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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IMF Approves Upsized $56.3BN Bailout Loan For Argentina: Here Are The Implications – Tyler Durden
27 oktober
On Friday, the IMF Executive Board completed its first review of the Argentine 3-year Stand-By Arrangement (SBA). As a result, the revised SBA was upsized to $56.3 billion (SDR40.71BN), up from $50bn under the original program of which $15bn were disbursed in June. With the approval, the IMF will disburse $5.7bn (SDR 4.1bn) immediately, and likely another $7.7bn before the end of the year.
As reported before, the revised SBA augments and frontloads the access to IMF funding: compared with the original SBA access to IMF funding was increased by $19 billion through the end of 2019, to $36.2bn total (up from $17.5bn in the original June SBA). Specifically, US$13.4bn will be disbursed during the remainder of 2018 (on top of $15bn disbursed in June), and another $22.8bn in 2019 (≈$5.7bn/quarter). Finally, $5.9 billion are planned for 2020-21
Furthermore, Goldman notes that the IMF program would no longer be treated as precautionary and the authorities intend to use IMF funds for budget support.
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Swedish Central Bank Makes U-Turn on Cash as NIRP is Ending – Don Quijones
26 oktober
Cash is less of a threat to central bank policies when interest rates rise above zero.
Sweden’s Riksbank has become the first central bank in the 21st century to take concrete measures to ensure that cash does not disappear as a means of payment from the financial system. To that end, the Riksbank proposes, in a document published on its website, to make it mandatory for all banks and financial institutions to offer cash services.
The pronouncement comes in response to a recent policy suggestion by the Riksbank Committee that only the country’s six major banks should be obligated to continue offering cash services.
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Weekend Reading: Recession Risks Rising – Lance Roberts
26 oktober
In yesterday’s post, we discussed the importance of the S&P 500 as a leading indicator of recessions in the U.S.
“The problem with making an assessment about the state of the economy today, based on current data points, is that these numbers are “best guesses” about the economy currently. However, economic data is subject to substantive negative revisions in the future as actual data is collected and adjusted over the next 12-months and 3-years. Consider for a minute that in January 2008 Chairman Bernanke stated:
‘The Federal Reserve is not currently forecasting a recession.’
In hindsight, the NBER called an official recession that began in December of 2007.”
My friend David Stockman from Stockman’s ContraCorner (a must-read site) sent me an email on Thursday morning stating:
“On your topic of today regarding recession recognition, here’s another point about after-the-fact revisions. NF payrolls were revised down by about 500,000 per month during the September-February 2008 plunge:”
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The Inevitable Failure of Public Pensions – Justin Murray
25 oktober
Unless your primary news feed is Facebook, you’ve probably been exposed to the fact that public pensions are in pretty big trouble with funding. Being a liberty-bent community with Austrian economics as a core focus, the immediate reaction is to think that the underlying is the fact that these public pension systems are run by the public sector and that the private sector would do a better job managing such plans. However, being a State-run institution is only a problem in just one aspect, which will be discussed later. First, it is important to recognize that the reason the public sector pension systems around the country are failing is more fundamentally a problem of mathematics than it is a problem of being run by the State.
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Why I think the Ugly October in Stocks Is Just a Preamble – Wolf Richter
27 oktober
Yet, the crybabies on Wall Street are already clamoring for the “Powell put.”
Let me just say right up front: The stock market did not “collapse.” It has experienced a sell-off that made some people’s ears ring, as sell-offs normally do, and October has been ugly so far, but it wasn’t a “collapse.”
This matters because the crybabies on Wall Street are already clamoring for the “Powell put.” But the folks at the Fed have been around, and they know what a routine sell-off looks like and what a crash looks like, and they’re glancing at these numbers, and they yawn. Because in the grander scheme of things, not much has happened yet. The next uptick lurks around the corner, powered by the dip buyers and massive corporate share-buybacks.
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Monetary and non-monetary news in central bank communication – Anna Cieslak, Andreas Schrimpf
22 oktober
Central bank communication affects asset prices and therefore the broader economy, but the channels through which this happens are not clear. The column proposes a novel approach to distinguishing the types of news. In more than half of communication events, the non-monetary component dominates the market reaction to central bank communication.
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America’s Social Depression Is Accelerating – Charles Hugh Smith
24 oktober
We need to value honesty above optimism. Once we can speak honestly, there is a foundation for optimism.
Beneath the rah-rah statistics of “the greatest economy ever,” the social depression is accelerating. The mainstream is reluctantly waking up to the future of the American Dream: downward mobility for all but the top 10% of households. A 2015 Atlantic article fleshed out the zeitgeist with survey data that suggests the Great Middle Class/Nouveau Proletariat is also waking up to a future of downward mobility: The Downsizing of the American Dream: People used to believe they would someday move on up in the world. Now they’re more concerned with just holding on to what they have.
I have been digging into the financial and social realities of what it takes to be middle class in today’s economy for years: Are You Really Middle Class?
The reality is that the middle class has been reduced to the sliver just below the top 5%–if we use the standards of the prosperous 1960s as a baseline.
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***Statistical Analysis Isn’t Enough to Understand Human Action – Frank Shostak
24 oktober
According to modern economics, various ideas that we have established about the world of economics emanates from historical data. By inspecting the data, an economist forms a view regarding its behavior. As long as the theory seems to explain the data, it continues to be regarded as valid. Once it fails to adequately explain the data it is replaced by a new theory. Note that on this way of thinking a theory is derived from the data.
According to most experts, the sharp increase in the living standards in the western world in the past few hundred years could be attributed to the accumulation of technical knowledge.
This conclusion was reached by observing that for the thousands of years most people lived in great poverty, but since the 18th century there was a massive increase in prosperity, which economists attribute to the sharp increase in technical knowledge.1
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It’s the Banks Again – Wolf Richter
22 oktober
US bank stock index down 17% from January. EU bank stocks crushed, crushed, crushed since Financial Crisis.
Monday early afternoon, the US KBW Bank index, which tracks large US banks and serves as a benchmark for the banking sector, is down 2.5% at the moment. It has dropped 17% from its post-Financial Crisis high on January 29. If the index closes at this level, it would be the lowest close since September 18, 2017:
While that may be a nerve-wracking decline for those who have not experienced bank-stock declines, it comes after a huge surge that followed the collapse during the Financial Crisis:
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Only Twice In History Have Markets Been This Ugly: The 1970s Stagflation And The Global Financial Crisis – Tyler Durden
27 oktober
This month’s violent market rout, which sent both the S&P500 and Dow to unchanged for the year and pushed most global markets into a bear market, has delivered several other dubious distinctions across asset classes. After seemingly untouchable, many credit spreads (US HY, Euro HG and HY) have widened to their highest levels this year….
… while EM Equities and EM Asian currencies have made new 18-mo lows, and every market – including the Nasdaq, commodities and US Leveraged Loans – has underperformed the trade weighted USD in 2018.
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***Fixing the euro needs to go beyond economics – Anne-Laure Delatte
23 oktober
The agenda to fix the euro is hampered by conflicting national interests. Creditor countries demand fiscal house cleaning and debtor countries ask for risk sharing. There is currently a political deadlock about how the adjustment burden should be distributed, perpetuating a state of vulnerability that is not in the collective interest of euro area members. This column, part of the Vox debate on euro area reform, argues that overcoming this coordination failure requires reforming the political governance of the EU, rather than just its economic governance.
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Spain’s Mortgage Market Seizes Up, Bank Stocks Sink, Legal Uncertainty Reigns – Don Quijones
24 oktober
A fiasco threatens to spiral out of control.
In the last five trading days, the shares of Spain’s five largest listed banks have re-energized their plunge that had started at the end of January and now amounts to 40%. The cause for the recent drop? A shock ruling by Spain’s Supreme Court that lenders, rather than mortgage borrowers, should pay the contractual tax on mortgage loans, on the grounds that the lender is the only party with an interest in getting the loan certified by a notary, since this is what enables the bank to begin foreclosure proceedings if the borrower defaults on payments.
Even the Supreme Court’s desperate decision last Friday to suspend its own ruling a day after it had announced the ruling, a historic flip-flop that left everything in limbo and its reputation in tatters, failed to stop the rout (data via YCharts):
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Gold & The Biggest Of Big Pictures – Alasdair Macleod
25 oktober
I have had a request from Mrs Macleod to write down in simple terms what on earth is going on in the world, and why is it that I think gold is so important in this context. She-who-must-be-obeyed does not fully share my interest in the subject. An explanation of the big picture is also likely to be useful to many of my readers and their spouses, who do not share an enduring interest in geopolitics either.
That is the purpose of this article. It can be bewildering when a casual observer tries to follow global events, something made more difficult by editorial policies at news outlets, and the commentary from most analysts, who are, frankly, ill-informed. Accordingly, this article addresses the topic that dominates our future. The most important players in the great game of geopolitics are America and China. But before launching into an update, I shall lay down the disciplines required for an informed analysis.
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Attitudes towards debt and debt behaviour – Johan Almenberg, Annamaria Lusardi, Jenny Säve-Söderbergh, Roine Vestman
27 oktober
Household indebtedness is high in many countries, and continues to rise. This column uses data from Sweden to argue that evolving attitudes toward debt may help explain the observed increase. Individuals who report being comfortable with debt have considerably more of it, and they are more likely to have parents who were also comfortable with debt. For others, discomfort with debt may act as a self-imposed borrowing constraint.
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Deficits Do Matter: Debt Payments Will Consume Trillions of Dollars in Coming Years – Ryan McMaken
27 oktober
Interest on the national debt is quickly becoming one of the largest expenses in the national budget. Based on projections from the OMB, it now appears that growth in interest payments on the national debt will be significantly outpacing any other spending category in coming years.
The OMB’s projections show debt-payment outlays growing a startling 70 percent from 2017 to 2020. The sector with the next-highest growth rate is Defense, but that grows by only 20 percent over the same period.
While Medicare, defense, and Social Security all, for now, still use up much larger portions of federal spending, it won’t be long before payments on the debt will eat up hundreds of billions of dollars every year on a par with programs like Medicare and National Defense.
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