Parenting Advice from Economists

Winning is Everything

Winning isn't Everything;

Joshua Gans is 'over the moon' because his daughter won a sports event. With some qualifications he asserts winning is everything. Its a very American attitude and I don't agree at all particularly in relation to kids sport where I think the key objective for the vast majority of kids is to participate - to enjoy participating in a healthy activity. Assuming Joshua's type of elation feeds back into the incentives influencing participation decisions by youth it seems to me unhealthy for those who don't really need to win and don't in fact win. The key reward from sport is to the individual in terms of enhanced individual physical potentiality not their ability to rank themselves ahead of other competitors.

Nor, for that matter, am I overly concerned with the signalling function of education - the important issue is to add value not to order students 1,2,...N. Again the ordering is irrelevant because it does not map into something that reflects significant value in any field of life. From an individualistic perspective the point is to realise individual potential not to be able to rank yourself ahead of the other guy.

The King of Bollywood in New York

There is no American equivalent to this spectacle, in which actors, joined by dozens of dancers, recreate musical numbers from popular movies. Here, all talents — acting, singing, dancing — are equal. Well, not always singing; in most Bollywood films, vocals are provided by playback singers while the stars on screen lip-sync...

Though the musicians remained onstage for Amitabh Bachchan’s first solo set, they were less consequential. His appearance was more an exercise in collective memory than a great performance. A star of stratospheric proportions, he was celebrated with hagiographical videos and voice-overs. (“Even the way he stands makes an impact.” “They aped his hairstyle.”) The younger Mr. Bachchan performed one of his father’s best-known routines, from “Don,” while images from that film flashed on a screen behind him.

With a silver goatee and short dark hair, the elder Mr. Bachchan cut an august figure. But he, too, was not immune to the pulls of legacy. Toward the end of the show, in a segment that was part spoken-word performance, part “Inside the Actors Studio,” he discussed his own parents with emotion. First, he recited a few lines of “Agneepath,” a poem by his father, Harivansh Rai Bachchan, which was, he said, “written to inspire the Indians.” (Friday was the 61st anniversary of Indian independence.)

Then he spoke about his mother, who died last year, and slipped into his character from the film “Deewaar,” who prays for his mother’s health. As Mr. Bachchan delivered the lines, his voice grew deep, mean and improbably raspy. And then, just as quickly as he had begun, he snapped back to normal and was greeted with the night’s most sincere standing ovation. On a night full of carefully choreographed moments, this blatant blast of acting also proved to be the truest.

-Movie Stars Take to the Stage, Giving ’Em the Old Bollywood Razzle-Dazzle

Assorted Olympics

China 2008 olympic medal tally by population

Olympics at Sports-Reference.com

The Glory of Just Showing Up

IT Age and narrowing of science?

Electronic Publication and the Narrowing of Science and Scholarship
James A. Evans

Online journals promise to serve more information to more dispersed audiences and are more efficiently searched and recalled. But because they are used differently than print—scientists and scholars tend to search electronically and follow hyperlinks rather than browse or peruse—electronically available journals may portend an ironic change for science. Using a database of 34 million articles, their citations (1945 to 2005), and online availability (1998 to 2005), I show that as more journal issues came online, the articles referenced tended to be more recent, fewer journals and articles were cited, and more of those citations were to fewer journals and articles. The forced browsing of print archives may have stretched scientists and scholars to anchor findings deeply into past and present scholarship. Searching online is more efficient and following hyperlinks quickly puts researchers in touch with prevailing opinion, but this may accelerate consensus and narrow the range of findings and ideas built upon.

The Miseducation of Robert S. McNamara

He was a brilliant student at the University of California and at Harvard Business School, where he became a member of the HBS faculty. McNamara was a devotee of managerial control, an expertise he applied in his work at the Ford Motor Company and later at the Department of Defense as secretary in President John F. Kennedy's cabinet.

His mantra was measurement. As secretary of defense, McNamara developed, along with key subordinates, including Robert Anthony of the HBS control faculty, long-range procurement cycles. He even tried to get the U.S. Navy to subscribe to a common aircraft for the three branches of the military. The Navy refused to go along, since this branch was concerned about aircraft operating from carriers.

McNamara urged field commanders in Vietnam to apply measurement to enemy losses, but did not realize until it was too late that the measurements were unreliable to assess enemy losses. The most reliable assessments came from correspondents like Neil Sheehan and David Halberstam. McNamara published a book years after he retired to reassess the Vietnam War and his role in it as secretary of defense. His main theme was the failure to examine critically the assumptions leading to U.S. involvement in this disaster. Editorial writers took no pains to spare McNamara's feelings.

The moral I took away from his story is to avoid the perils of the fox and its reliance on a single belief, in this case measurement, and the technology of control.

-The Inner Life of Leaders

Tropic Thunder

Good luck

Lugo 'to end' Paraguay corruption

I've been warning the world- Saakashvili

Russia: Georgia will lose South Ossetia

Podcast of the Day

Nassim Taleb Says Crisis Continues Until Banks' Management Changes

Nuke, Kooks and Democracy in Iran

Abbas Milani's talk will be "Nuke, Kooks and Democracy in Iran: a discussion of Iran's current political situation, and the prospects of democracy, and a resolution of the country's nuclear program." His most recent book is Tales of Two Cities: A Persian Memoir.

-Iran signed an agreement with MIT to train 100 nuclear scientists in 1976
-Khomeni stopped the program after the revolution, started it after Saddam's use of chemical weapons (and when the world ignored it).

Related;
Islamic Republic of Iran: 2008 Article IV Consultation - Staff Report

Islamic Republic of Iran: Selected Issues

Job description for a Goddess

Despite being revered as a powerful Hindu divinity, the Himalayan state's Royal Kumari has no option but to step down once she reaches puberty. Because Preeti Shakya, the current holder of the centuries-old role, has reached her 11th birthday, the race is on to find a replacement before the end of the summer...

The job criteria are rigorous: Kumaris, who are typically selected as toddlers, must have a voice “as soft and clear as a duck's”, “the body of a Banyan tree” and “the chest of a lion”. The 32 prerequisite physical “perfections” also include flawless skin, hair, eyes and teeth. A suitable horoscope is mandatory and being afraid of the dark is not allowed.

-Nepal seeks new child goddess

The Night of the Gun

Me and My Girls

The Gift of Time

The Gift of Time-Letters from a Father
By Jorge Ramos

Blaming Monica Goodling

Poverty Measurement

a sensible way to measure poverty?

Top Reformer goes at it again

Moments after President Bush appeared at the Rose Garden to say that the Pentagon would begin a humanitarian aid mission to support Georgia, Mr. Saakashvili was on the phone with a Western reporter, talking fast. “This is a turning point,” he said. Soon he appeared on national television, his tousled hair combed back flat and wearing a freshly pressed suit, assuring his country that the worst had passed.

No matter that Russian troops were 30 miles away, milling on the road outside the capital, meeting no resistance. Mr. Saakashvili was in cocky form in an interview later in the evening with reporters, expounding on Nazi propaganda, Orwell and the film “Dr. Strangelove.”

“Russians should see that this is not a demoralized, you know, nervous panicking capital that is just scared,” he said. “Shops are open. There are no lines for gas stations. Prices are not up.”

He added, “We will fight to the end, until the last Russian soldier leaves Georgian soil and this country is not going to be brought to the knees anymore. We are not surrendering, no matter what.”

Mr. Saakashvili’s latest show of bravado came only a day after Secretary of State Condoleezza Rice said that she and a special State Department envoy had explicitly and repeatedly warned him not to take any military action against Georgian separatists that might provoke Russia, cautioning that the United States was not prepared to back him militarily if he did. He also appeared to exaggerate the Pentagon’s planned relief operation, making it seem larger and further developed than it was.

“We already saw U.S. Air Force landing in Georgia despite Russians controlling the airspace,” he said, after a C-17 had touched down. “And we will see U.S. military ships entering Georgian ports despite Russians blocking it. That we will see.” He added, “These will be serious military ships.”

Q & A on Georgia

Economics … by John McCain

Podcasts

The great grammar debate
Is learning formal grammar essential to becoming a good writer and communicator? Or is it more important to develop a feeling for language that can be applied in different contexts?

John Milton: 400 Years On

Restructuring secondary education

Being your own therapist - Buddhist style

Is being gay in your biology?

Cuba: socialism with salsa

Post traumatic stress disorder

Oral cancer

Why Most Published Research Findings Are False

Pole to Pole: A vet on the ice with seals

The Wallace-Darwin papers on biological evolution - 150 years ago

Buckminster Fuller

Chinese contemporary art

State-Building: Governance and World Order in the 21st Century

Goldman Says Economic Recovery Requires More Saving

Public Bailout of Bank’s Recklessness
In response to the ongoing sub-prime crisis, the recently published Crosby Report recommends that the Government uses public money to swap bank’s seriously damaged mortgage-backed securities for pristine government bonds. Matthew Watson from the Department of Politics and International Studies at Warwick University talks about these recommendations, and how the global ‘credit crunch’ is affecting Labour’s popularity with the electorate.

Chilli, Chocolate, and Chips: Foods that Originate from the New World

South Korea’s Cram Schools

“Min-ju, do your best! Fighting!” Mr. Chung shouted as his daughter disappeared into the building. Min-ju turned around and raised a clenched fist. “Fighting!” she shouted back.

South Koreans say their obsession to get their children into top-notch universities is nothing short of “a war.” Nowhere is that zeal better illustrated than in cram schools like Jongro Yongin Campus, located in a sparsely populated suburb of Yongin, 25 miles south of Seoul.

Most Jongro students are “jaesoo sang,” or “study-again students.” Having failed to get into the university of their choice, they are preparing relentlessly for next year’s entrance examination. Some try and try again, for three years running after graduating from high school.

The Jongro school pursues a strategy of isolation, cut off from competing temptations of any sort. Its curriculum is so tightly regulated and the distractions so few that students say they have no option but to study.

“Sending Min-ju here was not an ideal, but an inevitable choice,” said Mr. Chung, a 50-year-old accountant. “In our country, college entrance exams determine 70 to 80 percent of a person’s future. It’s a sad reality. But you have to acknowledge it; otherwise you hurt your children’s future.”

Admission to the right university can make or break an ambitious young South Korean. The university that students attend in their 20s can determine the jobs they get and the money they make in their 50s. The top-tier schools — Seoul National, Korea and Yonsei Universities, collectively known as SKY— may hardly register on global lists of the best in higher education. But here, their diplomas are a ticket of admission, an envied status symbol and a badge of pride for graduates and parents.

The life of a South Korean child, from kindergarten to high school, is dominated by the need to excel in standardized entrance examinations for college. The system is so demanding that it is credited with fueling the nation’s outstanding economic success. It is also widely criticized for the psychological price it exacts from young people. Among young people 10 to 19, suicide is the second most common cause of death, after traffic accidents.

-A Taste of Failure Fuels an Appetite for Success at South Korea’s Cram Schools

Mahmoud Darwis' Legacy

Parenting advice from Michael Phelps' Mother

As he entered public school, he displayed what his teachers called “immature” behavior. “In kindergarten I was told by his teacher, ‘Michael can’t sit still, Michael can’t be quiet, Michael can’t focus,’ ” recalled Ms. Phelps, who was herself a teacher for 22 years. The family had recently moved, and she felt Michael might be frustrated because the kindergarten curriculum he was getting in the new district was similar to the pre-K curriculum in their old district.

“I said, maybe he’s bored,” Ms. Phelps recalled saying to his teacher. “Her comment to me — ‘Oh, he’s not gifted.’ I told her I didn’t say that, and she didn’t like that much. I was a teacher myself so I didn’t challenge her, I just said, ‘What are you going to do to help him?’ ”

In the elementary grades at their suburban Baltimore school, Ms. Phelps said, Michael excelled in things he loved — gym and hands-on lessons, like science experiments. “He read on time, but didn’t like to read,” she said. “So I gave him the Baltimore Sun sports pages, even if he just read the pictures and captions.”

She will never forget one teacher’s comment: “This woman says to me, ‘Your son will never be able to focus on anything.’ ”

His grades were B’s and C’s and a few D’s.

It was a tough period. Ms. Phelps and her husband, a state trooper, were divorcing. She had just gone back to school to get a master’s degree to become an administrator, she said, and at the same time she had to be the 24/7 parent.

Michael grew like crazy, but not evenly — his ears looked huge, and when he ran, his arms swung below his knees. (He was on his way to being 6 feet 4 inches tall with an arm span of 6 feet 7 inches.) Kids bullied him, and when he whacked one on the school bus, he was suspended from the bus for several days....

At age 9, Michael was put on Ritalin, a stimulant used to treat hyperactivity.

His mother thinks it helped a little. “He seemed to be able to focus longer,” she said. “He could get through homework without moving around so much.” She said he was still a middling student. “It might have raised some C’s to B’s,” she said. But if a homework assignment had to be at least four sentences, she said, “he’d just do four sentences.”

After two years, Michael asked to get off the meds. He had to go to the school nurse’s office to take a pill at lunch, she said, and felt stigmatized. “Out of the blue, he said to me: ‘I don’t want to do this anymore, Mom. My buddies don’t do it. I can do this on my own.’ ”

“I was always stern as a parent,” she said, “but from Day 1, I included my children as part of the decision process. So I listened.” After consulting with Dr. Wax, Michael stopped medication.

-Phelps’s Mother Recalls Helping Her Son Find Gold-Medal Focus

Assorted on Iran

Bueno de Mesquita on Iran and Threats to U.S. Security;

Ahmadinejad is the President of Iran, but virtually all power there is held by the Supreme Council. Has veto power, can remove people from office; all people elected including Ahmadinejad serve at the pleasure of the Supreme Council. Interviews, Ahmadinejad ranked 18th in terms of power. At odds with most people's public perception. Maybe he's 17th or 19th; but he's not 3rd or 4th. He is a very outspoken man, says many outrageous things, so he gets a lot of news coverage. Came to power by election from being mayor of Teheran by carving out a constituency of not-very-well educated who saw in him someone who would advance Iranian nationalist sentiment. His power has faded and his party keeps losing by elections. Media attention also because American media has poor or no access to Ali Khamenei, head of the Supreme Council, most powerful person in Iran. Putin had audience with Khamenei; Western leaders only get to see Ahmadinejad. Why would Khamenei want Ahmadinejad in power? Good for floating trial balloons, has a salutary effect in terms of foreign policy; has convinced some people that the Iranian leadership is irrational, and in doing so have attained a certain amount of deterrent clout. Very Schellingesque (Thomas Schelling, Nobel Prize winner), soft application of game theory to national security problems, brinksmanship. Strategy that if you convince the other guy that you'll drive off the cliff, the other guy gets pretty nervous about it.

Iranian interior minister's fake Oxford diploma

When the the obviously faked diploma hit the Web, it caused a popular firestorm in Iran, with calls for Kordan to step down immediately if he can't produce the real thing. The Iranian Web site that first revealed the bogus document has now been blocked inside the country. Some analysts even think Ahmadinejad may have set Kordan up to embarrass his likely rival in the next presidential race, Ali Larijani. Kordan is a former aide to Larijani, who is also speaker of the parliament and looking slightly worse for the wear as the controversy continues.

New Ministers in Iran May Quash Ahmadinejad’s Economic Plans

Incredible America

The census calculates that by 2042, Americans who identify themselves as Hispanic, black, Asian, American Indian, Native Hawaiian and Pacific Islander will together outnumber non-Hispanic whites. Four years ago, officials had projected the shift would come in 2050.

The main reason for the accelerating change is significantly higher birthrates among immigrants. Another factor is the influx of foreigners, rising from about 1.3 million annually today to more than 2 million a year by midcentury, according to projections based on current immigration policies.

“No other country has experienced such rapid racial and ethnic change,” said Mark Mather, a demographer with the Population Reference Bureau, a research organization in Washington.

-In a Generation, Minorities May Be the U.S. Majority

Assorted Economic Podcasts

Allan Meltzer Says Fed Failing to Control Inflation

Harvard's Feldstein Says Fed Slow to Recognize Credit Crisis

James Poterba Says U.S. Consumer `Likely' to Retrench

What Would Nixon Do on U.S.-Cuba Relations?

Related;
Nixon Center

More on Georgia

Professor Padma Desai and Nina Kruscheva



Russia Blog Readers Comment on Conflict

Next Big Thing on the Web?

Fire Eagle

Related;
Yahoo Unveils Platform for Location-Based Services

Force feeding little girls

A deeply disturbing habit from Mauritania;

Big is often regarded as beautiful in Mauritania, but the controversial act of force-feeding is still practiced in some parts of the country.

Assorted

Why Are Exchange Rates So Difficult to Predict?

Building a Better World: Infrastructure's Role in Economic Growth

Clearing the Roadways: The Case for Congestion Pricing

Why the U.S. Treasury Began Auctioning Treasury Bills in 1929

Poverty in New York City, 1969-99:
The Influence of Demographic Change, Income Growth, and Income Inequality

The Changing Nature of the U.S. Balance of Payments

Early warnings of inflation in India'

World Free of Poverty on Vacation

World Bank's Poverty and Growth blog goes on vacation.

Photo of the Day

via Boing Boing- Pieter Hugo's Nollywood Series

Related;
Nigerian films are so successful that the government wants to get involved;

Today, filmmaking employs about a million people in Nigeria, split equally between production and distribution, making it the country's biggest employer after agriculture, according to the National Film and Video Censors Board (NFVCB). The industry has sales of $200m-300m a year....

The films cost anywhere between $15,000 and $100,000 to make, and the money comes directly from the market. Producers, or “marketers”, as they are known, use some of the profits from one film to pay for the next. Banks do not lend to Nollywood, as there are no statistics from which they could estimate likely returns

Free Reads

Looking Backward and Forward: Policy Issues in the Twenty-first Century
Author: Charles Wolf Jr.

Lenin's Brain and Other Tales from the Secret Soviet Archives
Author: Paul R. Gregory

Bits, Bytes, and Balance Sheets: The New Economic Rules of Engagement in a Wireless World
Author: Walter B. Wriston

George Washington on Leadership

Richard Brookhiser

Explainer of the Day

Gasoline prices

Was the Top Reformer stupid?

Interesting observations on the Russia and Georgia war from Belgravia Dispatch;

Which brings me to a fifth point, and perhaps a more proximate causal factor contributing to this explosion of misfortune in Georgia, namely, that of stupidity, or at least, severe miscalculation. Saakashvili, an apparently quite idealistic 40 year-old former NY lawyer, seems to have erred too much in thinking that giddy summitry with Western big-wigs might pay dividends (or too his far too excited involvement in the Iraq adventure which, incidentally, looks to be coming to a quite precipitous end) but unfortunately, insufficiently appreciated the disastrous waning in U.S. power these past years, despite his constant hankering for NATO membership (which a resurgent Russia will never accept regardless of Kosovo or whatever else, best I can tell), and thus has fallen short with regard to better appreciating a variable which would have been more apropos, namely, a harsh dose of realpolitik. And this despite Putin having warned Saakashvili rather pointedly: "On April 21, Mr. Saakashvili called the Russian leader to demand that he reverse the decision [possible Russian recognition of Abkhazia and South Ossetia]. He reminded Mr. Putin that the West had taken Georgia’s side in the dispute. And Mr. Putin, according to several of Mr. Saakashvili’s associates, shot back with a suggestion about where they could put their statements. Mr. Saakashvili, prudent for once, shied from uttering the exact wording, but said that Mr. Putin had used “extremely offensive language,” and had repeated the expression several times." Permit me to be less prudent than Mr. Saakashvili, who appears perhaps to be a poor prioritizer of where to be prudent and where not. Mr. Putin told him that he could (and excuse the crudity) stick American and Western European assurances regarding the territorial disputes in question up his rear end, I suspect, and I'm afraid that's not a too inaccurate assessment, if a bit biting and brusque (save if McCain trumps Obama and decides to ride the NATO cavalry up from Kabul to Tbilisi a few months hence--perhaps on the back of some more WaPo interventionist rhapsodizing--devoid of the merest smidgen of appreciation for historical context and subtlety, leading to another toweringly idiotic 'Washington consensus' of some sort).

NYT's The Lede has more coverage.

Germans and Poles start a fight

Nudist war on the German-Polish border!

Georgia the Model?

World Bank's Doing Business blog seems to have more posts on Georgia than any other country. For example;

Top Reformer Wins Election in Georgia

The new mandate will allow further reforms. Mr Saakashvili vows to increase Georgia's GDP from $10 billion to $30 billion and use the new wealth to help the poorest third of the population.

The Next Singapore?

Assorted on Russia and Georgia

American officials and a military officer who have dealt with Georgia said privately that as a result, the war risked becoming a foreign policy catastrophe for the United States, whose image and authority in the region were in question after it had proven unable to assist Georgia or to restrain the Kremlin while the Russian Army pressed its attack.

-In Georgia and Russia, a Perfect Brew for a Blowup




In Russia-Georgia Conflict, Balkan Shadows

Taunting the Bear

Georgia-Russia Clash: A 'Bump' or 'Turn' in Road?

Assorted

A Tale of Two Charts

More Reasons Not To Take The Candidates' Budget Proposals Too Seriously

Make Diplomacy, Not War

Anne-Marie Slaughter on China;

One of the best books I read on China was Susan Shirk’s “Fragile Superpower,” which argues that for all its energy and emerging power, China is fragile precisely because its political system is just one layer deep. If the Communist Party were to lose power, there is no back-up in place — only the specter of in-fighting fragmentation, chaos, and even civil war. Which is precisely why the government is so worried to stamp out any spark that could potentially ignite wider unrest.

The fragility extends to the economy. If ordinary Chinese suddenly cannot get jobs, or can’t get jobs that will allow them to put food on the table or gas in their motorbikes in an era of rising food and energy prices, there are no years of experience with the business cycle of expansion and recession to cushion the shock of unemployment and belt-tightening. Our current development has happened over decades, fairly steadily since the Depression, but with plenty of bumps along the way. Those psychological layers, just like the layers of our infrastructure, create resilience and strength.

These Olympics, Americans will compete as hard as we possibly can for the gold. Those of our athletes who lose, however, will know that they or their successors will have the chance to compete again; that the nation’s honor does not rest once and for all on their shoulders. America has hosted the Olympics before and will again.

For China, the veneer is much thinner and the stakes are much higher. Beijing has built fantastic Olympic buildings and will put on a dazzling show to tell all the world that it has resumed its rightful place on the global stage. But for all China’s accomplishments, and they are accomplishments, the architecture, infrastructure, economy and even the political system are only one layer deep.

Podcast of the Week

Bueno de Mesquita on Iran and Threats to U.S. Security

Deterrence. Fashionable at the moment for people to think the Israelis will take out the Iranians or that the Iranians are crazy and will attack Israel if they have a chance. Look at world history: very, very large number of international disputes since the bomb was dropped on Hiroshima, many of which rose to the level of wars. Divide world into subgroups depending on possession of nuclear weapons or access to them via allies, etc. and plot probability of their becoming violent, see virtually nothing at the nuclear level; you only get war when there is no nuclear deterrence. Unlikely Iran would be different. Iranian leadership has been in power almost 30 years; little evidence of their irrationality. Shah. Muammar Gaddafi, depicted as irrational, rolled tanks to the border of Libya but didn't go over. Know how to stay in power but don't take undue risks. Much of U.S. foreign policy has been focused on making sure that no one else gets a nuclear weapon that doesn't already have one. Should we be so vigilant? 1982, article joint with William Riker, "Assessing the Merits of Selective Nuclear Proliferation", took positive rather than normative position--how does the world work as opposed to how should it work--to explain mutual deterrence. Why is the U.S. opposed to nuclear proliferation? Answer was that either you believe in deterrence or you believe you are willing to sacrifice deterrence to have the U.S. be in a dominant political position. If we have the bomb and they do not, that's an advantage. Usual argument to oppose it is window dressing.

Turkey Fact of the Day

Turkey's gender gap in years of schooling (of women relative to men) has also been consistently lower than other Muslim countries.

via Iyigun Blog

Not Related;
Turkey Problem

Obama Fact of the Day

His favorite Harry Potter character may be Dumbledore (he won’t comment when it’s mentioned that the headmaster of Hogwarts may be gay.) He favors the Rolling Stones over the Beatles and Batman over Iron Man.

-Obama Talks About His Girls

Personal Productivity Links of the Day

Five Best To-Do List Managers

Team Effectiveness MindMap Templates

The Teen Brain

Dictators and binding revolution constraints

The dictator’s approach to electoral patterns;

Democracies rarely repress their own citizens but authoritarian and totalitarian regimes do. According to one estimate (See Table 1), of the 110 million persons repressed by Marxist-Leninist regimes in the twentieth century, more than 90% were their own citizens. In democracies, less than 0.5% of victims were own citizens. It is statistics, such as these, that suggest some "generality" in Stalin's behaviour. Empirical studies also suggest that totalitarian regimes generate more "violence" than democracies (Mulligan, Gil, Sala-I-Martin, 2004)...

Our model suggests that the number of eliminations depends on the probability of correctly identifying enemies, the number of enemies, and the “threat” that the enemy poses. Although we are unable to “prove” our model based on the stylised facts of the three repressions, we can show that the model is consistent with these facts. The model makes one prediction that is consistent with Stalin’s observed behaviour that is far from intuitively obvious. A rational dictator will deliberately eliminate innocent citizens and will eliminate more innocents when enemies are difficult to identify. Stalin’s slaughter of innocents is cited by historians as a sign of his mental derangement, but in our model it is the predicted behaviour of a dictator facing a binding revolution constraint.

Mahmoud Darwish, Palestinian poet

this poet--was put under house arrest by the Israeli military occupation for close to a decade and only because he wrote poetry that offended Israeli occupiers of Palestine

- Angry Arab

Related;
Links to Darwish's poems

Your Next Vacation Destination

Make it Bolivia

Blast from the Past

Northwoods Memo via Angry Bear

Macro Podcasts

Former Director Reinhart Says U.S. Asking Too Much of Fed

Parry Says Fed Is Facing `Serious' Policy Challenges

Related;
With Fannie and Freddie, is the government mistaking a ‘first-generation’ crisis for a ‘second-generation’ crisis?;

There are two main types of crises. In a “first-generation” or fundamentals-based crisis, investors choose to flee from a currency, or actively speculate against it, because they correctly recognize that the country’s policies will not support a fixed exchange rate forever. Leaving the fixed exchange rate regime is inevitable, but the timing can be forced by market participants when they sense the government’s vulnerability. In the corporate world, if a company’s debt service is so rickety that eventually it will become insolvent, investors will flee as soon as they realize that. They will not wait until the corporate cupboard is bare.

In a “second-generation” or self-fulfilling crisis, speculators are in the driver’s seat. A country’s resources might be sufficient to maintain an exchange rate peg indefinitely, as long as the country is not forced to pay an unduly high risk premium in markets. But if investors come to doubt its ability to defend the peg, those doubts become self-fulfilling and the risk premium balloons. In other words, the peg does not hold because investors doubt that it will.

Similarly, a company might be viable as long as it can roll over maturity debt. If investors trust the firm to be viable, it can access markets. However, if its survival comes into doubt, the markets will be shuttered and, eventually, so too will the firm.

Secretary Paulson has been working on the assumption that the travails of Fannie and Freddie stem from a self-fulfilling speculative attack: in other words, that this is a “second-generation” crisis. If that is true, those speculators can be beaten back by an overwhelming show of force. Thus, the Federal Reserve has thrown open its discount window to the GSEs and the Bush administration has sought from Congress an unlimited authority to lend to Fannie and Freddie. The Fed and the White House hope this will convince market participants that GSE debt will always be honored and that all maturing obligations can be rolled over at narrow spreads to Treasuries. The mere possibility of a massive governmental infusion of funds should squash the crisis of confidence without any need for disbursement.

Meanwhile, the Securities and Exchange Commission (SEC) has prohibited the “naked” short selling of the shares of certain financial firms, including those of Fannie and Freddie. (A naked short sale involves selling an equity you do not have in your possession.) In addition, the SEC is apparently becoming more aggressive in dealing with rumor-mongering among traders.

Again, the assumption is that the financial woes of the GSEs derive from speculative withdrawal rather than from weak fundamentals. But this assumption might be wrong. Fannie and Freddie are called the two housing giants for a good reason: they own or guarantee over $5 trillion worth of U.S. mortgages—more than half the market. Which means they have a large, under-diversified exposure to a sector that has plummeted.

Mistaking a “first-generation” crisis for a “second-generation” crisis is a lot like countersigning a loan for a relative who turns out to be feckless. Three unfortunate developments ensue.

Messages from Merrill’s Misfortunes;

Perhaps more firms will follow Merrill’s path and seek to raise new capital. But aggregate financial losses may wind up dwarfing private-sector resources. In that case, the health of the U.S. economy may require an injection of government funds into the financial sector. One lesson of the savings-and-loan debacle of the late 1980s—and also a lesson of banking crises worldwide—is that delaying such a government capital injection will raise the overall tab. With federal resources already stretched thin and many national priorities unfulfilled, the idea of sinking still more money into large financial firms seems distasteful. But we must accept the fact that our national economy is hostage to the financial system.

Repel the calls to contain competitive marketsBy Alan Greenspan

The Iraq Surplus

In Iraq, Far From a Deficit

Related Report;
Stabilizing and Rebuilding Iraq: Iraqi Revenues, Expenditures, and Surplus;

Iraq has an estimated 115 billion barrels of crude oil reserves, the third largest in the world. Oil export revenues are critical to Iraq's reconstruction, accounting for over 90 percent of the Iraqi government's revenues. In June 2008, GAO reported low 2007 spending rates by the Iraqi government for some critical sectors in the face of declining U.S. investments in these sectors. This report examines (1) Iraq's estimated revenues from 2005 through 2008, (2) Iraq's estimated expenditures from 2005 through 2008, (3) Iraq's financial deposits through 2007 and budget surpluses, (4) U.S. cumulative expenditures on stabilization and reconstruction activities in Iraq since 2003, and (5) factors affecting Iraq's efforts to accelerate spending. GAO analyzed relevant data and reviewed documents, including Central Bank of Iraq oil receipts data, International Monetary Fund's (IMF) reports, translated copies of Iraqi budget and expenditures, and U.S. agency funding data and reports. GAO also interviewed officials from the Departments of Defense (DOD), Energy, State, Treasury, and the IMF. This report contains no recommendations. Treasury agreed with the report's findings and stated that Iraq has adequate funds to make and maintain capital investments that deliver services and foster economic growth. State provided technical comments. DOD had no comments.

From 2005 through 2007, the Iraqi government generated an estimated $96 billion in cumulative revenues, of which crude oil export sales accounted for about $90.2 billion, or 94 percent. For 2008, GAO estimates that Iraq could generate between $73.5 billion and $86.2 billion in total revenues, with oil exports accounting for between $66.5 billion to $79.2 billion. Projected 2008 oil revenues could be more than twice the average annual amount Iraq generated from 2005 through 2007. These projections are based on actual sales through June 2008 and projections for July to December that assume an average export price from $96.88 to $125.29 per barrel and oil export volumes of 1.89 to 2.01 million barrels per day. From 2005 through 2007, the Iraqi government spent an estimated $67 billion on operating and investment activities. Ninety percent was spent on operating expenses, such as salaries and goods and services, and the remaining 10 percent on investments, such as structures and vehicles. The Iraqi government spent only 1 percent of total expenditures to maintain Iraq- and U.S.-funded investments such as buildings, water and electricity installations, and weapons. While total expenditures grew from 2005 through 2007, Iraq was unable to spend all its budgeted funds. In 2007, Iraq spent 80 percent of its $29 billion operating budget and 28 percent of its $12 billion investment budget. For 2008, GAO estimates that Iraq could spend between $35.3 billion and $35.9 billion of its $49.9 billion budget. As of December 31, 2007, the Iraqi government had accumulated financial deposits of $29.4 billion, held in the Development Fund for Iraq and central government deposits at the Central Bank of Iraq and Iraq's commercial banks. This balance is the result, in part, of an estimated cumulative budget surplus of about $29 billion from 2005 to 2007. For 2008, GAO estimates a budget surplus of between $38.2 billion to $50.3 billion. If spent, a proposed Iraqi budget supplemental of $22 billion could reduce this projected surplus. Since fiscal year 2003, the United States appropriated about $48 billion for stabilization and reconstruction efforts in Iraq; it had obligated about $42 billion of that amount as of June 2008. U.S. agencies spent about $23.2 billion on the critical security, oil, electricity, and water sectors. From 2005 through April 2008, Iraq spent about $3.9 billion on these sectors. U.S. government, coalition, and international officials have identified a number of factors that have affected the Iraqi government's ability to spend more of its revenues on capital investments. These factors included the shortage of trained staff; weak procurement and budgeting systems; and violence and sectarian strife. The United States has funded activities to help build the capacity of key civilian and security ministries to improve Iraq's ability to execute its capital project budget.