Leta i den här bloggen


Politicians let people buy more stuff. But that can’t be the offer any more

 Politicians are sticking to their traditional promise: annual rises in gross domestic product that let people buy more stuff. But that can’t be the offer any more. Making and consuming stuff heats the planet.

Shorter hours certainly wouldn’t work for poor countries, but then they produce relatively low emissions per capita anyway.



There are parliaments, national assemblies and senates which won't back what their prime minister or president might want. There are electorates who might just punish the politician who pushes for measures that might threaten their jobs, or increase fuel prices.


Developing nations say rich countries wrecked the planet as they industrialized, and it’s now unfair they’re thwarting others’ economic progress -- and failing to provide enough cash to help poor countries adjust. 



“There’s a whole series of bubbles going on right now,” Richard Bernstein - Prices, Wages Rise at Fastest Pace in Decades

He speculates a meltdown could resemble the tech bubble. It took 14 years for the Nasdaq 100 to break even if you invested in it on Dec. 31, 1999, he noted.

Bernstein warned rising home prices were starting to make the mid-2000s housing bubble seem rather mild.


U.S. Prices, Wages Rise at Fastest Pace in Decades

WSJ 29 October 2021


Nice, sort of, video about supply problems.

A carbon price should be top of the wish list at the climate talks

 A $50-a-tonne carbon price (ie, tax) at an identified future date. It comes from a coalition of some of the world’s biggest banks, asset managers and insurance companies, known as the Sustainable Markets Initiative.

The message is that the best way to change behaviour to save the planet is to change relative prices. 

Gillian Tett FT 28 October 2021


 We need a carbon tax now 

 Collectively we make many billions of decisions every day about what to buy, how to travel and where to set the thermostat. We cannot be expected to do so with Berners-Lee at hand.

The brilliance of a carbon tax is that we would not have to.

Tim Harford FT  29 October 2021


Analysts, economists and other forecasters are no better at predicting inflation than at predicting anything else

They stink at it. As then-chairman of the Federal Reserve Alan Greenspan noted in 1999, estimates of future inflation—including those by the Fed itself—“have been generally off,” and even changes in inflation that were “doggedly forecast” never occurred.

Several tech giants, including Apple Inc., Facebook Inc. (soon to be “Meta”) and Google’s parent Alphabet Inc., are priced at roughly the same multiples of their current earnings as the S&P 500 overall.

You can also add TIPS, or Treasury inflation-protected securities. Even though they aren’t cheap, they still offer protection against unexpected jumps in consumer prices down the road.

WSJ 29 October 2021


investors added a record $6 billion to Treasury-inflation-protected-securities ETFs in October

Inflation-linked bond funds see their stock rise
Concerns over steeply rising prices are fuelling flows into ETFs that can offer protection

Unusual Moves Happening in Bond Markets

At some point this week, the world’s interest rate traders collectively woke up and decided to price in a massive tightening of monetary policy around the globe, leading to some very dramatic and at times strange moves in the bond market.

Central banks now face a challenge as bond markets foreshadow one of the starkest hiking cycles in recent history, with everything from German bunds to Brazilian bonds, British gilts and U.S  Treasuries  pricing in more imminent increases to benchmark rates.

Bloomberg 29 October 2021


A logjam of container ships, at top, wait to offload at the Port of Los Angeles in September



China’s eco-warrior Xi Jinping keep building coal plants

 As Zhejiang party chief 20 years ago he wrote a weekly newspaper column noted for denouncing ecological degradation, and for warning that China’s “energy-intensive and high-polluting” economic model was unsustainable. 

The Himalayas and Tibet - Asia’s "water tower'" - are heating twice as fast as the global mean. A report by the China Meteorological Administration in August said glacier loss has already reached 15pc. 

This is likely to accelerate and destabilize the great river systems that have fed China through history

Ambrose Evans-Pritchard Telegraph 28 October 2021


Carry Trade Biggest Returns Since 2016

 borrowing in nations where interest rates are still low and investing in those where yields are higher.

 “Carry works in a benign, low volatility environment -- which is what we have had with all the central bank stimulus in place.” 

Bloomberg 29 oktober 2021 


Carry Trade at IntCom



Dags att diskutera euron igen, tycker Svenskt Näringsliv

 Segrarna i folkomröstningen har från tid till annan förnumstigt kunnat yttra fraser som, vad var det vi sa, så fort något problem har visat sig i EU.

Det första att ta till sig och som få svenskar tänker på, är att euron har klarat sig bättre än förväntat. 

Teoretiskt hade det så klart varit bättre om euron redan från början hade kombinerats med finanspolitiska mekanismer eller att länder med svaga ekonomier inte hade släppts in för tidigt.


Kommentar RE: Att det inte gjordes berodde på att det då var omöjligt.

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



Kalkylen har dessutom förändrats när det gäller de asymmetriska kriserna. Dessa trodde man på 1990-talet var en naturlag för ett land som Sverige med sin annorlunda näringslivsstruktur. Men de ekonomiska kriser som Sverige de facto har upplevt, har inte varit asymmetriska utan snarare symmetriska.

Om vi fortsätter att sända signalen att vi inte vill delta fullt ut riskerar vi att få mindre inflytande.  En sådan utveckling är inte ofarlig och kan bli ett självspelande piano. 

Jonas Frycklund tillförordnad chefekonom, Svenskt Näringsliv, SvD 28 oktober 2021


Jonas Frycklund och Svenskt Näringsliv 2003 hos nejtillemu.com


Dags för en förnyad debatt om ett svenskt deltagande i euro­samarbetet

Sven Hegelund, tidigare stats­sekreterare i finans­departementet under regeringen Persson

SvD 15 september 2021


Euron kan inte kan införas utan en ny folkomröstning

Nils Lundgren  21 oktober 2021



Pledges of “net zero” thirty years from now are too easy. Wolf

 It is necessary to cut emissions by close to 40 per cent by 2030, instead. The curve of emissions must be bent downwards now. That is economically and technologically feasible, albeit hard. 

Ten years hence, it will be too late to avoid irreversible damage 

Martin Wolf FT 26 October 2021


 So, what must be done? The Energy Transitions Commission’s Keeping 1.5°C Alive: Closing the Gap in the 2020s, published last month, addressed this question. It recommended a six-point plan that should provide the benchmark for discussions in Glasgow.

The idea of timing a bubble is seductive, but it’s close to impossible in practice

 Why people stay in bubbles. They think they are going to be the ones to get out at the right time.

Value managers who stuck to their guns in the late 1990s had often lost their jobs by the time the bubble burst. Even if you know you’re in a bubble, the conventional wisdom goes, it’s best to stay with the herd. 

John Authers Bloomberg 27 October 2021


Hushållens bostadslån uppgick i september till totalt 3 824 miljarder kronor

en ökning med 26 miljarder jämfört med månaden före och 

en ökning med 240 miljarder jämfört med motsvarande månad i fjol.

TT 27 oktober 2021


Port System Collapse

 City  Prepping Youtube 25 October 2021


 America’s woefully inefficient ports.

Ships idling off the coast, waiting to offload goods, have become an icon of paralysis.

Unions representing longshoremen have been remarkably effective in advancing their members’ interests — the average wage is $182,000 a year for dockworkers at West Coast ports

Bloomberg Editorial 26 October 2021


Why the S&P 500 could continue climbing into year's end, eclipsing its 21% rally so far in 2021

 S&P 500 SPX  has more than doubled since the worst of last year’s pandemic-induced meltdown, signifying a 104.1% gain from its bear-market low of 2,237.40 set on March 23, 2020.

MarketWatch 25 October 2021


Before the 1986 act, the S&Ls were the primary source of loan capital for local property owners...

 developers and builders. After 1986, 747 institutions with assets of more than $394 billion (about $1 trillion in today’s dollars) collapsed into the federal Resolution Trust Corp. 

When the S&Ls failed, community-based lending and much of the local home-building industry vanished. The fallout was ultimately felt up and down Main Street during the recession of 1990-91.

 Wall Street was the big winner, filling the void left by the S&Ls with commercial mortgage-backed securities, or CMBS. Today, most commercial and multifamily real-estate funding is done by CMBS loans. All major financial institutions—including banks, insurance companies and pension funds—participate heavily in CMBS markets. Consequently, we are all in this together. 

When the CMBS market collapsed in 2008, it plunged the global economy into the Great Recession. Taxpayers funded huge bailouts.

 Without tax incentives, real estate can’t compete with other investments for essential capital. Currently, real-estate professionals get depreciation deductions against taxable income, and long-term capital-gains rates when they sell. 

WSJ 25 October 2021


The Savings and Loans Bailout


Over the past 20 years major financial disruptions have taken place roughly every three years Financial crises differ in detail but, just as there are plot cycles common to literary tragedies, they follow a common arc.

Lawrence Summers, Financial Times August 27 2007



No one is forecasting a U.S. recession — or was, until now. David “Danny” Blanchflower

 Plunging consumer confidence in the future. It’s called the six last recessions, the Dartmouth professor and former Bank of England policy maker warns in a new paper.

MarketWatch Oct. 23, 2021


in a new paper


Bondholders Risk $2.6 Trillion Hit on Even a Modest Yield Rise

It’s a result of investors’ exposure to duration, a key gauge of risk for bondholders that’s near record highs.

Even a half-percentage point jump in yields from here, to roughly the pre-pandemic average in 2019, would be enough to ravage funds of all stripes.

It’s a threat with implications across asset classes, from emerging markets to high-flying tech shares.

Bloomberg 23 October 2021


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.




Many assume increasing the throughput of the supply chain to meet overstimulated demand over the short term is doable

Last week I wrote about the growing Logistical Sandpiles problem. It shows no sign of improvement. That’s not good, but I think this situation is also a clue to our deeper problems. 

But if the problem is the supply chain is at capacity now, expanding will be hard/impossible over the next several months.

My friend Jim Bianco explained what is happening in a magnificent Twitter thread you should read. I’ll excerpt his key points and charts.

John Mauldin 22 October 2021

Shortages throughout the supply chains on which corporate America depends are translating into widespread inflationary pressure  

FT 23 October 2021

Poland must make a fundamental choice between being part of a state-in-the-making and secession

Ursula von der Leyen. “It is a direct challenge to the unity of the European legal order.”

In a sense, she is right. The primacy of EU law is what turns a club of nations into a superstate. Take it away, and the EU becomes just one more international association like Nato, ASEAN or the Council of Europe.

Why, you might ask, did the member countries agree to this surrender? The answer is that they didn’t – at least, not until very recently. The primacy of EU law is not to be found anywhere in the Treaty of Rome. 

It was invented, rather, by the European Court of Justice (ECJ) in a series of controversial rulings which even committed federalists now admit amounted to a power-grab. In particular, two landmark cases in the 1960s – Van Gend en Loos and Costa vs ENEL – established that EU rulings were directly binding upon individuals and businesses within the member states, knocking aside any national legal acts that might contradict them.

For a long time, this blatant judicial activism went unacknowledged in the treaties. It was only in 2009, in a declaration attached to the Lisbon Treaty, that the member governments retroactively acknowledged the supremacy of EU law “in accordance with well settled case law of the ECJ”.

Daniel Hannan Telegraph 23 October 2021


"We must recover our legal sovereignty,” Michel Barnier told a rally last week.

 “We should no longer be subject to rulings by the European Court of Justice or the European Court of Human Rights!”

Daniel Hannan,  September 12th, 2021



Merkel warns of ‘spiral’ in Brussels’ conflict with Poland

 “You can’t resolve big political differences through court cases,” she said.

Merkel sought to deflect criticism from Poland, saying the rule of law conflict went to the heart of a much broader debate within Europe over “what should be in the EU’s competence and what in the competence of nation states”.

FT 22 October 2021


The EU has been warned not to delay the next phase of global banking rules,

as draft plans show that Brussels is suggesting giving European banks a two-year extension to an internationally agreed deadline.

Carolyn Rogers, secretary-general of the Basel Committee for Banking Supervision, said the new rules were “a really important final chapter” in the overhaul of capital regulations known as Basel III. 

They had to be implemented “consistently and as soon as possible”, she told the Financial Times.

A delay would be welcomed by banks in countries such as France

FT 24 October 2021



Václav Klaus Institute on Commissioner Leyen's attacks on Poland

 When democracy in Europe, or rather in the European Union, is under threat, it is necessary for European democrats to protest loudly. What is at stake today is not insignificant. 

In her speech in the European Parliament on October 19, Mrs Leyen declared that the recent ruling by the Polish Constitutional Court challenging the supremacy of EU laws “calls into question the foundations of the European Union”. 

According to Leyen, it is her “Commission's duty to protect the rights of EU citizens” and therefore “the Commission will act.” That is an unprecedented statement.

Poland did not break free from the Soviet rule to lose its sovereignty again, this time under seemingly democratic setting. The Polish Constitutional Court was aware of this, and that is what its ruling was about. It is the duty of us the Czechs, in our own interest, to support the Poles in this matter.

Shortly before Mrs Leyen’s outburst, Václav Klaus sent a letter to Jaroslaw Kaczyński in which he personally endorsed the Polish position.

Václav Klaus Institute, October 19th, 2021


De statliga garantierna för lånen till Saab personbilar kostade 2,2 miljarder

 (exklusive räntekostnader). 

Lotta Engzell-Larsson DI 23 oktober 2021


Det var pinsamt att höra Maud Olofsson berätta om vilka bra säkerheter som Spyker hade ställt gentemot staten. När det nya företaget går i konkurs kommer nog dessa säkerheter att visa sig värdelösa.

Englund blogg 2010-01-29



Germany's Inflation Dilemma Is a Threat to Europe

As tighter fiscal policy that would be workable in Germany would be unfeasible in countries like Italy that have amassed much more debt, an unduly orthodox finance minister could reignite the euro zone’s sovereign debt crisis.

As Tooze says:  Europe’s recovery is still fragile. Europe’s debts are higher than before. The politics of eurozone governance is as unresolved as ever.

John Authers Bloomberg 22 oktober 2021


The future of Europe is at stake in the fight for Germany’s finance ministry

A fiscal conservative in the job and a new era of debt limitation could spell disaster for EU countries

In Merkel’s governments between 2009 and 2017, the post of finance minister was held by Wolfgang Schäuble. He became notorious as the pacemaker of the eurozone crisis. His constant demands for austerity put debtor countries under huge pressure. At the climax of the crisis, in 2015, he went so far as to suggest that Greece take a “time out” from euro membership. 

Schäuble is a conviction politician. For him the rule of law – including European treaties and fiscal rules – is the embodiment of Europe’s highest ideals, the greatest achievement of western civilisation.

Adam Tooze The Guardian 20 October 2021


Adam Tooze is the author of Shutdown: How Covid Shook the World’s Economy



Euron kan inte kan införas utan en ny folkomröstning

Som vi alla vet, vill en stor del av den svenska politiska eliten byta den svenska kronan mot euron så snart som möjligt, medan bara omkring 20 procent av det svenska folket stöder tanken. 

Men Brexit och USA:s upptagenhet med Kinas växande makt kommer nu att föra upp eurofrågan på bordet i Sverige.

Den ekonomiska analysen när vi förhandlade om EU-medlemskap 1993–1994 var att kostnaden för att kalkylera, växla och ta växelkursrisker på grund av olika valutor var låg. 

Däremot var kostnaden hög för anpassning till ekonomiska kriser om man inte har en egen valuta och en självständig penningpolitik. Att behålla kronan sågs som en billig försäkring mot risken för stora kostnader i ekonomiska kriser.

Nejsidan vann en övertygande seger, 56 procent mot 42 för jasidan, trots jasidans överväldigande ekonomiska och politiska resurser. Valdeltagandet var mycket högt. Detta betyder att euron inte kan införas utan en ny folkomröstning. 

Nils Lundgren 21 oktober 2021


Kommentar RE:

Den svenska utrikespolitikens eviga fråga: Skall vi följa England eller skall vi följa Tyskland.

Så länge vi står utanför euron kan vi lämna EU om vi vill.

Om vi inför euron blir vi som Grekland. ECB kan då se till att pengarna i bankomaterna tar slut om vi inte lyder Bryssel.

 "ever closer union" - The United States of Europe


Everything Is Awesome — Except in China

 Bitcoin is at another all-time high as it continues to head for the moon. The Dow Jones Industrial Average hit a record, while many more useful indexes of American stocks came close to peaks....  with the second-largest economy entering its worst slowdown in a generation.

John Authers Bloomberg 21 oktober 2021 


 Shares in China Evergrande fell sharply as the company’s stock resumed trading on Thursday after the Chinese real estate developer disclosed that a plan to sell its property services division had collapsed.

Evergrande’s Hong Kong-listed stock fell as much as 13.6 per cent after the end of the two-week suspension

FT 21 October 2021

The pain is spreading in the market for Chinese junk bonds

Real-estate developers dominate China’s international high-yield bond market, making up about 80% of its total $197 billion of debt outstanding, according to Goldman Sachs.

WSJ 21 October 2021


Evergrande said a potential sale had collapsed...

 deepening the pressure on the group that has just days to avoid an official default on its debt.

 FT 20 October 2021


Credit Suisse, once the top international underwriter of Evergrande bonds, sold down its entire exposure to the troubled Chinese property developer late last year



China Evergrande Calls Off Plans to Sell Key Unit for $2.6 Billion

WSJ 20 October 2021

Den krisdrabbade kinesiska fastighetsutvecklaren Evergrande har ansökt om att handeln i  bolagets aktie ska återupptas på Hongkongbörsen i morgon den 21 oktober klockan 09.00 lokal tid.

Where to hide if the world goes into recession

Covid monetary and fiscal stimulus is being withdrawn just as the global economy slows.  

Nomura calls it China’s “Volcker Moment”, a deliberate purging of rampant excesses that can no longer be delayed.

... the greater danger ahead is “Japanification” and a relapse into secular stagnation may win the next round. 

We know in hindsight that the US economy went into recession in November 2007 almost a year before the collapse of Lehman Brothers, but the Federal Reserve had no idea at the time.

Shiller price/earnings ratio on Wall Street currently at a record 38 times. The pre-Lehman peak in late 2007 was 27. 

... stick to the classic: three-month US Treasuries. This is where Warren Buffett has parked $113bn, waiting to pounce after an equity correction. The dollar always spikes in a big global sell-off. 

Ambrose Evans-Pritchard Telegraph 19 October 2021


TINA appears to have morphed into TINA RIF (There Is No Alternative — Resistance Is Futile)

 Fund managers’ equity allocations are higher than they were during the dot-com boom, even as economic growth fades.

TINA (There Is No Alternative — to stocks), appears to have morphed into her fearsome sister TINA RIF (There Is No Alternative — Resistance Is Futile). 

With yields low and inflation on the horizon, bonds are regarded as unbuyable.

John Authers Bloomberg 20 oktober 2021


SEB kommer även att köpa tillbaka egna aktier för 2,5 miljarder kronor


SEB kommer även att köpa tillbaka egna aktier för 2,5 miljarder kronor. 

DI 20 oktober 2021



EU is withholding 36 billion euros of Polish stimulus funds

Morawiecki defended the ruling saying that Poland is ready for a dialog on the rule of law. But he warned that the country wants its sovereignty respected and financial coercion would backfire and undermine the entire EU. 

“I won’t agree to politicians trying to blackmail and threaten Poland so that the blackmail becomes the way of conducting politics against any member states.”

Bloomberg 19 October 2021


Poland Just Raised a Question the European Union Must Answer


The European Commission has produced a clip for the 20th anniversary of the fall of communism, but it forgot to mention that it all started in Poland. “Solidarity”, Lech Walesa and the events of 1989 are completely absent.

The rare shots from Poland show general Jaruzelski, who introduced martial law in 1981.


Vietnam, Poland, Mexico, Morocco and Indonesia 

are benefiting from the reshuffling of supply chains in response to US-China tensions.



California Has Driest Year Since 1924

 Gov. Gavin Newsom has asked Californians to cut their water use by 15% in light of the conditions. 

The state is home to about 70,000 farms and ranches, with a combined output of about $50 billion a year. 


40 Million People Rely on the Colorado River. It’s Drying Up Fast


Greta Thunberg singing, dancing and Rickrolling the climate

BBC 16 October 2021


We know which side will win in the end, because vested interest is slowly shifting towards the ever-larger renewable sector, and because inertia over time loses ground to the movements that keep growing. 

But we don’t know if that win will come in time to matter. 


The Dawn of Everything: A New History of Humanity by David Graeber and David Wengrow

 Still, the question the authors repeatedly ask, but never quite get round to answering is, how then did we become “stuck” in a system of hierarchies and conspicuous inequalities of power and consumption? 


Flaskhalsarna hamnarna. Miljölagar gjorde det olagligt för ca 50% av de tillgängliga lastbilarna att transportera gods genom Kalifornien


Supply chain chaos is already hitting global growth. And it’s about to get worse

CNBC OCT 18 2021


Ratings agencies issued a fresh round of downgrades on Chinese property firms

Sinic Holdings warned last week it’s not likely to repay offshore bonds worth $250 million.

China Properties Group, said it had defaulted on $226 million worth of notes.

CNBC 18 October 2021


China risks making ‘big mistakes’ with widespread crackdown, says Raghuram Rajan,  ex-IMF chief economist

CNBC 15 October 2021


The marvelously complex division of labor among millions of people around the world

 The ongoing, intensifying supply chain... The problem is complex systems are inherently fragile. 

The optimization that makes them cost-effective also removes the redundancies that make them resilient.

Things can fall apart quickly when some unforeseen event occurs. Or an unforeseen sequence of events, which is what’s happened.

Everything works until suddenly it doesn’t

John Maulding 15 October 2021


Bank of America debt security now stands at nearly $970bn

 The biggest US banks highlighting the debate on Wall Street over the direction of interest rates.

 JPMorgan Chase is more inclined to park deposits at the Federal Reserve than buy potentially overpriced Treasuries    

 Lending out the money would be their preferred option. But loan growth has been sluggish as companies have found ample liquidity in the bond markets and consumers have paid down debts on credit cards.

 If rates move higher, Treasuries could fall out of favour with the banks, creating a negative feedback loop in the markets.

FT 16 October 2021



Lagos is poised to become the world’s biggest city

 A Week in the World’s Most Chaotic City

Unending traffic jams, incessant noise and a population of over 20 million people: Lagos is a city on the brink of insanity. 

Der Spiegel 30 September 2021



One of the greatest mysteries confronting the markets is the obdurate persistence of low real bond yields Authers Plender

 (obdurate: stubbornly persistent in wrongdoing)

In the case of 10-year TIPS yields for the U.S., they have managed to fall once again below the once-inconceivable minus-1% level. Yields like that are not supposed to happen, and certainly not when the economy is growing and people are worried about inflation. 

Biden’s political difficulties have multiplied with startling speed. 

That leads to the risk that it waits too long to raise rates, allows inflation to take hold, and has to raise rates more in consequence. That is the kind of miserable prospect that might make it sensible to accept a negative real yield. 

Can I summarize all of this neatly? No, not really. A few decades from now, it will be obvious what was going on as the world tried to emerge from the pandemic. At present, all that is clear is that things are changing profoundly.

Q: What’s the difference between a Bond and a bond trader?

A: A Bond matures.

James Bond has a license to kill, so does the long bond

John Authers Bloomberg 15 October 2021

IMF says that there is significant uncertainty about the effect of normalisation on asset prices

In its latest Global Financial Stability Report.

The central bankers know this ... there could be a behavioural bias towards caution and delay in tightening. 

Yet investors’ deep seated conviction that monetary authorities will always come to the rescue if markets tank suggests that weakness in bond and equity prices will not turn into a rout just yet. 

John Plender 15 October 2021



The search for a congruent euro area policy mix


Marco Buti, Marcello Messori 13 October 2021


Stupiditetspaktens död

Viktor Munkhammar DI 6 maj 2021


Gravitas Plus: The Supply chain crisis

 Gravitas Plus: The Supply chain crisis

10 okt. 2021


From Shenzhen to Los Angeles, storms, Covid and labour shortages are causing disruption


The Washington Consensus is on its way out

Having narrowly avoided a global economic collapse twice – first in 2008 and then in 2020, when the coronavirus crisis nearly brought down the financial system – the world now confronts a future of unprecedented risk, uncertainty, turmoil, and climate breakdown. 

The alternative is the recently proposed “Cornwall Consensus.”

Mariana Mazzucato Project Syndicate 13 October 2021


What is the “Washington Consensus? Did it fail?


Samuelson and Friedman — two giants of postwar economics

Nicholas Wapshott’s book, Samuelson Friedman: The Battle Over the Free Market.

Friedman’s victory was ambiguous. Though Paul Volcker’s interest rate hike in 1979 put a stop to inflation in the US, Friedman disowned the experiment. The shock therapy that Volcker administered was not monetarism as Friedman envisioned it. 

To mark Friedman’s 90th birthday in 2002, Ben Bernanke paid tribute to him and Schwartz. Referring to the Fed’s baneful role in the Great Depression, he remarked: “You’re right. We did it. We’re very sorry. But thanks to you, we won’t do it again.”

In 2008 Bernanke and his colleagues let Lehman Brothers fail. The result was to drive the world to the brink of the greatest financial crisis since the 1930s.

Adam Tooze FT 14 October 2021


Kaletsky menar att det var Paul Volcker som ledde återgången till "demand management".


Lehman Brothers at IntCom


Martin Wolf: John Maynard Keynes and Milton Friedman, today’s policy orthodoxies are a synthesis of their two approaches.


Milton Friedman's Cherished Theory - The permanent income hypothesis - Is Laid to Rest Noah Smith



Today’s central bankers are flying blind in one important respect:

they have forsaken the tools of interest-rate targeting for a balance-sheet approach to monetary policy supported by a breathtaking quantitative easing. 

Therein lies a serious risk that was not present in the 1970s. Central bankers haven’t a clue about the links between their asset holdings and the forces of supply and demand that are currently wreaking havoc on inflation.

 I was part of the staff involved in that regrettable exercise to create the first measure of core inflation, on the team that developed new metrics and wrote brilliant reports that no one ever read.

Aaggregate demand is likely to be far less sensitive to central bank balance sheet adjustments than to the real cost of money, and monetary policy actions have a long lag time.

Inflation is unlikely to peak soon.  And it will take far more monetary tightening than financial markets are expecting to avoid stagflation 2.0.

Stephen Roach  FT 13 October 2021

A return to 1970s stagflation is only a broken supply chain away

Stephen Roach FT 6 May 2020

Fed Is Behind the Curve on Countering Runaway Inflation Risks, Summers Says

MarketWatch Oct. 12, 2021 


Slammed by losses tied to bad mortgages and other distressed holdings in 2008, it required more U.S. taxpayer support than any other bank in the financial crisis. 

In 2009 its stock price dipped below $1. 

Even now, the shares trade 86% lower than 15 years ago.


Citigroup, the nation's third-largest bank by assets, was on the verge of being closed by regulators the week of Nov. 24, 2008


Chuck Prince, a former head of Citigroup, who was asked why the bank was still lending in mid-2007, just before the financial crisis.

“As long as the music is playing, you’ve got to get up and dance,” he said.


The crypto-currency market is double the size of the sub-prime debt in the U.S. on the eve of the financial crisis...

and poses a threat unless urgently regulated, the Bank of England said.

Crypto assets are now worth $2.3 trillion, about 200% more than at the start of the year. While that’s still a small part of the $250 trillion global financial system, it’s about twice the size of the $1.2 trillion sub-prime real estate debt market in 2008.


Jemima Kelly, Cryptocurrencies and all that (Bitcoins, Tulips, South Sea Company)


The Biden administration lacks a coherent China policy

Peter Morici MarketWatch Oct. 13, 2021 


Deadly poker game over Taiwan


When it comes to the big turning points, the IMF almost invariably fails to see them and therefore gets it disastrously wrong.

 This is what the WEO says about the outlook for inflation: “We project, amid high uncertainty, that headline inflation will likely return to pre-pandemic levels by mid-2022 for the group of advanced economies and emerging and developing economies.” 

That’s certainly what policymakers are hoping for. But for many countries, including our own, it’s looking increasingly at odds with the evidence.

Jeremy Warner Telegraph 13 October 2021


“the end to 60/40”

 Bank of America Corp. called it “the end to 60/40” while Goldman Sachs Group Inc. said losses from such portfolios could swell to 10%. 

Similar alarms also rang at Deutsche Bank AG, where strategists including Jim Reid said a shift in the stock-bond relationship may force money managers to adjust their thinking.

...  if so a lot of the relationships that have prevailed in the average person’s investment career could change.” 

IEA Warns World Isn’t Investing Enough

 investment in green energy like solar and wind is falling short of what’s needed to keep the planet from warming up significantly.

At the same time, spending on fossil fuels is lower than needed if current demand growth for oil, natural gas and coal continues. 

global emissions are on track to post their second-largest annual increase in 2021, nearing an all-time high.


IEA warns clean-energy spending must triple to curb climate change

 even if all governments’ current net zero pledges were implemented in full and on time, the world would only achieve 20 per cent of the emissions cuts by 2030 needed to keep the goal of net zero emissions by 2050 a possibility.


Three weeks after Evergrande Group began failing to make scheduled payments on its debt...

 prompting a one-off shock to U.S. equity prices, there is no obvious reason to feel any more relaxed about the situation. 

The Chinese real estate sector itself is selling off ever more aggressively, and its descent has only accelerated this month. 

Survey shows the proportion of small businesses preparing to raise prices in the next three months at its highest in more than four decades. It has only once been higher, amid the oil crisis of 1979

John Authers Bloomberg 13 oktober 2021 



Fed Won’t Rush to Stock Market’s Rescue This Time

 After six consecutive quarters of gains that has been driven by generous monetary and fiscal support, momentum has been fading for U.S. and European equities in recent weeks. 

The S&P 500 Index is down almost 4% from its record high reached last month, as surging inflation, tapering fears, an energy crisis and slowdown concerns have weighed on the sentiment. 

Bloomberg 12 October 2021


Asset valuations are elevated, Bank of England says P/E


Poland Just Raised a Question the European Union Must Answer

Forces the bloc to decide whether it wants to be a federation or just a club.

Brussels, obviously, cannot let this stand. That situation would overturn the EU’s presumed vertical hierarchy, in which the European Court, based in Luxembourg, sits atop the 27-member nations’ high courts the same way the U.S. Supreme Court has primacy over state courts. 

The EU tried to adopt a constitution once, but in 2005 French and Dutch voters rejected it in referendums. In its absence, the bloc continues to rely on treaties among the member states.

But those are clearer on the European Court’s horizontal supremacy — its power to review the law coming out of other pan-European institutions — and rather vague on its vertical authority vis-a-vis national courts. 

Another constitutional convention would revive the idea of “ever closer union,” which implies a sovereign European state as the ultimate destination. 

Europe’s leaders and citizens may regard that as unrealistic or even undesirable. It could, in time, lead other nations to follow the British example and exit. If so, the EU should at least admit that a federation is no longer the goal.

Andreas Kluth Bloomberg 12 oktober 2021


EU’s draft constitution, produced by a convention that he chaired, was voted down by his fellow French citizens and by the Dutch before its reforms finally found a home in the Lisbon treaty of 2009. 

The referendum defeats in 2005 shook the entire Union and exposed the gap between the people and the Brussels elite.

FT 3 December 2020



Deadly poker game over Taiwan

 Would the US go to war to prevent that happening? The short answer is that no one really knows. 

Not the military planners in Washington and Beijing, whose job it is to draw up elaborate plans for conflict over Taiwan. Nor, possibly, even America’s commander-in-chief, Joe Biden. 

So much would depend on the nature of the attack — and the domestic and international political situation at the time.

As the Cuba missile crisis of 1962 and the 1914 July crisis in Europe both demonstrated, world-shaking decisions about war and peace, are often made in a surprisingly haphazard fashion under the pressure of fast-changing events.

Gideon Rachman FT October 2021


 One-China policy


Biden must therefore make it crystal clear to Xi that the US would mobilize its own military resources to defend Taiwan. But will he? 


Britain is instrumental in the worldwide concealment of cash and assets

And some tax havens are closer to home than many would imagine.

Nicholas Shaxson the author of “Treasure Islands,” a book about tax havens, and “The Finance Curse,” about oversize global finance.

NYT 11 October 2021


What the heck is happening in the Cayman Islands?

Almost 20 per cent of banks’ cross-border dollar funding is now supplied by entities based in the Cayman Islands

Gillian Tett 10 October 2019


China - The final stage of one of the largest real-estate booms in history

More than $5 trillion in debt

WSJ 10 October 2021




Evergrande is the first domino of something worse

Domino 2: Companies Similar to Evergrande. 

A significant number of companies are borrowing above 20% rates and can no longer fund from the dollar funding market. 

These companies can either default, they can try to sell assets, they can go to government banks to borrow money (but this route is currently closed until January) or they can go to the government. Today there are 35 “significant” companies, as per the strategist’s definition, and 13 are saying in the dollar funding market that they should not be refinanced. 

This is like the sub-prime equivalent; one has gone down, and the others are feeling the knock-on effect. These companies are 12.5% of the current market cap of the property sector. The amount of market cap that has been lost is $250 billion and including Evergrande is $500 billion to give some scale of numbers.  

Domino 3: Minsheng Bank. 

In 2008, Bear Stearns imploded due to subprime debt. 

Citigroup is watching Minsheng Bank, which has lost over half of its market cap over the last few months. It is currently modelling a 20% probability of default. It could create contagion effects within the banking system.  

Domino 4: Small Banks. There are numerous banks in China that are very similar to Northern Rock.

Domino 5: Ping An. This is a private insurer with a lot of problems. 

Domino 6: The Equity Market. There are $300 billion worth of margin loans. 

Domino 7: Big Banks


Domino 10: The Crisis Goes Global.

This is an extreme scenario which the authors don’t believe will happen. It would not be in Beijing’s interest to let events progress that far. But it’s also unclear at what point the Chinese government would intervene.

John Mauldin 8 October 2021



Fredrik Johansson: Euron – för Sveriges skull

Ett reellt skäl till att Sverige inte skulle införa den gemensamma valutan 1999 var bristen på folkligt stöd

Opinionsläget bedömdes vara så ogynnsamt att det inte var politiskt legitimt att den folkvalda riksdagen fattade beslut om att införa euron. 

Det formella skälet var att Sverige inte uppfyllde de så kallade konvergenskriterierna

1. Brexit förskjuter maktförhållandena och Sverige kan inte längre förlita sig på att ha en tung aktör utanför eurozonen som bromsar när utvecklingen går mot också våra intressen. 

2. Det europeiska samarbetet utvecklar sig på viktiga punkter på tvärs mot svenska intressen.

Vi kommer behöva engagera oss djupare för att det är avgörande för Sverige. Att införa euron är en del av det och därmed ett hårt svenskt realpolitiskt intresse. 

Fredrik Johansson SvD 9 oktober 2021


- Vi är väldigt glada över att Fredrik har valt att ansluta till Hallvarsson & Halvarsson 

säger Anna Grönlund Krantz, vd. I det svårtolkade politiska landskap som våra kunder verkar i behövs kombinationen av vassa analyser och förmågan att kunna navigera rätt och där blir Fredrik ett värdefullt tillskott för våra kunder.


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.


Dags för en förnyad debatt om ett svenskt deltagande i euro­samarbetet

 Det är hög tid att bestämma sig för vilken roll Sverige ska ha i Europa.

Sven Hegelund, tidigare stats­sekreterare i finans­departementet (1999–2002, under regeringen Persson), författare till den nyutkomna boken ”Intressanta tider. Ekonomi och geopolitik i det 21:a århundradet”

SvD 15 september 2021


Göran Persson som idag är konsult på kommunikationsbolaget JKL, var för ett svenskt inträde i eurosamarbetet vid folkomröstningen 2003, och han tror fortfarande att det är dithän vi är på väg.



And then there is the renewed threat of stagflation

The threat of global contagion from the troubled Chinese property developer Evergrande is far from negligible. For good measure the ebb and flow of news on the pandemic continues to be alarmingly unpredictable. And then there is the renewed threat of stagflation.

Power outages, supply chain disruption, shortages in the shops, soaring energy prices, labour shortages, accumulating debt — the bad news piles up.

The difficulty amid all these uncertainties is to understand precisely where we are in a cycle that has been hijacked by Covid-19... What is confusing now is that inflationary pressure is arising much earlier than usual in an upturn.

John Plender FT 7 October 2021

1997 Clinton-Jiang Summit and U.S.-China Joint Statement

 October 29, 1997

China stresses that the Taiwan question is the most important and sensitive central question in China-U.S. relations, and that the proper handling of this question in strict compliance with the principles set forth in the three China-U.S. joint communiques holds the key to sound and stable growth of China-U.S. relations. The United States reiterates that it adheres to its "one China" policy and the principles set forth in the three U.S.-China joint communiques.

1997 Summit and the State Department on the "Three Noes"148

October 31, 1997

We certainly made clear that we have a one-China policy; that we don't support a one-China, one-Taiwan policy. We don't support a two-China policy. We don't support Taiwan independence, and we don't support Taiwanese membership in organizations that require you to be a member state. We certainly made that very clear to the Chinese.



The ‘Orient Express’ is a real train

 $2,300 for a one-night trip. That’s the starting rate to go from Florence to Paris aboard the Venice Simplon-Orient-Express, a historic luxury train operated by the LVMH-owned Belmond travel brand. 

Other routes cost more — much more.

In the 1970s, American James Sherwood, Belmond’s founder, bought several dilapidated carriages at an auction. By 1982, he had located — and restored to their former grandeur — enough original carriages to form the Venice Simplon-Orient Express that still operates today.

CNBC 7 October 2021


Global supply-chain bottlenecks are feeding on one another...

 with shortages of components and surging prices of critical raw materials squeezing manufacturers around the world.

The supply shocks are already showing signs of choking off the recovery in some regions.

Meanwhile, global labor shortages, often the result of people leaving the workforce during the pandemic, are throwing further obstacles in the way of producers.

WSJ 8 October 2021


“Hiking  will reduce demand a little bit and strengthen the currency. But it will have no impact on supply chain issues [ . . .] it won’t bring back lorry drivers.”

FT 30 September 2021


Nice pic of shipping containers and container ships are seen at the ports of Long Beach and Los Angeles last week.

MarketWatch 29 September 2021

Nearly 80,000 shipping containers are stacked in various configurations at the Port of Savannah — 50 percent more than usual.

NYT 10 October 2021

Asset valuations are elevated, Bank of England says P/E

As of the end of September, U.S. companies are trading on a price-to-earnings ratio for next year of 20.6, compared to just 11.8 for the U.K., according to Citi. Globally, developed markets are trading at 18.3 times next year’s earnings, according to Citi.

The Bank of England said asset valuations could correct sharply if market participants re-evlauate the prospect for growth, inflation of interest rates. The Bank of England added that risks in leveraged loan markets are continuing to build globally.

MarketWatch Oct. 8, 2021 


Financial Policy Summary and Record - October 2021

Bank of England 8 October 2021


Laurent Binet’s counter-history “Civilizations”

The half-sister of Leif Erikson leaves Greenland for the North American shores known as Vinland. 

Quickly befriending and mixing with the coastal indigenous tribes Freydis Eriksdottir and her entourage pass on to the native peoples an invaluable source of knowledge: the method of extracting iron from peat.

Christopher Columbus upon landing is met by an organized Taíno military armed with axes and iron-tipped spears. Naked, ailing and housed in the Cuban royal court as a kind of jester Columbus perishes.

Arriving in a wondrous city called Lisbon, the Incas find the population shell-shocked by an earthquake, and, more generally, demoralized by the effects of never-ending warfare against Muslims, Jews, the French and the continent’s many factions of Protestants—all of whom prove to be biddable allies against a common oppressor, the Holy Roman Emperor Charles V....

WSJ  Sept. 17, 2021 


Virtual History: Alternatives And Counterfactuals

by Niall Ferguson


List of alternate history fiction


The books discussed here each use history to examine the conundrum of debt as both a necessity and a potential problem

In 1931: Debt, Crisis, and the Rise of Hitler, economic historian Tobias Straumann of the University of Zurich offers an impressive, fast-paced narrative account of the crucial phase in Germany’s Great Depression, underscoring the point about consensus and the politics of debt

Breaking with what has become conventional wisdom, Straumann does not see the politicians of the Depression era – particularly Heinrich Brüning, known as the “Hunger Chancellor” – as having made bad choices in pushing austerity when they did. 

The burden of external debt (in the form of war reparations) played a critical role in creating these political conditions. As Straumann shows, it was Adolf Hitler’s campaign against a new reparations program (the 1929 Young Plan) that brought the National Socialists back from the political wilderness. 

 Adam Tooze, who has also written extensively on Germany and the interwar failures, has produced a genuinely global narrative chronicle of the explosion of central bank-financed debt in response to the COVID-19 pandemic.

His approach in Shutdown reprises that of Crashed, his 2018 account of the 2008 financial crisis; but, for obvious reasons, the new book lands in the middle of the events it examines, like a history of WWI written in 1915.

Tooze’s basic framework is borrowed from a schema outlined by Chen Yixin, the secretary-general of the Communist Party of China’s Central Political and Legal Affairs Commission. 

MMT is applicable only in countries that have full monetary sovereignty

Markus Brunnermeier’s The Resilient Society explicitly asks how long the apparent free lunch of low-to-zero-cost debt can continue. 

As OECD Chief Economist Laurence Boone warns, “it’s not free money forever.” In a striking passage, Brunnermeier suggests that government debt is not just financial rocket fuel, as Tooze has it, but also “essentially a bubble,” a Ponzi scheme.

Ludger Schuknecht’s Public Spending and the Role of the State offers valuable historical lessons   He argues that a low-interest-rate environment may obscure the necessity of choosing how and how much to invest in the future. 

In the moral view, public debt is bad, as it represents a burden that current generations pass on to the unborn. In the high-minded political view, debt in democracies is good, because it creates solidarity. And in the low-minded political view, it is good because it wins elections and brings other rewards.

Harold James Project Syndicate 8 October 2021


Tooze’s implication is clear: The West has no systematic ability to prevent or effectively fight large-scale crises. Our political systems are broken by cultural division and, in Tooze’s view, hamstrung by outmoded economic principles.


Between 1930 and 1932, in the middle of the Great Depression, Brüning cut spending, increased taxes and rolled back the social safety net.


The Young Plan


What We Owe Each Other


Twentysomethings With Fat Checkbooks Join the SPAC Rush

Growing numbers of young people are raising funds for SPAC deals in a challenge to financial vets. The trajectory of blank-check companies is shaping up to be a classic feeding frenzy—they've morphed in just a couple of years from a niche product aimed at pros into a mass-market phenomenon.

SPACs raise funds from investors to make an unspecified acquisition, though they’ll sometimes declare a theme such as health care, technology, or Asia. After a SPAC begins trading, its promoters scour the globe for a good company to buy. The two sides negotiate a deal and merge, effectively offering the target a shortcut to going public—and a rich reward for the SPAC’s founders. 



The warning signs are already apparent in today’s high price-to-earnings ratios, low equity risk premia, inflated housing and tech assets, and the irrational exuberance surrounding special purpose acquisition companies (SPACs)

Nouriel Roubini Project Syndicate 30 June 2021


US Trade dream


Back when offshoring production by Corporate America to cheap countries was hailed as good for the overall economy, rather than just good for Corporate America, any fears about potentially exploding trade deficits were papered over with visions of the new American Dream: 

America was great at producing and selling high-value services – the financialization of everything, movies, software, business services, IT services, etc. Exports of these high-value services would make up for the imports of cheap goods. 

And trade would balance out.


By Wolf Richter. Originally published at Wolf Street


RE: It is disturbing that the only time US had a near zero deficit was in 1992 and the dollar was low against the swedish krona.


Nu står kronan i 8.78. Det var när dollarn sjunkit från 9:40 till 5:30 som Carl Bildt m fl till varje pris ville försvara kronkursen

Dollarn skulle inte kosta mer än 5:30, tyckte Bildt, med flera.