Fareed Zakaria GPS – CNN 02-15-15

Salient to Investors:

Fareed Zakaria said:

  • The IEA said Russia faces a perfect storm of collapsing oil prices, international sanctions and currency depreciation.
  • The IMF predicts the Russian economy will contract by 3% in 2015.
  • Putin does not respond to higher costs in a rational calculating manner.
  • Military aid to Ukraine would stoke Russian nationalism, and the loss of men and money in a military operation will not deter it. No one believes that Ukraine can win a military contest with Russia. The consensus believes the only possible strategy is to raise costs for Russia.
  • Paul Krugman at the New York Times says Greece is only asking for what the Germans asked for in the 1950s.
  • Within 5 to 7 years, 800 million Indians will be connected to the Internet, versus 100 million today.
  • Steve Ratner said most southern European economies are fundamentally uncompetitive – there are 2,700 pages of labor laws in Italy.
  • Within 5 to 7 years, 800 million Indians will be connected to the Internet, versus 100 million today.

Bill Browder at Hermitage Capital Mgmt said:

  • The Russian oligarchs and government officials were stealing all the profits out of the companies he invested in.
  • Putin arrested the richest oligarch and told the others that if they did not want to be arrested they needed to share their money with him. Putin is the biggest oligarch and the richest man in the world, worth $200 billion in property, Swiss bank accounts, shares, and hedge funds.
  • In Russia, whoever has the power to arrest people is the person in power.
  • The one thing in Washington that everybody could agree on was that these Russians were bad.
  • While in power Putin will run Russia into the ground and cause the West many problems.

Zanny Minton Beddoes at The Economist said:

  • The Greek crisis will go down to the wire. The limited solution is relatively simple and that is more reform in return for debt relief. Greece cannot possibly repay its debt. Germany is wrong in demanding austerity and refusing to think about the debt.
  • The Greek economy has bottomed and is beginning to grow, but just as it appears they have got through the worst, they are throwing baby out with the bath water.
  • It is not clear that there would be massive contagion if Greece left the EU.
  • We will get the typical European solution which is akin to kicking fudge, but the odds of an accident this time are the highest in a long time.

Gillian Tett at Financial Times said:

  • Greece is only asking for what the Germans asked for in the 1950s and which has enjoyed a lot of debt relief in the last century.
  • The question is this Europe’s Lehman Brothers moment or will we see a chain reaction that could be extremely bad for the economy? The chance of an accident is rising.

Rana Foroohar at Time Magazine said:

  • Germany has benefited more than any other country from being in the euro zone, and will benefit from ECB QE because that will make the euro more competitive in the international market. Eventually the Germans will blink but expect much pain along the way and the problem not being fixed this time around.
  • Germany has done enough to create a consumption economy and bolster wages.
  • The political solution in Europe is a United States of Europe with real fiscal integration and more power in Brussels with Berlin holding the purse strings.
  • The periphery European economy needs to have a comfort zone in which they can reform.

Freedom House said:

  • Democracy has been declining for 9 straight years and is under greater threat than at any time in the last 25 years
  • 40% of the world’s population is free, 24% is partly free, and 36% is not free. In 2014, 61 countries saw their freedom deteriorate from 2013, versus 33 countries that saw freedom improve. The Middle East and North Africa are the least free.
  • Autocrats are no longer paying as much lip service to democracy and are returning to old 20th century modes of oppression: e.g. Russia’s invasion of Crimea, while China is detaining activists under stricter conditions than just house arrests and televising people’s confessions, and Egypt sentenced hundreds of political prisoners to be executed in sham trials.
  • Azerbaijan, Vietnam and Ethiopia do not receive the full ire of the free world despite their oppression.

Bill Gates said:

  • We are innovating at a wonderful speed and we will be reducing inequity for the basics faster than ever before.
  • Economists have always had a hard time with innovation because it is exogenous.
  • China’s growth is lower than it was but is still at a level that the US and the world would love to have.
  • Improving economic fundamentals will accelerate in the next 15 years.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript

at http://transcripts.cnn.com/TRANSCRIPTS/1502/15/fzgps.01.html

Weil’s View on Finance, Afternoon Edition – Bloomberg 08-30-13

Salient to Investors:

Steve Hanke at Johns Hopkins University said inflation is always and everywhere a monetary phenomenon, but hyperinflation is always and everywhere a political phenomenon.

Ricardo Hausmann at Harvard says the Fed’s planned tapering is not the only reason why emerging-market stocks and bonds are down. Hausmann said for most emerging markets, economic growth from 2003 to 2011 was caused by terms-of-trade improvements, capital inflows, and real appreciation, and these mean-reverting processes are reverting and the buoyant performance of the recent past is unlikely to return any time soon.

Gillian Tett at the Financial Times said most hedge fund leaders have done a dismal job of orderly succession.

Yves Mersch at ECB said investor confidence has been damaged by the perception that some supervisors have not been tough enough with their domestic banks. Mersch said the average price-to-book ratio of large and complex banking groups in the euro area is only 0.5, which implies that investors think banks are overvaluing their assets, will not meet their required rates of return, or will require new capital.

Read the full article at  http://www.bloomberg.com/news/2013-08-30/weil-s-view-on-finance-afternoon-edition.html

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Fareed Zakaria GPS – CNN 05-05-13

Salient to Investors:

Fareed Zakaria said:

  • A recent Pew survey found that only 51 percent of Americans think it’s essential to act on immigration reform this year, versus 70 percent who demand a deficit reduction deal this year, despite the wealth of data that shows that immigration reform will lead to deficit reduction.
  • The economy looks good driven by the private sector.
  • People genuinely don’t care where you’re from in America because there’s a sense in which everyone comes from somewhere.

Richard Haas at the Council on Foreign Relations said the US has to:

  • Fix long-term entitlements are the cancer hole hanging over the American body politic.
  • Fix infrastructure: it takes very little money to do it through public-private partnerships. Pass immigration reform; that is the driver of innovation and jobs.
  • Resist the temptation to get pulled into the Middle East.

Joe Klein at Time said our smartest young people should be making things instead of making deals, and American need to understand that investing in our people is investing in our future.

Anne-Marie Slaughter at New America Foundation said the US needs to build an infrastructure of care that guarantees that people can both earn an income and care for their loved ones: with better schools, better health, affordable daycare, paid family leave, flexible arrangements – essentially we leave no one behind.

The Center for American Progress said immigration reform is a very simple way to increase tax revenues, expand GDP and create jobs all at the same time. Legalizing undocumented workers brings them into the formal economy where they have to pay income taxes, Social Security and health care taxes etc and gives them access to many more jobs and at higher wages. The gains to the economy would be:

  • Scenario 1. All of America’s 11 million, undocumented immigrants are immediately granted citizenship then over the next 10 years GDP would expand by an additional $1.4 trillion, 203,000 additional jobs would be generated on average every year, and tax revenues would increase by an additional $184 billion.
  • Scenario 2. Undocumented immigrants are granted legal status and it takes 5 years to become citizens, then GDP gains an additional $1.1 trillion over the 10-year period, jobs and tax revenues increase as well.
  • Scenario 3. Undocumented immigrants are only granted legal status and not citizenship during the ten years, then GDP expands by an additional $832 billion, 121,000 extra jobs on average are added every year, and tax revenues grow by an additional $109 billion.

Douglas Holtz-Eakin said immigration reform could raise the pace of economic growth by nearly one percent in the near-term and increase GDP per capita by $1,500.

Rana Foroohar at Time magazine said:

  • If you strip the public sector out, US growth is 3.1 percent and mostly down to the American consumers, who have done a good job of balancing their budgets, getting out of credit card debt, and are now able to dip a little more into savings.
  • Political gridlock is going to make it hard to come up with the kinds of spending that would actually be useful, like infrastructure and education. The US is the prettiest house on an ugly block.
  • After the German election, there will be an increasing realization that Germany has as much to lose if not more than any other European country if there is a fracture in the Euro zone – a lot of their trading partners are in the Euro zone.
  • American manufacturing is back though the jobs have not returned in mass yet because of the big, complex supply chains in places like India and China. Many CEOs are complaining about how risky these supply chains are now. Companies have lost billions in recent years in reputation, and coupled with rising energy prices, it has become more cost-effective to bring production closer to home, helped by the need for quick, customized products.

Gillian Tett at The Financial Times said:

  • Consumers have managed to adjust to the new normal, with credit card debt down to a 10-yr low.
  • Ireland, Greece, Italy and Portugal are absolutely fed up at being told by the Germans and the IMF that they need more austerity. An entire generation is essentially being thrown into the garbage can and the problem is they are not spending, not stimulating the economy.
  • Bangladesh’s fire, social media, demonstrates how quickly consumers can turn on a dime and cause serious brand damage very quickly. American wages are becoming more competitive on global standard, while the cost of moving things around the world is high, so we could see more localization.

Salman Rushdie said many immigrants to England came from very poor agrarian communities, not from the urban middle class, and were much more traumatized in Western industrial urbanized culture; while immigrants to the US are more middle class and therefore more easily adjustable to urban life in America.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1305/05/fzgps.01.html