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EconVue Spotlight

Dear R. Hunter,

It has been an eventful year with no let-up post-Brexit & Trump. In 2016
the longest-ruling monarch, King Bmibol Adulyadejhu of Thailand, and the
longest-ruling national leader, Fidel Castro, both passed from the
scene. A surprise demonetization in India made economic history, as
Zimbabwe prepares to sweep US dollars from circulation . Change is
everywhere and the pace seems to be quickening. Today, 2 million people
gathered to demand the ouster of South Korean President Park Geun-hye.
Yesterday, President-elect Trump spoke with Taiwanese President Tsai
Ing-wen breaking diplomatic tradition, and tomorrow we await the results
of the Italian constitutional referendum.

If 2016 has taught us one lesson, it must be humility in the face of
history. We have gathered some of the best analysis we can find to begin
to piece together the puzzle of 2017.

We include a deep dive by the esteemed young economist Esther Duflo that
relates to easing the friction of fiscal expansion. Carmen Reinhart
discusses the increase in Italian debt as a result of capital flight,
and we take a look at a surprising map of public debt per capita.
Infrastructure, energy, China, Malaysia, India, Iran, Japan, the UK, and
Harvard Law Prof. Hal Scott's address to the IMF on the dangers of
Dodd-Frank round out our Spotlight this week.

STORIES IN OUR SPOTLIGHT Fleeing from Italy

https://www.project-syndicate.org/commentary/capital-flight-from-italy-by-carmen-reinhart-2016-11

Carmen Reinhart 11/23/2016 Project Syndicate As a member of the EU,
Italy no longer has the option of raising interest rates, devaluing its
currency, or controlling capital outflows, which have soared. The
country is holding a constitutional referendum on December 4th which
could presage an exit from the EU if a No vote forces out PM Mario
Renzi. The more interesting result in this contrarian year would be a
Yes vote, which would be stabilizing for the EU and the euro. Reports
are that younger voters are supporting Renzi-could the polls be wrong
again? US House Passes Taiwan-US Military Exchanges Draft

http://www.taipeitimes.com/News/taiwan/archives/2016/12/04/2003660548

Taipei Times 12/4/2016 While the focus on Friday was on Trump's phone
call with Taiwan, the same day the US House of Representatives passed a
draft agreement for senior military exchanges between Taiwan and the US,
which in previous years had been vetoed by the White House. Last year,
the US sold $1.7B of military equipment to Taipei. IMF U-turns on Brexit
warning as UK poised to be fastest growing G7 economy this year

http://www.cityam.com/250721/imf-u-turns-brexit-warning-uk-poised-fastest-growing-g7

Jessica Morris 1/4/2016 City A.M. Markets didn't crash, and the UK
economy grew; Cassandra was wrong before & after the UK-US votes. But is
the current run sustainable?

These countries are saddled with the most debt per person, in one chart

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct4_1/1?sid=TV2%3Andyp9X4RM

Rachel Koning Beals 11/23/2016 MarketWatch

A lot of discussion about the state of the world economy centers around
mounting public debt. Try to find China on the terrific graphic in this
article. Its public per capita debt is minuscule, $1,300 compared to the
US $42,500 and the winner, Japan at $85,700.

How Does Education in China Compare With Other Countries?

http://chinapower.csis.org/education-in-china/?utm_source=CSIS+All&utm_campaign=5bb16f8c4c-EMAIL_CAMPAIGN_2016_12_01&utm_medium=email&utm_term=0_f326fc46b6-5bb16f8c4c-150295485

CSIS China Power 2016

467,308 primary schools closed in China since 1995. How does education
in China compare with other countries?

Hal S. Scott Delivers Speech to International Monetary Fund on
Connectedness and Contagion

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct6_1/1?sid=TV2%3Andyp9X4RM

Harvard Law Professor Hal S. Scott 11/7/2016

T he U.S. crisis was successfully stemmed with three weapons: 1) lender
of last resort; 2) liability guarantees and 3) capital injections. Post
crisis, all of these weapons have been limited or eliminated, primarily
by the Dodd-Frank Act, as undesirable "bailouts."

The Economist as Plumber: Laying the Pipes, Fixing the Leaks

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct7_1/1?sid=TV2%3Andyp9X4RM

Esther Duflo 11/8/2016 IMF Richard Goode Lecture

The wunderkind French MIT economist says that fiscal expansion without
efficient means of transmission to receptive nodes of the real economy
will be wasteful and ineffective. She calls upon economists to assist
with smart policy.

What We Learn From a Sovereign Debt Restructuring in France in 1721

https://www.chicagofed.org/publications/economic-perspectives/index

François R. Velde 2016 Federal Reserve Bank of Chicago How the ‘Trump
Bump' to the U.S. Economy Could Fall Flat

http://www.marketwatch.com/story/how-the-trump-bump-to-the-us-economy-could-fall-flat-2016-11-28

David Levy 11/28/2016 Jerome Levy Forecasting Center, MarketWatch We
still maintain that the ultimate Treasury yield lows are to come…In any
event, the next global downturn likely will drive overnight rates back
to zero and Treasury yields to new lows under the weight of deflating
balance sheets.

The Trump Trade Is Getting Out of Hand: Buy Bonds

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct10_1/1?sid=TV2%3Andyp9X4RM

James McKintosh 11/14/2016 Wall Street Journal

Infrastructure money takes time to spend. Did markets overshoot? Once
more is known, the Trump Bump could come to an end.

China's Bond Market Can't Handle a Global RMB

http://blogs.cfr.org/geographics/2016/12/01/chinas-bond-market-cant-handle-a-global-rmb/

Benn Steil and Emma Smith 12/1/2016 CFR

Great Expectations: Geo-Graphics, China's Bond Market Can't Handle a
Global RMB.

How Republicans Plan to Spend Like Crazy Without Running Up Debt

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct12_1/1?sid=TV2%3Andyp9X4RM

Brendan Greeley 11/17/2016 Bloomberg Will new goverment debt crowd out
private investment? Maybe not. Trump is focused on public-private
partnerships.

USGS Estimates 20 Billion Barrels of Oil in Texas' Wolfcamp Shale
Formation

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct13_1/1?sid=TV2%3Andyp9X4RM

U.S. Geological Survey 11/15/2016

Geopolitically, why should the US care about OPEC? OPEC does not have a
history of keeping to its promises to curb production. Saudi Arabia is
also preparing for an IPO of Aramco which could have impacted its
decision.

Maximizing the Opening with Iran: How President Trump Can Secure
American Interests in the Middle East

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct14_1/1?sid=TV2%3Andyp9X4RM

Video conference to discuss report

https://www.niacouncil.org/wp-content/uploads/2016/11/Report_Improving-US_Iran_Relations_TRUMP_fnl2email.pdf

to the PEOTUS by the National Iranian American Council 11/16/2016

Steve Clemons of the Atlantic moderates an impressive panel. John
Mersheimer, Trita Parsi, Reza Murashi, Andrew Bacevich, Sanam
Naraghi-Anderlini.

Malaysia Caught in Currency Ripples

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct16_1/1?sid=TV2%3Andyp9X4RM

Christopher Langner 11/20/2016 Bloomberg

Malaysia's butterfly flaps its wings. Will a storm result?

Zimbabwe: 'They Want to Sweep All the Usd From the Streets' - What
Zimbabweans Are Saying About #bond Notes

http://allafrica.com/stories/201611280973.html

AllAfrica, News24Wire 11/28/2016

ECONVUE RESEARCH AND INSIGHTS We are pleased to introduce London-based
expert Deepak Lalwani

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct18_1/1?sid=TV2%3Andyp9X4RM

Mr. Lalwani specializes in Indian economics and finance. Download his
latest report

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct19_1/1?sid=TV2%3Andyp9X4RM

on the recent politically bold, but risky demonetization by Prime
Minister Modi aimed at corruption, tax evasion and terrorist financing.
An economic experiment on a grand scale.

Trump Dilemma on NAFTA - Part 1

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct20_1/1?sid=TV2%3Andyp9X4RM

& Part 2

https://econvue.com/reports/richard-katz/trumps-dillemma-nafta-china-part-2

Richard Katz

http://content.davidhaleweb.com/acton/ct/3037/s-01c8-1612/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct22_1/1?sid=TV2%3Andyp9X4RM

The "Rust Belt" states, as well as Texas and California, are far more
dependent on trade than the US as a whole. And this dependence includes
not just the items that they export, but it also includes all the
imports that provide indispensable inputs to their own production. Data
Round-Up: Solid November Jobs Report Sends All-Clear for FOMC Rate Hike

https://econvue.com/reports/michael-lewis/data-round-solid-november-jobs-report-sends-all-clear-fomc-rate-hike

Michael Lewis

https://econvue.com/experts/michael-lewis

A tale of two surveys: it was the best of times, it was pretty good
times. Payrolls turned in another fine (consensus-like) performance.
Data Round-Up: Solid Income Gains Fueling Near +2.5% Consumption for
16Q4

http://econvue.com/reports/michael-lewis/data-round-solid-income-gains-fueling-near-25-consumption-16q4

Michael Lewis

https://econvue.com/experts/michael-lewis

Based on these early results, real consumption is on track to grow near
a respectable +2.5% this quarter. Healthcare's Gettysburg Moment

http://econvue.com/pulse/healthcare's-gettysburg-moment

David W. Johnson

https://econvue.com/experts/david-w-johnson

As the new Trump administration takes shape, healthcare represents a
unique opportunity to pursue bi-partisan reform based on the
market-based mechanisms embedded within Obamacare (even after its
repeal). FinTech Notes

https://econvue.com/pulse/random-fintech-notes

Collin Canright

https://econvue.com/experts/collin-canright

Top 2016 fintech influencers and brands, regulatory effects in faster
payments, fintech grief cycle for bankers, lessons from a long-forgotten
fintech bank, and blockchain watch. A new panel

https://econvue.com/panels/japans-corporate-governance-revolution

is now up on our site. Our EconVue expert Nicholas Benes

https://econvue.com/experts/nicholas-benes

discusses the corporate governance revolution in Japan. Please register

https://econvue.com/user/register?destination=node/1000%23comment-form

to participate in the discussion.

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Lyric Hughes Hale

Editor-in-Chief

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