Feb 192012

I was watching CNN’s Fareed Zakaria today, who expressed his opinion that the Eurozone crisis is over: that Greece may still default, but by and large, as a result of the activities of the European Central Bank, the Euro itself is now stable and its long-term survival is assured. I hope Zakaria is correct… indeed, this may be the best-case scenario, with a stronger Euro emerging from this crisis. One hopeful sign supporting this optimistic scenario has been the drop in the 10-year rates of Spanish and Italian government bonds; from a peak near 7% (exceeding 7% briefly in the case of Italy) the rates are back down to a more manageable 5.5%.

I wish I could say the same thing about Hungary. Unfortunately, the interest rate on 10 year bonds there is still well in excess of 8%. True, 8% is less than the 10% this rate was at just less than two months ago, or the astonishingly high rate over 12% back in 2009, but it is still very high, limiting the Hungarian government’s ability to deal with the crisis. The fact that many Hungarians (individuals, businesses, even municipalities) have accumulated large debts in foreign denominations (mainly in Swiss francs) also complicates things. Normally during this crisis, having a national currency should have worked to the government’s advantage; not with these excessive foreign currency debts.

My opinion about the abilities of Mr. Orban and his administration to deal with these challenges is less than flattering, but I have to admit that the challenges may test the abilities of even the best prepared government.

 Posted by at 4:38 pm
Feb 162012

Ontario is in trouble. According to economist Don Drummond’s devastating report, only drastic measures can reverse the trend of ballooning deficits. So something must be cut. But what? And who will do the cutting?

Normally, this would be the time when I’d be expressing a desperate wish for a Conservative government to replace the Liberals ASAP. Unfortunately, I don’t trust Ontario Conservatives. Chances are that rather than cutting, they’d continue with business as usual, perhaps even spending some more on populist programs that happen to suit their ideological agenda (like Harper’s federal government did, with its tough-on-crime legislation at a time of falling crime rates.) Paradoxically, by commissioning the Drummond report, the Liberals indicated that they may be the best candidates to fix the mess that we are in, even though they may very well have caused it in the first place.

Still, it will be an interesting spectacle with the governing Liberal minority introducing an austerity budget in the provincial legislature. Will the Conservatives vote against an austerity bill just to bring down the government?

 Posted by at 11:46 am
Nov 012011

Well, if I thought Halloween was bad enough already, I quickly learned the error of my ways this morning, when I found out about the Greek referendum thing. How does a world order unravel? In 1914, all it took was a bullet to pull the first thread. Perhaps in 2011, it’s a boneheaded move by an embattled prime minister of a minor economy within the Eurozone. I have a very, very bad feeling about this.

And Facebook still hates me, not picking up my blog posts unless I reset the link manually every time.

 Posted by at 12:55 pm
Sep 122011

The other day, I bought some new undershirts. It was my wife who noticed something on the label that escaped my attention: Made in Canada/Fabrique au Canada. It has been so long since I last saw such a label, I almost forgot what it looks like. The undershirts were made by Stanfields, in Nova Scotia.

I also got two books from my wife. They were both printed in the USA. What can I say… neat.

 Posted by at 7:51 pm
Jul 292011

Using the Internet in China just got a little harder. Not content with operating one of the most heavy-handed Internet censorship regimes in the world, Chinese authorities decided that free Wi-Fi makes it just too easy for all sorts of unsavory electronic communication to take place without appropriate supervision by Big Brother… so they ordered public Wi-Fi access providers to install costly software to record the identities and monitor the Web activities of users.

This is why I am not really afraid that the 21st century will belong to China. Sure, they became an economic giant, but this kind of institutional paranoia is ultimately self-limiting. Now if one day, they suddenly kicked out the Chinese Communist Party and replaced its one-party rule with a pluralist society… but then again, if that were to happen and China became the world’s most populous liberal democracy, why would I need to feel worried about their economic prosperity?

 Posted by at 12:45 pm
Jul 282011

Here is a picture, shown a few nights ago on Jay Leno’s show, of United States Senate majority leader Harry Reid and minority leader Mitch McConnell. If you can’t easily tell which is which, you are not the only one:

Just how ridiculous is it that a few days before the debt ceiling deadline, they are simply incapable of coming to an agreement? That even though they seem to agree on the basics (the debt-ceiling must be raised, a long-term solution to tackle the deficit problem must be found) gaining a political advantage over their opponent is more important than resolving a crisis that will likely have long-term repercussions not only for the economy of the United States but that of the entire world?

Looking at the recklessness and ineptitude of today’s politicians (and not just in the United States, I don’t want to be an America-basher here) it does make me wonder how long we have before World War Three…

 Posted by at 12:21 pm
Apr 242011

I have often expressed my opinion that the system of personal income tax is not only incomprehensibly complex and costly to administer, not only is it unfair, but it also represents an absolutely unreasonable intrusion by government into our personal lives. In my opinion, it should be abolished in favor of a value added sales tax which is easy to administer, which can be fair and reflective of social policy (e.g., through different tax tiers for different classes of goods) and would require no government intrusion at all into our existence.

But I am just a lone nutcase, so who cares what I think?

However, when it is a former secretary of the U. S. Treasury who advocates this very idea, perhaps people notice. I certainly noticed when Paul O’Neill made this very point talking to CNN’s Fareed Zakaria this morning.

 Posted by at 5:19 pm
Mar 062011

Courtesy of CNN’s Fareed Zakaria, I just stumbled upon gapminder.org: an amazing data visualization project, complete with a downloadable desktop version, providing animated plots of many important economic, health, and social indicators. Statistics is usually a dry topic, but the bouncing bubbles of gapminder.org are actually fun to watch!

 Posted by at 4:59 pm
Jun 102010

I admit: I really thought Obama was better than this.

Back after 9/11, the moronic Bush administration shut down all commercial air traffic for days in a knee-jerk reaction that exaggerated the economic fallout of the 9/11 attacks possibly by orders of magnitude. (None of which prevented them from chartering special flights to help Saudi nationals, including members of the Bin Laden family, flee the United States in haste. But that is another story.)

Now here’s this oil rig disaster in the Gulf of Mexico. To be certain, there exists a serious need to review how these rigs are licensed, how they are operated, and whether or not future drilling is worth the economic risk. But shutting down on-going drilling operations? Not only does it do grave economic harm to an already heavily affected region, it may actually increase the risk of another spill.

If this is how Obama continues his presidency, I don’t know what will save us from seeing Sarah Palin and her friends move into the White House in January 2013. Now there’s a scary thought.

 Posted by at 2:51 pm
Oct 242009

Recently, I bought a television series on DVD online. One of the DVDs appears unreadable. I noticed some scratches on it, but I also noticed that it happened to carry the HD DVD label. Is it possible that one of the disks in the boxed set was mistakenly an HD DVD? Unfortunately, I don’t have an HD DVD drive in which to test it.

Which reminded me that I’ve actually been meaning to buy an HD DVD drive before they vanish completely, just to be able to read HD DVDs in case I come across any. I looked and found one online that I liked. I tried to buy it… only to be informed repeatedly by Yahoo shopping that “there was a problem saving your information and basket”.

No matter, it can wait… I’ve also been meaning to do another thing this morning, namely to buy a new Microsoft Developer Network subscription. So I went to the MSDN Web site, clicked all the right buttons, logged in with my blasted Microsoft Live ID, and presto… I was told by Microsoft that they “are unable to validate your customer information and proceed with your order at this time”.

Looks like The Powers That Be just don’t want me to spend any money this morning. No matter, I have better things to do with it… and with my time, too.

 Posted by at 2:20 pm
Aug 112009

Nortel’s CEO has quit. But the company is in good shape, he says: after all, it is “stabilized”.

Isn’t that a little like the surgeon showing up at a patient’s funeral, boasting that as a result of his expert attention, the patient’s condition is fully stabilized?

 Posted by at 4:50 pm
Jul 222009

There is an interesting article in The Globe and Mail this morning that asks a very curious question: given the amounts of money spent in Canada to help save GM and Chrysler (who do most of their research and engineering outside of Canada), why was there not a similar government effort to save Nortel from bankruptcy, even though this company was by far Canada’s largest contributor to private research?

 Posted by at 10:01 am
May 062009

The EU banned the import of Canadian seal products, in an attempt to stop the cruel practice of seal hunting.

About bleeping time, I say. We can thank Brussels for making a decision that our own spineless politicians were unwilling to make.

Yes, it means the loss of income for some who made a (part-time) living from hunting seals. I am not against them but what can I say? Should we also reinstate the death penalty just so that we don’t end up with unemployed executioners?

There is also a concern that stopping the seal hunt would threaten already depleted fish stocks, as seals that would otherwise be hunted will eat millions of tons of fish. Inflated numbers aside, there may be some truth in that… but again, chances are humans eat a lot more fish than seals do, so if we’re really concerned about the future of fish stocks, perhaps it’s time to fish a little less and not treat the oceans as an undepletable source.

Now if only our politicians were smart enough to move on and not spend millions of taxpayer dollars (more than the entire industry is worth) to fight this eminently reasonable and humane European decision… Those millions would be much better spent on the battle to block American efforts to export a Draconian copyright law to our country, a fight in which the latest round was fired recently when the Obama government put Canada on the same blacklist of copyright violators that contains Russia and China. All because we’re unwilling to give Mickey Mouse a 99 year copyright and put kids on jail for sharing music online.

 Posted by at 3:12 am
May 052009

Jack Kemp has died. He was a former American Congressman and vice presidential candidate, also a champion of the theory of supply side economics.

The basic premise of supply side economics is that lowering taxes increases demand; increased demand means a healthier economy, hence more tax revenue.

Others say hogwash, supply side economics is just a euphamism for making the rich richer at the expense of the public treasury, i.e., ultimately at the expense of the poor.

So which side is right? Neither.

Or, to be more precise, neither side is right all the time, though both have a point. Yet both are liars, since both elevate to the level of universal truth a principle that is right only some of the time.

Let me illustrate. If the average rate of taxation is 0%, there is obviously no government revenue. If the rate of taxation is 100%, i.e., the State takes away everything, there is no economy, hence no government revenue. At intermediate values, i.e., when the taxation rate is somewhere between 0% and 100%, there is some government revenue. One of the simplest curves that satisfy these criteria looks like this:

Revenue vs. taxation rate

Revenue vs. taxation rate

In reality, the curve may be more complicated, but it’s going to be continuous and it’s going to be positive between the end points, hence it will have (at least one) maximum. And here’s the kink. The supply siders are right if the current rate of taxation happens to be to the right of that maximum… lowering the tax rate would indeed increase economic activity and hence, government revenue. But if the present taxation rate is to the left of the maximum, decreasing the tax rate will decrease revenue, and while it may increase economic activity, it certainly also increases the public debt.

So the trick, for a responsible but cash-strapped government, would be to find the maximum of this curve not to subscribe to any political ideology. Not that it’s likely to happen… politicians need snappy soundbytes to secure victory, not boring explanations.

 Posted by at 12:49 am
Apr 022009

They did a group photo at the G-20 and our very own Prime Minister, Stephen Harper, was missing. According to a Canadian television channel, he was busy engaged in a discussion with an official. According to the BBC, he was in the toilet.

Stephen Harper

Stephen Harper

So they redid the group photo. Or tried to, anyhow. This time around, Berlusconi appeared to be missing… there was no word why.

Nonetheless, signs are that the G-20 meeting was (at the very least) not a failure, and perhaps even a modest success. I guess we’ll know in the next couple of days. But, if it is not just wishful thinking and real, meaningful decisions were made, then perhaps this is where the world changes to a track different from the one followed in the 1930s… instead of choosing protectionism, leading to a collapse of international trade, we’re choosing to keep the system of international trade robust and intact.

The BBC just updated their story: quoting a Harper press secretary, they’re now saying that Harper was indeed engaged in a conversation with an aide, he was not in the washroom.

 Posted by at 12:24 pm
Mar 252009

I’m hearing on the BBC that Japan’s exports in February are down 50% since February last year and that their car exports are down an astonishing 70%.

These numbers are insane. What is this world coming to?

 Posted by at 11:12 pm
Mar 242009

Republican lawmakers in America are concerned: they think that the request of the Obama administration and its treasury secretary for additional powers represents an unprecedented power grab. Being a libertarian at heart, I share their concerns even as I recognize the necessity for unprecedented government intervention at a time of unprecedented crisis.

But, it is difficult not to notice of the hipocrisy. The same lawmakers did not appear to be nearly as upset when the Bush administration grabbed unprecedented powers… not in the economic arena, mind you, but in the area of safety and security, directly impacting the personal freedoms and liberties of not just Americans, but also foreign nationals on American soil, such as Canadian Maher Arar who was deported to Syria for torture and unlawful imprisonment. If only Republican lawmakers were as eager to guard constitutional freedoms back then!

 Posted by at 8:07 pm
Mar 172009

This phony, populist outrage over the AIG bonuses is really becoming ridiculous. They make it sound as if AIG’s top executives just took the bailout money as bonuses and ran with it. But that’s nonsense. First of all, the bonuses in question amount to barely 0.1% of the bailout that AIG received. Second, there are managers and there are managers… the ones getting these bonuses, are they the top level managers responsible for AIG’s demise, or are they the managers running, say, a successful branch office of AIG insurance?

Of course answering these questions might require some investigative journalism, some thinking, some hard explaining… not the kind of stuff the soundbyte journalism of the cable news universe likes. Glad I am not going to be home tonight, as I will not even accidentally watch the populist tripe of Lou Dobbs on CNN as he, no doubt, will take his turn at expressing outrage. Now if instead of spewing indignation, he actually took the trouble of locating a typical AIG executive who received a bonus and sat him or her down for a meaningful interview… of course I am quite willing to bet that this is not going to happen, not on CNN nor anywhere else… with the possible exception being BBC News.

 Posted by at 9:47 pm