By Douglas K. Smith, Member, Board of Directors, SeaChange Capital Partners This is the second part of a two-part post on social impact bonds. Please see Part 1 for a description of how they work as well as the benefits ascribed to them by supporters such as New York Times writer David Leonhardt and Harvard […]
Read more...t’s high time that reporters start lifting the veil to look at exactly who is behind the “research” put out by think tanks. Even drug company research, which many members of the public now know to view with some doubt, at least has an actual investigation of some sort underpinning it (the doubts about them usually involve study design and/or interpretation of results). Think tank end product should be taken with even more salt, since it too often is the intellectual equivalent of a CDO: taking junk ideas and dressing it up in a structure and a brand name so that most people will regard it as AAA-rated thinking.
A piece by Andrew Ross Sorkin at the New York Times is an all-too-rare and badly need hard look at the less than savory process of creating impressive-looking arguments in favor of special-interest serving policies.
Read more...This is astonishing. Jeffrey Sachs manages to speak candidly about what is going on about the Obama budget cuts and related politics on an MSM outlet. To put it mildly, this is a marked contrast with his prior stance on liberalization of financial markets and development. Hat tip Jesse via e-mail:
Read more...By Matt Stoller, the former Senior Policy Advisor for Rep. Alan Grayson. His Twitter feed is @matthewstoller
Via Wikileaks, we learned that the son of the former President of Egypt, Gamal Mubarak, had an interesting conversation in 2009 with Senator Joe Lieberman on the banking crisis. Gamal is a key figure in the forces buffeting Egypt, global forces of labor arbitrage, torture, and financial corruption. Gamal believed that the bailouts of the banks weren’t big enough – “you need to inject even more money into the system than you have”. Gamal, a former investment banker trained at Bank of America, helped craft Egypt’s industrial policy earlier in the decade.
Our purpose is to improve Egyptians’ living standards. We have a three-pronged plan to achieve this: favoring Egypt’s insertion into the global economy, reducing the state’s role in the economy, and giving the private sector greater freedom.
Deregulation, globalization, and privatization. This should be a familiar American recipe, commonly associated with former Treasury Secretary and Goldman Sachs chief Bob Rubin. That Rubinite rhetoric has been adopted by the children of strongmen shows the influence of Davos, the global annual conference of power brokers. Gamal, far more polished than his father, understood that the profit and power for his family lay in cooperating with foreign investors to squeeze labor as hard as possible.
Mubarak’s inner circle aligned themselves with international investors and set themselves against domestic business and military interests.
Read more...Prairie dogs kiss for an audience BBC
Why infertility will stop humans colonising space Independent
Egypt Crafts Stimulus Plan to Jump-Start ‘Sudden Stop’ Economy Bloomberg (hat tip reader bob)
The west can no longer claim to be an honest broker in the search for peace Guardian (hat tip reader May S)
Arab rulers confront a new world Financial Times
By Douglas K. Smith, Member, Board of Directors, SeaChange Capital Partners
Social impact bonds, a useful experiment underway in England, is gaining attention on this side of the pond, including from the Obama administration. We are glad to see this at SeaChange (a non-profit group seeking innovative ways to bring capital to the non-profit sector). What is deeply concerning, though, is how some elites are packaging and promoting social impact bonds as yet one more example of everything the market does is good while everything government does is bad. Moreover, these same elites betray a stunningly superficial grasp about how markets actually work.
Read more...The FCIC has made a great show of being transparent, but if you are going to make that your signature, you can’t engage in halfway measures. Lambert Strether, in an e-mail titled “A data conversion effort that shows FCIC’s “Resource Library” is farcically bad and obfuscatory” noted:
Obviously, any independent evaluation of the material is not at all a priority with these guys. Yes, they’ve made it easy enough to DISTRIBUTE, and no doubt there will be an iPhone app any day now. Yay. But as far as making it easy to EVALUATE, which takes data you can interchange and manipulate and search, everything they have done makes that harder. Every single thing.
More tooth gnashing from Lambert here and here.
Another mystery is why so many interviews are being withheld.
Read more...Don’t be blinded by the web. The world is actually stagnating Guardian (hat tip reader May S)
Johannesburg at risk from acid lakes Independent (hat tip reader May S)
Extra Testosterone Reduces Your Empathy, Researchers Find ScienceDaily
Surrogate mother fought legal battle after learning that would-be parents were violent Daily Mail (hat tip reader furzy mouse)
WikiLeaks Springs a Leak TruthDig (hat tip reader furzy mouse)
My mother is not so dumb. I’m visiting her today, and showed an economic analysis of the looting in Egypt by Gamal Mubarak and his cronies to her. The reaction:
That’s terrible. Those bloodsuckers. No wonder he didn’t want to leave. He wanted to make sure his money was safe first.
Turns out she was spot on. As I know by virtue of having read Nicholas Shaxson’s Treasure Islands (out in the UK, due to be published here in April) on tax havens, the world of “offshore” banking is vastly larger and more untouchable than most people realize. He describes in considerable detail about how buffers are built in so that funds become untraceable, and have further protections (as in if the authorities walk in to shut down a banking operation, the money can be moved through rapidly through several banking centers so it cannot be found, much the less seized).
And the de facto offshore banking protectorates of the US and the UK appear to be the state of the art. As George Monbiot observed:
Read more...The release of the first batch of FCIC interview reveals interesting finger-pointing among some of the major players. We’ve argued (and in ECONNED, provided a considerable amount of supporting analysis) that the subprime shorts drove the demand for bad mortgages. There is no other explanation for the explosion of demand for “spready,” meaning bad, mortgages that started in the third quarter of 2005. As Tom Adams and I describe in a recent post:
Read more...Signs of recklessness were more visible in 2004 and 2005, to the point were Sabeth Siddique of the Federal Reserve Board, who conducted a survey of mortgage loan quality in late 2005, found the results to be “very alarming”.
So why, with the trouble obvious in the 2005 time frame, did the market create even worse loans in late 2005 through the beginning of the meltdown, in mid 2007, even as demand for better mortgage loans was waning? It’s critical to recognize that this is an unheard of pattern. Normally, when interest rates rise (and the Fed had begun tightening), appetite for the weakest loans falls first; the highest quality credits continue to be sought by lenders, albeit on somewhat less favorable terms to the borrowers than before.
In other words: who wanted bad loans?…
Spending the Kitty on Pooches Wall Street Journal
Bizarre mammals call using quills BBC
Press release reveals journalists believe everything they see on the Internet PhysOrg. I will never link to PhysOrg again after reading this “story” (except maybe cute animal stories that have little informational value). First, the underlying research involved “students”, both of seventh graders, not professional journalists. Second, the sample size for each of only two studies was so small as to clearly be unreliable as far as making generalizations was concerned: one was 25, the other 53.
CO2, birth & death rates by country, simulated real-time Breathing Earth (hat tip reader furzy mouse)
Science Programs Hit Hard By Proposed Budget Cuts Slashdot
Read more...One of the reasons American management isn’t what it used to be is that most companies do not give a rat’s ass about employees. Yes, you’ll get the usual human resources blather about how “our employees are our most important asset”, but actions on this front speak vastly louder than words. In the 1970s and early 1980s, management gurus and the business press argued that one reason German and Japanese manufacturers were trouncing their American counterparts was that they had better employee relationships. But even though there is still a mini-industry dedicated to producing corporate “leaders”, US companies too often see employees as costs, and their objective is to get buy spending as little as possible on them, rather than treating them to the extent possible as allies in building a more successful, profitable venture.
An article in the “You’re the Boss,” a New York Times column, demonstrates how deeply these warped values have taken hold in American business. Now admittedly, this feature focuses on small businesses, and these enterprises are often on the knife edge of survival. At the same time, every now-big company was a small company once, and presumably a venue like the New York Times is trying to help these companies perform better and for those that have significant potential, to chart a path that increases their odds of achieving it.
So consider this discussion:
Read more...By James K. Galbraith, a Vice President of Americans for Democratic Action who teaches at the University of Texas at Austin. Cross posted from New Deal 2.0.
Economist James K. Galbraith goes behind the scenes at a Pete Peterson gathering of deficit hawks to see what they have to say.
The Fiscal Solutions Tour is the latest Peter G. Peterson Foundation effort to rouse the public against deficits and the national debt — and in particular (though they manage to avoid saying so) to win support for measures that would impose drastic cuts on Social Security and Medicare. It features Robert Bixby of the Concord Coalition, former Comptroller General David Walker and the veteran economist Alice Rivlin, whose recent distinctions include serving on the Bowles-Simpson commission. They came to Austin on February 9 and (partly because Rivlin is an old friend) I went.
Mr. Bixby began by describing the public debt as “the defining issue of our time.” It is, he said, a question of “how big a debt we can have and what can we afford?” He did not explain why this is so. He did not, for instance, attempt to compare the debt to the financial crisis, to joblessness or foreclosures, nor to energy or climate change. Oddly none of those issues were actually mentioned by anyone, all evening long.
Read more...Yes, the question in the headline is rhetorical. We know that great efforts have been made and are continuing to be made not to reveal certain aspects of the financial crisis, and the only rationale that makes an iota of sense is the information would embarrass certain people in power.
The latest object lesson is the failure of the FCIC to post the full recording of its 2009 interview with Bernanke. The rationale is that the interviews contain “legal or proprietary information”, so it is being withheld for five years. Are these people unable to use a calendar? The critical phase of the crisis was pretty much over as of end of 2008. Any sensitive customer or transaction position information from that period is now stale.
Read more...Animal intelligence: sheep are raising the baa Sydney Morning Herald (hat tip reader Crocodile Chuck). The video is great, but now I’m gonna feel even worse on those rare occasions when I eat lamb chops.
Aussie crocs ‘traumatised’ by cyclone PhysOrg
Mali: A Gift Economy Forbidden Knowledge (hat tip reader Dwight)
NY Fed: 2005 Bankruptcy Bill Led to Hundreds of Thousands of Unnecessary Foreclosures Dave Dayen, FireDogLake. A bit late to this, but worth noting.
The Great British Corporate Tax Giveaway Lee Sheppard, Forbes
