Wednesday, September 28, 2016

ICYMI: Growth and Ageing on BFM

I was on BFM this morning talking about growth in the long run:

IMG_7023

Posted by hishamh at 3:00 PM
Labels: ,

9 comments:

  1. Anwar Rangkuti, CFPSeptember 29, 2016 at 5:21 AM

    Very American la u punye accent :-)

    ReplyDelete
    Replies
    1. hishamhSeptember 29, 2016 at 9:42 PM

      @Anwar

      Can't be helped LOL. I started schooling there.

      Delete
  2. JasonSeptember 29, 2016 at 5:32 PM

    EPF is the 14th largest?

    Anyway, it's quite comforting that BFM took an interest in demography and growth.

    Follow up questions from my (horrific) list of questions last week...

    1) How long do you think before pension and insurance funds globally decide to be really,really aggressive in yield hunting? (since the implication is that this will be the inevitable result)

    2) Will this influence global monetary policy decisions, even more so than today? (I'm hoping this will increase the reliance on rating agencies for my own self-serving existence)

    3) The next few questions you do not have to answer (directly or at all). What will happen if EPF annual returns are lower than inflation? Should/Would policymakers intervene directly? And can we safely proxy EPF returns as Malaysian urban (KL) inflation?

    ReplyDelete
    Replies
    1. hishamhSeptember 29, 2016 at 9:47 PM

      @Jason

      1. Some of the developed country pensions have been investing in hedge funds for the past decade. Norway's actually has an allocation for small-caps...in Malaysia! Increasing interest in the VC space already. Having said that, I don't think we're going to start investing in art or coin collections just yet.

      2. You betcha. "Unconventional" policy will I think become the norm

      3. One saving grace is that ageing populations will be inherently deflationary. Our risk statement basically aims for achieving 2% above the rate of inflation, so we'll do what it takes to achieve that.

      Delete
  3. FungSeptember 30, 2016 at 11:26 AM

    The RM1.60-consumer-surplus thing is very eye-opening and stimulated some thinking. I guess that applies to almost everything except Apple's products and toll fare.

    ReplyDelete
  4. AnonymousOctober 2, 2016 at 8:07 AM

    Hahaha....a whole load of bunkum doeth gets one far...i guess. Ageing has as little to do with declining growth as UFOs has with warts on our bodies......ROFLMAO

    The real issue is stagnant wages, income and wealth disparities,global supply chain dynamics, TFP plus the shift to a sharing economy. Its a cop out to attribute declining growth to ageing for it sweeps the need to address all those problems in err...one fell swoop under the carpet, out of sight, out of mind.

    Contemporary economists are part of the exploitative class with their imagination spun fact less postulations, after all many of them are neo-liberals in disguise...wink..wink. and that is proven especially in the classic case of Japan which has embarked upon absurd voodoonomics while ignoring the bull in the china....err...japanshop ..that is stagnant wage growth because addressing that would go against the pockets of big corporate fat cats and their cartels. In fact, in a report which I have in hand, self styled experts like Bernanke, Krugman etc wondered about the output gap in Abe Japan and speculated it would resolve itself soon enough...which unsurprisingly it never did.

    A year or so on..my contention that wages are the cause have not been answered here. That a long wait dude,,,help I cant hold my breathe longer!!

    The global economy is in the state it is because of the unfettered greed of the 1% has unhinged the previous equilibrium. Address that and watch economies purr everywhere. But then again, policy makers including economists are hostages to them 1 percenters ...right? hahahahaahha

    To imagine that I would be sitting and typing this out after a surfing break in Mentawai, Sumatera is laughable.....but hey.....bunkum does get to one eventually.

    Warrior 231

    ReplyDelete
  5. AnonymousOctober 2, 2016 at 8:08 AM

    Hahaha....a whole load of bunkum doeth gets one far...i guess. Ageing has as little to do with declining growth as UFOs has with warts on our bodies......ROFLMAO

    The real issue is stagnant wages, income and wealth disparities,global supply chain dynamics, TFP plus the shift to a sharing economy. Its a cop out to attribute declining growth to ageing for it sweeps the need to address all those problems in err...one fell swoop under the carpet, out of sight, out of mind.

    Contemporary economists are part of the exploitative class with their imagination spun fact less postulations, after all many of them are neo-liberals in disguise...wink..wink. and that is proven especially in the classic case of Japan which has embarked upon absurd voodoonomics while ignoring the bull in the china....err...japanshop ..that is stagnant wage growth because addressing that would go against the pockets of big corporate fat cats and their cartels. In fact, in a report which I have in hand, self styled experts like Bernanke, Krugman etc wondered about the output gap in Abe Japan and speculated it would resolve itself soon enough...which unsurprisingly it never did.

    A year or so on..my contention that wages are the cause have not been answered here. That a long wait dude,,,help I cant hold my breathe longer!!

    The global economy is in the state it is because of the unfettered greed of the 1% has unhinged the previous equilibrium. Address that and watch economies purr everywhere. But then again, policy makers including economists are hostages to them 1 percenters ...right? hahahahaahha

    To imagine that I would be sitting and typing this out after a surfing break in Mentawai, Sumatera is laughable.....but hey.....bunkum does get to one eventually.

    Warrior 231

    ReplyDelete
    Replies
    1. hishamhOctober 4, 2016 at 6:25 PM

      @Warrior

      Happy to oblige as always. Nice to see you back.

      Of course, what the recent developments you're talking about have to do with long run growth, I'm not at all sure - they all appear to be symptoms to me, not the disease.

      I'm looking at the past couple of thousand years, and projecting into the next 200. For market developments, it's really the post-WWII period that seems to be the key.

      But hey, it's all bunkum right? In any case, I'm actually wishing I'm wrong, but I don't think I am.

      Delete
    2. hishamhOctober 4, 2016 at 7:08 PM

      @Warrior

      Just to clarify:

      1. I think the current slowdown is partly due to cyclical factors (such as higher inequality, credit constraints after a financial crisis), but also due to deeper structural factors (declining labour force growth).

      2. Aging itself has an impact on lower productivity (e.g. here), though again there is more than one factor (the sharing economy for one - my next Star article will be on that).

      3. I actually share your opinion on Japanese policy - it's gone too far - though probably for very different reasons than yours. Declining labour force growth implies both lower economic growth as as well as (benign) deflation, something I pointed out years ago. Wage stagnation and corporate cash hoarding (fewer investment opportunities) are byproducts of the aging process.

      4. Under these circumstances, a focus on inflation targeting will not work (especially in an open economy). The objective should be on maintaining full employment, which Abenomics actually achieved, and then some. Japan's GDP per capita growth is at least as good as the US and better than Europe's. The only real "problem" Japan has is public debt, and that's solvable.

      Delete

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