[Philosophy] Obligations

What do we do when there is conflicting priorities? If we are gifted with extraordinary power (like talent), are we therefore obliged to perform extraordinary acts? Or more simply, is it true that obligation follows straight from having power? 

So what is an obligation? Here are 2 definitions:
- an indebtedness or amount of indebtedness.
- a binding promise, contract, sense of duty, etc.
They are not optional, and we are blamed if we ignore the debt we owe.
Positive obligations are achieved when actions are taken. For instance, if we go help others, or a particular person. Whereas negative obligations could be fulfilled by refraining from doing something. For example, not lying is regarded as obligation by some.

There exists situations where you are bounded by conflicting obligations. Do we just choose the 'easy way out' by judging on the amount of efforts required or is there something else we should consider?
Let's say you are put into a situation where you, as a head of school, are obliged to follow school rules and thereby set a good example to fellow junior students. Would it be wrong if you skipped school to babysit your younger sister who is left alone at home? (And hence setting up a poor example for his fellow junior students?)
Here, we could classify obligations as "imperfect obligation", ones that could be honoured through various possible ways. For example, here, the head boy has an obligation to set a good example at school. To fulfil this obligation, he could help others in need at school or contribute positively in various school events. Therefore, he gets to choose when and how to honour his obligation (apart from following every single school rule) to his fellow students.
By contrast, "perfect obligations" involve no such choosing. As a brother, he has an obligation to look after his sister (there is no other way apart from missing school in order to keep her baby sister safe). Ultimately, by forgoing the imperfect obligation at school, he successfully honoured his perfect obligation, and this could potentially be deemed as a heroic act and aspired by other junior students (perhaps unlikely).

Hence, one might say, perfect obligation takes priority over imperfect ones.

How about lying? Someone might insist it is our perfect obligation to never lie (note that this is a negative obligation, and you can be achieving it right now by not saying anything). However, we often see people forgoing this perfect obligation as means to oblige to imperfect ones. Think of the time when you lie to keep someone else happy. 

So this kind of distinctions could potentially complicate matters. 

After all we are analysing all these tradeoffs mentally on a daily basis. Achieving first-best solutions often requires too much time and effort, and it might be optimal to stick to your heart ultimately.

Does great power comes great responsibility? It depends...

[Philosophy] The Beginning

Where does it come from, this quest? This need to solve life's mysteries, when the simplest of questions can never be answered. Why are we here? What is the soul? Why do we dream? Perhaps we'd be better off not looking at all. Not delving, not yearning. But that's not human nature, not the human heart. This is not why we are here.

[Economics] Industrial disasters: pointing the finger

Why do companies risk lives to make small short term savings?
It is predicted that the next trillion barrels of oil will be used up in 30 years, compared to the first trillion barrels took us 125 years to use. The world's resources are running out thanks to ever-increasing demand. It is estimated that the Middles East will have the only guaranteed reserves of oil left in 50 years. Companies are scrambling to extract those remaining and, because these reserves are often the ones which are harder to access, companies like BP are having to use riskier extraction methods like deepwater drilling.

The increasing scarcity of resources does not however absolve corporations of responsibility for the safety of their employees, the environment and the general public. The real tragedy of all these  disasters is that ultimately, they are all preventable.

So how are we to go about avoiding these accidents in future, given that as resources inevitably dry up, companies appear to be less avers to risky strategies?

The issue of corporate ethics and social responsibility is a murky one. Despite the millions spent on PR campaigns and the spewing out of slogans brimming with social concern, ultimately the fact is that the purpose of a corporation is to generate profit for itself and for its shareholders, and there's few legal obligations on them to do anything else. That's not to say that corporations are inherently evil, but simply that its unrealistic to expect them to act in any other manner unless forced to do so.

As the world's resources continue to dwindle, competition for them will get fiercer and the temptation for corporations to cut corners will become greater. Ultimately, the responsibility lies with governments to ensure that proper regulation is in place and enforced correctly.

[Economics] Markets Fundamentals

Greed and fear played an important part in the market over the course of past 2 years, with volatile hopes and fears driving the ups and downs of stocks, bonds and commodities. Risk perception was the main driver of investor sentiments. Risk-on trades are undertaken by investors who move to invest in riskier investments, seeking higher returns (e.g. US investors buying foreign currencies, stocks, commodities and other risky assets), whereas risk-off attitude would see investors rushing to store wealth in forms of safe assets (e.g. the US dollar).

For much of last year, correlation between the strength of US dollar and stock market is strongly negative. As we see stocks were rising, it indicates positive sentiment (as investors are confident) and money would shift from 'safe heaven' to the stock market, and vice versa. It was a virtual mirror image of each other.

Same as commodities, higher risk appetite would generate higher demand for risky investments in forms of commodities.

This has reduced the fundamental pricing mechanism of various assets into oblivion. We could not deploy simple analysis across global markets, due to this frenetic interplay of asset classes. This has undoubtedly thwarted efforts of investors in making long term trades during much of 2010.

It is of a relief that there exists signs of these unusual relationships (or correlations) to be breaking down. The S&P 500 stock index and US dollar, valued against a basket of key trading partners' currencies, have a correlation of roughly 0.1, which is close to zero, meaning that the relationship between stocks and dollar is virtually nonexistent.

This could be explained by the US dollar no longer trace the risk appetite of investors, so that the reasoning that investors made (to buy US dollar for safety at low time and sell US dollar for riskier assets at high time) is no longer 'valid' in a sense.

To add more variables into play, gold and stock prices moved in unison as did gold and Treasurys. These relationships we saw last year have become unconnected lately.

A Start

My blog defines me. At least this is what I expect my blog to be, and therefore this is about "I Me Myself and Mine"! A few keywords about me: friendships, football, movies and economics (and possibly banking). So this blog isn't probably just about me and myself. My initial aim would be to put down whatever I can think of, something I believe is worth sharing, nothing too personal perhaps.

With my main interests being knowing people (and myself), watching (and playing) footy, and understanding economics and finance through various channels. I also update myself with latest current affair, read a few books, and do plenty of internet surfing as most people do.

Finally, I am learning to expect the unexpected. I should probably get myself to do something non-trivial now, and start thinking and typing away!