Category Archives: World

(NYT) Stocks Fall, Wiping Out Gains for 2018

(NYT)

The stock market’s gains for 2018 were erased in early trading on Tuesday, as a sell-off led by giant technology stocks continued. The renewed declines in the United States came after drops in Asia and Europe.

The tumble of more than 1 percent in the S&P 500 followed a sell-off in high-flying technology stocks like Google, Apple and Amazon in the United States on Monday, as investors weighed the prospects for increased regulation, trade tension and threats to the profit outlook for the large technology companies that exert a large influence on major market indexes.

The pain persisted for such companies on Tuesday with Apple and Amazon falling by more than 4 percent in early trading. But a new area of concern also flared after the retailer Target reported third-quarter sales and profit that missed Wall Street expectations. Target’s shares dove by more than 10 percent.

The softness in retail shares reflects growing investor concern that the strong American economy — which has so far shrugged off Federal Reserve interest rate increases and signs of weakness in China and Europe — is likely to face increasing challenges in 2019, as the impact of federal tax cuts and spending increases diminishes.

Also weighing on stocks was a slump in crude oil prices, which hit their lowest point this year after dropping as much as 7 percent on Tuesday. Energy companies in the S&P 500 fell more than 3 percent.

Monday’s slide in the United States had already spilled over into Europe and Asia before trading on Wall Street opened on Tuesday. By the end of the trading day, the Euro Stoxx 50, an index of eurozone blue-chips, had dropped more than 1.4 percent.

Concerns about privacy lapses and mismanagement at technology companies weighed on stocks on Monday, adding to broader concerns about the impact of a trade war between the United States and China as well as signs of slowing growth around the globe.

The pessimism continued in the Chinese markets of Shanghai and Shenzhen as the worries that hurt technology stocks in the United States hit stocks in other parts of the world.

In Hong Kong, Shanghai and Shenzhen, trade concerns helped to push the stocks of Chinese semiconductor makers and other big technology companies into the red. A drop in the stock price of the chip maker Nvidia several days ago after disappointing earnings may also have rattled investors in chip makers across China. The Chinese stock market is down by more than 20 percent so far this year.

Shares of Tencent, the Chinese internet conglomerate, fell 3.3 percent in Hong Kong trading. A broader index of large Chinese companies listed in Hong Kong dropped by 1.6 percent, while the Hong Kong market closed the day down 2 percent.

“Stocks look weak,” Robert Carnell, chief economist for Asia Pacific at the Dutch bank ING, wrote in a note to investors. “Oversupply in the semiconductor industry is an issue for Asia, and made worse by an apparent lack of demand for some well-known producers of high-tech products,” he added.

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Trade frictions also continue to overhang markets. World leaders are meeting next week in Argentina for the Group of 20 conference, which President Trump and President Xi Jinping of China will attend. Hopes that the two sides would come to a trade agreement on the sidelines have waned since officials from both countries sparred over the weekend at the Asia-Pacific Economic Cooperation summit meeting in Papua New Guinea.

Stocks in Japanese automobile companies helped to drag the benchmark exchange in Tokyo down by 0.7 percent. The sell-off was prompted in part by news that Carlos Ghosn, the chairman of Nissan, was arrested on Monday after the carmaker found that he had underreported his compensation to the Japanese government. Shares in Nissan fell 5.5 percent in Tokyo.

In Seoul, South Korea, and Taipei, Taiwan, the markets finished the day down nearly 1 percent.

(DN) Nós, ibero-americanos – Augusto Santos Silva

(DN) Há palcos de mais, no mundo de hoje, para polarização e antagonismo; e palcos de menos para respeito mútuo, debate genuíno e aprendizagem recíproca.

Várias organizações internacionais baseiam-se em afinidades forjadas pela história e estão consolidadas, entre outros, pelo poderosíssimo fator da identidade linguística. É o caso da Organização da Francofonia, da Comunidade dos Países de Língua Portuguesa (CPLP,) ou mesmo, em certa medida, da Commonwealth.

Mas a Conferência Ibero-Americana (CIB) e os seus organismos setoriais constituem, do meu conhecimento, a única entidade internacional de base linguística que se funda não numa mas em duas línguas: o espanhol e o português. E esta característica distintiva resulta do facto de, na sua génese, em 1991, ter estado a vontade de articular oconjunto da América Latina e o conjunto da Península Ibérica – isto é, de não reduzir a organização ao diálogo entre Espanha e os países saídos dos seus domínios coloniais.

Esta contribuição de Portugal para que seja o mundo ibérico europeu a relacionar-se com o mundo latino-americano seria razão bastante para a nossa política externa investir na CIB. Mas há outras duas igualmente fortes. Por um lado, a dinâmica ibero-americana é uma forma específica, e particularmente operativa, da relação mais geral entre a Europa e a América Latina. Por outro lado, a interação paralela de Portugal e do Brasil com os países africanos da CPLP potencia uma triangulação euro-americana-africana que, tendo um eixo central no Atlântico, se estende às margens do Pacífico e do Índico.

Portanto, não devia causar nenhuma admiração a intensificação dos laços latino-americanos com a União Europeia, quer no âmbito da Cimeira UE-CELAC (Comunidade de Estados Latino-Americanos e Caribenhos), quer no quadro das lógicas de integração sub-regional representadas pelo Mercosul, pela Aliança do Pacífico ou pelo SICA (Sistema de Integração Centro-Americana), quer através dos acordos entre a UE e países como o Brasil, o México e o Chile, o Acordo Multipartes com a Colômbia, o Peru e o Equador, ou o Acordo de Associação com a América Central.

Ainda é mais interessante notar as recentes iniciativas de aproximação latino-americana e ibero-americana à CPLP, concretizadas na entrada do Uruguai, do Chile, da Argentina e, futuramente, do Peru como observadores associados, assim como na aquisição deste estatuto pela Organização Ibero-americana para a educação, a ciência e a cultura (OEI) – sendo a primeira vez que uma organização internacional solicita e obtém a associação à CPLP.

Tudo isto é possível porque a CEI integra as duas línguas e se vincula ao equilíbrio entre elas. É uma batalha constante de Portugal, não só em proveito próprio mas também, e sobretudo, porque são os mais de 600 milhões que falam as línguas de García Márquez e Guimarães Rosa (ambas entre as cinco mais faladas no mundo) que fazem verdadeiramente a ponte entre a América Latina e a parte mais ocidental da Europa e afirmam uma cada vez mais evidente força global do presente e do próximo futuro.

A raiz desta força não é a identidade de situações nem a unanimidade de posições. Como outras organizações internacionais, a CIB vive da convicção nas virtudes do multilateralismo, da vinculação aos princípios da Carta das Nações Unidas e da ideia de que, reunindo 19 países americanos e três europeus em torno de características históricas, linguísticas e sociais partilhadas, acrescenta valor próprio à ordem internacional. Mas nada disto requer nem a hegemonia interna de qualquer Estado membro nem alinhamentos ideológicos ou cristalizações geopolíticas. A CIB tem-se fortalecido sempre que se concebe como um espaço de cooperação sul-sul e sul-norte, orientada para a capacitação das pessoas e das instituições; e sai enfraquecida sempre que é vista, por exemplo, como mera soma das cooperações bilaterais, em especial da cooperação espanhola, ou então como um espaço de confrontação entre campos políticos intra-latino-americanos excessivamente polarizados.

A atual secretária-geral, a costa-riquenha Rebeca Grynspan, tem precisamente acentuado a CIB como um quadro de cooperação e não de confrontação. O que não é fácil, mas absolutamente necessário, numa região tão vibrante mas também dilacerada no plano ideológico como é a América Latina. Portugal apoia enfaticamente a sua visão. Há palcos de mais, no mundo de hoje, para polarização e antagonismo; e palcos de menos para respeito mútuo, debate genuíno e aprendizagem recíproca. Como a União para o Mediterrâneo (a única organização que reúne os 43 países ligados por este grande mar interior, incluindo Israel e Palestina), a CIB é o único espaço em que todas as nações latino-americanas, de par com Espanha, Portugal e Andorra, podem convergir para ações e bens comuns. O que, concedo, dá menos dramatismo teatral às cimeiras, em contraste com homéricas disputas do passado, mas torna-as mais úteis.

Como assinalou o Presidente português, numa das mais inspiradas e calorosamente recebidas intervenções da Cimeira de Antígua Guatemala, a CIB é um quadro óbvio para trabalhar em agendas multilaterais tão urgentes como as do clima, dos oceanos e das migrações. Ela tem sido um catalisador da cooperação sul-sul e triangular (envolvendo, por exemplo, Portugal, Espanha, um ou dois países latino-americanos e/ou um país africano). Ela tem contribuído para avanços em agendas cruciais de direitos humanos, igualdade de género, povos indígenas e inclusão social. Os seus programas de mobilidade académica, de implementação de sistemas de avaliação do ensino superior ou de troca de experiências na universalização da educação básica ajudam aos processos de capacitação e desenvolvimento dos diferentes Estados.

Portugal conta a partir deste ano com um escritório da OEI em Lisboa. Participa em oito programas de cooperação, em áreas que vão da governação à propriedade industrial, da investigação científica ao ensino, dos arquivos e museus ao cinema. As suas universidades e politécnicos acolhem quase 12 mil estudantes ibero-americanos. O Instituto Camões colabora com o congénere espanhol na promoção do valor internacional das duas línguas. Estão em curso ou em preparação projetos conjuntos com países latino-americanos para cooperação com Estados terceiros. Fazemo-nos representar ao mais alto nível em todas as cimeiras, e sempre com mensagens de apoio à concertação respeitadora da diversidade. Realizamos tudo isto porque temos a noção clara da importância estratégia da relação entre a Europa e a América Latina – e do papel decisivo dos países ibéricos nessa relação. E é por isso que a participação na CIB é uma das linhas de força da nossa política externa.

(ZH) Nassim Taleb Explains How The Global Economy Is More Fragile Today Than In 2007

(ZHIn what was incredibly appropriate timing given the ‘shocktober’ market blowup, Bloomberg News invited “Black Swan” author Nassim Taleb to its set on Halloween for a discussion about the increasingly fragile market ecosystem in which we all reside, and the mounting risks that, Taleb believes, could soon ignite another financial crisis that will be even more severe than what we saw in 2008.

Taleb, dressed up as “black swan man”, wasted little time in explaining how the global economy is becoming increasingly vulnerable to a global debt crisis, how the global quantitative easing did nothing to fix the underlying problem of too much debt – instead it exacerbated it – and how the inevitable reckoning might play out in markets once the long-dreaded “inflection point” finally arrives.

Taleb began the interview by describing how the global aggregate debt burden has only climbed since the crisis. And while this debt is no longer dangerously concentrated in a single sector, like, say, the housing market, it doesn’t change the fact that the overall credit risk in the system has been amplified. And while central banks have for years managed to impose metastability in global markets, as they transition from a period of low interest rates back to “neutral”, the destructive forces that they long suppressed will surge back to the surface.

Just like he did in the run-up to the 2008 crash, Taleb isn’t trying to forecast the next crash; he’s only trying to explain how the global economy has become “more fragile today” than it was in 2007.

“You put novocaine on cancer, and what happens? The patient is going to look better, he’s going to feel better, but at some point, you pay a higher price.”

And while this debt is distributed in different ways, “you don’t get a free lunch.” In other words, just because governments and corporate balance sheets have done most of the accumulating, doesn’t mean that this debt is ‘risk-free’.

“Governments, they think they can borrow for free. But they have had to borrow a lot. We have had to borrow more than $1 trillion dollars…and we’re paying some $300 billion in interest.

This has left the US and the rest of the world on the cusp of a dangerous downward spiral.

“You can enter a spiral. In my mind, it’s when governments have to borrow more and more to pay interest – like a Madoff scheme.”

And once that spiral begins, it’s incredibly difficult to arrest the progression.

“The minute you enter that phase, there’s nothing healthy about it from an economic standpoint.”

Take the US federal government for example. Not only has it accumulated another $10 trillion in debt since the crisis, but it also has “hidden liabilities” on its balance sheet that Taleb believes should be factored in to this total. Social security is one hidden liability. Student debt, which the government will almost certainly need to backstop, is another.

“But we’ve accumulated an additional $10 trillion in debt since the crisis. Plus we have hidden liabilities that should count as debt – like social security, you have hidden liabilities when you have to bail out firms, you have hidden liabilities from student debt…you have a lot of things, if you’ve committed to some expenditures, on top of debt you have hidden liabilities that should act like debt.”

And while in the past, debt crises have been confined to emerging-market economies like Argentina, today, major developed economies like Italy are already seeing signs of strain as their populist government is hoping to expand the country’s budget deficit, adding to what is already the third-largest debt-to-GDP burden in the developed world.

“Years ago we had a debt crisis…in 82′ it started in Latin American countries…today it’s hitting the core, it’s no longer the periphery…look at countries like Italy…but it’s getting closer to us.”

In the past, the go-to fix for overwhelming debt has been inflation. But the problem with inflation – as the US experienced in the 1970s, is that, once it gets going, it can be almost impossible to control.

“In the past, the normal solution is inflation…but the minute you start to create inflation it’s an animal, you can’t control it…like we learned in the 1970s…price stability will not be there and traditionally it hasn’t been controllable.”

It wouldn’t take much to trigger a debt crisis in the US. If the Chinese and other ‘regular customers’ of Treasury debt were to step away from the market, who would take their place?

“The Chinese and the overproducing states were regular customers…maybe they’re not going to be there.”

Circling back to central banks and their strategy for averting an all-out financial collapse, Taleb pointed out that QE’s biggest accomplishment was the transfer of credit risk from individuals to the state. And with interest rates now beginning to rise, somebody is going to need to pay the price for all of this leverage.

“In 2008, we transferred debt from individuals to the states…now ten years later, we’re starting to raise rates. We have to raise rates. It’s unhealthy to keep rates at zero. So someone is going to have to pay the price.

Though debt isn’t as concentrated as it once was, the first signs of stress, according to Taleb, are already beginning to surface in real-estate, where stress that has already appeared in the high end of the market will likely spread (a trend that we have anticipated again and again and again).

“The first shoe to drop will be probably real estate. The higher end real estate has already gone down world wide, people have noticed but they’re not talking about it…it will be the higher end real estate first then the rest of the real estate market. One thing that quantitative easing did was increase inequality.”

After real estate “the next shoe to drop” will be the stock market…”though what we’re seeing today is nothing,” Taleb said. Equities cannot maintain their high valuations when interest rates are rising.

“No…what we’re seeing today is nothing…but you cannot maintain high valuations in the stock market with higher interest rates.”

“With higher interest rates we’re going to see some volatility.”

While the risks are arrayed against the average investor, there is one “miracle scenario” that could save the US economy from an extremely painful bout of deleveraging. And that would be a combination of torrid real growth with low price instability – essentially a turbocharging of the “goldlilocks” economic conditions that enabled the ever-higher highs during 2017 and 2018.

“What we need, the thing that would save us, miraculously, is real growth without debt…real growth maybe miraculously will take us out…or maybe some type of inflation that maybe wouldn’t cause so much price instability…but we’ve never seen that. Unless we have these two, we’re doomed.”

While anybody who has expressed concerns about the blowout in the US budget deficit under Trump should find Taleb’s arguments compelling, a quick glance at the S&P 500’s annualized returns over the past decade might be enough to quash these doubts. After all, why should investors listen to the doomsayers when so many crisis-era superstars, who built their reputations on the rightward bets they made during the runup to the crash, have not only failed to match their returns from 2007 and 2008, but have seen their winnings dissipate entirely in the years since?

Because, as has been demonstrated by at least one fund, the above assumption isn’t entirely accurate. Mark Spitznagel, CIO at Universa Investments, which counts Taleb as an advisor, revealed back in September that funds betting on the “end of the world” can, in fact, produce alpha and tack on a few points to a fund’s CAGR even during bull markets if the balance of allocations, and the hedging strategies employed, are calibrated in just the right way.

Universa

As he revealed in a letter to investors obtained by the WSJ back in September, Spitznagel has managed to outperform the S&P 500 by keeping the bulk of his money invested in a passive benchmark-tracker, while using a tiny sliver of his portfolio (just 3.3%) to buy up out-of-the-money put options when they’re looking cheap. This has allowed Spitznagel to book staggering profits during a handful of blowups (like the August 2015 ETF flash crash, where this strategy returned 20% in a single day).

Watch the full interview below:

(Visão) Portugal tem uma visão “cor-de-rosa” e “falsa” sobre a Primeira Guerra

(VisãoA participação de Portugal na Primeira Guerra resultou de “um projeto político radical” contestado pelo Exército e pela sociedade, defende o historiador António José Telo, criticando a visão histórica “cor-de-rosa” e “falsa” que subsiste sobre este período

“As ideias que existem são bastante erradas. Os manuais escolares continuam a dizer que Portugal entrou na Guerra a pedido da Inglaterra. Não é bem assim. Na realidade, a Guerra provoca uma profunda divisão na sociedade portuguesa […] e a esmagadora maioria, quer do mundo político, quer da opinião pública, alinha com os chamados anti-guerristas”, disse o historiador, em entrevista à agência Lusa.

O professor catedrático de História na Academia Militar trabalha, desde 2014, numa linha de investigação ligada à evocação dos 100 anos da Primeira Guerra Mundial, do Ministério da Defesa, tendo já publicado dois livros: um sobre o Corpo Expedicionário Português (CEP) em França e outro sobre a guerra no Atlântico português.

Ainda em novembro, quando se assinala um século da assinatura do Armistício, deverá ser publicado um volume sobre a Guerra em África, ficando a coleção completa com um livro sobre a parte final do CEP e o pós-guerra em Portugal.

António José Telo sustenta que Portugal entrou na Grande Guerra por causa de “um pequeno grupo radical” de republicanos, o chamado Partido Democrático, que forçou a integração das tropas portuguesas no conflito contra a vontade da Inglaterra.

“É este setor que vai forçar a beligerância portuguesa contra a opinião da Inglaterra”, pensando que “conseguiriam o apoio de Inglaterra”, o surgimento de “um movimento patriótico” que unisse o país à volta destes radicais e a consolidação “do seu poder político”, acrescentou.

Uma vez aceite a participação portuguesa no terreno de batalha, explica o historiador, assiste-se a “uma resistência, passiva e ativa, de toda a sociedade portuguesa e em particular do corpo de oficiais do Exército, que entendem esta beligerância como um projeto não nacional”.

Por outro lado, acrescenta, havia também a resistência da Inglaterra a braços, em França, mas também em África, com um corpo militar “ineficaz”, “indisciplinado” e “minado de clubes”.

“O Corpo Expedicionário Português (CEP) em França foi desde o início forçado a um Exército que não o queria. Ninguém entendia o que o Corpo Expedicionário estava a fazer em França. Só o aceitam porque os radicais portugueses conseguem o apoio do Governo francês e encostam Inglaterra à parede”, disse.

Para o historiador, “o que é triste é que esta realidade é apresentada como um projeto nacional, por razões patrióticas, para manter o império, as colonias, a integridade nacional, para nos defender contra a agressão alemã…Não foi nada disso, foi por um projeto partidário de criar uma república radical e que era de facto antidemocrática”.

Por isso, sustenta, é preciso “desmistificar” as ideias sobre a participação de Portugal na Primeira Guerra.

“Continuamos a ser o país europeu que tem a ideia mais errada do que foi a beligerância portuguesa” e existe, tal como naquela altura, uma união “à volta de uma visão de propaganda e falsa” sobre o que se passou, afiança o historiador.

Admitindo que sente a censura a estas ideias, António José Telo afirma não ter “absolutamente qualquer ilusão que esta [sua] visão se imponha a curto prazo”.

“Os que se opõem a [esta visão] estão instalados nas alavancas principais da produção histórica e tentam por todos os meios ocultar a verdade. Vai continuar a vigorar a visão cor-de-rosa, a visão errada, a visão do radicalismo de dinossauros sobre o que foi a beligerância portuguesa”, considerou.

Portugal participou na Primeira Guerra com cerca de 100 mil militares ao lado dos aliados, enviando soldados para a frente de batalha em França (1917 – 1918), Angola (em 1914-1915) e Moçambique (1914-1918).

Para assinalar os 100 anos do fim da Primeira Guerra Mundial mais de 60 chefes de Estado, incluindo o Presidente da República Portuguesa, Marcelo Rebelo de Sousa, participam domingo, em Paris, no Dia do Armistício.

(Economist) Lessons from history 100 years after the Armistice

(Economist) The guns fell silent a century ago

Shortly after 2am on November 11th 1918 a train came to a halt in a wood in Compiègne, near Paris. A second train pulled up on a nearby track. After four years of fighting, delegates of the German government sought an armistice from Ferdinand Foch, the commander of the French forces. Rare photos of the scene, hazy as a memory, show engine smoke twisting between the twiggy trees, makeshift boardwalks across the leaf-strewn ground and clusters of soldiers by the rails. At 5.15am the Germans signed the peace in the light of brass lamps in a teak-lined dining car. At 11am the guns fell silent along the 400km (250 mile) front, their thunder replaced by the pealing of church bells.

This peace ended a collective nightmare of hitherto unrivalled intensity and volume. The first world war was not just a grand tragedy. For the 67m who fought, it was a sordid hellscape. Few of the 10m killed in combat died from a “bullet, straight to the heart”, as pro forma telegrams to relatives put it. Many more bled to death in no-man’s land, their wails lingering for days like “moist fingers being dragged down an enormous windowpane”, as a British lieutenant wrote of the Battle of the Somme. Traumatised survivors sometimes slept in open sewers, and begged for their mothers as superiors ordered them over the top.

They guarded what slivers of humanity and dignity they could. At Compiègne today visitors can view silver rings from the trenches bearing initials (LV, MJ, SH or G) or four-leaf clovers; pipes with marks worn where teeth once clenched; a tube of insect-bite cream; letter-openers fashioned from shell casings, the names of yearned-for correspondents etched into their blades (“Marguerite”, “Mlle Rose-Marie”). A certain stoic humour also played its part. “I was hit. I looked round and saw that my leg had shot out and hit the fellow behind me (who got rather annoyed about [it])” wrote Charlemagne’s great-grandfather in his diary in 1915, just outside Ypres.

The memorial at Compiègne focuses on the leaders, the “switchmen of history” as Geert Mak, a Dutch historian, calls them. A replica carriage is the star artefact, name cards marking where the German and French delegates sat. Outside, a statue of Foch keeps vigil over the clearing. On November 10th Emmanuel Macron and Angela Merkel will visit the site. As they enter the room where the carriage stands they will pass under a quote by Winston Churchill: “Those who do not learn from history are condemned to repeat it.”

Pondering the exhibits, that apophthegm seems at once true and yet hopelessly hubristic. The first world war happened because a generation of Victorian leaders took for granted the stable order that had prevailed in most of Europe for decades. They should have read their history books. Yet the war was also a tale of forces beyond the power of any leader, however well-read; of nations and continents not as trains on history’s railway lines, run by drivers and switchmen, but as rafts tossed about on history’s ocean, dipping at most an occasional oar into the waves. Fate was the real grand homme of the “Great War”. The assassination of Archduke Franz Ferdinand in 1914 would not have happened had his driver not taken a wrong turning in Sarajevo. The German army’s initial advance was halted at Nieuwpoort by a Belgian lock-keeper who flooded the surrounding marshlands. Political twists in Berlin, not crushing defeat on the battlefield, pushed Germany to sue for peace in 1918.

The raftsmen also lacked maps. Across the continent, the armistice was greeted with relief. Newspapers announced it with a retrospectively stomach-churning sense of finality. “The war is over” cried Londoners as ceremonial gunfire broke the news. The nightmare seemed to have passed, but it had not. The armistice and the peace treaties that followed in 1919 and 1920 reshaped the maps of Europe and the Middle East, and imposed vengeance on the defeated, seeding future conflicts. Millions returned from the front angry, traumatised, wounded, resentful or all four. Gueules cassées (broken faces) the French called them. One such, an Austrian-born lance-corporal, would take Germany to war again two decades later, and in 1940 would have the French sign their own surrender in the same railway carriage at Compiègne.

The power of nightmares

Memories are everywhere. Two plaques in Compiègne’s station list the 23 locals killed in the first world war and the 20 killed in the second. Engraved brass cobblestones glint from German streets marking the addresses where Holocaust victims once lived. Recollections live on in diaries or passed through families orally. The past summer’s hot weather exposed shells and bullets in dried-up rivers. Other artefacts remain hidden: the original French version of the Treaty of Versailles went missing and probably rests, forgotten, in some German attic or cellar. “Europe is a continent in which one can easily travel back and forth through time,” writes Mr Mak. The eu, forged from the rubble of the two wars, knits the continent together in the spirit of lessons learned: peace, fraternity, unity in diversity. The pedagogical value of the past is to today’s European establishment what the uninhibited pursuit of freedom is to the American one, a foundational story, an essence.

Long may that learning continue. Yet modesty is also due, about forces greater than the wits and power of even historically aware societies are able to contain. National chauvinisms live on despite the Somme. Anti-Semitism lives on despite the Holocaust. Societies’ capacity to imagine collapse and barbarism in visceral terms fades with time. All Europeans can do is be vigilant and humble before these forces, dip their oars into the waves of history when possible, hold tight to their humanity and be grateful that their continent’s past and present are now broadly in harmony, the former educating and civilising the latter, for now at least. Like train lines running together in a wood.

(Algemeiner) Pope Condemns Antisemitism Amid Increase in Attacks on Jews

(Algemeiner)

Pope Francis meets a delegation of rabbis from the “World Congress of Mountain Jews” of Caucasus, during a private audience at the Vatican, Nov. 5, 2018. Photo: Vatican Media / ­Handout via Reuters.

Pope Francis called on Monday for the eradication of antisemitism following an increase in attacks and hate crimes against Jews in several countries and said it was vital to preserve the memory of the Holocaust.

In the worst attack ever against US Jews, a gunman yelling, “All Jews must die,” stormed a Pittsburgh synagogue on Oct. 27, killing 11 worshipers and wounding six other people including four police officers, before he was arrested.

“We are called to commit ourselves to ensure antisemitism is banned from the human community,” Francis said during a meeting with rabbis from the World Congress of Mountain Jews.

Mountain Jews are the descendants of Jews who left ancient Persia and settled in the Caucasus.

A 94-year-old German appeared in court in a wheelchair on Tuesday accused of assisting in the murder of hundreds of…

Francis said the Holocaust, in which the Nazis murdered six million Jews around Europe during World War Two, must continue to be commemorated to keep its memory alive.

“Without a living memory, there will be no future, for if the darkest pages of history do not teach us to avoid the same errors, human dignity will remain a dead letter,” he said.

He noted the recent 75th anniversary of the deportation of Rome’s Jews by Nazi occupiers and that Nov. 9 will be the 80th anniversary of “Kristallnacht,” the night when mobs ransacked thousands of synagogues and Jewish businesses in Germany and Austria.

“Sadly, antisemitic attitudes are also present in our own times. As I have often repeated, a Christian cannot be an anti-Semite, we share the same roots,” Francis said, stressing the importance of interfaith dialogue.

In the run-up to Tuesday’s contentious US elections, in which immigration has become a central issue, racist fliers have been reported on university campuses in at least five states, while synagogues in New York and California have been sprayed with antisemitic graffiti.

Last week British police launched an investigation into alleged antisemitic hate crimes within the opposition Labour Party, after a report that Labour itself had found evidence of party members threatening politicians.

(GUA) Shares soar as Trump hints at possible US-China trade deal

(GUA) President’s positive remarks about a call with Xi Jinping, and a report that he has asked officials to draw up terms, lift marketsDonald Trump and Xi Jinping are reportedly both keen to resolve the trade dispute.

 Donald Trump and Xi Jinping are reportedly both keen to resolve the trade dispute. Photograph: Andy Wong/AP

Asian shares have surged on reports that Donald Trump wants to reach an agreement with Chinese president Xi Jinping about the trade dispute that has dogged markets for months.

The US president spoke to Xi on Thursday and later tweeted that trade talks with China were “moving along nicely” ahead of face-to-face talks between the pair at the G20 summit in Argentina later this month.

Donald J. Trump

@realDonaldTrump

Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!

But Bloomberg later reported that the phone call – in which Trump and Xi both expressed optimism about resolving their bitter trade disputes – prompted Trump to ask officials to begin drafting potential terms.

China’s foreign ministry said on Friday that the telephone call between the two leaders was quite positive and that the pair believed they should “enhance trade relations”.

The reports lit a fire under stock markets that have beset by fears of a full-blown trade war between the world’s two biggest economies.

The Nikkei was up 2.5% in Tokyo, the Hang Seng climbed 3.7% in Hong Kong and the Shanghai Composite was up 3.3%. In South Korea, where the export-oriented economy has showed signs of a downturn, the Kospi index had its best day for seven years, jumping 3.5%. The ASX200 in Sydney had already closed up a more modest 0.14% when news of a possible deal came through.

US stock futures rose 0.7% and the FTSE100 is set for a jump of almost 1% when it opens in London on Friday morning. France’s CAC and Germany’s DAX are expected to enjoy similar gains.

In currencies the dollar eased, signalling some relief for emerging markets, while the pound climbed above $1.30.

The US and China’s tit-for-tat tariffs on each other’s goods have rumbled on for months as Trump pledges to help create more US manufacturing jobs. The tariffs have been blamed for a weakening of China’s mighty manufacturing sector which this week showed a marked slowdown in activity.

Trump administration officials have said that trade talks with China cannot resume until Beijing comes up with specific actions it is willing take to meet US demands for sweeping changes to policies on technology transfers, industrial subsidies and market access.

The two countries already have imposed tariffs on hundreds of billions of dollars of each other’s goods and Trump has threatened to slap tariffs on the remainder of China’s $500 billion-plus exports to the United States if the disputes cannot be resolved.

The trade dispute has also forced the yuan to fall in value but on Friday it was stronger for the first time this week, also helped by Xi’s pledge on Thursday of more support for private firms.

Tai Hui at JPMorgan Asset Management said a stabilising trade relationship between US and China and more stimulus from Beijing would be the key ingredients to revive market confidence in Asia.

“While we are still cautious over a full resolution of recent tensions in the medium term, resumption of dialogue between Washington and Beijing would be good enough to investors for now,” he told Bloomberg.

(C-J) “Globalist” Doesn’t Mean “Jew” – Seth Barron

(C-J) Liberal commentators try to equate all criticism of the international order with the anti-Semitism that motivated the synagogue murderer.

The massacre of 11 worshippers during Sabbath services at a Pittsburgh synagogue on Saturday was indisputably an act of anti-Semitic terror, and the most savage attack against American Jewry in its history. The killer, Robert Bowers, made clear on social media his belief that Jews are in control of the United States and are intent on destroying it by importing millions of Muslim immigrants. “There is no #MAGA,” posted Bowers, “as long as there is a kike infestation.” Curiously, Bowers’s insect metaphor echoed Nation of Islam leader Louis Farrakhan’s recent comment that he is not in fact an anti-Semite, but an “anti-termite.” Though Bowers and Farrakhan probably don’t agree on much else, anti-Semites have a long history of representing the Jewish people as vermin and as underminers of cultural and national supports.

Following the attack, however, many commenters on the Left rushed to blame it on President Trump, his supporters, and their political agenda, claiming that their pejorative use of the term “globalist”—supposedly a code word for “Jew” in the white-supremacist lexicon—makes them complicit in the Pittsburgh slaughter. (Bowers used “globalist” and “globalism” a lot, too.) In the Washington Post, Dana Milbank alleged that Trump has made America unsafe for Jews as a result of his “full-throated targeting of Jewish ‘globalists.’” In New York, Jonathan Chait argued that Trump has always agitated sub rosa against Jews, “lambast[ing] his enemies as ‘globalists,’ which, through its implication of extra-national loyalty, closely tracks the primary accusation made against Jews.” And comedian Sarah Silverman alerted her 12 million Twitter followers to the “Dogwhistle reminder that these words used by our openly Nationalist President are winks to the alt right: Soros = The Jews Globalist=dirty jew Nationalist = white Nationalist.”

These critics claim that Trump, along with Lou Dobbs and other conservative commentators, is more or less consciously referencing the 1903 forgery Protocols of the Elders of Zion, and similar propaganda that propounds worldwide, malevolent Jewish domination. According to this line of thought, critique of supranational institutions like the EU, NAFTA, and the United Nations is rooted in a corrupted ideology of racial nationalism that in its most powerful incarnation, produced the Holocaust.

But the fact that Bowers and a handful of like-minded lunatics are hypnotized by a fantasy of malevolent Jewish domination of the world monetary system doesn’t mean that Trump’s critique of post-nationalist thinking is necessarily wrong. The two phenomena have nothing to do with each other, aside from the fact that they both use the word “globalist.” Globalism in its contemporary usage didn’t exist around 1900, when modern anti-Semitism was formulated. Empires ruled distant lands from imperial capitals, but outside of the halls of the World Esperanto Congress, the novels of John Buchan, and the dreams of the Second Communist International, there was no recognized international system of governance that imposed itself upon nation-states such as we have today, represented by manifold and overlapping hierarchies of rule-making bodies, multilateral trade agreements, and mutual-defense pacts.

Drawing a comparison between anti-Semitic slurs from Tsarist Russia or Henry Ford’s fervid ruminations, and today’s analysis of the postwar world order is facile in the extreme. At the recent Jewish Leadership Conference, held in New York the day after the killings in Pittsburgh, Yoram Hazony, an Israeli philosopher whose recent book The Virtue of Nationalism defends vigorously the traditional nation-state, responded in an interview to the argument that criticism of “globalism” is anti-Semitic. “The word ‘globalism,’” explained Hazony, “has been used for the last generation both in academic settings to describe a technical worldview that has nothing to do with Jews, and also in the public sphere to describe a broad political and intellectual vision that likewise has nothing to with Jews.” Hazony continued: “There are always going to be bigots and haters who are twisting words and using them in all sorts of strange ways. . . . So many terms that have clear and normal meanings—and ‘nationalism’ and ‘globalism’ are just a few of them—are being interpreted as though their principal valence is about race and bigotry, that you cease to be able to have an intelligent conversation about the central ideas.”

It is unsurprising that the Left has sought to tie the murderous hatred of Robert Bowers—who said explicitly that he thinks of President Trump as a “globalist” stooge of Jewish puppet-masters—to Trump’s agenda of promoting American interests above a nebulous vision of global progress, because the Left is committed to pursuing that latter vision at all costs. Its hatred of Trump and his millions of deplorable supporters is so intense, and at this point so beyond reason, that it pounces on a savage act of hatred as an opportunity to score political points.

(PUB) “É proibido proibir!” na era de Trump e Bolsonaro – José Pedro Teixeira Fernandes

(PUB) Com um clima de guerra cultural e de insegurança instalado, o resvalar para o iliberalismo e para o autoritarismo está em marcha. Resta saber o que vai ficar da democracia tal como a conhecíamos.

1. Talvez os ocidentais ­—­ sobretudo os que se vêem, a si próprios, como liberais ou progressistas —, pudessem perceber melhor o que está ocorrer no Ocidente se observassem atentamente os fenómenos sociais e políticos em curso nas sociedades muçulmanas. Os valores seculares (e também, de alguma forma, liberais), que estavam aí em ascensão até aos anos 1960/1970, foram amplamente revertidos pela vaga islamista, ou seja, do “Islão político”. Nos últimos anos, a transformação da Turquia com Recep Tayyip Erdogan exemplifica esse rumo dos acontecimentos. Contraria a ideia ocidental de progresso e de crescente secularização da humanidade. Um aspecto maior dessa transformação é a adesão dos jovens ao islamismo. Mostra a direcção da dinâmica social. Em média, o eleitorado do Partido da Justiça e Desenvolvimento (AKP), o partido Recep Tayyip Erdogan, é um eleitorado mais jovem do que o eleitorado do secular Partido Republicano do Povo (CHP), herdeiro de Mustafa Kemal Atatürk. Ser islamista — que, grosso modo, é o equivalente a ser um radical de direita ou extrema-direita nas sociedades ocidentais —, é algo que atrai muitos jovens de ambos os sexos em contexto muçulmano. As razões são complexas, mas, por exemplo, o comportamento de uma jovem que passa a cobrir a cabeça com um véu pode ser motivado por um acto de rebeldia juvenil face a uma mãe / família / sociedade onde isso tinha sido banido.

2. No Ocidente, a partir dos anos 1960, valores e causas que vinham das margens, de uma esquerda alternativa à hegemonia ideológica dos partidos comunistas ao estilo soviético, ganharam terreno político e visibilidade social (grosso modo, na mesma altura em que os islamistas começavam a reverter o secularismo liberal no Islão). Feministas, ambientalistas, sexualidades alternativas (gays, lésbicas e transsexuais), minorias étnicas e/ou religiosas entraram em força na agenda social e política de todos os países ocidentais. As suas causas afastaram-se, gradualmente, do proletariado e da lógica marxista clássica da luta de classes. Hoje são, em grande parte, o mainstream, social e político. Em muitos aspectos, alteraram radicalmente o sentido usual da moral e dos bons costumes. Este enorme sucesso trouxe novos padrões morais e de bom comportamento social. Fundamentalmente estão hoje já enraizados na população com escolarização mais elevada, sobretudo quando a sua formação teve predominância nas ciências sociais e humanidades. (Aí essas ideias operaram uma enorme transformação na forma de fazer teoria e nas temáticas estudadas, que passaram a incluir muitas das novas “causas”). Os media usualmente considerados “de referência”, ou seja, vistos como exemplos de bom jornalismo, são um outro agente crucial do processo de enraizamento dos valores pós-1960. Não é por acaso que são um alvo preferido dos que se lhe opõem no actual ambiente de guerra cultural.

3. “É proibido proibir” (“Il est interdit d’interdire!”) foi um dos slogans mais icónicos do Maio de 68. Captou particularmente bem o espírito de contestação à ordem social e política estabelecida e à moral e bons costumes (conservadores), tal como normalmente eram entendidos na época. Mas, como já notado, as causas dessa época e aquilo que era visto como uma transgressão nos anos 1960 em geral — e no Maio de 68 em particular —, hoje são, em grande parte, comportamentos normais na sociedade e na política. Uma das consequências menos percebidas dessa transformação, nas suas mais profundas implicações, é que isso retira a essas ideias/causas o apelo da contestação, na sociedade e na política. Transformou-as, paradoxalmente, na moralidade e bons costumes de muitos dos mais velhos, na população mais urbana e com mais escolarização, retirando apelo aos mais jovens. Assim, o(a) jovem que hoje se afirme a favor da sexualidade fora do casamento, da emancipação feminina, da defesa do ambiente, dos direitos das minorias, etc. não transgride nada. Na realidade, apenas adere aos valores estabelecidos como bons — pelo menos nos já referidos meios urbanos e na classe média com mais educação. Vejamos melhor a dinâmica sociológico-política instalada.

4. Meio século depois, nas sociedades ocidentais, os jovens rebeldes dos anos 1960 são hoje sexagenários ou septuagenários. Mantêm uma (auto)imagem de rebeldia de progressismo e de defesa boas causas dos mais fracos e excluídos. Todavia, como já notado, para os mais novos, como os actuais jovens millennials (ou geração Y) esses são já os valores da sociedade estabelecida em que nasceram. Não permitem actos de rebeldia e contestação para se demarcaram dos adultos das gerações anteriores. Assim, os sexagenários ou septuagenários que estiveram na origem do actual padrão moral e político usualmente aceite, por paradoxal que possa parecer, estão hoje mais próximos da imagem de guardiães do passado, ou seja, de conservadores, do que imaginam. Ironicamente, estão hoje numa situação similar à dos que suplantaram na função de guardiães da moralidade da era pré-1960. Como resultado dessa transformação, quem parece estar a captar / manipular o sentimento de rebeldia é outro movimento que veio também das margens da sociedade e do sistema político: a alt-right. Tal como os islamistas conseguiram reverter a questão geracional a seu favor no Islão, e transformar o tradicional em radical, incorporando o sentimento contestatário, um processo algo similar parece estar em curso no Ocidente com a direita radical.

5. Nas sociedades ocidentais e em outras que lhe são culturalmente próximas, a maior transgressão das normas morais, sociais e políticas estabelecidas é hoje é feita por indivíduos que se apresentam como como anti-sistema e contestatários radicais. Numa lógica de (extrema)direita prosseguem a sua própria versão do “É proibido proibir” e da “normalidade” de transgredir — o sexismo, a homofobia, a xenofobia, ou a islamofobia, são as suas transgressões favoritas. Donald Trump elogia a masculinidade viril de um político republicano do Montana com uma piada jocosa sobre agressão a um jornalista. Jair Bolsonaro usa similares técnicas de choque e transgressão nos seus frequentes ataques verbais a feministas egays. Quanto a Rodrigo Duterte, o actual Presidente das Filipinas, cultiva um radicalismo ainda maior na linguagem e na transgressão de códigos de conduta moral. Dizer e/ou fazer coisas que transgridem a sensibilidade moral e política herdada dos anos 1960, vistas como politicamente incorrectas, parece ser a nova fórmula de sucesso que mobiliza a contestação e as massas.

6. As ideias filosófico-políticas (e técnicas) que serviram para atacar o status quo social e político nos anos 1960, estão agora a ser apropriadas e replicadas pela alt-right e outros movimentos similares. A plasticidade, o radicalismo e as contradições do pensamento do filósofo Friedrich Nietzsche — que já entusiasmou fascistas (Benito Mussolini) e nazis (Adolf Hitler), bem com a esquerda intelectual e política do Maio de 68 (Michel Foucault, Jaques Derrida, etc.) —, são um bom guia para perceber o radicalismo instalado nas sociedades democráticas e as suas contradições. Ao contrário do que acontecia no passado do século XX a imagem de “revolucionário(a)”, de contestatário(a), ou de alguém irreverente, está a afastar-se, cada vez mais, das feministas, ambientalistas, sexualidades alternativas (gays, lésbicas e transsexuais), ou da defesa das minorias étnicas e/ou religiosas. Esse é, ironicamente, o preço do sucesso das suas ideias. À medida que se transformaram nas ideias políticas e moralidade do establishment, tornaram-se, também, o rosto de um sistema que aos mais descontentes apetece atacar e transgredir, seja qual for o motivo. Ironicamente, às vezes até contra os seus próprios interesses económicos ou políticos.

7. Em sociedades onde se cultivou, durante décadas, a transformação e a desconstrução de valores e regras sociais — originalmente com proveniência da esquerda radical e das margens do sistema —, vive-se uma nova vaga que mimetiza essa lógica — oriunda igualmente das margens, mas agora da direita radical. (Não tem a sofisticação intelectual e política da esquerda radical, sendo, nesse aspecto, bastante grosseira e rudimentar.) Ao mesmo tempo, nas democracias liberais, um dos pilares do sistema moral e de valores erigido no pós-anos 1960, os media tradicionais, perdeu a hegemonia que detinha sobre a formação da opinião pública. Hoje a esfera pública é, cada vez mais, dominada pela Internet e redes socais, com as virtudes e problemas que daí decorrem. São o novo espaço público de contestação e radicalismo por excelência, com o predomínio do emocional sobre o racional, do instantâneo sobre o comprovadamente factual e profundo. O novo terreno do “É proibido proibir!”, agora numa lógica quase antitética da original. Com um clima de guerra cultural e de insegurança instalado, o resvalar para o iliberalismo e para o autoritarismo está em marcha. Resta saber o que vai ficar da democracia tal como a conhecíamos.

(Economist) The next recession

(Economist) Toxic politics and constrained central banks could make the next downturn hard to escape

JUST a year ago the world was enjoying a synchronised economic acceleration. In 2017 growth rose in every big advanced economy except Britain, and in most emerging ones. Global trade was surging and America booming; China’s slide into deflation had been quelled; even the euro zone was thriving. In 2018 the story is very different. This week stockmarkets tumbled across the globe as investors worried, for the second time this year, about slowing growth and the effects of tighter American monetary policy. Those fears are well-founded.

The world economy’s problem in 2018 has been uneven momentum (see article). In America President Donald Trump’s tax cuts have helped lift annualised quarterly growth above 4%. Unemployment is at its lowest since 1969. Yet the IMF thinks growth will slow this year in every other big advanced economy. And emerging markets are in trouble.

This divergence between America and the rest means divergent monetary policies, too. The Federal Reserve has raised interest rates eight times since December 2015. The European Central Bank (ECB) is still a long way from its first increase. In Japan rates are negative. China, the principal target of Mr Trump’s trade war, relaxed monetary policy this week in response to a weakening economy. When interest rates rise in America but nowhere else, the dollar strengthens. That makes it harder for emerging markets to repay their dollar debts. A rising greenback has already helped propel Argentina and Turkey into trouble; this week Pakistan asked the IMF for a bail-out (see article).

Emerging markets account for 59% of the world’s output (measured by purchasing power), up from 43% just two decades ago, when the Asian financial crisis hit. Their problems could soon wash back onto America’s shores, just as Uncle Sam’s domestic boom starts to peter out. The rest of the world could be in a worse state by then, too, if Italy’s budget difficulties do not abate or China suffers a sharp slowdown.

Cutting-room floors

The good news is that banking systems are more resilient than a decade ago, when the crisis struck. The chance of a downturn as severe as the one that struck then is low. Emerging markets are inflicting losses on investors, but in the main their real economies seem to be holding up. The trade war has yet to cause serious harm, even in China. If America’s boom gives way to a shallow recession as fiscal stimulus diminishes and rates rise, that would not be unusual after a decade of growth.

Yet this is where the bad news comes in. As our special report this week sets out, the rich world in particular is ill-prepared to deal with even a mild recession. That is partly because the policy arsenal is still depleted from fighting the last downturn. In the past half-century, the Fed has typically cut interest rates by five or so percentage points in a downturn. Today it has less than half that room before it reaches zero; the euro zone and Japan have no room at all.

Policymakers have other options, of course. Central banks could use the now-familiar policy of quantitative easing (QE), the purchase of securities with newly created central-bank reserves. The efficacy of QE is debated, but if that does not work, they could try more radical, untested approaches, such as giving money directly to individuals. Governments can boost spending, too. Even countries with large debt burdens can benefit from fiscal stimulus during recessions.

The question is whether using these weapons is politically acceptable. Central banks will enter the next recession with balance-sheets that are already swollen by historical standards—the Fed’s is worth 20% of GDP. Opponents of QE say that it distorts markets and inflates asset bubbles, among other things. No matter that these views are largely misguided; fresh bouts of QE would attract even closer scrutiny than last time. The constraints are particularly tight in the euro zone, where the ECB is limited to buying 33% of any country’s public debt.

Spending ceilings

Fiscal stimulus would also attract political opposition, regardless of the economic arguments. The euro zone is again the most worrying case, if only because Germans and other northern Europeans fear that they will be left with unpaid debts if a country defaults. Its restrictions on borrowing are designed to restrain profligacy, but they also curb the potential for stimulus. America is more willing to spend, but it has recently increased its deficit to over 4% of GDP with the economy already running hot. If it needs to widen the deficit still further to counter a recession, expect a political fight.

Politics is an even greater obstacle to international action. Unprecedented cross-border co-operation was needed to fend off the crisis in 2008. But the rise of populists will complicate the task of working together. The Fed’s swap lines with other central banks, which let them borrow dollars from America, might be a flashpoint. And falling currencies may feed trade tensions. This week Steve Mnuchin, the treasury secretary, warned China against “competitive devaluations”. Mr Trump’s belief in the harm caused by trade deficits is mistaken when growth is strong. But when demand is short, protectionism is a more tempting way to stimulate the economy.

Timely action could avert some of these dangers. Central banks could have new targets that make it harder to oppose action during and after a crisis. If they established a commitment ahead of time to make up lost ground when inflation undershoots or growth disappoints, expectations of a catch-up boom could provide an automatic stimulus in any downturn. Alternatively, raising the inflation target today could over time push up interest rates, giving more room for rate cuts. Future fiscal stimulus could be baked in now by increasing the potency of “automatic stabilisers”—spending on unemployment insurance, say, which goes up as economies sag. The euro zone could relax its fiscal rules to allow for more stimulus.

Pre-emptive action calls for initiative from politicians, which is conspicuously absent. This week’s market volatility suggests time could be short. The world should start preparing now for the next recession, while it still can.

(P-S) The Dollar and its Discontents – Barry Eichengreen

(P-S) Having unilaterally reimposed sanctions on Iran, US President Donald Trump’s administration is threatening to penalize companies doing business with the Islamic Republic by denying them access to US banks. But that could hasten the dollar’s demise as the main global currency.

BRUSSELS – US President Donald Trump’s unilateralism is reshaping the world in profound and irreversible ways. He is undermining the working of multilateral institutions. Other countries, for their part, no longer regard the United States as a reliable alliance partner and feel impelled to develop their own geopolitical capabilities.

Now the Trump administration is eroding the dollar’s global role. Having unilaterally reimposed sanctions on Iran, it is threatening to penalize companies doing business with the Islamic Republic by denying them access to US banks.

The threat is serious because US banks are the main source of dollars used in cross-border transactions. According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), dollars are used in nearly half of all cross-border payments, a share far greater than the weight of the US in the world economy.

In response to the Trump administration’s stance, Germany, France, and Britain, together with Russia and China, have announced plans to circumvent the dollar, US banks, and US government scrutiny. “Plans” may be a bit strong, given that few details have been provided. But the three countries have described in general terms the creation of a stand-alone financial entity, owned and organized by the governments in question, to facilitate transactions between Iran and foreign companies.

Those companies will presumably settle their claims in euros, not dollars, freeing them from dependence on US banks. And insofar as the Europeans’ special-purpose financial vehicle also bypasses SWIFT, it will be hard for the US to track transactions between Iran and foreign companies and impose penalties.

Is this scheme viable? While there is no purely technical obstacle to creating an alternative payments channel, doing so is certain to enrage Trump, who will presumably respond with another round of tariffs against the offending countries. Such, unfortunately, is the price of political independence, at least for now.

Having learned a painful lesson about dependence on the dollar, will other countries move away from it more generally? The fact that the dollar is used so widely makes doing so difficult. Banks and companies prefer using dollars because so many other banks and companies use dollars and expect their counterparties to do likewise. Shifting to another currency would require coordinated action. But with the governments of three large European countries having announced just such coordination, such a scenario can no longer be excluded.

It is worth recalling how the dollar gained international prominence in the first place. Before 1914, it played essentially no international role. But a geopolitical shock, together with an institutional change, transformed the dollar’s status.

The geopolitical shock was World War I, which made it hard for neutral countries to transact with British banks and settle their accounts using sterling. The institutional change was the Federal Reserve Act, which created an entity that enhanced the liquidity of markets in dollar-denominated credits and allowed US banks to operate abroad for the first time. By the early 1920s the dollar had matched and, on some dimensions, surpassed sterling as the principal vehicle for international transactions.

This precedent suggests that 5-10 years is a plausible time frame over which the US could lose what Valéry Giscard d’Estaing, then France’s finance minister, famously called the “exorbitant privilege” afforded it by issuing the world’s main international currency. This doesn’t mean that foreign banks and companies will shun the dollar entirely. US financial markets are large and liquid and are likely to remain so. US banks operate globally. In particular, foreign companies will continue to use dollars in transactions with the US itself.

But in an era of US unilateralism, they will want to hedge their bets. If the geopolitical shock of Trump’s unilateralism spurs an institutional innovation that makes it easier for European banks and companies to make payments in euros, then the transformation could be swift (as it were). If Iran receives euros rather than dollars for its oil exports, it will use those euros to pay for merchandise imports. With companies elsewhere earning euros rather than dollars, there will be less reason for central banks to hold dollars in order to intervene in the foreign exchange market and stabilize the local currency against the greenback. At this point, there would be no going back.

One motivation for establishing the euro was to free Europe from excessive dependence on the dollar. This is likewise one of China’s motivations for seeking to internationalize the renminbi. So far, the success of both efforts has been mixed, at best. In threatening to punish Europe and China, Trump is, ironically, helping them to achieve their goals.

Moreover, Trump is squandering US leverage. Working with the Europeans and the Chinese, he could have threatened Iran, and companies doing business there, with comprehensive and effective sanctions had there been evidence that the country was failing to live up to its denuclearization obligations. But working together to ensure Iran’s compliance was, of course, precisely what the Joint Comprehensive Plan of Action, renounced by the Trump administration earlier this year, was established to do.

(P-S) The Myth of Secular Stagnation – Joseph E. Stiglitz

(P-S) Those responsible for managing the 2008 recovery found the idea of secular stagnation attractive, because it explained their failures to achieve a quick, robust recovery. So, as the economy languished, a concept born during the Great Depression of the 1930s was revived.

NEW YORK – In the aftermath of the 2008 financial crisis, some economists argued that the United States, and perhaps the global economy, was suffering from “secular stagnation,” an idea first conceived in the aftermath of the Great Depression. Economies had always recovered from downturns. But the Great Depression had lasted an unprecedented length of time. Many believed that the economy recovered only because of government spending on World War II, and many feared that with the end of the war, the economy would return to its doldrums.

Something, it was believed, had happened, such that even with low or zero interest rates, the economy would languish. For reasons now well understood, these dire predictions fortunately turned out to be wrong.

Those responsible for managing the 2008 recovery (the same individuals bearing culpability for the under-regulation of the economy in its pre-crisis days, to whom President Barack Obama inexplicably turned to fix what they had helped break) found the idea of secular stagnation attractive, because it explained their failures to achieve a quick, robust recovery. So, as the economy languished, the idea was revived: Don’t blame us, its promoters implied, we’re doing what we can.

The events of the past year have put the lie to this idea, which never seemed very plausible. The sudden increase in the US deficit, from around 3% to almost 6% of GDP, owing to a poorly designed regressive tax bill and a bipartisan expenditure increase, has boosted growth to around 4% and brought unemployment down to a 18-year low. These measures may be ill-conceived, but they show that with enough fiscal support, full employment can be attained, even as interest rates rise well above zero.

The Obama administration made a crucial mistake in 2009 in not pursuing a larger, longer, better-structured, and more flexible fiscal stimulus. Had it done so, the economy’s rebound would have been stronger, and there would have been no talk of secular stagnation. As it was, only those in the top 1% saw their incomes grow during the first three years of the so-called recovery.

Some of us warned at the time that the downturn was likely to be deep and long, and that what was needed was stronger and different from what Obama proposed. I suspect that the main obstacle was the belief that the economy had just experienced a little “bump,” from which it would quickly recover. Put the banks in the hospital, give them loving care (in other words, hold none of the bankers accountable or even scold them, but rather boost their morale by inviting them to consult on the way forward), and, most important, shower them with money, and soon all would be well.

But the economy’s travails were deeper than this diagnosis suggested. The fallout from the financial crisis was more severe, and massive redistribution of income and wealth toward the top had weakened aggregate demand. The economy was experiencing a transition from manufacturing to services, and market economies don’t manage such transitions well on their own.

What was needed was more than a massive bank bailout. The US needed a fundamental reform of its financial system. The 2010 Dodd-Frank legislation went some way, though not far enough, in preventing banks from doing harm to the rest of us; but it did little to ensure that the banks actually do what they are supposed to do, focusing more, for example, on lending to small and medium-size enterprises.

More government spending was necessary, but so, too, were more active redistribution and pre-distribution programs – addressing the weakening of workers’ bargaining power, the agglomeration of market power by large corporations, and corporate and financial abuses. Likewise, active labor-market and industrial policies might have helped those areas suffering from the consequences of deindustrialization.

Instead, policymakers failed to do enough even to prevent poor households from losing their homes. The political consequences of these economic failures were predictable and predicted: it was clear that there was a risk that those who were so badly treated would turn to a demagogue. No one could have predicted that the US would get one as bad as Donald Trump: a racist misogynist bent on destroying the rule of law, both at home and abroad, and discrediting America’s truth-telling and assessing institutions, including the media.

A fiscal stimulus as large as that of December 2017 and January 2018 (and which the economy didn’t really need at the time) would have been all the more powerful a decade earlier when unemployment was so high. The weak recovery was thus not the result of “secular stagnation”; the problem was inadequate government policies.

Here, a central question arises: Will growth rates in coming years be as strong as they were in the past? That, of course, depends on the pace of technological change. Investments in research and development, especially in basic research, are an important determinant, though with long lags; cutbacks proposed by the Trump administration do not bode well.

But even then, there is a lot of uncertainty. Growth rates per capita have varied greatly over the past 50 years, from between 2 and 3% a year in the decade(s) after World War II to 0.7% in the last decade. But perhaps there’s been too much growth fetishism – especially when we think of the environmental costs, and even more so if that growth fails to bring much benefit to the vast majority of citizens.

There are many lessons to be learned as we reflect on the 2008 crisis, but the most important is that the challenge was – and remains – political, not economic: there is nothing that inherently prevents our economy from being run in a way that ensures full employment and shared prosperity. Secular stagnation was just an excuse for flawed economic policies. Unless and until the selfishness and myopia that define our politics – especially in the US under Trump and his Republican enablers – is overcome, an economy that serves the many, rather than the few, will remain an impossible dream. Even if GDP increases, the incomes of the majority of citizens will stagnate.

(Economist) How to reform the world’s biggest piggy-banks

(Economist) Singapore offers a model for running sovereign-wealth funds well

IN MOST countries the priority with the public finances is how to stop debt spiralling. But some places have the opposite difficulty: how to manage piles of savings. China and Saudi Arabia are examples. Globally, governments have over $20trn stashed in state-run investment vehicles. That sum is three times the size of BlackRock, the world’s biggest asset manager. Managing it is fraught and becoming more so owing to protectionism. Governments with spare funds should study Singapore, which, as in many aspects of administration, has its head screwed on.

State investment funds come in several flavours. There are currency reserve funds, which are often managed solely by central banks. Then there is an array of entities that are lumped together under the “sovereign-wealth fund” label, which typically manage pension assets, oil revenues, some currency reserves, or own stakes in companies that governments view as strategic.

Central bank reserve kitties have existed for centuries, and sovereign-wealth funds date back to the 1950s, but both became prominent in 2004-08. High oil prices, trade surpluses and capital inflows meant that Asian and Arab countries were knee-deep in foreign earnings, which they reinvested in safe treasury bonds and also in riskier assets such as stakes in foreign firms. The spending spree peaked in 2008. By that point Western governments had become uneasy about the funds’ power.

There are still problems. Often the funds’ objectives are muddled. Some have their capital depleted by profligate politicians; others cannot decide whether to invest at home as well as abroad. It is a constant struggle to avoid cronyism and to persuade other countries that they are not a tool of foreign policy.

Judged by their size, state funds have trodden water. Since 2015 emerging countries have burned up reserves as capital flows reversed and commodity prices fell. Adding up all global currency reserves and sovereign-wealth funds, their weight in the financial system has stayed flat over the past six years, at 12% of the market value of all shares and bonds. Governance is patchy. A Malaysian state fund, 1MBD, has been at the centre of a corruption scandal. The $250bn Saudi Public Investment Fund is making huge, wild, bets on Silicon Valley and pursuing the pet projects of Muhammad bin Salman, the crown prince.

China has pots of money but has made little progress on reform. A body called SASAC owns stakes in firms at home, but fails to insulate them from political influence. Another fund, CIC, styles itself as an independent global asset manager, but holds stakes in local banks, talks up foreign policy aims such as the Belt and Road Initiative, and wants approval to play in the sagging domestic stockmarket. Even Norway’s $1trn fund has seen political rows over its approach to private investment and energy firms.

Relative to the pack, Singapore is doing well. Its funds have assets of about $770bn—the exact figure is secret. They have made an annual return (in dollar terms) of about 6% over the past two decades, slightly more than an indexed portfolio with two-thirds of its assets in shares and one-third in bonds. Their income pays for a fifth of government spending. The funds are free of scandal and enjoy a solid reputation both in China and the West.

There is a clear division of labour. The central bank runs $290bn of liquid reserves. A national piggy-bank manager called GIC runs an estimated $250bn, long-term, diversified foreign portfolio. Then a holding company, Temasek, has the rest, keeping a quarter of its portfolio in stakes in Singaporean firms. It also makes punchy bets abroad.

On the funds’ boards sit a combination of officials, politicians and captains of industry; Singapore’s elite can sometimes seem too tightly knit. Yet overall governance is good. The city-state’s leaders view reserves-management as a national mission. Advisory boards and staff include lots of outsiders: 37% of the total employees of Temasek and GIC are foreign, versus under 10% at CIC. There is little evidence of Temasek meddling in the local champions in which it invests, such as DBS, a bank. In 2014 it did raise its stake in Olam, a struggling local commodities firm, but made a modest profit on the deal. In 2015 it unsentimentally sold control of Neptune Orient, a shipping line, to a French firm.

The fiscal framework is admirably clear. The reserves have special protection under the constitution. Under rules put in place in 2008, the government can spend up to half of the long-term expected annual real return of its net reserves each year. In practice this equates to about 1.6% of the funds’ capital value. The aim is to ensure that the pool of reserves and their income remain constant as a share of GDP over time, which Singapore has achieved; its capital is about 220% of GDP, the same as in 1997, The Economist estimates. While the official calculations are confidential, a rough estimate is that annual nominal returns would need to drop below 5.5% before the state eats into its inheritance.

Keeping on the Strait and narrow

Few countries have Singapore’s graft-free civil service and polity, which make technocratic excellence easier. And there are blemishes. The funds are now so big that there is more risk of pointless duplication. In June, for example, both GIC and Temasek invested in Ant Financial, a Chinese fintech firm. Mistakes happen: in 2007-08 both funds made some badly timed bets on Western banks. As Singapore’s population ages, state health-care costs will rise by almost one percentage point of GDP over the next decade. There will be pressure to raid the piggy bank, or for the funds to juice up their returns by taking bigger risks.

Nonetheless, for many countries, including China and Saudi Arabia, Singapore’s model for state investment funds is the one to emulate. Markets are frothy, so rash investment decisions can be very expensive. And protectionism means that countries lacking a credible, apolitical investment process may suffer a worse fate: having their state funds locked out of foreign markets.

(ECO) FMI só antecipou 47 das últimas 313 recessões desde 1991. Em Portugal, previu metade das recessões

(ECOFMI só conseguiu prever uma em cada sete recessões nas principais economias do mundo. Mas em Portugal a taxa de sucesso é de 50%: os técnicos anteciparam as últimas três recessões portuguesas.

Fundo Monetário Internacional (FMI) conseguiu antecipar apenas 47 das últimas 313 nas principais economias do mundo desde 1991, o que faz com que apenas uma em cada sete recessões tenha sido prevista pelos peritos internacionais, num registo que a própria instituição admite que é “pobre”. Mas, olhando para o caso de Portugal, as previsões da organização foram mais certeiras já que anteviram metade das seis recessões que a economia nacional registou nos últimos 27 anos.

É o próprio FMI que o admite com algum embaraço: “As previsões do World Economic Outlook (WEO) deveriam ser melhores, tendo em conta que já incorporam juízos sobre políticas, fatores externos e notícias económicas recentes que afetam as trajetórias das economias. Contudo, uma análise às previsões do WEO e do setor privado entre 1991 e 2016 confirma as dificuldades em fazer previsões de recessões económicas”.

Os técnicos do Fundo falam mesmo de um “registo pobre” em matéria de previsão de recessões e mostram a dimensão concreta daquilo a que chamam de “Uma Missão Dantesca”: “Enquanto os países da amostra registaram em média 2,7 recessões entre 1991 e 2016, das 313 recessões de uma amostra de 117 economias, apenas 47 foram antecipadas”, revela a instituição que, apesar de reconhecer as dificuldades e os erros — a taxa de sucesso de previsão de uma recessão é de apenas 15% neste período –, volta esta terça-feira a divulgar as suas perspetivas para a evolução da economia mundial, incluindo Portugal.

No relatório hoje publicado, os experts não deixam de meter o dedo na ferida e insistem: “Mesmo em 2009, o ano após a contração económica na sequência do colapso do Lehman Brothers, apenas seis economias avançadas (e não mercados emergentes ou economias em desenvolvimento) tiveram previsões de recessão no WEO de outubro de 2008; subsequentemente, estima-se que o Produto contraiu em 56 (quase metade) das economias da amostra“.

Sobre Portugal, segundo os dados acedidos pelo ECO, os especialistas do FMI conseguiram um score melhor. Isto é, das seis recessões que a economia portuguesa atravessou no mesmo período (nos anos 1993, 2008, 2009, 2011, 2012 e 2013), três delas foram previstas pela instituição. Mais concretamente as últimas três, em pleno período de ajuda financeira internacional que implicava a presença regular dos técnicos internacionais em Lisboa para acompanhar o plano de ajustamento.

Apesar do relativo sucesso quanto ao caso português, os resultados globais “não satisfazem” o Fundo, que diz, porém, que não acertar nas previsões é algo “comum entre quem faz previsões”.

Na verdade, esse é também o caso da Consensusb Economics, que reflete a média das expectativas de previsores privados para 44 economias. Comparando os dados, “há um padrão que é surpreendentemente comparável” entre FMI e Consensus Economics no que toca ao sucesso das previsões: esta última apenas conseguiu prever duas de 75 novas recessões nas suas previsões (sem contar economias que já se encontravam em recessão), segundo as contas da instituição liderada por Christine Lagarde.

Já a prever abrandamentos da economia, “as previsões do WEO fazem um trabalho de alguma forma melhor”. “Entre 1991 e 2016, abrandamentos económicos ocorreram em cerca de metade do tempo e cerca de metade dos abrandamentos foram previstos com precisão”, sublinha o FMI.

Mesmo em 2009, após a falência do Lehman Brothers, o registo revela uma maior eficácia das previsões dos técnicos do FMI quando se trata de prever abrandamentos da economia: três quartos dos abrandamentos registados naquele ano foram efetivamente antecipados pela instituição.

“Resumindo, as previsões do WEO revelam um melhor desempenho na antecipação de abrandamentos económicos do que na antecipação de recessões”, diz o FMI. “Mas o registo histórico deixa muito espaço para melhoria em ambos os casos e os erros de previsão durante episódios de abrandamentos severos são grandes”, reconhece.

No WEO hoje publicado, o FMI aponta para um crescimento de mundial de 3,7%, tanto para 2018, como para 2019, uma revisão em baixa de 0,2 pontos percentuais face às previsões feitas em abril. Entre os vários países para os quais o Fundo apresenta previsões, apenas uma mão cheia deverá registar uma contração da economia este ano e no próximo: Venezuela (-18% em 2018 e -5% em 2019); Argentina (-2,6% e -1,6%); Porto Rico (-2,3% e -1,1%, respetivamente); Irão (-1,5% e -3,6%) e Sudão (-2,3%este ano e -1,9% no próximo). De frisar que, para este ano, a instituição liderada por Christine Lagarde prevê que a economia angolana registe uma quebra de 0,1% depois da contração de 2,5% de 2017. Mas para o próximo ano, Angola já deverá crescer (3,1%).

(OBS) Nobel da Economia de 2018 vai para os norte-americanos William Nordhaus e Paul Romer

(OBS) William (“Bill”) Nordhaus foi premiado pela pesquisa sobre o tema do impacto económico das alterações climáticas. Já Paul Romer concentrou-se no estudo de como a tecnologia influencia o crescimento.

O prémio de Ciências Económicas em Memória de Alfred Nobel, mais conhecido por “Nobel da Economia”, foi atribuído nesta segunda-feira aos norte-americanos William Nordhaus e Paul Romer, anunciou a Real Academia Sueca das Ciências.

William (“Bill”) Nordhaus é um dos académicos mais respeitados na área da economia ligada ao meio-ambiente e, em particular, às alterações climáticas. Já era visto, nos últimos dias, como um dos mais prováveis vencedores, pelos modelos que criou e que calculam a interação entre a economia, o uso de energia e as alterações climáticas.

Em 1993, Nordhaus avisava que “a Humanidade está a arriscar a sua sorte na relação com o ambiente natural, através de uma multiplicidade de intervenções — injetando na atmosfera gases vestigiais como os gases com efeito-estufa ou químicos que libertam ozono, promovendo enormes alterações sobre o uso da territórios como a desflorestação, eliminando várias espécies [animais] nos seus habitats naturais ao mesmo tempo que criam espécies transgénicas em laboratório, e acumulando armas nucleares suficientes para destruir as civilizações humanas”.

Já Paul Romer, que foi economista-chefe do Banco Mundial, é sobretudo conhecido por ter formulado a teoria do crescimento endógeno, decisiva para “integrar a inovação tecnológica na análise macroeconómica de longo prazo”, afirma a Real Academia Sueca das Ciências. Em chamada telefónica audível na cerimónia de entrega dos prémios, Paul Romer também respondeu a questões ligadas às alterações climáticas e salientou que “o problema que temos hoje é que as pessoas pensam que proteger o ambiente vai ser tão difícil e tão oneroso que preferem ignorar o problema e fingir que não existe”.

Romer garantiu, na mesma conversa, que não estava à espera de receber o prémio — de tal forma que ignorou duas chamadas telefónicas ao início da manhã, que eram da academia mas que Romer achou que deviam ser “chamadas de spam“. O académico demitiu-se do Banco Mundial, no início deste ano, depois de ter dado uma entrevista ao The Wall Street Journal onde deu a entender que as inclinações políticas dos técnicos do banco estavam a ter uma influência indesejável na preparação dos rankings mundias sobre os países onde é mais fácil ter negócios.

The Nobel Prize

@NobelPrize

BREAKING NEWS: ⁰The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2018 to William D. Nordhaus and Paul M. Romer.

O prémio, que foi entregue pela primeira vez há exatamente 50 anos pelo banco central sueco (que financia o prémio), não é formalmente um Prémio Nobel — como são os prémios para a ciência, a paz e a literatura (que este ano não vai ser entregue). Mas é a distinção mais prestigiante que um economista pode receber — e, além do prestígio, o vencedor ganha um diploma, uma medalha de ouro e um cheque no valor de nove milhões de coroas suecas (cerca de 850 mil euros, a dividir pelos premiados nos casos em que o prémio é partilhado).

No ano passado, o premiado foi Richard Thaler, cujos estudos ajudam a perceber como o comportamento humano muitas vezes se desvia dos modelos teóricos.

(OBS) China confirma detenção do presidente da Interpol

(OBS) China confirma detenção do presidente da Interpol no país, Meng Hongwei, por alegada e “grave violação da legislação estatal”, noticiou o diário South China Morning Post.

LINTAO ZHANG / POOL/EPA

A China confirmou esta segunda-feira (hora local, domingo em Lisboa) a detenção do presidente da Interpol naquele país, Meng Hongwei, por alegada “grave violação da legislação estatal”, informou o diário South China Morning Post.

Meng estava considerado desaparecido desde 25 de setembro, quando viajou para a China. Após vários dias de silêncio, a Comissão nacional de supervisão (o órgão anticorrupção chinês) informou num breve comunicado a detenção de Meng — que anteriormente ocupava a pasta de ex-ministro-adjunto para a Segurança Pública do governo chinês antes de ser nomeado como dirigente máximo da Interpol em novembro de 2016, assinala o jornal de Hong Kong.

No comunicado oficial não são indicados os motivos da detenção de Meng, nem se teria infringido algumas das normas do Partido Comunista, a forma de a Comissão nacional de supervisão indicar os supostos casos de corrupção que submete a investigação.

Segundo o periódico, em 30 de setembro decorreu uma reunião de altos dirigentes do Partido Comunista chinês na qual o ministro da Segurança Pública, Zhao Kezhi, forneceu detalhes de uma conversa que manteve com Ding Xuexiang, chefe de gabinete do Presidente chinês Xi Jinping, e onde manifestou a urgência em reforçar a vigilância contra a corrupção.

Por sua vez, a mulher do presidente da Interpol disse hoje acreditar que o seu marido está em perigo e pediu à comunidade internacional que intervenha para clarificar o seu paradeiro. Grace Meng promoveu uma conferência de imprensa num hotel de Lyon, em França, onde se encontra a sede da organização internacional de polícia, para explicar que recebeu duas inquietantes mensagens ‘sms’ do seu marido em 25 de setembro, e desde então não tem notícias suas.

Na primeira mensagem, Meng pedia que “aguardasse a sua chamada”, e mais tarde chegou outro ‘sms’ com um ‘emoticon’ que representa uma situação de perigo, segundo o diário local Le Progrès. A mulher leu uma declaração em chinês e inglês na qual também exorta a comunidade internacional a intervir no caso, para que seja desvendado o que aconteceu ao seu marido.

O secretário-geral da Interpol, o alemão Jürgen Stock, pediu à China no sábado que clarifique o paradeiro de Meng, que desapareceu pouco após chegar ao seu país. Stock aguarda “uma resposta oficial das autoridades chinesas” que esclareça as preocupações que suscitou o desaparecimento de Meng, que segundo a imprensa do seu país estaria detido e sob investigação, uma informação que acabou por ser confirmada.

A procuradoria de Lyon abriu na sexta-feira uma investigação sobre o desaparecimento de Meng, que segundo diversos media de Hong Konh estaria a ser investigado como antigo responsável do governo chinês e poderá ter sido vítima de uma purga interna do regime. Apesar de ser um cargo essencialmente honorífico, a designação de Meng foi muito criticada por organizações de defesa dos direitos humanos.

(ZH) IMF’s Lagarde Warns “Clouds On Horizon Have Materialized”, Global Growth To Slow

(ZH) IMF Managing Director Christine Lagarde just stole the consensus jam out of the global recovery donut, warning during a speech in Washington that trade wars and tighter credit are dimming economic outlooks, signaling that her outlook for 3.9% growth may be overdone.

The fund will update its World Economic Outlook on Oct. 9 ahead of opening its annual meeting in Bali, Indonesia.

“Six months ago, I pointed to clouds of risk on the horizon,” Lagarde said, according to her prepared remarks.

“Today, some of those risks have begun to materialize.”

One glimpse at the collapse in global economic data and it’s perhaps more than obvious that consensus needs some adjustment…While Lagarde acknowledged the global expansion is still the fastest in seven years, recent data suggest a cooling.

As Bloomberg reports, Lagarde said protectionist rhetoric was turning into “actual trade barriers,” spreading uncertainty among businesses and consumers. A strengthening U.S. dollar and tightening financial conditions have increased challenges for many emerging markets, she said.

Specifically, Lagarde called on countries to resolve their trade disputes, warning that the fracture of corporate supply chains could have “devastating” effects.

“History shows that, while it is tempting to sail alone, countries must resist the siren call of self-sufficiency — because as the Greek legends tell us, that leads to shipwreck,” she said, without naming countries that are putting up new barriers.

Additionally, Lagarde warned nations to guard against “fiscal and financial turbulence.” She said global public and private debt has reached a record $182 trillion, up almost 60 percent from 2007. Emerging markets and developing countries are being pinched as central banks raise interest rates in advanced economies, she said.

“That process could become even more challenging if it were to accelerate suddenly,” she said.

“It could lead to market corrections, sharp exchange rate movements, and further weakening of capital flows.”

And finally, in what appears to be a dig at President Trump, Lagarde urged world leaders to rebuild trust in institutions and policymakers…

“In too many cases, workers and families are now convinced that the system is somehow rigged, that the odds are stacked against them,” she said.

Ironically, she urged this rebuilding of trust while noting that since 1980, the top one percent of income earners have captured twice as much of the gains from growth as the bottom 50 percent.. but we should all trust them now…?

(PUB) Investigação sobre imunoterapia para o cancro vence Prémio Nobel da Medicina

(PUB) James P. Allison e Tasuku Honjo descobriram novas formas de bloquear os travões do nosso sistema imunitário que se revelaram muito eficazes no tratamento do cancro. “Um novo paradigma na luta contra o cancro”, considerou o comité do Nobel.

O prémio Nobel da Medicina ou Fisiologia de 2018 foi atribuído aos investigadores James P. Allison e Tasuku Honjo pelas descobertas relacionadas com o papel do sistema imunitário na luta contra o cancro, anunciou esta segunda-feira o comité do Nobel no Instituto Karolinska, em Estocolmo (Suécia). O prémio tem um valor de nove milhões de coroas suecas (cerca de 871 mil euros).

“O Prémio Nobel deste ano assinala um marco na luta contra o cancro”, anunciou o comité do Nobel esta segunda-feira, acrescentando que as investigações dos dois laureados representam uma mudança de paradigma. “É um princípio totalmente novo. Neste caso, em vez de ter como alvo as células cancerosas, estas abordagens usam os travões das células do nosso sistema imunitário para travar o cancro.” A descoberta feita pelos dois laureados do Nobel da Medicina aproveita assim a capacidade do nosso sistema imunitário de atacar as células cancerosas estimulando-o e bloqueando os “travões” das células do sistema imunitário, os linfócitos T. Com este bloqueio dos travões, o sistema imunitário acelera, investindo rapidamente nas células cancerígenas.

PÚBLICO -

Foto
Tasuku Honjo, um dos premiados com o Nobel da Medicina de 2018, rodeado pela sua equipa assim que soube da distinção DR

O norte-americano James P. Allison estudou uma proteína, a CTLA-4, que funciona como um travão no sistema imunitário, e Tasuku Honjo, da Universidade de Quioto, investigou uma outra proteína, a PD1, e mostrou que ela também funciona como um travão, mas com um mecanismo de acção diferente. Usando estas duas moléculas é possível bloquear os travões e fazer com que o sistema imunitário ganhe em força e velocidade. As duas terapias, que se complementam, mostraram-se surpreendentemente eficazes na luta contra o cancro, com resultados comprovados em tumores como o melanoma, cancro dos pulmões e dos rins.

“Até as descobertas feitas pelos laureados da Medicina de 2018, o progresso no desenvolvimento clínico foi modesto”, considerou o comité, sublinhando que são os “resultados fantásticos” das investigações que justificaram a escolha. A terapia de controlo (checkpoint) imunitário, como é conhecida, revolucionou o tratamento do cancro e mudou fundamentalmente a maneira como encaramos esta doença.

Por volta das 9h30 da manhã, foi publicado um tweet na conta do Prémio Nobel que anunciava que o vencedor já tinha sido escolhido. “Alguém está a receber notícias emocionantes de Thomas Perlmann, o secretário-geral do comité do Nobel.”

Em 2017, o Prémio Nobel da Medicina ou Fisiologia foi atribuído a três cientistas norte-americanos, Michael Rosbash, Jeffrey Connor Hall e Michael Warren Young, por descobertas sobre os mecanismos moleculares que controlam o ritmo circadiano.

(MW) A Hindenburg Omen is forming in the stock market. Should investors ignore it?

(MW) More new lows than new highs despite big gains in the market indexes warns that breadth is deteriorating

Courtesy Everett Collection
HINDENBURG, Burgess Meredith, Anne Bancroft, William Atherton, 1975

MARKDECAMBRE

The Hindenburg Omen is materializing in the stock market, raising hackles among some market participants who closely watch for patterns that may portend ill for a stock market that has been knocking on the door to fresh highs.

Named after the German dirigible that notoriously exploded in 1937, the Hindenburg Omen is formulated to predict market crashes, or severe downturns, by synthesizing data, including 52-week highs and lows as well stock moving averages on the New York Stock Exchange. It was created by Jim Miekka, a blind mathematician, marksman and teacher, who died about four years ago. Miekka claimed that his indicator had been an accurate predictor of every market crash since 1987 on.

But as a number of market participants have noted, an appearance of the so-called Hindenburg Omen, hasn’t always resulted in an unraveling of the equity market.

A jump in the number of stocks hitting 52-week lows and highs on the New York Stock Exchange has been a key feature, among others, used to calculate the bearish pattern. Jason Goepfert, president of Sundial Capital Research, highlighted in a recent note cited by Bloomberg News that he has observed a clutch of such high/low moves on the NYSE and the Nasdaq, which can signal a degree of market indecision that can result in a broader market break down.

On Sept. 11, for one, there were 121 new 52-week lows put in on the NYSE, compared with 95 highs, Dow Jones market data show, despite healthy gains in the major market indexes.

A market’s propensity to produce more new lows than new highs suggests that market breadth is deteriorating, which can also be interpreted as a warning sign in stocks.

TimeS&P 500 IndexNov 17Jan 18Mar 18May 18Jul 18Sep 18

US:SPX
2,5002,6002,7002,8002,9003,000

Bearish market predictions come as the S&P 500 index SPX, +0.00% is within shouting distance of a fresh record above 2,914, while the Nasdaq Composite Index COMP, +0.05% and the Dow Jones Industrial Average DJIA, +0.07%  have been in an uptrend, albeit a tenuous one that has been vulnerable to rhetoric related to concerns centered on trade relations between the U.S. and China.

The Hindenburg Omen, however, has produced a spotty record, lately.

Prominent technical analyst Tom McClellan told MarketWatch’s Tomi Kilgoreback in 2014 when another Omen appeared that “there are far more Hindenburg signals than there are scary declines.”

McClellan told MarketWatch on Friday that he has seen a cluster of 7 Hindenburg instances, including on Friday (before the close), in which 52-week highs and 52-week lows were more than 2.8% of the total of advancers plus declining shares, one key feature of the omen (see chart below):

McClellan told MarketWatch that such clusters “matter more than individual signals.”

However, he said “they are not a guarantee that trouble has to come, just a warning that things are getting hinky in a way that has mattered before.”

Hindenburg Omen back in August of 2017 formed and was spotted by Goepfert but didn’t amount to much either.

Mark Arbeter, technical analyst at Arbeter Investments LLC, said more context is usually required to genuinely interpret the bearish-sounding formation.

Arbeter wrote in a research note on Sept. 13:

It seems like spurious reasoning to me that if there are a fair amount of new highs as well as new lows, that this is bearish. There can be instances when the overall market is doing well and one sector is really weak, leading to many new 52-week lows. It happens as each individual sector is driven by its own fundamentals. Now if we see many stocks from many sectors hitting new 52-week lows, then there might be trouble ahead.

Miekka recommended caution when thinking about his own indicator, likening it in a 2010 interview with The Wall Street Journal before his death to “sort of like a funnel cloud.” He said “it doesn’t mean it is going to crash.” However, he suggested that there may be a high probability that the market is headed for a fall. “You don’t get a tornado without a funnel cloud.”

Sometimes it is hard to ignore such patterns like the Hindenburg or the Ohama Titanic Syndrome but they have thus far been poor predictors of stock-market collapses. To be sure, even a broken clock is right twice a day.

(Zeit) A System for the Elite

(Zeit) The financial crisis of 2008 was no fluke and today, little has improved. Bankers and investors are still driven by the same ideology that led us over the cliff.

Financial Crisis: An investor looks at screens showing stock market movements at a securities company in Beijing.
An investor looks at screens showing stock market movements at a securities company in Beijing. © Wang Zhao/AFP/Getty Images

To mark the anniversary of that once-in-a-century event, features, analyses and retrospectives abound: How did it happen? Have we learned our lessons? Can it happen again? These are all valid questions. But Lehman is just a symptom of a much deeper systemic crisis. A crisis that began long before Sept. 15, 2008, and which continues today. It is the cause of growing social inequality and acts as a brake on both groundbreaking innovation and on efforts to combat climate change.

It makes sense that the 2008 financial crisis and the Lehman bankruptcy are seen as exceptional. The events were so dramatic that Hollywood – otherwise not known for its interest in credit default swaps and mortgage-backed securities – produced more than a half-dozen films about the crisis, casting stars such as Brad Pitt and Matt Damon. From the 2010 film “Inside Job” to the cult German series “Bad Bank,” blame was universally assigned to greedy, unscrupulous bankers and the impenetrable products they were selling. It was a narrative that played into the hands of the financial industry. After all, if the crisis had been caused by moral failings and the incompetence of those involved, then it made no sense to call the system itself into question. In other words, 2008 was simply a vast blunder that could be rendered unrepeatable with a few more rules. Wrong.

The ideology that led to Lehman and, ultimately, to the social and political upheavals we are witnessing today, remains unchanged among bankers, executives and investors. It became part of the broader public conscience over four decades ago. In the mid-1960s, future Nobel Prize laureate Milton Friedman said that business has just one social responsibility, that of using its resources to increase its profits. Friedman was reacting to a movement that demanded more social responsibility and commitment to the environment from large corporations like General Electric. Such demands, Friedman wrote in his famous 1970 article in The New York Times, are akin to “pure and unadulterated socialism.”

Friedman’s essay struck a nerve among investors. At the time, corporate America was mired in a crisis. As a consequence of Japan’s rise, American manufacturers suddenly found themselves confronted by strong competitors on the domestic market for the first time. Furthermore, the oil shock and resulting inflation had pushed living costs through the roof and labor unions, which were still powerful at the time, were demanding higher wages to compensate. Companies reacted with a wave of mergers and acquisitions, resulting in bloated conglomerates that largely failed to generate the profits they had promised. Stockholders were unhappy. Inspired by Friedman’s theories, an army of consultants got to work sanitizing and optimizing underperforming companies on behalf of their shareholders.

Today, the fixation of managers and shareholders on profit maximization and endless cost-cutting has become so widespread and internalized that it seems as though there has never been a different approach to capitalism – as though the doctrine of shareholder value was an original component of the system. Other standpoints, such as that of management guru Peter Drucker, who argued that customer satisfaction and constant product improvement was a company’s core task, have been shoved aside. The creation and preservation of jobs have also had to subordinate themselves to the interests of capital.

Professors from renowned business schools and universities rubberstamped the new reality. Shareholders could demand compensation, according to the academic justification, because they were the ones bearing the investment risk. But the British economist Colin Mayer argued that employees, customers and suppliers contribute more to a company’s success than is reflected by their contractual obligations. And in contrast to shareholders, who are generally able to sell their shares, these investments cannot be quickly turned into money.

Taking Out as Much as Possible

One reason the doctrine of shareholder value was so widely accepted is because it is so advantageous to the wealthy, influential elite. They, after all, make up the majority of the shareholders. Company executives, of course, are merely employees as well, albeit highly paid ones. But to ensure that managers and shareholders agree on the appropriate strategy, senior managers receive a significant percentage of their compensation in the form of stocks or stock options and their success is measured by the rising value of the company’s shares. The result has been exorbitant executive salaries. In the United States, a CEO now earns 140 times that of an average company employee. Thanks to the growing ratio of stocks and options in executive remuneration, the gap between the top floors and the factory floor is growing in Germany as well. CEOs of companies listed on the DAX, Germany’s blue-chip stock index, earn an average of 71 times what employees in their company do, according to a study conducted last year for the Hans Böckler Foundation. An all-time high.

The misguided dogma of shareholder primacy drives managers to constantly and ruthlessly look for ways to increase shareholder value, argued American corporate law scholar Lynn Stout, who passed away earlier this year. In the pursuit of that mission, she said, they sell business units, lay off long-time employees, skimp on customer service and cut R&D investments. The financial crisis is a consequence of this thinking.

Until the early 1970s, investment banks were prohibited from becoming publicly traded companies themselves, instead being organized as partnerships, with partners sharing both profits and risk. If one partner lost money in a risky deal or damaged the firm’s reputation with its clients, then they had to answer to the other partners. Short-term profit scraping at the expense of long-term business relationships made little sense because partners had invested their own capital and couldn’t extract themselves overnight. Once the rules were changed, though, large Wall Street investment firms started going public. It was an extremely lucrative step to take. When Goldman Sachs became one of the last investment banks to become incorporated in 1999, the shares that the 221 partners received had a value of $16.5 billion.

No Role for Jobs

Investment bank partners instantly became executives and major shareholders, which changed the culture. Now, the focus became that of driving stock prices up as far as possible. Suddenly, it made sense to take on $35 in debt for each dollar in capital and to use that money for speculation. It became OK to sell mortgage-backed securities to pension funds – knowing full well that they would very likely implode. It is difficult to imagine partners, whose own money was on the line, willingly going along with such excesses. It’s not that they weren’t interested in generating the highest profits possible. Nobody goes to Wall Street to indulge in altruism. But partners would have been more likely to recognize that short-term profits would come at the risk of painful losses on the long-term.

The shareholder-value doctrine has also become ensconced in Germany. These days, the majority of the shares of DAX-listed companies belong to foreign investors, and most of those are from the Anglo-Saxon world. According to a study conducted this spring by the consulting firm Ernst & Young, that number is fully 70 percent for companies like the Deutsche Börse Group, Adidas, Bayer and Infineon. The rising importance of foreign investors has an influence on corporate strategy, Ernst & Young notes. That influence can be seen, the consultancy says, in the sale of large business sectors, significant acquisition activity and “profound changes to structures and business models.”

Hedge funds have also become increasingly active in corporate Germany. They are the absolutists among the shareholder-value adherents: Their one-and-only goal is its maximization. Once they have secured a sufficiently large stake in a company, they push management and the rest of the shareholders to squeeze as much out of the company as possible. A current example is ThyssenKrupp, where the American hedge fund Elliott is pushing for the company to be dismantled. The New York-based hedge fund cares nothing about the jobs that might be lost in German steel factories and the consequences of steel mill closures on the communities where they are located is not a concern either.

Companies as Cash Machines

But when it comes to the most dubious practices associated with the shareholder-value doctrine, stock buybacks are high on the list. The practice involves publicly listed companies buying up their own shares, artificially creating demand and thus driving up the stock price. It also reduces the supply of shares in circulation. The result is that key indicators like earnings per share, which financiers use to decide where to invest their money, look more attractive – on paper, at least. German companies also engage in the practice. This year, they will spend more than 10 billion euros on stock buybacks, almost twice the amount earmarked for the practice last year.

The justification often put forth for stock buybacks is that companies should distribute money to their shareholders if they have no urgent need for it themselves. Given the advances currently being made in artificial intelligence, digitalization and automation, however, it is difficult to imagine a situation where companies are unable to find any future-oriented project in which to invest their money. It gets even more absurd when stock buybacks are financed via the issuing of new shares, which is not an uncommon practice. It essentially turns the principles of capitalism on their head. Investors are no longer lending money to a company so that it can create goods and services. Rather, the company is transforming itself into a cash machine.

It’s Time for a New Doctrine

The private equity firms on Wall Street have transformed the debt-to-profit alchemy into a business model. They are fond of claiming that once they buy a company, their goal is to restructure it and improve efficiency before then selling it onward at a profit. Consistent with the shareholder-value doctrine. In fact, though, they buy the companies with the help of junk bonds for which they carry no responsibility. Rather, the company they buy is on the hook for that debt. And instead of waiting for a successful post-restructuring resale, they increasingly demand the payment of premature dividends. Under the weight of such a debt load, many companies find themselves unable to compete.

The best example is the bankruptcy of Toys “R” Us. After the toy store chain was bought up by three private equity firms – including KKR and Bain Capital – its debt grew to $5 billion. As a result, Toys “R” Us was forced to pay out $400 million per year in interest – leaving little left over for the battle against the new competitor on the block, Amazon. In June, the company closed its last store and 30,000 employees lost their job.

The shareholder-value doctrine is not a law of nature. The time has come to replace it. With ideas that ensure that executives and companies care just as much about their employees and the community at large as they do about their investors.