Englund

Den som inte visste var den lilla byn Sibbhult låg fick den rejält placerad på kartan av Gösta Bohman. Där, i nordöstra Skåne, hade arbetarekommunen motionerat om avsikten att de svenska produktionsmedlen ”alltmer övergår till samhället och de anställda”.  Den socialdemokratiska partikongressen hade antagit motionen.  Var det alltså, undrade Bohman försmädligt ofta, Olof Palmes vilja att avskaffa marknadsekonomin? Erik Helmerson DN 27 juni 2018

Varför har den Europeiska Unionen infört Euron och Schengen fastän det stod klart för de flesta att detta var högriskprojekt ? Jo, därför att de romantiska utopisterna vill skapa en riktig Union, som USA. En stat med Parlament, Domstol, en yttre men ingen inre gräns, ett EU-pass och medborgarskap samt naturligtvis en valuta. Frimärkena kommer väl senare, liksom försvaret som dock redan är under uppbyggnad. Och, givetvis, en flagga. If you want to understand what is happening to the European Union’s constitution, the EU flag is a good place to start.  European leaders will agree to delete references to the flag in the constitution. Everybody knows the flags will keep flying.  The words in the constitution will change. But the substance will remain the same. Gideon Rachman, Financial Times June 12 2007 The constitution is a symbol. After decades in which the EU has gradually accrued more powers – without going out of its way to draw attention to the fact – the...

Germany is the largest guarantor of the European Central Bank’s credit default insurance, known as the OMT,  and provides by far the largest stock of “target” overdraft credit to other European countries, currently €956bn. Hans-Werner Sinn FT 27 June 2018

The proportion of U.S. equity-fund assets that are passively managed has nearly doubled in that time to nearly 40 percent. Satyajit Das Bloomberg 27 June 2018

Germany even gave up its fabled deutschmark, a totem of hard-earned postwar affluence, to forge a monetary union and satisfy French and British fears over its post-reunification muscle. Bloomberg 27 June 2018 In Strasbourg on Dec. 9, 1989, after the Berlin Wall fell, Germany agreed to monetary union in order to get President Mitterand to agree to German reunification WSJ 23 Sept 2011

  the insidious illusion of permanent liquidity has not gone away.  insidious = proceeding in a gradual, subtle way, but with very harmful effects. Agustín Carstens, general manager of BIS, FT 25 June 2018

For one, it means that rates will probably remain low even after the ECB finishes its asset purchases. Marc Chandler FT 27 June 2018

More than $425bn, or 12 per cent, has been knocked off the value of S&P 500 financial shares since they set a post-crisis record in January.  FT 27 June 2018 Banks at IntCom

Banks may be disguising their borrowings in a way similar to that used by Lehman Brothers Holdings Inc., with debt ratios falling within limits imposed by regulators just four times a year. Lenders use repurchase agreements -- known as repos -- to massage down their assets as reporting dates approach, typically as quarters end, the Bank for International Settlements said in its Annual Economic Report. Bloomberg 24 June 2018

Not surprisingly, this has put homeownership out of reach for most Chinese. Bloomberg 24 June 2018

Until Greece can successfully sell a multi-billion euro bond to international investors, it can’t truly be said to be on a sustainable path.   An offering could come as soon as July, but yields need to fall further and investors need to turn up in size. Neither is certain. For now, the European Union, the International Monetary Fund and European Central Bank have chosen to extend and pretend. Bloomberg 22 June 2018

World debt ratios have spiralled to record levels during the era of super-easy money and markets are showing tell-tale signs of late-cycle excess, leaving the international financial system acutely vulnerable to a jump in borrowing costs.  Ambrose Evans-Pritchard, Telegraph 24 June 2018 Any reversal in our fortunes could be “quick and sharp”, says the Bank for International Settlement s, the venerable global watchdog based in Switzerland and the scourge of dissolute practice. Full text

Nils-Eric Sandberg om Per Ahlmark SvD 21 juni 2018 "Det kommunistiska partiet har skapat ofantligt mycket som är värdefullt och framtidsdugligt.  Det har bland annat – och det är en stor sak – befriat det ryska folket från påträngande materiell nöd, medan samtidigt miljoner svälter i Förenta Staterna"  Olof Lagercrantz om Sovjetunionens kommunistiska parti. Dagens Nyheter, 11/7 1968. Läs mer här Tänk om dom hade fått igenom sina förslag!

Pierre Moscovici, the EU’s economy commissioner, said after the meeting.  The earliest repayment deadlines shift from 2023 to 2033. FT 22 June 2018 Greece - Extend and Pretend, again

In coming months, on the 10th anniversary of the last great financial crisis, there will be a new round of debate about why banks and regulators missed the risks in the credit system before 2008. It’s not the big, obviously radical decisions that create disasters in finance but subtle periods of mission creep, when slightly deviant behaviour is quietly tolerated. Gillian Tett FT 20 June 2018 Financial crisis

An agreement was close that would leave Greece with minimal repayments until after 2030 on the €228bn it owes to the rest of the eurozone.  FT 21 June 2018 “extend and pretend” Europe's Unserious Plan for Greece The latest deal on debt won’t work, and everybody knows it. The Editors, Bloomberg 21 June 2017 Extend and pretend

Det finns goda skäl att vara kritisk till hur det europeiska samarbetet har utvecklats under de senaste åren.  Förslaget på nästa långtidsbudget med nya utgiftsökningar och egen beskattningsrätt för unionen är ett.  Kommissionens generella ovilja att lyssna på den kritik om centralisering och överstatlighet som åtminstone delvis föranledde det brittiska utträdet, är ett annat. Catarina Kärkkäinen Ordförande Fria Moderata Studentförbundet SvD 20 juni 2018 Kommentar RE: Lycka till Catarina i arbetet för att vända utvecklingen inom EU till mer subsidiaritet och färre åtaganden, mer som EEC än som EU och ett nytt Romarrike.  Vi tror på Europa Federalism

Part of the adjustment mechanism built into the currency union is the pro-cyclical impact of monetary policy:  real interest rates are higher in countries forced through internal devaluations. The mechanism of adjustment in the eurozone is therefore essentially that of the 19th-century gold standard.  Prolonged recessions are a feature, not a bug. Martin Wolf FT 19 June 2018

 It has become a source of discord. The story of Italy is revealing and, given its size, of crucial importance. All of this was predicted.  In his excellent EuroTragedy, Princeton University’s Ashoka Mody cites a critique of the 1970 Werner Committee report, the first blueprint for a monetary union, by Nicholas Kaldor, a British economist of Hungarian origin. Kaldor argued there would need to be fiscal transfers. That would require a political union.  But the conflicts created by the currency union would fester, making moves towards such a union more difficult. So it has proved. Martin Wolf FT 19 June 2018

Germany increased its competitiveness by keeping wage growth muted in the worst years of the global financial crisis.  It managed to push unemployment to record lows, but this came largely through the creation of low-paying, low-skill jobs, resulting in a decline in labor productivity Deutsche Welle 19 june 2018

“The consequences of another economic downturn dwarf and massively exceed  any adverse consequences associated with inflation pushing a bit above 2 percent,”  Summers said at a European Central Bank conference in Sintra, Portugal. Bloomberg 18 June 2018 Riktiga karlar är inte rädda för lite inflation https://englundmacro.blogspot.com/2010/02/riktiga-karlar-ar-inte-radda-for-lite.html

Low volatility leads investors and traders to adopt strategies that make the financial system more fragile and vulnerable to crisis. John Plender FT 18 June 2018

For three years, the ECB has allowed investors to overlook the fragilities in the public finances of several member states and the flaws in the monetary union. Governments must now learn to do without the central bank’s support. Bloomberg Editorial 15 June 2018

and deposited them across the Eurosystem's banking institutions. Target2 liabilities now stand at €465bn Jamie Powell ftalphaville 12 June 2018

Italy, the eurozone’s third largest economy, has chosen what can at best be described as a Euroskeptic government. This should surprise no one.  Joseph E. Stiglitz, Project Syndicate 13 June 2018

trots varningar om att Sverige då inte hade den förmågan. Thomas Gür SvD 17 juni 2018

Statssekreterare Karolina Ekholm intervjuas av Per Lindvall Realtid 15 juni 2018. Karolina Ekholm är professor i nationalekonomi. Hon var vice riksbankschef under åren 2009-2014. Jag letar i min dator och finner där: Karolina Ekholm skrev, tillsammans The Usual Suspects, inför folkomröstningen om Euron, en artikel under rubriken "Euron lyfter Sverige" som bör bli famös,  att "nationella valutor med rörliga växelkurser fungerar som handelshinder. Därför är en gemensam valuta ett naturligt och nödvändigt steg för att realisera den gemensamma marknaden".  Sådant kan man bli professor för i Sverige, tråkigt nog. Man kan också efter denna lojalitetsförklaring till euron bli både vice riksbankschef och statssekreterare. Kanske en svensk Deep State? Full text  

ECB to phase out €2.4tn bond-buying programme by year end FT 14 June 2018 Hur mycket är det ? 1 tn = 1.000 miljarder. 2,4 tn = 2.400 miljarder. Detta är euro. 1 euro = 10,15 SEK Det blir 24.360 miljarder kr eller 24 360 000 000 kr, eller skall det vara tre nollor till ? Det är väl väldigt mycket? Jag har nog räknat fel. https://sv.wikipedia.org/wiki/Biljon

https://www.internetional.se/realr.htm#1806mul

Post-crisis, financial regulators decided to nominate a select few GSifis  (global systemically important financial institutions).  From the market top on January 26 until May 31, they lost $800bn in market capital, or about 18 per cent. John Authers FT 14 June 2018

För tio år sedan höll världsekonomin på att implodera efter det att Lehman Brothers gick i konkurs. Sedan dess har världens centralbanker hållit räntan runt noll procent . Nu måste de höja räntan igen för att skuldsättningen inte skall skena vidare. Men debatten rasar om huruvida detta är för tidigt. Många är osäkra på om världens ekonomi tål högre räntor utan att implodera igen . Så illa är det. We do live in interesting times.

Monetarists and "creditists" disagree profoundly over the mechanism.  Which of the two is right will determine whether the world muddles through or crashes into recession in 2019. Ambrose Evans-Pritchard Telegraph 13 June 2018 The global bond rout has begun, leaving equities on borrowed time Ambrose Evans-Pritchard, 10 JANUARY 2018

Or maybe it’s really close.    Nobody really has a clue on the timing, of course.   MarketWatch 12 June 2018 with nice pic of gathering storm.

  David Stockman's Contra Corner 12 June 2018 Nice chart, sort of

As the /book/ title indicates, this is not a pros versus cons assessment. Instead the author treats the Euro as a clear mistake, a triumph of a political ideal of European unity over basic economics. The author provides a clear (and accessible for non-economists) account of how the idea of the Euro began to dominate the political discourse of particularly the French elite  and how Germany leaders agreed on the condition that they determined the design Simon Wren-Lewis 2 June 2018 Moderaterna inför EU-valet: "Vi är i grunden positiva till en gemensam valuta" Moderaterna och EMU

Hans Lindblad , om att vi främst kan erbjuda tillgång till svenskt luft-, sjö- och landterritorium. SvD 2 maj 2018

first honed in the late 1990s that markets in the West were about to follow the example set by Japan bond yields heading to zero and a collapse in equity values  after the Japanese bubble burst at the end of the 1980s.  FT 9 June 2018

The main, obsessive focus for debate around the Fed right now is whether it will raise policy rates three or four times this year. But if Urjit Patel, the governor of India’s central bank, is correct, this obsession with US interest rates misses the point. Gillian Tett 7 June 2018

  But with our ability to pretend almost gone, we’re heading to the Great Reset. John Mauldin 8 June 2018

The Great Disrupter is fixing to do his thing at the G-7 meeting, and his impending rebuke to the keepers of the G-7 "consensus" could not be more welcome. That's because these so-called globalist multilateral institutions are the real enemy of democracy, capitalist prosperity and human liberty in the world today. The G-7, the G-20, NATO, the IMF, the World Bank, the WTO ( World Trade Organization) and the rest are the vehicles through which the permanent political class rules and ruins the world. That is, elected presidents, prime ministers and parliamentarians come and go. But mostly they get led around by the nose by the bureaucrats and apparatchiks who run their governments, populate their think tanks, NGOs and lobbies and propagate their group-think through the likes of G-7.  http://davidstockmanscontracorner.com/bombs-away-over-toronto/

But the gap is still on track to widen in 2018 to the highest level in a decade. MarketWatch 6 June 2018

The head of Germany’s central bank Jens Weidmann, who is seen as a leading candidate to become the next president of the ECB,  has taken aim at plans for creating new eurozone funds to help crisis-hit countries, urging governments to instead make greater efforts to put their finances in order. ECB president Mario Draghi last month called explicitly for the eurozone to equip itself with “an additional fiscal instrument to maintain convergence during large shocks, without having to overburden monetary policy”. FT 5 June 2018

EU-fantaster applåderar Macrons imperiedrömmar, men de skulle bara öka bara de klyftor som öppnat sig mellan öst och väst, syd och nord.  Problemet är att ingen verkar kunna formulera alternativ med politisk kraft. Det enda som kommer är lite mildare varianter av Macronmodellen. Johan Hakelius Fokus 4 juni 2018

FT 5 June 2018 with links

RBS Government’s stake is worth around £24bn,  little more than half the £45bn of public money used to keep the bank afloat Jeremy Warner 12 May 2018 I am no populist.  Yet when I think of the sums earned by those responsible for dumping this mess on to the UK taxpayer, even my blood boils. Martin Wolf, Financial Times March 5 2009

This is a minimalist agenda but, unlike Macron’s, it’s detailed and actionable.  It’s also largely in line with the European Commission’s ideas.  This effectively reduces Macron’s grand economic union visions to the most politically harmless, and cheapest, measures.  Leonid Bershidsky Bloomberg 4 June 2018

bloated and over-levered.  John Authers FT 2 June 2018

If you are really pro-euro, my advice is to stop treating the euro as an article of faith but fight for its sustainability.  Wolfgang Münchau FT 3 June 2018 I wanted to keep Greece in the eurozone sustainably and was clashing with Germany’s leaders in favor of the debt restructuring that would make this possible .   By crushing our Europeanist government in the summer of 2015, Germany sowed the seeds of today’s bitter harvest:  a majority in Italy’s parliament that dreams of exiting the euro. Yanis Varoufakis Project Syndicate 29 May 2018

Germans and French are better off than the Italians compared to 17 years earlier.  Germany, joined by the Dutch, Finns, and Austrians, runs a monster $1 trillion plus trade surplus with the rest of Europe and the eurozone. John Mauldin 1 June 2018

published in November 2012, sets out the Commission's vision for future euro area integration.  Click

Since the eurozone crisis began receding in 2012, too little has been done to fix the underlying problems of the single currency. A fragmented banking system, inadequate crisis rescue capacity and a lack of fiscal flexibility to offset asymmetric shocks. FT Editorial 1 June 2018

is an advocate of full-blown fiscal reflation and  printed money to rescue Europe’s high-debt states,  putting him on an inevitable collision course with Brussels and Germany’s policy elites. Ambrose Evans-Pritchard Telegraph 1 June 2018

and therefore has no backstop defence for its commercial banking system. The European Central Bank is progressively removing its shield as quantitative easing is wound down and purchases of Italian bonds fall to zero.  There will be no protection by the end of the year. The Draghi pledge to do “whatever it takes” no longer holds. No future rescue by the ECB is possible unless the Italian government of the day – endorsed by parliament – formally invokes the bail-out mechanisms (OMT-ESM) and accepts austerity imposed by Brussels. Ambrose Evans-Pritchard 30 May 2018

  The rise of the populist politics represented by the anti-establishment Five Star Movement and the far-right League   is an all-too-comprehensible consequence of gross economic mismanagement both within Italy and in a very imperfect monetary union. Within the monetary union, Italy cannot address this competitiveness issue through devaluation.  The only remedy is internal devaluation via wage deflation. Yet despite unemployment of 11 per cent and youth unemployment at a devastating 35 per cent, unit labour costs have not come anywhere near to delivering that internal devaluation. In reality, the level of unemployment that would be required to restore competitiveness might well be unthinkable. John Plender, FT 30 May 2018