The World Economy: Some Data

On August 28 2013 11:11 fabiano wrote:
Interesting info.

If I'm not mistaken the brazilian central bank has reduced the prediction of economic growth of the country to 2.5% when initially had expected 4.5% (and is set as 3.0% in your graph).

Funny to see Brazil with 38% of taxation rate, right below European countries, and yet our country general infrastructure/health/education are so shitty compared to them. The destruction power of corruption and bad administration is quite impressive.

Also, how did Japan acquire such a huge government debt? Was it due to the tsunami?

On August 28 2013 11:11 fabiano wrote:
Interesting info.

If I'm not mistaken the brazilian central bank has reduced the prediction of economic growth of the country to 2.5% when initially had expected 4.5% (and is set as 3.0% in your graph).

Funny to see Brazil with 38% of taxation rate, right below European countries, and yet our country general infrastructure/health/education are so shitty compared to them. The destruction power of corruption and bad administration is quite impressive.

Also, how did Japan acquire such a huge government debt? Was it due to the tsunami?

On August 28 2013 11:34 RvB wrote:

No their debt was already high before the tsunami. Part of the reason why they have such high debt with low interest rate is that 90% of it is domestically held. Add to that that there has been deflation or little inflation in Japan for a while which means ¥100 now will be worth more in the future so even a small interest rate will be profitable (interest+deflation). This all makes Japan a special case really.
That's not to say their debt isn't reaching dangerous levels though, they've already been warned by the IMF to be cautious with their debt.
Edit: Japan already had these crazy debt numbers long before Abenomics was even initiated. It does increase the deficit and debt further though.

On August 28 2013 11:28 bkrow wrote:

http://en.wikipedia.org/wiki/Abenomics

Basically, issuing a ton of government bonds to shock the economy into shape

On August 28 2013 13:16 zachMEISTER wrote:
Makes me a bit more hopeful about the economic condition of the United States.

THE SKY WAS FALLING! Until I saw the comparisons...now I'm relieved a bit, but the sky might still fall!

On August 28 2013 13:51 Introvert wrote:
By the way, what is "Net Debt?" If I remember correctly, the US's current debt is over 100% of GDP. Almost $17,000,000,000,000.

Edit: does it refer to how much more is being spent per year than being taken in? That would be my guess.

Edit again: Google is a helpful tool.

On August 28 2013 13:48 Introvert wrote:


Just because the entire world goes a certain way doesn't mean a crisis isn't inbound

On August 28 2013 13:51 Introvert wrote:
By the way, what is "Net Debt?" If I remember correctly, the US's current debt is over 100% of GDP. Almost $17,000,000,000,000.

Edit: does it refer to how much more is being spent per year than being taken in? That would be my guess.

Edit again: Google is a helpful tool.

On August 28 2013 14:24 LittleRedBoy wrote:
GDP really isn't a terribly good figure to measure the well being of people. In the United States during World War II, GDP was increasing but nobody had a good life; you had men fighting in the war and everyone else working in factories. Anyway, I don't see things getting any better in the future. Nobody even has jobs here in the United States. A large amount of college graduates don't have jobs and a lot of the ones that do have jobs that don't require degrees. On a side note, we have the nuttiest politicians in the world here in the United States. If anyone has been listening to the news, there has been talk of the United States bombing Syria. Iran has said they will attack Israel if this happens. This whole thing is going to turn into a mess.

On August 28 2013 13:58 bkrow wrote:

Lol - I was just about to google it but as far as I am aware it is gross debt less the value of the assets held

Your comment on "how much is spent vs being taken in" - i think you may be referring to 'deficit' which is a very different thing to 'debt'

No, the US current debt is not over 100% of the GDP.

On August 28 2013 15:23 Introvert wrote:


No, I know the difference there. I didn't word that the way I wanted to. I know the deficit is the amount spent over the $$ revenue, and the debt is essentially the accumulation of that. What I was trying to say...I don't know. I didn't know if it was just another word for deficit, but that made little sense, hence my initial confusion.

But I'd be less confused by this if it had some sort of linked source.




Really? The GDP is about 15-16 trillion, and the total debt so far is almost 17 trillion.

On August 28 2013 12:57 aksfjh wrote:

Not completely. A lot of the debt was already accumulated in the Lost Decade, where they kept trying to stimulate the economy, but would then stop before it gained traction. There's also the problem they've had with deflation, which has pushed the debt up quite a bit.

On August 28 2013 22:40 GreenGringo wrote:
Due to its population density (the lowest in the world), inhabitants of Australia are "living the dream" and it seems like folly to try and replicate the Australian conditions in another country with 50 times more people living in every square mile.

The United States also experienced a utopia-like economy for its first couple hundred years. It's a natural consequence of the low population density.

All that talk about "liberty" is well and good for New World countries where they have detached houses even in ghettos. However, the data says that it simply doesn't work for countries with high population density. E.g. the UK has one of the highest "ease of doing business" indices in the entire world and is the most underperforming economy in Europe.

(Half-assed conjecture about history: I suppose the main reason South America didn't experience the success of the English-speaking colonies is that the Catholics weren't as zealous as the Puritans and didn't kill as many natives.)

On August 29 2013 03:08 legor wrote:
This is complete rubbish. A low population density does not have positive effects on GDP per capita. I checked for some studies to proove this point, but this fact seems must be so obvious that research in this area doesn't exist.
.

One of the surprising features of modern economic growth is that economies with abundant natural resources have tended to grow less rapidly than natural-resource-scarce economies. In this paper we show that economies with a high ratio of natural resource exports to GDP in 1971 (the base year) tended to have low growth rates during the subsequent period 1971-89. This negative relationship holds true even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates, and other variables. We explore the possible pathways for this negative relationship by studying the cross-country effects of resource endowments on trade policy, bureaucratic efficiency, and other determinants of growth. We also provide a simple theoretical model of endogenous growth that might help to explain the observed negative relationship

On August 29 2013 05:57 legor wrote:
Then how come the richest countries in the earth are small city states like Hongkong or Singapure and not huge countries with high ressources like Russia?

The low population density was not the reason the New World was settled. Escape from political prosecution and pioneer spirit was.

On August 29 2013 05:57 legor wrote:

One of the surprising features of modern economic growth is that economies with abundant natural resources have tended to grow less rapidly than natural-resource-scarce economies.

The obvious point remains that abundant natural resources, by the very definition of the concept, doesn't do you any harm.

My point remains that Australia, as having the lowest population density in the world, is in a unique situation and its economic development seems to follow the pattern of that of the USA and Canada.

On August 29 2013 05:53 GreenGringo wrote:
Obviously it is ridiculous to take a bunch of countries that are mostly desert and use them to work out a correlation. And obviously your entire post is a strawman, as I never claimed there was a general correlation.

My only point was that an utterly extreme case of vast resources and land to expand into is almost certain to lead to a growing and healthy economy. Lo and behold, that is exactly what we find again and again throughout history as frontier regions were settled and grew into thriving communities.

If I were wrong, then the New World would never have been settled in the first place. There would be more prosperity in clustering together in one area. Everyone knows that that is preposterous and it makes perfect economic sense to expand into an area with extremely low population density -- regardless of your chart that completely misses the point and speaks to nothing but an inability to think critically.

It is not obvious, to economists anyway, that cities should exist at all. Crowds of people mean congestion and costly land and labour. But there are also well-known advantages to bunching up. When transport costs are sufficiently high a firm can spend more money shipping goods to clusters of consumers than it saves on cheap land and labour. Workers with specialised skills flock to such clusters to be near to the sorts of firms that hire them. Such workers make a city still more attractive to growing companies. The deep pool of jobs and workers improves matches between employer and employee, boosting productivity and pay.

There are benefits to being close to the competition, too. In the car industry’s early days Detroit’s entrepreneurs kept a close eye on rivals, learning to tweak designs and business models until a lucky few succeeded spectacularly. Silicon Valley’s technological metabolism is powered by similar competitive co-operation.

When new firms or workers create more value for other residents than they add to the costs of congestion, a city enjoys what economists call “increasing returns to scale”: a metropolis becomes more attractive and productive as it grows. Increasing returns are a recipe for breathtaking growth

On August 29 2013 06:33 legor wrote:
Can you simply stop making those unbased assumptions?
1. There is no clear correlation between ressources and economic growth.

On August 29 2013 06:33 legor wrote:2. Please show evidence for positive impact of "modern city planning". Paris, London, Berlin weren't planned. They seem fine.

On August 29 2013 06:33 legor wrote:3. Please show evidence for positive impact of "many cheap places to build". That would give countries in Africa or Russia a huge advantage. How come they don't prosper?.

On August 29 2013 06:33 legor wrote:Not always does our daily intuition transfer into such a complex field like economics. Even if there exists an example that fits your story.

On August 29 2013 06:43 JonnyBNoHo wrote:
Since the industrial revolution, however, the importance of land has given way to the importance of manufacturing. More recently the importance of industry has given way to the importance of the service industry. Both those trends pushed down the importance of agriculture and land and raised the importance of things like human capital, machines, infrastructure and institutions.

On August 29 2013 07:04 GreenGringo wrote:
Good point there (and much better than quoting -- as a previous poster did -- pedantic charts on raw and unqualified data that only loosely relates to the matter at hand).

However, I would respond:

(1) It's not for nothing that experts quote Russia as a potential superpower. It's because of their land and resources. The value of these is rising, not falling.

(2) Cheap land with excellent living conditions means your population is spending less on housing and has cheaper cost of living. Rent in the UK is significantly higher than in the US, and the cost of housing is nearly 3 times as high. Take money out of the average consumer's pocket and the economy will feel the difference.

On August 29 2013 06:52 GreenGringo wrote:
I'm pretty sure there's a correlation between extracting wealth out of the ground and getting wealthy. You're just being stupid by comparing countries across radically different cultures and situations.

Right...so we have these historic capital cities. Therefore building on old land can't be an inconvenience or constraint. Nice argument.

On August 29 2013 06:33 legor wrote:3. Please show evidence for positive impact of "many cheap places to build". That would give countries in Africa or Russia a huge advantage. How come they don't prosper?.

Or guys from a real scientific field know how to apply their common sense and look for explanations of phenomena -- not place their faith in meaningless, pedantic correlations.

On August 29 2013 06:26 GreenGringo wrote:
The obvious point remains that abundant natural resources, by the very definition of the concept, doesn't do you any harm..

On August 29 2013 13:13 DannyJ wrote:
Pretty sure it's just a really horrible diagram. Hopefully the numbers are right though...

On August 29 2013 09:08 JonnyBNoHo wrote:
1) Well Russia used to be an actual superpower, so I'm not too impressed that, one day, Russia may be a superpower again. Sure, it's recent success is due to selling commodities, but keep in mind that commodities tend to run in long cycles. Just because commodity prices had a long 15 year run higher doesn't mean that the next 15 will be so bright.

On August 29 2013 09:08 JonnyBNoHo wrote:
In 1990 South Korea and Russia both had roughly the same per capita income. Today, resource rich Russia's per capita income lags far behind smart South Korea's.

On August 29 2013 09:08 JonnyBNoHo wrote:
2) You have a fair point that land restrictions can lead to high land prices, but that's more of an issue of how income gets distributed throughout the economy rather than a restriction on economic activity.

On August 29 2013 19:49 GreenGringo wrote:
Russia was never a superpower; the Soviet Union was a superpower, which had approximately twice the population of Russia. To make it worse, Russia's population has since then remained stagnant.

That only reinforces the point I'm making about potential. Nobody doubts that Russia has more potential than South Korea. That is because of land and resources, not how "smart" they are relative to Koreans. There's only so far a country can grow, relative to other countries, with a very limited patch of land. South Korea is never going to become a global superpower, whereas Russia might and is probably only going to get stronger on the international stage. (Same applies with Brazil.)

No, it's a natural consequence of land ownership in a country with high population density. It's not because of more stringent rent controls that the USA has the cheaper rent (and bigger, more desirable houses, by the way). It's because the UK is overcrowded and in the UK the land has more value attached to it.

Potentially all the land could made public and rent could be abolished. That's not going to happen, and even if it did there'd still be more competition for land in a country with dense population and planning would still be inherently more difficult. Not to mention all the drawbacks that come with state control of the land if such a scheme were adopted -- and even the psychological effects of cramped living conditions, which aren't something to be sneezed at.

On August 29 2013 06:33 legor wrote:
Can you simply stop making those unbased assumptions?
1. There is no clear correlation between ressources and economic growth.
2. Please show evidence for positive impact of "modern city planning". Paris, London, Berlin weren't planned. They seem fine.
3. Please show evidence for positive impact of "many cheap places to build". That would give countries in Africa or Russia a huge advantage. How come they don't prosper?

Not always does our daily intuition transfer into such a complex field like economics. Even if there exists an example that fits your story.


If ressources lower economic growth comapred with countries that do not have those ressources. Rssources do harm by the very definnition of the concept.


Other countries have a lower population density than Australia. If you refuse to understand more difficult concepts, at least try to get the basics right. It is not that hard.

You are not reading into these findings in a correct way, resource rich countries have lower growth compared to other countries that have to find other ways of making money. That does not imply low growth in absolute terms.

Furthermore, the findings concern modern times, where true economic growth has mainly been from innovation and population growth.

Having _____________ do not automatically imply you are worse off, but if it is your only source of income or main source of income then it becomes harder to grow faster because you are constrained by price mechanisms. If you double your production prices will fall and your productivity per capita employed will be actually be reduced. [

On August 29 2013 12:51 SilentchiLL wrote:

Why is asia eastern europe?

On August 29 2013 23:31 legor wrote:
Absolute growth doesn't matter if you compare countries with each other. Of course you can have absolute growth, but if it lags behind the absolute growth of other countries you still have a net loss.


Quantitative analyses try to control for these factors.


You can fill in anything and the statement is true.

On August 29 2013 19:49 GreenGringo wrote:
Russia was never a superpower; the Soviet Union was a superpower, which had approximately twice the population of Russia. To make it worse, Russia's population has since then remained stagnant.

That only reinforces the point I'm making about potential. Nobody doubts that Russia has more potential than South Korea. That is because of land and resources, not how "smart" they are relative to Koreans. There's only so far a country can grow, relative to other countries, with a very limited patch of land. South Korea is never going to become a global superpower, whereas Russia might and is probably only going to get stronger on the international stage. (Same applies with Brazil.)

No, it's a natural consequence of land ownership in a country with high population density. It's not because of more stringent rent controls that the USA has the cheaper rent (and bigger, more desirable houses, by the way -- e.g. the type of houses you have in many ghettos in the USA and Australia can only be possessed by affluent families in the UK). It's because the UK is overcrowded and in the UK the land has more value attached to it.

Potentially all the land could made public and rent could be abolished. That's not going to happen, and even if it did there'd still be more competition for land in a country with dense population and planning would still be inherently more difficult. Not to mention all the drawbacks that come with state control of the land if such a scheme were adopted -- and even the psychological effects of cramped living conditions, which aren't something to be sneezed at.

On August 30 2013 01:41 JonnyBNoHo wrote:
Well, the big difference between Russia and the Soviet's would be the more industrialized, densely populated western areas, yes? And why is Russia's current population falling if it has all that empty land and wonderful resources? There's just so many more important variables!

On August 29 2013 09:08 JonnyBNoHo wrote:
Well Africa is one of the largest continents and very resource rich. Super long term, the potential there is huge. But for the past thousands of years that hasn't meant squat.

On August 29 2013 09:08 JonnyBNoHo wrote:
Sure, Singapore will likely never be a world superpower. But on a per capita basis it's future is looking much better than the future of the average Russian.

On August 29 2013 09:08 JonnyBNoHo wrote:
So why does anyone live in Manhattan if you can just get a nicer, bigger, cheaper place in Connecticut? There's just much more to the story than just population density and overcrowding...

On August 28 2013 11:29 Verator wrote:
In regards to politicians, higher pay and renumeration wouldn't necessarily attract great leaders. It would attract leaders who create more money for themselves. Which is what is largely happening now, with politicians able to receive incredible benefits for being in office.

You'd have to tie politician reward in many categories to the country as a whole or the average citizen, their healthcare is that of the average citizen, their salary that of the average, etc.

Its the same problem with many CEOs trying to maximize short term gain, rather than long term stability.

On August 30 2013 02:11 Olferen wrote:


What evidence do you have for that? None? So you're implying that people are innately greedy? Where's your reputable paper on that? Nowhere?

On August 30 2013 02:13 GreenGringo wrote:
No evidence is needed to assert a well-known and common sense fact such as that lots of people are innately greedy. You'd actually need evidence to negate that claim.

On August 30 2013 02:17 Olferen wrote:


Common sense? Okay, enlighten me on how it's common sense that people are innately greedy. I'd like to know what evidence there is for this.

On August 30 2013 02:21 GreenGringo wrote:
A certain standard tends to be assumed on any forum on which nerds preponderate. If you're really so ignorant about the world you live in, it's time to stop posting on forums and read a book.

On August 30 2013 02:23 Olferen wrote:


Hahaha, you're asserting something without any evidence, YOU need to read a book, and YOU need to learn that assuming people are innately negative will get you nowhere.

On August 30 2013 02:27 GreenGringo wrote:
I could quite easily give evidence that lots of people are innately greedy. I'm just making a stand on a point of principle. In a thread in which something of substance is being discussed, you shouldn't countenance the morons.

On August 30 2013 02:09 GreenGringo wrote:
This is like arguing with the Tea Party or something.

The reason Siberia is so sparsely populated is because it's a frozen barren wasteland and its winters are deadly. In terms of arable land, the United States has more. It's not because people randomly decided not to make use of perfectly good land.

Maybe because culturally and technologically they were hundreds if not thousands of years behind? Just a thought.

So a major port is more affluent on a per capita basis than the whole of Russia. Impressive finding that you've made there.

Following your logic: why doesn't everyone just move to Manhattan? Why doesn't everyone just live on top of one another if it's a magic formula for wealth creation? You see how easy it is to come up with such strawmen?

You have to be really dyed in the wool to believe, as you seem to do, that massive arable land in the New World didn't really confer any advantages and maybe instead of settling it the same wealth would have been created purely by people piling up on top of one another in cities like Singapore.

On August 30 2013 02:32 Olferen wrote:


Go for it, give me evidence.
Blanket statements have no place on this planet.
Also regarding human nature, the question of that is thousands of years old, you do not have the answers or knowledge to make statements regarding the whole of humanity.

On August 30 2013 02:49 GreenGringo wrote:
That last point is actually something not completely trivial, at least worth dignifying.

And the correct answer is that actually all the major religions have assumed that the natural state of mankind is one of "living in sin". That is why the various prohibitions were felt necessary. You would hardly have needed Jesus Christ if the Golden Rule were innate in human beings.

Assuming you're serious, you can check out Napoleon Chagnon's stories from living with the Yanomami (the last stone age people) if you want an idea of what it's like in a society that's as close to the state of nature as any that we know. People in one village thought they had a right to kidnap and rape women in a neighbouring village. The only way anthropologists could ensure their own personal safety was to bribe them with lots of gifts and promise more. They were altruistic toward close kin, but that's about it.

On August 30 2013 02:58 GGTeMpLaR wrote:
So in the first graph, I like how Siberia and Mongolia are considered "Eastern Europe" hahaha

+ Show Spoiler +

Maybe I'm ignorant of some new map convention though

On August 30 2013 03:14 Hryul wrote:

we already had this the last page.
my explanation was that they just counted russia to eastern europe since most of its population is there. together with the fact that some scaling might have shifted the markings. Is this some fundamental criticism?

On August 30 2013 02:37 JonnyBNoHo wrote:
Do we live in the 1700's still? Agricultural land used to be really valuable. Not so much now.

On August 30 2013 04:14 Rassy wrote:
Off course large land areas are only an advantage.How can this even be a point of discussion?

On August 30 2013 03:04 Olferen wrote:
You defeated yourself right there, if they were innately greedy then their regard for each other would not be there. Also, a single tribe of 20,000 people do not define the entirety of humanity, sort of like a company's leader does not define the entirety of the company. Plus the tribe's believing they had a right to rape women has nothing to do with greed.

On August 30 2013 04:14 Rassy wrote:
Off course large land areas are only an advantage.How can this even be a point of discussion?
If all things are equall you can better have land then not have it, it only give your more options/resources.
It can never ever be a negative factor, not even if its favourable to clump up. Even when you have a large amount of land at your disposal, you can still clump up and decide to not use all of the land. Like the usa in the NY and LA areas for example.

On August 30 2013 03:34 GreenGringo wrote:
Skipping to the main thrust and cutting all the irrelevant filler, we have:

Agriculture contributes 12% of Australia's GDP and isn't to be scoffed at. However, you raise an important point. My response would be that, apart from agriculture, large land area confers the following advantages:

(1) Much easier planning and macromanagement. Nobody wants to constantly have to demolish buildings from the 18th century. Nobody -- with the exception of the owners -- wants expensive land where everywhere is built.

(2) Much cheaper cost of living in loosely regulated housing markets. Rent and mortgage is a hole in the consumer's pocket, and a black hole for the national economy.

(3) Mineral wealth and resources. (About 50% of Australia's exports are mineral and fuel.)

(4) Impetus. How do you pay for getting millions of people together in a city? It's not cheap and often happens on the back of a gold rush or a port or coal mining. Then when you have a city, the inhabitants can move to other occupations before the gold rush (or longshoreman industry or whatever) comes to an end, and you'll still retain the "bond energy" that was originally bought from land in an opportune spot.

(5) Living conditions and psychology. Very difficult to analyze quantitatively (though there is some empirical evidence), but people are happier if they're less cramped and they enjoy more space and liberty. A happy population is a successful population.

As for Russia, the answer there is that nobody wants to live in Siberia because it's mostly barren and the winters are deadly. But the land still is useful and that's why experts see Russia as a potential superpower.

On August 30 2013 04:14 Rassy wrote:
Off course large land areas are only an advantage.How can this even be a point of discussion?
If all things are equall you can better have land then not have it, it only give your more options/resources.
It can never ever be a negative factor, not even if its favourable to clump up. Even when you have a large amount of land at your disposal, you can still clump up and decide to not use all of the land. Like the usa in the NY and LA areas for example.

The world global gdp (the Gwp) is 71.000 billion dollars, wich is 41.000 billion measured in dollars of 1990.
Apearantly the wgp rose with less then 10% from 2000-2012 (measured in 1990 dollars) it was 40 trillion in 2000 and now its at 44 trillion. This is a verry poor performance for the last decade when compared to the decades before. Not sure how this is possible with all emerging economys growing so much in recent years:s. Maybe the numbers are a bit off.
When christ was born the Wgp was 18 billion dollars, and it was 1 billion dollars in the time the pyramids where build.
Kudos to the person who made all these, no doubt verry reliable, estimates.

http://en.wikipedia.org/wiki/Gross_world_product

On August 30 2013 05:31 Crushinator wrote:


It is easier to develop infrastructure in a smaller area. Businesses are much happier when there are more people in a smaller geographical area. Economies of scale come into play in all sorts of ways. People cannot be persuaded to clump up just because it would be convenient.

Having little available land can also be a stimulus for the competitiveness of a nation. The Netherlands has a very productive and competitive agricultural sector precisely because there is relatively little arable land, which forced the sector to innovate and find high-tech solutions, where other nations would just use more land.

It is not at all clear cut.

On August 30 2013 05:49 Rassy wrote:



Hmm i get what you are saying and i think you are partially right,shortages can fuel inovation and you can not persuede everyone to clump up for the convenience of smaller infrastructure needed.It is indeed not so clear cut though i do still think then in general "more" of a usefull item is always better.

The longer i keep looking at the list of world gdp (wich was linked in my previous post) the less i understand about it.
From 1900 till 2000 the wgp rose with about 50% every 10 year (and even with nearly 100% in the years 1960-1970)
Yet in the final 12 years the wgp rose only with 10%. It realy sticks out and i do not understand why it rose only so little.
Sure we had the financial crisis but there have been severe crisis in nearly every decade and in the papers i read all this good news about former poor countrys who experience huge economic growth recently (like brazil and china)
How can the wgp only have risen with 10% in the past 12 years where it used to be an average of at least 50% per decade over the past centurys? Am i reading the numbers wrong?
Am starting to think i am because such a small growth realy makes little sense to me, but i can not see where i read the numbers wrong.
If the numbers apear to be right, then the conclusion should be that the process of globalisation is not good for the productivity of the world as a whole somehow?

well it clearly states:

Year

Nominal GWP (billions)
(figures are in 1990 international dollars, unless otherwise indicated
Then it says 71t for 2012 and (44t in 1990 dollars)

On August 30 2013 05:39 JonnyBNoHo wrote:
Wikipedia lists agriculture as ~4% of Australia's economy.

On August 30 2013 05:31 Crushinator wrote:
Having little available land can also be a stimulus for the competitiveness of a nation. The Netherlands has a very productive and competitive agricultural sector precisely because there is relatively little arable land, which forced the sector to innovate and find high-tech solutions, where other nations would just use more land.

It is not at all clear cut.

On August 30 2013 05:55 GreenGringo wrote:
No, it's 12% when you account for processing. Even Wikipedia says that.

I think all of my points were valid and I'm sorry that you're trying to hold on to your religion that having land is bad or neutral and vast quantities of new land wasn't a factor driving the New World's success, and the American Dream could be realized anywhere if only they cut taxes on the rich so the wealth can trickle down. Because you heard it on Glenn Beck, etc.

On August 30 2013 06:13 Startyr wrote:
I would just like to leave this here.

http://www.equalitytrust.org.uk/research/equality-not-growth

I would highly recommend reading through that site.

On August 30 2013 06:16 JonnyBNoHo wrote:

Processing isn't related to land. You can process food in a city.

On August 30 2013 06:16 JonnyBNoHo wrote:
For clarification, my position is that land is good, but inconsequential compared to other factors.

On August 30 2013 06:24 Chocolate wrote:

That doesn't make much sense, because the argument is not logical. They talk about how improving real quality of life across the board involves a more equal society, and then talk about environmentalism. There is no mechanism of transition between the two topics, and there is also very little logic that actually supports their claims that improving equality will be more beneficial than gross growth. I could talk all day about how equality = good and environmentalism = good but nobody would take me seriously if I didn't actually have an argument beyond a mere statement of my beliefs.

On a more serious note, the economic growth rate in developing countries is really fast. There has to be a way for a westerner to get a piece of that pie by providing capital, right? If you are an individual who does not run a business but has something like ten thousand dollars lying around, would there be a way to invest in foreign markets?

On August 30 2013 05:55 GreenGringo wrote:
No, it's 12% when you account for processing. Even Wikipedia says that.

I think all of my points were valid and I'm sorry that you're trying to hold on to your religion that having land is bad or neutral and vast quantities of new land wasn't a factor driving the New World's success, and the American Dream could be realized anywhere if only they cut taxes on the rich so the wealth can trickle down. Because you heard it on Glenn Beck, etc.

On August 30 2013 06:40 GreenGringo wrote:
The processing in question is closely related to the farming. As in that industry wouldn't exist without the agricultural base. Frequently agriculture is quoted as 12% of the Australian economy, because it's tacitly assumed that the processing is part of that industry.

But seriously, what is wrong with you? Every step of the way you clutch at straws like the most dyed in the wool religious zealot.

On August 30 2013 06:56 Chocolate wrote:
So there's nothing like a mutual-VC where everybody pitches in a relatively small amount of money in exchange for equity? I knew that stocks were different from actual capital, but was just wondering if there was a way to ride the developing gravy train, so to speak. I'm also not too interested in China because I think the prospect of a housing bubble there is quite scary.

On August 30 2013 06:56 Chocolate wrote:
So there's nothing like a mutual-VC where everybody pitches in a relatively small amount of money in exchange for equity? I knew that stocks were different from actual capital, but was just wondering if there was a way to ride the developing gravy train, so to speak. I'm also not too interested in China because I think the prospect of a housing bubble there is quite scary.

On August 30 2013 07:10 Crushinator wrote:


I am not sure if such a thing exists, but I don't think so.

On a sidenote, for an amount like 10k, and if you have a bit of time to manage it, I think a very interesting investment strategy would be to buy into any initial public offering you can find for the minimum guaranteed amount (and no more) indiscriminately and then selling it on day one of trade, also indiscriminately. Average day one returns are like 20% or something crazy like that, and you are pretty much 100% guaranteed to not make a loss. Requires no thought at all.

On August 30 2013 07:13 JonnyBNoHo wrote:

IPO's are hard. You suffer the 'winner's curse' and so any one investor's return is worse than the average.

On August 30 2013 07:18 Crushinator wrote:


Aha! but you see, by buying only the minimum guaranteed amount (and no more) you (mostly) get rid of the winners curse.

Minimum guaranteed amount is like a few thousand usually.

On August 30 2013 07:23 JonnyBNoHo wrote:

What's the minimum guaranteed amount? I don't think I've heard of that. Is this some crazy Europe thing?

On August 30 2013 07:28 Crushinator wrote:


THe minimum amount of shares that you are guaranteed to get. (not auction) There isnt always a minimum but you simply dont buy those then.

On August 30 2013 07:35 JonnyBNoHo wrote:

But you can't sell them before they trade, so you could still lose when you go to sell, right? Or is it at a predetermined price and there's some arbitrage there? I think I'm going to have to do some googling later

On August 30 2013 07:47 Crushinator wrote:


Yes you could still lose on any individual transaction. (though losses are very rare in IPOs anyway). But the idea is to make the amount you end up buying independent of the interest in the offer. So you will always buy the minimum allotment, meaning that you dont get more of the bad and less of the good, just equal amounts in everything. You dont go for the auctions, just the underwriting stuff.

I'm not a hundred percent sure if this logic is perfectly sound, but it should be close enough. I'm not a hundred percent sure if you can keep 10k occupied for a decent amount of the time either, but if I had that amount saved, it would be interesting to give it a go.

On August 30 2013 07:23 JonnyBNoHo wrote:

What's the minimum guaranteed amount? I don't think I've heard of that. Is this some crazy Europe thing?

On August 30 2013 16:25 IgnE wrote:


I guess if you had bought Facebook shares and sold the first day, it's possible you would have made a little money.

On August 30 2013 03:34 GreenGringo wrote:
Skipping to the main thrust and cutting all the irrelevant filler, we have:

Agriculture contributes 12% of Australia's GDP and isn't to be scoffed at. However, you raise an important point. My response would be that, apart from agriculture, large land area confers the following advantages:

(1) Much easier planning and macromanagement. Nobody wants to constantly have to demolish buildings from the 18th century. Nobody -- with the exception of the owners -- wants expensive land where everywhere is built.
.

On August 30 2013 23:36 legor wrote:


I really do not want to make fun about your economic illiteracy. How can something be expensive if no one wants it?

On August 30 2013 22:25 Rassy wrote:
Think its no mystery, a huge amount of shares have to be sold in a short period of time, wich is only possible if they are priced competitivly.
Its not so much that the ipo is to low, its more so that the prices 2 years after the ipo are often to high.
During an ipo institutional investors buy the shares for the biggest part, They are not going to sell them in 1 year or even 10 years usually.So after the ipo there are relativly few shares freely available while the demand for them is more or less continuous existing, wich makes it easy for the price to go way above the "true value"

Another nice example of an ipo is royal ahold. In 2001 the company went bankrupt basicly,due to fraud in its american devission. The company had to emit shares at ~ 2 euro each. We are now 10 years later and the shares are at 12. The company realy didnt become 6 times more valuable over the past 12 years. That is basicly impossible for the defensive sector ahold is in. Still the shares have gone to 12 easily only because the people who initially bought the ipo are refusing to sell and hoarding their stocks.
Now that 10 years are over thoose intitial investors are slowly wanting to sell and the way they are going to sell without crashing the price is interesting. They made ahold starting a share buyback program (as soon as a company announces a share buyback program you now that it is time to sell...) so that they can sell back their 2 euro stocks to the company for 12 euro each without crashing the price, the company goes along with this because the people wanting to sell their shares have a huge influence over the company, due to the amount of shares they have.
Ahold is a safe short for the long term if the overall market stops rising and starts consolidating.

This is the same game as was played with KPN.... In 2000 kpn emitted shares for ~ 2 euro each. In 2009 the company started a share buyback program buying back the shares for ~ 10 ea. And now in 2013 the company is emitting shares again, selling them for 1,20 each...(yes, the same shares the company bought 4 years ago for 10 ea, though you now need 3 times as manny shares for the same percentage of ownership, making the price comparison a little less bad with 3.60 vs 10 but with 2.40 extra cash deposited per share wich the 10 euro shares didnt have)
Its hilarious (outright criminal) what is happening lol.
Buying back shares is one of the bigger scams in the financial markets. It is said that companys do it to give monney back to the share holders but why not simply raise the dividend then?? When buying back shares the monney is only going to ex-shareholders...thoose people who sold back their shares.
So what you have to do is join them, whenever a company anounces a share buyback you should sell. It might not be the absolute top but you can be sure it is verry close.
Apple is starting a share buyback as well, so apple wont rise much more (wont go above previous top i think) and will go in a long term decline as soon as the share buyback program is finished (within 2 years i asume), this prediction i dare to make and put monney on.

On August 30 2013 07:47 Crushinator wrote:


Yes you could still lose on any individual transaction. (though losses are very rare in IPOs anyway). But the idea is to make the amount you end up buying independent of the interest in the offer. So you will always buy the minimum allotment, meaning that you dont get more of the bad and less of the good, just equal amounts in everything. You dont go for the auctions, just the underwriting stuff.

I'm not a hundred percent sure if this logic is perfectly sound, but it should be close enough. I'm not a hundred percent sure if you can keep 10k occupied for a decent amount of the time either, but if I had that amount saved, it would be interesting to give it a go.

On August 31 2013 00:34 Crushinator wrote:


There is definitely mystery around IPOs and a comprehensive economic explanation for why they are so underpriced is a topic of ongoing research. YOur comment about the prices after 2 years make no sense at all. The two year price is utterly irrelevant to day 1 returns, and the long term performance of stocks after an IPO is fairly poor on average. Which is another part of the IPO mystery. Buying back shares is not any kind of scam, it is just a way to return excess cash to shareholders and has no criminal or shady element to it at all. Dividends are indeed another way to do it, but the result is exactly the same, there is literally no difference when you do the maths. Nobody is damaged in a share repurchase.

I dont understand why you insist that a company is not worth what people are willing to pay for it. I would also like to point out that both your cases are not IPOs but rather seasoned equity offers. Which makes a rather big difference. There really isn't very much in your post that makes any sense at all, to be honest.

On August 30 2013 03:34 GreenGringo wrote:
Skipping to the main thrust and cutting all the irrelevant filler, we have:

Agriculture contributes 12% of Australia's GDP and isn't to be scoffed at. However, you raise an important point. My response would be that, apart from agriculture, large land area confers the following advantages:

(1) Much easier planning and macromanagement. Nobody wants to constantly have to demolish buildings from the 18th century. Nobody -- with the exception of the owners -- wants expensive land where everywhere is built.

(2) Much cheaper cost of living in loosely regulated housing markets. Rent and mortgage is a hole in the consumer's pocket, and a black hole for the national economy.

(3) Mineral wealth and resources. (About 50% of Australia's exports are mineral and fuel.)

(4) Impetus. How do you pay for getting millions of people together in a city? It's not cheap and often happens on the back of a gold rush or a port or coal mining. Then when you have a city, the inhabitants can move to other occupations before the gold rush (or longshoreman industry or whatever) comes to an end, and you'll still retain the "bond energy" that was originally bought from land in an opportune spot.

(5) Living conditions and psychology. Very difficult to analyze quantitatively (though there is some empirical evidence), but people are happier if they're less cramped and they enjoy more space and liberty. A happy population is a successful population.

As for Russia, the answer there is that nobody wants to live in Siberia because it's mostly barren and the winters are deadly. But the land still is useful and that's why experts see Russia as a potential superpower.

On August 31 2013 00:58 JonnyBNoHo wrote:

Google wasn't giving me much. What's the pricing mechanic when you do that? Do you not have to bid for the minimum allotment?

On August 31 2013 21:32 bkrow wrote:

Agriculture makes up 2.2% of the Australian economy. That is, two point two percent

On August 31 2013 19:17 Rassy wrote:



Well its not that difficult.
A company is not worth what 1000 people are willing to pay for 1% of the shares.
A company is worth what x people are willing to pay for 100% of the shares.
Stock prices often inflate way above the true value (that what people are willing to pay for all the shares) because only a small percentage of the shares is on the market. As soon as all shares would be offerd for an inflated price the price would crash, it can only hold its inflated price because the amount of shares offerd is verry low. (this specially in europe and with small caps)

Buying back shares is a big scam, i can not stress this enough. Why buy back shares when you can also give dividend?
Because when buying back shares, the monney only goes to a select group of shareholders, the group that sold their shares back, and dividend goes to all of the shareholders... this is the ONLY reason.
So..when a company is buying back shares, make sure you are in the group of people that gets the monney, the group of people that is selling their shares.

How can you explain a company selling shares for 2 euro, then buying them back for 10 euro 6 years later, and then 4 years after that selling them for 1.20 lol? The only other explanation possible is that the company has extremely bad management, not able to forsee the future well.
Buying shares for 10 and 4 years later selling them for 1,20 lol ><
You have to see what is going on here (the company beeing played with by the banks to suck it dry and let small shareholders left behind)
This company had a debt of like 25b euro in 2009-2010, yet instead of paying down debts with cash they start a share buyback program worth like 6b euros buying shares for 10 euro each (and higher, if look at the chart, then you can see the share buyback program is exactly at the top lol, i did examine manny share buyback programs and far more often then not they all where initiated at an absolute high for the shares)
Then 4 years later the debt of the company is deemed to high,and the banks say to the company "hey your debt is to high, you cant meet the conditions annymore and you have to sell shares for 1 euro ea"

The scam is the banks buying the shares in 2003 for 2 euro each, then in 2010 forcing the company to buy them back for 10 euro each, and then forcing the company in 2013 to sell them again for 1.10 ea.
The price of 2010 was the inflated price btw, manny small investors bought for that price thinking "the price of the stockmarket is always the right price, so i cant go wrong" But this mistake is unforgivable for the higher management of the company who aproove of the buyback program,and who do have a verry clear insight in the true value of the company.

Now apple: 100b+ in cash to hand out to the shareholders, i believe they are going to pay out dividends of like 25b and use 75b to finanance a share buyback program... They are even going to lend monney to finance a part of the share buyback program while they never had debts before.
Whats going on here?
Imo its big investors wanting to go out of apple because they can all see that in the next 10 years apple will get completely crushed by the competition from korea and china.(because apple lost their innovative advantage and now that marktet will become dominated by cheap producers because noone can compete with an innovative product)
After having had a great ride for 10 years with the stock going from 20$ to a high of 700$ (and 470$ now) they want to get out. They rightly fear that if they would start selling their holdings onto the market the price would crash so they go the the company and say
"hey we have so manny shares so you have to do what we want, and we see you have tons of cash" "we want you to give the cash back to the shareholders"
And apple goes
"ok, i can start pay out dividends, how does that suit you guys?" and the big investors go "meh we dont realy like that because then the monney will go to every idiot who bought apple shares lately, and we think they dont deserve anny of that monney" "lets do this different, we want to get out and sell our shares, so you start a buyback program and buy our shares" and apple goes "hmm its not realy ethical but i guess i will need you guys in the future, so lets do this"

And no, i wish i was a conspicary idiot who only imagine this, but unfortunatly this is realy how the game is beeing played.
Annyway:I realise this is all slightly off topic btw, so will stick to the subject in next posts.

On August 31 2013 22:45 Crushinator wrote:
'

Pricing is done by the underwriter(s), they set a price based on their evaluation of the company. There are auctions where the bids determine the final price, but those are not what I'm tlaking about, and are only a small minority of IPOs.

On August 31 2013 22:52 GhastlyUprising wrote:
Let's be reasonable. Let's not take advantage of a poster's banned status to reiterate a point he already addressed. Agriculture + its closely allied sectors which wouldn't exist without Australia's agriculture together make up approximately 12% of Australia's GDP. Source.

Edit: Fixed link.

On September 01 2013 00:33 JonnyBNoHo wrote:

Rassy, you could make that claim both ways.

100% of the shares not being sold today, so the price is 'inflated'. But you could say the opposite: 100% are not being bought so the price is 'discounted'. Just because you can flood the market one way or another and, on paper at least, change the price doesn't mean that the market price is biased to stocks being traded for more than they are really worth.

Share buybacks are functionally little different than dividends. The point is to give cash back to shareholders, not trade the stock (buy low sell high is largely irrelevant). Whether you do a buyback or a dividend really just comes down to a corporation and its shareholder's preferences.

If a big investor wanted his shares bought back that's no different than a big investor wanting to sell some of their shares. They don't somehow get more money by having them bought back than if they just sold them.

On September 02 2013 00:03 Rassy wrote:



Hmm you are right it goes both ways lol, stocks are also underpriced now and then.
I still dont see how buying back shares is not a scam. I see not a single reason to buy back shares instead of paying an extra dividend, besides the reasons i mentioned.
Can you give me 1 argument or reason why a company who wants to give monney back to its shareholders would do a share buyback instead of didend? (no fiscal technical reason pls lol) I realy can see no reason other then to give the monney to a part of the shareholders instead of to all of them.
And what about buying back shares when you have still heavy debts ? why not pay down the debts instead wich will safe you a ton of interest? No, companys even go the other way, they go lend extra monney to buy back shares.
It makes no sense at all and its only done so a few selected big investors/funds can sell their shares at top prices where there are not enough normal buyers to buy thoose shares for said price.
Share buyback is a sign on the wall (at least here in europe) and you can make alot of free monney by selling your longs as soon as a buyback starts, and go short as soon as the buyback program has finished.

If the usa plays the game in the same way (wich i think it does) then apple will stay stable for ~ 2 more years tops during the buyback program (between say 400 and 600) after wich a long term (5 year+) decline will start bringing apple below 200 again.
Then in 5 years from now, with apple at sub 200 you can see all the hedgefunds have sold their shares for 500 to apple.
They have gotten their monney back from the company but all small time investors who buy a stock and hold it till their pension hoping for nice dividends wont have seen anny from this 100b apple paid to buy back stocks.
They will have an increased holding in the company, but that is barely a compensation because 100b cash just left the company and the company is only going down hill further.

On September 01 2013 21:34 bkrow wrote:

Your link didn't work but i'd love to read what comprises the 12%. I have a chart on my work computer that shows the industry make-up of Australia's economy, which I can access tomorrow. I'd love to compare the numbers

edit: just googled and found the website - National Farmers' Federation probably doesn't instill greatest confidence in terms of bias and integrity of data. Anyway - it claims that the 'processes that food and fibre go through once they leave the farm' plus the value of the inputs that go into the farm equates to 12% of the Australian economy. That statement seems quite misleading - who knows what is included in that calculation. Pure agricultural output accounts for 2.2% of the economy - if you aren't referring to agriculture, then don't call it agriculture.

On August 28 2013 12:57 aksfjh wrote:

Not completely. A lot of the debt was already accumulated in the Lost Decade, where they kept trying to stimulate the economy, but would then stop before it gained traction. There's also the problem they've had with deflation, which has pushed the debt up quite a bit.

On September 02 2013 02:38 GhastlyUprising wrote:
Real link is here.

You're right that Australia's foremost advocacy organization on behalf of farmers mightn't instill the greatest confidence in terms of bias and integrity of data to an Ayn Rand objectivist. We're lucky that if you check their source, the data was obtained by Econtech as well as the the Department of Agriculture, Fisheries and Forestry.

Ignoring the processing of agricultural products seems to be utterly ridiculous and out of place in a discussion concerning the benefits of Australia's land. There's no chance in hell you would apply such an unfair and pedantic standard to banking and your other favourite sectors.

On September 02 2013 03:46 JonnyBNoHo wrote:
As I said elsewhere on the topic, raw material processing, agricultural or otherwise, doesn't always have to be done close to the point of extraction. Australia can and does export raw agricultural products to be processed in other countries. Australia also exports raw iron and coal to be processed and used in other countries. To give an example, Japan mines little iron ore, yet produces a lot of steel.

On September 02 2013 07:12 GhastlyUprising wrote:
It is RIDICULOUS to use the pre-processed figures as a representation of the wealth Australia reaps from its agriculture. In the modern world we don't eat most crops without processing them. Yes, the processing could be done in other countries, but in practice it isn't because the Australians aren't inclined to sell for cheap.

At the very best you are nitpicking, as the 12% figure was never offered as a key argument, just an observation. "You mean agriculture + closely allied sectors". That's all you should have said and it's the only point you have to offer here.

On September 02 2013 07:12 GhastlyUprising wrote:
It is RIDICULOUS to use the pre-processed figures as a representation of the wealth Australia reaps from its agriculture. In the modern world we don't eat most crops without processing them. Yes, the processing could be done in other countries, but in practice it isn't because the Australians aren't inclined to sell for cheap.

At the very best you are nitpicking, as the 12% figure was never offered as a key argument, just an observation. "You mean agriculture + closely allied sectors". That's all you should have said and it's the only point you have to offer here.

On September 02 2013 08:18 bkrow wrote:

I think you're getting overly worked up mate, I'm not saying the figure is wrong - all i'm saying is that statement "and closely allied sectors" is incredibly vague and to my mind, misleading.

Does the website offer any explanation of what those closely allied sectors are because I could argue Woolies/Coles (major supermarkets) could be termed closely allied as they sell the processed products? I just want more information on what the 12% is made up of, that's all. Nobody is damning your dear farmers to hell, I just want more data.

The 2.2% figure comes from ABS, what constitutes the 12% figure?

On September 02 2013 13:33 Rassy wrote:



Wiki also mentions the 12%

Agriculture[edit source]

Main articles: Agriculture in Australia and Australian wine

Agriculture contributes 3% of Australia's GDP at the farm gate and when value-added processing beyond the farm is included this figure rises to 12%.[95] 60% of farm products are exported. Irrigation is an important and widespread practice for a country where many parts receive low rainfall.

On September 02 2013 03:53 JudicatorHammurabi wrote:
Interesting data. Mostly stuff that I expected or knew, but I found Russia to be extremely surprising. It's interesting how Russia, which had a financial collapse that makes the Great Depression look like Disneyland, is able to keep their debt low and budget relatively balanced. Usually the exact opposite would be expected.