Archive for June 5th, 2015

Book Review — Never Let A Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown

June 5, 2015

This is really a must read book for those interested in the economics subject and profession.Written by Prof Philip Mirowski, a scholar in history of economic thought. Someone who has explained in several texts how economics has become a machine like, mathematical subject over the years.

In this book, written post crisis Prof M takes a stab at the Neoclassical school of economics which he calls it nicely as Neoclassical Thought Collective (NTC). As he is a scholar of thought, he painfully builds this entire NTC thinking before the crisis and the cheerleaders of this thinking. This NTC group was the go to group and had all people placed at the right places to push their ideas and make it the mainstream thinking.

During and post crisis, most of these ideas were found wanting. But guess what? It did not harm the careers or thoughts of any of the NTC brigade. They have actually only become bigger and their influence has only surged.

How did these so called self appointed guardians of world economy manage this Houdini? This is what the book explains in a really long narrative. The author explains how this club regrouped quickly post crisis and  behaved as if nothing has happened. They actually demonstrated that they are the only ones who can save the world as well. Some of them pointed  vociferously that they did say that  a crisis was emerging and hence they continue to remain relevant. Infact, these predictor guys popularity grew within the club and they were promoted as the new leaders of the NTC.  Within all these people changes, utmost efforts were made to ensure that NTC ideas continue and remain dominant as they were before the crisis. This meant ignoring all calls to make the subject interdiscipinary laced with history and other social sciences.

The brief of the book is:

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Will the hike in service tax be easily digested?

June 5, 2015

Veeresh Malik has an article in Money Life:

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There is macro and there is media macro

June 5, 2015

Terrific post by Prof Simon Wren Lewis. He distinguishes between macroeconomic as it is studied and media macro which is just a media creation and has nothing to do with facts.

It is on UK economy but sums up really well for India (and others) as well:

The story presented in much of the UK media is simple and intuitive. The previous government messed up: they spent too much, and it left the UK economy on the brink of financial meltdown. The coalition came to the rescue: clearing up the mess was tough at first, but now it is all coming good.
In previous posts I have shown that this is almost complete fiction. The increase in the government’s budget deficit under Labour was all about the recession, which in turn was created by the global financial crisis. There was no prospect of a UK financial crisis in 2010, which meant that austerity was not something the government was forced to undertake. Reducing the deficit could have been left until the recovery was secure (and crucially interest rates had risen above their lower bound), but the coalition chose to do otherwise. As a result they delayed the recovery by three years, at great cost. Even since 2013 we have simply seen a return to normal growth rates: there has been no catching up of lost ground. In that sense growth under the coalition hardly deserves the term recovery, and we have seen an unprecedented lack of growth in living standards. Productivity growth has been non-existent, yet the government has feted the employment growth that is its counterpart.
The government’s claims of macroeconomic success can therefore be dismissed without saying a word about the nature of the GDP growth that has taken place. But what growth there has been is itself worryingly unbalanced, as a new report discussed here sets out. Growth is too dependent on consumption, there is not enough investment, and the current account deficit is very large.
A large part of the media sees their role as supporting the government’s line, however far from the truth it may be. For whatever reason, most of the remaining media has bought this line, and failed to expose it as fiction. Even a headline in the Guardian yesterday talked about “rip-roaring growth rates of 2013 and 2014” when growth in GDP per head in those years was at best just average, and growth in income per head non-existent.
It is still commonplace to hear media commentators say that the economy is doing great, and ask why the government is not reaping the benefit in terms of political support. In truth the puzzle is the opposite – given how poor economic performance under the coalition has been, and that this poor performance has hit most people in their pockets, the real puzzle is why so many people think the government is economically competent. And the answer to that puzzle in turn lies in the myths that mediamacro has allowed to go unchallenged. Perhaps the latest growth figures might begin to dent them, but a remarkable feature of these myths is that they seem impervious to actual data.
I coined the term mediamacro because I obviously find it strange that public discourse on the macroeconomic fortunes of the UK economy seems so different from what the data and simple economics would suggest. For once I can be the one handed economist that Truman demanded, because the evidence is so clear and the economics (what little there is) so uncontentious. But mediamacro has implications well beyond macroeconomics. If the media has been capable of distorting reality by so much for so long in this case, are there other areas where it has done the same, and what does that tell us about the health of our democracy?

Brilliant 🙂

The media now a days is just at war to prove how certain regime/certain individual is driving the economic/financial market growth.

Has Mario Draghi lost his touch? If yes, that is good news for Eurozone..

June 5, 2015

There was a time when Mario Draghi was the most celebrated central banker of the world. His famous words “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough”  stirred European  markets like nothing else could. Suddenly markets jumped and ECB ended up lowering yields without spending a penny. This was in 2012 and 2013 leading to several awards for the central banker.

And now we are in 2015, The same news sites which celebrated Draghi are wondering whether the central banker has lost his touch. One’s luck in central banking can only stretch so far. It is the usual story. The awards should instead be titled as the luckiest central banker of the year. Those central banks who claim that they are not cheerleaders of markets are living in utopia. The success of a central banker is just dependent on how markets perceive and cheer the monopolist leader. Most of these awards anyways are usually sponsored by the financial street directly or indirectly.

On to Draghi:

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How Larry Ellison is spending a fortune to save American tennis

June 5, 2015

One has grown up to see Americans dominate Men’s Tennis for years to come. Atleast there were always a few players in top 10 and in 1990s most top 5 players were Americans.

This has suddenly declined to a shocking level with only one American being there that too in top 20 (John Isner at 16; next is Jack Sock at 38). In women’s if Williams sisters retire, there will be just one player in top 20 (Madison Keys at 16). In sports, one goes through these transitions as top players retire and young take time to adjust as we see in Aus cricket team. But the same has not happened to US Tennis. After slipping it remains there with no future talent emerging from the country.

Given this, Larry Ellison, Founder of Oracle is trying to resurrect tennis in US.

Amid a devastating drought, the Southern California town of Indian Wells seems like it should perhaps be illegal. Left alone, the ground here is baked and cracked and the same color brown as the barren mountains that surround this enclave of 5,000, many of whom are wealthy, white, and retired. But there aren’t that many spots where the ground remains in its natural state. Indian Wells is a vacation paradise full of resorts with luscious green golf courses, vibrant flower gardens, and abundant pools. Some resorts even have sandy beach wading areas for the grandchildren. The weather is perfect eight months of the year.

In 2011, Larry Ellison, co-founder of Oracle, paid $43 million for Porcupine Creek, a 249-acre estate here. Visitors sign a nondisclosure agreement to get past the armed guard and front gate. Once inside, they find an exquisitely maintained 18-hole golf course decorated with sculptures of naked women lounging among pink and purple tropical flowers, a “slidetacular” pool, and a Bellagio-worthy fountain that shoots water into the air when cars approach. These diversions surround a 27-room residence reminiscent of an Italian villa. Each year, Ellison’s architect adds another signature feature to the estate to keep him from getting bored.

Ellison comes to Porcupine Creek for at least two weeks in mid-March to take in the BNP Paribas Open tennis tournament at the Indian Wells Tennis Garden, 20 minutes away. Ellison is worth an estimated $47 billion, making him the world’s seventh-wealthiest person. He bought the tournament and its facilities for $100 million in 2009 and since then has invested another $100 million, improving the event year-after-year. Indian Wells, as it’s commonly known, has become one of the world’s premier tennis venues, attracting top players from both the men’s and women’s professional tours and, this March, 456,000 fans. That’s more than will attend the French Open, which ends on June 7, and rivals the draw of Wimbledon. It’s been dubbed the “fifth Grand Slam” and has become the model of how a tournament can be profitable while offering lavish perks to players and fans.

“It is so important for the tour to have someone like Larry buying a big tournament and pushing the other events,” says Rafael Nadal, a three-time winner at Indian Wells, shortly after losing to Milos Raonic in the quarterfinals this year. Nadal stays at Porcupine Creek as Ellison’s guest during the tournament. The estate has three tennis courts nestled into a grassy knoll with butlers on call from a central cabana to serve espresso, Champagne, or, as Nadal prefers, chilled coconut water. The cabana could be Nadal’s second home: Scores of his rackets fill a floor-to-ceiling locker; photographs of his trophy presentations dot the walls. “What Larry is making is amazing,” he says.

This is all eltitist stuff. He wants to dig deeper as well:

During a weeklong visit to the stadium and Porcupine Creek, it became clear that on the strength of Indian Wells, Ellison isn’t content with adding a fifth Grand Slam to the pro tour. With help from Mark Hurd, Oracle’s co-CEO and fellow tennis aficionado, he wants to restore tennis to prominence in the U.S., and make the game more profitable globally. “I think we simply have to do something to improve the quality of American tennis,” Ellison says, sounding for a moment like someone determined to end malaria. To do that, he and Hurd are plotting an all-new American tennis tour, and they want to cultivate the next Andre Agassi and Pete Sampras. Around Indian Wells, meanwhile, there are plans to build for tennis fans what Las Vegas is for gamblers. “I wouldn’t call Indian Wells a competitor to Monaco just yet, but the desert is changing,” Ellison says. “And why not? We should compete in all of these dimensions.”

Ellison, 70, has rebuilt a sport before. His love of sailing led him to his highly controversial domination of the America’s Cup, the capstone to decades of exploits that have included brushes with death while sailing in the Pacific, the construction of a real estate empire in Malibu and Hawaii (where he owns 98 percent of the island of Lanai), and liaisons with far younger women, including current girlfriend Nikita Kahn, a young actress and model from Ukraine.

 In the runup to the 2013 America’s Cup in San Francisco, Ellison used his fortune and connections in technology to create the biggest, fastest yachts the world has ever seen. The result: two- and three-hulled boats that travel more than 50 miles per hour, pleasing spectators while putting the crews at risk. (A sailor on a competing entry died when a yacht capsized.) Ellison’s team made unapproved changes to a practice boat and was penalized for cheating before completing one of the greatest comebacks in sailing history. While San Francisco officials had complained about the regatta’s cost and impact on the city, spectators packed the waterfront and millions tuned in on TV and tracked the boats online. Encouraged by the success, Ellison wants to take smaller, safer boats and start a worldwide racing series. “We want to turn this into Formula One,” he says. “We want to have regattas in Shanghai where they close down the Bund. We want to be in Tokyo Bay, in Auckland, Marseille, and Sicily racing these boats in big breezes.”
Ellison took up tennis about a decade ago. The pickup basketball games that kept him in shape were grinding down his body. “You can only play with 22-year-olds and get your nose broken so many times before you look for a sport that is cardiovascularly demanding but without the broken bones,” Ellison says. He plays tennis about five times a week now at his main residences in Malibu and Woodside, Calif. Most often, Ellison competes against Sandy Mayer and Trey Waltke, a pair of former pros.
Hope we see something in American tennis in future..

 


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