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The permanent negative supply shocks from accelerated de-globalization and renewed protectionism will make stagflation all but inevitable

While there is never a good time for a pandemic, the COVID-19 crisis has arrived at a particularly bad moment for the global economy. 

The world has long been drifting into a perfect storm of financial, political, socioeconomic, and environmental risks, all of which are now growing even more acute.

As central banks try to fight deflation and head off the risk of surging interest rates (following from the massive debt build-up), monetary policies will become even more unconventional and far-reaching. In the short run, governments will need to run monetized fiscal deficits to avoid depression and deflation. 

Yet, over time, the permanent negative supply shocks from accelerated de-globalization and renewed protectionism will make stagflation all but inevitable.

Nouriel Roubini Project Syndicate 28 April 2020


Wave of corporate defaults owes much to foolhardy share buybacks

There was a time in the postwar period when big corporations routinely aspired to a triple A credit rating. Then came an intellectual revolution. 

In the 1980s Michael Jensen of Harvard University wrote eloquently about the agency problem, originally identified by Adam Smith, whereby agents (executives) managed companies in their own interest rather than that of their principals (shareholders).

Interestingly, very little buying took place when the markets were low in 2008-09 while buybacks proliferated in the peak years of 2018 and 2019.

Such expensive buying can be explained by another principal-agent problem. 

Since so many bonuses and incentive structures are related to earnings and share prices executives have an incentive to shrink the equity to bump up earnings per share. But they do so at the cost of systematically weakening the balance sheet of the corporate sector. 

John Plender FT 29 April 2020

Coronavirus crisis lays bare the risks of financial leverage, again

As before, reliance on high leverage as a magical route to elevated profits has led to private profits and public bailouts. 

The state, in the form of central banks and governments, has come to the rescue of finance on a gigantic scale.  It had to do so. But we must learn from this event.

Martin Wolf FT 28 April 2020

Machiavelli and his enduring appeal

If we want to know who we are and where we came from, some knowledge of the Renaissance seems essential.

Tony Barber FT 29 April 2020


The Great Crash came in two phases

Pointing to the precedent of the 1929/30 crash, some pundits believe that we are in a kind of a delusional pause, with the worst still to come. 

The Great Crash came in two phases - an initial sell-off, followed by a sharp rebound, in which still stuck in the old mentality investors like lambs to the slaughter piled back in, and then a second almighty 80pc plunge into the abyss. 

The worry is that the same pattern will repeat itself.

Jeremy Warner and Ambrose Evans-Pritchard 28 April 2020

The real story of how Britain won WW2

the yield curve for inflation indexed bonds is negative throughout the maturity structure

Politicians who exploit real or imagined fiscal distress to feed a reactionary policy agenda


PO Enquist och löntagarfonderna

1981 hade LO-kongressen, efter förslag av LO-ledningen, beslutat att "löntagarna, inte medborgarna, bör vara fondernas uppdragsgivare". 

LO-kongressen hade visserligen medgivit att "viktiga principiella skäl talar för att fondstyrelserna bör utses i direkta val" men hade i samma andetag framhållit att det "samtidigt finns praktiska skäl som talar för att styrelserna skall utses av de fackliga organisationerna, inte minst det faktum att valproceduren blir mycket enkel".

1982 — Direkta val
I sitt tal i Almedalen inför valet 1982 tog Olof Palme upp frågan hur löntagarfondernas styrelser skulle väljas i framtiden. LO-kongressen hade beslutat att löntagarna, inte medborgarna, borde vara fondernas uppdragsgivare. LO ville ha löntagarfonder, inte medborgarfonder.

I sammanfattningen till det socialdemokratiska kongress- beslutet hade stått att läsa att partikongressens beslut helt överensstämmer med det beslut om löntagarfonder som LO-kongressen hade antagit 1981.

Därtill uppmanad av partiorganet Arbetet, i anledning av att författaren P O Enquist tagit till orda i Expressen, förklarade Olof Palme som sin personliga mening att det skulle vara direkta val till löntagarfonderna styrelser.

Direkta val betydde att löntagarfondernas styrelser skulle utses i val, inte som LO ville, av facket.

Men vem skulle ha rösträtt i valen? Enbart löntagare, sade LO. Men vem är löntagare? Det är svårt att fastställa. Därför ansåg Olof Palme att det borde bli allmänna val, precis som till riksdagen, landstingen och kommunerna.

En modig ledarskribent i den då ännu inte nedlagda Stockholms-Tidningen, med största säkerhet Anne-Marie Lindgren, skrev:

"Visst rymmer frågan om vilka som skall rösta vid fondvalen åtskilligt sprängsstoff. I koncentrat rymmer den nämligen en central tvistefråga i socialistisk teoretisk debatt: skall medborgarna ta makten över företagen, dvs skall man förverkliga socialismen genom förstatligande? Eller skall löntagarna ha inflytande över produktionen enligt den gillessocialistiskt/syndikalistiska modellen?"

Statssocialism eller fackföreningssocialism, det var frågan. Eller som P O Enquist hade skrivit: Vem skall ha makten över fonderna, regeringen, eller facket, eller folket i direkta val?

Sommaren 1983 — Inget löfte givet?
Sommaren 1983 hävdade Kjell-Olof Feldt att något löfte om allmänna eller direkta val aldrig hade givits. P O Enquist, som då trodde och kanske fortfarande tror att allmänna och direkta val till fonderna leder till något annat och bättre än statssocialism, blev rasande. 

Han hade lurats att rösta på fonderna och socialdemokraterna i 1982 års val av löftet om allmänna val till fondstyrelserna.

Ur Rolf Englund, Löntagarfonderna de nya aktörerna... (Timbro)



History says that political union is the essential glue of any currency union.

This invariably entails a centralised system of taxation and public spending.  

It offers a way to deal with economic disruptions that have an uneven effect across the currency zone. 

A shared fiscal policy automatically directs support to where the economic hurt is greatest. 

The coronavirus is one such “asymmetric shock”. It hit Italy and Spain first, and hardest, within Europe. 

A country with its own money could in principle absorb such shocks through a weaker currency or with a monetary policy tailored to its needs. 

This is not possible in a currency union.

The commitments of a shared currency are not easily shaken off. The complexity of the financial super-structure built upon the euro makes break-up a terrifying prospect. 

The Economist 25 April 2020

European leaders have dodged their "moment of truth".

 Berlin, the Hague, or Vienna. 
They know that Mr Macron is trying to bounce the North into fiscal union, exploiting the emotions of the pandemic to change Europe’s constitutional structure. 

Such a jump violates treaty law. It breaches the German Basic Law and alienates the Bundestag’s tax-and-spend prerogatives. 

It cannot legally be done with a flick of the political fingers.

The ECB will avert an immediate crisis by mopping up Italian debt under its "pandemic QE" plan. But it cannot keep doing this forever. 

Private sellers are off-loading their bonds on the ECB and rotating the proceeds out of the country in what amounts to capital flight.  These flows will surface in the ECB’s Target2 payments data. 

The Bundesbank is in effect having to provide a forced "credit" to Club Med central banks that will soon blow through €1tn. 

At some point this will become politically and legally untenable.

Ambrose Evans-Pritchard, Telegraph 24 april 2020


Emmanuel Macron and Spain’s Pedro Sanchez insisted that any aid would need to be grants, not loans

which would just contribute to member states’ debt load, officials said.

“There will certainly be a sound balance between grants and loans and this is a matter of negotiation within the group,” European Commission President Ursula von der Leyen said.

The commission was asked to come up with a compromise proposal by May 6

Bloomberg 23 April 2020

EU fails to settle rifts over size and shape of ‘recovery fund’

Guy Verhofstadt, a former Belgian prime minister who is now an MEP, said piling more loans on embattled countries risked causing a “new sovereign debt crisis”. “Grants are like water in a fire fight while loans are the fuel,” he said. 

Ms Merkel insisted that any funding borrowed on the markets must ultimately be paid back. There were “limits” on what kind of aid could be offered, she told leaders, adding that grants “do not belong in the category of what I can agree”.

FT 24 April 2020

– Tillsammans med våra likasinnade länder har jag i dag framfört de krav vi ställde på den här fonden. Den ska vara begränsad i tid och omfång, det ska vara lån och inte bidrag och den ska leva upp till högt ställda krav på effektivitet och återbetalning, säger Löfven.

SvT 23 April 2020

Carl Bildts okunskap om historia

Jag har med viss möda försöka ta mig igenom Carl Bildts senaste bok, Den nya oredans tid.

På sidan 33 kan man läsa om Mussolini och Libyen:

- Benito Mussolini ... kom till makten 1922... Man kastade sig över och försökte kontrollera den gamla romerska provinsen Libyen.

Denna framställning är totalt felaktig.

Wikipedia: Italien betraktade provinserna i nuvarande Libyen som sitt intresseområde. Från 1911 invaderade Italien området.

 I Lausanne i oktober 1912 utfärdade sultanen ett dekret som gav självständighet åt Tripolitanien och Cyrenaika medan Italien samtidigt förklarade sin formella annektering av dessa territorier. 

Källa: sv.wikipedia.org/wiki/Libyens_historia_som_italiensk_koloni

Dessutom var Mussolini som dåvarande socialist emot invasionen av Libyen.

Wikipedia: 1910 he returned to his hometown of Forlì, where he edited the weekly Lotta di classe (The Class Struggle).

He had become one of Italy's most prominent socialists. In September 1911, Mussolini participated in a riot, led by socialists, against the Italian war in Libya. He bitterly denounced Italy's "imperialist war", an action that earned him a five-month jail term

He was rewarded the editorship of the Socialist Party newspaper Avanti! 


Jag avstår motvilligt från ytterligare kommentarer.

Rolf Englund 23 april 2020

Not about bad debt or excessive lending or stock buybacks

No matter how much you want this to be a story about bad debt or excessive lending or stock buybacks or whatever, it just isn’t about that. It’s about the virus.

This has triggered the usual howls from the usual suspects (I won’t link to them, you know who they are and they need no more attention than they already get) complaining that the Fed just needs to let everything burn and if they don’t let everything burn then nothing is real anymore or whatever.

Tim Duy's Fed Watch 10 April 2020

Why a ‘return to normal’ could mean disaster for the stock market

Hussman, who’s been very vocal about getting burned by his bearish misfires in recent years — “Did it take too long for me to abandon my belief in a ‘limit’ to the stupidity of Wall Street? Yes it did” 

Nice chart.

MarketWatch 22 April 2020

The “Doomsday Dollar” scenario - both the greenback and stock prices could potentially fall at once.

I put forward an idea last year called the “Doomsday Dollar” scenario, which laid out how both the greenback and stock prices could potentially fall at once. 

Foreign buyers of Treasury bills are getting worried that helicopter money is turning slowly but surely into MMT, meaning the central bank funding of the Treasury, and that from there it will be a slippery slope over time to the post-dollar world. 

Rana Foroohar FT 20 April 2020

In fact, the decade between the 2008 financial crisis and this one saw the creation of a vast asset price bubble in just about everything. 

That bubble is now bursting

Rana Foroohar FT 19 April 2020


Germany Has a Winning Hand Again in Europe

The French president, Emmanuel Macron, regularly offers rousing words about the need for common action, but tends not to follow through.  

In theory, Spain could team up with Italy and other southern European states such as Portugal to revolt against the north. But...

Germany’s economic primacy looks set to strengthen in the crisis. Inevitably, its political might will grow too.

Bloomberg 22 April 2020

ECB can save the eurozone - It has near-unlimited firepower and is the only EU institution willing and able to act

The pandemic is creating an enormous common shock. But it has asymmetric results. 

Italy and Spain.

The collapse of the eurozone would be a catastrophe. 

Martin Wolf 21 April 2020

The euro has been a failure. The story of Italy is revealing

Martin Wolf FT 19 June 2018

Let us think the unthinkable: Could the eurozone disintegrate?
The answer is yes.

If /Italy/ fails to rise to the challenge it confronts, a default or even a forced withdrawal from the eurozone is perfectly conceivable.


Spanien och Italien missnöjda med räddningspaketet

Eurozone finance ministers agreed on the principle of a recovery fund this month, but its size and nature have yet to be decided on Thursday. 

Many Northern  countries resist the idea of raising debt and handing it in the form of grants to member states in need, preferring loans instead.

Spain calls for €1.5tn EU recovery fund in grants (not loans)

FT 21 April 2020

Prime Minister Giuseppe Conte has sent mixed messages 

Matteo Salvini’s populist League accusing him of betraying his own country and the futures of its youth.

PM Conte has flip-flopped on the issu.

Accessing the lines is one of the preconditions for unlocking the ECB’s outright monetary transactions (OMTs) which were born with former bank president Mario Draghi’s “whatever it takes” speech at the height of the sovereign debt crisis in 2012. 

OMT - This would need a unanimous vote from all eurozone members, which gives Germany a veto.

Måndagen den 20 april klockan 11.30 samråder EU-nämnden med regeringen via telefon. EU-minister Hans Dahlgren (S) återrapporterar från videomöte den 24 mars 2020 och informerar och samråder inför videomöte den 22 april. 



The case for central-bank independence went largely unquestioned for years.

According to the conventional view, there’s no lasting tradeoff between inflation and employment.

Looking back, it’s nothing short of remarkable how widely this thinking was accepted.

To support demand, the Fed and other central banks had to resort to bond-buying on an enormous scale — a policy that blurs the line between monetary and (more explicitly political) fiscal policy. 

Bloomberg Clive Crook 20 april 2020 

Nice picture

Martin Wolf and Buiter about Helicopter Money


Since the 1980s, the US has incentivised debt over savings for both consumers and corporations

and encouraged the growth of a financial sector that has repeatedly brewed up asset bubbles to support the spending that real economic growth could not.

In fact, the decade between the 2008 financial crisis and this one saw the creation of a vast asset price bubble in just about everything. 

That bubble is now bursting

Rana Foroohar is Global Business Columnist and an Associate Editor at the Financial Times


Italy. Professor Tooze: The bailout fund is unusable. No country that needs it will touch it.

Italy is in more danger than the eurozone will acknowledge

There does not appear to be a majority in the Italian parliament for ESM support. 

Nor is it clear that the ECB would agree to trigger OMT. The argument is that it is not intended to address looming insolvency.

There is zero appreciation in Germany, and, I suppose, the Netherlands too, of a potentially catastrophic downside to their financial sectors and their economies were Italy to default.

Wolfgang Münchau 19 April 2020

Professor Tooze, author of Crashed: How a Decade of Financial Crises Changed the World, says the angry North-South clash over recent weeks has removed the “fig leaf” of the ESM. 

The bailout fund is unusable. No country that needs it will touch it.

Ambrose Evans-Pritchard, Telegraph 14 april 2020

Libya is Sliding Toward Partition

Both sides are receiving support from outside powers, for whom the contest for Libya is a struggle over regional natural resources and over the future of Islamist groups in the Arab world.

Bloomberg 17 April 2020

Big US banks should raise $200bn in capital now

Stress test modelling by the Minneapolis Fed indicates that under severe Covid-19 scenarios, large banks, those with assets greater than $100bn each, could together lose hundreds of billions of dollars of equity capital.

Neel Kashkari FT 16 April 2020

Neel Kashkari, president and chief executive of the Federal Reserve Bank of Minneapolis, oversaw the Troubled Asset Relief Program

Macron warns of EU unravelling unless it embraces financial solidarity

“If we can’t do this today, I tell you the populists will win — today, tomorrow, the day after, in Italy, in Spain, perhaps in France and elsewhere,” he said.

 “The Marshall Plan, people still talk about it today . . . we call it ‘helicopter money’

FT 16 April 2020

Emmanuel Macron is right that without solidarity the single currency could fail

Many details need to be worked out. There would have to be conditions. But the scale of this crisis requires a demonstration of exceptional solidarity. 

Without it, political support for the euro will evaporate.

FT Editorial 19 April 2020


– Det Riksbanken ska uppnå är inflationsmålet, säger Mats Dillén.

Den uppgiften har varit allt annat än lätt de senaste åren då inflationen har snittat långt under Riksbankens mål. Det har tvingat Riksbanken att inte bara sänka räntan till under noll, utan också att köpa nästan hälften av alla Sveriges statsobligationer.

Enligt Mats Dillén ska Riksbanken även i fortsättningen kunna köpa olika sorters värdepapper. Om statspappersköp inte räcker ska banken även kunna köpa till exempel bostads- eller företagsobligationer för att stimulera ekonomin.

SvD 29 november 2020

Ingves rasar mot nytt lagförslag

”Riksbanksutredningens förslag går ut på att särskilja och dra en gräns mellan Riksbankens två huvudsakliga uppdrag – penningpolitik och finansiell stabilitet. Man vill på så sätt dela upp Riksbankens verktygslåda i olika delar och i detalj reglera vilket verktyg som ska användas när, var och hur. Vi menar att detta är feltänkt. Penningpolitik och finansiell stabilitetspolitik är sammanlänkade”,

SvD  15 april 2020


The world economy is now collapsing

The biggest crisis the world has confronted since the second world war and the biggest economic disaster since the Depression of the 1930s. 

It will be impossible to reopen economies with a raging epidemic, increasing numbers of dead and pushing health systems into collapse. Even if we were allowed to buy or go back to work, many would not do so. 

Martin Wolf 14 april 2020

Tobins Q och Englunds R

När dottern var liten, 6-7 år sådär, frågade hon om jag hade fått Nobelpriset. Nä, sade jag, och inte lär jag väl få det heller. Men, svarade hon, om du skriver någonting väldigt bra. Det har jag tydligen inte gjort. Men nu ett nytt försök.

Styrkt av tanken av att Tobin fått Nobelpriset tänker jag på att ekonomernas spådomar hämtade ur kristallkulor ges bokstäver som V, för snabb återhämtning, U för långsam återhämtning och L för ingen återhämtning alls.

Vilken bokstav kommer att beskriva återhämtningen efter Coronan?

Jag tror det blir bokstaven R, en krokig bana som löper av och an  och upp och ner.

Tycker Du inte att det är värt Nobelpriset?

Minns då Nobelpristagaren Rober Lucas.

- Five years before the financial meltdown of 2008, Robert Lucas famously declared that “the central problem of depression-prevention has been solved . . . and it has been for many decades”.

Edward Luce FT 9 October 2019


- Många smittade kommer från Somalia, Irak och Syrien.

Enligt Tegnell är även spridningen på svenska äldreboenden ”starkt kopplade till dödstalen vi nu ser som skiljer sig från våra grannländer”.

Omni 14 april 2020

The eurozone’s emergency plan to fight Covid-19 has unravelled within days.

Italy’s prime minister has rejected the central element of the €540bn package as a “trap”. 

The fund is the core component of the package. But it is also toxic in Italy, widely deemed to be a tool of coercion and a Trojan Horse for a Troika regime under EU commissars.

The ball is now back in Germany’s court. 

There is no legal mechanism in place. The process would take months.

Ambrose Evans-Pritchard, Telegraph 14 april 2020

Tysklands författingsdomstol

Federal Reserve has encouraged moral hazard on a grand scale

Chair Powell has gone from preaching about credit risks to buying junk bond funds

Lending to potentially insolvent companies is bad enough, but buying corporate bonds and ETFs in the secondary market is of questionable legality ...

It also does nothing to help fund the economy, and merely helps the returns of investors who have already bought corporate bonds. It is a paradise for speculators.

The obvious beneficiaries of the junk bond-buying programme are overleveraged private equity groups and unhealthy borrowers.

Jonathan Tepper, FT 13 April 2020

För att inte folk i allmänhet och bankdirektörer i synnerhet skall göra om samma misstag bör de bestraffas för sitt beteende under högkonjunkturen. Kanske till och med statsministrar, finansministrar och riksbankschefer borde, om inte straffas, så åtminstone vanäras, så att de i alla fall inte återkommer till att sitta under kristallkronorna på UD?

Annars hotar Moral Hazard.

Moral Hazard at IntCom


Depression or inflation: Where will Covid-19 end?

Central banks will be under enormous political pressure to maintain supportive money printing at least until the economy has unambiguously returned to health. 

Having crossed the Rubicon into direct financing of budget deficits, that’s almost bound to be inflationary, never mind reassurance from the Lords of Finance that this time is different.

Jeremy Warner Telegraph 12 April 2020


The battle for the eurobond is lost.

The re-nationalisation of policy is in full force. 

And we are set for another financial crisis soon, when the impact of Covid-19 on the debt sustainability of member states becomes only too clear.

Eurointelligence 10 April 2020

How the next euro crisis could unfold

The German economic institutes have produced their joint forecast of an improbably precise 4.2 per cent decline in national gross domestic product this year, followed by a 5.8 per cent increase in 2021

The president of the ECB may actually have meant it when she said the bank’s job is not to close spreads. 

There are quite a few people in the ECB governing council who believe exactly that.

Wolfgang Münchau  FT 12 April 2020

Argentina heads for ninth sovereign debt default

Analysts expect the country to make bondholders an offer they cannot accept

“I fear that Argentina may jump into the pool without first making sure there is water in it,”

“The result is likely to be a failure of the offer and, hence, default.”

FT 12 April 2020

More than $20 trillion of global bonds and loans due before the end of the year

pose a “refinancing risk” with vulnerable emerging markets heavily exposed to the latest crunch, according to the Institute of International Finance (IIF).

The world economy is entering a recession with $87 trillion more debt than at the onset of the financial crisis.

Telegraph 11 April 2020


Så här skulle omslaget sett ut på den bok jag skulle skriva.
Fastän med guldbokstäver förstås.


EU finance ministers’ plan creates political difficulties for Rome and it doesn’t answer the long-term debt question.

Salvini’s right-wing League described Thursday night’s deal as a fiasco for Italy. 

Most worrying, the co-governing Five Star Movement has joined the country’s crusade against the ESM.

The second danger is long-term debt sustainability. Whether they borrow from the ESM, the Commission’s labor market scheme or the financial markets, euro zone members will still accumulate debt on their own. 

For all this week’s focus on the finance ministers, the euro zone will keep being held together by its central bank.

Bloomberg 10 April 2020

The momentous issue of fiscal union has to be addressed once and for all.


Martin Wolf and Buiter about Helicopter Money

In exceptional circumstances, such as times of war, deep depressions or pandemics, it is the job of the central bank to support the overriding need for the state to protect people’s lives and livelihood.

Only the craziest libertarian would disagree. 

As an organ of the state, the central bank must help. Its independence, while normally desirable, is a means to an end, not an end in itself. Even price stability is not overriding in all circumstances. Other things matter.

Even “helicopter money” might well be fully justifiable in such a deep crisis.

“Independence doesn’t mean having to say no to a request for direct monetization,” says Willem Buiter, a former Bank of England policy maker and Citigroup chief economist. 

“It means you can say yes or no.”

 MMTers say the question of whether spending is financed by treasury bonds or central-bank reserves isn’t a big deal -- since both are government liabilities in the end. 

What matters is whether the spending triggers inflation.

Bloomberg 19 April 2020

The momentous issue of fiscal union has to be addressed once and for all.

ECB was each time left to do the dirty work and find plausible ways to skirt the EU treaty law. " 

It is no longer viable - economically or politically - to keep buying time by piling more debt on southern European states already on the threshold of runaway debt trajectories. 

There must be joint debt issuance and debt forgiveness, along the lines of the London Conference in 1953 when half of Germany’s foreign loans were written off - for the good of all.

The IFO Institute says the Bundesbank may one day have to suspend target2 payments the ECB system to protect its own solvency. 

Dr Schauble,  now president of the German Bundestag, says it is a dangerous distraction to call for new instruments that require a EU treaty change, and would come too late to make any difference in this pandemic.

“Even in a crisis, you have to behave correctly. You have to respect parliamentary democracy and the rule of law. Germans have a constitution that tells us what is permissible or not,” he said.

Germany’s top court has already ruled that joint eurobonds violate Germany’s Basic Law. 

And yet, if Germany sticks to its guns, it risks the death of the euro, and the single market, and the whole post-War European experiment. 

Europe’s leaders will no doubt come up with a fudge over the coming days, concocting some sort of hybrid debt security to blow smoke and buy time. 

EU Finance Chiefs Agree on $590 Billion Virus Rescue Package

A temporary fund that would help kick-start the recovery and support the hardest-hit countries, while leaving open key details, including how it would be financed.

As with many an EU deal, everyone claimed a victory and some of the thornier details will still need to be ironed out among the leaders.

Bloomberg 9 April 2020

Diskussionen om euroobligationer är långt ifrån över.
5 500 miljarder avvärjer eurokris – men bara för stunden

Teresa Küchler SvD 10 april 2020


QE is reversible, goes the argument: monetary financing is forbidden.

This is something that you have to say when you are currently a central banker, to prevent politicians running off to the sweetshop with central-bank funded spending.

Those who have previously been in the chair, such as Lord King, seem relaxed at the largesse. The question is one of degree, and confidence in the independence of institutions.

Telegraph  8 April 2020

EU Fails to Agree on 500 bn euro. Negotiations end in acrimony

The acrimony (bitterhet) highlights how Europe is mired in the same old divisions that almost tore it apart during the sovereign debt crisis almost a decade ago. 

Bloomberg 8 April 2020

In 2012 she /Ms Merkel/ said there would be no eurobonds “as long as I live”. After nine European heads of government wrote a joint letter last month saying the EU needed to “work on a common debt instrument”, she said pointedly that that wasn’t “the opinion of all member states”.

 Germany’s constitutional court had made clear that such an innovation would need the prior approval of the Bundestag, and a two-thirds majority might be required for such a fundamental change

FT 6 April 2020

Time to integrate further or break-up

For two decades they /Northern leaders /have shied away from the fact that the currency union cannot succeed unless its members share more risk.

If they do not face up to that today, the euro, and perhaps the European Union itself, will not survive.

The Economist 11 April 2020

To the astonishment of almost everyone in the room, Angela Merkel began to cry.

the man sitting next to her, French President Nicolas Sarkozy, and the other across the table, US President Barack Obama

Das ist nicht fair.” That is not fair, the German chancellor said angrily, tears welling in her eyes. “Ich bringe mich nicht selbst um.” I am not going to commit suicide.

A cornered Ms Merkel threw the French and American criticism back in their faces. If Mr Sarkozy or Mr Obama did not like the way her government ran, they had only themselves to blame. After all, it was their allied militaries that had “imposed” the German constitution on a defeated wartime foe six decades earlier.

Peter Spiegel, Financial Times 11 May 2014

EU finance ministers struggle to break impasse between Italy and the Netherlands

Italy’s finance minister Roberto Gualtieri said his government would not accept a final report sent to EU leaders unless it explicitly mentioned debt mutualisation as a tool for the economic recovery. 

Rome also demanded that any use of loans from the European Stability Mechanism come with no conditions attached.

The Netherlands’ finance minister Wopke Hoekstra said no on both points. 

FT 8 April 2020


Since the Great Financial Crisis, the primary stock buyer has been the listed companies themselves via their stock repurchase programs.

Their net purchases dwarf all others.

CARES Act restricts buybacks from companies receiving federal loans, loan guarantees, or other assistance.

All that means buybacks will likely be scarce for a while, and stock prices may have a hard time rising unless some other large buyer appears. 

Bull markets require people willing to buy. 

Bear markets develop simply in the absence of buyers.

John Mauldin with nice chart 3 April 2020

In the eurozone, they talk much of eurobonds.

But the support that matters will have to come from the European Central Bank. 

There is no alternative. Nobody should care. There are ways to manage the consequences. 

Even “helicopter money” might well be fully justifiable in such a deep crisis.

Martin Wolf 7 April 2020


Ledare i Financial Times öppnar för Helicopter Money

Ekonomer och andra måste lägga Joakim von Anka bakom sig, skrev jag här i går.

Detta upptogs inte väl av alla. Det får man ta.

I dag kan man läsa en ledare i Financial Times som skriver:

Helicopter money is a valid tool for central bankers

Quantitative easing programmes may be here for the long term

Without limits, allowing a government to finance itself by creating money can lead to hyperinflation. But these risks can be manageable

There is no clear distinction between quantitative easing and monetary financing.

The scale of today’s downturn means even the most direct monetary financing, such as “helicopter money”, or handing cash to the public, should remain an option.

German Foreign Minister and Finance Minister called for a European response to the economic fallout of the pandemic.

"We need a clear expression of European solidarity in the corona pandemic," the high-profile German officials said in an op-ed published in several European newspapers in Italy, France, Greece and Spain.

Deutsche Welle 6 April 2020

Germany has always argued the idea would violate the “no bailout” clause in the EU treaty, which says that no EU country should be liable for the debts of other members

FT 6 April 2020

”Kerstin Hessius-gänget”

Realtids Johan Såthe frågar sig om de som vill öppna vår ekonomi igen – ”Kerstin Hessius-gänget” – verkligen har fattat att Sverige kanske är det mest öppna landet av alla?

”Människor kommer inte att börja agera ’normalt’ förrän de anser att det är säkert att göra det. Det är inget någon politiker kan bestämma, det är virusspridningen som avgör”, skriver han.



Ekonomer och andra måste lägga Joakim von Anka bakom sig

Farbror Joakim hade sina penningbingar med guldpengar. När han köpte något blev det mindre kvar. Detta är ett synsätt som många har svårt att frigöra sig ifrån.

Har vi råd med alla dessa stödåtgärder frågan sig många, alltför många. Men dom har väl inte läst vare sig Keynes eller Friedman.

"Om man har en sedelpress går man inte i konkurs", skrev jag nyligen.

Man har en sedelpress om man har en egen valuta och inte är med i EMU.

En utgift är en belastning om den medför att man inte kan göra något annat för dessa pengar. 

Underskottet i statsfinanserna är en ointressant siffra. Staten kan ge ut obligationer som Riksbanken köper. Den går inte i konkurs för den har verkligen en sedelpress.

Man skall i stället, återigen efter många år, hålla ett öga på penningmängden.

Om ett företag eller en löntagare går med förlust och detta underskott täcks av statsbidrag är penningmängden oförändrad.  

Vi måste också sluta med fiktionen att Riksbanken inte är en del av staten. 

Om staten har en skuld på 1.000 miljarder och dessa obligationer har köpts av Riksbanken tar dessa summor ut varandra.

Niema problema, säger anhängarna av Modern Monetary Theory.

To the extent modern monetary theory is true, it is unoriginal; 

to the extent it is original, it is false

The doctrine behind MMT was smart but not completely right

Faced with slow growth, political discontent, and large inherited debt burdens, monetary finance cannot be a taboo option.

 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 Thinking. 

The deficit only matters once you reach full employment, when overheated consumer demand can lead to inflation. 

But we’re nowhere near that point right now, meaning there’s plenty of room for deficits, without any possibility of default.

New Republic 11 May 2016

Monetarism på min site

Money creation in the modern economy at Peak Prosperity

Money creation in the modern economy at Bank of England pdf, QB 2014 Q1

Why the Fate of Milan Will Be the Fate of Italy

The government is deploying at least 50 billion euros ($55 billion) in economic aid, which will add to borrowings already totaling 135% of GDP, more than twice the ratio of Germany.  

That growing debt load threatens to leave Italy dependent on the European Union to maintain financial stability—and could put it at the mercy of its EU partners to keep investment flowing.

The virus crisis is unfolding just as Italy’s banks have finally gotten back on their feet after the 2008 financial crisis. 

Nice pics.

Bloomberg 4 April 2020

Furious at their plight being ignored and over resistance to coronabonds, Italians’ sense of betrayal deepens

“You have to consider my party is one of the most pro-European parties in Italy and I now have members writing to me saying: ‘Why do we want to stay in the EU? It is useless.’”

Donald Tusk, the former European Council president, who is now president of the European People’s party, the centre-right political alliance. 

“We must save Italy, Spain and the whole of Europe and not be afraid of extraordinary measures. This is a state of emergency.”

FT 6 April 2020

What Happens When Stock Buybacks DROP By 50%?

Corporate Debt Domino Effect Has Begun.

The Money GPS Youtube 5 April 2020

Skapar centralbankerna stagflation? Experter tvekar.

När världens centralbanker pumpar ut likviditet i de finansiella systemen har oroade röster pekat på risken för stagflation – att arbetslöshet och inflation lyfter samtidigt.

Med bra länkar.

Sandra Johansson omniekonomi 4 april 2020

Om Stagflation hos IntCom


Siktade Lee Harvey Oswald inte på JFK utan på John Conally?

John Connally; On November 22, 1963, he was seriously wounded while riding in President Kennedy's car in Dallas, when the president was assassinated. 

Connally does not endorse the conclusions of the Warren Commission. When asked if he believed the Warren Commission's findings he said: "Absolutely not. I do not, for one second, believe the conclusions of the Warren Commission."

Connally hade varit marinminister och därvid avslagit Lee Harvey Oswald överklagande av sitt vanhedrande avsked ur Markinkåren. 

Det var kanske Connally som Oswald siktade på och inte JFK?

Den frågan har man kunnat läsa på min website i många år.

När jag nu googlar hitta jag en artikel från 2016 om att historian and journalist James Reston Jr. has questioned whether JFK was the actual target

Reston argued in his book about the assassination, “The Accidental Victim,” that Oswald had long harbored a deep grudge against the Texas Governor; 

Oswald's attempt to defect to the Soviet Union had led to his discharge from the Marines being downgraded to undesirable and he knew that when he returned to the United States he would struggle to find work because of it. 

He appealed to Connally, then Secretary of the Navy and a fellow Texan, only to be rebuffed with a letter embossed with the Secretary’s smiling face and a campaign leaflet urging him to support his candidacy for Governor. 

This, Reston believes, was the root of Oswald’s hatred and ultimately lead him to plot the politician’s assassination.

He adds that in the testimony of Oswald’s wife, Maria, to Congress’s Select Committee on Assassinations in 1978 she categorically named Connally as the real target of the assassination, not JFK. 

Other people who knew Oswald are alleged to have corroborated this view, saying that he in fact admired JFK for his efforts to engage with the USSR.

If so, why is this theory not more widely accepted? 


James Reston Jr.’s notion that Lee Harvey Oswald’s real target was Texas Gov. John Connally was firmly rejected by Vincent Bugliosi in his definitive investigation published in 2007, “Reclaiming History.” (“Lee Harvey Oswald’s little green book shows JFK wasn’t the real target,” Opinion, Nov. 22)

Bugliosi reports that Connally wrote to Oswald that he had left his position as Navy secretary before Christmas 1961 in order to run for governor of Texas, and he was passing along Oswald’s request to his successor, Fred Korth. 


Former Secret Service Agent Bill Carter explains, "So anyway, he got kicked out of the marines, and when I saw that, who was the Secretary of the Navy who’s in charge of the Marines? John Connally was sitting in front of Kennedy."

Connally had become governor of Texas after being secretary of the Navy.



ECB should not be used to finance national borrowing, which is explicitly prohibited by its founding treaty.

To trigger the ECB’s power to buy sovereign debt under OMT, a country must first have been granted a rescue programme from the European Stability Mechanism. 

This would need a unanimous vote from all eurozone members, which gives Germany a veto.

For the distressed borrower, the conditionality this implies would be humiliating. 

Mr Draghi never had to put OMT into effect and, even now, no one wants to invoke the mechanism to support the stressed states in the pandemic.

FT 3 April 2020

Germany is the largest guarantor of the OMT

Fannie and Freddie could require bailout if lockdown lasts

The two groups.collectively underpin the $10tn US housing market..

Regulator Mark Calabria, director of the Federal Housing Finance Agency. says US mortgage guarantors have sufficient resources for about 12 weeks

“Fannie and Freddie are still in conservatorship and 
levered 240 to 1. 

FT 3 April 2020

Fannie and Freddie at IntCom

What about the hundreds of billions of dollars of Level 2 and Level 3 assets held by the biggest banks?

Complex, risky trades whose fair value is hard to determine.

These are the so-called Level 2 and Level 3 assets, the types of instruments that blew up in 2008.

Europe’s banks have hundreds of billions of euros of risky assets

Bloomberg 3 April 2020

Emerging market debt burdens may be sorely understated

It makes much less sense for a bond issued by Petrobras International Finance Company, a Cayman Island subsidiary of the Brazilian oil group, to be added to the debt statistics of the Cayman Islands.

Investors braced for credit crisis in emerging markets

Last month $31bn was sucked out of emerging-market debt funds, the biggest outflow on record since October 2008, according to the IIF. 

Analysts say the developing world as a whole is more resilient than at the onset of previous downturns, such as the Asian financial crisis of 1997-98 and the Latin American debt crisis of the 1980s. 

FT 2 April 2020

Asian financial crisis of 1997-98 

Latin American debt crisis of the 1980s

"Om man har en sedelpress går man inte i konkurs".

Hur kommer det sig att regering och riksbank i Sverige, England och USA gång på gång kan lägga fram stödpaket på mångmiljardbelopp? 

Var kommer pengarna ifrån frågar sig nog många.


Svaret är att den svenska regeringen kan alltid betala sin skulder /denominerade i kr/.

Men Grekland  och andra euroländer har sina skulder i euro och sedelpressen står i Frankfurt och kontrolleras av ECB.

Jag inbillar mig gärna att jag var en av de första som på nätet observerade att "Om man har en sedelpress går man inte i konkurs". 

Det var varit det till synes självklara budskapet på denna blogg ett antal gånger, första gången i november 2011.

Sedan kom även BBC och Soros på det.

Soros om att dom inte förstod att det var ett stort steg att avskaffa den egna sedelpressen

BBC: Greece does not have its own central bank that print money

EU och ECB kunde kväsa Grekland. Pengarna tog slut i de grekiska bankomaterna.

England kunde lämna EU eftersom Bank of England har en egen sedelpress.

Det var således viktigt att det blev Nej till svensk euroanslutning i folkomröstningen 2003.