Thanks very much to my old friend, Steve Sedgwick at Squawk Box Europe for the chat this morning. We looked at Growth v Value, the US v ROW, we touched on bonds and borrowing, money supply, inflation, lockdown, commodities & gold – all in under 10 minutes!
To fill out what all might seem a bit rushed on the soundfile, here are the notes I sent to accompany our chat, complete with a little extra gloss for you to read at your leisure:-
A recent Wall St Journal article gave vent to a scare-story full of Underconsumptionist claptrap, carried under the catchy headline: “The Coronavirus Savings Glut”. Ironically, and only a day later, the paper ran a second piece entitled “How Coronavirus Upended a Trillion-Dollar Corporate Borrowing Binge and Kicked Off a Wave of Bankruptcies”.
Huh? Does the Journal think we have too many savings or too few? Who can say? The only thing that is clear is that editorial consistency comes a distant second to clickbait and column inches.
Meanwhile, politicians everywhere have been urging those they have at last let out of Lockdown to get out and ‘spend’ as a means of speeding the recovery. Nor have the various banks’ Talking Heads been slow to chime in with predictably supportive exhortations for their various home governments to adopt policies aimed at ‘driving demand’.
[A version of this article is also available as a PODCAST] Continue reading
With many commodity prices touching multi-year lows and with mounting fears for real estate valuations and car-lease residuals, numerous commentators seem convinced that ours is now a deflationary future. QE failed to raise CPI by anywhere near what the spin promised, they say, partly because it was ‘unsupported’ by fiscal policy. Therefore, if we don’t get Roosevelt, we’ll get Brüning, they conclude, and, meanwhile, we need the Fed to cut rates below zero, said one prominent pundit on April 5th. We replied:-
Ahead of my remote appearance on CNBC @SquawkBoxEurope on April 3rd, I prepared a few notes for the guys which I am happy to share here with you. The main topic, ahead of the emergency OPEC meeting which briefly bolstered crude prices that week was, unsurprisingly, oil but we did also discuss the outlook for the wider economy.[An audio version of our conversation can be had here: CNBC Podcast ]
On March 15th, the Eurozone branch of the Throw-more-money-at-it lobby were making themselves heard, calling for the ECB to run the printing presses for a limited (author pulls down lower eyelid with index finger) period as a supplement to the to the €120 billion in extra security purchases already made to that point. [NB total ‘assistance’ to April 17th had reached to €275bln in RP, €148bln in securities, and €126bln in FX swaps for a total of €550bln in five short weeks].We responded:-
As governments took ever more drastic action to close markets and confine people to their homes, the question loomed of how to mitigate some of the worst consequences of this self-imposed state of siege. A Twitter thread of March 10th offered up some initial thoughts, here lightly edited.
Markets have paradoxically both been on edge – and in the throes of euphoria – since the repo shock in mid-September, being at the same time alarmed and yet strangely reassured by the Fed’s frantic backpedalling and the $400+ billion boost to its balance sheet which this entailed.
However, at a time when an already faltering flow of business revenues across the major nations has now to weather the unquantifiable, but potentially far-reaching, disturbance spread by the China coronavirus outbreak, the margin for error seems slim, indeed. Extreme levels of overstretch are everywhere apparent.
To download as a PDF, please click here: 20-02-21 Overstretch
As promised, in this episode of Cantillon Effects, I have considered in much more detail whether there is such a thing as a ‘Consumer’ in isolation? I ask if a person’s role as producer is not more important. I look at the part played by interest rates, capital, and entrepreneurs, as well as by the state. I argue that worship of that False God – the ‘Consumer’ – not only slows economic progress in general and encourages heavy-handed and often harmful policies of intervention but also that it leads directly to the wastefulness of Boom and Bust. [To listen instead to Part I and Part II of my podcast on this, please go to CantillonCH at SoundCloud, or search Apple Podcasts here and here and Spotify for ‘Cantillon Effects’] Continue reading
As a way of providing easy access to most of the regular work we have published over the past two years – and hence to getting a feel for what we do and how we do it – please see here for a collection in PDF form, offered in reverse chronological order. Continue reading
There must be something in the air this winter – something that is besides the whiff of climate cant and manufactured eco-hysteria emanating from Davos and all the other organs of bien pensanterie. For, everywhere you look, someone is going less than quietly insane, either cooking up or Swedish chef rehashing glaring errors of economic idiocy or sweet-shop window socialism. Bork, bork, bork!
[This article can be heard as a podcast on Soundcloud under ‘CantillonCH‘ or iTunes under ‘Cantillon Effects‘] Continue reading