EconVue Spotlight - April 2021

Images of the Ever Given container ship stuck in the Suez Canal have been ubiquitous over the past week.  Less discussed is the physics behind the accident. Most probably the culprit is something called the bank effect, the tendency of the stern of a moving ship to swing towards the near bank when operating in a constricted waterway, influenced by a host of factors but preceded by a "yawing moment" as the bow moves laterally.  

I'm neither a sailor nor an expert calculator of Euler angles, but we have all experienced the yaw, pitch and roll of a ship or an airplane during turbulence and have felt those first slight sideways motions that signal trouble ahead. 

Perhaps this incident resonated because it is so obviously symbolic of the times in which we now find ourselves. We seem to be moving ahead but then forward momentum is lost again. Infections rise in spite of a vaccine rollout that is no less than spectacular, at least in the US, as we wade into the unmapped and choppy waters of monetary and fiscal policy experiments. Markets are steaming ahead nevertheless. Consumer confidence is up, and people are making plans again. Spring is in the air, so who cares about the vanities of geometry? 

I'm beginning to think that this journey is going to take a lot longer than we now expect, and that we might not end up where we thought we were going. I've included some articles below that attempt to chart out this new future and that might challenge some of your assumptions. In particular, global public health is still at risk, and not just from the pandemic.

Next week marks the annual Spring Meetings of the IMF and the World Bank, virtual although I am very much hoping to attend the Fall Meetings in person. Mid-month, I will be doing a podcast interview with Paul Sheard, currently a fellow at the Harvard Kennedy School and formerly chief economist at Lehman Brothers, Nomura Securities, and Standard & Poor's.  On April 21st, I will once again be moderating for the CFA Society of NY, this time a panel provocatively titled "Infinite Intervention: Rates, Trade, and Economies in a Post-Recovery World"  featuring Suzanne Bishopric and Karen Petrou.

Finally, to end on a happy note this glorious spring weekend, the US March employment report was better than even the most optimistic forecasts. Chicago economist Mike Lewis offers his analysis below. 

Research from EconVue Friends & Experts

April 2, 2021/ FMI
March Employment: Exceptional Results on (Almost) All Fronts
Michael Lewis

In like a lion, and out like an even bigger lion. March jobs and vehicle sales surprised to the upside, even for those such as FMI who were expecting well-above-consensus gains. FMI is still expecting +6% real GDP growth for 21Q1 and +10% for 21Q2.

March 24, 2021/ Washington Monthly
$900 Billion in COVID Spending for Everyone is Just What the Economy Needed
Robert Shapiro

These massive fiscal and monetary interventions are as unprecedented as the sustained public health crisis that dictated them. Ironically, they accomplished their missions – and attracted the overwhelming public support they needed to pass — by not targeting their enormous resources. 

March 23, 2021 / Cuts ADDA
Current Situation in the US, What It Means for Asia and the World 
Marsha Vande Berg A question that bothers international audiences as well as those across the US is the extent of the divide in American society today. That was the topic of a recent conversation between India Ambassador Amit Dasgupta and Marsha Vande Berg. The conversation also highlights the evolving relationship between the US and India. (See other new articles by Marsha Vande Berg on the EconVue website.)

March 22, 2021/ Global Americans
China and El Salvador: An Update
R. Evan Ellis The country has achieved few of the trade or investment benefits it hoped for when it recognized the PRC in 2018, yet  behind the scenes, PRC influence has quietly been quietly expanding, with its companies poised to significantly advance their position as El Salvador recovers from Covid-19.

April 1, 2021 EconVue
Prima Facie, Biden Stamps Democratic Solidarity as the Nucleus of America’s Grand Strategy
Eleanor Shiori Hughes  For the time being, President Biden’s foreign policy agenda in advancing a rules-based international arena is prima facie centered on close and constant consultation with our allies and partners.

February 7, 2021
Why Bitcoin is Money-in-Waiting
Robert PringleBitcoin shows that a would-be form of money can still arise through private initiative. They were exchangeable at a fixed rate with the dominant state money. Bitcoin is a privately created, irredeemable electronic asset with claims to be money.  

U.S.

March 24, 2021 / Palladium
The End of Industrial Society
Samo Burja

Maybe the key to Robert J Gordon's productivity puzzle can be found in this thoughtful macroanalysis of the ebbing of the Industrial Revolution.

March 24, 2021 / Brookings
The Fiscal Policy Response to the Pandemic
Christina D Romer

The fiscal response to the pandemic will push the U.S. debt-to-GDP ratio from 79 percent before it emerged to 110 percent by the end of the 2023 budget year. And counting.

March 26, 2021 / National Review
Environmentalism, Infrastructure, and Inequality
Dan McLaughlin

Costs per mile of new interstate highways, for example, tripled between the 1960s and 1980s. One major culprit? New environmental rules passed in the 1970s gave wealthier communities more weapons to redirect infrastructure away from them and towards poorer communities, while imposing delays on the entire process.

March 9, 2021 / WSJ
China’s Rise Drives a U.S. Experiment in Industrial Policy
Greg Ip

U.S. push to incentivize domestic semiconductor manufacturing signals bipartisan embrace of industrial policy. Why now, after decades of markets deciding production location? In a word: China.

 February 9, 2021 / Science Magazine
U.S. rushes to fill void in viral sequencing as worrisome coronavirus variants spread
Meredith Wadman

US capacity is sidelined due to government  payment issues, creating unnecessary risks: The US is a sequencing superpower, but as of 7 Feb it ranks 36th in the world in sequencing SARS-CoV-2” meaning that COVID variants aren’t being routinely tracked. 

March 19, 2021 / Science Blog
Alarming Health Declining In Gen X And Gen Y, National Study Shows
Ohio State University

Recent generations show a worrying decline in health compared to their parents and grandparents when they were the same age, a new national study reveals.

April 2, 2021 / Journal of the American Medical Association (JAMA)
Excess Deaths From COVID-19 and Other Causes in the US, Mar 1 2020-Jan 2, 2021
Woolf SH, Chapman DA, Sabo RT, Zimmerman EB.

A study analyzing US mortality in March-July 2020 reported a 20% increase in excess deaths, only partly explained by COVID-19. Surges in excess deaths varied in timing and duration across states and were accompanied by increased mortality from non–COVID-19 causes.

World

March 19, 2021 / NPR
Next Pandemic: Scientists Fear Another Coronavirus Could Jump From Animals To Humans
Michaeleen Doucleff

Are we living in the new normal? Coronavirus pandemics might not be once in a 100 year events. ‘The next one could come at any time. It could come in 50 years or in 10 years. Or it could be next year.

March 2021 / National Bureau of Economic Research
Sovereign Debt in the 21st Century: Looking Backward, Looking Forward
Kris James Mitchener & Christoph Trebesch

The evolution of sovereign debt is key to the post-covid recovery: Will self-fulfilling panics, rollover crises and bank-sovereign “doom loops” become more pertinent? How will the rise of China & other emerging powers influence global debt markets?

 April 1, 2021 / The Scholar's Stage (Blog)
Welcome to the Decade of Concern

The 2020's aren't looking good.  Is a confrontation over Taiwan closer than we think?

March 25, 2021 / Bloomberg
Taiwan Central Bank Insiders Call for Overhaul of Dollar Policy
Argin Chang, Miaojung Lin and Samson Ellis

As their economies recover from the COVID-19, are other Asian central banks thinking about less focus on strong reserves? Unlearning the lessons of the Asian Financial Crisis. 

March 23, 2021 / Asia Power Watch
The governmentality of Taiwan’s anti-epidemic politics
Gunter Schubert

The subtleties of Taiwan’s biopolitical experiment, and an argument against declaring victory too soon anywhere.

Fintech & Technology

March 22, 2021  / American Purpose
Why Analog Is Better than Digital II: Losing Kodachrome
Francis Fukuyama

We are still living for the most part in a 20th century world in which we take the veracity of a photograph or video for granted. Imagine a world 20 years from now, however, in which producing a deep fake photo or video has become as easy as moving a Photoshop slider today.

March 15, 2021 / U.S. Securities and Exchange Commission
Remarks at the British Blockchain Association’s Conference
“Success Through Synergy: Next generation Leadership for Extraordinary Times”
US Security & Exchange Commissioner Hester M. Pierce

Hester Pierce might be the regulator who saves the US from falling behind in the cryptocurrency wars: The disproportionate focus on illicit uses and the underestimation of the protective uses of crypto is one example of how evidence-based rulemaking is not yet the norm in crypto-regulation.