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
- Foreign Affairs describes how AI can distort decision-making processes and enhance structural cognitive biases among political leaders and institutions.
- Japan’s Minister for Digital Affairs has declared a war on the use of floppy disks for Japanese governmental procedures – which are still required as a submission medium for at least 1,900 types of applications.
- The Federal Reserve in Minneapolis tells the truth about Central Bank Digital Currencies … they’re useless.
- The excellent Francine McKenna of Re: The Auditors takes a closer look at the Tether accounting debacle.
- 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:
- Sarah Palin loses Alaska’s only US House seat, marking the first Democrat victory for the seat in the state in over 50 years.
- The chairman of Russian oil producer Lukoil, Ravil Maganov, died on Thursday after falling through a Moscow hospital window.
Accident or defenestration? Ravil Maganov is but one example of the many recent sudden and unexplained ends that have met many Russian businessmen. Rumours online indicate Lukoil had recently posted a statement claiming “we stand for the immediate cessation of the armed conflict”. However, this statement was made in March 2022. Curiously, the incident occurred roughly the same time that Putin laid flowers for Gorbachev at the Central Clinical Hospital of Moscow. – DGG
- Impressive drone footage of a short-range engagement between Ukrainian and Russian fighters, with no apparent casualties.
- China has been stockpiling food long before the Ukraine war broke out because it realised long ago that the age of abundance and easy living was coming to an end.
- Japanese Defence Minister requests an 1.1 per cent increase in the defence budget for the fiscal year 2023, the largest ever budget request from this ministry. The request is the 11th such rise under the Liberal Democratic Party, formerly led by Shinzo Abe, until his tragic assassination earlier this summer.
- Germany is to expand its military presence in the Indo-Pacific to counter the “enormous” increase in Chinese forces in the region.
- Poland is seeking WW2 reparations from Germany.
It’s worth putting this in the context of Brussels still blocking Covid recovery funds to Poland over what some might call a subjective interpretation of the country’s judicial reform. – IK