Smart Links 24 July 2012

Commentary on the shift in manufacturing away from low wage to high technology countries, the sport of politics, let Greece go, rethinking retirement, and Canadian consumers go very long car loans.

It’s about the robots and other things.

Foreign Policy -- The Future of Manufacturing Is in America, Not China
How new technology is driving a U.S. industrial comeback.


Financial Times -- Corporate Japan: Back on track
After decades of introspection the country’s dealmakers have returned to the global acquisition trail.

In DOW we trust.

New York Times -- The Long-Term Argument for Dow 20,000
AFTER the last several years, you don’t need a finance course to know that stocks are risky.

Romney has been cast as a killer of American jobs and a liar. Now it’s his move.

New Yorker -- Sorry!
In 1935, the year that Parker Brothers came out with Monopoly, Oswald B. Lord, of Park Avenue, New York, invented a board game called Politics.

Parting is such sweet sorrow: let Greece go and watch the economy grow.

Telegraph -- Euro exit and depreciation would bring economic gains
In an exclusive extract from his updated book, Roger Bootle explains why allowing a country such as Greece to leave the euro is not as hard as critics think.

Finding a solution to retirement.

New York Times -- Our Ridiculous Approach to Retirement
I WORK on retirement policy, so friends often want to talk about their own retirement plans and prospects. While I am happy to have these conversations, my friends usually walk away feeling worse — for good reason.

John Mauldin on Japan.

It has been said that you can’t consider yourself a real global macro trader until you have lost money shorting Japanese bonds. Japan is a bug in search of a windshield – but it keeps dodging. Japan has a debt-to-GDP ratio that is approaching 230% (at a rate of increase of 8-10% a year!).

The savings rate is declining rapidly and will soon go negative. At that point, the thought is, Japan will need to seek out foreign investors to buy its bonds. And who will buy a Japanese bond at 1% for ten years? If rates rise only 2%, then Japan would be spending almost 80% of tax revenues on just the interest on its bonds.

I would submit that that is not a workable business model.

So traders keep shorting Japanese bonds (JGBs). And they keep losing money.

But what if Japanese rates never rose? How could that be, you ask?

Given that Japan will collapse if interest rates rise, I would suggest that interest rates will not be allowed to rise. The Bank of Japan will fire up the printing press for their own version of Operation Twist, but on a scale that will make the other central bankers of the world jealous.

So then Japanese bonds don’t revalue (on an internal basis). But the consequence is that the Japanese yen goes seriously south. Can you say 125 to the dollar? 150? 200? Do I hear 250?

At what point will you be able to buy a Lexus cheaper than you can buy a Kia?

Think that will make Korea happy? Or any of Japan’s Asian neighbors? Think the Japanese care?

They will continue to churn out quality products made with robots that will compete very favorably with those of any industrial country. Japanese equities will soar in such an environment (in terms of a depreciating yen), which makes buying cutting-edge Japanese stocks and shorting the yen an interesting trade.

Canada’s stretched households.

Globe and Mail -- Debt-burdened Canadians succumb to lure of long-term car loans
Massive mortgage debt is top of mind for Bank of Canada Governor Mark Carney, but in his quest to curtail Canadians’ borrowing, he might want to start thinking about the vehicles sitting in their driveways and garages, too.



get Smart Picks in your Inbox!
Add your opinion Rate this story Share Subscribe E-mail Print

Post new comment

Keep up with CEF!

User login

Login using social networks

Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.