Ali’s blog

Mostly quant stuff with occasional digressions

Archive for March, 2008

Engdahl on food prices

Posted by alifinmath on March 31, 2008

In rense.com:

A deadly fungus, known as Ug99, which kills wheat, has likely spread to Pakistan from Africa according to reports. If true, that threatens the vital Asian Bread Basket including the Punjab region. The spread of the deadly virus, stem rust, against which an effective fungicide does not exist, comes as world grain stocks reach the lowest in four decades and government subsidized bio-ethanol production, especially in the USA, Brazil and EU are taking land out of food production at alarming rates. The deadly fungus is being used by Monsanto and the US Government to spread patented GMO seeds.

Ironically, the current bio-ethanol industry is being driven by US government subsidies and a scientifically false argument in the EU and USA that bio-ethanol is less harmful to the environment than petroleum fuels and can reduce CO2 emissions. The arguments have been demonstrated in every respect to be false. The huge expansion of global acreage now planted to produce bio-fuels is creating ecological problems and demanding use of far heavier pesticide spraying while use of bio-fuels in autos releases even deadlier emissions than imagined. The political effect, however, has been a catastrophic shift down in world grain stocks at the same time the EU and USA have enacted policies which drastically cut traditional emergency grain reserves. In short, it is a scenario pre-programmed for catastrophe, one which has been clear to policymakers in the EU and USA for several years. That can only suggest that such a dramatic crisis in global food supply is intentional.

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Job market 2009

Posted by alifinmath on March 31, 2008

A hilarious video on Youtube on job prospects in 2009. On second thoughts maybe best not to laugh: it might be a shade too close to what may well happen.

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Chess education in Idaho

Posted by alifinmath on March 30, 2008

Stumbled across this article in the NYT:

On Thursday, state officials will announce in Boise that the program will be extended in the fall to all second and third graders — making Idaho the first state to offer a statewide chess curriculum.

Idaho is using a curriculum called First Move, which was developed by America’s Foundation for Chess, a nonprofit, Seattle-based organization that promotes teaching chess in school. First Move is now taught to 25,000 students in 18 states, according to Wendi Fischer, the vice president of the foundation.

I’m a firm believer in chess being part of a school curriculum. The game is more accessible than an academic subject like mathematics, which not only requires years of effort before revealing its  aesthetic dimension but which can often degenerate into dull meaningless routine. And chess not only teaches individual responsibility for one’s decisions but rewards unwavering concentration with wins.

There used to be a foundation — the HB Foundation — here in the Twin Cities that used to help schools with chess sets and used to provide young chessplayers with college scholarships. Unfortunately the foundation organised a tournament in Minneapolis three years ago — with the aim of earning some income — that went awry in terms of player participation, and being unable to shoulder the losses folded soon afterwards.

In Estonia and Latvia I recall seeing parents taking their children to the chess club after school, where they’d be exposed to a couple of hours of instruction and play almost every day. With such a large pool of players and with such systematic instruction it’s inevitable that they’ll have a large pool of masters and grandmasters. Here on the other hand, if a youngster learns how the horsey moves (just kidding: the knight), his proud parents call him a chess prodigy. Even if an American youngster does become a strong master, making a living from the game is exceedingly difficult and fraught with uncertainty.

In the old communist days, a Soviet GM would earn about three times what an engineer or physician did (plus opportunities for foreign travel). But today things are just as tough there. I recall meeting and playing the Latvian master Vitolins, who used to help out at the Riga Chess Club, in 1995. But a couple of years later, the Latvian government cut his job and the modest stipend it paid him. He committed suicide shortly afterwards. I visited Riga again in 2004 — the chess club is gone.

There was a chess club in the Twin Cities — the Castle Chess Club — for about thirty years. They were first situated on top of a pizza joint at the intersection of University and Snelling. They moved later to Northeast Minneapolis. But they shut their doors over a year back. It now exists only in name: some players meet on designated days at the Bridge Centre.

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Air strikes in Iraq

Posted by alifinmath on March 28, 2008

On Fox (and umpteen other sites):

At least four were killed in the U.S. airstrike in Baghdad’s Sadr City neighborhood — a center for the Mahdi Army militia of anti-American cleric Muqtada al-Sadr. The U.S. military said the missile strike killed four militants, although Iraqi officials said the dead were civilians.

I suspect the four were civilians. The Americans make up their own convenient stories as they go along. Anyway, how would they know whether they were militants or civilians?

Ground forces called for the airstrike in Sadr City after coming under small-arms fire while clearing a main supply route before dawn, U.S. military spokesman Lt. Col. Steve Stover said.

More bunkum. I’m pretty confident Iraqi ground forces asked for no airstrikes. Iraqi forces are a proxy, a velvet glove for the US. When the fighting gets dirty, the US takes off the velvet glove.

“It’s going to take awhile, but it’s a necessary part of the development of a free society,” Bush said at a White House news conference with visiting Australian Prime Minister Kevin Rudd. At the same time, the president said the situation in Iraq remains “dangerous and fragile.”

Yet more baloney. Right from the start, the US has thwarted any real self-government and any real democratic impulses by the Iraqi people. The puppet government of Iraq is entirely an American creation, and a front for the United States. They’re a bunch of quislings.

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Jimmy Cayne joins the lumpenproletariat (just kidding)

Posted by alifinmath on March 28, 2008

In the FT:

Jimmy Cayne, a one-time travelling salesman who became a paper billionaire last year as chief executive of Bear Stearns, has sold his entire stake in the investment bank for a little more than $61m.

Bear shares hit an all-time high of $171.51 in January last year, making Mr Cayne’s stake worth nearly $1bn and placing him near the top of the list of Wall Street wealthiest chief executives.

Going down from $1bn to $61m is a big descent. At the higher level it means penury. He can no longer hold up his head in polite society. He has to think twice before chartering a jet. Some of the swankier 5th Avenue apartments in NYC are going for $20m; some of the posh mansions in London’s Belgravia and Mayfair are going for more. The Indian steel tycoon Mittal spent $60m on his daughter’s wedding. Don’t get me wrong: $61m is serious change; it’s just not real wealth anymore.

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Health care crisis

Posted by alifinmath on March 28, 2008

Well, we already know about this but I thought I’d paste excerpts from a good essay in Monthly Review:

Michael Moore’s film, Sicko, dramatically illustrated how problems in access to health care in the United States have escalated to the point of a crisis for all but the richest Americans. The problems include the fact that many citizens are uninsured, health care costs are increasing faster than inflation and wages, and more of those costs are being passed on from employers to employees. Many indices of health care effectiveness show that the United States fares very poorly in comparison to other developed capitalist countries. Almost all the other developed capitalist countries have universal health care. All their citizens are insured and their per capita costs are much lower.

Health care spending is currently 16 percent of the gross domestic product.11 It is projected to rise to 25 percent by 2030. In 2003, the United States spent $5,635 per person on health, more than twice the average within the Organisation for Economic Co-operation and Development (OECD), an association of developed capitalist countries.12 This was around ten times more than the lowest-spending countries within the OECD, Mexico and Turkey. These costs have doubled in the past seven years,13 and now the annual premium that a health insurer charges an employer for a health plan covering a family of four averages $12,106.

As for the benefits of this debt debacle, Americans get very little bang for their buck. Comparisons to other OECD countries are disastrous. The United States has one of the highest infant mortality rates in the OECD.22 If the U.S. rate were lowered, for example, to Canada’s, over 20,000 more babies would survive every year. U.S. life expectancy is twenty-second among the thirty OECD countries, forty-eighth among the top fifty countries in the world, tied with Denmark, where half as much is spent per capita and everyone is insured.

24 Much of the growth is due to higher drug costs. Brand-name drug prices in the United States rise over 6 percent a year.25 Most other OECD countries control spending by holding down drug prices. And the drug industry has for decades been the most profitable in this country. In addition, the administrative costs of health care in the United States are higher, because many OECD countries have government-administered health insurance while in the United States there are many private competing insurers. The profits of insurance companies and the relatively new entities called health care corporations have skyrocketed.

 The inequalities in U.S. health care exacerbate the already severe socioeconomic inequalities and injustices in the country….However, insurers and individuals spend vast sums on medications that are palliatives which assure high profits for pharmaceutical companies. These drugs, like cholesterol-lowering statins, often under-perform lifestyle changes. In the United States, over $250 billion is spent annually on drugs, realizing a 15.7 percent profit for the drug industry, as a percentage of its revenues.30 From the pharmaceuticals’ point of view, public health is the opposite of wealth. In Canada, such a degree of exploitation is against the law.

Capitalists who moan and groan about health care costs would find help in any universal plan. For years manufacturers like GM have spent more on health care than on steel, and retailers like Starbucks spend more money on health care than on coffee.42 Some capitalists, like Wilbur Ross, an investor in the steel and auto industries, realize that “Every country against which we compete has universal health care. That means we probably face a 15 percent cost disadvantage versus foreigners.”43 But in this age of interlocking directorates, manufacturers cannot just look out for their own narrow interests. For example, six of the eleven directors on GM’s board have or recently have had high positions in drug, insurance, or health care companies.44 The board protects those interests as well.

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Conning Americans out of their social security benefits

Posted by alifinmath on March 28, 2008

Again in the FT:

Many politicians are telling us that the resulting rise in Social Security “entitlement” payments will break the budget, so we have to cut benefits to retired people. But the politicians do not want to mention that the Social Security system has been compiling a huge surplus. Why? Because they have been using that surplus for years to hide the real size of the current federal budget deficit, allowing them to spend more and justify tax cuts for the wealthy.

Politicians understand that, with the Social Security Trust Fund surplus declining, they will no longer be able to borrow from them under the table while announcing fictitiously smaller deficits to justify continued expenditures and tax cuts. And they will have to generate funds from other sources of revenue to redeem the bonds after 2017. Rather than admit too much was borrowed recently, and must now be repaid, they want to reduce Social Security benefits. This puts much of the burden on the middle class, who created most of the surplus that has been used to hide the real size of the deficits.

Americans can’t trust their own government not to screw them blind. The US government robs from the poor to give to the rich (who have effectively hijacked the apparatus of the state). While this blatant robbery is going on, the rich-controlled mass media is busily churning out propaganda, disinformation, and red herrings around the clock. I’ve never seen this kind of banditry in any other Western country and it raises the interesting question of whether the USA today is anything more than an oversized banana republic. Certainly in terms of looting, embezzlement, corruption, and disparities between rich and poor it is.

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Chinese staying away from dollars

Posted by alifinmath on March 28, 2008

In the FT:

Chinese exporters shun flagging dollar

According to Alibaba.com, the online company that matches Chinese suppliers with international buyers, the vast majority of their almost 700,000 Chinese suppliers no longer use dollars to settle non-US transactions to minimise foreign exchange risk.

“They are moving to euros, pounds, Australian dollars or even quoting prices in renminbi,” David Wei, chief executive, told the Financial Times. Moreover, he added, prices quoted in dollars were now often valid for just seven days compared with the 30-60 days common previously.

The dollar’s decline is still an orderly retreat and not yet a rout, as happened with the Russian rouble in the early ’90s. I remember the rates at the currency exchanges in Warsaw in 1994, when I had to exchange some pounds for zlotys. The spread for major currencies was barely 1/2 of 1% (thus if 35,100 zlotys bought one pound, one could trade a pound for 34,900 zlotys). But while one Russian rouble bought two zlotys, it took eight zlotys to buy one rouble. This is the kind of spread one sometimes encounters for third-world currencies where the official rate and the black-market rate are at variance. For example the Nigerian naira was at parity with the pound in the mid ’80s — but since the Nigerian government wasn’t willing to buy nairas for pounds, the black market rate was between four and five nairas to one pound in the London currency exchange kiosks. This fate hasn’t yet hit the dollar but there is a growing reluctance to accept them and to hold on to them which doesn’t bode well for the USA. Ultimately, of course, all fiat money becomes worthless.

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Perkins: economic hitman

Posted by alifinmath on March 27, 2008

Perkins’ Confessions of an Economic Hitman came out four or five years ago. There were numerous copies available at my local B&N, but though the title intrigued me, the contents didn’t satisy me enough to purchase it. Two or three years ago, Perkins came to talk at the Har-Mar B&N. I was disappointed. The audience was the usual group of little old ladies and gents, vaguely liberal, who haven’t a clue as to how the world really runs, and who perhaps would rather not know. The ones who need to have their vague faith and hope in happy endings and the essential goodness of humanity affirmed. The ones who’ll probably be voting for whichever charlatan becomes the Democratic nominee this year. And Perkins was playing to this audience, speaking in terms they could understand, and ending his talk with an earnestly expressed conviction that if members of the audience all worked and strove together, they could change things. As with so much else coming from the “liberal left” (whatever that means in the US), I was troubled by the lack of a theoretical prism — both with regard to the speaker and to his nitwits of an audience. Theory is two-thirds of the battle. Theory provides the framework which directs actions, gives them meaning, focuses them on achievable targets, allows for meaningful plans. If there’s no theory of how a ruling class rules, how historically it came into being, what its instruments for control are, how it subjugates every other class, then how is it going to be countered except with wishy-washy feel-good assertions and hopes?

Last year Perkins came out with a second book, The Secret History of the American Empire, which I also don’t have. However there’s a good review at the Mayday blog, an excerpt of which I paste below:

Recent articles in the world press have shown that governments and even traditional corporate boards are being superseded by 6,000 trans-international financiers, mostly older white males, acting as an ‘uber’ ruling class for the whole world. These people are like the hyper imperialist ‘hedge’ funds of the corporatocracy, the ultimate jet-setting Davos star chamber. After painting a picture of a bloody years-long struggle for domination by the worlds’ corporations, Perkins expects us to think the people who hire ‘jackals’ will calmly lie down with the lambs after some meek pressure. Never does he mention as desirable unions, or strikes, or demonstrations, or land occupations, or People’s Parties, or even revolutions – any of the really powerful mechanisms the working class has to influence the world. He relegates them to secondary status, while the massive force of negative advertising, consumer boycotts, shareholder resolutions, on-line petitions, board room elections and street theatre work their magic. His one saving grace is that he supports communities organizing for their own needs.

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Nawaz Sharif

Posted by alifinmath on March 27, 2008

Also in the Guardian:

On Tuesday, senior coalition partner Nawaz Sharif gave the visiting Americans a public scolding for using Pakistan as a “killing field” and relying too much on Musharraf.

The body language between Negroponte and Sharif during their meeting on Tuesday spoke volumes: the Pakistani greeted the American with a starched handshake, and sat at a distance.

I never had the opportunity to meet Sharif. I’ve met some of his senior people — Sartaj Aziz (foreign minister) and Lt.Gen. Saeed Qadir (chair of the Privatisation Commission), but not Sharif himself (partly because I wasn’t in Pakistan long enough in 1994). Sharif — unlike Benazir — has never been comfortable with Westerners, and they are not comfortable with him. He’s too much a product of another culture, and not at home in the cultural and intellectual milieu of Europe and the USA. He has some feeling for Pakistan, but then on the other hand, he’s almost as corrupt as Benazir and her bagman hubby were. Indeed, his political career allowed him to make his own business group one of the most prominent in the country. Politics and business are even more intricately interwoven in Pakistan than they are in the US (I should know, as I’ve worked for some of the Pakistani outfits).

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