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2019-04-18

During the 80 months between Q1 2012 and Q4 2018 the S&P index rose by 125%

but pre-tax corporate profits of $2.2 trillion (annual rate) did not rise by single dime.

David Stockman  April 17th, 2019


2019-04-17

My /Cullen Roche/ View On Minsky’s Financial Instability Hypothesis

In short, Minsky’s FIH was ignored for far too long. 

At the same time, it has the potential to mislead people into thinking that booms are necessarily going to lead to busts and that private debt financed booms will tend to become speculative and ponzi booms. 

Additionally, the mainstream models that ignored debt and assumed that ponzi booms were unpredictable, is probably extreme.

Cullen Roche PRAGMATIC CAPITALISM 11 April 2019


 “well-intentioned government policies aimed at reducing the systemic risks of a crisis in the global financial system may have the unintended and perverse consequence of actually increasing the risk of such a crisis.” 
Or Hyman Minsky’s analysis of why stability is destabilizing.


The Federal Reserve seems to be achieving the fabled soft landing.

With growth likely to transition down toward the longer-term trend in 2019, expect monetary policy to remain on hold for the foreseeable future. 

If the Fed were to move, the odds still favor an interest rate cut over an increase. 
We are likely at the peak of this rate hiking cycle.

Tim Duy Bloomberg 17 april 2019 

 Det erinrar om dagens situation där I USA centralbankschefen Greenspan försöker uppnå en "soft landing" på ekonomins hangarfartyg. Han känner att han inte kommer fram, drar gasen - räntan - i botten, men motorn, penningmängden, svarar inte. Farten sjunker.
Rolf Englund i Smedjan nr 4/1992



2019-04-15

US in the midst of the largest wealth bubble in post-World War II history

Today the United States sits in the midst of the largest wealth bubble in post-World War II history, as measured by household net worth (or wealth) relative to gross domestic product

 “well-intentioned government policies aimed at reducing the systemic risks of a crisis in the global financial system may have the unintended and perverse consequence of actually increasing the risk of such a crisis.” 

Or Hyman Minsky’s analysis of why stability is destabilizing.



Eugene Steuerle is a fellow and the Richard B. Fisher chair at the Urban Institute. 
He is co-founder of the Tax Policy Center of the Urban Institute and Brookings Institution.



2019-04-12

The independence of central banks is under threat from politics

Technocrats face a difficult challenge. The rich world has hardly any room to cut interest rates before hitting zero, so central banks will once again have to turn to unconventional stimulus, such as bond-buying. 

In a single generation billions of people around the world have grown used to low and stable inflation and to the idea that the interest rates on their bank deposits and mortgages are under control.

https://www.economist.com/leaders/2019/04/13/the-independence-of-central-banks-is-under-threat-from-politics

Did inflation targeting fail? 
Central banks have mostly escaped blame for the crisis.
How can it have gone so wrong? 
Martin Wolf, Financial Times, May 5 2009


Last month marked the 30th anniversary of the announcement of the “Brady plan”.


 In response to the 1980s Latin American debt crisis, this plan, named after then US Treasury Secretary Nicholas Brady, allowed countries to exchange their commercial bank loans for bonds backed by US Treasuries, bringing an end to a tumultuous period with possible systemic consequences for the global banking system at the time. 

In what was then a novel approach, banks agreed to provide much needed debt relief—the average write down was 35 percent—in exchange for risk-free tradable instruments.

https://blogs.imf.org/2019/04/11/the-imf-30-years-after-brady/

Skuldkrisen - LDC Debt

Rolf Englund, Den Stora bankkraschen, Timbro, 1983


Shadow Banking SKYROCKETS To $52 Trillion and Completely Out of Control! Major Risk

IMF fears Italian debt spiral, and Macron is making it even more dangerous

2019-04-11

What to do if stagnation threatens when interest rates are already close to zero?

We are back to facing the same question as in 2016: What to do if stagnation threatens when interest rates are already close to zero?

The depth of the subsequent recession, and the long period of slow growth that followed, was the result not of continued financial system fragility, but of the excessive leverage in the real economy that had developed over the previous half-century. 


Faced with slow growth, political discontent, and large inherited debt burdens, monetary finance cannot be a taboo option.

Adair Turner Project Syndicate 29 March 2019


See also https://www.project-syndicate.org/commentary/defending-helicopter-money-stimulus-by-adair-turner-2016-08

 Adair Turner, a former chairman of the United Kingdom's Financial Services Authority and former member of the UK's Financial Policy Committee, is

Chairman of the Institute for New Economic Thinking. 

His latest book is Between Debt and the Devil.

2019-04-09

The night of the referendum, as the results came in, my old comrade was both upbeat and realistic. “It’s a great victory,” he said, “but you realise they’ll never let it happen.”

In 1992, the Danes voted against Maastricht; their government secured opt-outs and, in 1993, the public backed the Treaty on a second referendum.

In 2001, the Irish rejected the Nice Treaty; a year later, after caveats, they gave it the nod.

In 2005, France and the Netherlands voted down the EU constitution; the EU repackaged the constitution as the Lisbon Treaty and carried on merrily. 

The Irish said no to Lisbon in 2008 but affirmed it after a rethink in 2009.

Local politicians have been instrumental to these reversals. 

Tim Stanley Telegraph 8 April 2019


Ett svenskt medlemskap i euron är inte aktuellt just nu.
Ulf Kristersson 16 maj 2018

Moderaterna inför EU-valet 2014: 
"Vi är i grunden positiva till en gemensam valuta"


Vid sitt framträdande hos SNS talade Göran Persson om Europaparlamentets växande maktambitioner.

- Man måste behandla dem artigt och med respekt, annars blir det låsningar, ungefär så sade Göran Persson, som uppskattat sina möte med de andra Stats- och regeringscheferna i Det Europeiska Rådet.



Towards a genuine capital markets union

Integrated capital markets require effective supervision. As a starting point, the European Securities and Markets Authority (ESMA) should contribute to further convergence of supervisory practices, in accordance with its mandate, notwithstanding the open debate on future integration steps. 

The recent agreement on the framework for the European System of Financial Supervision will also contribute to more harmonisation.

Such a Financing Union would be a decisive and feasible step to complete our Economic and Monetary Union.

François Villeroy de Galhau, Governor of the Banque de France and Dr Jens Weidmann, President of the Deutsche Bundesbank

Deutsche Bundesbank 4 april 2019

German elite call for radical rethink of EU's Brexit strategy

Gabriel Felbermayr, head of the Kiel Institute for the World Economy, said the EU’s Brexit strategy had gone off the rails and should be stopped before it does any more harm to long-term relations with Britain.
A new formula must be found to ensure friendly ties with countries on the outer rim of the European continental system that do not wish to be part of ever-closer union.



Battle for Tripoli escalates as fighting nears Libyan capital

Haftar’s self-styled Libyan National Army, backed by the United Arab Emirates, is leading a multi-pronged assault on the capital in an attempt to overthrow the Tripoli-based GNA.

https://www.theguardian.com/world/2019/apr/07/libya-us-forces-evacuated-haftar-seeks-military-control



On 19 March 2011, a multi-state NATO-led coalition began a military intervention in Libya

https://en.wikipedia.org/wiki/2011_military_intervention_in_Libya

The United States and Britain have warmly welcomed Libya's decision to abandon its programmes for developing weapons of mass destruction.

http://news.bbc.co.uk/2/hi/africa/3336627.stm


British Prime Minister Tony Blair put his personal seal of approval on Libya's return to international respectability by shaking hands Thursday with Libyan leader Moammar Gaddafi in a ceremonial Bedouin tent near Tripoli.
Blair's visit to the home of the Arab ruler, whom President Ronald Reagan once described as the "mad dog of the Middle East," constituted a diplomatic reward for Gaddafi's agreement to dismantle Libya's weapons of mass destruction programs and condemn terrorism.





Without Stock Buybacks the Stock Market Would Collapse! Unless...


https://www.youtube.com/watch?v=Icu4eZ-2alk

Corporate buybacks alone cannot account for the extent of this year’s rally

https://www.marketwatch.com/story/how-is-this-possible-analysts-puzzle-over-stock-markets-rally-amid-equity-fund-exodus-2019-04-05

The surge in buybacks reflects a fundamental shift in how the market is operating, cementing the position of corporations as the single largest source of demand for American stocks.

https://www.nytimes.com/2019/02/25/business/stock-market-buybacks.html