LyrArc Article Gist
The risks facing China of slow growth and a bubble economy as the new leadership of Xi Jinping takes over in 2012. The export model for the economy is coming to the end of its run and the new leaders have to come up with a new plan for the future. At the same time they face the interests of state owned companies, banks and local governments interested in maintaining the status quo.

LyrArc Article Gist
EIA figures show U.S. stockpiles of crude oil, refined fuels and other petroleum products increasing to 1.149 billion barrels in the week ending Jan 2, 2015, excluding the strategic petroleum reserve. This is the highest ever since 1990, except for June 2013. Brent crude drops below $50 a barrel.

LyrArc Article Gist
This issue of the Economist magazine looks at Saudi oil price cuts and the future for shale oil in the world's energy mix. In the short run overleveraged companies in the shale oil business in the U.S. will be affected by oil prices below $50 a barrel. The Economist points out that shale oil deposits are extensive in the U.S. and other parts of the world. The upfront costs are as little as $1.5 million for drilling a well. As a result the economics of shale will depend on new advances in technology and efficiency to bring costs down below existing costs averaging of about $57 a barrel, with some producers at costs of $35 a barrel. Because of technology advances anticipated in the field it points to shale oil as a reliable source of low cost oil supplies in the future, keeping oil prices lower than in the past and much less subject to manipulation by cartel pricing or oil price shocks. The lower volatility and lower level of oil prices will be good for the rapidly growing economies in Asia and the developed economies of Europe and the U.S., and for countries in Latin America such as Argentina with large shale deposits....

LyrArc Article Gist
China's GDP growth for the 4th quarter of 2012 was 7.9% over prior year, increasing from 7.4% in the third quarter of 2012, according to the National Bureau of Statistics. GDP growth for 2012 was 7.8%, down from 9.3% in 2011. Growth is stabilizing at 8% which shows China is managing the economy, slowing the growth rate with a smaller stimulus planned in 2013, and working on sustainable growth for the longer term. This is a significant positive as a new leadership takes over in China and sets priorities for stable growth, and improvements in housing and health care.

LyrArc Article Gist
Keith Bradsher describes the life of one family of migrant workers in China struggling to get their ony daughter through college. Wu Yiebing is a worker in coal mining and his wife Cao works on farms nearby. He has managed to send his daughter Wu Caoying to college. She is a sophomore in college but fears for the future because of the lack of opportunities for new college graduates in China. She also feels the heavy burden as the parents spend half their income to get her through college and have no retirement savings. This is typical of many migrant families in China who see education as the only way for the next generation to have better lives than their parents.

LyrArc Article Gist
Browning points out the record Dow Jones Industrial Average (DJIA) average was not in 2007 but in 2000 when adjusted for inflation- on Jan 14, 2000. Since 1994 consumer prices measured by the Bureau of Labor Statistics have risen by 55%. Using 1994 dollars the March 5, 2013 closing DJIA average is at 9256, the 2007 high at 10194, and the record on Jan 14, 2000 at 10424, according to calculations made by Bespoke Investment Group. In inflation adjusted terms these calculations show the Dow barely making any progress in relation to the 2000 figure. When dividends and taxes are included, Browning says the inflation adjusted Dow is still not back up to the 2000 level. For retirees and sensible investors the real value of this money has to be taken account. Yale University professor, who founded the CAPE cyclically adjusted P/E, confirms what Browning says in an article in the WSJ March 10, 2013. There Shiller says that the inflation adjusted S&P 500 index has not made it to the 2000 level, so that investors have not made up for money lost in inflation in 13 years....

LyrArc Article Gist
Simon Nixon of the Econmist on the report's findings for the future of the world economy. He points to the heavy debt overhang for individuals and banks that will take years to overcome resulting in entrenched unemployment and sluggish growth, somewhat reminiscent of Japan's years of stagnation after its bubble. The entrenched unemployment he argues will permanently lower the economic potential of developed countries of US and Europe. Public debt will rise so that private debt can fall. Bank lending that is cautious will only slow any recovery for a long time. And the grim facts he presents are that about 25 million jobs will be lost in the 30 rich countries of the OECD before all this is over during the coming decade, and several million jobs probably will never come back. Auto manufacturing and manufacturing in general is an example where some jobs lost may never be regained. There is no room for complacency here.

LyrArc Article Gist
Foxconn announces salaries for workers would increase by 16-25% to about $400 a month before overtime. Foxconn plans to reduce overtime. Foxconn is a major supplier in China for Apple Computer.

LyrArc Article Gist
Capcity utlization rates are dropping at Toyota's truck plants in Texas and Indiana. According to market research firm CSM the San Antonio plant will be at 72% capacity utilization this year and the Princeton, Indiana plant at 45%.

LyrArc Article Gist
This analysis of coal use using graphs shows a clear move away from coal in the world, except for two growth markets China and India which account for 60% of the increase in coal use since 2008. India has gone black in its shift to increasing use of coal. China has begun the shift away from coal to address the smog over large urban areas, poor air quality and health impact of coal use. Because China used five times the coal used by India in 2017, the overall impact in China and India is showing a shift away from coal to hydropower, other renewables including solar energy. It is likely that India will make the shift following China's example in the future. 

The trend is clear when one looks at the incremental terawatt hour and where it comes from. The shift is clear to renewables, hydropower, and non fossil uses in the rest of the World and China which account for most of the coal use in the world.

 

LyrArc Article Gist
Questions about the viability of Canadian crude oil production from tar sands and shale as oil prices for Canadian crude are at about $17 in Jan. 2016. Western Canadian Select from Alberta traded at about $14 in Jan 2016. Crude oil NY benchmark is at $31, other crude is priced lower if transportation costs and other factors including quality and grade have to be figured in.

LyrArc Article Gist
Studies at the University of Padova in Italy and by France's research agency INSERM show higher risks of dementia from retiring early. The INSERM study shows that for every additional year worked we reduce the risk of dementia by 3.2 percent. Retiring at age 50 is considered very, very poor decision, and before 60 very poor decision, as cognitive development, mood, and active engagement with work offering complexity, all relate to good mental health. Countries like U.S. and Denmark where people tend to work for longer than in France and Austria are shown to be doing significantly better in cognitive performance in a 2010 study published in the Journal of Economic Perspectives. The Italian study shows the longer you spend in retirement the higher the risks of cognitive decline.

LyrArc Article Gist
John Cochrane, professor at the Booth School of Business, University of Chicago points to the simple truths about U.S. healthcare- out of control pricing because of the pathologies created by previous laws and regulations. He points out that costs are high in healthcare because regulations keep them high. Supply of new doctors is controlled because Congress and the AMA made it that way with a cap on residency programs and AMA opposing the expansion of medical schools. In a system of open competition new hospitals and health care businesses would challenge old ones which is not happening in a regulated market with regulations working to limit competition for the firms already in the business and with the influence to limit competition. Insurance costs for major expenses in an open and deregulated competitive market without the regulations would be so much lower than todays costs that its likely we would not even need a mandate such as the one the Obama healthcare law imposes.

LyrArc Article Gist
The Economist looks at real estate markets in the U.S., Canada, Britain, Germany, Hong Kong, India and other countries in May 2013. It looks at price to disposable income and price to rent ratios and sees if these ratios are higher than historical averages to determine if prices are based on sound foundations. Canada's real estate market looks set to face problems of a bubble bursting. The U.S. recovery is seen to be based on firm foundations. Property prices are undervalued in Germany and set to rise.

LyrArc Article Gist
Problems with the old 4% rule for withdrawal from savings for retirees in 2013 include- the decreasing income from bonds, the high P/E 10 ratio of 23 for the stock market in the U.S. in 2013, the timing of entry into retirement and the economic conditions, inflation and unforeseen expenses. The 4% rule needs to be modified in today's conditions.