Cook County is destroying wealth one tax increase at a time
Chicago, Cook County, and Illinois more generally are bankrupt. The progressives who run these governments have run them into the ground.
As Japan's population shrinks, bears and boars roam where schools and shrines once thrived
The Japanese prior to surrender in 1945 were the vilest culture to disgrace the planet, perhaps this is the kismet coming home. Fortunately they are building robots, and soon there will be so few Japanese we will think them an island of robots.
Will Japan Survive Its Great Big Debt Disaster?
The plan seems to be to build up a huge debt, die out as a people, and leave the debt for the robots to repay. How Japanese is that!?!
Putin’s Russia is a poor, drunk soccer hooligan - The Boston Globe
"Russia is not the country you think it is. Its economy is smaller than South Korea’s. Its people are poorer than Kazakhstan’s. It trails Finland in technology. And it has a smaller military budget than Saudi Arabia."
More after the break.
These 6 charts explain the world's looming demographic crisis
. . . absent war, or other mass disaster.
The article is quite good although uneven. Demographics is the culmination of society's economic negotiation with itself over a significant period of time. The idea that this negotiation will change on a dime is faulty. Outside of a serious calamity, like plague, government force, or war, demographics continue to march along according to the framework of the negotiation. The primary drivers are wealth, and security.
This is where the article becomes uneven, because the first chart is a doozy. It assumes the world's population could reach 14 billion. The idea that the world's population could reach 14 billion by 2100 can only be explained by the fact that it is a UN estimate, and the UN is pretty much wrong about everything, all the time. Best just consider anything the UN has to say as fiction.
Hans Rosling has much to say about this over at TED.com
More after the fold!
Notice in the Rosling TED talk that the world works in a very specific way. Poor countries have large families, and short lives, rich counties have small families and long lives. But then notice China which after Mao takes control goes all wonky now and again. This is because absolute government control can override the societal demographic negotiation. The threat of death has a way of overpowering even rational thought.
Expect the actual to be between the Green line and Yellow line.
The second chart discusses population growth. This chart is of limited value because it does not show the population growth over time, for this you need to go back to the Rosling video, which clearly and unequivocally shows that rate of population growth over time is declining. The areas where population is growing are primarily found in Central Africa, the Middle and Near East, and then sporadicly throughout the rest of the world. This group is declining over time, and there is no reason to believe this will change. There is good reason to believe the population decline will accelerate.
Expect world population growth to continue to shrink.
This chart shows lifespans growing pretty much everywhere. To the extent that population grows, this is the actual reason, we are living longer, pretty much everywhere.
Expect this trend to continue.
Which asked, who will support the children and elderly? Based on the most demographically "advanced" countries like Japan, Italy, Russia, parts of Easter Europe, and China, the children will not be a problem, they will be an infinitesimally small part of the population. The old are the problem. Japan is leading the way here, and they are beginning to build robots to help the old stay active longer, and ultimately to care for the old. This seems like an odd model. How long before Japan becomes nothing but an island chain filled with robots which attempt to provide products for the rest of the world? We might need to start a dead pool!
This chart gets it wrong, China will not be hit first. Japan, Russia, some of Eastern Europe, Italy, and a number of other countries are already or very near actually declining population, not just the growth rate. China's demographic demise is still years away. The problem for China is, however, that it is not yet wealthy, like Japan, and Italy, and how a low-moderate income country like Russia, or China will deal with this economic issue is unclear. China is already addressing the issue with robotization, but this will surely cannibalize its workforce which will create welfare problems. I see serious self-inflicted damage for China.
This final chart shows working age populations in the US, Ireland, Japan, Spain, and China. Don't be too concerned with the US line which rises from 1970 to 2005-2010 then begins to fall. This is the Boomer, and Millennial generations temporarily inflating the working age population. I do not know how much this kind of effect is being shown in the other graph lines. The US has been at replacement rate until the recent recession. We maintain this rate through births and immigration.
We are at a place where the real problem in the world is unchecked population decline, yet I still hear some complaining about overpopulation. We will need to take a more proactive stand on preventing damaging population decline. As it sits, much of the world appears willing to embrace this destructive shift.
Unchecked population decline would be far worse than population growth.
I hope you found this interesting.
"A Total Game Changer" - From Over-Population To De-Population
The problem is too many old people, and not enough young, in the progressive system which is dependent upon a large and increasing young population to pay for the oldsters.
The progressive system became a Ponzi during the 1980s in Japan, the 1990s for Germany, and most of Europe, including East Europe, and Russia, soon in the US, and within the next few decades in China.
An economic and financial system premised on perpetual growth was bound to run into trouble (what do you do when you have taken a wrong turn?...apparently just keep going!). The inevitable deceleration of population growth was the trigger that turned central bankers into pushers offering ever cheaper credit. The lower rates drove unsustainable rates of consumption absent even further rate cuts and likewise drove overcapacity which likewise needed even lower rates. But negative rates of NIRP are simply no longer under the heading of capitalism (a market that doesn't value capital likely isn't capitalism?!?). When we've clearly changed "ism's"...we've crossed the Rubicon.
What happens as population growth turns to population decline is honestly and literally a complete and total game changer. A flat to declining number of buyers and consumers opposite ramping elderly sellers plus their unfunded liabilities is a problem with no happy resolutions. Currencies (what will constitute "money"), "free-markets", and perhaps the basis of civilization hang in the balance of the transition from high population growth to potential outright depopulation.
I believe this is the correct lens through which to view and understand why growth is perpetually weakening, why commodity overcapacity and slowing demand will only accelerate, why the Treasury market continues to see "buying" despite the near total absence of buyers (Treasury Mystery), why equities are a "buy" (but for all the wrong reasons), and why precious metal valuations are so extremely suspect in the face of a monetary onslaught. "
We need a new model which will allow us to find a new way forward economically based on these changes. The ownership economy, and the Third Way offer some good ideas, as does the economic reformation going on in both Sweden, and Germany. All of our socio-economic systems are poorly designed for the problems we face today, welfare is a disaster tying the poor to poverty, Social Security, Medicare, and the other oldster safety net no longer is functional, due to the massive cost overhang. All of these and our tax code must be reformed to meet our needs going forwards, this will require a new socio-economic model.
The essential elements of this are republican governance, free markets, reformed religions, limited government power, and personal ownership of assets. What this will look like precisely is anyones guess.
Coastal California Getting Older, Not Bolder | Newgeography.com
. . . is this end stage terminal demographic decline?
"For the better part of a century, Southern California has been seen as the land of surfers, hipsters and youthful innovators. Yet the land of sun and sea is becoming, like its East Coast counterpart Florida, increasingly geriatric."
But this is happening throughout the country, we are an aging nation, still vital, but on average older.
"At the same time, our analysis shows that some areas – notably along the Orange County coast – are rapidly becoming virtual retirement communities, with a diminishing number of children and young families. For those sitting in their houses in affluenza-afflicted enclaves of Southern California, this may seem good news: “aging in place” while their homes increase in value. But this trend is less a boon for younger people, particularly families, as well as for companies seeking to launch and expand here."
So, the kids are leaving, moving to more prosperous pastures, likely to Texas, and the SunBelt, anywhere but California, and the West, where housing is unaffordable.
MILLENNIALS are having a tough time economically here is Portlandia . . .
What are the chances they will ever move back? With home prices resting in the $7500,000 to 2.5 million per house? Probably never. Who would want to move from Tennessee, with reasonable house prices for a nice spacious home on an acre or more for a small house on 7,000 sq. ft. lot, for thrice the price?
These oldsters love that the home prices are high, and apparently do not fear that the kids are leaving. Who will buy these homes? More old people? How many uber rich are there, and how many of them will be willing to move and spend a million or so on a home? Perhaps this will become an enclave of oldsters, with the young old buying from the old old. And perhaps this will become Detroit.
. . . you to believe.
"Some economists now see first-quarter growth as negligible, and it could easily turn out to be negative.
Economists shaved already weak growth forecasts by a few more tenths Friday, after wholesale inventories fell 0.5 percent month over month in February, much more than the anticipated 0.1 percent decline. January was also revised down by 0.4 percent."
We have discussed this here, often. The US economy is very weak, the world economy is even weaker, with parts in a recession, and other parts in a long term depression.
The southern European countries are in what must be described as a depression with incredibly high unemployment, especially under 35 unemployment.
Northern Europe is stronger but still it looks more like America today, with a slow, tired economy looking for a nap. Don't look here for world economic salvation.
China is impossible to parse, since all its data is suspect. Secondary sources are difficult, and so the Chinese economy is unclear. What is clear is China has a massive debt problem, and is hemorrhaging money. Expect the negatives to continue in China, and the positives to be mostly made of whole cloth.
Again, Russia and the rest of the BRICS are in very bad shape, with Brazil leading the pack. I expect no salvation from this quarter.
Japan is in demographic decline, and is midst attempting the difficult maneuver of destroying its money without destroying the country. This is a great place to be short. You go girls.
The oil patch, whether they have healthy multifaceted economies like Norway, or they are mono oil economies like Saudi Arabia, are all in pretty bad shape. All of these countries have begun to rely more heavily over the past decade on their oil incomes to provide for government revenue. This is a very bad idea as when the oil price drops, so do government revenues, and the commonly associated welfare perks that go with it.
The Middle/Near East is doing what it always does, playing a tawdry low budget game of thrones. Expect the Islamic Reformation to continue which means wars, proxy wars, and rumors of wars. All of this will dampen growth and turn profits into munitions, which will then be expended. This will once again prove Bastiat correct, breaking things does not grow an economy, it shrinks it.
Africa is poor, and will remain so, although it is rapidly improving its economic position, because it has so far to go we will simply see it as poor. Africa is actually one of the bright spots in the world economy. If they can just put together the whole rule of law thing, they are ready to power out of poverty.
Hans Rosling has a number of talks up over at TED, they are all well worth you time. He is a European democratic socialist, what we here call a progressive, and he is in the tank for wackadoo climate alarmism, but beyond that, he has an excellent grasp of world demographics, and tells a story well, especially one about his grandmother and a washing machine. Plus, he really does have great visuals.
Hans Rosling's TED talks
As you can see, if the US drops into a recession it seems the world will just slowly slump into a recession. I would suggest it will be a European style recession of exhaustion, not a US style recession triggered when mature reason finally catches irrational exuberance.
Yellen and the Fed are clueless about all this, luckily they are manning the levers of monetary policy. Sigh!
Rising Threats: Shrinking Military
. . . a man incapable of building a high quality staff to help him run his administration.
The quality of a President's staff is critically important to his decision making. President Obama had a staff of such low quality it resulted in the shocking chaos we see in the world today.
For example, President Obama's feckless policy in Libya has resulted in the metastization of militant radical islam through out much of northern, and central Africa. The Middle East, and the Near East are in incredible turmoil.
Military spending is increasing, a sure sign of the breakdown of the Pax Americana which has successfully maintained a more peaceful world since 1945.
The Global Vote of No Confidence in Pax Americana
"What’s forgotten among all the grousing by President Obama and Donald Trump about ‘free riding’ allies is this basic fact of international life: the Pax Americana was intended to suppress global geopolitical and military competition by providing a framework for international security. That benefitted the world by making countries safer at a lower cost and by assuring people that their national defense and access to world trade and markets did not require them to build huge military establishments."
No one is willing to rely on the assurance that America will provide a framework of international security.
While Walter Russell Mead is correct that the kvetching about free riders is over the top, it is also true that Americans are becoming tired of continually saving the world at our own cost, having the rest of the world plow their peace dividend (the money they didn't have to spend to achieve peace) into social programs, and then lecture us about how we need to toe the social welfare line. We paid billions to rebuild those countries after WWII, we paid billions more to protect them, since 1945. We created the Pax Americana, a massive and costly effort to keep the world but especially the Europeans, and Asians from murdering tens of millions more of their own. And what do we get?
Pissing and moaning like adult children still living in their parents basement. They are so militarily incompetent, they cannot project power from Europe to Europe (the Balkans in the 1990s), or Libya, or Syria. Such efforts require a force mostly comprised of the US. They free ride on medical treatments, procedural advancements, new devices, and pharmaceuticals. In addition, they have created societies so uninteresting and lackluster, no one within them wants to have babies. They simply want to consume whatever they can before they die. If Europe wants to slowly die through demographic suicide, I am not sure I am concerned about their forward security.
The President could prod these countries for changes which would likely reinvigorate them, but he will not. He is an inexperienced fool who does not understand the responsibility inherent in the office.
His policies reflect this, and these interviews with his former Secretaries of Defense confirm it. These interviews are deeply shocking. They reveal a man who would be at home in a pot fueled freshman bull session, but completely adrift in the real world, and even worse in the presidency.
I am nonplussed.
Making Work Work in the 21st Century
"These new forms of work are going to continue to expand, and under the right conditions they can mean more flexibility for both workers/contractors and the businesses that bring them on. But we still have a system of benefits and regulation based on the old model—the paternalistic corporation. Benefits ranging from health insurance to retirement savings to unemployment and disability have yet to be established in a sustainable way for this new class of workers. There’s an opening here to create a new kind of financial services firm that can process payments and manage benefits for contractors and businesses in the gig economy, but this will be difficult to accomplish without changes to state and federal employment law."
The fault line breaks between the Millennials and the Boomers. Ask a Boomer and he will tell you how everyone wants to work an 8-5 job 40 hours per week. Ask a Millennial and she will tell you she wants more flexibility, not a rigid 8-5 routine, but hours which suit her schedule, and days too, and she might not want to work the full 2,000 hours per year. Instead she might want to spend 6 weeks in Europe.
"Over time, more and more Americans will likely operate in the gig economy, mixing part time and temporary employment with independent contractor jobs. People who work in this world should not be second class citizens, and they should not be inundated with the crazed paperwork requirements of an employment system that is oriented to old-fashioned long-term employment. Taxes need to be collected, retirement savings need to be accumulated, and people have to be included in disability, healthcare, and unemployment insurance programs, some of which will need to be redesigned to accommodate job-hopping and gig work. And that structure needs to be flexible and cost effective enough to make it easier for businesses to create jobs and for people to piece together a living from several different activities."
The big change here is the need to apply creative destruction to the entire employment safety net. The Boomers will be shocked by this, but the Millennials will understand the need, and with a small amount of prompting will be willing to indulge these ideas.
These changes do not need to alter the outcomes for people still in the old programs, although it would be appropriate to offer them buyouts to move to the new replacement programs, which will be, without doubt, better.
Many of these changes will likely create strong pressure to eliminate the income, corporate, estate/gift, and payroll taxes, and convert them into some sort of consumption/sales tax. This would be a positive outcome. On the safety net side, the individual should be able to own, and control his own safety net assets, although among the poorer we will likely need to continue some sort of government assistance. The Third Way offers some answers to these issues, and I am sure we will find new arrangements once we begin to discuss these issues more deeply.
"All this is part of one of the most important and complicated tasks our society faces: creating an institutional and legal framework for an information economy that will be as different from the industrial economy as that economy was from the agricultural economy that came before it. At the moment, both political parties seem more interested in peddling competing brands of nostalgia than in promoting a workable vision for the post-industrial economy in which millions of Americans already live and work."
Yes, and failure means something more like this, Japan’s elderly turn to life of crime to ease cost of living - FT.com
Japan has a debt of approximately 240% of GDP. What they spent that money on is unclear, but it is clear it was not on retirement funding for the elderly.
"Japan’s prison system is being driven to budgetary crisis by demographics, a welfare shortfall and a new, pernicious breed of villain: the recidivist retiree. And the silver-haired crooks, say academics, are desperate to be behind bars.
Crime figures show that about 35 per cent of shoplifting offences are committed by people over 60. Within that age bracket, 40 per cent of repeat offenders have committed the same crime more than six times.
There is good reason, concludes a report, to suspect that the shoplifting crime wave in particular represents an attempt by those convicted to end up in prison — an institution that offers free food, accommodation and healthcare."
Yikes, Japan's oldsters are breaking into prison?!
"The mathematics of recidivism are gloomily compelling for the would-be convict. Even with a frugal diet and dirt-cheap accommodation, a single Japanese retiree with minimal savings has living costs more than 25 per cent higher than the meagre basic state pension of Y780,000 ($6,900) a year, according to a study on the economics of elderly crime by Michael Newman of Tokyo-based research house Custom Products Research."
The solution for a fiscally healthy society would be to calculate the real cost of living for these retirees, and then provide financial assistance to alleviate this poverty problem. Prison is a very expensive alternative. But Japan is not a healthy society. It is a society with the worlds largest government debt, and an unbalanced budget which requires the government to borrow more each year. There is simply no more money for such trivialities as old age welfare pensions. Or something.
To avoid a similar outcome the US needs to rethink our welfare state, reform our welfare state, and build something better. The progressives on both sides of the political isle will fight this tooth and nail!
Mish has a nice piece on the gig economy . . .