Exclusive outtakes from industry leaders
Generations of Americans have clocked in to work each morning confident that their daily toils would afford them a better standard of living than their parents. But that central promise of the American dream may now be under threat.
According to a productivity and competitiveness report from the consulting firm McKinsey & Co., the U.S. economy requires dramatic productivity gains to ensure that future workers will benefit from economic growth. How to achieve these gains will be the focus of a discussion between Reuters global editor-at-large Chrystia Freeland and McKinsey’s global managing director Dominic Barton for a Thomson Reuters Newsmaker event on March 1, "Thriving in the New Global Economy."
The McKinsey report says past GDP growth was driven primarily by adding workers to the U.S. labor force. But as baby boomers retire and the number of working women peaks, these sources of labor are starting to dry up.
Without that increased labor input, McKinsey says productivity must rise by at least 30% to sustain past GDP growth rates. The consequences of inaction are stark: Americans born in 1960 saw their per capita GDP grow 2.5 times by the age of 40; Americans born in 2000 are forecast to see an increase of 1.6 times.
Reuters Global Editor-at-Large Chrystia Freeland will conduct a live interview with the Global Managing Director of consulting company McKinsey & Co.
Jim O’Neill, the new Goldman Sachs Asset Management chairman who is famous for coining the term BRICs for the world’s new emerging economic giants, reckons he knows why Germany might not be rushing to bail out all the euro zone debt that is under pressure. Europe is not as important to Berlin as it was.
Speaking at the Reuters 2011 Investment Outlook Summit being held in London and New York, O’Neill pointed out that in the not very distant future Germany will have more trade with China than it does with France.
At first sight, that sounds unthinkable.
Lomborg, a Danish statistician who wrote the book “The Skeptical Environmentalist”, argues that the world should develop cheap new green technologies before taking radical steps to fight global warming (…echoes of the policies of former U.S. President George W. Bush).
A surge in portfolio inflows is flooding into emerging central Europe, although yield-hungry investors are picking solid policy and higher growth over countries still struggling to put the crisis behind them.
After deep contractions across the region, a two-speed recovery is underway, with countries boasting better debt fundamentals like Poland and the Czech Republic for the moment ahead of those who depend on foreign lending.
Rich investors are taking more precautions than ever in their wealth, and instruments once seen as complex and exotic are becoming more commonplace in their portfolios, wealth managers said at the Reuters Private Banking Summit.
Asset classes such as foreign exchange, gold, oil and industrial commodities are beginning to have specific and identifiable hedging roles in portfolios, beyond the broad brush “diversification”.
Investment trusts, financial constructions often associated to clever tax structuring, can actually help women inherit their fair share in countries were they are discriminated by law, a top private banker says.
“In countries where Shariah law is applied, being a woman is not as advantageous as being a man. In that situation, the trust allows the structuring to have children taken care of,” says Karen Simpson, the Swiss-based Head of Private Banking at Royal Bank of Canada, the world’s No.1 bank player in the trust business.
“Gold is not an investment. It doesn’t pay you interest and it doesn’t increase wealth,” complained one investment advisor recently as he perused exploding client demand for the yellow metal.
“It’s just a cautious asset for scared investors,” he grumbled as he waved a chart showing prices had once again hit an all-time high.
With the German government hot on the heels of untaxed wealth stashed in Swiss bank accounts, and the U.K. government taking a tougher stance on clawing back bonuses, rich folks will likely head for the hills – or the Alps to be more precise – senior private banking executives said in Geneva.
“People are going to arbitrage different tax jurisdictions. We are going to see European clients moving to Switzerland, very large families,” said Alberto Valenzuela, deputy chief executive of Societe Generale Private Banking (Suisse) SA.
How rich is rich? For most people, the answer is simple: ”not me.” But for private bankers keen to handle the assets of the well-heeled from Moscow to Malibu, that question is a slippery one. Sometimes a simple number won’t do, either.
Just about every executive at Reuters Global Private Banking summit in Geneva has a different standard for what those in the business call “ultra high net worth individuals”, the really rich that are the industry’s prime catch.