8 Fascinating Reads

Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are eight fascinating ones I read this week.

The benefits of aging
The New York Times mentions an upside of the aging population:

With more than 200,000 boomers exiting the labor force each month through retirement, the rule of thumb that the economy needs to add 140,000 jobs per month to keep up with population growth no longer holds. The new normal is 100,000, which is why 150,000 new jobs a month has brought the unemployment rate from 9.5 percent to 7.9 percent over the last two years.

Welcome back
Charles Fishman writes in The Atlantic about the growing trend of insourcing:

After years of offshore production, General Electric (NYSE: GE  ) is moving much of its far-flung appliance-manufacturing operations back home. It is not alone. An exploration of the startling, sustainable, just-getting-started return of industry to the United States.

Raging or aging?
Analysts at Goldman Sachs (NYSE: GS  ) made a bold call last week: The decade-long bull market in gold may be at a turning point:

Medium term ... the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in US real rates on better US economic growth. Our expanded modeling suggests that the improving US growth outlook will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013.

Accountants earning their pay
Bloomberg shows how Google (NASDAQ: GOOGL  ) keeps its tax bill low:

The Internet search giant has avoided billions of dollars in income taxes around the world using a pair of tax shelter strategies known as the Double Irish and Dutch Sandwich, Bloomberg News reported in 2010. The tactics, permitted under tax law in the U.S. and elsewhere, move royalty payments from subsidiaries in Ireland and the Netherlands to a Bermuda unit headquartered in a local law firm.

New normal
Financial blogger and advisor Josh Brown shares a friend's response regarding why he's not eager to buy a home:

1. Many qualified younger buyers are in industries/on career paths that move frequently. My wife and I recently moved to Texas for her job on the management track at a manufacturing company. Her job will move her within 3 years, unless she works hard enough/lucks out enough to skip a step in the promotion chain. That next location could be anywhere from Colorado, Texas, Ohio or Singapore. In our position, why take the risk that liquidity is a major problem when we have to move? We're paying a 5% premium to rent in this environment for a liquid housing situation. We'll have more visibility on our situation in a year, but any property acquired would likely have to be a desirable rental property once we are done with it.

2. The long-term real return of housing according to Shiller's work is something like .06% annually since the start of the 20th century. Why get embroiled in a highly leveraged investment vehicle with limited liquidity that displays such a paltry real return, especially when prices aren't as bottomed out as they were 18 months ago?

3. I am much more comfortable devoting excess cash to funding an emergency fund, building retirement balances and other savings.

Incoming
The National Intelligence Council predicts China will become the world's largest economy in 2030. The New York Times writes:

Russia's clout will wane, as will the economic strength of other countries reliant on oil for revenues, the assessment says.

"There will not be any hegemonic power," the 166-page report says. "Power will shift to networks and coalitions in a multipolar world."

Go to school and stay in school
Ben Casselman writes in The Wall Street Journal about millions of people dropping out of college with student loans:

According to a 2011 study by the Institute for Higher Education Policy, a Washington, D.C.-based research firm, 58% of the 1.8 million borrowers whose student loans were began to be due in 2005 hadn't received a degree. Some 59% of them were delinquent on their loans or had already defaulted, compared with 38% of college graduates. The problem has almost certainly worsened since, as the recession wiped out job opportunities for less-educated workers.

How to make better predictions
Edge.org has a really great 45-minute interview with University of Pennsylvania professor Phil Tetlock on why we're so bad at predictions and what you can do about it. Watch it here.

Enjoy your weekend.


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