Weekly Selection 11 October 2019

Jim Bianco, Central Banks Can't Create Negative Rates by Themselves

(Bloomberg Opinion, October 9, 2019)

This article explains in very simple terms why there is more to low yields than monetary policy rates. Two factors that are structural in nature and therefore likely to stay in place for an extended period are pushing inflation and bond yields lower: advances in technology and the growing global savings glut caused by global ageing. For those in the US searching for yields, the response is: “we have bad news, you have it now at 1%. Embrace it and be lucky U.S. yields are not negative – yet” (reads in 5-6 min).

Rik Kirkland, A Nobelist on government’s role, the power of ideas, and how to measure progress: An interview with Paul Romer

(McKinsey, October 2019)

This is a video and its transcript of an interview with the Nobel Prize-winning economist Paul Romer. The transcript reads in less than 5 min and provides much food for thought about how ideas (rather than objects and resources) can propel economic growth, why living longer, healthier lives is the proper measure of progress (rather than GDP per capita), and how it’s the combination of the government and the market together that generates progress.

OECD takes aim at tech giants with plan to shake up global tax

(Irish Times, October 9, 2019)

Many global companies continue to avoid paying more taxes by headquartering themselves in low-tax jurisdictions. A new OECD proposal to tax these companies based on where customers are, rather than the location of their sham home office, is about to become reality by creating a new and “stable” international corporate tax system. It will break the taboo in international corporate taxation that countries only had a right to tax activities from companies that had a physical presence on their soil (reads in 5-6 min).

Michael Schwirtz, Top Secret Russian Unit Seeks to Destabilize Europe, Security Officials Say

(The New York Times, October 8, 2019)

This is naturally an article that reads like a detective story! Western security officials have now concluded that several recent operations, and potentially many others, conducted in Western Europe, are part of a coordinated and ongoing destabilization campaign executed by an elite unit inside the Russian intelligence system skilled in subversion, sabotage and assassination (reads in 7-8 min).

Franklin Foer, Jeff Bezos’s Master Plan

(The Atlantic, November 2019)

This is a fascinating “insider’s view” on what the Amazon founder and CEO wants for his empire and himself, and what that means for the rest of us. It peers into Jeff Bezos’ modus operandi and endgame, based on extensive interviews with current and former Amazon executives, and different observers (not Bezos himself). In short: “His ambitions are not bound by the gravitational pull of the Earth.” It takes more than 20 minutes to read, but this is a piece of journalism at its best.