Visar inlägg från oktober, 2016

Satyajit Das: Governments and central banks have probably lost any chance they once had of averting a prolonged stagnation.

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

Carl Bildt: In the 1950s, the North’s economy was better off than the South’s

 Project Syndicate 19 October 2016 Park Chung-hee

Richard Swartz: EU har funnit sig i att Grekland aldrig kommer att kunna (eller vilja) betala tillbaka sina skulder.

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

The return of Keynesianism, Sandbu about Yellen speech

- 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

Now, some strategists and investors think that the linkers — inflation-linked government bonds — trade is back on.

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

Excellent article by John Authers about Why bond yields are so low

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

Otmar Issing Euro EMU: "One day, the house of cards will collapse,”

“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

Tett: How can anyone make sense of today’s markets?

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 is right about debt relief to Greece, FT

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

Coppola about The necessary arrogance of elites

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

Jiohn Mauldin is angry. By reducing the incomes of retirees and terrifying near-retirees, the Fed successfully reduced economic activity.

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

Richard Swartz om globaliseringen

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

Launch of the European Border and Coast Guard

" 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."

IMF has warned that risks to financial stability are growing. It expresses particular concerns about Europe, Japan and China.

Wolf, More than nine years after the start of the global financial crisis, worries over the health of the financial system remain significant, especially in Europe.

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