Fareed Zakaria GPS – CNN 08-09-15

Salient to Investors:

Fareed Zakaria said:

  • Obama is an optimist about the world and America’s place in it – historically, optimists have tended to be right.
  • Iran’s Gulf enemies outspend it militarily by 8 to 1, America by 40 to 1. Iran is being forced to fight on two fronts to preserve its security – not a sign of strength.
  • The US has made many mistakes when it acted out of fear, but when it has patiently organized allies, negotiated agreements with adversaries, built its internal strength, it has prevailed in the end. The US has outlasted monarchy, fascism, revolution and communism, and will outlast radical Islam andcope with Iran.
  • The UN the global population will increase 2.4 billion to 9.7 billion by 2050. Before then India’s population will surpass China. By 2050, Nigeria will be the world’s third most populous country, and its 9th largest economy in the world by 2050 , up from 20th in 2014, according to PWC.

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

at http://transcripts.cnn.com/TRANSCRIPTS/1508/09/fzgps.01.html

Zanny Minton Beddoes – Charlie Rose 02-10-15

Salient to Investors:

Zanny Minton Beddoes at The Economist said:

  • The economy’s fundamental drivers, particularly rapid technological change, means that the rewards disproportionately go to the top.
  • The latest IMF research suggests that you get stronger and more lasting economic growth in societies that are more equal.
  • The last time we had this huge a technological change – the Industrial Revolution – we also had huge changes in public policy.
  • The world has incredibly low interest rates and a big need for more spending on infrastructure so it is a no-brainer to do that.
  • India is the shining example of a country with remarkable economic growth and devotion to classic liberalism and to free markets.
  • A lot of China’s growth came from liberalization but more recently from debt-fueled investment binge. China is naturally slowing because it is richer and aging fast.
  • The US economy has accelerated in the last 6 months. Inequality and an aging population are challenges so rapid growth is going to be lower than it was 30-40 years ago.
  • Europe is still a mess. Japan shot itself in the foot with its consumption tax. The emerging world, including Brazil, is slowing.
  • The difference to the last time the Saudis let oil prices stay down for a while is that this time the shale investment time is much shorter than for traditional oil drilling. The oil market economics has shifted from one of OPEC domination to one that is supply and market driven.
  • Putin’s paranoia is under-appreciated as is the depth of his desire to remain popular.
  • Venezuela is headed for default quite soon.
  • The disproportionate losers from lower oil prices are also the tricky regimes, like Nigeria, Russia, Iran.
  • The short-term risk to the global economy is too much reliance on one engine, the US, an echo of the 1990s. Longer term, the risk is political economy fueled by stagnant living standards for the majority.
  • We are nearer the beginning than the end of this huge technology revolution.

Watch the video at http://www.charlierose.com/watch/60514294

IMF downgrades global growth forecast – BBC News 01-19-15

Salient to Investors:

The IMF said:

  • The global economy will grow 3.5% in 2015 and 3.7% in 2016.
  • The boost from the sharp fall in oil prices will be more than offset by negative factors, including weaker investment.
  • The euro area recovery will continue at only 1.2% growth in 2015 and 1.4% in 2016.
  • China will slow to 6.3% growth in 2016 – versus an average of 10% over the three decades up to 2010 – but an orderly slowdown, though will have important effects in other emerging economies in Asia.
  • Russia will contract by 3% in 2015 and 1% in 2016 due to the fall in oil prices and the crisis in Ukraine and Western sanctions.
  • Nigeria will grow 4.8% in 2015.
  • The US will grow 3.6% in 2015 and 3.3% in 2016.
  • The UK will grow 2.7% in 2015 and 2.4% in 2016.

Olivier Blanchard at IMF said:

  • Deflation in Europe is not the kiss of death and won’t derail the recovery.
  • Many countries have recovered from the global crisis, notably the US, but countries with very high debt will take a very long time to rectify, especially Japan.
  • Things are improving though not as quickly as we would dream.

Read the full article at http://www.bbc.com/news/business-30876954

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Fareed Zakaria GPS – CNN 01-18-15

Salient to Investors:

Fareed Zakaria said:

  • The theory that “we fight them there so we don’t have to fight them here” is still wrong and would commit the US to a fool’s errand for decades. Cherif Kouachi, one of the Paris terrorists, testified that it was American intervention in the Middle East that caused him to become a jihadi. Robert Pape and James Feldman found that the vast majority of the terrorists behind suicide bombings from 1980 to 2009 were acting in response to American intervention and involvement in the Middle East rather than out of a religious or ideological motivation – the two spectacular Western plots after 9/11, the Madrid and London bombings, were specifically inspired by the invasion of Iraq.
  • The chance of a global recession in 2015 is greater than people think.
  • US economic prospects look good – PricewaterhouseCoopers predicts over 3% growth in 2015, the fastest since 2005, led by continuing falls in unemployment.
  • India looks good thanks in part to reform minded Modi and a large population of consumers. PricewaterhouseCoopers predicts a growth rate in 2015 that could rival China.
  • Indonesia looks good and has a large population of consumers.
  • Europe will continue to lag without needed reforms.
  • Japan is still in a bind despite Abenomics.
  • The big oil producers, especially those with large populations like Venezuela, Iran, Nigeria and Russia, will be the big losers.
  • The big wild card is will the price of oil continue to stay low?
  • Twice as many Jews left France for Israel in 2014 than in 2013.

Andrew Bacevich said that before Syria, the US launched interventions in 13 countries in the Islamic world since 1980.

Leon Panetta at the Panetta Institute said:

  • We are entering a more threatening and more dangerous period in the war on terrorism.
  • Paris was a French intelligence failure because they had these individuals on watch lists.
  • Europe is less aggressiveness than the US at going after these individuals when they return.
  • The presidency is not just about policy and substance, but also about the optics of leadership.

Ruchir Sharma at Morgan Stanley said:

  • The world was perilously close to recession in 2014 – only 2.6% growth versus the recession benchmark of under 2% growth.
  • Global recessions happen regularly – in the early 80s, two in the 90s, in the early 2000s, and the one that began in 2007.
  • We are due a global recession. The catalyst could be China, which contributed 38% of global growth in 2014, versus 20% from the US, and 13% from the EU. In 1994, the proportions were 8%, 33% and 26% respectively.
  • Persistent low oil prices can signal weak demand and could be a leading indicator of the next global recession.

Doug Saunders at The Globe and Mail said:

  • Muslim minorities in European countries have grown during the last 20 years to between 1%-5%. In places like France for over 50 years, to almost 8% percent of the population.
  • Muslims could peak around 10% in a couple of countries in Europe within the next 20 or 30 years, so there is no chance of a Muslim population takeover.
  • Immigrants are extremely loyal to the countries they live in and their institutions, even Muslim populations that are not integrating well in terms of their beliefs.  The Pakistanis of northern England have done very poor economically yet are by some measures more loyal to Britain and its institutions, including the military, than the Anglican population of Britain. The percentage of Muslims who value their religion above their country is about the same as for Christians in those countries.
  • Muslim communities in Europe, despite being marginalized economically and educationally, tend to be among the most contented with their lives of any minority group, often more so than the general population.
  • No-go zones are a fiction. I have never seen a prayer mat in any of the hundreds of hotels in Europe that I have stayed at.

Malcolm Gladwell said the cause of the dramatic long time reduction in NYC crime is more complicated than simply an attention to visible signs of disorder: one very successful policy is based on police establishing real ties with their communities, to win the trust of families.

Bernard Harcourt  at Columbia Law School said the huge drop in NYC crime is due to reversion to the mean – what goes up a lot goes down a lot. San Diego had a very different policing approach yet exhibited similar drops in crime rates. Harcourt said Times Square has changed not because of broken windows policing, but because of real estate redevelopment that was planned in the 1970s.

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

at http://transcripts.cnn.com/TRANSCRIPTS/1501/18/fzgps.01.html

A BRICS Bank Needs a Sense of Purpose to Succeed – Bloomberg 08-05-13

Salient to Investors:

Jim O’Neil writes:

In April, the BRICS said they would build their own development bank. Their difficulty in cooperating is simply because they are not very alike.

Brazil, Russia, India and China are the world’s largest emerging economies, while China is bigger than all the others put together – China effectively grows a new India every 2 years, or a new South Africa every few months.

Brazil, India and South Africa are democracies; China and Russia are not. China and India are major commodity importers; Brazil, Russia and South Africa are major commodity exporters.

Russia’s annual per capita income, adjusted for purchasing-power parity, is $24,000 versus $9,000 to $12,000 for Brazil, China and South Africa, and $4,000 for India.

China is the real odd man out, not just because of its size but because it is the only one that so far this decade has met my expectations for growth.

China may see a BRICS bank as a low-risk rehearsal for the role they are fated to play at the IMF and the World Bank, within G-20 and maybe even at the UN.

Nigeria will soon have a bigger economy than South Africa.

Fast-growing emerging economies have rapidly expanding middle classes, who see governments wasting public money on pet projects instead of investment in things that will make them proud and more prosperous, and combat.

Three areas are vital for emerging economies to escape the so-called middle-income traps. Better government not more, education, including at the most basic levels, and access to modern technology.

Read the full article at  http://www.bloomberg.com/news/2013-08-05/a-brics-bank-needs-a-sense-of-purpose-to-succeed.html

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