Does Europe Still Matter?

Europe Is Losing
https://www.wsj.com/world/europe/europe-is-losing-fe179376
European nations have fallen far behind in economic dynamism and military clout. Will the continent that once ruled the world become a bystander to history? 

Jerome Powell's Take on the State of the US Economy

Powell’s Take: Monetary Policy and the Fed’s Framework Review
https://www.federalreserve.gov/newsevents/speech/files/powell20250822.pdf
This year, the economy has faced new challenges. Significantly higher tariffs across our trading partners are remaking the global trading system. Tighter immigration policy has led to an abrupt slowdown in labor force growth. Over the longer run, changes in tax, spending, and regulatory policies may also have important implications for economic growth and productivity. There is significant uncertainty about where all of these polices will eventually settle and what their lasting effects on the economy will be.
Changes in trade and immigration policies are affecting both demand and supply. In this environment, distinguishing cyclical developments from trend, or structural, developments is difficult. This distinction is critical because monetary policy can work to stabilize cyclical fluctuations but can do little to alter structural changes.

Related:

Powell Is on the Cusp of Taking a Big Gamble with the U.S. Economy 
https://www.nytimes.com/2025/08/21/business/jerome-powell-fed-jackson-hole.html 

President Trump’s efforts to control the Federal Reserve and the Bureau of Labor Statistics are among a series of moves that pose a larger threat, economists warn.
https://www.nytimes.com/2025/08/22/business/trump-federal-reserve-bls.html

How Long Can This Uncanny Stock Market Prosper?
https://www.nytimes.com/2025/08/22/business/stock-market-nvidia-trump.html 

The Failure of Fed’s FAIT Framework
https://vivekjayakumar.blogspot.com/2025/08/the-failure-of-feds-fait-framework.html

China, US, and the Future Global Economic Order

The New Economic Geography by ADAM POSEN (President of the Peterson Institute for International Economics)
https://www.foreignaffairs.com/united-states/new-economic-geography-posen
Who Profits in a Post-American World? 

The Weaponized World Economy
https://www.foreignaffairs.com/united-states/weaponized-world-economy-farrell-newman
Surviving the New Age of Economic Coercion.
 
China Is Enjoying Trump 2.0
https://www.foreignaffairs.com/china/china-enjoying-trump-20
How the Trade War Is Helping Beijing Prepare for Long-Term Competition.
 
The Real China Model
https://www.foreignaffairs.com/china/real-china-model-wang-kroeber
Beijing’s Enduring Formula for Wealth and Power. 

A Long-Term Threat to the US Economy

Trump’s Attacks on Institutions Threaten a Bulwark of Economic Strength
https://www.nytimes.com/2025/08/22/business/trump-federal-reserve-bls.html
President Trump’s efforts to control the Federal Reserve and the Bureau of Labor Statistics are among a series of moves that pose a larger threat, economists warn. 

The AI Vibe Shift

The AI vibe shift is upon us
https://www.cnn.com/2025/08/22/business/ai-vibe-shift-nightcap 

An MIT report that 95% of AI pilots fail spooked investors. But it’s the reason why those pilots failed that should make the C-suite anxious
https://finance.yahoo.com/news/mit-report-95-ai-pilots-165754716.html

Disagreement Among Economists

Economists disagree about everything. Don’t they?
https://www.economist.com/finance-and-economics/2025/08/21/economists-disagree-about-everything-dont-they
Their discipline is famous for its fissiparousness. 

On Globalization

Was globalization ever a meritocracy?
https://www.economist.com/international/2025/08/19/was-globalisation-ever-a-meritocracy
The Trumpian assault on globalism, as seen from Singapore. 

Decarbonization Battle - China versus USA

China’s Decarbonization Is So Fast Even New Coal Plants Aren’t Stopping It
https://foreignpolicy.com/2025/08/21/china-clean-renewable-energy-coal-plants-emissions/
Advances in clean energy are compensating for new construction.
 
Trump’s Global War on Decarbonization
https://www.project-syndicate.org/commentary/trump-global-war-on-decarbonization-green-technologies-by-mark-blyth-and-daniel-driscoll-2025-08
The Trump administration is doing everything it can to ensure that fossil fuels remain dominant in the energy mix of the twenty-first century. If it succeeds, the short-term returns to the US will be huge; but the long-term damage to the planet will be orders of magnitude larger. 

Financial Trading – Complex versus Simple Models

In praise of complicated investing strategies
https://www.economist.com/finance-and-economics/2025/08/18/in-praise-of-complicated-investing-strategies
To understand markets, forget Occam’s razor.

AQR's 'Hard to Believe' Study Spurs Clash Over AI Use for Quants
https://www.bloomberg.com/news/articles/2025-08-20/aqr-s-hard-to-believe-study-spurs-clash-over-ai-use-for-quants
Ungated version:
https://www.fa-mag.com/news/aqr-s--hard-to-believe--study-spurs-clash-over-ai-use-for-quants-83735.html
 
The Virtue of Complexity in Return Prediction
https://doi.org/10.1111/jofi.13298
ABSTRACT
Much of the extant literature predicts market returns with “simple” models that use only a few parameters. Contrary to conventional wisdom, we theoretically prove that simple models severely understate return predictability compared to “complex” models in which the number of parameters exceeds the number of observations. We empirically document the virtue of complexity in U.S. equity market return prediction. Our findings establish the rationale for modeling expected returns through machine learning. 

Germany’s Economic Challenges

Can Germany’s Merz Revive the Economy? Voters Are Running Out of Patience
https://www.wsj.com/world/europe/can-germanys-merz-revive-the-economy-voters-are-running-out-of-patience-651902fc
A torrent of bad economic news is pushing the German chancellor to focus on the home front this autumn.
 
Germany falls back into ‘recessionary territory’ as second-quarter GDP revised down
https://www.ft.com/content/a4d2660f-311f-4281-895c-c95274234a7f
Europe’s largest economy contracted 0.3% as exports and investment dropped. 

The Failure of Fed’s FAIT Framework

In 2020, the Fed introduced a new framework – the Flexible Average Inflation Targeting (FAIT) framework. It is now largely considered to be a flop:
Powell Plans U-Turn on an Economic Strategy That Soured by Nick Timiraos
The Fed unveiled a strategy five years ago for worries that the economy outgrew. Now, it will formally reset.
https://www.wsj.com/economy/central-banking/fed-jerome-powell-strategy-change-6fab8188

Fed Officials Erase Old Policy That Tolerated Higher Inflation
https://www.wsj.com/economy/central-banking/fed-officials-erase-old-policy-that-tolerated-higher-inflation-7636e3ee
The central bank retired a previous strategy and on Friday unveiled a new approach that updates how inflation and employment are balanced. 
 
As far back as September 2020, I argued that adoption of the FAIT framework was a mistake:
Will the Fed’s recasting of its monetary policy strategy help the US economy? BY Vivekanand Jayakumar, The Hill - 09/01/20
https://thehill.com/opinion/finance/514624-will-the-feds-recasting-of-its-monetary-policy-strategy-help-the-us-economy/
 
In Feb 2021, I again critiqued Fed actions during the pandemic era:
Have misguided policies led to recent asset bubbles and boom-bust cycles?
BY Vivekanand Jayakumar, The Hill - 02/16/21
https://thehill.com/opinion/finance/538921-have-misguided-policies-led-to-recent-asset-bubbles-and-boom-bust-cycles/
An added risk in the current cycle is that surging asset prices combined with unprecedented fiscal and monetary largesse may finally cause inflation to emerge from its long dormancy. Standard inflation measures often fail to properly account for early signs of pricing pressures. By having overcommitted to its easy policy stance, the Federal Reserve will find it hard to change direction in the future without creating significant financial market upheaval. 

Growing Popularity of Women's Professional Sports in India

Women in Indian Sports Sweat for Their Share of a Booming Market
https://www.nytimes.com/2025/08/21/world/asia/india-sports-women-female-athletes.html
Female athletes are using social media to increase viewership and seek better sponsorship deals in a field long dominated by men. 

The Stunning Elegance of Smriti Mandhana (Indian Cricket Star):

Smriti Mandhana Hits 112 Runs off 62 Balls | England v India

https://youtu.be/TxXwlMfmNQc

Mobile Devices in Classrooms

Smartphone/Technology Usage in Classroom and Student Performance
https://vivekjayakumar.blogspot.com/2023/12/smartphones-and-dumbing-down-of-society.html

Here’s What Happened When I Made My College Students Put
https://www.nytimes.com/2025/08/21/opinion/mobile-phones-college-classrooms.html
 
The Pen Is Mightier Than the Keyboard: Advantages of Longhand Over Laptop Note Taking
https://www.jstor.org/stable/24543504
Abstract
Taking notes on laptops rather than in longhand is increasingly common. Many researchers have suggested that laptop note taking is less effective than longhand note taking for learning. Prior studies have primarily focused on students' capacity for multitasking and distraction when using laptops. The present research suggests that even when laptops are used solely to take notes, they may still be impairing learning because their use results in shallower processing. In three studies, we found that students who took notes on laptops performed worse on conceptual questions than students who took notes longhand. We show that whereas taking more notes can be beneficial, laptop note takers' tendency to transcribe lectures verbatim rather than processing information and reframing it in their own words is detrimental to learning.
 
Brain Drain: The Mere Presence of One’s Own Smartphone Reduces Available Cognitive Capacity
https://www.journals.uchicago.edu/doi/10.1086/691462
Abstract
Our smartphones enable—and encourage—constant connection to information, entertainment, and each other. They put the world at our fingertips, and rarely leave our sides. Although these devices have immense potential to improve welfare, their persistent presence may come at a cognitive cost. In this research, we test the “brain drain” hypothesis that the mere presence of one’s own smartphone may occupy limited-capacity cognitive resources, thereby leaving fewer resources available for other tasks and undercutting cognitive performance. Results from two experiments indicate that even when people are successful at maintaining sustained attention—as when avoiding the temptation to check their phones—the mere presence of these devices reduces available cognitive capacity. Moreover, these cognitive costs are highest for those highest in smartphone dependence. We conclude by discussing the practical implications of this smartphone-induced brain drain for consumer decision-making and consumer welfare.

Ban smartphones from schools, says major UN report
https://www.telegraph.co.uk/news/2023/07/25/smartphones-school-classroom-ban-united-nations-unesco/
Report warns excessive mobile phone use is associated with poor educational performance and emotional instability
 
Related: https://www.unesco.org/gem-report/en/technology 

Goods versus Services Trade

The Trade That Binds the Indian and American Economies
https://www.nytimes.com/2025/08/21/business/trump-tariffs-india.html
President Trump focuses on the trade in manufactured goods, where India sells more to the U.S. than it buys. But the countries share a balanced trade in services. 

Currency Competition

When the Dollar Falls
https://www.project-syndicate.org/onpoint/what-happens-if-dollar-is-no-longer-world-leading-reserve-currency-by-dennis-j-snower-2025-08
By driving up the federal debt, undermining central-bank independence, and imposing sweeping tariffs on key allies, US President Donald Trump is striking at the heart of America’s financial power. If the dollar were to lose its reserve-currency status, the resulting realignment would be neither gradual nor orderly.
 
EU speeds up plans for digital euro after US stablecoin law
https://www.ft.com/content/8ad60169-d1e5-4d2c-b928-d53d668f0ec6
Concern over competitiveness raises possibility of digital currency using public rather than private blockchain.

China considering yuan-backed stablecoins to boost global currency usage, sources say
https://www.reuters.com/business/finance/china-considering-yuan-backed-stablecoins-boost-global-currency-usage-sources-2025-08-21 

Tariff Impact is Starting to Emerge

The Steep Cost of Tariffs Is Finally Coming into Focus
https://www.bloomberg.com/opinion/articles/2025-08-21/trump-tariffs-steep-cost-is-coming-into-focus
If the original motivation was to reduce trade deficits, it now looks as if the only way that will happen is through slower economic growth and investment.

Trump’s roving banditry will undermine the US economy
https://www.ft.com/content/030fd15e-9780-40a9-9f58-5dc37692ddf3
On tariffs and tax the president acts like a mafia boss, but not a very good one 

Trump and the Triffin Dilemma

The Defunct Economist Who Shapes Trump’s Trade Policy
https://www.wsj.com/opinion/the-defunct-economist-who-shapes-trumps-trade-policy-6726b3bb
Robert Triffin’s ‘dilemma’ didn’t pan out, but it holds sway over some of the president’s key advisers.

My take from Jan 2025:
https://thehill.com/opinion/5092814-dollar-weakens-2024/
Meanwhile, in a recent report, Stephen Miran, the Harvard-trained economist who is expected to chair President-elect Trump’s Council of Economic Advisers, places much of the blame for the persistent trade imbalances on the rest of the world’s insatiable demand for dollar-denominated safe assets. The historical antecedent of this viewpoint is the Triffin dilemma. Robert Triffin had famously questioned the stability of the Bretton Woods arrangement by noting that the sovereign issuing the world’s reserve currency will have to run persistent balance of payment deficits in order to satisfy the rest of the world’s ever-increasing need for global liquidity. 

American Hypocrisy - Latest Example

Why Trump is really targeting India
https://www.ft.com/content/dfba92c3-523a-41b2-b940-d10c2ccb340e
Ashok Malik notes:
India is not the only nation trading with Russia, not even in the narrow energy sector. China is the biggest importer of its crude oil and coal. The EU is the largest customer of Russian LNG and pipeline gas. The EU’s LNG imports from Russia have risen in the past year, reaching record levels. Turkey receives crude oil, oil products and pipeline gas. Surely these countries don’t get energy supplies for free from the Russians?
Are America’s hands clean? Despite the Ukraine war, the US continues to import fertilisers from Russia for its farmers, as well as from Belarus. It buys Russian uranium and plutonium for its nuclear industry. Its electronic and automobile industries source palladium from Russia. 

By conflating corporate trade with national policy, the White House is undermining the U.S.-India relationship.

https://foreignpolicy.com/2025/08/21/india-trump-trade-manufacturing-oil-russia/  

Risk of a Sudden Shift in Market Sentiment

A Stock-Market Crash Foretold
https://www.project-syndicate.org/commentary/trump-economic-policy-could-lead-to-us-stock-market-crash-by-desmond-lachman-2025-08
On the eve of World War I, when it was already apparent that the geopolitical order was crumbling, the stock market remained buoyant. There is every reason to believe that the US stock market's current sky-high valuations, despite obvious geopolitical and economic risks, are vulnerable to a sudden shift in sentiment. 

Brace for a crash before the golden age of AI
https://www.ft.com/content/a76f238d-5543-4c01-9419-52aaf352dc23
History teaches that tech revolutions follow a predictable cycle of installation followed by creative destruction.

The ‘Ghosts of 2007’ and the graybeard ‘Nifty 50’: BofA looks at the rare situation in markets and finds ominous parallels to the GFC and the dotcom bubble
https://finance.yahoo.com/news/ghosts-2007-graybeard-nifty-50-201540276.html

AI Is Holding Up the Sky. The Rest Fell Back to Earth
https://www.bloomberg.com/opinion/newsletters/2025-08-19/ai-is-holding-up-the-sky-the-rest-are-back-to-earth
Since the release of ChatGPT in November of 2022, earnings per share of the MAG 7 have risen 125% (through 8/18), while earnings per share of the other 493 companies comprising the S&P 500 have risen just 4%. 

Will Anyone Standup for Free-Market Principles?

Corporate America is silent as Trump abandons free-market principles
https://www.cnn.com/2025/08/20/business/companies-trump-free-market 

Investors grapple with Trump’s corporate America by Katie Martin
https://www.ft.com/content/cac34e31-b4b9-4a72-ac06-3d72687bee3f
It is no longer left to the invisible hand of capitalism to figure out who are the winners. 

The U.S. Marches Toward State Capitalism with American Characteristics
https://www.wsj.com/economy/the-u-s-marches-toward-state-capitalism-with-american-characteristics-f75cafa8
President Trump is imitating Chinese Communist Party by extending political control ever deeper into economy.

Trump’s strongman capitalism risks killing American enterprise
https://www.telegraph.co.uk/business/2025/08/17/trumps-strongman-capitalism-will-kill-american-enterprise/
The US president’s interference in business runs against his country’s great traditions.

Market Spotlight on the Fiscal Dominance Risk

Investors warn of ‘new era of fiscal dominance’ in global markets
https://www.ft.com/content/8478aaac-0d16-4c52-8d8c-caad02785d20
Combination of record government debt and rising borrowing costs puts central banks under pressure. 

Trump's interest rate demands put 'fiscal dominance' in market spotlight
https://www.reuters.com/world/us/trumps-interest-rate-demands-put-fiscal-dominance-market-spotlight-2025-08-19
 
Ex-Fed Governor Warsh says new accord between Treasury, central bank needed
https://www.reuters.com/business/ex-fed-governor-warsh-says-new-accord-between-treasury-central-bank-needed-2025-07-17

Related:

Investors beware: Fiscal dominance and financial repression ahead by VIVEKANAND JAYAKUMAR, The Hill - 07/13/25

https://thehill.com/opinion/finance/5397963-fed-keeping-rates-low-trump-administration/ 

Example of Market Failure?

Parents are paying more than they can afford, but daycares and preschools can barely make ends meet. It is a market failure—but it doesn’t have to be.
https://www.wsj.com/personal-finance/daycare-prices-solutions-eaff4b24 

Impact of Trump Tariffs on US Agriculture

How China’s $285M Export Hub in Brazil Will Cost U.S. Billions
https://youtu.be/A4l_wHA8kvk
China’s new $285 million export terminal in Brazil, being built outside of São Paolo by Chinese state agricultural giant Cofco, threatens billions of dollars in revenue for U.S. farmers. This new terminal and Trump’s recent 50% tariffs on many Brazilian goods threaten to push China and Brazil even closer together.
 
Why the World Is Turning Away from American Agriculture
https://youtu.be/Y7DXBRn42PQ
America’s farms are more productive than ever, but farmers are facing rising input costs and shrinking export markets. In Iowa, farming runs in the blood and families are fighting to keep their legacy alive amid a growing agricultural trade deficit. Once seen as the 'supermarket of the world', US farmers are looking for ways to make up the difference domestically, processing about a third of American corn for ethanol and gasoline, but the long term future of US farming hinges on a more robust export market. 

How Trump is Unintentionally Boosting the BRICS Alliance

Is Trump a BRICS Secret Agent?
https://www.project-syndicate.org/commentary/trump-trade-war-alienating-friends-and-going-easy-on-adversaries-by-jim-o-neill-2025-08
His rhetoric notwithstanding, US President Donald Trump is going easy on China and Russia, while pushing away Brazil, India, South Africa, and America’s fellow G7 members. Does he want to give the BRICS+ group of major emerging economies and others an even stronger reason to develop alternatives to the Western-dominated order?

With U.S. Ties on the Rocks, India Draws Closer to China
https://time.com/7310270/china-india-us-trump-xi-modi-tariffs-trade-russia-oil
Ultimately, though, the perception of the U.S. as an unreliable partner will “increase the international trend toward greater multipolarity,” Lidarev tells TIME.
“Not only will India’s role as an independent pole less tied to the U.S. grow, but its closer relations with China, Russia, and the E.U. will strengthen these actors’ positions as other major poles in the international system,” he says. Furthermore, the dynamic could legitimize emerging international institutions like BRICS “as a hedge against dependence on Washington.”
 
Trump Is Pushing India Back Toward China
https://www.nytimes.com/2025/08/18/world/asia/india-china-trump.html
Prime Minister Narendra Modi had been moving to align India with the United States and freeze out China. Now, efforts to rebuild ties between the Asian giants are gaining momentum.

Trump is attacking Brazil to weaken BRICS – but his plan might backfire
https://www.chathamhouse.org/2025/08/trump-attacking-brazil-weaken-brics-his-plan-might-backfire
Trump is using Brazil to send a warning to other assertive middle powers. But the attack on a sovereign country’s democratic institutions risks damaging the United States’ global standing.

A Stealth Target of Trump’s Brazil Tariffs
https://www.project-syndicate.org/commentary/trump-tariffs-on-brazil-also-target-pix-national-payment-system-by-rogerio-studart-2025-08
US President Donald Trump’s crippling 50% tariff on Brazil is aimed not only at bending a sovereign country’s judiciary to his will, but also at beating back a challenge to the US-led financial order. Pix, Brazil’s government-backed payments system, is a step toward creating a new kind of monetary system free of dollar hegemony. 

How China’s $285M Export Hub in Brazil Will Cost U.S. Billions
https://youtu.be/A4l_wHA8kvk

The True Meaning of Trump’s Tariffs
https://www.project-syndicate.org/commentary/trump-tariffs-are-geopolitical-not-economic-by-carla-norrlof-2025-08
If US President Donald Trump’s constantly changing trade policies were really about closing economic imbalances or applying market leverage, the recently unveiled tariff schedule would reflect this logic. Instead, the figures make clear that the tariffs are meant to reward geopolitical alignment and punish independence. 

Related:
https://www.yahoo.com/news/articles/opinion-trump-economic-war-india-150000572.html

Inflation and the Fed

Powell has used Jackson Hole to battle inflation and buoy jobs; he's now caught between both
https://www.reuters.com/business/powell-has-used-jackson-hole-battle-inflation-buoy-jobs-hes-now-caught-between-2025-08-18

Why America can’t shake off inflation
https://www.economist.com/finance-and-economics/2025/08/17/why-america-cant-shake-off-inflation
Our measure of entrenchment suggests its problem is among the rich world’s worst.

Questions for the Fed
https://www.project-syndicate.org/commentary/federal-reserve-recent-performance-raises-questions-for-next-chair-by-glenn-hubbard-2025-08
Although Donald Trump is wrong to impugn the US Federal Reserve chair's motives, the central bank has made some serious mistakes. To avoid repeating them, the next chair will have to confront fundamental questions about the institution's approach to policymaking.

Profile of RF Kuang

New Yorker Profile of Rebecca F. Kuang (author of Babel and other books):
https://www.newyorker.com/magazine/2025/08/25/the-otherworldly-ambitions-of-r-f-kuang 

Data Manipulation - Lessons from Greece

I’ve Seen What Happens When a Country Messes with Data. America, Beware.
https://www.nytimes.com/2025/08/19/opinion/labor-statistics-data-trump.html

Europe's Free-Speech Problem

Europe’s Free-Speech Problem
https://www.theatlantic.com/ideas/archive/2025/08/europe-free-speech-republicans/683915/ 

Now Europe and the United States are diverging. Never mind enduring disagreements about how to treat Nazis and other would-be totalitarians. Europe today, in both its individual countries and its shared continental governance, is criminalizing more and more speech that doesn’t come close to American thresholds for incitement or harassment.

Ungated: https://www.yahoo.com/news/articles/europe-free-speech-problem-110000809.html

Carbon Dioxide and Planet Earth

‘A climate of unparalleled malevolence’: are we on our way to the sixth major mass extinction?
https://www.theguardian.com/environment/2025/aug/19/a-climate-of-unparalleled-malevolence-are-we-on-our-way-to-the-sixth-major-mass-extinction
Churning quantities of carbon dioxide into the atmosphere at the rate we are going could lead the planet to another Great Dying. 

Where America’s CO2 emissions come from – what you need to know, in charts
https://theconversation.com/where-americas-co-sub-2-sub-emissions-come-from-what-you-need-to-know-in-charts-258904

Is AI a Labor-Augmenting or a Labor-Substituting Technology?

AI will replace most humans, but then what?
https://www.reuters.com/technology/artificial-intelligence/ai-will-replace-most-humans-then-what-2025-08-19
 
New Frontiers: The Origins and Content of New Work, 1940–2018
https://doi.org/10.1093/qje/qjae008
Abstract
We answer three core questions about the hypothesized role of newly emerging job categories (“new work”) in counterbalancing the erosive effect of task-displacing automation on labor demand: what is the substantive content of new work, where does it come from, and what effect does it have on labor demand? We construct a novel database spanning eight decades of new job titles linked to U.S. Census microdata and to patent-based measures of occupations’ exposure to labor-augmenting and labor-automating innovations. The majority of current employment is in new job specialties introduced since 1940, but the locus of new-work creation has shifted from middle-paid production and clerical occupations over 1940–1980 to high-paid professional occupations and secondarily to low-paid services since 1980. New work emerges in response to technological innovations that complement the outputs of occupations and demand shocks that raise occupational demand. Innovations that automate tasks or reduce occupational demand slow new-work emergence. Although the flow of augmentation and automation innovations is positively correlated across occupations, the former boosts occupational labor demand while the latter depresses it. The demand-eroding effects of automation innovations have intensified in the past four decades while the demand-increasing effects of augmentation innovations have not.
 
Related:
My take from Feb 2025 - 
https://thehill.com/opinion/5151848-generative-ai-economic-concerns/
Looking ahead, the rise of generative artificial intelligence poses a much bigger challenge for policymakers. Generative AI appears to truly upend prior assumptions regarding the stability of high-skill positions as it can easily and rapidly perform many cognitive and non-routine tasks. Suddenly, white-collar jobs appear vulnerable. Entry-level positions in information technology, law, finance, accounting, marketing and other professional services are already experiencing cutbacks.  

Tax Reform to Boost Consumption in India

India's complex GST tax and how Modi's reform will make goods cheaper
https://www.reuters.com/world/india/indias-complex-gst-tax-how-modis-reform-will-make-goods-cheaper-2025-08-19 

Adam Smith's Model of Specialization

Adam Smith at 250
https://www.project-syndicate.org/commentary/adam-smith-economic-specialization-being-reversed-and-challenged-by-ai-by-michael-spence-2025-08
Nearly 250 years ago, Adam Smith identified two potential constraints on economic specialization: the “extent of the market” and the inevitable risks. Today, the risk constraint is proving to be the more powerful, and another, more fundamental challenge to Smith’s model of specialization has emerged. 

Do Politicians Have an Information Advantage?

The Americans making millions buying shares like top politicians
https://www.telegraph.co.uk/business/2025/08/18/americans-making-millions-copying-politicians-investing/
Success of US lawmakers’ financial moves fuels explosion in ‘copy trading’ strategies. 

The Very Definition of Narcissism

Gemini AI’s definition of Narcissism:
Narcissism is characterized by an excessive admiration of oneself, a grandiose sense of self-importance, a lack of empathy for others, and a need for constant admiration. Narcissistic individuals often exhibit a sense of entitlement, exploit others for personal gain, and believe they are special and unique.

 
Trump’s Nobel Peace Prize Obsession Is Getting Way Out of Hand
https://www.yahoo.com/news/articles/trump-begged-norwegian-minister-incredibly-141442281.html

Give Trump a Nobel! And an Emmy. And an Oscar …
https://www.nytimes.com/2025/08/18/opinion/trump-nobel-peace-prize.html 

Trump's Biggest Foreign Policy Strategy Error

Fareed's Take: The damage is done: India will no longer trust America
https://youtu.be/gMT3fRhkDBI

Trump’s biggest foreign policy mistake
www.washingtonpost.com/opinions/2025/08/15/trump-india-tariffs-insults-mistake/
The United States is often criticized for orienting itself toward the short term, for being too quick to change course. In fact, on important issues Washington has been remarkably consistent in its foreign policy. Consider the strategic outreach to India that began during the Clinton administration and was expanded in a bipartisan manner over 25 years — until now. President Donald Trump’s sudden, inexplicable hostility toward India reverses policies pursued under five administrations, including his own previous one. If this new attitude holds, it might be the biggest strategic mistake of his presidency so far.
 
The Shocking Rift Between India and the United States
https://www.foreignaffairs.com/india/shocking-rift-between-india-and-united-states
Can Progress in the Partnership Survive Trump? 

Trump’s economic war on India is a gift to China
https://www.yahoo.com/news/articles/opinion-trump-economic-war-india-150000572.html
Targeting India over Russian oil purchases smacks of selective enforcement. The European Union’s large imports of Russian energy products, especially liquefied natural gas, have been left untouched. Such European imports not only contribute more to Russia’s coffers than India’s purchases, but Europe spends more on Russian energy than on assisting Ukraine.

Trump Is Pushing India Back Toward China
https://www.nytimes.com/2025/08/18/world/asia/india-china-trump.html
Prime Minister Narendra Modi had been moving to align India with the United States and freeze out China. Now, efforts to rebuild ties between the Asian giants are gaining momentum.

Narendra Modi vows ‘self-reliant India’ in wake of Donald Trump’s 50% tariff
https://www.ft.com/content/b04ac590-34da-4408-b477-28bedfac7103
Modi on Friday announced the creation of a dedicated “task force for next generation reforms” to be charged with cutting compliance costs for companies and entrepreneurs, reducing the scope for arbitrary legal actions, and streamlining laws to improve the ease of doing business. 

Rule of Law

How Rule of Law Hits Wall Street
https://youtu.be/Ool91gxjJeA 

Related:

These Thinkers Set the Stage for Trump the All-Powerful

https://www.nytimes.com/2025/05/04/opinion/trump-schmitt-strauss-intellectuals.html

AI and College Students

College Students Have Already Changed Forever
https://www.theatlantic.com/technology/archive/2025/08/ai-college-class-of-2026/683901/
Members of the class of 2026 have had access to AI since they were freshmen. Almost all of them are using it to do their work.
 
Ungated: https://www.yahoo.com/news/articles/turning-point-ai-college-110000816.html 

Addicted to Stimulus

How the West Got Hooked on Economic Support by Tej Parikh
https://www.ft.com/content/62b44835-1ce6-461e-9d8b-ba4b728c4e9e
Crisis firefighting has given way to a dependence on government and central banks  

Stock Valuation Ratios

Price Primarily Predicts Future Returns, Not Future Earnings Growth
https://www.morningstar.com/markets/price-primarily-predicts-future-returns-not-future-earnings-growth
Investors should look beyond growth forecasts, study suggests.
 
The return of return dominance: Decomposing the cross-section of prices
https://doi.org/10.1016/j.jfineco.2025.104059    
What explains cross-sectional dispersion in stock valuation ratios? We find that 75% of dispersion in price–earnings ratios is reflected in differences in future returns, while only 25% is reflected in differences in future earnings growth. This holds at both the portfolio-level and the firm-level. We reconcile these conclusions with previous literature which has found a strong relation between prices and future profitability. Our results support models in which the cross-section of price–earnings ratios is driven mainly by discount rates or mispricing rather than future earnings growth. Evaluating six models of the value premium, we find that most models struggle to match our results; however, models with long-lived differences in risk exposure or gradual learning about parameters perform the best. The lack of earnings growth differences at long horizons provides new evidence in favor of long-run return predictability. We also show a similar dominance of predicted returns for explaining the dispersion in return surprises. 

Reviving Mixed Doubles in Tennis

The Hyped Revival of Mixed Doubles
https://www.newyorker.com/sports/sporting-scene/the-hyped-revival-of-mixed-doubles
In the U.S. Open, the format is being redesigned as a popularity contest engineered to generate buzz. 

The Decline in Credit Spreads

US credit spreads hit lowest level this century after sharp rally
https://www.ft.com/content/adb4c7da-26af-4550-8d5e-b3527bde7684
Investors warn credit markets are ‘weirdly confident’ despite threats to global economy. 

Related:

Americans Pull Back from an Epic Credit-Card Binge
https://www.wsj.com/personal-finance/credit/americans-pull-back-from-an-epic-credit-card-binge-ebf33c42
Credit-card spending is growing more slowly than debit-card spending for the first stretch in years.

Engineers versus Lawyers

A Nation of Lawyers Confronts China’s Engineering State
https://www.theatlantic.com/ideas/archive/2025/08/china-america-tariffs-trump-economy/683895/

Breakneck: China’s Quest to Engineer the Future
https://www.ft.com/content/261a0eaa-7fb9-4052-ac78-f4d8d9969e72
Wang’s central contention is that China is run as an engineering state that excels at construction while the US has become a lawyerly society that favours obstruction. By 2020 all nine members of the Chinese Politburo’s standing committee had trained as engineers. By contrast, the US has turned into a “government of the lawyers, by the lawyers and for the lawyers.”
The result is that the country’s legal aristocracy prioritises process over outcomes and systematically favours the well-off, Wang argues. From 1984 to 2020, every single Democratic presidential and vice-presidential nominee had attended law school. 

Breakneck by Dan Wang

https://wwnorton.com/books/9781324106036

Emerging Markets and Risk Premiums

EM companies rush to global debt markets as risk premium falls to near 20-year low
https://www.ft.com/content/a850fbcb-b4c2-4fb9-ae45-54e0cd90a0db
The overall yield on a JPMorgan benchmark index of corporate emerging market bonds is still about 6 per cent, but with US bond yields rising this year, its “spread” over 10-year Treasuries — the premium investors demand to hold riskier debt — has fallen to less than 2 percentage points for the first time in nearly two decades. 

Interesting Labor Economics Application

White House says jobs surging among U.S.-born. Here’s what economists say.
https://www.washingtonpost.com/business/2025/08/16/native-born-jobs-foreign-immigrant-labor-census
The White House claims U.S.-born workers are winning in the job market, but economists say the data isn’t reflecting that trend. 

The Boom in American-Born Employees Isn’t Real
https://www.bloomberg.com/opinion/articles/2025-08-20/the-boom-in-american-born-employees-isn-t-real
The Bureau of Labor Statistics has reported big increases since December in native-born population and jobholders. That’s not possible.

AI in the C-Suite

C.E.O.s Want Their Companies to Adopt A.I. But Do They Get It Themselves?
https://www.nytimes.com/2025/08/16/business/ceos-adopt-ai.html
Some are being nudged to learn how to use the nascent technology. Coming to the C-suite retreat: mandatory website-building exercises using A.I. tools. 

The Visible Hand of Crony Capitalism

Investors grapple with Trump’s corporate America by Katie Martin
https://www.ft.com/content/cac34e31-b4b9-4a72-ac06-3d72687bee3f
It is no longer left to the invisible hand of capitalism to figure out who are the winners. 

The U.S. Marches Toward State Capitalism with American Characteristics
https://www.wsj.com/economy/the-u-s-marches-toward-state-capitalism-with-american-characteristics-f75cafa8
President Trump is imitating Chinese Communist Party by extending political control ever deeper into economy.

Trump’s strongman capitalism risks killing American enterprise
https://www.telegraph.co.uk/business/2025/08/17/trumps-strongman-capitalism-will-kill-american-enterprise/
The US president’s interference in business runs against his country’s great traditions.

Do Job-Skill Certificates Pay Off?

More Workers Are Getting Job-Skill Certificates. They Often Don’t Pay Off.
https://www.wsj.com/lifestyle/careers/more-workers-are-getting-job-skill-certificates-they-often-dont-pay-off-be49236f
Many of thousands of online courses and other credentials employees pursue fall short in delivering, new study finds. 

One Way to Reduce CPI Inflation

How to lower reported inflation: drop things that are getting really expensive from the basket. It is worth noting that, with an aging population, long-term care (LTC) insurance is likely to become a bigger factor in the budget of many families. Yet, the BLS has decided to drop it from the basket.

Upcoming change (posted on BLS site):
https://www.bls.gov/cpi/notices/2025/methodology-changes-2025.htm
Changes to the health insurance index (posted August 12, 2025)
With the release of October 2025 data on November 13, 2025, the Bureau of Labor Statistics (BLS) will remove long-term care (LTC) insurance from the health insurance index. Changes in the market for LTC insurance have made it out of scope and ineligible for pricing in the CPI market basket. 

Passive versus Active Investing

Why Hands-Off Investing Pays Off
https://www.nytimes.com/2025/08/15/business/investing-fund-returns-interfere.html
Put money into low-cost stock and bond funds, but don’t forget the rest of the recipe: Leave your investments alone. 

China's Role in Global Innovation

China’s Role in Global Innovation Is Changing
https://www.stlouisfed.org/on-the-economy/2025/aug/china-role-global-innovation-changing 

Challenges Facing Young Men

Boy Crisis of 2025, Meet the ‘Boy Problem’ of the 1900s
https://www.nytimes.com/2025/08/15/opinion/men-boys-crisis-progressive-era.html
Many boys and men are struggling today, too, in an America once again disrupted by technological change, immigration and growing inequality. Since 2010, suicide rates among young men have risen by a third — they are now higher than they are among middle-aged men. The share of college degrees going to men has fallen to 41 percent, lower than the women’s share in 1970. One in 10 men aged 20 to 24 is effectively doing nothing — neither enrolled in school nor working. That’s twice the rate in 1990. 

Can US Auto Industry Compete?

The American Car Industry Can’t Go on Like This
https://www.theatlantic.com/technology/archive/2025/08/ford-china-electric-cars/683880/
The auto giant is taking drastic steps to compete with China’s cheap electric cars. Even that might not be enough. 

What Happens in Vegas ...

Trump chaos triggers decline of Las Vegas
https://www.telegraph.co.uk/business/2025/08/15/the-slow-death-of-sin-city/
The slump in Sin City’s tourism industry raises fears over the health of America’s economy. 

Decline in Geographic Mobility

Nobody’s Buying Homes, Nobody’s Switching Jobs—and America’s Mobility Is Stalling
https://www.wsj.com/economy/american-job-housing-economic-dynamism-d56ef8fc
The paralysis has economic consequences for everyone. Growing families can’t upgrade, empty-nesters can’t downsize, and when people can’t move for a job offer, they often earn less. 

The Tariff Inflation Puzzle

Why Haven’t Tariffs Boosted Inflation? This Theory Is Gaining Traction
https://www.wsj.com/economy/trade/trump-tariff-inflation-expectations-83d06efa
New research suggests the actual tariff rates are well below what economists have suspected.
 
Why inflation’s got you down, even if it’s not really happening (yet)
https://www.cnn.com/2025/08/15/business/inflation-cpi-ppi-reports-tariffs 

Rational or Irrational Exuberance?

The Stock Market Is Getting Scary. What You Should Do. By Burton G. Malkiel (author of A Random Walk Down Wall Street)
https://www.nytimes.com/2025/08/15/opinion/stock-market-advice-investing.html
 
Tariffs Are High. So Is the Stock Market.
https://www.nytimes.com/2025/08/15/business/tariffs-stock-market-records.html
Strong corporate earnings, mostly stable tariff rates and the expectation of interest rate cuts have eased worries of a market reckoning. 

If you’re feeling FOMO, envy and greed about record stock prices, you’re not alone. That’s how market bubbles form.
https://www.marketwatch.com/story/if-youre-feeling-fomo-envy-and-greed-about-record-stock-prices-youre-not-alone-its-how-market-bubbles-form-9167d073
 
How to invest in a stock market bubble
https://www.ft.com/content/5efd8714-e0cf-4d4b-961f-f3c5b3a4f16d

Ireland and Transfer Pricing in the Trump 2.0 Era

Tariffs Are Set to Hit Ireland, Where U.S. Drugmakers Play ‘Tax Games’
https://www.nytimes.com/2025/08/14/health/pharma-tariffs-ireland-taxes.html
Manufacturing in Ireland has long helped American drug companies pay lower taxes, a strategy designed for a world without President Trump’s tariffs. 

Tolstoy's Search for the Meaning of Life

Leo Tolstoy’s Search for the Meaning of Life
https://www.wsj.com/opinion/leo-tolstoys-search-for-the-meaning-of-life-technology-death-17c08880
The author and his protagonists find that they’d sought a theory in the wrong place. 

A Pick Up in PPI-Based Inflation Measures

BLS: https://www.bls.gov/ppi
The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services. 

Now We Know Who’s Paying the Tariffs
https://www.wsj.com/opinion/now-we-know-whos-paying-the-tariffs-081f461d
Producer prices surge, and real wages still aren’t rising fast enough.

Population (By Country) Data

Population Data (2025):
https://www.worldometers.info/world-population/population-by-country/ 

Trump's Growing List of Foreign Policy Errors

Trump’s biggest foreign policy mistake
www.washingtonpost.com/opinions/2025/08/15/trump-india-tariffs-insults-mistake/
The United States is often criticized for orienting itself toward the short term, for being too quick to change course. In fact, on important issues Washington has been remarkably consistent in its foreign policy. Consider the strategic outreach to India that began during the Clinton administration and was expanded in a bipartisan manner over 25 years — until now. President Donald Trump’s sudden, inexplicable hostility toward India reverses policies pursued under five administrations, including his own previous one. If this new attitude holds, it might be the biggest strategic mistake of his presidency so far.

Donald Trump’s capricious dealmaking destabilizes the world
https://www.economist.com/leaders/2025/08/14/how-to-win-at-foreign-policy 

The Shocking Rift Between India and the United States
https://www.foreignaffairs.com/india/shocking-rift-between-india-and-united-states
Can Progress in the Partnership Survive Trump?

Is Trump forcing a marriage of convenience between India and China? Like most relationships, it’s complicated.
https://www.cnn.com/2025/08/13/india/india-china-trump-trade-policies-intl-hnk
Their relationship is defined by a bloody border dispute, a vast power imbalance and a fierce contest for influence across Asia. Yet, President Donald Trump’s latest trade war may be achieving the unthinkable: pushing India and China into a wary but tactical embrace. 

Trump is the gift that keeps giving to China
https://www.ft.com/content/d10ea991-627d-4c79-8d80-04af180c69dc
Ed Luce:
Aiding the emergence of a strong and counterbalancing India has been America’s most important China play in the last quarter of a century. But Trump keeps going the extra mile to cast doubt on whether that still holds. Having claimed (falsely according to India) that he stopped India and Pakistan from going to war in May, Trump is going out of his way to woo Pakistan. On the same day in June that Trump invited Modi to Washington, he had a private lunch with Asim Munir, Pakistan’s military chief. American presidents do not share one-to-one meals with heads of foreign armies. Yet for Pakistan he made an exception. Modi politely declined Trump’s invitation. Now Trump is taunting India that it has a “dead economy” and might one day have to import its oil from Pakistan. This is how you lose friends and squander influence. 

India’s Pragmatic Pivot Toward China
https://foreignpolicy.com/2025/08/04/india-pivot-china-trump-geopolitics-uncertainty/
By improving business ties with Beijing, New Delhi is advancing its economic interests amid uncertainty from Washington.

Can the U.S.-India Relationship Be Saved?
https://www.wsj.com/opinion/america-and-india-can-this-relationship-be-saved-asia-trump-diplomacy-5615ee69
Trump and Modi can meet in the middle to repair their countries’ mutually beneficial partnership.

On GPS: The end of the US-India friendship?
https://www.cnn.com/2025/08/10/world/video/gps-0810-india-trump-tariffs

Democracies snubbed, dictators courted: Inside Trump’s embrace of Pakistan by Michael Rubin
https://www.aei.org/op-eds/democracies-snubbed-dictators-courted-inside-trumps-embrace-of-pakistan

Trump’s Missed Opportunities Are Piling Up
https://foreignpolicy.com/2025/07/29/trumps-missed-opportunities-are-piling-up/
The Trump administration had an unprecedented chance to change the United States for the better.
 
What Has Being a ‘True Friend’ to Trump Gotten Modi? Not Much, Indians Say.
https://www.nytimes.com/2025/07/31/world/asia/modi-trump-india-tariffs.html
India’s prime minister has made a big effort to build closer ties using his rapport with the U.S. president, but critics say he is getting little in return.

 
Why Brazil Might End Up with Higher Tariffs Than Any Other Nation
https://foreignpolicy.com/2025/07/30/brazil-trump-tariffs-lula/
The rift between the Western Hemisphere’s two largest democracies is the strongest evidence yet that Trump is in the business of autocracy promotion. 

No One Is Defying Trump Like Brazil’s President
https://www.nytimes.com/2025/07/30/world/americas/brazil-president-lula-trump-tariffs.html
Faced with threats of 50 percent tariffs and demands to end a criminal case, President Luiz Inácio Lula da Silva said he wouldn’t take orders from President Trump.
 
Brazil’s Brave Stand Against Trump
https://www.project-syndicate.org/commentary/brazil-president-lula-standing-up-to-trump-by-joseph-e-stiglitz-2025-07 

Blue States – Obsessed with High Taxes?

Blue States Hunt for Ways to Wring More Taxes from the Wealthy
https://www.wsj.com/economy/democratic-states-wealthy-tax-bills-c924b3b5
‘Taylor Swift tax,’ among other levies, targets the rich. Will they be driven away? 

Europe - Back to the Ice Age?

The shutdown of ocean currents could freeze Europe
https://www.economist.com/leaders/2025/08/14/the-shutdown-of-ocean-currents-could-freeze-europe
When climate change poses a strategic threat, it needs a strategic response.
 
Earth’s climate is approaching irreversible tipping points
https://www.economist.com/interactive/science-and-technology/2025/08/13/earths-climate-is-approaching-irreversible-tipping-points
Scientists are racing to work out just how close they might be.