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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All Is Not Well In Financial Markets – Thorsten Polleit
24 juli
It seems to be a hard time for those expressing concern about the build-up of risks in the economic and financial system: the major economies in the world are expanding at a decent clip, credit default concerns are very low, and stock and housing prices keep going up, driven by investor optimism and supported by an ongoing low interest rate environment.
Moreover, cyclical indicators do currently not suggest that something terrible is just around the corner. But of course, there is good reason not to get carried away by the “all is well” mentality that has gripped financial market action. For central banks have, by way of their monetary policies of exceptionally low interest rates, set into motion an artificial upswing (“boom”).
While the boom leads to higher output and employment levels, it also causes — beneath the surface, so to speak — malinvestment on a grand scale: the development of the economies’ production and employment structure is getting diverted from the path it would have taken had there not been a downward manipulation of interest rates on the part of central banks.
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When Long-Brewing Instability Finally Reaches Crisis – Charles Hugh Smith
25 juli
Keep an eye on the system’s buffers. They look fine until they suddenly collapse.
The doom-and-gloomers among us who have been predicting the unraveling of an inherently unstable financial system appear to have been disproved by the reflation of yet another credit-asset bubble. But inherently unstable / imbalanced systems can stumble onward for years or even decades, making fools of all who warn of an eventual reset.
Destabilizing systems can cling on for decades, as the inevitable crisis doesn’t necessarily resolve the instability. History shows that when systems had enough inherent wealth to draw upon, they could survive for centuries, thinning their resources, adaptability and buffers until their reservoirs were finally drained. Until then, they simply did more of what’s failed to maintain the sclerotic, self-serving elites at the top of the Imperial food chain.
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Scott Sumner Wants to “Modernize the Fed” — This is What He Gets Wrong – Mark Thornton
25 juli
Scott Sumner recently penned an article suggesting that the Federal Reserve needs to modernize its approach to monetary policy, a sentiment shared by many economists and policymakers. The Fed certainly has made a series of changes and adjustments to increase its transparency and its credibility after President Nixon took the world off of the Bretton Woods era gold standard in 1971.
However, in Sumner’s case, he is asking for a modernization of the monetary policy schedule. The Fed’s monetary policymaking body—the Federal Open Market Committee—meets approximately every 6 weeks, takes a vote and then issues its policy guideline for the Federal funds rate, i.e., the FFR, over the next 6 weeks.
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Income-contingent university loans: Policy design and an application to Spain – Antonio Cabrales, Maia Güell, Rocío Madera, Analía Viola
24 juli
In most of Europe, the state pays for a university education, meaning that university finances are both regressive and cyclical. This column asks how the alternative system of income-contingent university loans would fare in Spain. The analysis suggests that the policy is feasible even in a country with a relatively poorly functioning labour market for young graduates.
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10 Down-to-Earth Things Powell Said about Cryptocurrencies – Wolf Richter
23 juli
Go find someone else to regulate them.
Fed Chairman Jerome Powell, during his testimony before the House of Representatives Committee on Financial Services, was asked by representatives Patrick McHenry (R, North Carolina) and Juan Carlos Vargas (D, California) about the Fed’s thinking on cryptocurrencies. Instead of pussyfooting around the issues, as Fed chairs used to do, he refreshingly stepped right into it, with both boots on the ground, so to speak.
McHenry, “Could you outline your thinking on cryptocurrencies?” Powell:
1. No serious financial stability threat yet: “I think the question I was asked that you’re referring to was, ‘Do cryptocurrencies currently (strong emphasis) represent a serious financial stability threat.’ And my answer was, ‘They’re not big enough to do that yet (strong emphasis).’ That’s really what I was saying – not that they’re not a longer-term thing.
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The Minimum Wage Doesn’t Do What You Think It Does – Jordan Setayesh
28 juli
The assumption that the minimum wage helps low-wage workers permeates public discourse on the topic. One of the most curious political phenomenon is how the idea of the minimum wage is mindlessly accepted by the public as a policy that undoubtedly helps the poor. This transformation of the minimum wage from a policy originally intended to keep minorities out of the labor force to one aimed at protecting marginalized workers has been a stunning political magic trick.
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“Cliff Edge” Brexit Threatens $34 Trillion of Derivative Contracts: UK Regulator – Don Quijones
24 juli
A high-risk blinking contest no one wants to lose.
A messy, no-deal Brexit could throw 48 million insurance contracts and £26 trillion ($34 trillion) of derivatives deals into confusion. Nausicaa Delfas, head of international strategy at the Financial Conduct Authority (FCA), told delegates at a CityUK and Bloomberg event that there were “cliff-edge” risks due to uncertainty over the legality of financial contracts extending beyond the planned Brexit date, in March.
The UK government has already passed regulations that would allow European banks and insurers to maintain their UK operations under current rules after Brexit. So far, the EU has refused to reciprocate, even on a temporary basis.
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Trade War – John H. Cochrane
25 juli
I am encouraged by the reported Senate reaction (Politico) to the latest salvo in the trade war, the agriculture department’s announcement to ramp up Roosevelt-era farm subsidies to offset the Administration’s tariffs.
“Taxpayers are going to be asked to initial checks to farmers in lieu of having a trade policy that actually opens and expands more markets. There isn’t anything about this that anybody should like,” said Sen. John Thune of South Dakota, the No. 3 GOP leader….
You put people in the poorhouse and provide them aid. What you need to do is not put them in the poorhouse,” Corker said
These views are good, but not really in my mind the largest danger. The closest is Sen. Ron Johnson:
“This is becoming more and more like a Soviet type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits,” said Sen. Ron Johnson (R-Wis.). …”
It’s not really Soviet, which was more do what you’re told or go to Siberia. It’s a darker system, which leads to crony capitalism.
Everyone depends on the whim of the Administration. Who gets tariff protection? On whim. But then you can apply for a waiver. Who gets those, on what basis? Now you can get subsidies. Who gets the subsidies? There is no law, no rule, no basis for any of this. If you think you deserve a waiver, on what basis do you sue to get one?
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En het directe vervolg:
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Trade war off? – John H. Cochrane
27 juli
Events move quickly in the Trump era. Since my last post, President Trump met with European Commission President Jean-Claude Juncker and announced a cease-fire with Europe. A correspondent sends this link to Marc Thiessen at Fox news on the subject
it appears Trump is being proved right. On Wednesday, he and European Commission President Jean-Claude Juncker announced a cease-fire in their trade war and promised to seek the complete elimination of most trade barriers between the United States and the European Union. “We agreed today … to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” declared the two leaders in a joint statement.
…. contrary to what his critics allege, Trump is not a protectionist; rather, he is using tariffs as a tool to advance a radical free-trade agenda.
… during the G-7 summit he made a sweeping proposal. “I said, ‘I have an idea, everybody. I’ll guarantee you we’ll do it immediately. Nobody pay any more tax, everybody take down your barriers. No barriers, no tax. Everybody, are you all set?’ …
Now Trump’s hard-line trade strategy is being vindicated. Not only is the E.U. negotiating zero tariffs, but also it agreed to immediately buy more American soybeans — which helps Trump in his trade battle with China.
If Trump succeeds in using trade wars to bring down European and Chinese trade barriers, he may end up being one of the greatest free-trade presidents in history.
The question always remains with our President’s dramatic moves. Crazy like a fox or just plain crazy? To his credit, it helps if your opponents think the latter.
Could this trade war really be in the service of a completely free trade agenda — either very well hidden, or newly discovered? There is nothing I would like to see more than a pure free trade world, and it is heartening to see this president or any president come close to endorsing such.
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***The Largest Ships in the Huge Iron-Ore Trade – MCO1
28 juli
Exports are dominated by two countries, imports by three. And everything revolves around China.
China’s phenomenal and somewhat worrying rise as the top steel producer in the world has fueled an absolutely unprecedented boom in the trade of iron ore. The latest data available (2016) put the worldwide seaborne dry bulk trade at 4,553 million metric tons, of which 1,354 million metric tons, or 30%, were iron ore. The iron ore tonnage is up 37% from 2010.
The iron ore trade is overwhelmingly directed at East Asia: China accounted for 68%, Japan for 10%, and South Korea for 5%. Combined, they account for 83%. Germany, next in line, accounts for only 3%.
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Spending Our Way to a Fiscal Crisis – Ron Paul
23 juli
According to financial writer Simon Black, the federal government is spending approximately 52,000 dollars per second. This, not last year’s tax cuts, is the reason why the national debt has reached a record 21 trillion dollars, which is more than America’s gross domestic product (GDP).
Another ominous sign is that this year both Social Security and Medicare will have to draw down on their reserve funds to be able to pay benefits. The Social Security and Medicare trust funds will both soon be bankrupt, putting additional strains on the federal budget and American taxpayers.
The excessive debt caused by excessive spending will inevitably cause a major economic crisis. Yet, with a few notable exceptions, there is little to no desire in Washington to cut spending. Instead, both parties are committed to increasing spending on warfare and welfare while ignoring the looming entitlements crisis.
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Exploring the wide dispersion in productivity among European firms – Yuriy Gorodnichenko, Debora Revoltella, Jan Svejnar, Christoph Weiss
25 juli
Many barriers keep resources from flowing to the most efficient firms in the EU. This column uses firm-level data from all EU countries to explore how the dispersion of resources affects macroeconomic performance. Harmonising the business environment – and thus easing the flow of resources – across countries and industries could increase aggregate EU growth by 18%. The findings also demonstrate how firm-level characteristics can help us understand distortions in the allocation of resources across firms.
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JPMorgan: QE Might Have Devastating Consequences After All – Tyler Durden
28 juli
Approximately 9 years after various “tin-foil” wearing blogs first warned that the long-run negative consequences of QE will drown out and vastly outnumber any positive ones (which have mostly been confined to make the rich richer and create the illusion of economic stability built on the cracking foundations of trillions in newly created dollars), none other than JPMorgan today admits that QE may, indeed, have some devastating financial, economic and political consequences. And by some, we mean a lot.
What prompted this exciting moment of monetary introspection?
According to JPM’s Nick Panigirtzoglou, it was last week’s report that the BoJ has expressed concerns over negative side effects of its QE current policies (especially keeping the 10Y yield fixed around 0%), and which resulted in a sharp, if brief, global bond steepening which demonstrated once again just how dominant central bank monetization policies are in determining the long-end of the curve.
And, as the market demonstrated, a hawkish policy shift and a subsequent reduction in duration absorption by the BoJ would intensify the quantitative tightening already in place by the Fed and the ECB, and according to JPM represents “a significant tail risk that has generated intense debate among our clients.”
So what are these possible ‘devastating’ side-side effects from unorthodox BoJ – and other central bank – policies?
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Capitalism: Why Chile Is So Much Richer than Venezuela – J. Mitchell
24 juli
I’m in China this week, giving various lectures at Northeastern University in Shenyang. My topic today was “Real-World Examples,” which gave me an opportunity to share many of the charts I’ve developed showing how market-oriented nations enjoy much more long-run success.
One of the charts shows how Chile has enjoyed strong growth since it shifted to free markets, especially compared to Venezuela, which is burdened by a vicious form of statism .
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Understanding the bias in technological change and its impact on the labour market – Zsofia Barany, Christian Siegel
25 juli
Economists agree that structural transformation and job polarisation are both caused mainly by biased technological progress, but there is no consensus on the nature of these biases. The column uses US data to estimate the extent to which technological change is biased across sectors and across occupations. It finds that for improved labour market outcomes, policies targeting occupational choice for workers might be better than industrial policies to protect sectors of the economy.
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***Biggest Apartment-Construction Boom-Towns Are Not What You May Think – Wolf Richter
24 juli
No, it’s not Seattle. Denver is by far #1. New York isn’t even in the top 25. And it explains why rents in Chicago are collapsing.
We’re going to shake up the status quo of apartment construction reporting. First, we’re going to lay out the status quo – the classic way of looking at this, the way you typically see it, where the New York metro comes out invariably as #1.
And then we’re going to look at it by population size of the metro, for metros with over one million people. And boy, do we get surprises.
For the past few years, there has been a multi-family construction boom across the US. About 283,000 new apartments are expected to be completed by the end of 2018, just a bit below last year when apartment deliveries hit a 20-year record of 317,872 units.
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