Visar inlägg från februari, 2017

Whatever happened to secular stagnation? Davies

Gavyn Davies FT 26 February 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 FT 25 February 2017

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 ideologica

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. Wolfgang Münchau, associate editor of the Financial Times, 12 February 2017

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

Greece 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

A modest proposal to save the world Charles Gave on The End of the Dollar Standard

via John Mauldin 7 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...

  Mish 2 February 2017

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. Aidan Regan, European Politics and Policy/LSE, 2 February 2016

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 mortgag

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 th

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

Italy 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