Zhu Baoliang, chief economist at the State Information Centre, a government think-tank, has apparently signalled the probability that China will cut taxes and slash banks' reserve requirements to try to support slowing economic growth http://www.reuters.com/article/2012/02/02/us-china-economy-policy-idUSTRE8110NL20120202
As the regime is flush with cash (at least as far as we know), cutting taxes is a smart move.
However, reducing banks' reserve requirements is a palpably false move since there is already a lot of bad debt in the system, and such a move will make it worse - and thereby make Chinese banks even more vulnerable than they already are.
As growth declines to 8% or less, a lot more capital will flee China - making the situation even more difficult for China to handle.
Sphere: Related Content
Thursday, February 02, 2012
The state of play regarding one key aspect of reforms that would provide a basis for growth
One of the key factors strangling growth at present is that the basic rules of play are not clear.
I hailed the Dodd-Frank Act as providing one such basic rule of play, on the basis of which growth could be soundly resumed.http://www.blogger.com/img/blank.gif
But as its requirements have played out there has been intense action against each of those requirements by exactly the organisations that created the crisis.
Occasionally, I have commented on the tussle between those who want to implement the requirements of Dodd-Frank in the spirit in which they were intended and those who would like to dilute them as far as possible.
The current state of play regarding the key matter of the Volcker Rule is at: http://www.reuters.com/article/2012/02/02/us-financial-regulation-volcker-idUSTRE8112AU20120202
The crux of the matter is that all the struggles since then, and all the compromises and exceptions that are now being included, which have resulted in the 298 pages of the current version, have apparently (and predictably) simply muddied the waters.
In general, the longer the draft of a regulation, the more exceptions it is trying to allow while also trying to safeguard at least something of the letter of what was originally proposed.
All that fudging ends in - guess what? - a fudge.
According to the Reuters report to which I refer above, "the divide comes down to a natural tension between attorneys writing the comment letters and traders whose activities will be curtailed". The point of the Volcker Rule was precisely to curtail those activities.
Further, the report says the split is about "the best approach to make sure the ban on proprietary trades doesn't also capture trades that banks make for their customers' benefit, known as "market making", or firms' own portfolio hedging". The Volcker Rule was clear that banks should not be making trades for customers' benefit (that should be done by other entities).
And hedging a portfolio is a bit of nonsense.
The portfolio is itself meant to spread (or hedge) risk. If that does not spread the risk sufficiently, something is wrong with the portfolio, and it is in principle wrong to then go to someone else to try to take whatever risk is there in that portfolio off you.
Portfolio managers are supposed to be paid for their expertise in spreading risk by portfolio methods.
If the managers are not good enough, they should be fired - not insured.
If you do not fire incompetent portfolio managers but seek to insure them instead, you are asking an insurance company, which does not know the portfolio intimately, to second guess someone who does know the portfolio intimately.
In principle, only an idiotic insurance company would take on such insurance.
Yet we know that insurance companies DO take on such insurance - on very large scales. And when you think of such insurance companies, remember AIG.
In America, the favourite way of avoiding genuine debate is by labelling something "communist" or "leftist".
The reporter gives away Reuters' bias by saying that the Volcker Rule was "hailed by leftists" and goes on to say: "the Volcker rule has been excoriated by the right, who warn it could take liquidity out of the market and make it hard for firms to raise capital". That was, and is, the whole point of the Volcker Rule.
Difficult as it is to think about this in the current state of the global economy, there are some kinds of liquidity that are bad.
And certain kinds of firms should not be able to raise capital too easily.
The scale of the bust was primarily because too much capital was going into speculation. Not enough capital was going into productive uses.
Capital should go to productive uses, not to speculative uses.
In other words, production should be favoured over gambling.
That is essentially what the Volcker Rule is about.
If we want to take back Capitalism from Casinoism, then it is critical to back the Volcker Rule, not fudge it.
If the regulators proceed to incorporate the sort of "discretion" that is being suggested, to be exercised by the entities that created the crash, then it is clear what will happen soon enough - another crash. And an even bigger crash. Sphere: Related Content
I hailed the Dodd-Frank Act as providing one such basic rule of play, on the basis of which growth could be soundly resumed.http://www.blogger.com/img/blank.gif
But as its requirements have played out there has been intense action against each of those requirements by exactly the organisations that created the crisis.
Occasionally, I have commented on the tussle between those who want to implement the requirements of Dodd-Frank in the spirit in which they were intended and those who would like to dilute them as far as possible.
The current state of play regarding the key matter of the Volcker Rule is at: http://www.reuters.com/article/2012/02/02/us-financial-regulation-volcker-idUSTRE8112AU20120202
The crux of the matter is that all the struggles since then, and all the compromises and exceptions that are now being included, which have resulted in the 298 pages of the current version, have apparently (and predictably) simply muddied the waters.
In general, the longer the draft of a regulation, the more exceptions it is trying to allow while also trying to safeguard at least something of the letter of what was originally proposed.
All that fudging ends in - guess what? - a fudge.
According to the Reuters report to which I refer above, "the divide comes down to a natural tension between attorneys writing the comment letters and traders whose activities will be curtailed". The point of the Volcker Rule was precisely to curtail those activities.
Further, the report says the split is about "the best approach to make sure the ban on proprietary trades doesn't also capture trades that banks make for their customers' benefit, known as "market making", or firms' own portfolio hedging". The Volcker Rule was clear that banks should not be making trades for customers' benefit (that should be done by other entities).
And hedging a portfolio is a bit of nonsense.
The portfolio is itself meant to spread (or hedge) risk. If that does not spread the risk sufficiently, something is wrong with the portfolio, and it is in principle wrong to then go to someone else to try to take whatever risk is there in that portfolio off you.
Portfolio managers are supposed to be paid for their expertise in spreading risk by portfolio methods.
If the managers are not good enough, they should be fired - not insured.
If you do not fire incompetent portfolio managers but seek to insure them instead, you are asking an insurance company, which does not know the portfolio intimately, to second guess someone who does know the portfolio intimately.
In principle, only an idiotic insurance company would take on such insurance.
Yet we know that insurance companies DO take on such insurance - on very large scales. And when you think of such insurance companies, remember AIG.
In America, the favourite way of avoiding genuine debate is by labelling something "communist" or "leftist".
The reporter gives away Reuters' bias by saying that the Volcker Rule was "hailed by leftists" and goes on to say: "the Volcker rule has been excoriated by the right, who warn it could take liquidity out of the market and make it hard for firms to raise capital". That was, and is, the whole point of the Volcker Rule.
Difficult as it is to think about this in the current state of the global economy, there are some kinds of liquidity that are bad.
And certain kinds of firms should not be able to raise capital too easily.
The scale of the bust was primarily because too much capital was going into speculation. Not enough capital was going into productive uses.
Capital should go to productive uses, not to speculative uses.
In other words, production should be favoured over gambling.
That is essentially what the Volcker Rule is about.
If we want to take back Capitalism from Casinoism, then it is critical to back the Volcker Rule, not fudge it.
If the regulators proceed to incorporate the sort of "discretion" that is being suggested, to be exercised by the entities that created the crash, then it is clear what will happen soon enough - another crash. And an even bigger crash. Sphere: Related Content
Thursday, January 26, 2012
The current state of robotics in Japan
Readers may recollect that I had publicised, some years ago, the year 2012 as the date on which Japan would start releasing the next generation of "intelligent robots" (some of which I previewed in those posts).
I don't see any sign that any spectacular release is planned for this year, though it could be that the releases may happen without much fanfare - or that the launch has been delayed by the crisis which started in 2007. However, there is lots going on the robotics industry in Japan.
Japan is biggest producer of robots in the world. For example,some 290,000 industrial robots were operating in Japan last year, 60% more than in its closest competitor, North America. Japanese companies are more active in certain fields than in others - e.g. houcsecleaning and nuclear sites have not been among their priorities so far. However, at the Fukushima Daiichi nuclear plant, it was Japanese robots that entered the No. 2 reactor building (while American ones entered building no. 3). The Japanese robots, called Quince, were developed by the Chiba Institute of Technology. Not only is Japan the overall leader, but it is also launching new initiatives to become the world leader in segments, verticals and niches where it is not yet number one.
While Japan anticipates going into the red in terms of its trade balance this year, I anticipate that it will move back into the black as soon as the new generation of intelligent robots is properly in the market.
The most interesting robots produced recently include:
1. The Wedding robot:
The wedding of Professor Satoko Inoue and Satoko Shibata was presided over by I-Fairy, a 4-feet high robot, valued at 6.3 million yen and made by Kokoro Co. Ltd. I-Fairy is able to recognise people and imitate natural movements while reciting pre-recorded lines.
2. The Singing and Dancing Fashion Model:
Fashion designer Yumi Katsura chose Miim, a 5-foot 2’’ robot to model a wedding dress on the catwalk as the finale for her design showcase. Miim is walks the catwalk and pauses at the end. She not only talks, walks, claps, waves, smiles, frowns, sings, exercises, and dee jays, she can even hold her own in a press conference!
3. The Perfect Companion:
Created by computer specialist Le Trung, Aiko is a pretty robot who can cook, clean, do the accounts, read newspapers and speak 13,000 sentences in English as well as Japanese.
4. The Sommelier:
NEC System Technologies and Mie University developed a ‘wine-bot’, a 2ft robot sommelier that can ‘taste’ wine and provide customers with accurate identification of the wine. Apparently, the robo-sommelier can be programmed to provide personalized wine recommendations.
5. The Dental Patient:
Simroid is a robot designed by Kokoro and Co. Simroid looks like a small Japanese woman and has a full set of teeth with sensitive virtual nerves. Designed for dental patients to practice on, Simroid is able to yelp if the dental students touch any nerves.
6. Kobot is a three-wheel single-seat electric scooter that responds to a smart phone and, for example, folds itself into a space of about one cubic meter for storage.
7. The Hairdresser:
Panasonic created a hair-washing and drying robot with 8 fingers and a 3-motor mechanism.
8. The Actress: Geminoid F is a robot actress that has performed in a play directed by Japanese director Oriza Hirata, alongside human actress Bryerly Long. Geminoid F was created by Hirohoshito Ishiguto and is scarily lifelike
9. Dual home cleaning/cinema:
RIDC-01 is a $85,000 robot designed to clean houses. Once finished, RIDC-01 has a projector and can be converted into a home cinema to project DVDs.
10. The Ladder-Climber:
Osaka-based industrial equipment maker Muscle Corporation and a few other Japanese companies have developed a humanoid that can climb up and down ladders all by itself. The so-called “Dream Robo” was initially showcased during the Shanghai Expo 2010. Now it stands 1.4m high, weighs about 30kg and moves with the help of five motors that are built into its body.
11. The Farmer:
You may not believe it, but robots are being sent in to try and save Japan's ravaged agricultural production. After the 9.0-magnitude earthquake and subsequent tsunami that devastated Japan in March 2011, the government is planning to spend $52 million in the next 6 years to place robots on farmland decimated by floodwater from the tsunami. The robots will work the fields and then box the crops after harvest. Whether anyone will want to buy and eat what is boxed is a different kind of question. Sphere: Related Content
I don't see any sign that any spectacular release is planned for this year, though it could be that the releases may happen without much fanfare - or that the launch has been delayed by the crisis which started in 2007. However, there is lots going on the robotics industry in Japan.
Japan is biggest producer of robots in the world. For example,some 290,000 industrial robots were operating in Japan last year, 60% more than in its closest competitor, North America. Japanese companies are more active in certain fields than in others - e.g. houcsecleaning and nuclear sites have not been among their priorities so far. However, at the Fukushima Daiichi nuclear plant, it was Japanese robots that entered the No. 2 reactor building (while American ones entered building no. 3). The Japanese robots, called Quince, were developed by the Chiba Institute of Technology. Not only is Japan the overall leader, but it is also launching new initiatives to become the world leader in segments, verticals and niches where it is not yet number one.
While Japan anticipates going into the red in terms of its trade balance this year, I anticipate that it will move back into the black as soon as the new generation of intelligent robots is properly in the market.
The most interesting robots produced recently include:
1. The Wedding robot:
The wedding of Professor Satoko Inoue and Satoko Shibata was presided over by I-Fairy, a 4-feet high robot, valued at 6.3 million yen and made by Kokoro Co. Ltd. I-Fairy is able to recognise people and imitate natural movements while reciting pre-recorded lines.
2. The Singing and Dancing Fashion Model:
Fashion designer Yumi Katsura chose Miim, a 5-foot 2’’ robot to model a wedding dress on the catwalk as the finale for her design showcase. Miim is walks the catwalk and pauses at the end. She not only talks, walks, claps, waves, smiles, frowns, sings, exercises, and dee jays, she can even hold her own in a press conference!
3. The Perfect Companion:
Created by computer specialist Le Trung, Aiko is a pretty robot who can cook, clean, do the accounts, read newspapers and speak 13,000 sentences in English as well as Japanese.
4. The Sommelier:
NEC System Technologies and Mie University developed a ‘wine-bot’, a 2ft robot sommelier that can ‘taste’ wine and provide customers with accurate identification of the wine. Apparently, the robo-sommelier can be programmed to provide personalized wine recommendations.
5. The Dental Patient:
Simroid is a robot designed by Kokoro and Co. Simroid looks like a small Japanese woman and has a full set of teeth with sensitive virtual nerves. Designed for dental patients to practice on, Simroid is able to yelp if the dental students touch any nerves.
6. Kobot is a three-wheel single-seat electric scooter that responds to a smart phone and, for example, folds itself into a space of about one cubic meter for storage.
7. The Hairdresser:
Panasonic created a hair-washing and drying robot with 8 fingers and a 3-motor mechanism.
8. The Actress: Geminoid F is a robot actress that has performed in a play directed by Japanese director Oriza Hirata, alongside human actress Bryerly Long. Geminoid F was created by Hirohoshito Ishiguto and is scarily lifelike
9. Dual home cleaning/cinema:
RIDC-01 is a $85,000 robot designed to clean houses. Once finished, RIDC-01 has a projector and can be converted into a home cinema to project DVDs.
10. The Ladder-Climber:
Osaka-based industrial equipment maker Muscle Corporation and a few other Japanese companies have developed a humanoid that can climb up and down ladders all by itself. The so-called “Dream Robo” was initially showcased during the Shanghai Expo 2010. Now it stands 1.4m high, weighs about 30kg and moves with the help of five motors that are built into its body.
11. The Farmer:
You may not believe it, but robots are being sent in to try and save Japan's ravaged agricultural production. After the 9.0-magnitude earthquake and subsequent tsunami that devastated Japan in March 2011, the government is planning to spend $52 million in the next 6 years to place robots on farmland decimated by floodwater from the tsunami. The robots will work the fields and then box the crops after harvest. Whether anyone will want to buy and eat what is boxed is a different kind of question. Sphere: Related Content
Apologies
I apologise for having been "off" for a bit but I was travelling, and my computer was on the blink.
The idea is to resume some service as of today, and full service on Feb 1. Sphere: Related Content
The idea is to resume some service as of today, and full service on Feb 1. Sphere: Related Content
Monday, January 23, 2012
What happens to philanthropy during a recession?
Interestingly, IN THE USA, it goes UP!
http://www.bauer.uh.edu/rexdu/how%20economic%20contractions%20and%20expansions%20affect%20expenditure%20patterns.pdf
The above link takes you to the text of an article based on results of a substantial study (6000 households over 20 years - 1982 to 2003 - which experienced three recessions).
The article is published in The Journal of Consumer Research, by Wagner A. Kamakura (Ford Motor Company Professor of Global Marketing, Fuqua School of Business, Duke University) and Rex Yuxing Du (Hurley Professor of Marketing, C. T. Bauer College of Business, Houston University).
What does the data show? That: recessions shrinking US GDP by 2% caused some US consumers to increase charitable giving by 32% (!!!), while others increased their tobacco consumption by 16%.
As regular readers of my Blogs will know, I have followed philanthropic giving for some time, and this finding is astounding.
Americans really are rather special people. Sphere: Related Content
http://www.bauer.uh.edu/rexdu/how%20economic%20contractions%20and%20expansions%20affect%20expenditure%20patterns.pdf
The above link takes you to the text of an article based on results of a substantial study (6000 households over 20 years - 1982 to 2003 - which experienced three recessions).
The article is published in The Journal of Consumer Research, by Wagner A. Kamakura (Ford Motor Company Professor of Global Marketing, Fuqua School of Business, Duke University) and Rex Yuxing Du (Hurley Professor of Marketing, C. T. Bauer College of Business, Houston University).
What does the data show? That: recessions shrinking US GDP by 2% caused some US consumers to increase charitable giving by 32% (!!!), while others increased their tobacco consumption by 16%.
As regular readers of my Blogs will know, I have followed philanthropic giving for some time, and this finding is astounding.
Americans really are rather special people. Sphere: Related Content
Saturday, January 21, 2012
If interested in textiles from India
On my visit to India this year, in the cold of Delhi, I am reminded that one of the most honest and reliable exporters of wollens, carpets, etc from India is Mr Om Prakash Kalia, whose office is very near the Golden Temple, telephone: +91 9988 245 000.
I have known him for some decades, and can call him a real friend. And I suppose I should make it clear that I have no share in his business, and benefit financially from it in no way. Sphere: Related Content
I have known him for some decades, and can call him a real friend. And I suppose I should make it clear that I have no share in his business, and benefit financially from it in no way. Sphere: Related Content
Friday, January 13, 2012
Assessment of Global Risks 2012 by the World Economic Forum
If you have not yet read the WEF view for this year's Global Risks, I encourage you to read it: http://reports.weforum.org/global-risks-2012
Here are the top five clusters of risk (which they call risk-related Centres of Gravity):
•Chronic fiscal imbalances (economic)
•Greenhouse gas emissions (environmental)
•Global governance failure (geopolitical)
•Unsustainable population growth (societal)
•Critical systems failure (technological)
I am surprised to find "unsustainable population growth" included here, as it is fairly clear that global population growth will start declining shortly. The biggest societal risk is surely the rise of a worldwide "me" generation, that cares little for wider society and does not want to get involved in politics, leaving the first field to a few do-gooders, and the second field to liars, thieves and murderers. Sphere: Related Content
Here are the top five clusters of risk (which they call risk-related Centres of Gravity):
•Chronic fiscal imbalances (economic)
•Greenhouse gas emissions (environmental)
•Global governance failure (geopolitical)
•Unsustainable population growth (societal)
•Critical systems failure (technological)
I am surprised to find "unsustainable population growth" included here, as it is fairly clear that global population growth will start declining shortly. The biggest societal risk is surely the rise of a worldwide "me" generation, that cares little for wider society and does not want to get involved in politics, leaving the first field to a few do-gooders, and the second field to liars, thieves and murderers. Sphere: Related Content
Sunday, January 01, 2012
The Druid forecast versus mine for 2012
A cheerful bit of news from a local newspaper in the UK apparently says: “2012 will be a great year... Druids... have high hopes after the Sun shone on Stonehenge, in Wiltshire, yesterday to mark the Winter Solstice.”
The friend who sends me the above says: "THANK YOU, DRUIDS! We could all do with a great year".
Yes, we could indeed all do with a great year.
But if what is meant by a great year is a great year financially or economically, you'll have to wait to see whether the Druids are right, or I....
Meanwhile, the really good news is that money isn't everything. It isn't even signify a lot. Money is merely a necessity or convenience. What matters is what one does with the money one has, however little that may be.
Do good to others. Spread cheer to the people you come across. Reach out to the poorest and most miserable folk that you may not even know personally, through people you trust. That way, whatever is happening in global economics and politics, the year will be a great one for you and yours. Sphere: Related Content
The friend who sends me the above says: "THANK YOU, DRUIDS! We could all do with a great year".
Yes, we could indeed all do with a great year.
But if what is meant by a great year is a great year financially or economically, you'll have to wait to see whether the Druids are right, or I....
Meanwhile, the really good news is that money isn't everything. It isn't even signify a lot. Money is merely a necessity or convenience. What matters is what one does with the money one has, however little that may be.
Do good to others. Spread cheer to the people you come across. Reach out to the poorest and most miserable folk that you may not even know personally, through people you trust. That way, whatever is happening in global economics and politics, the year will be a great one for you and yours. Sphere: Related Content
Friday, December 30, 2011
Forecast for 2012
I am probably in a minority of one in making the following forecast, but here it is for what it is worth.
Let me start with the apparently not very important countries, explain why I am doing so, and then move to the more important countries, and finally to what implications all that has for the management of your savings and wealth.
Established democracies (India and Indonesia) are being threatened by fascist forces (in one case Hindutva, in the other Islamist), though the established structures have so far proved resistant to fascist agendas. Expect the threats and attacks to continue, and let us hope that these democracies continue to weather the attacks.
Budding democracy in Nepal is threatened by Hindutva forces that want to restore the corrupt and incompetent monarchy. Here, one can only hope and pray, as the basic shape of what is to come is not clear.
Emerging or struggling democracies in North Africa and the Middle East face the possibility of having democracy nipped by Islamism (for example, Pakistan, Iraq, Tunisia and Egypt). In these countries, a particular Islamic ideology (Salafist or similar) is being imposed by violence on the population without anyone in authority seeming inclined or able to counter that, in order to nurture political, cultural, religious and social openness in these countries.
So what will happen if the anti-democratic forces in such countries succeed in imposing their agenda? The countries concerned may have an initial period of stability and even prosperity, but stagnation will soon ensue, and it may then take three generations before they liberate themselves from the hold of such forces.
China’s new generation of leaders, led in all probability by Xi Jinping and Li Keqiang, will have an interesting time helping determine and working with their new team. While they will have the support of the existing leaders, who will step down but remain available and influential, the key question is whether they will together be able to steer China through challenges it has never before faced in its history: a population gradually but inevitably becoming more open to the outside world at the same time as the growth rate falls below 8% and therefore begins to unleash social and political tensions as unemployment rises. It is not at all clear to me that China will find it easy to negotiate these challenges. There is therefore a very real danger of China taking to internal repression and/or external aggression.
Untoward developments in any country will further weaken confidence in emerging markets, and pull out from them even more money, both domestic and international.
That applies also to the European Union, though I am more optimistic about that. I expect that the 17 nations which have decided to go ahead with fiscal union will proceed with it, at least the important ones among them in the next three to six months, though it will take perhaps up to two years for everything to be agreed. Naturally, if the Euro project falters, then that will pull money ≈ out of the Euro area also.
Where will all the money pulled out of these countries go to? To the US and UK, where it is already headed in a significant though not yet substantial way.
The UK economy will begin an upswing for structural reasons from some time in 2012 (and the timing of that will depend to a certain extent on how well or badly the Olympics go from a financial and business point of view).
The US economy has already begun its upswing, as I stated publicly some months ago in my speech in Phoenix. This will continue. American banks will start lending to businesses again, and US businesses should do well, at least in the US itself. While unemployment will fall, it will regretfully not fall in proportion to economic growth, due to reasons I have detailed elsewhere.
President Obama will therefore have a recovering economy to boost his prospects of re-election, but a resistant rate of unemployment to mar his prospects.
While he will be tempted to focus all his energies on domestic issues in order to try and win the Presidential race, his chances of actually reducing unemployment and ensuring a victory depend entirely on whether he can take the international initiatives that will reduce unemployment - that is, by means of a world trade agreement that provides a level playing field for all countries, and does not unfairly privilege countries which improperly exploit their human resources, and avoid looking after their environmental and ethical responsibilities.
For the last three decades or so, unethical and environmentally-unfriendly practices have driven global "growth". This may be the crucial year which determines whether our leaders turn our back on that kind of growth and put growth on a new basis which is sustainable and just.
We are going into a year that could be dangerous or exciting, depending on how our leaders respond to the crises that are facing us in principle, and will face us even more in actuality this year.
So much for global politics. What about global economics? Here too we are in an unprecedented situation, with at least one of the best economies in the world now offering a negative rate of return for government bonds - in other words, investors are paying that government to keep their money for them, and losing money in order to do so, presumably on the basis that it is better to have a guaranteed (small) loss than the prospect of much bigger losses elsewhere (e.g. in equities).
What am I talking about?
Denmark's Central Bank has just placed government bonds with three-, six- and nine-month terms, and gained 2.32 billion Danish kroner (approximately EUR 310 million). Two of the three bonds offer investors a return of less than zero per cent - the State will have to pay back less money than it has been lent. The interest for the three-month bonds is minus 0.21 percent, while the interest for the six-month bonds is minus 0.07 percent. Meanwhile, if you were interested in Italian government bonds, those were offering over 9% interest. That is now the gap between bonds from an "unsafe" economy versus bonds from a "safe" economy. Expect more such offers from governments, but weigh them carefully.
Stupid quesiton, but why did not the Danish investors put more of their money in gold? Because even gold might still be over-valued in the current circumstances. Why not more money then in real estate? Because current prices regarding that may turn out to be a bubble too.
So what is the best way of investing? Spread your portfolio as wide as possible, forgetting growth and focusing solely on protecting the value of your savings or wealth. The worst investments might well turn out to be, as I have said for a long time, in the so-called "liquid investments" (i.e. in quoted instruments), which are most exposed to a fall in value. And the best investments might turn out to be those you make in real businesses, producing real goods and services, run by people you know and can trust. But don't forget that it is the US market which is the only one that is guaranteed to grow - unless something extremely stupid is done by America's leaders.
As we go through the swings and roundabouts, and the ups and downs, of 2012, let's do our best with our money and our talents, but let's keep in the forefront of our minds that this life is temporary.
What matters to us eternally is whether we are living our lives on the basis of developing a relationship with God, or whether we want to run our own lives in defiance or ignorance of God.
May Jesus the Lord bless and guide each of us on our path as we consider these things. Sphere: Related Content
Let me start with the apparently not very important countries, explain why I am doing so, and then move to the more important countries, and finally to what implications all that has for the management of your savings and wealth.
Established democracies (India and Indonesia) are being threatened by fascist forces (in one case Hindutva, in the other Islamist), though the established structures have so far proved resistant to fascist agendas. Expect the threats and attacks to continue, and let us hope that these democracies continue to weather the attacks.
Budding democracy in Nepal is threatened by Hindutva forces that want to restore the corrupt and incompetent monarchy. Here, one can only hope and pray, as the basic shape of what is to come is not clear.
Emerging or struggling democracies in North Africa and the Middle East face the possibility of having democracy nipped by Islamism (for example, Pakistan, Iraq, Tunisia and Egypt). In these countries, a particular Islamic ideology (Salafist or similar) is being imposed by violence on the population without anyone in authority seeming inclined or able to counter that, in order to nurture political, cultural, religious and social openness in these countries.
So what will happen if the anti-democratic forces in such countries succeed in imposing their agenda? The countries concerned may have an initial period of stability and even prosperity, but stagnation will soon ensue, and it may then take three generations before they liberate themselves from the hold of such forces.
China’s new generation of leaders, led in all probability by Xi Jinping and Li Keqiang, will have an interesting time helping determine and working with their new team. While they will have the support of the existing leaders, who will step down but remain available and influential, the key question is whether they will together be able to steer China through challenges it has never before faced in its history: a population gradually but inevitably becoming more open to the outside world at the same time as the growth rate falls below 8% and therefore begins to unleash social and political tensions as unemployment rises. It is not at all clear to me that China will find it easy to negotiate these challenges. There is therefore a very real danger of China taking to internal repression and/or external aggression.
Untoward developments in any country will further weaken confidence in emerging markets, and pull out from them even more money, both domestic and international.
That applies also to the European Union, though I am more optimistic about that. I expect that the 17 nations which have decided to go ahead with fiscal union will proceed with it, at least the important ones among them in the next three to six months, though it will take perhaps up to two years for everything to be agreed. Naturally, if the Euro project falters, then that will pull money ≈ out of the Euro area also.
Where will all the money pulled out of these countries go to? To the US and UK, where it is already headed in a significant though not yet substantial way.
The UK economy will begin an upswing for structural reasons from some time in 2012 (and the timing of that will depend to a certain extent on how well or badly the Olympics go from a financial and business point of view).
The US economy has already begun its upswing, as I stated publicly some months ago in my speech in Phoenix. This will continue. American banks will start lending to businesses again, and US businesses should do well, at least in the US itself. While unemployment will fall, it will regretfully not fall in proportion to economic growth, due to reasons I have detailed elsewhere.
President Obama will therefore have a recovering economy to boost his prospects of re-election, but a resistant rate of unemployment to mar his prospects.
While he will be tempted to focus all his energies on domestic issues in order to try and win the Presidential race, his chances of actually reducing unemployment and ensuring a victory depend entirely on whether he can take the international initiatives that will reduce unemployment - that is, by means of a world trade agreement that provides a level playing field for all countries, and does not unfairly privilege countries which improperly exploit their human resources, and avoid looking after their environmental and ethical responsibilities.
For the last three decades or so, unethical and environmentally-unfriendly practices have driven global "growth". This may be the crucial year which determines whether our leaders turn our back on that kind of growth and put growth on a new basis which is sustainable and just.
We are going into a year that could be dangerous or exciting, depending on how our leaders respond to the crises that are facing us in principle, and will face us even more in actuality this year.
So much for global politics. What about global economics? Here too we are in an unprecedented situation, with at least one of the best economies in the world now offering a negative rate of return for government bonds - in other words, investors are paying that government to keep their money for them, and losing money in order to do so, presumably on the basis that it is better to have a guaranteed (small) loss than the prospect of much bigger losses elsewhere (e.g. in equities).
What am I talking about?
Denmark's Central Bank has just placed government bonds with three-, six- and nine-month terms, and gained 2.32 billion Danish kroner (approximately EUR 310 million). Two of the three bonds offer investors a return of less than zero per cent - the State will have to pay back less money than it has been lent. The interest for the three-month bonds is minus 0.21 percent, while the interest for the six-month bonds is minus 0.07 percent. Meanwhile, if you were interested in Italian government bonds, those were offering over 9% interest. That is now the gap between bonds from an "unsafe" economy versus bonds from a "safe" economy. Expect more such offers from governments, but weigh them carefully.
Stupid quesiton, but why did not the Danish investors put more of their money in gold? Because even gold might still be over-valued in the current circumstances. Why not more money then in real estate? Because current prices regarding that may turn out to be a bubble too.
So what is the best way of investing? Spread your portfolio as wide as possible, forgetting growth and focusing solely on protecting the value of your savings or wealth. The worst investments might well turn out to be, as I have said for a long time, in the so-called "liquid investments" (i.e. in quoted instruments), which are most exposed to a fall in value. And the best investments might turn out to be those you make in real businesses, producing real goods and services, run by people you know and can trust. But don't forget that it is the US market which is the only one that is guaranteed to grow - unless something extremely stupid is done by America's leaders.
As we go through the swings and roundabouts, and the ups and downs, of 2012, let's do our best with our money and our talents, but let's keep in the forefront of our minds that this life is temporary.
What matters to us eternally is whether we are living our lives on the basis of developing a relationship with God, or whether we want to run our own lives in defiance or ignorance of God.
May Jesus the Lord bless and guide each of us on our path as we consider these things. Sphere: Related Content
My first American Christmas celebration
For family reasons, I had to be in the US over Christmas this year, which gave me the opportunity to observe and celebrate how Americans "do" Christmas.
On the sunday before Christmas, our friends took us to Lake Avenue Church in Pasadena, one of the megachurches, and it was quite a moving experience, not least because the orchestra is first-rate, and would be first-rate even for a professional one (this one is of course a purely volunteer one - quite extraordinary.
On Christmas Eve, we returned to the Church for the midnight service, which was candlelit - totally magical.
Even for a die-hard anti-christian (me), it was something to see these so well done, balancing the performance aspects with things that involved the participants, whether singing or prayer or passing the peace....
On Christmas Day itself, our hosts had family together in order to read the Bible together, and to talk to God (and listen to God) together.
We were also at two different Christmas parties. One was a relatively straightforward evening, not unlike any other family celebration, though the father of the house has the hobby of being a gourmet chef, so the food was excellent (though I speak from first-hand experience only regarding the vegetarian dishes, of course; for the non-veg dishes, I am simply reporting the views of the others there).
The second party was quite extraordinary (at least from my point of view): there were about 50 people there, family and friends, all ages; there were drinks and quickbites to welcome everyone, then a parlour game involving accepting a random number, which indicated the order in which one could go to the tree and pick a packed present and share the excitement of presents being opened - but the next in line could ask for any of the "open" presents, which added to the piquancy of the occasion! - but all the presents were fun so it all went very well. This was followed by about an hour of carolling led by a choir from a nearby public school (very good). No idea how late some of the other stayed, but we took off at about 9pm as I am an early bird.
On mentioning the above to another American friend, here's the response I had: "I'm happy you enjoyed your first-ever American Christmas Party. I don't really think that gathering should be considered a typical American Christmas Eve. The family and friends part, absolutely! I can only speak from my own personal experiences and say that my childhood Christmas Eve's were roast beef and mashed potatoes, and I'm certain we children provided all the Christmas carols!!!!! And our "Santa Claus" only brought pajamas for all the children and we were expected to put them on, fall asleep and let the adults have some fun!!"
Well, all I can say is, thank God I wasn't offered that cuisine, or I would have had to be content with mashed potatoes. And the idea of Santa presenting pyjamas to the little ones so they can be sent packing seems like a good bit of respite for the adults, but no fun at all for the children!
It was quite interesting to see how many homes and how much of the public spaces were all lit up for Christmas - and it is sad to reflect how Indian homes are being lit less and less now for the Indian festival of lights, Diwali.
Would I have another Christmas in the US? Yes, gladly, though I suspect that this might be my only one in the USA, as we don't have any of our close family there, and Christmas is, like Diwali, more a family time than anything else. Sphere: Related Content
On the sunday before Christmas, our friends took us to Lake Avenue Church in Pasadena, one of the megachurches, and it was quite a moving experience, not least because the orchestra is first-rate, and would be first-rate even for a professional one (this one is of course a purely volunteer one - quite extraordinary.
On Christmas Eve, we returned to the Church for the midnight service, which was candlelit - totally magical.
Even for a die-hard anti-christian (me), it was something to see these so well done, balancing the performance aspects with things that involved the participants, whether singing or prayer or passing the peace....
On Christmas Day itself, our hosts had family together in order to read the Bible together, and to talk to God (and listen to God) together.
We were also at two different Christmas parties. One was a relatively straightforward evening, not unlike any other family celebration, though the father of the house has the hobby of being a gourmet chef, so the food was excellent (though I speak from first-hand experience only regarding the vegetarian dishes, of course; for the non-veg dishes, I am simply reporting the views of the others there).
The second party was quite extraordinary (at least from my point of view): there were about 50 people there, family and friends, all ages; there were drinks and quickbites to welcome everyone, then a parlour game involving accepting a random number, which indicated the order in which one could go to the tree and pick a packed present and share the excitement of presents being opened - but the next in line could ask for any of the "open" presents, which added to the piquancy of the occasion! - but all the presents were fun so it all went very well. This was followed by about an hour of carolling led by a choir from a nearby public school (very good). No idea how late some of the other stayed, but we took off at about 9pm as I am an early bird.
On mentioning the above to another American friend, here's the response I had: "I'm happy you enjoyed your first-ever American Christmas Party. I don't really think that gathering should be considered a typical American Christmas Eve. The family and friends part, absolutely! I can only speak from my own personal experiences and say that my childhood Christmas Eve's were roast beef and mashed potatoes, and I'm certain we children provided all the Christmas carols!!!!! And our "Santa Claus" only brought pajamas for all the children and we were expected to put them on, fall asleep and let the adults have some fun!!"
Well, all I can say is, thank God I wasn't offered that cuisine, or I would have had to be content with mashed potatoes. And the idea of Santa presenting pyjamas to the little ones so they can be sent packing seems like a good bit of respite for the adults, but no fun at all for the children!
It was quite interesting to see how many homes and how much of the public spaces were all lit up for Christmas - and it is sad to reflect how Indian homes are being lit less and less now for the Indian festival of lights, Diwali.
Would I have another Christmas in the US? Yes, gladly, though I suspect that this might be my only one in the USA, as we don't have any of our close family there, and Christmas is, like Diwali, more a family time than anything else. Sphere: Related Content
Monday, December 19, 2011
Why the US is becoming the country in the developed world with the least freedom
Why would a free country vote to abolish its freedom?
Because freedom is essentially something that resides in the hearts and minds of people, and all the institutions that are created, maintained or modified by a people reflect basic attitudes and beliefs for which they are prepared to work and, if need be, to die.
US freedoms were built, like they always have to be built, from the inside out. They are also dying from the inside out.
Once any group of people stop believing in the importance of freedom, or stop being willing to work and die for freedom, then freedom gradually or swiftly dies.
That is what we have been witnessing in this generation, the 2nd or 3rd since America started rejecting its own "soul" (for a discussion of what constituted that soul, see Dr. Vishal Mangalwadi's THE BOOK THAT MADE YOUR WORLD, Thomas Nelson, USA, recently published).
But why do I say that the US is becoming the least free country in the developed world?
Because US legilators have just passed, with an astounding two-thirds majority, a bill with the suitably military name of "HR 1540", which gives the US President power to detain "terrorist suspects" indefinitely. Such suspects, who can be arbitrarily arrested, include U.S. citizens on American soil.
Till recently, Bush and Obama claimed to have the legal power to do these things, but it was not clear whether or not they actually had this power, because their claim rested on obscure and contentious issues in law, custom and Constitution.
Following the passage of HR 1540, however, there can be no further challenge to such Presidential claims. Earlier, Presidents did not indubitably have that power, though they claimed it; now that power has indubitably been given to them by American lawmakers, duly representing the American people.
Why does HR 1540 constitute the end of US freedoms? Because it is the Administration that now defines what is a terrorist, as well as who is or is not a suspect. Any "suspected terrorist" can be arrested at any time, and kept under detention indefinitely - without trial and without bringing her or him before any court: no explanation or defense of the action is necessary at all.
I doubt that President Obama will misuse this authority (though he could of course do so, and there is very little apart from his own conscience now to stop him).
But what will prevent future Presidents from defining as "suspected terrorists" anyone who is a meddling journalist, political opponent, or social activist?
The US's record on freedom is not unblemised. Consider McCarthyism and the resulting vilification and hounding of "suspected Communist sympathisers" from the 1940s to the 1950s.
So what does it take to maintain freedom? The willingness to invest time, effort and (some, at least minimal) money to ensure that public policies and administrative actions are fair, just, and in the public interest.
Given the march of Mammon since a nice man (Ronald Reagan) unleashed it, public spiritedness has declined, and politics has become the province of the huckster, the cowboy and the con artist. That is an inevitable consequence once a culture starts enshrining greed and worshipping money instead of probity and public interest.
Can the US be returned to freedom? In the next few years, probably yes - though it will require at least tens of thousands of people willing to make huge sacrifices to restore the freedoms that have been lost as a result of the passage of this bill.
Want to know how far the US has fallen from its traditions of freedom? Most Americans did not even know that HR 1540 was being discussed, and had no idea what it portended.
My conclusion: Americans have fallen away so thoroughly from their "soul" or their heritage that they have become totally focused on their "security" and have abandoned any interest in even knowing about threats to their freedoms.
How do I know that?
Well, were you watching the blogosphere and the US media???
How much discussion of HR1450 did you see? Sphere: Related Content
Because freedom is essentially something that resides in the hearts and minds of people, and all the institutions that are created, maintained or modified by a people reflect basic attitudes and beliefs for which they are prepared to work and, if need be, to die.
US freedoms were built, like they always have to be built, from the inside out. They are also dying from the inside out.
Once any group of people stop believing in the importance of freedom, or stop being willing to work and die for freedom, then freedom gradually or swiftly dies.
That is what we have been witnessing in this generation, the 2nd or 3rd since America started rejecting its own "soul" (for a discussion of what constituted that soul, see Dr. Vishal Mangalwadi's THE BOOK THAT MADE YOUR WORLD, Thomas Nelson, USA, recently published).
But why do I say that the US is becoming the least free country in the developed world?
Because US legilators have just passed, with an astounding two-thirds majority, a bill with the suitably military name of "HR 1540", which gives the US President power to detain "terrorist suspects" indefinitely. Such suspects, who can be arbitrarily arrested, include U.S. citizens on American soil.
Till recently, Bush and Obama claimed to have the legal power to do these things, but it was not clear whether or not they actually had this power, because their claim rested on obscure and contentious issues in law, custom and Constitution.
Following the passage of HR 1540, however, there can be no further challenge to such Presidential claims. Earlier, Presidents did not indubitably have that power, though they claimed it; now that power has indubitably been given to them by American lawmakers, duly representing the American people.
Why does HR 1540 constitute the end of US freedoms? Because it is the Administration that now defines what is a terrorist, as well as who is or is not a suspect. Any "suspected terrorist" can be arrested at any time, and kept under detention indefinitely - without trial and without bringing her or him before any court: no explanation or defense of the action is necessary at all.
I doubt that President Obama will misuse this authority (though he could of course do so, and there is very little apart from his own conscience now to stop him).
But what will prevent future Presidents from defining as "suspected terrorists" anyone who is a meddling journalist, political opponent, or social activist?
The US's record on freedom is not unblemised. Consider McCarthyism and the resulting vilification and hounding of "suspected Communist sympathisers" from the 1940s to the 1950s.
So what does it take to maintain freedom? The willingness to invest time, effort and (some, at least minimal) money to ensure that public policies and administrative actions are fair, just, and in the public interest.
Given the march of Mammon since a nice man (Ronald Reagan) unleashed it, public spiritedness has declined, and politics has become the province of the huckster, the cowboy and the con artist. That is an inevitable consequence once a culture starts enshrining greed and worshipping money instead of probity and public interest.
Can the US be returned to freedom? In the next few years, probably yes - though it will require at least tens of thousands of people willing to make huge sacrifices to restore the freedoms that have been lost as a result of the passage of this bill.
Want to know how far the US has fallen from its traditions of freedom? Most Americans did not even know that HR 1540 was being discussed, and had no idea what it portended.
My conclusion: Americans have fallen away so thoroughly from their "soul" or their heritage that they have become totally focused on their "security" and have abandoned any interest in even knowing about threats to their freedoms.
How do I know that?
Well, were you watching the blogosphere and the US media???
How much discussion of HR1450 did you see? Sphere: Related Content
Global framework for financial services finally looks set
Finally, it appears that all the combined tactics of the contra lobby has resulted in no paralysis of the move towards new global regulation of the financial services industry: http://online.wsj.com/article/SB10001424052970204058404577106643689193010.html?mod=dist_smartbrief
Of course, much remains to be done in strengthening this global framework. For example, America's Dodd-Frank legislation created an Office of Financial Research, which was given the responsibility of gathering information that financial institutions have till now withheld from regulators, for the purpose of identifying systemic risks to the financial system; this kind of responsibility needs to be extended, one way or another, to the global level.
Overall, however, the acceptance by the USA of Basel III, as the new rules are called, is to be welcomed and should help stabilise the global financial system.
Naturally, we will need to see the final form of Basel III before detailed comments can be made or its overall effectiveness assessed. Sphere: Related Content
Of course, much remains to be done in strengthening this global framework. For example, America's Dodd-Frank legislation created an Office of Financial Research, which was given the responsibility of gathering information that financial institutions have till now withheld from regulators, for the purpose of identifying systemic risks to the financial system; this kind of responsibility needs to be extended, one way or another, to the global level.
Overall, however, the acceptance by the USA of Basel III, as the new rules are called, is to be welcomed and should help stabilise the global financial system.
Naturally, we will need to see the final form of Basel III before detailed comments can be made or its overall effectiveness assessed. Sphere: Related Content
Sunday, December 18, 2011
“ABOUT TURN! … ATTENTION! … DISMISS!"
A full-throated command to a drilled mass
I remember it dimly from parade grounds seen in childhood
the assembled drumbeat of feet disintegrating into hubbub, obscurity and dust.
But there is also a subtlety, addressed to individuals who turn their backs
to go boldly where the facts lead them astray
from the main stream of conformity, and its gathered strength.
So it was that two men, smiling, frowning, angry, polite
said to me, their minds and lips nimble
far from skirmishing with anything that might sound even vaguely like
that word strong, separating me from a field where I with them had toiled and struggled.
FAIR? No, sir!
HURTS? Yes, sir!
UNDER ORDERS TO TURN THE OTHER CHEEK?
(Really, sir!)
Reluctancy turns me round and about
spins me dizzy
till I do, eventually, stagger to attention,
take the deepest breath
and, softly as asssisted strength, whisper
“Dismiss”, and shake from my feet the dust. Sphere: Related Content
I remember it dimly from parade grounds seen in childhood
the assembled drumbeat of feet disintegrating into hubbub, obscurity and dust.
But there is also a subtlety, addressed to individuals who turn their backs
to go boldly where the facts lead them astray
from the main stream of conformity, and its gathered strength.
So it was that two men, smiling, frowning, angry, polite
said to me, their minds and lips nimble
far from skirmishing with anything that might sound even vaguely like
that word strong, separating me from a field where I with them had toiled and struggled.
FAIR? No, sir!
HURTS? Yes, sir!
UNDER ORDERS TO TURN THE OTHER CHEEK?
(Really, sir!)
Reluctancy turns me round and about
spins me dizzy
till I do, eventually, stagger to attention,
take the deepest breath
and, softly as asssisted strength, whisper
“Dismiss”, and shake from my feet the dust. Sphere: Related Content
Friday, December 09, 2011
Orthodox views of the current situation versus my views of the current situation
Analysis just issued by one of the best-known financial houses says that we should expect a growth rate of 2% in the US in 2012, zero growth in the Eurozone, and that, "in light of the dramatic shift in the worldwide balance of power, the hopes of the struggling industrialized countries rest on the emerging markets".
The house in question does not seem to have noticed that, while emerging markets may at least be growing, they are now growing at a sharply decelerating rate - and that their slowed rate of growth means that all their so-called "power" will be needed to fight their own social and political problems. Whether that "power" will be enough for those purposes depends on how "dramatic" the slowdown is - as well as on the wisdom of the leaders concerned.
Briefly, the BRIC countries: Brazil's economy will be substantially hit; Russia's will be hit too, but how much it is hit will depend on energy prices; India's will probably be hit least; China's will probably be hit most.
Other emerging markets will mostly stop emerging, and will probably largely "de-emerge" or sink, as they usually tend to do in troubled times. Sad and tough. But there it is.
The Eurozone's "tiny but structurally important" decisions taken yesterday indicate very little of what will actually happen, because the decisions (which appear to be boringly technical) will need to be approved by their Parliaments (and even the UK Government may be forced by developments to have a referendum regarding whether or not to finally join the Eurozone - I have said that the country should have structural recovery in 2012, but there are other factors which are too much to go into here).
If, as I expect, the Parliaments of the 17 Eurozone and non-Eurozone countries which have decided to commit themselves to a treaty for deeper economic integration over the next three months to negotiate and may require referendums in countries such as Ireland. If the Parliaments concerned do not approve, then the uncertainty about the Eurozone will continue. My guess is that for psychological reasons, some of the Eurozone countries which are most committed to the present course will attempt to rush agreement through their Parliaments. The timing and weight of the countries which first get this through, and the timing and weight of any countries that do not, is what we have to watch. Meanwhle, markets have reacted initially positively, marginally, while the propaganda barrage has been skeptical.
The US will almost certainly grow at more than 2%: how much more, I cannot say - as that depends on what is happening in the rest of the world. But the surprise for the US economy can be expected to be on the upside, in spite of the fact that the various existing stimulus measures are expected to run out, and in spite of the impending race for the Presidential election. That growth is also why Obama has a fighting chance of getting re-elected (I should say that I am neutral regarding his continued Presidency, and I am "equally neutral" on anyone else . whether from his party or from the Republicans - getting in as the next President: the US system is now so corrupt that I do not think it makes much difference who is President).
BTW don't believe what Obama will say in an interview to be broadcast tomorrow about an economic fix for the US taking years to be effective. I greatly doubt there is any chance of a real economic fix till there is a proper crash, as there is no sign that anyone in a position is authority is even contemplating any economic fix at present: everyone is focusing on how to hang on to or consolidate their own power.
Of course, what Obama means by an "economic fix" is not clear. If he means "for growth to return", he is likely to be surprised, as I indicate above.
If he means "for the US political system to be sorted out so that growth is more equitably distributed", that is going to have to wait for spiritual, moral and ethical revival in the US population and particularly its leaders.
If Obama means things like Dodd-Frank to be effective, he is partially right, though it is already starting to bite - and whether it continues to bite will depend on political shenanigans. Sphere: Related Content
The house in question does not seem to have noticed that, while emerging markets may at least be growing, they are now growing at a sharply decelerating rate - and that their slowed rate of growth means that all their so-called "power" will be needed to fight their own social and political problems. Whether that "power" will be enough for those purposes depends on how "dramatic" the slowdown is - as well as on the wisdom of the leaders concerned.
Briefly, the BRIC countries: Brazil's economy will be substantially hit; Russia's will be hit too, but how much it is hit will depend on energy prices; India's will probably be hit least; China's will probably be hit most.
Other emerging markets will mostly stop emerging, and will probably largely "de-emerge" or sink, as they usually tend to do in troubled times. Sad and tough. But there it is.
The Eurozone's "tiny but structurally important" decisions taken yesterday indicate very little of what will actually happen, because the decisions (which appear to be boringly technical) will need to be approved by their Parliaments (and even the UK Government may be forced by developments to have a referendum regarding whether or not to finally join the Eurozone - I have said that the country should have structural recovery in 2012, but there are other factors which are too much to go into here).
If, as I expect, the Parliaments of the 17 Eurozone and non-Eurozone countries which have decided to commit themselves to a treaty for deeper economic integration over the next three months to negotiate and may require referendums in countries such as Ireland. If the Parliaments concerned do not approve, then the uncertainty about the Eurozone will continue. My guess is that for psychological reasons, some of the Eurozone countries which are most committed to the present course will attempt to rush agreement through their Parliaments. The timing and weight of the countries which first get this through, and the timing and weight of any countries that do not, is what we have to watch. Meanwhle, markets have reacted initially positively, marginally, while the propaganda barrage has been skeptical.
The US will almost certainly grow at more than 2%: how much more, I cannot say - as that depends on what is happening in the rest of the world. But the surprise for the US economy can be expected to be on the upside, in spite of the fact that the various existing stimulus measures are expected to run out, and in spite of the impending race for the Presidential election. That growth is also why Obama has a fighting chance of getting re-elected (I should say that I am neutral regarding his continued Presidency, and I am "equally neutral" on anyone else . whether from his party or from the Republicans - getting in as the next President: the US system is now so corrupt that I do not think it makes much difference who is President).
BTW don't believe what Obama will say in an interview to be broadcast tomorrow about an economic fix for the US taking years to be effective. I greatly doubt there is any chance of a real economic fix till there is a proper crash, as there is no sign that anyone in a position is authority is even contemplating any economic fix at present: everyone is focusing on how to hang on to or consolidate their own power.
Of course, what Obama means by an "economic fix" is not clear. If he means "for growth to return", he is likely to be surprised, as I indicate above.
If he means "for the US political system to be sorted out so that growth is more equitably distributed", that is going to have to wait for spiritual, moral and ethical revival in the US population and particularly its leaders.
If Obama means things like Dodd-Frank to be effective, he is partially right, though it is already starting to bite - and whether it continues to bite will depend on political shenanigans. Sphere: Related Content
Wednesday, December 07, 2011
What are the advantages and disadvantages of Twilk?
One of my blog-friends has sent me a mail encouraging me to use this new-ish application ("ap") called Twilk.
On checking it out, I find nothing on the internet about the advantages and disadvantages of using this ap.
Here is what I find from the Twilk site itself about what the ap does and does not do:
"This application will be able to:
•Read Tweets from your timeline.
•See who you follow, and follow new people.
•Update your profile.
•Post Tweets for you.
This application will not be able to:
•Access your direct messages.
•See your Twitter password".
While what Twilk does NOT do is comforting, and I am comfortable about all the other things that Twilk is able to do (e.g. read my Tweets and see who I follow), I am not comfortable about Twilk's ability to "follow new people".
What does Twilk mean by "new people" (presumably people who I do not follow)?
HOW does Twilk find such "new people" to follow? Presumably via the people who I do follow?
If so, how does it get access, without their permission, to their contact lists?
Or does it automatically mail everyone who I follow and ask for their permission to access their contact lists?
Or does it do so more subtly by mailing them and inviting them to join Twilk?
Perhaps one of my readers can enlighten me? As usual, either via a personal email or via a response here.
Oh, and BTW, if you're wondering what Twilk actually does, all it does is "prettify" your Twitter site with the avatars of everyone you follow and everyone who follows you.
Not much use if you don't like the avatars concerned.
But if you do like the avatars concerned, does putting all these avatars on your Twitter page not also slow down the download of your Twitter page, specially in locations where only has a slow or shared line?
Thanks for any information you share. Sphere: Related Content
On checking it out, I find nothing on the internet about the advantages and disadvantages of using this ap.
Here is what I find from the Twilk site itself about what the ap does and does not do:
"This application will be able to:
•Read Tweets from your timeline.
•See who you follow, and follow new people.
•Update your profile.
•Post Tweets for you.
This application will not be able to:
•Access your direct messages.
•See your Twitter password".
While what Twilk does NOT do is comforting, and I am comfortable about all the other things that Twilk is able to do (e.g. read my Tweets and see who I follow), I am not comfortable about Twilk's ability to "follow new people".
What does Twilk mean by "new people" (presumably people who I do not follow)?
HOW does Twilk find such "new people" to follow? Presumably via the people who I do follow?
If so, how does it get access, without their permission, to their contact lists?
Or does it automatically mail everyone who I follow and ask for their permission to access their contact lists?
Or does it do so more subtly by mailing them and inviting them to join Twilk?
Perhaps one of my readers can enlighten me? As usual, either via a personal email or via a response here.
Oh, and BTW, if you're wondering what Twilk actually does, all it does is "prettify" your Twitter site with the avatars of everyone you follow and everyone who follows you.
Not much use if you don't like the avatars concerned.
But if you do like the avatars concerned, does putting all these avatars on your Twitter page not also slow down the download of your Twitter page, specially in locations where only has a slow or shared line?
Thanks for any information you share. Sphere: Related Content
Why I am a Devolutionist
No, I am not referring to the devolution of political power from London to the UK's regions.
I am referring to Devolution as contrasted with Evolution.
Why am I writing this post? Essentially, because I have been challenged on this recently, and have never written anything on it.
Devolutionists are unconvinced by Creationism as well as by Evolutionism.
Why am I a Devolutionist and not an Evolutionist?
For two main reasons.
First, it is clear that, while mutations occur, the vast majority of these are "sub-normal" (so they don't survive) rather than "super-normal" (in fact, there is no evidence of any "super-normal mutations" at all, as far as I can discover at present). However, whatever the mechanism, it is clear that existing biological organisms can be arranged in "trees". If one discounts the human tendency to consider ourselves "superior" to other organisms, the "trees" can be arranged in a Devolutionary manner just as easily as in an Evolutionary manner. Consider further that humans can be killed pretty quickly, whereas "primitive" life forms (e.g. fungi and viruses) are extremely hard to eliminate. So on the basis of "survival of the fittest", fungi and viruses are more "survivable" than humans, so should they not be considered much more "advanced" or "fit" than us?
Second, physics came before biology; and physics is not dependent on biology, while biology is dependent on physics. The Second Law of Thermodynamics makes clear the principle of entropy. It is unlikely that the reverse of entropy, which is necessary for Evolution to take place, actually took place. Further, Evolutionists offer us no evidence to believe that the reverse of entropy takes place or has taken place anywhere, nor do Evolutionists offer us any reason why entropy should be reversed on earth, and only in relation to life forms.
Not quite QED, perhaps. But that is my thinking so far. Sphere: Related Content
I am referring to Devolution as contrasted with Evolution.
Why am I writing this post? Essentially, because I have been challenged on this recently, and have never written anything on it.
Devolutionists are unconvinced by Creationism as well as by Evolutionism.
Why am I a Devolutionist and not an Evolutionist?
For two main reasons.
First, it is clear that, while mutations occur, the vast majority of these are "sub-normal" (so they don't survive) rather than "super-normal" (in fact, there is no evidence of any "super-normal mutations" at all, as far as I can discover at present). However, whatever the mechanism, it is clear that existing biological organisms can be arranged in "trees". If one discounts the human tendency to consider ourselves "superior" to other organisms, the "trees" can be arranged in a Devolutionary manner just as easily as in an Evolutionary manner. Consider further that humans can be killed pretty quickly, whereas "primitive" life forms (e.g. fungi and viruses) are extremely hard to eliminate. So on the basis of "survival of the fittest", fungi and viruses are more "survivable" than humans, so should they not be considered much more "advanced" or "fit" than us?
Second, physics came before biology; and physics is not dependent on biology, while biology is dependent on physics. The Second Law of Thermodynamics makes clear the principle of entropy. It is unlikely that the reverse of entropy, which is necessary for Evolution to take place, actually took place. Further, Evolutionists offer us no evidence to believe that the reverse of entropy takes place or has taken place anywhere, nor do Evolutionists offer us any reason why entropy should be reversed on earth, and only in relation to life forms.
Not quite QED, perhaps. But that is my thinking so far. Sphere: Related Content
Do we really need such research?
In another example of apparently entirely unnecessary research, Dr. Peggy Huang of Tulane University discovers that companies which agree to give their CEOs all-cash payouts, in case they step down, significantly underperform their competitors.
A cash-only contract in force during a given year is associated with annual stock returns over the subsequent three years that are 4.2% lower than the average returns of firms whose CEOs have no severance provisions.
Do we really need to know whether the returns are 4.2% lower, or 4% or 5%?
Isn't it obvious that, if I am a CEO with the parachute of a cash payout, that will tend to incentivise me to take less responsible actions than if my payout is principally in terms of shares which are blocked for say 5 years after I depart the company?
Dr Huang also says that all-cash contracts appear to be on the rise. If so, that appears to be a research finding worth having, does it not? True, but it would be more valuable if there was some accompanying analysis of WHY all-cash payouts are increasing when they are against both commonsense and research findings such as Dr Huang's.
Not to attack Dr Huang's research too much, I should point out that her research covered a sample of S&P500 CEO severance agreements between 1993 and 2007, and examined whether and how the existence and structure of severance agreements influences subsequent firm performance, CEO investment behavior, and the likelihood of CEO turnover. Her research shows that while firms with severance agreements tend to perform worse than firms without severance agreements, the structure of severance agreements also affects performance significantly.
Surprisingly, her research suggests that executives with severance contracts are more likely to be forced out of their firms - in her view because severance agreements, rather than promoting incentive alignment between CEOs and shareholders, actually exacerbate agency problems which lead to overinvestment and poor subsequent firm performance. She does not seem to examine whether companies whose value-set leads them to provide cash-only severance contracts are also companies whose value-set leads them to more rapidly dismiss CEOs (so should anyone really want to work as a CEO for a company which has such values?)
In another surprise, she finds that CEOs who are provided a cash-only severance package tend to "over-invest" in research. Over-invest? In research? Now that would be worth researching! Sphere: Related Content
A cash-only contract in force during a given year is associated with annual stock returns over the subsequent three years that are 4.2% lower than the average returns of firms whose CEOs have no severance provisions.
Do we really need to know whether the returns are 4.2% lower, or 4% or 5%?
Isn't it obvious that, if I am a CEO with the parachute of a cash payout, that will tend to incentivise me to take less responsible actions than if my payout is principally in terms of shares which are blocked for say 5 years after I depart the company?
Dr Huang also says that all-cash contracts appear to be on the rise. If so, that appears to be a research finding worth having, does it not? True, but it would be more valuable if there was some accompanying analysis of WHY all-cash payouts are increasing when they are against both commonsense and research findings such as Dr Huang's.
Not to attack Dr Huang's research too much, I should point out that her research covered a sample of S&P500 CEO severance agreements between 1993 and 2007, and examined whether and how the existence and structure of severance agreements influences subsequent firm performance, CEO investment behavior, and the likelihood of CEO turnover. Her research shows that while firms with severance agreements tend to perform worse than firms without severance agreements, the structure of severance agreements also affects performance significantly.
Surprisingly, her research suggests that executives with severance contracts are more likely to be forced out of their firms - in her view because severance agreements, rather than promoting incentive alignment between CEOs and shareholders, actually exacerbate agency problems which lead to overinvestment and poor subsequent firm performance. She does not seem to examine whether companies whose value-set leads them to provide cash-only severance contracts are also companies whose value-set leads them to more rapidly dismiss CEOs (so should anyone really want to work as a CEO for a company which has such values?)
In another surprise, she finds that CEOs who are provided a cash-only severance package tend to "over-invest" in research. Over-invest? In research? Now that would be worth researching! Sphere: Related Content
Pope joins movement to ban the death penalty
Up to now, the Pope and the Roman Church have maintained a conservative stance on ethical matters.
Now they may have started down the slippery slope, with the Pope (and presumably the Church) now committed to opposing the death penalty.
From the point of view of most people who oppose the death penalty, life and death are of no ultimate value, so they seem to be against the death penalty mostly for sentimental reasons.
So the question to ask, from the viewpoint of society, is: does abolishing the death penalty for people who have undoubtedly committed murderer have any disadvantages?
Here are two:
1. because murderers are normally locked up for many years, jails become filled to overflowing; and
2. taxpayers have to pay for the food, exercise and security involved in looking after murderers for the years and years that murderers are in prison - and in a time of decreasing employment prospects, murdering one person and ensuring that you are caught can become an easy way of ensuring that you are looked after for many years (perhaps for the rest of your life) at the expense of taxpayers :)
Of course laws need to be reformed in relation to those accused of murder, so that only individuals where the evidence for murder is overwhelmingly clear are given their deserts.
Meanwhile, ironically, the most organised "death industries" (the suicide-help industry, the abortion industry, and the so-called "defense" industries - better described as the war industries) carry on their ever-widening and ever-more-profitable activities.
Few of these so-called liberals are willing to commit themselves to fight against organised death-mongering by the suicide industry, the abortion industry and the war industries. Sphere: Related Content
Now they may have started down the slippery slope, with the Pope (and presumably the Church) now committed to opposing the death penalty.
From the point of view of most people who oppose the death penalty, life and death are of no ultimate value, so they seem to be against the death penalty mostly for sentimental reasons.
So the question to ask, from the viewpoint of society, is: does abolishing the death penalty for people who have undoubtedly committed murderer have any disadvantages?
Here are two:
1. because murderers are normally locked up for many years, jails become filled to overflowing; and
2. taxpayers have to pay for the food, exercise and security involved in looking after murderers for the years and years that murderers are in prison - and in a time of decreasing employment prospects, murdering one person and ensuring that you are caught can become an easy way of ensuring that you are looked after for many years (perhaps for the rest of your life) at the expense of taxpayers :)
Of course laws need to be reformed in relation to those accused of murder, so that only individuals where the evidence for murder is overwhelmingly clear are given their deserts.
Meanwhile, ironically, the most organised "death industries" (the suicide-help industry, the abortion industry, and the so-called "defense" industries - better described as the war industries) carry on their ever-widening and ever-more-profitable activities.
Few of these so-called liberals are willing to commit themselves to fight against organised death-mongering by the suicide industry, the abortion industry and the war industries. Sphere: Related Content
Tuesday, December 06, 2011
Brazil’s rapid growth shudders to a halt
As anticipated in my analysis, with which readers will be familiar:
http://link.ft.com/r/IOCBMM/GDNVDG/NGUK/HYQ233/YBAJ5N/7V/t?a1=2011&a2=12&a3=7
The same was predicted for Russia and China - and for commodities; even worse for other emerging markets.
For India, I had anticipated that there would be a slowdown, but not to the same extent as in Brazil, Russia and China - unless the Indian government did something stupid. So far the government has resisted that temptation. Sphere: Related Content
http://link.ft.com/r/IOCBMM/GDNVDG/NGUK/HYQ233/YBAJ5N/7V/t?a1=2011&a2=12&a3=7
The same was predicted for Russia and China - and for commodities; even worse for other emerging markets.
For India, I had anticipated that there would be a slowdown, but not to the same extent as in Brazil, Russia and China - unless the Indian government did something stupid. So far the government has resisted that temptation. Sphere: Related Content
Friday, December 02, 2011
Why are those who study economics less philanthropic?
Just over a month ago (on October 29, to be precise) I had posted a piece arguing that the addition of business ethics courses by themselves cannot reverse the systematic brainwashing of students in anti-human values done by business schools; what is needed is systematic examination, critique and reform of the values taught by business school courses, and even by the existence of expensive and elitist business schools: http://prabhuguptara.blogspot.com/2011/10/role-of-business-schools-in-promoting.html
As you probably know, there has been research underway for some time on the question of why economics students donate less than those who do not study economics.
According to the latest published piece of research, if someone who is not a major in economics takes an introductory course in microeconomics, that reduces the likelihood of her/his donating money to nonprofits by 2 percent; to make matters worse, if that sort of person takes an intermediate course, the likelihood of her/his giving to nonprofits goes down by 3.7 to 7.9 percent.
That's in an article by Yoram Bauman and Elaina Rose of the University of Washington, published in the Journal of Economic Behavior & Organization, volume 79 (2011), pages 318-327: http://ideas.repec.org/a/eee/jeborg/v79y2011i3p318-327.html Sphere: Related Content
As you probably know, there has been research underway for some time on the question of why economics students donate less than those who do not study economics.
According to the latest published piece of research, if someone who is not a major in economics takes an introductory course in microeconomics, that reduces the likelihood of her/his donating money to nonprofits by 2 percent; to make matters worse, if that sort of person takes an intermediate course, the likelihood of her/his giving to nonprofits goes down by 3.7 to 7.9 percent.
That's in an article by Yoram Bauman and Elaina Rose of the University of Washington, published in the Journal of Economic Behavior & Organization, volume 79 (2011), pages 318-327: http://ideas.repec.org/a/eee/jeborg/v79y2011i3p318-327.html Sphere: Related Content
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