Financial market insights and politics aficionado | trying to craft us a better future (all views are my own, 'likes' are not necessarily endorsements)
Stockholm, Sweden
Joined June 2014
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Governments have taken up a massive borrowing from future generations. Some stats on to what extent it was used for productive investments vs pensions/consumption/etc would be interesting (and maybe terrible).
The global debt crisis has never been worse.
Japan now has a gross government Debt-to-GDP ratio of 204.4%, the highest among any major world economy.
Italy follows at 138.4%, while the United States stands at 125.8%, which is only below the ~132.0% record set during the 2020 pandemic.
At the same time, France’s gross government Debt-to-GDP ratio is 118.4%, while Canada’s, China’s, and the UK’s are 110.7%, 106.9%, and 103.6%, respectively.
By comparison, Germany is the only major economy below 100.0%, at 64.6%.
The current average among advanced economies is 108.2%.
The world economy is drowning in debt.
Roger T Storm retweeted
After an initial broad sell-off, markets have started to differentiate among 🇪🇺 govts. Spreads widened again in 🇫🇷 & 🇧🇪, which has a weak backdrop, fractious politics and large consolidation needs, but shrank in South Europe. Bond market is back as the key constraint for govts.
Roger T Storm retweeted
ChatGPT has now a big problem.
Researchers at Oxford and Cambridge exposed a massive threat to large language models.”
They call it “model collapse."
Internet ecosystem is rapidly changing, and generative AI will soon contribute much of the text found online. This forces us to consider what happens to future iterations like gpt-n when they are trained on data scraped from the web that was already generated by an llm.
According to the research, indiscriminately using model-generated content in training causes "irreversible defects" in the resulting ai. the model loses the "tails of the original content distribution." in other words, it begins to forget the creative, fringe, and unique nuances of actual human writing, collapsing into a repetitive echo chamber.
This isn't just a chatgpt issue.. the researchers built theoretical intuition showing this collapse is ubiquitous across learned generative models, occurring in large language models as well as in variational autoencoders and gaussian mixture models.
Tech companies rely on scraping the internet for large-scale data to build smarter models. However, the paper warns that if we want to sustain the benefits of training on web data, model collapse must be taken seriously.
Ultimate takeaway? data collected from genuine human interactions is going to become increasingly valuable in a web filled with ai content.
Roger T Storm retweeted
How are prices determined? While I slept, Claude made me "History of economic thought since Aristotle." I asked it to use my favourite textbook (Blaug, Economic Theory in retrospect). The result will astonish of you. Even top economists here will learn something, I promise.
Roger T Storm retweeted
Some data we recently assembled on entrepreneurship/compute in Europe: eudata.vercel.app.
We hope that one of the useful roles that Stripe can play is in collecting and publishing empirical data pertaining to entrepreneurship and industry in Europe. There's growing appetite to get Europe on a better footing, and cross-sectional comparisons can often shine light on where opportunities lie. If you're interested in this kind of thing, we publish more at stripeeconomics.substack.com.
Roger T Storm retweeted
🇺🇸 Palo Alto säger att AI kommer driva cybersäkerhetsinvesteringar, något vi hört förut, men som det inte pratas tillräckligt mycket om. AI sägs tvinga företag att modernisera ca 1 000 miljarder dollar om året i global cybersäkerhetsinfrastruktur. Detta märks också på bolagen där Palo Alto rusat +85% YTD likväl som sektorkollegan Crowdstrike som rusat +79% för att nämna två. Faktum är att cybersäkerhet driver på renässansen för SaaS där min barometer är IGV #PrataPengar #Finanstwitter articles.finwire.com/FWM00EB…
Roger T Storm retweeted
To all those who still believe it’s “business as usual,” “hybrid,” “globalization, “complex interdependence,” and all that nonsense: Please pay attention to what communist #China has been doing.
China just passed a law that lets it seize your assets in wartime. It takes effect right before Xi locks in his fourth term.
Beijing revised its National Defense Mobilization Law on August 28. Effective October 1. It defines how the state converts the entire country from peacetime to wartime, financial systems, transportation, water, energy, all rationed and prioritized for the military.
The revision adds one word that changes everything: expropriation. Not requisition. Confiscation. Analysts note it's vague enough to apply to any business or individual inside China, foreign companies included, despite officials' assurances otherwise.
It also links "unity" directly to wartime mobilization for the first time. One analyst called it plainly: legal warfare against Taiwan, laying the legal groundwork in advance so an invasion looks justified to the rest of the world after the fact.
The timing isn't incidental. This clears the legal runway right before Xi's expected fourth term is announced at next year's Party Congress. One analyst predicts China effectively goes under martial law in the gap between now and then, to guarantee nothing embarrassing happens on the way to consolidating his grip.
Roger T Storm retweeted
🇳🇴🇷🇺L'affaire des câbles sous-marins du Svalbard connaît des rebondissements.
D'après Reuters, au printemps, des forces britanniques, norvégiennes et américaines ont surpris des sous-marins russes près de l'archipel nordique.
Ils étaient en train de simuler le déploiement d’une nouvelle technologie destinée à neutraliser des câbles sous-marins critiques sans laisser de traces. L’opération était menée par le GUGI, l’unité russe spécialisée dans la guerre des grands fonds.
L’enjeu est considérable car les câbles reliant le Svalbard à la Norvège continentale transportent notamment les données de SvalSat, la plus grande station satellite au monde. Leur destruction pourrait perturber communications, transactions financières et capacités spatiales occidentales.
Pour certains responsables du renseignement, ce type de sabotage pourrait ainsi faire partie des premières actions russes en cas de confrontation directe avec l’OTAN. Cette opération s’inscrit surtout dans une pression russe désormais constante sur le Grand Nord.
Moscou cartographie les infrastructures sous-marines, développe des capacités de sabotage et dispose dans la péninsule de Kola d’une importante flotte de sous-marins nucléaires dont l'accès à l’Atlantique passe par les eaux arctiques.
Face à cette menace, l’OTAN renforce ses patrouilles et multiplie les exercices autour du Svalbard, de Jan Mayen et des principales voies d’accès à l’Atlantique Nord (d'où l'importance stratégique de l'Islande d'ailleurs). S'attaquer à des câbles sous-marins dans l'Arctique est une action typique de la guerre hybride russe.
L'OTAN les a dissuadés pour ce coup-ci, mais il faut garder les deux yeux sur la menace.
🇳🇴🇷🇺Des navires de pêche russes ont multiplié des passages au-dessus des câbles sous-marins reliant la Norvège au Svalbard.
La répétition de ces mouvements, parfois par des bâtiments déjà surveillés par le contre-espionnage norvégien, alimente les inquiétudes à Oslo.
En 2022, l’un des deux câbles reliant le Svalbard à la Norvège avait été endommagé par une activité probablement humaine après qu’un chalutier russe eut effectué des dizaines de passages dans la zone. En 2021, plusieurs kilomètres d'un autre câble sous-marin norvégien avaient été déplacés.
Le cas illustre parfaitement la menace hybride russe : des activités civiles parfaitement ordinaires peuvent également offrir des capacités de renseignement, de surveillance ou d’action contre des infrastructures stratégiques.
La Norvège continue évidemment de surveiller étroitement ses eaux mais c'est régulièrement que des navires russes, tant civils que militaires, attirent l'attention en Mer de Barents. L'Arctique est une zone d'influence importante pour la Russie qui s'y comporte comme si tout lui appartenait.
Roger T Storm retweeted
Varningsklockor borde ringa högre - inte minst i EU. Kinas exporttillväxt i aug: +25% !!! Om några veckor träffas Xi & Trump i Vita huset. I oktober ska Kina & EU hitta väg framåt för bilaterala handeln. Om man har läst Kinas nya 5-årsplan inser man: Kinas strategi ligger fast.
Roger T Storm retweeted
Diversification has become more difficult in recent years. Stocks and bonds increasingly sell off together, weakening a core hedge that investors relied on for decades. This shift raises new risks for investors and financial stability. More in our blog
imf.org/en/blogs/articles/20…
China tightens grip on Europe’s car supply chain
giftarticle.ft.com/giftartic…
Roger T Storm retweeted
BREKAING: China now accounts for ~28% of global manufacturing, more than any other country or economic bloc.
This percentage has more than tripled since 2004.
By comparison, US factories account for ~17% of global manufacturing value added, or 11 percentage points less than China.
In 2004, the US proportion stood at ~22%, more than double China's.
Meanwhile, the Eurozone economy represents ~15% of world manufacturing, while Japan accounts for just ~5%.
China has become a critical component of global manufacturing.
Interesting reflection on where we are heading with AI - the financing capacity. Where in the stack the value-add will remain, is another question
Ex Google CEO, Dr. Eric Schmidt: AI may hit a money wall before it hits a power wall.
"The real limit to AI is not energy; it is actually cash. When you add up the cost of these things, if you take round numbers, say $50 billion per gigawatt, then 10 gigawatts is half a trillion dollars.
How many companies, countries, and so forth can hand an industry a trillion dollars of capital? Very, very few. The Chinese could certainly do it. I do not know if they are doing it, but I am going to try to find out.
In America, there are people who hope that is going to happen. It is interesting that you can finance these things because the brilliance of the American capital market allows us to borrow that kind of money. For example, the Europeans cannot do this, which they are sort of sore about."
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Full video from 'Special Competitive Studies Project' YT channel ( link in comment)
Roger T Storm retweeted
Satya Nadella, CEO of Microsoft, says every company now runs on two kinds of capital, and leaking one of them is a one-way door:
"This economy is going to be shaped going forward by both human capital and, let's call it, this token capital. That is true for Microsoft, that is true for a new startup, that's going to be true for any bank that's been in existence for 100 years."
"The interplay between human capital and token capital, and compounding the returns of it, is what you need to do."
"What is the tacit knowledge of an enterprise or a firm? It's the unique ways that you're able to operate, pass judgment, have taste."
"The model, in some sense, is able to extract that tacit knowledge through human trajectories, and then code it in a set of weights in a model."
"Every enterprise now needs to be more mindful about that interplay of humans and their digital estate working together, those trajectories training the models that they keep as IP versus leak it."
"Because if you leak it, it's a one-way door. You're done in some sense."
The moat was never the data sitting in your warehouse. It was the judgment your people apply to it, and AI now turns that judgment into weights you either own or hand away.
Treat your tacit knowledge like a patent, not a prompt. The firms that pipe a hundred years of taste into someone else's frontier model are trading a permanent edge for a quarter of convenience.
Interesting read … change of trade economists’ perspective
I figured this would eventually happen, but not as quickly as it seems to be happening and, for this, Paul Krugman should get credit. For years mainstream economists were unable to understand how trade and globalization work because they were locked into trade models that implicitly assumed that trade was balanced (except, occasionally, over short time periods) and that capital flowed towards its most productive use. That is why their understanding of trade had no relevance to the actual world of trade that emerged in the 1970s and 1980s.
But this couldn't last. As the problem of unbalanced trade became more obvious , and as policymakers were increasingly forced to ignore the advice of their economists and respond to real problems, mainstream economists would eventually begin to recognize how, in an unevenly globalized world, countries that aggressively intervene in their domestic economies and externalize the costs through trade surpluses are also effectively intervening in the domestic economies of countries that supposedly remain committed to "free trade".
Most economists still don't understand trade. But with Krugman now acknowledging that tariffs and other forms of trade intervention can be expansionary under some conditions and contractionary under others (as Ragnar Nurkse explained as long ago as in his 1944 book), I suspect that younger economists will develop a completely different understanding of trade, and one that is perhaps a little more realistic.
Roger T Storm retweeted
This remains the most insane data point about France. Companies there must spend €95k to pay an employee a net €39k.
Can you imagine the incentive to replace French jobs with AI and robots?
Roger T Storm retweeted
A country with fewer people than NYC built the greatest serial acquirer ecosystem on the planet.
Sweden's serial acquirers returned 40x over 20 years.
They buy small, profitable, family-owned businesses and hold them forever.
Roger T Storm retweeted
This is the most understated issue in Europe. Spain and Italy have some of the lowest birth rates in Europe and, at the same time, the highest unfunded pension obligations, at more than 400% of GDP
Who is supposed to pay these unfunded pensions if the next generation is missing?
Roger T Storm retweeted
EU Capital Markets Union
Finance ministers of the six largest EU economies met in Berlin
Germany, France, Italy, Spain, the Netherlands, and Poland have agreed on a joint position to advance the EU’s Capital Markets Union.
This would mean:
Easier access to financing for European companies
Removing barriers to cross-border investment
Stronger EU-level supervision (ESMA)
These six countries represent ~70% of the EU population and the vast majority of its capital markets
This could unlock trillions in investment and reduce Europe’s heavy reliance on bank lending.
Ireland and Luxembourg are the only ones to oppose this.
The final decision will require qualified majority: 15 out of 27 EU countries + those countries represent at least 65% of EU population. E6 already covers ~70%, so passage is now very likely.
