Mac Margolis wrote last week about how the reliable democracies of Latin America have stood idly by while their more volatile neighbors eroded democratic institutions like legislatures and constitutions. Here, Ecuador's man in Washington responds:

There once was a time in the United States when only land-owning white men were allowed to vote. At the time it was called a democracy, although most citizens were excluded. 

Your correspondent Mac Margolis seems to long for such a time. Clearly he fears majority rule in Central and South America and disapproves of leaders who "exacerbate the region's class and race pathologies" by encouraging poor and indigenous people to vote and participate in their government.

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Generally speaking, the UN gets low points for shock value on the Arab Human Development report it released today, the gist of which can be reduced to war = insecurity = bad for business. But Chapter 5, the economy section, deserves a look for two big reasons.

Reason A: The GDP Rollercoaster Ride

UNDP Arab Human Development Report 2009

 

If there were ever any question as to the extent of the MENA region's volatility, this should pretty much clear it up. After all the intense ups and downs of the multi-decade roller coaster ride, the region's per capita economic growth has hardly changed at all since 1980.

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Some interesting news today on the currency front. Remember all the hoopla a few months ago about how the dollar was going to be replaced by a wacky new IMF backed currency that went by the acronym “SDR” – or special drawing rights? China was calling for the new system, and U.S. Treasury Secretary Tim Geithner didn't rule it out. Well, the IMF is now on the verge of taking a big leap towards this new system, with a proposal to increase the supply of these SDRs (which are basically just a bundle of several currencies including the dollar, yen, sterling, and the euro) by eightfold. The IMF will vote on the measure on August 7^th and would start issuing the new currency by the end of the month.

If it passes, this would be the first time the IMF would have increased the number of SDRs since 1981 – a pretty substantial shift. It doesn’t mean the dollar is going away – it still makes up 44 percent of the composite of the SDRs. But it does mean that the world is taking a big step away from the dollar as the de-facto global reserve currency. “The decision could mark a watershed moment in the evolution of global monetary relations,” say the folks at Capital Economics in London, who put out a smart note on the topic this morning. But for that to happen, many more parties would have to hold and trade the SDRs. Right now, only central banks and big government institutions can trade them.

What does all this mean for you? Ultimately, it means Americans won’t be able to live quite as large as they have in the past, since the dollar will become less important. But it also means that other countries around the world (who could potentially exchange SDRs for their local currencies) could live larger. That could be good for purchasing power, but could also fuel inflation and create a lot of volatility in currency markets. Which, of course, also means investment opportunities. Stay tuned.

The Ben Bernanke sweepstakes is heating up. Sometime over the next few months, President Obama will decide whether to reappoint the Federal Reserve chairman to a second four-year term. The betting now is that Bernanke will be back, and he almost certainly helped himself on Tuesday with his Humphrey-Hawkins testimony before the House Financial Services Committee. In his prepared remarks, along with an op-ed in the Wall Street Journal, Bernanke answered the most strident questions posed by his critics. He does, in fact, have "an exit strategy" from the Fed's expanded balance sheet and loose monetary policy, he said. He's prepared to wield a wide array of tools to make that happen. "The extraordinary policy measures we have taken in response to the financial crisis and the recession can be withdrawn in a smooth and timely manner as needed," Bernanke said -- in other words, of course I can deal with future inflation, it's just not going to be now. Compared to some past performances, Bernanke sailed through the day.

Still, there were a few signs of tension with the Obama administration, which could bode ill for Gentle Ben. Bernanke indirectly raised questions about the administration's fiscal policy, saying current spending is unsustainable, and he appeared to differ with Treasury Secretary Tim Geithner when he called for an activist counsel of advisors to oversee systemic risk. Perhaps that too was in answer to his critics, among them Anna Schwartz, the 93-year-old scholar who earned herself a permanent place in economic history when she co-authored, with Milton Friedman, the "Monetary History of the United States." In an interview, Schwartz accused Bernanke of being "very much influenced by the Treasury." Others, however, would say it is Bernanke that has pushed the Treasury. And even if Obama has reason not to want to reappoint Bernanke, he risks political disaster if he opts for his chief economic advisor, Larry Summers, as his replacement. Summers, at this stage, would be perceived as an Obamaite infringement on the Fed's independence, not to mention an confirmation nightmare.

All in all, it's looking as if Bernanke is making the case that he's got too many balls in the air right now to be shoved aside. And he may be right.  

The iPhone has apps for reading the news, checking bank accounts, and streaming music. Now it's got one for exacting revenge on overpaid CEOs and Ponzi schemers.

Squash the $treet, a creation of Last Legion Games, lets you "watch the shady bankers, creepy fraudsters, and corrupt CEOs flee their gilded offices, sprinting for the nearest escape vehicle," as the creators put it. Once they're out on the street, in the "festering heart of the city where all the thievery and greed began," you can "squash and flick the snarky scoundrels."

The app is a testament to the status of videogames─and iPhone apps in particular─as pieces of cultural criticism.

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