Tag: Economy & Business

1% Getting Richer In European Welfare States Too

As the chart from the Roine and Waldenström study shows, the share of income for the top 1% in these seven countries generally follows the same trend line. That means domestic policy can’t be the principal reason for the current spread between high earners and others. Since the 1980s, that spread has increased in nearly all seven countries. The U.S. and Sweden, countries with very different systems of redistribution, along with the U.K. and Canada show the largest increase in the share of income for the top 1%.

The main reasons for these increases are not hard to find. Adding a few hundred million Chinese and Indians to the world’s productive labor force after 1980 slowed the rise in income for workers all over the developed world. That’s the most important factor at work. The top 1% gain relatively because they are less affected by the hordes of newly productive workers.

But the top 1% have another advantage. Many of them have unique skills that are difficult to replicate. Our top earners include entrepreneurs, rock stars, professional athletes, surgeons and lawyers. Also included are the managers of large international corporations and, yes, bankers and financiers

via Allan Meltzer: A Look at the Global One Percent – WSJ.com.

China Cost Advantages Erode as U.S., Mexico Gain

China, which is experiencing negative pressure as an exporter because of wage inflation, exchange-rate pressures and higher freight rates, could lose its cost advantage vis-à-vis U.S. production in four years if freight rates rise at 5 percent annually, according to the 2011 U.S. Manufacturing-Outsourcing Cost Index.

Since 2007, Mexico, some locations in Europe and locations in Asia other than China have gained a competitive advantage for offshore manufacturing. In addition to Mexico, emerging LCCs, including India, Vietnam, Russia and Romania, had lower landed cost for their exports to the U.S.

via China Cost Advantages Erode as U.S., Mexico Gain, Report Says | Journal of Commerce.

China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills

China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

Treasury bills are securities that mature in one year or less that are sold by the U.S. Treasury Department to fund the nation’s debt.

Mainland Chinese holdings of U.S. Treasury bills are reported in column 9 of the Treasury report linked here.

Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term U.S. Treasury securities. Thus, until October, China’s overall holdings of U.S. debt continued to increase.

Since October, however, China has also started to divest from longer-term U.S. Treasury securities. Thus, as reported by the Treasury Department, China’s ownership of the U.S. national debt has decreased in each of the last five months on record, including November, December, January, February and March.

via China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills | CNSnews.com.

Garbage is USA’s Most Containerized Export

America Chung Nam, the sister company and supplier of wastepaper to China’s largest containerboard manufacturer, was the largest American exporter of containerized goods by volume in 2010 for the 10th year in a row, according to the latest Journal of Commerce Top 100 Importers and Exporters annual rankings.

The California-based company shipped a total of 300,800 20-foot equivalent units from the U.S. in 2010. The volume was 16 percent ahead of the 259,300 TEUs America Chung Nam exported in 2009.

America Chung Nam, founded in 1990, sends recycled paper goods to Chinese paper mills, which are then converted into fiberboard, cardboard, and packaging. The company has their customer base in the U.S., Asia and Europe. In addition to containerboard, they also exports plastic recyclables.

Recycling paper, plastics and scrap metal is good not only for the environment but also for reducing the U.S. foreign trade deficit. Then, it comes back to us, as Wal-Mart remained the No. 1 importer of containerized ocean cargo, increasing its shipping volume into the United States 1.8 percent in 2010. The world’s largest retailer imported 696,000 20-foot equivalent units last year, up from 684,000 TEUs in 2009. The company also was No. 39 on the Top Exporters 2010 list with 28,000 TEUs shipped out of the U.S.

via Wastepaper Giant ACN Was Top US Exporter | Journal of Commerce.

The Great Disruption Has Arrived

Why didn’t more of us see it coming? After all, the signals have been clear enough – signals that the ecological system that supports human society is hitting its limits, groaning under the strain of an economy simply too big for the planet. But we didn’t and, as a result, the time to act preventatively has past.Now we must brace for impact. Now comes The Great Disruption.It is true that the coming years won’t be pleasant, as our society and economy hits the wall and then realigns around what was always an obvious reality: You cannot have infinite growth on a finite planet. Not ‘should not’, or ‘better not’, but cannot. We can, however, get through what’s ahead – if we prepare. Continue reading “The Great Disruption Has Arrived”

How Greedy States & Cities Were Fleeced $4 Billion By Wall Street

For more than a decade, banks and insurance companies convinced governments and nonprofits that financial engineering would lower interest rates on bonds sold for public projects such as roads, bridges and schools. That failed promise has cost more than $4 billion, according to data compiled by Bloomberg, as hundreds of borrowers from the Bay Area Toll Authority in Oakland, California, to Cornell University in Ithaca, New York, quietly paid Wall Street to end agreements since 2008.

The termination payments to Wall Street firms come at the worst possible time. The longest recession since the Great Depression left states facing budget gaps of $72 billion next fiscal year, according to the National Conference of State Legislatures. U.S. cities saw their general fund revenue fall the most since at least 1986 in the budget year that ended June 30, according to the National League of Cities.

Wall Street banks and insurers peddled financial derivatives known as interest-rate swaps to governments and nonprofits that bet they could lower the cost of borrowing. There were as much as $500 billion of the deals done in the $2.8 trillion municipal bond market before the credit crisis, according to a report by Randall Dodd, a senior researcher on the Financial Crisis Inquiry Commission, published by the International Monetary Fund in June.

via Wall Street Collects $4 Billion From Taxpayers as Swaps Backfire – Bloomberg.

China Gobbles Up the World’s Copper

China is prospecting for mineral treasures around the world as it develops faster than any major economy in history. Its copper use is growing so quickly that by 2035 global demand for the metal may outstrip supply by 11 million tons, according to CRU, a London-based mining and metals consulting firm.

More than half of China’s 1.3 billion people live in rural areas. Over the next 15 years, the country will need 50,000 skyscrapers, 170 mass transit systems and urban housing for 350 million people as it develops the interior, according to a 2009 study by the McKinsey Global Institute, a research arm of New York-based McKinsey & Co. That represents a potential doubling of the domestic market for autos, appliances, televisions and other consumer goods.

Copper—first smelted over wood fires 10,000 years ago—is at the center of it all, conveying the country’s electrical pulse and providing the nervous system for the computers, dishwashers and microwaves China makes for the world.

via China Boss in Peru on $50 Billion Peak Bought for $810 Million – BusinessWeek.

China Abandons The Abacus

China said today that it’s raising interest rates by a quarter of a percentage point.

That’s a big deal. China hasn’t raised interest rates since 2007, and the move is a sign of strength for China’s economy.

One interesting detail: It’s the first time in modern history that China’s central bank made an interest-rate move that wasn’t a multiple of .09.

“The reason is that on the abacus, adding multiples of nine was much easier than adding multiples of 10. So the modern People’s Bank of China inherited that special character from the old days,” an economist with Citigroup in Beijing told Reuters. Continue reading “China Abandons The Abacus”

The Scariest Unemployment Graph I’ve Seen Yet

The median duration of unemployment is higher today than any time in the last 50 years. That’s an understatement. It is more than twice as high today than any time in the last 50 years.

via The Scariest Unemployment Graph I’ve Seen Yet – Business – The Atlantic.