The bubble that built up after the "roll-back" of the state under Mrs Thatcher burst some months ago, but the philosophy that she espoused seems to be up for challenge only now.
In today's Financial Times a British think tank, Policy Exchange, calls for a publicly-funded bank focusing on energy, communications, utilities, schools and hospitals - not to mention transport!
This would amount to re-nationalisation by the back door, and is being called for in an exchange (or reversal) of policies not merely by ANY think tank, let alone a leftist think tank, it is an exchange of policies being called for by the favourite think tank of the CONSERVATIVE leader, David Cameron, who has inherited Mrs Thatcher's mantle. What delicious irony! Policy Exchange indeed!
The danger is that the backlash against Thacherite policies will go too far.
What Policy Exchange, or any other think tank for that matter, ought to pursue before specific recommendations such as this publicly-funded new bank, is a debate on the role of the state versus the role of the private sector - and not merely in the UK but globally.
Without that global perspective, debate and consensus we are condemned to swing between on the one hand the Keynesianesque/ trade union extreme that preceded the Reagan/Thatcher era, and on the other hand the monetarist/ bubble era heralded by the Reagan/Thatcherite extreme.
Sphere: Related Content
Sunday, August 30, 2009
Friday, August 28, 2009
Should central banks target stock prices?
That is the title of a paper just published by Paul De Grauwe, on behalf of the Centre for European Policy Studies, Burssels, Belgium: http://tinyurl.com/ksu5tr
[Open in new window]
Based on a more academic Working Document, it asks whether central banks should target stock prices so as to prevent bubbles and crashes from occurring.
This was as unthinkable only a few weeks ago as Lord Turner championing the idea of the Tobin Tax (see http://tinyurl.com/lt3cax
[Open in new window].
While I have long argued for the Tobin Tax, I maintain that targeting stock prices alone is half-baked. We need a system of independent, comprehensive watch on global stability such as outlined in my article in the New York Times Online ("DealBook" section) some weeks ago.
Not only can an independent comprehensive view never be provided by individual countries or by individual measures such as targeting stock prices, doing such things would be simply counter-productive in terms of system stability. Sphere: Related Content
[Open in new window]
Based on a more academic Working Document, it asks whether central banks should target stock prices so as to prevent bubbles and crashes from occurring.
This was as unthinkable only a few weeks ago as Lord Turner championing the idea of the Tobin Tax (see http://tinyurl.com/lt3cax
[Open in new window].
While I have long argued for the Tobin Tax, I maintain that targeting stock prices alone is half-baked. We need a system of independent, comprehensive watch on global stability such as outlined in my article in the New York Times Online ("DealBook" section) some weeks ago.
Not only can an independent comprehensive view never be provided by individual countries or by individual measures such as targeting stock prices, doing such things would be simply counter-productive in terms of system stability. Sphere: Related Content
Russian President Medvedev becomes a Buddhist goddess, apparently becaue he upholds the Rule of Law
On the first official visit by a head of state to Ivolginsky, a Buddhist monastery in Buryatia, eastern Siberia, President Medvedev was hailed as a Buddhist goddess, Tara.
Tara is not much known in the land that is the birthplace of Buddhism (India) but Tara is thought, at least by some devotee, to be the mother of all Buddhas. She is considered to typify compassion and serenity, which Medvedev is thought to embody - at least according to the spiritual leader of the monastery, Pandito Khambo Lama Damba Ayusheyev.
When asked about the president’s spiritual elevation, the Pandito is reported, by the the Interfax news agency, to have responded: “It’s very hard to understand this for non-Buddhists and even for some Buddhists too.”
Yes, very hard indeed.
Russia’s Buddhists consider all the country’s leaders to be an emanation of the female Buddha - a belief that dates back to the 18th century when the Empress Elizabeth officially recognised the religion.
According to the Pandito: “The leader of the country is a man who bears very serious responsibility for others. The Buddhists must support him, identifying him as a deity.”
Well, what are gods and goddesses supposed to do? Fulfil your wishes, of course! So it was entirely appropriate for Medvedev to promise financial support to the Buddhist community and to announce that he will introduce Buddhist chaplains to the Russian Federation’s army.
The latter action may make him popular among the nation's 0.7% who are Buddhist, but is likely to make him much less popular among the nation's 63% who are Russian Orthodox. After 70 years of thorough Marxist propaganda, only 16% say they are non-believers, according to a poll by the Russian Public Opinion Research Center.
So why has President Medvedev accepted the role of a Buddhist goddess? According to Geoffrey Bamford of the Oxford Centre for Buddhist Studies:“It’s a psychological thing that doesn’t quite have a parallel in our language. It’s philosophically based. Saying he is a goddess is a bad translation.For Buddhists he represents a bundle of qualities on the contemporary political scene. Identifying him as White Tara is a shorthand way of visualising that bundle of qualities in order to summon them up in oneself. Medvedev’s thing is the rule of law – he’s a lawyer. He produced a remarkable state of the nation address in November last year in which he anatomised the difficulty of making a modern state out of Russia. It was basically about being a law-based society and this, I think, is the characteristic that the Buryats and the Kalmyks identify in him when contemplating the White Tara.”
Interesting philosophical and practical question: Is accepting the role of a god in line with promoting the rule of law?
Another interesting question: Which societies have been most committed to the rule of law?
Readers of my blog will be aware that my answers to these questions are, respectively, "No", and "Northern Europe and North America". Sphere: Related Content
Tara is not much known in the land that is the birthplace of Buddhism (India) but Tara is thought, at least by some devotee, to be the mother of all Buddhas. She is considered to typify compassion and serenity, which Medvedev is thought to embody - at least according to the spiritual leader of the monastery, Pandito Khambo Lama Damba Ayusheyev.
When asked about the president’s spiritual elevation, the Pandito is reported, by the the Interfax news agency, to have responded: “It’s very hard to understand this for non-Buddhists and even for some Buddhists too.”
Yes, very hard indeed.
Russia’s Buddhists consider all the country’s leaders to be an emanation of the female Buddha - a belief that dates back to the 18th century when the Empress Elizabeth officially recognised the religion.
According to the Pandito: “The leader of the country is a man who bears very serious responsibility for others. The Buddhists must support him, identifying him as a deity.”
Well, what are gods and goddesses supposed to do? Fulfil your wishes, of course! So it was entirely appropriate for Medvedev to promise financial support to the Buddhist community and to announce that he will introduce Buddhist chaplains to the Russian Federation’s army.
The latter action may make him popular among the nation's 0.7% who are Buddhist, but is likely to make him much less popular among the nation's 63% who are Russian Orthodox. After 70 years of thorough Marxist propaganda, only 16% say they are non-believers, according to a poll by the Russian Public Opinion Research Center.
So why has President Medvedev accepted the role of a Buddhist goddess? According to Geoffrey Bamford of the Oxford Centre for Buddhist Studies:“It’s a psychological thing that doesn’t quite have a parallel in our language. It’s philosophically based. Saying he is a goddess is a bad translation.For Buddhists he represents a bundle of qualities on the contemporary political scene. Identifying him as White Tara is a shorthand way of visualising that bundle of qualities in order to summon them up in oneself. Medvedev’s thing is the rule of law – he’s a lawyer. He produced a remarkable state of the nation address in November last year in which he anatomised the difficulty of making a modern state out of Russia. It was basically about being a law-based society and this, I think, is the characteristic that the Buryats and the Kalmyks identify in him when contemplating the White Tara.”
Interesting philosophical and practical question: Is accepting the role of a god in line with promoting the rule of law?
Another interesting question: Which societies have been most committed to the rule of law?
Readers of my blog will be aware that my answers to these questions are, respectively, "No", and "Northern Europe and North America". Sphere: Related Content
Are we anywhere near recovery yet?
That the answer is "No" is confirmed by the latest figures from the Federal Deposit Insurace Corporation:
All the institutions insured by it together reported a net loss of US$3.7 billion in th quarter ending June 2009, even though they had a net income of US$7.6 billion in the previous quarter.
Provisions for loan losses totaled $66.9 billion in the 2nd quarter this year, an increase of $16.5 billion (32.8%) year-on-year.
Extraordinary losses stemming from writedowns of asset-backed commercial paper totaled $3.6 billion.
Noninterest expenses were $1.7 billion (1.7%) higher year-over-year - though it must be conceded that this may have been primarily due to increased FDIC deposit insurance premiums.
Indicators of asset quality continued to worsen during Q2.
And so many people still want to believe not merely that we have reached the bottom of the cycle but that things are actually improving! Sphere: Related Content
All the institutions insured by it together reported a net loss of US$3.7 billion in th quarter ending June 2009, even though they had a net income of US$7.6 billion in the previous quarter.
Provisions for loan losses totaled $66.9 billion in the 2nd quarter this year, an increase of $16.5 billion (32.8%) year-on-year.
Extraordinary losses stemming from writedowns of asset-backed commercial paper totaled $3.6 billion.
Noninterest expenses were $1.7 billion (1.7%) higher year-over-year - though it must be conceded that this may have been primarily due to increased FDIC deposit insurance premiums.
Indicators of asset quality continued to worsen during Q2.
And so many people still want to believe not merely that we have reached the bottom of the cycle but that things are actually improving! Sphere: Related Content
Wednesday, August 26, 2009
Are we at the bottom of the crisis?
It is difficult to say whether we are.
While most "authorities" are happy to have announced teh end of the crisis, we need to keep in mind the following factors:
1. I have commented earlier that there is too much printed money in the world, as a result of over-printing over the last 20 or so years. This money acts as a natural booster of the economy, because no one who holds money likes to keep it under the mattress so to speak. In other words, there is a systemic "push" to invest, and everyone has been indoctrinated in the last 20 years to believe that equities will always outperform other forms of investment "in the long run" (whatever that is). So even Pension Funds which should have an interest in stable long term returns, and therefore should invest largely in bonds, tend to invest largely in equities. Beliefs about where the money should go act as a self-fulfilling prophecy - money goes to where people believes it should go, creating a demand for equities that is systemically too high (i.e. higher than it should be, given fundamentals). That is what explains "animal spirits" in the stock market.
2. We can therefore say that the crisis is over not when investors rush into the stock market (which has happened, and will happen several times before the crisis really eands), but when real expenditure returns to the market. That is mostly cosumer expenditure historically, but there is no reason why capital expenditure should not take its place. In fact, tax incentives to increase capital expenditure in relation to green technologies would be the most intelligent way of increasing consumption, but no one is doing that in any substantial way at present, leaving it to private consumption to drive the economy. What about government expenditure? It is of course a significant factor at present, but it can never be large enough to really drive the economy, first because it is not large enough in relation to private and capital expenditure and because it usually takes too long and is usually not productive enough (governments tend to spend on defence, infrastructure and social services). Briefly, government expenditure is up practically all over the world, but capital and private expenditure is not up - and till that improves the crisis will not be over.
Private expenditure tends to be driven by three factors (beliefs, employment levels and house prices). The beliefs can be manipulated by government propaganda and stock prices. Employment figures can be manipulated by governments to a certain extent. House prices tend to be relatively objective, though of course governments can and do intervene in the housing market.
We have been told that employment will not pick up for some time. But that is simply what the US government believes, or would like us to believe.
As for housing, The S&P/Case-Shiller 20-City Composite Index fell is still declining, having fallen 15.4% y/y in June 2009 after declining 17.1% y/y in May.
By June 2009, average home prices were at similar levels to what they were in early 2003.
From the peak in mid-2006, the 10-City Composite is down 32.5% and the 20-City Composite is down 31.4%. If one agrees that the peak was hugely exaggerated, the questions are: (a) has the decline now reached the lowest it is going to reach? and how long will it be before there is a sustained (even if slow) rise in price of say 3% or more a year? My answer to (a) is "No", though I do not know how much further house prices have to fall (I hope not a lot). My answer to (b) is that no one knows, not even governments who have made public their "belief" that house prices, employment levels and the economy in general will start coming out of the recession in 2010.
For the reason that I mentioned at the start of this post, too much money sloshing around the system creates systemic distortion and unpredictability. It can (as it has already) cause an apparent end to the crisis very much sooner (or very much later) than 2010.
My view continues to be that we will continue to yo-yo along something like the bottom, reaching marginally lower levels (which will be systemically discounted - at least, so I hope!) and touching marginally higher levels (which will be systemically heralded as the end of the crisis.
Certainly it helps if large numbers of business leaders and ordinary people behave as if the crisis is over.
But watch the fundamentals I mention above.
Governments have begun to put many sensible things in place, which I have been arguing for, and which are helping to resolve the crisis, but we still have the unresolved question of toxic assets - all that we have done is move them from private hands to the hands of governments. In one or two small countries, we see encouraging signs that at least some of the toxic assets are no longer toxic. Assets become less toxic or eventually beneficial as the economy improves, but become more and more toxic as the economy deteriorates. It is only as the bulk of toxic assets in the world economy as a whole are sorted out that the fundamentals will have been addressed sufficiently. Sphere: Related Content
While most "authorities" are happy to have announced teh end of the crisis, we need to keep in mind the following factors:
1. I have commented earlier that there is too much printed money in the world, as a result of over-printing over the last 20 or so years. This money acts as a natural booster of the economy, because no one who holds money likes to keep it under the mattress so to speak. In other words, there is a systemic "push" to invest, and everyone has been indoctrinated in the last 20 years to believe that equities will always outperform other forms of investment "in the long run" (whatever that is). So even Pension Funds which should have an interest in stable long term returns, and therefore should invest largely in bonds, tend to invest largely in equities. Beliefs about where the money should go act as a self-fulfilling prophecy - money goes to where people believes it should go, creating a demand for equities that is systemically too high (i.e. higher than it should be, given fundamentals). That is what explains "animal spirits" in the stock market.
2. We can therefore say that the crisis is over not when investors rush into the stock market (which has happened, and will happen several times before the crisis really eands), but when real expenditure returns to the market. That is mostly cosumer expenditure historically, but there is no reason why capital expenditure should not take its place. In fact, tax incentives to increase capital expenditure in relation to green technologies would be the most intelligent way of increasing consumption, but no one is doing that in any substantial way at present, leaving it to private consumption to drive the economy. What about government expenditure? It is of course a significant factor at present, but it can never be large enough to really drive the economy, first because it is not large enough in relation to private and capital expenditure and because it usually takes too long and is usually not productive enough (governments tend to spend on defence, infrastructure and social services). Briefly, government expenditure is up practically all over the world, but capital and private expenditure is not up - and till that improves the crisis will not be over.
Private expenditure tends to be driven by three factors (beliefs, employment levels and house prices). The beliefs can be manipulated by government propaganda and stock prices. Employment figures can be manipulated by governments to a certain extent. House prices tend to be relatively objective, though of course governments can and do intervene in the housing market.
We have been told that employment will not pick up for some time. But that is simply what the US government believes, or would like us to believe.
As for housing, The S&P/Case-Shiller 20-City Composite Index fell is still declining, having fallen 15.4% y/y in June 2009 after declining 17.1% y/y in May.
By June 2009, average home prices were at similar levels to what they were in early 2003.
From the peak in mid-2006, the 10-City Composite is down 32.5% and the 20-City Composite is down 31.4%. If one agrees that the peak was hugely exaggerated, the questions are: (a) has the decline now reached the lowest it is going to reach? and how long will it be before there is a sustained (even if slow) rise in price of say 3% or more a year? My answer to (a) is "No", though I do not know how much further house prices have to fall (I hope not a lot). My answer to (b) is that no one knows, not even governments who have made public their "belief" that house prices, employment levels and the economy in general will start coming out of the recession in 2010.
For the reason that I mentioned at the start of this post, too much money sloshing around the system creates systemic distortion and unpredictability. It can (as it has already) cause an apparent end to the crisis very much sooner (or very much later) than 2010.
My view continues to be that we will continue to yo-yo along something like the bottom, reaching marginally lower levels (which will be systemically discounted - at least, so I hope!) and touching marginally higher levels (which will be systemically heralded as the end of the crisis.
Certainly it helps if large numbers of business leaders and ordinary people behave as if the crisis is over.
But watch the fundamentals I mention above.
Governments have begun to put many sensible things in place, which I have been arguing for, and which are helping to resolve the crisis, but we still have the unresolved question of toxic assets - all that we have done is move them from private hands to the hands of governments. In one or two small countries, we see encouraging signs that at least some of the toxic assets are no longer toxic. Assets become less toxic or eventually beneficial as the economy improves, but become more and more toxic as the economy deteriorates. It is only as the bulk of toxic assets in the world economy as a whole are sorted out that the fundamentals will have been addressed sufficiently. Sphere: Related Content
Thursday, August 20, 2009
The idiocies of Lists and Rankings
Forbes magazine (USA) has just a Special Report listing "The 100 Most Powerful Women".
According to this, the most powerful woman in the world is Chancellor Angela Merkel of Germany. This is possibly true.
The 2nd most powerful woman is Sheila Bair, the Chairman of the United States' Federal Deposit Insurance Corp - also possibly true.
However, the 3rd most powerful woman - hold on to your seat! - is Indra Nooyi, the CEO of PepsiCo. This too might be true, except that, down at number 13 on the list, BELOW Cristina Fernandez, President of Argentina, is our own Sonia Gandhi!
Well, Forbes is an American magazine, so I guess their perspective must be that the further away geographically from the US one is, the less important one must be! Sphere: Related Content
According to this, the most powerful woman in the world is Chancellor Angela Merkel of Germany. This is possibly true.
The 2nd most powerful woman is Sheila Bair, the Chairman of the United States' Federal Deposit Insurance Corp - also possibly true.
However, the 3rd most powerful woman - hold on to your seat! - is Indra Nooyi, the CEO of PepsiCo. This too might be true, except that, down at number 13 on the list, BELOW Cristina Fernandez, President of Argentina, is our own Sonia Gandhi!
Well, Forbes is an American magazine, so I guess their perspective must be that the further away geographically from the US one is, the less important one must be! Sphere: Related Content
Monday, August 17, 2009
The latest from the Global Association of Risk Professsionals
In relation to my review of Dr Willi Brammertz's book, a friend draws my attention to last week's Newsletter of the Global Association of Risk Professionals (GARP), which had a stunning bit of news:
GARP has now moved to accepting that standard contract types need to be defined for credit derivatives. It also now accepts that higher capital charges need to be made if standards are not followed. You may recollect that these are two key proposals made in Dr Brammertz's book.
The new GARP view is a bit of a revolution for the organisation - even if, in light of the crisis, the change of heart is not wholly unexpected.
At present, the GARP proposal is limited to credit derivatives - but it should be applied to all financial contracts, as Dr Brammertz quite correctly argues in his book. Sphere: Related Content
GARP has now moved to accepting that standard contract types need to be defined for credit derivatives. It also now accepts that higher capital charges need to be made if standards are not followed. You may recollect that these are two key proposals made in Dr Brammertz's book.
The new GARP view is a bit of a revolution for the organisation - even if, in light of the crisis, the change of heart is not wholly unexpected.
At present, the GARP proposal is limited to credit derivatives - but it should be applied to all financial contracts, as Dr Brammertz quite correctly argues in his book. Sphere: Related Content
Iran is apparently now going to have WOMEN in the Government!
Well, to be precise, what is being signalled is women members of the Cabinet:
Iran's president, Mahmoud Ahmadi-Nejad, said he would nominate at least three female ministers to his cabinet, reaching out to the women who have been particularly active in post-election protests against his government:
http://preview.tinyurl.com/q2b5ad
Even if it is a result of mere politics of the most cynical sort, the move should be welcomed by all people of goodwill as a dilution of Islamism (which, by the way, is a heady but contradictory mixture of Koranic, traditional and reactionary views).
Most importantly, it should be welcomed as signalling a change in the oppression of women that has occured again in newly-Islamised societies - think, for example of the re-suppression of education for women in Afghanistan and of acid being thrown on women who are not dressed in the traditional burqa.
If women are in the cabinet in Iran it will be more difficult to suppress women's rights not only in Iran but in all the places where Iran's influence runs, from Lebanaon to Afghanistan (and much wider!). Sphere: Related Content
Iran's president, Mahmoud Ahmadi-Nejad, said he would nominate at least three female ministers to his cabinet, reaching out to the women who have been particularly active in post-election protests against his government:
http://preview.tinyurl.com/q2b5ad
Even if it is a result of mere politics of the most cynical sort, the move should be welcomed by all people of goodwill as a dilution of Islamism (which, by the way, is a heady but contradictory mixture of Koranic, traditional and reactionary views).
Most importantly, it should be welcomed as signalling a change in the oppression of women that has occured again in newly-Islamised societies - think, for example of the re-suppression of education for women in Afghanistan and of acid being thrown on women who are not dressed in the traditional burqa.
If women are in the cabinet in Iran it will be more difficult to suppress women's rights not only in Iran but in all the places where Iran's influence runs, from Lebanaon to Afghanistan (and much wider!). Sphere: Related Content
Saturday, August 15, 2009
Are all religions the same?
In response to one of my posts, a friend writes: "All religions are the same. It is the belief which counts. Believe in Him and you can never fail".
I could respond with material to fill a book, but I'll confine myself to the following:
Dear A
Your sort of comment is often heard nowadays, but it doesn't bear examination.
First, not all "religions" accept that there is a "Him" (or "Her" or "Her/Him"). Buddhism, Jainism and Vedanta (if you consider them "religions") believe either in an "It" or finally in nothing, depending on which version of these you accept.
Then, it is not merely a matter of belief. In Judaism and Islam, e.g., what is expected is that you commit yourself to quite specific actions too - e.g. Ramadan or Shabbat or eating or not eating certain kinds of food or….
Finally, "believe in Him and you can never fail" is a modern corruption of traditional religions, most of which hold that you will reap the reward of your good deeds in the NEXT life though in this life you may and probably will have HUGE problems.
"So what?", you may retort, "The average person lives on the basis I have indicated and scholars may go hang".
Well, belief systems have consequences not only at the individual level but also at the social, economic and political level. That's why India is still so corrupt and backward while Northern Europe was cleaned up by the Protestant Reformation, with an impact slowly in other parts of the world due to the social, economic and political progress that resulted there being copied by other parts of the world - including our own country.
The attempt to produce the shoots without the roots is interesting and can even be encouraging, but roots have to be put down sometime if you want growth to be sustained. Sphere: Related Content
I could respond with material to fill a book, but I'll confine myself to the following:
Dear A
Your sort of comment is often heard nowadays, but it doesn't bear examination.
First, not all "religions" accept that there is a "Him" (or "Her" or "Her/Him"). Buddhism, Jainism and Vedanta (if you consider them "religions") believe either in an "It" or finally in nothing, depending on which version of these you accept.
Then, it is not merely a matter of belief. In Judaism and Islam, e.g., what is expected is that you commit yourself to quite specific actions too - e.g. Ramadan or Shabbat or eating or not eating certain kinds of food or….
Finally, "believe in Him and you can never fail" is a modern corruption of traditional religions, most of which hold that you will reap the reward of your good deeds in the NEXT life though in this life you may and probably will have HUGE problems.
"So what?", you may retort, "The average person lives on the basis I have indicated and scholars may go hang".
Well, belief systems have consequences not only at the individual level but also at the social, economic and political level. That's why India is still so corrupt and backward while Northern Europe was cleaned up by the Protestant Reformation, with an impact slowly in other parts of the world due to the social, economic and political progress that resulted there being copied by other parts of the world - including our own country.
The attempt to produce the shoots without the roots is interesting and can even be encouraging, but roots have to be put down sometime if you want growth to be sustained. Sphere: Related Content
Friday, August 07, 2009
Encouragement
Having been a vigorous atheist from the age of 8, I became a follower of Jesus at the age of 14. Ever since then I have tried in my feeble and failing way to invest at least some energy in making the world a little better. That had huge consequences for my family, including having to leave the country I love. However, even in the more congenial West, one is always conscious of how deeply unfashionable and unrewarded it is to be engaged even partially in something so quixotic. From time to time, one gets discouraged.
Then I call to mind the story of the discouraged prophet who complained to God that he was the only prophet left unkilled by a wicked queen and that even he was being hunted. The prophet is told that actually seven thousand people were still faithful to God. In the Bible, three symbolises God, seven symbolises perfection, and ten symbolises plenitude - so you do not need me to spell out what ten times ten times ten indicates. In another story, the prophet Elisha asks God to give his discouraged servant a momentary glimpse of what is really going on, so that he is encouraged.
An experience like those happened to me yesterday, when I received the following mail from someone who I had never even heard of earlier:
"I teach both an undergraduate course in organizational behavior as well as an MBA course in leadership and organizational behavior at Rowan University in Glassboro, New Jersey.
"Ever since I heard your program on NPR's Speaking of Faith on “The Gods of Business,” I have begun these courses by asking the students to listen to that program and then write a three-page “working note” (based on the idea originated by A.K Rice at the Tavistock Institute).
"It has been a wonderful way to get business majors to take seriously the relationship between their goal of learning how to make lots of money and their responsibility as citizens of the human community. They respond thoughtfully and it sets the stage for a usefuI semester. I thank you and Krista Tippett for the conversation."
Dr. Thomas Michael, who is Professor Emeritus at the Rohrer College of Business, goes on to say "I intend to begin the MBA class with the program again this September" and then to ask some questions that I was happy to try to answer.
Dear Dr. Michael, thank you. I do not know if you realise it but in Hebrew, which is the language from which your surname comes, "Michael" means "Who is like God". Because Michael is the name of one of the chief angels in the Bible (as well as in the Koran), I take it that the name indicates that, of all created beings, Michael is most like God. In the two or three glimpses we are given of him in the Bible, Michael both works actively himself for God, and assists and encourages others in their work.
Dear Dr. Michael, I have no idea whether you put your trust in God or do not even believe that He exists. But in working for ethics and responsibility you are acting like the angel - indeed like God, as God Himself directly encourages us and requires us to be...and you may not have realised this either, but you encouraged me like your namesake angel yesterday. Sphere: Related Content
Then I call to mind the story of the discouraged prophet who complained to God that he was the only prophet left unkilled by a wicked queen and that even he was being hunted. The prophet is told that actually seven thousand people were still faithful to God. In the Bible, three symbolises God, seven symbolises perfection, and ten symbolises plenitude - so you do not need me to spell out what ten times ten times ten indicates. In another story, the prophet Elisha asks God to give his discouraged servant a momentary glimpse of what is really going on, so that he is encouraged.
An experience like those happened to me yesterday, when I received the following mail from someone who I had never even heard of earlier:
"I teach both an undergraduate course in organizational behavior as well as an MBA course in leadership and organizational behavior at Rowan University in Glassboro, New Jersey.
"Ever since I heard your program on NPR's Speaking of Faith on “The Gods of Business,” I have begun these courses by asking the students to listen to that program and then write a three-page “working note” (based on the idea originated by A.K Rice at the Tavistock Institute).
"It has been a wonderful way to get business majors to take seriously the relationship between their goal of learning how to make lots of money and their responsibility as citizens of the human community. They respond thoughtfully and it sets the stage for a usefuI semester. I thank you and Krista Tippett for the conversation."
Dr. Thomas Michael, who is Professor Emeritus at the Rohrer College of Business, goes on to say "I intend to begin the MBA class with the program again this September" and then to ask some questions that I was happy to try to answer.
Dear Dr. Michael, thank you. I do not know if you realise it but in Hebrew, which is the language from which your surname comes, "Michael" means "Who is like God". Because Michael is the name of one of the chief angels in the Bible (as well as in the Koran), I take it that the name indicates that, of all created beings, Michael is most like God. In the two or three glimpses we are given of him in the Bible, Michael both works actively himself for God, and assists and encourages others in their work.
Dear Dr. Michael, I have no idea whether you put your trust in God or do not even believe that He exists. But in working for ethics and responsibility you are acting like the angel - indeed like God, as God Himself directly encourages us and requires us to be...and you may not have realised this either, but you encouraged me like your namesake angel yesterday. Sphere: Related Content
Thursday, August 06, 2009
How can the economy grow if consumption does not pick up?
What is the basic problem with the global economy today?
I have made my view quite clear in this blog: unfashionably, I maintain that the fundamental problem is still toxic assets - and, while a temporary reprieve has been provided by governments being persuaded by our elites to spend an unprecedented amount of tax money, the result is the economic decline is merely slowed or halted, at the expense of massive public liabilities that will haunt the relevant countries for decades to come.
And "slowing down or halting the decline" is not the same thing as an economy that is growing healthily!
In the global economic model that we have at present, economic health depends entirely on consumption.
The US has been the primary consumer in the world, with private consumption in 2008 amounting to some US$10 trillion, which accounted for 16% of global output. By contrast, private consumption in the EU, even though it is a much more populated region, was about US$9 trillion; and the largest population group in the world, Asia, provided less than US$5 trillion of consumption. This was already in the middle of the crisis, with spending in the US and Europe slowing from their usual highs, and spending in Asia being artificially boosted by government actions.
US and EU consumption is continuing to slow due to more people being "let go" from their jobs, and those who have money becoming much more careful about when and how they spend.
Will Asia be able to take up the slack? As far as I can see, not in terms of private consumption. Even in the case of governments with cash, e.g. China, they have not so far succeeded in encouraging private consumption, rather the governments has spent money on things such as highways (which is of course very good, and which does indirectly put money in the hands of employees).
So we have two choices: either re-expand global consumption with all the ecological consequences, or we can re-orient the global economy towards a more rational and sensible model - on which I have written at several points in this blog and in various articles. Sphere: Related Content
I have made my view quite clear in this blog: unfashionably, I maintain that the fundamental problem is still toxic assets - and, while a temporary reprieve has been provided by governments being persuaded by our elites to spend an unprecedented amount of tax money, the result is the economic decline is merely slowed or halted, at the expense of massive public liabilities that will haunt the relevant countries for decades to come.
And "slowing down or halting the decline" is not the same thing as an economy that is growing healthily!
In the global economic model that we have at present, economic health depends entirely on consumption.
The US has been the primary consumer in the world, with private consumption in 2008 amounting to some US$10 trillion, which accounted for 16% of global output. By contrast, private consumption in the EU, even though it is a much more populated region, was about US$9 trillion; and the largest population group in the world, Asia, provided less than US$5 trillion of consumption. This was already in the middle of the crisis, with spending in the US and Europe slowing from their usual highs, and spending in Asia being artificially boosted by government actions.
US and EU consumption is continuing to slow due to more people being "let go" from their jobs, and those who have money becoming much more careful about when and how they spend.
Will Asia be able to take up the slack? As far as I can see, not in terms of private consumption. Even in the case of governments with cash, e.g. China, they have not so far succeeded in encouraging private consumption, rather the governments has spent money on things such as highways (which is of course very good, and which does indirectly put money in the hands of employees).
So we have two choices: either re-expand global consumption with all the ecological consequences, or we can re-orient the global economy towards a more rational and sensible model - on which I have written at several points in this blog and in various articles. Sphere: Related Content
Wednesday, August 05, 2009
China's "Economic Growth Story"
Readers of my Blog are aware that I have for years been skeptical of the figures that are routinely produced regarding "China's economic growth".
Naturally, I have no doubt that economic growth is taking place. My skepticism relates only to the kinds of figures that are bandied about by officials as well as non-officials.
Now the Financial Times newspaper becomes the first of the respectable Western periodicals to join the skepticism: http://preview.tinyurl.com/l66yqh
[Open in new window] Sphere: Related Content
Naturally, I have no doubt that economic growth is taking place. My skepticism relates only to the kinds of figures that are bandied about by officials as well as non-officials.
Now the Financial Times newspaper becomes the first of the respectable Western periodicals to join the skepticism: http://preview.tinyurl.com/l66yqh
[Open in new window] Sphere: Related Content
Friday, July 31, 2009
Don't take your eye off the ball
The global economy is still overwhelmingly driven by the USA, Europe and Japan - though you might not think so, given all the noise about the rise of China and India.
Even if one uses as the basis of calculation the fashionable but ridiculous idea of Purchasing Power Parity (PPP), the US and Europe account for around 45% of world GDP and 60% of global personal consumption spending in 2007. Over half of world exports and imports originate from these countries, as do nearly three-fourths of global outward foreign direct investment and a similar share of global mergers or takeover deals.
The rest of the world is inevitably dependent on what happens in the "driver or central economies".
The "marginal or peripheral economies" are always more badly hit than the central economies during a bust phase of the economic cycle, but the peripheral economies rise more quickly during the boom phase.
As the global economy at present bumps along an artifically-sustained bottom, the effects on the peripheral economies are patchy - the "leading peripheral economies" have maintained some sort of equilibrium overall though parts of their economies too have been hit. Meanwhile the "even more peripheral economies" have been uniformly hit.
Of course if your economy was dependent on exports, then it was more likely to be hit by the crisis.
And it is likely to continue to be hit by the crisis unless your government can stimulate internal demand.
Naturally, the more your government tries to stimulate internal demand by spending money or reducing taxes, the weaker it will get in terms of its finances (on China, which is reckoned to be an exception to this rule, I have written skeptically earlier).
A few such countries caught in this dilemma (e.g. Iceland) can try to rush into the arms of larger economic groupings for protection. Most do not have this option.
They should think seriously of adopting one or more complimentary currencies as a mechanism that can help their economies stabilise - and not just in the current crisis. Stabilisation is as much needed when nearing the top of a boom as it is needed when nearing the bottom of a bust. Sphere: Related Content
Even if one uses as the basis of calculation the fashionable but ridiculous idea of Purchasing Power Parity (PPP), the US and Europe account for around 45% of world GDP and 60% of global personal consumption spending in 2007. Over half of world exports and imports originate from these countries, as do nearly three-fourths of global outward foreign direct investment and a similar share of global mergers or takeover deals.
The rest of the world is inevitably dependent on what happens in the "driver or central economies".
The "marginal or peripheral economies" are always more badly hit than the central economies during a bust phase of the economic cycle, but the peripheral economies rise more quickly during the boom phase.
As the global economy at present bumps along an artifically-sustained bottom, the effects on the peripheral economies are patchy - the "leading peripheral economies" have maintained some sort of equilibrium overall though parts of their economies too have been hit. Meanwhile the "even more peripheral economies" have been uniformly hit.
Of course if your economy was dependent on exports, then it was more likely to be hit by the crisis.
And it is likely to continue to be hit by the crisis unless your government can stimulate internal demand.
Naturally, the more your government tries to stimulate internal demand by spending money or reducing taxes, the weaker it will get in terms of its finances (on China, which is reckoned to be an exception to this rule, I have written skeptically earlier).
A few such countries caught in this dilemma (e.g. Iceland) can try to rush into the arms of larger economic groupings for protection. Most do not have this option.
They should think seriously of adopting one or more complimentary currencies as a mechanism that can help their economies stabilise - and not just in the current crisis. Stabilisation is as much needed when nearing the top of a boom as it is needed when nearing the bottom of a bust. Sphere: Related Content
Wednesday, July 29, 2009
What kind of risk-appetite has returned?
Appetite for risk seems to have returned - but only, so to speak, for "simple risks" such as equities and bonds. There is a simple reason for the return of the risk appetite, when the fundamentals have not been sorted out: when people are paid to be "active", they HAVE to be "active" if they don't want to lose their jobs.
On the other hand, appetite for what might be called "complex risks" is yet to return (and a good thing, too?):
Chicago-based Hedge Fund Research claims to have found that hedge fund assets are still on their way down; in the final quarter of 2008 investors withdrew $152 billion while, in the 2nd quarter of 2009, withdrawals were at a lower level of $43 billion.
Though there was an increase in the value of hedge fund assets by $100 billion in the second quarter, this was entirely due to an improvement in investment performance (and that, as far as I can see, was itself due to the effects of all the stimulus packages around the world rather than any extraordinarily intelligent actions on the part of hedge fund managers - I am not implying that they were doing anything stupid, simply that they were doing, as far as can be worked out, what might be called "normally intelligent" things).
So "simple risks" may be accepted or declined with greater alacrity right now, but the appetite for "complex risks" is still declining. Sphere: Related Content
On the other hand, appetite for what might be called "complex risks" is yet to return (and a good thing, too?):
Chicago-based Hedge Fund Research claims to have found that hedge fund assets are still on their way down; in the final quarter of 2008 investors withdrew $152 billion while, in the 2nd quarter of 2009, withdrawals were at a lower level of $43 billion.
Though there was an increase in the value of hedge fund assets by $100 billion in the second quarter, this was entirely due to an improvement in investment performance (and that, as far as I can see, was itself due to the effects of all the stimulus packages around the world rather than any extraordinarily intelligent actions on the part of hedge fund managers - I am not implying that they were doing anything stupid, simply that they were doing, as far as can be worked out, what might be called "normally intelligent" things).
So "simple risks" may be accepted or declined with greater alacrity right now, but the appetite for "complex risks" is still declining. Sphere: Related Content
Friday, July 24, 2009
Visit to Israel (continued)
It is a fortnight since I returned from Israel and I have been too busy to put anything more down regarding it! So I know that if I don't do it NOW, it won't get done at all!
At this time of year, Israel is of course extremely hot. 43 degrees on the Golan Heights, 37 in Haifa (where we were based). Even in Haifa, and at the top of Carmel, it was so hot that I, in spite of being Indian, could only sleep because of the sea breeze which is quite strong at night.
On our drive around to Lake Galilee, I am told (and see) that the water level is 8 or possibly even 10 metres below what it should be - and it is the main source of water for the whole land! We discuss why the level has dropped. It occurs to me that the expansion of the human population around the lake may be at least one factor. The population of Israel has gone up from 800,000 at the time the country was established, to some 8 million today. All around the Lake, there is evidence of new building, mostly by expansion of old settlements, some of it along the lake but a surprising amount up the hills aorund.
However, our guide mentions that Israel has the number one position in the world for recycled water. "Guess how much of the water in the country is recycled?", he asks. I have no idea so make a wild guess: 30%? The correct answer is 85%, says our guide. "And which country has the 2nd highest amount of recycled water?", he continues. Again, no idea. This time I am so totally stumped that I cannot even offer a wild guess. The correct answer is apparently: Spain. But our guide is not satisfied by how much of my ignorance he has already exposed. "How much of the water in Spain is recylced?", he asks. Again, no idea. "Fifteen per cent", he says. I am astonished. "Only 15%?!", I ask. That is incredibly huge gap betwen the number one country at 85% and the number two country at 15%. I must check the background to that out some time....
At the beautifully preserved and maintained Orthodox Monastry in Capernaum to which he takes us, I see in the fenced-off garden, a donkey and a variety of hens, ducks, geese, peacocks and peahen - even though only one monk lives here (as far as we were told).
By contrast, when we drive a couple of minutes to the nearby Roman Catholic occupied site of the town of Capernaum, it seems very established and prosperous but not nearly so well kept. It is prosperous because of the hordes of tourists who are brought to visit it, as it has a sort of church built in such a way as to more or levitate over the supposed site of the home of Peter - you can peer down on what is left of the town. However, the simple explanation why it "must" be Peter's house don't add up: that is the largest of the structures (presumably a dwelling, though there is no evidence of that!) but we have no indication from the records that Peter was anything other than an ordinary fisherman from a human point of view.
The "white synagogue" nearby (also much visited and within the "occupied site") is only from the 4th century, and my guess is that the myth regarding which is Peter's house originated then, with the need for the newly-converted Emperor's folk to dignify the history as much as possible. The "white synagogue" is built literally on top of the synagogue which existed in the time of Jesus and to which Jesus may have gone (one can peer down to the original at one or two places, though you see hardly anything). So what you have in the splendid ruins of the white synagogue is a moden (4th century) ruin on top of the old ruin - really, nothing worth seeing for the pilgrims who come here. But, I guess, as pilgrims, they don't really come to SEE anything, they come because they acquire some sort of satisfaction from having visited the site
At the entrance to the Roman Catholic occupied territory, the bronze and larger than life size statue of Peter by some pious sculptor makes him look rather gormless.
On our way around the lake, we stop to see if there is anything at Magdala but there is only a sort of banner by the side of the road informing us that the tiny ruins (three quarters surrounded by a sort of holiday hotel site, and one quarter bounded by the road) are all that are left of a once-prosperous fishing village. However, just up the hill is the "modern" village of Migdal (which we do not see as the possible connection between the two only dawns on me some time later, when I opine that the ancient village probably went much higher up the hill - the lower part was ruined in some battle or other, while the uphill part survived and was built up again later....Again, something to be checked out when one has the time....
A bit further around the lake, I ask our guide/ driver to kindly take us off his scheduled route to follow a sign advertising "The museum of the ancient boat". The museum itself is much like most museums, but the boat takes the cake for the best thing seen on the entire tour. It is 10 metres long, and I wonder why I am moved to see it. Possibly because it is a real thing from the time of Jesus, not merely some interpretation of some ruin that you can hardly make out. The story of the finding of the boat, and its extraction from the mud of the lake, and the years and effort and money that were required to get it to a state in which it can be seen by the public - all that is very well told in the video show which is offered, and I suppose is part of the reason I am so impressed. Was this one of the boats in which Peter fished, or any of the others who are mentioned in the historical records? Was this a boat in which Jesus himself travelled on one of his many recorded and unrecorded journeys across the lake? These are among the questions that the museum poses in written form near the exhibit. The questions are interesting, but not as interesting as the exhibit itself, though another of the signs there shows all the different kinds of wood that went into the boat, from which it can be deduced that the boat was used over a long time, and (as it was repaired again and again by employing different kinds of wood) was used by relatively poor people, at least at some point in time - presumably as the entire region went from prosperity at the time of Jesus to poverty following the destructio of Jerusalem by the Romans in 70 AD.
I observe that the northern end of the lake is stony and arid, but the middle starts being more hospitable nad the southern valley of the Jordan seems quIite productive and almost green.
We start driving up the Golan Heights, which I mentioned earlier, though we visited it almost at the end of our day-long tour. It is not only extremely hot, even the air is hot. In north India, we call the hot summer wind that blows the "loo". The Heights are what may be described as a single strip of hills, between 1000 and 1300 metres high between the river Jordan on one side, and the plain with the Sea of Galilee on the other. From the Heights, one can see right across the whole plain of Galilee (Israel is a tiny country, and relatively thin). I had not realised it quite so starkly earlier: whoever controls the Heigts controls the water supply for at least the whole of the northern part of the country. From the viewpoint of their national defence, it would not just be extremely stupid for Israelis to give up the Golan Heights, it would be tantamount to national suicide.
On the heights, there are several disused bunkers originally built by the British to keep an eye on what is today Syria and Jordan. I have never actually visited the site of a bunker earlier. All around there are signs warning visitors to keep to the market paths as mines were laid down all around and there are still many unexploded ones that may still be live. However, the bunkers could be a good tourist attraction - specially for children - and it would not take that much money to get them cleared and cleaned....
The Golab heights seem to have both Arab and Jewish settlements but both seem relatively new - or at least not ancient.
I know a bit about Judaism but had not realised the distinction between those Jews who are secular, those who are "merely" observant of the religious lawas, versus the "religioius" do no work nor serve in the army and have to be maintained out of the taxes of those who do work! It appears, however that the religious seem very well organised and have been able to defend their benefits successfully so far.
It is a pleasant and unevetful drive back to Haifa. On the outskirts, a former dump is being beautified _ there are aertistically shaped margins that have been bricked out and various flora planted. However, cows are wandering the area freely as we drive past on our last evening here - reminding me of India once again.
In Haifa, I am startled to see a sign announcing "George Eliot Street". Why does Haifa name a road after George Eliot, I ask my guide. This time it is his turn to appear ignorant. Another thing I must check out some time.
Truth to tell, I have seen hardly anything in the week or so I have spent in Israel. But I too feel a curious sense of satisfaction at having been here and seeing whatever little I could see.
BTW, I did not see a single tank in my entire week there (though my wife tells me that she saw one). I did see soldiers with guns, but they were either manning security check points for tourists in Jerusalem (I will post something on our few hours in Jerusalem, when possible) or they were on trains riding to and from their training. Each Israeli, man or woman, has to give THREE YEARS of life to the military. That is extraordinary, but not so extraordinary as how little the normal rhythm of life is impacted by security considerations compared to the portrayal of Israel in the media. When we mentioned to a few friends and relatives that we were going to Israel, the instant and universal reaction was: "Dangerous!". Actually, except for the soldiers with guns on the trains, the land was entirely normal. The hotels were nearly fully booked, whether those top of the range or those that are youth hostels.... No we didn't stay in either. Sphere: Related Content
At this time of year, Israel is of course extremely hot. 43 degrees on the Golan Heights, 37 in Haifa (where we were based). Even in Haifa, and at the top of Carmel, it was so hot that I, in spite of being Indian, could only sleep because of the sea breeze which is quite strong at night.
On our drive around to Lake Galilee, I am told (and see) that the water level is 8 or possibly even 10 metres below what it should be - and it is the main source of water for the whole land! We discuss why the level has dropped. It occurs to me that the expansion of the human population around the lake may be at least one factor. The population of Israel has gone up from 800,000 at the time the country was established, to some 8 million today. All around the Lake, there is evidence of new building, mostly by expansion of old settlements, some of it along the lake but a surprising amount up the hills aorund.
However, our guide mentions that Israel has the number one position in the world for recycled water. "Guess how much of the water in the country is recycled?", he asks. I have no idea so make a wild guess: 30%? The correct answer is 85%, says our guide. "And which country has the 2nd highest amount of recycled water?", he continues. Again, no idea. This time I am so totally stumped that I cannot even offer a wild guess. The correct answer is apparently: Spain. But our guide is not satisfied by how much of my ignorance he has already exposed. "How much of the water in Spain is recylced?", he asks. Again, no idea. "Fifteen per cent", he says. I am astonished. "Only 15%?!", I ask. That is incredibly huge gap betwen the number one country at 85% and the number two country at 15%. I must check the background to that out some time....
At the beautifully preserved and maintained Orthodox Monastry in Capernaum to which he takes us, I see in the fenced-off garden, a donkey and a variety of hens, ducks, geese, peacocks and peahen - even though only one monk lives here (as far as we were told).
By contrast, when we drive a couple of minutes to the nearby Roman Catholic occupied site of the town of Capernaum, it seems very established and prosperous but not nearly so well kept. It is prosperous because of the hordes of tourists who are brought to visit it, as it has a sort of church built in such a way as to more or levitate over the supposed site of the home of Peter - you can peer down on what is left of the town. However, the simple explanation why it "must" be Peter's house don't add up: that is the largest of the structures (presumably a dwelling, though there is no evidence of that!) but we have no indication from the records that Peter was anything other than an ordinary fisherman from a human point of view.
The "white synagogue" nearby (also much visited and within the "occupied site") is only from the 4th century, and my guess is that the myth regarding which is Peter's house originated then, with the need for the newly-converted Emperor's folk to dignify the history as much as possible. The "white synagogue" is built literally on top of the synagogue which existed in the time of Jesus and to which Jesus may have gone (one can peer down to the original at one or two places, though you see hardly anything). So what you have in the splendid ruins of the white synagogue is a moden (4th century) ruin on top of the old ruin - really, nothing worth seeing for the pilgrims who come here. But, I guess, as pilgrims, they don't really come to SEE anything, they come because they acquire some sort of satisfaction from having visited the site
At the entrance to the Roman Catholic occupied territory, the bronze and larger than life size statue of Peter by some pious sculptor makes him look rather gormless.
On our way around the lake, we stop to see if there is anything at Magdala but there is only a sort of banner by the side of the road informing us that the tiny ruins (three quarters surrounded by a sort of holiday hotel site, and one quarter bounded by the road) are all that are left of a once-prosperous fishing village. However, just up the hill is the "modern" village of Migdal (which we do not see as the possible connection between the two only dawns on me some time later, when I opine that the ancient village probably went much higher up the hill - the lower part was ruined in some battle or other, while the uphill part survived and was built up again later....Again, something to be checked out when one has the time....
A bit further around the lake, I ask our guide/ driver to kindly take us off his scheduled route to follow a sign advertising "The museum of the ancient boat". The museum itself is much like most museums, but the boat takes the cake for the best thing seen on the entire tour. It is 10 metres long, and I wonder why I am moved to see it. Possibly because it is a real thing from the time of Jesus, not merely some interpretation of some ruin that you can hardly make out. The story of the finding of the boat, and its extraction from the mud of the lake, and the years and effort and money that were required to get it to a state in which it can be seen by the public - all that is very well told in the video show which is offered, and I suppose is part of the reason I am so impressed. Was this one of the boats in which Peter fished, or any of the others who are mentioned in the historical records? Was this a boat in which Jesus himself travelled on one of his many recorded and unrecorded journeys across the lake? These are among the questions that the museum poses in written form near the exhibit. The questions are interesting, but not as interesting as the exhibit itself, though another of the signs there shows all the different kinds of wood that went into the boat, from which it can be deduced that the boat was used over a long time, and (as it was repaired again and again by employing different kinds of wood) was used by relatively poor people, at least at some point in time - presumably as the entire region went from prosperity at the time of Jesus to poverty following the destructio of Jerusalem by the Romans in 70 AD.
I observe that the northern end of the lake is stony and arid, but the middle starts being more hospitable nad the southern valley of the Jordan seems quIite productive and almost green.
We start driving up the Golan Heights, which I mentioned earlier, though we visited it almost at the end of our day-long tour. It is not only extremely hot, even the air is hot. In north India, we call the hot summer wind that blows the "loo". The Heights are what may be described as a single strip of hills, between 1000 and 1300 metres high between the river Jordan on one side, and the plain with the Sea of Galilee on the other. From the Heights, one can see right across the whole plain of Galilee (Israel is a tiny country, and relatively thin). I had not realised it quite so starkly earlier: whoever controls the Heigts controls the water supply for at least the whole of the northern part of the country. From the viewpoint of their national defence, it would not just be extremely stupid for Israelis to give up the Golan Heights, it would be tantamount to national suicide.
On the heights, there are several disused bunkers originally built by the British to keep an eye on what is today Syria and Jordan. I have never actually visited the site of a bunker earlier. All around there are signs warning visitors to keep to the market paths as mines were laid down all around and there are still many unexploded ones that may still be live. However, the bunkers could be a good tourist attraction - specially for children - and it would not take that much money to get them cleared and cleaned....
The Golab heights seem to have both Arab and Jewish settlements but both seem relatively new - or at least not ancient.
I know a bit about Judaism but had not realised the distinction between those Jews who are secular, those who are "merely" observant of the religious lawas, versus the "religioius" do no work nor serve in the army and have to be maintained out of the taxes of those who do work! It appears, however that the religious seem very well organised and have been able to defend their benefits successfully so far.
It is a pleasant and unevetful drive back to Haifa. On the outskirts, a former dump is being beautified _ there are aertistically shaped margins that have been bricked out and various flora planted. However, cows are wandering the area freely as we drive past on our last evening here - reminding me of India once again.
In Haifa, I am startled to see a sign announcing "George Eliot Street". Why does Haifa name a road after George Eliot, I ask my guide. This time it is his turn to appear ignorant. Another thing I must check out some time.
Truth to tell, I have seen hardly anything in the week or so I have spent in Israel. But I too feel a curious sense of satisfaction at having been here and seeing whatever little I could see.
BTW, I did not see a single tank in my entire week there (though my wife tells me that she saw one). I did see soldiers with guns, but they were either manning security check points for tourists in Jerusalem (I will post something on our few hours in Jerusalem, when possible) or they were on trains riding to and from their training. Each Israeli, man or woman, has to give THREE YEARS of life to the military. That is extraordinary, but not so extraordinary as how little the normal rhythm of life is impacted by security considerations compared to the portrayal of Israel in the media. When we mentioned to a few friends and relatives that we were going to Israel, the instant and universal reaction was: "Dangerous!". Actually, except for the soldiers with guns on the trains, the land was entirely normal. The hotels were nearly fully booked, whether those top of the range or those that are youth hostels.... No we didn't stay in either. Sphere: Related Content
Should a Eurozone Bond be created?
The admirable Dr. Otmar Issing has just published a persuasive piece arguing against the creation of such a bond, though his argument is undercut by the fact that, basically, Northern/ Western Europe has committed to social and political rescue of at least the western part of the old Soviet empire - with huge costs that have anyway been paid, and are being paid, by Western Europe (principally Germany).
Issing's article is here
What do you think? Sphere: Related Content
Issing's article is here
What do you think? Sphere: Related Content
Monday, July 20, 2009
Whatever happened to checks and balances?
In the UK, as in the US, the current mood is for renewed centralisation.
This too is a kind of bubble.
I see in this morning's FT that the Tories (the UK's Conservative Party) would like to abandon Britain’s tripartite system of financial regulation and transfer all the powers to the Bank of England.
Though the intention is noble, and the instinct is more sweeping, this is in substance very similar to the Obama proposals in the USA (no surprise to see the Tories following the US Democratic Party now!).
However, systemic risk does not come only from the banking sector, or even from financial institutions.
Systemic risk comes from the system as a whole :)
Though the immediate cause may come from a particular sector of course....
In the Asian crisis (which sank just about all the Asian Tigers, so completely that they still have not properly recovered!), the primary cause was political....
That is why it is best to keep the wider issue of systemic risk separate from the narrow technical questions of banking regulation as well as from the broader questions of financial services regulation.
I stand by my suggestions for a Global Systemic Risk Regulator, made in my piece in the New York Times on 30 June:
http://dealbook.blogs.nytimes.com/2009/06/30/another-view-a-global-approach-to-financial-risk/
See too the earlier piece, also published by the DealBook section of the NYT, evaluating the Obama proposals as a whole, which is at: http://dealbook.blogs.nytimes.com/2009/06/25/another-view-flaws-in-the-obama-oversight-plan Sphere: Related Content
This too is a kind of bubble.
I see in this morning's FT that the Tories (the UK's Conservative Party) would like to abandon Britain’s tripartite system of financial regulation and transfer all the powers to the Bank of England.
Though the intention is noble, and the instinct is more sweeping, this is in substance very similar to the Obama proposals in the USA (no surprise to see the Tories following the US Democratic Party now!).
However, systemic risk does not come only from the banking sector, or even from financial institutions.
Systemic risk comes from the system as a whole :)
Though the immediate cause may come from a particular sector of course....
In the Asian crisis (which sank just about all the Asian Tigers, so completely that they still have not properly recovered!), the primary cause was political....
That is why it is best to keep the wider issue of systemic risk separate from the narrow technical questions of banking regulation as well as from the broader questions of financial services regulation.
I stand by my suggestions for a Global Systemic Risk Regulator, made in my piece in the New York Times on 30 June:
http://dealbook.blogs.nytimes.com/2009/06/30/another-view-a-global-approach-to-financial-risk/
See too the earlier piece, also published by the DealBook section of the NYT, evaluating the Obama proposals as a whole, which is at: http://dealbook.blogs.nytimes.com/2009/06/25/another-view-flaws-in-the-obama-oversight-plan Sphere: Related Content
Thursday, July 16, 2009
Will the recession really be over "by the end of this year"? If so, what does that mean?
At the start of the current recession, the consensus view was that it would be a short and shallow one lasting some eight or nine months, like the recessions in 1990-91 and 2001.
Nouriel Roubini and other "doomsters" (such as me) argued that the recession would be deep and long-lasting, and we have been proved right so far. Roubini argued that the recession would last 24 months, and we are more than 10 months beyond the consensus forecast at the time the recession started - and have only some 5 months left of the recession, according to Roubini's forecast. My view is that the recession could end very soon if the US Congress tackles the key issues of the ack of transparency, the multiplication of leveraged speculation, and the speculation (about which I have written and spoken extensively, most recently by invitation at the Israeli Chambers of Commerce in Israel).
The US Congress is debating those very issues right now - and the question is whether or not they choose to address those issues at least as vigorously as suggested by the Obama proposals. In my articles published in the New York Times Online ("DealBook" section) a couple of weeks ago, I have argued that a more vigorous approach would be even better. But at least the response of Congress should be no weaker. Provided that were to be so, then the recession could end within days.
HOWEVER, THE END OF THE RECESSION IS NOT THE SAME THING AS A RECOVERY.
Whether we see sustained recovery depends on further factors, specifically how quickly employement returns to the US economy, and how quickly the US consumer is able to and does starts$ spending again - but this time out of savings, not merely by increasing debt!
Households in the US are already overloaded with debt, as is the corporate sector, and of course also the government with its now unbelievably massive fiscal and public debt.
A renewed bout of recession will therefore remain as a risk. The "bottoming out of the recession" has been based entirely on governments' unsustainable explosion in monetary and fiscal easing - and it will not be easy to get the timing and size of the withdrawal right.
Fundamental questions remain to be answered about the nature of the global economic system that we have at present. I have argued consistently over several years that the human and ecological consequences of the current economic system are set to destroy humanity - much sooner than consensus predictions have indicated even recently.
At the very minimum, questions of ecology and social justice need to be integrated into global economic and financial rules. It is just possible that we may still succceed in the first (environmental issues) at the Copenhagen conference this year. There are also attempts to renew the Doha round to get the WTO talks going again - and, if so, there will be a chance to get issues of worldwide social justice included in any new WTO treaty. However, these represent more or less our last chances to tackle these issues. Ideally, we should go beyond the ecological and social issues to the psychological, cultural and spiritual issues that are at the heart of the repeated crises that are endemic to the nature of the current economic system.
Some of us have already been addressing those issues for ages, others of us have begun to address those issues more recently, and I hope and pray and wish that all of us may begin to see and address these issues urgently and as soon as possible. Sphere: Related Content
Nouriel Roubini and other "doomsters" (such as me) argued that the recession would be deep and long-lasting, and we have been proved right so far. Roubini argued that the recession would last 24 months, and we are more than 10 months beyond the consensus forecast at the time the recession started - and have only some 5 months left of the recession, according to Roubini's forecast. My view is that the recession could end very soon if the US Congress tackles the key issues of the ack of transparency, the multiplication of leveraged speculation, and the speculation (about which I have written and spoken extensively, most recently by invitation at the Israeli Chambers of Commerce in Israel).
The US Congress is debating those very issues right now - and the question is whether or not they choose to address those issues at least as vigorously as suggested by the Obama proposals. In my articles published in the New York Times Online ("DealBook" section) a couple of weeks ago, I have argued that a more vigorous approach would be even better. But at least the response of Congress should be no weaker. Provided that were to be so, then the recession could end within days.
HOWEVER, THE END OF THE RECESSION IS NOT THE SAME THING AS A RECOVERY.
Whether we see sustained recovery depends on further factors, specifically how quickly employement returns to the US economy, and how quickly the US consumer is able to and does starts$ spending again - but this time out of savings, not merely by increasing debt!
Households in the US are already overloaded with debt, as is the corporate sector, and of course also the government with its now unbelievably massive fiscal and public debt.
A renewed bout of recession will therefore remain as a risk. The "bottoming out of the recession" has been based entirely on governments' unsustainable explosion in monetary and fiscal easing - and it will not be easy to get the timing and size of the withdrawal right.
Fundamental questions remain to be answered about the nature of the global economic system that we have at present. I have argued consistently over several years that the human and ecological consequences of the current economic system are set to destroy humanity - much sooner than consensus predictions have indicated even recently.
At the very minimum, questions of ecology and social justice need to be integrated into global economic and financial rules. It is just possible that we may still succceed in the first (environmental issues) at the Copenhagen conference this year. There are also attempts to renew the Doha round to get the WTO talks going again - and, if so, there will be a chance to get issues of worldwide social justice included in any new WTO treaty. However, these represent more or less our last chances to tackle these issues. Ideally, we should go beyond the ecological and social issues to the psychological, cultural and spiritual issues that are at the heart of the repeated crises that are endemic to the nature of the current economic system.
Some of us have already been addressing those issues for ages, others of us have begun to address those issues more recently, and I hope and pray and wish that all of us may begin to see and address these issues urgently and as soon as possible. Sphere: Related Content
Wednesday, July 15, 2009
Is an FDR-type "bank holiday" on the cards?
The Blogosphere has been busy with a lot of chat on the subject. Roughly half the hits for a Google search for "fdr bank holiday" show up on a search for "fdr bank holiday 2009".
I'll tell you what interested me:
http://www.newyorkfed.org/research/epr/09v15n1/0907silb.pdf
If I was Obama, and I had this at all in mind, I would have acted on this by now.
Of course, it is possible that the administration's judgment is that the public needs to be prepared before such a move is made, whenever that may be necessary.
Should that be the case, then it would of course be useful to encourage extensive discussion of this on the Blogosphere before drawing more traditional media into the discussion, and finally announcing such an actual move.
However, a week is a long time in politics and it remains to be seen whether such a drastic move will be thought necessary. Because the consequences will not be pretty: in 1933, the US was pretty isolated from the rest of the world, and vice versa....
It is doubtful if the result would stop at greater bank & system control, fewer banks & a lower US Dollar. The impact on US Treasuries, and on Emerging Markets would be terrible.
Greater bank and system control is already being sought by legislation being considered by the US Congress. Banks are going out of business by the day, though that gets hardly any publicity. And a lower Dollar can be more predictably and efficiently obtained by other measures.
So the supposed main advantages of a "bank holiday" are already on the way to being obtained (we hope!). Any additional advanatages of such a possible move are more uncertain than in 1933. And the disadvantages of a "bank holiday" might be horrendous. Sphere: Related Content
I'll tell you what interested me:
http://www.newyorkfed.org/research/epr/09v15n1/0907silb.pdf
If I was Obama, and I had this at all in mind, I would have acted on this by now.
Of course, it is possible that the administration's judgment is that the public needs to be prepared before such a move is made, whenever that may be necessary.
Should that be the case, then it would of course be useful to encourage extensive discussion of this on the Blogosphere before drawing more traditional media into the discussion, and finally announcing such an actual move.
However, a week is a long time in politics and it remains to be seen whether such a drastic move will be thought necessary. Because the consequences will not be pretty: in 1933, the US was pretty isolated from the rest of the world, and vice versa....
It is doubtful if the result would stop at greater bank & system control, fewer banks & a lower US Dollar. The impact on US Treasuries, and on Emerging Markets would be terrible.
Greater bank and system control is already being sought by legislation being considered by the US Congress. Banks are going out of business by the day, though that gets hardly any publicity. And a lower Dollar can be more predictably and efficiently obtained by other measures.
So the supposed main advantages of a "bank holiday" are already on the way to being obtained (we hope!). Any additional advanatages of such a possible move are more uncertain than in 1933. And the disadvantages of a "bank holiday" might be horrendous. Sphere: Related Content
UK Government Minister's behaviour descends to new low in the battle regarding public broadcasting
Ben Bradshaw, the UK Culture Secretary, is thoroughly emotionally-committed to the so-called "Digital Brain" proposals which include, among other things, the idea that the Licence Fee, which is paid by everyone in the UK who owns a TV, should be shared by organisations other than the BBC (at present, the Fee goes entirely to the BBC; this is because other organisations are expected to raise their funding from the market).
In an interview with the Financial Times yesterday, Mr. Bradshaw described the leadership of Mark Thompson, the BBC director-general, and of Sir Michael Lyons, chairman of the BBC Trust, as “wrong-headed” and claimed not only that opposition to government plans to share some of the licence fee with rival broadcasters was “self-defeating” but even that the BBC staff themselves were in favour of the Bradshaw proposals - something whose veracity can easily be checked, if necessary, but is wholly denied by Mr Thompson, who says that he has "seen absolutely no evidence that the BBC is anything other than fully united" against the Bradshaw proposals.
Splitting the licence fee is a move designed to weaken public broadcasting in the UK and, as the BBC is the premier broadcasting organisation in the world, that would have tremendous negative consequences on public broadcasting around the world - as well as on the future of democracy, as I have argued elsewhere. What is needed, rather, is to strengthen public broadcasting.
The BBC is not a perfect organisation, but it is an important bastion of human and humane values - and it is open to public scrutiny in a way that few other media organisations are.
Splitting the licence fee would undoubtedly lead in time to using the licence fee for wider purposes that are at present supported by general taxation.
The net effect of would be a continued weakening of the BBC, and eventual loss of independence from market forces for the BBC.
In any case, the Culture Secretary has indulged in uncultured behaviour in descending to personal attacks on Mr Thompson and Sir Michael.
We all have uncontrolled moments, so I do not call for Mr. Bradshaw's resignation. However, I do call on him to apologise to Mr. Thompson and Sir Michael.
And I call on him to withdraw the thoroughly damaging proposal that the Licence Fee be shared by other organisations whose role historically has been, and is today, to raise their funding from the financial and advertising markets. Sphere: Related Content
In an interview with the Financial Times yesterday, Mr. Bradshaw described the leadership of Mark Thompson, the BBC director-general, and of Sir Michael Lyons, chairman of the BBC Trust, as “wrong-headed” and claimed not only that opposition to government plans to share some of the licence fee with rival broadcasters was “self-defeating” but even that the BBC staff themselves were in favour of the Bradshaw proposals - something whose veracity can easily be checked, if necessary, but is wholly denied by Mr Thompson, who says that he has "seen absolutely no evidence that the BBC is anything other than fully united" against the Bradshaw proposals.
Splitting the licence fee is a move designed to weaken public broadcasting in the UK and, as the BBC is the premier broadcasting organisation in the world, that would have tremendous negative consequences on public broadcasting around the world - as well as on the future of democracy, as I have argued elsewhere. What is needed, rather, is to strengthen public broadcasting.
The BBC is not a perfect organisation, but it is an important bastion of human and humane values - and it is open to public scrutiny in a way that few other media organisations are.
Splitting the licence fee would undoubtedly lead in time to using the licence fee for wider purposes that are at present supported by general taxation.
The net effect of would be a continued weakening of the BBC, and eventual loss of independence from market forces for the BBC.
In any case, the Culture Secretary has indulged in uncultured behaviour in descending to personal attacks on Mr Thompson and Sir Michael.
We all have uncontrolled moments, so I do not call for Mr. Bradshaw's resignation. However, I do call on him to apologise to Mr. Thompson and Sir Michael.
And I call on him to withdraw the thoroughly damaging proposal that the Licence Fee be shared by other organisations whose role historically has been, and is today, to raise their funding from the financial and advertising markets. Sphere: Related Content
Subscribe to:
Posts (Atom)