1/10

The latest IMF report on China was released yesterday and provides a lot of good information and intelligent insight on the Chinese economy. The IMF’s measure of China’s adjusted fiscal deficit (including estimated off-budget

1/9

Good article. But while growing international criticism and rising trade tensions may have had some impact, as the article suggests, I don’t think they really explain the great reversal in BRI lending of the past few years.

2/9

As I have been writing since 2011, China’s development lending was always likely to follow the pattern of other countries when they first “went out” (e.g. the US in the 1920s, USSR in the 1950s, Japan in the late 1970s). Because of little historical...

3/9

knowledge and no previous experience, an early rapid rise in development lending would be driven mainly by underestimating risk and an overestimation of their own business "success" in making loans, and would of course be further supported by geopolitical ambitions.

4/9

This combination would inevitably lead to bad lending decisions, followed just as inevitably by debt restructuring, loan losses, and a contraction in development lending. In the 1920s, for example, the US set off quite explicitly and aggressively to displace England in...

5/9

Latin America, and American businesses and banks assumed they “understood” Latin America much better than the English did, in spite of the vast English experience there, but their early displacement of British lending only resulted in the huge loan losses of the 1930s.

1/11

An article worth thinking about: “As changes to the world structure accelerate, China’s rule is in sharp contrast with the turmoil in the West,” says Beijing.

I agree, but I draw a different conclusion. The world is certainly currently

2/11

through "a period of turbulent change", in Beijing’s words, and great structural adjustments, but usually when that happens, what matters in the long run is not how stable a system seems but rather how successfully political, economic and social institutions adjust to...

3/11

the new conditions. In the past these adjustments have almost always been messy, chaotic, and disheartening to most, but ultimately they were necessary even if we were unable to judge them so at the time.

I would argue that the world today is undergoing both a reversal...

4/11

and rejection of the current model of globalization and an urgent need for most countries in the world, including China, to initiate a major rebalancing of the way income and wealth (and ultimately political power) is distributed, but there are few if any historical...

5/11

precedents in which this level of restructuring and rebalancing have been neat or orderly.

Beijing's response, which is to do whatever it takes to maintain stability, may look good in the short term, as this strategy always does, but if it prevents the necessary...

1/10

This is a really tough problem to resolve, especially if the massive increase in inflows from the trade and financial accounts are sustained, as I expect they will be well into 2021.

Clearly the PBoC would like to see the RMB gradually...

2/10

strengthen. This would keep financial markets stable and promote rebalancing, but the RMB has already strengthened a lot, and this puts unwanted pressure on exporters and “international circulation”.

Although PBoC reserves have been flat, other state-controlled Chinese...

3/10

banks have bought large amounts of dollars, but this is expensive. If these banks have half a trillion dollars of exposure, for example, they are losing at least $15-17 billion annually on negative carry, plus another $20-30 billion just this year from the rise of the RMB.

4/10

Beijing seems also to be trying other measures to slow the rise. The regulators are relaxing capital controls on outflows. In mid October the PBoC cut to zero the reserve requirement ratio for banks doing FX forward trading. This requirement was created in 2018 to reduce...

5/10

downward pressure on the RMB. In late October it suspended the counter-cyclical factor in RMB fixing, which was introduced in 2017 also to reduce downward currency pressure. But in both cases while the RMB dropped a few pips on the news, it quickly resumed its upward climb.

1/9

While debt-to-GDP ratios already have a limited but very misunderstood use, it seems economists are finding bright new ways of misunderstanding them. Now we say that when nominal interest rates are lower than nominal growth rates, the

2/9

downward pressure on the debt-to-GDP ratio makes rising government debt and larger government deficits more sustainable and more easily justified.

This is totally confused. When the nominal interest rate is lower than the nominal GDP growth rate, it only means that net...

3/9

borrowers are getting a disproportionate share of growth relative to net lenders. This in and of itself changes the comparability of the debt-to-GDP ratio, so the fact that the ratio may decline tells us nothing about its sustainability which, I'm glad to say, isn't...

4/9

a mistake Olivier Blanchard makes in this article.

At least three things matter. First, whether or not rising debt is sustainable depends almost wholly on underlying conditions in the real economy, and only trivially on the arithmetical relationship between...

5/9

the interest rate and the growth rate. Second, this approach simply assumes away financial distress costs, in which case debt capacity is infinite anyway and the interest rate becomes irrelevant. And third, it assumes that the nominal debt level matters independently...

1/16

It is a little frustrating to see the response many analysts had to the GDP growth data Chinese released today. These numbers aren’t especially good, and they certainly shouldn’t have been surprising. Back in April and May, when most

2/16

were projecting negative or barely positive GDP growth for China in 2020 (the OECD, for example, expected China’s GDP to contract by 3.7%), I insisted that GDP growth for 2020 would be positive, and probably between 2% and 3%.

Today, it was reported as 2.3%. How did...

3/16

I know? Because I knew that while most of the healthy sources of Chinese growth would contract (except for exports, which would expand given Beijing’s intense supply-side response to the impact of Covid-19), Beijing was going to respond to a significant...

4/16

worsening of the healthy parts of its economy by unleashing enough of the unhealthy, non-productive growth it has long tried to constrain – basically real estate and infrastructure investment – in order to achieve as much economic activity as it...

5/16

needed for domestic political ends.

And that’s exactly what happened. While GDP grew by 6.5% in the fourth quarter, even with substantial tailwinds its retail sales measure – a proxy for consumption – was only up 4.6%, and it was down 3.9% overall in 2020.

Today in pulp I look back at the world of Soviet women's fashion!

It's not all berets, but it mostly is...

Now you may think that fashion and the Soviet Union go together like Groucho Marx and Friedrich Engels. However that is to misunderstand the nature of the Commad Economy: if she commands it, you'd better buy it for her!

So there is a rich history of fashion and fun (along with the tractor factories and endless ballet performances) in the old USSR. Let's take a sashay along it...

At the start of the Soviet years women's fashion, let's face it, tended towards the functional. Red was popular, as were headscarves, hobnail boots and the ability to field strip a 3-line rifle.

But all that was about to change...

...because Russia had a new fashionista in charge: Stalin! He hated the peasant look of War Communism because it made socialism seem synonymous with poverty. He ordered Soviet Woman to spruce herself up.

President Muhammadu Buhari’s romance with Niger Republic has become an affront to the national interest of Nigeria. When he was sworn-in as an elected president in 2015 he went to Mamadou Issoufou’s presidential palace in Niamey, Niger Republic, to celebrate.

They gave him the reception of a conquering Fulani warlord: a white horse and sword.
I found that curious. How can a Nigerian leader celebrate his electoral victory in a foreign country and not Daura, his supposed hometown in Nigeria?

Answer has since been provided through Buhari’s policy actions in the past 5+ years. We have since learnt that Buhari is a first-generation Nigerian whose father, Ardo Adamu Buhari, a duck seller, had migrated from Niger, settled in Nigeria and married a Nigerian woman, Zulaihat.

The borders defined by the European colonial masters mean nothing to typical Northerners. When you hear that Nigerian borders are porous, what it really means is that there is no intention in the minds of Northern Nigerians and their elite to create an effective barrier between..

them and their kith and kin in the neighbouring countries of Niger, Chad and Northern Cameroun. Meanwhile, the Southern borders are strictly monitored (within the limits permitted by the selfish interests of corrupt Customs and Immigration officials).

How do you explain the Trinity in Chinese? If you're a Christian in Tang China, there's a few ways!

I'm @ChenHuailun, back for my last #Twittistorian thread, this time on translating the names of God in Chinese Christian documents. ~ahc #jingjiao 1/

There are two main writers/translators credited in the extant documents of the Christian (called 'Jingjiao' 景教 in Chinese) corpus of Tang China: Aluoben and Jingjing. ~ahc #jingjiao /2

Aluoben (阿蘿本) was said to have been the Persian missionary responsible for bringing Christianity to China, arriving in Chang'an in 635 and building a church there with 21 monks. ~ahc #jingjiao /3

'Observing the azure clouds, he [Aluoben] bore the true sacred books; beholding the direction of the winds, he braved difficulties and dangers.' - Xi'an stele ~ahc #jingjiao /4

Let's pause on this name, Aluoben (阿蘿本). Some translate it as 'Olopen.' Is it a Syriac name, perhaps a rendering of Yahballaha or Abraham? Or perhaps a Middle Persian name Anōš-ruwān (meaning immortal soul)? ~ahc #jingjiao /5

Those with a stated interest in heritage, like e.g.
@theSpurtle @NTBCC
may be interested to read our new section covering the extensive advice given to the Council & Developer by Historic Environment Scotland.

To save people having to read the whole thing here are a few key points. HES conclusion: "the proposed development would give rise to "adverse effects on the OUV of the Old and New Towns of Edinburgh World Heritage Site (WHS) & the setting of the Category A listed Royal Crescent"

Regarding the application brought forward HES "recommended changes to the design of the development which we consider would reduce and avoid the impacts described" (on the OUV of the WHS). These included reduced height.

However, even the 1st pre-application advice issued to the developer & Council said "On the northern part of the site.. six-storey blocks would constrain... views to the Crescent from the north… Reducing the height of the.. blocks…would… protect the WHS topography & townscape"

Then on another occasion "our clear preference would be for the consideration of alternative options for the footprint and massing of development in this area" Referring to the southernmost blocks nearest to Royal Cres

1/ By far, the biggest Ponzi scheme I've discovered until now was the diamonds one. In 2014, two years before other media and 3 years before prosecutors, I wrote stories about physical diamonds sold by 2 brokers through banks to tens of thousands of Italian investors.

2 / Diamonds were sold at constantly rising prices in a sort of linear progression, which wasn't related to real market prices. The prices were produced by the two brokers themselves, Intermarket Diamond Business (Idb) and Diamond Private Investment (Dpi), then published monthly

3/They published monthly table of their prices in markets pages on my newspaper, Il Sole 24 Ore, Italy's highest-selling financial daily. Then the 2 diamonds brokers cut the price tables from the pages and presented them to the public as "Il Sole 24 Ore records" but they weren't

4 / People were lured into the scheme with the promise of constantly revaluating physical luxury assets, easy to be hidden (a lot of diamonds were sold to tax evaders and probably gangsters). For just connecting their clients to the 2 brokers, banks earned 15-20% fees.

5 / The business throve thanks to a hole in Italy's financial regulations: diamonds weren't overseen neither by Bank authority Bank of Italy nor financial authority Consob. In two decades, the 2 brokers sold diamonds for 2/3 billion € proceeds.