May 15, 2009
Completely off-topic for a blog about security issues and international relations, but nevertheless an interesting and tragi-comic story about how a senior economics journalist (at the NYT no less) gets into trouble with his mortgage and watches his personal finances collapse.
Made even more poignant by the fact that he’s completely candid about the decisions and the circumstances that led to the trouble, even going into detail on the effect it had on his mental state and his marriage. Having previously worked in the real estate/mortgage industry (in what seems like another life now), and having had a no-doc, no income verification mortgage myself, I can relate to his difficulties. I also remember being stunned that Washington Mutual would throw so much money at a guy like me, seemingly without asking the most basic of questions. Fortunately, life’s circumstances got me out of that mortgage before it ruined me. Unfortunately, I had to leave behind a lot of other good things at the same time.
Anyway, it’s a good article, worth reading even if you’ve never experienced the kind of troubles he’s talking about.
One question though: is it possible that one reason US newspapers are in such financial trouble because they’re paying their reporters $120,000 a year?
May 12, 2009
Foreign Policy has an interesting (if brief) essay by Khadija Sharife on the problem of keeping African money in Africa. She downplays the standard interpretations of endemic corruption of African elites or the theft of resources from war-torn countries (although she mentions both of these problems.)
Instead, Khadija’s essay focuses on the use of tax havens, mostly in Europe, that facilitate the transfer and dispersal of tax revenues and cash from Africa. As she writes:
The numbers are staggering. Each year, more than $1 trillion exits developing countries, and more than $140 billion of comes from Africa. That’s almost four times as much as the continent gets in official development aid. Sub-Saharan Africa may be the world’s poorest region, but it’s also its leading net creditor.
She’s right. Those numbers are staggering. Staggering and enlightening and depressing. $140 billion dollars, which by all rights should remain in Africa for spending, investment and savings, is basically disappearing in a massive swap to support the lavish Swiss economy or some accountant on the Channel Islands.
International capital flows are usually beyond my understanding (and the scope of this blog), but even a financial retard like myself can see that this is an untenable situation. For every dollar in aid that goes into Africa, almost four more are spirited out to various tax havens and corporate accounts. Generally speaking, I take a fairly libertarian view of government regulation, especially given that the law of unintended consequences seems to apply especially strongly to new financial legislation. However, in this case, I can’t help but wonder if some readjustment of either the international financial system or local European tax laws might make more of a difference for Africa than all the aid that is currently pumped into the place.