Archive for category Macroview

Can Government Help the Economy

VN:F [1.9.16_1159]
Rating: 5.0/5 (1 vote cast)

Is Presidential Election year and we are one month away from 2012 Presidential Elections in the USA.  This year, there are elections all the world over including China and Japan.

Last year and part of this year, we have seen new government leaders come and old leaders leave.  Italy is one such large economy with new leadership.

It is the believe of many that the government can make an economy improve and some even believe is the role of government to make economies rich and improve forever.

Since 2000, we have seen 3 major crisis of financial magnitude to affect the economy the world over. 2000, the dotcom bubble bursting, 2009 the real estate bubble busting into a mortgage crisis, 2011 the European sovereign debt crisis which is still percolating.  In the background, we have China and India which have had decades of growth defying all economic gravity and continously performing over all crisis non-stop.

Here are some charts showing how even the centrally controlled governments (here China), have little correlation of government changing to economic results. (the vertical lines showing every 5 year Congress where new leadership is determined.

image

To some extend the (incomplete – data not available) Foreign Investment line does show a increase in GDP as FAI increased.

So we will extend the same conclusion to the USA political debates and subsequent election.

One more chart, even though the culprit to the last 2009 real estate crisis started in the USA from excessive mortgage credit, you can see here that the effect of the real estate bubble (excitement) also manifested in China (as shown by the parabolic rise of the Shanghai Stock Index) and subsequent real estate crash creating the crash of the China stock market.

image

Further economic and political science theorist may continue this study.

In addition, since winning politics t0days is more a follow the market approach (“find what people like to hear, and tell them that”).  The policies that government leaders enact are in reaction to social trends.  For example, there are significant trends toward regulation, increased taxation, protectionism and anti-importing tendencies (nobody seem to understand or want to understand the advantages of outsourcing).  The policies and laws adopted do have a long term effect on the economy, and policies and laws are enacted by the government, however is that direct or indirect consequence of social trends.

As undermined is the idea of the value of a free economy and free market.  Like gravity and the Universal Law, is there and it always shows it’s manifestation sooner or later.

2012 Q4 Forecast – A Framework

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

Is not hard to imagine the large number of short sellers in Europe that covered their shorts once QE3 (QE+ some call it) was announced.  These speculative shorts went from around 250,000 in june to 100,000 as of this week (Sept 28th, 2012).  The USA stock market went up in a parabolic move to closing at the highest level since 2008 (1465 – as a matter of fact is only 6% below the peak of the real estate bubble in Oct 2007 and 5% from the April 2000 peak of the dotcom bubble).

We are now monitoring the foreign currencies particularly with respect to the US Dollar (the international currency).  We expect the QE3 will have an effect on the USD depending on what other countries (and their currencies) do on their QE as well.

The G10 central banks (RBA, BOE, RBA and BOJ) will meet .  This will be another synchronized effort to work together at the same rhythm, so the effect will be more global than not.

Week ending Sept 25               Commitment of Traders    
    (speculative position in thousand of contracts)    
  Net Prior Week Gross Long Change Gross Short Change  
Euro -50.2 -73.5 53.3 4.5 103.6 -18.7  
Yen 21.1 15.4 47.3 5.8 26.2 0.2  
Sterling 27.1 14.4 60.8 8.2 33.7 -4.5  
Swiss Franc -0.9 -4.5 13.6 0.0 14.5 -3.7  
Canadian Dollar 105.0 112.0 123.6 -3.0 18.3 3.5  
Australian Dollar 89.6 69.2 119.1 2.1 29.6 -18.2  
Mexican Peso 141.0 118.0 147.2 6.9 6.0 -16.2

Many global analyst are eyeing this week events to determine the outcome for Q4.  A few critical ones are:  Japan releases its quarterly Tankan survey shortly Monday (is holiday in China but not the rest of the world).  The US presidential election is coming to a critical phase everyone eyeing on unemployment figures (even if these are inaccurates – everyone is now no longer fighting the release data – real, accurate or not).  These we consider to be relative points against some more fundamentals that must be considered.

There now is small improvement in the US economy and the UK (after 3 quarters of contraction) is coming as the stronger one with positive results.  However, a continuing deterioration on the global economic outlook for other countries excluding Latin America.  (although not in the news, Latin American has come up clear a winner and above all during the entire financial crisis).  

The US economic data will mostly have surprises to the downside. 

The euro zone is clerly contracting although the bad news stopped for a while and Greece, Spain, Portugal are all digesting their new capital (it appears as if the party continues until the booze is finished or near finished).

So, with only 2 eyes per person, now is obvious to turn the other eye on other places.  The eye will be on the industrial output in Japan, China, and other major countries in Asia (South Korea and Taiwan).  China has been the leader in supporting the entire world economy since the onset of the 2009 financial crisis.  It’s GDP has continously increased at over 8% until recently.  Now China has its own domestic challenges in addition to the already reduced export markets, result of the US financial crisis and the European sovereign debt crisis, China’s biggest export regions. 

“(Reuters)… So it comes as a surprise to find that in Berlin’s corridors of power, the main worry is not whether Greece sticks to its reform pledges or Spain demands an EU bailout. As the world’s third largest exporting nation, Germans are far more concerned about whether China loses its appetite for their machine tools and cars, or about what the famed Teutonic manufacturers should make in the year 2030.”

China is not expect to reach equilibrium for the next few quarters and when it does inflation will likely follow like a guided missile will seek its target. (refer to http://writings.basiliochen.com/?p=2583).

For Japan although shocked from the 2011 earthquake and devastating ensuing tsunami, recovered, at least til now.

For  Japan’s economy we expect contraction.  In addition, the geopolitical conflict with China has created severe consequences where Japan’s business has been severe ly hurt as a result of anti-japanese sentiments which includes Chinese boycott of japanese products.  It is reported that Toyota factories in China had major threats toward factories operations and as a result all factories have been closed for an extended holiday and their resumption will be a significantly lower pace.  (unofficial reports rate this incident as reduction in Toyota sales within China of over 60-80%, a devastating number).

In Europe, Spanish and France released their 2013 budgets but is unlikely many will consider them able to meet them (the fundamental question is if all the austherity waiting for the improved economy will create net gains or the interest owed will come before the economy kicks).  In all cases, optimistic assumptions about growth continues but also bailouts which seldom creates any new growth.  Overshoots in the budget has been more the norm so far and fundamentally not much as change so we rule the adherence to the budget as an exception.  

There is no closure yet on Greece and there may not be until November.  Spain’s three-prong debt crisis (sovereign, regions, and banks) is also morphing into a potentially national crisis.  Prime Minister Rajoy meets with the regional heads on Tuesday in an attempt ease the dispute with Catalonia.

 Under Spain’s current tax system, the country’s seventeen regions, which are largely self-governing, turn over most of the tax to the central government. The Catalans lay claim to over €16 million they allegedly raise in tax every year but go to the central government and subsequently to other regions. 

Catalonia asked for more tax autonomy from the central government. However, Spanish Prime Minister Mariano Rajoy gave a negative answer to Catalonia’s n September 20, and this triggered bitter disappointment. 

“The prime minister told me there is no room to negotiate a fiscal pact with Catalonia and that his answer will be ‘no’ in the coming weeks and months,” said the President of the Generalitat of Catalonia Artur Mas after talks with PM Rajoy. Adding “If the negative answer to the fiscal pact is so obvious, then we will have to take decisions in the next days”.

 For emerging countries (the BRIC’s), it appears a good portion of the global stimulus channeled into this area.  However, the resulting effect was not totally efficient, ie the value creation was mild at best.  It just resulted in investment without apparent net real production.

BNP Paribas recently released a chart, here included: (YoY GDP Growth).

EMEs GDP

According to Ryutaro Kono believes the emerging market economies (EMEs) is in the process of deflating  and these nations are undergoing a tremendous structural (as opposed to a cyclical) adjustment.  

To show how the Stimulus had an effect on these EME’s in a cause-effect action, consider the following real example:

Monetary easing started in the US had a direct impact on monetary policy in emerging markets. The weakening the US dollar puts upward pressure on EMEs’ currencies.

The central banks of these  EME nations’ in order to defend it’s competitiveness abroad attempt to maintain a peg (implicit or explicit) to the US dollar to defend their exports’ competitiveness (ie when the US Dollar drops, they also want to drop or at least not allow their currencies to raise.  A higher EME currency will make their exports less competitive). To do so the EME’s central banks must buy US dollars and sell (“print” or create) their domestic currency. That ends up boosting foreign reserves (of US Dollars) and increasing the monetary base, creating an extremely easy domestic monetary policy (ie more EME currency is created).  So, in net, every US Dollar that is created, there is an equivalent (normally unequal and typically higher) currency created at the opposite country.

You can see how the resulting decrease of the US Dollar and increase in US Dollar stimulus resulted in all EME’s foreign exchange reserve balloning in this next chart.

Foreign Exchange Reserves

“BNP Paribas: – The direct cause of the slowdown that began last spring by three big EMEs— China, Brazil and India — was the stripping away of the effects of the massive fiscal stimulus adopted in 2009. For instance, China’s fiscal stimulus package was massive at RMB 4 trillion (13% of GDP), and this made China the global economy’s growth engine following the Lehman shock. What is more, monetary conditions were also made extremely accommodative. Specifically, the aggressive easing by the Fed (QE1 and QE2) spilled over into the EMEs via their exchange rates. The mechanism involved worked like this: Because the Fed’s aggressive easing resulted in the weakening of the dollar, EMEs had to undertake dollar-buying intervention in the FX market to neutralize upward pressures on the local currency, something that made domestic monetary conditions extremely accommodative. Thus, the robust growth by the EMEs these past three years was inflated by the aggressive monetary/fiscal policies, and so was unsustainable.”

It is thus, the EME’s will be digesting its excess while Europe and the USA are attempting a recovery.  So, far the USA stand strongest to gain given it’s financial infrastructure however it balooning deficit is also a major structural problem.  China has its advantages of being fiscally sound along with other Asian countries but is not yet strong structurally in a regional way.  USA relationships with Western economies have been proven, tested and now stronger than any of the Asian countries. 

On the positive side of the Keynesians (who are the majority), all the massive double fiscal and financial easing of capital the financial assets as measured by additional currency in the world has become large again.  If the problems can be successfully swept under the carpet where it is hoped to disintegrate (vanish by magic), then new recovery will come in time and the untrained eye will not notice anything (as for inflation, it cannot be easily seen and since the CPI is said to be low, everything on the surface is said to be fine).  After all, the bank account appears to have the same amount of cash deposited and people have a higher salary.

And to show how QE is making the market sing to its tone,

Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, said he believes

“…we could see a rebound” this week “if we get some of the stars aligning and have Spain ask for a bailout, the ECB announcing favorable terms for that bailout, and if we see the Bank of Japan announce further monetary intervention.

“If Spain and the ECB don’t deliver, we could set ourselves up for a further lateral move in the markets,” Jacobsen added. “A negative would be if Rajoy flat-out denies that they need a bailout.”

 So, Spain asking for a bail out will be positive for the market…

Once in a lifetime, owing money and not being to pay it, left you unable to ask for more money but not it appear is good news that you ask for more money even though (Spain) is the #1 in sovereign defaults in the lasts 400 years in the world of large economies.

No offense to my motherland but financial rules seem to be ignored just as in the Nasdaq dotcom bubble when people at large decided that making profit was not important for modern businesses and that the prosperity will continue under the new rule.

This rule of finance was again ignored in the real estate bubble in 2009.

I now wonder if the rule will change for the sovereign debt bubble.

The dotcom bubble wiped out billion of dollars but also made many billionaires.  The RE mortgage bubble deflated about $60 trillion from the world.  I wonder what will the sovereign debt bubble do.  Maybe this time is really different, again.

Economic Paralysis Set for Action – Phase 3

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

We are set for our last of 3 Phases in this 2000 started Secular Down Trend.   It will be the least seen one by the ordinary eye as massive government intervention globally can occur from a well prepared global system that has now had 2+ years to prepare.

The global economy is quickly deteriorating, not surprising to the trained eye as commonsense dictates you can sweep the dust under the carpet hoping it will disappear quickly clearly when that dirt becomes the size of large furniture under a carpet.

China’s economy is also finally exhausted and with its own excesses with the only exception to others in Europe or the USA that China has substantial positive cash and asset reserves.

Europe programs cannot address a complex multi-country multi-culture system. 

This is the economic status and score card pointing to zero global growth and this time including China’s downgraded economy.

Unemployment rates: Europe and the U.S. continue to climb in unemployment. The EU (17) unemployment hit a Euro-era record 11.3% in July, as U.S. initial jobless claims and the unemployment rate have started to creep back up. Portugal’s unemployment rate hit a Euro-era record 15% and Spain’s unemployment rate rose to 25%.  German unemployment increased five straight months in August to reach 2.9 million. German factory orders fell 7.8% in June YOY as manufacturing output contracted further in August.   China also has thousands of bankrupt factories where their millions of employees left looking for the return of their bosses who ran away for shelter. 

No Growth: The last bastallion for growth, China, is stalled now! Reduced exports and delays in propping up the internal consumption which is tiny compared to the GDP contribution of external exports (purchasing power parity of Chinese consumers is low compared to a USA or European consumer.  In addition, China’s new trading partners, Africa and Asian partners also have low purchasing power parities).  Specifically, China’s exports to the EU (17) dropped 16.2% in July, as sales to Italy plunged 26.6% from a year earlier. The base metals prices has stumbled down.  Prices like iron ore falling 33% since July, lowest level since October 2009.  In addition, the nucleus of Europe, Germany, is beginning to split due to national problems which includes increases in unemployment and philosophical disagreement with debt and austerity belief’s.

Strong Monetary Philosophical Polarization: The European Central Bank is gaining control over banking regulation.  Now, the central bank in the USA and Europe will be practically working in full philosophical allignment.  Like China has full control of its regional banks, now there will be all developed countries bank (Europe and USA and UK) under the ECB in Euro-17 zone and the Federal Reserve in the USA and the Bank of England in the UK.  Under this arrangement, the belief is that global markets can be controlled from central monetary stimulus point of view.

 The next few days we will see the global forces developing.  In the ensuing month we should be able to see further confirmation.  Ultimately, by year end (I would assume after the USA relection – Obama would like be the winner), full throttle will take place, not because of the winner but because the public will not have anything else to focus their attention on and the least anyone wants for the next few years is a public that has too much free time.

 

 

 

China Economic Correction – Update #2

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

We are at present monitoring the China’s long awaited correction.  The big question is: “Is correction a soft or hard (landing) one”.

A soft correction will show brief and quick recovery.  A hard one may take more time.  We are talking about months versus years (in the case of a hard one).

Here is the Balance Sheet of the People’s Bank of China (China’s Central Bank).

The first obvious observation is that most of assets of PBOC (shown in darker blue) are in foreign assets (US Treasuries and other governmental bonds which were used to balance the export trade surplus).  It is also obvious that the pace of balance sheet expansion has been slowing. 

The first notable and persistent slowdown in balance sheet expansion happened during the 2008/09 financial crisis, when the pace of PBOC balance sheet expansion slowed from way above 30% yoy to around 10%. 

It stayed in the 10% level until the end of 2011 and starting in 2012, it broke down considerably. The most recent balance sheet reduction is happening right now (September 2012), with the size of balance sheet with less than 3% at June 2012 compared with the same month last year.  The source of the current slowdown in balance sheet expansion is very obvious, which is the end of foreign assets accumulation, which drove much of the balance sheet expansion in the past. 

Clearly the opposite situation of the recipient of the foreign assets (USA in it’s majority with other develop countries) would show a negative asset (liability) base.  However, in China’s case, it equally creates major challenges starting from a situation no different than slowing landing a rocket.  Would it land straight, crocked, break from a fast drop, etc… All these in a social infrastructure that is still in its development infancy.  This is the fist time in modern China that wealth and economic growth has been successfully experienced for such a long time (continuously since the Tianamen Square crisis except for a short correction in the 1996 Currency Crisis and another short one in 2008-2009)).

This is also a situation where with all of the strategic minds at work knowingly to shift the focus into a internal consumption from external, shifting trade to other countries away from the matured USA and slowing Euro zone are smart choices however a complex effort.

Here is another chart showing internal transportation (a indirect measure of internal business/consumption).

 

Notice that Railways and GDP tracks closely.  However, the more expensive Air Transportation is already at 2009 levels.  The only positive is that Highways is still high.  The more inelastic (water) is already at 0% level.

In the international scene, the Baltic Index keeps going lower and lower, now below 700 (693 now).  The BDI is now following a double oversold condition with RSI(14) on a second cycle down.

The Baltic Index in a longer timeframe shows little improvement from 2008/2009.  If the Index goes much below the prior low in the 630 range, there may have significant international trade impact.  (Is near end of the year, time for busy Christmas shopping).

The PRC reported production trend is also in severe slow down shown here:

And in a more longer term basis it is already near 2005 levels.

Electricity output in the PRC also confirms the lower production trend.

Notice that in percentage terms the electric power output from the peak on 2009 at 16+% has come down to 6+%, or nearly 10% down.  Comparing this to 2007 when it was at 12+% down to 2% in 2009, is also a 10% drop.  The difference is that 2007-2009 is shorter in time frame.

 

Middle Class Growing in China – Poor/Lower Middle class to 5% by 2015

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

A recent report by McKinsey, details the trend for Chinese luxury good as the largest and fastest in the world. In addition, the report points out significant statistics that deeper implication, for example the reduction of the lower and poor class to 5% by 2015.

Tapping China’s luxury-goods market
By 2015, Chinese consumers will account for more than 20 percent of the global luxury market. How is their behavior evolving?
• Exhibit 1: China’s upper middle class currently accounts for about 12 percent of the luxury-goods market, but that share is expected to grow to 22 percent by 2015.
• Exhibit 2: Chinese consumers increasingly prefer internationally well-known brands.

China will account for about 20 percent, or 180 billion renminbi ($27 billion1), of global luxury sales in 2015, according to new McKinsey research. Even during the global recession in 2009, sales of luxury goods in the mainland rose by 16 percent, to about 64 billion renminbi—down from the 20 percent growth of previous years but far better than the performance of many other major luxury markets. To get a better idea of the dynamics, McKinsey surveyed more than 1,500 luxury consumers in 17 Chinese cities in spring 2010.2Three findings stood out.

Shifting attitudes
At a time of rapidly rising incomes, widely available luxury products (and information about them), and shifting attitudes toward the display of wealth, more Chinese consumers than ever feel comfortable buying luxury goods. As a result, China’s love for them is moving down the economic ladder, creating opportunities and challenges for marketers accustomed to serving only the very rich. While wealthy consumers (with incomes above 300,000 renminbi, or about $46,000) will continue to account for a majority of luxury consumption, our research shows that the 13 million households in China’s upper middle class (incomes between 100,000 and 200,000 renminbi) offer the biggest new growth opportunity. They already account for about 12 percent of the market, and their numbers are growing rapidly: we expect to see 76 million households in this income range by 2015, accounting for 22 percent of luxury-goods purchases (Exhibit 1).
Interest in them is moving beyond handbags, jewelry, fashion, and the like. A growing number of Chinese luxury consumers are also splurging on spas and other wellness activities. Consumption is growing faster for such luxury services than for luxury goods: 20 percent of these consumers said they were spending more on experiences, only 13 percent on products.

Greater sophistication


The Chinese are increasingly exposed to luxury goods through the Internet, overseas travel, and first-hand experience. As a result, they have become more discerning.
With the surge in the number of luxury stores, fashion magazines, and Web sites and the use of social media, Chinese consumers are now familiar with nearly twice as many brands as they were in 2008. Half of the consumers we surveyed in 2010, for instance, could name more than three ready-to-wear brands, compared with only 23 percent two years before. As Chinese consumers become more familiar with luxury goods, they are becoming savvier about the relationship between quality and price. In 2010, only about half of consumers equated the most expensive products with the best ones, down from 66 percent in 2008.
Price transparency contributes to this dynamic. More than half of luxury consumers check product details and prices online, compared with 13 percent of all urban dwellers. Since two out of three luxury consumers have made at least one trip overseas, they have access to external benchmarks for comparing prices back home. In 2008, only two of five people in China realized that in the mainland, prices were at least 20 percent higher than they were in places such as Hong Kong. By 2010, 66 percent did.
Luxury-goods companies have long waged a battle against counterfeit goods in China. But there’s good news for marketers: our research shows that consumers increasingly want the real thing. The percentage of those who said they would buy fake jewelry, for example, dropped to 12 percent, from 31 percent, in 2008. Some luxury buyers told us they felt sure that their friends would spot a counterfeit. A woman who used her first salary check to reward herself with a luxury handbag said, “it would be meaningless if it was fake.” What’s more, an internationally well-known brand has become one of the most important factors in making a purchase (Exhibit 2).

Back to top
New geographic markets
Rapid urbanization and growing wealth beyond China’s largest cities are creating a number of geographic markets with sizable pools of luxury-goods consumers. More small cities will become large enough to justify the presence of stores catering to them; we expect luxury sales in urban areas such as Qingdao and Wuxi, for instance, to triple over the next five years. By 2015, consumption in such cities will approach today’s levels in Hangzhou and Nanjing—now two of China’s most developed luxury-goods markets—and luxury consumption could pass 500 million renminbi in more than 60 cities, compared with 30 today. But the luxury-goods market will remain concentrated in the top 36, which will account for 74 percent of the market’s growth and 76 percent of total luxury sales by 2015.
Most of the world’s luxury-goods companies are already in China or contemplating increased investment there. They must tackle several big issues before making their next moves. First, delivering exceptional service in stores is critical; two out of three consumers are disappointed with the indifferent attitudes of salespeople. While the in-store experience is by far the most important factor driving purchasing decisions, the Internet has rapidly become the second-most-important consumer touch point for luxury categories such as fashion. Marketers will need increasingly sophisticated Web strategies; for example, they can work with social-media agencies to monitor and shape online conversations among consumers or to identify influential bloggers and help educate them about brands.

Finally, much of luxury’s allure comes from the opportunity to share in the rich cultural heritage associated with a brand. This concept is rapidly catching on with Chinese luxury consumers, and many leading brands are promoting their history and craftsmanship. But the picture isn’t totally straightforward: one-third of luxury consumers in China said they would prefer to buy products that were designed specifically for the country and incorporated Chinese imagery.

Equity Volume Trend – A Clear Indication

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

The volume of equity and stock transactions has been coming down considerably and consistently. This chart shows a dramatic drop of over 50% from the top in 2008 (400 million shares down to 200 million shares annually).

Measured in a quarter basis these are the figures:
2008 100 million (Q1) 83 million (Q2)
2011 65 million (Q1) 60 million (Q2)
2012 50 million (Q1) 53 million (Q2)
This down volume is conclusive and consistent with the trend as interest from equity participants reduces as the trend matures and at the end of the trend, most people turn their attention away from equities and public sentiment toward stock become negative as most give up trying and many have lost money in their stock investment.
That same condition (lack of public participation as demonstrated with low volume), sets the stage for the new beginning. It also means that companies involved in the stock market including companies that depend on volume to be in business will be severely affected.

Credit Default Swap – Insurance on Defaulted Sovereign Debt, A Template

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

This is a perfect template of following the “leader”.
The graph shows the cost of insuring against sovereign debt default. As it increases, it become a clear measure of probability of default.

And to some extend is a self-fulfilling prophecy.

Japan’s 20 Years of Quantitative Easing Must Be Studied

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

What Can We Learn From Japan 20 Years of Quantitative Easing
Japan, the world’s third-largest economy as measured by GDP has been in a deflationary depression for two decades with very low, if not negative, gross-domestic-product growth, and deflation more often than inflation.

On a net basis, Japan’s government-debt-to-GDP ratio has been steadily increasing from 11.5% in 1991 to 113% in 2011 only rivaled by Italy’s. And most recently it reached exponential proportions of major concern. Japan’s gross government debt is now over 220% of gross domestic product, according to the International Monetary Fund, by far the largest ratio of any Group of Seven (G7) country.

Is This The End of Japan’s Economy?

Does all this mean that Japan is finished as a major economy?

Hardly. Despite little growth in GDP per capita since 1995, it is a wealthy country. Japan has the highest Per Capital Production of Any Major Economy. In 2010, GDP per capita was still more than that of France, Germany, the U.K. and Italy. And China’s economy is now larger than Japan’s because of its huge population, 1.3 billion compared with 128 million, however China’s $5,414 GDP per capita is only 12 percent of Japan’s $45,920.

General Progress in Standard of Living Can Be Achieved

With that said, looking at Japan today in 2012, it is not necessary correct to assume that such a 20 year of lost economic progress would result in a decayed country as anyone who visits Japan can clearly express the country is as modern now than ever before and that people’s living standards and confidence appears unharmed. However, what can be said is that Japan does not have a large disparity between rich and poor. Putting it in different terms, it can be said that there is no middle class in Japan or you can change the perspective and say it is all a middle class in Japan.

How Can The Yen Currency Remain Strong With Constant Quantitative Easing?

What will happen to Japan with a 220% and growing government debt-to GDP, we will find out however Japan has demonstrated resilience over its 2 decades of quantitative easing and as such is a suitable case study of how a major economy like Japan with its prior decade of glory and economic success in the 90’s sustained itself in a constant deflationary depression for over 20 years. What created it and more importantly why and how can a currency like the yen’s endure such a considerable strength against the US dollar and other major currencies over that long period where other economies like Zimbabwe ended up in a hyper inflation and destruction of their currency basis. In addition, this study could shine light as to what to expect under the conditions that created an deflationary depressed Japan.

Baltic Index Crossed Down May 2012 at 986

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

The Baltic Index has been depressed since the Financial Crisis.  It has been on a decline but now is getting into critical territory crossing an important trend average at 986.

Enters the Age of Digital Distribution

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

In 1999, I gave a talk in Kuala Lumpur, Malaysia by the auspicies of Malaysia Technology Development Corporation, a capital arm of Malaysia’s government.  The title was “Future Directions in Technology” as an attempt to predict the next generation of computing technology.

The introduction was the fun part showing the first computing device – the Abacus.  From there we fast forwarded to the present giving some anecdotes for the role of technology in society.

The practical part of those 5 minutes began with stating that technology through history provided solutions to human major problems.  In the 1800’s manual labor was replaced by steam engine and in the 1900’s electricity and computing extended the human brain and created improvements to mental labor increasing human productivity and allowing people to break all barriers in geography and time with the advent of the world wide web.

I ended up making a bold prediction that Peer-to-Peer was the way of the future but more bolder than that I suggested that the way P2P was going to manifest was through Digital Distribution.

We are now at that final frontier for it to start unfolding thanks to Smartphones and Mobility computing.  I envision one day every automobile will come with a voice activated computer assistant connected to the web traveling a high speeds without interruption.

While waiting for all the pieces to come together, I watched one by one each one of them coming together.  Palm came up with a user friendly portable computing device without the need for a keyboard.  Blackberry evolved it to combine phone and computing to begin the Smartphone.  Apple created the mass acceptance and large hardware base coupled with Google’s give away of Android’s systems.  One missing part nobody knows is the contribution of Skype and Voice-Over-IP.  How to use packet data to provide continuous speech over the internet.

For several years now, the public is used to digital photos and then digital video popularised by YouTube.  Just like fixed devices (computers) were replace with laptops, smartphones with the cultlike push of Apple with iPad’s and iPhone’s there is tremendous momentum and a large base to start truly delivering and more importantly distributing digital information.

Facebook revolutionalized mass social connection.  The Smartphone is a wireless internet appliance that now can provide multiple usage beyond a phone and computing.  It can access vast amounts of information available globally.

The hardware and the software is now available in miniaturized and consumer attractive manner.  Even battery technology can make it last a practical limit.  And user interfaces are now friendly.  The last missing piece for all of this Digital Distribution to take place is the final connection fabric.  High speed digital data Wireless.

For years, fiber optics taking over cable wires of megabit speed was capable of delivering gigaspeed but it was all still a fixed connection.  With the new advent of totally digital protocols like WiMAX and LTE and modernization of microwave radio technology including smart micro-antennas arrays (which was the big controversy with the launch of iPhone4), gigaspeed wireless connections can now make all of the needed digital content of any high resolution delivered to any mobile device (Smartphone) and seen by a human.

With the confluence of hardware, software, communications (4G is the only true packet IP technology that begins delivering gigaspeed data wireless.) and a large worldwide base of smartphone users, Digital Distribution begins a new era of Technology and specifically Information Technology.

 

Improve the web with Nofollow Reciprocity.
Uses wordpress plugins developed by www.wpdevelop.com