Cuba ocupa con 25 dolares mensuales el ultimo lugar mundial en salarios - Estudio

la diferencia para cubrir el costo basico de vida proviene del "invento", el robo al estado y las remesas de familiares en el exterior. alguna dudas del paraiso neokaxtrizta al que han conducido las reformas del general de despachos? se entienden ahora los desesperados esfuerzos por emigrar de la poblacion cubana y las esperanzas puestas en los yumas?

---------------------- 
Cuba Cost of living Stats: NationMaster.com

176

Cuba

$25.05

2014

SOURCES: Numbeo.com. Cost of living.; Numbeo.com; http://www.numbeo.com/cost-of-living/; Numbeo.com. Cost of living.; cost of living

Average monthly disposable salary > After tax	$25.05	2014	145th out of 145
Basic utilities > Garbage, water, heating, electricity for 85 sqm apartment	$13.50	2014	146th out of 146
Cinema ticket price > International release	$0.06	2014	144th out of 144
Clothing and shoe prices > Jeans > 1 pair of Levi 501s or equivalent	$37.65	2014	126th out of 143
Clothing and shoe prices > Shoes > Pair of Nikes	$85.00	2014	93th out of 143
Internet > Broadband 6Mpbs, uncapped data	$350.00	2014	2nd out of 146
Prices at markets > Apple > 1kg	$7.00	2014	5th out of 146
Prices at markets > Cigarettes > Pack of Marlboro	$1.00	2014	143th out of 146
Prices at markets > Egg > Dozen	$0.57	2014	146th out of 146
Prices at markets > Loaf of bread > Fresh, white	$0.36	2014	139th out of 146
Prices at markets > Milk > 1 litre	$1.12	2014	97th out of 146
Real estate prices > Rent index	8.32	2014	138th out of 144
Real estate prices > Rent per month > 3 bedroom apartment > City centre	$455.60	2014	135th out of 146
Restaurant prices > McDonalds meal	$6.00	2014	78th out of 146
Transport prices > New car > Volkswagen Golf 1.4 or similar	$15,000.00	2014	134th out of 140

Did you know

• A monthly internet connection costs $305 more in Cuba than the US. While in Afghanistan it costs $900!
• A meal at McDonalds in Guantanomo Bay would cost a Cuban his weekly wage but Cubans are not allowed in anyway.

Cuba Cost of living Profiles (Subcategories)

Clothing and shoe prices 4	Restaurant prices 8
Prices at markets 16	Transport prices 7
Real estate prices 8

Cuba categories

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Background	Geography	People
Conflict	Government	Religion
Cost of living	Health	Sports
Crime	Import	Terrorism
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Energy	Media

How Low Can Oil Go?

The New Yorker

By James Surowiecki

Just in time for Christmas, there’s a surprise present for consumers: plummeting oil prices. They have fallen forty per cent since July—gasoline now costs well below three dollars a gallon—saving Americans hundreds of millions of dollars a day. This has been a mini-stimulus for the economy, and one that was almost completely unexpected. Before the summer, prices had been high for years. Despite a lot of geopolitical turmoil and macroeconomic anxiety, the oil market had been remarkably stable, and it seemed possible that, as one study put it, “hundred-dollar oil is here to stay.” But in a matter of months all that changed.

So what happened? At the most basic level, it’s a simple supply-and-demand story. Europe’s continued troubles and a slowdown in the Chinese economy muted the demand for oil. Meanwhile, the U.S. shale-oil boom and a rebound of drilling in Libya boosted supply. “Libya’s ramping up of production caught people genuinely off guard,” Steven Kopits, the managing director of Princeton Energy Advisors, told me. “That’s the kind of thing that’s hard to predict unless you have really good intelligence assets on the ground.” The result was that the market was producing many more barrels of oil a day than were consumed. As oil was dumped on the market, prices inevitably fell.

In the oil market, though, nothing is simple. The real story of the past few months isn’t that oil prices have fallen; it’s that they’ve fallen so far so fast, and that they may still have a long way to go before hitting bottom. That suggests that the stability of the past few years has yielded to a new era of volatility, in which small changes in supply and demand will lead to big price swings.

Such volatility is exactly what the history of oil prices would lead us to expect. Commodities are more volatile than other assets—the price of copper fluctuates a lot more than that of a television set—and oil has historically been more volatile than most other commodities; a 2007 study found that in the U.S. it was more volatile than ninety-five per cent of other products. The biggest reason for this volatility is that short-term supply and demand for oil are what economists call “price-inelastic,” which means that they don’t respond much when the price of oil changes. People don’t immediately start driving less when gasoline prices spike—they just pay more for gasoline. On the supply side, drilling projects take a long time to start up or to shut down, so higher prices don’t immediately translate into more supply, or lower prices into less. This means that the way prices typically return to normal—through increasing supply or diminishing demand—doesn’t really happen in the oil market. So a two- or three-per-cent change in supply, which is about how much the shale boom and the Libyan rebound added to global daily production, can spark a huge move in price.

In recent years, hedge funds and commodity-index funds have put hundreds of billions into the oil market, and studies suggest that this flood of investment may have increased the market’s volatility. By its nature, oil trading is beset by uncertainty. It’s not just the precarious geopolitics of where most of the world’s oil reserves are. There’s also the fact that predicting future demand requires forecasting the performance of the entire world economy.

You might think that the existence of OPEC would guarantee stability. But OPEC is weaker than it once was, thanks to the emergence of big non-OPEC oil producers, like the U.S. Besides, enforcing stability at a time of falling prices is easier said than done. OPEC’s members face a classic collective-action problem. They’d be better off ultimately if they all agreed to curb production—Saudi Arabia, in particular, would have to cut back—but individually they have a greater incentive to continue pumping. And the Saudis know from history that cutbacks don’t always work. In the early nineteen-eighties, they slashed output in an attempt to prop up energy prices. “They cut production and cut production and cut production, and all it did, more or less, was wreck their economy for the next twenty years,” Kopits said. “This time around, they’re drawing a line in the sand and saying We’re going to keep pumping, and everyone else is going to have to adjust around us.”

The shale-oil boom has added to uncertainty, too. OPEC has no control over what U.S. producers do. And even though shale-oil producers often face higher production costs than traditional drillers do (which should make them quick to cut production when prices fall), many also have debt payments to make and fixed costs to meet if they don’t want to go out of business. So they’re likely to keep pumping, since that keeps revenue coming in until (they hope) the price recovers. But continuing to pump, of course, makes it harder for prices to stabilize.

It would be a mistake for oil producers to expect a return to the high, stable prices of recent years. By the same token, American consumers shouldn’t get too used to cheap gas, since in the long run low oil prices erode the conditions that brought them about. Producers are already starting to adjust: ConocoPhillips just announced that it’s cutting its drilling budget. And, because cheap oil gives everyone an economic boost, eventually it leads to higher demand. We’re awash in oil right now. Soon enough, we may be wondering where it all went.

Precio del petróleo, elecciones 2014 y revolución energética en EEUU

cubanalisis

Diego Trinidad, PhD

En el dinámico mundo de la energía se producen cambios diariamente. Desde que escribí en agosto mi tercer artículo sobre la revolución energética que se ha producido en Estados Unidos en los últimos cinco años, mucho ha cambiado. Específicamente, el precio del barril de petróleo en el mercado mundial ha bajado dramáticamente un 27% desde principios del verano hasta la fecha (hoy domingo 9 de noviembre cerró en $78.65 el barril; a principios de junio estaba a $115 el barril). 

Esta baja en el precio del petróleo ya ha traído cambios enormes en la geopolítica mundial. En el futuro inmediato, todavía mucho más cambiará si este nivel de precios, entre $78 y $85 por barril, como todo parece indicar, se mantiene en el 2015. El petróleo a ese precio representa una ganancia de un trillón de dólares ($1’000,000’000,000, es decir, un millón de millones en español) para los consumidores en el mundo entero.

Esta semana, cuando en la elección congresional de EEUU el Partido Republicano ganó el control del Senado con un aumento de 8 senadores (quizás 9 cuando se celebre una elección especial en Lousiana en diciembre, donde el candidato republicano es favorito para ganar) se produjo el otro gran evento reciente.

Los cambios que el control del Congreso (Cámara de Representantes, donde el Partido Republicano ganó 18 escaños adicionales, y Senado, en el que en enero controlarán 53 ó 54 asientos frente a 46 ó 47) por los republicanos, comenzando en enero del 2015, traerán a EEUU en el campo energético serán sísmicos. El desarrollo de estos dos temas, y como afectarán a EEUU y el resto del mundo en el próximo año, es el tema de este cuarto artículo. Durante el nuevo año, según se produzcan más acontecimientos, continuará esta serie de artículos.

Algunos analistas y expertos previeron la caída en el precio del petróleo durante el verano, pero pocos pensaron que sería tan súbita y tan grande. Sin embargo, al nivel presente, la producción de petróleo en EEUU no será afectada significativamente.

La nueva tecnología de fracking (fraccionamiento hidráulico) para extraer petróleo de las formaciones rocosas de shale (esquisto) es productiva por lo menos hasta un precio de $60 por barril. Casi nadie prevé que los precios bajen a ese nivel, pero aunque así fuera, los nuevos pozos de petróleo que utilizan la tecnología de fracking son diferentes a los pozos tradicionales. Cuando el precio del petróleo baja y hace estos pozos económicamente  improductivos, pueden ser clausurados y fácilmente reabiertos cuando el precio sube de nuevo. 

Además, algunas compañías como Whiting Petroleum, basada en Denver, Colorado, y una de las dos grandes compañías que han desarrollado los yacimientos del campo Bakken, en Dakota Norte, junto con Continental Petroleum, tienen una estrategia interesante para enfrentar precios mas bajos en el mercado, como los de ahora: compran acciones futuras a precio más bajo, y cuando el precio baja, lejos de perder, ganan dinero.  De esa manera, se protegen y pueden soportar precios más bajos.

Para los consumidores americanos -y para el resto del mundo que no es productor de petróleo- los nuevos precios más bajos han sido una enorme bonanza económica. Cada consumidor americano ahorrará como $700 por año con la gasolina a menos de $3.00 por galón, como está ahora por primera vez en dos años.

Para el resto del mundo significará grandes ahorros en la importación de petróleo, presupuestos más bajos, y un nivel de inflación mucho menor. China ahorra más de $2 billones (un billón en inglés son mil millones) por cada dólar que baje el precio del barril de petróleo. Para la India, estos nuevos precios significan un ahorro de más de $40 billones.

Pero para ciertos países gobernados por regímenes autoritarios y dictatoriales, como Rusia, Irán y Venezuela, estos nuevos precios son ruinosos. Para Arabia Saudita y los Emiratos del Golfo Pérsico representa pérdidas multimillonarias de dólares en exportaciones, pero Arabia Saudita en particular, con reservas de 737 billones de dólares, puede fácilmente soportar este nivel de precios por largo tiempo.

Rusia, Irán y Venezuela no pueden. Rusia basa su presupuesto en un barril de petróleo a $100. Pero tiene reservas de 454 billones de dólares. Sin embargo, las tremendas pérdidas en divisas a precios alrededor de $80 significan que los proyectos expansionistas del Presidente Vladimir Putin quedan paralizados. De la misma manera, las mejoras necesarias en la infraestructura de Rusia, incluyendo en la exploración y producción de los pozos petroleros de Siberia, también tendrán que ser pospuestas.

Irán basa su presupuesto en el petróleo a $136 por barril y tiene bajas reservas por motivo de las restricciones comerciales provocadas por las sanciones impuestas por EEUU y la Unión Europea, a pesar de haberse relajado en meses pasados. Por otro lado, Irán produce y exporta gas natural, y en China sobre todo tiene un cliente a largo plazo. Pero los nuevos precios del petróleo han limitado mucho su capacidad para hacer daño en el Medio Oriente y en su apoyo a grupos terroristas, lo cual es una bendición para el resto del mundo.

Venezuela es el país que más y mayores riesgos enfrenta en el futuro inmediato. Venezuela necesita el petróleo a $120 por barril. De manera que desde principios del verano está sufriendo pérdidas ruinosas en sus recaudaciones por la exportación de petróleo, las cuales han caído a muy bajos niveles debidos al deterioro de su infraestructura de producción.

Por cada dólar que baja el precio de un barril, Venezuela pierde entre 450 y 500 millones de dólares en sus ganancias por la exportación de petróleo, y sus entradas dependen en un extraordinario 90% de la exportación de petróleo. Además, el año pasado Venezuela tuvo un déficit fiscal del 17% de su Producto Interno Bruto (PIB). Con un nivel de inflación del 60% anual (el mayor del mundo), reservas de solo 20 billones de dólares y una deuda externa gigantesca, la cual ya malamente puede pagar, el país está al borde de la quiebra. Cuanto tiempo puede sobrevivir bajo estas condiciones es la gran pregunta.

Claro que los problemas de Venezuela son mucho mayores debido a su ayuda, a través de PetroCaribe, a países de la Cuenca del Caribe, incluyendo, por supuesto, a Cuba. Todos estos países sufrirán muy pronto las consecuencias de la ruina venezolana, pero ninguno como Cuba.

El gobierno de Cuba ya hace años viene previendo el momento cuando los subsidios de Venezuela se reduzcan o terminen. Se ha asegurado de otros suministradores como Angola, Irán, Brasil, Rusia y otros exportadores de petróleo. Recibe ayuda económica de Rusia y de China, y esta misma semana se reportó que tiene planeado producir hasta un 24% de su energía de fuentes renovables para el año 2030. Además, todavía aspira a desarrollar las reservas de petróleo en sus aguas adyacentes.

Pero para esto falta mucho tiempo, el tiempo que el régimen cubano no tiene. Cuba probablemente nunca se verá en la situación que afrontó a partir de 1991-92, cuando perdió los subsidios económicos y el suministro de petróleo de la Unión Soviética, pero una reducción inmediata en la ayuda de Venezuela puede afectar seriamente al régimen en el futuro próximo.

Casi tan importante, si no mucho más, que la caída en los precios del petróleo, ha sido -y será- el impacto de las elecciones congresionales ganadas el pasado martes 4 de noviembre por el Partido Republicano. El control del Senado por los republicanos, y por consiguiente del Congreso, ya que la mayoría en la Cámara no solo se mantuvo, sino que aumentó, logrará que en enero del 2015, los grandes cambios previstos (y predichos en esta serie de artículos desde hace casi tres años) en lo que puede ser un renacimiento económico en Estados Unidos, se logren antes que un nuevo presidente sea electo en el 2016.

Ya los líderes republicanos de ambas cámaras han anunciado lo que será su programa de gobierno para el 2015. La primera ley que probablemente aprobará el Congreso, quizás en el mismo enero, será la construcción y apertura del viaducto Keystone XL, desde la provincia occidental de Alberta, en el oeste de Canadá, al Golfo de México. Este importante proyecto, paralizado innecesariamente por razones estrictamente políticas por el Presidente, producirá por si solo una tremenda bonanza económica para EEUU.

El Presidente dijo durante la campaña presidencial del 2012 que este proyecto solo crearía 50 empleos (lo que le ganó el premio de 4 “Pinochos” del Washington Post por una de las mentiras mas grandes del año). En verdad, de acuerdo con varios estudios recientes, creará al menos 45,000 empleos durante su construcción -y hasta medio millón de nuevos empleos para el 2035.

Pero no solo eso, sino que existen al menos 25 otros proyectos relacionados con la construcción del viaducto Keystone XL en Canadá y EEUU que pueden convertir a Norteamérica (incluyendo a México) en un productor de 17.5 millones de barriles de petróleo diarios, casi igual a la producción de Arabia Saudita y Rusia sumadas.

Otros dos proyectos de ley planeados por los republicanos en enero del 2015 son casi tan importantes como el anterior. Uno es la abrogación de la ley federal de 1975 que prohíbe la exportación de petróleo americano. El otro es el relajamiento en las regulaciones para construir plantas y terminales para la exportación de gas natural licuado a Europa en la costa este, y a Japón y China desde la costa oeste de EEUU.

Hay más de 25 proyectos esperando por su aprobación, y estas plantas/terminales demoran como dos años en construirse, de manera que el tiempo apremia. Claro que estos tres proyectos de ley, de ser aprobados por el Congreso en enero, pueden ser vetados por el Presidente.

Pero los tres proyectos cuentan con apoyo bipartidista (en el Senado quizás cuente con 65 votos; se necesitan 66 para anular un veto presidencial), y es muy posible que el Presidente, debilitado políticamente como ha quedado, y con solo dos años restantes en su segundo período, firme cada una de estas tres leyes. En estos momentos solamente se puede imaginar el efecto positivo que esto produciría en la industria privada en general, pero más que todo en la industria energética en particular.

Solo se puede imaginar el efecto que esto produciría en la industria privada en general, pero en la industria energética en particular será impactante. Los empresarios de negocios verían con optimismo un nuevo clima en el cual la economía funcionaría con mas libertad, menos regulaciones y menos interferencia del gobierno federal. Una tasa de crecimiento mayor que el 3% anual sería fácil de visualizar.

Tres otras medidas que pueden beneficiar mucho a la economía americana y contribuir a un mayor crecimiento económico, son la apertura de la gran reserva ANWR en el norte de Alaska (10 billones de barriles de petróleo), la apertura en general a la exploración y perforación en tierras federales del oeste de EEUU, donde se encuentran mas del 80% del petróleo y gas natural en el país, y finalmente, la liberación al mercado del petróleo contenido en la Reserva Estratégica de Petróleo situada en varias cuevas en las costas del Golfo de México.

Esta Reserva, una reliquia de los tiempos de Carter y Ford, cuando primero la OPEP (Organización de Países Exportadores de Petróleo) restringió la exportación de petróleo a EEUU después de la segunda guerra entre Israel y Egipto, ya no es necesaria, debido a que EEUU es el primer productor de petróleo en el mundo. Pero contiene 700 millones de barriles de petróleo, los cuales, si se liberan lentamente, pueden ayudar a bajar todavía más el precio de la gasolina en EEUU y aumentar la capacidad exportadora de petróleo americano al resto del mundo.

Adicionalmente, la aprobación de otras dos leyes más generales se contempla por el liderazgo congresional republicano. Una es rebajar la tasa a los impuestos corporativos,  que ahora están en un 39.1%, los mas altos en el mundo desarrollado. En contraste, en la Unión Europea promedian menos del 24%. El Presidente y los demócratas públicamente apoyan una rebaja al 29%; los republicanos prefieren el 25%. Pero claramente hay apoyo bipartidista a la medida, y esto sería quizás el mejor estímulo que pudiera recibir la economía.

La otra ley propone invitar a los capitales de compañías multinacionales americanas en el extranjero, que se calculan puedan llegar a dos trillones de dólares (dos millones de millones en español), para que sean repatriados sin pagar impuestos, solo con la condición de que sean invertidos en EEUU para crear empleos.

Pero el Presidente y su partido demócrata irracionalmente amenazan con cobrar hasta un 50% de impuesto a las compañías que accedieran a repatriar esos capitales, algo obviamente absurdo. Aquí no hay ningún espacio para negociar, pero tres trillones de dólares invertidos para crear empleos posiblemente producirían al menos tres millones de nuevos trabajos. El impulso para la economía sería incalculable. 

Sin embargo, estas dos últimas medidas, y hasta las tres anteriores (excepto la aprobación del viaducto Keystone XL, la abrogación de la ley que prohíbe exportar petróleo americano, y el relajamiento de las restricciones para exportar gas natural, las que SÍ cuentan con apoyo bipartidista) no serán fácilmente aprobadas por el Congreso, y si lo fueran, indudablemente serían vetadas. De manera que todas ellas son proyectos a largo plazo, casi seguro para después que una nueva administración llegue a Washington en 2017.

Todo esto, lo que hasta el pasado martes solo era una gran esperanza para el 2017, cuando un nuevo presidente (o presidenta), sin importar de que partido, tomara posesión del cargo, ahora puede ser realidad, mucho antes de lo que nadie hubiera pensado.

El mundo desde el nuevo año 2015 puede ser un mundo distinto, de mayor prosperidad y de mayor cooperación internacional, en el cual Estados Unidos otra vez se convierta en el motor de la economía mundial.

Ya no es un sueño, ya no hay que esperar tres años más. Ya puede ser realidad.

Fears: IMFC’s Tharman Says Low Growth Scenario Can Be Averted

International Monetary Fund

IMF Says China World's Largest Economy, Sort Of

breitbart

By Chriss W. Street 

The International Monetary Fund officially announced that China just surpassed the United States as the world’s largest economy, sort of. China’s victory is only on a “Purchasing Power Parity” (PPP) basis. Although Gross Domestic Product is about 50% higher in the U.S., IMF says the total output of goods and services in China are estimated to now be slightly higher than in the U.S.

Many economists complain that relying on currency exchange rates to calculate Gross Domestic Product (GDP) as the value of all goods and services is misleading in comparing real standards of living in different countries. Goods and services that are not traded across borders, such as medical services, retail, and constructions services, and haircuts—are almost always cheaper in poorer countries because of cheap labor. Using exchange rate driven GDP’s to compare living standards may understate the benefits that citizens in poor nations enjoy from access to cheaper goods and services.

Purchasing Power Parity “conversion factor” is the number of units of a country's currency required to buy the same amount of goods and services in the domestic market as a U.S. dollar would buy in the United States. The IMF’s purchasing power parity estimates--which take into account these differing costs--are considered an alternative by some analysts as a revealing way of computing and comparing standards of living and economic size across boundaries different nations.

According to the World Bank’s “Price level ratio of PPP conversion factor (GDP) to market exchange rate”, China’s PPP factor is weighted at about “0.6”. 

To compare the PPP of China versus the PPP of the United States, the IMF essentially converted the latest annualized GDP estimate in U.S. dollars for China’s third quarter ending September 30. Multiplying the $10.6 trillion estimate by 1.6667 (conversion factor reciprocal) equals Purchasing Power Parity for China of $17.6 trillion.

The United States PPP conversion factor is “1.0," since the U.S. GDP is already calculated in U.S. dollars. The latest annualized GDP estimate in U.S. dollars for United States for the third quarter ending September 30 is $17.4 trillion.

The “conversion factor” for China is an arbitrary number that is set as an estimate of equivalent purchasing power in different nations. China has enjoyed higher GDP growth rates than the United States, but about a third of the difference has been higher inflation. This should tend to narrow the difference in the PPP conversion factor.

If the IMF narrowed the Chinese conversion factor to “0.7”, then the multiplier to convert GDP to PPP would be only 1.4286. Multiplying the latest $10.6 trillion annualized GDP for China by the 1.4286 (conversion factor reciprocal) equals Purchasing Power Parity for China of $15.1 trillion.

For about 2000 years until approximately 1750 AD, China had the largest population and the largest GDP in the world. China kept the banner as the most populous country, but lost in GDP to Britain, who lost it to the United States in 1872. On an individual basis, China is still a poor country with average per capita income of $6,807, versus $53,143 in the U.S. Even the most optimistic analysts do not believe China will pass the U.S. in GDP for almost a decade. 

Many Americans could improve their retirement purchasing power by moving to China. Medical services, retail and constructions services, and haircuts are undoubtedly cheaper. But the numerous quality, safety, and security differences may not be reflected in International Monetary Fund’s estimates Purchasing Power Parity. 

Father of Modern Finance Warns US, Europe: 'None of Their Debt Is Credible,' Recession in 2014

breitbart

By Tony Lee 

Eugene Fama

One of the fathers of modern finance and a winner of this year's Nobel prize for economics said the bloated deficits of the United States and European nations may lead to a worldwide recession. 

Eugene Fama, whoe "shared the economics prize for research into market prices and asset bubbles" with Robert Shiller and Lars Peter Hansen, told Reuters on Saturday that the markets may not find the debts of European nations and the United States to be credible.

"There may come a point where the financial markets say none of their debt is credible anymore and they can't finance themselves," he said. "If there is another recession, it is going to be worldwide."

Fama, who is a professor at the University of Chicago, also played down the United States's stronger labor market data from last month.

"I am not reassured at all. The jobs recovery has been awful. The only reason the unemployment rate is seven percent, which is high by historical standards in the U.S., is that people gave up looking for jobs," he said. "I just don't think we have come out of (the recession) very well."

Famed Investor’s Dire Warning: ‘This Is Going to End Badly… Be Prepared, Be Worried, and Be Careful’

 

Read on TheBlaze >>

Cuban American Economics professor Antonio Morales-Pita weighs in on global economic isssues

the best professor I have ever known.
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WCIU

DePaul University Economics professor Antonio Morales-Pita weighs in on global economic isssues.

U.S. Tries To Halt Stock Slide After Selloff Goes Global - Forbes

Forbes

Ben Bernanke (Getty Images via @daylife)

Equity markets ran red around the world Thursday, on concern the Federal Reserve’s commitment to keeping its foot on the gas may be wavering and a lackluster economic data out of China and Europe.

The selloff began in the U.S. Wednesday, when Ben Bernanke said the Fed could start to taper asset purchases this summer and FOMC minutes from the last meeting showed more discussion of such action, perhaps as early as June.

Meanwhile, Chinese factory activity slowed for the first time in months, as the flash HSBC purchasing managers index dipped to 49.6 (a reading below 50 indicates contraction). In Europe meanwhile, flash PMI came in ahead of expectations at 47.8, but still signaled slowing activity.

While stocks fell in both China and Europe, the day’s worst performance came from Japan where the Nikkei plunged nearly 7%. Long Japanese stocks and short the yen has been a popular trade this year with the Bank of Japan emptying both barrels on monetary stimulus efforts, but the trade had a sharp reversal Thursday with the Nikkei’s drop and a snapback for the nation’s currency in the forex market. (See “Is Japan The New Apple?”)

In New York, stocks were cutting morning losses as the major averages recouped a chunk of the early declines. The major indexes were down less than 1% about an hour before midday, with the S&P 500 off 8 points at 1,648, the Dow Jones industiral average just 31 points at 15,276 and the Nasdaq 10 points to 3,454.

Among stocks to watch Hewlett-Packard HPQ -2.61% bucked the market’s downward trend. The tech giant recorded declines in profit and revenue Wednesday, but earnings beat estimates and investors seem willing to stick with Meg Whitman‘s turnaround plan for now. Shares jumped 13.1%, the only gain among Dow components to top 1%.

Tech stocks were in the best shape of any sector, down only slightly in general and with names like HP, IBM IBM -0.21% and Dell managing to show gains. (See “Searching For A Silver Lining At Dismal Dell.”)

Concern about the Fed hitting the brakes on its stimulus actions has the 10-year Treasury yield back above 2% and weighed heavily on the rate-sensitive utility sector, where fat dividend yields look less attractive at lower spreads against the perceived safety of government debt. The Utilities Sector SPDR ETF slumped 1.7% Wednesday and names like Sempora Energy and Pepco Holdings were down more than 3% apiece to be among the S&P’s worst performers.

US Plummets to 18th in New Economic Freedom of the World Rankings

International Liberty

By Dan Mitchell

Wow. I wasn’t surprised to learn that the United States dropped in the new rankings unveiled today in Economic Freedom of the World.

 

But I’m somewhat shocked to learn that we fell from 10th last year all the way down to 18th this year, as can be seen on the chart (click to enlarge).

Last year, the U.S. fell from 7th to 10th, and I though dropping three spots was bad. But falling by eight spots this past year is a stunning decline.

Who would have thought that Scandinavian welfare states such as Denmark and Finland would rank higher than the United States? Or that Ireland, with all its problems, would be above America?

But since I’m not a misery-loves-company guy, I’m happy to see some nations doing well. I’ve previously highlighted the good policies in Hong Kong and Singapore. And I’ve trumpeted the good policies in Switzerland and Australia, as well as Canada, Chile, and Estonia.

So kudos to the leaders in those nations.

 

American politicians, by contrast, deserve scorn. Let’s update the chart I posted when last year’s report was issued.

As you can see, it’s an understatement to say that the United States is heading in the wrong direction. We’re still considerably ahead of interventionist welfare states such as France and Italy, though I’m afraid to think about what the U.S. score will be five years from now.

Here’s what the authors of the report had to say about America’s decline.

The United States, long considered the standard bearer for economic freedom among large industrial nations, has experienced a substantial decline in economic freedom during the past decade. From 1980 to 2000, the United States was generally rated the third freest economy in the world, ranking behind only Hong Kong and Singapore. After increasing steadily during the period from 1980 to 2000, the chainlinked EFW rating of the United States fell from 8.65 in 2000 to 8.21 in 2005 and 7.70 in 2010. The chain-linked ranking of the United States has fallen precipitously from second in 2000 to eighth in 2005 and 19th in 2010 (unadjusted ranking of 18th).

For those interested in why the United States has dropped, the “size of government” score has fallen from 8.65 in 2000 to 7.70 in the latest report. That’s not a surprise since the burden of government spending has exploded during the Bush-Obama years.

But the trade score also dropped significantly over the same period, from 8.78 to 7.65. So the protectionists should be happy, even though the rest of us have less prosperity.

The most dramatic decline, though, was the in the “legal system and property rights” category, where the U.S. plummeted from 9.23 in 2000 down to 7.12 in the new report. We’re not quite Argentina (3.76!), to be sure, but the trend is very troubling.

Global Turmoil in the Middle Run

Immanuel Wallerstein

www.usatoday.com

Making predictions in the short run (the coming year or two) is a fool's game. There are too many unpredictable twists and turns in the real political/economic/cultural world. But we can attempt to make plausible statements for the middle run (a decade or more) based on a workable theoretical framework combined with a solid empirical analysis of trends and constraints.

What do we know about the world-system in which we are living? First of all, we know that it is a capitalist world-economy, whose basic principle is the ceaseless accumulation of capital. Secondly, we know that it is an historical system, which like all systems (from the universe as a whole to the tiniest nano-systems) has a life. It comes into existence, it lives its "normal" life according to rules and structures it creates, and then at some point the system moves too far from equilibrium and enters into a structural crisis. Thirdly, we know that our present world-system has been a polarizing system, in which there has been a steadily increasing gap among states and within states.

We are in such a structural crisis right now, and have been for some forty years. We shall continue to be in it for another twenty to forty years. This is quite an average length of time for a structural crisis of a historical social system. What happens in a structural crisis is that the system bifurcates, which means essentially that there emerge two alternative ways of ending the structural crisis by "choosing" collectively one of the alternatives.

The principal characteristic of a structural crisis is a series of chaotic and wild fluctuations of everything -- the markets, the geopolitical alliances, the stability of state boundaries, employment, debts, taxes. Uncertainty, even in the short run, becomes chronic. And uncertainty tends to freeze economic decision-making, which of course makes things worse.

Here are some of the things we can expect in the middle run. Most states are facing, and are going to continue to face, a squeeze between reduced income and increased expenditures. What most states have been doing is to reduce expenditures in two ways. One has been to cut into (even eliminate) a great many of the safety nets that have been constructed in the past to help ordinary people deal with the multiple contingencies they face. But there is a second way as well. Most states are cutting the money transfers to subordinate state entities -- federated structures, if the state is a federation, and local governments. What this does is simply to transfer the need to increase taxes to these subordinate units. If they find this impossible, they can go bankrupt, which eliminates other parts of the safety nets (notably pensions).

This has an immediate impact on the states. On the one hand, it weakens them, as more and more units seek to secede if they think it economically advantageous. But on the other hand, the states are more important than ever, as the populations seek refuge in state protectionist policies (keep my jobs, not yours). State boundaries have always been changing. But they promise to change even more frequently now. At the same time, new regional structures linking together existing states (or their subunits) -- such as the European Union (EU) and the new South American structure (UNASUR) -- will continue to flourish and play an increasing geopolitical role.

The juggling between the multiple loci of geopolitical power will become ever more unstable in a situation in which none of these loci will be in a position to dictate the interstate rules. The United States is an erstwhile hegemonic power with feet of clay, but one still powerful enough to wreak damage by missteps. China seems to have the strongest emerging economic position, but it is less strong than it itself and others think. The degree to which western Europe and Russia will draw closer is still an open question, and is very much on the agenda of both sides. How India will play its cards is very much undecided by India. What this means for civil wars like that in Syria at the moment is that outside interveners cancel each other out and internal conflicts become ever more organized around fratricidal identity groups.

I shall reiterate my long-argued position. At the end of a decade, we shall see some major realignments. One is the creation of a confederal structure linking Japan, (a reunited) China, and (a reunited) Korea. The second is a geopolitical alliance between this confederal structure and the United States. A third is a de facto alliance between the EU and Russia. A fourth is nuclear proliferation on a significant scale. A fifth is generalized protectionism. The sixth is generalized world deflation, which can take one of two forms -- either a nominal reduction in prices, or runaway inflations that have the same consequence.

Obviously, these are not happy outcomes for most people. World unemployment will rise, not fall. And ordinary people will feel the pinch very severely. They have already shown that they are ready to fight back in multiple forms, and this popular resistance will grow. We shall find ourselves in the midst of a vast political battle to determine the world's future.

Those who have wealth and privilege today will not sit idly by. However, it will become increasingly clear to them that they cannot secure their future through the existing capitalist system. They will seek to implement a system based not on a central role of the market but rather on a combination of brute force and deception. The key objective is to ensure that the new system would guarantee the continuation of three key features of the present system -- hierarchy, exploitation, and polarization.

On the other side will be popular forces across the world who will seek to create a new kind of historical system, one that has never yet existed, one that is based on relative democracy and relative equality. What this means in terms of the institutions the world would create is almost impossible to foresee. We shall learn in the building of this system in the decades to come.

Who will win out in this battle? No-one can predict. It will be the result of an infinity of nano-actions by an infinity of nano-actors at an infinity of nano-moments. At some point, the tension between the two alternative solutions will tilt definitively in favor of one or the other. This is what gives us hope. What each of us does at each moment about each immediate issue matters. Some people call it the "butterfly effect." The fluttering of a butterfly’s wings affects the climate at the other end of the world. In that sense, we are all little butterflies today.

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Immanuel Wallerstein, Senior Research Scholar at Yale University, is the author of The Decline of American Power: The U.S. in a Chaotic World (New Press)