Archive for Debt

Employment On The Rise But Salaries Still At Risk

The latest data on unemployment figures- currently on a downward trend at 8.5%- has prompted an upswing in polls for the Obama administration, and may improve his chances for re-election, according to the Financial Times.

While this change is indeed a positive one, it is worth taking a look at the factors behind this figure. The BLS website defines “employed” as a person over the age of sixteen who has a job, while “unemployed” is a person over sixteen who has done no profitable work in the past week and has actively been looking for a job within the last four weeks.

American DNS for Netflix

What this survey does not take into account are the under-employed (workers who have had their paid hours cut or cannot get enough hours in their current job), the chronically unemployed (those who have given up looking for work) and workers who have had their salary or benefits cut as a result of the troubled economy. These ‘unseen’ categories are just as significant to the millions of workers in the US today as the basic employment rate.

Workers in sectors that are generally considered “dispensable” are the worst hit by any recession; this is especially true of those in the financial and retail sectors, for example, who experience an increase in redundancies and salary reductions across the board. Qualified professionals in essential services such as healthcare do better, such as doctors, dentists, pathologists and ultrasound technicians. For example, the ultrasound technician salary has been largely unaffected in the years since 2008, with a steady increase in pay and benefits, and job openings on the rise. Unqualified individuals within that same sector, such as pharmacy technicians, may not be so lucky in terms of salary although the demand for their services remains high.

You can see the state of the employment market in specific areas by looking online.  Most of the major job sites allow you to customize the search very specifically.  Most independent researchers however will use buy mobile proxies in order to change their IP address to a regional one to check out other sources like Craigslist.

What this year will bring for those of us still in the workforce in terms of employment and pay rates remains to be seen. For the young ones just starting their qualifications or looking for jobs, a good bet is the strong healthcare industry or other essential services where the demand for workers is projected to remain high. If you are in a position to obtain a strong qualification in such a sector, so much the better; you are separating yourself from the masses of job seekers out there who would willingly step into your shoes. In today’s economy, a reliable salary and good benefits are well worth the extra effort.

Lessons of the Rwanda Aid Scandal

A story from nearly seven years ago to illustrate how the same issues are repeated over and over again with regards to foreign aid. The United Kingdom has often come under criticism for various aspects of it’s foreign policy particularly in Africa, yet it remains one of the most generous benefactors to the continent.

Picture courtesy of an Instagram proxy.

The government has come under fire for its decision to resume foreign aid to Rwanda, after the African country was accused of supporting rebels involved in fighting in the Democratic Republic of Congo. Rwanda, along with Uganda, denies funding the rebels, but the UK government has been accused of a ‘profound error of judgement’. Justine Greening, International Development Minister, was put under pressure to explain the government’s decision by her Labour counterpart, Mr Ivan Lewis, who questioned the motives behind what appears to be curious move.

‘Shambolic’ Decision
Mr Lewis, in his address to Ms Greening, said:

“The government’s policy on this crisis has been nothing short of shambolic, and has seriously undermined the international effort to send a unified and unequivocal message to the Rwandan government that their actions are entirely unacceptable.”

It transpires that Ms Greening’s predecessor, Mr Andrew Mitchell, agreed to unfreeze up to £16million of aid to Rwanda on the day before he took over the post of Chief Whip. The UN accuses Rwanda of supporting a rebel militia group known as M23, a charged that the Rwandan government denies.

Justine Greening Responds
Ms Greening defended the government’s decision to restore aid to the troubled African country, explaining:

“Labour has no ability to really criticise us in relation to, a, tracking results of our aid, and, b, being clear about whether it is being spent appropriately or not. Whenever we have needed to take action to curb aid, we have indeed done that.”

It is notable that Uganda, which stands accused of supporting M23 alongside Rwanda, has had all of its aid from the UK cut after it emerged that much of it was transferred into private hands of government members in the country. The Ugandan government has said it is ‘not happy’ with the decision, but was willing to acknowledge that government aid had been stolen.

Alas some things never change, and yet again we see the same stories and pattern being repeated in different areas of the world.

Further Reading: More on Proxies

Can a Football Tournament Transform the Russian Economy

There are of course only a few sporting events which have the potential to affect an economy as large as Russia’s.  Indeed the Olympics and the World Cup are probably the only two that come even close.  Despite some incredible sounding predictions it still seems unlikely that even one of the world’s biggest sporting events has the capacity to make even a small impact.

There’s no doubt that Russia’s economy needs a boost and it needs one fast. President Putin has pretty much been allowed to be flexible on the democratic process on the understanding that he brings prosperity and jobs to the Russian economy.  That has not been easy over the last  few years, with a huge fall in oil prices and the ongoing sanctions placed as a result of Russia’s international policies.

The World Cup has been seen by many Russians as a chance to start integrating Russia back into the world economic marketplace where it’s become increasingly isolated due to the Ukraine and Syria issues. The World cup is huge and brings plenty of potential in tourism and other related effects.  The last report published actually estimated that there could be a total impact of around $30 billion to the Russian economy.

This sounds a staggering amount but just to clarify the report suggests that this is the measured impact on GDP over the 10 years 2013 to 2023.  This is roughly the time scale of the project ranging from the initial infrastructure projects to the ongoing impact from these investments after the tournament has finished.

Of course, hosting the World cup isn’t cheap, indeed the Russian state has probably spend around $11 billion on the various infrastructure needed. However much of this spending has revolved around roads, transport links and stadiums which would have been built anyway even if the tournament hadn’t been held here.

Confusion like this is why these economic figures about sporting events are always so hotly disputed.  It’s extremely difficult to isolate costs and resulting benefits from the actual event especially when it comes to things like transport links.  Some of these investments can genuinely invigorate areas especially in isolated and neglected regions.  The problem is that economic benefits can easily be attributed to the event over this long time scale even if only some of this is genuinely attributable.

The easiest major benefit to measure is of course the tourism that the actual event brings.  There has been some trepidation from many football fans from attending this event, with rumours of Russian hooligans and worries about policing.  It’s important that tourists have a great time and these impacts are minimal as they can also have a long term effect on Russian tourism well after the event has finished.

Obviously many people will not risk travelling to the country for a variety of reasons, however football fans are usually extremely hardy and will support their teams whatever the costs.  Many will prefer to enjoy the tournament from home and digital streaming, perhaps watching Match of the Day stream across the internet. Yet the tournament will almost certainly be a sell out with transport links from European countries fairly reliable and inexpensive.

Russia has of course, already invested heavily in another sporting event this decade in the form of the 2014 Winter Olympics.   Spending on that was reported as being over $50 billion which seems incredible, and if true made them by far the most expensive Winter games in history.

Ultimately though, these events are worth even more than money to the President Putin – they are a way of promoting national prestige.  With Russia facing many challenges abroad with their overseas policy these sporting events are an ideal way of promoting Russia on the international stage.

Further Reading:


French State Offer Debt Relief

The French railway network is often cited as a fantastic example of how a national railway network can be run. There’s no doubt that it provides a fantastic service to people throughout the country, but whether it’s an efficient system is a completely different matter.

The SNCF Network is literally drowning in debt, latest estimates for last year suggest that it has a debt of over 46 billion Euros and it’s continuing to rise.  Some experts believe that it will reach over 50 billion by the end of the decade given current progression.  Needless to say this is a huge amount of debt for any organisations to service, let alone reduce in any meaningful way.

President Macron has been under pressure to do something about this debt and reform the industry.  His latest announcement suggests  that there will be some relief for SNCF with the French state taking over part or all of this debt burden over the next few years.  There was no exact amount specified but it will probably be linked to the extent of the reforms that Macron is proposing.

The president suggested that the SNCF is more than 30% less efficient than other European rail networks.  Many have criticised the amount that the state has invested in it’s railway infrastructure, but the figures suggest that it is not the amount but how it has been invested.

The figures are obviously huge and indeed are actually so big that they will significantly effect the French Government’s own debt to GDP figures.  There are some economists who forecast that taking over the whole debt may even push France over the politically sensitive 100% ratio where the Government owes more than it earns.

If the State does take over the debt it is seen as vital that there are significant reforms to the corporation as part of that deal.  It is unlikely considering the President’s politics that any deal would be sanctioned without some serious cost cutting measures being implemented along side it.

Many British people look longingly over at the French railway network’s performance and wish the same could be implemented here.  Yet it’s obvious to those who keep an eye out on French politics and current affairs that this is a real political issue in France. Indeed many rightly point out that the UK system is actually much more efficient at least in monetary terms than the network run by SNCF.  It’s easy to sit and watch news reports from the UK TV about how waiting times and delays on UK networks without realising how much the French actually spend on theirs.  Incidentally, if you want to access these reports from the BBC – this application can allow access to BBC iPlayer from France.

President Macron has insisted that the debt would be taken over only when his reforms are actually being carried out. There are already many strikes taking place in the transport sector and efficiency reforms within SNCF are almost certainly going to lead to more when implemented.

Further Reading:

Is the Irish recovery in Jeopardy ?

The Irish economy is probably one of the  most studied in the world.  Despite it’s size – estimated at less than 0.5% of the Worlds economy, it’s quoted and studied by economists across the planet.  Only last week I read several articles in the Chinese press reporting on the Housing Boom/Bust and the effects of Brexit on the Irish economy.

One of the reasons is that the Irish have a cultural reach far beyond it’s tiny size and a high profile in many of the world’s biggest economies. Most British and Americans for example where well aware of the rise and subsequent fall of the Irish economy  in the first decade of this century.  It’s often covered in the US and UK media and during the boom year a decade ago the success of the Irish economy was well covered on the BBC News (check here for access via a VPN).

However another reason for it’s popularity with economists is that the Irish economy is often seen as a microcosm for advanced western style democratic nations.  They have targeted and in many senses succeeded in attracting high value/high tech businesses through offering competitive corporate tax rates.  Indeed many companies like Dell and Microsoft sell good s and service to the much larger UK market just across the sea.

However although the Irish economy was successful, expanding much quicker than most European countries  -it’s over investment and huge housing boom led to a spectacular crash in 2008. It’s taken a long time and many sacrifices by the population for the economy to recover, and in recent years has started to experience more modest growth.  However many worry that history is about to repeat itself.

That gentle recovery fueled by several austerity budgets has started to gain speed.  In 2017 the Irish economy grew by over 5%, the highest growth in the Euro-Zone for the fourth successive year.  It looks great news yet as we know, GDP rises are not the only indicator of an economy’s success.

There are problems, for example Ireland has one of the highest per-capita GDP figures in the world, much higher than  the UK or Germany for example.  Yet despite this high level of productivity, wages are still quite subdued and the property prices are rapidly approaching the high levels of the previous boom years.  The result a hugely successful economy where it’s citizens can’t afford to buy property is always a cause for concern.

Some of the success is indeed slightly artificial due to the relative undervalue of the single currency.  It is the same reason that Germany has always been so successful, a German Mark or Irish Punt would have a much higher value than the Euro does.  This is often a criticism of the single currency where the highly competitive and efficient economies benefit from the low valuation of the Euro where as less competitive countries like Greece always struggle.  There are full lists of these in the economic data sections of the BBC website, check out also some of the content on BBC News which you can access here from abroad.

The Irish recovery has been impressive although it has taken many years,. so why are we worried?  Well the economic success doesn’t always seem to be filtering through to the Irish people and budgets.  Some of that is due to the fact that much of the success is merely on ‘the books’ where foreign firms are allocating profits to Irish branches in order to benefit from the low corporation tax.  The level of unemployment is still much higher than across in the UK – most countries with high growth levels do not tend to have 9% of the population unemployed.

The worry is that the Irish economy overheats again under the rising prices of property.  The problem is that the main instrument to control this is higher interest rates but as these are set in Germany then there’s a lack of control there.  Cyclical boon and bust scenarios are extremely damaging to ordinary citizens who often end up paying the price.

South African Cryptocurrency Debts

Although many think that cryptocurrency may be the way to solve African debt and investment problems, there seems to be scant evidence that this is happening.  Like most areas of the world, the crypto craze looks to have little real world benefits. Sure some people are making huge profits betting on the enormous swings of Bitcoin and it’s rivals, but this is of little help to real world issues.

Certain African countries seem to be really keen on the new cryptocurrencies predictably Nigeria and South Africa where there’s intensive trading and speculation on both formal and informal trading networks.  Indeed in South Africa, there are many reports of people getting into financial trouble betting on the wild swings of various cryptocurrencies.

Much like the day trading crazes of the 1990’s, buying and selling these currencies in the short term is extremely risk but of course can be incredibly lucrative.  Many are investing money from second mortgages and credit card debt hoping to profit from the boom in prices.  Of course, the volatility goes both ways with Bitcoin trading in a range of around $8000 – $20000 in just a few weeks. Any of these currencies can easily rise or fall by over 30% in a single day and possibly much more than that.  One individual in cape Town was reported as selling his car just to invest in the cryptocurrency Ethereum after getting a tip on it’s imminent rise.

For ever investor who is losing money on investments in crypto speculation  there are a couple who have simply been scammed.  There are numerous Ponzi and MLM schemes operating in the African continent which supposedly invest in cryptocurrencies.  The schemes offer guaranteed returns and also referral schemes designed to draw in more victims. It should be noted that if there’s one thing for certain with regards investing in bitcoin or similar that’s uncertainty is guaranteed.  There is no way anyone can predict the long term prices of bitcoin as it doesn’t have any underlying value. Bitcoin is always going to be extremely volatile and as such no scheme could ever guarantee anything at all.

South Africans are not the only Africans embracing Bitcoin however, as a recent report from Citibank has indicated. Apparently Kenya, are the fifth highest bitcoin holders in the world just behind Nigeria.  There’s certainly a real appetite for investing in the digital currency on the African continent.

How important is this? Well the countries like Kenya who are investing large proportions of their private wealth in cryptocurrency are obviously very vulnerable to a collapse in prices.  What’s worse is that every cent invested in this digital world is not invested in traditional projects in the country.  More developed countries would cope with this investment drain better than most African nations.

Most financial institutions are very positive about blockchain the technology behind the currencies so this could have a beneficial effect in the long term on African economies.  The hype on cryptocurrencies however rises daily, you can see lots of reports and coverage on mainstream media – try watching UK TV abroad for some insight in their financial sections.

Much will depend on how cryptocurrencies fair in the long term, it may be that they turn out to be a valuable wealth generation tools.  African’s perhaps see these currencies as a way of investing in Western economies in a simple way.What is certain is that Africa’s economic success will be much more certain if the world of the cryptocurrency develops further in the coming years.

Steven (BBC News) Baker

Improvements in Eurozone Growth

A strong performance from the German economy in the 3rd quarter of the year aided the Eurozone to sustain its remarkable momentum. This was in accord with the latest national figures released today. Gross domestic product expanded by 0.8 percent in Germany, Europe’s largest economic area throughout the 3rd quarter. These figures were verified by the German Federal Statistical Office and represents a vast improvement from the 0.6 percent growth in the second quarter. Over the last year the German economy has grown by an impressive 2.8%, while Italy and Portugal both contributed to the broader growth in Eurozone economics. From previous recession they are now both growing by just over 0.5 percent during the 3rd quarter. The European economic area has gathered pace in the course of 2017, leading to surging customer assurance since unemployment has continued to fall steadily.

The unemployment figures are perhaps the most important in a political context. High growth levels are important for GDP and funding services, but all this can be undone with accompanying levels of high unemployment. The improvement in employment figures suggests that part of this growth has been fueled in the manufacturing sectors where high levels of labour are required.

Another important sector which is showing signs of growth is the digital economy. If you watch the UK news through a BBC live VPN then you’ll see how important it is to the UK economy. However it’s becoming increasingly developed in other European nations too partly due to some innovative legislation provided by the EU. Their aim is to create a single European digital market in line with the full single market and provide cross border support for purchases, distribution and transactions.

The advancement has buoyed European Central Bank president Mario Dragh who has diverted criticisms of an accommodating fiscal policy, saying it is essential to sustain the strong momentum. The improved prognosis has helped investor confidence, which rose additional in the previous month, in accord with this ZEW indicator of economic sentiment for Germany.

The widely followed measure climbed to 88.8 points up 1.8 points from October and progressively moving towards the longterm mean degree. Achim Wambach, Zew president, said: The prospects for the German economics stay encouragingly positive. Total high levels of growth across Europe from the third quarter are encouraging further growth in Germany and fostering expectations for the coming six months. The broader European economics grew by 0.6 percent in the 3rd quarter, based on a slight upward revision of growth printed today by the European Commission.

James Williams

UK Proxy and Technology Blogger.

Americans Start Borrowing Again

Debt can be a scary concept, although if you spend time with economists they’re certainly generally a little more accepting.  Financial shocks though tend to make people much more wary and over the last decade Americans have severely reduced the levels of debt they incur.

That’s seems to be changing, there are many signs that with memories of the recession fading they are starting to borrow again.  The numbers in the US are as always somewhat frightening, US consumers now owe nearly $13 trillion on things like mortgages, loans and credit cards.  The number is large and in fact exceeds the total that preceded the last financial meltdown.

Our economists look at increased borrowing as a sign of economic growth, of a confident financial future and there is some merit in that opinion.  Yet consumer debt can quickly change from being a positive economic indicator to being deemed unsustainable just as before the housing crash.

Debt at a push can be seen as a short term indicator of a recover but it’s not something to build a healthy economy on. You can see the change on US mainstream TV, consumerism and credit is growing.  Check out the adverts and feelings on local stations, international viewers can buy a US proxy to view the channels online.

Debt undoubtedly is not something which you want in the long term, healthy economies are rarely built on high levels of debt. One of the issues is the lack of stability, you might think a certain level of debt is manageable but if interest rates rise or economic circumstances alter that might change very quickly indeed.

One of the best ways to assess debt is to consider what it has been incurred for.  Credit card debt built up simply on consumerism might boost short term economic indicators but the benefits are short lived.  Mortgages and things like student loans are perhaps more positive, with people actively improving their lives.

This doesn’t mean they are safe either though, as we saw with the mortgage crisis in the US which precipitated the financial crash. This time it is perhaps student loans which are the worry for the US economy.  US students have risen markedly as college costs have gone up and now stands at an amazing $1.34 trillion. What’s more, over 10% of that is more than 90 days past due – a rate that has almost doubled in the last decade.

Debt is safest when you have a stable job and a decent income, but many factors can alter this very quickly. Job loss, economic changes or something like ill health can cause chaos to even a high earner who has high levels of debt.  It doesn’t have to be something this dramatic, interest rates are starting to rise and this can increase the cost of servicing debt very quickly.

Consumers may get use to maintaining high levels of debt to purchase cars, own bigger homes, electronic goods, US Netflix subscriptions and other luxuries yet if these are bought on credit there could be problems in the future.