Michael Pettis: The Absurd Theater Of The AIIB

Michael Pettis in GlobalSource Partners’ newsletter highlights the importance of Asian Infrastructure Investment Bank (AIIB) and London’s decision to join it.

London’s decision to join the AIIB creates a spectacular political theater

Special points to highlight in this issue:

Michael Mauboussin: Here’s what active managers can do

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkThe debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More

  • Investors seem to be increasingly acknowledging that the world suffers from a structural excess of savings over desired private investment, and it is this excess that was responsible for the excess consumption during the bubble years and the weak demand and high unemployment since then.
  • The best path for the global economy to follow would be if policymakers in creditworthy countries took advantage of very ample credit availability as extraordinarily low long-term rates to fund a massive rebuilding of productivity-enhancing infrastructure. Policy gridlock and confusion about the distinction between rising debt and a rising debt burden, however, make this unlikely.
  • London’s decision to join the Asian Infrastructure Investment Bank (AIIB) was shocking, and it created spectacular political theater, especially embarrassing for Washington and favorable for Beijing, but the importance of the AIIB has been overstated. It is unlikely to represent a significant shift in the way trade and capital flows are managed in the future.
  • And it will do very little, if anything, to further the RMB’s progress towards becoming a major reserve currency. The only very plausible ways in which this can happen is either if the PBoC were to take on trillions of dollars of extremely risky exposure to very weak sovereign credits, or if China were willing to run large trade deficits.

For additional information and full country coverage, please visit our website www.globalsourcepartners.com.

We can also be reached by phone, 212.317.8015, or by email, [email protected]