Englund

His new book, Humankind,  displays his gift for synthesising libraries full of academic research into spellbinding reads. Generally, the more you’re paid, the dumber your audience.  The cleverest audiences are students and, of course, old people.  If you speak in a care home, they’ve always read your book and they undress you with good questions. But a 25-minute keynote at some hip congress — nothing happens, man. Simon Kuper FT 29 May 2020

It does the minimum needed to avert a North-South political crisis and to head off a funding crisis for the "Club Med" bloc in 2021, but it does not in itself put monetary union on a viable footing. It does not pool the legacy debts of all the states in a joint sinking fund. The financing is linked to the Commission’s seven-year budget and is not joint and several liability.   It is therefore not the start of eurobonds, which would be a breach of the German Grundgesetz.  France’s Emmanuel Macron is going along with the scheme because he hopes it will lead step by step to debt mutualisation by the Monnet Method of incremental facts on the ground. Ambrose Evans-Pritchard Telegraph 28 May 2020  By the Fifties, Monnet realised that their dream could not be realised overnight.  It should, therefore, be assembled stealthily, bit by bit, without for a long time declaring its real goal. And they should begin by pretending that it was just an ec...

Här skall jag försöka förklara teorin om optimala valutaområden för Lydia Wålsten, tidigare  kommunikationschef på Timbro, nu ledarskribent på SvD. Stödpaketet från EU-länderna skall rädda euron.  Det är samma länder som skall räddas nu som räddades förra gången som euron hotade att kollapsa.  Då var det en finanskris, nu är det ett virus, men orsaken är den fasta växelkursen som man får när man inför euron. SvD Ledarredaktion diskuterade häromdagen EU-kommissionens nya stödpaket under ledning av  Lydia Wålsten under rubriken Sverige öppnar nog plånkan för EU. https://englundmacro.blogspot.com/2020/05/sverige-oppnar-nog-plankan-for-eu.html De nämnde inte federalism och heller inte, det är jag ganska säker på, optimala valutaområden. Götaland, Svealand och Norrland har samma valuta fastän områdena är ganska olika. Det fungerar, någorlunda, eftersom det över statsbudgeten sker stora transfereringar även, men inte bara, genom skatteutjämningsbidragen...

SvD Ledarredaktion diskuterar EU-kommissionens nya stödpaket under ledning av  Lydia Wålsten   https://www.svd.se/sverige-oppnar-nog-plankan-for-eu Lydia Wålsten har varit kommunikationschef på Timbro Bild på Lydia Dom är så gulliga allihopa med dom lyckas så vitt jag kan höra undvika ordet federalism.

It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created. Romano Prodi, EU Commission President. FT 4 December 2001 Klick - Jag vill inte ha en federativ utveckling. Svenska folket har inte gått med i en federation.  - Logiken i det hela rör sig i federativ riktning... Sch! säger Kohl åt mig när jag tar upp det Göran Persson If you want to save the euro permanently, the judges are saying, write new rules into the European treaties and explain them to your voters. Klick Federalism Federalism

Lloyds Banking Group Plc, a large British lender, has just become the third European bank this year to do what was once unthinkable and decline to redeem an outstanding “CoCo” bond at its first call date.  Bloomberg 27 May 2020 The problem with cocos more broadly is that nobody knows if they work.  FT 21 March 2017

Peter Malmqvist  – Jag är otroligt överraskad över börsutvecklingen, säger han. Om man jämför med bottenläget under förra finanskrisen så låg börsen på botten i ett par månader innan det vände upp. Nu har det vänt upp otroligt fort, trots att det är väsentligt mycket värre än vid förra finanskrisen. Så jag kan bara sälla mig till de andra som ser ut som en fågelholk. Fokus 20 maj 2020 https://www.fokus.se/2020/05/skilda-varldar-varfor-har-inte-coronakrisen-stoppat-borsrallyt/

Will the coronavirus do the same for medicine? Consider masks, for example: The World Health Organization said early on that there was no point in encouraging healthy people to use them, but now most doctors agree that widespread mask-wearing is a good idea.  The pandemic has reminded us that science — and medicine in particular — has limits. In a way, the last few months have resembled what occurred in the 2008 crisis, as economists fought over the right response to the crash.  The academic community split between those who said the U.S. government should save all large banks and those who said it should let Lehman Brothers go bust.  Ferdinando Giugliano Bloomberg 25 May 2020

Den nya återhämtningsfonden skulle förändra unionens karaktär, men både kritiker och anhängare överdriver dess betydelse. EU skulle börja ”häva sig upp” till det sjätte steget på den ”integrationstrappa” som statsvetaren Sverker Gustavsson har beskrivit så väl.  Annika Ström Melin DN 25 maj 2020 Annika Ström Melin, det har jag skrivit många gånger, är en av vårt lands kunnigaste skribenter om EU. Och Sverige har väl haft avsevärt sämre utrikesministrar än Carl Bildt. Men dom förefaller ha en svaghet gemensamt.  Båda är utopister. Englund 24 mars 2011 Annika Ström Melin Desillusionerade Europaanhängare längtar efter en djupare mening med den gemensamma valutan Klick

– Mycket är högst osäkert, men i ett scenario där arbetslösheten stiger upp emot 15 procent räknar vi med att bostadspriserna skulle falla med 20 procent, säger Christina Nyman, chefsekonom på Handelsbanken, samtidigt som hon poängterar att fallet sker från en relativt hög nivå. SvD/TT 25 maj 2020 Bostadspriserna i Sverige hos IntCom

Creating any EU recovery plan will require unanimous support from the EU’s 27 member countries – and this will involve unseemly late-night squabbles between the self-styled “Frugal Four” northern governments (the Netherlands, Austria, Finland, and Sweden), which have vehemently opposed funding for Mediterranean EU members  Anatole Kaletsky Project Syndicate 21 May 2020 Europe’s ‘Jefferson Moment’ is a defeat for the federalist dream Ambrose Evans-Pritchard Telegraph 20 May 2020  The European Union Is on the Brink of Historic Change The Commission’s $825 billion rescue fund would break many taboos, possibly paving the way for EU taxes and an EU treasury.  Bloomberg 27 May 2020

David Hume, philosopher, historian and pioneering monetary economist, his friend Adam Smith, author of The Theory of Moral Sentiments and The Wealth of Nations and John Maynard Keynes, founder of macroeconomics. The dinner will take place in the Reform Club’s library. The Reform, where I have been a member since 1982, is modelled on an Italian Renaissance palace. Martin Wolf FT 22 May 2020 The Reform Club

"The period commencing in the 1990s became known as the Great Moderation, an era of strong economic growth, high production and employment, low inflation, reduced volatility in the business cycle, and self-adulation amongst politicians, central bankers and academic economists."  (from "The Age of Stagnation" by Satyajit Das) https://www.internetional.se/hedgefunds.htm#dasfebr2015 https://www.internetional.se/nosuchthing.htm#greatmoderation Satyajit Das Bloomberg Opinion Columnist

The Rubicon has not been crossed. The €500bn Merkel-Macron plan is not fiscal union. It is not the start of eurobonds or joint and several debt issuance. It is not a great leap forward in the constitutional structure of the EU that many wish it to be. Nor does it rectify the structural failings of monetary union, nor restore the post-Covid solvency of Italy and Club Med states facing a debt-deflation trap.  The money will not start flowing until next March.  Ambrose Evans-Pritchard Telegraph 20 May 2020  If you have common bonds, is that not a fiscal union of sorts?  The key problem with the euro since its founding in 1999 has been that it was — and is — a currency without a fiscal union.  Austria, Denmark, Sweden and the Netherlands are fundamentally against the idea of mutualising debts.  Netherlands is the key country to watch. FT 21 May 2020 Politicians and analysts say the plan could mark a turning point in the history of the EU....

Angela Merkel har gjort en plötslig helomvändning, kanske för att hon är på väg ut och inte har fler val att ställa upp i. Merkel har kapitulerat för Macrons överstatliga böjelser. Båda hoppas slingra sig undan besvärliga fördragsändringar.  Eftersom efterfrågan på ett federalt EU är begränsad är folkomröstningar en risk. DN-ledare 21 maj 2020

For the exact opposite, however, keep reading for the latest downer from Charles Hugh Smith. The man behind the OfTwoMinds.com, which was recognized by CNBC as one of the best alternative financial blogs on the internet, has been calling for the implosion of the U.S. empire for years now, and the coronavirus pandemic has him believing that time has finally come. Nice chart MarketWatch 19 May 2020 https://www.oftwominds.com/

Magdalena Andersson, Sweden’s finance minister, said on Tuesday 20200519 : “We will be constructive partners in this discussion as well, but at the same time we will co-operate with the ‘frugal four’. There are big question marks when it comes to borrow for spend and whether it is allowed with EU treaties.”  Olaf Scholz, Germany's finance minister, said the EU was approaching its "Hamilton moment” - in reference to the first US Treasury Secretary who in 1790 turned the US into a fiscal union by converting state debt to federal debt. His French counterpart Bruno Le Maire called the deal a “historic step for France and Germany and also a historic step for the whole European Union”. But some northern European states are digging their heels in. Austrian chancellor Sebastian Kurz said that he and his counterparts in the Netherlands, Denmark and Sweden would only accept a rescue fund that dished out loans. FT  19 May 2020   Tyskland har motsatt sig att den sortens e...

Does this mean the question of whether this long debt cycle must end in inflation has to be answered in the affirmative? No, but this is possible Broad measures of money supply had grown slowly since the 2008 crisis. But this time it really is different.  If one is a monetarist, like Tim Congdon, the combination of constrained output with rapid monetary growth forecasts a jump in inflation. But it is possible that the pandemic has lowered the velocity of circulation Martin Wolf FT 19 May 2020 The inflation hawks may be right, but when 30-year bonds are trading at 1.35 per cent interest rates, the collective wisdom of the market is making a huge bet in the other direction.  FT 19 May 2020

It is open to Berlin to try to amend the German constitution or the EU treaties, to make it absolutely explicit that the ECB’s actions are legal. If Berlin cannot win that argument at home — or in the wider EU context — then Germany may have to consider leaving the European single currency. Anybody who has worked in Brussels will be familiar with the bicycle theory of European integration.  The idea is that unless the EU keeps moving forward, it will fall over and crash. But the bicycle theory is dangerously out of date. To survive, the EU actually needs to find a brake and a reverse gear. Gideon Rachman, ledande EU-kramare på FT. 18 maj 2020 Som jag skrev i Nya Wermlands-Tidningen 2002-03-01: - Det är som att cykla, skrev Percy Barnevik om EU i Financial Times i juni förra året. Det går inte att stå stilla, antingen rör man sig framåt eller så faller man, hette det i artikeln, förmodligen skriven av någon av Wallenbergsfärens välbetalda PR-konsulter. - Men varje 5-åri...

“The delivery of this recovery plan will be the moment of truth for this European Commission — the moment when it will determine its fate,” says Pascal Lamy, a former head of the World Trade Organization who was cabinet chief to Jacques Delors when he led the commission from 1985 to 1995. Paolo Gentiloni, EU economics commissioner: “The commission is asked to make a proposal capable of bridging different positions and to reach a consensus — which is easy to say but is not very easy to achieve.” FT 18 May 2020 One precedent they have is Hamilton’s move in 1790 to transfer the revolutionary war debts accrued by the states to the federal government. By letting President George Washington levy taxes to repay those obligations and issue treasury securities, Hamilton laid the foundations for the U.S.’s federal system. https://www.bloomberg.com/news/articles/2020-05-19/merkel-and-macron-conjure-hamilton-moment-to-fight-euro-break-up – Vi vet alla nu, och vi visste alla då, att G...

-   EU-domstolen har sista ordet om alla EU-beslut. Hur skulle det annars se ut? https://www.expressen.se/ledare/ylva-nilsson/de-roda-rockarna-kan-valta-hela-eu/ Jodå, ECB måste följa EU-domstolens beslut. Men Bundesbank måste följa den tyska författningsdomstolen beslut. Germany last week sought to re-establish that Berlin, not Brussels, holds supreme power within its own borders.

The European Court (ECJ) has acquired the habit of claiming powers that are not rooted in any Treaty text, advancing Monnet federalism by an odd mixture of bravado and stealth. The EU assumed it could get away with this because the German policy class has been broadly complicit  Ambrose Evans-Pritchard Telegraph 17 May 2020 

The eurozone would be in a better place today if the prime ministers of the south had told the leaders of the north during the eurozone crisis that the unsustainable cannot last. By truth to power, I mean constructive criticism from friends. Europeans are not good at that. We are either pro or anti. Wolfgang Münchau  FT 17 May 2020

Want to find out more about the jetstream? https://www.netweather.tv/charts-and-data/jetstream

To enhance investor returns, CLOs have introduced higher levels of leverage and complex risk.  While banks are required to hold capital of up to 16% against their loan exposure, CLOs, which are not regulated, hold significantly less. This increases leverage, generating potentially higher returns for shareholders. Satyajit Das MarketWatch May 14, 2020  CLOs: ground zero for the next stage of the financial crisis?

He first made his name by raging against the terms of the Versailles peace treaty; his economic views were shaped by the experience of Britain in the 1920s, which was marked by deflation and high unemployment. Then came the Great Depression For a while, as the profession moved away from his ideas, it looked as if Keynes might become one of the “defunct economists” he once quipped about.  But the 21st century has restored his reputation. The Economist 7 May 2020

One of Wall Street’s least known but most important debt machines: collateralised loan obligations. The close cousin of collateralised debt obligations that became notorious during the subprime mortgage meltdown over a decade ago  FT 13 May 2020 C.L.O.’s are nothing more than a package of risky corporate loans made to companies with less than stellar credit. 

Rich countries supported their small and medium-sized enterprises with grants or wage subsidies, and their large companies with cheap loans. While expensive, the logic went, it would only be for a short while. This view may be overly optimistic. Business reopening looks likely to be long drawn out Raghuram Rajan FT 11 May 2020 Raghuram Rajan, one of the few economists to see the financial crisis coming, wins the Financial Times and Goldman Sachs Business Book of the Year award FT 28/10/2010

An attack on basic economics, the central bank’s integrity, its independence and the legal order of the EU. The court’s instruction puts the Bundesbank into a conflict of laws. Martin Wolf FT 12 May 2020 Germany last week sought to re-establish that Berlin, not Brussels, holds supreme power within its own borders.

Konstigt nog är detta resonemang felaktigt. Med skaplig tillväxt, normal inflation och någorlunda låga räntor i framtiden kan staten rulla över skulden i all framtid utan åtstramningar.  Med tillväxt och inflation kommer statsskulden att krympa som andel av BNP även utan amorteringar. Faktum är att det var så vi blev av med skuldberget som uppstod under 90-talet, inte genom att amortera utan genom tillväxt. John Hassler Expressen 8 maj 2020 Den hemska sanningen om John Hassler, Göran Persson och kronkursförsvaret Englund 7 mars 2012 Göran Persson om 90-talet: Vi gjorde mycket fel, naturligtvis. Kanske borde vi ha sparat lite mindre. SvD 7 maj 2017

Janek Wasserman’s The Marginal Revolutionaries A general history of the Austrian School from its beginnings to the present day. The title refers both to the later marginalization of the Austrian economists and to the original insight of its founding father, Carl Menger. New York Review of Books 14 May 2020 Den österrikiska skolan

När fransmän och holländare hade röstat nej till det som skulle bli en Konstitution enligt amerikansk förebild slopades flaggan och hymnen i det som i panik gjordes om till ett fördrag i Nice. Läs mer här http://www.nejtillemu.com/flageurach.htm#rachmanflag

The ECB’s massive bond buying is no longer about controlling inflation, but amounts to explicit, treaty-busting bailouts, the German court has ruled. The euro was supposed to generate stability and harmony. It has instead driven instability, division and deepening political tensions, both within and between nation states – as more productive northern economies have benefited from a relatively low currency, while southern members struggle with a currency which for them is far too high. None of this is surprising to anyone who has objectively studied currency unions. Liam Halligan Telegraph 9 May 2020 An independent court has attacked the legality of a ruling by another independent   (and, with respect to EU law, superior) court, for the latter’s supposed failure to police an independent central bank.  The age-old question, “Who governs the governors?” (quis custodiet ipsos custodes?), has never been more relevant. The EU is not a federal state; it relies on p...

Om ett webbsänt seminarium från Studieförbundet näringsliv och samhälle.  Deltagarna, EU-ambassadör Lars Danielsson och DN:s ledarkolumnist Annika Ström Melin, gjorde inga försök att dölja problemen men gav också en tydlig motbild. Se det här Bild: Robert Schuman presenterar sina unionsplaner i franska Nationalförsamlingen den 9 maj 1950. DN 9 maj 2020 Robert Schuman  Freden

The economy was at the mercy of the weather.  Three years after the slump of 1706, the country was in trouble again due to the Great Frost of 1709.  It helped trigger a 14% drop in activity – a much more severe setback than the pricking of the South Sea Bubble in 1720. The Guardian 7 May 2020 South Sea Bubble"

CNBC 8 May 2020 Later that day. Dow ends week 455 points higher, shaking off the worst U.S. unemployment rate since the Great Depression MarketWatch  The market v the real economy The Economist 7 May 2020

This has delivered price stability, and a semblance of full employment, but it’s also helped drive a boom in asset prices together with a world awash with debt, which has in turn been used as a lazy substitute for the lack of productivity led growth in real wages.  Capital has unsustainably gained at the expense of labour. We may have to get used to rather higher levels of inflation Jeremy Warner Telegraph 8 Maj 2020 Riktiga karlar är inte rädda för lite inflation Englund 19  februari 2010 Riksbankens mål om 2,0 procents inflation tillkom i all hast för litet mer än 20 år sedan Inflationsmålet skulle inte ha funnits där, om Sverige hade klarat att hålla fast växelkurs. Johan Schück, DN 2015-05-08 Did inflation targeting fail?  How can it have gone so wrong? Martin Wolf, Financial Times, May 5 2009

Germany’s highest court on Tuesday sent shockwaves through Europe’s legal and political system when it ruled that the ECB’s public sector bond purchases may be ultra vires, or unconstitutional. “The judges made clear that the mission of the ECB and the jurisdiction of the ECJ have their limits, which are set by the constitution.” FT 8 May 2020 Charles Michel, European Council president, said the rule of law implied “respecting the fundamental principle of the hierarchy of norms and the primacy of European law”. FT 8 May 2020

Indeed, the German court openly questions the CJEU’s (   Court of Justice of the European Union)  legal competence, explaining that it will respect CJEU decisions, “as long as the CJEU applies recognized methodological principles and the decision it renders is not arbitrary from an objective perspective.” The implication, of course, is that the CJEU has not satisfied this basic criterion. If Germany were suddenly to say “nein” to the Public sector purchase programme (PSPP), one or more eurozone countries could be forced to crash out of the monetary union. Willem Buiter Project Syndicate 6 May 2020 DN kallar tyska författningsdomstolen paragrafryttare när de värnar grundlagen