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A Geonomica Brief archive is available at Geonomica.com


FACTOID OF THE WEEK

"A Wall Street Journal analysis of census figures shows that in Illinois, New York, Ohio, Virginia, Florida, Georgia and other states, more immigrants from China and India arrived than from Mexico in 2014, the most recent year for which data are available."

Wall Street Journal, September 9

Finance

On high-yield debt in emerging markets

Bloomberg, September 9

"Investors scooping up the riskiest emerging-nation corporate bonds in an indiscriminate rush for yield are facing a growing clamor of warnings. While a 12.4 percent return this quarter on company debt rated eight levels below investment grade rewarded those who pushed into the fringes of the debt market, sub-investment grade defaults have reached a six-year high."

Read Full Article Here


On Goldman Sachs

Wall Street Journal, September 8

"There is perhaps no better sign of the changes that have engulfed Wall Street than this: Goldman has recently started giving clients the tools that made it a trading powerhouse, for free. The firm’s motives aren’t altruistic; rather, many of the edges that once made Goldman’s traders feared and admired have been blunted. New rules have limited banks’ trading risks, and made it costly to hold large inventories of stocks and bonds on their books. And electronic trading has squeezed margins, dimming the clamor of trading floors across Wall Street."

"Traders and executives tap into SecDB to inform how to price securities, and how the value of those assets may change with a twist on the dial on any one of thousands of potential variables. That information can be used to analyze potential trades—and then to monitor the risks posed by those positions.

"What made it the envy of Wall Street, though, was its ability to scale up to include new classes of securities, new trading desks, even whole businesses. And the data it harnessed was all in one place. Megamergers left rivals with a hodgepodge of different systems and different factions of employees loyal to each of them. Goldman avoided big acquisitions, evading issues that would slow its ability to track risks. Thus, Goldman’s new gambit: Deploy its technology to win more business from clients. Many of those tools are being offered in the form of web-based applications that customers can customize and operate on their own."

Read Full Article Here

Asia

On rising debt levels in China

New York Times, September 8

"China is in the midst of one of the biggest borrowing binges in recent history. Its debt load reached $26.6 trillion in 2015 — about five times what it was a decade ago, and more than two and a half times the size of the country’s entire economy."

Read Full Article Here

Miscellaneous

On economic expansion in the eurozone

Wall Street Journal, September 8

"Unemployment in the eurozone last month fell back to where it stood in November 1998, just two months before the euro came into being. The 7.5 million jobs created in the eurozone since the start of 2014, the year the ECB went negative, is ahead of 6.3 million in the U.S., with a roughly similar population, up to the end of the first quarter of this year (the latest available in Europe). Job creation coincided with a resumption of borrowing by companies and, to a lesser extent, households, as interest rates on loans fell.

"It gets better. For the past three quarters the eurozone economy has grown faster than the U.S. Gross fixed capital formation in the eurozone, one measure of overall investment before depreciation, has been rising year-on-year since late 2013. While it was disappointingly flat in the second quarter compared with the first quarter, in the U.S. it actually fell."

Read Full Article Here


On immigration to U.S. shifting from Mexico to Asia

Wall Street Journal, September 7

"Chinese and Indian newcomers to the U.S. are now outpacing Mexican arrivals in most regions of the country, a marked reversal from a decade ago, when immigrants from America’s southern neighbor dwarfed arrivals from the large Asian countries. A Wall Street Journal analysis of census figures shows that in Illinois, New York, Ohio, Virginia, Florida, Georgia and other states, more immigrants from China and India arrived than from Mexico in 2014, the most recent year for which data are available. 

"That year, about 136,000 people came to the U.S. from India, about 128,000 from China and about 123,000 from Mexico, census figures show. As recently as 2005, Mexico sent more than 10 times as many people to the U.S. as China, and more than six times as many as India."

"The Journal’s analysis found that in 2014, there were 31 states where more immigrants arrived from China than from Mexico that year, up from seven states in 2005. Newly arrived immigrants from India in 2014 outnumbered those from Mexico in 25 states, up from four states in 2005. Even in California, a top destination for Latinos, Chinese immigrants outnumbered Mexican immigrants in 2014, and the number from India was only slightly below that of Mexico."

Read Full Article Here


On declining college enrollment in the U.S.

Bloomberg, September 7

"For decades, a growing pool of college graduates poured into the U.S. labor market, boosting productivity and shaping America’s status as the world’s dominant economic power. That driver of growth is diminishing. Enrollment has declined every year since peaking in 2011, according to the Census Bureau and the National Student Clearinghouse Research Center. The reasons include an aging population, rising tuition costs and a healthy rate of hiring that lessens the demand for learning."

Read Full Article Here


On the U.S. labor market

WSJ.com, September 7

"One of the labor market’s biggest mysteries just got deeper: The number of job openings available at the end of July climbed to a new record of 5.9 million. Yet the number of people actually being hired into one of those jobs was 5.2 million for the second month in a row. The number of unemployed workers per job opening has fallen to 1.3, the lowest since 2001. What would normally sound like good news—abundant jobs—is tempered by the fact that people simply aren’t being hired into the positions at rates like in the past. About 300,000 fewer people are being hired each month compared with the pace reached in February. And during the entire economic recovery, the U.S. has yet to notch a month of hiring that matches the pace seen at the heights of the middle of last decade or the early 2000s."

Read Full Article Here


On rising living standards through history

New York Times, September 4

"By 2010, the average daily income in a wide range of countries, including Japan, the United States, Botswana and Brazil, had soared 1,000 to 3,000 percent over the levels of 1800. People moved from tents and mud huts to split-levels and city condominiums, from waterborne diseases to 80-year life spans, from ignorance to literacy.

"You might think the rich have become richer and the poor even poorer. But by the standard of basic comfort in essentials, the poorest people on the planet have gained the most. In places like Ireland, Singapore, Finland and Italy, even people who are relatively poor have adequate food, education, lodging and medical care — none of which their ancestors had. Not remotely."

"In the last 40 years, the World Bank estimates, the proportion of the population living on an appalling $1 or $2 a day has halved. Paul Collier, an Oxford economist, urges us to help the 'bottom billion' of the more than seven billion people on earth. Of course. It is our duty. But he notes that 50 years ago, four billion out of five billion people lived in such miserable conditions. In 1800, it was 95 percent of one billion."

"What, then, caused this Great Enrichment? Not exploitation of the poor, not investment, not existing institutions, but a mere idea, which the philosopher and economist Adam Smith called “the liberal plan of equality, liberty and justice.” In a word, it was liberalism, in the free-market European sense. Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become extraordinarily creative and energetic."

Read Full Article Here

book
BOOK OF THE WEEK

The Upside of Inequality: How Good Intentions Undermine the Middle Class

by Edward Conard

"Four years ago, Edward Conard wrote a controversial bestseller, Unintended Consequences, which set the record straight on the financial crisis of 2008 and explained why U.S. growth was accelerating relative to other high-wage economies. He warned that loose monetary policy would produce neither growth nor inflation, that expansionary fiscal policy would have no lasting benefit on growth in the aftermath of the crisis, and that ill-advised attempts to rein in banking based on misplaced blame would slow an already weak recovery. Unfortunately, he was right. Now he’s back with another provocative argument: that our current obsession with income inequality is misguided and will only slow growth further.
 
"Using fact-based logic, Conard tracks the implications of an economy now constrained by both its capacity for risk-taking and by a shortage of properly trained talent—rather than by labor or capital, as was the case historically. He uses this fresh perspective to challenge the conclusions of liberal economists like Larry Summers and Joseph Stiglitz and the myths of 'crony capitalism' more broadly. Instead, he argues that the growing wealth of most successful Americans is not to blame for the stagnating incomes of the middle and working classes. If anything, the success of the 1 percent has put upward pressure on employment and wages."

Purchase on Amazon
 

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