Recently I've been reading a book written by the best Islamic scholar in the world, Dr. Yusuf al-Qardhawy, not that I'm over impress by this book, I've read and studied most Islamic economy reseaches and this book has refreshing my mind to the true value of economic morality that we need to practice.
What is Economic morality? As for most academic, they might define it as an act of attitude towards our decision making, our daily behavior and spending structure. But, eventually, In Islam, this code of conduct are well written in the holy Quran and has been practiced by most Muslims for centuries. Not that I'm against capitalism and totally supporting pure Muamalat (Islamic Finance). Dr. Qardhawy stated that Islamic finance is the best medium in economic as it stands in between Capitalism and Communism doctrine.
I shall share the wisdom of thought that has been highlighted by Dr. Qardhawy, so that we could understand, appreciates and practice it in our daily activities.
It suffice us here, to take an idea concerning the essential rules which the establishment of economy is based on Islamic society, the important of this rules are as follow:
1. Consideration of wealth as a favour and bounty in the hands of righteous.
2, Wealth belonged to Allah, the human being is vicegerent on it.
3. Injunction for work and good earning, considering it as a kind of worship and strife
4. Prohibition of evil earning resources.
5. Recognition of individual ownership and it's protection.
6. Depriving the individuals from taking in possession the things is necessary for society.
7. Forbid the owner to do any harms to the other.
8. The investment of wealth should not be on the expense of moral and public interest.
9. The achievement of self-efficiency for the nation.
10. Moderation is expenditure.
11. Establishment of mutual responsibility among the members of society.
12. Narrowness of gaps between classes.
Tuesday, November 23, 2010
Monday, November 15, 2010
Weekend: Return to Jekyll Island (taken from Wealth Daily)
Weekend: Return to Jekyll Island
By Steve Christ | Saturday, November 13th, 2010
In the end, the crooks always return to the scene of the crime.
Just days after announcing a $600 billion money drop, the members of the Federal Reserve retreated to the place where it all began: Jekyll Island, Georgia. Only this go-round was nothing like the covert operation that took place 100 years ago...
This time it was just a bunch of backslapping as Bernanke and Co. spent the weekend hidden in plain sight, celebrating themselves as the smartest guys in the room.
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Back to where it all started
For this, we have the most expensive hunting trip in history to thank.
You see, while you didn't learn this in school, the Federal Reserve Bank actually began in a New Jersey train station on a November night shrouded in secrecy.
Leaving from the Hoboken Railway station in 1910 were a group of the nation's leading financiers, along with a handful of powerful Washington insiders and their staff members.
And while a few reporters suspiciously witnessed the gathering of these big wigs, none of them bothered to report on it. These men, they were told, were simply going “duck hunting.”
But ducks had nothing to do with it...
Leading the secret trip to Georgia was Senator Nelson Aldrich, head of the National Monetary Commission. Joining him were A. Piatt Andrew, Assistant Secretary of the Treasury; Frank Vanderlip, President of National City Bank of New York; Henry P. Davison, senior partner of J.P. Morgan Company (generally regarded as Morgan's personal emissary); Charles D. Norton, President of the First National Bank of New York; Benjamin Strong, a known Lieutenant of J.P. Morgan; and Paul Warburg, a recent immigrant from Germany who had joined the banking house of Kuhn, Loeb and Company of New York as a partner.
And while you may not recognize any of these names, they were among the most powerful and well-known men of their day. Together they represented approximately a quarter of all the world's wealth.
On an island off the coast of Georgia, the nation's banking system changed forever... Once ensconced in their private and discreet playground, the rich and the powerful went to work creating the plan that would eventually become the Federal Reserve Bank.
So it was out of these secret meetings that the control of the nation's money supply was handed over to the very bankers and private corporations that earlier generations of Americans — including Thomas Jefferson and Andrew Jackson — found to be so onerous.
Some three years after that now famous “hunting trip,” the plan conceived on Jekyll Island became law.
On December 22, 1913, while many members of Congress were celebrating Christmas at home, the Federal Reserve Act was rammed through Congress, and later signed into law by President Wilson.
Ideas have consequences
We have been at the mercy of their printing presses ever since... Which is why the greenback will continue to twist in the wind, no matter how much Ben Bernanke and Tim Geithner talk about a strong dollar policy.
You see, for them and their banker friends, there is really only one cure for this mess: Inflation today, tomorrow, and likely forever.
That's why the price of commodities is edging higher across the board. Meanwhile, smart investors work to hedge themselves against these same characters, their grand plans born in some conference room.
One way to beat them at their own game is to simply buy gold — which our precious metals expert, Luke Burgess, says still has “plenty of room to the upside.” And he's not alone on that one...
Just a few weeks ago, investment powerhouse Goldman Sachs predicted gold will rally more that 20 percent to $1,650 an ounce in a year, simply on further quantitative easing and the prospect for falling long-term interest rates.
That to me — considering the Fed's game plan — is practically a given. After all, there's no end in sight to what started on that hunting trip a hundred years ago...
By the way, since the creation of the Federal Reserve, the purchasing power of a 1913 dollar is now worth exactly five cents.
If that's not highway robbery, I don't know what is...
As for some places to invest your money as the next bubble forms, here are a few of the best investment ideas from the pages of this week's top-read Wealth Daily and Energy & Capital articles.
Have a great weekend.
Your bargain-hunting analyst,
Steve Christ
Editor, Wealth Daily
Editor, Wealth Daily
Wednesday, October 27, 2010
Malaysia: Dilemma On High Income Nation,
I was taken aback by Tun Dr. Mahathir views on the Malaysian ambition to achieve high income economy. A very thoughtful message that makes me want to share more about this issue on my essay.
High income is easily defined as higher salary gained per worker. This not means that a janitor should pay more from what they are currently obtained, but more towards the specialize industries with specialize skills and qualification. This so-called professional will eventually representing the statistic to achieve a high income nation and flourish the economy.
This ambition is not just an ambition anymore as Malaysian government has made several programs and plans to stimulate this idea. By creating more mega projects where locals can participate, attracting FDI to Malaysia to invest into Malaysia as it will offered more professional Malaysian to work, et cetera. The number of degree holders in Malaysia are also increasing, whereby most corporate sectors and companies need this professional labor force.
But, when Malaysia has achieved a high income nation status, the so-called current cost of living will eventually altered. No more the old days price and inflation are the subject that can't be pushed away.
Inflation happened. Every years, and the most healthy increment rate will be at 2-5% per year. We can look back to the time when we were a little kid, the price of the goods that we use to pay are not the same price anymore. Like my late Granpa told me, on his day, a 5cent (Malaysian currency) are sufficient for a bowl of noodle and a loaf of bread. Yes, it is the old days. But this is how the inflation effect. We seems not realizing the increment as we all has improve our way of life and improve our living standard.
So does having a high income nation status means nothing to the Malaysian? (Technically Yes)
Having a high salary community doesn't means the spending power is increasing? The prices of products and services are also follow the hike, so how does this phenomena happened? and how to minimize the effect?
Merchant, businessman, service provider are all opportunist. When the level of affordability has risen, so does the price will be. We can't avoid it unless a strict intervention from government who will govern the ceiling price for each products and services. This approach is merely impossible and difficult to implement. After all, we must accept inflation.
But there's a way to minimize this effect. And this role are played by the government. A strict regulation on prices of product and service will be a priority in this case, a lowering tax from what are currently imposed to the vendors to ease the probability and reasons for them to increase the price, allocating a fraction of nation wealth to subsidize the cost of raw material, and educating citizen and promoting local made products and services.
A high income economic and nation are good in a sense it can promote Malaysia to another level of perception, but bear in mind that inflation is always following us. No matter how hard we steer the wheel of economic, inflation is up there to catch us. Let's Tan Sri Zati Aziz do her best to curb this phenomena
High income is easily defined as higher salary gained per worker. This not means that a janitor should pay more from what they are currently obtained, but more towards the specialize industries with specialize skills and qualification. This so-called professional will eventually representing the statistic to achieve a high income nation and flourish the economy.
This ambition is not just an ambition anymore as Malaysian government has made several programs and plans to stimulate this idea. By creating more mega projects where locals can participate, attracting FDI to Malaysia to invest into Malaysia as it will offered more professional Malaysian to work, et cetera. The number of degree holders in Malaysia are also increasing, whereby most corporate sectors and companies need this professional labor force.
But, when Malaysia has achieved a high income nation status, the so-called current cost of living will eventually altered. No more the old days price and inflation are the subject that can't be pushed away.
Inflation happened. Every years, and the most healthy increment rate will be at 2-5% per year. We can look back to the time when we were a little kid, the price of the goods that we use to pay are not the same price anymore. Like my late Granpa told me, on his day, a 5cent (Malaysian currency) are sufficient for a bowl of noodle and a loaf of bread. Yes, it is the old days. But this is how the inflation effect. We seems not realizing the increment as we all has improve our way of life and improve our living standard.
So does having a high income nation status means nothing to the Malaysian? (Technically Yes)
Having a high salary community doesn't means the spending power is increasing? The prices of products and services are also follow the hike, so how does this phenomena happened? and how to minimize the effect?
Merchant, businessman, service provider are all opportunist. When the level of affordability has risen, so does the price will be. We can't avoid it unless a strict intervention from government who will govern the ceiling price for each products and services. This approach is merely impossible and difficult to implement. After all, we must accept inflation.
But there's a way to minimize this effect. And this role are played by the government. A strict regulation on prices of product and service will be a priority in this case, a lowering tax from what are currently imposed to the vendors to ease the probability and reasons for them to increase the price, allocating a fraction of nation wealth to subsidize the cost of raw material, and educating citizen and promoting local made products and services.
A high income economic and nation are good in a sense it can promote Malaysia to another level of perception, but bear in mind that inflation is always following us. No matter how hard we steer the wheel of economic, inflation is up there to catch us. Let's Tan Sri Zati Aziz do her best to curb this phenomena
Why Rich People Living On Tent?
Re-post essay from Wealth Daily
Why Rich People are Living in Tents
By Brian Hicks | Wednesday, October 27th, 2010
This week is “Winter Awareness Week” in North Dakota.
Some of the precautions the North Dakota Department of Emergency Services recommends to prepare for the state’s brutal winters include:
- Winterizing your vehicle
- Dressing in warm layers
- Wearing gloves
- Wearing stocking caps
- If your fingers or toes feel numb, get inside as soon as possible
Uhhh... Really?!?
I live in Baltimore, Maryland... And even I would know to do these things if I visited NoDak during the winter.
But in North Dakota — a state that averages three feet of snowfall per year — the average temperatures for the months of January, February, and March are 9, 17 and 28 degrees respectively…
You would think North Dakotans know what to do to prepare for a wintery onslaught...
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But the truth is North Dakota officials have real reason to be concerned.
You see, the housing shortage in North Dakota is so bad, makeshift tent cities are popping up in parks and parking lots all over eastern part of the state.
And the people living in these tents are from states like Texas, Louisiana, Alabama, and Oklahoma.
Many are from Mexico — and have never seen snow, much less a blizzard.
The housing crisis is so dire that a former church in Killdeer and a former hospital in Stanley, ND, are being converted to apartments.
In towns like Minot and Williston, temporary housing used in the Winter Olympics in Vancouver and for people displaced by Hurricane Katrina is being shipped in...
Obama even sent HUD Secretary Donovan to the state this past August to get a first-hand look at the housing crisis.
Housing prices have jumped 20% from a year ago. Only 1% of the total rental property supply is available for rent.
Lease and real estate agents can barely keep up, often not returning phone calls for days.
The convenience store in Stanley — the Cenex — is struggling just to meet demand.
“We really just can’t hardly keep up with the explosion of new business. I’ve been here just over a year and we’ve been doing construction, remodeling ever since I got here. Right now, we just need to catch our breath,” said a store manager.
What’s going on in North Dakota?
A bona fide oil rush.
It seems like new oilfields are being discovered almost every year in NoDak.
You know about the Bakken already... Two-and-a-half years ago, we told you about the Bakken and how to play it.
If you followed our advice from the very start, this is what you made from our Bakken boom stocks:
It’s been a profit bonanza for sure in the Bakken.
But with the technological breakthrough of fracking and horizontal drilling proven in the region, other previously undrillable formations are now open for business...
The latest is the Spearfish formation in ND near the Canadian border. In April of this year, EOG announced the Spearfish discovery.
The Spearfish is a Jurassic formation, and is at a much shallower depth than the Bakken — only about 3,000 feet below the surface — so it should be cheaper to drill.
Drilling times for the Spearfish wells on the Canadian side (called the Waskada) were only about four days from spud to reaching total depth...
Because of existing infrastructure in place, those Canadian wells only cost about $1 million, and EOG hopes that once comparable infrastructure is in place, the U.S. wells will carry comparable price tags.
With 80,000 net acres, EOG holds a sizeable amount of Spearfish acreage and plans to utilize six laterals per 160-acre spacing.
Initial production of the wells is estimated at around 200 barrels per day. The two existing U.S. wells are producing 285 and 305 barrels per day, respectively.
By 2012, EOG projects it could produce as many as 18,500 barrels per day.
The Spearfish is picking up steam.
This past August, Minot-based media outlet KXMCTV reported, "… Major oil companies are making moves that suggest a second oil boom is in its infancy."
Lynn Helms, director of the North Dakota Department of Mineral Resources, indicates oil companies are expecting to drill 50 wells this year to figure out the edges of the primary part of the Spearfish play, and 50 to 100 next year.
They then expect to go into full development mode, which means they could drill anywhere between two and seven thousand wells up there.
Of course, we’re hot on this development.
And we’ve discovered a $7 stock that will go great guns with the development of the Spearfish… as well as many of the other fracking and horizontal drilling formations.
Stay tuned for more,
Brian
Monday, October 25, 2010
What is Saltwater Economy?
I totally admit that I'm a biggest fan of Paul Krugman, a devoted to his essays on New York Times posts and admire his writing on several of his book. But who is Krugman? He's a saltwater!
I'm a saltwater too, I believes in Keynesian approach in macroeconomic decision. As the matter of fact, Keynesian is the most relevant economic thought for macroeconomic intervention in my personal perspective.
So what is saltwater?
Saltwater economics colloquially refers to a school of thought which has a more Keynesian approach with overarching macroeconomic analysis, tends to scepticism about the efficiency of markets and has called for government spending to help the world pull out of recession. Many of the economists associated with it are based at the US’s coastal academic universities and institutions - Harvard, Princeton, Berkeley.
and who are the opposite of Saltwater Economic? A Freshwater!
Freshwater economics colloquially refers to a school of thought whose macroeconomic conclusions are more closely rooted in microeconomics, which places greater trust in markets and is sceptical of active fiscal policy. Economists whose work is in this tradition are often based at US universities close to the Great Lakes – Chicago, Minnesota, Carnegie-Mellon.
I'm here not to talk about freshwater.
In fiscal policy, a Saltwater economists often support the effectiveness of fiscal policy, Advent advocate the effectiveness of fiscal stimulus, following Keynesian economics.
Some freshwater economists arguing that business cycles are efficient and government cannot fiscal policy and/or monetary policy. This contrasts with saltwater Keynesian economists, who argue that "business cycles" represent market failures, and should be counteracted. In 2009 Paul Krugman commented that "since then [forty years ago] macroeconomics has divided into two great factions: “saltwater” economists (mainly in coastal U.S. universities), who have a more or less Keynesian vision of what recessions are all about; and “freshwater” economists (mainly at inland schools), who consider that vision nonsense". However, Krugman noted that the difference had become mainly theoretical during the The Great Moderation, but that the financial crisis cast the dichotomy in a new, harder light.
(sources from WikiPedia)
Eventually the different between a saltwater and freshwater are just the theory. These competing theories have set the terms for national and international debate over economic policy for decades. Freshwater economists point to the 1970s as an example of government intervention causing high unemployment and inflation which, they claim, otherwise wouldn’t have occurred. Saltwater economists view government regulation and discretionary fiscal policy as an important and necessary part of overseeing the economy. They do not view consumers in the marketplace as perfectly rational variables.
Government intervention is important, I personally believes that nobody can run everything on their own. There are only two saltwater theories which are the fiscal policy and and Keynesian economic. In economy, fiscal policy is the use of government expenditure and revenue collection to influence economy. Fiscal policy can be contrasted with the other main type of macroeconomic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the money supply. The two main instruments of fiscal policy are government expenditure and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy e.g aggregate demand, pattern on resource allocation and the distribution of income.
Keynesian economic is is a macroeconomic theory based on the ideas of 20th century British economist John Maynard Keynes. Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.
While freshwaters argued their theories such as
I'm a saltwater too, I believes in Keynesian approach in macroeconomic decision. As the matter of fact, Keynesian is the most relevant economic thought for macroeconomic intervention in my personal perspective.
So what is saltwater?
Saltwater economics colloquially refers to a school of thought which has a more Keynesian approach with overarching macroeconomic analysis, tends to scepticism about the efficiency of markets and has called for government spending to help the world pull out of recession. Many of the economists associated with it are based at the US’s coastal academic universities and institutions - Harvard, Princeton, Berkeley.
and who are the opposite of Saltwater Economic? A Freshwater!
Freshwater economics colloquially refers to a school of thought whose macroeconomic conclusions are more closely rooted in microeconomics, which places greater trust in markets and is sceptical of active fiscal policy. Economists whose work is in this tradition are often based at US universities close to the Great Lakes – Chicago, Minnesota, Carnegie-Mellon.
I'm here not to talk about freshwater.
In fiscal policy, a Saltwater economists often support the effectiveness of fiscal policy, Advent advocate the effectiveness of fiscal stimulus, following Keynesian economics.
Some freshwater economists arguing that business cycles are efficient and government cannot fiscal policy and/or monetary policy. This contrasts with saltwater Keynesian economists, who argue that "business cycles" represent market failures, and should be counteracted. In 2009 Paul Krugman commented that "since then [forty years ago] macroeconomics has divided into two great factions: “saltwater” economists (mainly in coastal U.S. universities), who have a more or less Keynesian vision of what recessions are all about; and “freshwater” economists (mainly at inland schools), who consider that vision nonsense". However, Krugman noted that the difference had become mainly theoretical during the The Great Moderation, but that the financial crisis cast the dichotomy in a new, harder light.
(sources from WikiPedia)
Eventually the different between a saltwater and freshwater are just the theory. These competing theories have set the terms for national and international debate over economic policy for decades. Freshwater economists point to the 1970s as an example of government intervention causing high unemployment and inflation which, they claim, otherwise wouldn’t have occurred. Saltwater economists view government regulation and discretionary fiscal policy as an important and necessary part of overseeing the economy. They do not view consumers in the marketplace as perfectly rational variables.
Government intervention is important, I personally believes that nobody can run everything on their own. There are only two saltwater theories which are the fiscal policy and and Keynesian economic. In economy, fiscal policy is the use of government expenditure and revenue collection to influence economy. Fiscal policy can be contrasted with the other main type of macroeconomic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the money supply. The two main instruments of fiscal policy are government expenditure and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy e.g aggregate demand, pattern on resource allocation and the distribution of income.
Keynesian economic is is a macroeconomic theory based on the ideas of 20th century British economist John Maynard Keynes. Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.
While freshwaters argued their theories such as
- Bounded rationality
- Policy Ineffectiveness Proposition
- Rational expectations
- Real Business Cycle Theory
- Ricardian equivalence
- Say's Law
- Treasury view
- Efficient-market hypothesis
Sunday, October 24, 2010
Where Do We Live?
It's amazing that we have billion of humankind living in this planet, contributing to to economic success and distributing the wealth of each nation to the limit of its capabilities, hence this phenomena is why we as a humankind are scattered along this globe.
Where do we live? A simple but yet subjective question thrown out on this essay.
Travelling a lot! That quote is best to be linked to my hectic life, I'm blessed to have the opportunity to travel the globe and learn the nature of human behaviors, economic approaches, unique sociology systems and demographic cultures. This observation helps me to understand more towards the most essential necessity of human life which is a house.
Humankind dated back from early BC are tend to find a place to settle, and the most popular settlement is near the river banks and seasides, some archaeological research found that several amazonian tribe reside near the river,although there are also tribes who choose to lives inside the caves. All of these early settlements have 2 factors in common, such as the supply of water, and moisture of soil. Earlier homo sapiens live in a very organized community. Producing foods, tools to hunt and others handy application in order to survive in this world.
All right.. I'm not doing this elaboration to promotes history lesson instead to emphasize the economic relation that we shares from our ancestor.
Human life are motivated by incentives, I learn that a in a hard way due to my crazy background. Thanks to Professor Paul Krugman teaching, his books and lectures has guides me and other aspiring economists. Human life are motivated by incentives. Let alone the sentence to be interpreted by you! What we did whether it is based on economic favors or personal favors are solely based on incentives. This theory are common sense, look at one example, there are two types of condom available on the supermarket, one is the cheaper than the another one but the expensive type of condom offers 15% discount for the whole pack comprising 12 pieces of condom per pack, after making the calculation, the differentiation of the expensive type of condom only exceed a fraction of 2% more than the cheaper condom. and we realize we hit a good deal by assuming the expensive condom are better in quality rather than the cheaper type. unless the penises are made of steel.. that might be a different issue.
Take a look at the condom theory again. Our brain are moved by incentive, by assuming it cheap or good deal, we secured the deal. And this phenomena is the beauty part of our human life system, because of our capability to think and compare, and it makes humankind productive. The same theory goes to why we choose a settlement location. Let alone the Paleolithic period where on that period, choices are limited.
We can see that's there community even in the remotest area in the world. Some live in the jungle, at the seaside, on the countryside, in the middle of nowhere village. A question lies here, why do they choose to live there? Is it because they have to? They wanted to? They needed to? or They forced to?
The world is in the era of network and information, we call it globalization but I like to call it Lady Diana Effect (read on Lee Iacocca's Where All The Leaders Gone) There's no such things as we called "I have no idea that that's possible", if these people want to move and start a new living in the city, they actually can. But why didn't they? The lamest answer from a family that I met in Ethiopia when I asked them on why they didn't make a move to Addis Ababa? They say they preserves the nature by living in the jungle. Preserve the jungle? The nation with its nominal GDP of USD 32.32 Billion have the worst water system to its population, the water sample contain e-coli, yes!! e-coli will scare people like me and you. But they insisting to stay there. Why?
Incentives
Yes, throughout the whole process of mankind, we calculate the pros and cons, the yin and yang for every factors of our decision and the fine guideline that we attribute is incentive. Incentives is convenience, incentives is bonus.
A short trip that I've made in 2007 to Oslo, Norway has triggered me a question. Why do people live there? The vodka are expensive, the tobacco tax are scary, the whether are constant winter which will freeze you to death. The estimated population for Norway are 4,906,400 with density of 31/sq mi. Almost it is hard for me to understand what kind of life they have there. But, eventually, they do have life, they do have a structured socioeconomic, and they enjoyed their salmon well. What I've learn from them is that the life in Norway are just similar to the life at other places around the world. Human tend to adapt every situation that they faces. E.g If the price of imported goods increased, we'll tend to purchase local manufactured products. This theory implied to all of us.
Why do we choose to live at where we are now?
We can make a survey to common people and ask them whether they have any dream country to live and settle. Most of them are some places in mind. Reason for this is because we like to have security in our life, we want a quality in our daily standard, we insist the best for our life. But this is just a dream for most of them. Most of these people are stuck! Reasons such as liability, responsibility and commitment has blocked their intention to move unless they are truly determine to move and have an incentive for moving.
The way we live, the socioeconomic is always the same.
Economy is just a study of human behavior in making their decision, and we are totally agree to say that wherever you live, even in North Pole, you are all are bounded by incentive that the location provides for you.
Where do we live? A simple but yet subjective question thrown out on this essay.
Travelling a lot! That quote is best to be linked to my hectic life, I'm blessed to have the opportunity to travel the globe and learn the nature of human behaviors, economic approaches, unique sociology systems and demographic cultures. This observation helps me to understand more towards the most essential necessity of human life which is a house.
Humankind dated back from early BC are tend to find a place to settle, and the most popular settlement is near the river banks and seasides, some archaeological research found that several amazonian tribe reside near the river,although there are also tribes who choose to lives inside the caves. All of these early settlements have 2 factors in common, such as the supply of water, and moisture of soil. Earlier homo sapiens live in a very organized community. Producing foods, tools to hunt and others handy application in order to survive in this world.
All right.. I'm not doing this elaboration to promotes history lesson instead to emphasize the economic relation that we shares from our ancestor.
Human life are motivated by incentives, I learn that a in a hard way due to my crazy background. Thanks to Professor Paul Krugman teaching, his books and lectures has guides me and other aspiring economists. Human life are motivated by incentives. Let alone the sentence to be interpreted by you! What we did whether it is based on economic favors or personal favors are solely based on incentives. This theory are common sense, look at one example, there are two types of condom available on the supermarket, one is the cheaper than the another one but the expensive type of condom offers 15% discount for the whole pack comprising 12 pieces of condom per pack, after making the calculation, the differentiation of the expensive type of condom only exceed a fraction of 2% more than the cheaper condom. and we realize we hit a good deal by assuming the expensive condom are better in quality rather than the cheaper type. unless the penises are made of steel.. that might be a different issue.
Take a look at the condom theory again. Our brain are moved by incentive, by assuming it cheap or good deal, we secured the deal. And this phenomena is the beauty part of our human life system, because of our capability to think and compare, and it makes humankind productive. The same theory goes to why we choose a settlement location. Let alone the Paleolithic period where on that period, choices are limited.
We can see that's there community even in the remotest area in the world. Some live in the jungle, at the seaside, on the countryside, in the middle of nowhere village. A question lies here, why do they choose to live there? Is it because they have to? They wanted to? They needed to? or They forced to?
The world is in the era of network and information, we call it globalization but I like to call it Lady Diana Effect (read on Lee Iacocca's Where All The Leaders Gone) There's no such things as we called "I have no idea that that's possible", if these people want to move and start a new living in the city, they actually can. But why didn't they? The lamest answer from a family that I met in Ethiopia when I asked them on why they didn't make a move to Addis Ababa? They say they preserves the nature by living in the jungle. Preserve the jungle? The nation with its nominal GDP of USD 32.32 Billion have the worst water system to its population, the water sample contain e-coli, yes!! e-coli will scare people like me and you. But they insisting to stay there. Why?
Incentives
Yes, throughout the whole process of mankind, we calculate the pros and cons, the yin and yang for every factors of our decision and the fine guideline that we attribute is incentive. Incentives is convenience, incentives is bonus.
A short trip that I've made in 2007 to Oslo, Norway has triggered me a question. Why do people live there? The vodka are expensive, the tobacco tax are scary, the whether are constant winter which will freeze you to death. The estimated population for Norway are 4,906,400 with density of 31/sq mi. Almost it is hard for me to understand what kind of life they have there. But, eventually, they do have life, they do have a structured socioeconomic, and they enjoyed their salmon well. What I've learn from them is that the life in Norway are just similar to the life at other places around the world. Human tend to adapt every situation that they faces. E.g If the price of imported goods increased, we'll tend to purchase local manufactured products. This theory implied to all of us.
Why do we choose to live at where we are now?
We can make a survey to common people and ask them whether they have any dream country to live and settle. Most of them are some places in mind. Reason for this is because we like to have security in our life, we want a quality in our daily standard, we insist the best for our life. But this is just a dream for most of them. Most of these people are stuck! Reasons such as liability, responsibility and commitment has blocked their intention to move unless they are truly determine to move and have an incentive for moving.
The way we live, the socioeconomic is always the same.
Economy is just a study of human behavior in making their decision, and we are totally agree to say that wherever you live, even in North Pole, you are all are bounded by incentive that the location provides for you.
Saturday, October 23, 2010
Re-post : The Worst Economist In The World
Re-post : Professor Paul Krugman.
The Worst Economist in the World
A thought: it has occurred to me that we could use an economics equivalent of Keith Olbermann’s “Worst Person in the World” award. KO does not, of course, mean that the person he goes after on any given night really is the worst person in the world; he just uses the title to highlight some especially awful action or statement.
I’d encourage others to enter this game — and yes, I know that various paid trolls and others will award me the title five times a day if they can. But here’s what caught my eye: the WSJ’s Real Time Economics explaining (or rather, “explaining”) the risks form competitive devaluation:
Why do dollar commodity prices tend to rise when the dollar falls? Because other countries buy commodities too, so that a constant dollar price would mean a fall in terms of other currencies. To a first approximation, in fact, you’d expect commodity prices to remain constant, other things equal, in terms of a GDP-weighted basket of currencies around the world.
So yes, a fall in the dollar tends to raise the price of oil in dollars — but it also tends to reduce the price of oil in euros. A fall in the euro tends to raise the price of oil in euros, but raise it in dollars. So what would devaluations that raise commodity prices in terms of all currencies look like? I have no idea.
There is, I think, a tendency to think of devaluations as reductions in the value of currencies relative to something external and eternal — and hence as making us all poorer. But the reality is that my depreciation is your appreciation, and vice versa; we can’t all devalue at the same time.
But competitive devaluation is one of those things people just know is bad, and so critical thinking has a tendency to go out the window.
Paul Krugman
I’d encourage others to enter this game — and yes, I know that various paid trolls and others will award me the title five times a day if they can. But here’s what caught my eye: the WSJ’s Real Time Economics explaining (or rather, “explaining”) the risks form competitive devaluation:
When one country devalues its currency, others tend to follow suit. As a result, nobody achieves trade gains. Instead, the devaluations put upward pressure on the prices of commodities such as oil. Higher commodity prices, in turn, can cut into global economic output. In one ominous sign, the price of oil is up 8.7% since August 27.Urk.
Why do dollar commodity prices tend to rise when the dollar falls? Because other countries buy commodities too, so that a constant dollar price would mean a fall in terms of other currencies. To a first approximation, in fact, you’d expect commodity prices to remain constant, other things equal, in terms of a GDP-weighted basket of currencies around the world.
So yes, a fall in the dollar tends to raise the price of oil in dollars — but it also tends to reduce the price of oil in euros. A fall in the euro tends to raise the price of oil in euros, but raise it in dollars. So what would devaluations that raise commodity prices in terms of all currencies look like? I have no idea.
There is, I think, a tendency to think of devaluations as reductions in the value of currencies relative to something external and eternal — and hence as making us all poorer. But the reality is that my depreciation is your appreciation, and vice versa; we can’t all devalue at the same time.
But competitive devaluation is one of those things people just know is bad, and so critical thinking has a tendency to go out the window.
Paul Krugman
Thursday, October 21, 2010
Warisan Merdeka Tower : Why Do We Need It
Let's open our heart and think as an opportunist and optimist.
Warisan Merdeka Tower is a new project announced by our Prime Minister, Dato' Sri Najib Tun Razak. The project cost is estimated to be around RM 5 billion and will be constructed and supervised by PNB Berhad. A mammoth in Malaysian corporate sector, this project is said to be fully funded by PNB Berhad itself and the Malaysian Government will only give its blessing to the project.
But what I read on daily basis ever since this project is announced is that there are some Malaysian opposing the idea, they even created a Facebook page to derive support from fellow Malaysian. So why does they opposing this idea? What consequences that this construction bring to many Malaysian? What disadvantage will overcome after the completion of this tower? Why must this tower be condemn?
As always, every mega development in Malaysia will face criticizing first from her people, such precedence cases like Petronas Twin Tower, who was once the tallest tower in the world and Penang second bridge. This simple examples shows us that our nature is to oppose before we think. We are full of anger. (sad)
I still remember when the government announce years ago about their plan to built Petronas Twin Tower, many opposed, especially opposition politicians, they uttered many criticisms onto the prospect. I was young at that time, too young to understand, too young to interpret the logic behind it, too young to explore into a more complex economical benefit from the tower, but I can remember my dad and his pals in old days condemned the idea. They said the construction money should be distributed to all Malaysian evenly, they said the money to construct the tower comes from tax payer, they said that there is no point to have such a tall and big tower and it is pointless to have that big ambition as we are nothing to compare to other developed nation in the world.
But now, look what's our perception later. When the Petronas Tower is completed, we all say woooooooo, wtf, mamma mia, or my good lord that's one tall building. We are all awe! Until now, the tower has attracted many visitors from all over the world, many businesses operate inside the tower, many job opportunity has been created and Malaysian life standard has been lifted up.
Let me know if there's any Malaysian now still think that Petronas Tower is useless, and I will condemn him or her.
I am blessed to have the chance to travel to most part of the world. Been to many country for my economy and sociology researches, business trip and vacation. Every time I'm at the cafe or bar enjoying my cigar or pipe, I met new friend, we'll talk about the current world, we'll talk about Malaysia, and Petronas Twin Tower is the compulsory topic and I never miss to hear from them beside Sepang International Circuit topic.
I'm a patriotic kinda guy, I'll shed tears when people praise Malaysia development. Hence, without hesitation, I always be their host every time they visit Malaysia as a gratitude to acknowledge Malaysia.
Now you see what is the impact from just a tower. It's a branding strategy, it's a marketing strategy, it's a way to let other nation to look upon us and say 'Malaysia is not bad, I never thought they are ahead with others nation.'
So the same strategy is applied to Warisan Merdeka Tower, the tower is offering business opportunity, will open more job opportunity, shall boost our tourism and boost our image to the world.
The 100 storey tower will comprise shopping center, office, car park and apartment. This development in economic perspective will stimulate the economic activity in Malaysia in a long term prospect. FDI is predicted to enter Malaysia drastically, more job opportunity is expected to be created and living standard will be lifted as well. So why oppose?
During my writing, it has already 80,126 visitor in Facebook clicked 'like' to the 1 Malaysian Reject 100 Storey Tower page on Facebook, some commenter wrote :-
I read all the comments, I don't condemn them, I don't criticize them. Everybody has a right to express what they though. This is a free country, I'll fight for liberty, equality and fertility.
But let us be reminded again, this project is not funded by the government.!
Warisan Merdeka Tower is a new project announced by our Prime Minister, Dato' Sri Najib Tun Razak. The project cost is estimated to be around RM 5 billion and will be constructed and supervised by PNB Berhad. A mammoth in Malaysian corporate sector, this project is said to be fully funded by PNB Berhad itself and the Malaysian Government will only give its blessing to the project.
But what I read on daily basis ever since this project is announced is that there are some Malaysian opposing the idea, they even created a Facebook page to derive support from fellow Malaysian. So why does they opposing this idea? What consequences that this construction bring to many Malaysian? What disadvantage will overcome after the completion of this tower? Why must this tower be condemn?
As always, every mega development in Malaysia will face criticizing first from her people, such precedence cases like Petronas Twin Tower, who was once the tallest tower in the world and Penang second bridge. This simple examples shows us that our nature is to oppose before we think. We are full of anger. (sad)
I still remember when the government announce years ago about their plan to built Petronas Twin Tower, many opposed, especially opposition politicians, they uttered many criticisms onto the prospect. I was young at that time, too young to understand, too young to interpret the logic behind it, too young to explore into a more complex economical benefit from the tower, but I can remember my dad and his pals in old days condemned the idea. They said the construction money should be distributed to all Malaysian evenly, they said the money to construct the tower comes from tax payer, they said that there is no point to have such a tall and big tower and it is pointless to have that big ambition as we are nothing to compare to other developed nation in the world.
But now, look what's our perception later. When the Petronas Tower is completed, we all say woooooooo, wtf, mamma mia, or my good lord that's one tall building. We are all awe! Until now, the tower has attracted many visitors from all over the world, many businesses operate inside the tower, many job opportunity has been created and Malaysian life standard has been lifted up.
Let me know if there's any Malaysian now still think that Petronas Tower is useless, and I will condemn him or her.
I am blessed to have the chance to travel to most part of the world. Been to many country for my economy and sociology researches, business trip and vacation. Every time I'm at the cafe or bar enjoying my cigar or pipe, I met new friend, we'll talk about the current world, we'll talk about Malaysia, and Petronas Twin Tower is the compulsory topic and I never miss to hear from them beside Sepang International Circuit topic.
I'm a patriotic kinda guy, I'll shed tears when people praise Malaysia development. Hence, without hesitation, I always be their host every time they visit Malaysia as a gratitude to acknowledge Malaysia.
Now you see what is the impact from just a tower. It's a branding strategy, it's a marketing strategy, it's a way to let other nation to look upon us and say 'Malaysia is not bad, I never thought they are ahead with others nation.'
So the same strategy is applied to Warisan Merdeka Tower, the tower is offering business opportunity, will open more job opportunity, shall boost our tourism and boost our image to the world.
The 100 storey tower will comprise shopping center, office, car park and apartment. This development in economic perspective will stimulate the economic activity in Malaysia in a long term prospect. FDI is predicted to enter Malaysia drastically, more job opportunity is expected to be created and living standard will be lifted as well. So why oppose?
During my writing, it has already 80,126 visitor in Facebook clicked 'like' to the 1 Malaysian Reject 100 Storey Tower page on Facebook, some commenter wrote :-
'please...we're not searching for fame via this mega tower , it's a waste of money! put those money to enhance our education, liberate ones from poverty... & so on in the name of helping us,the Malaysians'
'Mega turd idea!! Wahahaha once again we prove to the world we are led by turds who thinks the longest upright structure would show the world we mean business... Incidentally, showing foreigners the longest finger we got on our hand, literally, also means business... AWESOME FACT! They should just dig the deepest hole and hide in there...'.
'Where are the Honest reporting Journalist ? 80,000 people objecting to something surely should be making News Headlines'. 'i like roti canai. u all know what ? im only a kiddo but can think about this country future because i love my country. not only to show my name to the world that i build this fucking taller building. oh yeahh.roti canai to all fakir miskin...'.
'this time i really proud malaysian can unite to disagree with government STUPID planning to wasting people money!!!!! luv u all Malaysian!! haha'.
I read all the comments, I don't condemn them, I don't criticize them. Everybody has a right to express what they though. This is a free country, I'll fight for liberty, equality and fertility.
But let us be reminded again, this project is not funded by the government.!
But if the government decided to build it, I will still agree, because the benefit will always goes to Malaysian.
The best method to analyze every decision that has been decided is to sit calmly, and write down the pros and cons. From there you will know that the issue is wise or unwise.
Dear fellow Malaysian, I'm not here to say I'm a big fan of the government, I'm just a big fan of economy, as I was saying, I'm a saltwater economist. Where there's a greater good for the people, I'm there to support. I'm a Malaysian.
Check on PNB Berhad. They are the one who proposed the idea, they are the one to finance the whole project, not the government.
Tuesday, October 19, 2010
Zimbabwe : What Is the Next Challenge?
The Republic Of Zimbabwe motto is Unity, Freedom and Work. Aren't it idealist?
So, what's so interesting for me to share in this article about the economic of Zimbabwe? For a period, I have planned to discuss Zimbabwe issue to the public, for us to understand their perspective, our perspective, economic perspective and globalization perspective and how can we interpret from this essay.
Back in 2009, I was in Lumut, Malaysia. Living there is pretty bored even though me and my friend rented a villa next to the sea. Due to the boringness plus the heat that produced by the sea breeze, I've recalled back to the time when I was in Ethiopia in 2007. I was there accompany my late girlfriend to study the water treatment, water supply and Geo-politic in Ethiopia, during my stays at Dire Dawa, I've learned that most African tend to be living in a laid-back attitude. For them, time for them is best to be enjoy slowly and took everything one after another. At first we had many difficulties to work in there because our schedule is pretty tight, but we can't force the local to follow our way of work because they will not adapt it easily. What I've learned from my visit to Ethiopia is much more than the economic perspective, but I've learn the sociological aspects.
So what's there for me to link my experience from Ethiopia to Zimbabwe? As what I've mentioned earlier, African are the most laid-back type, and I don't mean laid-back culture is unproductive. Every culture has its own style and methodology on dealing every task, and what's for us to concern right?
But when it come to budget deficit, monetary policy or banking structure. This whole phenomena aren't supposed to happen, this kind of attitude should be eliminate. A strict regulation are mandatory to unsure a nation wealth is fully distributed. Administrating a country is not easy as administrating SME enterprises. A president or prime minister are the CEO of the nation, they are the decision maker, policy maker and key player to the nation growth. That's the weight of responsibility which the title carry.
Robert Mugabe not my favorite type of President. The recent hyperinflation that struck Zimbabwe represented his incapability to run the nation. Hyperinflation in Zimbabwe began in the early 2000s, shortly after Zimbabwe's confiscation of white own farmland. It is estimated on 2008, Zimbabwe's annual inflation rate at 89.7 sextrilion, annual inflation was estimated at 6.5 quindecillion novemdecillion percent, the equivalent of
6 quinquatrigintillion 500 quattuortrigintillion percent, or 65 followed by 107 zeros – one googol 65 million. That's how severe the inflation is.
So how does this inflation happen?
Shortly after the confiscation of white-owned farmland, and land reform policy, it has causes a drastic consequences on Zimbabwe economy. The main objective of land reforms is to distributes the nation land to the local from the white colonial, and this so-called nationalist approaches has failed drastically.
Zimbabwe is the first country in the 21st century to hyperinflate. In February 2007, Zimbabwe’s inflation rate topped 50% per month, the minimum rate required to qualify as a hyperinflation (50% per month is equal to a 12,875% per year). Since then, inflation has soared.
The last official inflation data were released for July and are hopelessly outdated. The Reserve Bank of Zimbabwe has been even less forthcoming with money supply data: the most recent money supply figures are ancient history—January 2008.
Absent current official money supply and inflation data, it is difficult to quantify the depth and breadth of the still-growing crisis in Zimbabwe. To overcome this problem, Cato Senior Fellow Steve Hanke has developed the Hanke Hyperinflation Index for Zimbabwe (HHIZ). This new metric is derived from market-based price data and is presented in the accompanying table for the January 2007 to present period. As of 14 November 2008, Zimbabwe’s annual inflation rate was 89.7 Sextillion (1021) percent.
By
Professor Steve H. Hanke, The Johns Hopkins University and Senior Fellow The Cato Institute.
On 14-Nov-08, the inflation rate is 79,600,000,000.00%, inflation index is 853,000,000,000,000,000,000,000.00 and annual inflation rate is 89,700,000,000,000,000,000,000%.
Do you see the figure? Don't know how to pronounce it? Forget it, you will never see this kind of numbers anymore.
As we are all understand, inflation means the rise in the general level of price of goods and services in an economy over a period of time and hyperinflation means inflation that is very high or "out of control", a condition in which prices increase rapidly as a currency loses its value.
In 1956, Phillipe Cagan wrote The Monetary Dynamics of Hyperinflation, generally regarded as the first serious study of hyperinflation and its effects. In it, he defined hyperinflation as a monthly inflation rate of at least 50%. International Accounting Standard requires a presentation currency. International Accounting Standard (IAS 21) provides for translations of foreign currencies into the presentation currency. IAS 29 establishes special accounting rules for use in hyperinflationary environments, and lists four factors which can trigger application of these rules:
On this post, I did not decide to blame anyone, but hope that we understand why this sad hyperinflation happened so that in the future, we would never see this kind of scary data.
Let's look at the person who help Zimbabwe economy to become much more worst. He is Gideon Gono. He is the current Governor of the Reserve Bank Of Zimbabwe who acted as Central Bank for the country.
The policy that will always be remembered by most economist in the world is on his decision to print Zimbabwe currency in a large quantity.
Several reports that I've read is criticizing his policies and the impact that followed after he implementing his policies. The impact has causes a great problems in Zimbabwe finance, such problems are:
The formula of Quantity Theory of Money is simple:
For those who not really understand how the economy works might think the same solution as Mr. Gono did, because the common understanding is that the more money circulate on the market, the more secure it will be, but by printing enormous amount of money, it has caused a devaluation on the currency itself.
Let's remember the basic theory of economy here, where there's a demand, there's a supply, it applicable to every activity that we practice on everyday life. So when there's no demand for the products or services, but there's a lot of money haven't been spent, then there will be an immediate hike of price for the goods or services that available money can buy. When this scenario happened, inflation took place and when it goes out of hand, hyperinflation is the monarch in the financial system.
Not only by printing the money, Mr. Gono also demonetized old bank note and introducing new currency while the hyperinflation is at peak, the new currency represent a new high value where 1 Zimbabwe Dollar is equivalence to 1000 New Zimbabwe Dollar. For the period of 2 years, Gideon Gono has introduced many types of denomination ranging from 100, 100 000, 200 000, 500 000, 750 000 to 200 million and 50 billion Zimbabwe Dollar. From the time of currency revaluation to the beginning of June 2008 the money supply in the country has increased from $45 billion to more than $900 quadrillion, or a 20,000,000 fold increase!
Mr. Gono is a very 'religious man' when he once quoted "In the Lord's hands, I commit this Monetary Policy Framework for our economic turnaround." And he put god to a position where 'he' too will be participating in Zimbabwe monetary policy.
So, from Robert Mugabe and Gideon Gono, they are the type of laid back person. Where in Zimbabwe, a bread would cost hundreds of million, this kind of people enjoy the luxury money could buy.
So to Zimbabwe.. what is the next challenge to you? How fast can you recover? Why must Gono still be your Governor?
Think! let's think! Think again for the Zimbabwe motto which are Unity, Freedom and Work..
So, what's so interesting for me to share in this article about the economic of Zimbabwe? For a period, I have planned to discuss Zimbabwe issue to the public, for us to understand their perspective, our perspective, economic perspective and globalization perspective and how can we interpret from this essay.
Back in 2009, I was in Lumut, Malaysia. Living there is pretty bored even though me and my friend rented a villa next to the sea. Due to the boringness plus the heat that produced by the sea breeze, I've recalled back to the time when I was in Ethiopia in 2007. I was there accompany my late girlfriend to study the water treatment, water supply and Geo-politic in Ethiopia, during my stays at Dire Dawa, I've learned that most African tend to be living in a laid-back attitude. For them, time for them is best to be enjoy slowly and took everything one after another. At first we had many difficulties to work in there because our schedule is pretty tight, but we can't force the local to follow our way of work because they will not adapt it easily. What I've learned from my visit to Ethiopia is much more than the economic perspective, but I've learn the sociological aspects.
So what's there for me to link my experience from Ethiopia to Zimbabwe? As what I've mentioned earlier, African are the most laid-back type, and I don't mean laid-back culture is unproductive. Every culture has its own style and methodology on dealing every task, and what's for us to concern right?
But when it come to budget deficit, monetary policy or banking structure. This whole phenomena aren't supposed to happen, this kind of attitude should be eliminate. A strict regulation are mandatory to unsure a nation wealth is fully distributed. Administrating a country is not easy as administrating SME enterprises. A president or prime minister are the CEO of the nation, they are the decision maker, policy maker and key player to the nation growth. That's the weight of responsibility which the title carry.
Robert Mugabe not my favorite type of President. The recent hyperinflation that struck Zimbabwe represented his incapability to run the nation. Hyperinflation in Zimbabwe began in the early 2000s, shortly after Zimbabwe's confiscation of white own farmland. It is estimated on 2008, Zimbabwe's annual inflation rate at 89.7 sextrilion, annual inflation was estimated at 6.5 quindecillion novemdecillion percent, the equivalent of
6 quinquatrigintillion 500 quattuortrigintillion percent, or 65 followed by 107 zeros – one googol 65 million. That's how severe the inflation is.
So how does this inflation happen?
Shortly after the confiscation of white-owned farmland, and land reform policy, it has causes a drastic consequences on Zimbabwe economy. The main objective of land reforms is to distributes the nation land to the local from the white colonial, and this so-called nationalist approaches has failed drastically.
Zimbabwe is the first country in the 21st century to hyperinflate. In February 2007, Zimbabwe’s inflation rate topped 50% per month, the minimum rate required to qualify as a hyperinflation (50% per month is equal to a 12,875% per year). Since then, inflation has soared.
The last official inflation data were released for July and are hopelessly outdated. The Reserve Bank of Zimbabwe has been even less forthcoming with money supply data: the most recent money supply figures are ancient history—January 2008.
Absent current official money supply and inflation data, it is difficult to quantify the depth and breadth of the still-growing crisis in Zimbabwe. To overcome this problem, Cato Senior Fellow Steve Hanke has developed the Hanke Hyperinflation Index for Zimbabwe (HHIZ). This new metric is derived from market-based price data and is presented in the accompanying table for the January 2007 to present period. As of 14 November 2008, Zimbabwe’s annual inflation rate was 89.7 Sextillion (1021) percent.
By
Professor Steve H. Hanke, The Johns Hopkins University and Senior Fellow The Cato Institute.
On 14-Nov-08, the inflation rate is 79,600,000,000.00%, inflation index is 853,000,000,000,000,000,000,000.00 and annual inflation rate is 89,700,000,000,000,000,000,000%.
Do you see the figure? Don't know how to pronounce it? Forget it, you will never see this kind of numbers anymore.
As we are all understand, inflation means the rise in the general level of price of goods and services in an economy over a period of time and hyperinflation means inflation that is very high or "out of control", a condition in which prices increase rapidly as a currency loses its value.
In 1956, Phillipe Cagan wrote The Monetary Dynamics of Hyperinflation, generally regarded as the first serious study of hyperinflation and its effects. In it, he defined hyperinflation as a monthly inflation rate of at least 50%. International Accounting Standard requires a presentation currency. International Accounting Standard (IAS 21) provides for translations of foreign currencies into the presentation currency. IAS 29 establishes special accounting rules for use in hyperinflationary environments, and lists four factors which can trigger application of these rules:
- The general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested to maintain purchasing power
- The general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that foreign currency.
- Interest rates, wages and prices are linked to a price index and the cumulative inflation rate over three years approaches, or exceeds, 100%.
On this post, I did not decide to blame anyone, but hope that we understand why this sad hyperinflation happened so that in the future, we would never see this kind of scary data.
Let's look at the person who help Zimbabwe economy to become much more worst. He is Gideon Gono. He is the current Governor of the Reserve Bank Of Zimbabwe who acted as Central Bank for the country.
The policy that will always be remembered by most economist in the world is on his decision to print Zimbabwe currency in a large quantity.
Several reports that I've read is criticizing his policies and the impact that followed after he implementing his policies. The impact has causes a great problems in Zimbabwe finance, such problems are:
- cash shortages
- fuel and food scarcity, shortages in agriculture.
- businessmen have been arrested by the police and army under Gono's orders.
- some Zimbabweans have become fugitives or have languished in prison, notably Mutumwa Mawere, James Makamba, July Moyo, Philip Chiyangwa and David Batau.
- the highest inflation in the world and unemployment and the collapse of the health, education and agriculture sectors.
The formula of Quantity Theory of Money is simple:
For those who not really understand how the economy works might think the same solution as Mr. Gono did, because the common understanding is that the more money circulate on the market, the more secure it will be, but by printing enormous amount of money, it has caused a devaluation on the currency itself.
Let's remember the basic theory of economy here, where there's a demand, there's a supply, it applicable to every activity that we practice on everyday life. So when there's no demand for the products or services, but there's a lot of money haven't been spent, then there will be an immediate hike of price for the goods or services that available money can buy. When this scenario happened, inflation took place and when it goes out of hand, hyperinflation is the monarch in the financial system.
Not only by printing the money, Mr. Gono also demonetized old bank note and introducing new currency while the hyperinflation is at peak, the new currency represent a new high value where 1 Zimbabwe Dollar is equivalence to 1000 New Zimbabwe Dollar. For the period of 2 years, Gideon Gono has introduced many types of denomination ranging from 100, 100 000, 200 000, 500 000, 750 000 to 200 million and 50 billion Zimbabwe Dollar. From the time of currency revaluation to the beginning of June 2008 the money supply in the country has increased from $45 billion to more than $900 quadrillion, or a 20,000,000 fold increase!
Mr. Gono is a very 'religious man' when he once quoted "In the Lord's hands, I commit this Monetary Policy Framework for our economic turnaround." And he put god to a position where 'he' too will be participating in Zimbabwe monetary policy.
So, from Robert Mugabe and Gideon Gono, they are the type of laid back person. Where in Zimbabwe, a bread would cost hundreds of million, this kind of people enjoy the luxury money could buy.
So to Zimbabwe.. what is the next challenge to you? How fast can you recover? Why must Gono still be your Governor?
Think! let's think! Think again for the Zimbabwe motto which are Unity, Freedom and Work..
Thursday, September 23, 2010
Re-Post Oil Price Fantasy: The True Cost of Crude
Like most Americans, I often wonder what the world would look without our dependency on the free flow of oil from the Persian Gulf.
Of course, this has always been something of a national fairy tale...
But it's still fun to fantasize.
Ever since the gas lines of the 1970s, Middle Eastern oil has become the ultimate global hobgoblin — a thorn in the foot of the industrialized world.
And every day this geographic lottery treats us to a never-ending stream of bad news from an area of the world that we will never completely understand — or conquer.
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Without the region's abundance of black gold, I think I can safely say that what is happening in the Middle East would be as interesting to us as what's going on in, say, Borneo.
By the way, the big news in Borneo these days is that wildlife rangers have successfully rescued a few endangered Pygmy elephants that recently went astray.
While this news may be interesting to some folks, most Americans could probably care less. And I think that's how most of us would feel toward the majority of news coming out of Syria, Iran, and the places in between — if it weren't for the size of those oil fields.
Absent the crude, it would be a giant and collective: "Who cares?" or, "Saddam Hussein? Never heard of him... "
The true cost of oil
But that's simply not the hand the industrial world has been dealt. By fate, the majority of oil is in places where instability is something of a way of life.
And while I do understand that oil is not the only reason we involve ourselves “over there,” I think we all instinctively understand that crude is at the root of it all.
But hey — so long as the price of a gallon of gas is still under $2.90, most people live with the devil in the details. After all, if there's one thing that nearly every American driver makes his or his business, it's the price of gas...
I don't know about you, but I can easily name at least 10 people who routinely drive across town to save a penny or two at the pump. Whatever floats your boat, I guess.
But what if I told you — or them — that this "bargain gas" is nothing more than a mirage, since it doesn't actually capture all of the input costs? Would that change your mind about a few things?
That's because the price of a barrel from the Middle East is the real fantasy here. Its spot price may be about $74/barrel; but the reality is that the true cost of a barrel is much, much higher — we simply pretend that it's not.
How much higher, you ask?
Try $469.00 per barrel higher, if that crude comes from the Persian Gulf...
That means that the true cost of a barrel of Middle Eastern oil is not $74 as is widely believed; but a hefty $543.00 — or 7.3 times its spot price.
And that's why the spot price of a barrel of oil is a completely insufficient measure of its cost. Spot price only involves the unit price, failing to take into account all the costs associated with keeping those millions of units flowing.
And as we know, in the bloody and turbulent world of the Persian Gulf, it is both American blood and treasure that keeps it all going — for us and for everybody else. We pull the wagon and the rest of the world comes along for the ride.
Although we could never even begin to calculate the value of the lost and broken American lives created by this struggle, we can examine the cost of oil in defense dollars. That's the share every American spends to subsidize this charade.
And it's how I came up with the "true" price for a barrel of oil from the region.
The uncounted cost of oil
According to estimates, we spend nearly half of our entire $685 billion defense budget protecting and ensuring the free flow of the approximately 730 million barrels of oil that we import annually from the Persian Gulf.
And given the realities created by such terrifically large numbers, this means we spend an additional $469.00 on each of these units in order to bring them safely to market.
So while we can all now happily fill up at a mere $2.70 per gallon, the actual price of that gas is much higher, once you figure in the cost of the defense dollars necessary to bring it all to market.
Add to that its cost in blood — and its true price is off the charts.
Even when you average out the high cost of Middle Eastern oil with the rest of our imports, you arrive at a true cost of $152.00 a barrel — almost twice its spot price.
Maintaining the illusion of cheap oil is considerably more costly than we think.
So what's the real cost of a gallon of gas?
By my reckoning, it's about twice as much as we think it is — about $6.50/gallon. That means your 22-gallon fill-up rings in at around $143.00.
That's why I can't understand the adverse attitudes some folks maintain toward alternative energy.
Energy independence has to start somewhere. And the truth is that if we pursued these goals as vigorously as we work to defend the free flow of oil, we would already be that much closer to the day when we leave the Middle East behind.
Now that is a future worth thinking about, even if it may take a long time to realize.
Of course, none of this is new to our team of analysts. When it comes to the energy curve, we pride ourselves on being one step ahead of the herd.
In fact my colleagues Nick Hodge and Christian DeHaemer have tracked down two new energy plays that promise to early investors a fortune. To learn more about these opportunities, click here and here.
Your bargain-hunting analyst,
Steve Christ
Editor, Wealth Daily
Of course, this has always been something of a national fairy tale...
But it's still fun to fantasize.
Ever since the gas lines of the 1970s, Middle Eastern oil has become the ultimate global hobgoblin — a thorn in the foot of the industrialized world.
And every day this geographic lottery treats us to a never-ending stream of bad news from an area of the world that we will never completely understand — or conquer.
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Without the region's abundance of black gold, I think I can safely say that what is happening in the Middle East would be as interesting to us as what's going on in, say, Borneo.
By the way, the big news in Borneo these days is that wildlife rangers have successfully rescued a few endangered Pygmy elephants that recently went astray.
While this news may be interesting to some folks, most Americans could probably care less. And I think that's how most of us would feel toward the majority of news coming out of Syria, Iran, and the places in between — if it weren't for the size of those oil fields.
Absent the crude, it would be a giant and collective: "Who cares?" or, "Saddam Hussein? Never heard of him... "
The true cost of oil
But that's simply not the hand the industrial world has been dealt. By fate, the majority of oil is in places where instability is something of a way of life.
And while I do understand that oil is not the only reason we involve ourselves “over there,” I think we all instinctively understand that crude is at the root of it all.
But hey — so long as the price of a gallon of gas is still under $2.90, most people live with the devil in the details. After all, if there's one thing that nearly every American driver makes his or his business, it's the price of gas...
I don't know about you, but I can easily name at least 10 people who routinely drive across town to save a penny or two at the pump. Whatever floats your boat, I guess.
But what if I told you — or them — that this "bargain gas" is nothing more than a mirage, since it doesn't actually capture all of the input costs? Would that change your mind about a few things?
That's because the price of a barrel from the Middle East is the real fantasy here. Its spot price may be about $74/barrel; but the reality is that the true cost of a barrel is much, much higher — we simply pretend that it's not.
How much higher, you ask?
Try $469.00 per barrel higher, if that crude comes from the Persian Gulf...
That means that the true cost of a barrel of Middle Eastern oil is not $74 as is widely believed; but a hefty $543.00 — or 7.3 times its spot price.
And that's why the spot price of a barrel of oil is a completely insufficient measure of its cost. Spot price only involves the unit price, failing to take into account all the costs associated with keeping those millions of units flowing.
And as we know, in the bloody and turbulent world of the Persian Gulf, it is both American blood and treasure that keeps it all going — for us and for everybody else. We pull the wagon and the rest of the world comes along for the ride.
Although we could never even begin to calculate the value of the lost and broken American lives created by this struggle, we can examine the cost of oil in defense dollars. That's the share every American spends to subsidize this charade.
And it's how I came up with the "true" price for a barrel of oil from the region.
The uncounted cost of oil
According to estimates, we spend nearly half of our entire $685 billion defense budget protecting and ensuring the free flow of the approximately 730 million barrels of oil that we import annually from the Persian Gulf.
And given the realities created by such terrifically large numbers, this means we spend an additional $469.00 on each of these units in order to bring them safely to market.
So while we can all now happily fill up at a mere $2.70 per gallon, the actual price of that gas is much higher, once you figure in the cost of the defense dollars necessary to bring it all to market.
Add to that its cost in blood — and its true price is off the charts.
Even when you average out the high cost of Middle Eastern oil with the rest of our imports, you arrive at a true cost of $152.00 a barrel — almost twice its spot price.
Maintaining the illusion of cheap oil is considerably more costly than we think.
So what's the real cost of a gallon of gas?
By my reckoning, it's about twice as much as we think it is — about $6.50/gallon. That means your 22-gallon fill-up rings in at around $143.00.
That's why I can't understand the adverse attitudes some folks maintain toward alternative energy.
Energy independence has to start somewhere. And the truth is that if we pursued these goals as vigorously as we work to defend the free flow of oil, we would already be that much closer to the day when we leave the Middle East behind.
Now that is a future worth thinking about, even if it may take a long time to realize.
Of course, none of this is new to our team of analysts. When it comes to the energy curve, we pride ourselves on being one step ahead of the herd.
In fact my colleagues Nick Hodge and Christian DeHaemer have tracked down two new energy plays that promise to early investors a fortune. To learn more about these opportunities, click here and here.
Your bargain-hunting analyst,
Steve Christ
Editor, Wealth Daily
Saturday, September 18, 2010
Re-post Wealth daily: Stake Your Claim in Lake Superior's $1.9 Trillion Secret
Stake Your Claim in Lake Superior's $1.9 Trillion Secret
By Luke Burgess | Friday, September 17th, 2010
The Russians might be tapped out of one of their most precious natural resources...
Palladium.
And now that the country won't be able to supply the market, palladium prices could be headed for an explosive increase.
For investors, there's a small window of opportunity to get in before prices really start to take off.
I'll give you one idea on how to yield maximum profit in just a minute...
But before I do that, it's important for you to understand why palladium prices are set to continue rising — and how I think this will help you turn a healthy profit from my latest investment idea.
Advertisement
I've Uncovered A Photograph that Could Hand You $36,950 by this Time Next Year...
I don't blame you if this sounds far-fetched...
In fact, if I hadn't met the man who traveled 1,400 miles to track me down — just to hand me a photo — I wouldn't have believed it, either.
But once you take a peek at the snapshot, as well as the three reasons it could make you rich, I have no doubt you'll change your mind.
Palladium: A new precious metal investment angle
Even though it's considered a “precious metal,” palladium is not used for jewelry as much as gold and silver are.
Rather, the white metal is primarily used in consumer and industrial goods.2009 palladium demand by sector
Palladium is often found in electronics — cell phones, LCD TVs, laptops, iPods, DVD players, monitors... There's no doubt that you have several electronic devices nearby, as you read this, that are filled with palladium.
But the primary application for palladium is in the manufacturing of automobile catalytic converters, which convert up to 90% of harmful gases from auto exhaust (like carbon monoxide) into less harmful substances.
In fact half of annual worldwide palladium supplies go into the production of autocatalysts.
As such, palladium demand is generally correlated to the health of the global auto industry, which has strongly rebounded this year.
Vehicle sales in every one of the top ten auto markets in the world are increasing:
*
The U.S. auto market, where sales have climbed 8.4% in the first eight months of 2010 to almost 7.7 million units.
*
China, the largest car market in the world, increased auto sales by 39.0% in the January-August 2010 period to 11.6 million units.
*
Domestic monthly sales of new cars, trucks, and buses in Japan, the world's #3 auto market, increased 46.7% in August 2010 from a year earlier — the highest monthly gain since 1972. This was the 13th straight month of increased auto sales in the country.
Overall, global light vehicle production is expected to increase 60% through 2016.
As the global auto industry continues to recover, the demand for palladium will increase with the growing demand for catalytic converters.
The recovery of the global auto industry will push the demand for palladium higher.
But the world's palladium resources are extremely limited. About 80% of the global palladium supply comes from just two countries: South Africa and Russia.
The largest palladium reserves in the world are in the Bushveld Complex in South Africa.
But half of the global supply of palladium comes from just three sources in Russia:
*
Norilsk Nickel (OTCBB: NILSY)
*
the Russian State Precious Metals and Gemstones Repository (Gokhran)
*
the Russian Central Bank
Norilsk Nickel is the largest palladium producer in the world. Each year, the company produces about 2.5 million ounces of palladium — enough to satisfy a whopping 40% of total global demand.
But Norilsk's palladium production isn't enough to meet rapidly growing demand from the auto industry, so Russia fills the deficit from Gokran and the Russian Central Bank.
However, industry insiders are now suggesting that there will be no sales from Russia's palladium stockpiles in 2011, indicating that the country's supplies are nearing depletion.
Russia's giant palladium stockpiles nearly dried up
Director of Norilsk Nickel Anton Berlin noted in a presentation given at ETF Securities Ltd. that the consensus is there will be no sales of palladium from the Russian state stockpile next year.
The actual level of Russia's palladium stockpiles is a state secret, so Mr. Berlin had to be careful with his responses during the presentation...
He did point out that palladium sales from Russian stockpiles have been falling year after year. And he mentioned that stockpile sales are now a fraction of historic values — a clear indicator that Russia's palladium reserves are approaching depletion.2011 palladium bar
Two years ago, the Russian government announced that it would begin limiting sales of palladium from the country's inventories. Now it's clear why.
Without Russian stockpiles to help feed supply, global demand will be more dependent on mine production.
But with the majority of resources concentrated into two potentially unreliable regions, increasing production to meet demand is nearly impossible.
Norilsk Nickel has published production plans as far out as 2025, and there are no plans for any substantial increase in palladium production.
South Africa is actively looking to increase palladium production by boosting the platinum: palladium production ratio from 2.1:1 to 1.9:1.
The issue here is that rising production costs are discouraging miners to focus production on palladium, which they can only sell at a third of the price of platinum.
The only other country in the world with tangible upside in terms of palladium production is Zimbabwe, but the security and political risk inherent in working in Zimbabwe is not ideal.
There is, however, one other region that has the potential to become a major palladium producer...
And it's right here in North America.
Lake Superior's $1.9 trillion secret
On the Northwestern shores of Lake Superior, bordering Ontario and Minnesota, the small port town of Thunder Bay is home to just over 100,000 people.
It's been long known that just 50 kilometers north of Thunder Bay, geologic structures are similar to those of the Russian giant Norilsk-Talnakh deposits — the largest nickel-copper-palladium deposits in the world.
For decades, there has been one major setback with the minerals found at Thunder Bay...
Up until recently, explorers only found low-grade ore that was often uneconomical to process.
However, modern mineral exploration technology has led the way for the discovery of several new high-grade deposits in the past few years.
These deposits currently have estimated resources of:
*
15.6 billion pounds of nickel
*
501.4 billion pounds of copper
*
32.9 million ounces of platinum
*
37.4 million ounces of palladium
In total, these resources would be worth nearly $1.9 trillion out of the ground.
The entire region now has significant potential to be a major North American nickel-copper-platinum-palladium camp, as recent discoveries have demonstrated the presence of high-grade mineralization.
Major players in the area include Rio Tinto (NYSE: RTP), Marathon PGM (TSX: MAR), and North American Palladium (AMEX: PAL).
There are a handful of smaller companies exploring and developing similar nickel-copper-platinum-palladium projects — including one that I'm particularly excited about...
It's a junior exploration and development mineral company with over 100,000 hectares, and it's located smack-dab in between the two largest palladium deposits in North America.
To the west is North American Palladium's Lac des Iles Mine, one of the largest palladium mines in North America. Lac des Iles has 3.7 million ounces of palladium resources and is projected to produce 140,000 ounces next year.
To the east is Marathon PGM's Marathon Mine — containing 2.4 million ounces of palladium reserves plus 3.0 million ounces of palladium resources. It was just bought by Stillwater Mining (NYSW: SWC) for $118 million.
These are two of the most important palladium mines in North America.
Every junior palladium explorer wants land around them.
This junior company has already made the discovery of a palladium deposit on one of its many mining claims of 730,000 ounces of palladium-equivalent resources...
But the company is actively working to upgrade and increase its palladium resource base.
The target: 2.6 million ounces of palladium-equivalent resources.
And it's worth 12.6 times more than the company's current market cap.
This means that — once this company becomes resource-heavy and properly valued — share prices could increase 1,163%.
And that's just at current palladium prices!
The last time palladium was entering a similar bull market, prices rapidly surged from $160 to over $1,100 an ounce — a 588% increase!
Fortunately, palladium prices have pulled back quite a bit, allowing for a buying opportunity. And if we have a similar bull market for palladium, prices could hit $3,438 an ounce!
With palladium prices nearing $3,500 an ounce, the investment gains from this small stock will start to increase exponentially...
I've already taken up too much time here. There's a lot more to this story that I want you to hear.
I haven't even begun to touch on how palladium prices are about to be forced higher by the global auto industry's “big switch.”
In fact I just updated my latest report — one that I put together for an investment buddy up in New York.
I'm going to publish this report for paid subscribers of my Underground Profits investment advisory and to the Wealth Daily website next week.
But you can check out this report before I do that — by simply clicking here or copying and pasting the following link into your internet browser's address bar: https://www.angelnexus.com/o/web/23273.
Good Investing,
luke_signature.gif
Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire and Underground Profits
By Luke Burgess | Friday, September 17th, 2010
The Russians might be tapped out of one of their most precious natural resources...
Palladium.
And now that the country won't be able to supply the market, palladium prices could be headed for an explosive increase.
For investors, there's a small window of opportunity to get in before prices really start to take off.
I'll give you one idea on how to yield maximum profit in just a minute...
But before I do that, it's important for you to understand why palladium prices are set to continue rising — and how I think this will help you turn a healthy profit from my latest investment idea.
Advertisement
I've Uncovered A Photograph that Could Hand You $36,950 by this Time Next Year...
I don't blame you if this sounds far-fetched...
In fact, if I hadn't met the man who traveled 1,400 miles to track me down — just to hand me a photo — I wouldn't have believed it, either.
But once you take a peek at the snapshot, as well as the three reasons it could make you rich, I have no doubt you'll change your mind.
Palladium: A new precious metal investment angle
Even though it's considered a “precious metal,” palladium is not used for jewelry as much as gold and silver are.
Rather, the white metal is primarily used in consumer and industrial goods.2009 palladium demand by sector
Palladium is often found in electronics — cell phones, LCD TVs, laptops, iPods, DVD players, monitors... There's no doubt that you have several electronic devices nearby, as you read this, that are filled with palladium.
But the primary application for palladium is in the manufacturing of automobile catalytic converters, which convert up to 90% of harmful gases from auto exhaust (like carbon monoxide) into less harmful substances.
In fact half of annual worldwide palladium supplies go into the production of autocatalysts.
As such, palladium demand is generally correlated to the health of the global auto industry, which has strongly rebounded this year.
Vehicle sales in every one of the top ten auto markets in the world are increasing:
*
The U.S. auto market, where sales have climbed 8.4% in the first eight months of 2010 to almost 7.7 million units.
*
China, the largest car market in the world, increased auto sales by 39.0% in the January-August 2010 period to 11.6 million units.
*
Domestic monthly sales of new cars, trucks, and buses in Japan, the world's #3 auto market, increased 46.7% in August 2010 from a year earlier — the highest monthly gain since 1972. This was the 13th straight month of increased auto sales in the country.
Overall, global light vehicle production is expected to increase 60% through 2016.
As the global auto industry continues to recover, the demand for palladium will increase with the growing demand for catalytic converters.
The recovery of the global auto industry will push the demand for palladium higher.
But the world's palladium resources are extremely limited. About 80% of the global palladium supply comes from just two countries: South Africa and Russia.
The largest palladium reserves in the world are in the Bushveld Complex in South Africa.
But half of the global supply of palladium comes from just three sources in Russia:
*
Norilsk Nickel (OTCBB: NILSY)
*
the Russian State Precious Metals and Gemstones Repository (Gokhran)
*
the Russian Central Bank
Norilsk Nickel is the largest palladium producer in the world. Each year, the company produces about 2.5 million ounces of palladium — enough to satisfy a whopping 40% of total global demand.
But Norilsk's palladium production isn't enough to meet rapidly growing demand from the auto industry, so Russia fills the deficit from Gokran and the Russian Central Bank.
However, industry insiders are now suggesting that there will be no sales from Russia's palladium stockpiles in 2011, indicating that the country's supplies are nearing depletion.
Russia's giant palladium stockpiles nearly dried up
Director of Norilsk Nickel Anton Berlin noted in a presentation given at ETF Securities Ltd. that the consensus is there will be no sales of palladium from the Russian state stockpile next year.
The actual level of Russia's palladium stockpiles is a state secret, so Mr. Berlin had to be careful with his responses during the presentation...
He did point out that palladium sales from Russian stockpiles have been falling year after year. And he mentioned that stockpile sales are now a fraction of historic values — a clear indicator that Russia's palladium reserves are approaching depletion.2011 palladium bar
Two years ago, the Russian government announced that it would begin limiting sales of palladium from the country's inventories. Now it's clear why.
Without Russian stockpiles to help feed supply, global demand will be more dependent on mine production.
But with the majority of resources concentrated into two potentially unreliable regions, increasing production to meet demand is nearly impossible.
Norilsk Nickel has published production plans as far out as 2025, and there are no plans for any substantial increase in palladium production.
South Africa is actively looking to increase palladium production by boosting the platinum: palladium production ratio from 2.1:1 to 1.9:1.
The issue here is that rising production costs are discouraging miners to focus production on palladium, which they can only sell at a third of the price of platinum.
The only other country in the world with tangible upside in terms of palladium production is Zimbabwe, but the security and political risk inherent in working in Zimbabwe is not ideal.
There is, however, one other region that has the potential to become a major palladium producer...
And it's right here in North America.
Lake Superior's $1.9 trillion secret
On the Northwestern shores of Lake Superior, bordering Ontario and Minnesota, the small port town of Thunder Bay is home to just over 100,000 people.
It's been long known that just 50 kilometers north of Thunder Bay, geologic structures are similar to those of the Russian giant Norilsk-Talnakh deposits — the largest nickel-copper-palladium deposits in the world.
For decades, there has been one major setback with the minerals found at Thunder Bay...
Up until recently, explorers only found low-grade ore that was often uneconomical to process.
However, modern mineral exploration technology has led the way for the discovery of several new high-grade deposits in the past few years.
These deposits currently have estimated resources of:
*
15.6 billion pounds of nickel
*
501.4 billion pounds of copper
*
32.9 million ounces of platinum
*
37.4 million ounces of palladium
In total, these resources would be worth nearly $1.9 trillion out of the ground.
The entire region now has significant potential to be a major North American nickel-copper-platinum-palladium camp, as recent discoveries have demonstrated the presence of high-grade mineralization.
Major players in the area include Rio Tinto (NYSE: RTP), Marathon PGM (TSX: MAR), and North American Palladium (AMEX: PAL).
There are a handful of smaller companies exploring and developing similar nickel-copper-platinum-palladium projects — including one that I'm particularly excited about...
It's a junior exploration and development mineral company with over 100,000 hectares, and it's located smack-dab in between the two largest palladium deposits in North America.
To the west is North American Palladium's Lac des Iles Mine, one of the largest palladium mines in North America. Lac des Iles has 3.7 million ounces of palladium resources and is projected to produce 140,000 ounces next year.
To the east is Marathon PGM's Marathon Mine — containing 2.4 million ounces of palladium reserves plus 3.0 million ounces of palladium resources. It was just bought by Stillwater Mining (NYSW: SWC) for $118 million.
These are two of the most important palladium mines in North America.
Every junior palladium explorer wants land around them.
This junior company has already made the discovery of a palladium deposit on one of its many mining claims of 730,000 ounces of palladium-equivalent resources...
But the company is actively working to upgrade and increase its palladium resource base.
The target: 2.6 million ounces of palladium-equivalent resources.
And it's worth 12.6 times more than the company's current market cap.
This means that — once this company becomes resource-heavy and properly valued — share prices could increase 1,163%.
And that's just at current palladium prices!
The last time palladium was entering a similar bull market, prices rapidly surged from $160 to over $1,100 an ounce — a 588% increase!
Fortunately, palladium prices have pulled back quite a bit, allowing for a buying opportunity. And if we have a similar bull market for palladium, prices could hit $3,438 an ounce!
With palladium prices nearing $3,500 an ounce, the investment gains from this small stock will start to increase exponentially...
I've already taken up too much time here. There's a lot more to this story that I want you to hear.
I haven't even begun to touch on how palladium prices are about to be forced higher by the global auto industry's “big switch.”
In fact I just updated my latest report — one that I put together for an investment buddy up in New York.
I'm going to publish this report for paid subscribers of my Underground Profits investment advisory and to the Wealth Daily website next week.
But you can check out this report before I do that — by simply clicking here or copying and pasting the following link into your internet browser's address bar: https://www.angelnexus.com/o/web/23273.
Good Investing,
luke_signature.gif
Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire and Underground Profits
Wednesday, January 27, 2010
Re-post: Important Report on China energy consumption
According to the Energy Information Administration, the world's demand for energy has been increasing for decades and will continue to rise into the foreseeable future. Take a look:
This isn't news.
John Felmy, the Chief Economist at the American Petroleum Institute says, "There's no question demand internationally is increasing, and virtually all the major forecasters for the year have been increasing their forecasts for demand worldwide."
This only makes sense. The global economy is coming out of a recession. China just announced that GDP grew 10.9% last quarter. India is expecting to grow GDP at 7.5% in 2010.
Heck, even the UK announced that its longest recession in history was now over and GDP grew in that country at a sedate 0.1%...
And despite what you might hear from Al Gore and U2's leading man Bono, oil consumption will increase over the next ten years.
According to the World Institute for the Analysis of Global Security: "From now to 2020, world oil consumption will rise by about 60%. Transportation will be the fastest growing oil-consuming sector. By 2025, the number of cars will increase to well over 1.25 billion from approximately 700 million today. Global consumption of gasoline could double."
It's simple: More cars are sold in China today than in any other country. India is spending billions to build highways, and India's Tata Motors is now selling a $2,000 car to the masses.
China Loves Oil
The most recent data showed that China's oil demand in November rose 18.7 percent year-over-year — the third straight month of double-digit growth. It is no wonder then that over the past two years, China has been securing long-term contracts to its energy needs. It has used its nearly $2 trillion in foreign reserves to gain access to for foreign gas and oil supplies.
China is selling its suspect dollars to lock in hard assets.
Starting back in 2008 when the price of crude dropped to $35 a barrel, China (through its three top oil companies) started an aggressive campaign to scoop the West. They invested in Iraq, Iran, Kazakhstan, Nigeria, Venezuela, and Argentina, among others.
The Chinese have even invaded North America's backyard. They made inroads against the U.S. supply of Canadian oil sands, as Canada is afraid that new low-carbon fuel standards in the U.S. will restrict the purchase of oil sands oil.
China is also looking to buy leases in the Gulf of Mexico from Devon Energy and announced that they were buying a major holding from the Saudis: a transfer station in the Caribbean.
The Chinese are also beating the Europeans and Russia. The Middle Kingdom has recently built an oil pipeline, the first running east from the oil- and gas-rich nations along the Caspian Sea including Kazakhstan and Turkmenistan. There are reports that certain types of crude from Saudi Arabia can't be bought in Europe anymore... they're all going to China.
And just last month, China Development Bank announced that it was investing $50 billion to buy 6 billion barrels of oil reserves in Nigeria.
Obama Does Nothing...
Given China's aggressive tactics, one might expect the U.S. government might try to counter China's oil grab by securing its own oil future. After all, most of us still remember the oil embargo in the 1970s that drove the economy into a decade of stagnant growth and high inflation...
But you would expect wrong.
From a recent report from the Institute for Energy Research:
On February 4, 2009, Interior Secretary Salazar rescinded 77 oil and gas leases in Utah that could cost American taxpayers millions in lost lease bids, production royalties, new jobs, and the energy needed to offset rising imports of oil and gas.
On February 10, Secretary Salazar delayed for 6 months the development of the new 5-year leasing program for offshore drilling that would have set the framework for accessing newly available areas.
On February 25, Secretary Salazar canceled a new round of commercial-scale oil shale research, demonstration, and development leases in Colorado, Wyoming, and Utah.
On February 26, President Obama introduced a budget that contains page after page of taxes on oil and gas totaling more than $31 billion that will reduce our domestic energy production.
On March 30, President Obama signed the Omnibus Public Lands Management Act into law, prohibiting energy production on over 3 million acres of federal land.
After rescinding 77 Utah oil and gas leases in February, Salazar announced on October 8 that he would lease 17 of them.
On October 20, after canceling a new round of commercial-scale oil shale research, demonstration, and development leases last February, Salazar issued a new oil shale leasing program that decreases lease acreage by 87 percent, demands unrealistic timelines for investment into cutting edge research, and leaves royalty rates at the whim of the Secretary or in new regulations.
The truth is this: The Obama Administration is so bent on green energy that they haven't even acknowledged the need for oil.
Despite the highest estimates for windmills and sun-power, the wildly held view is that oil will continue to account for 40% of global energy demand 25 years from now... And this at time when energy demand as a whole is expected to increase 60% or more!
Futhermore, all serious research suggests that hydrocarbon-based fossil fuels (oil plus coal, natgas, etc.) will still account for 85% of world energy demand in 2035.
That's why the top tier Chinese oil companies CNPC, Sinopec, and CNOOC have worked with their government bank and made hundreds of billions of dollars of oil and gas investments.
The Chinese Love Their Oil Companies
The popular mood toward oil companies in the U.S. and China couldn't be more different. In China, they have the full support of the government and people.
In the U.S. the big American oil companies like ExxonMobil, ConocoPhillips, and Chevron are dragged before Congress and scapegoated. You may remember your representatives on their high horse back in 2008.
Sen. Dick Durbin (D-Ill.) said, "You have to sense what you guys are doing to us," and called the oil companies "unconscionable."
Rep. Edward Markey (D-Mass.), chairman of the Select Committee on Energy Independence and Global Warming said, "On April Fool's Day, the biggest joke of all is being played on American families by big oil."
The naive sheeple and politicians in the U.S. routinely vilify the very people who supply the energy they use every day. They curse Big Oil as they fill up their Expeditions. Exxon, they claim, is Beelzebub.
If you think oil is expensive now... just wait until we can't get anymore of it.
Giving Away the Store
The cold, hard reality of it all is this: oil is power.
And right now, America and the West are handing over — uncontested — the largest power in the history of the world to their chief rival.
As an investor, I see the future. If the short-term dollar bounce means that oil falls to $70, or $60 or even $55 — I'm a buyer, not a seller. For the simple reason that the Chinese will provide a hard floor and ensure prices. And with the world coming out of recession, there is plenty of upside.
Make China Pay
The good news is that I know where China is going next... and how you can make them pay in what I confidently proclaim will be the best investment opportunity of the decade.
Don't believe me? Read this free report.
All the Best,
Christian DeHaemer
Editor, Wealth Daily
Founder and Editor, Crisis & Opportunity
This isn't news.
John Felmy, the Chief Economist at the American Petroleum Institute says, "There's no question demand internationally is increasing, and virtually all the major forecasters for the year have been increasing their forecasts for demand worldwide."
This only makes sense. The global economy is coming out of a recession. China just announced that GDP grew 10.9% last quarter. India is expecting to grow GDP at 7.5% in 2010.
Heck, even the UK announced that its longest recession in history was now over and GDP grew in that country at a sedate 0.1%...
And despite what you might hear from Al Gore and U2's leading man Bono, oil consumption will increase over the next ten years.
According to the World Institute for the Analysis of Global Security: "From now to 2020, world oil consumption will rise by about 60%. Transportation will be the fastest growing oil-consuming sector. By 2025, the number of cars will increase to well over 1.25 billion from approximately 700 million today. Global consumption of gasoline could double."
It's simple: More cars are sold in China today than in any other country. India is spending billions to build highways, and India's Tata Motors is now selling a $2,000 car to the masses.
China Loves Oil
The most recent data showed that China's oil demand in November rose 18.7 percent year-over-year — the third straight month of double-digit growth. It is no wonder then that over the past two years, China has been securing long-term contracts to its energy needs. It has used its nearly $2 trillion in foreign reserves to gain access to for foreign gas and oil supplies.
China is selling its suspect dollars to lock in hard assets.
Starting back in 2008 when the price of crude dropped to $35 a barrel, China (through its three top oil companies) started an aggressive campaign to scoop the West. They invested in Iraq, Iran, Kazakhstan, Nigeria, Venezuela, and Argentina, among others.
The Chinese have even invaded North America's backyard. They made inroads against the U.S. supply of Canadian oil sands, as Canada is afraid that new low-carbon fuel standards in the U.S. will restrict the purchase of oil sands oil.
China is also looking to buy leases in the Gulf of Mexico from Devon Energy and announced that they were buying a major holding from the Saudis: a transfer station in the Caribbean.
The Chinese are also beating the Europeans and Russia. The Middle Kingdom has recently built an oil pipeline, the first running east from the oil- and gas-rich nations along the Caspian Sea including Kazakhstan and Turkmenistan. There are reports that certain types of crude from Saudi Arabia can't be bought in Europe anymore... they're all going to China.
And just last month, China Development Bank announced that it was investing $50 billion to buy 6 billion barrels of oil reserves in Nigeria.
Obama Does Nothing...
Given China's aggressive tactics, one might expect the U.S. government might try to counter China's oil grab by securing its own oil future. After all, most of us still remember the oil embargo in the 1970s that drove the economy into a decade of stagnant growth and high inflation...
But you would expect wrong.
From a recent report from the Institute for Energy Research:
On February 4, 2009, Interior Secretary Salazar rescinded 77 oil and gas leases in Utah that could cost American taxpayers millions in lost lease bids, production royalties, new jobs, and the energy needed to offset rising imports of oil and gas.
On February 10, Secretary Salazar delayed for 6 months the development of the new 5-year leasing program for offshore drilling that would have set the framework for accessing newly available areas.
On February 25, Secretary Salazar canceled a new round of commercial-scale oil shale research, demonstration, and development leases in Colorado, Wyoming, and Utah.
On February 26, President Obama introduced a budget that contains page after page of taxes on oil and gas totaling more than $31 billion that will reduce our domestic energy production.
On March 30, President Obama signed the Omnibus Public Lands Management Act into law, prohibiting energy production on over 3 million acres of federal land.
After rescinding 77 Utah oil and gas leases in February, Salazar announced on October 8 that he would lease 17 of them.
On October 20, after canceling a new round of commercial-scale oil shale research, demonstration, and development leases last February, Salazar issued a new oil shale leasing program that decreases lease acreage by 87 percent, demands unrealistic timelines for investment into cutting edge research, and leaves royalty rates at the whim of the Secretary or in new regulations.
The truth is this: The Obama Administration is so bent on green energy that they haven't even acknowledged the need for oil.
Despite the highest estimates for windmills and sun-power, the wildly held view is that oil will continue to account for 40% of global energy demand 25 years from now... And this at time when energy demand as a whole is expected to increase 60% or more!
Futhermore, all serious research suggests that hydrocarbon-based fossil fuels (oil plus coal, natgas, etc.) will still account for 85% of world energy demand in 2035.
That's why the top tier Chinese oil companies CNPC, Sinopec, and CNOOC have worked with their government bank and made hundreds of billions of dollars of oil and gas investments.
The Chinese Love Their Oil Companies
The popular mood toward oil companies in the U.S. and China couldn't be more different. In China, they have the full support of the government and people.
In the U.S. the big American oil companies like ExxonMobil, ConocoPhillips, and Chevron are dragged before Congress and scapegoated. You may remember your representatives on their high horse back in 2008.
Sen. Dick Durbin (D-Ill.) said, "You have to sense what you guys are doing to us," and called the oil companies "unconscionable."
Rep. Edward Markey (D-Mass.), chairman of the Select Committee on Energy Independence and Global Warming said, "On April Fool's Day, the biggest joke of all is being played on American families by big oil."
The naive sheeple and politicians in the U.S. routinely vilify the very people who supply the energy they use every day. They curse Big Oil as they fill up their Expeditions. Exxon, they claim, is Beelzebub.
If you think oil is expensive now... just wait until we can't get anymore of it.
Giving Away the Store
The cold, hard reality of it all is this: oil is power.
And right now, America and the West are handing over — uncontested — the largest power in the history of the world to their chief rival.
As an investor, I see the future. If the short-term dollar bounce means that oil falls to $70, or $60 or even $55 — I'm a buyer, not a seller. For the simple reason that the Chinese will provide a hard floor and ensure prices. And with the world coming out of recession, there is plenty of upside.
Make China Pay
The good news is that I know where China is going next... and how you can make them pay in what I confidently proclaim will be the best investment opportunity of the decade.
Don't believe me? Read this free report.
All the Best,
Christian DeHaemer
Editor, Wealth Daily
Founder and Editor, Crisis & Opportunity
Monday, January 25, 2010
Business, Consumer and Relationship - Dilemma of Service
(I'm writing with a huge sense of responsibility and I hail the doctrine of Liberty, Equality and Fertility.)
Convenience always paired with the term service. As the global grew more demanding, social structures making progress, from zero to hero or from poor to rich as promised by the idea of capitalism. Hence, the business which our ancestors practiced hundred years ago in a time of barter trading are now flourished with variety of goods to choose, variety of services we could pick, and end result of our life are depending on the decision we make to acquire whom or to favor whom is this flamboyant free market.
This the the core idea of economy studies, this is the main subject we emphasized and took concern. It is because we as a human always have a right. To choose the provider which can in return provide us in our personal interpretation of favorable.
Hitherto. The business environment has progress from exchanging between goods to currency (money). As the fundamental of trade is the core guideline, the progress that we're now appreciating are the most basic concept of service. It is like a chains. A laymen works to earn money, in order for the laymen to earn his money is by providing his service to his employer (in other term, customer) this two party are providing with each other in a natural hope that they both will obtain a relevant rewards and incentives as what logical according to their perspective. The central bank printed the money in order for the inhabitant of the nation to utilize the money, as the money circulate, th nation economy will flourish. In this concept, the central bank is an employee to the government (employer). When the printed money exceed the total requirement, inflation arise or vice versa and the result is deflation. When the laymen felt that his reserve money are not in use, he kept it to the bank, this will make the bank acted as a employee to the laymen. So, the main idea will always to go the term service.
Most people were not aware about the meaning of service. The terminology of service according to Oxford English Dictionary means:
• noun 1 the action or process of serving. 2 a period of employment with an organization. 3 an act of assistance. 4 a ceremony of religious worship according to a prescribed form. 5 a system supplying a public need such as transport, or utilities such as water. 6 a public department or organization run by the state: the probation service. 7 (the services) the armed forces. 8 (often in phrase in service) employment as a servant. 9 a set of matching crockery used for serving a particular meal. (in tennis, badminton, etc.) a serve. a periodic routine inspection and maintenance of a vehicle or other machine.
• verb 1 perform routine maintenance or repair work on. 2 provide a service or services for. 3 pay interest on (a debt). 4 (of a male animal) mate with (a female animal).
Everybody provides service, as I explained on earlier paragraph, service is the most common necessity which what we as a human are required. Service creates a relationship, trust and respect either from provider or receiver. This positive result of service will hence nourish the business, making the market more competitive, generating a strong environment and stabilizing the business. This vital concept are therefore shall not be neglected or refused.
The nature of services nowadays are not as what we expected. The pursuit for extra miles services are in demand by consumer. As human mind and expectation progress, consumer can evaluate the kind of services they hope for. For example, If a customer proceed to a Jaeger Le-Coultre boutique, they expecting an espresso or coffee served to them, they shall inquire a full explanation in detail about the particular product, from where the sapphire came? 15k or 21k gold? which nation does the diamonds derives? et cetera. In this scenario, the service provider need to equip himself a full knowledge of the product, probably the knowledge gained not from the pamphlet or brochure of the product, the service provider also need to entertain the customer for whatever he requested and in a possible circumstances to fulfill it. But this scenario will be different if the customer went to a normal watch shop, where the sales person shall not wear any long sleeve or neck tie, and possibly had no deep understanding about the product that they'd sell, worst, the might not possibly interested to entertain you. According to their unofficial motto, "you want it, buy, don't want, go".
So the extra miles services are come to a very significant value to consumer, and this idea and concept are drastically implemented to most of the retail sectors to cater the need and demand from the customer.
Question is, what if the service are not provided? effect and consequences?
Few consumer believes that is they make a complain to the higher management, the issue will be solve like a magic wand. In reality, this is not Hogward, there's no Harry Potter and his gang. There's always be a consequences for what ever actions we made. More consumer find it is convenient to just pick up the phone or email the management and complain, some of their words of complain are not even happen at all, but it just naturally created by them without them notify due to the anger they carried during the complaint. In a relevant state of mind, this action will causes the service provider to change and progress according to the complainer advises, but actually it will worsen the situation. As the complain obtained by the management, they will have a different perspectives about their operation and employee, they might also presume the complainer an insane customer. Not that I admit the business management perception are rotten as it is, but the weight of this matter is not as crucial to them rather than developing a new marketing plan in order to attract more customer and more investor. (unless there's a group of angry and dissatisfy banning the business and inviting others to do so)
Bad service creates bad relationship and good service makes customer happy. We all agree with the term. McDonald with their trademark "customer is always right" has absorb the ideology, honestly, I hate the term, customer never right. A service will somehow creates an unintentionally relationship. Buy and sell activity makes us related. We need services, and when a service is provided, there's a legislation to protect consumer and service provider. But does the legislation can solve this dilemma?
Tons of bills has been passed by the parliament in the whole world due to the concern of consumer. Consumer right organization are campaigning to the public to gives information and their right, they also act as an adviser to the problem that consumer faced. But this will not help entirely the process. There will still be problems they consumer might face. So what's the remedy?
Culture, mind-set and the ability to interpret is the remedy we are looking here. Both party need to provide service in order to achieve this changes. Changes need a full cooperation from every party, to create a new perspectives of service delivery, to emphasize the important of service, creates a harmonious and competitive market. Complaining is crucial, complain indicates concern, to built a more customer oriented environment. As a provider of service, there's nothing wrong to give an extra miles, to extend the smiles and acted more professionally then ever. It gave the impression, it creates a trust and confident, it makes a strong bond of relationship and it will enhance the economy.
Business, Consumer and Relationship are very important, the weight of this matter shall not be accepted as normal. Let's think and creates more professional environment, be the one to be love not to be hate.
Convenience always paired with the term service. As the global grew more demanding, social structures making progress, from zero to hero or from poor to rich as promised by the idea of capitalism. Hence, the business which our ancestors practiced hundred years ago in a time of barter trading are now flourished with variety of goods to choose, variety of services we could pick, and end result of our life are depending on the decision we make to acquire whom or to favor whom is this flamboyant free market.
This the the core idea of economy studies, this is the main subject we emphasized and took concern. It is because we as a human always have a right. To choose the provider which can in return provide us in our personal interpretation of favorable.
Hitherto. The business environment has progress from exchanging between goods to currency (money). As the fundamental of trade is the core guideline, the progress that we're now appreciating are the most basic concept of service. It is like a chains. A laymen works to earn money, in order for the laymen to earn his money is by providing his service to his employer (in other term, customer) this two party are providing with each other in a natural hope that they both will obtain a relevant rewards and incentives as what logical according to their perspective. The central bank printed the money in order for the inhabitant of the nation to utilize the money, as the money circulate, th nation economy will flourish. In this concept, the central bank is an employee to the government (employer). When the printed money exceed the total requirement, inflation arise or vice versa and the result is deflation. When the laymen felt that his reserve money are not in use, he kept it to the bank, this will make the bank acted as a employee to the laymen. So, the main idea will always to go the term service.
Most people were not aware about the meaning of service. The terminology of service according to Oxford English Dictionary means:
• noun 1 the action or process of serving. 2 a period of employment with an organization. 3 an act of assistance. 4 a ceremony of religious worship according to a prescribed form. 5 a system supplying a public need such as transport, or utilities such as water. 6 a public department or organization run by the state: the probation service. 7 (the services) the armed forces. 8 (often in phrase in service) employment as a servant. 9 a set of matching crockery used for serving a particular meal. (in tennis, badminton, etc.) a serve. a periodic routine inspection and maintenance of a vehicle or other machine.
• verb 1 perform routine maintenance or repair work on. 2 provide a service or services for. 3 pay interest on (a debt). 4 (of a male animal) mate with (a female animal).
Everybody provides service, as I explained on earlier paragraph, service is the most common necessity which what we as a human are required. Service creates a relationship, trust and respect either from provider or receiver. This positive result of service will hence nourish the business, making the market more competitive, generating a strong environment and stabilizing the business. This vital concept are therefore shall not be neglected or refused.
The nature of services nowadays are not as what we expected. The pursuit for extra miles services are in demand by consumer. As human mind and expectation progress, consumer can evaluate the kind of services they hope for. For example, If a customer proceed to a Jaeger Le-Coultre boutique, they expecting an espresso or coffee served to them, they shall inquire a full explanation in detail about the particular product, from where the sapphire came? 15k or 21k gold? which nation does the diamonds derives? et cetera. In this scenario, the service provider need to equip himself a full knowledge of the product, probably the knowledge gained not from the pamphlet or brochure of the product, the service provider also need to entertain the customer for whatever he requested and in a possible circumstances to fulfill it. But this scenario will be different if the customer went to a normal watch shop, where the sales person shall not wear any long sleeve or neck tie, and possibly had no deep understanding about the product that they'd sell, worst, the might not possibly interested to entertain you. According to their unofficial motto, "you want it, buy, don't want, go".
So the extra miles services are come to a very significant value to consumer, and this idea and concept are drastically implemented to most of the retail sectors to cater the need and demand from the customer.
Question is, what if the service are not provided? effect and consequences?
Few consumer believes that is they make a complain to the higher management, the issue will be solve like a magic wand. In reality, this is not Hogward, there's no Harry Potter and his gang. There's always be a consequences for what ever actions we made. More consumer find it is convenient to just pick up the phone or email the management and complain, some of their words of complain are not even happen at all, but it just naturally created by them without them notify due to the anger they carried during the complaint. In a relevant state of mind, this action will causes the service provider to change and progress according to the complainer advises, but actually it will worsen the situation. As the complain obtained by the management, they will have a different perspectives about their operation and employee, they might also presume the complainer an insane customer. Not that I admit the business management perception are rotten as it is, but the weight of this matter is not as crucial to them rather than developing a new marketing plan in order to attract more customer and more investor. (unless there's a group of angry and dissatisfy banning the business and inviting others to do so)
Bad service creates bad relationship and good service makes customer happy. We all agree with the term. McDonald with their trademark "customer is always right" has absorb the ideology, honestly, I hate the term, customer never right. A service will somehow creates an unintentionally relationship. Buy and sell activity makes us related. We need services, and when a service is provided, there's a legislation to protect consumer and service provider. But does the legislation can solve this dilemma?
Tons of bills has been passed by the parliament in the whole world due to the concern of consumer. Consumer right organization are campaigning to the public to gives information and their right, they also act as an adviser to the problem that consumer faced. But this will not help entirely the process. There will still be problems they consumer might face. So what's the remedy?
Culture, mind-set and the ability to interpret is the remedy we are looking here. Both party need to provide service in order to achieve this changes. Changes need a full cooperation from every party, to create a new perspectives of service delivery, to emphasize the important of service, creates a harmonious and competitive market. Complaining is crucial, complain indicates concern, to built a more customer oriented environment. As a provider of service, there's nothing wrong to give an extra miles, to extend the smiles and acted more professionally then ever. It gave the impression, it creates a trust and confident, it makes a strong bond of relationship and it will enhance the economy.
Business, Consumer and Relationship are very important, the weight of this matter shall not be accepted as normal. Let's think and creates more professional environment, be the one to be love not to be hate.
Thursday, January 21, 2010
U.S. Leading Economic Index Rose More Than Forecast (Update1)
Let look at this report by Bloomberg and I'll make my personal elaboration later (after I'm done with my current research)
Jan. 21 (Bloomberg) -- The index of U.S. leading indicators increased more than anticipated in December, a sign the economy will keep growing through the first half of the year.
The New York-based Conference Board’s gauge of the outlook for the next three to six months rose 1.1 percent, the most in three months, after climbing 1 percent in November. The December gain was the ninth straight and exceeded the median forecast in a Bloomberg News survey for a 0.7 percent rise.
Fewer firings, rising stock prices and efforts by the Federal Reserve to keep short-term interest rates low boosted the leading index and may help keep Americans spending. Faster economic growth will hinge on sustained employment gains that have yet to materialize.
“The economic recovery still has momentum,” said Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who correctly forecast the December gain. “Right now, the linchpin is confidence. Both businesses and consumers need to feel like it’s a worthwhile thing to start spending money again.”
A separate report showed manufacturing in the Philadelphia area expanded in January for a fifth month. The Fed Bank of Philadelphia’s general economic index fell to 15.2 this month from 22.5 in December. Readings greater than zero signal growth.
Jobless Claims
Labor Department figures today showed jobless claims unexpectedly increased to 482,000 last week from 446,000 a week earlier, reflecting a backlog of applications from the year-end holidays.
U.S. stocks drifted between gains and losses after the reports. The Standard & Poor’s 500 Index rose 0.2 percent to 1,140.11 at 10:06 a.m. in New York. Treasury securities fell.
Economists surveyed by Bloomberg projected the leading indicators index would increase 0.7 percent from a previously reported 0.9 percent gain in November, according to the median of 58 estimates. Estimates ranged from gains of 0.3 percent to 1.1 percent.
Eight of the 10 indicators in the leading index contributed to the gain, led by the difference between long-term and short- term interest rates, building permits and a drop in jobless claims in December. Stock prices, consumer expectations and supplier deliveries also helped the index.
None of the indicators fell during the month, while gauges of the factory workweek and orders for consumer goods were unchanged.
Coincident Indicators
The Conference Board’s index of coincident indicators, a gauge of current economic activity, rose 0.1 percent in December for a third month. The index tracks payrolls, incomes, sales and production, the measures used by the National Bureau of Economic Research to determine the beginning and end of U.S. recessions.
The gauge of lagging indicators decreased 0.2 percent last month. The index measures business lending, length of unemployment, service prices and ratios of labor costs, inventories and consumer credit.
The world’s largest economy will probably expand at a 2.7 percent annual pace from January through March and at a 2.9 percent rate in the following quarter, according to the median estimate of economists surveyed by Bloomberg earlier this month.
Interest Rates
The index’s positive spread between the yield on the 10- year Treasury note and the overnight fed funds rate is based on expectations the economy will keep improving.
Seven of 10 indicators for the leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times.
The Conference Board estimates new orders for consumer goods, bookings for capital goods, and the money supply adjusted for inflation.
Jobless claims averaged 460,250 in December, down from 480,750 a month earlier. U.S. stocks continued to rise last month as reports suggested the economy was improving. The S&P 500 averaged 1,110.38 in December, compared with 1,088.07 the previous month. The index reached the highest closing level in 14 months on Dec. 28.
Applications for building permits rose 11 percent to a 653,000 annual rate last month, the most since October 2008, the Commerce Department said yesterday.
The Reuters/University of Michigan’s reading on consumer expectations for the next six months rose to 68.9 in December from 66.5 the previous month.
‘Seeing Stabilization’
“We are seeing stabilization in the economy,” Brian Moynihan, chief executive of Bank of America Corp., said yesterday in an interview. The head of Bank of America, the largest U.S. lender, said the economy is still “fragile.”
Reiterating their pledge to keep interest rates “exceptionally low” for “an extended period,” Fed policy makers last month said the recovery faced hurdles.
The central bankers, who next meet Jan. 26-27 in Washington, will keep their target for overnight lending among banks unchanged through September before raising it by half a point in the fourth quarter, according to the median forecast of economists surveyed this month. The Fed has kept the benchmark rate near zero since December 2008.
Jan. 21 (Bloomberg) -- The index of U.S. leading indicators increased more than anticipated in December, a sign the economy will keep growing through the first half of the year.
The New York-based Conference Board’s gauge of the outlook for the next three to six months rose 1.1 percent, the most in three months, after climbing 1 percent in November. The December gain was the ninth straight and exceeded the median forecast in a Bloomberg News survey for a 0.7 percent rise.
Fewer firings, rising stock prices and efforts by the Federal Reserve to keep short-term interest rates low boosted the leading index and may help keep Americans spending. Faster economic growth will hinge on sustained employment gains that have yet to materialize.
“The economic recovery still has momentum,” said Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who correctly forecast the December gain. “Right now, the linchpin is confidence. Both businesses and consumers need to feel like it’s a worthwhile thing to start spending money again.”
A separate report showed manufacturing in the Philadelphia area expanded in January for a fifth month. The Fed Bank of Philadelphia’s general economic index fell to 15.2 this month from 22.5 in December. Readings greater than zero signal growth.
Jobless Claims
Labor Department figures today showed jobless claims unexpectedly increased to 482,000 last week from 446,000 a week earlier, reflecting a backlog of applications from the year-end holidays.
U.S. stocks drifted between gains and losses after the reports. The Standard & Poor’s 500 Index rose 0.2 percent to 1,140.11 at 10:06 a.m. in New York. Treasury securities fell.
Economists surveyed by Bloomberg projected the leading indicators index would increase 0.7 percent from a previously reported 0.9 percent gain in November, according to the median of 58 estimates. Estimates ranged from gains of 0.3 percent to 1.1 percent.
Eight of the 10 indicators in the leading index contributed to the gain, led by the difference between long-term and short- term interest rates, building permits and a drop in jobless claims in December. Stock prices, consumer expectations and supplier deliveries also helped the index.
None of the indicators fell during the month, while gauges of the factory workweek and orders for consumer goods were unchanged.
Coincident Indicators
The Conference Board’s index of coincident indicators, a gauge of current economic activity, rose 0.1 percent in December for a third month. The index tracks payrolls, incomes, sales and production, the measures used by the National Bureau of Economic Research to determine the beginning and end of U.S. recessions.
The gauge of lagging indicators decreased 0.2 percent last month. The index measures business lending, length of unemployment, service prices and ratios of labor costs, inventories and consumer credit.
The world’s largest economy will probably expand at a 2.7 percent annual pace from January through March and at a 2.9 percent rate in the following quarter, according to the median estimate of economists surveyed by Bloomberg earlier this month.
Interest Rates
The index’s positive spread between the yield on the 10- year Treasury note and the overnight fed funds rate is based on expectations the economy will keep improving.
Seven of 10 indicators for the leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times.
The Conference Board estimates new orders for consumer goods, bookings for capital goods, and the money supply adjusted for inflation.
Jobless claims averaged 460,250 in December, down from 480,750 a month earlier. U.S. stocks continued to rise last month as reports suggested the economy was improving. The S&P 500 averaged 1,110.38 in December, compared with 1,088.07 the previous month. The index reached the highest closing level in 14 months on Dec. 28.
Applications for building permits rose 11 percent to a 653,000 annual rate last month, the most since October 2008, the Commerce Department said yesterday.
The Reuters/University of Michigan’s reading on consumer expectations for the next six months rose to 68.9 in December from 66.5 the previous month.
‘Seeing Stabilization’
“We are seeing stabilization in the economy,” Brian Moynihan, chief executive of Bank of America Corp., said yesterday in an interview. The head of Bank of America, the largest U.S. lender, said the economy is still “fragile.”
Reiterating their pledge to keep interest rates “exceptionally low” for “an extended period,” Fed policy makers last month said the recovery faced hurdles.
The central bankers, who next meet Jan. 26-27 in Washington, will keep their target for overnight lending among banks unchanged through September before raising it by half a point in the fourth quarter, according to the median forecast of economists surveyed this month. The Fed has kept the benchmark rate near zero since December 2008.
Tuesday, January 19, 2010
Brasil...Economy and Social - Development
Brasil.. I prefer to use the capital 's' rather than 'z' to honor Brasillian. Whereby the history of Portuguese colonization dated back in 1500 commanded by Pedro Álvares Cabral (while Malacca, Malaysia was invaded by Portuguese in 1511) and hence until the new era of democracy, Brasil has a lot of unique and interesting facts to observe and understand.
As in this year 2010, Brasil will again 'confront' with national election for the new President. Several candidate that run the campaign has come up with more creative and constructive new ideas for Brasilian, matters such as economic, social policies, green-policies and civil-safety policies were the main concern for these candidate. As Brasil heads towards the economic growth and economic prosperity with rapid development and industrialization, a new measure and policies need to be focus more deeply on poor and rural population.
According to Blanco Central do Brasil, Brazil is a member of diverse economic organizations, such as Mercosul, SACN, G8+5, G20 and the Cairns Group. Its trade partners number in the hundreds, with 60% of exports mostly of manufactured or semimanufactured goods.[11] Brazil's main trade partners in 2008 were: Mercosul and Latin America (25.9% of trade), EU (23.4%), Asia (18.9%), the United States (14.0%), and others (17.8%), its gross domestic product,GDP, surpasses $1.6 trillion dollars, the eighth in the world and the second in the Americas in the World Bank ranking; measured by purchasing power parity, $1.9 trillion, making it the ninth largest economy in the world.
History of Brasil economy are dated back during Portuguese era (1500-1822), where the main economic activity are sugar, gold and coffee, this rapid activity of production makes Portuguese to bring African slaves to cope with the demand of production, estimated statistics show that 4.5 million people emigrated to the country between 1882 and 1934 and creates a new identity and demographic more unique and diversify.
Period of great economic transformation and growth occurred between 1875 and 1975 where in 1808, Brasil obtained a permit from the Portuguese colonial government to set up its first factories and manufacturers. In the last decade, domestic production increased by 32.3% and agribusiness (agriculture and cattle-raising), which grew by 47% or 3.6% per year, was the most dynamic sector. Recent report from Blanco Central do Brasil indicated that Brasil inflation rose 0.28% per annum which where this growth of inflation is in a healthier pace.
Oil production is the second biggest in Latin America after Venvuela. Brasil proven oil reserve stood at the rank 16th with 0.90%. Several invitation from OPEC has been refused and rejected my current President Lula as he quoted 'there's no reason for Brasil to join OPEC as Brasil intended to export oil derive materials and not the crude oil'. This action worried OPEC members. Lula reportedly claimed that Brasil shouldn't import raw material as Brasil itself will aims to increase its own national industrial production. Current largest purchaser on Brasil oil is United States of America, People Republic of China and other smaller nation. Economist in Brasil projected that the revenue derived from oil production and export will enhance more drastically towards Brasil economy and development.
GDP report on 2008 is US$ 1.612 trillion which ranked Brasil the 8th in the world, GDP growth is 1.5%, GDP per capita is US$ 8.295 ranked 63th by IMF and Unemployment Rate is 7.5% - 9.1 % on 2009. Export valued at US$ 197.9 billion (wikipedia) and import valued at US$ 173.2 billion (wikipedia). Blanco Central do Brasil released a report on Foreign Reserve for the year 2009 net value US$ 237.5 billion and Public Debt at US$ 103.2 billion.
According to my best friend who reside in Rio de Janeiro, the cost of living in Brasil especially in São Paulo and Rio de Janeiro are extremely high, and according Mercer's 2009 Cost of Living surveys stated that the cost of living in Sao Paolo and Rio de Janeiro have experienced a reverse move, plummeting from 25th to 72nd and 31st to 73rd respectively as it is believes to be due to the strengthening of US dollar and active domestic involvement to stimulus the economy.
Brasil component of economy comprised on the service sector as the largest component of GDP at 66.8%, followed by the industrial sector at 29.7% (2007 est.). Agriculture represents 3.5% of GDP (2008 est.). Brazilian labor force is estimated at 100.77 million of which 10% is occupied in agriculture, 19% in the industry sector and 71% in the service sector. The minimum wage set for the year of 2010 is R$ 6.630,00 or R$ 510,00 per month plus and additional 13th salary (R$ 255,00 in June and R$ 255,00 in December)(Brasil National Labour Statistic 2009). Moisés Naím, a Venezuelan writer, critique gave his comment on Brasil economic status saying that "In Brazil a labor-union leader has presided over an amazing period of social and economic progress. It is also one of the few countries that have successfully managed to reduce economic inequality at a time when everywhere else inequities are deepening. Successive Brazilian governments, of rival political parties, have succeeded in improving education, health and the living standards of millions of impoverished citizens who have now joined a growing middle class. Brazil has an energy policy that has spawned the world's most vibrant biofuels industry. In 1995, 15 percent of Brazilian school-age children did not go to school. In 2005, this fell to 3 percent, and today Brazil has practically achieved universal basic education." Newsweek - June 2009.
Comment from Dr Naim has open a new perspective for me to explore more toward the social structure and demographic reality of Brasil and of course Brasilian.
The terminology of 'economic inequality' makes me wonder what does it is actually means.. could it be a metaphor or simply sarcastic hyperbole? Need to agree again with my friend in Rio, Miss Esteves, whereby she'd explained to me that the social income are utterly in a biggest gap. There's not anymore 'invincible hand' as our Father of Modern Economy, Adam Smith, taught us. Social issues in Brasil contrasts for the fact of the country be the ninth largest economy in the world and the largest in Latin America. It is a country of extremes, with outstanding cultural, social and ecological diversity. Modern industry and commerce has flourished alongside with tremendous inequality, currently, one of the most serious challenges for the country today. Despite the rich natural resources, rapid economic development, and the overall size of Brazil's economy, the nation has major problems with poverty, hunger, disease, and inadequate public services. The income difference between rich and poor is among the most substantial in the world. According to Gini Coefficient Index, Brasil has amongst the highest income inequality in the world, ranking 49.3, with the richest 10% of Brazilians receiving 50% of the nation's income, while the poorest 10% receive less than 1%.
"Poverty in Brasil is most visually represented by the various favelas, slums in the country's metropolitan areas and remote upcountry regions that suffer with economic underdevelopment and below-par standards of living. An attempt to mitigate these problems is the "Fome Zero" hunger-eradication program implemented by President Luiz Inácio Lula da Silva in 2003. Part of this is "Bolsa Família," a major anti-poverty program that gives money directly to impoverished families so as to keep their children in school." wikipedia
President Lula's government reduced 19.8% the rate of misery based on labour income during June 2002 and June 2006 according to Fundação Getúlio Vargas. In June 2006, the rate of misery was 18.57% of the population. The rate of poverty is in part attributed to the country's economic inequality. Brazil ranks among the world's highest nations in the Gini coefficient index of inequality assessment. A study on the subject shows that the poor segment constitutes roughly one third of the population, and the extremely poor make out 13% (2005 figures). However, the same study shows the income growth of the poorest 20% population segment to be almost in par with China, while the richest 10% are stagnating.
The world still remember this shocking incident occurred in Rio de Janeiro on October - November 2009 when the Police and Drug gang member are shooting each other for several weeks. The Rio Times called it a 'war'. This has tarnished Rio de Janeiro image for 2016 Olympic, and makes people wonder would it be safe to live in Rio? Of course it is safe living in Rio if you have someone you know in Brasil, Crimes can happen anywhere and nobody could avoid this phenomena, but when there's a lack of action and prevention done by the authority.. this will causes worried, the domestic economy will suffer because it is not more safe to operate their businesses, the Foreign Direct Investor would withdraw from Brasil as they afraid that this circumstances will caused panic to the market and this will result a new economic crisis. Brasil has serious problems with crime especially in São Paulo and Rio de Janeiro. With roughly 23.8 homicides per 100,000 residents, muggings, robberies, kidnappings and gang violence are common. Police brutality and corruption are widespread. In response, the Brazilian government established the National Public Security Force (FNSP) in June 2004 by the Ministry of Justice, to act in situations of emergency, in times of crisis. But the FNSP only react when there's time of crisis, why don't enhance the civil security services? discipline? anti-corruption? and widening and also enhancing civil legislation to create more peace and safer Brasil? It's is well understand that President Lula and his teams has done every measures and action to solve this issue the best they could.
Dr Naim stated again that the school attendance are really bad for Brasilian children. School attendance by absence is the biggest problem in Brasil educational system. As reported by UN, most children in poor family has started to work at the age of 10, while it is illegal to work under the age of 16 in Brasil, the number of child labour are increasing, one of the biggest reason for these wonderful children to work at the young age is to help their family. The standards of primary and secondary public education have been falling over the past decades. Since the country invested little in education, public education's standards dropped and the middle class moved their children to private schools. Nowadays, practically all the middle class sends their children to private schools. Costs may vary from as little as R$ 600 (US$ 240) p.a. in smaller cities to R$ 30,000 (US$ 17,000) p.a. in São Paulo or Rio de Janeiro. I would like to give a biggest applause to Bolsa Escola and FUNDEF in thier effort to improve Brasil educational system. (I wish this effort will encourage parents to sent their children to school)
Education is vital, it creates nation, it creates civilization and it makes the nation think and react appropriately according to the most civilized approach. Drugs issues always my main concern in every part of the world, (currently I'm still doing research on drugs economy and government collaboration) When children lack of education and started to work at the early age, they are more vulnerable to adult peers, they sees things that they shouldn't see, and learn things that they should't know. I'll took one example when I was in Cambodia and Thailand, I met several families and interviewed them about the concept of education, personal finance and health issues.. most of the poor family agree with me that education is the most vital part for their children but due to financial difficulties, they can't afford to sent them to school, and the result, the children become odd job workers in the street of Siem Reap and Phnom Pehn, some were bagger, and some of this children are selling drugs on the street and it is really makes me sad. This wonderful children have a great future later to develop the nation but the financial pressures faced by most poor families and lack of government initiatives plans to creates more flexible and affordable educational system has causes this dilemma to occur. Back when I was in Pattaya, Thailand, I met a family where the mom is a veteran prostitute and the father is old time junkies did not sent thier son to school instead they have a plan to convert their son into becoming a ladyboy when thier son grows up to cater the sex industries in Pattaya, and the boy is illiterate and could not understand any English I'm spoken to him but instead the boy can only say one paragraph, 'fuck you farrang (foreigner)' There's another family I met where this single mother is a prostitute refused to sent her daughter to school by stating that the school could not offer her daughter wealth but instead she hope when her daughter grew up, she'll married some Caucasian or worst work in the brothel.. This is actually just a minor example and I'm not claiming that this phenomena are wide spreading to the whole Pattaya but my main objectives here is about the important of education to saves our beautiful children. So when the issue of illiterate and lack of school attendance by absent occured in Brasil, it's really sad phenomena.
Brasil may achieve social indicators similar to those of developed countries by 2016 if the country is able to maintain the same rate of reduction of extreme poverty and income inequality as recorded over the 2003 to 2008 period. By the same token, the country may record an absolute poverty rate of 4%. The data, were taken from a document issued by the Institute of Applied Economic Research (Ipea), linked to the Secretariat of Strategic Affairs of the Presidency of the Republic. People are considered extremely poor who earn up to 25% of one minimum wage per month, whereas the absolutely poor earn up to 50% of one minimum wage per month.
"If we make a projection of the best performances recently recorded in Brazil in terms of poverty and inequality reduction (2003-2008 period) to the year of 2016, the result would be a very positive social outlook. Brazil may virtually overcome the problem of extreme poverty, as well as attain a national absolute poverty rate of only 4%, which means its near-eradication," the document states. According to the document, the majority of the progress achieved by Brazil in fighting poverty and inequality is either directly or indirectly related to the structuring of public policies of social intervention, provided for in the Federal Constitution of 1988.
So the conclusion here.. does the statistic of GDP, GNP is relevant to Brasilian? Social classes are in a huge gap, the rich are getting richer and the poor are getting poorer. We understand the concept of the rich and poor but to enhance quality of life through education, economic equilibrium and wealth distribution. 2010 is the year of election for Brasil. What will the candidates bring up front issues and measures to fight for in order to help Brasil? Will we see a new Brasilian spirit that loves Brasil? That love Brasil like Dom Pedro II? I still remember Senator Rui Barbosa famous last comment on Dom Pedro II : "Le manque de justice, M. le Sénateurs, est le grand mal de notre terrain, le mal de maux, l'origine de toutes nos malchances, la source de tout notre discrédit, est la misère suprême de cette pauvre nation. […] Après le fait de voir tant de triomphe d'inutilité, après le fait de voir tant de déshonneur prospérer, après le fait de voir tant de pouvoir dans les mains des méchants gens grandissent, l'homme devient démoralisé de la vertu, il rit à lui de l'honneur et devient confus d'être honnête. Cela a été le travail de la République dans les années dernières. Dans l'autre régime [dans la Monarchie] l'homme qui avait une certaine honte dans sa vie a été perdu pour toujours, comme une carrière politique lui serait fermée. Il y avait un factionnaire attentif [Dom Pedro II], dont chacun a craint la sévérité et que, brillant et très haut, a protégé les environs, comme un phare qui ne s'éteint jamais, dans l'avantage d'honneur, justice et moralité."
We'll pray and gives our love to Brasil, Brasil economy, Brasil Children and Copacabana...
As in this year 2010, Brasil will again 'confront' with national election for the new President. Several candidate that run the campaign has come up with more creative and constructive new ideas for Brasilian, matters such as economic, social policies, green-policies and civil-safety policies were the main concern for these candidate. As Brasil heads towards the economic growth and economic prosperity with rapid development and industrialization, a new measure and policies need to be focus more deeply on poor and rural population.
According to Blanco Central do Brasil, Brazil is a member of diverse economic organizations, such as Mercosul, SACN, G8+5, G20 and the Cairns Group. Its trade partners number in the hundreds, with 60% of exports mostly of manufactured or semimanufactured goods.[11] Brazil's main trade partners in 2008 were: Mercosul and Latin America (25.9% of trade), EU (23.4%), Asia (18.9%), the United States (14.0%), and others (17.8%), its gross domestic product,GDP, surpasses $1.6 trillion dollars, the eighth in the world and the second in the Americas in the World Bank ranking; measured by purchasing power parity, $1.9 trillion, making it the ninth largest economy in the world.
History of Brasil economy are dated back during Portuguese era (1500-1822), where the main economic activity are sugar, gold and coffee, this rapid activity of production makes Portuguese to bring African slaves to cope with the demand of production, estimated statistics show that 4.5 million people emigrated to the country between 1882 and 1934 and creates a new identity and demographic more unique and diversify.
Period of great economic transformation and growth occurred between 1875 and 1975 where in 1808, Brasil obtained a permit from the Portuguese colonial government to set up its first factories and manufacturers. In the last decade, domestic production increased by 32.3% and agribusiness (agriculture and cattle-raising), which grew by 47% or 3.6% per year, was the most dynamic sector. Recent report from Blanco Central do Brasil indicated that Brasil inflation rose 0.28% per annum which where this growth of inflation is in a healthier pace.
Oil production is the second biggest in Latin America after Venvuela. Brasil proven oil reserve stood at the rank 16th with 0.90%. Several invitation from OPEC has been refused and rejected my current President Lula as he quoted 'there's no reason for Brasil to join OPEC as Brasil intended to export oil derive materials and not the crude oil'. This action worried OPEC members. Lula reportedly claimed that Brasil shouldn't import raw material as Brasil itself will aims to increase its own national industrial production. Current largest purchaser on Brasil oil is United States of America, People Republic of China and other smaller nation. Economist in Brasil projected that the revenue derived from oil production and export will enhance more drastically towards Brasil economy and development.
GDP report on 2008 is US$ 1.612 trillion which ranked Brasil the 8th in the world, GDP growth is 1.5%, GDP per capita is US$ 8.295 ranked 63th by IMF and Unemployment Rate is 7.5% - 9.1 % on 2009. Export valued at US$ 197.9 billion (wikipedia) and import valued at US$ 173.2 billion (wikipedia). Blanco Central do Brasil released a report on Foreign Reserve for the year 2009 net value US$ 237.5 billion and Public Debt at US$ 103.2 billion.
According to my best friend who reside in Rio de Janeiro, the cost of living in Brasil especially in São Paulo and Rio de Janeiro are extremely high, and according Mercer's 2009 Cost of Living surveys stated that the cost of living in Sao Paolo and Rio de Janeiro have experienced a reverse move, plummeting from 25th to 72nd and 31st to 73rd respectively as it is believes to be due to the strengthening of US dollar and active domestic involvement to stimulus the economy.
Brasil component of economy comprised on the service sector as the largest component of GDP at 66.8%, followed by the industrial sector at 29.7% (2007 est.). Agriculture represents 3.5% of GDP (2008 est.). Brazilian labor force is estimated at 100.77 million of which 10% is occupied in agriculture, 19% in the industry sector and 71% in the service sector. The minimum wage set for the year of 2010 is R$ 6.630,00 or R$ 510,00 per month plus and additional 13th salary (R$ 255,00 in June and R$ 255,00 in December)(Brasil National Labour Statistic 2009). Moisés Naím, a Venezuelan writer, critique gave his comment on Brasil economic status saying that "In Brazil a labor-union leader has presided over an amazing period of social and economic progress. It is also one of the few countries that have successfully managed to reduce economic inequality at a time when everywhere else inequities are deepening. Successive Brazilian governments, of rival political parties, have succeeded in improving education, health and the living standards of millions of impoverished citizens who have now joined a growing middle class. Brazil has an energy policy that has spawned the world's most vibrant biofuels industry. In 1995, 15 percent of Brazilian school-age children did not go to school. In 2005, this fell to 3 percent, and today Brazil has practically achieved universal basic education." Newsweek - June 2009.
Comment from Dr Naim has open a new perspective for me to explore more toward the social structure and demographic reality of Brasil and of course Brasilian.
The terminology of 'economic inequality' makes me wonder what does it is actually means.. could it be a metaphor or simply sarcastic hyperbole? Need to agree again with my friend in Rio, Miss Esteves, whereby she'd explained to me that the social income are utterly in a biggest gap. There's not anymore 'invincible hand' as our Father of Modern Economy, Adam Smith, taught us. Social issues in Brasil contrasts for the fact of the country be the ninth largest economy in the world and the largest in Latin America. It is a country of extremes, with outstanding cultural, social and ecological diversity. Modern industry and commerce has flourished alongside with tremendous inequality, currently, one of the most serious challenges for the country today. Despite the rich natural resources, rapid economic development, and the overall size of Brazil's economy, the nation has major problems with poverty, hunger, disease, and inadequate public services. The income difference between rich and poor is among the most substantial in the world. According to Gini Coefficient Index, Brasil has amongst the highest income inequality in the world, ranking 49.3, with the richest 10% of Brazilians receiving 50% of the nation's income, while the poorest 10% receive less than 1%.
"Poverty in Brasil is most visually represented by the various favelas, slums in the country's metropolitan areas and remote upcountry regions that suffer with economic underdevelopment and below-par standards of living. An attempt to mitigate these problems is the "Fome Zero" hunger-eradication program implemented by President Luiz Inácio Lula da Silva in 2003. Part of this is "Bolsa Família," a major anti-poverty program that gives money directly to impoverished families so as to keep their children in school." wikipedia
President Lula's government reduced 19.8% the rate of misery based on labour income during June 2002 and June 2006 according to Fundação Getúlio Vargas. In June 2006, the rate of misery was 18.57% of the population. The rate of poverty is in part attributed to the country's economic inequality. Brazil ranks among the world's highest nations in the Gini coefficient index of inequality assessment. A study on the subject shows that the poor segment constitutes roughly one third of the population, and the extremely poor make out 13% (2005 figures). However, the same study shows the income growth of the poorest 20% population segment to be almost in par with China, while the richest 10% are stagnating.
The world still remember this shocking incident occurred in Rio de Janeiro on October - November 2009 when the Police and Drug gang member are shooting each other for several weeks. The Rio Times called it a 'war'. This has tarnished Rio de Janeiro image for 2016 Olympic, and makes people wonder would it be safe to live in Rio? Of course it is safe living in Rio if you have someone you know in Brasil, Crimes can happen anywhere and nobody could avoid this phenomena, but when there's a lack of action and prevention done by the authority.. this will causes worried, the domestic economy will suffer because it is not more safe to operate their businesses, the Foreign Direct Investor would withdraw from Brasil as they afraid that this circumstances will caused panic to the market and this will result a new economic crisis. Brasil has serious problems with crime especially in São Paulo and Rio de Janeiro. With roughly 23.8 homicides per 100,000 residents, muggings, robberies, kidnappings and gang violence are common. Police brutality and corruption are widespread. In response, the Brazilian government established the National Public Security Force (FNSP) in June 2004 by the Ministry of Justice, to act in situations of emergency, in times of crisis. But the FNSP only react when there's time of crisis, why don't enhance the civil security services? discipline? anti-corruption? and widening and also enhancing civil legislation to create more peace and safer Brasil? It's is well understand that President Lula and his teams has done every measures and action to solve this issue the best they could.
Dr Naim stated again that the school attendance are really bad for Brasilian children. School attendance by absence is the biggest problem in Brasil educational system. As reported by UN, most children in poor family has started to work at the age of 10, while it is illegal to work under the age of 16 in Brasil, the number of child labour are increasing, one of the biggest reason for these wonderful children to work at the young age is to help their family. The standards of primary and secondary public education have been falling over the past decades. Since the country invested little in education, public education's standards dropped and the middle class moved their children to private schools. Nowadays, practically all the middle class sends their children to private schools. Costs may vary from as little as R$ 600 (US$ 240) p.a. in smaller cities to R$ 30,000 (US$ 17,000) p.a. in São Paulo or Rio de Janeiro. I would like to give a biggest applause to Bolsa Escola and FUNDEF in thier effort to improve Brasil educational system. (I wish this effort will encourage parents to sent their children to school)
Education is vital, it creates nation, it creates civilization and it makes the nation think and react appropriately according to the most civilized approach. Drugs issues always my main concern in every part of the world, (currently I'm still doing research on drugs economy and government collaboration) When children lack of education and started to work at the early age, they are more vulnerable to adult peers, they sees things that they shouldn't see, and learn things that they should't know. I'll took one example when I was in Cambodia and Thailand, I met several families and interviewed them about the concept of education, personal finance and health issues.. most of the poor family agree with me that education is the most vital part for their children but due to financial difficulties, they can't afford to sent them to school, and the result, the children become odd job workers in the street of Siem Reap and Phnom Pehn, some were bagger, and some of this children are selling drugs on the street and it is really makes me sad. This wonderful children have a great future later to develop the nation but the financial pressures faced by most poor families and lack of government initiatives plans to creates more flexible and affordable educational system has causes this dilemma to occur. Back when I was in Pattaya, Thailand, I met a family where the mom is a veteran prostitute and the father is old time junkies did not sent thier son to school instead they have a plan to convert their son into becoming a ladyboy when thier son grows up to cater the sex industries in Pattaya, and the boy is illiterate and could not understand any English I'm spoken to him but instead the boy can only say one paragraph, 'fuck you farrang (foreigner)' There's another family I met where this single mother is a prostitute refused to sent her daughter to school by stating that the school could not offer her daughter wealth but instead she hope when her daughter grew up, she'll married some Caucasian or worst work in the brothel.. This is actually just a minor example and I'm not claiming that this phenomena are wide spreading to the whole Pattaya but my main objectives here is about the important of education to saves our beautiful children. So when the issue of illiterate and lack of school attendance by absent occured in Brasil, it's really sad phenomena.
Brasil may achieve social indicators similar to those of developed countries by 2016 if the country is able to maintain the same rate of reduction of extreme poverty and income inequality as recorded over the 2003 to 2008 period. By the same token, the country may record an absolute poverty rate of 4%. The data, were taken from a document issued by the Institute of Applied Economic Research (Ipea), linked to the Secretariat of Strategic Affairs of the Presidency of the Republic. People are considered extremely poor who earn up to 25% of one minimum wage per month, whereas the absolutely poor earn up to 50% of one minimum wage per month.
"If we make a projection of the best performances recently recorded in Brazil in terms of poverty and inequality reduction (2003-2008 period) to the year of 2016, the result would be a very positive social outlook. Brazil may virtually overcome the problem of extreme poverty, as well as attain a national absolute poverty rate of only 4%, which means its near-eradication," the document states. According to the document, the majority of the progress achieved by Brazil in fighting poverty and inequality is either directly or indirectly related to the structuring of public policies of social intervention, provided for in the Federal Constitution of 1988.
So the conclusion here.. does the statistic of GDP, GNP is relevant to Brasilian? Social classes are in a huge gap, the rich are getting richer and the poor are getting poorer. We understand the concept of the rich and poor but to enhance quality of life through education, economic equilibrium and wealth distribution. 2010 is the year of election for Brasil. What will the candidates bring up front issues and measures to fight for in order to help Brasil? Will we see a new Brasilian spirit that loves Brasil? That love Brasil like Dom Pedro II? I still remember Senator Rui Barbosa famous last comment on Dom Pedro II : "Le manque de justice, M. le Sénateurs, est le grand mal de notre terrain, le mal de maux, l'origine de toutes nos malchances, la source de tout notre discrédit, est la misère suprême de cette pauvre nation. […] Après le fait de voir tant de triomphe d'inutilité, après le fait de voir tant de déshonneur prospérer, après le fait de voir tant de pouvoir dans les mains des méchants gens grandissent, l'homme devient démoralisé de la vertu, il rit à lui de l'honneur et devient confus d'être honnête. Cela a été le travail de la République dans les années dernières. Dans l'autre régime [dans la Monarchie] l'homme qui avait une certaine honte dans sa vie a été perdu pour toujours, comme une carrière politique lui serait fermée. Il y avait un factionnaire attentif [Dom Pedro II], dont chacun a craint la sévérité et que, brillant et très haut, a protégé les environs, comme un phare qui ne s'éteint jamais, dans l'avantage d'honneur, justice et moralité."
We'll pray and gives our love to Brasil, Brasil economy, Brasil Children and Copacabana...
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