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«I see speculative bubbles like in 2007»
«We are in a world where the profits belong to the banks, while the governments socialize all the losses»: William R. White
William R. White, the former chief economist of the Bank for International Settlements, warns of grave adverse effects of the ultra loose monetary policy.
William White is worried. The former chief economist of the Bank for International Settlements is highly sceptical of the ultra loose monetary policy that most central banks are still pursuing. «It all feels like 2007, with equity markets overvalued and spreads in the bond markets extremely thin», he warns.
Mr. White, all the major central banks have been running expansive monetary policies for more than five years now. Have you ever experienced anything like this?
The honest truth is no one has ever seen anything like this. Not even during the Great Depression in the Thirties has monetary policy been this loose. And if you look at the details of what these central banks are doing, it’s all very experimental. They are making it up as they go along. I am very worried about any kind of policies that have that nature.
The honest truth is no one has ever seen anything like this. Not even during the Great Depression in the Thirties has monetary policy been this loose. And if you look at the details of what these central banks are doing, it’s all very experimental. They are making it up as they go along. I am very worried about any kind of policies that have that nature.
But didn’t the extreme circumstances after the collapse of Lehman Brothers warrant these extreme measures?
Yes, absolutely. After Lehman, many markets just seized up. Central bankers rightly tried to maintain the basic functioning of the system. That was good crisis management. But in my career I have always distinguished between crisis prevention, crisis management, and crisis resolution. Today, the Fed still acts as if it was in crisis management. But we’re six years past that. They are essentially doing more than what they did right in the beginning. There is something fundamentally wrong with that. Plus, the Fed has moved to a completely different motivation. From the attempt to get the markets going again, they suddenly and explicitly started to inflate asset prices again. The aim is to make people feel richer, make them spend more, and have it all trickle down to get the economy going again. Frankly, I don’t think it works, and I think this is extremely dangerous.
Yes, absolutely. After Lehman, many markets just seized up. Central bankers rightly tried to maintain the basic functioning of the system. That was good crisis management. But in my career I have always distinguished between crisis prevention, crisis management, and crisis resolution. Today, the Fed still acts as if it was in crisis management. But we’re six years past that. They are essentially doing more than what they did right in the beginning. There is something fundamentally wrong with that. Plus, the Fed has moved to a completely different motivation. From the attempt to get the markets going again, they suddenly and explicitly started to inflate asset prices again. The aim is to make people feel richer, make them spend more, and have it all trickle down to get the economy going again. Frankly, I don’t think it works, and I think this is extremely dangerous.
So, the first quantitative easing in November 2008 was warranted?
Absolutely.
Absolutely.
But they should have stopped these kinds of policies long ago?
Yes. But here’s the problem. When you talk about crisis resolution, it’s about attacking the fundamental problems that got you into the trouble in the first place. And the fundamental problem we are still facing is excessive debt. Not excessive public debt, mind you, but excessive debt in the private and public sectors. To resolve that, you need restructurings and write-offs. That’s government policy, not central bank policy. Central banks can’t rescue insolvent institutions. All around the western world, and I include Japan, governments have resolutely failed to see that they bear the responsibility to deal with the underlying problems. With the ultraloose monetary policy, governments have no incentive to act. But if we don’t deal with this now, we will be in worse shape than before.
Yes. But here’s the problem. When you talk about crisis resolution, it’s about attacking the fundamental problems that got you into the trouble in the first place. And the fundamental problem we are still facing is excessive debt. Not excessive public debt, mind you, but excessive debt in the private and public sectors. To resolve that, you need restructurings and write-offs. That’s government policy, not central bank policy. Central banks can’t rescue insolvent institutions. All around the western world, and I include Japan, governments have resolutely failed to see that they bear the responsibility to deal with the underlying problems. With the ultraloose monetary policy, governments have no incentive to act. But if we don’t deal with this now, we will be in worse shape than before.
But wouldn’t large-scale debt write-offs hurt the banking sector again?
Absolutely. But you see, we have a lot of zombie companies and banks out there. That’s a particular worry in Europe, where the banking sector is just a continuous story of denial, denial and denial. With interest rates so low, banks just keep evergreening everything, pretending all the money is still there. But the more you do that, the more you keep the zombies alive, they pull down the healthy parts of the economy. When you have made bad investments, and the money is gone, it’s much better to write it off and get fifty percent than to pretend it’s still there and end up getting nothing. So yes, we need more debt reduction and more recapitalization of the banking system. This is called facing up to reality.
Absolutely. But you see, we have a lot of zombie companies and banks out there. That’s a particular worry in Europe, where the banking sector is just a continuous story of denial, denial and denial. With interest rates so low, banks just keep evergreening everything, pretending all the money is still there. But the more you do that, the more you keep the zombies alive, they pull down the healthy parts of the economy. When you have made bad investments, and the money is gone, it’s much better to write it off and get fifty percent than to pretend it’s still there and end up getting nothing. So yes, we need more debt reduction and more recapitalization of the banking system. This is called facing up to reality.
Where do you see the most acute negative effects of this monetary policy?
The first thing I would worry about are asset prices. Every asset price you could think of is in very odd territory. Equity prices are extremely high if you at valuation measures such as Tobin’s Q or a Shiller-type normalized P/E. Risk-free bond rates are at enormously low levels, spreads are very low, you have all these funny things like covenant-lite loans again. It all looks and feels like 2007. And frankly, I think it’s worse than 2007, because then, it was a problem of the developed economies. But in the past five years, all the emerging economies have imported our ultra-low policy rates and have seen their debt levels rise. The emerging economies have morphed from being a part of the solution to being a part of the problem.
The first thing I would worry about are asset prices. Every asset price you could think of is in very odd territory. Equity prices are extremely high if you at valuation measures such as Tobin’s Q or a Shiller-type normalized P/E. Risk-free bond rates are at enormously low levels, spreads are very low, you have all these funny things like covenant-lite loans again. It all looks and feels like 2007. And frankly, I think it’s worse than 2007, because then, it was a problem of the developed economies. But in the past five years, all the emerging economies have imported our ultra-low policy rates and have seen their debt levels rise. The emerging economies have morphed from being a part of the solution to being a part of the problem.
Do you see outright bubbles in financial markets?
Yes, I do. Investors try to attribute the rising stock markets to good fundamentals. But I don’t buy that. People are caught up in the momentum of all the liquidity that is provided by the central banks. This is a liquidity driven thing, not based on fundamentals.
Yes, I do. Investors try to attribute the rising stock markets to good fundamentals. But I don’t buy that. People are caught up in the momentum of all the liquidity that is provided by the central banks. This is a liquidity driven thing, not based on fundamentals.
So are we mostly seeing what the Fed has been doing since 1987 – provide liquidity and pump markets up again?
Absolutely. We just saw the last chapter of that long history. This is the last of a whole series of bubbles that have been blown. In the past, monetary policy has always succeeded in pulling up the economy. But each time, the Fed had to act more vigorously to achieve its results. So, logically, at a certain point, it won’t work anymore. Then we’ll be in big trouble. And we will have wasted many years in which we could have been following better policies that would have maintained growth in much more sustainable ways. Now, to make you feel better, I said the same in 1998, and I was way too early.
Absolutely. We just saw the last chapter of that long history. This is the last of a whole series of bubbles that have been blown. In the past, monetary policy has always succeeded in pulling up the economy. But each time, the Fed had to act more vigorously to achieve its results. So, logically, at a certain point, it won’t work anymore. Then we’ll be in big trouble. And we will have wasted many years in which we could have been following better policies that would have maintained growth in much more sustainable ways. Now, to make you feel better, I said the same in 1998, and I was way too early.
What about the moral hazard of all this?
The fact of the matter is that if you have had 25 years of central bank and government bailout whenever there was a problem, and the bankers come to appreciate that fact, then we are back in a world where the banks get all the profits, while the government socializes all the losses. Then it just gets worse and worse. So, in terms of curbing the financial system, my own sense is that all of the stuff that has been done until now, while very useful, Basel III and all that, is not going to be sufficient to deal with the moral hazard problem. I would have liked to see a return to limited banking, a return to private ownership, a return to people going to prison when they do bad things. Moral hazard is a real issue.
The fact of the matter is that if you have had 25 years of central bank and government bailout whenever there was a problem, and the bankers come to appreciate that fact, then we are back in a world where the banks get all the profits, while the government socializes all the losses. Then it just gets worse and worse. So, in terms of curbing the financial system, my own sense is that all of the stuff that has been done until now, while very useful, Basel III and all that, is not going to be sufficient to deal with the moral hazard problem. I would have liked to see a return to limited banking, a return to private ownership, a return to people going to prison when they do bad things. Moral hazard is a real issue.
Do you have any indication that the Yellen Fed will be different than the Greenspan and Bernanke Fed?
Not really. The one person in the FOMC that was kicking up a real fuss about asset bubbles was Governor Jeremy Stein. Unfortunately, he has gone back to Harvard.
Not really. The one person in the FOMC that was kicking up a real fuss about asset bubbles was Governor Jeremy Stein. Unfortunately, he has gone back to Harvard.
The markets seem to assume that the tapering will run very smoothly, though. Volatility, as measured by the Vix index, is low.
Don’t forget that the Vix was at record low in 2007. All that liquidity raises the asset prices and lowers the cost of insurance. I see at least three possible scenarios how this will all work out. One is: Maybe all this monetary stuff will work perfectly. I don’t think this is likely, but I could be wrong. I have been wrong so many times before. So if it works, the long bond rates can go up slowly and smoothly, and the financial system will adapt nicely. But even against the backdrop of strengthening growth, we could still see a disorderly reaction in financial markets, which would then feed back to destroy the economic recovery.
Don’t forget that the Vix was at record low in 2007. All that liquidity raises the asset prices and lowers the cost of insurance. I see at least three possible scenarios how this will all work out. One is: Maybe all this monetary stuff will work perfectly. I don’t think this is likely, but I could be wrong. I have been wrong so many times before. So if it works, the long bond rates can go up slowly and smoothly, and the financial system will adapt nicely. But even against the backdrop of strengthening growth, we could still see a disorderly reaction in financial markets, which would then feed back to destroy the economic recovery.
How?
We are such a long way away from normal long term interest rates. Normal would be perhaps around four percent. Markets have a tendency to rush to the end point immediately. They overshoot. Keynes said in late Thirties that the long bond market could fluctuate at the wrong levels for decades. If fears of inflation suddenly re-appear, this can move interest rates quickly. Plus, there are other possible accidents. What about the fact that maybe most of the collateral you need for normal trading is all tied up now? What about the fact that the big investment dealers have got inventories that are 20 percent of what they were in 2007? When things start to move, the inventory for the market makers might not be there. That’s a particular worry in fields like corporate bonds, which can be quite illiquid to begin with. I’ve met so many people who are in the markets, thinking they are absolutely brilliantly smart, thinking they can get out in the right time. The problem is, they all think that. And when everyone races for the exit at the same time, we will have big problems. I’m not saying all of this will happen, but reasonable people should think about what could go wrong, even against a backdrop of faster growth.
We are such a long way away from normal long term interest rates. Normal would be perhaps around four percent. Markets have a tendency to rush to the end point immediately. They overshoot. Keynes said in late Thirties that the long bond market could fluctuate at the wrong levels for decades. If fears of inflation suddenly re-appear, this can move interest rates quickly. Plus, there are other possible accidents. What about the fact that maybe most of the collateral you need for normal trading is all tied up now? What about the fact that the big investment dealers have got inventories that are 20 percent of what they were in 2007? When things start to move, the inventory for the market makers might not be there. That’s a particular worry in fields like corporate bonds, which can be quite illiquid to begin with. I’ve met so many people who are in the markets, thinking they are absolutely brilliantly smart, thinking they can get out in the right time. The problem is, they all think that. And when everyone races for the exit at the same time, we will have big problems. I’m not saying all of this will happen, but reasonable people should think about what could go wrong, even against a backdrop of faster growth.
And what is the third scenario?
The strengthening growth might be a mirage. And if it does not materialize, all those elevated prices will be way out of line of fundamentals.
The strengthening growth might be a mirage. And if it does not materialize, all those elevated prices will be way out of line of fundamentals.
Which of the major central banks runs the highest risk of something going seriously wrong?
At the moment what I am most worried about is Japan. I know there is an expression that the Japanese bond market is called the widowmaker. People have bet against it and lost money. The reason I worry now is that they are much further down the line even than the Americans. What is Abenomics really? As far as I see it, they print the money and tell people that there will be high inflation. But I don’t think it will work. The Japanese consumer will say prices are going up, but my wages won’t. Because they haven’t for years. So I am confronted with a real wage loss, and I have to hunker down. At the same time, financial markets might suddenly not want to hold Japanese Government Bonds anymore with a perspective of 2 percent inflation. This will end up being a double whammy, and Japan will just drop back into deflation. And now happens what Professor Peter Bernholz wrote in his latest book. Now we have a stagnating Japanese economy, tax revenues dropping like a stone, the deficit already at eight percent of GDP, debt at more than 200 percent and counting. I have no difficulty in seeing this thing tipping overnight into hyperinflation. If you go back into history, a lot of hyperinflations started with deflation.
At the moment what I am most worried about is Japan. I know there is an expression that the Japanese bond market is called the widowmaker. People have bet against it and lost money. The reason I worry now is that they are much further down the line even than the Americans. What is Abenomics really? As far as I see it, they print the money and tell people that there will be high inflation. But I don’t think it will work. The Japanese consumer will say prices are going up, but my wages won’t. Because they haven’t for years. So I am confronted with a real wage loss, and I have to hunker down. At the same time, financial markets might suddenly not want to hold Japanese Government Bonds anymore with a perspective of 2 percent inflation. This will end up being a double whammy, and Japan will just drop back into deflation. And now happens what Professor Peter Bernholz wrote in his latest book. Now we have a stagnating Japanese economy, tax revenues dropping like a stone, the deficit already at eight percent of GDP, debt at more than 200 percent and counting. I have no difficulty in seeing this thing tipping overnight into hyperinflation. If you go back into history, a lot of hyperinflations started with deflation.
Many people have warned of inflation in the past five years, but nothing has materialized. Isn’t the fear of inflation simply overblown?
One reason we don’t see inflation is because monetary policy is not working. The signals are not getting through. Consumers and corporates are not responding to the signals. We still have a disinflationary gap. There has been a huge increase in base money, but it has not translated into an increase in broader aggregates. And in Europe, the money supply is still shrinking. My worry is that at some point, people will look at this situation and lose confidence that stability will be maintained. If they do and they do start to fear inflation, that change in expectations can have very rapid effects.
One reason we don’t see inflation is because monetary policy is not working. The signals are not getting through. Consumers and corporates are not responding to the signals. We still have a disinflationary gap. There has been a huge increase in base money, but it has not translated into an increase in broader aggregates. And in Europe, the money supply is still shrinking. My worry is that at some point, people will look at this situation and lose confidence that stability will be maintained. If they do and they do start to fear inflation, that change in expectations can have very rapid effects.
The Swiss National Bank has increased its balance sheet the most in relation to Swiss GDP. Should the Swiss be worried?
Yes, I do think you should be concerned. But at the same time, remind you, what you have here is a very different beast from what you are seeing in other countries. The SNB has not increased base money because they wanted to pump up the economy, but to prevent the Swiss Franc from appreciating too much. And that was not a monetary, but a political decision. I would say barring some major shocks outside, what they have done was the right thing to do and highly successfully implemented. But you cannot deny the arithmetics that the balance sheet is huge, much of it in foreign currency, and if something bad happens outside, and then Switzerland will look like a refuge again, the pressure on the Franc will be huge.
Yes, I do think you should be concerned. But at the same time, remind you, what you have here is a very different beast from what you are seeing in other countries. The SNB has not increased base money because they wanted to pump up the economy, but to prevent the Swiss Franc from appreciating too much. And that was not a monetary, but a political decision. I would say barring some major shocks outside, what they have done was the right thing to do and highly successfully implemented. But you cannot deny the arithmetics that the balance sheet is huge, much of it in foreign currency, and if something bad happens outside, and then Switzerland will look like a refuge again, the pressure on the Franc will be huge.
While that policy is in place, Swiss domestic interest rates are too low. Should the SNB be worried about a real estate bubble?
Yes, absolutely. You are caught between a rock and a hard place. To prevent the Franc from going up, you have to introduce too easy monetary policy, and you don’t like that either. So the SNB has to introduce macroprudential measures, trying to cool off the real estate market. That’s the right thing to do, because housing tends to be the big thing that goes wrong when you have too easy financial conditions.
Yes, absolutely. You are caught between a rock and a hard place. To prevent the Franc from going up, you have to introduce too easy monetary policy, and you don’t like that either. So the SNB has to introduce macroprudential measures, trying to cool off the real estate market. That’s the right thing to do, because housing tends to be the big thing that goes wrong when you have too easy financial conditions.
Abrazos,
PD1: No te había contado nada hasta hoy del manifiesto de Europa. Es una interesante propuesta…, que apuesta por buscar soluciones radicales para una salida de la crisis:
Our manifesto for Europe
European Union institutions no longer work. A radical financial and democratic settlement is needed
The European Union is experiencing an existential crisis, as the European elections will soon brutally remind us. This mainly involves the eurozone countries, which are mired in a climate of distrust and a debt crisis that is very far from over: unemployment persists and deflation threatens. Nothing could be further from the truth than imagining that the worst is behind us.
This is why we welcome with great interest the proposals made at the end of 2013 by our German friends from the Glienicke group for strengthening the political and fiscal union of the eurozone countries. Alone, our two countries will soon not weigh much in the world economy. If we do not unite in time to bring our model of society into the process of globalisation, then the temptation to retreat into our national borders will eventually prevail and give rise to tensions that will make the difficulties of union pale in comparison. In some ways, the European debate is much more advanced in Germany than in France. As economists, political scientists, journalists and, above all, citizens of France and Europe, we do not accept the sense of resignation that is paralysing our country. Through this manifesto, we would like to contribute to the debate on the democratic future of Europe and take the proposals of the Glienicke group still further.
It is time to recognise that Europe's existing institutions are dysfunctional and need to be rebuilt. The central issue is simple: democracy and the public authorities must be enabled to regain control of and effectively regulate 21st century globalised financial capitalism. A single currency with 18 different public debts on which the markets can freely speculate, and 18 tax and benefit systems in unbridled rivalry with each other, is not working, and will never work. The eurozone countries have chosen to share their monetary sovereignty, and hence to give up the weapon of unilateral devaluation, but without developing new common economic, fiscal and budgetary instruments. This no man's land is the worst of all worlds.
The point is not to pool all our taxes and government spending. All too often today's Europe has proved to be stupidly intrusive on secondary issues (such as the VAT rate on hairdressers and equestrian clubs) and pathetically impotent on important ones (such as tax havens and financial regulation). We must reverse the order of priorities, with less Europe on issues on which member countries do very well on their own, and more Europe when union is essential.
Concretely, our first proposal is that the eurozone countries, starting with France and Germany, share their corporate income tax (CIT). Alone, each country is hoodwinked by the multinationals of every country, which play on the loopholes and differences between national legislations to avoid paying tax anywhere. National sovereignty has thus become a myth. To fight against this "tax optimisation", a sovereign European authority needs to be given the power to establish a common tax base that is as broad as possible and strictly regulated. Each country might then continue to set its own CIT rate on this common base, with a minimum rate of around 20%, and with an additional rate on the order of 10% to be levied at the federal level. This would make it possible to give the eurozone a real budget, on the order of 0.5% to 1% of GDP.
As the Glienicke group rightfully points out, this budget capacity would allow the eurozone to carry out stimulus and investment programmes, in particular with respect to the environment, infrastructure and training. But unlike our German friends, we feel it is essential that the budget of the eurozone comes from a European tax, not from contributions by the states. In these times of starving budgets, the eurozone needs to demonstrate its ability to raise taxes more fairly and more efficiently than the states; otherwise people will not grant it the right to spend. Beyond that, it is necessary to very quickly generalise the automatic exchange of banking information within the eurozone and establish a concerted policy to make the taxation of income and wealth more progressive, while at the same time jointly waging an active fight against tax havens outside the zone. Europe must help to bring tax justice and political will into the globalisation process: such is the content of our first proposal.
Our second proposal is the most important and flows from the first. To approve the tax base for the CIT, and more generally to discuss and adopt the fiscal, financial and political decisions on what is to be shared in the future in a democratic and sovereign fashion, we must establish a parliamentary chamber for the eurozone. Here too we join our German friends from the Glienicke group, though they hesitate between two options: either a eurozone parliament consisting of the members of the European parliament from the countries concerned (a sub-formation of the European parliament reduced to the eurozone countries), or a new chamber based on grouping a portion of the members of the national parliaments (eg 30 French MPs from the National Assembly, 40 members from the German Bundestag, 30 Italian deputies etc, based on the population of each country, according to a simple principle: one citizen, one vote). This second solution, which takes up the idea of a "European chamber" proposed by Joschka Fischer in 2011, is, we believe, the only option for moving towards political union. It is impossible to completely deprive the national parliaments of their power to set taxes. It is precisely on the basis of national parliamentary sovereignty that a shared European parliamentary sovereignty can be forged.
In this scheme the European Union would have two chambers: the existing European parliament, directly elected by the citizens of the EU 28, and the European chamber, representing the states through their national parliaments. The European chamber would initially involve only the countries of the eurozone that want to move towards a greater political, fiscal and budgetary union. But it would be designed to welcome all EU countries agreeing to go down this road. A minister of finance of the eurozone, and eventually an actual European government, would answer to the European chamber.
This new democratic architecture for Europe would make it possible to finally overcome today's inertia and the myth that the council of heads of state could serve as a second chamber representing the states. This wrong fable reflects the political impotence of our continent: it is impossible for one person to represent a country, unless we resign ourselves to the permanent impasse imposed by unanimity. To finally move to majority rule on the fiscal and budgetary matters that the eurozone countries choose to share, it is necessary to create a genuine European chamber, where each country is represented not by its head of state alone, but by members who represent all political persuasions.
Our third proposal directly concerns the debt crisis. We are convinced that the only way to put this definitively behind us is to pool the debts of the eurozone countries. Otherwise speculation on interest rates will renew again and again. It is also the only way for the European Central Bank to conduct an effective and responsive monetary policy, as does the US Federal Reserve (which would also be hard pressed to do its job properly if every morning it had to arbitrate between the debts of Texas, Wyoming and California). The pooling of debt has de facto already begun with the European Stability Mechanism, the emerging banking union and the ECB's Outright Monetary Transactions programme, which already affect the taxpayers of the eurozone to one extent or another. It is necessary now to go further, while clarifying the democratic legitimacy of these mechanisms.
We must restart from the proposal for a "European debt redemption fund" made in late 2011 by the council of economic experts to the German chancellor, which was designed to pool all debts exceeding a country's 60% GDP limit, and add in a political component. It is not possible to decide 20 years in advance how quickly such a fund could be reduced to zero. Only a democratic body, namely the European chamber formed out of the national parliaments, would be able to set the level of the common deficit every year, based concretely on the state of the economy.
The choices made by this body will sometimes be more conservative than we might personally wish, and at other times more liberal. But they will be taken democratically, based on majority rule, in the light of day. Some on the right would like these budget decisions to be confined to post-democratic bodies or frozen in constitutional marble. Others on the left, prior to accepting any strengthening of political union, would like a guarantee that Europe will forever carry out the progressive policies of their dreams. These two pitfalls must be avoided if we want to overcome the current crisis.
Debate over Europe's political institutions has all too often been pushed aside as technical or secondary. But refusing to discuss the organisation of democracy ultimately means accepting the omnipotence of market forces and competition and abandoning all hope that democracy can regain control of 21st century capitalism.
This new political space is crucial. Beyond macro policies or fiscal issues, our social models are a common good that we need to preserve and sustain. But they are also key to a successful inclusion in globalisation. For fiscal systems convergence to the growing concern on social investment, France and Germany initiatives or reinforced cooperation are missing the point. Twenty-eight EU lags on those subject to translate consensus into act and, when it come to money, finally fails. A European chamber would be the place where decisions are made because all implications in terms of rights and duties would be explicit. The scope for such decisions is large and one can dream of subjects to be considered: German corporate governance, by a broader power accorded to employee representatives has contributed to keep a productive sector in the crisis; childhood care for all; training; social legislation convergence; a price for CO2 emissions in order to mitigate climate change.
Many will oppose our proposals by arguing that it is impossible to amend the treaties, and that the French people do not want greater European integration. These arguments are false and dangerous. The treaties are being modified constantly, as was the case in 2012, when the matter was settled in little more than six months. Unfortunately, this was a poor reform, which reinforced a federalism that is technocratic and inefficient.
To claim that public opinion does not like today's Europe, and then conclude that there should be no change in its basic functioning and institutions, amounts to a culpable inconsistency. When the German government produces its new proposals for reforming the treaties in the coming months, nothing says these reforms will be more satisfactory than those of 2012. But rather than just sit on our hands waiting, what is needed is finally to start a constructive debate in France so that we finally have a social and democratic Europe.
PD2: En el último mes han cambiado muchas cosas en Europa. En Francia Hollande ha tenido un mal resultado electoral y ha tenido que anunciar más ajustes fiscales en medio de la campaña. La economía francesa está casi estancada y el temor, justificado, del gobierno francés es que esos ajustes les condenen a un estancamiento secular o incluso a una nueva recesión.
Hollande ha remodelado su Gobierno y ha nombrado a Valls primer Ministro. Valls ya ha demostrado que es un político duro y ha iniciado la guerra del euro. Los franceses han pedido abiertamente al BCE que deprecie el tipo de cambio tras el último Eurogrupo. Francia tiene la tasa de paro en máximos, las exportaciones estancadas y déficit por cuenta corriente. Por lo tanto, una depreciación del tipo de cambio, teniendo en cuenta la debilidad de la demanda interna, sería un estímulo inmediato sobre sus exportaciones, producción industrial, inversión empresarial y empleo.
El problema es que Alemania tiene la tasa de paro en mínimos, crea empleo y, aunque sus exportaciones también están estancadas, tiene un superávit exterior del 7,5% del PIB. Alemania creó 600.000 empleos en 2013 y los salarios crecen un 3%. Por lo tanto, en Alemania la depreciación del euro aumentaría la inflación, aunque sin poner en riesgo la estabilidad de precios. Alemania se ha opuesto a la medida argumentando que la responsabilidad del euro es del BCE que es independiente.
Alemania sabe que eso no es verdad. Los Tratados confinan al BCE el objetivo de estabilidad de precios y es el Eurogrupo el responsable de la política cambiaria. No obstante, el tipo de cambio es un fenómeno monetario y depende del dinero en circulación y es el BCE el que controla esa variable. El tipo de cambio efectivo nominal está próximo a máximos históricos y se ha apreciado con fuerza el último año, especialmente con países emergentes. El comercio mundial creció un 3% en 2013, la mitad que el promedio histórico. Y ha empezado 2014 con fuertes caídas de exportaciones en China y EEUU. Europa tiene la mayor tasa de paro del mundo y la fortaleza del euro ayuda a explicarlo.
Los tipos del BCE están prácticamente al 0% y no hay margen efectivo para influir en el tipo de cambio. Habría que ir a compras de bonos. Las compras de deuda pública requieren que el país esté rescatado y por decisión política los países han salido de los rescates, salvo Grecia y Chipre. Por lo tanto sería deuda privada. Hay planes con titulizaciones de créditos de nueva concesión a pymes que el BCE no compraría a vencimiento pero si permitiría financiar con una LTRO especial.
En España las exportaciones también están estancadas, al igual que la producción industrial, las ventas minoristas y el empleo, como reflejó la EPA del primer trimestre. Además el crédito a empresas y familias sigue en caída libre y explica casi la totalidad de la contracción de crédito de la Eurozona. España sería el país más beneficiado en esta guerra pero estamos en negación de la realidad y Merkel se aprovechará de nuestra debilidad.
PD3: Desde un simple restaurante se puede hacer mucho más por España que desde todas las embajadas españolas por ahí fuera y toda la gente que se dedica a promocionar la “marca España”… Dura 38 minutos, pero es una lección de inteligencia, de brillantez, de sensatez…(hubo un momento en que pensé, al verlo, que le debían nombrar ministro de lo que fuera o incluso Presidente de Gobierno… Este tipo de personas es la que necesita España. Este tipo de personas, muchas veces ocultas en su anonimato, están ahí sin que nos demos cuenta y sin que les saquemos el fruto y el rédito que provocan. Enhorabuena por su trabajo bien hecho. Muchos éxitos le deseo y confío en que siga Ud contando su historia…, es la mejor formación que se puede dar a nadie… No te lo pierdas: http://cincodias.com/cincodias/2014/05/05/sentidos/1399294307_367074.html
PD4: ¿Nos japonizamos? Deuda en Japón: to infinity and beyond…: ¥1,020,000,000,000,000.00
Japan’s national debt totaled a record-high ¥1.02 quadrillion as of the end of March, up ¥33.36 trillion from a year earlier, the Finance Ministry said.
The central government debt, which increased ¥7.01 trillion from the end of December last year, kept rising mainly due to ballooning social security costs in line with the aging of the population.
The balance of government bonds, financing bills and other borrowing crossed the ¥1 quadrillion line for the first time ever at the end of June 2013.
The national debt stood at ¥8.06 million per capita, based on an estimated population of 127.14 million as of April 1.
Finance Minister Taro Aso said the situation has become “very severe” because of slow progress in fiscal reforms.
Of the debt, general government bonds increased ¥38.86 trillion from a year earlier to ¥743.87 trillion. Financing bills, used to procure funds for currency market intervention, totaled ¥115.69 trillion, up ¥420.8 billion.
But fiscal investment and loan program bonds, used to raise funds for loans to government affiliates, decreased ¥5.05 trillion to ¥104.21 trillion.
Long-term debt, excluding fiscal investment and loan bonds, financing bills and others, totaled ¥770.4 trillion.
El banco de Japón lleva dos años imprimiendo de lo lindo… Decidió que sacaba a Japón de la deflación con un brutal QE, pero lo único que ha conseguido es que ha llenado el sistema de yenes…
Y mira quién tiene los bonos públicos japoneses:
Y sí, ha conseguido que el IPC deje de ser negativo, pero a costa de devaluar los salaries (como aquí…, a costa de que la gente pierda capacidad adquisitiva)
Y siendo una de las economías con un ahorro sostenido, la tendencia es muy negativa. Mala cosa si no se ahorra (como nos pasa aquí también)
La gravedad del asunto es que su sector exterior, superavitario durante décadas, se ha vuelto negativo… En vez de llegar yenes a Japón de vuelta, empiezan a deber a los demás países, lo que se junta a la gravedad de sus deudas internas…
Ha perdido competencia con sus vecinos. Ya no es la locomotora sus exportaciones…, ha dado el relevo a China. Normal.
Aquí puedes ver la incidencia de las seis crisis, de las seis burbujas y su intensidad. Japón ha sufrido dos de ellas:
La carga de intereses de su deuda pública es descomunal. Los ingresos del estado en parte son emisiones de nuevas deudas…, y el coste de la deuda es ya del 24% de sus gastos!!!
PD5: Estancamiento: El consenso de cómo crecerá el mundo en 2014 sigue a la baja. Todos los países que lo componen van a crecer menos que lo que se esperaba hace unos meses:
En el caso particular de España, las previsiones son las siguientes:
¿Acertará alguno? No suelen hacerlo. Es muy fácil predecir y muy difícil acertar…, siempre se equivocan, más porque estamos condicionados con nuestros socios comerciales que no andan muy finos…
Hay que corregir estos desequilibrios, cosa nada fácil…
Y mientras tanto, éxito de las colocaciones del Tesoro… Si lo que vendemos es más deuda que se sigue acumulando sin parar… ¡De locos!
Ayer se dieron a conocer un montón de datos macro de los países europeos. Te los resumo. PIB trimestrales (no son anuales, son del primer trimestre solo) publicados:
Alemania: 0.8%..., se sale
Polonia +3.3%.
Japón +1.5%, consecuencias de tanto estímulo monetario...
Austria +0.3%.
Francia 0.00%, stagnates
R.Checa 0.00%.
Italia -0.1%.
Cyprus -0,7%
Latvia 0,7%
Netherlands -1,4%..., ¡qué dolor!
Austria 0,3%
Portugal -0,7% Ay…
Finlandia -0,4%.
Toma recovery de mierda!!!
Unos cuantos gráficos +:
Grecia:
Italia:
Portugal:
Japón:
Francia y Alemania:
Mientras en España fardamos de lo bien que vamos, de que vamos a crecer lo que ni se sabe…, aunque dependemos de que los demás nos compren nuestras cosas y vengan a gastarse sus dineros… Lo terrorífico: se confunde al ciudadano que toma decisiones de compra duradera, de gasto en función de unas expectativas que están infladas y que pueden luego no cumplirse… Pero no, los políticos quieren que se repita la historia, que todo el mundo vuelva a consumir y que los bancos vuelvan a conceder muchos créditos, para volver a repetir los mismos errores tan recientes… Pero de recortar gastos y de fomentar el ahorro que es inversión, ni a tiros… Eso no genera votos y tal… Memos!
PD6: ¡Qué pocos abrazos nos damos! Cada vez nos damos más la mano y nos damos menos abrazos… Esto los yanquis lo tienen muy claro, andan dándose abrazos a todas horas. Los españoles solíamos, hasta que nos saludamos con un lacónico “BUENAS” y se queda la gente tan pancha, y nos despedimos con un ridículo “CHAO, CHAO”… Sólo se salvan los vascos con ese ¡AUPA! Y ese ¡AGUR!
Hay una tendencia nueva de dar abrazos y acariciar la espalda al abrazado… Esto a mi no me gusta. Me parece que me están sobando, sobre todo si la que te da el abrazo es otra mujer distinta a la mía. Yo soy más de dar un beso a las mujeres (con un beso basta no hace falta darles dos…), y un buen abrazo apretado a los hombres, sin caricias adicionales… (de ahí que se llame un fuerte abrazo). Así que, más fuertes abrazos, menos “buenas” y menos “chao, chaos”, y menos saludos cordiales y todas esas memeces que se suelen poner en los emails…
