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2022-11-25

Climate Progress Is Happening, Just Not Fast Enough COP27

 It would’ve been better to do more, of course, since the world is still on course for devastating levels of warming.

The ethics of the “loss and damage” question were never in dispute. Rich countries have already emitted almost all the carbon the atmosphere can stand if climate change is to be arrested. 

A group of countries led by the US and Japan announced a $20 billion financing package to support Indonesia’s plan to shift from coal to renewables.

The agreement would not have happened without the leadership of Indonesia and the G-7 nations, along with Mark Carney and Mary Schapiro of the Glasgow Financial Alliance for Net Zero, a group Carney and I co-chair that includes many of the world’s largest financial firms and asset managers. 

Michael R. Bloomberg Bloomberg 25 november 2022

Michael R. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News

https://www.bloomberg.com/opinion/articles/2022-11-25/michael-bloomberg-on-cop27-climate-progress-is-happening-just-not-fast-enough


The COP climate process has been a miraculous success, thanks to technology and capitalism

Ambrose Evans-Pritchard Telegraph 22 November 2022 

https://englundmacro.blogspot.com/2022/11/the-cop-climate-process-has-been.html


 


Pressure on the Hong Kong Dollar Peg Keeps Building

 The social and economic costs of maintaining the currency’s link to the greenback may be getting too great to continue bearing.  

Richard Cookson Bloomberg 23 november 2022

https://www.bloomberg.com/opinion/articles/2022-11-23/pressure-on-the-hong-kong-dollar-peg-is-building


2022-11-24

Den 1 januari 2006 tillträder Stefan Ingves som riksbankschef.

 Han kommer från ett toppjobb vid Internationella valutafonden IMF. Innan dess har han bland annat hunnit med att vara vice riksbankschef och generaldirektör för bankstödsnämnden.

Efter finanskrisen uppstår en konflikt i Riksbankens direktion om hur snabbt räntan ska sänkas för att stimulera ekonomin. Ingves är på sidan som vill skynda långsamt. 

Konflikten blir offentlig sommaren 2012 när vice riksbankschef Lars EO Svensson går ut och anklagar sina kolleger för att föra en politik som i onödan driver upp arbetslösheten.

Även om Lars EO Svensson har lämnat får han till slut gehör för sin linje om sänkt ränta. I juli 2014 sänker Riksbanken räntan med 50 punkter från 0,75 procent till 0,25 – mot chefens vilja. Enligt protokollet har Ingves förordat en mindre sänkning, på 25 punkter, men blivit nedröstad.

Det är första gången i Riksbankens historia som den övriga i direktionen kör över sin chef. Ingves gör sitt bästa för att tona ner oenigheten. Att det blev 50 och inte 25 punkter var enligt honom en fråga om ”nyansskillnader”.

Samtidigt innebär det penningpolitiska mötet den 2 juli i princip slutet för den period då Riksbanken hållit räntan högre för att dämpa hushållens skulder och bostadspriser. Från och med nu är det inflationen och inget annat som gäller.

Direktionen lyfter vid mötet över ansvaret för hushållens skulder på politikerna, med formuleringen ”att det nu är ännu mer angeläget att andra politikområden vidtar åtgärder för att hantera riskerna...”.

Birgitta Forsberg, Mikael Törnwall, Anders Billing SvD 23 november 2022

https://www.svd.se/a/onEjXj/ingves-slutar-pa-riksbanken-efter-17-ar


Riksbanken har sänkt räntan till noll.

Det skall väl få tyst på en del av den enfaldiga kritiken ledd av Lars E.O. Svensson, som, även om det är väl dolt på sidan om honom hos Wikipedia, var vetenskaplig rådgivare åt riksbanken när Bengt Dennis och Carl Bildt misslyckades med kronkursförsvaret, trots en ränta på 500 procent.

Så skilda personligheter som Bertil Ohlin, John Maynard Keynes, Adolf Hitler och Ernst Wigforss insåg att när räntan hade sänkts och det ändå inte blev fart på ekonomin skulle man använda använda andra metoder.

Till och med Hitler förstod att det var bättre att folk byggde motorvägar och Volkswagen-bilar än att de skulle gå arbetslösa och inte göra något.

På senare år har emellertid Tea Party-typer lyckats utnyttja vanligt folks oförmåga att skilja på statens budget och sin egen och skrämt dem med att staten i dåliga tider måste spara, det måste vi ju alla göra...

Ingen i TV-soffan har haft modet att stå emot detta budskap. 

Englund blogg 28 oktober 2014

https://englundmacro.blogspot.com/2014/10/jag-tycker-det-ar-skriande-uppenbart.html



Riksbanken kommer att anpassa penningpolitiken på det sätt som behövs för att säkerställa att inflationen återförs till målet inom rimlig tid

 För att få ner inflationen och värna inflationsmålet har direktionen beslutat att höja styrräntan med 0,75 procentenheter till 2,5 procent. 

Prognosen visar att styrräntan sannolikt kommer att höjas ytterligare i början av nästa år för att då vara strax under 3 procent. 

https://www.riksbank.se/sv/penningpolitik/penningpolitisk-rapport/2022/penningpolitisk-rapport-november-2022/

https://www.riksbank.se/globalassets/media/rapporter/ppr/svenska/2022/221124/bilder-fran-presstraffen-den-24-november-2022.pdf

https://www.di.se/live/riksbanken-hojer-rantan-med-75-punkter-spar-ingen-sankning-innan-2025/

https://www.di.se/nyheter/riksbankens-inflationsskrack-rantan-kan-hojas-till-4-5-procent/

https://www.di.se/nyheter/varningen-nya-rantebanan-knacker-bomarknaden-ar-redan-jattepaverkad/

https://www.svd.se/a/jlv07w/nordea-spar-rorliga-borantor-pa-over-5-procent


The extraordinary thing about rates is not how high they are but how low

https://englundmacro.blogspot.com/2022/10/the-extraordinary-thing-about-rates-is.html



2022-11-22

Cryptotalk at Thanksgiving

 Holiday gatherings are going to be awkward for people who told their relatives to buy cryptocurrencies last year.

When his family discusses crypto at Thanksgiving this year, Tyler Lucky says his parents will “slap me upside the head and say I’m dumb.”

The 28-year-old tech consultant in Virginia told his relatives all about digital currencies and non-fungible tokens at the family gathering in 2021. Now, he’s preparing himself for them to say: “I told you so.” 

“They’ll say, ‘Why didn’t you go into something safer?’” Lucky said, adding he expects them to ask why he didn’t invest in companies like Apple Inc. or Microsoft Corp. 

For that, he has a ready reply: “They haven’t done so well either.”

Claire Ballentine Bloomberg 22 November 2022

https://www.bloomberg.com/news/articles/2022-11-22/bitcoin-btc-and-ftx-crypto-investors-face-awkward-questions-at-thanksgiving


When I was an investment banker,

 one thing that I did was pitch convertible bond offerings to companies. A coverage banker — an investment banker whose job was to know companies and advise them on financial topics — would bring me to a meeting with the chief financial officer of one of her companies to talk about convertible bonds. 

And I would come in and say “the convertible bond market is hot, you should do one, we think you could raise $200 million of 5-year convertibles and pay 2% interest with a 30% conversion premium.” 

Matt Levine Bloomberg 22 november 2022

https://www.bloomberg.com/opinion/articles/2022-11-22/s-p-overpromised-and-overdelivered


The rental surge of 2021-22 was quite spectacular,

 with rents rising at double-digit rates for about a year and a half. But it has leveled off recently. 

In fact, Zillow’s index have been signaling rent declines for two or three months. This is good news for renters. It’s also, potentially, good news for the fight against inflation.

Actual rents plus these “imputed” rents account for more than 30 percent of the Consumer Price Index, and almost 40 percent of the so-called core index, which excludes food and energy.

So rising rents have been a major factor in stubbornly high inflation, which led many economists (again, myself included) to retreat from the view that inflation was transitory.

I don’t want to overstate the bottleneck story. We probably do, in fact, have an overheated economy, which would have inflation problems even in the absence of bottlenecks in specific areas. But a larger amount of recent inflation now looks more transitory than many economists were arguing even a few months ago.

But here’s the thing: Easing rent inflation hasn’t yet begun to show up in official price statistic

Paul Krugman NYT 22 Novenber 2022


The COP climate process has been a miraculous success, thanks to technology and capitalism

 The star of Glasgow was South Africa. The country agreed to shut most of its 15 coal plants by 2030, even though coal provides 85pc of its power and employs 80,000 people. 

That deal was made possible by an $8.5bn pilot project of cheap loans from the US, UK, and the EU known as the Just Energy Transition Partnership (JETP). It has had teething problems but remains the global template. 

In Sharm El-Sheikh the star was Indonesia, the second of the JETP series, this time drawing the biggest financial climate package ever put together. The country agreed to halt 13 gigawatts of planned coal plants, phase out unabated coal plants, and start reducing power emissions by 2030, seven years early and at a much lower level than expected. 

In recompense, the US and Japan will lead the West in coming up with $20bn of funding, half from state agencies, which in turn unlocks the other half from HSBC, Bank of America, et al, under the Glasgow Financial Alliance for Net Zero.

Ambrose Evans-Pritchard Telegraph 22 November 2022 

https://www.telegraph.co.uk/business/2022/11/22/cop-climate-process-has-miraculous-success-thanks-technology/


Glasgow Financial Alliance for Net Zero

GFANZ was launched in April 2021 by UN Special Envoy on Climate Action and Finance Mark Carney and the COP26 presidency, in partnership with the UNFCCC Race to Zero campaign, to coordinate efforts across all sectors of the financial system to accelerate the transition to a net-zero global economy. 

https://www.gfanzero.com/


Svensk ekonomi har fyra varningslampor som blinkar i EU-kommissionens årliga kontroll

Huspriserna i Sverige beräknades vara övervärderade med 35 procent 2021, en av de högsta nivåerna i EU, skrev kommissionen i rapporten. 

Kommissionen varnar för risker med övervärderade huspriser, hög privat skuldsättning, snabb ökning av skuldsättningen och hög ungdomsarbetslöshet. DI 22 november 2022

https://www.di.se/live/eu-kommissionen-ser-flera-varningslampor-i-svensk-ekonomi/


Mortgage Market Upheaval - $17 Billion in Paper Losses for Banks

While rising rates buoy revenue for the country’s largest banks, in the short term they also force them to write down the value of assets they hold on their balance sheet

Bloomberg 17 November 2022

https://www.bloomberg.com/news/articles/2022-11-17/mortgage-market-upheaval-sparks-17-billion-in-paper-losses-for-us-banks


Credit Suisse How a bastion of Swiss banking lost its way

For more than 160 years, Credit Suisse Group AG’s stone-clad headquarters on Zurich’s moneyed Paradeplatz has exuded power, stability and quiet wealth. 

Those days are over.

It’s one of the few banks that’s in a weaker position today than when it emerged from the 2008 global financial crisis—notably without a state bailout.

Bloomberg 22 november 2022

https://www.bloomberg.com/news/features/2022-11-22/credit-suisse-s-future-hinges-on-overcoming-a-fraught-past


Den svenska styrräntan sjönk under nollstrecket 2015,

så förblev det fram till ingången av 2020. 

Ända fram till maj i år var styrräntan noll. 

Riksbankschefen hävdade i februari 2022 att styrräntan skulle vara noll fram till 2024

DI 22 november 2022

https://www.di.se/debatt/debatt-ingves-bedrovliga-tajming-har-forsvagat-ekonomin/


 

Sweden Is Rethinking What Makes It Great


Sweden was never able to match its generous policy toward migrants with its ability to absorb them into society.

Successive waves of refugees, hailing from Bosnia, the Middle East and Somalia, have been trapped in housing developments on the peripheries of big cities such as Stockholm, Gothenburg, Upsala and Malmo. 

The combination of geographical isolation with low skills in a high-wage economy (with minimum wages negotiated at two-thirds of the median wage) proved toxic. Parallel societies based on clan and religious ties developed. Young people were recruited by criminal gangs. Drug-related crime and violence exploded.

The final straw came in 2016 when Sweden granted 156,031 residence permits to refugees

Bloomberg 22 November 2022



OECD inflation


 

Vi har inte ens sett början av de stora obligationsförfallen i fastighetsbolagen

Hans Bolander DI 22 November 2022

https://www.di.se/nyheter/fastighetsforvaltaren-vi-ar-mitt-i-stormens-oga/


Fed this year has been raising rates at the fastest pace in four decades

 

https://www.wsj.com/articles/feds-aggressive-rate-hikes-are-a-game-changer-11669006579


WSJ 21 November 2022

Under 200 år har vi skapat dagens samhälle

 Nu måste vi göra om samhället i grunden på 20-30 år.

 Sett på nätet, förmodligen Bloomberg.


2022-11-21

Sweden’s home-price decline accelerated in October,

 as the Nordic country gripped by the most severe housing slump in three decades shows what may lie ahead for many other developed economies. 


 Home prices in Canada are now down 10% from the peak. In addition to Sweden, peak-to-trough declines of as much as 20% are forecast for countries including the US, the UK and New Zealand.

Bloomberg 21 November 2022

https://www.bloomberg.com/news/articles/2022-11-21/sweden-s-housing-market-rout-deepens-in-showcase-for-world


Remember 2008

Although the repercussions of the carnage in crypto markets won’t be as broad or dire as those of the 2008 financial crisis, the parallels between the two episodes offer insights into what went wrong, and what’s likely to come.

All financial manias have some features in common. Strong beliefs feed into self-reinforcing feedback loops. On the way up, positive performance and speculation compound one another, fueled by borrowed money. 

On the way down, everything runs in reverse. Failures erode trust and participants flee until the whole system breaks down.

In the 2000s, the central belief was that home prices couldn’t decline on a national basis. 

In crypto, the belief was that this new market would keep growing until it displaced traditional finance.

Bill Dudley Bloomberg 21 november 2022

https://www.bloomberg.com/opinion/articles/2022-11-21/want-to-know-where-crypto-is-headed-remember-2008


This crypto pioneer wants tough U.S. laws to prevent another FTX and stabilize digital markets. 


A small but vocal group of critics is, paradoxically, urging a “head in the sand” approach to these market events — both of which were caused by irresponsible risk-taking and fraud rather than the failure of the underlying blockchain technology. 

These critics contend that legislation will legitimize an irredeemable industry. 


2022-11-20

Denmark’s central bank has no inflation mandate, instead focusing on keeping its currency tied to the euro

That’s worked well when prices hardly moved. 

Denmark’s inflation rate is now at 10.1%, the highest since around the time the peg was introduced four decades ago. In recent months, some Danish economists, think tanks and a former government minister have argued that there should be a discussion about whether the fixed-exchange-rate policy is still the right choice.

Olsen at Danske Bank says he thinks Denmark will opt to keep its peg, given the current monetary policy is backed by a majority of academics, government officials, politicians as well as the central bank itself.

Bloomberg 18 November 2022

https://www.bloomberg.com/news/articles/2022-11-18/danish-inflation-frustration-boils-over-to-spark-euro-peg-debate


Allan Larsson: Jag var mitt i smeten, i Riksbanksfullmäktige

Den morgonen 1992 /som kronan flöt/ hade finansminister Wibble begärt vårt stöd för att knyta kronan till Dmarken! Kronan skulle bli hårdvaluta! 

- Riksbanksledningen hade förstått att klockan var slagen och styrelsen godkände ett förslag till en process som innebar att marknaden skötte omläggningen av valutaregimen! 

Kronan fick ingen ny fast kurs, den fick flyta - det var början på en ny tid!

Allan Larsson på Facebook 20 november 2022


En felaktig analys låg i botten på den första uppgörelsen mellan oss och regeringen", menade Allan Larsson [i Visby på söndagen]. 

Man trodde att det var de dåliga statsfinanserna som rubbat tilltron och orsakat valutaspekulationen. I verkligheten var det finanskrisen, anser Allan Larsson i dag.

DN-ledare 1993-07-19

Han var 1990–1991 Sveriges finansminister, satt i styrelsen för Sveriges riksbank 1991–1994. 

Åren 1967–1969 arbetade han i Statsrådsberedningen och ingick i Tage Erlanders stab av politiska medarbetare. 1971 återgick han till Svenska metallindustriarbetareförbundet som utredningschef. Han författade där en av de motioner till LO-kongressen år 1971 som ledde fram till förslaget om löntagarfonder år 1974.

RE: De flinande finansvalparna i New York brydde sig inte om hur många karensdagar vi hade i sjukförsäkringen.





Central banks and inflation - eroded their credibility in the eyes of investors and society at large

Central banks’ independence is harder to justify after such a failure of “analysis, forecasts, action and communication,” Allianz SE’s chief economic adviser, Mohamed El-Erian, tweeted in October. 

The tragic result, he says, is “the most front-loaded interest­-rate cycle that we have seen in a very long time

When reckless lending eventually blew up the housing and credit markets in 2008, then-chair Ben Bernanke deployed the Fed’s balance sheet in ways that hadn’t been seen since the Great Depression.

Their coordinated response in March 2020 put a floor under asset prices and kept bond yields low, helping governments fund the massive spending needed to support millions of ­unemployed people.

While central banks in most modern economies enjoy day-to-day independence, their mandates are set by democratically elected governments. 

Bloomberg 20 November 2022

https://www.bloomberg.com/news/features/2022-11-20/inflation-has-humbled-central-bankers-here-s-how-they-can-regain-trust


Rolf Englund: 

Om centralbankerna inte kunde få upp inflationen från noll till två, hur kan då någon tro att de inom rimlig tid skall få ner den från 8-10 procent till två?



2022-11-18

Börsen 17 november 2022

 






One chart is all it took to move financial markets

That chart was presented by St. Louis Fed President James Bullard and it shows where he sees “the sufficiently restrictive zone” for the central bank’s main policy rate target.

Bullard put the zone somewhere between 5% to 7%

Bullard’s zone was based on estimated policy levels recommended by Taylor-type rules

https://www.marketwatch.com/story/this-is-the-chart-that-is-rattling-u-s-financial-markets-thursday-11668701498


Inflation may improve at times. The point is we aren’t going back to the halcyon days of 1% and 2% inflation for years 

John Mauldin 23 September 2022

https://englundmacro.blogspot.com/2022/09/the-federal-open-market-committees-fomc.html