Tag: Economy & Business

Economic View – For Much of the World, a Good Financial Decade

Steady economic growth is an under-reported news story.

In a given year, an extra percentage point of economic growth may not seem to matter much. But, over time, the difference between annual growth of 1 percent and 2 percent determines whether you can double your standard of living every 35 years or every 70 years. At 5 percent annual economic growth, living standards double about every 14 years.

Putting aside the United States, which ranks third, the four most populous countries are China, India, Indonesia and Brazil,all had over 5% annual growth. Even Africa, as a whole grew at moer than 5% most years.

via Economic View – For Much of the World, a Good Financial Decade – NYTimes.com.

Our New Economy’s Direction

The U.S. remains the world’s largest manufacturing nation, larger than China or anyone else.  Many of these manufactured goods are sold outside of the U.S..  U.S. farm products, technology products, consumer products, commodities, and services are also sold abroad.

New Car DirectionBureaucracy and hierarchy were wonderful administrative structures for a manufacturing based economy and for command and control based activities like large scale manufacturing, large military, mass education, and the big government of the 1940’s, 50’s, 60’s, and even the 70’s.  However, since the 1980’s, the efficacy of the command and control oriented hierarchical bureaucracy has been poor.  Since that time, large manufacturing companies have been downsizing and failing with great frequency.

On the other hand, many of the more flexible, quick moving, and technologically advanced organizations have prospered.  One reason for this may be that Technology based companies have flat organizational structures rather than hierarchical bureaucracies.  In addition they often have merit-based promotion and compensation schemes, rather than seniority based promotion schemes.  Guild Investment Letter

China Largest Meat & Poultry Producer

Meat Production And China is the largest aqua-culture producer of seafood and the largest Wheat grower in the world (for all those Dim Sums and noodles to feed  their 6 Billion mouths). Click on this link to see an animation on the Chinese populationn trend and their oncoming aging problem, similiar to Japan’s. To read more about the latest surprising population trends read the linked article under “Muslim Birth Rates Falling Worldwide”.

India and China want IMF to sell its $100b gold

Another example of the emerging Markets thinking outside-of-the-box to come up with a seemingly simple solution to re-starting the developing world’s growth.

India and China may press for the sale of the entire gold reserves of the International Monetary Fund (IMF) to raise money for the least developed countries.

The IMF holds 103.4 million ounces (3,217 tonnes) of gold that, if sold, can fetch about $100 billion.

A draft paper exchanged between New Delhi and Beijing proposes that the gold be sold in bullion markets over a period of two to three years. The money thus raised must be used in tackling poverty in the poorest nations.

via India and China want IMF to sell its $100b gold.

IMF Warns Over Limits Of Stimulus

Mr Strauss-Kahn called for a urgent action to “cleanse banks” of toxic assets and for further fiscal stimulus beyond the 2pc of global GDP already agreed. The snag is that high-debt countries may have hit the limits already.

“The impact becomes negative for debt levels that exceed 60pc of GDP,” said the Fund.

While no countries were named, this would raise questions about Japan, Germany, France, Italy and ultimately Britain and the US after their bank rescues.

via IMF warns over parallels to Great Depression – Telegraph.

A ‘Copper Standard’ for the world’s currency system? – Telegraph

One thing is clear: Beijing suspects that the US Federal Reserve is engineering a covert default on America’s debt by printing money. Premier Wen Jiabao issued a blunt warning last month that China was tiring of US bonds. “We have lent a huge amount of money to the US, so of course we are concerned about the safety of our assets,” he said.

This is slightly disingenuous. China has the world’s largest reserves – $1.95 trillion, mostly in dollars – because it has been holding down the yuan to boost exports. This mercantilist strategy has reached its limits.

The beauty of recycling China’s surplus into metals instead of US bonds is that it kills so many birds with one stone: it stops the yuan rising, without provoking complaints of currency manipulation by Washington; metals are easily stored in warehouses, unlike oil; the holdings are likely to rise in value over time since the earth’s crust is gradually depleting its accessible ores. Above all, such a policy safeguards China’s industrial revolution, while the West may one day face a supply crisis.

The next industrial revolution is going to be led by hybrid cars, and that needs copper. You can see the subtle way that China is moving into 30 or 40 countries with resources

via A ‘Copper Standard’ for the world’s currency system? – Telegraph.

Free Food, Party All Night – At Denny’s

On February 1, the 56-year-old company aired a Super Bowl commercial that promised free Grand Slams to anyone who walked through the door from 6 a.m. to 2 p.m. on Feb. 3. Denny’s, which is open 24/7, says some two million free meals were served.

Do these promotions justify the cost? CEO Marchioli. The additional customers buying juice and coffee with their free breakfast, plus the repeat business the giveaways generate, covers the cost. “We’ve already paid for the Super Bowl promotion, and then some,”

dennys-free-breakfast1Denny’s has created something called the “Allnighter” program. From 10 p.m. to 5 a.m., the chain has started playing alternative rock music on the restaurant soundtrack. Denny’s has now sponsored over 30 emerging bands —they get free meals while on tour — and organized late-night meet-and-greets, and occasional jam sessions, with the musicians in the restaurants. The servers wear casual black t-shirts instead of a buttoned-up uniform. Denny’s also just introduced four new late-night menu items, each priced between $3 and $4. These include the “Pancake Puppy 12-pack,” a dozen bite sized hotcakes rolled in cinnamon and sugar, and “Kickin’ Flavor Wraps,” two tortillas served with chicken strips. The idea is to serve stuff that groups of amped-up rabble-rousers can share. Denny’s wants to give the late-night crowd a social experience they can’t get at the fast-food drive-thrus, which are now staying open later through the night and eating away at the chain’s graveyard shift revenues.

via Denny’s: Where The Food Is Free, and Drunks Can Pee – TIME.

Black Swan-proof World

We love 10 step programs. So here an economic perscription by the author who was a veteran trader, a distinguished professor at New York University’s Polytechnic Institute and the author of The Black Swan: The Impact of the Highly Improbable 1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.

2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

via FT.com / Comment / Opinion – Ten principles for a Black Swan-proof world.

Continue reading “Black Swan-proof World”

Serious Threats to Sirius Radio

Web outfits like Pandora, Foneshow, Stitcher, and Slacker broadcast portable and mobile content that makes Sirius look overpriced and stodgy.

Companies like the Web radio service Pandora, Foneshow, Stitcher, and Slacker—as well as traditional content providers—are broadcasting portable and mobile content that is cheaper or even free. Moreover, these upstarts can often replicate Sirius programming. One example: On Mar. 30, MLB will release an iPhone (AAPL) mobile application that will stream games live from all 30 teams—which is what Sirius customers get now—and offer video clips and live score updates for $10 for the entire season. Sirius’ subscriptions that include MLB games start at $10 a month. The new app doesn’t violate baseball’s contract with Sirius XM, which covers rights to stream games only on satellite radio.

For Sirius XM, this competition over price and content comes at the worst possible time.

via Serious Threats to Sirius Radio – BusinessWeek.

Let’s Put Down the Pitchforks

During a financial crisis, fairness is a luxury we cannot afford. During the 1930s, bankers and financiers lost everything, but the outcome — a decade-long depression — was hardly fair to the ordinary American. The key question is not whether something is fair, but whether it helps get us through this mess faster and at a lower cost.

mob_pitchforks_smallAt the moment, the Treasury is working (and working and working) on ways to entice private capital back into the banking and shadow-banking system by offering government financing and guarantees against losses. Every dollar of private capital that can be attracted back into the system is a dollar that the Treasury won’t have to borrow or the Federal Reserve won’t have to print. And only with the return of private capital will the government be able to get back the rescue money it has committed.

As the financiers see it, there’s a big difference between the government that sets tough terms for participation in its financial rescue programs and a government that is a fickle and unreliable partner, that tries to micromanage their businesses and changes the rules of the game with every zig and zag of public opinion

While it was Wall Street that got rich by peddling new ways for Americans to live beyond their means, the decision to do so was ours. It was we who ran up the credit card bills, we who drew down the equity in our homes and we who refused to tax ourselves for the government services we demanded. Wall Street bankers may have been the pushers, but it was we Americans who became addicted to the easy credit.

via Steven Pearlstein – Let’s Put Down the Pitchforks – washingtonpost.com.