For the usual reasons (life intruding on blogging) i am going to have to take a short break from blogging.
Will still be visiting other blogs and commenting and such like, writing for the Australian Libertarian Society and helping the LDP make some progress in the forthcoming Federal Elections.
Hopefully i won't be too long.
Thursday, August 30, 2007
I May Be Some Time
Tuesday, August 28, 2007
APEC Rally For Free Trade
In September, Sydney will host the Asia Pacific Economic Cooperation (APEC) forum. APEC is an inter-government forum which aims to facilitate economic growth and prosperity, cooperation, trade and investment within the Asia-Pacific region.
A bunch of anti-globalisation and Stop Bush demonstrators plan to march through the city to 'protest against the wars on Iraq and Afghanistan. The protest will also call for urgent action to stop environmental destruction and for the defence of workers’ rights.'
The LDP will be holding our own demonstration in Martin's Place on Saturday morning in support of free trade. Free trade (not foreign aid) is the only effective means of dragging the world's poor our of poverty. That is why it is vital. The best defence of worker' rights are free trade and a deregulated labour market. Countries with these two policies in place have the lowest unemployment rates and the highest standard of living.
We are no fans of Bush's disastrous policies in Iraq (though Afghanistan is more complex and certainly a more morally valid conflict), but do not share GreenLeft's view that he is 'the world’s leading mass murderer and climate vandal' nor do we 'reject the idea that non-violence is the only tactic that can be used in the battle against oppression.'
A peaceful demonstration is our aim. We are not violent thugs.
The itinery for the day is as follows:-
Please come along and join us if you share these aims.Saturday 8th September 2007
9:00am - Meet at the corner of York and Market Street on street level above the post office. This is across the intersection from the North-West corner of the Queen Victoria Building (QVB). There will be a short briefing with any last minute updates.
9:20am - Make our way as a group toward Hyde Park.
10:00am - 11:30am - Take our message of freedom to the people.
Update; these are the type of uneducated children who will be chanting school-yard slogans,
'The Liberty and Democracy Party are a bunch of Australian igno-douches halfway between 1st year economics and their first graduate jobs in the p.r./marketing/banking sector. But they’re not all poorly educated assholes.
Some of them are just assholes.
Anyway, the whole globalisation, workplace slavery, environmental degradation, planetary pollution, exponentiation of inequality, stealing land, killing villages, two-party police state bound by economic monotheism thing is going so badly (obviously) that these fans of John Laws think their mighty voices, tiny minds and hunger for media ops are needed at APEC.
So get along and check them out. Take urine.'
Charming.Time To Shut Down SBS
Paul Sheehan, writing in the SMH, argues that
'The real question facing the Federal Government, and the overwhelming majority of taxpayers who pay for SBS but rarely watch it, is whether SBS should continue to exist at all.'
(For those outside Australia, the SBS is a state-owned and run free-to-air TV channel roughly equivalent to BBC2). Sheehan continues,
'The Special Broadcasting Service Act should be repealed, the corporation dismantled and sold and its valuable broadcasting spectrum auctioned off. SBS has outlived its charter, and the charter has always been of dubious social utility. (I quote, in part: "As far as practicable, inform, educate and entertain Australians in their preferred languages.")'
'According to SBS projections, during the next five years, the Federal Government will spend almost $1 billion to keep the corporation afloat. And then there's the opportunity costs of the digital spectrum given to SBS by the Howard Government.'SBS was set up to provide Australians with a multicultural array of TV programs in an era of just two or three stations. Today, by subscribing to Foxtel, one can receive hundreds of such multicultural stations and foreign news 24/7. SBS averages a market share of just 5.4% of network TV viewers. It no longer serves any useful purpose.
The LDP believes that SBS, along with the ABC should be fully privatised.
Governments simply should not be in the business of owning and running TV stations. Their role is to regulate content to ensure standards are met and advertisers' claims are valid. The market is amply served and competition is rife, ensuring a large and diverse selection of TV channels to consumers at a good price.
The money can be better utilised building a Australia's much-needed broadband network or simply handed back to taxpayers to spend on a Foxtel subscription if that is what they want.
Monday, August 27, 2007
Time To Devalue Faith
Comedian Pat Condell on the growing menace of religious, especially Islamic, intolerance.
'Cultural sensitivity be damned. Some things are more important. Peaceful protest and free speech are not negotiable. Anyone who's offended by that, should damn well stay offended. Personal faith should stay personal.'
via Pub Philosopher
Friday, August 24, 2007
Thursday, August 23, 2007
Where Does Your University Rank?
The new 2007 Shanghai Jiao Tong University rankings are out.
- Harvard tops again (miles ahead of its nearest competitor)
- 17 of the Top 20 are American, 2 are English (Cambridge and Oxford) and 1 is Japanese
- 39 of the Top 50 are American
- The highest placed Aussie Unis are the Australian National University (57) and the Univ of Melbourne (79)
- Alumni of an institution winning Nobel Prizes and Fields Medals
- Staff of an institution winning Nobel Prizes and Fields Medals
- Highly cited researchers in 21 broad subject categories
- Articles published in Nature and Science
- Articles in Science Citation Index-expanded, Social Science Citation Index
- Academic performance with respect to the size of an institution
Socialism Guarantees Income Inequality
Isn't income equality the primary goal of socialists?
Well, in that case, why does Freedom (free trade, capitalism, deregulated markets)....
...correlate so perfectly with Social and Income Equality?
Dark green - most equal societies
Light green
Olive
Orange
Pink
Red
Dark red - most unequal societies
So, if socialism guarantees income inequality, then, err, what's its point?
Is Free Trade Working?
Some food for thought for us supporters of free trade.
Today's protectionist drift is similar to the challenges faced by the architect of the original New Deal. In August 1934, President Franklin Roosevelt declared;
'This Government intends no injury to honest business. The processes we follow in seeking social justice do not, in adding to general prosperity, take from one and give to another. In this modern world, the spreading out of opportunity ought not to consist of robbing Peter to pay Paul. In other words, we are concerned with more than mere subtraction and addition. We are concerned with multiplication also -- multiplication of wealth through cooperative action, wealth in which all can share.'
An interesting article in Foreign Affairs magazine by Kenneth F. Scheve, Professor of Political Science at Yale University and Matthew J. Slaughter, Professor of Economics at the Tuck School of Business at Dartmouth, accuses globalisation of failing to spread the wealth and recommends higher taxes for the rich to avert a protectionist backlash.
Summary
'Globalization has brought huge overall benefits, but earnings for most U.S. workers -- even those with college degrees -- have been falling recently; inequality is greater now than at any other time in the last 70 years. Whatever the cause, the result has been a surge in protectionism. To save globalization, policymakers must spread its gains more widely. The best way to do that is by redistributing income.'
The authors argue that US policy is turning more protectionist because the US public is turning more protectionist, and the reason is stagnant incomes for all groups except the very richest. The 109th Congress introduced 27 pieces of anti-China legislation, the Doha Trade round is in tatters and other developed nations, particularly France, are upping the anti-foreigner rhetoric.
They then argue that this is a deeply worrying trend as globalisation has been so economically beneficial for both the US (adding $1 trillion to its economy and doubling its worker productivity) and for the developing world, creating an entire new middle class in less than a generation in places such as India and China.
They cite the three commonly expressed opinions as to why globalisation is faltering;
i) the successful lobbying efforts of a few industries that have been hit the hardest (e.g. farmers and manufacturers)
ii) policy makers and the business community have failed to make the case for free trade effectively.
iii) the need to balance economic interests with national security concerns has resulted in a more protectionist stance.
But they go on to dismiss all three arguments and lay the blame squarely at stagnating incomes and the uneven distribution of incomes. They point to data showing an 11% rise in real median wages versus a 58% rise for those in the 90th percentile of income and 121% for those in the 99th percentile. Another way of looking at this data is the CEO/worker ratio which has jumped from 80x in the 1980s to 425x in 2005 (see graph above). the last time data such as this appeared was in 1928 - just before the Great Depression (caused ironically by a rise in protectionism).
A combination of globalised free trade and high immigration is exerting immense pressure on wages of the low-skilled and they know it. Hence politicians (all the Democrat nominees for the Presidency are espousing some protectionist policies) are merely responding to growing resentment amongst the population.
The authors argue that supporters of free trade now face a stark choice; ensure workers share more of the spoils or accept that liberalisation is no longer sustainable. Given how important free trade is for the US economy, they argue that tax breaks must be distributed to the poorest workers to be paid for by the richest. Their solution is to eliminate payroll tax (15%) for those workers earning below the median wage and to increase them for the richest.
Update; Jason Soon points me to this very interesting paper. The authors point out that whilst income inequality is indeed rising, inequality by race and sex are rapidly diminishing, especially for American black and Latino women.
Wednesday, August 22, 2007
Ten Things You Should Know About Hedge Funds
Chris Dillow asks why 'market neutral' hedge funds have performed so badly of late. (Market neutral means they are supposed to be indifferent to the ups and downs of the stock market because the are 'neutral' the market by being both long and short stocks.)
Having worked in the industry for many years, perhaps i can enlighten,
i) Hedge Funds are never 'market neutral'. They are generally long stocks with upwards momentum (e.g. commodity stocks, banks) and short those out of favour (conglomerates, healthcare).
ii) They invariably all have the same trades on. When the market turns, they all try and get out at the same time. Officially this is known as 'illiquid markets' or 'dislocation'. Unofficially this is called 'panic'.
iii) In a rising market, they tend to be an awful lot 'longer' than they are 'shorter' (i.e. they own far more stocks than they are 'short'). They should probably be called 'market neutral-ish'.
iv) In the golden days (pre-2003), HFs used to be able to genuinely 'arbitrage' the markets (put on riskless trades) because there were so few hedge funds. Now that every dog and his wife is a HF manager, these arbitrage opportunities are long gone. Now they are just stock pickers with a track record no better than a monkey throwing darts at the WSJ.
v) HFs are not asset managers. They are fee-generating machines with an attached asset management business.
vi) There are Two Golden Rules.
a) Golden Rule No.1 is "Never accept money paying less than '2 and 20'". i.e. never accept fees that don't pay 2% annually plus 20% of all performance. Some good HFs only take 20% excess performance (the return over the risk free rate). But this hard to do so they tend not to.
b) Golden Rule No. 2 is 'Always play with OPM' (other people's money). OPM is much easier to lose and much less painful than your own.
vii) The ultimate fee-machines are 'Fund of Funds'. These really are modern alchemy - they turn client assets into fees. Brilliant and simple. Their after-fee returns are similar to a Treasury bond (5%) but not quite so good.
viii) HF managers all work in three streets in London - Berkely Square, Curzon St and St. James'. They all drink at the same bars, attend the same parties, and are paying alimony to the same divorced wives.
ix) HF managers are all 'long a call option'. This means that they incentivised by their firms to bet the house. If they are right, they are paid on average 10% of whatever they make. This can and often does amount to millions of dollars. If they are wrong, they are fired and re-appear fully refreshed after a month's vacation at another HF.
x) In order to keep the client money rolling in, HFs have to show to the world that they really do make outsized returns. Hence these ever ingenious folk have come up with a unique concept - 'survivor bias'. This means that the HF Indices showing overall returns exclude those HFs that have gone bust (about 1 in 5 each year) so blostering the average returns. Neat, huh?
All HF managers are aware of these ten points and all know the game will soon be up. Hence all are gambling furiously with your money right now before the ref blows the whistle for full-time.
IPCC Myths Attacked
A quite extraordinarily scathing attack on the IPCC has just been published by four leading Australian scientists.
The Australian Federal Parliament's Standing Committee on Science and Innovation recently completed a report entitled Between a Rock and a Hard Place, on the subject of "Geosequestration of Carbon Dioxide". However, four members of that committee have issued a "Dissenting Report" which devastates the Committee's major premise — that mankind causes global warming.
The dissenting MPs are former CSIRO scientist Dr. Dennis Jensen, Hon Jackie Kelly, Hon Danna Vale and Mr. David Tollner. Their report was compiled with the assistance of a number of leading scientists, including climate scientist Dr. John Christy, former lead author of the IPCC.
They state at the very outset that,
"We disagree with the report's unequivocal support for the hypothesis that global warming is caused by man—so-called anthropogenic global warming (AGW). We are concerned that the Committee's report strays well outside its terms of reference.'
Their objections are as follows;
Conclusion
Climate change is a natural phenomenon that has always been with us, and always will be. Whether human activities are disturbing the climate in dangerous ways has yet to be proven. It is for this reason that we strongly disagree with the absolute statements and position taken in this review regarding AGW. We have taken no evidence regarding the science of AGW, yet a strong position has been taken regarding this.
i) The science related to anthropogenic global warming is not, despite the assurances of some, settled in the scientific community. In particular, Yuri Israel, Vice Chairman of the IPCC, has stated ‘There is no proven link between human activity and global warming’.
ii) The critical area of the fallibility and shortcomings of computer modelling is not mentioned anywhere. iii) There is no detectable warming in the lower troposphere, the place where the enhanced greenhouse effect is claimed to be evident. iv) The observed surface warming that is highlighted by the IPCC must therefore have a different cause, which is probably the biasing of the records by urban heat effects. v) The full IPCC report ...represents a consensus of government representatives rather than of scientists. vi) There are also other scientific factors that contribute to climate that are not even considered by the IPCC, such as the role of cosmic ray activity in cloud formation. vii) Warming has also been observed on Mars, Jupiter, Triton, Pluto, Neptune and others. It is the natural property of planets with fluid envelopes to have variability in climate. Thus, at any given time, we may expect about half the planets to be warming. This has nothing to do with human activities. viii) Science is a discipline which relies on testing hypotheses and exposing flaws, not on consensus, in order to further scientific understanding. Scientific fact is not a democracy. The laws of physics are not subject to the democratic vote of a group of scientists; they cannot be repealed by a popular vote. ix) The report on geosequestration also gives a false impression of the importance of carbon dioxide on the greenhouse effect. All of the gases mentioned in section 2.5 are minor contributors to greenhouse. Between 75%-95% of the greenhouse effect is the result of water vapour and cloud. The understanding of the influence of the latter is low, by the IPCC’s own admission. x) Doubling CO2 will only increase the natural greenhouse effect less than 2%. This would produce warming of the order of 1 degree Celsius in the absence of negative feedbacks which are the norm in sustainable physical systems. xi) The IPCC does not explain how that despite the concentration of atmospheric CO2 increasing fairly rapidly following the Second World War, the period between 1940 and 1975 was associated with a reduction in global surface temperatures. xii) Or why in the nine years since 1998, global temperatures have been relatively stable despite rising carbon dioxide concentrations in the atmosphere. xiii) IPCC states that snow cover and ice extent have decreased. [But] it is generally accepted that the main Antarctic ice cap is, in fact, both cooling and increasing its ice mass. xiv) Sea levels all over the globe have been rising for centuries; this is not due to anthropogenic global warming, but merely a recovery from the last ice age. A recent analysis has found that no statistically significant ocean warming has occurred over the late 20th century. xv) It is a pity that the report uses the Stern Review as a basis for the scientific understanding of anthropogenic global warming. Not only has this report been thoroughly debunked in a scientific and economic sense, but Stern acknowledges that he had zero understanding of the issue less than one year before the Stern Review. xvi) Also it is worth noting that the Stern Review was commissioned because UK Prime Minister Blair and Chancellor of the Exchequer Brown did not like the findings of the House of Lords Report into climate change. xvii) It is a matter of public record that some scientists have withdrawn from the IPCC process because of dissatisfaction with its probity and methods. xviii) Most of the public statements that promote the dangerous human warming scare are made from a position of ignorance—by political leaders, press commentators and celebrities who share the characteristics of lack of scientific training and lack of an ability to differentiate between sound science and computer-based scaremongering.
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