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Monday, January 31, 2005

2020 - Demographics

While the present "globalization" phenomenon is driving economic change in Asia and elsewhere, demographic changes will also impact the geo-political scene for 2020 and beyond:

  • U.S. population growth will continue to be among minorities which may lead to
    • a lower percentage of the population with high school educations (see U.S. graduation rates by race)
    • a lower percentage of the population with bachelor or advanced degrees (follows from overall lower high school graduation rates)
    • a higher percentage of marginally employed or unemployed adults
    • greater fragmentation along "ethnic" lines

      Bottom Line: Population changes will likely increase social problems and economic strain without adding to U.S. competitiveness in the global markets

  • China will have the largest absolute population, but
    • a significant trend toward a much older average age
    • a slowing growth rate may occur with the one-child policy
    • a larger segment of very-well educated people
    • a very large segment of marginally-educated people
    • a growing overall demand for consumer goods and services
    • a growing overall demand for manufacturing and energy resources

      Bottom Line: Population changes will improve China economically and enable it to become an economic and military superpower, but internal disparities will be a challenge

  • India will have the second largest population
    • a growing population with no population control policy which may eventually lead to India being the most populated country
    • a significant Muslim minority population and possible unstable relations with neighboring Muslim nations
    • a larger segment of very-well educated people
    • a very large segment of marginally-educated people
    • a growing overall demand for consumer goods and services
    • a growing overall demand for manufacturing and energy resources

      Bottom Line: Population changes will improve India economically and enable it to become an economic and military superpower, but internal disparities will be a challenge and Muslims citizens and neighbors may lead to serious economic backsliding overall for India

  • Europe will have a stable or declining indigenous population but at growing Muslim immigrant population from Southwest Asia which may
    • increase ethnic and religous tensions and violence
    • increase the strain on the social support systems
    • shift focus from Europe-American commerce to Europe-Western Asia issues

      Bottom Line: Europe will have a changing population mix that may cause serious ethnic and religious confrontation that could disrupt its potential to rival the U.S. in the form of a United Europe

  • South America will be split between the prosperous south and east and the backward and corrupt west and north. Brazil and Argentina populations will continue to grow and they will become global suppliers of food products and other materials supplanting other major producers.
    • China will attempt to have close ties with Brazil and Argentina and, as a major customer, attempt to use its influence there as part of overall competition with the U.S.
    • U.S. will be a net importer of products from South America and lose more of its overall exporting markets to South America

      Bottom Line: Brazil and Argentina will grow and prosper while the remainder of South and Central America will have increasing populations and increasing problems

  • North and Central Asia will fall behind the rest of Asia and Europe. Russia will have a stable or declining population while Central Asia will have a growing, but poorly educated Muslim population that will cause political instability to its north and south.
    • Russia may be able to exploit its natural resources provided that its government can stabilize the economic system and address the issue of an older population
    • Central Asian countries have no apparent population, resource, policy, or skill advantages to be competitive any time during the next century
    • Central Asian countries will continue to seek independence and isolation and will be a non-factor or negative factor in overall Asia

      Bottom Line: Russia's population will probably stagnate or decline and it will slide backward in the world's economic competition. Central Asian countries will have increasing populations and be non-players economically, but the sources of conflict throughout Asia

  • Africa will have growing populations in some areas and declining populations in others if AIDS is not quickly addressed.
    • North Africa will align with the Middle East and Central Asia in an attempt to reinforce Muslim authority through Europe and Asia as overall Muslim population grows
    • Sub-Sahara Africa will continue to be isolated from the rest of the world by political unrest and depopulation from AIDS unless that disease can be controlled very soon

      Bottom Line: Africa will continue to be two distinct populations - North and South going different directions, but both likely to be the sources of political unrest



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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
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- O. Henry
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The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates

FEDERAL RESERVE & HOUSING

SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
November 28, 2007 FED VICE CHAIRMAN DONALD KOHN
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."
http://www.reuters.com/

December 11, 2007 Somehow the Fed misses the obvious.
fed_rate_moves_425_small.gif
[Image from: CNNMoney.com]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's Economy.com. "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)