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Godot's Page: May 2008

Godot's Page

Gatekeeper to the Theater of the Absurd

Tuesday, 27 May 2008

The Plagues of Pegs III - Recipe for disaster

Disclaimer: The monetary policy discussion below is not meant to serve as a dummys guide to policy, it s a simple example of what typically happens in economies managed by rational leaders. I dont want to hear any yapping about how different variables can cause a different approach to monetary policy, I already know. Don't become a moving target for Godot's abuse. He will fuck you up.

Global economic interdependence has made it such that policies can be directly imported from one country to another. The obvious example here is the transfer of monetary policy from the US to GCC countries whose currencies are pegged to the dollar. The two previous posts highlighted the indirect problem of inheriting inflation through a weak dollar, and the question of why a de/re-peg is not in action was begged (incidentally, peg and ‘beg’ are interchangeable in this part of the world depending on the color of your collar…yes I know I managed to overkill 2 puns in one sentence, shut up).

Despite consuming a half gallon of creativity juice, the only plausible argument I came up with for keeping the peg is to maintain the value of GCC foreign reserves. Apologies liver. In other words, when you build a massive foreign reserve (which the GCC has done) denominated in dollars, and you re-peg to a basket of currencies thereafter, the value of your foreign reserve is going to be significantly diluted because the dollar is so weak.

To many this sounds reasonable, wait for the dollar to stabilize, then re-peg, in order not write off the several billions you otherwise would have to. To me, it sounds like a colossal economic goat-fuck. Lets take Dubai for example, the economy is doing superbly well with double digit GDP growth rates, industry diversification etc… the central bank should be hiking its interest rates to persuade savings (to propel future investment in capital goods) right? Right. Instead, Dubai is inheriting a recessionary monetary policy (ie lax) from the US, decreasing real interest rates, increasing inflation, and adding the proverbial wood to the proverbial fire, paving the way to an overheating economy.

To make this simpler to understand, inflation is when you can buy less lollipops tomorrow with the same amount of money you have today. If you lower interest rates, it is likely that there will be more money circulating in the economy bidding up the price of lollipops. So when you’re heading into a period of slowdown where no one is spending, like the US is, you lower your interest rates to encourage spending to jump start the economy. When your economy is doing really well and people are making large sums of money, the usual approach is to start hiking up rates to encourage people to save and invest in capital goods (as opposed to consumer durables) to make sure that no crazy bubbles are created. So clearly, your policy approach should be different depending on where you are in your business cycle. This is not what’s happening in Dubai. The US is heading into recession whereas Dubai is reaching the summit of its boom, and yet we have the same monetary policy. Hence the cosmic cluster fuck.

Practically speaking, annual inflation here is around 14% and the nominal interest rate is around 8%, implying a negative real interest rate. In other words, put your money in a bank and you’re a retard because the interest you accrue cannot keep up with inflation. This is a possible explanation for the massive housing boom as investors look for higher returns to keep up with inflation.

It is high time for the Dubai authorities to choose between an overheating economy and a diluted foreign reserve account. To me, its fuckin obvious. Maybe if they had some more creative juice they would get the point too.

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Wednesday, 21 May 2008

Musharraf Condemns America - 2002

Another creation of boredom from university days...

On Wednesday, General Pervez Musharraf, the President of Pakistan, called a press conference to condemn the representation of Indians and Pakistanis in the in the United States and other “bery bad” western countries; people familiar with the situation think his indignation may have been caused by President Bush’s statement that, “Pakistan’s a whole lot like one of them convenience store thingamawhatsers in Texas. You go in, kill a bunch uh faruners and grab some, I mean a coke, before you go.” While Americans were busy celebrating Bush’s nearly cogent thought, Indian and Pakistani soldiers in Kashmir took a moment to angrily reflect together on the demeaning reference before they resumed killing each other. Musharraf began the conference in an angry staccato stating, “Holy cow man, westerners never take us seriously even when we are mad, bery, bery mad.” He went on to make a few more points that were drowned out by the uproarious laughter of those gathered at the press conference. One reporter, who wet himself from laughing so hard, couldn’t believe, “How much those brown people really do sound like Apu from the Simpsons.” By the time the conference came to a close, three reporters had died from exhaustion and three more were hospitalized. “Those fat bastards just weren’t physically ready to laugh so much,” stated one doctor. The family’s of the deceased reporters are considering filing a suit against the Pakistani government but have had trouble finding lawyers to take the case as Pakistan’s yearly GNP is not nearly as high as the punitive damages typically awarded in cases of this nature. Although angered by the outcome of the conference, Musharraf made sure to thank all of those who were gathered and even invited them to, “Please come again.”


Sharon's New Vows - 2002

From my days in college, when the flow of satire was ample...

Friday, in unheard of concessions, Israel’s Prime-Minister Ariel Sharon vowed to, “Put an end to the violence that has so long afflicted the people of the disputed Gaza and West-Bank areas.” He even vowed to, “Stop killing Palestinians as soon as they are all dead.” In order to expedite the peace process he has quickly passed three new amendments to Jewish law.
Firstly, Palestinian babies have been declared the only food suitable for Shabbat. (American Jews needn’t worry that they will no longer be able to conform to Jewish law, however. In legislation rushed through by Senator Joseph Lieberman, America will now receive the tasty dish in exchange for the 15 tonnes of arms per day currently exported to Israel.)
Secondly, the Israeli government has sponsored a host of sitcoms to be aired in Israel and the University of Pennsylvania (the world’s second most concentrated Jewish bastion). In all of the sitcoms an Arab man named Jesus will play the lead role. At the end of every show, subliminally flashing throughout the credits, the message, “Stop using that yarmulke to cover your male pattern baldness and go crucify the bastards,” will be aired.
The final amendment makes it illegal to be of Arab descent. Violators can be jailed without probable cause, blown to pieces with Apache helicopters, or forcibly moved from their homes to make way for the burgeoning Israeli population. When asked how the final amendment will actually change Israel’s current policy Sharon responded, “It won’t, we just wanted to make sure we had this one on the books so the UN won’t bitch about human rights-this and illegal-thats.”
When asked where he got the inspiration for such a revolutionary plan for peace, Sharon admitted that he alone was not completely responsible for the plan: “When I was in Europe I had some extra time to visit the Hague and consult with my old friend Slobodan Milosovic. I asked him how he would have gone about the eradication of ethnic Albanians differently if he had had the support of America and the Western media. We went on talking and forged the laws together.” Although it is only a rumor at this stage, many experts point to Sharon as the ‘obvious’ nominee for this year’s Nobel Peace Prize.


Monday, 12 May 2008

The Revolutionary

Sports celebrities are often known for their overt self-praise, grandiose statements, shameless self promotion, and other similar dick activities. Nice, amicable, equitable, and harmless are all characteristics I want to find in a bitch, not the most competitive individuals on the planet. Who the fuck does this guy think he is trying to change centuries of sports etiquette?

On Sunday afternoon, Lewis Hamilton, rising F1 superstar, 2007 Driver’s Championship runner up, and goody-two-shoes dick made a grand statement that warmed the hearts of fans across the globe.

” I am so thrilled with the result and I think this is the best race ever for me," said Hamilton upon finishing second in the Turkish Grand Prix.

Reporters were baffled upon hearing this from last season’s primary contender and winner of several 2007 Grand Prix.

When asked about his reflections on the race, Hamilton gleefully replied:
"It doesn't particularly matter whether you win or not. It's whether you drive 100%, it's whether you extract the most out of the car." At that point, stewards were seen restraining Kimi Raikkonen, who was attempting self-mutilation in the form of eye gouging with an ice pick – (incidentally, the only other record of Kimi expressing an emotional outburst was upon winning last year's Driver's Championship when he exclaimed 'vat eva'). On the opposite side of the room, Max Moseley, who couldn’t seem to control his limbs, began a nancy routine showcasing his robust hip movements…nobody in the press conference could quite decipher his disturbing staccato, but suffice it to say that it was reminiscent of 1930’s reic...I mean Germany...the man wasn't too happy.

Somewhere between Lewis’ profound thought and Alonso's profuse vomiting, the drivers formed a circle, held hands, and sang Kumbayah whilst giving a trademark Lewis Hamilton smile. Anthony Hamilton, Lewis' manager/father (fathager) led a procession of Heal the World following an emotional group hug. Analysts expect the sport to take on an entire new direction in the coming years with an ‘overtake me because you deserve to’ courtesy, a ‘yield’ sign for pitting cars, and an obvious carbon neutral strategy. Some are even putting a half life on the sport’s name with a popular vote indicting “Formula Green” leading the polls, followed closely by "1 Love ".


Sunday, 11 May 2008

Havoc – Just another day in Lebanon

By now, news outlets have lessened the hemorrhaging of reports and analyses of the situation in Lebanon. Hezbollah’s potential grip on Lebanon has long been known albeit seldom tested. Notwithstanding the common perception on control, it is still astounding to see how little resistance Hezbollah faces in occupying West Beirut. They might as well be doing it with bb guns and water pistols. What is scarier than a minority that can drag an entire country into war? Oh, I know, it is having political lightweights at the helm of what the West deems to be a legitimate body. Fair enough, the religious zealot will use any ridiculous excuse to flex his muscles, atleast this time he tested the threshold of absurdity by saying “touch my telecom cables and I’ll take this country back to the mid 1970’s.” Slight over reaction, but still an opportunity to show his might. Disgustingly, you can’t but help thinking that atleast he doesn’t cover it up with some politically correct convolution. I am not a Hezbollah supporter, mainly because it is a religious entity, but no one can deny Hasan's charisma and leadership.

So what’s May 14’s response to this breach? “It was a misunderstanding.” Come again? What the fuck is that? Is that it? Misunderstanding? Grow a pair, you are responsible for your government's actions.

What a failure to his father’s legacy this guy has been. In the war of religious sectarianism and secular unification, Hezbollah has won all rounds thus far. I do not posses the intellectual prowess to accurately convey my disbelief at how weak this Lebanese mainstream is. Suffice it to say that in my mind, we have reached a new level of what the fuckness.


Thursday, 8 May 2008

Wasting space, energy, and oxygen

US Treasury Secretary Paulson shares his morsels of wisdom on the credit crunch:

“We're closer to the end of this than the beginning," Mr. Paulson told the Associated Press news agency. In other breaking news, it was revealed that Monday is followed by Tuesday and that the day before yesterday is two days ago. In his concluding remarks, Mr. Paulson stated that “I wouldn't be surprised at all to see more bumps in the road.” How has this piece of news influenced anything in anyone's life? Thank you for using up the airwaves to broadcast your ridiculously moot point.


Wednesday, 7 May 2008

Defeating the Bots

Apparently, the bots at blogger.com flagged my blog as a spam site. I don't exactly know how that happened but it explains the lack of updates. The blog was 'locked until a human can verify whether this is in fact a spam account or not.' How Kubrik-esque. I would like to point out that my blogging rate will probably not increase , I just wanted you all to know that I have crushed the bots.


Monday, 5 May 2008

Emotional Candidates and Unsuspecting Sheep

As the race to the White House intensifies, I can't but notice the added emotional fervour. Exhibit A shows Senator Clinton's opening remarks regarding energy policy, a key economic issue:

"I'm not going to put my lot in with economists," Clinton said in an exclusive appearance on a special edition of "This Week...

Interesting way to start a pitch on economic policy. We'll let that one slide. Resounding statements made to unify an angry voice of frustration is somewhat the norm here in the Middle East, I'm kind of used to that 'fuck you' cowboy attitude. What really did it for me was Senator Clinton's solution to the rising oil price problem facing American producers and consumers alike. Exhibit B:

"My proposal is very different from Sen. McCain," she said. "Sen. McCain has said take off the gas tax, don't pay for it, throw us further into deficit and debt. That is not what I've proposed. What I've proposed is that the oil companies pay the gas tax instead of consumers and drivers this summer."

In plain English Clinton is proposing that oil companies pay more tax. The rationale is that since they are making super normal profits because of high global oil prices, they get to pay more tax to relieve consumers of some of that burden. Apparently, the revenue generated will be used for green energy technologies, or so the plan goes. What Senator Clinton does not realize is that she is indirectly promising higher oil prices through her policy of penalizing oil companies. Disincentivized by the windfall tax, oil companies will find it more attractive to abandon exploration and investment in new oil fields due to the higher burden put on them, therefore inhibiting their oil production process and hence overall supply. What happens when the supply of a commodity is curtailing with constant demand? Fuckin moron.

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