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1. Last year the global economy came juddering to a halt. This year it got moving again, only to become stuck in one of history’s biggest traffic jams. New indicators developed by Bloomberg Economics underscore the extremity of the problem, the world’s failure to find a quick fix, and how in some regions the Big Crunch of 2021 is still getting worse. The research quantifies what’s apparent to the naked eye across much of the planet — in supermarkets with empty shelves, ports where ships are backed up far offshore, or car plants where output is held back by a lack of microchips. Looming over all of these: rising price tags on almost everything. Central banks, already retreating from their view that inflation is “transitory,” may be forced to counter rising prices with earlier-than-expected interest-rate hikes. That poses new threats to an already stumbling recovery, and could take the air out of bubbly equity and property prices. Behind the logjams lies a mix of overloaded transportation networks, shortages of labor at key chokepoints, and demand in the U.S. that’s been bolstered by pandemic stimulus and focused more on goods than services. (via bloomberg.com)

2. Volatility in US bonds is surging in stark contrast to the relatively placid run for equities, leading some analysts to warn over the danger that central banks trigger a spasm of volatility in Wall Street’s stock market. Fixed income markets have been jolted by fears that rising inflation will force monetary policymakers into scaling back stimulus programs, but stocks have largely shrugged off these concerns, with Wall Street’s main equities barometers rallying to a series of new record peaks last week. The gap between measures of the near-term, derivatives-implied volatility of the S&P 500 benchmark and US Treasury bonds has widened at its fastest rate in a decade, according to Bank of America. Some analysts now warn that the divergence indicates investors are complacent about the risks posed by more hawkish central banks. (via ft.com)

3. There are now more than 75 million users of Bitcoin, up from around three million seven years ago, and the number of digital currencies has exploded. Globally, 220 million people use cryptocurrencies, according to a July report by Crypto.com. “Most people agree that in the future — it might be 10 or 20 or years or it might be sooner — effectively all assets are going to be in a digital format,” said Thomas Olsen, a partner at Bain & Company who advises financial firms on cryptocurrencies and other digital asset matters. (T)he banking industry is racing to catch up. Banks want to compete in this new world and profit from it. Their approach is two-pronged: experimenting with cryptocurrency offerings and lobbying regulators to create rules that work in the banks’ favor. Some are offering cryptocurrency investments to their wealthy clients. Others are weighing trading desks for Bitcoin. JPMorgan even started its own digital currency in 2019. Read the whole thing. (via nytimes.com)

4. The fuel ecosystem is slated to undergo significant change in the decades leading up to 2050. By 2030, the cost of green hydrogen is projected to fall by 30%. By 2040, the demand for energy storage is expected to grow to 10,000 gigawatt-hours, and the market could overtake the value of the oil market. By 2050, green hydrogen could supply up to 20% of total global energy, and total biofuel demand could more than double, and power 40% of aircraft. (via qz.com)

5. The international community’s chief representative in Bosnia has warned that the country is in imminent danger of breaking apart, and there is a “very real” prospect of a return to conflict. In a report to the UN seen by the Guardian, Christian Schmidt, the high representative for Bosnia and Herzegovina, said that if Serb separatists carry out their threat to recreate their own army, splitting the national armed forces in two, more international peacekeepers would have to be sent back in to stop the slide towards a new war. International peacekeeping duties in Bosnia are currently the task of a residual EU force (Eufor) that is 700 strong. (via theguardian.com)

6. Same story (more or less) as yesterday, but with more detail: Pakistan averted a political showdown on Monday as officials reopened a key national highway that supporters of a militant Islamist group had occupied for days, following a secret pact between the government and the group. The agreement defused a crisis that had left the country reeling in recent days, the latest in a series of debilitating standoffs with Islamist hard-liners protesting perceived blasphemy. But it also illustrated the growing influence and power of such groups, including Tehreek-e-Labaik Pakistan, or T.L.P., which Pakistan banned as a terrorist organization in April, and the weak civilian government’s struggle to assert itself amid economic troubles and rising inflation. (via nytimes.com)

7. Elon Musk hit back at a suggestion that he and other billionaires should “step up now” to help solve world hunger, pointing the finger instead at a prominent global food program. Musk lashed out after David Beasley, director of the United Nations World Food Program, told CNN that just a sliver of Musk’s and other billionaires’ wealth could help solve world hunger, saying, “$6 billion to help 42 million people that are literally going to die if we don’t reach them. It’s not complicated.” Musk responded on Twitter: “If WFP can describe on this Twitter thread exactly how $6B will solve world hunger, I will sell Tesla stock right now and do it.” Seems fair enough, no? (via marketwatch.com)

8. Kissinger, Schmidt and Huttenlocher: “AI will challenge the primacy of human reason. For all of history, humans have sought to understand reality and our role in it. Since the Enlightenment, we have considered our reason — our ability to investigate, understand and elaborate — our primary means of explaining the world, and by explaining it, contributing to it. For the past 300 years, in what historians have come to call the Age of Reason, we have conducted ourselves accordingly; exploring, experimenting, inventing and building. Now AI, a product of human ingenuity, is obviating the primacy of human reason: It is investigating and coming to perceive aspects of the world faster than we do, differently from the way we do, and, in some cases, in ways we don’t understand.” (The three men are co-authors of a new book about AI, which expands upon Mr. Kissinger’s essay on the subject, published three years ago). Their book is reviewed here. It’s a review well worth reading. (via wsj.com, theatlantic.com)

9. Today’s Long Read: “Algorithms that zero in on solutions to optimization problems are the beating heart of machine reasoning. New results reveal surprising limits.”

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Quick Links: Full text of Xi Jinping’s statement at COP26 climate summit. John Authers: Bond whiplash raises risk of a financial market “accident.” Italian bond sell-off signals rising angst over ECB backing of riskier debt. E If you have not read The Washington Post special report(s) on the events of January 6th — before, during and after — do so. It’s extraordinary work. One-third of Americans think 2020 presidential election was stolen. Only 36% of Democrats and Democratic leaning independents say their party will have a better chance winning the White House with Biden at the top of the ticket. 44% want someone else, and 20% are unsure. Biden Administration circular firing squad. Seib: “there are effectively four political parties in Washington right now. And there is zero trust among them.” The Economist explains: What is “gain-of-function” research? The race is no to develop a vaccine against every coronavirus. China locks 30,000 visitors inside Shanghai Disneyland after one guest got Covid-19. Vaccine breakthrough cases on the rise in Germany.

Founder and Editor, News Items. Political analyst. Founder of and contributing editor to Bird News Items. Former columnist for The Boston Globe.