A question to ponder after looking at the distribution of results to a current affairs quiz by Pew:
http://pewresearch.org/politicalquiz/quiz/
Thursday, December 30, 2010
Sunday, December 26, 2010
I've Often Had This Thought -- Now The Onion Elaborates
WASHINGTON—Citing a desire to gain influence in Washington, the American people confirmed Friday that they have hired high-powered D.C. lobbyist Jack Weldon of the firm Patton Boggs to help advance their agenda in Congress.
Known among Beltway insiders for his ability to sway public policy on behalf of massive corporations such as Johnson & Johnson, Monsanto, and AT&T, Weldon, 53, is expected to use his vast network of political connections to give his new client a voice in the legislative process.
Weldon is reportedly charging the American people $795 an hour.
"Unlike R.J. Reynolds, Pfizer, or Bank of America, the U.S. populace lacks the access to public officials required to further its legislative goals," a statement from the nation read in part. "Jack Weldon gives us that access."
"His daily presence in the Capitol will ensure the American people finally get a seat at the table," the statement continued. "And it will allow him to advance our message that everyone, including Americans, deserves to be represented in Washington."
The Rest.
Known among Beltway insiders for his ability to sway public policy on behalf of massive corporations such as Johnson & Johnson, Monsanto, and AT&T, Weldon, 53, is expected to use his vast network of political connections to give his new client a voice in the legislative process.
Weldon is reportedly charging the American people $795 an hour.
"Unlike R.J. Reynolds, Pfizer, or Bank of America, the U.S. populace lacks the access to public officials required to further its legislative goals," a statement from the nation read in part. "Jack Weldon gives us that access."
"His daily presence in the Capitol will ensure the American people finally get a seat at the table," the statement continued. "And it will allow him to advance our message that everyone, including Americans, deserves to be represented in Washington."
The Rest.
Friday, December 24, 2010
Wednesday, December 22, 2010
Monetary Bouleversement
I'm not an economist, but.....
It seems China is going to buy several billions of Portugal's debt. They did the same for Greece, and if memory serves, with that they negotiated some terms for building a port facility to transit goods made in China.
If China buys euro debt, it lowers eurozone interest rates. If they buy US debt, they help keep US interest rates "contained".
So siting on $2T in reserves, doesn't that mean they can function like a central banker to the world and fine tune rates in various regions? That's better than Bennie and the Feds can do...
Maybe dollar hegemony is evaporating before our eyes without anybody sending a memo.
It seems China is going to buy several billions of Portugal's debt. They did the same for Greece, and if memory serves, with that they negotiated some terms for building a port facility to transit goods made in China.
If China buys euro debt, it lowers eurozone interest rates. If they buy US debt, they help keep US interest rates "contained".
So siting on $2T in reserves, doesn't that mean they can function like a central banker to the world and fine tune rates in various regions? That's better than Bennie and the Feds can do...
Maybe dollar hegemony is evaporating before our eyes without anybody sending a memo.
Tuesday, December 21, 2010
The Snows of Europa
I've suspected that the increased snow in Europe this year and last reflects global warming, but I've been too lazy to chase it down.
Thankfully, Monbiot has done some work and has a post that goes into some details.
Inter alia -- I didn't realize that Baffin has been 15 DEGREES warmer lately.
Yikes.
Nowhere to hide for us monkeyshines. Perhaps some day some extraterrestrials will comb through the wreckage and figure out what happened to our planet.
Thankfully, Monbiot has done some work and has a post that goes into some details.
Inter alia -- I didn't realize that Baffin has been 15 DEGREES warmer lately.
Yikes.
Nowhere to hide for us monkeyshines. Perhaps some day some extraterrestrials will comb through the wreckage and figure out what happened to our planet.
Monday, December 20, 2010
About as clear as it gets
John Hussman's piece this week has a clear synopsis of the financial events of the Great Recession in just a few paragraphs.
While most of you know this well, it is still useful to read a concise exposition of what happened, and why it didn't have to be handled the way it was.
The usual straw man argument is that it was TARP or Armageddon.
Hussman:
4) We did not avoid a second Great Depression because we bailed out financial institutions. Rather, the collapse in the economy and the surge in unemployment were the direct result of a gaping hole in the U.S. regulatory structure that prevented the rapid restructuring of insolvent non-bank financials. Policy makers then inappropriately extended the "too big to fail" doctrine to ordinary banks. Following a striking loss of public confidence that resulted from arbitrary policy responses, coupled with fear-mongering by exactly those who stood to benefit from public handouts, the self-fulfilling crisis was contained by a change in accounting rules that effectively disabled capital requirements for all financial companies. We are now left with a Ponzi scheme.
While it's clear that the four-second tape in Ben Bernanke's head is an endless loop saying "We let the banks fail in the Great Depression, and look what happened," any disruption caused by the "failure" of a financial institution is not due to financial losses to bondholders, but is instead due to the necessity of liquidating the assets in a disorganized, piecemeal way, as was the case with Lehman Brothers. Large, sometimes major banks fail every year without a material effect on the economy. The key is to have regulations that allow these failures to occur with the minimal amount of disruptive liquidation.
It is important to recognize that nearly every financial institution has enough debt to its own bondholders on the balance sheet to absorb all of its losses without any damage to depositors or customers. These bondholders lend at a spread, and they knowingly take a risk.
Bank regulations intelligently allow the FDIC to cut away the "operating" portion of a financial institution from the obligations to its bondholders and stockholders. Consider a bank with $100 billion of assets, against which it owes $60 billion of customer deposits, $30 billion of debt to its own bondholders, and $10 billion in shareholder equity. Now suppose those assets decline in value to just $80 billion, creating an insolvent institution ($80 billion in assets, $60 billion in deposit liabilities, $30 billion in debt to bondholders, and -$10 billion in equity). The "operating portion" is the $80 billion in assets, along with the $60 billion of customer deposits, which can be sold as a "whole bank" transaction for $20 billion to another institution. The stockholders are wiped out, while the bondholders get the $20 billion residual and take a loss on the rest. Depositors and customers now get statements with a different logo at the top. The seamless "failure" of Washington Mutual is a good example of this in action.
The problem with Bear Stearns and Lehman was that no equivalent set of regulations was in place to allow "cutting away" the operating portion of a non-bank institution. Instead, the Fed illegally expanded the definition of the word "discount" in Section 13(3) of the Federal Reserve Act and created a shell company to buy $30 billion of Bear Stearns' questionable long-term assets without recourse. The remaining entity was sold to JP Morgan, where Bear Stearns bondholders still stand to get 100 cents on the dollar plus interest. Lehman was allowed to "fail," but because there was still no set of regulations that allowed cutting away the operating entity, it had to be liquidated piecemeal.
Importantly, and even urgently, it was not this "failure" that produced the economic downturn. If you carefully observe what happened in 2008, the large-scale collapse of the financial markets and the U.S. economy started literally sixty seconds after TARP was passed by Congress on October 3, 2008. At that moment, the world was told not that the smooth operation of the global financial system would be ensured by taking receivership of failing financial institutions; not that the focus of policy would be the protection of depositors, customers, and U.S. fiscal stability; but instead that insolvent private balance sheets would now be defended, subject to the arbitrary decisions of policy makers in which nobody had confidence. Lehman's failure simply told investors that these decisions could be completely arbitrary, since there was really no operative distinction between Bear Stearns, which was saved, and Lehman, which was not. Moreover, in order to pass TARP, the public had to be convinced that a global meltdown would result if financial institutions weren't preserved in their existing form. In this way, policy makers created a crisis of confidence.
Skip forward and carefully observe what happened in 2009, and you'll see that the crisis was suspended once the FASB threw out rules requiring financial companies to report their assets at market value, while at the same time, the Federal Reserve illegally broadened the definition of "government agency" in Section 14(b) of the Federal Reserve Act in order to purchase $1.5 trillion of Fannie Mae and Freddie Mac obligations. These actions replaced the arbitrary discretion of policy makers with confidence that no major institution would be at risk of failing because, in effect, meaningful capital standards would no longer apply.
Thus, our policy makers first created a crisis of confidence, and then resolved it by legalizing a global Ponzi scheme.
As David Einhorn at Greenlight Capital has noted, "We learned the wrong lesson." We should have learned that existing capital standards were insufficient and that there was a large, gaping hole in our regulatory structure that failed to provide "resolution authority" for non-bank financial companies. Instead, we've learned the dangerously misguided notion that some institutions are simply too big to fail. This inevitably creates a situation where reckless misallocation of capital continues to be subsidized at increasing public cost, while bondholders go unscathed and insiders take bonuses with the same alacrity as Bernie Madoff's early investors.
In short, the downturn in the real economy occurred because regulators refused to take receivership of insolvent institutions, while pushing a story line that the entire global economy would crumble if bondholders had to take losses. This created a fear among depositors and consumers that the entire system was arbitrary and unstable, fueled periodic runs on various financial institutions, tightened the availability of credit to companies having nothing to do with real estate, and created a self-fulfilling prophecy of global economic weakness. Had our policy makers said "depositors and customers will be protected, we will immediately exercise resolution authority over insolvent institutions, and bondholders will not be spared" we could have simply had a "writeoff recession" in paper assets, rather than an implosion of the real economy and an explosion in public debt.
The facts simply do not support the idea that taking receivership of insolvent financials leads to economic distress. Rather, it properly rests losses on the bondholders, and preserves the operation of the financial system by bolstering its solvency. One might argue that we could not possibly let bondholders take the trillions of dollars of losses that would have been required in order to restructure debt and get the bad obligations off the books. This is absurd. A 20% stock market decline wipes out about $3 trillion in market value. Indeed, given the size and average maturity of the U.S. bond market, just the increase in interest rates that we've observed over the past 6 weeks has knocked off trillions in market value.
The financial markets are perfectly capable of taking losses. They don't do well with disorganized piecemeal liquidation - where perfectly good loans are called in and countless positions have to be unwound - but that isn't required if your regulatory structure allows receivership/conservatorship that can cut away and gradually transfer the operating portion of an institution. What the global economy is not capable of taking is the uncertainty that results when policy makers apply arbitrary rules, leaving all other decision makers in the economy frozen at the edge of their seats to discover what the results of those arbitrary decisions will be. We have learned the wrong lesson, and we continue to pay for it.
The rest of this week's Hussman's commentary here.
While most of you know this well, it is still useful to read a concise exposition of what happened, and why it didn't have to be handled the way it was.
The usual straw man argument is that it was TARP or Armageddon.
Hussman:
4) We did not avoid a second Great Depression because we bailed out financial institutions. Rather, the collapse in the economy and the surge in unemployment were the direct result of a gaping hole in the U.S. regulatory structure that prevented the rapid restructuring of insolvent non-bank financials. Policy makers then inappropriately extended the "too big to fail" doctrine to ordinary banks. Following a striking loss of public confidence that resulted from arbitrary policy responses, coupled with fear-mongering by exactly those who stood to benefit from public handouts, the self-fulfilling crisis was contained by a change in accounting rules that effectively disabled capital requirements for all financial companies. We are now left with a Ponzi scheme.
While it's clear that the four-second tape in Ben Bernanke's head is an endless loop saying "We let the banks fail in the Great Depression, and look what happened," any disruption caused by the "failure" of a financial institution is not due to financial losses to bondholders, but is instead due to the necessity of liquidating the assets in a disorganized, piecemeal way, as was the case with Lehman Brothers. Large, sometimes major banks fail every year without a material effect on the economy. The key is to have regulations that allow these failures to occur with the minimal amount of disruptive liquidation.
It is important to recognize that nearly every financial institution has enough debt to its own bondholders on the balance sheet to absorb all of its losses without any damage to depositors or customers. These bondholders lend at a spread, and they knowingly take a risk.
Bank regulations intelligently allow the FDIC to cut away the "operating" portion of a financial institution from the obligations to its bondholders and stockholders. Consider a bank with $100 billion of assets, against which it owes $60 billion of customer deposits, $30 billion of debt to its own bondholders, and $10 billion in shareholder equity. Now suppose those assets decline in value to just $80 billion, creating an insolvent institution ($80 billion in assets, $60 billion in deposit liabilities, $30 billion in debt to bondholders, and -$10 billion in equity). The "operating portion" is the $80 billion in assets, along with the $60 billion of customer deposits, which can be sold as a "whole bank" transaction for $20 billion to another institution. The stockholders are wiped out, while the bondholders get the $20 billion residual and take a loss on the rest. Depositors and customers now get statements with a different logo at the top. The seamless "failure" of Washington Mutual is a good example of this in action.
The problem with Bear Stearns and Lehman was that no equivalent set of regulations was in place to allow "cutting away" the operating portion of a non-bank institution. Instead, the Fed illegally expanded the definition of the word "discount" in Section 13(3) of the Federal Reserve Act and created a shell company to buy $30 billion of Bear Stearns' questionable long-term assets without recourse. The remaining entity was sold to JP Morgan, where Bear Stearns bondholders still stand to get 100 cents on the dollar plus interest. Lehman was allowed to "fail," but because there was still no set of regulations that allowed cutting away the operating entity, it had to be liquidated piecemeal.
Importantly, and even urgently, it was not this "failure" that produced the economic downturn. If you carefully observe what happened in 2008, the large-scale collapse of the financial markets and the U.S. economy started literally sixty seconds after TARP was passed by Congress on October 3, 2008. At that moment, the world was told not that the smooth operation of the global financial system would be ensured by taking receivership of failing financial institutions; not that the focus of policy would be the protection of depositors, customers, and U.S. fiscal stability; but instead that insolvent private balance sheets would now be defended, subject to the arbitrary decisions of policy makers in which nobody had confidence. Lehman's failure simply told investors that these decisions could be completely arbitrary, since there was really no operative distinction between Bear Stearns, which was saved, and Lehman, which was not. Moreover, in order to pass TARP, the public had to be convinced that a global meltdown would result if financial institutions weren't preserved in their existing form. In this way, policy makers created a crisis of confidence.
Skip forward and carefully observe what happened in 2009, and you'll see that the crisis was suspended once the FASB threw out rules requiring financial companies to report their assets at market value, while at the same time, the Federal Reserve illegally broadened the definition of "government agency" in Section 14(b) of the Federal Reserve Act in order to purchase $1.5 trillion of Fannie Mae and Freddie Mac obligations. These actions replaced the arbitrary discretion of policy makers with confidence that no major institution would be at risk of failing because, in effect, meaningful capital standards would no longer apply.
Thus, our policy makers first created a crisis of confidence, and then resolved it by legalizing a global Ponzi scheme.
As David Einhorn at Greenlight Capital has noted, "We learned the wrong lesson." We should have learned that existing capital standards were insufficient and that there was a large, gaping hole in our regulatory structure that failed to provide "resolution authority" for non-bank financial companies. Instead, we've learned the dangerously misguided notion that some institutions are simply too big to fail. This inevitably creates a situation where reckless misallocation of capital continues to be subsidized at increasing public cost, while bondholders go unscathed and insiders take bonuses with the same alacrity as Bernie Madoff's early investors.
In short, the downturn in the real economy occurred because regulators refused to take receivership of insolvent institutions, while pushing a story line that the entire global economy would crumble if bondholders had to take losses. This created a fear among depositors and consumers that the entire system was arbitrary and unstable, fueled periodic runs on various financial institutions, tightened the availability of credit to companies having nothing to do with real estate, and created a self-fulfilling prophecy of global economic weakness. Had our policy makers said "depositors and customers will be protected, we will immediately exercise resolution authority over insolvent institutions, and bondholders will not be spared" we could have simply had a "writeoff recession" in paper assets, rather than an implosion of the real economy and an explosion in public debt.
The facts simply do not support the idea that taking receivership of insolvent financials leads to economic distress. Rather, it properly rests losses on the bondholders, and preserves the operation of the financial system by bolstering its solvency. One might argue that we could not possibly let bondholders take the trillions of dollars of losses that would have been required in order to restructure debt and get the bad obligations off the books. This is absurd. A 20% stock market decline wipes out about $3 trillion in market value. Indeed, given the size and average maturity of the U.S. bond market, just the increase in interest rates that we've observed over the past 6 weeks has knocked off trillions in market value.
The financial markets are perfectly capable of taking losses. They don't do well with disorganized piecemeal liquidation - where perfectly good loans are called in and countless positions have to be unwound - but that isn't required if your regulatory structure allows receivership/conservatorship that can cut away and gradually transfer the operating portion of an institution. What the global economy is not capable of taking is the uncertainty that results when policy makers apply arbitrary rules, leaving all other decision makers in the economy frozen at the edge of their seats to discover what the results of those arbitrary decisions will be. We have learned the wrong lesson, and we continue to pay for it.
The rest of this week's Hussman's commentary here.
Sunday, December 19, 2010
Hot or Not?
One thing about entrepreneurialism that grabbed me was the same change-the-world impulse that animated political activity. So I found that aspect of the Facebook movie quite fun to watch. The sense of riding a big societal tsunami on a surfboard and landing high on a mountaintop was palpable, and certainly one of the most awe inspiring aspects of the ongoing migration of human activity to digital networks is the dizzying speed with which the right idea can explode.
On the other hand, I find that I'm not that engaged when I log on to FB.
Perhaps it's that I score high on neuroticism traits... This recent piece in the Economist on human happiness across the age spectrum suggests that your satisfaction with Facebook will be a function of your underlying traits -- and I must admit that I do enjoy a quiet night at home (when the kids are reading and not screaming)
"Whereas neuroticism tends to make for gloomy types, extroversion does the opposite. Those who like working in teams and who relish parties tend to be happier than those who shut their office doors in the daytime and hole up at home in the evenings."
So maybe I'm just a stay-at-home whether online or in the real world, but I doubt it. I love an evening of good conversation with people I enjoy being with -- in the end, I think that FB is basically too flat an experience for me. While humans are obviously social creatures, the inputs are multisensory -- and there is a huge amount of bandwidth in realtime verbal and nonverbal communication --- think about jokes or flirting-- body language, tone of voice, facial expression, etc. is all missing online. Then again, we are in the early innings of the digital revolution, so guys like Kurzweil are undoubtedly correct about how much more there is to come.
Maybe when we have holographic displays and multi-user 3D chats, things like Facebook 3.0 will be richer and more satisfying. As anyone who has tried to moderate a meeting will know, you'll need some serious algorithms for that. We do have those embedded in ourselves when we engage in a dinner party conversation..
As I get off a phone call with my friend 9 time zones away, feeling much more connected that his FB updates ever achieve for me, it's clear that a key element of human sociality is its essentially synchronous dimension. Asynchronous communication for social networking seems to put more distance between us, and seems to concede too much to the artificial constraints on time that is the essence of the modern world.
If we are to reclaim the human, that is gonna have to go. That can't happen til the world of work turns upside down.
This review of The Social Network by Zadie Smith is a great read, and saves me the trouble of writing more: here
On the other hand, I find that I'm not that engaged when I log on to FB.
Perhaps it's that I score high on neuroticism traits... This recent piece in the Economist on human happiness across the age spectrum suggests that your satisfaction with Facebook will be a function of your underlying traits -- and I must admit that I do enjoy a quiet night at home (when the kids are reading and not screaming)
"Whereas neuroticism tends to make for gloomy types, extroversion does the opposite. Those who like working in teams and who relish parties tend to be happier than those who shut their office doors in the daytime and hole up at home in the evenings."
So maybe I'm just a stay-at-home whether online or in the real world, but I doubt it. I love an evening of good conversation with people I enjoy being with -- in the end, I think that FB is basically too flat an experience for me. While humans are obviously social creatures, the inputs are multisensory -- and there is a huge amount of bandwidth in realtime verbal and nonverbal communication --- think about jokes or flirting-- body language, tone of voice, facial expression, etc. is all missing online. Then again, we are in the early innings of the digital revolution, so guys like Kurzweil are undoubtedly correct about how much more there is to come.
Maybe when we have holographic displays and multi-user 3D chats, things like Facebook 3.0 will be richer and more satisfying. As anyone who has tried to moderate a meeting will know, you'll need some serious algorithms for that. We do have those embedded in ourselves when we engage in a dinner party conversation..
As I get off a phone call with my friend 9 time zones away, feeling much more connected that his FB updates ever achieve for me, it's clear that a key element of human sociality is its essentially synchronous dimension. Asynchronous communication for social networking seems to put more distance between us, and seems to concede too much to the artificial constraints on time that is the essence of the modern world.
If we are to reclaim the human, that is gonna have to go. That can't happen til the world of work turns upside down.
This review of The Social Network by Zadie Smith is a great read, and saves me the trouble of writing more: here
Friday, December 17, 2010
Thursday, December 9, 2010
More on Sweden from Dilbert
Pretty funny:
If you haven't read any background about the so-called rape charges against Assange, you really should. Apparently Swedish laws are unique. If you have a penis, you're half a rapist before you even get through customs. And if your condom breaks, that's jail time. What I'm saying is that the Club Med in Sweden is a nervous place.
I was having a hard time making up my mind about Assange. On one hand, he might be hurting the interests of my country and putting people in danger. Death to him! On the other hand, a little extra government transparency might prevent more problems than it causes. Hero! It was a toss-up. Then Sweden turned Assange from a man-whore publicity hound into Gandhi. Advantage: Assange.
The rest here.
If you haven't read any background about the so-called rape charges against Assange, you really should. Apparently Swedish laws are unique. If you have a penis, you're half a rapist before you even get through customs. And if your condom breaks, that's jail time. What I'm saying is that the Club Med in Sweden is a nervous place.
I was having a hard time making up my mind about Assange. On one hand, he might be hurting the interests of my country and putting people in danger. Death to him! On the other hand, a little extra government transparency might prevent more problems than it causes. Hero! It was a toss-up. Then Sweden turned Assange from a man-whore publicity hound into Gandhi. Advantage: Assange.
The rest here.
Tuesday, December 7, 2010
Julian Assange
This article from Counter Punch from several months ago is well worth a read for those who are not familiar with it.
The Swedish charges really do appear to be arising from a faux feminism run amok. I thought the charge of not calling the next day was a joke, but now I'm not so sure.
Jon Stewart, where are you?
The Swedish charges really do appear to be arising from a faux feminism run amok. I thought the charge of not calling the next day was a joke, but now I'm not so sure.
Jon Stewart, where are you?
Monday, November 29, 2010
Saturday, November 27, 2010
Vladimir Ulyanov
I used to check Lenin's Tomb regularly, but somehow lost the habit, much to my regret. A friend sent me his latest posts, on-the-ground coverage of the student protests in the UK , reminding us of what kind of function blogging journalism can accomplish.
His claim that the UK protests were primarily spontaneous and organized through social media underlines my longstanding view that these forms of digital networks are the organizing tool of our time. But the fact that most of these technologies are corporate-driven and server-based is an Achilles heel. If Mark Zuckerberg, or Mr Tweet, or Eric Schmidt, or Langley decide that enough is enough, and the networks go dark, what's the alternative?
If anyone knows of a peer-to-peer social networking system, let me know.
Scrolling down further at Lenin's Tomb, some Irish analysis:
This breakdown of Fianna Fail's support hasn't yet benefited the Left in a big way, but it can do so. Labour is the main centre-left opposition party, and has made serious gains in the polls as a result of Fianna Fail's difficulties, rising to 27%, an increase of 10% since last year. The radical left has previously demonstrated its ability to make surprising break-throughs, and is probably represented in the 8% support that 'independents' get. The Greens are worried about their own position, and they're right to be worried. They gambled on collusion with the government's austerity measures, justifying every betrayal on similar grounds to those offered by the Liberals - because we're in government, we can implement some of the beneficial policies that we want to see. But they now know they face the wrath of the voters and are trying to limit the damage. They certainly have no ability to channel any protest, as they've made themselves the objects of protest: they garner a miserable 3% in the polls. As yet, it still looks like the right-wing Fine Gael will be the main beneficiary of the protest vote, with 33% support.
I wasn't aware that the Green Party there had signed up for austerity. Such an idiotic position could only come out of the political stupor induced by years and years of fake prosperity and stability induced by the credit bubble. (and not just in Ireland).
And I see that there is a re-release of that masterpiece of cinematography, the Conformist, just in time.
His claim that the UK protests were primarily spontaneous and organized through social media underlines my longstanding view that these forms of digital networks are the organizing tool of our time. But the fact that most of these technologies are corporate-driven and server-based is an Achilles heel. If Mark Zuckerberg, or Mr Tweet, or Eric Schmidt, or Langley decide that enough is enough, and the networks go dark, what's the alternative?
If anyone knows of a peer-to-peer social networking system, let me know.
Scrolling down further at Lenin's Tomb, some Irish analysis:
This breakdown of Fianna Fail's support hasn't yet benefited the Left in a big way, but it can do so. Labour is the main centre-left opposition party, and has made serious gains in the polls as a result of Fianna Fail's difficulties, rising to 27%, an increase of 10% since last year. The radical left has previously demonstrated its ability to make surprising break-throughs, and is probably represented in the 8% support that 'independents' get. The Greens are worried about their own position, and they're right to be worried. They gambled on collusion with the government's austerity measures, justifying every betrayal on similar grounds to those offered by the Liberals - because we're in government, we can implement some of the beneficial policies that we want to see. But they now know they face the wrath of the voters and are trying to limit the damage. They certainly have no ability to channel any protest, as they've made themselves the objects of protest: they garner a miserable 3% in the polls. As yet, it still looks like the right-wing Fine Gael will be the main beneficiary of the protest vote, with 33% support.
I wasn't aware that the Green Party there had signed up for austerity. Such an idiotic position could only come out of the political stupor induced by years and years of fake prosperity and stability induced by the credit bubble. (and not just in Ireland).
And I see that there is a re-release of that masterpiece of cinematography, the Conformist, just in time.
Thursday, November 25, 2010
Matt Taibbi Before He Was Discovered
Five years ago I was siting in a felafel joint on the upper west side when I picked up a local free newspaper expecting to waste some time. A review of Tom Friedman's "The World is Flat" caught my eye and gave me a jolt of sheer delight. I'd never heard of the author, but that reading experience in a by-the-way throwaway left an indelible engram...(and confirmed once more that NYC is just way cool)
So today while perusing Salon.com's list of the "Hack 30" (where Friedman comes in at Number 3) I discover that the author was none other than Matt Taibbi:
An excerpt from the review:
I'll give you an example, drawn at random from The World Is Flat. On page 174, Friedman is describing a flight he took on Southwest Airlines from Baltimore to Hartford, Connecticut. (Friedman never forgets to name the company or the brand name; if he had written The Metamorphosis, Gregor Samsa would have awoken from uneasy dreams in a Sealy Posturepedic.) Here's what he says:
I stomped off, went through security, bought a Cinnabon, and glumly sat at the back of the B line, waiting to be herded on board so that I could hunt for space in the overhead bins.
Forget the Cinnabon. Name me a herd animal that hunts. Name me one.
Now I get the pleasure of reading a relatively recent one, a review of the environmentalist Tom.
So today while perusing Salon.com's list of the "Hack 30" (where Friedman comes in at Number 3) I discover that the author was none other than Matt Taibbi:
An excerpt from the review:
I'll give you an example, drawn at random from The World Is Flat. On page 174, Friedman is describing a flight he took on Southwest Airlines from Baltimore to Hartford, Connecticut. (Friedman never forgets to name the company or the brand name; if he had written The Metamorphosis, Gregor Samsa would have awoken from uneasy dreams in a Sealy Posturepedic.) Here's what he says:
I stomped off, went through security, bought a Cinnabon, and glumly sat at the back of the B line, waiting to be herded on board so that I could hunt for space in the overhead bins.
Forget the Cinnabon. Name me a herd animal that hunts. Name me one.
Now I get the pleasure of reading a relatively recent one, a review of the environmentalist Tom.
Can another era of tumbrils be far behind?
Some details on Mukesh Ambani's new "house".
If India is not incubating a million madames Defarge by now, I would doubt we'll remain a single species for long.
Imagine a boot......
If India is not incubating a million madames Defarge by now, I would doubt we'll remain a single species for long.
Imagine a boot......
Wednesday, November 24, 2010
A counter example for the Irish
From the Spectator:
In many ways, Iceland is in better shape than Ireland or Greece, both of which may well be stuck in recession for a decade. It may even be in better shape than Britain: we still don’t have much idea how much RBS or Lloyds-HBOS will end up costing us, or when we will be rid of them. There is an important lesson in that experience. Almost every government in the world has accepted the idea that they have to bail out their banks if they run into trouble. But Iceland suggests that isn’t necessarily true. In fact, governments could simply protect domestic deposits. After that, they could say they were very sorry, but there simply wasn’t enough money to pay back all the debts the bankers had run up.
It might be better financially. Bad debts would get written off immediately, rather than remaining a millstone around the neck of the country for years to come. More importantly, it would be better morally. Reckless, irresponsible behaviour would not be rewarded. Bankers would have to think a lot harder about what risks they were taking, and what their consequences might be. And depositors would have to be a lot more careful about where they put their money, rather than just lazily assuming the government would pick up the tab for any losses.
If Britain followed Iceland’s example, it’s possible the economy would survive and bounce back fairly quickly. Perhaps we could even put the prime minister who presided over the reckless expansion of the banks on trial for negligence, just as the Icelanders have. Come to think of it, that might not be a bad idea.
In many ways, Iceland is in better shape than Ireland or Greece, both of which may well be stuck in recession for a decade. It may even be in better shape than Britain: we still don’t have much idea how much RBS or Lloyds-HBOS will end up costing us, or when we will be rid of them. There is an important lesson in that experience. Almost every government in the world has accepted the idea that they have to bail out their banks if they run into trouble. But Iceland suggests that isn’t necessarily true. In fact, governments could simply protect domestic deposits. After that, they could say they were very sorry, but there simply wasn’t enough money to pay back all the debts the bankers had run up.
It might be better financially. Bad debts would get written off immediately, rather than remaining a millstone around the neck of the country for years to come. More importantly, it would be better morally. Reckless, irresponsible behaviour would not be rewarded. Bankers would have to think a lot harder about what risks they were taking, and what their consequences might be. And depositors would have to be a lot more careful about where they put their money, rather than just lazily assuming the government would pick up the tab for any losses.
If Britain followed Iceland’s example, it’s possible the economy would survive and bounce back fairly quickly. Perhaps we could even put the prime minister who presided over the reckless expansion of the banks on trial for negligence, just as the Icelanders have. Come to think of it, that might not be a bad idea.
The question of the hour
Will the Irish people accept crucifixion? This panel discussion on mainstream television, with mainstream people is sobering.
Tuesday, November 23, 2010
Americans are not stupid -- just their leadership
This map shows the most trusted newscaster now that Cronkite is dead.
While I'm pleased to see Massachusetts' results, I'm most surprised by Utah, Idaho and Arkansas....
While I'm pleased to see Massachusetts' results, I'm most surprised by Utah, Idaho and Arkansas....
The Balkans of the East
This article alarms me, though I suppose I shouldn't be surprised. The issue distills to the question: Who owns Pakistan?
An excerpt:
However, a clash of interests between the Pakistani military establishment and Washington now appears likely. Washington understands that during winter, fighting in Afghanistan slows down and a major chunk of insurgents goes to Pakistan's cities to see their families, especially in places like Quetta, the provincial capital of Balochistan. The Americans want to take action during this period, but the Pakistani military establishment cannot allow this to happen.
Whether Pakistan is ready to pay the cost if it tries to impede American operations is another matter as the US is already upset with Islamabad's refusal to launch operations against the powerful Haqqani network in the North Waziristan tribal area. That is, is the loss of military and economic aid an affordable option?
Pakistan has already expanded its arms procurement base, notably with China, with which it is negotiating a submarine purchase deal, beside several air-defense system deals. These military ties are expected to deepen as an alternative to American military support.
An excerpt:
However, a clash of interests between the Pakistani military establishment and Washington now appears likely. Washington understands that during winter, fighting in Afghanistan slows down and a major chunk of insurgents goes to Pakistan's cities to see their families, especially in places like Quetta, the provincial capital of Balochistan. The Americans want to take action during this period, but the Pakistani military establishment cannot allow this to happen.
Whether Pakistan is ready to pay the cost if it tries to impede American operations is another matter as the US is already upset with Islamabad's refusal to launch operations against the powerful Haqqani network in the North Waziristan tribal area. That is, is the loss of military and economic aid an affordable option?
Pakistan has already expanded its arms procurement base, notably with China, with which it is negotiating a submarine purchase deal, beside several air-defense system deals. These military ties are expected to deepen as an alternative to American military support.
Germany aims to take Europe's reins
A big picture article on European econo-geo-politics from the Guardian.
Given the scale of the Chinese, Indian, American (and potentially) Russian economies, it does seem hard to imagine France leaving its German embrace.
Given the scale of the Chinese, Indian, American (and potentially) Russian economies, it does seem hard to imagine France leaving its German embrace.
Saturday, November 13, 2010
"The political system is disintegrating"
This interview with Tom Ferguson states fairly crisply what we all know:
People who were hailing Obama as a new FDR were viewing American politics through the wrong lens. They were treating public policy as the result of the will of voters. But in fact, American political parties are mostly bank accounts. What you are told is the voice of the people is usually the sound of money talking.
People who were hailing Obama as a new FDR were viewing American politics through the wrong lens. They were treating public policy as the result of the will of voters. But in fact, American political parties are mostly bank accounts. What you are told is the voice of the people is usually the sound of money talking.
Friday, November 12, 2010
Irish 2 year yields approaching 7%
YIKES!
Nemo, who comments regularly at Calculated Risk has a post on the Irish situation here.
Starting line:
Note to self: Never lend money to a country where happy hour starts at 9 A.M.
Nemo, who comments regularly at Calculated Risk has a post on the Irish situation here.
Starting line:
Note to self: Never lend money to a country where happy hour starts at 9 A.M.
A nice synopsis of the current investing climate
(Unless you are a hedge fund guy)
A 30 min video goes well over a good cup o' tea
A 30 min video goes well over a good cup o' tea
Sunday, November 7, 2010
Neo-feudalism: the beat goes on
Alleged hit-and-run driver may not face felony
Victim, attorneys furious with misdemeanor deal
EAGLE, Colorado — A financial manager for wealthy clients will not face felony charges for a hit-and-run because it could jeopardize his job, prosecutors said Thursday.
Victim, attorneys furious with misdemeanor deal
EAGLE, Colorado — A financial manager for wealthy clients will not face felony charges for a hit-and-run because it could jeopardize his job, prosecutors said Thursday.
Friday, November 5, 2010
Wednesday, November 3, 2010
The key attribute of any successful ideology is that people don’t recognize it is an ideology.
An interview with James Kwak from the Straddler via Yves Smith:
It's interesting to consider in the context of the housing crisis. On the one hand, you had condemnation of the poor for buying houses that were too big, which has at least two roots in American thinking. One is this Puritan work ethic—you’re supposed to work for a living, not gamble on housing going up. Secondly, it has a class component, which is basically that the working class shouldn’t aspire beyond its station. "Who is this poor person with the gall to buy a nice house in a subdivision when he can’t afford it?" Both of those dictate that you should be critical of the poor person who buys a big house. But we have this other strain of thinking which says, (a) it’s a free market and you should maximize your profits, and (b) individual initiative is good, and you should go and do what is good for you. We don’t, however, apply those to the poor person who buys a big house; we apply those to traders on Wall Street. So, for some reason, we apply different elements of our national ideology to different sets of people.
As I say, you could see it in the housing crisis, where a lot of the right-wing think tanks blamed the individual and the government for the collapse. Now, even though there were people who were taking out mortgages that they couldn’t afford, or taking out lots of home equity in order to buy big, flat-screen TVs—everyone always says flat-screen TVs—I think that, this is just a guess, but for every person who was drawing down his home equity to buy a flat-screen TV, or an SUV, there were two people who were drawing it down to pay medical bills or college bills, basically trying to make ends meet. Middle class wages have been declining for ten years and stagnant for thirty years, and if you have a financial system that allows people making $15,000 a year to take out $400,000 mortgages, I don’t think that’s the fault of the guy making $15,000. I think it’s the fault of the financial system.
But, let’s say I’m a guy who makes $15,000 a year. I realize, wow, I can get a $400,000 mortgage and I can live in this house for a few years, and if housing prices go up, I can flip it and I can actually make a couple hundred thousand dollars. And let’s say I’m really clever, and I say, if housing prices go down, I’ll just walk away and I will have gotten to live in a really nice house for three years at no cost to myself. I mean, that’s the worst, most cynical spin you can put on it, right? But this is exactly what people on Wall Street do. The person who is criticizing the janitor for doing this is the same person who thinks that businesses should exploit every legal opportunity to make profits. So even if you attribute the worst possible state of mind to the guy making $15,000, he’s still just doing what any businessman should do under the circumstances. But our national ideology somehow doesn't allow us to think about it in those terms.
[SNIP]
In one transaction that ProPublica talks about, JPMorgan did this deal, they got $20 million in fees, they created a CDO whose total value was about a billion dollars, and for whatever reason, instead of selling it to other investors, they held onto it. The next year, when the crisis hit, they booked a loss of about $880 million and Magnetar made about $1 billion.
So there are two possibilities here. One is that the people at JPMorgan really thought that the CDO wouldn’t collapse, even though these are people who should have known more about this market than anybody else. The other possibility is that they knew there was a fair chance it would collapse, but the $20 million in fees—half of that went into the bonus pool, most of it went into their bonuses, and they knew that if the collapsed, as long as it didn’t collapse this year, the losses would be borne by other people, which is exactly what happened. So it’s hard to say, were they clever and exploiting their own bank, or were they so caught up in how much money they were making that they were blind to the fact that it was going to collapse?
You know, there is a famous saying of Balzac that behind every great fortune there is a great crime—we certainly do not believe that in this country. The people on Wall Street are a kind of aristocracy, and I think a lot of Americans have deeply mixed feelings about whether they really want to overthrow their aristocracy.
It's interesting to consider in the context of the housing crisis. On the one hand, you had condemnation of the poor for buying houses that were too big, which has at least two roots in American thinking. One is this Puritan work ethic—you’re supposed to work for a living, not gamble on housing going up. Secondly, it has a class component, which is basically that the working class shouldn’t aspire beyond its station. "Who is this poor person with the gall to buy a nice house in a subdivision when he can’t afford it?" Both of those dictate that you should be critical of the poor person who buys a big house. But we have this other strain of thinking which says, (a) it’s a free market and you should maximize your profits, and (b) individual initiative is good, and you should go and do what is good for you. We don’t, however, apply those to the poor person who buys a big house; we apply those to traders on Wall Street. So, for some reason, we apply different elements of our national ideology to different sets of people.
As I say, you could see it in the housing crisis, where a lot of the right-wing think tanks blamed the individual and the government for the collapse. Now, even though there were people who were taking out mortgages that they couldn’t afford, or taking out lots of home equity in order to buy big, flat-screen TVs—everyone always says flat-screen TVs—I think that, this is just a guess, but for every person who was drawing down his home equity to buy a flat-screen TV, or an SUV, there were two people who were drawing it down to pay medical bills or college bills, basically trying to make ends meet. Middle class wages have been declining for ten years and stagnant for thirty years, and if you have a financial system that allows people making $15,000 a year to take out $400,000 mortgages, I don’t think that’s the fault of the guy making $15,000. I think it’s the fault of the financial system.
But, let’s say I’m a guy who makes $15,000 a year. I realize, wow, I can get a $400,000 mortgage and I can live in this house for a few years, and if housing prices go up, I can flip it and I can actually make a couple hundred thousand dollars. And let’s say I’m really clever, and I say, if housing prices go down, I’ll just walk away and I will have gotten to live in a really nice house for three years at no cost to myself. I mean, that’s the worst, most cynical spin you can put on it, right? But this is exactly what people on Wall Street do. The person who is criticizing the janitor for doing this is the same person who thinks that businesses should exploit every legal opportunity to make profits. So even if you attribute the worst possible state of mind to the guy making $15,000, he’s still just doing what any businessman should do under the circumstances. But our national ideology somehow doesn't allow us to think about it in those terms.
[SNIP]
In one transaction that ProPublica talks about, JPMorgan did this deal, they got $20 million in fees, they created a CDO whose total value was about a billion dollars, and for whatever reason, instead of selling it to other investors, they held onto it. The next year, when the crisis hit, they booked a loss of about $880 million and Magnetar made about $1 billion.
So there are two possibilities here. One is that the people at JPMorgan really thought that the CDO wouldn’t collapse, even though these are people who should have known more about this market than anybody else. The other possibility is that they knew there was a fair chance it would collapse, but the $20 million in fees—half of that went into the bonus pool, most of it went into their bonuses, and they knew that if the collapsed, as long as it didn’t collapse this year, the losses would be borne by other people, which is exactly what happened. So it’s hard to say, were they clever and exploiting their own bank, or were they so caught up in how much money they were making that they were blind to the fact that it was going to collapse?
You know, there is a famous saying of Balzac that behind every great fortune there is a great crime—we certainly do not believe that in this country. The people on Wall Street are a kind of aristocracy, and I think a lot of Americans have deeply mixed feelings about whether they really want to overthrow their aristocracy.
Tuesday, November 2, 2010
Rally for Sedating Sanity
Chris Hedges' has a critique of Jon Stewart which rings true. Nice to see Guy Debord resurrected as well. It suggests that the emerging coalition of the reasonable is just a front group for Comedy Central and Huffington Post. The era in which the big media outfits are organizing our political speech seems to have firmed up.
Thursday, October 28, 2010
Metempsychosis
Glenn Greenwald is a great American.
This rage-filled eloquent take-down of John Burns (who used to nauseate me when he was regularly trotted out as an expert-pundit about the situation on the ground in Iraq -- back when I bothered to watch TV) is a must read, and should be circulated widely.
On a broader level, I think that the NYT has lost its bearings. This is not nostalgia. What I mean is that the current historical conjuncture is one of decay of the old order on many levels. And one of them is that the center cannot hold as class divisions intensify political ones. In a pre-civil war era, the traditional role of the NYT in running the country and keeping the educated middle classes sedated is obsolete.
Oh, and did I mention that Glen Greenwald is a great American?
Thinking of Izzy Stone, it's enough to make me believe in reincarnation.
This rage-filled eloquent take-down of John Burns (who used to nauseate me when he was regularly trotted out as an expert-pundit about the situation on the ground in Iraq -- back when I bothered to watch TV) is a must read, and should be circulated widely.
On a broader level, I think that the NYT has lost its bearings. This is not nostalgia. What I mean is that the current historical conjuncture is one of decay of the old order on many levels. And one of them is that the center cannot hold as class divisions intensify political ones. In a pre-civil war era, the traditional role of the NYT in running the country and keeping the educated middle classes sedated is obsolete.
Oh, and did I mention that Glen Greenwald is a great American?
Thinking of Izzy Stone, it's enough to make me believe in reincarnation.
Forces of Production
I remember back in the early 80's that I expected a wave of proletarianization due to the need to squeeze profits out from somewhere. Didn't happen, primarily because consumption was defended by the 2 decade orgy of debt we've just completed.
Regardless of the business cycle, however, technology trends are inexorable -- just the stuff in the pipeline already guarantees huge transformations ahead. Yet as Portugal, Ireland and Greece reach the breaking point, I wonder when people will stop seeing market forces as laws of nature, and when the movements for progressive technology will gain a stronger voice.
In the end we come back to the core question: How much wealth is sufficient for us to realize our potential, and what relationship should human beings have to nature and each other in its achievement?
From an article on technology, robotics, and automation:
If this polarization continues, a whole cohort of people who expected to be middle class—or at least financially stable—might find themselves living a very different reality. Then they might start asking questions about why they are in that position. If it gets increasingly hard to pretend that the average liberal-arts degree prepares a student for a decent job, there may be broader support for a sober assessment of our education system, and the reforms it needs. If the skills and talents that are truly financially rewarding become harder and harder to acquire, people who would never consider themselves students of Marx might start questioning whether, given the circumstances, it still makes sense to pay people based solely on the demand for their skills in a marketplace that would be demanding very few skills.
If market forces and increased automation leave the average person without any prospects for a decent job, we may have the chance—or perhaps even the moral obligation—to recast the opportunity to do meaningful work not merely as a privilege, but as something everyone deserves.
The whole article is here.
Regardless of the business cycle, however, technology trends are inexorable -- just the stuff in the pipeline already guarantees huge transformations ahead. Yet as Portugal, Ireland and Greece reach the breaking point, I wonder when people will stop seeing market forces as laws of nature, and when the movements for progressive technology will gain a stronger voice.
In the end we come back to the core question: How much wealth is sufficient for us to realize our potential, and what relationship should human beings have to nature and each other in its achievement?
From an article on technology, robotics, and automation:
If this polarization continues, a whole cohort of people who expected to be middle class—or at least financially stable—might find themselves living a very different reality. Then they might start asking questions about why they are in that position. If it gets increasingly hard to pretend that the average liberal-arts degree prepares a student for a decent job, there may be broader support for a sober assessment of our education system, and the reforms it needs. If the skills and talents that are truly financially rewarding become harder and harder to acquire, people who would never consider themselves students of Marx might start questioning whether, given the circumstances, it still makes sense to pay people based solely on the demand for their skills in a marketplace that would be demanding very few skills.
If market forces and increased automation leave the average person without any prospects for a decent job, we may have the chance—or perhaps even the moral obligation—to recast the opportunity to do meaningful work not merely as a privilege, but as something everyone deserves.
The whole article is here.
Monday, October 25, 2010
Obama Cuts his Losses
MK Bhadrakumar's latest is a good snapshot of the Af-Pak situation. Indian strategists will be unhappy.
For Obama and the US -- kick the can down the road and get out of Dodge (at least as a tale to tell the children, err, the American voters. ----- There will be a garrison remaining for multiple purposes, but securing Kabul and building the Afghan state will not be one of them)
For the Indians --- there is no substitute for standing on your own two feet.
The US is probably telling India behind the scenes, "keep growing at 9%+ annually, and all else will follow". The key question to me is whether resource constraints emerge to throttle Indian growth before they can achieve strategic parity with China. Kinda hard to be an ambitious would-be imperial power without an educated and well-fed population.
or oil.....
or water.....
For Obama and the US -- kick the can down the road and get out of Dodge (at least as a tale to tell the children, err, the American voters. ----- There will be a garrison remaining for multiple purposes, but securing Kabul and building the Afghan state will not be one of them)
For the Indians --- there is no substitute for standing on your own two feet.
The US is probably telling India behind the scenes, "keep growing at 9%+ annually, and all else will follow". The key question to me is whether resource constraints emerge to throttle Indian growth before they can achieve strategic parity with China. Kinda hard to be an ambitious would-be imperial power without an educated and well-fed population.
or oil.....
or water.....
Saturday, October 23, 2010
Another great experience with Carolina Chocolate Drops last week
Strange to be at a nightclub til 11:30 ...... but sweet bluegrass
This is "Genuine Negro Jig", the title track of their latest album.
This is "Genuine Negro Jig", the title track of their latest album.
Paging Winston Smith
One of the problems with not having a live cable feed at home is that you can miss politico-cultural events of significance.
This ad caught my eye at the gymn this morning. While the theme is supposedly about fiscal matters, trade, and taxes, it was hard for someone of my age not to see echoes of the Macintosh "Big Brother" ad, as well as the Manchurian candidate. For me it was a creepy preview of a coming age of crazed "minute of hate" propaganda.
This ad caught my eye at the gymn this morning. While the theme is supposedly about fiscal matters, trade, and taxes, it was hard for someone of my age not to see echoes of the Macintosh "Big Brother" ad, as well as the Manchurian candidate. For me it was a creepy preview of a coming age of crazed "minute of hate" propaganda.
A little smile from Hoocoodanode
HooCoodanode is the comments section of Calculated Risk
Jonathan wrote on Fri, 10/22/2010 - 9:50 pm
I'm not sure why, but this reminded me of what might happen in the bond market...
Aircraft crashes after crocodile on board escapes and sparks panic - Telegraph
One of the passengers had hidden the animal, which he planned to sell, in a big sports bag, from which the reptile escaped as the plane began its descent into Bandundu.
The plane was then sent off-balance "despite the desperate efforts of the pilot", said the report.
Jonathan wrote on Fri, 10/22/2010 - 9:50 pm
I'm not sure why, but this reminded me of what might happen in the bond market...
Aircraft crashes after crocodile on board escapes and sparks panic - Telegraph
One of the passengers had hidden the animal, which he planned to sell, in a big sports bag, from which the reptile escaped as the plane began its descent into Bandundu.
The plane was then sent off-balance "despite the desperate efforts of the pilot", said the report.
Friday, October 22, 2010
Remarkable numbers for the Greens in Germany
From Der Spiegel:
It's not just Künast, however, who might have the opportunity to soon take over the leadership of one of Germany's states. In Baden-Württemberg, the Green Party has seen its support climb steadily in recent months and now finds itself, with 32 percent support, well ahead of the SPD (19 percent) and within just a couple of points of Chancellor Angela Merkel's Christian Democrats (34 percent). With the SPD already having indicated it would join a coalition with the Greens as the junior partner -- and with no strong partner in sight for the CDU -- there is a very real possibility that the leader of the Greens in the state, Winfried Kretschmann, will become the state's next governor when voters go to the polls there in March.
Kretschmann has benefited mightily from his party's opposition to "Stuttgart 21," a massive development project in Baden-Württemberg's capital. While construction has already begun on the project -- which envisions moving Stuttgart's train station underground and creating a new city quarter above -- many in the city have mobilized against it, saying it is a vast waste of money that was planned with little input from city residents. Merkel and the CDU have come out in favor of the project.
The 62-year-old Kretschmann, who began his political life as a communist in the mid-1970s, has so far seemed unimpressed by his party's sudden rise. "We are staying on the carpet," he is fond of saying, "even if it happens to be flying at the moment."
But there is no denying that the Green Party's carpet is indeed flying. In nationwide polls, the party has been hitting record after record. A poll published in the Frankfurter Allgemeine Zeitung on Wednesday found that 20.5 percent of Germans would vote for the Greens.
Given the impending realignments in global geopolitics, this is a trend to watch.
It's not just Künast, however, who might have the opportunity to soon take over the leadership of one of Germany's states. In Baden-Württemberg, the Green Party has seen its support climb steadily in recent months and now finds itself, with 32 percent support, well ahead of the SPD (19 percent) and within just a couple of points of Chancellor Angela Merkel's Christian Democrats (34 percent). With the SPD already having indicated it would join a coalition with the Greens as the junior partner -- and with no strong partner in sight for the CDU -- there is a very real possibility that the leader of the Greens in the state, Winfried Kretschmann, will become the state's next governor when voters go to the polls there in March.
Kretschmann has benefited mightily from his party's opposition to "Stuttgart 21," a massive development project in Baden-Württemberg's capital. While construction has already begun on the project -- which envisions moving Stuttgart's train station underground and creating a new city quarter above -- many in the city have mobilized against it, saying it is a vast waste of money that was planned with little input from city residents. Merkel and the CDU have come out in favor of the project.
The 62-year-old Kretschmann, who began his political life as a communist in the mid-1970s, has so far seemed unimpressed by his party's sudden rise. "We are staying on the carpet," he is fond of saying, "even if it happens to be flying at the moment."
But there is no denying that the Green Party's carpet is indeed flying. In nationwide polls, the party has been hitting record after record. A poll published in the Frankfurter Allgemeine Zeitung on Wednesday found that 20.5 percent of Germans would vote for the Greens.
Given the impending realignments in global geopolitics, this is a trend to watch.
Wednesday, October 20, 2010
Empire of Debt
I have a mental model in which Britain's present is America's future. The declining, bankrupt empire and all that.....Of course, the Brits were pretty nimble and financialized so much in the last decades, that they managed to seem in lock step with the US in a real Anglo-American "special relationship". And in the recent bubble years, suburban London was really looking pretty comfortable.
So now what to make of the Tory move to austerity? Well, for one it confirms Carville's line about wanting to be reincarnated as the bond market-- "everyone is scared to death of the bond market"...
Because sterling is no longer a reserve currency, the Brits had no choice, methinks. They really are Reykyavik on the Thames and a funding stop would be a disaster. The US on the other hand can still print the scrip which the rest of the world remains willing to exchange for real goods, and so they are about to do so with gusto.
But it is also a great drama of an experiment in relationship to Keynesian notions of aggregate demand. Because Britain is not going to be a source of growth for the rest of the world. This is a relatively big domino to fall as we flirt with the double dip.
From the Guardian:
On the government's own figures, there will be 490,000 jobs lost in the public sector over the next four years as a result of the CSR; at least an equivalent number will be lost from private sector firms – in the construction sector, for example – that rely heavily on state contracts. Osborne is banking on the rest of the private sector growing quickly enough to absorb all the jobs lost from the public sector and creating at least a million more on top of that.
While not unprecedented, this will be challenging. The last time the UK went through an austerity programme — the mid-1990s — large numbers of private sector jobs were created. But this was a period when the global economy was booming, making life easier for exporters. It was a time when the economy was benefiting from the sharp drop in interest rates and the 25% devaluation of sterling that resulted from Britain's departure from the exchange rate mechanism on Black Wednesday. And it was a time when the banking system was functioning normally. None of those conditions apply today, which is why reducing demand by 0.5% of GDP in each of the next four years will hit growth and make it harder to bring borrowing down.
Colour me skeptical. But given that there will be a sovereign default somewhere on the periphery of the eurozone some time in the next few years, Greece, Ireland, Spain, take your pick, Britain will be well served by this pre-emptive austerity because trying to act after the fire starts would be much more expensive.
But the hit to the standard of living, especially of the poor, will be significant. All to keep debt contracts sacrosant, and the bondholders made whole.
I guess it would be silly to imagine repudiation of the debt and the issuance of a new currency, with confiscation of the fake superprofits of the big banks....
So now what to make of the Tory move to austerity? Well, for one it confirms Carville's line about wanting to be reincarnated as the bond market-- "everyone is scared to death of the bond market"...
Because sterling is no longer a reserve currency, the Brits had no choice, methinks. They really are Reykyavik on the Thames and a funding stop would be a disaster. The US on the other hand can still print the scrip which the rest of the world remains willing to exchange for real goods, and so they are about to do so with gusto.
But it is also a great drama of an experiment in relationship to Keynesian notions of aggregate demand. Because Britain is not going to be a source of growth for the rest of the world. This is a relatively big domino to fall as we flirt with the double dip.
From the Guardian:
On the government's own figures, there will be 490,000 jobs lost in the public sector over the next four years as a result of the CSR; at least an equivalent number will be lost from private sector firms – in the construction sector, for example – that rely heavily on state contracts. Osborne is banking on the rest of the private sector growing quickly enough to absorb all the jobs lost from the public sector and creating at least a million more on top of that.
While not unprecedented, this will be challenging. The last time the UK went through an austerity programme — the mid-1990s — large numbers of private sector jobs were created. But this was a period when the global economy was booming, making life easier for exporters. It was a time when the economy was benefiting from the sharp drop in interest rates and the 25% devaluation of sterling that resulted from Britain's departure from the exchange rate mechanism on Black Wednesday. And it was a time when the banking system was functioning normally. None of those conditions apply today, which is why reducing demand by 0.5% of GDP in each of the next four years will hit growth and make it harder to bring borrowing down.
Colour me skeptical. But given that there will be a sovereign default somewhere on the periphery of the eurozone some time in the next few years, Greece, Ireland, Spain, take your pick, Britain will be well served by this pre-emptive austerity because trying to act after the fire starts would be much more expensive.
But the hit to the standard of living, especially of the poor, will be significant. All to keep debt contracts sacrosant, and the bondholders made whole.
I guess it would be silly to imagine repudiation of the debt and the issuance of a new currency, with confiscation of the fake superprofits of the big banks....
Tuesday, October 19, 2010
The gathering forces of Mordor.
Chomsky has noticed the weird anti-Muslim currents rippling through the body politic like the anti-semitic fantasies which coursed thru the Reich.
This post from Orcinus, a site I haven't visited for a few years, rightly points out and names the violent ferment on the right.
I'd move to Canada, but that's the first country they'll annex in some kind of nordic Anschluss.
This post from Orcinus, a site I haven't visited for a few years, rightly points out and names the violent ferment on the right.
I'd move to Canada, but that's the first country they'll annex in some kind of nordic Anschluss.
Sunday, October 17, 2010
Droit du Seigneur
Naked capitalism seems way ahead on foreclosuregate issues.
This post captures the anger fused with analysis that is badly needed.
An excerpt:
Perhaps the most insidious propaganda line, and certainly the most scabrous, is the bashing of alleged “deadbeats”. While the subprime borrower – powerless, often a minority – has long been an easy target, and the contempt has been spreading up the income scale as more people are engulfed in the catastrophe, the fact remains that few people intentionally bought more house than they could afford. Most were induced by the massive propaganda barrage from the banks, government, MSM, and even consumer groups, to see a house as a guaranteed investment which could only appreciate in price. More importantly, the main cause of inability to keep up the mortgage is losing one’s job or suffering a medical disaster. It’s the banks themselves who have presided over the destruction of America’s jobs, especially over the last two years. And it’s the government which refuses to counteract the banks’ campaign of socioeconomic scorched earth. (That’s the same government which also pointedly refused to reform the health care system, choosing instead to further entrench the existing larcenous dysfunction under a facade of lies and misdirection.)
So it’s the banks and government themselves who are overwhelmingly responsible for the wave of defaults. The defaults are the knock-on effects of the bank crimes, and now the banks want to seize the homes by further criminal means. Even after all this, few people fight foreclosures if they can’t afford to pay. The great majority of them say they can pay if they get a promised modification, or claim to be the victims of servicer error. So by any measure – moral, rational, or legal – the “deadbeat borrower” talking point is a sham.
And more:
This preference for lawlessness, this knee-jerk recourse to lies and crimes, is however no joke. At the lower levels, outside the regular media eye, the banks have repeatedly demonstrated their comfort with pure brutality. The examples proliferate of thugs threatening people, breaking and entering, bashing in doors, terrorizing occupants. So long as government at every level is the waterboy of the banks while people on the ground remain unorganized, atomized, and vulnerable, this will only get worse.
Finally:
All of this, from the original predatory lending, to flippancy about conveying the titles and legally securing the trusts, to the Bailout dedicated to propping up those toxic MBS, which we now know are probably nothing but unsecured loans, to the government-led propaganda campaign and legislative hankering to cover up and eventually “legalize” this latest revelation, down to the brutish violence and dirty tricks of the gutter, is one coherent whole, one simple train of logic. It’s simply the logic of might makes right, feudal greed, and total nihilism vis the law and democracy. The mortgage debacle reveals so many abdications of the system, and this abdication of the rule of law is one of the most thorough.
If only there were a political party willing to link up resistance on the ground with a comprehensive strategy of mass messaging and organizing......
This post captures the anger fused with analysis that is badly needed.
An excerpt:
Perhaps the most insidious propaganda line, and certainly the most scabrous, is the bashing of alleged “deadbeats”. While the subprime borrower – powerless, often a minority – has long been an easy target, and the contempt has been spreading up the income scale as more people are engulfed in the catastrophe, the fact remains that few people intentionally bought more house than they could afford. Most were induced by the massive propaganda barrage from the banks, government, MSM, and even consumer groups, to see a house as a guaranteed investment which could only appreciate in price. More importantly, the main cause of inability to keep up the mortgage is losing one’s job or suffering a medical disaster. It’s the banks themselves who have presided over the destruction of America’s jobs, especially over the last two years. And it’s the government which refuses to counteract the banks’ campaign of socioeconomic scorched earth. (That’s the same government which also pointedly refused to reform the health care system, choosing instead to further entrench the existing larcenous dysfunction under a facade of lies and misdirection.)
So it’s the banks and government themselves who are overwhelmingly responsible for the wave of defaults. The defaults are the knock-on effects of the bank crimes, and now the banks want to seize the homes by further criminal means. Even after all this, few people fight foreclosures if they can’t afford to pay. The great majority of them say they can pay if they get a promised modification, or claim to be the victims of servicer error. So by any measure – moral, rational, or legal – the “deadbeat borrower” talking point is a sham.
And more:
This preference for lawlessness, this knee-jerk recourse to lies and crimes, is however no joke. At the lower levels, outside the regular media eye, the banks have repeatedly demonstrated their comfort with pure brutality. The examples proliferate of thugs threatening people, breaking and entering, bashing in doors, terrorizing occupants. So long as government at every level is the waterboy of the banks while people on the ground remain unorganized, atomized, and vulnerable, this will only get worse.
Finally:
All of this, from the original predatory lending, to flippancy about conveying the titles and legally securing the trusts, to the Bailout dedicated to propping up those toxic MBS, which we now know are probably nothing but unsecured loans, to the government-led propaganda campaign and legislative hankering to cover up and eventually “legalize” this latest revelation, down to the brutish violence and dirty tricks of the gutter, is one coherent whole, one simple train of logic. It’s simply the logic of might makes right, feudal greed, and total nihilism vis the law and democracy. The mortgage debacle reveals so many abdications of the system, and this abdication of the rule of law is one of the most thorough.
If only there were a political party willing to link up resistance on the ground with a comprehensive strategy of mass messaging and organizing......
Saturday, October 16, 2010
The Serengeti
Stolen in full from The Big Picture:
Bank of America announced that it has discovered a few trivial, easily-remedied technical problems with some of its mortgages. “We will stop foreclosure sales in some states until our assessment has been satisfactorily completed, or until the politicians whom we have compensated so generously do their damn jobs and get rid of those pesky laws and rights that are slowing us down. Our ongoing assessment shows the basis for foreclosure decisions is accurate, except in those few regrettable cases where we repossessed a house that actually had no mortgage on it whatsoever—hey, nobody’s perfect, ha ha,” a Bank of America spokescreature said. “It’s really quite a lot of trouble to verify the address before we take someone’s house,” the spokescreature continued. “Comparing addresses on two documents slows us up by a good fifteen seconds. After all, we have a lot of houses to foreclose on. Anyway, many of those people actually do owe money to us, or to somebody, anyway. I know it is a bit confusing to citizens when our competitor HSBC and another bank simultaneously try to foreclose on the same property, especially when they are in a federal foreclosure prevention program. It’s sort of like one of those programs on Animal Planet where each hyena grabs a leg of the still twitching gazelle and tries to pull it away from the other hyenas. But that’s the way nature works—nobody asks those hyenas petty-minded questions about whether title to the gazelle was properly transferred, and to which hyena, and whether the title was properly notarized by an authorized local cheetah. Sometimes a company just has to sink its fangs into a customer, lock its jaws, which can exert a pressure of 1,000 pounds per square inch, brace its legs, yank, and see what tears loose. If we get the wrong gazelle, we will make every effort to compensate it for our erroneous gnawing, bone-crushing, and marrow-sucking.”
“It appears that some of our process servers may not have actually served the owners with notice of our intent to foreclose. But, honestly, wouldn’t warning them make it a whole lot harder to catch them? It is a myth that hyenas giggle and cackle before they attack. Actually, they are usually quite silent until they get close enough to bite. On the Serengeti, due process means that the gazelle runs as fast as it can and the pack keeps ripping small chunks off until the gazelle collapses due to shock and blood loss and inability to pay for a lawyer. There may have been some trivial, unimportant problems with the relevant documents, but we are confident that many of those gazelles really did owe us money, and we believe that our ripping them into pieces, digesting them, and regurgitating their horns and hooves is ecologically sound and generally in accord with the law of nature. Now, if you’ll excuse me, I will have to go mark the boundaries of my pack’s territory with the musk from my anal scent gland. We don’t want other hyena packs like J.P. Morgan invading our turf. That could be a real mess—those guys know how to sink their fangs in, and they know how to break down the door of a house and change the locks even when they haven’t foreclosed on the property.”
Asked for comment, a J.P. Morgan spokesperson said, “We have no interest in invading the grasslands turf of Bank of America or HSBC because we are not hyenas. We are amphibious apex predators, and our preferred mode of foreclosure is to lurk underwater by the bank of a river. When a gazelle or a wildebeest sticks its muzzle in the water, we surge upward and, um, serve papers on it, or something. Or grab a leg and go into our famous death roll, spinning and thrashing until the leg comes off. Then we like to take the borrower’s corpse up-river for a few days of what we in the mortgage business call ‘seasoning’. We would also like to remind you puny, pathetic citizens that we can grow to twenty-three feet long, we can gallop at up to seventeen miles per hour for short distances, we have maintained our distinctive business culture successfully since before dinosaurs evolved, we have thick dorsal osteoderms which are hard to penetrate even with an axe, and we are much more biologically complex than other reptiles: unlike them, we have features like a cerebral cortex and a four-chambered heart, and many of us have Ivy League degrees. We recommend that AMBAC and Pimco think carefully about all of these features before trying to push their mortgage-backed securities back onto our balance sheet. As for any legislators or prosecutors who might be thinking about going after us, we have very slow metabolisms. We can submerge for an hour and go for months without eating. We will outwait you and probably eventually hire you as a lobbyist. We would also like to note, though, that we are not without compassion. We honor our prey and weep for it: do you see the large tears rolling out of our eyes and down our scaly cheeks? You probably thought crocodile tears were a mere myth or proverb, but we do in fact have lachrymal glands that secrete a proteinaceous fluid. Crying has an important place in our corporate culture: it lubricates our eyes and cleans our nictitating membranes.”
The Senate and the House, with remarkable foresight, have already passed HR 3808, a bill to facilitate the sharing of taxpayer carcasses across state lines. The bill’s sponsor, Representative Robert Aderholt, an Alabama Republican, said, “It is important to ensure that multiple species of predators can efficiently divide a taxpayer carcass and transport pieces of it from one waterhole to another.” David Axelrod, an advisor to President Obama, said, “We originally planned to sign it, but we are less than a month away from elections, and many gazelles and springboks seem to be agitated about this issue, so we decided to table it for now. We have complete confidence, though, in our ability to find some swift, quiet resolution of this problem after the election.” Secretary of Predation Timothy Geithner added, “I think we can all agree that our nation’s highest priority is to ensure a steady and increasing flow of protein to our apex predators. Crocodiles and hyenas are actually very delicate creatures, and any regulatory interference with their feeding habits could have a catastrophic effect on the entire ecosystem.” Despite their superficial differences, both parties fervently agree on the crucial importance of making life easier for apex predators.
Bank of America announced that it has discovered a few trivial, easily-remedied technical problems with some of its mortgages. “We will stop foreclosure sales in some states until our assessment has been satisfactorily completed, or until the politicians whom we have compensated so generously do their damn jobs and get rid of those pesky laws and rights that are slowing us down. Our ongoing assessment shows the basis for foreclosure decisions is accurate, except in those few regrettable cases where we repossessed a house that actually had no mortgage on it whatsoever—hey, nobody’s perfect, ha ha,” a Bank of America spokescreature said. “It’s really quite a lot of trouble to verify the address before we take someone’s house,” the spokescreature continued. “Comparing addresses on two documents slows us up by a good fifteen seconds. After all, we have a lot of houses to foreclose on. Anyway, many of those people actually do owe money to us, or to somebody, anyway. I know it is a bit confusing to citizens when our competitor HSBC and another bank simultaneously try to foreclose on the same property, especially when they are in a federal foreclosure prevention program. It’s sort of like one of those programs on Animal Planet where each hyena grabs a leg of the still twitching gazelle and tries to pull it away from the other hyenas. But that’s the way nature works—nobody asks those hyenas petty-minded questions about whether title to the gazelle was properly transferred, and to which hyena, and whether the title was properly notarized by an authorized local cheetah. Sometimes a company just has to sink its fangs into a customer, lock its jaws, which can exert a pressure of 1,000 pounds per square inch, brace its legs, yank, and see what tears loose. If we get the wrong gazelle, we will make every effort to compensate it for our erroneous gnawing, bone-crushing, and marrow-sucking.”
“It appears that some of our process servers may not have actually served the owners with notice of our intent to foreclose. But, honestly, wouldn’t warning them make it a whole lot harder to catch them? It is a myth that hyenas giggle and cackle before they attack. Actually, they are usually quite silent until they get close enough to bite. On the Serengeti, due process means that the gazelle runs as fast as it can and the pack keeps ripping small chunks off until the gazelle collapses due to shock and blood loss and inability to pay for a lawyer. There may have been some trivial, unimportant problems with the relevant documents, but we are confident that many of those gazelles really did owe us money, and we believe that our ripping them into pieces, digesting them, and regurgitating their horns and hooves is ecologically sound and generally in accord with the law of nature. Now, if you’ll excuse me, I will have to go mark the boundaries of my pack’s territory with the musk from my anal scent gland. We don’t want other hyena packs like J.P. Morgan invading our turf. That could be a real mess—those guys know how to sink their fangs in, and they know how to break down the door of a house and change the locks even when they haven’t foreclosed on the property.”
Asked for comment, a J.P. Morgan spokesperson said, “We have no interest in invading the grasslands turf of Bank of America or HSBC because we are not hyenas. We are amphibious apex predators, and our preferred mode of foreclosure is to lurk underwater by the bank of a river. When a gazelle or a wildebeest sticks its muzzle in the water, we surge upward and, um, serve papers on it, or something. Or grab a leg and go into our famous death roll, spinning and thrashing until the leg comes off. Then we like to take the borrower’s corpse up-river for a few days of what we in the mortgage business call ‘seasoning’. We would also like to remind you puny, pathetic citizens that we can grow to twenty-three feet long, we can gallop at up to seventeen miles per hour for short distances, we have maintained our distinctive business culture successfully since before dinosaurs evolved, we have thick dorsal osteoderms which are hard to penetrate even with an axe, and we are much more biologically complex than other reptiles: unlike them, we have features like a cerebral cortex and a four-chambered heart, and many of us have Ivy League degrees. We recommend that AMBAC and Pimco think carefully about all of these features before trying to push their mortgage-backed securities back onto our balance sheet. As for any legislators or prosecutors who might be thinking about going after us, we have very slow metabolisms. We can submerge for an hour and go for months without eating. We will outwait you and probably eventually hire you as a lobbyist. We would also like to note, though, that we are not without compassion. We honor our prey and weep for it: do you see the large tears rolling out of our eyes and down our scaly cheeks? You probably thought crocodile tears were a mere myth or proverb, but we do in fact have lachrymal glands that secrete a proteinaceous fluid. Crying has an important place in our corporate culture: it lubricates our eyes and cleans our nictitating membranes.”
The Senate and the House, with remarkable foresight, have already passed HR 3808, a bill to facilitate the sharing of taxpayer carcasses across state lines. The bill’s sponsor, Representative Robert Aderholt, an Alabama Republican, said, “It is important to ensure that multiple species of predators can efficiently divide a taxpayer carcass and transport pieces of it from one waterhole to another.” David Axelrod, an advisor to President Obama, said, “We originally planned to sign it, but we are less than a month away from elections, and many gazelles and springboks seem to be agitated about this issue, so we decided to table it for now. We have complete confidence, though, in our ability to find some swift, quiet resolution of this problem after the election.” Secretary of Predation Timothy Geithner added, “I think we can all agree that our nation’s highest priority is to ensure a steady and increasing flow of protein to our apex predators. Crocodiles and hyenas are actually very delicate creatures, and any regulatory interference with their feeding habits could have a catastrophic effect on the entire ecosystem.” Despite their superficial differences, both parties fervently agree on the crucial importance of making life easier for apex predators.
Friday, October 15, 2010
An inflection point is upon us
The phony war may be ending. I think everyone should have a little physical gold and silver handy, unless you live in a country with plenty of water, food, petroleum, medicines, and rare earth metals.... If you do, please let me know where it is, 'cause I wanna move there, or at least buy its currency.
As most of you know, the contradictions of capitalism are showing up in the FX market (foreign exchange, for all you literature majors). What's clear is that TPTB are rapidly losing control at the international level and it looks like the Washington Consensus is approaching crack-up. There is a debate about who is going to "win" -- Martin Wolf in the FT a few days ago thinks it's the USA, but retaliatation from elsewhere is also likely being prepared. The Chinese authorities are by turns trying to scare us with the risk of a major domestic upheaval in their country if the yuan revalues up too rapidly, while also trying to move tout de suite to arrange trade with direct settlements invoiced in local currencies.....
Meanwhile, clearly some in the capital markets are awake to "tail" events:
From the FT Alphaville site:
The rift between Japan and Korea which has spilt into the open in the past 24 hours, with a Japan minister protesting Korea’s currency policy, only to be rebuffed by the BoK governor, is significant for the rifts that are opening up WITHIN Asia.
c) Start taking more note of what is going outside of the ostensibly major players: i) Russia widens rouble intervention band – sells it as a step towards inflation targeting – but in truth they are fed up with constant non-RUB flow related interventions, and the instability of their $480 Bln FX reserves ii) Singapore tightens policy, but widens SGD intervention band for the first time since 9/11, eminently expecting more volatility and again probably fed up with intervening. iii) Taiwan regulator suggests foreign investors put up foreign currency as margin for Taiwan stock trades – are they fed up with intervening? I think so..
More observations as and when they come to light, but there seems little doubt that we are now heading down the cliff face of a full blown crisis, but smelling the coffee of that crisis is not yet en vogue!
The upcoming G20 meeting promises to be a hugely significant event, though we hoi polloi won't get the details until very late after marching orders have already been issued. This was supposed to be the meeting at which the composition of the SDR was to be re-negotiated, I believe, but I've heard nothing about that lately. Given the latest events, I expect volatility in global financial markets will accelerate immediately afterwards unless there is a grand, sustainable compromise announced in the final press conference. What are the odds of that?
Michael Hudson has a good comprehensive piece here, which is widely being linked to, and is the closest we are getting to a progressive view of these developments in realtime.
What was it that Frank Fukuyama said about the end of history? Maybe it really was all that dope he smoked as a high school kid.....
As most of you know, the contradictions of capitalism are showing up in the FX market (foreign exchange, for all you literature majors). What's clear is that TPTB are rapidly losing control at the international level and it looks like the Washington Consensus is approaching crack-up. There is a debate about who is going to "win" -- Martin Wolf in the FT a few days ago thinks it's the USA, but retaliatation from elsewhere is also likely being prepared. The Chinese authorities are by turns trying to scare us with the risk of a major domestic upheaval in their country if the yuan revalues up too rapidly, while also trying to move tout de suite to arrange trade with direct settlements invoiced in local currencies.....
Meanwhile, clearly some in the capital markets are awake to "tail" events:
From the FT Alphaville site:
The rift between Japan and Korea which has spilt into the open in the past 24 hours, with a Japan minister protesting Korea’s currency policy, only to be rebuffed by the BoK governor, is significant for the rifts that are opening up WITHIN Asia.
c) Start taking more note of what is going outside of the ostensibly major players: i) Russia widens rouble intervention band – sells it as a step towards inflation targeting – but in truth they are fed up with constant non-RUB flow related interventions, and the instability of their $480 Bln FX reserves ii) Singapore tightens policy, but widens SGD intervention band for the first time since 9/11, eminently expecting more volatility and again probably fed up with intervening. iii) Taiwan regulator suggests foreign investors put up foreign currency as margin for Taiwan stock trades – are they fed up with intervening? I think so..
More observations as and when they come to light, but there seems little doubt that we are now heading down the cliff face of a full blown crisis, but smelling the coffee of that crisis is not yet en vogue!
The upcoming G20 meeting promises to be a hugely significant event, though we hoi polloi won't get the details until very late after marching orders have already been issued. This was supposed to be the meeting at which the composition of the SDR was to be re-negotiated, I believe, but I've heard nothing about that lately. Given the latest events, I expect volatility in global financial markets will accelerate immediately afterwards unless there is a grand, sustainable compromise announced in the final press conference. What are the odds of that?
Michael Hudson has a good comprehensive piece here, which is widely being linked to, and is the closest we are getting to a progressive view of these developments in realtime.
What was it that Frank Fukuyama said about the end of history? Maybe it really was all that dope he smoked as a high school kid.....
Sunday, October 10, 2010
Undersea Currents
I believe I recently read that China has been a net seller of Japanese Govt Bonds, reversing the intervention of late summer. Nevertheless, this post is a good articulation of some of the underlying geopolitical aspects of current economic policy. I do believe that the Chinese intervention was at the least a demonstration project to make a point.
There is a curiously perverse but symbiotic relationship that exists between China’s mercantilists and America’s finance capitalism. The whole “Bretton Woods II” process contributes to the financialization of our economy, as it continues to hollow out our manufacturing base. It represents an unholy alliance between Wall Street and China’s military, which is driving much of the investment in China because they are reaping so many material benefits. The problem, however, is that at some point Chinese credit expansion has no place to put its money. All of the targets have been saturated, which means that there will be overinvestment in all industries and to an incredible degree. This may well kill industry after industry. It appears to be happening already in Japan.
There is a curiously perverse but symbiotic relationship that exists between China’s mercantilists and America’s finance capitalism. The whole “Bretton Woods II” process contributes to the financialization of our economy, as it continues to hollow out our manufacturing base. It represents an unholy alliance between Wall Street and China’s military, which is driving much of the investment in China because they are reaping so many material benefits. The problem, however, is that at some point Chinese credit expansion has no place to put its money. All of the targets have been saturated, which means that there will be overinvestment in all industries and to an incredible degree. This may well kill industry after industry. It appears to be happening already in Japan.
Sunday, October 3, 2010
We'll know its the 1930's if they take the White House
Matt Taibbi strikes again with an entertaining, clear article on the Tea Party's psychological underpinnings. I consider Rolling Stone pretty mainstream, though I don't know its circulation these days. Gotta be reaching people who don't read Frank Rich, though.
Many quotable lines, this is just one example:
So how does a group of billionaire businessmen and corporations get a bunch of broke Middle American white people to lobby for lower taxes for the rich and deregulation of Wall Street? That turns out to be easy. Beneath the surface, the Tea Party is little more than a weird and disorderly mob, a federation of distinct and often competing strains of conservatism that have been unable to coalesce around a leader of their own choosing. Its rallies include not only hardcore libertarians left over from the original Ron Paul "Tea Parties," but gun-rights advocates, fundamentalist Christians, pseudomilitia types like the Oath Keepers (a group of law- enforcement and military professionals who have vowed to disobey "unconstitutional" orders) and mainstream Republicans who have simply lost faith in their party. It's a mistake to cast the Tea Party as anything like a unified, cohesive movement — which makes them easy prey for the very people they should be aiming their pitchforks at. A loose definition of the Tea Party might be millions of pissed-off white people sent chasing after Mexicans on Medicaid by the handful of banks and investment firms who advertise on Fox and CNBC.
Read the rest here.
This was today's must read from Yves Smith's Naked Capitalism.
Many quotable lines, this is just one example:
So how does a group of billionaire businessmen and corporations get a bunch of broke Middle American white people to lobby for lower taxes for the rich and deregulation of Wall Street? That turns out to be easy. Beneath the surface, the Tea Party is little more than a weird and disorderly mob, a federation of distinct and often competing strains of conservatism that have been unable to coalesce around a leader of their own choosing. Its rallies include not only hardcore libertarians left over from the original Ron Paul "Tea Parties," but gun-rights advocates, fundamentalist Christians, pseudomilitia types like the Oath Keepers (a group of law- enforcement and military professionals who have vowed to disobey "unconstitutional" orders) and mainstream Republicans who have simply lost faith in their party. It's a mistake to cast the Tea Party as anything like a unified, cohesive movement — which makes them easy prey for the very people they should be aiming their pitchforks at. A loose definition of the Tea Party might be millions of pissed-off white people sent chasing after Mexicans on Medicaid by the handful of banks and investment firms who advertise on Fox and CNBC.
Read the rest here.
This was today's must read from Yves Smith's Naked Capitalism.
Saturday, September 25, 2010
Both a particle and a wave, across the universe
Just back from a concert of Carnatic music by the great violinist Dr L. Subramaniam (he graduated med school before choosing a career in music)
This was in a small hall at a local Hindu temple -- theater held maybe 300 seats.
Now I usually don't get a huge spiritual charge from south Indian music the way I do from Hindustani, but this guy is the real deal. His technique was flawless --- his ability to bow, finger, and pluck all in lightning speed while improvising opened up a new world for me. Very innovative technique, and yet seamlessly woven into a Carnatic raga. A revelation.
Whenever one encounters an artist who is non-pareil like Dr L, one is lifted to the heavens, high above the muck below.
I wanted to post a Youtube clip, but none of them really does justice to what I heard tonight....
This was in a small hall at a local Hindu temple -- theater held maybe 300 seats.
Now I usually don't get a huge spiritual charge from south Indian music the way I do from Hindustani, but this guy is the real deal. His technique was flawless --- his ability to bow, finger, and pluck all in lightning speed while improvising opened up a new world for me. Very innovative technique, and yet seamlessly woven into a Carnatic raga. A revelation.
Whenever one encounters an artist who is non-pareil like Dr L, one is lifted to the heavens, high above the muck below.
I wanted to post a Youtube clip, but none of them really does justice to what I heard tonight....
Friday, September 17, 2010
A Sign of Our Times and a Question
I got this email from a friend who travels in political circles quite different from mine:
You Would Never Have Guessed
Captain Kangaroo passed away on January 23, 2004 at age 76 , which is odd, because he always looked to be 76. (DOB: 6/27/27 ) His death reminded me of the following story.
Some people have been a bit offended that the actor, Lee Marvin, is buried in a grave alongside 3 and 4-star generals at Arlington National Cemetery His marker gives his name, rank (PVT) and service (USMC). Nothing else. Here's a guy who was only a famous movie star who served his time, why the heck does he rate burial with these guys? Well, following is the amazing answer:
I always liked Lee Marvin, but didn't know the extent of his Corps experiences.
In a time when many Hollywood stars served their country in the armed forces often in rear echelon posts where they were carefully protected, only to be trotted out to perform for the cameras in war bond promotions, Lee Marvin was a genuine hero. He won the Navy Cross at Iwo Jima There is only one higher Naval award... the Medal Of Honor!
If that is a surprising comment on the true character of the man, he credits his sergeant with an even greater show of bravery.
Dialog from "The Tonight Show with Johnny Carson": His guest was Lee Marvin.. Johnny said, "Lee, I'll bet a lot of people are unaware that you were a Marine in the initial landing at Iwo Jima ...and that during the course of that action you earned the Navy Cross and were severely wounded."
"Yeah, yeah... I got shot square in the bottom and they gave me the Cross for securing a hot spot about halfway up Suribachi. Bad thing about getting shot up on a mountain is guys getting shot hauling you down. But, Johnny, at Iwo, I served under the bravest man I ever knew... We both got the Cross the same day, but what he did for his Cross made mine look cheap in comparison. That dumb guy actually stood up on Red Beach and directed his troops to move forward and get the hell off the beach. Bullets flying by, with mortar rounds landing everywhere and he stood there as the main target of gunfire so that he could get his men to safety. He did this on more than one occasion because his men's safety was more important than his own life.
That Sergeant and I have been lifelong friends. When they brought me off Suribachi we passed the Sergeant and he lit a smoke and passed it to me, lying on my belly on the litter and said, "Where'd they get you Lee?" "Well Bob.... if you make it home before me, tell Mom to sell the outhouse!"
Johnny, I'm not lying, Sergeant Keeshan was the bravest man I ever knew.
The Sergeant's name is Bob Keeshan. You and the world know him as Captain Kangaroo."
On another note, there was this wimpy little man (who passed away) on PBS, gentle and quiet. Mr. Rogers is another of those you would least suspect of being anything but what he now portrays to our youth. But Mr. Rogers was a U.S. Navy Seal, combat-proven in Vietnam with over twenty-five confirmed kills to his name. He wore a long-sleeved sweater on TV, to cover the many tattoos on his forearm and biceps He was a master in small arms and hand-to-hand combat, able to disarm or kill in a heartbeat
After the war Mr. Rogers became an ordained Presbyterian minister and therefore a pacifist. Vowing to never harm another human and also dedicating the rest of his life to trying to help lead children on the right path in life.. He hid away the tattoos and his past life and won our hearts with his quiet wit and charm..
America's real heroes don't flaunt what they did; they quietly go about their day-to-day lives, doing what they do best. They earned our respect and the freedoms that we all enjoy.
Look around and see if you can find one of those heroes in your midst.
Often, they are the ones you'd least suspect, but would most like to have on your side if anything ever happened.
Take the time to thank anyone that has fought for our freedom. With encouragement they could be the next Captain Kangaroo or Mr. Rogers.
Send this on, will you please? Nothing will happen to you if you don't, but you will be awakening others to what a HERO is made of..
It turns out I have another friend who knew Mr Rogers very very well. So I forwarded this to him, credulously wondering how Mr Rogers could have been in Vietnam, since late boomers were watching him as that war was heating up.
Oh, please…
This stuff about Bob and Fred is all pure bullshit. I knew them both very well, Bob as a friend and Fred as a longtime colleague and friend. Bob did serve in the military but never saw combat. Fred never served in the military at all, and especially not during the Vietnam War which was exactly the time when “Mister Rogers’ Neighborhood” was produced.
My question is: what exactly does this represent?
I know there is a militaristic hero worship thing going on out there, but why the need to coopt pacifist, mainstream, but presumably liberal icons into that narrative?
Is this an unconscious desire to be mainstream, or a calculated strategy to mainstream hero-worship?
Any thoughts or references would be appreciated.
On a side note, a current post at NC evokes comments that shock me in their near consensus that we face a serious social breakdown, and a neofeudal fascism in our future.
I suppose I should feel reassured: I thought I was the only one who thought that!
You Would Never Have Guessed
Captain Kangaroo passed away on January 23, 2004 at age 76 , which is odd, because he always looked to be 76. (DOB: 6/27/27 ) His death reminded me of the following story.
Some people have been a bit offended that the actor, Lee Marvin, is buried in a grave alongside 3 and 4-star generals at Arlington National Cemetery His marker gives his name, rank (PVT) and service (USMC). Nothing else. Here's a guy who was only a famous movie star who served his time, why the heck does he rate burial with these guys? Well, following is the amazing answer:
I always liked Lee Marvin, but didn't know the extent of his Corps experiences.
In a time when many Hollywood stars served their country in the armed forces often in rear echelon posts where they were carefully protected, only to be trotted out to perform for the cameras in war bond promotions, Lee Marvin was a genuine hero. He won the Navy Cross at Iwo Jima There is only one higher Naval award... the Medal Of Honor!
If that is a surprising comment on the true character of the man, he credits his sergeant with an even greater show of bravery.
Dialog from "The Tonight Show with Johnny Carson": His guest was Lee Marvin.. Johnny said, "Lee, I'll bet a lot of people are unaware that you were a Marine in the initial landing at Iwo Jima ...and that during the course of that action you earned the Navy Cross and were severely wounded."
"Yeah, yeah... I got shot square in the bottom and they gave me the Cross for securing a hot spot about halfway up Suribachi. Bad thing about getting shot up on a mountain is guys getting shot hauling you down. But, Johnny, at Iwo, I served under the bravest man I ever knew... We both got the Cross the same day, but what he did for his Cross made mine look cheap in comparison. That dumb guy actually stood up on Red Beach and directed his troops to move forward and get the hell off the beach. Bullets flying by, with mortar rounds landing everywhere and he stood there as the main target of gunfire so that he could get his men to safety. He did this on more than one occasion because his men's safety was more important than his own life.
That Sergeant and I have been lifelong friends. When they brought me off Suribachi we passed the Sergeant and he lit a smoke and passed it to me, lying on my belly on the litter and said, "Where'd they get you Lee?" "Well Bob.... if you make it home before me, tell Mom to sell the outhouse!"
Johnny, I'm not lying, Sergeant Keeshan was the bravest man I ever knew.
The Sergeant's name is Bob Keeshan. You and the world know him as Captain Kangaroo."
On another note, there was this wimpy little man (who passed away) on PBS, gentle and quiet. Mr. Rogers is another of those you would least suspect of being anything but what he now portrays to our youth. But Mr. Rogers was a U.S. Navy Seal, combat-proven in Vietnam with over twenty-five confirmed kills to his name. He wore a long-sleeved sweater on TV, to cover the many tattoos on his forearm and biceps He was a master in small arms and hand-to-hand combat, able to disarm or kill in a heartbeat
After the war Mr. Rogers became an ordained Presbyterian minister and therefore a pacifist. Vowing to never harm another human and also dedicating the rest of his life to trying to help lead children on the right path in life.. He hid away the tattoos and his past life and won our hearts with his quiet wit and charm..
America's real heroes don't flaunt what they did; they quietly go about their day-to-day lives, doing what they do best. They earned our respect and the freedoms that we all enjoy.
Look around and see if you can find one of those heroes in your midst.
Often, they are the ones you'd least suspect, but would most like to have on your side if anything ever happened.
Take the time to thank anyone that has fought for our freedom. With encouragement they could be the next Captain Kangaroo or Mr. Rogers.
Send this on, will you please? Nothing will happen to you if you don't, but you will be awakening others to what a HERO is made of..
It turns out I have another friend who knew Mr Rogers very very well. So I forwarded this to him, credulously wondering how Mr Rogers could have been in Vietnam, since late boomers were watching him as that war was heating up.
Oh, please…
This stuff about Bob and Fred is all pure bullshit. I knew them both very well, Bob as a friend and Fred as a longtime colleague and friend. Bob did serve in the military but never saw combat. Fred never served in the military at all, and especially not during the Vietnam War which was exactly the time when “Mister Rogers’ Neighborhood” was produced.
My question is: what exactly does this represent?
I know there is a militaristic hero worship thing going on out there, but why the need to coopt pacifist, mainstream, but presumably liberal icons into that narrative?
Is this an unconscious desire to be mainstream, or a calculated strategy to mainstream hero-worship?
Any thoughts or references would be appreciated.
On a side note, a current post at NC evokes comments that shock me in their near consensus that we face a serious social breakdown, and a neofeudal fascism in our future.
I suppose I should feel reassured: I thought I was the only one who thought that!
Wednesday, September 15, 2010
LOL
Just got home from a Harvard Med School Faculty meeting where a speaker discussed the special aspects of teaching the millennial generation.
Water from Peruvian glaciers to the English dinner table
This story sent by a friend opened my eyes to details that I have kept myself from learning, but is going to become depressingly common. Turns out that Peru is a huge exporter of asparagus...
"Asparagus grown in Peru and sold in the UK is commonly held up as a symbol of unacceptable food miles, but a report has raised an even more urgent problem: its water footprint.
[ SNIP]
The Ica Valley is a desert area in the Andes and one of the driest places on earth. The asparagus beds developed in the last decade require constant irrigation, with the result that the local water table has plummeted since 2002 when extraction overtook replenishment. In some places it has fallen by eight metres each year, one of the fastest rates of aquifer depletion in the world."
The full story here.
"Asparagus grown in Peru and sold in the UK is commonly held up as a symbol of unacceptable food miles, but a report has raised an even more urgent problem: its water footprint.
[ SNIP]
The Ica Valley is a desert area in the Andes and one of the driest places on earth. The asparagus beds developed in the last decade require constant irrigation, with the result that the local water table has plummeted since 2002 when extraction overtook replenishment. In some places it has fallen by eight metres each year, one of the fastest rates of aquifer depletion in the world."
The full story here.
Sunday, September 12, 2010
Trying to Keep Hope Alive
My summer reading included James Lovelock's Revenge of Gaia. I'm afraid his dark view of our planet's near future (15 -20 years) was highly plausible to me. Reminded me of those days in 2006 and 2007 when the so-called experts were crooning soothing words about the great moderation in bond yields being a sign of stability, but each data point that I was seeing didn't fit their views. The biggest, consistent error humans make is to extrapolate the instantaneous slope of a non linear process as if it were linear. And this is what Lovelock highlights, along with network effects that seem to me to be obvious. So I found him profoundly credible, and have been struggling to cope since then.
Here is a (somewhat) more hopeful TED talk by a leading planetary scientist that shows us some of the way forward.
In passing, his talk seems to indicate that there is an emerging consensus among people who really know this stuff that we have 1 or 2 decades at most to head off a planetary catastrophe.
And, yes, on my recent weekend in Stockholm, I did notice those Swedes are, just like this guy, very slim and trim.
Here is a (somewhat) more hopeful TED talk by a leading planetary scientist that shows us some of the way forward.
In passing, his talk seems to indicate that there is an emerging consensus among people who really know this stuff that we have 1 or 2 decades at most to head off a planetary catastrophe.
And, yes, on my recent weekend in Stockholm, I did notice those Swedes are, just like this guy, very slim and trim.
Saturday, September 11, 2010
Saturday, August 7, 2010
Lydon hits it out of the park
The first 3 podcasts of Chris Lydon's trip to India are up at radoopensource.
All I can say is: wow!
When I heard he was starting in Bangalore I was a little puzzled, since I knew he wanted the India beyond the current cliches....
But this is quite a brew of ferment, intellectual richness, and remarkable human beings representing another Bangalore that has always been there but not really availabe from the mainstream US press.
The first one, with a family of social entrepreneurs, points to the likely trajectory of business leadership throughout the world, if you believe, as I do, that the Anglo-American model of financialized capitalism is involuting, and the ecologic crisis will be with us for a century or more. Defining new economic circuits of the flow for value will be at the heart of the challenges and opportunities ahead of us.
The second, with a woman ecologist living in the forest doing ecological restoration and biodiversity work who says many interesting things, such as: " — the human species has come out of this million-year evolution, [having] eye-to-eye contact with snakes, and elephants, and plants." makes me think that the residuum of our preagrarian past which was absorbed and is still being absorbed into the culture of India may have prepared the people of that country best of all to lead us on the central global question of out time: survival of our species without extinction of all others.
The third with a remarkable independent intellectual of forceful, sharply articulated views on the contours of Indian history of the last 60 years. His views are unusually centrist for the Indian political milieu, but highly persuasive. He gets key aspects of the Indian diaspora in the West wrong however. And his dissing of Amartya Sen as a romantic rings true only up to a point -- Sen I think better captures the importance of habits of culture across the millennia --For instance, I think it is no accident that Turkey today is more secular and modern than other Islamic countries once you see how the Ottoman Turks' cosmopolitan policy seeped into the region over centuries. (As I get older I'm more and more impressed with the profoundly conservative, persistent nature of culture across institutions).
Of course I have differences with, criticisms of, and concerns about some of the views of each of the people interviewed. But this stuff really made we want more of all of this. And also offered a hope of a kind I have been lacking lately -- hope in people's ability to envision and realize solutions.
So download 'em for you next trip to the gym or for your commute.
I hope the next batch of interviews are on deck!
All I can say is: wow!
When I heard he was starting in Bangalore I was a little puzzled, since I knew he wanted the India beyond the current cliches....
But this is quite a brew of ferment, intellectual richness, and remarkable human beings representing another Bangalore that has always been there but not really availabe from the mainstream US press.
The first one, with a family of social entrepreneurs, points to the likely trajectory of business leadership throughout the world, if you believe, as I do, that the Anglo-American model of financialized capitalism is involuting, and the ecologic crisis will be with us for a century or more. Defining new economic circuits of the flow for value will be at the heart of the challenges and opportunities ahead of us.
The second, with a woman ecologist living in the forest doing ecological restoration and biodiversity work who says many interesting things, such as: " — the human species has come out of this million-year evolution, [having] eye-to-eye contact with snakes, and elephants, and plants." makes me think that the residuum of our preagrarian past which was absorbed and is still being absorbed into the culture of India may have prepared the people of that country best of all to lead us on the central global question of out time: survival of our species without extinction of all others.
The third with a remarkable independent intellectual of forceful, sharply articulated views on the contours of Indian history of the last 60 years. His views are unusually centrist for the Indian political milieu, but highly persuasive. He gets key aspects of the Indian diaspora in the West wrong however. And his dissing of Amartya Sen as a romantic rings true only up to a point -- Sen I think better captures the importance of habits of culture across the millennia --For instance, I think it is no accident that Turkey today is more secular and modern than other Islamic countries once you see how the Ottoman Turks' cosmopolitan policy seeped into the region over centuries. (As I get older I'm more and more impressed with the profoundly conservative, persistent nature of culture across institutions).
Of course I have differences with, criticisms of, and concerns about some of the views of each of the people interviewed. But this stuff really made we want more of all of this. And also offered a hope of a kind I have been lacking lately -- hope in people's ability to envision and realize solutions.
So download 'em for you next trip to the gym or for your commute.
I hope the next batch of interviews are on deck!
Tuesday, August 3, 2010
This series on Al-Jazeera English looks more interesting than what we see on US TV
It starts with some cheesy voiceover, and Michael Moore-like editing, then goes into a talking heads discussion of globalization of the ruling class. The matter of fact mention of Marx strikes me as a real sign that the cold war is over.
The section on philanthrocapitalism at about minute 20 is nice.
The section on philanthrocapitalism at about minute 20 is nice.
Friday, July 30, 2010
Markets Rule
From NC.
Update 3:30 AM: Philip Stevens’ comment is germane:
Political resolve has given way to fear. No one waxed more eloquently than Mr Sarkozy about the iniquities of liberal markets. This was the moment, the French president told us, when capitalism would be remade in the image of the European social market. All this, though, was before the Greek sovereign debt crisis saw the eurozone under siege. Now Mr Sarkozy lies awake each night worrying that France might lose its triple A credit rating.
He is not alone. As they struggle to reduce huge budget deficits, western politicians almost everywhere are in thrall to global capital markets. David Cameron has made no bones about it – Britain’s prime minister says he is slashing spending on the welfare state and paring back the nation’s global role because the Bank of England has told him that the rating agencies would be satisfied with nothing less.
The rating agencies – remember them? Some may recall that these very same organisations were deeply complicit in the chicanery that saw worthless debt instruments repackaged as top-notch financial securities. I am sure I heard the politicians say they would be cut down to size. It never happened. The rating agencies never repented; and now they are masters again….
Financial institutions are still extracting large profits from trading activities described by Lord Turner, the head of Britain’s Financial Services Authority, as inherently useless. Lord Turner, however, has been almost a lone voice in suggesting a fundamental rethink.
The crisis in the eurozone shows how the herd instincts of capital markets can destabilise an entire continent. The consequence has been to push European governments into a premature, and risky, race to slash fiscal deficits before economic recovery is assured.
With a little help from the regulators, the big banks can now declare themselves duly stress-tested, but the systemic instabilities remain. International markets have moved far ahead of the capacity of political leaders to understand, let alone properly oversee them. This failure of political governance to keep pace with global economic integration is as apparent now as it was in 2007.
Even if politicians better recognise the risks of interdependence and the vulnerabilities of particular institutions and financial instruments, they are far from any consensus on how to share responsibility for global oversight. So, three years on, things are much as they were – except that most of us are poorer. The markets rule. OK?
Yves again. It’s worse than that. Not only are the non-banksters poorer, but the perps now have mechanisms in place to assure that the next round of looting will go more smoothly.
Update 3:30 AM: Philip Stevens’ comment is germane:
Political resolve has given way to fear. No one waxed more eloquently than Mr Sarkozy about the iniquities of liberal markets. This was the moment, the French president told us, when capitalism would be remade in the image of the European social market. All this, though, was before the Greek sovereign debt crisis saw the eurozone under siege. Now Mr Sarkozy lies awake each night worrying that France might lose its triple A credit rating.
He is not alone. As they struggle to reduce huge budget deficits, western politicians almost everywhere are in thrall to global capital markets. David Cameron has made no bones about it – Britain’s prime minister says he is slashing spending on the welfare state and paring back the nation’s global role because the Bank of England has told him that the rating agencies would be satisfied with nothing less.
The rating agencies – remember them? Some may recall that these very same organisations were deeply complicit in the chicanery that saw worthless debt instruments repackaged as top-notch financial securities. I am sure I heard the politicians say they would be cut down to size. It never happened. The rating agencies never repented; and now they are masters again….
Financial institutions are still extracting large profits from trading activities described by Lord Turner, the head of Britain’s Financial Services Authority, as inherently useless. Lord Turner, however, has been almost a lone voice in suggesting a fundamental rethink.
The crisis in the eurozone shows how the herd instincts of capital markets can destabilise an entire continent. The consequence has been to push European governments into a premature, and risky, race to slash fiscal deficits before economic recovery is assured.
With a little help from the regulators, the big banks can now declare themselves duly stress-tested, but the systemic instabilities remain. International markets have moved far ahead of the capacity of political leaders to understand, let alone properly oversee them. This failure of political governance to keep pace with global economic integration is as apparent now as it was in 2007.
Even if politicians better recognise the risks of interdependence and the vulnerabilities of particular institutions and financial instruments, they are far from any consensus on how to share responsibility for global oversight. So, three years on, things are much as they were – except that most of us are poorer. The markets rule. OK?
Yves again. It’s worse than that. Not only are the non-banksters poorer, but the perps now have mechanisms in place to assure that the next round of looting will go more smoothly.
Monday, July 26, 2010
Mr Market seems to be handing out free money
Headline in Yahoo: " Home sales surge in June with inventory at 42-year low" and the Dow obliges with a hundred point pop.
Meanwhile Calculated Risk gives his usual reliable take: New Home Sales: Worst June on Record and the Consumer Metrics Daily Growth Index drops to minus 3% as the duration of the current contraction in consumer spending hits 6 months This, plus the ECRI leading indicators crash of the last month screams double dip even as the market tries to retake the highs of this bear market rally. The disconnect between the economic tea leaves and the markets is glaring, and despite Mr Keynes' famous dictum ("The markets can stay irrational longer than you can stay solvent") I think the break is coming soon.
My prediction: the markets are going to roll over in not more than 3 weeks as the July data starts coming in. By the time September data arrives in October, there will be panic selling as the double dip gets priced in. At that point we will see the lows of March 09 re-tested.
Whether I am right or wrong, being long equities right now seems hugely risky.
Meanwhile Calculated Risk gives his usual reliable take: New Home Sales: Worst June on Record and the Consumer Metrics Daily Growth Index drops to minus 3% as the duration of the current contraction in consumer spending hits 6 months This, plus the ECRI leading indicators crash of the last month screams double dip even as the market tries to retake the highs of this bear market rally. The disconnect between the economic tea leaves and the markets is glaring, and despite Mr Keynes' famous dictum ("The markets can stay irrational longer than you can stay solvent") I think the break is coming soon.
My prediction: the markets are going to roll over in not more than 3 weeks as the July data starts coming in. By the time September data arrives in October, there will be panic selling as the double dip gets priced in. At that point we will see the lows of March 09 re-tested.
Whether I am right or wrong, being long equities right now seems hugely risky.
A small island off the coast of a subcontinent.
Those of you who know me well will know what a pleasure are the ironies of history.
So I will simply refer you to this story, seemingly mundane, about the upcoming trip to India by David Cameron.
Fast forward to 2030 or thereabouts, and the full dimensions begin to appear.
So I will simply refer you to this story, seemingly mundane, about the upcoming trip to India by David Cameron.
Fast forward to 2030 or thereabouts, and the full dimensions begin to appear.
Tuesday, July 20, 2010
Is Neo-Localism Coming?
From the blog "Automatic Earth" a theme that will grow in importance. But of course, skype and the internet are not going to be un-invented..... so most likely there will be some kind of hybrid world emerging. I don't think, despite the best efforts of Benny and the Feds, Trichet & Co, et al. that we can return to the globalization of the kind we have just experienced... What comes next?
Thanks to globalization, we are much more dependent on trade than people were in the 1930s. The combination of credit drying up on the one hand and global trade wars on the other is an extreme threat to our vulnerable supply lines. Add to that the general upheaval created by severe economic disruption, which can easily lead to increased physical risks to transporting goods, and the longer term potential for much higher energy prices, and we could see an outright collapse of global trade in the approaching years.
The benefits of self-sufficiency will be seen in places where it still exists. So long as the whole supply chain is local, localized production means being able to maintain access to essential goods at a time when obtaining them from overseas may be difficult or impossible. It is currently more expensive, but the relative security it can provide can be priceless in a dangerous world. The ability to produce locally does not arise overnight however, especially where there are no stockpiles of components. In places where it has been lost, it will take time to regain. There is no time to lose.
We will be returning to a world of much greater diversity as we lose the homogenizing effect of trade. That means the existing disparities between areas will matter far more in the future than they have in the recent past. We will need to think again about the pros and cons of our local regions - what they can provide and what they cannot, and for how many people. Some areas will be in a great deal of trouble when they lose the ability to compensate for deficiencies through trade. As the global village ceases to exist, the world will once again be a very large and variable place.
Thanks to globalization, we are much more dependent on trade than people were in the 1930s. The combination of credit drying up on the one hand and global trade wars on the other is an extreme threat to our vulnerable supply lines. Add to that the general upheaval created by severe economic disruption, which can easily lead to increased physical risks to transporting goods, and the longer term potential for much higher energy prices, and we could see an outright collapse of global trade in the approaching years.
The benefits of self-sufficiency will be seen in places where it still exists. So long as the whole supply chain is local, localized production means being able to maintain access to essential goods at a time when obtaining them from overseas may be difficult or impossible. It is currently more expensive, but the relative security it can provide can be priceless in a dangerous world. The ability to produce locally does not arise overnight however, especially where there are no stockpiles of components. In places where it has been lost, it will take time to regain. There is no time to lose.
We will be returning to a world of much greater diversity as we lose the homogenizing effect of trade. That means the existing disparities between areas will matter far more in the future than they have in the recent past. We will need to think again about the pros and cons of our local regions - what they can provide and what they cannot, and for how many people. Some areas will be in a great deal of trouble when they lose the ability to compensate for deficiencies through trade. As the global village ceases to exist, the world will once again be a very large and variable place.
Tuesday, July 13, 2010
What rough beast
From Mort Zuckerman's commentary in US News and World Report via Zero Hedge:
Historically, presidents with approval ratings below 50 percent—Obama is at 45—lose an average of 41 House seats in midterm elections. This year, that would return the House of Representatives to Republican control.
In the normal post-war era, such a shift would be of modest consequence. With the economy about to dive again, and with the misery index about to rise for many who saw themselves as middle class (state and municipal workers), there is no doubt that the slash and burn tactics of the Republican right will intensify.
Just saw the Maddow piece on how the Acorn videos were selectively edited. The guy called the cops as soon as the so-called pimp left the Acorn office! I expect more of these Goebbels tactics in the run up to 2012.
Who will it be? Petraeus on a white horse or Palin under a swastika? Even if Obama squeaks through to a second term, it will be gridlock as the productive economy continues to deteriorate and financial manipulation remains ascendant.
Historically, presidents with approval ratings below 50 percent—Obama is at 45—lose an average of 41 House seats in midterm elections. This year, that would return the House of Representatives to Republican control.
In the normal post-war era, such a shift would be of modest consequence. With the economy about to dive again, and with the misery index about to rise for many who saw themselves as middle class (state and municipal workers), there is no doubt that the slash and burn tactics of the Republican right will intensify.
Just saw the Maddow piece on how the Acorn videos were selectively edited. The guy called the cops as soon as the so-called pimp left the Acorn office! I expect more of these Goebbels tactics in the run up to 2012.
Who will it be? Petraeus on a white horse or Palin under a swastika? Even if Obama squeaks through to a second term, it will be gridlock as the productive economy continues to deteriorate and financial manipulation remains ascendant.
This Aussie walks into a bar.....
In case you missed it -- heard on the Beeb this morning:
A drunk man who climbed into a crocodile enclosure in Australia and attempted to ride a 5m (16ft) long crocodile has survived his encounter.
The crocodile, called Fatso, bit the 36-year-old man's leg, tearing chunks of flesh from him as he straddled the reptile.
He had been chucked out of a pub in the town of Broome for being too drunk.
The man, who was not named by the police, climbed over a fence and tried to sit on the 800kg (1,800lb) saltwater crocodile.
"Fatso has taken offence to this and has spun around and bit this man on the right leg," Sgt Roger Haynes of Broome police told journalists.
"The crocodile has let him go and he's been able to scale the fence again and leave the wildlife park."
"The man who climbed the fence was fortunate because Fatso was a bit more sluggish than normal, due to the cooler nights we have been experiencing in Broome," said Mr Douglas.
"If it had been warmer and Fatso was more alert, we would have been dealing with a fatality."
A drunk man who climbed into a crocodile enclosure in Australia and attempted to ride a 5m (16ft) long crocodile has survived his encounter.
The crocodile, called Fatso, bit the 36-year-old man's leg, tearing chunks of flesh from him as he straddled the reptile.
He had been chucked out of a pub in the town of Broome for being too drunk.
The man, who was not named by the police, climbed over a fence and tried to sit on the 800kg (1,800lb) saltwater crocodile.
"Fatso has taken offence to this and has spun around and bit this man on the right leg," Sgt Roger Haynes of Broome police told journalists.
"The crocodile has let him go and he's been able to scale the fence again and leave the wildlife park."
"The man who climbed the fence was fortunate because Fatso was a bit more sluggish than normal, due to the cooler nights we have been experiencing in Broome," said Mr Douglas.
"If it had been warmer and Fatso was more alert, we would have been dealing with a fatality."
Thursday, July 8, 2010
Sic Transit Gloria
British military power adjusts to post-bubble realities:
We have come a long way from "Rule, Britannia"!
Lt Gen David Leakey, the former director general of the EU’s military staff, said: “We won’t ever be operating in a national sovereign capacity. We will always be doing it in a multi-lateral capacity.”
We have come a long way from "Rule, Britannia"!
Lt Gen David Leakey, the former director general of the EU’s military staff, said: “We won’t ever be operating in a national sovereign capacity. We will always be doing it in a multi-lateral capacity.”
Tuesday, July 6, 2010
Why I Call it Neo-Feudalism.
From a blog on the new Plutocracy (I don't recall that all 4 had perfect records in Q1):
Goldman Sachs, JPMorgan Chase, Citigroup AND Morgan Stanley ALL had PERFECT quarters in Q1, not having a single loss in the markets in over 250 combined chances with GS alone making $9.74Bn in trading profits without having a single bad day. Let’s assume GS was the best of the best and that they hedged so well that they are normally up 7 out of 10 days using their system. What are the odds of a single firm having 63 consecutive wins, EVEN if they already have a 70% advantage? ONE IN 5.7 BILLION! And don’t forget, Q1 was a wild quarter with huge ups and huge downs – yet they were NEVER wrong. We are blessed, on this planet Earth, with a population of 6 Billion, to be in the company of 4 firms that have pulled this off AT THE SAME TIME. What will it take to wake people up to this scam?
When you put it this way, it's clearly nothing but massive sociopathic looting.
Goldman Sachs, JPMorgan Chase, Citigroup AND Morgan Stanley ALL had PERFECT quarters in Q1, not having a single loss in the markets in over 250 combined chances with GS alone making $9.74Bn in trading profits without having a single bad day. Let’s assume GS was the best of the best and that they hedged so well that they are normally up 7 out of 10 days using their system. What are the odds of a single firm having 63 consecutive wins, EVEN if they already have a 70% advantage? ONE IN 5.7 BILLION! And don’t forget, Q1 was a wild quarter with huge ups and huge downs – yet they were NEVER wrong. We are blessed, on this planet Earth, with a population of 6 Billion, to be in the company of 4 firms that have pulled this off AT THE SAME TIME. What will it take to wake people up to this scam?
When you put it this way, it's clearly nothing but massive sociopathic looting.
The Bank I'm Looking For
Taken from: The Secret of OZ.
I'm looking for such a bank.
Letter to the New Mayor of Reykjavik, Iceland
Sunday, 04 July 2010 11:44 administrator
July 4, 2010
to: Jon Gnarr
Mr. Mayor,
I am the writer/director of "The MoneyMasters" and the new film, "The Secret of Oz".
By coincidence, I landed in Iceland on May 31, 2010, two days after your election.
I was asked to come to Iceland to try to help make suggestions for your economy. ........
We (IMRWG) decided that the BEST thing to do was to try to meet with you to convince you to form the BEST BANK to help relieve the people whose homes were being foreclosed on by the banks. BEST BANK would be modeled on the Bank of North Dakota (BND).
Here is how it works. The City of Reykjavik (CR) creates its own bank. Really, since Iceland has had bad experiences with banks being closely tied with certain political parties, it is probably BEST to call it "Bank of Reykjavik" (BR). But just for fun, let's call it Best Bank (BB).
CR deposits all its tax receipts into BB. Let's say that is 200.000.000 KR per year. This is an asset that can be multiplied by a factor of 9 according to international banking rules. Using the fractional reserve principle that is well accepted by the IMF, that would allow BB to IMMEDIATELY make loans of 1.800.000.000 KR. Since CR completely owns BB, BB could make these loans to anyone it chooses, including the city government, at NO interest -- yes, that's right, ZERO interest. This is completely legal! That is why North Dakota is the ONLY state in the U.S. with a balanced budget, no debt, and the lowest unemployment rate in the nation.
But it gets ever better. The City of Reykjavik has other assets as well. According to the same international banking rules, the CR gets to count the value of all roads, bridges, buildings, etc. into its asset base. That amount is huge! Now, of course, you would not want to inflate the amount of money too much, or take any risk with the assets of CR, so you wouldn't loan out anywhere near as much as you could, but think of the number of people you could help by lending out 2 BILLION KR? Of course, the CR could use this money to help repair the economy in other ways as well as keep taxes low in these difficult economic times. That is what North Dakota does with its bank.
When it comes to houses, there is a problem.The cost of houses went far too high. That needs to be brought down. So you need to consider this. You do not want to keep the price of housing high. Prices must come down. But there are good economists in Iceland which can help you there, including the Gang of 8.
You have an historic opportunity today to change the Icelandic monetary system. If you approve of Best Bank, the Parliament will follow. If the nation of Iceland escapes the debt money system which the IMF is trying to enslave Iceland in, investment money from around the world will flow into Iceland. My wife and I would gladly deposit our money into Best Bank because we know how strong it would be. Many other Americans would do the same. Once BB is working, other nations will be watching.
Bill Still
Last Updated ( Sunday, 04 July 2010 11:49 )
I'm looking for such a bank.
Letter to the New Mayor of Reykjavik, Iceland
Sunday, 04 July 2010 11:44 administrator
July 4, 2010
to: Jon Gnarr
Mr. Mayor,
I am the writer/director of "The MoneyMasters" and the new film, "The Secret of Oz".
By coincidence, I landed in Iceland on May 31, 2010, two days after your election.
I was asked to come to Iceland to try to help make suggestions for your economy. ........
We (IMRWG) decided that the BEST thing to do was to try to meet with you to convince you to form the BEST BANK to help relieve the people whose homes were being foreclosed on by the banks. BEST BANK would be modeled on the Bank of North Dakota (BND).
Here is how it works. The City of Reykjavik (CR) creates its own bank. Really, since Iceland has had bad experiences with banks being closely tied with certain political parties, it is probably BEST to call it "Bank of Reykjavik" (BR). But just for fun, let's call it Best Bank (BB).
CR deposits all its tax receipts into BB. Let's say that is 200.000.000 KR per year. This is an asset that can be multiplied by a factor of 9 according to international banking rules. Using the fractional reserve principle that is well accepted by the IMF, that would allow BB to IMMEDIATELY make loans of 1.800.000.000 KR. Since CR completely owns BB, BB could make these loans to anyone it chooses, including the city government, at NO interest -- yes, that's right, ZERO interest. This is completely legal! That is why North Dakota is the ONLY state in the U.S. with a balanced budget, no debt, and the lowest unemployment rate in the nation.
But it gets ever better. The City of Reykjavik has other assets as well. According to the same international banking rules, the CR gets to count the value of all roads, bridges, buildings, etc. into its asset base. That amount is huge! Now, of course, you would not want to inflate the amount of money too much, or take any risk with the assets of CR, so you wouldn't loan out anywhere near as much as you could, but think of the number of people you could help by lending out 2 BILLION KR? Of course, the CR could use this money to help repair the economy in other ways as well as keep taxes low in these difficult economic times. That is what North Dakota does with its bank.
When it comes to houses, there is a problem.The cost of houses went far too high. That needs to be brought down. So you need to consider this. You do not want to keep the price of housing high. Prices must come down. But there are good economists in Iceland which can help you there, including the Gang of 8.
You have an historic opportunity today to change the Icelandic monetary system. If you approve of Best Bank, the Parliament will follow. If the nation of Iceland escapes the debt money system which the IMF is trying to enslave Iceland in, investment money from around the world will flow into Iceland. My wife and I would gladly deposit our money into Best Bank because we know how strong it would be. Many other Americans would do the same. Once BB is working, other nations will be watching.
Bill Still
Last Updated ( Sunday, 04 July 2010 11:49 )
Thursday, July 1, 2010
Sunshine and tap water to run your car --I can't wait.
I'm sure this unit cost about a million dollars, but eventually, it will cost thousands, and I want one!
Water-to-solar-to-hydrogen-to-auto- and back again to water....
An at-home system for refueling a car that doesn't pollute? It's not just a pipe dream.
June 25, 2010|By Susan Carpenter, Los Angeles Times
Imagine a world where all it took to power a car was sunshine and tap water. That isn't a pipe dream but, rather, the reality of emerging technology that someday could turn your house into a personal, zero-emission gas station.
It's called a residential hydrogen refueler, and only one currently exists. Tucked away on the Torrance campus of Honda R&D behind a security guard and a locked gate, the sleek system is designed to power Honda's limited-production FCX Clarity sedan and other hydrogen fuel-cell vehicles. The system uses solar panels — a 6-kilowatt array of thin-film cells, to be precise — to power a machine the size of a mini-refrigerator that sips in H2O and breaks it apart into hydrogen and oxygen gases. The hydrogen is then pumped directly into the car, which uses the gas to generate electricity for the car's electric motor. No fossil fuels, no pollution, no additional strain on the power grid — and all done at home.
Water-to-solar-to-hydrogen-to-auto- and back again to water....
An at-home system for refueling a car that doesn't pollute? It's not just a pipe dream.
June 25, 2010|By Susan Carpenter, Los Angeles Times
Imagine a world where all it took to power a car was sunshine and tap water. That isn't a pipe dream but, rather, the reality of emerging technology that someday could turn your house into a personal, zero-emission gas station.
It's called a residential hydrogen refueler, and only one currently exists. Tucked away on the Torrance campus of Honda R&D behind a security guard and a locked gate, the sleek system is designed to power Honda's limited-production FCX Clarity sedan and other hydrogen fuel-cell vehicles. The system uses solar panels — a 6-kilowatt array of thin-film cells, to be precise — to power a machine the size of a mini-refrigerator that sips in H2O and breaks it apart into hydrogen and oxygen gases. The hydrogen is then pumped directly into the car, which uses the gas to generate electricity for the car's electric motor. No fossil fuels, no pollution, no additional strain on the power grid — and all done at home.
Wednesday, June 30, 2010
Only a Revolutionary Government Will Give the American People Justice
From the NYT:
Mr. Jester, according to several people with knowledge of his financial holdings, still owned Goldman stock while overseeing Treasury’s response to the A.I.G. crisis
Mr. Jester, according to several people with knowledge of his financial holdings, still owned Goldman stock while overseeing Treasury’s response to the A.I.G. crisis
Tuesday, June 29, 2010
"A Cheap Agatha Christie Novel"
If anyone knows just what these guys were doing, I'd love to hear it. The Russians are predictably denying involvement, but in this case it rings true. The USG seem to have offended their sense of professionalism!
From the FT:
Mr Kovelav said the overall shoddiness of the operation indicated it had nothing to do with the Russian government. “Illegals who launder money, live on forged documents and get money from glass jars buried in the earth. These cannot be employees of a Russian intelligence service. That is totally ridiculous. It’s like a cheap Agatha Christie detective novel.”
But more importantly, said Mr Liubomov, it was unclear what the goal of such an operation was.
From the FT:
Mr Kovelav said the overall shoddiness of the operation indicated it had nothing to do with the Russian government. “Illegals who launder money, live on forged documents and get money from glass jars buried in the earth. These cannot be employees of a Russian intelligence service. That is totally ridiculous. It’s like a cheap Agatha Christie detective novel.”
But more importantly, said Mr Liubomov, it was unclear what the goal of such an operation was.
Saturday, June 26, 2010
Chris Lydon Keeps on Doing the Now, Superbly
Hard to keep up with my friend Chris who is soon off to India.
His latest interview on radioopensource is with the wonderful jazz musician and composer Vijay Iyer.
A few years ago, Avram and I went out to the Queens Museum of Art one weekend for an India-America Cultural festival when I happened to be in the City.
Now I knew this would be a lot more hip than the immigrant kind of thing I went to growing up as a kid -- you know -- the amateur music and dance by little kids in front of gushing parents that made you wince. No, this was at a MUSEUM in NEW YORK -- and looking at the program listings of theater, multimedia art, and music one knew that it was going to be very contemporary.
Nevertheless, when we walked in to the concert by Vijay Iyer and Rudresh Mahanthappa... being the aging boomer exiled on the cultural island of Cape Cod (the mid cape, not P-town) .... I had no clue about Iyer. I really didn't know a thing about him. I found out later that he had been voted Rising Jazz Star of the Year in Downbeat two years running.
And of course, after hearing him play, I walked out in a trance. I felt healed knowing that a deep tradition was being upheld and reinvented at the same time..
The next time I was in the City I caught the operatic piece he did in Brooklyn and once again was transported to a place I had forgotten existed. As a teenager I used to long for the kind of global culture of music and literature that has now emerged, though I didn't have the wit or courage to create it at that time- After the show, Iyer was in the foyer and I went up to him and stammered something about how profound his work was, forgetting for that instant as I paid my homage that he is as old as a son of mine might be if my life had been only a little bit different. He just looked at me, perhaps a bit taken aback by the intensity of this greying guy, and said "thanks".
So this long interview Chris does with Iyer is a real treat, a wonderful stew of American cultural history, jazz music, Indian diaspora, globalism, improvisational elan, riffs on issues of colour, and much more.
A remarkable dude talking to a remarkable dude.
Listen to this podcast now!
His latest interview on radioopensource is with the wonderful jazz musician and composer Vijay Iyer.
A few years ago, Avram and I went out to the Queens Museum of Art one weekend for an India-America Cultural festival when I happened to be in the City.
Now I knew this would be a lot more hip than the immigrant kind of thing I went to growing up as a kid -- you know -- the amateur music and dance by little kids in front of gushing parents that made you wince. No, this was at a MUSEUM in NEW YORK -- and looking at the program listings of theater, multimedia art, and music one knew that it was going to be very contemporary.
Nevertheless, when we walked in to the concert by Vijay Iyer and Rudresh Mahanthappa... being the aging boomer exiled on the cultural island of Cape Cod (the mid cape, not P-town) .... I had no clue about Iyer. I really didn't know a thing about him. I found out later that he had been voted Rising Jazz Star of the Year in Downbeat two years running.
And of course, after hearing him play, I walked out in a trance. I felt healed knowing that a deep tradition was being upheld and reinvented at the same time..
The next time I was in the City I caught the operatic piece he did in Brooklyn and once again was transported to a place I had forgotten existed. As a teenager I used to long for the kind of global culture of music and literature that has now emerged, though I didn't have the wit or courage to create it at that time- After the show, Iyer was in the foyer and I went up to him and stammered something about how profound his work was, forgetting for that instant as I paid my homage that he is as old as a son of mine might be if my life had been only a little bit different. He just looked at me, perhaps a bit taken aback by the intensity of this greying guy, and said "thanks".
So this long interview Chris does with Iyer is a real treat, a wonderful stew of American cultural history, jazz music, Indian diaspora, globalism, improvisational elan, riffs on issues of colour, and much more.
A remarkable dude talking to a remarkable dude.
Listen to this podcast now!
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