Claim your one month free trial for access to our premium content.

By Bilal Hafeez 20-08-2019
In: post | Newsletter

Macro Hive Podcast Playlist: Curse of low rates / India’s Challenge / Deepfakes and news

Resize text:

(total reading time: 8 mins)

A growing number of economists are questioning the effectiveness of monetary policy. Among them is Professor Tuomas Malinen of the University of Helsinki, who in our first featured podcast argues that low rates impede productivity growth. We also have former Bank of England MPC member and labour market expert, Danny Blanchflower, dissecting weak wage growth.

Moving to emerging markets, we present a podcast looking at the current dispute between India and Pakistan and the numerous challenges that India’s Prime Minister, Narendra Modi, is facing. And sticking with India, we have former RBI governor Raghuram Rajan argue that the country needs large scale privatization and a revamp of policy making. We also examine how China is quietly warming up to the Middle East.

We also have a Deutsche Bank podcast that examines how technology impacts the way we consume news. One negative is ‘deepfakes’, which are prominent on social media and could appear in the 2020 election newsfeeds.

Finally, if you are wondering whether success comes from hiring individualistic ‘superstars’ or focusing more on strong team chemistry and social dynamic matters, I explore the scientific evidence in my latest podcast.

Scroll down for all the links and podcast summaries.


Podcast banner

He begs to differ (Grant’s Current Yield Podcast, 22 mins) Tuomas Malinen, CEO of GnS Economics and an Adjunct Professor of Economics at the University of Helsinki argues that an extremely low-interest-rate environment and QE don’t work as intended (in an excellent Hive special last week, John Tierney proposed that QE doesn’t reach the real economy). Malinen believes that the 1990’s experience of Japan should have been used by the major central banks as a case in point: that in effect, a low-interest-rate environment mutes price growth and fails to attack real GDP growth adequately. There is emerging evidence that these environments in fact impede productivity growth, and to illustrate his point he gives an example of how European Banking Sector profitability margins are being squeezed. Malinen also joins a number of economists calling for a re-visit in the mandate of Central Banks.

Why does this matter? Predictions are emerging of a further slowdown in the EU – at least according to the recent data. Using the reasoning presented by Malinen, further reduction in Interest Rate and QE may fail to ignite the growth engine in the EU. This, in turn, serves as a pessimistic scenario for the European Asset Classes, in particular, the Euro going forward.

Danny Blanchflower Discusses Labor Economics (Masters in Business, 75 mins) Danny Blanchflower, former Bank of England MPC member attempts to decipher the puzzle of muted wage growth despite unemployment nearing its natural rate. He states that income inequality disincentivizes the working class to raise productivity. He also questions whether the natural rate of unemployment (NAIRU) is about 4%, as western central bankers commonly believe. Blanchflower explains that if NAIRU was at 4%, we would have seen significant wage growth by now and the concept of the Zero Hour Contract (in the UK) would be deemed absurd. He claims that NAIRU in westerns state is around 2-2.25 % due to the structural break after 2008 GFC that caused workers to lose their bargaining power. 

Why does this matter? If NAIRU is below 4%, it makes central bank susceptible to policy errors. Moreover, it also puts things in perspective. After all, the recent cut by the FED could be more than just ‘Global Macro’ risks growing and ‘Mid Cycle’ adjustment, as they claim. In fact, it could be the rectification of prior errors – hiking rates when they shouldn’t have. Consequently, using Blanchflower’s argument and with the recent inversion in the US yield curve, it seems the markets may have got this right.

Kashmir Is the 72-Year ‘Wound’ between India and Pakistan (Deep Dish on Global Affairs, 29 mins) We recently observed Prime Minister Modi and his government’s historic announcement to alter the Indian Constitution and diminish Kashmir’s autonomy. In this podcast, Nisid Hajari from Bloomberg and academic Paul Stainland analyse the possible motives behind this change and its implications: the possibility of renewed insurgency in the region, civil unrest, and a US and global foreign policy response – something that so far seems subdued. Although recent increased development and investment in the region seems to be one of the main official reasons for the change, the extent of its success remains to be seen given that countrywide private investment is at a 14-year low. On the topic of India’s development, another insightful podcast that caught our eye interviews the former head of India’s central bank, Raghuram Rajan. He believes India’s hope to reach a large middle-income class similar to China’s lies in massive private sector expansion to create new wealth and the involvement of smaller communities in policy making.

Why does this matter? India needs to grow by at least 9% per year to reach Modi’s aim of making it a $5 trillion economy by 2025, and Kashmir expanded by 11% last year. The appeal for greater control is clear, therefore, but we see escalating tensions leading to further violence between Pakistan and India, hampering the already fragile development in the region. We also see issues with the predictions of 7.5% GDP growth for this year, given the local bank’s unwillingness to lend, a property crisis, and suffering consumer confidence.

Chinese Interests and Policies in the Middle East: A Conversation with Jon Alterman (Economics – Audio, 25 mins) In this episode, Dr Jon Alterman, director of the Middle East Program at Center for Strategic and International Studies, explains how for China, being the world’s largest importer of crude oil has an edge in building economic partnerships with MENA states. This includes exporting billions of dollars’ worth of Chinese infrastructure and hedging energy supply risks by striking balances between both non-US (Iran) and US allies (Saudi Arabia, the UAE) around the Gulf area. Alterman also speaks about the Sino-Israel relationship, where Israel sought to ‘remain interesting’ to China by exchanging military technologies and China responded by making tremendous investments in the Israeli economy. All this is causing concerns regarding US national security despite China’s claim to adhere to its ‘non-interference’ policy and stay out of the political disputes. China’s Belt-and-Road initiative also appeared lucrative to many MENA state governments, leading a surprising number of UN ambassadors from the area to support China’s recent mass detention of Uighur populations in its Xinjiang Province.

Why does this matter? East Asia and the Middle East have been quietly getting closer over the past few years and energy trade is part of the story. With the US trade tensions escalating, China is clearly seeking new partners – it has signed a number of strategic partnership agreements since Jinping’s first visit to the region in 2016. But we see concerns about the terms of loans and investment, which other states have found difficult to navigate. In the case of Sri Lanka, for example, having taken out large loans for ambitious infrastructure projects, it was unable to service its debt to China. Read more on the topic in this recent report.

The future of news (Podzept with Deutsche Bank Research, 14 mins) In an age of information overload, the future of news and its consumption is predicted to change. This podcast by Deutsche Bank provides an insight on five ways the 5G telecommunications network will change the way we consume news. A rise in charitable endeavours from wealthy individuals, i.e. Jeff Bezos, will sponsor the return of regional reporting. The advent of slow journalism will curate the coming of another life cycle of news consumption. Recently the FT reported it’s 1 millionth subscriber proving that people are willing to pay for trusted news.  As in other industries, automation is playing a big role as we see the Associated Press enlisting the help of AI to write standard reports. Finally, news bulletins are also making a comeback with Reuters already developing a curated video news bulletin.

Why does this matter? Fake news seems to be an ongoing epidemic in the current Internet era (we also came across a related podcast on the emerging issue of ‘deepfakes’). The change in consumer habits might herald a new age of news production and an opportunity to stamp this out.



(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)

Sign up for the free newsletter here: