Thursday, January 31, 2008

Interesting Articles - January 2008

Face Value: Physiognomy & Success (The Economist, 24 Jan. 2008)

"Psychologists spent much of the 20th century denigrating the work of 19th-century physiognomists and phrenologists who thought the shapes of faces and skulls carry information about personality. However, recent work (Dr. Nalini Ambadi, Tufts University) has shown that such traits can, indeed, be assessed from photographs of faces with a reasonable accuracy."

Market ups and downs are normal for capitalism - Meghnad Desai (Times of India p20, 31 Jan. 2008)

"...we do not like stories which are dominated by random events. We see a conspiracy unless there is an elaborate causal story of who did what and when...Something similar happens when we encounter theories of who runs the world, who controls global capitalism...It is hard for people to believe, as Karl Marx did, that societies and even modes of production are self-organizing systems which no one ‘runs’ but which are run by a sum total of infinitely many decisions we all take. Some of the actors are big and others small but no one is big enough to buck the system or small enough not to make an impact."

"Last fortnight has proved the truth of that insight. On the one hand, American multinationals admitted that they goofed up big time. Merrill Lynch, Citibank, Bear Stearns and others lost billions of dollars in a market which they thought they knew and dominated. They have gone cap in hand to various sovereign wealth funds, which are by and large Asian. So the Kuwait, Qatar, Abu Dhabi and Chinese funds will own large slices of American multinational banks."


Sovereign-wealth funds: Asset-backed Insecurity (The Economist, Jan 17th 2008)

"Sapped by the subprime crisis, rich-world financial-services groups have been administered nearly $69 billion-worth of infusions from the savings of the developing world in the past ten months...sovereign-wealth funds...are now worth about $2.9 trillion...they will be worth $10 trillion by 2012...Although sovereign-wealth funds make up only 2% of the world's $165 trillion-worth of traded securities, they have a lot of firepower: more equity than private equity and more funds than hedge funds."

"Kiribati, a Pacific island country that mined guano for fertiliser, set up the Kiribati Revenue Equalisation Reserve Fund in 1956. Today the guano is long gone, but the pile of money remains. If it manages a yield of 10% a year, the $400m fund stands to boost the islands'GDP by a sixth.

"A broad, politicised hostility to foreign direct investment would come at a high cost. Such investment spreads financial capital, know-how and technology. It helps the world economy adjust to imbalances and gives countries stakes in each other's prosperity."

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