The Great Game Version Two?
When everyone is dead the Great Game is finished. Not before.
-Rudyard Kipling, Kim, 1901
The Great Game describes the behind-the-scenes diplomacy and spy games played by the British and Russians for supremacy in Central Asia during the mid and late 1800s. Made famous by the Rudyard Kipling novel, Kim, it was a power struggle between Great Britain’s interest in Asian, especially India, and Russia’s desire to exert influence on all the countries along its southern borders. One of the most famous participants in the Great Game, Sir Francis Younghusband, traveled all over Central Asia, as well as Nepal, modern-day India, Pakistan, and Bangladesh working to destabilize Russian alliances established by his counterpart Bronislav Gromchevsky.
While Kipling fantasized what was really most likely a boring, diplomatic series of negotiations, there is nothing benign about the events currently taking place in the exact same area over a century later. Russia is once again desperate to exert its influence on Central Asia. It has used a series of carrots and sticks to buy, cajole, and bully its way into the politics of Turkmenistan, Belarus, Kyrgyzstan, and their central Asia neighbors. This time, however, Russia’s Great Game foes are the United States and China. Read the rest of this post »
July 3, 2009 |
Posted in: Uncategorized |
By: Charles Parekh | 
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Why Do Recessions Happen?
The Bureau of Labor Statistics released numbers yesterday stating that, non-farm payroll employment continued to decline in June (-467,000), and the 
unemployment rate was little changed at 9.5 percent. Job losses were widespread across the major industry sectors, with large declines occurring in manufacturing, professional and business services, and construction. This means that roughly 14.7 million people are currently looking for work. In addition according to the Economic Policy Institute, this is the first recession since the Great Depression that has completely wiped out all the job gains from the previous economic expansion. In sum, even though growth in unemployment is slowing, we show no signs of a turnaround any time soon.
A good question to ask at this point is why do recessions occur.В Why can’t we maintain periods of growth indefinitely? Some answers commonly heard are the housing market crashed or Wall Street screwed things up. While both these statements may be true, recessions occur even when these are not the causes.
First of all recessions are a phenomenon of capitalist, market economies. Centrally planned economies such as Cuba and the Soviet Union do (did) not experience recessions. Of course, those economies are largely depressed all the time. In essence, recessions are the price we pay to have the long-term economic growth that we get with market economies.
July 2, 2009 |
Posted in: Economics |
By: Charles Parekh | Print
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GM and Market Overexuberance?
Yesterday, General Motors had to remind investors that when it emerges from bankruptcy, its common stock will be worthless. Why did they have to do this? Well, apparently GM stock has undergone several days straight of heavy trading, and they cannot really figure out why anyone is buying up equity that will soon be worthless.
According to the GM press release, “GM management continues to remind investors of its strong belief that there will be no value for the common stockholders in the bankruptcy liquidation process, even under the most optimistic of scenarios.”
Weird. Why exactly would people buy up stock that has no resale value? One answer is that until the end of the bankruptcy, the stock will have some value, but this doesn’t make sense under an efficient market hypothesis. As long as it is known that the stock eventually will have no value, someone down the line will not be able to sell it. So, even if there is a cue of buyers waiting to buy GM shares, the last guy would not pay for it. If the last guy won’t pay, then the next to last guy won’t buy, and so on. As soon as the bankruptcy started, the stock should cease trading.
I am not sure why GM is still trading; it has been de-listed, and it should be worth nothing. Perhaps the stock market is not as efficient as we would like to believe.
July 2, 2009 |
Posted in: Economics |
By: Charles Parekh | Print
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You Give Oil A Bad Name
Seriously. The Russian giant oil firm Gazprom is forming a joint venture with the Nigerian state-run oil company, NNPC. The new firm will be called Nigaz. Way to do some branding research first.
June 30, 2009 |
Posted in: Uncategorized |
By: Charles Parekh | Print
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Flying and Child Safety Seats
There is a thread currently going on at Flyertalk, my favorite website, about 
whether or not to mandate child safety seats for small children, who currently travel in their parent’s lap. The reasoning is that in any heavy turbulence, a parent may not be able to hold the child, thus putting that child in danger. I think this type of legislation would be a bad idea.
First is the obvious, people are not prevented from placing their child in a car seat, they are choosing not to do so because of the extra cost. Revealed preference clearly shows us that such a rule would decrease welfare, not increase. There is no obvious externality here, and if the child is injured, other passengers would largely be unaffected. I am well aware that a child cannot advocate for itself, but society has long established that this advocacy then falls to the parent.
June 30, 2009 |
Posted in: Economics, Policy |
By: Charles Parekh | Print
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