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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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Apple reports rare fall in profits

Category : World News

Computer and smartphone maker Apple reports its first quarterly drop in profits in a decade, despite strong sales in the three months to March.

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VIDEO: Apple results may reveal profits fall

Category : Business, World News

Apple will report its latest set of results on Tuesday, and analysts say it will reveal first fall in profits in a decade.

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India car sales hit as economy slows

Category : Business

Annual car sales in India have fallen for the first time in a decade, underlining the impact a slowdown in its economy is having on key sectors.

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Bad weather hits British wheat crops

Category : Business, World News

Britain will become a net importer of wheat for the first time in a decade this year because of bad weather, the National Farmers’ Union says.

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Obama pitches $2bn clean energy fund

Category : Business, World News

US President Barack Obama calls for pumping $2bn (£1.3bn) from gas and oil royalties over a decade into clean energy research.

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Australia adds most jobs in 13 years

Category : World News

Australia adds 71,500 jobs in February, a huge jump and the biggest rise in total employment in more than a decade.

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AUDIO: ‘Decade of neglect of nuclear policy’

Category : Business

The Conservative MP Tim Yeo says the government is guilty of a “decade of neglect of nuclear policy”.

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The false-alarmists behind this shrinking population panic | Dean Baker

Category : Business

Policy-making elites would have us believe a smaller workforce spells the end of prosperity. Actually, it spells redistribution

The retirement of the baby boom cohorts means that the country’s labor force is likely to be growing far more slowly in the decades ahead than it did in prior decades. The United States is not alone in facing this situation. The rate of growth of the workforce has slowed or even turned negative in almost every wealthy country. Japan leads the way, with a workforce that has been shrinking in size for more than a decade.

Slower population growth is affecting the developing world as well. Latin America and much of Asia are seeing much slower population growth than in prior decades. In China, the one-child policy adopted in the late 1970s has virtually ended the growth in its labor force.

According to many media pundits, this picture of stagnant or declining labor forces is cause for panic. After all, it means that countries will be seeing an increase in the ratio of retirees to workers. Countries around the world will be suffering from labor shortages. And with even developing countries experiencing slower population growth, there will be nowhere to turn to make up the shortfall.

The only part of this picture that should, in fact, be scary is the failure of people involved in economic policy debates to have even a basic understanding of economics and arithmetic. There is no reason why the prospect of a stagnant or declining workforce should concern the vast majority of people. Rather, from the standpoint of addressing global warming and other environmental problems, this is great news.

First, a bit of arithmetic would be useful. People involved in economic policy-making tend to have problems with arithmetic, which is why they failed to recognize the housing and stock bubbles. Some simple sums can quickly show that the concerns about falling ratios of workers to retirees are ill-founded. In the United States, the social security trustees project that the ratio of workers to retirees will fall from 2.8 in 2013 to 2.0 in 2035.

It’s pretty simple to figure out the impact of this decline. Let’s assume that an average retiree consumes 85% as much as the average worker. This means that our 2.8 workers must produce enough goods and services to support the equivalent of 3.65 workers. That would imply each worker gets to keep 76.7% (2.8/3.65) of what they produce, with the rest taken away through taxes or other mechanisms to support pesky retirees.

When the ratio of workers to retirees falls to 2.0 then each worker will get to keep 70.2% (2.0/2.85) of what they produce. This implies a drop in the share of output going to workers of 8% over the next 22 years.

While that would depress living standards, we will also be seeing an increase in potential living standards from rising productivity growth. If productivity grows at the rate of 1.5% annually – roughly the rate it has been growing over the last two decades – then productivity in 2035 will be almost 40% higher than it is today. This means that the fall in the ratio of workers to retirees will take back less than a quarter of the potential gains from productivity growth. (It’s true that most workers have seen little benefit from productivity growth over the last three decades, but this points again to the importance of intra-generational distribution; it’s not a reason to be distracted by demographic nonsense.)

And this story puts the situation in the worst possible light. After 2035, productivity will continue to grow, but the ratio of workers to retirees will be little changed for the rest of the century. Why, exactly, are we supposed to be so scared?

The story is even more ridiculous for China, where productivity per worker has been increasing by more than 5% annually. This translates into an increase in output per worker of more than 160% over two decades. Do we seriously expect workers in China to be terrified if 10-15% of these gains are pulled away to support a larger population of retirees?

Of course, there is a story of labor shortages in this picture – in the sense that it will be difficult to find workers for the lowest-paying and least productive jobs. With a stagnant or declining labor force, workers will have their choice of jobs. It is unlikely that they will want to work as custodians or dishwashers for $7.25 an hour. They will either take jobs that offer higher pay or these jobs will have to substantially increase their pay in order to compete.

This means that the people who hire low-paid workers to clean their houses, serve their meals, or tend their lawns and gardens will likely have to pay higher wages. That prospect may sound like a disaster scenario for this small group of affluent people, but it sounds like great news for the tens of millions of people who hold these sorts of jobs. It should mean rapidly rising living standards for those who have been left behind over the last three decades.

And that is the basic story of fears over stagnant or declining populations. The people who hire help – the very same who also dominate economic policy debates – are terrified over the prospect that they will have to pay workers more in the future.

But the rest of us can sit back and enjoy watching them sweat as ordinary workers may finally start to see their share of the gains of the economic growth of the last three decades.

Throwing some cold water on India, and the BRIC story

Category : Stocks

Growth rates in India and the other large emerging economies are unlikely to stage a comeback this decade, argues a new book by Morgan Stanley’s emerging markets equity head.

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The lessons I learned from my week with Japan’s power-brokers | Will Hutton

Category : Business

The new Bank of England governor should heed Japan’s efforts in trying to emerge from its lost decade

Most of us, including many bankers, now agree that the last 25 years have been a dreadful mistake. Western consumers and businesses have too much private debt, with Japan serving as an awesome warning of how that can drag an economy down for decades. There is a lot of hand-wringing over why regulation was so light-touch and why bankers were allowed to get away with so much. But those were the mistakes of a bygone world; the big question we face now is what to do next.

Last week, the governor-designate of the Bank of England, Mark Carney, and a man who was once a rival for the job, Adair Turner, both argued with one eye on Japan, where I have just spent an intriguing week, that it is time to open a debate about inflation. At the very least, declared Carney, we need to be very flexible about how inflation targets are met, keeping a weather eye on what is happening to growth and employment.

In a formidable speech, Turner went even further. The unthinkable – printing money to finance government deficits – should no longer be unthinkable, he argued. It should be one available policy tool, a way of countering deflation. In many respects, Britain’s situation is even worse than Japan’s in 1990 when its lost decades began. Our stock of private debt is much higher proportionally; our banks are in much worse shape; our productivity is disastrously low and falling. What’s more, our loss of share of world export markets is the worst in the G20. Incomes per head are set to stagnate for 10 years, the worst in modern times. Our government, unlike the Japanese, is mulishly opposed to increasing public debt to compensate for the private sector trying to reduce its debt.

All that has stood between Britain and a Japanese-scale debacle is that at least the Bank of England has been obliged to keep inflation up rather than watch prices fall and it has been moderately imaginative about how it has done so. Nonetheless, it is crystal clear that it could, and should, have done more.

In Japan, I was simultaneously aware of what a toll two decades of deflation had levied on Japanese society, but also of the compensatory force of Japan’s underlying economic strength. But gloom and pessimism still suffuse the country. Hiromasa Yonekura, the president of the Keidanren, Japan’s all-powerful employers’ association, told me that this lack of confidence, in his view unjustified, had become hard-wired into Japan’s culture by falling prices. It affected even the birth rate and was the chief cause of Japan’s rapidly ageing society. Nor is the birth rate the only sign of a society in stress. Young women’s role in Japanese society is being knocked back by the fashion for coquettishness and cartoon-style prettiness, complete with singsong voices and contrived ways of walking. It is a return to suffocating traditionalism masked as fashionable faddishness. A society worried about its future becomes socially regressive.

Yet Japan’s capacity to resist the malign element of deflation is very much greater than our own. It is still the third biggest economy in the world, with some fabulous companies possessing frontier technology, and going global rapidly. Hiroaki Nakanishi, the president of Hitachi, having just bought Horizon Nuclear Power from the Germans and aiming to build nuclear power stations in Britain, was worried that Britain was retreating from our global vocation. Tell your prime minister, he said, that Hitachi would consider it a disaster if Britain withdrew from the EU. I promised him that if the opportunity arose I would.

But Hitachi’s commitment to frontier engineering is only one example; others are rail company Japan Central’s investment in the Maglev train, which travels at over 300mph, and textile expert Toray’s commitment to new carbon materials that are many times stronger than anything known to man. Japan is engaging in investment and innovation across the board and on a scale Britain can only dream of.

Time after time, as I questioned company leaders about their capacity to do this, I was referred to Japan’s “public interest” or “stakeholder” capitalism – committed long-term ownership, partnership with the state to drive research forward and corporate leaderships keen to find commercial responses to the giant economic and social problems of our time. It is a world foreign to our own of shareholder value maximisation and gigantic personal bonuses, where interest in social problems is seen as “anti-business”. This dynamism refuses to be submerged by debt deflation; Yonekura pointed out that, while New York had built 20 skyscrapers in the last decade, Tokyo had built 50. But to unleash this dynamism, Japan has had to break out of its monetary and financial trap. The newly elected government has gone some of the way, proposing a huge Keynesian stimulus and lifting the inflation target to 2%. But, as Turner argued, Japan’s stock of public debt is now even more suffocating than private debt. Japan must go further: turn it from onerous debt into free cash by in effect printing money. Done right, this would not create inflation but steady the economy. There is an intense private battle raging between the Ministry of Finance and the Bank of Japan. Either the bank starts monetising public debt, as Turner argues, or the Ministry of Finance will launch another unthinkable, unilateral reduction of Japan’s public debt burden by demanding borrowers accept worse repayment terms. Plans are being laid for a managed default unless the Bank of Japan prints money.

This is what happens when societies face impossible demands. To sustain the social fabric, investment and innovation, governments have to do non-conservative things – reframe their capitalism and break conservative financial rules. Japan is now ready to do this, the Liberal Democrat party feeling that too much is at stake not to act.

Carney and Turner are pointing the way in Britain. But there is a limit to what a central bank can do by itself. What is becoming clearer by the month is that every Tory maxim – leaving the EU, belief in smaller government, a hands-off approach to capitalism, junking the welfare state – is 100% wrong. Britain needs to learn from Japan. We don’t need just a radicalisation of monetary policy – we need to recast, from top to bottom, how our companies are owned, financed and managed. Otherwise, we face an economic and social calamity. The final shredding of Toryism before brutal economic truths will signal the rebirth of the British economy.