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Rolf Englund blog

Kommande och tidigare krascher, observera 1974-1975



My economic Gurus

Economic theory discredited

Global recession timeline BBC

Alan Greenspan

Rogoff

Stabiliseringspolitik

Stagflation

Martin Wolf

Other Economists

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Staying sane when working from home


Inside Job
Trailer, Youtube

2011 (på svenska)

Most important

Skuldfrågan/Who is responsible?

Moral Hazard
What this crisis is all about

Houseprices

Unemployment

Banks...

Funding

The Shadow banking system

Minsky, Hyman

Rebalancing

Deleveraging

USD Dollar

USD/SEK

EMU Collapse

Doom

*

Basel

Bernanke

Carry Trade

Derivatives

The Endgame

Fannie and Freddie

Foreclosures

Glass-Steagall Act

Lehman Brothers

Leverage

Mark-to-Market

The Taylor Rule

Too Big to Fail

The Volcker rule


Interesting too

Baltikum

Bankinspektionerna - The Bank supervisors
"Det är svårt att vara olyckskorp när allt går som smort"

Bondinsurers

Central Banks injection

Books

Davos

Rescue plans

Spain

Swedbank



Finanskrisen 2007 -



U.S. Trade Deficit:
Causes, Magnitude and Consequenses
Rolf Englund 2001-05-21

Next Bubble: U.S. Government Bonds
Rolf Englund

How to solve the financial crisis?
Let me tell you a little secret, folks.
Play for time, pray for markets to turn.

Allan Sloan, senior editor CNN, August 18, 2008


RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis,
warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel.
Ambrose Evans-Pritchard, 11 Jan 2016



“Fangs” — Facebook, Amazon, Netflix and Google
As with the first Shanghai Surprise, the stark reaction to this week’s Chinese events reveals deep lack of confidence in the health of the western corporate sector.
Even if the situation now stabilises — as it did for several months back in 2007 —
the message of concern, in both west and east, is clear.
John Authers, FT 8 January 2016


One of the (many) fascinating things about this latest global financial crisis is that there’s no single catalyst.
Unlike 2008 when the carnage could be traced back to US subprime housing, or 2000 when tech stocks crashed and pulled down everything else,
this time around a whole bunch of seemingly-unrelated things are unraveling all at once.

zerohedge 7 January 2016

Submitted by John Rubino via DollarCollapse.com

Interest rates, for instance, were high by current standards at the beginning of past crises, which gave central banks plenty of leeway to comfort the afflicted with big rate cut announcements.
Today rates are near zero in most places and negative in many.

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News


A Year of Sovereign Defaults?
Carmen Reinhart, Project Syndicate 31 December 2015

Like so many other features of the global economy, debt accumulation and default tends to occur in cycles. Since 1800, the global economy has endured several such cycles, with the share of independent countries undergoing restructuring during any given year oscillating between zero and 50%

The most recent default cycle includes the emerging-market debt crises of the 1980s and 1990s. Most countries resolved their external-debt problems by the mid-1990s, but a substantial share of countries in the lowest-income group remain in chronic arrears with their official creditors.

Read more at https://www.project-syndicate.org/commentary/sovereign-default-wave-emerging-markets-by-carmen-reinhart-2015-12#z8IKDElycECkDZ8Q.99

Welcome, then, to what Carmen Reinhart, senior fellow at the Peterson Institute for International Economics in Washington,
and Harvard’s Kenneth Rogoff call “the second great contraction” (the Great Depression of the 1930s being the first).


Den stora paniken 1873, som ledde till den långa depressionen 1873–96.
Waldemar Ingdahl, SvD Understreckare 13 februari 2009

1873 års ”stora panik” hade sin grund i den osäkra politiska strukturen i Europa.
I det ombildade Österrike-Ungern, det nyligen enade Tyskland och i det åter republikanska Frankrike, stödde staten uppkomsten av en ny typ av kreditinstitut som utfärdade inteckningar i det kommunala bostadsbyggandet för sämre bemedlade.
Det var lätt att låna, och en stor byggboom inleddes. Tomtvärdena verkade ständigt fortsätta stiga.
Det var operahusens, wienerbalernas, boulevardernas och de magnifika byggprojektens tid. Europa hade börjat ta tillväxten för given när kraschen kom.

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Other crashes

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News


The S&P 500 finished 2015 with a loss of 0.7 per cent,
its worst annual performance since the financial crisis in 2008 when it declined 38.5 per cent.
Financial Times 31 December 2015


Getting economies "back to normal" was always the hope during that remarkable time when the financial system was in danger of going bust.
I'm not sure anyone thought that, eight years on, we would still be in a near zero interest rate world.
Or, in cases such as the eurozone, a negative interest rate world.
Kamal Ahmed, BBC Business editor, 16 December 2015

Central banks around the world slashed interest rates to near zero and created billions of pounds of support for governments and the wider economy.

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News


As every student of recent economic history will know, the first rumble of thunder in the Global Financial Crisis came with the collapse in the summer of 2007 of two large Bear Stearns hedge funds.
Investors demanded their money back, but managers were unable to liquidate their positions fast enough to deliver.
Jeremy Warner, Telegraph 15 December 2015

These early signs of panic were to snowball into an all-embracing run on the global banking system, forcing central banks to flood the market with cheap liquidity to prevent mass liquidation and economic collapse.
Are we about to see history repeat itself?

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Frozen withdrawals in 2007 and 2015
Rolf Englund blog 2015-12-12

Doom


A day after a prominent Wall Street firm shocked investors by freezing withdrawals from a credit mutual fund, things only got nastier in the junk-bond market.
Prices on the high-risk securities sank to levels not seen in six years and, to add to the growing sense of alarm,
billionaire investor Carl Icahn said the selloff is only starting.
Bloomberg 11 December 2015

“The meltdown in High Yield is just beginning," Icahn, who’s been betting against the high-yield market, wrote on his verified Twitter account Friday.

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News


US and Europe still live with the legacies of the financial crisis of 2007-09 and the subsequent eurozone crisis.
Could better policies have prevented that outcome; and, if so, what might they have been?
Martin Wolf, FT 10 November 2015

A recovery is under way, but only in a limited sense. The change in gross domestic product of crisis-hit countries is now almost universally positive.
But GDP remains far below what might have been expected from pre-crisis trends.

This raises two further questions: could the adverse impact of the crisis have been smaller? And can it still be reversed?
The answer to the first must be yes. But it would have required stronger fiscal and monetary responses, and more aggressive restructuring of damaged financial institutions.
The eurozone, in particular, should have done far better.

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News


Some people never learn. They follow the same path that destroyed their finances in the past.
Wall Street is desperately packaging the increasing amounts of subprime slime in new derivatives of mass destruction and peddling them to clients, while shorting those same derivatives.
It’s called the Goldman Sachs method. When home prices begin to tumble, these derivatives will self-destruct again.
What is happening today is nothing more than rearranging the deck chairs on the Titanic.
zerohedge 25 September 2015

The table is set for the next financial crisis. The apologists for the warped ideology that has resulted in $10 trillion of additional debt being layered on the original un-payable $52 trillion, argue subprime lending is lower than the 2008 peak, so all is well.
They fail to realize the system is far more fragile and will collapse once the next Lehman moment arrives. The country is already in, or headed into recession.
All economic indicators are flashing red. The stock market has fallen over 10% in the last month. Virtually every new car owner you see driving that fancy BMW, Lexus, or Volvo is underwater on their auto loan.
Home price growth has stalled at record levels. Mortgage rates are poised to rise from record lows. We all know what happens next. Look out below.

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News


Turbulence in financial markets gathered momentum amid intensifying concern over slowing global growth,
pushing the Dow Jones Industrial Average into a correction and giving other stock gauges their worse losses since 2011.
21 August 2015


Lord Skidelsky said that Keynes would have found two things upsetting.
First, he would be frustrated with the lack of precautions taken to prevent a huge financial crash like the one we saw in 2008.
Secondly, Lord Skidelsky believes Keynes wouldn't be happy with the policy measures taken after the crash. Keynes would have wanted a more "buoyant response," he said.
Specifically, he doesn't think Keynes would have liked the Federal Reserve's quantitative easing
BloombergTV, 13 August 2015

… the recovery has been very very slow. We've been for many years in a state of semi-stagnation, and the recovery is still very very weak in the European Union.

The actual recovery measures we've taken, particularly quantitative easing, have actually skewed the recovery towards asset buying and real estate,
thus threatening to recreate the circumstances that led to crash in the first place.

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Keynes

Rolf Englund;
Själv brukar jag med en dåres envishet upprepa följande ord, första gången den 5 december 2009:
Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken.

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News


One of the things that occurred to me is the consequence of the 2008 crisis.
I knew something was brewing, but I missed the actual date as frankly did everybody else.
Alan Greenspan, Telegraph 10 August 2015


Explainer: Puerto Rico’s debt problems
FT June 29, 2015

How did a small island of just 3.5m people manage to amass $70bn of debts,
as well as a pile of unfunded pension liabilities?

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News


Monetary policymakers have run out of room to fight the next crisis
with interest rates unable to go lower, the BIS warns
Telegraph 28 June 2015

The so-called central bank of central banks launched a scatching critique of global monetary policy in its annual report.
The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.

These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates.

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

Men väljarna och därmed deras medlöpande politiker är rädda för budgetunderskott och vill hellre att villaägarna skall låna än att staten skall göra det.

Strategin synes vara att det gäller att stabilisera, helst höja, villapriserna så att konsumenterna främst i USA skall återgå till att konsumera med lånta pengar, dvs just det som ledde fram till katastrofen.

Detta kan inte vara klokt.

Rolf Englund blog 5 december 2009

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News


Output is financially sustainable when spending patterns and the distribution of income are such that the fruit of economic activity can be absorbed without creating dangerous imbalances in the financial system.
It is unsustainable if generating enough demand to absorb the output of the economy requires too much borrowing, real rates of interest rates that are far below zero, or both.
Martin Wolf, FT 14 April 2015

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Next Bubble Is Forming: U.S. Government Bonds

Martin Wolf at IntCom

News


Do eerie parallels presage new crisis?
Falling oil, rising dollar and US rate rise fears also present in 1997-98
Satyajit Das, FT February 23, 2015

Weak growth, high debt levels, disinflation or deflation, policy driven destructive competitive devaluations, inflated financial risk taking and mispricing compounds the problems.

The impending crisis may develop as follows.

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A future crisis is likely to unfold as follows.
Satyajit Das, FT October 29, 2014


The biggest debt write-offs in the history of the world
In 1792BC, the self-proclaimed King Hammurabi of Babylon forgave all citizens’ debts owed to the government, high-ranking officials, and dignitaries.
If any one owe a debt for a loan, and a storm prostrates the grain, or the harvest fail, or the grain does not growth for lack of water,
in that year he need not give his creditor any grain, he washes his debt-tablet in water and pays no rent for this year.

Hammourabi’s jubilees were part of a long line of debt cancellations that can be traced back to Mesopotamia as long ago as 2400BC.
Mehreen Khan, Telegraph, 2 Feb 2015

Following the end of WWII, the London Debt Agreement of 1953 saw the abolition of all of Germany's external debt.
The total forgiveness amounted to around 280pc of GDP from 1947-53, according to historian Albrecht Ritschl.

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Crashes


The U.S. dollar, at its highest level in nine years, is about to fall off its perch.
That’s the outlook, at least, of Lawrence G. McDonald, n his New York Times best-seller, “A Colossal Failure of Common Sense,” warned colleagues at Lehman Brothers
Energy companies took out $1.6 trillion worth of debt since 2009. Since 2012, emerging market governments and companies have taken out around $2 trillion worth of debt.
The catch here is that they often borrowed in dollars.
MarketWatch 7 january 2015


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The US Federal Reserve has pulled the trigger. Emerging markets must now brace for their ordeal by fire.
They have collectively borrowed $5.7 trillion in US dollars, a currency they cannot print and do not control.
This hard-currency debt has tripled in a decade, split between $3.1 trillion in bank loans and $2.6 trillion in bonds.
It is comparable in scale and ratio-terms to any of the biggest cross-border lending sprees of the past two centuries.
Ambrose Evans-Pritchard 17 Dec 2014

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The Fed put
Federal Reserve uttered the single word “patience” and everything changed.
On Wednesday the stock market rose 2 per cent and on Thursday the Dow Jones Industrial index had its best day in three years.
The market dependence on Fed policy has never seemed greater
Financial Times December 19, 2014


The lights are again flashing red on the dashboard of the world economy, David Cameron warned yesterday.
Just to extend the metaphor, the plane is flying on empty, having pretty much exhausted its fiscal and monetary reserves,
and there is no sign of a safe landing strip in sight.
Jeremy Warner, Telegraph, 18 Nov 2014


Finanskriskommittén
Riksgäldens garantiprogram för bankerna infördes 2008.
Sammanlagt ställdes bankgarantier för 354 miljarder kronor.
SvD Näringsliv 18 november 2014


Finanskrisen
Martin Wolf på Financial Times är, vågar jag påstå, den världsledande journalisten på området finansiell ekonomi.
När han analyserar den globala finanskris som fortfarande pågår lyssnar alla som vill förstå.
Nils Lundgren, Axess Magasin nr 8, november 2014

Wolf konstaterar att bara sedan 1980 har vi drabbats av sex stora finanskriser som har skakat världsekonomin:
den latinamerikanska krisen (tidigt 1980-tal), den japanska krisen (tidigt 1990-tal), Tequilakrisen (inleddes i Mexiko 1994), den ostasiatiska krisen (1997–1999), den globala finanskrisen (2007–2009) och eurozonkrisen (2010–2013).

Därtill har det uppstått många finanskriser av mera begränsad och regional karaktär.
Den svenska finanskrisen 1990–1994 var mycket dramatisk och förändrade svensk ekonomi och politik på ett genomgripande sätt.
Enligt en IMF-rapport från 2012 inträffade inte mindre 147 bankkriser under perioden 1970–2011.

Det är uppenbart att den globala finanssektorn är extremt instabil och att
de realekonomiska kostnaderna för dessa finanskriser i form av förlorad produktion, arbetslöshet och kapitalförluster är enorma.

Något är i grunden fel!

Wolfs bok handlar om de två senaste kriserna på listan.

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Ja till EU - nej till EMU?
Huvudpunkter i Nils Lundgrens föredragning i Helsingfors inför riksdagens utrikesutskott den 21 september 1994
Ja, det var 1994 och det håller än


In my book, The Shifts and the Shocks, I suggest that a number of shifts in the world economy
created chronically weak demand in the absence of credit booms.
US, the eurozone, Japan and the UK have been suffering from “chronic demand deficiency syndrome”.
More precisely, their private sectors have failed to spend enough to bring output close to its potential
without the inducements of ultra-aggressive monetary policies, large fiscal deficits, or both.
Martin Wolf, FT November 25, 2014

What happens then is a “balance-sheet recession” – a period when the indebted focus on paying down debt

Still more unorthodox is outright monetary financing of fiscal deficits,
as Adair Turner, former chairman of the UK’s Financial Services Authority, has recommended.

This means nationalising the creation of money now delegated to often-irresponsible private banks.

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Martin Wolf


Today’s most important economic illness: chronic demand deficiency syndrome.
David Cameron “red warning lights are once again flashing on the dashboard of the global economy”.
Martin Wolf, Financial Times 18 november 2014


RE: The best book I have ever read
In my book The Shifts and the Shocks, I argue that pre-crisis trends
– huge global current account imbalances, rising inequality and weak propensity to invest –
had already created weak underlying demand in high-income countries.

The de facto response of policy makers was toleration, if not promotion, of credit booms.

When these collapsed, extraordinary policy easing was needed both to replace the lost demand impetus from the credit bubbles and to
offset the drag on demand from debt overhangs, predominantly in private sectors:

too many people had borrowed too much.

Martin Wolf, FT October 9, 2014


The Germans have a name for their unique economic framework: ordoliberalism.
Wolfgang Münchau FT 16 November 2014


List of economic crises
Wikipedia


Eevery Fed tightening cycle has brought a financial crisis. Here is the list. Chad Hudson March 2, 2005


Hindsight is a wonderful thing, especially when it comes to explaining market crashes.
The glaringly obvious guide to the next crash
James Mackintosh, FT September 21, 2014


The financial crises and the years of economic malaise that followed represent profound failures of the economy and of policy.
Above all, they were failures of understanding.
We have learnt much since. But we have not learnt enough to avoid a repeat of this painful experience.
As I argue in a new book, we retain unbalanced and financially fragile economies.
Martin Wolf, Financial Times, September 3, 2014

Those in charge saw little danger in the rapid growth of credit; they were largely unconcerned by rising leverage; they thought financial innovation added to rather than reduced stability;
and they believed it was easier to clean up after asset-price bubbles burst than to prevent them from growing in the first place.
On all this they were proved wrong, as the late and disregarded Hyman Minsky had sought to warn them.

The new regulatory regime is an astonishingly complex response to the failures of this model.
But “keep it simple, stupid” is as good a rule in regulation as it is in life.

The sensible solution seems clear: force banks to fund themselves with equity to a far greater extent than they do today.

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Martin Wolf, The Shifts and the Shocks: What We’ve Learned – and Have Still to Learn – from the Financial Crisis

Martin Wolf

Glass-Steagall Act

Economic theory discredited


One of the United States’ defining – and disheartening – economic trends over the last 40 years has been
real-wage stagnation for most workers.
Median full-time male worker earned $50,033 in 2013,
barely distinguishable from the comparable (inflation-adjusted) figure of $49,678 in 1973.
Laura Tyson, Project Syndicate, 26 September 2014

Because most households earn the bulk of their income from their labor, the absence of real-wage growth is a major factor behind the stagnation of family incomes. The average family income of the bottom 90% of households has been flat since about 1980. Real family income for the median household in 2013 was 8% below its 2007 level and nearly 9% below its 1999 peak.

Stagnating middle-class wages and family incomes are a major factor behind the US economy’s slow recovery from the 2007-2009 recession, and pose a serious threat to long-term growth and competitiveness. Household consumption accounts for more than two-thirds of aggregate demand, and consumption growth depends on income growth for the bottom 90%.

Read more here

Marian Radetzki, unemployment and Stall Speed


The Greater Depression
First it was the 2007 financial crisis. Then it became the 2008 financial crisis.
Next it was the downturn of 2008-2009. Finally, in mid-2009, it was dubbed the “Great Recession.” Late 2009, the world breathed a collective a sigh of relief. We would not, it was believed, have to move on to the next label,
which would inevitably contain the dreaded D-word. But...
J. Bradford DeLong, Project Syndicate, 28 august 2014

Read more here

Stabiliseringspolitik


The world is at risk of another financial crash following a steep rise in asset prices,
according to Raghuram Rajan, governor of the Reserve Bank of India
– and one of the few people to have warned of the last financial crisis.

FT 7 August 2014


UK house price growth has taken the multiple of average home values to
more than five times earnings for the first time since the financial crisis.
Telegraph 7 August 2014 with nice chart


Why We're Doomed: Interest and Debt
Charles Hugh Smith, July 15, 2014

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BIS Slams the Fed
"A Controlled Collapse?"
I propose Yellen is clueless. If she had any sense, she would have acted in advance to prevent an asset bubble
or at least stall the one Bernanke had started.
The Fed is not going to attempt a controlled collapse.
Yet, a collapse is coming. It will be anything but controlled.
Mike "Mish" Shedlock, 11 July 2014


The Coming Liquidity Crisis
What was the cause of the last crisis? Everybody points to subprime debt, but that was really just a trigger.
What happened was that everybody in the financial world became distrustful of everybody else’s balance sheet
Dylan Grice and John Mauldin 7 July 2014

What was the cause of the last crisis? Everybody points to subprime debt, but that was really just a trigger.
What happened was that everybody in the financial world became distrustful of everybody else’s balance sheet
and so decided to go to cash, but there was so much debt and so much invested in illiquid assets that everybody couldn’t get out of the theater at the same time.

It is happening again today.
The intense drive for yield is driving down interest rates and volatility, pushing up assets of all kinds,
and setting us up for the same song, second verse of the 2008 crisis.

While I have been hinting around about that possibility for some time, it really crystallized for me this morning as I was reading the latest “Popular Delusions” from Dylan Grice.

Let me quote a bit from the opening of his typically brilliant essay:

French ten-year bonds (OATS) are paying 1.7%. Spanish (2.68%) and Italian (2.83%) debt are paying roughly the equivalent of US debt. German debt, at 1.27%, pays less than half of US debt at 2.64%. Somewhere in that equation, sovereign debt is spectacularly mispriced. Rated ten-year corporate bonds are paying between 3% and 3.4%. That is less than a 1% premium for bonds that are only single-A. Seriously?

You should be thinking of cash not as cash per se, but as an option on future deep-value trades.

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www.edelweissjournal.com/issues

Doom



The International Monetary Fund pointed out this month that housing can do a lot of damage.
An increase in prices provides an initial spur to the wider economy: construction activity is boosted and homeowners grow richer.
But as a boom continues, leverage grows and price rises become unsustainable.
The bursting of a bubble devastates bank balance sheets and leaves behind an economy that must painfully reallocate productive resources from a bloated construction industry to other sectors.
Mark Schieritz, economics correspondent of Die Zeit, Financial Times June 22, 2014


”Det kan vara årets viktigaste bok om ekonomi, det skulle kunna vara den viktigaste boken sedan finanskrisen.”
Det är inget dåligt beröm författarna Atif Mian och Amir Sufi får för sin bok 'House of debt' och berömmet kommer från ingen mindre än Larry Summers.
Louise Andrén Meiton, SvD Näringsliv 15 juni 2014


Lawrence Summers on ‘House of Debt’
Did the response to the financial crisis focus too much on banks while neglecting over-indebted homeowners?
Lawrence Summers, Financial Times June 6, 2014


Claudio Borio, the BIS's chief economist,
says this refusal to let the business cycle run its course and to purge bad debts is corrosive.
leads to "time inconsistency". It steals growth and prosperity from the future, and pulls the interest rate structure far below its (Wicksellian) natural rate.
"The risk is that the global economy may be in a deceptively stable disequilibrium," he said.
Ambrose Evans-Pritchard 4 June 2014

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Bubbles have three stages: expansionary; then contractionary; and, finally, perhaps inflationary.
The world economy is now in the second stage.

That is why today's worry is deflation. But it is unlikely to stay there for ever.
Ultimately, efforts to ward off post-bubble deflation risk creating its opposite.
A more helpful guide is the Swedish-Austrian theory of the business cycle, developed by Knut Wicksell
Martin Wolf Financial Times 28/5 2003

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From March 2000 to the autumn of 2002,
the US stock market declined more than 40 per cent. Losses were a staggering $8tn.
The reason that the real economic effects of the collapse of internet stocks were well contained is that the internet bubble was not financed by debt
Contrast the situation that followed the collapse of real estate prices in 2007
after a period when the (inflation adjusted) prices of single family houses had doubled over the preceding decade.
Burton Malkiel, author of A Random Walk Down Wall Street, Financial Times 21 May 2014

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Don't Sell Out
Burton G. Malkiel. Wall Street Journal 2001-09-26

A Random Walk Down Wall Street


Martin Hellwig ”The Bankers' New Clothes: What's Wrong with Banking and What to Do About It”
The 2008 crisis was made possible by an extremely fragile financial system
in which banks and many other businesses indulged in excessive leverage — too much borrowing — as well as hazardous reliance on short-term funding
and negligent risk management, with lax regulatory supervision by the government.
Roger E. Alcaly, The York Review of Books, 5 June 2014

The regulatory failures in the buildup to the recent crisis were induced by the same complacency that infected the financial system and economy
in the latter stages of the period economists call “the great moderation,” beginning in the early 1980s and spanning roughly two decades of relatively steady growth and low inflation, interrupted only by recessions that were short and mild.

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"This is the most important book to have come out of the financial crisis", Martin Wolf

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Are financial crises an inevitable feature of capitalism?
Must the government rescue the system when huge crises occur?

In his book Stress Test , Timothy Geithner answers “yes” to both questions.
Yet these answers also harm the legitimacy of a market economy.
Martin Wolf, Financial Times, 27 May 2014

It is bad enough if capitalism is crisis-prone.
It is worse still if the state feels obliged to rescue those whose folly or criminality caused the damage, to protect the innocent.

Mr Geithner argues not only that crises are sure to recur but that governments must react with overwhelming force.
The only way to stop a crisis is to remove the circumstances making it rational to panic.

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"a how-to manual for anyone faced with a financial crisis"
Mr Geithner was known for his brutal candour, and as an author, he does not disappoint.
Stress Test: Reflections on Financial Crises
The Economist print 17 May 2014

At one meeting he realised that John Thain, Merrill Lynch’s chief, did not know the name of his chief risk officer who was sitting next to him.

In 2008 he had the right instinct. But taken too far, it affirms suspicions that many firms and markets are “too big to fail”

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Tim Geithner
Stress Test: Reflections on Financial Crises, lunch with Martin Wolf
"the big persistent misperception is that we acted out of an excessive concern for the banks" Financial Times 15 May 2014

In the 1990s, he worked on the Mexican and Asian crises.
As president of the New York Federal Reserve (2003 to January 2009) and then as President Barack Obama’s Treasury secretary (until January 2013),
he was at the centre of efforts to cope with the financial crisis that hit the US in 2007 and reached its peak a year later.

“to lean against the instinctive reactions people have in a normal crisis, which is to let it burn out, be indifferent to the failure of individual firms, or embrace austerity quickly.
And I think the big persistent misperception is that we acted out of an excessive concern for the banks rather than out of recognition that if you leave the country vulnerable to the failure of the system,
you leave the average person exposed to much greater damage even than we saw in this crisis.”

Martin Wolf: My own view is that the people, including Geithner, who dealt with this crisis made big mistakes
but also saved the world from another Great Depression

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Tim Geithner

Martin Wolf


Lehman Brothers
Utvecklingen av finanskrisen, som briserade 2008, hade kunnat se helt annorlunda ut.
Det slår Timothy Geithner, chef på Federal Reserves New York-kontor fast i sin nya bok "Stress test".
SvD Näringsliv, 13 maj 2014


“The Great Recession: Causes and Consequences.”
We were suffering from inadequate demand.
Why, at the moment it was most needed and could have done the most good, did economics fail?
Paul Krugman, NYT 1 May 2014

Policy makers and politicians have ignored both the textbooks and the lessons of history. And the result has been a vast economic and human catastrophe, with trillions of dollars of productive potential squandered and millions of families placed in dire straits for no good reason.

Economists who took their own textbooks seriously quickly diagnosed the nature of our economic malaise: We were suffering from inadequate demand.

The financial crisis and the housing bust created an environment in which everyone was trying to spend less, but my spending is your income and your spending is my income, so when everyone tries to cut spending at the same time the result is an overall decline in incomes and a depressed economy.

And we know (or should know) that depressed economies behave quite differently from economies that are at or near full employment.

For example, many seemingly knowledgeable people — bankers, business leaders, public officials — warned that budget deficits would lead to soaring interest rates and inflation.

But economists knew that such warnings, which might have made sense under normal conditions, were way off base under the conditions we actually faced.

Sure enough, interest and inflation rates stayed low.

Full text

Economic theory discredited

Stabiliseringspolitik


Money Mania: Booms, Panics and Busts from Ancient Greece to the Great Meltdown by Bob Swarup. Bloomsbury Press
So what does Mr Swarup’s offering, Money Mania, add to the field? First it is unusually well-told, and expansive in scope.
Similarities between different episodes are breathtaking. Events in Ancient Rome and Athens, and Georgian Britain followed the same pattern as the crisis of 2008.
Review by John Authers, FT 27 April 2014


David Wessels bok om finanskrisen 'In Fed we Trust' Ben Bernanke's War on the Great Panic
I december firade Federal Reserve 100 år.
I december var det också fem år sedan styrräntan sänktes mot noll.
Louise Andrén Meiton, SvD 28 mars 2014


Wall Street banks and their foreign rivals have paid out $100bn in US legal settlements
since the financial crisis, according to Financial Times research
regulators and the Obama administration seek to counter perceptions that bankers have got off lightly for their role in the financial crisis.
Financial Times, 25 March 2014


Now that Ben Bernanke is no longer the head of the Fed, he can finally tell the truth about what caused the financial crash.
At least that's what a packed auditorium of over 1000 people as part of the financial conference staged by National Bank of Abu Dhabi, the UAE's largest bank, was hoping for earlier today when they paid an exorbitant amount of money to hear the former chairman talk.

Ben Bernanke about what caused the financial crash
So what was the reason, according to the man who was easily the most powerful person in the world for nearly a decade?
Ready?
"Overconfidence."
Tyler Durden, zerohedge, 4 March 2014

Bernanke's explanation, brought to us by Reuters, we wonder: did he perhaps get into the reason for the overconfidence? Maybe such as the Fed's endless hubris in believing it knew what it was doing, when time after time and especially over the past 30 years, the US central bank has shown that all it now does is lead the nation from bubble to bubble, from crisis to crisis, and replaces one asset bubble, first the dot com, then the housing, with another, even bigger one, until we get to the biggest bubble of all time - the stock market as you see it currently, where the S&P 500 soars to all time highs and when news of an ICBM launch can barely cause a dent in a ridiculous upward ramp driven by, you guessed it, overconfidence.

Full text at zerohedge

Ben Bernanke


Matthew O’Brien at The Atlantic has done the math. Fed.
In August 2008 there were 322 mentions of inflation, versus only 28 of unemployment and 19 of systemic risks or crises.
In the meeting on Sept. 16, 2008 — the day after Lehman fell! — there were 129 mentions of inflation
versus 26 mentions of unemployment and only four of systemic risks or crises.

Paul Krugman, 2 March 2014

In part it reflects the belief that the government should never seek to mitigate economic pain, because the private sector always knows best. Back in the 1930s, Austrian economists like Friedrich Hayek and Joseph Schumpeter inveighed against any effort to fight the depression with easy money;
to do so, warned Schumpeter, would be to leave “the work of depressions undone.”
Modern conservatives are generally less open about the harshness of their view, but it’s pretty much the same.

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How the Fed Let the World Blow Up in 2008
High oil prices blinded the Fed to the growing danger before the crash
MATTHEW O'BRIENFEB 26 2014


Can the European Central Bank legally act as lender of last resort to ensure the survival of the euro?
This question is of fundamental importance for the sustainability of the monetary union. Recently, the German Constitutional Court ruled that it cannot.
In the court’s view the ECB has the power to conduct monetary policy,
but not to support member states in financial distress even if necessary to ensure the survival of the common currency.
Katharina Pistor, Vox, 26 February 2014


Janet Yellen announced February 19th that America’s central bank is moving to
cut off the massive financial lifeline that has been subsidizing the European banking system since the beginning of the global financial crisis in March of 2008.
By delaying foreign bank compliance with the stringent capital and borrowing requirements of section 165 of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) imposed on American banks,

the Fed was engaging in the moral hazard of allowing Europe to borrow at virtually zero interest from the Fed to fund its bloated social welfare states.
Chair Yellen’s actions mean the Fed is cutting off Europe and providing greater support for U.S. borrowing.
Breitbart, 24 February 2014

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RE: Det förefaller som om det var Fed och inte ECB som ställde upp som Lender of Last Resort för de europeiska bankerna
som professor Pelotard har viskat i mitt öra.

The Federal Reserve final rule requiring higher capital levels from non-US banks,
including Deutsche Bank, Barclays and Credit Suisse,
with the aim of avoiding a US government bailout if their New York operations run into trouble.
FT February 19, 2014

European bank executives welcomed concessions by the Fed,
which came after a massive lobbying effort that enlisted the support of some US banks worried about retaliation from European regulators.

In particular, several bankers and lawyers said that they were relieved by a delay in the implementation
allowing more time for banks to increase their capital levels by retaining profits.

Full text

Thanks To QE
Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever
Tyler Durden, zerohedge, 21 May 2013

Full text

How The Fed Is Handing Over Billions In "Profits" To Foreign Banks Each Year
All the cash generated by Fed excess reserves, has gone to foreign banks operating in the US, which according to the Fed, are vastly composed of European financial institutions.
Tyler Durden, zerohedge, 11 February 2013

Why has the Fed paid some $6 billion in interest to foreign banks, in the process subsidizing and keeping insolvent European and other foreign banks, in business and explicitly to the detriment of countless US-based banks who have to compete with Fed-funded foreign banks

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The Fed's $600 Billion Stealth Bailout Of Foreign /European/ Banks Continues
At The Expense Of The Domestic Economy, Or Explaining Where All The QE2 Money Went
Tyler Durden, zerohedge, 6 December 2011

Courtesy of the recently declassified Fed discount window documents, we now know that the biggest beneficiaries of the Fed's generosity during the peak of the credit crisis were foreign banks, among which Belgium's Dexia was the most troubled, and thus most lent to, bank.

Many speculated that the US central bank would primarily focus its "rescue" efforts on US banks, not US-based (or local branches) of foreign (read European) banks: after all that's what the ECB is for.

If it becomes popular knowledge that the Chairman of the Fed, despite explicit instructions to enforce the trickle down of "printed" dollars to US banks, was only concerned about rescuing foreign banks with the $600 billion in excess cash created out of QE2, then all political hell is about to break loose

Full text

Basel

Banks

ECB

Yellen

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The Great Recession: Bailout
Paul Krugman, NYT, 23 February 23, 2014

Download from here

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Recession - The R-word - Transcripts
Policy makers at the Federal Reserve tell us not to worry,
that it’s mostly just bad weather and the normal ups and downs of the economic data.
But what if they’re wrong? Would they tell us if they thought we were heading for a new recession?
Rex Nutting, MarketWatch, Feb. 27, 2014



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Laughing all the way to an economic crash
How the central bank coped with a crisis
DAVID WEIDNER'S WRITING ON THE WALL, MarketWatch, Feb. 25, 2014

“There are some critics who say we panicked in response to the market sell-off of that Monday.
I do not believe that’s the case, and I don’t believe it’s the case because I find it impossible to believe.”

Hilarious. What’s also impossible to believe was that curious bit of logic was spoken by Richard Fisher, president of the Federal Reserve Bank of Dallas, in 2008.
Fisher was speaking at one of several meetings of the Fed’s Open Market Committee in response to a financial crisis that was unfolding.

Transcripts of those meetings, more than 1,500 pages worth , were released at the end of last week

William C. Dudley, head of the open market desk, at one key meeting in June 2008. That month he gave a status report to the committee about Lehman Brothers, which would file for bankruptcy less than 90 days later. “Lehman’s short-term financing counterparties have generally proved to be patient,” Dudley said. “The financing backstop provided by the Primary Dealer Credit Facility has been cited by many counterparties as a critical element that has encouraged them to keep their financing lines to Lehman in place.”
To be fair to Dudley, his assessment wasn’t too far off at the time. The worst of Lehman’s descent didn’t happen until September.

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Transcripts of the U.S. central bank's meeting on Sept. 16 2008
Feb 21, 2014 Reuters/CNBC
Federal Reserve policymakers, in an emotional meeting on one of the darkest days of the 2008 financial crisis, were worried the failure of Lehman Brothers a day earlier would wreak havoc on a teetering financial system but feared cutting already low interest rates might prove an over-reaction.

Transcripts of the U.S. central bank's meeting on Sept. 16 of that year, released on Friday, showed then Fed Chairman Ben Bernanke flatly telling his colleagues he was philosophically torn about the collapse of the investment bank.
They also threw fresh light on a debate over whether to loosen monetary policy in the face of a crisis that was fast engulfing financial markets but which some policymakers thought would be resolved relatively quickly.
Full text

Full text of Transcripts at Fed

Lehman Brothers


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On the morning after Lehman Brothers filed for bankruptcy in 2008, most Federal Reserve officials still believed that the American economy would keep growing despite the metastasizing financial crisis.
The Fed’s policy-making committee voted unanimously against bolstering the economy by cutting interest rates, and several officials praised what they described as the decision to let Lehman fail,
saying it would help to restore a sense of accountability on Wall Street.
That optimism would not long endure. Just minutes after the end of that first meeting, a smaller group of Fed officials agreed to rescue the faltering insurance giant the American International Group, a company never before subject to Fed supervision that until then was barely on the government’s radar.
New York Times, 21 February 2014


As the world’s financial system stood on the verge of collapse in October 2008, Janet L. Yellen...
Mr. Bernanke, as chairman, played the role of mediator and consensus builder, Ms. Yellen often became the most outspoken defender of the policies, and a reference point for others.
New York Times, FEB. 21, 2014


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Centralbanker skall INTE vara förutsägbara
Det är inte bra att aktörerna känner sig säkra. Det gör dem bara med oförsiktiga.
Rolf Englund blog 2014-02-13

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Investors are hoping for a Goldilocks outcome for the US economy,
with growth forecast to be close to 3 per cent, but inflation just 1.6

This may happen. But the consensus is dangerously, well, consensual.
The gap between the highest and lowest growth forecasts is down to levels last seen at the height of the credit bubble in 2007, and before that at the end of the dotcom boom.
James Mackintosh, FT 11 Febr 2014

The danger is that investors, economists and the Fed turn out to be wrong.

When everyone agrees, any upset disturbs markets far more than when there is a wide range of views, as all will want to change their position at once.

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Goldilocks

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This time is different
Don’t fret about soaring asset prices – this time is different
The probability of a rerun of what happened in the past decade is low
Wolfgang Munchau, Financial Times, December 29, 2013


All-time-high house prices in 10 of top 50 US metro areas
Home prices have zipped back into record territory in a handful of American cities,
a milestone that comes seven years after the housing bust ravaged the market and the broader economy.
MarketWatch, Dec. 30, 2013

Rolf Englund blog 5 december 2009:
- Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken. Men väljarna och därmed deras medlöpande politiker är rädda för budgetunderskott och vill hellre att villaägarna skall låna än att staten skall göra det.
Strategin synes vara att det gäller att stabilisera, helst höja, villapriserna så att konsumenterna främst i USA skall återgå till att konsumera med lånta pengar, dvs just det som ledde fram till katastrofen.
Detta kan inte vara klokt.
Klicka här


This is the most important book to have come out of the financial crisis.
The Bankers’ New Clothes: What’s Wrong with Banking and What to Do About It,
by Anat Admati and Martin Hellwig, Princeton
Review by Martin Wolf, March 17, 2013


Eight ways conventional financial wisdom has changed post crisis
Nobody assumes subprime mortgage bonds are safe, for example, or blithely trusts triple-A credit ratings.
Nor do they presume that big banks cannot collapse, or that western central banks cannot keep rates at zero.
Gillian Tett, Financial Times December 26, 2013

Full text

Gillian Tett - Asset price bubbles and Central Bank Policy


Posterity will regard the economic performance we are now witnessing as a golden age.
It will also know, although we do not, how long this era lasts.

Martin Wolf, FT, 2/5 2007


When Lehman Brothers went bankrupt and AIG was taken over by the US government in the fall of 2008, the world almost came to an end.
Major banks in the US and the UK were literally hours away from shutting down, and ATMs were on the verge of running out of cash.
John Mauldin 29 October 2013


From 2008 to now: Charts of the financial crisis
MarketWatch, September 18, 2013

Watch the charts here


Varför min sida om Finanskrisen heter hedgefunds.htm
Finanskrisen och därmed eurokrisen tog sin början i Frankrike,
när tre hedgefonder tillhöriga Frankrikes största bank, BNP Paribas,
inställde betalningarna i augusti 2007.
Rolf Englund blog 26 augusti 2013


Stockholmsbörsen rasar för tredje dagen i rad, en nedgång som kostat aktieägarna nästan 300 miljarder kronor.
Årets uppgång är snart ett minne blott - och ett 40-tal aktier handlas på årslägsta.
DI 24 juni 2013

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Hollande Bids Adieu to EU Vacation Culture as Crisis Lingers
six years after a phone call from Frankfurt shattered former European Central Bank President Jean-Claude Trichet’s holiday in northern France.
The caller informed him that three troubled BNP Paribas SA hedge funds were causing money markets to seize up, the first signal that a global financial crisis was breaking out.
Bloomberg, Aug 26, 2013
You could read about it at the time on this website


Dow 2003-2013


"We are all Keynesians now"
Why do we pursue austerity when it seems not to work?
Rogoff and Reinhart?

John Mauldin 22 April 2013
Highly Recommended

What do I think about the real problems that are surfacing in the Rogoff and Reinhart assertion that debt above a ratio of 90% debt to GDP seems to slow economic growth by 1% (especially since I have quoted that data more than a few times)?

The first question comes from correspondence I have had with Ms. Aga Barberini, who works in the investment world in Milan, Italy. She came there from Poland some 20 years ago.
- I will vote Berlusconi again. I can't stand communists even if they call themselves "the left."

If by "working" we mean that austerity is supposed to produce growth, then of course it doesn't work. By definition, austerity means you are reducing a fiscal deficit, and doing so will reduce growth in the short term. That begs the question, why would you want to do that?

"Austerity" is now the name we give to the situation where a government has to limit its spending during an economic downturn or recession.

"We are all Keynesians now" is a famous phrase uttered by Milton Friedman and attributed to US President Richard Nixon. (The phrase was first attributed to Milton Friedman in the December 31, 1965, edition of Time magazine. In the February 4, 1966, edition, Friedman wrote a letter clarifying that his original statement was, "In one sense, we are all Keynesians now; in another, nobody is any longer a Keynesian.") (Wikipedia)

The problem that arose was that most countries rarely followed through on the second part of Keynes's prescription, which was to pay back the debt when times were good.

My inbox almost exploded the last two days as friends and colleagues sent me links to multiple sources talking about the problems with Rogoff and Reinhart's work and asked for my thoughts. Given that I find This Time Is Different one of the more important books of the last decade, let me provide some context.

In 2010, economists Carmen Reinhart and Kenneth Rogoff released a paper,"Growth in a Time of Debt."

Their main result was that "… median growth rates for countries with public debt over 90 percent of GDP are roughly one percent lower than otherwise; average (mean) growth rates are several percent lower." The work suggested that countries with debt-to-GDP ratios above 90 percent have a slightly negative average growth rate.
This has been one of the most cited stats in the public debate during the Great Recession.

If politicians want to keep the borrow-and-spend party going "just one more election cycle" and if no one takes away the punchbowl, the Bang! moment will most certainly arrive. That is the clear lesson of history.

It is almost irrelevant whether that number is 90% or 120% or 80%. It will be a different number for each country, depending on the confidence that investors have in the ability of a country to pay back its debt

As Reinhart and Rogoff wrote:
Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang! – confidence collapses, lenders disappear, and a crisis hits.
Bang! is the right word. It is the nature of human beings to assume that the current trend will work itself out, that things can't really be that bad. The trend is your friend … until it ends. Look at the bond markets only a year and then just a few months before World War I. There was no sign of an impending war. Everyone "knew" that cooler heads would prevail.

Italy is in a currency union called the Eurozone.
A currency union cannot allow its members to run up debts beyond what the market is willing to finance,
or the whole currency union will collapse.

Austerity is a consequence, not a punishment. A country loses access to cheap borrowed money as a consequence of running up too much debt and losing the confidence of lenders that the debt can be repaid.

Lenders don't sit around in clubs and discuss how to "punish" a country by requiring austerity; they simply decide not to lend.

If Italy were in control of its currency, might it make sense to print a little in the meantime, as the US, Great Britain, and Japan are doing?

There is certainly a school of thought that says yes. But in a currency union of multiple countries that are all at different places on the economic journey, it is almost impossible to have a one-size-fits-all monetary policy.

Full text

Martin Wolf och Rolf Englund om att den som har en sedelpress går inte i konkurs.
Click


Highly Recommended
The Last Time The Dow Was Here..
Zerohedge 5 March 2013

It is Highly Recommended to click here for Full text


It is five years to the day since the world woke up to something bad happening to the balance sheets of the world's largest banks.
That's five years since banks started to worry about lending to each other - and the global financial system started to seize up.
Stephanie Flanders, BBC Economics editor, 8 August 2012

Back then it was difficult for many outside the financial markets to see the potential risks for the global economy. It took the collapse of Lehman's investment bank and a world recession - a year later - to demonstrate that.

But, even pessimists would have hesitated to predict that Britain would still be struggling to put the crisis behind it, in the middle of 2012.

I have a more personal way of dating the crisis: my daughter, Claudia. She was born just weeks before the collapse of Lehman Brothers. Everyone said I had "missed the big story".
Now that baby is starting school next month, and the "big story" is still going strong. Alas.

Full text

Stephanie has been a reporter at the New York Times (2001); a speech writer and senior advisor to the US Treasury Secretary (1997-2001); a Financial Times leader-writer and columnist (1993-7); and an economist at the Institute for Fiscal Studies and London Business School.
She became BBC economics editor in April 2008. She has won numerous awards, including the 2010 Harold Wincott Award for online journalism.
Her father was Michael Flanders, of the 1950s and '60s musical comedy duo, Flanders and Swann.
She lives in West London with her partner and their two children.



Ambrose Evans-Pritchard, the Telegraph's international business editor,
has followed the global financial crisis from the credit crunch to the eurozone debt crisis.
Here is a selection of news and views from his stories, blogs and columns over the past five years.
Daily Telegraph, 9 August 2012


Ekot om den globla skuldkrisen


Dow Charts - Crisis jargon buster, BBC


The risks of what Sir Mervyn King, the Governor of the Bank of England, on Wednesday referred to as
the “unimaginable and unmentionable”, by which he meant a disorderly breakdown of the euro,
are high and getting worse.
Jeremy Warner, Daily Telegraph 10 Aug 2011


e24 11 augusti 02:54


Statsminister Fredrik Reinfeldt uttalar sig i kväll för första gången om den senaste finansiella oron.
– Det som skulle behöva göras är att sätta handling bakom orden om hårdare sparkrav
SvD 10 augusti 2011 kl 21:45 med bild av R omgiven av livvakter

Reinfeldt i Aktuellt 10 augusti 2011 om finanskrisen
Klicka här

De flesta av oss minns, eller bör minnas, hur den svenska regeringen, ledd av Carl Bildt, lade fram åtstramningspaket efter åtstramningspaket, likt Grekland, Irland, Italien, Spanien och Portugal i dag.
Det slutade med 500 procents ränta och Bildts berömda misslyckande som gav oss en flytande växelkurs.
Krisländerna inom eurozonen (EZ som den ibland kallas) har inte bara stora skulder och underskott i sina statsfinanser.
De har också en felaktig kostnadsnivå.

Läs mer här, på Rolf Englund blog 19 juli 2011

Det blir inte bättre av att det blir sämre

- Det är en i Sverige vanlig uppfattning att det var Göran Perssons nedskärningar som satte fart på den svenska ekonomin. Nedskärningarna räddade landet, tror många.
Men det som satte fart på den svenska ekonomin var att kronan sjönk och dollarn steg när Carl Bildt hade gjort sitt misslyckande.

Läs mer här, på Rolf Englund blog 5 juli 2011


“Central bankers have so far been the tower of strength,”
said Stefan Schneider, chief international economist at Deutsche Bank AG in Frankfurt.
“Lawmakers have done everything to destroy belief in their ability to solve the problems they’re facing.”
Bloomberg 11 August 2011


On Wednesday Mr Sarkozy summoned members of his government back from holiday for an emergency meeting
In a statement after the two hour meeting in the Elysee Palace in Paris, Mr Sarkozy said France’s pledge to reduce the budget deficit from last year’s 7.1 per cent to 3 per cent by 2013
“will be kept whatever the evolution of the economic situation”.

Financial Times 10 August 2011

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Nouriel Roubini och Arne "Ratos" Karlsson oense

Another recession may not be preventable. But policy can stop a second depression.
Nouriel Roubini

Ett så kraftigt kursfall förutsätter att man tror det ska bli en global djup recession,
och det tror inte jag
säger Arne Karlsson, vd på Ratos

Rolf Englund blog 10 augsti 2011


The general view is now that in this, the next round of the Great Recession,
there is a high risk of things getting worse, with no effective instruments at governments’ disposal.
The first point is correct but the second is not quite right.
Throughout the crisis – and before it – Keynesian economists provided a coherent interpretation of events
Joseph Stiglitz, August 9, 2011

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Skandias Realräntefond har stigit med 7,5 procent i år
Mest av alla Skandias fonder
Läs mer här


Past peak oil - life after cheap fossil fuels
Bulent Gokay, professor of international relations at Keele University UK, 4 August 2011


När Peak Oil höjer prisena och ny-Hooveristerna kör åtstramning
UK riots: 16,000 officers policing London's streets
Rolf Englund blog 9 augusti 2011


The Federal Reserve pledged for the first time to keep its benchmark interest rate at a record low at least through mid-2013
in a bid to revive the flagging recovery after a worldwide stock rout.
Bloomberg Aug 9, 2011


The underlying cause of this mess is the same as it was in the banking crash and Great Recession of 2007-9
- which is the recycling of the great surpluses of the exporting nations, China, Germany and Japan,
into the unsustainable debts of the great consuming nations, the US, UK, and much of the eurozone.

Robert Peston, BBC Business editor, 9 August 2011


Everyone agrees that bold action is required, but what kind of bold action?
Kenneth Rogoff, Financial Times August 8, 2011

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The Wilshire 5000 Total Market Index, the broadest index of U.S. stocks, lost 891.93 points, or just over 7%, Monday.
This represents a paper loss for the day of approximately $1.0 trillion.
CNN August 8, 2011


The crisis that started in the US real estate sector in 2007
has devastated state finances on both sides of the Atlantic and is threatening to wreck the euro and trigger a second global downturn.
Der Spiegel 8 August 2011


"Det gäller bara Grekland", Mycket fiffigt, Too clever by half,
men allt var fel från början
Rolf Englund blog 2011-07-22


1937! So demand will be depressed in both crisis and non-crisis economies;
this will lead to a vigorous recovery through … what?
Paul Krugman, July 21, 2011, 11:51 AM


The eurozone is a modern version of the gold standard
with the expectation that long and painful adjustment processes in deficit countries would unfold without a systemic crisis.
Miguel Carrion, Eurointelligence 19 July 2011

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UK is the most indebted advanced economy in the world
At every level – public, corporate, household and financial – the UK is attempting to pay off its debts.
As long as this continues, there's unlikely to be much growth in real terms.
Jeremy Warner, Daily Telegraph, 19 July 2011

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The World's Biggest Gold Reserves
CNBC July 2011


Raising taxes or cutting spending has side effects that cannot be ignored.
Either one or both will make it more difficult for the economy to grow. Let’s quickly look at a few basic economic equations.
The first is GDP = C + I + G + net exports, or
GDP is equal to Consumption (Consumer and Business) + Investment + Government Spending + Net Exports (Exports – Imports). This is true for all times and countries.
John Mauldin 16 July 2011

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A question (to which I don’t have the full answer):
Why are the interest rates on Italian and Japanese debt so different?
As of right now, 10-year Japanese bonds are yielding 1.09 %; 10-year Italian bonds 5.76 %
Paul Krugman, July 16, 2011

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"50-60 procent nedsida för lägenhetspriserna"
säger Lars Wilderäng
e24 2011-07-12

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The Relationship Between Peak Oil and Peak Debt - Part 1 Gail Tverberg Tuesday, 12 July 201

The Economic Consequences of the Peak

Martin Wolf:
The US may be on the verge of making among the biggest and least-necessary financial mistakes in world history.
In the US, utopians of the right are seeking to smash the state that emerged from the 1930s and the second world war.
Via Rolf Englund blog


The key point here is the difference between raising the economy’s long-run growth rate, which is very hard,
and increasing demand when the economy is operating below potential, which isn’t hard at all.
Paul Krugman blog 12 July 2011

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50.2 billion USD, 330 miljarder SEK in May
The trade deficit in the U.S. widened in May to the highest level in almost three years, reflecting a surge in crude oil imports.
The gap grew 15 percent to $50.2 billion, exceeding all forecasts of 73 economists surveyed by Bloomberg News and the biggest since October 2008
Bloomberg 12 July 2011


Sverige, Irland och deras Tiger-ekonomier och bostadsbubblor
Rolf Englund blog 11 juli 2011


Tidskriften The Economist placerar Sverige bland de länder som har världens mest övervärderade bostadsmarknader.
Bara Hongkong, Australien och Frankrike anses ha mer uppblåsta huspriser.
DN 11 juli 2011


Confessions of a Financial Deregulator
Depression-era restrictions /Glass-Steagall/ on risk seemed less urgent,
given the US Federal Reserve’s proven ability to build firewalls between financial distress and aggregate demand.
New ways to borrow and to spread risk seemed to have little downside.
J. Bradford DeLong, project-syndicate.org, 2011


The Sorrow and the Pity of Another Liquidity Trap
I had read Hicks. I even knew Hicks. But I thought that his era, the Great Depression, had passed.
Brad DeLong, Bloomberg 5 July

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The truth is that creating jobs in a depressed economy is something government could and should be doing
Paul Krugman NYT 10 July 2011


Good, bad really, charts showing US Employment and Unemployment
John Mauldin 9 July 2011


While Democrats favor tax increases and mild adjustments to entitlements, Republicans pound the table for trillions of dollars of spending cuts and an axing of Obamacare.
Both, however, somewhat mystifyingly, believe that balancing the budget will magically produce 20 million jobs over the next 10 years.
Bill Gross, July 2011


Stall speed
Richard Yamarone notes that if year-over-year GDP growth dips below 2%, a recession always follows.
John Mauldin 2 July 2011


Debt ceiling
Although it is still very likely that Republican leaders in Congress will strike a last-minute deal with the White House,
the very fact that the two sides can contemplate a fight to the death over this issue is truly frightening,
not only for America but for the world as a whole.
Anatole Kaletsky, The Times July 6 2011


The Housing Horror Show Is Worse Than You Think
It starts with a steep decline lasting three or four years, followed by a brief rally that ends in years of stagnation.
The Dow took 35 years to return to pre-crash levels. The Nikkei trades at less than a third of where it peaked 22 years ago.
“The housing decline,” he says, “will be a long, multiyear process, and the multiplier effect across the economy will be enormous.”
Bloomberg 7 July 2011

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The employment population ratio fell to 58.2%, matching the lowest level during the current employment recession.
U-6, an alternate measure of labor underutilization that includes part time workers
and marginally attached workers, increased to 16.2%, the highest level this year.
CalculatedRisk 8 July 2011
Excellent graph


“Deleveraging” will dominate the rich world’s economies for years.
Done badly, it could wreck them
The process of deleveraging has barely begun
The Economist print July 7th 2011

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Europe Should Learn From Uruguay
In the 1990s he headed the advisory committees of international banks that negotiated debt-restructuring agreements for Argentina, Brazil, Mexico, Peru and Uruguay
Bill Rhodes, CNBC 7 Jul 2011


Angel Gurria, secretary general of OECD
dicusses whether there is a way out of the cycle of high debt and low growth that the developed world finds itself in.
Hard Talk BBC, 6 July 2011
Highly Recommended


Gary Shilling is looking for a brand new cyclical recession beginning in 2012
The economy, he says, is like a four-cylinder engine, and a recovery usually requires all four to be firing.
They are consumer spending, employment, housing and the reversal of the inventory cycle.
Howard Gold, MarketWatch 24 June 2011

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Nice, sort of, chart of Youth Unemployment
Sverige mellan Frankrike och Rumänien
The Economist 5 juli 2011


Grekland, Persson och Jens Henriksson
Det blir inte bättre av att det blir sämre
Rolf Englund blog 5 juli 2011


This is truly a tragedy
Barack Herbert Hoover Obama
Paul Krugman, New York Times, July 2, 2011


Many commentators remain complacent about the debt ceiling;
the very gravity of the consequences if the ceiling isn’t raised, they say, ensures that in the end politicians will do what must be done.
But this complacency misses two important facts about the situation: the extremism of the modern G.O.P.,
and the urgent need for President Obama to draw a line in the sand against further extortion.
Paul Krugman, New York Times, 30 June 2011

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Specter of Years of Stagnating Wages Haunts the Globe
Median male real US earnings have not risen since 1975
Average real Japanese household incomes after taxation fell in the decade to mid-2000s
And those in Germany have been falling in the past 10 years.
Chris Giles, Financial Times, 28 Jun 2011, via CNBC


Friedman and Keynes
Many economists agree that the drastic measures taken probably prevented a repeat of the Great Depression. But...
Howard Gold, MarketWatch 1 July 2011


Det är en i Sverige vanlig uppfattning att det var Göran Perssons motsvarande nedskärningar som satte fart på den svenska ekonomin. Nedskärningarna räddade landet, tror många.
Det som satte fart på den svenska ekonomin var att kronan sjönk och dollarn steg när Carl Bildt hade gjort sitt misslyckande.
Rolf Englund blog 29 juni 2011


Why austerity alone risks a disaster
Martin Wolf, Financial Times June 28, 2011

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Every intervention so far has pretended that the crisis is one of liquidity, which can be solved by making loans to the troubled banks and governments in question.
Since there has been no open admission of default or debt restructuring by any of the troubled nations, the banking sector has not been forced to write down debt and raise more capital.
Gavyn Davies, FT blog June 19, 2011

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Denial of peak oil becomes more dangerous by the day.
The Obama administration prattles about clean energy, solar, wind and ethanol,
when petroleum powers 96% of the transportation sector and 44% of the industrial sector.
Nice Chart
TheBurningPlatform 15 June 2011


So I sent the government another request: in the light of what the IEA has revealed, what contingency plans has the UK now made?
The response amazed me: "With sufficient investment, the government does not believe that global oil production will peak between now and 2020 and consequently we do not have any contingency plans specific to a peak in oil production."
treehugger, 17 June 2011

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What is the “stall speed” of an economy?
Unemployment tends to rise when GDP growth falls below about 2.5-3 per cent
Gavyn Davies blog June 15, 2011


Whenever a big bank becomes insolvent, the Chancellor is faced with a stark choice.
Either you can bail the bank out with taxpayers’ money, his officials will tell him, or tomorrow there will be mayhem in the markets followed by economic collapse.
With the gun placed firmly against his head, the Chancellor will always opt for the apparent lesser of the two evils, and order a bail-out.
Jeremy Warner, Daily Telegraph 15 June 2011


According to the NBER, the “Great Recession” is now two years behind us,
but the recovery that normally follows a recession has not occurred.
While growth did rise for a while, it has been anaemic compared to the norm after a recession, and it is already trending down. Growth needs to exceed 3 per cent per annum to reduce unemployment—the rule of thumb known as Okun’s Law—and it needs to be substantially higher than this to make serious inroads into it. Instead, growth barely peeped its head above Okun’s level.
It is now below it again, and trending down.
Steve Keen June 11th, 2011

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The government was warned by its own civil servants two years ago that there could be
"significant negative economic consequences" to the UK posed by near-term "peak oil" energy shortages.
Terry Macalister, guardian, 15 June 2011

The Department of Energy and Climate Change (DECC) is refusing to hand over policy documents about "peak oil" – the point at which oil production reaches its maximum and then declines – under the Freedom of Information (FoI) Act, despite releasing others in which it admits "secrecy around the topic is probably not good".
Terry Macalister and Lionel Badal, The Observer, 22 August 2010

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It's official:
The housing crisis that began in 2006 and has recently entered a double dip
is now worse than the Great Depression.

CNBC 14 Jun 2011

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Nouriel Roubini:
Världsekonomin hotas av en ”perfekt storm” bestående av usla amerikanska statsfinanser,
omstrukturering av skulder i EMU, stagnation i Japan och inbromsning i Kina
DI 2011-06-13

Roubini Says ‘Perfect Storm’ May Threaten Global Economy
Bloomberg 13 June, 2011

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BP Report
China Surpasses US As Largest Energy Consumer;
World Has 46.2 Year Of Proved Oil Reserves;
Crude Has Lots Of Upside In Real Terms
zerohedge, 8 june 2011


The extent of global oil demand is a subject that generates surprisingly little attention.
The reality is, though, that worldwide oil consumption is escalating far faster than is commonly understood.
New estimates by BP suggest that by 2030 the world will be consuming 40pc more energy than it does today.
Liam Halligan, Daily Telegraph 11 Jun 2011

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Who’s Been Buying Treasuries?
Tim Iacono 10 June 2011

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Robert Shiller, co-creator of the S&P/Case-Shiller Home Price Indices
Claiming that he wasn't making any predictions, he predicted that home prices could fall another 25 percent.
"Statisticians deal with things that repeat themselves. This housing boom and bust is so historic and unprecedented, you can't forecast the future because you have no comparison."
Diana Olick, CNBC Real Estate Reporter, 10June 2011


Household wealth has only recovered about half the $16.4 trillion lost in the Great Recession.
One reason that the U.S. economy still struggles to achieve sustained growth is that Americans are a long way from recovering the
trillions of dollars of household wealth lost during the Great Recession.
CNN 9 June 2011

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How could any central banker with half a brain have looked at that graphic
in 2003, 2004, and 2005 and not thought that there was some pretty big trouble ahead?

Tim Iacono, 8 June 2011

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It is time to drop the emphasis on core inflation
Why the Fed will repeat its worst error
Is the Fed doomed to repeat its most infamous mistake,
the 1937 monetary tightening that extended the Great Depression?
Colin Barr, CNN, 6 June 2011

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Frankfurter Allgemeine;
Deutsche Banken bangen mit Griechenland

The irony of all this is that Germany would take the biggest hit if there was the private sector participation that Angela Merkel and Wolfgang Schäuble are always asking for.
Eurointelligence 7 June 2011

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Är det rätt att stimulera ekonomin med ökade statliga utgifter i samband med en kris, som Keynes menade?
Eller kan stimulanspolitik snarare hämma den långsiktiga tillväxten, enligt Hayeks synsätt?
Om stimulansåtgärder finansieras med hjälp av tidigare överskott snarare än genom massiv belåning är riskerna med stimulanspolitik små.
Johnny Munkhammar och Nima Sanandaji, Svensk Tidskrift, 20 maj 2011

Grekland, Spanien och grunderna i macro BNP är C + I + G +/- X Skall det vara så svårt att förstå för microhjärnorna?
Rolf Englund blog 2010-05-29


1991–1994 kom realräntechocken. Det rationella vore att släppa den fasta växelkursen.
Industrin kraschade, men regeringen behöll växelkursen, och lånade 600 miljarder för att hålla uppe statsutgifterna.
Nils-Eric Sandberg, Kristianstadsbladet 1 juni 2011


Has Vietnam turned a corner and become a good opportunity for investors?
CNBC 3 June 2011


USA: Huspriserna ner, arbetslösheten upp.
Det borde vara tvärtom för att krisen skall vara över
Rolf Englund blog 3 juni 2011


Home prices in Q1 of this year are now 2.9 percent below the previous quarterly bottom in Q1 of 2009,
effectively giving up all the gains of the past few years, which were of course fueled by the home buyer tax credit.

Diana Olick, CNBC Real Estate Reporter, 31 May 2011


the economy will need to add 200 thousand jobs per month to hold the unemployment rate steady.
The economy gained a mere 54,000 jobs in the month
The unemployment rate worsened to 9.1% from 9% in April
CNN June 3, 2011


The debate over post-crisis monetary and fiscal policy has been heating up, on both sides of the Atlantic.
So who is right? It will come as no surprise that economists disagree deeply.
Martin Wolf, Financial Times, 2 June 2011

---

A strange thing has happened to policy discussion: on both sides of the Atlantic,
a consensus has emerged among movers and shakers that nothing can or should be done about jobs.
Paul Krugman 29 May 2011

---

The disappointing economic data on US activity in recent months has brought a key policy debate back into focus.
The Keynesian side of this debate has been well served, with frequent outstanding contributions from Paul Krugman, Brad DeLong and others.
But I have had more trouble finding serious economic contributions from the classical school, even though they seem to be gaining ground in political and policy circles on both sides of the Atlantic.
For that reason, I was particularly interested in the recent lecture on the US recession given by the University of Chicago’s Robert Lucas.
Lucas is universally recognised as an intellectual giant, and his lecture gives a neat synopsis of what the classical school currently thinks, straight from the horse’s mouth.
Gavin Davies FT blog 31 may 2011


One Sunday in October 2008, Alistair Darling flew back from Washington to find Britain on the brink of banking meltdown. The chancellor was told by his Treasury officials that unless a rescue plan was announced by the time the City opened for business the following morning, there was no guarantee that cashpoints would work and that cheques would be honoured.
The possibility of global financial implosion concentrated minds wonderfully; bailout plans were announced that ensured disaster was averted. Co-ordinated and collective action meant there was no return to the 1930s, and within six months most countries were recovering.
Larry Elliott, Guardian, 31 May 2011


Not just that the global economy remains severely unbalanced or that it is business as usual in an unreformed financial sector.
It is not even that the euro area could trigger the sort of mayhem last seen in the autumn of 2008.

It is that oil prices have been rocketing and greenhouse gas emissions increased by a record amount last year.
There is the potential there for not just one crisis but three: a situation where the ATMs freeze up, the planet warms up, and the lights go out
Larry Elliott, Guardian, 31 May 2011

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Consider this:
It took all of human history into the 20th century to reach a population of 2 billion.
But in just the next 40 years, the world will add another 2 billion (for a total of 9 billion).
agriculture, as well as oil, metals, and other materials
CNN/Fortune 26 May 2011


IMF: Svenska huspriser för höga
Sveriges exit från den globala krisen har varit unikt lyckad vid jämförelse med andra länder inom EU.
”Bostadspriserna förefaller övervärderade och ett utdraget prisfall verkar sannolikt”
Dagens Industri 2011-06-01

"We estimate that house prices have peaked, and we believe that interest rates are set to continue to rise.
Therefore house prices will probably continue to fall," said Peter Doyle at the IMF said
The IMF warned in its annual assessment of the Swedish economy, that Swedish house prices are in line for a fall even if the eurozone debt crisis does not impact on growth.
thelocal.se, 1 June 2011

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Deja vu for the global economy
As explained in this earlier blog, economic fundamentals suggest that oil prices may have trouble maintaining their present levels,
and seem quite likely to drop by 10-20 per cent in coming quarters.
If that proves correct, then the global slowdown, like last year’s, will prove temporary.
If not, then it is a different ball game entirely.
Gavyn Davies May 29, 2011


Co-Founder Of Reaganomics, Paul Craig Roberts:
"There Is Probably More Democracy In China Than There Is In The West"
not in Greece, not in Ireland, not in the UK, not here, the outcomes are always to punish the innocent and reward the guilty.
Youtube via Zerohedge 23 May 2011


The reckless masters of "economic armageddon"?
There have been many books written about the financial crisis: What caused it, who’s to blame and how it could have – and should have – been prevented
This new one, “Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon,” lives up to its lengthy title and gets deep into the weeds of who did what, when and how.
In short, Gretchen Morgenson and Joshua Rosner name names and connect the dots.
CNN 27 May 2011 with nice pic

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The only thing that could prevent another oil shock from happening before the end of 2012 would be another major economic contraction
One part I whiffed on was in my prediction that the world community would have embraced the idea of Peak Oil by now and begun adjusting accordingly
Perhaps things are being differently and more seriously considered behind closed doors, but out in public the dominant story line concerns reinvigorating consumer demand, not a looming liquid fuel crisis.
How the major economies can continue proceeding with a business-as-usual mindset given the oil data is really quite a mystery to me
Chris Martenson's Blog, May 27, 2011

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The Arab uprisings and the world financial crisis
What they have in common is the complete failure of almost all these experts to predict them.
The moral is to try to understand a bit more and compute a bit less.
Samuel Brittan, FT, May 26 2011

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De svenska bostadspriserna ligger enligt OECD 34 procent över
ett långsiktigt genomsnitt i förhållande till inkomsterna
DI 27 maj 2011


Bomarknaden har bromsat in
DN 27 maj 2011


Nygammal kunskap om orsak och verkan budgetunderskott och konjunktur
Rolf Englund blog 27 maj 2011

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Varför har skuldökningstakten överstigit inkomstökningarna i drygt ett decennium?
Lånefebern har svalnatoch är nu den lägsta sedan i december 1998.
Tillväxttakten för hushållens skuldberg växlade i april ned till 7,2 procent i årstakt.
Det kan jämföras med 7,3 procent i mars
Cecilia Hermansson, DI 26 maj 2011

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The Coming Economic Contraction
Economic contraction, the lowering of material wealth standards especially for the middle classes,
is more complex than the simple redistribution of tiny increments of wealth from the multitude to the aggressively rich.
James Keye / May 25th, 2011


Statskassan väntas bidra med 33 miljarder kronor 2011 till räntesubventioner för att de svenska hushållen ska kunna fortsätta jaga sitt drömboende.
Hushållens ränteavdrag väntas explodera mellan 2010 och 2011 till 124 miljarder kronor,
enligt Ekonomistyrningsverket ESV:s prognos
DI 25 maj 2011

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Bundesbank President och Grekland – “the central bank equivalent of nuclear deterrence:
defy us and we will blow up the world”

Rolf Englund blog 25 maj 2011


The western world is in serious economic and political trouble
Europe is ensnared in a debt crisis that threatens the future of its single currency, and the social stability of the European Union.
The US cannot control its budget deficit and must contend with infantile politics and a palpable sense of national decline.
Gideon Rachman, FT 23 May 2011


According to an index that Comeback America developed, the US is in worse shape from a fiscal standpoint than debt-plagued nations such as Italy or Spain
CNBC 23 May 2011


Svenska bankers riskabla dollarlån uppgår till 450 miljarder kronor
Vice riksbankschefen Lars Nyberg satte nyligen fingret på en annan öm punkt. Under finanskrisen fick de svenska bankerna problem med att betala sina amerikanska lån eftersom det saknades dollar.
Riksbanken fick undsätta bankerna med dollar från valutareserven, men också med dollar som den amerikanska centralbanken Fed ställde upp med.
Patricia Hedelius, e24, 23 maj 2011

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För att räkna ut den verkliga avkastning som tillexempel en köpare av statsobligationer får på sina utlånade pengar brukar man tala om realränta, det vill säga räntan justerad för inflation.
I USA är den ettåriga realräntan idag minus 3 procent, i Storbritannien minus 4 procent, i Tyskland minus 1 procent.
Även i Sverige är realräntan negativ
Andreas Cervenka, SvD Näringsliv 20 maj 2011

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"I wrote the software that turned mortgages into bonds"
Michael Osinski’s reflection on his Wall Street days when he created the software program
that turned mortgages into mortgage backed securities, enabling them to be traded around the world.
via Tim Iacono, May 18, 2011

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Don’t let another politician run the IMF
The fund is designed to push tough policies to straighten out countries that have mismanaged finances,
not win a popularity contest
Raghuram Rajan, professor at the University of Chicago Booth School and former IMF chief economist
Financial Times 19 May 2011


The housing market
The darkest hour
House prices dropped 3.3% in the year, the fastest decline since November 2009
That would mean big trouble for the economy.
The Economist print 19 May 2011

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Oil-producing countries have been warned /by IEA/to increase output
to safeguard global economic recovery or face the threat of the release of strategic stockpiles of oil
by western countries for the first time since 2005

Financial Times 19 May 2011


Watch out for tail risks hanging over the $14,300bn US Treasuries market
Risky to fund long-term holdings with short-term debt.
Gillian Tett, Financial Times, 19 May 2011


Something has gone badly wrong in the American labour market in recent years.
Once the envy of the developed world, US unemployment has risen much more sharply than in other economies since 2008,
and this has come after a prolonged period in which the number of jobs in the economy has been considerably less responsive to GDP growth than used to be the case.
So what has changed?
Gavyn Davies FT blog 6 May 2011


Sleepwalking through America’s Unemployment Crisis
The scope and composition of unemployment in America – a problem that is yet to be sufficiently recognized
for its increasingly detrimental impact on the country’s social fabric, its economic potential, and its already-fragile fiscal position and debt dynamics.
Mohamed A. El-Erian, ProjectSyndicate, 2011-05-01


The most interesting moment at a recent conference held in Bretton Woods economic came when Martin Wolf quizzed Larry Summers
"[Doesn’t] what has happened in the past few years, simply suggest that [academic] economists did not understand what was going on?”
Here is the most interesting part of Summers’ long answer: “There is a lot in [Walter] Bagehot that is about the crisis we just went through. There is more in [Hyman] Minsky, and perhaps more still in [Charles] Kindleberger.”
That may sound obscure to a non-economist, but it was a devastating indictment.
J. Bradford DeLong, 2011-04-29
Very Important Article


Finanspolitiska Rådet om Fastighetsskatten, maj 2011
Legitimitetsproblemet borde kunna lösas inom ramen för grundprinciperna att investeringar i och konsumtion av bostäder inte ska subventioneras i skattesystemet och att rörligheten på bostadsmarknaden inte ska hämmas
Klicka här


The activity of high frequency traders and the algorithms they used one year ago today when a ‘flash crash’ rattled the markets worldwide
should cause the Securities and Exchange Commission to “thoroughly” examine their role,
said agency chief Mary Schapiro, CNBC 6 May 2011


How long before a new financial crisis?
If the core ingredients of a financial crisis are boundless optimism, excessive leverage and overpriced assets,
then we are already in dangerous territory less than three years after the collapse of Lehman Brothers
John Plender, Financial Times, 17 May 2011

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Oil prices are likely to continue rising because the world's oil reserves are dwindling,
The world uses 86 million barrels of oil every day, he pointed out, adding: "we found some big oil fields in Brazil and let's say the bull estimates there are correct, that's still only two years worth."
famous investor and commodities bull Jim Rogers told CNBC 5 May 2011


Svenska bostäder är övervärderade med runt 20 procent, enligt Bostadskreditnämnden BKN
Hushållens rekordstora skulder på en övervärderad bostadsmarknad ökar Sveriges sårbarhet inför nästa kris, varnar statliga Bostadskreditnämndens analytiker.
Men SBAB:s chefsekonom anser att riskerna minskar
Dagens Industri 17 maj 2011


Lista: Så mycket kostar huset
Under den senaste tremånaders perioden kostade ett småhus i snitt 2.028 miljoner kronor i Sverige.
DN 17 maj 2011


Kenneth Rogoff, former chief economist of the International Monetary Fund and now a professor at Harvard University,
Given the low growth, he says, inflation above central banks’ targets could be helpful:

“A bit of inflation is by far the lesser evil compared with even lower growth.
Five per cent inflation for 2 to 3 years is not the end of the world. There are even some benefits.”
Financial Times 13 may 2011

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The U.S. trade deficit widened in March, to $48.2 billion
Exports grew 4.6 percent to a record $172.7 billion.
Imports grew 4.9 percent to $220.8 billion
as the average price for imported oil hit $93.76 per barrel, the highest since September 2008.
CNBC 11 May 2011


Tar oljan snart slut?
Danne Nordling blog 14 juni, 2006, OBS 2006

Jag var igår 13/6 på Nationalekonomiska föreningen och lyssnade på professor Marian Radetzki, som talade över ämnet "hur högt kan oljepriset bli". Det bestod till större delen av en kritik mot de s k oljepessimisterna eller "peak-oil-företrädarna" som hävdar att oljekonsumtionen kulminerar när hälften av alla resurser förbrukats. Detta kommer att inträffa det här årtiondet pga resursbrist.

Debatten började den 12 maj 2005 då professor Kjell Aleklett, ordförande i ASPO, the Association for the Study of Peak Oil&Gas, skrev ett inlägg på Brännpunkt i SvD där Kinas stigande konsumtion anfördes som argument för att toppen för oljekonsumtionen snart är nådd.

Läs mer här


Peak Oil at - ABC (Australian Broadcasting Corporation)
I it is interesting to watch the issue creep into the mainstream media

Liks to videos at youtube
May 2011


Peak oil kommer att sänka vår levnadsstandard
Peak Oil innebär att oljeproduktionen når ett maximum och sedan dalar mot noll. Peak Oil sägs ha inträffat i Texas 1971 och i Norge för tio år sedan. Det viktiga ur ekonomisk synpunkt är vad som händer när det uppstår en brist, när efterfrågan överstiger tillgången. Det nya är att efterfrågan från länder som Indien och Kina blivit större vad vi tidigare hade en aaaning om.
Det skriver Rolf Englund, tidigare på Timbro, och en av grundarna av Medborgare mot EMU, Newsmill 2011-05-03


Just as we began to see at least the potential for peak oil and a rapid decline in the quality of some of our resources, we had the explosion of demand from China and India and the rest of the developing world.
Here, the key differences from the past were, as mentioned, the sheer scale of China and India and the unprecedented growth rates of developing countries in total. This acceleration of growth affected global demand quite suddenly.
Jeremy Grantham, the Chief Investment Officer of GMO Capital, with over $106 billion in assets under management, oilprice.com, 2nd May 2011


What's wrong with America's economy?
The biggest dangers lie in an area that politicians barely mention: the labour market.
The Economist print April 28th 2011


Peak Oil
The reason, as with so many global economic trends, can be summed up in a single word: China.

Since 2008, the last time oil passed $100 per barrel, demand in the developed world has fallen by 2.7m barrels per day,
or 6 per cent, and 4 per cent in the US, according to Trevor Houser of the Rhodium Group in New York.
At the same time, demand in developing countries has grown by 4.4m b/d, or 11 per cent, with China accounting for roughly half that growth.
FT April 25 2011


Peak Oil
Vi måste anpassa oss i betydligt snabbare takt än vi hittills gjort
Kjell Aleklett, Brännpunkt 23/4 2011


It's as if 2008 never happened.
Once again the world's investors are pumping up bubbles that will probably explode in their faces.
Bloomberg Businessweek's Economics editor Peter Coy, April 14, 2011

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In the depths of the financial crisis, many analysts pointed to the role of economics in causing the debacle.
Since then, though, whereas the bankers have been subject to continual harassment and threats of reform, the economists have managed to slip away into the night.
The searchlight needs to pick them out again. Having played a major role in causing the financial crisis, heaven knows what future disasters they will spring on us.
Roger Bootle, Daily Telegraph 24 Apr 2011


The combination of rising gasoline prices and the steepest increase in the cost of food in a generation
is threatening to push the US economy into a recession,

according to Craig Johnson, president of Customer Growth Partners
CNBC 21/4 2011

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In May 1931, a Viennese bank named Credit-Anstalt failed.
Founded by the famous Rothschild banking family in 1855, Credit-Anstalt was one of the most important financial institutions of the Austro-Hungarian Empire,
and its failure came as a shock because it was considered impregnable.
Bloomberg Businessweek's Economics editor Peter Coy, April 20, 2011

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The UK Industry Taskforce on Peak Oil and Energy Security (ITPOES)
is a group of British companies concerned that threats to energy security are not receiving the attention they merit.


The advanced countries are in no sense back to normality:
fiscal deficits remain exceptional; monetary policy is hugely accommodative; the financial sector is fragile, particularly in the eurozone; credit growth has been remarkably slow in the US and eurozone; households of several countries, including the US and UK, remain highly indebted; and there exists the possibility of sovereign defaults, bank failures or both within the eurozone.
Moreover, despite the scale of the monetary and fiscal stimuli applied, the recovery in these countries is still expected to be anaemic
Martin Wolf, FT April 19 2011

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I fjol så höjde 350.000 eller 12 procent av samtliga bolånetagare sina bolån med mer än 10.000 kronor samtidigt som de bodde kvar
237.000 personer höjde bolånen med mer än 100.000 kronor
DI 20/4 2011

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Credit rating agencies should never be taken too seriously, but for Standard & Poor's to put the United States on "negative outlook" is none the less something of event
Jeremy Warner, Daily Telegraph, 18 April 2011


Oljan har tagit miljoner år att bildas. Och på dryga 100 år har vi förbrukat hälften av jordens oljetillgångar...
På mindre än tjugo år skall vi konsumera vad som återstår...
Hur har det kunnat bli så?
Gunnar Lindstedt i boken "Olja - Jakten på det svarta guldet när världens oljekällor sinar", 2005


So says Goldman Sachs
"A key reason for concern is the sharp rise in gasoline prices so far in 2011
which is siphoning off household income at a run rate equivalent to $100 billion per year,"
writes economist Andrew Tilton CNN 18/4 2011


Svenska banker har skulder i utländsk valuta motsvarande på 1,5 gånger Sveriges BNP
Enligt Riksbankens senaste stabilitetsrapport är de svenska bankernas beroende av marknadsfinansiering bland de högsta i Europa.
Och en allt större del av pengarna till kredittörstiga svenska hushåll hämtas utomlands.
Andreas Cervenka, e24, 17 april 2011


After the Latin American debt crisis in the 1980s, US regulators lied about the health of American banks until they were in a position to take a voluntary haircut on their bad loans.
The Brady Plan holds important lessons for euro-zone governments looking for a way out of the current debt crisis.
Jacob Funk Kirkegaard, Der Spiegel 14/4 2011


An extra $20 a barrel means America will pay an additional $69.3 billion /SEK 431 miljarder/ each year
Simon Hobbs, CNBC 14 Apr 2011

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A Senate panel issued a scathing report that describes
Goldman Sachs as a "case study" of the recklessness and greed on Wall Street
that set off the 2008 financial crisis.

CNN 14/4 2011


It is a question asked repeatedly across America:
why, in the aftermath of a financial mess that generated hundreds of billions in losses,
have no high-profile participants in the disaster been prosecuted?

New York Times, 14 Apr 2011

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World-Record
China Reserves Pass $3 Trillion
Policy Challenge for G-20
Bloomberg 14 april 2011


Svenska banker tillhör tillsammans med banker baserade i Australien, Hong Kong och Singapore de bättre kapitaliserade bankerna.
En lärdom från den senaste finansiella krisen är dock att även om banker är relativt välkapitaliserade
kan detta förhållandevis snabbt förändras.
Budgetprop. våren 2011, sidan 47


Tepco - Tokyo Electric Power - is Lehman Brothers times 10.
It really is too big to fail
David Pilling, FT, April 13 2011

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According to a study by PriceWaterhauseCoopers, the total volume of bad debt
in five EU countries – Germany, UK, Italy, Spain and Ireland rose 14% to € 688 bn in 2010.
The largest chunk came from the German banks, whose estimated bad debts rose 7% at € 225 bn /SEK 2 025 miljarder/
Eurointelligence 14/4 2011


RE: "Tsunamani sinks all the boats"
Eurozone banks need to address serious weaknesses in their funding, the report argued,
citing a $3,600bn “wall of maturing debt” coming due in the next two years across the globe,
with Irish and German banks facing the greatest difficulties in rolling over funding.
about IMF global financial stability report, FT 13/4 2011


Dominique Strauss-Kahn, managing director of the IMF,
warned countries against cuttting their budgets
too far and creating long-term unemployment
Daily Telegraph 13/4 2011


The U.S. trade deficit, with and without petroleum
Click here


The /US/ petroleum /trade/ deficit decreased in February
as the quantity declined even as import prices continued to rise
Prices will be even higher in March and April
CalculatedRisk 12/4 2011

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The size of the subsidy taxpayers provide to big banks,
through their (our) implicit promise to banks that they won't be allowed to fail

Robert Peston BBC 12 April 2011


The nightmare of taking on ‘too big to fail’
The objective of regulation is not to prevent bank failures.
Governments cannot prevent them – though they can bail out failed banks
John Kay, FT April 12 2011


U.S. and Brent crude futures pushed higher Tuesday, despite a fresh warning from the International Energy Agency that high prices could erode demand
a flat reading of Saudi Arabian production raised questions about spare capacity
CNBC 12 Apr 2011


There are a couple of things to say about Britain’s banks
They still pose a serious threat to the nation’s long-term stability and prosperity.
They rely for their profits – and for the huge bonuses paid to senior staff – on the fact that taxpayers are underwriting the risks.

Thus public subsidy is turned into private profit
Philip Stephens, FT, April 11, 2011

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Gordon Brown told a US conference he had not realised the "entanglements" of global institutions
BBC 11/4 2011


The thinking behind the ring-fencing recommendation is that if the wholesale or investment banking arm of a universal bank were to go bad, the retail operation - which looks after our savings, lends to business and moves money around - would not be tainted.
Robert Peston, BBC, 11 April 2011


The Volcker rule
Why fences, walls and other myths cannot save us from bankers' risks
- a dilemma shared by much of the Western world
IBC's solution is built on a series of myths, myths that have been ruthlessly promoted by the UK banking lobby
Liam Halligan, Liam Halligan, Daily Telegraph, 9 Apr 2011

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I today, April 11th 2011, hereby declare to have invented the phrase
The Economic Consequences of the Peak
Rolf Englund Read more here


Peak Oil and the Second Great Depression (2010-2030):
A Survival Guide for Investors and Savers After Peak Oi
Kenneth D Worth 2011

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Sweden’s housing boom from 1997 to 2007 lasted 11 years and resulted in an above-trend increase of house prices by 67 percent,
Only France was close with an above-trend increase by more than 50 percent over nine years
Bloomberg 7/4 2011


Bor vi i en bubbla?
Är de stigande bostadspriserna i kombination med den ökande utlåningen exakt
de förutsättningar som behövs för att bostadsbubblan ska blåsas upp som luftskeppet Hindenburg?
Erik Helmerson, Signerat, DN 7/4 2011

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Waiting for the great rebalancing
I can say that nine trillion dollars is surely enough
Martin Wolf April 5 2011

Top of page


German banks are among the biggest holders of eurozone sovereign debt
– with €46.5bn of bonds from the governments of Greece, Ireland, Portugal and Spain combined,
according to the most recent data from the Bundesbank
The banks have another €91bn of exposure to those countries’ banking sectors
James Wilson and Gerrit Wiesmann, FT, April 5, 2011


Federal Reserve policy is keeping Treasury yields too
low to provide reasonable returns for most investors

Pimco's Bill Gross told CNBC 5 Apr 2011

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Sveriges bostadsägare lever farligt.
Den slutsatsen går att dra utifrån den forskningsrapport som Riksbanken presenterade i dag.
Hoten är många – räntorna stiger, utbudet av bostäder växer och olika regleringar ökar kostnaderna.
För att dämpa riskerna finns många metoder.
En av dem kan vara en ny konjunkturstyrd bolåneskatt
Annika Creutzer, e24 5/4 2011

Riksbankens utredning om riskerna på den svenska bostadsmarknaden
De höga svenska bostadspriserna kan i stor utsträckning förklaras av det man brukar kalla fundamentala faktorer, det vill säga att det finns naturliga ekonomiska förklaringar till den prisstegring som har skett
DI 5/4 2011

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In this New York Times story the other day, Floyd Norris noted the relationship between home prices and the Consumer Price Index’s measure of the same
- the nefarious “owners’ equivalant rent”
– a subject that is near and dear to the heart of yours truly
Tim Iacono April 4, 2011


The price of Brent crude edged above $120 a barrel
a two-and-a-half-year high
BBC 4 April 2011

Top of page


ECB and The Taylor Rule - a difference of 9 per cent
President Trichet’s European Central Bank again faces the conundrum that its monetary policy rarely suits all 17 members of the euro area
Spain, Portugal, Ireland and Greece would need an average rate of minus 4.6 percent, according to estimates by Credit Suisse equity strategists.
Germany requires a rate of 4.5 percent, they say.
Bloomberg Apr 4, 2011


Even Marc Faber isn’t perfect.
His best prediction of all time, he says, was also the worst investment call he’s ever made.
“That was the prediction that the tech bubble would burst,” which he made in 1998.
“But it came two years too early.”

CNBC 1 Apr 2011

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The trouble with this latest US recovery
it is built on monetary and fiscal policies which are wildly expansionary,
wholly unsustainable and will surely soon come to an end
Liam Halligan, Daily Telegraph 2 Apr 2011

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As an example, if the working age population grows 2.5 million per year and the participation rate rises to 65% (from 64.2%) over the next two years, the economy will need to add 200 thousand jobs per month to hold the unemployment rate steady.
Here is a repeat of the graph showing the US participation rate, unemployment rate, and employment-to-population ratio.
CalculatedRisk 3/4 2011 with, as usual, excellent charts

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Republicans
Mellon-style liquidationism is now the official doctrine of the G.O.P.
“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.”
Paul Krugman, New York Times, March 31, 2011

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Bara en floskelavtrubbad EU-byråkrat kan kalla en blyväst för en livboj och förvänta sig att bli trodd.
Politikernas räddning av krisande euroländer ser i själva verket ut att vara en enkelbiljett till den undergång de påstår sig vilja undvika
Andreas Cervenka, SvD Näringsliv 1 april 2011


The chart shows US real median household income since 1967
Real median income will not have grown for almost 14 years
Can You Say Jobless Recovery?
John Mauldin 2/4 2011
Nice charts

Top of page


Were it not for people dropping out of the labor force,
the US unemployment rate would be over 11%

Mish 1/4 2011
Nice charts

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The Irish finance minister, Michael Noonan, said that 30 September, 2008, will go down in history as the blackest day in Ireland since the Civil War.
That was the fateful day on which the then Irish government extended its infamous guarantee to the banks, and thereby saddled the Irish taxpayer with liability for years of excessive, corrupt and injudicious lending.
Jeremy Warner, Daily Telegraph March 31st, 2011

I find it unforgivable that the last Irish government guaranteed bank debt so insouciantly and that the rest of the European Union has supported this decision.
For a sovereign to destroy its own credit, to save creditors of its banks, is plainly wrong.
It does not make it better, but worse, that it is doing so largely to protect financial systems in other countries.
Martin Wolf, FT March 8 2011


Liksom för Irland så är inte Spaniens största bekymmer att statsfinanserna spårade ur, som för Grekland och i viss mån Portugal,
utan att landets privata sektor och banker har bygg upp och finansierat en gigantisk fastighetsbubbla.
(Såväl de irländska som de spanska bankerna har i sin tur finansierat sig hos andra europeiska insititut.)
Per Lindvall e24, 1/4 2011


Keynes’s landmark 1936 General Theory
As he saw it, the propensity to save has exceeded the propensity to invest throughout most of recorded history.
The unpopularity of very low interest rates leads to what is known in financial circles as “the search for yield”.

Samuel Brittan, FT March 31 2011

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This is not a joke
At the height of the financial crisis, the Federal Reserve allowed the world’s largest banks to turn more than $118 billion in junk bonds, defaulted debt, securities of unknown ratings and stocks into cash.
Collateral of those asset types made up 72 percent of the total $164.3 billion in market-rate securities pledged to the Fed on Sept. 29, 2008, two weeks after the bankruptcy of Lehman Brothers
CNBC Apr 1, 2011


Those new GDP figures I mentioned yesterday showed real household disposable income falling by 0.8% in 2010.
That's the first time this measure has fallen since 1981.
As Graham Turner of GFC Economics has pointed out, it's also the largest annual decline since 1977
Stephanie Flanders, the BBC's economics editor, 30 March 2011


German president and SPD chief attack bankers
Like his predecessor Horst Köhler, who had called the financial markets “a monster”, German President Christian Wulff attacked the bankers by accusing them of being highly paid inhabitants of a parallel world.
Eurointelligence 1/4 2011

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Home prices are falling in most major U.S. cities, and the average prices in four of them are at their lowest point in 11 years.
The Standard & Poor's/Case-Shiller 20-city index shows price declines in 19 cities from December to January. Eleven of them are at their lowest level since the housing bust.
Home values in Atlanta, Las Vegas, Detroit and Cleveland are now below January 2000 levels.
CNBC 29/3 2011


Säkerheten går före allt annat, säger den tyska förbundskanslern Angela Merkel. Men det är inte sant.
Tillväxten går före allt annat. Drömmen om att kunna leva i överflöd eller åtminstone välstånd är i dag spridd över hela världen, egentligen den enda globaliserade religionen i vår tid, en dröm som bokstavligen livnär sig på energi.
Och utan kärnkraft och fossila bränslen är den drömmen slutdrömd;

Richard Swartz, kolumn DN 2011-03-19

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“Black Swan” events — those well outside an ordinary distribution of outcomes — that cause massive losses
Peddlers of tail-risk products like to compare them to insurance
The Economist print 24/3 2011


Real vs Nominal Housing Prices: United States 1890-2010
Yves Smith nakedcapitalism

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Marcus Wallenberg vill inte se strängare eller tidigarelagda regler för svenska banker.
Anders Borgs utspel om att Sverige ska gå i bräschen för införandet av ett nytt regelverk för banker, har inte tagits emot med någon större glädje av de svenska storbankerna.
DI 24/3 2011


De svenska hushållen fortsätter att låna.
Under 2010 ökade lånen med 188 miljarder.
e24 24/3 2011

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Federal Reserve Bank of Dallas President Richard W. Fisher said he sees “extraordinary speculative activity” in the U.S.
after the central bank pumped record amounts of stimulus into the economy.
Bloomberg 23/3 2011

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Meredith Whitney an Optimist? There Has to Be a Catch
CNBC 21 Mar 2011

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Three years after we entered the worst economic slump since the 1930s, a strange and disturbing thing has happened to our political discourse:
Washington has lost interest in the unemployed.
There are almost five times as many unemployed workers as there are job openings; the average unemployed worker has been jobless for 37 weeks, a post-World War II record.
Paul Krugman 17/3 2011


Bolån totalt i riket 2 022 miljarder
Stockholmarna har nu bostadsrättslån på drygt 324 miljarder kronor.
DI 2011-03-19

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The case for co-ordinated yen intervention
Gavyn Davies March 17, 2011 (nice charts)


Events of the past three months have shattered many assumptions about the Middle East.
The endurance of America’s special relationship with Saudi Arabia may now be next,
especially as the presence of Saudi troops on Bahraini soil presents the White House with a stark choice
between relations with Riyadh and support for democracy.
Ian Bremmer, FT March 17 2011


Who will buy Treasuries when the Fed doesn’t?
Treasury yields are perhaps 150 basis points or 1½% too low
when viewed on a historical context and
when compared with expected nominal GDP growth of 5%.
Bill Gross, March 2011

Top of page


For global financial markets, once-in-a-lifetime events are happening with such regularity that black swans may as well be white swans.
Such supposedly rare occurrences, brought into the national consciousness largely through Nassim Taleb’s 2007 book, “The Black Swan,” have dominated the markets for more than a decade.
CNBC 16/3 2011


US Building permits fell to an annual rate of 517,000 permits last month,
the lowest level seen since the government started tracking the figures in 1959
CNN March 16, 2011


US Housing Starts See Biggest Drop Since 1984
CNBC 16 March 2011

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The two great issues of the age, Niall Ferguson believes, are how a handful of Western countries came to dominate the world,
and whether their domination is now threatened by the rise of Asia.

The Economist print Mar 10th 2011


The January US trade deficit increased to $46.3 billion.
Exports rose 2.7 percent to an all-time high of $167.7 billion.
But imports rose a faster 5.2 percent to $214.1 billion.
That reflected a big jump in America's foreign oil bill.
CalculatedRisk March 10, 2011


A widening trade deficit is bad for the U.S. economy.
When imports outpace exports, more jobs go to foreign workers than to U.S. workers.
CNBC 10 Mar 2011


Recessions are supposed to teach thrift. So when the amount Americans owe on their houses, cars and credit cards,
which more than doubled in the years between the tech and housing busts,
fell $550 billion in 2009, commentators said U.S. consumers had reformed.
But nearly 2½ years after the financial crisis, we still owe $6 trillion more than we did a decade ago.
Worse, figures released by the Federal Reserve in late February revealed that 65% of the recent drop in consumer debt stems not from our paying overdue bills but from write-offs--banks' foreclosing on homes, canceling credit cards and otherwise...
Time, March 14 2011
Very Important Article


/Pimco's/ bearish call on Treasuries will not have been made lightly.
Given the record of Mr Gross, one cannot ignore the decision.
Since the total return fund began in 1987, it has generated an average annual return of 8.42 per cent
FT 11 March 2011


Pimco has dumped all of its US Treasury bond exposure in its flagship Total Return Fund.
The move makes sense given Pimco chief Bill Gross's public statements that Treasurys are over-valued.
CNBC 9/3 2011


Time to worry about oil?
Until recently, the received wisdom in the city was (a) that the steep rise in the oil price would be temporary,
and (b) that it would only cause serious problems if it went to $150 a barrel.
At least one of those two beliefs is now being tested. Possibly both.
Stephanie Flanders, the BBC's economics editor, 8 March 2011

Top of page


Charles Mackay, author of the 19th-century classic Extraordinary Popular Delusions and the Madness of Crowds, captured the essential dynamic.
"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
Maybe modern-day oil traders could profit from reading Mackay's book, even though it was published in 1841.


In the 1970s and 1980s savings were in the 5 - 7% range.
In the decades since, personal savings have declined to the 1 - 3% range.

CNN June 30, 2010


Globalisation is the megatrend of our age.
Globalisation means change - within societies and economies as well as between societies and economies.
And success in the age of globalisation is to a large extent decided by the ability of nations and economies to change.
Carl Bildt, Utrikesminister, Tal vid Bilgi University, Istanbul 6 mars 2011


Once, only manufacturing workers needed to worry about competition from overseas,
but the combination of computers and telecommunications has made it possible to provide many services at long range.
Paul Krugman 6/3 2011


The Financial Services Authority (FSA) was in denial about the scale of the banking crisis right
up to the week of the historic multi-billion-pound bailout in October, 2008
Daily Telegraph 7/3 2011

Top of page


The ECB's governors might usefully study
Systematic Monetary Policy and the Effects of Oil Price Shocks, a seminal work in 1997 by a Professor Ben Bernanke of Princeton.
The reason why such shocks often lead to slumps is because policymakers make a hash of it.
Ambrose Evans-Pritchard 7 March 2011

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Why economic recovery has been so long in coming
Some economists expected a rapid bounce-back once we were past the acute phase of the financial crisis
— what I think of as the oh-God-we’re-all-gonna-die period —
which lasted roughly from September 2008 to March 2009.
Paul Krugman, New York Times March 3, 2011

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Saudi Arabia’s stock index has tumbled 11pc in wild trading over the past two days
The latest sell-off was triggered by the arrest of a Shi’ite cleric in the Kingdom’s Eastern Province
after he called for democratic reforms and a constitutional monarchy.
The province is home to Saudi Arabia’s aggrieved Shi’ite minority and also holds the country’s vast Ghawar oilfield,
placing it at the epicentre of global crude supply.
Ambrose Evans-Pritchard, 2 March 2011


The 2011 oil shock
The Arab oil embargo of 1973, the Iranian revolution in 1978-79 and Saddam Hussein’s invasion of Kuwait in 1990 are all painful reminders of how the region’s combustible mix of geopolitics and geology can wreak havoc.
There are good reasons to worry. The Middle East and north Africa produce more than one-third of the world’s oil.
The Economist print March 3rd 2011


"I don't know who's buying 30-year fixed debt.
I don't understand TIPS (Treasury Inflation Protected Securities)
that are projecting 30 years of benign inflation,"

Ray Dalio, founder & CIO of the hedge fund Bridgewater Associates, 3 Mar 2011
Bridgewater Associates is the world's largest hedge fund, with $8.9 billion under management.


Why it makes sense to hope for a house price crash
Student debts are making it impossible for many young people to save - even before tuition fees rise to £9,000 a year - and could push the average age of first time buyers up to 44
Ian Cowie, Daily Telegraph,personal finance editor 3/3 2011

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Sverige har länge haft stora överskott i bytesbalansen och trenden fortsätter.
Under fjolårets fjärde kvartal var överskottet 53,3 miljarder kronor.
Det var en ökning från motsvarande kvartal 2009 då överskottet uppgick till 39,9 miljarder.
Viktor Munkhammar, DI 3/3 2011


George Orwell's utopian vision has found an echo in a little-known French philosopher
The West-knows-best, free-market-fundamentalism of the 1980s and triumphalist 1990s lasted until 2001-2008,
when it was exploded by 9/11, the sub-prime crash, global warming and the rise of China.

John Lichfield, The Independet, 1 March 2011

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Olof Palme förlorade tre val i rad och var med om att ruinera svensk ekonomi.
Göran Persson vann tre val i rad, räddade välfärdsstaten och genomförde ekonomiska reformer som vi fortfarande skördar frukterna av.
Den dagen socialdemokraterna inser att Persson var en mer framgångsrik ledare än Palme har de tagit ett viktigt steg mot regeringsmakten,
skriver PM Nilsson, chefredaktör på Newsmill 3/1 2011


The Congressional Budget Office recently announced that this year’s US budget deficit will be $1,500bn – a grim figure that is dominating the attention of policymakers.
Frequently overlooked, however, are our long-term structural deficits and debts; these are the biggest threat to our economic future.
Peter Peterson, FT, February 28 2011

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Att varna för en förestånde finanskrasch har vissa likheter med att slå larm om en kommande jordbävning i San Fransisco-trakten.
Till och med en jagsvag nybörjarprofet kan vara helt säker på att få rätt.
Men lika gärna som det kan smälla imorgon kan det dröja femtio år innan det blir dags att låta ett
”vad var det jag sa!” eka över de kaliforniska kullarna.
Andreas Cervenka, e24, 2011-02-27

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Greiders problem är att passionen övertrumfar det klara förnuftet och bitvis leder honom in i en längtan tillbaka till en förlorad värld – det svenska folkhemmet som det formades under 50- och 60-talen.
Han pläderar för att den reformism som socialdemokratin då stod för snarast var en medveten socialistisk politik.
Det tror jag inte på. Socialdemokratin har alltid varit en realistisk politisk rörelse som avskrev de socialistiska målen mycket tidigt.
Håkan Arvidsson om boken "Ingen kommer undan Olof Palme" av Göran Greider, SvD 27 februari 2011


Det var jag som betalade Ebbe Carlssons privatspaningar efter Olof Palmes mördare.
Tomas Fischer, Fokus nr 19 - 25/5 2007


Var Olof Palme en stor politiker?
I boken Olof Palme: Med verkligheten som fiende (Timbro, 2006) konstaterar jag att Palme – tillsammans med revolutionshjältar som Marx och Lenin – hedrades av Castro på Kuba med egen affisch:
Ӏr det ett pro eller ett kontra? Svaret blir helt beroende av den politiska vinkeln.
Och det är inte svar nog. Svaret måste handla om vart han strävade och vad han uträttade.”
Claes Arvidsson, SvD 27/2 2011

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In 2008, oil prices approached $150 per barrel.
Shortly afterwards, the global economy collapsed.
Stephen King, HSBC's group chief economist, 28 February 2011


Ever since the early 1970s, every single time oil prices have spiked sharply (rising by 80pc or more),
regular as clockwork the US has entered recession.
Given America's massive influence on worldwide economic sentiment,
the past five global recessions have all come in the wake of sharp jumps in the price of crude.
Liam Halligan, Daily Telegraph, 26 Feb 2011

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Vi ser att de tre länder (UK, ES, FR) som hade den mest expansiva prisutvecklingen vid mitten av 00-talet inte var de som utlöste prisnedgången.
Inte heller Sverige, som haft den långsiktigt mest expansiva prisuppgången, har ännu idag drabbats av någon verklig prisnedgång.
Istället var det USA, som långsiktigt hade den minsta prisuppgången näst Tyskland, som först drabbades av en prissänkning.
Danne Nordling 25/2 2011

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Peak oil:
Revelations that the Saudis have overstated their oil reserves are
a timely reminder of the huge threat to the global economy
Guardian 10 February 2011


The combined REO (Real Estate Owned) inventory
for Fannie, Freddie and the FHA
increased to a record 295,307 units at the end of Q4
CalculatedRisk on 2/24/2011

Top of page


International Energy Agency, IEA.
Chefen för IEA, Nobuo Tanaka, varnade för att om priserna ligger kvar på höga nivåer kan det knuffa världen tillbaka till finanskrisen 2008.

– Om priser på 100 dollar fortsätter under hela 2011, vi kallar det oljebördan skapar det samma slags kris som 2008, sade Tanaka till nyhetsbyrån Reuters. I juli 2008 noterades rekordpriset 147 dollar per fat.
DN, Marianne Björklund 25/2 2011


Skulle förslaget bli verklighet blir det bli svårare för en ny politisk majoritet att återinföra fastighetsskatten.
Fastighetstaxeringen har upplevts som orättvis, inte minst för dem som bor i storstäder och i fritidshusområden.
Så motiverar regeringen nu att den väljer att tillsätta en utredning för att se om inte hela taxeringssystemet ska slopas
eller "avsevärt förenklas".
DI, Linda Öhrn 25/2 2011

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The 9 billion-people question
The world’s population will grow from almost 7 billion now to over 9 billion in 2050
A special report on feeding the world
The Economist print Feb 24th 2011


Petrol prices in America are substantially below levels elsewhere in the rich world,
and this is almost entirely due to the rock bottom level of petrol tax rates.
Very nice chart
The Economist Feb 23rd 2011


“Stagflation” remains a word not uttered in the polite company of the financial world.
But there remain only a few more tumblers to fall into place for a return to that awful word that conjures up images of the “malaise days” of the late 1970's and early ‘80s, where rising inflation and slumping employment tamped down economic growth.
CNBC, 23 Feb 2011

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Olof Palme var ingen stor politiker
Palme hade chansen att införa demokratisk socialism med hjälp av LO:s förslag om löntagarfonder
Göran Greiders nya Palmebiografi
Danne Nordling 22/2 2011


Bostadsmarknaden i Tyskland är ett föredöme, enligt BKN:s analytiker Bengt Hansson
som länge har varit den tydligaste rösten för att det finns en svensk bostadsbubbla.
Sjunkande bostadspriser under de senaste tjugo åren, lån som vanligtvis har en bindningstid på mellan 5 och 10 år,
regelmässiga amorteringar, inga ränteavdrag och en stor och fungerande hyresmarknad.
Linda Öhrn, DI 23/2 2011


Hushållens skuldsättning i spåren av finanskrisen
- en internationell jämförelse

Bostadskreditnämnden Februari 2011


Hushållen underskattar risken med att låna högt med bostaden som säkerhet.
När bopriserna faller kommer många hushåll att få det svårt.
"Vi har en bubbla sedan två år tillbaka och den kommer att fördjupas i takt med att räntorna stiger.
När vi kommer upp i normala räntenivåer på 5,5 procent, kommer det att märkas",

Bengt Hansson, analytiker på Bostadskreditnämnden (BKN), DI/TT 23/2 2011


Robert Shiller, a Yale economist and half of the Case-Shiller team:
"There's a substantial risk of home prices falling another 15%, 20% or 25% more,"
CNN February 22, 2011

Top of page


For those of us who lived through the ERM crisis of 1992 and followed German events closely at that time, all this has a familiar ring.
It was not just recession in the UK, Italy, Spain, and parts of Scandinavia that caused the fixed exchange system to blow up, it was the deadly cocktail of slumps and banking troubles in these countries combining with German overheating. The mix triggered the final crisis.
Ambrose Evans-Pritchard, February 21st, 2011

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Fear of 'Catastrophic' Crash Rising Despite Bull Market
the Flash Crash Advisory Commission that met on Friday has a long way to go
CNBC 18 Feb 2011


Regulators want big, complex banks to hold larger buffers of capital to protect the financial system.
Big banks argue this is unnecessary because risk is diversified across their larger balance sheets.
Who is right? Natural sciences – especially epidemiology, ecology and genetics – provide clues.
The writers are executive director for financial stability at the Bank of England,
and a professor of zoology at Oxford University and former British chief scientific adviser

FT February 20 2011

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Tack vare regeringens framgångsrika hantering av finanskrisen har Sverige inte drabbats av de underskott som nu plågar så många europeiska länder.
Detta budskap har upprepats så många gånger det senaste året att det förvandlats till ett slags sanning, höjd över varje form av ifrågasättande.
Men hur väl stämmer finansministerns version överens med vad som faktiskt inträffat?

Peter Wolodarski, DN 20/2 2011
Highly recommended


Gene Sharp is no Che Guevara but he may have had more influence than any other political theorist of his generation.
His central message is that the power of dictatorships comes from the willing obedience of the people they govern
- and that if the people can develop techniques of withholding their consent, a regime will crumble.
BBC 21 February 2011


Will Saudi Arabia be Next?
The country supplies about 12% of global oil production and sits on at least a fifth of the world’s oil reserves.
Bahrain is near key parts of the country’s crude reserves.
CNBC, 20 Feb 2011

Close ties between the United States and Bahrain
CNN video 2010

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The Federal Deposit Insurance Corp. plans to file a civil suit against at least three former Washington Mutual executives,
including former chief executive Kerry Killinger, seeking to collect more than $1 billion in damages
CalculatedRisk 19/2 2011


Based on one measure of volatility, stocks haven't risen this much amid price swings this narrow since 1971
Don't get complacent.
CNBC 17/2 2011


The S&P 500 hit 1334 in morning trading Wednesday.
You may not have inscribed that number on your forehead, but it is noteworthy all the same because
it means the big-cap stock index has doubled its financial meltdown low of 666.79 on March 6, 2009.
CNN February 16, 2011

*

Ekonomiläroböckerna och finanskrisen
I min egen lärobok, som har kommit i elva upplagor, finns visserligen en del avsnitt
om bubblor och om irrationaliteten och kasten på t.ex valutamarknaderna.
Men de avsnitten måste byggas ut till nästa upplaga. Likaså måste Keynes få en grundligare behandling - inte minst begreppet “likviditetsfälla” och hur den påverkar penningpolitiken.
Klas Eklund blog 2/3 2009

Top of page


Bloody crack-down in Bahrain
The situation is fraught with risk since a Sunni monarchy rules a Shia majority
with mixed Iranian ancestry and sympathetic ties to Tehran.
Ambrose Evans-Pritchard, 18 Feb 2011

If you thought the revolution in Egypt posed some tricky dilemmas for American foreign policy, how about the upheavals in Bahrain?
Bahrain is a tiny place. But is also the base for the US Fifth Fleet – the basis of American power in the Persian Gulf.
Gideon Rachman blog February 17, 2011


What caused the Flash Crash?
You won't find it in this report. It's really a series of recommendations
Here's a few highlights.
Bob Pisani, CNBC 18 Feb 2011

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It's a fair bet that there will never be another film
on general release that features both Matt Damon and the FT's Chief Economic Commentator, Martin Wolf.

Inside Job, the documentary about the financial crisis, also has an Oscar nomination for best documentary film,
and some really pretty pictures of Iceland.
Stephanie Flanders, the BBC's economics editor, 17 February 2011

Top of page


How Goldman Killed A.I.G.
WILLIAM D. COHAN, NYT February 16, 2011

Did Goldman Sachs Kill AIG ?
The Big Picture February 17th, 2011

Top of page


Germany may have Europe’s largest and most robust economy, but...
An auction for WestLB, a publicly owned institution in Düsseldorf that was once Germany’s third-largest lender, has attracted just two bidders
The New York Times 17 Feb 2011

Top of page


Sun unleashes huge solar flare towards Earth
By Paul Rincon Science reporter, BBC News 16 February 2011


For 2011, we should expect multi-family completions to be
at or near a record low, and an increase in multi-family starts.

CalculatedRisk 16/2 2011

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The free fall of the dollar in the late 1970s forced the US to tighten monetary policy and address its budget deficits, commencing the correction of double-digit inflation.
In the mid-1980s, large current account deficits and a sharp dollar decline helped produce initial cuts in budget deficits.
Most importantly, the recent crash came after record imbalances had seen huge capital inflows into the US, keeping monetary conditions loose and interest rates low.
Fred Bergsten, FT February 15 2011

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President Obama's plan to limit two popular deductions for wealthy taxpayers will hit a wall of resistance from entrenched special interests.
The president once again proposed in his budget to curtail high-income earners' tax deduction for mortgage interest payments and charitable contributions.
CNNMoney February 15, 2011

Top of page


The British prime minister’s repudiation of multiculturalism was so uncontroversial as to be almost platitudinous.
In a recent speech, David Cameron emphasized the distinction between Islamic devotion and jihadi extremism,
and argued that the government ought not to fund organizations that reject democracy, women’s rights, and equality before the law.
Daniel Hannan, Newsweek February 13, 2011


Governments in Jakarta, Manila and New Delhi are grappling with their own subprime crisis of sorts.
This one reflects a toxic mix of suboptimal food stocks, exploding demand, wacky weather and zero interest rates around the globe.
Nouriel Roubini, the New York University economist who predicted the U.S. financial crisis, says surging food and energy costs are stoking emerging-market inflation that’s
serious enough to topple governments. Hosni Mubarak over in Egypt can attest to that.
William Pesek Bloomberg Feb 13, 2011

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Vilket börsfall klarar en genomsnittlig pensionssparare utan att gripas av panik?
Valfrihet har varit honnörsordet, men extrem aktieexponering har blivit effekten.
Peter Malmqvist, DN Debatt 14/2 2011

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Aleklett
Är vi på väg mot en ny oljeprischock eller är den senaste tidens starka återhämtning bara tillfällig?
I grafiken kan du följa oljepriset per fat (Brent) sedan år 2000.
DN 2011-02-05

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Västvärldens extremlåga räntor är ett förföriskt gift som svider lika mycket för många sparare som en börskrasch.
Även i det numera världsberömda tillväxtundret Kingdom of Sweden ligger Riksbankens reporänta fortfarande på blygsamma 1,25 procent.

Realräntan är negativ. I Europa och USA råder samma permanenta undantagstillstånd.
Andreas Cervenka, e24 13/2 2011


After eighteen years as the world’s most powerful central banker, Alan Greenspan has changed the way people think about money, credit,
and most importantly, he has changed the way people view debt.
Debt, a pariah to generations following the Great Depression, has been embraced by recent generations.
Tim Iacono, February 11, 2011


Why a Housing Double Dip Could Kill the Recovery
TIME, Feb. 08, 2011


US Trade Deficit /$40.6 bn/ increased in December
The first graph shows the monthly U.S. exports and imports in dollar
The second graph shows the U.S. trade deficit, with and without petroleum
CalculatedRisk, February 11, 2011
Higly Recommended

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When the Queen asked asked an academic at the LSE why the economics profession had failed to predict the credit crunch, she raised a topic which continues to resonate.
Although many answers have been given to Her Majesty’s question, I suspect that none of them has really settled the issue. Her question is disarmingly simple, but the answer is not.
Gavyn Davies blog, February 10, 2011


The International Monetary Fund badly missed the risks that led to the global financial crisis
because of a naive admiration of light-touch US and UK financial regulation and a “groupthink” mentality
FT February 9 2011


The International Monetary Fund (IMF)'s management and staff welcomed a report released on Wednesday by the Independent Evaluation Office (IEO) of the IMF on the Fund's performance in the period prior to the global economic and financial crisis.
People´s Daily Online English (Folkets Dagblad, Peking), 10/2 2011


"Even as late as April 2007, the IMF's banner message was one of continued optimism
within a prevailing benign global environment,"
Behind the scenes, a number of board members took issue with the upbeat messages
Daily Telegraph 10 Feb 2011

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The deleveraging process in the US and, to a lesser extent the UK, appears to have stalled
before it has even started to gather impetus.
Household sector debt in the UK and Spain amounted to 101 per cent and 85 per cent of GDP respectively in 2008.
John Plender, FT, February 8 2011

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Between 2010 and 2015, the UK is forecast to have the third largest reduction in the share of government borrowing in national income among 29 high-income countries:
only Iceland and Ireland are to cut more.
The reduction in cyclically adjusted borrowing, is even forecast to be the second largest, after Greece.
Yet the UK has had no fiscal crisis. That makes its austerity remarkable.
Martin Wolf, FT 8/2 2011


The core issue in Egypt can be boiled down to this:
Are we witnessing Tehran 1979 or Berlin 1989?
Roger Cohen, IHT February 7, 2011

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The abysmal results came as no surprise to those who knew that
the Keynesian doctrine of spending your way to prosperity had been discredited decades ago.
Research conducted by Harvard economist Robert Barro, for instance, found that the extra economic impact of government spending – also known as the Keynesian multiplier effect, which must be greater than one for any fiscal stimulus to be effective – was “insignificantly different from zero”.
The Romer-Bernstein report, however, dubiously assumed a multiplier of 1.57.
Darrell Issa, FT, February 7 2011

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According to yesterday’s UN figures, world food prices rose to another record high in January,
Fed by explosive growth in demand in the developing world, the costs of fuel, metal and other commodities are following a similar trajectory.
Daily Telegraph 3 Feb 2011


Den danska banken Amagerbanken har begärt sig själva i konkurs.
Banken blir ett fall för det statliga bolag, som bildats för att avveckla krisande banker.
Ekot 7/2 2011


It is hard to estimate the exact amount it will cost to recapitalise the European banking sector. I have heard a credible estimate of €100bn-€200bn.
Last year’s bank stress tests came up with a puny €3.5bn – a deliberate attempt by Europe’s regulatory authorities to misrepresent facts and mislead the public.
Everything I hear about the next round of stress tests tells me they will once again try to hide the truth.
Wolfgang Münchau. FT February 6 2011


Best Reagan Clips from 1980 Carter debate
Youtube

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Payroll employment is still 7.7 million below the pre-recession peak,
and if the the U.S. adds 2.5 million payroll jobs per year it would take 3+ years to return to the pre-recession peak.
And that doesn't include population growth
CalculatedRisk with nice charts, as usual, 6/2 2011

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With memories of last May's "Flash Crash" still fresh in investors' minds,
now comes warning of a market meltdown that could extend beyond stocks
— a possible "Splash Crash" that also would affect currencies, commodities and bonds.
The interconnectedness of high-speed trading platforms is making such an event increasingly possible, says John Bates
CNBC 3 Feb 2011

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Today’s rock-bottom yields, however, have less to do with disinflation and more to do with providing fuel for an asset-based economy that promotes unsustainable wealth creation and a false confidence in perpetual capital gains.
Bill Gross, Pimco, February 2011

As a profession we have failed miserably at our primary function – the efficient and productive allocation of capital: The S&L debacle of the early 1980s, the Asian crisis, LTCM, dotcoms, subprimes, Lehman and the resurrection, instead of the reformation, of Wall Street, are major sins of the modern era of money.
Bill Gross, Pimco, February 2011


SEB:s vd Annika Falkengren
Vinst 4,3 miljarder bara under det sista kvartalet.
Bonusfest på 1,7 miljarder - en bonusökning med 107 procent.
Och nu väntar höjd utdelning för familjen Wallenberg och de andra aktieägarna.
Expressen 4 feb 2011


The key issue in Europe now is not the merits of the single currency but the parlous state of its banking system.
Philippe Legrain, Eurointelligence 11.01.2011


Klas Eklund, SEB:s seniorekonom, har skrivit en rapport från årets World Economic Forum i Davos.
Analytiker och ekonomer oroar sig över skulduppbyggnad och globala obalanser.
Anpassningen för skuldsatta länder blir smärtsam och utdragen.
I detta läge framstår det robusta Norden som en förebild.
SEB 2011


Larry Summers about Banks och Shadow Banks:
“There is a Maginot Line risk,” “That which is being defended is indeed impregnable – but not difficult to circumvent.”
FT February 2 2011

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Under 2011 når världens befolkning sju miljarder, och befolkningskurvan stiger brant.
Kan vårt klot livnära oss alla? Och vart är befolkningstillväxten på väg?
Se videon hos National Geographic – om du vågar!

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“Amazing” that the Irish government has “socialized” the banks
— some $80 billion in senior and subordinated debt — and made it the financial responsibility of Irish taxpayers, who didn’t create it.
Michael Lewis, author of "Liar’s Poker," "The Big Short" and "The Blind Side,"
CNBC 1 Feb 2011

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The crisis has not proved a great turning point, so far.
The ratio of private gross debt to US gross domestic product rose from 123 per cent in 1981 to 293 per cent in 2009.
By the third quarter of last year, the ratio had fallen to 263 per cent.
Martin Wolf, February 1 2011

Top of page


/House/ Ownership Society Is Over
Diana Olick, CNBC Real Estate Reporter, 1 Feb 2011

Mätt med det handelsvägda TCW-indexet noterar kronan den starkaste nivån sedan sommaren 1998.
e24 26/1 2011

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Are zero interest rates a subsidy to banks?
Back and forth between Leijonhufvud and Krugman
Axel Leijonhufvud: The two pioneers of modern monetary economics – Irving Fisher and Knut Wicksell ...
Eurointelligence 26/1 2011

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Some 5.6m US home loans are at least three months in arrears on payments
FT January 23 2011

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As on most things, economists disagree – sometimes violently – on the question of
whether apparently ballooning global demand for energy can be met in an economically sustainable way.
One trusts to the genius of markets to find efficiencies and alternative
The other takes the view that rising demand will drive prices so high that it kills growth and/or excludes poorer countries from participating in it, with potentially catastrophic economic, social and geo-political consequences.
BP has placed itself firmly with the former of these two camps with its latest "Energy Outlook"
Jeremy Warner Daily Telegraph 20 Jan 2011

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The IMF’s Article IV report on Ireland published in September 2007 begins:
“Economic performance remains very strong, supported by SOUND policies. Given the Irish economy’s strong fundamentals and the authorities’ commitment to sound policies, Directors expected economic growth to remain robust over the medium term.”
The IMF said Ireland was in fiscal SURPLUS of 3pc of GDP and total public debt had fallen to just 12pc.
Ambrose Evans-Pritchard January 21st, 2011

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Get Ready For Another Housing Crash
John Carney, Senior Editor, CNBC 18 Jan 2011

Top of page


25 People to Blame for the Financial Crisis
Time Magazine, January 2011


Om bankerna kräver en amortering på nya lån så att de inom tio år är högst 70-75 procent av en bostads värde så innebär det att
ett hushåll som köper en bostad för två miljoner kronor och lånar 85 procent åläggs ett sparande till sig själv på uppemot 30.000 kronor om året i tio år.
Historiskt sett har dock bostäder stigit i värde, vilket gör att amorteringskravet i praktiken skulle upphöra tidigare.
Stefan Attefall (KD), civil- och bostadsminister, DN Debatt 19/1 2011


Mellan 2000 och 2010 ökade priset på en svensk villa med 72 procent.
Samtidigt ökade bostadsrätterna i pris med 153 procent i genomsnitt

e24 18/1 2011, reporter Christina Lindqvist Sjöström


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På frågan om hur han ser på exempelvis sänkta ränteavdrag och ändrad fastighetsbeskattning sade Anders Borg att
det gäller att titta brett på olika åtgärder.
"Vi ska inte stänga dörren, vi behöver en bred diskussion", sade han.
Dagens Industri 17/1 2011


Många unga, högutbildade medelinkomsttagare i Stockholm är lånemiljonärer.
Fortsätter prisrallyt uppåt kan de fortsätta att använda sina villor och innerstadsbostadsrätter som bankomater för att plocka ut ännu mer pengar och åka till Bahamas på semester eller köpa en teppanyakihäll.
Sofia Nerbrand, Kolumn SvD 17/1 2011


Current Account Imbalances Coming Back
Joseph E. Gagnon, Peterson Institute for International Economics
January 2011

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Hur många euro går det på en tulpanlök? Rätt svar är: minst en.
Den gemensamma valutan har alla förutsättningar att tillsammans med 1600-talets holländska tulpaner
kvala in på fortsättningen av den framlidna professorn Charles P Kindlebergers klassiska lista över historiska finans- och spekulationskriser.
Per Lindvall e24 14/1 2011

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Citigroup, the nation's third-largest bank by assets, was on the verge of being closed by regulators the week of Nov. 24, 2008
as depositors rapidly withdrew money and the bank's counterparties declined to provide it credit, according to a government report
Huffington Post 13/1 2011

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Roubini:
Europe needs growth to prevent a disorderly collapse of the euro area.
Der Spiegel 11/1 2011


Portugal
Åtstramningarna som har framtvingats av marknaderna gör saken inte bättre, i alla fall inte på kort sikt. Medan länder som Tyskland och Sverige växer så det knakar väntas Portugals BNP sjunka i år,
precis som investeringarna, sysselsättningen och den offentliga och privata konsumtionen.

Hur Portugal i det läget ska klara av att sänka budgetunderskottet är för många en gåta.
Tomas Lundin, SvD Näringsliv 12/1 2011

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In a new book “The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation”*, Gary Shilling, an economist, argues for the deflationary outcome.
He expects American GDP growth to average only 2% over the next decade as the economy struggles to deal with the debt burden.

Buttonwood, The Economist print Jan 6, 2011

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Det är inte konstigt att vi lånar i stället för att spara, och att det blir risk för bubblor,
när man får göra avdrag för låneräntor medan sparräntor beskattas stenhårt.
Carl B Hamilton (FP) pekar i rätt riktning när han vill ha sänkt skatt på sparande och minskad avdragsrätt, men...
SvD ledarsidan 11/1 2011

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Deleveraging, Deceleration and the Double Dip
For a long time I’ve focused on the contribution that the change in debt makes to aggregate demand,
in the relation that “aggregate demand equals the sum of GDP plus the change in debt”.
Posted on October 19, 2010 by Steve Keen

Top of page


Otmar Issing, the former chief economist of the European Central Bank and the German Bundesbank,
is a genial number-cruncher who believes in the overall benefits of European integration
has turned virulently pessimistic over the European single currency.
In a marked change from his relative sanguinity during his eight years at the ECB,
he terms member countries’ unreliability on economic policies “a basic design flaw of monetary union.”
David Marsh, Market Watch, Jan. 10, 2011
Highly recommended


If the euro zone is truly to put the debt crisis behind it,
three very painful measures are going to be needed
“The sovereign debt crisis in the euro area periphery is closely tied up with a suppressed banking crisis
throughout the euro area — core and periphery”

according to Citi Chief Economist Willem Buiter, CNBC 7/1 2011
Highly recommended


Non-farm payrolls increased 103,000, below economists' expectations for 175,000.
The unemployment rate fell to 9.4 percent, the lowest since May 2009, from 9.8 percent in November.
CNBC 7/1 2011

Top of page


The destruction of wealth - that of investors, including more-or-less anyone saving for a pension - has been savage, running to tens of billions of pounds in each case.
But for RBS, the Financial Services Authority as watchdog has already ruled - just before Christmas - that there was no wrongdoing.
Robert Peston, BBC, 4 January 2011


Between the beginning of 2008 and the end of 2009, the losses on loans made by Lloyds and HBOS combined were £39bn
- of which the vast bulk was contributed by HBOS (which became a part of Lloyds two years ago).
Robert Peston, BBC, 4 January 2011


Under den senaste femårsperioden har inflationen, räknat i KPI, varit i snitt ca 1,5 procent per år.
Men i Riksbankens beräkning av prishöjningarna i landet ingår inte bostadspriserna.
Priserna på bostadsrätter i Storstockholm har under samma femårsperiod stigit med över 13 procent per år.
Detta samtidigt som de nominella lönerna i Stockholm under samma period stigit med endast drygt 3 procent per år.
Björn Jonasson och Gustav Almqvist, SvD Brännpunkt 6 januari 2011


Att ränteavdragen är heligare än påven fick Fredrik Reinfeldt lära sig redan 2006.
I Ekots partiledarutfrågning inför valet det året öppnade Reinfeldt för sänkt avdragsrätt som ett sätt att betala för löftet om slopad fastighetsskatt.
”Jag vill inte skapa nervositet på bostadsmarknaden, men
jag tycker att man också ska titta på ränteavdragen”, sade Reinfeldt
.
Peter Wolodarski, signerat DN 9/1 2011


Det finns en berättigad oro för att en prisbubbla på fastigheter nu håller på att utvecklas.
En begränsad minskning av ränteavdraget är en effektiv och träffsäker åtgärd
Carl B Hamilton, ekonomisk-politisk talesperson och riksdagsledamot (fp), DN Debatt 5/1 2011


Under 2009 gjorde svenskarna ränteavdrag för 80 miljarder kronor.
Det gjorde att staten fick in nära 21 miljarder mindre i skatt. – Framöver dock, tror vi att ränteavdragen stiger kraftigt i takt med att ränteläget höjs
Ekot 4/1 2011


Folkpartiets förslag skulle slå mot högt belånade bostadsrätts- och villaägare utan några större kapitalinkomster, menar Villaägarnas riksförbund.

”Man straffar fattiga för att gynna rika”, säger vice förbundsdirektör Joacim Olsson.
DI 5/1 2011

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"The most important graph of the year"

Gavyn Davies, blogsft, December 22 2010

Top of page


Money and Credit – There Is A Difference
The Link between Money and Credit in the Fractionally Reserved Banking System
Pater Tenebrarum, December 18th, 2010


Suppose that the U.S. economy were to grow at 4 percent a year
Even with that kind of growth the unemployment rate would be close to 9 percent
at the end of this year, and still above 8 percent at the end of 2012.
Even with pretty good growth, are unemployment rates that not long ago would have been considered catastrophic — because they are.

Behind those dry statistics lies a vast landscape of suffering and broken dreams.
And the arithmetic says that the suffering will continue as far as the eye can see.
Paul Krugman NYT 2/1 2010

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Commercial Real Estate
One dirty secret in the financial world is that the lack of drama in the CRE sector
has partly arisen because banks on both sides of the Atlantic have been “evergreening” loans
– or in essence extending the maturities – and practising forbearance to avoid recognising losses.
Gillian Tett FT December 30 2010

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Palme bröt med svensk modell
Olof Palme medverkade till att samförståndsmodellen på arbetsmarknaden bröt ihop.
Men i de biografier om honom som nyligen kommit ut sägs väldigt lite om hans ansvar
Svante Nycander Axess Nr 9 2010

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"There has been an effective moratorium on foreclosure," said Roubini.
CNBC 28 Dec 2010

"12 million households are already in negative equity and 8 million more have an LTV btw 95 and 100%.
Thus even a 5% fall in home price will push an extra 8 million in negative equity
with risk of millions walking away from their home—i.e. jingle mail," Roubini wrote CNBC 28 Dec 2010

Top of page


Oil is back above $90 a barrel.
What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices.
Paul Krugman NYT December 26, 2010

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Dante Cinque had buyers lined up even before opening
Ferrari’s first Polish showroom, taking over the Warsaw site formerly occupied by the Communist Party.
Cinque, general manager of Ferrari Warszawa, said in the store on Nowy Swiat Street,
Bloomberg Dec 28, 2010


Palme Om SAF och löntagarfonderna - 1981
Youtube

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– Det finns inga indikationer på att bostadspriserna är ohållbara
eller oförenliga med en hög efterfrågan och ett måttligt utbud.
Lars E O Svensson e24 28/12 2010


Ny topp för hushållens förmögenhet
De svenska hushållens nettoförmögenhet ökade med 244 miljarder kronor till 7.264 miljarder Q3 2010, vilket är den högsta nominella nivån någonsin, enligt SEB:s sparbarometer.
DN/TT 2010-12-20


Allt fler skjuter reavinstskatten från sina bostadsaffärer framför sig.
Nära 600 000 svenskar har i dag fått uppskov på en tidigare reavinst.
På fem år har den uppskjutna skatten närapå fördubblats till drygt 241 miljarder kronor
DN 21/12 Reporter Thorbjörn Spängs

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In Hoc Anno Domini
When Saul of Tarsus set out on his journey to Damascus the whole of the known world lay in bondage. There was one state, and it was Rome. There was one master for it all, and he was Tiberius Caesar.

Everywhere there was civil order, for the arm of the Roman law was long. Everywhere there was stability, in government and in society, for the centurions saw that it was so.
Read more here

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Unscientific but entertaining estimates of how long citizens would need to work
to afford a 100-square-metre apartment in central Beijing, which currently sells for about Rmb3m ($450,000)
FT December 23 2010

Top of page


Look and learn from across the Irish Sea
A generation ago it would have seemed ridiculous to go to Ireland for economics lessons. Not any more
George Osborne, numera finansminister, The Times February 23, 2006


The Bank of England's most consistently interesting economist had some bad news today
He thinks that those current-account imbalances are likely to get bigger, probably a lot bigger, in the next 10 to 20 years - and there may not be very much that anyone can do about it.
Stephanie Flanders, BBC , 21 December 2010

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Borrowed time
Inflated: How Money and Debt Built the American Dream. By Christopher Whalen.
The Economist print Dec 16th 2010


USA har i genomsnitt haft en marginellt negativ realränta sedan januari 2002, vilket ledde till en ohygglig fastighetsbubbla, som i sin tur orsakade den stora recessionen i hela världen.
Märkligt nog håller Riksbanken på att upprepa den amerikanska centralbankens misstag.
Varför vill någon upprepa det största ekonomiska misstag världen sett efter att kommunismen föll?
Anders Åslund, DN Debatt 22/12 2010

*

Anders Åslund och den svenska fastighetsbubblan
Rolf Englund blog 22/12 2010


Den svenska bostadsbubblan
SvD maj år 2000
Highly Recommended

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Wellcome Trust, which has amassed a £14.5 billion investment fortune,
said that it had sold its last bond in April as it positioned itself for a rise in inflation.
the country is facing its biggest inflationary threat for 20 years
The Times 16/12 2010

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US Treasuries last week suffered their biggest two-day sell-off
since the collapse of Lehman Brothers in September 2008.
Daily Telegraph 11 Dec 2010

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Ingen bostadsbubbla på Östermalm
Richard Lagerling, mäklare i Stockholm, Brännpunkt 15 december 2010


Huset används som bankomat
Även befintliga villa- och bostadsrättsägare tar upp nya lån på sina hus.
e24 2010-12-14


Snittpriset för ett hus i Stockholmsområdet har gått upp till 3,7 miljoner kronor.
Det är högre än Londonområdet, där medelpriset uppges vara 3,3 miljoner kronor, enligt SEB:S Johan Javeus
DI 13/12 2010

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Long-term unemployment
It is unprecedented in post-World War II U.S. history to have 3% of the labor force unemployed for over a year,"
Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, said in a recent speech.
Fortune 13/12 2010

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The big financial economy and markets event of the past few days has been
a sharp fall in the price of US government debt,
whose corollary is a rise in the implicit interest rate
Robert Peston 13 December 2010

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Den svenska banksektorn är riskfylld eftersom den
är stor,
är exponerad mot länder som har stora obalanser i sin ekonomi,
samt på grund av att bostadspriser och utlåning under lång tid har ökat kraftigt.

Sandro Scocco och Magnus Lindmark, DN Debatt 12/12 2010

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The graph shows the U.S. trade deficit,
with and without petroleum
CalculatedRisk December 12, 2010
Higly Recommended

Top of page


The best interpretation of our current difficulties is that we’re suffering from a deleveraging shock,
and that the economy will need support until over-leveraged players have had time to work down their debt.
Paul Krugman 9 december 2010

Top of page


Former British Prime Minister Gordon Brown has said he
fears the euro will face a "high noon" moment of reckoning early in the New Year.
BBC 8 December 2010

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In its financial stability report, the ECB warned that some banks are overreliant on ECB funds.
9 December 2010 - Financial Stability Review December 2010


Martin Wolf about low interest rates and leverage
December 9 2010

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Bank runs have not recurred (after Norther Rock), in spite of the eurozone’s continuing crisis.
But the calm ignores a writhing nightmare of worries behind the doors of once unquestionably sound institutions from Dublin to Athens.
Financial Times December 8 2010


The total value lost since the housing market's peak in 2006 is $9 trillion
American homes are expected to be worth $1.7 trillion less in 2010 than they were worth last year
This year's drop in home values is 63% bigger than the $1 trillion dip in 2009
CNN 9/12 2010


Gordon Brown:
'We have a major crisis in the euro area'
The enormous liabilities of the eurozone's banks are
a serious and substantial accident waiting to happen.
BBC, 8 December 2010

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"Det är viktigt att bromsa en bubbla tidigt"
Belåningsgraden för svenska hushåll nu högre än innan 1990-talskrisen,
och högre än för amerikanska hushåll.
Hushållens skulduppbyggnad och riskerna för en ny bubbla på bostadsmarknaden.
Svenskt Näringsliv 9/12 2010


Reinfeldt: Vi har ingen bostadsbubbla
DI 2010-12-09 15:58


Anders Borg: "Bopriserna måste bromsas"
Rolf Englund blog 7/12 2010

*

Bostadspriserna är en av de mer allvarliga riskerna mot svensk ekonomi i ett medelfristigt perspektiv.
Men att vidta åtgärder för att dämpa stigande bostadspriser ligger inte i närtid för regeringen.
Anders Borg, 2009-11-04

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The Japanese government Friday confirmed the country's first outbreak of a high-risk bird flu in three years,
though it stressed that there was no evidence the disease had spread beyond chickens.
The report came two weeks after Hong Kong reported the first human case there since 2003
Wall Street Journal 3/12, 2010, 3:57 P.M. ET

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Direct
Oil Price 90 dollar
CNN


Är friheten hotad i USA?
15 miljoner arbetslösa
Rolf Englund blog 4/12

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Pimco's McCulley to Leave Investing for Think Tank
Bloomberg Dec 3, 2010



DN Ekonomi 30 november 2010


"Bankerna har god motståndskraft"
En ökad oro för länder med statsfinansiella problem kan leda till att de finansiella marknadernas funktionssätt påverkas. Detta kan i sin tur påverka de svenska bankernas tillgång till marknadsfinansiering.

Det finns också risker som grundar sig i den svenska bostadsmarknaden som kan medföra refinansieringsrisker för de svenska bankerna.
Riksbanken 2010-12-02


Shiller was right about market irrationality then, and he’s still right now
— with two big bubbles that he called correctly under his belt.
The question we should ask, however, is why the economics profession has been so resistant to the obvious.
Paul Krugman December 3, 2010

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The lessons of 1979-82
Paul Krugman July 30, 2009

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The number of unemployed Americans rose to 15.1 million
The unemployment rate rose to 9.8 percent,
Payrolls increased 39,000, less than the most pessimistic projection of economists surveyed by Bloomberg News,
The jobless rate rose to a seven-month high, while hours worked and earnings stagnated.
Bloomberg Dec 3, 2010


Rep. Mike Pence, a Republican from Indiana
"The Fed can print money, but they can't print jobs,"
"Printing money is no substitute for sound fiscal policy

CNN December 3, 2010

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Interactive overview of global house prices
Who’d have guessed that home prices in South Africa have risen more than anywhere else over the last seven years?
Not surprisingly, Hong Kong sits directly below South Africa in the right-most portion of the chart
followed by Belgium, Australia, New Zealand, and Sweden.
The Economist


European Union states have underwritten their financial sectors
with 4.5 trillion euros ($5.9tn) of aid since the banking crisis hit.
Sweden 161.6 bn euros
BBC December 1, 2010 with nice list

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One can interpret the intransigence of the German government and its EU allies in two ways.
First, they understand neither economics nor politics.
Alternatively, policy makers in Germany – and in France and Britain – are scared to death over what Ireland restructuring its bank debt would do to their own banking systems.
Barry Eichengreen


Prof. Dr. Dr. h.c. mult. Otmar Issing
President Center for Financial Studies

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Under a floating exchange rate, some of the pressure would be relieved by a rising exchange rate in the boom and a falling rate in the bust.
With a pegged rate, the collapse in the currency would normally restore competitiveness and growth.
In a currency union, these safety valves are lost. Instead, we have a joint credit and competitiveness crisis.
The solution for the loss of competitiveness is a sharp fall in prices.
But that worsens the credit crisis: this, then, is debt deflation, as Ireland knows
Martin Wolf, FT November 30 2010

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Probably one of the best pieces of analytical commentary we have yet read on the eurozone situation
Once the dust finally settles Europe will either be a unified country
with fiscal sovereignty firmly established in Berlin or Brussels,
or it will be fragmented with little chance of reunion.

Michael Petis via Rolf Englund blog 24/11 2010


Irland gick in i den finansiella och ekonomiska krisen utan underskott och med närmast exemplariskt skötta statsfinanser.
Kanske är vi i Sverige blinda för att vi befinner oss i en irländsk/spansk situation med lånefest och, än så länge, stigande bostadspriser.
Rolf Englund blog 21/11 2010

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I Sverige har bostadspriserna rusat i höjden med hela 116 procent på tio år.
Det är lika mycket som i Spanien och betydligt mer än på krisdrabbade Irland
där priserna stigit med 34 procent sedan år 2000, enligt SEB.
Expressen 24/11 2010


The ideas that sustained the pre-crisis policy framework have been thoroughly discredited
Among these ideas, the central and most clearly falsified are the supposed “Great Moderation” in economic volatility and the “Efficient Financial Markets Hypothesis”.
John Quiggin, FT November 29 2010

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Portugal is the next example of a country to demonstrate that austerity in the middle of a financial crisis is a sure recipe for disaster.
The mood in the bond markets is deteriorating sharply, as Portuguese, and Spanish, spreads reach new records,
amid expectation that the crisis is very certain to spill over to Portugal, and possibly even to Spain.
FT Deutschland makes the remark the Portuguese spreads are about as high now as the Greek spreads
were ahead of the rescue.
Eurointelligence 24/11 2010

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The Irish bailout is not, after all, what one normally thinks of as a bailout
— it’s not like the Texas S&L bailout, where national taxpayers assumed the losses of failed Texas banks.
It’s simply an agreement to lend Ireland funds at more or less safe market rates.
We can also see why the bailout isn’t likely to succeed. The basic situation is that given the cost of rescuing Ireland’s banks
and the damage harsh austerity is inflicting on Ireland’s economy,
investors are understandably skeptical that the Irish government will actually be able to meet its commitments.
Paul Krugman New York Times November 23, 2010

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The eurozone is pressing ahead with the same approach it has followed ever since the collapse of Lehmans
When in doubt, sign another blank cheque to private creditors, and try not to think about the money, or the moral hazard.
Stephanie Flanders, the BBC's economics editor, 22 November 2010

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Nobel Laureate Diamond Is Unqualified for Fed
Peter Diamond, the Nobel Prize-winning economist nominated for the Federal Reserve Board, should be rejected by the Senate and sent home to Massachusetts. There, where he is a professor at Massachusetts Institute of Technology, he can do the least harm to U.S. monetary policy.
bloomberg.com/news/2010-11-22/nobel-winner-diamond-is-bad-choice-for-fed-commentary-by-mark-a-calabria.html

Är Diamond, Mortensen och Pissarides värda Nobelpriset?
Rolf Englund blog 11/10 2010


Finansmarknadsminister Peter Norman:
De svenska hushållen har en hög skuldsättning och det vore oroande om
den snabba ökningen av skulderna skulle fortsätta i flera år till.

Affärsvärlden 22/11 2010

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"All The Devils Are Here"
The finger was pointed at greedy traders, cowardly legislators and clueless home buyers,
And it proves that the crisis ultimately wasn't about finance at all; it was about human nature.
Says the publisher

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Mark-to-Make-Believe Perfumes Rotten Loans
Jonathan Weil Bloomberg Opinion Nov 18, 2010

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Ireland borrowed and spent itself into a financial crisis.
Irish banks borrowed abroad and re-lent the money to Irish home buyers on the expectation that home prices would continue to climb.
When the real estate market collapsed, borrowers crashed, the banks came tumbling after, and so did the rest of the economy.
Sound familiar?

Jeffry A. Frieden, a professor of government at Harvard, author of Global Capitalism: Its Fall and Rise in the Twentieth Century."
New York Times November 17, 2010

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Europe heads back into the storm
Ireland’s basic problem is that it now has to choose between its own sovereign solvency and the solvency of its banks.
Other European countries – in and out of the eurozone – may soon face the same choice.
In such a world, keeping banks afloat with public capital risks sinking the sovereign
– and with it, the whole banking system.

Financial Times editorial November 17 2010

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The Dark Ages, Returned In Full
Schumpeter, Wolfgang Schauble, the government of China,
Narayanan Kocherlakota, and Sarah Palin
Paul Krugman November 17, 2010

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Even in the best case, the government will have to pour an extra $6 billion into Fannie Mae and Freddie Mac,
whose implicit public guarantees suddenly became explicit when the housing market deteriorated in 2008.
A more likely projection calls for a $19 billion injection
CNBC 17/11 2010


Unemployed Americans have collected $319 billion in jobless benefits over the past three years
Heated debate in Congress in coming weeks over whether to extend this safety net for the fifth time this year.
Lawmakers must act by Nov. 30 or two million people will start losing extended benefits next month.
CNN 17/11 2010

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In The Age of Deleveraging, Gary Shilling notes that with deleveraging comes slow economic growth,
and he details nine reasons why real GDP will rise only about 2% annually in the years ahead
— far below the 3.3% growth it takes just to keep the unemployment rate stable.
John Mauldin 15/11 2010 with nice chart of comm real estate

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Euro under siege after Portugal hits panic button
'If the euro fails, then Europe fails,'
warned the German Chancellor Angela Merkel last night
DT Tuesday 16 November 2010 with nice pic


Europe stumbles blindly towards its 1931 moment
Unless the ECB takes fast and dramatic action, it risks destroying the currency it is paid to manage,
and allowing a political catastrophe to unfold in Europe.
Ambrose Evans-Pritchard 14 Nov 2010


It is not an exaggeration to say that there would not be a banking system in Ireland - and therefore not an economy in any conventional sense
- if it weren't for the generosity of the European Central Bank in providing loans to Irish banks
that the markets won't provide.

Robert Peston, the BBC's business editor, 15/11 2010

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De svenska hushållens lån i banker och bostadsinstitut ökade under tredje kvartalet med 53 miljarder kronor.
Så mycket har lånen aldrig tidigare ökat under ett tredje kvartal, enligt Statistiska centralbyrån (SCB).
Hushållens totala lån uppgick vid kvartalets slut till 2.369 miljarder kronor.
DN Ekonomi 15/11 2010

De globala ekonomiska obalanserna fortsätter att växa och med dem skuldsättningen hos de redan hårt skuldsatta och ansamlingen av allt osäkrare fordringar hos kreditorerna.
Risknivån i den globala balansräkningen ser alltmer ohälsosam och ohållbar ut.
Den växande valutaoron är ett tydligt tecken på att spänningarna börjar närma sig bristningsgränsen.
Per Lindvall e24 2010-11-15

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G20 show how not to run the world
This is not collective leadership but joint abdication of power.
Financial Times editorial November 12 2010

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Is the discipline of economics succumbing to a twinge of self-doubt now? Or at least some heresy? Perhaps. In the last couple of years, the reputation of the profession has suffered badly, as a host of commentators – including the Queen of England herself – have asked why this well-paid priesthood failed to predict the financial crunch.
Gillian Tett, FT November 12 2010

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History lessons for a world out of balance
The prevailing rhetoric about currency wars smacks of the 1930s
John Plender, FT November 11 2010

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Europas stabilitet är inte längre given
Om boken Peer Steinbrück, tidigare Tysklands finansminister, Unterm Strich
Rolf Gustavsson, SvD 6 november 2010

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Raghuram Rajan, one of the few economists to see the financial crisis coming,
wins the Financial Times and Goldman Sachs Business Book of the Year award
FT 28/10/2010

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Bernanke Leaps into a Liquidity Trap
If consumers wish to reduce their debt, and companies do not have a desirable menu of potential investments, there is little benefit in reducing interest rates
John P. Hussman, at John Mauldin 5/11 2010


Keynes Paradox of Thrift
The reason that the current recovery is below par is that the economy is experiencing a massive paradox of thrift.
Michael E. Lewitt, at John Mauldin, 1/11 2010

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Ben S. Bernanke’s push to jump-start the U.S. economy this week may weaken the dollar
Within 33 hours this week, fallout from the Fed could cause even ECB change course if the euro surges
Bloomberg 1/11 2010

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The problem is that, even after more than two years of near-zero official rates and huge amounts of stimulus spending, economies such as the US have failed to grow as strongly as hoped.
The hangover effect of the debt-fuelled house-buying and consumption binge that started to unravel three years ago.
People are no longer able to borrow unless they have a good credit history. In any event, many people do not want to borrow.
They are focused instead on reducing the debts they have taken on – a process called deleveraging – either by choice or because they cannot roll over debts with new loans.
FT October 31 2010

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How to Restore the American Dream
Americans fear that we are in the midst of not a cyclical downturn but a structural shift,
one that poses huge new challenges to the average American job, pressures the average American wage and endangers the average American Dream. The middle class, many Americans have come to believe, is being hollowed out.
I think they are right.
Fareed Zakaria Time Magazine, Oct. 21, 2010

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The Economist, QE och finanspolitisk stimulans
Rolf Englund blog 2010-10-29

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In the spring of 2010, fiscal austerity became fashionable.
I use the term advisedly: the sudden consensus among Very Serious People that everyone
must balance budgets now now now wasn’t based on any kind of careful analysis.
It was more like a fad, something everyone professed to believe because
that was what the in-crowd was saying.
Paul Krugman, NYT October 21, 2010

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USA hotar med tullar och extremt expansiv penningpolitik
för att få fart på den inhemska ekonomin, pressa upp inflationen och därmed driva ner värdet på dollarn.
Källan till striden om valutapolitiken är den traditionella: växelkursen är bestämd av staten – inte av marknaden.
Lars Jonung, Kolumn DN 27/10 2010

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Home price indexes; Down again THE storm clouds have been gathering for months. Almost immediately after the expiration of the government's tax credit for homebuyers,
it became clear that American housing market stability had been remarkably dependent on the generous subsidy.
The Economist Oct 26th 2010

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Utlåningen för bostadsändamål uppgick sammanlagt till 1,976 miljarder kronor
i slutet av september, en ökning med 9,3 procent jämfört med samma månad föregående år.
DI 27/10 2010

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They Knew What They Were Selling
Warning to Mr. Robert Rubin and Management
Testimony from Mr. Richard Bowen, former senior vice-president and business chief underwriter with CitiMortgage Inc. This was given to the Financial Crisis Inquiry Commission Hearing on Subprime Lending and Securitization and Government Sponsored Enterprises.
John Mauldin 23/10 2010

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Come and meet the world's leading Austrian economist
Jesús Huerta de Soto, who is delivering the annual Hayek Lecture at the LSE
Daniel Hannan October 22nd, 2010

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När det gäller hushållens ökande skuldsättning säger Riksbankschefen att takten i skuldökningen inte är hållbar på sikt.
E24 26/10 2010

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Mervyn King says banking must be reinvented
I am away from the mothership for a few days, but I could not resist beaming back a few thoughts about
the remarkable speech given last night in New York by Mervyn King,
Banking: from Bagehot to Basel, and back again
Robert Peston, BBC 26 October 2010


Bank of England Governor Mervyn King has attacked the 'absurd' level of risk taken on by banks
He called the banks' reliance on short-term debt to meet funding needs in 2008 an "accident waiting to happen".
BBC 26/10 2010


Investors accepted a yield of minus 0.55 per cent on $10bn of Treasury Inflation Protected Securities
– or Tips – which compensate holders if the consumer price index rises.
Financial Times 26/10 2010

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Ten-year Treasury yields fell this month to their lowest levels since the dark days of January 2009.
TIPS are at similarly historical levels, lowest since the government started selling them in 1997.
A low yield means demand is high for TIPS, which offer investors additional annual returns to make up for the rate of inflation.
The gap, or breakeven, between the two yields implies what investors expect inflation to be.
WSJ 25/10 2010

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“Economics is a science of fashions – Keynes and ‘pump-priming’ at one time, Friedman and monetarism at another,”
the Franco-American mathematician, Benoît Mandelbrot, who died last week at 85, wrote in "The (Mis)behaviour of Markets", a book he co-authored with Richard L. Hudson in 2004.
By Christopher Caldwell, FT October 22 2010

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No governments have yet fallen, and no sovereign debt has yet been repudiated.
The key word is "yet."
Irwin Stelzer, director of economic-policy studies at the Hudson Institute
Wall Street Journal 25/10 2010

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The new French revolution
Youths as young as 15 are turning France into a battleground in a violent protest over pensions.
Are they becoming unstoppable?
The Times 24 October 2010

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British Budget Cuts 'A Dangerous Experiment'
British Prime Minister David Cameron is embarking on a painful period of austerity.
Some economists say his savings plan is dangerous. Some German columnists agree.
Der Spiegel 21/10 2010


Of the 1.2 million workers at risk of losing federal benefits, 387,000 are workers who were recently laid-off and are now receiving the six months (26 weeks) of regular state benefits.
After exhausting state benefits, these workers would be left to fend for themselves
in a job market with just one job opening for every five unemployed workers
and an unemployment rate that has exceeded nine percent for 17 months in a row.
CalculatedRisk on 22/10 2010

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Sedan 1997 har de svenska bostadspriserna stigit med 173 procent.
Bara i Sydafrika (421 procent), Australien (220 procent) och Storbritannien (181 procent) har priserna stigit mer.
Enligt Economists kalkyler är de svenska bostäderna övervärderade med 41,5 procent.
Viktor Munkhammar, DI 2010-10-22

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Sarkozy warning as French strikes hit power supply
BBC 20 October 2010, with nice video.

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Fannie/Freddie Bailout Could Total $363 Billion
Diana Olick 21 Oct 2010

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If you think we are gloomy, you should listened to Mervyn King, /chef för Bank of England/
who yesterday predicted a 1930s style global meltdown, unless policy makers can agree a common approach
to managing currencies (something we they will never do, even if faced with a trade war).
Eurointelligence 20/10 2010

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What are we learning about the relative role of monetary and fiscal policies?
As Joseph Stiglitz argued in the FT this week... Monetary policy has worked, in practice, via credit expansion.
It is, as a result, at least partly responsible for the debt crisis of today.
Who can now confidently state that reliance on a policy which worked by financing overpriced housing was better than using surplus savings for higher public investment?
Martin Wolf, FT October 19 2010

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A group of influential hedge fund managers with assets of about $100 billion
has launched a stinging attack on central banks and regulators for bailing out stricken financial institutions.
The Times October 18 2010

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Laughable
35 business leaders back Osborne's cuts
The 35 also make one statement that will amuse many economists.
They say "everyone knows that when you have a debt problem,
delaying the necessary action will make it worse not better".

Robert Peston, BBC 17 October 2010

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Ben Bernanke declared war today - not on China, but on the possibility of deflation.
He knows that a vicious cycle of slow growth, stagnant or falling prices and high unemployment poses a much greater threat to America's way of life than China's silly exchange rate.
But like it or not, the exchange rate will be caught up in the Fed's response.
Stephanie Flanders, BBC 15 October 2010

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It is folly to place all our trust in the Fed
The US Federal Reserve may make funds available to banks at close to zero interest rates,
but if the banks make those funds available it is at a much higher rate.
Joseph Stiglitz, FT October 18 2010

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French strikes force petrol stations to shut
BBC 18 October 2010, with nice video

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It is fitting that on September 15 Japan, the world's only major economy battling actual deflation, initiated what has come to be a global round of quantitative easing.
Quantitative easing involves a central bank creating money to buy securities, adding reserves to the banking system, and hoping to increase lending and economic activity in the process.
By John H. Makin AEI Online October 2010

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Konventionell ekonomisk visdom säger att det är ohållbart att i längden ha så stora obalanser i världshandeln som vi haft sedan början av 2000-talet. Länder med underskott i utrikeshandeln måste ta sig samman och och sluta att leva på utlandslån (USA, Storbritannien och PIIGS-länderna). Här är euro-området en svag punkt. Den europeiska centralbanken ECB har en mycket rigid inställning till QE. En bedömare som professor Nouriel Roubini menar att ECB är beredd att offra PIIGS-länderna för att slippa vidta QE med hänvisning till inflationsfaran. Roubini pekade i förrgår på att risken för PIIGS-länderna istället är deflation. Nu utmålar han allvarliga risker för att en ny världsdepression är under uppsegling.
Danne Nordling 16 oktober 2010

...

Så kan det bli ny världsdepression
Jag är personligen något skeptisk till Roubinis förutsägelser.
Han hade naturligtvis rätt i att peka på det fallande bostadsbyggandet som en allvarlig risk för en kraftig konjunkturnedgång. Men när han gjorde detta i september 2006 hade de snabbt uppdrivna bostadsinvesteringarna redan fallit under mer än ett års tid (diagr).
Att han då sågs som en Kassandra säger nog mera om det socialpsykologiska klimatet bland politiker och ekonomer i USA än om Roubinis yrkesskicklighet.
Danne Nordling 16 oktober 2010

...

Roubini vänder sig mot synen att skuldkrisen ska lösas genom att alla länder med underskott i den offentliga sektorn ska bedriva åtstramningspolitik.
Det leder till deflation och att allt blir ont värre.
Men dessvärre är Roubinis sätt att måla fan på väggen något som inte kan negligeras.
Den mera nyanserade analys som Barry Eichengreen framförde i juli ser vi inte mycket av längre. Det bådar inte gott.
Danne Nordling 16 oktober 2010

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Robert Mundell — the Columbia University professor
who advocated the hard-money, low-tax policy mix that broke stagflation in the early 1980s,
and who received the Nobel Prize in 1999 for his work on exchange rates —
He thinks the European Central Bank, along with the Federal Reserve, should intervene in currency markets
to limit movement in the world's single most important exchange rate

Wall Street Journal, 16/10 2010

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All western governments face severe difficulties in the years ahead
House prices have fallen and interest rates are low, but in Britain a mortgage of three times earnings will not buy a home on the edge of
a provincial city for even a relatively high-income family on say, £60,000 a year.

Max Hastings, FT October 15 2010

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Federal Reserve Chairman Ben S. Bernanke said additional monetary stimulus may be warranted
because inflation is too low and unemployment is too high.
Blooomberg Oct 15, 2010 2:43 PM GMT+0200

Dollarn föll två öre mot kronan efter Bernankes uttalande, ned till 6:53 kronor per dollar.
Det är den lägsta nivån sedan september 2008.

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The deliberate attempt by the Federal Reserve to create more inflation is beginning to have
a big impact on financial markets.

Yesterday the dollar came under selling, and commodity prices increased.
The dollar fell to a 15-year low (nominal that is!) against the yen, and an eight-month low against the euro
Copper reached a two year year, and gold rose further to $1387, an all time nominal high.
Eurointelligence 15/41 2010

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"Sverige har världens dyraste hus, i förhållande till disponibel inkomst.
Och vi har världens största räntedoping.
Det är osäkert om det är en bubbla, men det finns skäl till oro"

Pär Magnusson, nordisk chefsanalytiker på Royal Bank of Scotland (RBS) TT/DI 15/10 2010

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Stockholm dyrast i Norden
Bopriserna fortsätter att stiga i Stockholms innerstad och enligt SBAB:s mäklarstatistik hamnade
det genomsnittliga kvadratmeterpriset i september för en trerumslägenhet på 56 152 kronor.

– Om vi antar att en genomsnittstrea är på 75 kvadratmeter så motsvarar detta 4 211 400 kronor
SvD 14 oktober 2010

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The trade deficit widened 8.8 percent to $46.3 billion in August
CNN 14 october 2010 with nice chart

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30-Year Mortgage Rate Hits Decades-Low of 4.19 %
CNBC 14 Oct 2010

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Euro disintegration was never a great risk.
The real danger was and remains a collapse of Europe’s financial system
and the slump this would trigger. A sovereign default could easily have repercussions exceeding even those of the Lehman bankruptcy two years ago.
The fact that the aid to Greece was a surreptitious /Obtained, done, or made by clandestine or stealthy means/ rescue of German banks was an important, if unmentioned, reason for Berlin’s willingness to play along.
Financial Times editorial October 12 2010

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At the current rate of job creation, the nation would need nine more years to recapture the jobs lost during the recession.
And that doesn’t even account for five million or six million jobs needed in that time to keep pace with an expanding population.
Median house prices have dropped 20 percent since 2005. It would take 13 years for housing prices to climb back to their peak
Commercial vacancies are soaring, and it could take a decade to absorb the excess in many of the largest cities.
New York Times 13 Oct 2010

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Rebalancing
The first is internal rebalancing – a return to reliance on private demand in advanced countries and retrenchment of the fiscal deficits that opened in the crisis.
The second is external rebalancing – greater reliance on net exports by the US and some other advanced countries and on domestic demand by some emerging countries, notably China.
Martin Wolf 12 october 2010

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From Basel III to Bern I
Patrick Raaflaub, Wall Street Journal 12 october 2010

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Treasury yields continue free fall
Yields on 10-year 2.36% lowest level since January 2009
CNN 12 october 2010 with nice chart

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The government currently estimates that 2.2 million jobs were lost from April of 2009 through March of this year,
a significant portion of the 7.8 million jobs lost since the start of 2008.
a little-noticed note at the bottom of September's jobs report, the Labor Department said it now appears there were 366,000 additional jobs lost during the 12 months that ended in March
CNN October 12, 2010

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”Som banker fungerar i dag är den enda verkliga tillgången förtroende.
Om förtroendet försvinner är det slut – ungefär som ett pyramidspel”, säger Larry Kotlikoff.
Spelet kallas bråkdelsreserver eller fractional reserve banking.
Andreas Cervenka, SvD/e24, 2010-10-10

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The US is due on Tuesday to propose its own so-called “resolution” regime that would
allow officials to stabilise a big, distressed bank, sell off assets over time and force creditors to take a discount on the value of their debt,
without taxpayer money or market disruption
RE: Holy Grail found ?
FT October 11 2010

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Är Diamond, Mortensen och Pissarides värda Nobelpriset?
Men transaktionskostnader läste jag om på universitetet redan på på 1960-talet.
Rolf Englund blog 2010-10-11

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Europe is the region in the world most at risk of losing a currency war.
Unlike normal nation states, the eurozone lacks a legal and institutional framework to deal effectively with such a situation.
The most likely outcome would be a further large real appreciation of the euro,
which would ultimately lead to a significant slowdown in exports and growth.
One of the numerous toxic effects likely to occur in such a scenario is the imminent failure of the European bank rescue strategy.
Wolfgang Münchau, FT October 10 2010

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“You can’t cut debt by borrowing.” How often have you read or heard this comment from “austerians” (a nice variant on “Austrians”),
who complain about the huge fiscal deficits that have followed the financial crisis?
The obvious response is: so what?
Martin Wolf, September 26, 2010

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The euro:
Dinner on the edge of the abyss
On a spring evening, a group of the world’s most powerful policymakers sat down to dinner at 501 Pennsylvania Avenue.
Eleven days earlier, European leaders and the International Monetary Fund had promised Greece a €45bn ($62bn) bail-out. But the discussions at 501 Pennsylvania Avenue, hosted by Jim Flaherty, Canada’s finance minister, established that this was likely to be far too little.
Tony Barber, FT October 10 2010

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What is the use of economics if it cannot answer even such a basic question?
Two years ago at the height of the financial crisis, the Queen challenged staff of the London School of Economics with a simple but devastating question:
“Why did no one foresee this?”
the inability of professional economists in Britain and America to agree on something as important as whether
reductions in government deficits will accelerate or slow growth
Anatole Kaletsky, The Times September 29 2010

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The U.S. jobless rate was flat at 9.6 % in September,
but the government’s broader measure of unemployment rose even more to 17.1 %,
the highest rate since April and down just slightly from the October 2009 high of 17.4 %.
WSJ OCTOBER 8, 2010

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Dollarras att vänta
Redan till våren halkar dollarn under 6 kronor. Och det är bara början, spår storbanken Goldman Sachs.
Om ett år väntas kursen vara den lägsta sedan 1992.
Viktor Munkhammar, DI 2010-10-08


What made the biggest difference was companies’ response to the crisis. In most rich countries they cut hours more than bodies.
German firms last year reduced working time by the equivalent of 1.4m full-time employees.
The Economist Oct 7th 2010

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This item from June 11, 2007
Are most economists naive?
Tim Iacono On October 5, 2010

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Currency wars, trade barriers and other protectionist policies
are rising to the top of domestic political agendas as governments across the world struggle to resurrect economic growth.

After the early united front to stem the global collapse in 2008, "the momentum [of economic co-operation] is decreasing",
Dominique Strauss-Kahn said at the IMF's annual conference in Washington.
Nice (?) photo of DSK
DT 7 Oct 2010

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Video of Krugman, Feldstein and Hatzius
I'm not sure who is the most pessimistic.
CalculatedRisk on 10/07/2010

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As the International Monetary Fund and World Bank meetings start in Washington,
the word “deleveraging” is haunting policymakers and investors.
It is now crystal clear to everybody that debt levels were absurdly high during the credit boom.
Gillian Tett, FT October 7 2010

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Insättningsgarantin
Det är bra med ökad trygghet för spararna, bara man inte slutar att ha koll på sin bank för det.
Marja Lång, presschef på Riksgälden, DN Ekonomi pappersupplagan 7/10 2010


Riksdagen sade på onsdagen för första gången nej till ett EU-förslag med hänvisning till närhetsprincipen
Beslutet gällde två förslag från EU-kommissionen om att alla EU-länder ska bli skyldiga att låna ut pengar till andra medlemsländer som inte klarar av insättningsgaranti och investerarskydd.
Sydsvenskan 7 oktober 2010


Återinför fastighetsskatten.
”Fastigheter är en utmärkt skattebas och de möjligheter till uppskov med reavinstskatten som tidigare fanns gjorde inlåsningseffekterna minimala.
Jonas Vlachos, docent i nationalekonomi vid Stockholms Universitet, DI 6/10 2010

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The forces that will stop the imbalances are already very evident
Fiscal consolidation cannot properly occur in advanced economies until there is a strengthening in private demand.
For well rehearsed reasons, this is proving difficult to achieve.
The handover from fiscal stimulus to private demand growth isn’t happening as quickly as hoped.
Unfortunately, the private sector is still in a strongly deleveraging frame of mind.
Jeremy Warner, Daily Telegraph 7 Oct 2010

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"One of the most catastrophic political decision taken in post-war Europe"
The collapse of Lehman Brothers was without a doubt the single most symbolic moment of the financial crisis.
But for Europe it was on Tuesday, 30 September 2008, when the Irish prime minister gave a blanket guarantee for the entire banking sector.
Wolfgang Münchau, Eurointelligence 7/10 2010

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Warren Buffett hints at bond bubble
Investors buying bonds at the prevailing high prices are 'making a mistake,'
Fortune October 5, 2010

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Sverige klarade finanskrisen bättre än de flesta andra länder
genom att de offentliga finanserna var goda från början och regeringen fortsatte värna dem.
DN-ledare 6/10 2010

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Bostadsbankomaten lika viktig som regeringens skattesänkningar
Bolån som används för konsumtion har fyllt plånböckerna med lika mycket pengar
som alla de fyra jobbskatteavdragen tillsammans.
Men, om bopriserna planar ut är det slut på festen och tillväxten stryps.
Viktor Munkhammar, DI 2010-10-05

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If you strip away the political correctness,
Chapter Three of the IMF's World Economic Outlook more or less condemns Southern Europe to death by slow suffocation
and leaves little doubt that fiscal tightening will trap North Europe, Britain and America in slump for a long time.
Ambrose Evans-Pritchard 03 Oct 2010

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Joseph Stiglitz sees bleak future for euro as New Malaise takes hold
Exclusive extract: In an updated edition of his critically acclaimed book, Freefall, Joseph Stiglitz analyses the response to the financial crisis and finds new threats stalking the global economy
Freefall: America, Free Markets, and the Sinking of the World Economy
Amazon

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The flash crash of May 6 was sparked by a rapidly executed $4.1bn sale of stock index futures by a single institutional investor
who was hedging against the risk of a market downturn, a report by leading US regulators said on Friday.
The order was completed so quickly That it triggered wild automated selling by computer traders,
which wiped out nearly $1,000bn off the value of US shares for a period of several minutes.
FT October 1 2010

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Or maybe it’s become just too obvious that we created the financial crisis.
As even Oliver Stone showed in his movie, we borrowed all that money and thought the housing boom would never end.
We saw the risks in the disclosure documents but ignored them, or refused even to look. We heard the doomsayers and preferred to ignore them. We elected the politicians who subsidized the housing bubble, and decided which firms should live and which should die.
Maybe we have seen the face of the financial crisis. In the mirror.
Larry Ribstein.THE CREATIVE DESTROYER blogs.forbes.com Sep. 26, 2010

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Nassim Nicholas Taleb, renowned derivatives trader, university professor and author of "The Black Swan," warned
of the growing risk the nation has taken on as a result of poor decisions by the Fed and policymakers, including
trillions of dollars in taxpayer money funneled into bailouts of private industry.
"This transformation from private debt ... to public debt" is "bad" from a risk standpoint and "immoral"
Shahien Nasiripour Huffington Post 30/9 2010

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In pictures: Lehman artworks
BBC

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By a vote of 348-79, Democrats and Republicans alike put aside their acrimonious differences and agreed, at least for a moment,
to stop blaming each other for the sad state of American economic life.
Instead, they agreed to blame China.
The bill is the perfect campaign gesture, bombastic, angry, self-righteous, and without much real-world consequence.
Zachary Karabell, Huffington Post, September 30, 2010

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The IMF’s foolish praise for austerity
Some argue that we have no right to bequeath higher debt to future generations.
But why would it be wise to bequeath a smaller economy to posterity, instead?

Martin Wolf, FT September 30, 2010

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Mr Trichet and other devotees of “expansionary fiscal consolidations” believe that belt-tightening can actually aid growth in the short term?
The intellectual backing for these claims comes from a study by two Harvard economists, Alberto Alesina and Silvia Ardagna, which studied past fiscal adjustments in rich countries*.
They found that, more often than not, fiscal adjustments that relied on spending cuts boosted growth, even in the very short run.
But a new study by economists at the IMF reckons that the Harvard study was seriously flawed**.
The Economist Sep 30th 2010

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John Connally, Nixon’s secretary of the Treasury, famously told the Europeans that
the dollar “is our currency, but your problem”.
The Chinese respond in kind. In the absence of currency adjustments,
we are seeing a form of monetary warfare: in effect,
the US is seeking to inflate China, and China to deflate the US.
Both sides are convinced they are right; neither is succeeding;
and the rest of the world suffers
Martin Wolf, FT September 28 2010

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What can be done about mass unemployment?
All the wise heads agree: there are no quick or easy answers.
All the facts suggest that high unemployment in America is the result of inadequate demand — full stop.
Saying that there are no easy answers sounds wise, but it’s actually foolish

Paul Krugman, NYT, September 26, 2010

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The third graph shows the price declines from the peak
for each city included in S&P/Case-Shiller indices.
Calculated Risk 28/9 2010
Nice Chart

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We live in an amazing world. Everybody has big budget deficits and big easy money
but somehow the world as a whole cannot fully employ itself,”
said former Fed chair Paul Volcker in
Chris Whalen’s new book Inflated: How Money and Debt Built the American Dream.
Ambrose Evans-Pritchard, 26 Sep 2010
RE: Very Important Article

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Lars E O Svensson tror inte på bostadsbubbla
SvD/e24 reporter Leif Petersen, 2010-09-27

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Bolånetaket ett slag i luften
Lånetaket på 85 procent är inget större problem för bankerna. Tvärtom.
Lånetaket gäller bolån, alltså lån med bostaden som säkerhet. Men det står bankerna fritt att ge blancolån. Det är lån utan säkerhet och därför med högre ränta.
Det är också möjligt för bankerna att kräva att en borgensman för blancolånet
ANNIKA CREUTZER, e24 2010-09-28

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Part 1 of our series on the spring’s sovereign-debt crisis.
On the Secret Committee to Save the Euro
Two months after Lehman Brothers collapsed in the fall of 2008, a small group of European leaders set up a secret task force—one so secret that they dubbed it "the group that doesn't exist."
Wall Street Journal September 24, 2010

---

Part 2 of our series on the spring’s sovereign-debt crisis.
The next day, a Friday, euro-zone leaders were due in Brussels for a quick meeting to approve the Greek package. Events were overtaking them: Lending between European banks was freezing up; investors were fleeing weaker euro nations' bonds.
Wall Street Journal 27 September 2010

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This couple is so happy because, on the advice of Money Magazine, they have opened up a home equity line of credit – they have done the number one “smartest thing” that they could do with their money.
Tim Iacono September 25, 2010

...

Seniorlån - lev på ditt boende
Känner du att det skulle vara bra med lite extra pengar varje månad? Visste du i så fall att det idag finns goda möjligheter att få en extra månadsinkomst från ditt boende?
Allt fler har upptäckt möjligheterna med att leva på sitt boende. Genom att frigöra en del av bostadens värde med hjälp av ett seniorlån skapas en extra månadsinkomst utan att du behöver sälja din bostad.
Reklam från AG Pension september 2010


Alla sedvänjor och idéer på jorden står tyvärr inte i samklang med de mänskliga rättigheterna.
I sin nyss inledda självrannsakan borde Socialdemokraterna börja med att återerövra de tidlösa upplysningsidealen.
Lena Andersson, Kolumn, DN 25/9 2010

...

Det har blivit ett mantra att regeringen skött ekonomin exceptionellt bra.
Detta trots att vår BNP i fjol sjönk med fem procent, mer än övriga Europas och dubbelt mot USA.
Lena Andersson DN 11/6 2010

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Det är inte uteslutet att ett eller flera länder så småningom kan överge euron som valuta,
säger Ottmar Issing, före detta ledamot i Europeiska centralbankens styrelse.
Ekot 23 september 2010

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A recent IMF study argues that sovereign default in today’s advanced economies (AEs) is “unnecessary, undesirable and unlikely"
The study represents the triumph of dogma over evidence and logic
Willem Buiter cit. by Tyler Durden at zerohedge 23/9 2010

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Chinese purchases of our bonds don’t help us — they hurt us.
The Japanese understand that. Why don’t we?
Paul Krugman NYT September 12, 2010

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Kronan påverkar extremt mycket. Särskilt när den går under eller över magiska gränser och hela krontal
Och under en magisk krongräns, 7 kronor, gick kronan mot dollarn på tisdagen.
Vid slutet av dagen kostade en dollar 6,96 kronor.
Samtidigt stärktes kursen mot euron till 9,14 kronor.
Så stark har inte kronan varit mot euron på nästan tre år.
DN Ekonomi 22/9 2010

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Larry Summers, the Obama administration’s top economic adviser, will step down
after the November midterm elections and return to Harvard University
FT September 21 2010

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Ask Not Whether Governments Will Default, but How
The sovereign debt crisis is not European: it is global. And it is not over.
Arnuad Mares at John Mauldin 20/9 2010

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She is just 57.
But four years after losing her job she cannot, in her darkest moments,
escape a nagging thought: she may never work again.
New York Times 20 sep 2010

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Portugal
That is what happens when you cut interest rates suddenly from 16 to 3 per cent
yields back to May crisis levels when the EU faced its "Lehman moment"
Ambrose Evans-Pritchard, 19 Sep 2010

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Ireland has shown what happens when you grasp the fiscal nettle, slashing public wages by 13pc – to applause from EU elites – without offsetting monetary and exchange stimulus.
Ambrose Evans-Pritchard, 19 Sep 2010

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Deleveraging/The Chances of a Double Dip
The good life and rapid growth that started in the early 1980s was fueled by massive financial leveraging and excessive debt, first in the global financial sector, starting in the 1970s and in the early 1980s among U.S. consumers.
That leverage propelled the dot com stock bubble in the late 1990s and then the housing bubble.
But now those two sectors are being forced to delever and in the process are transferring their debts to governments and central banks.
Gary Shilling at John Mauldin 17/9 2010

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Arbetslinjen segrar på Kuba 2010
This week the government announced it is to shed 500,000 workers, who will instead have to become self-employed or start co-operatives in just six months.
Financial Times September 17 2010

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Basel
Banks will also have to subtract items such as goodwill, some tax credits and minority investments from equity and retained earnings.
The deductions are likely to cut many banks’ equity totals by between 30 per cent and 40 per cent, according to people who have seen the data.
Brooke Masters, FT September 16 2010

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High and long-lasting unemployment represents a risk to the stability of existing democracies
Dominique Strauss-Kahn, the IMF's chief, said a double-dip recession remains unlikely
but stressed that the world has not yet escaped a deeper social crisis.
Ambrose Evans-Pritchard, 13 Sept 2010

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Medelpriset för ett hus var drygt 2 miljoner kronor under den senaste tremånadersperioden.
I Stor-Stockholm var det genomsnittliga huspriset nästan 3,8 miljoner kronor
och i Stor-Göteborg och Stor-Malmö var det drygt 2,9 miljoner kronor.
SvD e24 2010-09-16

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”villaskattsvalet” 1979
Även om debatten om hur stora avdrag villaägarna skulle få göra på sina lån var viktig fanns det andra frågor.
Men eftersom Olof Palme gjort bort sig i en tevedebatt genom sin okunskap om huspriserna i Stockholm
– ”det hade jag ingen aning om”, sa han förvånat när han fick siffrorna – blev valrörelsen förknippad
med taxeringen av småhus.
DN Signerat Henrik Berggren 2010-09-14

...

Som bekant vill de rödgröna väcka liv i fastighetsskatten.
Här kan man ta del av varför detta, enligt Johnny Munkhammar, vore en mycket dålig idé.

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Given the combination of the expiration of the home buyer tax credit
and the increasing number of loans moving to final foreclosure,
we knew that home prices overall would take a hit, but it would take a while.
Well we're here.
Diana Olick, CNBC Real Estate Reporter, 15/9 2010

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Bostadsrättspriserna i riket som helhet steg 8 procent mellan juli och augusti,
medan villapriserna sjönk 1 procent.
De senaste tolv månaderna har bostadsrättspriserna stigit 11 procent
samtidigt som villapriserna har stigit 6 procent.

DI 15/9 2010

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Why 9/15 changed more than 9/11
Two years have elapsed since the collapse of Lehman Brothers
triggered a global financial crisis and provoked fears of a new Great Depression.
Gideon Rachman, FT September 13 2010

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Leverage was at the root of the crisis
The writer was chairman of the Council of Economic Advisers under President George W. Bush, and is dean of Columbia Business School.
He is co-author with Peter Navarro of ‘Seeds of Destruction: Why the Path to Economic Ruin Runs Through Washington,
and How to Reclaim American Prosperity’
Glenn Hubbard, September 13 2010

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Världens mest skuldsatta folk är rubriken för en artikel i DI 9/11 2010
”Sverige och Norge liknar varandra. Vi har stigande huspriser, hushållen lånar allt mer och skuldkvoterna närmar sig 200 procent.”
Rolf Englund blog 2010-09-11

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The Man Who Divided Germany Why Sarrazin's Integration Demagoguery Has Many Followers
Der Spiegel 6/9 2010

Basel
Svenska bankföreningen har varnat för att svenska bankmodellen
med mycket bolån i balansräkningen
kan få problem om det införs ett absolut kapitalkrav i form av ett "hävstångsmått",
framräknat utan klassificering av bankernas utlåning i olika riskklasser.
DI/TT 2010-09-12


Regulators agree 7% capital ratio for banks
Stiff resistance from a number of countries, led by Germany, many of whose banks typically have much lower stocks of core capital in the form of equity and retained earnings
- and will have great difficulty meeting the new standard.
Robert Peston, BBC 9 September 2010

...

Baselkommittén
Dåliga nyheter för SEB, Swedbank, Handelsbanken och Nordea.
De svenska bankerna har väldigt bra kvalitet på sina tillgångar, exempelvis mycket bostadsutlåning.

Men det får man alltså inte tillgodoräkna sig i det nya måttet.
SvD/e24 2009-12-18

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Den svenska antiliberalismen är främst en bestående effekt av 70-talsradikalismen.
Den hämtar näring från social utopism, marxism och olika postmoderna läror.

Antiliberaler sprider fientliga schabloner om den tanketradition som historiskt är förutsättningen för ett öppet modernt och sekulärt samhälle.
Svante Nycander DN 9 september 2010


Marxismen betraktas av sina anhängare som en vetenskap, en särskild skola inom forskningen.
Det finns en objektiv verklighet som blir synlig först om man intar ”en bestämd, icke neutral, klassmässig position”, enligt Sven-Eric Liedman.
Många som inte längre bekänner sig till marxismen – genusteoretiker med flera – har behållit idén att den egna ideologin är en alternativ vetenskap, med förtjänster som saknas inom ”positivismen”,
en hållning som ofta förenas med stridbarhet och intolerans mot oliktänkande.
Svante Nycander, DN 2010-08-10


1938 in 2010
PAUL KRUGMAN, NYT September 5, 2010

TO: President Obama FROM: Thomas I. Palley
Plan B for Obama on the economy
FT, September 6, 2010

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Förnyad oro för europeiska banker
2010-09-09
Nice pic


Trade Deficit declines in July
CalculatedRisk on 9/09/2010

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U.S. Marines Recapture German-Owned Ship Attacked by Pirates
September 09, 2010


En form av ohelig allians, där problemtyngda stater garanterar problemtyngda banker,
som i sin tur köper statsskuld med finansiering från den europeiska centralbanken

minskar risken för misslyckade emissioner,
men frågan är hur långt det går att driva detta reptrick innan bubblan spricker.
Martin Enlund, senioranalytiker på Handelsbanken, DI 2010-09-09

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Joachim Fels, chief global economist at Morgan Stanley, said strains had reached a point where "one or several governments" may soon have to tap soon the rescue mechanism.
"Neither the European sovereign debt crisis nor the banking sector crisis has been resolved and both continue to mutually reinforce each other," he said, adding that the EU's stress tests for banks had failed to restore confidence.
Ambrose Evans-Pritchard, 08 Sep 2010

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This early cycle weakness is often associated with fears of another recession.
During my own professional career, I can recall the US “growth scares” of 2002, 1992 and 1984.
Is the “growth scare” of 2010 different?
Sushil Wadhwani, FT September 8 2010

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The number of Americans who have been out of work for more than 6 months now stands at 6.5 million,
compared to peaks of only about 2 million in the previous two recessions.

Gavyn Davies, FT blog September 3, 2010

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SCB, reviderar upp det andra kvartalets BNP-tillväxt från tidigare 3,7
till urstarka 4,6 procent i årstakt.
DI 2010-09-08

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För andra valet i rad förlorar S på hus-skatten
Efter förra valet hävdade Göran Persson att Socialdemokraterna förlorade på grund av fastighetsskatten.
Jag tror han hade rätt. Nu vill de rödgröna ta revansch genom att höja fastighetskatten för småhus i lägen som de ogillar och sänka den för hyres- och bostadsrätter.
Det handlar om närmast kosmetiska förändringar, felräkningspengar i statsbudgeten.
INGA-LISA SANGREGORIO, Newsmill 2010-09-07

Happy Days are here again, så länge det varar
Den sakligt och moraliskt felaktiga, men valtaktiskt framgångsrika sänkningen av fastighetsskatten
Rolf Englund blog 2010-09-08

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Joseph Stiglitz, winner of the Nobel Prize for Economics in 2001, said austerity as a policy to end the global crisis was a "disaster",
adding that Europe was heading towards more economic difficulties if politicians meant what they say when they promised to cut back spending rather than just trying to calm down markets.
CNBC 8 Sep 2010

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Hans-Werner Sinn, head of Germany’s IFO Institute, said the US would have to purge its debt excesses the hard way.
“The bitter truth is that there is no way out of this with monetary and fiscal policy.
They will just have to see their living standards go down.”
Dr Roubini said the US growth rate was likely to fall below 1pc in the second half of the year
Niall Ferguson said the US has exhausted fiscal stimulus, The fiscal crisis seems to be out of control.
Ambrose Evans-Pritchard,05 Sep 2010

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Thilo Sarrazin
European countries cannot have it both ways on immigration
Which European politician said in July that his country was “suffering from 50 years of lax immigration rules that have led to a failure of integration”?
Tony Barber, FT September 3 2010

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The conservative counter-revolution
The Great Recession almost certainly marks its end
Martin Wolf's Exchange August 23, 2010

Bernanke’s recent Jackson Hole speech didn’t contain one reference to the key force driving the American economy right now:
private sector deleveraging
(here’s the previous year’s speech for comparison’s sake
By Steve Keen at John Mauldin 2010-09-06

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Statliga riksgälden har tjänat sex miljarder på att den svenska kronan stärkts sedan förra året.
Riksgälden passade nämligen på att ta på sig skulder i utländsk valuta,
något som blivit en god affär nu när kronan återigen har stärkts.
Ekot 7/9 2010

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Paul Krugman, Niall Ferguson
The vanity of economists needs to be challenged.
Above all, their claim to scientific rigour – buttressed by models and equations –
must be treated much more sceptically.
Gideon Rachman, FT September 6 2010

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Households and companies will continue to reduce debt built up before the financial crisis,
according to a report by the Bank for International Settlements.
Bloomberg 6/9 2010

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Trading, alltså en bank som för egen räkning köper och säljer värdepapper för att tjäna pengar
är en verksamhet som är helsnurrig av flera skäl
Andreas Cervenka, SvD/e24 2010-09-05

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While the Europeans are celebrating the end of the financial crisis, something strange is happening in the bond markets.
The gap in the yields – the spread – between the 10-year bonds of peripheral eurozone countries and Germany has been growing at an alarming rate.
It is now close to the level that prevailed in the days before the European Union decided to set up its bail-out fund in May.

Wolfgang Münchau, FT September 5 2010

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It is easy to vow that next time lenders’ losses will be pushed onto their creditors, not onto taxpayers.
But cast your mind back to late 2008. Anyone exposed to them tried to yank their cash out, causing a run that threatened another Great Depression.
Can anyone honestly say that they would let a big bank go down?
And yet, somehow, that choice is what the people redesigning the rules of finance must try to make possible.
The Economist Aug 26th 2010

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Central bankers are flying blind.
With short-term policy rates at or near zero,
getting more of a monetary boost means expanding a set of instruments whose efficacy, and side-effects, are ill-understood (see article).
The Economist Sep 2nd 2010

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Delta Force
GDP = C + I + G + Net Exports (that is, exports minus imports)
Savings = Investments
We believe that the recent stimulus in the US, as an example, did in fact have a temporary effect and kept the US out of what might have been a depression, but not without its own costs. That debt must be repaid.
John Mauldin 4/9 2010

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California produces about a quarter of America’s farm production with immigrants from south of the border doing the back-breaking work in the fields of the Salinas Valley, which was made famous by John Steinbeck.
But the most visible “crops” sprouting up these days are For Lease or foreclosure signs in the real estate market.
CNN September 2, 2010

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As the policy debate intensifies, investors might spare a thought for Korekiyo Takahashi,
Bank of Japan governor from 1911 to 1913.
Gillian Tett, FT September 2 2010

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Carnegie tar hem spelet om HQ.
Firman har därmed dribblat bort den senfärdiga och klumpiga Finansinspektionen
FI:s ordförande Bengt Westerberg är en systemrisk på finansmarknaden
Torbjörn Isacson, SvD/e24 2010-09-03

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Paradoxes Of Deleveraging And Releveraging
From 1929 to 1933, everyone was trying to pay down debt — and the debt/GDP ratio skyrocketed thanks to contraction and deflation.
During and immediately after WWII, there was massive borrowing — but GDP grew faster than debt, and the debt burden ended up falling.
Paul Krugman, New York Times, September 3, 2010

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"If the crisis has a single lesson, it is that the too-big-to-fail problem must be solved," Bernanke said Thursday while testifying before the Financial Crisis Inquiry Commission.
CNBC 2/9 2010


Bernanke also said it was impossible for the Fed to rescue Lehman Brothers from bankruptcy in 2008
because the Wall Street firm lacked sufficient collateral to secure a loan.
Lehman's former chief executive told the panel a day earlier that the firm could have been saved, but regulators refused to provide help.
CNBC 2/9 2010


U.S. regulators did not grant Lehman Brothers the same assistance as its competitors,
knocking out the possibility of an orderly unwind of the firm and aggravating the global crisis,
former Lehman Chief Executive Dick Fuld said
CNBC 1 September 2010


FI:s ordförande Bengt Westerberg uppges vara den som talat för mycket hård press på HQ
eftersom banken vållat FI problem under flera år
DI 2010-09-01

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The Fed Can Print More Money, But It Can’t Print Jobs
Larry Kudlow 10 Aug 2010

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Two results from Gallup, in March 1938:
Do you think government spending should be increased to help get business out of its present slump?
37% Yes - 63% No


In your opinion which will do more to get us out of the depression: increase government spending, or reduce taxes on business?
15% Increase government spending - 63% Reduce taxes on business - 21% No opinion
Paul Krungman 4 september 2010

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Suppose that the US presidential election of 1932 had, in fact, taken place in 1930, at an early stage in the Great Depression.
Suppose, too, that Franklin Delano Roosevelt had won then, though not by the landslide of 1932. How different subsequent events might have been. The president might have watched helplessly as output and employment collapsed. The decades of Democratic dominance might not have happened.
On such chances the wheel of history turns.
Martin Wolf, FT, August 31 2010

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Almost two years into the bond flight, about $550 billion has poured into U.S. bond mutual funds
Using inflation-adjusted figures, investors had put $499 billion at this same stage of the Internet bubble.
Colas selected December 1996, the month of Alan Greenspan’s “irrational exuberance” speech, as the estimated start of the bubble in equities.
For bonds, he uses the collapse of Bear Stearns in March 2008.
CNBC 31 Aug 2010

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Problem bank list climbs to 829
its highest level since 1993 during the second quarter
CNN August 31, 2010


Rädsla och girighet blev HQ:s fall
en stor, etablerad revisionsfirma som KPMG medverkat
Björn Elmbrant, Dagens Arena 30 augusti, 2010


HQ:s revisor synas
Revisorsnämnden har beslutat att granska HQ:s revisor Johan Dyrefors.
Det är andra gången på kort tid som revisionsbyrån KPMG är inblandad i en tradingskandal.
SvD Näringsliv 31 augusti 2010

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However unclear monetary policy might be, the current state of thinking around fiscal policy was far worse.
Why Even Central Bankers Are Unsure What to Do Now
Jean-Claude Trichet, president of the European Central Bank, tried to reclaim the Ricardian high ground
The late economist Hyman Minsky came more and more into the discussions
For monetary policy, the financial crisis has been the geologic equivalent of the faults that uplifted the Grand Tetons.
CNBC 30 Aug 2010


Bernanke, in his Aug. 27 speech in Jackson Hole, Wyoming
“Strong and stable” growth will “require appropriate and effective responses from economic policy makers across a wide spectrum”
“We all know that the main gorilla in the room is fiscal policy,” Jacob Frenkel, a former Bank of Israel governor who’s now chairman of JPMorgan Chase International
Bloomberg 30 August 2010

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Faber advises investors "stay away from Treasurys as they’ve been rallying since 1981
- equivalent to a 19-year bull run," - when the 10-year bottomed out on Sep. 21, 1981.
Faber says Dec. 18, 2008 was the peak of the bond bubble with yield of 2.08% and 2.53% on 10-year and 30-year respectively.
(See 10-year chart)
August 25, 2010

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The NBER committee in April issued a statement that it was too soon to declare an end to the recession that began in December 2007.
How the hell can the NBER put odds of a double-dip at 5% to 33% without having declared the end to the last recession?
Mish 28/8 2010

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One of the foreclosure cascade's not-so-hidden secrets is that the banks and investors who hold millions of busted mortgages are in no hurry to kick debtors out of their homes.
The average homeowner in foreclosure now is an amazing 461 days behind in his payments.
CNBC 28 Aug 2010

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- Vi ska vårda den ljusnande konjunkturen och föra Sverige tillbaka till överskott.
Annons från Alliansen 28/8 2010

- Krisen orsakades av en global finansiell krasch där giriga spekulanter tog orimliga risker, skriver Alliansen i sitt valmanifest 2010

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Jackson Hole – a disappointing speech and an interesting debate
Eurointelligence 30/8 2010

...

The Bernanke trap Speech at the annual Federal Reserve retreat in Jackson Hole
to do whatever is necessary to keep the economy from stumbling down the Japanese path
CNN/Fortune, August 27, 2010, with good links

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GDP report: Sharp slowdown in economic growth
Revised sharply lower to an annual growth rate of 1.6%
The initial reading had been for a 2.4% growth rate in the period
CNN August 27, 2010

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The important question is whether growth is fast enough to bring down sky-high unemployment.
We need about 2.5 percent growth just to keep unemployment from rising,
and much faster growth to bring it significantly down.
Yet growth is currently running somewhere between 1 and 2 percent, with a good chance that it will slow even further in the months ahead.
If unemployment rises for the rest of this year, which seems likely, it won’t matter whether the G.D.P. numbers are slightly positive or slightly negative.
All of this is obvious. Yet policy makers are in denial.
Paul Krugman, New York Times, August 26, 2010

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USA-ekonomins Moment 22
Fastighetsmarknaden vänder inte uppåt förrän arbetsmarknaden förbättras.
Och arbetsmarknaden förbättras inte förrän fastighetsmarknaden vänder uppåt
Rolf Englund blog 2010-08-27

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Is the crisis coming back?
After the downgrading of Ireland by S&P, Irish sovereign bond spreads rose from 318bp to 344bp to level higher than before May, and even Greece spreads are now back at close to 10%, the level before the agreement on the EFSF. This means that the European rescue package have failed to calm down the market stress that triggered on those package in the first place.
There was further bad news from the US, where existing home sales declined by a record amount for July, giving rise to expectations of another decline in US house prices.
As ever, Calculated Risk has the best coverage of this.
The Wall Street Journal says in a comment that even a downturn to annualised growth rates of under 2% will feel like a recession.
In a 2% economy, there won’t be any job creation, or wage increases.
Eurointelligence 25/8 2010

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This graph shows existing home sales (left axis) and new home sales (right axis) through July.
This graph starts in 1994, but the relationship has been fairly steady back to the '60s.
Then along came the housing bubble and bust, and the "distressing gap" appeared
CalculatedRisk 25/8 2010

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Lånefesten vägrar ta slut
Utlåningen för bostadsändamål uppgick sammanlagt till 1,639 miljarder kronor i slutet av juli,
en ökning med 10,4 procent jämfört med samma månad föregående år
DI 2010-08-26

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

Rolf Englund blog, 2009-12-05

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With the exception of temporary bubbles caused by reckless monetary policy, rising home prices are merely a symptom of a vibrant economy, not a cause.
The true cause of economic growth and higher living standards is rising productivity, which occurs when societies wisely invest in many things, such as new technologies and new ways of doing business.
Housing is just one of those things.
Setting as a goal the maintenance of high levels of investment in housing has obvious political appeal, but
it's junk economics for a nation that wants to innovate and grow.
Wall Street Journal 25/8 2010

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Swedbank kan inte för alltid enbart vara beroende av bostadsobligationsmarknaden, utan måste förr eller senare ge sig ut på den andra seniora obligationsmarknaden, menar Birgitta Forsberg, som skrivit den nyutgivna boken Fritt fall.
Det har dock klarats av med begränsad framgång hittills.
I februari i år gjorde banken det första försöket att ta upp lån i eget namn.
SvD Näringsliv 25/8 2010

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Is there a government bond bubble?
Probably not, but approach low-probability risks carefully
The Economist invitation August 2010

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New Home Sales Reach New Record Lows
Tim Iacono, August 25, 2010 with nice chart

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Existing Home Sales lowest since 1996
Months of supply increased to 12.5 months in July from 8.9 months in June.

A normal market has under 6 months of supply
CalculatedRisk, 24 August 2010

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Other things equal, demand is higher, the lower the real interest rate.
Do you really want to quarrel with that?
But right now, thanks to the aftermath of the financial crisis, even a zero nominal rate, which is a slightly negative real rate, isn’t low enough to produce full employment.
if you can’t raise employment by cutting interest rates, deficit spending — which doesn’t crowd out private spending when the interest rate doesn’t change — becomes a way to put unemployed resources to work
Paul Krugman New York Times August 23, 2010


Fed is running the risk of replaying the disaster movie that led to the credit crisis
by keeping monetary policy loose for too long
This is not the time for an aggressive Fed tightening, but...
Stephen Roach, CNBC 24 Aug 2010

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The European economy is at risk of sliding back into a recession as governments cut spending to reduce their budget deficits.
Nobel Prize-winning economist Joseph Stiglitz, Bloomberg 24/8 2010

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Yankee bonds
– dollar-denominated bonds sold by non-American companies into the US
So far this year, 773 have been issued, raising $412.9bn
– beating the $378.1bn raised up to this point last year
The attraction of the US market is lower funding costs.
Banks are the biggest issuers.
Eurointelligence 24/8 2010

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Interest rates near zero risk fanning asset bubbles or propping up inefficient companies, say Raghuram G. Rajan and William White, former head of the Bank for International Settlements’ monetary and economic department.
After Europe’s debt crisis recedes, Fed Chairman Ben S. Bernanke should start increasing his benchmark rate by as much as 2 percentage points so it’s no longer negative in real terms, Rajan says.
Bloomberg 23 August 2010

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Many real estate experts now believe that home ownership will never again yield rewards
like those enjoyed in the second half of the 20th century.
The wealth generated by housing in those decades, particularly on the coasts,
powered the economy, paying for the education of children and grandchildren,
keeping the cruise ships and golf courses full and the restaurants humming.

New York Times 23 August 2010

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Housing led the U.S. out of seven of the last eight recessions.
This time, it may kill the recovery.
Bloomberg Aug 23, 2010

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Member countries share a common currency, but when it comes to sovereign credit they are on their own.
This fact was obscured until recently by the willingness of the European Central Bank (ECB) to accept the sovereign debt of all member countries on equal terms at its discount window.
This allowed the member countries to borrow at practically the same interest rate as Germany,
and the banks were happy to earn a few extra pennies on supposedly risk-free assets by loading up their balance sheets with the government debt of the weaker countries.

These positions now endanger the creditworthiness of the European banking system.
"The Crisis & the Euro", George Soros, New York Review of Books, August 19, 2010

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I know it’s over the top, but here it is anyway:
the policy elite — central bankers, finance ministers, politicians who pose as defenders of fiscal virtue
are acting like the priests of some ancient cult,
demanding that we engage in human sacrifices to appease the anger of invisible gods.

Paul Krugman, New York Times 19/8 2010

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Varning! Bildt äter kräftor på Harpsund
Rolf Englund blog 2010-08-20


Det som händer nu är att marknaderna slutligen har upptäckt att pessimisterna hade rätt
"en tillväxt på bara en eller två procent, innebär ökad arbetslöshet och stora påfrestningar på samhället
Paul Krugman, Ekot 20/8 2010

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'Just a bad trend' - 500,000 jobless claims
"You can sometimes dismiss a big number and say , 'Oh, it's just one week,'" Quinlan added. "But with the four-week moving average continuing higher, you can see this is just a bad trend."
CNN August 19, 2010

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We've been living in a veritable bubble bath the past 10 years what with two stock bubbles, a real estate bubble and a derivatives bubble. And now, with so much money flooding into Treasury securities and interest rates so low,
many people are wondering whether the next pop! we'll hear will be the bursting of a bond bubble.
CNN Money Magazine: Ask the Expert, 19/8 2010

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Fastighetsskatten är en av de mest omdiskuterade skatterna.
Men det är naivt att tro att vi kan bli av med den.
Troligen är någon form av fastighetsbeskattning allt viktigare för statskassan.
Det handlar om stora belopp, det är tillgångar som inte kan flyttas utomlands och det är en skatt som inte påverkar tillväxten nämnvärt.
Vad än politiker säger så älskar de i hemlighet skatten på bostäder.
Annika Creutzer SvDe24 19/8 2010

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Nordic Economies Risk Housing Market Collapse
Swedish real estate may fall as the 20 percent of borrowers with the biggest debts struggle with burdens as much as 46 times their disposable incomes, says Royal Bank of Scotland Group Plc.
Bloomberg Aug 19, 2010

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Knäckte fastighetsskatten Socialdemokraterna i valrörelsen 2006?
Det hävdade förre statsministern Göran Persson i sina memoarer.
Redan under Almedalsveckan för fyra år sedan ville Persson ställa ut ett löfte om frysta taxeringsvärden, i syfte att få bort fastighetsskatten från debatten. Men statsministern påstår att han inte orkade köra över sin finansminister Pär Nuder, som motsatte sig idén. Och sen gick det som det gick i valet.
DN-ledare 19/8 2010

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Fastighetsskatt är bra att ha
Sanningen är att inget parti med regeringsambitioner kan tänka bort fastighetsskatten då
den är en alldeles utmärkt skattebas. Den är förhållandevis stabil, flyttar inte och har i förhållande till andra skatter betydligt mindre oönskade samhällsekonomiska effekter.
Det betyder inte att Göran Perssons gamla fastighetsskatt var något att föredra. Konstruktionen saknade legitimitet...
Expressen-ledare 19/8 2010

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When, however, the economy suffers from Post Bubble Disorder,
characterised by private sector deleveraging and a fat-tail risk of deflation
In such a liquidity trap, private sector demand for credit is, axiomatically, very inelastic to low interest rates,
as evidenced by contracting private sector debt footings, even when the central bank’s policy rate is pinned against zero.
In such circumstances, the central bank has a profound duty to act unconventionally
Paul McCulley August 2010

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Aggregate consumer debt continued to decline in the second quarter,
continuing its trend of the previous six quarters.
As of June 30, 2010, total consumer indebtedness was $11.7 trillion,
a reduction of $812 billion (6.5%) from its peak level at the close of 2008Q3
Calculated Risk with nice chart 17/8 2010

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By 2006, /US house/ prices were starting to slide; they have since crashed almost to pre-bubble levels.
FT 16/8 2010


Familjen Brogren i Bromma är en av de stora vinnarna med regeringen Reinfeldt
Mer pengar i plånboken, lägre fastighetsskatt och lättare att renovera huset.
DN 6/8 2010 sidan 12 i pappersupplagen - men ej på nätet - här ett scannat utdrag i pdf-format

USA:s huspriser övervärderade med 14,0 procent
Svenska huspriser övervärderade med 34,7 procent
Economist print Decembet 30th 2009


The real interest rate on 5-year inflation-protected securities is now negative.
In other words, prospects for other investments are so poor that some investors prefer a safe asset that doesn’t quite keep up with inflation.
The invisible bond vigilantes continue their invisible attack: nominal 10-year bonds at 2.71%.
Paul Krugman 11 August 2010


Double-entry bookkeeping was a great invention.
It is a shame that so many macroeconomists and political pundits – and therefore, politicians themselves – seem to have forgotten it.
Paul McCulley July 2010

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There is neither the political will nor the public appetite for a new round of spending to create jobs.
A recent Time magazine poll found that only 24% of Americans favored a fresh stimulus program, as against 67% who opposed it.
Fortune 11 August 2010


U.S. Trade Deficit Unexpectedly Widens to $49.9 Billion as Exports Decline
- the highest level since October 2008
Bloomberg Aug 11, 2010


Armageddon Sells: Permabears Now Becoming Cool
Albert Edwards forecasts a “bloody, deep recession” that produces a stock market collapse of at least 60 percent,
followed by years of inflation of 20 percent to 30 percent
New York Times 10 Aug 2010

Could it really have arrived? Are global stocks about to tank in an all consuming way?
Indeed, is this the moment Albert Edwards has been waiting for since 1996?
Of course, Edwards is perhaps London’s best-known doom-monger when it comes to stocks.
FT Alphaville Monday, March 5th, 2007


The handling of the current financial crisis has reinforced too big to fail doctrine.
So how can one reduce moral hazard and reduce expectations of future bail-outs?
Living wills to curtail too-big-to-fail, perhaps even thereby allowing systemically important banks, such as Citigroup, Goldman Sachs or Barclays, to fail or, at least, to be unwound.
Charles Goodhart and Dirk Schoenmaker, FT August 9 2010

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Since the beginning of April, when optimism about the economic recovery was at its peak, 2-year bond yields have fallen by 0.63 per cent as the market has realised that the Fed would not tighten monetary policy until at least the end of 2011.
More remakarbly, the 5-year yield has dropped by 1.20 per cent, and the 10-year yield has tumbled 1.14 per cent, presumably reflecting a belief that abnormally low short rates will persist for many years to come.
The decline in bond yields has flown directly in the face of expectations that bond yields would rise because of fears about excessive government deficits, in a pattern which is disturbingly similar to what happened when Japan headed towards deflation a decade ago.
Gavyn Davies, FT 9 august 2010 with nice charts


Sven-Olof Johansson varnar för att hushållen är på väg in i en skuldfälla.
”Vill man vara lite konspiratorisk kan man säga att Sverige håller på att närma sig den situation som USA befann sig i 2007”, säger han.
”Risken är att vi får en baksmälla. I övriga världen ökar hushållen sitt sparande men här kör man på som om ingenting har hänt”.
Sven-Olof Johansson, DI 9/8 2010


IMF report
It isn’t only Spain where the current account deficits are going to persist.
Edward Hugh, A fistful och euros 7 august 2010


To meet even the conservative growth rates posited in the economics section, global energy production would need to rise by 1.3% per year. By the 2030s, demand is estimated to be nearly 50% greater than today. To meet that demand, even assuming more effective conservation measures, the world would need to add roughly the equivalent of Saudi Arabia’s current energy production every seven years.
U.S. Joint Forces Command’s Joint Operating Environment (JOE), February 2010


Siffrorna är osäkra, men i dag räknar man med att det finns uppemot 11–12 miljoner olagliga invandrare i USA.
Hur landet ska hantera detta problem har lett till en infekterad debatt som har fått omvärlden att fråga sig om USA håller på att närma sig den mer negativa europeiska synen på invandring.
Mest kontroversiellt är det lagförslag som antogs i Arizona under våren och som ger polisen befogenhet att undersöka om en misstänkt person är en olaglig immigrant.
DN-ledare 8/8 2010


"a loss of confidence – not merely in the idea that the future will be a brighter place, but also, most crucially, about whether anybody is able to predict that future at all."
So what on earth is going on? Optimists like to blame it on a summer lull, or temporary jitters about US unemployment or the eurozone. They may be right. But personally, I suspect that there is something more fundamental going on too.
Gillian Tett, FT August 5 2010


As the third anniversary of the credit crunch approaches, I have been doing some reflecting on where I went wrong as an economist.
As the greenest student of economics will tell you, there are counter-examples to the principle that markets work and the financial system of the past five years has made a compelling case to be added to the list.
Tim Harford, FT August 3 2010


Basel
What happened in 2008, the collapse and rescue of the worldwide banking system, touched all of us: it turned a gentle recession into the worst recession since the 1930s; and we'll be living with the consequences, in the form of lower growth and squeezed living standards, for years.

Now imagine that the equivalent disaster had occurred in the airline industry, that almost every aeroplane came within a few seconds of dropping out of the skies.

In the aftermath, and however complex the engineering of a plane may be and irrespective of the intricacies of traffic control, the effort to mend and reform air transport would be conducted in full public gaze, using ideas and phrases understandable to all.

As citizens, we wouldn't tolerate anything else - and nor would politicians and regulators believe for an instant that they could get away with stitching up some ostensible solution in private.

So what is it about banking regulation that makes it inappropriate for discussion in front of the children?
Robert Preston, the BBC's business editor, 2 August 2010


Currency traders said expectations of looser US monetary policy raised the prospect of
a return of the so-called dollar “carry trade”, in which investors take advantage of low US interest rates to invest in higher-yielding currencies.
FT August 3, 2010


If you want to worry about something, I can recommend the US current account deficit.
A modest depreciation in the US dollar would only be enough to stimulate a J-curve making imports more expensive and having little effect on the deficit.
The magnitude of the adjustment is likely to be far more disruptive than what little overall price instability seems to be in store.
Richard Robb, Economists' Forum, FT August 2, 2010


Lawrence Summers, chief economic adviser to President Barack Obama, described the world’s leading economies as “in or near liquidity trap conditions”
With the shock of 2008 fading into memory, the moment of reckoning for the global economy has arrived.
Will the bounce back from the nadir become established as a return to sustainable expansion – or will initial relief mutate into the despair of a renewed slowdown?
Chris Giles, FT July 27 2010


Future generations will curse us for cutting in a slump
In 1937 Keynes wrote: “The boom, not the slump, is the right time for austerity at the Treasury.” Jean-Claude Trichet disagrees.
Robert Skidelsky and Michael Kennedy, FT July 27 2010


Claremont Review of Books Spring 2010
Bubbles, Bubbles, Toils and Troubles
Robert J. Samuelson in the Spring 2010 issue of the Claremont Review


Hushållens lån dubbelt så mycket som statsskulden
Rolf Englund blog 2010-07-27


Finansinstitutens utlåning till hushållen ökade med 8,9 procent i juni
Hushållens samlade lån uppgick vid utgången av juni till 2.428 miljarder kronor,
varav den största delen, 1.625 miljarder kronor, bestod av lån kopplade till bostaden.
Riksgälden: Den svenska statsskulden var 1 115 miljarder kronor den 30 juni 2010.
DI 2010-07-27


Basel
Sheila Bair, chairman of the Federal Deposit Insurance Corporation, has said some members of the committee setting international capital standards are “succumbing” to “disingenuous” lobbying from large banks. In an interview with the Financial Times, Ms Bair also said she would not hesitate to use newly acquired powers to break up an institution if it could not provide a credible “living will”
describing how it could be wound up in the event of failure.
FT July 20 2010


Basel
Global banking regulators have reached a breakthrough agreement to tighten capital requirements and impose new worldwide liquidity and leverage standards,
but softened some of their proposals and delayed others to at least 2018.
FT July 26 2010


Davidson, Galbraith, and Skidelsky declined to sign due to a difference of opinion on deficits. Their position is outlined below
Our reservations centered on one sentence, namely, "We recognize the necessity of a program to cut the mid-and long-term federal deficit.. "
Since we do not agree with this statement, we could not sign the letter.
Huffington Post 26/7 2010


Away from traditional portfolio theory and more toward "Black Swan" mentalities espoused by author Nassim Taleb.
Pimco bond fund mangers have coined "New Normal" as their outlook for the next several years Pimco's Richard H. Clarida about fatter tails, that less probable events
CNBC 26 July 2010


Is America facing an increase in structural unemployment?
When an economy experiences a severe recession associated with a sharp decline in aggregate demand, we should not begin by asking whether structural unemployment is the problem.
Instead, we should first try to see how much of the unemployment can be explained by nominal shocks.
Structural unemployment is a sort of residual; it represents those long-term unemployed that would be without jobs even if aggregate demand was on target.
Scott Sumner The Economist July 25th 2010


When the private sector is deleveraging even with zero interest rates, the economy enters a deflationary spiral as it loses aggregate demand equal to the sum of unborrowed savings and debt-repayments every year.
If left unattended, the economy will continue to contract until either private sector balance sheets are repaired, or the private sector has become too poor to save any money (=depression).
The last time this deflationary spiral was allowed to materialise was during the Great Depression in the US.
Richard Koo, Chief economist, Nomura Research Institute, The Economist Jul 26th 2010


To understand modern Republican thinking on fiscal policy, we need to go back to perhaps the most politically brilliant (albeit economically unconvincing) idea in the history of fiscal policy: “supply-side economics”.
Martin Wolf July 25, 2010


The Death of Paper Money
As they prepare for holiday reading in Tuscany, City bankers are buying up rare copies of an obscure book on the mechanics of Weimar inflation published in 1974.
Ambrose Evans-Pritchard, 25 Jul 2010


Germany’s Hypo Real Estate Holding AG, Agricultural Bank of Greece SA and five Spanish savings banks didn’t have adequate reserves to maintain a Tier 1 capital ratio of at least 6 percent in the event of a recession and sovereign-debt crisis
Had the Tier 1 threshold been 7 percent, 24 of the banks would have failed,
said Andrew Sheets, Morgan Stanley’s head of European credit strategy in London
Bloomberg July 25, 2010


Certainly, the stress tests should be based on what one might call a plausible worst-case scenario, not one that represents the absolute worst. Nobody is asking the bank supervisors to stress-test the impact of an alien attack.
But sovereign default in the case of Greece is not such a far-fetched scenario – even if you believe it to be unlikely. It is irresponsible for the stress testers to ignore that sort of event.
That is like a car crash tester failing to consider the possibility of an oncoming vehicle.
Wolfgang Münchau FT July 25 2010


Economics is not hard - Part I: Don’t let professional economists tell you otherwise
Why did economics bloggers appear in the years after the collapse of the tech bubble in the early 2000s and flourish during the rise of the housing bubble starting in 2002?
Answer: to fill the vacuum created by the professional economics community that repeatedly failed to protect consumers from the ravages of not one but two asset bubbles in ten years that resulted in the greatest wealth transfer in world history and the near dismantling of the remnants of the world’s once most productive economy.
Itulip 13/7 2010


Part 5B. What Happens If Things Go Really Badly?
More Things Can Go Badly:
Credit Default Swaps, Interest Swaps and Options, Foreign Exchange
at CalculatedRisk on 7/24/2010


In fact, banks have virtually ceased to function as financial intermediaries since 2008, preferring to use the zero cost of money provided by the Fed to finance purchases of Treasury securities instead of supplying loans to households and small businesses.
John H. Makin, American Enterprise Institute, July 2010


The initial response to the crisis (sharp cuts in interest rates, bank bailouts, stimulus spending) probably averted a depression.
But the crisis has also battered the logic of all major theories: Keynesianism, monetarism and "rational expectations."
Robert J. Samuelson, June 28, 2010


A few links about the state of Economics as a science
Click here

Helping the long-term jobless in a prolonged recession is generally a bipartisan issue,
but this time, Republicans argued that the measure will add too much to the national debt.
Heidi Shierholz, Washington Post, July 25, 2010


Only seven of 91 banks failed the tests
Five of the seven were cajas, Spanish savings banks
The Bank of Spain on Friday indicated that it had sufficient contingent liquidity measures in place to reassure caja customers and counter any threat of a run on these banks.
FT July 23 2010 17:46


In fact, banks have virtually ceased to function as financial intermediaries since 2008, preferring to use the zero cost of money provided by the Fed to finance purchases of Treasury securities instead of supplying loans to households and small businesses.
John H. Makin, American Enterprise Institute, July 2010


Ingen fara säger Bank of Spain
Rolf Englund blog 2010-07-24


What lessons does history have to teach us about Jean-Claude Trichet’s call for immediate, rapid, and substantial fiscal and monetary retrenchment and austerity
- his full-throated endorsement of the agenda of the Pain Caucus?
Brad DeLong, FT July 23 2010


There is nothing particularly new about the most recent financial crisis
We refer to them as being "white swan events"
to compare them with the idea of a black swan event that has been popularized by my friend Nassim Taleb. Nouriel Roubini, Motley Fool May 14, 2010


Back in 2008 the US government effectively nationalised Fannie and Freddie
under the fig leaf of a “conservatorship” scheme.
$145bn of taxpayers’ money to prop them up, more than was spent on direct injections into the US banks or car sector.
Gillian Tett, FT July 22 2010



The three dominant credit-ratings providers in the US have requested their clients not to use their credit ratings

This is the direct consequence of a new /german/ law that will make ratings firms liable for the quality of their ratings decisions, effective immediately.


“That means new bond sales in the $1.4 trillion market for mortgages, autos, student loans and credit cards could effectively shut down.”
Eurointelligence 23/7 2010


The scandal of economic theory
competing schools of macro policy.
Underbelly July 22, 2010


Robert Solow: Building a Science of Economics for the Real World
http://democrats.science.house.gov/Media/file/Commdocs/hearings/2010/Oversight/20july/Solow_Testimony.pdf


Unfortunately, the front-loaded deficit reductions may push economically weak countries into recession for the next year or two. That is the cost of achieving the needed long-term deficit reduction in the current economic and political environment.
However, government officials are not warning the public that this is the choice that they have made.
Instead they are claiming that the front-loaded fiscal deficit reductions will not weaken the economy
Martin Feldstein, FT July 22 2010


Our economies are emerging from the worst economic crisis since the second world war, and without the swift and appropriate action of central banks and a very significant contribution from fiscal policies, we would have experienced a major depression.
Now is the time to restore fiscal sustainability.
But the timing remains disputed.
Jean-Claude Trichet, FT July 22 2010


In extraordinary times, the economy may be close to non-linear phenomena such as a rapid deterioration of confidence among broad constituencies of households, enterprises, savers and investors.
My understanding is that an overwhelming majority of industrial countries are now in those uncharted waters, where confidence is potentially at stake
Jean-Claude Trichet, FT July 22 2010


The British government has just stopped the sale of index-linked national savings certificates. These paid the rate of inflation plus 1% for five years, with returns being tax-free.
Buttonwood, The Economist July 20th 2010


"What’s causing all the trouble is a `carry trade’ unwind by real estate companies and people in Eastern Europe who borrowed in francs to buy houses.
They are in effect being bailed out at the cost of the Swiss taxpayer."
Ambrose Evans-Pritchard, 21 July 2010

Top of page


The world economy is entering a new phase after the failure of fiscal stimulus to create a sustained recovery in either the US or Europe. Consumers will not provide the engine of recovery, nor should they after overspending for a decade.
Jeffrey Sachs FT July 21 2010


Krugman versus Ferguson: Round Two
Not since Ken Rogoff’s famous attack on Joe Stiglitz has the dismal science of economics provoked such pompous, self-important, personalised squabbling.
The reality is that nobody knows what cutting the deficit into a weak economic recovery is going to do to output and jobs
Jeremy Warner, The Daily Telegraph, 20 July 2010


In an unusually personal and public rebuke, the International Monetary Fund's top economist accused Nobel-winning economist Joe Stiglitz of slander, self-aggrandisement and intellectual vanity.
Mail Guardian Online 1 January 2002


The stress tests may ultimately lead to catastrophic real-life stresses on banks vital to the prosperity of Europe.
Robert Preston, the BBC's business editor, 21 July 2010


I morgon släpps resultaten av de stresstest som ska avslöja hälsoläget hos Europas 91 största banker. Värst vore om alla klarade provet galant.
Ett väl godkänt betyg skulle sänka förtroendet helt för ett test som redan mötts av skepsis och ifrågasättanden. Nästa fråga skulle då bli: vad är det myndigheterna försöker dölja? Ungefär så paranoid är finansmarknaden.
Andreas Cervenka SvD Näringsliv 22/7 2010


Domedagen II
“If HRE is the only German bank that fails, that completely discredits the tests – not just for Germany but for the whole of Europe”.
Rolf Englund blog 2010-07-21

Top of page


The discussion of fiscal stimulus this past year and a half has filled me with despair over the state of the economics profession.
Paul Krugman July 18, 2010


The academic evidence on Keynesian growth effects of fiscal deficits is thoroughly inconclusive.
Kenneth Rogoff, July 20 2010


My new maxim, never to stand in the middle of a fight between Paul Krugman and Niall Ferguson
It says a lot about the talents of John Maynard Keynes – and just as much about the shortcomings of modern macroeconomics – that when the financial crisis struck, policymakers instinctively reached not for their fancy models, but for the Keynesian idea of fiscal stimulus
Tim Harford, FT July 20 2010
Highly recommended


Domedagen blir på fredag
Då lägger EU fram resultaten, utvalda resultat, av de stresstester de har utsatt de europeiska bankerna för.
Anatole Kaletsky i The Times "undemocratic survival plan for the euro"
Rolf Englund blog 2010-07-20


Today’s Keynesians have learnt nothing
Niall Ferguson, FT July 19 2010


It is far too soon to end expansion
Greece, Ireland, Spain, Portugal and Italy need to be austere.
But Germany, Britain, America and Japan do not.
Brad DeLong, FT July 19 2010


Hungary's IMF revolt augurs ill for Greece
"Austerity is extremely hard to sell to electorates.
The risk is that this moves from a wider financial and economic crisis to a European political crisis as governments are punished by voters.
The approval rating for Lithuanian's prime minister has fallen to 7pc."
Ambrose Evans-Pritchard, 19 July 2010

Top of page


Savings products linked to the inflation rate have been withdrawn from the market by National Savings and Investments after proving too popular.
BBC 19 July 2010


Det största problemet:
har risken för att exempelvis Grekland ställer in betalningarna verkligen lagts in i testerna på ett ärligt sätt?
Enligt Financial Times har marknaderna tagit höjd för förluster på 60 procent på grekiska statsobligationer – medan regleringsorganen har sagt åt bankerna att räkna med 17 procent.
DN-ledare, signerad Gunnar Jonsson, 20 juli 2010


Will taxpayers will have to bail out their banks, when we have the results on 23 July of stress tests?
Only a few weeks ago there was an initial billion dollar bailout of European banks.
You may have missed it, because it wasn't called a bank rescue programme.
BBC's business editor Robert Peston, 16 July 2010


timiacono.com/
housing-market-index-hits-17-month-low/


If you want to be really, really pessimistic...
...then Calculated Risk is the place to this morning.
What Happens If Things Go Really Badly? $15 Trillion of Sovereign Debt in Default
CalculatedRisk on 7/18/2010


The great austerity debate
Over the next week some of the world’s leading policymakers and economists will be addressing in the FT the all-consuming contemporary economic debate: austerity versus stimulus. The writers, including Larry Summers, Jean-Claude Trichet and the FT’s Martin Wolf will argue whether cutting now risks suffocating the fragile recovery of the global economy.
FT July 18 2010


"Åtstramning för expansion"
I sydeuropeiska länder kan finanspolitiken fungera på ett omvänt sätt.

Stora underskott och viss risk för statsbankrutt kan behöva motverkas med drastiska nedskärningar.
Men detta borde inte gälla mer välskötta länder trots deras underskott.
Danne Nordling 17/7 2010

Top of page


Alan Greenspan the 2001 Bush tax cuts
"They should follow the law and let them lapse," Greenspan said.
The government needs the revenue
July 16, 2010


The Debt Supercycle
I have been writing about The End Game for some time now.
And writing a book of the same title.
John Mauldin 17/7 2010


The Fed minutes warned of "significant downside risks" and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.
"The Committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," it said. The economy might not regain its "longer-run path" until 2016.
"The Fed is throwing in the towel," said Gabriel Stein, of Lombard Street Research. "They are preparing to start QE again. This was predictable because the M3 broad money supply has been contracting for months."
Ambrose Evans-Pritchard, 15 July 2010


Jon Kyl of Arizona, the second-ranking Republican in the Senate, was asked the obvious question:
if deficits are so worrisome, what about the budgetary cost of extending the Bush tax cuts for the wealthy, which the Obama administration wants to let expire but Republicans want to make permanent? What should replace $650 billion or more in lost revenue over the next decade?
His answer was breathtaking:
Paul Krugman, New York Times July 15, 2010


One fascinating idea now provoking a chorus of behind-the-scenes debate among regulators and central banks
to force creditors – not taxpayers – to swallow losses if disaster strikes
Gillian Tett, FT July 15 2010


Man får inte glömma bort att vi har en fortsatt stark konjunkturuppgång, vilket borgar för en stabil prisutveckling på bostadsmarknaden.
Det blir nog inga dramatiska prisförändringar i höst
Peeter Pütsep, vd för Svensk Fastighetsförmedling, DN 2010-07-14

Top of page


Conundrum
After numerous boom-bust cycles driven by domestic safe asset shortages,
emerging markets learned to export rational bubbles to economies with a comparative advantage in generating safe assets.
Mike Story (hm), FT July 14 2010
Highly recommended


Bankvärlden håller andan.
Idag och imorgon möts Baselkommittén för att besluta om nya regler för bankerna som mest sannolikt kommer att leda till högre räntor för hushåll och företag.
Annelie östlund E24 2010-07-14


There are two schools of thought on how to respond.
On the one hand, we have the new and unexpected coalition of monetarists and Keynesians.
On the other, there is the Austrian school
Jamil Baz, FT July 13 2010


As Raghuram Rajan of the University of Chicago Booth School of Business and former chief economist of the International Monetary Fund notes in a thought-provoking new book, the underlying “fault lines” are still with us.
Martin Wolf July 13 2010
Highly recommended


ONE of the failures leading up to the crisis was the inability of regulators to understand the scale of the shadow banking system or its interconnectedness with the overall financial system.
July 13th 2010, by S.C. The Economist Economics Free exchange


"The U.S. trade deficit widened unexpectedly"
CNBC 13 July 2010


“Everyone wants to think they’re smarter than the poor souls in developing countries, and smarter than their predecessors,” says Carmen M. Reinhart
Ms. Reinhart and her collaborator from Harvard, Kenneth S. Rogoff, have spent years investigating wreckage scattered across documents from nearly a millennium of economic crises and collapses.
New York Times July 2, 2010


So what is the material difference between the optimists and the pessimists?
The optimists divide into two groups. There are those who have difficulties counting to zero,
who cannot add up the global private, public, and foreign balances, which must equal zero by definition.
Wolfgang Münchau, FT July 11 2010


Samma fråga som om svenska bilköpare kan ställas om banker och stater, hur skulle det gå om alla slutade leva över sina tillgångar?
Den berättelsen skulle man gärna vilja höra, hur det skulle kunna gå till att demontera de globala skuldbergen, om det är möjligt att sluta köpa saker vi inte behöver, för pengar vi inte har.
Marie-Louise Samuelsson, Sydsvenskan 11 juli 2010


Morgan Stanley’s former Asia chief Stephen Roach:
“Alan Greenspan kept the policy rate too low for too long, set us up for credit and property bubbles that led to an enormous crisis, [and] I think Ben Bernanke is just rerunning the Greenspan movie of seven or eight years ago.”
You’ll read much the same thing from Roach on this very first TMTGM post from about five-and-a-half years ago
July 9, 2010, by Tim Iacono


Keynes Versus Hayek, 1932
It’s deeply tragic that we’re having to have this debate all over again,
as the world economy slides into deflation and stagnation
Paul Krugman July 9, 2010


Whether it is their residence, a second home or a house bought as an investment,
the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.
CNBC 9 July 2010


In 1984, I bought my London house. I estimate that the land on which it sits was worth £100,000 in today’s prices. Today, the value is perhaps ten times as great.
The people of the US, UK, Spain and Ireland became feverish speculators in land.
Today, the toxic waste poisons the entire world economy.


Martin Wolf, FT July 8 2010

Martin Wolf om fastighetsskatten
Rolf Englund blog 9/7 2010


Morgan Johansson nämner inte fastighetsskatten i sin artikel om att
Reinfeldt ligger till höger om Lundgren
Newsmill 2010-07-08


The creation of the euro resulted in the disappearance of intra-area exchange rate risk and an expectation of fiscal and macroeconomic convergence among the euro member countries.
This was reflected in a significant narrowing of regional sovereign spreads until very recently.
On the heels of Greece’s fiscal troubles, investors are now re-pricing these risks across the region.
This highlights the need for policymakers to continue to pursue credible fiscal consolidation plans and strengthen economic governance in the euro area.
IMF Global Financial Stability Report, July 7, 2010


US 10-year Treasury note yield below 3 percent
2010-07-07
Read more here


Italy could fall into a so-called 'debt trap.'
We think that it might take a decade or more of stagnant or falling wages to restore full competitiveness
Roger Bootle and his team over at Capital Economics
CNBC 6 Jul 2010


Oil price graph July 2010
Calculated risk


Samtidigt som det svenska skattetrycket går ned kraftigt och börjar närma sig EU-snittet, har Borg etablerat de borgerliga som mer trovärdiga i ekonomiska frågor än de rödgröna.
Borg har vittring på något stort. Han får se upp så att framgången inte stiger honom åt huvudet.
Peter Wolodarski, DN 2010-07-05


Kevin Daly som är makroekonom på finansjätten Goldman Sachs, och som nu besöker Almedalen, håller med om att den svenska ekonomin ser stark ut.
Och han tillägger att den svenska regeringen gått och väl skulle kunna lätta på finanskranarna för att stimulera ekonomin ytterligare
Ekot 5 juli 2010


They (G-20) may hope that retrenchment now will spur on private spending.
But what is their plan if it turns out that it does not?
Martin Wolf, July 6 2010

My conclusion, then, is that the advanced countries remain highly short of demand.
In this environment, rapid cuts in fiscal support make sense if, and only if, monetary policy can be effective on its own and expanding the interest-elastic parts of the economy is the best way to climb out of the hole. There is reason to doubt both ideas.
Martin Wolf, July 6 2010

On Monday, the yield on 10-year government bonds was 1.1 per cent in Japan, 2.6 per cent in Germany, 3 per cent in the US and 3.3 per cent in the UK.
Based on yields on index-linked securities, real interest rates on borrowing by these governments are very low (1.2 per cent, or less, in the US, Germany and UK).
Investors are saying that they view the risk of depression and deflation as greater than that of default and inflation.
Martin Wolf, July 6 2010


Is monetary policy too expansionary or not expansionary enough?
Martin Wolf blog June 27, 2010

Why it is right for central banks to keep printing
Martin Wolf, FT June 22 2010


The number of unemployed Americans fell by 350,000 - and the unemployment rate fell to 9.5 per cent.
But consider that this was mainly due to a reduction in the civilian labour force of 652,000 workers.
FT blog Moneysupply July 2, 2010



If the economy were a coal mine, the job market would be an 800-pound canary,
warning of a recovery that is running out of oxygen. Congress has failed to provide even the most basic support — extended unemployment benefits and bolstered aid to states.
New York Times editorial 2nd July 2010


There is undeniably a risk that tightening policy too early will cause the economy to dip back into recession. But ...
In the view of The Times, the balance of risks suggests that policymakers should begin to withdraw the stimulus.
The Times editorial, July 2 2010


Goodbye Keynes, hello Hoover
To Keynesian critics the switch to austerity is a colossal blunder.
Supporters of the shift to austerity believe by boosting firms’ and households’ confidence and lowering the risk premium on government debt, well-designed fiscal consolidation can actually boost growth.
RE: Ha, ha, ha
The Economist print July 1st 2010

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Markus Uvell ny vd för Timbro

Markus Uvell har utsetts till ny vd för Stiftelsen Fritt Näringsliv/Timbro.

Markus kommer närmast från Svenskt Näringsliv där han i dag är opinionsanalyschef och t f kommunikationschef.

Dessförinnan har han en bakgrund som bl a vd i Demoskop, vd och grundare av United Minds och senior partner på Kreab.

Full text

Peje/Kreab


Wolfgang Munchau on the BIS annual report
ultra-low nominal interest rates play a significant role during the built-up of bubbles – a role that may not yet be sufficiently understood
Eurointelligence 30 June 2010


Alla kan inte exportera sig ur krisen, för då är det ingen som köper.
Grekland och Spanien måste skära ned drastiskt, inget annat kan återställa finansmarknadernas förtroende.
Tyskland ska ha ordning på statsfinanserna, men ....
DN-ledare 29 juni 2010


Gabriel Stein: The BIS ought to know better"
The Bank for International Settlements has warned authorities across the developed world that they cannot rely on ultra-low interest rates to cushion the blow of austerity measures.
The Swiss-based "bank for central bankers" said ultra-low rates and massive fiscal stimulus saved the world from an economic meltdown during the credit crisis, but the balance of advantage has since shifted.
Ambrose Evans-Pritchard, 28 June 2010


Hushållens lånefest fortsätter
DI 2010-06-28 09:34
De monetära finansinstitutens utlåning till hushållen ökade med 9,1 procent i maj jämfört med samma månad föregående år. Föregående månad var ökningstakten 9,2 procent.

Det visar Riksbankens finansmarknadsstatistik, som publiceras av SCB.

...

Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken.
Rolf Englund blog 2009-12-05


Världsekonomin är nära en ny depression, och om en sådan utveckling blir verklighet beror det främst på en misslyckad politik.
Paul Krugman i New York Times med anledning av helgens G20-möte i Toronto.
DI 2010-06-28

The Third Depression
You might have expected policy makers to realize that they haven’t yet done enough to promote recovery.
But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy
Paul Krugman, New York Times June 27, 2010

---

Only a closer union can save the eurozone
I am aware that, at a time of rising nationalism and regionalism throughout the EU, there is no consensus for such sweeping reforms
Wolfgang Münchau, FT, June 27 2010 19:52


Regeringar klarar att stimulera i dåliga tider, men att strama åt i goda är långt svårare. Det är svårt att i en opinionskänslig och ganska upplyst demokrati bedriva konjunkturpolitik. Och den internationella finansmarknaden slår tillbaka med räntehöjningar när stater börjar låna för mycket.

När stater stimulerar står det en hord av bankekonomer i TV-rutan och talar om att det kommer surt efter – och då väljer många att spara. Därför fungerar Keynes recept dåligt idag.
OLLE WäSTBERGS NYHETSBREV 17 JUNI 2010


GDP = C + I + G + (X-M)
John Mauldin 18 June 2010


The age of easy credit and its aftermath
Is there life after debt?
The Economist print, Jun 24th, 2010


Krugman: "That '30s Feeling" In the NY Times
Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere ...
CalculatedRisk 6/17/2010


Den kritiska frågan är:
Hur ska man få ned den totala skuldsättningen i världsekonomin utan att förvärra krisen ännu mer?
Det oroande svaret på denna fråga om åtstramningar är nog att det inte finns några framträdande ekonomer som kan ge besked.
Danne Nordling blog 11 juni 2010


Are these hardships necessary?
The trick of the British establishment is to turn discussion from “whether to” into “how to” questions. The media debate is on which government services to cut or on the balance between spending cuts and tax increases. Once the discussion has been channelled into these trenches the establishment has won.
The real argument, however, should be on whether we need unparalleled fiscal austerity or not.
Samuel Brittan, FT June 17 2010


The parallel with what happened in 1931 is irresistible.
The current stampede to thrift shows that the re-conversion to Keynes in the wake of the financial collapse of 2008 was only skin-deep
We are about to embark on a momentous experiment to discover which of the two stories about the economy is true
Robert Skidelsky, FT June 16 2010
Highly recommended

Top of page


New home construction tumbled in May following the expiration of the homebuyer tax credit in April,
a development that surprised many forecasters for some reason.
Nice chart at Tim Iacono


But bank profits are up tremendously; so where are all these increased profits coming from?
Not to worry! By borrowing trillions of dollars from the FED at ¼% and lending the money right back to the Government by buying FHA bonds paying 4%, that require no reserves be kept, so naturally they show big increases in profits
Aubie Baltin, June 2010


By the way, what ever happened to all those Toxic Assets that were on the banks' books?
Oh, they no longer count since they do not have to mark to market anymore
Aubie Baltin, June 2010


Economists propose one obvious solution: bank boards and regulators should also link executive pay to the performance of bank debt, measured either by bond prices or the cost of insuring bank bonds against default using credit default swaps.
That, they argue, would provide both a capitalist incentive and one to keep banks stable – and, better still, without Big Government control.
Gillian Tett, FT June 15 2010


While it's certainly too early for historical perspective on the stunning events of 2007-2009, I venture to guess that, when the history of the period is written, it will read something like this:
For a host of reasons the U.S. economy was struck by a calamitous financial crisis followed by a vicious recession.
The government—including two administrations, Congress, and the Fed—marshaled enormous resources to save the financial system and to fight the recession.
It worked.

Alan S. Blinder, WSJ 16 June 2010


The world’s biggest excess savers, Germany, Japan and China, are not going to stimulate domestic demand in a way that would allow the G20 to announce an agreed strategy for global rebalancing. Real default, in the form of debt restructuring, seems likely in parts of southern Europe.
Inflation is a plausible outcome for the US in the long run.
John Plender, FT 15 June 2010


Premature retrenchment threatens recession and even deflation, as I argued last week.
Having barely survived the biggest financial meltdown in history, we need to appreciate that these downside risks are serious.
Cutting public spending will not automatically raise private spending.
Martin Wolf June 15 2010


A consensus is forming that policymakers should tighten fiscal policy
What if they find that it tips economies into recession, or even deflation?
Martin Wolf, 8 June 2010


A blogger who left Britain 20 years ago for rural bliss in Spain has become an unlikely economic sage whose advice has been sought by the International Monetary Fund.
Edward Hugh counts Nobel Prize winner and American economist Paul Krugman among his avid followers.
CNN June 10, 2010


The eurozone’s tragic small-country mindset
One of the most important characteristics of a small open economy is that its own actions have little impact on the rest of the world.
Wolfgang Münchau, FT 13 June 2010


This is a rare one newspaper-only scoop.
Frankfurter Allgemeine reports this morning that EU officials will start talks about a bail out for Spain, citing unnamed sourced in Berlin. The paper said the situation had deteriorated so much that they did not want wait until the EU summit on Thursday.
The trigger is the freeze in the inter-banking market last week as the markets have lost confidence in the Spanish banking sector.
Eurointelligence 14 June 2010


In a sea of academic economic literature, there are a handful of essays that provide lifelong analytical anchors.
Some Unpleasant Keynesian-Minsky Logic
Paul McCulley June 2010


So far, so good. But here is my question: what is your “plan B”?
I have been fascinated – if appalled – by the pre-Keynesian approach you and the prime minister have taken to the UK’s fiscal challenges.
What Keynes called “the Treasury view” – that fiscal policy has no effect on activity, even in a deep recession – is alive and well in Downing Street.
Martin Wolf, 10 June 10 2010


The economic situation today is drastically worse than a couple years ago,
and the euro is doomed as a concept,
Nassim Taleb, professor and author of the bestselling book "The Black Swan,"
CNBC 10 June 2010


Tyskland, G20, Grekland EU/SPV
Rolf Englund blog 2010-06-08


Den ekonomiska vetenskapen har inte kunnat komma fram till en teori som beskriver hur den finansiella ekonomin hänger ihop med den reala.
Nästa steg är att denna (hypotetiska) teori måste få sådant genomslag att aktörer och kommentatorer agerar utifrån denna institutionella ram.
Först därefter kan man med större säkerhet uttala sig om vilka olika konsekvenser störningar och stabiliseringsåtgärder sannolikt kommer att ha.
Danne Nordling blog 5 juni 2010


Madmen in Authority
Rereading my post on the folly of the G20, it seems to me that I didn’t fully convey just how crazy the demand for fiscal austerity really is.
Here’s the IMF’s estimate of sources of the growth in debt over the next few years
Paul Krugman 7 June 2010


Tyskland ska spara 771 miljarder
DI 2010-06-07


German Government Agrees on Historic Austerity Program
Right or wrong – whether this plunges the whole world into a deflationary abyss from which there is no escape or if, somehow, this has the desired effect of restoring financial stability over time
– it’s nice to see that there are at least a few elected officials in the world who question the idea of simply piling on more debt to cure the world’s economic ills.
Tim Iacono 7 Jun 2010


Lost Decade, Here We Come
The deficit hawks have taken over the G20
Paul Krugman June 6, 2010


Time to plan for post-Keynesian era
Mainstream Keynesian economics is facing its last hurrah. The global fiscal stimulus championed last year by the Obama administration is coming undone, repudiated by the same Group of 20 that endorsed it last year.
Jeffrey Sachs, FT June 7 2010


En vanlig uppfattning inom ekonomisk forskning är att bubblor är svåra, eller omöjliga, att peka ut innan de brister.
Egenskaperna hos bubblor brukar vara desamma oavsett om det handlar om tulpaner, bopriser eller aktier.
Edward Chancellor, DI 2010-06-04


According to IMF calculations, the credit crunch, bank bailouts and recession only account for 14 per cent of the expected increase in Britain’s public debt burden.
The remaining 86 per cent of the long-term fiscal pressure is caused by the growth of public spending on health, pensions and long-term care.
2020 the majority of the baby-boomers will be retired.
Anatole Kaletsky, The Times June 2, 2010

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The unemployment rate for teenagers remains at 26.4 percent, while 15.5 percent of African Americans and 12.4 percent of Hispanics can’t find jobs.
Seventeen states, along with the District of Columbia, still have jobless rates well in the double digits, and the fate of the long-term unemployed is terrifying.
Newsweek 4 June 2010


G20 drops support for fiscal stimulus
FT June 5 2010


What’s the greatest threat to our still-fragile economic recovery?
I currently find most ominous is the spread of a destructive idea:
the view that now, less than a year into a weak recovery from the worst slump since World War II, is the time for policy makers to stop helping the jobless and start inflicting pain.
Paul Krugman 30 May 2010


European banks
Waiting for the big one
The Economist print June 3rd 2010

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Heidi Shierholz, an economist at the Economic Policy Institute in Washington, estimates
about 2.4 million “missing workers” either left the labor force or did not enter it in the last 28 months.
That is on top of the 15.3 million people who are officially counted as unemployed.
New York Times, 4 Jun 2010

Nobel Prize-winning economist Joseph Stiglitz
The U.S. economy must grow at least 3 percent to create enough jobs for new entrants into the labor force
CNBC 21 Dec 2009

Top of page


G20 central banks are delaying their withdrawal of emergency stimulus
as Europe’s debt crisis shakes financial markets and threatens to hinder the global recovery
Bloomberg 4 June 2010


Swedbank
Folksam anklagas i pantbråk
Uppdrag granskning 2 juni 2010


Jag har länge propagerat för realräntepapper - i USA benämnda TIPS -
och de senaste tre åren tycks det ha varit en god placering.
Rolf Englund 2 juni 2010


Inflation Adjusted S&P500
1996-2010


Force me out if you can.
A growing number of the people whose homes are in foreclosure are refusing to slink away in shame.
They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero.
NYT 1 Jun 2010


Barney Frank (THE CHAIRMAN OF THE HOUSE FINANCIAL SERVICES COMMITTEE)
Here is Frank saying he didn’t push for housing just last week:
And here is Frank in 2005 saying there is no bubble in the housing market and that subsidizing home ownership is a good plan

Pragmatic Capitalism 22 May 2010

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“My fear is that we’re going to run into a negative fiscal shock in the eurozone,” says Pontus Braunerhjelm, of the Swedish Entrepreneurship Forum.
“Everyone will have to be like the Germans, and that could have a huge impact on demand. But our experience suggests this will force more structural reform in many countries.
If it doesn’t, we risk falling into a vicious downward spiral.”
FT 31 May 2010

Full text

Pontus Braunerhjelm, Wikipedia

Pontus Braunerhjelm hos nejtillemu.com


The fixed-exchange mechanism had gone horribly wrong
The tragedy of the interwar years in Germany was that the Social Democrats - then the world’s foremost socialist party - became fatally tainted by acquiescing in /accepting/ Bruning’s deflation torture from 1930 to 1932.
They did so, of course, because they dared not confront the orthodoxies of the Gold Standard.
The result in Germany was the Reichstag election of July 1932 when the Communists and Nazis won over the half the seats.
Ambrose Evans-Pritchard 23 May 2010


An ABC of financial shocks and fiscal aftershocks
“But they bailed out Greece,” said the boy. “So why all the turbulence?”
The big point is that investors are not altogether stupid: they know these are temporary patches; they know Greek indebtedness is going to worsen; they know that other countries in peripheral Europe will find it hard to grow out of their plight
Martin Wolf, May 28 2010
Highly recommended


The new OECD Economic Outlook is a terrifying document
OECD wants the Fed to start raising interest rates soon
what’s scary is the utter folly that now passes for respectable opinion
Paul Krugman, NYT 27 May 2010

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Greece is implementing a sweeping austerity plan.
But the underlying maths of its fiscal problems – with its public debt to gross domestic product forecast to hit 150 per cent – makes it extremely hard to believe that Greece will really fix its woes before the aid runs out.
Gillian Tett, FT May 27 2010


Olof Palme regerade Sverige 1969–1976 och 1982–1986.
I biografen Klas Eklunds ögon var han de ständiga misslyckandenas politiker.
Val förloras. Sveriges ekonomi försämras. Rosornas krig bryter så småningom ut.
Ulrika Kärnborg, Aftonbladet Kultur, 2010-05-21


“This is Susan Webber, a brilliant economist who crossed the lines and, under the pen name Yves Smith, runs Naked Capitalism, the world’s most influential financial blog.
Her account of how Wall Street has brought about the financial crisis in a cynical and calculated way is just chilling”.
Read more here

We aren’t Greece. We are, however, looking more and more like Japan.
Paul Krugman NYT 20 may 2010


Hanteringen av löntagarfonderna har diskuterats ingående i tidigare kapitel och kan svårligen ses som något annat än ett misslyckande.
Fondfrågan blev en lång, plågsam historia för den svenska socialdemokratin och demonstrerade att samspelet mellan partiordföranden och LO-ledningen brast på en rad punkter.
Klas Eklund, i sista kapitlet av sin Palme-bok som Newsmill publicerade ett utdrag ur 2010-05-21.

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Hösten 2008 var hela det finansiella systemet hotat.
Regeringen införde då en rad stödåtgärder, höjd insättningsgaranti, garantiprogram och kapitaltillskottsprogram.
och en stabilitetsfond som ska finansieras med avgifter från bankerna själva, som en slags försäkring. Den innebär att bankerna ska betala 0,036 procent av sin balansräkning till fonden varje år.
Andreas Cervenka e24, 21 maj 2010

När Nordea genomförde sin nyemission förra våren gav staten bort teckningsrätter värda 4 miljarder kronor till stabilitetsfonden. Sedan dess har värdet på aktierna stigit med 12 miljarder.
När aktierna säljs går pengarna till bankerna istället för skattebetalarna.


Germans are amazed at global reaction to their fiscal proposals
FT Deutschland had an interesting culture shock article in which it quotes several economists as saying that
Germany’s debt rule, if applied to the whole of the eurozone, is much more likely to result in investor panic than solve the problem.
Eurointelligence 20 may 2010


It is an elementary fact of accounting that the private sector as a whole can only spend less than it earns if some other sector spends more than it earns.
That sector has tended to be the government, usually as automatic stabilizers kicked in while recessions deepened.
nakedcapitalism MAY 17, 2010

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Det är nu vi måste påbörja ett snabbt utträde ur de offentliga underskotten.
Jag har fått Parlamentets stöd för krav på en snabb återgång till balans i de offentliga finanserna och hänsyn till välfärdens kostnader
Gunnar Hökmark, Europaportalen 20 maj 2010


Behind the drama in Europe lies a global crisis
The euro is under threat – along with our entire free-market system<br /> In Washington the US Senate voted 94:0 to prevent IMF from using its cash to help countries that are inextricably trapped in a debt spiral.

Edmund Conway Daily Telegraph 19 May 2010


"The idea that we’ll be able to close down an institution like Goldman (Sachs) in an orderly way
a business that operates in nearly a hundred countries—is absurd.”

Nouriel Roubini 18 May 2010


2

Husprisökningarna sedan 2000-talets början är inte långsiktigt hållbara
och när Riksbanken kommer att överväga när det är lämpligt att börja höja räntan är huspriser och utlåning några av de variabler som direktionen kommer att granska med stor noggrannhet.
vice riksbankschef Lars Nyberg, DI/Direkt 19 maj 2010

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Så mycket kostar husen där du bor
Det framgår av SCB.s småhusbarometer till och med april.
E24 18 maj 2010


Riksbankschefen Stefan Ingves är oroad över de svenska hushållens höga skulder. Det sa han när han talade inför nationalekonomiska föreningen
Ekot 18/5 2010


Guldpriset, Riksbanken och Tomas Fischer
Rolf Englund blog 2010-05-17


Förre statsministern Göran Persson om det ekonomiska stålbadets betydelse.
Godmorgon Världen 16 maj 2010


Här är de dyrste bostadsrätterna som ligger ute till försäljning i internet just nu.
SvD 15/5 2010

Many of the jobs lost during the recession are not coming back.
For the last two years, the weak economy has provided an opportunity for employers to do what they would have done anyway:
dismiss millions of people — like file clerks, ticket agents and autoworkers — who were displaced by technological advances and international trade.
New York Times 13 May 2010


The US trade deficit widened in March to the highest level in more than a year to $40.4 billion
May 12 (Bloomberg)


IMFs dödsdom över Grekland och EU:s räddningspaket
Rolf Englund blog 2010-05-12


The End of the Beginning for the Euro
Parallels between Europe's sovereign-debt crisis and the global financial crisis are manifold
Marc de Vos, WSJ,May 12, 2010


"People are sitting in their houses not paying their mortgages, and the banks are letting those delinquencies extend longer and longer periods of time before they put them in foreclosure,"
That, he adds, is the main reason we're seeing lower numbers of new defaults.
The borrowers are in default, but the banks aren't paying attention, so they don't show up in the numbers.
Diana Olick 13 may 2010


The number of US homes being repossessed hit an all-time high last month
Banks took control of 92,432 properties in April, a 45% rise from a year earlier, said RealtyTrac.
BBC 13 maj 2010


"Strategic defaults" now account for nearly one in three foreclosures
The numbers of repossessed properties, also called real-estate owned or REOs, have been boosted by a spike in the number of homeowners voluntarily giving up their homes because their the value has dropped so precipitously.
CNN 13 maj 2010


När man lägger en fastighetsskatt på hus taxerade över
4,5 miljoner kronor så är det vanliga stockholmare som drabbas.

SvD signerat Per Gudmundson 12 maj 2010


Enligt de rödgrönas förslag ska skatten vara en procent av den summa som överstiger 4,5 miljoner,
utöver dagens fasta maxbelopp för fastighetsskatt på drygt 6.362 kronor (inkomståret 2009)
Nästan 8 procent av villor och fritidshus i Stockholms län omfattas av den nya fastighetsskatten.
I Danderyd och Lidingö berörs mer än vartannat hus.
”Det är inte klokt”, säger Göran Hasselskog som bott i samma hus i Bromma i 31 år.
DN 11 maj 2010


German Chancellor Angela Merkel accused the financial industry of playing dirty. "First the banks failed, forcing states to carry out rescue operations. They plunged the global economy over the precipice and we had to launch recovery packages, which increased our debts, and now they are speculating against these debts. That is very treacherous," she said. "Governments must regain supremacy. It is a fight against the markets and I am determined to win this fight".
Ambrose Evans-Pritchard, 6 May 2010


The Global Crisis of Legitimacy
The greatest systemic risk is not an economic concept but a political one
There were those who were concerned that a united Europe would exist to benefit the elites, rather than the broader public.
George Friedman May 4, 2010 at John Mauldin


DN har skådat ljuset: "Ländernas konkurrenskraft har också betydelse för valutans stabilitet."
Rolf Englund blog 2010-05-07

Problemen i Spanien, Grekland och Portugal kommer även att tynga Sverige.
"Bastionerna är bemannade", säger Anders Borg och hävdar att Riksbanken, regeringen och Riksgäldskontoret har full beredskap.
DI 7/5 2010


"We've seen a crisis start in a country — Greece — become regional, impact the whole of the Euro zone and is on the verge of truly going global,"
El-Erian, CEO of the world's biggest bond fund, CNBC 6/5 2010


Financial markets and rating agencies fail to see
the interconnectedness of government and private debt
Paul De Grauwe Eurointelligence 6/5 2010


Bra film av Johan Norberg om finanskrisen, men utan svar
"överdos - en film om nästa finanskris"
Rolf Englund blog 2010-05-04

Se filmen här


Låga räntor och räddningsaktioner för banker och storföretag
uppmuntrar till samma huvudlösa risktagande som ledde till den värsta finanskrisen sedan 1930-talet
Johan Norberg, DN Debatt 2009-07-25


Finansinspektionen föreslår ett tak för bolån
på max 85 procent av bostadens marknadsvärde.

Ekot 5/5 2010


Oil has been a slumbering giant for nearly a year, but experts say
the world's most important commodity is set to resume its climb back to $100 by this summer at the latest.
Time Magazine 2 may 2010

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Satsa på en hästkur av samma kraft som Lettland!
Den Atenska smittan kan sprida sig och få förfärliga effekter
Från svensk horisont är det inte så mycket annat att göra än att hoppas
PJ Anders Linder, SvD 2 maj 2010


And that’s why a devaluation would help Greece — it wouldn’t reduce the need for fiscal adjustment, but it would reduce the costs associated with fiscal adjustment.
As I argued yesterday, this difference is an important reason why Britain, with a primary deficit as large as Greece’s, isn’t in anything like the same amount of trouble.
Paul Kruman, May 1st 2010

Dagens globala finanskris har utlöst en kris för ämnet nationalekonomi.
Sökandet efter bättre ekonomisk analys pågår för fullt.
Lars Jonung kolumn DN 29/4 2010


Hur långt är ett snönre?
How long is an "Extended Period"?
Short answer: Longer than many analysts expect.
CalculatedRisk on 4/28/2010 with very nice chart


As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier
Another 4.8 million mortgage holders were at least 60 days behind on their payments …
Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload.
TIm Iacono/WSJ nice chart 26/4 2010


Germany
Four professors will launch a legal challenge in early May at the Verfassungsgericht (high court).
Should they secure an injunction, EMU may fly apart.
EMU shut the warning signals, disguising risk.
What investors overlooked is that currency risk mutates into default risk in a monetary union
The EU-IMF "therapy" of deflation for Greece repeats the catastrophic errors of Chancellor Heinrich Bruning in the early 1930s and must lead to a depression
Ambrose Evans-Pritchard, 25 Apr 2010

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The Taylor Rule
Professor Taylor made one huge, simplifying assumption, that the neutral real Fed funds rate is a constant 2%.
Paul McCulley April 2010

A year later, the evidence is in: Depression 2.0 has indeed been avoided.
No, I haven’t yet bought that second home. In fact, I actually sold my only one, at a good level, as I was no longer using it, preferring to live in a little rental house on the water where I have my 32-foot fishing boat, named the Moral Hazard, and my 18-foot electric Duffy boat, named the Minsky Moment. Yes, I am sorta non-normal.
Paul McCulley April 2010

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More evidence has arisen that the "strategic default" consumer spending thesis is correct
- and that the economic recovery on the whole is based on a rotten sham.

In this sleazy imitation of a free market economy, liars, cheats and deadbeats are the ones getting rewarded.
Marcet Oracle, Apr 20, 2010 By: Justice_Litle

Thanks to Ben Bernanke, banks can borrow as much as they want for practically nothing
... plow that cash into longer-dated U.S. Treasuries... and make perpetually huge profits with little to no risk.
It's like a permanent backdoor bailout subsidy.
Marcet Oracle, Apr 20, 2010 By: Justice_Litle


Husboom i USA
2010-04-23

New home sales surged 27 percent in March
as buyers rushed to get under contract in advance of the expiring homebuyer tax credit next week.
As opposed to yesterday’s report on existing home sales that reflect closings, new home sales figures reflect contracts signed.
Tim Iacono, April 23, 2010


Halting the financial doomsday machine
The combination of state insurance (which protects creditors)
with limited liability (which protects shareholders) creates a financial doomsday machine.
Martin Wolf, FT April 21 2010


Economics may be dismal, but it is not a science
The failures of economics in the recent crisis are most evident in two areas:
the inadequacies of the efficient market hypothesis, the bedrock of modern financial economics,
and the irrelevance of recent macroeconomic theory.
John Kay, FT April 13 2010

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Since the start of the Great Recession in December 2007, the U.S. economy has shed 8.4 million jobs
and failed to create another 2.7 million required by an ever-larger pool of potential workers.
Robert Reich 12/4 2010


Meredith Whitney says unemployment will rise again
So, retail sales are up. Unemployment is down. And the Dow is near 11,000.
That doesn't mean that all is right with the world.
CNN Money April 8, 2010

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The trade deficit in the U.S. widened in February
increased 7.4 percent to USD 39.7 billion
Bloomberg April 13 2010

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Svenska fondförmögenheten rekordstor
– Jag tycker att det här visar på optimism. Att konstatera att finanskrisen och det värsta har vi bakom oss och redan 2009 så blev det en uppgång som överträffade allas förväntningar.
Pia Nilsson intervjuad av Louise Andrén Meiton Ekot 13/4 2010


The emotional markets hypothesis and Greek bonds
Gillian Tett, FT April 9 2010

With link to The efficient-markets hypothesis

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However, there is one fellow who is widely viewed as an expert and who has proven that he actually understands economic reality. His name is Professor Robert Shiller
Financial Armageddon 11/4 2010

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Caroline Baum questions the accuracy, timeliness, and, ultimately, the usefulness of the Federal Reserve’s main gauge of inflation pressure in the system – the “output gap” – in today’s column at Bloomberg.
timiacono.com/ April 12, 2010


Deflation is the only way Greece can effectively tackle its debt problems,
International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn was quoted on Monday as saying.
CNBC 12 Apr 2010


Yet let us be honest. This is not a bail-out for Greece. It is a bail-out for European creditors that account for most of Greece's €391bn external debt (163pc of GDP). As such it is the first line of defence against greater sums at risk across Club Med. The EU rescue shifts the debacle onto taxpayers in order to prevent a systemic crisis
Ambrose Evans-Pritchard, 11 Apr 2010

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Greece could alleviate some of its problems by leaving the euro, and devaluing.
But it’s hard to see how Greece could do that without triggering a catastrophic run on its banking system.
Indeed, worried depositors have already begun pulling cash out of Greek banks.
Paul Krugman, New York Times April 8, 2010

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China may post its first trade deficit in six years
after a surge in imports of commodities and consumer goods, weakening U.S. arguments that the nation is keeping its currency undervalued to gain an advantage.
Bloomberg April 9 2010

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Fed boss Greenspan says no one saw the crisis coming. Really?
Only in America would it be possible to spawn a financial crisis so devastating that it would collapse the entire world economy.
Jeremy Warner, Daily Telegraph 7 Apr 2010

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Watching Chuck Prince and Robert Rubin, the former Citigroup chairmen, giving evidence today on the bank’s losses in “super-senior” sub-prime mortgage securities, was not reassuring for anyone seeking lessons from the 2008 financial crisis.
In summary, they told the Financial Crisis Inquiry Commission in Washington that the risk management and management structures at Citigroup were state-of-the-art, that regulators were keeping a close eye on the business, and that the board was functioning correctly.
John Gapper FT blog April 8, 2010


IMF:s förre chefsekonom, MIT-professorn Simon Johnson, och hans professorskollega Peter Boone visar i en lång artikel på ekonomibloggen Baselinescenario.com att
Greklands ekonomiska situation är långt värre än vad den var i Argentina under åren 1991-2001, det vill säga fram till det att Argentina ställde in sina betalningar.
Per Lindvall SvD/e24 2010-04-08

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Robert Rubin, a senior adviser to Citigroup at the time of its deep losses from subprime mortgages,
said he learned belatedly that Citi had $43 billion in high-risk securities on its books.
CNBC 8 Apr 2010


The most audacious monetary experiment in modern history ended on April Fools' Day.
The US Federal Reserve has completed its purchase of $1.7 trillion of mortgage securities, agency debt and US Treasuries,
the conjuring trick of "credit easing" that allowed Ben Bernanke to create stimulus equal to 12pc of GDP.
Ambrose Evans-Pritchard, 04 Apr 2010

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About Krugmans NYT article “How Did Economists Get It All So Wrong” The Spanish economist Luis Garicano made himself famous for a day because he was asked by the Queen of England the very question
Paul Krugman: I think that what happened was a combination of two things.
Edward Hugh, Fistfulofeuros, January 3, 2010


I am aware of the commitment of Europe’s elite to the success of the European project.
But the crisis is profound – for the eurozone, the European Union and the world.
As Wolfgang Münchau has pointed out, last week’s European Council was not a solution but a fudge.
Martin Wolf FT March 30 2010

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Tänk om vi lever i en ny era?
Om lönepengar och lånepengar var rubriken på ett inlägg på denna blog för snart ett halvår sedan.
Rolf Englund blog 30 mars 2010


Due to the length of a typical lifetime and the number of those years that individuals are productive, it’s reasonable to think that someone in their mid-60s could retire today and look back at the last 40 years only to conclude that what they just experienced was normal.
But, what if the last 40 years were anything but normal?
What if, in the world of finance and economics, it was all just a big bubble?
Tim Iacono, 24 March 2010

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Waiting for the other shoe to drop
Fears are growing of a second dip in the housing market
Sales of new and existing homes have fallen for three consecutive months. As a result inventories have grown, putting downward pressure on home values.
The Economist print March 25th 2010


Världens finansiella system, eller patienten, som Investors vd Börje Ekholm uttrycker saken,
drabbades av ”hjärtattack” för något år sedan. Nu är världens ekonomier tungt dopade med låga räntor för att starta igång systemet igen och faran är inte över.
– Men i Stockholm märker man inte mycket av krisen. Folk korkar upp champagnen på fredag eftermiddag, krogarna är fullsatta och fastighetsmarknaden blomstrar
Börje Ekholm föreslår att stockholmarna lämnar huvudstaden för någon dag och beger sig söderut, till städer som Trollhättan och Göteborg. Där är stämningen en annan.
SvD/e24 2010-03-28


Hyman Minsky, points out that stability leads to instability.
The longer a given condition or trend persists (and the more comfortable we get with it), the more dramatic the correction will be when the trend fails.
The problem with long-term macroeconomic stability is that it tends to produce highly unstable financial arrangements. If we believe that tomorrow and next year will be the same as last week and last year, we are more willing to add debt or postpone savings for current consumption.
Thus, says Minsky, the longer the period of stability, the higher the potential risk for even greater instability when market participants must change their behavior.
John Mauldin 26/3 2010


Former Federal Reserve Chairman Alan Greenspan said the recent rise in Treasury yields represents a “canary in the mine” that may signal further gains in interest rates.
Bloomberg March 26 2010

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The difference between the benign scenario of a soft landing and a collapse in house prices with a spillover to the financial sector is enormous.
Bubbles eventually burst and economic forecasts implode when bubbles explode.
Wolfgang Munchau, FT 18/9 2006


The bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices Social Security will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016,
according to the Congressional Budget Office
NYT, March 24, 2010


Germany should boost domestic demand and wages to ease the lopsided euro-region trade flows
that restrict growth in economies from Greece to Portugal, Bank of England policy maker Adam Posen said.
Bloomberg March 25 2010


Hans-Werner Sinn's remarks are apparently listened to as closely as are the Federal Reserve Chairman's remarks in the US. He said:
The Greek drama will have a 'frightful' ('schreklich') ending no matter which course of action is taken.
The objective is to avoid having a Greek default trigger another banking crisis across the EU.
John Mauldin 22/3 2010


The world's oil reserves have been exaggerated by up to a third,
according to Sir David King, the Government's former chief scientist, who has warned of shortages and price spikes within years.
Daily Telegraph 22 March 2010


Whatever you think about fractional reserve banking the truth is that we no longer have it.
Reserve requirements apply only to transaction accounts, which are components of M1, a narrowly defined measure of money. Deposits that are components of M2 and M3 (but not M1), such as savings accounts and time deposits, have no reserve requirements and therefore can expand without regard to reserve levels.
Washingtons blog 21/3 2010

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The orthodoxy on inflation is certainly shifting.
The best policy may well be to talk tough about inflation while keeping interest rates low for as long as possible.
The Economist print March 11th 2010


World leaders are choosing recession
The world economy will not grow as it did during the boom, so how will it now expand?
That is the cardinal problem in macroeconomics.

FT Editorial March 19 2010


IOU: Why Everyone Owes Everyone and No One Can Pay.
By John Lanchester. Simon & Schuster
Published in Britain by Allen Lane as “Whoops! Why Everyone Owes Everyone and No One Can Pay”
The Economist 18/3 2010


Det finns alltid bedömare som i vaga ordalag hävdar att utvecklingen kommer att gå åt skogen. Svårigheten ligger i att kunna skilja fantasterna från dem som har hittat fundamentala orosfaktorer av sådan karaktär att de borde tas på allvar.
En sådan person är den iransk-israeliske ekonomen Nouriel Roubini
Vad som skulle behövas är en utvärdering av varför Roubinis varningar inte togs på allvar. Hur såg de första varningarna i september 2006 ut?
Danne Nordling 16/3 2010

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China and Germany unite to impose global deflation
Germany is in a supposedly irrevocable currency union with some of its principal customers. It now wants them to deflate their way to prosperity in a world of chronically weak aggregate demand.
I am beginning to wonder whether the open global economy is going to survive this crisis.
The eurozone may also be in some danger.
Martin Wolf, FT March 16 2010


Does nobody read German any more?
As of today, German finance minister Wolfgang Schauble has not yet agreed to anything beyond a last resort rescue “if insolvency were imminent” and if there were to be a threat to the “financial stability of the euro area as a whole”.
Ambrose Evans-Pritchard March 16th, 2010
Very Important Article


Lessons from the collapse of Bear Stearns
In March 2008, Bear had tangible equity capital of about $11bn supporting total assets of $395bn – a leverage ratio of 36.
FT, John Cassidy March 14 2010


i Spanien har valutavärdet mer än fördubblats
Finansanalytikern Peter Malmqvist konstaterade nyligen i Dagens industri:
”Den svenska kronan är industrivärldens svagaste valuta.
Oavsett under vilken tidsperiod och mot vilket industriland vi mäter, har den svenska kronan försvagats markant."

Olle Wästbergs nyhetsbrev 22 Februari 2010


Nearing Retirement and Unemployed or Underemployed
One of the groups seriously impacted by the great recession is the "pre retirement" generation - currently the "Baby Boomers" - the workers between the ages of 45 and 64.
CalculatedRisk 13/3 2010

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Harry Schein är ett av mina tre stora – och ouppnåeliga – föredömen i just kolumnistrollen.
De andra är Anders Isaksson i Dagens Industri och senare DN och Allan Fagerström i Aftonbladet.
De är borta nu, men deras intellektuella stringens, formuleringskonst och bildning lever vidare i texterna.
Per T Ohlsson, Sydsvenskan 7 mars 2010

Kommentar av Rolf Englund
Harry Schein: "Risken med att vara rolig är att folk tror att man skämtar"
Det citatet har jag sedan länge på min startsida


Report into the collapse of Lehman Brothers
Business Week, FT editorial


Germans like to believe that they made a huge sacrifice in giving up their beloved D-mark ten years ago, but
they have in truth benefited more than anyone else from the euro.
Almost half of Germany’s exports go to other euro-area countries that can no longer resort to devaluation to counter German competitiveness.
The Economist print March 11th 2010


Leading the PIIGS to an (as yet) Unrecognized Slaughter
Everyone cannot export their way out of this crisis.
Someone has to actually run a current account deficit.
Rob Parenteau at John Mauldin 9/3 2010

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Arun Motianey, author of the book "SuperCycles" and director Roubini's:
The global economy is entering a next "supercycle" phase
that will generate inflation necessary for recovery

CNBC 10 Mar 2010


Establishing the EMF would require a new treaty
We must note an even greater difficulty. The notion that the big threat is fiscal indiscipline is false.
Martin Wolf FT March 9 2010


Everyone has a theory about the financial crisis.
But what do we really know?
Paul Krugman March 7, 2010


The economy shed 36,000 jobs last month
With the latest monthly tally, 8.4 million jobs have been lost since the recession began in December 2007.
Another 2.7 million jobs needed to absorb new workers were never created, leaving the economy bereft of 11.1 million jobs.
New York Times editorial March 5, 2010


Policymakers are desperate to unwind the “unconventional support”, to activate “exit strategies” and begin the long march back to normality.
But there is still little sign of the sustained private-sector recovery required to take up the slack.
Jeremy Warner Daily telegraph 5 Mar 2010


"The preservation of a sense of national identity"
What is the long-term justification for putting taxpayers on the line to subsidize homeownership?
Is this nothing more than a sacred cow in American society — a political necessity because so many voters own homes and are mindful of their resale value?
Robert J. Shiller, New York Times March 5, 2010

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At the level of the early 80s.
A very nice graph shows the employment-population ratio;
this is the ratio of employed Americans to the adult population.
Calculated Risk 5 March 2010


Roger E. Alcaly about
Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis
by John B. Taylor
NYRB Volume 57, Number 5 March 25, 2010


Even long-term rates are low — the real interest rate on
10-year bonds is below 1.5 percent.

Paul Krugman NYT March 5, 2010


Keynes och moral hazard
Min hypotes är att det finns en makroekonomisk moral hazard (ung trygghetsrisktagande) som innebär att själva föreställningen, att det finns en kraftfull stabiliseringspolitik att ta till om det skulle gå snett, kan leda till stora obalanser.
Danne Nordling 4 mars 2010

även om deras slutsatser skiljer sig åt är både Hayeks och Keynes teorier födda ur rädsla.
De är inte utopiska, de utlovar inget framtida lyckorike. De säger bara att den som följer deras läror har en god chans att undvika social kollaps, anarki och diktatur.
DN-ledare 4 mars 2010 signerad Henrik Berggren


"I allt väsentligt kan staten jämföras med hushållet", skriver Svegfors,
med en formulering som kan komma att bli (herostratiskt?) ryktbar.
ökar penningmängden för mycket kan det bli överhettning i ekonomin.
Att det läget inte nu råder beror på att andra aktörer, hushåll, byggbolag, banker, ägnar sig åt kreditkontraktion, i st f kreditexpansion som under 80-talet.

Mats Svegfors har humor. Det framgår av att han idag 940531 skriver att Keynes och Friedman har tänkt fel och att Anne Wibble har tänkt rätt.
Rolf Englund 13 jun 1994

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The big intolerably uncertain question for Britain and America (and for Greece, Ireland and others) is
can we reduce our debts in an orderly way
- one which would be gruelling for us, as we save more and consume less, but not unbearable?
Robert Peston, the BBC's business editor, 30 December 2009


Premier Wen Jiabao calls China’s economic growth path “unbalanced, uncoordinated, and unsustainable.”
Bloomberg March 4 2010


$1,000bn
Median single family house prices nationwide are down by slightly more than 30 per cent from their early 2006 peak.
Roughly one in four mortgages today exceeds the house’s value – approximately 10.7m homes.
Mort Zuckerman, FT March 4 2010


The “inflation fundamentalists”
This elite of central bankers, top economic officials, politicians, academics and journalists maintains the risks of allowing inflation to climb above 2 per cent are unacceptable.
Uri Dadush and Moisés Naím, FT March 4 2010
With comment by Rolf Englund

This misunderstanding pops up now and then, also in this article:
"the disastrous experience with hyperinflation in Germany in the 1930s"
But the hyperinflation was in the 1920s, not in the 1930s.
In the 1930s there was unemploymnet, as we all know.
Rolf Englund FT March 4 2010


Greece desperately needs €20 billion ($27 billion) in the next two months to roll over expiring debt.
“We want to be able to borrow at the same rates as other euro-zone countries,” Mr Papandreou said, perhaps optimistically.
On the other hand, as he has also pointed out, Greece cannot afford to go on borrowing indefinitely at 350 basis points over Germany.
The gains from austerity measures could be swallowed up by such a high debt premium.
The Economist print Mar 4th 2010

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We need a Plan B to curb the debt headwinds
An unsustainable level of private sector debt is the main factor explaining the present severe downturn,
as well as many previous downturns in history.
William White FT March 2 2010


“I would be cheering for the return of the Glass-Steagall Act,”
John Bogle, founder of mutual fund giant Vanguard Group
CNBC March 2, 2010


To begin with, let’s get reacquainted with the fundamental economic problem of our age – lack of global aggregate demand – and how we got to where we are today:
(1) Twenty years of accelerated globalisation incrementally undermined the real incomes of most developed countries’ workers/citizens,
forcing governments to promote leverage and asset price appreciation in order to fill in what is known as an “aggregate demand” gap – making sure that consumers keep buying things.
Bill Gross March 2010


Despite? Should it not have been "by a fall in GDP...." ?
Right, hamnaren! Shame on The Economist:)
Hämnaren från åkersberga får medhåll hos The Economist


Barack Obama's home state of Illinois is near the point of fiscal disintegration.
"We are next to bankruptcy. We have a $13bn hole in a $28bn budget."
Ambrose Evans-Pritchard, 28 Feb 2010

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Fantasy Economies
the name that was popular the last time we were in this same position:
The Goldilocks Economy, the BEARS always come home.
Aubie Baltin February 5, 2010


Both groups might be right.
The Sunday Times letter argued that “the government’s goal should be to eliminate the structural current budget deficit over the course of a parliament”, instead of the two planned by the government.
In response, opponents argued that it would be foolish to slash the structural deficit if this led to a deeper recession and so to an offsetting rise in the cyclical deficit.
Martin Wolf February 25 2010


Federal Reserve chairman Ben Bernanke:
"Indeed, more than 40 percent of the unemployed have been out of work six months or more, nearly double the share of a year ago,"
CNN February 24, 2010


Larger polygamous financial institutions were allowed by the Basel capital regime to run with lower capital buffers than their smaller monogamous partners.
John Plender Ft Feruary 23 2010


Anybody who looks carefully at the world economy will recognise that
a degree of monetary and fiscal stimulus
unprecedented in peacetime is all that is prodding it along

The conventional wisdom is that it will also be possible to manage a smooth exit.
Nothing seems less likely. So let us consider the endgame, instead.
Martin Wolf, FT February 23 2010


20 procent lägre bostadspriser än i dag
Huspriskorrigeringen som drabbat många andra länder de senaste åren kommer och frågan är bara när.
Den kan slå hårt mot många högbelånade hushåll,
säger Bengt Hansson, analytiker på Statens bostadskreditnämnd, BKN
till DN/TT 23/2 2010.


The doomsday cycle
Over the last 30 years, the US financial system has grown to proportions threatening the global economic order.
This column suggests a ‘doomsday cycle’ has infiltrated the economic system and could lead to disaster after the next financial crisis.
Peter Boone, Simon Johnson, 22 February 2010
Very Important Aritcle

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Swedbank har ett värde i balansräkningen på sina tre baltiska verksamheter på 31,8 miljarder kronor. Nästan hälften, 12,6 miljarder kronor, motsvaras inte av några materiella tillgångar, utan kallas goodwill.
Swedbanks uppenbara övervärdering har också betydelse för Sveriges anseende som utvecklad börsnation.
Peter Malmqvist DI 2010-02-22


- Det är klart att Göran Perssons historiska insats är monumentalt betydelsefull för Sverige. Vi kan ha haft olika synpunkter på hur man borde sanerat vår ekonomi. Men den sanering de gjorde är oerhört viktig för att vi har en god ordning i vår ekonomi.
Anders Borg ref. i DN 2010-02-19


The risk premium on Greek government bonds continues to hover around 3 per cent, depriving Greece of much of the benefit of euro membership. If this continues, there is a real danger that Greece may not be able to extricate itself from its predicament whatever it does. Further budget cuts would further depress economic activity, reducing tax revenues and worsening the debt-to-GNP ratio. Given that danger, the risk premium will not revert to its previous level in the absence of outside assistance.
George Soros FT February 21 2010



What we’re doing now is moving in the wrong direction, with real interest rates rising even as the nominal rate remains at zero.
Paul Krugman February 19, 2010


Olivier Blanchard, the IMF’s chief economist called for several bold innovations.
Central banks should raise their inflation targets—perhaps to 4% from the standard 2% or so.
The Economist print Feb 18th 2010


March 6 marks the first anniversary of the world not coming to an end.
The world economy has, it seems, been saved from a fate even worse than our Great Recession.
James Grant February 19, 2010

On that date one year ago, the Standard & Poor's 500 Index put in its low. The broken bones of credit began to knit, and the economy stopped shrinking and resumed growing. So powerful is the recovery today that it is almost possible to imagine a company hiring an employee and a bank making a new loan. Compared to the darkness of the abyss, even a partly cloudy sky looks dazzling.

James Grant

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Cantillon, en irländsk ekonom, bankir och börsspekulant på 1700-talet, var först med att poängtera att
effekten av penningpolitiken beror på de kanaler genom vilka nya pengar pumpas in i samhällsekonomin,
på vem som får pengarna och vad de används till.
Lars Jonung Kolumn DN 2009-12-17

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I never imagined that mark-to-market accounting would be the theme of a sell-out musical comedy.
But if you beg, borrow or steal a ticket for Enron at the Noël Coward theatre in London’s West End, you will discover that the financial crisis has made a topic that was once a guaranteed conversation-stopper the talk of the town.
John Kay FT February 16 2010

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Jumps in fiscal deficits are the mirror image of retrenchment by battered private sectors.
In the US, the financial balance of the private sector (the gap between income and expenditure) shifted from minus 2.1 per cent of GDP in the fourth quarter of 2007 to plus 6.7 per cent in the third quarter of 2009, a swing of 8.8 per cent of GDP.
Martin Wolf February 16 2010

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"This moment is a turning point for Emu, and for the future of Europe."

It seems that quite a number of observers have forgotten what Emu is, and what it is not.
Financial aid from other EU countries or institutions that amounted, directly or indirectly, to a bail-out would violate EU treaties and undermine the foundations of Emu.
Such principles do not allow for compromise.
Once Greece was helped, the dam would be broken. A bail-out for the country that broke the rules would make it impossible to deny aid to others.
Otmar Issing, February 15 2010


How many Irish people have even noticed what is happening in Latvia?
But if the entire periphery found itself having to fight market panic by cutting in an excessive fashion, simultaneously, that could be very dangerous — especially if Spain, or, God forbid, Italy, became involved as well.
Kevin O’Rourke, The Irish Economy 14/2 2010

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The PIGS (Portugal, Italy, Greece and Spain) are old hat.
The new acronym on trading floors for possible dominoes if Greece should fall is STUPID (Spain, Turkey, UK, Portugal, Italy, Dubai).


The Case For Higher Inflation
Olivier Blanchard, currently the chief economist at the IMF,
conclusion, central banks have been setting their inflation targets too low
I’m not that surprised that Olivier should think that; I am, however, somewhat surprised that the IMF is letting him say that under its auspices. In any case, I very much agree.
Paul Krugman, Febr 13 2010


Cirka 55000 kronor per kvadratmeter är snittpriset för januari i år, enligt Mäklarstatistik.
Priserna i centrala Stockholm ser ut att närma sig nya rekordnivåer
är en bubbla på väg att brista?
SvD 13/2 2010


Riskerna för ett prisfall på bostäder ökar
Handelsbanken: huspriserna kan falla med nära 10 procent
Statens bostadskreditnämnd spår prisfall runt 20 procent
SvD/E24 2010-02-13


Sarkozy, Merkel, Bildt och den politiska viljan
Rolf Englund blog 2010-02-12


Goldman Sachs and other banks should give up their bank status if they want to avoid the ban on proprietary trading proposed by the White House,
Paul Volcker, head of President Barack Obama’s Economic Recovery Advisory Board, FT February 12 2010


Det är ohyggligt underskattat vad räntan betyder. En snabb kalkyl visar att hushållens skuldsättning är ungefär 2 300 miljarder kronor. Skulle räntan stiga 2,2 procent, lika mycket som den har sjunkit under det senaste året, så motsvarar det ungefär, om lönesumman i Sverige är 1 300 miljarder kronor, fyra kronor i kommunalskattehöjning.
Det är stimulansens storlek. Det är en våldsamt kraftfull spak, den här räntan. Avvägningen av hur det ska gå till blir en rysare.
Göran Persson, Affärsvärlden 11/2 2010


The US trade deficit rose to $40.2bn in December,
10% higher than in November and the largest for 12 months.
BBC 10/2 2010


Drygt 26 miljarder kronor rann ut ur Swedbank, SEB och Nordea kreditförluster i Baltikum.
52 miljarder kronor blev bankernas totala nota för kreditförluster under 2009.
DI 2010-02-10

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German exposure to the region amounts to €43bn in Greece, €47bn in Portugal, €193bn in Ireland, and €240bn in Spain,
according to the Bank for International Settlements.
German lenders are already vulnerable, with the world's lowest risk-adjusted capital ratios bar Japan.
Ambrose Evans-Pritchard, 10/2 2010


Jesper Katz och Johnny Munkhammar:
Ge inget EU-stöd till Grekland
Vanligtvis leder sänkta statliga utgifter till minskad tillväxt tillfälligt, men om det leder till sänkta räntor kan en budgetsanering ge högre tillväxt än vad som annars vore fallet.
Europaportalen 2010-02-04


Riksbankens direktion har beslutat att tillsätta en utredning om risker på den svenska bostadsmarknaden.
Bakgrunden är att bostadspriserna har stigit kraftigt under flera år.
"Hittills har vi inte gjort bedömningen att det finns någon bubbla på bostadsmarknaden", säger Mattias Persson på avdelningen finansiell stabilitet."Det finns flera faktorer som talar för att prisuppgången i Sverige beror på fundamentala faktorer.
Men det kan också finnas risker på den svenska bostadsmarknaden", skriver Riksbanken i ett pressmeddelande.
DI 9/2 2010

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Greece's drama has already metastasised into a wider systemic crisis.
For the third time in 18 months the global financial system risks spinning out of control
Flow data shows an abrupt withdrawal of German and Asian capital from Club Med debt markets.
Ambrose Evans-Pritchard, 07 Feb 2010


Whether he likes it or not, Jean-Claude Trichet is not just the president of the European Central Bank.
Mr. Trichet, 67, is also the de facto president of Europe,
at least for the 16 nations that rely on the euro as their common currency.
Jack Ewing. The New York Times, 8 February 2010.
VIA - Very Important Article with good links, if I may say so

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For all the concern over the $1.6 trillion U.S. budget deficit and record debt load,
the dollar is as valuable now as 35 years ago.
Bloomberg Feb. 8, 2010


Spain is an object lesson in the problems of having
monetary union without fiscal and labor market integration.
Paul Krungman, New York Times, February 5, 2010


The last few days have reminded me of the speculative attacks on sterling and the Italian lira in September 1992.
Wolfgang Münchau February 7 2010

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Such panics are easily triggered and difficult to stop.
Greek 10-year borrowing costs, at 6.7 per cent, are about 2 percentage points dearer than Ireland or Portugal, the two next riskiest eurozone sovereigns. This air of danger has infected Greek businesses.
Financial Times editorial February 5 2010


Total job loss from the start of the recession to 8.4 million.
Tim Iacono 2010-02-05


The BIGGEST Financial Weapon of Mass Destruction
Treasury Bonds with maturities of 10 years or more
Aubie Baltin January 15, 2010

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The US unemployment rate fell unexpectedly from 10 percent to 9.7 percent in January,
as black unemployment remained high at 16.5 percent.
thedailyvoice.com febr 2010


Bankerna är ett oligopol som tjänar enorma pengar på att ge dyra lån till företagen.
Hans företag tvingas betala 5-6 procent medan hushållen med rörlig ränta bara betalar drygt 1 procent.
Problemets kärna är bankernas kapitaltäckningsregler

PR-firman Kreabs grundare Peje Emilsson SvD/E24 2010-02-05


U.S. payrolls fell but the unemployment rate dropped
The number of "discouraged job seekers" rose to 1.1 million in January from 734,000 a year ago.
CNBC 5 Feb 2010


The US long-term unemployed now make up roughly 40% of all unemployed.
That's more than six million people
BBC 5 February 2010


Should Germany bail out Club Med or leave the euro altogether?
Germany faces a terrible dilemma. Either Europe's paymaster agrees to underwrite a Greek bail-out and drops its vehement opposition to a de facto EU economic government, treasury, and debt union, or the euro will start to unravel,
and with it Germany's strategic investment in the post-war order.
Ambrose Evans-Pritchard, 31 Jan 2010

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Experts in Athens told the country's parliament that it had
uncovered €40bn of "hidden debts"
during an investigation into past manipulation by the financial authorities.
Ambrose Evans-Pritchard, 02 Feb 2010


Greece is not the only country with problems.
The eurozone has a structural flaw in the shape of a north-south financial imbalance.
John Plender, February 2 2010


Should Greece be left to go bust?
Otmar Issing, a former board member of the European Central Bank, says an EU rescue would be disastrous.
The Economist online Feb 3rd 2010

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4.5 million homeowners
When a home’s value falls below 75 percent of the amount owed on the mortgage,
the owner starts to think hard about walking away, even if he or she has the money to keep paying.
The New York Times, 3 Feb 2010


This U.S. debt to GDP started accelerating in the 1960s
the first decade of this century when it took over $6 to generate an additional $1 of GDP.
Comstock january 2010


If new-classical and new-Keynesian economics are both wrong, where do we go from here?
For 30 years, macroeconomists have been of two stripes: new-classical and new-Keynesian.
Neither has anything interesting to say about the current crisis.
Roger E.A. Farmer FT January 28, 2010

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We need to learn from those countries that evidently did it right. And leading that list is our neighbor to the north. Right now,
Canada is a very important role model.
PAUL KRUGMAN January 31, 2010


Former Treasury Secretary Hank Paulson admitted that saying Lehman Brothers would not get a government bailout was a ploy in the negotiations His new book on the financial crisis,
"On the Brink: Inside the Race to Stop the Collapse of the Global Financial System."
CNBC Feb 2010


British chancellor Alistair Darling said Britain would not join any European effort to bail out Greece
FT January 29 2010


As retiring Baby Boomers flee to safer investments, some analysts fear there will be too many stocks and too few investors. But, a lot depends on how many of the more than 70 million Boomers can really afford a more conservative investing style, as they try to recover from a lost decade for the stock market
CNBC 1 Feb 2010


What the eurozone must do if it is to survive
The clear and present danger to the eurozone is Spain.
Wolfgang Münchau January 31 2010


Armageddon at Parthenon?(nice pic)
The yield on 10-year Greek bonds blasted upwards by over 40 basis points to 7.15pc in a day of wild trading.
Spreads over German Bunds reached almost four percentage points,
by far the highest since Greece joined the euro, and close to levels that risk a self-feeding spiral.
Contagion hit Portuguese, Spanish, Irish, and Italian bonds.
Ambrose Evans-Pritchard 28 Jan 2010


The deeper concern is Spain, where youth unemployment has reached 44pc
and the housing bust has a long way to run.
Nouriel Roubini said Spain is too big to contain.
"If Greece goes under that's a problem for the eurozone. If Spain goes under it's a disaster," he said
Ambrose Evans-Pritchard 28 Jan 2010


When central banks start implementing exit strategies,
there is the potential to deliver a whole new range of currency upheaval,
particularly in relation to the crucial, but oft-ignored, issue of the dollar carry trade.
Gillian Tett in Davos January 28 2010


Nine European banks have balance sheets that are larger than the GDP of their country.
Eurointelligence 28/1 2010


The Volcker rule – that deposit-taking banks would not be able to engage in proprietary trading, or to own hedge funds or private equity firms – is the first time any government has proposed a sensible structural remedy for the problems created by bailing out banks in 2008.
John Gapper FT January 27 2010


Roubini said he’s never been more pessimistic about the future of European monetary union,
saying Spain poses a looming threat to the euro region holding together.
“Down the line, not this year or two years from now, we could have a breakup of the monetary union,”

Roubini said in a Bloomberg Radio interview from the World Economic Forum’s annual meeting in Davos
Bloomberg Jan. 27 2010


“Volcker Rule”
As Paul Tucker, deputy governor of the Bank of England, noted in an important recent speech,
“shadow banking” also had to be rescued.
Any institution that promises to redeem its liabilities on demand, while investing in longer-term or riskier assets, has bank-like characteristics and is vulnerable to a run.
Martin Wolf January 26 2010


World Economic Forum, Davos 2010
BBC Special Report


How the market can control the banks
bondholders keep bank risk-taking under control - and bear the costs if they fail
James Mackintosh FT-blog January 24, 2010


Tishman Speyer and BlackRock walking away from Stuyvesant Town and Peter Cooper Village in Manhattan.
Trying to refi $4.4 billion in debt on the 11,200-apartment property, to no avail.
Tishman and buddies walked away from the equivalent of 38 thousand mortgages
So now they're handing over the keys to the lenders.
CNBC 25 Jan 2010


World Economic Forum, Davos 2010
BBC Special Report


Writing in the NYT, Richard Thaler provides the disturbing potential conclusion on homeowners changing their viewpoint and strategically defaulting:
"An important implication is that we could be facing another wave of foreclosures, spurred less by spells of unemployment and more by strategic thinking. Research shows that bankruptcies and foreclosures are “contagious.” People are less likely to think it’s immoral to walk away from their home if they know others who have done so. And if enough people do it, the stigma begins to erode."
If enough people do it, the housing market collapses.
CNBC 25 Jan 2010


China: 'Dubai times 1,000'?
James S Chanos
He is planning a speech later this month at the University of Oxford to drive home his point.
THE NEW YORK TIMES and Todayonline Jan 08, 2010


Att stänga av respiratorn
Nu ska räddningspaketen avvecklas.
Första stegen blir strypta lån och högre räntor.
§ Anders Billing Fokus 22/1 2010


The management of the Greek economic crisis raises some disturbing parallels with the aftermath of the Peloponnesian war. The war ended in 404BC
I fear something similar might happen if the eurozone were to impose austerity from the outside, as a quid pro quo for a possible bail-out, which may become necessary if the Greek government were to get into financial difficulty.
Wolfgang Münchau January 22 2010


Priserna på bostäder är på en hög nivå.
Mätt i relation till boendekostnaden (”hyran”) är priserna idag i nivå med tidigare toppar från åttio- och nittiotalen.

Den historiska utvecklingen visar att höga bostadspriser i relation till ”hyran” följs av en låg avkastning på boendet till följd av fallande bostadspriser.
Det finns liten eller ingen anledning att tro att det skall vara annorlunda
Statens Bostadskreditnämnd, Oktober 2009


Basel 3
The Basel regime (European and American banks use either version 1 or 2) represents a monumental, decades-long effort at perfection, with minimum capital requirements carefully calculated from detailed formulae.
The answers were precisely wrong.
Five days before its bankruptcy Lehman Brothers boasted a “Tier 1” capital ratio of 11%, almost three times the regulatory minimum.
The Economist print Jan 21st 2010


The Death of Davos Man
Bruce Nussbaum Businessweek January 21, 2010


Never again will the American taxpayer be held hostage
by banks that are too big to fail

President Obama BBC 22/1 2010


The Greek government has promised to slash its fiscal deficit
from an estimated 12.7 per cent of gross domestic product last year to 3 per cent in 2012.
Is it plausible that this will happen? Not very.
But Greece is merely the canary in the fiscal coal mine.
Other eurozone members are also under pressure to slash fiscal deficits.
What might such pressure do to vulnerable members, to the eurozone and to the world economy?
Martin Wolf, January 19 2010

Some, knowing of my opposition to UK membership of the eurozone, may suppose that I find some pleasure in these looming difficulties.
On the contrary, I fear the dangerous consequences.
Martin Wolf, January 19 2010


Who is going to buy the multiple trillions in government debt that the G-7 countries want to issue? The dollar may be the worst currency in the world, except for all the others.
Where do you put your reserves? The dollar? The euro? Really? The euro is not a currency, it is an experiment.
I think Spain is an even bigger nightmare for the EU when compared to relatively small Greece.
Italy? Belgium? Portugal? All those countries (and their voters) will be watching to see how the EU deals with Greece. The potential for volatility in the euro is just huge.
Walt Ratterman at John Mauldin January 15, 2010


Forex lending represents around 91 per cent of the total in Latvia, 87 per cent in Estonia and 72 per cent in Lithuania
and over 50 per cent in Hungary, Romania and Bulgaria
a senior official at the European Bank for Reconstruction and Development FT 19/1 2010


"An awful lot of people are not managing their own money,"
"In old-style 19th Century capitalism, I owned my company, I made a mistake, I bore the consequences."
Joseph Stiglitz, Columbia University professor and Nobel laureate CNBC 19/1 2010

The corporation is a wonderful institution. But it contains inherent drawbacks, at the core of which are conflicts of interest. Control over the company's resources is vested in the hands of top managers who may rationally pursue their interests at the expense of all others.
Economists call this the "principal-agent" problem.
In the modern economy, where shares are held by fund managers, there is not just one set of principal-agent relations but a long chain of them.
Martin Wolf Financial Times Jan 30 2002


Tio tecken på en bostadsbubbla
Att säga att vi har en överhettad bostadsmarknad i Sverige är kanske att sparka in en tältöppning, men
här är några saker som talar för att Sverige blivit en drivbänk där något riktigt läskigt kunnat gro under lång tid.
Andreas Cervenka SvD/e24 2010-01-17


Soros: En andra recession, 2010 eller 2011.
Rolf Englund blog 19/1 2010


Finanskrisens problem löstes genom att socialisera riskerna och efterfrågan
Det behövs ”en uthållig ökning av den privata sektorns efterfrågan”
"alla länder kan inte samtidigt ha exportledd tillväxt"
Martin Wolf intervjuad i SvD/e24 av Johan Myrsten 2010-01-16


The curse of long-term unemployment
Only about 400,000 more Americans were employed in December 2009 than in December 1999,
while the population grew by nearly 30m.
The Economist print Jan 14th 2010


The City and Wall Street, the last bastions of Marxist workers’ control
Why did financiers think they could get away with rewarding themselves so lavishly?
The answer lies in Tito’s Yugoslavia
Anatole Kaletsky The Times January 14, 2010


Greek Prime Minister George Papandreou said there was "no chance" that Greece would exit the euro zone,
as the country's reform plans came under renewed criticism from the European Central Bank.
WSJ 14/1 2010


Bostadsbubblan en opinionsbubbla?
Inte ens 2011 kommer bostadsinvesteringarna att ha återhämtat sig till tidigare nivåer.
Hur kan det komma sig?
är efterfrågan på bostäder för låg? Varför varnar en del experter i så fall för fortsatta prisstegringar och framtida bubblor som kommer att brista med prisfall som följd?
Danne Nordling 11/1 2010


Superräntan fick lägenheter och villor att stiga med
20 respektive 10 procent under helåret 2009 - mitt i lågkonjunturen.

DI 2010-01-14


Japan’s experience strongly suggests that even sustained fiscal deficits, zero interest rates and quantitative easing will not lead to soaring inflation in post-bubble economies suffering from excess capacity and a balance-sheet overhang, such as the US.
It also suggests that unwinding from such excesses is a long-term process.
Martin Wolf, January 12 2010


ARMS
Thousands of American homeowners are starting to see their monthly mortgage payments skyrocket, dealing a fresh blow to the already shaky housing recovery.
CNBC 12 Jan 2010


The trade deficit in the U.S. widened in November to $36.4 billion
Exports increased 0.9 percent, the seventh consecutive gain, to $138.2 billion
Imports increased 2.6 percent, reflecting a jump in oil prices, to 174,6
Bloomberg Jan. 12 2010


The Fed and the Crisis: A Reply to Ben Bernanke
In his recent speech, the Fed chairman denied that too-low interest rates were responsible.
Does this mean we're headed for a new boom-bust cycle?
John B. Taylor WSJ JANUARY 10, 2010


America slides deeper into depression
The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings.
One million American families lost their homes in the fourth quarter.
Ambrose Evans-Pritchard 10 Jan 2010


Let the finger-pointing begin.
This week the commission to investigate the causes of the financial crisis will hold its first public hearing.
First up to be accused of causing massive foreclosures, nearly bankrupting our financial system and robbing us all of our retirement savings: Wall Street CEOs.
TIME 11/1 2010


Enligt marknaden för CDS-kontrakt, är det just nu allra högst risk att låna ut till Ukraina, Argentina och Venezuela.
Grekland, Island, Lettland och Dubai är andra länder som hamnar i pestligan på den internationella marknaden för statspapper med urusla kreditbetyg.
DI 11/1 2010


Unemployment in the eurozone 10 per cent for the first time since the introduction of the single currency. Despite extraordinary measures to protect the labour market during the downturn, 4m have lost jobs across the 16 countries that use the euro, according to the European Commission’s statistical arm.
FT January 8 2010


“The actual unemployment rate is higher than shown by the official numbers,”
Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent
Bloomberg 2010 Jan. 9


Once again, cheap money is driving up asset prices
"commercial banks are causing a bubble to develop in government-bond markets"
The Economist print Jan 7th 2010


The European Central Bank has given its clearest warning to date that
there will be no EU bail-out for Greece if it fails to control its spiralling deficit,
raising the stakes in a game of brinkmanship over the future of the euro.

Ambrose Evans-Pritchard, 6 Jan 2010
Nice pic of dark clouds over Acropolis


Har centralbankernas inflationsmålspolitik bidragit till krisen?
Hur kommer det sig att Keynes återuppstått?

Klas Eklund December 27th, 2009


Vem ska avgöra om kreditgivningen till bostadssektorn skapar svårhanterliga risker eller inte?
Vem ska bestämma när det är dags att sänka belåningsgrader och öka krav på amortering?
Dessa frågor kräver svar snarast.
Stefan Ingves DN Debatt 2009-12-31


Southern Europe is being ordered to carry out IMF-style austerity, without the IMF-style devaluation required to rectify the massive imbalances that have built up between North and South under the euro.
The victims are caught like France and Germany under the Gold Standard of the early 1930s, when society was broken on a wheel of deflation decrees.
Ambrose Evans-Pritchard, 20 Dec 2009


The Bank for International Settlements will gather top central bankers and financiers for a meeting in Basel this weekend amid rising concern about a resurgence of the “excessive risk-taking” that sparked the financial crisis. “The concern here is that the prolonged assurance of very cheap and ample funding may encourage excessive risk-taking,” the BIS invitation note says.
FT January 6 2010


As the great bear rally of 2009 runs into the greater Chinese Wall of excess global capacity, it will become clear that we are in the grip of a 21st Century Depression
– more akin to Japan's Lost Decade than the 1840s or 1930s, but nothing like the normal cycles of the post-War era.
Ambrose Evans-Pritchard
Posted to John Mauldin's Outside the Box on 4/1 2010


The cause of our crises has not gone away
We should listen to /Iceland/ before the same message is conveyed in much more violent form, in another place and at another time.
John Kay FT January 5 2010


The eurozone’s next decade will be tough
Many have argued that, within a currency union, current account deficits do not matter any more than between Yorkshire and Lancashire.
They are wrong.
Martin Wolf January 5 2010


USA:s huspriser övervärderade med 14,0 procent
Spanska huspriser övervärderde med 55,1 procent
Svenska huspriser övervärderade med 34,7 procent
Engelska huspriser övervärderade med 28,8 procent
The Economist print Decembet 30th 2009


Even the normally sober Martin Wolf has fallen for this line (FT, December 16 2009). The pre-crisis UK economy, he says, was a “bubble economy”. The bubble made UK output seem larger than it actually was!
Robert Skidelsky December 22 2009


The biggest intermediate-term risk for risk assets is not that the big-V doesn’t unfold, but that it does, inciting the Fed to bring the extended period of a near-zero policy rate to a close.
But again, you retort, doesn’t that imply that in the absence of the big-V, risk asset prices could levitate into bubble valuation space?
Yes, it does mean that.
Paul McCulley November 2009


In simple terms, the prevailing consensus is to view the post-2007 crisis as the result of an external shock which could not have been anticipated.
In fact, the world’s problems did not come from an external shock but were created within the various economies
Derek Scott, economic adviser to Tony Blair from 1997 to 2003, FT December 22 2009


Monetary Policy and the Housing Bubble
Chairman Ben S. Bernanke

"Some observers have assigned monetary policy a central role in the crisis. Specifically, they claim that excessively easy monetary policy by the Federal Reserve in the first half of the decade helped cause a bubble in house prices"
January 3, 2010


Eurozone credit contraction accelerates
Bank loans and the M3 money supply in the eurozone contracted at an accelerating pace in November, raising the risk that a lending squeeze will choke the region's fragile recovery next year.
Ambrose Evans-Pritchard, 30 Dec 2009


Om det finns något kritiskt att säga om Ben Bernanke så är det att han var blind för finanskrisen – fram till att den inträffade. Under lång tid avfärdade han varningarna om en bubbla på bostadsmarknaden.
I likhet med sin företrädare Alan Greenspan ansåg inte Bernanke att det var centralbankernas sak att bromsa bostadsrallyt.
Peter Wolodarski 2009-12-27


Den som tror att Sverige följer samma ekonomiska tyngdlagar som länder som USA, Storbritannien och Spanien bör förbereda sig på att det smärtsamma prisfallet på bostäder kommer, kanske till och med under 2010.
Peter Wolodarski 2009-12-27


Lars E O Svensson anses vara en av världens ledande akademiker inom området penningpolitik.
Men hans insatser i riksbanksdirektionen för tankarna till en kapten som slaviskt följer sitt sjökort, även om fartyget kört på ett isberg.
Peter Wolodarski 2009-12-27


The Age of Deleveraging
Total consumer debt is shrinking for the first time on 60 years.
And the decline shows no sign of abating.
John Mauldin 19/12 2009


Arvind Subramanian argues that economics has redeemed itself by rescuing the world economy from the crisis. I agree, but only up to a point.
These extraordinary interventions have not returned the patient to health. They have merely prevented him from dying.
We now must heal five chronic conditions, instead of survive last year’s brutal heart attack.
Martin Wolf, December 29 2009


It is exactly 20 years since Japan's Nikkei hit its peak of 38,957.
The index now trades at about quarter of that value. In other words, it has lost about 73%, closing at 10,638 on Tuesday.
BBC 29 December 2009


Mr Greenspan described the new world in 2002:
“The use of a growing array of derivatives and the related application of more sophisticated methods for measuring and managing risk are key factors underpinning the enhanced resilience of our largest financial institutions. As a result, not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more stable.”
John Kay, FT December 28 2009


Senators John McCain and Maria Cantwell
Lawmakers in both parties, seeking to prevent future financial crises while soothing public anger over bailouts and bonuses, are turning to an approach that’s both simple and transformative:
re-imposing sections of the 1933 Glass-Steagall Act that separated commercial and investment banking.
Bloomberg Dec. 28 2009


In 2008, as the global financial crisis unfolded, the reputation of economics as a discipline and economists as useful policy practitioners seemed to be irredeemably sunk. Queen Elizabeth captured the mood when she asked pointedly why no one (in particular economists) had seen the crisis coming.
There was no doubt that, notwithstanding the few Cassandras who correctly prophesied gloom and doom, the profession had failed colossally.
The totemic symbols of this failure were, of course, the two most important policymakers, Alan Greenspan and his successor as chairman of the US Federal Reserve, Ben Bernanke. They, among many others, helped create a belief system that elevated markets beyond criticism.
Arvind Subramanian, FT December 27 2009


The realisation that the yawning US current account deficit was increasingly being financed by Asian central banks, with the Chinese moving into pole position, was, for me at least, the eureka moment of the decade.
As I reflected on the rise, and probable fall, of America’s empire, it became clear to me that there were three fatal deficits at the heart of American power
Niall Ferguson December 27 2009


I want to be very, very clear: too big to fail is one of the biggest problems we face in this country, and we must take action to eliminate too big to fail.
Ben Bernanke, Time Person of the Year, December 2009

Bernanke was as clueless as Greenspan about the coming storm. He dismissed warnings of a housing bubble. He insisted that economic fundamentals remained strong.
In March 2007, he assured Congress that "the problems in the subprime market seem likely to be contained."
Time Magazine december 2009


The rest of the world was inclined to believe that the west, whatever its faults, knew what it was doing, particularly where running a market economy was concerned. But then the teacher failed the examination.
Thirty years of surging growth in private sector leverage, in the balance sheets of the financial sector and in notional profitability of the financial sector in the US and other high-income countries has ended in calamity.
The emergence of massive global current account “imbalances” has proved highly destabilising.
Martin Wolf December 23 2009


Nobel Prize-winning economist Joseph Stiglitz
The U.S. economy must grow at least 3 percent to create enough jobs for new entrants into the labor force
CNBC 21 Dec 2009

Will the dam break in 2007?
Joseph Stiglitz, The Guardian 27/12 2006


The gap between yields on Treasuries and so-called TIPS due in 10 years closed above 2.25 percentage points last week, the longest stretch since August 2008.
That’s the low end of the range in the five years before Lehman Brothers collapsed,
and shows traders expect inflation, not deflation in coming months

Bloomberg Dec. 21 2009


The Great Stabilisation
The Economist print Dec 17th 2009

The Great Moderation
An unusual suspect


Baselkommittén
Dåliga nyheter för SEB, Swedbank, Handelsbanken och Nordea.
De svenska bankerna har väldigt bra kvalitet på sina tillgångar, exempelvis mycket bostadsutlåning.

Men det får man alltså inte tillgodoräkna sig i det nya måttet.
SvD/e24 2009-12-18


After predicting in his 2003 book "The Dollar Crisis" that the U.S. property bubble would trigger a global recession,
Duncan's new book argues that governments will have to keep stimulating their economies because U.S. demand for cheap goods will not return to the halcyon days of the 2003 to 2007 boom.
CNBC december 2009


Ben Bernanke Time Magazine "Person of the Year"
Time magazine famously named Mr. Greenspan, Robert Rubin and Lawrence Summers “The Committee to Save the World” — the “Three Marketeers” who “prevented a global meltdown.”
Tim Iacono 16/12 2009


Almost 25% of homeowners, or 10.7 million borrowers, were "underwater" on their mortgages Q3. Another 2.3 million are near that drowning point, where you owe more on your loan than your home is worth.
A basic cost-benefit analysis predicts that these people will abandon their homes and accept foreclosure. But...
CNN december 2009


The European Central Bank will lend banks 96.9 billion euros ($141 billion)
as some financial institutions try to lock in cash at a record low interest rate.
Bloomberg Dec. 16 2009


Will the Federal Reserve's actions to combat the crisis lead to higher inflation down the road?
The answer is no; the Federal Reserve is committed to keeping inflation low and will be able to do so.

Chairman Ben S. Bernanke At the Economic Club of Washington D.C., Washington D.C. December 7, 2009


Deja Vu: Will the U.S. Undergo a Reprise of 1937?
Deflation took hold of the country for another two years and unemployment spiked to 20% and didn't drop below 15% until 1940. Property prices and stock markets languished below their pre-1929 levels until World War II shocked production back to life.
Roubini 16/12 2009

Krugman beskriver världsdepressionen i början av 30-talet som en efterfrågekris:
”Det som satte stopp för trettiotalsdepressionen i USA var ett massivt underskottfinansierat program för offentliga arbeten som kallas andra världskriget”.
Carl Johan Gardell, Understreckare SvD 13 augusti 2009


Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since the aftermath of World War II.
Bloomberg Dec. 9 2009


This year the housing market /in the US/ showed signs of life.
But with foreclosures and unemployment climbing, prices have further to fall.
CNN Money 8/12 2009


The IEA puts a date on peak oil production - 2020
The Economist print December 10th 2009


Greece defies Europe as EMU crisis turns deadly serious
Euroland's revolt has begun.
Greece has become the first country on the distressed fringes of Europe's monetary union to defy Brussels and reject the Dark Age leech-cure of wage deflation.
Ambrose Evans-Pritchard, 13 Dec 2009


US trade deficit in October $32.9 billion.
Exports $136.8 billion
Imports $169.8 billion.
Bloomberg Dec. 10 2009


Iceland Is Sacrificed to Save EU:
Shame on Britain and Holland

The Brussels Journal, 2009-12-05


Bankers had cashed in before the music stopped
In 2000-07, the top five executives at Bear and Lehman pocketed cash bonuses exceeding $300m and $150m respectively
Lucian Bebchuk, Alma Cohen and Holger Spamann FT December 6 2009


Den produktion av kol och olja som IPCC:s skräckscenarier bygger på över huvud taget inte är möjlig.
Detta kan förvisso lindra oron för klimatet, men å andra sidan måste vi oroa oss desto mer för framtida energibrist
Kjell Aleklett DN Debatt 7/12 2009


Explaining The Drop In Unemployment Rate
Note the drop in the civilian labor force by 98,000.
Moreover, those "not in the labor force" rose by 291,000 constituting nearly all of the decline in unemployment.
Mish 5/12 2009


Jag /Rolf Englund/ tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken. Finanspolitiska Rådets chef Lars Calmfors är inne på liknande tankar:
- Lars Calmfors budskap är: Riksbanken måste agera. Annars hotar en bolånebubbla


Mr Bernanke was appointed by former President George W Bush in 2006, tasked with following the 18-year reign of Mr Greenspan, whom Gordon Brown that year introduced in London as "the man acknowledged to be the world's greatest economic leader of our generation".
BBC 3 December 2009


Mot bakgrund av den kraftigaste recessionen i världsekonomin sedan andra världskriget finns det anledning att se över om den politik som centralbanker bedriver kan utformas för att bättre kunna främja en balanserad ekonomisk utveckling.
Vice riksbankschef Karolina Ekholm 2009-12-04


Bubblan som vägrar spricka
Skenbar stabilitet. Bostadspriserna stiger och skulderna ökar.
Men Riksbanken ser inte det som skäl att höja räntan.
Fokus 30 november 2009 Text: Lotta Engzell-Larsson


Trade imbalances will grow from their current low levels in the months ahead, and this is politically dangerous.
Deficit country economies remain extremely fragile, and even if they avoid a double dip recession their unemployment rates will continue to rise well into next year.
Kevin O'Rourke Eurointelligence 4.12.2009


Dubai and Euroland
What would happen if a member of the euro area could no longer finance its debt?
would default by one euro-zone country threaten the viability of the euro itself?

The Economist print Dec 3rd 2009


Look what I found by accident on my own website!
Posterity will regard the economic performance we are now witnessing as a golden age.
It will also know, although we do not, how long this era lasts.
Martin Wolf, FT, May 2nd 2007


Englund's Q
How come that unemployment is rising when the recession is over?
It is the productivity, Stupid
For employment to rise GDP must increase more than Productivity (P), of course
ΔGDP/ΔP gives a nice Q
Rolf Englund 4/12 2009


The headlines said that initial job-less claims dropped to 466,000
That is a lot of people losing their jobs
Second, the headline number was a seasonally adjusted number.
The actual number was 543,926.

John Mauldin 28/11 2009


Mats Svegfors har i sin betraktelse (98-03-14) i SvD förundrats över att det är så gott om jobb i USA och så ont om jobb i Sverige.
Svegfors äldsta dotter har nämligen haft en utbytesstudent från USA hos sig. Den unga damen har förundrats över att det är så ont om jobb i Sverige, medan det är så gott om jobb i USA.
Svegfors delar denna förundran.


How to take moral hazard out of banking
Niall Ferguson and Laurence Kotlikoff, FT December 2 2009


Bank of America says it plans to repay its $45bn US government bailout
BBC 2 December 2009


Uppenbarligen krävs det mycket mera underlag än vad Roubini hittills har kommit med för att vi skall sätta någon tilltro till hans varningar /om dollarn/ .
Danne Nordling 29/11 2009


Vi är på väg mot en monsterbubbla på finansmarknaden
Det handlar framförallt om spekulation i en allt billigare dollar.
Nouriel Roubini, Ekonomiekot 27/11 2009


2011
Rolf Englund blog 24/11 2009


Bank of England provided almost 62 billion pounds (USD 102.9 billion) in emergency loans
to Royal Bank of Scotland and HBOS at the height of the credit crisis last year.
The money was repaid in full by January this year
A spokesman for the prime minister said it was "a powerful reminder" of how the banking system had nearly collapsed.
CNBC and BBC 24 Nov 2009


The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true. But that happy situation, aided by ultralow interest rates, may not last much longer. An additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
Edmund L. Andrews New York Times 23 Nov 2009


At Lehman, the top five executives received cash bonuses and proceeds from stock sales
totaling $1 billion between 2000 and 2008,

and at Bear, the top five received more than $1.4 billion,
according to Harvard Law School.
CNBC 23 Nov 2009


“It is inherently extraordinarily difficult to know whether an asset’s price is in line with its fundamental value,”
Bernanke said in response to audience questions after a speech in New York.
“It’s not obvious to me in any case that there’s any large misalignments currently in the U.S. financial system.”
Nov. 23 2009 Bloomberg


Could sovereign debt be the new subprime?
Gillian Tett, FT November 22 2009


Either central banks are wrong to keep rates low,
or markets are wrong to expect recovery

The Economist print Nov 19th 2009


About Richard A. Posner, A Failure of Capitalism: The Crisis of '08 and the Descent into Depression
Were a lot of people reckless and stupid? Of course! But that cannot explain why the whole system crashed, since a lot of people are always reckless and stupid.
The problem, fundamentally, is that markets cannot, and rationally should not, anticipate their own collapse
Jonathan Rauch, NYT, May 14, 2009


We need an orderly way to let institutions fail
Arthur Levitt, former chairman of the Securities and Exchange Commission, FT October 8 2009


Residential investment is the best leading indicator for the economy.
Residential investment will not recover rapidly because of the large overhang of existing vacant housing units.
Existing home sales are largely irrelevant for the economy.
CalculatedRisk 18/11 2009


Mortgage loans: Record number are late
Efforts to combat foreclosure plague are falling short as the total number of delinquent mortgage loans hits 9.64%.
Les Christie, CNNMoney November 19, 2009


At some point, American workers will rebel.
US unemployment is already 17.5pc under the broad "U6" gauge followed by Barack Obama.
Realty Track said that 332,000 properties were foreclosed in October alone.
More Americans have lost their homes this year than during the entire decade of the Great Depression.
A backlog of 7m homes is awaiting likely seizure by lenders.
If you are not paying attention to this political time-bomb, perhaps you should.
Ambrose Evans-Pritchard, 15 Nov 2009


As a result of Lehman’s bankruptcy, millions of people have needlessly lost their jobs, hundreds of thousands of homes have been needlessly repossessed and trillions of dollars, pounds and euros have been needlessly added to the debt burdens of governments around the world.
I repeat that word needlessly because most of these losses would not have happened if Lehman had been supported or wound down in an orderly way.
Anatole Kaletsky, The Times, September 18, 2009

Why a Lehman deal would not have saved us
Niall Ferguson, FT September 14 2009


In the two years after Silicon Valley's dot-com bubble peaked in August 2000, the US stock market fell by almost half.
It was not until May 2007 that investors in the Standard & Poor's 500 had recouped their losses.
Then, just three months later, a new financial storm blew up, this time in the credit market... as millions of American households discovered they could not afford to service billions of dollars' worth of subprime mortgages.
Niall Ferguson, The Ascent of Money


Federal Reserve chairman Ben Bernanke played his part Monday in foreshadowing the dollar’s grim future. He offered the hollow assurance that
the fed was “attentive to the implications of changes in the value of the dollar.”
Such benign neglect whispers the truth: impotence in the face of impending misfortune.
Charles Goyette, author of The Dollar Meltdown: Surviving the Impending Currency Crisis with Gold, Oil, and Other Unconventional Investments.
CNBC 17 Nov 2009


Barack Obama, president of the US, met Hu Jintao, president of the People’s Republic of China,
This, then, was an opportunity for Mr Obama to tell some brutal truths. I hope he did
Martin Wolf, FT November 17 2009


"tro inte att det värsta är över"
Tongångarna från männen som förutspådde finanskrisen,
Nouriel Roubini, Marc Faber och Peter Schiff,
har inte blivit muntrare.
E24 2009-09-30


The headline /Mishkin in FT/ sort of says it all:
"Not all bubbles present a risk to the economy."
That is completely false.
Any genuine bubble poses great risk, which is why they should be avoided, as I have warned repeatedly since at least 1997.
Bill Fleckenstein, MSN Money, 13/11 2009


You have been warned about “the mother of all carry trades.”
Emerging economies “might overheat and experience financial turmoil,”
Bank of Japan Governor Masaaki Shirakawa said
Low rates and the dollar’s depreciation present “new, real and insurmountable risks to the recovery of the global economy,”
Liu Mingkang, China’s top banking regulator, said
Bloomberg, Nov. 16 2009


Inflation Tips
Worries about the size of America’s budget deficit and fears about the potential politicisation of the Federal Reserve are rising.
There is a danger that higher headline inflation will be misread, even as rising energy costs sap demand.
Nice chart
The Economist print 12/11 2009


In a guest article,
Robert Lucas rebuts criticisms that
the financial crisis represents a failure of economics
The Economist print, Aug 6th 2009


Our company, J.P. Morgan Chase, employs more than 220,000 people, serves well over 100 million customers, lends hundreds of millions of dollars each day and has operations in nearly 100 countries. And if some unforeseen circumstance should put this firm at risk of collapse, I believe we should be allowed to fail.
Jamie Dimon, Washington Post, November 13, 2009


The monthly trade gap grew to $36.5 billion
The U.S. trade deficit widened in September by an unexpectedly large 18.2 percent,
the most in more than 10 years
A separate report showed non-oil import prices up 0.7 percent.
CNBC/Reuters Friday, 13 Nov 2009


Everyone realizes that the dollar will have to fall to enable the U.S. to export more, since American households will be consuming less.
Barry Eichengreen, Eurointelligence 13.11.2009


Dangerous asset bubbles are developing in emerging Asia and in China in particular.
Barry Eichengreen, Eurointelligence 13.11.2009


Victory in the cold war was a start as well as an ending
In the case of this crisis, the failure lies not so much with the market system as a whole, but with defects in the world’s financial and monetary systems.
Marin Wolf, FT November 10 2009


Nytt guldprisrekord
över 1.121 dollar per uns
Hittills i år + 27 procent
DI 2009-11-12

Finansmannen Tomas Fischer starkt kritisk till Riksbankens guldutförsäljning
"Sverige förlorar miljarder på att sälja sitt guld"
Dagens Industri 29/5 2007


China Signals That It May Allow Currency to Rise Against Dollar
CNBC/Reuters, 11 Nov 2009


Why will the dollar be the first of today’s fiat currencies to collapse? dollarcollapse.com


Investors should shun U.S. government bonds
former Bank of England policy maker Willem Buiter said.
Bloomberg Nov. 10 2009


Not all bubbles present a risk to the economy
Frederic Mishkin, FT November 9 2009


I Finansinspektionens senaste stresstester kommer de fyra storbankerna att få kreditförluster på sammantaget cirka 175 miljarder kronor under perioden fjärde kvartalet 2009 till 2012.
Swedbank väntas gå med förlust 2010
DI 2009-11-10


Trots att arbetslösheten stiger och svensk ekonomi krymper med fem procent – det största fallet på flera decennier – så växer hushållens bolån med över åtta procent i årstakt.
En rekordstor andel av hushållen väljer också att ta lån med rörlig ränta.
Finansinspektionens generaldirektör Martin Andersson och chefsekonomen Lars Frisell
DN Debatt 10/11 2009


Eurons växelkurs har nått smärttröskeln för industrin i euroområdet.
Det är dåliga nyheter för tillväxten i hela Europa.
Det sade ordföranden för den europeiska företagarorganisationen Business Europe Jürgen Thumann
i ett uttalande på måndagen i samband med ett EU-möte om arbetsmarknaden.
DI 2009-11-09


Bostadspriserna är en av de mer allvarliga riskerna mot svensk ekonomi i ett medelfristigt perspektiv.
Men att vidta åtgärder för att dämpa stigande bostadspriser ligger inte i närtid för regeringen.
Anders Borg, 2009-11-04


Why a Lehman deal would not have saved us
Niall Ferguson, FT September 14 2009


De svenska bolånekunderna får betala storbankernas svarta hål i öst.
På hemmaplan har både SEB och Swedbank bättrat på sina vinstmarginaler på utlåningen.
"Man måste i viss mån förstå att bankerna anpassat sina marginaler med tanke på de ökade riskerna i utlåningen", säger finansmarknadsminister Mats Odell
DI/TT 2009-10-21


Den lettiska centralbanken genomförde stödköp av den egna valutan, lats,
för sammanlagt 16,7 miljoner euro (cirka 175 miljoner kronor) i förra veckan.
TT/DI 2009-11-02

The price of oil has reached a new high for 2009,
continuing its recent rise on the back of the weak US dollar and strong US company results.
US crude rose 52 cents to $79.05
BBC 19 October 2009


Whatever happened to imbalances?
Samuel Brittan, FT October 15 2009


15 miljoner arbetslösa i Euroland
BBC 30/10 2009


Finansmannen Tomas Fischer drev på affären där ålandsbanken köpte Kaupthing Bank.
Men det är Fischers vän, eller kanske före detta vän, Lage Jonason, som lagt rabarber på hela provisionen på 15 miljoner kronor
DI 28/10 2009

Efter kraschen i isländska Kaupthing sydde Tomas Fischer ihop en affär där ålandsbanken köpte Kaupthing Bank Sverige. Under processens gång fanns representanter för bolagen samt Lage Jonason på bankirfirman Lage med och affären blev verklighet i februari i år.

Men Tomas Fischer har inte sett till en krona av provisionen på 15 miljoner kronor och går nu till domstol för att få pengar av Lage Jonason

"Det är väldigt tråkigt. Det är kanske mer principen det handlar om än pengarna. Jag kan klara mig utan pengarna, men man gör inte så här", säger Fischer till DI.

Full text

Tomas Fischer

Lage Jonason


Om hushållens upplåning fortsätter att öka med 8 procent är det inte riktigt hållbart", säger SEB:s chefsekonom Robert Bergqvist.
Det är Statistiska centralbyråns, SCB:s, senaste finansmarknadsstatistik som ser ut som om Riksbanken misslyckats totalt i sin räntepolitik.
Tanken var ju att garantera företagen billiga lån för att få igång investeringarna och skapa nya jobb.
DI 27/10 2009


As the US, UK and Japan will be trying to borrow the same buck in international markets, bond yields will rise when QE stops and there is an even modest recovery in credit demand from the private sector.
That alone is enough to prevent the development of a new credit bubble similar to those that have been economic drivers for nearly two decades.
David Roche, FT October 26 2009


Dollarn på sin hittills lägsta nivå mot kronan på över ett år.
Dollarkursen har fallit med 28 procent sedan toppnoteringen 9,30 i mars
och är sammanlagt ned med 14,5 procent under 2009.
DI 26/10 2009

Full text

Dollarn


"The euro at $1.50 is a disaster for the European economy and industry,"
said Henri Guaino, right-hand man of President Nicolas Sarkozy.
French finance minister Christine Lagarde said it was intolerable that Europe
should "pay the price" for a dysfunctional link between the US and China.

Ambrose Evans-Pritchard, 20 Oct 2009


Släpp valutan fri
Den lettiska regeringen har svårigheter med att uppfylla omvärldens lånekrav.
Om valutan tilläts flyta skulle den ekonomiska återhämtningen gå fortare.
Så skedde i Sverige i början på nittiotalet.
Efter ett fåfängt och dyrt försvar av kronan släpptes valutan fri.
DN huvudledare, 6/10 2009


Europe’s plot to take over the world
the G20 is Europe’s Trojan horse
Gideon Rachman, FT, October 5, 2009


Multiplying multipliers
Mark Thoma, Menzie Chinn, and The Economist all have posts on the question of the size of the fiscal multiplier.
Paul Kruman, October 1, 2009


The US Job Numbers for September
263,000 more jobs lost in September, and unemployment now at 9.8 percent
The only reason the numbers don't look worse is that 571,000 workers dropped out of the labor force.
Remember that the economy needs about 125,000 new jobs every month just to keep up with a growing population.
Robert Reich 2/10 2009


Why the Dow is Hitting 10,000 When Consumers Can't Buy And Business Cries "Socialism"
Robert Reich 22/9 2009


The Keynes comeback
A trio of new books celebrate the man and declare victory for his ideas
“This present crisis is a crisis of systemic ignorance not asymmetric information.”
The Economist print Oct 1st 2009


RE: Njaa, hur är det med ECB?
Vice riksbankschef Lars E O Svensson om vilka lärdomar man kan dra av finanskrisen och inflationsmålspolitiken.
Han inleder med att konstatera att alla centralbanker med inflationsmål har detta som ett flexibelt mål som också går ut på att stabilisera realekonomin.
Detta till skillnad mot en strikt inflationsmålspolitik där enbart inflationen skall stabiliseras.
Danne Nordling 25/9 2009


Vice riksbankchefen ser ingen bobubbla
"Frågan är om det /den låga räntan/ leder till att priserna på bostadsmarknaden stiger på ett orimligt sätt.
Vi ser inga tecken på det idag"
Dagens Industri 2009-09-25


Despite the price falls of the past two years
In Britain house prices remain 170% higher than they were in 1997,
but average earnings have risen by only 55% in the same period.

Steep declines in affordability have also taken place in Ireland, Spain and Australia.
The Economist 19/9 2009


Bostadsmarknaden blomstrar igen.
Priserna rusar och ROT-rabatterade hantverkare monterar upp italienskt kakel
på löpande band i de svenska hemmen.
Det är bara ett problem. Det pyramidspelsliknande bostadsbytandet låser in kapital
och hushållens skulder växer.
Dick Klang, Timbro och Barbro Engman,
ordförande Hyresgästföreningen, SvD Brännpunkt 16/9 2009


Western economies have woken up with a hangover from a drunken binge of
excess consumption and leverage that was reckless and irresponsible
Central banks “were empowered as the ultimate whistle-blowers in a financial system
and they failed, utterly failed to do their job
in this period of excess”.

Stephen Roach,
chairman of Morgan Stanley Asia,CNBC, 16 Sep 2009


The U.S. current-account deficit narrowed in the second quarter
to $98.8 billion, the least since 2001
Bloomberg Sept. 16 2009


The gap between US imports and exports grew 16 percent, in July
the most in more than a decade, to $32 billion

from a revised $27.5 billion in June that was larger than previously estimated
Bloomberg 10/9 2009


Boom, Bust and Blame
The Inside Story about America's Economic Crisis
CNBC, September 2009


Why it is still too early to start withdrawing stimulus
Two groups of thinkers reject this viewpoint.
One argues that the economy is always in equilibrium.
Both the guilty and the innocent must suffer
Martin Wolf, FT September 8 2009


Financial crises are all different, but they have one fundamental source
That is the unquenchable capability of human beings when confronted with
long periods of prosperity to presume that it will continue.

Alan Greenspan, BBC 8 September 2009


U.S. Economy Lost 216,000 Jobs in August
after falling by a revised 276,000 in July and 463,000 in June.
Total loss of jobs since the recession began in December 2007 - 6.9 million.
(Remember, it takes 150,000 jobs per month (or so) simply to maintain
the employment rate, due to growth in the population.
)
RGE Monitor 2009-09-07


It would, I believe, be an error of historic proportions if we were to repeat the mistakes of the 1930s
- when premature tightening prolonged the great depression
- or if we failed to learn the lessons from Japan’s experience of stagnation in the 1990s.
The Prime Minister Gordon Brown, speech to G20 Finance Ministers in London on 5 September 2009, ahead of the Pittsburgh Summit.


Både penningpolitiken och finanspolitiken bör vara expansiv under både 2009 och 2010.
Det sa finansminister Anders Borg vid en presskonferens på fredagen inför G20-mötet för finansministrar.
"Vad gäller ekonomin så står vi fortfarande i askan, och det är inte rätt tid att kalla tillbaka brandkåren.
Jag tycker det är rimligt att under både 2009 och 2010 behålla en expansiv penningpolitik och finanspolitik"
Anders Borg, DI 2009-09-04


How Did Economists Get It So Wrong?
“central problem of depression-prevention has been solved,” declared Robert Lucas of the University of Chicago
in his 2003 presidential address to the American Economic Association
Paul Kruman, New York Times Magazine, 2/9 2009


There was a common ingredient in most /Bank/ failures:
an over-reliance on wholesale borrowing.
As the Western banking system has expanded over the past two decades
its assets have grown to about 2.5 times its deposits
The Economist print, September 3rd 2009


Most new borrowing during America’s housing boom was for spending
Almost all of the $1.45 trillion the authors estimate was borrowed against rising home equity was used for spending.
The Economist print, September 3rd 2009


Hushållens totala skulder hos bankerna ökade med 14 miljarder under juli,
nästan hela ökningen är bostadslån. Den årliga ökningstakten var i juli 7,9 procent.
Finansinspektionen 2009-08-31


Swedbank garanterad nysemission om 15 miljarder kronor
Folksam Liv och Folksam Sak har var för sig beslutat garantera 2 miljarder kronor
DI 2009-08-17


Krugman beskriver världsdepressionen i början av 30-talet som en efterfrågekris:
”Det som satte stopp för trettiotalsdepressionen i USA var ett massivt underskottfinansierat program för offentliga arbeten som kallas andra världskriget”.
Carl Johan Gardell, Understreckare SvD 13 augusti 2009


Betrakta kurvan härintill.
Det är inte den som brukar publiceras i samband med nyheter om tillväxten, men det är den som visar hur värdet av Sveriges varor och tjänster utvecklats i fasta priser sedan 1950.
Som synes har Sveriges välstånd ökat kraftigt.
Man kan här läsa ut att Sverige med det värsta scenariot, drygt sex procents negativ tillväxt i år, kommer att backa till ungefär 2005 års nivå innan det vänder upp igen. Fattigare än så blir vi inte.

Anders Bolling, DN 2009-08-10


Roosevelts New Deal på 30-talet gick ut på att med höjda inkomstskatter och utgiftsminskningar få balans i budgeten, som till slut uppnåddes 1938.
Då bröts uppgången och produktionen sjönk.
Först när balansmålet övergavs kunde ekonomin expandera tillräckligt mycket.

Danne Nordling, 20/2 2009


The crisis and its impact on pension plans have focused attention on the baby boomers,
typically 20-25 per cent of the populations of western economies,
who are now starting to head off into retirement.
George Magnus, FT August 13 2009


Leaving a financial crisis is like leaving an awkward social gathering: a good exit is essential.
In 1936-37, the Federal Reserve made a colossal mistake in its “exit strategy”.
Randall Kroszner, FT August 11 2009


Om lönepengar och lånepengar
Rolf Englund 2009-08-12


Arbetslösheten fortsätter att öka men det ekonomiska läget har blivit "ett par snäpp bättre".
Det finns därför ett visst utrymme för satsningar i höstens budget.
Anders Borg, E24 2009-08-06


Huru tänker Anders Borg?
Rolf Englund 2009-08-12


Teorin om automatiska stabilisatorer förutsätter att kommunerna inte skall avskeda eller höja skatten.
Därför måste staten stabilisera kommunerna.
Men detta tycks inte vara motivet för att nu ge extra pengar till kommunerna.
Man kan dela in stabiliseringspolitiken i tre kategorier: automatisk, reaktiv och proaktiv.
Danne Nordling 11/8 2009


We are in the process of deleveraging
the most leveraged economy in history.

Of course, if the U.S. doesn't recover there will be no worldwide recovery
We, however, don't believe that the U.S. massive stimulus programs and money printing can solve a problem of excess debt generation that resulted from greed and living way beyond our means.
Comstockfunds, August 6, 2009


Keynes: The Return of the Master
“Why did no one see the crisis coming?”, Queen Elizabeth asked
A seminar at the British Academy tried to answer and the FT has taken up the discussion.
Robert Skidelsky, FT, August 5 2009


On a visit to the London School of Economics last November, the Queen asked why no one saw the financial crisis coming. For if people with enough authority and influence had foreseen it, some preventive action would have been taken and either the crisis would not have occurred, or it would at least have taken a different form.
Samuel Brittan, FT, August 6 2009


Prices in the $3.5 tn U.S. commercial real estate have fallen about 39% from the peak in mid 2007
The 39% drop in commercial real estate prices has already eclipsed the 27% decrease during the S&L crisis of the late '80s to early '90s.
Elizabeth MacDonald, Fox, August 5, 2009


China’s central bank warned that its counterparts in developed nations face difficult choices
as monetary easing threatens to cause “severe” inflation and exchange-rate volatility.
“Failure to manage the degree of easing may lead to concerns about mid- and long-term inflation and exchange-rate stability,”
the People’s Bank of China said in a quarterly monetary policy report, posted on its Web site today.
Bloomberg August 5 2009


The U.S. Treasury Department plans to ramp up sales of inflation-protected bonds
China, the largest holder of U.S. government debt, is among investors that have indicated they want to buy more of the securities
Also: Link to nice slideshow about the Biggest Holders of US Gov't Debt, such as Luxembourg, Russia, Brazil, Caribbean Banking Centers (Bahamas, Bermuda, the Cayman Islands, Netherlands Antilles, Panama and the British Virgin Islands), Oil Exporters, Japan, China (Mainland)and Federal Reserve and US Intragovernmental Holdings (That’s right, the biggest holder of US government debt is the United States itself. The Federal Reserve system of banks and other US intragovernmental holdings account for a stunning $4.806 trillion in US Treasury debt.
CNBC/Reuters 5 Aug 2009


I recently had the pleasure of reading Justin Fox’s new book The Myth of the Rational Market.
It offers an engaging history of the research that has come to be called the “efficient market hypothesis”.
It is similar in style to the classic by the late Peter Bernstein, Against the Gods.
Richard Thaler, FT, August 4 2009


Despite the region’s small size, the intensifying crisis in the Baltics cannot be treated as a freakish local squall of little concern to outsiders.
Bank failures or plunging currencies in the three Baltic nations – Latvia, Lithuania and Estonia – could threaten the fragile prospect of recovery in the rest of Europe.
These countries also sit on one of the world’s most sensitive political fault-lines.
They are the European Union’s frontier states, bordering Russia.

Gideon Rachman, Financial Times, August 3 2009


Amelia Earhart, the world's most famous female aviator, became the first woman to fly across the Atlantic in 1928. Unfortunately, her Lockheed Electra disappeared over the Pacific
Amelia's story has much in common with Alan Greenspan's latter years at the helm of the Federal Reserve.
The serial bubble-blower appeared to lose his compass and the subsequent hard landing in uncharted territories
Irish Times, July 24, 2009


“Why did no one see the crisis coming?” Queen Elizabeth asked last year.
If the economics profession could not warn the public about the credit crunch and the recession,
what is the profession’s raison d’etre?
FT writers and outside experts will set out their views in the posts below.
July 28, 2009 by FT


Before 2007, independent central banks would have had no problem presenting credible exit strategies. They would have pointed to their inflation target, and how they would use their medium-term inflation forecast or some other analytical framework to ensure that the price level would remain on a stable trajectory.
Wolfgang Münchau, FT July 26 2009


Being too big, too interconnected, too complex and too international to fail is a big business asset.
The too-big-to-fail problem has been central to the degeneration and corruption of the financial system in the north Atlantic region over the past two decades.

Willem Buiter, June 26 2009


"Too big to fail is a terrible situation and we've got to fix that"
more laws were needed to permit government to wind down failing "financial behemoths" in a transparent manner
Ben Bernanke BBC 27/7 2009


Låga räntor och räddningsaktioner för banker och storföretag
uppmuntrar till samma huvudlösa risktagande som ledde till den värsta finanskrisen sedan 1930-talet
Johan Norberg, DN Debatt 2009-07-25


On March 14, 2008, Robert Rubin spoke at a session at the Brookings Institution in Washington, stating that "few, if any people anticipated the sort of meltdown that we are seeing in the credit markets at present”. Rubin is a former US Treasury Secretary, member of the top management team at Citigroup bank and one of the top Democratic Party policy advisers.
“No One Saw This Coming” Understanding Financial Crisis Through Accounting Models
Dirk J Bezemer, University of Groningen, 16 June 2009


An Englishman doesn't have to own his castle
We should all learn our lesson from the house-price bubble
Government must reshape the tax system so that it does not favour home ownership
Edmund Conway, 24 June 2009


Göran Persson visar runt på sitt älskade Torp,
den 370-hektarsgård som enligt vissa kostade Socialdemokraterna valsegern 2006.

Den förre statsministern lägger också ut texten om sitt nya privata bolag, livet som bonde och dagens mesiga politiker.
DI 2009-07-18


Most people wonder how the financial crisis will end. For some, the story of how it began is just as important.
Control of that tale will help determine how we respond to the past two years of market mayhem.
At stake is the financial industry’s business model and billions of dollars in annual profits.
Bloomberg July 8 2009


Rebalancing global growth
Before the financial crash, global demand was horribly skewed. It was far too reliant on spending from increasingly indebted American consumers:
witness the country’s gaping current-account deficit, which reached almost 6% of GDP in 2006.
The Economist print July 23rd 2009


John Taylor has a message for economists who say Ben S. Bernanke is ignoring a benchmark guide for interest rates: They’re wrong.
Taylor should know: He wrote the rule.
Bloomberg July 24 2009


Forty years ago, the psychiatrist Elizabeth Kübler-Ross identified the five stages of grief following a traumatic event:
denial, anger, bargaining, depression and acceptance.
In my own struggle to come to terms with last year's banking crisis – a personal trauma for every taxpayer – I have so far experienced only anger and depression.
This week, however, I have regressed to anger, and I sense I am not alone.
Tracy Corrigan, 16 July 2009


Professor Tim Congdon from International Monetary Research said the eurozone money figures are "horrifying" and portend a serious crunch ahead.
"My verdict is that the senior people in the ECB [and the Fed] have little organised understanding of the debt-deflationary processes initiated in late 2008," he said.
Ambrose Evans-Pritchard, 12 July 2009


Hur vi en dag ska ta oss från lågränteträsket till en lite mer sund räntesättning förstår jag inte.
Det gör ingen annan heller och det börjar väl bli några av oss som undrar hur exit-strategin bland
”stora tänkare” som Ben Bernanke eller Lars E O Svensson egentligen ser ut.

Pekka Kääntä, 2 juli 2009

Top


Riksbanken har inklusive dagens SEK-auktion med fast ränta lånat ut 303 miljarder kronor
och 17,8 miljarder dollar.
Omräknat till dagens valutakurs har Riksbanken totalt lånat ut 500 miljarder kronor
Riksbanken 2009-07-13


The efficient-markets hypothesis
Of all the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself.
Paul Krugman argued that much of the past 30 years of macroeconomics was
“spectacularly useless at best, and positively harmful at worst.”

The Economist print July 16th 2009


The worst FEAR is that the inevitable Debt Collapse that I have been warning you all about is about to take place and it works something like this:
On the way up, the FED deposits $100 in the Banking system which is then able to lend up to (assuming a 10% reserve requirement) $1,000, thus creating $900 out of thin air (all the while creating an illusion that real money was being created).
Now here comes the problem: Eventually something happens that wakes everyone up to the illusion that the Emperor Has No Clothes. When a borrower defaults on $100, it is the same as the FED taking back their initial $100 thus forcing the Banking system to call in $900 worth of loans.
Aubie Baltin 6/8 2007

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In search of a Goldilocks exit strategy
Exit strategies, in other words: when and how will economic policy return to normality?
Jean Pisani Ferry, 16/7 2009


The Fed did not see the crisis coming
The list of dogs that did not bark is a long and distinguished one.
Maverecon: Willem Buiter, FT, July 17, 2009


Swedbank drabbades under andra kvartalet av kreditförluster på 6,7 miljarder kronor.
"Marknaden hade räknat med en betydligt lägre siffra, 6,1 miljarder kronor".
Rörelseresultatet förlust på 1,8 miljarder kronor, mot förväntade minus 1,3.
DI 2009-07-17


Riksbankens erbjudande att låna ut 100 miljarder kronor till de svenska storbankerna mottogs med stort intresse
Räntan fastställdes räntan till 0,45 procent
Leif Petersen E24 2009-07-14

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Många bedömare anser att amerikanska myndigheter gjorde ett misstag när man lät Lehman Brothers gå i konkurs förra hösten.
Pehr G Gyllenhammar, vice ordförande i Rothschild Europe, inte lika säker.
DI 2009-07-15


We have two options. The first is to deflate debt, the other is to inflate assets
The core of the problem, the unavoidable truth, is that our economic system is laden with debt,
about triple the amount relative to gross domestic product that we had in the 1980s.
Nassim Nicholas Taleb and Mark Spitznagel, FT July 13 2009


Five golden rules for regulating the banks
Mark-to-market - If there is a contest between shareholder transparency and financial stability, stability must win
Anatole Kaletsky, The Times July 9, 2009

Top


Make Sure You Get This One Right
Are we facing a deflationary spiral or will the monetary
and fiscal stimulus ultimately create (hyper) inflation?

By Niels C. Jensen, at John Mauldin, 7/6 2009

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Finanskrisen beror på fem olika faktorer.
Danne Nordling 11/7 2009


The $6,000bn dollar question for the wider financial system.
After all, it was a turn in the US property market that triggered the financial crisis.
And while many other financial disasters have since followed,
the state of the US property market remains crucial to the banking world as a whole.
Gillian Tett, FT July 9 2009


As Summers puts it, “The global imbalances have to add up to zero and so, if the US is going to be less the consumer importer of last resort, then other countries are going to need to be in different positions as well.”
Obama’s most important international assignment may turn out to be coaxing the rest of the world into accommodating this reshaping of the US economy.
Chrystia Freeland, FT July 10 2009

Top


Can the deleveraging process be stopped through fiscal interventions?
Michael Pomerleano, FT July 10, 2009


The U.S. trade deficit in May decreased to $26 bn ,
the smallest deficit since November 1999
Bloomberg July 10 2009

Top


A well-known historian called upon economists to abandon the gods of their profession.
If only there were still such gods. There are not even clearly defined schools of thought.
A typical discussion will consist of a series of overlapping points of view, leaving the innocent listener at best “confused at a higher level”.
What follows is an attempt to outline the main issues.
Samuel Brittan, FT July 9 2009


Anders Borgs plan för balans i EU-ekonomin
Mats Hallgren, Svde24 2009-07-07

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ECB-chefen Trichet skämtar:
"It is extremely important that the US has been saying that a strong dollar is in the interests of the US."
Rolf Englund 7/7 2009


Lars Christensen, chefsekonom på Danske Bank, blev bespottad och utbuad när han på ett tidigt stadium varnade för en baltisk krasch.
Torbjörn Becker, chef på institutet för tillväxtekonomi vid Handelshögskolan i Stockholm, betonade på att det inte är staten utan hushåll och företag som skuldsatt sig grovt.
Skevheterna uppstod när letter under 15 procents inflation fick låna euro till 7 procents ränta.
"Hushåll fick betalt för att låna i euro, i reala termer", sa Torbjörn Becker och förordade att Lettland släpper sin valutakoppling till euron
DI 2009-07-02

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"Vi är själva med om att skapa nästa kris med de nuvarande låga räntorna", varnar Bengt Dennis. Greenspans lågräntepolicypekas återigen ut som syndabock till finanskrisen, bland annat av Lars Jonung DI 2009-07-01

Full text

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Our economy’s lights, if not switched off in a rehash of the 1930s Depression, have certainly been dimmed in a 21st century version likely to be labelled the Great Recession. McHouses, McHummers, and McFlatscreens, all financed with excessive amounts of McCredit created under the mistaken assumption that the asset prices securitising them could never go down.
There is a developing optimism that we can go back to the lifestyle of yesteryear.
Forecasts based on econometric models inevitably miss these secular/structural breaks in historical patterns because it is impossible to quantify human behaviour
Bill Gross, July 2009


It could be that future generations of German politicians find ingenious ways around the balanced budget law.
Or that they find a two-thirds majority to overturn it.
Or that Mr Sarkozy or his successors follow Germany into a future of austerity.
But as long as one of those three events fails to happen, Germany may discover that unilateral fiscal rigour in a monetary union could prove extremely costly.
For the sustainability of the euro, you surely do not want to get into a position where a large member state has a rational economic reason to quit.
So if Germany and France really do what they both promise,
you may as well start the egg timer.

Wolfgang Münchau, Financial Times June 28 2009


"Nu vänder det" Världsekonomin är nära botten, spår OECD
Svensk BNP rasar med 5,5 procent i år.
Abetslösheten fortsätter att stiga och landar på 11,4 procent nästa år /valåret 2010/.
DI 24/6 2009


In contemporary banks, leverage of 30 to one is normal.
Higher leverage is not rare.
Reform of regulation has to start by altering incentives
Banks central activity is creating and trading assets of uncertain value, while their liabilities are, as we have been reminded, guaranteed by the state.
This is a licence to gamble with taxpayers’ money. The mystery is that crises erupt so rarely.
Martin Wolf, Financial Times, June 23 2009


Wickman, Wickman, Wibble, Novemberrevolutionen och CMBS
Riksbanken har ett väl rotat institutionellt minne av bankkrisen på 1990-talet
som i mångt och mycket var en fastighetskris.

Vice riksbankschef Barbro Wickman-Parak 2009-06-17


Banken tjänar mer nu än före krisen på sin utlåning till bostäder.
– Vi kan konstatera att boräntemarginalerna har kommit upp.
Om marginalerna var för låga tidigare, så är de för höga nu.
Nordeas vd Christian Clausen, DN 2009-06-22


Investors are kicking themselves for failing to spot the twin bubbles in the stock and housing markets
when the laws of economic gravity for both became spectacularly unhinged.
Now, America should be on red alert for another bubble that's destined to pop
-- outrageously overpriced government bonds, the flipside being outrageously low interest rates.
Fortune Shawn Tully, editor at large June 19, 2009


Den 2/6 2009 skrev Carl-Johan Westholm under rubriken "Politiskt inkorrekt av Reinfeldt och Borg"
ett hyllningsinlägg på sin blog Stateblind.

Rolf Englund blog 22/6 2009


Government debts are both unsustainable and desirable
Government debts today is a natural consequence of the unsustainable
debt explosion in the private sector during the last ten years

Paul de Grauwe, Eurointelligence 18/6 2009
Excellent article


Is this the death of the dollar?
Edmund Conway, Daily Telegraph 20 June 2009


The recovery from the Depression is often described as slow
because America did not return to full employment until after the outbreak of the second world war. But...

Christina Romer, chairwoman of Barack Obama's Council of Economic Advisers and a scholar of the Depression, The Economist print June 18th 2009


Sustained recovery requires decreased domestic US spending and
increased domestic spending in China and much of the rest of the world,
together with adjustments in exchange rates.

Olivier Blanchard, Financial Times, June 18 2009
The writer is chief economist of the IMF


The collapse of Lehman Brothers has shown the havoc that can ensue when large, interconnected banks implode.
Quite apart from the fact that the world is littered with banks which are too big to fail (but too costly to keep saving),
the world also has banks that are too big to manage.

Gillian Tett, Financial Times June 18 2009


The Myth Of the Rational Market
Stocks fell off what Irving Fisher had called a "permanently high plateau" in October 1929
and didn't return until that level until 1954.
Justin Fox, Time, June 22, 2009


Everybody who bought real estate did it with somebody else's money
These guys actually believed that if they bought that house they would make $3 million over the next ten years.
Peter Schiff 16/6 2009


Inte nog med att en släpphänt reglering och intern styrning förorsakat två inhemska finanskriser på 15 år,
nu har bankerna dessutom lyckats med att mer eller mindre konkursa några av våra grannländer.
Anders Borg, var tog din kritik mot bankernas otyg vägen? Och hur ser åtgärdslistan ut?
är det rimligt att trygga, svenska bolånetagare än en gång ska stå för slantarna?
Pekka Kääntä, 18/6 2009 (med länkar)


Lithuania rules out devaluation
“It’s clear that we are suffering a bit more because of our currency board arrangement tying the litas to the euro, but devaluation is not an option,”
Andrius Kubilius, prime minister
Financial Times June 18 2009


Why Bernanke Is Right to Be Worried
Originally published on ft.com on 3 June 2009
Mohamed El-Erian 3 June 2009


Most rational investors accept the dual proposition that
a Fed funds rate pinned against zero and near-$800 billion of excess reserves sloshing around the banking system are not enduringly sustainable.
This is the case despite the fact that most – though a smaller most – applaud the Fed for engineering these outcomes, so as to cut off the fat tail risk of deflationary Armageddon.
Paul McCulley, June 2009


Dollar Again Substantially Overvalued
"principally though not exclusively, against the Chinese renminbi and some other Asian currencies"
requires substantial dollar depreciation as well as a few others like the Swedish krona and the Swiss franc.
Peterson Institute for International Economics June 3, 2009


What gave the Great Depression its name was a brutal decline over three years.
This time the world is applying the lessons taken from that event by John Maynard Keynes and Milton Friedman, the two most influential economists of the 20th century.
The policy response suggests that the disaster will not be repeated.
Martin Wolf, Financial Times, June 16 2009


With the backing of the International Monetary Fund and the European Union,
Riga is hoping that if it can impose enough pain on the domestic economy,
it will be able to maintain its exchange rate peg to the euro.

That would allow it entry into the single currency zone within the next four years.
Financial Times 16/6 2009


The U.S. current account deficit
shrank in the first quarter to $101.5 billion, the smallest deficit since the fourth quarter of 2001
Reuters 17/6 2009

Underskottet i den amerikanska bytesbalansen uppgick under första kvartalet till 101,5 miljarder dollar.
Analytiker hade räknat med ett underskott på 85,0 miljarder dollar, enligt Bloomberg News snittprognos.
DI 2009-06-17


Beröm om boken "Finanskrisen" av Johan Lybeck
Rolf Englund 17/6 2009

Början på sidan - Top of page


Socialismen har genom finanskrisen och klimathotet fått två gratischanser att visa att den lever och att dess praktik borde vara adekvat att tillämpa mot båda. Men ingenting hörs.
Inte ens Göran Greider har längre något konstruktivt att säga om socialismen. Den måste vara död.
Danne Nordling 15/6 2009

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The ECB estimated bank writedowns total of $649 billion,
with an estimated $366 billion already announced.
CNBC Reuters 15 Jun 2009


Latvia - IMF experts were overruled by Brussels
Contrary to revisionist talk, Argentina was not a basket case.
Its imbalances were no worse than those of the Baltics, Balkans, Spain, or Greece, and arguably better.
The denouement sequence is worth rehearsing since it offers a crude guide for those with euro pegs in Eastern Europe,
and ultimately perhaps for Club Med inside EMU.
The explosive power of this broad group dwarfs Argentina.
Ambrose-Evans Pritchard, Daily Telegraph 14 Jun 2009

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For 30 years or so Keynesianism ruled
The new assault was led by Milton Friedman and followed up by a galaxy of clever young disciples
Adaptive Expectations, Rational Expectations, Real Business Cycle Theory, Efficient Financial Market Theory – they all poured off the Chicago assembly line, their inventors awarded Nobel Prizes
Then along came the almost Great Depression of today
Robert Skidelsky, Financial Times June 9 2009

Början på sidan - Top of page


Barbro Hedvall fundamentalist om EMU
Rolf Englund 2009-06-14


$375 billion - It seems unfair. This was supposed to be a US crisis.
And now it turns out that the real banking mess is still coming for the eurozone
Adam S. Posen, Eurointelligence 5/6 2009


Most people think of the Great Depression as originating in the stock market crash of 1929.
But Nobel Prize-winning economist Vernon Smith's research indicates that the 1929 crash was itself
the result of an earlier collapse in the boom housing market during the Roaring '20s.

The Bellingham Herald, 5/6 2009

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Lettland
Den svenska regeringen tycks mest oroa sig för SEB:s och Swedbanks väl och ve.
Om bankerna inte klarar en lettisk devalvering och inta kan få ägarna att skjuta till nya pengar så får vi väl helt enkelt ta och förstatliga dem, rekonstruera och sälja dem vidare med god förtjänst om några år.
Det är inte marknadsekonomins undergång att två på vissa sätt illa skötta banker går i sank, snarare tvärtom.
Pekka Kääntä VA blog 10/6 2009


”När musiken tystnar – en rapport om den globala finanskrisen”.
beskriver krisens förlopp och orsaker, men anger också vilka principer som bör gälla för en ny regleringsmodell.
Ola Pettersson, LO-ekonom 2009-06-10

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Kronan är en dyrbar lyx.
Omvärlden backar upp Sverige och Sverige backar upp Baltikum.
även om Lettland fortsätter sin svältkur kommer förlusterna att bli mycket stora.
Barbro Hedvall, Signerat DN 2009-06-12


Beräkningar från IMF och ett antal kreditvärderingsinstitut pekar mot att
de svenska utgifterna kan bli lika stora som under 1990-talskrisen.
Bo Lundgren avfärdar dessa beräkningar som "överslag".
Affärsvärlden 2009-06-12

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Credit default swaps are "instruments of destruction" that should be outlawed
George Soros CNBC 12 Jun 2009

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Carl Bildt vill lägga ned det svenska generalkonsulatet i New York.
Det vore bättre affär att söka lämpliga New York-advokater som mot vinstandel är beredda att
väcka talan mot amerikanska staten med krav på skadestånd för »gross negligence« i Lehman-konkursen.

Tomas Fischer, Fokus 12 juni 2009

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Letting the banks out of Tarp at this point was premature. Supposedly weaned off public support, the 10 had to demonstrate they could raise funds without government guarantees. The temporary liquidity guarantee programme, however, remains available to them.
In effect subsidised by the government, but freed from Tarp rules on compensation and hiring, they can poach both staff and business from competitors still in Tarp.
This is more regulatory discrimination than it is restitution of market discipline.
Financial Times, editorial June 10 2009


Sluta dalta med krisbankerna
Svajande storbanker hålls under armarna med hjälp av statliga insatser, läs subventioner,
där staten och skattebetalarna bär en allt större del av riskerna utan att få eller ta betalt.
Per Lindvall e24.se 2009-06-10

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Bo Lundgren, som ledde Bildtregeringens insatser för bankerna och nu på Riksgälden administrerar upprepningen, har som "Mr Fix It" turnerat världen runt med denna framgångssaga.
Men det finns skäl att kika närmare på uträkningen... Det allmänna tog på sig kursförluster på omkring 95 miljarder.
Men också bortsett från allt detta är kalkylen missvisande.
Mikael Nyberg, Flamman 11/6 2009

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Andrum för Lettland - men behovet av devalvering kvar
Det finns skäl för även Estland och Litauen att släppa nuvarande euroanknytning och i stället hitta en rimlig växelkurs.
Johan Schück, DN Ekonomi 12/6 2009


Latvia’s currency crisis is a rerun of Argentina’s
Devaluation seems un­avoidable
Nouriel Roubini, Financial Times, June 10 2009

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Mer än hälften av de lettiskt ägda bankernas inlåning är i utländsk valuta medan aktiekapitalet är i lettiska lat.
Skulle Lettland devalvera sjunker då värdet på dessa bankers aktiekapital i förhållande till den del av inlåningen som är i utländsk valuta.
Vid en viss nivå på fallet skulle bankerna bli insolventa
och nödvändiggöra en större räddningsoperation från regeringens och/eller centralbankens sida.
Rutger Palmstierna, SvD Näringsliv 8/6 2009

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Is the US (and a number of other high-income countries) on the road to fiscal Armageddon?
Are recent jumps in government bond rates proof that investors are worried about fiscal prospects?
Martin Wolf, Financial Times June 2 2009


Latvian debt crisis shakes Eastern Europe
The central bank has been burning reserves to defend the lat in Europe’s Exchange Rate Mechanism,
but markets doubt whether Latvia has the political will to carry through draconian cuts in spending
– or whether such a policy even makes sense at this stage.
Ambrose Evans-Pritchard, Daily Telegraph 03 Jun 2009


Kollaps för lettisk finansmarknad
Den lettiska finansmarknaden fungerar inte längre till följd av valutaoron,
sedan Lettlands finansdepartement på onsdagen misslyckades med få sålt statspapper
DI 2009-06-03 16:23

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Riksbanken har beslutat att återställa valutareserven genom att låna valuta för motsvarande 100 miljarder kronor via Riksgälden.
Beskedet kan ha stärkt oron för att Riksbanken vet något om utvecklingen i Baltikum som inte är allmänt känt.
Riksbanken vill återställa valutareserven i händelse av att de åtaganden som Riksbanken har ingått med bland annat centralbankerna i Estland och Lettland skulle utnyttjas.
Johan Javéus, chefsstrateg för valutamarknaden på SEB Merchant Banking till nyhetsbyrån Direkt, DI 27/5 2009


Measured by Standard & Poor’s Case-Shiller indices, the pace of decline is accelerating in the third year of the housing market’s slump.
From the September 2006 peak, prices are down 31 per cent on average.
FT, Lex 26/5 2009


The Shadow Banking System and Hyman Minsky’s Economic Journey
How did financing get so creative? It didn’t happen within the confines of a regulated banking system,
which submits to strict regulatory requirements in exchange for the safety of government backstopping.
Instead, financing got so creative through the rise of a “shadow banking system,” which operated legally,
yet almost completely outside the realm of bank regulation.

Paul McCulley, May 2009

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Consider what would happen if the UK or US were to attempt Hungarian or Estonian style cuts.
There would be a huge outcry.
So rather than taking the axe to public spending, the British and American governments are borrowing madly,
with no sign of any credible long-term plan to balance the books.
Gideon Rachman, Financial Times, May 25 2009

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What I hear more and more, both from bankers and from economists, is that the only way to end our financial crisis is through inflation.
Their argument is that high inflation would reduce the real level of debt, allowing indebted households and banks to deleverage faster and with less pain.
The advocates of such a strategy are not marginal and cranky academics. They include some of the most influential US economists.
Wolfgang Münchau, Financial Times, May 24 2009


There are three key flaws to panglossian hopes for a bull market and a V-shaped economic recovery.
David Roche, Financial Times, May 19 2009

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After the US, the country with the biggest banking problem is probably Germany.
a bank can apply to set up its own bad bank
It buys the structured securities from the bank at 90 per cent of book value, guaranteed by the government
Wolfgang Münchau, Financial Times May 17 2009


Bengt Dennis och Per Unckel förespråkar delvalvering
Rolf Englund blog 2009-05-14


Did inflation targeting fail?
Central banks have mostly escaped blame for the crisis.
How can it have gone so wrong? Also about The Taylor Rule
Martin Wolf, Financial Times, May 5 2009


Pandemic
Read more here


MV=PQ
Okay, when you become a central banker, you are taken into a back room and they do a DNA change on you.
You are henceforth and forever genetically incapable of allowing deflation on your watch.
It becomes the first and foremost thought on your mind: deflation, we can't have it.
John Mauldin 24/4 2009


In the world that existed before the financial crisis, central bankers were triumphant.
They had defeated inflation and tamed the business cycle.

And they had developed a powerful intellectual consensus on how to do their job, summarised recently by David Blanchflower, a member of the Bank of England’s monetary policy committee, as “one tool, one target”.
The tool was the short-term interest rate, the target was price stability.
The Economist April 23rd 2009


Is America the new Russia?
Prof Johnson argues that the refusal of powerful institutions to admit losses
– aided and abetted by a government in thrall to the “money-changers”
may make it impossible to escape from the crisis.
Martin Wolf, Financial Times April 14 2009


It's a bit misleading to talk about money supply,
because what money really is is roughly $2 trillion of cash and then $50 trillion in credit.
Because what do the banks do? They take deposits in and then they borrow money to leverage them up. I take my credit card and I spend with it.
I borrow against a house. I have an asset that rises, and I borrow against it.
John Mauldin 17/4 2009
Highly Recommended


By fixating on the anti-depression drill, authorities are failing to address
the root cause of the current crisis and recession
-- the lethal unwinding of unsustainable global imbalances.
"the willingness of consumers to live well beyond their means by extracting equity from over-valued homes"
Stephen Roach, April 13 (Bloomberg) 2009


The eurozone faces three threats more serious than any in the US or Britain:
the extreme vulnerability of Germany's economy to collapsing exports,
financial instability in Eastern Europe and
the growing tensions between the core and the periphery of the eurozone.
Between now and the German general election on September 27,
these dangers could combine into a perfect storm
Anatole Kaletsky The Times 9/4 2009


No, a wave of house repossessions will not necessarily teach the virtue of living within one’s means,
when the government is around to force lenders to stay their hands,
and create moral hazard on a huge scale
Irwin Stelzer The Sunday Times April 12, 2009


US Non-oil goods imports were down 25% y/y,
Brad Setser with nice charts


PPIP is a risky effort to buy time while the Obama administration tries to find a way to convince an immensely hostile Congress to supply
another $1 trillion, or more, to remove toxic assets from bank balance sheets.

John H. Makin, American Enterprise Institute, April 2, 2009


The success of the Irish government’s plans to set up a “bad bank” rests on details that have not yet been finalised.
The loans have a nominal value of €80bn-€90bn – about half of Ireland’s annual economic output.
Financial Times April 8 2009


Germany’s government is finalising “bad bank” plans to deal with toxic financial assets
as part of efforts to restore confidence to the banking system that also include a
takeover offer launched this week for Hypo Real Estate, the stricken property lender.
Financial Times April 10 2009


The 10th anniversary of the Dow surpassing the 10,000 mark passed quietly last week,
even though a decade ago it was banner news across the country and world,
But today the Dow is at 8,017, nearly 20 percent lower than where it was 10 years ago
- making a seeming mockery of the often-quoted adage that stock market investments historically gain on average 7 percent a year.
Boston Herald)By JAY FITZGERALD April 06, 2009


This /The Geithner plan/ is a recipe for the insolvency of the FDIC and
an attempt to bail out bank bondholders using funds that have not even been allocated by Congress.
The whole plan is a bureaucratic abuse of the FDIC's balance sheet, which exists to protect ordinary depositors, not bank bondholders.
John P. Hussman, at John Mauldin, 6/4 2009


There are four deflationary spirals presently at work in the world economy, i.e.
the Keynesian savings paradox, Fisher’s debt deflation,
the cost cutting deflation, and the bank credit deflation.
Each of these deflationary spirals can be dealt with when they occur in isolation.
They become lethal when they interact with each other.
Paul de Grauwe 6/4 2009


The politics of bank rescue are toxic.
A former European finance minister reminded me that, from a political perspective, there is nothing in it for a rational politician.
The real problem with the US bank rescue plan is that it may exhaust the public’s sense of fair play.
Wolfgang Münchau, Financial Times April 5 2009


How owners' equivalent rent duped the Fed
In 2003 and 2004 the average fed-funds rates were lower than in any year since 1955 when the rate series began. Monetary policy, mortgage finance, relaxed lending standards, and tax-free capital gains provided
astonishing economic stimulus: Mortgage loan originations increased an average of 56% per year for three years
-- from $1.05 trillion in 2000 to $3.95 trillion in 2003
Tim Iacono 6/4 2009


Stockholmsbörsen var stigande vid lunchtid på måndagen i likhet med de ledande europeiska börserna på fortsatt optimism om att den globala ekonomiska nedgången börjar närma sig botten och att det värsta av finanskrisen är över.
Dagens Industri 2009-04-06


It seems that hedge funds have been designated for ritual sacrifice, even though they played no more than a cameo role in the genesis of this crisis.
It was not they who took on extreme debt leverage: it was the banks
– up to 30 times in the US and nearer 60 times for some in Europe that used off-books "conduits" to increase their bets.
Ambrose Evans-Pritchard, Daily Telegraph April 2009


Faced with this cataclysm, policymakers have been fighting back with the biggest and most synchronised macroeconomic stimulus since the second world war.
The G20 and the world economy, The Economist editorial, April 2nd 2009


även om Annika Falkengrens två miljoner kronor anses provocerande är de med förlov sagt bara felräkningspengar i jämförelse med vad svenska banker förlorar i Baltikum.
SEB, Swedbank och Nordea har över 500 miljarder kronor – nära en femtedel av Sveriges BNP – utlånade i den krisdrabbade regionen.
Sofia Nerbrand SvD Kolumn ledarsidan 23 mars 2009


The Financial Accounting Standards Board voted to adopt new guidelines under the so-called mark-to-market accounting rules.
The changes will allow the assets to be valued at what they would go for in an "orderly" sale, as opposed to a forced or distressed sale.

CNBC 2/4 2009


What is needed is both a large increase in aggregate demand and
a shift in its distribution, away from chronic deficit countries, towards surplus ones.
Unless and until surplus countries recognise that this cannot continue,
no durable escape from the crisis will be achieved
.
Martin Wolf, Financial Times March 31 2009


Folkpartiets ekonomiske talesman Carl B Hamilton säger nej tack till en kraftigt expansiv politik
i ett läge utan säker internationell uppgång i sikte.
Här även med citat av Anders Ferm och Carl Bildt
DN/TT 31/3 2009


US house prices fell by a record 19% in January compared with a year earlier
The Standard & Poor's/Case-Shiller Home Price index records prices in 20 of the largest cities in the US.
BBC 31/3 2009


The Geithner plan
"It still is not going to solve the problems of those institutions that are effectively insolvent. If you buy the assets at true long-term value, they're still going to be under water,"
Nouriel Roubini, in an interview with CNBC, 31/3 2009


Stock markets across the globe have to be close to a turning point.
Alan Greenspan, Financial Times, March 30 2009


Finanskrisen gjorde 1930 års nedgång till depression
En allvarlig lågkonjunktur i USA utvecklades till Den stora depressionen genom att banksystemet inte fungerade.
Förluster och bankrusningar medförde att 9 000 banker gick omkull.
Detta var en medveten politik från finansminister Mellon.
Danne Nordling 27/3 2009

1929


Samtal med Johan Norberg
Varför blev det finanskris?
Var det girigheten som löpte amok?

Den osunda kulturen före finanskrisen hade aldrig uppstått
om det inte varit för alla politiska misslyckanden.
PJ Anders Linder, SvD 29 mars 2009


Strategy to avoid a pension catastrophe
Marginal Revolution, a very good economics blog, decided to republish a Long View from February last year
it ended with the throwaway line that Nouriel Roubini put all of his money into stocks
John Authers, FT Investment editor, March 20 2009


The extraordinary risk-management discipline that developed out of the writings of the University of Chicago’s Harry Markowitz in the 1950s
produced insights that won several Nobel prizes in economics.
It was widely embraced not only by academia but also
by a large majority of financial professionals and global regulators

But in August 2007, the risk-management structure cracked
a potential loss of at least $1,000bn
Alan Greenspan, Financial Times March 26 2009


Bankgarantin blev grundbulten i den svenska modellen.
Det var kronans fall i november 1992 som på sikt tog Sverige ur krisen
Lars Jonung om Amerikas väg ur bankkollapsen DN 2009-03-24


A thinly veiled attempt to transfer up to hundreds of billions of dollars of US taxpayer funds to the commercial banks,
by buying toxic assets from the banks at far above their market value.
It is no surprise that stock market capitalisation of the banks has risen about 50 per cent
Jeffrey Sachs, Financial Times March 25 2009


This is not a true market mechanism, because the government is subsidising the risk-bearing.
Prices may not prove low enough to entice buyers or high enough to satisfy sellers.
Martin Wolf, Financial Times March 24 2009


If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.
It won’t work.
PAUL KRUGMAN March 22, 2009


De fasta växelkursernas tid är förbi. Men...
Kronan försvagas mot alla valutaindex. Få tycks riktigt bry sig.
Generaldirektören Olle Wästberg, som var statssekreterare i finansdepartementet under valutakrisen 1992
Expressen 23/3 2009


Vi befinner oss mitt i den största ekonomiska nedgången på 80 år,
för första gången i världshistorien har vi en global kris.
Följderna kan bli synnerligen stora och kostsamma,
men det verkar inte ha utlöst någon nämnvärd kreativitet bland våra ledare.

Kristina Persson, Global Utmaning 17/3 2009


Fed ska köpa statspapper för upp till 300 miljarder dollar.
Finansieringen sker genom sedelpressen.
DI 19/3 2009

Federal Reserve plan stuns investors - plans to buy $300bn of US government debt,
triggering a plunge in bond yields and the dollar
Financial Times March 18 2009


Ekonomiläroböckerna och finanskrisen
I min egen lärobok, som har kommit i elva upplagor, finns visserligen en del avsnitt
om bubblor och om irrationaliteten och kasten på t.ex valutamarknaderna.
Men de avsnitten måste byggas ut till nästa upplaga.

Likaså måste Keynes få en grundligare behandling - inte minst begreppet “likviditetsfälla” och
hur den påverkar penningpolitiken.

Klas Eklund blog 2/3 2009


The forthcoming Group of 20 summit is going to be a disaster.
So it looks like it is going to be an L – not a V or a U.
I mean an L-shaped recession, one that starts with a steep decline, followed by very low growth for many years.
Wolfgang Munchau, Eurointelligence 09.03.2009


The Bank of England may have averted a catastrophe.
If ever there was a time when this country needed its own monetary authorities this is the moment.
Those nations with fossilised or timid central banks clinging to outdated ideologies are not so lucky.
Even less lucky are those such as Spain and Ireland that have surrendered policy to a body that is deaf to their pleas and constitutionally obliged to ignore the welfare of their particular societies.
They face crucifixion.
Ambrose Evans-Pritchard, Daily Telegraph, 08 Mar 2009


As a shell-shocked world tries to fathom how its economic collapse happened, commentators are busily outbidding each other with claims about the exceptional nature of this crisis.
But the most astounding fact is how familiar it look compared to past financial crashes.
The story of the modern capitalist economy is a rhythmic repetition of cycles, syncopated by eerily similar crises.
Financial Times March 9 2009


Next week, Bo Lundgren, the head of Sweden’s debt office who played a central role in resolving his country’s banking mess in the early 1990s, will embark on a striking mission.
Washington’s Congressional Oversight Panel has summoned Mr Lundgren and others to explain how they fixed Sweden’s banks – presumably to glean tips on what Washington should do next.
Gillian Tett, Financial Times March 12 2009

Sweden was able aggressively to reflate and stimulate demand for its output by allowing its currency to float.
It is important to understand that that option is not available today
to the large economies engulfed in a global crisis.
John H. Makin, American Enterprise Institute
(Timbros storasyster) March 2, 2009


Links


Mina bästa artiklar
My best articles
Rolf Englund


vox - Research-based policy analysis and commentary from leading economists

Huffington Post

5 centuries of bubbles and bursts
CNN 2010

Time Line by Federal Reserve Bank of St. Louis

Timeline by BBC

Timeline by Council on Foreign Relations

Slideshow from CNBC
Thirty-seven banks have failed this year.
Click on to find out which of them rank as the 10 largest failures so far in 2009.
June 8, 2009

Bank rescue plans


The Global Financial Crisis
in Photos

Time March 2009


Markets and Bears (mostly)


Office of Thrift Supervision

BBC Global credit crunch
Daily Telegraph: Credit crisis

CNBC about European Credit Crunch
The Independent creditcrunch

The Economist: The financial system, What went wrong

FT In depth Global credit squeeze


Perhaps it is already over?


"The Bailout Game"
Play for free as in beer

---------------


More to come A
B
C
D
E
F
G
H

Kronan kollapsar
Euron steg till 11:79, drygt 40 öre högre.
Enligt analytiker är det sannolikt gårdagens Moody´s-rapport om

det svenska banksystemet som pressar den svenska valutan.

DI 2009-03-06


- Most mainstream macroeconomic theoretical innovations since the 1970s
(the New Classical rational expectations revolution associated with such names as Robert E. Lucas Jr., Edward Prescott, Thomas Sargent, Robert Barro etc, and the New Keynesian theorizing of Michael Woodford and many others)
have turned out to be self-referential, inward-looking distractions at best.

Rolf Englund agreeing with Willem Buiter, blogging at Maverecon, 5/2 2009


The Great Recession
"We are in an automotive depression amid 'the Great Recession,' "
Standard and Poor's analyst Efraim Levy said in a sobering report Tuesday.
FREE PRESS BUSINESS WRITER • MARCH 4, 2009


Det är Kontantinsatsen, Stupid!
Det var en gång för länge sedan vanligt med gammalmodiga bankkamrerare som sade
åt hugade fastighetsspekulanter att det nog gick att låna till villaköpet men att man skulle ha en egen kontantinsats på 25 procent.
Rolf Englund blog 18/2 2009


Vår slutsats blir att euron är bra för både näringsliv och konsumenter i Sverige, skriver Klas Eklund, Carl Johan åberg och åtta andra nationalekonomer /däribland således Karolina Ekholm/.
- Den räntepolitik som förs av ECB i normalfallet kommer att stabilisera även den svenska ekonomin, skrev de.
Inte ens det är väl riktigt sant, men den viktiga frågan är vad som händer när läget inte är normalt, som t ex om världen skulle råka in i en Finanskris.
Rolf Englund blog 14/2 2009

När och hur spricker EMU?


The statement that systemic breakdowns are surprisingly rare
in the free-wheeling Anglo-Saxon model is false.
Martin Wolf February 9, 2009


Davos 2009


Nu gör han en pudel igen
- Jag visste att derivaten fanns,
men trodde inte att systemet var så bräckligt och komplext

Klas Eklund i Veckans Affärer print 22/1 2009


The Great Depression seared some life lessons into my parents' generation
What lessons, I wonder, will the great downturn of 2008 teach our children?
"In America, loans have gone from 'something to be repaid' to 'something to be refinanced.' "
David Ignatius, Washington Post, January 1, 2009


It's the end of an era. We know that 2008, much like 1932 or 1980, marks a dividing line for the American economy and society. But what lies on the other side is hazy at best.
The great lesson of the past year is how little we understand and can control the economy.
Robert J. Samuelson, December 29, 2008


Drivkrafterna bakom dagens amerikanska kris och den svenska 90-talskrisen är i stort sett identiska.
På grund av den fasta kronkursen kunde Riksbanken inte driva en självständig penningpolitik riktad mot bubblan.
Lars Jonung, kolumn, DN 25/11 2008


This is the endgame for the global imbalances
If the surplus countries do not expand domestic demand relative to potential output, the open world economy may even break down.
As in the 1930s, this is now a real danger.
Martin Wolf, Financial Times, December 2 2008


One might not expect much from economists, but one would surely expect them to warn us of a crisis on this scale.
Speech given by Martin Wolf, chief economics commentator, at the FT’s annual economists’ drinks party in London
Financial Times, 27/11 2008


“Why didn’t we see this coming?”
“What do you mean ‘we,’ white man?”
Paul Krugman, årets nobelpristagare, New York Times, 27/11
Highly recommended


The vision thing
Her Majesty’s question ("If these things were so large, how come everyone missed them?")
Chris Giles, FT, November 25 2008


The Subprime Credit Crunch: One Year Old - Kreditkrisen Ett år - "Nyliberalerna tysta så det dånar"

Finankrisen – därför hände det, och så blir följderna för dig
SvD Näringslivs Lars-Georg Bergkvist och Leif Petersen förklarar finanskrisens bakgrund och följder.
Det är dags att putsa upp nygamla ord som kontantinsats och amortering.
SvD 10 oktober 2008

E24 om Finanskrisen


Questions abound over a $700 billion rescue plan for Wall Street
Mr Paulson’s plan is stunning in its brevity (two-and-a-half pages) and audacity.
It would authorise him to purchase any “residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages,” implying the right to take over derivative positions.
Economist.com Sep 22nd 2008


Jackson Hole 2008
Papers presented at the Federal Reserve Bank of Kansas City's economic policy symposium,
"Maintaining Stability in a Changing Financial System,"
held Aug. 21 - 23 in Jackson Hole, Wyo


Stefan Ingves:
– När det här är över skulle det inte förvåna mig om krisen som Sverige upplevde i början av 1990-talet, visar sig vara värre än det som vi idag ser i USA.
I det svenska fallet krympte ekonomin under tre år i rad och det var den största krisen som vi hade haft sedan 1930-talet.

Ekot 16/9 2008


Varför stoppade ni inte den vansinniga utlåningen?
- Vi hade inte någon glaskula att titta i. Och vi hade blivit utskrattade.
- Det är svårt att vara olyckskorp när allt går som smort, sade en av hans högre medarbetare Stig Danielsson.
Bankinspektionens tidigare chef Hans Löwbeer, intervjuad i Aftonbladet 13/10 1992


America's house price time bomb
Some American home-owners are taking radical action;
they are choosing to walk away from homes and their mortgages.

Roubini: "You could have most of the US banking system wiped out, so this is a total disaster."
BBC, 29 July 2008
Highly Recommended


The current financial crisis in the US is likely to be judged in retrospect as
the most wrenching since the end of the second world war.

It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities.
Alan Greenspan, Financial Times, March 17 2008


The true balance sheet of US Investment banks
There are two sides of the balance sheet: the left side and the right side.
On the left side, there is nothing right.
And on the right side, there is nothing left.

Unknown originator, somewhere on the internet, october ? 2008


US can ride out financial turbulence if it follows lessons of Swedish crunch
Carl Bildt, Arab Times 27/9 2008


John McCain: (not Naomi Klein)
"Wall Street has betrayed us.
They've broken the social contract between capitalism and the average citizen"

John McCain, September 16, 2008


The end of American capitalism as we knew it
There is a long-standing argument that "there is no real case for private ownership of deposit-taking banking institutions
Willem Buiter, Financial Times September 17, 2008


These are historic moments for the world economy.
First and most important, what is happening in credit markets today is
a huge blow to the credibility of the Anglo-Saxon model of transactions-orientated financial capitalism.
A mixture of crony capitalism and gross incompetence has been on display in the core financial markets of New York and London.
Martin Wolf, FT 12/12 2007


How to solve the financial crisis?
Let me tell you a little secret, folks.
Play for time, pray for markets to turn.

Allan Sloan, senior editor CNN, August 18, 2008


The /banking/ insolvency crisis will come to an end only as home prices in the US begin to stabilise
Home prices will stabilise only when the absorption of the huge excess of single-family vacant homes is much further advanced
Alan Greenspan, Financial Times, August 4 2008


-
"Economist, author, and Kudlow & Company guest Jerry Bowyer's recent op-ed on
the supposed housing crisis.

Wikipedia - Hedge Funds at BBC


Fed Funds rate


For the latest news on the Subprime crisis, see also Latest


Consider the insights gained during this crisis.
First, supervision has to focus on containing systemic risk rather than on avoiding individual bank defaults.
Second, early warning signals need to be backed up by reliable information on all financial markets, including derivatives.
Both aspects have been neglected in the past and continue to be neglected today.
Otmar Issing and Jan Krahnen, Financial Times, February 18 2009


Regeringen föreslår åtgärder för att stärka bankernas kapitalbas och därmed öka utlåningen
"För att förbättra möjligheterna för svenska företag att få krediter vill regeringen möjliggöra för bankerna att stärka sin kapitalbas genom statliga kapitaltillskott."
PRESSMEDDELANDE, 3 februari 2009, Finansdepartementet


Why the bank bailouts are doomed
The entire system is simply insolvent
Jon Markman, 1/29/2009

The US is not strong enough to rescue the world economy on its own.
The US have, at present, structurally deficient capacity to produce tradable goods and services.
Martin Wolf, Financial Times, January 6 2009
Highly recommended


The End of the Financial World as We Know It
Good God, the world seems to be saying, if they don’t know what they are doing with money, who does?
Michael Lewis and David Einhorn, New York Times January 3, 2009


How to stop the recession
Too much recent commentary has treated the current recession as if it were preordained and unstoppable. Recessions are not Acts of God.
What must policy-makers now do? The answer is that they must raise the growth rate of bank deposits in the hands of genuine non-bank agents, such as companies and households
Tim Congdon and Gordon Pepper, Daily Telegraph 07 Jan 2009


It is suddenly fashionable to suggest we are in the throes of a fresh investment bubble - this time in government bonds.
Gilts have been bid up to dizzy levels as investors buy into the notion that deflation is coming and is here to stay.
David Wighton, Business Editor, The Times January 7, 2009


Protectionist dominoes are beginning to tumble across the world
The riots have begun.

Dominique Strauss-Kahn, the head of the International Monetary Fund, is worried enough to ditch a half-century of IMF orthodoxy, calling for a fiscal boost worth 2pc of world GDP to "prevent global depression".
Ambrose Evans-Pritchard, 20 Dec 2008


In a guest article, Alan Greenspan says banks will need much thicker capital cushions than they had before the bust
The Economist print edition, December 18th 2008


I don't say this to pat myself on the back, but to offer specific examples that these problems were knowable well ahead of time.
So if the problems were knowable to so many people -- including me, a regular guy here in San Diego with no letters behind his name or anything -- then how is it that the people in charge of running the world's largest economy were absolutely blindsided by them?
Rich Toscano, Voice of San Diego, 12/10 2008
Rolf Englund: I could not agree more


For most readers, the commercial paper market is something you don't think about.
But it is the lifeblood of business.
We have seen this market drop by almost 30% in a year and by 10% in just the last three weeks!
I simply cannot overstate how serious this is.
John Mauldin, The Curve in the Road, 3/10 2008


Så här uppstod finanskrisen
LJUD & BILD | Lars-Georg Bergkvist ger bakgrunden och förklarar vad som hänt fram till i dag.
SvD 16/10 2008


Om inte bostadspriserna i USA hade börjat sjunka hade inte det inte blivit kris och dagens räddningsoperationer hade varit överflödiga.
En av orsakerna till svängningen i bostadspriserna var den låga räntan.
Denna var i sin tur frambringad av en vilja att rädda jobben och välståndet tidigare under 00-talet.
Det var en strävan efter trygghet som var ursprunget till krisen.
Danne Nordling SEPTEMBER 18, 2008

The Homeownership Obsession
Robert J. Samuelson, July 26 2008

The real cost of home ownership depends on real house prices, interest rates and other housing costs (such as depreciation, repairs, insurance and taxes). But, above all, it also depends on expected changes in house prices.
The more house prices are expected to rise, the cheaper the effective purchase price also becomes. This last point is central.
If people's expectations of future price increases are affected by their recent experience prices will tend to overshoot fundamentals:
this is just how bubbles form.

In the Morgan Stanley analysis, people's expectations of future price rises are affected by both recent experience and the belief that there is some long-run average rate of house price inflation towards which the current rate will converge.
Martin Wolf, FT 24/11 2006
Very Important Article


The banking system needs another $500 billion to survive
beyond the $700 billion rescue plan being contemplated by Congress, said Pimco founder Bill Gross.

CNBC.com 25 Sep 2008


Ireland leads euroland into recession as property crashes
Ireland has become the first country in the eurozone to slide into recession as the torrid housing boom of recent years turns into a deep slump.
Construction was 21pc of GDP at the peak last year, which is even worse than Spain (18pc) and far worse than America (11pc) at the height of the bubble,
Ambrose Evans-Pritchard Daily Telegraph 25 Sep 2008


"Det var en väldigt stökig dag. Ingen har velat hålla i Swedbankobligationer,
så handeln med dessa har pajat ihop"

DI 2008-09-24


It was two years ago that Nicholas Taleb wrote those words in his book The Black Swan:
The increased concentration among banks seems to have the effect of making financial crisis less likely, but when they happen they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur ….I shiver at the thought.
James Quinn, September 22, 2008


Hitler och kronkursförsvaret
I finansbranschen slås de ut som tagit störst risker på en marknad som fullständigt tappat kontrollen över sin egen riskhantering.
Girigheten har fått härja fritt på närmast regellösa marknader.
Ragnar Roos, signerat, DN 2008-09-19


I botten ligger att bostadslån har getts hejdlöst till hushåll som inte hade råd med dem.
Under Bill Clintons år som president pressades det halvstatliga Fannie Mae och Freddie Mac, som svarat för cirka hälften av alla huslån i USA, att frångå sedvanliga lånekriterier i syfte att hjälpa låginkomsttagare till egna hem.
Hans Bergström, kolumn DN 2008-10-09

Full text


Det handlade inte om att banken skulle ha vägrat att ge afroamerikanska familjer lån för att köpa hus,
utan tvärtom att den beredvilligt gett dem för stora lån.

år 1976 var en husköpare i USA tvungen att lägga minst 20 procent av köpesumman i handpenning. år 2006 var genomsnittet 2 procent.
Håkan Forsell, DN Kultur, 23/8 2008

äVEN OM WELLS Fargo slår undan anklagelserna som befängda, visar stadens egna analytiker att 65 procent av de svarta husägarna sitter på avsevärt dyrare lån än vita som köpt hus vid samma tillfälle, och att hus utmäts eller säljs på exekutiv auktion fyra gånger så ofta i stadsdelar som har svart majoritet.

Håkan Forsell är urbanhistoriker vid Stockholms universitet och gästforskare vid Johns Hopkins universitetet i Baltimore

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David Freund, "Colored Property. State Policy and White Racial Politics in Suburban America", University of Chicago Press


Många har förundrats över över hur vårdslös utlåning till låginkomsthushåll i USA kan dra in världsekonomin i en allvarlig kris.
Hänsynslös vinsthunger, överdriven skuldsättning och alltför högt risktagande. Dessa försyndelser håller nu på att knäcka de amerikanska investmentbankerna. Här finns också mycket av orsaken till den allt djupare finanskrisen.
Johan Schück, DN 2008-09-19

Full text


Den amerikanska bolånekrisen är en social tragedi. Offren finns bland låginkomsttagare, ofta svarta eller spansktalande, som har lockats att ta krediter för att köpa bostäder på skenbart goda villkor. Men många av dem har inte klarat stigande räntor, utan står nu som förlorare.
Johan Schück, DN Ekonomi 13/8 2007


For years, liberal Democrats in Congress and some Republicans pushed for banks and other institutions to make home loans to unqualified borrowers, and suddenly we find many of these people cannot repay their loans.
A Chicago "public interest" lawyer named Barack Obama was active in this movement.
Richard W. Rahn, Washington Post, September 23, 2008


I början av 2000-talet sänkte Federal Reserve styrräntan ända ner till 1,0 procent i syfte att motverka krisen sedan IT-bubblan hade spruckit.
Detta lade grunden till vad vi sedan har sett av överdriven utlåning och uppblåsta huspriser.
Johan Schück, DN 16/9 2008

Full text


Barclays was last night considering a direct plea from Hank Paulson, the US Treasury Secretary, to assemble a cut-price rescue bid for Lehman Brothers
Daily Telgraph 14/9 2008


Planning to announce the decision as early as Sunday, before the Asian markets reopen
Senior officials from the Bush administration and the Federal Reserve on Friday called in top executives of Fannie Mae and Freddie Mac
and told them that the government was preparing to place the two companies under federal control
New York Times, September 5 2008


Fannie and Freddie
That is capitalism at its worst:
it means shareholders and executives reap the profits,
but the taxpayer bears the losses.

The Economist, editorial, August 28th 2008


Jackson Hole 2008
Papers presented at the Federal Reserve Bank of Kansas City's economic policy symposium,
"Maintaining Stability in a Changing Financial System,"
held Aug. 21 - 23 in Jackson Hole, Wyo


It is not just about putting $25 to $50 billion into Fannie and Freddie (assuming that would be enough).
If that's all it was, just issue preferred shares and wipe out the current shareholders
But. What do you do with the current preferred shares?
A significant portion is held by banks in their capital base.

John Mauldin, August 30, 2008

Top of page


The risk of a downward spiral of house prices is the primary danger facing the American economy.
Because of the structure of securitised mortgage finance, this risk has the potential to cause a global financial crisis.
Both of these problems will remain until a new policy brings stability to house prices.
Martin Feldstein, Financial Times, August 26, 2008
Very Important Article


“The topic du jour is Fannie and Freddie.
Clearly, the market is looking for a solution that is permanent, clear and definitive. That dwarfs everything.”
Financial Times, August 24 2008

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Banksocialisering i USA och roffarkapitalism i Ryssland och Kina
- Så det kan bli
Rolf Englund blog 22/8 2008


Fannie Mae and Freddie Mac were down 19% and 18%, respectively.
A Barron's article this weekend suggested the takeover is inevitable and would wipe out existing shareholders; even holders of the companies' $19 billion in subordinated debt would suffer losses.
MSN 18/8 2008


Top of page

How U.S. banks sold home equity loans
International Herald Tribune, August 15, 2008


AIG offered investors an 8.25% yield for $3.25 billion of 10-year notes, and
Citi offered 6.5% for $3 billion of five-year notes.

CNN 18/8 2008


Nearly 25% of all homes sold nationwide fetched less than sellers originally paid,
CNNMoney August 13, 2008


Prime mortgages are starting to default
at disturbingly high rates
CNNMoney August 12, 2008

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The /banking/ insolvency crisis will come to an end only as home prices in the US begin to stabilise
Home prices will stabilise only when the absorption of the huge excess of single-family vacant homes is much further advanced
Alan Greenspan, Financial Times, August 4 2008


8 who saw the crisis coming... and 8 who didn't
One year after the credit crunch began, Fortune looks back at who saw trouble ahead, and who just ended up in trouble.
CNN/Fortune August 2008


Credit crunch a year on: The losers
However you look at them, the figures remain startling.
BBC 3 August 2008


Let's see. It's Friday, what bank(s) is the FDIC taking over this weekend?
According to this report in CNN/Money, it's Florida's First Priority Bank
Tim Iacono 1/8 2008

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I går var det på dagen ett år sedan kreditkrisen började i USA.


Cirka 105 miljarder kronor om dagen har Fed pumpat in i bankväsendet den senaste veckan.
- Det visar att det fattas likviditet i systemet, säger Christopher Low, chefsekonom på FTN Financial i New York.

De så kallade ”nödlånen”, steg samtidigt till 534 miljoner för den förra veckan.
Alltså mer än dubbelt så mycket som veckan före.

usatoday.com/money/


Bankkollapser och krispaket i USA
DN/TT/Reuter 26/7 2008


Banks with federally insured deposits, which are limited in the risks they’re allowed to take and the amount of leverage they can take on — have been pushed aside by unregulated financial players.
We were assured by the likes of Alan Greenspan that this was no problem: the market would enforce disciplined risk-taking
Paul Krugman 28/7 2008

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The housing correction - and related credit crunch - appears to be at or near its low point in America
My view has been - and remains - that this episode is likely to be remembered as one of those extremes of panic or euphoria in financial markets turn out to be simply wrong.
Anatole Kaletsky, The Times July 28, 2008


The Homeownership Obsession
As a society, we overinvest in real estate. We build (and buy) too many extra-big homes and strive to make almost everyone into a buyer.
Robert J. Samuelson, July 26 2008


Nouriel Roubini predicts the worst financial crisis since the Great Depression and
the worst U.S. Recession in the last few decades.

July 15, 2008


The bail-out of Fannie Mae and Freddie Mac by the combined forces of the US Treasury and the Federal Reserve Board is the ugliest exercise of its kind I have ever observed outside early transition economies and mature banana republics
Willem Buiter, Financial Times, July 14, 2008

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"Vi har nog underskattat krafterna i bolånekrisen."
Så säger SEB:s chefsekonom Robert Bergqvist
DI 2008-07-14

Robert Bergqvist räknar med påfrestningar på den amerikanska ekonomin en bra bit in på nästa år. Och Sverige, som hittills varit hyfsat skonad från bolånekrisens spridningseffekter, kommer nog få mer konkreta problem under hösten.
"Arbetsmarknaden kan komma att försämras, men vi håller fast vid vår majprognos om en BNP-tillväxt på 1,3 procent för 2009", säger Robert Bergqvist.
"Sverige har tre försvarslinjer under en lågkonjunktur. Den första är starka balansräkningar bland hushållen och företagen. Sedan kan lågkonjunkturen mötas med en expansiv finanspolitik
och Riksbanken kan sänka räntan", fortsätter han.


US taxpayers are about to find out what their long-standing and (strictly speaking) non-existent guarantee of Fannie Mae and Freddie Mac will cost them.
One way to think of it is this: take the US national debt of roughly $9,000bn and add $5,000bn.
Not bad for an obligation still officially denied.
Clive Crook. FT July 13 2008


Treasury Acts to Save Mortgage Giants
The Bush administration on Sunday asked Congress to approve a sweeping rescue package that would give officials the power to inject billions of federal dollars into the beleaguered companies through investments and loans.
New York Times 14 July 2008


With a stunning $32 billion in assets, this is by far one of the largest failure in decades.
Dr Housing Bubble 14/7 2008

Top of page


The government keeps a private list of financial institutions at risk. Two years ago, there were 50 on the list, today it stands at 90. The government now acknowledges that IndyMac wasn't even on the list.
Oh dear.
Tim Iacono July 14, 2008


The operations of the Pasadena, Calif.-based thrift - once one of the nation's largest home lenders - were shut down at 3 p.m. PDT by the Office of Thrift Supervision and transferred to the Federal Deposit Insurance Corp.
About 95% of the $19 billion in deposits in the bank are insured, but that leaves $1 billion that was not covered by FDIC guarantees.
http://money.cnn.com/2008/07/12/

all 4,173 news articles


The California-based IndyMac Bank, has collapsed
Federal regulators seized the bank's assets
It is the second-largest financial institution to fail in US history
BBC, July 12 2008

Full text

Doom

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"This is the third time in 100 years that support for taken-for-granted economic ideas has crumbled.
The Great Depression discredited the radical laissez-faire doctrines of the Coolidge era.
Stagflation in the 1970s and early '80s undermined New Deal ideas and called forth a rebirth of radical free-market notions.
What's becoming the Panic of 2008 will mean an end to the latest Capital Rules era.
"


It is unclear if current shareholders would see their holdings wiped out - leading to the pre-market sell-off.
Immediately after the market open shares of Fannie and Freddie were both off more 45% from their already battered close on Thursday.
In the first four trading days of the week, the shares of Fannie have lost 30% of their value, while Freddie shares have tumbled 45%.
For the year, Fannie is down 67% and Freddie 77% through Thursday's close.
CNNMoney July 11, 2008


Senior Washington officials on Thursday sought to to reassure the markets about the financial health of the nation's two largest mortgage finance companies
The rapid sell-off of shares of Fannie Mae and Freddie Mac came after comments from a former central banker that they may not be solvent
New York Times, July 11, 2008

More about Fannie and Freddie

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How to see world economy through two crises
The financial crisis was an avoidable stupidity. Rising prices of energy are a bitter reality.
Martin Wolf, Financial Times, June 24, 2008


Call the latest banks-inspired stock market selloff whatever you want,
but don't call it a capitulation. That's wishful thinking
CNBC 20 Jun 2008

Capitulation is considered a point at which stocks are oversold and setting themselves up as bargains. That would be bad news in the short term as it would mean equities have fallen to perilously low levels, but good news in the long range in that it would signal a bottom and a point off which the market can rally.

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Regional Banks Spiral Towards Zero
Mish, June 20, 2008

Why didn't Bank United raise capital at $31, $20, $14, or even $8?
It's market cap today is $68 million. Now it wants to raise $400 million which is 588% of what the market says it's worth.
If that dilution comes on top of the declines we have already seen, its share price will be something like 32 cents

Full text


How imbalances led to credit crunch and inflation
Martin Wolf, Financial Times, June 17, 2008


I have been staring in amusement
at Bernanke's latest proclamation: Danger of downturn appears to have faded.
Before we can say the worst is over or the danger has passed, the storm has to reach shore first.
With that in mind I thought it might be interesting to look at a few headlines of things that are going to happen but have not happened yet.
Mish 11/6 2008


Infectious Exuberance
Financial bubbles are like epidemics
Robert J. Shiller, July/August 2008 Atlantic Monthly


In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending.
Washington Post June 10, 2008

Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more "affordable" loans made to these borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.

Today, 3 million to 4 million families are expected to lose their homes to foreclosure because they cannot afford their high-interest subprime loans. Lower-income and minority home buyers -- those who were supposed to benefit from HUD's actions
-- are falling into default at a rate at least three times that of other borrowers.

Full text

http://www.hud.gov/

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Why It's Worse Than You Think
For months, economic Pollyannas have looked beyond the dismal headlines and promised a quick recovery in the second half.
They're dead wrong.
Daniel Gross, Newsweek Cover Story Jun 16, 2008


Bernanke believes that the danger of a "substantial downturn" in the US economy has abated over the past month,
but that inflation risks are increasing.
FT June 10 2008


Riksbanken fasar ut inflationsmåttet KPIX eftersom banken nu räknar med en varaktig skillnad i ökningstakten mellan KPI och KPIX.
2008-06-09


We are in the process of deleveraging
the most leveraged economy in history.

Of course, if the U.S. doesn't recover there will be no worldwide recovery
We, however, don't believe that the U.S. massive stimulus programs and money printing can solve a problem of excess debt generation that resulted from greed and living way beyond our means.
Comstockfunds, August 6, 2009

This excess debt actually resulted from the same money printing and easy money that we are now using to alleviate the pain.

We wrote a special report in January of this year titled "Substituting Debt for Savings and Productive Investment". We stated in the report that it took $1.50 of debt to generate $1 of GDP in the 1960s, $1.70 to generate $1 of GDP in the '70s, $2.90 in the '80s, $3.20 in the '90s, and an unbelievable $5.40 of debt to generate $1 of GDP in the latest decade.

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The most urgent issue is how to contain the destructive power of deleveraging.
Mortgages and mortgage-backed securities account for about $23,000bn of the $48,000bn of total debt owed
by the financial and non-financial private sectors.
George Magnus, FT, September 29 2008 16:05

The focus on the mortgage sector only misses the point that debt destruction and asset deflation are generic. The shrinkage of balance sheets is occurring equally in banks and in the non-financial sector.

Full crisis management must provide, therefore, for the re-capitalisation of the banking system by the state in exchange for equity participation that could be sold back at a later date. This could be bolstered by a more robust change in accounting standards, so that some types of losses can be absorbed over time and reported in the income statement, rather than appear in immediate capital destruction.

How much capital do US banks need? It is impossible to be precise, but using a loan loss rate of about 5 per cent (roughly 3 per cent historically), a top-down estimate suggests there may be about $2,000-2,500bn of mark-to-market losses in the economy. Assuming a 50 per cent recovery rate and allowing for the $300bn or so of capital that has been raised since August 2007, the banking system may now be undercapitalised to the tune of roughly $700bn. It might have been better to use the EESA authority for this purpose, rather than to purchase bad assets

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Just over a year ago, Malcolm Knight, the general manger of the Bank for International Settlements, the central bankers' bank in Basel, confessed that
one of his greatest concerns about the financial outlook was "deleveraging".
Gilian Tett FT June 8 2008

Vast levels of leverage "in which financial institutions and investors borrow heavily" had furtively built up in the financial system earlier this decade.
He feared that it would be difficult to cut this debt without triggering a market shock.

"We are still in this process of deleveraging and that always implies downward pressure on asset prices," said Mr Knight

Full text

More about deleveraging


The next administration - whether it's McCain or Obama - will be forced to restore the Resolution Trust Corp., which was created in 1989 to dispose of assets of insolvent savings and loan banks.
The effects on the dollar, however, will be catastrophic.
Mike Whitney 6 June 2008


European banks harder hit by credit crunch
Of the $387bn in credit losses $200bn was suffered by European groups and $166bn by US banks,
according to Institute of International Finance
Gillian Tett, FT June 5 2008

The data also show that European institutions have raised only $125.5bn of capital to compensate for the losses compared with nearly $141bn raised by their US rivals.

Full text

Institute of International Finance

The European Commission ran an exercise in which it pretended
a commercial insolvency was threatening to bring down two banks

Read more here


även om de svenska bankerna hittills lyckats stå emot den finansiella oron relativt väl innebär den att sårbarheten för andra risker ökat.
Bankernas utlåning till företag och hushåll i de baltiska länderna utgör en fortsatt källa till oro.
Riksbankschef Stefan Ingves, 2008-06-03


Ambac and MBIA swooned after Moody's said it might downgrade the struggling bond insurers
Fortune June 4, 2008


I see nothing in the present situation that is either menacing or warrants pessimism. . . . I have every confidence that there will be a revival of activity in the spring and that during the coming year this country could make steady progress. Andrew W. Mellon, U.S. Secretary of the Treasury, December 31, 1929
John Makin, False Dawn, May 30, 2008


Behovet av ett starkare regelverk för hantering av banker i kris
I många fall tycker jag ärligt talat inte att våra nuvarande ordningar för att hantera svaga banker räcker till.
Riksbankschef Stefan Ingves 2008-05-19


Senate Banking Committee Approves Housing Bill
Washington Post 20/5 2008


Stocks looked set for a sharp decline at Friday's open as AIG's big loss raised credit jitters and soaring oil prices fanned inflation concerns.
CNN 2008-05-09

Less than three hours before the open, Nasdaq and S&P futures were lower and pointing to heavy losses at the start for Wall Street.
Insurer AIG reported a quarterly $7.8 billion loss after the market close Thursday. The dismal results raised fears about the impact of the credit crunch on financial firms. Shares of the Dow component tumbled 7.4% in after-hours trading following the report.

Full text

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Because US mortgages are "no-recourse" loans (lenders have no recourse to the house's owner beyond the value of the house), individuals with negative equity have an incentive to default.
Martin Feldstein, FT May 7 2008


There are signs that the mix of policies and economic circumstances that gave a protracted laisser-passer to the rich and to business is coming to an end
Income inequality in the US is at its highest since that most doom-laden of years: 1929.
Throughout the main English-speaking economies, earnings disparities have reached extremes not seen since the age of The Great Gatsby.
John Plender, FT 7/4 2008
Highly Recommended


How well can an economy long characterised by soaring house prices, exploding debt
and a dynamic financial sector adjust to a new world?

Martin Wolf, Financial Times May 1 2008


Why this crisis is still far from finished
The writer is co-chief executive and co-chief investment officer of Pimco
Mohamed El-Erian, Financial Times April 24 2008

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Consumer sentiment hits 26-year low
MSN Money 25/4 2008
Hm... 2008 - 26 = 1982


How do we persuade citizens that the rise of the emerging countries, the brightest story of our era, is to be welcomed, rather than resented or even resisted,
when what they experience is financial disarray, falling house prices, recession and soaring costs of essential commodities?
Martin Wolf, Financial Times, April 22 2008


Hillary Clinton is one of several prominent figures to warn that the US "might be drifting into a Japanese-like situation".
Three factors distinguish Japan's long malaise from the present US crisis:
the source of the problem, the size of the problem and the response of policymakers.

Richard Katz, Financíal Times April 21 2008


First, anybody who thinks it is a duty of the state to help keep housing expensive is crazy;
second, policymakers should respond only to clear market failures; and,
third, with a floating exchange rate and an independent central bank, the UK can weather the storm if it keeps its head.

Martin Wolf, Financial Times April 17 2008


A plan to loan billions of pounds to British banks is needed to stop the UK's financial crisis worsening, the chancellor has said.
to swap about £50bn worth of government bonds for British banks' mortgages.
BBC 20/4 2008


Citigroup cutting 9,000 jobs - $12bn of write-downs for sub-prime mortgages and other risky assets.
BBC 18/4 2008

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Policy makers have slowly recognised the Minsky Moment followed by the unfolding Reverse Minsky Journey.
But I want to emphasise "slowly,"
Part of the reason is human nature: to acknowledge a Reverse Minsky Journey, it is first necessary to acknowledge a preceding Forward Minsky Journey
Paul McCulley, April 2008


Wachovia joins the list of chronic anemics along with Citigroup (C), Washington Mutual (WM), Merrill Lynch (MER) and Countrywide Financial (CFC).
That price represents a discount of more than 15 per cent to Wachovia's share price
Mish April 14, 2008


G7 försäkrade att deras centralbanker ska fortsätta att samordna åtgärder för att lindra kreditkrisen.
Penningpolitiken måste vara den första försvarslinjen, enligt IMF.
Samtidigt har IMF-chefen Dominique Strauss-Kahn efterlyst en plan för samordnade finanspolitiska stimulanser världen över.
Sådana megakeynesianska övningar bör man vara försiktig med.
DN-ledare 14/4 2008


The Inflation Solution to the Housing Mess
John Makin, Wall Street Journal April 14, 2008

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The collapse of the housing bubble in the United States is mutating into a global phenomenon,
with real estate prices swooning from the Irish countryside and the Spanish coast to Baltic seaports
New York Times 14/4 2008


Back in April 1999, didn't the Chairman of the Federal Reserve, the Chairman of the SEC, The Secretary of the Treasury and the Chairperson of the CFTC jointly prepare a 140 page report on the Lessons of LTCM in which they stated that:
The principal policy issue arising out of the events...is how to constrain excessive leverage...
Mark Wenzel, April 13, 2008


Trillion Dollar Meltdown:
Easy Money, High Rollers, and the Great Credit Crash, by Charles R Morris
thought-provoking for experts and a readable primer for the layperson
Review by Gillian Tett, FT, September 23 2007


What Exactly Is The G7 plan?
Mish, April 12, 2008

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Misslyckat försök göra en pudel
The world's leading banks – represented by the Institute of International Finance – concurred with a conclusion long ago reached by the rest of the world:
they screwed up, the credit crisis is largely their fault, and everybody else is suffering for their errors.
The admission may not be enough to prevent a dangerous backlash.
Financial Times editorial April 11 2008


Internationella media tycks nu fyllas av mer eller mindre beundrande beskrivningar av den svenska modellen.
Nu är det hanteringen av finanskrisen.
att det nu internationellt ses som en stor framgång finns ju anledning att notera.

Carl Bildt, wordpress blog 11/4 2008

Policymakers are studying how Sweden managed to rescue four of its biggest banks when its own credit boom turned to bust in the early 1990s.
House prices had slumped, the currency was out of control, and unemployment and bankruptcies were rising rapidly.
The state aid was skilfully targeted, so none of the cash went to the bank's shareholders
BBC 9/4 2008

Comment by Rolf Englund
In fact, the Swedish government bailed out the shareholders of Nordbanken.
Read more about in swedish at
www.internetional.se/re95nb.htm

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Riksbanken får beröm för att dom ljög
The International Monetary Fund last week gave central banks some wicked advice.
They should no longer ignore residential property prices when setting interest rates.
At the same time, the IMF recommends central banks should retain their inflation-targeting frameworks.
It all sounds very plausible. Unfortunately the two goals are inconsistent.
Wolfgang Münchau Financial Times April 6 2008


The International Monetary Fund (IMF) has warned that potential losses from the credit crunch
will reach $945bn and could be even higher.

"losses are spreading" - "collective failure"
BBC 8/4 2008

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Bear Stearns' bailout has echoes of 1907 panic
In my opinion, the private credit markets have forfeited their privileged right to operate relatively autonomously because of incompetence, excessive greed, and in minor instances, fraudulent activities.
Bill Gross, April 2008

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I am puzzled why the remarkably similar housing bubbles that emerged in more than two dozen countries between 2001 and 2006 are not seen to have a common cause.
The dramatic fall in real long term interest rates statistically explains, and is the most likely major cause of, real estate capitalization rates that declined and converged across the globe. By 2006, long term interest rates for all developed and major developing economies declined to single digits, I believe for the first time ever.
Alan Greenspan, Financial Times April 6, 2008


Many today are complaining about Alan Greenspan's monetary stewardship - "serial bubble-blower" is the most polite phrase that I have heard.
But would the world economy really be better off today under an alternative monetary policy that kept unemployment in America at an average rate of 7% rather than 5%?
Would it really be better off today if some $300 billion per year of US demand for the manufactures of Europe, Asia, and Latin America had simply gone missing?
Brad DeLong April 05, 2008

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Banks are overwhelmed by the U.S. housing crisis
The number of borrowers at least 90 days late on their home loans rose to 3.6 percent
April 4 2008 Bloomberg


-Denna kris börjar redan utmana nedgången 1989/90,
som var den allvarligaste av de fem finanskriser som varit de senaste 20 åren.
Den ser också allvarligare ut än Dot Com-krisen och krisen i Mexiko 1994/95, skriver Morgan Stanley
E24 1/4 2008

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Recession

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One way of measuring how perilously close the U.S. financial system came to melting down in mid-March 2008
is to look at how low the rate on one-month Treasury bills fell at the depths of the crisis.
That number is 12 basis points. 0.12%.
Michael Lewitt, at John Mauldin, 2008-03-31


UBS seeks $15.1B in new capital
Switzerland's largest bank, expects writedowns of $19 billion
just as Deutsche Bank AG, Germany's largest bank, announced similar writedowns of about $4 billion.
CNN 1/4 2008


Government sponsored enterprises
Capital infusions to date fall far short of prospective losses. Without new capital, the financial sector will operate with too much risk and leverage or will put the economy at risk by restricting the flow of credit.
Lawrence Summers, FT March 31, 2008


Jim Grant of Grant's Interest Rate Observer on Bloomberg
"What manner of incompetence - both at the public policy level and at the so-called financial professional level -
led to this mess?"

And the people who are paying are the savers, among others.
March 26, 2008

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The mismanaged collapse of Northern Rock before it collapsed into public hands.
Before the crisis, the Bank did not have oversight of individual institutions, and there was no mechanism for banks at risk of failure.
Telegraph 7 January 2015

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A month before the start of the financial crisis,
the Bank of England was apparently unaware of the impending danger, new documents reveal.
In a unique insight into its workings, the Bank has published minutes of top-secret meetings of its governing body, the Court, between 2007 and 2009.
BBC 7 January 2015


The Financial Services Authority, the City watchdog,
has admitted to 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


US house prices have fallen at the sharpest rate in more than 20 years, and
American consumers are now at their most pessimistic since Richard Nixon was in the White House
Fed stopped derivatives implosion
Daily Telegraph 25/03/2008

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Iceland shows cracks as the krona crashes
Moody's downgraded ratings of the top three banks - Kaupthing, Lansbanki and Glitnir
Daily Telegraph 23/03/2008

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Contrary to popular belief, the stock market crash of 1929 wasn't the defining moment of the Great Depression.
What turned an ordinary recession into a civilization-threatening slump was the wave of bank runs that swept across America in 1930 and 1931.
This banking crisis of the 1930s showed that unregulated, unsupervised financial markets can all too easily suffer catastrophic failure.
As the decades passed, however, that lesson was forgotten — and now we're relearning it, the hard way.
To grasp the problem, you need to understand what banks do.
Paul Krugman, New York Times 21/3 2008


I dagsläget har Fed inte mycket att välja på. Alltför stora värden står på spel.
Men att ständigt skyndsamt agera räddare i nöden, när marknadens aktörer misskött sig eller blåst upp bubblor som spricker, leder också fel. Det är ingen bra uppfostringsmetod - det är lika illa som att vara curlingförälder.
Det skapar grogrund för aktörerna att ta större risker än vad de annars skulle göra. Till slut kan riskbeteendet ha blivit så stört att inte ens "storpappa" Ben Bernanke kan reda upp saken.
Vems är det direkta felet till att kreditmarknaden krisar?
DN huvudledare 17/3 2008

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It is déjà vu for those who remember previous emerging market crises:
imploding balance sheets, a bank run, disorderly falls in the currency
Yet there is a huge difference: this is happening in the US
Mohamed El-Erian, FT March 18 2008


The Federal Reserve, struggling to prevent a meltdown in financial markets,
cut the rate on direct loans to banks and became lender of last resort to the biggest dealers in U.S. government bonds.

March 17 2008(Bloomberg)

``It is a serious extension of putting the Federal Reserve's balance sheet in harm's way,'' said Vincent Reinhart, former director of the Division of Monetary Affairs at the Fed and now a scholar at the American Enterprise Institute in Washington. ``That's got to tell you the economy is in a pretty precarious state.''

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The bailout was nothing more than an
agreement by the ratings agencies to pretend that the
monolines were still worthy of AAA

How could MBIA - which recently had to pay 14% to borrow money ever possibly be considered AAA?
Fleck CNBC 3/3 2008


A key cause of the present slowdown and potential recession was not a tightening of monetary policy but the bursting of the house-price bubble
The Fed therefore will not be able to end the recession as it did previous ones by turning off a tight monetary policy.
Martin Feldstein, Wall Street Journal, February 20, 2008


The credit crunch has forced Peloton Partners, a $3bn (£1.5bn) hedge fund run by former Goldman Sachs star traders, to liquidate its two investment funds, leaving its founders millions of pounds out of pocket.
Daily Telegraph 29/02/2008


The financial system is a subsidiary of the state.
A creditworthy government can and will mount a rescue.

That is both the advantage – and the drawback – of contemporary financial capitalism.
Martin Wolf, Financial Times February 26 2008
Highly recommended


More than 10m would have negative equity in their homes and
more than 2m foreclosures would take place over the next two years.

Lawrence Summers, Financial Times February 24 2008

It appears house prices are down by 5-10 per cent from their peak, with derivatives markets predicting further declines of about 20 per cent.

Price falls of this magnitude are likely to mean more than 10m would have negative equity in their homes and more than 2m foreclosures would take place over the next two years.

Foreclosures are extremely costly. Between transaction costs that typically run at one-third or more of a home's value and the adverse impact on neighbouring properties, foreclosures can easily dissipate more than the total value of the home being repossessed. They also inflict collateral economic damage, as reduced wealth and diminished borrowing capacity in homes reduces consumer spending, increases credit market fragility and depresses local tax bases.

Remarkably, bankruptcy laws currently provide that almost every form of property (including business property, vacation homes and those owned for rental) except an individual's principal residence cannot be repossessed if an individual has a suitable court-approved bankruptcy plan. The rationale is the prevention of costly and inefficient liquidations. It is hard to see why similar protections should not be prudently extended to family homes.

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Lawrence Summers

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The monoline insurers, as the news goes, will be split up into bad company/good company entities,
and this "magic wand" will save the day.
It will not
Fleckenstein, February 25 2008

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Stage I is to provide liquidity to the banking system at high interest rates. We passed out of Stage I at the end of last year.
Stage II is forgetting about punishing feckless financiers. We are now in Stage II.
Now Alan Blinder says that it is time to move on to Stage III: nationalization.
Brad DeLong's Weblog February 24, 2008


A group of banks is preparing to inject $2bn to $3bn into the troubled bond insurer Ambac,
which is racing against time to come up with fresh capital to avoid a sharp cut in its triple-A credit
rating that could trigger wider financial market turmoil.
Financial Times February 22 2008


Like a 1930s bank run
There are now plans to split up the companies
that insure bonds and derivatives based on mortgages and buyout loans.

Jim Jubak 22/2 2008

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America's economy risks mother of all meltdowns
The connection between the bursting of the housing bubble and the fragility of the financial system
has created huge dangers, for the US and the rest of the world.
Martin Wolf, Financial Times, February 19 2008


Defaults in the US housing market are spreading from sub-prime
to the much larger stock of top-grade housing debt.
The Mortgage Bankers Association says default rates on all outstanding home loans in the US
have reached 7.3pc, the highest level since modern records began in the 1970s.
Ambrose Evans-Pritchard, International Business Editor, Daily Telegraph 13/02/2008

While sub-prime and close kin "Alt A" total $2,000bn of debt, the prime market in all its forms is roughly $8,000bn.

US house prices have fallen by 7.7pc over the past year, according to the Case-Shiller index of the 20 biggest cities.
The slide is likely to gather pace as 2.2m mortgages taken out at the height of the credit bubble adjust upwards by 250-300 basis points.
Goldman Sachs says house prices may fall by as much as 25pc from peak to trough - creating the worst slump since the Great Depression.

Over 40pc of all mortgages issued from late 2005 to early 2007 are on adjustable rates - a break with the US tradition of fixed-rate borrowing.

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Spanish banks doubled their share of the ECB's weekly funding auctions, taking their borrowing up to €44bn.
Financial Times February 11 2008 22:01


Speaking after the meeting of Group of Seven finance leaders, Peer Steinbrück, German finance minister,
said the G7 now feared that write-offs of losses on securities linked to US subprime mortgages could reach $400bn.
FT February 10 2008


Six of the nation's largest mortgage lenders have temporarily stopped foreclosure proceedings
Legal efforts to oust seriously delinquent borrowers from their homes will be postponed for 30 days.
CNNMoney February 12 2008


The Rising Risk of a Systemic Financial Meltdown:
The Twelve Steps to Financial Disaster
by Nouriel Roubini, February 11, 2008
at John Mauldin

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Warren Buffett to the rescue?
Stocks jump after the Oracle of Omaha
offered help to troubled bond insurers by reinsuring $800 billion worth of municipal bonds
CNBC 12/2 2008


If Citigroup could have borrowed reserves from the Fed at 3-4%
wouldn't it had done so instead of raising $7.5 billion from Abu Dhabi
at an interest rates of 11%?

Reuters is reporting Dozens of U.S. banks will fail by 2010.
Mish 9/2 2008

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The Credit Crisis is Simply Getting Worse
John Mauldin's Weekly E-Letter February 8, 2008
Highly Recommended
RE: Probably the monst frightening I have read so far

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Visst finns det likheter mellan dagens ekonomiska läge och 90-talskrisen. Men skillnaderna är större.
I början av 1990-talet gick Sverige in i den värsta ekonomiska krisen på många decennier.
Värdet av produktionen – BNP – sjönk tre år i rad och arbetslösheten steg till nivåer Sverige knappt sett sedan 1930-talet.
Då hade Sverige fast växelkurs, en politik som hade stöd både av socialdemokratiska och borgerliga regeringar.
Det tvingade upp räntorna på nivåer som förvärrade ett redan allvarligt läge.

Dan Lucas, DN Ekonomi 7/2 2008

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Pia Gripenberg intervjuar Handelsbankens vd Pär Boman:
Är vi på väg in i något som kan vara lika allvarligt som finanskrisen i början av 90-talet?
-Absolut, ... När vi tittar på vad som sker på grossistmarknaden för pengar, och affärerna som sker banker emellan,
ser jag definitivt ett scenario som är mer bekymmersamt än den situation vi hade under första halvan av 90-talet.

DN Ekonomi 7/2 2008

I början av 90-talet ökade räntorna, konkurserna blev betydligt fler och 1994 var arbetslösheten över 13 procent.

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"Perssons påstående att han tog Sverige ur krisen är inget annat än en myt."
Den förkättrade "marknaden", valutaspekulanterna, "räddade" alltså Sverige genom att pressa fram en rörlig kronkurs i november 1992
Lars Jonung, kolumn DN 8/2 2008
Highly Recommended


Fears about corporate and commercial property debt reached new heights in the US and Europe on Friday
as investors liquidated holdings in a sign of spreading credit turmoil.
Financial Times 9/2 2008

The markets were gripped by worries that economic weakness would affect corporate profits, leveraged buy-outs and commercial property. This represents an escalation of the crisis that began with concerns about US subprime mortgages.

Hedge funds that bet on the likelihood of buy-out deals happening have been among the casualties. The turmoil has also put pressure on banks and other investors who are holding $200bn (£103bn) of leveraged loans that they had been hoping to sell.

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The recession of 2008 will be a longer, "U-shaped" affair, driven by an unusual, persistent drop in consumption and investment.
Underlying is an "endogenous" risk appetite cycle, one that is tied to the fundamental problem facing the U.S. economy:
the build-up and subsequent implosion of the housing bubble.
John Makin, American Enterprise Institute (Timbros storasyster) January 28, 2008
Highly Recommended


A recession is a normal part of the business cycle.
It takes a major policy mistake by a government or central bank to create a depression.
John Mauldin, February 2, 2008

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It's the housing market, stupid.
Mest på svenska
Rolf Englund blog 28/1 2008


The intensifying credit crunch is so severe that
lower interest rates alone will not be enough
Dominique Strauss-Kahn, managing director of the International Monetary Fund.
Reported by Chris Giles and Gillian Tett, FT January 27 2008


2007 nearly $4.50 of credit was being generated per $1 of GDP growth.
It is too late to stop the US recession and the slowdown under way in Europe and Japan
George Magnus, senior economic adviser at UBS Investment Bank, FT


Leading US banks are under pressure from New York state's insurance regulator to provide as much as $15bn to support struggling bond insurers.
FT


The apparatus of the US government is now in rescue mode.
The Federal Home Loan Bank system has quietly slipped mortgage banks $750bn since the crunch.
It injected $210bn in November alone, with taxpayer guarantees. Citigroup gobbled $95bn.
God bless socialism.
Ambrose Evans-Pritchard, Daily Telegraph, January 21 2008

We know that rates on $1,500bn in adjustable mortgages will jump by 300 basis points over 18 months.

The White House is crafting the Bush bail-out, an instant helicopter drop worth 1pc of GDP. Congress is not going to get in the way. "Everyone should put their ideological baggage aside and try to pump money into the economy to get things going," said Charles Schumer, Senate Banking chairman.

Yet if the storm is peaking in the US, it has hardly begun in Europe. Bernard Connolly, global strategist at Banque AIG, says euro-losses may surpass the US debacle.
"The next really big shock to financial markets is likely to be the risk of collapse in the EMU credit bubble: the private sector credit consequences are likely to be catastrophic," he said.

Budget deficits must stay below 3pc of GDP, on pain of fines. Germany once breached this with impunity, but that was before Angela Merkel appeared. Virtuous again, Germany now demands rigour.
Since France and Italy are already nearing the 3pc buffer, they may have to tighten into a downturn.

Monetary bail-outs are not allowed either, at least not until the German bloc gives a green light to the European Central Bank.

We are a decade into EMU. The outcome is what Bundesbank sceptics feared. Interest rates have been far too low for Club Med and Ireland, fuelling property booms.

These have burst, are bursting, or will burst. The victims are beached with current account deficits of 10pc of GDP in Spain, 13pc in Greece. The "Nordics" have surpluses, at Club Med expense.

Italy and Spain have lost 30pc in labour competitiveness against Germany under EMU. France has lost 20pc. An attempt to deflate these countries back to balance will run into revolt.

Hedge funds are already circling.

"While tensions can be camouflaged during economic upswings, they surface during downswings. All failed currency unions were abandoned during times of economic stress," said BNP Paribas.
We are nearing the moment when the ECB must decide whether it is a bank or the political guardian of the EU Project.
It cannot be both.

The monetary crunch needed to restrain German wage deals after the rail workers won 11pc will crucify Spain.
Over 40,000 estate agents closed doors in Spain last year. Property prices are dropping in Madrid, Barcelona, and Seville.
Spanish banks are issuing mortgage bonds to use as collateral at the ECB's window, without even trying to sell them on the open market. La Gaceta said this "abuse" has reached €40bn.

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EMU Collapse

Spain

Början på sidan - Top of page


The owners of WestLB are to inject up to inject 2.90 bn dollar into the troubled German public sector bank
FT January 21 2008

January 20 2008:
Owners of WestLB were on Sunday evening meeting over the future strategy of the German public sector bank, which has been hit by a trading scandal as well as the global credit squeeze.
WestLB refused to comment on the details of the gathering, which was also attended by Axel Weber, president of the Bundesbank. But the banks' owners were expected to discuss a possible capital increase as well as restructuring plans.
German media reported that the capital injection could be as large as €2bn.

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Carnegie Mellon economist Allan Meltzer, who is finishing the second volume of his history of the Federal Reserve,
warns that Bernanke is risking a disastrous replay of the 1970s
CNN


Stagflation. Plain and simple.
Asset prices simply cannot be justified relative to consumer prices.

FakeBen


/The rating agency/ Fitch disclosed as recently as March 2007 that
their model for rating CDOs assumed low to single digit home price appreciation forever into the future.
Michael Shedlock, December 31, 2007


De fem största amerikanska investmentbankerna har betalat bonusar om totalt 39 miljarder dollar,
motsvarande 256 miljarder kronor, för 2007.
Det rapporterar Bloomberg News som utifrån bolagens bokslut har tagit fram uppgifterna.
DI 2008-01-17


Merrill Lynch reported a loss for 2007 after a $14.1bn write-down related to sub-prime mortgages.
Nice table with "MAIN SUB-PRIME LOSSES SO FAR"
BBC 17 January 2008

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The US consumer is on the precipice of experiencing the first recessionary phase since 1991
David Rosenberg, chief North American economist for Merrill Lynch, FT November 14 2007

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Efforts ineffective, aimed at containing a subprime credit crisis,
not a rapidly spreading prime-credit, solvency crisis
that is leading the U.S. economy into recession.
John Makin January 3, 2008


Is the 2007 US Sub-Prime Financial Crisis so Different?
(Different from the Debt Crisis of the 80's?)
Martin Wolf, FT January 8 2008


The collapse of the auction-rate security market
Why has a crisis that began with loans to a limited group of home buyers ended up disrupting so much of the financial system?
Because, ultimately, it's more than a subprime crisis; indeed, it's more than a housing crisis.
It's a crisis of faith.
Paul Krugman New York Times 15/2 2008

People no longer trust assurances that fancy financial instruments will function the way they're supposed to — after all, they know what happened to people who thought their subprime-backed securities were safe, AAA-rated investments.

One simple measure of the seriousness of the credit problem is this: although the Federal Reserve has sharply cut the interest rate it controls over the past few weeks, the borrowing costs facing many companies and households have actually gone up.

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There was a definite Hirohito feel to the explanation Ben Bernanke gave Krugman
When announcing Japan's surrender in 1945, Emperor Hirohito famously explained his decision as follows: "The war situation has developed not necessarily to Japan's advantage."

Ben Bernanke: "Market discipline has in some cases broken down, and the incentives to follow prudent lending procedures have, at times, eroded."

More about Bernanke

Banks Gone Wild Paul Krugman NYT Nov 23 2007
This slump was both predictable and predicted.
"These days," I wrote in August 2005, "Americans make a living selling each other houses, paid for with money borrowed from the Chinese. Somehow, that doesn't seem like a sustainable lifestyle."
It wasn't.

Krugman om EMU

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Crisis may make 1929 look a 'walk in the park', Ambrose Evans-Pritchard

RECESSION 2008 » DEPRESSION 2009, Aubie Baltin
Aubie Baltin
House Prices - Monetarism


Most estimates put the eventual tally for defaults by America's subprime borrowers at $200 billion-300 billion, The Economist

Merrill Lynch & Co Inc may get up to $5 billion in a capital infusion from Singapore state investor Temasek Holdings, MSN

US bond insurer MBIA has disclosed it guarantees $30.6bn in complex debt investments
linked to the US housing slump, BBC


The financial crises of capitalism
The beginning of wisdom is to recognise that financial booms and busts have been a feature of capitalism from the very start.
Indeed they are as deep-rooted as human gullibility and greed.
Samuel Brittan, FT May 8 2008

Crises succeeding each other at intervals of about a decade so beloved by old-fashioned business cycle theorists, but others coming hot on the heels of their predecessors after only a couple of years.
Their frequency tempts one to parody Churchill: capitalism is a bad system, but the others are worse.

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Comment by Rolf Englund:
But they are too frequent and now and then too dangerous
Crises succeeding each other


Fed bailout of Bear Stearns
Remember Friday March 14 2008
it was the day the dream of global free-market capitalism died.
Martin Wolf, Financial Times, March 26 2008


Bear Stearns' bailout has echoes of 1907 panic
In my opinion, the private credit markets have forfeited their privileged right to operate relatively autonomously because of
incompetence, excessive greed, and in minor instances, fraudulent activities.

Bill Gross, April 2008


There are signs that the mix of policies and economic circumstances that gave a protracted laisser-passer to the rich and to business is coming to an end
Income inequality in the US is at its highest since that most doom-laden of years: 1929.
Throughout the main English-speaking economies, earnings disparities have reached extremes not seen since the age of The Great Gatsby.
John Plender, FT 7/4 2008

Awash with easy money, Wall Street became hooked on what the economist J.K. Galbraith in that subsequent seminal work on the period – The Great Crash – called "the magic of leverage": the ability to increase returns through borrowing.

From a political perspective the notable feature of the inegalitarian, free-market era that began in the 1980s is how little backlash there has been against the stagnation of ordinary people's earnings in such a large portion of the developed world economy.

Yet there are signs that the mix of policies and economic circumstances that gave a protracted laisser-passer to the rich and to business is coming to an end.

This is potentially dangerous territory. For as Bill Gross, managing director of Pimco, the world's biggest bond fund, has argued: "When the fruits of society's labour become maldistributed, when the rich get richer and the middle and lower classes struggle to keep their heads above water as is clearly the case today, then the system ultimately breaks down; boats do not rise equally with the tide; the centre cannot hold."

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John Plender

http://en.wikipedia.org/wiki/The_Great_Gatsby

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These are historic moments for the world economy.
First and most important, what is happening in credit markets today is
a huge blow to the credibility of the Anglo-Saxon model of transactions-orientated financial capitalism.
A mixture of crony capitalism and gross incompetence has been on display in the core financial markets of New York and London.
Martin Wolf, FT 12/12 2007

Second, these events have called into question the workability of securitised lending, at least in its current form.

Full text
Martin Wolf
Paul Krugman, a fundamental problem of solvency
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Up to 110 bn dollar in loans will be made available to world money markets by central banks
Analysts say the unprecedented move is a sign of the severity of the problems.
BBC 13/12 2007
Portal


This isn't just a mortgage or housing crisis.
At the center of this still-unfolding disaster is the collateralized debt obligation, or CDO.
Steven Pearlstein, Washington Post, December 10, 2007


Goldman Sachs, began reducing its inventory of mortgages and mortgage securities late last year.
Even so, Goldman went on to package and sell more than $6 billion of new securities backed by subprime mortgages.
IHT 6/12 2007


Saving Face (SIV Rescue Edition) Events have overtaken the SIV rescue plan
brokered by the Treasury Department and sponsored by Citigroup, Bank of America, and JP Morgan.
We said early on that this plan looked to be for the benefit of Citi, and that is turning out to be the case.
Nakedcapitalism 6/12 2007


Companies in Britain and Europe have failed to place a single high-yield bond
since the credit crunch kicked off in August,
and may now have to wait until next year before the credit market reopens for business.
Will Europe survive the euro?
Ambrose Evans-Pritchard, Daily Telegraph, 29/11/2007

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Euro collapse


"What is happening right now suggests that the moves by the Fed and ECB just haven't worked as we hoped,"
"The interbank lending business has broken down almost completely
Gillian Tett, Financial Times September 5 2007

Time to nationalise Northern Rock?
Financial Times editorial November 16 2007


"The reasons why the massive liquidity injections and policy rate cuts by central banks have miserably failed are clear,"
"We are facing a credit/insolvency problem in addition to a liquidity crunch and central banks' monetary policy is impotent in dealing with credit problems."


NOURIEL ROUBINI, November 26th, 2007


The Next Dominos:
Junk Bond And Counterparty Risk

one of the more important editions of Outside the Box this year. This is a must read. You absolutely need to understand the nature of the systemic risk we are facing, and Ted does a great job of explaining in very clear terms the nature of the risks that we have created in our modern markets.
Ted Seides at John Mauldin 26/11 2007


Wake up to the dangers of a deepening crisis
The odds now favour a US recession that slows growth significantly on a global basis.
There is the risk that the adverse impacts will be felt for the rest of this decade and beyond.
Lawrence Summers, FT November 25 2007


It is only halfway through November but I think we can already declare the winner of the 2007 Quote of the Year competition. It is Chuck Prince, the former chairman and chief executive of Citigroup.
As Mr Prince departs, however, it should be noted that his statement was not, as history will record it, idiotic.
His offence was not that he misunderstood or misstated how banks have operated over the past few years but that he blurted out the truth rather too openly.
Note that he did not say "if" the music stops but "when".
John Gapper, FT November 14 2007


I think the really interesting question to be asked to which extent central banks have contributed to, or even caused, this crisis.
This is not about Mr Greenspan, or a single monetary policy decision at a particular time, or whether US interest rates were raised too late in the last cycle.
This question relates to the longer-term impact of monetary policy during the age of global disinflation,
which started in the early 1990s, and which has just ended.

The ECB, the Fed, and the Credit Crisis, Wolfgang Münchau. 07.11.2007


Financial companies' losses due to the US sub-prime crisis could be as much as $400bn
The estimate by Goldman's chief economist Jan Hatzius is higher than that of the Federal Reserve but in line with some recent independent forecasts.
Mr Hatzius predicts leveraged investors may have to reduce their lending by $2 trillion as a result.
"The macroeconomic consequences could be quite dramatic," Mr Hatzius said.
BBC 16/11 2007

Raised eyebrows
Last week, RBS, Royal Bank of Scotland, the British banking group, raised eyebrows when it was widely reported that one of its highly respected credit analysts had predicted that subprime losses could eventually rise to between $250bn and $500bn – or twice previous estimates.
Gillian Tett, Financial Times, November 15 2007


- What the heck's happening to our financial system?
That will be a question many people will be asking after Washington Mutual shares plunged 17 percent in a single day.
This after all is an industry-leading bank with over $320 billion in assets.
CNN Fortune 2007-11-08

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World stock markets are braced for further turmoil, amid reports that a US Treasury plan to stabilise troubled credit markets may have stalled.
The $75bn scheme, designed to buy debt of questionable value to avoid panic selling, has been thrown into doubt by problems at Citigroup
BBC 2007-11-07

There are also concerns that downgrades of some packages of debt will lead to discount sales of some assets. At the same time, the shortage of cash to fund takeovers is biting, with buyouts worth $202bn (£97m) having failed this year.

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Risk of securities fire sale mounts
FT November 7 2007

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What we saw this summer is something we've seen before and will undoubtedly see again. The sell-off was predictable and avoidable.
Some people were apparently shocked to learn that gambling was occurring at Rick's Cabaret.
Speech by Michael E. Lewitt, made at the The Bank Credit Analyst Conference
Mauldin's Outside The Box 2007-11-05


A mere 5.4% decline in the value of Citigroup's assets would make Citigroup insolvent.
Michael Shedlock, November 01, 2007


Aided and abetted by the explosion of new financial instruments
- especially what is now over $440 trillion of derivatives worldwide -
the world embraced a new culture of debt and leverage.
Yield-hungry investors, fixated on the retirement imperatives of aging households,
acted as if they had nothing to fear.
Stephen S. Roach 2007-10-22


The wolf packs are circling. Hedge funds target currency pegs
Fifteen years after George Soros smashed the sterling and lira pegs of Europe's Exchange Rate Mechanism, central banks have invited hedge funds to pounce again. This time on a global scale.
Ambrose Evans-Pritchard, Daily Telegraph 15/10/2007

The global M3 money supply is growing at 10.6pc as stimulus from America, Europe – and Japan, through the carry trade – leaks out to the vibrant parts of the world economy... With the usual lag, inflation has at last hit.

The easiest prey are in the Baltics and Balkans, where EU newcomers have let rip by importing an ECB monetary policy designed for the slow barges on the Rhine. All are overheating.
Inflation is now 11pc in Latvia, and 7pc in Estonia and Lithuania. Property prices in the capitals of all three are more expensive than Berlin. Inflation is 12pc in Bulgaria and 6pc in Romania.
The ECB has now invited the wolves to kill.

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Monetarism

1992 och kronkursförsvaret

EMU Collapse


The shadow banking system of hedge funds and CDOs, CLOs, PIPES, etc.
I'm sure that Bernanke, Paulson, and their cohorts understand this, but...
Bill Gross 1/10 2007

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Shares in E-Trade, the online broker that has seen its expansion into the mortgage market backfire, plunged nearly 59 per cent on Monday amid fears that its dependence on uninsured deposits could force it to sell assets at fire sale prices.
FT 2007-11-12

Prashant Bhatia, Citigroup analyst, cut his rating to "sell" and said there was a significant chance of E-Trade winding up in bankruptcy.


Central banks keep throwing in sticks of dynamite until the ocean finally disgorges a huge dead whale
the Rock would have to turn to the BoE for a loan of at least £30-£40 billion
Anatole Kaletsky, September 17, 2007

For almost a year now, we have been driving our clients crazy with Charles's tired old metaphor about the global liquidity contraction, in which the central banks keep throwing in sticks of dynamite until the ocean finally disgorges a huge dead whale. However much it annoyed our clients, we just couldn't stop using this metaphor for two reasons:
* Firstly because, on past experience, the long-awaited appearance of the whale - Continental Illinois, Chrysler, Brazil, Drexel Burnham, Kidder Peabody, Mexico, LTCM/Russia, Enron/MCI/Argentina - would announce the beginning of the end of the liquidity crunch.
* Secondly, because we started thinking in the middle of 2006 that our whale was overdue for an appearance, but it never quite turned up. In February we finally realised what species of a fish we were looking out for - a mortgage lender, with a specialty in high-risk loans - but still the damn creature refused to show. But this weekend, a whale finally surfaced, though somewhere totally unexpected.

The bottom line is that the Bank of England, the media and the markets have no idea of the force which could be about to hit them - a situation uncannily reminiscent of the days before Black Wednesday, exactly 15 years ago.

With essentially all its liquidity already exhausted, the Rock would have to turn to the BoE for a loan of at least £30-£40 billion. This would probably be the biggest single loan ever advanced by a government to any private company anywhere in the world. What would be the political reaction to such a loan, especially after Mervyn King's long lecture last week against bank bailouts?

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How the banks can win back confidence
Josef Ackermann (Deutsche Bank), Financial Times July 30 2008

One step towards this goal is the wide dissemination of the final report of the Institute of International Finance’s committee on market best practices (CMBP).

The industry recognises that strengthening practices in many areas is now essential to rebuild confidence in the global banking system and make markets more efficient.

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Deutsche Bank gör ytterligare en nedskrivning på 3,6 miljarder dollar, motsvarande drygt 21 miljarder kronor
Totalt har banken tvingats skriva ned sina tillgångar med 11 miljarder dollar.
DI 31/7 2008


Deutsche Bank's shares fell 2.9% Thursday after Chief Executive Josef Ackermann said he expects results to be negatively affected because
the bank will have to reassess investments of EUR29 billion
that now look risky in light of the ongoing financial crisis
.
20/9 2007

Fotnot
29 miljarder euro är 9,22 ggr så mkt i kronor, drygt 267 miljarder kr.


The Financial Services Authority, the City watchdog, has admitted to 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

Northern Rock fuelled its rapid growth by borrowing most of its cash for lending in wholesale money markets rather than relying on customers' savings deposits.

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Början på sidan - Top of page


Northern Rock to be nationalized
CNN 17/2 2008

Treasury chief Alistair Darling said Sunday that struggling bank Northern Rock PLC will be nationalized after the government rejected two private takeover bids.
Darling told a news conference that the ailing mortgage lender would be placed under temporary public ownership because both bids had failed to meet the government's demands.
He said neither a proposal from Richard Branson's Virgin Group nor an in-house management team delivered "sufficient value for money to the taxpayer."
The government had said more than 25 billion pounds (U.S. $49 billion) in government loans must be paid back within three years.

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Kommentar av Rolf Englund
Socialisterna har alltid velat förstatliga bankerna, och inte bara bankerna:
Den allvarligaste kritiken som framkommit när det gäller förslaget till nytt partiprogram, är att programkommissionen vill ta bort de allmänna grundsatserna. Många har i diskussionen framförallt velat slå vakt om skrivningen att bestämmanderätten över produktionen skall läggas i hela folkets händer.
http://www.socialisten.nu/arbr/sap/partiprogram_historia_53.shtml

Att så många inom (s) hatar Göran Persson beror nog på att han strök socialismen ur partiprogrammet.
Den urgamla formuleringen i det socialdemokratiska partiprogrammet - "Socialdemokratin vill så omdana samhället, att bestämmanderätten över produktionen och dess fördelning läggs i hela folkets händer"... fanns kvar ännu i det som antogs efter Murens fall på partiets 31:a kongress år 1990.
Göran Persson kommer att gå till den ideologiska historien som den partiledare som på partikongressen år 2001 strök detta mål om socialismen ur partiprogammet.
Rolf Englund 8/5 2005

That the latest government rescue package will allow IKB Deutsche Industriebank
shareholders to walk away with money in their pockets is a disgrace,
Financial Times editorial 15/2 2008

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Time to nationalise Northern Rock?
Financial Times editorial November 16 2007

Timeline: Northern Rock bank crisis
BBC

Let us call a spade a spade.
The blame for the vulnerability of Northern Rock lies with its management
Would it not be better to let mismanaged institutions go under, while protecting small depositors effectively?
Answer: yes, it would.
Martin Wolf, Financial Times November 15 2007

What is now needed is better and more effective deposit insurance and bankruptcy provisions. If these had existed, Northern Rock would now be in some form of public administration and that is exactly where it should be today.

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Moral Hazard

Martin Wolf


BoE blames laws for Northern Rock crisis
Daily Telegraph 20/09/2007

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Credit turmoil:
How Goldman steered clear
IHT 18/11 2007


Mr King told them it would have been "irresponsible" to have intervened earlier to save the Northern Rock bank.
But he admitted that he might have got the balance wrong when the run started.

BBC 20/9 2007

To be prepared for the unexpected has long been the unwritten motto of the International Monetary Fund,
says Michel Camdessus, its former head.
Sadly no one seems to have been prepared for the latest turmoil shaking the international financial system.
Financial Times September 19 2007

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"Värsta krisen på 20 år"
Det är nervöst i London. Skulder på närmare 800 miljarder kronor ska refinansieras i veckan.
Ledande brittiska banker varnar nu för den värsta krisen på 20 år på penningmarknaden. Den enorma refinansieringen är till och med större än den som skapade kreditkrisen i mitten av augusti,
skriver Times Online.
Dagens Industri 10/9 2007


If a week is a long time in politics, it is an eternity during a financial crisis.
The credit market crisis is entering its second month and growing worse.
Friday's US employment report was a reminder, if any was needed, that the risk of an American recession is non-trivial and rising.
Wolfgang Munchau, Financial Times September 10, 2007

There is a further risk, that an economic slowdown could reverberate back to the credit markets through an increase in defaults on segments of consumer debt and corporate loans. As defaults in these other areas rise, one set of investors would demand compensation from another set, which optimistically agreed to provide this assurance through credit default swaps.

Another channel of potential global contagion is the exchange rate. If US interest rates fall over the next few months, so might the dollar.

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Recession in 2007?

US Dollar

Cataclysm

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Questions and answers on the debt crisis
Martin Wolf, September 5 2007

We are living through the first crisis of our brave new world of securitised financial markets.
It cannot be blamed on "crony capitalism" in peripheral economies, but rather on irresponsibility in the core of the world economy.

Financial crises are always different in detail and the same in their essence. This one is no exception. It showed the normal pattern of rising prices of assets, expanding credit, speculation, excess, then falling prices, default and finally panic.

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More by Martin Wolf


The problem is not a liquidity problem but a credibility problem.
There is plenty of cash, and central banks around the world are adding to it daily.
The problem is that no one wants to buy debt that they do not completely understand.
John Mauldin's Weekly E-Letter, 7/9 2007

If you are a bond buyer for an institution, it is a career ending decision to buy an asset backed investment grade bond even rated AAA if it goes bad. You might be able to explain buying such assets last spring. Buying a problem bond today and it is now your fault, not to mention your job.

And commercial paper from another financial institution? How much subprime debt do they have hidden on off-balance sheet vehicles? Why loan anyone money for just a few extra basis points when you can't be 100% sure? Especially if you are looking at your own exposure and you see how easy it might be to hide a few problems here or there.

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Central banks face a liquidity trap
Central banks have always drawn a line between illiquidity and insolvency.
Raghuram Rajan, Financial Times, September 7 2007


Många banker har sålt delar av sin kreditrisk till andra institutioner.
De senaste veckorna har det visat sig att kreditriskerna inte i så hög utsträckning som förväntat
hamnat hos placerare som verkligen har kapital för att bära dem.

Vice riksbankschef Lars Nyberg, 2007-09-05

Många banker har under senare år på olika sätt sålt delar av sin kreditrisk till andra institutioner.
Investmentbanker har paketerat krediter i särskilda portföljer eller företag och sedan finansierat dessa genom att ge ut obligationer på räntemarknaden.
Marknaden för olika former av "Collateralised Debt Obligations, CDO", har vuxit snabbt och stora kreditvolymer har flyttat ut från bankerna till andra aktörer.

I den utsträckning som kreditrisken förts över till placerare med stort eget kapital, till exempel försäkringsbolag och pensionsstiftelser, har detta varit positivt. Det har ökat marknadens stabilitet, det vill säga dess motståndskraft mot oväntade störningar. Men problemet har varit att ingen varit riktigt säker på var kreditriskerna slutligen har hamnat. De nya instrumenten för att paketera och sedan tranchera och sälja kreditrisk på olika delmarknader har gjort det svårt att få en bild av i vilka balansräkningar riskerna verkligen befinner sig."

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Danger: Steep drop ahead
Even if the credit crunch passes without a major catastrophe,
the prices of stocks, bonds and real estate have a long way to fall.
By Jeremy Grantham, CNN/Fortune September 5 2007, 9:27 AM EDT


Existing home sales drops to lowest level since 9/11 attack.
CNN 5/9 2007


Daily Telegraph Special Report
The crisis in America's subprime mortgage market, which lends to people with patchy credit histories, has shaken financial markets across the globe.
A rise in defaults by borrowers in the US has forced central banks to inject cash, hit equity markets and raised fears that global economic growth will slow.
Click here


A perfect example of one of these fallacies recently exposed is the widespread report in August that the
Fed had "injected" billions of dollars worth of "money" into the "system" by "buying" "sub-prime mortgages."
In fact, all it did was offer to stave off the immediate illegality of many banks' operations
by lending money against the collateral of guaranteed mortgages,
but only temporarily under contracts that oblige the banks to buy them back within 1 to 30 days.
The typical duration is 3 days.

Prechter, August 30 2007

1. The Fed did not give out money; it offered a temporary, collateralized loan.
2. The Fed did not inject liquidity; it offered it.
3. The Fed did not lend against worthless sub-prime mortgages; it lent against valuable mortgages issued by Fannie Mae (the Federal National Mortgage Association), Ginnie Mae (the Government National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation).
The New York Fed is also accepting "investment quality" commercial paper, which means highly liquid, valuable IOUs, not junk

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Monetarism


Is A Subprime Recession Inevitable?
John Mauldin 28/8 2007

Recession in 2007?
Click here


Central banks should not rescue fools
Martin Wolf, Financial Times, August 29 2007


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


Macho men crying 'Mommy'
The financial world: It's populated with rich, hypocritical whiners. Wall Street, the hedge-fund community and their lap dogs in the news media continually brag about how much they love capitalism and free markets.
Yet when the creative-destruction component of capitalism rears its ugly head, they want the central planners to bail them
Bill Fleckenstein, CNBC 27/8 2007


The central banks have been forced to pump in billions of dollars to oil the wheels of lending.
But what happened in previous financial crises, and what are the lessons for today?
BBC 26/8 2007


Rating agencies badly misjudged default rates in subprime mortgages and are
now having to downgrade reams of securities linked to them.
The Economist 23/8 2007

With the credibility of ratings in tatters, investors have been left without a compass. Rather than trust in their own analysis of credit risk they are staying on the sidelines because they can't work out what securities are worth, not because they don't have the money to buy them.

Even if stability returns to the markets, the repricing of risk is likely to continue.
How far it goes will depend largely on the state of the mortgages that serve as collateral for many of the newfangled instruments that were, until recently, hawked with glee on Wall Street.
The outlook is not good.

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Nu är det värsta över
Gissa om jag får äta upp den här rubriken om jag får fel.
Gunnar örn, DI 2007-08-24

That question may be the key to the future actions of the Federal Reserve.
One estimate of "How Low Will Housing Go?" comes from Jan Hatzius, Chief Economist of Goldman Sachs:
The Big Picture 23/8 2007

Bill Gross, who runs the world's largest bond fund,
has called on President George W. Bush rather than the Federal Reserve
to bail out American homeowners struggling with sub-prime mortgages.
Daily Telegraph 23/8 2007

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Bill Gross

Moral Hazard

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Will the money market crisis of the past two weeks come to be known as the Countrywide Crunch?
Originating 17 per cent of all mortgages in the US, mostly not in the troubled subprime sector,
and relying on money markets for its funding, it made sense for the company's fortunes to preoccupy markets.
John Authers, Investment Editor, Financial Times August 23 2007


"There's a little bit of nervousness that another shoe might drop,"
Arthur Hogan, managing director at Jefferies, told CNBC.com.
23 Aug 2007

Stocks traded lower as nervousness about tightening in the credit markets offset earlier enthusiasm over a $2 billion investment in Countrywide Financial.

Bank of America's decision to throw a $2 billion lifeline to Countrywide Financial is far more than BofA telling Countrywide "here's some money, pay us back when you can." Countrywide is paying dearly for the injection.There are big strings attached to the deal which only serve to highlight the desperate position that Countrywide faces. In exchange for the $2 billion, Bank of America is receiving non-voting preferred stock that yields a whopping 7.25% and can be converted into Countrywide Countrywide Financial Corp common stock at $18 per share.

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Länge trodde de flesta - däribland jag själv - att effekterna skulle begränsas till subprime-marknaden.
Men vi hade fel. Smittspridningen har blivit värre.

Klas Eklund, DN Debatt 23/8 2007

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The Fed can indeed be accused of being a serial bubble-blower.
But this is not because it has been managed by incompetents.
It is because it has been managed by competent people responding to exceptional circumstances.

Martin Wolf, August 22 2007

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Axel Weber, president of Germany's Bundesbank, may rue his choice of words eight days ago.
The bail-out of IKB, a previously little-known listed bank that had been caught in the fallout from the US subprime mortgage crisis earlier in August, was an "isolated, institution-specific incident", he said.
By late last Friday night, it had happened again.
Financial Times 22/8 2007

Sachsen LB and IKB may have been small players but the impact of their downfall and the embarrassment faced by the Bundesbank has spread far beyond Germany. Financial markets and policymakers have been left worrying whether further bank crises are lurking and whether banking regulators are really in command of the facts. In turn, that has complicated the task of central bankers, including the Frankfurt-based European Central Bank, as they aim to restore order to short-term credit markets battered by the turmoil of recent weeks.

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Lender of Last Resort

ECB är varken systemets gemensamma centralbank eller ens en sann centralbank.
Den har därför varken förmågan att utjämna inflationsskillnader inom EMU eller att verka som "lender of last resort".
Otto Steiger, Ekonomisk Debatt nr 2/2007

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Bank of England has said it lent money directly to a financial instiution from its emergency lending facility,
as the flight to quality assets by investors gathered pace again today.

Daily Telegraph Tuesday 21/8 2007

The Bank, which has stood back from the liquidity crisis that has gripped financial markets, said it lent £314m to an unidentified institution through its facility on Monday. The facility, which allows banks to borrow unlimited amounts of money at about one percentage point above the base rate, was last tapped on July 17.

Ambrose Evans-Pritchard points the finger at the central banks that created the credit bubble: Capitalism not to blame

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The process that turned subprime mortgages into triple AAA rated securities is, by now, pretty well known.
Rich Bookstaber (his blog is here) describes the process nicely.
Brad Setser Aug 20, 2007

Here's the recipe for a CDO: you package a bunch of low-rated debt like subprime mortgages and then break the package into pieces, called tranches. Then, you pay to play. Some of the pieces are the first in line to get hit by any defaults, so they offer relatively high yields; others are last to get hit, with correspondingly lower yields. The alchemy begins when rating agencies such as Standard & Poor's and Fitch Ratings wave their magic wand over these top tranches and declare them to be a golden AAA rated. Top shelf. If you want to own AAA debt, CDOs have been about the only place to go; hardly any corporation can muster the credit worthiness to garner an AAA rating anymore.

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Nouriel Roubini and Marc Faber Are Not Impressed
naked capitalism blog 20/8 2007

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Panic eases, credit woes persist
The Federal Reserve's move to encourage bank lending last week has helped ease some of the panic in financial markets, but the underlying problems that led to the seizing up of credit markets are still there - and won't disappear overnight.
Grace Wong, CNNMoney.com staff writer August 20 2007

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Although the writing is on the wall, it seems that it is only Daniel that can read it.
What do sub-prime mortgages have to do with Private Equity Hedge Funds and Corporate Takeovers?
NOTHING; except that all credit has virtually disappeared overnight.

Aubie Baltin 17/8 2007

This Market, including stocks, bonds, real estate and commodities have all been built on a massive amount of credit and "out of thin air" monetary creation.
But unlike all previous massive printing press monetary inflations, this one has been based on a combination of huge amounts of easy credit combined with completely unrealistic low interest rates world wide: Beginning with ZERO interest rates in Japan to negative 4% ( 1% interest - 5% inflation) in the USA.

Well my friends, unless you are deaf, dumb and blind, this game is over. "IT" has begun almost exactly as predicted with the trigger being the realization that there were no bids for the attempted sale of CMOs by the Bear Sterns Hedge Funds. The problem was NOT as stated; that they were junk bonds based on sub-prime mortgages, after all they were rated AAA. The real problem is that the world has reached its limit on how much debt can be absorbed.

Suddenly, the whole world realized that the Emperor Had No Clothes and credit virtually dried up everywhere.

Full text of this and other excellent articles by Aubie Baltin

Monetarism


Anybody who has borrowed to buy securities – a category that includes a lot of banks – has a problem.
Lenders want their money back, but selling assets is difficult, so there is a squeeze on cash.
That, in a nutshell, is what has been happening in the past couple of weeks and what may continue.
Financial Times editorial 18/8 2007

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Prudent Bear's Doug Noland has for years been pointing out that one of the drivers of the credit bubble has been the ever-broadening definition of money.
As the global economy expanded without a hic-up, more and more instruments came to be used as a store of value or medium of exchange or even a standard against which to value other things—in other words, as money. Thus mortgage-backed bonds and even more exotic things came to be seen as nearly risk-free and infinitely liquid. In Noland's terms, credit gained "moneyness," which sent the effective global money supply through the roof. This in turn allowed the U.S. and its trading partners to keep adding jobs and appearing to grow, despite debt levels that were rising into the stratosphere. For a while there, borrowing actually made the world richer, because both the cash received and the debt created functioned as money.
John Rubino, Dollarcollapse.com 19/8 2007

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Nobody quite knows exactly where the subprime losses truly lie
Nobody knows the real value of these instruments either

Gillian Tett, Financial Times August 23 2007 17:07

Common sense would suggest the best way to deal with these two problems would be to take two steps: namely inject more transparency into the system, by encouraging institutions to reveal their exposures – and then encourage financial institutions to create a proper market to trade the assets, and thus determine a price. That, after all, was how America's savings and loans mess was sorted out two decades ago.

Right now, it is probably relatively easy to guess at what a simple subprime loan might be worth.
However, working out the values for associated derivatives, or derivatives of derivatives, of these loans, is far harder. And when other assets have been chucked into the mix, to create the type of diversified asset pools that are now so widespread, the valuation task becomes truly nightmarish.
No wonder investment banks say it can take entire weekends for their computers to value instruments such as collateralised debt obligations.

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*

During times of market turmoil it helps to simplify and get basic
– explain things to a public and even yourself in terms of what can be easily understood.

Goodness knows it's not a piece of cake for anyone over 40 these days to understand the maze of financial structures that now appear to be unwinding.
Bill Gross, September 2007
RE: Even more excellent than usual

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Raised eyebrows
Last week, RBS, Royal Bank of Scotland, the British banking group, raised eyebrows
when it was widely reported that one of its highly respected credit analysts had predicted
that subprime losses could eventually rise to between $250bn and $500bn
– or twice previous estimates.
Gillian Tett, Financial Times, November 15 2007

For behind the scenes – and occasionally in public view – the credit analyst community remains distinctly divided about just how big the final hit might be, let alone what write-offs to expect from banks. Thus while some observers project a $100bn hit, others talk about $500bn.
Perhaps there are even bigger numbers in ultra-ultra private reports I have yet to see.

This feels wearily familiar. A decade ago, I covered the Japanese bank crisis and became embroiled in a bad-loan guessing game that continued for many years. The tally of Japanese bad loans was estimated to be about $100m at the start of the 1990s, but by 1999 had risen to 1,000 times that size. I am told that a similar game occurred during the Latin American debt crisis in the 1980s and the Savings and Loans crisis – or indeed in almost every other recent banking shock.

Worse still, the losses are emerging with unusual speed. That is partly because instruments such as collateralised debt obligations tend to have a shelf life of three years or so, which means that losses crystallise faster than on, say, a Japanese corporate loan.

But this mark-to-market process is not being applied in a uniform way: though parts of the financial world are using it, others are not. Thus, senior bankers currently find themselves in the worst of all worlds: investors have just enough knowledge about the losses to feel scared but not enough information to think the worst is past. In this situation, partial transparency can actually be worse than no transparency at all.

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Financial companies' losses due to the US sub-prime crisis could be as much as $400bn
The estimate by Goldman's chief economist Jan Hatzius is higher than that of the Federal Reserve but in line with some recent independent forecasts.
Mr Hatzius predicts leveraged investors may have to reduce their lending by $2 trillion as a result.
"The macroeconomic consequences could be quite dramatic," Mr Hatzius said.
BBC 16/11 2007


If the Financial Times' Gillian Tett were hit by a bus, I'd be in a lot of trouble.
With all due respect to her colleagues, she is the best source of financial news.
naked capitalism blog, August 13, 2007

Today, in "Structured investment vehicles' role in crisis,"
Tett probes what went wrong in the credit markets last week.
As others have pointed out, the problem was that the commercial paper market, a short-term (typically under 90 day) market for corporate IOUs dried up.
As these IOUs mature, they are often rolled (i.e., paid out of the proceeds of new IOUs) rather than repaid.
Since commercial paper issuers are high quality creditors, this usually isn't a problem.

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Comment by Rolf Englund:
I checked my own website for articles by her and this is what I found:

Why the yen borrowing game could end in players taking a tumble
Peter Garnham and Gillian Tett, Financial Times 15/2 2007

"I don't think there has ever been a time in history when such a large proportion of the riskiest credit assets have been owned by such financially weak institutions . . . with very limited capacity to withstand adverse credit events and market downturns."
Gillian Tett, FT 18/7 2007

"What is happening right now suggests that the moves by the Fed and ECB just haven't worked as we hoped,"
"The interbank lending business has broken down almost completely
Gillian Tett, Financial Times September 5 2007

It appears that the prospect of receiving new liquidity demands has prompted banks to rush to raise funds – and, above all, hoard any liquidity they hold. The high demand from banks to secure liquidity for the next three months, coupled with their desire not to lend out what liquidity they have, has made it virtually impossible to execute trades – even at the official prices quoted for such borrowing.

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More by Tett

Yes, she is very good.


Next week, Bo Lundgren, the head of Sweden’s debt office who played a central role in resolving his country’s banking mess in the early 1990s, will embark on a striking mission.
Washington’s Congressional Oversight Panel has summoned Mr Lundgren and others to explain how they fixed Sweden’s banks – presumably to glean tips on what Washington should do next.
Gillian Tett, Financial Times March 12 2009


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Floyd Norris posted a fabulous take down of the report from Goldman Sachs entitled "The Quant Liquidity Crunch."
The annotations are by a hedge fund manager who sent me a copy of the report to Norris.
The Goldman quotes from the report are in italics, while the fund manager's commentary is on regular type.
The Big Picture, August 18, 2007


The subprime-mortgage-market meltdown is a classic example of the way small fry get devoured,
but the whales of Wall Street get rescued.

Here's the deal:
Allan Sloan, Fortune senior editor-at-large, August 17 2007

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The doubts burst into the open on August 9th when central banks were forced to inject
liquidity into the overnight money markets because banks were charging punitive rates to lend to each other.

The Economist print 16/8 2007

At first, the problems appeared more serious among European banks. The pain in America was concentrated in the largest hedge funds, including those run by Wall Street's biggest name, Goldman Sachs. Increasingly, however, analysts worry about the exposure of American, Canadian and Asian banks.

Collateralised-debt obligations (CDOs), made up of clumps of those securities and laced with leverage, have become almost impossible to trade. So none of the players really knows how much he has lost. While this uncertainty lasts, investors are taking it out on the banks that peddled the securities by dumping their shares; and the banks are taking it out on those they sold them to by demanding more collateral on their loans. The banks have even grown cagey about lending to each other.

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5 ways to know if the bull is over
Before it keels over, a bull market typically leaves a few road signs.
Here's what to keep an eye on - from Money Magazine.
CNN 16/8 2007


Moodyå½s varnar nu för att oron på kreditmarknaden kan få en större hedgefond att gå omkull,
en utveckling som skulle skapa ytterligare oroligheter på världens finansmarknader.
Det skriver Dow Jones Newswires. Chris Mahoney, vice ordförande för Moodys, tror att risken för en kollaps av en större hedgefond kommer att finnas kvar under de kommande tre till sex månaderna.
2007-08-16: Nyhetsbyrån Six/DI


Fear makes a welcome return
This is not new. It is as old as financial capitalism itself.
The late Hyman Minsky, who taught at the University of California, Berkeley, laid down the canonical model.
Martin Wolf, Financial Times 15/8 2007

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Central bank intervention last Friday to inject liquidity into the global financial system did not mark the beginning of the end of financial market turmoil.
It was merely the end of the beginning.

Liquidity injections will not deliver lengthy respite. The next phase of market volatility will be more vicious than before, led by downgraded ratings on credit instruments and followed by further dislocation in the credit markets that will spill over to equity markets.
Avinash Persaud, Financial Times 16/8 2007


No. 1 mortgage lender Countrywidetumbles as traders worry about financing
rumors that the mortgage lender was not able to raise money in the commercial paper market.
CNN 15/8 2007


A Temporary Power Outage
Wall Street remains caught in a tizzy over a power outage in the credit markets.
But Main Street is in fine economic shape, according to the latest reports out of Washington.
Lawrence Kudlow 15/8 2007

Subprime bailout? $120 billion
More than 1 million borrowers may be at risk of defaulting on their mortgages.
CNN 13/4 2007


Varför betalade ECB 1.800 miljarder kronor för att rädda euron?
Rolf Englund blog 15/8 2007


The euro slipped to a six-week low against the U.S. dollar on Wednesday and
high-yielding currencies stayed weak as investors continued to unwind risky positions
on concerns that fallout from the U.S. subprime problems is spreading to other countries.
CNBC/Reuters August 14, 2007


The banks are currently holding (roughly) $300 billion in collateralized debt obligations (CDOs) and
another $225 billion in collateralized loan obligations (CLOs)

Mike Whitney, Atlantic Free Press, 13 August 2007

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Is the worst over?
10-point guide to understanding two harrowing weeks - and what's likely to happen next.
Fortune's Peter Gumbel, CNN August 14 2007

Why did America's subprime mortgage woes have such a big impact on world financial markets?

Because these mortgages were lumped together in packages and sold as asset-backed securities all over the world, particularly in Europe. Often the initial securities were themselves put into new packages, leveraged up and resold as so-called collateralized debt obligations (CDOs). They are a sort of derivative play on the underlying mortgages, just as futures and options are a play on stocks and commodities. Big banks have whole securitization departments who create these instruments. They do so to profit from the difference between the long-term returns these investment vehicles produce and their more plain vanilla short-term borrowing, and to earn fees.

Who bought them?

Everyone, and that's the problem. The CDO market has exploded in recent years: More than $100 billion worth of structured cash CDOs were issued in the fourth quarter of last year alone, according to CreditFlux Data+, a London firm that tracks them (and that doesn't include the even more arcane "synthetic" CDOs). Banks, institutional investors and hedge funds have been the main customers, but some retail investors have also bought into them through the asset-backed securities, or ABS, funds that some of the biggest European banks sell to the public. Everyone who bought these securities was given the same pitch, namely that they were a relatively safe bet, since much of the paper had AAA ratings, but offered higher returns than regular corporate bonds.

Read more here

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Japan's Finance Minister Koji Omi said the worst of the U.S. housing-loan crisis may be over
thanks to steps taken by the world's largest central banks.
Aug. 15 (Bloomberg)

Central banks injected $290 billion into money markets last week
as concern that U.S. subprime mortgage losses will curtail lending drove up short-term borrowing costs.


Q&A: World stock market falls
BBC 10/8

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Five reasons why this is a crash, not a correction
Wolfgang Münchau blog 05.03.2007

This is a market crash, make no mistake.
There are those who talk about a technical correction, an intermezzo.
Don't believe a word.

......

So here are five reasons why this is a crash, not a correction. This does not mean that the price may not go up at some point this week. I am making no prediction about the timing, except to say that last week was the begin of a long bear market.

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Long Term Capital Management
"The world does not understand how close we came to a total meltdown of the markets."
vice-chairman of one of the largest insurance firms in the world
cit. by John Mauldin 10/8 2007

It turns out that he was vice-chairman of one of the largest insurance firms in the world, and was a real financial insider, seemingly knowing every big name on Wall Street personally. After he had a few drinks (he was clearly somewhat stressed), he began to talk about the Long Term Capital Management fund and the problems in the markets. He had had a ring side seat at the Fed-sponsored bailout proceedings."We came to the edge of the abyss in the financial markets this week,' he told me, "and then we looked over. The world does not understand how close we came to a total meltdown of the markets."

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Wednesday night's bailout of Long-Term Capital Management, a highflying hedge fund, has the smell of $3.5 billion worth of moral hazard.
Here we have the Federal Reserve Bank of New York parading all the big securities houses to pony up so that the fund's investors don't take a bath in 1998 after having earned 17.1% last year, 40.8% in 1996 and 42.8% in 1995.
Wall Street Journal 1998-09-25

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It is very obvious to us that the most extreme credit boom in history is already in the process of unwinding, as investors are reassessing risk.
The only question is whether it will unwind orderly or not. We tend towards the latter interpretation
Eurointelligence, 1/8 2007

We tend towards the latter interpretation because of some of the extreme exposures that have been built-up; the overuse, and abuse, of some modern credit market instruments, such as CDOs, which are not fully understood by many investors; systemic flaws in the credit ratings for senior tranches of CDO debt; excessive optimism by investors about correlation risks; and deep flaws in some modern risk management methods, such as VaR, as they provide market participants with a false sense of security.

This is going to be an interesting summer.

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Financial Times:
Stefan-Michael Stalmann, an investment banking analyst at Dresdner Kleinwort, coined the term "the great unwind" in a in a research note.
In February of 2007 he wrote a report examining the relationships between the investment banking industry and the hedge fund community in which he warned of the risk posed by leveraged hedge funds should positions unwind.

"The great unwind" has now become part of everyday market terminology to refer to the implosion of a number of leveraged funds triggered by exposure to the subprime mortgage market in the US. The report, written five months before the collapse of two Bear Stearns hedge funds, contains a frighteningly accurate picture of how things may, and some would argue, have turned out.

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The Economist:The interbank lending market is an essential corner of the financial system that keeps cash flowing where it is most needed—from banks that have a glut of deposits, to banks that are temporarily short.
The price that banks charge is closely aligned with (if not always identical to) the interest rate set by the central bank, the ultimate font of cash.

Towards the end of last week the cost of interbank lending suddenly shot up. Rates for overnight borrowing spiked to nearly 6% in America, well above the Federal Reserve's target rate of 5.25%.
In the euro area rates rose to 4.7%, compared with the central bank's benchmark rate of 4%.

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The European Central Bank on Monday injected another 47.67 billion euros ($65 billion) into the banking system
13 Aug 2007 08:06 AM ET


Speculation is mounting that the European Central Bank will seek to arrange a currency swap
with the US Federal Reserve that would allow it to lend dollars to
European banks struggling to meet short-term dollar funding needs.
Financial Times, August 13, 2007


From June 2006
ECB warns of hedge funds risk to stability
in the same category as a possible bird flu pandemic
Financial Times 2/6 2006


Fed joined ECB adding temporary cash to the banking system for a second day,
aiming to stem a collapse in credit markets.
Fed is providing reserves to "facilitate the orderly functioning" of markets,
in a statement unprecedented since the aftermath of the Sept. 11, 2001

Aug. 10 (Bloomberg)

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ECB in effect assured European banks that they could borrow from it whatever they needed to address their short-term cash needs.
The Economist August 9, 2007

Immediately, the pressure on overnight interest rates eased, but not before stockmarkets once again started to dive, gripped by a resurgence of fears about the fallout from America's subprime-mortgage crisis.

The catalysts for the latest sell-off were just the sort of "Frankenstein-finance" vehicles that have come to haunt the markets lately. They are complex, held off the banks' balance sheets and pop up in surprising parts of the world—the most troublesome to date has been that of IKB Deutsche Industriebank, a small German lender which has required a messy bail-out by German banks.

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The European Central Bank made a second move to boost liquidity in the financial market Friday, putting 61.05 billion ($83.6 billion) into the euro money markets,
having already injected 94.8 billion euros Thursday.
CNBC.com 10 Aug 2007 06:11 AM ET

Räntearbitrage förklarar kanske paniken
Rolf Englund blog, 10 augusti 2007

Skall 8/10 bli lika känt som 9/11 ?
Rolf Englund blog, 10 augusti 2007


The Hedge Fund Subprime Credit Crunch Explained
Nadeem Walayat 1/8 2007


"When the music stops, in terms of liquidity, things will get complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing."
Citigroup chief executive Chuck Prince in July 9 interview in Tokyo with the Financial Times
cit. by John Makin, AEI, 26/7 2007, who writes that:
"the range of possible outcomes, both for the U.S. and global economies and for global financial markets, is wider than it has been for some time"

Makin writes:

Looking down at the world economy from 30,000 feet, the music is still playing, and investors--at least those outside the U.S. subprime mortgage sector and the housing industry--still feel a compelling need to get up and dance. Those who do not will underperform their competitors while the music is playing. Beyond that, at the center of the party, the U.S. stock market has, since 1982, always rewarded those who buy the dips associated with periodic crises like the 1987 stock-market crash, the 1990 Iraqi invasion of Kuwait, the 2000 bursting of the NASDAQ bubble, the 9/11 attacks on New York and Washington, D.C., and the 2005 Katrina shock.

To date, the subprime crisis has largely been confined to buyers who cannot even pay the teaser rates or who never even made the first payment on their undocumented mortgages. This has driven default rates on subprime mortgages to 8 or 9 percent, but that figure will rise rapidly as the subprime mortgages reset from the teaser rates to far higher market levels.

The key to the future direction of the world economy remains the U.S. economy and stock market. Most analysts are sanguine at present. Growth of demand for world goods is still driven largely by the U.S. consumer who, in turn, is driven by the path of wealth and income of U.S. households. The market capitalization of the U.S. stock market, at nearly $14 trillion, dwarfs that of China, which, even including Hong Kong, is about $2 trillion.

Continued support for U.S. consumption growth, the key to avoiding a U.S. recession in view of the persistent drag from housing, is questionable.

One thing is clear following the rapid flow of events over the past month tied to stresses in the U.S. housing and mortgage sector: the range of possible outcomes, both for the U.S. and global economies and for global financial markets, is wider than it has been for some time.

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The recent sell-off in financial markets is good news.
It may, at last, have brought people to their senses.
The Economist 2/8 2007


Bear Stearns' sobering lessons
It raises questions about the exposure of market participants to risk, and the wisdom of aspects of the Basel II accords on bank capitalisation.
Sean Egan, Financial Times August 2 2007

The writer is a co-founder of the Alliance for Mortgage Securitization Reform and a managing director of the Egan-Jones Group

Investors in two hedge funds managed by US investment bank Bear Stearns were wiped out in June, which was surprising given that the securities in the funds were rated either AAA – the same level of safety as US Treasury bonds – or one notch lower at AA.
Within a couple of months, $1.5bn of capital was lost in only two funds.

One could argue that rating firms today are capable of assessing credit quality and halting the flow of garbage by withholding a rating. Unfortunately, in the ratings field, the tough rater is likely to be the underemployed rater. One of the major rating firms, Moody's, announced last week that it lost market share when it became less liberal than its competitors.

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Next victims of the credit squeeze
Trouble in the credit markets threatens to push companies
already in poor health to the brink of bankruptcy.
Grace Wong, CNNMoney.com staff writer, August 3 2007


$43bn of deals pulled in a fortnight
Ambrose Evans-Pritchard:
Has Bear Stearns finally popped the great world bubble?
Tightening debt markets have forced some of the world's largest lending banks to pull $43bn worth of deals in the past fortnight
Daily Telegraph 3/8 2007


Some 46 financing deals representing $60 billion have been pulled from the market since June 22,
according to an analysis by Baring Asset Management.
By comparison, no deals were pulled in all of last year, according to the investment management firm.
CNN 3/8 2007

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So the question is:
Are we in the midst of a credit crunch?
Jim Jubak, CNBC 3/8 2007

In the market for mortgage-backed bonds, leveraged-buyout loans and high-yield, or junk, bonds, yes, the crunch is upon us. The absolute paucity of buyers for those classes of assets -- what I described as a buyers strike in my July 31 column, "Stocks feel the pain of a buyers strike" -- has led lenders to cut way back on putting their capital at risk in leveraged loans or junk bonds. In these markets, not only have prices collapsed, but deals are being scrapped because of a lack of new credit.

But in the general economy where consumers live and spend, the credit crunch hasn't yet materialized. Banks are still lending, credit card issuers are still issuing, and mortgage lenders are still refinancing. Until a credit crunch hits the consumer, the damage will remain confined to the most leveraged sectors of the financial markets, and there the damage could be severe.

The junk-bond market - A massive re-pricing of risk was behind the huge swing in returns in the sector. What had been one of the narrowest risk premiums on record -- with the yield on junk bonds just 2.4 percentage points above the yield on safe Treasury bonds -- climbed to something like a more normal 4.1 percentage points. Fear usually doesn't stop at a "normal" spread, of course, and the market could see a 6-percentage-point risk premium if the pendulum keeps swinging. The average for the last decade is 5.4 percentage points, and the risk premium has been as high as 10.6 percentage points.

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Bolåneföretaget American Home meddelar att det lägger ner det mesta av sin verksamhet redan i dag.
Företaget lånade förra året ut 59 miljarder dollar, närmare 400 miljarder kronor,
det mesta till personer med något bättre kreditvärdighet än de låneinstitut som drabbats tidigare.

DN/TT 3/8 2007


Some hedge funds that have suffered losses on investments are closing the gate on clients who want to pull money out,
a move that could further undermine confidence in already shaky financial markets.
Los Angeles Times 2/8 2007


KKR Financial, Kohlberg Kravis Roberts listed arm, said it had begun talks with creditors
after deferring payment of billions of dollars of debt for a second time.
It had borrowed money to invest in home loans
BBC 20/2 2008

KKR Financial had borrowed to invest in home loans - particularly the Alt-A category of loans that are riskier than mainstream borrowers, but safer than sub-prime loans, the Financial Times reported.

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Det amerikanska riskkapitalbolaget, KKR, (Kohlberg Kravis Roberts & Company)
behöver låna 32 miljarder dollar för att finansiera en affär.
Banken Citibank ska ge krediten, men nu ryktas det om att den inte kommer att låna ut pengarna,
trots att banken då får böta 1 miljard dollar.
DN Ekonomi 1/8 2007

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German bail-out
Jochen Sanio, head of Germany's financial regulator, is said to have warned of the worst banking crisis since 1931
Financial Times 2/8 2007

German government rescue of a domestic lender that suffered heavy losses on subprime investments. The rescue of IKB, a specialist lender based in Düsseldorf, began on Sunday when Peer Steinbrück, German finance minister, called top banking executives to discuss a bail-out. According to people who took part in the conference call,

Jochen Sanio, head of Germany's financial regulator, is said to have warned of the worst banking crisis since 1931

.

KB surprised investors this week with a profits warning after a multi-billion euro fund it managed was hit by problems stemming from its US subprime exposure. The news sent its shares plunging and prompted KfW, the state-owned development bank, to step in with a pledge to guarantee obligations of more than €8bn ($10.9bn) – more than five times IKB's stock-market value.

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1933


The end of LBOs
Lex, Financial Times July 27 2007 13:44

Private Equity Intelligence provides an estimate for "dry powder" – committed equity as yet unspent – for buy-out funds. To this can be added the likely capital raised by private equity outfits on the road now to produce a total of $548bn. It is reasonable to assume that this money is spent on takeovers that are three-quarters debt-financed and occur at a one-third premium to the stock market price.

On this basis the total LBO takeover premium due to be paid to stock market investors is $506bn.


The end of the credit party
The once-endless stream of cheap credit is starting to dry up; buyouts, corporate deals take a hit.
CNN 27/7 2007

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July 27 (Bloomberg) -- Deutsche Bank AG, JPMorgan Chase & Co. and six more banks delayed selling 1.75 billion pounds ($3.6 billion) of Alliance Boots Plc loans until next week, bankers involved in the deal said.
Read more here

The Wall Street Journal is reporting that the sale of $12 billion in debt related to the Cerberus Capital purchase of Chrysler Group from DaimlerChrysler (NYSE: DCX) has been postponed. Apparently the debt underwriters -- including J.P. Morgan Chase (NYSE: JPM), Citigroup (NYSE: C), Goldman Sachs Group (NYSE: GS), Bear Stearns (NYSE: BSC) and Morgan Stanley (NYSE: MS) -- have been unable to find buyers for the debt, which is part of a $20 billion loan package planned for Chrysler. The money will be used in Chrysler's production and finance operations.
Read more here


Wall Street's latest parlour game is to bet on who will be next to get caught in the storm. A fair few have placed their chips on the so-called monoline insurers
, an obscure but important bunch who guarantee the timely repayment of bond principal and interest when the issuer defaults.

The two largest monolines, MBIA and Ambac, both started out in the 1970s as insurers of municipal bonds. In recent years, much of their growth has come in structured products, such as asset-backed bonds and the now infamous collateralised debt obligations (CDOs). The total outstanding amount of paper insured by monolines reached $3.3 trillion last year.

The Economist print 26/7 2007


A market correction is coming, this time for real
Today, hedge funds, private equity and those involved in credit derivatives play important, and as yet largely untested, roles. The primary worry of many who make or regulate the market is not inflation or growth or interest rates, but instead the coming adjustment and the possible destabilising effect these new players could have on the functioning of international markets as liquidity recedes.
William Rhodes, FT March 29 2007


A U.S. presidential panel said the current system of hedge-fund regulation is ``working well'' and market discipline remains the best way to protect investors and guard against risks to the financial system.
(Bloomberg) 22/2 2007

The panel, led by Treasury Secretary Henry Paulson and including his counterparts at the U.S. Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission, said in guidelines released today that the responsibility of maintaining discipline falls on hedge-fund managers, investors, creditors, trading partners and market regulators.
``Those who would believe that the role of regulators is to guard against any losses or somehow prevent losses or to prevent a hedge fund from having problems, they have a different philosophy about regulation than I do,'' Paulson said in an interview.

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En hedgefond kan innebära att man placerar med större risk än vanliga fonder,
men det finns också de som har en minimerad risk.

Därför är det viktigt att undersöka vilken storts hedgefond det är man tänker placera i
Ragnhild Wiborg,intervjuad i DN Ekonomi 19/2 2007

Under de senaste åren har det funnits mycket pengar i omlopp på aktiemarknaden, delvis på grund av de låga räntorna. Ragnhild Wiborg är skeptiskt till Riksbankens besked häromdagen, att styrräntan (enligt prognosen) inte kommer att höjas till mer än 3,75 procent fram till 2010.Det är en farlig taktik för Riksbanken att ändra inriktning. Det är farligt att vara för släpphänt, även om de höjde räntan nu senast. Det finns en risk att man blåser upp ekonomin och får en fastighetsbubbla.
På 1990-talet fick vi betala dyrt för det i efterskott, säger Ragnhild Wiborg.
Hon ser även tendenser till att det kan bildas börsbubblor.


Hedge Funds: Origins and Evolution
John H. Makin, Monday, May 15, 2006

Everyone wants to invest in a hedge fund once they are convinced that the term is synonymous with 25 percent-plus annual returns. Regulators sometimes act as if they believe that any investment vehicle earning extraordinarily high returns must either be extraordinarily risky or crooked.

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"Hedge funds now number 9,500 and are managing $1.3 trillion," Sonders says. "Their time horizons are often measured in minutes, not months, quarters or years like traditional institutions."
Charles Schwab's chief investment strategist Liz Ann Sonders,
San Francisco Business Time 15/6 2006


ECB warns of hedge funds risk to stability
in the same category as a possible bird flu pandemic
Financial Times 2/6 2006


Lastly, the global financial system, while fundamentally a source of strength, is also a source of weakness. The explosion of unregulated hedge funds and the widespread use of derivatives...
Perhaps that complacency is the greatest risk of all.

Kenneth Rogoff, Financial Times, January 2 2006
The writer is professor of economics at Harvard University and former chief economist at the International Monetary Fund


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