By Ian Morris, Friday, April 1, 12:40 PM

“The state is not ‘abolished,’ ” Friedrich Engels insisted back in 1878. “It withers away.”

Engels was mistaken about a lot of things, but he may have got this one right. For 5,000 years, states have been the most powerful organizations on earth, but they are now being challenged from every direction. Governments that go to war without United Nations resolutions are branded criminals; states that ignore the bond markets or George Soros go bust; and regardless of what they do, politicians are named and shamed by WikiLeaks.

“The Future of Power” by Joseph S. Nye Jr. (PublicAffairs. 300 pp. $27.99)

We could all use a roadmap to this complicated new world. Now, thanks, to two insightful, readable and very different books, we are almost spoiled for choice.

Parag Khanna, a 30-something journalist and rising star in the world of think tanks, makes the case in “How to Run the World” for what he calls “Generation Y geopolitics.” He describes the 21st century as “neo-medieval,” because now, as in the Middle Ages, “rising powers, multinational corporations, powerful families, humanitarians, religious radicals, universities and mercenaries are all part of the diplomatic landscape.” Because states no longer matter much, he says, we should dump old-style diplomacy, with its “stiff waltz of rituals and protocols among states alone,” for “mega-diplomacy . . . a jazzy dance among coalitions of ministries, companies, churches, foundations, universities, activists, and other willful, enterprising individuals who cooperate to achieve specific goals.” “Generation Y,” he promises, “will own mega-diplomacy.” The result will be a new renaissance, like the one that ended the original Middle Ages.

Joseph S. Nye, by contrast, is a 70-something professor at Harvard and former dean of its Kennedy School of Government. As he sees it in “The Future of Power,” the old, stiff waltz is not over yet. “Today,” he suggests, “power in the world . . . resembles a complex three-dimensional chess game.” On the top of the board is military power, where states still reign supreme; in the middle is economic power, where states and non-state actors share the play; and only on the bottom do we find something like Khanna’s Generation Y geopolitics.

In a series of earlier books, Nye drew a massively influential contrast between “hard power” (being able to coerce others) and “soft power” (being able to co-opt others). Real power, he insists, has to be “ ‘smart power’ . . . the combining of hard and soft power into successful strategies.” His latest book is written to clarify these distinctions for critics (including perhaps Khanna, who dismisses soft and smart power as “vague concepts”) and to explain what they mean for the United States in the 2010s.

Nye recognizes that “on an increasing number of issues in the 21st century, war is not the ultimate arbiter” and that “outcomes are shaped not merely by whose army wins but also by whose story wins.” But he is not ready to cede the dance floor to the NGOs, hacktivists and celebrities just yet. “Military power,” he observes, “provides a degree of security that is to order as oxygen is to breathing: little noticed until it begins to become scarce.”

Nye is surely right that “two great power shifts are occurring in this century: a power transition among states and a power diffusion away from all states to nonstate actors.”

Khanna’s case for Generation Y is always interesting but often overstated. The state has not yet withered away, and Khanna’s recurring image of the 21st century as “neo-medieval” soon becomes strained. It has its uses (Nye, in fact, makes a similar comparison at one point), but the Byzantine Empire is a very odd analogy for contemporary America; comparing gated communities in Miami with Carolingian warbands seems unhelpful; and just what it is that modern companies should be learning from medieval guilds remains obscure.

Nye’s argument is just as interesting as Khanna’s and just as rich in clever one-liners and felicitous phrases. But it is also more judicious, more carefully presented, better referenced and, in the end, more compelling. Nye is a master of his field at the height of his powers.

Both these books repay careful reading and reflection, but Nye’s three-dimensional chess game is the better model for a world in which the state withers but refuses to go away.

Ian Morris teaches at Stanford University and is the author of “Why the West Rules — For Now: The Patterns of History, and What they Reveal About the Future.”

Chris's question is an example of the traps you can fall in when not fully thinking through all the costs and possible revenue sources of an investment, and a good example of the problem with old rules of money embodied in phrases like, "A penny saved is a penny earned."

As always, I want to thank everyone for great questions. It’s always hard to pick just one, but that’s the rules, so here goes.

This month’s question comes from Chris K.

Robert, You have always said that buying a house for yourself is not an asset, but rather a liability. I understand that cash flow is most important, but if I were to buy a house now for my family with 100 percent cash (Approximately 300K), I figure that I would be making a positive cash flow by saving 2K per month in expenses (mortgage). Is this not as good as buying an investment property that cash flows at 2K per month? A penny saved is a penny earned right? Am I missing something? Please advise what you think.

As I said, there were many good questions this month. Many of them were on very technical aspects of the market. I picked Chris’s question because it is probably something most people would struggle with and can identify with.

Also, Chris’s question is an example of the traps you can fall in when not fully thinking through all the costs and possible revenue sources of an investment, and a good example of the problem with old rules of money embodied in phrases like, “A penny saved is a penny earned.”

First off, I want to point out that the absence of an expense does not equal income. Not paying $2,000 per month in a mortgage is not the same as making $2,000 a month from a rental property. All it means is that your income, wherever it comes from, is free for other things. In this case, if the income came from a job, it would be an income that is taxed at the highest rate and a result of a job from which you have no control over. That’s the worst form of income. It’s earned income rather than passive income.

I’ll go back to my rich dad’s very simple definition of an asset. An asset is something that puts money in your pocket. In this case, paying $300,000 out of pocket does not give you an asset that puts money in your pocket. It gives you a house that you’ve paid for. The income going into your pocket comes from somewhere else, and if it’s from a job, it’s at a very steep cost—the vast majority of the hours in your day and high tax rates.

Also, rich dad’s definition of a liability is something that takes money out of your pocket. In this case, the house is still a liability because you have to pay property taxes, take care of maintenance costs, pay for electricity and water, cover the cost of insurance, and more. All this on top of the $300,000 you dished out of pocket.

That being said, having an extra $2,000 a month because you’ve reduced expenses can be a great opportunity to invest in things that do create cash flow. However, a majority of people would either spend that money on other liabilities like cars or television, or put it in the bank as savings.

The problem with the first scenario is that when retirement comes, you’ll have a bunch of obsolete liabilities and no income producing assets. Your source of income, your job, is gone.

The problem with the second scenario is that in an economy where money is printed out of thin air, a penny saved is not a penny earned. Over time, inflation eats away at the value of your “pennies” till they’re nearly worthless.

What is more, I’d say that the cost of laying down $300,000 to get $2,000 a month less in expenses, while still having to cover the costs of your house out of pocket, isn’t the best strategy. Here’s why.

One of the reason’s why I love real estate investing is because I don’t have to pay one hundred percent of the price but I still enjoy one hundred percent of the benefits.

When I find a good real estate investment, I can go to the bank and get a loan for 80 percent of the purchase price. I then only have to put down 20 percent of my own money—or investor’s money, if it’s a good enough deal. And even though the bank is fronting 80 percent of the costs, I get all the rent and appreciation, if there is any. All the bank wants is the interest.

If I’ve found the right deal, a cash flowing deal, this is a win for me because my renters will pay for the costs of the property, including the mortgage. Additionally, I enjoy tax benefits from the property such as depreciation that make my return even higher, and the income from the property is taxed at the lowest rate because it is passive income.

So, the win for me is simple. I pay less out of pocket initially, have no monthly expenses, and have more money left in my pocket for other investments. While this is not as initially exciting or sexy as having freed up $2,000 a month in expenses, it’s the path to true long-term wealth and financial freedom. The more investments I’m able to do like this, the more cash flow I’ll have from assets that actually, tangibly put money in my pocket each month while costing me nothing out of pocket. And when it comes time to retire, I’ll have a portfolio of solid, cash flowing investments that work for me, not the other way around.

Parte I

Parte II

Historian and diplomat Joseph Nye gives us the 30,000-foot view of the shifts in power between China and the US, and the global implications as economic, political and “soft” power shifts and moves around the globe.

Firemen extinguish a fire on the streets of San Martin Texmelucan, Puebla, after a deadly explosion of a PEMEX oil pipeline, on December 19, 2010.

The fuel black market might be worth $4 billion a year, meaning it has the same valuation as Twitter

In the early hours of a frosty February morning, a resident in the Central Mexican town of Amozoc heard suspicious noises in the field near his house. He called for help. When the state agents arrived, they found a truck trying to leave the area — with a whopping 5,000 gallons of crude oil in the back. The three men on board had drilled a hole into a major oil pipeline that runs through the town and sucked the fuel into their truck through a hose. Worst of all, the alleged culprits were town policemen.

Such oil theft has become increasingly common in Mexico amid a breakdown in law-and-order in certain states. Last year, the government oil monopoly Petroleos Mexicanos or Pemex detected 712 such pipeline taps — a fivefold increase compared to the 136 spotted in 2005. It represents a significant loss of government income at a time when revolution in the Middle East has pushed crude oil prices to nearly $100 a barrel. (The Amozoc haul would be the equivalent of about 120 barrels or roughly $12,000.) Adding to the alarm, detectives working on several cases have traced the thefts to drug cartels, such as the Zetas, an indication that the country’s overlords of crime have branched out into yet another line of business.

As with the narcotics business, the clandestine nature of Mexico’s illegal oil market makes it impossible to know exactly how much it is worth. Pemex is one of the world’s leading oil companies with revenues of $104 billion in 2010. That alone provides some 40% of Mexico’s federal budget. Company officials insist they are losing less than 1% of their black gold to the bandits. However, energy analyst David Shields believes that figure is an underestimate; he calculates that the fuel black market is now worth $2 billion to $4 billion annually. “The government is so involved in other matters such as assassinations and whole towns being controlled by drug cartels, that the illicit fuel market doesn’t seem such a big deal,” Shields says. “So the government has failed to see that it has to act more strenuously on this.”

Oil thieves sometimes hawk stolen gasoline on the side of highways. But other times it is actually sold by middlemen to Pemex franchise gas stations — and ends up in the cars of unknowing consumers. Meanwhile, stolen crude is sold off to brick makers who use the fuel to fire their ovens; or it is smuggled across the border and peddled to oil tycoons in the United States. Following a bi-national probe, U.S. police charged five Houston-based oil brokers with receiving stolen Mexican fuel (in this case, petroleum condesate), including the president of Continental Fuels who was given probation by a Houston federal court in January.

Fighting Fire with Fire Driven by a lust for power and evangelical zeal, a bizarre gang of Christian-fundamentalist narcotraffickers known as La Familia Michoacana has built a powerful cartel around the manufacture and sale of methamphetamine. Known for its extremely violent methods, La Familia clashed with Mexican law enforcement on several occasions. The Apatzingán house in the photo above still stands vacant two years after the gang faced Mexican soldiers in a fire fight.

La Familia gunmen have been blamed for an April 24 attack on the car of public safety secretary Minerva Bautista.

As the fuel is stolen it can be sold for less than half the market price at a time of record highs. But once in the system, it impossible to know stolen from legitimate fuel and it can pass into the refineries and tankers of legitimate companies, traveling across Mexico, the United States and beyond. With oil in such high demand, even relatively small amounts can quickly turn gangsters into millionaires.

Pemex officials argue they are getting better at detecting the illegal taps, but concede it is a tough to stop the robbers. “We have the technology to detect any change of pressure in the pipelines. But as you see, they are very sophisticated gangs who know our operations,” Pemex Director Juan Jose Suarez told a recent news conference. The problem is aggravated by the fact that some of the Mexican states with the most oil are the scenes of its worst drug violence, such as Tamaulipas on the border with Texas. Among recent bloodshed there: the assassination of the leading gubernatorial candidate last June; the slaughter of an entire village that had been fleeing gangsters in December; and the killing of 18 people in a single gunfight on March 7. Stolen oil ends up low on the list of crimes for police to deal with.

When detectives did finally launch a major probe in Tamaulipas, they found that a cell of the deadly Zetas gang was organizing oil robbery and transporting the crude into Texas. Mexican authorities in February froze 16 million pesos ($1.3 million) in bank accounts that they alleged came from this racket However, they say that money was only a spit in the ocean of some 508 million pesos ($42 million) that they estimate the Zeta cell made selling oil in two years. Black gold rivals the profits in drugs.

On a positive note, the authorities claim that oil theft shows that the good guys are winning the drug war and forcing gangsters to look for other income. The criminals, “have moved into so many crimes because of pressure,” White House Drug Tsar Gil Kerilowskie told Mexican correspondents in January. “They are spending more time robbing Pemex or stealing cars or kidnapping or extorting.” Critics, however, retort that the diversification of Mexico’s criminal cartels show they are getting stronger and eating into more and more spheres of national life.

The crime has other hazards. Pemex officials say attempted theft may have caused an oil leak that triggered an explosion in the town of San Martin Texmelucan in December. The blast sent flames — as high as 30 yards and at temperatures of as much as 1,000 degrees centigrade — down the streets, incinerating dozens of homes and killing 30 people. Resident Oscar Quiroz woke up that morning to the roar of flames and screams. After rescuing his family, he pulled neighbors from burning houses. “This was where my neighbor and her two children lived,” Quiroz says, pointing to a charred patch of ground. “All that was left of them was ashes. This is something that nobody should have to go through.”
Article taken from TIME Magazine

A tres meses del estreno del mercado global colombiano, solo hay negocios con 6 de las 28 acciones extranjeras.

Las acciones del estadounidense Citigroup son las más negociadas en los primeros tres meses de operación del Mercado Global Colombiano (MGC), que la semana entrante completará tres meses.
Le siguen (por volúmenes negociados) Schlumberger (firma de servicios petroleros), Gran Tierra Energy, Amazon, Apple y Barrick Gold. Y aunque existen otras 22 empresas para invertir, pertenecientes a una gran variedad de sectores, lo cierto es que aún no han registrado operaciones.
El MGC es una plataforma de la Bolsa de Valores de Colombia (BVC), en la cual se pueden conseguir acciones de 28 empresas extranjeras ampliamente reconocidas.
Desde el 15 de diciembre hasta el 28 de febrero se habían negociado 242 millones de pesos. Según expertos, una de las principales explicaciones del lento despegue del MGC está relacionada con que tiene restricciones de acceso.
Puntualmente, solo los inversionistas considerados profesionales pueden realizar operaciones en este mercado, es decir, grandes instituciones, como los fondos, además de aquellas personas naturales que acrediten que efectúan movimientos de manera frecuente y que manejan grandes portafolios de recursos.
De todas maneras, se espera que en el mediano plazo las casas de bolsa desarrollen productos como carteras colectivas, para que el ciudadano de a pie también pueda comprar estas acciones.
Pero el otro tema clave es el conocimiento del mercado. No tanto sobre el funcionamiento del Mercado Global, sino sobre la información relacionada con las compañías emisoras de las acciones.
Como se recuerda, las firmas comisionistas de bolsa patrocinadoras de los títulos –es decir, quienes los trajeron– deben responder ante los inversionistas por toda la información relacionada con las empresas.

Pero, aparte de la necesidad de conocer el desempeño de las firmas, hay que monitorear muy de cerca la evolución de las bolsas en donde están inscritas estas acciones. La gran mayoría están en Wall Street, aunque también hay algunas enlistadas en la Bolsa de Toronto (Canadá).

A esto, un informe del Grupo Bancolombia añade que los inversionistas también deben tener en cuenta lo que ocurra con la tasa de cambio, pues las negociaciones en el país son en pesos, mientras que en la bolsa de origen de las compañías se opera con monedas diferentes.

No obstante, se espera que, como ha ocurrido en otros países, en cualquier momento el MCG tome impulso. El esquema se ha adoptado en varias naciones latinoamericanas, como Argentina, México, Brasil o Chile. En algunos casos, sin haber cumplido cinco años, este mercado responde por más de la tercera parte del total de las operaciones diarias.


Artículo tomado de

AT MIDNIGHT army pickup trucks trawl Benghazi, the rebels’ main town, collecting thawar, or revolutionaries, for the front. Four-day veterans exhale their modern equivalent of a war-cry, a hail of anti-aircraft bullets blasted into the night sky, and bundle Ahmed Labeidi, a pint-size boy, into the truck. Almost half his class have already joined up. The minimum age for the draft has been lowered to 15. “My father told me to join my friends,” he says sadly, bowing to peer pressure.

Recruits are meant to have a week’s instruction before the thawar head west. Many get less. In a schoolyard a few score of boys, plus a pensioner who says he last held a gun 35 years ago, gather for three hours of training. They have only four guns, and the instructors are late. “Perhaps they’ve left for the front,” says an organiser.

Instead of being taught to shoot, raw recruits are being told to take inspiration from Omar Mukhtar, a Libyan jihadist who fought (albeit in vain) against Italian imperialists in the 1920s, armed just with an ancient Ottoman rifle. Lacking in experience though they plainly are, the thawar have had some success. Last week they ousted the colonel’s troops from two oil ports, Brega and Ras Lanuf, between Tripoli, the capital, in the west and Benghazi, the rebels’ headquarters in the east. But then, as they pushed on, the rebels were ambushed at Bin Jawwad, west of Ras Lanuf, and have since taken heavy losses. Ambulances race to the front with recruits, defying orders from calmer leaders to reinforce the front line only where they are confident of holding it. “You can be a martyr fighting Qaddafi’s planes here,” the young recruits shout at teenage newcomers.

The colonel seems to be biding his time, consolidating his hold in the west and concentrating his superior firepower on Zawiya and Misrata, the two rebel-held towns closest to Tripoli. As The Economist went to press, reports suggest he may have retaken Zawiya. He may then counter-attack eastward towards Benghazi. Overall, the outcome of what has become a civil war is still in the balance. But the colonel may be recouping after his initial setbacks.

His forces are superior in numbers, weaponry and organisation, though neither side can boast much of the last. He still commands the bulk of an army that was 50,000-strong before the uprising against him began. Some 6,000 of his troops have joined the rebels, who number many thousands of volunteers but have only rudimentary equipment. Half of the deserters take orders from General Suleiman Mahmoud, based in Tobruk, north-east of Benghazi, and another 1,000 or so special forces are led by Colonel Qaddafi’s former interior minister, Abdel Fatah Younis. Though both men declared their defection, they seem to be defying demands by the rebels’ “national transitional council” to throw their military weight fully behind the war against their former comrades still loyal to the colonel. Perhaps they are hedging their bets. “They’re playing games,” says a council member.

Another 2,000-odd army defectors answer to Major Ahmed Qetrani, who sounds more whole-hearted in his support for the rebels. “He’s forcing me to intervene,” he says of Colonel Qaddafi from an operations room in Benghazi, after receiving the latest news of an air raid on Ras Lanuf’s water tank. But even Major Qetrani seems loth to wage all-out war against Colonel Qaddafi’s forces. “It would create two Libyan armies, it would make fitna [civil war], it would ruin our infrastructure and set our country back 100 years,” he says.

Whereas the front line is thin and shaky, there is a security vacuum in Benghazi. The east-based units of army, which at first declared for the rebels, have retired to their bases and are loth to guard government buildings and institutions against pro-Qaddafi forces. “We want the army to defend the liberated cities,” says a member of the national council. “But they have not been playing their part.” The gates of four of the eastern zone’s main arsenals have remained open since four of Colonel Qaddafi’s brigades fled to the government’s zone in the west. The largest, at Rajma, outside Benghazi, exploded on March 5th, reportedly killing 40 people. After the blast, young thawar rather than the army cordoned off the surroundings.

The police are also lying low, apparently afraid of the locals’ wrath. In their absence, the thawar patrol the streets with police truncheons. Fear that Colonel Qaddafi may recover control over the whole country, including the liberated east, may be growing. A grenade was recently hurled into a Benghazi hotel full of Western journalists. At another hotel the senior managers have fled. Rumours are swirling of bombs to be planted near the court-house where the council meets. There is talk of plots to assassinate council members. In the eastern hinterland, rebels have hoisted the old tricolour that was the national flag before Colonel Qaddafi took power in 1969. But few of Benghazi’s people are brave enough to fly it on their houses.

The rebels are patently ill-equipped. “Our tanks and artillery are derelict,” says a special-forces officer who defected to the rebels. “They were kept simply for national pageants.” The arms dumps abandoned by Colonel Qaddafi’s forces in the east have ammunition but no guns. The rebels have only half a dozen or so out-of-date aircraft—without bombs. Grand plans for an amphibious landing to relieve Misrata, the beleaguered rebel-held town sandwiched between the colonel’s two strongholds, Tripoli and Sirte, his home town, have apparently been shelved.

Despite his superior numbers and firepower on land, sea and in the air, the colonel seems mainly to be holding back for now. After failing to recapture the oil terminals at Brega and Ras Lanuf, he has apparently laid a ring of landmines to defend Sirte and deployed a brigade there, led by one of his sons, Saadi.

After weeks of demonstrations, Tripoli is once again said to be quiet. The colonel controls Libya’s western border and nearby gasfields. Much depends on the loyalty of Libya’s tribes. Omar Hariri, from the powerful Farjani tribe, has been made head of the rebels’ military council, in the hope of stirring strife with Colonel Qaddafi’s own clan around Sirte. But the colonel has long been a master of tribal politics. He has been shoring up old alliances, not least by taking male hostages from the main tribes, including the Warfalla, the largest, with an implicit threat that he may kill them if their tribes rise up. The thawar say the colonel is using women and children as human shields on the front line; if they are killed, tribal codes will require their relatives to turn on the rebels. As the rebels’ dream of conquering Tripoli unaided fades, their other aim, to hold fast in the east, may begin to look optimistic too. Rebel leaders speak with foreboding of the prospect that, once the colonel has recovered his grip in the west, he may turn his tanks and aircraft to the east.

Calls by the rebel council for foreigners to come to the rescue, muted a week ago, sound increasingly desperate. Most easterners strongly oppose the idea of friendly foreign troops on the ground, but pleas for air raids against Colonel Qaddafi’s base in Tripoli—and for a no-fly zone imposed by the West—have become a lot louder.

Britain and France are tilting towards an outright demand in the UN Security Council for a no-fly zone, but the Americans are still hesitant and the Russians against. The outcome of this debate could decide the fate of Libya and its dogged colonel.


Article taken from The Economist