where curious minds meet
Posts tagged as:
The economics behind women’s tennis tournaments.
Eurozone’s dysfunctional internal markets.
Does the special relationship across the pond still exist?
How the German language evolved from the primordial Germanic soup.
Can the French economy be in better shape than the German’s?
Interesting short story from the perspective of a mail-order bride.
Nationalistic sentiments running high everywhere, including Japan.
businessweek.com- Many Greeks view the state with a combination of a sense of entitlement, mistrust, and dislike similar to that of teenagers vis-à-vis their parents. …
US Federal Reserve- “It is not the wolf at the door but the termites in the walls that require attention. The sooner the house’s structure is strengthened, the better.” …
FT- It is time to recognise that Greece is not just suffering from a liquidity crisis; it is facing an insolvency crisis too. …
blogs.ft.com- The eurozone’s most vulnerable economies are getting little benefit from the euro’s fall because they are too inflexible and uncompetitive. …
standpointmag.co.uk- The least bad option would be for the German bloc to leave EMU. Germany’s banks might still have to be recapitalised, but it would be less costly than trying to “rescue” Greece. …
The Economist- Rich countries with their greying populations should be saving whereas younger, fast-growing developing countries should be borrowing heavily. But in fact it is the other way round. …
NY Times- Austrian banks slowly recover from a sharp economic downturn and tries to pay down a pile of private-sector debt. …
marketwatch.com- We’re still living in a fantasyland. Most people have no idea what’s really going on in the economy. …
WSJ- Hayek understood that the opposite of top-down collectivism was not selfishness and egotism. A free modern society is all about cooperation. …
Newsweek- We may be reaching the limits of economics. The disconnect between theory and reality seems ominous. …
newyorker.com- Financial illiteracy isn’t new, but the consequences have become more severe, because people now have to take so much responsibility for their financial lives. …
cjr.org- Rolling Stone made a virtue of the fact that it is not wedded to the news cycle in order to produce journalism that helped drive it. …
seedmagazine.com- No animal spends more of its allotted time on earth fussing over sex than homo sapiens. …
Business
Sweet spot for China’s blue-collar revolution
english.caing.com- Recent spate of worker strikes at factories in China, what does it mean for the rest of the world?
iPhone economics and lower barriers to entry
O’Reilly Radar- The App Store created a marketplace that anyone with the appropriate skills can enter. Can it last?
Forget peak oil, peak lumber is coming
Minyanville- The mountain pine beetle is ravaging Canadian forests, leading a long-term bull market in lumber.
When anyone can be a published author
salon.com- Will readers have to flounder in an ocean of slush before the new gatekeepers appear to rescue them?
Finance & Economics
Public sees a future full of promise and peril
pewresearch.org- In the public’s view, the next 40 years promises to be an era of technological progress.
Trichet explains why Soros is wrong about the Euro
cnbc.com- Reforming the real economy in each country in the euro zone is what is needed, according to Trichet.
Sterling is the star
Credit Write Downs- The budget credibility, the lower gilt issuance and reduced risk of a downgrade is helped sterling recover.
Europe: Adrift amid the rift
FT- Economic and financial crisis in the eurozone has exposed deep and long-standing divisions between the two largest European economies.
Fed watch: China, day one
Economists’ View- While China appears willing to adjust the parity rate, changes are likely to be more window dressing than anything else.
The rest
Personality shows up in brain structure
pagingdrgupta.blogs.cnn.com- Personality differences are now being explored biologically in the brain.
Words of the future
thenational.ae- As ebooks increase in popularity, typesetters are working hard to design the ideal fonts for on-screen reading.
Working on a (temp) dream
inthesetimes.com- Welcome to the freelance economy, where workers are atomized, badly compensated and strangely optimistic.
Beating China, India turns world’s top spam source
hindustantimes.com- The top country where spam servers are located is India, accounting for 16.9%, Brazil 8.7%.
Business
China needs a service-sector revolution
project-syndicate.org- Employing workers in sectors where their productivity is stagnant would not be a recipe for social stability. …
Environmentalists as battered spouses
american.com- Greens keep returning to their abuser after another promise to do good, but nothing in President Obama’s oil spill speech should offer them any hope that the administration is really going to change. …
Flight of the desktops
slate.com- The shift to portable machines fits larger social trends. More Laptops, netbooks, and tablets fit into the new lifestyle. Desktop don’t. …
Pleated pants watch: Don’t you want to be “clean”?
slate.com- Marketing men’s fashion is tricky because, for the majority of male clothes-wearers, the goal is to convince them that it is not fashion. …
BOOM: Big issues
gq.com- Lost in the catastrophic aftermath of the Gulf of Mexico oil spill is the gripping tale of the rig workers and the Coast Guard crewmen who rescued them. …
Finance & Economics
Germany’s super competitiveness
VoxEU.org- German wage restraint has led to a real depreciation of Germany’s fixed nominal exchange rate vis-à-vis its Eurozone members, helping Germany to win market shares at the expense of Southern Europe. …
On the lessons to be learned from the elimination of the Canadian federal deficit in the 1990s
worthwhile.typepad.com- If you’re going to count on exports to sustain aggregate demand while your government cuts back, you have to figure out which foreign economy is supposed to absorb all that extra production. …
Why it’s different this time for housing
online.barrons.com- For the economy as a whole, and housing in particular, restraint in borrowing will keep housing well below past cycles, no matter the level of interest rates or house prices. …
Gartman: Gold is good but Euro is doomed
Credit Write Downs- With the euro crisis and European credit easing, people have awoken to the fact that the euro is also a fiat currency and that the Europeans may be willing to depreciate the value of their currency as well. …
On your Marx
nplusonemag.com- It would add a nice dialectical twist to the future history of our period if it could be said that, around the time the post-Maoist Chinese took up shopping, the post-bubble Americans turned to studying Marx. …
Alan Greenspan v. Paul Krugman
Capital Gains and Games- The fiscal debate has become so polarized that combatants on both sides are glossing over what they don’t know. …
POLITICIANS ON ECONOMICS
Europe must focus on what works
FT- Chris Patten weighs in on the future of knowledge economy, security policy and enlargement in Europe. …
Euro exit is ludicrous idea for any country: Hannes Androsch
preview.bloomberg.com- We must be prepared to bite the bullet with regard to pensions and social services, something our governments have shown little appetite for to date, says Austria’s former finance minister. …
Vladimir Putin, transaction cost economist
streetwiseprofessor.com- Putin is advocating a system in which the state plays an important role in setting and administering prices, and governing contractual relationships between big firms. Coolidge once said “the business of America is business.” In this case, the politics of Russia is business. …
BUSINESS
Consumer adverts for pharmaceuticals: Impact on prices and sales
Voxeu- As a result of changes in regulation in the late 1990s, spending on direct-to-consumer advertising of pharmaceutical drugs in the US leapt from $150 million in 1993 to $4.24 billion in 2005. …
Digital self-publishing shakes up traditional book industry
WSJ- Much as blogs have bitten into the news business and YouTube has challenged television, digital self-publishing is creating a powerful new niche in books that’s threatening the traditional industry. …
How much the average American spends on entertainment
visualeconomics.com- On average, Americans devotes 5.6% of their budgets to entertainment. The biggest chunk? Audio and visual equipment and services. …
The counter-revolution of development economics: Hayek vs. Duflo
aidwatchers.com- Experimentation, for Hayek as well as Duflo, is the chief instrument of social change. Making experimentation work for development requires institutional feedback mechanisms which can fit together newly-discovered ways of doing things in mutually reinforcing ways. …
Escaping the mediocrity, sometimes unfathomable bureaucracy, and a general lack of opportunities in their home countries, many European economists have stayed in the US after pursuing a degree.
This is not exactly shocking news. But it reminds me of my own. So allow me to indulge for a minute.
While in university, some of my friends went on exchange, and many to Europe. While getting B-ish grades in our own universities, many came back with A+ from schools in Europe while maintaining a party schedule the rest of us could only dream of.
Not too long ago, I myself spent some time at a European university for a master’s degree. Now watching my boyfriend also pursuing a master’s degree from the same reputable university, I can say from first-hand experience: There-Are-No-Standards.
First off, many universities in Europe have no entrance cut-offs. That means, with the right preceding degree – which was also given to students that studied with no real entrance requirements, you are stuck in a classroom with the lowest dominator. Having a “tolerant” education system also means assignments can be handed in late, exams can be taken and re-taken, an atmosphere of genuine lacklustre-ness prevails.
Adding to the lack of uninspired classroom interactions, the hierarchical structure on the other end of the podium is also unfathomable. Unlike the tenured and untenured tracks in the North American system, complete with resident RAs that mark assignments and hold the occasional seminars, the entire supporting arm of this higher education branch is missing!
Contrasting my lonely graduate student life with those that pursued their graduate careers in Canada – with their own office space, more-or-less guaranteed research assistant positions, access to professors and conferences, and a structured graduate-student social life, my deal was truly crap.
So I buy the story when it says:
Don Coxe is an investment strategist. But unlike most investment strategists that flaunt degrees in mathematics or quantum physics, Coxe is a curious historian. At 73, his curiosity has yet to wane, and his quarterly newsletter Basic Points has followed him from his old employer BMO to his new investment advisory business.
He makes investment a fun pursuit, not only of numbers, but of knowledge. In his own word, he studies history to “compare popular views about economics, finance, geopolitics with evidence of what has happened in various eras.” And making money is merely a financially rewarding byproduct of that pursuit.
In his March edition of Basic Points, Coxe drew my attention to a few points rarely discussed by investment advisors and analysts in the mainstream. Let’s see what they are.
Lack of sunspot activities and possible crop failures
Most of us are aware that the earth has been warming up in the last couple of centuries. The rise of environmentalism makes sure of that, and Gore’s Inconvenient Truth enforces that belief. As humans, we are no doubt responsible for the unprecedented level of pollution and degradation to our natural habitats. But the feverish pitch of the environmentalists has become dogmatic in recent years, and any dissent over either methodology or the validity of data that supports their belief is deemed treasonous.
As much as environmental awareness is a more than commendable cause, the sensationalism and the selectivity over the type of news and data that make it to the front page has been astounding. Bloopers are swept into the background, and wildly pessimistic and sensationalistic pieces inject more fear and exaggerated claims into mainstream conversations. We are all for a better living environment, but no end justifies the means if facts and truths are misrepresented in the process. The public will turn their backs on the cause, no matter how noble it may be.
Welcome Gen-X readers, and thank you for visiting my blog. I write about investing, macro-economics, society, culture, career, and any other ideas and thoughts I have from my own experiences. Some samples are available here. If you enjoy my posts, then please consider subscribing to the RSS feed and spread the word, I would love to hear from you!
Here are some places to start that will give you a taste of this blog:
More on the Recession
On investment
Some investment ideas
It’s been a month since the Investoralist officially kicked off, and I thought I’d briefly pause and write about what I’ve learned so far. Granted, a month is barely a blip, and some of the musings may seem pretty amateur to bloggers that have been labouring in this medium for years. But hey, this is the Internet, everyone gets their piece. And there’s hardly anything that I can do to prevent you from clicking away. So off I go.
The need to provide value. Before I enrolled in politics – that was my choice for graduate studies, I was interested in the Middle East. To prove it, I went traveling in the region and ended up living in Egypt for three months. I took Arabic classes. Then I went to grad school, and realized that everyone was interested in the Middle East, and everyone has seen the sufferings of the Palestinians, first-hand. I then promptly decided that I was no longer interested in the Middle East, since whatever problems it may have had, it was not for a lack of concerned political science students. And if all these smart, motivated, and outraged graduates of political science studies around the world have yet to find a solution to the problem – other than becoming bitter and indignant and depressed, I had little to offer. At least not through the same path. Or not at all.
So now I find myself blogging about investing, which is a subject that’s pretty vast and covered by a lot of people. The same issues are frequently debated up and down the journalistic and blogsophere chain. Some opinions are fruits born from careful examinations of arguments and data, some agenda-driven, some are pure drivel and derivatives. The issue of adding value to the discussion is never far from my mind when I write.
The need to be interesting. I’m not sure if the importance of being interesting should take a back-seat to providing value. God knows that we are subjected to enough dull and dreary readings. I can barely work up the will to look at my tax re-assessment from 2007 and call the government to see why they are demanding $64.36.
Thank you to Penny Daily for including us in its Carnival of Investing Strategies #5.
What makes a successful long-term investor? Is it an exceptional understanding of the market? Is it a Blackberry full of Wall Street contacts that tip you on every insiders’ move? Is it a PhD in quantum-physics or mathematics?
No. Because if that was the case, then most investment funds with their well-paid, well-educated, and well-connected managers would not be walking around with their portfolios 50% lighter.
So what is it about the market that suckers in so many people? How is it that some investors are ruthlessly spit out, and others remain relatively unscathed in the long-run?
Knowledge.
But not just business knowledge. What has been taught in business school and other rudimentary business classes do little to improve one’s chances when it comes to investing. Why? Because the knowledge presented in those accounting and finance classes only give you a myopic look at the whole picture.
For example, say you are an accounting maven but know nothing of what’s going on in the mortgage market in 2006. You look at the balance sheet of banks, match up the debit and credit sides, check off the triple-A rated loans, and marvel at how the bank has managed to grow so quickly in the last few years. But any economists looking at the picture would be alarmed at the rate of growth, probe deeper into the loan ratings, gasp at the poor judgment exercised on part of the bankers, and issue a warning. Someone who is schooled in politics would take a hard look at the political contributions made to head of committees that signed off on the predatory lending policies and yell foul! And any Tom, Dick, and Harry, who’s been canvassed by sketchy pseudo-lending institutions would tell you that if it walks like a scam, and quacks like a scam, it is a scam.
On an ABC interview aired February 10th, President Obama acknowledges that America has a thing or two to learn from two previous sufferers of financial crisis brought on by housing bubbles.
TERRY MORAN: There are a lot of economists who look at these banks and they say all that garbage that’s in them renders them essentially insolvent. Why not just nationalize the banks?
PRESIDENT OBAMA: Well, you know, it’s interesting. There are two countries who have gone through some big financial crises over the last decade or two. One was Japan, which never really acknowledged the scale and magnitude of the problems in their banking system and that resulted in what’s called “The Lost Decade.” They kept on trying to paper over the problems. The markets sort of stayed up because the Japanese government kept on pumping money in. But, eventually, nothing happened and they didn’t see any growth whatsoever.
Sweden, on the other hand, had a problem like this. They took over the banks, nationalized them, got rid of the bad assets, resold the banks and, a couple years later, they were going again. So you’d think looking at it, Sweden looks like a good model. Here’s the problem; Sweden had like five banks. [LAUGHS] We’ve got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would — our assessment was that it wouldn’t make sense. And we also have different traditions in this country.
Obviously, Sweden has a different set of cultures in terms of how the government relates to markets and America’s different. And we want to retain a strong sense of that private capital fulfilling the core — core investment needs of this country.
And so, what we’ve tried to do is to apply some of the tough love that’s going to be necessary, but do it in a way that’s also recognizing we’ve got big private capital markets and ultimately that’s going to be the key to getting credit flowing again.
There’s a been a lot of talk of the Swedish bail-out models by the economic big-wigs lately. Here are some facts to get you up to snuff.
In the early 90s, Sweden suffered from an economic crunch brought on by the property bubble. From 91 to 93, the economy went into the reverse gear.
According to the Swedish central bank, “a tidal wave of bankruptcies” between 1990 and 1994 left Sweden’s seven largest banks, which accounted for 90 percent of the market, with loan losses totaling the equivalent of 12 percent of Sweden’s annual gross domestic product.
Sweden set up an agency to recapitalize the banks. Contrary to what the US is proposing – taking over the bad debts of the near-insolvent banks, the Swedish government became owners of those banks in exchange for help.
Provide blanket guarantee on all bank liabilities.
Outcome: Restore depositor and creditor confidence, prevent run on banks that would’ve made restructuring impossible.
Parliament passes emergency legislation to take over and nationalize any bank on the verge of failing.
Outcome: Good enough banks would gain enough time and credibility from the blanket guarantee that no take-out/nationalization is needed.
The threat of government control scared most banks away from seeking bail-outs. Most of the large institutions found ways to get through the problems without any government help.
For example, large Swedish banks such as SEB and Swedbank obtained new capital from private investors, and established their own bad banks with the help of outside investors.
Liquidity test on banks. If the model indicates the bank can become profitable again in the near term, then it is given support to survive. If the model indicates the bank will never become profitable again, then it is closed or merged.
Outcome: Avoids the Japanese problem, where illiquid or semi-liquid banks were given a lifeline despite its profit outlook.
Nationalize insolvent banks once they write down their losses.
Laura Davis: The thing that I love about European vacations is that they can be so much longer than U.S. ones. They get soooo much... The right to vacation 
Bad Credit Auto Loans: Well, the fact's are that there are going to be people on the top and the bottom,... Inequality is Shrinking, Does Anyone Care? 
DoctorJ: I agree completely that Ayn Rand was a typical Russian reactionary, with neither a proper... Ayn Rand belongs to Russian history, not American? 
Dana: A somewhat unexpected Cup this year, no? Which one are you cheering for? French World Cup meltdown Dana: There’s of course a balance that needs to be found. I do think that the US’ welfare safety net is perhaps a bit... Insidious benevolence 