematic dilemma: Trump’s Mexican wall, or a government shutdown. While various financial pundits rushed to discount the odds of a worst case scenario, the market – in Treasury bills, if not so much equities – was spooked, sending the “pre-post default bill” spread to the widest on record…
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The external debt of the US is no cause for concern, yet – Wim Boonstra
25 augustus
Measured in dollars, the US is by far the most indebted country in the world. As this column describes, however, the country still has a positive capital income in spite of its high net debt position, and its external debt position is much smaller than one would expect based on cumulated current account deficits. Furthermore, fluctuations in the dollar exchange rates have a strong direct effect on the country’s international investment position. As long as it can finance its external obligations in dollars, its international debt position is no cause for concern for the US. For the rest of the world, however, the story may be different.
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Data Scientist Cathy O’Neil: “Algorithms Are Opinions Embedded in Code” – Yves Smith
26 augustus
Cathy O’Neil has a PhD in mathematics from Harvard and is the author of the best seller Weapons of Math Destruction. She is also involved in Occupy Wall Street.
In this TED talk, she describes how algorithms routinely institutionalize bias, bad practices, and personal opinion. Worse, the “gee whiz” factor of technology and the difficulty lay people have in forcing the algorithm creators to make their assumptions and processes transparent, and allow for audits of their algorithms, makes them an all-too-easy way to reinforce and legitimate skewed power dynamics.
One part of her talk, on how hiring practices reinforce existing “success” models, which often have embedded biases, is consistent with our 2007 Conference Board Review article,
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*** Japan Sees Surge In Gold Smuggling As Yakuza & Wealthy Chinese Team Up – Tyler Durden
25 augustus
In a story that was seemingly tailor-made for the tabloids, Japanese news agency Nikkei is reporting that, in an unusual but tantalizing example of financial symbiosis, wealthy Chinese investors are teaming up with Yakuza gangsters to smuggle gold into Japan. The payoff for each side is simple: Chinese investors, who are increasingly fearful that a depreciating yuan will create turbulence in local stock and bond markets, can circumvent China’s stringent capital controls and move their money out of the country. And by cheating the Japanese government out of a consumption tax, the Yakuza stand to make a healthy profit.
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Next Brick to Drop on UK Economy: Housing Bubble Deflates – Don Quijones
25 augustus
The symbiotic sectors of construction and real estate have been a vital engine of economic growth in the United Kingdom for decades, but that could be about to come to an end. In the words of Paul Smith, the chief executive of the UK’s largest independent lettings and real estate agency, Haart, “unaffordability in the UK’s property market is now reaching crisis point.” If drastic measures are not taken to tame prices, the UK could lose its place as a property owning democracy, he warns.
The latest figures published by the Office for National Statistics (ONS) reveal that the average cost of a home jumped by £10,000 in June from a year earlier, to £223,000. In the last eight years prices have surged by almost 50%. Its National House Price Index is now 18% higher than during the peak of the prior housing bubble (September 2007). This chart is for the UK overall. But home prices in London have now turned the other way.
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The productivity slowdown is even more puzzling than you think – David Byrne, Dan Sichel
22 augustus
One explanation given for the apparent recent slowdown in labour productivity growth in advanced economies is poor measurement. This column argues that while the available evidence on mismeasurement does not in fact provide an explanation for the slowdown, innovation is much more rapid than would be inferred from official measures, and on-going gains in the digital economy make the productivity slowdown even more puzzling. At the same time, this continued technical advance could provide the basis for a future pickup in productivity growth.
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Fitch Threatens US with Downgrade – Wolf Richter
23 augustus
Bitter irony! Just yesterday, I had a conversation with Bill Tilles, and we agreed on all three points. This morning, we’re already proven wrong on one of them:
A government shutdown as Congress fails to pass spending levels for fiscal 2018? Yes, it could happen.
A failure to raise the debt ceiling, thus pushing the US government into default, or “selective default?” Very unlikely. Lawmakers are political animals that use charades and posturing to accomplish their goals, but they’re not stupid (we hope).
A threat by US ratings agencies to slash the US credit rating due to the debt-ceiling charade and the consequences of a “selective default?” No way, we agreed. Ratings agencies learned their lesson from how the US government hounded Standard & Poor’s after its 2011 downgrade of the US.
A new day, and we’re already wrong. Standard & Poor’s may have learned its lesson. But Fitch Ratings hasn’t – though its language this morning was a lot kinder and gentler (emphasis added).
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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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