Archive for year: 2016

China, Endangered Plants, and Japanese Electrification

Last night driving back to the worldwide headquarters of International Need to Know, traffic came to a complete halt. This is no longer an uncommon occurrence in this neck of the woods, even though it was after rush hour. We soon learned our delay was caused by a Beyoncé concert. But even Queen Bey was unable to prevent us from turning Lemonades into lemons and worrying about housing prices in China, despairing over endangered flora but ultimately brightening to electrifying news out of Japan. It’s this week’s International Need to Know, not needing to dope up like a Russian athlete to bring you the most important happenings of Beyon–er, our world.

Without further ado, here’s what you need to know.

Location, Location, Rembrandt

Last week, we were working with some Chinese investors looking for ROI here in the Seattle area. While walking in a residential neighborhood on our way to a meeting, one of the investors asked, “How much does a house cost in Seattle?” It’s a curious question, kind of like asking how much do paintings cost. It depends, of course, on the house–how large, where it’s located, does it have a view, does it have an antique Rembrandt in the attic? Chinese are looking to place their money in “safe” investments overseas now that large returns are no longer guaranteed in-country. China’s economy is definitely slowing, as we’ve pointed out in this space. More evidence of the slowdown came this week when provincial growth rates were reported. Of 31 provinces, 25 reported a slowdown from 2015’s year-on-year growth and 14 are undershooting their expansion targets. And these are the official statistics. What is really going on at the province level may be worse. Housing data is also showing a slowdown, although not in Tier 1 cities, as the chart below shows. Tier 1 cities in China saw huge inflation through 2015. Tier 2 and Tier 3 cities? Not so much. Which brings us back to our Chinese investor’s question. How much does a house cost? Here in Seattle we see housing prices continue to rise. In fact, that worldwide headquarters of INTN that Beyoncé prevented us from reaching in a timely manner? A house kitty-corner from HQ recently sold for about 50% more than its Zillow value. Values here are being driven up by lack of inventory but also by Chinese and other outside investors buying into the market. Seattle is becoming a Tier 1 city. As the world urbanizes, Tier 1 cities around the globe are likely to continue to experience housing inflation…right up ’til the moment they don’t. More on China’s housing situation soon.

Save the Plants

When worried about world encompassing environmental problems, photos of animals–the polar bear, or the Sumatran tiger or some other cute mammal or bird–are often used to make the point of how dire the situation is. But what about the cute fern or lonely lichen or other plants? Because as it turns out, far more plants are endangered than animals in our little world today. In fact, the International Union for Conservation of Nature claims that “there are almost as many threatened species of plants as fish, birds and mammals combined.” The flora may be in more trouble than we fauna which, of course, has implications for we fauna.

Japan is Electrifying

No, not their economy, though Japan’s economy surprisingly expanded by 1.7% in the first quarter, staving off recession worries. What we’re talking about is Japan’s robust electric car infrastructure. Japan now has more car charging stations than gas stations as you can see below courtesy of Forbes. Japan is now the proud home of 40,000 electric vehicle charging stations, more than four times the United States and now outnumbering the 34,000 Japanese gas stations. Nissan, with it’s electric Leaf, is helping to drive this infrastructure build-out. Of course, Japan’s geographic territory is much smaller than the United States, making it easier to develop its electric infrastructure. But this growing and large number of electric charging stations is indicative of the change that is coming to our auto infrastructure. Now the key question is how will Japan generate the electricity to power the cars?

Corruption, Renewable Energy Investments & Where People Vacation

Perhaps it’s no coincidence that in the same week UFO aficionados came out for Hillary Clinton, and in the same year that Mulder and Scully made a triumphant return, NASA announced this week that they have discovered another 1284 planets using the Kepler telescope, more than doubling the number of known planets. Apparently nine of these newly found planets may have the characteristics needed to sustain life, bringing the known total of so-called “Goldilocks” planets to 21. But even as we wondered which presidential candidates we would like to send to one of these 21, it did not distract us from ferreting out corruption around the world, inquiring into who is spending money on renewables and discovering where all the tourists are coming from. It’s this week’s International Need to Know, your Area 51 of unseen information about our own so far habitable planet.

Without further ado, here’s what you need to know.

The Gift of Trade

We’ve had the occasion to talk with lots of exporters in recent months about their challenges and opportunities in exporting. Many of these companies noted the challenge of Byzantine rules in overseas markets. Regulations in these countries seem to change haphazardly in ways that adversely affect the companies’ ability to do business and often in ways that are beneficial to their domestic competitors. A few companies even touched on the corruption in the markets they sell to, not calling them fantastically corrupt as David Cameron put it to the Queen this week, but just your everyday type of corruption, which is more than enough distortion for your average business to deal with. How pervasive is corruption? The World Bank quantifies the corruption problem in the chart below. In interviews of more than 130,000 firms across 135 economies, the World Bank found that “1 in 3 companies identify corruption as a major constraint to operating their establishments.” Nearly 20 percent of these businesses said they are expected to give gifts to public officials in order to “get things done.” None of this is new, of course. But it is occurring in a world in which trade rules are under attack, especially in the United States. Ironically, we probably need more trade agreements (with real teeth), not less.

Renewing Investments

Show me the money. This week we do so in clean energy. Investments in renewable energy continue to be robust totaling $206 billion in 2015 and for the first time more than half of all new generation capacity came from renewals. Regular readers of INTN will not be surprised given our predictions in this space that solar will dominate energy generation within 20 years. China, the world’s biggest polluter was also the biggest investor in renewables at $103 billion. The U.S., the second-largest polluter, was also the second-largest investor in renewables at $44.1 billion. Ahh, sweet symmetry. The rest of the top investors are displayed below in all their technicolor glory courtesy of the Frankfurt School UNEP Center. But it’s not all rosy for the renewable energy market. The report by the Frankfurt School notes that more than half of the world’s coal-fired power station capacity is less than 23 years old. Since coal plants usually have 40-year lifetimes, and, as Frankfurt notes, “the costs of running them once built is much less than the cost of constructing new fossil fuel or renewable capacity,” we, like bad kids on Christmas, probably have lots of coal burning in our future with all the consequences associated with it.




As Memorial Day looms here in the United States, we’re headed into prime tourism season. Soon swarms of rabid tourists will descend on museums and heritage sites with selfie sticks and phone cameras eagerly at their grasp. A year or so ago, International Need to Know found a ticket booth with no line at the Eifel Tower. When a large group of Chinese tourists saw our discovery, we were nearly stampeded to death. So we are not surprised by the answer to the question of who are the world’s top tourism spenders. It’s not even close. Last year Chinese tourists spent $292 billion, more than twice what American tourists spent and triple the expenditures of German tourists. This large sum is partly because of the number of Chinese tourists and partly because Chinese tourists spend more per trip than other vacationers. The U.S., however, continues to be the largest destination for international tourists. Tourism, by the way, is an export, and an increasingly important one. International tourism now accounts for 7% of total world exports and 30% of service exports. In the future, when robots rule the world, will we all be tourists or will we beWALL-E-style inhabitants of this planet?

Technology Democratization, Dual Citizenship and Where Your Clothes are Made

The Broadway sensation Hamilton received a record 16 Tony nominations this week leaving the John Jay Society seething in resentment. All of this raises the question of which of today’s current policy and political figures will inspire musical tributes two centuries from now? We’ll take your suggestions even as we try to explain why you may want to hide your face, determine where the global citizens are and discover where your clothes are made. It’s this week’s International Need to Know, providing neither song nor dance as we try to make sense of this stage of a world in which we all play a part.

Without further ado, here’s what you need to know.

The Continued Democratization of Technology

Just last week we remarked on how technology spreads more quickly and is developed in more parts of the world than it was 30 years ago. Fresh evidence of that comes from Russia where big strides in facial recognition were recently made.  A Russian software developer named Andrey Mima claims he was able to use nothing other than photos of two women from 2010 to track them down. He inputted the photos into his perhaps inelegantly yet succinctly named software, Findface, and the software found the two women on Russia’s version of Facebook (calledVkontakte). The face recognizing algorithm was originally developed by a Russian start-up calledNTechLab. This small, new Russian company beat out Google and other big players in theUniversity of Washington’s MegaFace face recognition challenge. Put aside for a moment worries about privacy and the fact that there is a contest called “MegaFace” and understand that innovation and technological development happens all over the world nowadays. Such democratization of technology and its development will have a big impact on the world economy, security issues and poverty, to name just a few. Okay, now you can go back to worrying about the privacy implications (see the linked story for one example) of this particular technology while International Need to Know stays busy deleting all known photos of itself from the Internet.

Dual Citizenship

If our music streaming service is informing us correctly, John Lennon once sang “Imagine there’s no countries, it isn’t hard to do.” For most people, it actually is pretty difficult to imagine. People think of themselves as Americans, or Canadians or Brazilians or any number of other nationalities. But there are indeed many who think of themselves as global citizens first as a new poll by Globescan for the BBC shows in the chart below. The poll was conducted in 18 countries across five continents. The results defy simple stereotypes. More people in China see themselves as global citizens than do Americans, Canadians or British. A few weeks ago, we noted the economic challenges in Spain so perhaps we should not be surprised that 45% of Spanish “strongly agree” that they see themselves more as a global citizen then a citizen of Spain. Of course, ask a Spaniard if they are a part of Real Madrid nation and the chart may blow up entirely.

Made in ?

We probably all remember 15 years ago heading to our favorite clothing store and noticing that everything was made in China. Unless you joined a nudist colony, you were wearing clothing made from that ever fascinating, complicated country. Today, China still accounts for 41% of all apparel exports as you see in the chart below from the World Bank’s Stitches to Riches Report (Stiches to Riches sounds like a cleaned up Nicki Minaj lyric). But, as China diversified it’s economy into electronics manufacturing and other industries, apparel now only accounts for seven percent of China’s exports. China’s share of global apparel exports are likely to fall too as labor costs in China rise. The always stylishly attired INTN, is already seeing anecdotal evidence of this. Today, when shopping for new duds, the “Made in China” tag is not nearly as ubiquitous. Instead we see tags indicating Bangladesh, Vietnam and other countries as the source of the clothing. We often wonder if certain African countries may enter the picture in the future. Low labor costs in Africa combined with China’s investments in Africa seem like a winning combination for a future apparel industry.

India, Face Recognition and Part-Time Dutch

Some weeks the world can be especially disorienting. As we continue to reconcile ourselves to a world without Prince, a fall election featuring Donald Trump and a Seattle Mariners team in first place, we still find time to take a passage to India, wonder about Moore’s Law of Mad Scientists and ponder where the part-time help is located. It’s this week’s International Need to Know, providing a Sign o’ the Times in a purple world of international information.

Without further ado, here’s what you need to know.

An Economic Passage to India

India has many challenges going forward, including ongoing infrastructure deficits, large environmental challenges and a bureaucracy as skeletal and large as the Tyrannosaurus Rex in the lobby of the Natural History Museum. And yet India has been doing relatively well in recent years. So far in 2016 they have one of the world’s fastest GDP growth rates; last year they were also near the top with GDP growth of 7.6%. And, India is now, as you see in the chart below, the largest recipient of Greenfield investment in terms of total value.* China still has more projects but India pulled in more in value. India is a fascinating place to watch. Twenty years ago, even ten years ago, people would compare China and India and predict which would grow and develop faster. China won that race easily. China might be over investing in infrastructure, but India invested far too little. And, India’s famous bureaucrats have hamstrung growth there for decades. Prime Minister Modi is trying to break the bureaucracy. It’s an intimidating, entangling challenge, but if he can succeed, then India may win the next few decades in a different way from how China won the last two. Even as we continue to eye India’s economy, sometime soon we’ll delve deeper into India’s pollution and environmental challenges.


You Have Lost Control

America’s use of drones in Afghanistan have been controversial for a number of reasons. But that has not slowed down the use of them. In fact, last year marked the first time that more weapons were fired from drones than from traditional aircraft. And so far this year, “drone strikes account for 61% of attacks in Afghanistan.” The number was 5% in 2011, a mere five years ago. But we are not here to comment on military strategy, but to note that the world itself has indeed changed lots in the last 5 years. Countries do not have monopolies on advanced technology like they once did. Or at least the monopolies are short-lived nowadays. Five years ago, 11 countries were deploying drones. Today, at least 57 countries have and use drone technology. The spread and adoption of new technologies continues to accelerate.   Access to powerful technology is much more widespread. It reminds me of Moore’s Law of Mad Scientists: “The minimum IQ required to destroy the world drops by one point every 18 months.” Enjoy your afternoon!

Who is Working Part Time

The workforce is changing in recent years we’re told. There’s the so-called Gig economy full of Uber drivers, freelancers for hire and others. In addition, during and after the Great Recession data pointed to lots of underemployment. People who lost their jobs couldn’t find the same level of employment or in some cases had to rely on part-time work. In other cases, part-time work is just what people wanted. Which countries have the largest percentage of part-time workers? The Netherlands, by far, especially for women. Labor participation rates in the Netherlands are very different than in the E.U. as a whole, with 26.8% of Dutch men and 76.6% of Dutch women working less than 36 hours per week (which many in workaholic America would consider part time) as opposed to 8.7% of men and 32.2% of women in the E.U. as a whole working part-time. The full list is below for your pleasure and study when you’re not working full time.


Confusing China, Peak Oil (Usage), Where are the Cynics

Many years ago I was traveling to Melbourne, Australia for work and brought gifts for some of the people we would be meeting with. Unbeknownst to me, the gifts–glass art work made by local artists–contained plants pressed between the glass. Australia is very rigid about plants and animals coming into their isolated continent and my gifts were confiscated at the airport. I was a very unwise man bringing neither frankincense nor myrrh. So I had some sympathy and certainly nostalgia when viewing Johnny Depp and Amber Heard’s dog video released this week. But even tough-minded customs officials can’t stop us from discussing the always confusing China, presenting more evidence of peak oil usage and showing where in this great big world of ours the optimists can be found. It’s this week’s International Need to Know, your neither optimistic nor pessimistic but merely clear eyed if somewhat amused look at what’s important in the world.

Without further ado, here’s what you need to know.

The Ever Confusing China

Surprisingly*, last week China announced that GDP growth rates for the first quarter were right in line with expectations–an annualized 6.7% growth rate. Others pointed out this growth was built on a shiny new skyscraper of credit. In fact, as you see in the chart below, China’s first quarter financing was as large as entire countries economies such as Indonesia and the Netherlands. That’s misleading a bit, of course, since China’s scale makes most things seem small in comparison (though Indonesia is the world’s 4th largest by population). Nonetheless, total credit in China in the first quarter was CNY7.5 trillion, up 58% year over year. That’s about 46% of nominal GDP, a record level for China. Maybe GDP growth really is at 6.7% (some independent experts estimated 4%) but if so more and more credit is needed to achieve that growth rate. GDP growth appears to be driven by government spending and bank loans (ahh, the dark deep waters of China’s banks that we will continue to explore) with government spending rising 16.9% in the first quarter. Of course, this may be smart Keynesian policy in an economic downturn. But for how long can GDP growth be propped up with credit?  Time, that rascally ever marching dimension, as always, will tell.

More Signs Peak Oil Usage is Coming

We noted in this sacred space a few months ago that we are nearing peak oil consumption (not production). Today comes more evidence for this with the news that, “Saudi Arabia is raising $10B from a consortium of international banks as it embarks on its first global debt issuance in 25 years.” For the first time, Saudi Arabia is becoming dependent on foreign capital. At the same time, the country is building a sovereign wealth fund using $108 billion from its investments in local companies. The idea apparently is to start investing around the world through the sovereign wealth fund and use the returns as revenue for the state budget, a budget that increasingly has less oil money to spend. Saudi Arabia is becoming like a public pension fund. Other oil countries are also now borrowing on the world market, including Oman and Qatar. The changing nature of the oil markets (there may be short and even mid-term price spikes but as we noted last month, oil prices in the long term will stay low), is forcing changed interactions between oil producing states and the rest of the world.

Where the Cynics Aren’t

In the throes of a political campaign and on the washed up shores of cynicism, we hear lots of pessimism out there nowadays. In the midst of rapid technological change, environmental concerns and terrorism threats, lots of people think the world is getting worse, not better. But someone out there must be optimistic, right?  Below is a poll showing the share of the population who think the world is getting better. China tops the list. For hundreds of millions of Chinese, the world is indeed better than it was thirty years ago. Whatever the trade-offs that came with that, it is a good thing these hundreds of millions are doing better and rose out of poverty.

*Someone needs to create a sarcasm emoji**




–Note some design changes to INTN.  More to come soon, including a website where you can find INTN archives–

China’s Banking System, Self-Driving Trucks and Where the Rich Women Ar

Journalists from more than 15 countries covered Kobe Bryant’s last NBA game last night. Chinese journalists were prominent among this flock (or is it a murder?) of journalists. Kobe is huge in China. So as we bid adieu to Kobe’s long career, we examine just how safe his money is in a Chinese bank, pull over briefly at a computer’s truck stop and gaze in wonder at where the wealthiest women are concentrated in the world. It’s this week’s International Need to Know,  working to be the Stephen Curry of international information sources.

Without further ado, here’s what you need to know.

Dipping a Toe in the China Banking System

We’ve promised a deep dive into the China banking system but we start gingerly, testing the murky financial waters. We’ve discussed in this space that China’s official statistics are often likeBill Clinton’s golf score, something to smile over but not entirely trust.That makes understanding the challenges of China’s banks difficult. China’s official statistics claim non-performing loans (NPL) at only 1.6%. Other estimates, as you see in the graph below, put the NPLs at above 20%.  Of course, this is not the first time there has been great worry over Chinese banks. I remember in early 2007 attending a program where U.S. Fed speakers talked about China’s NPLs and the systemic risk it presented to China’s economy. That was quickly forgotten when less than a year later the U.S. banking system nearly collapsed post-Lehman Brothers.  Back then China’s government dealt with the problem by essentially taking the bad assets from the banks and putting them aside. Continued rapid economic growth helped alleviate the problem over the next eight years. The Chinese government is well aware of the current NPL problem but the challenge today occurs in a slower growth environment. More on all this sometime soon when we may at least wade up to our ankles.


Truck Driving Man, Er, Computer

We’ve discussed self-driving cars before and will again and not just because they are a bit of an obsession of INTN, but instead because they promise to be a transformative technology. We first predicted in another forum in 2006 that self-driving cars would exist in 7 – 10 years and be commercially viable soon after that. But we are not here today to talk about cars but rather trucks. Last week, a dirty dozen of self-driving trucks from Volvo and Daimler traveled across Europe. The trucks departed from Stockholm, Stuttgart and Brussels and converged on Rotterdam. The trucks were participating in the European Truck Platooning Challenge, organized by the Dutch government. These trucks formed a digital convoy so that they traveled right behind each other, making them more fuel efficient. Humans should not tailgate but computers can do so safely. Unilever is hoping to deploy such trucks as early as 2017 making my 2006 prediction relatively accurate (please do not look up any of my other predictions). But, to do so, Unliver must leap through some EU regulations, which leads to one more prediction: regulatory, not technological issues, will ultimately be the main roadblock to seeing these vehicles on the Autobahn, I-5 and other roads. Here’s a video of the self-driving European trucks with a strangely fitting soft-jazz soundtrack.

Where the Rich Women Are

Perhaps not where you think. Via Ian Bremmerwe learn where women’s wealth is located, or at least that of “self-made”* female billionaires. If you thought the United States would be number one, you would be wrong. China takes the top spot. The United States is second but you may be surprised by some of the other top countries listed below.

Total Wealth of Self-Made Female Billionaires

  1. China $95.4B
  2. US 28.8
  3. UK 4.9
  4. Spain 4.6
  5. Italy 2.4
  6. Nigeria 2.4
  7. Australia 1.8
  8. Brazil 1.4

*Self-made can be interpreted many ways, of course

Forgotten Japan, The Changing Look of Death and the French Like Brexit

We were just returning from making a withdrawal from one of our offshore accounts when we realized we are deeply underpaid compared to aclassical cellist of the St. Petersburg orchestra.Still, we carry on and remind ourselves that Japan is not as bad as you think, face the changing look of death squarely in the eyes, and chuckle at the French and British. Yes, it’s this week’s International Need to know, providing important information lost in the cheese factories of Wisconsin while singing Merle Haggard back home.

Without further ado, here’s what you need to know.

The Forgotten Japan

It is common to think of Japan’s economy as a basket case. Overall GDP Growth has been slow to nonexistent there since the crash way back in Taylor Swift’s 1989. The government debt to GDP ratio is the highest in the world by far at 220%, much higher than Greece’s 179%. GDP growth last year was less than 1% and there are worries this year Japan will lapse back into recession. They have instituted negative interest rates, one of a growing number of countries taking this uncharted measure. If you ask about the Japanese economy, likely the answer you’ll get is Japan is a slow-moving, 30-year disaster. But remember, as we noted here before, that Japan’s population has begun shrinking. In discussing Japan’s microscopic GDP growth rates and stagnant economy, we too often forget that there are less Japanese then before, and certainly less working-age Japanese. So, despite everything, GDP per capita continues to grow as you can see in the graph below. When a country is shrinking in population, it’s difficult for the overall economy to grow but that does not meant things are getting worse for the individual. As Mr. Spock did not say, the needs of the one are not always affected by the economy of the many.  When I travel to Japan I do not encounter a dystopian future but instead what feels like a prosperous society. Yes, Japan has deep challenges and they may be creating systemic risks, but things are not as bad for the average Japanese as one would be led to believe.


The Changing Look of Death

Death in the world is changing. In the rich part of the world we are accustomed to dying of heart disease, diabetes and other such ailments. But the developing world is increasingly dying of these things too. The good news is we’ve made much progress on malaria, diarrheal diseases, HIV/AIDS and other maladies that have inflicted so much misery and pre-mature death in the developing world. But as you can see in the World Bank graph below, so-called first-world diseases such as strokes, diabetes and heart attacks are rapidly rising in low and mid-income countries. In fact, today as many people die of strokes as they do of malaria in these countries.  We need to genetically modify mosquitoes to carry a virus that makes people repulsed by French fries.

Brexit More Popular in France than Britain

Brexit More Popular in France than Britain In just a couple months the good people of the UK will be voting on whether to stay in the EU.  It’s fortunate the French are not the ones voting since as it turns out more Brits than French prefer the UK be part of the EU. According to an Odoxa poll, 55 percent of the British want to remain in the union, but only 54 percent of French want this. I’m sure there’s an old Monty Python skit fit for this polling data. But, as you see below, the rest of Europe is happier at the prospect of the UK remaining a part of their club.

Against Brexit

  • UK 55 percent
  • France 54 percent
  • Spain 76 percent
  • Germany 65 percent
  • Italy 67 percent

Russian Sadness, Spanish Storms and Where the Muslims are

As we place our iPhone in a dark corner far from prying FBI eyes, watch a campaign manager get charged with literally twisting arms, and gaze upon 10% of the Cuban population rocking out with Mick, Keith and the gang, we cast glum eyes on the wreck that is Russia, worry about the long-term health of Spain and list the perhaps surprisingly largest locations of Islam.* Yes, it’s this week’s International Need to know, bringing the sanity of facts and figures to a world seemingly head over heals in love with crazy.

Without further ado, here’s what you need to know.

The Sadness that is Russia

There are many bears in this world. The polar bear is unfortunately threatened by climate change. The Chicago Bears will never surpass my beloved Green Bay Packers. Yogi Berra left this world last year. But perhaps the saddest bear these days is Russia. While Vladimir Putin poses sans shirt like a crazy Uncle at a drunken family reunion, the country’s economy continues to struggle.

Raising the minimum wage is all the rage nowadays. We see California is considering raising the state minimum wage to $15 per hour. Russia is in on the act as well, raising their minimum wage this week yet again, by 21 percent.  This comes after a 4 percent increase in January. The Russian economy is a mess. More than 20 million Russians, about 14% of the population, are now living in poverty, up from 16 million in 2014. These are the official statistics but it would be no surprise if the numbers are much greater than that.The Russian economy contracted 3.7% in 2015 and so far it’s getting smaller this year too. Vodka exports are down 40%, which is bad for the economy, but perhaps good for Russians who need a stiff drink in bad times, but bad because of Russian’s huge alcoholism rates. Two drunken steps backwards for every step forward seems to be the norm there. In fact, Russia is perhaps the only country where life expectancy is getting shorter, at least for males, due to alcoholism and disease. Some of the economic problems are due to sanctions and to an economic climate mired in corruption. But oil prices play a role too. Nearly half of Russia’s government revenue comes from its oil and gas exports. With prices remaining at a low level for over a year, Vladimir Putin is like a vicious Jed Clampett who has run out of black gold. INTN once knew lots of people doing business in Russia. Now we can count them on one hand.

Long Spanish Storms

Much of Europe is still in distress despite some marginal improvements the last year. Usually we think of Europe’s problems as a result of the financial crisis, austerity and a currency union absent a fiscal union. But Spain, which puts the plural in PIIGS (Portugal, Italy, Ireland, Greece and Spain), the countries that were most in distress a year or so ago, may tell us otherwise. I recently came across the graph below. This shows Spain’s economic growth below trend since 1978.  It’s possible the problems of the EU, or at least parts of it, are more long-standing and complicated then we think.  Some of these economic difficulties are like a blues soul song, a long time coming.

Where the Muslims Are

Via the Pew Research Center, we find that the largest Muslim populations are not in the Middle East but in Asia. Strangely enough, I have not see any calls for banning Indians from coming to America.

1. Indonesia, 205 million

2. Pakistan, 178 million

3. India, 177 million

4. Bangladesh, 149 million

5. Egypt, 80 million

6. Nigeria, 76 million

7. Iran, 75 million

8. Turkey, 75 million

9. Algeria, 75 million

10. Morocco, 32 million

*Yes, we have promised a dive into the deep end of the Chinese banking system but we’re still assembling our mask and oxygen. Stay tuned!

European Loans, Services Trade and Terrorism in Europe

As we said last week, International Need to Know fled to New Orleans for a week of music, mirth and food. We have only just returned and are still recovering from seeing the legendary George Porter Jr jam at the Maple Leaf, gorging on fried chicken at Willie Mae’s and hanging with Dr. John watching the Mardi Gras Indians march on Super Sunday. So this week’s INTN leaves you with three graphs and one great NOLA photo. Next week, we return to our regularly scheduled programming.

Without further ado, here’s three important graphs.

Non-Performing Loans in Europe

We’ll ignore Cyprus and Greece for the moment. Take a look at Italy where non-performing loans make up nearly 20% of its banking system’s assets. These loans are also about 20% of Italy’s GDP. All of this in the 8th-largest economy in the world.  Yikes is the technical term to use here, I believe.


Trade in Services

The U.S. has a large trade deficit in merchandise goods (more about that in a future INTN) but continues to maintain a large surplus in services trade.


Terrorist Incidents in Europe Since 1970

Having been in Brussels just about exactly a year ago, our hearts and thoughts go out to the good people of Brussels. Even in times of horrible tragedy, it is good to take the long view.  The number of victims of terrorism is too high today but still generally below the level of the 1970s and 1980s. We do not, despite what it may seem, live in unprecedented times.


Bonus New Orleans Photo

      Big Chief Monk Boudreaux on Super Sunday

Tanking Brazil, Better Educated Women and the Donald Trump of China

Merrick Garland is in the new Indiana Jones movie and Harrison Ford has been nominated to the Supreme Court. Or have I gotten my old men mixed up? Apparently March Madness reigns supreme on the court and at the court. But even as International Need to Know escapes the madness for New Orleans–the only city in the United States where you feel like you are not in the United States–for intensive cocktail, music and cultural research, we gaze steely eyed at the question of whether Brazil is in another one of their lengthy bust cycles, we consider an international gender gap and we worry about whether to expect a Donald Trump of China.  It is, of course, this week’s International Need to Know, a tour of the world’s important issues minus baggage fees and jet lag.

Without further ado, here’s what you need to know.

The Tanking of Brazil

This week I met with a small company whose biggest export market was until recently Brazil. The president of the company told me their sales are way down because of Brazil’s tanking economy. Yes, Brazil is struggling like a salesperson selling faulty mosquito nets at this summer’s Rio Olympics. As I type, tens of thousands of Brazilians are rioting in the streets (U.S. political protesters are slackers by comparison). There’s a reason for a disgruntled nation: the economy is contracting, last year by 3.8% and this year the shrinkage continues.  In fact, some analysts believe it will contract by 4.6% in 2016. If so, that will be the deepest, most sustained contraction since the country began keeping records in 1901. To add misery to insult, the country’s inflation rate is the highest it’s been since 2003. China’s slowing economy has played a part in Brazil’s troubles. Brazil rode the commodity gravy train right off the dining room table. In 2000, Brazil’s annual trade with China was $2 billion. By 2013 it grew to $83 billion with more than $40 billion in exports to China. But China’s slowdown has caused Brazilian exports to China to tumble by 20%. Of course, Brazil has plenty of internal challenges as well, including corruption and mismanagement. In fact, Brazil has trod this muddy economic path before. The now busted Brazilian miracle of the mid-2000s was proceeded by one in the late 1960s and early 1970s. That “miracle” was followed by a lost 1980s decade. Let’s hope Brazil finds its way to the path of economic prosperity sooner this time.



Women are Better Educated than Men

If you’re a male reader you may have difficulty reading this since you are increasingly an uneducated slob. This is true not just in the United States but around the world. In OECD countries, we see that the gap between women and men obtaining a higher education is widening. Today 58% of people in the OECD graduating from an institution of higher learning are women.  In only four OECD countries are more men than women graduating–Japan, Germany, Korea, Switzerland and Turkey.  The closing of the gender gap is not contained to just OECD countries. In fact, more women than men are graduating from universities in the Middle East, including in Saudi Arabia, Iran and Kuwait.  It is good that finally women are getting opportunities, and taking them. It is disconcerting that men are doing so badly worldwide. Of course, there are educational pockets where men still dominate and women unfortunately lag. In STEM fields, at least in the OECD, there are still far more men graduating: “only 31% of the bachelor’s degrees awarded in science and engineering went to women.”  There are different types of gender gaps for men and women these days in higher education; it would be good to fix them both.

Where’s the Donald Trump of China?

  • U.S. Net manufacturing jobs loss/gain since 2010:  +861,000
  • Decrease in open manufacturing positions in China since 2012:  -6%

Okay, it’s not exactly apples to apples due to the vagaries of Chinese data, but it squares with previous data that manufacturing jobs are decreasing in China and such jobs are increasing in America. From current political discourse you would think the opposite is true. Of course, up is down and down is up in so many ways in that bloody arena. While in recent years we have seen manufacturing gains in the United States and decreases in China, economic studies have shown that before this decade, the U.S. lost between 1 and 3 million manufacturing jobs to China.  But those days are over. In the future both China and the U.S. are likely to lose jobs to machines rather than to each other.