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In the Blind Spot (Price Controls, Nationalisation, Perpetual Futures)

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This edition of The Blind Spot wrap was compiled by Dario Garcia Giner (DGG) and Izabella Kaminska (IK).

Econ, Finance, Business etc…

  • A Finnish company is warning that energy costs are leading to production stoppages and a potential toilet-paper shortage.
  • Commodity market expert Craig Pirrong offers policy makers a lesson on why price controls applied to a supply-side energy scarcity problem will only exacerbate the problem.

    As Pirrong notes: Price controls always exacerbate the scarcity and create actual shortages by encouraging consumption and discouraging production. They will necessitate rationing schemes. In electricity, rationing often involves brownouts and blackouts. Planned blackouts, such as no power availability at all for some hours of the day.

    Every policy maker should read this piece. I’m still shocked that this isn’t self evident to almost everyone. – IK

  • Reports on Wall Street Bets suggest that Bed, Bath and Beyond stock is being hit by purchasing limitations on the RobinHood platform.
  • Derek Thompson at The Atlantic¬†notes that the national teacher shortage narrative in the United States is not backed up by the numbers.
  • Bank of America announces zero down payment and zero closing cost mortages for first-time homebuyers of Black or Hispanic descent.
  • The two-year Treasury yield has touched 3.5 per cent for the first time since 2007.
  • China has been quietly shuffling sales of excess Russian LNG to Europe.
  • Is the mortgage market about to break?
  • Michael Pettis thinks countries friendly to Russia friendly will have to absorb the trade consequences of Russian mercantilist policies.
  • Can perpetual futures help the financial system generate the liquidity savings it needs?

    In my Bloomberg column, I argue that perpetual futures could be the smartest thing to come out of crypto. For more on how they came to be invented tune into The Blind Spot’s next deep dive which will be out this weekend. The piece features an exclusive interview with the contract’s inventor, Ben Delo, the co-founder of BitMEX, and explains in detail why the structure of the current intraday funding market is not fit for purpose. – IK

Cyber Talk:

Nationalisation Watch:

  • Allister Heath predicts mass socialisation and nationalisation of assets in Britain, but claims this is a shock win by Putin.

    Allister is right about a lot of things in this piece, but not that this should be treated as a shock win by Putin. Most of this was entirely predictable. What I don’t understand is why markets remain so calm vis-a-vis the prospect of the bulk of the European capitalist system being nationalised. Is this because we have sold ourselves the rope with which we are now hanging ourselves?

    Either way, it’s worth considering what the technical path to nationalisation might look like at this point. I personally see it as the great reversal of the Thatcherite privatisation process.

    Instead of a “right to buy” distressed homeowners and business owners will likely be given a “right to sell” their assets to the government in exchange for special conditions or discounts on rentals, which will over time become blurred with taxes. The remaining propertied classes won’t escape unscathed though. They’ll have to pay for it with increased wealth or property taxes. It really will be a great reset. It might even look something like this.

    Paul Mason, however, has some alternate views.¬† I don’t exactly agree. – IK.

From the Land of The Brave:

Geopolitical Pivots:

Troll Warfare:

  • Someone hacked #YandexTaxi and ordered all available taxis to Kutuzov Prospect in Moscow.
  • ICYMI: Senior RAF female recruitment officer resigns over diversity targets.

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