USD / Debt / Gatekeepers

Japan

USD / Debt / Gatekeepers

The defensiveness of the Yen is intriguing given the government debt position, large short term refinancing requirement and dependency on local capital (which faces demographic challenges). The following link to the recent IMF Global Financial Stability Report provides a concise summary of a number of metrics for a range of countries (refer Table 1.1 in Chapter 1, page 5).

Link to article (see page 5)

USD / Debt / Gatekeepers

The attached article is from the Financial Times earlier this week. The last paragraph seems particularly pertinent. While international bodies make progress on public sector accounting disclosure for financial instruments, they appear to lack urgency (from January 2013) and it remains to be seen if they go far enough.  The current uncertainties around government debt demand a greater level of transparency.

Article

Political will – Healthcare

I came across the following Chart in the January 2010 edition of National Geographic showing US healthcare spending per capita relative to other countries – it also shows the implications for life expectancy. While the daily US news flow continues  to highlight the political difficulties in achieving healthcare spending reform, the attached chart is a reminder of why it is required.

I have been impressed with the frankness and perspective of US Budget Office Director Peter Orszag on these issues but ultimately it is about political will from elected representatives.

Short term bias

Has the seemingly cooler weather this summer in some States contributed to climate change being seen as a less important issue? Headlines of lower temperates and higher rainfall / flooding have replaced those of bushfires and sustained exteme temperatures. Seemingly, more emphasis is being placed on more recent observations. Perhaps similar can be said for investing – is undue emphasis placed on recent observations at the expense of medium to longer term trends?

Interference Discount – More evidence

The Federal government’s relatively comfortable budget position has seen the re-emergence of a more active industry policy in Australia. The recent home insulation program is one example of how industry policy can be used to distort markets leading to a rush of resources to a niche sector. When the policy fails, the structural adjustment is painful and, in this case, results in another band-aid being applied. A similar scenario appears to be playing out in parts of the solar industry.