Why you are living in the wrong spot, or Why you should get up and move to Mogadishu

Right now, I live in Chicago, but am considering a move outside the country.  I ask myself, "where would I choose to live were I born today?"  As the world is becoming more and more urban, major cities are becoming connected hotbeds of innovation.  What most interests me is how relatively underpopulated the United States, Australia and Russia are for their size.  Asian populations, combined with economic freedoms is changing the way that our planet works.   via UN:



Bloomberg published a list of the global megacities in 2030.  That coincides with growth prospect for 2030.  My take on where I would choose to live would be in an area that had high future prospects.  Places for growth in the Americas would be Lima and Bogota which quickly will be surpassing Buenos Aires in population.  Arequipa, Peru would be a secondary spot where I would be expecting economic growth, especially with the Transoceanic highway connecting inland Brazil to the Pacific. In Asia, China has already done most of its population growth.  My prediction is that in 2030 people in India will be laughing at how unimpressive the Chinese growth story is.   The average age in India is about 26, while the average age in China is 39.  Think where India will be when the average age is 39. 

Africa too has high growth prospects, both in the Lagos/Kinshasa/Luanda region and also in the Ethiopia/Tanzania.  Tanzania will grow because it is the likely port to service the 100MM people in the African Basin.  Mogadishu/Djibouti (snicker) will grow because they will be the primary port to service the close to 100MM people in Ethiopia. 

IMF Special Drawing Rights, a key to making Chinese Renmibi a global reserve currency

The IMF special drawing rights basket is currently under review for changes, to be finished with their review in 2015.  John McCormick, Chairman of RBS APAC seems to think that China will push hard for the Renminbi to be placed within that basket, instantly, giving almost all countries, even those that don't trade directly with China, a strong incentive to increase their international reserves in the Chinese currency.  Via RBS:

the International Monetary Fund is reviewing its special drawing rights basket, which uses four key international currencies to supplement member countries’ official reserves and bolster liquidity.

The deadline for completing that review is 2015. Based on where we see the G7 countries today, we believe there’s a very strong chance that China can get the onshore version of RMB, CNY, into that basket – a real boost to the currency on the world stage.

 

Protest ignite across Brazil, the radicals demand: lower the bus fare by ten cents.

From the Guardian:

An 18-year-old man was killed in Sao Paolo state after a car drove through barricades.

The country's president Dilma Rousseff called off a visit to Japan to deal with the crisis.

Official estimates suggest that there were more than a million protesters out across the country in total.

As Brazil, the emerging giant of South America, throws up in hands at protests, I can't help but think of Turkey.  In Turkey, a demonstration about an old tree in a public square caused a riot.  A country with a history of repression and political prisoners, bordering Iraq and Syria decides to riot over a tree.  In Brazil, almost a million people take to the street and the only demands they mention is to reduce the bus fare by 10 cents.  Laughable. 

The difficulty of Dilma Roussef, the current president of Brazil, is that she wants to be seen as silently encouraging the protestors.  Like Bill Clinton in Seattle, she will realize, that once you have crossed the line from liberal radical to entrenched political cog, the new liberal radicals won't like you no matter how much you pretend to like them. 

EconomyPolitics 4th annual Index of Economic Efficiency of the World

The top ten countries in terms of economic efficiency for 2013:  

This is the first in a three part series where we identify the most attractive international investment opportunities for the next ten years. We start out by looking at economic efficiency, i.e. the fundamental freedoms and legal framework, which facilitates successful investing.

In doing country analysis for international investments, it is often a first step to look at sovereign bond ratings from Moody's, Fitch or S&P. However, many smaller developing countries get very little if any play at the agencies. CDS spreads, another measure of investor risk only covers 80 countries. Our index covers 127 countries.  To do so, we have looked at business and freedom indexes which assign values to sovereign attributes to gauge risk and assess opportunity. These indices attempt to measure economic freedom and a legal clarity.

There are plenty of indices by many different sources, each one looks at important factors which could influence returns and hurdle rates. But which index do you use? We have looked into four of such indices and compiled an index of indices to measure efficiency.

I have included information on five of such indices and compiled our own index of economic efficiency.  The indices include: 

• Heritage Foundation: Index of Economic Freedom
• Fraser Institute: Economic Freedom of the World
• World Economic Forum: Global Competitiveness Report
• World Bank:  Doing Business
• Euromoney Country Risk

Please download our white paper:

Economic Efficiency 2013

Correlation between Right to Work laws and Republican Voting

With Michigan passing right to work laws, I ask Interesting on many levels.

There is a high correlation between right to work laws and voting patterns.  This is a real blow to unions, even a greater blow than Scott Walker's taking away collective bargaining for government employee unions. One thing I was noticing was the high correlation between the two maps.  Almost all the North East, Great Lakes area and the left coast are all forced unionism states.

The correlation is not perfect, but there are weird patterns, such as Indiana.  India is the only great lakes state that is right to work.  It is also the only great lakes state to vote Republican in the last election.  Also, New Mexico and Colorado are the only states in the last election to vote Democrat.  They are both forced unionism states surrounded by right to work states.

Correlation is not causation however, so making Michigan a right to work state will not make it Republican.  If there is any causation, it is probably the Republican voting patterns that allow the state legislatures to pass right to work legislation.  In this case, Michigan could likely be an anomaly.

Another, more likely explanation is that right-to-work legislation is a sensible legislation which is being pushed by conservative voters, but is catching on slowly throughout the country.  In that case, the leglislation is likely to pass in other states too.  Map via NRTW:

Right to work States vs. Forced Unionism States

Blue = Democrat, Red = Republican