Category — Current Events

In their Questions of the Week column, Foreign Policy claims that Britain’s newly elected David Cameron and Nick Clegg are the Doublemint Twins. Me and Jørund are offended. We are the real Doublemint Twins. There is no way Nick and Dave are anywhere near as suave as us, nor as good at making nice sketches of sandy blond passersby.

The Norwegian Government Pension Fund, managed by Norwegian Bank Investment Management (NBIM) sold off more than half of it’s 133 billion kroner position in Greek, Portugese, and Spanish government bonds during 2009. The funds chief executive, Yngve Slyngstad, explained that while Eurozone government bonds in 2008 were priced as if they gave risk-free returns, “we said they were more like return-free risks”. Well done, Nassim Taleb would have been proud – there are arguably no such things as risk-free returns anyway (at least not in Southern Europe).

Yngve Slyngstad, not yet fifty years old, started his career as a junior researcher at Norges Bank at the age of 31 after completing a whopping four Master’s degrees in Law (University of Oslo), Economics (UC Santa Barbara), Business Administration (NHH) and Political Science (University of Paris, Sorbonne), spending years backpacking around Asia, and living by himself in the wild and weather-torn Northern Norway reading Wittgenstein. Needless to say, we here at Evolution-Revolution think this is a pretty awesome guy.

Back in January my dear co-author Jørund wrote a short piece on  the future prospects of the Norwegian krone, whereby Evolution-Revolution agreed with Credit Suisse’s prediction that the krone was on its way up (while, admittedly, making ourselves guilty of blogger-journalism-commentator hedging dicussed in this post by the eminent Baruch at Ultimi Barbarorum). Since then, the Norwegian Krone has, indeed, strengthened a bit vis-a-vis both Euro, Pound, and Dollar (although as Nassim Taleb would be quick to point out, this might have been completely random). Nevertheless, the krone still has a way up to go, even more so than it did in January.

In particular, three factors underlie this prognosis: [Read more →]

The United States is not the only place where offshore drilling has been on the political agenda during the last years. In Norway, where the offshore oil and gas industry is a significant part of the economy, making Norway the third largest oil exporter in the world, there has been debate about opening up scenic coastal areas of Lofoten and Vesterålen for offshore drilling. The Northern Norwegian coastal archipelagos feature amazingly scenic nature complete with fjords and mountains, the world’s largest population of cod along with a thriving fishing industry, and whether possible drilling in the area should be allowed to commence has already been the subject of intense debate.

Still, Norway’s Labor Party led coalition government is arguably leaning towards opening up the area for oil and gas investments, in spite of vocal protests from its Socialist Left Party members. It has certainly been  [Read more →]

During the year and a half since Barack Obama got elected president of the United States the country has been awash in hysteric conservative paranoia. One of the last incarnations of this amongst the conservative grassroots movements are so-called “open-carry” demonstrations. That is, demonstrations where people show up carrying rifles and loaded handguns in order to show how committed they are to the United States Constitution and American democracy.

Yesterday, one of these these rallies, [Read more →]

The following were (seriously) the top three headlines last night on the RSS feed I get from Dagens Næringsliv, Norway’s biggest business and economics newspaper:

LONG, LONG LINE OF GOOD WINES

(Lang, lang rekke med gode viner)

-

APPEALING SYRAH-WINES

(Tiltrekkende syrah-viner)

-

ABDUCTED FINANCIAL ADVISOR

(Bortførte finansrådgiver)

That last link is foreign news, of course, about a something that happened in Germany. So far, it appears we are still living the good life.

By Stephan Andreas Jensen

A saying goes that “acceptable unemployment is defined as the level at which the Government economist writing the report still has a job.” Certainly, it can be argued that in most countries, economists tend to be quite insulated from the consequences of the policies they propose. Apparently, this is not the case in North Korea. After a major currency reform last year failed completely, the high-level economist Pak Nam Gi, former finance director for the North Korean “Worker’s Party”, was convicted of treason for “ruining the national economy as the son of a big landlord who infiltrated the ranks of revolutionaries” and executed by firing squad.

The policy environment leading the execution of the North Korean economist, who was most likely a scapegoat, is hardly one that should be emulated. However, I can’t help but think about how the U.S. or Europe might have looked in the wake of the financial crisis if a more North Korean approach had been taken during the witch-hunt that followed it (and is still ongoing).  Could you charge Richard Fuld with treason for over-leveraging, or Eugene Fama for trying to make people think that capital markets are efficient?. Certainly one would expect the emergence of a slightly more risk-averse financial sector.

For a more realistic discussion about discretionary power being given to regulators, check out The Epicurean Dealmaker’s recent post about fire alarms, strong men, and big axes.

Thanks goes to loyal Evolution-Revolution reader and good friend Jan Petter Janssen, creator of Developing Trader, for the tip about Pak Nam Gi.

By Stephan Andreas Jensen

Picture from: http://pressthat.wordpress.com/2007/10/19/reinterpreting-islam/

Most of the links contained in this article point to Norwegian-language websites – as such I hope those of you who do not speak Norwegian and are interested in their contents make good use of Google translate. All the quotes below are translated from the original Norwegian by myself. If any Norwegians amongst you find any wrong or questionable translations, please email me and I will do my best to correct them.

During the last few weeks the homeland of Evolution-Revolution’s authors has been the stage of a fiery public debate after Dagbladet, one of the biggest newspapers in Norway, printed a picture on their front page of the Islamic Prophet Mohammed as a pig scribbling in the Koran with his trotters. However, despite its unpleasantness, the still ongoing furore following the publication has arguably been very valuable in that we have learned a whole lot about the state of immigration, integration, and Islam in Norway.

The picture in question was linked to in a post on the the Norwegian Police Security Service (PST’s) Facebook-page discussion board, amongst other posts containing highly racist remarks. After recieving a tip about it, Dagbladet wrote an article presumably meant to criticize PST for allowing a considerable amount of hateful and racist statements to be posted on their discussion board with apparent impunity. In doing so, however, they put the  - to Muslims – extremely offensive caricature in question on the front page of their print edition.

Predictably, there were heated reactions from many of Norway’s approximately 140 000 Muslims. In particular, many saw [Read more →]

The Grinch Who Stole Twelfth Grade

So argues Republican state Senator Chris Buttars in the Utah State Assembly, who recently proposed to drop the last year of high school altogether in an attempt to balance the state of Utah’s bleeding budget. Of course, an advantage of doing this from state Sen. Buttars point of view would be less time to teach students Biology – the senator has previously sponsored a (failed) bill to change the curricula of the science subject so as to add in “Divine Design” as an alternative to evolution. Last year, Senator Buttars also stated that radical homosexuals are “probably the greatest threat to America going down I know of.” We here at Evolution-Revolution think deteriorating education might be a better guess.

By Stephan Andreas Jensen

The Fall of Icarus by Rubens 1633

Intuitively, large foreign account reserves should be a cushion against runs on the local currency especially for countries with high foreign debt levels or lots of foreign investments that at some point need to be repatriated. If you don’t have enough foreign currency to repay, crisis will surely follow as we have seen during the many Latin-American or Asian balance of payment crises. As such, China’s enormous reserves of about 5-6 percent of global GDP should be reassuring, but as Michael Pettis explains the risks that threaten large developing countries are quite different from those smaller countries can experience.

“The risks that China faces today (and the US in the late 1920s and Japan in the late 1980s) is of excessive domestic liquidity having fueled asset and capacity bubbles, the latter requiring the uninterrupted ability of foreign countries to absorb via large and growing trade deficits. These risks include an explosion in domestic government debt directly and contingently through the banking system.”

Quite similar to what countries rich in natural resources often experience, where large inflows of foreign currency and current account surpluses cause bubbles to arise. And importantly, as foreign reserves cannot be used to solve the problems the solution lies domestically through higher interest rates, less lending, stronger currency and consequentially a less competitive export industry.

We all know what happened to the US and Japan, hopefully China will manage better.

Read the whole post over at China Financial Markets here

-Jørund