Leta i den här bloggen


Mervyn King: the eurozone is doomed

The eurozone is doomed to fail and will lurch from crisis to crisis unless it is broken up, according to the former governor of the Bank of England.

Telegraph 29 Febr 2016

Finlands ekonomi växer igen, utropar Sveriges Radio

Men i texten ser man att Finlands BNP växte med totalt 0,4 procent under 2015.

Noll komma fyra procent under hela året.

- För den som inte har arbete ser det fortfarande mörkt ut då arbetslösheten och i synnerhet långtidsarbetslösheten i Finland har fortsatt stiga kraftigt.

- I år väntas många söka sig utomlands för att jobba, främst till Sverige, men även till länderna i Baltikum.

Att man skulle få söka arbeta i Estland om man införde euron var väl inte något som Ja-sidan talade om på sin tid.

Sveriges Radio 29 febr 2016

Kan det vara barkborren?

U.S. home prices have exceeded their 2005 peak, Tyler Cowen


Stockman:There is no hope for the future of capitalist prosperity and a free society at home and world peace abroad unless the Republican Party is destroyed

There is no longer a Republican Party rooted in the main street highways and byways of America. What’s left of it is not really even the xenophobic, nativist, crypto-racist flotsam and jetsam of the populist right that Trump is successfully calling to political arms.

The fact is, the GOP has mutated into the Warfare State party.

Whenever its pro forma rhetoric about small government and fiscal prudence becomes inconvenient to the needs of the military/industrial/surveillance complex or the fund-raising requirements of its special interest rackets, the GOP’s putative conservative economics platform quickly becomes “inoperative” in the Nixonian vernacular.

David Stockman 27 Febr 2016

Keynes invented macroeconomics – the theory of output as a whole, Skidelsky

Keynes’s second major legacy is the notion that governments can and should prevent depressions. 

Milton Friedman reasserted the pre-Keynesian view of how market economies work. 

Inflation, Friedman said, resulted from attempts by Keynesian governments to force down 
unemployment below its “natural” rate. 

An even bigger shock to the pre-2008 orthodoxy than the collapse itself was the revelation of the corrupt power of the financial system and the extent to which post-crash governments had allowed their policies to be scripted by the bankers. 

Robert Skidelsky, Project Syndicate 23 Febr 2016

This graph shows the U.S. trade deficit, with and without petroleum


World economy stands on the cusp of another crash, warns Lord Mervyn King.

Since the crisis, low interest rates have fuelled asset prices and a desperate search for yield, leaving central banks trapped “in a prisoner’s dilemma” unable to raise rates for fear of slowing growth and causing another downturn.
However, short-term measures to maintain market confidence in the aftermath of the crisis has only perpetuated the underlying disequilibrium, Lord King argues.

Telegraph 26 Febr 2016

The bloody history of civil war in the Tory party and The 1990 Tory coup against Margaret Thatcher

That the Conservative party believes as much in the strong state as it does in the free economy has long been both its triumph and its tragedy

In the run-up to the 1992 general election, Sir John returned to a hero’s welcome after supposedly winning “game, set and match” in the negotiations over the Maastricht treaty. 

But when the UK’s ignominious post-election exit from the European exchange rate mechanism Tories who insisted that Thatcher had been stabbed in the back by a cabal of Europhile colleagues were no longer dismissed as embittered obsessives.

Tim Bale, Financial Times 26 Febr 2016

The writer is the author of ‘The Conservative Party: From Thatcher to Cameron


The 1990 Tory coup against Margaret Thatcher 

After a series of fervid meetings and maneuvers while she was away, the members of her own party brought her down. 

She came back from Paris (the Paris Summit was the peace conference of the Cold War) betrayed and red around the eyes.

But she still had to lead a Question Time in the House of Commons, speaking for a government she no longer headed. It was a triumph. She dominated the hall, crushed the hecklers and rose magnificently above her own misery. 

The men who destroyed her leapt to their feet and roared

David Brooks, New York Times, April 8, 2013

Mrs. T:

"The greatest issue in the election - indeed the greatest issue before our country - is whether Britain is to remain a free independent nation state or whether we are to be dissolved in a federal Europe," she said.

"To surrender the pound, to surrender our power of self-government would betray all the past generations down the ages that lived and died to defend it.


Yves here. It’s astonishing to see Germany take active steps to wreck the Eurozone. ‘eurozone finance ministry’

By Thomas Fazi. Originally published at Social Europe
In recent weeks, Germany has put forward two proposals for the ‘future viability’ of the EMU that, if approved, would radically alter the nature of the currency union. For the worse.
The first proposal, already at the centre of high-level intergovernmental discussions, comes from the German Council of Economic Experts, the country’s most influential economic advisory group (sometimes referred to as the ‘five wise men’). It has the backing of the Bundesbank, of the German finance minister Wolfgang Schäuble and, it would appear, even of Mario Draghi.
 The second proposal, initially put forward by Schäuble and fellow high-ranking member of the CDU party Karl Lamers and revived in recent weeks by the governors of the German and French central banks, Jens Weidmann (Bundesbank) and François Villeroy de Galhau (Banque de France), calls for the creation of a ‘eurozone finance ministry’, in connection with an ‘independent fiscal council’.

All political debates, including whether or not we should belong to the European Union, can ultimately be traced to a profound and historic disagreement over human nature.

Half the world believes that human beings are inherently good and benign 

The other half is convinced that people, including those in a position of authority, are unavoidably self-interested and fallible, and that power should therefore be constrained and divided to reduce the chance of a catastrophic failure. 

I’m a paid-up member of this second category, and that, dear reader, is why I want the UK to leave the European Union.

 Allister Heath, Telegraph 24 Feb 2016

Göran Persson: ”Jag ser en monumental risk för en mycket stor påfrestning mot euron.”

Det stora hotet mot EU är inte ett brittiskt utträde, utan att vi är på väg in en ny finanskris utan att euron är säkrad.

Grunden till nästa finanskris har enligt Göran Persson till stor del lagts genom den mycket expansiva penningpolitiken runt om i världen, med centralbankernas extremt låga räntor och kvantitativa lättnader, och tillståndet i världsekonomin är skört.

Göran Persson, DI 26 febr 2016

FT: The G20 governments should look towards boosting fiscal stimulus

The precarious state of the global economy

- The G20 governments should look towards boosting fiscal stimulus

Financial Times editorial, February 25, 2016 

- Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken.

Det skrev jag på min blogg första gången den 5 december 2009.

Nu skriver jag det igen.


Ingen fara - fattas bara

Citi: Here Comes a Global Recession

"In our view, global growth is at a highly precarious point, after 2-3 years of relative calm," the team of economists led by Willem Buiter said in their note, which is likely to exacerbate concerns about the world's ability to withstand a pause in China's stunning economic growth.

Bloomberg February 25, 2016 


Chuck Prince, the former chairman and chief executive of Citigroup.

Mr Prince’s remark: “As long as the music is playing, you’ve got to get up and dance.” 

Note that he did not say “if” the music stops but “when”. 

John Gapper, FT November 14 2007

Satyajit Das: The mispricing of assets across world markets has reached epidemic proportions.

The major driver of stock prices is liquidity, in the form of zero interest rates and quantitative easing.

U.S. stock buybacks have reached 2007 levels and are running at around $500 billion annually

Satyajit Das, MarketWatch Feb 25, 2016

"We interrupt regular programming to announce that the United States of America has defaulted …" 

Satyajit Das Eurointelligence 23.07.2008


Stockman: The only beneficiaries of overnight money at 38 bps are Wall Street carry trade gamblers

and they would be just as grateful for an announced peg at 12 bps or 100 bps or even 250 bps. 

The only thing they really care about is short-run certainty about the cost of carrying their gambling chips—-something the Fed’s peg unfailingly provides. 

From the perspective of the main street economy, however, the whole federal funds targeting gambit is a thoroughly pointless farce.


David Stockman at IntCom

Carry Trade



How Italy will fail and drag down the European Project

Italy will drag the whole structure down if it continues on its current trajectory, and there is nothing to suggest it will change course.


Martin Wolf: Helicopter drops might not be far away

More recently, this is the policy foreseen by Ray Dalio, founder of Bridgewater, a hedge fund. 

Also the recommendation of Adair Turner, former chairman of the Financial Services Authority, in his book Between Debt and the Devil.

 Martin Wolf, FT 23 Febr 2016

After years of record low interest rates, central banks may resort to just dumping cash out of helicopters, Lynn

Zero interest rates are not doing enough to stimulate flagging economies, while negative rates, by destroying the profitability of the banking system, may well do more harm than good. 

Matthew Lynn, Telegraph 22 Feb 2016

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

Om EU och dess utveckling mot en ny stat, 

Neues Deutschland skulle man kunna kalla den, 

vacklar fortfarande den svenska statsledningen.

- They are not more European than we are. They are just more federal; Mrs. Thatcher

I fully support the firm stand that my right hon. Friend [ Douglas Hurd] the Foreign Secretary and my right hon. Friend [ John Major] the Prime Minister have taken against any commitment to a federal Europe.

I would hope that most people in the House were against a federal Europe; otherwise, what is the point of people standing as candidates at the next election—to come back here and propose to hand over all their powers as representatives of constituents to another Parliament?

The second point—[Hon. Members: "The second point."] Thank you very much. The second point is that we should not let those who support a federal Europe pretend that they are somehow more European than the rest of us. They are not; they are just more federal. 

There is nothing specifically European about a federal structure—indeed, the opposite: it is the nation state which is European.




“too big to fail”

 We all know what the new rule book says; that when one of the world’s largest banks becomes close to going bust, then it is up to all of its debt and equity holders to pay for the rescue. That bit is clear. 

But financial history is littered with examples of rule books being ignored in the teeth of a crisis.

Simon Samuels, FT 22 Febr 2016


Boris Johnson: There is only one way to get the change we want – vote to leave the EU

Democracy matters; and I find it deeply worrying that the Greeks are effectively being told what to do with their budgets and public spending, in spite of huge suffering among the population. 

And now the EU wants to go further. There is a document floating around Brussels called “The Five Presidents Report”, in which the leaders of the various EU institutions map out ways to save the euro. 

It all involves more integration: a social union, a political union, a budgetary union. 

At a time when Brussels should be devolving power, it is hauling more and more towards the centre, and there is no way that Britain can be unaffected.

Boris Johnson, Telegraph, 22 Febr 2016

Treaty of Rome clearly stipulates that its signatories are "determined to lay the foundations of an ever closer union among the peoples of Europe."

The way forward looks daunting to many people.

But those who think that way don't know, or have simply forgotten, the history of enormous political difficulties and economic sacrifices the founding members have overcome on the long way from a largely improvised customs union to a single market and a common currency.

It, therefore, seems that what the euro area members have to do now is relatively easy, because most of the required political and economic concessions – i.e., de facto sovereignty transfers - have already been made, and most of the institutions they need are there.

Dr. Michael Ivanovitch, CNBC 22 Febr 2016

Dr. Michael Ivanovitch served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia Business School.

Germany’s capital spending clinging stubbornly to a five-year low

Investment as a share of German GDP fell to less than 20 percent last year from about 23 percent at the turn of the century.

Private investment slid to 11.5 percent from 13.4 percent.

Bloomberg, February 22, 2016

Secular Stagnation

Stockman: Keynesian academics and apparatchiks have justified the lunacy of unending ZIRP and massive QE

For several years now the small coterie of Keynesian academics and apparatchiks who have seized nearly absolute financial power through the Fed’s printing presses have justified the lunacy of unending ZIRP and massive QE on the grounds that there is too little inflation.

 In fact, the whole cockamamie theory was explained in an obscure book called “Inflation Targeting” issued in November 1998 by Bernanke and two other academic power grabbers: 
Frederic Mishkin, who later was appointed to the Fed and became a principle proponent of the Wall Street bailouts in 2008; 
and Adam Posen, an academic (well)stuffed shirt who peddled the same nonsense at the Bank of England and has been an incessant voice urging the BOJ to print more and still more money.

You can look it up. The book stands at #2,503,823 on Amazon’s sales ranking!

David Stockman, February 20, 2016

Keynes at IntCom

Stagflation and Secular Stagnation

Back then, a 37% and 49% decline in equity prices wasn’t called a crash but instead a bear market. 
Don't expect a crash — expect a continued bleed. 

L.A. Little, MarketWatch Feb 21, 2016


David Cameron's EU deal: what he wanted and what he got

Ever-closer union

What Cameron wanted: a declaration that the treaty motto of “ever closer union among the peoples of Europe” did not apply to the UK. EU leaders had already agreed a special formula of wording in June 2014 that not all member states were on the road to integration, but Cameron wanted something stronger.

What he’s got: Much more emphatic language, stressing that the UK is not on the road to deeper integration. “It is recognised that the United Kingdom ... is not committed to further political integration in the European Union ... References to ever-closer union do not apply to the United Kingdom.”


What he got

A win for Mr Cameron who has convinced EU leaders that the EU treaties, when they are next opened, will include a new reference to make it clear that the words “ever closer union do not apply to the United Kingdom”.

Mr Cameron confirmed that he would lead the fight for Britain to stay in “a reformed EU” in a referendum expected on June 23.

The Deal

- The dogs are barking, but the caravan is moving on, lär Helmut Kohl ha sagt.


"The caravan of Germany moves on, even if the dogs are barking."



Must read 19 Febr 2016

It’s different this time

If fiscal and monetary policy is supposed to be the last defence against market worries, then it’s not ideal when the market’s biggest worries are inspired by fiscal and monetary policy.

Ben Wright, Telegraph 18 Feb 2016

 The Koch Brothers
Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right

BBC om EU Referendum

Soon Cameron will come out with a paper and say: This means peace in our time.

Does the treaty vow commit governments to build a United States of Europe, as the Union's federalist host Belgium hopes and eurosceptic Britons fear? Or is it just an abstract political aspiration,

"Every lawyer in Europe agrees 'ever closer union' doesn't mean anything. It's just a nice phrase," said one EU official. 

But fear of what it means about EU power has made it a British political reality.



Madrid to seek emergency talks with Brussels on day one, FT

No other country in the eurozone has strayed further off course than Spain — a fiscal failure that has darkened the country’s image as the bloc’s economic comeback kid.



IMF wants “structural reforms”

Higher investment, loose monetary policy and structural reforms would all be needed to boost the recovery and ward off the financial stability risks "plaguing" the economy, IMF said.


OECD Chief Economist Catherine L. Mann was explicit: “A stronger collective policy approach is urgently needed, focusing on a greater use of fiscal and pro-growth structural policies, to strengthen growth and reduce financial risks.”

The OECD proposes “changing the policy mix” — a key phrase meaning less austerity and more spending. 

“The focus should be on policies with strong short-run benefits and that also contribute to long-term growth. A commitment to raising public investment would boost demand and help support future growth,” Mann said.

Whenever they run out of things to say, today’s central bankers refer to “structural reforms”, although they never say what precisely such reforms would achieve. 


Negative interest rates set stage for next crisis, Stephen Roach says

In what could well be a final act of desperation, central banks are abdicating effective control of the economies they have been entrusted to manage. 
First came zero interest rates, then quantitative easing, and now negative interest rates — one futile attempt begetting another.
Just as the first two gambits failed to gain meaningful economic traction in chronically weak recoveries, the shift to negative rates will only compound the risks of financial instability and set the stage for the next crisis.

Must read 18 Febr 2016

How to fix the Eurozone: 
Views of leading economists, VOX

EU Summit
Europe’s standard operating procedure for dealing with difficult problems — to delay action — won’t work this time around either. 
The clock has run down. The refugees won’t wait. Nor will the Brits.


After a decade at the helm of Europe’s dominant country, the chancellor best known for weighing her actions and words is getting testy as she struggles to win allies to help ease the refugee burden on Germany and ensure her own political survival. 

The upshot is she’s rarely looked so lonely as she returns to Brussels for a European Union summit Thursday.


Economics 101
Without theory, data is very hard to interpret  
without data, theories can’t be verified, falsified or even effectively modified


Low for Long? 
Causes and Consequences of Persistently Low Interest Rates


Central banks: Negative thinking

Deutsche Bank strategists have compared the policy to weapons of mass destruction, escalating a currency war that will only bring “mutually assured destruction”, and said central banks need to find a “better bazooka”.



Must read 17 Febr 2016

Martin Wolf

Banks are still the weak links in the economic chain

Why have the prices of bank shares fallen so sharply?

Central banks face credibility test


S=I But why?

Savings is larger than Investments, ex ante.

So we have ZIRP and NIRP.

Savings glut?

Perhaps I is too small?

Could explain Swedish and German trade surplus?

Hitler finds out about negative interest rates

Sub-zero central bank rates should be welcomed, not lamented,Sandbu

Central banks unprecedented policies may well be a sign that things are not well; that is no reason to shoot the messenger. 

Negative rates make the standard banking model impossible without negative rates on retail deposits. 

Then logic compels us to expect either negative deposit rates or the end of banking.

The rout in European financial markets last week was a wat­ershed event. Münchau

What we saw — at least here in Europe — is the return of the financial crisis.

The toxic twins: the interaction between banks and their sovereigns.

Italy’s position may be better than Portugal’s but it is still not sustainable. 

Europe’s banking union has failed.
No deposit insurance and no government backstop to bail out failing lenders.


“I guess we can’t call it the dismal science anymore,” Mauldin

Each year since about 2005, forecasters have been predicting a rise in corporate earnings, in GDP, in inflation, in interest rates—in basically all of the vital growth metrics – that is substantially higher than what subsequently occurred. 

And I’m talking about every forecaster: the IMF, World Bank, Fed, ECB, OECD, and CBO, along with surveys of business economists….


Economic theory discredited



Feds Keynes policy of QE and ZIRP does not work any more, Stockman 11/2

Both of these effects are aimed at inducing businesses and households to borrow more than they would otherwise, and to then spend more than they produce.

But now those household and business balance sheets are all used up because we are at Peak Debt, along with most of the rest of the world.

The stimulative effect of low and ultra-low interest rates never really leaves the canyons of Wall Street. And when it does, it trickles its way into credit extensions to the weakest borrowers left in the land. That is, students and subprime auto borrowers. 



Buybacks are a tool used to artificially inflate bottom line earnings

“The reality is that stock buybacks are a tool used to artificially inflate bottom line earnings per share which, ultimately, drives share prices higher.

In all, the massive speculation unleashed in the equity markets since the March 2009 bottom has caused more than $5 trillion of current cash flow and new debt to be allocated to corporate stock buybacks, M&A deals and LBOs. 


Carl Bildt och andra föraktar väljarna. Det förklarar framgångarna för Trump, Sanders m fl

Jag har alltid trott att New Hampshire var ett hyfsat anständigt litet ställe. Nu på morgonen ser det ut att vara spritt språngande galet”, skriver Bildt.

Donald Trump, Marine Le Pen, Nigel Farage
The economic losers are in revolt against the elites
Martin Wolf January 26, 2016

The six founding members of the European Union are “concerned about the state of the European project” but committed to ever closer union

The six founding members of the European Union are “concerned about the state of the European project” but committed to ever closer union


Federalism at IntCom

Janerik Larsson: Sanders dröm är det forna Sovjet eller Östeuropa

Det som många påpekat är att tonläget satts av de mest extrema högerpopulisterna, Donald Trump och Ted Cruz, samt av den lika extrema vänsterpopulisten Bernie Sanders.
Gemensamt för dessa är en framtidsbild som i Trumps och Cruz’ fall handlar om en närmast absurd dröm om att återskapa 1950-talets USA och i Sanders’ fall snarast är det forna Sovjet eller Östeuropa vid ungefär samma tid.


The financialisation of home ownership

At one point, rising home ownership solved many of the problems identified the 1960s. 
The predictably steady rise in house prices over time, like predictable inflation, created an escalator for the working class. 
If you combined that with vigorous social housebuilding, as practised by both Labour and Conservative councils in the 1970s, you created affordability at both ends of the scale.
If you then dramatically slash the supply of social housing, through right-to-buy and reduced council building, you create a permanent imbalance that turns home ownership into a form of asset investment.