Economist Feb 1st 2014

《The Triumph of Vladimir Putin》

  • Good year: protests seen off; Syria; NATO frustrating in Afghanistan;
  • Ukraine matters much to Putin

《Sochi or Bust》

  • Most expensive in history – corruption, inefficiencies;
  • Tight security;
  • As vulnerable as 1980s: oil & gas rent – use them to consolidate power; problem is excess of money and lack institutions; repression or democratization? Widespread dissatisfaction and discontent among elites.

《Too Big to Fail, But in a Good Way》

Koc and Sabanci: more than a quarter of Turkish market cap;

  • Short positions in FX provide hedge;
  • Untrammeled access to a market in EU;
  • Despite of conglomerate discount, global indexes prefer to own holding company;
  • Resist the vanity of owning news media and out of public facilities, governments have left them to get on with doing business – “long may that continue.”

《Deal or No Deal?》

  • Polarization of two parties, obama’s promise to bypass legislature – things are getting better;
  • Several deals are possible: minimum wage vs income tax credit; immigration; promoting free trade.

《The Odd Couple》

New Komeito and LDP – relations hit a low point:

  • Conflict in Yasukuni shrine;
  • Self defense constitution;
  • Nuclear reactors;
  • China policy;
  • Economy

Votes: bind this odd couple together – 8m members of Buddhist, Soka Gakkai.

《Physician, Heal Thyself》

  • A system that inflates the cost of medicine;
  • Public hospital is actually not public, doctor underpaid & higher than OECD spending on medicine;
  • Kickbacks account for more than 20% of final retail price
  • Promoting generic brands is difficult in China – Provincial bidding system, squeezes margins of drug companies, they would rather not make or supply the drugs

《Less Amazing than Amazon》

  • Walmart New CEO, an inflection point: open more smaller stores, step up its counterattack on Amazon – But it is chasing a fast-moving target;
  • Aims to – build up the market ecosystem that pulls together shops, warehouses, delivery, fleets, and technology.

《Fixing a Flat》

The departure of Lanxess CEO

  • One quarter of revenues from types and auto parts;
  • Oversupply when doing well causes fall in prices;
  • It needs a disciplined manager to cut costs (New CEO from Merck);
  • One solution: produce abroad or keep pushing those high-end products

《Don’t Panic》

  • Most EM are far less vulnerable than they were in 1997.
  • Risk factors: rising rates in America; slower growth in China.
  • Policy makers used market turmoil to push through more reform;
  • Yet not wholly in control, the flow of capital has more to do with what happens beyond their borders.

《Locus of Extremity》

  • Rising rate impact on the Fragile Five: reducing demand for EM assets;
  • As group, EM actually net exporters of capital: smoked the foreign currency but did not inhale, while some of them breath deep
  • Countermeasures: ban imports, taxed luxuries, let currencies fall;
  • Anticipating a more normal world – pension funds can meet their obligations and investors more reluctant to venture into anything exciting abroad.

《The Coin Has Two Faces》

  • Currency traders have had little to get their teeth into;
  • Policy dampens fluctuations;
  • Long term investors shifted to dollar buyers;
  • Last period of dollar strength was late 1990s – Internet booms, now linked to potential of shale gas;
  • Negative consequence: EM struggled to peg, difficult for American exporters, and for commodity importers;
  • Good news: US bonds more attractive

《The Price of Getting Back to Work》

America recovered quickly but lower in employment rate, reversed trends in UK;

Productivity puzzle:

  • Falling productivity cushioned against job losses in recession, while resulted in high inflation;
  • Declining productivity is consequence of falling real wages: lower real wages encouraged firms to use more labors and less capital, causing productivity to fall but popping up employment;
  • In US, milder inflation, discourages hiring, leading to rising productivity and weak employment growth.

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