The American safe harbor premium; China falling behind AI race; Giant batteries powering energy revolution; Applying history's lessons in new 'cold war'
James Pethokoukis: Is America riskier than we think?
If perceptions of US stability were to erode, however, the safe harbor premium could diminish, leading to nasty economic repercussions.
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Maybe some experts are suffering from recency bias and placing too much weight on recent political turmoil or focusing too much on worst-case scenarios, while markets see a country with a long history as a stable democracy that pays its bills. Or perhaps investors see rising political instability as a worldwide trend. The US, then, may merely be the cleanest dirty shirt in the laundry.
In a world of rising global political risk, the US safe haven premium might hold up better than expected. That said, I hope the premium doesn’t get put to a serious test given America’s importance in creating a more peaceful and prosperous world in the 21st century.
Semafor: China is falling behind in race to become AI superpower
“It’s possible China won’t catch up to US firms because of the barriers on importing foreign-made, high-powered chips from abroad, researchers told Nature. China is lagging between five and 10 years behind the US, they said.
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“Washington revoked some export licenses to Huawei, which could curb the flow of chips into China to use in laptops and phones, the Financial Times reported. The decision shows Washington is serious about China’s security threat, one analyst said.
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“Tech has increasingly become the ‘entire game’ for foreign policy, Nathaniel C. Fick, the State Department’s ambassador for cyberspace and digital policy, told the Times. ‘The international order will be defined by whose metaphorical operating system dominates,’ he said.”
NYT: Giant batteries are driving energy tech transformation with California & Texas leading the way
Since 2020, California has installed more giant batteries than anywhere in the world apart from China.
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Over the past three years, battery storage capacity on the nation’s grids has grown tenfold, to 16,000 megawatts. This year, it is expected to nearly double again, with the biggest growth in Texas, California and Arizona.
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In California, by contrast, batteries appear to be cutting emissions from fossil fuels. The state’s gas use in April fell to a seven-year low. “We have reached the conclusion that batteries are displacing natural gas when solar generation is ramping up and down each day,” said Max Kanter, chief executive of Grid Status, an electricity data tracking firm.
Bloomberg Opinion: Niall Ferguson’s lessons for applying history for a new cold war
Lesson 1: We have passed from the “foothills” to the “mountain passes” of Cold War II.
Lesson 2: Politics > economics.
Lesson 3: Populism is potent.
Lesson 4: A pandemic of a highly contagious respiratory virus is a big deal, even if most of the fatalities are seniors.
Lesson 5: Tariffs, plus talk of decoupling, plus fiscal excess, is likely to be inflationary.
Lesson 6: In a cold war, you should expect multiple proxy wars.
Lesson 7: If Cold War II is here, proxy wars are continuing, and the economy might yet slow, then you probably shouldn’t underestimate Trump’s chances in 2024.
Lesson 8: Don’t bet against US technological leadership.
“Learning from Yesterday, Today acts prudently lest by his action he spoil Tomorrow.”