Quantum Economics Podcast

 Hitchhikers Guide to Quantum Economics and Quantum Computing.The sound track of  Hitchhikers Guide to Quantum Economics and Quantum Computing.Soundtrack only.  Full presentation on You Tube:   https://youtu.be/XRH0WRYLnks.How Quantum Physics links to Quantum Economics & how Quantum Computing empowers it.

Omicron Covid (B.1.1.529) variant - the economy and markets.The Pandemic has become a Permademic.  Even without Omicron, global cases have doubled since September.  For the moment Europe is the epicentre .  But it moves in waves globally.  It will not go.  The vulnerability of populations to Covid is 30-35% in developed economies; 35-40% in China and 55% to 95% in Developing and Poor Economies. Vulnerability is a function of unvaccinated people who would want to be; anti-vaxxers; ageing vaccinations & poor quality vaccinations. That is plenty for the virus to work with.The economic consequences are tolling supply chain disruptions which increase inflation and reduce growth simultaneously - unlike most economic crises (which are normally deflationary shocks).In the longer term the result is Globalisation as manufacturing and associated services are on-shored or near-shored.  This increases security of supply but increases costs and inflation.

The US Fed, The Appointments and Your Pocket!What does the renomination of Jerome Powell as Fed Chair and the nomination of Lael Brainard as Vice Chair mean for monetary policy, interest rates and markets.

What the new German coalition program means for the economy,  the EU and you

COP 26 ends, not with a bang, but with a whimper.  What it means for climate change, the world economy and your assets.

COP 26 The Great Climate Copout Why does COP 26 emit more hot air than Green House Gas cuts?  What would COP 26 have to deliver to succeed?  What does it deliver - a critical look at its three touted agreements on Rain Forests, Coal and Methane - and an analysis of why the holes in the "agreements" are more gaping than Gruyere. Why this will deliver a temperature increase closer to 3-4C than 2C.  Why this is a key to discounting the lives of future generations and of investments: the Conundrum of Terminal Values

The Hidden War for Global Dominance - The US , China & Digital Assets. Stable Coins, on the other side of US regulation and Darwinian market battles, is the hypersonic weapon with which the US can cement US dollar global dominance and win the war against China's (and others') Central Bank Digital Currency.  Rather than being an explicit part of a US strategy this is wired into the architecture of Stable Coin.  This piece attempts to explain how & why this is so!

Copping on to COP 26 - a Climate Change Conference Vital in All But Name!  Why COP 26 will fail.  Why this is not the end of the world (yet?).  A look at market driven alternatives to political posturing.  How would a functioning climate change policy work?  We examine the mechanics of the relatively succesful EU Emissions Trading Scheme coupled with the ambitious plans of "EU Fit for 55" and the fiscal intervention of the EU Next Generation Recovery & Resilience Fund.  Does the EU initiative crowd in the private sector - as it must to achieve Green House Gas emission goals - or crowd it out?

Quantum Economics: Introduction to You Tube: The Future History of EconomicsIntroduction to You Tube video "The Future History of Economics:  https://youtu.be/HFMt17dFO80This podcast summarises the new Quantum Economics framework for analysis of the combination of the structure of the post pandemic recovery and supply chain disruptions.   The full presentation is on the You Tube video link.The podcast and video bring together analysis of: * the pattern and causes of traditional recessions. * the pandemic recession and how it both boosted household income and excess savings and            protected corporate and banking balance sheets and cash flows. * The cost of big government resulting from the pandemic policies. * the Sawtooth shape of the post pandemic recovery and what drives it. * the long term output curve and why trees growth will be lower than the historical  trend line would indicate.

Supply chain disruptions have many “local” causes but they generate global crises. Many are durable. They seem to have come together as an almost perfect storm in the post-Covid economy. Will they fade as service demand replaces manufactured goods demand? Probably not. This report sifts the evidence from supply-chain disruption in labour markets, energy, semi-conductors and freight transport.  One lasting effect will be de-globalisation - the shortening of supply chains to reduce risk paid for by higher costs and inlfation.

Digital Currencies and Global Reserve Currencies.  Substitutes or Rivals?How does a currency become global reserve currency?Could a digital version replace the US dollar? Why is it so difficult to debunk the dollar from its global throne?

China & Cryptocurrency- Why does Beijing hate Bitcoin? What does China's own Central Bank Digital Currency (CBDC) aim to do?  How does it work? Some lessons to be learned about digital currencies globally.

China is in the eye of an almost perfect storm based on 4 factors:  real estate sector crisis; supply chain disruptions (e.g. ports to producer margins); the electricity power crisis;  and the move from wild west capitalism to Common Prosperity.  The short term hit to growth will produce the first contraction in China's Q3 GDP in most peoples' living memory.  But this does not herald the systemic collapse of China's economy or political system. It is a transition to a 4-5% secular rate of growth - typical of a middle income economy with unresolved structural issues.

German election results!  The big winners are the SPD ((Social Democrats) & Die Gruenen (the Greens) and the big loser is the CDU.  So which parties will rule?  how does the vote translate into Bundestag seats?   How are coalitions negotiated in Germany. What will be the policies of the new German government?  How does the effect economies and markets in Germany and Europe? 

Evergrande, China Real Estate, the Economy and Common Prosperity! Evergrande is a perfect Quantum Disruption.  The effects will flow through to the economy, deleveraging and the replacement of the current Chinese housing model by that clearly stipulated in President Xi Jinping's new ideology of Common Prosperity. It was a known-known that China was way over leveraged and saddled with a legacy of unproductive assets..  But we were told it didn't matter because the Chinese owed the debts to themselves.  Such comfortable, dumb. consensus forecasts have now been disrupted by a single Quantum event:  Evergrande going bust.   The housing market was a part of this architecture of inefficiency and inequality. Tycoons and corrupt officials reaped economic rents along the way. People buying houses to dwell in lost out and paid the economic rents to the rich. Inequality blossomed.   It's over!The short term cost will be recession.  The long term benefit is affordable housing, less wealth and income inequality and a more efficient economy.However, most international investors are on the losing side of this manichaean battle....and will suffer accordingly.

Geopolitical Stability & AUKUS (the Australian nuclear sub deal). This is part 1 of 2 broadcasts analysing recent events that change things for China and the world.  The second, next, deals with the Chinese and HK housing sectors. 

German Elections (Sept 26) - How do they work?  What will the outcome mean for Germany & Europe?  What is most likely coalition to succeed the incumbent CDU and CSU? Who will be Kanzler? How will policy change. In what ways will this impact the EU?That & more.....

Global Supply Chain Disruption - A Dog's ViewDisruption of supply chains will have significant effects on current global growth, inflation and equity margins. But it goes beyond this. There are long-term consequences for the architecture of the world economy. This report goes from the micro of biking to Chinese ports, through the theory and reality of supply-chain shocks to the ultimate consequences for the shape of the world economy and its governance.

Forecasting with Random Disruptive Variables: Human forecasters "pigeon hole" multiple disruptive variables by tying them all together with seamless logic in what strategist spin as a good storyline.   These constructs impart security and a sense of safety (Like Big Objects in Quantum Mechanics).  But such forecasts are only be right by chance.   That's because the relationship between each disruptive variable is random and not set by historical observations or correlations. Here we look at 7 random disruptive variables individually and independently. Some are sure to happen.  The Disruptive Variables are: The Kabul Curse;  China Succession; Positive Feed Forward Loops and Climate Change; Zero Tolerance Covid Policy;  Private Versus Public Crypto Currencies;  The Economies of War;  Collapse of the Post-Pandemic Economic Architecture;  

Analysis of prospects for  the German Federal Elections on September 26, 2021. Germany is about to dumped the CDU/CSU coalition that has ruled it for 50 yrs.  The new government is likely to include the SDP and the Greens.  That will change many things: fiscal policy will expand as will green and infrastructure spending.  Electric vehicle adoption will accelerate. So will the achievement of zero Green House Gas emissions.  But Germany is also key to what happens in Europe.  The next government will be pro EU integration. It will add credibility and backing to the EU Next Generation (NGEU) initiative- critical to the reform of southern EU members. It will consolidate EU integration by facilitating North- South fiscal transfers. And it will create a European Common Bond Market that could enhance international use of the Euro as a store of wealth.

China's Common Prosperity is a new ideology. It changes dramatically the operating system of the Chinese economy from creation of individual wealth to serving common prosperity by creation of a new middle class.  This is not a typical marxist-leninist goal of hefting the masses. It literally targets the creation of a new middle class through state intervention. This alters how investors are rewarded.  But more so, how Chinese society works.  It is closely linked to what we have seen in terms of the dramatic increase in regulation of  the private sector.

US Fed- Jackson HoleJerome Powell, Fed Chairperson, just gave his keynote address at Jackson Hole..  It is a porridge speech. not to hot, not too cold. But like porridge it will get stickier as it cools.  This video tells why!  But for the moment Powell admits the economy is providing justification for the Fed to buy less bonds. But any increase in Fed Fund Rates is a long way away.the view given here differs:  1. not only the US but 23 other global economies have got inflation back.  2. The specific types of inflation are idiosyncratic to each economy, but inflation is the common denominator. 2. Inflation is a real and resent danger in logistics and transport; IT hardware, low wage sectors and services; agricultural products; industrial raw materials, housing and construction .... i.e almost everywhere 3. The Fed stands out as doing nothing about it. Other Central Banks are normalising policy.  In the short term, markets will ignore this, comfortable that the Fed parked its well-used car in never never land again.Long term there are even more risks:1. De-globalisation and return to national(ist) economics will, provide security and employment in the states which do it, but at the cost of productivity and inflation.  Increased cold war between China and Democracies will also be driver. And this is set to get worse post Kabul.2. Big Government to deal with the inequalities deepened and accelerated by the Pandemic but constituting a quasi permanent legacy.  In democracies, big government will have to buy the votes of the dispossessed by measures, which though kind and ethical will be both inflationary and a cause of low productivity.3. The unholy marriage will endure between Governments and Central banks until death do them apart because central bank bond buying that holds cost of capital down is the only way that increasing sovereign debt burdens can be stopped becoming unsustainable.

Quantum Economic Loops - How Positive Forward Feeding Loops could save the planet.  This is quite different to using negative feed back loops to explain the history of economic crises.  That's the stuff of classic economics. Positive forward feeding loops are  about how, from a single point of renewable energy cost competitiveness, such loops can save the planet from human destruction...... on one condition.  That markets are allowed to function. Which means eliminating the dinosaur fossil fuel brigade and their dumb political lackeys.

Chaos in Kabul. The Consequence of US Defeat for the Global Balance of Power. The second of two part series on the Fall of Afghanistan (Part I: the Meaning of theFall of Afghanistan).  A forensic analysis of true and false narratives about the significance of the Taliban victory. And a balance sheet analysis of the shift in power that ensues for Russia, China, the Middle East, Pakistan, India  and US Global Alliances.

The Meaning of the Fall of AfghanistanThe Fall of Afghanistan has far reaching consequences beyond the horror inflicted on those now subjected to Taliban rule and those who died and suffered trying to prevent it.  It shows up President Biden as incompetent and unintelligent. He got the right advice from the Chiefs of Staff and ignored it.  The outcome will reinforce failed state regimes, like North Korea, and extremist Islamic and other groups.  It will destabilise the Middle East further as US credibility is eroded. This applies to Iraq, Lebanon and Libya in particular. It is a gift to Russia and China.  China believes that the US is a declining power.  This, in Beijing's eyes, proves the point. It will reinforce extreme but powerful regimes - like MBS's Saudi Arabia - to write their own script and ignore the US.  It will hinder trust of the US among US's allies, from Taiwan to Berlin .  And for US assets, it will make Biden's vast public spending initiatives more difficult to implement and more critically assessed.  This will call into question the strong dollar and promises higher yields

Climate Destruction Government Posturing & Market Disruption as (partial) Solution. Don't expect 4,000 page reports from the IPCC to produce effective policy from governments!  Market disruption by economic forces will kill off the fossil fuel dinosaurs and address at least some of the critical issues. Within the same sector - say power utilities, food, energy and cars - corporations will be divided between the dumb , the dying and the innovators- those that are the engines of change

Inflation: So you thought used automobiles would save you from inflation? The  US (and global) July inflation hype. Why a 5.4% US CPI rate tells you more not less is in store.Consensus Committee V Quantum Economics Disruptive Forecasting- The Teddy Bear Syndrome.Why inflation will rise: - SawTooth recovery and rotation of growth from manufacturing to services;- Delta-China-Lockdowns and the accelerated reversal of globalisation;- The Covid legacy of:  Big government - the marriage made in hell of central banks and finance ministries - inequality and populist policies to mitigate its political cost.The inevitable adjustment of financial markets

Delta China V the World - the Counterintuitive Consequences.  Global Policy & Economic Fall Out.The UK with 27,000 cases a day is opening up and partying. China with 200 cases a day is locking down and disrupting.  Why? and what does it mean for the Chinese global economy, inflation and supply chain disruption.  The Sawtooth recovery gets more jagged!

Untying the Knot: Supply Chains and GlobalisationWhence and whither for globalisation & the supply chains that drove it.  What made globalisation happen: the Fall of the Wall and the opening up of the China's economy.  What did globalisation do for us: growth, productivity, and disinflation and the lifting of 100's of millions out of poverty.  What did it do that caused its downfall: rising inequality on a world-wide scale.Now Cold Wars, Protectionism, the Pandemic, internet disruption, and the advent of big interventionist government in democracies will doom globalisation, replacing it with national and regional economic models, and skittle its positive effects without addressing the negative ones (entrenched and rising inequality).  The result will be lower growth, higher inflation and the inevitability of a social wage to keep the peace

Bond yields today are unsustainably low.  It is easy to see why: Fed inflationary use of the word "transitory" finishes by creating "truth" out of a myth and Commercial Banks have so much excess liquidity parked at the Fed that putting it into higher yielding bonds is a no brainer.But this will all reverse.  The causes will be the size of the US budget deficit that increases demand but not supply for Treasuries. And the longer term drivers of inflation: Big Government, Big debts, Central Bank lack of independence, Inequality and Social Income and National Economic Policies that reverse the disinflationary forces of Globalisation.When bond market bubbles burst, equities will follow suit because the discount factor for future profits will rise reducing their present value and profits will become more cyclical and unpredictable. 

This year, the Chinese authorities have taken on: A. Wealth that rivals the supremacy of the CCP and the threat of Fin-tech corporations owned by the super wealthy to state controlled banks; B. Data accumulated outside state control and beyond China's borders;  C. Private sector Digital Currencies that could rival its PBOC Central Bank Digital Currency; D. Corporations that provide "for-profit" education and increase the cost of Kids.  What sectors will be targeted next?  What is the political background.  How does it all tie together in the US - China Cold War and  the consolidation President Xi Jinping's grip on power?

Why are Chinese assets underperforming  world markets?How national policy aims, geopolitical data control and competition are all embedded in the Chinese Communist Party measures (Data Security Law (DSL), State Secrets Law (SSL) and the Cyber Security Law (CSL).  What does this tell us about the supremacy of the Chinese Communist Party?  How does it affect the risks of investing?

A Stroll around the Houses.  Why classic economic measures of housing are daft.  How does Quantum Economics treat housing.  Why the global house price boom?   Does it threaten economies?

This economic recovery is like no other.  It is characterised by periods of excess demand growth followed by a decline in demand to trend growth.  The second stage implies negative growth - shinkage.  The first period of excess demand growth is financed by government funding of strong household and corporate balance sheets during the pandemic.  This is the first time that recession creates wealth in private hands and debts in government hands. It means that private sector demand does not have to earn back recession losses before it expands.  This is unique. The pandemic constrained opportunity  to satisfy  demand. And there were supply side constraints like the shortage of chips to make autos.  Once, the blockages are removed, as sun follows rain, excess demand will be followed by a decline to trend.   This happens at different times in different sectors (services versus manufacturing) and place (EU V UK and US).  The location of any asset on the Saw Tooth recovery map is a vital input to forecasting currencies, bonds and equites.  It is a not driven by history but a Quantum Economic discontinuum.

The ECB New Monetary Policy Framework- what does it mean for  monetary policy, inflation, the Euro and EU bonds and equities.

China has launched investigations into 4 major on-line platforms: New York listed Didi Chuxing (Ride Hailing) as well as two Truck Hailing Corporations and one Employment Agency (Huochebang, Yunmanman and Bosszhipin).   This is not new for the state and private sector to be in conflict. .  The process started with ANT-Alibaba and Jacky Ma.  But this is a significant new step in sch confrontation. Is China killing the golden goose of its best known and succesful entrepreneurial corporations? Why is it happening?  How does this influence the prudential case against owning Chinese corporations on their commercial merits alone.   This goes deep into the power structure and practices of the Chinese Communist Party and of what is a Leninist (all power vested in the Part) state but not a Marxist one.  Investors must understand what this means.   

Do your eyes close and your head starts to nod when Central Banks start "explaining"? Central Bank "speak" was once defined by Alan Greenspan as being purposefully incomprehensible.   Central Bank language is a special parlance. Here is how markets will interpret it in two distinct time frames

The Fed's FOMC produced a shift in policy perception towards tightening & inconsistent economic forecasts. But what was more surprising was the reactions of three asset classes: Equities, US Treasuries and currencies.  Here's why... & what it means for the future

Wimmin as Winners!  Women are the world's greatest "hidden" asset.  "Hidden" because oppressed.  In open societies the pandemic may be women's great enabler unlocking their full economic and poltical  potential.  In many poorer countries, the opposite holds. 

How are these three factors linked. Is the Fed in denial or right about inflation being "transitory". 

Is Europe about to have its day in the sun?Europe is turning a corner. The current massive projects to Green and Wire the EU - funded in part by the EU New Generation Funds could add 1-2% per year to Europe's growth rate. It is matched by economic, judiciary and social reforms and is thus productivity boosting. It is designed to be socially inclusive.  It will boost public investment by nearly 10% of GDP between now and 2026 in Italy and Spain. But it is designed to crowd in private investment in areas where the EU has an edge (e.g. Green investment). And the (Die Gruene) Greens coming to power in Germany in September are likely to add 1.5% points of GDP to productive public spending, with a focus on Green projects,  after years of sclerotic decline in Germany's infrastructure.  For investors this supports EU equity long positions and a strong Euro. But bond yields will go higher and should be avoided.

Is inflation "transient"  or are there fundamental forces that will structurally heft it?  Yes there are: 5 fundamental pro  inflationary forces:  Inequality, De-Globalisation,  Big Government; Monetising Central Banks;  and fiscal over-stimulation of the economy.There are countervailing forces too: home working; on-line retailing; bankrupting and reallocation of the resources of unproductive  corporations; and technology - such as the replacement of workers with robots - to name a few.which wins?  Why? And what it means for society and investors.

Is the US Dollar about to start another leg down in its the long term trend of decline? What would cause this to happen: Bidenomics? Has China shifted policy on the Renmibi?

Crypto Currency prices have fallen 40% since mid May.  Why? are the causes temporary or a the end to an unsustainable bubble

Will Honest How Biden go down in history as a decent man who could not add.  The fiscal debts and deficits of his economic plans add up to 10% of GDP coming on top of the 26% of GDP already spent on Covid relief.   The increased taxation plans to finance this spending will cover only a small % of it. The US is a savings deficit economy . This deficit is set to expand enormously.  Put another way this means foreign savers must finance the US's lack of savings.    This will only happen on the other side of higher long term US interest rates and a much cheaper US dollar.

Back to the Future:  Centrally Planned (or controlled??)  Economies.   Has technology now solved the structural defects of centrally planned economies.  A history of the production of Bra's is used to analyse the failure of Soviet economic planning.  But what about China? - is it centrally planned or centrally controlled as an economy.  Does it deliver better economic outcomes for the masses.  If so would the same technology not have made the USSR a sustainable model....so changing the course of history..  

Why military might and economic success do not have to go together. The contrasting cases of China and Russia.

Policy normalisation.  Can governments and Central Banks normalise policy.  Certainly not to anything like what was normal before Covid-19.  This has big economic and societal consequences. And what will happen when markets reach a tipping point after which more stimulus is bad and less is good?

The shape of government and society after Covid is over: the permanent changes

Vaccinations,  International Trade, Supply Side Disruption & De-Globalsiation - all embed more Inflation