Photo Blog of the Day- Island Hopper's Diary

via Island Hopper's Diary

Income of an escort in Singapore

If you have youth, glamourous looks and finesse, we want you. Join us in entertaining our world wide clientele. Do not hesitate to contact us immediately. Selected applicants can expect to earn between US$10K to US$15K per month

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Not bad, given that 'the average monthly earnings in Singapore in the first quarter of 2008 is $4,316'

A fisherman turned banker, now back to Fishing

Lean and hungry-looking, wearing genuine rather than designer stubble, Alfsson still looks more like a trawler captain than a financier. He went to sea at 16, and, in the off-season, to school to study fishing. He was made captain of an Icelandic fishing trawler at the shockingly young age of 23 and was regarded, I learned from other men, as something of a fishing prodigy—which is to say he had a gift for catching his quota of cod and haddock in the least amount of time. And yet, in January 2005, at 30, he up and quit fishing to join the currency-trading department of Landsbanki. He speculated in the financial markets for nearly two years, until the great bloodbath of October 2008, when he was sacked, along with every other Icelander who called himself a “trader.” His job, he says, was to sell people, mainly his fellow fishermen, on what he took to be a can’t-miss speculation: borrow yen at 3 percent, use them to buy Icelandic kronur, and then invest those kronur at 16 percent. “I think it is easier to take someone in the fishing industry and teach him about currency trading,” he says, “than to take someone from the banking industry and teach them how to fish.”

He then explained why fishing wasn’t as simple as I thought. It’s risky, for a start, especially as practiced by the Icelandic male. “You don’t want to have some sissy boys on your crew,” he says, especially as Icelandic captains are famously manic in their fishing styles. “I had a crew of Russians once,” he says, “and it wasn’t that they were lazy, but the Russians are always at the same pace.” When a storm struck, the Russians would stop fishing, because it was too dangerous. “The Icelanders would fish in all conditions,” says Stefan, “fish until it is impossible to fish. They like to take the risks. If you go overboard, the probabilities are not in your favor. I’m 33, and I already have two friends who have died at sea.”

It took years of training for him to become a captain, and even then it happened only by a stroke of luck. When he was 23 and a first mate, the captain of his fishing boat up and quit. The boat owner went looking for a replacement and found an older fellow, retired, who was something of an Icelandic fishing legend, the wonderfully named Snorri Snorrasson. “I took two trips with this guy,” Stefan says. “I have never in my life slept so little, because I was so eager to learn. I slept two or three hours a night because I was sitting beside him, talking to him. I gave him all the respect in the world—it’s difficult to describe all he taught me. The reach of the trawler. The most efficient angle of the net. How do you act on the sea. If you have a bad day, what do you do? If you’re fishing at this depth, what do you do? If it’s not working, do you move in depth or space? In the end it’s just so much feel. In this time I learned infinitely more than I learned in school. Because how do you learn to fish in school?”

This marvelous training was as fresh in his mind as if he’d received it yesterday, and the thought of it makes his eyes mist.

“You spent seven years learning every little nuance of the fishing trade before you were granted the gift of learning from this great captain?” I ask.

“Yes.”

“And even then you had to sit at the feet of this great master for many months before you felt as if you knew what you were doing?”

“Yes.”

“Then why did you think you could become a banker and speculate in financial markets, without a day of training?”

“That’s a very good question,” he says. He thinks for a minute. “For the first time this evening I lack a word.” As I often think I know exactly what I am doing even when I don’t, I find myself oddly sympathetic.

“What, exactly, was your job?” I ask, to let him off the hook, catch and release being the current humane policy in Iceland.

“I started as a … “—now he begins to laugh—“an adviser to companies on currency risk hedging. But given my aggressive nature I went more and more into plain speculative trading.” Many of his clients were other fishermen, and fishing companies, and they, like him, had learned that if you don’t take risks you don’t catch the fish. “The clients were only interested in ‘hedging’ if it meant making money,” he says.

-Wall Street on the Tundra

A unique way to catch Tuna

Catching tuna Maldivian style

Economic Gangsters from Paradise

The lavish lifestyle of the former head of the tiny island nation of Maldives;

Gold Plated Toilets


Over 8 million dollars!


Private island retreat with a cricket pitch


The Palace, cost unknown, staff 300

Singapore debate legalising organ trading

Assorted Olympics

China 2008 olympic medal tally by population

Olympics at Sports-Reference.com

The Glory of Just Showing Up

Latest IMF Survey

IMF Survey - July 2008

Commodity Price Surge Impact
Impact on African Economies
Factors Behind Oil Price Surge
Jeddah Meeting on Oil
Policy Response to Price Surge
Haiti Interview
Norway’s Sovereign Fund
Mexico: Achieving Full Potential
Switzerland’s Monetary Policy
Mauritius: New Growth Miracle?

Mauritius Economic Update

Recently from the Fund;

Mauritius: 2008 Article IV Consultation-Staff Report

Mauritius: Selected Issues

I'm waiting to see Fazeer's comments on the IMF's review.

Econ Talks

India: The Emerging Giant
Featuring the author Arvind Panagariya, Jagdish Bhagwati Professor of Indian Political Economy, Columbia University with comments from Swaminathan Aiyar, Research Fellow, Cato Institute.

Botswana and Mauritius: African Success Stories

Memo to Self- Books to Read

The Practice of Economic Management: A Caribbean Perspective
by Courtney Blackman

African Development: Making Sense of the Issues and Actors
by Todd J. Moss

Singapore's Success : Engineering Economic Growth
by Henri Ghesquiere

Rents, Rent-seeking and Economic Development: Theory and Evidence in Asia
By Mushtaq H Khan and Jomo Kwame Sundaram

Flat World, Big Gaps: Economic Liberalization, Globalization and Inequality
by Jomo K.S. , Jacques Baudot

Guess the following oil producing country

The economy contracted during the first half of 2007. This was driven by a drop in oil production following a strong outturn in 2006, reflecting cutbacks to optimize oil field utilization as well as ongoing facilities maintenance. The government and private nonenergy sector, on the other hand, provided a positive impetus to growth benefiting from energy-related income spillovers.

Inflation is subdued and credit growth has only recently picked up. Inflation remains low at 0.1 percent (year-on-year) through the first nine months of 2007, partly due to price controls and declining prices on clothing and recreation. Credit growth rose by around 5 percent in the first half of 2007 following a contraction in 2006, reflecting base effects and more broad-based credit expansion. Although nonperforming loans (NPLs) in the banking sector remain high, these mostly relate to credit losses incurred in the late 1990s following financial problems in the corporate sector; provisioning appears broadly adequate and the generation of new NPLs is low. Moreover, local banks' capital adequacy ratios remain high at close to 20 percent.

High oil and gas prices continue to drive large fiscal and current account surpluses. As in the past, energy-related revenue windfalls are being largely saved and invested abroad. The primary fiscal surplus reached 21½ percent of GDP in FY2006/07 (April-March) as oil and gas revenues remained very high. The current account surplus reached 56 percent of GDP in 2006 for the most part reflecting high nominal energy exports.

Growth will remain weak in the near term, but recover over the medium-term. Output is projected to slow to around ½ percent in 2007 and decline fractionally in 2008 due to extensive oil sector facilities upgrading as well as the maturation of oil fields; nonenergy private growth is expected to remain solid. The main risk to the near-term outlook is a global slowdown leading to lower energy prices. Over the medium term, growth is expected to recover and reach around 3 percent as oil production returns to current levels, with new and upgraded facilities coming on stream, and government capital spending is stepped up with improved implementation. There are upside risks to this outlook related to possible new hydrocarbon discoveries.

Nauru's Australian national sport

Aussie Rules- the national sport of the smallest country in the world

Fire on Ice

Iceland’s current woes teach a useful lesson about the interconnectedness of global markets: trouble can come from anywhere. Homeowners default on mortgages in San Diego, and suddenly people in Reykjavík are paying more for gasoline and wondering if their bank deposits are safe. That doesn’t mean that Iceland is an innocent victim. The country went overboard with spending and borrowing—between 2000 and 2007, domestic credit in the Icelandic banking system more than quadrupled as a share of G.D.P. And relying on foreign money to fuel that kind of frenzy is foolish, since it puts you at the mercy of fickle foreign investors. But Icelanders can be forgiven for wondering if they’ve really been any more reckless than many other countries—most obviously the U.S., which relies heavily on foreign capital to fund home buying and profligate consumption, and whose banking system is rife with reckless lending.

And that’s the second lesson of Iceland’s plight: even in a flat world, there are different rules for different players. In order to prop up the króna, and keep foreign capital from fleeing, Iceland’s central bank has had to raise interest rates to an astounding fifteen per cent, a move that will slow the economy to a crawl. By contrast, the dollar, while weak, has evaded the króna’s precipitous fall; the Federal Reserve, far from raising interest rates, has slashed them; and Congress is borrowing a hundred and fifty-two billion dollars to hand out tax rebates. Iceland’s government has been forced to inflict pain; the U.S. is doing everything possible to avoid it. If Iceland were to attempt to emulate America’s approach, its currency would be demolished, and foreign investors would almost certainly head for the exits. The U.S., by contrast, remains the beneficiary of the world’s generosity—no matter how bad our financial situation looks, countries like China and Japan keep pouring hundreds of billions of dollars into U.S. securities. They’re doing this not out of kindness, of course, but because the U.S. is a colossal market and they need us to keep buying stuff. The world can’t afford to have the U.S. fail, and so we are able to get away with behavior that would wreck smaller countries. Great for us, but when we look at Iceland’s predicament we should say that there but for the grace of China go we.

-Iceland’s Deep Freeze

Doing Business in Small Islands

Interesting post from World Bank's Doing Business blog;

In Mauritius, it takes only 7 days. Mauritius, the best performing SIDS economy, ranks 27th on the ease of doing business, while Guinea Bissau is at 176 out of 178 countries.

The government that took office in July 2005 embarked on a bold economic reform program aimed at moving Mauritius from reliance on trade preferences to global competitiveness. Over the last two years Mauritius has reformed in 7 of the 10 areas Doing Business measures—one of the most dedicated government reform efforts that the project has seen worldwide. Out of 18 reforms affecting business regulations in SIDS introduced between April 2006 and June 2007, 6 were implemented by Mauritius.

Reforms pays off. Over the past two years, Mauritius's economy has enjoyed a steady increase in the annual growth rate – from 2.2% in 2005 to 5.4% in 2007. This is consistent with Doing Business research finding - a hypothetical improvement on all aspects of the Doing Business indicators to reach the level of the top quartile of countries is associated with an estimated 1.4 to 2.2 percentage points in annual economic growth. This is after controlling for other factors, such as income, government expenditure, investment, education, inflation, conflict, and geographic regions.

Reforms are also associated with faster job creation. In Mauritius, overall the unemployment rate dropped by 1.1% from 9.6% in 2005 to 8.5% in 2007. Doing Business research also shows that women and young workers benefit the most from reforms. Mauritius is no exception. Female unemployment was reduced by 2% from 16.4% in 2005 to 14.4% in 2007.

The Darling of IFI's- Bhutan

Bhutan hopes to cash in on hydro-electric power


Fed-Up Money Treks to Bhutan to Grasp Gross National Happiness ;

Tshering Jamtsho uncoils the burgundy robe from around his chin and smiles as the first light of a Himalayan dawn streams through the casement chiseled into a stone-cold cell at the Pangrizampa Monastery.

Twigs crunch outside, a voice calls out from the dark and an apprentice enters the chamber gripping the ``Mopai.'' The ancient 250-page goatskin volume provides human calculators, called ``tsips,'' with intricate mathematical and astronomical formulas to compute a client's fate and fortune before birth, during life and in the afterlife.

``I am one of the 40 calculators,'' Jamtsho says over cups of the pungent yak-butter tea his predecessors began serving clients here in the Kingdom of Bhutan more than 1,500 years ago.

``What is your investment question?'' the 25-year-old financial analyst and Buddhist lama adds. ``Large numbers of Western businessmen come for our guidance.''

Last year, Jamtsho says, some 300 American and European bankers and businessmen made the grueling journey to Bhutan -- a country smaller than Switzerland, with 180 broadband subscribers, five elevators and less than 700,000 inhabitants -- to have the calculators of Pangrizampa use the hand-scripted Mopai as a financial forecasting tool.

``There's nothing extraordinary about this,'' says Tashi Yezer. He should know. Yezer is the chief executive officer of the Royal Securities Exchange of Bhutan Ltd., the country's stock market, where the trading bell only rings on Tuesdays and Fridays at 11 a.m. ``The exchange closes when our four stock brokers are done,'' Yezer says....

Bhutan now harvests only 2,000 megawatts, with plans to export 5,000 megawatts by 2020 and reach a capacity of 10,000 megawatts by 2028. ``We could have full capacity in a matter of years, if we followed the accepted market path,'' Dorji says, sitting beneath an embroidered tapestry of Buddha in the country's capital city, Thimphu, about 10 miles from the monastery...

``I intend to ultimately export Bhutanese bankers to New York and London and have them carry the philosophy of GNH as the model for corporate governance,'' Tshering says. ``The last thing I want is Western bankers coming here to modernize us with anything other than technology.''

Over at the stock exchange next door, the ground floor of a traditional Bhutanese timber building decorated with lotus flowers, clouds and phalluses to ward off hobgoblins, trading in the 16 listed companies has stopped and the combined market value holds firm at $25 million.

``We take a holistic approach to capital markets that's missing in the West,'' Yezer says, focusing on the nearby mandala, a geometric pattern that represents the universe. ``Buddhism isn't a religion or an excuse for how we do business, but it is based around a basic economic fact: What goes around, comes around. We call it karma.''

Climate Change- a human rights or a foreign aid problem?

The island nation of the Maldives said it made a big step forward Friday toward protecting its very existence, which it fears is threatened by global warming.

The Indian Ocean archipelago, which says it risks loosing its entire territory to rising sea levels, leaving its 360,000 inhabitants with no place to go, drummed up enough support in a key U.N. body to request a study on the impact of climate change on human rights.

"We feel it is very important that the Human Rights Council start addressing the issue of climate change," said the Maldives Foreign Minister Abdulla Shahid.

"If we look at the consequences of climate change, it is the individual human rights of every person on the planet which is going to be violated, including the right to life," he told The Associated Press by telephone from the Maldives.

Some countries were unhappy to link climate change to human rights. Russia said the United Nations already has enough agencies tackling the problem.

But Shahid said the Maldives wants the council's work to be complementary to other U.N. organizations dealing with climate change, such as the Nobel Prize-winning U.N. Intergovernmental Panel on Climate Change.

The 47-nation council said in the document adopted by consensus that it is "concerned that climate change poses an immediate and far-reaching threat to people and communities around the world and has implications for the full enjoyment of human rights."

The Maldives, which consist of 1,200 islands, were joined by other small island countries such as the Fiji Islands and Tuvalu in offering the resolution. They have said they risk disappearing altogether if global warming continues unabated and that the world would see hundreds of thousands of stateless people who have nowhere to go, no government to protect them or to deliver basic services.

The 3,000 inhabitants of Papua New Guinea's Carteret Islands, in the far western Pacific, are already preparing to be among the world's first "climate refugees."

As seas expand from warming and from the runoff of melting land ice, higher and higher tides are eating away at tiny places like the Carterets, a sandy atoll of a half-dozen islands. Its people are getting ready to abandon the islands over the next several years, resettling on designated land on nearby Bougainville island.

Shahid said the inhabitants of the Maldives "don't intend to go anywhere."

If significant measures are taken now, the tiny island nation can be saved, he said. "It's not too late, but time is ticking."

-Maldives gets UN top human rights body to study climate change

Related;
What Development Economists Need to Know About Climate Change ;

Schelling started his presentation by characterizing the climate change issue as a bargaining between developed countries, leaving the developing countries with a limited role. Yet it is the developing countries that are truly vulnerable to the effects of climate change, he said. This is largely because in developing countries so many people live on agriculture. Additionally, Schelling explained, this is where the bulk of the population resides, and will increasingly reside in the next few decades. Other reasons for developing countries’ vulnerability that Schelling cited included weaker health care systems and less access to crucial nutrients, clean water, and sewage systems. Additionally, he pointed out that as climates become warmer, vectors that carry pathogens (mosquitoes, flies) become more numerous and also more virulent. These will all be key factors in offsetting the effects of climate change, Schelling said, and as such the best defense of developing countries against climate change will be their own development. This will allow them to become less dependent on agriculture and become sufficiently wealthy to afford a decent public health infra-structure.

Another moronic move by the U.N. Human Rights Council

Would Gross National Happiness increase under democracy?

The Himalayan kingdom of Bhutan ended a century of absolute monarchy Monday by electing a staunch royalist as its first prime minister.

The Bhutan Peace and Prosperity Party took 44 of the 47 seats in the new Parliament, Election Commissioner Kunzang Wangdi said. The People's Democratic Party won the remaining three seats. Turnout was slightly more than 79% of the 320,000 registered voters. The results will not be official until Tuesday morning.

Jigmi Kinley, who twice served as premier under royal rule, is expected to be named prime minister. Mr. Kinley's Bhutan Peace and Prosperity Party was considered the more royalist of the two very royalist political parties in the elections.

The election came with a twist: It was the king, not the people, who pressed for democracy. The democracy process in Bhutan was started by King Jigme Singhye Wangchuck, who abdicated in favor of his son in December 2006. Bhutanese regularly refer to both as "His Majesty."

"His Majesty is like our father. We all prefer our father," said Karma Tsheweng, a 35-year-old mechanic.

Bhutanese have reason to be ambivalent. The tiny country of about 600,000 people has prospered under royal rule. Its fast-growing economy is slowly lifting many people out of poverty and nearly everyone has access to schools and hospitals. Bhutan has an average annual of income of $1,400 was twice neighboring India's, and nearly all its people had access to schools and hospitals, a rare achievement in this corner of the world. Such success contrasts sharply with South Asian countries like Nepal or Bangladesh, which often seem like case studies in democracy gone wrong -- a fact that left many here dreading the change.

But "we have come to see that this is an opportunity he has given us because he is farsighted and wise," said Karma Dorji. Still, he added, "We prefer our king."

Mr. Kinley was celebrating his landslide -- his party took 44 of the 47 parliament seats -- in remote eastern Bhutan on Monday. The party's spokesman, Palden Tshering, called the win a "victory for His Majesty." Mr. Kinley is likely to be named prime minister soon. The king, 28-year-old Jigme Keshar Namgyal Wangchuck, will remain head of state and likely retain much influence.

Mr. Kinley's party, like the opposition, hews closely to the king's vision. Both vow to follow the latest five-year plan – called "His Majesty's vision" -- and promote Gross National Happiness, an all-encompassing political philosophy that seeks to balance material progress with spiritual well-being.

Known by its people as the Land of the Thunder Dragon, Bhutan's snowcapped peaks and mountainside monasteries have long intrigued Westerners in search of a Buddhist nirvana. But the kingdom is, in many ways, a strikingly conformist place where the outside word is viewed warily and self-promotion and confrontation are frowned upon.

Bhutan's election campaign was exceedingly mild by the standards of other democracies with candidates more likely to compliment competitors than criticize them. But there were ugly moments. One party accused the other of vote buying (it was actually paying its workers); a candidate charged his opponent with trying to influence powerful monks by having his wife donate a butter lamp to a monastery.

-Bhutan Holds Its First Parliamentary Vote

Mauritius Budget Reforms

IMF's PFM blog has an interesting post on budget classifications.

Just skimming through Mauritius' Ministry of Finance found the following Medium Term Expenditure Framework for 2005. In the most recent budget the MTEF has disappeared- and now it is a Programme-Based Budget.

I wonder whether it was on account of advise from the Fund.

The Challenges to Mauritius

According to IMF;

"The economic recovery is accelerating with strong growth in tourism, construction, finance, and services. Foreign investment is growing rapidly in response to the reform efforts, notably those which have improved the business environment and lowered tax rates. Real economic growth is projected to rise to about 7 percent in 2007/08. Unemployment has been moderating, but inflation remains a concern. Fiscal policy has been tightened as revenues have risen in response to tax reforms and expenditure has been contained. The external current account deficit has widened somewhat on strong foreign investment-stimulated import growth. The institutional framework for monetary policy has been revised to strengthen the focus on reducing inflation. Increased efficiency in the management of public funds is needed to support monetary policy in the face of large capital inflows.

"The challenge is to sustain the reform effort to improve competitiveness and address bottlenecks to economic growth. The budget deficit needs to be reduced further over the medium term to lower public debt and counterbalance the impact of strong foreign capital inflows on aggregate demand. Efforts to improve the effectiveness of social assistance and expand the tax base should be continued to create the fiscal space needed for education and the retraining of the labor force as well as to raise investment spending on much needed infrastructure. Structural reforms, including those to improve labor market flexibility, stimulate greater competition in goods markets, and lower costs of doing business need to be carried forward to improve the supply response to the foreign investment stimulus. Efforts to protect vulnerable groups and ensure that the benefits of economic recovery are widely distributed are also vital.

Related;
The Time is Ripe for Means-Testing