Stray Thoughts:

Greece crisis, banks and shortselling:

There can be no doubt that the banks led by Goldman Sachs played a crucial role in exacerbating the crisis through short selling of Greek bonds. Short selling amounts to selling what the seller doesn’t own. If I borrowed an asset from a friend and sold it I would most likely go to jail even if I provide a replacement. Therefore, in my forty years of investing I have never seen the morality of short selling. Moreover, when the bank lends the stock from my account for some one to sell, I should be informed and I should have some claim on the profits. If the regulators really want to minimize volatility in trading and eliminate phony crises, tightening shorting rules would be the first step.


Oil price and Alberta’s budget deficit:

Alberta's budget deficit goes up and down like a yo-yo because it is based on oil and gas prices, which also go up and down. Huge deficits and huge surpluses are expected in a commodity-based economy. The swings could be reduced if the province based its spending on the long-term average price of commodities and set aside surpluses in good years to make up for shortfalls in bad. This will stabilize provincial spending and allow municipalities to plan with confidence. (Edmonton Journal May 16, 2010)

Atheists and Pope:

The crude attempts to humiliate the Pope (Hitchens, Dawkins attempt Pope's arrest on U.K. visit, April 12) are disgraceful. Atheists must have tolerance for other belief systems and must respect individuals who command the following of millions of people to deserve any tolerance and respect for their own beliefs. Such behaviour causes much shame and grief to atheists like me who believe that every one is entitled to the belief system they can live with in peace.

Spill and Oil Sands:

What will you have, major disasters like this or continuous pollution by extraction from oil sands? At least the later is predictable and in the long term manageable. In any event nothing beats doing without what will consume you sooner or later.

Lap dancing teachers:

What surprises me in this furor is that no one asked how good or bad were the teachers in the class. For all we know they were exceptionally good teachers. Even if they were merely satisfactory as teachers it seems a little shortsighted to end the promising careers of two trained young professionals when a warning or a suspension would have been a sufficient penalty. In all probability, Winnipeg has lost two teachers because the media and some parents made more fuss than their thoughtless action required.

Greek debt crisis:

What surprises me the most is that the Euro partners of Greece can even
contemplate helping them out in view of their shenanigans before admittance to the ECM. This Greek tragedy has its origin in then Greek
government sweeping the debt under the carpet rather than facing up to it and finding ways to reduce it. They pulled wool over the eyes of their future partners and now want their money. Only reason for Germany and France to help now will be that they were a party to the trick then being played and they are willing to risk the well being of their citizens to save face, sacrificing in the process a golden opportunity to establish a solid foundation for Euro.

More on Greek debt crisis

It is not surprising that the workers are complaining about the austerity being imposed on them by leaders who will suffer relatively little in comparison. There is no doubt that the current crisis is due to the excesses of the past and the situation has to be rectified. Unfortunately, the time for gradual adjustment is past and the changes have to be drastic but they should be presented in a palatable form. Perhaps the workers would have been more amenable to cuts in their wages if they saw the prosperous group in the society subjected to a more than cosmetic tax increase and severe penalties for past and present tax avoidance. I had hoped that the governments had learnt from Bolshevik revolution – you can not expect the poorest to shoulder the biggest burden of the restructuring of the society just because they appear to be the weakest without risking major upheaval.


EU lawmakers and oil sands

While it would be churlish to deny the environmental damage caused by oil sand development and production, it is equally incomprehensible to see producer country and companies being blamed rather than the consumers who demand it. If lawmakers want oil sand production to be curtailed, all they have to do is promote vigorously an alternative, if there is one, and oil price will drop to the level where production from oil sands is uneconomic.

Stiffer penalties for illegal tobacco:
With due respects to the doctors, the problem is with enforcement, not
with penalties. If you do not find the culprits what good will the stiffer penalty do? And if you found the smugglers and prosecuted them regularly, existing penalties will put them out of business. To solve this problem we need to look into why our policing agencies fail to apprehend smugglers and why, when caught, the smugglers are let off cheaply by the justice system.

Surge in populism:

The growing classes of haves and have nots do indeed inflame populism as Prof. Buruma says. However, these classes have always been there. The difference now is that have nots are becoming have nothings while consumerism is rampant among the haves. This is particularly alarming in developing countries and if the trend does not reverse, the violent protests of Thailand are only setting a stage for what is to come in more populous Asian countries.

Victims 'ashamed', 'violated' or just cheated:

Although the victims claim they feel ‘violated,’ perhaps cheated would be more accurate. As Bernard Shaw told the irate lady when he offered her a pound after she had agreed she would go to bed for a million pounds, “Madam, we have established your profession, it is the rate we are discussing.” If the ladies asked for payment in advance, as most sex workers do, they would not have been cheated at worst and would not have felt ‘violated’ at best.

On household debt:

Canadian’s household debt is of two very different kinds. One is the mortgage debt taken on to profit from increasing value of the homes. The other is taken by young persons to keep up with their peers and is largely high interest credit card debt. While both are worrisome, it is the later that is more dangerous because it assumes continued employment. Rising interest rates will cause higher unemployment via reduced consumer spending by mortgage holders. This will squeeze new unemployed while most mortgage holders will get by. Therefore, it is the credit card companies who should be taking urgent precautionary actions. However, judging from the ‘preapproved’ application forms arriving in the mail every day for my teenagers, I suspect that another bank crisis is on the horizon.

Century of Africa:

It is strange to lump a vast continent like Africa and proclaim that this will be their century. Africa, in spite of the dark skin of its people, has different cultures, tribal conflicts and most important different economic systems, strengths and weaknesses and different regions will perform differently as they did in Asia. Japan, South Korea, Singapore and Malaysia took lead since the fifties while China and India lagged. Now these two countries are catching up. Will it be their century? Only if they solve immense social problems they face and that is not a given. If they do not succeed in distributing the wealth better than they have done recently, their success will be a flicker rather than permanent light. Similarly, if we emphasize commerce and aid without helping them solve their social conflicts, the prosperity will remain a dream in the eyes of Western optimists.

Quebec and Greece

It may be all Greek to Quebec but it should not be all Greek to the rest of Canadians. $8.6 billion a year is a bribe to Quebec so they stay in the Federation just as the loan to Greece is a bribe for Greece to stay in Euroland. Without the loans Greece will have to drop Euro as its currency and may even leave the common market. If this happens some or all of the countries like Spain, Portugal, Ireland and Italy may be forced to follow suit. Germany and France do not want the disintegration of their markets, hence the bribe. It has nothing to do with the pensions and retirement age, every thing to do with Greeks and other southern Europeans buying their products and services. (Calgary Herald, May 10, 2010)

BP and the oil leak:

It is only right that BP, or their insurance company, should pay for the cost of containing the oil spill. But how does one calculate the costs of damage to the birds and fish? All industrial activity, even though it is most obvious in extraction of resources, has the costs which we disregard. If these costs, pollution and depletion of the air and water, long term costs of deforestation and damage to non-human life forms in air and water and on land were included the balance of prices of different items will change and the consumption patterns will more truly represent what we take from the nature. This may transform our society, although there is no guarantee, into one which is more in harmony with our environment.