Fareed Zakaria GPS – CNN 06-05-16

Salient to Investors:

Fareed Zakari said:

Remains skeptical of an American military solution to Syria.

The US is no longer the world’s humanitarian leader and has become an international embarrassment.

The UN says 4 in 10 people do not have access to adequate sanitation and that every dollar spent on sanitation produces a return of $9. Water Aid says over 770 million Indians and 329 million Chinese do not have access to a toilet at home.

Richard Haass at the Council on Foreign Relations said the US has more often than not benefited from interventions in the world: mistakes have been self-inflicted, viz Vietnam, Iraq.

Ruchir Sharma at Morgan Stanley Investment Banking said:

Since 2009, the number of billionaires has risen 80%, equally distributed. The US has had one of the biggest increases in billionaire wealth to 15% of GDP versus the historical norm of 10% due to easy money producing one of the strongest stock market gains in history. The rich own stocks in a disproportionate manner.

The public mood against wealth turns negative when that wealth is being created in corruption-prone industries in countries like Russia and Mexico.

More than 50% of billionaires in India inherited their wealth. The US ranks OK on this metric which is why Trump is able to run for office.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1606/05/fzgps.01.html

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Fareed Zakaria GPS – CNN 05-29-16

Salient to Investors:

Fareed Zakari said:

The US has re-enforced its position as the world’s leading economic, technological, military and political power, and energy superpower.

The US dominates virtually all leading industries including social networks, mobile telecom, nano and bio technology.

The US is at the cutting edge of green technology.

The US is demographically vibrant, while all its major economic peers, including Japan, Europe and China, face certain population decline.

The US dominates the military and political world. The US has 10 aircraft carriers versus China’s one secondhand Ukrainian ship. The US counts numerous allies while China has only North Korea.

The US will not have a real rival for a very long time. However, China’s share of global GDP in 1990 was 1.7% versus 15% today, and developing countries accounted for 20% of world GDP in 1990 versus 40% today.

China’s global influence is large and growing – able to create the Asian infrastructure investment bank over US objections. Regional powers like Saudi Arabia and Turkey are rising.

Joshua Cooper Ramo says the US dominates all 9 global tech platforms, including Google Chrome, Facebook, and Microsoft Office.

Stephen Brooks and William Wohlforth say that China is the US’s only rising rival, but only when it comes to GDP: half its exports are imported for assembly and re-exported.

Bret Stephens at the Wall Street Journal said Donald Trump is the biggest loser in presidential history, manifestly unqualified to be president in any way.

Pro Publica says apartheid schools (schools with 1% or fewer white students) more than doubled since 1988 to 6,727 schools in 2011. GAO reports K-12 public schools with extremely high percentages of poor, black or Hispanic kids comprised 16% in 2013-2014 versus 9% in 2000-2001.

Paul Tractenberg at Rutgers says that between 2000 and 2013, the number of Americans living in high poverty neighborhoods rose from 7.2 million to 13.8 million.

Rucker Johnson at Berkeley said:

More than 1 in 4 poor blacks live in extreme poverty neighborhoods versus 1 in 13 for poor whites.

Blacks that attended desegregated elementary schools were more likely to graduate and 22% less likely to be incarcerated as adults. Blacks who spent 5 years in desegregated schools saw their health improved to the equivalence of being 7 years younger, and earned 30% more than those not attending desegregated schools.

The narrowing of the achievement gap and increased success of black students had no negative effect on whites on any metric.

Reid Hoffman at LinkedIn said:

The cost of sequencing the genome is falling faster than Moore’s Law.

The US has a unique advantage not in start-up culture but in blitz scaling. The majority of the super interesting tech companies are on the west coast, primarily Silicon Valley, an area 25 square miles with 8.5 million people.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1605/29/fzgps.01.html

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Fareed Zakaria GPS – CNN 03-20-16

Salient to Investors:

Fareed Zakaria said:

Trump’s nomination would transform the Republican party into a blue-collar populist, nationalist movement with a racial element, like many others in the West.

The Federation of American Scientists says Pakistan has the fastest growing nuclear arsenal – up as much as 44% in the last 4 years – and could have 251 warheads by 2025, the 5th largest stockpile in the world ahead of Great Britain.

The IEA says that 90% of new global electrical generation in 2015 came from renewable sources, of which more than 50% came from wind power. China has reduced its coal usage by 10% in just 4 years to under 70% of its total electricity.

Richard Haass at the Council on Foreign Relations said the era of consolidated nation states in the Middle East where governments hold sway over the entire territory is ending.

Thomas Frank said

Both US political parties have abandoned the working class and become the party of elites, and have stopped caring deeply about economic inequality. Inequality has worsened under Obama.

Broadly speaking, the Republican party is becoming a blue-collar populist nationalist party while the Democratic party is becoming the party of urban professionals.

Tom Wainwright at The Economist said:

Incarcerating drug dealers in the US and Europe only reduces supply and pushes up prices, while addictive consumption remains constant, thus inflating the size of the drug market and enriching the drug cartels.

Drugs should be legalized, one by one. Legalized marijuana has greatly reduced the criminal economy in places like Colorado and deals a huge blow to organized crime. Legalized heroin in Switzerland means addicts no longer have to steal or deal.

Piers Sellers said that overshooting the 2-degree global warming is a near certainty because of the momentum of the global economy, and solutions will be implemented later than scientists would like, as usual.

Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the full transcript at http://transcripts.cnn.com/TRANSCRIPTS/1603/20/fzgps.01.html

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The zero rate trap – The Economist 09-18-15

Salient to Investors:

No Fed tightening was a sensible decision. The Fed is in a trap: low interest rates have raised global equity markets, whose collapse in August helped in preventing the Fed from raising rates.

Most British homeowners have variable rate mortgages so while interest rate cuts staved off a potential disaster in the housing market, the UK housing market did not return to more affordable price levels as it did in the US.

May Rostom at the Bank of England says:

  • The ratio of house prices to first-time buyer incomes in London is 9.4 versus 2.6 in 1996 and 7.2 at the last peak in London.
  • The 1971-1980 and 1981-1990 birth cohorts face sharply rising debts to get on the housing ladder but their incomes have not risen near as fast.
  • Since 1995, the debt of older generations has barely budged, while that of those aged 25-45 has shot up in real terms. A world where younger households reach 65 and still have debt is possible.
  • The widening wealth inequality across income or socioeconomic categories is also across generations as the low-rate regime has boosted asset prices for the older generations that own the assets.

The Bank of England is in a trap: if it raises interest rates and forces down house prices, young people not yet on the housing ladder would benefit, but for those with high debts, it would be a disaster. Building more houses is not enough: even Savill’s forecast of a 55% rise in homebuilding over a 5-year period would produce only 167,000 units in 2018, versus the 240,000 needed.

Read the full article at http://www.economist.com/blogs/buttonwood/2015/09/asset-markets-and-monetary-policy

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Sentiment Building to Deport Nation’s Billionaires – The New Yorker 08-24-15

Salient to Investors:

Andy Borowitz reports that the University of Minnesota’s Opinion Research Institute found that Americans hold US billionaires in the lowest ever esteem, and the majority would like to see them deported.

Read the full article at http://www.newyorker.com/humor/borowitz-report/sentiment-building-to-deport-nations-billionaires

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Barack Obama Tells Another Whopper – He Did Not Create 12.8 Million Jobs – David Stockman’s Contra Corner 07-05-15

Salient to Investors:

David Stockman writes:

  • Total non-farm labor hours are no higher than in Q4, 2007 and only 1% higher than in the spring of 2000, meaning we have added virtually no new employment to the US economy over 2 business cycles.
  • Over the 29 quarters after the 1990 business cycle peak (Q2, 1990 to Q3, 1997) non-farm labor hours increased by 12% and after the 1981 peak (Q3, 1981 to Q4, 1988) increased by 17%.
  • Worse, we keep replacing high productivity hours in the full-time jobs sector for low-skill, low-pay jobs in bars, restaurants, Wal-Marts and temp agencies.
  • The number of full-time jobs in energy and mining, construction, manufacturing, white-collar professions, business management and services, IT, transportation/distribution and finance, insurance and real estate is 1.7 million below their level of December 2007 and lower than in 2000.
  • The Keynesian Fed is fueling serial financial bubbles, causing a temporary lift in the discretionary incomes of the top 10% of households, which own 85% of the financial assets, and the next 10-20% which feed off their winnings. The result is the leisure and hospitality sectors boom, creating many jobs for bar tenders, waiters, bellhops, etc. which mostly are 26 hours per week and $14 per hour. As soon as the financial bubble bursts, these jobs quickly disappear.
  • The 12.3 million manufacturing jobs reported for June was 10% below the level of December 2007, and nearly 30% lower than in January 2000. The 19.6 million high-productivity, high-pay goods producing jobs in energy, mining, manufacturing and construction in June was 5 million lower than in January 2000. No wonder the median real household income has declined by 7% over the last 15 years.
  • BLS reports health, education and social services generated another 48,000 jobs in June versus the 42,000 monthly average for the sector since 2000. But these jobs pay on average only $35k a year and are almost entirely fiscally dependent on a public sector that is broke and a public debt that keep ballooning.

Read the full article at http://davidstockmanscontracorner.com/barrack-obama-tells-another-whopper-he-did-not-create-12-8-million-jobs/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Saturday+9+AM

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The Warren Buffett Economy—Why Its Days Are Numbered (Part 5) – David Stockman’s Contra Corner 06-17-15

Salient to Investors:

David Stockman writes:

  • Economists Piketty and Krugman are zero-sum anti-capitalists.
  • Real capitalism cannot thrive unless inventive and entrepreneurial genius is rewarded with outsized fortunes. Massive central bank  intervention is not necessary for capitalism to thrive.
  • The free market does not perennially slump toward underperformance and depressionary collapse without fiscal and monetary intervention. Heavy-handed monetary central planning destroys capitalist prosperity.
  • The panics of the pre-Fed period usually ended quickly when the overnight money rate soared by hundreds of basis points a day and often deep into double digits. Free market interest rates cured speculative excesses. The great speculators of the day like Jay Cooke ended up broke after 10 years, not worth $73 billion after three decades like Warren Buffett et al whose financial gambling fortunes are not due to genius, but to the Fed’s $50 trillion bubble..
  • The difference between fiat credit and honest savings is the fundamental dividing line between bubble finance and healthy capitalist prosperity. Free market finance is an unknown  concept today, and Wall Street and Washington both militate against it.

Read the full article at http://davidstockmanscontracorner.com/the-warren-buffett-economy-why-its-days-are-numbered-part-5/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Mid+Day+Friday

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The Warren Buffett Economy – Why Its Days Are Numbered (Part 4) – David Stockman’s Contra Corner 06-15-15

Salient to Investors:

David Stockman writes:

  • The Fed has generated a $50 trillion financial bubble and made money and capital markets to little more than gambling casinos.
  • Speculative rent-seeking in the financial market has replaced entrepreneurial innovation and supply side investment and productivity, resulting in a severe drop in real growth and a massive redistribution of windfall wealth to the few, who own most of the financial assets.
  • Keynesian stimulus has artificially goosed the price of bonds and lowered their yields, while the implicit Fed “put” underpins the economics of buy-the-dip speculators.
  • Keynesian economics originated during the Depression: it was wrong then, and utterly irrelevant now in our global post-industrial economy. The Fed can do nothing to cause the US steel industry’s capacity utilization rate to be 90% or 65%, given today’s world of open trade and the vastly over-sized global steel market.
  • Keynes advocated for stringent protectionism and economic self-sufficiency 6 years before his General Theory – they are absolutely necessary to state management of the business cycle. Keynes made sure to publish his works in German, believing Nazi Germany was the ideal test bed for his economic remedies.
  • Potential labor supply is a function of global labor costs and comes atomized as hours and temporary contracts, not census bureau head counts. The government has no idea what the real world’s potential labor force computes to, thus the pursuit of “full employment” by Yellen is nonsensical and target of 5.2% on the U-3 unemployment rate as ridiculous.
  • The real unemployment rate is not 5.5%. The 210 million Americans between ages 16 and 68 represents 420 billion potential labor hours in full-time jobs, but BLS estimates only 240 billion hours were supplied to the US economy in 2014, meaning 180 billion unemployed labor hours, meaning that the real unemployment rate was 42.9%, a result of global economic forces of cheap labor and new productive capacity.
  • The Fed improved GDP and the labor utilization rate from the Kennedy administration to 2007 but only by using the one-time pony of leveraging up households and businesses through cheap debt. Households are still deleveraging relative to income, businesses are incrementally borrowing for stock buybacks, M&A deals and LBOs and not for new plant, equipment and other tangible assets.
  • At the limits of peak debt, the Fed’s default business becomes inflating the financial bubble and subsidizing carry-trade speculation.
  • The student debt bomb is $1.3 trillion, versus less than $300 billion only a decade ago, and will explode in the years ahead.
  • Off-shoring has spread to service work, resulting in wage suppression as those replaced workers accept low wages in adjacent activities.

Read the full article at http://davidstockmanscontracorner.com/the-warren-buffett-economy-why-its-days-are-numbered-part-4/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Mid+Day+Friday

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Fareed Zakaria GPS – CNN 05-03-15

Salient to Investors:

Fareed Zakaria said:

  • The US justice system is a rubber stamp for the prosecution due to America overreacting to the crime wave of the 1970s and enacting bad legislation.
  • The vast prison industrial complex lobbies aggressively, which means more arrests, lockups, and prisons.

Conrad Black says:

  • The US has 25% of the world’s prisoners but only 5% of the global population.
  • Because of the plea bargain, US prosecutors win 95% of their cases, 90% without ever having to go to trial: vs. a conviction rate of 60% in Canada and 50% in Britain.
  • Judge Jed Rackoff says the US criminal justice system bears little relationship to what the founding fathers contemplated, to what movies/tv portrays, and to what the average American believes.

Thomas Erdbrink at The New York Times said:

  • Iran’s hardliners are unlike the hardliners in the West and take their cue from Ayatollah Ali- Khamenei, the great architect behind the nuclear talks.
  • Ayatollah Khamenei is very well aware of the wish of his people for sanctions to be lifted.
  • Rouhani and Zarif’s limited power is demonstrated by their inability to get Jason Rezaian released.

The Global Burden of Disease Study found:

  • In 2013, more people died from drowning than from natural disasters, more from road injuries than from malaria, twice from suicide than from breast cancer, and nearly as many from falls as from leukemia and prostate cancer combined.
  • UAE, Saudi Arabia, and Oman had very high injury road injury death rates – Oman twice the global average vs. Sweden with a quarter of the global average.
  • Since 1990, India and China accounted for half of all global suicides; a rising number in India, a falling number in China.
  • US maternal mortality rates are rising and are much higher than in other developed countries.
  • In 2010, Rwanda’s biggest risk factor for premature death and disability was indoor air pollution from cooking.


Blaine Harden said:

  • The Kim family dynasty in North Korea survived its creator – unlike every other totalitarian system – because its family system institutionalized Stalinist tools of control.
  • Kim Jong-un is very rational, very cunning – like his father and grandfather – and good at purging and eliminating challengers. He projects an image of being wild to inhibit challengers.
  • North Korea is exactly where it was 15 years ago, with no indication that the family’s rule is in any imminent danger.

Robert Putnam said:

  • The unbelievable contrast between rich and poor US kids is new and nationwide, and a result of the growing wealth inequality and segregation along class lines.
  • There is growing gap between classes in terms of how much time their parents spend reading to them, a growing and large gap between how much money parents spend for summer camp, piano lessons etc – 7 times as much for the average rich kid vs. the average poor kid.
  • Gaps in quality of schooling, church attendance are growing. Social mobility is low, as seen in getting the college degree with the necessary credentials.
  • Kids with high-test scores and low parental income are less likely to graduate from college than rich kids with lower scores.
  • Universal early childhood education works, and especially so for poor kids.
  • Charging for extracurricular activities – which have a payoff with employers – has resulted in poor kids dropping band and chorus and football, etc.

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

at http://www.cnn.com/TRANSCRIPTS/1505/03/fzgps.01.html

Fareed Zakaria GPS – CNN 01-25-15

Salient to Investors:

Fareed Zakaria said:

  • Radical Islam is the default ideology of anger, discontent and violent opposition for a small number of alienated young Muslim men around the world. Only Muslims and particularly Arabs can cure this cancer.
  • In the 12 years between 9/12/01 and 2013, only 42 Americans have died on US soil due to terrorism versus 32,351 who died because of firearms, 33,783 who died in-vehicle accidents in one year.
  • Little has changed in Saudi Arabia – women still cannot drive, there is still segregation by sexes, the religious establishment is still very powerful, and the country still adheres to a very puritanical version of Islam.

Tony Blair said:

  • King Abdullah was a genuine reformer and modernizer. Saudi Arabia is genuinely part of the solution, and in many ways the heart of Islam.
  • Islamist ideology is growing and is the biggest security issue we face – we are at risk of several Afghanistans.

Martin Wolf at The Financial Times said:

  • Saudi Arabia remains is the central oil producer, the biggest exporter, the cheapest producer, and the only swing producer. Saudi Arabia is stable enough so can outlast everybody else at current oil price levels.
  • The oil glut will last for quite a few years.

Oxfam said the 80 richest people had $1.9 trillion while the poorest half had just $1.8 trillion in 2014, versus $1.3 trillion and $2.6 trillion respectively in 2010. The wealthiest 1% owned 48% of the world’s wealth in 2014 versus 44% in 2010.

David Leonhardt at The New York Times said US wages and incomes have gone virtually nowhere in the last 15 years: not paralleled since perhaps the Great Depression.

The Center for American Progress found that the bottom 90% of earners in Canada averaged over 1% annual income growth in the 2000s versus 2.5% annual in Australia and a decline of 1% annual in the US.

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

at http://transcripts.cnn.com/TRANSCRIPTS/1501/25/fzgps.01.html