The energy share of consumer spending falls to a record low
. . . including Europe, and Japan. This article discusses one of the reasons Americans are so wealthy, and why they are accelerating away from the rest of the world. Energy is important, and necessary to create the safe, healthy environment we live in today. Europeans, and much of the developed world pay huge amounts for their energy. This is primarily due to rapacious government taxation. The result is a very much lower standard of living in Europe than in America. I had the dubious pleasure of living, and driving during the massive energy price bubble of the mid 1970s - mid 1980s. Unfortunately for the Europeans, they still live in 1980 with energy prices at catastrophically high levels. One other point, I am constantly bombarded with articles showing that Americans wages have not risen particularly rapidly over the past many decades. But wages need not rise for living standards to increase where the cost of products and services declines. And in America the price of nearly all products has, and continues to decline, and they declined dramatically over the past many decades. We are incredibly wealthy, we just are unwilling to admit it.
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Olivier Blanchard eyes ugly 'end game' for Japan on debt spiral
. . . how the hell does a country decide to allow the debt level to reach 250% of GDP? "Japan is heading for a full-blown solvency crisis as the country runs out of local investors and may ultimately be forced to inflate away its debt in a desperate end-game, one of the world’s most influential economists has warned. Olivier Blanchard, former chief economist at the International Monetary Fund, said zero interest rates have disguised the underlying danger posed by Japan’s public debt, likely to reach 250pc of GDP this year and spiraling upwards on an unsustainable trajectory." I can still remember back in the 1980s when Japan was going to take over the world, and the value of land in Tokyo was higher than all the land in the US. Needless to say, that little bubble popped. Soon after, Japan slid into its old age, with its economy barely able to get up to use the toilet. The article starts out focused and worried about Japan, but quickly turns its attention to Europe, as it should. I keep asking myself, who would lend money to the Japanese? Only younger Japanese. Demographically, Japan is dying. There are too many old, too few young, and the workforce is contracting. They will need to achieve near perfect robotization to fill their factory floors, take care of the old, keep the water, and sewers running, and babysit the vanishingly few children. How long before all that is left is an island of robots? Well, we know when Japan has reached that point when the robots are making 2nd generation sex robots to satisfy the 1st generation sex robots. Europe is hot on Japan's heels with bad demographics, an impossibly weak economy, and a large number of nations which appear to be in permanent economic depression. The solution to these problems is not particularly difficult, but requires tax reform, work rule reforms, wage reforms, union reforms, political reforms, welfare reforms and there is less than zero interest in any of this. The Germanic north, and Scandinavia seem to be willing to make serious reforms, and when implemented, the reforms, work well. They might be slow in implementing these changes, but they happen. The south is unwilling to even contemplate real change. Eventually the article glances off the whole Brexit problem, but answers no questions. Britain is faced with this question, should it stay in the Eurozone, build its relations there becoming a full member? Or should Britain leave the Eurozone and build relations elsewhere? The above analysis seems compelling. Europe is mostly a disaster sliding into economic catastrophe. Why would Britain agree to that? Belgium, France, Portugal, Spain, Italy, Greece, and more are in dire shape, with debt averaging well above 100% of GDP. All claim to be following the rules, but still debt seems to increase endlessly. These countries are in what amounts to a permanent depression. Exactly what does Britain stand to gain from these relationships? Debt? Obligations? Perhaps it is time to look elsewhere. Perhaps the NAFTA could provide some direction. Britain could turn away from Europe, and turn to its former colonies, like Canada, and even America. It could form, or join existing trade agreements between these nations. The nations involved in NAFTA have far more economic potential than do the European countries. These are mostly active and healthy economies. It will be interesting to see what Britain does. I await the referendum. Kyle Bass Blog |
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