Learning Lessons from Crisis

Just two days after Haiti’s earthquake, Leonel Fernández, the president of the neighbouring Dominican Republic, ordered a helicopter to fly him over the border for an unannounced visit. He was worried that his Haitian counterpart and friend, René Préval, was still incommunicado. What made this neighbourly gesture remarkable was that the two countries that share the island of Hispaniola have long been divided by mutual suspicion. During a previous term in the 1990s, Mr Fernández became the first Dominican president to visit Haiti in 60 years.Economist, Feb 2010

Not only did Fernandez visit Haiti, but his country has helped a lot, sending crews of engineers and doctors along with mobile kitchens, buses refitted as temporary schools, and teams to build hospitals and other facilities.  These are huge gestures of goodwill between nations where children are taught of the atrocities their people have suffered at each others hands, and where significant racism still exists between parties. Continue reading

The Toyota Recall

[Shares in] Toyota Motor Corp., the world’s largest carmaker, fell in Tokyo as it expanded a U.S. recall by more than 1 million vehicles to 5.35 million, adding to concerns its reputation for quality may be permanently tarnished.” The article continues, “…Toyota’s “reputation for long-term quality is finished,” said Maryann Keller, senior adviser at Casesa Shapiro Group LLC in New York, a strategic adviser to the auto industry. ‘People aren’t going to buy Toyotas, period. It doesn’t matter which model. What’s happened is sufficient to keep people out of the stores’ ” – Source – Bloomberg

The above is rather symptomatic of the sort of headline we have been seeing, in early 2010, concerning the worldwide recall of Toyota vehicles for a range of accelerator and brake issues.

To put this into some initial context, Toyota is the world’s largest car manufacturer, with annual sales exceeding 8.9 million vehicles.  The firm has always sold itself on reliability, safety and innovation as key values, and has built a loyal worldwide customer base in commercial, retail, and specialist vehicles. Continue reading

Dictators, Democracy and Some Home Truths…

As Foreign Policy Magazine reports, “Equatorial Guinea’s economy depends almost entirely on oil, which generated revenues last year of well over $4 billion, giving it a per capita annual income of $37,900, on par with Belgium.” While this has given the country’s ruler (Teodoro Obiang Nguema Mbasogo) an estimated net worth of over $600m (which in reality will be many magnitudes higher) it has left the population impoverished with one in three dying before the age of 40 and a US State Department Report citing problems including (but not limited to): “…limited ability of citizens to change their government; unlawful killings by security forces; torture of detainees and prisoners by security forces; life-threatening conditions in prisons and detention facilities; official impunity; arbitrary arrest, detention, and incommunicado detention; harassment and deportation of foreign residents with limited due process; judicial corruption and lack of due process; restrictions on the right to privacy; restrictions on freedoms of speech, press, assembly, association, and movement; government corruption; violence and discrimination against women; suspected trafficking in persons; discrimination against ethnic minorities; and restrictions on labour rights….

While the country suffers such problems- the ruler’s son lives in abject comfort, enjoying a $30m home in Malibu (California) with a $10m fleet of cars (including two $2m Bugattis) and a playboy lifestyle.  As Foreign Policy Magazine continued, “Many African regimes have degenerated into kleptocracy, but Equatorial Guinea’s corruption is so entrenched, scholar Geoffrey Wood has written, that it “is one of the few African countries that ‘can be correctly classified as a criminal state.’

Equatorial Guinea is by no means a unique case.  Many nations throughout the world suffer incredible wealth disparities, corruption and social issues caused by dictators who control natural resources or have a vice-like grip on the political system.  Continue reading

The Start of The Great Unwind?

The Federal Reserve Board sent its most explicit signal yet that the emergency supply of liquidity to financial markets is done and the most aggressive monetary policy easing in its 96-year history will eventually reverse.” – February 19th, Bloomberg.

Citing “continued improvement in financial market conditions”, the US Federal Reserve raised its discount rate (the rate banks are able to borrow directly from the Fed) by 25 basis points to 0.75% (from 0.50%).  This may not seem, at face value, to be a large change; but there are a number of reasons why this increase is significant:

Market Complacency

The Federal Reserve (along with most central banks) now keeps an extremely close eye on markets, with the aim of more proactive ‘pricking’ of bubbles as they emerge.  The markets have, since the aggressive global rate cuts, become accustomed to ‘cheap wholesale money’ (regardless of their unwillingness to lend this to individuals or businesses).  This support has to be removed to allow markets to naturalise, and one of the first methods will be to raise the wholesale cost of funds.  It is important to also understand the potential existence of bubbles within the Treasury bill market, as investors were able to borrow money extremely cheaply, to buy very low yielding treasury bills, creating close to zero risk returns.  By raising the discount rate, the Fed is signalling to investors that they need to begin unwinding these positions (which would cease to be positive in yield) diverting capital elsewhere in the market. Continue reading

Could Greece End the Euro?

As I write this, my Bloomberg feed shows that, “Euro-region leaders [have] ordered Greece to get the bloc’s highest budget deficit under control and said they are prepared to take “determined” action to staunch the worst crisis in the currency’s 11-year history.”, with the FT adding, “Under an agreement hammered out in last minute negotiations in Brussels, the 16-country eurozone stopped short of providing immediate financial support for Greece, but gave an implicit assurance to help Athens if it encountered problems in refinancing its sovereign debt later this year.Continue reading

How The Internet and Digital Culture Affect Rights and Liberties.

In this interview, we talk toGigi Sohn, President and Co-Founder of Public Knowledge (a highly influential Washington, D.C.-based public interest group working to defend citizens’ rights in the emerging digital culture) and Ross Anderson, Professor of Security Engineering at the University of Cambridge. We talk about how digital technologies and the internet have affected our rights as citizens and consumers. We discuss the challenges and opportunities posed by the digital era, and how these will affect our rights in the future.

http://thoughteconomics.blogspot.com/2010/02/how-internet-and-digital-culture-affect.html

The Truth About Democracy

In recent weeks, we have seen uprisings in Tunisia, Egypt, Algeria, Yemen and Jordan where members of the populous have taken to the streets, demonstrating and disrupting a country over issues ranging from food inflation, corruption, freedom of speech, living conditions and basic human and economic rights.  Most notably of these have been the actions in Tunisia and Egypt which, at least academically, have forced some degree of regime change.  For the first time within the Arab world, populations have realised that they can create change by mobilising.

The Missing Ingredient

So what’s changed? Why did this not happen sooner? The answer is technology.

In each of these countries, you are dealing with regimes which curtail freedom of speech and communications to a degree which gives them notional control over the population.  The combination of fixed line and mobile internet, together with social media platforms and even SMS has given ‘the general public’ tools by which they can co-ordinate themselves in an organised and massive fashion; and in a way which subverts the typical methods of censorship employed by regimes.  In the Egyptian example, even recreant actions such as  ’switching off the internet’ didn’t preclude demonstrations from continuing, as firms such as Google provide alternative access platforms for users. Continue reading

Follow

Get every new post delivered to your Inbox.