Archive for August 24th, 2011

Linking US demographics with equity markets

August 24, 2011

This blog has mentioned couple of times – ignore demographics at your own peril (see my paper on this).

This new paper from FRBSF econs - Zheng Liu and Mark M. Spiegel – says demographics could lead to lower stock market indices in future. As baby boomers become baby busters, they would be moving away from equity as an asset class leading to its decline.

They develop a ratio – middle-age cohort, age 40–49, to the old-age cohort, age 60–69-  and call it the M/O ratio. This M/O ratio depicts P/E ratio of S& P index really closely since 1954:

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South Sudan introduced new currency

August 24, 2011

South Sudan recently become the newest country of the world on 9 Jul 2011 (I was reading this article which said despite 22 years of fall of Berlin Wall, around 28 new border wall have come up since the fall. In 44 years before the fall only 11 new borders came up. Not sure whether South Sudan is included or not).

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Biggest threat for urbanisation – earthquakes/natural disasters

August 24, 2011

Here is another superb article from City Journal. This one is by Claire Berlinski who is a contributing editor.

She says seismic risk poses the biggest risks for cities in the world. There are two reasons for this. One, an earthquake causes more damage than anything else. Two, most big cities end up naturally being in the seismic danger zone. People like to live near water and fertile ground. Over the millennia, seismic activity creates coasts, valleys that channel water, temperate microclimates. So people come and settle at these places and become big cities. As per Claire, 8 of top 10 cities are in seismic zone.

So cities should be working to address this huge risk. And there are some good examples from recent Japanese, NZ and Chilean earthquakes:

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