Englund

From bubble to bubble, from crisis to crisis, there were increasingly compelling reasons to question the Fed’s stewardship of the US economy. That now appears to be changing.  STEPHEN S. ROACH Project Syndicate Dec 24, 2018

The explanation is easy. For every buyer of a stock or bond there is a seller. For every seller there is a buyer. Someone much hold every stock or bond issued, 100% of the time. Individual investors may take action, but rebalancing cannot and will not occur in aggregate because it is mathematically impossible. https://moneymaven.io/mishtalk/economics/treasury-secretary-mnuchin-is-totally-clueless-about-how-markets-function--qk2D694HkamTb2SqR9yrQ/

Shares are often used as collateral for other transactions.  When Wall Street goes down there will be a lot of collateral damage. Rolf Englund Twitter 25 December 2018

https://www.cnbc.com/2018/12/24/us-stock-futures-fall-slightly-as-the-dow-attempts-to-rebound-from-its-worst-week-in-a-decade.html

and jogged worrying memories of the financial crisis Sunday with a statement that  Secretary Steve Mnuchin convened calls with the CEOs of six leading banks to confirm they had ample liquidity, in hopes of averting another Wall Street selloff Monday.   https://www.marketwatch.com/story/treasury-departments-odd-attempt-to-reassure-investors-may-have-just-backfired-2018-12-23 https://www.cnbc.com/2018/12/23/treasury-secretary-mnuchin-held-calls-with-the-ceos-of-major-banks-to-discuss-the-market-turmoil.html

These leaders had a clear vision of a simpler yet stronger Union, led not by a 28-member commission, but by a real government with 12 ministers. They would have allowed Europeans to vote directly for a parliament with full competencies and legislative authority, and without the system of unanimity that has allowed rogue member states such as Hungary to tie the entire bloc’s hands.  Guy Verhofstadt Project Syndicate Dec 12, 2018 Guy Verhofstadt, a former Belgian prime minister, is President of the Alliance of Liberals and Democrats for Europe Group (ALDE) in the European Parliament and the author of Europe’s Last Chance: Why the European States Must Form a More Perfect Union.

The Dow Jones Industrial Average recorded its biggest weekly drop in percentage terms since 2008. BBC 21 December 2018 https://www.bbc.com/news/business-46654064 About the stock market at IntCom

We have known for years that QE had helped to keep the stock market aloft, and it was logical to believe that  1) QT would follow QE, and that 2) QT would have the effect of reversing the impact of QE.  Wednesday may go down in history as the day when the market finally grasped this. John Authers 20 December 2018

The Dow Jones Industrial Average  ended with a decline of 352 points after being up by as much as 382 points before the FOMC’s announcement. https://www.marketwatch.com/story/powell-party-pooper-here-are-the-worst-performing-stocks-after-the-fed-wrecks-the-market-2018-12-19 It's The Balance Sheet, Stupid! It's not about a piddling 50 basis points on the Federal funds rate next year To the contrary, the clear and present danger to the greatest financial bubble in modern history is the fact that Powell affirmed without hesitation that the Fed will proceed---on automatic pilot no less---to drain that other Swamp via QT or balance sheet run-off. David Stockman

https://www.marketwatch.com/story/all-the-biggest-stocks-that-are-now-in-a-bear-market-in-one-chart-2018-12-17

 Of companies in the MSCI World Index -- a gauge of developed-market firms -- 52 percent are down by more than 20 percent from their 52-week high Bloomberg 10 December 2018

68 procent uppger att de skulle rösta nej.   SvD 7 december 2018 Annie Johansson (hon har senare bytt namn till Lööf) ångrar ett politiskt beslut:  att hon röstade nej till att byta krona mot euro 2003.  I slutet av nästa mandatperiod hoppas hon att svenskarna, på nytt, ska få säga sitt i EMU-frågan. – Fler och fler är ju positiva till EU och EMU. http://www.nejtillemu.com/maudolofsson.htm#annie

Ms. Merkel, for all her power and influence, is just one politician. Germany’s new political crisis runs much deeper. It stems from an economic system that has resulted in stagnant wages and insecure jobs.  The erosion of Germany’s postwar  — a strong welfare state, full-time employment, the opportunity to move up in the world — has created a populace open to messages and movements previously banished to the fringes. NYT 7 December 2018

Bloomberg 6 december 2018

Hushållens skuldkvot är rekordhög och företagen har lånat ännu större belopp.  Varför lånar vi så mycket? Vilka risker är det som byggs upp? Författaren och forskaren Tino Sanandaji har skrivit boken Tio tusen miljarder – skuldkalaset och den förträngda baksmällan. Han samtalar med PJ Anders Linder. Inspelat den 19 oktober 2018. https://www.axess.se/tv/vodplayer.aspx?vod=10413 https://tino.us/

https://www.svd.se/barbarerna-missforstadda--ville-inte-alls-forstora-rom Rome, Habsburg and the European Union https://www.internetional.se/paxromana.htm

Minnesord kallades det. Ett mycket selektivt minne, dock. -- Jag vet inte hur Villy Bergström skulle ha känt om han vetat om att han fått minnesord över sig tryckta av Svenska Dagbladets ledarsida. - Dagens arbetarrörelse har mycket att vara stolta över, och mycket att lära, av Villy Bergström. Benjamin Katzeff Silberstein SvD 2 december 2018 Ur min första löntagarfondsartikel, 1974, i Svensk Linje: Villy Bergström (VB) har skisserat förutsättningarna för branschfonderna och dessas konstruktion på i korthet följande sätt. Enligt VB skulle en lösning efter de linjer som han drar upp skapa förutsättning både för ekonomisk tillväxt och en genomgripande demokratisering av det ekonomiska livet - kort sagt en smidig övergång till en demokratisk socialism.  Han säger att demokratiseringen från två håll blir den kniptångsmanöver, vars skänklar är löntagarnas krav att bli hörda och näringslivets kapitalbehov, som till slut avskaffar kapitalismen i Sverige. Full text

Den dramatiska nedgången för SPD började med Gerhard Schröder och hans så kallade  Harzreformer  2003, ett i grunden nyliberalt reformpaket för låglönemarknader och kraftig begränsning av arbetslöshetsförsäkringen SPD är nu nere på omkring 15 procent i opinionsundersökningar och medlemmarna är ursinniga och villrådiga.  Den tyska socialdemokratins öde  är en del av ett europeiskt drama. Det tycks som om socialdemokratins tid runnit ut.  Carl Tham Dagens Arena 29 november 2018

Det sade Fredrik Reinfeldt i sitt segertal i natt då han mötte 650 jublande partikamrater 2010. Aftonbladet Efter valet 2010 hade Alliansen inte längre egen majoritet Migrationsuppgörelsen mellan Alliansen och Miljöpartiet 2011  Wikipedia https://sv.wikipedia.org/wiki/Migrationsuppg%C3%B6relsen_mellan_Alliansen_och_Milj%C3%B6partiet_2011

Rising risk premia undermine the expansionary effect of fiscal deficits even during recessions. The Eurozone economy’s Coming Downturn Project  Syndicate 27 November 2018 Lucrezia Reichlin, a former director of research at the European Central Bank, is Professor of Economics at the London Business School.

Låt inte Putin hyvla den ukrainska salamin Linda Nordlund Expressen Ryssland kokar grodor och skär salami Tove Lifvendahl SvD De borgerliga grodorna är inte lustiga att se Rolf Englund 87- 08- 27 De battartikel för NPT

Patricia Hedelius: SvD 25 november 2018

Banks bailed out to the tune of £500bn;  the bankers responsible punished only in the court of public opinion;  the imbalance between risk and sky-high rewards barely addressed by boards and shareholders. FT editor Lionel Barber 23 November 2018

Non-performing exposures constitute almost half of Greek banks’ assets. Most of their regulatory capital consists of deferred tax claims against the battered Greek sovereign. Bloomberg 23 november 2018

Read more here

https://www.cnbc.com/2018/11/19/tech-stocks-like-facebook-and-apple-got-crushed-once-again.html

“We’re seeing more and more banks take risks that, back in 2008 and 2009, they said they’d never do again,” said Korbinian Ibel, a director general at the ECB’s banking supervision arm. “They argue that everyone else is doing it, so how can they avoid it? That sounds a lot like 2007.” https://www.bloomberg.com/news/articles/2018-11-19/european-banks-are-taking-lending-risks-like-it-s-2007-ecb-says?srnd=premium-europe

The most plausible solution to the latest impasse appears to be “Italexit”— Italy’s secession from the euro zone.  Europe has always been a disunited continent, with broad ethnic, cultural, linguistic, political, and economic divides.  Given these disparities, the imposition of a single currency on a population that now totals 340 million people arguably has been doomed from the start. Avi Tiomkin Barron's Nov. 16, 2018 Italy’s Threat to the Euro Desmond Lachman, America Enterprise Institute, November 18, 2018 Italy, the Eurozone’s third largest economy, is coming under increased market pressure fueled by doubts about the country’s economic outlook and the sustainability of its public finances.  This has to once again raise questions as to whether the Euro can survive in its present form.

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But there are others, and some have the capacity to be even deadlier. BBC 14 November 2018

 and  the amount of money homeowners pulled out of their homes through equity loans dropped by an amazing 14 per cent of disposable household income.  The resulting damage to consumption explained the onset of recession in 2008.  Gavyn Davies FT 11 November 11, 2018

Rest assured that not all of today’s trading strategies are predicated on that reality. To return to Mr Minsky, the big question around the instability hypothesis now turns on the behaviour of the central banks. John Plender FT 13 November 2018

but an implied guarantee that said “Global banks cannot be allowed to fail”.  Frances Coppola - September 15, 2018

Here are 10 things I would like all my children to understand about what happened to their great-grandfather’s generation. 1. The war was not “for Civilisation,” as claimed on John Ferguson’s Victory Medal. It was a war for predominance between the six great European empires — the British, the French, and the Russian against the German, the Austrian, and the Ottoman — that broke out because all their leaders miscalculated ... Niall  Ferguson Boston Globe  NOVEMBER 12, 2018

On Nov. 13, Treasury will sell a combined $164 billion of bills maturing in 4 weeks, 8 weeks, 3 months and 6 months https://www.bloomberg.com/news/articles/2018-11-12/bond-traders-about-to-see-if-they-re-underrating-inflation-risks?srnd=fixed-income

As a firm believer in the Austrian Business Cycle Theory – first drafted by Ludwig Von Mises in early 1900’s – I believe that artificially moving interest rates away from the markets natural rate is opening Pandora’s box. Sure – lowering rates across the yield curve is good for stimulating the economy.  And like John Maynard Keynes explained, it’s a good tool for ‘papering over’ a slowdown – a quick fix. But like Mises said – it’s not the boom that matters (from lowering rates). It’s the bust that will follow (from raising rates). Suddenly and artificially raising short-term rates – which the Fed does when they hike – disrupts the current equilibrium. Palisade Research  via Zerohedge 11/09/2018   

https://www.iwm.org.uk/history/the-polish-pilots-who-flew-in-the-battle-of-britain Battle of Britain 303   After the war, the Polish pilots felt their country had been betrayed to Soviet communism. And they were not included in victory celebrations in Britain, nor in war films celebrating RAF heroism.  Other Polish contributions to the war effort - such as vital work in the cracking of the German Enigma code - went similarly unacknowledged. https://www.bbc.com/news/stories-45516556

Xi has said homes are for living in, not for speculation. Bloomberg News 8 november 2018

The CBO calculates that servicing costs will triple in size to nearly $1tn by 2028 Gillian Tett FT 8 November 2018

—Tom Toro (b. 1982), American cartoonist for The New Yorker Cit by John Mauldin 2 November 2018

Grekland,  Italien, Spanien, Irland,  Portugal. Johan Carlström SvD 4 November 2018 När och hur spricker EMU?

zombie companies Excessive leverage may light the fuse, but the real problems are deeper. US government deficit will be (drumroll, please) approximately $1.4 trillion per year for the next five years,  which will mean $29 trillion total debt by 2024.  And that’s without a recession.  John Mauldin 2 November 2018

Just over three years ago, when I was negotiating on behalf of Greece with the German government to end the combination of unsustainable loans and hyper-austerity that are still crushing my country, I warned my interlocutors at a Eurogroup meeting of eurozone finance ministers: “If you insist on policies that condemn whole populations to a combination of permanent stagnation and humiliation, you will soon have to deal not with Europeanist leftists like us but, instead, with anti-Europeanist xenophobes who see it as their vocation to disintegrate the European Union.” YANIS VAROUFAKIS Project Syndicate  May 29, 2018  

The moral of the story is that if only we economists had spoken up sooner, been more convincing on the issues where we were right, and recognized where we were wrong,  the situation today would be considerably better. J. Bradford DeLong Project Syndicate 1 November 2018

The findings suggest that summers like 2018, when the jet stream drove extreme weather on an unprecedented scale across the Northern Hemisphere, will be 50 percent more frequent by the end of the century if emissions of carbon dioxide and other climate pollutants from industry, agriculture and the burning of fossil fuels continue at a high rate. https://insideclimatenews.org/news/31102018/jet-stream-climate-change-study-extreme-weather-arctic-amplification-temperature

Banking’s diminished role in lending has enormous, still under-appreciated implications Robin Wiggglesworth FT 2 November 2018 James Bigglesworth, DSO, DFC, MC

Lasting Effects: The Global Economic Recovery 10 Years After the Crisis,, 3 October 2018

Mish 1 November 2018

AMBROSE EVANS-PRITCHARD 31 October 2018

The shortfall rose to $54 billion for the month, and reflective of a 10.1 percent increase year to date The goods deficit stood at $76.3 billion, the highest on record on a seasonally adjusted basis. Exports increased to $ 212 .6 billion, a $3.1 billion gain from August,  while imports rose $3.8 billion to $ 266 .6 billion. CNBC 2 November 2018

Simon Kuper FT 1 November 2018

Fed have caused the short-term dollar funding to rise  dramatically . Back to levels not seen since 2008. https://www.zerohedge.com/news/2018-10-30/emerging-markets-face-new-problem-trillions-bonds-mature-and-soon

The true lesson of IBM’s move for Red Hat: Open-source has truly arrived International Business Machines Corp.’s hefty  $34 billion deal to buy Red Hat Inc . is the biggest proof yet that the 20-year-old movement of free and open software can lead to a real revenue-generating business, thanks to new advances in technology. https://www.marketwatch.com/story/the-true-lesson-of-ibms-move-for-red-hat-open-source-has-truly-arrived-2018-10-29

Read more here

Interest rates on two-year certificates of deposit have just cracked 3%  U.S. stocks are at historically elevated levels when compared to, say,  the size of the national economy , or the  corporate earnings of the past decade .  https://www.marketwatch.com/story/cash-is-king-again-but-is-that-also-a-sign-of-an-impending-recession-2018-10-29

French and German banks have more than $400 billion at stake and would lose big   if the country left the currency union. When Greece’s fiscal mismanagement triggered a crisis in 2010, French and German banks were holding about $115 billion in various Greek investments Bloomberg 29 October 2018

 NASDAQ 100 was recently up nearly  220%  in inflation-adjusted terms since the pre-crisis peak in 2007 compared to a mere  2.2%  gain in industrial production over the same 11 year period. We are talking apples-to-apples here: Constant dollar stock prices versus real physical output; and also from the prior peak, not the March 2009 stock market bottom. David Stockman 22 October 2018

He is endowed to the highest degree with what the Romans called virtus (virtue): moral courage, integrity, sagacity, prudence and devotion to the service of country. Review by Martin Wolf FT 29 October 2018

It is their responsibility in the months ahead to make sure it doesn’t come to that. Jim O'Neill Project Syndicate 17 October 2018

 Ambrose Evans-Pritchard Telegraph 25 October 2018

Mr Volcker is publishing his memoir. The release of Keeping At It was initially scheduled for late November but the publisher has rushed the date forward to October because the former Fed chair is ill.  So the towering figure of finance wanted to share some thoughts — and warnings — to current and future policymakers, politicians, voters and investors. Gillian Tett FT 25 October 2018

The main instrument of coercion in the eurozone is not its fiscal rules, but the power of the European Central Bank to withdraw funding from national banks. This is not a discretionary power, but one that is automatically triggered once a country‘s sovereign debt loses investment grade status. Wolfgang Münchau FT 28 October 2018

Hans bästa bok hette  Ja-sägarna - Medlöpare och nickedockor kring Gyllenhammar, Karl XII, Kreuger och andra furstar. Jag föreslog honom att komplettera med en bok om nej-sägarna - den skulle ha blivit betydligt tunnare. Nils-Eric Sandberg SvD 28 oktober 2018 Läs om boken här

When money is constantly cheap and available everything seems straightforward.  Markets go up whatever happens, leaving investors free to tell any story they like about why.  It is easy to believe that tech companies with profits in the low millions are worth many billions.  Or, as one fund manager told me last month, that traditional equity valuation methods are no longer the point Merryn Somerset Webb FT 26 October 2018

I find this disinfo argument somewhat hilarious because of the extraordinary level of dishonesty inherent in it, but I also find it revealing in a way. Brandon Smith via Alt-Market.com 26 October 2018

Mish 26  October 2018

That is no longer because it is technically impossible. It is because it is politically painful.  We are instead set on running an irreversible bet on our ability to manage the consequences of a far bigger rise even than 2C.  The scale of the uncertainty is an argument for action, not inaction.  Nobody really knows what risks humanity will ultimately find it has run by continuing on its present course. But we do know that our descendants are quite likely to end up on a different planet, with no way back to our own.  The bet that our descendants will then cope might be correct. But it might also be disastrously wrong.  The sane choice must surely be to preserve the planet we have. Martin Wolf FT 23 October 2018

With new borrowings of $1.2 trillion by the US Treasury and $600 billion of existing bond sales by the Fed during FY 2019, you have $1.8 trillion of homeless debt slamming hard upon the scales of supply and demand. That this fiscal eruption is not even in today's Wall Street narrative and the QT is completely ignored tells you all you need to know.  Soon the casino gamblers will be shocked, blathering that another purported comet from outer space caused interest rates to soar, notwithstanding disappointing "growth". Moreover, once the bond market Armageddon gets cranking, it will way overshoot to the high side (above 4% or even 5% on the 10-year). Thereupon, carry trade speculators will be forced to dump their bonds, triggering massive mutual fund redemptions and the violent unwinding of Wall Street hatched bespoke trades. David Stockman 17 October 2018

Instead, the Great Depression finally ended with the explosive growth of military expenditures starting in mid-1940.  Capitalism in America: A History, by Alan Greenspan and Adrian Wooldridge FT 16 October 2018

Nackdelarna överväger dock.  Bubblor riskerar att uppstå på tillgångsmarknaderna genom den rikliga tillgången på billiga pengar. Obalanser skapas i ekonomin. Den privata skulduppbyggnaden drivs på. Handlingsutrymmet vid en framtida kris krymper.  Historien har lärt oss att finansiella kriser kan få förödande effekter på ett lands ekonomi. Anders Palmér, tidigare prognoschef på finansdepartementet och chefstrateg på Första AP-fonden, SvD 14 oktober 2018 There is no time like the present to adopt a monetary target better suited to a world of low interest rates. The Economist 11 October 2018 Ambrose, Wolf och Johan Schück om inflationsmålet

https://www.cnbc.com/2018/10/11/ubschief-economist-this-is-not-the-end-of-the-bull-market.html Wall Street

Consumers, rating agencies, and policymakers all bet on housing NICOLA GENNAIOLI , ANDREI SHLEIFER Project Syndicate Sep 27, 2018

Krisen drabbade inte minst svenska banker som lånar det mesta av sina pengar på kreditmarknaden i stället för från vanliga sparare – pengar som de sedan lånar ut till exempelvis bolånetagare. Varningen kommer från vice riksbankschef Cecilia Skingsley, SvD 10 oktober 2018 Cecilia Skingsley: Den 23 september 1992 blev läget akut.

The financial crisis of 2008-09 and the resulting recession were a historical watershed.  The pre-crisis world was one of globalisation, belief in markets and confident democracies. Today’s is a mirror image. Martin Wolf 9 October 2018

https://www.marketwatch.com/story/its-the-surge-in-real-yields-that-could-spell-danger-for-stocks-as-bond-markets-swoon-2018-10-09

Patricia Hedelius SvD 8 oktober 2018 Läs mer här

CNBC 8 October 2018

Taktiken att bekämpa SD genom att isolera dem har inte visat sig särskilt framgångsrik. Trots vad som avslöjats om SD:s ursprung har över en miljon väljare gett dem sina röster. De har gjort det av en enda anledning. Beträffande invandrings- och integrationspolitiken hade de gamla partierna fel och SD rätt.  Det visade sig helt enkelt inte möjligt för lilla Sverige att ta emot alla förföljda och nödlidande människor i världen. Invandringen måste regleras. När de etablerade partierna försummade att lyssna på väljarna och deras – som det ansågs – inskränkta och främlingsfientliga åsikter på detta område, öppnades en möjlighet för ett populistiskt parti att ta sig in i riksdagen.  De gamla partiernas försök att låtsas som om nykomlingen inte fanns där har snarast motverkat sitt syfte. Det vore klädsamt om övriga partier erkände sin felbedömning och sin medverkan till att SD kommit in i riksdagen. Om det inte vore för invandringspolitiken, skulle de inte varit där i dag.   La