Category — United States

The opening session today in the ongoing OECD Forum 2010 was on the future of capitalism, where economic historian Anatole Kaletsky argued that “we’re entering a new period of pragmatism, when ideology will give way to a more “common sense” approach.” Arguably, this is not such a radical notion; the financial crisis has shown in a dramatic way that there have been some serious cracks in what has commonly been accepted as “good” economic policy. It is easy to blame greed and carelessness in the financial sector, but that hardly goes to the heart of the problem. At the end of the day, even if the greed and carelessness of a few “evil bankers” really is to blame, policy has to change if the economic structures have been conducive to making it cause despair for millions of people.

Aside from highlighting dysfunctional economic structures and the need for reform, a very immediate consequence of the crisis is that Governments have been [Read more →]

In the still ongoing political smear campaign against Goldman Sachs conducted by the Senate Subcommittee on Investigations, the latter has been particularly enraged by Goldman Sachs’ supposed “bet against home owners”. That is, because Goldman Sachs was net short exposure to mortgage-related securities, policy-makers have been arguing that the bank was contributing to pushing prices down, and in an evil way benefiting from the ruin of hard-working regular Americans.

Now, first of all, I am unsure about whether Goldman’s supposed “big short” really had a significant impact on housing prices. Arguably, the collapse of the U.S. housing market in 2007-2008 was a necessary consequence of unsustainably rapid price increases brought about by horribly easy credit in the years before, and would have been just as painful for regular hard-working Americans regardless of whether Goldman had a net short position or not. One could perhaps even argue that the crash would have been worse if Goldman had not been as hedged as they were.

Above: Charles Ponzi, the model banker, according to the Senate Subcommittee on Investigations

Nevertheless, it is interesting for the sake of argument to assume that Goldman’s supposed “big short” did in fact push down the price of property, which seems [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 →]

As a part of its 18-month long inquiry into the causes of the financial crisis, Senate Homeland Security and Governmental Affairs Investigations Subcommittee on Tuesday summoned Lloyd Blainkfein and several other senior Goldman executives to answer for their role in causing the financial crisis.

According to the subcommittee, it has [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 →]

Above: “I think this is a very good death”, Lord Katsumoto tells a perplexed Tom Cruise, soon to become The Last Samurai

Like Custer at Little Bighorn, Lehman Brothers bravely removed the possibility of surviving by means of a tactical retreat in case they were befallen by a great host of hostile Indians by making use of the now infamous repo 105 contracts. Andrew Clavell, author of Financial Crookery, posted an interesting article on how and why they work here. Especially recommended for those of our readers who aren’t working with or haven’t studied a lot of finance or derivatives.

Above: Microsoft’s Entertainment and Devices Division after one of Steve Ballmer’s “angry” days.

The Wall Street Journal reports that Microsoft management is cracking down on the use of iPhones amongst company employees. In a recent meeting executives Andy Lees (who is in charge of mobile-phone software development) and Robbie Bach (President of Entertainment and Devices Division, responsible for a.o. the Xbox) were chastised by CEO Steve Ballmer when arguing that [Read more →]

Learning by analogy:

sometimes supposed solutions make the original problem worse. In whale-removal as well as in economics.

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.

Rescuing a virgin in dire straits

The development of Norway’s soverign wealth fund, the Government Pension Fund (GPF), has always been interesting. GPF will this year attend 2000 meetings with American companies, in which they own up to 5 percent, urging them to separate the role of CEO and Chairman. They hope to make the governance structure more transparent and independent. Governance structure in many American corporations is arguably quite old fashioned and this should be a welcome nudge in the right direction. It’s hard to argue this to be a bad thing and it could quite possibly increase returns for Norway in the long run. Even a marginal increase would be significant as the stated investment horizion of the fund is infinite, that is until the collapse of the universe or the world financial system, whichever should come first.