the
world’s poor are getting richer faster than the rich
- the auroran sunset
Forget the lefty whining, the reality is that it is
the trade and freedom spread by America and her allies that are making
the world better for the world's poor.
“Only two decades ago the world's poor nations provided only 14 percent
of wealthy nations' manufactured imports. Today they provide 40 percent
and by 2030 they are projected to provide over 65 percent.”
—
“For the next 25 years the report estimates that developing nations
will increase their wealth by an average of 3.1 percent per year, above
their average of 2.1 percent for the last 25 years. "That rate
of increase will produce average per capita incomes [constant dollars
adjusted for purchasing power parity] in the developing world of $11,000
by 2030, compared with $4,800 today, roughly the level of the Czech
Republic and the Slovak Republic today.”
“The net result is that the income of developing countries "will
continue to converge with those of wealthy countries. This would imply
that countries as diverse as China, Mexico and Turkey would have average
living standards roughly comparable to Spain today." ”
The actual World Bank report, “Prospects
for the Global Economy”, is here.
related material
what
makes people happy
the web address for this article
is
https://www.abelard.org/news/economics0601.php#poor_rich_161206 |
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french
pm attacks the emu - the sound of chickens coming home to roost
“What was once seen as a giant step towards "ever-closer
union", as prescribed by the Treaty of Rome, is becoming an intolerable
straitjacket . Common sense would suggest loosening the sleeves, but
it may well be ignored as each of the camps cries foul. Britain found
itself in a similar quandary before it left the ERM in 1992. For the
eurozone members, there is, unfortunately, no immediate way out.”
Oh yes, there is a way out ....
Written about nine years ago, one of the very
first items on my wonderful web site, and a main motivator for starting
abelard.org:
EMU and inflation - a civil
liberty issue
the web address for this article
is
https://www.abelard.org/news/economics0601.php#emu_villepin_131206 |
on
speculating, investing and currencies
Many who invest, don’t understand markets
and are, in fact, speculating.
A while ago, people were worrying about their negative
equity in housing. I told them the equity would probably reverse if they
were calm and patient. It is not much different with most investment,
if you are in it for the long term.
The foolish are the ones who think they ‘know
when to jump’.
The objective of investment is simple: to buy when
you assess prices are low, and to sell when you assess they are high.
In my view, the dollar is too low. That is a buy signal,
not a sell signal.
If you buy sommat because it looks cheap, and it goes
down, then a sane person buys more if they can. It’s idiots that
would buy when a price gets too high. That is how they get caught in bubbles
and sell in panic on falling prices.
These are the sort of person the rich live off.
First, you must know what high and low mean. If I think
the dollar is under-valued relative to the euro, as currently I do, I
will tend to increase dollars at the expense of euros, for in my view
dollars are relatively cheap! So you may say wait until next month, but
I’m not interested in next month. My minimum time-frame is 5 years.
As for, say, dumping dollars and buying euros, or visa
versa - well, I wouldn’t do that sort of gambling. I might as will
wish I’d backed Twinkle Toes in the 3:30, after the event when it
won.
I would not seek to dump dollars in fear of what I
might think after the 3:30, or next month. Meanwhile, why hold more of
any currency than is necessary? Just about all currencies are being steadily
eroded.
Further, I never move unless I can see three possible
routes towards gain. That is because I am well aware I cannot forecast
the future, unlike the foolish who believe they can. I allow for at least
one aspect to go wrong and hope it is not two.
I don’t tend to lose, but then investment is
for spare cash.
It is possible to make plain wise investments based
on a vast knowledge of the particular business or market.
I don’t have ‘vast knowledge’. I
do understand money. I am much less knowledgable about business.
So remember the principles of Warren Buffet : keep
it simple and stick to what you know.
All investments can go down as well as up - this is
sometimes regarded as a trite saw, but it has virtually been made law
so potential gamblers, sorry investors, can be constantly reminded.
Sane investment is about risk and opportunity assessment.
Arbitragers may be able to make profits (or losses)
in relative exchange rates, I don’t do arbitrage. That is just one
market. It is a market that requires a different attitude to my own. But
I don’t play poker either.
So, it currently makes sense to buy some dollars. But
gamblers are probably selling dollars short and hoping that the dollar
will weaken, partly because of their actions. However, shorting the dollar
is to attack a mammoth. You may well get stood upon.
“The desire seemed to be to find a short cut to money and to
pass over the
obvious short cut - which is work.” Henry Ford
I understand money because I have worked hard, and
do work hard, at doing that.
the web address for this article
is
https://www.abelard.org/news/economics0601.php#dollar_strength_061206 |
fossil
media circulation falling despite book cooking
- the auroran sunset
The American economy is booming. The American population
is booming. Here
is the fourth consecutive twice yearly report on US fossil media newspaper
circulation to show losses:
“While the estimated decline 2.8% for daily circulation for all
reporting papers may seem negligible, consider that in years past that
decrease averaged around 1%. [ed. it's not 'insignificant' when compounded
like that!] Sunday, considered the industry's bread-and-butter, showed
even steeper losses, with a decline of about 3.4%.”
—
“The Los Angeles Times reported that daily circulation fell 8%
to 775,766. Sunday dropped 6% to 1,172,005.
“The San Francisco Chronicle was down. Daily dropped 5.3% to
373,805 and Sunday fell 7.3% to 432,957.
“The New York Times lost 3.5% daily to 1,086,798 and 3.5% on
Sunday to 1,623,697. Its sister publication, The Boston Globe, reported
decreases in daily circulation, down 6.7% to 386,415 and Sunday, down
9.9% to 587,292.
“The Washington Post lost daily circulation, which was down 3.3%
to 656,297 while Sunday declined 3.6% to 930,619.
“Circulation losses at The Wall Street Journal were average,
with daily down 1.9% to 2,043,235. The paper's Weekend Edition, however,
saw its circulation fall 6.7% to 1,945,830.”
The list goes on and on and on... Only two papers on
the list increased daily circulation - both by less than 1% and both with
larger losses in Sunday circulation.
Meanwhile, the newspaper companies both legally
and illegally
inflate their circulation figures:
“Last year, the Chicago-based Tribune Co. acknowledged that circulation
levels had been inflated by as much as 20 percent at Newsday, and as
much as 50 percent for daily sales of Hoy. [..]
“Now, for the first time, the federal government says the business
models for Newsday and Hoy were based on criminal fraud from 2002 through
2004.”
The Tribune Co. (TRB on the graph below) also owns
the LA Times and the Chicago Tribune. It is not the only company caught
in fraudulent practices over the last few years. The newspapers want higher
circulation numbers so that they can charge more to advertisers because
the adverts are getting seen by more people. Advertising is by far the
largest income stream for media organisations.
Little wonder that the advertising revenues are moving
to the internet. The internet has two advantages for advertisers. First
readship auditing is easier and more transparent than with the fossil
media. The second advantage is perhaps more important: advertisers only
pay when a reader clicks through to their site. That means that, unlike
with a newspaper, the advertiser can be fairly sure that they are paying
only for the readers who are interested in their product. This both makes
the advert more valuable and also decreases the costs to the advertiser,
because they don’t need to pay for blanket advertising to get results.
Unsurprisingly the fossil media share prices and profits
are
also falling in these boom times:
“At the New York Times Co., 3Q operating profit was down 48%
from the same period in 2005 to $20.5 million on total revenues that
slipped 2.4% to $739.6 million.”
The New York Times has long been leading the losses
race amongst the fossil media industry. Here is a graph of the
top ten newspaper companies by market capitalisation, with the Dow
Jones Average as a benchmark, over the last five years. As you can see,
only two of those companies, EW Scripps (SSP) and the Washington Post
Company (WPO), have joined in the happy economic times.
Both SSP and WPO tend to be somewhat right-leaning
companies, although most news companies own outlets with biases all over
the spectrum! Scripps is also largely a television company and so far
there is still money to be made in television.
The New York Times is probably the most consistent
and extreme left-leaning fossil media organisation. Go figure.
the web address for this article
is
https://www.abelard.org/news/economics0601.php#fossil_media_circulation_171106 |
| on
friedman: important economic warrior dies age 94
“Inflation is always and everywhere a monetary phenomenon.”
Milton Friedman
Milton Friedman was, effectively, a spiritual follower
of Hayek without
Hayek’s depth. He was important in concentrating the minds of modern
governments on money supply. His criticism of neo-Keynsianism (not to
be confused with the real views of Keynes)
has now become accepted convention. Naturally, statists hate him and leftist
fellow travellers are purblind to what he was teaching.
Friedman’s main weakness was a market fundamentalist
approach to his own theories - a religious faith in the market that, at
times, goes beyond the
rational. But, all in all, he was a very positive influence on modern
times.
Obit
in the New York Times:
“In the 1963 book "A Monetary History of the United States,
1867-1960," which he wrote with Anna Jacobson Schwartz, Mr. Friedman
compiled statistics to buttress his theory that recessions, as well
as the Great Depression, had been preceded by declines in the money
supply. And it was an oversupply, he argued, that caused inflation.”
—
“A spiral developed. Wages and prices rose until expectations
came into line with reality, usually at the natural rate of unemployment.
Once that rate is achieved, any attempt to drive down unemployment through
expansionary government policies is inflationary, according to Mr. Friedman’s
thesis, which he unveiled in a speech to the American Economic Association
in 1968.
—
“Mr. Friedman also pursued his attack on Keynesianism in a more
general way. He warned that a government allowed to regulate the economy
could not be trusted to keep its hands off individual liberties.”
—
Criticising President Kennedy, he said:
“What your country can do for you," Mr. Friedman said, implies
that the government is the patron, the citizen the ward; and "what
you can do for your country" assumes that the government is the
master, the citizen the servant. Rather, he said, you should ask, "What
I and my compatriots can do through government to help discharge our
individual responsibilities, to achieve our several goals and purposes,
and above all protect our freedom.”
—
“In Vietnam, whose constitution was amended in 1986 to guarantee
the rights of private property, the writings of Mr. Friedman were circulated
at the highest levels of government. "Privatize," he told
Chinese scholars at a meeting in Shanghai’s Fudan University;
and he told those in Moscow and elsewhere in Eastern Europe: "Speed
the conversion of state-run enterprises to private ownership."
They did.
“Among economic scholars, Milton Friedman had no peer,"
Federal Reserve Chairman Ben Bernanke said yesterday. "The direct
and indirect influences of his thinking on contemporary monetary economics
would be difficult to overstate. Just as important, in his humane and
engaging way, Milton conveyed to millions an understanding of the economic
benefits of free, competitive markets, as well as the close connection
that economic freedoms bear to other types of liberty." ”
—
“[...] In another address, he[reagan] quoted Mr. Friedman, saying,
"When you start paying people to be poor, you wind up with an awful
lot of poor people.” [Quoted from online.wsj.com
]
Recommended book
 |
Free to Choose: A Personal Statement
by Milton Friedman and Rose Friedman (originally published 1980)
$10.20
[amazon.com] {advert} Harcourt Reprint, pbk, 1990, 015633460
£7.09
[amazon.co.uk] {advert} Thomson Learning, pbk, 1990, 0156334607
Only four GoldenYaks because Friedman stands so firmly on the shoulders
of Hayek and Keynes, more a great populariser than an original.
Free to Choose is reasonably easy and important reading
reading for any person with adequate curiosity.
|
the
web address for this article is
https://www.abelard.org/news/economics0601.php#friedman_171106 |
bernanke
before congress - the us economy examined
extracts from the full text:
“The U.S. economy performed impressively in 2005. Real gross
domestic product increased a bit more than 3 percent, building on the
sustained expansion that gained traction in the middle of 2003. Payroll
employment rose 2 million in 2005, and the unemployment rate fell below
5 percent. Productivity continued to advance briskly.
“The economy achieved these gains despite some significant obstacles:
energy prices rose substantially yet again, in response to increasing
global demand, hurricane-related disruptions to production, and concerns
about the adequacy and reliability of supply.
“The Gulf Coast region suffered through severe hurricanes that
inflicted a terrible loss of life; destroyed homes, personal property,
businesses, and infrastructure on a massive scale; and displaced more
than a million people.
“The storms also damaged facilities and disrupted production
in many industries, with substantial effects on the energy and petrochemical
sectors, and on the region's ports.
“Full recovery in the affected areas is likely to be slow.”
—
“At that meeting monetary policymakers also discussed the economic
outlook for the next two years. The central tendency of the forecasts
of members of the Board of Governors and the presidents of Federal Reserve
Banks is for real GDP to increase about 3.5 percent in 2006, and 3 percent
to 3.5 percent in 2007.
“The civilian unemployment rate is expected to finish both 2006
and 2007 at a level between 4.75 percent and 5 percent.”
“Construction of new homes and apartments, defying forecasts
of a housing slowdown, shot up in January at the fastest pace in more
than three decades.
“The Commerce Department reported Thursday that building activity
was up 14.5 percent last month when compared to December, pushing construction
to a seasonally adjusted annual rate of 2.276 million units.
“That was the fastest construction rate since March 1973, but
it was expected to be a one-time blip caused by unusually warm weather
in January that prompted builders to start work on more homes. Analysts
are forecasting that housing construction will slow this year as the
nation's five-year housing boom quiets down.”
—
“ Building activity rose in all parts of the country in January.
The biggest gain was a 29.2 percent rise in the Northeast followed by
increases of 23.7 percent in the Midwest, 16.9 percent in the West and
8.7 percent in the South.” [Quoted from normantranscript.com]
“The Dow jumped to a new four-and-a-half year high today following
moderate gains, buoyed by Hewlett-Packard Co's earnings, a surprising
jump in home construction and more positive comments from the Federal
Reserve.
“A late surge in trading pushed the Dow Jones industrial average
to 61.71 points, or 0.56 per cent, to 11,120.68 while Standard &
Poor's 500 index gained 9.38, or 0.73 per cent, to 1,289.38, and the
tech-focused Nasdaq index rose 18.20, or 0.8 per cent, to 2,294.63.”
[Quoted from theage.com.au]
“Later, in a question and answer period, Bernanke reiterated
a commitment to the Fed's dual mandate of maintaining price stability
and maximum employment. He also said the U.S. current account deficit
should contract over time, and that he's not particularly worried that
China will shift its foreign reserves away from U.S. assets.”
[Quoted from jacksonholestartrib.com]
Meanwhile, that pesky US dollar, which I keep
being told is going to ‘plummet’ or ‘collapse’,
has gained about ten percent against the pound sterling in the past year.
This is not unreasonable considering that Gordon Brown (UK finance minister)
is inflating like blazes, while the Fed. has continued to pursue its strong
dollar policy.
All this strength of the US economy is in the face
of rising energy costs. Those eurosocialists and UK oldnewoldlabour pundits
must be making George W. Bush real jealous of their glorious socialist
model.
the web address for this article
is
https://www.abelard.org/news/economics0601.php#us_economy_170206 |
ex-eu
commissioner questions survival of euro
“Frits Bolkestein, who served in the previous Prodi commission
as internal market commissioner from 1999 to 2004, last week predicted
that the common currency would face a huge test in around 10 years,
when a pensions boom is likely to hit Europe.”
This comment is confused. It is quite possible to have
‘euros’ of different and diverging values; for instance, the
UK pound and the Irish punt.
The breakdown in the euro will come when countries
become fed up with the cross-border transfers of value, which are currently
very large.
The euro will not work unless the ‘stability
pact’ is enforced, but pretty well all the EU countries presently
are ignoring the ‘stability pact’.
Further, at the heart of euro policy are contradictory
objectives:
- to challenge the US dollar
- to erode the value of working-class wages and of pensions.
The euro cannot survive as long as these problems remain,
unless Europe becomes one country under one government, an unaccountable
government that imposes ‘unity’. The current
situation will lead inevitably to ever-increasing inflation.
“Lenin was right. There is no subtler, no surer means of overturning
the existing basis of society than to debauch the currency. The process
engages all the hidden forces of economic law on the side of destruction,
and does it in a manner which not one man in a million is able to diagnose.”
John Maynard Keynes 1919.
Keynes was correct then, and his statement remains
correct now.
You may ignore facts for just so long, .but eventually
the facts will blow you out of the water.
The above statements about the euro are facts. Arguing
will not change facts.
related material
EMU (European
Monetary Union) and inflation – a civil liberty issue
the web address for this article
is
https://www.abelard.org/news/economics0601.php#euro_survival_030206 |
| greenspan
“I guess I should warn you, if I turn out to be particularly
clear, you’ve probably misunderstood what I’ve said.”
Alan Greenspan, one of the few serious economic experts
around the world, is about to retire, although doubtless his advice will
be sought in the future.
“Tuesday morning Alan Greenspan will preside over his last meeting
as chairman of the Federal Reserve, a post from which he has steered
the nation through more than 18 years of the most solid and inflation-free
growth in its history.” [Quoted from sfgate.com]
While Greenspan is one of the really able/great monetary
economists of the modern age, what I find of greater interest is the shoaling
minnows who constantly circle offering foolish ‘analysis’
and ‘advice’. Realities seem to matter nothing to them. You
can see several of their uninformed ‘opinions’ and assertions
in the article linked above.
“A New York City-bred and educated economist, Greenspan has kept
inflation at bay for nearly two decades. But he hardly stopped there.
Greenspan reinvented the job, deftly maneuvered the country through
financial crises, set new standards for economic policy and altered
the Fed itself.
“Along the way, his handiwork touched every homeowner who refinanced
a mortgage, every pensioner sustained by a fixed income, every worker
with a steady paycheck who survived two mild recessions and every investor
confident enough to own stocks despite the market’s 1987 crash
and new millennium tech meltdown.
“The Greenspan era will be noted also for the 50 percent jump
in the economy’s output per person, said longtime Fed analyst
Allan Meltzer, whose first-volume history of the Fed carries an introduction
by Greenspan.
“ "It’s hard to find a period which was better,"
Meltzer said. "Unemployment
rates have been low. That’s a real achievement, and we owe that
to the
Greenspan Fed." ” [Quoted from kansascity.com]
In answer to a correspondent:
Alan Greenspan has an intellect far above most of his listeners and certainly
far above that of his would-be critics.
From the second article:
“He has enormous patience," Hoenig said. "To work
with 18 other people, all of whom have opinions, allow them to say their
piece, bring the group together and avoid needlessly offending or cutting
off, is just an amazing show of patience from my perspective and what
I’ve seen him do over the years.”
and:
“Alan probably knew more about everything than I knew about
anything," said Norman Robertson, an adjunct professor of economics
at Carnegie Mellon University and a friend of Greenspan for more than
40 years.”
Norman Robertson’s statement is merely
honest and cautionary.
Often I tell people things, which long experience has
taught me, most of them will not understand very well.
Of course, the quotes above are from able men; they
do not lack confidence to the extent that they need to bluster.
the web address for this article
is
https://www.abelard.org/news/economics0601.php#greenspan_010206 |
|
useful
item on government price index manipulation
- Now this item is useful, even if somewhat
naive in places. The author does not understand fiat
[or ticket] currency at various levels.
For instance:
- • he has the usual poor grasp of the
meaning of ‘interest rates’;
• ‘hedonics’as
a practice does have some justification, but used as
wildly as he reporting, it is being misused;
• he misses entirely the effects of USA reserve
currency status.
The author further misses the high importance of hydrocarbon
inputs to farming. He also needs a counterpoise item on GDP
structure.
Despite claims in the item, none of his discussion
has much to do with ‘markets’ in the sense of major corporations
and stockmarkets. Businesses should be building these factors into any
planning, although small businesses and idiots will not.
I quote from the article:
“In effect, the US is exporting its inflation and it will ultimately
result in deflation in the rest of the world, which is heavily laden
with overcapacity and hyperinflation in the US when foreigners no longer
finance our deficits. That is when the end game of hyperinflating our
way out of our debt bubble really begins [...] ”
The first comment is arrant nonsense up to the comma
- the reverse is the case, it will liable to generate inflation abroad.
The rest of that section is mere babble.
His comments on fiat money are a combination
of the speculative and the erroneous.
Now the next statement is much more important if he
could make any sort of case, but all I see is an unbacked assertion.
“An understated CPI also overstates GDP by not removing the full
inflationary impact of pricing from nominal numbers. It also overstates
productivity by overstating the numerator part of the equation.”
So, read the article for an understanding of the CPI
(RPI in the UK). On this he is accurate and has done his homework, a useful
contribution.
The rest of the article is unsupported dribble.
end notes
- hedonics
- an attempt to compare items by their value rather than their price.
For instance, you can buy a computer with a much higher spec. this year
than last year while still paying the same price. Hedonics attempts
to quantify that increase in value.
-
- the web address for this article
is
https://www.abelard.org/news/economics0601.php#cpi_170106
|
