Social Contract

 A social contract is the agreement between government, business, wealthy and ordinary households in how to apportion the costs and benefits of society.  The recently concluded (?) American election comes to mind, as a potential first step towards a new (green?) deal.  In this, the 34th episode of Making Sense, Jeff Snider identifies another, less obvious freshly fashioned contract: China and its recent 14th Five-Year plan.  But as Snider explains, question marks are not unique to democratic republics -- communist 'republics' have them too.

The most successful, contemporary social contract your podcaster is aware of are the early-2000s Hartz Reforms in Germany. Listeners may be surprised to learn that before them today's "economic engine of Europe" was the "sick man of Europe".  The decade-long assimilation of East Germany had taken a heavy toll and unemployment levels would breach more than 10% -- in 2004!  The new social contract ensured employment in return for low-wage growth that favored business. So, success doesn't mean cost-free.  But we've always known that; remember the story of one of humanity's original contracts?

As we learn in Exodus, Moses had to introduce The Commandments twice; the stone tablets were angrily shattered in the first attempt!  And by the time the second draft was presented the scene was rather tense.  Firstly, God was annoyed as all get-out to see Moses again -- what, he doesn't have anything else to do other than hew stone tablets?  Secondly, Moses was ill-tempered that he couldn't leave the chosen people alone for a few days before they started chugging flagons like Frank the Tank.  Lastly, the people, like the teenager unable to thread the needle in a way that explained bongs and brassieres strewn across the yard to her parents, were anxiously awaiting judgement. 

When Moses returned for the second time the apprehensive throng gathered before him.  Moses announced, "I have good news and bad news.  The good news is, I got him down to ten."  And a great cheer of relief issued forth.  "The bad news is... adultery stays."

----------WHY----------
PART 01: Does Xi Jinping, General Secretary of the Chinese Communist Party, have a BETTER understanding of the global economy than capitalists? China's newest Five-Year Plan is sending the following signals: (A) Globalization is dead. (B) The world's monetary order has broken. (C) Bye.

PART 02: Central bankers in Frankfurt and London are very active lately. They want, "to help the economy", "to boost lending" and give banks "confidence" all so as to achieve their inflation targets. So far? Bubkis. Would MMT be different?

PART 03: The LIBOR price-fixing scandal was called "crime of the century". Central bankers saw the crime as an opportunity to shunt aside LIBOR - a global rate that shouldn't exist for a supply of dollars that shouldn't exist. But does.

----------WHERE----------
AlhambraTube: https://bit.ly/2Xp3roy
Apple: https://apple.co/3czMcWN
iHeart: https://ihr.fm/31jq7cI
Castro: https://bit.ly/30DMYza
TuneIn: http://tun.in/pjT2Z
Google: https://bit.ly/3e2Z48M
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PocketCast: https://pca.st/encarkdt
SoundCloud: https://bit.ly/3l0yFfK
PodcastAddict: https://bit.ly/2V39Xjr

----------WHAT----------
China’s 1st 15-year Xi-athon: https://bit.ly/3p4vo11
E$U M.S. Ep. #17 - From Bond Yields to Communism, Don’t Call It A Comeback: https://bit.ly/32kijag
Washington looms large over drafting of China’s next five-year plan: https://on.ft.com/2U0T1JF
In 2020, Central Bankers Everywhere Are Being Exposed: https://bit.ly/3k8DQZm
COT B-und?: https://bit.ly/38iQaUC
There Is A Hard Truth To This Soft SOFR Arrogance: https://bit.ly/38mPBJM
IMF Global Markets Monitor (03-Nov-2020): https://bit.ly/2GD911j

----------WHO----------
Jeff Snider, Head of Global Investment Research for Alhambra Investments with Emil Kalinowski, social-media beast of burden. Artwork by David "Mr. Universe" Parkins. Podcast intro/outro is "All Emotions" by ELFL at Epidemic Sound.