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Why would business leaders invest rather than buying back some of their companies’ own shares?

Why would business leaders invest in an uncertain world, rather than paying dividends to demanding (but generally risk-averse) investors, or buying back some of their companies’ own shares (thereby improving the price/earnings ratio and, better yet, increasing their own remuneration)? 

Jim O'Neill,  former chairman of Goldman Sachs Asset Management and former Commercial Secretary to the UK Treasury,

Project Syndicate 26 April 2017


- Members of the single currency are forced to issue obligations in a currency none of them can print. Why not just call for a global gold standard?

If you like the euro, why not just call for a global gold standard?

Argentina and Korea at least had the option of breaking their pegs to the dollar and printing money to support their banks. Similarly, countries bound by the gold standard always had the option of de-linking and re-pegging. 

There is no comparably straightforward way to exit the strictures of the euro.

So, for those who believe the euro was a good idea at the time and remains a good idea for prospective members, why would you oppose restoring the classical gold standard? Why should the benefits of integration and price stability be limited to Europe?

Om man har en sedelpress går man inte i konkurs, skrev jag den  4 november 2011


IMF Global Financial Stability Report April 2017

prolonged low-growth, low-interest rate environment can fundamentally change the nature of financial intermediation. 

Combined with low credit demand, this would lower bank earnings, particularly for smaller, deposit-funded, and less diversified institutions, and 

presenting long-lasting challenges for life insurers and defined-benefit pension funds.

Read more here

About Banks at IntCom

California Legislature approved a package of groundwater-management laws

In 2014, the California Legislature approved a package of groundwater-management laws -- long after most other Western states had done so -- that are now slowwwwwly beginning to take effect.

Local groundwater-management agencies are being formed that will have to come up with plans to reach groundwater sustainability within 20 years.

Bloomberg 18 April 2017

Groundwater at Google


Germany’s trade surplus is a threat to global stability

Amounts to 9 pc of GDP.

Measured by capita, it is roughly three times the size of the Chinese trade surplus

Matthew Lynn, Telegraph 15 April 2017


The Eurogroup is asking Greece to do something unprecedented

Historical experience — not just Greece’s experience, but that of a typical advanced country — is inconsistent with the primary surplus  paths that would make Greece’s current debt sustainable.

New research from Jeromin Zettelmeyer, Eike Kreplin, and Ugo Panizza suggests Schaeuble is wrong: there is no reasonable likelihood that the Greek government can continue without significant further debt relief.

Matthew C Klein, FT 13 april 2017

Glass-Steagall Big US banks defy calls that they should be broken up

Talk from the Trump administration about restoring some kind of modern-day Glass-Steagall, 

a Depression-era law that prohibited banks from trading and investing at the same time as taking /insured/ deposits from consumers.

FT 14 April 2017


Ms Lagarde insisted there could be no special treatment of Greece when it comes to any fund decision on joining the bailout.

“If and when I put a programme to the board of the IMF it will have to comply with the rules of any…programme,” she said. 

“There cannot be a specific case for any particular country.”

FT 12 April 2017


Soaring Trump dollar risks global trade war and China currency crisis, warns Posen

We expect the dollar to rise by another 10pc to 15pc.

Politicians from the G5 powers ultimately intervened to drive down the Reagan dollar at the Plaza Accord in 1985

That attempt to manipulate currencies in defiance of economic fundamentals led - by a complex chain of causality - to the Nikkei bubble in Japan, and to the 1987 stock market crash on Wall Street.

Ambrose Evans-Pritchard, 11 April 2017


“Stein’s law” If something cannot go on forever, it will stop.” China, Wolf

If something cannot go on forever, it will stop.” 

This is “Stein’s law”, after its inventor Herbert Stein, chairman of the Council of Economic Advisers under Richard Nixon. 

Rüdiger Dornbusch, a US-based German economist, added: 

“The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”

Martin Wolf, FT 11 april 2017

Stein's Law: If something cannot go on for ever it will stop. 

Herbert Stein The Public Interest nr 97 Fall 1989

UK house prices may only be corrected by a market crash

according to economists from the University of Reading.

Bloomberg 11 April 2017


What's Really Driving the US Trade Deficit. Capital flows dwarf trade flows

During this time trade imbalances were mostly determined by direct differences in the cost of traded goods, while capital flowed from one country to another mainly to balance trade flows. 

Today, however, conditions have changed dramatically. 

Capital flows dwarf trade flows, and investment decisions by fund managers determine their direction and size.

Michael Pettis, Bloomberg 3 April 2017


Jacques Delors Institute: “At some point in the future, Europe will be hit by a new economic crisis. In its current set-up the euro is unlikely to survive that coming crisis,”

A group of leading economists and thinkers for the Jacques Delors Institute warned in a seminal report last year that EMU states will have to accept a supra-national system with a pooling of debts - anathema to the creditor bloc of Germany, Finland, Holland and Austria.

“At some point in the future, Europe will be hit by a new economic crisis. We do not know whether this will be in six weeks, six months or six years. But in its current set-up the euro is unlikely to survive that coming crisis,” they said.

It feels like 2008 again

In 2017 total household debt will reach its previous peak of $12.68 trillion, which it reached in the third quarter of 2008. 

MarketWatch 3 April 2017


Homeowners are pulling cash out again - Olick

Fast-rising home prices gave homeowners more equity than many expected, and they are now tapping that equity at the fastest rate in eight years.

Diana Olick, CNBC 3 April 2017


Trump has a big point on US Current Account Deficit

The US president signed an executive order on Friday 2017-03-31 calling for a study of the US’s $500bn annual trade deficit. 

FT 31 March 2017 


Cervenka om bopriser och skuldsättning. Om de haft rätt hade ju förstås landets folkvalda för flera år sedan vidtagit en lång rad åtgärder i syfte att undanröja faran.

Orosspridarna? Sveriges Riksbank, Konjunkturinstitutet, Finansinspektionen, Boverket, Internationella Valutafonden, OECD, EU-kommissionen, European Systemic Risk Board, Moody’s, UBS, Nobelpristagare som Robert Shiller och Paul Krugman, svenska ekonomer som Lars Jonung med flera, förre finansministern Anders Borg, förre Riksbankschefen Lars Heikensten… hur mycket tid har ni?

Gemensamt för ovanstående är att de på olika sätt har uttryckt oro för de svenska bostadspriserna, hushållens skuldsättning, de svenska bankerna och det otrevliga som allt detta riskerar att göra med svensk ekonomi.

Lite ovanliga namn för att ingå i en populistisk desinformationsoperation, det ska medges.

Andreas Cervenka. SvD 27 mars 2017

Huspriser hos IntCom


The Commission’s recent “White Paper on the Future of Europe” that sets out five possible paths forward for Europe

Rather than rearranging the deck chairs on the Titanic, the EU needs to address why the ship is sinking.

The choice will require EU leaders first to assess, with honesty and even bravery, where the EU is right now. 

They must be willing to call a spade a spade – or, in this case, to call the EU an intergovernmental organization in transnational clothing. 

Only after they recognize that this is a dysfunctional structure – because it allows both the EU institutions and member states to skirt responsibility by constantly pointing fingers at one another – can they pursue the needed rebalancing.

Ana Palacio, a former Spanish foreign minister and former Senior Vice President of the World Bank, Project Syndicate 20 March 2017

Att lämna euron eller sin partner är jobbigt. Men det kan var mödan värt.

 - En möjlig tolkning är att euron snarare än att vara en mekanism för ”en allt fastare sammanslutning av de europeiska folken” kanske kan vara den mekanism som håller ihop EU och förhindrar ett sönderfall därför att en återgång till nationella valutor upplevs som alltför komplicerad och riskfylld. 

Lars Calmfors, Eurokrisen, eurosamarbetets regelsystem och den framtida integrationen (SIEPS 2017:1)


The Economist: Never-closer union

If it is to survive, the European Union must become a lot more flexible

The Economist print 25 March 2017


The problem with cocos more broadly is that nobody knows if they work. FT

Lloyds Bank of the UK issued the first coco as part of a big capital restructuring in 2009.

Over $153bn of the securities have been issued since

FT 21 March 2017

Varför investera när man kan köpa tillbaka sina egna aktier?

Då stiger vinsten per aktie. Antalet aktier minskar ju.

Det kan bli fina bonusar av det.

$4 Trillion of Corporate Equity Liquidated Since 2000

Se även

There’s Only One Buyer Keeping S&P 500’s Bull Market Alive - $165 billion Buyback

S&P constituents are poised to repurchase as much as $165 billion of stock this quarter, approaching a record reached in 2007. 

The real, less respectable reason why companies engage in buybacks, namely to boost earnings per share by shrinking the equity.


A popular options-market gauge of so-called black swan trades at record levels.

A popular options-market gauge of so-called black swan, or difficult to predict, events 
is drawing the attention of some bears on Wall Street as it trades at record levels.

MarketWatch 21 March 2017


Fed might be doing the right thing for the U.S. But for foreign companies and governments ....

But for foreign companies and governments that have borrowed trillions of U.S. dollars, the adjustment could be painful.

Mark Whitehouse, Bloomberg 19 March 2017


IMF - Conservatives in US Congress say Europeans should solve the crisis on their own

“For seven years now, the IMF has been used to shield eurozone officials from their voters, which has tarnished the Fund’s reputation, prolonged Greece’s misery, and put off hard choices about Europe's future that must be made regardless.”

FT 17 March 2017


Greenspan conundrum has, for now, disappeared. Davies

Greenspan found it puzzling that long term bond yields were declining in a period during which the FOMC had just raised short-term rates by 150 basis points. 

Gavyn Davies, FT 12 March 2017


US President Donald Trump suffers from an acute strain of trade deficit disorder. Roach

The US has trade deficits with 101 nations. This is not a bilateral problem.

Reflects a far deeper problem: the US’s saving deficit. 

Stephen Roach, FT 7 March 2017


Postmortem plans for banks under threat of extinction

Today, there is worrying evidence on both sides of the Atlantic that the resolution idea could be in jeopardy before it has been fully implemented, let alone tested

FT 6 March 2017

The Dollar, Bretton Woods, Triffin and China

Now as then, the US could meet the rest of the world’s appetite for dollars by issuing more dollar debt.

This would require the US to run sustained current-account deficits, mirrored in fiscal deficits.

Of course, while the link to gold is passé, any domestic fiscal objective to curb US debt growth would be at odds with the international role as sole provider of the reserve currency.

Carmen Reinhart, Project Syndicate 2 March 2017


Max Weber Lecture by Barry Eichengreen (Berkeley), 15 February 2017

The present outbreak of euphoria contains a number of distinct, bubble-like characteristics. Warner

Markets are leaving themselves virtually no room for disappointment. 

There is unfortunately a real possibility that Mr Trump will be unable to deliver on his tax cutting and infrastructure spending plans

Jeremy Warner, Telegraph 2 March 2017


De svenska storbankerna lånar in korta pengar och lånar ut långa – det klassiska receptet för allvarliga finanskriser.

Tidigare hanterades bolånen av särskilda bolåneinstitut. De gav ut bostadsobligationer med mycket långa löptider, som svarade mot låntagarnas amorteringstider. 

På 1950-talet uppgick den återstående löptiden på bostadsobligationerna till nästan 40 år.

Swedbank och Handelsbanken är värst, med 15,5 respektive 14,8 års löptid på tillgångarna, mot 3,7 år på skulderna.

Gunnar Wetterberg om rapport från Riksbanken, Expressen 26 februari 2017

Warren Buffett endorses share buybacks

Warren Buffett has ridden to the defence of a corporate practice that is sometimes condemned as the height of short-termism: share buybacks.

Critics of share buybacks include Larry Fink, chief executive of the asset manager BlackRock


Stockman: The current manic rally rests overwhelmingly on the Trump Stimulus and the notion that sweeping tax cuts, deregulation and fiscal stimulus will touch off a booming economy

After all, the current manic rally rests overwhelmingly on the Trump Stimulus and the notion that sweeping tax cuts, deregulation and fiscal stimulus will touch off a booming economy and a consequent eruption of corporate profits. Yet never before in stock market history has such a giant wager been placed on such an utterly implausible proposition.
Indeed, the Donald is the Orange Swan of the present era precisely because the fiscal and financial crash landing he's generating is completely visible, predictable and palpable; there's no unexpected black swan shock and surprise to it.
Even if the Donald's economic program were a miracle cure, which it most certainly isn't, its fiscal math is so daunting that it couldn't be pushed through the Capitol Hill sausage factory by a political Houdini like Lyndon Johnson at the helm of massive Congressional majorities like those of 1965-1966. 
But today's thin GOP majorities amount to a boisterous gang of ideological factions led by a whirling dervish in the Oval Office

mainly macro: The academic consensus on austerity solidifies, bu...

mainly macro: The academic consensus on austerity solidifies, bu...: With yet another study showing how damaging austerity can be, you would think that at some point some politicians would eventually get it....


Dowding, han som vann Battle of Britain, hade det värre än jag.

Alla kan vi väl då och då tycka att vi inte fått den erkänsla som vi själva tycker vi vore värdiga.

Men Dowding har nog ett oslagbart rekord härvidlag.

- AIR CHIEF MARSHAL HUGH DOWDING. Commander in Chief RAF Fighter Command. 

Dowding continued to have constant brushes with the political heavies, he had done his job, he had succeeded in winning the Battle of Britain.

But he was forced to relinquish his position as C-in C in November 1940 and resigned from the RAF in 1942. 

Läs mer här


Münchau: A failure to tell the truth imperils Greece and Europe

If the IMF pulls out, Europe will be free to mismanage the crisis on its own

Greek debt sustainability was premised on an obviously unfulfillable assumption.

Another untold truth is that Germany will never forgive Greek debt. This is because the German parliament will not accept it

Italy’s membership of a monetary union with Germany is also transparently unsustainable.
Yet no Italian prime minister has ever mounted a credible challenge to the way the system is governed.


FT Editorial Greece IMF. Eurozone governments deserve to be defeated.


European nations are over-represented on the board relative to their size in the global economy. 

Wielding that power to dissuade the fund from demanding debt relief from eurozone governments is a clear conflict of interest and poses a threat to the fund’s credibility and independence.

Eurozone governments have behaved poorly on this issue. They deserve to be defeated.

FT Editorial 9 February 2017


IMF board split over bailout terms for Greece

After a meeting to discuss it on Monday the IMF issued an unusual statement conceding that its board was split over its findings.

“Most” of the 24 board members “agreed with the thrust of the staff appraisal” contained in its regular “Article 4” review of the Greek economy, the IMF said.

But “some" had different views on the fiscal path and debt sustainability”.

FT 7 February 2017


Germany trade surplus of nearly $300bn outpacing China by more than $50bn

Schäuble blames ECB for euro that is ‘too low’ for Germany

According to the Ifo Institute, Germany recorded a trade surplus of nearly $300bn last year, outpacing China by more than $50bn to hold the world’s largest trade surplus.

FT 5 February 2017

Trump’s election has almost certainly ended the 35-year trend of disinflation and declining rates

But investors and policymakers don’t believe it yet.

Anatole Kaletsky, Project Syndicate 30 January 2017


Currency Manipulator? Will the administration call for Germany’s exit from the euro?

Jeromin Zettelmeyer, senior fellow at PIIE, is a former director-general for economic policy at the German Federal Ministry for Economic Affairs and Energy.

The United States has complained about the German current account surplus for years, and so has the European Commission.

The result of these complaints has been a set of policy recommendations directed at Germany

Yet, the German government has refused to implement them, 

partly because of the Ministry of Finance’s obsession with balanced budgets, 

and partly because these reforms are politically difficult

If the Trump administration were to throw its political and economic weight behind these reforms, it would be good for Germany, Europe, and the United States.

Jeromin Zettelmeyer (PIIE)February 1, 2017


“currency manipulator” ? - definition in the Trade Facilitation and Trade Enforcement Act of 2015, that Obama signed...

Why austerity and structural reforms have had little to do with Ireland’s economic recovery Regan

The Irish recovery has nothing to do with austerity induced cost competitiveness and everything to do with a State-led enterprise policy to attract foreign direct investment (FDI) from the United States.

The European Commission argues that the Irish recovery is an outcome of the government’s successful implementation of their structural adjustment programme

The problem with this old fashioned concept of competitiveness is that the firms driving Ireland’s export-led recovery are in high-wage price inelastic sectors (biotech, pharmaceuticals, finance, business and computer services). 

What this means that their products are less sensitive to movements in international prices.

Mark Roe: the global financial system is no safer today than it was in 2007.

This overnight market was – and remains – huge, rivaling the size of the entire deposit-based banking system.

Regulators  want to make sure that banks pay off the overnight mortgage pools first. That way, the overnight mortgage-pool buyers are less likely to get spooked, rush to their cars, and clog up the evacuation route at the first sign of trouble at a single bank.

But what if overnight mortgage-pool buyers decide, in the face of a crisis, that it is not worth waiting around to find out whether the highly complex mechanisms meant to ensure that they are paid will work as planned? 

What if they’re worried about the entire mortgage-pool market and not just the safety of a single bank? They could flee en masse – and take their cash with them.

If those who use overnight mortgage pools receive priority over other creditors, as is the case today, the short-term market for housing securities will surely grow. 

The result could well be even greater bank dependence on mortgage pools, which are safe enough taken separately, but, together, render the entire system more fragile.

Mark Roe, professor at Harvard Law School, Project Syndicate, 31 January 2017


Is Navarro right about Germany and the trade surplus?

There is a pattern. Someone - the European Commission, or some economist - accuses Germany of running an excessive current account surplus.

If there is a response at all, it is always the same: Germany is not too strong, the others are too weak. More structural reforms, please. And this is it. 

Germany does not engage in a dialogue with anybody over the conduct of its own economic policy. Nor has Germany taken any unilateral action on its now 9% current account surplus. 

Are his criticisms justified? There is a tendency to denounce everything the Trump administration does or says after the recent blitz of executive orders. But, on this point, we would agree with them.

Germany runs an obscenely large current account surplus.

It has imposed deflationary policies on the eurozone, as a result of which the eurozone as a whole runs a current account surplus of over 3 per cent, very large for an economy that size. 

There is a case for a very large appreciation of the euro, but the diverging monetary policies between the Fed and the ECB make that impossible. 
Furthermore, there is no hope that Germany will 

agree to a change in the EU's fiscal rules, let alone on its own constitutional balanced-budget law, which is one of the deep causes behind the ballooning surplus. 

So yes, the criticism is fair.

Eurointelligence 1 February 2017

Se also 


Italy Joblessness in the eurozone’s third largest economy crept up to 12 per cent. Youth unemployment rose to 40.1 per cent.

Joblessness in the eurozone’s third largest economy crept up to 12 per cent 

underscoring Italy’s long struggle with low growth and double-digit unemployment 

Youth unemployment rose to 40.1 per cent.

FT 31 January 2017

Martin Wolf: huge current account surpluses in some countries forced deficit countries into financial excesses

The orthodox view is that the US can always achieve full employment by active use of fiscal and monetary policy tools. 

Experience since 2000 and especially since the financial crisis suggests this may be difficult.

Martin Wolf, FT 31 January 2017


Donald Trump’s top trade adviser: Germany is using a “grossly undervalued” euro to exploit the US and its EU partners

FT 31 January 2017

If Germany were the one to leave, the euro would be the currency that fell in value, relative to Germany’s new national currency and also to the dollar. 

The weaker European countries would get to keep the euro but still get the devaluation they need, which would reduce their labor costs far less painfully than through wage cuts.

Michael Sivy, TIME 12 April 2012

EMU Start Page

The Hitchhiker’s Guide to the Galaxy and the Eurocrisis

For those uninitiated in The Hitchhiker’s Guide to the Galaxy, the only recorded thoughts of a bowl of petunias as it suddenly came into being and started to hurtle towards the ground were “Oh no, not again!”.

Most of us hoped never again to have to pay attention to spreads between the bonds of different countries that share the same currency. 

The fact that they are moving suggests that the existence of the euro might again be called into serious question.

John Authers, FT 31 January 2017


Har Sverige nu en ”pseudoflytande växelkurspolitik” ?

Vice ordförande i riksbanksfullmäktige, Michael Lundholm, frågade sig var gränsen går mellan det penningpolitiska syftet – det vill säga att uppnå inflationsmålet – och att det utanför centralbanken kan uppfattas som att det finns en implicit kurs som man styr mot. 

Han använde uttrycket ”pseudoflytande växelkurspolitik”.

I dagsläget har riksbankschef Stefan Ingves och förste vice riksbankschef Kerstin af Jochnick mandat att på direktionens vägnar sälja svenska kronor på valutamarknaden. 

Fler kronor till salu ska enligt teoriboken pressa priset på kronan, eller med riksbanksspråk: förhindra att kronan stärks för snabbt.

Louise Andrén Meiton, SvD 22 januari 2017

Om man vill vara konspiratorisk kan man ana att Riksbanken vill hålla kronan inom det spann som krävs för att ansluta oss till euron. Det vill ju både Löfven och Batra...

America's Unsustainable Current Account Deficit

"Never in the history of modern economics has a large industrial country run persistent current account deficits of the magnitude posted by the U.S. since 2000."

A day of reckoning for what economists call our "current account deficit" is likely to arrive soon.

And the price will be paid in a currency drop that will significantly reduce domestic economic growth.

That's the conclusion of a study by NBER Research Associate Sebastian Edwards.

National Bureau of Economic Research, 23 January 2017

I reached the same conclusion in 2001...
Stein's Law: If something cannot go on for ever it will stop.

The current climate is far too permissive of share-repurchase programs

In nominal terms, the Dow is up 70% from its peak in January 2000.

The Dow is up only 19% in real (inflation-adjusted) terms since 2000. 

A 19% increase in 17 years is underwhelming.

The national home price index that Case and I created is still 16% below its 2006 peak in real terms. 

But hardly anyone focuses on these inflation-corrected numbers.

Robert J. Shiller, Project Syndicate 18 Jnuary 2017


A Greek tragedy: how much can one nation take?

Greece’s economic crisis has disappeared from the minds of many in Europe, but inside the country, the pain is only getting worse  

FT 20 January 2017

Varoufakis: From the mid-1970s to 2008, the US economy had kept global capitalism in an unstable, though finely balanced, equilibrium.

It sucked into its territory the net exports of economies such as those of Germany, Japan and later China, providing the world’s most efficient factories with the requisite demand. 

How was this growing trade deficit paid for?

Yanis Varoufakis 11 November 2016


Gränskontrollen vid Öresundsbron och muren mot Mexiko

Sverige har gränskontroll vid Öresundsbron mot Danmark. Varför skulle inte USA ha gränskontroll mot Mexiko? 

Trump kommer inte att stänga gränsen. Muren skall bara se till att de som kommer från Mexiko till USA blir registrerade liksom de som kommer till Sverige från Danmark. 

Eller har jag fel?

Inflation-Protected Securities. Demand was so great

Inflation-Protected Securities 

Demand was so great that primary dealers were left with about 16 percent of the bonds, the lowest on record in data going back to 2003.

Robert Burgess, Bloomberg 19 January 2017 with nice charts


EU ambassadors “line of protection”, Libyan authorities will intercept people before they leave territorial waters

After dozens of summits, half-a-million arrivals in Italy and more than 10,000 dead or missing since 2014, the EU is no closer to finding a solution to the crisis in the central Mediterranean.

När Khaddafi fick jobb som EU:s gränspolis
I början av oktober 2010 åkte EU-kommissionär Cecilia Malmström till Libyen

More here


Explanations for the Financial Crisis Ritholtz

Discussions of causation frustrate those who seek to oversimplify the complex as they pursue a political agenda 

Any theory that claims to explain the financial crisis should be able to answer these 10 questions

Barry Ritholtz, 18 January 2017

Can Italy maintain the €?

Yes, if it grows, unlike in the last 17 years.

Francesco Papadia January 17, 2017


Trump said the U.S. currency, has gotten “too strong,”

In a Friday interview with The Wall Street Journal, 

Trump said the U.S. currency, which touched a more-than 14-year high about two weeks ago, has gotten “too strong,”

“Our companies can’t compete with them /China/ now because our currency is too strong. And it’s killing us,” he told WSJ.

MarketWatch 17 January 2017

U.S. Trade and Current Account Deficit

Huntington, The Davos Man and The Clash of Civilizations, Ambrose

It was Harvard professor Samuel Huntington who first hurled the epithet “Davos Man” at the new elites 

He warned of a cosmopolitan superclass of 20 million people.. This rootless supra-culture was cornering the gains of the global economy, and capturing ideological power. 

“They have little need for national loyalty, view national boundaries as obstacles that thankfully are vanishing, and see national governments as residues from the past whose only useful function is to facilitate the elite’s global operations,” he wrote.

Prof Huntington has earned his posthumous vindication.

Ambrose Evans-Pritchard, Telegraph 12 January 2017

The Clash of Civilizations (COC) is a hypothesis that people's cultural and religious identities will be the primary source of conflict in the post-Cold War world.

It was proposed by political scientist Samuel P. Huntington in a 1992 lecture at the American Enterprise Institute

Tåg i Schweiz


Why Trump attacks China and Germany

It may have someting to do with that those countries have large trade surpluses with USA, I guess.

The United States has the world's largest trade deficit and has run one since 1975. 

In 2015, the deficit on goods and services was $500.4 billion, higher than the $490.2 billion deficit in 2014. 

The deficit occurred because exports, at $2.3 trillion, were lower than imports, at $2.761 trillion. 

(Source: "U.S. International Trade in Goods and Services," U.S. Census Bureau.)

The U.S. trade deficit in goods alone was $762.5 billion, 2.4 percent higher than last year.

Read more here


Moody’s in $864m settlement over subprime mortgage bonds

The settlement is smaller than the $1.375bn that rival rating agency S&P Global reached in February 2015.


Milton Friedman's Cherished Theory - The permanent income hypothesis - Is Laid to Rest Noah Smith

But as economists get better and better data, they’re finding that even modification isn’t enough. 

A new study by Peter Ganong and Pascal Noel shows that consumer behavior is more short term than almost any mainstream model predicts.

Even the greatest scientists can be wrong. The measure of a science is how quickly it comes to grips with the mistakes its heroes make.

Noah Smith, Bloomberg 12 January 2017

The Need for Different Classes of Macroeconomic Models (DSGEs). Blanchard

This is is my third piece on dynamic stochastic general equilibrium models (DSGEs). 

The first, a PIIE Policy Brief, was triggered by a project, led by David Vines, to assess how DSGEs had performed during the financial crisis (namely, badly) and how they could be improved. 

That brief went nearly viral (by the standards of blogs on DSGEs ☺).

Olivier Blanchard (PIIE)  January 12, 2017

Robert Shiller presidential address to the American Economic Association

It was something out of the usual — as we should expect from as fertile, contrarian and original thinker as Shiller — namely a plea for economists to take seriously the importance of “narrative epidemics”. 

That is to say, be aware of the stories people tell one another about the economy, because they may have real effects.

Shiller’s paper is a rich read. It proposes a causal role for stories: because people’s beliefs affect their actions, the “viral spread” of some ideas and narratives over others can constitute a causal mechanism in the unfolding of an economic phenomenon or event.

Martin Sandbbu, FT 12 January 2017


The real number to keep an eye on is 2.6 per cent yield on the 10-year Treasury note, says Bill Gross.

The Janus portfolio manager, dubbed the “Bond King”, warned that if the 10-year yield crosses that threshold, it will signal the start of a “a secular bear bond market”.

FT 10 January 2017 

Mr Obama’s presidency began amid the worst financial crisis since the 1930s. Wolf

The latest Economic Report of Obama’s Council of Economic Advisers

Mr Obama’s presidency began amid the worst financial crisis since the 1930s. 

If we consider the disaster he inherited and the determination of the Republicans in Congress to ensure he would fail, his record is clearly successful. 
This does not mean it is perfect.

Martin Wolf, FT 10 January 2017


Stephanie Flanders about Richard Baldwin book, The Great Convergence.

The driving force of the old globalisation was the falling cost of moving goods. 

The driving force of this more recent wave has been the falling cost of moving ideas.

Stephanie Flanders, chief market strategist for Europe at JPMorgan Asset Management, 

FT 8 January 2017

Policymakers seem to think the European project will be safe if the mainstream political leaders can survive the next 12 months.

Stephanie Flanders, chief market strategist for Europe at JPMorgan Asset Management, 

FT 8 January 2017


The Bank of England’s chief economist has admitted his profession is in crisis

having failed to foresee the 2008 financial crash and having misjudged the impact of the Brexit vote. 

So what can the dismal science do to regain the trust of the public and politicians?

Guardian 6 January 2017