Leading Indicators & a NAFTA Breakthrough - EconVue Spotlight

posted by Lyric Hughes Hale on October 2, 2018 - 1:38pm

Last week was the 73rd session of the United Nations General Assembly in New York, held each fall to the dismay of Manhattanites who suffer a weeklong traffic nightmare.  But for policy wonks, it is an opportunity to meet with and listen to world leaders at countless events on the sidelines of the UN meetings: seeing them interact in person can be a useful leading indicator of a country’s future and its political economy.

At the Council on Foreign Relations, I was privileged to attend presentations by a range of global heads of government.  Videos of some of the events are online, at cfr.org.  Among my favorites were PM Justin Trudeau . As we await today’s NAFTA news , it was easy to conclude it would not be easy to negotiate with FM Chrystia Freeland, a former journalist who sidestepped my question about Canada’s cooperation with China on the new Polar Silk Road. I did wonder why Jim Carr, the trade minister on the left in the photo below did not play a more central role than the foreign minister in NAFTA, but fingers crossed this evening.

I was impressed by the energetic enthusiasm of President Moon Jae-in of South Korea, who seems to be the unsung force behind the Korean peace process. Cyril Ramaphosa, the president of South Africa frankly worried me and probably investors in the room with his glib discussion of land rights and an anti-corruption campaign aimed at multinational companies.

Most refreshing of all was Mahathir Mohamad, the always frank 93-year old prime minister of Malaysia, who in two years’ time will cede power to the man he imprisoned, Anwar Ibrahim. His forecast: in fifty years, all the world will look like Malaysia.  His recent comments on Chinese investment, and the closing of several major projects he said his country cannot afford, have caused a stir. EconVue expert Karim Pakravan discusses some of the bumps and challenges along the Silk Road.

You also won’t want to miss the video of the Symposium of the Legacy of the Global Financial Crisis, details below as well as some other intriguing discussions of post-crisis macroeconomic policy. And finally just for fun, try the CFR online quizzes on foreign affairs and see how much you know about China, Wars, Trade, Foreign Aid etc. I am sad to say that I missed more than couple of questions on Canada before attending that presentation.

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Speed Bumps on the Silk Road
Karim Pakravan 

China's Belt & Road project is meeting significant obstacles and seems in urgent need of a reboot.  And the main sources of criticism and reevaluation come from some of the major beneficiaries of the project.

Data Round-Up: Real Consumption on Track for +3.5% Growth in 18Q3
Michael Lewis

Real consumption appears headed for a solid +3.5% annualized gain in 18Q3. Core PCE inflation, now at the Fed’s +2% target, will likely drift up through next year. Regional surveys show healthy momentum for both manufacturing and services.

Geeking-Up Healthcare: Consumer Giant Best Buy Makes a Big Move
David W. Johnson 

Healthcare has experienced a parade of surprising megamergers and acquisitions during the last year. At first glance, Best Buy’s August acquisition of GreatCall may be the most startling. At a deeper level, however, Best Buy’s movement into healthcare reflects a nuanced understanding of consumerism, retail market dynamics and America’s need for more connected, holistic care services.

Lending Gaps and Lessons
Collin Canright

The gap in small business lending, which the easy-money policies of the Federal Reserve were supposed to fill, are well documented. It's more difficult for small businesses to get small loans from banks, in large part because it's less profitable for banks of all sizes to make small-dollar loans. Fintech lenders have stepped in to fill the gap "through greater innovation in how small business loans are evaluated, underwritten, and managed."

Tech Can Sustainably Feed Developing World Cities of the Future. Here’s How
Banning Garrett 

New technologies, coupled with new business models and supportive government policies, can create more resilient urban food ecosystems in the coming decades. These tech-enabled systems can sustainably link rural, peri-urban (areas just outside cities), and urban producers and consumers, increase overall food production, and generate opportunities for new businesses and jobs.

The Decennial Census has Big Political and Scientific Problems, and Not for the First Time
Robert Shapiro 

At virtually every level, the 2020 decennial Census is in serious trouble. The Trump administration continues to press for a new Census question on each respondent’s citizenship status, despite warnings from the National Academy of Sciences and others that the question will discourage millions of immigrants and others from responding at all. 


Global Macro 

Ten years on: The legacy and lessons of the financial crisis
9/24/2018 Council on Foreign Relations event  VIDEO

I attended this event in NYC, one of many to discuss the 10-year anniversary of the Great Financial Crisis.  Ruth Porat, the CFO of Alphabet moderated, a terrific choice.  Fascinating to listen to the key players, Bernanke, Paulson and Geithner.

Secular stagnation, myth and reality
Gauti E. Eggertsson 9/2/2018 Blog Post

If you’re interested in secular stagnation and the persistence of low global demand, you’ll love this post. Assuming we have a recession in the next 2-3 years, fiscal rather than monetary policy will be center stage.

The most important least-noticed economic event of the decade
Neil Irwin 9/29/2018 New York Times

Most important, the mini-recession of 2015-16 offers a cautionary tale for any policymaker who might want to think of the United States as an economic island. What happens overseas can return to American shores faster and more powerfully than once seemed possible.

Who is funding the U.S. budget deficit?
Lisa Abramowicz 9/28/2018 Twitter

Chart of the week is by DB’s Torsten Slok: US debt is increasingly domestic, even though foreign-held debt is low risk because the USD is also the world’s reserve currency. Another sign of relative US economic strength.

Government debt per person
9/22/2018 the Spectator Index

Japan, Ireland and the US top the list. Yet Greece is deemed irresponsible.

Interview with Chad Syverson
6/2018 Federal Reserve Bank of Richmond

People who say economists should get out in the real world and study how businesses really work should read this interview. The University of Chicago economist says that productivity declines are not just due to mismeasurement, they are real and they are global.

Health Care

Vulnerability to pandemic flu could be greater today than a century ago
Rebecca Voelker 9/28/2018 JAMA Network

We have three times more people now and new modes of transmission such as passenger aircraft. The number of people living in urban slums exceeds the entire world population of 1918- and we still don’t understand why some viruses are worse than others.

These are the economies with the most (and least) efficient health care
Lee J Miller & Wei Lu 9/19/2018 Bloomberg

Just as the dollar is the world's reserve currency, US health care also performs a global role in terms of research and innovation leadership. This investment is conflated with costs and yes, is borne by US citizens. But benefits are worldwide.

What will be the breakthrough that finally disrupts Alzheimer’s? 
9/13/2018 the Atlantic Video

The Atlantic Magazine was in Chicago to talk about Alzheimer’s, a disease that is expected to grow 300% by 2050. When @SCClemons⁩ asked the audience how many had been personally touched by Alzheimer’s nearly every hand in the room shot up.


Chicago hotel workers strike for decent health care
9/19/2018 the Real News Network

Chicago is seeing one of the biggest labor actions in many, many years as hotel workers went on strike for health care benefits. Is this the start of something new on a national basis?

Just one percent of workers do gig work as main job, secondary job or additional income
Eileen Appelbaum and Hye Jin Rho 9/28/2018 Center for Economic and Policy Research Blog

This is not what I expected based upon all the hype around the gig economy.

Unions Did Great Things for the Working Class
Noah Smith 6/13/2018 Bloomberg

Is the slow motion demise of unions a central factor in lower wages and increased income inequality? 

Millennials Are Sitting Out the Bull Stock Market
Barry Ritholtz 9/5/2018 Bloomberg

I wonder if fear & job insecurity rooted in the GFC also drove millennials to accept lower wages? ⁦‪@ritholtz⁩ says research suggests the financial crisis scarred a generation of young investors 


Mongolia: Central bank gives permission to issue first digital currency
9/28/2018 Altcointoday.com 

From mining to crypto.

@DiarNewsletter analyzed how much the government is spending on blockchain analysis
9/24/2018 Twitter threads

US government spending on blockchain technology research is way up, as these charts show.

Can you live on cryptocurrency in China? Documentary Bitcoin Girl shows attempt to do so over 21 days
Zheping Huang 9/19/2018 South China Morning Post

The short answer is no, you can’t live on bitcoin in China. 

Hence my public comments over the past few years: it’s all about public
Angus C de Crespigny 9/17/2018 Twitter threads

Confirms my understanding that a private blockchain is usually a suboptimal technology solution, and public blockchains powered by incentives (crypto) are a thing apart. From a technologist who tried the private route. 


Today, Europe lost the Internet. now, we fight back
Cory Doctorow 9/12/2018 Electronic Frontier Foundation

Europe has totally lost its way along the digital highway. GDPR and now this. 

Today I discovered an unfortunate consequence of GDPR
Jean Yang 9/11/2018 Twitter

GDPR and Mifid2 are two of the worst ideas to come out of Brussels ever, with long-lasting consequences that will permanently impair information and data flows in and out of Europe—The Great Wall of the European Union. Here’s one story of GDPR’s unintended consequences.

Overblown rhetoric over UK withdrawal
David Marsh 9/17/2018 OMIFF

Dramatic Brexit predictions are deliberately or unwittingly exaggerated to ward off unpleasant outcomes. Britain will leave the EU more or less on time on 29 March with an accord not too different from the Chequers compromise deal.


China property tax may be five years away, ex-head of finance ministry’s think tank says
Xu Wei 9/19/2018 Yicai Global

Maybe this is the reason behind recent increased bond issuance at the local government level. To replace expected income from property taxes. 

In China, retired people are queuing up to go back to university
Neha Thirani Bagri 9/17/2018 World Economic Forum

Over 7 million senior citizens have gone back to school. Lifelong learning. 

China can’t afford a cashless society
Rui Zhong 9/11/2018 Foreign Policy

Mobile payments leave out the poor and the elderly, and dampen consumption. Unintended consequences of rapid deployment of a new technology. 

Cryptocurrency mining could become the new face of energy storage. Here’s how
Enass Abo-Hamed & Daniel Evans 9/16/2018 World Economic Forum

Use excess renewable energy that cannot otherwise be stored to mine cryptocurrencies, creating value and reinvestment opportunities in more clean energy. 

PBoC's digital currency lab launches new research center
Wolfie Zhao 9/5/2018 Coin Desk

Looks like the People’s Bank of China is all in on digital currency research. Given the difficulties of internationalizing the Yuan, unsurprising the PBoC would explore cryptocurrencies that could compete with the US dollar as the world’s reserve currency.