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It’s out of date.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 FT.com—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.

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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.

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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.