Chavez (Hearts) America's Poor via CITGO

♠ Posted by Emmanuel in at 12/27/2007 03:32:00 PM
RGE's latest mailing brought to my attention this earlier YouTube propaganda clip by the firm CITGO. It is of course owned by Venezuela's national oil firm, PDVSA. If you will recall, Hugo "Go to Hell, Gringos" Chavez made a PR stunt earlier in the year by using it to sell low-priced heating oil to poor Americans. The ploy supposedly demonstrated that Venezuela's leader cared more for America's poor than Bush did. (Among other things, Chavez has called Bush the devil.) It was a pretty good stunt if attracting attention was the goal. Will Chavez make CITGO do so again in 2008? Your guess is as good as mine. Goodness knows energy prices are even higher n...
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Maybe Securitization Really is Casino Capitalism

♠ Posted by Emmanuel in at 12/26/2007 01:30:00 AM
Securitization involves the packaging of various assets to be sold to other investors in the form of, well, securities. Most infamously, residential mortgage backed securities or RMBS have been in the limelight as the subprime mess has hit primetime and housing loans which should never have been granted in the first place have begun defaulting in ever higher numbers. Actually, I am not a hardened critic of the idea of securitization as it can serve as a worthwhile way for securing additional funding. However, there isn't much you can do when what is being securitized is garbage to begin with like in the case of the housing...
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Japan Pushes Financial Sector Reform (Again)

♠ Posted by Emmanuel in at 12/26/2007 01:06:00 AM
Relatively moribund financial markets in Japan have led the government to shake things up yet again to get more activity going. Time and again Japan has experimented with financial reforms to enliven this sector. However, many of these efforts have been piecemeal and have not really resulted in the intended improvements. With the likes of Sydney, Hong Kong, and Singapore becoming relatively more competitive than Tokyo in the Pacific Rim by offering lower taxes and regulation, Japan has little choice but to make more "market-friendly" reforms should it wish to remain a financial center worth its salt. Dare we say that it is...
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Season's Greetings from Birmingham!

♠ Posted by Emmanuel in , at 12/23/2007 07:50:00 PM
For a bit of a change befitting the holiday season, here's some economic history about the city I am currently living in. Pictured is a scene from the annual Frankfurt Christmas Market in Birmingham. Markets go back a long way here in Birmingham. Since 1166, commerce has taken place in what has come to be known as the Bullring in the city center. Aside from being a "shopping center" for eight and a half centuries, Birmingham also played a key role in the industrial revolution. Brummie James Watt made crucial design enhancements to the steam engine. Soon, the output from Watt's brainchild became instrumental in powering factories,...
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No Rest for the Timid: Xmas Reading

♠ Posted by Emmanuel in at 12/23/2007 07:09:00 PM
In case you were wondering about the holiday reading backlog of an IPE grad student, wonder no more: above is the stack of library books lined up for me over the holidays. On the bright side, being an IPE student allows for a great variety of interesting reading. However, it is still a lot of reading. Unlike in the American system where doctoral students are given four years to complete a degree, they only have three here in the UK. Therefore, a compressed time schedule means that I must do more during the break other than watch reruns of Fawlty Towers, much as that would seem fun. But, it's a choice I've gladly make to...
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Oil Prices Forecast to Rise Further in 2008

♠ Posted by Emmanuel in at 12/23/2007 06:40:00 PM
What will the price of crude oil be in the coming year? The Wall Street Journal notes that prognosticators are now betting on the high side after incorrectly lowballing estimates for the past few years. One of the interesting indicators noted in the article is the use of Saudi Arabian benchmarks for the price of oil while making government budget forecasts. Usually, the Saudi government conservatively estimates the price of oil. Like many Middle East petrostates, Saudi Arabia does not collect income taxes; 90% of its revenues are from the black stuff. Hence, there is a strong incentive for the country to come up with accurate...
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California's Tent City of the Foreclosed

♠ Posted by Emmanuel in at 12/21/2007 04:53:00 PM
Here are some excerpts from a speech on boosting home ownership made by the leader of the free world, George W. Bush, in 2002: But I believe owning something is a part of the American Dream, as well. I believe when somebody owns their own home, they're realizing the American Dream. They can say it's my home, it's nobody else's home. And we saw that yesterday in Atlanta, when we went to the new homes of the new homeowners. And I saw with pride firsthand, the man say, welcome to my home. He didn't say, welcome to government's home; he didn't say, welcome to my neighbor's home; he said, welcome to my home. I own the home,...
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Tancredo's Gone But Tancredoism Isn't

♠ Posted by Emmanuel in , at 12/21/2007 04:04:00 PM
Immigration is promising to be one of the more decisive--and divisive--issues of the 2008 US presidential election. I am sure you're all familiar with the one-note, single-issue focus of representative Tom Tancredo (R-CO) on the issue. While Tancredo has just given up his run at the Oval Office--no one expected him to be a serious contender anyway--the issue he championed has been brought into the limelight in a way it might not have had he not spoken up so much about it. The chart to the right depicts results from a recent US survey by the Economist. As you can see. there appears to be an emerging consensus that American...
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USA Still Masochistic Over Cotton Subsidies

♠ Posted by Emmanuel in , at 12/20/2007 01:14:00 AM
Here is the latest ruling on the long-running cotton subsidies case filed by Brazil against the US in the WTO's dispute settlement mechanism (case DS 267). Brazil had previously won the case as American cotton subsidies were deemed illegal for they were granted on the basis of export performance. Still, Brazil has not been pleased with America's record in complying with this ruling and subsequently launched an Article 21.5 panel investigating US compliance. The DSM has once again found the US in breach of its WTO obligations due to its limited efforts at complying with the WTO ruling. This finding paves the way for Brazil...
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Will Cargo Ships Return to Wind Power?

♠ Posted by Emmanuel in , at 12/20/2007 12:35:00 AM
As I noted a few posts ago, the international shipping industry has entered the crosshairs of environmentalists because many of its vessels rely on bunker fuel, an inexpensive but highly polluting energy source. With the growing amount of shipping in the wake of international trade's continuous expansion, this problem is only set to grow. However, some shipping companies are now addressing this problem like the German firm Beluga in partnership with SkySails which has developed a novel propulsion technology. In a slight return to a bygone era, Beluga has just christened a new vessel which relies on sails for about a fifth...
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World Bank Shrinks Chinese Economy by 40%

♠ Posted by Emmanuel in ,,, at 12/19/2007 02:37:00 AM
OK, that title is somewhat misleading. There are many things the World Bank stands accused of, but being able to shrink the Chinese economy by 40% is certainly not within its capabilities. Rather, what we have here is a change in the way that the World Bank measures economic activity that has resulted in drastic changes in the estimated size of the Chinese as well as the Indian economy. As you probably now, there are two main ways of measuring national income for the purposes of international comparison. First, you can convert the national income of various countries into dollar terms by using market exchange rates. However,...
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Will the Commodity Boom Bust Soon?

♠ Posted by Emmanuel in ,, at 12/19/2007 01:58:00 AM
I'm of two minds about this particular question concerning whether high commodity prices are here to stay or if they'll soon be a thing of the past. True, there have been many previous periods when commodity prices were elevated and many pundits spoke of permanently higher commodity prices. Yet, these prices came down eventually, and the same may happen again. In a nutshell, the yea and nay arguments go something like this:(1) Yes, high commodity prices are here to stay. We are reaching Malthusian limits to resource supplies that weren't approached in the past. These constraints are fast approaching because the two largest countries in the world with a combined population of 2.3 billion persons, China and India, are now quickly moving up the income and, consequently, the consumption ladder. With so many people clamoring for a higher standard of living, there is a "demand pull" effect as folks fight over the same finite resources.(2) No, each time commodity prices have been elevated...
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Investing in Low to No Transparency Dubai

♠ Posted by Emmanuel in , at 12/18/2007 02:43:00 AM
Here is an unspoken challenge for foreign investors looking to put their money into Dubai and other emerging Middle East investment destinations: Given that transparency in these locales is low to non-existent, what's the likelihood that you're going to get repaid if push comes to shove? Quite often the answer may be "it's all up in the air." Credit rating agencies are unable to give reliable data on the soundness of various institutions. For instance, the vast real-estate boom in Dubai is increasingly being funded by borrowing through state entities in spite of Dubai not even having a sovereign debt rating. Think of it as...
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On "Measuring the Progress of Societies"

♠ Posted by Emmanuel in , at 12/17/2007 02:04:00 AM
I have used the term "growth lubber" to put down those who make economic growth (as exemplified by measures such as GDP) their principal measure of human well-being. Few will argue that economic growth is a necessary but not a sufficient condition for human well-being. While GDP and other income-based measures of human progress have been criticized for being highly imperfect indicators of human progress, not much progress has been made either on establishing alternate criteria.It's not that folks haven't tried to come up with better criteria for measuring progress than income-based measures like GDP. For instance, the UN Development Program (UNDP) uses the Human Development Index (HDI) which combines measures of income, health, and education to gauge, well, human development. The tiny state of Bhutan prefers to use Gross National Happiness as an indicator of progress. Even China monkeyed around with "Green GDP" for a while until local officials complained that these statistics...
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Reply to Posner: Is HDI "Dubious" and "Senseless"?

♠ Posted by Emmanuel in ,, at 12/17/2007 01:51:00 AM
While preparing material for the post above on measuring the progress of societies, Google pointed me in the direction of a recent post made by Richard Posner on the popular Becker-Posner blog which features his thoughts as well as those of Nobel laureate Gary Becker. Judge Posner makes it amply clear that he does not think much of the United Nations Development Program's Human Development Index (HDI). What follows are a few excerpts from his post in which he accuses the HDI of being "dubious" and "senseless":I cannot myself see the value of the Human Development Index. Not that per capita income, life expectancy at birth, and level of education as proxied by adult literacy and school enrollments are unimportant; a ranking of each of these aspects of human development might be a good first step in identifying areas of weakness that a society might wish to devote additional resources to improving. It is the combining of the indexes and announcing that the combination offers a...
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Eco-tourism? Bah! Try Climate "Doom Tourism"

♠ Posted by Emmanuel in , at 12/17/2007 01:40:00 AM
I made a double take at the title of this International Herald Tribune piece, but no, it is for real. We've all heard of the term "eco-tourism" for supposedly environmentally sound travel in an industry dominated by resource hogging hotels, cruise ships, and other touristy accouterments. With all the attention being placed on likely irreversible climate change, however, a new tourist promotion has sprung up: "doom tourism." No, it has nothing to do with blasting evil alien species to kingdom come. Rather, it concerns visiting places on our environmentally Bush-whacked earth that may soon be unrecognizable from their current...
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