A Catch 22

A case of deflationary collapse or hyperinflation

Joseph Heller published his famous book “Catch-22” in 1961, describing American pilots during World War II. In this day and age of financial misery and economic havoc one could use Heller’s beautiful description of a catch-22 as an analogy. Central bankers everywhere face a classic catch-22. Bankers who are piloting our economies so to speak.

To me it is not so much of a question if they are facing a catch-22. It is one of how much Ben Bernanke, Jean-Claude Trichet, Mervyn King and all other central bankers are aware of it. Continue reading “A Catch 22”

Great Depression 2.0 – Now, That Is An Innovation!

Financial innovations have been at the heart of the current economic mess. For any economist who is educated and specialized in the domain of economic renewal and innovativeness, it must have been a distinctively uncomfortable experience to hear the word innovation so many times in the context of financial products.

All these bankers and their financial liaisons who commonly use this word, only do so because it seems to sound about right. Too many times this simple word is used in an elaborate story in which it is falsely claimed they were unaware of the substantial risks they took creating these so-called financial innovations.

Did they really think that risks could be innovated non-existent? In this age of financial wizardry, such an explanation must be considered a harbinger of blatant ignorance and intellectual incompetence.

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Redt de Nederlandse woningmarkt! Maar hoe?! Plan B

De Nederlandse huizenprijzen zijn overgewaardeerd en dreigen in te storten. Deze overwaardering is in 2007 op 30 procent geschat (Herengrachtindex). Deze schatting werd eerder dit jaar onderschreven door het IMF. Bloomberg.comi meldde 24 november j.l. dat nabij het van Gogh Museum in Amsterdam de huizenprijzen met 13 procent zijn gedaald.

De oorzaak van de overwaardering van Nederlandse huizen is tweeledig. Ten eerste heeft De Nederlandsche Bank jarenlang een veel te ruim monetair beleid gevoerd. Hierdoor konden commerciƫle banken steeds meer schulden creƫren. Ten tweede werd deze schuldcreatie door de Nederlandse overheid gesubsidieerd middels de hypotheekrente aftrek (HRA). Het financieringspotentieel van huizenkopers is hierdoor jarenlang veel te hoog geweest, met een zeepbel als gevolg.

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