Beginning of the end - or end of the beginning?...Dead-cat bounce? 2. Or breakout from 13-year bear...
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Beginning of the end - or end of the beginning? Anatole Kaletsky Co-Chairman and Chief Economist GaveKal Dragonomics
Transcript of Beginning of the end - or end of the beginning?...Dead-cat bounce? 2. Or breakout from 13-year bear...
Beginning of the end -
or end of the beginning?
Anatole KaletskyCo-Chairman and Chief Economist
GaveKal Dragonomics
Churchill after Alamein, 1942
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“This is not the end.
“It is not even the beginning of the end.
“But it is, perhaps, the end of the beginning.”
Dead-cat bounce?
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Or breakout from 13-year bear market?
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Structural growth obstacles
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1. Bad public policy – fiscal and monetary uncertainty
2. Credit bubbles in China and EMs
3. Deleveraging by banks and households
4. Inequality > underconsumption
5. Environment and commodity constraints
6. Underinvestment etc > weak productivity
Structural growth drivers
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1. End of communism > global single market
2. Three billion new producers and consumers
3. Information and computer technology
4. Unlimited fiat money
5. Alternative energy
6. Moore’s law, robots etc > accelerating productivity
Is it a rabbit or a duck?
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… US job growth sets all market trends
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US “New Normal” may be 3.5%-4% growth
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US housing rebound will continue
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Household leverage has normalised too
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Europe and Japan recovery hardly begun…
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US and EU now only 45% of global GDP
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China’s reforms still a major risk
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“New Normal” - same as the Old Normal
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Investors need to discriminate among EMs
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Necessary conditions for euro’s survival
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1. Fiscal union (1): joint control of fiscal policy
2. Fiscal union (2): joint responsibility for debt
3. Banking union: joint resolution and guarantees
4. Monetary union: sovereign lender of last resort
5. Political union: democratic legitimacy
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The biggest story in China and EMs
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A Brief History of Global Capitalism
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0. 1776-1800 American and French Revolutions, Napoleonic Wars
1800-1848 Pre-Capitalism struggles with Post-Feudalism
1. 1848-1865 European Revolutions, US Civil War
1865-1929 Global Capitalism: Economic and Political Liberalism
2. 1929-1945 Great Depression, World War
1945-1974 Keynesian Golden Age: Government-Led “Mixed Economy”
3. 1974-1980 Great Inflation, Cold War
1980-2007 Thatcherism-Reaganomics: Market Fundamentalism
4. 2008-2013 Global Financial Crisis
2013-???? “Capitalism 4.0”: Sceptical, Evolutionary, Experimental
What’s Next?
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