Level Sixteen

Recently, Argentina defaulted on its sovereign debt -- amidst possibly one of the worst times in the international economic history -- for the ninth time. Behind the shaky history of the country as a debtor, there are lessons to be learnt with regards to lending and creditor behavior. We've always thought of national government as being the safest investment there can be, when it actually comes down to investment at a broad level. Over several years, the idea of a 'risk-free rate of return' has directly or indirectly referred to a rate of return offered on investments made in the safest instruments, backed by the most risk-free entity there can be - the sovereign government. But there is definitely some misunderstanding in terms of the actual usage and interpretation of such a rate. After all, no investment can be completely risk-free, and even the safest investments carry a certain level of risk. Argentina's case sheds some light on this aspect. While it's certainl...

Ever since the International Monetary Fund (IMF) was incorporated in 1945, one of its responsibilities has been to involve itself in managing international monetary crises. This mainly comes in the form of lending, such as Stand-by Arrangements (SBAs) and credit facilities, especially for countries struggling to improve their Balance of Payments (BoP). This form of lending was eventually more popularly known as "bailouts". Although bailouts were only a small part of IMF's overall original agenda of 'reconstructing the international payments system' , they eventually became a major function of IMF as more and more countries started experiencing such BoP difficulties. However, IMF bailouts were never straightforward for any country seeking one. The concept of conditionality was introduced within just a few years of IMF's birth as an enforcement mechanism and eventually grew into a mechanism of ensuring government efficiency and a more liberal trade system. In...

There are a lot of philanthropic efforts already involved in climate change. At least, it feels like that. Estimates have suggested otherwise, with many sources citing a figure of less than 3% of total philanthropic money going towards combating climate change. Needless to say, it is considered inadequate given the gravity of the threat we face. In UK, a group of scientists wrote to the top 100 wealthiest charitable bodies and families, requesting funding for climate change research, adding that the efforts to tackle ecological crisis are desperately under-funded. These scientists themselves believe that less that 3% of philanthropic funding goes towards climate-related issues. This not only implies a state of urgency, but more importantly, a state of helplessness. Naturally, one of the main question that arises is - why is it so low? There are several explanations for it (although even despite these plausible explanations it's hard to wrap your head around such a low fi...