Danska klippningar och bail-outs

bild från FT 24 maj

Tracy Alloway, "A senior haircut precedent in... Denmark", FT Alphaville-bloggen 7 februari
Tracy Alloway, "Armageddon bank", FT Alphaville-bloggen 17 maj
Tracy Alloway, "How do you say bail-in in Swedish?", FT Alphaville-bloggen 19 maj
Tracy Alloway, "Concerns grow over Denmark's bail-in rules", FT 24 maj
FT ledare, "Danish lessons",

"Yields on Danish bank bonds have risen since Denmark introduced its burden-sharing bank resolution mechanism. Of course with two of Denmark’s banks failing, this could simply reflect nervousness about the country’s banking sector as a whole. But some Danish bankers think they are paying a price for their government’s speed of reform."
R.A., "Small enough to fail", Economist Free Exchange 28 juni

Avhopp från skolan - typiskt flumskolan?

(källa: Eurostat)

Ett av målen i EU:s EU20-strategi är att få ner andelen av ungdomar som aldrig går ut motsvarande gymnasiet i Sverige till 10 procent. Detta mäts med andelen av 18-24-åringar som inte har någon sådan examen och inte heller är i utbildning. År 2010 låg snittet i EU-länderna på 14,1 procent och i Sverige var siffran 9,7 procent.

Såssarnas flumskola måste ha varit väldigt inflytelserik i övriga EU... (T ex Storbritannien: 14,9 procent.)

Inflation, penningpolitik och löneandelen

"The extreme end of these fears [anti-inflationära, EB anm] can be found in Kansas City Federal Reserve President Thomas Hoenig’s recent Washington Post interview:

WP: One place where there’s not any inflation is in wages. Can you really have an inflation problem without wages rising?
TH: Not initially. But people are losing real purchasing power, and that changes how they’re going to negotiate. People want this lost purchasing power back in time. In negotiating, they’ll say, “Prices have been rising, we deserve more.” We’re already seeing it in some of the surveys that we run. Businesses are telling us, “Yes, we had a pay freeze a year and a half ago, but we’re doing some catch up now. We want to make sure we keep our good people.”

Any significant wage gains in the current environment appear to be sector specific – it certainly does not appear in the aggregate data. And note Hoenig’s distress that some firms are looking to play catch-up. I think you could interpret this as Hoenig desiring to see a downward level shift in trend wages. In other words, Hoenig expects the recession should result in a permanently lower level of standard of living than would have been the case otherwise. /.../
If unit labor cost growth remains constrained, the Fed will tend to delay tightening, as the overriding economic reality is that simply described by New York Federal Reserve President William Dudley:

...the recovery remains moderate and we still have a considerable way to go to meet the Fed's dual mandate of full employment and price stability.

That said, it is worth considering that even the Fed doves probably have something of an itchy trigger finger when it comes to tightening. They are willing to stay the course given the lack of pass-through to wages, but one could imagine that changing quickly with the slightest whiff of rising unit labor costs. Which brings to mind an interesting topic. Way back in 2009, spencer at Angry Bear noted that labor payments as a share of output have been falling since the early 1980’s. Can this situation ever be reversed if the Fed steps on the brakes every time workers get a little too confident for their own good?"

Tim Duy, "The War on Inflation", 22 maj

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Uppdatering 24 april 2012
Tim Duy skriver mer om kopplingen mellan penningpolitik, inflation och löneandelen.
Tim Duy, "Distributional Impacts of Monetary Policy", 22 april

också:
Dean Baker, "How Is Inflation a Highly Regressive Tax on Wages?", 20 april
Och Krugman:

"The latest fad — illustrated by this piece in today’s WSJ — is that expansionary monetary policy is a giveaway to banks and plutocrats generally. Indeed, that WSJ screed actually claims that the whole 1 versus 99 thing should really be about reining in or maybe abolishing the Fed. And unfortunately, some good people, like Daron Agemoglu and Simon Johnson, have bought into at least some version of this story."

Paul Krugman, "Plutocrats and Printing Presses", 20 april

Centralbankers klasskaraktär

Under 1990-talet svepte en våg av "centralbankism" över världen: en tankegång i anti-interventionistisk anda att centralbanker skulle styras av byråkrater, inte av politiker*.

Vad innebär detta då för centralbankernas klasskaraktär? Citigroup-ekonomen Willem Buiter kritiserade nyligen ensidigheten i centralbanker som USA:s Federal Reserve-system:

"This problem is most apparent in the regional Reserve Banks of the Federal Reserve System of the US. Like all 12 regional Reserve Banks, the Fed of New York has a nine-member, three-class non-executive board of directors. Three Class A members are elected by member banks to represent member banks. Currently the class A members are the Chief Executive Officer and Chairman of Banco Popular de Puerto Rico, the President, Chief Executive Officer and Chairman of the Board of the Adirondack Trust Company, and the Chairman of the Board and Chief Executive Officer of JPMorgan Chase. Three Class B members are elected by member banks ‘to represent the public’ (as seen by the member banks). Two class B member positions are vacant; one of these vacant positions was until recently held by the CEO of General Electric Company, the other by the former Chairman and CEO of Pfizer. The third Class B Director position is held by the President and CEO of Loews Corporation. Finally, three Class C members are appointed by the Board of Governors of the Federal Reserve System to represent the public (as seen by the Board of Governors). Currently, these positions are held by the President of Columbia University, the President and CEO of the Partnership for New York City, and the President of the Metropolitan Museum of Art. It is clear that this is not a governance structure the Bank of England would want to emulate. Class A and Class B Directors run afoul of the necessity to avoid both the appearance and the substance of potential conflict of interest. Class C Directors are examples of ‘the Great and the Good’ who are at high risk of not contributing materially to good governance because of lack of relevant expertise."

Tracy Alloway, "Buiter bashes BoE accountability, and other central banks", FT Alphaville-bloggen 2 juni

*Se Sylvester C.W. Eijffinger och Jakob de Haan, "The Political Economy of Central Bank Independence" (pdf), Princeton University Dept of Economics Special Papers in International Economics No 19, maj 1996. Och Alex Cukierman, "Central bank independence and monetary policymaking institutions — Past, present and fhttp://www.blogger.com/img/blank.gifuture", European Journal of Political Economy, 2008. Cukierman, "The central bank independence revolution", voxeu, 2007

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Uppdatering 23 oktober 2011

"Economist Joe Stiglitz has long advocated that labor should be represented on the Fed’s interest rate setting Open Market Committee, and this raises a point given short shrift by the GAO: the most important type of diversity missing from the Fed isn’t ethnic, racial, or gender, it’s class."

Yves Smith, "Quelle Surprise! GAO Finds the Fed is a Club of Backscratching, Well Connected, White Bankers", Naked Capitalism 20 oktober

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Uppdatering 7 februari 2012

"The ECB’s behavior should not be surprising: as we have seen elsewhere, institutions that are not democratically accountable tend to be captured by special interests. That was true before 2008; unfortunately for Europe – and for the global economy – the problem has not been adequately addressed since then."

Joseph Stiglitz, "Capturing the ECB", Project Syndicate 6 februari

Uppdatering 10 maj
Chris Giles är förvånansvärt kritisk mot avpolitiseringen av Bank of England i FT idag - jag trodde inte att någon annan än vänsterpartister kritiserade centralbankers "oberoende" idag.

"The traditional argument for central bank independence rests on preventing politicians from cutting interest rates before an election and stoking an unsustainable credit expansion. We don’t know what then-prime minister Gordon Brown would have done with the monetary policy lever, but it is difficult to make the case that elected politicians would have adopted a more irresponsible policy stance than the unelected officials at the BoE.

By contrast, it is simple to build a compelling counterfactual case that policy would have been better without BoE independence. Knowing the BoE dithered as the financial crisis started in 2007, Britain would have been quicker to spot the dangers, providing greater protection against the global crisis of confidence that occurred after the collapse of Lehman Brothers.
There is also no doubt the media, parliament and financial markets would have scrutinised ministers more carefully than central bankers in the period before the crisis.
With the benefit of hindsight, the first 15 years of BoE independence should be seen as a well-intentioned failure /.../"

Giles, "Bank independence was a well-intentioned failure", FT 10 maj

Uppdatering 28 juni 2012
Nick Rowe, "Does monetary policy have (bad) distributional consequences?", 5 juni Simon Johnson, "Three More Governance Questions for the Fed", Economix 28 juni

Uppdatering 11 januari 2013
Gillian Tett diskuterar i dagens FT ett nytt paper av Zoltan Pozsar, tidigare vid New York Fed, och Paul McCulley, tidigare vid Pimco, som diskuterar penningpolitiken i dagens läge och ifrågasätter centralbankernas politiska oberoende. Pozsar och McCulley gör en fyrfältare med offentliga sektorns leveraging (ökade utgifter) eller deleveraging (åtstramningspolitik) på x-axeln och privata sektorns dito på y-axeln, och konstaterar att många rika länder idag befinner sig i den ruta där privat sektor och offentlig sektor skär ner på sina utgifter samtidigt, vilket fördjupar recessionen.

Därför måste i en situation som denna, säger Pozsar och McCulley, penningpolitiken underordnas finansdepartementet och göras stimulerande parallellt med finanspolitiken. Tett:

"Pozsar and McCulley argue that in this fourth quadrant we need to embrace a mental flip. Instead of considering central bank independence to be a good thing, because it prevents inflation, central banks need to lose that independence, and work under finance ministries instead. Monetary policy and fiscal expansion must both be stimulative, since loose money alone will not work. Thus the central bank needs to monetise the public debt by buying lots of government bonds, say, or take other steps to co-ordinate fiscal and monetary measures.
Now a cynic might suggest that some Western central banks have already done this, by accident, if not design; the Fed has been gobbling up treasury bonds."

Gillian Tett, "Fed's mapmaker charts central bank rethink", FT 10 januari 2013.
Paul McCulley och Zoltan Pozsar, "Helicopter Money: Or How I Stopped Worrying and Love Fiscal-Monetary Cooperation" (pdf). GIC Global Society of Fellows.

FDR om "organized money"

Det här är jävligt bra:

Franklin D Roosevelt valtalar i New York City, 1936.

"For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.

For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.

We had to struggle with the old enemies of peace: business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me and I welcome their hatred."

Den enda förklaring jag kan se till att Simon Johnson och James Kwak inte hänvisar till detta i sin styckesvis lysande 13 Bankers, som på ett mycket tydligt sätt visar på relevansen av FDR:s analys från 1936, är att detta låter för politiskt inkorrekt/ohövligt och att det därför är säkrare att citera Jefferson och Andrew Jackson istället för historiskt stöd för en systemkritisk analys.