Saturday, July 25, 2009

Family energy savings and the slow return to prosperity

The world's foremost financial shaman started his latest post with:

Eh? What's going on? Why am I writing on a Saturday afternoon? Is there something wrong with me? No, dear reader, I'm just feeling a bit bored...
As for me, no, I'm not bored, though I am writing on a Saturday night. Instead, I'm poor again. Empty as a pocket with nothing to lose. The #%$* US dollars from my account vanished. For an illuminating cause, but just like that. Yeah baby, no more dance for you tonight.

I am poor again.

To compensate somewhat for this sorry state of affairs, save the day, and edge forward, I'm watching Le plus grande cabaret du monde on TV5.
On voudrait des sous pour acheter des frites, on voudrait des sous pour aller dancer...
The lyrics are emboldening, the dance phenomenal. Moreover, it seems that many more are looking for some kind of change.

At the same time, as someone raised for, and used to, multitasking activities, I'm reading with reasonable optimism through this interesting research paper, 'Smart Family' Opportunities for Energy Savings. It claims to allow families to save up to $10,000 per year per home in energy bills (emission abatement included), by using a range of simple technologies. [The practical Canadian home owner may want to refer to CMHC's Renovating for energy savings and, in Ontario, also to OPA's Every kilowatt counts.]

Who knows.

Sous by sous, one might become riche again...

Sunday, July 19, 2009

Start small, grow rich

Singapore, Taiwan, Austria: what do they have in common?

All these countries have extremely performant and export-oriented economies.

Singapore - iShares MSCI Singapore Index (EWS)

Singapore has an export-oriented economy, one of the most exposed to the global economy. This city-state does not expect to return to growth until the global economy shows its signs of recovery. Most notably, the full recovery will depend on the economic performances of overseas markets such as the US, China, and Japan. However, once the external trades start to pick up, Singapore's economy is likely to be among the first to rebound.

Taiwan - iShares MSCI Taiwan Index (EWT)

Another heavily trade-dependent economy, it will continue to suffer until global economic recovery takes place. Several economic indicators point to a slight easing of Taiwan's deep economic recession during the second quarter of 2009.
Six of the seven components of the index — export orders, average monthly overtime in industry and services, book-to-bill ratios in the semiconductor machinery industry, monetary aggregate M1B (currency in circulation, current-account and passbook deposits [M1A] plus passbook savings deposits), stock prices, and producers' inventory — showed positive movement. However, the barometer, which uses five colours to measure the health of the economy, continued to flash blue, indicating recession, for the ninth month in a row.
Austria - iShares MSCI Austria Investable Market Index (EWO)

The latest Purchasing Managers' Index (PMI) released by Bank Austria showed a slowing of the downturn in June, and points to a turnaround of Austria's industry most likely in the summer.
Decline in new orders, stocks of finished goods and output lose momentum. Layoffs remain at a high level. Industry poised for stabilization but a clear recovery is not anticipated.
Sources: Economist Intelligence Unit, Bank Austria

Special Drawing Rights

The Special Drawing Right (SDR) is an international reserve asset created by the IMF in 1969 to supplement the official reserves of its member countries. Nowadays, its main function is to serve as the unit of account of the IMF and some other international organizations.

The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold — which, at the time, was also equivalent to one US dollar. After the collapse of the Bretton Woods system in 1973, however, the SDR was redefined as a basket of currencies, today consisting of the euro, Japanese yen, pound sterling, and US dollar.
The currency value of the SDR is calculated daily (in US dollars). The valuation basket is reviewed and adjusted every five years.
The SDR is neither a currency nor a claim on the IMF. It is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions.
Each IMF member country is assigned a quota, based on its relative size in the world economy. A member's quota, denominated in SDRs, determines its financial commitment to the IMF, its voting power, and access limits to financing from the IMF.

People’s Bank of China (PBOC), among other important emerging markets countries, has called at the beginning of this year for a new global reserve currency:
Special consideration should be given to giving the SDR a greater role. The SDR has the features and potential to act as a super-sovereign reserve currency. Moreover, an increase in SDR allocation would help the Fund address its resources problem and the difficulties in the voice and representation reform. Therefore, efforts should be made to push forward a SDR allocation.

Tuesday, July 7, 2009

The abundance of thrift

There has been an explosion of frugal advice in the blogosphere, both individual posts and entire blogs dedicated to the subject. Given the crowded space, tightwads are, unavoidably, forced to read through profligate portions of excruciating cut-and-paste spam, and not of the thrifty, edible kind.

Piet Mondrian, Composition with Yellow, Blue, and RedWe find most suggestions rather impractical ("how to save money by dumpster diving"; "breast-feeding saves me a lot of money"; "brush your dog's teeth" or, more economical yet, "pass on pets" altogether), a few which are nothing new ("use condoms" and, possibly related, "look for inexpensive entertainment options"; and then, in the inauspicious case you skimped over the first piece of advice herein, "switch to cloth diapers" and "make your own baby food"), and several downright ludicrous ("make your own feminine products", "quit smoking", and "reduce alcohol"). We managed to uncover more usable information in Paul Simon's 50 Ways To Leave Your Lover.

For those who lived in Romania during the Golden Era, what with the daily Scînteia (The official organ of the Central Committee of the Romanian Communist Party) the toilet paper of necessity more often than not, it is difficult to find real value in North American blogs advocating frugality (oh yeah, "cut down on your visits to the spa"). Granted, this is a tough audience for such a topic, economic crisis or not. A reader of one of these blogs dismissed a long list of penny-wise tips with the comment, "In other words, become an Amish."

In the minimalist spirit of the time, here's a couple more pieces of frugal advice, courtesy of financial tactics. A friend of ours suggested once that rather than getting married, buying a house, etc., you'll be much better off in the long run living in a hotel, eating at restaurants, and frequenting a friendly professional. We won't be so extreme as to propose such a long-range commitment. And unlike the typical tip in the blogs of frugality, there isn't even the need to track down and print coupons, nor generally expend time and effort (quite the contrary, at which we excel). We equally refrain from swinging to the other extreme on the advice scale ("time is money, so blog less"). By the bye, if your printer is still of the dot matrix variety, you may have already given these a try.
  • Do not shave. Or, at the least, not as often. (Don't you ever watch House?)

    Cut down on blades et al. If you are dedicated enough to go all the way, then once you don a sizeable beard you can, without anyone asking questions or dropping hints, take up painting or, if that's not thrifty enough for you (materials being pricey and all), get into philosophizing. Blogging, which comes free, is optional. A tub, preferably second-hand, is also something to consider.

  • Laughter is the best medicine. 'Nough said.

    Ditch the health plan. Even signing up for a comedy channel may be cheaper. The best we could find in the above-mentioned blogs was the suggestion to downgrade the current medical insurance plan, which is clearly for the novice. We are aware of one instance where this fails (at the doctor, knife in the back, "Are you in great pain?" "Only when I laugh."), but it's statistically negligible.
Image: Mondrian, Composition with Yellow, Blue, and Red, 1937-42, oil on canvas, 72.5 x 69 cm, Tate Gallery, London. Source: