Visar inlägg från 2017

The men who crashed the world

The Greatest Bubble Ever

David Stockman, December 28th, 2017

Popular mythology in Germany has it that the Weimar hyperinflation of 1922-23 led directly to the rise of Hitler. This is not true.

Heinrich Brüning -  When the Reichstag threw out his austerity budget, it was imposed by presidential decree. Hitler won the 1932 general election with a landslide.  The rest, as they say, is history. Frances Coppola 31 August 2014

Här är samtidshistorien om Volvo AB där kineserna nu köper in sig.

Ända sedan 1999 är Volvo AB den blågula fordonsjuvelen som förblev ”svenskägd”, när Volvo Cars knoppades av till utländska intressen. Här är samtidshistorien om Volvo AB där kineserna nu köper in sig. SvD 27 december 2017

The Unexplored Causes of the Financial Crisis and the Lessons Yet to be Learned, by Tamim Bayoumi

Regulators, led by Alan Greenspan at the Fed, believed the efficient markets hypothesis, that bankers’ self-interest would avert excesses. Martin Wolf, 1 December 2017 "I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms," said Greenspan. The Guardian 24 October 2008

Heretics welcome! Economics needs a new Reformation

Steve Keen  was one of the economists who knew there was big trouble brewing in the years leading up to the financial crisis of a decade ago but whose warnings were ignored.  Larry Elliott, the Guardian's economics editor, 17 December 2017

What the Entire Internet Looked Like in 1973

Open Culture 20 December 2017

Krona losing appeal as ‘carry trade’ currency

It has already appreciated against the dollar this year, compared to other popular funding currencies such as the yen and the Swiss franc. The yen and the krona are still below their fair value, deliberately weakened by central banks attempting to stave off deflation. FT 20 December 2017 Carry Trade

Bolund: Med tanke på att bostadsrättspriserna har tredubblats på tio år tycker jag inte att de är någon jättedramatik att de sjunker med 10 procent.

SvD 20 december 2017

The Dangerous Delusion of Price Stability

The period of disinflation from the late 1980s to 2007, commonly referred to as the “Great Moderation.” The end of the Great Moderation should have disabused policymakers of their belief that low inflation guarantees future economic stability. If anything, the opposite has been true. Global debt ratios have risen sharply since the financial crisis began, while traditional lenders’ margins have been squeezed, raising questions about their overall health.  And as lending has continued to migrate further into the “shadows,” price discovery in financial markets has become severely compromised, to the point that many assets now seem to be overvalued. William White, Project Syndicate 14 December 2017 

Fed and FDIC found “living wills” drawn up by eight of the country’s largest and most complex banks were satisfactory.

FT 20 December 2017

Östeuropéerna såg äntligen chansen att efter 1989 återuppta sitt stora projekt: den egna nationalstaten

EU var svaret på allt. Dessutom var det där pengarna fanns. Fast mer än för EU:s pengar intresserade sig östeuropéerna sällan.  I stället påminde Bryssel dem alltför mycket om de främmande maktcentrum som förr dikterat deras tillvaro. Men efter att ha blivit av med habsburgarna, ottomanerna och till sist också moskoviterna, såg östeuropéerna äntligen chansen att efter 1989 återuppta sitt stora projekt: den egna nationalstaten. I mer än hundra år, fast ibland med långa avbrott, har man envist arbetat på den mer än på något annat, etniskt rensat ut minoriteter och grannar, ibland slagit ihjäl dem i småkrig på sparlåga, stöttat landsmän på andra sidan gränsen när man inte försökt rita om Europas karta till den egna nationens fördel. Västeuropa har tagit mycket liten notis om denna östeuropeiska vision, till och med halvt omedvetet försökt motverka den med statsbildningar som Tjeckoslovakien och Jugoslavien som bara ljumt intresserade dem som skulle leva i dessa mångnationella konst

The world is set up for the unwinding of three mega-trends: unconventional monetary policy, the real economy’s dependence on assets, and a potentially destabilizing global saving arbitrage.

At risk are the very fundamentals that underpin current optimism. One or more of these pillars of complacency will, I suspect, crumble in 2018. Stephen S. Roach, Projet Syndicate 14 December 2017

Örjan Berner Tyskland och Europa

Axess 2013-04-11

Does Europe Really Need Fiscal and Political Union?

This is one of the interesting revelations in Varoufakis’s fascinating account of his tenure as finance minister.  “You are probably the one [in the Eurogroup] who understands that the eurozone is unsustainable,” Varoufakis quotes Schäuble as telling him. “The eurozone is constructed wrongly. We should have a political union, there is no doubt about it.” But there is also an alternative, much less ambitious view, according to which neither fiscal nor political union is needed.  What needs to be done instead is to de-link private finance from public finance, insulating each from the malfeasance of the other. Dani Rodrik, Project Syndicate 11 December 2017

Per T: Löntagarfonderna hade kunnat förvandla Sverige till vad Venezuela är idag

Thorbjörn Fälldin förhindrade ett systemskifte som – om det fullföljts i enlighet med de ursprungliga planerna – hade kunnat förvandla Sverige till vad Venezuela är idag. Per T Ohlsson, Sydsvenskan 31 Juli 2016

Skräckscenariot: Bostadspriser i fritt fall och skenande arbetslöshet.

  Kritikerna menar att det kan bli följden vid en global kris. Johan Carlström, SvD 15 december 2017

The revised Basel bank-capital standards are complete at last

But have Europe’s banks got off lightly? The Economist print 14 December 2017

Skärpningen av amorteringskravet undantar nyproduktion

Köpstarka bostadsspekulanter med höga löner eller en förmögenhet som ger dem gräddfil till den svenska överhettade bostadsmarknaden är de som gynnas av undantaget för lyxlägenheter. För nyproduktion är i de allra flesta fall just lyxlägenheter. Det är för att man byggt för dom rikaste som kommunerna kunnat kammat hem ohemula pengar på markförsäljning och bostadsbyggarna kunnat vada i vinster de senaste åren. Patricia Hedelius SvD 11 december 2017

The markets believe in Goldilocks

But the bears are out there Buttonwood, The Economist print 7 December 2017

Martin Schulz calls for ‘United States of Europe’

German SPD leader says EU member states must sign up to a federal union or leave the bloc Martin Schulz told a party conference in Berlin on Thursday that he wanted EU member states to agree a new “constitutional treaty” to establish a federal union and that countries that did not sign up would have to leave the bloc. FT 7 december 2017 Det tidigare försöket, som väljarna i Frankrike och Nederländerna sade nej till, konventets förslag, som senare ersattes av Lissabonfördraget. Problemets kärna är att det inte går att ha EMU om man inte vill ha ett Federalt Europa, styrt från Bryssel och Frankfurt, eller om det blir Berlin.  Rolf Englund, Nya Wermlands-Tidningen, 11 juni 2001

End of an era for irrational complacency in markets

The signs are widespread.  Yields on European junk bonds have fallen below US Treasuries. Emerging market countries with a history of default, such as Argentina, have issued 100-year bonds.... Alberto Gallo FT 6 December 2017

Europe’s banks are stronger than they were, but not strong enough

The European Commission is urging governments and the European Parliament to complete the EU’s banking union by 2019 and thus cut the “doom loop”, in which weak banks and sovereigns drag each other down One big missing piece is a common European deposit-insurance scheme. The Economist print 30 November 2017

Fallande bopriser ett hot mot hela börsen

Anders Elgemyr analytiker på Jarl Securities har sammanställt en lista över de mest riskfyllda aktierna kopplade till bostäder. – Men så länge inget systemkritiskt bolag havererar s om Nyckeln som drog med sig Gota Bank i början av 90-talet  så lär marknaden kunna rida ut stormen.  I bästa fall återhämtar sig marknaden inom loppet av två år eftersom det finns en stor underliggande efterfrågan i Sverige. Patricia Hedelius SvD 6 december 2017

Stocks and bonds

The cyclically adjusted price-to-earnings ratio of the S&P 500 is at its 97th percentile relative to the last 130 years. In the bond market, a 1 percentage point increase in interest rates would lead to a decline of almost $1.2 trillion in the securities underlying the index.

Carl Hammer, chefsstrateg på SEB, tror att kronan kommer att stärkas

eftersom det mest sannolika scenariot är att svenska bostadspriser inte kommer att falla mer än tio procent. SvD 5 december 2017

Juncker Seeks Greater Commission Control over Eurozone

Turning the ESM into an EU institution should in theory necessitate treaty change,  but the Commission has come up with a way around that requirement.  Article 352 of the EU Treaty, a kind of emergency clause, allows the Commission to grant itself competencies it might need. Spiegel Online 5 December 2017

Republican tax package will definitively put an end to 36-year upswing for Treasuries

With hindsight, we can identify the inflection point as July 5 this year when 10-year Treasuries closed at a rock bottom yield of 1.37 per cent. John Plender 5 December 2017 More by John Plender at IntCom

Best books of 2017: Economics, Wolf

Martin Wolf selects his must-read titles FT 1 December 2017

Offshore Banking Guards Against Tyranny

There are often good reasons for placing money in shadowy accounts abroad. Bloomberg Opinion 30 November 2017

Professor på KTH efterlyser bostadskrasch

- Det vore bra om vi så snabbt som möjligt kan komma ner till långsiktigt vettiga priser  vilket är en halvering av den nivå vi ser nu, säger Hans Lind. Patricia Hedelius, SvD 30 November 2017

Dynamic stochastic general equilibrium modeling, abbreviated DSGE

The new defense of DSGE It's so silly that I almost suspect Christiano et al. of staging a false-flag operation to get more people to hate DSGE modelers. Noah Smith 15 November 2017

I dag är det - tack vare att bostadspriserna ökat - lån på banken som gör att vi har råd att handla och höja vår levnadsstandard

Fyra svenska börsbolag står för nästan hälften - 46 procent - av storbolagens samlade utdelningar.  Börsbolagen är händelsevis Handelsbanken, Nordea, SEB och Swedbank. En svensk medelklassfamilj som bor i hus eller bostadsrätt kan nu ta stora lån och betala pyttelite i ränta för att renovera, köpa bilar eller fritidshus. Det är inte längre för att Sverige säljer bilar, malm och skog som tillväxten ökar. Det är för att våra banker går så bra.  Aftonbladet 27 November 2017

What many see as a temporary bubble, pumped up by artificial and unsustainable monetary stimulus, has many more years to run. Kaletsky

maturing into a structural expansion of economic activity, profits, and employment   that probably has many more years to run. By demonstrating the success of monetary stimulus, the US has provided a roadmap that other countries have followed Anatole Kaletsky, Project Syndicate, 27 November 2017

Janet Yellen lecture on “A Minsky Meltdown: Lessons for Central Bankers” in April 2009

Janet Yellen expressed early worries about house prices.  While she did not expect the financial collapse — few did — she understood it better than many as it was under way,  to the point of giving a lecture on “A Minsky Meltdown: Lessons for Central Bankers” in April 2009. Martin Sandbu FT 27 November 2017 Lunch with Ben Bernanke  I turn, finally, to perhaps the biggest question about the crisis. Could they have avoided the failure of Lehman in September 2008?  Martin Wolf, FT 23 October 2015

“What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact."

Perhaps the most unhelpful of the psychological flaws we are prone to as investors is confirmation bias. Our desire to seek out information that reinforces our existing beliefs and to reject anything that undermines our prejudices is powerful and dangerous. Tom Stevenson Telegraph 10 November 2017 More about the stock market at IntCom.

Claudia Wörmann på SBAB tror inte att en bostadskrasch är förestående

Harry Flam ser inte heller att vi står inför en bostadskrasch. – Jag tror inte det kommer att bli något större ras, säger han. Christina Gustavsson, forskare vid institutionen för fastigheter och byggande på KTH, är lite mer försiktig inför framtiden, och menar att frågan om en eventuell bostadskrasch är svår att svara på. DN 27 November 2017 Om huspriser hos IntCom

Anyone questioning whether financial markets are in a bubble should consider what we witnessed in 2017, Mauldin

• A painting (which may be fake) sold for $450 million. • Bitcoin (which may be worthless) soared nearly 700% from $952 to ~$8000. • The Bank of Japan and the European Central Bank bought $2 trillion of assets. • Global debt rose above $225 trillion to more than 324% of global GDP. • US corporations sold a record $1.75 trillion in bonds. • European high-yield bonds traded at a yield under 2%. • Argentina, a serial defaulter, sold 100-year bonds in an oversubscribed offer. • Illinois, hopelessly insolvent, sold 3.75% bonds to bondholders fighting for allocations. • Global stock market capitalization skyrocketed by $15 trillion to over $85 trillion and a record 113% of global GDP. • The market cap of the FANGs increased by more than $1 trillion. • S&P 500 volatility dropped to 50-year lows and Treasury volatility to 30-year lows. • Money-losing Tesla Inc. sold 5% bonds with no covenants as it burned $4+ billion in cash and produced very few cars. John Mauldin 25 November 2017

Germany risks boom-bust havoc as zero rates cause overheating

Germany’s council of ‘Five Wise Men’ issued a stern rebuke to the ECB earlier this month over its loose money habits. Professor Richard Werner, a German economist from Southampton University, said zero rates are fatal for Germany.  Ambrose Evans-Pritchard, 24 November 2017

Jean-Claude Juncker’s Roadmap for European Disaster

This month, the European Commission's president called for an acceleration of the eurozone's eastward expansion.  But his plan for doing so could recreate the conditions that fueled the EU-wide crisis stemming from Southern Europe just a few years ago. Hans-Wernet Sinn, Project Syndicate 19 September 2017

Banks will have to provide for expected losses

Among their other shortcomings, banks had done too little, too late, to recognise losses on wobbly assets.  Under existing standards they make provisions only when losses are incurred, even if they see trouble coming.   IFRS 9, which comes into force on January 1st, obliges them to provide for expected losses instead. The Economist 16 November 2017

Fed's Trickle-down monetary policy

The Keynesian Fed economists who were dismissive of Reagan’s trickle-down theory  still don’t appear to see the irony in the fact that they applied trickle-down monetary policy   in the hope that by giving a boost to asset prices they would create wealth that would trickle down to the bottom 50% of the US population or to Main Street.  It didn’t. John Mauldin 17 November 2017

SEB: Boprisfallen stannar på 5–10 procent

SvD 21 november 2017

“Shadow banking”

It's larger than the world economy. It poses risks to financial stability. Bloomberg, 20 November 2017

Société Générale strategist, and well known permabear, Albert Edwards warns

that the past few sessions of falling prices seen in high-yield bonds and stocks of highly indebted companies   could suggest excessive leverage might be “the key area of vulnerability that could bring down the inflated pyramid scheme that the central banks have created.” MarketWatch 16 November 2017

Rethinking Macroeconomic Policy “We’ve learned over the past 10 years that fiscal policy can have pretty powerful effects in deep recessions

Under these circumstances, there is a strong case for loosening fiscal policy and borrowing more. This is especially true for policies that put money directly into the hands of people who will spend it quickly and counteract sluggish demand, and for investments that have long-term benefits. “Economies do not self-stabilise,” said Olivier Blanchard, at a conference on macroeconomic policy, on lessons of the financial crisis for monetary and fiscal policy.  Rethinking Macroeconomic Policy, Conference   Coordinators: Olivier Blanchard and Lawrence H. Summers. Gemma Tetlow, FT 13 November 2017 Själv brukar jag med en dåres envishet upprepa följande ord, första gången den 5 december 2009 Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken.   Men väljarna och därmed deras medlöpande politiker är rädda för budgetunderskott och vill hellre att villaägarna skall låna än att staten skall

“The blunt truth is there is a single monetary policy, but there is not a monetary union,” Mr Tucker said.

There is the money that Mario [Draghi, ECB president] issues, the notes. But these are inconvenient to carry about.  Most of the money we use are deposits held in 19 national banking systems. Claire Jones, FT 13 November 2017

Gordon Brown räddade England och världen

Som premiärminister ledde han G20-mötet som kan ha räddat världen undan en depression under finanskrisen. Dessförinnan hade han som finansminister stoppat Tony Blairs försök att föra in Storbritannien i euron.  Som Grekland visar är det svårt att lämna euron.  Utan Brown inget Brexit. Utan Brexit inget självständigt Storbritannien.  Marschen mot ett Europas Förenta Stater hade varit mycket svår att stoppa. Hans efterträdare David Cameron utlyste en folkomröstning om självständighet för Skottland, en omröstning han höll på att förlora. Gordon Brown, från Skottland, var viktig för att detta med nöd och näppe förhindrades. Heder åt Gordon Brown. Läs om hans memoarer här

We’re in bubble territory again, but this time might be different, Wolf

Martin Wolf, FT 10 November 2017 Unusual times call for unusual strategies from central banks Martin Wolf, FT 12 November 2017

The job of a normal central bank faced with this situation is to be the lender of last resort. But ECB...

But the ECB was deliberately constructed to be different from normal central banks.  One of the most striking moments in the euro crisis saga was when European elites forced Silvio Berlusconi to leave office in favour of unelected Mario Monti. This was possible because Italy is a member of the euro area, and is therefore uniquely vulnerable to capital flight and bank runs. Spaniards have good reason to hold euros in bank deposits and euro-denominated bonds as their safe asset, but have literally no reason to hold Spanish bank deposits or Spanish government bonds.  At any moment, euro-area creditors could decide they no longer wish to finance a country’s banks and its government. This arrangement is inherently unstable. Matthew C Klein, FT Alphaville 9 November 2017

The Asian financial crisis

Local banks and non-financial companies ended up borrowing dollars and yen short-term  to fund real estate bubbles and acquisitions. Matthew C Klein, FT Alphaville 8 November 2017

The institutional changes recommended by euro-area elites will likely exacerbate global imbalances.

One of the interesting ideas we discussed was the “re-nationalisation of fiscal policy”.  In exchange for accepting German plans for a European Monetary Fund, which would only provide emergency lending after private creditors are forced to take large losses,  elected governments would have more freedom to tax and spend.  Treaty-based deficit rules would be replaced by market discipline. Matthew C Klein, FT Alphaville 8 November 2017

The Fangs

The Fangs have delivered spectacularly in the past couple of years.  Originally named for the initials of Facebook, Amazon, Netflix and Google, and now typically also including Apple and Microsoft John Authers, FT 8 November 2017 Apple closes above $900 billion milestone in climb to $1 trillion market cap Apple could also hasten the drive to $1 trillion by buying back shares as it has actively done in the past, as it continues to issue bonds to fund buybacks and dividends. MarketWatch 8 November 2017 The good news is that the Fangs are not overvalued relative to the market.  The bad news is that the entire market is overvalued.  Research from the Boston-based fund manager GMO. John Authers, FT 10 November 2017

Adults in the Room Yanis Varoufakis,

Adults in the Room Yanis Varoufakis, the colourful former Greek finance minister, who bears the scars of his country’s bruising scrap with the EU over its debt crisis. David Davis is currently reading his account of those talks, Adults in the Room, a searing indictment of the anti-democratic, underhand and downright mendacious tactics used by what Varoufakis calls the EU’s “deep establishment” to make the Greeks grovel.  “Brussels is a democracy-free zone,” he wrote. “It is the nature of the beast to treat the will of electorates as a nuisance that must be, somehow, negated.” Telegraph, 3 October 2017

Anders Borg; Avveckla ränteavdragen och återinför en rimlig fastighetsskatt

Att avveckla ränteavdragen och  återinföra en rimlig fastighetsskatt vore på sin plats. Anders Borg, SvD 2 november 2017

Ambrose, Wolf och Johan Schück om inflationsmålet

The cult of inflation targeting began in New Zealand in the late Eighties .  Let us at least hope that the great monetary misadventure has burned itself out.  In the wrong circumstances such a doctrine is a formula for asset bubbles and deranged financial cycles, and that is precisely what events have conspired to produce.  The logic of constructing an entire financial order around one arbitrary variable such as inflation was never compelling. This technocrat urge to fine-tune prices is a radical departure from their historic role of central banks: to ensure financial stability and act as a lender-of-last resort in a crisis.  Ambrose 1 November 2017 Did inflation targeting fail?  How can it have gone so wrong? Martin Wolf, Financial Times, May 5 2009 Riksbankens mål om 2,0 procents inflation tillkom i all hast för litet mer än 20 år sedan Inflationsmålet skulle inte ha fun nits där, om Sverige hade klarat att hålla fast växelkurs.  Johan Schück, DN 2015-05-08

Gordon Brown his failure to rally the nation round the “necessary fiscal stimulus”

Gordon Brown has described his failure to rally the nation round  the “necessary fiscal stimulus” following the financial crisis as  one of the biggest regrets of his time in office. FT 30 October 2017

The Phillips curve may be broken for good

Central bankers insist that the underlying theory remains valid The Economist 1 November 2017

Harry Flam tror att bostadspriserna långsamt sjunker eller bara planar ut

Den svalnande bostadsmarknaden är inte ett tecken på att det finns en bostadsbubbla som håller på att spricka. Harry Flam tror snarare på en mindre dramatisk situation där priserna långsamt sjunker eller bara planar ut. Metro 28 oktober 2017 Bubblor planar inte ut Englund 2014

Banks do not "lend out" deposits or reserves

Rather, they create both loan assets and matching deposit liabilities "from nothing" by means of double entry accounting entries.  Creating money with a stroke of the pen (or a few taps on a computer keyboard) is what banks do. Frances Coppola, 29 October 2017

Six Ways NIRP Is Economically Negative

John Mauldin

Central banking is hard. But the Federal Reserve Bank of San Francisco makes it look easy.

They have a game called “Chair the Fed” where you get to set the level of short-term interest rates once every three months. The European Central Bank has its own game  Matthew C Klein, FT Alphaville 30/10 2017

Kronan borde ha släppts fri redan 1985. Feldt, Palme och Lars Wohlin.

Den 21 november 1985 vid ett-tiden fick jag - som chef för Stadshypotek - meddelandet om att Riksbanken hade upphävt alla utlåningsrestriktioner. Jag tittade på mina medarbetare och undrade om man på Riksbanken verkligen förstod vad man gjorde. Lars Wohlin i Ekonomisk Debatt nr 1/1998 Misstaget var att inte låta kronan flyta redan 1985 Kjell-Olof Feldt, SvD 28 oktober 2017 – När vi devalverade 1982 lovade vi att aldrig mer devalvera. Men det var ett misstag att inte låta kronan flyta långt tidigare. Hade vi släppt kronan 1985 så hade mycket gått bättre. Det är jag övertygad om, sade Feldt. Full text Kjell-Olof Feldt: ALLA DESSA DAGAR... I regeringen 1982-1990: Jag var emellertid tvungen att försöka fånga hans /Palmes/ uppmärksamhet åtminstone en kort stund för ett viktigt meddelande. Riksbanken ville nämligen inom kort avlägsna de sista resterna av regleringarna på kreditmarknaden... Men den politiska innebörden var solklar: det betydde att socialdemokrati

The Euro is good for separatists like Catalonia

It has always been a big problem for a new state to get a currency that is widely accepted. Catalonia does not have that problem.  They just keep the euro.  They do not have a printing press of their own, but neither has Spain. Ironic, is it not, that the Euro, meant to unite Europe, now serves to disunite Spain.

We cannot tell people they must remain stuck in a deflationary economy because it is the only way to stop the financial system from exploding.

Martin Wolf, about IMF Global Financial Stability Report, FT 24 October 2017

Oscar Properties

Investeringen i Oscar Properties uppges ha beskrivits som ”säker” av banken. Den beskrivning vänder sig Claes Hemberg emot. Bland annat hjälpte Swedbank Oscar Properties att ta upp ett lån på sammanlagt nära en halv miljard genom en så kallad obligation. SvD Näringsliv 25 oktober 2017

My modest conribution to solving the conundrum of missing NAIRU inflation

We all know from our first economics textbooks that demand can leak, into savings or imports. We all know that more and more of things are imported from China. When demand in countries like Sweden increases a lot of it goes to buying flatscreens TVs. From Asia, The conslusion is therefore that the effect should be seen not only in CPI but also more and more in the current account. This of course is something that every Master of The Universe economist knows.  But why do the not write about it? Too simple and already in their models? The relationship between slack and inflation nonetheless appears to hold at global level. John Plender FT 3 October 2017 What is the “stall speed” of an economy? Unemployment tends to rise when GDP growth falls below about 2.5-3 per cent Gavyn Davies blog June 15, 2011 U.S. Trade and Current Account Deficit

China risks 'Minsky Moment' as debt reaches saturation

China’s lending boom since the downturn in early 2015 is comparable to the massive stimulus after the Lehman crisis.  Non-financial debt has galloped up to 300pc of GDP, uncharted territory for a big developing economy. Ambrose 19 October 2017

The (non) disappearing Phillips Curve: why it matters

The existence, and recent disappearance, of the Phillips Curve is the hottest topic among macro investors and policy makers at the moment. Gavyn Davies' blog, 22 October 2017

Zhou Xiaochuan, the long-serving and respected governor of the People's Bank of China, raised eyebrows last week

when he cautioned that the country could have a "Minsky Moment" if "we are too optimistic when things go smoothly." Mohamed A. El-Erian, Bloomberg 23 October 2017

Tett: I believe that low rates have distorted the financial system so deeply that they are now doing more harm than good, creating perverse effects;

FT colleagues such as Martin Wolf disagree and think rates should stay low.  Gillian Tett, FT Magazine 20 October 2017

Unconventional policies are turning out to be a classic game-theoretic bad equilibrium

Each central bank stands to gain by keeping interest rates low, but, collectively, their approach constitutes a trap. Kaushik Basu, Project Syndicate 18 October 2017

There is one economist whose name is on everyone's lips today. Hyman Minsky

The phrase was never used in the FT until early 2007. It has now appeared more than 80 times.  The reason for this is that the Lehman crisis provided us with a perfect, textbook example of a Minsky Moment. John Authers, FT 29 October 2017

China’s central bank governor used the Communist party congress to caution a possible “Minsky moment”.

China’s central bank governor has warned in unusually stark language of the risks from excessive debt and speculative investment,  as he used the Communist party congress to caution that the country’s fast-growing economy faced a possible “Minsky moment”. FT 19 October 2017

Central bankers have one job and they don’t know how to do it

Matthew C Klein, FT Alphaville 18 Octobr 2017

Basil Fawlty’s “Don’t mention the war!” has given way to something nasty:

non-German macroeconomists over the euro and global reflation — with epithets like “ordo-liberal” and worse flying around. Former IMF staffer Peter Doyle, FT Alphaville 17 October 2017

Black Monday, October 19 1987, the US stock market fell by more than 20 per cent.

October has always been the month of highest crash risk — in addition to 1987, try 1929, 1997 and 2008 The big question is: could it happen again?  John Authers, FT 17 October 2017

ECB bondbuying, handled largely by national central banks, which purchase their own governments’ bonds

The vast bond-buying operations nominally undertaken by the ECB in recent years  have been handled largely by national central banks, which purchase their own governments’ bonds. Daniel Gros, Procect Syndicate 11 October 2017

DN-ledare: Frågan har ju alltid varit när och inte om bostadskarusellen i storstäderna kommer att hejdas.

Den svenska hyresregleringen tenderar att låsa in folk där de bor.  De som inte har etablerat sig är utfrysta. Vår skeva skattestruktur gör det samtidigt billigt att låna och bo, men dyrt att flytta från en villa eller bostadsrätt. Flyttkedjorna blir kortare, trögare.  Det vore därför inte så konstigt om den nya byggboomen slutade i en paradox: fina lägenheter som gapar tomma, och fortsatt stor bostadsbrist. DN-ledare 14 oktober 2017 ‘The risks have definitely increased’ – Sweden’s housing boom wobbles

More likely are rising inflation, a sharp rise in interest rates, a higher dollar and a huge surge in the US current account deficit.

Martin Wolf, FT 13 October 2017

World’s top economists worry about tools to fight economic downturn

The question is whether there are enough weapons to fight the next crisis when it comes With interest rate cuts unlikely to be sufficiently effective in another downturn because they will not start high enough, Mr Blanchard and Lawrence Summers, the former treasury secretary, advocated much more effective and planned use of fiscal policy.  In a joint presentation, they called for governments to put in place plans for aggressive fiscal stimulus in the event of a downturn. FT 13 October 2017

The US economy looked eerily similar in late 1965

The edifice of hyper-valued assets across the world is built on one elemental premise: that US inflation is dead, and therefore that the US Federal Reserve will continue to bathe international finance with dollar liquidity.  We have been here before. The US economy looked eerily similar in late 1965. The jobless rate had fallen to 4.2pc - exactly where it is now - without a flicker of wage pressure. It was the calm before the storm. Powerful forces were building below the surface. The US was on the cusp of the Great Inflation. Wall Street equities lost almost 60pc of their value in real terms over the next decade.  Bondholders were slaughtered.  The collective market bet is that this time is different. Ambrose 12 October 2017 NAIRU

The pundits may finally be right about the dollar

Pundits have been saying last rites for the dollar’s global dominance since the 1960s – that is, for more than half a century now.  But the pundits may finally be right Barry Eichengreen, Project Syndiate 11 October 2017

Central bankers face a crisis of confidence as models fail

Inflation is not behaving in the way economic models predicted. “the link between measures of domestic slack and inflation has proved rather weak and elusive for at least a couple of decades” (The relationship between slack and inflation nonetheless appears to hold at global level. John Plender)  FT 11 October 2017

Fastighetsbolag med exponering mot bostadsrättsmarknaden. JM har backat 21 procent.

Besqab har tappat nästan 28 procent, SSM drygt 39 procent och  Oscar Properties Holding nära 37 procent.  Annika Winsth, chefsekonom på Nordea:   - I alla län i Sverige har vi haft det högsta byggandet på 25 år. SvD 11 oktober 2017 Huspriser i Sverige

Martin Wolf on Inflation and stagflation

All this would undermine elevated asset markets and might trigger worries over debt sustainability. In a still fragile world economy, the results might be ugly. One might even see a return to the stagflation of the 1970s, with far lower inflation, but also far higher indebtedness. The starting point is a puzzle: why is inflation so low when the rate of unemployment is already a little below the level the Fed (and most economists) consider to be “full employment” (the rate at which inflation should start to accelerate upwards). Martin Wolf FT 10 October 2017

Wallenstam omvandlar första etappen av ett bostadsrättsprojekt mellan Telefonplan och Älvsjö till hyresrätter.

Solberga ligger mellan Telefonplan och Älvsjö, där det de senaste åren byggts tusentals nya lägenheter, varav många bostadsrätter. Aftonbladet 9 oktober 2017 Det finns troligen ingen bostadsbubbla i Sverige, eftersom det är dyrare att bo i hyresrätt än i bostadsrätt. Det menar Finanspolitiska rådets ordförande Harry Flam. 21 september 2017

Wolfgang Schäuble warns of debt-driven global financial crisis

Central bank policies raise threat of bubbles, says outgoing German finance minister  His comments come a day after Christine Lagarde warned of “threats on the horizon” from “high levels of debt in many countries to rapid credit expansion in China, to excessive risk-taking in financial markets”. The BIS warned last month that the world had become so used to cheap credit that higher interest rates could derail the global economic recovery. FT 8 October 2017

Svegfors om Anders Ferm, Tomas Fischer, Rolf Englund och kronkursförsvaret

Tack för tipset AF. Anders Ferm Tomas Fischer Vi har en väldigt dålig ansvarskultur i svensk politik. Det mest flagranta exemplet är kronfallet i november 1992. Och så kallade man detta ett misslyckande och alla satt kvar. Det menar jag var ett stort moraliskt haveri Barbro Hedvall i Filosofiska Rummet, 29/10 2006

Fed has no reliable theory of inflation, says Former Fed governor Tarullo

John Plender: The relationship between slack and inflation nonetheless appears to hold at global level. FT 4 October 2017

Population growth in Africa

As for Africa, the UN’s  mid-point projection  puts the population aged 20-65 at 1.3 billion in 2050 and 2.5 billion by 2100, up from 540 million today. Sep 29, 2017   ADAIR TURNER The global population is growing steadily.  The UN’s medium-variant projection shows a rise to 9.7bn people in 2050 and 11.2bn by 2100.   Robin Harding, FT August 11, 2015 How the world's population has changed, The Economist