Little India

 
  Little India by Donato Scarano on 500px

Global Manufacturing Ranking

The leaders of global manufacturing are changing rapidly, China, India and Russia are rising and Germany, Japan, UK, and Canada are sliding. The following chart simplifies the evolution of global manufacturing economies over the last four decades.

Trust and productivity

Relatively recent academic evidence explains how productivity works in places with underdeveloped legal institutions and cultural norms.
In 2009, Hsieh Chang-Tai and Peter Klenow found that a big part of the reason why China and India are so much poorer than the United States is that wildly unproductive firms are more likely to survive in those countries than in America.
After running a novel experiment, Nicholas Bloom, of Stanford University concluded that these firms were so unproductive because they were horribly managed (as opposed to having worse workers or inferior equipment). He speculated that the unproductive firms were able to survive because better-managed businesses were limited in their ability to expand thanks to uncooperative capital markets and, intriguingly, a dearth of trustworthy managers.

The problem is not the absence of people who know how to run businesses but the society at large.

In another paper, Mr Bloom and his colleagues argued that entrepreneurs in poorer countries are reluctant to trust people who are not directly related to them to manage any part of their enterprises. They are afraid that people from outside the family will steal from them and that the judicial system will not protect them. This (not unjustified) fear limits the ability of good firms to expand. Once you run out of siblings and cousins, you can't open more factories. The result is that bad firms are not driven out of business. Conversely, countries with higher levels of "social capital," i.e., trust, generally have higher productivity and are therefore richer, precisely because good firms have more resources available to drive out the bad ones and increase the standard of living through creative destruction.

This was the inspiration behind Paul Romer's ill-fated Charter Cities project, which ran aground in Honduras. The goal was to import the values and institutions of societies with high levels of "social capital" to poor countries in the hope that it would allow them to become richer and more productive. Ironically, the Honduran mission failed precisely because the agency that was supposed to ensure transparency refused to allow outsiders to audit agreements made between the government and private firms.

Beer Production Report

One of the fastest growing businesses in the world is Beer! In 2011, it rose by another 60 million hectoliters to 1.9 billion hectoliters, and was 38.3% higher than in 2000, according to the annual beer and hops report by Barth-Haas Group.


Although in this case as well growth is being fuelled by emerging economies. In most developed countries, production dropped.
In the US, it edged down 1.6% last year and 5.7% since 1990—despite a significant increase in the population.
In Germany, it stabilized recently, but had plunged 20.5% since 1990.
Production in the UK had skidded 27.5% during that time, though it ticked up last year.
In Japan, production is down 14.7% since 1990, and down 3.6% from 2010, the seventh straight year of declines.
But the rest of Asia is on a binge mission. Well, except India, the only major country that hasn’t yet discovered a taste for beer.
The driver in worldwide beer production growth was China, up 9.3% in 2011, and up an astonishing 600% since 1990. Of the 60 million hectoliters in growth worldwide last year, 42 million where brewed in China.
Vietnam made huge strides; in percentage terms a 2,680% melt-up since 1990.
Beer production also grew in Africa and Latin America.
Russia is a special case: in the Soviet Union in 1990, beer production was zero.
By 1996, Russian beers and Heineken were available, but hard to find in smaller towns or on trains, though vodka (served in water glasses or by the bottle) was everywhere. Since then, Russia has shot up to third place in beer production, knocking off Germany and other countries.





Today, the Czech Republic and Austria are the top two beer-drinking nations in the world with 143 and 108 liters per capita respectively.


 In 2011, 51.8% of the world’s beer was produced by six mega-brewing groups.

In June, ABInBev announced that it would acquire 7th ranked Grupo Modelo, giving the company a 21.5% share of the worldwide market. Without further acquisitions, the top six will brew 54.7% of all beer in 2012.
Germany still has about 1,250 breweries, four times as many as the rest of the EU combined. They range from brewpubs to mega breweries. About half of them are in Bavaria. And there are almost 5,000 brands.

EU is morally bankrupt and financially insolvent

Breaking news on Italian newspapers are quoting a decision of Brazil, Russia, India and China to coordinate massive purchase of Euro bonds to save Europe from assured disaster.
Although international newspapers are more sceptical of this possibility as reported by Reuters below.


From Reuters:

BRIC major emerging markets are considering ramping up holdings of euro-denominated bonds in a bid to help European countries mired in a sovereign debt crisis, newspaper Valor Economico reported on Tuesday, citing a monetary official.

Valor reported a decision could be made at a Sept. 22 meeting of finance ministers and central bank presidents from Brazil, Russia, India, China and South Africa in Washington.

Brazil's central bank declined to comment on the story. The source in the report was not identified.

It could be a trick to avoid stock collapse and earn some time as it was a trick yesterday's news of Chinese intervention on the Italian sovereign market.
True or not, this is an historic event, for the first time since Middle Ages Western powers are the rescued and not the saviours just this idea is destined to change the arrogant and obsolete mindset of the European population at last.
If BRIC countries will rescue Europe they will try to capitalize on this emergency as much as possible, they will try and pull concessions and strategic industries and infrastructure control in exchange for their money, the fire-sale of Europe will start and in a matter of few years the geography of power will be completely upturned with Europe finding itself under debt indentured service.
Interesting how Europe is getting back to the same debt dynamics of World War II, this time though not due to bombardments, war and destructions, we went into debt for villas, sport cars and luxury items we could not afford but we wanted just the same, for greed and arrogance, for short-sightedness and stupidity.
BRIC countries are aware as the ECB is aware that it is impossible to go on buying Italian, Spanish, Greek, Irish and Portuguese bond indefinitely to keep alive zombie economies and profligrate populations unwilling to pay the price of their recklessness.
Europe can posticipate the inevitable default but will be faced with an hefty bill for selling its soul in exchange for few years of mitigated decrease of standards of living.
The default will arrive maybe not this year but in 1-2 years if BRIC countries keep this insanity alive but when it will unleash Europe will be just a shadow of what is now, voided of power, wealth, dignity and prestige, just a leech.
There is another risk though which is worth consideration, as Chinese sources mentioned yesterday we do not trust buying Italian bonds if the ECB is unwilling to do it.
Effectively when the central European bank in unwilling to risk why those countries should?
The reality is that the EU has surrendered and it has effectively declared the breakup of the Euro, for the EU to leave the shielding of its periphery to external actors is an effective declaration of surrender.
It means that BRIC countries will sustain those economies until an orderly breakup can be arranged or other events will unfold.
Either way BRIC countries get access to a strategic European periphery.
Let us not forget that only 1 year ago for the EU it was a shame even to consider an assistance from the IMF on the Greek crisis, now with Italy and Spain at stake the IMF with Lagarde is silent, IMF does not even meddle anymore in this issue which gives us 1 or 2 thoughts on why Strauss-Kahn was liquidated.
With half of the developing world coming to rescue of Europe there is no embarrassment at all, either the situation is so desperate that shame is no longer in the equation or a trap is being set for the developing world to bleed assets in Europe before orderly default will occur just for strategic considerations.
Probably it is both but one thing is sure the degeneration of the EU is set to leave a very painful mark in the years to come.

World Population approaching the 7 billion mark

Another great graphics from Reuters:

15 Global Stress Points

According to Oxford Analytica, there are 15 "Global Stress Points" ranging from medium to extreme high impact to the entire world. These are listed below ranked by their potential impact.

1. Dollar Collapse
2. Taiwan / China Armed Hostility
3. Israel / Iran Armed Conflict
4. Mexico State Hollowing
5. Global Protectionism
6. Latin America Hydrocarbon Disruption
7. Iraq State Institutions Collapse
8. Russia Military Aggression
9. End of Euro
10. India / Pakistan War
11. Pakistan State Collapse
12. Argentina Sovereign Default 2.0
13. North Korea Military Conflict
14. War in North Africa
15. Lebanon Civil War

(Click to enlarge) Chart Source: Oxford Analytica

It can give us Europeans some comfort that the euro's demise is surprisingly not as big a deal as the Dollar Collapse or a China/Taiwan war.

Population and Peak Oil: where is the debate!

These days certainly we do have an abundance of gloom and doom subjects: the latest in the hit parade, swine flu is joining global warming and recession/depression at the forefront of media discussion.
It remains to understand though why the two key actors Population and Peak Oil are hardly discussed.
Population and Peak Oil are the source of every imbalance we are witnessing today; Global Warming, Water and Food depletion, Wars, Economical Crisis, pandemic etc. etc. are all consequences of these two strongly interlaced factors.
It is true that recently Peak Oil has started to be acknowledged by the oil experts and oil corporations that until 1 year ago were strongly calling everyone proposing the theory a lunatic.
Total, Aramco and others have finally acknowledged the fact that peak oil is here and that we probably peaked in 2005.
The excellent work of Matthew Simmons and Colin Campbell at explaining this potentially catastrophic issue is finally being considered more broadly by the establishment even though a large scale acknowledgment and discussion is still missing.
Population on the opposite is still widely ignored or diminished of magnitude, being the most delicate of the issues is being addressed with soft tones and occasional innuendos that are preventing any serious and drastic remedy. It is quite sad considering that population was a serious discussion in the 60s and 70s when the Club of Rome issued the famous report: The Limits to Growth.
Since then the issue has not been revisited anymore and has fallen in the sands of oblivion.
If the economy and corporations need always more and more clients to increase their revenue; growth in all its form cannot be bad! Right!
Well it is wrong actually! Unlimited and undisciplined growth in a world with finite resources is a monstrosity and a disaster being manufactured. We have had an explosion of population in the last 100 years due to the abundant and cheap oil.
Abundant and cheap oil allowed for the Green revolution which increased 10 fold the food output, allowed for transportation, manufacturing and energy to be readily available for a growing number of people, but now we are at a turning point in human history, oil is no longer abundant and cheap anymore. An oil shock according to many experts is only months away and a gas and food and water shock could follow in various parts of the world in the following years.
Controlling the world's population explosion is now more than ever essential to avoid an armageddon scenario unfolding in the following years.

The obstacles to control the population are first of all moral and political. Democracy and human rights by themselves are blocking any attempt to tackle this enormous problem, a new rethinking of what is a a sustainable democracy and what are human rights is longely due.

Human rights were proclaimed in a very different world from the one we are entering into now.
Western civilization was controlling the entire planet and consuming 90% of the resources.
Today hugely populated countries as China and India have entered the game as superpowers and they joined the party when only scraps have been left on the table.

If the population of China would live according to European standards we would need the resources, food and water of an extra 6 planets.

They will have to compete with the rest of us for those last scraps.

Democracy will not survive when the first signs of resource and social stress will show up and human life in the following years will become much cheaper.
Two paths are available either we continue on this road and then we will face resource wars, disasters and pandemics unleashing each year; or we accept that current population levels are unsustainable that our ant community has grown too big and too fast and that we need to rebalance the population level even with draconian measures. Ignoring the reality or being indolent in addressing it will only increase the price we will have to pay in terms of lives and social collapse when nature will take care of it soon!

Some scary things are happening right now and I will report them in following posts! Be tuned!