Category: Macro

Essay on China & macro, with Western narrative violations: “the notion that the world is deglobalizing would seem laughable to anyone living in Dubai, Singapore, São Paulo or Mumbai”

Source: https://research.gavekal.com/article/the-revenge-of-the-ottoman-empire/

My highlights:

—

Back in 2017, the value of Chinese exports to Asean economies amounted to 60% of China’s exports to the US. Today, China’s exports to Southeast Asia stand at roughly 120% of China’s exports to the US.

—

—

—

…from the early 2000s, global economic activity was massively boosted, not just by connecting China to the rest of the world, but also by connecting Chinese cities to each other, with all the associated construction of rail, air, road, telecommunications and power links this involved.

—

key income “thresholds’’. For example, if the average income in a country is below US$1,000, nobody owns a television; when incomes move above US$1,000, almost everybody buys one. For smartphones, the level seems to be around US$2,500. For the automobile industry, the critical level seems to be US$10,000 a year. For university education, the level is US$15,000 and above. For financial products like life insurance, brokerage accounts and mutual funds, the level seems to be US$30,000.

—

Today, the notion that the world is deglobalizing would seem laughable to anyone living in Dubai, Singapore, São Paulo or Mumbai. Rather, the world is going through a new wave of globalization, which is different from its predecessors. For the first time since Columbus sailed to the Americas (as Churchill said, “Christoper Columbus was the world’s first socialist: he didn’t know where he was going, he didn’t know where he was, and he did it all at taxpayers’ expense”), the world is experiencing a wave of globalization which does not require Western financiers, Western engineers, Western modes of transportation, Western currencies or Western technologies.

Worldview altering Erik Prince podcast (did you know only 3% of all American colonists fought in the Revolution?)

The whole interview is very long and may not be your political cup of tea, but there were multiple 🤯🤯🤯 moments for me, shared by someone with many decades of hard won first hand experience and a clear love for America and American values.

Below are a few of my takeaways. I was too focused on listening to take better notes.

—

Only 3% of all Americans took up arms in the Revolution. 30% of colonists were for independence, 30% were neutral, and 40% supported the crown — so more actually supported Britain. Never underestimate a small & passionate & coordinated group to change the world…

In the Wild West, the Pinkertons (a private security force) at their height were 6x larger than the US army; they effectively ran things

Largely unchecked growth in the modern American bureaucracy is a result of a 1984 Supreme Court ruling that effectively gave government agencies the “force of law”; thus bureaucrats could create regulations and enforce them as if they were laws (I want to research this more)

During WW2, Russia lost 22m people, while the US only lost 400k; in fact Russia lost more in a single battle than the US did in the whole war…for me, it just puts into perspective that when it comes to global war, and particularly war on the Eurasian landmass, America is usually the proverbial egg in a bacon-and-eggs breakfast

—

Countless other moments, including on China, Ukraine-Russia, Trump…embedding part 1 below:

20% of our tax dollars just to pay *interest* on America’s debt

Paul Tudor Jones on our fiscal predicament:

—

JONES: So, if you just think about what’s happened in since really in the last three or four months, we’re getting ready, I don’t know if we’ll have a Minsky moment in the bond market. I don’t know if we’ll have that point of recognition. But we’re going to have the grinding reality that with 122 percent of debt-to-GDP, as interest costs go up in the United States, you get in this vicious circle where higher interest rates cause higher funding costs, cause higher debt issuance, which cause further bond liquidation, which cause higher rates, which put us in an untenable fiscal position. We, our interest bill is going to, very shortly, exceed our defense spending, in just a couple of years. Our, it probably in four- or five-years ceteris paribus will have the highest interest bill as a percentage of GDP that we’ve ever had. It will probably be close to 20 percent of your taxes will go to pay interest on the debt unless we do something.

—

Source: https://twitter.com/3xliquidated/status/1715509499023233232?s=46

Some perhaps surprising numbers around (de)globalization

I’m always on the lookout for information that surprises me…

Source: https://conversableeconomist.com/2023/05/26/globalization-evolves-not-reverses/

Copy and pasted:

—

…exports as a share of GDP have levelled off in recent years–while remaining near the all-time high. However, global flows of data and information are dramatically rising

—

Indeed, it may be that the US-China conflicts end rearranging the patterns of world trade, with reduced flows between the two countries, but with those international flows being redirected to other countries rather than reduced.

—

[T]he world is less globalized than many presume. Most activity that could take place either
within or across national borders is still domestic, not international. Roughly 20% of global economic output is exported (in value-added terms), FDI flows equal just 6% of gross fixed capital formation, about 7% of phone call minutes (including calls over the internet) are international, and only 4% of people live outside of the countries where they were born

America is not in decline…?

amurica

The “America is failing” trade seems crowded these days. And this Economist essay reminded me to take a broader and longer-term perspective. (full archive.is version here)

Some highlights:

America remains the world’s richest, most productive and most innovative big economy. By an impressive number of measures, it is leaving its peers ever further in the dust.

America has nearly a third more workers than in 1990, compared with a tenth in western Europe and Japan. And, perhaps surprisingly, more of them have graduate and postgraduate degrees. True, Americans work more hours on average than Europeans and the Japanese. But they are significantly more productive than both.

America was blessed with a younger population and a higher fertility rate than other rich countries. That may not be easily remedied elsewhere, but countries can at least take inspiration from America’s high share of immigrants, who in 2021 made up 17% of its workforce, compared with less than 3% in ageing Japan.

However…

The share of prime-age American men who are not in work has been rising for years and is higher than in Britain, France and Germany. And life expectancy in America lags shamefully behind others in the rich world, mainly on account of too many younger people dying from drug overdoses and gun violence. Tackling such problems should be easier when the economy as a whole is growing. But America’s poisonous politics are no help.