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Davos X Factors

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On January 23-27 the World Economic Forum held its tres chic annual meeting in Davos, Switzerland.  Admission was by invitation only.  Nick Paumgarten of The New Yorker offered the following explanation of how different segments of society view the annual Davos event:

People like to project onto Davos their fears and fantasies about the way the world works. Right-wingers see insidious, delusional liberalism, in its stakeholder ethos and its pretense of world improvement.  They picture a bunch of Keynesians, Continentals, and self-dealing do-gooders participating in some kind of off-the-books top-down command-control charade.  Left-wingers conjure a plutocratic cabal, a Star Chamber of master puppeteers, the one per cent – or .01 per cent, really – deciding the world’s fate behind a curtain of heavy security and utopian doublespeak.  The uninvited, the refuseniks, and even many of the participants see a colossal discharge of hot air, a peacock strut.  They all deploy, with a sneer, the term Davos Man, coined by the late political scientist Samuel Huntington, who decried a post-national wealthy globe-trotting élite.  Davos Man can be either a capitalist oppressor or a Commie conspirator.  Either way, he is a windbag, a pedant, and a hypocrite. Businesspeople who have never been to Davos find many ways to be dismissive of it: “I can’t do business there.”  “It’s too political.”  “It’s not what it used to be.”  The translation may be that that person has not been invited.

The World Economic Forum’s website explained the role of its official communities:

A key part of the Forum’s activities is the creation of distinctive communities of Member and Partner companies as well as leaders from civil society for more informal opportunities for interaction.

I would assume that at this year’s meeting, one of the most popular topics must have been risk management – including risk aversion.  Ever since the financial crisis, the world has been on the verge of economic chaos.  The possibility that Silvio Berlusconi could return to power in Italy has heightened concerns that the European sovereign debt crisis could reverse course from its current recovery trajectory and head into oblivion.

One of the World Economic Forum’s communities is the Risk Response Network.  The RRN “was launched to provide private and public sector leaders with an independent, impartial platform to map, monitor and mitigate global risks.”  It is comprised of individual representatives of leading global corporations, research institutions, media outlets, governments and NGOs.  The Risk Response Network released a 78-page report for this year’s annual meeting entitled, Global Risks 2013 — Eighth Edition.  The report’s topics included:  Testing Economic and Environmental Resilience, Digital Wildfires in a Hyperconnected World, The Dangers of Hubris on Human Health and Building National Resilience to Global Risks.

I found Section 5 of Global Risks 2013 to be particularly interesting.  It begins on page 55 of the report and is entitled, “X Factors”.  The report described this section in the following terms:

In this section, developed in collaboration with Nature, a leading science journal, the Risk Response Network asks readers to look beyond our high-risk concerns of the moment to consider a set of five X factors and reflect on what countries or companies should be doing to anticipate them.

*   *   *

X factors are serious issues, grounded in the latest scientific findings, but somewhat remote from what are generally seen as more immediate concerns such as failed states, extreme weather events, famine, macroeconomic instability or armed conflict. They capture broad and vaguely understood issues that could be hatching grounds for potential future risks (or opportunities).

The five X Factors discussed in the report were these:

Runaway climate change:  Is it possible that we have already passed a point of no return and that Earth’s atmosphere is tipping rapidly into an inhospitable state?

Significant cognitive enhancement:  Ethical dilemmas akin to doping in sports could start to extend into daily working life; an arms race in the neural “enhancement” of combat troops could also ensue.

Rogue deployment of geoengineering:  Technology is now being developed to manipulate the climate; a state or private individual could use it unilaterally.

Costs of living longer:  Medical advances are prolonging life, but long-term palliative care is expensive.  Covering the costs associated with old age could be a struggle.

Discovery of alien life:  Proof of life’s existence elsewhere in the universe could have profound psychological implications for human belief systems.

My favorite was the last X Factor:  Discovery of alien life.  Although the report focused on the notion that astronomers involved in the study of exoplanets could find spectral information revealing chemical signs of life, the last paragraph of the section provided some insights on the fear which has been keeping this subject under wraps for years:

Through basic education and awareness campaigns the general public can achieve a higher science and space literacy and cognitive resilience that would prepare them and prevent undesired social consequences of such a profound discovery and paradigm shift concerning mankind’s position in the universe.

So The Powers That Be are worried about “undesired social consequences” and “paradigm shift”.  Why is that not a surprise?

Those in search of “the right stuff” on this subject might be interested in what the late astronaut, Gordon Cooper had to say about it.

A good “basic education and awareness campaign” should begin with that video clip.


 

Revenge Of The Blondes

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My vintage iPhone sputtered, stammered and finally stalled out as I tried to access an article about derivatives trading after clicking on the link.  The process got as far as the appearance of the URL, which indicated that the source was The New York Times.  I assumed that the piece had been written by Gretchen Morgenson and that I could read it once I sat down at my regular computer.  Within moments, I was at The Big Picture website, where I found another link to the same article.  This time it worked and I found that the piece had been written by Louise Story.  “Wrong blonde”, I thought to myself.  It was at that point when I realized how much the world had changed from the days when “dumb blonde” jokes had been so popular.  In fact, a vast amount of the skullduggery that caused and resulted from the financial crisis has been exposed and explained by women with blonde hair.  After a handful of unscrupulous Wall Street bankers brought the world’s financial system to the brink of collapse, an even smaller number of blonde, female sleuths set about unwinding this complex web of deceit for “the Average Joe” to understand.  Here are a few of them:

Yves Smith

All right  .  .  .   It’s an old picture from her days at Goldman Sachs.  Cue-up Duran Duran.  (It’s almost as old as the photo of Ben Bernanke in my fake Chandon ad, based on their  “Life needs bubbles” theme.)  On most days, the first blog I access is Naked Capitalism.  Its publisher and most frequent contributor is Yves Smith (a/k/a Susan Webber).  At the Seeking Alpha website, a review of her recent book, ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism, began this way:

ECONNED is the most deeply researched and empirically validated account of the financial meltdown of 2008-2009 and how its unaddressed causes predict similar crises to come.  As a long-time Wall Street veteran, Yves Smith, through her influential blog “Naked Capitalism” lucidly explains to her over 2500,000 unique visitors each month exactly what games market players use and how their “innovations” evolved over the years to take the rest of us to the cleaners.  Smith is that unusual combination of scholar, expert, participant and teacher, who writes with a clarifying sense of moral outrage and disgust at the decline of ethics on Wall Street and financial markets.

Smith’s daily list of Links at Naked Capitalism, covers a broad range of newsworthy subjects both within and beyond the financial realm.  I usually find myself reading all of the articles linked on that page.

Gretchen Morgenson

Gretchen Morgenson is my favorite reporter for The New York Times.  She has proven herself to be Treasury Secretary Turbo Tim Geithner’s worst nightmare.  Ms. Morgenson has caused Geithner so much agony, I would not be surprised to hear that he named his recent kidney stone after her.  With Jo Becker, Ms. Morgenson wrote the most revealing essay on Geithner back in April of 2009.  Once you’ve read it, you will have a better understanding of why Geithner gave away so many billions to the banksters as president of the New York Fed by way of Maiden Lane III.  Morgenson subsequently wrote her own article on Maiden Lane III here.

Ms. Morgenson has many detractors.  Most prominent among them was the late Tanta (a/k/a Doris Dungey) of the Calculated Risk blog, who wrote the recurring “Morgenson Watch” for that site.  Yves Smith of Naked Capitalism (see above) accurately summed up the bulk of the criticism directed against Gretchen Morgenson:

Gretchen Morgenson is often a target of heated criticism on the blogosphere, which I have argued more than once is overdone.  While her articles on executive compensation and securities litigation are consistently well reported, she has an appetite for the wilder side of finance, and often looks a bit out of her depth.  Typically, she simply runs afoul of finance pedants, who jump on misapplication of industry jargon or minor errors when those (admittedly disconcerting) errors fail to derail the thrust of the argument.

A noted example of this was Morgenson’s article of March 6 2010, in which she explained that Greece was hiding its financial obligations with “credit default swaps” rather than currency swaps.  The bloggers who vigilantly watch for her to make such a mistake wouldn’t let go of that one for quite a while.  Nevertheless, I like her work.  Nobody is perfect.

Louise Story

As I mentioned at the outset of this piece, Louise Story wrote the recent article for The New York Times, concerning anticompetitive practices in the credit derivatives clearing, trading and information services industries.  Discussing that subject in a manner that can make it understandable to the “average reader” (someone with a high school education) is no easy task.  Beyond that, Ms. Story was able to explain the frustrations of regulators, who had hoped that some degree of transparency could be introduced to the derivatives market as a result of the recently enacted, “Dodd-Frank” financial reform bill.  It’s an important article, which has drawn a good deal of well-deserved attention.

Last year, Ms. Story co-authored a New York Times article with Gretchen Morgenson, concerning collateralized debt obligations (CDOs) entitled, “Banks Bundled Bad Debt, Bet Against It and Won”.  As I pointed out at the time:  Pay close attention to the explanation of how Tim Geithner retained a “special counselor” whose previous responsibilities included oversight of the parent company of an investment firm named Tricadia, Inc.  Tricadia has the dubious honor of having helped cause the financial crisis by creating CDOs and then betting against them.

These three women, as well as a number of their non-blonde counterparts (including:  Nomi Prins, Janet Tavakoli and Naomi Klein) have exposed a vast amount of the odious activities that caused the financial crisis.  They have helped inform and educate the public on what the “good old boys” network of bankers, regulators and lobbyists have been doing to this country.  The paradigm shift that took us beyond the sexist stereotype of the  “dumb blonde” has brought our society to the point where women – often blonde ones – have intervened to alert the rest of us to the hazards caused by what Paul Farrell of MarketWatch described as “Wall Street’s macho ego trip”.

If you should come across someone who still tells “dumb blonde” jokes – ask that person if he (or she) has read ECONned.


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