EconVue Spotlight | What's Next for The World Economy

posted by Lyric Hughes Hale on October 2, 2017 - 11:08am

Last Sunday I gave a speech at the Adlai Stevenson Center on Democracy. The center website quotes Adlai Stevenson, who twice ran for president in the 1950's: "A free society is a society in which it is safe to be unpopular." Never was that more true or more apt than today.

My speech was an attempt to discuss whether or not today's global economy is operating on an entirely new set of rules. I spoke about the trend towards localization that is unfolding at all levels, from government to media, and the puzzles of inflation and productivity.

I'm afraid I shocked my audience with some demographic statistics. Some examples: by 2150, Nigeria will replace the United States as the third most populous nation By 2100, Africa will be home to almost 40% of the world's population.

I hope you enjoy the articles below, which focus on these and other issues. If you have any questions or would like to engage further with our EconVue experts, please don't hesitate to contact us. 


A New GOP Nightmare: Trump and Democrats Cut a Deal on Taxes 
Robert Shapiro

Since Democrats typically favor more federal spending, their traditional wish-list on taxes is heavy on ways to raise revenues rather than options for cutting them. That predilection could provide a basis for another agreement of convenience:  Cut taxes the way that President Trump wants, and pay for it the way that Democrats want.

FMI October 2017 Economic & Investment Outlook
Michael Lewis

The ‘Trump’ Fed: New Faces, New Chair(?), Same Policy; March to ‘Normal’ Policy to Continue under Yellen or Her Successor, Even If Inflation Remains Below Target; Expect Four More Rate Hikes by End of 2018. (FMI Sees Both Inflation & Real Growth Beating Fed’s Outlook – Four Hikes is the Lower Bound); Fed Chair Race: Warsh Surges, Yellen Still a Contender.

New Era of Mutual Learning for China and Singapore
Xi Sun

Nowadays, China's focal areas for learning from Singapore have gone far beyond economic development to mainly social governance, such as Singapore's advanced urban planning and environmental management, housing and social security system, state-owned enterprise management and anti-corruption system.

The Strategic Context of China's Advance in Latin America: An Update
R. Evan Ellis

This brief article gives an overview of the expansion of Chinese activities and influence across the region in military, commercial and other areas, with an emphasis on the acceleration of such engagement and PRC assertion of initiative toward the region during the past year, an analysis of declared and implicit PRC strategic objectives, and the principle vehicles that the PRC has used in pursuing them, concluding with a discussion of the strategic implications for the United States.

Going Digital
Collin Canright

Three reports this week show how incumbent financial institutions grapple with going digital. Taking the certainties of studies at face value: 
1. Bank branches will continue to add value to customers while incorporating more technology

2. Insurers will accelerate investments in digital technologies
3. Central banks will face a decision on whether to issue cryptocurrencies


Central Banking

Central Bank Quantitative Easing as an Emerging Political Liability
FT 9/19/2017

Mind the Wealth Gap
Harriet Torry 9/29/2017 WSJ

Are the Fed’s low-interest-rate policies making wealth inequality worse and crimping the U.S. economy? Lael Brainard might think so. 

Enhancing the Wealth of Nations: Gold and Sovereign Wealth Funds
World Gold Council 9/27/2017

Here is a More Granular Breakout of Inflation by Category. Huge Divergences
The Long View 9/17/2017 Twitter

Inflation: goods vs services in one chart.

The Next Downturn?

Economist Adam Posen is Changing His View on When the Next US Recession will Hit
Luke Graham 9/26/2017 CNBC 

Path to the Next Financial Crisis
Miroslav Singer 9/26/2017 OMIFF

The next disturbance could emanate from a sector that few regulators either oversee or understand.

So What Did the Great Recession Teach Us About the Power of Public Spending? Revisiting Paul Krugman
Benn Steil 9/22/2017 CFR

Common sense: the government cannot spend its way to prosperity with borrowed money. But this is the opposite of what was discussed at Jackson Hole.

The Next Crisis Will Start in Silicon Valley
William Magnuson 9/18/2017 Bloomberg 

Regulators always trail innovators.

UBS: These 8 Housing Markets around the World are Closest to a Bubble
Akin Oyedele 9/28/2017 Business Insider

Fed-up Illinois homeowners consider moving
Gail MarksJarvis and Corilyn Shropshire 9/29/2017 Chicago Tribune

Only 7,511 single-family homes were built in the Chicago metro area during the 12 months ending with July. 


Japan Opposition Leader: Unite behind Koike
Masayuki Yuda 9/28/2017 Nikkei Asian Review

Japan has a snap election coming up. Will Abe, like Teresa May regret his decision?

Yuriko Koike, Japan's Party of Hope, Political Ad
YouTube Video link 2017

Who would have ever thought that Japan could have a female head of government before the US? Stunning television ad, h/t Nicholas Benes

U.S.-China mission rushes bomb-grade nuclear fuel out of Africa
Richard Stone 8/31/2017 Science Magazine

Great story about US-China cooperation. but where does the fuel go?

The Anatomy of a Bankrupt State Firm’s Liquidation
Dinny McMahon 9/26/2017 Macro Polo

CFIUS, Chinese Investment, and How to Improve Both
Derek Scissors 9/18/2017 AEI 

As China develops its own technologies and processes, it should follow Japan's example with greenfield investments that employ US citizens. 


Merkel Lands Fourth Term, But at What Cost?
Philipp Wittrock 9/25/2017 Spiegel Online 

Former BoE Governor Lord King Calls for the UK Govt to Walk Away: “The UK Has to be Ready to Leave and Trade on WTO Arrangements”
Brexit Central 9/20/2017 Video

Sage advice from Mervyn King. UK not in a position to negotiate special treatment with an EU whose political objectives it does not share.