Monthly Archives: August 2008

Democrat Convention

Democratic convention 2008

More enter­tain­ing than the Olympics. Notice the dark area where the press pho­tog­ra­phers are locat­ed? Great light­ing. NY Times mul­ti­me­dia is out­stand­ing.

The Panic of 2007

The sub-prime mort­gage cri­sis sparked a finan­cial mar­ket pan­ic caused by lack of infor­ma­tion on the cur­rent size of the prob­lem. This mar­ket-infor­ma­tion fault is due, in essence, to the way that the sub-prime mort­gage is struc­tured.

Not an easy analy­sis, but care­ful, com­plete, con­vinc­ing. Hint: you can skip the real­ly obscure stuff on deriv­a­tive instru­ments and still find very good val­ue in this paper, pre­sent­ed by an expert in syn­thet­ic finan­cial instru­ments to the recent US Fed­er­al Reserve con­fer­ence.

A cen­tu­ry after the Pan­ic of 1907 we again con­tem­plate the caus­es of a pan­ic. Iden­ti­fy­ing the caus­es of the Pan­ic of 2007 will in large part deter­mine the pol­i­cy response to the cri­sis. I have argued that the sub­prime cri­sis was caused by infor­ma­tion prob­lems relat­ed to declin­ing house prices, which pre­vent sub­prime mort­gages from being refi­nanced. The design of sub­prime mort­gages is unique in that…

SPS database

It’s out of date. It con­tains records only up to May 2007 because…well, there weren’t many users and the WTO was talk­ing about min­ing it’s own data to cre­ate some­thing sim­i­lar. As far as I know they haven’t done that yet. So if you find this data­base of quar­an­tine bar­ri­ers is use­ful, please post a com­ment or email me to let me know.

The unravelling trade consensus

An much bet­ter account of the real, sec­u­lar chal­lenges fac­ing the WTO than Lar­ry Sum­mers’ jum­bled col­umn (see the Side­bar) can be found in Simon Evenett’s dis­sec­tion of the fail­ure of the Doha Round, writ­ten almost a year ago. I think Simon has set the bar too high, but his call—presaging that of the War­wick Com­mis­sion—for a peri­od of reflec­tion and a new start for the WTO is and intrigu­ing account; accu­rate and care­ful­ly-argued.

The EU and US pur­sued agri­cul­tur­al trade nego­ti­at­ing strate­gies that were not polit­i­cal­ly viable in their trad­ing part­ners and their demands for tar­iff cuts on indus­tri­al prod­ucts (dri­ven up by the extent of uni­lat­er­al reform in devel­op­ing coun­tries) could not be rec­on­ciled with some of the devel­op­ment-relat­ed prin­ci- ples adopt­ed for this Round. Final­ly, what was on the nego­ti­at­ing table was small com­pared to oth­er devel­op­ments in the world econ­o­my, mak­ing the cost of say­ing “no” eas­i­er and poten- tial­ly reduc­ing the atten­tion spent on con­clud­ing the Doha Round in the first place.” from Reci­procity and the Doha Round Impasse by Simon Evenett

An american preoccupation

What evi­dence is there for this? None that he cites. Reminds me of the non­sense I saw tossed around Wash­ing­ton in the ear­ly 1980’s about the alleged­ly ‘obses­sive’ Japan­ese cul­ture.

Nations are increas­ing­ly pre­oc­cu­pied with their rel­a­tive eco­nom­ic stand­ing, not the liv­ing stan­dards of cit­i­zens. Issues of strate­gic lever­age and vul­ner­a­bil­i­ty now play a big­ger role in eco­nom­ic pol­i­cy dis­cus­sions.

[From—Lawrence Sum­mers : The glob­al con­sen­sus on trade is unrav­el­ling]

Foreign direct investment approvals

Below the fold, my Op-Ed in today’s Aus­tralian Finan­cial Review on the approval of for­eign invest­ment pro­pos­als.

In sum­ma­ry, I’m advo­cat­ing a trans­par­ent poli­cies and pro­ce­dures using exist­ing review insti­tu­tions and laws (the Cor­po­ra­tions Act, the Aus­tralian Stock Exchange Guide­lines on busi­ness prac­tices, the trans­fer pric­ing reg­u­la­tions of the tax laws) to reg­u­late all com­pa­nies doing busi­ness in Aus­tralia, includ­ing for­eign investors. This will ensures con­tin­u­ing mon­i­tor­ing, reviewed by the Courts as nec­es­sary, in place of one-off ‘autho­riza­tions’ by the Trea­sur­er on entry based on obscure—apparently arbitrary—interpretation of ‘nation­al inter­est’. No-one should have to ask the per­mis­sion of a politi­cian to do busi­ness in Aus­tralia. That’s not how our econ­o­my (or democ­ra­cy) works.

Are one-off invest­ment approvals (and rejec­tions) such as the Chi­nal­co deci­sion the right pol­i­cy tool for man­ag­ing clos­er eco­nom­ic inte­gra­tion with Chi­na in the 21st cen­tu­ry? Or should we be look­ing for fair­er review and on-going engage­ment?

Weaning and whining

DairyTrade06.gif I know one sto­ry about an import-com­pet­ing, near-bas­ket-case, indus­try that turned-around with the help of gov­ern­ment sup­port and a re-struc­tur­ing plan, to become glob­al­ly com­pet­i­tive and an export suc­cess sto­ry.

It’s not motor vehi­cles.