Visar inlägg från februari, 2020


Nu börjat det blir spännande.  Kanske det nu är dags att ta fram den sida jag lade ut den 10 juni 2005 där jag sammanfattade mina dystra spådomar om bl a Climate change, Dollar collapse, Bonds collapse, Houseprice collapse, Stock Market Collapse, Euro collapse och Pandemic. - Each of the things are unpleasant, skrev jag och att "It will be even worse if they happen to occur more or less at the same time. Rolf Englund på Facebook 24 februari 2020 Cataclysm

The global economy may be heading for some sort of "sudden stop" in supply chains, trade flows and tourism more akin to the outbreak of the First World War than the Lehman or dotcom crises.

Covid-19 is self-evidently beyond the point of meaningful containment. What happens or does not happen in Wuhan has been overtaken by events in Iran, Italy, the Pacific Rim and no doubt Africa as well if there were surveillance data. The danger in any case is that the coronavirus epidemic not only spreads to Europe and the US but also that it lasts long enough to set in motion a contractionary chain-reaction, ending in a worldwide deflationary bust. Ambrose Evans-Pritchard, Telegraph 25 February 2020 We are in an unprecedented global situation more akin to the outbreak of war than any episode in collective economic memory.  “Everyone believes it’s going to be a V-shaped recession, but people don’t know what they are talking about. They prefer to believe in miracles,” said Nouriel Roubini, the Dr Doom of the 2008 saga. “This crisis is a supply shock that you can’t fight with monetary or fiscal policy.” Ambrose Evans-Pritchard, Telegraph 28 February 2020 Cataclysm

The Dow just logged its worst 2-day percentage drop in two years

The S&P 500 has shed more than $1.7 trillion in value in the past two days MarketWatch Feb 25, 2020

How Fast Can a Virus Destroy a Supply Chain?

Just-in-time networks are very efficient but extremely fragile. About 80% of the active pharmaceutical ingredients in U.S. medicines rely on Chinese or Indian components, so this does represent a very real public health risk for the U.S., even if the coronavirus itself does not. Tyler Cowen 25 februari 2020

China faces the possibility of a financial crisis, which would send a shockwave through the world

Chinese bank failures, loan defaults and supply-chain disruptions would put a dent in global GDP With the recent spread to Japan, South Korea and Italy, it looks like total infections will continue to grow.  With elevated valuations on U.S. stocks, it is unlikely that investors have discounted recessions, loan defaults or decreases in spending. MarketWatch 25 February 2020

The COVID-19 outbreak has hit at a time of much greater economic vulnerability than in 2003, during the SARS outbreak

China's share of world output has more than doubled since then. With other major economies already struggling, the risk of outright global recession in the first half of 2020 seems like a distinct possibility. Stephen S. Roach Project Syndicate 24 February 2020

“I don’t think there’s a letter in the alphabet which adequately describes the profile of the economic shock that … we’re beginning to see,”

Jonathan Pain, author of The Pain Report, told CNBC’s “Street Signs” on Monday morning in Asia. “I believe that repricing … has just started and I think it’s gonna be approximately 20 to 25% in the next month or so.” “I don’t think there’s a letter in the alphabet which adequately describes the profile of the economic shock that … we’re beginning to see,” Pain said.  “Of course there will be a recovery at some point in time, however, we don’t know when that point in time is.”  In the earlier days following the outbreak, many economists had predicted a V-shaped recovery, which describes downturns that see a steep fall before recovering sharply. CNBC 23 February 2020 Growing numbers of countries are screening passengers at airports and borders for signs of covid-19. But when a virus starts travelling around the world, says Michael Ryan of the  who , its real point of entry is a busy emergency room or a doctor’s surgery.  https://www.econ

The Monetarist Fantasy Is Over

UK Prime Minister Boris Johnson, determined to overcome Treasury resistance to his vast spending ambitions, has ousted Chancellor of the Exchequer Sajid Javid. But Johnson’s latest coup also is indicative of a global shift from monetary to fiscal policy. In the 1970s came the monetarist counter-revolution, led by Milton Friedman. The only stabilizing that a capitalist market economy needed, Friedman said, was of the price level.  Provided that inflation was controlled by independent central banks and government budgets were kept “balanced,” economies would normally be stable at their “natural rate of unemployment.” A notable turning point was the 2013 rehabilitation of fiscal multipliers by the International Monetary Fund’s then-chief economist Olivier Blanchard and his colleague Daniel Leigh.  Mark Carney, the outgoing governor of the Bank of England, recently admitted as much, saying that commercial banks had been “useless” for the real economy after the slump started, despi

Number of US companies dropping to junk ratings already close to half last year’s total

The total universe of BBB-rated debt stood at $3.4tn at the end of last month, according to Ice Data Services. FT 20 02 2020 The high-yield bond market. That’s the polite name for “junk” bonds

The difference is population growth

Chart from Martin Wolf FT 19 February 2020

The number of infections in Japan has more than doubled in the past week to 74

While the hundreds of cases aboard the ship have grabbed the world’s attention, they are not counted among Japan’s total. Bloomberg 19 February 2020

The stock market is ignoring these ‘white swan’ events that could upend everything, Roubini warns

In my 2010 book, “Crisis Economics,” I defined financial crises not as the “black swan” events that Nassim Nicholas Taleb described in his eponymous bestseller, but as “white swans.” According to Taleb, black swans are events that emerge unpredictably, like a tornado, from a fat-tailed statistical distribution.  But I argued that financial crises, at least, are more like hurricanes: they are the predictable result of built-up economic and financial vulnerabilities and policy mistakes. There are times when we should expect the system to reach a tipping point — the “Minsky Moment” — when a boom and a bubble turn into a crash and a bust. Such events are not about the “unknown unknowns,” but rather the “known unknowns.” Nouriel Roubini MarketWatch Feb 18, 2020 Hyman Minsky showed how stability leads to instability.  Humans have a way of reinterpreting stable periods that seemingly redefines words like reasonable, manageable, and prudent. That’s why we continue chasing yield an

Bond traders are famously skittish like deer, alert to danger: stock investors are more like grazing cows

unruffled and easily led to slaughter.   Few analysts have begun to ‘price’ the implication of a full-blown COVID-19 pandemic across the world.  Ambrose Evans-Pritchard, Telegraph 12 February 2020

Argentina faces prospect of another default

Argentina’s government has said it needs to restructure $100 billion in debt, including $44 billion to the IMF. CNBC 18 February 2020 Argentina defaulted on $100bn of debt in 2001-02, at the time the largest sovereign default in history. FT July 31, 2014

Flygande vingen

Var fjärde svensk kommun har växt av invandringen

Det har varit fördelar men också nackdelar och det känner vi av nu när det har gått en tid, säger Patric Åberg(M),  kommunstyrelsens ordförande i Östra Göinge i Skåne. SvT 16 februari 2020

Basically, he says he makes far out-of-the-money bets that cost little but deliver huge when it all comes crashing down.

Spitznagel, a former trader, is a protégé of Nassim Nicholas Taleb, the author of the 2007 bestseller, “The Black Swan,”

A pandemic is no longer a scientific tail-risk. It is fast becoming the central risk.

Leading virologists warn that it may already be too late to contain the virus in China. We should have a clear idea whether or not the spread is unstoppable within three weeks.  What is striking about the global epidemiology is the implausible absence of cases in Indonesia, Pakistan, Cambodia, or the whole of Africa, despite constant to and fro to China.  It is clear that there is no systematic testing or tracking in many countries. The virus may be circulating below radar in large areas.  This will make it nigh impossible for western states to control the spread unless global travel is shut down, but to do that would derail the globalised international economy overnight. Ambrose Evans-Pritchard, Telegraph 12 February 2020 "The containment phase is really to give us more time. This virus will become a community virus at some point in time, this year or next year," CNN  

Some have questioned the military value of Dresden.

Even British Prime Minister Winston Churchill expressed doubts immediately after the attack. "It seems to me that the moment has come when the question of bombing of German cities simply for the sake of increasing the terror, though under other pretexts, should be reviewed," he wrote in a memo. BBC 13 February 2020 Dresden: The Fire and the Darkness — was 1945’s bombing an atrocity? FT 21 February 2020

China must be nearing the point

where the social and economic costs of trying to stamp out the coronavirus by totalitarian methods are greater than the trauma of letting it run. A normal country would eventually conclude that the more rational course is to accept that the disease can no longer be contained (given the three lost weeks of the Wuhan cover-up), treat it as a form of turbo-charged winter flu, and direct all efforts instead at managing care more coherently. The focus would then shift to a different objective: trying to lower the death rate from apparent 1918 Spanish flu levels of 2pc to plausible levels below 1pc – still 10 times influenza flu –  Ambrose Evans-Pritchard, Telegraph 12 February 2020

Changi airport in Singapore is one of the most interconnected hubs in the world.

In fact, there's a flight taking off and arriving every 80 seconds here, making it more connected than JFK and San Francisco in the US and Dubai in the United Arab Emirates. BBC 13 February 2020 När jag gick i realskolan hade vi en dag filmförevisning. Svart-vitt. Där sades att smitta snabbt kunde spridas över världen genom att folk flög så mycket /50-tal/. Denna film gjorde ett starkt intryck på en ung man och jag har tänkt på de bilderna av och till sedan dess.

Dow jumps more than 200 points to a record despite coronavirus worries

CNBC 12 February 2020 Coronavirus: China and the virus that threatens everything BBC 11 February 2020 - There is no such thing as rational expectations. There is wishful thinking, or panic. Rolf Englund, many years ago (probably in 1997)

Wolf: Trump’s re-election would be dangerous for the world

Even if the great republic survived the trial largely unscathed (which is optimistic) the re-election of this man — a demagogue, a nationalist, an incontinent liar and an admirer of tyrants — would have worldwide significance. Martin Wolf FT 11 February 2020 Good charts

We must fight pandemics as if we were preparing for war

Owing to modern science and technology, and our capacity for collective action, we already have the tools to prevent, manage, and contain global pandemics.  Rather than thrashing around every time a new pathogen surprises us, we should simply deploy the same resources, organization, and ingenuity that we apply to building and managing our military assets. MarketWatch 11 February 2020

Ray Dalio thinks the coronavirus’ hit to global markets is probably exaggerated

“Because of the temporary nature of that, I would expect more of a rebound. It most likely will be something that in another year or two will be well beyond what everyone will be talking about.” CNBC 11 February 2020

Has the ‘Great Moderation’ returned — and is that a good thing?

The “Great Moderation” is the name often given to the period from the mid-1980s to 2007, when the Federal Reserve kept inflation and economic growth relatively stable… until it all collapsed in spectacular fashion in the global financial crisis of 2008. MarketWatch Feb 6, 2020  More here

The World Bank has just warned us that a fourth debt wave could dwarf the first three.

Emerging economies, which have amassed a record debt-to-GDP ratio of 170%, are particularly vulnerable.  As in the previous cases, the debt wave has been facilitated by low interest rates. There is reason for alarm once interest rates begin to rise and premia inevitably spike. Kaushik Basu Project Syndicate 31 January 2020 Kaushik Basu, former Chief Economist of the World Bank and former Chief Economic Adviser to the Government of India, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.