Englund

När det gäller den period med krympande BNP som inleddes 2012 är experterna i stort sett eniga: Finland hade kunnat lyfta sig snabbare ur recessionen med en egen, fritt flytande valuta.  DI/TT 30 december 2016

It was the morning after the night before and I was riding an elevator to the 13th floor in the European Commission.  Two men smiled at each other and one said "I hear Greece has been saved". "Couldn't be better," beamed the other, before disappearing into the vastness of bureaucracy. It felt like news shared from a distant front: "Bastogne has been relieved" or "Malta is holding out". Gavin Hewitt, the BBC's Europe editor blog 26 March 2010 In 1940, Malta found itself at the heart of a raging battle between Allied and Axis powers for naval control of the Mediterranean. Malta Today 21 December 2016

from whatever it takes to less is more targeting steeper yield curves  and the transmission mechanism of stimulus to the real economy,  Monetary stimulus without appropriate fiscal action  encouraged misallocation of resources to zombie firms and banks that should otherwise restructure; created asset bubbles in high dividend equities, property and precious metals, as well as art and collectibles;  and widened the gap in relative wealth between the haves and the have-nots. Alberto Gallo, FT 27 December 2016

Louise Andrén Meiton, SvD 28 december 2016

FT 27 December 2016

http://www.oftwominds.com/blogdec16/assets-liabilities2-16.html

Last-gasp private rescue plan for the world’s oldest bank looks set to fail FT 21 December 2016 Italy is to nationalise Banca Monte dei Paschi di Siena  Ambrose, Telegraph 9 December 2016

Party Like It’s 19,990 So. Is the smart money with ETFs? -  the most successful investment innovation of our time. The blog kept by the fund manager John Hussman is much followed, even if it is also much derided.  He has been incorrectly bearish on US stocks for much of the post-crisis era. But it would be unwise to ignore him. John Authers FT 21 December 2016

bloomberg.com/view/articles/2016-12-20/

When Italy adopted the euro in 1999, he had argued that Italy would change  from being an economy with a high probability of many currency devaluations  to one with the certain probability of eventual bankruptcy.  John Mauldin 7 December 2016

has been exceeded only in the 1929 mania, the 2000 tech mania, and the 2007 housing and stock bubble,”  MarketWatch 20 December 2016

Promoting economic growth and employment is one of the Fed’s core missions, assigned to it by Congress in (I believe) 1974.  It was a triumph of Keynesian thought over Hayek’s beliefs; and despite all evidence to the contrary, most market participants still think that monetary policy is the magic that drives the business cycle.  Policy is supposed to moderate the boom-and-bust cycle and lift the economy out of recessions within a reasonable period.  On that point, monetary policy has failed miserably. We’re seven years out of recession and have yet to see GDP growth break above 3%. The Fed’s answer in this week’s episode was to throw in the towel: Expect more of the same.  John Mauldin 19 December 2016

Today’s young Wall Street hotshots have never seen anything like that. To them the jump from 0.5% to 0.75% must seem like a big deal. It’s really not.  If the chart above were a heart monitor readout, we would say this patient is now dead and that last blip was an equipment glitch. John Mauldin 19 December 2016

If we, the liberal establishment, fail to do this, the populists will do it for us. Wolfgang Münchau, FT 18 December 2016

War of words breaks out between officials over austerity measures FT 15 December 2016

Greece was patently insolvent. It needed a textbook debt write-off to restore viability.  This was blocked because everybody feared a calamitous chain-reaction through Portugal, Ireland, Spain, and Italy. Ambrose Evans-Pritchard 14 December 2016 Greece cannot be condemned to austerity for ever Pierre Moscovici, European commissioner for economic and financial affairs, taxation and customs,  FT 15 December 2016

William Cline, a senior fellow at the Peterson Institute for International Economics, see further currency gains ahead. FT 13 December 2016

Most econ models are still based on rational expectations, the idea that people don’t systematically make errors when forecasting the future, A small but increasing number of papers are asking how markets would behave if investors improperly extrapolate recent trends into the future. Noah Smith, Bloomberg 8 December 2016

Storbankerna är skyldiga att hålla en viss mängd tillgångar som ses som likvida, som alltså enkelt kan säljas vid behov. Bankernas så kallade likviditetsreserver består till stor del av andra bankers bostadsobligationer,  ett korsägande som kritiserats av bland annat internationella valutafonden. SvD Louise Andrén Meiton 12 december 2016

as soon as this weekend, wiping out investors in a dramatic escalation of the country’s banking woes and political crisis. The Italian treasury has been left with no other option after the European Central Bank refused to give the crippled lender more time to clinch a deal with private funds.     Ambrose, Telegraph 9 December 2016

Most people don’t apply the right maturity and/or duration to their portfolios Cullen Roche

arguably the greatest monetary policy experiment since John Law began dabbling with fiat paper money in France Robin Wigglesworth, FT 8 December 2016

He  also issued a scathing critique of the EU, which he said   'deserved Brexit' after failing on 'monetary union, foreign policy, migration policy, radical Islam policy' Daily Mail 7 December 2016

the effect of Trump’s policies on growth could be considerable. In Keynesian jargon, there is still a large multiplier on fiscal policy.  It is easy to forget the biggest missing piece of the global recovery is business investment, and if it starts kicking in finally, both output and productivity could begin to rise very sharply. Those who are deeply wedded to the idea of “secular stagnation” would say high growth under Trump is well-nigh impossible. But... Kenneth Rogoff, Project Syndicate 7 December 2016

This chart highlights a 35-year (1946-1981) US bond market, and our most recent-35 year (1981-2016) bond market MarketWatch 8 December 2016

" default risks are rising   because more and more corporations are relying on the short-term money market to raise the finance they need to repay existing debts." FT 8 December 2016

... 8.  If you are a policymaker or politician, plan to eventually retire from the Fed/Congress/Executive Wing and claim it'll be up to the Millennials now.  Bill Gross, 6 December 2016 Economic theory discredited

Remarkably, real domestic demand in the eurozone was 1.1 per cent lower  in the second quarter of 2016 than it had been in the first quarter of 2008.  This extreme weakness of demand should not have happened.  It represents a huge failure.  Martin Wolf, FT 6 December 2016

FT 5 December 2016

Politicians seem unwilling to implement it.  FT 6 December 2016

20 years already? Alan Greenspan and the ‘irrational exuberance’ MarketWatch, Dec 5, 2016  The day of the speech, the Dow Jones industrial average closed at 6,437.10 points

Gideon Rachman, FT 5 December 2016 Euro Collapse

The Economist, 5 December 2016 Valresultatet i Sverige folkomröstningen om EMU 56 Nej 42 Ja

How were they persuaded to vote for something they knew could make them poorer?  FT 11 November 2016

En av få personer på Wall Street som förutspådde den amerikanska bostadskraschen var förvaltaren Steve Eisman, lysande porträtterad i filmen ”The Big Short”. Enligt Steve Eisman är läget betydligt värre än vad marknaderna verkar vilja inse. Italiens banker sitter på svindlande 3 500 miljarder kronor i dåliga lån. Steve Eisman räknar med att de får tillbaka futtiga 20 procent av dessa pengar, enligt tidningen The Guardian.       Problemet är att  om bankerna skulle erkänna denna jätteförlust skulle de i samma andetag gå under och riskera att dra med sig euron i fallet.   Andreas Cervenka, SvD 3 december 2016, med länkar.

Mr Mnuchin plans that would restore the status of the Treasury department as the vital driver of economic policy.  For those who can remember the pre-crisis era, it felt like a throwback to heavyweight predecessors such as  Robert Rubin, Lawrence Summers and James Baker III. FT 1 December 2016

In its latest Economic Outlook, the OECD gives a thumbs-up to Donald Trump’s plans (if that is what they are)  to enact a large fiscal stimulus and increase infrastructure spending Martin Sandbu FT 30 November 2016

Bringing to a close the worst period for the housing market since the Great Depression. zerohedge 29 November 2016

  François Fillon’s pole position in the race to become the next president of France owes much to the votes and enthusiasm of one of the country’s quietest and least understood political forces: the discreet bourgeoisie of its more affluent provinces. Full text Borgarklassens diskreta charm (originaltitel: Le Charme discret de la bourgeoisie) är en fransk surrealistisk, satirisk dramakomedifilm från 1972 i regi av Luis Buñuel. Youtube

Has until year-end to raise 5 billion euros of capital - seven times its current market value  Bloomberg 23 November 2016

FT editorial 23 November 2016

Tail risks wagging the dog with Wall Street fear gauge Markets, in moments of extreme stress, are prone to reset their expectations for the future  violently, rather than in a smooth and orderly manner.  Miles Johnson, FT 21 November 2016

Failure by the EU to construct a proper economic and banking union after the eurozone crisis of 2010-2012 and to impose austerity instead.  If you want to know why Angela Merkel cannot be the leader of the free world, look no further.  The German chancellor could not even lead Europe when it mattered. Wolfgang Münchau, FT 20 November 2016 About Italy at IntCom

https://www.britannica.com/list/5-of-the-worlds-most-devastating-financial-crises More at IntCom

That fantastically inflated financial bubble which has been building since January 1981 will finally implode.  And this time it will stay imploded because the monetary and fiscal branches of the state have fully exhausted their capacity to defy the fundamental laws of economics and sound finance. Contra Corner 18 November 2016

Trump’s own policies combined with the Federal Reserve’s likely response to the fiscal expansion  (higher interest rates) in itself is likely to cause the US trade deficit to balloon. The Market Monetarist, 18 November 2016

But this is the wrong question.  Unless there is a considerable shift in Eurozone politics, Greece WILL leave the Euro - eventually.  The question is when, and how. Coppola, 8 June 2016

Larmgränsen har Swedbanks bostadsrättsexperter satt vid ett sparande på 150 kronor per kvadratmeter och år. Johan Hellekant, SvD 17 november 201 6 Ska du köpa en  bostadsrätt är det nödvändigt att gå igenom föreningens årsredovisning för att se hur det står till med ekonomin. Klarar du inte att tyda årsredovisningen själv måste du be om hjälp. Maria Crofts DN 17 november 2016 Om avskrivningar i Brf hos IntCom

Martin Wolf FT 8 November 2016

In the bond sell-offs of 2013 and 2015, the difference between the nominal yield on 10-year US Treasurys and the real yield (which strips out the rate of inflation) was minimal, meaning market expectations of inflation were almost non-existent.  Today that gap is expansive. Fears about the damage wrought by inflation have propelled a flood of money into inflation protected bonds, with more than $1bn poured into the funds in the week to October 26 — the second largest weekly total on record, according to data from EPFR. FT 9 November 2016

http://davidstockmanscontracorner.com/ http://wallstreetexaminer.com/

The old joke among international macroeconomists was that the acronym IMF stood not just for the International Monetary Fund, but for “It’s Mostly Fiscal”.  It’s Mostly Fiscal is making a forceful comeback — including at the fund — which is all the more impressive for being flipped back to front.  The “new view” of fiscal policy, recently outlined in particular by White House economist Jason Furman, is that current economic ailments are largely due to excessively tight government budgets, and that the solution is more public borrowing and greater budget deficits.  That also contrasts markedly with the pre-crisis consensus for normal times, which was that macroeconomic stabilisation should be handled by monetary, not fiscal policy. This is a big change Martin Sandbu FT 7 November 2016 Davies, New fiscal theory ?

E21 6 November 2016 Yellen should re-read Friedman’s “The Role of Monetary Policy” and lay the Phillips curve to rest The Market Monetarist 

Fiscal policy is once again seen as effective in stimulating aggregate demand, especially when interest rates are constrained by the zero lower bound.  The  Keynesian multiplier is viewed as unusually high in such periods. Monetary policy is believed to be severely constrained in the case of a new recession, so fiscal policy would be the only game in town. Gavyn Davies, FT 6 November 2016

One way to view the situation is that there have been four serious diagnoses of the ills of the Global North.  They are: A Bernanke global savings-glut.  A Krugman-Blanchard return to ‘depression economics’. A Rogoffian-Minskyite crisis of overleverage and debt overhang.  A Summers secular-stagnation chronic crisis.” DeLong points out that each leads to different policy recommendations FT 4 November 2016 Stabiliseringspolitik

Cervenka SvD 3 november 2016 Ingves om 1992: Denna garanti utvidgades den 24 september när regeringen meddelade att den i en proposition till höstriksdagen ämnade föreslå en allmän, statlig garanti för samtliga svenskägda banker samt några namngivna kreditinstitut med statlig anknytning. En annan stabilitetsskapande åtgärd var likviditetsstöd från Riksbanken. Riksbanken använde en stor del, 57 miljarder som mest, av sina vlutareservtillgångar som likviditets stöd i form av insättningar bankerna. Härigenom motverkades minskningen av utländska "credit lines", så att neddragningen av valutadenominerade krediter till svenska kunder kunde ske mera utdraget i tiden, vilket reducerade kreditförlusterna. Riksbanken lämnade också likviditet till bostadsinstituten i ett läge där marknaden för dessas certifikat inte fungerade. Enligt vår uppfattning stod det finansiella systemet i Sverige inför en  kollaps  den 24 september 1992. Utländska långivare hade tappat för

– Det har varit billigt för bankerna att finansiera svenska bolån med lån från utlandet. Skulle utlandet tappa förtroendet för Sverige, blir det svårt att förnya lånen. Då tvingas Riksbanken eller staten att träda in för att rädda bankerna på samma sätt som fallet var vid finanskrisen 1992. Louise Andrén Meiton, SvD Näringsliv 3 november 2016 1992

The truth is that governments and central banks have very few weapons left - and have probably lost any chance they once had of averting a prolonged stagnation. Bloomberg 26 October 2016

 Project Syndicate 19 October 2016 Park Chung-hee

Alla miljarderna har gått upp i rök.  Fast av principiella och framför allt inrikespolitiska skäl kan man inte säga det öppet,  eftersom det vore detsamma som att peka ut den som kommer att bli tvungen att ta hand om notan: de europeiska skattebetalarna.  Richard Swartz, kolumn DN 22 oktober 2016

- Its modest focus — it is titled “Macroeconomic research after the crisis” — is deceptive. Beyond useful research recommendations, Yellen’s words carry more profound implications,  including an admission of the extent to which central bankers are navigating in the dark,  and a return to much more aggressive policies for demand management than modern macroeconomic theory had until recently admitted. Read more here

Société Générale has reiterated its call for clients to load up on inflation-proofed bonds, on the view that even modest global fiscal stimulus and rising commodity in the coming year will accelerate price growth further. Bargain prices is an additional bonus. “You can buy inflation [protected bonds] on the cheap, but conventional bonds are extremely expensive,” says Alain Bokobza, head of global asset allocation at SocGen. FT 20 October 2016

FT 20 October 2016 Also by Authers: City of London’s most famous bear, Albert Edwards of Société Générale, asked this week whether the three-decade bond bull market was finally over.  As he is known for his “Ice Age” thesis, which holds that bond yields will continue falling amid sluggish economic conditions, it was startling to many that he even asked the question. FT 20 October 2016

“Realistically, it will be a case of muddling through, struggling from one crisis to the next. It is difficult to forecast how long this will continue for, but it cannot go on endlessly," he told the journal Central Banking in a remarkable deconstruction of the project. Ambrose Evans-Pritchard, Telegraph 16 October 2016

One of the smartest answers came from Axel Weber, former head of the Bundesbank, now chairman of UBS. Western banks now have far more spare liquidity and capital. “If you look at pre-crisis, you could run a global bank on 1 or 2 per cent of core tier one capital,” Mr Weber told Fox TV in Washington. “Now most of the banks are well above 10 per cent.” The issue that investors need to understand now is that many “markets” are not true market not true, free, markets because of heavy government intervention. To my mind, this point needs to be proclaimed with a megaphone. Gillian Tett, FT 14 October 2016 Gillian Tett serves as US managing editor. She writes weekly columns for the Financial Times, covering a range of economic, financial, political and social issues. In 2014, she was named Columnist of the Year in the British Press Awards and was the first recipient of the Royal Anthropological Institute Marsh Award. In June 2009 her book Fool’s Gold won Financial Book of the Yea

IMF has argued stridently that /Greece/ needs relief on the fiscal and debt front in order to generate growth.  The IMF is right.  Greece has made some notable changes to its economy, albeit from an extremely dysfunctional base.  But structural reform is generally contractionary in the short to medium term.  It needs to be accompanied by supportive fiscal policy.  FT Editorial 11 October 2016

And as with “serious” music, when economics becomes so divorced from reality that it fails adequately to explain the real world in which people live, people reject it.  People rightly ask why academic economists failed either to predict or adequately explain the financial crisis, whereas heterodox economists working in the real economy – many of them untrained in formal economics – not only predicted it but correctly identified the causes.  There is a real danger that the anger people feel over what they see as the failure of mainstream economics leads to rejection of mainstream economics in its entirety and, importantly, withdrawal of funding for academic economic research. This, I feel, would be a mistake. Frances Coppola,  27 JULY 2012 Economic theory discredited at IntCom

I must confess, the more I think about where the “monetary policy community” of academic elites has brought us, the angrier I get. It has been a long time since I have been this passionately upset about something.  And not merely because the policies are stupid. If I got passionately upset about every stupid idea I come into contact with, I would soon require serious blood pressure medication.  Having been intimately involved in the political process for almost 25 years in a prior life, I daily came into contact with stupid ideas and thought myself somewhat immune. I would argue that the Great Recession was a result of a massive monetary policy error: keeping rates too low for too long, which, when coupled with lax or no regulation in the mortgage markets, resulted in a housing bubble and a crash, which bled over to global markets.  This outcome should not have been a surprise to anyone. A number of us were writing as early as 2004–05 about the problems that were the primary t

Globaliseringen har oåterkalleligen krympt världen och vid fronten konfronteras man med den rent fysiskt,  en front som går genom förorten eller på landsbygden, inte i storstaden.  Skulle invandrarna vara lika fysiskt påtagliga och närvarande i Stockholm som ute i landet hade SD förmodligen redan varit Sveriges största parti. Richard Swartz, Kolumn DN 8 oktober 2016

" The European Commission in December proposed to establish a new Agency – designed to meet the new challenges and political realities faced by the EU, both as regards migration and internal security." http://europa.eu/rapid/press-release_AGENDA-16-3267_en.htm

http://www.bbc.com/news/business-37563160 http://www.imf.org/external/pubs/ft/gfsr/2016/02/index.htm

This should not be surprising. But it should be disturbing. Martin Wolf. FT 4 October 2016

http://www.coppolacomment.com/2016/09/a-dent-in-surface-of-time.html

Mish 29 sept 2016 US Dollar at IntCom US Trade Deficit at Google

In the first presidential debate, Donald Trump said,  "Now, look, we have the worst revival of an economy since the Great Depression.  And believe me: We're in a bubble right now.  And the only thing that looks good is the stock market,  but if you raise interest rates even a little bit, that's going to come crashing down. Nigam Arora, MarketWatch Sept 29, 2016 At least one Wall Street economist agrees with Trump. –– ADVERTISEMENT –– In an op-ed written in The Wall Street Journal late Wednesday Morgan Stanley chief economist, Ruchir Sharma, says, Trump’s bubblicious depiction of the state of equities isn’t off base, given the degree to which the Federal Reserve is propping up stocks by maintaining ultralow interest rates in place.  Sharma says about 60% of the gains from the stock market since dovish monetary policy was enacted in the wake of the 2008 financial crisis can be attributed to central-bank support. Sharma puts it like this:

En bok som Tobisson inte refererar är Thage G Petersons Palmebiografi från 2002. I ett uttryck för aningslös klarsyn beskriver Peterson Palmes uppfattning i fondfrågan:  ”Redan från första början insåg han att löntagarfonderna inte hörde hemma i Sverige.  Ja, inte i något annat demokratiskt samhälle heller.” Fredrik Johansson, Axess

FT 28  September 2016 About Deutsche Bank at IntCom What Deutsche Bank Is Telling Investors in Europe Mohamed A. El-Erianm SEP 29, 2016 The bank's shares have been falling steadily from a recent high of €27.80 last November, but at their peak in May 2007, before the start of the banking crisis, they were valued at almost €100. http://www.bbc.com/news/business-37516805 Why is Deutsche Bank now the biggest worry in the financial world? http://www.telegraph.co.uk/business/2016/09/29/why-is-deutsche-bank-now-the-biggest-worry-in-the-financial-worl/

http://www.zerohedge.com/news/2016-09-27/dying-middle-class

https://www.ft.com/content/07e208dc-83ed-11e6-a29c-6e7d9515ad15

zerohedge 27 September 2016 Riksbanksrapport: Det finns ingen bostadsbubbla SvD 23 september 2016 Läs mer här

Edwards is known for his 1996 “Ice Age” thesis, in which he envisioned a world going to hell in a deflationary handbasket as inflation becomes elusive and growth sputters. The theory underpins his argument that if the Federal Reserve raises interest rates, a deep recession in the U.S. will result, dragging the rest of the world over the cliff. Edwards believes that investors flocking to U.S. stocks will be devastated in a market correction — a stark contrast to the general consensus that they currently offer investors the best bang for their buck. “It is madness, what we are seeing,” said Edwards. The coming crash, he said, “will be horrific compared with what we’ve seen so far.” Sue Chang, MarketWatch  Sept 19, 2016 More about Albert Edwards at IntCom