Recommended Weekend Reads
March 31 - April 2, 2023
Here are our recommended reads from stories we saw in the last week. Also, our chart of the week on how Wall Street picked for March Madness. Let us know your thoughts and if you or a colleague want to be added to our distribution list. Have a great week.
· “China as an International Lender of Last Resort” Kiel Working Paper, Kiel Institute for the World Economy
This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. The authors build the first comprehensive dataset on China’s overseas bailouts between 2000 and 2021 and provide new insights into China’s growing role in the global financial system. Taken together, China’s overseas bailouts correspond to more than 20 percent of total IMF lending over the past decade, and bailout amounts are growing fast. However, China’s rescue loans differ from those of established international lenders of last resort in that they (i) are opaque, (ii) carry relatively high-interest rates, and (iii) are almost exclusively targeted to debtors of China's Belt and Road Initiative.
· “Visual Investigation: Inside North Korea’s oil smuggling: triads, ghost ships, and underground banks” Financial Times
The FT, working with the Royal United Services Institute (a UK think tank) offers a superb visual report created by reconstructing satellite imagery of how North Korea, working with business figures in east Asia who are linked to organized crime, run a massive and highly lucrative black-market oil smuggling business globally.
· “Decoupling, Dersisking, and Diversifying: Rethinking Russia, China and Global Supply Chains” by Daniel S. Hamilton and Joseph P. Quinlan, The Transatlantic Economy 2023
Geopolitical tensions, economic disruptions, and ongoing pandemic shocks have forced countries and companies alike to take a hard look at vulnerabilities and dependencies they had acquired during the go-go years of hyper-globalization. North Americans and Europeans are reconsidering their regional and global supplier networks. They are adopting new approaches to protect their societies and promote their competitiveness. While Russia’s aggression in Ukraine is creating headline disruptions, the deeper rethink centers around China, given U.S. and European concerns about inordinate dependencies on another potent strategic rival, and the country’s far greater importance as a critical node in global supply chains.
“Five years into the trade war, China continues its slow decoupling from US exports” Peterson Institute for International Economics
The US-China trading relationship was recently reported to have hit “record levels” in 2022, suggesting that the supposed economic “decoupling” of the world’s two biggest economies has not yet arrived. That widely reported data point was misleading, however. US exports to China, which cratered during President Donald Trump’s trade war of 2018–19, are continuing to suffer. China is now shifting some purchases of foreign goods away from the United States. Both have the same fear: that the other side will suddenly weaponize trade flows—cut off imports or exports—in the name of security. Trying to get ahead of that, each is now attempting to diversify.
Chart of the Week
Americans Pull Back from Values that Once Defined the US
A Wall Street Journal-NORC poll released earlier this week showed that patriotism, religious faith, having children, and other priorities that defined the national character for generations have plunged. The poll questions – which were first asked in a similar poll in 1988, show that only 38 percent of respondents said patriotism was important, down from 70 percent in 1988. Religion was down to 39 percent from 62 percent in 1988. Tolerance for others came in at 58 percent, down from 80 percent only four years ago.
The only priority that grew was money which came in at 43 percent, up from 31 percent in 1998. You can read the full poll report HERE.
