The political economy of share-repurchase

This term, I'm teaching intermediate corporate finance. One of the class discussions was about the firm's decisions about the allocation of their retained earnings. Well, it turns out that more and more of such allocations is shifting towards dividend payments and share repurchase. On the politics side, with governments' support of research and development projects, firms find it more appealing to spend cash on repurchase and thus lobby for more government funding particularly for the kind of research that they had to traditionally fund out of their own pockets. Intel, for example, spends four times on share buyback as it receives from the government in the form of the research funds. This video on HBS is enlightening [link].  

Iran's Crippled Currency

Find my recent commentary on the "Project Syndicate" website: 

While Iran’s leaders have often downplayed the sanctions’ impact, President Mahmoud Ahmadinejad has recently cited them as the primary culprit behind Iran’s economic turmoil. But Iran has faced similar economic difficulties before – in the 1980’s, oil exports fell significantly amid the country’s eight-year war with Iraq, and in 1986-2000 global oil prices were extremely low – and handled them relatively well. Four factors have made the oil embargo particularly unbearable today.

Read the full article on this link:

http://www.project-syndicate.org/online-commentary/us-sanctions-trigger-currency-devaluation-in-iran-by-hosein-maleki-and-somayeh-kaviani

The Dust Question

I wrote this article for the "Project Dust" website. Project Dust addresses the problem of dust (dust storms) in the Middle East. - H. M

-- “Seeing is believing”

We cannot fully appreciate the effects of climate change, most probably because it all happens hundreds of miles away. I have never seen an iceberg; I don’t know what it means that they are being eradicated. Many people have not seen species at the verge of extinction, clearly making it hard for them to understand the true problem. Floods always happen for certain countries and always other people die, forgetting that it is only a matter of time before we, inevitably and forcefully, join the “others”.

I started learning about a persistent effect of a huge climate change right when I was almost being buried under a sand storm in one of my visits of my home town: Ahvaz; one of the seven largest cities of Iran and the capital of the main oil-producing state in the country. It was 2005. My first impression was that it is only a mistake: such a thing has rarely happened before and surely, it is not going to last. I was undeniably wrong as the situations began to exacerbate dramatically. The dust storms began to get more frequent, and more severe. The semi-green city with the largest river in the region and a flourishing agriculture now was constantly in the chamber of a blinding dust. Consequences were beyond imagination: flights started to cancel, governmental offices started to announce emergency shutdowns, and the schools started to have a constant challenge whether class cancellations are going to be a routine. And worst of all, new diseases began to appear and others worsened, among those: nose bleeding, a higher rate of lung and heart diseases.

The air pollution began to surpass the normal levels: starting from 9 times and even reaching 50 times the standard level. More than 4 million people were directly affected. There were rumours that the dust may contain radioactive particles: leading to a widespread panic. The storms began to happen repeatedly: even twice a week. I remember watching a football game on TV, played in a moderate dust, when some players began nose bleeding, others coughing and complaining the lack of oxygen in the playground. Historical places from 7000 years ago, as the signs of the earliest civilizations on earth, were going down under tons of dust. I can go on and on and am not sure when the list is going to end. The situation was severe. And now, it is even worse.

A dull and dusty afternoon in Ahvaz, Iran

It is one of the many examples of climate change that challenges both earth and the human life. No final solutions yet. No improvements. It is also a wakeup call for me and many others: demanding a spread of the word, and necessitating to finally “do something”, especially when we have seen and felt with all our senses a clear and present danger and a worsening human conditions. We have always heard about water projects, draught and hunger. I believe the growing dust storms in the Middle East and other parts of the world can be an alarm for a new global challenge.

No one knows exactly why this phenomenon persists. Some related it to the process of desertification, some say it is due to the Iraqi lagoons drying up, and others may have other ideas. To the extent of my knowledge, no thorough studies have been made. Recently, the phenomenon is not only limited to my hometown anymore. It is now widespread over almost all Iranian map, large parts of Iraq, and I guess other countries in the Persian Gulf. Affecting the daily lives of millions, it now demands an exhaustive analysis from a variety of perspectives. The economic and sociological consequences of this climate change are of main interest: shut down of industries, immigrations, health costs, costs to a variety of businesses, besides social panic, depression, and decrease in life expectancy are some observations, demanding more insight. The phenomenon itself needs particular attentions: how we can stop it, or stop similar phenomena in other parts of the world.

The “Project Dust” is an initiative to address this growing concern. Its multinational context, severity, the number of people involved, the vast land being affected, and its persistence besides its newness makes it of particular importance. “Project Dust” encourages researchers and institutions all over the world to consider this phenomenon, define research projects and recommends funding for related studies.  Its goal is to study, understand and enter proper actions in order to stop dust storms in the Middle East and especially the Persian Gulf area. Project Dust is at its early steps.  

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Photo: Reza Mohseni