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Daily Archives: September 21, 2022

Chart: The Canadian Dollar Weakened Further After the Fed Increased Rates

Dropped past the 1.34 per USD mark, the lowest since August of 2020

Source : Trading Economics

Change of Prices YoY of Land for Housing and Commerce in Japan

Source : Nikkei

Humour: News in Cartoon

Charts: China Key Economic Data in August 2022

Source: China National Bureau of Statistics

U.S. Economic Freedom Index Collapses to Carter Administration Levels

Phillip W. Magness and James R. Harrigan wrote . . . . . . . . .

The Fraser Institute’s Economic Freedom of the World 2022 report was released 2 weeks ago. This report covers 2020, which while most of our recent history is a bit of a blur, was the year when COVID-19 and COVID lockdowns defined our shared experience. The first of those lockdowns began in mid-March, and we spent most of the rest of 2020 figuring out how to negotiate a newly defined world. So whatever we end up seeing in the report, we’ll have to remember that we spent about 80 percent of 2020, for lack of a better word, grounded.

When additional years of data from the COVID era are added, we fully expect that economic freedom around the world will continue to falter. But let’s not get ahead of ourselves. The 2020 data is bad enough. The global average economic freedom rating fell .14 points in 2020, erasing a decade’s worth of improvements.

But first, some notes on what the Fraser Institute measures.

The Economic Freedom of the World report comprises measurements across five categories and 165 jurisdictions: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation. Perhaps the most important facet of the report is that we can look at the data in absolute terms, asking, for example, how well the United States has been doing over time. We can also look at the data in relative terms, asking how well the United States has been doing compared to the other nations of the world.

We have become accustomed to seeing a steady climb to better lives. Indeed, many of us could not comprehend living as our grandparents did. But thanks to the Fraser Institute, we now have detailed data from 1980-2020, detailing two generations. How do we stack up?

Many will be surprised that the United States is not at the top of the list of most-free countries. In 2020 the US was seventh, behind Hong Kong, Singapore, Switzerland, New Zealand, Denmark, and Australia. And while seventh in the world is nothing to sneeze at, the US trajectory has been downward for quite some time, if only moderately so. In 1980 and 1990, the US was the second economically freest nation in the world. In 2000, it was third. In 2010 and 2015 it was fifth and sixth, respectively. And by 2020, it was seventh.

But that only tells part of the story. It’s when we look at ratings rather than rankings that things get interesting. While the United States has been kicking around in the top ten, even if falling, for decades, it is not doing all that well when compared to itself over time. Indeed, the US’s cumulative rating of 7.97 is considerably lower than its 1980 rating of 8.34. Digging into the recent data, the United States dropped in rank across all five indexed categories from 2019 to 2020. The most significant changes have been in the size of government and regulation categories, where the United States fell 7.32 to 6.79, and 8.68 to 8.11, respectively. Both measures directly reflect the COVID era’s unprecedented expansions of government, as federal spending was unleashed from any semblance of fiscal constraint and draconian regulatory intrusions on daily economic life reached every single American.

In short, the United States finished 2020 less economically free than we were at the tail end of the Carter years.

In the time since COVID, these problems have only continued to compound. The United States appears to be entering the same economic malaise of bloated bureaucracy, excessive taxation, and spiraling inflation that typified the Carter years. Back then we had to wait in line, sometimes for hours, just to buy gas. Now we have rolling blackouts and energy crises in some states, impending electric vehicle mandates, perpetual budget-busting deficits that were unheard of even two decades ago, and – yes – a return of inflation that tops 8 percent for the year. Perhaps the most telling fact of all is that our elected officials and policymakers haven’t a clue how to reverse these trends. Indeed, they are still feeding them.

So where is all this going? Well, 2021 is a full year of COVID lockdowns, so you can bet that data will be worse. We will know then, though, if 2022 shows a reversal of the decline – assuming that the present trends do not continue to compound the problems that COVID lockdowns started.

The real question now is whether we have learned any lessons about economic freedom and lockdowns. These new data provide us an unwelcome warning of what happens when the power of government becomes unmoored from any restraint, but the trend may yet be reversible.

Source : AIER

China Households Could Cut Property Assets in $18 Trillion Shift

Lisa Du wrote . . . . . . . . .

China’s households are expected to shift 127 trillion yuan ($18.1 trillion) into financial products over the next nine years, an opportunity ripe for financial institutions as the country’s property sector sours, brokerage CLSA Ltd. said.

The share of Chinese household assets allocated to property will fall to 26% by 2030 from 37% in 2021, according to estimates from Hans Fan, the head of China financial research at CLSA. In contrast, the share of money allocated to investments such as mutual funds, wealth management products and insurance will grow to 21% from 13% in the same period.

In the coming years, “a huge pie of new money will go toward professional managed products. What this means for financial institutions is that the household balance sheet is a goldmine,” Fan said Thursday at the CITIC CLSA Flagship Investors’ Forum.

The shift would signal a sea change from decades of Chinese consumers putting their money into real estate as the surest way to grow their wealth. It would underscore both the longer-term impact of China’s housing downturn and the potential that lies in China’s nascent financial sector — a market estimated to be worth around $57 trillion.

Wealth Management

Revenue from household assets at financial institutions could more than double to 2.1 trillion yuan by 2030, Fan said. Mutual funds and fintech companies are expected to grow their market share as more money shifts to financial products.

“In the past 10 years, financial institutions have mainly explored revenue from the household liabilities side with lending to them,” he said. “In the future, revenue from the household asset side — meaning providing wealth management services, earning fees — will become a new driver for financial institutions.”

In the past year, China’s property sector, which had been a red-hot growth engine, has been beset by challenges as highly indebted developers paused construction projects and the country’s strict Covid Zero policy dented economic activity.

China’s new-home sale prices have fallen for 12 months straight, most recently dipping 0.29% in August from July. Tensions are high over a simmering mortgage boycott in recent months by homebuyers who are waiting for cash-strapped developers to complete delayed projects.

Source : BNN Bloomberg

U.S. Admiral Issues China Naval Taiwan Blockade Warning

“They have a very large navy, and if they want to bully and put ships around Taiwan, they very much can do that,” the admiral said.

China has already created a large and modern navy, Thomas stated, with the number of military vessels at Beijing’s disposal continuing to grow rapidly. The admiral said that he did not, however, know whether China is seeking to take any actual action against Taiwan, which Beijing regards as an integral part of its territory, whether through an all-out invasion or a naval blockade.

“Clearly, if they do something that’s non-kinetic, which, you know, a blockade is less kinetic, then that allows the international community to weigh in and to work together on how we’re going to solve that challenge,” he explained.

Beijing has also bolstered its military presence in the South China Sea, a busy waterway to the southwest of Taiwan, and has already “completely militarized” artificial and natural islands under its control in the waterway, the admiral also pointed out.

Biden claims US forces will defend TaiwanREAD MORE: Biden claims US forces will defend Taiwan
“They already have all the bunkers they need, they already have all the fuel storage capacity they need, the ability to house troops, they have the missiles, the radars, the sensors,” he said.

Taiwan has been a major issue in US-China relations for decades already, with tensions further aggravated by a recent visit by the US House Speaker Nancy Pelosi to the island. Pelosi traveled to Taiwan in early August, ignoring repeated warnings from Beijing to avoid doing so, becoming the most high-ranking US official to visit the island in more than 25 years.

Taiwan has been self-governed since 1949, when Chinese nationalists fled the mainland after losing the civil war to communists and setting up their own administration on the island. While formally recognizing Beijing’s sovereignty over the island and the ‘One China’ principle, Washington has maintained close informal ties with the island nation.

China considers Taiwan to be part of its sovereign territory which has been temporarily seized by separatists. Beijing has repeatedly said it would seek “reunification” and has not ruled out a military option to achieve this goal.

Source : RT

Read more about the Wall Street Journal Interview

US Navy Commander Says China Is Capable Of Blockading Taiwan . . . . .