Month: May 2007

The government began salting away its oil proceeds in a special reserve in 1996.  Known until last year as the Petroleum Fund, it was renamed the Pension Fund, which is supposed to make Norwegians aware that the fund’s purpose is to provide for future generations.

With the spike in oil prices, it has become the biggest public fund in Europe.  At the rate it is growing, experts say it will be worth $800 billion to $900 billion in a decade.  That translates into $180,000 for every man, woman and child in Norway.

“Inevitably, Norwegians feel bad about having all this money,” said Gro Nystuen, a human rights lawyer who is chairman of an ethics council that screens investments.  “Our job is to make the Norwegian people feel less guilty.”

The Norwegians won’t invest in Wal-Mart, but they will invest in Saudi Arabia.  And get this:

Blacklisting companies that worsen climate change, she said, would put Norway in an awkward spot as its national fortune rests on fossil fuels.

Here is the full story.

Historic cemeteries, desperate for money to pay for badly needed restorations, are reaching out to the public in ever more unusual ways, with dog parades, bird-watching lectures, Sunday jazz concerts, brunches with star chefs, Halloween parties in the crematory and even a nudie calendar.

Here is more.

Here in Oslo a bottle of water costs five to six dollars.  That’s not a bottle of water in a starred Michelin restaurant with molecular gastronomy.  That’s not a bottle of Voss served by a ravishing Norwegian blonde in a cool lounge with modern Scandinavian design, surrounded by hipsters.  That’s not a bottle of water served next to the main church or a lovely fjord.

That’s not even a super-large bottle of water.  That’s a mid-sized plain water from 7-11.

A so-so kung pao chicken costs 25 to 30 dollars, and that is for lunch.

Here is Dave Leonhardt’s stimulating piece.  Here is the key fact:

Last year, the Standard & Poor’s 500-stock index jumped 14 percent, while the average hedge fund returned less than 13 percent, after investment fees, according to Hedge Fund Research in Chicago…Since 2000, the average hedge fund hasn’t done any better, after fees, than the market as a whole, according to research by David A. Hsieh, a finance professor at Duke.

My guess is that a small number of very bright individuals can in fact beat the market on a systematic basis.  Today the world can mobilize enough capital so that these people become very very rich and have a larger impact on market prices than in times past.  These individuals also spawn overconfident imitators, which lead to subnormal returns for the non-superstars.  On average the gains and losses are a wash, but the true stars must limit the amount of capital they manage, for fear of pushing around market prices too much.  Some set of insiders thus continue to gain wealth whereas most outsiders are playing the usual efficient markets game, with slightly subpar returns, due to the informed trading of the insiders.  The geniuses are in effect taxing the uninformed trading of the non-genuises, but I do not see the trading volume of the latter group falling in response.  In that model, in the first best, it is the trading of the losers — not the winners — which should be taxed.

Notwithstanding the seductive academic merits of free trade, real world multilateral trade agreements are all about power and power politics. Negotiations cover items further and further away from simple trade and tariffs (eg. TRIPS, TRIMS, and the Singapore issues) pressing more and more concessions on poor countries without giving them what they really want and need: open access to rich country markets in agriculture, textiles and footwear (I know the multifiber agreement has expired, but what did the US and the EU do? Impose sanctions on "temporary surges" as allowed under the successor to the MFA). I for one have never understood why poor countries have continued with this process.

Last month I was at a conference and was opining that this time the poor countries would stick to their guns and scuttle the deal if no true agricultural opening was forthcoming. A fine gentleman named Rorden Wilkinson politely begged to differ and referred me to his excellent book: The WTO: Crisis and the Governance of Global Trade. The book argues that ministerial collapses and apocalyptic rhetoric are common throughout the history of GATT/WTO negotiations and often serve to advance, rather than deter, progress towards a conclusion satisfactory to the great powers. Even though I still think there will be no major trade deal, I highly recommend the book.