...The Swiss National Bank owns almost 2% of Apple. How much more do they have to buy before they want a board seat? [That’s a joke, gentle reader.] But it does take 66 pages to print a list of all the stocks the SNB owns.)
...The loss of competitiveness changes how macro policy works. Japan has been losing competitiveness against its Asian neighbours. As its population is small, relative to the regional total, lower wages in the region have exerted gravity on its labour market. This is the fundamental reason for the decoupling between the unemployment rate and wage trend.
The mistaken stimulus has the unintended consequences of dissipating real wealth and increasing inequality. American household net worth is at an all-time high of five times GDP, significantly higher than the bubble peaks of 4.1 times in 2000 and 4.7 in 2007, and far higher than the historical norm of three times GDP. On the other hand, US capital formation has stagnated for decades. The outlandish paper wealth is just the same asset at ever higher prices
...While Western central bankers can stop making things worse, only China can restore stability in the global economy. Consider that 800 million Chinese workers have become as productive as their Western counterparts, but are not even close in terms of consumption. This is the fundamental reason for the global imbalance.
China’s model is to subsidise investment. The resulting overcapacity inevitably devalues whatever its workers produce. That slows down wage rises and prolongs the deflationary pull...
...Overinvestment means destroying capital. The model can only be sustained through taxing the household sector to fill the gap.
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