Inflation’s silver lining

Feb 26th 2009
From the Economist Intelligence Unit ViewsWire

Falling inflation is providing relief to Asian economies

Falling inflation is providing a welcome boost to Asia’s badly faltering economies. Most importantly, it has given the region’s central banks room to cut interest rates, which should boost growth prospects

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

NPR’s This American Life created two interesting stories covering the Credit Crisis:

• 365: Another Frightening Show About the Economy (10.03.2008)
• 355: The Giant Pool of Money (05.09.2008)

The Art of Profitability in itself isn’t an amazing book, but it’s the first book that I’ve read to reference other texts in so much detail – very much written as if you were taking a course. Like any text, there are many obvious portions, but if you complete the entire reading list then AofP is really a great book! Peter Sprung from CT has put together the complete reading list from the Art of Profitability… All of the books below are part of that reading list…

Good year for India, bad for basically everyone else

See full article at TheEconomist.

I haven’t had a chance to catch up on Audible “reading” for a few months now, so here’s a little “audible update”. Possible good new reads:

- The Ascent of Money: A financial History of the World (11.5 hrs, $18)
- The World is Curved: Hidden Dangers to the Global Economy (10.5 hrs, $21)
- The Partnership: The Making of Goldman Sachs (33hrs, $32)
- The Pixar Touch: The Making of a Company (9.25 hrs, $18)
- Wealth, War and Wisdom (12 hrs, $25)

I’ll probably go with “Wealth, War and Wisdom” first as it has a quite interesting premise… We’ll see.

Especially when using the tiny 13.3″ 1280×800 MacBook Air display, there is just not enough room in the dock. I typically like to have Mail, Safari, Yojimbo ($39) iKana (€12), iCal, iTunes, WriteRoom and TaskPaper.

By Using LaunchBar and Dock Doger, I’ve been able to remove Adium, Skype and Address Book from my Dock without slowing me down, in fact, it speeds me up! My MenuBar now has: Skype, Adium, Little Snitch 2, Shimo (VPN Tunnel), Plaxo, iStat CPU monitor, iStat Network Monitor, Default Airport Monitor, Default Battery Monitor, iStat World Time, and Input Method Selection window (Romanji, Hiragana, IMK-QIM)

Make Adium function well as a background only application by assigning a “Global Shortcut” via the input box at the bottom of the Preferences/General tab. I recommend: ⌘⎋ (cmd+esc), the shortcut used by Proteus. This feature was added in Adium 1.2.

Also on the Preferences/General tab, select “Show Adium status in menu bar” so that you’ll know if Adium is running and if it has a background notification.

Note that once you put Adium into background mode, you’ll no longer be able to access many items of the “View” menu, so you’ll want to memorize the shortcut keys for:

⇧⌘H: Show All Contacts (SHIFT+CMD+H)
⌃⌘I: Hide User Icons (CTRL+CMD+I)
⌃⌘S: Hide Status Messages (CTRL+CMD+S)

Unfortunately, there is no shortcut for “Hide Groups” so you’ll need to use “Dock Dodger” to enable the Dock (and Menu Bar) each time you want to Enable and Disable the Groups in your contacts view…

Other shortcuts include:
⌘/: Show/Hide the Contacts List
⇧⌘L: Transcript Log Window
⌥⌘L: File Transfers Window
⇧⌘H: Hide Offline Contacts

⌘I: Get Info on Contact
⌘L: Open Log Viewer on Contact   

⌘Y: Set your Away Message
⇧⌘Y: Set your Available Message

The entire “View” menu includes:

Last, here is the Preferences/General Tab where you should both: a) Set the Global Shortcut Key and b) Show Adium Status in the Menu Bar.

5 years ago (Nov 2003) Buffett wrote a great article in FORTUNE that helps simplify the macroeconomic implications of a trade deficit. This device is the analogy of two islands: Thriftville and Squanderville…

We were taught in Economics 101 that countries could not for long sustain large, ever-growing trade deficits. At a point, so it was claimed, the spree of the consumption-happy nation would be braked by currency-rate adjustments and by the unwillingness of creditor countries to accept an endless flow of IOUs from the big spenders. And that’s the way it has indeed worked for the rest of the world, as we can see by the abrupt shutoffs of credit that many profligate nations have suffered in recent decades.

The U.S., however, enjoys special status. In effect, we can behave today as we wish because our past financial behavior was so exemplary–and because we are so rich. Neither our capacity nor our intention to pay is questioned, and we continue to have a mountain of desirable assets to trade for consumables. In other words, our national credit card allows us to charge truly breathtaking amounts. But that card’s credit line is not limitless.

Read Buffett’s original article.

Buffett even goes so far as to suggest a very creative solution – the creation of Import Credits that are issued to exporters based on the value of goods they sell abroad.

Seeking Alpha had a brief article this evening that pointed to Buffett’s original piece…

今早“寻找阿尔法”有一篇文章叫：央行家能防止大萧条？

这里有更多的消息关于为什么现在的全球金融危机是上世纪90年代的互联网泡沫和亚洲金融危机的后果。

Greenspan’s second error was pegging interest rates too-low and too-long at 1%, and moving too slowly to lift the fed funds rate to a more neutral level, that could have taken the wind out of the housing bubble. Instead, Greenspan was a “serial bubble blower,” inflating commodity and housing prices at the same time, while casting a blind-eye to reckless sub-prime lending in the mortgage market.

格林斯潘的第二个错误是太长的时候压着利息太低，在1%，然后他太慢把这个利息率提到一个合理的比例，如没有压着利息率那么低，房地产泡沫就早结束了。反而，格林斯潘是个“连续造成泡沫着”，同时造成通货膨胀和放低长价格升高，并没有监督很高危险的按揭贷款。

After stock market “bubbles” collapse, coinciding with economic recessions, it can take several years until the forces of inflation gain the upper-hand over deflation. The textbook way to combat deflation is for central banks to rapidly expand the money supply or bank credit, and slash interest rates. That’s what the BoJ and Fed did in 2001, in a double barreled assault against deflation.

如同时有股市泡沫崩溃和经济衰退，经济的反弹经常需要几年。反弹的过程要求通货膨胀需要超过通货紧缩。最典型克服通货紧缩方式是央行来快速扩大货币的供应，银行信贷，或把利息率剪得很低。直至2001年，日本央行和美联是怎么做的－直接攻击通货紧缩。

有一篇英语文章关于卖衍生品的销售者怎么看衍生品。感觉很多开发软件的人是换了到华尔街去。他说“衍生品越复杂，赚的钱越多”。自己研究一下：

Customized and client-specific, these transactions also meant something else: fat spreads. By the time the 1990s rolled around, spreads on vanilla derivative transactions collapsed rapidly and new entrants moved in and competition increased. Doing a vanilla fixed-to-floating swap off the back of a bond issuance or floating-to-fixed swap to lock-in the rate on a bank financing simply wasn’t interesting – from a compensation perspective. Knock-ins, knock-outs, up-and-outs, down-and-ins, embedded bermuda swaptions, momentum caps, etc. all helped to differentiate solutions from competitors and preserve proprietary profits in trades. Volumes off the corporate desk simply weren’t great enough to make a business solely on vanilla trades, and smart and creative derivative originators, structures and traders found ways to “add value” through complexity.

参考原文在Seeking Alpha：Insights from a Derivatives Salesman

Sometimes a picture truly is worth a thousand words. There’s a Reuter’s article stating that “Threatened by a “financial tsunami,” the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday“.

Here’s the chinese version of the “Financial Tsunami” (金融海啸） story. Toward the end of the story there’s an interesting picture.

Don’t worry, the picture is just chinese clipart from a regular Joe (or Zhang) — his pants say “房贷”, referring to the mortgage he’s paying and it’s an almost unbearable burden…

But if you read into it more – could be interesting

The global economy is likely to continue going south for another year, and once it bottoms out, the rebound will be slow in coming.

English: http://english.caijing.com.cn/20080821/77400.shtml

Chinese: http://magazine.caijing.com.cn/20080817/77330.shtml

搭便车问题（Free rider problem）是一种发生在公共财上的问题。指一些人需要某种公共财，但事先宣称自己并无需要，在别人付出代价去取得后，他们就可不劳而获的享受成果。

在日常生活中也常可找到搭便车的例子，例如许多轮船公司不肯兴建灯塔，他们可以获得同样的服务，此种搭便车问题会影响公共政策的顺利制定及有效执行。

例子

假设在一条街道有25名住户，并且本街道即将进行卫生设施改造，改造的费用为$2500。因此分摊到每个住户的改造费用为$100。虽然设施的改造会使得所有住户都可以受益，但当费用是自愿支付时，肯定会有一部分的住户拒绝交纳。这部分住户盘算着其他住户会分担改造费用，而此种卫生设施肯定会投入使用。

解决方法是使得25名相互独立的住户作为一个整体支付这笔费用，即集体意志代表个人意志。在此情况下，住户可以通过投票决定是否进行设施改造。如果投票的结果认为应该进行改造，则所有住户都必须交纳费用。

正是由于这个原因，一些公共服务，如国防、公共治安等，就必须由政府组织提供。

当然，仅仅通过投票决定还没能把问题解决。住户们还需要对费用的分摊比例进行讨论，因为一种平均分配费用的原则又显得无法公平的反映用户之间的差异。