1/ In a new study undertaken in partnership with @hiia_budapest I compare the relative geoeconomic strength of NATO and the BRICS+. We do not think a war between these is likely, but a war between members might turn these into autarkic trading blocs. 2/ Our first major finding is that the economies of the two groupings are now roughly the same size, with BRICS+ being slightly larger. This is an enormous development. Policymakers seem to imagine that we live around the year 2000 in this regard. They’re dead wrong.

1/ Here is a thread on why recent record sales by the Chinese of US Treasuries might be one of the first signs of a major fiscal crisis in the US. There is a lot of confusion about how this would work so let's go through it step by step. 2/ What matters here is not overall US government debt but rather the balance of payments. If a country runs a trade deficit this must be offset by financial inflows on the financial account to maintain equilibrium.

1/ A new paper is out with the @hiia_budapest. In it we explore reindustrialisation. With governments across the world waking up to the catastrophe caused by a decline in manufacturing we want to explore what reindustrialisation might entail and what might constrain it. 2/ Do not believe those who tell you deindustrailisation is driven by technology. A portion of it is, but most of it is a redistribution of manufacturing capacity from the Western countries to the emerging BRICS+ bloc - especially China.

1/ Ever since the pandemic the Western world has started to talk about ‘derisking’ and ‘decoupling’ which are both euphemisms for increased protectionism in the West, especially vis-a-vis China. A study I worked on with @hiia_budapest shows that this has not been thought through. 2/ Through globalisation the world has become highly interconnected. It used to be that China relied heavily on imports but now the EU is more reliant and the US is as reliant.

1/ In conjunction with the @hiia_budapest I will be working on a comprehensive series of economic studies on the emergence of the multipolar world in the 2020s. In the first othis series, we explore the Origins of Economic Multipolarity. Highlights in this 🧵. 2/ China overtook the US and the EU as the largest economy in 2017, but little attention was paid to this because of a flood of fake economic metrics (details in report).

1/ In our new paper demographer Paul Morland and I argue that Western countries facing low and falling birth rates are confronted with a trilemma. They can only pursue two of three possibilities: economic dynamism, ethnic continuity, and egoism. @arc_forum 2/ Countries like the United Kingdom can barely reproduce itself. Deaths in the country are close to outstripping births. Extremely high immigration rates are needed to keep the economy rolling.

1/ Iran are making big threats against the US. Some may be inclined to dismiss this. After all, isn’t Iran a third rate power and a hermit kingdom? A sort of Middle Eastern North Korea? Maybe not. 🇮🇷🇺🇸🇮🇱

https://twitter.com/clashreport/status/1717511229260939276

2/ Iran has a huge missile stockpile. These include around 3,000 ballistic missiles that can strike anywhere in the Middle East.

1/ I’ve spoken to numerous people this week, including some with experience in Middle East politics, who realise that the region is about to destabilise again. But they also think this is just part of the cycle, every ten years it falls apart there. But this time IS different. 🧵 2/ There is no doubt that the Middle East is a powder keg. It always has been. Many of its borders were drawn only a century ago, in line with Western interest. It remains true that the region is a powder keg, it does NOT remain true that it is still a “playground of empires”.

1/ From what I understand, word in DC is that the upcoming Battle of Gaza is going to be modelled on the Second Battle of Fallujah in the Iraq War. How the battle progresses and whether the IDF gets pinned down is basically contingent on whether this is an accurate assessment. 🧵 2/ There is, however, a potentially better analogue: the Siege of Mariupol in the Russia-Ukraine war. Let’s consider both.

1/ Here’s a hypothesis that I haven’t seen much discussed: maybe the economic growth that we are currently seeing in the United States is simply fake; that is, made up of make work to keep the economy ticking over before the election. 🇺🇸🧵 2/ I barely need to highlight how many leading indicators are screaming ‘recession’ in the US. Let’s just look at PMIs. Manufacturing PMI is at 47.6, worse than the beginning of the 2008 recession.

1/ Yesterday I published an article in @unherd arguing that the situation leading up to the French riots is being driven by high food prices and low consumption. I presented INSEE data showing a 17% drawdown in food consumption, totally unprecedented in recent history. Chart 👇 2/ I wouldn’t usually comment on the response to one of my articles - negative comments really don’t bother me. But the response to this was fascinating: person after person expressed disbelief in the numbers, said I hadn’t sourced them, and surmised that I made them up.

1/ There seems to be a bit of confusion being spread regarding the BoE 0.5% rate hike yesterday and how it will impact the coming recession. Apparently it is now mainstream to say that there will be a recession in the next 12 months. That’s a new development in and of itself. 2/ But the latest debate is whether this recession would not have happened without more rate hikes. In all likelihood it would, but this is really besides the point.

1/ The UK could be in a bit of trouble here. Labour are clearly dipping into the American liberal left playbook for basically all their policies. But where policies may be viable in the US, they may be harmful and even dangerous in the UK. 2/ First off, to be clear, I’m not shilling for carried interest. Looked at in terms of ‘fairness’ its debatable whether it should be taxed as capital gains. From an economic point-of-view, the carried interest debate isn’t even interesting. Except maybe in the case of the UK…

1/ Labour plan on allowing councils to force landholders to sell land at rates that don’t take into account potential improvements. Labour’s plan buys into the mythology that the problem is too little supply and so will fail like all the other failed plans. 🧵 2/ Other countries in Europe already to do this - and they have the same high house prices as the UK. For example, in the Netherlands they have this system and yet housing is still top of the list in elections.

1/ A 🧵on the @SecYellen speech which, while promising, seems to be a bit myopic both on the relative economic position of the US and on the relative isolation the US is experiencing in their China policies. 2/ The section that caught the headlines highlighted that the US did not want to decouple from China, calling such a prospect “disastrous”.

1/ Much discussion of de-dollarisation going on. But many seem not to understand what the process would look like and whether it can be 'measured' with today's data. Let's bust a few myths about global reserve currencies and what it means when they rise or fall. 🧵 2/ A lot of people out there are pointing to present reserve holdings and saying that these determine which currencies may emerge or remain in the shadoes. Here is a typical chart from @johnauthers this morning which he uses to claim the dollar is going nowhere.

1/ @Lagarde decided to go to New York and give a barnstormer speech on the emerging multipolar world. She didn’t even entertain the idea that it isn’t happening. She just assumed it is. She must be listening to @MultipolarPod! Highlights 👇 2/ She raises the issue that countries are experimenting with alternative currencies for trade settlement. Note she assumed that this is perfectly viable - because it is.

1/ This Yellen interview will very likely be used by future historians to assess why the US continued on its present course despite many people realising where it would lead. Its worth listening carefully to what the justifications are. 🧵 2/ There’s little point in focusing on Yellen’s assertion that the current sanctions will not lead to the decline of the dollar. It is just that: an assertion without an argument. She recognises the risk, that is relevant - the forced assessment of that risk is uninteresting.

1/ We've passed some milestones, or are about to pass some milestones, in the EU gas import market. The coming weeks are going to prove definitive. Here's why. 🧵 2/ In around the 10th week of the year, imports typically increase substantially. But we are now a few weeks past that and this increase hasn't happened. As you can see in the chart below a gap between previous years' imports and 2023 is opening up.

1/ The Finnish election was almost certainly driven by the cost of living crisis generated by the sanctions. KOK, the winners, got a major boost between February and May of 2022. 🇫🇮 2/ This was when prices started rising in Finland as the energy crisis started to bite.

1/ A lot of real estate deals have been taking place in private equity space this cycle. If the housing and commercial property markets tank there could be trouble. But it may go further than that. Let’s dive into a possible area of extreme financial weakness. @RanaForoohar 2/ One area that @RanaForoohar does not discuss is private credit. The industry is something of a black box but there’s some suggestions that they’re dipping their beak into the real estate market. They’re also lending to private equity firms that may be in the sector.