วันอาทิตย์ที่ 24 มิถุนายน พ.ศ. 2555

An Evaluation Framework - Economic Policy and Human Rights by Radhika Balakrishnan and Diane Elson

Economic Policy and Human Rights by Radhika Balakrishnan and Diane Elson apparently declares an intention to compare and contrast fiscal and monetary policy, public expenditure consequences, taxation, trade policy and pension reform in Mexico and the United States of America. The choice of countries is justified on several levels: they are of comparable size, differ in level of development, contrast in governmental approaches and, crucially, are both signatories of NAFTA, the North American Free Trade Agreement which, itself, suggests a commonality in certain policy areas. At the outset, the authors declare that the neoliberal economic assumptions that have dominated policy choice for thirty years have not worked, ostensibly because their main result has been the current crisis.

The authors thus attempt to illustrate this claim by examining a range of social, employment and economic indicators to assess the impact of the current paradigm on particular groups within both Mexico and the United States. But Balakrishnan and Elson also declare the intention of doing much more than this, in claiming that the framework they adopt could become transferable to other places and contexts. Their choice of framework appears to achieve exactly what they intend, and it does so quite spectacularly. And it is a position that could have benefited my own work a couple of decades ago, if only it had then existed.

My own research on education's role in Philippine development found that increased use of market forces and privatisation in an education system already heavily reliant on the private sector produced distortions that undermined some of education's potential and desired objectives. After the debt decade of the 1980s, increased reliance on market forces in Philippine education placed most high quality educational experience beyond the reach of anyone but the economic elite. And yet, declared policy stated that the promotion greater equality was one of the education system's explicit goals. In the future, work intending to identify such contradiction will benefit from employing the universal reference point of the transferable framework identified in Balakrishnan and Elson's superb study.

The authors begin with a short discussion of the Universal Declaration on Human Rights. Importantly, the rather general goals that this advises have been rendered more specific by subsequent declarations. And, by signing up to these, governments - presumably - declare their desire to see the declared goals achieved, both at home and abroad. Such general aims have thus become more specifically objectified via the Convention on the Elimination of All Forms of Racial Discrimination, the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights and the Covenant on the Elimination of All Forms of Discrimination Against Women. Thus policy objectives, if not timetables for their achievement, in the areas of race, gender, employment and several other areas can be specifically identified as having been espoused by governments because they have willingly signed up to these treaties, even though that might have been prompted more by political expediency than commitment.

Using these objectives as a framework for evaluation, the book's individual papers conduct a near-forensic examination of a range of Mexico's and the USA's recent economic and social policies in the specified areas in order to examine whether the agreed objectives have been furthered or hindered. Almost without exception, neoliberal policy conformity is shown to undermine these agreed objectives and often to impact differently from their declared intent on specific and identifiable target groups within the population. This evidence makes a strong case for greater and more active accountability of government action and thus also questions declared commitment to previously agreed - and politically convenient - principles. In more than one area, there is strong evidence to suggest that policies are mere populist window-dressing in that their stated objectives are in line with identified and desired goals whilst their implementation can only undermine their own stated intent.

Economic Policy and Human Rights thus provides much more than an examination of particular policy prescription in Mexico and the United States. Indeed it may even present an evaluative framework that could be applied by progressive analysts to any state or region that has adopted the objectives of these quite specific treaties. As such it will surely provide an important and enduring contribution to any debate on social and economic policy.

Philip Spires
Author of Mission and A Fool's Knot, African novels set in Kenya
http://www.philipspires.co.uk/
Migwani is a small town in Kitui District, eastern Kenya. My books examine how social and economic change impact on the lives of ordinary people. They portray characters whose identity is bound up with their home area, but whose futures are determined by the globalized world in which they live.



วันอังคารที่ 12 มิถุนายน พ.ศ. 2555

How to Trade - Book Review - John Murphy, Intermarket Analysis

AppId is over the quota
AppId is over the quota

The majority of literature that discusses asset allocation linking multiple markets has a heavy dose of macro and microeconomics. Typically, macro-micro relationships require applying econometric models to comprehend the structural linkages between the two intertwined fields of economics.  John Murphy removes the hard statistical methods while retaining the economic logic with chart-based reasoning.

John Murphy was the technical analyst for CNBC-TV for seven years and a professional analyst for over 25 years. His career includes time at Merrill Lynch as a Director of Commodity Technical Analysis.  John has his own consulting firm, JJM Technical Advisors.  He is also president of MurphyMorris, Inc., which was created to produce educational software products and online services for investors.

There are adequate reader reviews on Amazon and Google Book Search, to help you decide if you will get the book. For those who have just started or are about to read the book, I've summarized the core concepts in the larger and essential chapters to help you get through them quicker.

The number on the right of the title of the chapter is the number of pages contained within that chapter. It is not the page number.  The percentages represent how much each chapter makes up of the 246 pages in total, excluding appendices.

1.  A Review of the 1980s.  16, 6.50%.

2.  1990 and the First Persian Gulf War.  16, 6.50%.

3.  The Stealth Bear Market of 1994.  18, 7.32%.

4.  The 1997 Asian Currency Crisis and Deflation.  14, 5.69%.

5.  1999 Intermarket Trends Leading to Market Top.  16, 6.50%.

6.  Review of Intermarket Principles.  16, 6.50%.

7.  The NASDAQ Bubble Bursts in 2000.  18, 7.32%.

8.  Intermarket Picture in Spring 2003.  16, 6.50%.

9.  Falling Dollar During 2002 Boosts Commodities.  14, 5.69%.

10.  Shifting from Paper to Hard Assets.  14, 5.69%.

11.  Futures Markets and Asset Allocation.  20, 8.13%.

12.  Intermarket Analysis and the Business Cycle.  20, 8.13%.

13.  The Impact of the Business Cycle on Market Sectors.  18, 7.32%.

14.  Diversifying with Real Estate.  18, 7.32%.

15.  Thinking Globally.  12, 4.88%.

Focus on chapters 3, 7 and 11-14, which makes up about 46% of the book. Especially chapters 11-14 are relevant for practical trading purposes.  Unlike my prior book reviews, where I've summarized the key points for each focus chapter, I will summarize the key points across chapters 3, 7 and 11-14. This is to recognize the connectivity of intermarket relationships across the 4 main asset classes of Stocks (Equities), Bonds, Currencies and Commodities.  The context of the summary is to be viewed from a retail option trader's perspective.

Here are the Key Directional Intermarket Relationships in brief.

The U.S. Dollar (USD)
USD turns up as Bonds rise under normal conditions but Bonds fall during deflationary periods. USD turns down as Bonds fall but Bonds rise during deflationary periods.USD turns up as Commodities fall.  USD turns down as Commodities rise.USD turns up as Stocks rise but Stocks fall during deflationary periods. USD turns down as Stocks fall but Stocks rise during deflationary periods.

The USD remains the most liquid of all major traded currencies and maintains its position as the primary global reserve currency, despite growing sentiment for an alternative basket of currencies to replace it.

Bonds
Bonds turn up as the USD falls but the USD rises during deflationary periods. Bonds turn down as the USD rises but the USD falls during deflationary periods.Bonds turn up as Commodities fall.  Bonds turn down as Commodities rise.Bonds turn up as Stocks rise. Bonds lead Stocks and Stocks lag behind Bonds. Bonds turn down as Stocks fall. Again, Bonds lead Stocks and Stocks lag behind Bonds.
Commodities
Commodities turn up as the USD falls.  Commodities turn down as the USD rises.Commodities turn up as Bonds fall. Commodities turn down as Bonds rise.Commodities turn up as Stocks fall. Commodities turn down as Stocks rise.
Stocks
Stocks turn up as the USD rises.  Stocks turn down as the USD falls.Stocks turn up as Bonds rise.  Stocks turn down as Bonds fall. Again, Bonds lead Stocks and Stocks lag behind Bonds.Stocks turn up as Commodities fall.  Stocks turn down as Commodities rise.

Specific to Equities, as you trade the options on Sector Indexes of the S&P 500, please be aware of the correlation versus non-correlation with other equity and non-equity traded products. I am stating in brief, the more commonly known relationships that are repeatedly elaborated on in the book:
Changes in Energy (XLE) especially Oil (OIH, OSX) impacts Semiconductors (SMH, SOX).Utilities (XLU, UTH, UTY) are negatively correlated with Semiconductors (SMH, SOX).With broad-based Equity Indexes, the highest correlation is between Dow Jones and S&P 500.Canada benefits from rallies in oil being the ninth largest producer of crude oil globally.  While Japan, a major net oil importer suffers. The tickers for this inter-play would be FXC/XDC (Canadian Dollar), FXY/XDN (Japanese Yen) and OIH/OSX (Oil).Gold (XAU, GLD) behaves like the Australian Dollar (FXA, XDA). Australia is the third largest producer of gold globally.Top three currencies that have the tightest correlations with commodities are the Australian Dollar, the Canadian Dollar and the New Zealand Dollar.Gold/Silver (XAU, GLD) has very little correlation with other Indices.A deeper understanding of these inter-plays can help you construct effective pairs trading methods.

In conclusion, from a retail option trader's viewpoint, always remember that it is volatility that you are trading.  To trade the volatilities across multiple asset classes, use an optionable Index representing that particular asset class.  Remember, Implied Volatility can be added to or reduced from your portfolio, as not all Asset Classes or Sectors or Individual Companies or Countries move up/down in value ALL at the same time; and/or, ALL at the same rate.

This is not a criticism of the book but a personal observation.  It does not address the use of Relative Strength as a mechanism to cycle in or cycle out of an asset class, as one asset class weakens or strengthens against another asset class.  I have written about Relative Strength in another article, entitled "Stock Option Trading - Fundamental Flaw in Fundamental Analysis and Stock Picking". Please read it as a supplement to this article.

Thanks for reading my article,
Clinton Lee.
Founder, Home Options Trading: a uniquely retail-focused option-centric trading firm.

Please see Consistent Results (http://www.homeoptionstrading.com/consistent_results/), displaying the Model Portfolio's Performance YTD, updated each month-end. The portfolio models a typical self-directed retail option trader's account up to USD $50,000. Here's the stats in summary:
Return: Profit/Start of Year Cash Balance = up +75.62%.
Win/Loss Probability = 90.48%. 9 Wins per 1 Loss. Average Win/Average Loss = $3.09 Won per $1 Loss. Performance Ratio = (Win/Loss Probability) x (Average Win/Average Loss) = 90.48% x $3.09 = 2.80. Positive Expectancy = $1,051 per trade.

Preview an original 55 hour video-based course for online options trading from home, at http://www.homeoptionstrading.com/original_curriculum.html
Purchase the curriculum and receive a $800 options basic course as a Bonus!

Clinton's career spans 16 years of treasury, finance and banking across Hewlett Packard, JP Morgan Chase, Citibank; and, is currently a Corporate Director for Regional Business Development with ABN Amro (acquired by RBS) in Asia. Despite the years in the finance/banking industry, it did not help him directly grasp online options trading from home.