Be patient, the sun is rising in the East ... long & variable lags & what central banks are for.
Great links, images and reading from Chartbook Newsletter by Adam Tooze
The 90s … be patient the sun is rising in the East!
Fascinating image by Congolese artist Chéri Samba Les Annees 90 Patience, Le Soleil se leve a L’est Source: Seattle Art Museum
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Plate tectonics
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Long and variable lags?
It now appears the lags from monetary policy are shorter and less variable than we previously thought. That popular Friedman quote was based on faulty analysis. But there is more: evidence suggests not only that the lags are shorter than we previously thought but they have also become shorter over time. There are three potential explanations for this. First, central banks have become more transparent. By signalling their intentions far into the future, the authorities are able to guide sharper and more distinct turning points in financial conditions. … central banks now use their balance sheets to further enhance their policy guidance. When they are doing QE, investors can be sure that policy rates will stay low for years, whereas QT should signal continued tightening. Third, in recent decades there has been a migration of the global credit system from banks to capital markets. Capital markets are more responsive to central bank signals … on balance, shorter monetary lags should be bullish for the global economy in 2023. Perhaps there is not as much pent-up demand destruction as everyone is assuming, especially for economies – like the US – that have a penchant for fixed-rate mortgages. Shorter lags would also mean that even if the global economy were to deteriorate more quickly than everyone is expecting, a prompt reversal in monetary policy could limit the damage. The supertanker is not as slow to turn as the consensus assumes. But the real question for monetary policy, of course, is about the response times of the central bankers who are guiding the ship. When the facts about inflation change, will they change their minds? Or have they still got something to prove, perhaps?
The brilliant Dario Perkins at Lombard TS
Cuban debt .. yes they have on their plate too!
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Renewable Georgia
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What are central banks for?
"Unlike businesses, central banks are designed to make money only in the most literal sense." Cracking opening line from Augustin Cartens @BIS_org op-ed in FT
Chinese railway work in Namibia
China Gezhouba Group Corp (CGGC) finished a 107.5km upgrade of a rail line between the Namibian harbor Walvis Bay and the central logistics hub of Arandis on time, despite materials shortages and COVID-related delays. The upgrade doubles transport speeds on the line. The project is an interesting counterexample to troubled rail deals like in Pakistan (see above) and Kenya in that it’s jointly funded by the Namibian government and the African Development Bank (not Chinese lenders) and CGGC was only assigned part of the upgrade, with the rest going to a joint venture between the Chinese companies Qingjiang Group and Unik Construction Engineering.
Source: China Global South Project
“The True Map of the World”, Chéri Samba, 2011
Chéri Samba, Congolese, b. 1956
Chéri Samba was a founding member of the “Popular painting” school along with Pierre Bodo, his paintings exposing everyday life in the Democratic Republic of Congo’s capital city, Kinshasa. His representative, often fantastical paintings incorporate graphic narrative and figures with text and word bubbles that address forefront social and political issues, including AIDS, social inequity, and corruption. Starting in the 1980s, Samba began to portray himself frequently and literally in his works, taking on a direct role as the reporter of his ideas and personal story. “I appeal to people’s consciences,” he says. “Artists must make people think.”
On modern Congolese art this essay by Rachel Donadio in New York Times, is interesting.
Solomons in play
A polymetallic nodule for use in batteries, recovered by underwater mining.
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Her wounds came from the same source as her power
Cheri samba admires the work of Pablo Picasso taking inspiration from his genius
Source: Artsy.Net