The disconnect between momentum in global macroeconomic leading indicators, benign conditions in financial markets, and volatile global geopolitics could hardly be greater at the moment. Granted, leading indicators will always lag the latest gyrations in global geopolitics—especially in a world where Mr. Trump is conducting the orchestra—but judging by the past 12 months, not even the potential collapse of NATO or a full-blown EU–U.S. trade war will knock risk assets off course for more than a few minutes. That is not because such events would lack significance, but because markets are now deeply wedded to the idea that Mr. Trump’s bark—on tariffs and otherwise—is much worse than his bite. Time, as always, will tell. The fundamental problem for markets is that lofty valuations and generally exuberant investor sentiment mean that any repricing in response to a less optimistic view of the world would be violent.
Read MoreMy wife gave birth to our daughter, Veera, at the start of December, and it’s been a wild ride so far. Your job in the first few weeks and months, I now realise, is basically to keep your baby alive, which involves submitting yourself, and (in)famously your sleep patterns, to the needs of a lizard brain in a human suit that it has no control over. She feeds, sleeps, pees and poos, and screams in between all of these. More recently, she’s been doing mostly screaming.
Trying to look beyond this very intense period—and the miracle that my daughter is—can be difficult. People with children will tell budding parents that their life is about to permanently change, which is true, but in what way? It depends, I guess. Parenthood—in this case, fatherhood—is a strange initial feeling for me, best described as low-key dread and fear that something will go wrong and I won’t be able to help my daughter, mixed with a profound sense of responsibility. Cometh the hour, cometh the new father, I hope.
Read MoreThe economics of Santa Claus’s Christmas operation is perhaps the most ambitious logistics problem ever conceived. Each December, a vast global enterprise mobilises to deliver gifts to hundreds of millions of children, perfectly timed for the night of the 24th and the morning of the 25th. Behind the folklore lies an implicit economic system of remarkable efficiency, balancing production, inventory, transport, and distribution in a single night. If one treats Santa’s workshop not as magic but as a model economy, it becomes a fascinating exercise in applied economics—an improbable, but internally consistent, operation that obeys the logic of scale, incentives, and coordination.
Read MoreThe economics of currency crises has evolved through successive “generations” of models, each reflecting the historical experience and intellectual climate of its time. From the fixed exchange rate collapses of the 1970s to the financial crises of the 1990s and beyond, economists have sought to explain why speculative attacks occur, how they unfold, and what policy choices can prevent or exacerbate them. The three generations of models—spanning from mechanical balance-of-payments inconsistencies to self-fulfilling expectations and financial fragility—together trace a trajectory from deterministic to strategic and behavioural understandings of crises. Yet, in a modern world of complex capital markets and hybrid monetary regimes, each generation’s insights also reveals its limitations.
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