Wikipedia broadly defines "sovereign wealth funds" (SWFs) as "entities that can manage the national savings for the purposes of investment." The United States doesn't have one because there are no national savings. The State of Alaska, however, does. But most of these investment funds are owned by countries such as China and the oil-producing states—countries that have more money than they know what to do with.

In a study [PDF] that attempts to rank the funds I came upon this—

It could reasonably be argued that the objectives of a SWF should be merely to implement its investment strategy and maximize financial returns subject to whatever risk management constraints that have been established. In this case, its “ethical guidelines” would involve ignoring ethical considerations.... —Edwin M. Truman, Senior Fellow for the Peterson Institute for International Economics, writing in "A Scoreboard for Sovereign Wealth Funds"

This is a wonderful formulation! "Ethical guidelines" would involve ignoring ethical considerations. In the study, any fund that perfectly followed this principle received a "plus 1," though all the SWFs were found to be "ethically challenged" to some extent—which is to say that all SWFs were seen to have implicit restrictions on where they might invest.

This, of course, is standard Capitalist Business 101 wherein it is taught that the fiduciary responsibility of the corporate board and executives is to maximize the financial returns for the stockholders (which in privately held companies may consist only of themselves). And may the rest of the world be damned! It is a principle that even the Mafia has been known to abandon.

We all know what the reaction would be if an equivalent principle of ethical neutrality were promulgated for engineering within the fields of, say, biology, psychology and sociology. The Religious Right and the secular Left would find common cause overnight. And what is nuclear arms control if not an effort to bring humanitarian considerations into nuclear engineering?

Yet for economics, which is both a quasi-science of little predictive ability and a field of (implicit) social engineering based on dubious knowledge and even more dubious theories, the public allows a priesthood robed in grey-flannel suits not only to promulgate this principle but to wreak utter havoc in its service.

Well, let's just look at it as an "economic" question: What is the benefit of convincing the public to accept this principle and whom does it benefit?

Related post
A note on understanding elites (9/3/07)

Tags: * investment neutrality

• Senator Hillary Clinton outpigged her presidential rivals by scoring over a half billion dollars in earmarks for New York State. By comparison her opponents were pikers. She's on the Senate Armed Services Committee, so most of the money went to military or Veterans Administration projects. The prospect of a Clinton Presidency must have the military-industrial complex rejoicing.
   
• Five public-interest organizations (CREW, EFF, POGO, Public Citizen and the Sunlight Foundation) have banded together to create an online database of documents released under the Freedom of Information Act (FOIA). They're looking for citizens willing to review the documents.
   
• Another House Republican plans to spend more time with his family. Jim Saxton of South New Jersey let his plans be known to a "knowledgeable GOP source."
   
• The U.S. is garnering Sunni tribal

  "I have a weakness for Cuban cigars, French cologne, and Spanish-made loafers"

  leaders' support the old-fashioned way—with a bribe. Since they're paid in dollars they'd better spend them fast.
  
  Sam Dagher reports that "paying tribes to keep the peace is nothing new. It was one of Mr. Hussein's tools in his selective patronage system designed to weaken and control all institutions outside his Baath party. The British also tried it when they ruled Iraq last century."
  
  We know how that turned out.

Tags: news and politics

When Representative Dennis Kucinich introduced a privileged resolution to impeach Vice President Cheney on November 6 (H.Res.799), there was a lot of hoopla on the Left. But the real cheering was among the Republicans.

A privileged resolution takes precedence over other House business. If a motion to table (set aside) the resolution does not succeed, the resolution must then be debated for at least one hour.

The Repugs figured that a mini-impeachment debate might be just what the Democrats didn't need. Jonathan Kaplan described the proceedings—

The vote to kill [table] Kucinch’s [sic] privileged resolution began as a largely party-line affair, but halfway through the vote, Rep. John Shadegg (R-Ariz.) persuaded Republican leaders to get rank-and-file GOP lawmakers to change their votes to force the debate.

At one point, the vote to table the motion stood at 246-165. Once Republicans began switching their votes, momentum swung the other way. When the vote stood at 205-206, some Democrats began switching their votes.

The vote to kill Kucinich’s resolution finally failed 162-251, giving Republicans the opportunity to watch Democrats debate whether to impeach Cheney — a debate in which many liberal Democrats were more than willing to engage.

House Republicans clearly enjoyed watching Democratic leaders squirm during the series of votes, which lasted more than one hour.

The resolution was finally referred to John Conyers' Judiciary Committee, where it will of course languish. Only Kucinich and three other Democrats voted against sending the resolution to committee.

While the Republicans may have enjoyed "watching Democratic leaders squirm," what they succeeded in doing was to expose the utter duplicity of the Democrats who voted to move forward on the resolution while expecting it to be tabled. If anyone can track down the Democratic vote-switchers, I would love a list.

In 2005 I wrote with some hope of the possibility of a Bush-Cheney impeachment. I have long since ceased to harbor such a hope.

Related posts
New Republican idea: A bounty on politicians (7/27/05)
Editorial of the Day (11/8/05)
Rep. Conyers works toward Bush impeachment (12/21/05)
Political Wire: Democratic Leaders Back Away from Impeachment Talk (3/7/06)
Must-Read of the Day (9/8/07)

Tags: *

China has just announced plans to "diversify" its foreign exchange reserves. Translated that means that the Chinese would rather be holding anything other than dollars. The dollar fell immediately. Min Zeng reports that

The dollar fell to a record versus the euro and the lowest since 1981 against the pound after Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign exchange reserves.

The U.S. dollar also declined to the cheapest versus the Canadian dollar since the end of a fixed exchange rate in 1950 and a 23-year low against the Australian dollar. The New York Board of Trade's dollar index dropped to 75.077, the lowest since the gauge started in March 1973.

But here's the part that matters—

"The dollar sell-off was sparked by concern that foreign central banks' diversification away from dollar assets may accelerate," said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments in Boston.

You bet.

The situation facing the players is a classic problem for Game Theory. Let's say that you, I and Beelzebub are all holding a wad of dollars. We all know that the dollars are losing their value and would like to trade them for a stronger currency. It's like keeping your money in a savings account with a negative interest rate.

We also know that if anyone of us unloads them too fast their value could fall to near nothing. To put it another way, the only reason they're worth what they're worth is that we keep holding them and trading in them.

Now you, I and Beelzebub are not the closest of friends, and each fears that the other may try to pull a fast one by unloading the dollars while there's still a market for them. A hint, say, that Beelzebub intends to sell could cause you and me to panic and start a preemptive sell-off to trade our dollars before Beelzebub can get in on the action. And Beelzebub feels the same about us.

After all, the first to sell will get the best return. The last one to sell will be left holding some paper that will be about as valuable as a mortgage-backed SIV. So we warily watch each other's dollar accounts as we continue to pretend there's nothing we love more than dollars.

In the meantime we've been trying to shift the burden onto other poor suckers by using our dollars to buy real assets such as African oil or Bolivian gold, which promise to be worth something someday.

Jessica Hupp discusses the positions of some of the real players in this great game (Saudi Arabia, South Korea, China, Venezuela, Sudan, Iran and Russia) and raises a point seldom mentioned in the mainstream media—

.... Additionally, the revenue generated from the use of the dollar will be sorely missed if it’s lost. The dollar’s status as a cheaply-produced US export is a vital part of our economy. Losing this status could rock the financial lives of both Americans and the worldwide economy.

Sarkozy before the Congress

French President Sarkozy has paid a state visit to Washington after enjoying Bush's wienie roast so much in August. He was invited to speak to a joint session of Congress where they've decided to revoke the "freedom fry" and eat the post-Iraq-invasion French fry once again. Sarkozy was even allowed to speak French. It was quite a show.

Tom Baldwin reported—

The British former Prime Minister’s [Tony Blair's] own address to Congress in 2003 had been received with a huge ovation. But yesterday Senator Patrick Leahy suggested that Mr Sarkozy had outdone him, saying that the response to a foreign leader had been the “most positive that I’ve heard in 30 years”.

M. Sarkozy is standing as tall as a short politician can stand. He has been making threatening noises toward Iran, which makes him our new best friend. What has Britain, now mired in Afghanistan, done for us lately, I ask you?

Where former French presidents might have warned of American "cultural imperialism," Sarkozy couldn't get enough of it—

Mr Sarkozy described “the American dream” and went on to cite such figures as Elvis Presley, John Wayne, Marilyn Monroe and Neil Armstrong as he spoke of the impact that the US had made on his generation.

But toward the end Sarkozy slipped in some chastisements, first abusing us for our unregulated financial markets that gave the world, not to mention France, the subprime mortgage nightmare—

Those who love this nation which, more than any other, has demonstrated the virtues of free enterprise expect America to be the first to denounce the abuses and excesses of a financial capitalism that sets too great a store on speculation. They expect her to commit fully to the establishment of the necessary rules and safeguards. The America I love is the one that encourages entrepreneurs, not speculators.

And then the falling dollar—

Those who admire the nation that has built the world's greatest economy and has never ceased trying to persuade the world of the advantages of free trade expect her to be the first to promote fair exchange rates. The yuan is already everyone's problem. The dollar cannot remain solely the problem of others. If we're not careful, monetary disarray could morph into economic war. We would all be its victims.

Pretty strong words, when you think about it. The Congress applauded heartily.

How much time do we have left?

How long can this game go on before somebody cracks and begins a massive dollar sell-off? Weeks? Months? Till the next presidential election? Nobody but my copromancer knows, and he's not telling.

Not so long ago I wrote that

The dollar, of course, is not facing such a drastic loss of value. But by jerks and spurts the loss of value must and will continue.

Silly me. I fear I may have been overly optimistic. That the dollar may end with more of a bang than a whimper seems all too possible. If you liked "shock and awe," you ain't seen nothing yet.

With that in mind, you might want to peruse a transcription of Dmitry Orlov's PowerPoint presentation in which he makes a point-by-point comparison between the current state of the U.S. versus the U.S.S.R at the time of its collapse. He finds that, horrible as the Soviet collapse was, the Soviet Union was better prepared to endure it.

Orlov offers this—

If the economy, and your place within it, is really important to you, you will be really hurt when it goes away. You can cultivate an attitude of studied indifference, but it has to be more than just a conceit. You have to develop the lifestyle and the habits and the physical stamina to back it up. It takes a lot of creativity and effort to put together a fulfilling existence on the margins of society. After the collapse, these margins may turn out to be some of the best places to live.

I hope that I didn't make it sound as if the Soviet collapse was a walk in the park, because it was really quite awful in many ways. The point that I do want to stress is that when this economy collapses, it is bound to be much worse. Another point I would like to stress is that collapse here is likely to be permanent. The factors that allowed Russia and the other former Soviet republics to recover [oil, for instance] are not present here.

In spite of all this, I believe that in every age and circumstance, people can sometimes find not just a means and a reason to survive, but enlightenment, fulfillment, and freedom. If we can find them even after the economy collapses, then why not start looking for them now?

Related posts
Buying a used Mercedes (2/8/05)
Currency of the Day (7/23/07)
Many in finance found to be SIV-positive (10/30/07)

Tags: * currency economics monetary policy

• Six members of the Afghan Wolesi Jirga, the lower house of parliament, were killed by a bomb while touring a sugar factory. At least 35 others were killed, including tribal elders and children. The six lawmakers were members of the National Economy Commission. Among them was Sayed Mustafa Kazemi, a Shia who created Afghanistan's first opposition political party. The Taliban have denied responsibility and condemned the bombing, which was first reported as a suicide bombing but is under further investigation.
  
  Meanwhile in the "peaceful" northern province of Baghlan, former Afghan prime minister Gulbuddin Hekmatyar and leader of the Hizb-e Islami, an islamist mujahadin movement, is reported to be appealing to militia commanders in the north to join in battling Western forces.

Tags: news and politics

• Expecting a trip at government expense? Then don't miss Radar's "Guide to CIA Hospitality." The guide describes accommodations and services at American extraterritorial prisons in Afghanistan, Poland and Jordan. Food, Treatment, Decor and Survivability are rated on a scale from 1 to 30.

Tags: news and politics

"Bishop" Rick Hawkins, another family-values megachurch pastor, has found value in families—especially the wives. Hawkins was joined recently at the Family Praise Center in San Antonio by Florida televangelist Paula White.

White is under investigation by the Senate Finance Committee, but she's not alone. According to Wes Allison and Sherri Day, Republican Senator Charles Grassley has requested financial records from six top televangelists—

Rev. Kenneth Copeland of Newark, Texas; the Rev. Creflo Dollar, pastor of World Changers Ministry in College Park, Ga., and New York City; Benny Hinn, a televangelist based in Irving, Texas; Bishop Eddie Long of New Birth Missionary Baptist Church in Lithonia, Ga.; and Joyce Meyer, a popular evangelist and author based in Fenton, Mo.
....

The federal tax code prohibits using income and assets from tax-exempt organizations for personal gain. Unlike many other nonprofits, churches and ministries are not required to file Internal Revenue Service forms outlining their spending.

Expect to hear quite a bit about "freedom of religion" in the weeks ahead. And say a little prayer for them, won't you?

Related posts
Can't get the word out? Right-wing radio beats Left to the punch (4/28/05)
Rev. Ike gets a blow job, and I don't mean the pompadour (6/29/05)
The threat of evangelicism (8/9/05)
Praise the Lord! Jim Bakker's back and he wants your money (1/7/07)
Foreign Agents of the Day (7/24/07)

Tags: * televangelism corruption church-state relations Internal Revenue evangelicism evangelical church prosperity gospel

Do I have to examine my stool to know if the program is working? —infomercial for Dual Action Cleanse that brought a bleary-eyed Handy Fuse into full consciousness, or what passes for it

At first I thought George Bush had taken up copromancy. If he hasn't, he should. There's enough material for a reading.

This has put me in a strange mood. There's no telling what I may write today. But as the official Copromancy website proclaims, "Future happens!"

Tags: * humor divination cable television

• The Left continues gains in Latin America. Alvaro Colom won Guatemala's presidential election defeating retired General Perez Molina, who advocated getting tough on crime by using the "mano dura" ("strong hand") and reinstating the death penalty. Colom hopes to reduce the high crime and murder rate by "lifting people out of poverty." In the U.S. we can only marvel when an electorate is offered such a choice.
   
• Not a dumb blond, supermodel Gisele Bündchen's contract to sell Pantene hair products for Proctor & Gamble requires them to pay in euros. And "Jim Rogers, a former investor partner of George Soros, said that he was selling his home and all his possessions to buy Chinese currency...." In February '05 I noted that mules for the South American drug cartels prefer to swallow euros.

Tags: news and politics

Every decision by the security service to investigate someone entails a decision not to investigate someone else. —Jonathan Evans, Director General of MI5, Britain's internal security service, as quoted in "'Thousands' pose UK terror threat"

So many people to investigate, so little time! I have an idea: Why don't you spy on me and I'll spy on you? It will greatly expand the GDSP (Gross Domestic Spying Product) and was proved successful in any number of countries of Central, Southern and Eastern Europe.

Tags: * domestic+surveillance HUMINT United Kingdom UK