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The foreign sector mostly draining dollars from our real economy and then investing them in our financial economy

In the past, I used the name “MDuh” for bank-created money, the measure Friedman and Schwartz studied, not the measures they popularized

For this article, though, I’ll use “M63,” referring to the year they published their work.

Read more here

The euro is run in the interest of whichever country poses the biggest threat to the survival of monetary union. Right now that is Italy,”

The euro is run in the interest of whichever country faces the biggest problems and poses the biggest threat to the survival of monetary union at any particular time. 

Bernard Connolly, a hedge fund advisor and former currency chief for the European Commission, 

Ambrose Telegraph 22 February 2018


ECB should not have regarded low inflation as a permanent or even long-term condition that demanded an aggressive monetary-policy response.

Jürgen Stark is former Member of the Executive Board of the ECB and former Deputy Governor of the Deutsche 

Jürgen Stark, Project Syndicate 19 February 2018

The eurozone can’t fix its problems until it agrees on what went wrong in the first place.

A fascinating new paper /from Bruegel/ looked at the different ways the crisis was explained in the main countries.

Matthew Lynn, Telegraph 19 February 2018


Eight cities on the verge of a housing bubble

Eight cities on the verge of a housing bubble

We do not know that the “natural rate of unemployment” is roughly equal to the current unemployment rate.

The problem is that those making that argument are implicitly asserting that they know that the “natural rate of unemployment” – the lowest rate consistent with stable inflation – is roughly equal to the current unemployment rate. 

That is, they believe we’re at full employment. 

But the truth is they have no way of knowing that, and one key indicator – inflation – suggests they may be wrong.

Jared Bernstein, chief economist for Vice President Joe Biden, at John Mauldin 18 February 2018

Olle Wästberg då och då

Olle Wästberg, 1996:
Efteråt har det sagts att Sverige borde ha släppt kronan eller devalverat långt innan det fruktlösa kronförsvaret 1992. Jag tror inte det
Olle Wästberg: Det tomma rummet, Wahlström och Widstrand, 1996

Olle Wästberg, 2002:
Med facit i hand skulle man ha valt att släppa i september, säger folkpartisten Olle Wästberg.
DN 13/9 2002

US twin deficits Martin Feldstein’s catchphrase

US twin deficits

As the dollar weakened last week, Martin Feldstein’s catchphrase from the 1980s was on the lips of most macro traders.

This is what happened to the “twin deficits” during the Reagan and Bush fiscal injections

Gavyn Davies.FT 18 February 2018


Here is a recipe for disaster. Eurozone reformers act as if the crisis never happened

You start off by taking the two most toxic financial instruments of the past 20 years, and then merge them. 

The first is the collateralised debt obligation, the complex instrument at the heart of the US subprime crisis a decade ago.

Next, you take a much more innocent-looking instrument: a sovereign bond from a eurozone country.

Wolfgang Münchau. FT 18 February 2018


The country with the highest inflation get the lowest real rate.

With a common currency all have the same nominal interest rate. Therefore the country with the highest inflation get the lowest real rate.
The country with perhaps deflation will get the highest real rate.


Stefan de Vylder wrote that in 2002.

Did anyone write it before?

Att den nominella räntan är gemensam i en valutaunion innebär automatiskt att realräntan blir lägst i de länder som har den högsta inflationen

det vill säga de som skulle behöva en hög ränta, 

och högst i de länder som skulle behöva stimulera ekonomin.

RE: Det låter självklart. Men Stefan de Vylder var med stor säkerhet den första i världen son kom på detta.

Stefan de Vylder, Göteborgs-Posten 2002-10-22

2002 alltså.

Foresta. Lunch idag. Förut Bodströmsmiddag med Nord- och Sydkorea

Som mina Fb-vänner redan vet så åt jag i dag lunch på Foresta.

Jag föll därvid i tankar och erinrade mig när jag var på middag där, som ledarskribent på NWT inbjuden av Lennart Bodström, då chef för TCO som arbetade för införande av fondsocialism och som en förberedelse för maktövertagandet inköpt Foresta som ett ståndsmässigt palats.

Om detta har jag tidigare berättat med länk till Mats Johanssons berättelse om kvällen.

Kjell-Åke Bredenberg (KÅB) en annan av fondernas motståndare var också med.

Jag Googlade lite och fann att Björn Rosengren var den som på uppdrag av Lennart Bodström, pappa till advokaten med samman namn, hade förhandlat om köpet av Foresta.

Källa: Mitt i steget, Johan Hakelius, Björn Rosengren
Albert Bonniers Förlag, 24 maj 2016

The Fed can't legally save the world financial system in another 'Lehman' crisis

The Dodd-Frank Act, rushed through in a pageant of self-congratulation in 2010, prevents the Fed from rescuing individual companies in trouble (there must be at least five, and they must be solvent) or lending to non-banks in a panic. 

It can lend only to "insured depository institutions"

Ambrose Evans-Pritchard 14 February 2018

Increase in US inflation sparks bond market sell-off

Treasury yields hit 4-year highs as Wall St fears sharper rate increases

FT 15 February 2018


Policymakers relied too much on central banks and too little on fiscal policies, Wolf

Policymakers relied too much on central banks and too little on fiscal policies, in order to escape from the Great Recession. 

Martin Wolf, FT 13 February 2018

Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken.

Rolf Englund 5 december 2009


2018 will be the mirror opposite of 1999.

A triple squeeze will drain global excess savings: the U.S. will become the world’s largest oil producer, 

Germany will abandon its policy of budget surpluses, and India’s economic growth will outstrip China’s. 

The three gluts arose together, and together they will vanish. 

Who will supply the world’s capital after the retirement of these massive hoarders? 

John Authers, FT 7 February 2018

Canada’s housing market flirts with disaster


2017 the U.S. trade gap leaped to a nine-year high of $566 billion

The last time the U.S. ran a surplus was in 1975.

MarketWatch 6 February 2018

Is the 9-Year Long Dead Cat Bounce Finally Ending?

Markets tend to bounce back after sharp declines as participants (human and digital) who have been trained to "buy the dips" once again buy the decline, 

and the financial media rushes to reassure everyone that nothing has actually changed, everything is still peachy-keen wonderfulness.

Charles Hugh Smith, 6 February 2018

Household leverage ratios exploded

Whereas wage and salary incomes rose by $4.2 trillion or 2.9X, 

household liabilities soared by nearly $12 trillion or 5.2X.

Over the two decades, therefore, household leverage ratios (liabilities to earned income) nearly doubled from 124% to 224%.

David Stockman 5 February 2018

Authers: I hate to admit this, but I think I have found a good historical parallel for what is happening in the markets.

And it is with spring and summer of 2007, on the eve of the credit crisis.

I dislike admitting this because I do not want to be accused of alarmism

John Authers, FT 6 February 2018


Rädslan sprider sig efter apokalyptiskt börstapp

Tappet med 666 punkter i fredags fick Twitter att explodera. 

Sifferkombinationen är nämligen en biblisk symbol för ett odjur som visar sig under apokalypsen: "Number of the beast".

SvD 4 februari 2018

German politics is tilting towards federalism - Larmet går

The CDU and SPD accept the principle of a fiscal union for macroeconomic stabilisation, and transforming the European Stability Mechanism (ESM), the rescue fund, into an institution of the EU.

Otmar Issing, a former member of the European Central Bank’s executive committee, rightly recognised the importance of the EU section in the agreement.

As an economic conservative he was appalled by the ease with which Germany raised the white flag in the eurozone debate. Banking union, fiscal union, transfer systems — it could all happen very soon. 

It is what the conservative, ordo-liberal German establishment always fought against.

Wolfgang Münchau, FT 4 February 2018


Doom on Wall Street?

Even though they told us, and most of us believe, that QE was responsible for the inflation of asset prices across the board, somehow quantitative tightening (QT) is not supposed to have the opposite effect.

John Mauldin, 3 February 2018

There is a time to be in stocks… and a time to be out of them.
Without knowing the future, you can still know when something is not normal. 
And when something is not normal… it is just biding its time until it becomes normal again.

Bill Bonner February 2018


Alan Greenspan says there are "Bubbles in Stocks and Bonds".

Man Who Says "Bubbles Only Identified When They Burst" Detects Bubbles

Mike "Mish" Shedlock, 2 February 2018

Alan Greenspan

No hedge fund that wishes to survive is going to sit patiently on their repo silos at 95% leverage

To the contrary they are likely to not only begin selling with malice aforethought,  but also to actually pivot to the other side. 

That is, start "shorting" what in effect the Fed has announced it will be shorting to the tune of $600 billion per year commencing next October.


A bond market shock of biblical proportions is now just around the corner

Any security with a positive yield or prospect for even modest appreciation became a target for repo-style leveraged speculation. 

Traders bought the "asset" on 70-95% leverage, and did so with brimming confidence that they could roll the funding over and over again at virtually zero nominal cost.

The pity is that a bond market shock of biblical proportions is now just around the corner---yet neither end of the Acela Corridor sees it coming.

So now is the time to head for the emergency exits.

Acela is Amtrak's flagship service along the Northeast Corridor (NEC) in the Northeastern United States between Washington, D.C. and Boston via 14 intermediate stops including Baltimore, Philadelphia, and New York City. /Wikipedia

US bond market sell-off deepens

10-year Treasury yield rises to fresh four-year high at just under 2.8% 

“We think that the current level of rates do not yet pose a major risk for equity multiples,” Marko Kolanovic, a senior strategist at JPMorgan, wrote in a note on Thursday.


Cash it's not about a return on your money; it's about return of your money.

Preservation of capital might not be the most exciting investment objective ... but it is a worthy one when the market is signaling that both stocks and bonds are overvalued."

The next global economic downturn – probably in 2019 – will be traumatic for everybody

It is hard to believe that Latin Europe will tolerate a second round of hairshirt austerity imposed by Germany through its near absolute control of the policy machinery.

Ambrose Evans-Pritchard 31 January 2018