Category Archives: World

(PUB) Jared Diamond: “Se Lisboa só pudesse ter um museu, esse museu deveria ser o das descobertas”

(PUB) Jared Diamond Viveu entre os últimos caçadores-recolectores do mundo e emociona-se com o fim iminente desse modo de vida. Defende que para perceber o mundo actual temos de recuar à pré-história e que há coisas a aprender com as sociedades tradicionais. Para este prestigiado académico, uma das vantagens históricas da Europa é a sua desunião.

Jared Diamond não é um académico qualquer. Sereno, empático e de ar saudável, na sua presença sente-se como devem ter sido extraordinários os seus 81 anos, feitos há menos de uma semana. Durante décadas conviveu e fez amigos entre os membros das sociedades tradicionais das ilhas da Nova Guiné, que estão entre os últimos caçadores-recolectores do mundo, um modo de vida com seis milhões de anos, prestes a desaparecer. Quando estava nos “trintas” um novo-guineense chamado Yali fez-lhe uma pergunta: porque é que vocês brancos desenvolveram tantas coisas e as trouxeram para a Nova Guiné, mas nós, negros, tínhamos tão poucas coisas nossas? É uma pergunta avassaladora. Para a responder, não basta dizer que as várias sociedades humanas se desenvolveram de formas diferentes, que algumas chegaram à era espacial no século XX enquanto outras se mantiveram com tecnologia da Idade da Pedra até aos tempos modernos. É preciso tentar explicar porquê. Por exemplo, porque é que a agricultura e as ferramentas de metal apareceram em certos locais e não noutros? Estas são para Jared Diamond as razões últimas, necessárias para responder à pergunta de Yali.

Duas décadas volvidas, e já muito depois da morte de Yali, publica um livro com a sua tentativa de resposta, Armas, Germes e Aço. Em três palavras, são estas as razões imediatas para que os europeus e os seus descendentes tenham dominado o mundo num piscar de olhos, de apenas cinco séculos. Mas Diamond tenta chegar às razões últimas, ou seja, aos acontecimentos e circunstâncias que após o fim da última Idade do Gelo fizeram com que as coisas tivessem sido assim. O livro valeu-lhe o prestigiado Prémio Pulitzer em 1998. Tem várias obras de divulgação científica publicadas, todas sucessos planetários. No mais recente “O mundo até ontem” mostra-se grato pelas vantagens da modernidade, mas diz-nos que podemos aprender algumas coisas com as sociedades tradicionais. Não imitá-las, apenas adoptar algumas soluções para problemas específicos que certas sociedades resolveram melhor do que nós.

O pai era físico, a mãe linguista, professora e pianista. Jared é professor de Geografia na Universidade de Califórnia em Los Angeles (UCLA), mas ao longo da vida teve vários interesses e carreiras, sucessivas e em paralelo. Fisiologia, ornitologia, ecologia, história ambiental, entre outras. No final dirá que, apesar da importância da colaboração científica multidisciplinar, há uma vantagem em ter muito conhecimento num cérebro só. Veio a Portugal a convite da Fundação Francisco Manuel dos Santos para participar no encontro O Trabalho Dá Que Pensar. Resume aqui de modo dramático a sua resposta à pergunta de Yali, fazendo uso da arte da síntese, desenvolvida ao longo de décadas de contacto com jornalistas. Daí partimos para as descobertas portuguesas e respectiva proposta de criação de museu em Lisboa. Falamos ainda sobre as diferenças na educação, na avaliação de riscos e no envelhecimento, nas sociedades tradicionais e na nossa. E das vantagens e desvantagens da inteligência artificial. Pelo caminho, mandou-me deitar fora o saleiro.

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Algumas populações humanas permaneceram caçadoras-recolectoras até há pouco tempo. Outras evoluíram para formar sociedades muito complexas. Como é que as coisas aconteceram de maneira tão diferente?
As diferenças entre as sociedades humanas modernas resultam de diferenças na geografia e biogeografia, ao longo dos últimos 10 mil anos. Em particular na disponibilidade de espécies animais e de plantas adequadas para domesticação, mais do que em diferenças entre as pessoas em si.

Se entendi correctamente, não há mérito de uma sociedade particular por ter evoluído de uma certa maneira. Não há diferenças inatas nas populações, as diferenças estão nos seus ambientes?
É verdade. Claro que há diferenças fisiológicas e noutros aspectos. Há razões pelas quais os europeus podem digerir leite e os aborígenes australianos não. Mas diferenças que contam para que algumas pessoas se tornem escritores, empresários e operários metalúrgicos, enquanto outros povos permaneceram caçadores-recolectores, diferenças genéticas nos cérebros, não há provas disso.

Muitas pessoas procuram as raízes da desigualdade no mundo de hoje há 500 anos, quando os europeus chegaram à América. Mas no seu livro Armas, Germes e Aço argumenta que as raízes da desigualdade actual estão algures após o fim da última era glacial (há 13 mil anos) porque as sociedades evoluíram de maneira diferente a partir daí. Isso está correcto?
É verdade. Se alguém me dissesse que todas as diferenças no mundo moderno começaram a surgir há 500 anos, eu diria: olhem para o estado do mundo em 3000 a.C. Na Ásia ocidental, e a começar no Sudeste europeu, já existiam ferramentas de metal, escrita e reis. Enquanto na Austrália havia apenas caçadores-recolectores. E nas Américas, no México e nos Andes, a agricultura estava só a começar. Se um extraterrestre, uma criatura verde de oito pernas da nebulosa de Andrómeda, tivesse visitado a Terra em 3000 a.C. e lhe pedissem para prever quem iria conquistar o mundo, o visitante faria uma aposta correcta. Claro que seriam aquelas pessoas da Ásia ocidental e os seus descendentes. As diferenças em 3000 a.C. eram já tão grandes que foram essas que produziram o mundo moderno.

Escreve a palavra “descobertas” entre aspas, quando se refere às descobertas geográficas ibéricas no século XV. Porquê as aspas?
Porque as descobertas geográficas no século XV foram descobertas dos europeus de coisas que eram conhecidas por outros povos há 40 mil anos! O primeiro europeu a descobrir a Austrália foi um holandês em 1606 [Willem Janszoon]. Esse holandês descobriu a Austrália? Não! Os aborígenes da Austrália viviam lá há 60 mil anos. Foram eles que descobriram a Austrália. As aspas significam: descobertas por europeus.

O presidente da Câmara de Lisboa quer fazer um museu das descobertas. Algumas pessoas argumentam que a palavra “descoberta” esconde a escravidão e a colonização que se seguiram. Acha que devíamos ter um museu das descobertas em Lisboa?
Claro que devíamos ter um museu das descobertas em Lisboa! Possivelmente, a coisa mais importante acerca de Portugal nos últimos 600 anos foram as grandes descobertas feitas por navegadores portugueses. É verdade que Vasco da Gama não descobriu a Índia. Descobriu o caminho marítimo para a Índia. E também não é verdade que um português tenha descoberto o Brasil, já havia um milhão de nativos americanos a viver no Brasil, mas um navegador português foi o primeiro europeu a chegar ao Brasil. E isso teve uma importância enorme para a história mundial, porque levou à colonização europeia do Novo Mundo. Se Lisboa só pudesse ter um museu e tivéssemos de demolir todos os outros, esse único museu deveria ser das descobertas. Mas teríamos de entender o que significa descobertas.

Se escrevêssemos apenas uma página sobre Portugal num livro de história mundial, esse deveria ser o tema? Não o tráfico de escravos transatlântico?
É verdade. Claro que a coisa mais importante acerca de Portugal na história mundial foi o seu papel na expansão europeia pelo mundo. E a expansão europeia no mundo significou muitas coisas, boas e más. Significou o tráfico de escravos transatlântico, o que é mau. Significou a importação de sementes do Novo Mundo para a Europa, o que foi bom para a Europa. Significou o desenvolvimento de sociedades agrícolas altamente produtivas na Argentina, o que é bom. Uma pessoa pode ser selectiva tanto positiva como negativamente. Se uma pessoa disser que a descoberta portuguesa do Novo Mundo foi a coisa mais maravilhosa dos últimos 600 anos… não, disparate! Resultou no tráfico de escravos transatlântico e na matança da maioria dos nativos americanos, o que é mau. Se quisermos dizer que a descoberta portuguesa do Novo Mundo foi inteiramente má… não, não foi! Muitas pessoas querem que a vida seja simples. Que seja tudo bom ou mau. Lamento, talvez a vida seja assim na nebulosa de Andrómeda, mas aqui na Terra o bom e o mau misturam-se!

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RUI GAUDÊNCIO

O que aconteceu quando os europeus se encontraram com os nativos americanos foi em grande parte inevitável?
Infelizmente, sim. Ao longo da história humana quando povos mais poderosos encontraram povos menos poderosos, o resultado foi quase sempre a conquista, a expulsão, às vezes o extermínio dos povos menos poderosos. Foi apenas nos últimos 80 anos que começámos a ter excepções. Quando os europeus “descobriram” as ilhas da Nova Guiné, havia lá populações densas de milhões que viviam com tecnologia da Idade da Pedra. Quando os europeus chegaram, não os mataram todos porque em 1930 já não era considerado aceitável que os europeus exterminassem e expulsassem outros povos. Mas se os europeus tivessem descoberto as ilhas da Nova Guiné 80 anos antes, claro que os teriam matado ou expulsado a todos. Os comportamentos melhores são relativamente recentes. Isto não quer dizer que todos os comportamentos humanos nos últimos 80 anos foram bons. Podemos pensar em várias coisas que aconteceram na II Guerra Mundial que não foram boas.

Deveria um chefe de Estado português pedir desculpa pelo papel do país no tráfico transatlântico de escravos?
Caramba! Eu oiço esse argumento em relação à Austrália. Não estou familiarizado com os argumentos acerca de Portugal, mas devem ser sem dúvida semelhantes. Devem os australianos modernos pedir desculpa pelo que os europeus fizeram aos aborígenes australianos a partir de 1788, quando os britânicos colonizaram a Austrália? Eles mataram, infectaram com doenças e expulsaram das suas terras os aborígenes australianos. Devem os europeus modernos pedir desculpa pelo que os europeus de 1830, 1880 e 1920 fizeram? Um primeiro-ministro australiano chamado John Howard disse que os australianos modernos não devem pedir desculpa pelas coisas que os seus tetravós fizeram, mas sim pelas coisas que fazem hoje. Outros australianos acham que devem pedir desculpa por coisas que o seu povo, os seus antepassados, fizeram. É semelhante nos Estados Unidos. Devem os americanos brancos modernos pedir desculpa pela escravatura? Alguns americanos dizem que sim, outros dizem que foram os seus tetravós, como é que podem pedir desculpa pelo que eles fizeram? É um debate em aberto. A resposta para Portugal deve ser semelhante. Não foi você ou os seus colegas de escola que fizeram o tráfico transatlântico de escravos. Foram os vossos tetra-tetra-tetra-tetravôs. Sente-se responsável pelos actos deles?

Pedir desculpa pela escravatura não é incompatível com o seu argumento de que as causas da desigualdade não são de há 500 anos, mas de há 10 mil anos? Pedir desculpa pela escravatura é pedir desculpa por algo na história recente, mas que não foi determinado pela história recente.
Porque é que os europeus estabeleceram um comércio de escravos transatlântico? Porque é que os africanos não fizeram um comércio de escravos trans-mediterrânico, com africanos a escravizarem europeus? A razão para isso são armas, germes e aço; as origens precoces da domesticação de plantas e animais no Sudoeste asiático, porque havia lá muito mais espécies domesticáveis do que em África. Para além disso, é porque a Eurásia tem um eixo Este-Oeste [com latitudes e climas semelhantes], que permitiu que as sementes chinesas chegassem à Europa. Enquanto a África tem um eixo Norte-Sul [com grandes diferenças de latitudes e climas], por isso as sementes do Crescente Fértil nunca chegaram à África do Sul, até os holandeses navegarem até lá. É por causa da geografia e da biogeografia. É verdade. Por outro lado, essa é a razão última, mas as pessoas apesar disso têm responsabilidades morais. Se o povo A está numa posição de poder, hoje em dia nós dizemos que esse povo não deve usar esse poder para exterminar outro povo. Portugal é hoje mais rico e poderoso do que… o Congo. Se os portugueses fossem para o Congo e começassem a matar congoleses, devíamos dizer que a culpa não é dos portugueses, é porque tiraram partido da domesticabilidade do gado? Outros poderiam argumentar: sim, os portugueses tiraram partido da domesticação do gado, mas ainda assim têm responsabilidades morais quando decidem ir matar congoleses!

No início do século XV, a China tinha capacidade técnica naval para atravessar o Pacífico e chegar à costa oeste dos Estados Unidos? Ou para alcançar a Europa?
Por volta de 1432, sem dúvida que sim. Porque a China tinha uma série de frotas, com navios muito maiores do que os navios de Cristóvão Colombo. E eram frotas muito maiores, que a China enviou primeiro para a Indonésia, depois para a Índia, depois para a costa oriental de África. Parecia que as frotas chinesas estavam quase a dobrar o cabo da Boa Esperança e a chegar à Europa. Infelizmente para a China, houve uma mudança de imperador. O novo imperador disse: estas frotas são um enorme desperdício de dinheiro e trazem coisas inúteis para a China, que já tem tudo o que precisa. A China tinha certamente a capacidade tecnológica para chegar à Europa em 1432. E se tivesse assim escolhido teria também tido a capacidade técnica de chegar às Américas em 1432. Mas escolheu não o fazer.

Foi a unidade política na China que deu vantagem à Europa? Cristóvão Colombo pediu a vários reis para financiar a sua viagem.
Exactamente. Colombo primeiro pediu aos italianos, que disseram que não. Pediu aos franceses, não. Pediu ao rei de Espanha, não. Pediu aos portugueses, não. Pediu aos duques de Espanha, não. Finalmente pediu ao rei de Espanha, que disse está bem, leva estes dois barcos e vai. Na China, não havia seis hipóteses.

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“Um primeiro-ministro australiano chamado John Howard disse que os australianos modernos não devem pedir desculpa pelas coisas que os seus tetravós fizeram, mas sim pelas coisas que fazem hoje.”

Na altura não houve uma decisão centralizada que impedisse Colombo de fazer a viagem. Mas hoje há uma União Europeia. Pensa que a União Europeia pode minar esta vantagem histórica da Europa, de não ser politicamente unida?
É um grande desafio para a União Europeia. Como é que se conseguem as vantagens da União Europeia, sem perder a vantagem histórica da desunião? Isto é debatido por historiadores, mas eu vejo, entre as vantagens históricas da Europa, a sua desunião. A Europa teve a sorte de ser, de facto, uma península a oeste do Crescente Fértil. Obteve a escrita, ferramentas de metal e agricultura a partir do Crescente Fértil. Mas a Europa era desunida. O que significa que existiam 200 príncipes que competiam uns com os outros. Se um príncipe tomasse uma má decisão… houve príncipes que aboliram as armas. E sabe o que aconteceu? Príncipes vizinhos, que não tinham abolido as armas, conquistaram esses principados. Quando um imperador na China tomava uma má decisão, tal como, não há mais navios oceânicos, não havia mais 199 príncipes chineses para dizer que mantinham os seus navios oceânicos. Eu vejo as vantagens históricas da Europa como a sua proximidade ao Sudoeste asiático, estar nas zonas temperadas, ter terras realmente férteis, chuva no Verão e ser politicamente desunida. Para a União Europeia, hoje, o desafio é ter as vantagens de um certo grau de união, preservando a vantagem histórica de desunião. Mas eu não me preocupo com isso, de todo. Parece-me que a Europa está a fazer um excelente trabalho na preservação da sua desunião!

Viveu no seio de sociedades tradicionais, na Nova Guiné. Que impacto isso teve em si?
Transformou a minha visão da vida em muitos aspectos. Comecei a visitar a Nova Guiné muito antes de ter tido filhos. Tinha quase 50 anos quando os meus filhos [gémeos] nasceram. Eles nasceram em 1987 e a minha primeira visita à Nova Guiné foi em 1964. Eu tinha vivido na Nova Guiné ao longo de 23 anos, quando tive filhos. O meu modelo de como tratar os meus filhos era como os nova-guineenses criavam os seus. Eu não tinha prestado atenção ao modo como os americanos criavam os filhos. Isso é um aspecto. Outro é a minha atitude em relação ao perigo, que é baseada naquilo que eu vi na Nova Guiné. A minha mulher fica exasperada com a minha reacção a qualquer perigo possível. Mas o meu percurso foi na Nova Guiné. E eu sei que se fizer uma coisa mil vezes e de cada vez há o risco de um em mil que corra mal, se a repetir mil vezes, vou acabar morto. Aprendi isso na Nova Guiné. Os europeus não aprendem isso.

Diz no seu mais recente livro O Mundo até Ontem que devemos estar gratos pelas nossas sociedades modernas, mas também que podemos aprender e incorporar algumas coisas das sociedades tradicionais. Quais?
Para além das duas que já falei [educação e avaliação de riscos], os hábitos alimentares. Tem um saleiro na sua mesa de jantar?

Não. Mas uso um pouco de sal para cozinhar.
Ok. Quando chegar a casa, deite fora o sal da sua cozinha. A comida já tem sal, não há razão para ter sal na cozinha. A escolha é sua. Se gostava de morrer de hipertensão aos 65, mantenha o sal na cozinha. Se gostava de morrer de cancro aos 103, deite fora o sal!

A nossa biologia ainda não está totalmente adaptada ao nosso actual sistema de produção de alimentos? Biologicamente ainda estamos mais bem adaptados a uma dieta de caçadores-recolectores?
Em alguns aspectos, sim. Os portugueses, tal como os americanos, morrem principalmente de doenças não contagiosas. Morrem de hipertensão, doenças cardíacas, diabetes, cancro. Dessas, certamente que os nova-guineenses nunca morrem de hipertensão, doenças cardíacas ou diabetes. Isso é por causa do seu estilo de vida. Eles não têm saleiros. É porque não comem tanto como nós. Não comem regularmente alimentos ricos em gordura, não fazem três grandes refeições por dia. Eles comem batatas-doces ao pequeno-almoço, almoço e jantar durante semanas. Depois matam uns porcos e empanturram-se, ficam mesmo gordos e depois voltam a comer as batatas-doces. Não é que eu esteja a dizer que deveríamos imitar o estilo de vida dos nova-guineenses. Eu não como batatas-doces em três refeições por dia. E estou contente por isso. Eu gosto de comer bem e tento regular a boa comida que como. E deitei fora os saleiros para, pelo menos, reduzir o risco de morrer de hipertensão ou AVC.

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Jared Diamond viveu décadas entre as sociedades tradicionais da Nova-Guiné, facto que haveria de transformar a sua visão do mundo e da vida e até da educação dos seus filhos DR

Quanto tempo vivem em média os nova-guineenses que têm essa dieta?
Até aos tempos modernos, até à medicina moderna chegar à Nova Guiné, a esperança média de vida dos nova-guineenses seria talvez de 50 anos. Isso é terrível. A razão pela qual a sua esperança de vida era de 50 anos não era porque eles morressem de diabetes, AVC ou doenças cardíacas. Eles morriam porque se matavam uns aos outros. Morriam de doenças infecciosas, que nós tratávamos em Portugal e nos Estados Unidos com antibióticos. Morriam em acidentes, na selva. Se caíam e partiam uma perna, não havia médicos nem hospitais. Morriam de fome. As causas de morte na Nova Guiné tradicional são causas que nós já eliminámos em grande parte. Agora que a Nova Guiné foi trazida para o mundo moderno, os nova-guineenses vivem mais, até depois dos 60. Mas também estão a ficar gordos, diabéticos e hipertensos.

Disse que nas sociedades tradicionais da Nova Guiné muitos morriam de doenças infecciosas. Doenças locais ou vindas de fora?
Eram doenças infecciosas tradicionais. As doenças infecciosas europeias foram levadas especialmente para as Américas. Mas como a Nova Guiné fica no extremo leste da Indonésia, que é perto da China, as doenças asiáticas foram provavelmente chegando à Nova Guiné. Por isso não houve uma grande mortandade de nova-guineenses com doenças europeias. Eles morriam principalmente de doenças tropicais, especialmente malária e dengue. E de aquilo que nós chamamos “doenças gastrointestinais”.

Afirma que as sociedades ocidentais são das mais cruéis para os idosos. O que poderíamos aprender com as sociedades tradicionais em relação aos mais velhos?
Muitas sociedades tradicionais proporcionam aos idosos uma vida mais satisfatória do que na Europa. E por outro lado tiram mais partido dos idosos. Os mais velhos têm experiência. Um septuagenário teve muito mais experiência de relações humanas. Claro que um septuagenário não tem mais experiência com isto [telemóvel] do que o meu filho de 30. O facto de eu ter 81 anos não me ajuda nada com isto, peço ajuda ao meu filho. Mas eu e a minha mulher temos muito mais experiência a lidar com pessoas, a tomar decisões e a gerir pessoas. Apenas porque vivemos mais. Isso é algo em que os idosos são bons. Em muitos ou na maioria dos aspectos eu vejo vantagens da vida na Europa quando comparada com a vida nos Estados Unidos. Mas um aspecto em que a vida na Europa é inequivocamente pior do que nos Estados Unidos é que na Europa, muitas vezes, a aposentação é obrigatória. Soube que na função pública, em Portugal, há uma idade de aposentação obrigatória. Se eu fosse o Presidente Kim Jong-un, da Coreia do Norte, e quisesse arruinar-vos, faria exactamente o que os europeus estão a fazer a si próprios. Uma lei de aposentação obrigatória para que deitem fora as vossas pessoas mais experientes. Era igual nos Estados Unidos, mas a aposentação obrigatória foi tornada ilegal há cerca de 30 anos. Pelo contrário, na Nova Guiné, é reconhecido que os mais velhos têm valor. Quando não havia escrita na Nova Guiné, os velhos eram repositórios de conhecimento. É normal na Nova Guiné, quando alguém quer saber alguma coisa, ir perguntar a um velho. Ou se quiser um conselho.

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Ainda há caçadores-recolectores?
Sim. Na Nova Guiné, ainda há alguns grupos. Não muitos, mas ainda há alguns. Na bacia amazónica ainda há caçadores-recolectores e em África também há alguns grupos. Os hadza, da Tanzânia, alguns ainda são caçadores-recolectores. Entre o povo san, do Botswana e da Namíbia, havia caçadores-recolectores até há poucas décadas e provavelmente ainda existem alguns. Os inuítes, os esquimós no Árctico, alguns deles ainda vivem como caçadores-recolectores.

Há futuro para os caçadores-recolectores ou eles serão gradualmente assimilados pelas sociedades modernas?
Provavelmente, dentro de 20 anos não restarão nenhuns caçadores-recolectores em qualquer lugar do mundo. E isso é notável. Praticamente todos os humanos foram caçadores-recolectores durante os últimos seis milhões de anos. E isso significa que seis milhões de anos de história humana vão acabar nos próximos 20.

Os sistemas automáticos tornados possíveis pela inteligência artificial irão libertar os humanos para mais inovação e criatividade?
Sim e não. A inteligência artificial irá tornar algumas tarefas inúteis. As máquinas serão capazes de executar essas tarefas. Por exemplo, os computadores. O meu doutoramento foi em fisiologia laboratorial. Nesses tempos, os computadores que usávamos para fazer modelos de como os nervos conduzem impulsos eléctricos eram muito primitivos e demoravam duas semanas a calcular um impulso nervoso. Hoje, o cálculo é feito imediatamente. Com os computadores, conseguimos fazer coisas muito rapidamente. Isso é maravilhoso. Mas também é terrível. Porque, se olharmos para os jovens, estima-se que as pessoas como os meus filhos passam 80% do seu tempo com aparelhos electrónicos com ecrãs. Passam muito pouco tempo a falar com pessoas, a olhar pessoas cara a cara. Se se passa muito pouco tempo cara a cara com pessoas, então não se aprende a ler os sinais, os ligeiros movimentos, a respiração, a linguagem corporal. Simplesmente não se entendem as pessoas tão bem. Acho que é um dos factores que contribuem para o comportamento cada vez mais rude e cruel nos Estados Unidos. Especialmente na política americana, mas é mais generalizado. É mais fácil escrevermos uma mensagem muito rude se virmos uma mensagem num ecrã. É mais difícil para mim olhar para si e dizer coisa terríveis sobre si do que se estiver as escrevê-las num ecrã. Vejo isto como um dos grandes inconvenientes da tecnologia moderna, incluindo a inteligência artificial.

Quando a agricultura foi adoptada nalgumas sociedades, muitas pessoas ficaram livres para fazer outras coisas, já que nem todos precisavam de passar o tempo a procurar os seus próprios alimentos. Algumas puderam especializar-se na construção de ferramentas, outras tornaram-se soldados a tempo inteiro, políticos ou burocratas. Explica isto nos seus livros. A inteligência artificial, por libertar os humanos de certas tarefas (por exemplo, guiar carros), é semelhante à agricultura? Vê alguma semelhança entre as duas coisas?
Eu vejo exactamente essa semelhança que acabou de mencionar. A agricultura criou novas oportunidades. A inteligência artificial e a tecnologia em geral criam também novas oportunidades. Mas não conheço nenhuma tecnologia que tenha trazido apenas coisas boas. A agricultura é um bom exemplo. Quando foi trazida para a Europa, foi muito marcante. Os primeiros agricultores ficaram cerca de 15 centímetros mais baixos do que os caçadores-recolectores a que sucederam. Inicialmente, a agricultura foi menos nutritiva e forneceu menos vitaminas. Os caçadores-recolectores que viviam em Portugal em 7000 a.C. eram bastante altos. Só depois da I Guerra Mundial é que os agricultores portugueses voltaram a ser tão altos como os caçadores-recolectores de Portugal de 7000 a.C. A chegada da agricultura também esteve associada a muitas novas doenças. A agricultura trouxe grandes benefícios, mas também grandes inconvenientes. Todas as tecnologias têm benefícios e inconvenientes. A inteligência artificial também tem benefícios, mas já está a trazer inconvenientes.

Trabalhou em muitos campos, como antropologia, biologia, ornitologia, ecologia, história e geografia. Como vê a especialização actual na ciência, em que muitas vezes os investigadores estão focados apenas numa gama muito estreita de temas e técnicas?
A especialização, tal como a agricultura e a inteligência artificial, tem benefícios e desvantagens. Consideremos a especialização da genética moderna. Com as modernas técnicas genéticas, podemos analisar o ADN de esqueletos de caçadores-recolectores portugueses de há 9000 anos. E podemos responder a perguntas acerca da pré-história que eram impossíveis de responder antes de termos estas novas técnicas, dos últimos sete anos. Essa é uma grande vantagem da especialização. A desvantagem da especialização é que é muito complicada e é preciso investir muito tempo a aprender estas técnicas genéticas modernas. Quem aprender estas técnicas, provavelmente, não terá muito tempo para estudar línguas, pintura, a música de Bach, os primeiros exploradores portugueses. Sabe menos. Em ciência, para se tirar conclusões, é preciso colaborar com outras pessoas. Mas há uma vantagem em ter muito conhecimento num cérebro só, em vez de em sete cérebros diferentes. A especialização, tal como a agricultura e a inteligência artificial, traz poder, mas também desvantagens. O que é que podemos fazer acerca disso? Podemos tentar minimizar as desvantagens, colaborando. Especialistas em genética a colaborar com linguistas e com arqueólogos, o que felizmente acontece cada vez mais. Os melhores especialistas sabem que não sabem outras coisas e que precisam de colaborar com pessoas que saibam.

(BBG) S&P, Dow Soar to Record Highs as Trade Fears Abate: Markets Wrap

(BBG) U.S. stock benchmarks reached new highs Thursday on news from China about tariff and currency moves that could ease trade tensions. Treasury yields remained near their highest level this year. The dollar slid.

The S&P 500 Index soared to a record close — led by the technology, health-care and financial sectors — lodging its biggest gain in over a month. The Dow Jones Industrial Average also reached a new pinnacle, with 28 of 30 constituents flashing green. Most European and Asian shares also gained.

Trade conflicts that had stocks gyrating early in the week have since cooled off. China is said to be planning to cut the average tariff rate it charges on imports from the majority of its trading partners as soon as next month. On Wednesday, Premier Li Keqiang his government wouldn’t devalue the currency in order to boost its exports amid the trade war.

The yield on 10-year Treasuries held above 3 percent, near its high for the year. The greenback weakened after a report said the U.S. and Canada are unlikely to reach a deal on Nafta in Washington this week; jobless data was solid but did little to change the mood. The pound surged after August retail sales came in higher than expected.

“The dollar has generally strengthened on tariff fears, especially against EM currencies,” Pravit Chintawongvanich, an equity derivatives strategist at Wells Fargo Securities, said by phone. “What you’re seeing today is the opposite of that. EM equities and DM equities ex-U.S. are catching up. Today is a continuation of the risk-on theme we’ve seen in the last couple days.”

Equity markets have so far remained resilient in the face of rising bond yields, suggesting investors are comfortable with the outlook for corporate earnings and global growth even as borrowing costs rise along with trade tensions. Ahead of the Fed meeting next week some other central banks topped the agenda on Thursday, with Norway’s policy makers raisinginterest rates for the first time in seven years as the SNB kept deposit rates unchanged.

Elsewhere, emerging-market assets continued to rally off the lows seen earlier this month, with the rand among the leading developing-world currencies as the South African Reserve Bank held its key interest rate at a two-year low. Norway’s krone retreated as investors saw the central bank’s rate trajectory as dovish, while the Swiss franc strengthened.

West Texas crude dropped after U.S. President Donald Trump resumed his criticism of OPEC on Twitter.

Terminal users can read our Markets Live blog.

Here are some key events coming up this week:

  • The Organization of Petroleum Exporting Countries and its allies meet in Algiers this weekend.

These are the main moves in markets:

Stocks

  • The S&P 500 Index gained 0.8 percent as of 4 p.m. New York time to its highest on record.
  • The Dow Jones Industrial Average rose 1 percent, also reaching a record high.
  • The Stoxx Europe 600 Index jumped 0.7 percent.
  • The U.K.’s FTSE 100 Index climbed 0.5 percent.
  • The MSCI Emerging Market Index jumped 0.9 percent to the highest in more than two weeks.

Currencies

  • The Bloomberg Dollar Spot Index decreased 0.4 percent to the lowest in eight weeks.
  • The euro climbed 0.9 percent to $1.1779.
  • The British pound rose 1 percent to $1.3271.
  • The Japanese yen sank 0.1 percent to 112.41 per dollar.

Bonds

  • The yield on 10-year Treasuries rose less than one basis point to 3.07 percent, the highest in more than four months.
  • Germany’s 10-year yield decreased two basis points to 0.47 percent.
  • Britain’s 10-year yield fell two basis points to 1.585 percent.

Commodities

  • The Bloomberg Commodity Index rose 0.6 percent, approaching a six-week high.
  • West Texas Intermediate crude fell 0.4 percent to $70.80 a barrel.
  • LME copper fell 0.6 percent to $6,082.00 a metric ton.
  • Gold rose 0.3 percent to $1,207.28 an ounce.

(OBS) Uma crise que esconde outra – Rui Ramos

(OBS) Não foi o colapso do Lehman Brothers em 2008, mas o colapso das fronteiras em 2015 que provocou a verdadeira crise contemporânea.

A 15 de Setembro, fez dez anos que os empregados do banco Lehman Brothers limparam as secretárias. Tem sido fácil, desde então, simplificar a história: a maneira mais corrente é ver só a ganância dos banqueiros. Mas no princípio desde século, a banca também correspondeu ao interesse dos governos em prolongar artificialmente os bons tempos, à força de crédito arriscado. A partir de 2006, quando o petróleo atingiu valores históricos, os bancos centrais recearam a inflação, e, através de puxões dos juros, fizeram ruir a casa. Mas a era da “austeridade” depressa se tornou a era da criação de dinheiro barato, o que explica a nova euforia das bolsas e do imobiliário. Nada disso, porém, abalou os regimes ocidentais. As populações baixaram simplesmente as suas expectativas. A não ser na Grécia, a Grande Recessão fez apenas rodar no poder os partidos do costume, como em Portugal.

A crise que finalmente abalou os regimes políticos veio já quando o desemprego começava a descer. Resultou de outra decisão das elites ocidentais: a de compensar o recuo populacional com a importação em grande escala de mão de obra barata. No Verão de 2015, o afluxo ilegal de migrantes, a coberto do estatuto de “refugiado”, foi o momento Lehman Brothers dessa política demográfica clandestina. O problema não foi tanto a imigração em si, mas o descontrole e sobretudo a incapacidade de “integrar”: a este respeito, o fundamentalismo islâmico tornou apenas mais evidente o fracasso da última ilusão neo-colonial, a de que a Europa pode tornar europeu quem quer que seja. Tornou-se difícil esconder o risco de este tipo de imigração ilegal e caótica servir sobretudo para o Ocidente importar os problemas do resto do mundo. É isso, e não a Grande Recessão, que explica o Brexit no Reino Unido, um demagogo como Trump nos EUA, Salvini em Itália, Kurz na Áustria, os Democratas Suecos, Le Pen em França, ou Geert Wilders na Holanda.

É costume atribuir o sucesso dos chamados “populistas” à “ignorância” e ao “preconceito” do “povo”. Talvez fosse mais exacto, porém, admitir que os eleitores de Salvini ou dos Democratas Suecos sabem o que têm a perder. Não são apenas os bairros e os serviços sociais, pelos quais têm agora de competir com os migrantes. É, também, o estatuto derivado da identidade nacional. Um sueco não é apenas um titular de direitos sociais, mas membro de uma comunidade soberana, com uma cultura e uma história. As elites, porém, tratam agora as identidades cívicas nacionais como simples “construções”, e portanto coisas que podem ser “descontruídas” por decisão do governo. Confundindo identidade cívica nacional com o tipo de etnicismo exclusivista do século XIX (de que o nacionalismo catalão é um exemplo), as elites ocidentais dão até a entender que o fim das identidades nacionais na Europa seria uma conquista civilizacional. Não lhes ocorre que, num mundo que a globalização deixou em fluxo, essas identidades colectivas são das poucas âncoras que restam aos cidadãos — e, provavelmente, o vínculo mais efectivo para manter a coesão e a integridade das democracias e dos Estados sociais (veja-se, por exemplo, o modo como, no Reino Unido, o SNS está ligado à identidade britânica: será viável sem essa identidade? O Estado social não é só uma questão financeira).

Não foi o colapso do Lehman Brothers em 2008, mas o colapso das fronteiras em 2015 que provocou a verdadeira crise contemporânea. Ao declarar que os Estados são apenas uma espécie de aeroportos internacionais onde as pessoas passam sem nada precisarem de ter em comum, as velhas elites políticas ocidentais começaram a abandonar o “povo”, que por sua vez começou a abandonar as velhas elites. Não é difícil de compreender.

(BBG) We’re Living in What May Be the Most Boring Bull Market Ever

(BBG)  In an age of index funds and private companies, even a boom can feel blah.

To the extent anyone on Wall Street cares—and many will tell you they don’t—records in stocks are good for one thing: advertising. Talk all you want about rates of return or piling it up for retirement, but nothing beats a headline about an all-time high for bringing customers in the door.

And in they have come. Cheered by what’s become by some measures the longest bull market on record, U.S. investors have plowed money into U.S. stock exchange-traded funds at a rate of almost $12 billion a month since the start of 2017, five times as much as seven years ago. There are signs of stress—like the recent sell-off in Asia—but so far they appear in U.S. investors’ peripheral vision. Anyone buying stock in an American company right now must be comfortable paying two or three times annual sales per share, a level of shareholder generosity that hasn’t been seen since the dying throes of the dot-com bubble.

When we tell our grandchildren about this bull market, we’ll start by describing its demise, in the crash of 2019, or 2020, or 2025. But we don’t know the end of this story yet. What will we say of the rest? That dips were bought and passive investingruled, perhaps, and that a handful of tech megacaps—most of them decades old—grew to planetary size. But if the decade is remembered for anything, it could also be as the era when equities returned close to 20 percent a year on average from the March 2009 bottom and the stock market, somehow, got boring.

Which is to say, this isn’t like the boom of the late 1990s. Rarely do companies have initial public offerings where their stocks double on the first day of trading. The tip-dispensing cabbies of the bubble era are driving Ubers now, and any money they have to invest is going into ETFs, not individual stocks.

That’s what it’s like now: a market with fewer human voices, where the hum of computers is the background music to math projects with names like smart beta and risk parity. It’s a land ruled by giants. Three, to be exact—VanguardState Street, and BlackRock, which manage 80 percent of the $2.8 trillion invested in U.S. stock ETFs. IPOs, once the life of the market party, have turned into inconveniences in a world dominated by passive funds, occasions for reordering delicately balanced indexes.

In any case, companies are staying away from public markets in droves. From an annual rate of almost 700 new listings in the last half of the 1990s, the average has fallen 75 percent. While deals are up from last year and hope is running high that the spigot will open again, such expectations have been repeatedly dashed. “What we are really witnessing is an eclipse not of public corporations, but of the public markets as the place where young successful American companies seek their funding,” says a recent study by academics Craig Doidge, Kathleen Kahle, G. Andrew Karolyi, and René Stulz. They found there were 11 public firms for every million Americans in 2016, compared with 22 in 1975.

There’s no shortage of theories on what’s causing this, spanning everything from old-fashioned accounting rules to how the internet has made it easier to raise money from private investors, but the hardships of being a public company are frequently cited as the main culprit. While retail investors may have put more of their money on autopilot, hedge funds and other big investors seeking to carve out an edge can still make the life of a chief executive officer miserable. The number of so-called activist investorsmaking demands on public companies swelled past 500 for the first time in the first half of 2018. That’s nearly double the level of five years ago, according to research consultant Activist Insight.

Few topics get the pros’ dander up like this one. If you’re looking for an anomalous era, look at the 1990s, when every 22-year-old with a Java compiler ran a half-billion-dollar company. People paid dearly for euphoria back then. If the market is more discriminating today, good for it.

Still, the market’s image has dimmed. It’s seen by many as a channel for social blight. Companies may spend a trillion dollars this year on share repurchases—money that critics say should be used to build factories and create jobs (though those investments are up, too). People sense they’re getting screwed as all the country’s economic bounty flows to the top. At times in the past 10 years, the difference between annualized returns in the S&P 500 and growth in wages has been the widest for any bull market since the Lyndon Johnson administration.

Ten years after the worst meltdown since the Great Depression, all this is preventing rehabilitation of the idea of public company stewardship. If the sweet spot for entrepreneurship is somewhere around 30 years old, today’s best and brightest is an age cohort that graduated into the financial crisis. While this group’s Gen X forebears may remember a time when markets could be fun, now they’re a drag, a cesspool of high-frequency traders and at chronic risk of tipping over. What’s the point of going public when venture firms will hand you all the money you want?

That’s the big change: access to capital that doesn’t require a public listing. Right now, venture firms have about half a trillion dollars under management, roughly equivalent to all the money raised in IPOs over the last 10 years. Companies that would’ve gone public within a few years of being created in the 1990s aren’t even thinking about it now.

Disdain for public markets reached a kind of apotheosis last month with the story of Tesla Inc. CEO Elon Musk’s dalliance with going private. Tesla sits at the fulcrum of many of these market strains. Up about 40 percent a year since 2010, it’s a relatively recent IPO upon which the market confers a princely valuation. It’s also a favorite target of short sellers, who bet on the price of a stock falling, to the point where Musk was willing to forgo all the benefits he gets from public markets and consider leaving them. Technology companies trading at 100 times next year’s earnings didn’t used to consider going private. Apparently, they do now.

There’s talk of making markets more friendly to companies. Last month the Trump administration directed securities regulators to study a longer reporting cycle for corporate results. Instead of every quarter, earnings would be disclosed every six months. Job creation and greater flexibility were touted as possible benefits. And Jay Clayton, the Trump-appointed chairman of the U.S. Securities and Exchange Commission, wants to look at loosening restrictions on who’s allowed to trade shares in companies that have yet to go public.

Either proposal can be framed as a way of making equity investments a little less boring and predictable. Yet it’s strange to think that a market that’s created more than $20 trillion in value in less than a decade should need more strategies to burnish its image. If companies are so sick of the stock market after a run like this, the mind reels to consider what they’ll think after the crash of 2019, or 2020, or 2025.

BOTTOM LINE – Even as investors are willing to pay high prices for equities, companies have been slow to go public, and the stock market has lost much of its cultural buzz.

(Economist) A manifesto for renewing liberalism

(EconomistA manifesto for renewing liberalism

Success turned liberals into a complacent elite. They need to rekindle their desire for radicalism

LIBERALISM made the modern world, but the modern world is turning against it. Europe and America are in the throes of a popular rebellion against liberal elites, who are seen as self-serving and unable, or unwilling, to solve the problems of ordinary people. Elsewhere a 25-year shift towards freedom and open markets has gone into reverse, even as China, soon to be the world’s largest economy, shows that dictatorships can thrive.

For The Economist this is profoundly worrying. We were created 175 years ago to campaign for liberalism—not the leftish “progressivism” of American university campuses or the rightish “ultraliberalism” conjured up by the French commentariat, but a universal commitment to individual dignity, open markets, limited government and a faith in human progress brought about by debate and reform.

Our founders would be astonished at how life today compares with the poverty and the misery of the 1840s. Global life expectancy in the past 175 years has risen from a little under 30 years to over 70. The share of people living below the threshold of extreme poverty has fallen from about 80% to 8% and the absolute number has halved, even as the total living above it has increased from about 100m to over 6.5bn. And literacy rates are up more than fivefold, to over 80%. Civil rights and the rule of law are incomparably more robust than they were only a few decades ago. In many countries individuals are now free to choose how to live—and with whom.

This is not all the work of liberals, obviously. But as fascism, communism and autarky failed over the course of the 19th and 20th centuries, liberal societies have prospered. In one flavour or another, liberal democracy came to dominate the West and from there it started to spread around the world.

Laurels, but no rest

Yet political philosophies cannot live by their past glories: they must also promise a better future. And here liberal democracy faces a looming challenge. Western voters have started to doubt that the system works for them or that it is fair. In polling last year just 36% of Germans, 24% of Canadians and 9% of the French thought that the next generation would be better off than their parents. Only a third of Americans under 35 say that it is vital they live in a democracy; the share who would welcome military government grew from 7% in 1995 to 18% last year. Globally, according to Freedom House, an NGO, civil liberties and political rights have declined for the past 12 years—in 2017, 71 countries lost ground while only 35 made gains.

Against this current, The Economist still believes in the power of the liberal idea. Over the past six months, we have celebrated our 175th anniversary with online articles, debates, podcasts and films that explore how to respond to liberalism’s critics. In this issue we publish an essay that is a manifesto for a liberal revival—a liberalism for the people.

Our essay sets out how the state can work harder for the citizen by recasting taxation, welfare, education and immigration. The economy must be cut free from the growing power of corporate monopolies and the planning restrictions that shut people out of the most prosperous cities. And we urge the West to shore up the liberal world order through enhanced military power and reinvigorated alliances.

All these policies are designed to deal with liberalism’s central problem. In its moment of triumph after the collapse of the Soviet Union, it lost sight of its own essential values. It is with them that the liberal revival must begin.

Liberalism emerged in the late 18th century as a response to the turmoil stirred up by independence in America, revolution in France and the transformation of industry and commerce. Revolutionaries insist that, to build a better world, you first have to smash the one in front of you. By contrast, conservatives are suspicious of all revolutionary pretensions to universal truth. They seek to preserve what is best in society by managing change, usually under a ruling class or an authoritarian leader who “knows best”.

An engine of change

True liberals contend that societies can change gradually for the better and from the bottom up. They differ from revolutionaries because they reject the idea that individuals should be coerced into accepting someone else’s beliefs. They differ from conservatives because they assert that aristocracy and hierarchy, indeed all concentrations of power, tend to become sources of oppression.

Liberalism thus began as a restless, agitating world view. Yet over the past few decades liberals have become too comfortable with power. As a result, they have lost their hunger for reform. The ruling liberal elite tell themselves that they preside over a healthy meritocracy and that they have earned their privileges. The reality is not so clear-cut.

At its best, the competitive spirit of meritocracy has created extraordinary prosperity and a wealth of new ideas. In the name of efficiency and economic freedom, governments have opened up markets to competition. Race, gender and sexuality have never been less of a barrier to advancement. Globalisation has lifted hundreds of millions of people in emerging markets out of poverty.

Yet ruling liberals have often sheltered themselves from the gales of creative destruction. Cushy professions such as law are protected by fatuous regulations. University professors enjoy tenure even as they preach the virtues of the open society. Financiers were spared the worst of the financial crisis when their employers were bailed out with taxpayers’ money. Globalisation was meant to create enough gains to help the losers, but too few of them have seen the pay-off.

In all sorts of ways, the liberal meritocracy is closed and self-sustaining. A recent study found that, in 1999-2013, America’s most prestigious universities admitted more students from the top 1% of households by income than from the bottom 50%. In 1980-2015 university fees in America rose 17 times as fast as median incomes. The 50 biggest urban areas contain 7% of the world’s people and produce 40% of its output. But planning restrictions shut many out, especially the young.

Governing liberals have become so wrapped up in preserving the status quo that they have forgotten what radicalism looks like. Remember how, in her campaign to become America’s president, Hillary Clinton concealed her lack of big ideas behind a blizzard of small ones. The candidates to become leader of the Labour Party in Britain in 2015 lost to Jeremy Corbyn not because he is a dazzling political talent so much as because they were indistinguishably bland. Liberal technocrats contrive endless clever policy fixes, but they remain conspicuously aloof from the people they are supposed to be helping. This creates two classes: the doers and the done-to, the thinkers and the thought-for, the policymakers and the policytakers.

The foundations of liberty

Liberals have forgotten that their founding idea is civic respect for all. Our centenary editorial, written in 1943 as the war against fascism raged, set this out in two complementary principles. The first is freedom: that it is “not only just and wise but also profitable…to let people do what they want.” The second is the common interest: that “human society…can be an association for the welfare of all.”

Today’s liberal meritocracy sits uncomfortably with that inclusive definition of freedom. The ruling class live in a bubble. They go to the same colleges, marry each other, live in the same streets and work in the same offices. Remote from power, most people are expected to be content with growing material prosperity instead. Yet, amid stagnating productivity and the fiscal austerity that followed the financial crisis of 2008, even this promise has often been broken.

That is one reason loyalty to mainstream parties is corroding. Britain’s Conservatives, perhaps the most successful party in history, now raise more money from the wills of dead people than they do from the gifts of the living. In the first election in unified Germany, in 1990, the traditional parties won over 80% of the vote; the latest poll gives them just 45%, compared with a total of 41.5% for the far right, the far left and the Greens.

Instead people are retreating into group identities defined by race, religion or sexuality. As a result, that second principle, the common interest, has fragmented. Identity politics is a valid response to discrimination but, as identities multiply, the politics of each group collides with the politics of all the rest. Instead of generating useful compromises, debate becomes an exercise in tribal outrage. Leaders on the right, in particular, exploit the insecurity engendered by immigration as a way of whipping up support. And they use smug left-wing arguments about political correctness to feed their voters’ sense of being looked down on. The result is polarisation. Sometimes that leads to paralysis, sometimes to the tyranny of the majority. At worst it emboldens far-right authoritarians.

Liberals are losing the argument in geopolitics, too. Liberalism spread in the 19th and 20th centuries against the backdrop first of British naval hegemony and, later, the economic and military rise of the United States. Today, by contrast, the retreat of liberal democracy is taking place as Russia plays the saboteur and China asserts its growing global power. Yet rather than defend the system of alliances and liberal institutions it created after the second world war, America has been neglecting it—and even, under President Donald Trump, attacking it.

This impulse to pull back is based on a misconception. As the historian Robert Kagan points out, America did not switch from interwar isolationism to post-war engagement in order to contain the Soviet Union, as is often assumed. Instead, having seen how the chaos of the 1920s and 1930s bred fascism and Bolshevism, its post-war statesmen concluded that a leaderless world was a threat. In the words of Dean Acheson, a secretary of state, America could no longer sit “in the parlour with a loaded shotgun, waiting”.

It follows that the break up of the Soviet Union in 1991 did not suddenly make America safe. If liberal ideas do not underpin the world, geopolitics risks becoming the balance-of-power, sphere-of-influence struggle that European statesmen grappled with in the 19th century. That culminated in the muddy battlefields of Flanders. Even if today’s peace holds, liberalism will suffer as growing fears of foreign foes drive people into the arms of strongmen and populists.

It is the moment for a liberal reinvention. Liberals need to spend less time dismissing their critics as fools and bigots and more fixing what is wrong. The true spirit of liberalism is not self-preserving, but radical and disruptive. The Economist was founded to campaign for the repeal of the Corn Laws, which charged duties on imports of grain into Victorian Britain. Today that sounds comically small-bore. But in the 1840s, 60% of the income of factory workers went on food, a third of that on bread. We were created to take the part of the poor against the corn-cultivating gentry. Today, in that same vision, liberals need to side with a struggling precariat against the patricians.

Liberals should approach today’s challenges with vigour. If they prevail, it will be because their ideas are unmatched for their ability to spread freedom and prosperity

They must rediscover their belief in individual dignity and self-reliance—by curbing their own privileges. They must stop sneering at nationalism, but claim it for themselves and fill it with their own brand of inclusive civic pride. Rather than lodging power in centralised ministries and unaccountable technocracies, they should devolve it to regions and municipalities. Instead of treating geopolitics as a zero-sum struggle between the great powers, America must draw on the self-reinforcing triad of its military might, its values and its allies.

The best liberals have always been pragmatic and adaptable. Before the first world war Theodore Roosevelt took on the robber barons who ran America’s great monopolies. Although many early liberals feared mob rule, they embraced democracy. After the Depression in the 1930s they acknowledged that government has a limited role in managing the economy. Partly in order to see off fascism and communism after the second world war, liberals designed the welfare state.

Liberals should approach today’s challenges with equal vigour. If they prevail, it will be because their ideas are unmatched for their ability to spread freedom and prosperity. Liberals should embrace criticism and welcome debate as a source of the new thinking that will rekindle their movement. They should be bold and impatient for reform. Young people, especially, have a world to claim.

When The Economist was founded 175 years ago our first editor, James Wilson, promised “a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.” We renew our pledge to that contest. And we ask liberals everywhere to join us.

(JN) Roubini prevê próxima crise financeira e recessão global em 2020

(JNNuma coluna de opinião assinada por Nouriel Roubini e Brunello Rosa no Financial Times, os dois economistas dizem que o cenário para a próxima crise financeira já está a fermentar.

Os economistas Nouriel Roubini e Brunello Rosa, co-fundadores da consultora Rosa & Roubini Associates, advertem num artigo de opinião hoje publicado no Financial Times para o risco de estar a fermentar uma nova crise financeira e recessão global que poderão tomar forma em 2020.

Num artigo para assinalar os 10 anos da falência do Lehman Brothers, as advertências são várias e os autores antecipam que os mercados se confrontem com condições muito mais duras à medida que a economia mundial vá desacelerando.

“Numa altura em que assinalamos os 10 anos da crise financeira mundial, têm surgido inúmeros post-mortens que analisam as suas causas e consequências e que se questionam sobre se aprendemos as necessárias lições”, referem.

Por isso, acrescentam, “este parece ser um momento pertinente para perguntar quando – e porquê – ocorrerá a próxima recessão e crise financeira”.

E ambos apontam para 2020 como o ano em que isso poderá suceder. “A expansão global deverá continuar este ano e no próximo – porque os EUA estão a apresentar grandes défices orçamentais, a China prossegue as suas políticas de estímulo e a Europa mantém-se na vida da recuperação. No entanto, existem várias razões pelas quais poderão surgir as condições para uma recessão mundial e crise financeira em 2020”, salientam.

Nouriel Roubini

@Nouriel

My Financial Times column with @brunello_rosa on why the risk of the next global recession and financial crisis is rising by 2020 :

“Backdrop for the next financial crisis is brewing”https://www.ft.com/content/58d1ce9c-b5a2-11e8-bbc3-ccd7de085ffe 

Conditions necessary for next financial crisis may emerge by 2020

Markets will face a much tougher backdrop as the global economy slows

ft.com

 

Para começar, dizem, não só os actuais estímulos económicos nos EUA terão terminado em 2020 como também se espera um constrangimento orçamental que baixará o ritmo de crescimento do país para menos de 2%.

 

Por outro lado, “uma vez que os estímulos orçamentais nos EUA foram inoportunos, a Reserva Federal norte-americana terá de continuar a subir os juros directores, que deverão ascender a 3,5% em inícios de 2020”, consideram Roubini e Rosa.

 

Além da Fed, é provável que outros bancos centrais dêem início a – ou prossigam – medidas de normalização da política monetária, apontam.

 

Os dois economistas falam ainda sobre as fricções comerciais dos EUA com a China, Europa e os seus parceiros do NAFTA [México e Canadá], que dizem serem sintomas de uma rivalidade muito mais profunda do que aquilo que aparentam – no sentido de se determinar a liderança global nas tecnologias do futuro – e cujo efeito será o de abrandar o crescimento e aumentar a inflação.

 

Roubini e Rosa aludem ainda a outras políticas levadas actualmente a cabo nos Estados Unidos e que irão redundar num enfraquecimento da expansão económica e numa subida dos preços no consumidor. Entre elas estão o controlo sobre o investimento directo estrangeiro e sobre a transferência de tecnologias [que perturbam as cadeias de abastecimento], bem como as restrições à migração numa altura em que a população está a envelhecer.

 

No resto do mundo, a expansão ficará debilitada por outras razões, destacam. A China irá ser lenta a lidar com a sobrecapacidade e o endividamento excessivo, ao passo que os mercados emergentes [muitos deles já frágeis] serão ainda mais penalizados pela valorização do dólar, pela redução dos preços das matérias-primas e por uma China menos fervilhante, consideram.

 

E apesar de a Europa já ter perdido algum impulso, o intensificar das tensões comerciais e o fim das políticas de estímulo não-convencionais do Banco Central Europeu são factores que significam que em 2020 terá perdido ainda mais ímpeto.

 

Recorde-se que Roubini previu a bolha nos preços das casas nos EUA antes do pico neste mercado em 2006. Mas as suas previsões nem sempre foram certeiras, como sublinhou recentemente a Bloomberg, lembrando que quando o índice S&P 500 caiu para um mínimo de 12 anos a 9 de Março de 2009, Roubini disse que provavelmente o índice cairia para 600 pontos ou menos até ao final do ano. Em vez disso, o Standard & Poor’s 500 ganhou 65% no resto de 2009.

Activos sobreavaliados

Os dois autores chamam também a atenção para os preços dos activos. “A maioria está efervescente, se não mesmo em território de bolha”. As bolsas norte-americanas e do resto do mundo estão caras, consideram. Isso é sobretudo evidente nos EUA, onde os PER [rácio cotação/lucro por acção] estão 50% acima das médias históricas, assinalam.

 

Roubini e Rosa advertem igualmente para outros mercados que estão a fervilhar em todo o mundo e a tornarem-se muito caros, como é o da concessão de crédito e do imobiliário – tanto comercial como residencial.

 

“Por outro lado, os activos dos mercados emergentes já corrigiram, conforme se pode observar no ‘bear market’ das bolsas. Mas a correcção, incluindo nas matérias-primas e obrigações, irá continuar”, sublinham no artigo de opinião no FT.

 

Assim, os investidores que antecipam um abrandamento para 2020 vão começar a atribuir novos preços aos activos de risco a partir de meados de 2019, antecipam ambos os economistas.

 

Atendendo às alterações na estrutura dos mercados desde a crise financeira, assim que ocorra uma correcção o risco de falta de liquidez e de venda em massa de acções torna-se mais severo, referem.

As políticas de Trump

 

Os dois economistas debruçam-se ainda sobre a política da Casa Branca, que é mais um factor de pressão. “Donald Trump já está a atacar a Fed e temos o crescimento económico acima dos 4%, O que fará ele em 2020, que é ano de eleições, quando o crescimento estagnar abaixo de 1% e o desemprego começar a aumentar?”.

 

Roubini e Rosa respondem à sua própria pergunta: “haverá a tentação de criar uma crise de política externa. (…) Uma vez que Trump já deu início a uma guerra comercial com a China e não pode atacar uma Coreia do Norte com capacidades de resposta nuclear, o único alvo viável será provocar um confronto militar com o Irão. E isso irá desencadear um choque geopolítico com características de ‘estagdeflação’ [crescimento anémico e baixa inflação], tal como aconteceu em 1973, 1979 e 1990, levando a fortes subidas dos preços do petróleo”.

 

Por último, assim que esta tempestade perfeita ocorra em 2020, as ferramentas disponíveis para os responsáveis pela tomada de decisões estarão restringidas. “A política orçamental estará a ser penalizada pelas maiores dívidas públicas, mas o regresso às políticas monetárias não-convencionais poderá ser frustrado pelos balanços gigantescos dos bancos centrais”, apontam. E os resgates, por seu lado, enfrentarão um cenário de espírito populista, bem como países menos solventes”.

 

Roubini e Rosa terminam com um alerta: “ao contrário do que aconteceu há 10 anos, assim que se dê a próxima contracção económica e financeira, as ferramentas políticas disponíveis para reverter a situação irão, muito provavelmente, ser menos eficazes.

(Reuters) EMERGING MARKETS-Currency storms rage on, stocks wipeout nears $1 trillion

(Reuters)

* Biggest fall on Indonesia’s stock market in five years

* Rand tumbles to more than two-year low, bonds hit hard

* All eyes on Argentina after latest peso drubbing

* Turkish lira sags again but not the worst of the moves

LONDON, Sept 5 (Reuters) – Emerging markets storms raged fiercely on Wednesday, with South Africa’s rand at the centre of fresh currency tumult and losses since January for the world’s biggest EM stock index nearing $1 trillion again.

It was another torrid session in both Asia and fragile EMEA markets. Indonesia’s stock market had suffered its worst day in over five years as its currency pains worsened while Chinese equities fell almost 2 percent in Shanghai.

The rand then slumped to a more than 2-year low in a fresh 1.5 percent drop as traders also dumped its bonds and the most globally traded EM currency, the Mexican peso, too.

The latest peg for the spreading angst had been another 3 percent overnight drop for Argentina’s peso after news that it was trying to engineer a rapid injection of support from the International Monetary Fund.

Trade war and general economic health worries were raw too, with investors wary of the threat of fresh U.S. tariffs on another $200 billion worth of Chinese goods that could take effect after a public comment period ends on Thursday.

“Given the magnitude of the move in Argentina, I think the focus is still on that and on possible contagion,” said North Asset Management EM portfolio manager Peter Kisler.

There was no evidence of wide-spread contagion yet he added, though what global stock markets do next could be crucial.

The day’s falls across markets left MSCI’s 24-country EM stocks index down for a sixth straight day and down almost 20 percent from late January, a move that has wiped over $950 billion off its combined worth at the time.

The biggest individual move saw Indonesian stocks slump almost 5 percent at one point in the biggest fall since 2013 as the rupiah currency wobbled around its lowest levels since the Asian financial crisis in 1998.

The central bank said it had “decisively intervened” in FX and bond markets in morning trade.

“EM equities have really been underperforming developed markets. This will end sooner or later, but my feeling is that development markets will catch up to EM rather than that EM will bounce significantly.”

Financial flow numbers released by the Institute of International Finance on Tuesday had also underlined the nerves among EM investors.

Foreign money inflows to emerging markets shrank to just $2.2 billion in August from almost $14 billion in July, they showed, with net outflows from emerging debt of almost $5 billion during the month.

South Africa had said Tuesday its economy returned to recession in the second-quarter of this year with the second straight quarter of contraction, even before the worst of the emerging currency shock hit over the summer.

Elsewhere in Asia, India’s rupee had skidded further overnight to new record lows and Malaysia’s ringitt fell to its lowest in 9 months.

(ZH) BIS Warns Of “Perfect Storm” For Global Economy

(ZH) To those hoping for a quick resolution to the US-China trade war, Axios had some bad news earlier today, reporting that the trade feud is “likely to last much longer than originally thought — extending well into the second half of next year and perhaps beyond, experts say.” According to Axios, the main reason for the protracted conflict is that neither side is prepared to appear politically weak at home, and both are ready to absorb economic pain.

With few probable winners, the biggest losers would be farmers, users of steel, and consumers in the US, manufacturers of all types will see business leave to neighbors like Vietnam and Malaysia in China, while dampening economic growth in both nations and around the globe.

However, as the general manager of the Bank of International Settlements, Agustin Carstens warned, the greater risk is not how many points of GDP the rising tariffs will subtract from the US and China, but the growing danger to globalization itself, and on Saturday, Karstens delivered a scathing critique of rising protectionism, a not-so-subtle rebuke to Trump’s use of tariffs and trade talks to wring concessions from China, Mexico and many other countries.

Reversing globalization “could increase prices, raise unemployment and crimp growth,” Carstens, the former head of Mexico’s central bank, told fellow central bankers at the Jackson Hole annual economic symposium. Additionally, higher tariffs could (actually, just say would) drive up U.S. inflation and force the Fed to raise rates, driving up the dollar and hurting both U.S. exporters and emerging market economies in the process, Carstens said.

Protectionism also threatens “to unsettle financial markets and put a drag on firms’ capital spending, as investors take fright and financial conditions tighten,” he said.

“These real and financial risks could amplify each other, creating a perfect storm and exacting an even higher price”, the rotund central banker warned.

Bank for International Settlements General Manager Agustin Carstens

Alongside Carstens’ speech, the BIS released a research paper titled “Global market structures and the high price of protectionism” which that estimated that revoking NAFTA would mean a loss to GDP of $37 billion in Canada, $22 billion in Mexico, and $40 billion in the United States, with non-tariff trade barriers accounting for the lion’s share of the losses. Wages would also fall across North America, the research found according to Reuters.

The good news, is that as Bloomberg reported earlier, Mexican and U.S. negotiators have narrowed trade-pact differences in recent days and an agreement on bilateral trade may be announced as soon as tomorrow, with Canada expected to join trade talks once those have been resolved, but the overall future of NAFTA remains unclear.

The bad news is that last week, the United States and China ended two days of talks on Thursday with little progress as their trade war escalated with activation of another round of dueling tariffs on $16 billion worth of each country’s goods. According to Goldman Sachs, there is a 70% chance that Trump will levy an additional $200 billion in incremental tariffs over the next two weeks.

What is odd, is that despite the BIS’ dire warning, Fed Chair Powell and other central bankers have largely stepped around the effect of rising trade frictions on the U.S. economy and monetary policy, while signalling gradual rate hikes ahead. For now, they note that the impact of the tariffs themselves, and related currency gyrations in some countries including Turkey, are not slowing the U.S. economy, and therefore do not require a response.

Furthermore, while numerous business surveys indicate widespread concern about the impact of tariffs, the US economy has yet to be rattled by protectionism.

However, speaking at the final panel in the two-day meeting that examined market structures’ impact on inflation and other metrics that central bankers follow closely, Carstens warned that central bankers ignore trade skirmishes at their peril. And, as Reuters notes, “coming from a fellow former central banker who is now head of the bank for central bankers, the message may resonate.”

Additionally, Carstens highlighted the potential catalysts that could unleash the “perfect storm” he highlighted as the key risk resulting from the interaction of real and financial risks, namely: the trillions in outstanding dollar-denominated debt – whereby a dollar-shortage threatening to cripple international trade – and the growing risk of currency wars:

Consider that non-US banks provide the bulk of dollar-denominated letters of credit, which in turn account for more than 80% of this source of trade finance. The Great Financial Crisis highlighted the fragility of this setup, since non-US banks depend on wholesale markets to obtain dollars. Ten years on, we should not forget how the dramatic fall in trade finance in late 2008 played a key part in globalising the crisis. Any dollar shortage among non-US banks could cripple international trade.

On top of that, trade skirmishes can easily escalate into currency wars, although I hope that they will not. As we saw earlier with Mexico, imposing tariffs on imports tends to weaken the target country’s currency. The depreciation could then be construed as a currency “manipulation” that seemingly justifies further protectionist measures. If currency wars break out, countries may put financial markets off-limits to foreign investors or, on the other side, deliberately cut back foreign investment, politicising capital flows.

In addition, we must be mindful of long-observed knock-on effects from tighter US monetary conditions, given the large stock of dollar borrowing by non-banks outside the United States, which has now reached $11.5 trillion.

His conclusion: “Policymakers in advanced economies should not shrug off the growing evidence that abrupt exchange rate depreciations reduce investment and economic growth in emerging market economies. This has implications for everybody, in that weaker economic activity reduces demand for exports from advanced economies.”

“In the long term, protectionism will bring not gain but only pain,” Carstens said, echoing a familiar talking point of establishment economists. “Not just for the United States, but for us all.”

He may be right, but as long as the US stock market continues to ignore the growing danger of this pain, and hits new all time high, there is zero probability that the Trump administration will change course.

(Economist) Was John Maynard Keynes a liberal?

(Economist) People should be free to choose. It was their freedom not to choose that troubled him

IN 1944 Friedrich Hayek received a letter from a guest of the Claridge Hotel in Atlantic City, New Jersey. It congratulated the Austrian-born economist on his “grand” book, “The Road to Serfdom”, which argued that economic planning posed an insidious threat to freedom. “Morally and philosophically, I find myself”, the letter said, “in a deeply moved agreement.”

Hayek’s correspondent was John Maynard Keynes, on his way to the Bretton Woods conference in New Hampshire, where he would help plan the post-war economic order. The letter’s warmth will surprise those who know Hayek as the intellectual godfather of free-market Thatcherism and Keynes as the patron saint of a heavily guided capitalism.

But Keynes, unlike many of his followers, was not a man of the left. “The Class war will find me on the side of the educated bourgeoisie,” he said in his 1925 essay, “Am I a Liberal?”. He later described trade unionists as “tyrants, whose selfish and sectional pretensions need to be bravely opposed.” He accused the leaders of Britain’s Labour Party of acting like “sectaries of an outworn creed”, “mumbling moss-grown demi-semi-Fabian Marxism”. And he stated that “there is social and psychological justification for significant inequalities of incomes and wealth” (although not for such large gaps as existed in his day).

Why then did Keynes advocate Keynesianism? The obvious answer is the Great Depression, which reached Britain in the 1930s, shattering many people’s faith in unmanaged capitalism. But several of Keynes’s ideas dated back further.

He belonged to a new breed of liberals who were not in thrall to laissez-faire, the idea that “unfettered private enterprise would promote the greatest good of the whole”. That doctrine, Keynes believed, was never necessarily true in principle and was no longer useful in practice. What the state should leave to individual initiative, and what it should shoulder itself, had to be decided on the merits of each case.

In making those decisions, he and other liberals had to contend with the threats of socialism and nationalism, revolution and reaction. In response to the Labour Party’s growing political clout, a reform-minded Liberal government had introduced compulsory national insurance in 1911, which provided sickness pay, maternity benefits and limited unemployment assistance to the hard-working poor. Liberals of this kind saw unemployed workers as national assets who should not be “pauperised” through no fault of their own.

This cadre of liberals believed in helping those who could not help themselves and accomplishing collectively what could not be achieved individually. Keynes’s thinking belongs within this ambit. He dwelled on entrepreneurs who could not profitably expand operations unless others did the same, and on savers who could not improve their financial standing unless others were willing to borrow. Neither group could succeed through their own efforts alone. And their failure to achieve their purposes hurt everyone else, too.

How so? Economies produce, Keynes said, in response to spending. If spending is weak, production, employment and income will be correspondingly feeble. One vital source of spending is investment: the purchase of new equipment, factories, buildings and the like. But Keynes worried that private entrepreneurs, left to their own devices, would undertake too little spending of this kind. He once argued, provocatively, that America could spend its way to prosperity. Certainly, countries could underspend their way out of it.

Earlier economists were more sanguine. They believed that, if the willingness to invest was weak and the desire to save was strong, the interest rate would fall to bring the two into alignment. Keynes thought the interest rate had another role. Its task was to persuade people to part with money and hold less-liquid assets instead.

Money’s appeal, Keynes understood, was that it allowed people to preserve their purchasing power while deferring any decision about what to do with it. It gave them the freedom not to choose. If people’s demand for this kind of freedom was particularly fierce, they would part with money only if other assets seemed irresistibly cheap by comparison. Unfortunately, asset prices that were so very low would also depress capital spending—resulting in diminished production, employment and earnings. Falling incomes would reduce the community’s ability to save, squeezing it until it matched the nation’s meagre willingness to invest. And there the economy would languish.

The resulting unemployment was not merely unjust, it was also thuddingly inefficient. Labour, Keynes pointed out, does not keep. Although workers themselves do not disappear through disuse, the time they could have spent contributing to the economy is squandered for ever.

Such wastefulness still haunts the world. Since the beginning of 2008, the American workforce has put in 100bn fewer hours than it could have if fully employed, according to the Congressional Budget Office. Keynes was often accused by bean-counting officials of a cavalier disregard for fiscal rectitude. But his penny-foolishness was nothing compared with the extraordinary waste of resources from mass unemployment.

Somewhat pink

The remedy most often associated with Keynes was simple: if private entrepreneurs would not invest heavily enough to maintain high employment, the government should do so instead. He favoured ambitious programmes of public works, including rebuilding South London from County Hall to Greenwich so that it rivalled St James’s. In his letter to Hayek, he admitted that his moral and philosophical agreement with “The Road to Serfdom” did not extend to its economics. Britain almost certainly needed more planning, not less. In the “General Theory” he prescribed “a somewhat comprehensive socialisation of investment”.

His worst critics have seized on the illiberal, even totalitarian, implications of that phrase. It is true that Keynesianism is compatible with authoritarianism, as modern China shows. The interesting question is this: if Keynesianism can work well without liberalism, can liberalism prosper without Keynesianism?

Liberal critics of Keynes make a variety of arguments. Some reject his diagnosis. Recessions, they argue, are not the result of a curable shortfall of spending. They are themselves the painful cure for misdirected spending. Slumps thus pose no conflict between liberty and economic stability. The remedy is not less liberalism but more: a freer labour market that would let wages fall quickly when spending flags; and an end to activist central banks, because artificially low interest rates invite the misdirected investment that ends in a bust.

Others say that the cure is worse than the disease. Recessions are not reason enough to infringe on liberty. This stoicism was implicit in Victorian institutions like the gold standard, free trade and balanced budgets, which tied governments’ hands, for better or worse. But by 1925, society could no longer tolerate such pain, partly because it no longer believed it had to.

A third line of argument mostly accepts Keynes’s diagnosis but quarrels with his most famous prescription: public mobilisation of investment. Later liberals placed more faith in monetary policy. If the interest rate would not naturally reconcile saving and investment at high levels of income and employment, modern central banks could lower it until it did. This alternative sat more comfortably with liberals than Keynesian fiscal activism. Most of them (although not all) accept that the state has a responsibility for a nation’s money. Since the government will need a monetary policy of one kind or another, it might as well choose one that helps the economy realise its full potential.

These three arguments have rebuttals. If an economy has spent badly, surely the solution is to redirect expenditures, not to reduce them. If liberal governments do not fight downturns, voters will turn to illiberal governments that do, jeopardising the very freedoms the government’s pious inaction was meant to respect.

Last, Keynes himself thought easy money was helpful. He just doubted it was sufficient. However generously supplied, extra liquidity may not revive spending, especially if people do not expect the generosity to persist. Similar doubts about monetary policy have revived since the financial crisis of 2008. The response of central banks to that disaster was less effective than hoped. It was also more meddlesome than purists would like. Central-bank purchases of assets, including some private securities, inevitably favoured some groups over others. They thus compromised the impartiality in economic affairs that befits a strictly liberal state.

In severe downturns Keynesian fiscal policy may be more effective than monetary measures. And it need not be as heavy-handed as its critics fear. Even a small and unassuming state must carry out some public investment—in infrastructure, for example. Keynes thought these projects should be timed to offset downturns in private spending, when men and materials would anyway be easier to find.

In promoting investment, he was happy to entertain “all manner of compromises” between public authority and private initiative. The government could, say, underwrite the worst risks of some investments, rather than undertaking them itself.

By the 1920s Britain had progressive taxation and compulsory national insurance, which collected contributions from wage-earners and firms during periods of employment, then shelled out unemployment benefits during spells of joblessness. Although not intended as such, these arrangements served as “automatic stabilisers”, removing purchasing power during booms and restoring it during busts.

This can be taken further. In 1942 Keynes endorsed a proposal to lower national-insurance contributions during bad times and raise them in good. Compared with varying public investment, this approach has advantages: payroll taxes, unlike infrastructure projects, can be adjusted with the stroke of a pen. It also blurs ideological lines. The state is its most Keynesian (judged by stimulus) when it is also at its smallest (measured by its tax take).

Keynesian theory is ultimately agnostic about the size of government. Keynes himself thought that a tax take of 25% of net national income (roughly 23% of GDP) is “about the limit of what is easily borne”. He worried more about the volume of spending than its composition. He was broadly happy to let market forces decide what was purchased, provided enough was. Done right, his policies only distorted spending that would otherwise not have existed at all.

Keynesianism can certainly be carried to excess. If it works too well in reviving spending, it can strain the economy’s resources, yielding chronic inflation (a possibility that also worried Keynes). Planners can miscalculate or overreach. Their power to mobilise resources can invite vociferous lobbying, which can turn militant, requiring a forcible government response. The totalitarian states Keynes worked so hard to defeat showed that the “central mobilisation of resources” and “the regimentation of the individual” could destroy personal liberty, as he himself once noted.

But Keynes felt that the risk in Britain was remote. The planning he proposed was more modest. And some of the people carrying it out were as worried about creeping socialism as anyone. Moderate planning will be safe, Keynes argued in his letter to Hayek, if those implementing it share Hayek’s moral position. The ideal planners are reluctant ones. Keynesianism works best in the hands of Hayekians.

(ZH) Germany Calls For Global Payment System Independent Of The US

(ZH) In a stunning vote of “no confidence” in the US monopoly over global payment infrastructure, Germany’s foreign minister Heiko Maas called for the creation of a new payments system independent of the US that would allow Brussels to be independent in its financial operations from Washington and as a means of rescuing the nuclear deal between Iran and the west.

Writing in the German daily Handelsblatt, Maas said “Europe should not allow the US to act over our heads and at our expense. For that reason it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent Swift system,” he wrote, cited by the FT.

Maas said it was vital for Europe to stick with the Iran deal. “Every day the agreement continues to exist is better than the highly explosive crisis that otherwise threatens the Middle East,” he said, with the unspoken message was even clearer: Europe no longer wants to be a vassal state to US monopoly over global payments, and will now aggressively pursue its own “Swift” network that is not subservient to Washington’s every whim.

German foreign minister Heiko Maas

Swift, a Belgium-based global payment network, enables financial institutions worldwide to send and receive information about financial transactions. The system’s management claims Swift is politically neutral and independent, although it has previously been used to block transactions and enforce US sanctions against various countries, most notably Iran.  In 2012, the Danish newspaper Berlingske wrote that US authorities managed to seize money being transferred from a Danish businessman to a German bank for a batch of US-sanctioned Cuban cigars. The transaction was made in US dollars, which allowed Washington to block it.

According to Thorsten Benner, director of the Global Public Policy Institute, a Berlin-based think-tank, Maas’s intervention was the “strongest call yet for EU financial and monetary autonomy vis-à-vis US.”

The German foreign minister’s article highlights the depth of the dilemma facing European politicians as they struggle to keep the Iran deal alive while coping with the fallout of US sanctions imposed by Mr Trump against companies doing business with Tehran.

Maas also called for the creation of a “balanced partnership” with the US in which the Europeans filled the gaps left where the US withdrew from the world. Europe must, he said, “form a counterweight when the US crosses red lines”.

As the FT adds, the EU has vowed to protect European businesses from punitive measures adopted by Washington, but that has failed to convince EU companies, who are more concerned about maintaining their access to the lucrative US market than in the more modest opportunities presented by Iran.

Last month Washington rebuffed a high-level European plea to exempt crucial industries from sanctions. Mike Pompeo, US secretary of state, and Steven Mnuchin, Treasury secretary, formally rejected an appeal for carve-outs in finance, energy and healthcare made by ministers from Germany, France, the UK and the EU.

Swift is also affected: unless it wins an exemption from sanctions, it will be required by the US to cut off targeted Iranian banks from its network by early November or face possible countermeasures against both its board members and the financial institutions that employ them. These could include asset freezes and US travel bans for the individuals, and restrictions on banks’ ability to do business in the US.

Maas’s stark warning against US domination of global payments comes with relations between Germany and the US in their worst state for decades. Mr Trump has chastised Berlin over its large trade surplus, its relatively low military spending and its support for Nord Stream 2, a new gas pipeline that will bring Russian gas directly to Germany.

Meanwhile, Berlin has looked on in dismay as Mr Trump has withdrawn the US from the Iran deal and the Paris climate treaty, imposed import tariffs on EU steel and aluminium and appeared to question America’s commitment to Nato.

In short: Europe has finally had enough and it plans on hitting back at Trump where it truly hurts: the money.

(ZH) Lord Rothschild: The New World Order Is At Risk

(ZH) Over the past three years, an unexpected voice of caution has emerged from one of the most legendary families in finance: Lord Jacob Rothschild.

Lord Jacob Rothschild

Readers may recall that as part of the RIT Capital Partners 2014 annual report commentary, the scion of Rothschild family warned that “the geopolitical situation is most dangerous since WWII.” One year later, Jacob Rothschild again warned about the outcome of “what is surely the greatest experiment in monetary policy in the history of the world“, and then again in August 2017 he cautioned that “share prices have in many cases risen to unprecedented levels at a time when economic growth is by no means assured.”

Little did he know that they were only going to keep rising, but related to that, he also made another warning which the market has so far blissfully ignored:

The period of monetary accommodation may well be coming to an end. Geopolitical problems remain widespread and are proving increasingly difficult to resolve.

Fast forward to today when in the latest half-year commentary from RIT Capital Partners, Lord Rothschild has made his latest warning to date, this time focusing on the global economic system that was established after WWII, and which he believes is now in jeopardy.

The billionaire banker pointed to the US-China trade war and the Eurozone crisis as the key problems putting economic order at risk, and the lack of a “common approach” – a reference to the gradual unwind of globalization in the wake of President Trump – that has made “co-operation today much more difficult”:

In 9/11 and in the 2008 financial crisis, the powers of the world worked together with a common approach. Co-operation today is proving much more difficult. This puts at risk the post-war economic and security order.”

It wasn’t clear if he was referring to the post-war fiat standard that emerged once FDR devalued the dollar relative to gold, and then fixed a price for the yellow metal, a tenuous link that was subsequently destroyed by Nixon who finally took the US off the gold standard, or the primacy of the dollar which emerged as the world’s reserve currency after the end of WWII, but whenever one of the people who profited handsomely from the “post war world order” warns it may be on its last legs, it may be time to worry.

With global risks growing, how is Rothschild positioned? The Lord writes that “in the circumstances our policy is to maintain our limited exposure to quoted equities and to enter into new commitments with great caution” and indeed, in the first half, RIT had a net quoted equity exposure of only 47%, historically low. The reason: the iconic banking family is concerned that the 10-year bullish cycle and market rally could finally be ending.

The cycle is in its tenth positive year, the longest on record. We are now seeing some areas of weaker growth emerge; indeed the IMF has recently predicted some slowdown.

While Rothschild noted that “many of the world’s economies have enjoyed a broad-based acceleration not seen since the aftermath of the financial crisis of 2008, with as many as 120 countries seeing stronger growth last year” he also cautioned that “we continue to believe that this is not an appropriate time to add to risk. Current stock market valuations remain high by historical standards, inflated by years of low interest rates and the policy of quantitative easing which is now coming to an end.

One potential risk is Europe, where debt levels have reached “potentially destructive levels”:

The problems confronting the Eurozone are of concern – both political and economic – given the potentially destructive levels of debt in a number of countries.

There is also the threat that the global trade war escalates substantially from here, as Chinese stocks have learned the hard way:

The likelihood of trade wars has increased tension and the impact on equities has been marked,for example by early July the Shanghai Composite Index had dropped some 22% from its peak in January.

Rothschild also echoed the recent warning from the head of the Indian Central Bank, warning that the shrinking of global dollar liquidity is hurting emerging markets:

Problems are likely to continue in emerging markets, compounded by rising interest rates and the US Fed’s monetary policy which has drained global dollar liquidity. We have already seen the impact on the Turkish and Argentinian currencies.

Finally, Rothschild remains understandably “concerned about geo-political problems including Brexit, North Korea and the Middle East, at a time when populism is spreading globally.

(BBG) Move Over Millennials, It’s Gen Z’s Turn to Kill Industries

(BBG) Malls, print magazines and even football could be in mortal danger.

Millennials have been accused of killing so many products and industries—taxis, landlines, snail mail—that it’s become a media trope. But millennials are old news. Today, businesses and marketers are desperately anticipating the murderous whims of Gen Z, the demographic born after 1996.

Sometimes called “post-millennials” or “iGen,” Gen Z makes up more than one-fifth of the U.S. population and is the most racially and ethnically diverse group in the nation’s history. They’re true digital natives who report being online “almost constantly,” according to a 2018 study by Pew Research Center. (Psychologists have said their technology use has produced a national mental health crisis.)

More than 70 percent of Gen Zers influence their family’s spending, according to a 2017 report from International Business Machines Corp. and the National Retail Federation. With that kind of sway and billions of dollars in spending power, they have businesses scrambling to understand their desires.

Their relationship to money, it turns out, has been shaped by the Great Recession, one expert said.

“Their expectations are lower, they’re not as confident,” said Jean Twenge, a professor of psychology at San Diego State University who has studied the generation. “They’re not viewing the world through rose-colored glasses.”

They are less optimistic about economic opportunity and student debt. As a result, Gen Z likes to play it safe. “They are more risk-averse than previous generations in terms of both attitudes and behavior,” Twenge said, pointing to a study she authored that found today’s teens are less likely to have sex or drink.

Still, they also prioritize wealth and material goods. “In psychological terms, it’s a shift toward extrinsic values—money, fame and riches—rather than toward intrinsic values, like relationships and community feeling,” Twenge said.

The generation already wields a deadly combination of economic power and social media clout. A disparaging tweet from Kylie Jenner earlier this year about teen-dominated app Snapchat wiped out $1.3 billion in Snap Inc.’s market value. But businesses have been declared “dead” before. Millennials, after all, were supposed to kill off wine corksdatingbeercereal and bars of soap, but those things are still alive.

Still, if a tweet has the capacity to move that kind of capital, how else will this generation move markets and shape industries?

Malls

Given their love of digital life, the first expected victim of teen spending preferences is brick-and-mortar retail. America’s malls have been closing at a record pace as e-commerce becomes the preferred mode of shopping for millennials and Gen Zers. More than two-thirds of U.S. malls saw a decrease in national retailers in 2018, according to a report from property research firm Green Street Advisors LLC.

Retailers are grappling with young Americans’ demand for personalized, digitally augmented shopping experiences. An astounding 93 percent of Gen Zers prefer to shop without the help of a sales associate, according to a 2017 survey by Adyen NV, a global payments processor. But only 19 percent of retailers can provide such an experience, according to the IBM surveyof Gen Zers.

The apparel industry at large is already dying. In 1977, clothing accounted for 6.2 percent of U.S. household spending. Today, that number has halved to 3.1 percent, according to government data. Even fast-fashion stores, which have made clothing cheaper, are seeing slower growth. Hennes & Mauritz AB is opening fewer H&M stores and struggling to sell unwanted products in the stores it currently operates as young customers increasingly purchase clothing online.

Apparel brands specifically marketed to teens are on the decline. Abercrombie & Fitch Co. and Urban Outfitters Inc. have seen a 68 percent drop in the number of store locations in North America since 2016, according to Bloomberg Intelligence. Retailers Aeropostale, Pacific Sunwear and American Apparel all filed for bankruptcy in the last two years, and more are expected this year.

Print Magazines

Print magazines of all kinds are seeing newsstand sales decline. But teen magazines have struggled more than others to reach their intended audiences. Just last November, Condé Nast closed the quarterly (once monthly) print edition of Teen Vogue. Meanwhile, Hearst Communications Inc.’s Seventeen magazine, a 73-year-old print publication, slashed frequency from 10 magazines to six in 2016.

Though print may perish, magazines geared toward young women are bolstering their digital and social channels to spur new forms of online engagement. And it turns out, America’s youth are fired up by online political content.

Teen Vogue was one of the first titles to draw attention for successfully reaching young women on digital platforms during the 2016 election when an opinion piece, “Donald Trump Is Gaslighting America,” dominated the news cycle with more than 1.4 million unique views. This year, the brand has seen increased digital engagement, particularly with content on sexual health, reproductive rights and gun reform.

“Teen girls are so much smarter than anyone gives them credit for,” said Phillip Picardi, Teen Vogue’s digital editorial director. “We’ve seen an immense resonance of political coverage with our audience.”

Football

The National Football League has come under scrutiny in recent years over the link between head injuries and degenerative brain disease. Participation in high school football dropped roughly 3.5 percent in the five years between the 2011-12 and 2016-17 seasons, according to the National Association of State High School Federations (NASHSF).

A Boston University School of Medicine study found that athletes who participate in youth football before the age of 12 have more behavioral and cognitive issues than those who begin playing later. In response to mounting research concerning the risks, California State Assembly members introduced a bill to bar tackle programs before high school—and similar legislation has popped up in other states.

Across the country, there’s been a net loss of almost 150 boys’ high school tackle-football programs in the last five years, as school athletic departments encourage students to pursue alternatives like soccer, baseball and lacrosse, according to NASHSF data.

With fewer teens playing—and watching—football, the pipeline to recruit talented players may be compromised, said Tom Farrey, the executive director of the Aspen Institute’s Sports and Society Program.

Cash

American teens are four times less likely to use cash than the general public and only use cash for 6 percent of their transactions, according to data from teen debit-card company Current. Younger generations are also more likely to say they’d like cashless and cardless options at restaurants. And the majority of people under 30 prefer to use cards over cash, even for transactions under $5.

Unsurprisingly, money-transferring apps—such as Venmo, Google Pay and Apple Wallet—are seeing continued growth.

Venmo, which blends social media and payment processing, has become a favorite among teens. The company said it facilitated more than $40 billion of payments in the last 12 months and total payment volume grew 50 percent in the first quarter.

“This generation has grown up with a mobile device that is also a payment device,” said Stuart Sopp, chief executive officer of Current. “They are going to accelerate the adoption of the digital economy because digital payment is native to them.”

Retailers are also moving toward cashless payments. And SwedenDenmark, Norway and Singapore have made various efforts to move toward a digital economy—pledging to eliminate check usage and slash cash withdrawals from ATMs.

“There’s many reasons why businesses want to see a shift away from cash,” Sopp said. “Now they finally have a demographic cohort that is ready for it to happen. They won’t resist it, they will push for it.”

But forsaking cash altogether could pose a challenge to those who don’t have a bank account—as is the case with many teens. Amazon.com Inc., always looking for ways to drive more spending on its platform, has a planto make pseudo debit cards called Amazon Cash to tap into Gen Z’s spending habits before they are of age to manage their own accounts. If successful, Amazon could lock in lifelong, digital-centric customers.

Of course, predicting the future is difficult. The NFL and your local mall may escape the Gen Z purge. There’s only one thing we know today’s teens will kill with 100 percent certainty: articles about millennials killing industries.

(NYT) Decade After Crisis, a $600 Trillion Market Remains Murky to Regulators

(NYT

The European headquarters of Goldman Sachs Group in London. Two subsidiaries there trade derivatives, but only one is required to report the trades to regulators in the United States.CreditSimon Dawson/Bloomberg

In the maze of subsidiaries that make up Goldman Sachs Group, two in London have nearly identical names: Goldman Sachs International and Goldman Sachs International Bank.

Both trade financial instruments known as derivatives with hedge funds, insurers, governments and other clients.

United States regulators, however, get detailed information only about the derivatives traded by Goldman Sachs International. Thanks to a loophole in laws enacted in response to the financial crisis, trades by Goldman Sachs International Bank don’t have to be reported.

A decade after a financial crisis fueled in part by a tangled web of derivatives, regulators still have an incomplete picture of who holds what in this $600 trillion market.

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“It’s a global market, so you really have to have a global set of data,” said Werner Bijkerk, the former head of research at the International Organization of Securities Commissions, an umbrella group for regulators around the world overseeing derivatives markets. “You can start running ‘stress tests’ and see where the weaknesses are. With this kind of patchwork, you will never be able to see that.”

Derivatives are instruments whose values are derived from the prices of other things, like a stock or a barrel of oil or a bundle of mortgages. Originally designed to protect their holders against future risks, they evolved into vehicles that traders used for financial speculation. Unlike stocks, they often aren’t traded over public exchanges, which means the market — and who is exposed to what — is opaque.

The 2010 Dodd-Frank law was supposed to improve regulators’ ability to monitor derivatives. American banks had to start reporting specifics about their trades, including whom they traded with, to the Commodity Futures Trading Commission.

The goal was to prevent a recurrence of the financial crisis, when fatal problems at Lehman Brothers caused a tidal wave of troubles at other banks that were connected through derivatives. In part because nobody could map out those connections, nobody knew where problems lurked, and fearful banks stopped lending to one another.

But the Dodd-Frank Act contained a big gap: Banks don’t have to disclose to American regulators their holdings of derivatives housed in certain offshore entities. The critical variable is whether the American parent company is legally on the hook to bail out its foreign subsidiary if it gets into trouble. As long as the answer is no, the foreign entity isn’t subject to the Dodd-Frank requirements.

The size and severity of this blind spot are hard to measure. One consequence is that United States regulators are unable to grasp the full exposure of American banks to their foreign rivals. Germany’s troubled Deutsche Bank, for example, is one of the largest players in the derivatives market, and much of its derivatives trading occurs in foreign markets that are outside the purview of American regulators. That means they have limited visibility into United States banks’ connections to Deutsche Bank.

Other countries’ regulators can seek information about those holdings, but they generally do not collect the same data that is reported to American regulators.

The Dodd-Frank law “didn’t really give a mandate to coordinate on the things that naturally would benefit most from coordination, one of which is the flow of information,” said Guy Dempsey, a derivatives lawyer.

Goldman, for example, reports its total exposure to the derivatives market as a single number: The bank had $45 billion in over-the-counter derivatives alone on its balance sheet at the end of 2017. Because of the trading in its Goldman Sachs International Bank unit and other foreign subsidiaries, a certain amount of those trades are invisible to American regulators.

A Goldman spokesman said less than 1 percent of the bank’s global derivatives activity wasn’t visible to the Commodity Futures Trading Commission, but he declined to comment further.

For JPMorgan Chase, trades not reported to the commission account for less than 10 percent of all the bank’s derivatives, a spokesman said. (The firm reported $56.5 billion in outstanding derivatives for 2017.)

A Citigroup spokeswoman said the bank’s European derivatives trades were made “predominantly” through subsidiaries that reported their trades to the Commodity Futures Trading Commission.

The portion of Bank of America’s derivatives portfolio that isn’t reported to regulators is not discernible in its public filings. A bank spokesman would say only that the percentage is small. A Morgan Stanley spokesman said “virtually all” of its trades were reported to American regulators.

The banks say that they aren’t trying to hide anything and that in some cases they are responding to demands from overseas clients who don’t want the United States government looking at their transactions. Even foreign bank regulators argue there’s no reason American law should apply to financial instruments held outside the United States.

“This problem, I think, is really driven more by regulators each wanting their own silo,” said Sheila Bair, a former chairwoman of the Federal Deposit Insurance Corporation. “I think the industry would be fine with some type of consolidated reporting.”

Mr. Dempsey, the lawyer, said, “What you have is a picture that has more clarity to it than what the regulators had in 2008, but you still don’t have maximum clarity.”

Regulators can still monitor risk for individual institutions. The Federal Reserve, for example, can ask for specific information about derivatives trades as it sees fit. But because the trades aren’t automatically reported, the regulator would have to decide which trades to ask about beforehand. Theoretically, the Fed could ask for banks to report every single trade, but the central bank hasn’t done that.

In October 2016, the Commodity Futures Trading Commission proposed a rule that would have closed the reporting loophole by requiring all American bank subsidiaries to report their derivatives exposure. It also would have subjected the subsidiaries to financial regulations that would have made derivatives trading less profitable.

The banking industry opposed the rule. After President Trump took office, it was never authorized.

Officials at the Commodity Futures Trading Commission acknowledge that there is a problem. The agency noted in an April paper that the current reporting “cannot provide regulators with a complete and accurate picture” of risks in the market.

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Even so, Amir Zaidi, the director of the commission’s market oversight division, said more data was available to regulators now than before the financial crisis, enough to enable “effective oversight.”

In a recent paper, a University of Maryland law professor, Michael Greenberger, argued that banks were exploiting the disclosure loophole and creating a major vulnerability for the financial system.

The largest banks “have engineered a way to evade Dodd-Frank’s regulations at will,” Mr. Greenberger wrote. He warned that in a period of financial stress, derivatives cause cascading losses. Because the ownership and connections of those derivatives remain murky, he wrote, “the economic chaos and harm of the 2008 financial meltdown may very well be repeated.”

Mr. Greenberger’s warnings — published last month by the Institute for New Economic Thinking, a progressive think tank — have been endorsed by the former Federal Reserve chairman Paul Volcker and Thomas M. Hoenig, who stepped down as vice chairman of the Federal Deposit Insurance Corporation in April.

Mr. Hoenig noted that the universe of derivatives was already very complicated, “and so when you make it even more opaque in a foreign subsidiary, I think the ability to control outcomes is very different.”

He recalled earlier efforts to bring transparency to the derivatives markets. Such proposals were derailed by senior officials in the Clinton administration, and Mr. Hoenig warned against repeating that mistake.

(EUobserver) IMF warns global trade war could cost $430bn

(EUobserver) The global economy could suffer a $430bn loss in GDP as a result of a trade war between the US and the rest of the world, the International Monetary Fund has warned, adding that the US itself would be “especially vulnerable”, the Guardian reported. The IMF said the new tariffs risked lowering global growth by 0.5 percent by 2020, and the US would find itself “the focus of global retaliation”.

(Prospect) How economists predicted the wrong financial crisis

(ProspectIt is often said that economists failed to see a crisis coming in 2008. That is only half true

It’s not that economists didn’t see a crash coming—they just didn’t see the crash that happened. Photo: Max Pixel

As the 10th anniversary of the fall of Lehman Brothers approaches, many books on the financial crisis will be published. Few are likely to match Adam Tooze’s Crashed in scope, ambition or rigour. This is truly contemporary history—the book runs right up to the end of 2017. It is hard to think of another author who can write as authoritatively on such a wide range of subjects—from the workings of the credit default swap market to the intricacies of Italian politics and the geopolitics of Ukraine.

Tooze, an Anglo-German historian based in the US, is best known for his work on the first half of the 20th century: The Wages of Destruction (2006), a revisionist account of the Nazi economy and war effort; and 2014’s The Deluge dealt with the aftermath of the First World War, and the reshaping of the global order in the 1920s. So Crashed might, at first sight, seem like a radical departure. But the essential themes are familiar territory for him: the interactions of economics, finance and geopolitics—and how the world order is reshaped by catastrophe.

The twist is that Crashed examines the financial crisis through a new lens: a sharp focus is kept on bank balance sheets, and the (often cross-border) capital movements between them. This is less a work of contemporary macro-economic history and more a work of contemporary macro-financial history.

The global depression of the 1930s can be understood in a traditional macro-economic framework—in terms of nation states, the collapse in their willingness to invest and consume, and the knock-on effect on their national income and budgets. Many have tried to explain our crisis in the same old frame. But in truth, it was different.

The integrated global economy of the 1990s and 2000s cannot be understood by focusing on what’s going on within and between nation states; instead you need to concentrate on the macrofinancial “interlocking matrix” of bank balance sheets, and how money flows between them—often without much regard for national borders. Capital controls had, after all, ceased to operate a generation or more earlier in most of the west: Britain’s were abolished in 1979 by Margaret Thatcher.

As Tooze sees it, switching our attention to the macrofinancial carries a number of implications: finance comes to be seen not as something that grows out of the “real economy,” but rather as an independent cause of change within it. It becomes necessary to grapple with the arcane structures of banks, shadow banks and still stranger institutions in the financial system, and to recognise that it is this private system—dependent though it is on central banks—that is in charge of the world’s supply of money.

Financial flows around the world have grown out of all proportion to output, trade or anything else. The world and its banks have been woven together in a credit nexus, which had many effects, both good and ill—and also created a new potential for a great unwinding. As Tooze writes: “What the Europeans, the Americans, the Russians and the South Koreans were experiencing in 2008 and the Europeans would experience again after 2010 was an implosion in interbank credit.”

It is often said that economists failed to see a crisis coming in 2008, but this is only half true. Before 2008 there was, as Tooze shows, a rising chorus of voices warning a crisis was imminent. The problem was that they predicted the wrong crisis. Using the old macroeconomic lens, they foresaw a crisis in which the patience of creditor countries like China would suddenly snap with persistent spendthrift societies and -deficit nations, such as the US. But it turned out the crisis we got wasn’t about countries’ trading surpluses or national debts: it was about the sudden faltering of flows of purely private finance around a remarkably integrated international banking system.

The roots of the supposed crisis and the crisis we actually got in 2008 can both be traced back to the breakdown of the Bretton Woods system, which governed the global economy from the end of the Second World War until the early 1970s. Under Bretton Woods the value of the dollar, the anchor of the global monetary system, was nominally tied to gold while other currencies were pegged to the -dollar. Cross-border capital movements were severely curtailed. When the costs of maintaining that system became too high for the US, Nixon unilaterally dropped the dollar’s gold peg and the whole system fell apart. In the 1970s, for the first time in modern monetary history, no currency was limited by the need to maintain its value against a metallic standard. The result was a staggering rise in inflation, which in the UK in 1975 exceeded 25 per cent.

The eventual settlement—which in its original form was known as monetarism, and later “neoliberalism”—was to replace gold as an anchor with the “logic of discipline.” Government budgets, it was argued, should strive for balance, central banks should keep inflation low.

By the mid-1990s, policy-makers across the developed economies were heaping praise on themselves for achieving “the Great Moderation.” Growth was steady and (outside of asset and real estate prices) inflation was low.

But amid the mutual backslapping at the G-7 summits and IMF meetings, the more nervous policy wonks began to fret about what were termed “global economic imbalances.” In particular, by the mid-2000s, the US was consistently running a large trade deficit—essentially financed by dollars it could print without needing anything to back them up, for so long as it could persuade the world they were worth what they claimed to be. That sounded like an almighty hole in the supposed logic of discipline, and with the US running a widening budget deficit alongside the trade -deficit, the concern grew that the US could soon face a Wile E Coyote moment: that, like the hapless cartoon character pursuing Road Runner, the US economy had already run off the edge of the cliff but hadn’t yet realised it was no longer on solid ground. Eventually, many believed, the Chinese and other foreign investors would cease to regard bonds issued by Washington as a safe haven to invest in, and also lose confidence in the dollar as a store of value. The result would be a crash in the dollar’s value, a sharp rise in US interest rates and a large pickup in inflation.

What actually happened after 2008 was almost the polar opposite: the dollar surged, interest rates collapsed and the looming threat was not inflation, but severe deflation. Concerns before 2008 had concentrated on US public debt—but it was private debt that was the canary in the coal mine. In the early days of the crash, it was called the “subprime crisis,” because the trouble started when the markets woke up to the fact that cleverly repackaging mortgages owed by “subprime” borrowers (people who would struggle to repay) didn’t turn them into fundamentally safe assets. Before long, however, it was not a niche subprime crisis, but a “global financial crisis” and indeed a “Great Recession.” Subprime turned out to be a mere catalyst, not the underlying cause.

Sure, subprime lending in the US was important, and so too was financial innovation—if such lending practices can really be termed “innovation.” But that innovation was itself dependent on wider global forces. The 1990s had seen a series of crises in emerging markets—Mexico in 1994, Thailand, South Korea and Indonesia in 1997, Russia in 1998, Brazil in 1999 and Argentina in 2002. In each case investors had suddenly lost confidence and stampeded out, crashing asset prices and the currency’s value and leaving recession and the need for an IMF bailout in their wake.

China had no intention of being a victim of such an outcome. Its solution was to keep the value of its currency artificially low, which made its imports competitive and thereby enabled it to run big trade surpluses, through which it could acquire its own stock of foreign currency reserves—a buffer against ever needing the IMF. Between 2000 and 2009 the annual value of China’s trade surplus with the US rose to a colossal $227bn. To hold the value of the renminbi down against the value of the dollar, the Chinese authorities had to continually buy dollars and sell renminbi. In 10 years they acquired £1.19 trillion worth of financial claims on the US.

The logic of the global economy had been flipped on its head. Rather than capital flowing from rich nations to poor ones seeking a better return, poor farmers and factory workers in China were essentially financing the higher standard of living in the United States—funding their borrowing and subsidising their imports. This was vendor financing—when a sofa company, for example, lends you the money to buy its products—on a continental scale.

This was the source of what Federal Reserve Chair Alan Greenspan called his “conundrum.” In the mid 2000s, the Fed was raising interest rates as it sought to cool a growing economy and keep inflation in check. Despite more than a dozen hikes in short-term interest rates, the longer-term interest rates the government can borrow at—which, in theory, should depend on the market’s expectations of the path of short-term rates—refused to budge. Such was the insatiable demand of Chinese (and other surplus countries’) foreign reserve managers for US government debt that those long-term rates remained low.

The US financial system was awash with cash, and since the rates of return on government bonds were low, that cash had to be put to work elsewhere to gain a decent return. Whereas traditional macroeconomics might emphasise bubbly demand for credit during times when the mood is good, Tooze’s perspective is more concerned with the need of the great glut of Asian savings in a globalised economy to find somewhere to go. The result was subprime mortgages.

It stepped up another gear when the credit rating agencies, those supposed guardians of prudence, gave their blessing to the complex engineering, which essentially argued that adding together lots of risky investments into one investment created a less risky end product. But that was just the twist. The basic peril of the great flood of money from China was not that this tide of cash could suddenly turn; the real peril was the mood of abandon it induced in western banks.

This story of Chinese capital flows as the root of the crisis is an excellent starting point. Crashed becomes even stronger when it adds European banks to the picture.

Subprime mortgage origination, engineering and selling-on was a profitable business in the 2000s and the Europeans wanted a piece of the action. German banks were especially keen—and not just giants like Deutsche Bank, but smaller regional German Landesbanken too. Around one third of all the riskiest mortgage backed securities was issued by British or European banks.

Traditional macroeconomic analysis tends to focus on the flow of capital from China to the US, which is the corollary of its national trade surplus. But using a macrofinancial lens—which focuses less on national borders, and more on where the money is flowing—gives a clearer view. Capital may have been flowing into the US, but its financial system was part of a much larger trans-Atlantic banking system. By 2007, European banks had claims worth $2.6 trillion on the US banking system, while US banks had claims on the Europeans worth $1.6 trillion. As Tooze writes, for all the attention given to Asian money flows into the US before 2008, “the central axis of world finance was not Asian-American but Euro-American.” The upshot is that the European banks were just as implicated as US ones.

 

***

Some Europeans might like to think of 2008 as a story of the US spreading its contagion to Europe, and of the later euro-crisis of 2010-12 as a nasty complication, but in Tooze’s view, this is totally misses the point. For the original lending boom in the eurozone was just as spectacular as in the US. And as Tooze notes, “The flow of funds around Europe, as around the global economy, was driven not by trade flows but by the business logic of bankers, who compared the cost of funding and the expected return.”

The traditional post-crisis narrative that funds flowed mainly from the industrious and thrifty “core” economies of the eurozone to the more cavalier “periphery,” obscures as much as it reveals. In reality, Europe replicates in miniature the global picture ahead of 2008: while economies were still, to a large regard, “nationalised,” finance had become “globalised.”

Tooze is scathing about how this story of irresponsible bank lending in Europe was rewritten into a story of irresponsible borrowers; and how a crisis of American-European finance was somehow refashioned into a crisis of public debt. This analysis is unlikely to win him many friends in official circles in Berlin or Brussels.

The crisis was global and so were the (partial) solutions eventually found. Tooze notes the centrality of the efforts of US central bankers in bailing out the dollar-based system, not just through electronically creating money (quantitative easing) at home, but also through the very quiet -provision of “swap lines” to other central banks. These swap lines give them direct access to dollars with which to support their own financial sectors (as he wrote about in Prospect’s August 2017 issue in “The secret history of the banking crisis”).

Crashed shines a much-needed light on this crucial global role of the dollar in the global economy. It is still absolutely central, which produces tension because it is inevitably managed—in general—not for the global good but for the benefit of the US. When the Fed is setting interest rates its primary concern is the domestic economy. They are, of course, not blind to the impact that the value of the dollar has on other countries but, in the jargon, these are regarded as the international “spillovers” of their monetary policy, which matter if they then “spillback” on to the US.

If a hike in rates, for example, was likely to hammer Mexican growth in a manner that would damage US exporters, then that will be taken into account—but only to that extent. In effect, a technocratic panel in DC is making decisions that will have a large impact on the lives of workers in countries as diverse as Mexico and Turkey. This has had, as we have seen in recent years, profound political consequences with populists and strongmen in the ascendant.

Towards the end of the book, Tooze casts his eye to the future. He wonders how Trump would have dealt with 2008. If another crisis does hit, then the US’s seeming abdication of global leadership, coupled with the eurozone’s failure to provide an alternative, may not make for a bright outcome. For the origins of the next crisis, he calls on us to look “not to America and Europe, the old hub of transatlantic globalisation, but to China and the emerging markets, where the future of the world economy will be decided.”

The closing chapters—covering Brexit, Trump, Emmanuel Macron and the 2017 German election—end abruptly with the publisher’s deadline. The Italian election earlier this year, in which populists triumphed, coupled with the new trade war started by Trump, feel like the start of the next, as yet unwritten, chapters.

Indeed, Tooze may have taken on a Sisyphean task in attempting to write a history of the crisis. As he himself notes rather chillingly, a 10-year anniversary publication on how the 1929 crash had reshaped global politics would have been published in 1939. But whatever happens next, Crashed is likely to stand the test of time as the best history of 2008 written in its immediate shadow.

Crashed: How a Decade of Financial Crises Changed the World by Adam Tooze is published by Allen Lane, £30

(BBG) Stocks Sink on Trade War Escalation; Dollar Gains: Markets Wrap

(BBG) Stocks slumped, the dollar gained and commodities slid with emerging-market assets as markets prepared for another escalation in the burgeoning trade war between the U.S. and China.

S&P 500 futures headed for their biggest drop in two weeks, the Stoxx Europe 600 Index ended its best run since March and the MSCI Asia Pacific Index fell after the Trump administration released the biggest list yet of Chinese goods it may hit with tariff increases. The Asian nation vowed to retaliate, and shares in Shanghai led the retreat as the yuan weakened.

The potential escalation spurred advances in the greenback, Treasuries and most European government bonds. Stocks and currencies in emerging markets both declined, while metals bore the brunt of the reaction in commodities. Copper, nickel and zinc all tumbled.

Follow our live blog as China responds to latest tariff threats.

China’s Commerce Ministry described the U.S. move as “totally unacceptable” bullying, and promised to lodge complaints at the World Trade Organization without detailing what its retaliatory steps would be. One pattern seen so far in the escalating battle between the world’s top two economies is that the tensions hit Chinese shares harder than American ones — they are now in a bear market, while the S&P 500 is within about 3 percent of a record high.

“In the short run it’s very difficult to see what’s going to bring an end to this escalation of tit-for-tat,” Richard Turnill, chief investment strategist at BlackRock Inc., told Bloomberg TV in Hong Kong. “It’s those increasing concerns that are going to weigh on market returns and force investors increasingly to look for more resilience in their portfolios.”

A bumper corporate earnings season may still support sentiment, with expectations that strong results can compliment a recent run of positive economic data and overshadow growth concerns stemming from the trade tensions.

Terminal users can read more in Bloomberg’s Markets Live blog.

Elsewhere, oil dropped below $74 a barrel in New York, even as an industry report was said to show shrinking U.S. crude stockpiles.

These are some events to look out for this week:

  • Earnings season gets into gear with JPMorgan Chase & Co. and Citigroup Inc. among the largest companies due to give results, as well as India’s Infosys Ltd.
  • The most noteworthy U.S. data may be the June inflation report on Thursday, which consensus expects will show both headline and core price growth picking up. There’s another deluge of Treasury debt sales too, with a total $156 billion of notes and bills offered during the week.
  • Chinese trade data due at the end of the week will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said.

And here are the main market moves:

Stocks

  • Futures on the S&P 500 were down 0.6 percent as of 7:14 a.m. in New York after dropping as much as 1.1 percent earlier.
  • The Stoxx Europe 600 Index retreated 1.1 percent.
  • The U.K.’s FTSE 100 declined 1.1 percent.
  • Japan’s Topix index dropped 0.8 percent.
  • Hong Kong’s Hang Seng fell 1.3 percent and the Shanghai Composite lost 1.8 percent.
  • South Korea’s Kospi dropped 0.6 percent.

Currencies

  • The Bloomberg Dollar Index was up 0.3 percent
  • The Japanese yen slipped to 111.23 per dollar.
  • The offshore yuan fell 0.7 percent to 6.6768 per dollar.
  • The euro dropped 0.2 percent lower to $1.1716.

Bonds

  • The yield on 10-year Treasuries slipped one basis point to 2.84 percent.

Commodities

  • West Texas Intermediate crude slid 0.7 percent to $73.62 a barrel.
  • Gold lost 0.4 percent to $1,250.89 an ounce.

(BBG) The Key to Saving the Planet May Be Under the Sea

(BBG) Making carbon storage work is critical to fighting climate change. The question is where to put it all.

A Cold War-era joke has an American economist asking a Soviet peer how the communist economy is progressing. “In a word: good” the Russian responds. “In two words: not good.”

So it goes this century with the rapidly changing energy industry. Advances are taking place in clean energy, transport and efficiency that may have rightfully been considered miraculous a decade ago.

But here’s the catch: As fast as everything is proceeding, it’s still not fast enough. The International Energy Agency (IEA) reported last year that a critical technology—capturing carbon dioxide emissions from generators and either burying or otherwise disposing of them—isn’t expanding fast enough. The IEA reported that current “carbon capture and storage” (CCS) facilities are capable of handling just 7.5 percent of the emissions that the world will need eliminated every year by 2025. That’s necessary if nations are to meet the goal of keeping any increase in global warming below 2 degrees Celsius (3.6 Fahrenheit).

In China, researchers have been looking for ways to accelerate CCS. They decided to look out to sea.

On land, CCS isn’t just promising in principle—it’s been shown to work. There will be more than 20 large-scale capture facilities available by the end of the year, according to the Global CCS Institute. But there’s still concern about making sure the CO2, once buried, stays buried. The same can be said for the idea China has about burying CO2 at sea. For companies and countries to exploit the vastness of the ocean floor, they also need some kind of confidence that it’ll stay there.

By studying the long-term interactions of major physical forces in “unconsolidated marine sediment” such as loose silt, clay and other permeable stuff below the sea floor, researchers Yihua Teng and Dongxiao Zhang report that extreme conditions at the bottom of the ocean essentially hold CO2 in place, “which makes this option a safe storage.”

Under great pressure and low temperature, CO2 and water trapped in the sediment below the sea floor crystallize into a stable ice called hydrate. (Through a similar process, energy-rich methane freezes with water beneath the ocean and terrestrial permafrost, a potential source of energy being scrutinized by ChinaJapan, the U.S. and others.) The new paper on CCS demonstrates through simulation that the hydrates become an impermeable “cap” that keeps the CO2 below it from migrating back up to the sea floor.

Peking University’s carbon capture and storage research receives support from the multinational metals, mining, and petroleum company BHP Billiton Ltd., according to the paper.

The research appears this week in the journal Science Advances. The study should provide some confidence, they write, that ocean CO2 storage remains a viable tool in the push to reduce emissions of the most dangerous heat-trapping gas, even as commercialization of the process remains way off. In the meantime, there are other questions to answer, including how CO2 may behave differently under different kinds of geological conditions.

The big assumption, as with most underground CO2 storage scenarios, is that there’s no telling what the Earth’s living geology will do over the centuries and millennia. Fractures in the subsea sediment, either preexisting or created by tectonics or CO2 injection itself, could open a pathway for CO2 to escape—though significant uncertainty remains.

“In our assumption,” they write, “the unconsolidated marine sediment is intact.”

(ZH) Axios Leaks Trump Bill To Blow Up World Trade Organization

(ZH) Following the close of a second quarter that will be best remembered by President Trump’s vacillations on trade, Axioshas dropped a Sunday night bombshell that may spook markets hoping for a respite from the daily escalating trade war rhetoric as the second half of the year begins: White House reporter Jonathan Swan has obtained a copy of a draft bill, purportedly ordered by Trump himself, that would allow the US to “walk away” from its commitments to the World Trade Organization.

If passed, the bill (entitled the “United States Fair and Reciprocal Tariff Act”) would effectively blow up the WTO, an organization that the US helped create back in the 90s, by allowing Trump to unilaterally ignore the two most important principles:

The “Most Favored Nation” (MFN) principle that countries can’t set different tariff rates for different countries outside of free trade agreements;

“Bound tariff rates” — the tariff ceilings that each WTO country has already agreed to in previous negotiations.

“It would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal,” one anonymous source reportedly told Axios.

The bill asks Congress to hand over to Trump unilateral power to ignore WTO rules and negotiate unilateral trade agreements.

The leak of the draft bill follows another WTO-related scoop from Axios, published last week, where Swan reported that Trump has repeatedly badgered his aides about pulling the US out of the WTO, which the president has famously criticized as a “disaster”.

The bill’s chances of making it through Congress are extremely low. However, if Trump has taught us anything about his trade agenda, it’s never say never.

  • “The good news is Congress would never give this authority to the president,” the source added, describing the bill as “insane.”
  • “It’s not implementable at the border,” given it would create potentially tens of thousands of new tariff rates on products. “And it would completely remove us from the set of global trade rules.”

Trump was reportedly briefed on the draft in late May. Most of the individuals who were involved in the drafting of the bill assumed it would be “dead on arrival” – that is, all but Trump advisor Peter Navarro, who repeatedly encouraged Trump’s anti-free-trade positions. The White House, the US Trade Representative and the Department of Commerce were consulted during the drafting of the bill.

While the bill might be able to find enough support to pass in the extremely pro-Trump House, Republican proponents of free trade in the Senate would likely balk at the prospect of trashing the existing free trade order,while Democrats would be reluctant to hand more unilateral authority to the president.

It’s also worth noting that Congress is already trying to roll back Trump’s steel and aluminum tariffs in the form of a bipartisan bill authored by Republican Sens. Bob Corker and Pat Toomey and Democratic Sen. Michael Bennet.

  • In a White House meeting to discuss the bill earlier this year, Legislative Affairs Director Marc Short bluntly told Navarro the bill was “dead on arrival” and would receive zero support on Capitol Hill, according to sources familiar with the exchange.
  • Navarro replied to Short that he thought the bill would get plenty of support, particularly from Democrats, but Short told Navarro he didn’t think Democrats were in much of a mood to hand over more authority to Trump.

White House spokeswoman Lindsay Walters acknowledged that the bill was genuine, but cautioned that the public shouldn’t take it too seriously – after all, Trump’s frustrations with the WTO are already widely known.

  • But Walters signaled that we shouldn’t take this bill as anything like a done deal. “The only way this would be news is if this were actual legislation that the administration was preparing to rollout, but it’s not,” she said.
  • “Principals have not even met to review any text of legislation on reciprocal trade.”
  • Between the lines: Note the specificity of Walters’ quote above. Trump directly requested this legislation and was verbally briefed on it in May. But he hasn’t met with the principals to review the text.

The report sent US futures lower off the gate as trade tensions once again reared their ugly head, although the BTFDers promptly emerged, and with their traditional non-challance and disregard for risk or news, quickly sent futures back to unchanged.

(Xinhua) Portugal’s Antonio Vitorino elected as new IOM Director General

(Xinhua) Member states of the International Organization for Migration (IOM) on Friday elected Portugal’s Antonio Manuel de Carvalho Ferreira Vitorino as the IOM’s next Director General.

IOM’s current Director General, William Lacy Swing, will be stepping down after completing the second of two five-year terms.

Vitorino, 61, is expected to begin his directorship on Oct. 1 of 2018.

He was elected to Portugal’s Parliament in 1980. In 1983 he became Secretary of State for Parliamentary Affairs. He subsequently served as Minister for National Defense and Deputy Prime Minister within the government of Antonio Guterres, now the United Nations’ Secretary General.

From 1999 to 2004, Vitorino served as the European Commissioner for Justice and Home Affairs. He has been President of the think tank Notre Europe since June 2011.

Antonio Vitorino earned a degree from the University of Lisbon’s School of Law in 1981, as well as a Master’s Degree in Legal and Political Science.

Established in 1951, International Organization for Migration has over 10,000 staff and over 400 offices in more than 150 countries.

IOM is the UN Migration Agency and is the leading inter-governmental organization in the field of migration.

(StraitsTimes) Portugal, the European country that wants more migrants

(StraitsTimes)


Portugal’s Prime Minister Antonio Costa drew resounding applause when he announced that immigrants are welcomed and any xenophobic rhetoric will not be tolerated.
Portugal’s Prime Minister Antonio Costa drew resounding applause when he announced that immigrants are welcomed and any xenophobic rhetoric will not be tolerated. PHOTO: EPA-EFE

LISBON (AFP) – Unlike most European nations, who are trying to reduce the influx of migrants, Portugal is bucking the trend by looking to immigration as a way to counter its declining population.

“We need more immigration and we won’t tolerate any xenophobic rhetoric,” Prime Minister Antonio Costa told activists at a party conference in May, drawing resounding applause.

Demonstrating this openness, Portugal was one of the first that volunteered to take in some of the migrants on board the Lifeline, a rescue ship which had been stranded at sea since June 21 after Italy refused it safe harbour.

And as European leaders struggled to reach a deal at a summit last week over who should take in migrants rescued off the coast of North Africa, Portugal’s socialist government was already taking steps to make itself a more attractive destination.

“It was a very difficult summit and the apparent consensus reached in the deal did not hide the deep divisions which are today threatening the European Union,” Costa said after leaving the summit.

And Friday’s election of former Portuguese minister Antonio Vitorino as head of the International Organiz=sation for Migration “demonstrates the great importance that Portugal places on dialogue about the issue,” the foreign ministry said.

AIM: 75,000 PER YEAR

Costa, whose father was a well-known communist writer descended from an aristocratic family in the former Portuguese colony of Goa in India, has made reviving the declining population a key element of his political programme.

And it will be a central issue for him as the country heads into elections next year in which Costa is the frontrunner.

According to studies quoted by the government, Portugal needs at least 75,000 new residents every year simply to maintain a stable working population, which today numbers just 10.4 million people.

In this context, the government on Thursday adopted a raft of new regulatory measures to simplify the procedures for getting a visa for students or those wanting to create a start-up.

And it also opened the way to regularise the status of some 30,000 foreign nationals who arrived legally in Portugal but do not have any authorisation to work.

During the three years of recession which followed the financial crisis of 2011, more than 300,000 Portuguese left in search of a better standard of living, many of them young university graduates.

In 2017, Portugal registered a positive migration balance – the difference between those leaving and those entering the country – for the first time in six years, the National Statistics Institute said.

LACK OF SKILLED LABOUR

Last year, the Portuguese authorities issued 61,400 new residency permits, an increase of 31 percent from 2016, which reflected a six percent increase in the number of foreigners living in the country, a border police report said last week.

The country has also returned to growth, notably thanks to a boom in tourism and foreign investment in property, but business leaders have warned that it could be easily reversed by the lack of skilled labour.

The hard-won deal reached by EU member states on Friday stipulates that migrants rescued at sea should be redistributed among the different member states – on a voluntary basis.

Portugal is already part of a voluntary programme for the redistribution of refugees proposed in January by the European Commission which aims to resettle at least 50,000 refugees over the next two years.

Within the framework of an earlier programme, which ran from 2015 to March 2018, Portugal took in 1,552 refugees.

However, only about half of those who entered Portugal stayed, with the rest leaving for countries offering better economic opportunities.