Subject: Sturm und Drang | EconVue Spotlight October 13, 2018
From: "Ying Zhan" <[email-masked]>
To: "R. Hunter Biden" <[email-masked]>
Date: Sat, 13 Oct 2018 21:35:58 -0700 (PDT)

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EconVue Spotlight

Dear R. Hunter,

It has been a turbulent week to say the least. In response to an equity 
market sell-off, President Trump dared to say what many were thinking, 
that the Fed has "gone crazy" and raised interest rates prematurely. On 
the 10th year anniversary of the Global Financial Crisis, there has been 
much debate about its causes, including Saul Eslake's excellent essay 
below. What haunts me is that despite all the usual positive indicators 
such as unemployment and GDP growth, something is still not quite back 
to normal. Except in coastal cities, real estate prices have still not 
recovered, and for most Americans, their home is their largest asset. In 
fact, there are increasing signs that they are once again using their 
homes as ATM's. We all know that financing consumption instead of 
investment usually ends in tears. Robert Shapiro explains how working 
Americans are still facing a difficult reality.

China represents 30% of global GDP growth, and if China lags behind the 
world will too. Last week, Vice President Pence laid out what is 
essentially the Trump Administration's China policy. The Chinese have 
underestimated Trump's resolve, and thought that a resolution would be 
forthcoming by the mid-term elections. That will clearly not happen now, 
and the Xi-Trump Summit at the G20 meeting is still not a certainty. By 
continuing to court the old guard of China policy, while making lives 
difficult for the new generation of China watchers, Beijing was unaware 
of the sea change that this represented from prior administrations. 
Douglas Paal's analysis of the impact of young China hands is a 
must-read, not something I say lightly since there is so much repetition 
in US-China discussions.

After years of providing an unlevel playing field for MNC's operating 
and investing in China, China can no longer count on their unilateral 
support either. My take is that wisdom on both sides will prevail. 
Despite blustering corporate nationalism, most businesspeople in China 
recognize the value that foreign companies and their technologies can 
bring. Ultimately, there will be a trade agreement, but it will be a 
trade & technology agreement. It won't happen however until China agrees 
to the demilitarization and economic reunification of North and South 
Korea, which would be the crowning achievement of Trump's first term. 
That would imply an agreement not before this election, but before the 
2020 Presidential elections.

Recommended articles range from David Johnson

http://content.davidhaleweb.com/acton/ct/3037/s-01ff-1810/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct1_1/1?sid=TV2%3Ai84Oo5gzL

's article on the business of treating autism to the newest Nobel 
laureates in economics, to Karen Petrou's warning about fintech 
regulation. We'll all be waiting anxiously for market opens on Monday- 
equities last week were as volatile as cryptocurrencies!

RESEARCH BY ECONVUE EXPERTS

The Global Financial Crisis – A Decade On

https://econvue.com/pulse/global-financial-crisis-%E2%80%93-decade

Saul Eslake

https://econvue.com/experts/saul-eslake

Reflections on the global financial crisis (what was I doing – what was 
I thinking?) a decade after the collapse of Lehman Brothers.

Don't be Fooled: Working Americans are Worse off under Trump

https://econvue.com/pulse/don%E2%80%99t-be-fooled-working-americans-are-worse-under-trump

Robert Shapiro

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

Despite robust economic numbers during the Trump presidency, the 
American public has seemed curiously unmoved by good news such as the 
lowest U.S. unemployment level in nearly half a century. Its enthusiasm 
might have been dampened by this underappreciated economic reality: The 
typical working American's earnings, when properly measured, have 
declined during the Trump administration.

Autism Therapy Shines Bright: Innovative Therapies, More Reimbursement, 
Sector Poised for Growth

https://econvue.com/pulse/autism-therapy-shines-bright-innovative-therapies-more-reimbursement-sector-poised-growth

David Johnson

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

Autism Spectrum Disorder is the nation's fastest-growing developmental 
disorder, one that touches each child and family in unique and 
complicated ways. In response, innovative companies now provide therapy 
services in a variety of settings, including freestanding centers, at 
home and in schools. The therapy services administered in these programs 
provide a growing population of individuals—particularly children—with 
the opportunity to live longer, healthier, and more socially integrated 
lives.

STORIES IN OUR SPOTLIGHT

New ideas about new ideas: Paul Romer, Nobel laureate

https://voxeu.org/article/new-ideas-about-new-ideas-paul-romer-nobel-laureate#.W8D8MQl39p8.twitter

Chad Jones 10/12/2018 Vox

Romer's essential contribution is his clear understanding of the 
economics of ideas and how the discovery of new ideas lies at the heart 
of economic growth.

How we create and destroy growth: The 2018 Nobel laureates

https://voxeu.org/article/how-we-create-and-destroy-growth-2018-nobel-laureates#.W8D74J9-2jY.twitter

Kevin Bryan 10/11/2018 Vox

Occasionally, the Nobel Committee gives a prize that is unexpected, 
surprising, yet deft in how it points out underappreciated research. 
This year, they did no such thing. Both William Nordhaus and Paul Romer 
have been running favourites for the award for many years. The surprise, 
if anything, is that the prize went to both men together: Nordhaus is 
best known for his environmental economics; and Romer for his theory of 
‘endogenous' growth.

The tyranny of the top five journals

https://www.ineteconomics.org/perspectives/blog/the-tyranny-of-the-top-five-journals#.W70ZMbbsfxs.twitter

James Heckman and Sidharth Moktan 10/2/2018 Institute for New Economy 
Thinking

Unusual soul-searching about the economics profession and the origins of 
groupthink and publication funnels.

U.S.

Trump and the End of Smugness

https://warontherocks.com/2018/10/trump-and-the-end-of-smugness/

Devin Stewart 10/11/2018 War on the Rocks

Next level iconoclastic brilliance, must read.

Which U.S. major metro areas now offer the best housing values?

https://www.stlouisfed.org/publications/housing-market-perspectives/2018/us-housing?&utm_source=Twitter&utm_medium=SM&utm_term=housing&utm_content=pub&utm_campaign=6011_1

William R. Emmons 10/10/2018 Federal Reserve Bank of St. Louis

Housing markets in some Upper Midwestern major metro areas—Detroit, 
Cleveland, Cincinnati, Indianapolis and Chicago—now offer the best 
relative values, on average, nationwide.

The return to great-power rivalry was inevitable

https://www.theatlantic.com/international/archive/2018/09/liberal-international-order-free-world-trump-authoritarianism/569881/

Thomas Wright 9/12 2018 the Atlantic

Despite their significant differences, Barack Obama and Donald Trump 
both understood that the American people wanted to pull back, do less, & 
have other nations share more of the burden." Great read on the demise 
of the liberal world order & what's next.

The tyranny of the U.S. dollar

https://www.bloomberg.com/news/articles/2018-10-03/the-tyranny-of-the-u-s-dollar

Peter Coy 10/3/2018 Bloomberg

Dollar dominance is being debated now that the US economy is pulling 
ahead of the pack. This article ignores an obvious answer to the Triffin 
Dilemma- a global currency without sovereignty specifically, 
cryptocurrencies such as bitcoin.

China

How US-China disputes on trade, Taiwan and the South China Sea are 
driven by Washington's new generation

https://www.scmp.com/comment/insight-opinion/united-states/article/2167785/how-us-china-disputes-trade-taiwan-and-south

Douglas H. Paal 10/10/2018 South China Morning Post

The new generation of China hands in Washington has different values and 
a totally different experience of China. They are now a driving force 
behind US-China rivalry. Intriguing analysis by the inestimable Doug 
Paal.

Vice President Mike Pence's remarks on the administration's policy 
towards China

https://www.hudson.org/events/1610-vice-president-mike-pence-s-remarks-on-the-administration-s-policy-towards-china102018

Hudson Institute 10/2/2018

This is basically a comprehensive outline of the Trump Administration's 
China policy.

China 'spy chips' rattle global data center supply chain

https://asia.nikkei.com/Economy/Trade-War/China-spy-chips-rattle-global-data-center-supply-chain

Cheng Ting-Fang, Lauly Li and Toyoki Nakanishi, 10/6/2018 Nikkei Asian 
Review

Bloomberg's China spy chip story sent shock waves through the tech 
world, but was vigorously denied by both Apple and Amazon. Nikkei gives 
a balanced account.

Stop obsessing about China

https://www.foreignaffairs.com/articles/china/2018-09-21/stop-obsessing-about-china

Michael Beckley 9/21/2018 Foreign Affairs

The most sensible analysis of the US-China relationship I have read in 
quite some time. The biggest risk, as with the Fed, is policy 
overreaction on both sides.

Which Chinese hold top jobs at key international bodies?

https://www.scmp.com/news/china/diplomacy/article/2167522/which-chinese-hold-top-jobs-key-international-bodies

Laura Zhou 10/8/2018 South China Morning Post

Answers a question I'm sure many have been asking after the arrest of 
Meng Hongwei, Interpol chief. The answer includes the head of the 
International Civil Aviation Organization and the International 
Telecommunications Union.

FinTech

Regulators see risk, run for cover

http://content.davidhaleweb.com/acton/ct/3037/s-01ff-1810/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct20_1/1?sid=TV2%3Ai84Oo5gzL

Karen Petrou 10/12/2018 Federal Financial Analytics

Whistling on the sunny side of the street even as the U.S. stock market 
crashed, the FSB's new crypto-asset policy is yet one of a series of 
global pronouncements about emerging risk – some deemed as very 
worrisome – that regulators are nonetheless told to ponder very, very 
seriously without doing anything much about them

Some simple Bitcoin economics&nbsp;

http://content.davidhaleweb.com/acton/ct/3037/s-01ff-1810/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct21_1/1?sid=TV2%3Ai84Oo5gzL

Linda Schilling & Harald Uhlig 10/11/2018 Vox

"The BIS traces the instability of crypto-prices back to the lack of a 
crypto central bank." Bitcoin under the control of a central bank is 
just digital fiat. Is it impossible for traditional economists to 
abandon the rather recent concept of a central bank?

With all best wishes,

Lyric Hughes Hale

Editor-in-Chief

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