posted by Lyric Hughes Hale on December 5, 2016 - 9:47am
It has been an eventful year with no let-up post-Brexit & Trump. In 2016 the longest-ruling monarch, King Bmibol Adulyadejhu of Thailand, and the longest-ruling national leader, Fidel Castro, both passed from the scene. A surprise demonetization in India made economic history, as Zimbabwe prepares to sweep US dollars from circulation. Change is everywhere and the pace seems to be quickening.
Today, 2 million people gathered to demand the ouster of South Korean President Park Geun-hye. Yesterday, President-elect Trump spoke with Taiwanese President Tsai Ing-wen breaking diplomatic tradition, and tomorrow we await the results of the Italian constitutional referendum.
If 2016 has taught us one lesson, it must be humility in the face of history. We have gathered some of the best analysis we can find to begin to piece together the puzzle of 2017.
We include a deep dive by the esteemed young economist Esther Duflo that relates to easing the friction of fiscal expansion. Carmen Reinhart discusses the increase in Italian debt as a result of capital flight, and we take a look at a surprising map of public debt per capita. Infrastructure, energy, China, Malaysia, India, Iran, Japan, the UK, and Harvard Law Prof. Hal Scott’s address to the IMF on the dangers of Dodd-Frank round out our Spotlight this week.
STORIES IN OUR SPOTLIGHT
Fleeing from Italy
Carmen Reinhart 11/23/2016 Project Syndicate
As a member of the EU, Italy no longer has the option of raising interest rates, devaluing its currency, or controlling capital outflows, which have soared. The country is holding a constitutional referendum on December 4th which could presage an exit from the EU if a No vote forces out PM Mario Renzi. The more interesting result in this contrarian year would be a Yes vote, which would be stabilizing for the EU and the euro. Reports are that younger voters are supporting Renzi-could the polls be wrong again?
US House Passes Taiwan-US Military Exchanges Draft
Taipei Times 12/4/2016
While the focus on Friday was on Trump’s phone call with Taiwan, the same day the US House of Representatives passed a draft agreement for senior military exchanges between Taiwan and the US, which in previous years had been vetoed by the White House. Last year, the US sold $1.7B of military equipment to Taipei.
IMF U-turns on Brexit warning as UK poised to be fastest growing G7 economy this year
Jessica Morris 1/4/2016 City A.M.
Markets didn't crash, and the UK economy grew; Cassandra was wrong before & after the UK-US votes. But is the current run sustainable?
These countries are saddled with the most debt per person, in one chart
Rachel Koning Beals 11/23/2016 MarketWatch
A lot of discussion about the state of the world economy centers around mounting public debt. Try to find China on the terrific graphic in this article. Its public per capita debt is minuscule, $1,300 compared to the US $42,500 and the winner, Japan at $85,700.
How Does Education in China Compare With Other Countries?
CSIS China Power 2016
467,308 primary schools closed in China since 1995. How does education in China compare with other countries?
Hal S. Scott Delivers Speech to International Monetary Fund on Connectedness and Contagion
Harvard Law Professor Hal S. Scott 11/7/2016
The U.S. crisis was successfully stemmed with three weapons: 1) lender of last resort; 2) liability guarantees and 3) capital injections. Post crisis, all of these weapons have been limited or eliminated, primarily by the Dodd-Frank Act, as undesirable “bailouts.”
The Economist as Plumber: Laying the Pipes, Fixing the Leaks
Esther Duflo 11/8/2016 IMF Richard Goode Lecture
The wunderkind French MIT economist says that fiscal expansion without efficient means of transmission to receptive nodes of the real economy will be wasteful and ineffective. She calls upon economists to assist with smart policy.
What We Learn From a Sovereign Debt Restructuring in France in 1721
François R. Velde 2016 Federal Reserve Bank of Chicago
How the ‘Trump Bump’ to the U.S. Economy Could Fall Flat
David Levy 11/28/2016 Jerome Levy Forecasting Center, MarketWatch
We still maintain that the ultimate Treasury yield lows are to come…In any event, the next global downturn likely will drive overnight rates back to zero and Treasury yields to new lows under the weight of deflating balance sheets.
The Trump Trade Is Getting Out of Hand: Buy Bonds
James McKintosh 11/14/2016 Wall Street Journal
Infrastructure money takes time to spend. Did markets overshoot? Once more is known, the Trump Bump could come to an end.
China's Bond Market Can't Handle a Global RMB
Benn Steil and Emma Smith 12/1/2016 CFR
Great Expectations: Geo-Graphics, China’s Bond Market Can’t Handle a Global RMB.
How Republicans Plan to Spend Like Crazy Without Running Up Debt
Brendan Greeley 11/17/2016 Bloomberg
Will new goverment debt crowd out private investment? Maybe not. Trump is focused on public-private partnerships.
USGS Estimates 20 Billion Barrels of Oil in Texas’ Wolfcamp Shale Formation
U.S. Geological Survey 11/15/2016
Geopolitically, why should the US care about OPEC? OPEC does not have a history of keeping to its promises to curb production. Saudi Arabia is also preparing for an IPO of Aramco which could have impacted its decision.
Maximizing the Opening with Iran: How President Trump Can Secure American Interests in the Middle East
Video conference to discuss report to the PEOTUS by the National Iranian American Council 11/16/2016
Steve Clemons of the Atlantic moderates an impressive panel. John Mersheimer, Trita Parsi, Reza Murashi, Andrew Bacevich, Sanam Naraghi-Anderlini.
Malaysia Caught in Currency Ripples
Christopher Langner 11/20/2016 Bloomberg
Malaysia's butterfly flaps its wings. Will a storm result?
Zimbabwe: 'They Want to Sweep All the Usd From the Streets' - What Zimbabweans Are Saying About #bond Notes
AllAfrica, News24Wire 11/28/2016
ECONVUE RESEARCH AND INSIGHTS
We are pleased to introduce London-based expert Deepak Lalwani
Mr. Lalwani specializes in Indian economics and finance. Download his latest report on the recent politically bold, but risky demonetization by Prime Minister Modi aimed at corruption, tax evasion and terrorist financing. An economic experiment on a grand scale.
Trump Dilemma on NAFTA - Part 1 & Part 2
The “Rust Belt” states, as well as Texas and California, are far more dependent on trade than the US as a whole. And this dependence includes not just the items that they export, but it also includes all the imports that provide indispensable inputs to their own production.
A tale of two surveys: it was the best of times, it was pretty good times. Payrolls turned in another fine (consensus-like) performance.
Based on these early results, real consumption is on track to grow near a respectable +2.5% this quarter.
As the new Trump administration takes shape, healthcare represents a unique opportunity to pursue bi-partisan reform based on the market-based mechanisms embedded within Obamacare (even after its repeal).
Top 2016 fintech influencers and brands, regulatory effects in faster payments, fintech grief cycle for bankers, lessons from a long-forgotten fintech bank, and blockchain watch.