Category Archives: Global Economics

The 19 Most Productive Countries In The World

My Comments: Computers and the internet have been the major drivers of worker productivity across the planet over the past three decades. Here in the USA, we think of ourselves as being the best and throw scorn on anyone who suggests otherwise. And like with so many things, we don’t let facts get in the way. These facts suggest we’re OK, but so are a lot of other countries.

Will Martin,  Jul. 24, 2016

Productivity is one of the key drivers of economic success. The more productive a country’s workers are, the more value they can bring to their employers and therefore their home nation’s economy.

New research from business-to-business marketplace Expert Market has shed some light on where in the world people are the most productive. Expert Market compared data from 35 of the world’s biggest economies before compiling their ranking.

To do this, they looked at the GDP per capita of nations and divided that by the number of hours worked per person, giving a rough guide to which nations make the most money in the least amount of time, and are therefore the most productive.

Numbers quoted below are the amount of value each worker brings to their country’s economy per hour worked. Check out the ranking underneath:

See all 19, ranked in reverse order, here:

Why Interest Rates Are Lower Than Ever

Piggy Bank 1My Comments: Please keep reading…

Paul J. Lim,  July 6, 2016

If you think the financial panic over Brexit is over — because stocks have bounced back somewhat from their initial sell off — think again.

As scared investors continue to seek shelter in boring government bonds, fixed income prices have soared while yields on 10-year Treasury securities plummeted to as low as 1.34%, marking the lowest levels ever seen in U.S. history.

In early morning trading Wednesday, yields bounced slightly to 1.37%. But that’s a far cry from the 5% yields on 10-year Treasuries before the global financial crisis.

Overseas, the situation has gotten even worse: 10-year German and Japanese bonds have sunk further into negative yield territory, which means investors are so concerned about the economy that they’re willing to pay officials for the right to park their money with the government.
Aren’t record low rates a good thing?

Normally, investors crave low interest rates because cheap borrowing costs encourage spending and capital investments, which fuel economic activity and growth. Low rates also offer relief for debt-laden governments and consumers, who can now refinance existing loans at better terms.
But ultra-low interest rates can also be a sign that investors are so worried about stagnation or recession that their primary focus is on the safe return of their capital—that is, making sure they can simply get it back—not earning big returns on their capital.

The uncertainty caused by Britain’s unprecedented move to leave the European Union has fueled fear over what’s to come for the global economy. And in times of fear, investors generally flock to bonds, which drives up their prices and drives down their yields. (Market interest rates move in the opposite direction of bond prices.)

Less than two weeks after the vote, economists have already been ratcheting down their expectations for growth overseas. IHS Global Insight, for instance, now believes the gross domestic product among countries in the Eurozone will grow just 1.4% this year and 0.9% next year. Before Brexit, the economic research firm had been forecasting Euroepean economic growth of 1.7% this year and 1.8% in 2017.

How scared should you be?

It’s far too soon to tell if the U.S. is also headed for negative rates. But one thing is clear: The so-called “yield curve” is flattening out. And that normally spells trouble for the economy.

The yield curve refers to the spectrum of rates paid by Treasuries of various maturities. Normally, longer-dated Treasuries — such as 10- or 30-year bonds that require investors to tie up their money for extended periods of time — pay substantially more than short-term debt, which poses less risk.

Yet when fear over the economy bubbles over, investors tend to flock into long-term bonds, driving down long-term yields. And when that happens, the gap between what short- and long-term bonds are paying decreases and the yield curve “flattens.”

Ed Yardeni, president and chief investment officer at Yardeni Research, points out that the spread between yields on 10-year and two-year Treasuries is the flattest it has been since November 14, 2007. Indeed, the spread between 10-year and two-year yields is down to just 0.8 percentage points. A year earlier, it was roughly double that.

Why is this important? Because Nov. 14, 2007 was just two weeks before the start of the 2007-2009 recession that coincided with the global financial crisis.

If the yield curve actually inverts — meaning 10-year Treasuries start paying less than two-year Treasuries — it’s virtually certain that the economy is in or headed for recession.

If the economy is so scary, why are stocks doing reasonably well?

That’s a good question. IHS Global Insight economist Patrick Newport points out that “the seemingly contradictory demand for stocks given the rally in bonds is likely driven by the perception that the Federal Reserve will further delay raising rates in the wake of the Brexit vote, making stocks more attractive in terms of returns.”

Income-oriented investors, who’ve been frustrated by the paltry yields being paid by bonds, may also be driving this trend.

Back in the early 1980s 10-year Treasuries were yielding 10 percentage points more than the dividend yield on blue chip U.S. stocks, notes Jack Ablin, chief investment officer at BMO Private Bank. “Nowadays that gap has disappeared and then some,” he said. Indeed, today, the dividend yield on the S&P 500—what you get for holding the stocks above and beyond stock price appreciation—is more than half a percentage point higher than what 10-year Treasuries are paying.

This trend could persist and stocks could keep rising for months on the strength of income investors. The problem is, if the bond market is right and the economy is this weak, eventually the stock market will get the message too.

My delayed comment: there is a sizeable number of people in this country who are convinced we are in the ‘end of days’ scenario which I think is patently stupid. But constant talk about this assumed chaos can be a self-fulfilling prophecy when leadership elements keep pushing and pushing. But it makes no sense economically.

The Only Way To Save the EU Is For The UK To Leave It

Brexit-4My Comments: Forget the UK and Europe. There’s a message here that applies to us in the United States and the anger among so many that gives rise to a choice between Donald Trump and Hillary Clinton.

It echoes the comments I’ve made here for years that “It’s economics, stupid!”. A primary driver of deteriorating race relations, of attacks on immigrants, on law enforcement, on the LGBT community, on gun owners, etc., is the fear that many of us are no longer in control of our own destiny. There is a pervasive appeal to try and turn back the clock, to reinvent the past and the conditions that led to a growing middle class in this country.

To the extent that those at the lower end of the economic spectrum, whether white, black or brown, cannot find a way to improve their quality of life, there is going to be stress. And that stress manifests itself as protests in the streets that appear to be focused on racial issues, on law enforcement issues, on immigrants who ‘take away our jobs’, and any number of other real and imagined grievances.

When you’re working 40 plus hours a week and making enough money to adequately feed, clothe and house your family, those grievances become irrelevant. Or at least manageable. They only surface and become a societal nightmare when enough people feel abandoned and disrespected and forgotten. And economics is a fundamental cause behind this drift toward chaos.

I’m not sure Hillary can fix this and I’m quite sure Trump can’t fix this. But I’m going to vote for whomever I think is most likely to force a discussion about the economic realities in this country. This is a long read but if you believe that income inequality is a problem, you need to read all of it.

by Gwynn Guilford on July 15, 2016

Xenophobic. Racist. Jingoistic. Nativist. Parochial. The 52% of British voters who hit the EU eject button might be all of those things. But they were also backing the right horse.

The vote repudiates a vision of Europe that rewards companies at workers’ expense. It’s a rebuke of a government that invests authority in a professional elite insulated from the economic realities of ordinary Europeans. The free flow of goods, services, capital, and people within the EU was supposed to spread prosperity. It hasn’t. Eventually, something big had to break.

While Brexit is certainly big, the fissure beneath it is bigger than Britain, or even Europe. The imbalances of trade, capital, labor, and—above all—savings that lie at the heart of Europe’s current turmoil warp the entire global financial system. Nearly everywhere you look, growth is sputtering because there’s simply too little demand—and far too much debt—to go around. And that’s thanks in no small part to the EU’s wooly-headed policies. However painful it might make the next few months or years, Brexit might ultimately be the wake-up call that prevents the EU from unleashing another global financial crisis, and condemning the world to decades of feeble growth.

To understand why things have gotten to this point, we have to examine the fundamental flaws in the EU’s design that are largely responsible for these distortions.

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The Governing Cancer of Our Time

babel 2My Comments: Like most everyone else, I’m alarmed by the negativity and frantic rhetoric that is pervasive these days. I’ve tried to get used to it, but am not sure I should get used to it. I know that whatever is in the past is forever in the past and I can only observe the present and attempt to influence the future. Arguing in favor of what existed in the past is simply tilting at windmills or commanding the tides to stop their up and down movements.

Regardless of the outcome, we all have to encourage people to first register, and then to vote this coming fall. If you don’t vote, you forfeit your right to bitch and moan if the outcome is not what you wanted.

by David Brooks, FEB. 26, 2016

We live in a big, diverse society. There are essentially two ways to maintain order and get things done in such a society — politics or some form of dictatorship. Either through compromise or brute force. Our founding fathers chose politics.

Politics is an activity in which you recognize the simultaneous existence of different groups, interests and opinions. You try to find some way to balance or reconcile or compromise those interests, or at least a majority of them. You follow a set of rules, enshrined in a constitution or in custom, to help you reach these compromises in a way everybody considers legitimate.

The downside of politics is that people never really get everything they want. It’s messy, limited and no issue is ever really settled. Politics is a muddled activity in which people have to recognize restraints and settle for less than they want. Disappointment is normal.

But that’s sort of the beauty of politics, too. It involves an endless conversation in which we learn about other people and see things from their vantage point and try to balance their needs against our own. Plus, it’s better than the alternative: rule by some authoritarian tyrant who tries to govern by clobbering everyone in his way.

As Bernard Crick wrote in his book, “In Defence of Politics,” “Politics is a way of ruling divided societies without undue violence.”

Over the past generation we have seen the rise of a group of people who are against politics. These groups — best exemplified by the Tea Party but not exclusive to the right — want to elect people who have no political experience. They want “outsiders.” They delegitimize compromise and deal-making. They’re willing to trample the customs and rules that give legitimacy to legislative decision-making if it helps them gain power.

Ultimately, they don’t recognize other people. They suffer from a form of political narcissism, in which they don’t accept the legitimacy of other interests and opinions. They don’t recognize restraints. They want total victories for themselves and their doctrine.

This antipolitics tendency has had a wretched effect on our democracy. It has led to a series of overlapping downward spirals:
The antipolitics people elect legislators who have no political skills or experience. That incompetence leads to dysfunctional government, which leads to more disgust with government, which leads to a demand for even more outsiders.

The antipolitics people don’t accept that politics is a limited activity. They make soaring promises and raise ridiculous expectations. When those expectations are not met, voters grow cynical and, disgusted, turn even further in the direction of antipolitics.

The antipolitics people refuse compromise and so block the legislative process. The absence of accomplishment destroys public trust. The decline in trust makes deal-making harder.

We’re now at a point where the Senate says it won’t even hold hearings on a presidential Supreme Court nominee, in clear defiance of custom and the Constitution. We’re now at a point in which politicians live in fear if they try to compromise and legislate. We’re now at a point in which normal political conversation has broken down. People feel unheard, which makes them shout even louder, which further destroys conversation.

And in walks Donald Trump. People say that Trump is an unconventional candidate and that he represents a break from politics as usual. That’s not true. Trump is the culmination of the trends we have been seeing for the last 30 years: the desire for outsiders; the bashing style of rhetoric that makes conversation impossible; the decline of coherent political parties; the declining importance of policy; the tendency to fight cultural battles and identity wars through political means.

Trump represents the path the founders rejected. There is a hint of violence undergirding his campaign. There is always a whiff, and sometimes more than a whiff, of “I’d like to punch him in the face.”

I printed out a Times list of the insults Trump has hurled on Twitter. The list took up 33 pages. Trump’s style is bashing and pummeling. Everyone who opposes or disagrees with him is an idiot, a moron or a loser. The implied promise of his campaign is that he will come to Washington and bully his way through.

Trump’s supporters aren’t looking for a political process to address their needs. They are looking for a superhero. As the political scientist Matthew MacWilliams found, the one trait that best predicts whether you’re a Trump supporter is how high you score on tests that measure authoritarianism.

This isn’t just an American phenomenon. Politics is in retreat and authoritarianism is on the rise worldwide. The answer to Trump is politics. It’s acknowledging other people exist. It’s taking pleasure in that difference and hammering out workable arrangements. As Harold Laski put it, “We shall make the basis of our state consent to disagreement. Therein shall we ensure its deepest harmony.”

Brexit: Why Most Commentaries Miss The Point

Brexit-4My Comments: I found this a couple of days ago and it really helped me understand what happened in Great Britain the other day. If Brexit concerns you, this might help. It appeared in a news feed I follow written by a Tom Dispatch, if I have his name correct.

06/26/2016

Economist Robert Kuttner has a particularly judicious summary of and analysis of the Brexit decision, what lay behind it, and what it means. I’ve reproduced the whole essay below and recommend it for everyone puzzled by what just happened and what to make of it. Tom

What was the narrow British vote to leave the European Union really about? In recent days, you have read commentaries with variations on the following themes, ad nauseam. All of them contain pieces of the truth, but all miss the basic point:

Irrational Racism. This vote was a mostly racist reaction on the part of Brits who resented dark skinned foreigners in their midst, and mistakenly blamed the E.U. Britain actually has more control over its borders than most E.U. members, since London never signed the 1985 Schengen Agreement, which got rid of border controls for travelers throughout most of the Union. Before entering Britain, Europeans must still go through passport control, just like Syrians or Americans.

Scapegoating the E.U. for Economic Frustrations. Britain actually has a better deal than most E.U. nations. For starters, it retained its own currency, and controls its own monetary and fiscal policy. But as a member of the E.U., Britain does get to send tariff-free exports to the continent and London operates as a major European financial center. All of this now at risk.

The E.U. Had It Coming. Brussels is a remote, unaccountable bureaucracy, imposing regulations beyond democratic control. The vote, rightly or wrongly, was a yearning for lost national sovereignty.

Rejecting Liberal Internationalism. Britain has grown at a good clip since joining the E.U. in 1973. Globalization is here to stay. The people who voted for Brexit, are badly informed flat-earth types, failed to understand that they were shooting themselves in the foot.

What’s wrong with these commentaries? All fail to grasp that there is more than one brand of liberal internationalism. The kind represented by the E.U. since the 1990s (and Thatcherism since the late 1970s) has been operated largely by and for financial elites.

When the original institutions that later became the E.U. were created in the 1940s and 1950s, the international system was designed on the ashes of depression and war to rebuild an economy of full employment and broad based prosperity. The system worked remarkably well.

In the 1980s, as a backlash against the dislocations of the 1970s, Margaret Thatcher came to power in Britain (and Ronald Reagan in the US). Their policies returned to a dog-eat-dog brand of capitalism that benefited elites and hurt ordinary people. By the 1990s, when the European Economic Community became a more tightly knit European Union, it too became an agent of neo-liberalism.

Policies of deregulation ended in the financial collapse of 2008. The austerity cure, enforced the gnomes of Brussels and Frankfurt and Berlin, is in many ways worse than the disease.

Rising mass discontent has failed to dethrone the elites responsible for these policies, but it has resulted in loss of faith in institutions. The one percent won the policies but lost the people.

So, yes, the Brits who voted for Brexit got a lot of facts and details wrong. And Britain will probably be worse off as a result. But they did grasp that the larger economic system is serving elites and is not serving them.

The tragedy is that we are further away from a reformed EU than ever. A progressive EU, more in the spirit of 1944, is not on the menu. The exit of Britain will give even more power to Angela Merkel’s Germany, architect and enforcer of austerity.

The rest of Europe will become more like Greece economically and more like the British rightwing politically. there will be more far-right populist movements for other nations to quit the EU. This has already begun in France and the Netherlands, two of the founding nations of the European Community — and ones that also benefit, on balance, from the EU.

What about race? Didn’t race play a big role in this vote. Is surely did — and not just a backlash against just recent influx of refugees and economic migrants. Since the 1950s, when Britain rebranded its empire as the Commonwealth, Britain has had a relatively liberal immigration policy for its former colonies—one part carrot to promote allegiance, one part guilty conscience.

In the 1960s, the rightwing Tory Enoch Powell was already campaigning against immigrants and slogans appeared, “If you want a Ni—-r for a neighbour, Vote Labour.” By 2001, fifteen years ago, Britain was already 8 percent nonwhite. As traditional industry declined and living standards crashed, non-white populations increased, creating resentments against both economic misfortune and racial change. But the history of rightwing populism is invariably a mix of economic factors and nativist ones. In the 1960s, when Europe had full employment, there was little backlash against foreign “guest-workers.” Anti-Semitism was never far below the surface in Europe, but it took the German economic collapse of the 1920s and early 1930s to produce Hitler.

Rightwing revolts are always substantially irrational, as was the vote for Brexit. But when downwardly mobile Brits grasp that the EU and the larger model of neo-liberalism aren’t exactly on their side, they are grasping a truth.

What makes this vote so tragic is the absence of enlightened leadership, either in Britain or on the continent, to propose something better. Prime Minister David Cameron, who proposed the reckless gamble of a referendum as a tactical feint to paper over an intra-party schism, may now be responsible for the dissolution of two unions — not just the EU, but the UK, as Scotland secedes. He will be remembered as the worst British prime minister ever, a near-tie with Neville Chamberlain. The Labour leader, Jeremy Corbyn, who said he opposed Brexit but refused to actively campaign against it, was not much better.

Britain’s two major parties are now both in disarray. I can think of one possible silver lining. The referendum was not legally binding, and Article 50 of the Lisbon Treaty — withdrawal — still needs to be voted by the House of Commons. And a majority of British M.P.’s oppose Brexit.

Now that the implications of Brexit are clearer, including the likely breakup of the United Kingdom itself, it’s possible that the Commons could refuse to approve Article 50. Rather, Britain could have an early election, and maybe even a partisan realignment, with one party pledged to keep Britain in the EU but to modernize the EU to better serve regular Brits, and the other party standing for narrow nationalism. My bet is that the modernizers would win.

Absent this sort of recasting of politics and political choices, we are in for a grim era in which ultra nationalists and neo-fascists keep gaining ground.

Robert Kuttner is co-editor of The American Prospect and professor at Brandeis University’s Heller School. His latest book is Debtors’ Prison: The Politics of Austerity Versus Possibility.

Young People Just Got Brexited by Their Parents

CharityMy Comments: As someone with strong personal ties to Britain and the United Kingdom (I was born there in 1941), the vote to leave is profoundly shocking. One of my grandfathers and my favorite uncle served in the British Army during the Great War. They somehow came home alive. My father and his brother fought for Britain and its allies during the next global war, called World War II. Both somehow survived. But tens of millions of people didn’t.

Following these two conflicts, both of which engulfed the same generation, Winston Churchill, a leader of profound abilities, pushed hard to eliminate the chance of another such conflict in Europe by promoting the idea of a United States of Europe. It slowly happened and Britain became a member state in 1975.

This whole history, some of which engulfed me as a child, has been repudiated. Sure, it had flaws, but the premise was and is a valid one, and now Britain has told the world, and more specifically, the countries of Europe, that the idea of a united Europe is full of shit.

Granted, the rules are perhaps archaic, and are monitored by a bunch of bureaucratic goons, but the consequences of rejection are hard to fathom. Personally, by the time it all unfolds and either more armed conflicts or economic chaos is resolved, I’ll probably be dead. Which means I won’t have to worry about the consequences. But my kids and grandchildren will, which is one major reason why I thought the European Union, with Britain a full fledged member, was a good idea.

Here’s a link to an article that appeared this morning that articulates much of this far better than I could hope to. If you are looking for a way to wrap your brain around this profound global upheaval, check it out. It was written by a Henry Grabar, and appeared on a news feed I subscribe to on June 24, 2015.
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Sinking Atlantic Coastline Meets Rapidly Rising Seas

My Comments: Our esteemed Governor, Rick Scott, has decreed that the phrase ‘climate change’ cannot be uttered by any state employee. OK.

But it doesn’t change the reality that the planet is experiencing a warming trend that may or may not be influenced by advances in human activity. The reality is that for the foreseeable future, our coastlines, and those who live there, are going to be increasingly under threat. I happen to live in central Florida where coastal flooding last happened many millions of years ago and I suspect I’ll be long gone before it happens again.

But my grandchildren will experience over the next 70 years and more what some of us can rationally predict will happen. Some effort by our elected leaders, to mitigate the threat, seems to be a rational expectation.

By John Upton, Climate Central on April 14, 2016

The 5,000 North Carolinians who call Hyde County home live in a region several hundred miles long where coastal residents are coping with severe changes that few other Americans have yet to endure.

Geological changes along the East Coast are causing land to sink along the seaboard. That’s exacerbating the flood-inducing effects of sea level rise, which has been occurring faster in the western Atlantic Ocean than elsewhere in recent years.

New research using GPS and prehistoric data has shown that nearly the entire coast is affected, from Massachusetts to Florida and parts of Maine.

The study, published this month in Geophysical Research Letters, outlines a hot spot from Delaware and Maryland into northern North Carolina where the effects of groundwater pumping are compounding the sinking effects of natural processes. Problems associated with sea level rise in that hot spot have been — in some places — three times as severe as elsewhere.

“The citizens of Hyde County have dealt with flooding issues since the incorporation of Hyde County in 1712,” said Kris Noble, the county’s planning and economic development director. “It’s just one of the things we deal with.”

On average, climate change is causing seas to rise globally by more than an inch per decade. That rate is increasing as rising levels of greenhouse gases in the atmosphere trap more heat, melting ice and expanding ocean waters. Seas are projected to rise by several feet this century — perhaps twice that much if the collapse of parts of the Antarctic ice sheet worsens.

Ocean circulation changes linked to global warming and other factors have been causing seas to rise much faster than that along the sinking mid-Atlantic coastline — more than 3.5 inches per decade from 2002 to 2014 north of Cape Hatteras in North Carolina, a recent study showed.

The relatively fast rate of rise in sea levels along the East Coast may have been a blip — for now. The rate of rise recorded so far this century may become the norm during the decades ahead. “Undoubtedly, these are the rates we’re heading towards,” said Simon Engelhart, a University of Rhode Island geoscientist.

Engelhart drew on data from prehistoric studies and worked with two University of South Florida, Tampa scientists to combine it with more modern GPS data to pinpoint the rates at which parts of the Eastern seaboard have been sinking.

Their study revealed that Hyde County — a sprawling but sparsely populated farming and wilderness municipality north of the Pamlico River — is among the region’s fastest-sinking areas, subsiding at a little more than an inch per decade.
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