Investments: Is China really the best place to invest? - by Larry Swedroe

One of my major focuses is demonstrating that so much of the "conventional wisdom" of investing is wrong. One of the more persistent beliefs held by investors is that if you want high returns, you should invest in countries experiencing rapid economic growth.

Antti Ilmanen, in his book Expected Returns, reports that from 1993 through 2009, China's GDP growth rate averaged more than 10 percent. If ever there was a test that would demonstrate that high rates of economic growth translate into high investment returns, this should have been it. Yet, Ilmanen found that U.S. dollar-based investor would have earned negative returns over the period. The negative return has now been extended to 19 years as the iShares Trust FTSE China 25 Index Fund (FXI) returned just 2.1 percent in 2010, and then lost 17.7 percent in 2011. 
 
If the Chinese example doesn't convince you that the conventional wisdom is wrong, perhaps the cumulative weight of the evidence from the following studies will: One study found that for the period 1900-2000, the real return from stocks and a country's growth rate was negatively correlated (-0.27); another study ranked 83 countries and found that the lowest growth countries outperformed the fastest growing countries by almost 7 percent a year.

Note EU-Digest: "therefore, based on the above - and your investment security: invest in Europe. It will pay off, in addition to giving you, the investor, the security of knowing your capital is invested in a democratic society, which can not suddenly change the rules on foreign investments without due process."


For more: Is China really the best place to invest? - CBS News

New EU regulations on herbal medicines come into force

New European Union rules have come into force banning hundreds of traditional herbal remedies. The EU law aims to protect consumers from possible damaging side-effects of over-the-counter herbal medicines.

For the first time, new regulations will allow only long-established and quality-controlled medicines to be sold.

For more: BBC News - New EU regulations on herbal medicines come into force

Germany: no risk of chain reaction to Portugal aid |

Germany's deputy foreign minister told Reuters on Thursday Portugal's decision to seek aid from the European Union had averted risks to the country and to the eurozone and there was no risk of a chain reaction.


For more: Germany: no risk of chain reaction to Portugal aid | Reuters

The Netherlands: Designer clothes improve your chances in landing a job

A study, at Tilburg University, in the Netherlands, involved four experiments found that wearing well-known brand labels makes you appear wealthier, more worthy of respect and can even help you bag a better job.

The researchers tested reactions to well-known brands when judging status and wealth, responding to an invitation to take part in a survey, assessing a potential employee and being asked to give to charity.

In one test, women who wore a well-known brand on their polo shirt were given almost twice as much money when they solicited for charity than when they wore non-designer outfits. In another, wearing branded clothes not only increased a man's chances of being judged suitable for a job, but even increased the salary those surveyed would offer him by 9 per cent.

EU-Digest

Egyptian Revolution : A political Tsunami or a sign of changing realities? - a special EU-Digest report

It all started in a relatively unknown Tunisian town of Hammamet and is now threatening to change political structures of possibly the whole Arab World in the years to come. Political demonstrations are flaring up throughout the Arab world. Anger over authoritarian governments, rising prices and high unemployment has erupted in Yemen, Morocco, Algeria and even Saudi Arabia.

Yes, even Saudi Arabia, one of the economically strongest Arab nations, is a candidate for popular unrest. Saudi Arabia is going through a difficult path of its history and the only things that unite its people apart from religion is its enormous oil money. Democracy was virtually a ‘word’ unknown for many Saudi’s Peoples movements are very rare there till recently, but now, even there, we see manifestations happening. The call for action in this major oil exporter, where public protest is not tolerated, therefore comes as an open defiance of the authoritarian rulers there.

A popular unrest, however, like that what happened in Tunisia or is happening in Egypt now and threatening to start in Yemen, Jordan and elsewhere in the Arab world, is unlikely to happen in Saudi Arabia, as the Kingdom is enjoying complete support from energy greedy countries that include the US, the EU, China and India. And as long as Saudi will provides them with oil and without too many complications, the Saudi Kingdom will get the support it needs to fend off any protests from within.

Its different in Egypt. As President Hosni Mubarak fights for survival in the face of rapidly growing protests on the streets of a country he has ruled with an iron hand, diplomats and analysts across the region are bracing for a period of growing instability that presents fresh challenges to a host of players.

"An unexpected turn of events is probably an understatement. Egypt is now witnessing a major political tsunami with consequences for its surrounding region," warns an Arab diplomat from a Middle Eastern country who served in Cairo until last August. Speaking to CBS News on condition of anonymity, the diplomat warned of "a variety of dangers" following a regime change in Egypt. Going forward, he listed the emerging possibilities, ranging from "a significant rise of Islamic militants in Egypt who will take a harder line towards the U.S. and Israel," to "Egypt becoming a symbol of change for others to follow."

While President Mubarak for now appears to be defying the odds, Egypt is becoming increasingly locked in a state of growing paralysis, making a regime change, the longer Mubarak postpones to leave, an ever increasing risk to turn the situation into a bloodbath

The underlying problem in all this is also that historically the West, led by the US and to a certain extend also by  some of the members states of the EU, is speaking out one side of their mouth when it preaches "democracy", and on the other side, when it concerns their "political and security objectives". Even going as far as propping up totalitarian Governments to achieve the latter.  This hypocritical policy, unfortunately, is not only applied to the Middle East, but everywhere else in the world. That party basically is over.

The world is rapidly changing, and like it or not, the West will have to come to terms with this new reality and adjust their long-term strategy accordingly. Today, not one nation on earth has the sole power anymore to set or regulate the state of events in the world. More and more we will see that regional and even global consensus will be required in any potential conflict, be it economic, social or political, to solve problems.  

EU-Digest
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Trichet Says Euro Region Needs `More Ambitious' Rules to Keep Fiscal Rigor

European Central Bank President Jean-Claude Trichet called for “more ambitious” rules to force member countries to maintain fiscal discipline and punish those who don’t.

“For the euro area, more ambitious reforms are needed to ensure the smooth functioning of monetary union,” Trichet said in a speech at the World Policy Conference in Marrakech. There must be “greater automaticity, accelerated timelines and reduced room for discretion in procedures.”

European Union finance ministers meet in Luxembourg on Oct. 18 to consider European Commission proposals to fix budget management and avoid runaway deficits that led to Greece’s near- default this year. France is balking at calls for the faster imposition of sanctions on deficit-ridden governments, putting it at odds with Germany and the ECB over how to prevent a repeat of the debt crisis.

For more: Trichet Says Euro Region Needs `More Ambitious' Rules to Keep Fiscal Rigor - Bloomberg

Google: The Virtual Dictator of the Digital Economy - by Miachael Gray

At the surface it seems such a simple question to answer. However, to find the answer we need to dig a little deeper and understand the complexities of the modern internet and electronic commerce.

Google’s dominant share of the search landscape puts it in a unique position. For many consumers, Google is the internet, or at the very least Google is the start page of the internet and doorway to the rest of the virtual world. For most web publishers and site owners, Google is responsible for the lion’s share of their traffic. In some cases Google can account for 60-90% of a website’s overall site visitors. For an ecommerce website getting traffic from Google can be the difference between making a healthy profit or going out of business.

Google has cornered the market on traffic. They control who is listed on the organic side and set pricing, some times at astronomically uncompetitive levels, for paid advertisers. It has become a Google world and there wasn’t anything you could do to change it. Google operates in a market without government intervention, oversight or regulations.

Google is taking very aggressive steps to retain the market share that they fought to achieve. By giving away free services like GMail, Google Reader, and Google Analytics, they price competition out and keep users locked into their offerings and their integrated search engine.

But Google isn’t stopping there. Now they want all your data.

New initiatives like personalized search, and web history seek to gain a deeper level of access to your private world and all of the websites you visit. Google ‘bookmarks’ gives them access to the sites that you think are important, noteworthy or worth revisiting. Simply put - Google wants to mine your personal data and life to find out as much as it can about you. They want to learn how to market to you more effectively, and how they can extract the most profit from you.

While they may not have set out with this goal in mind, for many people Google knows more about them than the government.

While Google may be too powerful they’ve crafted a public image that is exactly the opposite. With their college-campus-like work environment, bean bag chairs, 6o’s throwback lava lamps, the image they created goes hand-in-hand with their “do no evil motto”. Google is too powerful, they know it, and that’s why they are willing to give you so much for free. The less attractive and harder they make it for you to change, the more they have you tucked neatly into their back pocket.

Note EU-Digest: Even though the above report dates back to 2007 it has become more actual than ever.

A recent proposal by Google which would give them the digital rights to millions of hard-to-find books has not only Google rivals but also consumer watchdogs, academic experts, literary agents, state governments and even foreign governments up in arms.

In an opinion filed by the US government it states they believe a proposal to give Google the digital rights to millions of hard-to-find books threatens to stifle competition and undermine copyright laws. The justice department also raised concerns that Google's partnership with the participating US publishers could turn into a literary group that would wield too much power over book prices. Judge Chin has scheduled a hearing for February 18 to consider approving the class-action settlement.

For more: Google The Virtual Dictator of the Digital Economy

ALDE Group in the European Parliament : European Elections June 4 : Speaking out for your Civil Liberties: "First they came"

For the video on "Speaking out for your Civil Liberties" by the Alliance of liberals and Democrats for Europe click on this link

Speaking out for your Civil Liberties: "First they came"

European Liberals and Democrats launched a campaign highlighting the value of civil liberties and raising awareness about possible infringements of fundamental rights such as the freedom of speech, the right to privacy and the right to transparent law-making. See for yourself, if your civil rights are protected - click on the movie here.