Archegos and Ponzi Finance 

Doug Nolan


I’ve been a longtime enthusiast for Hyman Minky’s analysis. 

His work plays prominently in my analytical framework. 

Financial structures evolve over time, and there is an innate propensity for this evolution to regress into a cycle of ever-increasing excess, fragility and instability. 

Success in finance – by borrowers, lenders, speculators, investment bankers, investors, businesses, central bankers and the like – ensures only more exuberant risk embracement over the course of the cycle. 

Importantly, debt structures degenerate over time, as the boom is perpetuated by expanding quantities of debt of deteriorating quality.

Minsky’s “financial instability hypothesis” models three categories of debt structures: Sound “hedge finance” - where “cash flows are expected to exceed the cash flow commitments on liabilities for every period.” 

Less sound “speculative finance” - where cash flows, although inadequate to fully service debt in the short-run, are generally sufficient over the longer-term. 

And unsound “Ponzi finance” - “cash flows from assets in the near-term fall short of cash payment commitments” and only with some future “bonanza” will cash flows ever be sufficient to service debts and provide any realistic hope of generating profits. 

Importantly, “a ‘Ponzi’ finance unit must expand its debt load to meet its financial obligations.” 

New money and credit in abundance are a necessity for perpetuating the scheme. 

The greater the ratio of speculative and Ponzi finance, the greater the fragility of the financial sector to rising interest rates and/or other shocks. 

Ponzi financed assets, in particular, are highly sensitive to both changing perceptions and higher interest rates. 

Traditionally, higher rates are problematic as debt service costs rise at the same time the present value of future cash flows drops. 

Quoting Minsky, “The rise in long term interest rates and the decline in expected profits play particular havoc with Ponzi units, for the present value of the hoped for future bonanza falls sharply.” 

Minsky: 

“It can be shown that if hedge financing dominates, then the economy may well be an equilibrium seeking and containing system. 

In contrast, the greater the weight of speculative and Ponzi finance, the greater the likelihood that the economy is a deviation amplifying system… 

Over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance.”

Minsky witnessed a lot, but he surely never imagined an environment of zero rates and endless Trillions of Fed monetization – and how such a backdrop – the perpetual “bonanza” - would extend the “deviation amplifying” Ponzi phase. 

The Archegos fiasco had me this week sharpening my focus on Minskian analysis. 

The facts are not altogether clear. 

But from numerous reports it appears Archegos had fund equity of around $10 billion. 

Positions have been estimated in the range of $50 billion to $100 billion, meaning a leverage ratio between 5 and 10 to one. 

After an insider-trading settlement back in 2012, the hedge fund was converted to a so-called “family office” that enjoys much less onerous reporting requirements. 

Archegos maintained highly concentrated positions, with upwards of a $10 billion (equal to fund equity!) position in Viacom. 

And with a second huge position in Discovery, Archegos was willing to accept the risk of having media exposure significantly in excess of fund equity. 

Furthermore, Archegos held substantial exposures to volatile Chinese Internet stocks (including Baidu and Tencent).

Bill Hwang, the founder of Archegos, has operated in the markets since the nineties. 

Hwang was a protégé of hedge-fund legend Julian Robertson at Tiger Asset Management, before founding Tiger Asia Management (a so-called “Tiger Cub”) in 2001. 

In Hwang’s long and distinguished career, he has been in the catbird's seat for extraordinary market cycles – including spectacular booms along with devastating bursting Bubbles. 

Why would Archegos employ such a risky strategy – basically reckless leveraging of volatile equities exposure? 

We can only assume the firm was emboldened by the hyper-loose policy and liquidity backdrop. 

And why would the dominant global securities firms (including Nomura, Credit Suisse, Goldman Sachs, Deutsche Bank, Morgan Stanley and Wells Fargo) so readily provide the financing for such a daring investment scheme? 

It does support the view that repeated Federal Reserve market bailouts, along with unfathomable liquidity injections, have numbed the entire marketplace to risk.

It has been my thesis that we’re in the throes of a “blow-off” period of unprecedented speculative leveraging. 

And Archegos provides yet another anecdote that the expansive global derivatives marketplace is at the epicenter of leverage and speculative excess. 

Archegos could employ such egregious leverage through “over-the-counter” derivatives positions with various securities firms – in what are called “basis” or “total return” swaps.

These types of derivatives are big business for Wall Street. 

From the FT (Robert Armstrong): 

“Global banks earned an estimated $11bn in revenue in 2019 from synthetic equity financing including total return swaps, double the level of 2012… 

The business, which has grown rapidly since the financial crisis, accounts for more than half of banks’ total equity financing revenue… — more than traditional margin lending and lending out shares for shorting combined. 

Synthetic financing continued to take share from other forms of equity financing in the first half of this year.”

Pulling from my Q4 Z.1 analysis from a few weeks back: 

“Broker/Dealer Loans expanded a record $100 billion, or 84% annualized, during Q4 to a record $574 billion. 

For 2020, Broker/Dealer Loans surged a record $164 billion, or 40%. 

This compares to previous cycle peak growth of $79 billion in 2006 and $75 billion in Bubble year 1999. 

Total Broker/Dealer Assets jumped $168 billion, or 19% annualized, during Q4 to a record $3.676 TN.”

This is the Fed’s own data. 

Do they not have a team ready to investigate such extraordinary Wall Street lending growth during a period of conspicuous exuberance and speculative excess? 

Since the “great financial crisis,” Fed chairs have repeatedly expounded the view that monetary policy is not an appropriate tool to counter asset inflation and Bubbles. 

It was, instead, macro-prudential polices that were to safeguard financial stability. 

Archegos is one more example of the serious shortcomings of this approach. 

How many times have we been told how closely the Fed on a daily basis monitors for risks to financial stability?

The FT’s Gillian Tett posed the relevant question: “So was Archegos an anomaly? 

Or a trend?” 

I give her credit for being diplomatic. 

This was utter craziness. 

A long-term trend that achieved powerful momentum; a perilous sign of the times. 

Some have drawn comparisons to Long-Term Capital Management’s 1998 blowup. 

Archegos is smaller and its derivatives exposure only a fraction of the Trillion or so (nominal) LTCM positions. 

It had not borrowed in the money markets and was not levered in Credit instruments, which would generally indicate less systemic impact. 

Yet, on its surface, Archegos’ positioning and leverage are more audacious than even LTCM. 

There have been no allegations that outright fraud is involved. 

No humongous “fat finger” trading flub, or the shenanigans of an overzealous hedge fund titan wannabe. 

There were no flaws in risk models or aberrant market dislocation that blew up the strategy. 

Instead, it was one crazy roll of the dice by a seasoned operator betting on the perpetual bull market – gleefully financed by the who’s who of global speculative finance. 

Archegos is emblematic of an out of control mania and a complete breakdown of responsible lending and regulatory oversight. 

It may not have posed a systemic risk. 

Yet the Archegos fiasco is certainly an indictment of the entire system from the speculators to the financiers to the regulators and – most importantly – the institution entrusted as guardian of our “money” and financial stability more generally.

March 31 – Reuters (David Lawder): 

“U.S. Treasury Secretary Janet Yellen is facing pressure from Democrats to revive tougher scrutiny of hedge funds and other large pools of capital as she heads her first meeting of the premier grouping of U.S. financial regulators… 

The meltdown of leveraged hedge fund Archegos Capital Management this week… gives the Financial Stability Oversight Council fresh evidence to review. 

The council, led by Treasury and including heads of the Fed, the Securities and Exchange Commission and other major financial regulators, is scheduled to meet… to privately discuss hedge fund activity and the performance of open-end mutual funds during the coronavirus pandemic.”

What are the ramifications of the Archegos implosion? 

We can assume regulators will take a sharpened approach with leveraged institution oversight – hedge funds and “family offices,” in particular. 

Lending conditions in levered “securities finance” will tighten. 

JPMorgan analysts estimate losses to the big securities firms could approach $10 billion – with the largest hits to Nomura and Credit Suisse. 

For Credit Suisse, it’s somewhat a “third (fourth) strike” (Greensill Capital, York Capital Management and Luckin Coffee). 

At least on the margin, the big securities firms will be more circumspect in extending Credit to highly levered market operators. 

Perhaps the most consequential near-term changes will unfold stealthily in the derivatives marketplace. 

Regulators will more carefully scrutinize the types of derivatives that allowed Archegos to go nuts with leverage. 

This should spur a more cautious approach from derivative counterparties (i.e. the big securities firms), with the upshot being a tightening of conditions for the leveraged speculating community. 

From the FT: 

“‘There is never just one cockroach,’ warns Andrea Cicione, head of strategy at research house TS Lombard. 

‘If all this sounds familiar, it is because of the similarities with the beginning of the global financial crisis, when two hedge funds…had to be bailed out by their sponsor, Bear Stearns, following margin calls they could not meet.’ 

He adds: ‘To be absolutely clear, we are not calling [another financial crisis] here — there simply is not enough evidence to conclude that Archegos is anything more than an isolated case.’”

There is every reason to believe Archegos is but the tip of the iceberg. 

While not obvious, the comparison to the Bear Stearns Credit fund blowups in June 2007 is apt. 

Those two funds had employed egregious leverage in their subprime mortgage derivatives holdings. 

And this type of speculative leveraging had acted as a marginal source of liquidity during the “Terminal Phase” of mortgage finance Bubble excess. 

And while the Fed’s aggressive monetary loosening was instrumental in sustaining general Bubble excess well into 2008, the implosion of the Bear Stearns funds marked a momentous inflection point – a tightening of lending conditions at the margin (subprime) that marked the beginning of the end for a historic Bubble.

There’s a case to be made for characterizing Archegos as an egregious employer of leverage at the fringe of an epic Bubble in leveraged speculation – having provided a marginal source of marketplace liquidity. 

The collapse and resulting tightening of lending conditions will now mark an inflection point for the historic Bubble in leveraged speculation across the securities and derivatives markets. 

My fascination with Bubbles goes back to the late-eighties Japanese Bubble period. 

A similar dynamic held through the many Bubbles I’ve analyzed over several decades: 

U.S. bond market 1992/3, Mexico, the SE Asian “Tigers,” the nineties “tech” Bubble, the mortgage finance Bubble, and others. 

In each case, I became convinced the amount of Credit, speculation and other egregious excess was extraordinary. 

And years ago I adopted a Bubble maxim: “I knew things were really bad. 

It was invariably much worse than even I imagined.” 

April 2 – Financial Times (Katie Martin, Robin Wigglesworth and Laurence Fletcher): 

“The super-rich face challenges that the rest of us do not have to consider: yacht maintenance, selecting the right fleet of private jets, finding boarding schools for their offspring. 

Thanks to their roughly $6tn in combined family wealth, they now have to worry about Bill Hwang too. 

Hwang has shot from relative obscurity to become the key figure in global markets over the past two weeks, as the implosion of his Archegos investment house has hammered a handful of stocks and punched multibillion-dollar holes out of Credit Suisse and Nomura.” 

I was unware that “family office” assets had inflated to $6 TN – through an astounding confluence of policy-induced wealth redistribution and asset inflation. 

From the FT: 

“That golden age has brought a proliferation. 

In a report issued a year ago, business school Insead noted that the number of single family offices had grown by 38% between 2017 and 2019, to reach more than 7,000. 

Assets under management stood at some $5.9tn in 2019.”

We can safely assume assets are at the minimum now approaching $7 TN – and, with some leverage, the size of holdings could be double or even triple. 

And while many “family offices” would be cautiously focused on wealth preservation, there’s an element of “regulatory arbitrage” that we all should find troubling. 

As Archegos has illuminated, this structure creates a loophole for avoiding regulatory oversight and reporting requirements. 

Most of these operations are domiciled in lax off-shore financial centers outside the purview of credible regulators. 

I have proffered tens of Trillions of speculative leverage have accumulated over this protracted Bubble period. 

The so-called “family office” universe has clearly become a key operator in global leveraged speculation. 

But let’s not lose sight of the big picture.

March 29 – Reuters (Gina Chon): 

“But broadly global watchdogs are eyeing opaque areas of the market. 

Assets among shadow banks have increased following the financial crisis, totaling more than $200 trillion in 2019, now making up about 50% of the global financial system, according to the Financial Stability Board, compared to 42% in 2008.”

Archegos is also a reminder of latent liquidity issues. 

For the most part, Archegos trafficked in exposures to liquid equity securities. 

For example, Viacom traded 38 million shares on March 23rd, trading at $96 late that Tuesday afternoon. 

By Friday, some 20 trading hours later, the stock had been more than cut in half to $40. 

Clearly, the large “margin call” block trades to unwind Archegos positions were a major factor. 

But how much selling came out of the woodwork in an attempt to “front run” this forced liquidation? 

Some smelled blood, and others panicked – and the market in Viacom stock turned illiquid, then quickly dislocated. 

It was the inverse of spectacular speculative melt-ups we became so accustomed to during the quarter. 

It made me recall the March 2020 implosion of some popular corporate bond and small cap equities ETFs. 

After beginning the year at $37, Viacom was trading at $100 only nine sessions ago. 

Importantly, it was the speculative melt-up that set the stage for the inevitable reversal, dislocation and Archegos blowup/deleveraging. 

We should all be worried by the ongoing proliferation of ETFs gorging on wildly volatile and speculative company stocks. 

It’s all late-cycle “Moneyness of Risk Assets” “Terminal Phase” egregious excess. 

Just wait until the “front running” (selling/shorting/put buying), illiquidity and dislocation when these funds suffer major losses and panicked outflows (“runs”). 

Q1 2021 – another quarter for the history books. 

The Banks (BKX) surged 24.0% (Nasdaq Bank Index up 28.7%), with the Broker/Dealers (XBD) gaining 19.2%. 

The small cap Russell 2000 jumped 14.1%, and the “average stock” Value Line Arithmetic Index rose 16.4%. 

The NYSE Arca Oil Index jumped 31.3%, while the Semiconductors rose 15.9%. 

The Dow Transports advanced 17.9%. 

Gamestop surged 916%, AMC Entertainment 342%, and Express 336%. 

Vaccinations reached 100 million, while 900,000 jobs were added in March. 

Mind-boggling fiscal stimulus, and the Fed holding doggedly to $120 billion of monthly QE (for months to come). 

The Treasury five-year inflation “breakeven rate” jumped 66 bps during the quarter to 2.64% (high since 2008) – with manufacturing survey price indexes surging to multi-decade highs.

Ten-year Treasury yields spiked 81 bps to 1.72%. 

The Brazilian real and Turkish lira each dropped 8.9%. 

Erdogan threw a tantrum and sacked Turkey’s chief central banker. 

Turkish lira bond yields spiked about 500 bps during the quarter to 17.4%. 

Brazilian real yields rose 253 bps to 9.40%. 

Supply-chain finance leader Greensill Capital collapsed during the period, while Archegos imploded spectacularly at quarter-end. 

Melvin Capital and other hedge funds suffered at the hands of wildly unstable markets. 

As Warren Buffet is fond of saying: 

“You find out who’s swimming naked when the tide goes out.” 

Get the women and children off the beach! 

It’s high tide, yet things are turning nasty already. 

Hyman Minky’s “Ponzi Finance” on a systemic (and global) basis – and the abhorrent scheme is showing its age. 

Hopes and fears of the global recovery

The good news is growth is accelerating; the bad news is major economic, health and social risks remain

Martin Wolf

    © James Ferguson


The recovery from the shock of the pandemic is here. 

It is driven, above all, by the arrival of vaccines, but also by an improvement in our ability to combine economic activity with social distancing, and huge fiscal and monetary support — especially from the US. 

Yet it is vital not to forget the perils we still face and the lessons we must still learn. 

Nothing can teach the reality of global interdependence better than a pandemic. 

But is this what we learnt? 

In our fear, we have turned inwards more than outwards.

Nevertheless, the news on the recovery is good. 

The OECD’s recently issued interim Economic Outlook shows a clear improvement in growth prospects for 2021 and 2022. 

Global output is forecast to be 2.5 per cent higher in the last quarter of 2022 than was expected as recently as last December. 

The single most important reason for this, after the miracle of the vaccines, is the US’s $1.9tn fiscal support package. 

This is forecast to raise US gross domestic product by 3.8 percentage points in its first full year. 

Its effects are also forecast to spill over to the rest of the world, raising eurozone GDP by 0.5 percentage points to take one example.

Yet there remain challenges and risks.


First, the US is undertaking a remarkably bold fiscal and monetary experiment. 

The Biden administration is already talking of a further $3tn spending package on infrastructure, clean energy and education. 

Together, these packages amount to nearly a quarter of US GDP. 

As the chances of a large tax increase are small, much of this will be financed by the Federal Reserve.


Lawrence Summers, former US treasury secretary, declares that: “These are the least responsible fiscal-macroeconomic policy we’ve have had for the last 40 years.” 

They are, at least, the most daring. 

This administration wants to avoid the mistakes of the Obama era. 

But it could make opposite ones. 

The desire to take these risks is understandable. 

Yet if the stimulus proves excessive, damage may be severe.

Second, the vaccine rollout is uneven and, relative to the challenges, too slow. 

So far, just under 6 doses have been given per 100 people worldwide. 

Among large countries, this rate goes from 45 in the UK and 38 in the US, to 13 in the EU, six in Brazil, three in India and near zero in Nigeria. 

If we assume global herd immunity requires two doses of vaccine for 75 per cent of the world’s 6bn adults, some 9bn doses need to be delivered. 

As only about 450m have been delivered so far, the chances of 9bn jabs being administered by the end of 2022 look small. 

At the same time, if the virus remains rife, the risk of dangerous variants emerging is high. 

Clearly, we must co-operate on increasing supply and delivery of doses worldwide.

Third, the pandemic has had dramatically different effects across countries. 

The OECD now forecasts that the US economy will be slightly bigger in the fourth quarter of this year than it expected in November 2019. 

The Indian economy, in contrast, is forecast to be 8 per cent smaller. 

Particularly sobering is the rise in the number of people in extreme poverty, now estimated by the World Bank at between 119m and 124m.


Fourth, the pandemic has affected people very differently within each country. 

The victims of its social and economic costs have mainly been children and young adults, people who cannot easily work from home, generally the less skilled, women (especially mothers of young children) and ethnic minorities. 

Meanwhile, skilled professionals and capitalists have done well. These scars are deep and need healing.

Fifth, the pandemic has accelerated changes in patterns of work and residence. 

New possibilities have opened up for those able to work remotely. 

But the consequences for others will be difficult.


Finally, the pandemic has accelerated the ongoing breakdown in relations between the US and China. 

Hostility to China seems to be almost the only thing on which the Trump and Biden administrations agree. 

Maybe this was bound to follow China’s rise. 

It is also dangerous.

As we look at these challenges and risks, we need to reflect on something remarkable that we have also learnt.


So far, Covid-19 is estimated to have killed 2.7m people worldwide over about 15 months. 

Nobody knows how many died from the Spanish flu a century ago. 

But estimates are that the number of fatalities was between 17m and 100m, in less than two years, out of a global population less than a quarter of today’s. 

So, deaths thus far are at most 4 per cent of those from the Spanish flu.

Many are now able to protect themselves while continuing to work, in ways impossible a century ago. 

High-income countries are able to cushion those who lost their jobs when their economies are partially closed down. 

Not least, we have been able to develop vaccines at astonishing speed. 

All these are indications of progress that we take too readily for granted. 

Our civilisation treasures life. 

We are right to do so. 

Above all, we are able to do so.


Yet we limit our success by our difficulties in co-operating, even when vital interests are threatened. 

The pandemic and the bigger challenge of climate change show us how much we depend on working together successfully on shared challenges. 

But the reality remains one of deep division, and the suspicions that inevitably follow.

The pandemic will not be over until it is over everywhere. 

We must co-operate to achieve that outcome. 

We have to heal scars at home, but we also need to heal them globally. 

Can our divided world achieve this? 

If it fails, it will not be because we lack the means, but rather because we lack the will.

Acrimony across the Pacific

A hostile meeting sets the tone for US-China relations

Joe Biden shows no sign of changing Donald Trump’s confrontational policy


LONG BEFORE it started, it was clear that the first high-level meeting between America and China during Joe Biden’s presidency would be deemed a success only if it appeared to go badly. 

By this measure, both sides ought to be delighted with the show of mutual recrimination that they put on at their encounter in Anchorage, Alaska, on March 18th and 19th.

Antony Blinken, the American secretary of state, issued a litany of complaints against China’s repressions and aggressions, including an increasingly militant posture toward Taiwan and the economic coercion of Australia. 

China’s behaviour, he said, threatened the global “rules-based order”. Yang Jiechi, a Politburo member and Xi Jinping’s most senior envoy, responded fiercely. 

He accused America of meddling in his country’s internal affairs, denounced its long history of destabilising military intervention abroad and criticised its human rights abuses at home, including what he called the “slaughter” of black Americans.

Such direct confrontation in public is highly unusual in the history of face-to-face diplomacy between China and America, which typically has been marked by platitudes with references to “frank” exchanges made in private. 

Yet the blustery rhetoric would have been familiar to anyone who reads the press in either country. 

Some analysts have suggested that the Alaska blow-up was just a display for domestic audiences. 

It is possible that, for all the frank talk in public, some more constructive diplomacy may have taken place in private.

Even so, the meeting in Anchorage has probably set the tone for an antagonistic relationship between the world’s two most important powers. 

President Joe Biden’s team had signalled there would be no thaw in US-China relations after they went into a deep freeze under Donald Trump.

Relations between the two countries have worsened more through actions than words; much of that behaviour is unlikely to change. 

China is carrying out a ruthless imposition of authoritarian rule in Hong Kong, brutal repression of Uyghurs in Xinjiang, punitive trade actions against Australia, sabre-rattling over Taiwan and, American officials say, cyber-attacks against American targets. 

These actions constituted the substance of America’s public and private criticism of China in Anchorage.

Precisely while the meetings were underway, a Canadian businessman, Michael Spavor, appeared in a courtroom in Dandong, China, on espionage charges, a case brought in evident retaliation for the detention in Canada of a senior Huawei official wanted in America for alleged violations of sanctions on Iran. 

Michael Kovrig, a Canadian ex-diplomat, is scheduled to appear in court on similar charges on March 22nd. 

The imprisonment of both Canadians as apparent hostages for more than 800 days is the sort of subversion of the “rules-based order” to which Mr Blinken referred.

America’s behaviour towards China, on the other hand, may become less mercurial than under Trump. But Mr Biden’s team has kept the Trump administration’s framing of “strategic competition” for the relationship—Mr Biden has even used the term “extreme competition”—and the divide between the two countries is likely to deepen. 

The Biden administration has emphasised working with allies to counter and compete with China. 

It has invested in building up the Quad, a security alliance with Japan, Australia and India that was given new life under Mr Trump. 

It has also maintained the sanctions imposed under Mr Trump for human rights abuses in Xinjiang and Hong Kong; just before the Alaska meeting it announced new sanctions related to Hong Kong on two dozen Chinese officials, including a Politburo member. 

The decision by Mr Blinken, and Jake Sullivan, Mr Biden’s national security adviser, to raise the subject of Taiwan publicly was a clear signal of continuity from the Trump administration, which upgraded ties with Taiwan in ways that have angered China (which claims sovereignty over Taiwan).

That said, confrontation is not the sum of either America’s or China’s policy. 

Mr Blinken has declared that there are areas where America must confront China (such as on human rights and the bullying of other countries); others in which they must compete (economically and technologically); and some fields in which they can co-operate (eg, on combating climate change). 

After the meeting in Alaska, Mr Blinken said that “on Iran, on North Korea, on Afghanistan, on climate, our interests intersect”.

Mr Yang and Wang Yi, China’s foreign minister, have said previously they want a fresh start in US-China relations. Xinhua, the official news service, described the Alaska meeting as a “strategic dialogue that both sides believe was timely and helpful and deepened mutual understanding”. 

But there is plenty of wishful thinking in these words. Both sides place the blame solely on the other’s actions for the sorry condition of the relationship.

Another high-level meeting may not be soon in coming. 

The Biden administration has explicitly rejected the idea of resuming a broad “strategic dialogue” (much less described the talks in Alaska to be such). 

If the Anchorage conference made anything clear, it is that the tough talk is not just for show. 

The world’s most important bilateral relationship will continue to be one of the most contentious.

Jobs Report Might Shift Thinking on Inflation and Yields

Economists were caught off guard by March’s strong labor market gains and might need to play catch-up on bond yield forecasts

By Spencer Jakab

Friday’s employment data is the latest sign of a quickening recovery in the U.S./ PHOTO: MARCO BELLO/REUTERS


Juuuuust a bit outside.

U.S. employers added 916,000 jobs in March or some 241,000 more than predicted by a Wall Street Journal survey of economists. 

February’s gains were revised higher as well. It is the latest sign of a quickening recovery in the U.S. economy as Covid-19 cases fall and more Americans are vaccinated.

Those same economists’ forecasts indicate that fears of major-league pressure on wages and prices are overblown even as the economy’s pace quickens. 

A glance at March’s government data would lead to the same conclusion with hourly wages declining slightly and employment in areas like retail and accommodations and food service still well below pre-pandemic levels. 

The surveyed economists see the headline unemployment rate at 5%, the Consumer Price Index up by 2.5% year-over-year and the benchmark 10 year Treasury note yielding 1.78% by this December.



But the surprisingly quick pace of recovery could force them to rethink their calculations. 

The survey week on which the March payrolls report was based came before Americans began to receive their latest stimulus checks and when tens of millions fewer vaccines had been administered than today. 

A report on Thursday by the National Federation of Independent Business showed a record share of respondents with job openings and a one-year high in the share of businesses that were raising wages to attract workers.

That latter figure is still below what business owners reported immediately before the pandemic when the unemployment rate hovered near an all-time low of 3.5%. 

Even so, there are so many other transitory price pressures from food and energy prices to logistics bottlenecks that workers might wield their improving bargaining power to keep their purchasing ability steady as labor slack disappears.

While a robust domestic recovery is great news for corporate profits, it might not be for stock prices if bond yields keep climbing—especially technology stocks, which have proven to be especially sensitive to yields recently. 

Back in December when vaccine and stimulus plans were known, economists thought that the 10 year note’s yield would be 1.08% in June. 

It jumped to 1.72% on Friday in response to the jobs report. 

Some forecasters see it topping 2% this year for the first time since the summer of 2019.

That would be no yield of dreams for stock bulls.

Will the New World Order Succeed?

by Jeff Thomas 


The concept of the New World Order first gained prominence at the turn of the twentieth century. 

It’s been in the works for quite a while but has ramped up considerably in recent decades. 

Not surprisingly, as its autocratic intent has become more apparent, people have become increasingly fearful that its coming will result in their subjugation.

They are correct.

At one time, economic moguls, industrial leaders and even presidents proudly stated their support for a New World Order. 

In fact, as can be seen in the image above, David Rockefeller stated (in his Memoirs in 2002) that he was fully on board with the New World Order.

He has since stated,

We are grateful to the Washington Post, the New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost 40 years… It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. 

But, the world is more sophisticated and prepared to march towards a world government. The super-national sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.

And yet, increasingly, the push for the New World Order is now being hushed up, even as its implementation has now begun. 

Interestingly, Wikipedia now titles it as "New World Order (conspiracy theory)", where it once left off the damning disclaimer.

But why should this be so? 

Well, if a people believe that unpleasant times are a long way off, they tend to ignore them. However, when they become imminent, people suddenly take notice. 

And here we refer to the more recent words of Mister Rockefeller:

"We are on the verge of a global transformation. All we need is the right major crisis."

That major crisis has now arrived on our doorstep in the form of a virus and the rolling-out of the New World Order has begun.

People have been conned into believing that a common seasonal flu has somehow taken on magical properties, with the potential to kill anyone who does not receive the government-approved vaccine. 

Although this vaccine is in the experimental stages and has not, in fact, gained the FDA approval to even be categorised as a vaccine, fear of death has made millions of people abandon their sense of reason and comply with anything the government demands, regardless of how irrational it may be.

Children cannot go to school, even though they’re almost certain to be unaffected by the virus. 

Those who don’t get the jab will not be allowed an immunity passport to travel, even though the vaccine doesn’t ensure immunity. 

And any place that people congregate to discuss issues – churches, bars or sporting events – are closed down or limited as to use. 

And yet, rioters have been tolerated – and even encouraged – in forty states.

The COVID hysteria has not been created by circumstances, but by governments and the media.

All of this (and quite a bit more) has fast-tracked the coming of the New World Order.

Over the many years that the New World Order has been presented by the elites, it has always had one consistent feature: that when it was introduced, it would be uniform, throughout the world.

And so, as that’s the predominant aspect of its presentation, it’s understandable if we presume that the Order is a given: that all countries will get on board and stay on board.

That will not be the case.

For anyone who has studied human psychology in any depth, it’s understood that sociopaths make up roughly four percent of any population, anywhere in the world. 

And that the alpha rats of any society – those who seek to dominate over others – make up the ruling class, as they’ll pursue it with greater fervour than non-sociopaths.

That, of course, ensures that the leaders of most all countries, but particularly the larger ones, will consistently seek to dominate their peoples and can therefore be expected to embrace the New World Order concept.

And it is for this reason that we may assume that a New World Order will succeed.

But there’s a flaw in this reasoning.

Just as a gang of criminals may join together to pull off a robbery, each agreeing to the plan, that tends to change in the aftermath of the robbery. 

Once it’s taken place, each robber tends to reveal that, all along, he had a hidden motive and intended to double-cross the others, so that his share of the spoils would be greater than he’d agreed.

In world terms, the tendency is the same. 

All that’s different is the scope of the plan.

In actual fact, the New World Order is made up primarily of the leaders of First World countries. 

Their hope is to create a cabal that, following an economic collapse in the First World, the Order will somehow rise like a phoenix from the ashes.

But this order cannot be complete without the cooperation of the other powers.

The countries of the second world – in particular, Asia – have for many years kept their cards close to their vests. 

They’ve followed a path that in most ways mimics the New World Order. 

However, they have no intention of yielding their power to the West.

An interesting trait common to all sociopaths is that, like the gang of robbers, they may agree on the surface to a grand plan, yet, when the time comes to divide the spoils, it’s revealed that they had their own agenda all along.

So, what does this mean as to the relative success or failure of the New World Order?

Well, the First World is on the ropes economically. 

They’ve reached an end-game condition and most certainly will crash. 

The first stages of that crash are now underway.

The attempt to create a New World Order will be very costly. 

An enhanced police state will be necessary at home and expanded warfare can be anticipated away from home.

The First World will either self-destruct from a combination of debt and misadventure in the coming decade, or will at the very least, fall to its knees.

Either way, when this occurs, other, stronger powers can be expected to step in. (Historically, world politics abhors a vacuum.) 

The world shall see a shift in dominance as it always does when one empire is relegated to the dustbin and others take its place.

This will take years to play out, but when the dust has settled, the New World Order will be yesterday’s news and the new concern will be whether the emerging powers will be able to dominate the entire world or only portions of it.


Editor's Note: Today, the United States is still the dominant power in the world. But, US dominance and the dollar hegemony isn't guaranteed in the months and years ahead.

In fact, the US government has quietly launched the most dangerous economic experiment since communism, and it's taking place right before our eyes.

Humanity’s Historic Test

National leaders who bend to domestic pressure and hoard COVID-19 vaccines will ultimately leave their own countries worse off, given the coronavirus's propensity to acquire new mutations. It is now us versus them – humankind against the virus and its many mutations.

Carl Bildt


STOCKHOLM – With “vaccine nationalism” intensifying by the day, the global effort to end the COVID-19 pandemic is at risk of faltering. 

As of mid-March, the coronavirus has infected approximately 120 million people globally, causing around 2.6 million deaths. 

Though these are huge figures, they represent merely a fraction of the global population, which means that the pandemic still has a very long way to go.

The good news is the historically unprecedented effort to tackle the crisis. 

Although bringing a new vaccine through the stages of development and approval normally takes up to a decade, pharmaceutical companies have completed the process in under a year. 

The World Health Organization has already approved four COVID-19 vaccines for emergency use, and others are likely to follow soon. 

Moreover, ambitious new global mechanisms have been created in short order to facilitate the rapid and equitable distribution of vaccines around the world.

For example, since April 2020, the WHO’s Access to COVID-19 Tools (ACT) Accelerator, which includes all aspects of fighting the pandemic, has aided the fight against the virus by facilitating one of the fastest coordinated global public-health efforts in history. 

And now, the COVAX facility has started deliveries of vaccines to at least 50 low- and medium-income countries around the world (though initial supplies have been limited in the early stages of vaccine production).

But aside from these initiatives, most countries are fixated on their own circumstances, neglecting the global connectedness that leaves all of us vulnerable until the virus has been stamped out everywhere. 

As the WHO has been emphasizing, no one is safe until everyone is safe.

As we are now witnessing firsthand, there is a high risk that new variants of the virus will frustrate or even derail the entire vaccination effort. 

We are currently dealing with the new British (B.1.1.7), South African (B.1.351), and Brazilian (P.1) variants, and there is no telling where the next one will emerge. 

The longer the pandemic continues, the more opportunities the virus will have to acquire dangerous new mutations that would allow it to evade the current vaccines. The question is not if but when.

Moreover, when new variants do emerge, we should anticipate that they will spread around the world sooner or later. 

We should know by now that national borders and physical distance offer only limited protection.

Apart from protecting us against a biological threat, a comprehensive, coordinated global response also has a clear economic justification. 

In our highly integrated global economy, the plight of one region will necessarily be felt elsewhere. 

A startling recent study commissioned by the International Chamber of Commerce warns that, “the global economy stands to lose as much as $9.2 trillion if governments fail to ensure developing economy access to COVID-19 vaccines, as much as half of which would fall on advanced economies.” 

And reports by RAND Europe and the Eurasia Group offer similar conclusions.

The cost of fighting the pandemic should be seen in this perspective. 

The ACT Accelerator initially needed $38 billion for 2020-21. 

An unprecedented mobilization of resources by governments and the private sector, as well as philanthropic and multilateral contributions, has now reduced the funding gap to $22 billion. 

That is peanuts compared to the potential losses estimated above, not to mention the trillions of dollars that have already been spent to support households and businesses over the past year.

And yet, the threat of vaccine nationalism looms large. 

Governments are under intense domestic political pressure to secure vaccines for their populations before allowing doses to be sent elsewhere. 

And some, like China, India, and Russia, have begun to use vaccine supplies and deliveries as an instrument in their foreign policy.

Yet, as tempting as vaccine nationalism may be for policymakers, it is ultimately self-defeating. 

Every new restriction ineluctably curtails the overall rollout and makes it more likely that vaccines will not reach the places where they are most urgently needed. 

More than ever, we need an open, transparent, well-functioning global economy. And, more than ever, we need political leaders who behave like statesmen, not tacticians.

Make no mistake: we are facing a historic test of our ability to unite against a common threat. 

All of our usual conflicts, rivalries, and sources of geopolitical tension of course remain; the question now is whether we can look past them when the situation demands it.

It is now us versus them – humankind against the virus and its many mutations. 

We will stand or fall together.


Carl Bildt was Sweden’s foreign minister from 2006 to 2014 and Prime Minister from 1991 to 1994, when he negotiated Sweden’s EU accession. A renowned international diplomat, he served as EU Special Envoy to the Former Yugoslavia, High Representative for Bosnia and Herzegovina, UN Special Envoy to the Balkans, and Co-Chairman of the Dayton Peace Conference. He is Co-Chair of the European Council on Foreign Relations.