Archive for the ‘Economic’ Category
“Now that President Obama has won a second term in office, the attention of Wall Street has immediately turned onto the looming fiscal cliff. To underline the importance of the issue, asset manager Blackrock along with several other state pension boards took out full page advertisements on the eve of the election in the Wall Street Journal, New York Times and Washington Post to warn of the impending disaster.
Furthermore, on October 18, CEOs of major banks including JP Morgan, Goldman Sachs and Bank of America, signed an open letter pressing Congress and the President to “reach a bipartisan deal to avoid” the looming fiscal cliff. As it stands, should current laws stay exactly the same going into 2013, commentators are almost certain that the fiscal cliff will bring about another recession in the United States.
Just what is this fiscal cliff, and why is it so important for investors?
Essentially, the fiscal cliff represents a series of fiscal stimulus that will expire on the stroke of midnight on Dec 31, 2012. The four main drivers of the fiscal cliff are 1) the expiry of the Bush tax cuts, 2) expiry of the payroll tax cut, 3) ending of the emergency unemployment compensation passed in 2008 and 4) automatic budget cuts due to the Budget Control Act.
The expiry of the package of tax cuts, spending stimulus, and emergency benefits will all occur in 2013 and it is expected to contract the economy immediately by more than US$500 billion (>3% of GDP), almost guaranteeing the end of the economic recovery and ushering in a new recession.
AN : so the question in bold is a question which leads one to think. And questions demand answers. And answers take thoughts turned into words. But for the ” Ah Ha ! Eureka moment ” to strike …the picture settles the matter. Those little projections on top there…those are people….and people…that is a loooong way down from the cliff……
via What is the Fiscal Cliff? And How It Can Drive America into Recession | Kapitall.
“Newsnight economics editor Paul Mason interviewed Prof Castells in front of an audience at The London School of Economics for BBC Radio 4’s Analysis about his latest book Aftermath: The Cultures of the Economic Crisis.
Prof Castells suggests we may be about to see the emergence of a new kind of capitalism, with businesses growing out of the counter-cultures of the last 20 years. Here are some extracts from their conversation. :
Paul Mason: How big is this culture change?
“It is fundamental because it triggers a crisis of trust in the two big powers of our world: the political system and the financial system.
People don’t trust where they put their money and they don’t trust those who they delegate in terms of their vote.
“It’s a dramatic crisis of trust and if there is no trust, there is no society.
“What we are not going to see is the economic collapse per se because societies cannot work in a social vacuum. If the economic institutions don’t work, if the financial institutions don’t work, the power relations that exist in society change the financial system in ways favoured to the financial system and it doesn’t collapse. People collapse, not the financial system.
“The notion is the banks are going to be alright, we are not going to be alright. So there is a cultural change. A big one. Total distrust in the institutions of finance and politics.
“Some people start already living differently as they can – some because they want alternative ways of life, others because they don’t have any other choice.
“What I refer to is about the observation of one of my latest studies on people who have decided not to wait for the revolution – to start living differently – meaning the expansion of what I call in a technical term ‘non-capitalist practices’.
“They are economic practices but they don’t have a for-profit motivation – such as barter networks; such as social currencies; co-operatives; self-management; agricultural networks; helping each other simply in terms of wanting to be together; networks of providing services for free to others in the expectation that someone will also provide to you. All this exists and it’s expanding throughout the world.”
Continue reading the main story
AN : Profound treatise ! Do read the whole article and delve further into what is actively happening in this transformational, disruptive thinking area of real economics.
via BBC News – Viewpoint: Manuel Castells on the rise of alternative economic cultures.
“Walt Disney Co. (DIS) agreed to buy George Lucas’s Lucasfilm Ltd. for $4.05 billion in cash and stock, adding “Star Wars” and “Indiana Jones” to a roster of film hits including “The Avengers” and “Finding Nemo.”
Lucas, 68, the sole owner, will receive half in cash and the balance in stock, becoming a major investor in the film, theme-park and TV company, according to a statement today from Burbank, California-based Disney. The first of a new trilogy of “Star Wars” films will be released in 2015, Disney said.
The deal brings Disney, which paid a combined $11 billion for Pixar and Marvel in the past decade, two of Hollywood’s most lucrative franchises. The “Star Wars” films have generated $4.54 billion in worldwide ticket sales, second to Warner Bros.’ “Harry Potter,” according to Box Office Mojo. “Indiana Jones” pictures have collected $1.95 billion.
“Dating all the way back to Walt Disney’s day, we learned the value of great content, characters, storytelling and great imaginary worlds,” Chief Executive Officer Robert Iger said in an interview.
The acquisition complements Iger’s focus on sequels and film franchises, fitting the same profile as the Marvel purchase three years ago.
“If Disney is really trying to focus on the tent-pole, event pictures, and given that this is something that has huge carryover value in the parks and merchandise business, it certainly makes sense,” said Matthew Harrigan, an analyst at Wunderlich Securities in Denver. “This is just the paradigm of the sustainable Hollywood franchise.”
AN : This report underscores the need to have those who are economic-centric understand the value of creativity and the creative arts. Yes ultimately it is about pure ejoyment of the expression of our God given talents , but it is also that such creative expression can be measured and monetized.
Too much emphasis is laid on economics as a driver. George Lucas, Steve Jobs et al opened whole new worlds, so to speak ,with their ways of thinking and what they thought up.
In another blog , ( http://www.nakedcapitalism.com/2012/10/randy-wray-the-worlds-worst-central-banker.html ) the author reviewed commentary about the Central Banker for Argentina :
“The head of the Argentine Central Bank—Mercedes Marco del Pont–has been awarded the distinction as “the world’s worst central banker”. By whom, you might ask? Well, by Wall Street’s sycophantic press. Wall Street hates Mercedes. The woman, not the car.
Why? Well, for one thing she’s a woman. Wall Street hates female heads of central banks (take a look at the list of the top ten worst—3 out of 10 are female; then take a look at the 10 best, of which all but one are males.)
But that’s not anywhere near the most important reason. Ms. Marco del Pont kicked off the conference with a rousing talk, defending her central bank’s recent move away from a single mandate (inflation target) to pursuit of multiple mandates: financial stability, employment creation, and economic development with social equity. “
When Central Bankers begin to get the message and get out the message that economics is not enough…we are onto something.
Creativity has tremendous value….Lucas would surely attest to that.
via Disney Buys ‘Star Wars’ Producer Lucasfilm for $4 Billion – Bloomberg.
“Growth is a mantra that cities, as well as nations and states, everywhere quest after. A growing number of economists caution that growth for growth’s sake does not necessarily equate to higher living standards or increased happiness. A blue-ribbon international commission headed by Nobel Prize-winning economists Joseph Stiglitz and Amartya Sen has called for new, broader measures of economic performance and social progress. Plus, not all “growth” is the same. I’ve previously called attention to “growth without growth,” the misguided notion that adding population equals economic growth. ”
via Is Your Region Innovative, Productive, Creative, or Just Populated? – Jobs & Economy – The Atlantic Cities.
AN : we need to measure ourselves, our Cities and Countries with scales and aspects that do not only focus on fiscal and numerical aspects. Education opportunites, arts, cultural and recreational amenities, nature and sport venues etc are extremely meaningful. Why are they most often overlooked ? Probably because the trained individuals are trained in the thoughts and tools of economic measures. The article provokes us to more such aspects.
AN : Richard Florida’s ” The Rise of the Creative Class Revisited” was released at the end of June. Huff Post , by permission ,excerpted from the 3rd chapter and the posting here shares insight from that.
Richard Florida: Creativity Is the New Economy.
“Back in 2001 when tech weary investors first started noticing the allure of the emerging markets, Goldman Sachs analyst Jim O’Neill coined the acronym “BRIC” to collectively refer to Brazil, Russia, India and China, then considered the top tier of the emerging economies. The BRIC countries became a symbol of the shift in economic power from the G7 countries to the developing world. For much of the first decade of the 21st Century, the BRICs lived up to their billing. They largely led the world in GDP growth and delivered rock solid returns to those wise enough to invest early. See our current analysis of Latin American rail in our latest Global Investor Newsletter
Over the years, with investors continuously seeking the next wave in emerging markets, other clever acronyms came and went, but none caught on quite like the BRIC. In the investment world nothing is static, and at Euro Pacific Capital we feel it’s time for a change. But the BRICs don’t need to be abandoned, just expanded. In particular, it needs another “I” as in Indonesia. In other words, we think the “BRIC” bloc should now be the “BRIIC” bloc. For a variety of reasons, Indonesia has earned the right to be considered as a premiere destination for emerging market investment.
Most investors don’t realize that Indonesia is the 4th most populous country in the world, with more people than Brazil or Russia, two other charter nations in the BRIC club. They also may be unfamiliar with Indonesia’s enormous under developed natural resources, including oil/gas, coal, tin, gold, wood and rubber. Indonesia’s economy is well-balanced, with a large consumption component and limited reliance on exports to the developed world. Impressively, retail sales in Indonesia doubled from 2009 to 2012 (yes, doubled in three years) which we attribute to an improving labor market, favorable demographics, strong growth in wages and high consumer confidence. Meanwhile, developed markets struggle with high unemployment, an aging workforce, stagnant wages, and low consumer confidence. It’s no wonder retail sales in the US and Europe, struggling to grow 1% per year, create a stark contrast to Indonesia.
While Indonesia’s economy is still small relative to the other BRICs (roughly half the size of Brazil and Russia), it does have an economic growth rate that puts it well into the mix. According to the IMF, for the 17 year period between 1990 and 2007, Indonesia grew at an annual rate of 7.54%. While this is less than China (13.3%) and India (7.6%), it is more than Brazil (6.1%) or Russia (4.92%). The country is the largest economy in Southeast Asia and is a member of the G-20 group of the world’s major economies. ”
via BRIIC is a better BRIC | MINING.com.
A fiery debate has broken out over an issue many thought had long been settled: Japan (JGDPAGDP)’s economy is sliding toward irrelevance.
The freshest evidence, reported earlier this week, is the first annual trade deficit in 31 years. It means, at the very least, that the huge pool of domestic savings that Japan uses to finance its staggering national debt might instead start going to support a trade deficit, an ominous sign.
Not necessarily a problem, says Eamonn Fingleton, a long- time observer who recently wrote an op-ed in the New York Times headlined “The Myth of Japan’s Failure.” His argument that Japan is a model worth emulating generated a huge buzz. So much, in fact, that it prompted a rebuttal from Nobel laureate and Times columnist Paul Krugman, who’s considerably less enamored with Asia’s No. 2 economy. Fingleton then rebutted the rebuttal.
Who’s right? I’m more in Krugman’s camp than Fingleton’s. Japan’s toxic mix of too much debt, too little growth, too many old people and too few babies will end badly if Tokyo doesn’t get its act together.
It’s important, though, to highlight where Fingleton is right. Japan is pretty close to a model society. It is an incredibly safe, clean, efficient, predictable and consistently quirky place for an expatriate to reside. Japan is reasonably egalitarian, its people have one of the highest standards of living and enjoy the longest life spans, and its cities feature the best infrastructure anywhere. On a more superficial level, Japanese cuisine arguably blows away all others.
It’s worth noting that, in some ways, the U.S. only wishes it could become Japan someday. All the chatter about “Japanization” takes on apocalyptic tones: lost decades, debilitating debt levels, zero interest rates forever, financial chaos and existential despair. Although those worries are valid, Japan never unraveled the way skeptics expected.
Crime didn’t skyrocket, homelessness didn’t explode, Arab Spring-like social instability never materialized. Workers and companies merely adjusted, living off their savings. Japan brought a whole new meaning to the concept of muddling through.
Could the U.S. pull off what Japan has? I doubt it. The key to Japan’s ability to withstand 20 years of stagnation is roughly $15 trillion of household savings. Many Americans couldn’t live two months without a paycheck. Japan, by contrast, is anything but a basket case.
Yet here is where Fingleton’s argument falls apart. In 1995, he published “Blindside: Why Japan Is Still on Track to Overtake the U.S. by the Year 2000.” Today, the real blindside among Japan bulls is thinking that what worked for Japan yesterday will work tomorrow.
Since its asset bubble burst more than 20 years ago, policy makers have worked frantically to keep the postwar boom alive. For years, pundits fretted about Japan’s zombie companies. The real zombie is Japan’s economic playbook.
The only reason Japan has any growth can be traced to its growing public debt, the world’s largest relative to the size of the economy, and the free money provided by the central bank. The economic equivalent of steroids is what holds Japan Inc. together, Krugman argues, not its organic vitality. To flourish, Japan needs to ease regulations, tap its female workforce and liberalize immigration. Lawmakers are doing none of the above.
There’s still a powerful aversion to change, and herein lies the nation’s Achilles’ heel. The Olympus Corp. (7733) scandal showed how corporate cronyism safeguarded an insular old-boys club. The radiation leaking from Tokyo Electric Power Co. reactors in Fukushima was a reminder of how dangerously top-down Japan is in a bottom-up economic world.
via Pesek: Krugman Take on $12 Trillion Question Rings True – Bloomberg.