11. janúar 2008 | Jóhannes Björn
Eftirfarandi vangaveltur eru að mestu leyti á ensku og fyrir þá sem hafa gaman af að fara ofan í saumana á því sem er að gerast á fjármálamörkuðum heimsins. Eins og vænta mátti þá hefur mesta bankakreppa heimsins í nærri 80 ár fengið marga snjalla menn til þess að skrifa misjafnlega góðar greinar um málið.-–—
Þrálát skuldasöfnun bandaríska ríkisins og gífurlegur viðskiptahalli ár eftir ár áttu stóran þátt í að skapa grundvöll fyrir braski banka og áhættusjóða. Halli upp á billjónir dollara flaut út úr landinu og lenti í hringrás sem á endanum stórhækkaði fasteignaverð víða um heim. Í næstu umferð var vafasömum pappírum sem þessar nýhækkuðu fasteignir í Bandaríkjunum unguðu út dreift með brögðum. Stephen Roach skrifar grein í Financial Times sem heitir America’s inflated asset prices must fall:
The US has been the main culprit behind the destabilizing global imbalances of recent years. America’s massive current account deficit absorbs about 75 per cent of the world’s surplus saving. Most believe that a weaker US dollar is the best cure for these imbalances. Yet a broad measure of the US dollar has dropped 23 per cent since February 2002 in real terms, with only minimal impact on America’s gaping external imbalance. Dollar bears argue that more currency depreciation is needed. Protectionists insist that China – which has the largest bilateral trade imbalance with the US – should bear a disproportionate share of the next down leg in the US dollar.
There is good reason to doubt this view. America’s current account deficit is due more to bubbles in asset prices than to a misaligned dollar. A resolution will require more of a correction in asset prices than a further depreciation of the dollar. At the core of the problem is one of the most insidious characteristics of an asset-dependent economy – a chronic shortfall in domestic saving. With America’s net national saving averaging a mere 1.4 per cent of national income over the past five years, the US has had to import surplus saving from abroad to keep growing. That means it must run massive current account and trade deficits to attract the foreign capital.
Það var sennilega Greenspan sem gerði þetta hugtak um “aukreitis sparnað” frá útlöndum vinsælt. Þetta er dæmigert möppudýramál, því sannleikurinn er sá að mest af þessum peningum verður til vegna viðskiptahalla Bandaríkjanna, sem er stjarnfræðilegur. Pappírar sem kaupa vöru og þjónustu frá útlöndum eru einfaldlega að snúa heim.
America’s aversion toward saving did not appear out of thin air. Waves of asset appreciation – first equities and, more recently, residential property – convinced citizens that a new era was at hand. Reinforced by a monstrous bubble of cheap credit, there was little perceived need to save the old-fashioned way – out of income. Assets became the preferred vehicle of choice.
Hér má bæta við að rauntekjur yfir 80 % fólksins hafa verið að lækka frekar en hitt og margir neyðast til þess að slá lán út á húsin sín. Það gengur heldur ekki upp þegar fólk með minnkandi rauntekjur kaupir fasteignir sem hafa hækkað langt fram yfir verðbólgustigið.
With one bubble begetting another, America’s imbalances rose to epic proportions. Despite generally subpar income generation, private consumption soared to a record 72 per cent of real gross domestic product in 2007. Household debt hit a record 133 per cent of disposable personal income. And income-based measures of personal saving moved back into negative territory in late 2007.
Hér þarf aðeins að staldra við. Maður gæti lesið úr þessum línum að bruðl hafi stóraukist hjá þorra fólks, en höfuðvandinn er hins vegar sá að stórir útgjaldaliðir—t.d. öll orka, heilsukerfið og skólagjöld—hafa hækkað miklu meira en flest annað. Fólk verður að punga út þessum peningum en það lítur út á yfirborðinu eins og neyslan hafi aukist.
None of these trends is sustainable. It is only a question of when they give way and what it takes to spark a long overdue rebalancing. A sharp decline in asset prices is necessary to rebalance the US economy. It is the only realistic hope to shift the mix of saving away from asset appreciation back to that supported by income generation. That could entail as much as a 20–30 per cent decline in overall US housing prices and a related deflating of the bubble of cheap and easy credit.
Það er rétt að hús eiga eftir að falla alls um 30% eða meira, en það er ráðgáta hvernig sparnaður í landinu getur aukist á meðan það er verið að soga um fimm þúsundir milljarða dollara út úr hagkerfinu [allt íbúðarhúsnæði í BNA kostaði um $22 billjónir 2006].
Those trends now appear to be under way. Reflecting an outsize imbalance between supply and demand for new homes, residential property prices fell 6 per cent in the year ending October 2007 for 20 major metropolitan areas in the US, according to the S&P Case-Shiller Index. Most likely, this foretells a broader downturn in nationwide home prices in 2008 that could continue into 2009. Meanwhile, courtesy of the subprime crisis, the credit bubble has popped – ending the cut-rate funding that fuelled the housing bubble.
As home prices move into a protracted period of decline, consumers will finally recognize the perils of bubble-distorted saving strategies. Financially battered households will respond by rebuilding income-based saving balances. That means the consumption share of gross domestic product will fall and the US economy will most likely tumble into recession.
America’s shift back to income-supported saving will be a pivotal development for the rest of the world. As consumption slows and household saving rises in the US, the need to import surplus saving from abroad will diminish. Demand for foreign capital will recede – leading to a reduction of both the US current-account and trade deficits. The global economy will emerge bruised, but much better balanced.
Þetta er allt gott og blessað, en gerist ekki á nokkrum mánuðum heldur mörgum erfiðum árum. Fólk (sem heild) getur ekki byrjað að spara peninga á sama tíma og það er að tapa stórt. Við þetta bætist að þegar fasteignir hríðfalla í verði þá eykst atvinnuleysi til muna og þar með heildartekjur í landinu.
Washington policymakers and politicians need to stand back and let this adjustment play out. Yet the US body politic is panicking in response – underwriting massive liquidity injections that produce another asset bubble and proposing fiscal pump-priming that would depress domestic saving even further. Such actions can only compound the problems that got America into this mess in the first place.
China-bashers in the US Congress also need to stand down. America does not have a China problem – it has a multilateral trade deficit with over 40 countries. The China bilateral imbalance may be the biggest contributor to the overall US trade imbalance but, in large part, this is a result of supply-chain decisions by US multinationals.
Því miður þá hefur hnattvæðingunni algjörlega verið stjórnað af fjölþjóðafyrirtækjum sem einblína á kostnað og ekkert annað. Þrælahald, eyðilegging stórra landsvæða og botnlaus mengun skipta engu máli. Siðaður vinnumarkaður getur ekki keppt við þennan óhugnað og heilar atvinnugreinar eru lagðar niður. Hnattvæðing fyrirtækja er komin lengst í Bandaríkjunum og millistéttin þar er að skreppa saman.
By focusing incorrectly on the dollar and putting pressure on the Chinese currency, Congress would only shift China’s portion of the US trade deficit elsewhere – most likely to a higher-cost producer. That would be the same as a tax hike on American workers. If the US returns to income-based saving in the aftermath of the bursting of housing and credit bubbles, its multilateral trade deficit will narrow and the Chinese bilateral imbalance will shrink.
It is going to be a very painful process to break the addiction to asset-led behavior. No one wants recessions, asset deflation and rising unemployment. But this has always been the potential endgame of a bubble-prone US economy. The longer America puts off this reckoning, the steeper the ultimate price of adjustment. Tough as it is, the only sensible way out is to let markets lead the way. That is what the long overdue bursting of America’s asset and credit bubbles is all about.
Thomas Palley skrifar:
In recent months the U.S. subprime mortgage crisis has been rippling outward affecting other countries. British banks have made large loan loss provisions and there has been a run on the Northern Rock bank. German banks have incurred similar losses and Germany has suffered two large bank failures. European banks have also become leery about lending to each other, forcing the European Central bank to infuse emergency liquidity. Now, Japan’s banks are feeling the heat.
These global spillovers have their origin in the huge U.S. trade deficits of the last several years. Those deficits played a critical role generating the distorted interest rate environment that created the sub-prime bubble, and they also explain how subprime loans have wound up in Tokyo portfolios. For policymakers everywhere there are lessons about the dangers of large trade deficits.
Over the last several years, the U.S. trade deficit has persistently drained spending from the U.S. economy. As a result, much of manufacturing failed to recover after the recession of 2001, making for a weaker than usual recovery. This weakness prompted the Federal Reserve to push interest rates to historic lows in 2003, keep them there for an extended period, and then only raise rates gradually for fear of undermining the economy.
The Fed’s “easy money” policy succeeded in avoiding a relapse into recession, but it came at the price of a housing bubble and a twisted expansion. The hallmarks of this twisted expansion were house price inflation, a construction boom, explosive growth of non-traditional subprime mortgages, a debt-financed consumer spending binge, and yet larger trade deficits.
The counter-part of these deficits was trade surpluses in the rest of the world, which provided the conduit for distributing sub-prime holdings globally. Moreover, these trade surpluses persisted because many countries actively pursue export-led growth, and they therefore blocked appreciation of their currencies against the dollar to maintain competitiveness in U.S. markets.
These large surpluses in turn sought an investment home, which helps explain why long-term interest rates did not rise as predicted when the Fed eventually raised short-term interest rates after 2004. More importantly, artificially low short-term interest rates promoted a “chase for yield” among investors, who started lending at diminished risk premiums.
This chase affected both American and foreign lenders. In Japan, interest rates have been close to zero for a decade, while European interest rates have been below US rates since the end of 2004. Japanese and European investors therefore willingly bought subprime mortgage loans, which spread holdings around the world and also elicited additional supply.
Ironically, owing to bureaucratic inertia, China is the one country that did not get caught up in the frenzy. Instead, it has invested in Treasuries, while capital controls have limited individual Chinese investor access and exposure to U.S. financial markets.
Þetta síðasta atriði er broslegt. Kínverjar eru enn svo aftarlega á frjálshyggjumerinni að þeir máttu ekki kaupa ruslabréf og spöruðu sér þannig stórfé!
The vast scale of foreign accumulation of dollar assets means that other countries are now vulnerable to U.S. credit market losses. Paradoxically, that may support the dollar. However, other countries are better placed in terms of economic fundamentals. Though they will bear financial losses, their households are in better financial shape - except in countries that have also had house price bubbles. Contrastingly, U.S. households are burdened with debt, and there is a massive over-hang of house supply that promises to drive down house prices, further erode financial wealth, and further undermine economic activity.
The sting in the tail is that a troubled U.S. economy will likely come back to haunt other economies because of their reliance on export-led growth and investments aimed at supplying US consumers. And that sting may hurt China most owing to its heavy reliance on export-led growth and foreign direct investment.
From a policy perspective there are several big lessons. First, failure to address problems in one area (trade deficits) can trigger policy responses elsewhere (monetary policy) that ultimately create even bigger problems. Second, large trade deficits cause real distortions, the consequences of which are costly, albeit slow to emerge.
Það var allt of hröð hnattvæðing sem skapaði þennan viðskiptahalla. Stórfall dollarans hefur lítið gert til þess að laga hallann vegna þess að of mikið af framleiðslunni hefur flúið land. Lækkandi dollari hækkar líka verð á innfluttri orku og öðru hráefni.
The consequences of the distortions caused by the U.S. trade deficit will be worst for the U.S., but they will also affect surplus countries that have accepted dollar-denominated financial assets in payment. Moreover, many countries are vulnerable to the extent that they depend on the U.S. market. That points to the urgency of global policy mechanisms preventing repeats of such trade imbalances, and for countries to shift from export-led growth to domestic demand-led growth.
John Mauldin segir m.a. í fréttabréfi sínu 4. janúar:
As I have made the case for over a year, the negative wealth affect from falling home prices is going to put a damper on consumer spending. The reduced ability to borrow money on homes is going to put a crimp in consumer spending. Higher unemployment from fewer construction, mortgage, and housing-related industry jobs will negatively affect spending.
This is going to be a problem until at least the middle of 2009, as it will take that long to work through inventories and foreclosures. That is one of the reasons why I think the recovery will be slower than it normally would be. But now let's turn to the second bubble, and a brewing problem that could mean a further round of massive bank write-offs.
Slæm lán halda áfram að dynja á bankakerfinu þar til 2011 og eyðimerkurgangan endar ekki fyrr en þá í fyrsta lagi. Óðaverðbólga, eins og sú sem borgaði upp lán á íslandi fyrir 1980, er það eina sem gæti breytt þessari niðurstöðu.
My middle son is an online gamer, typically playing combat games with teams formed by players from around the world. To advance in the rankings, you have to work together. "I've got your back" is a frequently heard term in my house. If no one has your back in the gaming world, you can be pretty sure that the enemy will soon be there and you will be a statistic.
The "back" for the mortgage investment business seems to be particularly absent. As in the online gaming world, it could get ugly really quick. And a lot uglier than I thought just a few weeks ago.
In a brilliant article in the Wall Street Journal, Carrick Mollenkamp and Serena Ng detailed the rise and fall of a collateral debt obligation (CDO) called Norma, ushered into existence by Merrill Lynch. This is a $1.5 billion CDO created in March of 2007 with over 90% of its paper rating "A" or better, and $1.125 billion rated AAA. In November 2007, the entire CDO was downgraded to junk.
That is not particularly news, as there are a lot of subprime CDOs that are being downgraded. What caught my eye was how this CDO was created. Quoting (and emphasis mine):
"For Norma, [the manager] assembled $1.5 billion in investments. Most were not actual securities, but derivatives linked to triple-B-rated mortgage securities. Called credit default swaps, these derivatives worked like insurance policies on subprime residential mortgage-backed securities or on the CDOs that held them. Norma, acting as the insurer, would receive a regular premium payment, which it would pass on to its investors. The buyer protection, which was initially Merrill Lynch, would receive payouts from Norma if the insured securities were hurt by losses. It is unclear whether Merrill retained the insurance, or resold it to other investors who were hedging their subprime exposure or betting on a meltdown.
"Many investment banks favored CDOs that contain these credit default swaps, because they didn't require the purchase of securities, a process that typically took months. With credit default swaps, a billion-dollar CDO could be assembled in weeks.
"UBS Investment Research estimates that CEOs sold credit protection on around three times the actual face value off triple-B-rated subprime bonds. 'The use of derivatives "multiplied the risk," says Greg Medcraft, chairman of the American Securitization Forum, an industry association. 'The subprime mortgage crisis is far greater in terms of potential losses than anyone expected, because it's not just physical loans that are defaulting.'"
Þessar nýju hetjur hagkerfisins, bankar og áhættusjóðir, hafa þá bara verið að búa til fljótgerð keðjubréf. Og tryggt þau með loftkastalatryggingum.
The article goes on to detail how the entire CDO world is one large daisy chain of credit default swaps. Who's got your back? And who's got the back of the guy who has your back? And … you better hope it is not ACA.
Never heard of the company? You will. ACA has dropped 95%, from $16.55 to $0.86 today. Why? Because the company sold credit insurance on CDOs. "If now junk rated ACA can't come up with an additional $1.7 billion in capital by January 18, it will be insolvent and the $69 billion in credit default swaps on CDOs it underwrote will be worthless." (Shilling) $69 billion? That is huge. Think that won't hurt balance sheets all over the world?
There is never just one cockroach. Write this down. Counterparty risk in the credit default swap market will be a huge story in 2008. Losses are going to mount far higher than estimates from just a few months ago. I believe that many financial institutions will be taking large losses every quarter for the next few quarters. At the end of each quarter, investors will hope that this is finally the end. "Surely this time they have gotten it all out in the open." It won't be, because banks can't write down loans until the counterparty risk problem is solved. Who's got your back?
Between more massive subprime-related losses, being forced to bring SIVs back onto their balance sheets, and deteriorating credit quality in other bank lines (like credit cards and auto loans, as well as commercial real estate), banks are going to be forced to raise capital and tighten lending standards. This is not something that is going to happen in one quarter. It may take the better part of the year for all of this to flush out of the system.
This tightening stance will also contribute to a slower than usual recovery. Even if the Fed cuts rates again and again, the banks still have to raise capital and become more prudent lenders. And that means the cost of borrowing is going up.
There are those who hope that the Fed will ride to the rescue with more rate cuts. I believe they will, but it is a case of "too little, too late." I think we will see a Fed rate below 3% by the end of the summer, if not before. But they are likely to initially take it slow, until it is clear we are in a recession, and/or inflation pressures have abated.
Eins og áður hefur verið bent á hér þá getur seðlabankinn ekki lækkað vexti niður fyrir það verðbólgustig sem markaðurinn áætlar. Síðasta sem seðlabankinn vill að gerist er að langtímavextir hækki á frjálsum markaði á sama tíma og verið er að lækka stýrivexti seðlabankans.
While rate cuts will help in general, the problem is that rate cuts won't help the credit crisis, won't solve the problem of credit default swaps, and won't bring back the subprime market. These are problems we simply have to work our way through, and it is going to take time.
Investment banks and the financial services industry made a great deal of money on securitizing all manner of risk. In general, that is a very good thing, except when the risk is fraudulent subprime mortgages. That source of income is drying up. You can bet the banks are working overtime on creating new forms of securitization that will allow for transparency and increased investor protection. There is a market for risk properly packaged and understood. Profits at investment banks are going to be under pressure until these new structures are developed and accepted by the marketplace. They have the incentive to get this done quickly and done right.
So let's get to the predictions. I think that we are in a recession for most of the first half of this year, and that we begin a slow recovery in the second half. It will be a Muddle Through Economy for at least another year after that. That would suggest that most companies will come under serious earnings pressure. If history is any indicator, that means we should see a bear market in the first half of this year. How deep will depend on how fast the Fed cuts, but I don't think we are looking at anything close to the bear market of 2000–2001. Still, I wouldn't want to stand in front of a bear market train.
Efnahagslægðin verður miklu verri en 2000–2001. Jafnvel verri en 1981 því bókhald heimilanna hefur ekki litið ver út í tæplega 80 ár. Neytandinn er 70% hagkerfisins. Bankakerfið er líka í vandræðum og ríkið stórskuldugt.
Consumer spending is going to slow, and it will be slower to rebound, for reasons outlined above. That will also make the recovery in the stock market a little slower. But I expect to become bullish on the market sometime this summer, if not before. I'm looking forward to it.
It also follows that bonds are a good buy at this point. It would not surprise me to see the 10-year bond fall to 3.5%.
I think the United Kingdom follows the United States into a mild recession, and European growth will come under pressure. Nearly every central bank in the developed world outside of Japan will be cutting rates by the beginning of summer. China will not have a hard landing this year.
Fasteignaverð er byrjað að hrapa á Bretlandseyjum (og víða í Evrópu) og það verður engin mjúk lending þar á bæ. Verðbólgan í Kína (opinberar tölur) er 11% um þessar mundir og kommissararnir í hálfgerðu pati. Þegar menn beita fáránlegustu úrræðum hagfræðinnar, verðstöðvunarlögum, þá veit maður að einhvers staðar er pottur brotinn.
Bandaríkjamaðurinn Paul Craig Roberts skrifar grein 7. janúar þar sem hann fjallar um atvinnusköpun í hagkerfi hnattvæðingarinnar.
December did not bring Americans any jobs. To the contrary, the private sector lost 13,000 jobs from the previous month.
If December is a harbinger of the New Year, it is going to be a bad one. The past year, hailed by Republican propagandists and "free trade" economists as proof of globalism’s benefit to Americans, was dismal. According to the Bureau of Labor Statistics’ no farm payroll data, the US "super economy" created a miserable 1,054,000 net new jobs during 2007.
This is not enough to keep up with population growth—even at the rate discouraged Americans, unable to find jobs, are dropping out of the work force—thus the rise in the unemployment rate to 5%.
During the past year, US goods producing industries, continuing a long trend, lost 374,000 jobs.
But making things was the "old economy." The "new economy" provides services. Last year 1,428,000 private sector service jobs were created.
Are the "free trade" propagandists correct that these service jobs, which are our future, are high-end jobs in research and development, innovation, venture capitalism, information technology, high finance, and science and engineering where the US allegedly has such a shortage of scientists and engineers that it must import them from abroad on work visas?
Not according to the official job statistics.
What occupations provided the 1.4 million service jobs in 2007?
Waitresses and bartenders accounted for 304,200, or 21% of the new service jobs last year and 29% of the net new jobs.
Health care and social assistance accounted for 478,400, or 33% of the new service jobs and 45% of the net new jobs. Ambulatory health care and hospitals accounted for the lion’s share of these jobs.
Professional and business services accounted for 314,000, or 22% of the new service jobs and 30% of the net new jobs. Are these professional and business service jobs the high-end jobs of which "free traders" speak? Decide for yourself. Services to buildings and dwellings account for 53,600 of the jobs. Accounting and bookkeeping services account for 60,500 of the jobs. Architectural and engineering services account for 54,700 of the jobs. Computer systems design and related services account for 70,400 of the jobs. Management consultants account for 88,400 of the jobs.
There were more jobs for hospital orderlies than for architects and engineers. Waitresses and bartenders accounted for as many of last year’s new jobs as the entirety of professional and business services.
Wholesale and retail trade, transportation, and utilities accounted for 181,000 of 2007’s new jobs.
Where are the rest of the new jobs? There are a few scattered among arts, entertainment, and recreation, repair and maintenance, personal and laundry services, and membership associations and organizations.
That’s it. …
Where is the benefit to Americans of offshoring? The answer is that the benefit is confined to a few highly paid executives who receive multi-million dollar bonuses for increasing profits by offshoring jobs. The rest of the big money went to Wall Street crooks who sold trusting people subprime derivatives.
Hnattvæðingin stenst ekki í sinni núverandi mynd og dæmið hefur reyndar aldrei gengið upp. Í staðinn fyrir að auka viðskipti við minna tæknivæddar þjóðir á svipaðan máta og t.d. þegar Evrópusambandið tekur inn ný ríki, þá hafa þröngir hagsmunir komist upp með að einblína á einn þátt, framleiðsluna, án þess að taka tillit til náttúru, mannréttinda eða hvaða afleiðingar þessi gróðastarfsemi hefur á lífsframfæri heilla stétta í öðrum löndum.
Sápukúlur af ýmsum gerðum—tæknidella, fasteignabóla og afleiðubrask—hafa breitt yfir vandann síðasta áratug, en núna er sápan búin. Það er ekkert í sjónmáli sem hægt er að þenja út.