Macroeconomics

Snippets on the big picture.

Macroeconomics

Panama Canal

  • Unprecedented drought in the Panama Canal is forcing some ships to offload 40% of their cargo.
  • It takes 200m liters of water per ship, that is pumped from Gatun lake.
  • Last year we had drought issues in the Rhine.
  • The coming El Niño weather pattern could lead to more issues for global transport supply chains.
  • Chart source: Tema ETFs.
Macroeconomics

Greece

  • The Greek economy is doing rather well, and starting to peel away in terms of growth.
  • Barclays, via FT Alphaville, argue it might be entering a third positive “megacycle”.
  • This analysis agrees – “Greece is growing, investment is booming, employment prospects are improving, the number of businesses is moving up, salaries are increasing, and the country is becoming less poor, not more“.
Macroeconomics

Kotkin on China and Communism

  • Kotkin is a scholar of Russia and the Soviet Union. Most famous for his three-part (only two are published so far) biography of Stalin.
  • In this interview, he turns his attention to China.
  • There are a lot of interesting points made here.
  • “There are two subjects at Party School that are absolutely dominant in the Chinese case. One is the supposed decline of the United States … But the other big subject — in fact, it’s an even bigger subject for them — is not having a Soviet collapse in China“
  • Interesting to read this together with Dalio’s latest on the US v. China.
Macroeconomics

America’s Protectionist Turn is at least 15 years Old

  • It didn’t start with the Inflation Reduction Act or Trump.
  • It started as early as 2008, and took the form, as this article identifies, of four key forces.
  • Things in global trade wars move slowly.
  • “If this analysis is correct, it should be clear that the American protectionist turn has been taken for a long time and will last long, as one doesn’t see the main forces that provoked it changing direction, starting with the desire to push China back.“
Macroeconomics

Setting Global Balance Scene

  • For every deficit there is a surplus.
  • Studying these global balances helps understand and predict where the stresses of financial systems build.
  • To this end, Brad’s re-opening post from November 2022 is a foundational read.
  • The short summary – deficits are back to pre-GFC highs, have concentrated in autocratic regime countries but with none of the historic reserve growth.
  • Prescient conclusion – “By implication, private financial intermediaries somewhere around the world will need to absorb Treasury bonds. Just as financial intermediaries globally had to absorb U.S. “subprime” (household) risk prior to the global crisis, now they have to absorb U.S. interest rate risk.”
Macroeconomics

Composition of EM Debt

  • “Just between 2000 and 2021, the share of public and publicly guaranteed external debt of low and lower-middle income countries (other than that held by IFIs) owed to bondholders jumped from 10 to 50 percent, while the share owed to China rose from 1 to 15 percent. Meanwhile, the share held by the 22 predominantly Western members of the Paris Club of official lenders fell from 55 to 18 per cent. Thus, co-ordinating creditors in a comprehensive debt restructuring operation has become far harder, because of their greater number and their diversity.“
  • Source.
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