If a Financial Institution is Too Big to Fail, It's Just Too Big

EXTRACT: "Shocks are here to stay, and our task is not to predict the next one – although someone always does – but to sharpen our focus on resilience. Staying the course of politically mandated policies while minimizing the inevitable dislocations is easier said than done. But that is no excuse to fall for the myth of being victimized by the unprecedented."

EXTRACTS: "A new world is indeed emerging. It will be characterized not only by more interdependencies, but also by more insecurity, danger, and war. Stability in international relations will become a foreign concept from a bygone age – one that we did not fully appreciate until it was gone."

EXTRACT: "Yet one must never forget that Putin is first and foremost an intelligence officer whose dominant trait is suspicion."

EXTRACTS: "In a recent commentary for the Financial Times, Martin Wolf trots out the specter of a 'public-debt disaster,' that recurrent staple of bond-market chatter. The essence of his argument is that since debt-to-GDP ratios are high, and eminent authorities are alarmed, 'fiscal crises' in the form of debt defaults or inflation “loom. And that means something must be done.' ----- "If, as Wolf fears, 'real interest rates might be permanently higher than they used to be,' the culprit is monetary policy, and the real risk is not rich-country public-debt defaults or inflation. It is recession, bankruptcies, and unemployment, along with inflation." ---- "Wolf surely knows that the proper remedy is for rich-country central banks to bring interest rates back down. Yet he doesn’t want to say it. He seems to be caught up, possibly against his better judgment, in bond vigilantes’ evergreen campaign against the remnants of the welfare state."

EXTRACT: "The first Russia, comprising those living in Russia’s two biggest cities, Moscow and Saint Petersburg, can pretend there is no war at all." ---- "Then there is the other Russia, the one you find in small towns and villages scattered across the country’s massive territory. Here, the Ukraine war is a source of patriotic pride,"

EXTRACTS: "I interviewed Wilders in 2005 " ---- "Frankly, I thought he was a bore, with no political future, and did not quote him in my book. Like most people, I was struck by his rather weird hairstyle. Why would a grown man and member of parliament wish to dye his fine head of dark hair platinum blond?" ----- "His maternal grandmother was partly Indonesian" ----- "Eurasians, or Indos as they were called, were never fully accepted by the Indonesians or their Dutch colonial masters. They were born as outsiders." ---- "Ultra-nationalists often emerge from the periphery – Napoleon from Corsica, Stalin from Georgia, Hitler from Austria." ---- "Henry Brookman founded the far-right Dutch Center Party to oppose immigration, especially Muslim immigration. Brookman, too, had a Eurasian background, as did another right-wing politician, Rita Verdonk, who founded the Proud of the Netherlands Party in 2007." ---- "A politician who might fruitfully be compared to Wilders is former British Home Secretary Suella Braverman. As a child of immigrants – her parents are double outsiders, first as Indians in Africa and then as African-Indians in Britain – her animus toward immigrants and refugees “invading” the United Kingdom may seem puzzling. But in her case, too, a longing to belong may play a part in her politics."

EXTRACT: "The good news is that the San Francisco summit was indeed an improvement on last year’s meeting. Above all, both sides took the preparations far more seriously this time. It wasn’t just the high-level diplomatic engagement that resumed in the summer, with visits to Beijing by US Secretary of State Antony Blinken, US Treasury Secretary Janet Yellen, US Secretary of Commerce Gina Raimondo, and climate envoy John Kerry. Equally important was identifying in advance the key issues on which the two leaders could cooperate and eventually agree."

EXTRACT: "It would be naive to hope that the Russian government or US diplomatic outreach would prevent nuclear war in the event of a serious threat to Putin’s political survival. The risk that Russia’s Ukraine misadventure could culminate in nuclear nihilism demands nothing less than a systemic review of America’s options."

EXTRACT: " Hamas’s barbaric massacre of at least 1,400 Israelis on October 7, and Israel’s subsequent military campaign in Gaza to eradicate the group, has introduced four geopolitical scenarios bearing on the global economy and markets. As is often the case with such shocks, optimism may prove misguided."

EXTRACT: "The last two years have been catastrophic for investors in US Treasury bonds. By one measure, 2022 was the worst year for such investors since 1788. Bond prices are poised to fall again in 2023, making this the first time in US history that they declined for three consecutive years. But now the “smart money” is jumping back in."

EXTRACTS: "China’s economic slowdown could lead the CPC to embrace a militant form of Chinese nationalism in an effort to maintain public loyalty. This would spell trouble for Taiwan, the Asia-Pacific region as a whole, and China itself in the long run. Given the threat posed by China’s assertiveness, it is no surprise that Japan is increasing its defense budget and that other countries have decided to follow America’s lead and explore ways to support Asia’s liberal democracies." .... "The difference between China’s and Japan’s economic trajectories raises the question: Can a corrupt Leninist regime outperform a free society? Whatever the answer, China is facing an uphill battle."

EXTRACT: "Of course, Putin owes his authoritarian mandate to Russians themselves. After the collapse of the Soviet Union, Russians – reeling from rapid, profound economic changes and the new culture of consumerist individualism – grew nostalgic for the 'strong' state. Their superpower status, historic breakthroughs in space, and grand victories on the battlefield were all long gone. Trading their new freedoms for the promise of renewed imperial glory seemed like a good deal." ----- "After Stalin, the only time the state engaged so openly in such violent repression was under Yuri Andropov, who headed the KGB in the 1970s before becoming General Secretary of the Communist Party in 1982 (he died in 1984). -- Putin, who regards Andropov as a personal hero, has reinstated the Andropov-era 'disciplinary check-ups' of cultural institutions." ------ "We are dealing with people who want 'full revenge for the fall of the Soviet empire.' The empire they want to build will include Andropov-style control over every aspect of Russian life, as well as a grander claim of being anointed by God. Like the Orwellian equation “2+2=5,” it is a story that you would have to be insane – or brutally compelled – to believe."

EXTRACT: "The cost of electricity from solar plants has experienced a remarkable reduction over the past decade, falling by 89% from 2010 to 2022. Batteries, which are essential for balancing solar energy supply throughout the day and night, have also undergone a similar price revolution, decreasing by the same amount between 2008 and 2022. ---- These developments pose an important question: have we already crossed a tipping point where solar energy is poised to become the dominant source of electricity generation? This is the very question we sought to address in our recent study."

EXTRACT: "Sooner or later, Israeli Prime Minister Binyamin Netanyahu’s destructive political magic, which has kept him in power for 15 years, was bound to usher in a major tragedy. A year ago, he formed the most radical and incompetent government in Israel’s history. Don’t worry, he assured his critics, I have “two hands firmly on the steering wheel.” But by ruling out any political process in Palestine and boldly asserting, in his government’s binding guidelines, that “the Jewish people have an exclusive and inalienable right to all parts of the Land of Israel,” Netanyahu’s fanatical government made bloodshed inevitable."

EXTRACTS: "....whereas Israel can prevail militarily over any of its enemies, albeit at an increasing toll in blood and treasure, it cannot stop the most dangerous threat of all—the deadly erosion, resulting from its continuing brutal occupation, of that moral foundation on which the country was established." --- "....the Israeli public must demand the immediate resignation of Prime Minister Netanyahu."

EXTRACT: "......today’s American body politic has little patience for long-term thinking. This was not always the case. George Kennan, first as a diplomat and later as an academic, devised the containment strategy that the United States used against the Soviet Union during the Cold War. Andrew Marshall, as the head of the Pentagon’s Office of Net Assessment, pushed the envelope on US military strategy. And Henry Kissinger, of course, was the ultimate practitioner of what has been dubbed “Grand Strategy.” "

EXTRACT: "In a recent CNN interview, Paul Krugman of The New York Times finds it hard to understand why ordinary American voters do not share his euphoric view of US President Joe Biden’s goldilocks economy – which appears to be neither hot nor cold. Inflation is falling, unemployment remains low, the economy is growing, and stock-market valuations are high. So why, Krugman asks, do voters give Biden’s economy a lousy 36% approval rating?" .... "what matters to working people is not the monthly or yearly price change taken alone. What matters is the effect on purchasing power and living standards over time. Whether these are rising or falling depends on the relationship of prices to wages. When wage growth exceeds price increases, times are generally good. When it doesn’t, they aren’t."

EXTRACT: "The fundamental lesson, then, is that the issuer of an incumbent international currency has it within its power to defend or neglect that status. Thus, whether the dollar retains its global role will depend not simply on US relations with Russia, China, or the BRICS. Rather, it will hinge on whether the US brings its soaring debts under control, avoids another unproductive debt-ceiling showdown, and gets its economic and political act together more generally."

EXTRACT: "TOULOUSE – The days between Christmas and the New Year often prompt many of us to reflect on the problems facing the world and to consider what we can do to improve our own lives. But I typically find myself in this contemplative state at the end of my summer holiday, during the dog days of August. After several weeks of relaxation – reading books, taking leisurely walks, and drifting in a swimming pool – I am more open to contemplating the significant challenges that will likely dominate discussions over the coming months and pondering how I can gain a better understanding of the issues at stake."

EXTRACT: "To the extent that international relations is an extension of interpersonal relations, how leaders publicly talk about their adversaries is important. US rhetoric about Putin, as much as shipments of F-16s, can push him – and thus the war – in various directions."