Subject: EconVue Spotlight October 22, 2017 | US Irrational Exuberance vs China's Minsky Moment
From: "Lyric Hughes Hale" <[email-masked]>
To: "R. Hunter Biden" <[email-masked]>
Date: Sat, 21 Oct 2017 22:20:40 -0700 (PDT)

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EconVue Spotlight

Dear R. Hunter,

The big story this past week has been the pomp and circumstance of 
China's 19 th Party Congress and its centerpiece, President Xi Jinping's 
lengthy speech. In spite of many columns of analysis, there have been no 
public surprises. You'll find my favorite article below, "Why Do We Keep 
Writing About Chinese Politics As If We Know More Than We Do?"

Earlier this month in Washington, I attended the rescheduled press 
conference

https://youtu.be/X-TGzUY8PL8

of Guo Wengui, sometimes known as Miles Kwok, but always identified as 
an exiled Chinese billionaire. I left early to attend another press 
conference at the Senate for the release of the annual report

http://www.cecc.gov/

of the Congressional-Executive Commission on China, chaired by Marco 
Rubio. Overall, I was more impressed by Senator Rubio than Mr. Guo.

The most important China news from an economic perspective has to be the 
extraordinary statement by Zhou Xiaochuan, governor of the PBoC, that 
China might be approaching a "Minsky Moment". John Authers at the 
Financial Times provides excellent commentary

https://www.ft.com/content/04c67054-b595-11e7-a398-73d59db9e399?mhq5j=e7

and warns that in spite of Friday's market recovery, Zhou's comments 
could presage further actions post-Congress.

Before he heads to China in early November, it is expected that 
President Trump will announce the appointment of the new chair of the 
Federal Reserve. Former Treasury Secretary Lawrence Summers, at a speech 
at Northwestern University last week, spoke about the weakness of 
economic models in terms of forecasting a crisis, including the FRB/US 
model

https://www.federalreserve.gov/econresdata/notes/feds-notes/2014/a-tool-for-macroeconomic-policy-analysis.html

used by the Fed since 1996. If we are having trouble understanding how 
our won economy works, it is even harder to sort out China's which is 
based on an entirely different institutional infrastructure.

RESEARCH BY ECONVUE EXPERTS

Data Round-Up: Storms Blunted Sept. Home Sales; Countdown to Fed Chair 
Choice Underway

https://econvue.com/reports/michael-lewis/data-round-storms-blunted-sept-home-sales-countdown-fed-chair-choice-underway

Michael Lewis

https://econvue.com/experts/michael-lewis

Hurricanes Harvey & Irma exerted some drag: total sales in the South 
were down -0.9%, while all other regions saw a +1.9% gain. Activity in 
hurricane-affected areas should rebound in coming months. The 
Yellen-Trump meeting produced no new public information. FMI believes 
that Yellen did express her interest in a second term -- if she was 
going to bow out, she has had ample opportunity to issue the traditional 
DC "I want to spend more time with family" cover story or an "I can't 
support this president" speech, which would boost her earnings on the 
liberal speaking circuit. By not doing either, she has set herself up 
for the humiliation of being "fired." Real GDP Growth Likely Exceeded 
+3% in 17Q3

https://econvue.com/reports/michael-lewis/real-gdp-growth-likely-exceeded-3-17q3

Michael Lewis

https://econvue.com/experts/michael-lewis

With rebuilding providing continuing tailwinds in 17Q4 (and into 2018), 
particularly in housing and non-residential structures, 2017-H2 real 
growth will likely be +2¾% annualized, clearly at the high-end for the 
cycle. Evaluating the Claim that Cutting Corporate Taxes Will Raise Your 
Wages

https://econvue.com/pulse/evaluating-claim-cutting-corporate-taxes-will-raise-your-wages

Robert Shapiro

https://econvue.com/experts/robert-shapiro

Real disputes among professional economists rarely make their way into 
political debates. But that's what's happened with the issue of whether 
the Trump administration's proposal to cut the corporate tax rate from 
35 percent to 20 percent would mainly benefit shareholders or workers. 
Both sides make coherent arguments – but in the end, the evidence 
supports the proposal's opponents. Moving at the Speed of Medicine Part 
II: Taking Systemness to the Next Level

https://econvue.com/pulse/moving-speed-medicine-part-ii-taking-systemness-next-level

David Johnson

https://econvue.com/experts/david-w-johnson

In post-reform healthcare, quality, efficiency and service increasingly 
define health system success. This requires efficient coordinated 
systems working across multiple service lines to deliver better 
outcomes, lower costs and enhanced customer experience.

Collaboration: Blockchain

https://econvue.com/pulse/collaboration-blockchain-0

Collin Canright

https://econvue.com/experts/collin-canright

Collaboration between banks and FinTech startups came to focus as 
financial media expanded on the need for collaboration, and a blockchain 
summit provided some cogent examples.

10-Year Retrospective: Lesson 4 | People Know Injustice When They See It

https://econvue.com/pulse/10-year-retrospective-lesson-4-people-know-injustice-when-they-see-it

Robert Pringle

https://econvue.com/experts/robert-pringle

The countries worst affected by the financial crisis, the United States 
and especially the United Kingdom, have since experienced severe 
political turbulence. I believe this can be directly traced back to the 
financial crisis and the way it was dealt with by governments, central 
banks and the financial elite.

STORIES IN OUR SPOTLIGHT World

A political shadow looms over the world economy

https://www.ft.com/content/899fa10e-aea8-11e7-aab9-abaa44b1e130

Martin Wolf 10/13/2017 FT Why Productivity Growth is Faltering in Aging 
Europe and Japan

https://blogs.imf.org/2016/12/09/why-productivity-growth-is-faltering-in-aging-europe-and-japan/

IMFBlog 2017 Japan's Birthrate Drops Below 1 Million

http://www.nippon.com/en/features/h00160/#.WeLFAguCQmF.twitter

Nippon 10/4/2017 Devastating demographics, and 315,000 fewer births than 
the previous year Global Economy's&nbsp;Stubborn Reality: Plenty&nbsp;of 
Work, Not Enough Pay

https://www.nytimes.com/2017/10/07/business/unemployment-wages-economy.html?smid=tw-share

Peter S. Goodman and Jonathan Soble 10/ 7/2017 NYT Weak demand, no 
inflation What Are the Secrets of the German Economy — and Should We 
Steal Them?

http://freakonomics.com/podcast/secrets-german-economy-steal/

Stephen J. Dubner and Greg Rosalsky 10/11/2017 Freakonomics (Radio 
Stream with transcript) The U.S. lost 5mil manufacturing jobs since 
2000. Germany kept — maybe even added — mfg. jobs. What's their secret? 
Sebastian Kurz's audacious gamble to lead Austria pays off

https://www.theguardian.com/world/2017/oct/15/sebastian-kurz-could-31-year-olds-audacious-bid-to-lead-austria-pay-off?CMP=share_btn_tw

Philip Oltermann 10/15/2017 The Guardian US Why "Full" Employment is an 
Empty Promise

https://economicequality.blog/

Karen Petrou 9/28/2017 EconomicEquality.blog Stuck! The Law and 
Economics of Residential Stability

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2896309

David Schleicher 1/9/2017 Yale and SSRN ...local govts more interested 
in local population stability...either generated or did not push back 
against falling mobility rates. Retiring baby boomers are going to have 
a huge impact on the economy

https://www.weforum.org/agenda/2017/09/retiring-baby-boomers-are-going-to-have-a-huge-impact-on-the-economy?utm_content=buffer00620&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Stephen McBride 9/14/2017 World Economic Forum Consumption falls by more 
than a third for retirees. U.S. buyers favor iPhone 7 over 8: research

https://www.reuters.com/article/us-apple-iphone-research/u-s-buyers-favor-iphone-7-over-8-research-idUSKBN1CL1Z1

Supantha Mukherjee, Tanya Agrawal 10/16/2017 Reuters Could it be that 
the new features aren't worth the price? Facial recognition has flaws. 
China Why Do We Keep Writing About Chinese Politics As if We Know More 
Than We Do?

http://www.chinafile.com/reporting-opinion/viewpoint/why-do-we-keep-writing-about-chinese-politics-if-we-know-more-we-do

Jessica Batke and Oliver Melton 10/16/2017 ChinaFile China's Xi 
Approaches a New Term With a Souring Taste for Markets

https://www.wsj.com/articles/chinas-xi-approaches-a-new-term-with-a-souring-taste-for-markets-1508173889?mod=e2twa

Lingling Wei 10/16/2017 WSJ The very definition of kicking the can down 
the road. Strategist Chovanec Says China's Problems Aren't Fixed

https://www.bloomberg.com/news/videos/2017-10-19/strategist-chovanec-china-s-problems-aren-t-fixed-video

Patrick Chovanec 10/19/2017 Bloomberg (Video) Not letting the market do 
its job. Financial instability in China:&nbsp;Possible pathways and 
their likelihood

https://www.merics.org/en/merics-analysis/china-monitor/merics-china-monitor-no-42/

Victor Shih 10/20/2017 MERICS China Monitor

With all best wishes,

Lyric Hughes Hale

Editor-in-Chief

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