The end of Poverty by 2030 (it’s been halved in the last 20 years)

Some truly uplifting news for a change.

In 1990, 43% of the world lived in extreme poverty (then defined at $1 subsistence a day). By 2010, extreme poverty came down by a half to 21%   (defined now at $1.25 subsistence a day). Can poverty be reduced to 1% by 2030?

For all the issues it has caused such as growing inequality and cultural degradation,the economic liberalization of the 90s in India lifted a vast number of Indians out of poverty. But the real driver of change has been the staggering reduction in poverty in China from 84% in 1980 to 10% by 2010 through economic growth.

IN SEPTEMBER 2000 the heads of 147 governments pledged that they would halve the proportion of people on the Earth living in the direst poverty by 2015, using the poverty rate in 1990 as a baseline.

It was the first of a litany of worthy aims enshrined in the United Nations “millennium development goals” (MDGs).

Many of these aims—such as cutting maternal mortality by three quarters and child mortality by two thirds—have not been met.

But the goal of halving poverty has been. Indeed, it was achieved five years early.

Read more here.

The full Brookings study here


The story of the US credit binge (it’s shorter than you think)

Came across this very good analysis by Jeffrey Grundlach, Chief Investment Officer from TCW, on Barry Ritholz’s blog The Big Picture .

The analysis is written for people reasonably unfamiliar with finance. There’s just a lot of common sense lines in the story. If we ran our own finances like the US govt, we’d be in debt for our lifetime and a generation more perhaps, and still borrowing. The govt debt is at 350% GDP right now and growing. I don’t even want to know how many multiples it might be of US revenue (such as taxes). From reading the possibilities of US monetization of debt and the resultant inflation, one understands why the emerging countries are beginning to clamour for a new global currency standard.

What some of us may not realize is that the debt burden of the country, and the individual, really began from the 80s with Reagan’s administration. So the story is a lot shorter than you think. Jeffrey’s theory is that the US credit story is a tragedy in 3 acts. And we’re just beginning Act 3.

No, it’s not over yet.

Letter from Jeffrey Grundlach

Trader Talk

Came across this on Zerohedge, a pretty intersting trading blog. A good way to start the smiles on the long weekend.

An excerpt


I have got to say that I think you have been rather less than even-handed in the way that you handled our small disagreement last week about how employees should conduct themselves in (and out of) the workplace. And being placed on suspension by that sycophantic loser in HR was just too much; if he was just a bit taller, I would have punched him!

Before I go to the expense of hiring a lawyer (again), I thought that it would make sense to send you a brief e-mail outlining the events as seen from my viewpoint, which will hopefully result in me being restored to my position as Head of Commodities Trading.

Let me start by confirming that you were correct that I misled you when I claimed my recent two-week unauthorized leave of absence was caused by me going down with the H1N1 flu virus; there was no virus and there was no quarantine. Having said that, and in my defence, I did have a very heavy cold. And, although I know that it looks bad that I returned to the office with what appeared to be a healthy sun-tan, I am disappointed that you chose not to accept my explanation that I had simply fallen asleep while under a sun-bed.

Full post below.
Afternoon Amusement Trader Talk

Are you in investment paralysis in the downturn? Read on…

Jeffrey Goldberg writes in the Atlantic wondering whether his Merill Lynch investment advisers were really looking after his interests, or Merill’s profits? Is there such a thing as an investment adviser for the small individual investor? Should one really invest at all? In what?

To find out, he drops names talks to hedge fund founders, top brokers, attends swanky parties in New York, gets in on the gossip, and extracts some earthy, straight as apple pie advice from Seth Klarman, the man who wrote THE book on value investing. Cody Lundin, who stands in snow barefoot and eats mice because it’s free protein (don’t ask), chimes in as well. And Goldberg doesn’t forget to ask those folks at Berkshire Hathaway, while he’s at it.

Have you stopped playing the market in these volatile times? Do you want to start again? Do you truly fit the definition of an investor? Read on…

Why I Fired My Broker

The credit crisis – A programmer’s two bits

With all the different takes on the crisis, it wasn’t going to be long before a programmer stood up and summarized his overall contribution to the debacle we find ourselves in today.

Michael Osinski, once a programmer on Wall St, now an oyster farmer in Long Island, gives us his story in the New York Magazine. Working in Salomon Brothers, Lehman and Kidder Peabody, he wrote a lot of the code used in the software to trade bond securities. He traces the evolution of securities and software from simple mortgage backed securities (MBS) to the now complex CDS and CDOs.

It’s a good read. Especially on the train to those oyster farms in Long Island.

My Manhattan Project


The Big Takeover – hard hitting Rolling Stone article on bailouts, AIG etc.

There’s a fascinating article in Rolling Stone magazine by Matt Taibi that’s been getting some attention recently.

It’s an in-depth read on the players, the beneficiaries, the losers, the corruption and the cronyism that’s pretty much in the open ever since the financial crisis blew the curtains off. While the article does rival a good romance novel in drama and hyperbole,

The best way to understand the financial crisis is to understand the meltdown at AIG. AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror….

Cassano’s outrageous gamble wouldn’t have been possible had he not had the good fortune to take over AIGFP just as Sen. Phil Gramm — a grinning, laissez-faire ideologue from Texas — had finished engineering the most dramatic deregulation of the financial industry since Emperor Hien Tsung invented paper money in 806 A.D.

it’s also a good primer on CDOs and CDS’s, that dreaded 2-headed hydra that’s belched fire and ruin on the houses of Weill, Morgan, Fuld, Cayne and Schwartz.

The mess Cassano created had its roots in an investment boom fueled in part by a relatively new type of financial instrument called a collateralized-debt obligation. A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box.

The key idea behind a CDO is that there will always be at least some money in the box, regardless of how dicey the individual assets inside it are….

Most importantly, the article focuses not on the paltry $165 million (that’s pocket change these days) bonuses in AIG, but on the actual billions, even trillions, of dollars being exchanged between pals and associates in the name of bailouts, TARP etc as part of the urgency of dealing with the crisis.

Link to the full article: The Big Takeover