Macroeconomia Crisi finanziaria e sviluppi
- Creatore Discussione METHOS
- Data di Inizio
troppidebiti
Forumer storico
Imark
Forumer storico
non devo neanche leggerla
siamo con le pezze al quolo giusto?
Da fine giugno estendono il financing via repo alle banche europee da 6 a 12 mesi, e già ora te lo accordano sostanzialmente a fronte di quasi ogni sorta di collaterale...
troppidebiti
Forumer storico
ah allora siamo messi peggio
grazie della precisazione
chiamali belini quelli che a inizio crisi hanno investito nell' oro
dei veri sempliciotti eh si
stockuccio
Guest
When the public debt rubber meets the investors’ anxiety asphalt
Nouriel Roubini | May 28, 2009
With the recent significant rise in US government long term bond yields and steepening of the US yield curve concerns about the medium term debt sustainability of the US fiscal policies – as well as the risk of an eventual downgrade of the US public debt AAA rating – are rising.
These risks were recently addressed in the “Green Shoots or Yellow Weeds?” piece I published last week.
Here are the relevant passages of that piece (emphasis added to relevant sentences) and some additional observations on unsustainability of current US fiscal and debt policies and the crowding out of private spending and growth that the ensuing steepening of the yield curve will entail:
Let us discuss in detail the many structural factors and vulnerabilities that will cause mediocre – below potential - economic growth over the medium term even once this severe global recession is over. We will also discuss the factors that may actually lead to a fall in the potential growth rate of many economies and thus further depress economic growth over the longer term. We can identify at least ten such risks and vulnerabilities to medium term global growth.
First, and more importantly, an incorrect interpretation of the causes of this crisis has led to a partially mistaken policy response to it that does not resolve the fundamental causes of this crisis. The right way to think of this crisis is as being caused by excessive over-borrowing and over-spending by households, excessive and risky borrowing and lending by financial institutions and excessive leverage of even a fat tail of the corporate sector in a global economy where housing, asset and credit bubbles got out of hand and eventually went bust. So this is a crisis of debt, credit and solvency, not just illiquidity. The alternative interpretation is that this is a crisis of confidence (an animal spirits driven self-fulfilling recession) that has led to a collapse of liquidity – as counterparties don’t trust each other – and a collapse of aggregate demand as concerned households and firm cut consumption and investment in ways that can turn a regular business cycle recession into a near depression. Note that even those who believe that this a crisis of over-leverage and over-spending do agree that a severe recession triggered by the bust of asset and credit bubbles can turn into a near depression if the collapse of liquidity and credit in financial markets and concerns about survival by households and firms lead them to cut spending even more than justified by those weak financial fundamentals. Thus, even those who believe in an excessive debt & spending view agree that aggressive monetary and fiscal easing is necessary to prevent a severe and unavoidable recession triggered by such excesses from turning into a near depression. I.e. animal spirits, self-fulfilling expectations, coordination failure that lead agent to focalize on bad equilibria, and crises of confidence and trust can lead an unavoidable serious recession into a real depression.
But while monetary and fiscal easing are necessary to avoid the global economy from falling from the cliff into a depression abyss the ability of these over-levered economies to resume lending, borrowing, spending, investment and growth fundamentally depends on the resolution of the real and financial excesses that causes the economic and financial crisis in the first place. And if this was a crisis of excessive leverage the current rhetoric about the deleveraging process is based on fantasy rather than data. In reality, true deleveraging by households, corporate firms and financial institutions has not really even started as private losses and debts of households, financial institutions and even corporations are being socialized and put on the back of the balance sheet of governments. Thus, the lack of true deleveraging – or appropriate debt restructuring – will lead to a corrosive debt deflation and limit the ability of households to spend, of firms to invest and of banks and other financial institutions to lend. In other terms if this is a crisis of credit and solvency rather than just illiquidity and confidence much more is needed than easy money and massive fiscal stimulus to resume high economic growth. Worse, the socialization of private losses – while private debts and leverage are barely reduced – implies that the process of re-leveraging continues with the public sector levering up to pick up the losses of the private sector. So, this policy solution creates – down the line – another dangerous debt and solvency problem, this time for the sovereign, with risks of a more severe financial crisis down the line once a refinancing crisis occurs and/or the ability by the sovereign to borrow more is curtailed. So, this fundamental misinterpretation of the causes of the crisis leads to a partially incorrect policy solution that exacerbates the debt problems of households, financial firms, corporate firms and governments in ways that are discussed in more detail below. The right way to resolve a problem of excessive debt relative to equity capital for households, firms and financial institutions is to reduce such debt and convert it into equity. Corporate debt should be converted into equity; financial sector unsecured liabilities should be converted into equity; and even households debts can be converted into equity by reducing the principal value of such mortgages and providing an equity upside to the mortgage creditor in the form of a warrant. If there is too much debt and too little equity in an economy a sector by sector conversion of debt (unsecured claims of creditors and bondholders) into equity is the right and efficient solution that allows agents buried under a debt overhang to start spend and invest again. Instead of this efficient debt conversion we are socializing the private losses and putting them on the balance sheet of governments and increasing public debts, thus increasing the overall leverage of the economy rather than reduce it and risking to create a sovereign debt problem while not reducing private leverage. This is not the proper growth-inducing way to resolve a problem of excessive debt and leverage…
Fifth, as discussed above the socialization of private losses and debts implies a sharp rise in public debt burdens. In the US alone the CBO estimates that the net public debt to GDP ratio will rise from 40% to 80%, or about 9 trillion dollar. If long term rates will then increase to 5%, the resulting increase in the interest rate bill alone would be about $450 billion or 3% of GDP. I.e. the fiscal primary surplus will have to be permanently increased by 3% of GDP (via an increase in taxes or cut in government spending) to prevent an unsustainable Ponzi increase in the stock of public debt as a share of GDP. The burden of trillions of dollars of additional public debt in the US and other advanced economies will be a medium term drag on growth. High debt levels may be financed only with default (an option that advanced economies have not followed in recent decades), a capital levy on wealth, the use of the inflation tax to wipe out the real value of public debt or a painful increase in regular taxes or reduction in government spending. All these options are costly as they imply distortions on the supply of labor and/or the returns to saving and investing.
And over time rising debt ratios of government will eventually lead to increases of real interest rates that may crowd out private spending and may even lead to sovereign refinancing/default risk. Indeed, sovereign risk that was until recently limited to emerging market economies is now on the rise in advanced economies, especially those in the Eurozone: rise of sovereign spreads relative to safer German Bunds or US Treasuries, downgrades by rating agencies, risks of failed government auction, risk of a refinancing crisis, less ability/willingness to monetize fiscal deficits (especially in a Eurozone where the ECB is hawkish on inflation) are becoming pervasive in many advanced economies; and eventually even the US may face a downgrade of its AAA rating. Sovereign risk is especially serious and rising in the periphery of the Eurozone where you have countries with large budget deficits, large public debt to GDP ratios and banking systems that are both too-big-to-fail and too-big-to-be-saved, i.e. financial systems whose liabilities are so large relative to the resources of the sovereign that the government could not bail out such financial systems unless there is cross border burden sharing (i.e. unless the German and French taxpayer bails out Greece, Ireland and possibly other weak Eurozone members).
If one rules out defaults and the inflation tax as options as their costs in advanced economies would be serious a painful process of increases in taxes and reduction in government spending may reduce the rate of economic growth over the medium term (2010 and beyond); such fiscal adjustment may be necessary to ensure medium term debt sustainability but it immediate effect would lead to a reduction in private and public aggregate demand. So it will be a drag on economic growth over the medium term.
Sixth, the rapid and massive monetization of fiscal deficits – that has been pursued by central banks this year - is not yet inflationary in the short run as there are massive deflationary forces in the world given the slack in goods markets and labor markets; also the collapse in the velocity of money implies that the excess liquidity has been so far hoarded by banks in the form of excess reserves. But if central banks don’t find a clear exit strategy from very easy monetary policies - that have led to the doubling or tripling of monetary base in the US alone - eventually either goods prices inflation and/or another dangerous asset and credit bubble will ensue when the global economy gets out of this severe recession. And some of the recent rise in equity prices, commodity prices and other risky assets prices is already clearly liquidity driven rather than being fully justified by the improving economic fundamentals.
Inflation may indeed become the path of least resistance for policy makers as it is easier to run the printing presses and cause inflation rather than pass politically difficult tax increases or spending cuts in Congress or other legislative bodies. But inflation is not a cheap solution to high public debts and the debt deflation problems of the private sector. If central banks were to allow the inflation genie out of the bottle allowing expected inflation and actual inflation to rise from low single digits to high single digits to double digits at some point a painful Volcker-style recessionary disinflation policy (like the one in 1980-82) would have to be implemented to break the back of inflation expectations and bring back the inflation genie expectation into the bottle. Thus, central banks destroying a quarter of century of achievement of price expectation stability and low inflation credibility to reduce the real value of public and private debts would be a costly solution to these debt problems. And high and variable inflation close to double digits would then lead to much higher real interest rates for government bonds, mortgages and other long term fixed interest rate debts of the public and private sector as investors will have to be rewarded with a high risk premium for high and volatile inflation. So the result would be another dismal low growth decade like the 1970s of high inflation and high and volatile real interest rates…
The risks of a double-dip W-shaped contraction
Finally, we have so far discussed why yellow weeds – rather than green shoot – will cause the global economy to bottom out and get out of its recession later than the optimistic consensus; and why structural weaknesses may led to lower actual and potential growth over the medium term once we are out of this severe economic downturn. But there is a third risk that has to be kept in mind. Once the global economy bottoms out there may be a couple of quarters of faster GDP growth as production is increased to rebuild inventories and as the effects of the policy stimulus reach their peak. But that recovery will be constrained by two factors: first, the medium term vulnerabilities and constraints to robust growth discussed before. Second, the risk of a double dip W-shaped recession as the wings of a tentative recovery of growth in 2010 could be clipped towards the end of that year or in 2011 by a perfect storm of rising oil prices, rising taxes and rising nominal and real interest rates on the public debt of many advanced economies.
First, oil and energy and commodity prices could spike as soon as there are tentative signs of a global recovery if the elasticity of supply of such commodities is inelastic to the price because of limited excess capacity of commodities after years of underinvestment in commodities and especially oil and energy. The resulting spike in commodity prices would be first inflationary but, more importantly, a sharp negative terms of trade effect on commodity importers that will reduce their real income and lead to further demand slowdown.
Second, by the end of 2010 many US tax cuts (on incomes, capital gains, dividends, estates) will expire and will be partially reversed; and the likely introduction of cap & trade will represent an additional tax increase (however necessary to control greenhouse emissions). This incipient tax increase may lead to a slowdown of consumption and investment spending.
Third, concerns about medium term fiscal sustainability and about the risk that monetization of fiscal deficits will eventually lead to inflationary pressures after two years of deflationary pressures could lead to increases in nominal and real interest rate on government bonds thus crowding out consumption, capex spending and a tentative recovery of housing.
Conclusion: significant triple risks to global economic recovery.
In conclusion, there are three major sources of downside risk to early and sustained global economic recovery. First, in the short run the evidence suggests that rather than green shoots there are plenty of yellow weeds. So this severe global recession may not end in the middle of 2009 – as the optimists claim – but rather towards the end of 2009 or some time in 2010. Second, global recovery after this recession may not be V-shaped (as the optimists claim) with rapid return to potential growth. Structural vulnerabilities and the legacy of over-leverage of households, corporate firms, financial institutions and now governments may lead to several year of below potential growth with additional real risks that even potential growth may fall in advanced economies. Third, the wings of global recovery could be clipped towards the end of 2010 or 2011 - and result in a double dip W-shaped recession - if rising oil and commodity prices, rising tax burdens and rising concerns about medium term fiscal sustainability and inflation lead to an early crowding out of private consumption, capex spending and residential investment.
The outlook for the global economy may turn out to be better than the one described in this analysis if appropriate policies – to be discussed in a separate note – are adopted to limit these short term and medium term risks and vulnerabilities. And as discussed above one cannot rule out a couple of quarters of rapid growth as the effects of the massive policy stimulus take hold and as firms that have sharply destocked inventories start to ramp up production once final sales start to bottom out and recover. But such short run recovery risks to be warped by the medium term structural vulnerabilities that will lead to low actual and potential growth in 2010-2011. And the risk of a double dip W-shaped recession towards 2011 cannot be ruled out either. Thus, the detailed analysis in this paper suggests that downside risks to sustained global growth recovery appear to be greater than to the upside risks.
A few additional remarks need to be made a week after I wrote the arguments above: maybe I was just a bit too optimistic about the timing of the risks deriving from large and growing fiscal deficits and debts. Given the market concerns in the last week and the rise in long rates such risks may emerge even sooner than expected. As I pointed out in my piece debt sustainability – or avoiding a Ponzi game on public debt – requires that the US would at least increase taxes or reduce government spending in an amount equal to the additional interest burden on the additional public debt; that primary adjustment may be of the order of $450 billion or about 3% of current GDP. This is a significant amount of primary adjustment especially in a country where talk of tax increases or spending cuts is becoming politically increasingly difficult.
Another way to consider fiscal sustainability is to estimate the permanent primary balance (as a share of GDP) necessary to stabilize the public debt to GDP ratio at 82% (the estimated level of such ratio by the CBO in 2018), i.e. we need to estimate what the US primary gap is. If average public debt rates were to average 5% (over time as long rates go higher and short rates are eventually normalized) and if the inflation rate is 2% and if the potential growth rate of the US slows to 2% (as discussed in my Yellow Weeds column), you need a primary balance of 0.8% of GDP to stabilize the debt ratio at 82% and avoid an unsustainable increase in that ratio. The primary balance this year is likely to be over 8% of GDP (but this is not a cyclically adjusted figure). If one measures the structural permanent primary balance (i.e. the one that is cyclically adjusted) then the estimate of it is between -2% and -3% of GDP depending on assumptions about long term growth and trends in revenues and spending. Thus, the permanent primary gap (i.e. the difference between the primary balance needed to stabilize the public debt ratio and the structural permanent primary balance) could range between 2.8% of GDP and 3.8% of GDP.
These are very large figures that suggest that, even after the US reduces its current large fiscal deficit once the recession is over and the recovery to potential growth is achieved, there will be a very large primary gaps that will take between about 3% and 4% of GDP to close to stabilize the public debt ratio at very high levels. Thus, the issue of medium term debt sustainability is quite serious for the US. Of course, higher potential growth rates for the US economy and lower real interest rates on the public debt would shrink this primary gap. But even in the unlikely scenario that the real interest rate – growth differential were to be zero the primary gap would still be between 2% and 3% of GDP. And these estimates of the primary gap do not even include the long term liabilities that the US faces from unfunded public sector liabilities (Social Security, Medicare and other health care costs).
Indeed, as pointed out above, the US is not yet at the stage where rating agencies will downgrade its rating from the current AAA, even if – by some parameters – this downgrade will be warranted in the next year or so. But over time the continuation of unsustainable fiscal deficit may lead to such downgrade. Rating agencies may delay such downgrade as their oligopoly power derives from the special and official regulatory role that the US and other governments have provided them; thus, the same conflicts of interest that led the rating agencies to mis-rate toxic assets may lead them to postpone for a long time the necessary downgrade of the US public debt. But investors should start doing their own homework – and assess the medium term unsustainability of current US fiscal policy rather than rely on rating agencies that are always doing "too little too late" and whose ratings are biased by the US government being the effective and official source of their rating power. This US government has already effectively bullied rating agencies in being lenient on US state and local government ratings in spite of the sharp deterioration of their fiscal balances. So one cannot expect rating agencies – that are effectively captured by their political masters - to provide unbiased ratings of the US public debt.
la relazione ... mi sono fermato qui
'Ma, perché ritorni la fiducia nelle grandi istituzioni finanziarie internazionali, resta l’esigenza di un esercizio completo, internazionalmente coordinato, coerente, rigoroso, di trasparenza sui bilanci delle banche, già avviato negli Stati Uniti, in corso di preparazione in Europa.'
Nouriel Roubini | May 28, 2009
With the recent significant rise in US government long term bond yields and steepening of the US yield curve concerns about the medium term debt sustainability of the US fiscal policies – as well as the risk of an eventual downgrade of the US public debt AAA rating – are rising.
These risks were recently addressed in the “Green Shoots or Yellow Weeds?” piece I published last week.
Here are the relevant passages of that piece (emphasis added to relevant sentences) and some additional observations on unsustainability of current US fiscal and debt policies and the crowding out of private spending and growth that the ensuing steepening of the yield curve will entail:
Let us discuss in detail the many structural factors and vulnerabilities that will cause mediocre – below potential - economic growth over the medium term even once this severe global recession is over. We will also discuss the factors that may actually lead to a fall in the potential growth rate of many economies and thus further depress economic growth over the longer term. We can identify at least ten such risks and vulnerabilities to medium term global growth.
First, and more importantly, an incorrect interpretation of the causes of this crisis has led to a partially mistaken policy response to it that does not resolve the fundamental causes of this crisis. The right way to think of this crisis is as being caused by excessive over-borrowing and over-spending by households, excessive and risky borrowing and lending by financial institutions and excessive leverage of even a fat tail of the corporate sector in a global economy where housing, asset and credit bubbles got out of hand and eventually went bust. So this is a crisis of debt, credit and solvency, not just illiquidity. The alternative interpretation is that this is a crisis of confidence (an animal spirits driven self-fulfilling recession) that has led to a collapse of liquidity – as counterparties don’t trust each other – and a collapse of aggregate demand as concerned households and firm cut consumption and investment in ways that can turn a regular business cycle recession into a near depression. Note that even those who believe that this a crisis of over-leverage and over-spending do agree that a severe recession triggered by the bust of asset and credit bubbles can turn into a near depression if the collapse of liquidity and credit in financial markets and concerns about survival by households and firms lead them to cut spending even more than justified by those weak financial fundamentals. Thus, even those who believe in an excessive debt & spending view agree that aggressive monetary and fiscal easing is necessary to prevent a severe and unavoidable recession triggered by such excesses from turning into a near depression. I.e. animal spirits, self-fulfilling expectations, coordination failure that lead agent to focalize on bad equilibria, and crises of confidence and trust can lead an unavoidable serious recession into a real depression.
But while monetary and fiscal easing are necessary to avoid the global economy from falling from the cliff into a depression abyss the ability of these over-levered economies to resume lending, borrowing, spending, investment and growth fundamentally depends on the resolution of the real and financial excesses that causes the economic and financial crisis in the first place. And if this was a crisis of excessive leverage the current rhetoric about the deleveraging process is based on fantasy rather than data. In reality, true deleveraging by households, corporate firms and financial institutions has not really even started as private losses and debts of households, financial institutions and even corporations are being socialized and put on the back of the balance sheet of governments. Thus, the lack of true deleveraging – or appropriate debt restructuring – will lead to a corrosive debt deflation and limit the ability of households to spend, of firms to invest and of banks and other financial institutions to lend. In other terms if this is a crisis of credit and solvency rather than just illiquidity and confidence much more is needed than easy money and massive fiscal stimulus to resume high economic growth. Worse, the socialization of private losses – while private debts and leverage are barely reduced – implies that the process of re-leveraging continues with the public sector levering up to pick up the losses of the private sector. So, this policy solution creates – down the line – another dangerous debt and solvency problem, this time for the sovereign, with risks of a more severe financial crisis down the line once a refinancing crisis occurs and/or the ability by the sovereign to borrow more is curtailed. So, this fundamental misinterpretation of the causes of the crisis leads to a partially incorrect policy solution that exacerbates the debt problems of households, financial firms, corporate firms and governments in ways that are discussed in more detail below. The right way to resolve a problem of excessive debt relative to equity capital for households, firms and financial institutions is to reduce such debt and convert it into equity. Corporate debt should be converted into equity; financial sector unsecured liabilities should be converted into equity; and even households debts can be converted into equity by reducing the principal value of such mortgages and providing an equity upside to the mortgage creditor in the form of a warrant. If there is too much debt and too little equity in an economy a sector by sector conversion of debt (unsecured claims of creditors and bondholders) into equity is the right and efficient solution that allows agents buried under a debt overhang to start spend and invest again. Instead of this efficient debt conversion we are socializing the private losses and putting them on the balance sheet of governments and increasing public debts, thus increasing the overall leverage of the economy rather than reduce it and risking to create a sovereign debt problem while not reducing private leverage. This is not the proper growth-inducing way to resolve a problem of excessive debt and leverage…
Fifth, as discussed above the socialization of private losses and debts implies a sharp rise in public debt burdens. In the US alone the CBO estimates that the net public debt to GDP ratio will rise from 40% to 80%, or about 9 trillion dollar. If long term rates will then increase to 5%, the resulting increase in the interest rate bill alone would be about $450 billion or 3% of GDP. I.e. the fiscal primary surplus will have to be permanently increased by 3% of GDP (via an increase in taxes or cut in government spending) to prevent an unsustainable Ponzi increase in the stock of public debt as a share of GDP. The burden of trillions of dollars of additional public debt in the US and other advanced economies will be a medium term drag on growth. High debt levels may be financed only with default (an option that advanced economies have not followed in recent decades), a capital levy on wealth, the use of the inflation tax to wipe out the real value of public debt or a painful increase in regular taxes or reduction in government spending. All these options are costly as they imply distortions on the supply of labor and/or the returns to saving and investing.
And over time rising debt ratios of government will eventually lead to increases of real interest rates that may crowd out private spending and may even lead to sovereign refinancing/default risk. Indeed, sovereign risk that was until recently limited to emerging market economies is now on the rise in advanced economies, especially those in the Eurozone: rise of sovereign spreads relative to safer German Bunds or US Treasuries, downgrades by rating agencies, risks of failed government auction, risk of a refinancing crisis, less ability/willingness to monetize fiscal deficits (especially in a Eurozone where the ECB is hawkish on inflation) are becoming pervasive in many advanced economies; and eventually even the US may face a downgrade of its AAA rating. Sovereign risk is especially serious and rising in the periphery of the Eurozone where you have countries with large budget deficits, large public debt to GDP ratios and banking systems that are both too-big-to-fail and too-big-to-be-saved, i.e. financial systems whose liabilities are so large relative to the resources of the sovereign that the government could not bail out such financial systems unless there is cross border burden sharing (i.e. unless the German and French taxpayer bails out Greece, Ireland and possibly other weak Eurozone members).
If one rules out defaults and the inflation tax as options as their costs in advanced economies would be serious a painful process of increases in taxes and reduction in government spending may reduce the rate of economic growth over the medium term (2010 and beyond); such fiscal adjustment may be necessary to ensure medium term debt sustainability but it immediate effect would lead to a reduction in private and public aggregate demand. So it will be a drag on economic growth over the medium term.
Sixth, the rapid and massive monetization of fiscal deficits – that has been pursued by central banks this year - is not yet inflationary in the short run as there are massive deflationary forces in the world given the slack in goods markets and labor markets; also the collapse in the velocity of money implies that the excess liquidity has been so far hoarded by banks in the form of excess reserves. But if central banks don’t find a clear exit strategy from very easy monetary policies - that have led to the doubling or tripling of monetary base in the US alone - eventually either goods prices inflation and/or another dangerous asset and credit bubble will ensue when the global economy gets out of this severe recession. And some of the recent rise in equity prices, commodity prices and other risky assets prices is already clearly liquidity driven rather than being fully justified by the improving economic fundamentals.
Inflation may indeed become the path of least resistance for policy makers as it is easier to run the printing presses and cause inflation rather than pass politically difficult tax increases or spending cuts in Congress or other legislative bodies. But inflation is not a cheap solution to high public debts and the debt deflation problems of the private sector. If central banks were to allow the inflation genie out of the bottle allowing expected inflation and actual inflation to rise from low single digits to high single digits to double digits at some point a painful Volcker-style recessionary disinflation policy (like the one in 1980-82) would have to be implemented to break the back of inflation expectations and bring back the inflation genie expectation into the bottle. Thus, central banks destroying a quarter of century of achievement of price expectation stability and low inflation credibility to reduce the real value of public and private debts would be a costly solution to these debt problems. And high and variable inflation close to double digits would then lead to much higher real interest rates for government bonds, mortgages and other long term fixed interest rate debts of the public and private sector as investors will have to be rewarded with a high risk premium for high and volatile inflation. So the result would be another dismal low growth decade like the 1970s of high inflation and high and volatile real interest rates…
The risks of a double-dip W-shaped contraction
Finally, we have so far discussed why yellow weeds – rather than green shoot – will cause the global economy to bottom out and get out of its recession later than the optimistic consensus; and why structural weaknesses may led to lower actual and potential growth over the medium term once we are out of this severe economic downturn. But there is a third risk that has to be kept in mind. Once the global economy bottoms out there may be a couple of quarters of faster GDP growth as production is increased to rebuild inventories and as the effects of the policy stimulus reach their peak. But that recovery will be constrained by two factors: first, the medium term vulnerabilities and constraints to robust growth discussed before. Second, the risk of a double dip W-shaped recession as the wings of a tentative recovery of growth in 2010 could be clipped towards the end of that year or in 2011 by a perfect storm of rising oil prices, rising taxes and rising nominal and real interest rates on the public debt of many advanced economies.
First, oil and energy and commodity prices could spike as soon as there are tentative signs of a global recovery if the elasticity of supply of such commodities is inelastic to the price because of limited excess capacity of commodities after years of underinvestment in commodities and especially oil and energy. The resulting spike in commodity prices would be first inflationary but, more importantly, a sharp negative terms of trade effect on commodity importers that will reduce their real income and lead to further demand slowdown.
Second, by the end of 2010 many US tax cuts (on incomes, capital gains, dividends, estates) will expire and will be partially reversed; and the likely introduction of cap & trade will represent an additional tax increase (however necessary to control greenhouse emissions). This incipient tax increase may lead to a slowdown of consumption and investment spending.
Third, concerns about medium term fiscal sustainability and about the risk that monetization of fiscal deficits will eventually lead to inflationary pressures after two years of deflationary pressures could lead to increases in nominal and real interest rate on government bonds thus crowding out consumption, capex spending and a tentative recovery of housing.
Conclusion: significant triple risks to global economic recovery.
In conclusion, there are three major sources of downside risk to early and sustained global economic recovery. First, in the short run the evidence suggests that rather than green shoots there are plenty of yellow weeds. So this severe global recession may not end in the middle of 2009 – as the optimists claim – but rather towards the end of 2009 or some time in 2010. Second, global recovery after this recession may not be V-shaped (as the optimists claim) with rapid return to potential growth. Structural vulnerabilities and the legacy of over-leverage of households, corporate firms, financial institutions and now governments may lead to several year of below potential growth with additional real risks that even potential growth may fall in advanced economies. Third, the wings of global recovery could be clipped towards the end of 2010 or 2011 - and result in a double dip W-shaped recession - if rising oil and commodity prices, rising tax burdens and rising concerns about medium term fiscal sustainability and inflation lead to an early crowding out of private consumption, capex spending and residential investment.
The outlook for the global economy may turn out to be better than the one described in this analysis if appropriate policies – to be discussed in a separate note – are adopted to limit these short term and medium term risks and vulnerabilities. And as discussed above one cannot rule out a couple of quarters of rapid growth as the effects of the massive policy stimulus take hold and as firms that have sharply destocked inventories start to ramp up production once final sales start to bottom out and recover. But such short run recovery risks to be warped by the medium term structural vulnerabilities that will lead to low actual and potential growth in 2010-2011. And the risk of a double dip W-shaped recession towards 2011 cannot be ruled out either. Thus, the detailed analysis in this paper suggests that downside risks to sustained global growth recovery appear to be greater than to the upside risks.
A few additional remarks need to be made a week after I wrote the arguments above: maybe I was just a bit too optimistic about the timing of the risks deriving from large and growing fiscal deficits and debts. Given the market concerns in the last week and the rise in long rates such risks may emerge even sooner than expected. As I pointed out in my piece debt sustainability – or avoiding a Ponzi game on public debt – requires that the US would at least increase taxes or reduce government spending in an amount equal to the additional interest burden on the additional public debt; that primary adjustment may be of the order of $450 billion or about 3% of current GDP. This is a significant amount of primary adjustment especially in a country where talk of tax increases or spending cuts is becoming politically increasingly difficult.
Another way to consider fiscal sustainability is to estimate the permanent primary balance (as a share of GDP) necessary to stabilize the public debt to GDP ratio at 82% (the estimated level of such ratio by the CBO in 2018), i.e. we need to estimate what the US primary gap is. If average public debt rates were to average 5% (over time as long rates go higher and short rates are eventually normalized) and if the inflation rate is 2% and if the potential growth rate of the US slows to 2% (as discussed in my Yellow Weeds column), you need a primary balance of 0.8% of GDP to stabilize the debt ratio at 82% and avoid an unsustainable increase in that ratio. The primary balance this year is likely to be over 8% of GDP (but this is not a cyclically adjusted figure). If one measures the structural permanent primary balance (i.e. the one that is cyclically adjusted) then the estimate of it is between -2% and -3% of GDP depending on assumptions about long term growth and trends in revenues and spending. Thus, the permanent primary gap (i.e. the difference between the primary balance needed to stabilize the public debt ratio and the structural permanent primary balance) could range between 2.8% of GDP and 3.8% of GDP.
These are very large figures that suggest that, even after the US reduces its current large fiscal deficit once the recession is over and the recovery to potential growth is achieved, there will be a very large primary gaps that will take between about 3% and 4% of GDP to close to stabilize the public debt ratio at very high levels. Thus, the issue of medium term debt sustainability is quite serious for the US. Of course, higher potential growth rates for the US economy and lower real interest rates on the public debt would shrink this primary gap. But even in the unlikely scenario that the real interest rate – growth differential were to be zero the primary gap would still be between 2% and 3% of GDP. And these estimates of the primary gap do not even include the long term liabilities that the US faces from unfunded public sector liabilities (Social Security, Medicare and other health care costs).
Indeed, as pointed out above, the US is not yet at the stage where rating agencies will downgrade its rating from the current AAA, even if – by some parameters – this downgrade will be warranted in the next year or so. But over time the continuation of unsustainable fiscal deficit may lead to such downgrade. Rating agencies may delay such downgrade as their oligopoly power derives from the special and official regulatory role that the US and other governments have provided them; thus, the same conflicts of interest that led the rating agencies to mis-rate toxic assets may lead them to postpone for a long time the necessary downgrade of the US public debt. But investors should start doing their own homework – and assess the medium term unsustainability of current US fiscal policy rather than rely on rating agencies that are always doing "too little too late" and whose ratings are biased by the US government being the effective and official source of their rating power. This US government has already effectively bullied rating agencies in being lenient on US state and local government ratings in spite of the sharp deterioration of their fiscal balances. So one cannot expect rating agencies – that are effectively captured by their political masters - to provide unbiased ratings of the US public debt.
la relazione ... mi sono fermato qui
'Ma, perché ritorni la fiducia nelle grandi istituzioni finanziarie internazionali, resta l’esigenza di un esercizio completo, internazionalmente coordinato, coerente, rigoroso, di trasparenza sui bilanci delle banche, già avviato negli Stati Uniti, in corso di preparazione in Europa.'
azetaelle
investitore(s)qualificato
mi sposto di qui perché là mi sembrava assai off-topic...Ma sai, io non é che abbia doti divinatorie, ed azzecchi sempre il timing ...
Pensa all'inflazione dei prezzi alla produzione negli USA, a doppia cifra prima di Lehman o in Germania, prossima al 8-9% nell'estate 2008, e poi letteralmente tracollata per effetto della distruzione di liquidità che ha fatto seguito a quel fenomeno in poche settimane...
Quindi, a meno che non si abbiano capacità di vaticinio (delle quali purtroppo non sono dotato...) si devono mettere in conto situazioni di emergenza che possono mutare radicalmente gli scenari.
Poiché le perdite in capo al sistema finanziario (bancassicurativo) non sono finite, c'è la possibilità che ad un certo punto gli elettori di qualche paese si ribellino all'abbinamento tasse più alte e recessione e che da qualche parte possa nascere una domanda politica di far pagare una parte più consistente del prezzo della crisi ai creditori del sistema finanziario, fino ad oggi ampiamente "salvati".
E i creditori del sistema finanziario sono gli obbligazionisti di banche, assicurazioni, brokers ecc. ecc.
Sul discorso crisi regionali sono più ottimista, nel senso che al di là delle varie spinte separatiste o estremiste non penso i numeri saranno mai tali da provocare vere e proprie crisi (e come già sottolineato anche Cechia e Slovacchia si sono separate pur rimanendo sotto l'egida CE).
Parlando invece della crisi economica attuale, pur ammettendo di non essere un esperto di finanza (ma anche questi hanno dimostrato di toppare spesso e volentieri...), secondo me non è una crisi strutturale (è stata troppo violenta) quanto la coincidenza di diversi fattori, non solo la crisi finanziaria oltreoceano ma anche il blocco dell'economia a seguito della speculazione sulle materie prime (petrolio a 150$ il barile? con un prezzo fatto poi quasi esclusivamente sui futures piuttosto che sui barili effettivamente prodotti? ma per favore!! e i geni pagati milioni di dollari prevedevano 200$ al barile!). Con la previsione di prezzi in discesa gli acquisti si sono ovviamente ridotti ai minimi termini, e solo ora che, guarda caso, i prezzi delle materie prime hanno invertito la rotta, gli acquisti stanno ripartendo.
Per quanto riguarda gli asset tossici in pancia al sistema finanziario... non pensi che nei prossimi mesi dovremmo assistere a una chiarificazione? nel senso che quelli veramente tossici dovrebbero andare in default e il discorso si chiude, mentre quelli che qualche mese fa erano semplicemente sottovalutati stante l'attuale ripresa del mercato azionario e obbligazionario ormai dovrebbero aver recuperato buona parte del proprio valore e quindi aver perso la propria "tossicità". Certo, rimane il problema del debito pubblico, che probabilmente cercheranno di "spalmare" sul lungo periodo con la speranza che la ripresa dell'economia accompagnata dalla ripresa delle entrate fiscali possa pian piano guarire il bubbone... Sempre che nel frattempo qualche suonato Kim Jong II o Ahmadinejad non si metta a tirare missili qua e la
, ma questo è un altro discorso.Imark
Forumer storico
mi sposto di qui perché là mi sembrava assai off-topic...
Sul discorso crisi regionali sono più ottimista, nel senso che al di là delle varie spinte separatiste o estremiste non penso i numeri saranno mai tali da provocare vere e proprie crisi (e come già sottolineato anche Cechia e Slovacchia si sono separate pur rimanendo sotto l'egida CE).
Parlando invece della crisi economica attuale, pur ammettendo di non essere un esperto di finanza (ma anche questi hanno dimostrato di toppare spesso e volentieri...), secondo me non è una crisi strutturale (è stata troppo violenta) quanto la coincidenza di diversi fattori, non solo la crisi finanziaria oltreoceano ma anche il blocco dell'economia a seguito della speculazione sulle materie prime (petrolio a 150$ il barile? con un prezzo fatto poi quasi esclusivamente sui futures piuttosto che sui barili effettivamente prodotti? ma per favore!! e i geni pagati milioni di dollari prevedevano 200$ al barile!). Con la previsione di prezzi in discesa gli acquisti si sono ovviamente ridotti ai minimi termini, e solo ora che, guarda caso, i prezzi delle materie prime hanno invertito la rotta, gli acquisti stanno ripartendo.
Per quanto riguarda gli asset tossici in pancia al sistema finanziario... non pensi che nei prossimi mesi dovremmo assistere a una chiarificazione? nel senso che quelli veramente tossici dovrebbero andare in default e il discorso si chiude, mentre quelli che qualche mese fa erano semplicemente sottovalutati stante l'attuale ripresa del mercato azionario e obbligazionario ormai dovrebbero aver recuperato buona parte del proprio valore e quindi aver perso la propria "tossicità". Certo, rimane il problema del debito pubblico, che probabilmente cercheranno di "spalmare" sul lungo periodo con la speranza che la ripresa dell'economia accompagnata dalla ripresa delle entrate fiscali possa pian piano guarire il bubbone... Sempre che nel frattempo qualche suonato Kim Jong II o Ahmadinejad non si metta a tirare missili qua e la
Ora sai, gli scenari sono una gran bella cosa, poi bisogna comprendere il proprio limite (perlo per me) per cui non mi azzardo ad entrare in ipotesi concrete ... Su Cechia e Slovacchia temo che l'Europa centri poco e bisognerebbe parlare della specificità di un paese culla della rivoluzione hussita, all'origine del protestantesimo europeo e del suo richiamo etico e libertario, in cui parlare almeno 3 lingue (4 con il russo sotto il comunismo) era normale per la classe media già nei primi decenni del secolo, quando la Cecoslovacchia era fra i primi paesi al mondo per PIL (e lì tornerà fra 20 anni). Troppo lungo, e completamente OT. Passo.
I geni pagati milioni di $ il petrolio te lo davano a 200 $ al barile perché le case di brokeraggio e le divisioni di investment banking per le quali lavoravano potessero shortarlo più facilmente...
Sugli asset tossici delle banche, lo sforzo è quello di stabilizzare, di diluire, di creare bad banks in europa in cui cercare di concentrare gli asset tossici (leggi, se hai un po' di tempo le Considerazioni finali del Governatore della Banca d'Italia
). Nel mentre, anziché eliminare le misure emergenziali mirate a rifornire stabilmente le banche di liquidità, la BCE a partire da luglio estende la durata massima dei rifinanziamenti da 6 a 12 mesi. Segno che la fine dell'emergenza non è dietro l'angolo.Agli asset tossici dell'immobiliare residenziale USA si aggiungono nel mentre quelli di molti altri crediti cartolarizzati, (dall'immobiliare commerciale americano ai leveraged loans sia loro che nostri) ed altre perdite arriveranno per questa via.
La tendenza del mercato per ora é quello di reagire come se la crisi fosse terminata.
Dico solo che le incognite restano tante, che potremmo avere ancora alti e bassi... anche per i bond
troppidebiti
Forumer storico
chiamali belini quelli che non sanno come funziona questo corrotto sistema di fiat money.
Questo non sarà il forum più indicato, ma io mi sento sempre più scemo a detenere investimenti come le obbligazioni, denominati in una moneta stampabile a piacere, e svalutata ogni santo giorno dalle banche che continuano a crearne dal nulla.
Il dilemma è che mi sento anche scemo a comprare oro a 22€/grammo.
Praticamente 2 ore di lavoro di un operaio per un grammo di metallo. Oppure un metro quadro di terreno agricolo, che al mondo esiste in quantita finita ancora più dell'oro. E perlomeno il terreno agricolo mi produce grano, patate e pomodori
il problema è che il terreno te lo possono espropriare e non è una cosa rara come si pensi: nuova edilizia, opere pubbliche ecc... abruzzo docet
lorenzo63
Age quod Agis
vero, ma l'oro può essere rapinato, ecc... comunque è questione di finitezza. Il terreno è in quantità finita, la moneta no ("At the end fiat money returns to its inner value—zero" Voltaire)
Poi l'oro, se ricordo bene, il costo di estrazione è sui 400$. E perchè dovrei pagarlo 1000$ ?
Ecco qui Siniscalco, di ritorno dal Bilderberg 2009 in Grecia
La frase finale cosa significa ? si lamenta della liquidità, e poi vuole le banche centrali ancora più libere a stampare ??
Il petrolio oltre i 66 dollari, ripresa minata dal barile. Siniscalco: è speculazione
Petrolio ai massimi dagli ultimi sei mesi
il prezzo è salito ancora, nel mercato after hours di New York, a 66,01 dollari al barile. Il rialzo è dovuto in parte alla perdita di valore del dollaro e in parte al nuovo diffuso ottimismo sulla possibile prossima ripresa economica internazionale.
Un aumento che non trova giustificazioni nei fondamentali
«In meno di quattro mesi il prezzo del greggio è passato da 40 a 65 dollari: un aumento che non trova alcuna giustificazione nei fondamentali. Significa che è tornata la speculazione». Una posizione così forte non arriva da un'associazione di consumatori ma da Domenico Siniscalco, ex ministro dell'Economia e attualmente responsabile per l'Italia di Morgan Stanley. Intevenuto giovedì sera alla Bocconi nella quarta conversazione di "Economia e società aperta", Siniscalco non ha usato mezzi termini: «Significa che si è di nuovo lì a far derivati». Le cause? «Credo che sia la conseguenza dell'enorme massa di liquidità che è stata immessa sul mercato» è la risposta di Siniscalco che ha poi allargato il discorso alla politica monetaria delle banche centrali, troppo stretta oggi nei paletti della stabilità dei prezzi.
......
http://www.ilsole24ore.com/art/Sole...326-4c1e-11de-b287-ce5e90524180&DocRulesView=
Penso che Siniscalco abbia ragione da una parte e torto dall' altra.
Ha ragione quando dice che si usa ancora i derivati ... e del resto: qualcuno li ha proibiti? o ha generato regole per cui non si possono utilizzare? nel mio piccolo non mi risulta.
Ed ha torto quando parla del petrolio e dei prezzi in generale legati alla liquidità immessa.
Al netto che secondo me sale per ben altri motivi...che non i derivati.
C'è stato un destocking a livello delle imprese brutale - è la definizione esatta-è fisiologico il fatto che proprio in occasione della primavera ci siano riordini.. poi: ogni azienda ha il budget da rispettare .. ovvero tante spese tanti investimenti tanti utili..ovvio che al primo timido cenno si tenta di saltare subito sul carro ed apprezzare (incrementare i prezzi)dei propri prodotti .. ed il petrolio è il primo indicatore di questo fenomeno.
Inoltre: da che mondo e mondo un aumento su questi valori (fino ad ora) ha generato solo riordini veloci per evitare, quanto meno subire poco il rincaro del petrolio e quindi delle materie prime .. proprio ieri sera stavo osservado un rincaro di Basf su delle ammine primarie da 50 a 70$ la tonnellata - non l' ho postato su report chimica, non ancora - e poi questo grande aumento della liquidità riguarda, secondo me, i piani alti dell' economia ... di sicuro non ha raggiunto anzi! la lower - middle class ... Quindi ci sono aumenti di prezzo perlopiu' determinati da dinamiche che al momento hanno poco a che vedere con i soldi immessi nelle banche (stante poi il fatto che le banche, come è noto, hanno ristretto e tantissimo i cordoni)...tanto è vero che i cinesi hanno fatto un primo forse timido ma significativo tentativo di instaurare un modello di finanziamento al consumo..(wsj qualche giorno fa)proprio per tamponare la caduta dell' export. E non di certo dovuta per mancanza di competitività delle loro merci.
E condivido, in pieno, la conclusione finale di METATARSO
circa il quantitative easing (+/-) voluto... Traendo una conclusione "laterale" a margine di quanto affermato da Siniscalco, è la conferma che MS lo ha assunto per gli agganci che egli ha, piuttosto che per la sua competenza.
imho, chiaramente.
stockuccio
Guest
zerohedge pesantino come al solito 
'So as essentially no institutional or retail clients are trading any more, it is just a few desperate computers trying to front run each other' http://zerohedge.blogspot.com/2009/05/goldman-sachs-principal-transactions_29.html
'So as essentially no institutional or retail clients are trading any more, it is just a few desperate computers trying to front run each other' http://zerohedge.blogspot.com/2009/05/goldman-sachs-principal-transactions_29.htmlSimilar threads
