Best deal for a Master’s degree in Economics?

This has got to be one of the best deals around. I got this mail from the highly ranked Toulouse School of Economics,

Tuition fees for [the English language] Master’s degree amount around 300 Euros for one academic year. Social security (compulsory health insurance) for students amounts 200 Euros per academic year. For living expenses in Toulouse, you should count at least 500 Euros per month (survival) and more probably 700 to 800 Euros all included.

Best regards
Aude Schloesing

Toulouse School of Economics
Université Toulouse 1
Manufacture des Tabacs
31042 Toulouse Cedex (France)
tel: + 33 (0)5 61 12 87 65
fax: + 33 (0)5 61 12 86 37


Hedge fund replication

Nice article in The New Yorker  on Harry Kat and hedge fund replication. Why pay high management fees if software can replicate what hedge fund managers do?

Not so long ago, Kat recalled, one hedge-fund manager, a “global macro” investor who specializes in betting on currencies and stock markets around the world, approached him with an offer. “He said, ‘Harry, I want to buy your thing so I can replicate myself. Then I’ll be able to enjoy life a bit more and keep sending my clients bills for two plus twenty. It’ll take them years to figure it out, if they ever do.’ ”

Falkenstein on Taleb

Who looks well-fed, sports a beard, and has an exaggerated idea of his own contribution to intellectual life? No, I am not thinking about Salman Rushdie, the author of The Satanic Verses, but Nassim Taleb (The Black Swan).

Tyler Cowen wrote a generally positive review of The Black Swan. He did say,

Taleb is a talented writer, and often offers up a brilliant sentence or a clever, darting aphorism; he has a harder time developing a systematic message that is not only true but also original.

Taleb (over)reacted with a Brief Discussion of Empirical and Logical Mistakes in Tyler Cowen’s Review of The Black Swan in Slate (pdf).

Now on Mahalanobis, Eric Falkenstein sets out to demolish Taleb. As hatchet jobs go, it is pretty good.

Microfinance: doing well by doing good?

Felix Salmon writes,

Outsize Returns From Investing in Microfinance

In April, Mexico’s Banco Compartamos went public, raising $450 million. By the end of the first day’s trading, the bank was worth more than $1.8 billion, and the people who had invested money in the bank during its early days found themselves sitting on enormous profits. It was a glorious day for Mexcian capitalism – except for one small problem: Banco Compartamos is a microfinance institution, devoted to improving the lives of the poor. What was it doing, then, improving the lives of already-rich private shareholders instead?

Development group CGAP was one of the early supporters of Compartamos, although it gave grants rather than equity capital, so it made no profit on the IPO. The group has now released a comprehensive report by Richard Rosenberg about what happened, and whether the outsize IPO profits came at the expense of the poor people Compartamos was founded to serve. In a word, it seems, the answer is yes.

The Compartamos numbers are stunning. It has a return on equity of more than 50% – something more or less unheard-of in the banking world. The interest rates that it charges borrowers are more than 100% per annum…

Story here.

Vulture Funds

As I was driving to work this morning I heard a harangue on the radio about vulture funds. An unprincipled opportunist/astute businessman had bought $44 million worth of Zambian debt at a deep discount, for less that $4 million, had sued Zambia, and was awarded 15 million in court. The person on the radio was outraged.

It seems totally legitimate to me, except under the following conditions.

1. The debt is odious, e.g. because a country was ruled by a dictator who used the money for private benefits. In this case the debt should be considered personal. In an ideal world, if a poor country didn’t have the means to pursue members of a former dictatorial regime, it could sell the debt to a vulture fund, which would then perform a valuable social service in going after funds stashed away in various places.

2. The debt is illegitimate because the lender failed in its fiduciary responsibilities. There has been a lot of reckless and incompetent lending by the World Bank and other aid organizations. In these cases, debts should be canceled. That is not “debt forgiveness”. There is nothing to forgive.

The very existence of an aid organization implies that expertise is supposed to flow from the aid organization to the poor country. Aid organizations must therefore bear most of the responsibility for failed aid projects.

Maybe vulture funds could play a useful role here as well. A country could sell its claim on a bank or aid organization for cancellation of debt and reimbursement of payments  towards an illegitimate loan (with interest and damages), and the vulture fund would try to collect from the organization. Now here is a business opportunity. Go, Vultures!

Update: Here is a really useful post on