Sunday, March 1, 2015
Productivity up, not jobs. I commented a number of years ago that there will not be a job recovery because of technology. Glad that this has now been observed. Aivars Lode
Some economists call it the “great decoupling.”
For decades, U.S. productivity and total employment rose in lockstep. From 1953 to 1999, average annual growth in productivity was 2.1%, exactly the same as growth in jobs. As the U.S. grew richer and its workers generated more output with the aid of better machines, it created a correspondingly healthy number of new jobs.
But at the turn of the century, something changed. Since 1999, productivity growth kept rolling along at 2.1%–but job growth has slumped to an average of 0.5%. Part of the problem can be traced to the last recession, which hit the job market hard and was followed by an extremely slow recovery.
Beyond that, economists see two other longer-lasting forces at work: globalization and technological advances. The offshoring of work has helped make U.S. businesses more efficient, while new machines allow the remaining U.S. workers to produce more with less.
“Technological progress has been a big cause—and my prediction for the future is that it will be an even bigger force going forward,” says Andrew McAfee, a management professor at the Massachusetts Institute of Technology’s business school who studies the trend.
Advanced automation keeps pushing up output, he says, “but there’s less and less demand for good old-fashioned human labor.”
Mr. McAfee notes there’s been a similar decoupling in recent years between productivity and wage growth.
Mr. McAfee co-authored a book about the impact of automation on the job market with fellow MIT professor Erik Brynjolfsson, entitled “Race Against the Machine.”
There are certain types of people that will tell you that the coldest month in Toronto’s record was caused by man made global warming. Whoops... They changed that to global climate change so that they can explain these anomalies. Aivars Lode
By Sam Colbert
Brag to your family: You just survived Toronto's coldest month in recorded history.
Despite the ridiculous cold, people still flocked to the Beach to do selfies with nature's ice sculptures last month.
Brag to your family. Print it on t-shirts. Whine to your heart’s content.
The numbers are in: February was Toronto’s coldest month in recorded history. And spring is just a few weeks away.
“Canadians laugh at us,” said Environment Canada’s senior climatologist David Phillips. “We’re often the brunt of all kinds of jokes here in the city because of our weather.
"Well hey, Canada, we just earned our badge of courage. Nobody alive today has ever experienced a colder month in Toronto than we did this month.”
Technically, it was a tie. February 1875 was exactly as cold at an overall average temperature of -12.6 C. But not even your grandparents can claim to recall that 140-year-old record.
In the past 37 frigid days, the daily high never broke the melting point – peaking at -1.4 C. The lowest of the lows in February dropped to -25.5 C, with a wind chill that neared -40 C. Twenty-three days were labelled extremely cold by Toronto’s Public Health department. That total well exceeded February 2014’s 12 alerts, and the three in February 2013 and two in February 2012.
February normally averages out -4.5 C — more than eight degrees warmer than this year.
Phillips said that, between a population boom, climate change and major infrastructure development, it’s remarkable that Toronto could get as cold as it did in 1875. “Cities are different now,” he said. “They’re urban heat islands.”
This week, Environment Canada is forecasting a high above 0 C for the first time since Jan. 24, with a single degree of warmth expected to last through Tuesday and Wednesday along with chances of snow and rain. In 1976 and 1977, a 51-day stretch of sub-zero chills lasted from Dec. 21 to Feb. 9. That’s a record Toronto won’t likely beat this year.
It didn’t break the coldest day record, either. Jan. 4, 1981 got down to -31.3 C.
The previous coldest month record in the Pearson Airport measurements was the January 1994 average of -12.4 C.
Measurements at the University of Toronto campus began in 1842. Pearson, which is the source of the city’s modern data-of-record, started collecting measurements in 1937.
Beyond Wednesday, daily highs are expected to drop back down to the single digits below freezing. But March is generally about five degrees warmer than February, said Phillips, and the countdown is on to the first day of spring on March 20.
For all Phillips’ interest in the cold, he wasn’t even around the experience it. He just got back from Florida.
“I’m kind of sad I wasn’t here to break that record.”
February 2015: By the Numbers
Record-breaking average overall temperature: -12.6 C
Average daily high: -8.3 C
Average daily low: -16.9 C
Warmest point: -1.4 C (Feb. 4)
Coldest point: -25.5 C (Feb. 15)
Days in a row below freezing: 37 (as of March 1)
So you think the USA is finished? Think again. Many predicted the fall of the US dollar as the reserve currency and the rise of Euro or the Chinese RMB; that does not look to be the case now. As we highlighted a number of years ago, there is just too much trust at the moment in the Chinese system. Over time this will change; just the sheer number of people in China and the size of its economy as it continues to grow will overshadow the US economy. Aivars Lode
Fears the megarich will take flight puts a floor under the currency’s slide against dollar
By Andrew Browne
SHANGHAI—China’s superrich are nervously watching as the Chinese currency weakens against the dollar.
Because of the extreme concentration of money at the apex of Chinese society, national stability rests to an extraordinary extent in the hands of just two million or so families. They are the top 1% of urban households, and already, their confidence in China’s future under President Xi Jinping is shaky.
Many are fleeing with their cash--not all of it, but enough to bid up prices of luxury real estate from Mayfair to Manhattan to Mission Bay, a waterfront neighborhood of Auckland, New Zealand.
Financial authorities are trying to ensure that the remainder doesn’t disappear across the borders. A potential trigger for a disorderly exodus of capital, one that could threaten the entire fragile financial system, would be a precipitous decline in the value of the Chinese currency.
That’s one reason—an important one—why a sharp yuan drop is unlikely, even though a slowing economy is increasing domestic pressure on the government to let the yuan fall in a bid to boost exports.
Indeed, in recent weeks there’s evidence that financial authorities are reversing years of intervention in foreign-exchange markets aimed at stopping the yuan from rising too rapidly against the dollar: Now the government appears to be surreptitiously propping it up—or at least to try to prevent a too-sharp decline.
One sign of reassurance that the yuan won’t be allowed to plunge came last week from a senior State Administration of Foreign Exchange official, who was quoted by the official Xinhua News Agency quoted as saying the yuan would remain “basically stable” in 2015.
That doesn’t mean the yuan will halt its gentle downward trajectory. It lost about 2.5% against the dollar last year and has edged down almost 1% so far this year. However, against the currencies of China’s other major trading partners, including Japan and those in Europe, it’s still riding high, partly a result of its loose peg to the dollar.
Beijing’s apparent efforts to defend a still-strong yuan in the face of the weakest growth in China in almost a quarter-century reflect a variety of national concerns.
Not least, under Mr. Xi a powerful yuan has become a symbol of China’s global resurgence. The thrust of Chinese currency policy has been to erode the influence of the mighty dollar in international trade and investment and to persuade foreign governments to include the yuan in their baskets of foreign-exchange reserves. A volatile yuan would work against all those goals.
There’s little doubt that the growing anxieties of China’s superrich also weigh on currency decision-making.
Mr. Xi has shaken up the status quo with the fiercest campaign against corruption in modern times. That’s creating political tensions at the heart of the Communist Party. The Gilded Age is over: We’re in a new era of austerity. All this uncertainty has unsettled the owners of China’s great fortunes who are now focused on protecting their capital.
Those on the lower rungs of China’s monied classes don’t have many options. They’re suffering, too, as the economy slows and the property market teeters. But it’s hard for them to get around the rule that prevents individuals from taking out of China more than $50,000 each year.
The superrich have clever ways of circumventing such restrictions—one of the reasons many of them got rich in the first place. The government knows this. It also understands that although its $4 trillion in foreign-exchange reserves would be a formidable defense in any crisis, they are not invulnerable.
In 2011, a study by Victor Shih, then a professor at Northwestern University, showed that the richest 2.1 million Chinese households controlled a staggering $2 trillion to $5 trillion in financial assets, such as stocks and bonds, and real estate. If they liquidated 30% of their wealth and moved the proceeds out of China, Mr. Shih calculated, they’d drain $1 trillion or more from the reserves.
Since that report came out, the concentration of wealth in China has likely become even more extreme. Capital flight is well under way. And the reserves are already starting to dwindle as hot money pulls out of China in anticipation that the U.S. Federal Reserve will increase interest rates, making investments outside China more attractive.
Making matters worse, the megarich and the companies they control have been using their Chinese assets as collateral for loans outside China. Those borrowings—more than $1 trillion, according to the Bank for International Settlements--are now so large they’ve caught the attention of banking regulators elsewhere, particularly those in Hong Kong. A devaluation of the yuan would add to the burden of repaying that foreign debt.
Moreover, if foreign banks turn wary about the value of that collateral, and call in their loans, the rich might have to sell off their Chinese assets and send the cash offshore, further depleting the foreign-exchange reserves.
Preventing panic is now a priority for the Chinese government. That doesn’t rule out more weakening of the yuan. But it does dramatically reduce the chances of a sudden devaluation as authorities put a floor under its slide.