Posts of March 2008

Post-Subprime: A Bloodbath in Trader Bonuses

♠ Posted by Emmanuel in Casino Capitalism at 3/31/2008 01:28:00 AM

Ladies and gentlemen, rest assured that I do not read the British lifestyle magazine Trader Monthly on a regular basis. Imagine a combination of Forbes, Stuff, and GQ and you can probably imagine its contents. While visiting a rather well-to-do relative, however, I came across this particular magazine. Something that caught my attention among the endless articles about shorting housing stocks, £40,000 wristwatches, and £3,000 power suits [what, there are women traders?] was a 2007 Bonus Survey projecting "average compensation levels for top-performing trading professionals at major banks globally, based on the best information...

Climate Change Investing Ain't Too Hot, Eh?

♠ Posted by Emmanuel in CSR,Environment at 3/31/2008 12:40:00 AM

The Bjorn Lomborg "global warming doesn't matter" set may be pleased by this news. While perusing today's edition of the Wall Street Journal, my eye was drawn to an ad asking me to dress up Zwinky for a global warming investment fund. Apparently, DWS Scudder, an asset management subsidiary of Deutsche Bank, has just set up a fund whose cause celebre is global warming. Call it an offshoot of the oh-so-trendy socially conscious investing. (Do view the slick videos about the DWS Climate Change fund if you've got the scratch.) Anyway, the fund info sheet has this to say about why future opportunities are plentiful in this area:Due...

The Next Real-Estate Bubble is in Farmland

♠ Posted by Emmanuel in Agriculture at 3/31/2008 12:14:00 AM

Call it Emmanuel's Bubble Theory: the popping of one bubble eventually begets another bubble. The implosion of the dot-com bubble led to interest rates being cut, thus giving rise to the housing bubble. Now that the latter is fast deflating and interest rates are again being cut to soften the blow of an oncoming recession, where are we (or at least the US) headed? I'll put my money on a new farmland craze that's taking shape. The reasons for this new craze are simple and require little explanation: First, growing prosperity overseas--especially China and India--ensures a steady source of demand for farm produce in yonder lands....

The California Gold Rush Circa 2008

♠ Posted by Emmanuel in Economic History at 3/30/2008 02:10:00 AM

This article from the Financial Times had me thinking a bit. Regardless of what the cause of rising commodity prices is--a slumping US dollar, strong demand from fast-growing Asian economies, an extended period of low interest rates, or a combination of all three--laws of supply and demand are taking effect as gold diggers of the non-figurative variety are going to California with an achin' for the precious metal. Go west, young speculator, go west:It has been almost 160 years since the first California gold rush but, with prices hitting record highs, prospectors are once again flocking to the state’s rivers and deserts in search of the precious metal. Gold’s ascent – prices crossed the $1,000 an ounce barrier this month and remain well above $900 – has sent sales of mining equipment soaring.“There’s been a dramatic change . . . our sales have risen four-fold in the last three months,” said Harrigan McGregor, owner of GoldFeverProspecting.com, an equipment retailer in northern...

That's Progress 2: Cubans Can Own Cell Phones

♠ Posted by Emmanuel in Latin America,Trade at 3/30/2008 12:56:00 AM

Whoa, Cuba's new Maximum Leader Raul Castro is making all sorts of socioeconomic advances that would fill the heart of a Taliban mullah with rage. After lifting a ban on owning DVD players and assorted gringo consumerist filth, the Cuban authorities are now in the process of allowing ordinary citizens the privilege of wielding cell phones. Who knows what will follow this consumerist revolucion. From the Guardian:The Cuban president, Raúl Castro, today lifted restrictions on ownership of mobile phones. Castro's move was another indication that he is prepared to grant more freedom to the island's residents. The right to own mobile phones had been restricted to the employees of foreign firms or those holding key posts in the communist-run state. Some Cubans had evaded the ban by asking foreigners to sign contracts in their names, but mobile phones remain relatively uncommon in Cuba compared with the rest of the world.Castro - who formally assumed power from his brother, Fidel, in...

Fearful of HillaryCare? Try al-SadrCare

♠ Posted by Emmanuel in Security at 3/28/2008 02:03:00 AM

Many in the United States fear that the election of a second President Clinton may mean the resurrection of HillaryCare. Well, there is something out there that is much more frightening because it's, well, real. For some reason I can't recall, I was led to the pages of USA Today and this article on "Sadrists' Grip on Iraqis' Health Care Takes Toll." What you have here is a situation in which the health ministry as well as the main importer of medicines is run by Muqtada's acolytes. It just furthers my conviction that the illusory gains made by the US in Iraq as of late have been bought by paying protection money to various...

Lyndon LaRouche's Take on Neoliberalism's End

♠ Posted by Emmanuel in Economic History,Neoliberalism at 3/28/2008 01:39:00 AM

Conspiracy theorists of all stripes will welcome this latest work from the acolytes of Lyndon LaRouche. The man has "run" for the US presidency continuously without any apparent success. In some ways, his jail time is more memorable to many than his forgettable electoral exploits. Nevertheless, while LaRouche has decided to sit out the 2008 campaign, his Executive Intelligence Review is still putting out all sorts of, ah, interesting stories. This sample purporting "The End of the Line of the Anglo-Dutch System" makes for entertaining if not quite accurate reading. It is beyond me how a drastically weakened Britain at the...

A Petition to Restrict Capital Flows in the EU

♠ Posted by Emmanuel in Anti-Globalization at 3/28/2008 01:23:00 AM

If you are an A-1 member of the anti-globalization set, consider signing up to this petition below to bar finance from "destroying society." Actually, I am relatively unperturbed by the usage of capital controls. In a number of instances, they may be useful in helping spur economic development. However, the idea that going back to a mythical pre-globalization age would somehow turn back the tide on financial manias, panics, and crashes is rather unlikely. The record of history indicates that even in a world where capital had nowhere near the mobility it has now, there were recurrent crises. Somehow, I do not think this will do the trick, but you may think otherwise and sign up yourselves. I've made an extended comment on Martin Wolf's blog on this very same topic. Anyway, here is the statement:Freedom for finance is destroying society. Every day, in both North and South, shareholders silently pressure firms and workers to extract higher and higher returns. The situation becomes...

Here We Go Again: The Day Neoliberalism Died

♠ Posted by Emmanuel in Casino Capitalism,Neoliberalism at 3/27/2008 04:20:00 PM

Love 'em or hate 'em, you must acknowledge the consistently pro-market outlook of the Financial Times. Yet, here are two recent op-eds by FT stalwarts in response to Deutsche Bank CEO Josef Ackermann stating "I no longer believe in the market's self-healing power." Well, I for one never did. Both authors specifically mention the Fed bailout of Bear Stearns as a turning point. For all the disagreements I have with one Karl Polanyi--a folk hero of the anti-globalization set--I do agree with him that the self-regulating market (SRM) is a myth. Furthermore, the invisible hand trope of Adam Smith has been tortured to mean that...

Japan Estimates Reserve Reval Losses at $187B

♠ Posted by Emmanuel in Economic History,Trade at 3/27/2008 04:06:00 PM

Here is a perfect illustration of the so-called balance of financial terror inherent in export-reliant Asian economies accumulating excess reserves. The Japanese FinMin Fukushiro Nukaga suggests that Japan has breathtaking unrecorded losses on its FX dollar assets which were acquired when the yen was rather weaker. It's a lose-lose situation for them: accumulate more dollars which have a tendency to go nowhere but down and you get losses of this magnitude ($187B). OTOH, slowing down the rate of accumulation of dollar assets and you face an even steeper loss on accumulated dollars as the wretched currency plunges at an even...

Is Mother Russia Nearing WTO Accession?

♠ Posted by Emmanuel in Europe,Trade at 3/27/2008 01:48:00 AM

Perhaps spurred by the Ukraine beating it to WTO membership, Russia is now pulling out all the stops in its efforts to also join the "nefarious" WTO. To gain entry into the organization, Russia needs to obtain the consent of all the WTO's members. For understandable reasons, negotiations with the Russia-fearing and NATO-joining (well, almost) republic of Georgia are among the most contentious discussions. RIA Novosti has a report on the negotiations between the two antagonists: Russia will hold negotiations with Georgia on joining the World Trade Organization in late April, Moscow's chief WTO negotiator said on Tuesday. Russia has been seeking membership of the WTO since 1993. So far, Russia has concluded bilateral talks with over 60 states but still needs to complete discussions with the WTO members - Saudi Arabia, the United Arab Emirates and Georgia - that have trade disagreements with the country. "We are discussing the possibility of a new meeting with Georgia, which...

Welcome to the Terrordome 2: WTO Headquarters

♠ Posted by Emmanuel in Anti-Globalization,Trade at 3/27/2008 01:32:00 AM

I sometimes get the feeling from the anti-globalization movement that the World Trade Organization is the seat of all evil, responsible for about 99.9% of what's wrong with the world from growing income inequality, environmental destruction, to the endless marketing of the talentless and disastrous Spears family. (The latter case would constitute "trade in services.") And that's just for starters: view this film clip of arch globophobe Walden Bello outside the WTO building cataloging the organization's infinite sins against mankind. Anyway, the WTO building struck me as a rather attractive base for this arch-organization of...

India Buys Britain, Cont'd: Land Rover and Jaguar

♠ Posted by Emmanuel in India,Supply Chain at 3/26/2008 02:11:00 AM

Boy oh boy, you're likely to have read it here first: the famous British marques Land Rover and Jaguar are to be sold to India's sprawling conglomerate the Tata Group for the tidy sum of £1 billion. Speculation had been running high about the potential suitors of Land Rover and Jaguar, but now the deed is done. Fortune once called the process of Indian companies buying up British ones "reverse colonization" in action, and I guess you can chalk this deal up under the same category. Selling off these brands is part and parcel of the seemingly unending woes at Ford Motor Company. When this deal concludes, Ford will no longer...

I Don't Buy It: Disney's Green Message in Toons

♠ Posted by Emmanuel in Environment at 3/26/2008 01:10:00 AM

File this one under "academics with too much free time on their hands." The Times of London has written a feature on author David Whitley's The Idea of Nature in Disney Animation which purports that Disney has long carried the green message to young children. I am exceedingly skeptical about this: as you will read below, most of the Disney films mentioned below do not have an overtly environmental message compared to, say, Dr. Seuss's The Lorax. Now that was a cartoon with a strong warning about the perils of over-industrialization. When I was a tiny tot, The Lorax scared the bejesus out of me. However, the same cannot be...

How Have Other LDCs Fared Against China Post MFA?

♠ Posted by Emmanuel in China,Development,Trade at 3/26/2008 12:39:00 AM

The phasing out of the voluntary export restraint (VER) known as the multi-fibre agreement (MFA) imposed by developed countries on textile exports from developing countries was thought to be potentially disastrous for countries in export competition with China. Indeed, the so-called bra wars between the EU and China over the sudden glut of Chinese textile exports is evidence of China's unleashed capabilities after the removal of the MFA. Justifiable fears have been raised by other LDCs which do not have the same manufacturing prowess as China about being literally killed off in global textile markets by the PRC juggernaut.Interestingly, I was reading the 2008 Global Economic Prospects publication of the World Bank which has a box section (page xlviii, Box 1.1) on the topic. How have other textile exporting LDCs fared post-MFA vis-a-vis China? Has China overwhelmed everyone else? While others have not done particularly well, some of the more doom-laden prognostications have failed...

Japan Inc: Yes, Decoupling is Possible

♠ Posted by Emmanuel in Trade at 3/26/2008 12:29:00 AM

Just out is news that Japanese exports for the month of February increased by 8.7%, somewhat assuaging those concerned about Nihon's exports slowing down in line with the US economy entering recession land or somewhere thereabouts. Combined with healthy export growth in January as well, this may be a good portent. Indeed, strong demand growth from LDCs is making up for the subprime-induced coma of the American economy. USA, who needs ye? From Bloomberg:Japan's export growth accelerated in February as demand from emerging markets helped automakers ride out the U.S. slump. Exports, which contributed more than half of the economy's expansion last quarter, climbed 8.7 percent from a year earlier after increasing 7.6 percent in January, the Finance Ministry said today in Tokyo. The median estimate of 19 economists surveyed by Bloomberg News was for a 7.5 percent gain. Hino Motors Ltd. and Honda Motor Co. are relying on consumers in emerging economies to make...

PRC Actually Loves Bloggers, Ban or Not

♠ Posted by Emmanuel in China at 3/23/2008 06:35:00 PM

Well this is funny. The Chinese government, the folks who've banned Typepad and my dear Blogger from polluting the minds of the Chinese people, are now trumpeting the efforts of overseas-based Chinese bloggers in pointing out Western bias in the coverage of the Tibet riots. There are also accusations that images are being manipulated to portray China as a country that is backwards on human rights and what else have you. Here's what I suggest to our favorite totalitarian regime: if the Chinese official media is so keen to use bloggers' posts to point out the flaws in Western media portrayal of the Tibet riots, then maybe actually allowing the Chinese people access to the likes of Typepad and Blogger would be welcome. What a radical idea. From our favorite official publication, the China Daily: Chinese netizens, including students studying overseas, have been angered by biased and sometimes dishonest reports about the recent riots in Tibet by some Western media. Pictures...