LyrArc Article Gist
If the minimum wage in 1968 had kept up with inflation in the U.S. it would be $10.67 in 2013, says Ralph Nader. The federal rate for the minimum wage is $7.25 in 2013. Nader points out that president Obama's call for a federal rate of $9.00 per hour by 2016 falls well short of what it would be just to make up for inflation. This does not include productivity improvements since 1968 in which those making the minimum wage do not share, and which would make it much higher than $10.67.

LyrArc Article Gist
Recent polls suggest that 4 out of 5 Germans say they are not benefitting from the rebound. Germany has experienced growth with the recovery in export markets in Asia, but the benefits are not being seen at home. Experts at the OECD, and at Duisburg-Essen University's employment institute, say that there has been a downside to the unemployment rate having reached 7.6%; much of this gain has been achieved by expanding the low wage sector. Something like this has not happened in other European countries. The OECD employment outlook report 2010, reveals that 21.5% of Germans were employed in the low-wage sector in 2008, compared to 16% in 1998. The Duisburg-Essen University estimate is that 2.3 million workers were added in this sector from 1998 to 2008, with a total of 6.55 million workers in this sector in 2008. What is happening according to experts is that the Hartz IV labor-market reform is subsidizing the low wages paid by the private sector. And the German government has spent $50 billion in subsidies for people in this sector since 2005. The concern relates to consumer spending which is tight in Germany, even as exports have done well in the recovery from 2008. Average net income has actually fallen since 2004 in Germany, reaching 15,815 euros in 2009 from the figure of 16,471 euros in 2004. Germay has no minimum wage across all sectors. To have a minimum wage comparable to other European countries, hourly pay would have to be between 5.93 euros and 9.18 euros. The DGB group of unions have called for a 8.50 euro minimum wage. ...

LyrArc Article Gist
A Wall Street Journal/NBC poll conducted in September 2010 shows a big change in public opinion in the US towards outsourcing of production and on free trade agreements. Poll respondents were asked "Do you think free-trade agreements have helped or hurt the US?" The response in 1999 was close to 30% for those who said hurt and those saying helped. By 2005 the curves diverged seriously with more people saying that it hurt and fewer saying it helped. In 2010 this swing is sharp with about 50% saying it hurts the US and only about 10% saying it helps. When asked "Do you agree or disagree that outsourcing of production and manufacturing work to foreign countries is a reason the U.S. economy is struggling and more people are not being hired?" the response is overwhelmingly agreeing that this is bad for the U.S. job situation. The answers are the same across party affiliation, in fact higher for Republicans than Democrats 90% to 84%, higher by income level with 93% for those making over $75,000 agreeing and 86% for those making less than 75,000 agreeing, 93% of professionals and managers agree compared to 89% white collar and 83% blue collar agreeing. This shows all segments of society agree that that the manner in which free trade and outsourcing of production is taking place is not helping the U.S., and this time the highly educated segments are leading the way. Bill McInturff, the Republican pollster who helped do the survey points to the big change in the way well educated and upper income people perceive free trade agreements. In 1999 only 24% of this group making over $75,000 said free trade hurt the U.S., now 50% of this group says it hurts the US. This is sure to lead to big changes in U.S. trade and currency issues with China and other countries. ...

LyrArc Article Gist
ECB study put out in April 2013 shows household wealth and income in eurozone countries based on 2009-2010 data for 60,000 households throughout the eurozone. The household wealth in southern European countries is higher than that in Germany. The study shows why ordinary Germans oppose bailouts for banks, Greece, and eurozone countries that experienced a boom in the 2000-2010 period, a period in which German workers took small pay raises to improve German competitiveness. Germans also see Portugal and Ireland in a different light compared to Greece, Cyprus, Italy and Spain where real estate speculation, lax accounting, tax evasion and favored treatment of certain groups, has created or aggravated the debt problems. Wealth is defined as total assets, including real estate, vehicles, bank deposits, investments and pensions, minus liabilities for mortgages, credit card debt and loans. By this measure German households had an average of 200,000 euros in wealth, and lower than this in Finland and Netherlands. At the median or midpoint German households had 50,000 euros, the lowest in the eurozone, for Greece the median was 102,000 euros. The impact of home ownership is significant in the report, as home ownership is lower in Germany than in Southern European countries, and mortgage interest is not considered favorably in German tax laws. The decline in value of homes after 2010 is also not reflected. Another indicator for comparitive wellbeing is income, and this is shown in figures released in March 2013 from the European Statistics Agency for GDP per capita. For Germany per capita GDP was 29,000 euros in 2010. The average GDP per capita for the eurozone is about 24,000 euros. By this measure Greece is at 21,000 euros, 24,000 euros for Italy and for Spain. Germany being 18-19% above Spain and Italy. If Germans, Dutch, Finns and Austrians are less well off then the argument favors having the banks, creditors, and including depositors, in a burdensharing arrangement for bailout of troubled eurozone economies. ...

LyrArc Article Gist
About 41% of Unilever's $53 billion in sales come from developing countries, up from 22% in 1990. In 2006 developing world sales increased by 8%, sales in Europe only 1%, and sales in the USA only 2.4%. This shows the growing significance of developing countries sales to Unilever. With head offices in Rotterdam and London, Unilever was formed from a 1930 merger of a Dutch food company and a British soap company. Unilever has been selling its bar soaps and cooking oils in the Dutch and British Empires, in countries like India, Indonesia, and South Africa since the 1880's. CEO Patrick Cescau is focussed on promoting products in fast growing regions of the world. The management structure is being changed to recruit new and nurture promising managers in countries like India and South Africa. These managers are being trained in western countries to learn new marketing methods, and are being asked to come up with their own new ideas for products from scratch for developing countries with low price points. Its not about adapting existing western products, but dreaming up new ones for low income shoppers. Its introducing a product called Cubitos- miniature bouillion cubes - tailored to low income shoppers in 25 developing markets and their tastes, for as little as 2 cents. The stakes are huge. Its competitors like P&G are doing this in Mexico. Nestle is expanding in Brazil with a new plant dedicated to shoppers making less than $10 a day, and setting up a distribution network to sell to small stores in shantytowns in Latin America. Unilever estimates are that 1.2 billion consumers will buy packaged goods for the first time in 2010, mostly all in the developing world. Detergent sales are soaring in places like India, as shoppers use powders to clean their clothes, moving up from bar soaps. Estimates are that each week 40,000 people in Asia use a washing machine for the first time. ...

LyrArc Article Gist
Is the market in S. Korea reflecting the bursting of the housing bubble in the USA, or is it simply a result of the Roh government's new taxes and rules for real estate such as the capital gains taxes of a shigh as 60% and the restriction on loan size so that monthly payments do not exceed 40% of monthly income. If its the new rules then it must be true that the crisis in the USA must have made the pause from the Roh measures give the market time to reflect. One factor is the oversupply from the building boom especially since the new housing had become increasingly unaffordable to average South Koreans at 100 time average income a 3 bedroom apartment cost $2 million in Seoul. A real estate Professor at Konkuk University estimates that about 1 million units will come onto the market by 2013. 2013 thats because the construction has continued even as sales have come to a near halt. Apartment prices have gone up 3% in 2008 compared to 93% in the last 5 years according to Kookmin Bank. What does this mean for the other Asian markets such as China, India and other Asia. Its not just speculation thats disappearing, but is there a sense that the market for Asian goods in the USA, especially for export powerhouses in Asia such as South Korea, is taking a hit from the credit and housing crisis in the USA. And if thats the case what does this mean for other Asian housing markets in bubble mode, consider this a Early Warning Link. See the link to the South Korean election where even corruption charges against the favored candidate are not affecting his popularity because he is seen as a candidate to who could help S. Korea overcome fears about the economic future. Comments that the current crisis is tougher for real estate and construction than the one during the Korean financial crisis of the 1990's suggest that this is something serious. ...

LyrArc Article Gist
Combining public and private credit is the future of fixed income says the CFO of Black Rock. This includes infrastructure and private credit.

LyrArc Article Gist
Seib cites as a key reason why the presidential race in the U.S. could change- Romney leads by three percentage points over Obama among voters most intensely interested in voting. Another related reason is the plan to reach out to low intensity voters, with the Romney campaign having knocked on 2 million more doors already than they did in all of 2008. Some of the intensely interested voters are more against Obama than in favor of Romney, something Obama experienced in 2008 with the anti-Bush sentiment over the war in Iraq carrying over to support for the Democratic ticket. Another part of the undecided voter sentiment is that more of these voters compared to other voters are dissatisfied with the current condition of the economy and the direction the country is taking. Other reasons that could be cited are the volatile situation in the Middle East which could create questions in voter minds about American resolve in that region, dissatisfaction among some black voters with the deteriorating economic situation for black people, and the lack of intensity among Hispanic voters who feel the Obama administration did not keep its promises on immigration changes, the poor performance of the economy in industrial states of the midwest and east with decline in incomes....

LyrArc Article Gist
John Taylor, a professor of economics at Stanford, points out that the numbers being thrown back and forth in the budget debate can be confusing. He suggests a better way to look at this. The U.S. budget was 20% of GDP in 2007, and has been at or below that level in recent years, before the higher spending to counteract the effects of the 2008 financial crisis. As the economy recovers and private investment increases it makes sense to bring the spending back to levels where it has been- spending levels that do not endanger the country's credit rating and are a prudent way to manage the nation's finances. Taylor asks the question- if the U.S. got by by spending 20% of GDP in 2007, then why is it not possible to do this in future years when the GDP will be higher. In 2000 spending was actually 18.2% of GDP. Taylor says that with higher incomes people will be moving into higher tax brackets which should increase revenues in future years. In three years since 2009 the spending levels are up to 24.4%. Under this scenario private investment would make up for lower government spending and debt, leading to higher employment and GDP as business confidence rises. ...

LyrArc Article Gist
The prices of soyabeans have fallen by half since July and corn prices dropped from $7.54 a bushel in July in central Iowa to $3.81 a bushel Oct 21. But fertilizer and seed costs could go up 40% for next spring's plantings. This year net US farm incomes will hit $95.7 billion up 10% from $86 billion in 2007 and nearly double the $58 billion of 2006, according to the Agriculture Department. In the boom years farmland prices shot up where prices jumped by double digits percentages for 4 years, now Purdue University economist predicts declining prices moderately for next 5 years. The farmers are being squeezed on both sides. Declining farmland prices reduces borrowing power. With the commodities boom prices of everything from fertilizer to harvesting combines went up. Prices of fertilizer are not coming down even as the price of oil has come down. So farmers are reducing the amount of plantings they will make this coming year which should lead to reduced farm production and lower agricultural exports. In the boom years swelling middle class in places like China increased demand for US agricultural products. But with the global crisis and reduced demand from other countries prices are coming down. ...

LyrArc Article Gist
With gas prices at $1.98 a gallon and crude at $55 a barrel in November and falling further are Americans going to need some special incentives or a gas tax not to go back to low fuel efficency or large vehicles? With about $1 trillion dollars of consumer debt in credit cards, auto and other loans and student loans, zero savings rate, and heavily in debt, and millions under water on their mortgages, the incentive is in the need to use the savings from lower gasoline bills to paydown debt. There is also the shift to parttime workers in the workforce a long term structural change similar to Japan after the economy became stagnant there. Parttime work means lower incomes and uncertain future and need to spend carefully. All these things will likely make the shift to higher fuel economy permanent, including legislative mandates, and new management at the automakers committed to serious conservation and the environment if government aid money brings new management at GM. And public habits are changing in how much and where they drive in pickups and SUV's, many using smaller cars and letting the SUV sit on the driveway for 2 or 3 car families....

LyrArc Article Gist
Nagourney and Dougherty of the NYT give this report on the housing crisis in California by 2017 with the median cost of a home skyrocketing to twice the figure for the U.S. This price is now $500,000. The result is longer commutes even for people with incomes over $150,000 a year, stretching to as much as 2 hours one way. It means people lacking housing stay in vans with improvised kitchens and other sleeping arrangements. Not enough homes are being built because of strict zoning and planning regulations that are kept in place by neighborhood groups, effectively excluding outsiders. Now its not just the coastal areas that are affected but the whole state. Governor Brown of California tried to pass a measure in 2016 that would push communities to build more affordable housing, and ran into opposition from local officials and environmentalists. Now the opinion in the state is changing with younger people denied a chance at decent housing at the forefront and some elected officials such as the Mayor of Los Angeles, Mr. Eric Garcetti. A new bill in the state legislature would make it harder for cities that are falling behind in building housing to lose the right for City Council to hold back on approval of new construction, effectively bypassing it. California's law capping property taxes after Proposition 13 was passed in 1978 has also held back construction. Other factors are the building of new offices for  companies in the tech boom around San Francisco without a corresponding effort to build new homes for these new office workers. California was slow to respond to housing needs for young people, with only 311,000 housing units built since 2006. ...

LyrArc Article Gist
The OPEC meeting in Qatar in April 2016 to stabilize oil prices with a freeze in production is not likely to affect supply and demand. Saudis and Russia are producing all out, and Iran plans to increase its production, making it difficult to reach an agreement. The International Energy Agency, IEA, predicts demand will rise by the end of 2016 from 94.8 million barrels a day to 95.9 million barrels a day. Production is at 96.4 million barrels a day, and this is expected to lead to narrowing the gap between supply and demand. Experts say cars are becoming more fuel effficient, and electric car technology is becoming commercially viable, leading to a lack of growth in demand in developed and middle income countries. This may have to be factored in for the intermediate and long run for demand growth.

LyrArc Article Gist
Yale University's Robert Shiller quotes Thomas Jefferson from a letter written in 1820, where he said about the passions in the North and South about extending of slavery to the Missouri territory: "this momentous question, like a fire bell in the night, awakened and filled me with terror." He says there are serious consequences of letting longterm unemployment continue. He cites a proposal by Edmund Phelps, Nobel prize winner in economics from Columbia University, which would have the government give a subsidy of $4.50 an hour for the lowest paid workers, with declining amounts till they earn $15 an hour. This proposal would cost about $150 billion and be aimed at reducing income inequality and making these lower paid jobs attractive. Other proposals for reducing unemployment are to use work-sharing on a national basis with government help.

LyrArc Article Gist
Jan Hatzius, economist at Goldman Sachs, says the May 2012 jobs report of only 69,000 jobs added, and 49,000 fewer jobs added in March and April after revisions by the Labor Department, should be seen in the light of higher hiring in the winter months because of warm weather. His estimate is that the warm weather added 100,000 extra jobs in the 3 months through February 2012, taking jobs from the March to May 2012 period which averaged 96,000 jobs per month. The underlying job growth if these weather related effects are taken out would be 120,000 to 130,000 jobs added each month in the March through May 2012 period. Macroeconomic Advisors draws the same conclusions, and adds that reductions in energy prices should offset any negative effects of slower job growth by boosting real disposable personal income and supporting real consumer spending.

LyrArc Article Gist
A veteran campaigner for Hong Kong values and civil rights presents his view of the Hong Kong protests for free elections. Is it in China's long term interest to let the same "cronyism" that is embedded into China's political governance be imposed on Hong Kong, when cronyism and corruption eventually lead to lower productivity, poor economic decisionmaking, and slower growth. Future leaders may need Hong Kong people to tackle these economic problems emerging from poor governance common to many countries leading to stagnation. With a rapidly aging population China risks falling into the middle income trap. The past governance achieved economic gains but an open system with a truly open Hong Kong is likely to be needed to generate the kind of economic growth needed inthe future. Opportunities lost can never be recovered in the same way again.

LyrArc Article Gist
Kessler says the assumption that pension systems such as Calpers (California Public Employees Retirement System), can make returns of 7.5% is fantasy considering that U.S. Treasury bonds are yielding 1.74%. Calpers reduced its expected rate of return on its portfolio to 7.5% fom 7.75% in June 2012. Public pension funds in Illinois use 8.18% for expected returns. U.S. public companies with defined benefit pension plan assets of $1.3 trillion use an expected rate of return of 7.5%, even though these assets have return of 5.6% since 2000. Kessler's estimate for expected rate of return is about 3%- fixed income yielding negative real rates of return and pulling returns down. For equities he estimates return at the total of inflation component at +2%, productivity component at +2%, and multiple expansion at -1% because interest rates are at zero.

LyrArc Article Gist
Lee says India started fom alower base but has made greater gains for the rural poor.India's urban-rural income gap has steadily declined since the earlier 1990's. And in the last decade economic growth in rural India has outpaced growth in urban areas by almost 40%. Rural India acccounts for almost half of the GDP, up from 46% in 1993. Lee points out that in the period of Deng's reforms right upto the Tiananmen Square massacre China made 80% of th poverty reduction, but since 2000 poverty and illiteracy have doubled in China, while they have been halved in India. DOmestic consumption as apart of GDP has fallen to 35% from around 60% in the 1980's. Lee is a foreign policy fellow at the Centre for Independent Studies in Sydney, and avisiting scholar at the Hudson Institute.

LyrArc Article Gist
About $18 billion will be spent in the 4th quarter of 2008 by the government in China out of the $586 billion stimulus package. So the initial impact will not be great for the next few months and unlikely to make up for the rapid slowdown in exports. By the time the stimulus package kicks in with a larger impact in 2009 the economy may well be at 4-5 % growth rates. The stimulus announcement is also a signal to government owned banks to increase lending. The stimulus package covers 10 areas, including low income housing, electricity, water,rural infrastructure, and projects aimed at environmental protection and technological innovation. After the Asian financial crisis in 1997 a similiar but smaller package was announced, with money spent to build the country's highway and tollroad system, projects to keep the economy growing.

LyrArc Article Gist
The French government announced a 26 billion euros or $33 billion package as Stimulus spending. Its going into infrastructure projectsand investents by state owned firms like Electricite de France. It also includes aone-off payment of 200 euros for low-income households. Its valued at 1.3% of GDP. Under this plan, France will dig acanal north of Paris, renovate university buildings, and put new metro cars in service, and also fincnace the construction of 70,000 homes, on top of the 30,000 unfinished homes it is buying in 2009. Motorists who scrap thier old cars to buy new fuel efficient cars in 2009 will get a1000 euros bonus. This is aimed at reducing the stock of unsold cars which is at 1 million cars. And small companies will be exempted from social charges when they hire new employees.

LyrArc Article Gist
In 2015 the new government of Antonio Costa took a U turn from austerity policies followed in return for a bailout from the European Union. This has helped Portugal achieve the highest growth in a decade coming back from a severe slump. Unemployment is cut in half with growth in the tourist industry, and investment in agriculture, construction, aerospace.  Traditional industries such as paper mills and textiles have invested in new technology resulting in a boom in exports. German companies Bosch, Mercedes Benz, and others have also invested in the country. Portugal has a good relationship with Germany and the European Union which has also helped attract foreign investment. Prime minister Antonio Costa says "too much austerity deepens a recession and leads to a vicious circle." Antonio Costa came to power in 2015 on promises to reverse cuts in income made by the previous government to reduce the deficit in exchange for a 78 billion euro international bailout. The government backed by left parties left out of government since 1974 with the collapse of the dictatorship, was able to increase public sector salaries, the minimum wage and pensions, over objections of the IMF and the German government. Incentives were given to small business in the form of tax incentives, development subsidies and funding. Budget balancing was achieved by cutting expenditure on infrastructure and other spending, cutting the budget deficit from 4.4% when Costa took office to 1%. A surplus is planned for 2020, ending a quarter century of budget deficits. ...