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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




2021-03-26

Companies raise record $140bn in US junk bond market in first quarter

Fundraising exceeds record at height of Covid crisis, when groups sprinted to fortify their finances

The three biggest issuance quarters on record have all fallen in the past 12 months, helping to propel the size of the US high yield market towards a record $1.5tn

FT 25 March 2021


https://www.ft.com/content/87e1ddd6-c613-4e51-bb7a-8db6d5fffe03




The housing market already is on fire, and inflation will soon follow

 Manoj Pradhan, formerly a Morgan Stanley managing director in charge of global economics and the founder of Talking Heads Macroeconomics, said at a presentation held by fund manager Tabula Investment Management that inflation is going to heat up just when the Federal Reserve expects it to cool down, next year.

Pradhan argued that the breakdown of the Phillips curve — the traditional relationship that shows inflation rising as unemployment falls — occurred because of China’s entrance into the global labor force. But he said demography and the COVID-19 pandemic will fix it.

MarketWatch 26 March 2021


https://www.marketwatch.com/story/the-housing-market-already-is-on-fire-and-inflation-will-soon-follow-this-former-morgan-stanley-economist-argues-11616756309


Talking Heads Macroeconomics

https://talkingheadsmacro.com/thm/



Upplägget Spac är en form av uppköpsskalbolag

Har hajpats på de amerikanska börserna det senaste året. Nu kommer den första svenska varianten.

Olyckskorpar varnar för en ny finansiell mani.

Det var sent 1600-tal. Redan då fanns begreppet bubbla.

De riktiga bolagen hette saker som Company for Making Hollow Sword Blades in the North of England. Trots namnet var bolaget under långa perioder ett finansiellt skal, utan riktig verksamhet. 

Genombrottet kom när det ömsade skinn till Söderhavskompaniet. Och i den inkarnationen stod företaget i centrum för den stora Söderhavsbubblan som sprack 1720. 

I praktiken har folk betalat 150 kronor för att få ha 100 kronor på ett sparkonto, i förhoppning om att pengarna ska placeras på ett genialt sätt. En renare form av spekulation får man leta efter.

Det är investeringsbolaget Bure som ska sätta ihop det första upplägget. 3,5 miljarder kronor skrapas ihop och sätts på börsen under namnet ACQ. Som ett tomt påskägg.

Carl Johan von Seth DN 10 nars 2021

https://www.dn.se/ekonomi/carl-johan-von-seth-flygande-bilar-kandisar-och-snabba-borsklipp-nu-aven-i-sverige/


Another infamous example was the South Sea Bubble in 1720. The London-based South Sea Company came up with an ingenious plan to take over Britain’s national debt in return for interest and sole trading rights to the South Seas (South America) and hence, in theory, access to the treasures of the gold and silver mines in Peru and Mexico.

 Even Sir Isaac Newton averted his gaze from the stars for long enough to buy some shares and make a profit, then buy some more and lose a packet. His comment? “I can calculate the motion of heavenly bodies, but not the madness of people.”

https://www.internetional.se/econspectulip9909.htm

Bure bildades 1992 ur de avvecklade löntagarfonderna och noterades på Nasdaq Stockholm 1993.

https://www.bure.se/om-bure/





2021-03-25

A former governor and former deputy governor of the Bank of England

Almost simultaneously publish books arguing that there is something profoundly awry with the economy as it is now

Some sections of each book read as though written by those more likely to have been marching on the streets during the Occupy movement

In What We Owe Each Other, Minouche Shafik begins by defining what she means by the social contract

Mark Carney’s Value(s)

Carney aligns himself with some authors admired by the heterodox economics community, such as Branko Milanovic, a scholar of inequality influenced by Marxism, and Hyman Minsky, the late US economist known for his theory of cyclical financial instability in capitalism.

Diane Coyle FT 25 March 2021

Diane Coyle is Bennett Professor of Public Policy at the University of Cambridge and author of ‘Markets, State and People: Economics for Public Policy’


https://www.ft.com/content/d54b4839-b66c-4237-8d1e-f1e7eb6035ab



Markets are facing a potential ‘Minsky moment’ collapse, strategist says





Can deeply indebted Britain actually afford a meaningful rise in interest rates?

This is not just a question for the UK: the same can be asked of the world economy as a whole.

Paul Krugman has been unrelenting in his derision. The lesson of the 2010/11 crisis, he notes, is “don’t panic”; there will be no return to 1970s style stagflation.

Well, maybe, but as Andy Haldane, chief economist at the Bank of England, observed in a recent speech, the chances of it are a good deal higher this time around than last. 

Starved for more than a year of the ability to spend, consumers won’t much care what it costs. They’ll pay almost anything for a pint in the pub.

Jeremy Warner Telegraph 24 March 2021


https://www.telegraph.co.uk/business/2021/03/24/britain-has-much-debt-handle-higher-interest-rates/



Lawrence Summer: “These are the least responsible fiscal-macroeconomic policy we’ve have had for the last 40 years.”

They are, at least, the most daring.

This administration wants to avoid the mistakes of the Obama era. 

But it could make opposite ones. 

Martin Wolf 23 March 2021

https://www.ft.com/content/cf2d5ad5-2b60-4398-a6d3-cbec8716d9ec







Over the long term, the twin deficits should put downward pressure on the dollar, but

Biden administration looks set to continue enjoying the dollar’s exorbitant privilege. 

FT 24 March 2021


https://www.ft.com/content/590c6ed8-5fb7-4d34-ad93-da9e66649984


2021-03-24

Snittföreningen har en belåning på 6.300 kronor per kvadratmeter

och i nyproduktionen är varje kvadratmeter belånad med 13.700 kronor. 

Det senare innebär en extra ryggsäck på 1,4 Mkr för köpare av en ny bostadsrätt på 100 kvadratmeter.


https://www.di.se/nyheter/da-blir-bolanet-50-procent-dyrare/


Biden will regret the $1.9 trillion stimulus

Households saved a good deal of their stimulus checks. Healthy corporations cut back investment and bulked up cash hoards, and weaker companies borrowed heavily to stay afloat. 

Investors hungry for yield jumped into junk bonds, and that leaves many firms—otherwise expected to travel through bankruptcy—heavily in debt but still functioning.

Mortgages became available at rock-bottom rates. Many who could work from home sought expanded living spaces, farther from commercial centers, and housing prices jumped 13% in 2020.

MarketWatch 24 March 2021


https://www.marketwatch.com/story/biden-will-regret-the-1-9-trillion-stimulus-because-it-squanders-the-money-hell-need-for-other-priorities-11616535817 


Erik Thedéen, Finansinspektionen: Risken är att en tro på att priser bara kan gå uppåt lägger grunden för en snabb och obehaglig vändning.

För att underlätta i coronakrisen har bankerna kunnat låta kunder slippa att amortera. Men trots osäkerheter rusar nu priserna på delar av bostadsmarknaden och skuldsättningen ökar.

 Det är dags att dra åt bromsen. 

DN 24 mars 2021

https://www.dn.se/debatt/dags-att-bromsa-bolanen-amorteringskrav-aterinfors/




2021-03-23

en betydande maktöverlåtelse från svenska folket till EU – utan mandat från svenska folket.

Birgitta Swedenborg m fl SvD 23 mars 2021

https://www.svd.se/ska-vi-bara-fortsatta-att-overlata-makt-till-eu


PODD | 23 mars. Skuldsättning av framtida generationer för att rädda coronakrisande EU-ekonomier. Borde Sverige säga nej?

https://www.svd.se/eus-aterhamtningspaket



A cheaper lira will mean Turkey’s banks could struggle to service foreign currency loans.

When the failures of the current approach become clear, Turkey will have few options to avoid a “hard landing”

FT Editorial 23 March 2021

https://www.ft.com/content/a3a2542f-0feb-4596-8357-30ab965697d6



Norska polistrupperr

 

The Norwegian army in Sweden during World War II - documentary

https://www.youtube.com/watch?v=jyY3dBJ_oI8


Värmland



Tegnell: Tydligt att socioekonomi spelar stor roll

DN publicerade på måndagen en unik kartläggning om vilka det är som hittills har dött i covid-19 i Sverige. Låginkomsttagare, lågutbildade och utrikesfödda från vissa länder är starkt överrepresenterade bland de avlidna. 

https://www.dn.se/sverige/unik-kartlaggning-har-ar-de-som-dott-i-covid-i-sverige/


Vi fick tidigt dessa signaler, till exempel att det var en stor dominans av utrikesfödda på Iva (intensivvården, reds anm). Det gällde framför allt personer födda i Mellanöstern och Afrikas horn.  

Den enskilt viktigaste riskfaktorn för dödlighet i covid-19 är dock ålder. Skillnaderna i risk är påtagliga. Bara en promille av de döda, 16 personer, var under 30 år. De allra flesta döda, 72 procent, finns i åldersgruppen 80 år och äldre.

– Ingen som jag har pratat med kan komma på någon sjukdom som är så extremt åldersberoende.

DN 23 mars 2031

https://www.dn.se/sverige/tegnell-tydligt-att-socioekonomi-spelar-stor-roll/


2021-03-21

John Maynard Keynes’s emphasis on the need to implement post-crisis economic policies in the right order is highly relevant.

The advisers in FDR’s “brain trust” were reformers, not Keynesians, and had a different view. 

Attributing the Great Depression to excessive corporate power, they thought that the route to recovery lay in institutional change. As a result, so-called Keynesian stimulus was a minor component of the New Deal – emergency treatment pending longer-run cures.

Robert Skidelsky March 16, 2021 Project Syndicate

https://www.project-syndicate.org/commentary/keynes-criticism-of-new-deal-relevant-to-covid19-by-robert-skidelsky-2021-03


The lessons of 1937

https://www.internetional.se/1937.htm



A second lost tourist season could result in another damaging lost decade for the likes of Spain, Italy and Portugal

Most of Italy is in lockdown again. France has imposed a disguised lockdown for another month in greater Paris, where critical care beds are saturated and the South African variant is nearing a tenth of cases. The variant is above 30pc in hotspots in western France.

AMBROSE EVANS-PRITCHARD Telegraph 19 March 2021


https://www.telegraph.co.uk/business/2021/03/19/europes-tourist-season-jeopardy-cost-vaccine-failure-keeps-rising/



2021-03-20

Why Grantham Says the Next Crash Will Rival 1929, 2000

https://www.youtube.com/watch?v=RYfmRTyl56w


Fed's Efforts to Hold Down Rates Raises Inflationary Pressures: Dalio

Stagflation

Bloomberg 20 mars 2021

https://www.youtube.com/watch?v=-wPKUoLjKLo

 

Ray Dalio, founder of Bridgewater Associates, and MMT

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


Save the last dance for me

WAITING FOR THE LAST DANCE

The Hazards of Asset Allocation in a Late-stage Major Bubble

Jeremy Grantham 5 January 2021

https://www.gmo.com/europe/research-library/waiting-for-the-last-dance/


Citigroup chairman Chuck Prince and ABBA: Dance While The Music Still Goes On

“So long as the music is playing, you’ve got to keep dancing. We’re still dancing.” 

Chuck Prince, former chairman and chief executive of Citigroup, interviewed only a month before the music stopped 2007. 

https://englundmacro.blogspot.com/2015/01/citigroup-chairman-chuck-prince-and.html


Elvis Presley Save the last dance for me

https://www.youtube.com/watch?v=SvK6rnAcNZE

Central banks’ contest with the markets

Investors are betting that loose monetary policy cannot last

At some point, the Fed may have to adjust policy to discourage market movements it does not like

FT 19 March 2021

https://www.ft.com/content/a9041dd8-9e5e-40e7-9949-0376877c15a1


The Fed has lost control of bond markets - and Europe is the victim

Ambrose Evans-Pritchard Telegraph 26 February 2021

https://englundmacro.blogspot.com/2021/02/the-fed-has-lost-control-of-bond.html








2021-03-18

Vad jag tycker om EU

Det är bra med samarbete, men det får ju finnas gränser.

I år är det exakt 50 år sedan jag skrev boken Vår framtid Europa, typ Ja till EEC. 

Det finns ingen anledning att ändra sig.

Rolf Englund 18 mars 2021

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



The Full Case Against Ultra Low and Negative Interest Rates

Yves here. This article by William White, famed for his days at the Bank of International Settlements, when along with Claudio Borio, he warned of housing bubbles forming in many economies in the early 2000s, is consistent with arguments we’ve been making against negative interest rates for many years 

(see our most recent example, Negative Interest Rates Are Coming, but There Is No Chance That They Will Work). 

March 18, 2021 by Yves Smith

https://www.nakedcapitalism.com/2021/03/the-full-case-against-ultra-low-and-negative-interest-rates.html


Why have markets reached their exposed position? The answer is that success breeds excess. 

This is the argument of a fascinating new paper from William White, economic adviser to the Bank for International Settlements.

Martin Wolf, Financial Times 24/5 2006


https://www.internetional.se/stabiliseringspolitik.htm#whiteplanb

Jerome Powell Promises Not to Take Away the Punch Bowl


If the economy turns into a giant party, the Fed is promising not to be an uptight host.

New York Times 17 March 2021


The Punch Bowl Speech: William McChesney Martin

2021-03-17

If a correction is due to higher rates and stronger growth, it would not matter much — except to investors. Wolf

We can indeed, as Grantham told the FT, observe classic symptoms of mania: the rise of amateur traders, frenzied interest in once obscure companies, soaring prices of speculative assets such as bitcoin and hot businesses like Tesla, and the emergence of special purpose acquisition companies, or Spacs. 

These are vehicles for the acquisition of unlisted companies and so a way around initial public offering rules. They are modern versions on a vastly bigger scale of the company allegedly created during the early 18th century’s South Sea bubble, “for carrying on an undertaking of great advantage, but nobody to know what it is”. 

That bubble ended badly. Will this time be different?

Martin Wolf 16 March 2021

Highly recommended

https://www.ft.com/content/a8e8475a-c808-4552-96fb-7ce5551e338e

WAITING FOR THE LAST DANCE

The Hazards of Asset Allocation in a Late-stage Major Bubble

Jeremy Grantham 5 January 2021

https://www.gmo.com/europe/research-library/waiting-for-the-last-dance/


För varje dag som går med nollränta växer problemen

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


2021-03-16

When Fed starts walking back from its extremely stimulative policies

Yet, while not impossible, top Fed officials are yet to show any inclination to contemplate this, let alone embark on it. 

This is not because they are blind to the improving economy and massive fiscal stimulus. 

It is because they are worried that a tightening of financial conditions would destabilise markets and undermine the recovery.

Mohamed El-Erian FT 16 March 2021

https://www.ft.com/content/5e31952b-2b51-4125-a182-477b445602e5


För varje dag som går med nollränta växer problemen

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


Some wonder whether there is a political element behind the decision to pause the vaccine

“At this stage, it is likely national regulators are acting conservatively and out of an abundance of caution, in the belief a risk-averse approach will help reassure the public and limit the impact on uptake going forward. But the prospect of a longer review or an outright ban cannot be ruled out,” Federico Santi, senior Europe analyst at Eurasia Group, said in a note Monday.

“Either way, the damage is done. Willingness to take the AstraZeneca vaccine had already been lower than the mRNA vaccines available in the EU due to lower headline efficacy numbers and the initial confusion over its suitability for over 65s,” he said.

Some wonder whether there is a political element behind the decision to pause the vaccine, given earlier disputes over the vaccine.


https://www.cnbc.com/2021/03/16/europes-suspension-of-astrazenecas-covid-vaccine-is-damaging.html

ECB May Give Banks More Time to Rebuild Capital After Pandemic

The ECB and other authorities have given banks unprecedented regulatory relief to ensure they can keep lending to companies hurt by lockdowns and other fallout from the health crisis. 

In a trade-off, the ECB froze dividend payments last year and capped them for much of 2021.

Bloomberg 16 March 2021


https://www.bloomberg.com/news/articles/2021-03-16/ecb-may-give-banks-more-time-to-rebuild-capital-after-pandemic



Han har arbetat med aktier sedan 1991 och konstaterar att det är väldigt sällan som det blir exakt som man tror på aktie-, ränte- eller valutamarknaden.

 

https://www.di.se/nyheter/aktiechefens-varning-da-kommer-det-att-gora-riktigt-ont/

För varje dag som går med nollränta växer problemen

Hushåll, företag och stater ökar sin skuldsättning.


Allt fler köper bostäder och aktier till stigande kurser.


Allt sämre företag kan sälja sina skräpobligationer, junk bonds.


Alla är glada. 


Happy days are here again!


https://www.youtube.com/watch?v=6h_GChgSv_A


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


Hur skall detta sluta?


Det är väl skriande uppenbart.


Det kommer att sluta illa den dag räntorna stiger.


Ju längre det dröjer, desto mer illa kommer det att sluta.


Jag hör redan hånropen skalla.


- Så har Du sagt länge, Rolf, men Du har haft fel. Vi som vet bättre har för länge sedan förstått att det är så, men vi skall hoppa av i tid. 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://www.investopedia.com/terms/g/greaterfooltheory.asp

If a correction is due to higher rates and stronger growth, it would not matter much — except to investors. 


Martin Wolf 16 March 2021

Highly recommended


https://englundmacro.blogspot.com/2021/03/if-correction-is-due-to-higher-rates.html

2021-03-15

Hundreds at central London event despite Priti Patel plea

 Hundreds of people have joined a vigil in London for Sarah Everard, despite Home Secretary Priti Patel urging against gatherings.

Earlier, the home secretary said she understood public anger over her death, but warned against protests while Covid restrictions were in place.

BBC 16 March 2021

https://www.bbc.com/news/uk-56406965


Priti Sushil Patel serving as Home Secretary since 2019 was born in London to an Ugandan-Indian family.

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

A number of countries have decided to suspend use of the Oxford-AstraZeneca vaccine as a precaution fol

https://www.bbc.com/news/health-56360646

“The only true inflation hedge are TIPS.

The downside of TIPS is that their prices are already at record highs and their real, inflation-adjusted yields at record lows. 

Those who bought into TIPS bonds during their last boom, in 2011-12, quickly saw their price collapse by about 10%, on average, when inflation worries faded.

TIPS offered a pretty good deal when their real, inflation-adjusted yield was about 2%. But today it’s either zero or negative. At this point it’s expensive insurance. The lowest price risk comes from shorter-term bonds (as usual). 

But someone buying five-year TIPS bonds is actually locking in a loss of purchasing power of about 1.7% a year between now and 2026. 

That sounds to me like a pretty lousy deal, at least unless I really am convinced inflation is about to hit.

MarketWatch 15 March 2021


https://www.marketwatch.com/story/a-worry-for-retirees-inflation-forecasts-hit-8-year-high-11615768498



2021-03-14

By targeting house prices, New Zealand shows the way

While consumer prices have been held in check by globalisation and automation, easy money pouring out of central banks has been driving up the price of assets from stocks to bonds and housing. As homes are generally not counted as consumer goods, even sharp price spikes carry relatively little weight in central bank deliberations. 

Of 502 international cities tracked by Numbeo, a research firm, prices are “unaffordable” (more than three times median family income) in more than 90 per cent.

Housing bubbles are the worst. The $220tn global housing market is more than twice the size of the global stock market and complicated by debt.

Ruchir Sharma FT 14 March 2021

The writer, Morgan Stanley Investment Management’s chief global strategist, is author of ‘The Ten Rules of Successful Nations’

https://www.ft.com/content/c8959502-7dae-43b1-b993-3bf85fb4325a


If Greenspan had raised rates because of rising inflation starting about 2003–4, there would have been no housing bubble, no subprime crisis, no overheated stock market, and no stock market crash. 

We would not have had the worst unemployment numbers since the Great Depression. 

Retirees and everyone else would have been able to earn reasonable yields on fixed income instruments.

John Mauldin 12 March 2021

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



For most people, housing is a major expense, and often the single largest one.

For most people, housing is a major expense, and often the single largest one. Hence it is rightly a big part of the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE).

The Federal Reserve favors the PCE measure, while for whatever reason, the business media seems to focus on CPI. Typically, the core CPI and PCE move more or less in tandem. But notice that both measures use housing as their biggest component.

Notice that owner’s equivalent rent (OER) in the CPI is 23.4%, but total housing costs are weighted at 42.4%. 

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. 

If Greenspan had raised rates because of rising inflation starting about 2003–4, there would have been no housing bubble, no subprime crisis, no overheated stock market, and no stock market crash. 

We would not have had the worst unemployment numbers since the Great Depression. 

Retirees and everyone else would have been able to earn reasonable yields on fixed income instruments.

John Mauldin 12 March 2021


https://www.mauldineconomics.com/frontlinethoughts/inflation-is-broken

Consumer Price Index (CPI)

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

2021-03-12

They accuse the European Central Bank of “blatant monetary financing of states” in breach of Article 123 of the Lisbon Treaty

A group of 16 economists and businessmen have finally pulled the trigger. They accuse the European Central Bank of “blatant monetary financing of states” in breach of Article 123 of the Lisbon Treaty and straying ever further into fiscal rescue missions, undermining the sacred contract agreed by the German nation when it gave up the Deutsche Mark.

“The ECB does not have a mandate to hold the eurozone together,” said the 140-page legal filing reported by Die Welt. It has a primary legal mandate to maintain price stability. 

If Germany is to take part in an EU fiscal union of shared debts this constitutional change must be validated by treaty changes.

Ambrose Evans-Pritchard Telegraph 12 March 2021


https://www.telegraph.co.uk/business/2021/03/12/lagardes-attempt-stave-global-bond-contagion-going-badly-wrong/


If Germany were suddenly to say “nein” to PSPP one or more eurozone countries could be forced to crash out of the monetary union.

https://englundmacro.blogspot.com/2020/05/if-germany-were-suddenly-to-say-nein-to.html

Behavioural finance helps explain why young investors act in unexpected ways

That is remarkable. And it underscores a second lesson from this week’s market swings — the need for investors to reread the 2011 book Thinking, Fast and Slow by the psychologist Daniel Kahneman

Gillian Tett FT 11 March 2021


https://www.ft.com/content/89c95e78-ec7f-4d06-9ea8-a9b19a5ed6da



Price growth will hot up in near term, but 1970s-style boom is unlikely

The US break-even curve, which tracks investors’ forecasts for inflation, has flipped upside down, with short-term rates eclipsing their long-term counterparts.

This previously happened on a sustained basis in 2008, during the global financial crisis. 

Powell recently argued that any jump in inflation would be “neither large nor sustained” and underscored that the economy is still a long way off from the US central bank’s goal of average 2 per cent inflation. 

FT 12 March 2021


https://www.ft.com/content/4b39a372-1924-4839-b931-c6773b251968

2021-03-11

De svåra framtidsfrågorna återkommer på dagordningen i EU

Avstampen för en framtidskonferens sker på Europadagen den 9 maj i Strasbourg. 

För att ändra i fördragen ställs krav på enhällighet, det vill säga varje medlemsland har vetorätt. Därtill kommer att förändringar måste godkännas i vart och ett av de 27 medlemsländerna, vilket öppnar för opposition i nationella parlament och kanske krav på folkomröstningar. 

Framtidsdiskussionen har historiskt sina rötter redan i förhandlingen i Maastricht (1991) då en del överblivna institutionella knäckfrågor lämnades till senare förhandlingar. Den processen kulminerade vid det katastrofala toppmötet i Nice (2000) som president Chirac ledde. Det avslutades i en motsägelsefull, oklar kompromiss som behövde rekonstrueras av experterna.

För att räta ut frågetecknen och för att förbereda EU för en stor utvidgning av medlemskretsen inkallades ett konvent som utarbetade ett förslag till ”konstitutionellt fördrag” under ledning av Valéry Giscard d’Estaing. Det förkastades i folkomröstningarna i Frankrike och Nederländerna (2005).

Tankepaus proklamerades och två år senare började en omredigering som 2009 kom att kallas Lissabonfördraget. Det antogs slutgiltigt under Fredrik Reinfeldts ordförandeskap i EU. 

Rolf Gustavsson SvD 10 mars 2021

https://www.svd.se/manga-fragetecken-kring-unionens-framtid


EUs grundlag - The Constitution

http://www.nejtillemu.com/konvent2007.htm


In 1992, the Danes voted against Maastricht; their government secured opt-outs and, in 1993, the public backed the Treaty on a second referendum.

In 2001, the Irish rejected the Nice Treaty; a year later, after caveats, they gave it the nod.

In 2005, France and the Netherlands voted down the EU constitution; the EU repackaged the constitution as the Lisbon Treaty and carried on merrily. 

The Irish said no to Lisbon in 2008 but affirmed it after a rethink in 2009.

https://englundmacro.blogspot.com/2019/04/the-night-of-referendum-as-results-came.html


Flaggan och hymnen är faktiskt inte officiella EU-symboler

När fransmän och holländare hade röstat nej till det som skulle bli en Konstitution enligt amerikansk förebild slopades flaggan och hymnen i det som i panik gjordes om till ett fördrag i Nice.

https://englundmacro.blogspot.com/2020/05/flaggan-och-hymnen-ar-faktiskt-inte.html


Robert Schuman och EU:s symboler

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

2021-03-10

”Inte ens jag själv vill läsa böcker som mina”

Är slutet nära för den litteratur vi alla har vuxit upp med – en värld med förlag, recensioner, krav på originalitet och konstnärlig frihet och oberoende?

Måns Wadensjö SvD 10 mars 2021

Detta är en understreckare

https://www.svd.se/litteraturens-slut-kan-oppna-for-nya-former

Hans tidigare artikel

https://www.svd.se/inte-ens-jag-sjalv-vill-lasa-bocker-som-mina


Happy Jankells debutroman ”Livlina” är en nästan fyrahundra sidor lång skildring av Livs problem med hälsoångest

Liv bor i Stockholms innerstad men deltar knappt i livet omkring eftersom hon oroar sig så starkt för sin hälsa. Utöver jobbet på fiket är hon mest hemma med ångesten, redo att åka till akuten. Hon kontrollerar sin fysik, hetsäter och skär sig.

SvD 10 mars 2021

https://www.svd.se/potentialen-slarvas-bort-i-jankells-debut


Retirement investing used to be easy

Save money, park it in interest-bearing instruments, and live off the income, with Social Security and maybe a job pension to help. Not complicated and it worked well for decades.

This chart shows the spread between 10-year Treasury yields and 30-year mortgage rates.

I noted last week that the long-lost “bond vigilantes” are trying to rise from the dead. 

I firmly believe that at some point the Federal Reserve will begin to buy large quantities of longer-dated securities, taking interest rates down and driving a stake into the heart of those who want higher returns for the risks they are taking. 

That point is likely when the market drops (say) 20%. Until then they just let things rock along. The Federal Reserve is going to give us return-free risk.

I reviewed stock valuations in more detail a few weeks ago (see here) and everything I said then still applies. Anyone who owns passive index funds will endure a major drawdown at some point. 

I can’t say exactly when but it’s going to hurt.

John Mauldin 5 March 2021

Nice, sort of, pic of  Fed Chair Jerome Powell

https://www.mauldineconomics.com/frontlinethoughts/everything-is-broken

President Biden’s gamble is based on Franklin’s Roosevelt’s war economy from 1941-1945, not the New Deal of the 1930s.

The idea is that if you “push down on the economic accelerator” you discover hidden slack. Added demand creates its own added supply.

Even Olivier Blanchard, the high priest of stimulus, is choking on the numbers. He warns of a ‘nonlinear’ effect where inflation suddenly breaks out, akin to the late 1960s.

Roosevelt’s military-industrial expansion tightened the labour market and lifted wages, leading to the most dramatic fall in income inequality in US history. It ushered in the ‘social democrat’ era of the American Dream. It is this that Mr Biden aims to replicate. 

The twin effect of a rising dollar and rising US rates is to drain global dollar liquidity. This has systemic consequences in a world where offshore dollar debt has reached $12 trillion and trade invoicing is still done mostly in US currency. The IFF warns of another ‘taper tantrum’ akin to the global sell-off in 2013 unless bond yields stabilise soon.

It is our budget deficit but your problem.

Ambrose Evans-Pritchard Telegraph 10 March 2021



”Det som satte stopp för trettiotalsdepressionen i USA var ett massivt underskottsfinansierat program för offentliga arbeten som kallas andra världskriget”. 
Carl Johan Gardell, Understreckare SvD 13 augusti 2009





Carmen Reinhart and Kenneth Rogoff

Their research provided the main intellectual underpinnings of the austerity policies that followed and are now widely thought to have done more harm than good. 

Following the coronavirus pandemic, policy makers are leaning hard on the work of Olivier Blanchard and Lawrence Summers, who have argued that low interest rates increase the scope for fiscal policy and larger deficits can actually help solve our economic woes. Their theory helped inspire Joe Biden’s $1.9 trillion stimulus package for the US economy.  

This week Blanchard tweeted that Biden’s plan reminded him of the snake that swallowed an elephant in Le Petit Prince by /French aristocrat, writer, and aviator/ de Saint-Exupéry. “The snake was too ambitious,” wrote the former chief economist of the IMF. “The elephant will pass, but maybe with some damage.”

Ben Wright Telegraph 10 March 2021


https://www.telegraph.co.uk/business/2021/03/10/crack-dam-holding-back-next-economic-crisis/

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

Between 11 January 1973 and 6 December 1974, Dow Jones lost over 45% of its value.

 

https://www.internetional.se/marketoracle1800.htm



A comeback in inflation is no less likely because it has been absent for the past 30 years

Fed has signalled it will tolerate an overshoot of the target for a period of time to compensate for persistently low inflation.

The risk, as I see it, is that inflation could overshoot the overshoot levels the Fed is comfortable with.

To date, US households have lost $490bn in income but have received $1.3tn in transfers. The total amount of transfers will undoubtedly rise with the passage of the next fiscal stimulus package.

Chetan Ahya FT 10 March 2021

The writer is chief economist at Morgan Stanley


https://www.ft.com/content/e8d6b6e6-1f19-473e-a1c5-fbe077615e0f




It has fallen to our generation to take responsibility for the planet and here is how to do it, Wolf

In a fascinating recent lecture on “Techno-optimism, behaviour change and planetary boundaries”, the British economist Lord Adair Turner tackles head on the question of how best to manage the challenges. 

http://www.kwaku.org.uk/Documents/Techno%20optimism%20behaviour%20change%20and%20planetary%20boundaries%20Nov%202020.pdf

In brief, the physics of the energy transition is simple. The difficulty is shortage of time. 

We need to make large progress towards lower emissions over the next decade.

Martin Wolf FT 9 March 2021

https://www.ft.com/content/a3285adf-6c5f-4ce4-b055-e85f39ff2988




2021-03-09

Det är inte när alla ser framför sig jordens undergång som fallet inleds

Det händer dagen efter midsommar när allt är toppen, men inte riktig lika ljust som dagen innan. 

Henrik Mitelman DI 8 mars 2021


https://www.di.se/analys/se-upp-for-rodljuset-som-hotar-borsfesten/

Bond sell-off is a foretaste of things to come

Government debt simply cannot provide the kind of safe harbour it once did

In short, stronger economic growth sparked by unprecedented stimulus or the return of inflation, will eventually lead to a pullback in liquidity support from central banks. 

Thushka Maharaj FT 9 March 2021

The writer is global multi-asset strategist at JPMorgan Asset Management


https://www.ft.com/content/c1e55398-2cbc-4172-86e3-bc53047f192d


US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

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

2021-03-08

I would like to come back as the bond market. You can intimidate everybody

For a long time, the joke did not appear to be ageing well. Bond markets were not intimidating anybody as central banks mopped up huge amounts of debt and investors fell over themselves to lend to governments – sometimes even at negative rates.

But all this has now changed. 

In many ways, the puzzle is not that bond yields should recently have risen but rather that they should have stayed so low for so long. In the whole history of bond markets over hundreds of years, there has been no precedent for yields being this low.

Median maturity of all government debt is set to be less than one year by March 2022.

Roger Bootle Telegraph 7 March 2021

https://www.telegraph.co.uk/business/2021/03/07/surging-bond-yields-threaten-cause-sleepless-nights-treasury/

Feldt: Hade vi låtit kronan flyta redan 1985 hade allt gått mycket bättre. Det är jag övertygad om.

 – Misstaget var löftet att aldrig mer devalvera. 

Hade vi låtit kronan flyta redan 1985 hade allt gått mycket bättre. Det är jag övertygad om.

Kjell-Olof Feldt, SvD 28 oktober 2017

Hos IntCom

https://www.internetional.se/98fltala.htm


– Misstaget var löftet att aldrig mer devalvera. Hade vi låtit kronan flyta redan 1985 hade allt gått mycket bättre. Det är jag övertygad om.

Det glada 80-talet slutade i ett klart dystrare 90-tal. Kraschen blev brutal.

SvD 28 oktober 2017

https://www.svd.se/s-legendaren-borgerlig-majoritet-efter-valet

2021-03-07

On Thursday August 9 2007, financial markets suddenly seized up.

Since I was running the Financial Times markets team, I spent two days frantically trying to identify the reason for the panic. Nobody knew. But that weekend I suddenly woke in the middle of the night with an image of a Spanish bin in my head.

A month earlier I had attended a credit conference in Barcelona, where I read brochures about a little-known, and supposedly safe, entity known as a “structured investment vehicle”. 

The material had seemed achingly dull. So on the way home I tossed the papers into an airport bin — and forgot it. 

But, somehow, my subconscious knew that had been a mistake. So I awoke and went online to uncover what I had left in that bin.

Gillian Tett FT 10 August 2017

https://www.ft.com/content/a859449e-7daf-11e7-ab01-a13271d1ee9c


Gillian Tett: Have we learnt the lessons of the financial crisis? 

FT 2018-09-01


https://englundmacro.blogspot.com/2018/09/gillian-tett-have-we-learnt-lessons-of.html


Frozen withdrawals in 2007 and 2015






2021-03-06

Nigel Farage quits politics

The former leader of the UK Independence Party and the Brexit Party, credited even by his sharpest critics as the most influential politician of the past two decades, has finally quit politics. 

Telegraph 6 March 2021


https://www.telegraph.co.uk/politics/2021/03/06/exclusive-nigel-farage-quits-politics-time-means/




Is Inflation Alive?

Inflation in most rich countries has been low since the 1990s, not least because of central banks’ success in lowering long-term inflation expectations. But 

https://www.project-syndicate.org/bigpicture/is-inflation-alive


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

https://englundmacro.blogspot.com/2021/03/amid-wide-range-of-options-inflation.html

2021-03-05

“Bonds are not the place to be these days,” Warren Buffett

Allowing the bond market to take some air out of ebullient valuations in equities and housing through higher 10-year rates is an appropriate policy approach given how far asset prices have risen and when economic growth is picking up. 

The US 10-year currently remains below the 1.80 per cent level seen before the arrival of the pandemic. Arguably, that looks low because the current macro outlook is the reverse of the slowdown that was evident in early 2020.


Michael Mackenzie FT 5 March 2021


https://www.ft.com/content/893d652f-36cb-4993-bfea-0ab936bed7df

Fastighetsbolagen har gått in i en ny fas efter det gyllene årtiondet

https://www.di.se/analys/ny-fas-efter-corona-slut-pa-det-gyllene-artiondet/

The stock market remains far from “crash” territory

As anyone with a working memory of last March’s pandemic-inspired selloff, much less the global financial crisis of 2008, the dot-com bubble burst in 2000 or October 1987 would recall.

Last year as it became apparent the COVID-19 pandemic would bring the U.S. and global economy to a near halt. The S&P 500 plunged from a record close on Feb. 19, dropping around 34% before bottoming on March 23.

Since those March lows, the S&P 500 remains up nearly 72%, while the Dow has rallied nearly 70%. And even with its recent pullback, the Nasdaq remains up more than 90% over that stretch.

MarketWatch 4 March 2021


https://www.marketwatch.com/story/stock-market-crash-no-but-a-rotation-away-from-u-s-tech-stocks-is-shaking-up-some-investors-11614888386


The $21tn US Treasuries sector

In March 2020, as Covid-19 hit the west, Treasury prices went haywire as market liquidity collapsed. 

That was shocking in a sector that is normally “the largest and most liquid government securities market in the world”, according to the Federal Reserve.

Fed officials eventually unblocked the market with unprecedented interventions

Last week, the markets started to gyrate alarmingly again amid inflation concerns

Gillian Tett FT 4 March 2021


https://www.ft.com/content/375e447e-4d69-4817-b00c-a472b06ec3f3


Liquidity is in the world’s biggest bond market, except when you really need it

https://englundmacro.blogspot.com/2021/03/iquidity-is-in-worlds-biggest-bond.html

2021-03-03

Liquidity is in the world’s biggest bond market, except when you really need it

Bond traders have been saying for years that liquidity is there in the world’s biggest bond market, except when you really need it.

Last week’s startling gyrations in U.S. Treasury yields may offer fresh backing for that mantra, and prompt another bout of soul-searching in a $21 trillion market that forms the bedrock of global finance.

Bloomberg 2 March 2021


https://www.bloomberg.com/news/articles/2021-03-02/a-21-trillion-treasuries-mystery-is-bedeviling-global-markets

Många trodde bostadspriserna skulle falla när pandemin bröt ut, men

Låga räntor och stor efterfrågan har istället lett till nya rekordnivåer. Vad får det för konsekvenser och hur länge kan det fortsätta så här? 

I studion riksbankschefen Stefan Ingves, Cecilia Hermansson, forskare i finansiell ekonomi vid KTH och Shoka Årman, privatekonom på SPP.

SvT 1 mars 2021


https://www.svtplay.se/video/30288014/ekonomibyran/ekonomibyran-sasong-3-avsnitt-7?start=auto


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

The rationale for inflation targeting has three components. 

The first is that one instrument — in this case, monetary policy — can only be aimed at one goal. 

The second is that a central bank can only target a nominal goal of some kind. 

The third is that inflation is a comprehensible and politically acceptable aim.


There are at least four strong objections to targeting asset prices.

It is possible that an exceptional crisis, such as the pandemic, will generate policy mistakes, including unexpectedly high inflation. Andy Haldane, the Bank of England’s chief economist, has stressed just this risk in a thought-provoking recent speech.

Martin Wolf FT 1 March 2021


https://www.ft.com/content/160db526-5e8d-4152-b711-21501a7fbd01



Andy Haldane recent speech.

https://www.bankofengland.co.uk/-/media/boe/files/speech/2021/february/inflation-a-tiger-by-the-tail-speech-by-andy-haldane.pdf


Inflation targeting has been successful because it managed to anchor expectations — until it did not.

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


 Did inflation targeting fail?  

Martin Wolf, Financial Times, May 5 2009

https://www.internetional.se/taylor.html#wolfomtaylormaj09






2021-03-01

The Looming Test for Central Bank Independence

The Accord itself — admirably short — was published for the morning papers on Sunday, March 4, 1951:

The Treasury and the Federal Reserve System have reached full accord with respect to debt management and monetary policies to be pursued in furthering their common purpose to assure the successful financing of the Government's requirements and, at the same time, to minimize monetization of the public debt.  


The striking difference between then and now is that the pressure to keep rates low is coming from central banks themselves. Guided by the belief that any bad news requires a monetary response, central banks today are assuring financial markets that rates will be low for a long time, with some engaging in “yield curve control” to explicitly cap rates farther along the yield curve. They’re expanding the money supply rapidly at the same time as governments are running large budget deficits.

It’s surprising that officials do not see inflation even as a risk. 

Mervyn King Bloomberg 1 March 2021 


https://www.bloomberg.com/opinion/articles/2021-03-01/mervyn-king-on-powell-yellen-and-central-bank-independence



Mervyn King's analysis of the “Great Stagnation”


https://englundmacro.blogspot.com/2019/10/mervyn-kings-analysis-of-great.html