Category: General

Life is good

It has been a while since my last post. Mostly because I have been predominantly occupied by work,  resulting in little time for both computing and trading. That said; life is good!

Earlier this year I bought a majority stake in the Norwegian cigar importer Augusto International / Augusto Cigars . This has turned out to be quite a fun extension of my interest in cigars and as such is a great hobby.

For now, however, I'm mostly looking forwards to Easter holidays, which I plan on spending in warmer surroundings at the Canary Islands (Maspalomas to be more exact). I must admit I'm tired of winter in Norway and with 18 degrees in London on Thursday this week I nearly regretted going back home on Friday.

In usual tradition I have picked out a few books to read during my week in the sun, and to keep up with old tradition they are for those particularly interested in Finance and psychology this year as well;

Michael Lewis: Panic

"This book is a series of articles that form a coherent whole, discussing the four "once in a millennium" financial meltdowns we had in the last 25 years. Michael Lewis weaves them together by contributing a chapter to each of the four parts. His portions are of course the most readable and interesting (although Dave Barry gives him a run for his money writing about how to get rich in real estate). For readers that lived through these times, this book is a nice recap to jog memories for brains that may fade with time and for those that are new to the markets and think the crash of 2008 in unusual, this may be an eye-opener."

William D. Cohan: House of cards

"As William D. Cohan makes clear in his engrossing new book, “House of Cards,” Bear Stearns is also a kind of microcosm of what went wrong on Wall Street — from bad business decisions to a lack of oversight to greedy, arrogant C.E.O.’s — and a parable about how the second Gilded Age came slamming to a fast and furious end. " - NY Times

Michael Ridpath: Trading Reality

"Mark Fairfax's dynamic job as a trader suits him well. But when his brother Richard is found dead, Mark feels compelled to step into his shoes as Managing Director of a world-leading virtual reality company in an attempt to save it from bankruptcy. But soon Mark realises that his own life is in danger and he will need all his trader's nerve and quick thinking to survive..." Author's website

Hopefully I get around to updating the blog a bit more forwards (but how many times haven't I said that? 🙂

Obamanopoly

Some wise words from Senator Orrin Hatch regarding the fundamental question of governmental interference. Speaking from someone living in a country that is on the far side of the matter - with government involvement in most parts of society - Please listen carefully!

And for other Norwegians, maybe we should try to do something about the government in this country, it is after all an election in September.

Obamanopoly Part 1

Obamanopoly Part 2

Protectionism

Ever heard the term "buy American"? I know I have, most recently it cought my attention when the house of representatives of the u.s. congress wanted to impose a provision in astimulus package. Thankfully the final version passed by the senate not only removed such statement, but acknowledged an obligation to avoid protectionist trade policies. Lets take a step back and see how the dictionary defines protectionism:

protectionism
n 1: the policy of imposing duties or quotas on imports in order
to protect home industries from overseas competition

At a quick glance, it is certainly tempting to boost own industry on the expense of othe countries. With unemployment rates spiking globally, political pressure towards job creation is enormous. Hopefully, however, the politicians doesn't go for what seems to be the quick fix. The world stretches past the domestic market, and global competition increases efficiency. Granted there can be a claim for macroeconomic correction of externalities and other market imperfections, but the point still remains. I have no doubt that e.g. the US automaker industry would've been in a better position today had it not been for politics such as "buy american". Instead, it seems General Motors will file for bankrupcy, maybe it will be restructured, maybe it won't . What is interesting to see is how, seemingly , Ford is doing so much better. With an anticipation of changed to consumer preferences towards smaller and more fuel-efficient cars can be one possible reason. In Europe, incentives towards cars with less emissions has been , mostly, driven by taxes and governmental regulations.

Moving away from the automaker industry, however, lets have a look at agriculture. This is a sector where most countries , especially Norway and a few other countries in Europe, should be particulary ashemed of. The level of taxes on foreign products and the amount of subsidies on domestic products is devastatingly high (looking at it from a taxpayer perspective). It can also be argued on moral grounds, in terms of the less fortunate countries in the world. Norway prides itself on the amount of foreign aid it provides, yet what is demanded the most by participants is market access. Free trade stimulates growth, and they know it.

Thankfully so does the Asia-Pacific Council of American Chambers of Commerce , an organization representing more than 10,000 U.S. Businesses. The organization urged the government to avoid protectionism and move toward expanding trade agreements with Asia *.  In order to avoid another 1930 situation in the real economy, we have to avoid protectionism. Indeed, argued by Joseph S. Nye, hard economic times are correlated with it ** ***. 17 out of the G-20 countries have already entered into some form of protectionistic measure since the beginning of this year ****. But guys, lets try to avoid another Smoot-Hawley Tariff Act as we saw in 1930. Ultimately it is a matter of game theory, if you face a rational expectation of what others will do to counteract a move by yourself, you might find that you're better off not making the move at all, and sadly, protectionism is increasing while global trade shrinks.