An interesting post on ING’s new eZonomics blog points the reader to a new study on older workers and health.  The findings — as reported in The Lancet — don’t at first glance look terribly surprising:

A poor work environment and health complaints before retirement were associated with a steeper yearly increase in the prevalence of suboptimum health while still in work, and a greater retirement-related improvement; however, people with a combination of high occupational grade, low demands, and high satisfaction at work showed no such retirement-related improvement.

In simple terms, this is saying that if a worker is happy, their health is better. Anyone who has ever had a bad job could have told them that! But the study, of course takes it further.

Working life for older workers needs to be redesigned to achieve higher labour-market participation.

This has broad implications, given the trend away from final salary pensions and the general view that workers are going to have to work longer than in previous generations. Companies that are faced with workers who cannot easily retire because of a lack of pension savings, that need people to work longer  and that are subject to increasing anti-age discrimination will need to take the employment needs of older employees on board.

It may not be easy. As the ING post points out, the OECD looks at the issue in a 2006 report entitled “Live Longer, Work Longer”. It began its report:

In an era of rapid population ageing, many employment and social policies, practices and attitudes that discourage work at an older age have passed their sell-by date and need to be overhauled. They not only deny older workers choice about when and how to retire but are costly for business, the economy and society.

Then comes the recommendations:

– There must be strong financial incentives to carry on working and existing, subsidised pathways to early retirement have to be eliminated.
– Wage-setting and employment practices must be adapted to ensure that employers have stronger incentives to hire and retain older workers.
– Older workers must be given appropriate help and encouragement to improve their employability.
– A major shift in attitudes to working at an older age will be required on the part of both employers and older workers themselves

Is any of this being done?

This week has seen a rush of key policymakers and business executives from Africa flocking to London. Apart from Sierra Leone, oil and gas executives have been discussing the outlook for Equatorial Guinea, a small central African state rich in oil.

Equatorial Guinea made a relatively rare foray into the global news earlier this month for a presidential pardon of  former British army officer Simon Mann, who was serving a 34-year prison sentence in the country for his role in a failed coup d’etat in 2004.

Gabriel Obiang Lima, vice minister of mines, industry and energy, was in London to talk about his ambition for the country. “Our aim is not to be the Kuwait of the region. It’s to be the Singapore of the region,” he told dozens of business executives in a conference in London on Wednesday.

“Equatorial Guinea has to have other industries that are not dependent on oil and gas.”

But it has a long way to go towards establishing a Singapore-like country. The U.S. State Department says application of the laws remains selective and corruption among officials is widespread, and many business deals are concluded under nontransparent circumstances.

The vice minister says Equatorial Guinea is investing heavily in ports, health care and infrastructure.

“Talk is cheap but we have to deliver,” he said, wrapping up his 40-minute speech.

The title of this post is taken from two sources. One was a headline in British tabloid, The Sun, in January 1979, when then-prime minister James Callaghan denied that strike-torn Britain was in chaos. The second was the title of a 1975 album by prog rock band Supertramp that famously showed someone sunbathing amidst the grey awfulness of the declining industrial landscape.

Are we now getting blasé about the latest crisis? Not so long ago, perfectly respectable economists and financial analysts were talking about a new Great Depression. The world was on the brink, it was said. Now, though, consensus appears to be that it is all over bar the shouting. The world is safe.

Wealth managers at Barclays have gone as far as telling their clients to get over it.

Move past the crisis …. The past year’s events were deeply traumatic for most investors, but now is the time to move on, and take a more “business as usual” approach ….”

Such bullishness may not be comforting to the record numbers of jobless in parts of the world, but it is bordering on consensus. It is left to the likes of perma-bears such as  Nouriel Roubini to try to burst the bubble of optimism on which many are floating. The economist began one of his latest articles bluntly:

Think the worst is over? Wrong.

Roubini’s main point is that unemployment is likely to get worse rather than better and that many U.S. jobs that have been lost will not come back.

Now, there can obviously be a disconnect between markets and economics, but the former tends to be based on assumptions about the latter. So which is right? Are we out of the woods? Or should Supertramp be firing up their keyboards again?

Even the best golfers -- yes, you Tiger Woods -- systematically miss the opportunity to score a "birdie" (when a golfer sinks a ball one stroke below par, or what is expected) out of fear of having a "bogey" (or taking one stroke more than par), according to a study by two University of Pennsylvania professors.

However, playing it safe has its own costs in golf and business, Devin Pope and Maurice Schweitzer, professors of economics and psychology at the Wharton School, said in their paper entitled "Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes."

The professors studied putts during pro golf tournaments and their research suggested the "agony of a bogey seems to outweigh the thrill of a birdie." They calculated that type of decision-making bias costs the average golfer about 1 stroke during a 72-hole tournament, translating to a combined loss of about $1.2 million in prize money per year for the top 20 golfers.

"This research provides evidence that people work especially hard in order to avoid losses," Pope said.

The researchers found that golfers avoid the possibility of loss by playing conservatively when they could do better than par, but will try harder if they are at risk of coming in above par. Pope said "loss aversion" is part of a growing field of behavioral economics, which explores how human psychology impacts markets and business.

In a business context, the professors said par might be equated to quarterly earnings or investors' approach to selling or holding on to stocks depending on what they initially paid for the shares.

The professors said their work challenges theories that suggest bias in decision making does not persist in markets. They used data from 230 PGA Tour golf tournaments between 2004 and 2009, concentrating on 2.5 million putts attempted by 412 golfers who each made at least 1,000 putts.

Pope, who does not golf, and Schweitzer, who only occasionally plays, said the study shows even experts in a subject suffer from bias in high-stakes settings.

"The bottom line is this," said Schweitzer, "If Tiger Woods is biased when he plays golf, what hope do the rest of us have?"

(Reuters photo by Mick Tsikas)

You know the American dollar is in trouble when… 
There is plenty of discussion about the fate of the U.S. greenback these days, what with multi-trillion dollar rescues still flowing through the financial system. But dollar bulls might feel just a little trepidation to see Jay Johnson, former head of the U.S. mint — the folks that print the stuff — become a spokesperson for gold. Johnson actually passed away last month, but he can still be seen on TV infomercials, singing gold’s praises.  

Gold this week rallied to a new record high above $1100 an ounce, even as the dollar sank to a 15-month low against a basket of major currencies. 

Dallas Fed President Richard Fisher said this week he was mindful of the possibility that the central bank’s pledge to keep interest rates at rock-bottom lows for an “extended period” might be fueling the carry trade. That’s when investors use a “cheap” low-yielding currency to fund trades on riskier assets with loftier returns.

He added that the dollar’s decline had not been disorderly so far, but that he would expect the FOMC (the Fed’s policy-setting committee) and other authorities to craft an appropriate remedy if that were to happen.

New German Finance Minister Wolfgang Schaeuble is winning over his European Union colleagues with a commitment to reduce Germany’s public deficit at his debut meeting of EU finance officials.

 ”I have great confidence in colleague Schaeuble,” Dutch Finance Minister Wouter Bos said on arrival for the Ecofin meeting in Brussels on Tuesday.

Germany expects its deficit to hit 3.7 percent of gross domestic product (GDP) this year, and roughly 6 percent in 2010, double the European Union limit of 3 percent.

But the veteran of German politics, a tax lawyer, convinced other EU finance ministers he would put Germany’s public finances in order. The 67-year-old told reporters he expected the Commission to propose that Germany would get it deficit within the EU limit in 2013.

“I think when one listens to Minister Schaeuble, one immediately has the impression one is listening to a very credible politician,” European Economic and Monetary Affairs Commissioner Joaquin Almunia said after a meeting late on Monday of euro area finance officials, the so-called Eurogroup.

Schaeuble, in a wheelchair since he was shot and nearly killed by a mentally ill man at a campaign rally in 1990, is seen as one of the most talented German politicians of his generation and may have become chancellor himself had he not become ensnared in the funding scandal that damaged his Christian Democrats (CDU) and former mentor Helmut Kohl a decade ago.

He was not Merkel’s first choice for finance minister but by picking him last month she electrified German media because Schaeuble is expected to be a forceful and possibly uncomfortable presence for Merkel in a cabinet largely devoid of strong personalities.

Spanish Economy Minister Elena Salgado said Schaeuble showed a strong commitment to respecting the EU’s deficit rules, enshrined in the Stability and Growth Pact. “I don’t think there was any doubt on our part as to his absolute commitment to comply with the provisions of that pact,” she said after Monday’s Eurogroup.

Gordon Brown is truly having a rough time. Rebuffed by the United States, International Monetary Fund and others for floating the idea of a tax on financial transactions at this weekend’s G20 meeting, he has now got short shrift from the Cayman Islands.

McKeeva Bush, the veteran Caymanian politican who is now premier of the British Overseas Territory, popped in to the Reuters London headquarters for a chat this week. His main concern was to explain plans for making the islands an easier place for financial services personnel to live in. He would like some of those 8,000 hedge nearly 10,000 funds that are registered there to be more than just brass plaques. But, when asked, he also had time to dismiss the idea of a transaction tax out of hand.

“That’s an old hat. I have been hearing about it for 25 years. It’s just not practicable. It will not work.”

And just in case the point was missed:

“We have looked at it and we do not think this is something that would work.”

Bush would not be drawn on the idea that a tax on transactions could, metaphorically speaking, sink his Caribbean island homeland under the waves. But Paul Byles, a government financial services consultant who accompanied the premier, did touch on the liquid nature of the issue:

“Tax flows, and they will move somewhere else.”

In July, Stella Dawson, Reuters’ global treasury editor, posted some thoughts on what she called the Summer of LUV, a description of a three-pronged global economic recovery based on the idea of different patterns in the United States, Europe and Asia. Since then her LUV thesis has been picked up widely. Here is her update (as originally published in The Times newspaper).

Financial policymakers won round one. Their $5 trillion, shock-and-awe campaign of tax cuts, spending programmes and super-cheap official money has wrested the global economy from the jaws of a deep and damaging depression. Now the real test begins: withdrawing this massive monetary and fiscal support without letting their economies slide back into recession.

The outlines for the withdrawal strategy started to take shape this week from major central banks. Many analysts this summer were looking for a LUV-shaped global recovery. That’s LUV as in a long, slow and L-shaped recovery in Europe (steep drop, flat-lining); a U-shaped rebound in the United States (the same but an earlier recover); and a V in Asia, namely a steep downdraft, then off to the races again.

But in recent weeks it started to feel more like a V-shaped one. China is powering ahead and set to deliver 8 percent growth this year. The United States posted a robust 3.5 percent upswing in the third quarter. Australia, Norway and Israel are sufficiently confident that they have started raising interest rates again. Manufacturing and services indices worldwide for October turned upward.

But the underlying factor remains that this economic recovery, whatever shape it might be, is a drug-induced one. It is kept alive by the unprecedented injection of money into banks coffers and citizens pockets. Only when the extraordinary measures are withdrawn will it become clear whether economies truly have regained resiliency.

Central bankers have tip-toed into those waters. The Federal Reserve last Wednesday said it will trim the amount of mortgage agency debt it buys to $175 billion from $200 billion, a minor adjustment in a $3 trillion market and one it described as technical in nature. Nevertheless, it marks its second baby step toward weaning the U.S. housing market, the epicentre of the credit crisis, off  life support.

The European Central Bank on Thursday joined in. President Jean-Claude Trichet said markets did not expect the ECB in December to renew its special programme of lending unlimited funds to banks for one year at very low rates. Decoding central bank speak, that means it is getting ready to withdraw support. Only the Bank of England on Thursday cranked up the machine. Yet its 25 billion pound expansion of asset purchases from banks to 200 billion pounds was half the increase expected. Little surprise it decided on more support when U.K. output has fallen by 6 percent since the start of 2008 and the country remains in the grip of its worst recession in at least 50 years.

But LUVers needn’t worry. Inventory rebuilding lies behind much of the stronger-than-expected growth countries have enjoyed in the past six months. Real, sustainable demand is shaky. In the U.S. for example, factory inventories grew in October but new orders, exports and delivery times all fell, suggesting a one-off boost. GDP numbers also were driven by government home purchase incentives and the cash-for-clunkers car buying programme, which is expiring. The consumer cannot pick up the slack when personal debt remains high, unemployment rising and home foreclosures continue at the rate of one filing per 13 seconds.

So little wonder stock markets after rocketing ahead for seven months have slipped and the VIX index, or fear gauge, is rising. The second phase of the rebuilding from the credit crisis has only just begun. LUV hurts.

German Bundesbank President Axel Weber is developing a reputation as a leading indicator for the European Central Bank.

In the same way as a pickup in confidence can foreshadow a pickup in the economy, Weber’s comments about the direction of ECB policy this year have tended to be borne out by events.

The ECB’s broad hint on Nov. 5 that it will drop its super-long, one-year loans to euro zone banks next year follows a similar suggestion by Weber a week earlier.

And earlier this year, the 52-year-old publicly argued (and succeeded) for the ECB not to cut its main interest rate below zero, or follow other central banks in adopting a massive asset-buying programme.

Some economists wonder whether Weber – seen along with Italy’s Mario Draghi as an heir apparent to  ECB President Jean-Claude Trichet in 2011– just dares to say publicly what others are already thinking, showing little regard for the unwritten rules that make Trichet the official barometer of ECB opinion.

But others say Weber’s record this year shows he is successful at convincing others to follow his lead. A former academic, he can talk eloquently about the nitty-gritty of economic analysis and as the representative of the euro zone’s biggest economy and banking sector, his opinion carries weight. 

“When Weber speaks, the market does tend to listen,” says Societe Generale economist James Nixon, a former ECB staffer.

It must be a strange experience for non-European officials to talk to Europeans at events such as this weekend’s Group of 20 nations’ financial conference in St. Andrews, Scotland. If you want to make a deal with Europe, whom do you speak to? At the table there is Germany, France, Italy and Britain, a representative of the country that holds the rotating EU presidency (currently Sweden) and a representative of the executive European Commission.

The famous quote from Henry Kissinger “Who do I call if I want to call Europe?” is just as valid in economic policy-making as it is in foreign or defence policy.

In theory, the 27-nation European Union prepares its common position for global forums like

the G20 at ministerial meetings or summits shortly before the G20. So it should be enough to have just one pan-EU delegation that would present that common view, by necessity an internal EU compromise. Somehow, it is not.

Sources taking part in the meetings say the four biggest European economies that guard their individual seats at the G20 do not always speak with one voice. Or toe the EU line.

How does that make the EU representative look? Or the European Union as a whole? Why would anybody want to do a deal with the EU if its biggest members themselves undermine its authority by the very fact that they don’t trust a single delegation to present their joint view? Doesn’t that mean that, in fact, there is no common view? Then why bother with going through the motions of preparing a joint position before a G20?

The EU is an area with the biggest gross domestic product in the world – almost one third of world output and much above the United States, according to 2008 IMF data. It has half a billion citizens, making it the third biggest in the world after China and India.