Tag Archives: United States

California`s strong economic performance relative to other industrialized economies is driven by worker productivity

Califorias economy is bigger than the United Kingdom. If California were a country, it would be the fifth largest economy in the world. Wow! That is pretty impressive. California is home to four of the worlds ten richest people.

Its also home to four of the worlds ten largest companies by market cap. California has nearly 40 million residents and is the most populous state in the United States. Its GDP rose by $127 billion from 2016 to 2017, and their GDP surpassed $2,7 billion, according to federal data.

The United Kingdom has 65 million residents. Thats 25 million more than California, but interestingly it has a smaller GDP. The UKs capital and largest city is London, a global city and financial centre with an urban are the population of 10,3 million.

Californias economic juggernaut is concentrated in coastal metropolises around San Francisco, San Jose, Los Angeles and San Diego. It has 12 percent of the U.S population but contributed 16 percent of the countrys job growth between 2012 and 2017.

California`s strong economic performance relative to other industrialized economies is driven by worker productivity.

All economic sectors in California is growing, except agriculture, and financial services and real estate are the best sectors. Second is the information sector, which includes many technology companies.

California is known for being rich in gold and pearls, and the gold rush starting in 1848 led to dramatic social and demographic changes, with large-scale emigration from the east and abroad with an accompanying economic boom.

That`s 170 years ago.

Now, you can clearly see another boom; a tech boom. California has a thriving technology sector in Silicon Valley. The worlds smartest tech brains are there. So are the biggest tech companies. But the worlds entertainment capital can also be found in Hollywood, California.

All this makes California a global trendsetter in popular culture, innovation and politics. It is the origin of the film industry, the hippie counterculture, the internet and the personal computer, among others.

The San Francisco Bay Area and the Greater Los Angeles Area are widely seen as the centers of the global technology and entertainment industries. Many of the richest people live in San Francisco and the nation`s highest GDP per capita in 2016 was $94,000.

We have a revolution going on. So was it 150 years ago. The industrial revolution started in England. It was the name given to the first factory automation initially in the manufacture of Textiles. At that time, many current US state capitals did not exist.

At that time, London was the biggest city in the world, and England was the biggest trading nation. England produced more steel than the rest of the world put together, and steam engine driven trains were rapidly taking over long distance travel.

150 years ago saw a prolific range of inventions around electricity, culminating in the inventions of the electric light bulb and the electric motor.

Inventors in this field at this time were; Frenchmen Volta (1800 the Volt) and then Ampere (the Amp) followed by Oersted, Faraday and Maxwell. These inventors in Europe were followed by the American Edison probably the most prolific inventor of all time (1847 – 1931).

Edison produced the electric light bulb, the first public supply of electricity, the gramophone, the movies and the thermionic valve-later the triode.

English physicist Sir Joseph Wilson Swan also independently invented the electric light bulb (1860). He also invented Bromide paper (1876) still used today for photographic prints.

150 years ago telephone technology was invented. Initially the transmission of coded text messages over copper wire between England and France by Morse Code and then in the US Alexander Graham Bell invented the telephone to carry voice over the same wires in 1875.

Englishman Charles Darwin publishes his theory of «Origin of Species by means of natural selection» (Now of course supported by genetics. Then dangerous and revolutionary thinking flying in the face of the accepted «Creation» in the Bible.

Now, California and Silicon Valley is the place to be. A place with economic growth which is higher than the United Kingdom. This is an evolution.

 

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The war in Bosnia and Herzegovina came about as a result of the breakup of the Communist Party Socialist Federal Republic of Yugoslavia

Euro Zone is a Danger Zone. It has always been like that and seems like it won`t be any better. 1995 is not long time ago. It sounds like a movie when we hear the story about Bosnian town of Srebrenica were 8,000 muslim were murdered and buried in mass graves.

And worst of all; A military commander is behind the worst atrocity since World War II. The UN Hague tribunal sentenced former Bosnian Serb military commander Ratko Mladic to life in prison for genocide and other crimes. This is unbelievable.

 

The conflict in Bosnia and Herzegovina resulted in a mass grave with about 100,000 people, and that is a huge crime against the humanity. The court also convicted Mladic (74) for violating the rules of war. The crimes wouldn`t be committed as they were, the court said.

“The crimes committed were among the most heinous known to human kind,” Judge Alphons Orie said at the International Criminal Tribunal on Wednesday.

Mladic is not alone. Former Bosnian Serb leader Radovan Karadzic is another one with war-crimes and the potential for reigniting disputes remains high.

This is all about the nations that emerged from Yugoslavia with ethnic lines by five wars. They tried to increase regional cooperation with the goal of following other ex-Communist nations into the European Union.

Bosnia-Herzegovina were annexed by pro-Hitler Croatian puppet state in 1941. Thousands of Serbs, Jews and Gypsies were sent to death camps.

From 1945 – 1991, Bosnia is part of Socialist Federal Republic of Yugoslavia (SFRY).

SFRY was the Yugoslav state in southeastern Europe that existed from its foundation in the aftermath of World War II until its dissolution in 1992 amid the Yugoslav Wars.

It was a socialist state and a federation governed by the League of Communists of Yugoslavia made up of six socialist republics: Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Serbia, and Slovenia with Belgrade as its capital. In addition; it included two autonomous provinces within Serbia: Kosovo and Vojvodina.

The SFRY tracks back to 26 November 1942 when the Anti-Fascist Council for the National Liberation of Yugoslavia was formed during World War II. On 29 November 1945, the Federal People`s Republic of Yugoslavia was proclaimed after the disposal of King Peter II thus ending the monarchy.

The new communist government originally sided with the Eastern bloc under the leadership of Josip Broz Tito at the beginning of the Cold War, but the SFRY pursued a policy of neutrality after the Tito-Stalin split of 1948, and it became one of the founding members of the Non-Aligned Movement.

Following the death of Tito on 4 May 1980, rising ethnic nationalism in the late 1980`s led do dissidence among the multiple ethnicities within the constituent republics. With the collapse of communism in Eastern Europe, inter-republic talks on transformation of the federation also failed and led to recognition of their independency by some European states in 1991.

This led to the federation collapsing along federal borders, followed by the start of the Yugoslav Wars and the final downfall and breakup of the federation on 27 April 1992.

Two of its republics, Serbia and Montenegro, remained within the reconstituted Federal Republic of Yugoslavia, but the union was not recognized internationally as the official successor state to the SFRY.

Following a number of violent incidents in early 1992, the war is commonly viewed as having started on 6 April 1992. The same day that the United States and European Economic Community (EEC) recognised Bosnia and Herzegovina. (There is debate over the start of the Bosnian War).

The war in Bosnia and Herzegovina came about as a result of the breakup of the Socialist Federal Republic of Yugoslavia.

Following the collapse of Communism in 1991, nationalists win first multiparty elections and form coalition.

A crisis emerged in Yugoslavia as a result of the weakening of the confederation system at the end of the Cold War. In Yugoslavia, the national communist party, the League of Communists of Yugoslavia, was losing its ideological potency.

Meanwhile, ethnic nationalism experienced a renaissance in the 1980`s after violence broke out in Kosovo, while the goal of Serbian nationalists was the centralisation of Yugoslavia, other nationalities in Yugoslavia aspired to the federalization and the decentralisation of the state.

Bosnia and Herzegovina is a former Ottoman province and has historically been a multi-ethnic state.

The war was part of the breakup of Yugoslavia, following the Slovenian and Croatian secessions from the Socialist Federal Republic of Yugoslavia in 1991, the multi-ethnic Socialist Republic of Bosnia and Herzegovina.

This was rejected by the political representatives of the Bosnian Serbs, who had boycotted the referendum. Following Bosnia and Herzegovinas declaration of independence (which gained international recognition), the Bosnian Serbs, led by Radovan Karadzic and supported by the Serbian government of Slobodan Milosevic and the Yugoslav Peoples Arma (JNA), mobilised their forces inside Bosnia and Herzegovina in order to secure ethnic Serb territory, then war soon spread across the country, accompanied by ethnic cleansing.

Events such as the Siege of Sarajevo and the Srebrenica massacre later became iconic of the conflict.

2,2 million were displaced. 20,000 women were raped, and 100,000 killed during the war.

People with inside information said Serbia waged war in Bosnia. Serbian strongman was Slobodan Milosevic who died in 2006. Mladic was arrested 15 years after he went into hiding following the fall of Slobodan Milosevic.

Bosnia-Herzegovina is deeply divided nations with three truths about the same war. Bosnia is one of the poorest nations in Europe and three ethnic groups are making them a crippled state with a complicated power structure.

They are also divided by religion were Bosnia is home to 3,517 million people were 50% of them are muslims, 31% Serbs and 15% Croats.

Pakistan defied the UN`s ban on supply of arms and airlifted missiles to the Bosnians Muslims, while after the Srebrenica and Markale massacres, NATO intervened in 1995 with Operation Deliberate Force targeting the positions of the Army of the republica Srpska, which proved key in ending the war.

The war brought to an end after the signing of the General Framework Agreement for Peace in Bosnia and Herzegovina in Paris on 14 December 1995.

This is the most devastating conflict in Europe since the end of World War II.

Is it over now? Why do some people talk about a silent civil war in Europe right now?

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Are China and the United States dependent on each other?

Both China and the United States should be happy with a strong dollar and a weak RMB or Yuan. Americans are happy because they can buy cheap products from China right now. Chinese people should also be happy because they are a export-driven economy.

This is the opposite of what the U.S stands for. The United States are not a export-driven economy, so the business relationship is profitable for them both. But what will happen if a conflict between those two destroy this business relationship?

 

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First of all; the exporters in China sell goods to the U.S and receive U.S dollars in return. But that is a problem for China in the long run because of an increasing imbalance between U.S dollars and Yuan. China need to do something.

When China sell goods to the U.S, they receive too much U.S dollars, so they must sell their dollars through exports to get RMB because their workers want to get paid with Renminbi, and that again will increase the USD supply and raise the demand for RMB.

PBOC (People`s Bank of China) carried out active interventions to prevent this imbalance between the U.S dollar and Yuan. PBOC buys the available excess U.S dollars from their own exporters and gives them the required Yuan.

They can print as much as they want but their intervention creates a scarcity of U.S dollars which keeps the USD rates higher. China hence accumulates USD as forex reserves. So, what is really going on between them?

Normally, a country in international trading will get paid in their own currency. If your country buy products more than they sell, the mechanism of those two currencies is self-correcting. People sending you goods will get paid in your own currency, which means the supply of your currency will increase.

The value of your currency will depreciate in value against other currencies, and if you sell more than you sell, you can start exporting more and import less to come back in balance again. This is how it is self-correcting with no intervention from any authority, but the U.S and China business is different.

We know that China do everything they can to keep their own currency low. This is how they are competitive in the international market. If the RMB appreciates, China`s export business will be hit and their unemployment will increase.

Therefore, China requires RMB in order to continue to have a lower currency than the USD, and thus offer cheaper prices. If they stops interfering in the previously described manner, the RMB would self-correct and appreciate in value. That is not China`s strategy.

So why doesnt other countries do the same? Its not so easy. The biggest challenge is that this strategy leads to high inflation. But China are able to control that. They have a tight, state-dominated control on its economy and is able to manage inflation through other measures like subsidies and price controls.

China can withstand any political pressure from other importing nations, which is not feasible in the case of other countries. In the 1980s, Japan had to give in to the U.Ss demands when it tried to curb JPY rates against the USD, so China is a strong nation.

4 trillion dollars of U.S reserves is what China have had since 2014, and they have found the U.S treasury securities to offer the safest investment destination for Chinese forex reserves. China also have a lot of Euro, and they need to invest such huge stockpiles to earn at least the risk-free rate.

Forex reserve money is not money you can gamble away in risky stocks. Real estate and other countries treasuries are also too risky, compared to U.S debt.

The huge U.S deficit trade with China gives China a reason to continue to buy treasury securities. The gigantic size of the monthly deficit is around $30 billion, so treasuries are among the best available option for China.

Buying U.S treasuries enhances China`s money supply and creditworthiness. Selling or swapping such treasuries would reverse these advantages.

U.S debt offers the safest heaven for Chinese forex reserves, which effectively means that China offers loans to the U.S so that the U.S can keep buyng goods China produces.

The more surplus China have with the U.S, the more U.S dollar and U.S debt the want.

What China is really doing is to loan to the U.S (purchase US debt) and that again enable the U.S to buy Chinese products, which is a win-win situation. Both benefit and are locked in a state of inter-dependency, and a conflict between them is a huge lose-lose strategy.

Some people are worried about China`s surplus with the U.S and what will happen if they are dumping its U.S forex reserves? We know what happened with GBP during the World War II. Other countries sold GBP reserves and UK faced a currency crisis.

Its economy deteriorated due to the excess supply of its currency, leading to high interest rates. This will not happen if China start to dump USD because the U.S reserves will either return back to the U.S or end up in other nations.

Not only that. It will be worse for China. An excess supply of U.S dollars would lead to a decline in USD rates, which in return will make RMB valuations higher. That will lead to more expensive products from China, and make them lose their competitiveness.

China won`t do that.

If they do, the U.S can start to print money which will reduce the value of the USD and increase inflation, and that will work in favor of U.S debt. That will be good for the U.S but very bad for the creditor China.

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

 

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Sweden has its own JFK case

John Fitzgerald Kennedy (JFK) was the 35th President of the United States. He was the first Roman Catholic president. On May 29, next year, he would have celebrated his 100 year birthday but someone on this planet wanted it different. JFK was assassinated in Dallas, Texas  on November 22, 1963.

Lee Harvey Oswald was arrested the same day and determined to have fired shots that hit the President from a sixth floor window of the Texas School Book Depository. Dallas nightclub owner Jack Ruby mortally wounded Oswald two days later in a jail corridor.

The FBI and the Warren Commission officially concluded that Oswald was the lone assassin, but its report was sharply criticized.

 

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JFK is not the first president to be assassinated. William McKinley was the 25th President of the United States, and served from 1897, until his assassination in September 1901, six months into his second term.

McKinley led the nation to victory in the Spanish-American War, raised protective tariffs to promote American industry, and maintained the nation on the gold standard in a rejection of inflationary proposals.

Sweden has its own JFK case. Prime Minister of Sweden Olof Palme (59) was assassinated in 1986. That`s exactly 30 years ago on Sunday 28, 2016.

Palme was shot twice in the stomach by a lone gunman after exiting a cinema with his wife Lisbeth Palme, whom the assassin shot and missed before fleeing the scene on foot.  The eyewitnesses called the ambulance and the police, but Palme died on the way to the hospital.

The ambulance could only confirm his death, while the police did a remarkably sloppy job, failing to secure and investigate the crime scene for hours. Furthermore, no real attempts to catch the perpetrator were made immediately after the murder.

Christer Pettersson admitted killing Palme in 1988, and he was also identified by Palmes wife. Later on, Pettersson took his confession back, saying he was coerced to do so by the police, and Mrs Palmes evidence was considered insufficient, and Pettersson went free.

Pettersson died in September 2004. He was reported to have confessed to the killing before his death, but the investigation into Olof Palme`s death remains open.

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Conspiracy theories considered the drug addicted and social outcast Christer Pettersson (42) to be a red herring, set up to finally close the case, but his rehabilitation prevented this from happening. He died by supposedly falling from the stairs and suffering a cerebral hemorrhage. The theorists expressed doubts in the accident nature of his injury.

Olof Palme was at the time of his death been accused of being pro-Soviet and not safeguarding Sweden`s interests. Arrangements had been made for a trip to Moscow to discuss Soviet submarine incursions into Swedish waters.

Palme was a social democrat and believed in an open government and shunned tight security. He normally had two bodyguards to protect him on official functions, but not at the cinema in Stockholm, Sweden.

Just like John Lennon and Bob Marley, Mr Palme was against the war in Vietnam, and he became a leading advocate of peace and non violence and campaigned for an end to the war in Vietnam. He will also be remembered as a campaigner for the working classes and Third World causes.

Bob Marley was a political peace activist and wrote the song  ”Get up, stand up.” John Lennon`s name will always be synonymous with peace and political activism, and the song ”Give peace a chance” is a 1969 single.

Lennon’s criticism of the Vietnam War resulted in a lengthy attempt by Richard Nixon`s administration to deport him.

 

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Bob Marley died at the age of 36, while John Lennon died in 1980 at the age of 40. Mark David Chapman shot Lennon in the back four times in Dakota, New York.

Ono issued a statement the next day, saying ”There is no funeral for John”, ending it with the words, ”John loved and prayed for the human race. Please pray the same for him.”

Olof Palme once said; ”I know that the Thatchers and the Reagans will be out in a few years. We have to survive till then.” Mr Palme was Anti-American, and saw himself carrying the banner of Social Democracy through Europe at a time when the Right was only temporarily in triumph.

That`s 30 years ago. Now we have the European Union and ISIS. Refugee and financial crisis. War in Syria, Iraq and Libya.

In terms of psychological impact, Palmes assassination had the same effects on Sweden as Kennedys assassination had on the U.S.

Palme and Kennedy`s death remains open.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Twitter up 76%

The first day of trading for Twitter (TWTR) yesterday was not a bad day for Twitter fans. As I predicted yesterday, the stock skyrocketed, and reached as high as $50,09, before closing the wild and crazy session at $44,90.

That`s not bad considering the IPO share price of $26 a share. Many people will follow the stock for the next trading days, because the stock price is based on the earnings from the future. This reminds me of the tech bubble from the 90`s.

Draghi cut the interest rate yesterday, and that is good for the financial system. But, It tells us that it is something in Europe that is terribly wrong. When the interest rate is low, you know that the economy is sick. It really seems like Europe is on the edge to collapse.

The banking system in the U.S is leveraged by 13 to 1, and in Europe the banking system is leveraged by twice; 26 to 1. Taken as a whole, European financial institutions have more debt than Europes entire GDP.

To put that in perspective: Lehman bros was leveraged by 30 to 1 when it collapsed. You only need a 4% drop to wipe out all capital. All the central banks are printing money at the same time for the first time in our history.

The central banks can do two things:

  1. Monetize everything (hyperinflation)

  2. Allow the default and collapse to happen (mega deflation)

It they go for #1, Germany will probably leave the Euro, because they have a bad experience with Weimar and will not tolerate aggressive monetization. If the Fed push the button and print more money, the dollar will collapse, inflations will skyrocket as well as inflation rates and we will enter a dark period in the world and the capital markets.

Europe as a whole is so big that if it collapse, it will affect the rest of the world as it is China`s largest trade partner. Accounts for 21% of U.S exports and the single largest economy in the world. That`s why Draghi want`s much more money into the banking system.

What we are about to see now is that Europe is doing the same mistakes that Japan did in the early 90`s. In Japan, the policy makers failed to beef up banks capital cushions and to make them clean up their balance sheets.

To boost the economy growth they needed to undetake structural reforms but they failed. The Japan ecperience, is currently happening in the U.S and Europe right now, and Europe is indeed heading towards a lost decade.

Europe has failed to recapitalize its banking system. U.S. did a much better job recapitalizing its banking system. They started with the original stress test conducted by the Fed in 2009 which was more effective than the European version, and are now free from problems. Germany appears to be an exception to the rest of Europe, because it undertook structural reforms before the crisis hit.

Important news today: Unemployment Numbers at 8:30am, Preliminary UoM Consumer Sentiment at 9:55am, Bernanke Speaks at 3:30pm.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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