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Институт нового экономического мышления
07 августа, 15:44

Dumb - And Dumber - Money Keeps Pouring In

Authored by John Rubino via DollarCollapse.com, Someday, stock, bond and real estate valuations will matter again. And the mechanism by which this return to sanity is achieved will probably be the torrent of money now flowing in from people who, for various reasons, don’t care about (or understand) the prices they’re paying. Millennials, for instance, seem to have reached the “beginners’ mistakes” phase of their financial lives. They’re major buyers of recreational vehicles – see The Perfect Crash Indicator Is Flashing Red — and are now opening stock brokerage accounts at a startling pace: Schwab: “New Accounts Are At Levels We Have Not Seen Since The Dot Com Bubble” As Millennials Rush Into Stocks (Zero Hedge) – In its Q2 earnings results, [stock broker Charles] Schwab reported that after years of avoiding equities, Schwab clients opened the highest number of brokerage accounts in the first half of 2017 since 2000. This is what Schwab said on its Q2 conference call:   New accounts are at levels we have not seen since the Internet boom of the late 1990s, up 34% over the first half of last year. But maybe more important for the long-term growth of the organization is not so much new accounts, but new-to-firm households, and our new-to-firm retail households were up 50% over that same period from 2016. In total, Schwab clients opened over 350,000 new brokerage accounts during the quarter, with the year-to-date total reaching 719,000, marking the biggest first-half increase in 17 years. Total client assets rose 16% to $3.04 trillion.   Schwab also adds that the net cash level among its clients has only been lower once since the depths of the financial crisis in Q1 2009:   “Now, it’s clear that clients are highly engaged in the markets, we have cash being aggressively invested into the equity market, as the market has climbed. By the end of the second quarter, cash levels for our clients had fallen to about 11.5% of assets overall, now, that’s a level that we’ve only seen one time since the market began its recovery in the spring of 2009.”   But wait, there’s more: throwing in the towel on prudence, according to a quarterly investment survey from E*Trade, nearly a third of millennial investors are planning to move out of cash and into new positions over the coming six months. By comparison, only 19% of Generation X investors (aged 35-54) are planning such a change to their portfolio, while 9% of investors above the age of 55 are planning to buy in.   Furthermore, according to a June survey from Legg Mason, nearly 80% of millennial investors plan to take on more risk this year, with 66% of them expressing an interest in equities. About 45% plan to take on “much more risk” in their portfolios. In other words, little by little, everyone is going “all in.” Here’s a related chart showing margin debt – many investors borrow against existing stock portfolios to buy more shares. Not surprisingly given the above, it’s at record levels and rising. Corporations, meanwhile, continue to hoover up their own shares even as the market averages break records: Big Pharma Spends on Share Buybacks, but R&D? Not So Much (New York Times) – Under fire for skyrocketing drug prices, pharmaceutical companies often offer this response: The high costs of their products are justified because the proceeds generate money for crucial research on new cures and treatments.   It’s a compelling argument, but only partly true. As a revealing new academic study shows, big pharmaceutical companies have spent more on share buybacks and dividends in a recent 10-year period than they did on research and development. The working paper, published on Thursday by the Institute for New Economic Thinking, is entitled “U.S. Pharma’s Financialized Business Model.”   The paper’s five authors concluded that from 2006 through 2015, the 18 drug companies in the Standard & Poor’s 500 index spent a combined $516 billion on buybacks and dividends. This exceeded by 11 percent the companies’ research and development spending of $465 billion during these years.   The authors contend that many big pharmaceutical companies are living off patents that are decades-old and have little to show in the way of new blockbuster drugs. But their share buybacks and dividend payments inoculate them against shareholders who might be concerned about lackluster research and development.   While stock buybacks appear to be particularly troublesome among drugmakers, big companies in other industries — in sectors like banking, retail, technology and consumer goods, among others — are also buying back boatloads of their shares. Through May, some $390 billion in buybacks have been announced this year, $13 billion more than at this time in 2016, according to figures compiled by Jeffrey Yale Rubin at Birinyi Associates, a stock market research firm.   June 28 was the biggest single buyback announcement day in history. That was when 26 banks disclosed buybacks worth $92.8 billion, largely a response to having just passed the stress tests administered by the Federal Reserve Board. That figure blew past the previous record of $56.4 billion announced on July 20, 2006. Note that last sentence: The previous record for corporate share repurchases occurred about a year before stock prices fell off a cliff. But the dumbest money is not in the private sector. It’s sitting around central bank conference tables making clueless bets on equities with taxpayer (i.e., make-believe) money. The Bank of Japan is leading the way: (Japan News) – At its Policy Board meeting on July 28-29, 2016, the BOJ decided to increase its purchases of ETFs, which hold stocks and other assets, at an annual pace of ¥6 trillion from ¥3.3 trillion.   Since then, the benchmark 225-issue Nikkei stock average on the Tokyo Stock Exchange has risen some 20 percent.   The BOJ program “has created a sense of security among investors,” Nobuyuki Hirano, chairman of the Japanese Bankers Association (Zenginkyo), and president of Mitsubishi UFJ Financial Group Inc., one of Japan’s three megabank groups, said at a press conference earlier this month. Last month, BoJ Governor Haruhiko Kuroda told reporters that it is “‘possible in theory’ to reduce the BOJ’s ETF purchases before inflation reaches the target. But it was ‘generally unthinkable’ that the BOJ would remove a part of its easing program, and had no intention of treating ETF purchases differently from the other elements of the program.” It bears repeating that this is all happening with most major equity indexes at or near record levels – that is, levels that have in the past preceded huge crashes. Which is how these guys came to be known as dumb money.

13 июня, 22:02

Links for 06-13-17

Their Own Private Pyongyang - Paul Krugman Reagan to the power of ten - Thomas Piketty A President at War With His Fed Chief, 5 Decades Before Trump - NYTimes Can US States Right Trump’s Wrongs? - Barry Eichengreen The...

08 июня, 19:28

Links for 06-08-17

Nobel Laureates Give Advice to Young Economists - YouTube When Trotsky (Temporarily) Embraced Prices and Markets - Tim Taylor Why has the US resisted Trump but the UK acquiesced to Brexit? - mainly macro Why Talk of Bank Capital ‘Floors’...

27 мая, 10:06

Links for 05-27-17

The Future of Education and Lifelong Learning - Brad DeLong The Question Is Why is Wage Growth So High - New York Times Proliferation of hate and intolerance - Understanding Society Algorithmic Pricing and Competition: - Tim Taylor May's groupthink...

21 мая, 12:25

The New Normal: Demand, Secular Stagnation and the Vanishing Middle-Class

Discusses twin diseases stymieing US middle-class-- secular stagnation and the polarization of jobs and incomes-- and potential policy cures.

20 мая, 10:06

Links for 05-20-17

Is big government bad for freedom, society, and happiness? - Lane Kenworthy Economic Forecasting Is Still Broken - Narayana Kocherlakota The Connection Between Finance and Politics - ProMarket Bad Optics: the Fed's Balance Sheet Edition - David Beckworth Assessing the...

19 мая, 18:48

After Piketty panel at the Graduate Center, CUNY (video) | Equitable Growth

**Must-Watch: Heather Boushey et al.**: _"After Piketty" panel at the Graduate Center, CUNY_: "Heather Boushey, Paul Krugman, Branko Milanovic, and Salvatore Morelli discuss After Piketty at the Graduate Center of CUNY on May 11, 2017. _After Piketty: The Agenda for Economics and Inequality_ ---- ---- **Janet Gornick**: Good evening. Welcome to the Graduate Center at the City University of New York. My name is Janet Gornick. I am professor of political science and sociology here at the Graduate Center, and Director of the Stone Center on Socio-Economic Inequality. The Stone Center is a research center here focused on the study of income and wealth disparities. Among our many activities is housing the United States Office of LIS, the cross-national data archive located in Luxembourg. The Stone Center is co-sponsoring this evening's event. In my role as director, I have the pleasure of welcoming all of you. And to those of you watching the livestream, thanks for joining us. We convene this evening for a conversation about a new book titled _After Piketty: The Agenda for Economics and Inequality_. In this volume the authors of 22 essays reflect on the enormously influential book by Thomas Piketty, _Capital in the 21st Century_,...

01 мая, 03:08

Links for the Week of April 30, 2017

**Must-Reads:** * **Branko Milanovic**: _El Super Clasico: Trade and Technology Duke It Out at CUNY_: "The panelists seemed to agree... * **Heather Boushey, Brad DeLong and Marshall Steinbaum**: _Equitable Growth in Conversation_: **Marshall Steinbaum**: "I think the key question... in Piketty terms [is]... * **Gauti Eggertsson, Neil Mehrotra, and Jacob A. Robbins**: _To accommodate or not: The Federal Reserve’s new normal_ : "Current [monetary] policy may be at or close to the natural rate... * **INET**: _Education Initiative_: "We are thrilled that you are joining us at the Berkeley Spring 2017 Education Convening, Friday, April 28th 9am-5pm Blum Hall, B100 #5570, Berkeley, CA 94720-5570... * **Matthew Yglesias**: _If you really respect Trump voters, tell them the truth_: "A wave of recent columns argue that what Trump superfans... * **Ezra Klein**: _The GOP’s biggest health care achievement has been making Obamacare more popular_: "It is bizarre watching House Republicans persuade themselves that the problem they face on health care... ---- **Should-Reads:** * **Adam Tooze**: _Reviewing ‘How Will Capitalism End?’ by Wolfgang Streeck_: "Streeck draws urgent practical conclusions... * **Arindrajit Dube**: _Minimum wages and the distribution of family incomes in the United States_: "I find robust evidence that higher minimum wages lead...

30 апреля, 03:04

Procrastinating on April 29, 2017

**Over at [Equitable Growth](http://EquitableGrowth.org): Must- and Should-Reads:** * **Trade, Jobs, and Inequality | Equitable Growth** * **What Can Be Done to Improve the Episteme of Economics? | Equitable Growth** * **Branko Milanovic**: _El Super Clasico: Trade and Technology Duke It Out at CUNY_: "The panelists seemed to agree... * **Trade, Jobs, and Inequality** : "CUNY :: The Graduate Center :: 365 Fifth Avenue :: C200: Proshansky Auditorium :: April 26, 2017: 6:30 PM ... * **INET**: _Education Initiative_: "We are thrilled that you are joining us at the Berkeley Spring 2017 Education Convening, Friday, April 28th 9am-5pm Blum Hall, B100 #5570, Berkeley, CA 94720-5570... * **Peter Ganong and Pascal Noel**: _Consumer spending during unemployment: Positive and normative implications_: "We study... unemployment insurance... using de-identified data from nearly 200,000 bank accounts... * **Nisha Chikhale**: _The importance of unemployment benefits for protecting against income drops_: "Jesse Rothstein... and Robert Valletta... the role that unemployment insurance plays in supporting family incomes... * **Dietrich Vollrath**: _Topics in Economic Growth_: "I just created some new pages... * **Nick Bunker**: _Weekend reading: “Link pass-through entity” edition | Equitable Growth_: "Arindarjit Dube summarizes his recent research on the effect of minimum wage hikes on family incomes... ----...

25 апреля, 18:56

What Can Be Done to Improve the Episteme of Economics?

Brad DeLong: What Can Be Done to Improve the Episteme of Economics?: I think this is needed: INET: Education Initiative: "We are thrilled that you are joining us at the Berkeley Spring 2017 Education Convening, Friday, April 28th 9am-5pm Blum...

25 апреля, 18:47

What Can Be Done to Improve the Episteme of Economics?

I think this is needed: **INET**: _Education Initiative_: "We are thrilled that you are joining us at the Berkeley Spring 2017 Education Convening, Friday, April 28th 9am-5pm Blum Hall, B100 #5570, Berkeley, CA 94720-5570... >...Sign up here: or email [email protected] I strongly share INET's view that things have gone horribly wrong, and that it is important to listen, learn, and brainstorm about how to improve economics education. Let me just note six straws in the wind: 1. **The macro-modeling discussion is wrong:** The brilliant Olivier Blanchard : "The current core... RBC (real business cycle) structure [model] with one main distortion, nominal rigidities, seems too much at odds with reality.... Both the Euler equation for consumers and the pricing equation for price-setters seem to imply, in combination with rational expectations, much too forward-lookingness.... The core model must have nominal rigidities, bounded rationality and limited horizons, incomplete markets and the role of debt..." 2. **The macro-finance discussion is wrong:** The efficient market hypothesis (EMH) claimed that movements in stock indexes were driven either by (a) changing rational expectations of future cash flows or by (b) changing rational expectations of interest rates on investment-grade bonds, so that expected returns were either (a) unchanged...

25 апреля, 18:29

Без заголовка

**Must-Read:** Friday 9-5 pm: Blum Center: U.C. Berkeley: INET says: learn, share, and brainstorm about concrete future endeavors in broad-church post-secondary economics education. I strongly share INET's view that things are seriously wrong... Sign up here: or email [email protected] **INET**: _Education Initiative_: "We are thrilled that you are joining us at the Berkeley Spring 2017 Education Convening, Friday, April 28th 9am-5pm Blum Hall, B100 #5570, Berkeley, CA 94720-5570... >...We are convening students and professors who are interested in broadening economics education.... Our goals are to learn more about prevailing needs, pool and share existing pluralist curriculums, and brainstorm the architecture and direction of concrete future endeavors in post-secondary economics education. The economics discipline is in disrepair: publicly discredited, theoretically narrow, and academically constrained. Economics education reflects these flaws.... INET is gathering people in the academic economics community in convenings across the U.S. to better understand the challenges and resources faced by those working to reinvigorate the economics discipline. >Invitations are extended to: pre- and non-tenure faculty, including adjuncts; undergraduate and graduate students; experienced faculty actively engaged in pluralist education.... The convenings will be group-led, facilitated, full-day workshops.... These convenings are an exploratory process for INET. We have not made any...

21 апреля, 10:06

Links for 04-21-17

Prudential regulation, capital controls, and second-best - Dani Rodrik Regulators Accuse Subprime Mortgage Servicer of Years of Abuses - NYTimes Evidence-Based Policy in Antitrust - ProMarket America is Regressing into a Developing Nation for Most People - INET Want to...

20 апреля, 06:00

Earth 2.0: Is Income Inequality Inevitable?

In pursuit of a more perfect economy, we discuss the future of work; the toxic remnants of colonization; and whether giving everyone a basic income would be genius — or maybe the worst idea ever. The post Earth 2.0: Is Income Inequality Inevitable? appeared first on Freakonomics.

13 апреля, 06:00

Earth 2.0: What Would Our Economy Look Like?

If we could reboot the planet and create new systems and institutions from scratch, would they be any better than what we’ve blundered our way into through trial and error? This is the first of a series of episodes that we’ll release over several months. Today we start with — what else? — economics. You’ll hear from Nobel laureate Angus Deaton, the poverty-fighting superhero Jeff Sachs; and many others. The post Earth 2.0: What Would Our Economy Look Like? appeared first on Freakonomics.

21 марта, 07:42

Links for 03-21-17

Robot Geometry (Very Wonkish) - Paul Krugman Market Power Probably Contributes to Inequality - ProMarket 1965: The Year the Fed and LBJ Clashed - FRBRichmond Is the Internet Causing Political Polarization? - NBER The Mechanical Turn in Economics and Its...

02 марта, 09:32

Links for 03-02-17

Coal Is A State Of Mind - Paul Krugman Why are peer reviews private? - Digitopoly Apprenticeship and the rise of Europe - VoxEU A reply to Lawrence White - MacroMania How colonial railroads defined Africa’s economic geography - VoxEU...

28 февраля, 11:06

Links for 02-28-17

A correction to my farewell to Kenneth Arrow - Larry Summers Social media, political donations and incumbency advantage in the US - VoxEU Kenneth Arrow Part II: The Theory of General Equilibrium - A Fine Theorem Global Financial Market Integration...

28 февраля, 10:03

Complexity: A new approach to economic challenges

William Hynes, OECD New Approaches to Economic Challenges (NAEC) initiative The OECD launched its “New Approaches to Economic Challenges” (NAEC) initiative in 2012 to reflect on the lessons for economic analysis and policymaking from the financial crisis and Great Recession. European Central Bank Governor Jean-Claude Trichet said that: “as a policy-maker during the crisis, I […]

13 февраля, 08:00

Богатые люди в США готовятся к катастрофе

Стив Хаффман, 33-летний соучредитель и гендиректор сайта Reddit, который оценивается в 600 миллионов долларов, до ноября 2015 года страдал от близорукости, пока не решился на лазерную коррекцию зрения. Процедуру он перенес не ради удобства или внешности, а, скорее, по причине, которую он обычно не афиширует: он надеется, что это улучшит его шансы на выживание после […]

06 мая 2015, 19:50

Йеллен: ценовые уровни рынка США "довольно высоки"

Председатель ФРС США Джанет Йеллен предупредила о потенциальных рисках, связанных с повышенными ценовыми уровнями американского фондового рынка.