Economics

Crocodile Regrets by Brandon

Corporate capitalism seems more complicated now than when I was twenty-two years old, thought the WTO, IMF and World Bank were evil incarnate, and didn't want to admit that corporations could be an effective organizational form, markets a dynamic wealth-generating system, and capital guided by ethics as well as greed.

But a few industries and professions remain unambiguously villainous, and they converge in a story told in the New York Times Magazine by Ben Heller, a hedge fund executive responsible for his firm's investments in "emerging markets." Of course, just as a mask and gun don't make someone a robber, it's possible that Heller did his work without enabling the plunder of the world's poorest regions, where labor and environmental protections — if not basic human rights — are non-existent. But it seems unlikely.

In lamenting the carelessness that had sickened his profession, Heller describes how it finally infected him. Projects that he would once have dismissed as economically dubious he now approved. "Some of these decisions today make me blush," he writes. "Anybody out there care for a small Argentine oil field? I’ve been assured that the angry gang of Mapuche activists blockading it will be gone soon."

The Mapuche are an indigenous group who live in Chile and Argentina. Impoverished and historically oppressed, they're currently engaged in lawsuits against Pioneer Natural Resources and the Apache Corporation — two American oil companies charged with stealing their land — and Repsol-YPF, a Spanish-Argentinian combine who want to drill near the headwaters of the rivers that feed the Mapuche's ancestral lands. Their claims echo those made against Chevron, who over several decades turned swaths of the Amazon rainforest into a cancerous pit.

Heller was probably — hopefully — making a joke, not describing one of his investments. It wasn't very funny, and hints at something easily forgotten now: fiscal mistakes staggered the global financial system, but its flaws were often moral, too.

Image: Antitezo

Counterfeit This Bag by Brandon

New York City police claim to have seized $25 million of fake Chinatown gear this year. "Easy and sleazy money," to use Mayor Bloomberg's phrase. The latest raid came in what he called the "counterfeit triangle" down between Canal, Walker, Baxter and Centre streets, a hypercongested market mecca frequented by nearly every 30-and-under NYC visitor, and many of its dwellers.

Thirty-two storefronts now shuttered -- plain aluminum planes in a teeming tide of people, many of them customers. Just two years ago, police raided "counterfeit alley," and it's hard to imagine the latest raids will have any more lasting effect. Fake designer bags from Chinatown are as American as apple pie; the demand is basic and eternal, even innocent. From the first random internet piece returned by "chinatown bag crackdown":

I went to china town yesterday because my friend wanted to get a chanel purse and all of the stores said that they didnt have anything anymore wich i thought was wierd because usually they had tons of stuff and then i went to Crystal mall near metro and the girl who owned one of the stores there said there was a huge police crackdown and almost all the stores had to get rid of there merchandise shitty deal because i always went down there to get bags n stuff.

Supposedly that impulse has cost the city $1 billion in sales tax, or a palpably preposterous $12 billion  in sales. Nobody with a shred of common sense could believe that $35 bag buyers would throw down $600 for the real. Who knows whether Bloomberg believes, or if was foisted on him by the police, or by campaign-friendly designers and high-end stores, or --  inexplicably -- NBC.

Equally unknown is the fate of the now-busted Chinese people who worked the storefronts; stories don't seem to talk much about them. But the supply has already adapted: hushed transactions down side streets, under scaffolding, Louis Vitton logos peeking out of garbage bags. This probably doesn't bode well for the Mayor's second justification, that the trade produced "money laundering and bloody turf wars." Whoever survives the latest disruption will probably be more ruthless than their predecessors. Evolution in action.

For the moment, though, sales will probably fall. And a dash of scarcity will add luster to the fakes, in turn making the real versions more desirable. A feedback loop of brand valuation, optimized when there are just enough fakes -- not too many, not too few -- directing the evolution of its own particular species: designers of garish, tactless handbags.

Or maybe officials really do believe the $1 billion crap. On that note, time to watch the final The Wire.

As America Slides Into the Second World by Brandon

The other day my father wondered why the U.S. doesn't play hardball with OPEC countries -- cut the oil prices or we turn your sand to glass. Civilized objections aside, I said, it's because they have us over a (ha) barrel: their businesses are pegged to the dollar. If they bail on our currency, our economy tanks.

Lo and behold:

'Kill the cable, kill the cable,' shouted the security guard as he burst through the double doors into the media room at the Intercontinental Hotel in Riyadh, followed by Saudi police. It was too late.

A private meeting of Opec leaders, gathered this weekend in Riyadh for the cartel's third meeting in its 47-year history, had just been broadcast to the world's media for more than half an hour after a technician had mistakenly plugged the TV feed into the wrong socket. The facade of unity that the cartel so carefully cultivates to a world spooked by soaring oil prices was shattered.

[...] On Friday night, during what the participants thought were private talks, Venezuela's oil minister Venezuela Rafael Ramirez and his Iranian counterpart Gholamhossein Nozari, argued that pricing - and selling - oil using the crippled dollar was damaging the cartel.

Oil leaders' private debate televised by mistake [Guardian Unlimited]