If the ECB has the policy tools to return inflation to its objective, why does it not deploy them?

For the past decade, inflation outcomes in the eurozone have persistently undershot the objective of the European Central Bank.

Output and employment have been lower than they needed to be to deliver on the ECB’s self-defined measure of price stability. 

For almost all of this period of inflation undershoot, the ECB has set monetary policy while its own forecasts showed inflation would not reach its objective over the usual two to three-year horizon

Malcolm Barr, head of western European economics at JPMorgan, FT 22 July  2021

https://www.ft.com/content/a590671c-7c16-4767-b54f-c6ba592b6b4e

Why the Greek deal will work

ECB President Mario Draghi effectively sidestepped both obstacles by launching a program of quantitative easing so enormous that it will finance the entire deficits of all eurozone governments (now including Greece) and mutualize a significant proportion of their outstanding bonds.

Germany, Spain, Italy, and several northern European countries required, for domestic political reasons, a ritual humiliation of radical Greek politicians and voters who openly defied EU institutions and austerity demands.

Having achieved this, EU leaders have no further reason to impose austerity on Greece or strictly enforce the terms of the latest bailout. 

Instead, they have every incentive to demonstrate the success of their “tough love” policies by easing austerity to accelerate economic growth, not only in Greece but throughout the eurozone.

Anatole Kaletsky MarketWatch July 22, 2015 

https://www.marketwatch.com/story/why-the-greek-deal-will-work-2015-07-22

What is both too hot and too cold? The answer: the United States economy in the summer of 2021

“We call it a whiff of stagflation,” said Paul Ashworth, chief U.S. economist at Capital Economics

Businesses are complaining of labor shortages and offering all kinds of inducements to attract workers. Yet the unemployment rate is a recession-like 5.9 percent. 

And the share of adults in the labor was 63.3 percent in February 2020 but has bounced around between 61.4 percent and 61.7 percent for more than a year.

In the first three months of the year, longer-term bond yields soared and the yield curve steepened. That has reversed in recent weeks. 

NYT 22 July 2021

https://www.nytimes.com/2021/07/21/upshot/economy-usa.html

US Home prices are rising at their fastest pace in history...

fueling concern that a new real estate bubble has formed.

So far, nothing has been done, despite protest from some Fed officials like Boston Fed President Eric Rosengren, who recently argued that a “boom and bust cycle” in real estate is incompatible with financial stability.

Former Federal Reserve Vice-Chairman Donald Kohn made a similar point in a 2017 speech that Washington regulators “need the power to put limits on loan-to-value and debt-to-income measures, when loosening standards, perhaps occurring outside the banking system, threaten financial and economic stability.”

MarketWatch 21 July 2021

https://www.marketwatch.com/story/washington-might-have-to-go-to-war-to-fight-a-housing-bubble-does-it-have-the-tools-to-win-11626881606

Vi har en hushållssektor som är mer räntekänslig än den någonsin varit tidigare, säger Stefan Ingves juli 2021

https://englundmacro.blogspot.com/2021/07/vi-har-en-hushallssektor-som-ar-mer.html

Housing expenses are the sleeping giant - US inflation

Shelter costs account for about a third of the overall CPI, and comprise rental prices as well as what is known as “owner-equivalent rent”, the estimated cost of a house occupied by an owner if it were rented out.

“We calculate the market won’t be fully in balance until 2023 or 2024. So I’m not sure that the uptick in rents is particularly shortlived,” said Ali Wolf

FT 21 July 2021

https://www.ft.com/content/efdf1845-6138-4af7-8d2b-c20df9fed218

ATT DEN POLITISKA KLASSEN STÅR HANDFALLEN OCH FÖRVIRRAD ÄR INTE KONSTIGT

 I veckan skrev jag en krönika om min djupa känsla av osläktskap med politikerna, om att jag hatar Annie Lööf för hennes lögner och väljarsvek. 

https://www.fokus.se/2021/07/anna-bjorklund-darfor-kanner-jag-avsky/

Den partipolitiska låtsasleken håller jag inte på med och det gör få smarta människor jag känner. Och det är väl det som är grundproblemet. Politik har en gång varit ärofyllt och hedersamt, till och med snobbiga näringslivspersoner och kulturmänniskor har engagerat sig. Nu är återväxten usel, de flesta håller med om att landet har problem, men de som vill arbeta med att lösa dem blir allt färre. 

Anna Björklund Fokus  2021-07-19

https://www.fokus.se/2021/07/att-den-politiska-klassen-star-handfallen-och-forvirrad-ar-inte-konstigt

The pandemic-induced recession ended more than a year ago — but

Some 9.3 million Americans remain unemployed, according to the June unemployment report published by the Bureau of Labor Statistics. 

Some 4 million people have been unemployed for more than 27 weeks — that’s 2.9 million more people than there were in February.

MarketWatch 20 July 2021

https://www.marketwatch.com/story/the-pandemic-induced-recession-ended-more-than-a-year-ago-but-the-u-s-economy-isnt-out-of-the-woods-yet-11626788581

Fiscal and monetary largesse in the advanced states overwhelm the residual pockets of Covid damage in the OECD bloc

 Pent-up savings and a capex restocking cycle should pick up the baton as state support fades (the US fiscal impulse turns negative this quarter).

The UK is the world’s laboratory for opening up. Unfortunately it has done so with breathtaking incompetence and given the process a bad name.

It will soon become clear to market traders across the globe whether British hospitalisations will remain manageable or whether the pandemic again approaches the catastrophism of Professor Neil Ferguson. 

Every time the US Federal Reserve in particular has tried to extricate itself from the great QE experiment, it has set off bond market turmoil. The attempt in late 2018 to unwind QE by ‘automatic pilot’ led to a plunge in yields and a major Wall Street scare. The Powell Fed was forced to retreat.

Ambrose Evans-Pritchard Telegraph 20 July 2021

https://www.telegraph.co.uk/business/2021/07/20/markets-fear-inflation-much-delta-variant/

Covid: UK faces a difficult summer, says leading scientist

https://www.bbc.com/news/uk-57877033

Man who started QE; Lord Mervyn King, now member of committee that slams QE

https://englundmacro.blogspot.com/2021/07/man-who-started-qe-lord-mervyn-king-now.html

Forntid Framtid Nuets Ansvar

 

Värnhems klosterkyrka Götiska Förbundet

Reklam för film på Netflix

Buy the dips.Väldigt många har väldigt länge blivit väldigt rika genom att följa detta råd

Men om många av dem nu säger att den här dippen skall jag inte köpa in i. Vem skall då köpa?

When the walls come down, investors will scavenge the news for “catalysts.” Don’t fall into this trap. Undoubtedly, some “catalyst” will be found, but the mistake will be in believing that the collapse is caused by that piece of “bad” news. 

The important question to ask is “What drove the bubble?” That’s where the lessons are. 

John P. Hussman

Världsberömd Permabjörn.

https://englundmacro.blogspot.com/2021/07/what-triggered-crash-hussman-funds.html

“The market appears ready to take on a more defensive character...

 as we experience a meaningful deceleration in earnings and economic growth,” wrote Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, in a note Monday. 

“Market breadth has been deteriorating for months and is just another confirmation of the mid-cycle transition, in our view. It usually ends with a material (10-20%) index level correction.”

The morning sell-off in stock futures is accelerating with Dow futures now down 450 points

PUBLISHED SUN, JUL 18 20216:06 PM EDT

https://www.cnbc.com/2021/07/18/stock-market-futures-open-to-close-news.html

Monday 19 July

Wall Street fredag 16 July

US inflation today is much more like good news than bad - Rogoff

In fact, economic theory gives very little robust guidance on whether, say, 3 per cent inflation is better than 2 per cent in normal times, so long as it remains reasonably stable and predictable. 

When Olivier Blanchard was IMF chief economist in 2010, he argued that inflation targets should be raised to 4 per cent.

Kenneth Rogoff FT 16 July 2021

The writer is a professor of economics and public policy at Harvard university and former chief economist at the IMF

https://www.ft.com/content/a7c101be-7361-4307-981d-b8edf6d002be

Riktiga karlar är inte rädda för lite inflation

https://englundmacro.blogspot.com/2010/02/riktiga-karlar-ar-inte-radda-for-lite.html

Did inflation targeting fail?

Martin Wolf, Financial Times, May 5 2009

https://englundmacro.blogspot.com/2020/07/the-troubling-bit-is-that-these.html

Riksbankens mål om 2,0 procents inflation tillkom i all hast för litet mer än 20 år sedan

Inflationsmålet skulle inte ha funnits där, om Sverige hade klarat att hålla fast växelkurs.

Johan Schück, DN 2015-05-08

https://englundmacro.blogspot.com/2020/05/weve-now-had-nearly-30-years-of.html

What Triggered the Crash? - Hussman Funds

When the time comes to ask the question – “What triggered the crash?” – remember that this is the least important question. A market crash requires nothing more than a shift in investor psychology from careless speculation to even modest risk-aversion.  

With valuations at the most extreme level in history, the one thing that the market simply cannot tolerate is the eager attempt of a substantial number of investors to exit. 

When the walls come down, investors will scavenge the news for “catalysts.” Don’t fall into this trap. Undoubtedly, some “catalyst” will be found, but the mistake will be in believing that the collapse is caused by that piece of “bad” news. 

The important question to ask is “What drove the bubble?” That’s where the lessons are. 

The root causes of a crash are always the factors that nurtured and encouraged the “happy” period of carefree and irresponsible speculation that led to the bubble extreme.

John P. Hussman, Ph.D. President, Hussman Investment Trust

July 2021

https://www.hussmanfunds.com/comment/mc210715/

Hussman’s claim to fame includes forecasting the market collapses of 2000 and 2007-2008. 

Long-suffering market bears, like John Hussman

https://englundmacro.blogspot.com/2019/05/long-suffering-market-bears-like-john.html

 

Man who started QE; Lord Mervyn King, now member of committee that slams QE

The House of Lords committee on which Lord Mervyn King sits has laid into the policy he initiated.

FT Alphaville 16 July 2021

https://www.ft.com/content/ce450316-d149-4ede-b4c6-5bc507e4f004

 

Mervyn King inflation fiscal union

https://englundmacro.blogspot.com/2020/06/mervyn-king-inflation-fiscal-union.html

Get ready for the most severe correction since the bull market began in March 2020.

Hayes Martin bases his sobering forecast on the increasing divergences within the U.S. market, as indicated by fewer and fewer stocks participating in the headline-grabbing strength of the leading indices.

Martin reports that the only area of the market not showing dangerous divergences right now is the large-cap dominated S&P 500. 

Mark Hulbert MarketWatch July 15, 2021 at 4:23 p.m. ET

https://www.marketwatch.com/story/expect-a-10-correction-in-u-s-stocks-by-mid-august-says-this-forecaster-with-a-proven-track-record-11626380633

 

Ständigt denna Jet stream

 

Severe flooding in western Europe

BBC 16th July 2021

https://www.bbc.com/weather/features/57862526

The Omega-Shaped Jet Stream Responsible for Europe’s Heatwave

Englund blogg 26 juni 2019

https://englundmacro.blogspot.com/2019/06/the-omega-shaped-jet-stream-responsible.html

Why Was the Discovery of the Jet Stream Mostly Ignored?

Maybe because it was published in Esperanto.

Between 1923 and 1925, Ooishi completed almost 1,300 observations of fierce high-altitude winds, later named the jetstream. The somewhat eccentric Ooishi was not only the director of Japan’s Tateno atmospheric observatory but also the head of the Japan Esperanto Society. Ooishi announced his discovery of the swift, high-altitude river of air in the Tateno observatory’s annual reports, which he published in Esperanto. Not surprisingly, his research was ignored, and the U.S. military was caught off guard by two consequences of the invisible jetstream.

Thanks Wayne.

https://www.airspacemag.com/as-next/as-next-may-unbelievablebuttrue-180968355

 

Yanis Varoufakis: De vägrade ägna sig åt ekonomiska argument

Vägrade. Man la fram ett argument som man verkligen hade jobbat på och säkerställt att det är logiskt konsekvent, och du möts av ansikten med tomt stirrande blick. Som om du aldrig sagt något. Man hade lika gärna kunnat sjunga den svenska nationalsången – och fått samma svar.

Det fanns sympatiska personer, som IMF-chefen Christine Lagarde, men eurogruppen däremot bestod av några otrevliga typer med mycket makt som stirrade på honom och sa: "Du har rätt i vad du säger, men vi kommer krossa dig ändå".

SvD 14 juli 2015

https://www.svd.se/yanis-varoufakis-basta-citat

Have you wondered how two Nobel laureate economists, sometimes sharing the same year’s prize, can consider each other charlatans? This would never happen among Nobel laureate physicists or biologists. 

https://englundmacro.blogspot.com/2021/02/trump-is-more-dangerous-than-mere-liar.html

Den amerikanska finanspolitiken handlar om reformer som får Marshallhjälpen efter andra världskriget att framstå som löjligt futtig

Henrik Mitelmam DI 14 juli 2021

https://www.di.se/analys/sluta-oroa-dig-for-ranteelandet/

Marshall-hjälpen och nästa svenska devalvering

Med dagens kurs SEK/USD på cirka 5:60 uppgick alltså den totala  Marshall-hjälpen till 382 miljaaarder svensk kronor.

Enligt dagens Dagens Industri (2/11) uppgår Sveriges utlandsskuld till 454 miljaarder kronor:

Den privata räntebärande nettoskulden till utlandet är uppe i 473 miljarder. 

Det är en ökning med mer än 200 miljarder på ett år.

Rolf Englund 1990 11 02

Sänt till Carl Bildt 90-11-02

Utlagt på Internet 96-10-29

https://www.internetional.se/cabpm.html