Monday, January 31, 2011

Mazi's Link O' the Day

The Epicruean Dealmaker's thoughts on the conflicts in Egypt:

http://epicureandealmaker.blogspot.com/2011/01/terrible-beauty-is-born.html

Sunday, January 30, 2011

Mazi's Link O' the Day

The effects of China's imports and exports on employment around the world:

http://www.economist.com/blogs/freeexchange/2011/01/economic_statistics

Saturday, January 29, 2011

Thursday, January 27, 2011

Contagion in the Middle East

With the protests in Egypt reaching more violent levels (three protesters have been killed), and the revolt that took place in Tunisia already, the possibility of further outbreaks are imminent. Already Yemen has seen taking to the streets, like the Egyptians.

Already the EGYPT index has plunged, in the last five days, from around $19 to $16.50. The Yemeni riyal has depreciated to 213 riyal to the dollar. These figures shouldn't be surprising, but we might want to take look at other countries in the region as well. If violence spreads, as it appears to be, we will have to look at the violence from two, opposing, economic points of view.

Firstly, we have the somewhat more obvious issue of civil war. Countries' economies, expectedly, tend to suffer during times of internal strife. For areas like Africa or the Middle East, places which are not particularly attractive to investors to begin with, these spurts of regional conflict could send the few, brave foreign investors fleeing to the hills. Markets in those countries will plunge, and we will most likely see some rapid depreciation. But what about the aftermath of conflict?

Here is my second view, and it is of a notably more positive bent. Assuming that these countries don't entirely collapse in on themselves, they will emerge with some form of (hopefully) functioning government. Now, there will be much rebuilding to be done, however, their economic outlook may not be as dour as it might appear. Large oil exporters would probably like their currencies to depreciate a little bit, though probably by different means than violence. When there currencies depreciate, their good become cheaper to foreigners, and their exports become more attractive. I'm guessing that for exporting economies (which many oil countries are), recovery from war is less painful than for those with trade deficits. There is of course the political bonus from a resolved conflict. Namely, dictators may be overthrown (always good), and if the new governments that emerge are truly stable, all those investors that stayed away might take a peek inside.

Let's hope these conflicts end sooner than later, and the recovery after may be a pretty profitable one.

Mazi's Link O' the Day

The gold standard explained:

http://www.forbes.com/2011/01/26/gold-dollar-bretton-woods-opinions-contributors-nathan-lewis.html

Tuesday, January 25, 2011

Saturday, January 22, 2011

Mazi's Link O' the Day

It seems China is more successful implementing America's capitalism than America is:

http://www.time.com/time/world/article/0,8599,2043235,00.html

Friday, January 21, 2011

Mazi's Link O' the Day

More Epicurean Dealmaker (he's been posting a lot these days). This time he offers his comparisons between lawyers and bankers (this is in response to a Wall Street Journal article):

http://epicureandealmaker.blogspot.com/2011/01/good-start.html

Wednesday, January 19, 2011

Tuesday, January 18, 2011

Monday, January 17, 2011

Mazi's Link O' the Day

The Epicurean Dealmaker writes again, this time in defense of the much maligned investment banking industry:

http://epicureandealmaker.blogspot.com/2011/01/some-people-never-learn.html

Sunday, January 16, 2011

Hahahaha

My winter break is almost at an end (tomorrow, precisely), and there's a great deal of playoff football to be watched today. So between these two dissimilar thoughts, my mind is quite cluttered. Therefore, instead of a thought-out, insightful post, I present to you, a joke:


A mathematician, an accountant and an economist apply for the same job.

The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."

Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."

Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, "What do you want it to equal"?

Thursday, January 13, 2011

Mazi's Link O' the Day

Here's an article explaining why raising the debt ceiling doesn't necessarily guarantee not defaulting. Interesting point: it appears the federal government has not set policy on what order it must meet its outstanding debt payments (i.e.- interest or non-interest outlays first):

http://www.economist.com/blogs/freeexchange/2011/01/americas_debt

Tuesday, January 11, 2011


With the stock market closing up 2010 with a nice rally, relative recovery is overshadowed by concerns of where the most money will be made in 2011. Could emerging markets be the answer?

Many investors are wary of the potential bubbles which could be forming, such as that of the Chinese housing market (most notably James Cannos of Kynikos Asosciates, a short only fund), but others are confident that the Chinese government having proved itself before will be able to contain the problem.

Those who argue for the potential of Asian markets look not to the economic activity and relative stability already in place but the excess of saving in China. With worries of inflation aside and taking into account rising wages it seems that the only missing part to the equation would be the same consumerism spirit which plagues other areas of the world. As soon the the Chinese learn to break the piggy bank and start spending we can expect corporate earnings to rise, making a nice profit for investors. If only we could some how introduce the magic bullet and snuggies to the Asian market. Could a Chinese TV Shop be the answer?

Mazi's Link O' the Day

This Canadian blog is quickly becoming one of my favorites. Let's talk about the cost of reducing murders, rapes, suicides, and other undesirable occurrences:

http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/01/how-much-would-you-be-willing-to-pay-to-reduce-murders-by-30.html

Monday, January 10, 2011

I Hate to Be the Bearer of Bad News, But...

... In light of the boom in equities in the latter part of 2010 and the successful holiday season for retailers, I feel I ought to offer some observations on the economy's position. For starters, the Federal Reserve will continue with its purchases of long-term debt in hopes of stimulating the economy further. Vice Chair of the Board of Governors, Janet Yellen, recently stated that she expected QE2 to create around 700,000 jobs for the economy, which would be peachy, obviously. Bernanke, while not offering completely opposing comments, had a more sobering view of the future. In front of the Senate Budget Committee he said that unemployment will probably be around 8% in two years. The "natural rate of unemployment," a term economists use to describe the rate that would exist if the economy were running at full capacity, is around 5.5%. So, in two years, we're still a ways off from where we want to be. Also, keep in mind that where we were just before the crash and crisis, was unrealistic. Don't expect housing prices to reach those levels for a long time, nor will unemployment, for that matter.

An article in the telegraph inspired me to take a look at the performances of some retail stocks. Why? Well, it would seem that while luxury goods have been doing exceptionally well this year, their success has drowned out some of the bad news coming from middle and low income retailers. Numbers? Here's but a sampling:

Louis Vuitton up 46.1% last year
Coach up 38%

On the other hand:

Best Buy down 9.8%
Walmart down 1.7%

What am I getting at here? The ever-present shadow of income inequality hangs over our recovery, and perhaps we should invent a new term: recovery inequality. While housing is still languishing, Wall Street seems to be doing well. That might irk some people, but objectively speaking, it's better to have Wall Street doing good business than not, so we'll chalk that up as a good thing. With GM's IPO behind us and already up 15%, and Ford succeeding despite not receiving a bail-out, perhaps a return to greatness for the American automaker is under way. Well.... that might be a bit optimistic, but let's hope that industry is on the way up and that the REST of retail catches up with the higher priced boutiques.

Mazi's Link O' the Day

Here's a nice article that harkens back to microeconomics class. We're talking about externalities here. Namely, we're talking about green energy and how to encourage firms to abandon their carbon-emitting ways:

http://www.economist.com/blogs/freeexchange/2011/01/climate_policy

Friday, January 7, 2011

Mazi's Link O' the Day

Austerity may seem like a novel concept to the younger generations, but it is a tried and true rule to live by for our elder citizen:

http://online.wsj.com/article/SB10001424052970203731004576046281081262112.html?mod=WSJ_Opinion_LEADTop

Thursday, January 6, 2011

Mazi's Link O' the Day

Corporate Social Responsibility, or CSR, is often discussed in an economic context, as is business ethics. Of course, we've all heard about the "unethical nature" of Wall Street. But what about the ethics of economists, in the purest sense of the term (think graduate degree in economics, not just business or finance)?

http://www.economist.com/blogs/freeexchange/2011/01/economics_1

Wednesday, January 5, 2011

Mazi's Link O' the Day

People respond to incentives. That's one of your first lessons in any introductory economics class. Well, here's a real life example of that. You impose a tax on paper bags, and people start to use reusable ones:

http://www.taxfoundation.org/blog/show/26946.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+TaxPolicyBlog+(Tax+Foundation+-+Tax+Foundation's+%22Tax+Policy+Blog%22)

Monday, January 3, 2011

Mazi's Link O' the Day

Well of course I'm going to include The Epicurean Dealmaker's "greatest hits" of 2010:

http://epicureandealmaker.blogspot.com/2010/12/teds-greatest-hits-of-2010.html

Communist Government or not, everyone loves a fat dividend...



Economic growth has been puttering along nicely in the Asian giant. Ok, so recent worries about the rising food prices have forced authorities to once again raise interest rates in an attempt to put a damper on inflation, but there's no reason why the government shouldn't reward itself for a good 2010 by taking a nice dividend out of its state-owned companies right?

The government's largest enterprises are all under consideration for dividend raises, which like most private companies are set to be paid out in Q2. State-owned energy, tobacco, telecom, and industrial giants are all looking at increasing the portion of bottom line profits paid to back to initial investor big-brother by 5% (the State-Owned Assets Supervision and Administration Commission expects that combined profits will exceed 1 trillion chinese Yuan).

While this action will reduce the amount that the enterprises will be allowed to reinvest in their businesses, the Chinese government highlights the need to help fund lagging state operations in education, healthcare, and social services.

Stateside: Wouldn't it be nice if we ask Phillip-Morris to help out with the budget deficit?


Sunday, January 2, 2011

Mazi's Link O' the Day

More reasons not to expect a housing crash that will bring down the larger economy with it:

http://www.economist.com/blogs/freeexchange/2010/12/housing_markets_0

Saturday, January 1, 2011

Mazi's Link O' the Day

There's been a lot of chatter recently about the stagnating effects housing prices could have on the recovery. Well, here's a link that tells you NOT to worry, even if some sources say otherwise.

http://mjperry.blogspot.com/2011/01/house-price-indexes-case-shiller-vs.html