Passive Aggressive Notes

This blog is hilarious.

Big pharma jittery

Obama will try to sever ties to big lobbyists and reduce drug prices, or so he says. The Economist (as is so often the case) acts as the Cassandra:

FOR many years America has been the heart and soul of the pharmaceuticals business. The adoption of price controls and government-run health systems in Europe, where the industry began, led many drugs firms to pitch their tents in the land of the free market. Keen to encourage innovation and suspicious of big government (until recently, anyway), America has allowed drugs companies to price their wares more or less as they please. As a result, over half of the leading firms’ profits come from America alone.

So it might seem odd to suggest that the industry’s future now lies in the developing world... If growth is the carrot luring the drugs giants into emerging markets, the stick is the change in regulatory outlook in America from friendly to possibly frosty. The industry is concerned that Barack Obama, once in office, might allow cheap drugs to be imported from Canada or force Medicare, the government health-care system for the old and disabled, to negotiate big discounts with drugs firms. Peter Lawyer of Boston Consulting Group estimates that the latter reform alone could reduce the industry’s American revenues by 3-10%.

Last, but not least, the word is out that Obama is "gonna take 'em guns from us" and gun sales in the South are going through the roof.

Hic Rhodus, hic kitsch!

Collossus of Rhodes is to be rebuilt, courtesy of a German architect. It will be interesting to see how he will fit his vision into the tranquil medieval port of the Greek island.

Which gives me the opportunity to post a painting from one of my favourite artists, Goya's Colossus.

The Republican wasteland

Canvassed by Frank Rich of the NYT:

At the risk of being so reviled, let me point out that in the marathon of Palin interviews last week, the single most revealing exchange had nothing to do with her wardrobe or the “jerks” (as she called them) around McCain. It came instead when Wolf Blitzer of CNN asked for some substance by inviting her to suggest “one or two ideas” that Republicans might have to offer. “Well, a lot of Republican governors have really good ideas for our nation,” she responded, without specifying anything except that “it’s all about free enterprise and respecting equality.” Well, yes, but surely there’s some actual new initiative worth mentioning, Blitzer followed up. “Gah!” replied the G.O.P.’s future. “Nothing specific right now!”

China in the doldrums

I found this Newsweek murder story truly fascinating.

Back in August, Tang's ordinariness was cause for relief: authorities quickly figured out that he wasn't a terrorist, and the Games went on. But the truth is perhaps more disturbing. The troubles that destroyed Tang—the loss of his job, the collapse of his marriage, heartbreak over his wastrel only child—are all too common across China. The country is the world's most stressful: three decades of reforms have shredded China's safety net and transformed society beyond recognition. That's why, as Chinese leaders prepare to mark the 30th anniversary of Deng Xiaoping's capitalist reforms next month, they're also frantically pumping more than half a trillion dollars into their economy in hopes of staving off a downturn.

The fall of the Wall

Michael Lewis writes for Portfolio:

To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.

I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.

When I was an undergraduate at Harvard I was always puzzled by (and, I must confess, jealous of) the prospect of some classmates making 150 grand straight out of college. What I am experiencing now is, well, not exactly schadenfreude, but definitely relief that there is a speck of commonsensical fairness in this world, after all.

Hat Tip: Dish

Something good will come out of this crisis...

... for my native country:

Greece could save in excess of 1 billion euros by reducing its defense spending next year, according to cuts announced by Prime Minister Costas Karamanlis in Parliament yesterday, as it was confirmed that the eurozone had slipped into recession.

Speaking after the news that the economic crisis has officially taken grip of Greece as well as the other eurozone members, Karamanlis said that he would cut the defense budget for 2009 by 15 percent in a bid to save money.

The big question is: WHY NOW? WHY SO LATE? Somehow, Turkey is no longer such a big security threat, after all. My personal long-standing position is that the military takes up too many resources of my country (financial, human, moral) and should be seriously curtailed.

Cool commercial of the week

Bretton Woods II?

No way. Obama decided to stand on the sidelines, Bush is clearly not willing (or mentally fit) to craft a coherent plan, the developing countries seem to think this is an opportunity to slash a larger share of the pie and the Europeans were not very specific in their delineation of a regulatory "college". This was a bit disappointing, I have to say. Expect large losses in the stock market tomorrow. A good analysis of what happened and the coming attractions from Business Week here. The full text of the common statement of the G-20 here. There was actually one interesting idea: the insertion of the principle of anti-cyclicality into the banking sector. Andrew walker of the BBC expounds:

And here is one to set the pulse racing: "mitigating against pro-cyclicality in regulatory policy". That might actually turn out to be quite important.

The idea is to have banking regulation that does not exacerbate the cycle of boom and bust - indeed the aim is to moderate it.
'Dynamic provisioning'

Spain's system has attracted a lot of interest.

In effect, it requires banks to build up a financial cushion in the good years which can help them absorb losses in the bad times when increasing numbers of borrowers fail to repay.

The basic principle is not exactly financial rocket science, although the name it has - dynamic provisioning - makes sound as though it is.