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Sebastian Mallaby profiles Arthur Winslow Jones, the Australian-born pioneer of hedge funds:
he studied at the Marxist Workers School in Berlin, ran secret missions for a clandestine anti-Nazi group called the Leninist Organization and reported on the civil war in Spain, where he hitch-hiked to the front lines in the company of Dorothy Parker…
Mr. Jones’s second distinguishing feature was a conscious avoidance of regulation. In his previous life as an anti-Nazi agent, Mr. Jones had kept a low profile. As a hedge-fund manager, likewise, Mr. Jones escaped the attention of regulators by never advertizing his fund; he raised capital by word of mouth, which sometimes meant a word between mouthfuls at his dinner table. Unhindered by the government, Mr. Jones expected no help from it either. The Jones men knew that if they mismanaged their risks, their fund would blow up—and nobody would save them.
posted on 13 June 2010 by skirchner in Economics, Financial Markets
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iPredict has launched a market on the outcome of this year’s Australian federal election, with a Labor Prime Minister (not necessarily Kevin) priced at 51% and a Liberal Prime Minister (again, doesn’t have to be Tony) priced at 45%.
Anthony Green provides a handy primer on likely federal election timing:
As the Constitution prevents writs for a half-Senate election being issued before 1 July this year, the first possible date on which a House and half-Senate election can be held is 7 August.
Constitutionally the last possible date for the election is 16 April 2011.
However, the fixed term election dates for Victoria on 27 November 2010 and NSW on 26 March 2011 mean that the Federal election will have to be over by the end of October to avoid overlap with state polls.
With football finals in September, and Commonwealth Games in October, that means the date for the Federal election date is likely to be either in August, early September, or between the 16th and 30th of October.
posted on 11 June 2010 by skirchner in Economics, Financial Markets, Politics
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The French government is selling off state-owned property assets. French openness to foreign buyers makes for an interesting contrast with the xenophobic reactions to foreign investment in Australian property markets:
All buyers, French or foreign, are welcome to bid for the properties but there will be checks to ensure that they acquired their money legally…
Heritage bodies welcomed the sale plan as a way of ensuring the improvement of neglected properties.
Francis Cahuzac, the head of the Commission for the Protection of Historic and Rural Heritage, said: “What matters is that the properties are protected, never mind if the owner is a foreigner or the Government. In most cases, foreigners are very good at restoring old buildings.”
posted on 11 June 2010 by skirchner in Economics, Foreign Investment
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Bob Doll makes the case for the continued outperformance of US equity markets:
U.S. equities arguably have been outperforming. In the first four months of 2010, U.S. markets were up roughly 6.5%, compared with 2.6% for global equities. Many European markets were in negative territory; only Japan was outpacing the U.S. When the sovereign-debt crisis escalated in May, European, Japanese and emerging markets stocks all fell more sharply than U.S. markets. The bottom line is that the U.S. has generally performed better on the upside this year and held its ground better on the downside.
While I would have once been sympathetic to this argument, the case for outperformance of US equities has been undermined by growing US convergence with European public policy outcomes. I’ve already indicated I’m on the side of John Quiggin in the Quiggin-Caplan wager, because the US is thinking more and more like Quiggin and less like Caplan. Public policy in the EU is not appreciably worse than it has been in the past, but the rate of deterioration in the US implies that their respective structural unemployment rates should converge via a faster rate of deterioration in the US. The capital allocation process in the US is now so compromised by political intervention that there is little reason to believe in the continued structural outperformance of the US economy. Differences in labour market institutions won’t matter much in this context. Caplan himself puts his chances of winning at only 60%.
posted on 08 June 2010 by skirchner in Economics, Financial Markets
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Samantha Maiden reviews David Marr’s profile of Kevin Rudd and the barely contained rage that motivates the Prime Minister. At the same time, Paul Kelly discusses Kevin Rudd’s Whitlamite experiment in big government:
Kevin Rudd is taking Australia on to a new policy trajectory of state intervention, control and faith that “government knows best”.
This looms as the decisive judgment on the Rudd era. It constitutes a break from Australia’s post-1983 tradition of pro-market, middle-ground economic reform. It is not necessarily unpopular but raises the alarm that Australia is marching a false policy path…
Yet Labor keeps moving in the direction of Rudd’s maiden speech philosophy. “I believe unapologetically in an active role for government,” he said. He repudiated the view that “markets rather than governments are better determinants of not only efficiency but also equity”. It is a sweeping statement. And it is entirely consistent with his interventionist car industry agenda, plans to build 12 new submarines, compulsion for new spending programs, government-directed nation-building across several fronts and declared timetables to reduce homeless levels and close the gaps for indigenous Australians.
The unifying idea is that government direction or intervention or ownership is the way forward. It fits into a more personal theme: Rudd knows best.
Sadly, Rudd has no shortage of enablers, including the likes of Paul Kelly, who continues to cheer the fiscal stimulus in the linked story. Kelly does not seem to understand that the problems with the stimulus spending are not simply problems of implementation.
posted on 07 June 2010 by skirchner in Economics, Fiscal Policy, Politics
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A WSJ editorial wags its finger at Scott Morrisson:
This marks a bipartisan failure. While government and opposition duke it out over a few thousand asylum seekers, neither party seems overly concerned about expanding legal work opportunities. Mr. Rudd’s government is oddly proud that net immigration will likely fall to around 250,000 this year. Representative Scott Morrison, the opposition point man on the issue, told us his party supports skilled migration but that immigration levels “need to be sustainable”—code for sympathy to restrictionism. Both sides miss the key point: Australia doesn’t know what skills it will need in the future or who has those skills. If that “low-skilled” but bright and hardworking teenager from Malaysia can’t get into Australia to wash dishes while he goes to night school, he’ll one day start a billion-dollar company somewhere else.
posted on 04 June 2010 by skirchner in Economics, Population & Migration
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According to Deadline New York:
Atlas Shrugged will be directed by Stephen Polk, an actor/producer whose father, Louis Polk, was once MGM chairman. He considers Atlas Shrugged to be his feature directing debut, though Polk acknowledges he stepped in and helmed the 2008 indie Baggage. Aglialoro was unavailable to speak directly, but sent a missive indicating that he’s courting actresses like Theron and Maggie Gyllenhaal to play Taggart. Sources in the camps of both actresses were aware of the project, but neither is planning to go to work on Atlas Shrugged next month.
Charles Murrary reviews the two recent Rand bios (my review can be found here). Brooks and Barone expound on themes that would have been all too familiar to Rand.
posted on 03 June 2010 by skirchner in Rand
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Tim Black reviews Matt Ridley’s The Rational Optimist:
Just after the end of the First World War, Britain’s Liberal prime minister David Lloyd George lamented: ‘How can Britain run an A1 empire with a C3 population [medical categories for army recruits]?’ This was no isolated complaint – it was indicative of a wider sense of Britain’s national decline refracted through the prism of biology. ‘If you go back to the turn of the twentieth century’, Ridley says, ‘there was an absolute domination of the book-publishing world by “declinism” literature, particularly about the so-called “degeneration of the race”. In the view of many at the time, this was because “stupid” people were having too many babies, the lower classes were evil, nasty and full of tuberculosis, and didn’t have the requisite physical strength. All this ludicrous stuff was hugely dominant.’
The web site for the book can be found here.
posted on 02 June 2010 by skirchner in Economics
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Justin Fox wants to know.
(HT: Chris Joye).
posted on 31 May 2010 by skirchner in Economics
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Tim Black reads Clive Hamilton, so you don’t have to:
What’s worse for Hamilton, is that this most sinister of modern social types – the shopper – has also appeared in that most populous, and potentially most polluting of countries, China. Not even the disciplined, production-oriented outlook of the Chinese Communist Party could ‘counter the lure of consumption among deprived people’. And not even that clause gave Hamilton pause for thought. No, for him, our desire to consume, to acquire things we want, luxury or not, is irrational and blinding.
Given our collective reluctance to face up to truth, our ‘casual denialism’ as Hamilton calls it, there has to be something to sustain his all-encompassing pessimism. And luckily for manically depressed readers, he finds it: ‘The only good news is provided by the global recession, which may provide a couple of years of breathing space.’ Sadly, he feels that is all it will be: breathing space. Once the economies pick up, we’ll carry on shopping and carry on denying all the way into the flooded, scorched future.
Clive was one of the economists putting his name to the letter supporting the RSPT. That says something about the tax, his co-signatories and Clive.
posted on 29 May 2010 by skirchner in Economics
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It’s time to tell your Mum about Stephen Conroy.
posted on 27 May 2010 by skirchner in Civil Liberties
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Terence Corcoran reads Roubini and Mihm’s Crisis Economics, so you don’t have to:
Crisis Economics, perhaps needless to say, presents no evidence to support any of its conclusions, assertions and judgments. It’s not an economics book, really; it’s a populist economic pamphlet that aims to promote and justify massive bouts of government spending, monetary madness and regulation.
posted on 25 May 2010 by skirchner in Economics, Financial Markets
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Pete Wallison on how bad ideas destroyed ‘the most innovative and successful financial system the world has ever known’. As Kevin Hassett notes:
It wasn’t a coincidence that equity markets posted their biggest drop in more than a year the day the U.S. Senate passed its sweeping financial reform bill…America has become the land of high taxes, big government, complex regulations and indignant politicians. The future of such a place is not bright. The markets understand that.
posted on 25 May 2010 by skirchner in Economics, Financial Markets, Rule of Law
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The new coalition government in the UK has handed responsibility for its economic and fiscal forecasts to an independent Office of Budget Responsibility:
The Chancellor said the Office for Budget Responsibility (OBR) would give greater credibility to the figures that were unveiled on Budget day…
Accusing the previous Labour government of consistently misleading the public, Mr Osborne said the OBR would be in charge of growth and borrowing forecasts.
“Again and again, the temptation to fiddle the figures, to nudge up a growth forecast here or reduce a borrowing number there, to make the numbers add up has proved too great, and that is a significant part of the reason for our current problems,” he said.
“I am the first Chancellor to remove the temptation to fiddle figures by giving up control of the economic and fiscal forecasts. I recognise that this will create a rod for my back down the line.
“That is the whole point. We need to fix the Budget to fit the figures, not fix the figures to fit the Budget.”
Robert Carling and I proposed a similar model for Australia in our CIS Policy Monograph, Fiscal Rules for Limited Government.
posted on 24 May 2010 by skirchner in Economics, Fiscal Policy
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Terry McCrann on the resource scarcity assumptions motivating the RSPT:
It is also clearly founded on the assumption of a long-term—Club of Rome-flavoured—secular upward trend in commodity prices. Thanks to China and India, demand is ever rising, while supply is limited. There’s only so much copper, etc. We must surely run out.
This is a merging of Henry’s green tendencies with his intellectual faith in the purity and reliability of econometric modelling—a blend most dramatically on view in the ludicrous Treasury modelling of the emissions trading scheme.
Henry implicitly rejects the view that non-fuel commodity prices are necessarily on a long-term secular down-trend—as revealed in graphs of aluminium and copper prices through the 20th century.
“Observed trends are sensitive to the commodity selected and the choice of time period,” he notes. So a chart of the copper price over a shorter period, between 1930 and 1970, showed the price “trended quite sharply upward”.
What he didn’t do was reproduce the shorter time period graph for aluminium. I don’t know why. It would have shown the exact opposite of the copper graph—the aluminium price on a long and short down trend.
There is more to this than selective charting. The anti-Club-of-Rome perspective—reality—of mineral supply and demand is not compatible with the logic of the super-profits tax. There is no alternative to developing our resources, even if the government takes 40 per cent more of the profits.
More exquisite was the graph with which he started his presentation. Taken from the budget, it showed the difference between Treasury’s GDP forecasts and projections in last year’s budget, and the ones in this year’s document.
What a very big difference a year makes. Henry is completely unable to see how Treasury’s failure, and the failure of its models, to get even close to predicting the present.
posted on 22 May 2010 by skirchner in Commodity Prices, Economics, Fiscal Policy
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