Let’s say you’re looking for some reading material for your Sunday. Well, I have some recommendations for you.
Start your day off with this slideshow from Foreign Policy on urban slums. That sounds like a real downer of a subject, but trust me here: it’s really, really beautiful photography and very thought-provoking. Trust me on this one.
The Wall Street Journal makes the case that ETFs are causing a bubble in emerging markets. It’s pretty convincing on the bubble part, but I’m not sure about the ETFs part—it says $26 billion have gone into emerging markets via ETFs and other sources. That’s really not that much. I suspect the real causes of the bubble are a) the carry trade (which I’ve talked about earlier) and b) genuine growth and reasons for economic optimism in the emerging markets (though how long they can persist in their exporter-oriented paradigm is very much an open question).
Philip Howard has a plea to avoid institutional madness in the wake of the Ft. Hood shooting. He uses as his example the zero tolerance policies put in place after Colubmines. That’s a very apt point: it’s clear now in the wake of 9/11 that US elites overresponded and this has been all sorts of damaging for our welfare. Whether it’s tightened visa rules for skilled immigrants, backlash in the Middle East, the increased debt caused by ruinous wars, the annoyances of airline travel these days, and most importantly, the geostrategic upheaval, the American elites have never missed an opportunity to miss an opportunity.
We passed the House Bill yesterday, and that’s a good thing. But the details, the devil’s in them. Take this example about the repeal of S-CHIP. Repealing S-CHIP would’ve been fine if there were a public option or Medicare for All proposal, but instead these children will be shunted into Medicaid and the more-expensive private insurance market. That’s bad. Of the points the GOP has made—very quietly—the complaint about Medicaid is by far the most accurate. Medicaid’s costs are borne partially by the states; whenever there’s a recession or financial difficulties, health care to the poor is among the first things to be cut. Due to the number of balanced-budget amendments in the states, this becomes a huge problem, and this will continue to be a huge problem in the future (unless you had, hypothetically here, a comprehensive health care reform bill that could deal with all these irrationalities in the system…). Of course—and this says a lot about the GOP—they have chosen to blather on about death panels and socialism and comparing health care reform to Dachau as opposed to actual cogent points like that. Says all you need to know.
Bankers, whether in England or America, continue to complain about their pay. Out-of-touch doesn’t even begin to describe their mentality. It looks like Citigroup is considering extending stock options to their employees. I continue to think this is a bad idea. Google CEO Eric Schmidt had an interview with Neil Cavuto (yes, a bad sign), in which he advocated for stock options for employees, noting that that had worked very well for Google and the Valley generally. But I think that point underscores the basic problem with granting options generally as opposed to Valley’s granting of options. The culture is different. If you work for a startup and get stock, you’re in it for the long haul: you probably have to work for a pretty long time and low pay—lower than you would get for an established company—and only after years of hard work do you get paid off. So employees and founders and investors therefore naturally focus on the long-term future for their efforts. Other companies, however, are obsessed with every gyration of their stock, to the long-term’s detriment (documented very memorably in Barbarians at the Gate) and I see no reason why Wall Street would be any different.
Also, if anyone sees SportsCenter top 10 plays for yesterday, could you send it along? Apparently Ryan Whalen's catch was a top 10 play yesterday.