Lecture 8: Growth Theory, Stock Market, Long Run Issues and
China Dr. Rajeev Dhawan Director Given to the EMBA 8400 Class South
Class Room #600 February 17, 2006
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Chapter 25 Production & Growth
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Production and Growth A countrys standard of living depends on
its ability to produce goods and services. In the United States
over the past century, average income as measured by real GDP per
person has grown by about 2 percent per year. A nations standard of
living is determined by the productivity of its workers.
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Table 1 The Variety of Growth Experiences Copyright2004
South-Western
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Productivity Productivity refers to the amount of goods and
services that a worker can produce from each hour of work (Average
Labor Productivity) Productivity plays a key role in determining
living standards for all nations in the world.
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The Factors of Production The inputs used to produce goods and
services are called the factors of production. The Factors of
Production Physical capital Human capital Natural resources
Technological knowledge
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The Production Function Y = A F(L, K, H, N) Y = quantity of
output A = available production technology L = quantity of labor K
= quantity of physical capital H = quantity of human capital N =
quantity of natural resources F( ) is a function that shows how the
inputs are combined.
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The Production Function Y/ L = A F(1, K/ L, H/ L, N/ L) Where:
Y/L = output per worker K/L = physical capital per worker H/L =
human capital per worker N/L = natural resources per worker The
preceding equation says that productivity (Y/L) depends on physical
capital per worker (K/L), human capital per worker (H/L), and
natural resources per worker (N/L), as well as the state of
technology, (A).
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The Importance of Saving and Investment Copyright2003
Southwestern/Thomson Learning (a) Growth Rate 19601991 (b)
Investment 1960 South Korea Singapore Japan Israel Canada Brazil
West Germany Mexico United Kingdom Nigeria United States India
Bangladesh Chile Rwanda South Korea Singapore Japan Israel Canada
Brazil West Germany Mexico United Kingdom Nigeria United States
India Bangladesh Chile Rwanda Investment (percent of GDP)Growth
Rate (percent) 01234567010203040
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What is the Impact on Growth? Investment from Abroad Education
Property Rights and Political Stability Free Trade Research and
Development
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CASE STUDY: The Productivity Slowdown and Speedup in US From
1959 to 1973 productivity grew at a rate of 3.2 percent per year.
From 1973 to 1995 productivity grew by only 1.5 percent per year.
Productivity accelerated again in 1995, growing by 2.6 percent per
year on average during the next six years.
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The Growth in Real GDP Per Person Copyright2003
Southwestern/Thomson Learning Growth Rate (percent per year) 1.0
1.5 2.0 2.5 3.0 3.5 4.0 1870 1890 1890 1910 1910 1930 1930 1950
1950 1970 1970 1990 1990 2000 0
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Growth Accounting 3 factors that Fuel Growth Labor Capital
Technology Debate is regarding the mechanism via which technology
contributes to growth 2 Main branches of thought Old Solow &
New Romer (Lucas) Style
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What does Paul Romer say (direct quote from Wired Magazines,
June 1996 article) Old growth theory says we have to decide how to
allocate scarce resources among alternative uses. New growth theory
says...
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.. Bull$#!+! Were in this world, its got some objects, sure,
but its got these ideas, too, and all that stuff about scarcity and
price systems is just wrong
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New Growth Economics Technical progress is an outcome of
conscious R&D investments done by the Industrial sector.
R&D involves the use of skilled people with existing stock of
knowledge to produce new knowledge.
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The new knowledge is in the form of: Specifically, one sectors
R&D efforts spill over to other sectors at very low cost.
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What do the New Growth Adherents have to Say (LA Times, June 10
1997) Allen Sinai What is coming could be the perhaps the best
performance in our history W. Michael Cox For the next 20 years,
were going to have a period of massive growth
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Where do I stand in this debate? The rise in the R&D
investments in 1980s coupled with the new technological
developments of the 90s are expected to raise the growth rate of
GDP. Q. By how much? A. 0.2% extra growth per year!
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What Does Research Tell Us? Mark Zandi A Productivity Primer
(1999) Measurement errors in CPI Falling proportion of self
employed workers Dhawan & Gerdes, Journal of Productivity
Analysis (1997). Analysis of U.S. Firm level Data using new
estimation tools shows that the Services sector is responsible for
the decline in technical progress during 1970-1989 period. Robert
Gordon Has the New Economy Rendered the Productivity Slowdown
Obsolete? (1999). No acceleration in productivity growth in the 99
percent of the economy once you take out computer hardware
sector!
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What Does Research Tell Us? Greenwood & Jovanovic, American
Economic Review (1999) % of GDP 1968 1996 1968 incumbents 80 46
Over the Counter 34 86 Dhawan, Journal of Economic Behavior and
Organization (2001). Small firms are atleast 20% more productive
than large firms using U.S. firm level data for 1970-1989.
Inflation and Growth Evidence in U.S. Averages Inflation GDP
Growth 1975-1980 8.9% 3.6% 1980-1985 5.5% 2.9% 1985-1990 4.0% 2.9%
1990-1995 3.1% 2.0% 1995-2000 2.4% 4.3% 1947 to 1998 correlation is
-0.43 1960 to1998 correlation is -0.48 Lead Correlation is
-0.59
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A Crazy Theory of Growth Take the typical growth model and
extend it to include inflation expectations (IE) Y t = A t F(K t, L
t ; IE) (1) A t, F(K t, L t : IE) = A t,K t L t 1 - [exp(IE)] <
0 (2) Doing the growth accounting Solow style one gets: Growth in Y
= Growth in A + [Growth in K] + 1- [Growth in L] + [deceleration in
Inflation Expectations]
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Why ? To paraphrase Chairman Greenspan, the economy works best
when inflation is so low that businesses and households do not have
to take into account when making everyday decisions. Governor Roger
Ferguson Jr., Sept. 9th,1999 Mark Schweitzer and Erica Groshen
Identifying Inflations Grease and Sand Effects in the Labor Markets
NBER Working Paper #6061
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Implications for a Central Banker 1. US FED should Maintain
Price Stability 2. Japanese Should Inflate! Reputation as Inflation
Hawk is Worth its Weight in GDP Growth.
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Signature THIS NUMBER HAS BEEN AUTHORIZED FOR IS THERE REALLY A
CRISIS? ARE PRIVATE ACCOUNTS A GOOD IDEA?
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19708090200010203020405060702080 Social Security Timeline
1984-2017 Trust-fund surplus builds to more than $3 trillion 2018
Costs surpass income; Trust-fund depletion begins 2018-2041 100% of
benefits are covered by the trust fund and taxes 2042 Trust fund is
empty. Tax income covers only 70% of promised benefits Source:
Social Security Administration; CBO; GAO; SSAB
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The TRUTH About Social Security Who Needs it? 63% Retirees (30
million) Spouses and children of retired and disabled workers (4.8
million) 10% Disabled workers (6.2 million) 13% Survivors of
deceased workers (6.7 million) 14% How Much of a Retirees Income
Comes from Social Security Less than 50% 50% to 89% 90% to 99% 100%
35% 32% 13% 20% Source: Social Security Administration; CBO; GAO;
SSAB
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How to Fix Social Security Raise Taxes, Trim Benefits The
Private Account Fix Bush Model Add-on Accounts The Do-Nothing
Approach What Crunch? Cartoon by Clay Bennett, The Christian
Science Monitor, Boston
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How Would the BUSH Plan Work? THE PROS Control Better Returns
Offset the Pain Encourage Savings No New Taxes THE CONS Risk Debt
Uncertainty Undersaving Delayed Reaction Source: The Time, January
24, 2005; Cartoon: David Catrow Springfield, Ohio - The
News-Sun
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Anonymous Venters Since when did Social Security become a
personal retirement plan? It is a safety net for the elderly that
must be preserved or society will pay in the end Source: The
Atlanta Journal Constitution, The Vent, Jan. 30 & Feb. 10, 2005
Social Security is not even close to being broke. The government
just does not want to pay back the money it has looted from it over
the years
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FranceGermanyJapanBritainU.S. Needed Productivity Growth Rate
to DOUBLE Per-Capita Income 1.8%2.0%2.3%1.7%1.6% Historical Growth
Rate (1980 2003) 1.5% 2.0%1.9%1.7% Productivity Can Make Up the Gap
Source: Business Week, January 31, 2005
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U.S. Long-Term Forecast 10 Year Averages for Years Ending: 2000
2010 2020 Real GDP Growth 3.43.22.9 Unemployment Rate (%)5.64.74.9
Inflation (CPI Index) 2.8 2.5 2.5 10-Year Bonds 6.4 6.0 5.0
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Health Care Cost Projections Our forecast scenario predicts
that by 2020 share of medical consumption in GDP will rise to 13%
from the current 9%. At 8% rate of growth the share is21% At 9%
rate of growth the share is 30%
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How Do We Solve This Problem ? 1. Tax Hikes and Benefit
Reductions 2. Ship Boomers to India 3. Bring in 100 Million
Immigrants
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Solution Whats needed are medical advances that prolong the
productive life-span and not so much the actual one! Work em Until
Theyre Dead! Prof. Larry J. Kimbell September 1997 Prof. Rajeev M.
Dhawan September 1998
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Working of Monetary Mechanism FED Hikes/Lowers Short Term Rate
Immediately Hikes/Lowers Long Term Rates First Hurts/Boosts Housing
and Auto Sales, Weakness/Strength then Ripples Through the Economy
Rate Hikes/Cuts also Hurt/Spur Bank Lending Which Hurts/Aids
Business Investment
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U.S. Macro Policy Issues Past Fed actions: 1959-61 Mild
recession-- killed Nixon 1967 False start -- mistake -- produced
Growth recession 1969-71 Recession, followed by price controls,
suppressed inflation, disaster in 1972-73 1973-75 WIN for Ford; bad
recession; Carter tried recovery when inaugurated in 1977, 2 yrs
after trough.
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U.S. Macro Policy Issues Past Fed actions: (cont)\ 1980
Carter/Volcker credit controls -- short recession, sharp recovery,
no cure, need drastic no quick fix -- Volcker/Reagan 1981-82
Serious long recession in spite of rational expectations effort by
Volcker/Reagan.
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U.S. Macro Policy Issues Past Fed actions: (cont) 1986-89 Fed
tightens to head off excess growth, might have succeeded except for
Kuwait War. 1994-95 Fed heads off over-heating successfully for the
first and only time 1997 Feds tried to pop the asset bubble?
1999-2000 Rate hikes popped the asset bubble 2001-Now Containing
the bubble and 9/11 damage
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Forecasting the Fed
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What Does Taylor Rule Predict? Federal Funds Rate = Real
Interest Rate + Targeted Inflation Factor + 0.5 (Current GDP
Gr.-Trend GDP Gr.)+ 0.5 (Current Inflation - Targeted
Inflation)
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What Does Taylor Rule Predict?
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Should the FED Have Been Aggressive in Raising Rates in the
late 90s?
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The Answer Depends Upon What are bubbles? Can the central
banker distinguish between stock price growth due to change in
fundamentals--lowered equity premiums and higher future dividends--
versus irrational exhuberance?
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The Late 90s!
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Whats A Bubble Tulipmania (1637) South Sea Bubble (1720)
Railway Mania (1840s) Crash of 1929 Kuwait (1982) Japan (1990)
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Whats Not A Bubble New Technology Reduced Equity Premiums
Higher Future Dividends
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Late 90s Expectations
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Greenspans Frank Admission To anticipate a bubble about to
burst requires the forecast of a plunge in the prices of assets
previously set by the judgments of millions of investors, many of
whom are highly knowledgeable about the prospects for the specific
companies that make up our broad stock price indexes. August
27th,1999
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Greenspans Worry People dont perceive the savings rate as
negative. As far as theyre concerned, theyre saving quite
adequately. They are looking at their 401(k)s ! -- May
27th,1999
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Was The Euphoria Misplaced? Yes! Implied that we were betting
the entire ranch on the expectation that Greenspan will cut rates
in case of a crash/correction. More Importantly the Central Banker
cannot distinguish between stock price growth due to change in
fundamentals versus irrational exuberance.
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Shillers Irrational Exuberance 3 Factors: Structural, Cultural
and Psychological Precipitating Forces: Internet, Optimism &
Demographic Shifts Amplifiers-Naturally Occurring Ponzi Processes
News Media & Wall Street Analysts
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The current technology, Internet and Telecom craze, fueled by
the performance desires of investors, money managers and even
financial buyers, is unwittingly creating a Ponzi pyramid destined
for collapse.-- Julian Robertson Jr.
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What Does Finance Theory Say Efficient markets imply stock
returns are a random walk. Valuation ratio (P/E) are stable around
the historical i.e. mean reversion property.
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Theory: Stock Returns are a Random Walk Implication: Mean
reversion of Dividend Payout Ratio Logic: Returns (r t ) = Dividend
+ Price Appreciation Price = (D t / P t ) + P / P t
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If D t / P t Ratio and r is constant : P / P t Price is a
function of Expected Future Dividends Dividend Stream (Dt) must
rise D t / P t ratio to yield a constant r Mean Reversion Property
of Div. Payout Ratio
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What Does Data Say Prices move in direction that drives drives
the P/E to its historical mean (Campbell & Shiller (2001) NBER
paper #8221).
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Are Stocks Esp. Tech Stocks a Bargain Now?
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Question On Everybodys Mind: Going in Now Will I Get 10%+ Stock
Returns?
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No one can predict with any certainty which way the next 1,000
points will be. - Wall Street Journal Monday October 1, 2001
Slide 80
Stocks long-term return looks better now than at any time over
the last four to five years. This is the time you want to go in.
But anybody who needs money in the next few years should not be in
the stock market. Anything can happen to the stock market over
short periods of time Jeremy Siegel Professor of Finance, Wharton
Source: Knowledge @ Wharton.com Jeremy Siegel on Stocks The Worst
is Over! The Worst is Over!
Slide 81
Theyre in a dream world(with regard to their overstated pension
return assumptions) G.E. is by no means at the top of the list
there are some companies projecting 10-%!... Its pie in the sky! -
John Bogle Vanguard Group Founder CNBC Interview, July 22, 2002 The
Admiral of Index Funds
Slide 82
Max Darnell, Partner, First Quadrant Speaker at Our May 2002
Quarterly Forecasting Conference Source: Attributing Return
Ibbotson Data
Slide 83
I think the stock market is setting up for future returns of
6%-7%...by providing dividend yields of 3%-4% which will require
companies to increase their current 2% yields OR the most probable
way is for prices to decline 25% or so.. the DOW will rest in the
6000-7000 range. The Bond King - Bill Gross PIMCO Total Return Fund
Manager CNBC Interview, July 22, 2002
Slide 84
Source: Fortune Magazine, December 10, 2001 A perspective from
Warren Buffet I never have the faintest idea what the stock market
is going to do in the next six months, or even the next year, or
the next two.
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Source: Fortune Magazine, December 10, 2001 If GNP is going to
grow 5% a year and you want market values to go up 10%, then you
need to have the line go straight off the top of the chart. That
wont happen.
Slide 86
Source: Forecasting Conference Nov 15 th 2001 A perspective
from Larry Kimbell Professor Emeritus UCLA & Ex-Director UCLA
Business Forecasting Project
Slide 87
Lesson 1. Dont stick your head in the sand Some anthrax victims
have waited to the last minute to be checked even though they were
obviously at risk.
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Lesson 2. Dont exaggerate risks During WWII American
statisticians estimated German tank production monthly fairly
accurately, but the estimates used for planning were 10 times too
large. The statistician (later my Professor at Yale) passed the
estimate to his superior, who being a prudent man, doubled it and
passed to to his superior, who...
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Therefore, face danger fearfully but realistically An in-depth
psychological study of the attitudes of surgery patients before and
after surgery found: Best results when attitude prior to surgery
was fearful but realistic. Next best when patients were
hysterical--since fears were neurotic & not based on real
threats. Worst results when patients had no fear. Later felt angry
at surgeons for victimizing them. Couldnt manage the pain. Realism
requires empirical evidence.
Slide 90
Ibbotson evidence shows good returns on large company
investments: Kimbell thinks otherwise
Slide 91
Ibbotson evidence show high returns on small company
investments
Slide 92
Source: WSJ, July 29, 2002 Market timing has gotten an
excessively bad reputation Conventional wisdom holds that its a
fools errand. Its certainly not an exact science, but I think
people will come back to it. Robert Shiller Professor of Economics
Yale University Comments from the Author of Irrational
Exuberance
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Source: Atlanta Journal Constitution, Friday July 19, 2002
Slide 94
Views From the Top of the Himalayas
Slide 95
Economic Fallacies & Forecasting Truths Growth of Today is
the Same as Yesterdays i.e. History Repeats itself (if it really
did then why call ME!) -Inflation vs. Deflation era -Lack of
Pricing Power; Tech Wave -Economies of Scale/Fixed Costs -9/11s
Cost Factor -BPM/Automation
Slide 96
Nobody has the capacity to fathom fully how the tragedy of
September 11 will play out. Alan Greenspan, Sept. 20, 2001.
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Real GDP 20002001 Most Optimistic Scenario Outlook following
September 11 200220042006 Time What If?
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I will PUMP UP PUMP UP K lifornia I will NOT pump up interest
rates
Slide 99
Economic Fallacies & Forecasting Truths Stock Market is
Where a 25+ Year Worker Should Invest -True as I Want Him/Her to
Pay For My Mistakes -False when I look at the PE Ratio
Slide 100
The Marc Faber View - Marc Faber Managing Director Marc Faber
Ltd., Hong Kong Mr. Greenspan was one of the principal architects
of this debt explosion over the past 20 years. But I pray he lives
as long as possible and is replaced by Mr. Bernanke, because the
business of everybody in this room has thrived on account of their
policies. We must be grateful to Mr. Greenspan. Every time there is
a shock to the system, more money is printed and our businesses can
continue to flourish Source: Barrons, January 19, 2004
Slide 101
The Abby Cohen View Typically, I look at the median P/E, for
the 250 th company in the S&P, which removes outliers. The
market is selling for 17-17.5 times 2004 earnings, which is
reasonable under a low-inflation scenario. The market is modestly
undervalued and will move higher as earnings improve - Abby Joseph
Cohen Chair, Investment Policy Committee Goldman Sachs, N.Y.
Source: Barrons, January 19, 2004
Slide 102
The Bill Gross View - Bill Gross Founder and Chief Investment
Officer Pimco, Newport Beach, Calif. There are two primary agendas
in the world today. No. 1, the US is trying to reflate its economy.
No. 2, China is trying to employ tens of millions of people. Both
agendas are dominating in terms of not only 1% interest rates in
the U.S., but Chinas insistence on fixing the renminbi to the
dollar. These agendas are calling the shots for lots of currency
moves, mini-bubbles in asset markets and potential global
volatility. Source: Barrons, January 19, 2004
Slide 103
Economic Fallacies & Forecasting Truths Trade Deficit is a
Bad Thing
Slide 104
The Marc Faber View - Marc Faber Managing Director Marc Faber
Ltd., Hong Kong But lets distinguish between real and fictitious
growth. In China, there is tremendous investment in plant,
equipment and infrastructure, which is real economic growth. On the
other hand, it has now become fashionable, especially in the U.S.,
for men to have cosmetic surgery. As a result, lets say more
hospitals are built. More doctors have to be hired and employment
goes up. But to what extent does that create economic growth? A lot
of economic growth in the U.S. is artificial, essentially
transferring money from Peters pocket to Pauls. Source: Barrons,
January 19, 2004
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The Meryl Witmer View If the dollar is low enough, the world
can get its plastic surgery here. - Meryl Witmer General partner
Eagle Capital Partners, N.Y. Source: Barrons, January 19, 2004
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Net Balance In International Trade* What They Buy From Us
Airplanes13.2 Chemicals (Plastic)10.9 Airplane Parts10.5
Soybeans6.6 Corn6.0 Wheat5.0 Scientific Instruments4.5 Cotton4.2
Metal Ores3.2 Animal Feeds3.0 What We Buy From Them Crude Oil-135.7
Vehicles-123.2 Clothing-67.9 Home Electronics-67.8 Office
Electronics-65.6 Petroleum Preparations-28.3 Furniture and
Bedding-23.7 Natural Gas-21.1 Electrical Machinery-20.2 Toys,
Sporting Goods-19.1 *Net Balance In Billions of Dollars
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Passenger Car Production & Sales Country
ProductionSalesDeficit/Surplus Japan8,117,5634,289,6833,827,880
Germany5,301,1893,341,7181,959,471 U.S.4,879,1198,422,625-3,543,506
France3,181,5492,254,732 926,817 S.
Korea2,471,4441,065,1611,406,283 Spain2,211,1721,437,192 773,980
Brazil1,495,6221,295,119 200,503 U.K.1,492,3652,458,769 -966,404
Canada1,274,853 868,188 406,665 Mexico1,000,715 667,565 333,150
China 703,521 780,604 -77,083 India 573,808 601,321 -27,513 Sweden
251,035 246,581 4,454 Source: Wards World Motor Vehicle Data
2002
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Sales By Country774,6913,578,1304,470,238 U.S.172,505955,711
426,974 Germany 237,815 (733,649) 98,999 1,008,742 (1,954,009) U.K.
93,348113,799 290,000 Spain 35,167 20,897 335,590 France 35,836
52,592 257,215 Japan- 1,587,882 (3,421,583)- China- 70,326 358,213
Brazil- 12,217 369,716 Passenger Car Sales By Manufacturer Source:
Wards World Motor Vehicle Data 2002
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CountryExportsImports Net Balance Their Current a/c as % of GDP
Canada190.2255.9-65.82.9% Euro Area127.1210.1-82.90.8%
Mexico110.8155.8-45.1-1.2% Japan54.4129.6-75.23.4% United
Kingdom36.046.4-10.4-2.0% China34.7196.7-162.02.4%
Germany31.477.2-45.94.4% Korea26.346.1-19.83.1%
Netherlands24.312.611.72.9% Taiwan21.734.6-12.96.9%
France21.231.8-10.6-0.6% Australia14.37.56.7-5.3% International
Trade Balance (2004) In Billions of Dollars
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The Bill Gross View - Bill Gross Founder and Chief Investment
Officer Pimco, Newport Beach, Calif. The Fed controls short rates.
Intermediate and long rates are determined by institutions,
individuals and foreign central banks, such as Chinas, which have
been massive buyers of Treasuries. Source: Barrons, January 19,
2004
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10-Year Bond Rate and Trade Deficit Source: Nov 2004, Forecast
of the Nation CPI Inflation2.72.31.61.8 10-Year Bond
Rate4.34.75.46.0 Core1.82.11.92.1
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This is Happening Now! 150 Basis Points Hike in 7 Months
Long-End is DOWN by 60 Basis Points!
Slide 117
The Money$$ Diamond RESIDENTIAL REAL ESTATE JOB GROWTH
CONFIDENCE OILEUROTRADE DEFICIT INTEREST RATES COMMERCIAL REAL
ESTATE
Slide 118
Economic Fallacies & Forecasting Truths Trade Deficit is a
Bad Thing Fiscal Deficits Matter For Interest Rates - Paper Money
Vs. Goods: INFLATE AWAY! -New Gold Brick of the World is the Dollar
(Euro will appreciate another 10%, so God Save The Union!)
-Export-Led Growth Strategy of East Asia & China is the New
Player on the World Stage -Deficits Matter for Long Term Growth But
We are All Dead in the Long Run!
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What is the federal budget deficit? It is a gigantic number of
dollars - like 300 jillion skillion drillion that the federal
government is spending, despite not actually having it. Is that
legal? It is if you have nuclear weapons Why does the government
spend so much money? Because it must pay for important federal
programs such as Social Security, the War on Terrorism, and the
artificial rainforest in Iowa. The rainforest will also teach
important educational lessons. Source: Atlanta
Journal-Constitution, March, 2004 Explaining the Headache that is
the Federal Deficit by Dave Barry Such as? Such as that Congress is
as trustworthy with money as a crack addict who is experimenting
with heroin. What is our political leadership in Washington doing
about the deficit problem? They're being total slime weasels.
They're spending MORE. They're pandering their brains out. The
Republicans just added a hugely expensive new drug benefit for
senior citizens, which the Democrats have bitterly criticized
because it isn't expensive ENOUGH.
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Bushs Budget Proposal Winners Department of Veterans
Affairs2.7% Homeland Security Department6.8% Defense Department4.5%
Treasury Department3.9% Department of Justice1% 11.5%Department of
Housing and Urban Development 9.6%Department of Agriculture
5.6%Environmental Protection Agency 4.4%Labor Department
2.0%Department of Energy Losers Source: The Atlanta Journal
Constitution, Feb. 8, 2005
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Source: Business Economics, January 2005
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Source: WSJ, February 8, 2005 Source: Business Economics,
January 2005
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Cartoon: Nick Anderson, Kentucky, The Louisville Courier -
Journal
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Final Parting Advice!
Slide 129
Source: WSJ, March 19, 2002 25 Worst Cliches 6. 6."The euro set
new lows for the session on signs of a U.S. economic rebound We
haven't the slightest inkling what the Connection is between the
euro and the U.S. economy. But there has to be some explanation for
the currency's tumble. 7. 7."Stocks are expected to open lower on
Monday " Sure, we're right only half the time. But Sammy Sosa would
kill for that sort of batting average. 9. 9."Bond prices fell in
anticipation of higher interest rates" Or maybe interest rates rose
in anticipation of lower bond prices. How could we possibly know?
We majored in English. 10. 10."Many investors fear there's more
stock-market carnage to come Everybody in the newsroom is totally
freaked out.
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Source: WSJ, March 19, 2002 25 Worst Cliches 13. 13."While many
small investors have suffered big losses recently, few can rival
the dismal record of Mr. Warren, who owns just three stocks --
Kmart, Enron and Global Crossing Can you believe this guy agreed to
speak to us? It's amazing what people will tell the press. 20.
20."The fund's risk-adjusted performance is among the best in the
growth-and-income category" Its raw performance stinks. 24. 24."The
fund's manager avoids swinging for the fences, instead aiming to
hit singles and doubles" Maybe the sports page has some openings.
25. 25."Today's boardroom Sturm und Drang left many observers with
a sense of deja vu" And if the foreign editor asks, tell her our
Italian is also pretty good.