Saturday, September 14, 2019

NOTES ON CHECKS & BALANCES

AM | @agumack

"Checks and balances are our only security" — John Adams

Resultat d'imatges de walter bagehot[1] Vassily Grossman. El escritor ruso Vassily Grossman (1905-1964) sobrevivió a todas las calamidades del wolfish twentieth century: la Revolución de 2017 y la guerra civil, el hambruna en Ucrania, la invasión alemana, la purga anti-judía en la URSS de los 1950s. En LA CENTRAL compré la biografía Vassili Grossman: un écrivain de combat (Paris: Plon, 2012) de Myriam Anissimov, autora de libros sobre otros dos grandes escritores judíos del siglo pasado: Primo Levi y Romain Gary. La novela de Grossman, Life and Fate (Жизнь и судьб) fue 'arrestada' por el regimen soviético en 1960—nunca fue publicada en vida del autor. El Financial Times anuncia una nueva biografía de Grossman, escrita por Alexandra Popoff y publicada por Yale University Press bajo el título Vasily Grossman and the Soviet Century (*). "It was the most dangerous times to be a humanist, pacifist and internationalist […] the amoral equivalence that Grossman drew between the Nazi and Soviet regimes was stark and incendiary". Dan ganas de leer Stalingrad y Life and Fate (comparada por algunos a Guerra y paz de Tolstoi).

(*) John Thornhill: "Poignant witness", Financial Times, 11-12 mayo de 2019. Sobre Romain Gary, ver la película La promesse de l'aube (2017). Ver también esta nota sobre Stalingrad, la primera novela de Grossman en una nueva traducción inglesa con las partes retiradas por la censura soviética.
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[2] Walter Bagehot. James Grant, well-known for his "Grant's Interest Rate Observer", is out with a biography of Walter Bagehot (1826-1877), former editor of The Economist, and one of the most influential Victorians (*). I used to watch Mr. Grant discuss financial markets on CNN, many years ago. Like me, he is a fan of John Adams—he even wrote Adams's biography: John Adams. Party of One (New York: Farrar, Strauss & Giroux, 2005 VIDEO). Walter Bagehot was an incredibly influential character. Lombard Street (1873), his masterwork on monetary economics, contains a dictum that was eventually embraced by most central banks during a financial crisis: "Lend freely against good collateral at a high rate of interest". Here's another great Bagehot quote: "To write about finance in a useful way is to take an unconventional view of the future (there’s not much demand for what everybody already knows)". But Bagehot was also a very influential political thinker. In The English Constitution (1867), he dealt a decisive blow to the idea that the British political system was based on the separation of powers when it was, in fact, a mixed regime [see].

(*) James Grant. Bagehot: The Life and Times of the Greatest Victorian. New York: WW Norton, 2019. See the review by John Plender: "A purveyor of punditry", Financial Times, 3 August/4 2019.
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[3] Hinde Pomeraniec. Hace un tiempo vi un RT de la siempre interesante Hinde Pomeraniec sobre la serie de HBO Years and Years dedicada al populismo de extrema derecha. No tengo el texto del RT, pero recuerdo el argumento: "Sería increíble que algo así sucediera en el siglo XXI". Recordé entonces al maestro John Adams, sin dudas el político de alto nivel que mejor entendía los contrapesos institucionales. En notas sobre los escritos de Mary Wollstonecraft sobre la Revolución francesa, Adams comenta: "The understanding will only make rivalries more subtle and scientific, but the passions will never be prevented, they can only be balanced" (*). La educación y la ciencia avanzan y seguirán avanzando; pero, contrariamente a lo que sugiere una visión ingenua —muy difundida en Argentina— esto no llevará de por sí a un mejor gobierno. Lo contrario puede suceder—demagogos siempre encontrarán argumentos 'científicos' para concentrar el poder en beneficio propio. La única solución, decía Adams, consiste en enfrentar pasión contra pasión, poder contra poder, fuerza contra fuerza.

(*) Centenares de citas de Adams están recopiladas en el magnífico libro de Zoltán Haraszti. John Adams and the Prophets of Progress. Harvard University Press, 1952 (esta cita es de la p. 229).
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[4] Hong-Kong. Fitch Ratings is downgrading Hong-Kong's foreign currency rating from AA+ to AA. Of particular concern, according to Fitch, is the blow to the quality of the territory's governance: "Hong Kong has an ESG Relevance Score of '5' for Rule of Law, Institutional and Regulatory Quality, and Control of Corruption as World Bank Governance Indicators have the highest weight in the SRM and are therefore highly relevant to the rating and a key rating driver". Meanwhile, noted China bear J. Kyle Bass has issued a report on the risks faced by China, a country "desperately short of dollars" (*). On his Twitter account, M. Bass mentions a strong upward pressure on HKD deposit rates: "Banks in HK are showing signs of panicked need for deposits. The money is running: deposit rate offers: China Merchants Wing Lung, 5% for 1mo HSBC, 4% for 7d Hang Seng, 4% for 7d : All while overnight HIBOR is 67bps and 1mo HIBOR is 1.85%. #HKQUIETPANIC #HKexit". Checks and balances and the cost of capital, anyone?

(*) J. Kyle Bass: "The Quiet Panic", Hyman Capital, April 2019.
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