Globalism

It sounds like the U.S.’s Generally Accepted Accounting Principles will be “Formerly Accepted Accounted Principles” within a decade.   As reported by the New York Times:

The Securities and Exchange Commission moved Wednesday to allow some large American companies to begin using international accounting standards as early as next year, and to require all American companies to do so by 2016.

The Securities and Exchange Commission moved Wednesday to allow some large American companies to begin using international accounting standards as early as next year, and to require all American companies to do so by 2016.

Accounting and financing folks around the country are either breathing a sigh of relief (over having to keep one fewer sets of books, if they’re in a multinational company), or bracing for a transition period.

Personally, I suspect that the folks overseeing the decision have discounted the threat of litigation gumming up the works.   From the NYT article again:

While it is often said that the international rules are based on standards, and the American ones on rules, the differences are more in degree than nature. Still, in many cases the international rules will require more professional judgment from auditors. Some auditors have liked rules, because they enable them simply to tell a company that a proposed accounting treatment violates a rule. Also, rules ostensibly provide a defense if the accounts are later challenged in a lawsuit.

In a world with more professional judgment, the auditors would be expected to tell companies that a given accounting treatment violates a standard because it produces a misleading result. Whether they would be willing to do that, and whether all would be equally willing, could become an issue.

An article in the Casualty Actuarial Society’s Actuarial Review mentions one extra potential complication for those of us in the insurance industry – the IFRS hasn’t finished establishing standards for the insurance industry, new global equivalents of FASB 5 and 60.

That odd sound you hear is the gnashing of teeth among CAS candidates who have to learn soon-to-be-obsolete accounting standards as part of the Part 7 curriculum.

This sounds like a few folks being confused by some weird mix of plans for I-69 and the Texas Transportation Corridor. From The Caucus:

Is there a secret plan being hatched by the federal government to construct a NAFTA super-highway from Mexico straight through to Canada, stopping off in Kansas City?

Alongside immigration and Iraq, it is a question that is being posed with surprising regularity to the leading Republican presidential candidates by people who fear it is the first step toward the establishment of a new mega-country that would merge Mexico and the United States.

Note to civil engineers—do not taunt the one-world-order conspiracy theorists by surveying project routes in black helicopters!

Idea du jour from Sunday’s New York Times:

Pritchett, a development economist and practiced iconoclast, has just left the World Bank to teach at Harvard and to help Google plan its philanthropic efforts on global poverty. In a recent trip through Chaurmuni, he praised the goats as community-driven development at its best: a fast, flexible way of delivering tangible aid to the poor. “But Nepal isn’t going to goat its way out of poverty,” he said. Nor does he think that as a small, landlocked country Nepal can soon prosper through trade.

To those standard solutions, trade and aid, Pritchett would add a third: a big upset-the-applecart idea, equally offensive to the left and the right. He wants a giant guest-worker program that would put millions of the world’s poorest people to work in its richest economies. Never mind the goats; if you really want to help Gure Sarki, he says, let him cut your lawn. [...] If goods and money can travel, why can’t workers follow? What’s so special about borders?

The economist profiled in the article advocates a guest-worker program as a tool to ease poverty in underdeveloped parts of the world. For example, in Nepal, there has been growth in the national GDP and improvements to a few families’ lives arising from remittances received from Nepalese who get jobs in India, and send back parts of their paychecks. Consider the benefit if more Nepalese who wanted to go abroad to work actually had a place to go to and be employed.

I like the idea in principle. However, I doubt (in the U.S.’s case) that the xenophobes in Washington would even consider anything remotely like toleration to an idea such as this.

When I first heard of the idea several months ago, I thought it was a big scheme likely to go nowhere due to the extreme magnitude of the project. However, judging by this Bloomberg article, it’s apparently got some legs.

The project, which Russia is coordinating with the U.S. and Canada, would take 10 to 15 years to complete, Viktor Razbegin, deputy head of industrial research at the Russian Economy Ministry, told reporters in Moscow today. State organizations and private companies in partnership would build and control the route, known as TKM-World Link, he said.

A 6,000-kilometer (3,700-mile) transport corridor from Siberia into the U.S. will feed into the tunnel, which at 64 miles will be more than twice as long as the underwater section of the Channel Tunnel between the U.K. and France, according to the plan. The tunnel would run in three sections to link the two islands in the Bering Strait between Russia and the U.S.

“This will be a business project, not a political one,” Maxim Bystrov, deputy head of Russia’s agency for special economic zones, said at the media briefing. Russian officials will formally present the plan to the U.S. and Canadian governments next week, Razbegin said.

Apparently, the current price tag for the project would be about $65 billion, with most of the expense going to build the thousands of miles of access railway in Siberia, Alaska, the Yukon, British Columbia, and Alberta. The plan also includes provisions for a intercontinental gas pipeline, fiber optic telecom wires, and electricity. Apparently the payback period on the project is 20 years.

I can’t imagine how the project will get through the environmental hurdles that will certainly be erected in the U.S. and Canada, given that the rail corridor would have to cross an awful lot of sub-arctic wilderness.

Other thoughts that come to mind:

• Wouldn’t it be terribly inefficient to transport electricity over that long of a distance, given current technology?
   
• If the project happens, and this rail link becomes a viable way to transport material Eurasia and North America, is our rail infrastructure capable of handling the increased demand that would almost certainly arise?
   
• Perhaps someday in a couple of decades it will be possible to determine which really is worse - rail passenger service in Russia, or rail passenger service in the United States.

As seen in the Wall Street Journal (subscriber link):

For decades, Alan S. Blinder — Princeton University economist, former Federal Reserve Board vice chairman and perennial adviser to Democratic presidential candidates — argued, along with most economists, that free trade enriches the U.S. and its trading partners, despite the harm it does to some workers. “Like 99% of economists since the days of Adam Smith, I am a free trader down to my toes,” he wrote back in 2001.

Politicians heeded this advice and, with occasional dissents, steadily dismantled barriers to trade. Yet today Mr. Blinder has changed his message

As seen in the Courant:

At the venerable Comstock Ferre plant and garden center in Wethersfield, owner Pierre Bennerup has begun selling a kind of banana - the “basjoo,” native to Japan - that ordinarily wouldn’t be expected to do well in these climes.

But Bennerup knows of one basjoo that has survived three winters out of doors. “And we’re talking about central Connecticut,” he said. “We just assumed they wouldn’t live, but they do. I don’t know why.”[.]

Published by the National Arbor Day Foundation to take into account rising temperatures attributed to global warming, the [new zone] map - which gardeners use as a guide to what they should plant and when - puts coastal towns, roughly from Old Saybrook to Greenwich, in Zone 7 and the rest of the state in Zone 6.

Both zones represent warmer classifications than those on the U.S. Department of Agriculture hardiness map, which divides the state into three zones. The USDA map was last revised in 1990, before a stretch of record hot years.

Even though Connecticut might be finding itself in a warmer hardiness zone, I suspect that the big icecap in my front yard and front flowerbed should, for now at least, kill any thoughts I might have had of bringing the azaleas I loved growing up in Memphis up here.

One of the sticking points in the enactment of NAFTA has been that of Mexican truck-drivers. Technically, the US-Mexican border was to have been opened up to cross-border trucking quite a while ago, but the reality of Mexican trucks being subject to less stringent maintenance and operating requirements and cross-border insurance issues.

According to the New York Times it sounds like those issues are being worked out:

According to the Transportation Department, inspectors will examine every truck and interview drivers to ensure they can read and speak English. They will examine trucks and check the licenses, insurance and driving records of the Mexican drivers, and they will verify that their employers are insured by companies licensed in the United States.

Needless to say, the teamsters union is not amused.

As seen at the New York Times:

QBE Insurance Group, Australia’s largest property and casualty insurer, has agreed to buy the United States arm of Winterthur for $1.16 billion, its biggest purchase and second American acquisition in three weeks.

The deal will add $1.45 billion in annual sales to QBE, which is based in Sydney, the company said yesterday. Winterthur U.S. Holdings, based in Wisconsin, is owned by AXA of France and trades under the General Casualty and Uniguard brands and sells policies in 33 states.

QBE’s chief executive, Frank O’Halloran, whose company gets 80 percent of its profit outside Australia, is acquiring insurers overseas as rivalry crimps prices at home. He bought Praetorian Financial Group of New York last month, more than doubling sales in the United States.

As seen at the Wall Street Journal (subscriber link):

The government Wednesday tossed a roadblock in the path of startup airline Virgin America Inc., ruling the company must change its ownership and corporate structure before it can receive an operating certificate.

Under the law, a U.S. airline must be 75% owned and controlled by Americans; the Department of Transportation said Virgin America doesn’t currently meet that requirement. Virgin America is based in Burlingame, Calif., and had planned to begin flights in 2007.

The folks over at Continental must be tickled pink over this ruling. They’ve been extremely vocal in their efforts to block Virgin America from getting its operating certificate.

I can understand the DOT’s calling into question Virgin America’s independence from Sir Richard Branson’s empire. However, in this day and age the 75% citizenship requirement seems a little anachronistic, especially given how poorly legacy carriers seem to be doing.

True, national security concerns are more than a strawman argument here, but you’d think that granting the DOT authority to waive the 75% rule on a case-by-case basis would be tolerable. While I can understand why the national security hawks might be uncomfortable if Taliban Air sought authority run an airline flying 757’s and 767’s between cities on the Northeast Corridor, you’d think that having British involvement (with Virgin America) or Dutch/French involvement (c.f. old speculation about a KLM/Northwest merger) would be perfectly palatable.

Via Slashdot, I came across this article at The Economic Times:

After blogs and websites, the government is planning a clampdown on BPOs and KPOs over, what it feels is, illegal use of internet telephony.[...]

According to official sources, foreign players such as Skype, in addition to disturbing the level-playing field for bonafide licensees, were also causing great revenue loss to the government as they did not pay the 12% service tax and 6% revenue share on internet telephony. Sources said DoT was keen to implement this move on security grounds too. Foreign service providers could be a �serious security threat as they did not come under any Indian regulator and policy framework,� they added.

An 18% tax rate on telephony?! That’s going to hurt some outsourced call centers.