Monday, May 16, 2005

The problem with investing outside the US is that since the US represents
nearly 25% of the global economy, a downturn in the US economy would drag
down the entire global economy. Thus getting your money outside the US
does not protect you from a downturn in the US. Such protection is the
whole point of diversification, so in this case diversification does not

The contrary case is not true. The US economy could expand dramtically
while the economies of other nations stagnate - just look at Japan and
Germany over the last 15 years. In that case, getting your money outside
the US would cost you.

So there is no likely upside, but a very likely downside, to international
investing for the US investor.

It could happen that the US economy expands, and the foreign countries you
invested in also expand, but do so faster than the US, so you earn a
little more than if you kept your money here. In any time frame there
will be at least some other countries that do this. But you never know
which countries will outperform the US, when they will do this, and for
how long. So you're left trying to "country pick", which is as frought
with danger as trying to stock pick.

The US is the wealthiest nation in the world because we have enjoyed the
highest sustained growth rate of any nation in the world. In any given
year or decade some other nations might show faster growth than the US,
but no nation has ever outpaced the US for the long term. If you're a
long term investor, that's all you need to know.

Wednesday, May 04, 2005

BNP is identified as a "French bank" but it is actually controlled by Paul Desmarais, the Canadian plutocrat who also controls Total, the "French" oil company that was given development rights to 25% of Iraq's oil reserves, provided Saddam remained in power.

Total's CEO is Desmarais' son, who is married to the daughter of Jean-Paul Chretien, the Canadian Prime Minster before the war, who strongly supported Saddam in that conflict.

The New Canadian Prime Minister, Paul Martin, is a long time associate of Desmarais. Desmarais gave Martin his first important job in the 1970s and has promoted his career ever since, to such an extent that Martin can be considered a Desmarais lackey.

Also employed by Desmarais, Maurice Strong, who founded a business in the 1990s called Cordex, in which Paul Martin was a partner. This company recieved $1 million in funding from Tongsun Park, who, while under investigation, admitted the money came from Saddam.

After this admission, Strong stepped down from his position as advisor to Kofi Annan.

So let's add Canadaian Prime Minister Paul Martin to the list of people who must go (perhaps to jail).

Wednesday, April 20, 2005

One thing no one seems to be noticing with all this talk of trade deficits is that US exports are at record high levels, both in absolute terms and as a percentage of GDP.

How would we account for record highs in both imports and exports? The simplest explanation is that the global economy is booming, but no one seems to be saying that.

Thursday, April 14, 2005

"I have always thought the argument that attributed the widening trade deficit to the absence of growth abroad was a bit deceptive, for the simple reason that in aggregate, growth abroad has been quite strong."

We don't trade with the world in aggregate. We trade with our trading partners:

Export partners: Canada 23.4%, Mexico 13.5%, Japan 7.2%, UK 4.7%, Germany 4%

Import partners: Canada 17.4%, China 12.5%, Mexico 10.7%, Japan 9.3%, Germany 5.3%

(2003 figures from CIA World Factbook)

Nations with above average growth represent a small percentage of US foreign trade; nations with below average growth a high percentage, Hence, a widening trade deficit driven by strong US growth.

Thursday, April 07, 2005

To me this looks like a non-issue. Parsing Clark's quote, it merely states that he and some other people in the administration would have recommended - to Reagan - the use of force. Presumably Reagan would have ignored that recommendation.

Nowhere does the article say that Reagan threatened war in response to a Soviet crackdown in Poland. The closest it comes is this: "President Reagan's White House made clear the U.S. would not be acquiescent again."

Not being acquiescent again could mean any number of things.

Newsmax probably just wanted an attention grabbing headline.

Wednesday, March 30, 2005

Comparisons that rely on household income are mostly crap. The
'household' is not a meaningful unit of measurement. The size of the
average household has declined since the 1960s from around 3 to around 2
persons per. Factor that in, and the 25% rise in household income becomes
about an 89% rise in per capita income.

Persons per household have declined because people are wealthier, so that
more people can afford their own place.

With more economic opportunity, people are waiting longer to get married
and have kids. With people staying single longer, and married couples
waiting longer to start families, average persons per household declines.

Divorce plays an important part in this too. Increased wealth lowers the
economic consequences of divorce (as Gary Becker explains), increasing
divorce rates. Divorce means a households splits up into two households
with fewer persons per. The near 50% divorce rate since the 1960s makes
this statistically significant.

This can happen only because people today are substantially wealthier than
a generation or two ago.