..." Pakistan's reaction to Obama's speech was to order its top military intelligence service, the ISI, to immediately begin rebuilding and strengthening covert ties to the Afghan Taliban in anticipation of their eventual return to power, according to a highly placed Pakistani official. There will be no more genuine cooperation from Pakistan (if there ever was)"...
The excerpt is from the analysis by two US military experts http://www.foreignpolicy.com/articles/2009/12/10/sorry_obama_afghanistans_your_vietnam?page=0,0
Tuesday, December 15, 2009
Monday, December 14, 2009
Wall Street Bonuses and Capital Requirement
Jean-Claude Trichet, head of the European Central Bank made excellent points about "excessive" bonuses but either he or the FT report muddled his punch line. Scroll down to the end for the FT report on his views.
Let me try to reword what I consider are the major issues involved in this whole Wall Street bonus controvery:
1) Bonuses to Wall Street bankers are fine. You cannot and should not penalize profit maximization.
2) "Excessive" bonuses by themselves do not fuel future bubbles. Past and present bonuses became "excessive" because the firms they work for themselves were and remain highly leveraged. Before the bubble and even now these firms are leveraged 30-40 times to their capital base. Hence, the incentive to take risks was and remains high since the returns of risk taking are extremely high.
Annual multimillion dollar bonuses became a benchmark of acceptable work performance.
In bull markets such rewards created the inevitable hubris in the minds of the bankers that they were "geniuses". Nothing could be further from the truth. In a bubble the word "risk" got less and less attention. And then of course the bubble burst taking down everyone including those "geniuses".
3) The way to curb Wall Street from aiding and abetting future bubbles is to increase capital requirements forcing them to work with a much lower leverage. And that capital requirement, like cost of living auto pilot adjustment factoring in inflation, should increase as the size of balance sheets increases.
4) With a lower leverage, the incentive to take "excessive" risk resulting in either "excessive" bonuses will be lower. At the same time the probability of Wall Street aiding and abetting the expansion of bubbles should also be lower.
Mr. Tricket did mention the necessity to increase capital requirement. However, too much of current media attention is focused on the immorality of "excessive" bonuses.
As I have often written, the "immorality" of excessive bonuses is more an issue with the slapdash, negligent way bailout money has been handed out than with the bankers themselves who operate within the legal parameters set by the bailout.
Recall back in the days of Bush Jr, the reigning ideology was to put total faith in discipline the Market supposedly would impose on all players. Alan Greenspan admitted in a famous confession that he had thought so but he was wrong to believe so.
You can't hang the Bushies now. So....go hang Team Obama first before sending God's "disciples" at Goldman et al to the guillotine.
Before writing checks to bailout Wall Street, Team Obama should have insisted on replacing all Board members who in theory should have supervised how Wall Street firms worked on behalf of their public shareholders, a duty they failed to discharge.
So, to blame the management is really missing the main points. Oh, by the way, the news today is Goldman Sachs has changed its compensation scheme whereby for 5 years senior management cannot cash in their options.
However, let unsaid clearly those senior guys and gals could borrow against those options effectively rendering the 5 years restrictions moot. Wall Street is indeed much much smarter than Washington DC and the press when it comes to financial exercises.
FT report:
Trichet warns on bankers’ bonuses
By Ralph Atkins in Frankfurt
Published: December 11 2009 15:00 | Last updated: December 11 2009 20:04
Awarding big bonuses to bankers could help sow the seeds of a future financial crisis, Jean-Claude Trichet, European Central Bank president, has warned.
Mr Trichet said financial institutions should be using higher profits to strengthen their capital bases rather than paying out “unwarranted levels of compensation or bonuses”.
A culture of excessive financial rewards for individuals encouraged “self-referential” and “self-serving” banking, Mr Trichet warned in a speech in London.
His comments amounted to the strongest criticism yet from the ECB of excessive bank remuneration .
Mr Trichet has long urged bankers to take advantage of an improvement in financial markets to increase their resilience in the face of a still-weak global economy.He warned that excessive pay could even threaten the stability of the financial system.
“I will say that the so-called bonus culture is one of the many factors that can drive the financial system in the wrong direction – away from intermediation to self-referential speculation; away from medium-term stability to short-term orientation; and away from being a service sector to being a self-serving sector.”
His comments followed the UK’s decision this week to impose a one-off supertax on bankers’ bonuses bonuses – a move quickly followed by France.
Mr Trichet reminded bankers that the ECB had provided the eurozone financial system with unlimited liquidity, “not for the banks themselves, but to enable them to finance the broader economy”. The economic slowdown and its impact on loan books, he said, had led to a “second wave” of writedowns.
Mr Trichet has hinted in recent speeches at ECB fears that the global financial system remains inherently fragile – perhaps even more so than before the recent financial market crises. oSpeaking in Cambridge on Thursday, he warned that policymakers might have reached the limit of what they could do to head off increasingly intense financial market crises.
“The instruments of counter-cyclical policy have been used so intensely – and more so from one financial cycle to the next – that authorities might have tested the extremes of their control procedures,” he said.
One particular concern of the ECB is that the actions taken by central banks and governments have encouraged bankers to believe that a worst-case scenario will always be averted.
In his London speech, Mr Trichet argued that the “systemic risks” revealed by the financial crisis highlighted the need for a new supervisory framework in Europe that also assessed general risks for financial stability as well as policing individual banks. Under EU plans nearing implementation, Mr Trichet is expected to head a new European Systemic Risk Board, which will be supported by the ECB. Three new pan-European watchdogs will also oversee the banking, insurance and securities sectors. But Mr Trichet told the European Parliament this week that he did not see the new European Union system as the “first best” solution. That probably reflected ECB concerns about the blurring of responsibilities between the EU and national institutions.
Copyright The Financial Times Limited 2009. Print a single copy of this article for personal use. Contact us if you wish to print more to distribute to others.
"FT" and "Financial Times" are trademarks of the Financial Times. Privacy policy | Terms
© Copyright The Financial Times Ltd 2009.
Let me try to reword what I consider are the major issues involved in this whole Wall Street bonus controvery:
1) Bonuses to Wall Street bankers are fine. You cannot and should not penalize profit maximization.
2) "Excessive" bonuses by themselves do not fuel future bubbles. Past and present bonuses became "excessive" because the firms they work for themselves were and remain highly leveraged. Before the bubble and even now these firms are leveraged 30-40 times to their capital base. Hence, the incentive to take risks was and remains high since the returns of risk taking are extremely high.
Annual multimillion dollar bonuses became a benchmark of acceptable work performance.
In bull markets such rewards created the inevitable hubris in the minds of the bankers that they were "geniuses". Nothing could be further from the truth. In a bubble the word "risk" got less and less attention. And then of course the bubble burst taking down everyone including those "geniuses".
3) The way to curb Wall Street from aiding and abetting future bubbles is to increase capital requirements forcing them to work with a much lower leverage. And that capital requirement, like cost of living auto pilot adjustment factoring in inflation, should increase as the size of balance sheets increases.
4) With a lower leverage, the incentive to take "excessive" risk resulting in either "excessive" bonuses will be lower. At the same time the probability of Wall Street aiding and abetting the expansion of bubbles should also be lower.
Mr. Tricket did mention the necessity to increase capital requirement. However, too much of current media attention is focused on the immorality of "excessive" bonuses.
As I have often written, the "immorality" of excessive bonuses is more an issue with the slapdash, negligent way bailout money has been handed out than with the bankers themselves who operate within the legal parameters set by the bailout.
Recall back in the days of Bush Jr, the reigning ideology was to put total faith in discipline the Market supposedly would impose on all players. Alan Greenspan admitted in a famous confession that he had thought so but he was wrong to believe so.
You can't hang the Bushies now. So....go hang Team Obama first before sending God's "disciples" at Goldman et al to the guillotine.
Before writing checks to bailout Wall Street, Team Obama should have insisted on replacing all Board members who in theory should have supervised how Wall Street firms worked on behalf of their public shareholders, a duty they failed to discharge.
So, to blame the management is really missing the main points. Oh, by the way, the news today is Goldman Sachs has changed its compensation scheme whereby for 5 years senior management cannot cash in their options.
However, let unsaid clearly those senior guys and gals could borrow against those options effectively rendering the 5 years restrictions moot. Wall Street is indeed much much smarter than Washington DC and the press when it comes to financial exercises.
FT report:
Trichet warns on bankers’ bonuses
By Ralph Atkins in Frankfurt
Published: December 11 2009 15:00 | Last updated: December 11 2009 20:04
Awarding big bonuses to bankers could help sow the seeds of a future financial crisis, Jean-Claude Trichet, European Central Bank president, has warned.
Mr Trichet said financial institutions should be using higher profits to strengthen their capital bases rather than paying out “unwarranted levels of compensation or bonuses”.
A culture of excessive financial rewards for individuals encouraged “self-referential” and “self-serving” banking, Mr Trichet warned in a speech in London.
His comments amounted to the strongest criticism yet from the ECB of excessive bank remuneration .
Mr Trichet has long urged bankers to take advantage of an improvement in financial markets to increase their resilience in the face of a still-weak global economy.He warned that excessive pay could even threaten the stability of the financial system.
“I will say that the so-called bonus culture is one of the many factors that can drive the financial system in the wrong direction – away from intermediation to self-referential speculation; away from medium-term stability to short-term orientation; and away from being a service sector to being a self-serving sector.”
His comments followed the UK’s decision this week to impose a one-off supertax on bankers’ bonuses bonuses – a move quickly followed by France.
Mr Trichet reminded bankers that the ECB had provided the eurozone financial system with unlimited liquidity, “not for the banks themselves, but to enable them to finance the broader economy”. The economic slowdown and its impact on loan books, he said, had led to a “second wave” of writedowns.
Mr Trichet has hinted in recent speeches at ECB fears that the global financial system remains inherently fragile – perhaps even more so than before the recent financial market crises. oSpeaking in Cambridge on Thursday, he warned that policymakers might have reached the limit of what they could do to head off increasingly intense financial market crises.
“The instruments of counter-cyclical policy have been used so intensely – and more so from one financial cycle to the next – that authorities might have tested the extremes of their control procedures,” he said.
One particular concern of the ECB is that the actions taken by central banks and governments have encouraged bankers to believe that a worst-case scenario will always be averted.
In his London speech, Mr Trichet argued that the “systemic risks” revealed by the financial crisis highlighted the need for a new supervisory framework in Europe that also assessed general risks for financial stability as well as policing individual banks. Under EU plans nearing implementation, Mr Trichet is expected to head a new European Systemic Risk Board, which will be supported by the ECB. Three new pan-European watchdogs will also oversee the banking, insurance and securities sectors. But Mr Trichet told the European Parliament this week that he did not see the new European Union system as the “first best” solution. That probably reflected ECB concerns about the blurring of responsibilities between the EU and national institutions.
Copyright The Financial Times Limited 2009. Print a single copy of this article for personal use. Contact us if you wish to print more to distribute to others.
"FT" and "Financial Times" are trademarks of the Financial Times. Privacy policy | Terms
© Copyright The Financial Times Ltd 2009.
Paul Samuelson the Great
Excerpt from Paul Samuelson's obituary in today's NY Times.
.."At Harvard, as at Chicago, he was not shy about critiquing his professors — “respecting neither age nor rank,” according to James Tobin, a Nobel laureate of Yale University. The young Mr. Samuelson’s chief complaint against economists was that they preoccupied themselves with finer economic principles while all around them people were being thrown into bread lines...."
Does it remind you of present day "Freshwater" economist types who still insist the free market would cure all problems, if problems even existed?
Samuelson on whose textbook at least 2 generations of economics students were raised was every bit as great as the obit described.
The obituary, the longest I can recall on any economist and one of the longest on anyone who had ever died is here.
.."At Harvard, as at Chicago, he was not shy about critiquing his professors — “respecting neither age nor rank,” according to James Tobin, a Nobel laureate of Yale University. The young Mr. Samuelson’s chief complaint against economists was that they preoccupied themselves with finer economic principles while all around them people were being thrown into bread lines...."
Does it remind you of present day "Freshwater" economist types who still insist the free market would cure all problems, if problems even existed?
Samuelson on whose textbook at least 2 generations of economics students were raised was every bit as great as the obit described.
The obituary, the longest I can recall on any economist and one of the longest on anyone who had ever died is here.
Sunday, December 13, 2009
Mr Volcker -- Too Late
Paul Volcker appointed by Obama to be his advisor never got his ears, frozen out by Larry Summers and Tim Geithner. It is clear why. What Volcker is saying is the opposite of what Summers/Geithner told the President.
Volcker's comment here on how Goldman Sachs is benefiting from taxpayers' money is well understood by anyone in the financial business. Goldman was given essentially risk free money by the US government with which Goldman has made record profits and is passing out record bonuses.
Let's be clear. Goldman has done nothing illegal. It's all within the parameters set by Team Obama.
Volcker is right to say a profit maximizing firm should not effectively be heavily subsidized, indeed, underwritten to make profits accrued to private interest.
However, it's too late. Appropriate restrictions had never been put on bailout money.
Volcker's comment here on how Goldman Sachs is benefiting from taxpayers' money is well understood by anyone in the financial business. Goldman was given essentially risk free money by the US government with which Goldman has made record profits and is passing out record bonuses.
Let's be clear. Goldman has done nothing illegal. It's all within the parameters set by Team Obama.
Volcker is right to say a profit maximizing firm should not effectively be heavily subsidized, indeed, underwritten to make profits accrued to private interest.
However, it's too late. Appropriate restrictions had never been put on bailout money.
Wall Street Didn't Get it??!!
President Obama over the weekend once again blasted Wall Street for not "getting it":
..."The president told CBS' "60 Minutes" that "the people on Wall Street still don't get it. ... They're still puzzled why it is that people are mad at the banks. Well, let's see. You guys are drawing down $10, $20 million bonuses after America went through the worst economic year ... in decades and you guys caused the problem," Obama said in an excerpt released in advance of Sunday night's broadcast of his interview..."
Here is a little quiz:
1) Did the "people on Wall Street" violate any regulations that came with the bailout package? If so, which?
2) If they acted totally within the parameters set by the Federal Government, in what way didn't they "get it"?
3) Are "people on Wall Street" in the charity or in the profit maximizing business. Remember the maxim: the business of America is business.
There is just one person on this planet, so it appears, who still doesn't "get it".
President Obama, the Wall Street "people" acted totally rationally within the parameters set by your own people. They include most importantly Tim Geithner, your Treasury Secretary, Larry Summers, your principal economic adviser and Ben Bernanke, your Fed Chairman.
If you now blame Wall Street for having done this or that, why did your people hand over multibillion dollar bailout money on a silver platter without any restrictions? Without cleaning out those running Wall Street for having aided and abetted the whole financial bubble? You did that with GM, a Main Street firm.
Why not disclose all records documenting in what negligent or worse deliberate ways former Treasury Secretary, Hank Paulson, handed over billions to aid AIG knowing a big chunk of that money would go to Goldman Sachs, his old firm?
I am sorry, I cannot get excited over Wall Street's basic nature to make money for itself. These "people" exist to do just that. Making money for oneself is not a crime. It is what once made America great.
The only person who is clueless, Sir, is you, Mr President. You just don't "get it" that your own people have aided and abetted Wall Street to do what they do best. Normally that too would have been OK, except this time you were using money from taxpayers over 10% of whom are unemployment, over 40% of homeowners are facing negative home equity and with California, for years the "future" state of the Union bankrupt. That's really pretty poor performance for a former Editor of the Harvard Law Review.
The report on Obama's "don't get it" is here.
..."The president told CBS' "60 Minutes" that "the people on Wall Street still don't get it. ... They're still puzzled why it is that people are mad at the banks. Well, let's see. You guys are drawing down $10, $20 million bonuses after America went through the worst economic year ... in decades and you guys caused the problem," Obama said in an excerpt released in advance of Sunday night's broadcast of his interview..."
Here is a little quiz:
1) Did the "people on Wall Street" violate any regulations that came with the bailout package? If so, which?
2) If they acted totally within the parameters set by the Federal Government, in what way didn't they "get it"?
3) Are "people on Wall Street" in the charity or in the profit maximizing business. Remember the maxim: the business of America is business.
There is just one person on this planet, so it appears, who still doesn't "get it".
President Obama, the Wall Street "people" acted totally rationally within the parameters set by your own people. They include most importantly Tim Geithner, your Treasury Secretary, Larry Summers, your principal economic adviser and Ben Bernanke, your Fed Chairman.
If you now blame Wall Street for having done this or that, why did your people hand over multibillion dollar bailout money on a silver platter without any restrictions? Without cleaning out those running Wall Street for having aided and abetted the whole financial bubble? You did that with GM, a Main Street firm.
Why not disclose all records documenting in what negligent or worse deliberate ways former Treasury Secretary, Hank Paulson, handed over billions to aid AIG knowing a big chunk of that money would go to Goldman Sachs, his old firm?
I am sorry, I cannot get excited over Wall Street's basic nature to make money for itself. These "people" exist to do just that. Making money for oneself is not a crime. It is what once made America great.
The only person who is clueless, Sir, is you, Mr President. You just don't "get it" that your own people have aided and abetted Wall Street to do what they do best. Normally that too would have been OK, except this time you were using money from taxpayers over 10% of whom are unemployment, over 40% of homeowners are facing negative home equity and with California, for years the "future" state of the Union bankrupt. That's really pretty poor performance for a former Editor of the Harvard Law Review.
The report on Obama's "don't get it" is here.
Saturday, December 12, 2009
Tiger Woods & The Trouble with Economics
Two items. 3 days ago, famous Harvard economics professor, greg mankiw, on his blog, using words of a UCLA professor as proxy, predicted Tiger Woods would play more games in 2010 based on the logic of "income effect", something straight from any good 101 textbook.
Today Tiger Woods announced an "indefinite break from professional golf".
What conclusion, if any, we may draw from fact vs theory?
The fact is economic theory as taught for years at academia is based on pure logic, a logic that assumes human beings are a specie of "homo economicus" -- a being acting purely on maximizing one's interest. To simplify matters, textbooks assume self interest is money. Money is measurable, quantifiable and is easy to use as evidence.
In Tiger Woods case, total income and wealth is expected to decline sharply as sponsors leave in droves. To maintain his accustomed life-style and to maximize his assets size, the axiom of "income effect" predicts MORE games Woods will play in 2010 not fewer.
Well, that's the problem with academic economics. We maximize and minimize all kinds of things in life. Sometimes it is $$ alone, other times, other stuff.
More often than not, except of course those guys and gals at Goldman Sachs et al, we maximize a lot of the "other stuff".
In Woods case, if we accept his public announcement that he wanted to work on being a "better person, a better husband and a father", the "other stuff" is not about money. It is anything but money.
The conceit of modern economics -- as we should all know by now -- was one of the factors in the creation and then the destruction of the financial bubble the fallout of which we are still living through.
Remember the big debate of "Freshwater" vs "Saltwater" Schools of economics? I wrote about that awhile back on my blog.
Here are the two references:
1) Greg Mankiw's blog:
Tiger Woods as a Natural Experiment
Chapter 21 of my favorite textbook discusses the role of income and substitution effects in determining labor supply, including a case study about lottery winners. UCLA economist Matthew Kahn applies this kind of thinking to the Tiger Woods saga.
Before reading Matthew's analysis, ask yourself this question: Does economic theory predict that Woods will play more or fewer tournaments next year?
Source: Greg Mankiw's blog
2) Tiger Woods' Statement here.
Today Tiger Woods announced an "indefinite break from professional golf".
What conclusion, if any, we may draw from fact vs theory?
The fact is economic theory as taught for years at academia is based on pure logic, a logic that assumes human beings are a specie of "homo economicus" -- a being acting purely on maximizing one's interest. To simplify matters, textbooks assume self interest is money. Money is measurable, quantifiable and is easy to use as evidence.
In Tiger Woods case, total income and wealth is expected to decline sharply as sponsors leave in droves. To maintain his accustomed life-style and to maximize his assets size, the axiom of "income effect" predicts MORE games Woods will play in 2010 not fewer.
Well, that's the problem with academic economics. We maximize and minimize all kinds of things in life. Sometimes it is $$ alone, other times, other stuff.
More often than not, except of course those guys and gals at Goldman Sachs et al, we maximize a lot of the "other stuff".
In Woods case, if we accept his public announcement that he wanted to work on being a "better person, a better husband and a father", the "other stuff" is not about money. It is anything but money.
The conceit of modern economics -- as we should all know by now -- was one of the factors in the creation and then the destruction of the financial bubble the fallout of which we are still living through.
Remember the big debate of "Freshwater" vs "Saltwater" Schools of economics? I wrote about that awhile back on my blog.
Here are the two references:
1) Greg Mankiw's blog:
Tiger Woods as a Natural Experiment
Chapter 21 of my favorite textbook discusses the role of income and substitution effects in determining labor supply, including a case study about lottery winners. UCLA economist Matthew Kahn applies this kind of thinking to the Tiger Woods saga.
Before reading Matthew's analysis, ask yourself this question: Does economic theory predict that Woods will play more or fewer tournaments next year?
Source: Greg Mankiw's blog
2) Tiger Woods' Statement here.
Friday, December 11, 2009
Global Main Street Revolt
Politicians love campaign donations, but they also can count. Main Street voters outnumber Wall Street bankers. Politicians have known for at least a year Main Street is seething with anger about Wall Street (including the City in the UK) profligacy, special treatments and obscene compensations.
Big banks are all global. So Swiss, Dutch, French and certainly UK based banks all needed to pay up to attract financial types who knew the definition of a Credit Default Option or an "accumulator", a derivative which acquired the nickname of "I kill you later" in Hong Kong after all those derivatives sold by famous banks blew up taking down many who thought they had bought a safe investment product from their friendly neighborhood Wall Street broker.
The 50% once off tax on bonuses proposed by the UK authorities though easy to dodge is an acknowledgement by the UK politicians that its own Main Street voters want to smell blood. The same realization among political leaders is spreading across the English Channel. Read this report in the Wall Street Journal.
While not a done deal, the cat is out of the bag that some sort of "punishment" on the over-paid bankers needs to be exacted. Stay tuned for more such actions in the big financial league. Nothing like that would happen in China because the financial bubble and toxic assets didn't get invented there.
Big banks are all global. So Swiss, Dutch, French and certainly UK based banks all needed to pay up to attract financial types who knew the definition of a Credit Default Option or an "accumulator", a derivative which acquired the nickname of "I kill you later" in Hong Kong after all those derivatives sold by famous banks blew up taking down many who thought they had bought a safe investment product from their friendly neighborhood Wall Street broker.
The 50% once off tax on bonuses proposed by the UK authorities though easy to dodge is an acknowledgement by the UK politicians that its own Main Street voters want to smell blood. The same realization among political leaders is spreading across the English Channel. Read this report in the Wall Street Journal.
While not a done deal, the cat is out of the bag that some sort of "punishment" on the over-paid bankers needs to be exacted. Stay tuned for more such actions in the big financial league. Nothing like that would happen in China because the financial bubble and toxic assets didn't get invented there.
Goldman Sachs & Its Shareholders
Better late than never.
Goldman Sach's new compensation plan is getting good PR traction. Read here.
It's been a scandalous mystery why the largest institutional shareholders of "too big to fail" Wall Street firms had refrained for so long to go public criticizing on behalf of their own shareholders on Main Street regarding the many shenanigans these Wall Street firms had engaged in. Finally, one of institutional investors has done so albeit indirectly by praising the latest Goldman Sachs action to cut its cash bonuses to its principal officers.
By praising Goldman, the country's largest pension fund for academics TIAA-CREF, is in effect saying Goldman's scrapped plan was not kosher.
Goldman's new compensation plan has gone some ways to dampen the anger on Main Street, though by no means entirely.
Goldman Sach's new compensation plan is getting good PR traction. Read here.
It's been a scandalous mystery why the largest institutional shareholders of "too big to fail" Wall Street firms had refrained for so long to go public criticizing on behalf of their own shareholders on Main Street regarding the many shenanigans these Wall Street firms had engaged in. Finally, one of institutional investors has done so albeit indirectly by praising the latest Goldman Sachs action to cut its cash bonuses to its principal officers.
By praising Goldman, the country's largest pension fund for academics TIAA-CREF, is in effect saying Goldman's scrapped plan was not kosher.
Goldman's new compensation plan has gone some ways to dampen the anger on Main Street, though by no means entirely.
Thursday, December 10, 2009
The Coming Decline of US physics.
Back in the middle 20th century at Columbia University's department of physics the atmosphere was electric charged with serial exciting discoveries. The joke, with some exaggeration, was that half of the department were Noble prize winners, the other half were waiting to be so recognized. MIT, Caltech, Harvard were not far behind. US dominated the field of physics. And then something happened.
The country, over-extended financially, decided not to fund fundamental research. In 1992, as this article here reports, the US Congress, in all its "wisdom", dismissed the idea to build the world's largest atomic smasher against dire warnings from the country's leading scientists, one of whom was Steve Weinberg, quoted in this same article. The largest smasher is now in Geneva. US is no longer in the lead.
Empires usually fell over a period of time with one seemingly unrelated event following another that at some point tipped the balance forever. Only then it became obvious it was too late. In the case of USSR not a day sooner.
Physics seems so unrelated to the rise and fall of empires that folks ignore its significance in the rise of the USA as a superpower. Now, this is yet another piece of corner stone disintegrating.
The country, over-extended financially, decided not to fund fundamental research. In 1992, as this article here reports, the US Congress, in all its "wisdom", dismissed the idea to build the world's largest atomic smasher against dire warnings from the country's leading scientists, one of whom was Steve Weinberg, quoted in this same article. The largest smasher is now in Geneva. US is no longer in the lead.
Empires usually fell over a period of time with one seemingly unrelated event following another that at some point tipped the balance forever. Only then it became obvious it was too late. In the case of USSR not a day sooner.
Physics seems so unrelated to the rise and fall of empires that folks ignore its significance in the rise of the USA as a superpower. Now, this is yet another piece of corner stone disintegrating.
Goldman Sachs Doing God's Work (2)
In a well-reported recent interview with a UK paper Goldman Sachs chairman Lloyd Blankfein told the reporter his firm was doing "God's work".
Former Fed chairman, Paul Volker, totally sidelined by Geithern/Summers said this to a recent gathering of well-heeled bankers in England:
..."“I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence,” said Mr Volcker, who ran the Fed from 1979 to 1987 and is now chairman of President Obama’s Economic Recovery Advisory Board"....
Volcker also said the only useful financial innovation from Wall Street in his memory was the ATM machine. Options, shmoptions? For the birds!
The whole article on his speech is here.
One of several Volcker's ignored recommendations to Obama was to temporarily nationalize all those "too big to fail" Wall Street firms, re-establish confidence, clean out both the balance sheets and those financial "arsonists" [my word] to be replaced by a new crew and then re-privatize them. That would have been a lot cheaper and fairer than what has happened. It was sometimes called the Swedish model named after a similar exercise following a banking crisis there in the early 1990's. Read here for a brief backgrounder.
Geithner famously dismissed that option saying: "The United States is not Sweden". To which I responded in an earlier writing back in April 2009 : "No, US is not Sweden. It is Thailand"!
I reproduce my blog here that has a link to a couple of published articles including one of mine:
SATURDAY, APRIL 25, 2009
US is Not Sweden, of Course. It is Thailand
It gives me no pleasure to compare USA to Thailand, the land of crony capitalism, notorious for not providing a level playing field to entrepreneurs, big, small or starting. Its politicians and business interests are inseparable.
I wrote about that comparison weeks ago published in the Bangkok Post, the country's leading English language paper. (Here.) I didn't expect to be taken seriously. After all, I was no world famous Nobel laureate.
My view is no longer so "weird". Read Columbia's Joseph Stiglitz, Nobel laureate in economics and Simon Johnson, MIT professor's testimony at the US Congress Joint Economic Committee on April 21. (Here.) Enough to make you do a Peter Finch "I am mad as hell and I can't take it anymore" in that classic movie "Network'.
Thomas Hoenig, president of the Federal Reserve Bank of Kansas, at that same hearing, weighed in with his thinly vieled criticism of the Geithner/Summers bailout strategy. Sober reading. Scroll down on that page to get the link to their respective testimonies.
Former Fed chairman, Paul Volker, totally sidelined by Geithern/Summers said this to a recent gathering of well-heeled bankers in England:
..."“I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence,” said Mr Volcker, who ran the Fed from 1979 to 1987 and is now chairman of President Obama’s Economic Recovery Advisory Board"....
Volcker also said the only useful financial innovation from Wall Street in his memory was the ATM machine. Options, shmoptions? For the birds!
The whole article on his speech is here.
One of several Volcker's ignored recommendations to Obama was to temporarily nationalize all those "too big to fail" Wall Street firms, re-establish confidence, clean out both the balance sheets and those financial "arsonists" [my word] to be replaced by a new crew and then re-privatize them. That would have been a lot cheaper and fairer than what has happened. It was sometimes called the Swedish model named after a similar exercise following a banking crisis there in the early 1990's. Read here for a brief backgrounder.
Geithner famously dismissed that option saying: "The United States is not Sweden". To which I responded in an earlier writing back in April 2009 : "No, US is not Sweden. It is Thailand"!
I reproduce my blog here that has a link to a couple of published articles including one of mine:
SATURDAY, APRIL 25, 2009
US is Not Sweden, of Course. It is Thailand
It gives me no pleasure to compare USA to Thailand, the land of crony capitalism, notorious for not providing a level playing field to entrepreneurs, big, small or starting. Its politicians and business interests are inseparable.
I wrote about that comparison weeks ago published in the Bangkok Post, the country's leading English language paper. (Here.) I didn't expect to be taken seriously. After all, I was no world famous Nobel laureate.
My view is no longer so "weird". Read Columbia's Joseph Stiglitz, Nobel laureate in economics and Simon Johnson, MIT professor's testimony at the US Congress Joint Economic Committee on April 21. (Here.) Enough to make you do a Peter Finch "I am mad as hell and I can't take it anymore" in that classic movie "Network'.
Thomas Hoenig, president of the Federal Reserve Bank of Kansas, at that same hearing, weighed in with his thinly vieled criticism of the Geithner/Summers bailout strategy. Sober reading. Scroll down on that page to get the link to their respective testimonies.
Wednesday, December 09, 2009
So, you are a Harvard reject?
A lot of students are crushed because they failed to get into their college of first choice. In the English speaking world outside of the United Kingdom, Harvard is by far the premier object of desire, sans pareil among college bound students.
In a famously ego crushing survey done by the NY Times a few years ago (here) Harvard came out way ahead of everyone else, including its closest academic rivals -- Yale and Princeton.
Mind you Yale, Princeton or for that matter, a host of other colleges such as Amherst, Williams or Chicago would deliver as good an education, some say better, than Harvard.
75% of students if accepted by both Princeton and Harvard would go to Harvard. Princeton, if you believe the US News Annual college survey, was often ranked number 1 over Harvard.
65% would prefer Harvard over Yale.
Yale, Princeton, Columbia and a few others reject at least 9 out of 10 of all applicants. Those applicants are normally already self-screened for being high probability candidates to enter any of those colleges.
What students who got rejected by their college of first choice should remember is that the rejection/acceptance is more a draw of luck than a statement about the applicant's ability or lack of. It is impossible really for the Admissions Office to make a Soloman's choice.
The following blog by Harvard professor Georg Mankiw provides, to my eyes, an accurate picture of how impossible it is to choose who should get in, who should not.
Though his example is about his freshman seminar, the same applies to college admissions.
Or the years I have told countless parents and their college seeking kids that to get rejected should NOT be borne as a scar nor should they consider that a judgement about their capability. A rejection by the college of your choice is definitely not a predictor of what the future would hold for the applicant.
The process of selection remains mysterious, putting it kindly.
I was once a "spotter" and a "gatekeeper" for one of the most selective colleges with an admissions rate of less than 9% based on last year's figures. I have also spent serious time at Harvard, Oxford, Princeton and Columbia as a visiting scholar with extensive contacts with students at each of these universities.
I met many brilliant students. But I also met students who did not seem obvious to me they were so extraordinary compared to any other smart students at, say, University of North Carolina or Virginia or any of the great pubic universities. Nothing wrong with being a normal kid without perfect SAT scores, by the way. Many of "perfect" scoring students crash and burn after college. Remember the "brilliant" Harvard graduate, the Unibomber?
After a few years serving as my alma mater's "gatekeeper" in Hong Kong, I quit in disgust and wrote a strongly worded protest letter to the Admissions Director.
Why? All my enthusiastic recommendations were rejected by the admissions officers and all my B to B minus recommendations got in. I knew then this so-called "brain wrecking" selection process at elite US colleges was often nuts without any earthshattering significance.
Consider this. I had interviewed all those candidates, sometimes twice. I had my own business. I had to hire staff. I was considerably older and more mature than the Admissions folks. I knew that because they listed their years of college graduation. I had vast international experiences working, living, traveling around the world, in cultures these admissions folks normally had scant first hand knowledge of. Yet, they thought they knew better than me in selecting talented students. I doubted that.
I don't know how Professor Mankiw finally arrived at his decisions, but I bet you a good meal if you pelled him with enough 1989 claret, he is likely to admit he decided more by the seat of his pants than by some seriously serious selection criteria. Here was an excerpt from his blog.
MONDAY, AUGUST 31, 2009
An Impossible Task
I am teaching a Harvard freshman seminar this semester (in addition to ec 10), and one of my first tasks is to choose the 15 students. About 200 applied. That means that getting into my seminar is about as hard as getting into Harvard--except that you first have to get into Harvard before you can even apply!
Having spent much of yesterday reading through the applications, I fully recognize how difficult and somewhat random such admissions processes are. I could fill almost the entire seminar with kids with perfect SAT scores (2400), but I won't, as there is more to life than test scores. I am looking also for passion about the subject, interesting life experiences, and a balance among the group of students to promote good discussion. But judging that from a few brief essays is very, very hard. To those students I do not pick: I am sorry, and it is my loss as well for not having the opportunity to get to know you better.
In a famously ego crushing survey done by the NY Times a few years ago (here) Harvard came out way ahead of everyone else, including its closest academic rivals -- Yale and Princeton.
Mind you Yale, Princeton or for that matter, a host of other colleges such as Amherst, Williams or Chicago would deliver as good an education, some say better, than Harvard.
75% of students if accepted by both Princeton and Harvard would go to Harvard. Princeton, if you believe the US News Annual college survey, was often ranked number 1 over Harvard.
65% would prefer Harvard over Yale.
Yale, Princeton, Columbia and a few others reject at least 9 out of 10 of all applicants. Those applicants are normally already self-screened for being high probability candidates to enter any of those colleges.
What students who got rejected by their college of first choice should remember is that the rejection/acceptance is more a draw of luck than a statement about the applicant's ability or lack of. It is impossible really for the Admissions Office to make a Soloman's choice.
The following blog by Harvard professor Georg Mankiw provides, to my eyes, an accurate picture of how impossible it is to choose who should get in, who should not.
Though his example is about his freshman seminar, the same applies to college admissions.
Or the years I have told countless parents and their college seeking kids that to get rejected should NOT be borne as a scar nor should they consider that a judgement about their capability. A rejection by the college of your choice is definitely not a predictor of what the future would hold for the applicant.
The process of selection remains mysterious, putting it kindly.
I was once a "spotter" and a "gatekeeper" for one of the most selective colleges with an admissions rate of less than 9% based on last year's figures. I have also spent serious time at Harvard, Oxford, Princeton and Columbia as a visiting scholar with extensive contacts with students at each of these universities.
I met many brilliant students. But I also met students who did not seem obvious to me they were so extraordinary compared to any other smart students at, say, University of North Carolina or Virginia or any of the great pubic universities. Nothing wrong with being a normal kid without perfect SAT scores, by the way. Many of "perfect" scoring students crash and burn after college. Remember the "brilliant" Harvard graduate, the Unibomber?
After a few years serving as my alma mater's "gatekeeper" in Hong Kong, I quit in disgust and wrote a strongly worded protest letter to the Admissions Director.
Why? All my enthusiastic recommendations were rejected by the admissions officers and all my B to B minus recommendations got in. I knew then this so-called "brain wrecking" selection process at elite US colleges was often nuts without any earthshattering significance.
Consider this. I had interviewed all those candidates, sometimes twice. I had my own business. I had to hire staff. I was considerably older and more mature than the Admissions folks. I knew that because they listed their years of college graduation. I had vast international experiences working, living, traveling around the world, in cultures these admissions folks normally had scant first hand knowledge of. Yet, they thought they knew better than me in selecting talented students. I doubted that.
I don't know how Professor Mankiw finally arrived at his decisions, but I bet you a good meal if you pelled him with enough 1989 claret, he is likely to admit he decided more by the seat of his pants than by some seriously serious selection criteria. Here was an excerpt from his blog.
MONDAY, AUGUST 31, 2009
An Impossible Task
I am teaching a Harvard freshman seminar this semester (in addition to ec 10), and one of my first tasks is to choose the 15 students. About 200 applied. That means that getting into my seminar is about as hard as getting into Harvard--except that you first have to get into Harvard before you can even apply!
Having spent much of yesterday reading through the applications, I fully recognize how difficult and somewhat random such admissions processes are. I could fill almost the entire seminar with kids with perfect SAT scores (2400), but I won't, as there is more to life than test scores. I am looking also for passion about the subject, interesting life experiences, and a balance among the group of students to promote good discussion. But judging that from a few brief essays is very, very hard. To those students I do not pick: I am sorry, and it is my loss as well for not having the opportunity to get to know you better.
Tuesday, December 08, 2009
Karzai wants more money!
You've got to give it to this President Karzai who knows a good thing when he sees one: the American printing press as this BBC report shows here.
This is also as good as any a predictor of how long the US will be forced to stay in Afghanistan. If Afghanistan needs $$ over 15 years to finance its security forces to which Obama was saying he would start handing over responsibility in 2 years time, guess how long would US forces remain there?
The obvious question one should pose to President Karzai's financial woes is this: Mr President, how about remitting back to Afghanistan all the billions stolen by your own folks in the government, including perhaps your own good self? How about asking your own brother to send back all this drug money?
This is also as good as any a predictor of how long the US will be forced to stay in Afghanistan. If Afghanistan needs $$ over 15 years to finance its security forces to which Obama was saying he would start handing over responsibility in 2 years time, guess how long would US forces remain there?
The obvious question one should pose to President Karzai's financial woes is this: Mr President, how about remitting back to Afghanistan all the billions stolen by your own folks in the government, including perhaps your own good self? How about asking your own brother to send back all this drug money?
The Afghan Quagmire
One day we were told President Obama had committed to a firm withdrawal from Afghanistan in 2010. That was the "punch line" of his big war speech just the other day.
Now we are told he didn't really mean that. We are told we misunderstood him. No date! Read this amazing report here.
So, would it be too unfair to conclude he just doesn't really know what the heck he wants to do with that war which is now HIS and not Bush's?
If there is no withdrawal date, then we are talking about an open-ended war, no?
That being the case, we are in for more troops calls going down the road. More deaths. More casualty and in the end, Afghanistan will still be in the hands of extremists: extreme corrupt officials and fundamentalist religious Taliban nuts who believe women are inferior and children should not go to school except to their religious ones.
So USA is getting deeper in that cesspool while its water is polluted, while California is technically bankrupt, while the roads, dams, airports, seaports are second rate?
Inevitable financial implications: budget deficits will remain huge and the dollar will remain weak and weaker.
Now we are told he didn't really mean that. We are told we misunderstood him. No date! Read this amazing report here.
So, would it be too unfair to conclude he just doesn't really know what the heck he wants to do with that war which is now HIS and not Bush's?
If there is no withdrawal date, then we are talking about an open-ended war, no?
That being the case, we are in for more troops calls going down the road. More deaths. More casualty and in the end, Afghanistan will still be in the hands of extremists: extreme corrupt officials and fundamentalist religious Taliban nuts who believe women are inferior and children should not go to school except to their religious ones.
So USA is getting deeper in that cesspool while its water is polluted, while California is technically bankrupt, while the roads, dams, airports, seaports are second rate?
Inevitable financial implications: budget deficits will remain huge and the dollar will remain weak and weaker.
Nation Building in USA, not in Afghanistan
The New York Times has a report here on how bad the water treatment capability has degraded back in USA.
Poor quality of domestic infrastructure has been warned for years by the American Civil Engineers Association that has been giving a failing grade on all US infrastructures. Their annual reports have fallen on deaf ears. US Congress was more willing to finance stupid foreign wars, cut taxes and then cut spending on such "minor" matters as infrastructure and education.
The money spent in Iraq and Afghanistan continues to drain national resources that are much more needed back home than abroad. If you want to talk about "national security", which is more important? Building up Iraq and Afghanistan or building up USA?
Previous administrations from LBJ down to Obama all implicitly believe you can have guns and butter at the same time.
Poor quality of domestic infrastructure has been warned for years by the American Civil Engineers Association that has been giving a failing grade on all US infrastructures. Their annual reports have fallen on deaf ears. US Congress was more willing to finance stupid foreign wars, cut taxes and then cut spending on such "minor" matters as infrastructure and education.
The money spent in Iraq and Afghanistan continues to drain national resources that are much more needed back home than abroad. If you want to talk about "national security", which is more important? Building up Iraq and Afghanistan or building up USA?
Previous administrations from LBJ down to Obama all implicitly believe you can have guns and butter at the same time.
Biochemistry, anyone?
2 decades ago, biochemistry, genetic engineering, all that stuff was considered the future. I met 3 biochem PhD's in Beijing who laughed at their own past expectations. Now all of them are in the financial business. I got curious and looked up salaries of professors in various disciplines. I believe they reflect what the ultimate market demand needs. Indeed, business, legal, engineering professors command the highest average salaries in the US. Biological and biomedical professors are not among the highest paid. This is corroborating evidence of what I was told by 3 Beijing biochem PhDs:
March 14, 2008
Average Faculty Salaries By Field and Rank at 4-Year Colleges and Universities, 2007-8
Professor
Associate professor
Assistant professor *
New assistant professor
Instructor
Agriculture, agriculture operations, and related sciences
$86,062
$68,259
$58,360
$57,963
$43,527
Architecture and related services
$93,591
$72,024
$58,808
$56,695
$46,345
Area, ethnic, cultural, and gender studies
$94,700
$71,014
$56,271
$56,035
$45,311
Biological and biomedical sciences
$86,146
$64,836
$54,610
$54,209
$41,938
Business, management, marketing, and related support services
$102,965
$86,633
$79,910
$86,640
$53,937
Communication, journalism, and related programs
$80,514
$61,745
$51,401
$50,469
$42,420
Communications technologies/ technicians and support services
$85,704
$63,950
$52,317
$42,519
$43,571
Computer and information sciences and support services
$96,180
$78,784
$68,954
$71,889
$48,859
Education
$79,281
$62,672
$53,075
$52,128
$43,639
Engineering
$107,134
$82,857
$72,734
$71,802
$55,364
Engineering technologies/technicians
$82,525
$68,513
$59,710
$59,335
$46,190
English language and literature/letters
$76,793
$59,949
$49,528
$48,289
$39,834
Family and consumer sciences/ human sciences
$81,482
$64,400
$53,667
$53,646
$42,709
Foreign languages, literatures, and linguistics
$82,094
$62,564
$51,621
$49,802
$40,638
Health professions and related clinical sciences
$88,748
$70,801
$59,091
$60,088
$50,015
History
$79,409
$60,523
$50,076
$49,314
$41,103
Legal professions and studies
$129,527
$94,444
$79,684
$78,901
$63,174
Liberal arts and sciences, general studies, and humanities
$81,626
$61,707
$49,876
$49,832
$41,788
Library science
$82,225
$65,266
$52,553
$54,108
$47,491
Mathematics and statistics
$81,818
$63,728
$53,800
$53,787
$40,971
Multi/interdisciplinary studies
$87,674
$66,784
$54,166
$51,338
$39,948
Natural resources and conservation
$87,676
$67,417
$56,735
$56,809
$46,053
Parks, recreation, leisure, and fitness studies
$76,038
$62,002
$50,894
$50,628
$42,702
Philosophy and religious studies
$81,464
$61,686
$51,183
$50,059
$40,228
Physical sciences
$85,294
$64,835
$54,782
$54,359
$42,403
Psychology
$80,546
$62,491
$52,825
$52,153
$42,896
Public administration and social-service professions
$85,477
$66,152
$54,268
$53,619
$44,677
Security and protective services
$80,766
$63,683
$52,340
$52,417
$43,618
Science technologies/technicians
$101,406
$69,155
$58,278
--
--
Social sciences
$85,729
$65,680
$55,052
$55,243
$43,667
Theology and religious vocations
$69,855
$57,790
$49,214
$51,105
$42,687
Visual and performing arts
$76,293
$60,204
$49,821
$48,004
$41,608
* Includes data for new assistant professors.
Source: College and University Professional Association for Human Resources
March 14, 2008
Average Faculty Salaries By Field and Rank at 4-Year Colleges and Universities, 2007-8
Professor
Associate professor
Assistant professor *
New assistant professor
Instructor
Agriculture, agriculture operations, and related sciences
$86,062
$68,259
$58,360
$57,963
$43,527
Architecture and related services
$93,591
$72,024
$58,808
$56,695
$46,345
Area, ethnic, cultural, and gender studies
$94,700
$71,014
$56,271
$56,035
$45,311
Biological and biomedical sciences
$86,146
$64,836
$54,610
$54,209
$41,938
Business, management, marketing, and related support services
$102,965
$86,633
$79,910
$86,640
$53,937
Communication, journalism, and related programs
$80,514
$61,745
$51,401
$50,469
$42,420
Communications technologies/ technicians and support services
$85,704
$63,950
$52,317
$42,519
$43,571
Computer and information sciences and support services
$96,180
$78,784
$68,954
$71,889
$48,859
Education
$79,281
$62,672
$53,075
$52,128
$43,639
Engineering
$107,134
$82,857
$72,734
$71,802
$55,364
Engineering technologies/technicians
$82,525
$68,513
$59,710
$59,335
$46,190
English language and literature/letters
$76,793
$59,949
$49,528
$48,289
$39,834
Family and consumer sciences/ human sciences
$81,482
$64,400
$53,667
$53,646
$42,709
Foreign languages, literatures, and linguistics
$82,094
$62,564
$51,621
$49,802
$40,638
Health professions and related clinical sciences
$88,748
$70,801
$59,091
$60,088
$50,015
History
$79,409
$60,523
$50,076
$49,314
$41,103
Legal professions and studies
$129,527
$94,444
$79,684
$78,901
$63,174
Liberal arts and sciences, general studies, and humanities
$81,626
$61,707
$49,876
$49,832
$41,788
Library science
$82,225
$65,266
$52,553
$54,108
$47,491
Mathematics and statistics
$81,818
$63,728
$53,800
$53,787
$40,971
Multi/interdisciplinary studies
$87,674
$66,784
$54,166
$51,338
$39,948
Natural resources and conservation
$87,676
$67,417
$56,735
$56,809
$46,053
Parks, recreation, leisure, and fitness studies
$76,038
$62,002
$50,894
$50,628
$42,702
Philosophy and religious studies
$81,464
$61,686
$51,183
$50,059
$40,228
Physical sciences
$85,294
$64,835
$54,782
$54,359
$42,403
Psychology
$80,546
$62,491
$52,825
$52,153
$42,896
Public administration and social-service professions
$85,477
$66,152
$54,268
$53,619
$44,677
Security and protective services
$80,766
$63,683
$52,340
$52,417
$43,618
Science technologies/technicians
$101,406
$69,155
$58,278
--
--
Social sciences
$85,729
$65,680
$55,052
$55,243
$43,667
Theology and religious vocations
$69,855
$57,790
$49,214
$51,105
$42,687
Visual and performing arts
$76,293
$60,204
$49,821
$48,004
$41,608
* Includes data for new assistant professors.
Source: College and University Professional Association for Human Resources
Monday, December 07, 2009
The 21st Century Belongs to.....? (2)
I knew China in the "dark" ages under Mao and the Gang of 4 and have been a frequent visitor to various parts of China. I just returned from a 6 days visit to Beijing, the capital.
Some conclusions are so obvious but they still need to be made since the media has been singing a somewhat different tune:
1) Anyone who still puts India and China together as in BRIC as if China and India were in the same league (other than population sizes) is not thinking straight.
These two economies are miles and miles apart. India's infrastructure with minor exceptions is still stuck in the early 20th century at best. China is already thinking 21st century. Free high speed Internet connection is available at most coffee shops, even some hole-in-the-wall places you don't expect. Roads are generally better than those in the USA. What used to take hours and hours to go from A to B now take less than an hour. From Beijing to the Great Wall is one example: 45 minutes on superb highway. From Beijing to Tienjin by train is now less than 30 minutes.
2) Traffic trams in Beijing is not due to lack of roads built. The number of cars is growing at a speed the public works folks cannot keep up. The quality of cars is mind boggling for those who still remember the bad old days. Now your lawyers or local high executive types drive BMW's or Mercedes.
3) The quality and quantity of professionals, in finance, law and even in such very local businesses as real estate development, is impressively global in outlook. Many hold degrees from global "brands". I stumbled upon the Xmas gala dinner of Oxford and Cambridge alumni at Grand Hyatt and walked in without an invitation to take a look see. The grand ballroom was filled.
I was invited to a special occasion dinner for 25, all Chinese citizens in their late 30's or early 40's, all successful professionals. Some from families with impeccable Party history.
I counted 1 Harvard College, 2 Harvard PhD's in biochemistry 1 Harvard MA in economics, 1 Boston U Phd also in bio chem with post doc work done at Harvard, 2 Wharton degrees, 1 Chicago, 1 Wellesley, 1 Columbia Law, 1 Rutgers. I didn't get a chance to query the rest. Naturally all speak fluent English.
The long held idea that Indians had an advantage in English proficiency is no longer so relevant. English has become the universal business language and the Chinese are fast catching up overall.
Latest US data indicate a continuing pattern of "surge" in PRC student applications to study in the US. Any cursory walk through the various campuses in the UK could mislead you into thinking the Chinese were taking over.
The relevant fact here is this: more Chinese are getting richer faster than Indians and they are sending their children abroad at a rate faster than India.
In China they are also expanding the capacity of universities faster than India with improving quality and paying salaries that are well above Indian rates to attract overseas talents and to retain domestic ones.
Any economist worth mentioning knows the two principal prerequisites of sustained high economic growth are: human capital (read Education) and public governance.
Both of these conditions are more in place in China than in India.
I should stop here for a pause. More on this subject going forward.
Most people cite Democracy in India as sine qua non in predicting that in the long run will outpace China. Skeptics of Chinese miracle also point to the fact that only democratic economies are rich.
2 caveats. Is Singapore a true democracy? Second, as John Maynard Keynes famously said: "In the long run, we are all dead". The third caveat maybe this: why is getting rich a necessarily morality story linking that to democracy. Don't forget Adolf's 3rd Reich was doing far better economically than its predecessor, the Weimar Republic.
Meanwhile comparing China and India is like comparing a Ferrari to a Soviet Volga.
Some conclusions are so obvious but they still need to be made since the media has been singing a somewhat different tune:
1) Anyone who still puts India and China together as in BRIC as if China and India were in the same league (other than population sizes) is not thinking straight.
These two economies are miles and miles apart. India's infrastructure with minor exceptions is still stuck in the early 20th century at best. China is already thinking 21st century. Free high speed Internet connection is available at most coffee shops, even some hole-in-the-wall places you don't expect. Roads are generally better than those in the USA. What used to take hours and hours to go from A to B now take less than an hour. From Beijing to the Great Wall is one example: 45 minutes on superb highway. From Beijing to Tienjin by train is now less than 30 minutes.
2) Traffic trams in Beijing is not due to lack of roads built. The number of cars is growing at a speed the public works folks cannot keep up. The quality of cars is mind boggling for those who still remember the bad old days. Now your lawyers or local high executive types drive BMW's or Mercedes.
3) The quality and quantity of professionals, in finance, law and even in such very local businesses as real estate development, is impressively global in outlook. Many hold degrees from global "brands". I stumbled upon the Xmas gala dinner of Oxford and Cambridge alumni at Grand Hyatt and walked in without an invitation to take a look see. The grand ballroom was filled.
I was invited to a special occasion dinner for 25, all Chinese citizens in their late 30's or early 40's, all successful professionals. Some from families with impeccable Party history.
I counted 1 Harvard College, 2 Harvard PhD's in biochemistry 1 Harvard MA in economics, 1 Boston U Phd also in bio chem with post doc work done at Harvard, 2 Wharton degrees, 1 Chicago, 1 Wellesley, 1 Columbia Law, 1 Rutgers. I didn't get a chance to query the rest. Naturally all speak fluent English.
The long held idea that Indians had an advantage in English proficiency is no longer so relevant. English has become the universal business language and the Chinese are fast catching up overall.
Latest US data indicate a continuing pattern of "surge" in PRC student applications to study in the US. Any cursory walk through the various campuses in the UK could mislead you into thinking the Chinese were taking over.
The relevant fact here is this: more Chinese are getting richer faster than Indians and they are sending their children abroad at a rate faster than India.
In China they are also expanding the capacity of universities faster than India with improving quality and paying salaries that are well above Indian rates to attract overseas talents and to retain domestic ones.
Any economist worth mentioning knows the two principal prerequisites of sustained high economic growth are: human capital (read Education) and public governance.
Both of these conditions are more in place in China than in India.
I should stop here for a pause. More on this subject going forward.
Most people cite Democracy in India as sine qua non in predicting that in the long run will outpace China. Skeptics of Chinese miracle also point to the fact that only democratic economies are rich.
2 caveats. Is Singapore a true democracy? Second, as John Maynard Keynes famously said: "In the long run, we are all dead". The third caveat maybe this: why is getting rich a necessarily morality story linking that to democracy. Don't forget Adolf's 3rd Reich was doing far better economically than its predecessor, the Weimar Republic.
Meanwhile comparing China and India is like comparing a Ferrari to a Soviet Volga.
Pathetic!
White House is putting out the word that it is recovering most of the billions delivered on silver patter to Wall Street. The taxpayers "only" lost $42 billion! How marvelous! Let's celebrate. Read this article here.
The taxpayers wrote near blank checks to Wall Street and what did they get? "Only" $42 billion loss while a few firms are reporting record earnings (using zero cost taxpayers' money with a guarantee), while paying out record bonuses in billions when the country is suffering from double digit unemployment rate and while California, formerly "the future" is teetering on the brink of being a "failed" state.
Losing only $42 billion is a "good" deal that warrants front page celebrations?
Pathetic is the only word I can think of.
Chalk it down as another Washington Xmas Giveaway. We all know the details of the bailout came from Hank Paulson, Larry Summers and Tim Geithner.
Let's not remember Harry Truman's axiom: The Buck Stops Here. Only one person and one alone must shoulder the accountability -- Barack Obama, the President of the United States.
The taxpayers wrote near blank checks to Wall Street and what did they get? "Only" $42 billion loss while a few firms are reporting record earnings (using zero cost taxpayers' money with a guarantee), while paying out record bonuses in billions when the country is suffering from double digit unemployment rate and while California, formerly "the future" is teetering on the brink of being a "failed" state.
Losing only $42 billion is a "good" deal that warrants front page celebrations?
Pathetic is the only word I can think of.
Chalk it down as another Washington Xmas Giveaway. We all know the details of the bailout came from Hank Paulson, Larry Summers and Tim Geithner.
Let's not remember Harry Truman's axiom: The Buck Stops Here. Only one person and one alone must shoulder the accountability -- Barack Obama, the President of the United States.
Sunday, December 06, 2009
Obama's Big Gamble on Afghanistan
Read this excerpt from today's paper, stop and think for a second how Obama settled on how to conduct his Afghan war:
..."as his top military adviser ran through a slide show of options, Mr. Obama expressed frustration. He held up a chart showing how reinforcements would flow into Afghanistan over 18 months and eventually begin to pull out, a bell curve that meant American forces would be there for years to come.
“I want this pushed to the left,” he told advisers, pointing to the bell curve. In other words, the troops should be in sooner, then out sooner.
When the history of the Obama presidency is written, that day with the chart may prove to be a turning point, the moment a young commander in chief set in motion a high-stakes gamble to turn around a losing war. By moving the bell curve to the left, Mr. Obama decided to send 30,000 troops mostly in the next six months and then begin pulling them out a year after that, betting that a quick jolt of extra forces could knock the enemy back on its heels enough for the Afghans to take over the fight"....
source: New York Times, Dec 7, 2009
The scary thing is this: Obama finalized his early in/early out war strategy by wishing the "bell curve" to move to the left.
This sounds more like a waving of a magic wand moving that curve "leftward". And that the realities on the ground will comply with his wish that an early "surge" would "work" allowing him to withdraw sooner.
What is the probability that these 30,000 new troops are enough?
The whole report is here.
..."as his top military adviser ran through a slide show of options, Mr. Obama expressed frustration. He held up a chart showing how reinforcements would flow into Afghanistan over 18 months and eventually begin to pull out, a bell curve that meant American forces would be there for years to come.
“I want this pushed to the left,” he told advisers, pointing to the bell curve. In other words, the troops should be in sooner, then out sooner.
When the history of the Obama presidency is written, that day with the chart may prove to be a turning point, the moment a young commander in chief set in motion a high-stakes gamble to turn around a losing war. By moving the bell curve to the left, Mr. Obama decided to send 30,000 troops mostly in the next six months and then begin pulling them out a year after that, betting that a quick jolt of extra forces could knock the enemy back on its heels enough for the Afghans to take over the fight"....
source: New York Times, Dec 7, 2009
The scary thing is this: Obama finalized his early in/early out war strategy by wishing the "bell curve" to move to the left.
This sounds more like a waving of a magic wand moving that curve "leftward". And that the realities on the ground will comply with his wish that an early "surge" would "work" allowing him to withdraw sooner.
What is the probability that these 30,000 new troops are enough?
The whole report is here.
Saturday, December 05, 2009
Harvard on Hard Times
Maybe it is a good thing. Maybe USA has too many lawyers anyway. Read what Harvard Law is doing of late here.
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