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It’s out of date.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.


p> 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.