Wednesday, 16 April 2014

World Redux

World unchanged (per capita $ incomes ranked in 2019)
Despite a lot of hullabaloo on faster growing emerging economies overtaking much of the advanced "western" world in the media, academic, and professional circles, the latest IMF projections from April 2014 above do not give a much different picture from 2000; with the exception of recent entrants like Korea (through economic history's most successful growth spurt and development), and the oil-rich Gulf states.

And looking back to the 1980s, the rich economies have a subset of very rich which is also little changed (now measured above $50,000 per capita incomes). Above, the yellow highlighted are large rich economies and the green are smaller rich economies measured by population (Although below you will find Switzerland in the top 20 largest economies measured by size despite having a smaller relative headcount and generally reflecting the resilience and depth of her economy).

Heavyweight Champions (Nominal $ GDP in Billions ranked in 2019)
Above the impression is consolidated as those same yellow rich advanced economies take up all the top 14 ranks in 2019 alongside the "BRIC" economies. Red highlighted are the two poorer nations, India and Indonesia, that by the privilege of their sizable masses are included within the top 20. Even the US is growing as fast as China nominally over this period; albeit this is somewhat accounted by a depreciating renminbi and slowdown to 5-6% in real Chinese GDP. The measure by nominal than PPP is more conducive to macro analysis because the Dollar even by 2019 would be the established world reserve and trading currency.

One thing is clear, that to be rich and big, one must not just have a sizable population but one that is occupied in high-productivity and rewarding enterprises that are nurtured by a sound combination of private and public enterprises. Finally, the below figures ranks the upper-middle income economies, with similar demarcation by yellow and green indicating large and small economies. Quite possibly by 2025, Taiwan and Saudi Arabia could be considered into the Rich large economies group alongside then mature entrant Korea.

Middleweight Risers (per capita $ incomes ranked in 2019)

Monday, 23 December 2013

A Génération Perdue

Rebel with Cause
A form of irrational NIMBYism pervades Western Europe and the advanced world. A form that is characterized not just by wealth or income inequality but geographic and generational inequality. Many within Britain, for whom its lost empire and waning soft power is a boon for a redefined sense of pugilistic morality based on bank and immigration bashing, are becoming increasingly narrow-minded. This is seen namely through this current political cycle, where much needed infrastructure spending, long term investments, and ill-defined opportunity costs are spurring on a "Lost Generation".

génération perdue that lacks opportunities and realization of their potential, without being in want of ability, pervades the streets of our global cities. Organizations and institutions face a world that is stagnating and not growing. The effects of computing and globalisation peter to an end and a world that is financially restricted from borrowing and investing becomes one where the long term effects are ever disastrous.

This lost generation, who sought first-time employment at the crux of the US financial crisis of 2008-09, feel ever distant like the generation affected by war of a century earlier. The effects of financial liberalisation and the Great Moderation are not paralleled in the jobs they want for the skills they acquire or the life they wish to lead, similarly wanting material abundance and "want-satisfaction" as those of their parents. Transfer of wealth from the old to the young is considered political suicide as the young do not vote or debate economic policy where it matters, as was not the case following World War II when Bretton Woods was structured to inflate and crowd out debt incurred for global warfare.

In the coming century, if my fears turn out to be true, we may have avoided a repeat of the collapse into the dark of the 1930s but we will face a century of social and economic stagnation. Where without technological progress, the global economy would stagnate; protectionism would be rife; xenophobia and jingoism would be not uncommon; and dangers of warfare would be ever greater.

Tuesday, 10 December 2013

These Economic Times

Follow the Leader
To those who are somewhat literate in Economics, one suggests to keep observant in ways of Human Nature. For many disciples of this profession are now coming to realize that this subject is all but a science; a "dismal science" which ill-deserves that pseudo-scientific identity.

An ivory tower sits between the ideologues and the practitioners; like those before them, economists liked to make themselves separate from the irrationality that penetrated the other social sciences. For some, mathematics and rationality defined human behaviour and thought. How wrong they were when herds, like wildebeests, swept the financial plains in 2008.

In each circumstance which we reside there are discrepancies; human nature when it comes to trade is governed by the exceptional economy, or individual, that differs from the rest. Similarly, financial markets have a commonality whether it is the system that is used or the conferences attended, there would seldom be a distinct view that is justified on disparate precepts.

Friday, 27 September 2013

A Paradigm Shift to Nowhere

Magellan's flat world 
There seems to be an upswell of opinion as to the direction of the world economy; whilst theoretical physicists work in revealing the secrets of the universe at this particular stage of the Universe that is habitable to life.

When reading the FT or The Economist, one is of ever the reminder that earnings, profits, and growth are all restricted in the advanced world to a miserly 1-2%. Emerging Markets would always be forever emerging, they lack the resolve to sustain the living standards one would find in the advanced economies. But where we are at is in an era of permanent stagnation especially when there is little, if any, financial tweaking with the real economy as was predominant in the Great Moderation.

Without a foreseeable paradigm shift on a comparable scale to the Industrial revolution, or the first era of Globalisation, we are going to drift for evermore into a state of abyss. Technological breakthroughs have always created markets; where there are markets, are customer and entrepreneurs ever fine tuning old ideas or stabbing into the dark for new.

Wednesday, 3 July 2013

The Unrest

In our times 
It is a symbol of our times that unwavering nationalism boils into jingoism and fervent patriotism of the Westphalian nation state. A time of stagnation where growth is absent and future is hopeless to the masses.

Such is the vitriol that spouts and overflows, at times, into central London and is common to most nations that underwent a subsequent change into a 'mature' economy under the past half a century. A criticism against all that is different; namely, immigration of ethnicities, which previously would have shied away from such latitudes, poverty in resources, and an uncertain future.

Many who may not concretely see this in manifestation would understand that those who inherently belong to a certain land feel protectionist in their claims and scarce hopes. Britain, which never was hesitant to control the affairs of other lands, is presently in turmoil. A state ravaged in supposed debt, and fed by an all too eager central bank, is lacking purpose in its resolve and aim.

Friday, 14 June 2013

The Pursuit of All Things Unconsidered

Investment Mirage.
Pension funds the world over are in somewhat a bind. With demographic changes and working populations shrinking, a rising dependency ratio in some economies is spelling disaster for fund managers looking to bring their increasing liabilities in line.

This problem is particularly acute when bond yields are negative and equities rise with the vagaries of investor sentiment on Fed tightening and fiscal stimuli from Japan or the EU. As such, many of those who grow old and retire with thoughts of permanent tranquility, which was amiss during most of their working lives, will find themselves being returned less than the amount they had initially put into their pension pot.

This has led many fund managers to previously chase returns from emerging market indices and equities, with a side allocation made into alternatives. Increasingly many of them are overcome by anxiety attacks, and carelessly allocate towards short term Hedge Fund managers, with supposed alpha-generation traits, and bullish equity rides, that are nothing but ephemeral.

For those who wonder where might the pension community head in the advanced world, they need not look much further from what is going to be a dire decade of stagnating growth and emerging markets still being "emerging". Without breakthroughs that we saw with ICT, wars, and the sciences, it is unlikely fund managers' prayers would be answered and liabilities, measuring in the trillions, will steadily grow faster.

Saturday, 18 May 2013

A Night at the Opera

A Conductorless System
Sometime back I was accosted by an Investment Banker for questioning the morality of his trade; he said "we do what we have to do" to my question on the purpose of introducing so much complexity and opaqueness into a system which is essentially a transfer of money to more useful activities and creation of social value by oiling a machine that, albeit, becomes increasingly cumbersome with time.

Much of what the financial system does is concentrated in the hands of the very few; this inequality in itself is morally egregious when comparing to the ideals created from political speech and rhetoric, which one finds in the hands of ideologues and radicals.

The time we live in is unique; a period of history, following the end of the Cold War, that led to unprecedented freedoms to connect and trade. Creation of three billion consumers, who otherwise would be living in destitute agrarian poverty.

Unbeknownst to the hand of the social planner a market grew based on arbitrage and profit seeking in activities that were previously heavily regulated and preserved to the instruments of the state. Enterprise gave birth to platforms that enabled mobility on the internet, ownership of real assets, and a pursuit of individual goals aligned to those of society.

Where we found ourselves lost was in the mass upheaval of things that shifted wealth and money creation through an almost intangible system that sought to preserve the very credit binge that brought down the hubris of the finance industry.

Friday, 19 April 2013

Economics of Firing

From the Cesspool comes one

Managing businesses, private enterprises, and companies in a time of hard turmoil, when good opportunities are as scarce as good capital, is a challenge. It is difficult to let go of those who you may consider your friend or who you have worked with for some time. Such is the cruel world of competition and cut-throat evolution of markets and demands. Those who succeed are entrepreneurs and are able to identify market arbitrage and gaps that others cannot see.

The economics of firing ensures that the best or those who are able to execute on the most profit-making or valued activities are able to do so. In some economies, where labour laws are entrenched into the blood of their socialist constitutions, this proves to be difficult; companies struggle to compete internationally and, in the long term, slowly move towards liquidation.

Fluidity of labour markets lead to short term costs in personal loss and alienation for those trapped between employment but make sure that society and economy benefits from having the best and brightest in the roles deciding what the world looks like tomorrow.

Job security can be taken for granted; and when it does it leads to enormous repercussions on the health of the economy. Within generations such inefficiencies may not be too damaging, however intra-generational transfers of a lackadaisical attitude towards work and effort leads to stagnation. Thankfully we live in a world of two hundred odd economies, each with their own economic philosophies and each competing ferociously against each other to some extent and some ways.

Friday, 5 April 2013

Nuclear Terrorism

Let them eat cake
North Korea is hell bent currently on a nuclear raid to threaten the way we all live. It has been nearly seventy years since a nuclear bomb was used to detonate with intent an entire city, yet nuclear terrorism exists and leads to fear on whether investments can be made under a climate of safety and where down the road investors are able to secure the returns for their patience. South Korea is directly under the weight of its childish and maniacal neighbour, and suffers from it directly when it comes to turning it into a full-fledged advanced economy.

Any nuclear war would be catastrophic, beyond the worst nightmares, leading to collapsing agricultural production, global depression, and utter chaos on the financial markets and society. It would lead to a permanent scar on this generation. There is very little we can do to temper Kim Jong Un's conscience, but try we must. For his coterie of hawkish prampushers have the world in their hands as we proceed into some dark tempests. The costs of nuclear war are all too clear.

Friday, 22 March 2013

The Great Financing

Fjordnomics
Long term payoffs through investing are universally recognised to be sound methods in guaranteeing future generations are better off. After all, many of the revolutions in technology and society have been realised through locking up capital in fixed assets.

These days many Portfolio managers at large institutions follow strategies that incorporate diverse range of asset classes, namely a mixture of equities, bonds, and alternative assets. At the two extremes is an allocation defined by liquidity needs, as at public and private pensions funds, and long term inter-generational transfers through illiquid investments made most predominantly by governments, via sovereign wealth funds, and private funds such as university endowments.

Even within comparable institutions with similar defined needs there tends to be disparate visions on a sound portfolio allocation. The Yale university endowment fund allocates actively into alternatives, the likes of Private Equity, Hedge Funds, and Real Estate, whereas the world’s second largest investor, the Government Pension Fund of Norway, maintain a 60/35 allocation into equities and bonds; the latter, only in recent years, after persuading the Norwegian Central Bank, has apportioned 5% to alternatives, and that only in real estate.

As in much of private finance, strategies change and modus operandi differ with the regulatory and private mindsets of the game players through policy regimes; as demonstrated quite clearly by the end to the Great Moderation and the present beginning of what I will call the Great Rebalancing. Eventually, original research based on fundamental thinking, first mover advantage, and a sound Weltanschauung more than offsets the trepidation that one feels in entering this disclaimer-ridden profession.

Friday, 1 March 2013

The Strangelove of the Post-Cold War

Potemkin Carrier
Has globalisation put to death the threat of Superpowers' mutually assured destruction (MAD)? Not thirty years ago, we were in the midst of two remarkable ideologies in a full bull's lock against each other. Proxy wars fought by the Yalu, Mekong, and Nile rivers marked the attritional status quo. The Soviets and Americans were foes in all but name.

It seems so distant; yet to be entering this decade marked by the rise, or re-rise, of China as a communist capitalist market economy gives a sour but familiar aftertaste. The question is only when is the fall of the wall likely ever to be true for the politburo in China. QFIIs have only recently been endowed more quota to allow foreign institutions to enter China. Whether it as at the behest of doves at the PBOC or Ministry of Finance is only a fool's guess. We know so little about the Chinese minister of Finance, Xie Xuren.

Much of the nature of this rivalry will not be determined by the legacy of the Obama Administration or that of the early days of Xi Jinping but at the impending trade forums and get-togethers at the sides of the G20. It is unlikely we are ever going to be in a bind similar to that of the Cold War but neither are we ever likely to see a free trade zone between superpowers. The EU-US FTA is still in its infancy and is unlikely to be ever global unless much of the way we structure the global economy changes alongside its International Institutions.

Saturday, 16 February 2013

World War III

A web that weaves itself
As much of that has happened in history tends to repeat itself, albeit in disguises which reflect some level of progress but the constancy of human nature stays the same over time, we are within another decade that is all too eerily familiar.

Currency wars were prevalent and pervasive following 1929, it did not take too long before Britain was joined by the US, both reneging on the good faith of the gold standard which had underpinned the global economy upto then. Continental currencies like the Franc were faithful to their classic economic dogmas only to suffer from a prolonged slump. We are seeing much of the same, five years on from the near collapse of the financial system in the dark days of 2008 Q4 and 2009 Q1.

The Japanese, with the government of Shizo Abe back at the helm, are initiating a decisive policy regime of currency intervention. Nothing new, as the Bank of Japan at the initiative of the behemoth that is the Japanese Ministry of Finance, have intervened, nearly entirely, in the Yen/Dollar market since the early 1990s to the tune of nearly a trillion nominal dollars. This time is indeed different, as much of the advanced world has caught on to the malaise of stagnated post-modern growth that Japan has been cursed with for the past two Lost Decades.

Monetary experiments in printing the world's reserve currencies in order to stimulate one's respective economies have led to indirect currency interventions on the major currency pairs. All in the name of the zero-sum game of beggar thy neighbour. Such was the animosity economic policymakers engendered in the 1930s that populism fed into radical fringe prejudices which sprouted a vicious cycle of political isolation and acrimony leading eventually, but inevitably, to a global war. Let us hope such events do not repeat themselves in any guise whatsoever.

Friday, 8 February 2013

American Dream

Crossing the globe
These United States of America have taken an emblematic place in history since 1776, when these states declared independence; the first time in human history where an independent nation seceded from a dominant rising power.

Her politics, society, and economy continue to mesmerize all and sundry. The United States lays to claim that unique human balance where state wrests control to the individual. Via her institutions one is able to circumvent the powerful and sustain a generational upward movement towards progress whether be through the presidency, supreme court, or congress.

Her financial markets dominate and control those who care; her culture brings forth the best and worst of human experience through cinema, internet, and media; her society caters to all those who want to live in a meritocracy  And for these reasons, and more, the United States dominates all rankings, despite the partial and parochial constraints to her progress from generational prejudice to ill-recognition of Hispanic immigration.

Those who look at the relative demise of the United States forget that in absolute terms she will always punch above her weight; two-and-a-half centuries onwards, she produces and consumes more than any other state. Her accumulative wealth is more than much of the world combined and she strikes fear into any nation state with her eleven battle carrier groups and arsenal of warring machines, and federal discount rates[!].

Saturday, 2 February 2013

When I fell in love with South Africa

A Rainbow Nation?
This country of races sitting there under the southern sun aloof to the ravages of the rest of this dark continent is something of an allure to those who wish to study history through a lens. It is a nation, not thirty years ago, blighted by the worst recesses of human prejudice; an economic repression of an entire race in the favour of another. To quote her greatest writer, J.M. Coetzee, "English is an unfit medium for the truth of South Africa"; for the nuances of this nation of nations cannot be described in any language.

One cannot help but feel that South Africa is knit and kept together by the still overwhelming presence of Nelson Mandela, who through his struggle brought about reconciliation in spite of the retributive nature of some of his party, including the current president. Nevertheless, militant ANC members roost over the legislature and executive reins of governance and do so with disdainful corruption.

South Africa, for those who have lived there, is a land of abundant wealth. She has the culture, sport, and institutions to create a standard of living that is unparalleled in the rest of the continent. It is in cricket, compared to other South African sports, where gentlemen of all faiths and races come to play as equals and comrades from club level to test. It is a demonstration of that status quo that the current South African cricket team is unrivalled in world cricket, led by white Afrikaners, a devout sunni muslim, and mixed race cricketers.

Friday, 1 February 2013

Trading Advantage?

Irresolute or intemperate?
Of late I have been thinking of taking on a trading book with some prop money. What would be the purpose of this insane endeavour one may ask, and that by an economist too! In a world increasingly uncertain with Mideast unrest, Chinese slowdown, European stagnation, and US quagmire, what would be the point of risking one's capital for such a risky proposition?

To be above this all one requires a fundamental economic intuition that is based on social, political, and financial understanding on how markets behave. For instance, asset volatility is shrinking compared to 2012, increasingly allowing one to take advantage of option spreads; the Japanese are intervening on the Forex markets to depreciate the Yen; on the other hand, the ECB is relatively prudish in its monetary flexing compared to the Fed, BoE, and BoJ [let alone the PBOC], allowing us to short the latter.

Trading takes advantage of economic misinformation and the failure of the efficient market hypothesis so as to take leads to short term lucrative rewards. But the disclaimer should always be, and more so in these circumstances, "past performance is not indicative of future".

Saturday, 26 January 2013

Lies and Damned Lies

A slippery slope
It is somewhat shocking that the cost of borrowing for the US has fallen steadily since global financial liberalisation began in earnest in the early 1980s. Despite a few hiccups during periods of boom and credit binges as in the late 1980s, mid 1990s, and mid 2000s.

This graph [thanks to Abnormal Returns] truly does sum up the continual disequilibrium in the global economy. In financial economics, treasury yields have long been considered as the base to measure the all important risk-free rate of return; a rate which determines the riskiness of all others in relative measures to it, as in the standard CAPM framework. Lacking a better alternative in Europe or China, these bonds are still apex predators.

Nevertheless, it is a worrying sign that many investors, though individually concerned over the sustainability of such a system where cheap borrowing sustains intragenerational excess spending, collectively act, from pension funds to SWFs, as if there is an indefinite need to sustain allocation towards low-yielding treasury bills. Assumptions reliant on the supposed future nominal growth of the American economy and the ability of future generations to carry the burden of the current.

What is more concerning is the Fed's sustained asset purchases in the past five years will slowly inflate the US economy in a few years, not reflected in the present due to the negative output gap. If this occurs, the risk premium would be certainly higher than the last period of prolonged and deliberate debt reduction: following WWII in Bretton Woods.

Saturday, 19 January 2013

For Whom the Bell Tolls

A Museum of Anarchy?
In Zero Dark Thirty, a gripping war narrative on the elimination of the casus belli to the wars waged by the US across the world in the past twelve years since the horrific sequence of events played out in New England on that cloudless late summer morning in 2001, they show at the end an anticlimactic and a tired descent of US Seals into Abbottabad, Pakistan; a state so benighted by her own existence since 1947 that she has failed to ever become fully functioning. The film, however, brings to light much about Politics, and in particular Geopolitics, which can never be far away from economic policy.

Failed States unfortunately for historical, cultural, and societal reasons have occurred and will continue to occur. States are segmented bodies defined by geographic and labour immobility shaped by the path of history. Many arose out of the carving out of tribal and unworked land from Zimbabwe to Malaysia at the dawn of Colonialism. Some had the institutions to self-preservation, like the US, others, which includes most, found it difficult to cultivate the enlightened masses that engender growth.

The recent War on Terror has been a Pyrrhic victory for the US as it enters another cyclic trough of isolationism that came previously after the comparable exuberance of Korea and Vietnam. A cycle which is unlikely to repeat itself given the increasing hard power of other states, specifically Asian states, and a series of crippling financial crises since 2008.

Additionally, the United Nations experiment has been meek in mitigating, let alone preventing, state-induced famines, genocides, and wars. The World Bank and the IMF have succeeded to some extent in addressing the stark gap in global public goods which leads to universal healthcare, education, and development, but have lacked the firepower to act wholeheartedly. The twenty first century increasingly relies on regionalism and reversal of any neoliberal fantasies of global government, at least sadly in my generation.

Friday, 18 January 2013

Great Expectations

A Sage of Old
The Latin root Credere lays to birth both the word credit and credible. Such is the importance of trust within the financial system that the Bundesbank is presently moving all its Gold holdings under the Banque de France to Frankfurt. The credibility of Gold offered trust within the system to trade and to speculate, the latter which undermined the Bretton Woods System by 1971.

Credibility is akin to blind trust; trust underpinned by an aggregate and mutual understanding of a cooperative equilibrium which would be otherwise undermined without the conditions in place. As it is with our fragile financial system, trust has become a word of caution and rarity. With the lack of trust between borrowers and lenders, and third parties, we are in a state of unconquerable demise of Post Bretton Woods.

What was Post Bretton Woods? A period of unprecedented prosperity , in main between 1992 and 2007, determined by financial rather than real forces. Lacking the significant advances in macro inventions, much of society succumbed to the petty innovations in high-end finance that read most into an unsustainable real asset boom in many of the economies in the advanced world.

Monday, 14 January 2013

Oscar Posts of 2012

Here is a shortlist of my favourite Posts for the last year:

Friday, 11 January 2013

Death in the Afternoon

Une femme fatale 
Woe betide those who live through 2013! A year to spell ill for those living through its namesakes in other centuries. It is the mature teen years of the twenty-first century which we are now poised to fully enter. As tweenagers it is likely that problems of old become those of the new.

As a frantic push towards social modernity occurs in India, Google's Eric Schmidt is opening the DPRK, equity markets are rallying on Janus' blind optimism, and policymakers are awakening to the reality of stagnation in the advanced world, highlighted by The Economist's provocative cover. As ever, a false feeling of generational change lingers in the undertones of the media and blogosphere.

In yester years Individual greatness built upon a yearning to enter Investment Banking or the heights of commerce is leading to a half-hearted withdrawal, in the present, to self-reflection of society. The role of finance as a means towards accomplishing apparently perfect markets through arbitrage and rent-seeking is being revisited full throttle.

The lack of any better private alternatives in Investment Banking, reinforced with the recent retreat of J.P. Morgan leaving Goldman as the sole survivor of the original motley, brings to mind the transition which will rapidly sweep corporate finance in the next few years. For if globalisation is a word towards sweeping modernity, it is more so a word to encapsulate the revival of Asia. A supercontinent underlying the bedrock of much of human progress till the 19th Century until a distant peripheral island industrialised and ruled the seas.

However in Asia, we find ourselves in a cacophanic soup of entities; from resource-aplenty Kazakhstan and oil-rich Saudi Arabia, to market-autocratic China and populist India. If the world was Asia, she would be satisfied for its richness. Yet it is difficult to predict what will happen in this century given the vagaries of these economies and societies.

Friday, 28 December 2012

The Opening of India

A Lost Society
There is a current uproar in Indian society for its careless approach to women rights, which are so sacrosanct and upheld strictly by the law in most societies; this deficiency is most probably going to be strongly readdressed by the weak government of Manmohan Singh after the recent death of the gang-raped girl.

For India to exist as the centre of the motley of religions and cultures that so populate Eurasia, she lacks the access to change that is feasible in a homogeneous nation. India is a strictly conservative nation ruled by a gerontocratic elite, which served her ill when she was young in birth after 1947. However, she struck modernity too soon.

Lacking the commitment to the economic forces, that were coercing many a closed state after the breakdown of Bretton Woods in 1973, and gaining momentum with advances in financial arbitrage and information technology in the late 1980s and the collapse of the USSR in 1990, India is a lost soul. She was preemptively opened up when there was a concerted attack on the Rupee and Air India was airlifting Gold to London and Zurich in 1991.

Indian Society has not liberalised, comparable to its, still fragile, economy. She has not moved from the mores of ages past, superstitious rules and traditions, and religious fervour. India, for a lack of a better word, is stagnant. She has not come to appreciate, not western, but universal ideals in individual freedom and moral decency and the gang-rape of that innocent girl highlights this more strongly than ever.

Saturday, 22 December 2012

Twelfth Night

"The fool that eats till he is sick must fast till he is well"
In Twelfth Night Sir Toby, a connoisseur of rowdiness and carousing, famously says to a righteous Malvolio in retort "Dost thou think, because thou art virtuous, there shall be no more cakes and ale?". This attitude was not uncommon for those living in the advanced economies in the days of Chinese über-growth, perceived financial security, debt binges, and property bubbles. Days that occurred no less than six years ago.

Looking ahead to 2013, a foreboding year in the twentieth century which marked the end of La Belle Époque, I will give a brief summary of the winners (+) and losers (-) of the coming year:

G2 leaders (+)

With Xi Jingping in power for the next ten years of the People's Congress, consolidating the fifth generation of Chinese autocratic leadership, and Barack Obama, securing himself as the rare breed that is the Democratic two-term President, we will see the positive growth in the relationship between the two most influential nations of the 21st Century. Greater economic security and trade liberalisation for many decades to come rests on a predicted positive start in 2013 for these two administrations.

BRIC (-)

The three leading emerging economies, plus Russia, are naturally seeing faltering growth as their export markets fledge, but also through self-induced malpractices: overinvestment, in the case of China, fractious institutions, see Brazil, and political quagmires, to wit India, obstruct further progress and development in the BICs.

South Korea (+)

The rise of Gangnam Style has rehighlighted the South Korean economy as a bright spark in the global supply chains not just as a manufacturing behemoth but a soft knowledge economy. In stark contract to the poverty of its brethrens up north, South Koreans are prosperous due to the magnetism of their Chaebols, the classic copycat perfectionists.

Arts (-)

The Arts Council in Britain is retrenching its cuts to the provisions of theatre, opera, music, and other elements that are the hallmarks of a vibrant society. These government-led chops should be the last in line for the Arts provide some comfort to stagnated rich economies and the underemployed proletariat.

Infrastructure Assets (+)

With stricter capital rules on bank lending, increased investment into infrastructure assets through fund routes and direct will be the increasing norm. In particular when corresponding alternatives in fixed income and equities are yielding net zero returns. The world's largest investor, the Government Pension Fund of Norway, is already increasing its investments into real estate infrastructure to a target allocation of 5% by 2013.

Grand Old Party (-)

The disastrous election night of 2012 and the stranglehold of the party by anti-tax merchants like Grover Norquist is spelling the beginning of the end for the Republican party. A party so partisan that it is alienating the growing demographics in the Hispanic population and increasingly urban and educated masses. It is not the question of if Texas will turn blue, but when.

Austerity (+)

Misleading conclusions on macroeconomics and economic history are leading to experiments in debt management led by dropping fiscal policy altogether in Britain and soon in the US, as well. This will come at a time when the Fed, ECB, and the BoE are being pushed to the limits with their money printing facilities, and extra liquidity in the economy would have marginal effects without a supportive expansionary fiscal policy.

Global Economy (-)

All in all the IMF had been over-optimistic with recovery forecasts in 2012 and they will have similar sentiments for 2013. With much of the world slowing, for a lack of better policy coordination between the five major economic blocs: U.S., China, EU, Japan, and Britain, this drop in aggregate demand and growth would be much more perceivable next year.

Friday, 21 December 2012

My name is Ozymandias

Your Lyricist's hood
What makes a great city? A city reduced to its economic function is an agglomeration of heterogeneous agents operating in a tight-knit system. Great cities of the modern age are interchangeable and determined mostly by their financial prowess. The City of London maintains London into the stratosphere; and lacking competition between the 20th West and 40th East Longitudes from rival cities, London has the position as the intermediary between East and West secured for many more decades to come. London trading hours operate from 0800-1800 GMT, timing well for the beginning of Tokyo's Sushi and Big Apple's lobster lunches.

Cities such as the European centres of power and those of civilisational weight are the cultural and social heavyweights. But from Damascus to Tripoli, many of these previously great cities are at the clutches of kleptocratic regimes that presently dominate for a period of time in their once nothing but illustrious histories.

Cities draw the young and create men of those who were once starry-eyed and idealistic. Great Cities however are born out of the piecemeal progression of successive generations. They need not be large, great cities are at times composed of a few inhabitants relying upon their laurels of past glories to bring them to the fore.

Friday, 14 December 2012

God's Game

O Captain!, My Captain!
"I tend to think Cricket is the greatest thing that God created on earth...." said Harold Pinter, and so, in the experience of your author, we have the world reduced to leather against willow. A game of cricket is a test of character and duty, she lasts for five days at the highest level and once in Durban, albeit for the last time, she ended on the ninth day as the touring English side caught the boat back home.

Cricket is much more than a field and a narrow patch of grassless earth, she provides a Colosseum in which gentlemen, through what comes naturally, contest a game of attrition, with all but red in tooth and claw. Bowlers steam into deliver smoking cannon balls and spinning jaffas, batsman with armour and a wooden sword claw it alone and stand guard against the tempests ahead, and fielders with cunning wile and chase surround the action like a wake of vultures.

Those who play the game know of its trials and tribulations; she conquered the realms of the empire which were previously under the Union Jack. Britain embraced the entertainment of her proxy colonial institutions through a game of Cricket played under the heat of the midday sun from Cape Town to Calcutta. No other sport sees fiercer rivalries between nation states, only a handful of which at any given time tour each other. Once the domain of the Anglo-Saxon race, Cricket was a means towards creating an egalitarian society through the grace and elegance of, amongst others, Learie Constantine, Sunil Gavaskar, and Imran Khan.

The Cricketing fraternity care for each other, and a true cricketer does not care who plays but that they play well and in the spirit of sportsmanship; with the recent retirement of one of the game's greats, the opposition South Africans formed a guard of honour in respect of seeing one of their own departing this God's game for fresher pastures.

Saturday, 8 December 2012

A Eulogy on Progress

Room for one more?
What, of anything possible in the journey of Humanity's path, do we envisage in the coming centuries and millennia? Given the pace of economic growth in the past two hundred years, there have been transformations beyond all recognition; revolutions in Industry, Physics, Medicine and Telecommunications, to name but a few. The world of 2212 would be similarly, one hopes, beyond recognition, jumping barriers into something unrecognisable and unfamiliar.

A world underpinned by unconditional equality of access to opportunities and resources for each member of the species, a world extinguished of conflict and starvation, a world that lacks rivalries and follows a purpose towards a spiritual and conscious harmony.

Nevertheless, the world we live in is ever divided into two hundred odd nation states each acting in an anarchic environment at the expense of a fragile Ecosphere. How would those who would claim to be members of the species and descendants of our generation judge us in their time? A perennial question which aims to highlight the need to sustain each generation as a series of progressions into which there is an in-built purpose. A purpose to better the lives of those who live on the fringes.

This author hopes by the end of his life, sometime in the mid-20th Century, there is a tentative global government that improves the welfare of all, a definitive scientific resolve to break barriers on understanding in areas pertaining most to that of the origins and aims of our Universe, and a cultural epoch marked by a global thirst for literature, art, and music. A world that is universally beyond all recognition.

The vastness and age of our Universe allows certainly for the window of a few million years in which intelligent life would have been able to spawn and climax. Ultimately this would not be expressed in empire or conquer, so beloved of science fiction; but in a society that is inward and self-dependent. A society that clings to its star and is comforted by the knowledge of its loneliness in understanding the futility of existence, which is ever spontaneous and ephemeral.