The Awesome Science of Chinonomics

You and I, inhabitants of the Americas, should all speak Chinese (or a derivative of it) instead of a European language. We don't, of course, because it was the Europeans who "discovered" ( for the second time ) this continent in 1492 and sparked a rat race among European States to stake a territory in the "virgin" lands of the "New World". China had all in its favor to beat the Europeans in the early 15th century. They led the world then in technological innovation: cast iron was  first invented  in China; the compass  was invented there ; gun powder was  first concocted there . Not to mention printing; the umbrella, porcelain, the wheelbarrow, hot air balloons, and even seismographs to measure earthquakes. How can you be that advanced and not attempt to conquer other lands to extract their resources? Well, they did. And succeeded.  Decades before  Columbus "discovered" La Hispaniola, the Chinese had reached as far as East Africa. Befo...

Being called a chicken is never a good thing. You get called that in the schoolyard and the most likely thing to happen next is to hear humiliating laughs of the other mean kids. A movie character loses a game of “chicken”, and he is most likely losing the girl. That game has even been studied by game and signaling theory.    The whole mess in Europe could be reduced to a game of chicken. Here, there are two cars being driven against each other, challenging each other not to veer to the side. One car is driven by Mario Draghi, the other one by the bond vigilantes (or speculators, as Europe’s politicians like to call them). Signaling is paramount. Mario Draghi resists to monetize, and signals that the ECB will not openly use its balance sheet without restrictions to push sovereign rates down. The reason? The ECB –always mindful of its standing as a hawkish institution known as protector of the value of the Euro - risks denting its reputation of independence, which for...

Humans are unpredictably predictable. When circumstances surrounding us are overwhelming and pressing, we try to change them. Sometimes aggressively (with revolutions) some other times more passively (quitting your job). Interestingly, this also applies to love life: after a long run of dating people with characteristic "X", the next person you look for is someone with the opposite characteristic, because you now know the disadvantages of that personal trait. The pendulum metaphor is at work. In societies, the metaphor applies to politics, and of course also to matters of economic policy. Totalitarian societies (like Pinochet's Chile or Franco's Spain) topple regimes looking for the longed freedom they did not have before. Societies that reach economic freedom (the U.S.A.) realize that opening their borders to trade allows other nations to get in and "steal" profits from domestic businesses via price undercutting and fierce competition and look to revert th...