Russia's Price for Buying Off Ukraine: $15B

♠ Posted by Emmanuel in ,, at 12/17/2013 07:13:00 PM
Put 'er there, Vlad, my country's yours for $15 billion
Let us update this strange tale of Ukraine. Having told his opponents to in effect get lost since they didn't win any elections or succeed in gaining a vote of no-confidence, President Viktor Yanukovych headed to the Kremlin to speak to his Russian counterpart Vladimir Putin. What is the price of fealty to Russia? Gulf Cooperation Council bigwigs bought off Egypt for $9.9 billion (so far)--$5B from the Saudis and $4.9B from the Emiratis to wean it off the upstart Qataris. Meanwhile, Yanukovych was able to wangle a $15B bailout from Russia to buy that much worth of Ukrainian sovereign debt over the next two years. Not bad, eh?
Ukraine sealed $15 billion of Russian financing and a one-third discount on energy imports from its neighbor as anti-government protesters in Kiev demanded to know what President Viktor Yanukovych had ceded in return. Russia will buy government debt this year and next and will cut the price it charges for natural gas to $268.5 per 1,000 cubic meters, President Vladimir Putin said today after meeting Yanukovych in Moscow. 
Ukrainian debt--certainly more than mildly distressed at this point--is slightly more relaxed as a result:
The yield on Ukrainian dollar bonds due 2023 plunged more than 1 percentage point to 8.833 percent as of 7:11 p.m. in Kiev, the lowest since June 17, data compiled by Bloomberg show. The yield on government debt due 2014 fell more than 6 percentage points to 15.193 percent. Putin said the financing is being provided in light of “the problems of the Ukrainian economy linked to the world financial crisis, and to support the budget of the Ukrainian government.” Trade restrictions on Ukrainian goods will also be lifted. 
However, the opposition may be further inflamed by the Russian bailout. Alike Saudi Arabia and the UAE lending, Russia lending is not exactly a "seal of good housekeeping" alike that granted by the IMF which opens doors to unbiased lending from more impartial sources:
“The shift towards Moscow risks inflaming the anti-government protests,” Capital’s Chief Emerging Markets Economist Neil Shearing said by e-mail. “While a deal with Russia was always likely to offer the best terms on short-term financing, closer ties with the EU were more likely to provide an anchor for the structural reforms needed to reinvigorate Ukraine’s faltering economy.”

Ukraine’s opposition had planned a rally for this evening and protesters flocked to Independence Square on hearing news of the Russian agreements. There were about 30,000 people there as of 7:30 p.m., according to The RBC-Ukraine news service. The Interior Ministry put the turnout at about 8,000.

“What did Yanukovych promise in exchange?” said 57-year-old Vera from Kiev, who declined to give her last name. “Nobody gives anything without a reason. Now we have only questions.” Opposition leaders addressing the crowds, who’ve blocked central Kiev since the government pulled out of a planned European Union association agreement, were similarly skeptical.  “I know only one place where there’s free cheese -- a mouse trap,” said Arseniy Yatsenyuk, head of jailed ex-Prime Minister Yulia Tymoshenko’s party. “We want to hear what he gave in return.” 
Your country's been sold, my friend. Collusion between Yanukovych and Putin reminds me of a gangster movie (not "gangsta," homey) with a dodgy plot and poor acting. Except in this case it's true-to-life. Most importantly, I hardly think it's solved its balance-of-payments issues by getting into bed with the country that's done quite a lot to exacerbate its situation by blocking trade and threatening to cut off gas supplies during winter. First, there's no guarantee this lifeline will be continued if Ukraine shows signs of disobedience. Second, Ukraine's habit of burning foreign exchange is hardly stopped by a lender with many strings attached showing up.

But hey, they voted for this guy, right?
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Boxers-Turned-Politicians: Pacquiao vs Klitschko

♠ Posted by Emmanuel in ,,, at 12/16/2013 09:17:00 AM
Fighting Russkies, Striking a Blow for the EU
If this were an actual fight, it would be a grossly unfair one since Manny Pacquiao stands 1.69m tall and weighs 65kg whereas Vitali Klitschko--older brother of fellow heavyweight champion Wladimir of Hayden-Panettiere-is-my-girl fame--is 2.01m tall and weighs 110kg. However, this comparison is grossly unfair in other respects of political consequence. In terms of celebrity, the Filipino boxer is far better known competing in the welterweight division where the glamor, money and attention in prizefighting is now concentrated, whereas the heavyweight division lacks compelling personalities. Yet, Vitali Klitschko makes up for the lack of star power with brain power since, like his brother, he has a PhD. Manny Pacquiao famously dropped high school to start fighting since his family needed the money.

I bring up this comparison because the Klitschko brothers are among the most prominent figures in the current campaign to force Ukranian President Viktor Yanukovych to ink a free trade deal with the European Union. Problematically for the brothers and their prospects for Ukraine politics, both have lived virtually all their professional lives outside their homeland in Hamburg, Germany then La La Land, California. Unlike Congressman Manny Pacquiao, they do not simply go abroad to ply their trade and then return home. Nevertheless, the WSJ op-ed pages recently ran a rather fawning feature on Klitschko the Elder as a champion of freedom and free markets (hey, would you expect anything else given the source?)
Yet Mr. Klitschko stands out among the opposition, and not just because of his breathtaking physical size. He's the one new face in a crowd of familiar political mediocrities. He has a Ph.D. in physical sciences, hence his nickname, Dr. Ironfist. His considerable fortune earned from boxing reassures people about the sincerity of his commitment to fight corruption and resist temptation...

He has broken out in the polls, leading Mr. Yanukovych in a head-to-head match, which may come sooner than the presidential election due in early 2015. The government fears him enough that earlier this fall it fiddled with the residency requirement for the presidency, patently to stop him, since he had trained and lived in Germany for most of the previous decade. Mr. Klitschko says the retroactive legal change won't hold up in court, but in another context notes that the judges are in Mr. Yanukovych's pocket.

"In these hard days, the moral support from friends of democracy is very important," says Mr. Klitschko. While the nationalists in Maidan [Square--protest site] play up Russian meddling, he is always careful to insist that the fight isn't so much about personalities or geopolitics as about values—democracy, human rights, the rule of law. In short, Europe.
It's all very anti-Russian if that's your sort of thing and imagine the Iron Curtain still hangs across Eastern Europe. As the proprietor of the IPE Zone, however, I am more interested in how these two pugilistic politicians regard trade. As I mentioned before, Manny Pacquiao sponsored the passage of trade exemptions for Philippine textile exports to the US that would have likely violated WTO strictures [1, 2]. Meanwhile, Klitschko is championing a preferential trade agreement with the EU. It's not necessarily trade-positive--trade diversion and all that--but the sentiment is there. Who wins in this respect? I'd say Klitschko by a technical knock-out since the Philippine congressman's proposed deal never made it off the ground.

At any rate, we'll probably have more time to learn about both fighters' views on trade since Vitali Klitschko now suggests he will run for the presidency in 2015. Pacquiao meanwhile has long set his sights on the Philippines' highest office.

On education grounds, I prefer the guy with the PhD, but I'm stuck being in the country with the high school dropout.
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World's Smallest Currency Union: Caribbean Challenges

♠ Posted by Emmanuel in , at 12/15/2013 03:16:00 PM
Yes, Virginia, these dollars bear Queen Elizabeth II's image
The Eastern Caribbean Currency Union (ECCU) is the world's smallest currency union among the four existing worldwide. The European Monetary Union (EMU) is known by all, whereas the other two are in Africa. What makes the ECCU doubly interesting is that it is pegged to the US dollar. In fact, it predates the EMU by half a century, although it changed the currency it is being pegged to from GBP to USD halfway through:
The OECS members share a common currency, the Eastern Caribbean dollar, which has been pegged to the U.S. dollar since 1976 at EC$2.70=US$1, and was pegged to the British pound at EC$4.80=£1 from 1950 to 1976. Prior to the recent inception of the European Central Bank, the ECCB was one of only three common central banks in the world and the only one where the member countries have pooled all their foreign reserves, the convertibility of the common currency is fully self-supported, and the parity of the exchange rate has not been changed.
Now, there's thought-provoking stuff over at the IMF site concerning the challenges faced by ECCU. Overall, it makes economic sense for micro-sized economies to band together currency-wise:
In terms of the benefits, the small size of these countries means that the currency arrangement allows them to take advantage of scale economies. It also allows them to diversify risk. This means that if one country gets hit by an external shock or natural disaster, the other countries can pool resources and deal with the shock more effectively.

Again, because of their size, these islands can provide, at the regional level, more cost-effective public services. So that is a major benefit. What also matters a great deal is when the union speaks with one voice the countries can be better represented at the global level. 
That said, it is subject to the same sorts of problems the Eurozone faces:
Interestingly enough, the ECCU is actually a microcosm of the European Economic and Monetary Union, since the ECCU has also faced rising fiscal deficits, unsustainable debt levels in a number of states, a lack of fiscal integration, and challenges in parts of the financial sector that can undermine the stability of this union. As illustrated by the European experience, overcoming these challenges is particularly difficult in monetary unions. 
What can I say? God save the queen--and the East Caribbean Dollar
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World's #2: Yuan Overtakes Euro in Trade Finance

♠ Posted by Emmanuel in , at 12/12/2013 05:15:00 PM
Trade finance is a somewhat arcane area despite its obvious importance to keeping world trade afloat. To make a long story short, a loan taken out by a trading firm for an international transaction is known as a "letter of credit." [LC] In effect, the lending bank's creditworthiness substitutes for the debtor's, allowing the counterparty to be assuaged regarding credit risk.

In recent times, the Chinese yuan or renminbi has come on like gangbusters as more and more of these instruments are denominated in RMB. Reflecting China's emergence as the world's largest trading nation in merchandise, a significant minority of the world's letters of credit are now in RMB. In fact, it has now reached a milestone of overtaking the vaunted Euro in this application in the month of October of this year:
China’s yuan overtook the euro to become the second-most used currency in global trade finance after the dollar this year, according to the Society for Worldwide Interbank Financial Telecommunication [SWIFT]. The currency had an 8.66% share of letters of credit and collections in October [2013], compared with 6.64% for the euro, Swift said in a statement Tuesday. China, Hong Kong, Singapore, Germany and Australia were the top users of yuan in trade finance, according to the Belgium-based financial- messaging platform.
So the dollar remains far and away the largest prominent currency in trade finance, but keep in mind where the yuan came from as late as January 2012 when it held less than a 2% share. Moreover, the appeal of the currency is coming on strong outside of China:
“It’s true that overseas exporters are using the renminbi more as the contract currency to increase the attractiveness and competitiveness of goods or services sold to China,” said Cynthia Wong, the Hong Kong-based head of emerging-market trading for Singapore and Hong Kong at Societe Generale SA.
That said, the Chinese currency still has a long way to go in terms of becoming a vehicle currency for all sorts of payments and being widely exchanged one in forex markets:
The Chinese currency ranked No. 12 for transactions in the global payments system in October, unchanged from the previous month, according to Swift figures. Payment value for the currency rose 1.5% that month, less than the 4.6% growth for all currencies, the Swift data showed. That saw the yuan’s market share drop to 0.84% from 0.86% in September.

Daily yuan transactions surged to $120 billion in April from $34 billion in 2010, making it the ninth most-traded currency in the world, according to a September report by the Bank for International Settlements in Basel, Switzerland.
So there's still a long way to go in terms of China allowing further capital account openness and market-trading for the yuan to become a legitimate rival to the dollar and the euro. Yet, the demand is likely there--especially for those who regularly trade with mainland China. That the currency is steadily appreciating is a further bonus to those who wish to hold it. To non-mainland residents, that is not an inconsequential draw:
The yuan has appreciated 2.3% against the greenback this year, the best performance in Asia, according to data compiled by Bloomberg...“I’m not surprised as cross-border trades between China and Hong Kong have been quite dominantly denominated in yuan,” Raymond Yeung, a Hong Kong-based senior economist at Australia & New Zealand Banking Group Ltd., said by phone today. “Yuan trades usually increase when there are strong expectations for yuan appreciation.”
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I Wanna Riot...In Singapore [?!]

♠ Posted by Emmanuel in at 12/10/2013 08:37:00 AM
@#$% the Police, Singapore Edition
Singapore has acquired a reputation for being squeaky-clean to the point of being antiseptic. It is particularly famous for two things in this respect: banning bubble gum in public that can litter surroundings and caning juvenile delinquents alike the Yankee brat kid Michael Fay [whappack!] In reality, though, there are tensions bubbling under the carefully stage-managed facade. There were race riots between ethnic Chinese and Malays in 1964 and 1969 whose records time has not erased. In their wake, Singapore has been at pains to level the playing field for all three major ethnic groups (including those of Indian ethnic descent) by, for instance, having a more diverse civil service, but things are never quite perfect.

Like many Asian nations, Singapore is highly inequitable and is becoming more and more so. Its Gini coefficient stands at 0.478. At the same time, the locals' very low birth rate results in few Singaporeans left to do blue-collar jobs...such as construction. Hence the elements for this year's sudden outburst as an Indian migrant construction worker was struck down by a wayward bus, resulting in that ever-so-rare event: a riot in Singapore.
A crowd of about 400 foreign workers, angered by a fatal road accident, set fire to vehicles and attacked police and emergency services workers late Sunday in Singapore's ethnic Indian district, injuring at least 18 people in a rare riot in the city-state

Police and eyewitnesses say the riot, the first major outburst of public violence here in more than four decades, started at about 9:23 p.m. local time (1323 GMT) after a bus hit and killed an unnamed 33-year-old Indian man in the Little India neighborhood, prompting large groups of South Asian workers to attack the bus with sticks and garbage bins.

Authorities quelled the violence before 11 p.m. after deploying 300 police officers to the scene, including its riot-control squad and Gurkha unit, police officials said in a news briefing early Monday, adding that officers didn't use any firearms to end the riot...

Police officials said 10 officers were hurt, none seriously, while the bus driver involved in the fatal accident—a Singaporean—was hospitalized. Five vehicles were burned—including three police vehicles, an ambulance and a motorcycle, the Civil Defense Force said. Several other vehicles—including police, civil defense, and privately owned cars—also were damaged, officials said...
The role of migrant workers has come under scrutiny:
The riot has sparked concerns of festering unrest amid the large foreign workforce, numbering about 1.3 million as of June, in this island state of 5.3 million people. In recent years, some foreign laborers—particularly low-pay unskilled workers in construction—have resorted to protests against alleged exploitation by employers, including a rare and illegal strike last year by about 170 public-bus drivers hired from China.
There is also, unfortunately, an element of racial profiling
Even so, police would "pay extra attention not just to Little India, but also to foreign-worker dormitories and known places of congregation, moving forward," Police Commissioner Ng Joo Hee said at the briefing. Police officials said they were treating the incident as a case of "rioting with dangerous weapons," an offense that carries penalties including up to 10 years' jail, as well as caning.
Good ol' caning; would this be Singapore without it? Yes, Singapore is highly inequitable, but its claim to fame has been different races living in relative harmony in recent years. I guess the seams are beginning to show once more as inequality becomes more evident based on racial differences. Then again, demographic realities probably mean that flashpoints of this sort will continue to occur in the near future, especially as income and racial divides reinforce each other.

This ain't Disneyland, folks.

UPDATE: Racial profiling in "Little India" is not new, and these events may further inflame matters.
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Numbers Don't Lie: Catholicism is Growing

♠ Posted by Emmanuel in at 12/10/2013 07:57:00 AM
It remains remarkable how a non-negligible portion of the world population can be classified under a single church with a single leader and a single history: the Catholic Church. I've been performing religion-related research and came across a 2013 Pew Research poll describing the extent of this faith. To be sure, there is fragmentation among Christian denominations: born-agains, charismatics and so on have mixed in with Anglicans and even Catholics. However, as fads in Christianity come and go, one thing remains fairly stable in terms of global proportion and growing in terms of absolute numbers--St. Paul's brand:
Over the past century, the number of Catholics around the globe has more than tripled, from an estimated 291 million in 1910 to nearly 1.1 billion as of 2010, according to a comprehensive demographic study by the Pew Research Center.

But over the same period, the world’s overall population also has risen rapidly. As a result, Catholics have made up a remarkably stable share of all people on Earth. In 1910, Catholics comprised about half (48%) of all Christians and 17% of the world’s total population, according to historical estimates from the World Christian Database. A century later, the Pew Research study found, Catholics still comprise about half (50%) of Christians worldwide and 16% of the total global population.

What has changed substantially over the past century is the geographic distribution of the world’s Catholics. In 1910, Europe was home to about two-thirds of all Catholics, and nearly nine-in-ten lived either in Europe (65%) or Latin America (24%). By 2010, by contrast, only about a quarter of all Catholics (24%) were in Europe. The largest share (39%) were in Latin America and the Caribbean.
Now, as then, the Catholic Church's critics are myriad. In the longer historical sweep, though, its geographic reach ostensibly in the business of saving souls is broader as stagnant-to-declining markets  (North America, Europe) are supplanted by more dynamic ones (sub-Saharan Africa, Asia-Pacific), while holding on to saturated markets (Latin America).
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Is Europe Overrepresented at World Cup? Nope

♠ Posted by Emmanuel in at 12/08/2013 09:47:00 AM
It's the weekend and it's time we had another feature dealing with international sport. Perhaps inevitably, let's talk about football. Some are lamenting that the ranks of World Cup participants for next year's event is in Brazil are filled with European teams. Why does Europe get represented by 13 teams--over 40% of the participants? Don't Europeans represent only slightly over 10% of the world population? Certainly this is an unfair remnant of a bygone, Eurocentric world?  With the group draws done and dusted, it's time to have a closer look at the matter.

The easiest way to go about our task is to look at the number of European teams in FIFA's rankings of national teams. Since there are 32 participants in the World Cup, how many of them are European? By this metric, things look rather fairer. Here are the Europeans in the world's top 32 as of November 28, 2013:

01. Spain
02. Germany
05. Portugal
07. Italy
08. Switzerland
09. Netherlands
11. Belgium
12. Greece
13. England
16. Croatia
18. Ukraine [did not qualify for World Cup 2014 - Brazil]
19. France
21. Bosnia-Herzegovina
22. Russia
25. Denmark [DNQ]
27. Sweden [DNQ]
28. Czech Republic [DNQ]
29. Slovenia [DNQ]
30. Serbia [DNQ]
32. Romania [DNQ]

Also consider two European teams that fall just outside the top 32:

33. Scotland [DNQ]
34. Armenia [DNQ]

So actually, Europe is (gasp!) underrepresented at the World Cup. If we dealt away with regional qualifiers which make it harder for Europeans to reach Brazil due to tougher competition--ie., each other--and instead select teams by virtue of their world rankings, then 20 out of 32 (62.5%) participants should be European instead of 13. Sorry, but the rankings imply that 7 teams from other regions of the world got in on football's equivalent of "affirmative action." We speak of a "group of death" featuring top-ranked national sides during the World Cup group stage that is hard to progress from into the knockout stages, but Europeans are invariably drawn into a "region of death" just to qualify for the event. Does anyone really doubt that European non-qualifiers alike the Czech Republic, Denmark or Sweden would beat the stuffing out of Costa Rica, Honduras or Iran?

Is it a throwback to a bygone era of Western political-economic dominance, then? No, Europe still rules over this sport if we go by international team rankings. Also keep geopolitics in mind: with the demise of the former Soviet Union and Yugoslavia, the number of world-class European national sides has significantly increased. Among the top 32, the former begat Russia and Ukraine while the latter begat Croatia, Bosnia-Herzegovina, Slovenia and Serbia. Why Europe still dominates is an interesting question which I suspect deals with the most lucrative and competitive of professional leagues being in Europe. If you want to sharpen your talents against world-class competition, then European professional leagues remain the place to be.
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WTO Welcomes Its 160th Member, Yemen

♠ Posted by Emmanuel in ,, at 12/08/2013 08:57:00 AM
Yemen, there's no need to feel down
I said Yemen, pick yourself off the ground...

A little neglected in the hullabaloo surrounding the conclusion of the "Bali package" at WTO negotiations in the eponymous Indonesian resort location has been the organization's acceptance of its 160th member. A stop on the Silk Route of centuries past, to say Yemen has fallen under hard times due to religious extremists and assorted nutcases taking up their various dubious causes is an understatement. However, it now joins the growing ranks of least-developed country members:
Immediately after the heads of delegations’ meeting, members formally accepted Yemen as a new WTO member — its “accession” to the WTO. At a ceremony to celebrate the decision, Mr Azevêdo congratulated the Yemen government for the domestic reforms it is undertaking after 13 years to finally become a WTO member. “We celebrate accessions both because of what it means for the individual country, but also because of what it means for this organization,” he said

The Republic of Yemen will be the 35th least developed country in the WTO. “This group makes up a fifth of the whole WTO membership. It is an important constituency — and, as we have seen in recent days, it is one that is increasingly making its voice heard,” said the Director-General. Yemen’s Industry and Trade Minister Sa’aduddin Bin Taleb expressed his country’s gratitude and excitement at finally becoming a WTO member.

“Sometimes things change for countries and fortunes change. But the very essence of a country and the history and the civilisation remains. Ours has been trading for the last at least five or six hundred years, in fact, since the spice route," he told the assembled ministers from the WTO’s current membership.“We aim to take back that road again and to connect with everybody in the world. ... I hope that after a few months, we will have a new Yemen born." The Yemeni Parliament will have six months, until 2 June 2014, to ratify its accession package. It will then inform the WTO and 30 days later it will officially become a member.
What can I say? Yemen's membership comes just in time to enjoy duty-free, quota-free access by least-developed countries to richer ones as well as preferential rules of origin. Meanwhile, the domestic debate is awfully similar to what countries considering joining the WTO have--we will be inundated with imports, our domestic industries will be wiped out as a consequence, domestic firms are not yet ready, etcIts :
Sana’a University economics professor Salah Al-Maqtari said the move was a bad one for Yemen. “Yemen already has no customs restraints, and international products have invaded its markets, even before accession to the WTO,” he said. Al-Maqtari said Yemen imports 85 percent of its food commodities from abroad and does not produce many goods for export.

“Yemen is on the losing side because its consumption [of imports] is higher than its production [of goods for export],” he said. Car importer Sami Sabiha said the Yemeni government has not made any preparations to help industries or the economy deal with the difficulties they will face as a result of joining the organization. 
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Venezuela's Bolivarian Revolution is Dead, Long Live F1!

♠ Posted by Emmanuel in ,, at 12/06/2013 02:11:00 PM
Sorry 21st century socialist sympathizers, but the economic and moral bankruptcy of Hugo Chavez's Bolivarian Revolution is becoming more apparent with each passing day as his successor finishes off the job. Even rose-tinted glasses cannot obscure the damage done. First, "oil diplomacy" is sagging as the US ups its domestic production of petroleum care of fracking and a slower world economy has limited Venezuela's ability to fund (costly) PR stunts:
The late President Hugo Chavez's dream of leveraging Venezuela's oil wealth to spread revolution across Latin America is crumbling under the weight of an economic crisis that is forcing his hand-picked successor to cut back on generous foreign aid.

Signs of the country's waning influence are becoming more apparent. In early November, Guatemala withdrew from the Petrocaribe oil alliance launched by Chavez, saying it didn't receive the ultra-low financing rates it had been promised by Venezuela when it first sought to join the 18-nation pact in 2008. Also in recent weeks, representatives of Brazil and Colombia have held meetings with their Venezuelan counterparts to collect overdue payment for food, manufactured goods and other imports. 
As some wiseguy said, the world's largest holder of crude reserves has Egypt-like FX reserves due to spectacular mismanagement aimed at generating publicity for Venezuela as some sort of alt-globalization hero and not at competence in managing a resource-rich economy.  Second, we now receive word that Venezuela is upping its police-state-like characteristics in attempting to ban public access to websites that list black market exchange rates for US dollars instead of taking scarcely believable "official" rates at face value which next to no dealers will sell you greenbacks at in exchange for the local currency (bolivars). These guys even outdo the Chinese in cyber-supression:
Venezuelans have been scrambling for dollars for weeks, taking refuge in the greenback as their own currency is in free fall. Rather than address the economic imbalances behind the bolivar's plunge, the government is going after the bearers of the bad news — it's blocking websites people use to track exchange rates on the black market.

Cyber-activists say the crackdown goes to absurd lengths, even targeting Bitly, the popular site for shortening Web addresses to make it easier to send them as links via Twitter and other social media. For more than two weeks, access to the service has been partially censored by several Internet service providers in Venezuela, apparently because Bitly was being used to evade blocks put on currency-tracking websites.

The New York company says such restrictions have only previously been seen in China, which has one of the worst records for Internet freedom, and even then not for such an extended period. Opponents of Venezuela's socialist government say the controls are designed to obscure reporting of the nation's mounting economic woes.
Can you say "police state"? Despite the country's ongoing descent into socioeconomic hell, what's notable is that state-sponsored F1 driver Pastor Maldonaldo has actually upgraded his ride next season from Williams (which scored exactly zero points this year) to Lotus (which finished fourth in the constructor's tables). How did this happen? Maldonaldo did not get his Lotus ride on merit; rather, the hard-up team is banking on Venezuelan state cash Maldonaldo will bring. In contrast to its former driver, world champion Kimi Raikkonen who the team still owes money, Maldonaldo will presumably bring in cold hard cash for his paid ride:
Lotus’ financial predicament was recently laid bare by their Ferrari-bound Finn Kimi Raikkonen, who revealed in Abu Dhabi that he had been paid “zero euros” by the team all year. It is thought that he is owed around £15 million. PDVSA paid just under £30 million a year for the quick but extremely erratic Maldonado to drive at Williams where he was responsible for the team’s first win in eight years, in Barcelona last year, along with numerous collisions. 
It's odd that Venezuela will plump big cash on this bourgeois sport as one of the last few PR stunts it can still afford even if many folks back home live lives of not-so-quiet desperation. Like in Thailand, this is democracy in action for you for better or (much) worse.
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OECD 2012 Education Rankings: US, Leftists Get Dumberer

♠ Posted by Emmanuel in at 12/04/2013 11:34:00 AM
I am annoyed with the leftist Economic Policy Institute's spin on the results for the OECD's standardized tests known as PISA. The EPI is complaining that the results portray an unfair picture of American academic performance, and that US policymakers paint an unnecessarily dire picture of US education. Another year, another batch of crappy (should I spell that "KrapPi" to make it more intelligible to certain North American audiences?) results. Ho-hum. Among other EPI complaints we have the following:
  • There is a test score gap between socioeconomically advantaged and disadvantaged students in every country. Although the size of the gap varies somewhat from country to country, countries’ gaps are more similar to each other than they are different.
  • Countries’ average scores are affected by the relative numbers of advantaged and disadvantaged students in their schools. The United States has relatively more disadvantaged students than the usual comparison countries. If average scores were adjusted so that each country had a similar social class composition, U.S. scores would appear to be higher than conventionally reported and the gap with top-scoring countries, while still present, would be smaller. Adjusting for differences in countries’ social class composition can also change their relative rankings.
While I appreciate the retro-Marxist class warfare stylings, the EPI argument boils down to this: "social class," i.e., household income (I aspire to the petty bourgeoisie, in case you're interested) is the largest determinant of PISA test performance. If we accept this premise, then the picture they paint is even direr than that portrayed by American policymakers. Why? Because Stateside incomes are going nowhere fast--and so there's no point in trying to improve test scores when they are tied to stagnant-to-declining incomes. Next, try this observation:
  • Some countries to which the United States is frequently unfavorably compared currently have higher test scores, but their test scores have been falling over time, while scores in the United States have not been similarly falling. It is not apparent to what extent U.S. policymakers should attempt to learn from the experience of countries with high scores, or from the experience of countries with rising scores.
Actually, US scores have been falling over time--see an older post--while those of others have only on a case-to-case basis. For them you have this explanation: Given that any number of developed countries are just as stagnant-to-declining in income growth terms as the United States, you would expect similar performance in terms of academic achievement. The EPI told us this, right?

IMHO both parties get it wrong. American policymakers should target raising incomes if they really are concerned about raising test scores. There are endogeneity biases possible here, but the wealth of nations is seldom discussed in education reform for obvious reasons despite good reasons to believe they are linked. It's not politically correct, is it? Meanwhile, the leftists do not manage to brush off this issue with Alfred E. Neuman ease but actually exacerbate it by tying it to American's economic fortunes in engaging with well-worn class warfare discourse. US incomes are going down the toilet (or floating around a porcelain bathroom fixture), and so are US test scores.

Bottom line: Results from Shanghai, Singapore, Hong Kong, Taiwan, Korea and Macau are definitely not representative since they are neither OECD members nor are they sampled nationwide but only in major cities. That said, their economies are not stagnant-to-declining, so there's really no surprise they're faring better. Do we really need more evidence of the shifting balance of knowledge?

There is no conspiracy here to keep Americans poor and stupid. As you get poorer, you get stupider; well no @#$%, Sherlock. Ask this guy...

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