Edward Hugh shared a link. 2 hours ago Demographics is no longer a dusty concern of academics and eccentrics, says John Dizard *************************************************** In European finance, last week’s Portugal government meltdown was a sign that demographics is moving from a dusty concern of academics and eccentrics to a central political and economic issue. Most of the time, changes in the demographic profile of a country (or, for portfolio managers, a credit) move in decades-long cycles. In Portugal, though, the voters are making loud noises about how all the young people are leaving the country or not having children. This national-demise trend has accelerated alarmingly since the euro crisis in the summer of 2011. Neither the IMF nor the eurocracy has been taking account of the departure of skilled young people from the countries they have been “supporting”. Lately, though, the footnotes in the fund’s reports suggest that its staff is reducing absurdly overestimated growth rates based on future workforces that won’t be there. In southern Europe, demographics have become the stuff of new conspiracy theories – or analyses, depending on your point of view. Edward Hugh, a Barcelona-based economist with an open bent for demographics, says, “At first people in Spain thought Germany was taking over Europe with vendor financing. Now they think the Germans are stealing their better-educated young population to pay their pensions.” There is no German Pied Piper of Hamelin, or room full of Hugo Boss-suited villains, luring away young Spanish engineers. Labour markets and the Schengen rules on free movement do that. Germany has reversed its working-age population decline in the past two years, thanks to skilled European immigrants. It’s not just state pension burdens and tax revenues that are shifting with European demographics. Corporate bond and equity issuers are also much more dependent on diverging demographic prospects. Before, say, 1934, nuclear physics was of interest to chalk-dusted academics. After that, the field started to grow into a vast and powerful industry. Demographic bombs take longer to detonate than the nuclear variety, but they are a serious threat to southern Europe, Japan, Korea and China. As Edward Hugh says, “The first stage is when the longhairs come in [to the councils of state]. The second is when the bomb goes off and they lose control.”
Posted on: Sat, 06 Jul 2013 10:32:34 +0000
Trending Topics
Recently Viewed Topics
© 2015