DAVOS: Pronouncements From the Sanatorium

Part of the big uncertainty is where the bodies are buried – R.G. Rajan, former chief economist of the IMF.

In Davos, the world’s elite are meeting in banquet rooms to discuss our fate. With celebrity appearances and all the usual scribes in attendance, they are making pronouncements from the sanatorium. And the reports so far are downright bizarre.

Talk on high of “Corporate Responsibility” and “Socially Conscious Capitalism”; Talk of “crisis sessions from the hotel suites”. Really? What is this, ANXIETY in the AGE OF GREAT MODERATION?

Bill Gates is slated to issue a call to arms: A New Approach to Capitalism in the 21st Century. “People are asking themselves” said Klaus Schwab, host of the event “What are the boundaries of the capitalist system? They think that the market may not always be the best mechanism for providing solutions.” Has George Soros comandeered the control room with a pack of penitent philanthropists?

Man, this latest Market Crash has got people more than a little worked up? Could it be that the profit reports are finally reflecting what any Joe has been experiencing for years, if not generations? Sweet Jesus, will the lion really lie down with the lamb?

How To Help Hal (Part 1)

Damon Winter/The New York Times

Hal is a marketing executive from Silicon Valley. Hal is age 51. Pictured here in a modest blue collar dress shirt, in front of a suburban looking backyard fence, Hal is the exemplar of a recent New York Times front-page story chronicling the woes of a new class of American society: the middle class rich.

Hal works 12 hours a day, arriving at work at 7am most mornings. He works an average of 10 hours on the weekend. He has a $1.2 million home that is paid off and he and his spouse are worth an estimated $3.5 million. Good job, Hal.

Hal says “a few million doesn’t go as far as it used to.” For fun, let’s see what Hal might be able to do if he liquidated a mere 1/2 of his assets. $3.5 mill / 2 = $1.75 mill. Say the feds were to take almost half. Hal would be left with about $1 million to play around with while the other $1.75 mill would continue to mature in the diversified investments of his choice.

With roughly $1 million – free and clear – Hal and his family may choose to: Purchase a seaside villa on the South Coast of Jamaica. 8 bed, 8 bath w/ “beautiful ocean and mountain views”… more details

At a mere $675,000 (he could probably do better with a little leg-work) minus $25,000 to grease some local wheels, Hal & Co could settle down w/ roughly $350,000. According to the World Bank, an average Jamaican family subsists on under $4000 a year. If they could squeeze by on merely 3Xs the local average – $12,000/year – Hal & Co should be able to make it until Old Hal turns 80. That’s 3 years past the average life expectancy for an American and 5 years past that of a Jamaican. Not bad, Hal.

Do you have any other thoughts of how to help Hal?

Arms For Oil Ain’t No Joke

An Excerpt from the NYT, June 7, 2007:

LONDON (AP) — A Saudi prince received millions of dollars for his own use as part of Britain’s largest arms deal, the British Broadcasting Corp. said.

In upcoming report from its ”Panorama” program, the BBC says that the payments went to Prince Bandar bin Sultan, who negotiated the $80 billion Al-Yamamah arms deal to sell 100 warplanes in 1985.

BAE Systems, the prime contractor, has denied that it ever violated British law in relation to the contract. Prince Bandar refused to comment, the BBC said in a statement Wednesday.

Al-Yamamah, meaning ”the dove,” was the name given to an agreement under which BAE supplied Tornado fighter jets and other military equipment to Saudi Arabia, which paid the British government with oil. The full extent of the deal was never revealed but it was widely believed to be Britain’s largest-ever export agreement.

Prince Bandar bin Sultan ///
Would Somebody Please buy this Dude a Plane?

Prime Minister Tony Blair has taken responsibility for calling off an investigation by the Serious Fraud Office into allegations that BAE Systems ran a $120 million ‘’slush fund” offering sweeteners to Saudi officials in return for contracts as part of the Al-Yamamah deal.

”This investigation, if it had gone ahead, would have involved the most serious allegations in investigations being made into the Saudi royal family and my job is to give advice as to whether that is a sensible thing in circumstances where I don’t believe the investigation incidentally would have led anywhere except to the complete wreckage of a vital strategic relationship for our country,” Blair said. ”Quite apart from the fact that we would have lost thousands, thousands of British jobs.”

Bush + Abdullah = Forever

Miss Shock & Awe: What Else You Got?