Photos of the day: World Water Day

It is not any painting here .... the river is polluted. The caption for the photo at the source:

A worker looks at a photographer from the door of a factory that manufactures screws and nuts, next to a polluted river inJiaxing, Zhejiang province, China, on March 15, 2012. China's continuing reliance on heavy industry meant it failed to meet its own targets for cleaning its air and water in 2011. (Reuters/Stringer)

Even more dramatic and terrifying is the following one, also from China:

So, how much more are you willing to pay for the cheap goods from China, in order to make sure that the precious water will be better managed?

Quote of the day, on the GOP presidential candidates

Compared with past commanders-in-chief, the motto of the current Republican candidates is simple: don’t know, don’t care.  

The "don't know, don't care" is a play, I presume, on that old joke, "what is the difference between ignorance and apathy?"

Anyway, that quote is from Daniel Drezner, who, in his own words is "a Republican in Name Only."

What an atrocious joke on the American and world population most of the current GOP candidates are.  Well, perhaps with the exception of John "no chance of winning anything" Huntsman.

Drezner again:

The Grand Old Party candidates’ current thinking on foreign affairs is a noxious mixture of cowardice, belligerence, ignorance — and, unfortunately, political savvy. 

Yep.

More inconvenient truths: this time from Ron Paul!

I would love to have Ralph Nader and Ron Paul as members of every possible committee (too bad Nader isn't in Congress) because, then from totally different ideological ends of the spectrum, both these old guys will keep needling the politicos with all kinds of inconvenient truths.  (Full disclosure: I voted for Nader in 2000 and 2008.  2004 is all foggy in my mind)

In the video blow (I can't recall how I ended up here) Paul points out the horrendous American foreign policy history

“A lot of people in this country have come to the conclusion that our policy overhaul has been inconsistent; that sometimes we support the bad guys and the bad guys become our enemies,” Paul told Secretary of State Hillary Clinton during a hearing of the House Committee on Foreign Affairs.
Rep. Paul pointed to America’s support for Osama bin Laden when he was fighting the Soviets in Afghanistan, its collaboration with Saddam Hussein against Iran in the 1980s, and its propping up the Shah in Iran for decades before that.
“But we keep supporting Algeria, Morocco, Yemen, all these dictators, and yet we pretend that as soon as, well, it looks like the dictator might fall, we're all for democracy and we're for freedom and we're against these dictators,” he said.

 Watch it because the video is far more effective than the mere text, and listen to Clinton's response:



But, here is the question: what percentage of the American electorate will be able to understand what Paul talks about, versus the percentage as convinced with the Iraqi links to the 9/11 attacks?

1979: start of a new era

Way back on January 31, 2008, the Register Guard published my op-ed--titled "1979 was the start of a new era", where I pointed out that pretty much everything that we are dealing with today as major global issues can be traced back to one single year: 1979.

Fast forward 18 months. One of the essays in the latest issue of Foreign Policy--a leading policy publication--is "1979: The Great Backlash"

Am excited that I was way ahead--by a year and a half, which seems more than a lifetime in this contemporary world :-)

Torture timeline

Foreign Policy has a chronological listing, with all kinds of hyperlinks, starting from September 11, 2001.

The US and the Great Recession: wins in the long run

Michael Lind has a number of wonderful, and debatable, observations in his essays in Foreign Policy. His conclusion is pretty neat:

Otto von Bismarck observed that God favors fools, drunkards, and the United
States of America. The U.S.A. has been a lucky country, and despite its present
suffering it is unlikely that America’s luck has run out. Relying on the import
of money, workers, and brains for more than three centuries, North America has
been a Ponzi scheme that works. The present crisis notwithstanding, it still
will.

Foreign Aid: to give or not to give?

A few weeks ago I blogged about the Q/A with Dambisa Moyo, which was in the NY Times magazine. In that interview Moyo had a neat argument:

Think about it this way — China has 1.3 billion people, only 300 million of whom live like us, if you will, with Western living standards. There are a billion Chinese who are living in substandard conditions. Do you know anybody who feels sorry for China? Nobody.
Forty years ago, China was poorer than many African countries. Yes, they have money today, but where did that money come from? They built that, they worked very hard to create a situation where they are not dependent on aid.

Here is Dambisa Moyo jousting with Stephen Colbert:

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Dambisa Moyo
comedycentral.com
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Is foreign aid screwing up African countries?

The NY Times Magazine has a short Q/A with Dambisa Moyo, whose comments are highly critical of aid to African countries, and the role of celebrities. It is a short one, and worth every minute of your time to read it. An excerpt here, where she compares African countries with China:

Think about it this way — China has 1.3 billion people, only 300 million of whom live like us, if you will, with Western living standards. There are a billion Chinese who are living in substandard conditions. Do you know anybody who feels sorry for China? Nobody.
Forty years ago, China was poorer than many African countries. Yes, they have money today, but where did that money come from? They built that, they worked very hard to create a situation where they are not dependent on aid.

Of course, there are lots of studies that are also critical of foreign aid. Including studies from the World Bank itself! Here is one:

Since the early 1980s, virtually every African country has received large amounts of aid aimed at stimulating policy reform. The results have varied enormously. Ghana and Uganda were successful reformers that grew rapidly and reduced poverty. Cote d'Ivoire and Ethiopia have shown significant reform in recent years, but it remains to be seen if this is sustained. In other countries policies changed little or even got worse. The paper synthesizes the findings from ten case studies that investigate whether, when, and how foreign aid has affected economic policy in Africa.

The main findings from the case studies are that:

• Policy formation is primarily driven by domestic political economy. Most major reforms have been preceded by economic and political crises.
• Large amounts of aid to countries with bad policy sustain those poor policies.
• In general donors have not discriminated effectively among different countries and different phases of the reform process. Donors tend to provide the same package of assistance everywhere and at all times.
• Aid played a significant and positive role in the two sustained reformers (Ghana, Uganda). It helped with ideas in the initial phase. Financial assistance grew as policy improved and increased the benefits of reform, helping sustain political support.
• The composition of aid is important. In the pre-reform period, technical assistance and policy dialogue are most supportive of reform. During periods of rapid reform, policy dialogue is important, as is finance. This is the phase in which conditional loans tend to be useful and effective. At a later stage of reform, conditionality is less useful, while finance remains important.
• In summary, aid in some cases has been effective in supporting policy reform, and by building on the lessons from these case studies assistance could be more systematically effective in this way.

The worst is yet to come?

So, Circuit City is officially liquidating.  Bloomberg reports that

 Circuit City Stores Inc., the bankrupt consumer-electronics retailer, hired four liquidators to sell all the remaining merchandise in 567 stores before it goes out of business, the company said today.

Circuit City signed an agreement with retail liquidators Great American Group WF LLC; Hudson Capital Partners LLC; SB Capital Group LLC; and Tiger Capital Group LLC, the company said.

The announcement comes a day after the company held an auction it billed in court papers as its last chance to survive bankruptcy as an intact, though smaller, chain.

“We are extremely disappointed by this outcome,” said James A. Marcum, acting chief executive officer, in a statement. “The company had been in continuous negotiations regarding a going-concern transaction. Regrettably for the more than 30,000 employees of Circuit City and our loyal customers, we were unable to reach an agreement with our creditors and lenders.”

I shudder to think that this blood-letting will continue on throughout 2009, and maybe even into 2010.  

The latest issue of Foreign Policy has commentaries from five "doomsayers" whose bottom line is that it ain't over yet.  Looks like they want us to understand that this is a lull before the second and final storm blows through and levels out some of the structures made unsteady the first time around.

Excerpts from a couple:

Dean Baker:

once the financial situation begins to return to normal (which might not be in 2009), investors will be unhappy with the extremely low returns available from dollar assets. Their exodus will cause the dollar to resume the fall it began in 2002, but this time, its decline might be far more rapid. Other countries, most notably China, will be much less dependent on the U.S. market for their exports and will have less interest in propping up the dollar.

For Americans, the effect of a sharp decline in the dollar will be considerably higher import prices and a reduced standard of living. If the U.S. Federal Reserve becomes concerned about the inflation resulting from higher import prices, it might raise interest rates, which could lead to another severe hit to the economy.

Nouriel "Dr. Doom" Roubini:

The global financial pandemic that I and others had warned about is now upon us. But we are still only in the early stages of this crisis. My predictions for the coming year, unfortunately, are even more dire: The bubbles, and there were many, have only begun to burst.

The prevailing conventional wisdom holds that prices of many risky financial assets have fallen so much that we are at the bottom. Although it’s true that these assets have fallen sharply from their peaks of late 2007, they will likely fall further still. In the next few months, the macroeconomic news in the United States and around the world will be much worse than most expect. Corporate earnings reports will shock any equity analysts who are still deluding themselves that the economic contraction will be mild and short.

Bad news ahead for India?

The Economist says:
Sharmila Wheelan, an economist at CLSA, a brokerage firm, forecasts that India’s current-account deficit will rise to almost 4% of GDP in the current fiscal year, and to 5.5% next year. Not only is the trade deficit soaring, largely as a result of higher oil prices; the overseas earnings of Indian IT services companies (two-fifths of which come from the financial sector) are likely to shrink this year.

The nature of the capital inflows financing a deficit also matters. Foreign direct investment (FDI) is less volatile than speculative capital inflows. If we assume that net FDI continues at last year’s pace, then it would more than finance the expected current-account deficits in Brazil and Mexico this year. In contrast, net FDI might finance less than one-third of India’s deficit and only one-sixth of South Africa’s, implying that their currencies are more at risk. The rupee has fallen by almost 10% against the dollar since late last year. Ms Wheelan forecasts that it will drop by another 9% by March 2009.

While in Foreign Policy, Yasheng Huang writes that India is the "Next Asian Miracle."

The only way both can be correct? The Economist is looking short-term, while Huang is looking at a much longer time horizon.

I think that Huang is overselling India. In fact, a perfect storm is brewing in India: elections are due in a few months; the ruling coalition is facing problems over the treaty with the US; inflation has kicked up to double-digits; and Pakistan seems to be getting more unstable. If India were a stock, I would sell now when it is high.