I added some long exposure toward the end of the day yesterday. Premarket today, futures look like they will open higher. I am likely to have shorter time frames with long trades, given overhead resistance on major index charts.


Here are some charts of current holdings (see yesterday's post):

- ISIL



- SU



- NOV



- RHT



- SFLY



- YGE



- WFR



And a few I am watching:

- RNWK



- TSL



- NFLX



- ELON



Looking at the news this morning, this caught my eye: G-20 Plans New Role for Emerging Economies in IMF Lending, Bank Regulation.

At the meeting Thursday of the Group of 20 industrialized and developing nations, heads of state including President Obama are expected to back the addition of 10 developing countries to a key economic council in Switzerland that has long operated as a club of rich nations. This will grant them a platform to help revamp global financial standards and take part in the supervision of the world's 25 largest banks, according to diplomatic sources.

Several major developing countries -- most notably China -- are also in late-stage negotiations to win new authority to shape decisions at the Washington-based International Monetary Fund, an organization that developing nations have long complained dictate to them rather than hear them out.

...The United States this week is proposing that five developing nations -- China, Brazil, Russia, Mexico and India -- be given more influence on IMF lending decisions in return for tens of billions of dollars in new donations, according to an administration official. Washington is looking for world leaders to endorse the idea this week, with details to be worked out before the IMF's annual meeting in Washington next month. Some European governments, however, are cautious, fearing they would lose power in an institution traditionally headed by one of their own.

I think this type of reform is long overdue at the IMF, which has been accused of a conflict of interest that promotes the interests of developed countries and corporations (e.g., the free trade agenda, privatization of national assets, corporate personhood, etc.) over those of the people it was created to serve in developing countries. This crisis is proving revolutionary to the global economic order, as the US is losing its bully pulpit, and economies with a greater tendency toward socialism and populist policies gain standing.

The result remain to be seen. While it is abundantly clear that people were poorly served by the more extreme forms of socialism, such as in Eastern Europe during the Soviet era, it is also clear that policies of global capitalism were failing to reach billions of the poorest and most marginalized, in Africa and Asia in particular. Too often the recent paradigm has produced increasing wealth disparities, and scarcity of resources for those at the bottom. Unfortunately, the mainstream media has done a poor job of reporting the honest grievances of those who have opposed some aspects of globalization, and the activities of international bodies like the IMF, World Bank, and WTO. Many of these grievances are quite valid, that free trade agreements are often structured to infringe on the sovereignty and self-determination of developing countries, that IMF and World Bank mandates often create austerities and cost inflation for basic necessities, that developed countries are in a position to easily abrogate these treaties (think agriculture and steel subsidies), and that the priorities often seem to be more about opening markets than helping people.

It is worth reading this article on Joseph Stiglitz, the Nobel prize-winning former Chief Economist of the World Bank. It is also interesting to note that Stiglitz was likely forced out by then-US Treasury Secretary Lawrence Summers, one of the architects of late 1990's banking deregulation and a prominent player in the current administration. Stiglitz has been critical of the Bretton Woods organizations since leaving the World Bank. Here Greg Palast gives us Stiglitz's views on country assistance strategies:

Stiglitz helped translate one from bureaucratise, a "Country Assistance Strategy." There's an Assistance Strategy for every poorer nation, designed, says the World Bank, after careful in-country investigation. But according to insider Stiglitz, the Bank's staff 'investigation' consists of close inspection of a nation's 5-star hotels. It concludes with the Bank staff meeting some begging, busted finance minister who is handed a 'restructuring agreement' pre-drafted for his 'voluntary' signature (I have a selection of these).

Each nation's economy is individually analyzed, then, says Stiglitz, the Bank hands every minister the same exact four-step program.

Step One is Privatization - which Stiglitz said could more accurately be called, 'Briberization.' Rather than object to the sell-offs of state industries, he said national leaders - using the World Bank's demands to silence local critics - happily flogged their electricity and water companies. "You could see their eyes widen" at the prospect of 10% commissions paid to Swiss bank accounts for simply shaving a few billion off the sale price of national assets.

...After briberization, Step Two of the IMF/World Bank one-size-fits-all rescue-your-economy plan is 'Capital Market Liberalization.' In theory, capital market deregulation allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money simply flowed out and out. Stiglitz calls this the "Hot Money" cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days, hours. And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%.

"The result was predictable," said Stiglitz of the Hot Money tidal waves in Asia and Latin America. Higher interest rates demolished property values, savaged industrial production and drained national treasuries.

At this point, the IMF drags the gasping nation to Step Three: Market-Based Pricing, a fancy term for raising prices on food, water and cooking gas. This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls, 'The IMF riot.'

The IMF riot is painfully predictable. When a nation is, "down and out, (the IMF) takes advantage and squeezes the last pound of blood out of them. They turn up the heat until, finally, the whole cauldron blows up," as when the IMF eliminated food and fuel subsidies for the poor in Indonesia in 1998. Indonesia exploded into riots, but there are other examples - the Bolivian riots over water prices last year and this February, the riots in Ecuador over the rise in cooking gas prices imposed by the World Bank. You'd almost get the impression that the riot is written into the plan.

...Now we arrive at Step Four of what the IMF and World Bank call their "poverty reduction strategy": Free Trade. This is free trade by the rules of the World Trade Organization and World Bank, Stiglitz the insider likens free trade WTO-style to the Opium Wars. "That too was about opening markets," he said. As in the 19th century, Europeans and Americans today are kicking down the barriers to sales in Asia, Latin American and Africa, while barricading our own markets against Third World agriculture.

I would also recommend the book When Corporations Rule the World by David Korten. I read it over ten years ago, and many of his viewpoints have stuck in my mind. For instance, he has a fundamental distrust of any organization so large that it isn't accountable to anyone. Here is an excerpt, The Betrayal of Adam Smith:

In the real world of unregulated markets, successful players get larger and, in many instances, use the resulting economic power to drive or buy out weaker players to gain control of even larger shares of the market. In other instances, "competitors" collude through cartels or strategic alliances to increase profits by setting market prices above the level of optimal efficiency. The larger and more collusive individual market players become, the more difficult it is for newcomers and small independent firms to survive, the more monopolisitic and less competitive the market becomes, and the more political power the biggest firms can wield to demand concessions from governments that allow them to externalize even more of their costs to the community.

...Market theory also specifies that for a market to allocate efficiently, the full costs of each product must be born by the producer and be included in the selling price. Economists call it cost internalization. Externalizing some part of a product's cost to others not a party to the transaction is a form of subsidy that encourages excessive production and use of the product at the expense of others. When, for example, a forest products corporation is allowed to clear-cut government lands at giveaway prices, it lowers the cost of timber products, thus encouraging their wasteful use and discouraging their recycling. While profitable for the company and a bargain for consumers, the public is forced, without its consent, to bear a host of costs relating to water shed destruction, loss of natural habitat and recreational areas, global warming, and diminished future timber production.

The consequences are similar when a chemical corporation dumps wastes without adequate treatment, thus passing the resulting costs of air, water, and soil pollution to the community in the form of health costs, genetic deformities, discomfort, lost working days, a need to buy bottled water, and the cost of cleaning up contamination. If the users of the resulting chemical products were required to pay the full cost of their production and use, there would be a lot less chemical contamination in our environment, our food and water would be cleaner, there would be fewer cancers and genetic deformities, and we would have more frogs and songbirds. If the full cost of producing and driving cars were passed on to the consumer we would all benefit from a dramatic reduction in urban sprawl, traffic congestion, the paving over of productive lands, pollution, global warming, and depletion of finite petroleum reserves.

Of course, what we are experiencing now is a massive externalization of financial sector costs onto the taxpayer. Perhaps we can still hope that what arises out of the ashes is a model that will better serve all people, not those who are already advantaged.