links for 2008-02-11

• Postmodern recessions - Paul Krugman Blog
• SWFs to IMF: mind your own business, not ours ... - Brad Setser
• Army Buried Study Faulting Iraq Planning - New York Times
• Profit versus the prophet - Los Angeles Times
• The “U-Index” [of happiness] - Economic Principals
• Short-termism in (readers of) online news - The Undercover Economist
• Nafta Is a Sweet Deal, So Why Are They So Sour? - New York Times
• L'éco 2.0 - Nonfiction.fr le portail des livres et des idées
• Recent Republican Presidents Are Illiberals - Jeff Frankel
• Obligatory Nonsense on Inequality at the NYT - Dean Baker

Comments

[hari]

Brad Setser is raising some (political) arguments against CIC and how it uses it funds in Chinese banks and abroad.
His mind is apparently fixed on CIC as a state-owned fund will most likely curry favour for the state and not the capital or financial markets. He argues without distinguishing the investments in Chinese mainland banks with Wall Street banks. The CIC boss wrote that it would not take stakes in foreign entities for any reason other than business as usual. Because CIC has taken substantial chunks in domestic banks, he thinks, it might do same in foreign and/or offshore investments. This is a political attempt to confuse the fact that domestic investments are not only commercial in character but also sanctioned, may be, by the relevant authorities. So, what CIC does on mainland China investments, I suggest, Brad should not be unduly influenced. Transparency of Hedge Funds was what most of G-7 govs asked (eg. Germany) and was refused by US Treasury. Now Brad would like to insist on de jure transparency of CIC and other SWFs - because it's now in US national interest.

[hari]

LATimes - Profit verses the prophet

This is an opinion-ed piece of a researcher at Carnigue Fund and is well written based on direct contact with Sharia finance market developed in Kuala Lumpur, Malaysia.
Malaysia is a progessive muslim country (with Chinese and Indian minorities).

Indonesia is another example of similar development based on Sharia laws.

In aftermath of 9/11, it is useful to know how the muslim are dealing with their banking sector under Sharia.

[Above Normal Levels]

PK..."...housing — which is the main thing that responds to monetary policy — has to rise above normal levels..."

That was the plan?

[GDP Stabilization]

If GDP falls, you can create additional demand by subsidizing lending via money creation. However, the act of money creation in and of itself doesn't produce any additional consumer goods. Since the subsidized borrowers will want consumer goods that they didn't produce, workers will now have to work a second job to produce enough for themselves plus the borrowers. Applied consistently for several generations, this accounts for why the median household now needs 2 incomes to make ends meet. They have to produce enough consumer items to consume themselves, plus enough items for subsidized borrowers to consume. When domestic workers reach the limit of their capacity to work more hours, the process can continue only if foreign workers are willing to give part of their production to the subsidized borrowers.