The Peanut Gallery

Statements, comments and forecasts that have no substance, but just might turn out to be relevant.

1. The price of copper has dropped 30 percent since early August, reaching a 14-month low. Because businesses in China have been using copper as a financing tool to bypass the tightening of credit markets, the repercussions on the Chinese economy of a sustained drop in the copper price could be widespread. Because of loan restrictions by Chinese banks, Chinese companies have been taking cheap loans (this is allowed) to purchase massive amounts of copper on the world markets, storing it in warehouses and using it as collateral (80%) for credit to invest in other sectors. PG: This could be serious. Apparently all copper purchases out of China in the last 3 months were for this purpose.

2.Think about this.There are 1.3 billion muslims on the planet. About 20% of world population. They are gripped by civil wars, revolutions and terrorism. While this is happening, world equity markets have hardly blinked. No contagion. Greece (Pop. 11mil) wobbles, Europe gasps and world markets panic. PG conclusion: The world muslim populations contribute about zero to world productivity. Interesting how the far left and Islamic extremists have formed a coalition. Some would say that opposite parasites attract.

3.FT: The Rhodium Group, an economic consultancy, predicts Chinese groups will invest up to $1,000bn in overseas acquisitions over the next decade, with a big slice of this investment heading to Europe. Figures from Dealogic show the taste for Europe is already developing rapidly – with Europe accounting for a full 30 per cent of Chinese overseas m&a in the year to date, up from just 6 per cent for the same period last year. PG: The Chinese are using good economic and political sense, buying on the weakness.

4. The world's decline in fertilility has been staggering. In 1970 the total fertilility rate was 4.45 per family. It is now 2.45 worldwide and lower in some surprising places. Bangladesh's rate is 2.16 having halved in 20 years. Iran's fertility fell from 7 in 1984 to just 1.9 in 2006. Countries with below-replacement fertility include Brazil, Tunisia and Thailand.

5.The average life expectancy in the US in 1935 was 61. So FDR set the retirement age four years above the average life expectancy. So much for compassion. He (they) assumed you would work into what was for them advanced old age. Today life expectancy is 79 and within a few decades is estimated to be 90. Under today's laws one could retire at 62 or 65 or 67 and, if you just lived an average lifespan, get far more in benefits than you paid in. Remember, 90 will just be the average. So when someone suggests that the retirement age should be raised to (gasp!) 70 in a few decades, just smile and think back to what FDR would do.

6.Fun fact: In most of Mexico, one does not need a driving test to get a drivers licence. The Economist writes "Six out of ten road deaths worldwide take place in 12 countries, one of which is Mexico".

7.A closer look at the Chinese economy reveals that an astonishingly large part of what is going on today is investment in urban residential real estate, which is growing at more than 25% a year. This looks a lot like a real-estate bubble --with Chinese characteristics. As for debt problems, Chinese bank loans were 97% of GDP in 2008. Today they're at 120%. All of which makes us wonder if China's recent gloating at US misfortunes might just prove a tad premature. Niall Ferguson, Newsweek.

8. The Shanghai Exchange peaked at 5900 in Oct of 2008. Today it is at 2450, a fall of 58%. In comparison The Dow is down 13% over the same time period. The difference being that China has $3 trillion in reserves, while the US owes over $14 trillion, and can print and devalue its currency, almost at will. PG: Clearly this is an unannounced (US) policy decision which might eventually backfire since a country's economic strength is measured by the strength of its currency. In 2006 China's holdings of US treasuries  were 70% of its reserves.
Today it stands at 43%. Follow the money.

9.The Beijing Power and Desalination Plant is a 26-billion-renminbi technical marvel: an ultrahigh-temperature, coal-fired generator with state-of-the-art pollution controls, mated to advanced Israeli equipment that uses its leftover heat to distill seawater into fresh water. The desalted water costs twice as much to produce as it sells for. Nevertheless the government is moving to quadruple the plant's desalinating capacity, making it China's largest. In some places, this would be economic lunacy. In China it is economic strategy. As it did with solar panels and wind turbines, the government has set its mind on becoming a force in yet another budding environment-related industry: supplying the world with fresh water.

10. Of the billions of dollars in cash that the U.S. shipped to Iraq during the war, "hundreds of millions if not billions of dollars . . . was stolen by senior Iraqi officials for their own personal gain," the Special Inspector General for Iraq reconstruction tells CNBC. That chunk of cash, a subset of the tens of billions the New York Fed has sent overall, became controversial over the summer because neither the New York Fed nor the Iraqi government would provide enough information to document what happened to it. PG: About par for the course in a corrupt region.

Nobody gets to live life backwards. That is where your future lies. - Ann Landers