Shadow Economy & Corruption : Invisible Hands: May 2007

Thursday 31 May 2007

Bus in one of Tehran Streets: ...!

Walking in the air!: He is an outlier in the civilized Iranian Society

Iran Considers Transrapid Route Designed By German Firm

The German version of the magnetic levitation train -- Transrapid -- may be built in the pilgrim city of Mashhad in north-eastern Iran, a German newspaper reported.

Germany's daily Süddeutsche Zeitung (SZ) reported that a Munich-based engineering firm has received a request about the viability of such a Transrapid route in Iran.

According to the paper, the Transrapid train would help transport millions of pilgrims along the 800-kilometer (around 500-mile) stretch from Tehran to Iran's holiest city, Mashhad.

A Transrapid train ride between the two cities could reduce the trip to two to three hours -- a stark contrast to the two days a bus normally needs.

Harald Späth, managing director of the firm Regierungsbaumeister Schlegel GmbH, told SZ that his company had received an official contract to investigate whether or not the high-speed magnetic levitation train could be built.

He said that then Bavarian Economic Minister Otto Wiesheu's visit to Iran in 2004 had helped to lay the groundwork for the negotiations.

Wiesheu, who left the Bavarian government in 2005, took up a post as board director of Germany's rail company Deutsche Bahn.

Uncertain future

Späth, who said he had met with Iran's ambassador in Berlin, Mohammad Akhondzadeh, last week in Berlin to discuss the project, said that the Iranian had allocated $1.5 billion (1.1 billion euros) as "start-up financing" for the project. He also told SZ that Iran was hoping for additional, private investors.

Iranian President Ahmadinejad has strained tiesBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Iranian President Ahmadinejad has strained tiesApparently, economic sanctions against Iran would not stand in the way of the project. According to SZ, German companies exported more than four billion euros in products and services to Iran last year.

Wiesheu said that the project is "in the very early stages" in Iran.

"Iran is without a doubt a complicated country," he told SZ. "But, I hope circumstances and international relations improve," he added, referring to the country's controversial nuclear program.

Source: http://www.dw-world.de

Without comment: Parliament Representative in Iran!

The Economics of Corruption 2007 - call for paper

http://www.icgg.org/corruption.lecture_2007.html

Wednesday 30 May 2007

Without comment! in Iraq

Sadjadpour: Revolutionary Guards Have Financial Interest in Keeping Iran Isolated

Interviewee: Karim Sadjadpour, associate, Carnegie Endowment for International Peace
Interviewer: Bernard Gwertzman, Consulting Editor

++++++++++++++++++++++++++++++++++++++++++++
Karim Sadjadpour, an Iranian-American who worked for several years in Iran with the International Crisis Group, says he increasingly believes elements within Iran’s Revolutionary Guards have an economic motivation in keeping Iran relatively isolated in the world, and in encouraging the latest domestic crackdowns. “Whenever there is the prospect of a U.S.-Iran dialogue or improved Iranian relations with the West, hardliners do their very best to torpedo such efforts,” he says.

• There have been several developments in Iran that have aroused considerable concern in the United States, particularly in academic circles. One is the arrest of a prominent American-Iranian scholar, Haleh Esfandiari, who has been a leader in encouraging Iranian-American academic exchanges, and who was in Iran to visit her mother. She’s been accused, as have the others, of plotting to bring about a “velvet revolution” in Iran, and of working for Israel and the United States. Her arrest has led to the condemnation of Iran from all sorts of people. What’s causing this latest crackdown on people who are interested in better relations in Iran ?
• Well, I don’t know if we can say there’s one precise reason behind the crackdown. I think it certainly was in the realm of possibility that the government in Tehran is trying to send a very stern signal to the Bush administration to cease any democracy promotion effort in Iran . At the same time, the government in Tehran is trying to send a very clear signal to Iranian-Americans and all those who work on issues of civil society or internal politics in Iran that they should tread very carefully. But I’m also increasingly coming to the conclusion that there’s a small but very powerful clique within Iran , among the political elite, who actually have entrenched political and financial interests in retaining Iran ’s isolation. And whenever there is the prospect of a U.S.-Iran dialogue or improved Iranian relations with the West, they do their very best to torpedo such efforts.

• You say they have a “financial interest” as well. Could you elaborate?

• You have hardline elements within the Revolutionary Guard, who right now have enormous financial assets, and they maintain a kind of a private mafia. And the last thing they want is Iran to open up to the rest of the world, to join the WTO. I think their logic is that right now Iran is a closed society, and the less open the merrier.
• “Whenever there is the prospect of a U.S.-Iran dialogue or improved Iranian relations with the West, hardliners do their very best to torpedo such efforts.”

Explain a little bit about the Revolutionary Guards. Is this a very large organization?
• The Revolutionary Guards comprise about 150,000 in number. They’re not a monolithic group. There’s a common perception right now that the Revolutionary Guards are very closely aligned with President Mahmoud Ahmadinejad. But I would say it’s the opposite. President Ahmadinejad has to pander to the Revolutionary Guards to project his own power, because he doesn’t have a very strong popular base. And it’s difficult to describe them as a group of 150,000 hardliners because in 2001 three-quarters of them voted for the liberal Mohammed Khatami’s re-election as president. In some ways, the Revolutionary Guards are more reflective of the Iranian society than we think. They also want change and reform to take place. But again, when I talked about this powerful clique with entrenched political and financial interest, I don’t think that they’re large in number. I think they represent a minority, a small minority of Iran ’s political elite. But they do an outstanding job of consistently playing the spoiler.
•
And are they involved in the ministry of intelligence which has been responsible for the arrests?
• I would say about those who want to retain Iran ’s isolationist status—it is not just for financial interests, but it also fits their political worldview. They’re very xenophobic, and many of them still adhere to the old adage from Ayatollah Khomeini, the leader of the Iranian revolution in 1978-79, that the relationship between the United States and Iran is like that between a wolf and a sheep. They’re extremely mistrustful of U.S. intentions and they don’t believe that having a more open Iran is in their own political interests.
• “It’s difficult to describe the[Revolutionary Guards] as a group of 150,000 hardliners because in 2001 three-quarters of them voted for the liberal Mohammed Khatami’s re-election as president. In some ways, the Revolutionary Guards are more reflective of the Iranian society than we think.”
•
Do some of these Revolutionary Guards own businesses? Are they in the oil business?
• Yes, they’re getting billion dollar contracts right now, and they essentially operate as contractors. They don’t have the technical know-how whether it’s in the oil industry, or in major infrastructure projects, but they get non-competitive bids, and then they outsource the project. They also have a lot of jetties, or “free-trade ports” where the average Iranian businessman who wants to import or export items is subject to heavy tariffs. The Revolutionary Guards, in turn, operate their own free-trade port, so they’re not subject to tariffs.
• I didn’t realize that. And how do the Revolutionary Guards relate to the Iranian army. Revolutionary Guards suggests sort of a militant group. You’re indicating they’re not just a military outfit.
• At the onset of the Revolution, there was a lot of concern that the Shah’s army couldn’t be counted on to be loyal to the newly established Islamic republic. So the Khomeinists started the Revolutionary Guards to be the protectors of the revolution. That was the original idea for their existence. But over time they’ve grown in number and they’ve grown in stature, and now there’s a lot of concern that as their economic interests have grown over the years, so have their political ambitions.
•
' Let’s move on to another subject. There’s been a crackdown in Iran , not only on those interested in the United States and the West, but on women’s rights groups. Can you elaborate?
• I think Iranian women are among the most progressive women in the Middle East . They’re very capable. We have Shrin Ebadi, the Nobel Prize winner. We have great artists, painters, and doctors and professionals. I would say that despite, not because of the Islamic Republic, Iranian women have still managed to assert themselves in a very important way in Iranian society. And I think their defiance is fairly subtle and fairly apolitical, meaning they’re not so much marching in the streets protesting, but it’s just daily acts of defiance. They are increasingly entering the workforce and going to university. Sixty percent of the universities are women, many not adhering to the strict dress code that was imposed upon them in the early days of the revolution. I would say that those who are political and out marching in the streets for women’s rights are not large in number as a percentage of the population, but they’re not negligible either. And the fact that the regime is choosing to crack down on them, shows that it is concerned about this women’s rights movement.
• Talk about the university students. Now if I read the political reporting correctly, there was a major effort by young intellectuals or reformers to boycott the last presidential election in 2005. Do they now regret this? There seems to be a lot of opposition to President Ahmadinejad among the university students these days.
• At the time, their rationale for not wanting to participate in the elections was this: “We went out to the polls en masse in 1997 to overwhelmingly elect Mohammed Khatami, but he wasn’t able to effect change the way we wanted him to. So over the course of the next five years, we elected a very reform-minded parliament, and when that wasn’t able to deliver change, we even went and reelected Khatami in 2001. We renewed his mandate and we turned out in Scandinavian turnout levels, 70-80 percent of the population voting, and we gave Khatami mandates of maybe 80 percent.”
• But after some eight years of not being able to effect changes via the ballot box, I think it’s very natural that many people decided that voting in Iran is an exercise in futility. As one secular intellectual once put it to me, “It’s like going to the gym every day for six years and not losing one pound. Pretty soon you’re going to stop exercising.” I think the rationale for not participating in the election was at the time sound, but I think now, in retrospect, those people who used to say, “Why should we vote, it doesn’t make any difference,” now realize that actually voting does make a difference, because you can go from kind of an unpleasant situation to a very negative situation. And you can go from someone like Khatami to someone like Ahmadinejad.

• Now is there an election coming up for the Majlis, the parliament, in February 2008. Could there be a groundswell of opposition to the president in this election?
• “President Ahmadinejad’s mandate when he was elected was extremely clear… I never encountered one person who said ‘I voted for Ahmadinejad because he’s going to take a hard-line nuclear posture or he’s going to take a hard-line against Israel .’ His mandate was extremely clear, and that was to improve people’s economic lot.”
• President Ahmadinejad’s mandate when he was elected was extremely clear. I covered those elections very closely, and I never encountered one person who said “I voted for Ahmadinejad because he’s going to take a hard-line nuclear posture or he’s going to take a hard-line against Israel .” His mandate was extremely clear, and that was to improve people’s economic lot. Now the way he’s been comporting himself both domestically and internationally has led to capital flight and to diminished foreign investment. And he’s created a very unfriendly economic atmosphere, and he hasn’t delivered on his lofty economic promises. So I think it would be logical that in the parliamentary elections, those who are aligned with President Ahmadinejad probably won’t do that well, because they haven’t delivered on any of their promises.

• What is the economy like in Iran now?
• Well, I think the economy in a country like Iran which is so rich in natural resources and so rich in human capital is really underperforming. You had a baby boom when the revolution occurred in 1979. Ayatollah Khomeini encouraged people to go out and have many children in order to produce this robust Islamic society. Now these children of the revolution are entering the labor market, but they’re not finding jobs. So you not only have unemployment, but you have a lot of underemployment. Young men and women who are educated are not finding jobs, and having to work at jobs for which they’re overqualified. They are driving taxis; architects are selling pizza. And there is heavy inflation. And any time you have a populist president like Ahmadinejad whose solution to problems is simply to inject cash into the economy, it’s natural that it leads to rising inflation.
• U.S. policy toward Iran seems to have two aspects. One is this rather modest program, the equivalent of the Cold War cultural program funding broadcasts and money to help out in exchanges. And the other is this cover activity that keeps going on. A lot of the commentators have sort of blamed the U.S. for the arrests in Iran. What do you say about that?
• Well, I don’t think we can blame the United States for the cruelty of the Islamic Republic. The Islamic Republic has been behaving in cruel fashion since 1979. For example, the punishment of stoning women to death for adultery existed before the neocons came to power in Washington . But that being said, I think the perception in Tehran , especially the perception of Ayatollah Khamenei, the supreme leader, is that the U.S. problems with Iran are not about Iran ’s external behavior, but about the very character of the Iranian government. Khamenei believes deep down that Iran ’s patch of real estate bordering the Caspian Sea and the Persian Gulf, a strategic location with natural resources, is so important that he believes that the United States really wants to go back to a relationship with Iran which they had in the time of the Shah. This was essentially a patron-client relationship. So when the U.S. appropriated $75 million for civil society and democracy promotion in Iran , this simply reinforced the world view of those in Tehran who believe that the United States is out to change the character of the Iranian government.
• And of course, the major foreign policy confrontation continues to be the nuclear enrichment program that Iranians continuing in the face of two series of sanctions in the Security Council, and probably another set will be coming up shortly if the Chinese and Russians agree. Is there any discomfort in the leadership over this sort of international isolation they’re getting themselves into?
• There are plenty of people like Ali Larijani, the nuclear negotiator, who doesn’t appreciate Ahmadinejad’s approach. I think they appreciate the need for Iran to retain good ties, for example, with the Europeans and not solely rely on Chinese and Russian support. But I think right now the leadership in Iran is banking on the fact that China and Russia won’t sign up to any substantial sanctions. And without China and Russia on board, European resolve is going to waver. The regime believes that if Iran continues to be persistent, this entire coalition is going to unravel. So I think they’re banking on the fact that if they hold strong, eventually, they’re going to be able to win out. At the same time, many Iranians feel, especially those like Ayatollah Khamenei, that they’re still in a difficult position because they think that if they compromise as a result of the pressure, it’s not going to get them out of trouble, but it’s going to invite even more pressure, it’s going to validate this hard-line approach against them. Someone like Ayatollah Khamenei doesn’t want confrontation—and certainly doesn’t want to have military confrontation—but he’s also averse to accommodation.
• I would think he’s making a mistake. I would think any sign of a compromise by Iran would be very welcome in the West.
• Well, again, we go back to his worldview. He really believes that it’s not about Iran’s external behavior, that it’s about the character of the Iranian government, which the United States has a problem with, and I think he believes that if he compromises as a result of the pressure, it’s not going to strengthen the argument of those in the State Department who argue for a conciliatory approach to Iran. It’s going to strengthen the argument of people like [Vice President] Dick Cheney who say, “See, the pressure’s working, let’s turn up the heat even more.”
• I would think the next presidential election in the United States would be very important for Iran. I don’t see any sign of any of the Democratic candidates wanting to have a softer view on Iran , do you?
• I think if you’re a U.S. politician, you don’t win any points by saying, let’s engage Iran , especially when you have a president in Iran who has called for wiping Israel off the map and questioned that the Holocaust happened. I think in the context of domestic U.S. politics it doesn’t win you any points by saying, let’s engage with Ahmadinejad.

Smuggling and Unemployment

What we learn from economic theory about the relationship between smuggling and unemployment?

Unfortunately, as far as I have searched, we will not find something clear in theoretical economics about this important aspect. In Empirical studies which mainly focus on the link between shadow economy and unemployment the similar ambiguity can be observed. Generally speaking, there are 2 possible potential links between smuggling and unemployment:

First, through business cycle effects. Increasing unemployment may be an indicator of recession and therefore we should expect a reduction in power of purchase of people. So their effective demand fir both legal and illegal imports will be reduced.

Secondly, increasing unemployment may create motivation for seeking job within shadow economy and smuggling can be an alternative for unemployment in official economy. So, increasing official unemployment rate may increase motivation for illegal business and reducing the risk of engaging in these activities.

Any comment and idea on this topic is highly welcome!

Mohammad

Tuesday 29 May 2007

Some technical expressions in financial career

Analyst
The lowest position of all, and what graduates become when they join. In investment banking speak, "analyst" is simply another way of saying ‘trainee.’

What analysts do varies from division to division. In corporate finance, analysts are hardworking number crunchers who put together “pitchbooks” (company and sector research that helps banks win bids), and analyse a company’s financials. In sales, analysts telephone relatively unimportant clients on non-crucial matters. On the trading floor, analysts can’t trade until they’ve passed their regulatory exams and, even then, are heavily constrained until they’ve proven they’re not going to press the wrong button and lose a small fortune.

At most banks you’ll be an analyst for three years. The bank then decides whether or not to renew your contract, and you, in theory at least, can also decide whether to stay on.

Associate
“Associates” are basically analysts who have made the grade, or business school students who joined after studying a Masters in Business Administration (MBA). Associates typically have a team of analysts in their charge, to whom they allocate work.
So what does it take to make the move from analyst to associate? "We would expect an analyst being considered for promotion to go beyond the use of analytical skills, “ explains Calum Forrest, head of recruitment at Goldman Sachs. The bank expects a lot from candidates for associate positions:

* real leadership potential: as an associate you may be expected to manage a small team (although an associate would also receive management support from a VP);
* increasingly sophisticated judgment, specifically the ability to develop a sometimes contrary point of view, and to articulate it persuasively;
* an understanding of client motivation and the commercial backdrop to their work.
* Expect to be an associate for another three years, before moving up to the next rung – VP.

VP/Director
At this level, life starts to become exciting. The title of Vice President (VP) sounds grand, but don’t be deceived: VPs are plentiful at any large investment bank.

As a VP in corporate finance, you’ll manage the day-to-day affairs of the associates and analysts beneath you, and you’re more likely to have frequent contact with clients. If you work in sales, trading or research, you should have your own book of customers, more relaxed trading risk parameters, or your own list of companies to research.

You’ll typically be a VP for three years, but you could be here for much longer, as VP can become a bit of a sticking point. “For the first five years, it is very much year-on-year progression if you perform well,” says John Harker, head HR at Citigroup, “Once you make it to VP, however, further progression is not guaranteed. It depends upon a much greater number of variables than at analyst and associate level. These include working effectively with your peers and supporting the bank’s values.”

VPs who fail to progress at one bank tend to move to another one, where they can join at the next rank up – director or executive directors.

Once you reach Executive Director or Director level the top rungs of the ladder are within your grasp. Executive directors or directors (the titles are used interchangeably) are the right-hand men or women of the real potentates of the investment banking world – the managing directors. In corporate finance, executive directors help managing directors cope with the daily whims of client companies. In sales and trading they have bigger and more important clients to call, or even larger trades to place.

MD+
You’ve made it! Managing directors (MDs) are the upper echelons of the banking hierarchy.
They typically make the most money, have the biggest offices, and command the most respect. MDs are the people who deal directly with clients and originate (bring in) business.
As with any pyramid structure, very few people who started out as analysts will make it this far. At one large US bank, only 6-8% of directors are promoted to managing director each year. At Goldman Sachs, there are little more than 1,000 managing directors for 20,000 employees.
To make MD, Richard Davies, executive director of HR at Morgan Stanley says: “It’s about individual performance, revenue generated, and client service. If you progress smoothly, you can become an MD by the time you’re in your early 30s.”

Exception to the rule
Although this hierarchical structure exists across most divisions in banks, it’s less noticeable in the sales and trading division. Sales people and traders work on their own to make money, so if you’re an exceptionally talented VP on the trading desk, there is every chance you could earn more than an MD…

source: http://students.efinancialcareers.co.uk

US MBA schools best for banking?

Should you go for Columbia or Cranfield, LBS or NYU Stern?

You may be based in London and doing business in Europe, but when it comes to doing an MBA you’re probably still better off across the Atlantic.

Although Europe’s MBA schools have progressed in leaps and bounds in the past decade, American banks in Europe (and even European banks in Europe) still favour schools in the US.

Merrill Lynch, for example, targets London Business School, INSEAD in France and IESE in Spain for European associate hires. In the US it targets Wharton, Columbia, Harvard, Chicago, and NYU Stern.

The head of associate recruitment at one major European bank says around 60% of its European MBA intake is sourced from US schools: “Big US schools are just streaks ahead in terms of their faculty and curriculum,” she says. “If you want to go into banking, you need to follow the banking route – Wharton is the top business school for finance and it has been for years.”

This may be changing. Research from London-based recruiter EM Finance suggested that students from European MBA schools were 57% more likely than their US contemporaries to be hired last year – however, the stats included recruitment at consulting firms, which tend to favour the likes of Cranfield Business School in the UK , which are all but ignored by banks.

The associate recruiter says some European schools are making their mark. “LBS have ramped up their ability to attract professors, which enhances their overall programme. We’re seeing more American students actually coming there to study as a result.”

source: http://news.efinancialcareers.co.uk

Wednesday 2 May 2007

Smuggling

Okay, after some weeks delay in writing here, now, i want to initiate a topic about smuggling in Iran or any other country. Both import and export sides of smuggling. in the next time, i will talk about basic concepts and specialized issues in this topic.

Mamad

Free counter

Shadow Economy & Corruption : Invisible Hands