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2020-12-02

Rather than secular stagnation the world economy will experience secular stagflation

The ageing and shrinking of the population in so many parts of the world is a striking and new phenomenon in human history.


Take Italy nearly a third of its population is over 60


Charles Goodhart and Manoj Pradhan in The Great Demographic Reversal


FT 2 December 2020



https://www.ft.com/content/fcbccad8-491e-4f5b-a859-6622bc368e5c




2020-12-01

Sky-high stock prices make sense, Robert Shiller says

The low level of interest rates indicates that equities may not be overvalued after all


MarketWatch 1 December 2020



https://www.marketwatch.com/story/sky-high-stock-prices-make-sense-robert-shiller-says-11606838599?mod=home-page





The IMF and the Nobel fraternity helicopter money or something akin to Modern Monetary Theory (MMT)

The IMF and the Nobel fraternity are more worried that the global economy will slip into a protracted slump as defaults increase and long economic Covid does its worst. 

If so, there will be pressure on central banks to tear up the rule book and opt for helicopter money or something akin to Modern Monetary Theory (MMT), in which case debate on the technicalities of today’s QE becomes irrelevant.


Ben Bernanke is calling for a “coordination mechanism” between the Fed and Congress, pointing the way to joined-up fiscal and monetary policy. 


He has suggested the nuclear option of helicopter money to fund the federal deficit and inject money into the veins of the economy.


Central bank independence as we knew it has become a shibboleth. 


Lord Adair Turner from the Institute for New Economic Thinking proposes a fiscal twin to the Monetary Policy Committee that could calibrate the dosage of monetisation in order to prevent electoral prime-pumping by politicians.


It would be dangerous for the UK to go it alone, but there is herd immunity from the markets if all the big central banks move in concert.


The world is not yet ready for such a radical departure. But when you have the IMF warning that the global economy is in a liquidity trap, it may not be so far away either.


Ambrose Evans-Pritchard Telegraph 30 November 2020



https://www.telegraph.co.uk/business/2020/11/29/dangerously-close-repeating-austerity-errors-2010/



2020-11-30

Martin Wolf selects his must-read titles for the second half of 2020

 

https://www.ft.com/content/9933dd9b-a464-4ebd-8ef7-3919ddace416





“The whole idea behind [flying boats] was passenger comfort

https://www.cnbc.com/2020/11/30/historic-airline-photos-from-golden-age-of-travel.html


Stratocruiser

https://www.youtube.com/watch?v=RbCbxEVYFaM



Hagwall, Svegfors och Mats Johansson

Svenska Dagbladets ledarsida var under Hagwalls chefsperiod starkt engagerad för svenskt EU-medlemskap, men intog en kritisk hållning gentemot EMU.projektet. 


Detta ledde till en växande kritik gentemot Hagwall och chefredaktören Mats Svegfors från den moderata partiledningens sida. 


Svegfors lämnade tidningen i februari 2000 och Hagwall i september samma år. (Wikipedia)


Omsvängningsledaren - 

Mats Johanssons första dag som politisk chefredaktör 

SvD-ledare 2000-02-16


http://www.nejtillemu.com/mjsvd.htm#svdturn



2020-11-29

In his General Theory of Employment, Interest and Money, John Maynard Keynes talked of the euthanasia of the rentier

where investors relying on interest income would struggle to survive as rates fall. 


In today’s world of low and negative interest rates we are witnessing both the euthanasia of the rentier and of the bond vigilante.


This accumulation of debt appears to have a diminishing ability to generate growth. 


This is worrying because the complementary monetary policy toolbox is close to bare. 


John Plender FT 28 November 2020



https://www.ft.com/content/784460c2-b12c-4269-be5c-11ffc9b80626




No weather event affects the power system more than heatwaves. The biggest impact on electricity demand, by far, is from air conditioners.

In Adelaide and Melbourne, demand could double in a heatwave due to air conditioning, Mr Skinner said.


"At about 7:00pm or 8:00pm on a typical Victorian weekday, the demand would be about 5,000 megawatts; on an absolute extreme stinker of a day, maybe 43 degrees or something, it would be around 9,500 megawatts.


https://www.abc.net.au/news/2020-11-29/heatwave-pushes-power-grid-to-the-limit-electricity/12930308


In 2050, as much energy will be used for world air conditioning as the whole of China uses today to produce all its electricity.



2050 kommer lika mycket energi att användas till världens luftkonditionering som hela Kina använder i dag för att producera all sin elektricitet


https://englundmacro.blogspot.com/2020/08/det-ar-kort-sa-kan-man-helt-kort.html


Sydney records hottest November night on record


https://www.bbc.com/news/world-australia-55118406

2020-11-27

Extremt låga räntor leder ofta till stigande priser på aktier, fastigheter och andra tillgångar

 Här kan man se hotet att Riksbanken medverkar till blåsa upp finansiella bubblor som förr eller senare spricker, med påföljd att det kan uppstå finanskriser.

Johan Schück 26 november 2020

https://johanschuck.se/riksbankens-balansgang-hur-mota-dagens-kris-utan-att-skapa-nya-kriser/

I Stockholm, Göteborg och Malmö har 40-talister tjänat mellan 3 och 6 Mkr på att bo i småhus

Inflationen var hög under 70- och 80-talen så lånen krympte snabbt, samtidigt som villapriserna steg. Det stora lyftet var att ränteavdragen var mycket gynnsamma, ekonomerna döpte effekten till att ”villaägare fick betalt för att bo”.

Ett nytt lyft kom efter 90-talskrisen då kreditmarknaden avreglerades, amorteringsfria lån introducerades och storstadsregionerna växte snabbt vilket ledda till ökande villapriser. Dessutom ombildades cirka 200.000 hyresrätter till bostadsrätter med förmånliga villkor. Här kunde många hushåll lägga grunden till en bostadskarriär.

DI 21 november 2020

https://www.di.se/nyheter/borallyts-bittra-baksida-de-missade-graddfilen-unga-har-drabbats-hart/

2020-11-26

The Dollar Is Weak. Investors Bet It Will Slide Even More.

The U.S. dollar hit its lowest levels against a basket of currencies in more than two years this week.

The consensus view of a falling dollar is based on a big assumption: 


Covid-19 will be more or less conquered in the months ahead. Vaccines will allow economies around the world to return to normal within the next year, encouraging investors to step back from the relative safety of U.S. assets and invest in stocks, bonds and currencies outside the U.S.

https://www.wsj.com/articles/investors-bet-on-more-dollar-weakness-11606386601




The Great Reset

What Do We Do with All That Debt?

But that still doesn’t answer the question that is on our minds: What happens when we come to the place where we have to deal with all that debt? Fortunately, my favorite central banker, Canadian Bill White who was the BIS chief economist, did a brilliant interview with my friend Mark Dittli in Switzerland this week which gives us some answers.

… my point is: Central banks create the instabilities, then they have to save the system during the crisis, and by that they create even more instabilities. They keep shooting themselves in the foot.

https://www.mauldineconomics.com/frontlinethoughts/the-great-reset-vs.-the-great-reset

Bill White world’s central banks were making a mistake with their single-minded focus on monetary policy, Mauldin


2020-11-25

More remarkable still was the lack of any kind of programme to close the yawning gap between government revenue and spending

After the 2010 crisis, George Osborne came up with the programme to achieve a surplus within six years. He never achieved it, and kept pushing the date back, but at least there was an intention to balance the books. 


Sunak foresees borrowing levelling off at £100 billion a year after 2023/24. 


No UK government has balanced the books since 2003; now, we’re not even going to try.


https://www.telegraph.co.uk/news/2020/11/25/debt-exploding-deluded-spendthrift-government-has-no-intention/