Visar inlägg från november, 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