Global AgeWatch Index: Norway best for older people – BBC News 09-30-14

Salient to Investors:

HelpAge International said:

  • Norway is the best of 96 countries to grow old in, followed by Sweden, Switzerland, Canada and Germany. Afghanistan is the worst.
    Australia, Western Europe and North America rank highly.
  • By 2050, 21% of the global population will be over 60, when 40 of the 96 countries will have 30% of their population aged 60 or over.
  • Mexico, Peru and some other Latin American countries have risen in the rankings.
  • Mexico (30th) ranks ahead of Brazil, Russia, India, China and South Africa.

The tradition of caring for the elderly within extended families is weakening.

The growth of tax-financed, non-contributory “social pensions” is key to helping tackle inequality for seniors.

In Mexico, nearly 9 out of every 10 people aged 65 or older receive a social pension.

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Fareed Zakaria GPS – CNN 09-07-14

Salient to Investors:

Fareed Zakaria said:

  • Islamic terror is not the isolated behavior of a handful of nihilists but a broader culture that has been complicit in it or at least unwilling to combat it.
  • Zawahiri’s effort to recruit Indian Muslims will fail.
  • The Arab world produces fanaticism and jihad because it is a place of complete political stagnation. Islam has become the language of political opposition to Arab dictators and the dynamic between dictators and Jihadists has not broken.
  • Egypt is now a more brutal police state than it was under Mubarak.
  • There is little danger of inflation in the US.

Brett Stephens at the Wall Street Journal said:

  • ISIS is a direct threat to the West and to the United States
  • Putin won’t stop in Ukraine but go on to Kazakhstan, the Baltics, and other parts of the former Soviet Union.
  • The US has walked away from the Budapest Memorandum – which guaranteed Ukraine’s borders – showing that its promises are paper deeds and that other countries should not allow the US to handle their foreign policies.

Peter Beinart at The Atlantic said the US tragically does not have the capacity to make a Ukraine that does not accommodate Russia.

Richard Haass at the Council on Foreign Relations said the world is getting messier and the time has come for the US to increase defense spending and use its energy abundance to strategically take on Russia.

The CBO says:

  • The US is firmly in economic recovery with substantially lower federal deficits, lower interest rates.
  • The federal deficit will be just 2.9% of GDP in 2014, slightly lower than the average deficit over the last 4 decades, and versus 9.8% in 2009.
  • The US will spend $95 billion less on Medicare in 2019 than it had predicted just 4 years ago.
  • The US could stabilize its debt to GDP ratio by finding tax increases or spending cuts equivalent to just 1.2% of GDP.

Paul Krugman said:

  • The debt and budget crisis were imaginary and the new CBO projections prove the debt apocalypse has been called off.
  • The debt-to-GDP ratio will increase after the next decade due to the aging population but health care costs have slowed dramatically.

Peter Bergen at the New America Foundation said al Qaeda is very conscious that they are yesterday’s story, while ISIS offers a much more appealing media strategy and are more successful than al Qaeda has ever been in terms of getting territory, money, fighters, and establishing a large foothold in the Middle East.

The World Economic Forum ranked Switzerland as the most competitive nation for the 6th year in a row, with the US moving up to 3rd place.

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Central Banks Spewing Cash Need to Plan Exit Timing, Rohde Says – Bloomberg 02-28-13

Salient to Investors:

Danish central bank Governor Lars Rohde said world central bankers need to plan for monetary tightening to avoid feeding asset bubbles. Rohde said there is no short-term alternative to global easing, given the state of the real economy.

Jacob Graven at Sydbank A/S said it will be the same pattern as every time cycles shift, but the risk of getting it wrong this time is considerably bigger.

Sweden, Norway and Switzerland are tightening rules on mortgage lending as low rates inflate property prices and credit growth. , S&P said Swedish household debt rose to 173 percent of disposable income in 2012, Norway’s will exceed 200 percent in 2013, while Denmark owns the world record at 322 percent of disposable incomes.

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Swiss Property Bubble Concern Seen Prompting Tightening – Bloomberg 02-14-13

Salient to Investors:

  • Governments from Singapore to Dubai to Hong Kong are moving to cool overheated property markets and avert property bubbles.
  • Switzerland is having its biggest property boom in two decades, with prices pushed higher by the influx of 50,000 people a year. The UBS Swiss Real Estate Bubble Index remained in the risk zone for a second quarter in Q4 2012, with Zurich, Geneva and  Lausanne at most risk of a bubble.
  • Janwillem Acket at Julius Baer said the SNB order to banks to hold additional capital buffers is a warning them that they were overgenerous with their credit lending and to be more restrictive.
  • Alexander Koch de Gooreynd at Knight Frank said even at its current level, the buffers will make mortgages more costly and require higher down-payments, affecting the market below 5 million francs. De Gooreyn predicts home prices will decline 2 to 5 percent over 2013 because there’s not as many international people.
  • Christian Kuendig and Cynthia Chan at Fitch said the measures on their own are unlikely to significantly slow down mortgage lending growth as mortgage rates will still be significantly lower than in the early 1990s, the peak of the last real estate cycle, even if the higher cost of capital were to be fully passed on to borrowers.
  • Matthias Holzhey and Fabio Trussardi at UBS said the direct influence of the buffer on mortgage rates may be low, with costs increasing less than 0.1 percent – more important is that the signal being sent so risk premiums will increase.
  • Alexander Koch at UniCredit said the SNB move is a first step.
  • Dirk Becker at Kepler Capital Markets said the impact on larger banks like Credit Suisse and UBS will be so small and manageable, but the effect on smaller banks is more delicate because Swiss mortgages are their core business.
  • Michael Landolt at the Swiss homeowners association said mortgage rates will increase but still be historically cheap, saying it’s very Swiss that everyone has to pay for the shortcomings of a few, as all mortgage borrowers are paying for the fact that banks are undercapitalized – the regulators could have applied the rules only to the banks that are lending too aggressively.



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Cure for Economic Slumps Seen in Raising Rates: Cutting Research – Bloomberg 11-23-12

Salient to Investors:

Stephanie Schmitt-Grohe and Martin Uribe at the National Bureau of Economic Research said the solution to an economic slump is higher interest rates when the cause of that slump is a confidence shock that cheap borrowing costs are failing to reverse, and ultra-easy monetary policy risks making fears of deflation a self-fulfilling prophecy as spenders sit tight. An increase in borrowing costs can boost inflationary expectations, stimulate employment and end the slump.

Evidence from the US and Japan during the last two decades suggests that zero nominal interest rates are not doing much to push inflation higher.

* * *

JPMorgan Chase said Finland would face the smallest economic cost should it quit the euro, the Netherlands the highest cost – because the higher the current account surplus of a country, the greater the cost of exit as it would probably incur an appreciating currency. Finnish and German 10-year bond yields would fall 35 basis points on an exit, the Netherlands would rise by a similar amount.

Steven Frable at IHS said the legalization of marijuana in Washington and Colorado could boost their economies by providing tax revenue, alleviating stress on law enforcement, transfer jobs out of the underground economy, and create pot tourism. Frable cautioned it could take years before any state can legally sell marijuana.

Joshua Aizenman at University of California and Ilan Noy at University of Hawaii said previous periods of financial pain tend to make repeats more probable possibly because regulators lag behind the pace of bank innovation or are focusing on the causes of the last crisis, not the next one.

The World Bank and PriceWaterhouseCoopers said:

  • Companies worldwide are paying less tax than before the financial crisis.
  • A medium-sized company pays an average 44.7 percent of profits in taxes to all levels of government, and the total tax rate has declined one percent in each of the last eight years.
  • Companies spent 267 hours complying with tax requirements, a fall of 54 hours in the past eight years.
  • Economies that reduced complexity in tax administration tend to enjoy higher economic growth.

The Economist Intelligence Unit said Switzerland has the best long-term economic forecasts to 2030, followed by Australia and Norway, with the US and Germany tied at 16th.

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Swiss Property in ‘Risk Zone’ for First Time Since 1991 – Bloomberg 11-05-12

Salient to Investors:

The UBS Swiss Real Estate Bubble Index entered the risk zone for the first time since 1991.

Matthias Holzhey and Claudio Saputelli at UBS said:

  • Population growth continues to favor price increases, but prices are increasingly being supported by investment demand and by low interest rates, Continued strong increase in household mortgage debt shows no signs of abatement.
  • The average Swiss household income required to buy a home rose in Q3 due to a renewed increase in real estate prices and stagnating income – the 5.9 times income needed to buy is is still below the 6.8 times peak in 1990.
  • Zurich, Geneva and Lausanne are most at risk from residential real- estate bubbles because of their national importance.

Holzhey expects the rise to continue next year, driven by interest rates that are too low.

50,000 people a year migrate to Switzerland, where unemployment is lower and income higher than most of Europe. The tax rate of 28.5 percent of GDP is below the OECD average of 33.8 percent.

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