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2021-08-05

Alla är nu börsexperter, särskilt i Sverige med femton positiva börsmånader av de sexton senaste

https://cornucopia.cornubot.se/2021/08/diskutera-spekulationsbubblan-i-sma.html

Global stock of negative-yielding debt above $16tn

US Germany Japan

France’s debt trading at sub-zero yields up to maturities of 12 years

Negative yields mean investors are willing to pay for the opportunity to lend their funds. 

Those who hold this debt to maturity are guaranteed to make a loss.

FT 5 August 2021

https://www.ft.com/content/43280fe3-b6cd-44e1-bb75-25b0962b5ba1


Marknadsräntorna har fallit. 

Någon entydig förklaring har inte experterna




Jag skulle inte kalla det marknadsräntor. Centralbankerna, dagens Gosplan, stödköper och har därmed satt marknadens informationssignaler ur funktion.

Inte bra. Men att dom gör det beror inte på att de är idioter, vilket de inte är, utan på att de fruktar vad som skulle hända om de inte stödköpte. Det är det som är oroande.



2021-08-04

The truth is that we know very little about inflation, including its causes and cures.

For years, central bankers in the US, Europe and Japan have targeted a healthy 2 per cent rate of inflation, but none has been able to produce it.

This despite continuous economic growth, significant budget deficits, rapid expansion of the money supply through quantitative easing and low interest rates — all of which are supposed to be inflationary.

A memo I wrote in 2001: “You Can’t Predict. You Can Prepare.”

https://www.oaktreecapital.com/docs/default-source/memos/2001-11-20-you-cant-predict-you-can-prepare.pdf


Howard Marks FT 4 August 2021

https://www.ft.com/content/3e45991a-ce3a-4cda-b439-1c18f74ad0c5


The Law of Supply and Demand


https://www.internetional.se/supplyanddemand.htm



Nonsens.

If the economy takes off above Stall Speed the Philips Curve will be back.



https://englundmacro.blogspot.com/2017/08/discussions-around-death-of-phillips.html






Marknadsräntorna har fallit. Någon entydig förklaring har inte experterna

 – En tumregel brukar vara att realräntan normalt sett ska motsvara ungefär de reala tillväxtförväntningarna i ekonomin. Så vad nedgången i realräntan pekar på är att marknaden har en väldigt dyster bild av hur tillväxten kommer se ut under de kommande tio åren, säger Pär Magnusson.

– Det var många som låg i positioner för stigande räntor och så ligger man helt enkelt väldigt fel och måste stänga sina positioner, säger Robert Bergqvist.

– Räntenedgången är framförallt en effekt av att Federal Reserve fortsätter att köpa statsobligationer för massiva belopp, säger Claes Måhlén.

Pär Magnusson tror att det är i den amerikanska centralbankens intresse att försöka hålla räntorna låga länge.

Johan Carlström SvD 4 juli 2021

https://www.svd.se/mysteriet-pa-marknaden-darfor-faller-rantorna


Varför är tioårsräntan så låg?

Dynamiken är uppseendväckande men inte isolerad till USA. Den som vill låna ut pengar till Tyskland får nu räkna med negativ avkastning redan nominellt även för obligationer med lång löptid, exempelvis 30 år.

https://englundmacro.blogspot.com/2021/08/varfor-ar-tioarsrantan-sa-lag.html


Flying blind

Lorenzo Bini Smaghi, the former member of the ECB’s executive board: 

“We don’t fully understand what is happening in advanced economies.”











2021-08-03

Americans increased their mortgage borrowings...

adding fuel to a housing boom that has seen US prices surge at a record pace.

That helped to push mortgage balances to more than $10tn — meaning about 44 per cent of the outstanding mortgage balance was originated in the past year. 

FT 3 July 2021

https://www.ft.com/content/2d914791-b8c2-4083-913d-11764b9c5e18


‘It has never been like this’: US house price spiral worries policymakers

FT 4 August 2021

https://www.ft.com/content/36cdd5d2-18af-4745-88e8-b101fd4cab3f


 

Biden is continuing Trump’s break with the neoliberal, trickle-down economics of Clinton, Bush and Obama

 United States has moved into a de facto, if not de jure, state of permanent debt monetization—a policy that began under Trump and Fed Chair Jerome Powell.

If policies to reduce inequality lead to unsustainable increases in private and public debts, the stage could be set for the kind of stagflationary debt crisis I warned about earlier this summer.

Nouriel Roubini MarketWatch 3 August 2021 

https://www.marketwatch.com/story/why-bidens-economic-policies-are-more-like-trumps-than-obamas-11628003140


After ‘the Minsky Moment’ crashes overheated speculative markets, ‘the Volcker Moment’ will arrive to crash the debt-burdened global economy

Nouriel Roubini MarketWatch 30 June 2021 2021

https://www.marketwatch.com/story/the-looming-stagflationary-debt-crisis-will-deliver-a-one-two-punch-to-markets-and-economies-11625078897


At some point, this boom will culminate in a Minsky moment (a sudden loss of confidence), and tighter monetary policies will trigger a bust and crash.

Roubini: The Looming Stagflationary Debt Crisis

https://englundmacro.blogspot.com/2021/07/roubini-looming-stagflationary-debt.html



Let me explain now in more detail why we are now back to the risk of a total systemic financial meltdown

This is not just a US financial crisis; it is a global financial crisis hitting institutions in the US, UK, Eurozone and other advanced economies (Iceland, Australia, New Zealand, Canada etc.).

Nouriel Roubini Sep 29, 2008




Varför är tioårsräntan så låg?

Att låna ut pengar till världens mest respekterade nationalstater ser nu ut som en ovanligt dålig affär – frågan är bara varför? 

Så sent som i mars toppade den amerikanska tioåringen på 1,77 procent... den handlats ned till under 1,2 procent

Dynamiken är uppseendväckande men inte isolerad till USA. Den som vill låna ut pengar till Tyskland får nu räkna med negativ avkastning redan nominellt även för obligationer med lång löptid, exempelvis 30 år.

Centralbankernas köp av statspapper och tekniska faktorer.

Gabriel Mellqvist DI 3 augusti 2021

https://www.di.se/analys/marknadens-krissignaler-bor-tas-med-en-nypa-salt/


Interest rates haven’t been this low in 5,000 years

https://englundmacro.blogspot.com/2021/07/interest-rates-havent-been-this-low-in.html


I would like to go back to a time when we didn’t wake up in the morning wondering what the Federal Reserve would do. 

Its actions have distorted the economy, repressed savers, and made the wealth and income divide far greater than it should be.

John Mauldin 23 July 2021

https://englundmacro.blogspot.com/2021/07/it-is-my-opinion-john-mauldin-that-this.html


Artikelns fråga: Varför är mycket berättigad.

Och frågan kan förändras till Varför köper marknaden dessa papper?

Avkastningen är dålig och dessutom kommer obligationerna att sjunka när, inte om, räntorna vänder uppåt.

Varför köper de inte aktier i stället? Det har ju gått så bra. 

Eller varför inte sätter dom inte pengarna på banken, bankerna är ju säkra. Visserligen är räntan noll, men pengarna är inte låsta i tio år.

Something must be terribly wrong.








$3.2 billion. That's how much money investors pushed into Treasury Inflation-Protected Securities (TIPS) this past week

https://www.investopedia.com/terms/t/tips.asp

https://www.investopedia.com/


The Economist has noticed that the ravages of climate change are coming to this generation, not the next one

But the real story of this excellent and informative piece isn’t about the climate and what it will do to us. It’s about what the reaction to the climate will do to us.

August 3, 2021 by Yves Smith

https://www.nakedcapitalism.com/2021/08/the-economist-notices-the-climate.html


By Thomas Neuburger. Originally published at God’s Spies

https://neuburger.substack.com/p/the-economist-notices-the-climate


The Economist - What’s the worst that could happen

Three degrees of global warming is quite plausible and truly disastrous

Rapid emission cuts can reduce the risks but not eliminate them

https://www.economist.com/briefing/2021/07/24/three-degrees-of-global-warming-is-quite-plausible-and-truly-disastrous

2021-08-02

Virtual History: Alternatives And Counterfactuals

What if there had been no American War of Independence? What if Hitler had invaded Britain? What if Kennedy had lived? What if Russia had won the Cold War? 

Niall Ferguson, author of the highly acclaimed The Pity of War, leads the charge in this historically rigorous series of separate voyages into “imaginary time” and provides far-reaching answers to these intriguing questions.

Ferguson's brilliant 90-page introduction doubles as a manifesto on the methodology of counter-factual history. His equally masterful afterword traces the likely historical ripples that would have proceeded from the maintenance of Stuart rule in England. 

This breathtaking narrative gives us a convincing, detailed “alternative history” of the West—from the accession of “James III” in 1701, to a Nazi-occupied England, to a U.S. Prime Minister Kennedy who lives to complete his term.

 Virtual History: Alternatives And Counterfactuals by Niall Ferguson

https://englundmacro.blogspot.com/2020/09/virtual-history-alternatives-and.html

[Fed Chair Jerome] Powell is no idiot and he knows what a complete mess things are ...

so if I /reader “Sagelike”/ am Powell I'd have to ask myself how I need to play this? 

I wouldn't want to be the guy who presides over an economic implosion so I'd just keep the game going to avoid being tarred with that label for all time and, I'd retire in January with reputation more or less intact and leave the mess to someone else…

Debt monetization is the last and only option left on the table at this point. Interest rates can't go low enough to spur growth as they are near zero anyways nor can they rise high enough to rebalance the system without leading to debt default and depression. 

QE forever doesn't work so what's left?

John Mauldin 30 July 2021


https://www.mauldineconomics.com/frontlinethoughts/policy-errors-have-consequences 

House prices are booming in almost every major economy...

the broadest rally for more than two decades and reviving economists’ concerns over potential threats to financial stability.

Claudio Borio, head of the monetary and economic department at the Bank for International Settlements

Is it a bubble?

FT 1 August 2021

https://www.ft.com/content/491a245d-4af7-4cad-b860-6ba51b86b45f

 

2021-08-01

Vad skall in? Sol och vind?


Källa FT


 

We are approaching the 50th anniversary of the so-called Nixon Shock, one the most decisive ruptures in monetary history

On August 15, 1971, US President Richard Nixon announced in a televised address that he was “closing the gold window.”

 By ending the dollar’s convertibility into gold (at an official rate of $35 per ounce), Nixon severed the millennia-long link between money and precious metals.

To some optimists in Washington, DC, the persistence of America’s centrality to global economic governance may seem inevitable:  The US would still provide two goods that everyone needs: the English language as a common medium of expression, and the dollar as a common medium of exchange.

 Enormous advances in automatic translation in recent years mean that people around the world can now rely on artificial intelligence, rather than English.

As the digital revolution accelerates, the national era in money is drawing to a close.

Harold James Projet Syndicate 30 July 2021

https://www.project-syndicate.org/commentary/digital-money-alternatives-to-dollar-by-harold-james-2021-07


Harold James is Professor of History and International Affairs at Princeton University. A specialist on German economic history and on globalization, he is a co-author of The Euro and The Battle of Ideas, and the author of The Creation and Destruction of Value: The Globalization Cycle, Krupp: A History of the Legendary German Firm, Making the European Monetary Union, and the forthcoming The War of Words.

The Euro and the Battle of Ideas 

https://muse.jhu.edu/book/64555

Project MUSE for Individuals

https://about.muse.jhu.edu/individuals/


För 50 år sedan, 1971, avskaffade president Nixon dollarns knytning till guldet (at a rate of $35 an ounce)

https://englundmacro.blogspot.com/2021/07/for-50-ar-sedan-1971-avskaffade.html



 

After a 13-year bull market, the clock is ticking for U.S. stocks

 After hibernating for months, the stock-market bears came out of their caves on July 19. 

Before the bears could say, “I told you so,” the next day, July 20, the 700-plus point Dow selloff was erased by a 550-point Dow rally.

While the bulls scored another victory this time, one day the market won’t reverse direction and will begin a steep correction, or worse yet, a bear market. 

MarketWatch 31 July 2021

https://www.marketwatch.com/story/heres-your-to-do-list-before-the-stock-markets-next-dive-11627360870


”The world in a selfie” massturismens drivkrafter och verkningar.

Mark Twain grundade inte sin förmögenhet på Tom Sawyer, utan på att skriva resehandböcker.

Marco D’Eramos ”The world in a selfie” (Verso)

 

https://www.svd.se/unescos-lista-over-kulturarv-skadar-miljon

2021-07-31

Banca Monte dei Paschi di Siena, the world’s oldest bank, would see its capital wiped out...

in a severe economic downturn, according to European stress tests that also delivered relatively weak results for Deutsche Bank and Société Générale.

FT 30 July 2021

https://www.ft.com/content/c4207dc7-578f-428e-bb72-6aabbaf31f57


Mario Draghi Has to Explain One Last Thing. So what happened, exactly, at Monte Paschi?

https://englundmacro.blogspot.com/2019/07/mario-draghi-has-to-explain-one-last.html


 European Banking Authority

https://www.eba.europa.eu/eba-publishes-results-its-2021-eu-wide-stress-test


Twenty-three banks, including JPMorgan Chase and Goldman Sachs, underwent “stress tests” by the Fed that modelled the financial damage from a series of doomsday scenarios. 

These included a US stock market crash, a steep drop in economic output and substantial distress in commercial real estate.

The results, released on Thursday, pave the way for billions of dollars in stock buybacks and dividends, which bank investors have been eagerly anticipating.

FT 25 June 2021

https://www.ft.com/content/78f53986-fefa-4208-b4ea-674052a9ca3f


Why 2% in the First Place?

 The Fed has never justified 2%. It is a number dreamt up, without explanation but unfortunately now used world-wide.

2% inflation benefits banks, the wealthy, and those with first access to money.

https://mishtalk.com/economics/economic-nonsense-is-extremely-well-anchored-in-fantasyland-and-not-just-at-the-fed


Amid a wide range of options, inflation targeting remains the simplest and least bad


2021-07-30

Interest rates haven’t been this low in 5,000 years

That’s a finding in the latest Bank of America flow show report, which, in fairness, is a number that’s been trotted out before. It’s based on a 2005 book about the history of interest rates, but the chart is still incredible to examine.

The Bank of America report pointed out there was a record weekly inflow to Treasury inflation-protected securities of $3.2 billion.  

The 10-Year Treasury Inflation-Indexed security yielded a record low negative 1.15% on Thursday.

MarketWatch July 30, 2021

https://www.marketwatch.com/story/interest-rates-havent-been-this-low-in-5-000-years-11627644496


https://www.wiley.com/en-gb/A+History+of+Interest+Rates,+4th+Edition-p-9780471732839


Vi kan mycket väl bevittna världshistoriens största och kanske farligaste bubbla.

Räntorna är de lägsta på åtminstone 5 000 år.

Detta betyder att priset på obligationer är de högsta på 5 000 år.

Andreas Cervenka, SvD 27 januari 2016






2021-07-29

Is it too late to prevent climate change? NASA

Even if we stopped emitting greenhouse gases today, global warming would continue to happen for at least several more decades, if not centuries.

https://climate.nasa.gov/faq/16/is-it-too-late-to-prevent-climate-change/


Does the elite treat its country as a sort of luxury watch that it’s only looking after for future generations...

or as a stolen wallet full of cash? 

South Africa is a case study of what happens when the elite’s time horizon shortens.

There are only a few lucky countries whose elites reliably think decades ahead. This is an unfairly self-perpetuating system. Typically, these are old democracies, where members of the elite live in old houses. Even there, elites have varying time horizons.

Simon Kuper FT 29 July 2021

https://www.ft.com/content/73f6ba3a-c381-424d-a94d-138921a896ce


2021-07-28

För 50 år sedan, 1971, avskaffade president Nixon dollarns knytning till guldet (at a rate of $35 an ounce))

August marks the 50th anniversary of a momentous event: Richard Nixon, then the US president, summoned his advisers to Camp David  to take the collective decision to sever the dollar’s link with the gold standard.

Jeffrey E Garten book Three Days at Camp David 

America simply did not possess enough gold to honour dollar claims. And that issue raised a bigger question that always stalks finance: what is the basis on which money commands value and trust?

David Graeber, a former anthropology professor,  in his book Debt, The First 5,000 Years.

Before then nobody thought money had value because an independent central bank had an inflation target. 

Gillian Tett FT 28 July 2021

https://www.ft.com/content/bb2bd452-727f-4fe4-877c-4d0875c187d3


John Connally, when Treasury secretary in President Richard Nixon’s cabinet, famously told his European counterparts in 1971 that the dollar “is our currency but your problem”

Trichet: "It is extremely important that the US has been saying that a strong dollar is in the interests of the US."

https://englundmacro.blogspot.com/2018/01/trichet-it-is-extremely-important-that.html


Could it be that changes in the jet stream or the migration of drought zones are triggering shifts we do not yet understand?

 Oreskes and her colleagues wrote in a 2012 paper, “core scientific values of objectivity, rationality and dispassion” have led to conservative projections about the impact of climate change, even in IPCC assessments.

The short answer is that scientists are divided about whether a more dangerous phase of non-linear change has begun. 

 FT 28 July 2021             

https://www.ft.com/content/3125bee9-73ae-4abf-ac58-615fe8e43396                   

Luis Buñuel's recipe for a dry martini - from "The Discreet Charm of the Bourgeoisie"

https://www.youtube.com/watch?v=00roxpI3Y7I


Le Charme discret de la bourgeoisie

https://englundmacro.blogspot.com/2016/11/le-charme-discret-de-la-bourgeoisie.html


Carl-Johan Westholm är upphovsman till uttryck som "Skapande eller bevakande Sverige"” och "Borgerlighetens diskreta skam". 

https://www.mynewsdesk.com/se/timbro/pressreleases/ny-skrift-fraan-timbro-se-staten-foer-statsblinda-92988

 

The Ilyushin Il-2 was one of the most heavily produced aircraft in military history

 The main reason for the heavy losses lay in the Il-2’s vulnerability in the air. Its heavy armor protected it from ground attacks but was less useful against enemy fighters. The Il-2 was no match for enemy fighters when it came to speed and maneuverability, as it had been designed for toughness, not agility.


https://www.warhistoryonline.com/instant-articles/the-ilyushin-il-2.html


2021-07-26

US real yields hit record low

 Negative real yields pose a big problem for pension funds and other long-term asset allocators that are also grappling with equity markets trading at high valuations.

FT 26 July 2021

https://www.ft.com/content/71d6661d-7a62-4a5f-959b-4cb2f1e94d68


Investors pour $3.2bn into inflation-protected US Treasuries

FT 30 July 2021

https://www.ft.com/content/f81485d3-4796-460c-bf23-79c0857d9a3c



“Stagflation is absolutely the biggest risk for every investor”

The possibility of stagflation — an economic environment marked by high unemployment, high inflation, and low economic growth, experienced in the U.S. in the 1970s — has moved onto the radar screen of some market analysts.

MarketWatch 26 July 2021


https://www.marketwatch.com/story/stagflation-is-a-legitimate-risk-that-would-be-painful-for-u-s-markets-11627093835


Slaget på Åsundens is - riksföreståndaren Sten Sture den yngre

Slaget på Åsundens is eller slaget vid Bogesund utspelades den 19 januari 1520 tre km söder om Bogesund (nuvarande Ulricehamn). 

En svensk styrka under riksföreståndaren Sten Sture den yngre förlorade slaget mot en dansk armé. 

Sten Sture sårades dödligt, varför slaget fick långtgående konsekvenser för den politiska utvecklingen i Sverige.


https://sv.wikipedia.org/wiki/Slaget_p%C3%A5_%C3%85sundens_is

The Day After Tomorrow Was Yesterday

 It feels like we are living through the first vertiginous 15 minutes of a disaster movie, maybe one called “The Day After Tomorrow Was Yesterday.”

Crazy storms that used to hit every century now seem quotidian, overwhelming systems that cannot withstand such a battering.

As Angela Merkel and President Biden touted a climate and energy partnership on her recent visit here, nature mocked them. While the two leaders had dinner, rains submerged huge swaths of Germany, including medieval towns.

“Everything we worried about is happening, and it’s all happening at the high end of projections, even faster than the previous most pessimistic estimates,” 

Maureen Dowd Opinion Columnist New York Times 24 July 2021

https://www.nytimes.com/2021/07/24/opinion/sunday/climate-change-floods-wildfires.html


Scientists say the shifting pattern of the jet stream is exacerbating the effects of climate change

https://englundmacro.blogspot.com/2021/07/scientists-say-shifting-pattern-of-jet.html


Det är kört. Så kan man helt kort sammanfatta Jonathan Jeppssons bok ”Åtta steg mot avgrunden”.

 2050 kommer lika mycket energi att användas till världens luftkonditionering som hela Kina använder i dag för att producera all sin elektricitet”

https://englundmacro.blogspot.com/2020/08/det-ar-kort-sa-kan-man-helt-kort.html


2021-07-25

2021-07-24

Britain entering first world war was 'biggest error in modern history'

Historian Niall Ferguson says Britain could have lived with German victory and should have stayed out of war

Guardian 30 January 2014




Gray Tide in the East is the best-selling counterfactual history of the First World War, if the Germans had not invaded Belgium in 1914 and thereby brought Great Britain and, eventually, the United States into the war. 




1-16 of over 50,000 results for "alternate history"

It is my opinion (John Mauldin) that this has the potential to go down as the greatest policy error in central bank history

The systemic meltdown risk had passed. The fire was still smoldering but at that point, it was mainly a fiscal fire. 

Fire Chief Jerome Powell himself said so, repeatedly begging Congress to deal with unemployment and business failures more effectively. He admitted there was little else his fire trucks could do but he kept them there anyway in the form of massive quantitative easing and keeping rates at the zero bound. 

They are still on-scene now.

It is my opinion that this has the potential to go down as the greatest policy error in central bank history. I know that’s saying a lot.

Here’s a handy timeline summarizing the Fed’s near-daily actions in March and April 2020. 

Consumer Price Index is a terrible proxy for consumer prices.

One argument, to which I am somewhat sympathetic, is that this doesn’t matter because the Fed can’t generate inflation even if it wants to. It’s been trying and failing for over a decade. 

Stock prices and home prices both respond to liquidity, and the Fed is stuffing the economy with as much liquidity as it can. Recent activity far outstrips what they did in the Great Financial Crisis and following, which was itself unprecedented at the time.

(Nice Chart)

I would like to go back to a time when we didn’t wake up in the morning wondering what the Federal Reserve would do. Its actions have distorted the economy, repressed savers, and made the wealth and income divide far greater than it should be.

John Mauldin 23 July 2021

https://www.mauldineconomics.com/frontlinethoughts/federal-reserve-folly


Housing prices have no direct influence on our inflation measures. They do have indirect influence via the imputed, subjective “owner’s equivalent rent” methodology. Its accuracy is questionable at best.

What’s not questionable, though, is that home prices have a direct impact on the homeowner’s spending power. 

https://englundmacro.blogspot.com/2021/03/for-most-people-housing-is-major.html


If the ECB has the policy tools to return inflation to its objective, why does it not deploy them?

https://englundmacro.blogspot.com/2021/07/if-ecb-has-policy-tools-to-return.html


VIETNAM SAIGON THE COMMUNISTS TAKEOVER

https://www.youtube.com/watch?v=mknTDi70KFE

Self-regarding economics departments at prestigious academic institutions no longer bother to teach the history of economic thought

Robert Skidelsky is a historian, an epic biographer of John Maynard Keynes, and a prolific debater in the United Kingdom’s House of Lords. He calls What’s Wrong with Economics? a “primer,”

Although the neoclassical hegemony was disrupted by the Great Depression and the rise of Keynesian models, that period proved to be merely a 40-year digression. The economics profession today is as Skidelsky describes it: an army of neoclassical technicians

... academics compete for attention, citations, rankings, promotions, and – above all – the approval of those who taught them those tools in the first place.

As such, Skidelsky’s appeal for a return to an economics that is rooted in history, sensitive to ethics, and alert to the limits of the “self-regulating” market is doomed to fall on deaf ears. 

In The Age of Fragmentation, Italian economist Alessandro Roncaglia, formerly of Sapienza University of Rome, provides a wide-ranging critical history of contemporary mainstream economic thought.

Harvard University economist Stephen A. Marglin’s Raising Keynes. 

The latest group of heretics are the advocates of Modern Monetary Theory, who have developed Keynes and Hyman Minsky’s real-time, uncertainty-driven, bank-money chartalism into a full-fledged critique of fraud and regulatory failure in the financial sector. 

In leading universities, governed at their highest levels these days by financiers, this group, no surprise, is treated as beneath contempt.

James K. Galbraith Project Syndicate 23 July 2021

https://www.project-syndicate.org/onpoint/economics-captured-by-neoclassical-magical-thinking-by-james-k-galbraith-2021-07


Scientists say the shifting pattern of the jet stream is exacerbating the effects of climate change

The deadly weather that has unfolded in recent weeks has left climate scientists “shocked” and concerned that extreme events are arriving even faster than models predicted.

FT 24 July 2021

https://www.ft.com/content/9a647a51-ede8-480e-ba78-cbf14ad878b7


Väderkartan är konstig (inte som den var förr)

Rolf Englund blog 12 maj 2010

https://englundmacro.blogspot.com/2014/11/allt-du-behover-veta-om-vadret-och-jet.html


2021-07-23

If the ECB has the policy tools to return inflation to its objective, why does it not deploy them?

For the past decade, inflation outcomes in the eurozone have persistently undershot the objective of the European Central Bank.

Output and employment have been lower than they needed to be to deliver on the ECB’s self-defined measure of price stability. 

For almost all of this period of inflation undershoot, the ECB has set monetary policy while its own forecasts showed inflation would not reach its objective over the usual two to three-year horizon

Malcolm Barr, head of western European economics at JPMorgan, FT 22 July  2021

https://www.ft.com/content/a590671c-7c16-4767-b54f-c6ba592b6b4e


2021-07-22

Why the Greek deal will work

ECB President Mario Draghi effectively sidestepped both obstacles by launching a program of quantitative easing so enormous that it will finance the entire deficits of all eurozone governments (now including Greece) and mutualize a significant proportion of their outstanding bonds.

Germany, Spain, Italy, and several northern European countries required, for domestic political reasons, a ritual humiliation of radical Greek politicians and voters who openly defied EU institutions and austerity demands.

Having achieved this, EU leaders have no further reason to impose austerity on Greece or strictly enforce the terms of the latest bailout. 

Instead, they have every incentive to demonstrate the success of their “tough love” policies by easing austerity to accelerate economic growth, not only in Greece but throughout the eurozone.

Anatole Kaletsky MarketWatch July 22, 2015 

https://www.marketwatch.com/story/why-the-greek-deal-will-work-2015-07-22


What is both too hot and too cold? The answer: the United States economy in the summer of 2021

“We call it a whiff of stagflation,” said Paul Ashworth, chief U.S. economist at Capital Economics

Businesses are complaining of labor shortages and offering all kinds of inducements to attract workers. Yet the unemployment rate is a recession-like 5.9 percent. 

And the share of adults in the labor was 63.3 percent in February 2020 but has bounced around between 61.4 percent and 61.7 percent for more than a year.

In the first three months of the year, longer-term bond yields soared and the yield curve steepened. That has reversed in recent weeks. 

NYT 22 July 2021

https://www.nytimes.com/2021/07/21/upshot/economy-usa.html


2021-07-21

US Home prices are rising at their fastest pace in history...

fueling concern that a new real estate bubble has formed.

So far, nothing has been done, despite protest from some Fed officials like Boston Fed President Eric Rosengren, who recently argued that a “boom and bust cycle” in real estate is incompatible with financial stability.

Former Federal Reserve Vice-Chairman Donald Kohn made a similar point in a 2017 speech that Washington regulators “need the power to put limits on loan-to-value and debt-to-income measures, when loosening standards, perhaps occurring outside the banking system, threaten financial and economic stability.”

MarketWatch 21 July 2021

https://www.marketwatch.com/story/washington-might-have-to-go-to-war-to-fight-a-housing-bubble-does-it-have-the-tools-to-win-11626881606


Vi har en hushållssektor som är mer räntekänslig än den någonsin varit tidigare, säger Stefan Ingves juli 2021

https://englundmacro.blogspot.com/2021/07/vi-har-en-hushallssektor-som-ar-mer.html


Housing expenses are the sleeping giant - US inflation

Shelter costs account for about a third of the overall CPI, and comprise rental prices as well as what is known as “owner-equivalent rent”, the estimated cost of a house occupied by an owner if it were rented out.

“We calculate the market won’t be fully in balance until 2023 or 2024. So I’m not sure that the uptick in rents is particularly shortlived,” said Ali Wolf

FT 21 July 2021

https://www.ft.com/content/efdf1845-6138-4af7-8d2b-c20df9fed218


ATT DEN POLITISKA KLASSEN STÅR HANDFALLEN OCH FÖRVIRRAD ÄR INTE KONSTIGT

 I veckan skrev jag en krönika om min djupa känsla av osläktskap med politikerna, om att jag hatar Annie Lööf för hennes lögner och väljarsvek. 

https://www.fokus.se/2021/07/anna-bjorklund-darfor-kanner-jag-avsky/


Den partipolitiska låtsasleken håller jag inte på med och det gör få smarta människor jag känner. Och det är väl det som är grundproblemet. Politik har en gång varit ärofyllt och hedersamt, till och med snobbiga näringslivspersoner och kulturmänniskor har engagerat sig. Nu är återväxten usel, de flesta håller med om att landet har problem, men de som vill arbeta med att lösa dem blir allt färre. 

Anna Björklund Fokus  2021-07-19

https://www.fokus.se/2021/07/att-den-politiska-klassen-star-handfallen-och-forvirrad-ar-inte-konstigt


The pandemic-induced recession ended more than a year ago — but

Some 9.3 million Americans remain unemployed, according to the June unemployment report published by the Bureau of Labor Statistics. 

Some 4 million people have been unemployed for more than 27 weeks — that’s 2.9 million more people than there were in February.

MarketWatch 20 July 2021

https://www.marketwatch.com/story/the-pandemic-induced-recession-ended-more-than-a-year-ago-but-the-u-s-economy-isnt-out-of-the-woods-yet-11626788581





2021-07-20

Fiscal and monetary largesse in the advanced states overwhelm the residual pockets of Covid damage in the OECD bloc

 Pent-up savings and a capex restocking cycle should pick up the baton as state support fades (the US fiscal impulse turns negative this quarter).

The UK is the world’s laboratory for opening up. Unfortunately it has done so with breathtaking incompetence and given the process a bad name.

It will soon become clear to market traders across the globe whether British hospitalisations will remain manageable or whether the pandemic again approaches the catastrophism of Professor Neil Ferguson. 

Every time the US Federal Reserve in particular has tried to extricate itself from the great QE experiment, it has set off bond market turmoil. The attempt in late 2018 to unwind QE by ‘automatic pilot’ led to a plunge in yields and a major Wall Street scare. The Powell Fed was forced to retreat.

Ambrose Evans-Pritchard Telegraph 20 July 2021

https://www.telegraph.co.uk/business/2021/07/20/markets-fear-inflation-much-delta-variant/

Covid: UK faces a difficult summer, says leading scientist

https://www.bbc.com/news/uk-57877033


Man who started QE; Lord Mervyn King, now member of committee that slams QE

https://englundmacro.blogspot.com/2021/07/man-who-started-qe-lord-mervyn-king-now.html


2021-07-19

Forntid Framtid Nuets Ansvar

 


Värnhems klosterkyrka Götiska Förbundet



Reklam för film på Amazon Prime



Buy the dips.Väldigt många har väldigt länge blivit väldigt rika genom att följa detta råd

Men om många av dem nu säger att den här dippen skall jag inte köpa in i. Vem skall då köpa?

When the walls come down, investors will scavenge the news for “catalysts.” Don’t fall into this trap. Undoubtedly, some “catalyst” will be found, but the mistake will be in believing that the collapse is caused by that piece of “bad” news. 

The important question to ask is “What drove the bubble?” That’s where the lessons are. 

John P. Hussman

Världsberömd Permabjörn.

https://englundmacro.blogspot.com/2021/07/what-triggered-crash-hussman-funds.html


“The market appears ready to take on a more defensive character...

 as we experience a meaningful deceleration in earnings and economic growth,” wrote Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, in a note Monday. 

“Market breadth has been deteriorating for months and is just another confirmation of the mid-cycle transition, in our view. It usually ends with a material (10-20%) index level correction.”


The morning sell-off in stock futures is accelerating with Dow futures now down 450 points

PUBLISHED SUN, JUL 18 20216:06 PM EDT

https://www.cnbc.com/2021/07/18/stock-market-futures-open-to-close-news.html



Monday 19 July






Wall Street fredag 16 July



2021-07-16

US inflation today is much more like good news than bad - Rogoff

In fact, economic theory gives very little robust guidance on whether, say, 3 per cent inflation is better than 2 per cent in normal times, so long as it remains reasonably stable and predictable. 

When Olivier Blanchard was IMF chief economist in 2010, he argued that inflation targets should be raised to 4 per cent.

Kenneth Rogoff FT 16 July 2021

The writer is a professor of economics and public policy at Harvard university and former chief economist at the IMF

https://www.ft.com/content/a7c101be-7361-4307-981d-b8edf6d002be


Riktiga karlar är inte rädda för lite inflation

https://englundmacro.blogspot.com/2010/02/riktiga-karlar-ar-inte-radda-for-lite.html


Did inflation targeting fail?

Martin Wolf, Financial Times, May 5 2009

https://englundmacro.blogspot.com/2020/07/the-troubling-bit-is-that-these.html


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

https://englundmacro.blogspot.com/2020/05/weve-now-had-nearly-30-years-of.html



What Triggered the Crash? - Hussman Funds

When the time comes to ask the question – “What triggered the crash?” – remember that this is the least important question. A market crash requires nothing more than a shift in investor psychology from careless speculation to even modest risk-aversion.  

With valuations at the most extreme level in history, the one thing that the market simply cannot tolerate is the eager attempt of a substantial number of investors to exit. 

When the walls come down, investors will scavenge the news for “catalysts.” Don’t fall into this trap. Undoubtedly, some “catalyst” will be found, but the mistake will be in believing that the collapse is caused by that piece of “bad” news. 

The important question to ask is “What drove the bubble?” That’s where the lessons are. 

The root causes of a crash are always the factors that nurtured and encouraged the “happy” period of carefree and irresponsible speculation that led to the bubble extreme.

John P. Hussman, Ph.D. President, Hussman Investment Trust

July 2021

https://www.hussmanfunds.com/comment/mc210715/


Hussman’s claim to fame includes forecasting the market collapses of 2000 and 2007-2008. 

Long-suffering market bears, like John Hussman

https://englundmacro.blogspot.com/2019/05/long-suffering-market-bears-like-john.html



 

Man who started QE; Lord Mervyn King, now member of committee that slams QE

The House of Lords committee on which Lord Mervyn King sits has laid into the policy he initiated.

FT Alphaville 16 July 2021

https://www.ft.com/content/ce450316-d149-4ede-b4c6-5bc507e4f004

 

Mervyn King inflation fiscal union

https://englundmacro.blogspot.com/2020/06/mervyn-king-inflation-fiscal-union.html


Get ready for the most severe correction since the bull market began in March 2020.

Hayes Martin bases his sobering forecast on the increasing divergences within the U.S. market, as indicated by fewer and fewer stocks participating in the headline-grabbing strength of the leading indices.

Martin reports that the only area of the market not showing dangerous divergences right now is the large-cap dominated S&P 500. 

Mark Hulbert MarketWatch July 15, 2021 at 4:23 p.m. ET

https://www.marketwatch.com/story/expect-a-10-correction-in-u-s-stocks-by-mid-august-says-this-forecaster-with-a-proven-track-record-11626380633

 

Ständigt denna Jet stream

 


Severe flooding in western Europe

BBC 16th July 2021

https://www.bbc.com/weather/features/57862526


The Omega-Shaped Jet Stream Responsible for Europe’s Heatwave

Englund blogg 26 juni 2019

https://englundmacro.blogspot.com/2019/06/the-omega-shaped-jet-stream-responsible.html


Why Was the Discovery of the Jet Stream Mostly Ignored?

Maybe because it was published in Esperanto.

Between 1923 and 1925, Ooishi completed almost 1,300 observations of fierce high-altitude winds, later named the jetstream. The somewhat eccentric Ooishi was not only the director of Japan’s Tateno atmospheric observatory but also the head of the Japan Esperanto Society. Ooishi announced his discovery of the swift, high-altitude river of air in the Tateno observatory’s annual reports, which he published in Esperanto. Not surprisingly, his research was ignored, and the U.S. military was caught off guard by two consequences of the invisible jetstream.

Thanks Wayne.

https://www.airspacemag.com/as-next/as-next-may-unbelievablebuttrue-180968355

 




2021-07-15

Yanis Varoufakis: De vägrade ägna sig åt ekonomiska argument

Vägrade. Man la fram ett argument som man verkligen hade jobbat på och säkerställt att det är logiskt konsekvent, och du möts av ansikten med tomt stirrande blick. Som om du aldrig sagt något. Man hade lika gärna kunnat sjunga den svenska nationalsången – och fått samma svar.

Det fanns sympatiska personer, som IMF-chefen Christine Lagarde, men eurogruppen däremot bestod av några otrevliga typer med mycket makt som stirrade på honom och sa: "Du har rätt i vad du säger, men vi kommer krossa dig ändå".

SvD 14 juli 2015

https://www.svd.se/yanis-varoufakis-basta-citat


Have you wondered how two Nobel laureate economists, sometimes sharing the same year’s prize, can consider each other charlatans? This would never happen among Nobel laureate physicists or biologists. 

https://englundmacro.blogspot.com/2021/02/trump-is-more-dangerous-than-mere-liar.html


Den amerikanska finanspolitiken handlar om reformer som får Marshallhjälpen efter andra världskriget att framstå som löjligt futtig

Henrik Mitelmam DI 14 juli 2021

https://www.di.se/analys/sluta-oroa-dig-for-ranteelandet/


Marshall-hjälpen och nästa svenska devalvering

Med dagens kurs SEK/USD på cirka 5:60 uppgick alltså den totala  Marshall-hjälpen till 382 miljaaarder svensk kronor.

Enligt dagens Dagens Industri (2/11) uppgår Sveriges utlandsskuld till 454 miljaarder kronor:

Den privata räntebärande nettoskulden till utlandet är uppe i 473 miljarder. 

Det är en ökning med mer än 200 miljarder på ett år.

Rolf Englund 1990 11 02

Sänt till Carl Bildt 90-11-02

Utlagt på Internet 96-10-29

https://www.internetional.se/cabpm.html



2021-07-14

Gordon Brown’s Seven Ways to Change the World

The dilemmas of globalisation lie at the core of Seven Ways to Change the World, which joins an expanding library of works offering answers to the problems in the global system and describing a path to a better, post-pandemic future.

If anything, Brown downplays the central role he played getting the G7 to write-off debt of the poorest developing countries in 2005, and rallying the G20 in 2009 to agree a bold plan for managing the global financial crisis.

FT 18 June 2021

https://www.ft.com/content/544eb226-71a4-4aeb-b6c0-3100f85eca32


Gordon Brown räddade England och världen

https://englundmacro.blogspot.com/2017/11/gordon-brown-raddade-england-och-varlden.html


Political Economy Club essay prize-winners

Among the founder members were two heavy hitters in the history of economics, Thomas Malthus and David Ricardo. 

Martin Wolf 14 July 2021

https://www.ft.com/content/95f2dcd9-937b-4f02-b6be-2d69c86a5370


The winning essays

WE NEED TO LOOK BEYOND THE MARKET TO BEAT CLIMATE CHANGE

https://www.ft.com/content/bb92c7aa-aa1d-4797-9739-81ce1054ceaa


CONSPICUOUS CONSUMPTION CAN NO LONGER BE OUR ECONOMIC ENGINE

https://www.ft.com/content/29aadf7b-10c3-4a02-b70e-dc87c474fa9d



 

Tanken att stater kan fortsätta att låna och spendera till negligerbara kostnader riskerar att bli nästa dyrköpta läxa

Vi riskerar att två kriser utbryter samtidigt: 1970-talets stagflation med ekonomisk nedgång och stigande konsumentpriser – och nya skuldkriser, eftersom både stater och hushåll är extremt belånade. 

Roubini är förvisso en känd dysterkvist, men var en av dem som långt i förväg varnade för finanskrisen.

Även om det skulle gå att fortsätta som nu ett tag till är frågan vad som skulle kunna uppnås. Japan har fört en expansiv ekonomisk politik i 30 år, men det som växt är statsskulden, inte ekonomin.

Mattias Svensson SvD 13 juli 2021

https://www.svd.se/sloseri-ger-ingen-ny-ekonomi


MMT Public Debt: How Much is Too Much?

Listen especiallly to the girl with a background at the Fed.

Impressive.

https://www.youtube.com/watch?v=Kqo2F9pIAb4


The French and Indian War (also known, much less poetically, as the Seven Years’ War

 


I had encountered it originally through a public television version of “The Last of the Mohicans,” but I soon found that the real conflict exceeded even James Fenimore Cooper’s romantic imagination

In world history it was folded into the larger categories of colonial warfare and endless Anglo-French conflict

The war that evicted the French from North America was not only incredibly fascinating but also one of history’s most important wars. Indeed, from a certain perspective, it was more important than the American War of Independence: 

The Revolution merely determined in what form Anglo-America would spread to embrace continental empire and global power, while the French and Indian War determined whether that continent-spanning America would come into being at all.

Ross Douthat NYT July 2021


Vi som barn läste Den siste mohikanen vet att mohikanerna, som stred på engelsmännens sida, var ädla och tappra, medan irokeserna, som stred på fransmännens sida, var svekfulla och blodtörstiga. 




Britain, France, and the 18th-Century Quest for a Peaceful World Order by John Shovlin

‘The Victory of Montcalms Troops at Carillon

John Law urged the French monarchy to adopt his “System” of public credit and paper money. Law fell out of favour and was exiled in 1720, when the failure of his joint-stock vehicle, the Mississippi Company, caused France’s newly established Banque Générale to collapse. 




2021-07-13

We live in a globalised world on a shared planet

Are we capable of acting upon the implications? 

That is the biggest question of the 21st century. 

The answer, I fear, is no.

Martin Wolf FT 13 July 2021



CPI climbed 0.9% last month. Economists polled by The Wall Street Journal had estimated a 0.5% advance

The rate of inflation in the 12 months ended in June climbed to 5.4% from 5%.

The last time prices rose that fast was in 2008, when oil hit a record $150 a barrel.

MarketWatch 13 July 2021



‘I worry about inflation. I do not believe inflation is going to be transitory"
Larry Fink, chairman and CEO, BlackRock Inc.,the world’s largest asset manager
MarketWatch 14 July 2021


There is an unsettling technical explanation for the perverse behaviour of the bond markets over recent weeks

The junk bond market is euphoric. Funds are happily mopping up the weakest CCC-rated corporate debt in the US as if there was no tomorrow, compressing risk spreads to levels that surpass the giddiest days of the pre-Lehman debt bubble. 

The spread on BBB-rated debt has fallen to a record 1.11pc.

Meanwhile, Bank of America says the trailing price-to-earnings ratio for the S&P 500 index on Wall Street is also at an all-time high of 29.8, topping the dotcom peak in 1999.

Ambrose Evans-Pritchard Telegraph 13 July 2021


2021-07-12

The EU’s €750 billion recovery fund will not be enough to achieve anything close to a convergence...

between southern and northern member states; indeed, it will not even be enough to prevent them from drifting further apart. 

Since the EU’s poorer member states are already over-indebted, they cannot borrow much more, particularly if interest rates rise. 

Whenever inflation begins to increase again, the European Central Bank’s implicit policy of monetizing member-state debt (through the unlimited purchase of government bonds from poorer countries) will have to end.

Under these conditions, the only remaining way out would be a “transfer union"

Sigmar Gabriel, former federal minister and vice chancellor of Germany, Chairman of Atlantik-Brücke, Project Syndicate 12 July 2021


https://www.project-syndicate.org/commentary/how-eu-germany-can-support-biden-democracy-agenda-by-sigmar-gabriel-2021-07


- 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

Prodi, Göran Persson och federalismen

https://englundmacro.blogspot.com/2020/05/prodi-goran-persson-och-federalismen.html


TINA Is Stupid


John Mauldin 9 July 2021

Increasingly the function of the primary equity market is to fund operating losses...

until such companies achieve profitability (or not as the case may be). And the structure of capital markets generally is dictated increasingly by ultra-loose monetary policy. 

In effect they outsourced liquidity management to the central bank with liquidity risk ultimately falling on the taxpayer.

Under the rules of the Basel Committee on Banking Supervision, liquidity has since been rebuilt

John Plender FT 12 July 2021

https://www.ft.com/content/fb3cddae-daca-4f4f-b0b7-aa58656041a0


Is there still the possibility of an orderly exit?

 What is clear to me is that we are moving irresistibly closer to a critical question for the economy and markets, and not just in the US: 

is there still the possibility of an orderly exit from what has been a remarkably long period of uber-loose monetary policies?

Mohamed A. El-Erian FT 12 July 2021

https://www.ft.com/content/ae158a9c-b783-4301-85c6-8ff8bc55a6b8


Fed needs to consider seriously how best to slowly lift its foot off the monetary accelerator

https://englundmacro.blogspot.com/2021/02/fed-needs-to-consider-seriously-how.html


2021-07-11

Currently, the cyclically-adjusted earnings yield on the S&P 500 is only 2.6 per cent.

This is at crash-warning levels, by historical standards. 

Should a prolonged bear market occur, equity valuations might collapse. The valuations of the mid-1960s did not return for 30 years. 

The big threat, then, is that, as John Maynard Keynes allegedly said, “the market can remain irrational longer than you can stay solvent.” In effect, there is a shortage of speculators able to prevent equities from remaining durably mispriced. 

Martin Wolf FT 11 Julu 2021

https://www.ft.com/content/e3a621d3-5cfc-4410-bd3c-0fde3535582b


Las Vegas matched its all-time temperature high of 47.2C

https://www.bbc.com/news/world-us-canada-57794263

The President of the Republic asked Olivier Blanchard, Professor Emeritus at MIT, and Jean Tirole, Honorary President of the Toulouse School of Economics, to chair a commission of renowned international experts

The major future economic challenges, by Olivier Blanchard and Jean Tirole

https://www.strategie.gouv.fr/english-articles/major-future-economic-challenges-olivier-blanchard-and-jean-tirole


Inequality and the Macron Commission

DANI RODRIK STEFANIE STANTCHEVA

Procet Syndicate July 8, 2021

https://www.project-syndicate.org/commentary/inequality-report-of-macron-commission-by-dani-rodrik-and-stefanie-stantcheva-2021-07