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Chartbook-Unhedged Exchange: China under pressure, a debate - 0 views

adamtooze.substack.com/...rtbook-unhedged-exchange-china china crisis policy politics economics history analysis options strategy
shared by Javier E on 24 Mar 22 - No Cached
  • China’s investment-driven, debt-heavy development model needs replacement. Its geopolitical and economic position will become more precarious if the globe’s authoritarian and liberal democratic blocs decouple, a threat made vivid by the war in Ukraine. Its demographics will be a drag on growth
  • Adam sees reasons for hope:
  • Similarly, the Chinese state’s recent intervention in the tech sector, while it has led to market volatility, is aimed at doing exactly what western regulators want to do, but can’t seem to do: stop huge companies from extracting monopoly rents from the economy. 
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  • China’s technocrats have, to date, demonstrated competence in managing the economy’s imbalances.
  • Mainland China has delivered significant extra returns -- 87 basis points a year more than the mighty S&P -- for anyone willing to hack the wild volatility
  • “On balance,” Adam sums up, “If you want to be part of history-making economic transformation, China is still the place to be.”
  • The third point is where we disagree. We just don’t see China as having any good options for maintaining strong growth. 
  • we think China’s underlying growth story is coming to an end as the country’s economic imbalances become unsustainable and global decoupling picks up steam. The volatility and low valuations, on the other hand, are likely here to stay. 
  • Replace bad investment with domestic consumption. 
  • What imbalances are we talking about? In crude summary, China’s growth has been driven by debt-funded investment, especially in property and infrastructure. The problem is that the returns on these investments are in fast decline, even as debt continues to build up.
  • This can’t go on forever. Eventually, you have all the bridges, trains, airports and apartment blocks you need, and the return on new ones falls below zero (How do you know that you have arrived at that point? When you have a financial crisis).
  • The problem is that without a healthy consumer, China’s only real options to create growth are investment and exports -- and at the same time as return on internal investments are declining, the rest of the world, led by the US, are increasingly wary of dependence on Chinese exports. 
  • What are China’s policy options? Broadly, there are five, as Micheal Pettis explained to us:
  • Stay with the current model.
  • Replace bad investment in things like infrastructure and real estate with good investment in things like tech and healthcare.
  • Beijing has policy options.
  • Replace bad investment with (even) move exports and a wider current account surplus.
  • Just quit it with the bad investment. 
  • we think that options 1 and 5 are not really options at all. The current model will lead to a financial crisis as return on investment falls further and further behind the costs of debt. Simply ceasing to overinvest in infrastructure and real estate, without changing anything else, will simply kill growth. 
  • Option 2 might be summed up -- as Jason Hsu of Ralient Global Advisors summed it up to us -- as China becoming more like Germany.
  • The idea is that China would steer more and more money away from real estate and towards high value-add sectors from biotech to chip manufacturing. 
  • The problem with option 2 is that investment is such a huge part of the Chinese economy that it is difficult to see how that the capital could be efficiently allocated to the country's tech-heavy, high value-add sectors, which are comparatively small
  • The most promising Chinese firms are swimming in capital as it is. And developing productive capacity isn't just about capital. It takes things the state can't rapidly deploy, like knowhow and intellectual property.
  • Option 3 is more promising. China could start, as Adam suggests, by building up a proper welfare safety net. But it is reasonable to expect pretty serious social and institutional resistance to this sort of mass redistribution.
  • why hasn’t China increased its welfare state until now? Longtime China watcher and friend of Unhedged George Magnus suggests it is because of a deep bias in the Chinese policy establishment. “It’s how Leninist systems operate: they think production and supply are everything … if you see a demand problem as a supply problem, you get the wrong answers.”
  • Option 4, increasing exports’ share of China’s economy even further, may be in the abstract the most appealing. But it runs directly into the fact that both China and the US and its allies have reasons to reduce mutual dependence on their economies.
  • The emergence of geopolitical divisions between the west, on the one hand, and Russia and China, on the other, will put globalisation at risk. The autocracies will try to reduce their dependence on western currencies and financial markets. Both they and the west will try to reduce their reliance on trade with adversaries. Supply chains will shorten and regionalise… 
  • Russia must remain a pariah so long as this vile regime survives. But we will also have to devise a new relationship with China. We must still co-operate. Yet we can no longer rely upon this rising giant for essential goods. We are in a new world. Economic decoupling will now surely become deep and irreversible.
  • In all, the most likely scenario is that China’s growth just keeps slowing. That does not mean that investors in China will necessarily lose money. But it does suggest that generic China exposure -- simply owning Chinese equity or credit indices -- is going to be a losing proposition in the long-term
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A Quiet Giant of Investing Weighs In on Trump - The New York Times - 0 views

www.nytimes.com/...h-klarman-trump-investors.html investor hedge fund trump
shared by Javier E on 07 Feb 17 - No Cached
  • a private letter he wrote to his investors a little over two weeks ago about investing during the age of President Trump — and offering his thoughts on the current state of the hedge fund industry — has quietly become the most sought-after reading material on Wall Street.
  • He is Seth A. Klarman, the 59-year-old value investor who runs Baupost Group, which manages some $30 billion.
  • Mr. Klarman sets forth a countervailing view to the euphoria that has buoyed the stock market since Mr. Trump took office, describing “perilously high valuations.”
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  • Much of Mr. Klarman’s anxiety seems to emanate from Mr. Trump’s leadership style. He described it this way: “The erratic tendencies and overconfidence in his own wisdom and judgment that Donald Trump has demonstrated to date are inconsistent with strong leadership and sound decision-making.”
  • “While they might be popular, the reason the U.S. long ago abandoned protectionist trade policies is because they not only don’t work, they actually leave society worse off.”
  • He worries, for example, that Mr. Trump’s stimulus efforts “could prove quite inflationary, which would likely shock investors.”
  • “Exuberant investors have focused on the potential benefits of stimulative tax cuts, while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers,”
  • “The big picture for investors is this: Trump is high volatility, and investors generally abhor volatility and shun uncertainty,” he wrote. “Not only is Trump shockingly unpredictable, he’s apparently deliberately so; he says it’s part of his plan.”
  • he warned, “If things go wrong, we could find ourselves at the beginning of a lengthy decline in dollar hegemony, a rapid rise in interest rates and inflation, and global angst.”
  • he issued a statement after Mr. Trump criticized a judge over his Mexican heritage, saying he planned to support Mrs. Clinton: “His words and actions over the last several days are so shockingly unacceptable in our diverse and democratic society that it is simply unthinkable that Donald Trump could become our president.”
  • “Despite my preference to stay out of the media,” he wrote, “I’ve taken the view that each of us can be bystanders, or we can be upstanders. I choose upstander.”
  • “This should give long-term value investors a distinct advantage,” he wrote. “The inherent irony of the efficient market theory is that the more people believe in it and correspondingly shun active management, the more inefficient the market is likely to become.
  • “In matters of style, swim with the current; in matters of principle, stand like a rock.”
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Apocalypse Now: What's Behind the Volatile Mood of Today's American - and European - Vo... - 0 views

www.nytimes.com/...ge-of-anger-pankaj-mishra.html new york times politics history crisis culture
shared by anonymous on 16 Feb 17 - No Cached
  • Apocalypse Now: What’s Behind the Volatile Mood of Today’s American — and European — Voters
  • Across the world, a spirit of anarchy is in bloom — an aimless desire to smash the liberal order, with only the distant, inchoate hope that a better world will emerge from the wreckage. That spirit apparently motivated many Trump voters, who didn’t mind that their tribune spoke in clownish generalities, possessed no relevant experience and exhibited an itchy trigger finger. Many of these voters admitted, with little compunction, that they wanted to implant his brash persona in the seat of power to shock the system, because the system deserved a shock
  • This is an important, erudite and flawed book about the deepest roots of this inflamed moment, which was shipped to the printer before the outcome of the American election.
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  • When the galleys of “Age of Anger” arrived, I dived for them. They slipped through the mail slot just after the Trump victory rocked my own faith in progress. Liberalism has no choice but to sincerely wrestle with its discontents, to become reacquainted with its moral blind spots and political weaknesses.
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Global Malaise Spurs U.S. Growth Worries - WSJ - 0 views

www.wsj.com/...-u-s-growth-worries-1452819336 u s growth economics
shared by zachcutler on 15 Jan 16 - No Cached
  • Concerns are mounting over whether the U.S. economy and financial markets can remain upright while so much of the world teeters.
  • Falling oil prices and worries about China’s economy have walloped stock markets, leading to a volatile start to the year.
  • Market volatility has heightened the stakes for Federal Reserve officials, who are expected to keep interest rates unchanged at a meeting later this month.
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  • Forecasters in The Wall Street Journal’s latest survey of economists said there is a 17% chance the U.S. will enter a recession in 2016,
  • Many investors have alternately feared the U.S. would succumb to global weakness or latched onto signs it would muddle through.
  • “I find it hard to believe that a quarter-point rate hike has created all this enormous uncertainty,” said Timothy Adams, head of the Institute of International Finance, a trade group representing financial institutions.
  • One reason economists aren’t even more worried: The U.S. relies less on trade than many of the world’s largest nations.
  • Still, the U.S. has more than 100 million people working in service industries—primarily transacting with other U.S. businesses and individuals
  • Some industries are sure to be hit harder than others if the global economy slows. Durable-goods makers
  • They forecast payroll growth falling from about 202,000 in the first three months of 2016 to 180,000 in the last three months
  • Little is known about how much emerging-market risk U.S. investors hold,” said Daniel Bachman, senior U.S. economist at Deloitte Services LP.
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After the Bust, Are Bitcoins More Like Tulip Mania or the Internet? - The New York Times - 0 views

www.nytimes.com/...coin-tulip-mania-internet.html bitcoin mania economics
shared by Javier E on 24 Apr 19 - No Cached
  • Even after last year’s bust, Bitcoin users are generally sending somewhere between $400 million and $800 million worth of Bitcoin across the network every day, according to data from the blockchain, the public ledger on which all Bitcoin transactions are recorded
  • Speculative transactions accounted for roughly 60 to 80 percent of all transactions on the blockchain
  • There is still quite a bit of mystery about what accounts for the other 20 to 40 percent of the transactions
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  • Chainalysis estimates that last year, companies handling Bitcoin payments accounted for 0.3 percent of all Bitcoin transactions, or $2.4 billion.
  • practical and legal uses have struggled to outpace illegal or clearly unethical activity.
  • In several ways, it’s worse. Paying with Bitcoin requires you to become a speculator on its volatile price for the time you are holding on to token
  • Venezuelans bought over $230 million in Bitcoin last year on the most popular platform for sales
  • The most compelling use that Bitcoin fanatics talk about is its value to people in repressive countries that have currencies that are even more volatile than Bitcoin.
  • The list of ways that Bitcoin has proved useful to criminals keeps growing, from the ransom payments on locked-up computer files — or even hostages — to illegal drug sales
  • The total dark net transactions in 2018, around $620 million, were more than twice the amount that Venezuelans bough
  • drug purchases account for a much larger proportion of the Bitcoin economy than their proportion of the dollar economy
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A Potent Fuel Flows to North Korea. It May Be Too Late to Halt It. - The New York Times - 0 views

www.nytimes.com/...orea-rocket-fuel-missiles.html history Us Trump north korea politics missile
shared by millerco on 18 Sep 17 - No Cached
  • A Potent Fuel Flows to North Korea
  • When North Korea launched long-range missiles this summer, and again on Friday, demonstrating its ability to strike Guam and perhaps the United States mainland, it powered the weapons with a rare, potent rocket fuel that American intelligence agencies believe initially came from China and Russia.
  • The United States government is scrambling to determine whether those two countries are still providing the ingredients for the highly volatile fuel and, if so, whether North Korea’s supply can be interrupted, either through sanctions or sabotage.
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  • there is a growing belief that the United States should focus on the fuel, either to halt it, if possible, or to take advantage of its volatile properties to slow the North’s program
  • Intelligence officials believe that the North’s program has advanced to the point where it is no longer as reliant on outside suppliers, and that it may itself be making the deadly fuel
  • Despite a long record of intelligence warnings that the North was acquiring both forceful missile engines and the fuel to power them, there is no evidence that Washington has ever moved with urgency to cut off Pyongyang’s access to the rare propellant
  • “based on North Korea’s demonstrated science and technological capabilities — coupled with the priority Pyongyang places on missile programs — North Korea probably is capable of producing UDMH domestically.” UDMH is short for unsymmetrical dimethyl hydrazine
  • Some experts are skeptical that the North has succeeded in domestic production, given the great difficulty of making and using the highly poisonous fuel, which in far more technically advanced nations has led to giant explosions of missiles and factories.
  • the Trump administration has been far more focused on ordinary fuels — the oil and gas used to heat homes and power vehicles. The United States has pushed to cut off those supplies to the North, but it settled last week for modest cutbacks under a United Nations resolution.
  • “If North Korea does not have UDMH, it cannot threaten the United States, it’s as simple as that,” said Senator Edward J.
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Opinion: The global economy won't recover if we don't get vaccines to developing countr... - 0 views

www.cnn.com/...index.html Politics Global Covid Vaccine Pandemic Economy
shared by yehbru on 07 Mar 21 - No Cached
  • The International Monetary Fund recently projected global GDP growth at 5.5% this year and 4.2% in 2022
  • As our note to the recent G20 meeting of finance ministers and central bank governors points out, there is a major risk that as advanced economies and a few emerging markets recover faster, most developing countries will languish for years to come.
  • We estimate that, by the end of 2022, cumulative per capita income will be 13% below pre-crisis projections in advanced economies — compared with 18% for low-income countries and 22% for emerging and developing countries, excluding China.
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  • Before the crisis, we forecast that income gaps between advanced economies and 110 emerging and developing countries would narrow between 2020 and 2022. But we now estimate that only 52 economies will be catching up during that period, while 58 are set to fall behind.
  • Last year, advanced economies on average deployed about 24% of GDP in fiscal measures, compared with only 6% in emerging markets and less than 2% in low-income countries
  • Insuring vaccine producers against the downside risks of overproduction may be an option worth considering.
  • Faster progress in ending the health crisis could raise global income cumulatively by $9 trillion between 2020 and 2025. That would benefit all countries, including around $4 trillion for advanced economies — which beats by far any measure of vaccine-related costs.
  • One risk going forward — especially in the face of diverging recoveries — is the potential for market volatility in response to changing financial conditions. Major central banks will need to carefully communicate their monetary policy plans to prevent excess volatility in financial markets, both at home and in the rest of the world.
  • For its part, the IMF has stepped up in an unprecedented manner by providing over $105 billion in new financing to 85 countries and debt service relief for our poorest members. We aim to do even more to support our 190 member countries in 2021 and beyond.
  • The alternative — to leave poorer countries behind — would only entrench abject inequality. Even worse, it would represent a major threat to global economic and social stability. And it would rank as a historic missed opportunity.
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Robinhood, TD Ameritrade restrict trading of GameStop, AMC stock - CNET - 0 views

www.cnet.com/...-trading-of-gamestop-amc-stock economics US policy
shared by cartergramiak on 28 Jan 21 - No Cached
  • GameStop's stock has continued to make big moves, briefly crossing $450 a share on Thursday, fueled by Reddit users collectively taking on the Wall Street establishment. But individual investors looking to make trades have faced multiple issues on trading sites and apps over recent days, with many experiencing service disruptions, according to Bloomberg.
  • Robinhood explained the move in a blog post Thursday morning, just before the stock exchanges opened: "In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK."
  • GameStop's stock price had hovered between $4 and $20 for the past year -- until Jan. 13 when it began skyrocketing. It closed Wednesday at $346.37. 
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  • On Thursday morning, GameStop shares spiked to $467 but then crashed to $126 as investors were unable to purchase more shares. As of 8:46 a.m. PT, the stock's price had rebounded to $207.90.
  • "In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME [GameStop], $AMC [AMC Theaters] and other securities," reads the TD Ameritrade message.
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Syria-Turkey crisis: Putin now owns this mess - CNN - 0 views

www.cnn.com/...index.html trump
shared by katherineharron on 20 Oct 19 - No Cached
  • Only a few hours later, airstrikes and artillery fire could be felt in northern Syria as the Kurdish-dominated Syrian Democratic Forces accused Ankara and its proxies of severe ceasefire violations.
  • The mood both in Washington and in the Middle East is that the ceasefire is not the real deal. It expires on Tuesday, October 22, the same day Russian President Vladimir Putin and his Turkish counterpart Recip Tayyip Erdogan will meet in Sochi to discuss the future of Syria. It seems pretty clear: that's when the world will find out that the real deal will be for the future of this volatile region.
  • Russia immediately started negotiations with the Kurds and Moscow's main ally, the Assad government, quickly reaching a deal to allow the Syrian military into Kurdish-held areas where Damascus has not had a presence for years in order to stave off the Turkish-led offensive. Moscow also quickly deployed its own military as a buffer to keep the Turks and their forces apart from the Kurds and Syrian government troops.
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  • The move caused a good deal of chest thumping among Putin's military: "When the Russian flag appears, combat stops -- neither Turks nor Kurds want to harm us, so fighting stops thanks to our work," a Russian army officer, Safar Safarov, was quoted as saying by Tass state news agency, as the country's military police units began patrolling Manbij.
  • With Russia's new role as the undisputed lead nation also come grave risks. The situation in northeastern Syria is more than volatile. The Turks have made clear they will not allow a Kurdish military presence near their border. But Ankara's ground force consists largely of Syrian rebel groups, many of them hardline Islamists whom the Kurds fear could unleash a campaign of ethnic cleansing against minorities in this diverse region.
  • The Kremlin is gravely concerned that Russians who fought with ISIS and other rebels groups could return to their homeland and cause instability there. From the moment Turkey launched its offensive in Northern Syria the Kremlin voiced extreme doubts about Turkey's ability to keep a lid on the thousands of ISIS prisoners and their relatives that the Kurds had been guarding.
  • "There are areas in northern Syria where ISIS militants are concentrated and until recently, they were guarded by the Kurdish military. The Turkish army entered these areas and the Kurds left... Now [ISIS fighters] can simply run away and I am not sure that the Turkish army can -- and how fast -- get this under control," Putin said last week at The Commonwealth of Independent States forum in Ashgabat.
  • But despite all the dangers facing Putin's high-stakes Syria gambit the Russian leader still seems to be in a position to possibly prevent the situation from blowing up even more than it already has.
  • Russia has a devastating track record in the Syrian conflict. Human rights groups have accused Moscow of committing war crimes in its campaign to support Syrian President Bashar al-Assad. The US says Moscow has systematically bombed civilian infrastructure, especially hospitals, and aided Assad in covering up alleged chemical weapons use by the Syrian military. Russian vehemently denies all these allegations.
  • And when the Kurdish-dominated Syrian Democratic Forces -- which were backed by the US and lost nearly 11,000 fighters in the war against ISIS -- found out they'd been dumped by Trump and left to be invaded by Erdogan's proxy force, they too went straight to the Russians because guess what: Moscow has been working with and talking to the SDF for years as well.
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Opinion | Our Most Dangerous Weeks Are Ahead - The New York Times - 0 views

www.nytimes.com/...p-election-night-violence.html politics election US
shared by delgadool on 02 Nov 20 - No Cached
  • If Donald Trump should lose, he may well not concede. And he will still be president, with all the power that bestows. His supporters will likely be seething, thinking that the election has been stolen. These are seeds he has been sowing for months.
  • Trump will have command of the military, the Justice Department and part of the intelligence apparatus.
  • A loss would be a supremely embarrassing rebuke, the first sitting president not to win re-election in 28 years.
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  • Cyrus R. Vance Jr., is investigating his dodgy finances. Trump knows he could face charges as soon as he leaves office — and he won’t be federally pardoned.
  • The pandemic will still be raging, but Trump, who has consistently downplayed it and tragically mismanaged it, will feel absolutely no obligation to contain it.
  • He will be wounded, afraid and dangerous.
  • “The broader pool of potential extremists has grown during Covid, with Americans at home and online, consuming vast quantities of propaganda and disinformation. So even if a relatively small percentage of people might actually mobilize to violence, the milieu from which they will emerge has metastasized significantly. The November election is increasingly perceived as a ‘winner-take-all’ contest, with no room for those who don’t identify with a specific side.”
  • upswing in the past few months in the number of Americans — both Democrats and Republicans — who said they think violence would be justified if their side loses the upcoming presidential election.”
  • has repeatedly told his supporters that the only way he can lose is if the election is stolen from him.
  • he said the Supreme Court will help secure a victory for him if he’s not declared the winner on election night: “If we win, if we win on Tuesday or, thank you very much Supreme Court, shortly thereafter.”
  • Trump doesn’t care if he “wins” ugly or unfairly, a win is a win. He doesn’t care if it could rip this country apart because he has never cared about the health and stability of the nation.
  • The Washington Post reported in early October that “the Justice Department is planning to station officials in a command center at F.B.I. headquarters to coordinate the federal response to any disturbances or other problems with voting that may arise across the country.”
  • “In a show of just how volatile the situation seems to the industry, 120 representatives from 60 retail brands attended a video conference this week hosted by the National Retail Federation, which involved training for store employees on how to de-escalate tensions among customers, including those related to the election. The trade group also hired security consultants who have prepped retailers about which locations around the country are likely to be the most volatile when the polls close.”
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German Utilities Seek Extra Funding as Energy Prices Explode - The New York Times - 0 views

www.nytimes.com/...-utilities-funding-prices.html
shared by criscimagnael on 13 Jan 22 - No Cached
  • As natural gas prices in Europe continue to hit record highs, utility companies in Germany are scrambling to secure millions of euros in extra liquidity to ensure they can meet future contracts.
  • Last week, another leading German utility, Uniper, announced that high energy prices had forced it to seek extra credit worth 10 billion euros ($11.4 billion). Most of the money, €8 billion, came from Uniper’s parent company, Fortum, based in Finland. The rest is from Germany’s state-owned development bank, KfW, and was secured as a backup to mitigate future price swings, the company said.
  • Other German energy companies, including RWE and EnBW, said that they had taken similar steps to ensure they had sufficient credit to weather the volatility in the European energy market, but declined to give details.
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  • They all face the same challenge of needing to hedge their sales of gas and electricity to cover price differences across different markets.
  • In a statement explaining the decision to provide Uniper with extra financing, Fortum said that European gas prices reached “unprecedented levels” in December.
  • In Britain, the sudden price rise has led to the collapse of several smaller energy suppliers.
  • In Germany, the price for energy to heat and power homes in November rose more than 101 percent from a year earlier, the country’s official statistics office, Destatis, said.
  • Global demand for energy jumped last year, after the world economy reawakened from widespread shutdowns aimed at slowing the spread of the coronavirus pandemic. When many economies started up again last spring, the need for natural gas shot up. Natural gas is crucial for generating electricity, running factories and heating homes across the continent.
  • European countries normally stock up on gas in the summer, when prices are relatively cheap, but the pandemic and a cold winter last year drew down levels of stored gas, leading to the wild swings in prices.
  • Prices for natural gas have risen about sixfold, to record levels. The surge means the wholesale price of electricity has reached stratospheric levels, making headlines across Europe as consumers, battered by the pandemic, are now hit by big increases in their home energy bills. Many European countries have tried to buffer the shock to consumers with price caps, subsidies and direct payments.
  • These high costs are also undermining the economics of companies that make fertilizer, steel, glass and other materials that require a lot of electricity.
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Binance Guilty Plea Shows What Crypto's Really About - WSJ - 0 views

www.wsj.com/...-cryptos-really-about-f84200a3 crypto use
shared by Javier E on 23 Nov 23 - No Cached
  • So it turns out that of the two largest crypto exchanges, one was a fraud and the other was a money launderer. Whoever could have guessed?
  • Skeptics of bitcoin and other cryptocurrencies have had their prejudices reinforced. The two main use cases—fraud and crime—have been exposed to the public in dramatic fashion, so now all we have to do is sit back and wait for the inevitable collapse in value.
  • There must be something underpinning this value, so what is it? Here are the options:
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  • Digital art: The latest fad in crypto is a bitcoin “ordinal,” digital art—or anything else—virtually inscribed on a fraction of a bitcoin in the digital ledger known as the blockchain.
  • The sudden demand supports bitcoin’s value, in the same way that shopping in bitcoin would. I don’t understand why anyone would pay a cent, let alone real money, to inscribe art in the bitcoin blockchain, but hey, whatever floats your boat. 
  • The rise in small bitcoin transactions also shows just how useless it is as a currency, and why it’s nonsensical to think bitcoin could ever be used as real money. The median fee leapt to more than $5 over the past week, even as transaction sizes plunged, an insane cost to pay for something invented as a payment method.
  • Crime: I was tempted a few years ago by the idea that the value of crypto could be underpinned by genuine transactions that need to avoid the financial system: buying illegal drugs; money laundering; avoiding sanctions; anonymous (but legal) pornography purchases; terrorist finance; and ransomware. 
  • Digital gold: When it became clear that bitcoin was useless as a currency, its backers switched to claiming that it is a store of value, with its maximum issuance offering protection against the money-printing tendencies of the Federal Reserve. The argument was tested to destruction over the past two years. Inflation was last below the Fed’s 2% target in February 2021, when one bitcoin cost close to $50,000. By the time inflation peaked in June last year the price had collapsed to $20,000, the opposite of what it should have done.
  • There was a time when savers in countries with dodgy currencies and bad governments would buy bitcoin or other crypto to escape devaluation and avoid capital controls. But the rise of stablecoins allows these savers to buy digital dollars without the pain of trying to open offshore bank accounts, so they have no need for other cryptocurrencies
  • Gambling: Crypto offers a store of volatility more than a store of value. Its volatility makes it an excellent way to bet, and the pretense that it is an investment asset gives speculators cover; it sounds much better to say you are a crypto trader than that you just bet $100,000 at the track.
  • Basing the value of an asset on speculation is risky, because the value depends on everyone else betting that it has value. But so long as the merry-go-round continues, it looks like it has value, and decentralized finance, or DeFi, provides the infrastructure for speculation in the language of Wall Street.
  • Bitcoin’s moves over the past three years have been much closer to the S&P 500 than to gold or inflation. But stocks are an investment in real assets that pay dividends, while bitcoin produces nothing.
  • Lots of that was going on, and Binance has paid the price for helping. Bitcoin isn’t a particularly good way to hide from the cops, anyway, as repeated police busts have demonstrated. Crypto has to clean up its act, so basing its value on illegal transactions no longer makes sense.
  • Bitcoin has failed to live up to its original promise of being cheap online cash, but crypto keeps on reinventing itself. It’s so technically satisfying that it must be the solution to something, but quite what remains a mystery.
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The Spiritual Crisis of the Modern Economy - The Atlantic - 0 views

www.theatlantic.com/...511067 crisis spiritual meritocracy grace culture
shared by Javier E on 27 Dec 16 - No Cached
  • This go-it-alone mentality works against the ways that, historically, workers have improved their lot. It encourages workers to see unions and government as flawed institutions that coddle the undeserving, rather than as useful, if imperfect, means of raising the relative prospects of all workers.
  • It also makes it more likely that white workers will direct their frustration toward racial and ethnic minorities, economic scapegoats who are dismissed as freeloaders unworthy of help—in a recent survey, 64 percent of Trump voters (not all of whom, of course, are part of the white working class) agreed that “average Americans” had gotten less they they deserved, but this figure dropped to 12 percent when that phrase was replaced with “blacks.” (Among Clinton voters, the figure stayed steady at 57 percent for both phrases.
  • This is one reason that enacting good policies is, while important, not enough to address economic inequality. What’s needed as well is a broader revision of a culture that makes those who struggle feel like losers.
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  • One explanation for why so many come to that conclusion in the first place has to do with the widening of the gulf between America’s coasts and the region in between them
  • Cities that can entice well-educated professionals are booming, even as “flyover” communities have largely seen good-paying factory work automated or shipped overseas, replaced to a large extent with insecure jobs: Walmart greeters, independent-contractor truck drivers, and the like.
  • a college degree has become the true mark of individual success in America—the sort of white-picket-fence fantasy that drives people well into their elder years to head back to school
  • the white working class that emerged in the 19th century—stitched together from long-combative European ethnic groups—strived to set themselves apart from African Americans, Chinese, and other vilified “indispensable enemies,” and build, by contrast (at least in their view), a sense of workingman pride.
  • this last election was a reminder that white male resentment of “nasty” women and “uppity” racial and other minorities remains strong.
  • That said, many Americans with more stable, better-paid jobs have blind spots of their own. For all of their professed open-mindedness in other areas, millions of the well-educated and well-off who live in or near big cities tend to endorse the notion, explicitly or implicitly, that education determines a person’s value
  • white voters from hard-hit rural areas and hollowed-out industrial towns have turned away from a Democratic Party that has offered them little in the way of hope and inspiration and much in the way of disdain and blame.
  • such a fervent belief in the transformative power of education also implies that a lack of it amounts to personal failure—being a “stupid” person
  • As much as both liberals and conservatives have touted education as a means of attaining social mobility, economic trends suggest that this strategy has limits, especially in its ability to do anything about the country’s rapidly growing inequalities
  • Well into the 21st century, two-thirds of Americans age 25 and over do not have a bachelor’s degree. The labor market has become more polarized, as highly paid jobs for workers with middling levels of education and skill dwindle away.
  • even some workers I spoke to—all former union members—said they felt that people without a good education did not deserve to make a good living.
  • The rules of meritocracy that these blue-collar workers say they admire barely apply to the very top levels of the economy. Groups of elite workers—professionals, managers, financial workers, tenured professors—continue to wall themselves off from competition. They still organize collectively, through lobbying, credentialing, licensing, and other strategies. But fewer ordinary workers have the same ability to do so
  • What has emerged in the new economy, then, is a stunted meritocracy: meritocracy for you, but not for me
  • One of the few things he could really depend on was his church. He volunteered on their Sunday-school bus, leading the kids in singing songs. “It helps to be around young people,” he said. For many of the jobless workers I interviewed, religion and tradition provided a sense of community and a feeling that their lives had purpose.
  • However exaggerated by stereotypes, the urbane, urban values of the well-educated professional class, with its postmodern cultural relativism and its rejection of old dogmas, are not attractive alternatives to what the working class has long relied on as a source of solace.
  • In the absence of other sources of meaning, Americans are left with meritocracy, a game of status and success, along with the often ruthless competition it engenders. And the consequence of a perspective of self-reliance—Americans, compared to people in other countries, hold a particularly strong belief that people succeed through their own hard work—is a sense that those who fail are somehow inferior
  • The concept of grace comes from the Christian teaching that everyone, not just the deserving, is saved by God’s grace. Grace in the broader sense that I (an agnostic) am using, however, can be both secular and religious. In the simplest terms, it is about refusing to divide the world into camps of deserving and undeserving, as those on both the right and left are wont to do
  • It rejects an obsession with excusing nothing, with measuring and judging the worth of people based on everything from a spotty résumé to an offensive comment.
  • Unlike an egalitarian viewpoint focused on measuring and leveling inequalities, grace rejects categories of right and wrong, just and unjust, and offers neither retribution nor restitution, but forgiveness.
  • With a perspective of grace, it becomes clearer that America, the wealthiest of nations, possesses enough prosperity to provide adequately for all. It becomes easier to part with one’s hard-won treasure in order to pull others up, even if those being helped seem “undeserving”—a label that today serves as a justification for opposing the sharing of wealth on the grounds that it is a greedy plea from the resentful, idle, and envious.
  • ignorance shouldn’t be considered an irremediable sin. Yet many of the liberal, affluent, and college-educated too often reduce the beliefs of a significant segment of the population to a mash of evil and delusion
  • From gripes about the backwardness and boredom of small-town America to jokes about “rednecks” and “white trash” that are still acceptable to say in polite company, it’s no wonder that the white working class believes that others look down on them. That’s not to say their situation is worse than that of the black and Latino working classes—it’s to say that where exactly they fit in the hierarchy of oppression is a question that leads nowhere, given how much all these groups have struggled in recent decades.
  • While there are no simple explanations for the desperation and anger visible in many predominantly white working-class communities, perhaps the most astute and original diagnosis came from the rabbi and activist Michael Lerner, who, in assessing Donald Trump’s victory, looked from a broader vantage point than most. Underneath the populist ire, he wrote, was a suffering “rooted in the hidden injuries of class and in the spiritual crisis that the global competitive marketplace generates.”
  • That cuts right to it. The modern economy privileges the well-educated and highly-skilled, while giving them an excuse to denigrate the people at the bottom (both white and nonwhite) as lazy, untalented, uneducated, and unsophisticated.
  • many well-off Americans from across the political spectrum scorn the white working class in particular for holding onto religious superstitions and politically incorrect views, and pity them for working lousy jobs at dollar stores and fast-food restaurants that the better-off rarely set foot in
  • This system of categorizing Americans—the logical extension of life in what can be called an extreme meritocracy—can be pernicious: The culture holds up those who succeed as examples, however anecdotal, that everyone can make it in America. Meanwhile, those who fail attract disdain and indifference from the better-off, their low status all the more painful because it is regarded as deserved.
  • the shame of low status afflicts not just the unemployed, but also the underemployed. Their days are no longer filled with the dignified, if exhausting, work of making real things.
  • For less educated workers (of all races) who have struggled for months or years to get another job, failure is a source of deep shame and a reason for self-blame. Without the right markers of merit—a diploma, marketable skills, a good job—they are “scrubs” who don’t deserve romantic partners, “takers” living parasitically off the government, “losers” who won’t amount to anything
  • Even those who consider themselves lucky to have jobs can feel a sense of despair, seeing how poorly they stand relative to others, or how much their communities have unraveled, or how dim their children’s future seems to be: Research shows that people judge how well they’re doing through constant comparisons, and by these personal metrics they are hurting, whatever the national unemployment rate may be.
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Bernard-Henri Lévy: Jews, Be Wary of Trump - The New York Times - 0 views

www.nytimes.com/...evy-jews-be-wary-of-trump.html jews trump israel crisis politics history
shared by Javier E on 19 Jan 17 - No Cached
  • There is a law that governs the relations between the Jews and the rest of the world.
  • That law was articulated in one form at the time of the trial of Adolf Eichmann, when the great Jewish thinker Gershom Scholem faulted Hannah Arendt for falling short of “ahavat Israel” — for showing insufficient “love of the Jewish people.”
  • This love is precisely what is required of an American president in dealings affecting Israel.
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  • that law says that demonstrations of love count for less, paradoxically, than love itself. It says, to be precise, that gestures of friendship, when they do not come from the bottom of the heart and are not built on sincere love — that is, finally, on a deep and true knowledge of the love object — are gestures that eventually may turn into their opposite.
  • we cannot rule out the possibility that Trump’s series of ostentatiously promising signals directed at Israel may have sinister effects in the long or even short term.
  • Those signals may, for example, strengthen the most shortsighted and therefore suicidal fringe of Israeli politics. It may send the wrong signal to those who would be only too happy to see the United States set the example of making unilateral, unnegotiated decisions, thereby opening the way to other shows of force.
  • In the United States, it may generate an overly enthusiastic embrace by pro-Israel Jews of a volatile president (one likely, depending on the needs of his deals, to change his mind), one who is so deeply unpopular with so many Americans that his embrace of Israel, however fleeting, could endanger the bipartisan consensus that has been so beneficial to Israel over the decades.
  • I cannot claim any knowledge of Donald Trump’s “heart” or of the sincerity of his commitment to the Jewish state. But there have been indications going back decades.
  • These statements suggest, to say the least, a certain contempt.
  • More precisely, they reflect that well-known variety of contempt that, according to Freud, serves to anticipate and defend the ego against the presumed contempt of the other.
  • The essential thing is that President Trump thinks they did, that he seems to see Jews as the caricature of the New York establishment that, for decades, took him for an agreeable but vulgar showman.
  • This is a perfect example of the self-defensive contempt that has so often fed anti-Semitism, with the Jews appearing, once again, as representatives of an elite that patronized him and against whom he can, now that he is in power, quietly take his revenge.
  • as in ancient Rome, the triumph of nihilism can enable a pig farmer — anybody — to become emperor.
  • Jewish wisdom, which responds to the situation as follows: “We had contempt for Diocletian the swineherd, but we are ready to honor Diocletian the emperor provided he, like Saul — who, before becoming king had tended donkeys — heeds the prophecy, rises to his office, and becomes a new man.”
  • And, above all, it is a good allegory of the double-edged favors, or, if you will, the poison apples, proffered by a humiliated swineherd, eager for revenge, who decides to show Jon Stewart and his fellow Jews that he is indeed smarter than they are.
  • In the face of this situation, nothing is more important, it seems to me, than to maintain a measure of distance.
  • They must not forget that, no matter how many times Mr. Trump declares his love for Israel, for Benjamin Netanyahu or anyone else, he will remain a bad shepherd who respects only power, money and the perquisites of his palaces, while caring nothing for miracles, of course, and not a whit for the vocation of study and the cultivation of intelligence that are the light of the Jewish tradition.
  • And they should be aware, finally, that in this period that has been labeled, for lack of a better word, populist, and of which the American election is but an outsize symptom; in a time when thought is attacked from all sides and when lies are flourished with unparalleled arrogance and aplomb; in this new political culture that has now encircled the earth, one in which, from the American plutocrats to their Russian oligarch cousins, the swineherds slap their pedigree shamelessly on imperial palaces, the little Jewish nation has no part to play.
  • To ally with that sort of “populism” would be to betray Israel’s calling.
  • Any sacrifice of the calling to intellectual, moral and human excellence; any renunciation of the duty of exceptionalism that — from Rabbi Yehuda to Kafka and from Rashi to Proust and Levinas — has provided the ferment for its almost incomprehensible resistance; any concession, in a word, to Trumpian nihilism would be the most atrocious of capitulations, one tantamount to suicide.
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Why I Cannot Fall in Line Behind Trump - The New York Times - 0 views

www.nytimes.com/...fall-in-line-behind-trump.html
shared by redavistinnell on 23 Jan 17 - No Cached
  • Why I Cannot Fall in Line Behind Trump
  • Republicans who disagree with my stance make the following argument: Mr. Trump, while flawed, is preferable to Hillary Clinton. His cabinet appointments, they say, have been reassuring, and it’s true that several of them are. In addition, the nominee to replace Antonin Scalia on the Supreme Court is certain to be more of an originalist than a Clinton appointment would be. On top of that, Republicans are in control of Congress, meaning they are likely to drive much of the agenda, particularly given Mr. Trump’s notable lack of interest in policy. Whatever misgivings anti-Trump conservatives might have had about him, he’ll undo much of the agenda of his liberal predecessor while Mrs. Clinton would have built on it.
  • For Mr. Trump, nothing is sacred. The truth is malleable, instrumental, subjective. It is all about him. It is always about him.
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  • The more pressing concern many of us had about Mr. Trump is that he simply isn’t up to the job of being president.
  • Last weekend Mr. Trump gave an interview to the Washington Post in which he said his administration would quickly put out its own health proposal, which would cover everyone now insured and cost much less.
  • The extraordinary and unenviable task facing the White House staff is to contain Mr. Trump, to keep a dysfunctional president from producing a dysfunctional presidency.
  • Beyond that, Mr. Trump has continued to demonstrate impulsivity and narcissism, an affinity for conflict and vindictiveness. Which leads to my main worry about Mr. Trump: His chronic lack of restraint will not be confined to Twitter. His Twitter obsessions are a manifestation of a deeper disorder.
  • He thrives on creating disorder, in violating rules, in provoking outrage. He is a shock jock. This might be a tolerable (if culturally coarsening) trait in a reality television star; it is a dangerous one in a commander in chief.
  • To understand why, it’s worth keeping in mind that my chief worries about Mr. Trump were never strictly ideological; they had to do with temperament and character.
  • When President Trump is buffeted by events — when hard times hit, when crises arise, when other politicians and world leaders do not bend to his will — pernicious things will happen.
  • Rather than try to address the alienation and anger that exists in America, he will amplify them. He’ll create yet more conspiracy theories.
  • He will also go in search of enemies — the press, the opposition party, other nations, even Republican leaders — in order to create diversions that inflame his most loyal supporters.
  • In failing to distinguish between the good of the nation and his own vanity, the danger is that Mr. Trump will fail to see the limits of his authority and will try to use both the bully pulpit and the power of government — the I.R.S., the F.B.I., regulatory agencies and others — to settle personal scores. He’ll do what he needs to in order to get his way.
  • What this means is that Republican leaders in Congress need to be ready to call Mr. Trump on his abuses and excesses, now that he is actually in office.
  • They need to ask themselves a simple, searching question: “If Barack Obama did this very thing, what would I be saying and doing now?” — and then say and do it.
  • man with illiberal tendencies, a volatile personality and no internal checks is now president. This isn’t going to end well.
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Hedge Funds Faced Choppy Waters in 2015, but Chiefs Cashed In - The New York Times - 0 views

www.nytimes.com/...fund-manager-compensation.html hedge fund income compensation rich
shared by Javier E on 10 May 16 - No Cached
  • Those riches came during a year of tremendous market volatility that was so bad for some Wall Street investors that the billionaire manager Daniel S. Loeb called it a “hedge fund killing field.”
  • The 25 best-paid hedge fund managers took home a collective $12.94 billion in income last year,
  • top hedge fund managers earn more than 50 times what the top executives at banks are paid.
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  • Their firms do more business in some corners of the financial world than many banks, including lending to low-income homeowners and small businesses. They lobby members of Congress. And they have put large sums of money behind presidential candidates, at times pumping tens of millions of dollars into super PACs.
  • The hedge fund industry has now ballooned in size, to $2.9 trillion, from $539 billion in 2001. So, too, has the pay of the industry’s leaders.
  • When Institutional Investor first started ranking hedge fund pay 15 years ago, George Soros topped the Alpha list, earning $700 million. In 2015, Mr. Griffin, who started trading as a Harvard sophomore out of his dorm room, and James H. Simons, a former math professor, each took home $1.7 billion
  • his own personal wealth has grown exponentially, and is estimated by Forbes at $7.5 billion.
  • Mr. Griffin’s firm, Citadel, has grown from a hedge fund that managed family and pension fund money into a $25 billion firm
  • He recently made headlines when he paid $500 million for two pieces of art. In September, Mr. Griffin, 47, reportedly paid $200 million to buy several floors in a new luxury condo tower that is being built at 220 Central Park South, in Manhattan.
  • He was the biggest donor to the successful re-election campaign of Mayor Rahm Emanuel of Chicago. More recently he has poured more than $3.1 million into the failed presidential campaigns of Marco Rubio, Jeb Bush and Scott Walker, as well as the Republican National Committee
  • Citadel’s flagship Kensington and Wellington hedge funds returned 14.3 percent over 2015
  • Mr. Simons, 78, has been a major political donor of the Democrats, donating $9.2 million in 2016, including $7 million to Priorities USA Action, a super PAC supporting Hillary Clinton.
  • Among 2015’s top hedge fund earners are five men who actually lost money for some investors last year but still made handsome profits because their firms are so big
  • For many managers, collecting large pay, even when performance was not tops, has become a side effect of growing bigger. Advertisement Continue reading the main story “Once a hedge fund gets to be large enough to produce incredibly outsized remuneration, the hardest part of due diligence is determining whether the investment process is affected,
  • “Is the goal to continue to make money in a risky environment or is the goal to preserve assets on which you collect fees?”
  • Michael Platt, the founder of BlueCrest Capital Management, took home $260 million, according to Alpha. It was a difficult year for his firm, once one of the biggest hedge funds in Europe with $37 billion in investor money. He lost investors in his flagship fund 0.63 percent over the year and then told them he was throwing in the towel.
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U.S. Jobless Claims Unexpectedly Drop to Lowest Level Since 1973 - Bloomberg - 0 views

www.bloomberg.com/...rop-to-lowest-level-since-1973 jobs US economics
shared by rachelramirez on 21 Apr 16 - No Cached
  • U.S. Jobless Claims Unexpectedly Drop to Lowest Level Since 1973
  • New applications for unemployment benefits fell by 6,000 to 247,000 in the week ended April 16
  • The number of Americans already on benefit rolls declined to a more than 15-year low.
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  • The four-week moving average of claims, a less volatile measure than the weekly figures, decreased to 260,500 from 265,000
  • Last week included the 12th of the month, which coincides with the period the Labor Department surveys employers to calculate monthly payroll data. The average was little changed from the 259,500 during the comparable period in March.
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Worldly Philosophers Wanted - NYTimes.com - 1 views

www.nytimes.com/...rldly-philosophers-wanted.html economics paradigm model crisis
shared by Javier E on 07 Nov 11 - No Cached
  • Keynes himself was driven by a powerful vision of capitalism. He believed it was the only system that could create prosperity, but it was also inherently unstable and so in need of constant reform. This vision caught the imagination of a generation that had experienced the Great Depression and World War II and helped drive policy for nearly half a century.
  • Friedrich Hayek and Milton Friedman, who envisioned an ideal economy involving isolated individuals bargaining with one another in free markets. Government, they contended, usually messes things up. Overtaking a Keynesianism that many found inadequate to the task of tackling the stagflation of the 1970s, this vision fueled neoliberal and free-market conservative agendas of governments around the world.
  • It took extensive government action to prevent another Great Depression, while the enormous rewards received by bankers at the heart of the meltdown have led many to ask whether unfettered capitalism produced an equitable distribution of wealth. We clearly need a new, alternative vision of capitalism. But thanks to decades of academic training in the “dentistry” approach to economics, today’s Keynes or Friedman is nowhere to be found.
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  • To refuse to discuss ideas such as types of capitalism deprives us of language with which to think about these problems. It makes it easier to stop thinking about what the economic system is for and in whose interests it is working.
  • Perhaps the protesters occupying Wall Street are not so misguided after all. The questions they raise — how do we deal with the local costs of global downturns? Is it fair that those who suffer the most from such downturns have their safety net cut, while those who generate the volatility are bailed out by the government? — are the same ones that a big-picture economic vision should address. If economists want to help create a better world, they first have to ask, and try to answer, the hard questions that can shape a new vision of capitalism’s potential.
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The Two Moons - NYTimes.com - 0 views

www.nytimes.com/...brooks-the-two-moons.html US party culture mentality
shared by Javier E on 22 Nov 11 - No Cached
  • both parties have developed minority mentalities. The Republicans feel oppressed by the cultural establishment, and Democrats feel oppressed by the corporate establishment. They embrace the mental habits that have always been adopted by those who feel themselves resisting the onslaught of a dominant culture.
  • Their main fear is that they will lose their identity and cohesion if their members compromise with the larger world. They erect clear and rigid boundaries separating themselves from their enemies. In a hostile world, they erect rules and pledges and become hypervigilant about deviationism. They are more interested in protecting their special interests than converting outsiders. They slowly encase themselves in an epistemic cocoon
  • The era of the two moons is a volatile era. Independent voters are trapped in a cycle of sour rejectionism — voting against whichever of the two options they dislike most at the moment
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  • In normal circumstances, minority parties suffer a series of electoral defeats and then they modernize. But in the era of the two moons, the parties enjoy periodic election victories they don’t deserve, which only re-enforce their worst habits.
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