September 30, 2008
There’s so much to write about: the failure of the US Congress to pass the bail-out plan, the more general collapse of the international economy, the upcoming debates between Sarah and Joe, etc. And on at least first two, I am well qualified to comment. But I figure you’re reading enough about the financial crisis, so I’ve decided to cover something a bit different in today’s Daily Planet: pirates. Yes, really, pirates. Though not those of the Caribbean, those of the Horn of Africa.
Most people don’t know that in this age of global trade and commerce, the shipping industry, which moves almost all of the goods traded internationally, is still susceptible to pirate attacks. In fact, there are an estimated 300-400 pirate attacks a year (a 75% increase over a decade ago), most of which happen in a narrow strip of water between Malaysia and Indonesia called the Straits of Malacca. At its narrowest point, the Straits are only 1.2km wide, and yet 50,000 ships a year, carrying 1/3 of all international trade (i.e. many things from China destined for Europe), pass through it. Basically the ships are sitting ducks and are extremely susceptible to pirate attacks. Billions of dollars a year are lost via piracy.
Before we proceed, let’s talk about modern pirates for a sec. Do they have hooks instead of hands? Eye patches? Parrots perched on their shoulders? Not that I know of. They are mostly people from poor, and poorly governed, countries, like Somalia. In fact, I wanted to report on pirates today because a story in the Financial Times caught my attention: rival pirates were killed in a shootout off the coast of Somalia. They were fighting about what to do with a Ukrainian ship they had captured. They disagreed, fought and killed several pirates in the process. With guns though… nobody walked the plank. Pirating off the Horn of Africa has increased dramatically in the past several years, in no small part because of the collapse of the Somali state and other political problems in the region. The inability of the Somalian government to patrol its waters increases the ability of pirates to operate.
Pirate attacks range from unsophisticated methods like holding the crew ransom long enough to steal the cash on board, to more sophisticated attacks where ships are commandeered, moved into port, repainted and flown under an alternative flag. This is possible because modern pirates are well armed (with rocket propelled grenades, mines, automatic weapons, etc).
All of this to say that globalisation has its contradictions: while short-selling, over-leveraging, unwound derivatives and other sophisticated risks to the global economy dominate the news, the globl economy is still suspetible to unsophisticated risks like piracy, a practice which has been around as long as boats. So as they say, the more things change…
September 29, 2008
The consequence of being a “jet-set journalist” is that at some point it catches up with you, and you become the jet-lag journalist. Or, in my case, you become the mother of a mini jet-lag journalist. My transition from Texas to London was surprisingly easy: my little sweetie behaved as just that on the return Houston – London flight, rather than the hellion he had been on the way over. He slept most of the way, and looked even more angelic in comparison to the other baby on the flight who screamed most of the way (been there, I told her mom). I was tired on arrival, but had no jet-lag since. But I’ve been suffering from indirect jet-lag. That is to say, the baby’s jet-lag has been keeping us all up at night. For a ten-month old who’s been sleeping through the night for more than 5 months, this has come as a bit of a shock. I’ve got circles around my eyes from the 11-Midnight awake hour, and the “it’s 2am, let’s play!” syndrome. Aside from the circles, the other consequence of baby-lag is that I haven’t had / made the time to post. But happy to report we all seem to be sleeping on schedule again (she writes with trepidation at 11pm, fearing a late-night wake up call via the baby monitor) and thus the Interdependence Complex will resume with its regularly scheduled programming.
September 29, 2008
I’ve come down with something: Palinitis. Governor Sarah Palin, Republican Nominee for Vice President, is making me sick. As a fellow blogger described: “Palinitis is a systemic inflammation that afflicts millions of liberals across the country. Initial onset appears as a mélange of slight irritations, but over time and with increased exposure, may grow to a massive and contagious rash with an array of physical and psychological effects.” This article from the New Yorker explains (with humour and brevity) exactly what it is that I don’t like about Palin. Namely, she makes Bush look kind of smart.
September 21, 2008
I moved away from the US just over six years ago, and have been hanging out in the olde world ever since. I come back to the US several times a year, either to Texas, where my family lives or to the east coast for work / to visit friends. This week while in Austin, I’ve been amassing a list of things that seem to have changed since I lived in the homeland, and I thought I would share it with you:
1) The price of groceries, and lunch. Prices are a bit like a child. If you’re around a child all the time, you don’t notice how much it grows. But if you go away for a while and come back, those prices have grown more than you could have imagined! That’s the way I feel about the price of food in the US. I used to spend $5 a day in downtown Manhattan for lunch in 2001. Now, a normal lunch seems to cost $10. Ditto groceries: it seems impossible to escape the grocery store without spending at least $60. Inflation’s been busy while I’ve been away.
2) The number of political talk shows on CNN and other networks. And the partisanship of the comments on those same shows (the myth of neutrality in American journalism seems dead to me. We have Fox to thank.)
3) The number of stadiums named after corporations.
4) The girth of baseball players (can you tell we’ve been watching American sports this afternoon?)
5) Fashion sense. Generally I would say Americans are much more fashionable than they were 6 years ago. Maybe its the explosion of design / fashion television.
6) The prevalence of goat’s cheese / sun-dried tomatoes / mixed greens / “micro-brew” beers and other food that used to seem “fancy.” Though note that people still find Obama elitist because he said he liked arugula.
7) The size of bagels. They’re HUGE.
8) The size of cars / trucks. They’re HUGE.
9) Counter-balancing the above, the number of people that drive a Prius, or another hybrid.
10) The Bush-bashing. It crosses party lines.
September 17, 2008
N.B. Another new column where I report on news relevant to the global economy, which in practice means just about anything in the news!
What do a high school teacher, a stock broker and a computer analyst have in common? They all lost money today when the American stock market closed another 450 points down after Lehman Brothers filed for bankruptcy and AIG needed the government to give them $85 billion to avoid the same fate. Several decades ago, none but the wealthiest Americans would be affected by a change in the value of the stock market. But as the process that political economists including Robert Wadeof the LSE call “financialisation of the economy” progresses, more and more “average” people have their retirement funds and other investments tied up in the stock market. Which means that more and more people are subject to the wild ride of what one of the founders of the discipline of international political economy, Susan Strange, called “Casino Capitalism.”
The Wall Street Journal comments today that “…Market turmoil translates into emotional turmoil for many people. Some are experiencing sleepless nights and random bouts of crying, while others hope for a miraculous windfall.” But all of this is new. A careful study by a political sociologist at UCLA argues that along with the transition to a post-industrial economy where the service industry dominates, financialisation (defined “as a pattern of accumulation where profit-making occurs increasingly through financial channels”) is the most important change in the American economy since the 1980s. American firms increasingly generate profit through their financial portfolio rather than through productive activity. Additionally, financial firms make up an increasingly large segment of total profits in the American economy.
Finacialisation of personal income and investments has followed these broader trends in the political economy with the conversion of retirement income and other investments to the stock market rather than more risk-free or traditional investments (like bonds). This has a broader implication for the political economy: in times of global downturn, citizens will put pressure on politicians to bailout firms and regulate the markets. However, the counter-veiling strength of corporations, whose business models are increasingly reliant on the financialised economy and where financial firms make up a larger part of the economy than ever, will resist such regulation. Thus bailouts will be more common, but regulation no more so. All of which implies a greater cost to taxpayers, who finance the bailouts in question, with no more responsibility on the part of firms.