Chi lo poteva prevedere? (parte 2)
Della settimana appena conclusa, si ricorderanno sia il calo del prezzo del petrolio, sia il rialzo del prezzo del dollaro in termini di euro (e le due cose NON sono del tutto scollegate) sia, e dal punto di vista di Recce’d soprattutto, la brusca e significativa marcia indietro della Federal Reserve, anche ma non soltanto per bocca del proprio vice- Governatore Clarida, il numero due alla Banca Centrale USA.
Una marcia indietro che arriva a pochi giorni dal momento nel quale (dopo la pubblicazione dell’ultimo dato) sono arrivate persino sui media più “ottimisti” le prime critiche in materia di inflazione rivolte proprio alla Federal Reserve.
Questo è proprio quel momento nel quale molte persone poco informate ma pure molte persone male intenzionate (i “finti sciocchi”) cominciano a dire: “del resto, chi lo poteva prevedere”?
Ovviamente, non si tratta soltanto di una questione teoria, del tipo “io avevo ragione, tu avevi torto”: si tratta di una questione che incide sulla vita di ognuno di noi, e sulle scelte quotidiane, come (a puro titolo di esempio) racconta il dato del grafico qui in basso.
La frase “chi lo poteva prevedere” è una patetica sciocchezza: la cosa era prevedibilissima, e si è intenzionalmente voluto fare nulla e continuare a fare finta di non vedere le evidenze, ed i fatti.
Tra i tanti che, in sede pubblica, avevano previsto una evoluzione della realtà come quella che poi tutti vedete oggi, c’è l’ex Ministro del Tesoro USA Larry Summers, come da noi più volte segnalato, anche nel Blog ma soprattutto ai Clienti.
Per questa specifica ragione, è utile domandarsi oggi che cosa dice Summers oggi, si ciò che poi vedremo domani e dopodomani.
Potete leggerlo qui sotto.
Contributing columnist
Today at 8:00 a.m. EST
There is a wise apocryphal saying often attributed to John Maynard Keynes: “When the facts change, I change my mind. What do you do?” After years of advocating more expansionary fiscal and monetary policy, I altered my view this past winter, and I believe the Biden administration and the Federal Reserve need to further adjust their thinking on inflation today.
Fed Chair Jerome H. Powell’s Jackson Hole speech in late August provided a clear, comprehensive and authoritative statement, enumerated in five pillars, of the widespread team “transitory” view of inflation that prevailed at that time and shaped policy thinking at the central bank and in the administration.
Today, all five pillars are wobbly at best.
First, there was a claim that price increases were confined to a few sectors. No longer. In October, prices for commodity goods outside of food and energy rose at more than a 12 percent annual rate. Various Federal Reserve system indexes that exclude sectors with extreme price movements are now at record highs.
Second, Powell suggested that high inflation in key sectors, such as used cars and durable goods more broadly, was coming under control and would start falling again. In October, used-car prices accelerated to more than a 30 percent annual inflation rate, new cars to a 17 percent rate and household furnishings by an annualized rate of just above 10 percent.
Third, the speech pointed out that there was “little evidence of wage increases that might threaten excessive inflation.” This claim is untenable today with vacancy and quit rates at record highs, workers who switch jobs in sectors ranging from fast food to investment banking getting double-digit pay increases, and ominous Employment Cost Index increases.
Fourth, the speech argued that inflation expectations remained anchored. When Powell spoke, market inflation expectations for the term of the next Federal Reserve chair were around 2.5 percent. Now they are about 3.1 percent, up half a percentage point in the past month alone. And consumer sentiment is at a 10-year low due to inflation fears.
Fifth, Powell emphasized global deflationary trends. In the same week the United States learned of the fastest annual inflation rate in 30 years, Japan, China and Germany all reported their highest inflation in more than a decade. And the price of oil, the most important global determinant of inflation, is very high and not expected by forward markets to decline rapidly.
Further considerations reinforce concerns about inflation. Meme stocks, retail option buying, crypto market developments, credit spreads and some start-up valuations suggest significant froth in some markets. Housing prices and rents are both up 15 to 20 percent in the past year. These movements are far from fully reflected in the shelter component of the consumer price index, which represents one-third of the CPI, implying substantial pressures to come.
What now?
First, let’s not compound errors that have already been made with far too much fiscal stimulus and overly easy monetary policy by rejecting Build Back Better. The legislation would spend less over 10 years than was spent on stimulus in 2021. Because that spending is offset by revenue increases and because it includes measures such as child care that will increase the economy’s capacity, Build Back Better will have only a negligible impact on inflation. It will of course be imperative to ensure that various temporary measures, such as the child tax credit, will not be extended without new revenues to pay for them.
Second, the administration is making a series of Fed appointments in coming weeks. The president’s choices need to recognize, as Powell has started to do in recent remarks, that the major current challenge for the central bank is containing inflation. If price stability is lost and inflation accelerates, sooner or later the consequence will be a severe recession that will hit the poor and middle class hardest and undo recent employment gains.
Third, Powell and his colleagues have rightly emphasized the need for close economic monitoring and attentiveness to inflation risks. Now the Fed should signal that the primary risk is overheating and accelerate tapering of its asset purchases. Given the house-price boom, mortgage-related purchases should stop immediately. Because of inflation, real interest rates are lower, as money is easier than a year ago. The Fed should signal that this is unacceptable and will be reversed.
Fourth, the administration should signal that a concern about inflation will inform its policies generally. Measures already taken to reduce port bottlenecks may have limited effect but are a clear positive step. Buying inexpensively should take priority over buying American. Tariff reduction is the most important supply-side policy the administration could undertake to combat inflation. Raising fossil fuel supplies, by relaxing regulations and deploying the Strategic Petroleum Reserve, are crucial. And financial regulators need to step up and be attentive to the pockets of speculative excess that are increasingly evident in financial markets.
Excessive inflation and a sense that it was not being controlled helped elect Richard Nixon and Ronald Reagan, and risks bringing Donald Trump back to power. While an overheating economy is a relatively good problem to have compared to a pandemic or a financial crisis, it will metastasize and threaten prosperity and public trust unless clearly acknowledged and addressed.
I fatti delle ultime ore ci dicono che alla Federal Reserve hanno scelto di procedere proprio nel modo che era richiesto da Summers nel suo articolo che avete appena letto.
In aggiunta, nel suo articolo Summers citava un secondo tema di grandissima attualità: l’annuncio che dovrebbe arrivare tra lunedì e mercoledì prossimi dell’incarico, da parte del Presidente USA, al ruolo di Chairman della Federal Reserve. Ruolo al quale potrebbe essere confermato Jerome Powell, ma si tratta di una conferma non scontata.
La settimana scorsa, il Premio Nobel Joseph Stiglitz ha spiegato, nell’articolo che leggete qui sotto, le ragioni per le quali Powell NON andrebbe confermato come Capo della Federal Reserve.
Recce’d NON condivide parecchie delle cose scritte da Stiglitz, ma ha ben chiare le ragioni per le quali oggi la figura di Powell è molto indebolita, ed è quindi molto attaccabile.
Associate queste considerazioni a quelle portate avanti da Summers a proposito della politica della Fed, ed avrete un quadro più preciso di che cosa ha agitato i mercati finanziari nelle ultime settimane.
NEW YORK – US President Joe Biden faces a critical decision: whom to appoint as chair of the Federal Reserve – arguably the most powerful position in the global economy.
The wrong choice can have grave consequences. Under Alan Greenspan and Ben Bernanke, the Fed failed to regulate the banking system adequately, setting the stage for the worst global economic downturn in 75 years. That crisis and policymakers’ response to it have had far-reaching political consequences, exacerbating inequality and nurturing a lingering sense of grievance in those who lost their houses and jobs. There are a host of clichés about why the current chair, Jerome Powell, should be reappointed. Doing so would be a demonstration of bipartisanship. It would reinforce the Fed’s credibility. We need a seasoned hand to steer us through the post-pandemic recovery. And so on. I heard all the same arguments 25 years ago when I was chair of the US President’s Council of Economic Advisers and Greenspan was being considered for reappointment. They were enough to convince Bill Clinton, and the country paid a high price for his decision. Ironically, President Ronald Reagan gave short shrift to these arguments when he effectively fired Paul Volcker in 1987, denying him reappointment after he had tamed inflation. Reagan owed Volcker a great deal, but because he wanted to pursue deregulation, he opted for Greenspan, an acolyte of Ayn Rand. Economic policymaking requires careful judgment and a recognition of trade-offs. How important is inflation versus jobs and growth? How confident can we be that markets are efficient, stable, fair, and competitive on their own? How concerned should we be about inequality? America’s two main parties have always had markedly different but clearly articulated perspectives on these matters (at least until the Republicans’ descent into populist madness). To my mind, the Democrats are right to worry more about the consequences of joblessness. The 2008 crisis showed that unfettered markets are neither efficient nor stable. Moreover, we know that marginalized groups have been brought into the economy and wage disparities reduced only when labor markets are tight.
The coming years are likely to test any Fed chair. The United States is already facing tough judgment calls concerning inflation and what to do about it. Are recent price increases mostly hiccups resulting from an unprecedented economic shutdown? How should the Fed think about the African-American employment rate, which still has not recovered to its pre-pandemic levels? Would raising interest rates (and thus unemployment) be a cure worse than the disease?
Equally, while the mispricing of mortgage-backed securities was central to the 2008 meltdown, there is now evidence of an even greater and more pervasive mispricing of assets related to climate change. What should the Fed do about that? Powell is not the man for the moment. For starters, he supported former President Donald Trump’s deregulatory agenda, risking the world’s financial health. And even now, he is reluctant to address climate risk, even though other central bankers around the world are declaring it the defining issue of the coming decades. Powell would say that climate issues are not included in the Fed’s mandate, but he would be wrong. Part of the Fed’s mandate is to ensure financial stability, and there is no greater threat to that than climate change. The Fed is also responsible for approving mergers in the financial sector, and Powell’s record suggests that he has never seen a bad one. Such laxity is the last thing the economy needs right now. A glaring lack of competition and the absence of adequate regulation are already allowing for outsize profits, diminishing the supply of finance for small businesses, and providing the dominant players greater scope for taking advantage of others. Some commentators have given Powell credit for the Fed’s response to the pandemic. But any college sophomore would have known not to tighten monetary policy and raise interest rates during a recession. Moreover, as Simon Johnson of MIT has argued, Powell does not have a deep commitment to full employment. On the contrary, as a member of the Fed Board of Governors for the past decade, Powell has a history of misjudgments in tightening monetary policy dating back to the “taper tantrum” of 2013. Though many Fed watchers insist that inequality is not the central bank’s business, the fact is that Fed policies have major distributional effects that cannot be ignored. Just as prematurely raising interest rates can choke off growth, weak enforcement of the Community Reinvestment Act allows for deeper concentrations of market power. Finally, the recent ethics scandal involving market trades by top Fed officials has undermined confidence in the institution’s leadership. Powell’s seeming insensitivity to conflicts of interest has long worried me, including in the management of some of the Fed’s pandemic-response programs. With four years of Trump having already weakened trust in US institutions, there is a real risk that confidence in the Fed’s integrity will be undermined even further. No Fed official should need an ethics officer to decide when certain trades would appear unseemly.
The Fed is in some ways like the US Supreme Court. It’s supposed to be above politics, but at least since Bush v. Gore, we’ve known that’s not true. Trump clarified that for any doubters. The Fed, too, is supposed to be independent, but Powell and Greenspan, as they followed their party’s deregulatory agenda, made clear that that also was not the case. But while the Board makes crucial decisions affecting every aspect of the economy, power historically has been concentrated in the chair – far more so than with the Supreme Court chief justice. It is the Fed chair who decides what to bring to a vote, and which issues to slow-roll or fast-track. The climate issue is just one example of where it absolutely matters who is at the head of the table.
The US needs a Fed that is genuinely committed to ensuring a stable, fair, efficient, and competitive financial sector. Anyone who thinks that we can rely on unfettered markets, or that regulation has already gone too far, is not seeing clearly. We need neither an ideologue like Greenspan nor a Wall Street-minded lawyer like Powell. Rather, we need someone who has a deep understanding of economics, and who shares Biden’s values and concerns about both inflation and employment. There are undoubtedly many figures who could meet these conditions. But Biden doesn’t have to look far to find someone who has already shown her mettle. Lael Brainard is already on the Board, where she has demonstrated her competence and gained the respect of markets – without compromising her values. Biden can have his cake and eat it: a Fed chair who maintains continuity and won’t roil markets, but shares his economic and social agenda