Wednesday, March 27, 2013
The Europe Trap (part II)
Hong Kong, like France, Germany and Britain, has an economy that is fully integrated into the world economy. They have a comprehensive social net to protect their citizens from financial discomfort, but they do not have reckless, foolish entitlement programs that burden the government. Argentina, while it has some international exposure, is a much more self-contained economy. They have an extremely high burden of entitlement programs. A person working for the government 1 day has earned a pension for life. Retirement age is very young.
When Argentina dropped its peg to the US dollar many Argentineans lost as much as 75% of their wealth overnight. Going forward they could take care of their internal obligations with devalued local currency. If Argentineans bought goods produced in Argentina they had inflation, but not as bad as that on imported objects.
The same thing would happen in the peripheral European countries. The real pain will come in decoupling from the Euro. Internal debt can be paid with depreciated local currency. Past international obligations are due in Euros. Many banks now offer accounts denominated in foreign currencies. These are backed by reserves in those currencies and can buffer the effects of inflation for local people.
David Segrest is an International REALTOR in Charlotte, NC. His email is david@segrestrealty.com , His webpage is http://davidsegrest.com , and his international real estate blog is http://dointernationalrealestate.blogspot.com/
Tuesday, March 19, 2013
The Europe Trap
I can’t help but wonder if the European Union has totally lost its collective mind. A tax on bank deposits to save the banks! That can only cause a run on the banks. Then, there is this whole austerity thing when the economies need stimulus not an anchor. The government of the EU is destroying the economies of its borderline countries.
Italy, Greece, Spain, Cyprus and Portugal should get out of the Eurozone. Their problem is that they can’t because they need the bailouts. The European Union is an excellent idea. The Euro is only good for the strong economies. Britain should be in the Eurozone. The countries mentioned above should get out.
Hong Kong and Argentina provide excellent examples of the benefits and pitfalls of currency fixes. The Hong Kong dollar is pegged to the US dollar; so when the Hang Seng crashed, the entire Hong Kong economy did not collapse. The Argentine peso was tied to the US dollar and when they had problems, the dollar peg made things worse. Why does this happen? Come back and read “The Europe Trap part II)
David Segrest is an International REALTOR in Charlotte, NC. His email is david@segrestrealty.com , His webpage is http://davidsegrest.com , and his international real estate blog is http://dointernationalrealestate.blogspot.com/
Italy, Greece, Spain, Cyprus and Portugal should get out of the Eurozone. Their problem is that they can’t because they need the bailouts. The European Union is an excellent idea. The Euro is only good for the strong economies. Britain should be in the Eurozone. The countries mentioned above should get out.
Hong Kong and Argentina provide excellent examples of the benefits and pitfalls of currency fixes. The Hong Kong dollar is pegged to the US dollar; so when the Hang Seng crashed, the entire Hong Kong economy did not collapse. The Argentine peso was tied to the US dollar and when they had problems, the dollar peg made things worse. Why does this happen? Come back and read “The Europe Trap part II)
David Segrest is an International REALTOR in Charlotte, NC. His email is david@segrestrealty.com , His webpage is http://davidsegrest.com , and his international real estate blog is http://dointernationalrealestate.blogspot.com/
Thursday, November 11, 2010
Clean Coal
This is a famous oxymoron. Even if coal can be made to burn cleaner than it does, it still destroys the world when it is mined. China has just pumped 7.5 billion dollars into a small Australian town to bring the coal from under that town to a seaport so that it can be burned in Chinese power plants. The population of this town will triple with the new jobs produced.
The town itself will probably become unlivable in a few decades. Look at what has happened to a large part of the state of West Virginia. Once pristine mountain streams are now dead and killing the rivers into which they flow. Ash retaining ponds at power plants are collapsing and destroying the nearby environments.
The insatiable demand for energy today is driving us to destroy the world that our children will inherit. This feels like the beginning of a bad “B” movie. Picture yourself walking in a barren landscape, trying to avoid deadly violent mutations looking for something to eat that won’t poison you. Science fiction….I doubt it.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
The town itself will probably become unlivable in a few decades. Look at what has happened to a large part of the state of West Virginia. Once pristine mountain streams are now dead and killing the rivers into which they flow. Ash retaining ponds at power plants are collapsing and destroying the nearby environments.
The insatiable demand for energy today is driving us to destroy the world that our children will inherit. This feels like the beginning of a bad “B” movie. Picture yourself walking in a barren landscape, trying to avoid deadly violent mutations looking for something to eat that won’t poison you. Science fiction….I doubt it.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
Wednesday, October 20, 2010
Hollow Demographics
The Economist Magazine ran an article on the hollowing out of the USA job force. They indicated that the new jobs becoming available are at the top end or the bottom end of the pay scale. People at the upper end will save their money and invest it. It is possible that their investments will be made abroad. People at the lower end have to constantly trim their budgets and decrease their style of living.
This will cause regular drops in consumer spending. More and more people will join the underground economy to stay afloat. This will impair the government’s ability to provide basic services. Cuts in education are exacerbating the situation. Military spending puts some money into the economy, but it does not improve infrastructure or educational levels. In many cases the spending is for weapons systems that will never be used. In other instances the materials just get blown up.
A serious investment in education and infrastructure could be made with the money that is currently going for defense. This is not a new idea. The interstate highway system was build as the Nation Defense Transportation system. More spending on education would reduce the spending on prisons. The Republicans do not want an educated population, because they would not be quite as susceptible to Fox news and Rush Limbaugh.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
This will cause regular drops in consumer spending. More and more people will join the underground economy to stay afloat. This will impair the government’s ability to provide basic services. Cuts in education are exacerbating the situation. Military spending puts some money into the economy, but it does not improve infrastructure or educational levels. In many cases the spending is for weapons systems that will never be used. In other instances the materials just get blown up.
A serious investment in education and infrastructure could be made with the money that is currently going for defense. This is not a new idea. The interstate highway system was build as the Nation Defense Transportation system. More spending on education would reduce the spending on prisons. The Republicans do not want an educated population, because they would not be quite as susceptible to Fox news and Rush Limbaugh.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
Monday, October 18, 2010
Jobs and Prosperity
It seems to be agreed that the economy will not truly heal until the jobs come back. Will this solve long-term problems? That depends on what kind of jobs come back. Building new weapons systems keeps people busy and gives them money to consume imported goods and local services. Does it really help things in the long run? It uses vast amounts of energy and natural resources and causes unbelievable pollution. What could be accomplished investing the same amount of money in infrastructure and education?
For one thing, the only way we can lower our Gini coefficient is to improve our educational system. There are plenty of people who are well qualified to get a “good job in a cotton mill”. The problem is there are no cotton mills. My dad’s first question when he was examining a new business opportunity was. “How will this make people’s lives better?” He knew that a business model based on providing benefits was saleable. What are the problems our world and our country are facing in the near and distant future? What are the skills and technologies needed to deal with these issues?
Directing our money and our energy into solving these problems will provide jobs and get the economy moving in a sustainable direction. New weapons systems will not.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
For one thing, the only way we can lower our Gini coefficient is to improve our educational system. There are plenty of people who are well qualified to get a “good job in a cotton mill”. The problem is there are no cotton mills. My dad’s first question when he was examining a new business opportunity was. “How will this make people’s lives better?” He knew that a business model based on providing benefits was saleable. What are the problems our world and our country are facing in the near and distant future? What are the skills and technologies needed to deal with these issues?
Directing our money and our energy into solving these problems will provide jobs and get the economy moving in a sustainable direction. New weapons systems will not.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
Monday, October 4, 2010
The Gini Coefficient and Income Disparity
The Gini coefficient measures the gap between the rich and the poor. The higher the number the greater the difference. The coefficient varies between 0 and 1, but is usually multiplied by 100. Canada and most of the western European countries have a ratio in the mid twenties. The USA was under 40 through the mid 1980’s at which time it began to rise. Now it is well over 40 and the USA has a similar position to many of the banana republics.
Anyone who has spent much time in Latin America knows that in this type of system, the poor people live in hell and the rich people live in jail. The middle class is almost non-existent. This has changed over the last several years. Latin America’s coefficients have been going steadily down, while the USA has gone steadily up.
Part of this can be explained by the erosion of our industrial base. Most of the problem comes from the governments theories of “trickle down” economics. The idea being that if the rich people get more money, the benefits will “trickle down”. Unfortunately the rich people use the money to invest abroad or by imported good. All the poor people get is a warm damp feeling on the back of their neck.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
Anyone who has spent much time in Latin America knows that in this type of system, the poor people live in hell and the rich people live in jail. The middle class is almost non-existent. This has changed over the last several years. Latin America’s coefficients have been going steadily down, while the USA has gone steadily up.
Part of this can be explained by the erosion of our industrial base. Most of the problem comes from the governments theories of “trickle down” economics. The idea being that if the rich people get more money, the benefits will “trickle down”. Unfortunately the rich people use the money to invest abroad or by imported good. All the poor people get is a warm damp feeling on the back of their neck.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
Thursday, September 30, 2010
Keeping the World Working
The motto of the world ever since Adam Smith has been “grow or die”. Prosperity and standards of living and education levels have increased in most countries dramatically. Growth has come to mean producing huge quantities of goods that no one needs and convincing them to buy them anyway. Perhaps this is like the disease organism that grows and grows until it kills its host and then dies itself.
Many of the Developed countries have taken worker security and benefits to the point where their economies have become uncompetitive. Now there is clamor for increasing working hours and push back retirement age as an incentive for companies to expand or hire more workers. The short term benefits of this are pretty obvious. Long term, the goal is to reduce the expected deficits in entitlement programs.
Most of the countries considering these things are experiencing high un-employment. Is squeezing more out of workers the answer to this problem? This will eliminate the need for more workers. More jobs are needed. The solution to this is more consumers not more workers. A retired person or a person on vacation is a professional consumer. Perhaps, the whole structure of production, consumption and employment needs to be re-examined in the light of and organism that may be growing itself to death.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
Many of the Developed countries have taken worker security and benefits to the point where their economies have become uncompetitive. Now there is clamor for increasing working hours and push back retirement age as an incentive for companies to expand or hire more workers. The short term benefits of this are pretty obvious. Long term, the goal is to reduce the expected deficits in entitlement programs.
Most of the countries considering these things are experiencing high un-employment. Is squeezing more out of workers the answer to this problem? This will eliminate the need for more workers. More jobs are needed. The solution to this is more consumers not more workers. A retired person or a person on vacation is a professional consumer. Perhaps, the whole structure of production, consumption and employment needs to be re-examined in the light of and organism that may be growing itself to death.
David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.
Subscribe to:
Posts (Atom)
