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2021-04-15

Ray Dalio on Youtube and text

Ray Dalio Explains Why America is Entering A Horrific Financial Crisis

https://www.youtube.com/watch?v=tw0wtyzW6nA


Bitcoin Ban, Hyper-Inflation, and Stock Bubble

https://www.youtube.com/watch?v=ndTjBsnJ23I


Ray Dalio, founder of Bridgewater Associates, and MMT

https://englundmacro.blogspot.com/2019/06/ray-dalio-founder-of-bridgewater.html






Fed will follow the 2013–14 playbook when it starts to taper its asset purchases

Since last summer, the Fed has been buying $80 billion in Treasurys and $40 billion in mortgage-backed securities each month to boost the economy and keep financial market conditions on an even keel.

MarketWatch 14 April 2021

https://www.marketwatch.com/story/powell-suggests-fed-will-follow-the-2013-2014-playbook-when-it-starts-to-taper-asset-purchases-11618422986


Current bond-market selloff worse than ‘taper tantrum’

https://englundmacro.blogspot.com/2021/02/current-bond-market-selloff-worse-than.html



The biggest risk to all markets today

lies in the loose monetary policy that has delivered ultra-low policy interest rates and contributed to low nominal bond yields, which remain in historically unprecedented territory even after the recent upward adjustment.

Investors search for more yield regardless of risk, and everyone — households, companies and governments — borrows to excess while debt servicing costs are minimal.

The result is an explosive growth in debt.

John Plender 15 April 2021


https://www.ft.com/content/edcaecb2-5f83-4909-9d96-cb4daa0f0401


Jeremy Grantham

https://englundmacro.blogspot.com/2020/06/stock-market-legend-who-called-3.html


Sverige kan komma tillbaka till ett överskott i statsfinanserna och samtidigt sänka skatten, enligt Moderaternas Elisabeth Svantesson.

Enligt Moderaternas ekonomisk-politiske talesperson Elisabeth Svantesson är det viktigt att snabbt komma tillbaka till överskott och det finansiella ramverket. Men ännu är det inte dags.

SvD 15 april 2021

https://www.svd.se/det-gar-att-lana-och-sanka-skatten-samtidigt


Skulden beräknas vara lägre i Sverige efter nedgången än vad den var för flertalet länder inom EU före konjunkturnedgången. Men Magdalena Anderssons slutsats blir ändå att ”utgiftstakets nivåer bör höjas för 2021 och 2022 men inte för 2023”. 

https://englundmacro.blogspot.com/2020/10/guldet-euron-och-budgetunderskottet.html


Who’s Afraid of MMT? by James K. Galbraith - Project Syndicate

https://englundmacro.blogspot.com/2021/01/whos-afraid-of-mmt-by-james-k-galbraith.html



2021-04-14

Is Stagflation Coming?

Centrals banks have been monetizing large fiscal deficits in what amounts to “helicopter money” or an application of Modern Monetary Theory. 

At a time when public and private debt is growing from an already high baseline (425% of GDP in advanced economies and 356% globally), only a combination of low short- and long-term interest rates can keep debt burdens sustainable. 

Monetary-policy normalization at this point would crash bond and credit markets, and then stock markets, inciting a recession. 

Central banks have effectively lost their independence.

Nouriel Roubini 14 April 2021

https://www.project-syndicate.org/commentary/stagflation-threat-after-covid19-pandemic-by-nouriel-roubini-2021-04


The 1970s were an era of stagflation — high inflation and low growth. They were also, as a result, an era of terrible performance for asset prices.

Martin Wolf 26 March 2021

https://englundmacro.blogspot.com/2021/03/a-spectre-is-haunting-investors-return.html


If the strategy fails, ending in overheating, high inflation, financial instability and the economics of the 1970s, the US experiment of 2021 will go down as one of the biggest own goals of economic policymaking since François Mitterrand’s failed reflation in France in 1981.

The whole world is watching.

FT 16 February 2021

https://englundmacro.blogspot.com/2021/02/for-four-decades-governments-have.html




All that recovery, and quite a bit more I would suggest, is already in the price

As far as many stock markets are concerned, it is as if the disease never happened, despite its continued and economically destructive prevalence in many parts of the world. 

The more representative S&P 500 is 22pc up on its pre-pandemic high

If it looks like a bubble... Even so, it’s a mug’s game trying to predict when it might deflate. If something cannot go on forever, it will stop, President Nixon’s economic adviser, Herb Stein, famously said.

Jeremy Warner Telegraph 13April 2021

https://www.telegraph.co.uk/business/2021/04/13/bull-bearthe-dangers-stock-market-gamble/


If something cannot go on forever, it will stop,

https://www.internetional.se/toft/usdeficit01.htm


2021-04-13

Great equity booms typically continue for a year or 18 months longer than a nervous rationalist believes possible.

When the end comes, it is because the US Federal Reserve has hit the brakes, or at least it has been for almost every cycle over the last century. 

Mr Wilson said the Russell 2000 index of small cap stocks has lagged the S&P 500 by 8pc over the last month. 

JP Morgan’s Jamie Dimon says you do not want to be the last person holding bonds when the economy overheats. “I wouldn't touch them with a 10-foot pole,” he said.

“Why in the world would you own bonds?” asks Ray Dalio from Bridgewater

The paradox of recovery is that it brings the eurozone’s festering North-South incompatibility to a head. Reflation robs the European Central Bank of its monetary, legal, and political justification for continuing to finance the entire debt issuance of Italy and Club Med.

Lie back and enjoy the surging global money supply.

Ambrose Evans-Pritchard Telegraph 13 April 2021

https://www.telegraph.co.uk/business/2021/04/13/bull-bearthe-dangers-stock-market-gamble/



We want to see inflation move up to about 2%.

“We want to see inflation move up to about 2%. And we mean that on a sustainable basis. We don’t mean just tap the base once. But then we’d also like to see it on track to move moderately above 2% for some time. And the reason for that is we want inflation to average 2% over time,” Powell said i

CNBC 12 April 2021






https://www.cnbc.com/2021/04/12/market-braces-for-key-inflation-report-tuesday-that-may-test-the-feds-mettle.html

 

Bo dig rik – ingen vet var skuldgränsen går

Under de senaste 12 månaderna har villapriserna i snitt stigit med 17 procent till 4.060.000 kronor för snitthuset. Det betyder att uppgången i runda slängar blivit 600.000 kronor för ägarna av detta hus.

 I relation till inkomster eller i förhållande till den totala ekonomin är våra skulder bland de högsta i världen

Tillgångspriser kan falla, medan skulderna är svårare att beta av, framför allt när det inte finns någon inflation som gör dem mer hanterbara.

Hittills har det funkat fint.

Henrik Mitelman DI 13 april 2021

https://www.di.se/analys/segerreceptet-bo-dig-rik-ingen-vet-var-skuldgransen-gar/


Svensk fest spårar snart ur. Den räntedopade svenska ekonomin går som en Tesla

Mitelman 2016-03-09

https://englundmacro.blogspot.com/2016/03/svensk-fest-sparar-snart-ur-den.html


2021-04-12

A new Washington consensus

The conversion by the IMF and World Bank to support the activist state would put Saul of Tarsus to shame

Fiscal probity, long the core of IMF prescriptions (the joke was that the initials stand for “it’s mostly fiscal”), is no longer about reining in public spending  

The IMF even suggested that rich countries could consider net wealth taxes, apparently channelling leftwing US senators Elizabeth Warren and Bernie Sanders. 

Martin Sandbu FT 11 April 2021

https://www.ft.com/content/3d8d2270-1533-4c88-a6e3-cf14456b353b


Governments should avoid deficits, liberalize trade and trust in markets. Taxes and social programs shouldn’t discourage work. This canon came to be known globally as the “Washington consensus” and in the U.S. as neoliberalism.

WSJ 7 April 2021

https://englundmacro.blogspot.com/2021/04/if-3-trillion-in-stimulus-is-ok-why-not.html


Economic theory discredited

https://internetional.se/aztopics.htm#economictheory





Martin Wolf and Larry Summers about inflation and stagnation

FT 12 April 2021

https://www.ft.com/content/380ea811-e927-4fe1-aa5b-d213816e9073



Carl Rudbeck: EU i all ära, men det är svårt att se organisationen som demokratisk

EU i all ära, men det är svårt att se organisationen som demokratisk när den ständigt flyttar allt större maktbefogenheter från nationella parlament till monstret i Bryssel. En berättigad känsla av maktlöshet sprider sig. Riksdagsval blir tomma ritualer som vi pliktskyldigast utför vart fjärde år.

Carl Rudbeck SvD 12 april 2021

https://www.svd.se/omtalig-och-bristfallig--men-val-vard-att-varda


Unionen håller på att bli ett slags monster som växer okontrollerat i alla riktningar.

EU håller på att bli ett överhetsprojekt där en liten privilegierad elit berikar sig själv.

Carl Rudbeck, Sydsvenskan 27 juni 2011

http://www.nejtillemu.com/englundcloser0506.htm#rudbecksds2011





Europe /Euroland/ Is Heading Toward a New Financial Crisis

Completing the EU’s banking union might be the only way to avoid the dreaded “doom loop.”

https://www.bloomberg.com/opinion/articles/2021-04-12/europe-is-heading-toward-a-new-financial-crisis


Italian and French banks revive ‘doom loop’ fears

FT 6 April 2021

https://englundmacro.blogspot.com/2021/04/italian-and-french-banks-revive-doom.html


Prodi: It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created."

"I am sure the euro will oblige us to introduce a new set of economic policy instruments. 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.  Financial Times, 4 December 2001

https://englundmacro.blogspot.com/2011/12/prodi-it-is-politically-impossible-to.html




2021-04-11

But what do these numbers really mean?

I don’t think the near-term rebound will be merely a statistical phenomenon resulting from the low base in 2020. 

Rather, it reflects a massive increase in involuntary savings, monetary and fiscal stimulus, and the targeted generosity of bailout programs. 

How long it will last will depend on a complex combination of factors, including the speed at which personal savings are spent down, the continuance (or suspension) of government support, inflationary signals, and the behavior of markets – which themselves will be influenced by all of the above.

Jim O’Neill Project Syndicate 6 April 2021

Jim O’Neill, a former chairman of Goldman Sachs Asset Management and a former UK treasury minister, is Chair of Chatham House and a member of the Pan-European Commission on Health and Sustainable Development.

https://www.project-syndicate.org/commentary/economic-boom-2021-will-it-last-by-jim-o-neill-2021-04


Germany waking up to the glaringly obvious need for productivity-enhancing, investment-based fiscal stimulus.

https://englundmacro.blogspot.com/2019/09/glaringly-obvious-skriande-uppenbart.html



Den som är satt i skuld är inte fri

Göran Persson påtalar i en intervju i DI vikten av att unga människor kan låna riktigt mycket pengar för att köpa bostad. Han ifrågasätter bland annat kravet på att en bostadsköpare måste betala 15 procent i kontantinsats.

Så frågan är - hur mycket bör en ung person som köper en bostadsrätt för fem miljoner betala i kontantinsats? 

Det är lätt att byta ekonomisk filosofi om man får rejält betalt.

Den hälsosame ekonomisten 25 March, 2021

https://www.ekonomism.us/den-som-aer-satt-i-skuld-aer-inte-fri-1#top


Göran Persson om 90-talet: Vi gjorde mycket fel, naturligtvis. Kanske borde vi ha sparat lite mindre.

SvD 7 maj 2017

https://englundmacro.blogspot.com/2017/05/goran-persson-om-90-talet-vi-gjorde_7.html



Warming Seas Are Accelerating Greenland's Glacier Retreat

https://climate.nasa.gov/news/3062/warming-seas-are-accelerating-greenlands-glacier-retreat/


Earth’s Margin for Error Narrows

https://englundmacro.blogspot.com/2021/01/earths-margin-for-error-narrows.html





The housing sector is far more important than many realize. They notice only when it falls apart.

For most people, buying a home is the biggest single purchase they ever make. It continues to represent the largest part of their net worth. It is also the most leverage most people ever take on. The risk of loss is very high if you have little equity in the home and need to sell it.

Housing has other effects on the economy, too. Booming home values contribute to a “wealth effect” that increases consumer confidence, making people spend more freely. Some homeowners tap their equity to finance other purchases. Some of it finds its way into the stock market. The industries that feed on all this—construction, building materials, mortgages, title companies, real estate agents, etc.—are huge employers.

Now, we may have a problem if mortgage rates keep rising, as they have recently.

Intended or not, the policies that bail out our government should also serve to cap mortgage rates at historically low levels.




John Mauldin 9 April 2021

https://www.mauldineconomics.com/frontlinethoughts/tiny-housing-bubbles





https://www.ekonomifakta.se/Fakta/Ekonomi/bostader/Bostadspriser/

https://internetional.se/houseprices.htm#sverige

Such a positive transformation in the global economic outlook within the space of just six months is extremely rare

As recently as October, the IMF was warning that coronavirus will cause “lasting damage” to living standards across the world with any recovery likely to be “long, uneven and uncertain”.

Yet the forecast it released this week is very different. By 2024, the IMF now believes, the US economy is likely to be stronger than it had predicted before the pandemic. 

... the advanced world can also look forward to largely self-correcting public finances. On the face of it, this might seem surprising.

https://www.ft.com/content/f99210c9-c909-4325-8f6b-6684faabef0a


The Debate Over the Next Move in Bonds Has Never Been Fiercer

On one side stand the likes of Bill Gross and Ray Dalio, who were among those declaring a bear market in 2018, when 10-year yields surpassed 3%, and who are again downbeat. 

For the other camp, including fund managers at Mitsubishi UFJ Kokusai Asset Management Co. and Northern Trust Asset Management, that’s all just noise. They say Treasuries are attractive on the view that inflation will remain tame and growth fueled by fiscal stimulus will fade.

https://www.bloomberg.com/news/articles/2021-04-10/the-debate-over-the-next-move-in-bonds-has-never-been-fiercer


2021-04-09

Monetarists fear inflation spiral

The Bank is financing the Government’s entire fiscal deficit, pound for pound. This has fueled an explosive rise in the "broad" money supply. The annual growth rate of non-financial M4 has reached 16pc. 

Critics warn that this latent stock of money will ignite like rocket fuel once people start spending extra savings built up during the pandemic, or in economic parlance as the "velocity" of money reverts to normal.

Ambrose Evans-Pritchard Telegraph 8 April 2021

https://www.telegraph.co.uk/business/2021/04/09/monetarists-fear-inflation-spiral-bank-england-stokes-economic/


El-Erian: Financial System Unprepared for Interest Rate Shock

https://www.youtube.com/watch?v=gUVRJx5VQao&t=3s


Alla är glada. 

Utom riksbankscheferna som vet att de inte har någon plan för återgång till något slags normalitet.

https://englundmacro.blogspot.com/2021/03/for-varje-dag-som-gar-med-nollranta.html




Europe’s Complacency Trap

Historically, populists have tended to be more effective from the outside, where they can help to focus mainstream politicians’ minds on questions they would prefer to avoid.

Today’s hybrid arrangement of federalism (through the European Central Bank), supranationalism (through the European Commission), and traditional national governance has both strengths and weaknesses. While it seems to reflect most Europeans’ preference for some limited degree of shared governance, it rules out effective policy action.

Rarely is there any willingness to change things, either by creating a genuine European government with the necessary fiscal muscle to reverse the continent’s relative economic underperformance, or by reversing the integration process.

Europe’s muddling underperformance can and most likely will last for some time to come. But this prospect is as uninspiring as it is ultimately dangerous.

Brigitte Granville Project Syndicate 8 April 2021

https://www.project-syndicate.org/commentary/europe-ready-for-crisis-management-but-not-for-reform-by-brigitte-granville-2021-04


Brigitte Granville is Professor of International Economics and Economic Policy at Queen Mary, University of London, and the author of What Ails France?

What Ails France?

https://www.waterstones.com/book/what-ails-france/brigitte-granville/9780228006800


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.





Inflation might be the way out of the debt crisis

A year ago, central banks and governments were forced to take unprecedented measures in real time to avert a 1929-style depression. 

The resulting skyrocketing debt will doubtless weigh on future generations, but, for now, it seems the only game in town to reboot national economies by making them even more debt addicted.

For this entire house of cards not to crumble, growth and inflation need to be restored. 

FT 8 April 2021

https://www.ft.com/content/c7ebe679-3373-4f01-94fe-015bf80c4d3b


Inflation Is the Way to Pay Off Coronavirus Debt

Noah Smith Bloomberg 7 maj 2020

https://englundmacro.blogspot.com/2021/04/inflation-is-way-to-pay-off-coronavirus.html


How do we get out of this scenario alive? 

By Rolf Englund, Financial Times 4/10 2005

https://www.internetional.se/usd.htm#stayingft


Kan man undvika recession i USA när man måste minska importen med 600 miljarder dollar? 

- Jag har länge oroat mig för dollarn och underskottet i USA:s handelsbalans. Men jag blev i dag ändå mera oroad när Klas Eklund - en av vårt lands skickligaste ekonomer - sade sig inte veta vad man bör göra åt saken. Om inte Klas vet, vem vet då?

Jag vill fästa uppmärksamheten på årtalen 1982 och 1992 i Klas första diagram över det amerikanska handelsunderskottet. Det visar att dessa märkesår i svensk ekonomisk politik var de enda år som USA hade balans i sin utrikeshandel.

Rolf Englund på Nationalekonomiska Föreningen 30/11 2004

https://www.internetional.se/egonatek0411usd.html



2021-04-08

The IMF report, actions taken during the coronavirus pandemic

“may have unintended consequences such as stretched valuations and rising financial vulnerabilities.”

https://www.cnbc.com/2021/04/08/imf-debt-overhang-and-financial-vulnerabilities-endanger-recovery.html


Global Financial Stability Report, April 2021

https://www.imf.org/en/Publications/GFSR/Issues/2021/04/06/global-financial-stability-report-april-2021




Biden’s big fiscal gamble

Neither the bond markets nor most economists foresaw the era of inflation that began in the late 1960s or the “great moderation” that replaced it in the 1980s.

It is worth stressing that investment spending is less inflationary than stimulus as, in principle, it boosts long-term productivity growth.

Edward Luce FT 8 April 2021

https://www.ft.com/content/fbba9770-ce1c-46d6-9ec0-c51063b6f96e


Why do economists continue to get it so wrong? Lucas

Edward Luce FT 9 October 2019

https://englundmacro.blogspot.com/2019/10/why-do-economists-continue-to-get-it-so.html




If $3 trillion in stimulus is OK, why not $6 trillion?

Bidenomicsa Declaring end to neoliberalism, new thinkers play down constraints of deficits, inflation and incentives

Governments should avoid deficits, liberalize trade and trust in markets. Taxes and social programs shouldn’t discourage work. This canon came to be known globally as the “Washington consensus” and in the U.S. as neoliberalism.

The latter label has always been more popular with its critics than its adherents. 

Deficits aren’t harmful and may be necessary. Mr. Summers has labeled this secular stagnation. 

“Modern monetary theory”—which few economists, even on the left, embrace—goes further, arguing deficits never crowd out private investment or raise interest rates.

WSJ 7 April 2021


https://www.wsj.com/articles/how-bidenomics-seeks-to-remake-the-economic-consensus-11617796981


Fiscal retrenchment, a smaller state and/or market liberalisation. 

The advice was heralded as the Washington consensus because of the IMF’s location

https://englundmacro.blogspot.com/2021/02/after-decades-of-market-liberalism-and.html


Secular Stagnation 

https://englundmacro.blogspot.com/2020/11/the-future-of-fiscal-policy-without.html



Central banks pay commercial banks interest on reserves created as a by-product of QE bond purchases

As inflation revives and rates go up, this cost goes up too. 

It is passed on to national treasuries.

The political structure of Europe’s monetary union and the Maastricht constraints mean that the European Central Bank cannot engage in a disguised bail-out of Club Med debts for much longer. 

Italy ultimately lacks a lender of last resort.

Sooner or later, there will have to be a partial jubilee to clear debts and reduce the burden on the millennial generation to tolerable levels. Creditors will have to take a haircut. The better the statecraft, the less traumatic it will be.

Debt restructuring is preferable to decades of austerity and primary budget surpluses in a self-defeating attempt to turn back the clock, as Britain attempted to do so stubbornly in the 1920s.

Ambrose Evans-Pritchard Telegraph 8 April 2021

https://www.telegraph.co.uk/business/2021/04/08/ballooning-global-debts-need-restructured-late/





U.S. trade deficit — which has returned to its all-time high during the Covid pandemic

ought to give policymakers pause when it comes to trumpeting the virtues of a strong dollar.

This isn’t the first time the U.S. has reevaluated its strong-dollar policy. In 1985, faced with mounting trade deficits with Germany and Japan, the U.S. negotiated a managed reduction in the dollar’s value against those countries’ currencies. Following the Plaza Accord, the dollar plunged in value

President Joe Biden recently named economist Brad Setser — who has been a strong critic of countries that keep their currencies low against the dollar — to be the counselor to the U.S. trade representative.

Noah Smith 24 February 2021

https://www.bloomberg.com/opinion/articles/2021-02-24/a-weak-dollar-is-better-for-the-u-s-than-it-sounds


The merchandise-trade deficit rose about 3% to $88 billion, while the nation’s surplus in services trade fell to $16.9 billion, the smallest since 2012.

The U.S. goods trade shortfall with China widened in February to a three-month high of $30.3 billion on a seasonally adjusted basis.

Adjusted for inflation, the merchandise-trade gap widened to a record $99.1 billion in February from $96.1 billion.

https://www.bloomberg.com/news/articles/2021-04-07/u-s-trade-deficit-widened-to-record-71-1-billion-in-february


Plaza Accord

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

Louvre Accord

An agreement reached in February 1987 by the five countries which comprise the G-5 (France, West Germany, Japan, the UK and US) following an earlier decision to correct an overvalued $US. They agreed that the $US had fallen sufficiently and that they would take steps to ensure stability in exchange rates.

https://www.armstrongeconomics.com/armstrongeconomics101/economics/louvre-accord-v-plaza-accord/






Inflation Is the Way to Pay Off Coronavirus Debt

Raising the long-term inflation target from the current 2% to a still-modest 4% would substantially increase the rate at which debt effectively vanishes.

A final concern is whether the Fed could actually hit the 4% target. The Bank of Japan has been trying mightily to raise inflation for years with only modest success. If businesses don’t raise their prices in response to the Fed’s new target, inflation just won’t happen.

Noah Smith Bloomberg 7 maj 2020

https://www.bloomberg.com/opinion/articles/2020-05-07/inflation-is-the-way-to-pay-off-coronavirus-debt


Englund: Without inflation, how could the debts ever be paid back?





2021-04-07

U.S. trade deficit jumps to record USD 71 bn in February

"Trade deficit is getting bigger because the U.S. economy is stronger vs. most other countries"

MarketWatch April 7, 2021

https://www.marketwatch.com/story/u-s-trade-deficit-jumps-4-8-to-record-71-1-billion-as-americans-snap-up-imports-11617799658



‘We’re seeing widespread frothiness, bubbles, risk-taking and leverage,’ warns ‘Dr. Doom’ Nouriel Roubini on state of stock-market

Roubini, was once named one of the “top 100 global thinkers” after his accurate calls about the impact of the housing crisis more than a decade ago.

MarketWatch April 6, 2021 

https://www.marketwatch.com/story/were-seeing-widespread-frothiness-bubbles-risk-taking-and-leverage-warns-dr-doom-on-state-of-stock-market-11617719690


One might not expect much from economists, but one would surely expect them to warn us of a crisis on this scale. 

In my gallery of heroes are Avinash Persaud, who told us early and often that the risk-management models on which regulators foolishly relied were absurd individually and lethal collectively

(Long list of names.....and Nouriel Roubini, of course, who was Dr Doom before almost anybody else.)

Speech given by Martin Wolf, chief economics commentator, at the FT’s annual economists’ drinks party in London 

Financial Times, 27/11 2008

https://www.internetional.se/wolfwhy081127.htm



In 2008, in a wonkish paper that bore no relation to any sci-fi, the enigmatic Satoshi Nakamoto launched Bitcoin

“a purely peer-to-peer version of electronic cash” that allows “online payments to be sent directly from one party to another without going through a financial institution.” 

What is the money of the future? My nine-year-old son thinks it will be Robux. For those of you trapped in the human museum known as adulthood, Robux is the currency used by players of Roblox computer games. 

Niall Ferguson Bloomberg 4 april 2021

https://www.bloomberg.com/opinion/articles/2021-04-04/don-t-let-china-mint-the-digital-currency-of-the-future



Så blev Malmöstudenten miljonär på Roblox


Coronapandemin har fått spelplattformen Roblox att fullkomligen explodera av användare, främst i åldrarna 9–12 år. 

Simon Mäkelä från Malmö var fjorton år när han skapade sitt första spel och i dag har hans fyra spel spelats 70 miljoner gånger och han har själv tjänat sin första miljon



Dimon Says ‘Fintech and Big Tech Are Here’ as Banks Lose Ground

Jamie Dimon, who built the biggest and most profitable U.S. bank in history, is warning shareholders his industry’s disruption by technology is finally at hand. 

Shadow lenders are gaining ground. 

Traditional banks are being consigned to a shrinking role in the financial system.

https://www.bloomberg.com/news/articles/2021-04-07/dimon-says-fintech-and-big-tech-are-here-as-banks-lose-ground


“It is possible that we will have a Goldilocks moment — fast growth, inflation that moves up gently (but not too much) and interest rates that rise (but not too much),” Wall Street’s leading banker said, adding that sustained spending could fuel a years-long hot streak.

Though the “Goldilocks” scenario was probable, Dimon assured investors that JPMorgan was also prepared for the possibility of runaway inflation or yet another wave of lockdowns.

https://www.ft.com/content/c33c9577-0faf-424d-919e-68bda2052867



Jamie Dimon, chairman and CEO of JPMorgan Chase & Co.

https://englundmacro.blogspot.com/2019/03/jamie-dimon-chairman-and-ceo-of.html


The shadow banking system and The Volcker Rule

https://www.internetional.se/billgrossoctober1.htm



Morgan Stanley dumped $5 billion in Archegos’ stocks the night before

The night before massive fire sale hit rivals

After Morgan Stanley and Goldman sold the first blocks of shares with the consent of Archegos, the floodgates opened. Prime brokers including Morgan Stanley and Credit Suisse then exercised their rights under default, seizing the firm’s collateral and selling off positions 


https://www.cnbc.com/2021/04/06/morgan-stanley-dumped-5-billion-in-archegos-stocks-before-fire-sale.html


Billions in Secret Derivatives at Center of Archegos Blowup

https://englundmacro.blogspot.com/2021/03/billions-in-secret-derivatives-at.html






Central banks should not target house prices

The worldwide fall in interest rates over the past two decades has caused a runaway boom in house prices.  

Higher interest rates would bring down house prices by suppressing demand across the whole economy. If this is really what people want, one could get a more targeted result by putting a tax on houses, and using the proceeds to cut income tax. 

FT 6 april 2021

https://www.ft.com/content/03348778-ec31-4120-a68e-098eea760440


”De större frågorna, som rör exempelvis hyresreglering, fastighetsskatt, ränteavdrag och beskattning av bostaden vid försäljning är politiska frågor, frågor som ingen politiker i grunden velat ta tag i” 

Riksbankschef Stefan Ingves 2019-09-18 

https://englundmacro.blogspot.com/2019/09/jag-ar-medveten-om-att-dessa-atgarder.html






I vilken grad var George Floyds död en följd av polismannen Derek Chauvins agerande?

När han greps hade han inte gjort mer än att handla cigaretter med en falsk 20-dollarsedel. För detta fick han betala med sitt liv.

Vilka signaler sänder det om Derek Chauvin frias eller får ett mildare straff än allmänheten anser att han förtjänar?

Malin Ekman SvD 3 april 2021


https://www.svd.se/mer-an-polisens-agerande-star-pa-spel-i-rattegangen



2021-04-06

Financial crises get triggered about every 10 years

During the late 1980s, nearly a third of the nation’s savings and loan associations failed, ending with a taxpayer bailout — in 2021 terms — of about $265 billion.

In 1997-1998, financial crises in Asia and Russia led to the near meltdown of the largest hedge fund in the U.S. — Long-Term Capital Management (LTCM). 

Exactly a decade later, too much leverage by some of those very institutions, and the bursting of a U.S. real estate bubble, led to the near collapse of the U.S. financial system. 

Once again, big banks were deemed too big to fail and taxpayers came to the rescue.

MarketWatch 5 April 2021


https://www.marketwatch.com/story/financial-crises-happen-about-every-10-years-which-makes-the-archegos-meltdown-unnerving-11617634942


The Savings and Loans Bailout

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


Save the last dance for me

WAITING FOR THE LAST DANCE

https://englundmacro.blogspot.com/2021/03/save-last-dance-for-me.html




Italian and French banks revive ‘doom loop’ fears

Exposure to own countries’ sovereign debt reawakens concern over faultline in Europe’s monetary union. 

At that time, banks’ vast domestic sovereign debt exposure created a “doom loop”, as a vicious circle between private sector lenders and governments weakened each other and ultimately threatened the existence of the single currency zone.

“carry trade”

FT 6 April 2021


https://www.ft.com/content/fde7833a-8283-45b8-97ae-9104e1c974cd

Carry-Trade Losses Smash Records Amid Mad Dash Into Dollars




I våldtäktsmål står ofta ord mot ord, minnesbilder mot minnesbilder

Det finns risk att förövare klarar sig undan straff. 

Men det finns också risk för att oskyldiga felaktigt döms.

Tove Lifvendahl SvD 2021-04-05


https://www.svd.se/den-ojamstallda-lagen-i-den-svarbedomda-verkligheten



2021-04-04

The New China Shock

The shift to a dual-circulation strategy raises the specter of a new “China shock” that could dwarf the impact of the first one, which struck Western economies after China’s accession to the World Trade Organization in 2001. 

Although China’s inclusion in the WTO generated a huge amount of wealth and lifted millions of Chinese out of poverty, it also created losers in places like the American Rust Belt and the United Kingdom’s “red wall” districts, setting the stage for the UK’s Brexit referendum and former US President Donald Trump’s election in 2016.

Rather than endangering legacy industries, the goal is to dominate cutting-edge sectors and compete with legal and financial firms in the City of London, automakers in Baden-Württemberg, and biotech firms in Sweden.

Mark Leonard is Co-Founder and Director of the European Council on Foreign Relations.


https://www.project-syndicate.org/commentary/the-new-china-shock-by-mark-leonard-2021-03


Suzhou Creek holds a special place in the hearts of Shanghai residents. This series explores the creek in each of the six city districts through which it flows.


https://www.shine.cn/A-River-of-History-and-Culture/


 

Keynes lived an extraordinary and vivid life

He attended the Paris Peace Conference after World War I as an economic adviser with the British delegation. He was appalled by the terms imposed on the defeated countries of Europe

Not even as brilliant an intellect as his could resist the fevered markets of the Roaring Twenties. He bought as the market ran up, and in the final two years of the 1920s lost 80% of his net worth. He initially described the Wall Street crash of late 1929 as a correction but soon changed his view.
 

 
Grundbultsfrågan: Hur blir S = I ??? Savings and investment, being different activities carried on by different people




2021-04-02

Long-term US government bonds endure worst quarterly fall since 1980

The losses are particularly pronounced given the historically low levels of yields since the Fed pulled its policy rate to near zero last year.

This environment makes bond prices, particularly at the longer end of the maturity spectrum, far more sensitive to interest rate fluctuations

Longer-term bonds are also more susceptible to changes in the inflation outlook

The Fed has not yet expressed concern about the rise in yields, but it has set parameters for the kind of market moves that would worry policymakers.


FT 1 April 2021

https://www.ft.com/content/c7107a3b-483d-4c6f-80c1-1f555ac38a97




Archegos avalanche shows cracks are hidden under the surface in the shadow banking world

Most striking of all, Archegos was apparently operating with more than five times leverage. This is comparable to patterns seen before the 2008 crash and seems to have been “the very definition of insanity”, given the concentrated nature of its portfolio,

Archegos rubble shows that years of excessively loose monetary policy have not just left asset prices elevated but created half-concealed pockets of leverage, too. When the two collide, disaster can erupt. 

Gillian Tett 1 April 2021

https://www.ft.com/content/4459a6b2-b842-4d21-b19b-bda138a5bfdf


The shadow banking system and The Volcker Rule

https://www.internetional.se/billgrossoctober1.htm



2021-04-01

China Is Missing from the Great Inflation Debate

Once again, massive fiscal spending in the United States has invited warnings of inflation and triggered dark memories of the 1970s. But these fears are based on a model that has since been obliterated by economic realities – not least the rise of China, which has fundamentally reshaped the US and global economies.

Reality, on the other hand, actually obliterated the Phillips curve. From the early 1980s – and unmistakably from the mid-1990s onward – no inflation could be found, and lower unemployment did not tend to bring it on. The relationship is not vertical or downward-sloping, but flat, which is to say it doesn’t exist – if it ever did.

What happened? The answer can almost, if not quite, be summed up in a single word: China. From the early 1980s, the US dollar began to rise, crushing America’s Midwest industrial base and trade unions. 

But won’t China now take advantage of high US demand to push up prices? No, because Chinese firms fear losing market share to other countries, and because China’s economic ethos prizes not profit maximization but social stability, steady production growth, and cost reductions through learning and new technologies.

US households are not suffering from a shortage of smartphones, dishwashers, and running shoes. What they lack is confidence and security. Hence, much of the Biden money will not go to China at all. It will go toward saving, in order to cover future rent, mortgages, utilities, and debt repayments.

James K. Galbraith Project Syndicate 31 March 2021

https://www.project-syndicate.org/commentary/us-stimulus-inflation-threat-reflects-outdated-economic-model-by-james-k-galbraith-2021-03


Yes, There Is a Trade-Off Between Inflation and Unemployment

https://englundmacro.blogspot.com/2019/09/yes-there-is-trade-off-between.html



The Dollar’s Fragile Hegemony

For many reasons, the Chinese authorities will probably someday stop pegging the renminbi to a basket of currencies, and shift to a modern inflation-targeting regime under which they allow the exchange rate to fluctuate much more freely, especially against the dollar. 

Considering how much the United States relies on the dollar’s special status – or what then-French Finance Minister Valéry Giscard d’Estaing famously called America’s “exorbitant privilege” – to fund massive public and private borrowing, the impact of such a shift could be significant. Given that the US has been aggressively using deficit financing to combat the economic ravages of COVID-19, the sustainability of its debt might be called into question.

Kenneth Rogoff Project Syndicate 30 March 2021


https://www.project-syndicate.org/commentary/flexible-renminbi-could-threaten-global-dollar-hegemony-by-kenneth-rogoff-2021-03





With the €750bn Recovery Fund, Europe’s leaders have unwittingly created a device to explode their own project

If the European project ever unravels it will probably because of a ruling by the venerable Verfassungsgericht.

Each time its interventions become a greater threat. You can stretch the EU treaties and Germany’s Basic Law only so far.

Legislative power over tax and spending is the lifeblood of democracies. It was an attempt to circumvent Parliament that led to the English Civil War, a point made by Otmar Issing, the ECB’s founding chief economist. He has since turned against monetary union, calling it a “house of cards”.

Prof Lucke's case invokes Article 311 of the Treaties.

Ambrose Evans-Pritchard Telegraph 1 April 2021

https://www.telegraph.co.uk/business/2021/04/01/legal-sword-damocles-hangs-europes-vast-bond-market/


Otmar Issing - a former chief economist at ECB: Five Presidents Report creating a fiscal union "without democratic legitimacy".

https://englundmacro.blogspot.com/2016/03/otmar-issing-former-chief-economist-at.html


Rome, Habsburg and the European Union

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



The Economy of Spain: World's Greatest Bubble?

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



2021-03-31

Nigel Farage: How the Euro Dies


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

How The Euro Dies by Nickolai Hubble

Over the 12 chapters he presents two main arguments-- 1) the euro was doomed to die and 2) it will be caused by Italy. 

He supports these arguments with 4 reasons ( the four horsemen) which are the Unholy Trinity, Target2, Democracy and No bailout. 

https://www.goodreads.com/book/show/48664775-how-the-euro-dies


“no intention of trying to block the recovery fund”

“I just want to ensure that the way it’s financed is legal and doesn’t violate the EU treaties.”

FT 31 March 2021

https://www.ft.com/content/950c218d-749c-4d2e-9079-e91bfbab0401


Germany's top court suspends ratification of EU recovery fund

https://englundmacro.blogspot.com/2021/03/germanys-top-court-suspends.html





Stockholmstrafikanterna testar världens första elektriska bärplansfartyg

Di Digital har tidigare skrivit om Lidingöbaserade Candela, som startades 2014 av Gustav Hasselskog. 

2018 startade serietillverkningen av fritidsbåten Seven, och nu inleds ett innovationsprojekt tillsammans med Region Stockholm för den 12 meter långa pendelbåten Candela P-30.

https://digital.di.se/artikel/stockholmstrafikanterna-testar-varldens-forsta-elektriska-barplansfartyg


https://candelaspeedboat.com/



Södra Värtan byggs ihop med Gärdet och Frihamnen

Värtahamnen och Södra Värtan ska bli Stockholms nya entré från sjösidan. Här kommer 5 000 personer att bo och dubbelt så många att arbeta när området är färdigställt. 

Södra Värtan är en del av det hållbarhetsprofilerade stadsutvecklingsområdet Norra Djurgårdsstaden

https://vaxer.stockholm/projekt/sodra-vartan/



2021-03-30

Archegos was reported to have about $10 billion under management

and anywhere from three to 10 times that amount in market exposure.

That’s risky. 

March 30, 2021 By Barron's


https://www.marketwatch.com/articles/investing-lessons-from-the-archegos-saga-51617106276




Deng visited Singapore in November 1978

Singapore did not inspire him because of its level of development. If that were his priority, many cities in Japan or the West would have impressed him more.

Singapore was special because it represented the achievement of an estranged relative. Nowhere else outside China was there a country with ethnic Chinese in its majority.

Lee Kuan Yew told him that if Singapore Chinese who were the descendants of poorly-educated coolies could make good, how much better mainland China could be if the right policies were adopted.


https://mothership.sg/2018/11/deng-xiaoping-singapore-china-george-yeo/



Billions in Secret Derivatives at Center of Archegos Blowup

Archegos used equity swaps or CFDs, people familiar have said

Instruments are popular with hedge funds, allow non-disclosure

Bloomberg 29 mars 2021  


https://www.bloomberg.com/news/articles/2021-03-29/billions-in-secretive-derivatives-at-center-of-archegos-blowup


The banks had each allowed Archegos to take on billions of dollars of exposure to volatile equities through swaps contracts


https://www.ft.com/content/db4508ed-ccb4-48f6-8dd6-dd7d38e3cfa4

Jay Powell is pursuing one of the highest-risk policy experiments in economic history

Powell is betting that economic growth will come roaring back later this year as the economy reopens, but that inflation, after a brief overshoot of target, will fall obediently back to about 2 per cent and stay there. 

Thus, there is no need to lift rates this year, or next, or the year after. 

FT 29 March 2021


https://www.ft.com/content/835efc35-3688-4795-ada1-ecb566a3aa9d


2021-03-29

Where is the one more fool when we really need him (or her)?

Vi kan uppfattas som idioter - fools, men vi skall sälja till One More Fool. 

Sedan skall vi köpa Buy the Dip och bli ändå rikare.

Frågan bli I slutändan denna: Where is the one more fool when we really need him (or her)?


https://englundmacro.blogspot.com/2021/03/for-varje-dag-som-gar-med-nollranta.html



Credit Suisse Joins Nomura Warning of Hit From Hedge Fund


https://www.bloomberg.com/news/articles/2021-03-29/credit-suisse-flags-potential-significant-loss-from-hedge-fund


Margin Call at Archegos Capital

https://englundmacro.blogspot.com/2021/03/margin-call-at-archegos-capital.html


A catalogue of errors in its handling of the Northern Rock crisis, which saw the first run on a British bank in more than a century. Daily Telegraph 26/03/2008


 

It’s not quite Creditanstalt



Related: Lehman



Birger Jarl vid Fjäderholmarna. I Larsberg är vi nästan skärgårdsbor.

 


Margin Call at Archegos Capital

Archegos Capital, a private investment firm, which had large exposures to ViacomCBS and  was hit hard after shares of the US media group began to tumble on Tuesday and Wednesday.

The declines prompted a margin call from one of Archegos’ prime brokers, triggering similar demands for cash from other banks

“forced deleveraging” 

https://www.ft.com/content/2542af81-9e93-4d05-a0b9-26c0f6aab6f3


What ‘unprecedented’ Discovery, ViacomCBS selloff means for Wall Street

MarketWatch March 28, 2021

https://www.marketwatch.com/story/stock-market-traders-fixated-on-what-unprecedented-discovery-viacomcbs-selloff-means-for-wall-street-11616970445


Bubblor planar inte ut

Bostadsbubblor, liksom andra bubblor, har en mycket karaktäristisk form.

Det brukar, alltid, se ut så här.

https://englundmacro.blogspot.com/2014/01/bubblor-planar-inte-ut.html


Anders Borg och Irving Fisher om att priserna har planat ut och nått en platå.

https://englundmacro.blogspot.com/2014/01/anders-borg-och-irving-fisher-om-att.html


Irving Fisher

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


Margin Call is a 2011 American financial thriller film. The principal story takes place over a 24-hour period at a large Wall Street investment bank during the initial stages of the financial crisis of 2007–2008.

https://en.wikipedia.org/wiki/Margin_Call



2021-03-28

The exit from unconventional central bank measures will be infinitely harder than the entry

Because policy rates cannot be raised to address any looming inflationary threat without inflicting serious financial instability along with economic recession, or worse.

John Plender FT 28 March 2021


https://www.ft.com/content/1fdf201b-ed47-4e1a-b5ff-098310db8bc2




Germany's top court suspends ratification of EU recovery fund

Judges at the constitutional court say the legislation can only be approved once they have heard all the legal challenges against the debt-pooling €750 billion rescue fund, part of a wider EU package agreed last year.

Deutsche Welle 26 mars 2021


https://www.dw.com/en/germanys-top-court-suspends-ratification-of-eu-recovery-fund/a-57018350


https://englundmacro.blogspot.com/2021/03/they-accuse-european-central-bank-of.html

http://www.nejtillemu.com/vonstauffenberg.htm




2021-03-27

Behind The Corporate Bond Market's $10.5 Trillion Debt 'Bubble'

Basics

CNBC 12 March 2021

https://www.youtube.com/watch?v=CCmdmOr06pY


WTF Happened in 1971?

Starting in the mid-1960s, various European countries began demanding payment for their dollars in gold. They wanted the US to balance its budget, which had gone wildly into deficit because of the Vietnam War. 

The US was literally using Air Force planes to ship gold from Fort Knox to New York and outbound. You can read many interesting stories like this one. We tend to think of crises as happening over very short periods. This one was building for years.

August 15, 1971, President Nixon ended the Bretton Woods system

The dollar crashed even more and we had to invent the word “stagflation” to define the widespread misery. 

A host of writers and websites have chronicled the seemingly sudden changes. For instance, try WTF Happened in 1971? 

Hourly compensation grew roughly in line with productivity from 1948 until the early 1970s. From there, productivity rose far faster than income.

College degrees have become a proxy for the IQ tests that were made illegal 50 years ago. They aren’t a particularly good proxy, but large employers lack better options.

John Mauldin 26 March 2021

https://www.mauldineconomics.com/frontlinethoughts/the-1970s-never-ended


WTF Happened in 1971? 

https://wtfhappenedin1971.com

Svenskt Näringsliv – en utpräglat pragmatisk röst i samhällsdebatten

Insikten om ägandets avgörande roll för innovationer och välstånd är central. Samtidigt är Svenskt Näringsliv – till skillnad från hur organisationen ibland beskrivs av vänsterdebattörer – en utpräglat pragmatisk röst i samhällsdebatten. Man tar inte ställning för eller mot något parti, utan pratar med alla. Inte minst med Socialdemokraterna.

Den moderna företagarrörelsen växte fram ur 70- och 80-talets kris och ideologiska strider. Vad de flesta förmodligen inte inser är att en del företagsledare då ryckte på axlarna åt socialiseringspolitiken. De var anställda tjänstemän. Vad brydde de sig om ägarfrågor? Inte deras kulle att dö på. Många såg nog rent av fram emot livet under fondsocialismen. I en värld utan kapitalister är verkställande direktören kung.

Janerik Larsson DI 27 mars 2021

Tidigare informationschef på SAF och vice VD på Svenskt Näringsliv. Aktuell med boken ”Det långa loppet – om näringslivets opinionsbildning” (Ekerlids Förlag).

https://www.di.se/debatt/den-storsta-utmaningen-pa-decennier-for-det-fria-naringslivet/

---------

Englund: Enligt min mening lade dom, vilka de nu var, ner SAF, sålde huset till Wallenberg och bytte ut skylten på Industriförbundet.

Socialists at the Gate /Timbro och dess föregångare/

Swedish Business and the Defense of Free Enterprise, 1940–1985 

https://englundmacro.blogspot.com/2020/11/socialists-at-gate-timbro-och-dess.html



 


A spectre is haunting investors: the return of inflation

Unexpectedly high inflation would raise interest rates, destabilise exchange rates, ignite unrest in labour markets, push the highly indebted towards default and destabilise asset markets.

The 1970s were an era of stagflation — high inflation and low growth. They were also, as a result, an era of terrible performance for asset prices.

Stocks did terribly, too. The cyclically-adjusted price/earnings ratio (CAPE), developed by Nobel laureate Robert Shiller, collapsed from 24 in 1966, to 8 in 1974 and 7 in 1982.

Another salient characteristic of the past four decades has been expanding debt

In 2005, former Federal Reserve chair, Ben Bernanke, called this phenomenon “the savings glut”. More recently, former US treasury secretary, Lawrence Summers has termed it “secular stagnation”.

The ideas of “Modern Monetary Theory” has won much intellectual favour on the left.

... waves of default far more pervasive than in the early 1980s, when the big story was the debt crisis in developing countries. This time, the debt crises could be almost everywhere, because there is so much more debt.

Inflation has not come back. It may never do so.

Martin Wolf 26 March 2021

https://www.ft.com/content/6cfb36ca-d3ce-4dd3-b70d-eecc332ba1df


The Communist Manifesto: "A spectre is haunting Europe—the spectre of communism.

https://en.wikipedia.org/wiki/The_Communist_Manifesto


This administration wants to avoid the mistakes of the Obama era. But it could make opposite ones. 

Martin Wolf 23 March 2021

https://englundmacro.blogspot.com/2021/03/lawrence-summer-these-are-least.html