Visar inlägg från april, 2019

Argentine interest rates have risen to 68 percent, the highest in the world

The country has been a serial defaulter (8 times) for upwards of two centuries including the largest sovereign default in history in 2001; and during the last 50 years has been an ungovernable fiscal and monetary basket case presided over by an alternating cast of populists, authoritarians and crooks. So how in the name of the economic gods did Argentina sell $2.75 billion of 100-year bonds on the international dollar market two years ago at a 7.13% yield, which bonds are now trading at 68 cents Argentine interest rates have risen to 68 percent, the highest in the world

Staten kan förlora miljarder på Saab-konkurs

Telegram från TT / Omni 20 april 2019 Det var pinsamt att höra Maud Olofsson berätta om vilka bra säkerheter som Spyker hade ställt gentemot staten. När det nya företaget går i konkurs kommer nog dessa säkerheter att visa sig värdelösa.

Fundamental questions about the future of the world’s dominant economic model

As the maladies of modern capitalism have multiplied, fundamental questions about the future of the world’s dominant economic model have become impossible to ignore.  But in the absence of viable alternatives, the question is how to reform a system that is increasingly at odds with democracy. James K. Galbraith Project Syndicate 19 April 2019  Ja, han är son till sin far. Han har också skrivit  Welcome to the Poisoned Chalice - The Destruction of Greece and the Future of Europe

With unusual precision, Citigroup said the next recession would start in December.

US stock market tops precede economic contraction by an average of five months.  Ergo, equities will peak in July.  That sounds about right. Ambrose 17 April 2019

During the 80 months between Q1 2012 and Q4 2018 the S&P index rose by 125%

but pre-tax corporate profits of $2.2 trillion (annual rate) did not rise by single dime. David Stockman  April 17th, 2019

My /Cullen Roche/ View On Minsky’s Financial Instability Hypothesis

In short, Minsky’s FIH was ignored for far too long.  At the same time, it has the potential to mislead people into thinking that booms are necessarily going to lead to busts and that private debt financed booms will tend to become speculative and ponzi booms.  Additionally, the mainstream models that ignored debt and assumed that ponzi booms were unpredictable, is probably extreme. Cullen Roche PRAGMATIC CAPITALISM 11 April 2019  “well-intentioned government policies aimed at reducing the systemic risks of a crisis in the global financial system may have the unintended and perverse consequence of actually increasing the risk of such a crisis.”  Or Hyman Minsky’s analysis of why stability is destabilizing.

The Federal Reserve seems to be achieving the fabled soft landing.

With growth likely to transition down toward the longer-term trend in 2019, expect monetary policy to remain on hold for the foreseeable future.  If the Fed were to move, the odds still favor an interest rate cut over an increase.  We are likely at the peak of this rate hiking cycle. Tim Duy Bloomberg 17 april 2019   Det erinrar om dagens situation där I USA centralbankschefen Greenspan försöker uppnå en "soft landing" på ekonomins hangarfartyg. Han känner att han inte kommer fram, drar gasen - räntan - i botten, men motorn, penningmängden, svarar inte. Farten sjunker. Rolf Englund i Smedjan nr 4/1992 Soft Landing at IntCom

Italy and France are at daggers drawn, pitted on opposite sides in battle for control of Libya and the oil fields

Ambrose Evans-Pritchard 14 April 2019

US in the midst of the largest wealth bubble in post-World War II history

Today the United States sits in the midst of the largest wealth bubble in post-World War II history, as measured by household net worth (or wealth) relative to gross domestic product  “well-intentioned government policies aimed at reducing the systemic risks of a crisis in the global financial system may have the unintended and perverse consequence of actually increasing the risk of such a crisis.”  Or Hyman Minsky’s analysis of why stability is destabilizing . Eugene Steuerle MarketWatch 15 April 2019 Eugene Steuerle is a fellow and the Richard B. Fisher chair at the Urban Institute.  He is co-founder of the Tax Policy Center of the Urban Institute and Brookings Institution. Hyman Minsky at IntCom

The independence of central banks is under threat from politics

Technocrats face a difficult challenge. The rich world has hardly any room to cut interest rates before hitting zero, so central banks will once again have to turn to unconventional stimulus, such as bond-buying.  In a single generation billions of people around the world have grown used to low and stable inflation and to the idea that the interest rates on their bank deposits and mortgages are under control. Did inflation targeting fail?  Central banks have mostly escaped blame for the crisis. How can it have gone so wrong?  Martin Wolf, Financial Times, May 5 2009

Last month marked the 30th anniversary of the announcement of the “Brady plan”.

 In response to the 1980s Latin American debt crisis, this plan, named after then US Treasury Secretary Nicholas Brady, allowed countries to exchange their commercial bank loans for bonds backed by US Treasuries, bringing an end to a tumultuous period with possible systemic consequences for the global banking system at the time.  In what was then a novel approach, banks agreed to provide much needed debt relief—the average write down was 35 percent—in exchange for risk-free tradable instruments. Skuldkrisen - LDC Debt Rolf Englund, Den Stora bankkraschen, Timbro, 1983

Shadow Banking SKYROCKETS To $52 Trillion and Completely Out of Control! Major Risk

The Money GPS 11 april 2019 The shadow banking system and The Volcker Rule at IntCom The IMF is worried about rising debt in the corporate sector

IMF fears Italian debt spiral, and Macron is making it even more dangerous

 Ambrose Evans-Pritchard 10 April 2019  Italy at IntCom

What to do if stagnation threatens when interest rates are already close to zero?

We are back to facing the same question as in 2016: What to do if stagnation threatens when interest rates are already close to zero? The depth of the subsequent recession, and the long period of slow growth that followed, was the result not of continued financial system fragility, but of the excessive leverage in the real economy that had developed over the previous half-century.  Faced with slow growth, political discontent, and large inherited debt burdens, monetary finance cannot be a taboo option. Adair Turner Project Syndicate 29 March 2019 See also  Adair Turner, a former chairman of the United Kingdom's Financial Services Authority and former member of the UK's Financial Policy Committee, is Chairman of the Institute for New Economic Thinkin g.  His latest book is Between Debt and the Devil.

The night of the referendum, as the results came in, my old comrade was both upbeat and realistic. “It’s a great victory,” he said, “but you realise they’ll never let it happen.”

In 1992, the Danes voted against Maastricht; their government secured opt-outs and, in 1993, the public backed the Treaty on a second referendum. In 2001, the Irish rejected the Nice Treaty; a year later, after caveats, they gave it the nod. In 2005, France and the Netherlands voted down the EU constitution; the EU repackaged the constitution as the Lisbon Treaty and carried on merrily.  The Irish said no to Lisbon in 2008 but affirmed it after a rethink in 2009. Local politicians have been instrumental to these reversals.  Tim Stanley Telegraph 8 April 2019 Ett svenskt medlemskap i euron är inte aktuellt just nu. Ulf Kristersson 16 maj 2018 Moderaterna inför EU-valet 2014:  "Vi är i grunden positiva till en gemensam valuta" Vid sitt framträdande hos SNS talade Göran Persson om Europaparlamentets växande maktambitioner. - Man måste behandla dem artigt och med respekt, annars blir det låsningar, ung

Towards a genuine capital markets union

Integrated capital markets require effective supervision. As a starting point, the European Securities and Markets Authority ( ESMA ) should contribute to further convergence of supervisory practices, in accordance with its mandate, notwithstanding the open debate on future integration steps.  The recent agreement on the framework for the European System of Financial Supervision will also contribute to more harmonisation. Such a Financing Union would be a decisive and feasible step to complete our Economic and Monetary Union. François Villeroy de Galhau, Governor of the Banque de France and  Dr Jens Weidmann, President of the Deutsche Bundesbank Deutsche Bundesbank 4 april 2019

German elite call for radical rethink of EU's Brexit strategy

Gabriel Felbermayr, head of the Kiel Institute for the World Economy, said the EU’s Brexit strategy had gone off the rails and should be stopped before it does any more harm to long-term relations with Britain. A new formula must be found to ensure friendly ties with countries on the outer rim of the European continental system that do not wish to be part of ever-closer union.   Ambrose Evans-Pritchard 8 April 2019  

Battle for Tripoli escalates as fighting nears Libyan capital

Haftar’s self-styled Libyan National Army, backed by the United Arab Emirates, is leading a multi-pronged assault on the capital in an attempt to overthrow the Tripoli-based GNA. On 19 March 2011, a multi-state  NATO -led coalition began a  military intervention in Libya The United States and Britain have warmly welcomed Libya's decision to abandon its programmes for developing weapons of mass destruction. British Prime Minister Tony Blair put his personal seal of approval on Libya's return to international respectability by shaking hands Thursday with Libyan leader Moammar Gaddafi in a ceremonial Bedouin tent near Tripoli. Blair's visit to the home of the Arab ruler, whom President Ronald Reagan once described as the "mad dog of the Middle

Without Stock Buybacks the Stock Market Would Collapse! Unless... Corporate buybacks alone cannot account for the extent of this year’s rally The surge in buybacks reflects a fundamental shift in how the market is operating, cementing the position of corporations as the single largest source of demand for American stocks.

The next recession will be deeper, longer and far more painful to many more people than your average recession, and could persist as long as the last one.

That is because the next recession in all likelihood will be truly global.  If you sailed through 2007–2009 without your lifestyle changing, I wouldn’t assume it will happen that way again. Investors once again “learned” that if you simply stay the course, the market will get you back to where you were and more. The Bernanke Fed’s answer was quantitative easing. It had an effect but not the intended one.  Instead of going to productive use, the new stimulus helped banks deleverage and public companies leverage up and repurchase their own shares John Mauldin 5 April 2019

Even if the yield curve inversion has historically heralded bad times for equities, this time might be different, says JPMorgan

because monetary conditions remain soft. Bloomberg 8 april 2019 Yield Curve at IntCom

Can the world's central banks rescue the slowing global economy even if they try?

Ambrose Evans-Pritchard 7 April 2019  Doom at IntCom

Keynesian dogma has become something close to a secular religion in popular economic-policy debates. But...

 “Austerity,” Alesina,  Favero, and  Giavazzi write, “indicates a policy of sizable reduction of government deficits and stabilization of government debt achieved by means of spending cuts or tax increases, or both.” Former IMF chief economist Olivier Blanchard’s recent address at the American Economic Association. Blanchard made headlines by endorsing the view that future growth will almost invariably be sufficient to cover future interest payments, implying that the debt in most advanced economies is far below the level that would ever cause problems. Austerity is a towering scholarly achievement, embodying decades of research and destined to serve as a touchstone for future studies – both by those who will build on it and by those who will try to tear it down. Alberto Alesina, Carlo Favero, and Francesco Giavazzi, Austerity: When It Works and When It Doesn’t, Princeton University Press, 2019. Kenneth Rogoff Project Syndicate 5 April 2019

NATO was created to “keep the Soviet Union out, the Americans in, and the Germans down.”

Lord  Ismay NATO’s first Secretary General had famously said  NATO was created to “keep the Soviet Union out, the Americans in, and the Germans down.”

Gång på gång har vi sett hur bankerna ställt till det i samhället.

Den ansedda brittiska tidningen The Economist kallade 2003 bankerna för ”den mest riskfyllda ekonomiska institution som människan skapat”. – Hela finanssektorn har som affärsidé att lura kunderna. Du säljer på dem extremt komplexa och dyra lösningar som väldigt få kunder förstår, säger chefen som talade om att maximera vinst. SvD 2019

Var fjärde invånare i Sverige har numera utländsk bakgrund (det vill säga är själv utrikes född eller har två utlandsfödda föräldrar).

 År 2000 uppgick antalet utrikes födda till ganska exakt en miljon (11,3 procent av befolkningen).  I slutet av 2018 hade antalet nästan fördubblats till 1 955 569 personer (19,1 procent av befolkningen). Största ursprungsland är Syrien följt av Finland och Irak.  Den 12 april släpper SCB en ny prognos över befolkningsutvecklingen Anna Dahlberg Expressen 30 mars 2019