marvin zonis - challenges for president obama
TRANSCRIPT
Marvin Zonis, ProfessorBooth School of BusinessUniversity of [email protected]
Diamond Management & Technology Consultants
DiamondExchange
Challenges for President Obama
March 2, 2009
The Global Economy - Chilling Statistics
European Union Industrial Production (Dec08 vs. Dec07)
-22.3%
China Imports (Jan09 vs. Jan 08)
-42%
China Exports (Jan09 vs. Jan08)
-17.5%
Taiwan Exports to China (Jan09 vs. Jan08)
-55%
Japanese Exports to China (Jan09 vs. Jan08)
-45%
Economic Decline (4thQ08 vs. 4thQ07)
Japan -12.7%
Eurozone -5.9%
U.S. –6.2%
2
Factory Output(Most recent Monthly Data vs. Month Previous Year )
Country Percent Country Percent
Taiwan -43% Spain -15%
Japan -30 Poland -15
Singapore -29 Brazil -15
Hungary -23 Italy -14
Sweden -20 Germany -12
Korea -19 France -11
Turkey -18 U.S. -10
Russia -16 U.K. - 9
www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/02/28/2009
4
The Financial Times, January 30, 2009
International Air Freight Traffic
Challenges for President Obama
Global Psychological Processes:
Humiliation
Fear
Mistrust
“Unemployment is Humiliation”
The New York Times, February 15, 2009
Anxiety – Edvard Munch
8
The Financial Times, January 27, 2009
Trust in US Business
Mistrust
9
Challenges for President Obama
• The United States10
Crawford to Chicago
11
U.S. Economic Plunge
New Home Sales, Jan09: 23,000
Fewest since records started – 1963
Total Housing Starts, Jan09: 464,000 (saar)
Lowest since records started – 1959
Single Family Starts, Jan09: 347,000 (saar)
Lowest since records started – 1959
Jobs Lost in 5 months, Sep08 - Jan09: 2.5 Million
Real Retail Sales, Jan09 vs. Jan08: -10.9%
Number of Containers (TEUs), Port Los Angeles:
Imports, Jan09 vs. Jan08: -14%
Exports, Jan09 vs. Jan 08: -28%
Capacity Utilization, Jan09: 72%
Lowest since 1983
12
Alcohol Purchases for Home Consumption
http://www.fivethirtyeight.com/2009/02/
1414
Haver Analytics, Merrill Lynch, November 17, 2008
Consumer Spending As % GDP
15
Growth of Household Debt
16
My Stuff/Your Stuff in the U.S.
The New Yorker, September 19, 2005
17
Increasing U.S. Home Size
1950’s Average US Home: 963 sq. ft.
1970’s Average US Home: 1,500 sq. ft.
Today’s Average US Home: 2,400 sq. ft.
National Association of Home Builders, Wall Street Journal, CNN, Intel
Average Home Size In Europe: 1,000 sq. ft.
Average Home Size In China: 400-800 sq. ft.
U.S. Home Tenancy in 1971: 3.1 people
U.S. Home Tenancy in 2004: 2.6 people
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More than 80 Square Miles or 215,000,000 Square Meters!
19
Credit Market Debt - 2008
20
The New York Times, December 6, 2008
Changes in Labor Force
21
A New Era of Responsibility, Office of Management and Budget, Feb. 2009
U.S. Underemployment Rate
22
The End of the Up Escalator….
“…men who were in their thirties in 1974 had median incomes of about $40,000, while men of the same age in 2004 had median incomes of about $35,000 (adjusted for inflation). Thus, as a group, income for this generation of men is, on average, 12 percent lower than those of their fathers‟ generation. While factors other than cash income also contribute to economic mobility, these data challenge the two-century-old presumption that each successive generation will be better off than the one that came before.”
The Pew Charitable Trusts, 2007
U.S. Fiscal Deficit
The Wall Street Journal, February 14, 2009
FY 2010 OBAMA BUDGET
Mandatory Spending Amount ($billions)
Medicare $ 453
Medicaid 290
Social Security 695
Other Mandatory 571
Net Interest 164
DOD + Nuclear Weapons 555
Iraq and Afghan Wars 130
Homeland Security 43
TOTAL MANDATORY $2,901
TOTAL FY2010 BUDGET REQUEST $3,552
PERCENT MANDATORY 81.7%
PERCENT DISCRETIONARY 18.3%
http://www.whitehouse.gov/omb/ + WSJ, O2/27/09
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U.S. Spending
26
Major Long-Term Fiscal Exposures(Fiscal Years 2000/2006)
Government Accountability Office, U.S. Government
27
Total Tax Revenues as % of GDP
The Economist, October 14, 2006
28
Taxes Paid in the U.S.
The New York Times, October 31, 2007
29
A New Era of Responsibility, Office of Management and Budget, February „09
Share of Income to Top 1 Percent
30
Foreign vs. Domestic Holders of U.S. Treasuries
The New York Times, November 4, 2006
The New York Times, February 21, 2009
32
U.S. International Spending($ billions)
www.whitehouse.gov/omb/budget/fy2008/and fy2010
Category 2008 2010 (Request)
DOD 483.2 533.7
Special
Expenditures 141.7 133.0
Total DOD 624.9 666.7
DOE/Nukes/
Miscellaneous 22.6 25.5
National
Defense 647.5 692.2
Non-Defense
International
Affairs
38.3 51.7
The D.N.I. Dennis Blair on the Crisis
“The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests”…Loss of faith in U.S. stewardship of the global economy “…may make it difficult to achieve long-time US objectives, such as the opening of national capital markets and increasing domestic demand in Asia.” But the crisis also presents an opportunity, for the U.S. to lead the way out of an economic crisis, which “looms as the most serious one in decades, if not in centuries.”
The Wall Street Journal, February 12, 2009
Challenges for President Obama
• Europe34
35
West European Banks Loans to Central and Eastern Europe
Bank for International Settlements
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Is This the Tip of the Iceberg?, Hennessee Group Research, 2-11-09
External Debt to GDP
Challenges for President Obama
• China37
38
Humiliation
Sun Yat Sen: China in 1924 was “a heap of loose sand” that had “experienced several decades of economic oppression by the foreign powers” and “as a consequence is being transformed everywhere into a colony.…”
Chiang Kai-shek: Writing in 1947, “During the past hundred years, the citizens of the entire country, suffering under the yoke of the unequal treaties which gave foreigners special „concessions‟ and extra-territorial status in China, were unanimous in their demand that the national humiliation be avenged, and the state be made strong.”
Mao Zedong in 1949: “Ours will no longer be a nation subject to insult and humiliation. We have stood up.”
Orville Schell, The New York Review of Books, August 14, 2008
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Chinese Nationalism: 2007
40
2008 Chinese Nationalism
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2008 Chinese Nationalism
Since 2006 More Office Space Built in Beijing Than the Entire Stock in Manhattan
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http://mpettis.com
China
The Financial Times, January, 2009
Prime Minister Wen on Electricity
After falling since July last year, electricity output and power demand started to turn around significantly since mid-February this year. During the middle 10 days of February, electricity output rose 15% yoy and 13.2% in sequential terms. In particular, electricity output in southern provinces, the major industrial area in China which have been hit the most by the global recession, also increased 10% yoy and 8% in sequential terms.
44
E mail from [email protected], March 1, 2009
45
Brad Setser: Follow the Money, February 11, 2009
China Monthly Exports and Imports($ billion)
46
Financial Times, February 12, 2009
The Problem
47
Consumer Goods
http://images.businessweek.com/ss/07/07/07
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China‟s Economy by Geography
49
Shenzhen Chengdu
5050
Financial Times, October 10, 2008
Arable Land
51
Water Shortage
Financial Times, February 26, 2008
Challenges for President Obama
• Russia52
53
Russian Highway System
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Vladimir Putin: Humiliation
“The collapse of the Soviet Union was the greatest geopolitical catastrophe of the century.”
State of the Nation Address, April 25, 2005
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Dmitry Medvedev(September 1, 2008)
"Russia, like other countries in the world, has regions in which it has privileged interests. . . In these regions are located countries which have friendly relations... Russia will work attentively in these regions . . . these "privileged” regions included states bordering Russia, but not only those.
56
Russian Industrial Production
The Economist, February 28, 2008
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Russia Under Putin
Martin Wolf, Financial Times, February 13, 2008
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The Borghese Collection
“Its richness was the result of unscrupulous appropriation and tyrannical extortion by the „Cardinal Nepote‟.”
Paola Mangia describing the art collection of Cardinal Scipione, nephew of Pope Paul V, 1605-1621
5959
RIA Novosti © 2008
Where Russians Save Their Money
Ambassador Sergei Kislyak
Challenges for President Obama
• The Middle East61
President Asaf Ali Zardari
The Presidents and The General
http://www.swamppolitics.com/news/politics/blog/2008/07/21
The President and The �Prime Minister
http://images.google.com/imgres?imgurl=http://www.nypost.com
Israeli Settlement
www.flickr.com/photos/ 8430129@N06/523422500/
Settlement
www.tadamon.ca
Abu Ghinim Settlement
www.imemc.org
Har Gilo
photo.dennisfox.net
Israeli Settlements
WWW.commons.wikimedia.org/ wiki/File:West_Bank
70
The Financial Times, February 13, 2009
Israeli Mathematics
�The New Government?
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Closing Down Free Expression
The Candidates
73
Ayatollah Khamene‟i
Challenges for President Obama
• Energy75
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Oil: Discovery and Production
Association for the Study of Peak Oil, 2007
7777
World Economic Outlook, International Monetary Fund, 10/2008
Oil Production Costs
7878
Financial Times, October 29, 2008
Projected World Oil Production
Challenges for President Obama
• Climate Change79
80
CO2 Emissions
Challenges for President Obama
• So?81
A Miracle Needed?
MIL
LIO
NS
CU
RR
EN
T P
PP
$GROSS DOMESTIC EXPENDITURE ON RESEARCH & DEVELOPMENT
OECD Main Science & Technology Indicators 2008-2
The Miracle?
Marvin Zonis, ProfessorBooth School of BusinessUniversity of [email protected]
Diamond Management & Technology Consultants
DiamondExchange
Challenges for President Obama
March 2, 2009