Wednesday, December 29, 2010

IMF's Fiscal Monitor November 2010

The IMF has come up with another useful "Fiscal Monitor". There is a wealth of interesting data, including on financial sector and carbon tax. Worth reading, including the accompanying slides.

Tuesday, December 28, 2010

Why it pays to be combine Wall Street with politics

Rajan's book on "Fault Lines", which I have just been reading, reminded me of Robert Rubin, former US Secretary of Treasury, earlier the CEO of Goldman Sachs and later the Chairman of Citibank. In December 2008, the Wall Street Jounal had a tasty story of how Robert Rubin helped run Citibank into the ground and later be bailed out by the US taxpayer while in the process being paid US$115 million for "his services". Just read the quotes from the article below, which I leave without any comment:

"The virtue of this arrangement for Mr. Rubin has become manifest during the current panic. While Mr. Rubin has acknowledged that he promoted the disastrous idea of exposing the bank to greater risk to boost profitability, his "no line responsibilities" job description now allows him to blame the line managers for the consequences of his ideas.

Citigroup shareholders have suffered losses of more than 70% since Mr. Rubin joined the firm. To this day, he appears unable to say what exactly he did for the $115 million that he took out of Citi. "I think I've been a very constructive part of the Citigroup environment," he recently told the Journal, in defense of his tenure. Try selling that line at your next annual performance review, especially when asking for an eight-figure salary.

What is clear is that Mr. Rubin encouraged changes that led Citi to the brink of collapse. Which brings us to his best (only?) argument to shareholders. Mr. Rubin was reportedly critical to securing the latest federal bailout of Citi -- $20 billion in preferred shares plus taxpayers taking on most of the risk in a $306 billion portfolio of dodgy assets. This is on top of the $25 billion in Citi preferred shares that taxpayers bought in October. Giving Mr. Rubin the benefit of the doubt that he is the fixer who delivered the federal cash, this could make his paycheck appear more reasonable to many shareholders."

Or perhaps Mr. Rubin will be a victim of his own Beltway success. The U.S. government, with a 7.8% stake, is now a major Citi shareholder. The activist investors known as American taxpayers might just decide that they have no more dollars to spend on "constructive parts of the environment" with "no line responsibilities."

Tuesday, December 21, 2010

Presentation on "The Coming Golden Age of New Europe" in Istanbul and Vienna

On December 10, I delivered a lecture on "The Coming Golden Age of New Europe" at the Management Faculty of ITU in Istanbul, the Turkish equivalent of the American MIT. The lecture slides are here

On November 25, I delivered a similar lecture at the 3rd GROW EAST CONGRESS "Restarting Growth in Central Europe and South-Eastern Europe" held at the Wiener Konzerthaus in Vienna, Austria. More info:

Wirtschaftsblatt, the leading Austrian business daily, published an interview with me on "Osteuropa ist besser als die BRIC-Länder" (Eastern Europe is better than BRICs). The article in German is here.

Why Americans have it easy and why they should be more humble

The Economist has an interesting debate on whether "the language we speak shapes how we think". The conclusion seems to be that this is indeed the case, at least to some extent.

If so, English-speakers have it so much easier to succeed in today's world since it monopolized by English and--perhaps even more importantly--by the English-language, Anglo-Saxon media (The Economist, Financial Times, WSJ, NYT plus all the movies, music etc etc).

English-speakers, mostly Americans, have shaped the world and the global debate in their own linquistic, cultural and philosophical terms. This gives them an unprecedented advantage over other nations, whose citizens need to not only learn to speak English as well as native speakers do, but additionally they also need to change the way they think to be understood properly in the new language.

The bottom line is that I understand the frustration of the French, who struggle to "express themselves" in so many ways. Americans, in turn, should acknowledge that some of their global achievements are not due to their inherent "genius", but simply to that fact that the world is stacked in their favor, including in linguistic ways.