Shorting common sense
Sat, Feb 06 2010evidence
investment
financial crisis
I've previously noted that the policy of banning short-selling looked just like the sort of hunch driven regulation that hurts both the economy and common sense. Its prohibition of speculation on price falls was Canute-like.
Now here's some strong evidence that bans such as ASIC's had adverse impacts on precisely factor most needed in a crisis of market confidence: liquidity.
"The evidence suggests that the knee-jerk reaction of most stock exchange regulators around the globe to the financial crisis – imposing bans or regulatory constraints on short-selling – was at best neutral in its effects on stock prices. The impact on market liquidity was clearly detrimental, especially for small-cap and high-risk stocks. Moreover, it slowed down price discovery" Extract from Short-selling bans in the crisis: Alessandro Beber and Marco Pagano
Chinese savings rate & the gender balance
Sat, Feb 06 2010china
macroeconomics
demographics
Fascinating. A strong, explanatory correlation appears between very high household savings rates and the male-gender imbalance.
"…[E]conomists and policymakers have looked with concern to the large Chinese current account surplus and large US current account deficit, or global imbalances, much of their discussion has focused on changing exchange rate policy. None of the discussion about global imbalances has brought family-planning policy or women’s rights to the table, because many do not see these issues as related to economic policy. Our research suggests that this is a serious omission." Extract from The mystery of Chinese savings: Shang-Jin WeiShang-Jin's hypothesis? Savings reflect competition in a marriage market with a significant deficit of females. I'm impatient to see the published paper.
Monckton Lecture, Melbourne Feb 1, 2010
Thu, Jan 28 2010climate
emissions
people
A number of people have asked for these details:
Monday, 1 February 2010, 5:30 pm
Ballroom, Sofitel Hotel (25 Collins St Melbourne)
Entry by $20 'donation' at the door (no reservations).
Christopher, Viscount Monckton is a serious analyst and good fun: he has mastered the art of keeping it simple and exaggerating (a little bit). So I expect a big crowd, a great atmosphere and some clever, convincing, talk.
Are the BRICS ready to lead?
Wed, Jan 20 2010wto
china
trade framework
kyoto
Reflecting on the greater influence of the BRICS, recently, in global forums, the always-interesting Alan Beattie asks:
"Is this a pivot point such as the second world war, where the confident, innovative US muscled aside the weakened, debt-laden economies of Europe and remade the global financial architecture? " Extract from FT.com
His guess? "No, not yet". He points out the BRICS are dominated by one country, China, that is still dependent on foreign demand for its economic strength rather than on its domestic resources.
"A decade of rapid growth is not enough for the Brics to seize the baton of global economic leadership from the US and western Europe. The grouping, or some of them, may have astonished the world with their progress over the past 10 years. But it will require a qualitative improvement as well as more growth to consolidate that shift of power."
In an accompanying article he argues:
"…Aside from the long-running debate about giving developing countries more votes in the IMF, it has proved hard to hammer out a substantive set of subjects on which the disparate Bric countries have the same interests." Extract from FT.com
Beattie points out that for all their capacity jointly to wield influence in global forums, the BRICS do not have much in common in their domestic policy approaches and few common external interests. This has been evident in the Doha negotiations where India and Brazil, especially, have opposing interests in matters such as agricultural trade liberalization, and at Copenhagen where China's interests were not apparently those of many developing countries; effectivelly sui generis. Beattie concludes that:
"In diplomacy, as in economics, the power wielded by the Bric countries may end up being distinctly weighted towards the wishes of Beijing."
I think all this is pretty sound. But…in my view we are witnessing, nonetheless, a secular change in global governance, to be marked by confusion, delay and irrelevance for global institutions such as WTO that cling to a mode of "explicit consensus" (as the Doha Declaration puts it) in decision-making. Such presumptive unanimity or compliance is no longer likely except where the decisions concerned are inescapable—like those on the global 'stimulus' (or otherwise trivial in a policy sense, such as humanitarian aid). The future seems, for now, to belong rather to plurilateral decision-making and institutions in different forms.
U.S. looks for a ‘critical mass’ climate deal
Fri, Jan 15 2010climate
trade framework
emissions
critical mass
There is absolutely nothing new in U.S. exasperation with the United Nations and its overblown processes. This statement from the deputy U.S. climate envoy recalls the responses of thousands of technocrats exposed for the first time to the diplomatic morass; for decades, we've heard something similar from every new Administration.
"Pershing said the flaws in the UN process, which demands consensus among the international community, were exposed at Copenhagen. 'The meeting itself was at best chaotic,' he said, in a talk at the Centre for Strategic and International Studies in Washington. 'We met mostly overnight. It seemed like we didn't sleep for two weeks. It seemed a funny way to do things, and it showed.'" Extract from UN should be sidelined in future climate talks, says Obama official | The Guardian
What is new is that the so-called BASIC countries—giant, rapidly growing but poor economies—have become the necessary interlocutors of the USA and, perforce, for Europe, Japan and the rest of the twenty-something countries that have committed to sign the 'pledge' on emissions cuts by 31 January this year.
Pershing goes on to say that he's looking for a 'critical mass' alternative:
"[He] indicated the focus would be narrower in scope than the UN's all-inclusive approach. "We expect there will be significant actions recorded by major countries," he said. "We are not really worried what Chad does. We are not really worried about what Haiti says it is going to do about greenhouse gas emissions. "
Elaborating the Ag. travesty
Thu, Jan 14 2010wto
agriculture
doha
trade framework
It is difficult to believe that the complex, weak, confusing, rent-preserving, ponderous white-elephant being proposed for an agreement on agriculture in the WTO Doha negotiations could be more bloated or further compromised…but that's exactly what seems to be happening.
According to a report* from ITCSD, developing countries and the EU want to further slow the pace of change where opening markets for products such as sugar, cut flowers, vegetable oils, fruits and juices might threaten some highly profitable deals between of a small group of EU importers and developing country exporters. So much for the poor old consumer!
"Trade sources told Bridges that this provision [to preserve tariff preferences] is meant to refer specifically to sugar; however, the language leaves open the possibility that other products, such as beef, could qualify as well. Specifically, if members use a complex methodology called ‘partial designation’ to select very specific products, then it is possible that those goods, which would not otherwise receive preference erosion treatment, might also qualify." Extract from ICTSD Preference Erosion List Marks ‘New Era’ in WTO Farm Talks
It's time to kill this ugly beast of an agreement and to start again with a simpler deal among countries that want open, competitive markets. If the current Doha text ever gets off the table it will serve only to anchor the development and expansion of international food trade in the morbid swamps of its infamously protectionist past.
* There's no sign of the EU-ACP proposal yet on the WTO website.
Lamy’s assessment of Copenhagen
Thu, Jan 14 2010wto
carbon
trade framework
emissions
It's called whistling in the wind.
"The outcome of the conference in Copenhagen represents a step forward. The Kyoto Protocol addresses about 30% of global carbon emissions. In contrast, the framework accord hammered out in Copenhagen last week may encompass the majority of world emissions. " Extract from WTO | 2009 News items - Lamy praises Copenhagen efforts, calls for more to be done
The Director-General of WTO goes on to claim that "…in the end, it is only through a multilateral process that we can achieve results which are legitimate and credible." But this is an argument seems to stand only when propped-up by jargon. Processes? What are they? Agreements to a coherent single-framework for action? Only a weak one at best, and likely compromised by exceptions, concessions and deals (qv Copenhagen, Doha). Or are 'processes' just talk?
Rahmstorf rebuffed
Tue, Jan 12 2010climate
evidence
statistics
garnaut
The Potsdam Institute physicist whose 2007 paper Ross Garnaut relied on for his assertion that "on the balance of probabilities" CO2-driven warming was accelerating dangerously, has been exposed as a scientific gadfly.
At the time of the publication of Garnaut's interim report, several well-qualified sceptics disputed Rahmstorf's projetions, including David Stockwell, Lucia Liljegren and Steve McIntyre with strong support from former Australian statistician Ian Castles. Ian also kindly supported my request to the Statistical Society of Australia to evaluate the Rahmstorf methodology in the interests of better informed public debate on Garnaut's recommendations (they eventually declined).
Now, A UK Met Office researcher and oceanographers have harshly criticised Stefan Rahmstorf for his extravagant prediction that warming would lead to sea-level rises of 1.88 meters by the end of the century.
"Critic Simon Holgate, a sea-level expert at the Proudman Oceanographic Laboratory, Merseyside, has written to Science magazine, attacking Professor Rahmstorf's work as 'simplistic'.
'Rahmstorf's real skill seems to be in publishing extreme papers just before big conferences like Copenhagen, when they are guaranteed attention,' Dr Holgate said." Extract from Sea-level theory cuts no ice | The Australian
Interesting to note Rahmstorf's weasly response to the criticism, reported at the end of The Australian's story.
Multilateralism not a ‘single undertaking’
Wed, Jan 06 2010wto
doha
trade framework
critical mass
More commentary—this time from the President of the U.S. Council on Foreign Relations—on the significance of the Copenhagen meeting as one of the first signs of whatever-it-turns-out-to-be that follows the pax atlantica
"Multilateralism in the 21st century is, like the century itself, likely to be more fluid and, at times, messy than what we are used to." Extract from Richard Haass in the Financial Times
Haass provides three possible new conformations of multilateralism for the 21st century that seem plausible to me: 'regionalism' as in regional trade agreements; 'functional' multilateralism—by which he means 'coalitions of the willing' or the 'critical mass' agreements that have been at the core of my recent work on agricultural trade agreements—and; 'informal' multilateralism comprising executive agreements on collaboration that fall some way short of treaties.
What these forms have in common, that distinguishes them from the form of multilateralism embodied in WTO, is that they are not 'single undertaking' agreements of the kind that has so crippled progress in the Doha Round of negotiations. It's past time that the WTO member governments got that idea.
Cheering for ‘democracy’
Tue, Jan 05 2010china
trade framework
multilateralism
countries
Rachman—who's normally pretty astute—assesses the emblematic events in Copenhagen as a blow to the U.S. program of 'spreading democracy'.
"As emerging global powers and developing nations, Brazil, India, South Africa and Turkey may often feel they have more in common with a rising China than with the democratic US." Extract from Gideon Rachman in the Financial Times
Although I share his sense that the Copenhagen events illustrated a watershed, I'm surprised by this pedestrian analysis from Rachman.
Even if 'spreading democracy' were still at the core of U.S. foreign policies under Obama (I doubt it), the idea that these emerging nations are somehow picking sides on the issue of 'democracy' is at best condescending. What, after all, does any of these countries need to learn from the USA about managing democracy? Not much, I'd say. Their democratic credentials have survived some of the most extreme challenges in the past half-century. What they have in common with China is something simpler and deeper than political philosophy: the desire for wealth.
How the deal was done
Mon, Dec 28 2009climate
china
trade framework
ideas
Official Chinese account of the negotiation of the accord at Copenhagen, emphasising, of course, their own role:
The Copenhagen conference has put China on a higher and broader world stage. China has reason to be proud and China will work even harder! Verdant mountains cannot stop water flowing; eastward the water keeps on going.
The report provides a detailed account of Premier Wen's movements and consultations over three days in Cophenhagen. No mention, however, of any talks with 'Friend of the Chair' and 'true friend' of China, Kevin Rudd.
Global governance in the aughties
Sun, Dec 27 2009wto
doha
trade framework
multilateralism
First, bodice-ripping as political theory
"We live in an era in which unprecedented globalization and economic interdependence, liberal-democratic hegemony, nanotechnology, robotic warfare, the 'infosphere,' nuclear proliferation and geoengineering solutions to climate change coexist with the return of powerful autocratic-capitalist states, of a new Great Game in Central Asia, of imperialism in the Middle East, of piracy on the high seas, of rivalry in the Indian Ocean, of a 1929-like market crash, of 1914-style hypernationalism and ethnic conflict in the Balkans, of warlords and failed states, of genocides in Bosnia, Rwanda and Darfur, and of a new holy war waged by radical Islamists complete with caliphates and beheadings reminiscent of medieval times." Extract from The National Interest
(Nanotechnology?)
Here's a more sober, more plausible, assessment of the likely route for the global governance framework (at least) from the U.S. National Intelligence Council:
The existing international organizations—such as the UN, WTO, IMF, and World Bank—may prove sufficiently responsive and adaptive to accommodate the views of emerging powers, but whether the emerging powers will be given—or will want—additional power and responsibilities is a separate question. Indeed some or all of the rising powers may be content to take advantage of the institutions without assuming leadership burdens commensurate with their status. At the same time, their membership does not necessarily have to involve heavy responsibilities or burden-sharing, allowing them to pursue their goals of economic development.
That veiw from mid-2008 is holding up pretty well, so far…except that 'accommodating views' does not mean doing anything. Which explains much about why WTO is stymied and why the Copenhagen conference of the UN Climate Convention was a farce (there are other reasons, too, in each case).
Plurilateralism… get used to it
Sun, Dec 20 2009trade framework
emissions
multilateralism
countries
Unless you've been asleep since the mid-1930s (when the League of Nations fell apart), the failures of the UN Climate Convention in Copenhagen or the World Trade Organization in Geneva to reach agreement should come as no surprise.
It's not the end of the world (or even of multilateralism) but it's an historic moment, all the same. I suspect it marks the iconic end of the pax atlantica; the benign dispensation that has, since its birth aboard HSM Prince of Wales in August 1941, been the engine and guarantor of multilateralism as embodied in the U.N., the WTO, the World Bank, IMF and the rest of the international paraphernalia.
Read more…Good idea or insidious threat?
Tue, Dec 08 2009china
australia
protection
usa
3 comments
When an economy has trade leverage, the threat of discriminatory duties need not be simple protectionism.
"The US can help China make the necessary adjustments toward a reduction in imbalances by adopting a uniform tariff of 10 per cent on all Chinese imports, based on their values when they enter the US. Six months after the establishment of this tariff, the rate would increase by one percentage point a month until the Chinese trade surplus with the US declines to $5bn a month." Extract from FT.com / Comment / Opinion - Tariffs can persuade Beijing to free the renminbi
But who, other than China, would loose if this idea worked and the Renminbi was revalued? Most of the rest of the world. Especially economies with a comparative advantage in agricultural production (Australia, New Zealand, Latin America) for whom imported Chinese deflation of manufactures prices offsets the EU's depression of agricultural prices (and inflation of manufactures prices).
In principle, too, everyone would loose from another U.S. defection from the core multilateral trade rules. But perhaps you could make the case that this kind of extraordinary action (like the 1980's Nixon Administration 'shocku' blow against Japan) doesn't really impact the rules.
What explains tariff levels?
Fri, Dec 04 2009wto
data
tariffs
It's not economic policy (or even necessity) as much as the political economy that drives trade policies.
"The relationship between the overall tariff policy (considering all product groups together) and the socio-economic variables is even more diffuse, and no strong relationship emerges between tariff policy clusters and the socio-economic context. Consequently, we can conclude that trade policy is not over-determined by economic considerations: the decision-making process defining a precise trade policy is the result of more complex interactions." Extract from Mapping the Tariff Waters by Diakantoni and Escaith (WTO Economic Research Division)A plausible, even unexciting, conclusion. But an interesting mapping of global tariff data.
Airstrip One lands
Thu, Nov 19 2009data
censorship
Of course, the name of this madness is pure NewSpeak:
"The new rules, known as the Intercept Modernisation Programme, will not only force communications companies to keep their records for longer, but to expand the type of data they keep to include details of every website their customers visit, effectively registering every online click. While public authorities will not be able to view the contents of these emails or phone calls, they can see the internet addresses, dates, times and identify recipients of calls." Extract from State to 'spy' on every phone call, email and web search - Telegraph
Let’s look at the data
Fri, Oct 30 2009climate
data
evidence
science
This is a very fine summary of the case that nothing very unusual is happening to the global climate and of the evidence—direct data, not proxies—that the IPCC projections are simply wrong about the key factor they say will result in alarming climate change (by the way that's not CO2)
Lindzen has a record that calls for attention. He has researched and taught atmospheric and climate science for more than 30 years, most recently as Alfred P. Sloan Professor of Meteorology and chair of the Department of Earth, Atmospheric and Planetary Science at the Massachusetts Institute of Technology. He was lead author of a chapter in the 2001 Third Assessment Report of the United Nations' Intergovernmental Panel on Climate Change (IPCC).
Why Australia should not adopt an ETS
Tue, Oct 13 2009climate
evidence
carbon
emissions
2 comments
The mainstream media offer us nothing but politics on the question of whether the proposed Emission Trading Scheme (ETS) legislation should be adopted. Political calculation is less demanding for the journalists and offers readers an engaging melodrama. But the politics are no guide to a responsible decision on the ETS. In this post I review both the governments' stated reasons for the ETS and my own assessment; that the ETS should be abandoned, because the balance of evidence is against it.
The carbon controls, even if fully only partly implemented (10% cut in 2000 emissions by 2020), imply a "substantial sacrifice" (Ross Garnaut's words) of our national welfare because Australia is one of the biggest users (on a per capita basis) and exporters of carbon (in the form of coal and LNG).
But the physical evidence strongly suggests that any program designed to affect global temperatures by cutting human-emitted CO2 will be both futile and unnecessary. The IPCC's 1992-2004 case has fallen apart: a key test of its theory fails to validate and its predictions for warming of land and ocean in this century have turned out to be useless (the models both under-predicted and over-predicted temperatures). The modest size and uneven progression of temperature change over the past century—including a decline over the past decade—shows the increasingly shrill alarm about warming to be a moral panic akin to the 'population bomb' panic that gripped President Obama's science advisor in the 1970s.
The ETS tax, disguised as a tradable property, is unreasonable (because not needed), regressive (because power-companies will be compensated ahead of consumers), and an invitation to rent-seekers who are scrambling for special treatment under the proposed distribution of emission permits.
In view of our 1% share of the global economy and carbon dependences it seems like vanity for the Prime Minister to take up the role of cheer-leader for global carbon restrictions, but it is insanity to impose these restrictions on ourselves before it is clear that the other 99% of the world is equally determined to do so.
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How to prepare for FTA negotiations (Part III)
In the third part of my 'checklist' for preparing an FTA negotiation I briefly cover the identification of relevant economic data (including hints on what to do if you can't find what you need), and; some topics that don't fit elsewhere but contain suggestions that arise from my own experience in negotiations including approaches to 'team management' for the negotiators. This section ends with a reminder that the benefits (and the costs) of a credible agreement are often anticipated by business and factored into their plans long before the end of the official 'implementation' period.
...moreOther things
Variable winds
"Asked about The Guardian's change of tack, a spokesman said: 'The Guardian editorial line is that global warming is happening and caused by human activities, but that does not mean we are blind to contradictory evidence" Extract from Media cools on global warming | The Australian
Spiralling down
"The credit crunch of 2007-08 was the third phase of a larger and longer financial crisis. " Extract from John Kay (FT) - The cause of our crises has not gone away
Kay is always worth reading
The ‘great big tax’
"…Firms that obtain free [emission] permits cannot sell them on exit from the industry. This encourages them to continue to operate even if their output could be more cheaply supplied by others. The compensation to households is even worse. Those payments will be income-based, phasing out as income rises. This will increase marginal tax rates that are already high, with the lost compensation meaning that each additional dollar in pre-tax earning could translate into less than 60c of take-home pay." Extract from Henry Ergas in The Australian
Don’t tell the trees
Like the 'Carbon Pollution Reduction Scheme', this is appalling twaddle. The main 'GHG', CO2, and the cycle of energy distribution that it mediates throughout the biosphere is essential to just about every form of life on earth.
"After a thorough examination of the scientific evidence and careful consideration of public comments, the U.S. Environmental Protection Agency (EPA) announced today that greenhouse gases (GHGs) threaten the public health and welfare of the American people. " Extract from U.S. EPA Press Release...more
Aliens vs Censors
Vlad the Impaler—the lengendary Transylvanian prototype of Dracula—did not, appparently, consider that someone could be impaled on their own head. (Have that image in mind? Shame on you!)
...morePikiness has a price
"‘I think sometimes that being overly type-sensitive is like an allergy,’ said Michael Bierut, a partner in the Pentagram design group in New York. ‘My font nerdiness makes me have bad reactions to things that spoil otherwise pleasant moments.’" Extract from NYTimes
iPhone as a media center
Stream video from your Mac to your iPhone over wifi. Just select, tap and play. No need to re-encode. Hook up a TV cable to the iPhone and you have a media center. Brilliant (opens in iTunes).
The Emissisions Trading bill madness
The text of my email to all Victorian senators at the start of the week in which the bill comes to the Senate.
...moreMortimer success
Intriguing evidence that the Mortimer Enquiry on Australia's export performance (on which I served as an advisor) was remarkably successful in its efforts to reinvigorate our trade balance. ;-)
Of course, I knew it would be. ('The exchange rate', you say? Really?)
FT iPhone App
Get this. It's 'free' (as in lunch). Simply beautiful layout for the small screen. Lovely, informative market charts that can be refocussed with a screen gesture. Seems to eschew (an FT word!) images. Access, if you're a subscriber, to most, if not all, of the paper including regional editions. After a few hours use I would say that the user experience is better than the FT website: it loads faster, fewer ads, layout is more consistent.
Temperatures for June in Victoria
June 2009 was not as warm as June 2008, but still 0.8° C above the average for 1961-1990, according to the Australian Bureau of Meteorology. There have been ten hotter Junes since 1950.
Caloric restriction diet doesn’t work
Reports this week that a "nutritious but reduced-calorie diet blunts aging and significantly delays the onset of such age-related disorders as cancer…" are a perverse account of a study that showed no statistically significant effect of calorie restriction.
Sandy Szwarc shows that the supposed benefits appear only if the results are cooked by 'cherry picking' the trial's mortality records. She also summarizes the weight of evidence that calorie restriction 'life extension' is vodoo (or possibly a commercial venture in this case)
Another small step
But it's impossible to ignore the significance of this continuing internationalization of the remminbi.
"Although it has no short-term implications for the full convertibility of the renminbi, the announcement provides ballast to the volley of political signals Beijing has been sending in recent months over its dissatisfaction with the US dollar." Extract from Financial Times
Ex-PMs attack Defense White Paper
Malcolm Fraser and Paul Keating, who would have believed it? Both criticize the obscurely Sino-phobic tone of the White Paper and advocate—in place of a more belligerent regionalism, or reliance on the US alliance (for something it is not designed to deliver)—a more effective regional engagement.
Doesn't convince the Colonel Blimps, of course, who imagine that with sufficient expensive and obsolescing weaponry, Australia could run a "totally independent foreign policy" (independent of those pesky foreigners, presumably).
Is the U.S.A. really warming?
An examination of the evidence using the U.S. government's own records. The Australian BOM 'adjustments' are similarly large.
"The corrected data from NOAA has been used as evidence of anthropogenic global warming yet it would appear that the rising trend over the 20th century is largely if not entirely an artefact arising from the 'corrections' applied to the experimental data, at least in the US, and is not visible in the uncorrected experimental data record." Extract from Jennifer Marohasy
Temperatures for May in Victoria
Temperatures in May 2009 were 0.52° C above the historical average.
Liberty upheld in France
Probably not the final word on this coup by copyright extortionists.
"The French Constitutional Council has ripped into the new Création et Internet law which would disconnect repeat online copyright infringers, calling the basic premise unconstitutional. 'Innocent until proven guilty' remains a central principle of French law, and it cannot be bypassed simply by creating a new nonjudicial authority." Extract from Ars Technica
Messages from AF447
"Over a time span of four minutes, starting at 02:10 UTC, a series of ACARS messages were sent -automatically- from the plane. The first message indicated the disconnection of the autopilot followed and the airplane went into 'alternate law' flight control mode. This happens when multiple failures of redundant systems occur. From 02:11 to 02:13, multiple faults regarding the Air Data Inertial Reference Unit (ADIRU) and ISIS (Integrated Standby Instruments System) were reported. Then on 02:13 the system reported failures of PRIM 1, the primary flight control computers that receive inputs from the ADIRU and SEC 1 (secondary flight control computers). The last message at 02:14 was a 'Cabin vertical speed' advisory. " Extract from Aviation Safety Net
Into the debt abyss
Engaging tale from one of the economic writers of the NY Times on his own part in the credit crisis.
But it's troubling that the story begins by him borrowing what he can't afford and barely moves on from there. Instead, he implicates the banks, his credit card and his mephistophelian mortgage broker, not really taking responsibility for his own actions. He squeezes whatever he can from an unsustainable (and finally, broken) system, right up to the last when he waits out a 90-day default so Chase Bank will accept a negotiated settlement.
Forking MYSQL?
This still looks like trouble to me.
"The MySQL relational database system is arguably one of the most important pieces of open source server software in existence" Extract from Ars Technica
The 'free' database, that Oracle now owns, competes with its most important commercial product. If Ellison forces users to buy a license or switch to a 'fork' of the code, the disruption would be enormous.
