Economics of Sex at the Olympic Games
Matthew Syed, a former British Table-Tennis Player, has written a wonderfully amusing article called “Sex and the Olympic City” about the sex life in the Athletes’ Village during the Olympic Games.
He makes two interesting observations, probably suspected by the casual onlooker, but in its sincerity most fascinating: first of all, an estimated 99% of all athletes are having the time of their life, at least sexually, during the Olympic Games. Secondly, gold medals help the males, don’t necessarily help the female athletes.
The second observation is explained by a reference to the disambigious way society deals with succesful women:
Sport, in this respect, is a reflection of wider society, where male success is a universal desirable whereas female success is sexually ambiguous.
The first observation, however, is explained through a number of theories:
- Is it related to the level of self-discipline which athletes must exhibit before the race, which finds a channel afterwards? No, as Syed observes:
“Most of the athletes I know are as up for it before and during competition as they are in the immediate aftermath.”
- Is it related to the level of testosterone, which increases aggression, competition and virility. Syed says:
“At a population level, higher naturally occurring levels of testosterone in both genders would provide a powerful explanation for the combination of sporting prowess and sexual potency.”
- He also mentions a moral, or rather immoral, argument:
“For most athletes, the village is thousands of miles from home.”
- Or is it simply evoluationary, which helps promiscuity, as Syed says:
“A man’s sperm count doubles when he spends a lot of time on the road.”
Syed concludes that a mixture of causes might be respoinsbile for the outbreak in sexual filibustering (I know, the term does not really apply here, but I like the sound of it). One cause he has overlooked: put together 10.000 athletes who have their mind set on medals – and only about 900 of them receive one. There must be some sort of compensation for the remaining bunch.
Topics of this post: Discussions, homo economicus, Matthew Syed, olympic games, sexSee also
Slaughter – A New World Order
Anne Marie Slaughters Book on A New World Order deals with transgovernmental networks. She focuses on the classic governmental networks, but also on regulators, judges and parlamentarians establishing their own network.
The description of Regulatory networks are particular interesting. According to Slaughter, regulatory networks emerged because of shared responsibility for transnational financial entities. These networks are concentrated around EU- and OECD-countries (in the field of financial regulation maybe it’s better to speak of BIS-networks).
She also distinguishes three different kinds of transgovernmental networks: government networks within international organisations (within the UN), within an executive agreements (G7) or spontaneous government networks which sometimes became institutionalized. She also distinguishes Information Networks, Enforcement Networks (which sometimes leads to capacity building) and Harmonization Networks.
The book tries to explain how increased transgovernmental networks help to solve the dilemma of needing increased cooperation between goverments on global problems with an increased scepticism against a global government. She also points to the dilemmas of criticism of transgovernmental network. For instance, the increased demand for accountability to domestic political groups might reduce the ability of transgovernmental networks to solve global problems.
Topics of this post: anne-marie slaughter, bis, Books, g7, oecdSee also
Eatwell, Taylor – Global Finance at Risk
Last week I had a fascinating conversation with a friend of mine who is an anarchist. We tend to discuss international capitalism and he always wants to convince me that it is possible to create a society without capitalism. When I asked him about what that would mean he often replies that he wants a society in which there no interest paid on the ownership of money. When I replied that interest rates simply identify the price of money, or the costs of borrowing money, which is necessary to induce capital holders to lend to capital borrowers, he replies that he would like to get rid of private ownership of capital alltogether.
I wished I had John Eatwells and Lance Taylors book “Global Finance at Risk: The Case for International Regulation” with me. For anyone interested in important aspects of financial regulations, it is a good starting point. It not only explains how financial markets changed since the introduction of flexible exchange rates, it also makes a good argument on the dilemma that policy-makers face when trying to induce markets to internalize systematic risk. The book also takes apart the notion that a financial crises are always induced by government policies, instead the authors argue that financial cycles leading to a financial crisis can originate in the behaviour of the markets themselves.
Where I disagree with the authors is on their assessment of the necessity of a World Financial Authority. The authors describe the limited capability of domestic regulation in the face of global financial markets and the need to gather the decision-making on the global level. They offer two alternatives for locating the WFA: inside the BIS-System or at an enhanced IMF. The BIS-System has the advantage of market knowledge, access to statistics, and flexibility and thus it would be beneficial to extend the power of this system. However it is unclear whether the USA would agree to move such a lot of regulatory power outside of the US to an institution dominated by Central Banks. And it is not clear whether such a World Financial Authority. And there has been little debate in the current crisis to institutionalize the web of regulatory bodies existing today, probably because any attempt at institutionalization risks loosing the flexibility of the current system.
Topics of this post: Books, capital markets, financial architecture, financial crisis, financial regulation, John Eatwell, Lance Taylor, World Financial AuthoritySee also
Broughton-Bradford: Challenges to Global Governance to the G8
James Boughton and Colin Bradford published an article in the IMF-Magazine “Finance and Development” in December 2007 called “Global Governance: New Players, New Rules”, in which they questioned the governance capability of the G8.
They define ideal global governance as such:
The ideal of global governance is a process of cooperative leadership that brings together national governments, multilateral public agencies, and civil society to achieve commonly accepted goals. It provides strategic direction and then marshals collective energies to address global challenges. To be effective, it must be inclusive, dynamic, and able to span national and sectoral boundaries and interests. It should operate through soft rather than hard power. It should be more democratic than authoritarian, more openly political than bureaucratic, and more integrated than specialized.
The G8 can be seen as the embodiement of such an ideal. They are a symbol of cooperative leadership, provide strategic interataction and can marshall collective energies. They operate through soft-power. However, due to demographic changes, changed in demand in energy commodities and global health challenges, the authors claim that the G8 is not representative anymore.
The first and most important front is to reform the process by which national political leaders come together at the summit or ministerial level to discuss common concerns. [...] Because the only truly powerful group—the G-8 summit—is composed exclusively of rich, industrial countries, mostly from the North Atlantic, there is a “democratic deficit” in the current summit grouping and, as a consequence, a void at the apex of the international system.
Unfortunately,the authors do not acknowledge that cooperation between the G8 and Emerging Economies are using a wide variety of channels. There is extensive cooperation through the BIS-hosted institutions, through the OECD and the FATF, through various governmental summits. The Heiligendamm Process of further cooperation with the O5 is an example of how governance is increased without changing the institutional composition of the summit itself.
Topics of this post: Colin Bradford, EMEs, g8, General, global governance, James BoughtonSee also
G8-Action Plan on Local Bond Markets – Missing Follow-Up Documents
The overview of G8 Action Plan on Local Bond Markets lists a couple of documents that were mentioned in the implementation report to be published soon, but have not been published since:
- IMF: “ABS in Emerging Markets: Recent Trends and Policy Implications”
- Capital Markets Consultative Group (CMCG): Study about the Impediments to development of emerging capital markets
- IMF: “Derivatives in Emerging Markets: Recent Trends and Policy Implications for Capital Markets”
- IMF and World Bank: Study about Economic Transmission Mechanisms and the impact of the current turmoil on the local bond markets.
- Working Group on Securities Databases: Report about September 2007 Meeting
- World Bank: Study about Regionalisation of East-African Securities
See also
G8 Action Plan on Local Currency Bond Markets – Overview
The Document contains an overview of the G8 Action Plan on the developments of local currency bond markets and the implementation report.
The overview-report looks at the problems identified by the G8 Action Plans, Task delegated to various institutions and results given from the implementation report. It is subdivided into ten sections:
- General Provisions
- Market Infrastructure
- Securitization Markets
- Public Debt Management
- Broadening and Diversifying the Investor Base
- Developing of derivative and swap markets
- Promoting Regional Initiatives
- Broadening the Database
- Developing bond markets in less-developed countries (especially Sub-Saharan Africa)
- Techical Assistance
The G8 Action Plan was mentioned in the recent report of the G8 Finance Ministers Meeting in Osaka, Japan, but also in various other conferences:
- High Level Workshop 2007 Developing Bond Markets in Emerging Market Economies, Frankfurt, May 10, 2007
- G8 Conference on Bond Markets in Emerging Economies and Developing Countries, Frankfurt, 31 January 2008
- Second OECD Forum on African Public Debt Management, 12-13 December 2007, Amsterdam
- World Bank Debt Management Stakeholder’s Conference, Oslo Norway, March 5-6 2008
A list of further documents can be found in the report, further entries will be added in the future.
Topics of this post: bis, cgfs, cpss, EMEs, g30, g7, g8, germany, ifc, imf, iosco, local bond markets, oecd, Papers, securities, sovereign debt, world bankSee also
Membership of Key Economies in International Organisations
This article discusses the membership of 43 key economies in the major international financial institutions. The aim is to assess whether the global financial architecture adequately incorporates the key economies. The article can also be found in this PDF-Document.
The chart (left) lists 21 international organizations. Some of them are grouped together to reduce the overlap. The organizations are clustered along four categories:
- informal government-institutions (blue): G5, G7, G8, G22, G33, G20, G24
- formal government-institutions (yellow): OECD, FATF, Paris-Club, World Bank, IMF
- central-bank-institutions (red): G10, CPSS, CGFS, BIS
- regulator institutions (green): FSF, BCBS, Joint Forum, IOSCO, IAIS
All institutions operate on the international level.
The power-ranking (below) lists the countries according to their membership in crucial institutions. The power-rank is calculated by assigning equal value to all organisations and then distributing the value across the members of an organisation. A country is more “powerful” if it is a member of a more exclusive group of nations.
The countries can be grouped into six categories:
- W1: The Group of Seven (G7): This premier league of Developed Western Economies can be subdivided into two groups:
- The Group of Five (G5): France, Germany, Japan, United Kingdom, United States
- The Two Add-Ons: Canada, Italy
- W2: Second league of Developed Western Economies: Netherlands, Switzerland, Belgium, Sweden, Australia, and Spain.
- W3: Third league of Developed Western Economies: Luxemburg, Denmark, Poland, Finland , Ireland, Norway, New Zealand, and Austria
- E1: The Emerging Ten: The premier league of emerging economies can subdivided into three groups:
- BRICS+05: Russia, Mexico, Brazil, China, India, South-Africa
- The Two Key Capital Markets: Singapore, Hong Kong
- The Two Emerging Aspirants: Argentina, South Korea
- E2: Second league of Emerging Economies: Turkey and Indonesia
- E3: Third league of Emerging Economies: Malaysia, Thailand, Saudi-Arabia, Greece, Egypt, Chile, Philippines, Morocco, Venezuela and Côte d’Ivoire.
Main findings
- The dominance of the G5 and the G7 in the international institutions can be clearly found in the institutional membership.
- Russia is quite unlike the G7, is not a full member in the financial institutions, and without G8 membership its rank would be significantly lower.
- China and Hong Kong together rank higher than all members of the W2, the second league of Western developed countries. In other words, China and Hong Kong together have more influence in international institutions than for instance the Netherlands, Switzerland or Belgium.
- Mexico, Brazil, China, India, South Africa, South Korea and Argentina are all good candidates for G8 enlargement when considering institutional membership. South Korea and Argentina are however impeded by the relative dominance of Mexico, Brazil, and China in international institutions. South Africa and India are less influential than South Korea and Argentina in terms of institutional membership.
- The main difference between the first (W1) and second (W2) league of developed economies is membership in the FSF and in the G20.
- The main difference between the second (W2) and third (W3) league of developed economies is participation in BIS-hosted institutions.
- The main difference between W3 and E3 is that E3 was a member of the G33 whereas W3 participates in the OECD.
- There is considerable overlap of membership in the BIS-hosted institutions and in the OECD-FATF-Paris-Club-Cluster.
- The BIS-hosted cluster of institutions, unlike the BIS itself, does not grant extensive membership to the emerging economies, with the exception of Hong Kong and Singapore.
See also
Complementary Currencies
A list of resources related to local currencies, sometimes also called complementary currencies can be found here.
Topics of this post: currency, developing countries, MemoSee also
Africa and Local Bond Markets
Great article by Peter Nixon on the Development of Local Bond Markets in Africa.
He outlines the following benefits from having Local Bond Markets:
- Reduced volatility and easier debt management
- Long-term fiscal budget stability
- Increased investors confidence
- Reduced conflict of interest between devaluation of currency to spur export growth and appreciation of currency to ease debt payment
- Local participation in the debt market
- Free capital by providing low-risk local currency government bonds which allow investors with an appetite for medium-risk exposure to invest in high-risk investments, such as SMEs and Startups.
- Lower capital adequacy requirements from banks because of availability of local-currency government bonds
- Allows the operation of enterprises with lower risk appetites –(particular pension funds)
- Local bond markets provide key investment information, including interest rate expectations, inflation rate expectations, yield curves.
- Better fiscal and monetary planning because of knowledge about market expectations
- Government over-borrowing is restrained by inflation and economic decline and would therefore in theory be restrained, foreign lenders share in the cost of excessive lending.
- Interest on government debt increases the revenues of the local investors, which in turn can increase the tax revenues of government.
Foreign versus local currency
Risk management and investment
Monetary policy
Shared costs of inflation targeting between public and private sector
Information
Market forces
Debt/investment cycle
He also describes why Local Bond Markets have not developed in developing countries:
There are many possible explanations why African countries initially chose foreign loans over local bonds – a lack of local capital, an abundance of apparently cheap foreign capital, the lower administration costs of foreign loans over issuing bonds – but once this decision was made, it became a self-reinforcing cycle. As the foreign loans drain local capital and foreign exchange reserves, more foreign capital and currency is required. As the economies stagnate for a variety of reasons, local capital becomes more scarce and more expensive, whilst foreign capital is readily available at cheaper rates. Any weakening of the currency reduces the relative size of local capital and increases the need for foreign exchange. A government eventually has no interest in issuing local bonds at very expensive rates, which will not provide vital foreign exchange. From the foreign lenders’ point of view, they would have no interest in buying local bonds carrying additional currency risk, when they are able to issue debt in the currency of their choosing. As the economic situation declines in the country, the lenders will insist on having their loans denominated in foreign currency so as to limit their risk. Eventually the multilateral institutions are brought in and, in an attempt to help, offer the countries even more foreign debt at even lower rates. A bond issued in local currency at market prices stands little chance of competing against these cheap and relatively freely available loans.
The topic is also discussed at Ecorica.
Topics of this post: africa, developing countries, Discussions, local bond markets, sovereign debtSee also
Inflation and Consumer Spending – NY Times Graph
The NYTimes has released an interactive graph which illustrates the spending of an average consumer and how this has changed over the last year. The graph was created by the Journalists Matthew Bloch, Shan Carter and Amanda Cox and German Computer-Visualisation-Expert Michael Balzer (Via Richard De La Madrid)
