Insane consumption, negative savings, unbalanced trade, hubris, delusions of empire, greed and doctrinaire worship of wishful thinking have reduced us to this. There are no innocents. Our future is dependent on the Chinese Communists taking our script.
Smoke em if you got em.
WTF.
________________
Clinton wraps Asia trip by asking China to buy US debt
Feb 22 AFP -BreitBart
Clinton Tells Chinese TV: US, China Going to ‘Rise or Fall Together’
US Secretary of State Hillary Clinton Sunday urged China to keep buying US debt as she wrapped up her first overseas trip, during which she agreed to work closely with Beijing on the financial crisis.
Clinton made the plea shortly before leaving China, the final stop on a four-nation Asian tour that also took her to Japan, Indonesia and South Korea, where she worked the crowds to try to restore America's standing abroad.
In Beijing, she called on authorities in Beijing to continue buying US Treasuries, saying it would help jumpstart the flagging US economy and stimulate imports of Chinese goods.
"By continuing to support American Treasury instruments the Chinese are recognising our interconnection. We are truly going to rise or fall together," Clinton said at the US embassy here.
Clinton had sought to focus on economic and environmental issues in Beijing, saying Washington's concerns about the human rights situation in China should not be a distraction from those vital matters.
Beijing's human rights record emerged nonetheless as an issue, as Chinese activists on Saturday reported being harassed or intimidated by Chinese authorities in a bid to stop them speaking out or meeting Clinton while she was here.
"Plainclothes police blocked me from leaving my home. They were afraid I would try to meet with Hillary Clinton or others in her delegation," democracy campaigner Jiang Qisheng told AFP by phone on Sunday.
Clinton and Chinese Foreign Minister Yang Jiechi largely agreed to disagree on human rights as they pledged future joint action on the economy and climate change.
The goodwill, also on display in her talks with President Hu Jintao and Premier Wen Jiabao, could raise hope for a new era of cooperation between the two largest greenhouse gas emitters and two of the world's top three economies.
"Now it is more important than any time in the past to deepen and develop China-US relations amid the spreading financial crisis and increasing global challenges," Hu told Clinton, according to state media.
Clinton began her day Sunday by attending a Protestant church service in western Beijing at which an AFP journalist saw plainclothes police taking away some visitors who attempted to enter the church.
Their identities could not be confirmed.
Later, Clinton met Chinese women's rights advocates at the US embassy but continued to steer clear of speaking on contentious human rights issues.
Instead, while taping an interview on a Chinese talk show, she focused on the need for China to help finance the massive 787-billion-dollar US economic stimulus plan by continuing to buy US Treasuries.
"Because our economies are so intertwined the Chinese know that in order to start exporting again to its biggest market, the United States had to take some very drastic measures with this stimulus package," Clinton said.
"We have to incur more debt. It would not be in China's interest if we were unable to get our economy moving again."
Clinton added: "The US needs the investment in Treasury bonds to shore up its economy to continue to buy Chinese products."
The US secretary of state had said on Saturday after meetings with China's leaders that Beijing was still confident in US Treasury bonds and expressed Washington's appreciation for the investments.
China is the top holder of US Treasury bills, with 696.2 billion dollars worth of the securities in December followed by Japan with 578.3 billion dollars, according to the latest official data from Washington.
China's economic growth is at its slowest rate in about two decades as foreign demand for its exports, including in the recession-hit United States, have dried up.
Yang indicated Saturday that China would not deviate drastically from its US Treasury policies, but gave no overt promises either way.
...and Hilary may be right...
ReplyDelete"TANJIA, China — Tan Tianying might not look like a troublemaker, but she and millions of other workers like her have government leaders fretting about the country’s stability.
A shy, delicately built seamstress who makes aprons and coveralls in Guangzhou, Ms. Tan, 24, is part of an army of migrants, 130 million strong, who have flocked to cities for jobs, but whose prospects for continued employment are increasingly dim.
As the global economic crisis deepens and the demand for Chinese exports slackens, manufacturing jobs in the Pearl River Delta and all along the once-booming coast are disappearing at a stunning pace. Over the last few months, more than 20 million migrant workers have been cast into the ranks of the unemployed, depriving impoverished towns like Tanjia of the much-needed income the workers sent home.
Since December, hundreds of employees at Ms. Tan’s uniform factory have been let go and wages have been cut by a third as orders from the United States dry up. Last year, 2,400 factories in and around Guangzhou closed."
-NY Times
Reposting this, cause I laughed my ass off. Der Untergang (The Downfall)
ReplyDeleteh/t Charles.
Yeah, Hillary is right in a way, it seems the old saying about the US catching a cold, the whole world gets pneumonia has some truth to it.
"We have to incur more debt."
ReplyDeleteMadame Clinton
Well, we have to incur more debt, or sell assets.
ReplyDeleteThe Federals hold 20% of the land in the United States, we could always sell some of it.
A Carrier Battle Group ought to bring a pretty penny, too.
I cited China's plunging exports to Japan, Korea, etc, but Larsen pointed to some market indicators that pointed toward a rebound.
ReplyDelete...I'll believe it when I see it.
'Rat no doubt remembers a prediction about Pakistan.
Unlimited, Unregulated, Unreasonable, Free Trade Dogmatists
ReplyDeleteIf you watched the Republican presidential debates — and had no other knowledge of economic history — you might believe that Ronald Reagan, the personification of modern conservatism, was a pure free trader. During a debate in Michigan, for example, Mr. McCain said that President Reagan “must be spinning in his grave” to hear Republicans expressing concerns about free trade. But while free traders like to quote some of President Reagan’s open-markets rhetoric, they did not like many of his actual trade policies.
President Reagan often broke with free-trade dogma. He arranged for voluntary restraint agreements to limit imports of automobiles and steel (an industry whose interests, by the way, I have represented). He provided temporary import relief for Harley-Davidson. He limited imports of sugar and textiles. His administration pushed for the “Plaza accord” of 1985, an agreement that made Japanese imports more expensive by raising the value of the yen.
Each of these measures prompted vociferous criticism from free traders. But they worked. By the early 1990s, doubts about Americans’ ability to compete had been impressively reduced.
President Reagan’s pragmatism contrasted strongly with the utopian dreams of free traders. Ever since Edmund Burke criticized the French philosophes, Anglo-American conservatism has rejected ivory-tower theories that disregard the realities of everyday life.
Modern free traders, on the other hand, embrace their ideal with a passion that makes Robespierre seem prudent. They allow no room for practicality, nuance or flexibility. They embrace unbridled free trade, even as it helps China become a superpower. They see only bright lines, even when it means bowing to the whims of anti-American bureaucrats at the World Trade Organization.
They oppose any trade limitations, even if we must depend on foreign countries to feed ourselves or equip our military. They see nothing but dogma — no matter how many jobs are lost, how high the trade deficit rises or how low the dollar falls.
Conservative statesmen from Alexander Hamilton to Ronald Reagan sometimes supported protectionism and at other times they leaned toward lowering barriers. But they always understood that trade policy was merely a tool for building a strong and independent country with a prosperous middle class.
Free traders like Mr. McCain instead rely too often on the notion that we should change the country to suit their trade policy — an approach that is not in the best traditions of American conservatism.
Robert E. Lighthizer, a trade lawyer, was a deputy trade representative in the Reagan administration and the treasurer of Bob Dole’s 1996 presidential campaign
Thke Myth of Inevitable Progress.
ReplyDelete---
So why, then, is his overall take on the world -- and in particular on how we got to where we are and what we need to do to keep things moving in the right direction -- unsatisfying in that Couéist way?
The simple answer is that Goklany's account leaves out too much that matters and pretends that incredibly complex phenomena can be explained away with a few catch phrases. In its overly sanguine and simplistic take on globalization, regulation, and the role of state and economic power, The Improving State of the World is symptomatic of what has become, in the eyes of many, a quintessentially American point of view -- a view according to which the task of creating a better world can ultimately be boiled down to the motto of the Wall Street Journal editorial page: "free markets and free people."
---
What is missing from The Improving State of the World, in the end, is a sense of just how complex societies and economies really are. Paradoxically, for a book dedicated to celebrating the enormous progress the world has made in the past two decades, it does not sufficiently acknowledge just how miraculous the success of the West and Japan has been and how far from assured it is that the rest of the world will enjoy anything like it.
The experience of the last two decades has had a chastening effect on the expectations of many of globalization's most ardent advocates -- even those in places such as the International Monetary Fund. Goklany, apparently, has remained immune.
Again, the point is not to return to the bad old days of protectionism and import-substitution industrialization. The point, rather, is that we simply know a lot less than we thought we did.
---
The fact that every country's experience is different does not mean that there are not deeper truths to be uncovered by looking at the experience of the world as a whole. But the truths thus far uncovered are relatively few in number and often limited in impact. So, yes, free trade is a good thing, subsidies to agriculture and official corruption are bad things, and so on. And policymakers should be aggressive in implementing those practices and policies that there is a good reason to think will work. But they also need to be cautious about taking theoretical pronouncements for reality, and they should be pragmatists rather than evangelists. After decades of misplaced certainty, it may be time to recognize the limits of our own knowledge -- at least if we want the state of the world to continue improving.
How the Financial Crisis Will Weaken the West
ReplyDeleteThe financial crisis has called into serious question the credibility of western governments and may precipitate an eastward shift of power.
Listen to this essay on CFR.org »
• A New Trade Agenda
Trade problems are an underlying cause of the financial crisis. To truly revive the world economy, a new trade consensus is necessary.
• Who Broke Global Finance?
The current economic crisis may have one winner: the Chinese financial model, which — together with the IMF — holds the keys to fixing the problem.
As to the predictions made by Buddy Larsen, he did come over a few months ago saying how I had been more right than wrong during the discussions at the old BC, and that he wanted to acknowledge that.
ReplyDeleteI believe Pakistan was part of that package.
- I Love Subprime -
ReplyDelete11 States That Are Showing A Little Spunk
ReplyDeleteWell, then. Let the recasting of Reagan proceed apace. From the National Journal:
ReplyDeleteSOCIAL STUDIES
Real Reaganites Raise Taxes
Conservatism may need to abandon the anti-tax dogma that it adheres to in Reagan's name.
Saturday, Feb. 21, 2009
by Jonathan Rauch
That heavy feeling in the pit of conservatives' stomachs this week was more than just indigestion brought on by the pork and fat in the Democrats' giant fiscal stimulus bill. Conservatives suspected that something irreversible was happening: that the sheer immensity of President Obama's fiscal and financial interventions may permanently change the size of government and the shape of post-Reagan conservatism.
One conservative who understands the potential implications is a curmudgeonly visionary named Bruce Bartlett. In today's Washington, he is something of a voice in the wilderness. Liberals mistrust him because in the 1970s, as an aide to then-Rep. Jack Kemp, R-N.Y., he helped fashion the original supply-side revolution. Conservatives mistrust him because in the 2000s he broke publicly with President Bush, in a book called Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy.
Conservatives hope that Bartlett is wrong. But there is a good case that he is right. To reclaim President Reagan's legacy in the Obama era, conservatism may need to abandon the anti-tax dogma that it adheres to in Reagan's name.
Conservatives and liberals have spent the past 40 years arguing about the size of government. But the size of government has not, so to speak, been arguing about them. As a share of the economy (gross domestic product), federal spending has remained curiously stable. Wars ended and began, double-digit inflation came and went, defense was cut, entitlements swelled, and outlays fluctuated as a share of GDP. Yet, as the chart shows, spending always returned to about 21 percent, almost as if regulated by an internal thermostat.
Over the same period, meanwhile, revenues had a comparably strong homing instinct, but the set point was lower: a little above 18 percent.
This budgetary stability, or stalemate, or whatever you call it, has been the greatest policy surprise of the last quarter-century. No one foresaw it, and no one has fully explained it. But it proved convenient for both sides.
Liberals (and Bush, who expanded Medicare) discovered that, up to a point, a growing economy would let them grow government without destabilizing spending as a share of GDP. Conservatives discovered that, up to a point, a growing economy would let them dig in against tax increases, and periodically cut taxes, without destabilizing revenues as a share of GDP.
For decades, everyone pretended to have a profound ideological disagreement about the size of government, but the reality was a comfortable standoff between 21 percent liberalism and 18 percent conservatism. In the end, both sides got what they most wanted: 21 percent spending for liberals, 18 percent revenues for conservatives -- at the politically tolerable cost of a deficit averaging 2 to 3 percent of GDP. This result was handy for politicians and acceptable to the public.
In Washington now, the obvious question is: Has Obama ended the 21 percent era? In January, the Congressional Budget Office forecast outlays at 25 percent in fiscal 2009. That was before enactment of the latest stimulus, which increases outlays by more than $500 billion through 2012; and the forecast didn't account for further financial bailouts. Unofficial estimates take 2009 spending to 26 percent or higher.
And after 2009? CBO forecasts that spending, after popping up this year, will decline to (where else?) 21 percent of GDP in 2012. But CBO is required to make some unrealistic assumptions. The analysts I interviewed believe that spending is likely to be well above 21 percent in 2012.
"I'm going to say spending is never going to go below 21 percent again in this country," says Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget. At the Brookings Institution, Isabel Sawhill, an economist and a former Clinton administration budget official, says, "My best guess would be 24 percent in 2012."
In the short run, of course, the stimulus increases spending. Not all of that spending will be temporary. ("At this point, these things are temporary," an administration spokesman told The Washington Post last week. Ah. Temporarily temporary.) Liberals have already broadcast their intention to extend some of the package's provisions, and federal beneficiaries have sticky fingers. Plus, there are those costly financial bailouts.
In the medium term, many economists expect a deep recession and a slow recovery. That would increase the spending-to-GDP ratio by suppressing growth in the denominator. In the longer term, intense upward pressure on spending will be generated by the combination of Baby Boom retirements -- which begin during the current administration and accumulate rapidly -- and soaring health care costs.
The Baby Boom fiscal shock would have arrived anyway, but the recession, the stimulus, and the bailout will have the effect of pulling it forward -- more or less to the present. In which case, the end of the 21 percent equilibrium may already have arrived.
In American politics, the dissolution of a 40-year equilibrium is likely to be a pretty momentous event. Liberals will have a practical problem. If they don't get serious about reforming and restraining Medicare, Medicaid, Social Security, and other entitlements, many of the other programs they most care about will be squeezed out of the budget. With his promise of a fiscal responsibility summit and his warnings about the need to confront long-term entitlement spending, Obama seems to grasp what liberalism must try to do, though whether he can deliver is another matter.
Conservatives, however, will face a doctrinal crisis. Or so Bruce Bartlett's logic persuasively suggests.
Many conservatives insist that structural reforms of entitlement programs -- benefit cuts, means-testing, privatization, and so on -- could keep spending at or even below 21 percent of GDP going forward. Dream on, Bartlett says.
"We're looking at a massive expansion of government spending," he says. "I became convinced in November of 2003, when a Republican president and Congress instituted a massive expansion of Medicare, at a time when the program was already badly broken and needed to be fixed, that there was absolutely no hope of restraining the growth of spending on those programs."
How will we pay for, say, 24 percent government? Permanent deficits at 6 percent of GDP would be unsustainable, and the creaky, inefficient income tax is barely able to raise even today's inadequate revenues.
The only really workable option, Bartlett argues, is a value-added tax or its equivalent: a broad-based tax on consumption. "It's the only way of preserving incentives and keeping the economy alive." Because it taxes spending rather than saving or investment and is inhospitable to market-distorting loopholes, this kind of tax raises a lot of money at relatively low economic cost.
Reaganites hate the value-added tax precisely because it is such an efficient cash cow. But Reagan, Bartlett contends, would have known better. Reagan was a conservative who admired FDR, and what he conserved was FDR's welfare state. He understood that the most practical way to make government less economically burdensome was to grow the economy.
By taming inflation, restructuring the tax code, and thinning regulatory undergrowth, Reagan made the welfare state sustainable, something liberals had proved unable to do. He wooed middle-class voters away from liberalism by stabilizing the modern entitlement state, not shrinking it.
If the 21 percent era is over, then the challenge for conservatives today is to give up on 18 percent government, which the public doesn't want and which conservatives can't deliver. Instead, as Bartlett wrote recently in Politico, "Conservatives would better spend their diminished political capital figuring out how to finance the welfare state at the least cost to the economy and individual liberty." Just like Reagan.
After looking over all the spending porkulus projects for my little town here, it looks like we'll have a brand new town after this is all over. Who can possibly be against this? I've always said, and my wife agrees with me, that Lewiston, basically, sucks.
ReplyDeleteGobama!
I just hope to live long enough to see it.
This comment has been removed by the author.
ReplyDeleteSell a Carrier Battle Group to Iran, if you want, they're getting the bomb anyway, but leave the National Forests alone!
ReplyDelete"Each of these measures prompted vociferous criticism from free traders. But they worked. By the early 1990s, doubts about Americans’ ability to compete had been impressively reduced."
ReplyDeleteThe burden is to demonstrate that it was the policies specifically mentioned by the author that did the trick. As given in the article, it is simply an assertion.
Unanswered, too, is whether the author's difficulty with free trade has more to do with the politics of China, or with free trade qua free trade. If the latter, the US-Colombia FTA I'll be waiting on til hell freezes over has no more merit than does the love-in with the ChiComs.
In any event: By this time next year I figure RR will be effectively redrawn, for all intents and purposes, as an avuncular, savvy progressive - a conservative icon swept up and refashioned by powerful currents. The man who succeeded to the extent that he didn't listen to Milton Friedman.
John Mauldin, one of my favorite financial writers:
ReplyDeleteThe Risk in Europe
I mentioned last week that European banks are at significant risk. I want to follow up on that point, as it is very important. Eastern Europe has borrowed an estimated $1.7 trillion, primarily from Western European banks. And much of Eastern Europe is already in a deep recession bordering on depression. A great deal of that $1.7 trillion is at risk, especially the portion that is in Swiss francs. It is a story that could easily be as big as the US subprime problem.
In Poland, as an example, 60% of mortgages are in Swiss francs. When times are good and currencies are stable, it is nice to have a low-interest Swiss mortgage. And as a requirement for joining the euro currency union, Poland has been required to keep its currency stable against the euro. This gave borrowers comfort that they could borrow at low interest in francs or euros, rather than at much higher local rates.
But in an echo of teaser-rate subprimes here in the US, there is a problem. Along came the synchronized global recession and large Polish current-account trade deficits, which were three times those of the US in terms of GDP, just to give us some perspective. Of course, if you are not a reserve currency this is going to bring some pressure to bear. And it did. The Polish zloty has basically dropped in half compared to the Swiss franc. That means if you are a mortgage holder, your house payment just doubled. That same story is repeated all over the Baltics and Eastern Europe.
Austrian banks have lent $289 billion (230 billion euros) to Eastern Europe. That is 70% of Austrian GDP. Much of it is in Swiss francs they borrowed from Swiss banks. Even a 10% impairment (highly optimistic) would bankrupt the Austrian financial system, says the Austrian finance minister, Joseph Proll. In the US we speak of banks that are too big to be allowed to fail. But the reality is that we could nationalize them if we needed to do so. (And for the record, I favor nationalization and swift privatization. We cannot afford a repeat of Japan’s zombie banks.)
The problem is that in Europe there are many banks that are simply too big to save. The size of the banks in terms of the GDP of the country in which they are domiciled is all out of proportion. For my American readers, it would be as if the bank bailout package were in excess of $14 trillion (give or take a few trillion). In essence, there are small countries which have very large banks (relatively speaking) that have gone outside their own borders to make loans and have done so at levels of leverage which are far in excess of the most leveraged US banks. The ability of the “host” countries to nationalize their banks is simply not there. They are going to have to have help from larger countries. But as we will see below, that help is problematical.
Western European banks have been very aggressive in lending to emerging market countries worldwide. Almost 75% of an estimated $4.9 trillion of loans outstanding are to countries that are in deep recessions. Plus, according to the IMF, they are 50% more leveraged than US banks.
Today the euro rallied back to $1.26 based upon statements from German authorities that were interpreted as a potential willingness to help out non-German (in particular, Austrian) banks.
However, this more sobering note from Strategic Energy was sent to me by a reader. It nicely sums up my concerns:
“It is East Europe that is blowing up right now. Erik Berglof, EBRD’s chief economist, told me the region may need e400bn in help to cover loans and prop up the credit system. Europe’s governments are making matters worse. Some are pressuring their banks to pull back, undercutting subsidiaries in East Europe. Athens has ordered Greek banks to pull out of the Balkans.
“The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan — and Turkey next — and is fast exhausting its own $200bn (e155bn) reserve. We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights. Its $16bn rescue of Ukraine has unravelled. The country — facing a 12% contraction in GDP after the collapse of steel prices — is hurtling towards default, leaving Unicredit, Raffeisen and ING in the lurch. Pakistan wants another $7.6bn. Latvia’s central bank governor has declared his economy “clinically dead” after it shrank 10.5% in the fourth quarter. Protesters have smashed the treasury and stormed parliament.
“‘This is much worse than the East Asia crisis in the 1990s,’ said Lars Christensen, at Danske Bank. ‘There are accidents waiting to happen across the region, but the EU institutions don’t have any framework for dealing with this. The day they decide not to save one of these one countries will be the trigger for a massive crisis with contagion spreading into the EU.’ Europe is already in deeper trouble than the ECB or EU leaders ever expected. Germany contracted at an annual rate of 8.4% in the fourth quarter. If Deutsche Bank is correct, the economy will have shrunk by nearly 9% before the end of this year. This is the sort of level that stokes popular revolt.
“The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU “union bonds” should the debt markets take fright at the rocketing trajectory of Italy’s public debt (hitting 112pc of GDP next year, just revised up from 101pc — big change), or rescue Austria from its Habsburg adventurism. So we watch and wait as the lethal brush fires move closer. If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?”
It's five minutes until the stock market starts dropping like a rock, according to the pattern revealed by my latest round of dart throwing.
ReplyDelete(GWB didn't listen to Milton Friedman either, but the former's gravest error according to Friedman remains for countless Republicans his most brilliant, "world historical" success.)
ReplyDeleteTwo from Tyler at MarginalRevolution.com:
ReplyDeleteHusband's Day in Iceland
Tyler Cowen
The article opens in this manner:
On Bondadagur, or Husband's Day, the menfolk of Iceland are spoiled by their wives and girlfriends, who serve them with traditional delicacies such as ram's testicles and sheep's head jelly, a recipe for which is handily included in the latest online edition of Iceland Review, alongside the latest bulletins on the economic meltdown.
It is interesting throughout.
February 23, 2009 at 04:18 AM in Food and Drink
What would Tacitus say?
Tyler Cowen
Via Natasha:
In fact, Moody's Economy.com estimates that metro Washington's economy will actually grow 2.5% from mid-2008 through mid-2010. New York's economy is expected to shrink 4.2%.
February 22, 2009 at 10:57 PM
1. Luckily for us, owning a home in NoVa is always a safe bet, regardless of administration.
2. Just for the Bar's menfolk, I'm preparing a casserole of ram's testicles bound with a lovely bechamel and some gruyere, with a side of sheep's head jelly and a homemade rye. For my own husband: A gallon jug of whine. There's more where that came from. But you know that.
Trish is reposting my previous posts, and yet, nobody is talking about the $1.4 trillion/year albatross hanging on the US economy in the form of bloated military spending.
ReplyDelete#03旅のしおり「笑う！ローカル線～銚子電鉄の旅～」
ReplyDeleteObama's talking about it.
ReplyDeleteGood, mat. It can profit from a second reading.
ReplyDeleteTPM:
Poll Analysis: Fall In Obama Approval Fueled Entirely By Republicans
By Eric Kleefeld - February 23, 2009, 9:55AM
A new polling analysis from Gallup shows a very interesting piece of data within the slight decline of President Obama's approval rating, down from its 68% honeymoon rating when he took office, to 63% now. Not only is the dip fueled solely by a fall in Republican support -- in fact, his ratings have gone up slightly among everyone else.
Between the polling sample from January 21-25, compared to February 9-15, Obama's ratings went from 90% to 94% among self-identified liberal Democrats, from 87% to 88% among moderate Dems, from 80% to 84% with conservative Dems, and from 47% to 50% among independents. On the other hand, his approval fell from 53% to 47% moderate Republicans, with a plummet of 36% down to 22% with conservative Republicans.
As for the albatross, we would like to remind you that freedom isn't free. In fact, it's priceless. So I think we're still within our budget.
Osama? Who's Osama?
ReplyDelete“Garden City and Land of (Nazi) Twins.”
ReplyDeleteAfter a few drinks I might be able to chew into a ram's testicle, but I'll pass on the head jelly.
ReplyDeleteIceland Review Online Sheep's Head Jelly Recipe
On second thought, I'll pass on both, and just have a trout, and another drink.
But thanks anyway, Trish.
As for the albatross, we would like to remind you that freedom isn't free. In fact, it's priceless. So I think we're still within our budget.
ReplyDelete==
Well, priceless, I wont bore you with any talk of budgets. Cause freedom, is not having to give a shit.
“It’s not too much of a mystery to me,” said Fabiane, whose family has five pairs of twins. “My brother married his third cousin. There are lots of cases like that, people marrying their cousins or other close family members.”
ReplyDeleteThere's your answer, Doug. Either that, or an underground UFO base in the area, warping the gravity field.
DOW 7295, and sinking--the darts never lie.
ReplyDeleteWell, priceless, I wont bore you with any talk of budgets.
ReplyDelete- Mat
Good. Because I always leave that to the bright folks in charge. (It's Princess, mat. Wherever I go, it's Princess.)
Nazis @ the Wimpy Cafe
ReplyDeleteI’m not going to add anything to the narrative describing how Christopher Hitchens and two other journalists were assaulted on Hamra Street, West Beirut. The persons who were there on the occasion can describe it themselves.
But since words often fail to give a sense of what the scene looked like, and since it involved a short foot pursuit, I’ve posted a trio of pictures after the Read More to give readers a flavor of the street and its environs.
The first image is a panorama of Hamra Street with the site of the infamous “Syrian Nazi” poster highlighted in full color while the rest of has been blued.
The sign that Hitchens wrote on — what he wrote I will leave to him to say — is not really a poster, but a commemorative sign marking the spot where members of that organization — the SSNP — once killed two IDF soldiers at a place called the Wimpy Cafe. As the NationMaster site says:
One of the best-known early actions of the resistance was the killing of two Israeli soldiers in the Wimpy Cafe on west Beirut’s central Rue Hamra by party member Khalid Alwan.
The party continues to commemorate this date. A party member, Habib Shartouni, was also responsible for the assassination of Lebanese president Bachir Gemayel in a bomb attack on 14 September 1982.
Whatever the SSNP may lack these days, ferocity is probably not one of them. The Wimpy Cafe is gone, but the site of the killings is commemorated by signs. In addition to the panorama of the street are two zooms showing the poster itself. You can the see the stylized swastika on the sign which had been cleaned up in the interval. Please click on the pictures to enlarge them to full size.
I can also read spider's webs, the twists in the rack of a bighorn sheep, and back eddies in rivers.
ReplyDeleteHitch And The Syrian Nazis
ReplyDelete-->
A man could get a reputation. He defaced a poster for the Syrian Nazis and all hell broke loose:
Later that night, three of our "scoop" brigade--Jonathan Foreman, Michael Totten and Christopher Hitchens--got involved in a street brawl with some thugs of a Syria-loving skinhead party called the SSNP after Hitchens rather gallantly insulted their swastika flag. On our way to a meeting with Minister of State Nassib Lahoud, Hitchens showed me the gashed knuckles and bruises suffered during the punch up. The attackers had apparently come out of nowhere on posh Hamra Street, where they had gone to buy shoes.
"I was on the ground," Hitchens said, "and getting it in the head."
So they went shoe-shopping late at night?
Attaboy.
It's all part of the holographic universe, you see, which never changes. Once you've found the secret, the answers lie always around you, ready to hand.
ReplyDeleteI can read the feathers that fall from a bird's wing.
It's Princess, mat. Wherever I go, it's Princess.
ReplyDelete==
Well, Princess, you seem very comfortable sitting on that porcelain throne.
I'm glad Hitchens wasn't really hurt, but it occurs to me he could use a slight whipping once in a while.
ReplyDeletegotta run..
The Angry Arab News Service wrote on Tuesday:
ReplyDeleteAt the invitation of Hariri-Saudi group, Hitchens is visiting Lebanon. A source sent me this: "I dont know if you find this as news worthy or not, but Christopher Hitchens is currently in Beirut sponsored by the same group that owns that crap NOW Lebanon. He got in a few nights ago and surprisingly went out drinking. On his way out of the bar he saw an SSNP poster and wrote on it "Fuck the SSNP". There just happened to be some SSNP thugs near by--most likely asking people for their ID, and most likely to no avail--and saw him write on the poster and kicked his ass. He is still walking with a limp."
The Abu Muqawama blog later noted:
Update: This story has now been confirmed. Look, it's widely known that since the May 2008 events the SSNP guys have behaved like thugs in Hamra (where the ass-kicking took place).
But seriously, would you roll into East L.A. and start writing over gang signs? I mean, is that smart? C'mon, Brother Hitchens, we're rootin' for you, but have a little walkin' around sense. He was probably at De Prague.
Where the wait staff is, like, 90% SSNP. Abu Muqawama's Top Three West Beirut Watering Holes: 1. Barometre (cheap arak, great fattoush); 2. Captain's Cabin; 3. Danny's. (In response to a reader, the great Chez Andre closed sometime a little over a year ago. That hole-in-the-wall was great.)
This one's for you, "Bob!"
ReplyDelete12. verner:
Well well. Looks like the Assad sponsored thugs of the SSNP realize that they attacked the wrong man, and don’t like the “international” disinfecting light of truth shined on their murderous activities. Now they are denying (via the malicious fascist loving jerk “angry arab”) that Hitchens was ever attacked. Cowards. Says it all.
Sorry fascists. There were too many witnesses.
Oh and Bob–You’re no better than the idiots at HuffPo.
It's better than that, mat. We maintain two porcelain thrones. One here. And one in Baghdad.
ReplyDeleteI'd count the one back home, but it isn't quite as impressive.
ReplyDeleteIt's better than that, mat. We maintain two porcelain thrones. One here. And one in Baghdad.
ReplyDelete==
As long as you're sitting on it and not in it.
Funny you should mention that, mat, as my husband refers to his position as "a big turd" among turds generally. Hence, the exclusive throne.
ReplyDeleteGuess it pays.
David Forsmark at NRO righteously defends King of the Hill.
ReplyDelete(Hank Hill is very much in manner like my own father. An added attraction of the show for me.)
Biblical seals unearthed in Jerusalem dig
ReplyDeleteFeb. 23, 2009
Etgar Lefkovits , THE JERUSALEM POST
A routine archeological excavation ahead of private construction in an Arab neighborhood on the outskirts of Jerusalem has uncovered a series of seal impressions from the reign of the Biblical King Hezekiah nearly 3,000 years ago, the Israel Antiquities Authority announced Monday.
The archeological treasure trove was discovered in the east Jerusalem neighborhood of Umm Tuba, on the southeastern edge of the city, during a "salvage" excavation carried out in the area in January ahead of the planned construction at the site.
A series of seal impressions that date to the reign of Hezekiah King of Judah (end of the eighth century BCE) including those of two high ranking officials named Ahimelekh ben Amadyahu and Yehokhil ben Shahar, who served in the Kingdom's government, were found at the site, which housed a large building during the First and Second Temple periods.
http://www.jpost.com/servlet/Satellite?cid=1233304857320&pagename=JPost%2FJPArticle%2FPrinter
http://snipurl.com/chuxy
More Detainees!
ReplyDeleteForeign Policy Passport:
Over a month since the United States launched its own counter-piracy effort, details of the operations are emerging. The U.S. coalition is deploying technological and legal creativity to get the job done.
The first tactic: drones. After a report surfaced last week that U.S. unmanned aircraft vehicles were watching the Somali skies, I wrote to Navy Lt. Nate Christensen, who replied: "I can confirm that UAVs are being used aboard U.S. Navy ships to conduct counter-piracy operations in the Gulf of Aden. They bring the ability to stay airborne for long periods and cover hundreds of square miles of ocean during the course of one mission." The resulting intelligence is shared among allies. A good start to tackling the surveillance conundrum of patrolling miles and miles of high seas.
Perhaps even more interesting, the U.S. is now detaining and holding pirates -- there are 16 in custody now. As Derek Reveron pointed out in Think Again, that's no small feat. Most countries have been nervous about touching the pirates, let alone keeping them in custody. Britain, for example, instructed its patrols not to pick up any of them. There is no mandated court to try the offenders, and many fear that amnesty requests would be the result of naval arrest. No such fears plague the U.S. Navy, apparently. "They will remain aboard Lewis and Clark until information and evidence is assembled and evaluated and a decision is made regarding their further transfer," reads a military press release.
Good effort, team, but it looks like the pirates haven't lost their edge yet. A coal carrier was taken hostage today, just one of the 24 attacks so far in 2009. (Navies have stopped nine others). At that rate, this year would bring in about 100 less attacks than last. Alas!
Last year, there were 293 worldwide.
I take it back. Rather than a sight whipping, Hitchens deserves a mild to medium whipping.
ReplyDeleteDOW 7229
Sounds familiar...
ReplyDeleteFrom GlobalSecurity:
[...]
Along with the GAO and Defense Department Inspector General, I testified on the failure by the U.S. and its allies over the past seven years to build effective Afghan security forces. That failure has provided an opening for the Taliban and its extremist allies to re-group in Pakistan and ratchet up their suicide and roadside bombs and attacks on Afghan communities, aid workers and the U.S. and NATO peacekeeping forces in the country.
In fact, when members of the UN Security Council returned from a trip to Afghanistan in December, they reported that almost 40 per cent of Afghanistan was either "permanently or temporarily inaccessible to government and non-government aid."
The reality is, some of the newly dispatched U.S. troops won't be searching the rugged terrain for extremists, but will instead have to fill the gap in training and mentoring the Afghan police. The U.S. has spent some $6 billion on training a police force of 80,000, but today about 20 percent of those police are AWOL, and just as many are either dead or injured, even though their names are still on the payroll so their families can collect benefits. Of the remainder, most have had barely two weeks training. Crisis Group first reported on the police training flaws in 2007 and again in December Policing in Afghanistan: Still Searching for a Strategy which can be found at http://www.crisisgroup.org/home/index.cfm?id=5824&l=1
Providing law enforcement is central to any effective counter-insurgency strategy, and while the U.S. has finally decided that it has to start from scratch to re-train the Afghanistan police units, , it is going to take years before they are ready to go it alone. At this point only 18 of Afghan's 433 police units are capable of effective operations.
Hopefully President Obama's Afghanistan strategy will recognize that putting trained and competent police on the streets of Afghanistan's communities to deal with crime and law enforcement ranks at the top of the priority list. Hopefully it also will put a premium on finding several thousand civilian police trainers, and new mechanisms to track both the police who are being paid - mostly by the U.S. - and the weapons that are being given to the police - mostly by the U.S. It won't solve Afghanistan's security situation, but it is an essential start.
Mark L. Schneider, Senior Vice President, International Crisis Group
"Dutch" Gets His Day In Court
ReplyDeleteA few decades too late, this Christian convert used to run one of the torture and execution prisons in Cambodia.
What a world. The Prime Minister of Cambodia today is a former Khemer Rouge foot soldier.
DOW 7223
Are we keeping a Dow Jones deathwatch, bob?
ReplyDeleteI take it back. Rather than a sight whipping, Hitchens deserves a mild to medium whipping.
ReplyDelete==
I think I read enough of his writings to think he probably knows this. Chris needs to live in the pressure cooker that is being a Jew to understand what it is to be human. Chris is barely going thru the motions and is using alcohol to numb the emotions. There's more to life than abstract intellectual exercises; Chris knows this. And he knows he can't manage it, even if he tried.
My darts showed a big loss today, Trish, just interested to see if they threw me a curve ball or not. I'm expecting a major collapse right before closing, based on the last few throws.
ReplyDeleteSo far we're down about -147.35 or -2.00%. Not bad, if I do say so myself, considering 2% today is not a 2% of six months ago.
ReplyDeleteMy services are of course free for directors and patrons of the Bar, everyone else pays 2% commission.
ReplyDelete"Major collapse" as in cries of horror and agony, screaming sirens, and banner headlines tomorrow - or "major collapse" as in the loss of, say, another hundred points from here?
ReplyDeleteNEW YORK -- The Standard & Poor's 500 index has fallen to its lowest level in nearly 12 years, the latest sign that investors are growing more and more pessimistic about the recession's impact on the global economy.
ReplyDeleteThe benchmark index most watched by Wall Street traders has fallen as low as 749.65, dropping below its Nov. 20 close of 752.44. That was the S&P 500's worst finish since April 14, 1997.
The index remains, at least for now, above the trading low it reached last Nov. 21 _ 741.02
Stocks are down broadly, with financial stocks under pressure although the government said earlier in the day it will take more steps to help the banking sector. Technology stocks are also falling after The Wall Street Journal reported that Yahoo Inc.'s new chief executive is planning a companywide reorganization.
The Dow Jones industrials are down 161 at 7,204. The S&P 500 is down 18 at 751, and the Nasdaq composite index is down 36 at 1,404.
The darts read out at something under 7,000 which was all I could decipher. Reading the darts is an art, not a science.
ReplyDeleteIf it were a science I'd be asking more than a measly 2%.
ReplyDeleteSo far we're down about -147.35 or -2.00%. Not bad, if I do say so myself, considering 2% today is not a 2% of six months ago.
ReplyDelete==
The DOW is starting to become irrelevant. In fact, I took it off my Market Monitor list.
Watching:
USO
GLD
VIX
SPX
NASDAQ
TRAN
SMH
FSLR
Regulators pledge to shore up financial system - AP - 1 hour, 24 minutes ago
ReplyDeleteFederal regulators said Monday they will launch a revamped program to shore up the nation's troubled banks that includes the option of increasing government ownership in financial institutions.
Bank stocks up amid report of gov't plan for Citi - AP - Mon 9:52 am ET
Bank stocks rose in early morning trading Monday after hitting new lows last week as investors welcomed the possibility that the government would increase its ownership stake in struggling Citigroup Inc. -- an alternative to nationalizing the bank.
http://biz.yahoo.com/top.html
http://snipurl.com/ci1pj
==
Good luck with that.
Reading the darts is an art, not a science.
ReplyDeleteMon Feb 23, 02:11:00 PM EST
Oh, I know all about it.
Plan to increase business at the Bar: Heavily advertise bob's free market analysis AND trish's ram's testicle casserole. Maybe throw in a weeknight Happy Hour wherein mat's calling for the summary execution of everyone but that W. H. Kunstler dude.
ReplyDeleteHere we go...
ReplyDeletehttp://spyswings.blogspot.com/2009/02/here-we-go.html
http://snipurl.com/ci3r0
==
Art that is a science.
Also suggest we put an empty pickle jar on the bar to collect donations to send me to Beirut for some "spirited" fact-finding. And tacky-trinket-shopping.
ReplyDelete7,153.57 -212.10 / -2.88%
ReplyDeleteIt's known as an "Obama Market"--
ReplyDelete(by the way, Rush was just saying that Michelle looked like a sausage at the big Governor's Dinner)
Dow -196.17 -2.66% 7,169.50
NASDAQ -43.59 -3.02% 1,397.64
S&P -21.71 -2.82% 748.34
DJ Wilshire 5000 -225.06 -2.88% 7,577.14
Russell 2000 -12.74 -3.10% 398.22
Philadelphia Semiconductor -7.34 -3.72% 189.94
Dow Transports -93.51 -3.46% 2,605.36
Dow Utilities -7.32 -2.18% 328.57
NYSE Composite -141.14 -2.94% 4,663.37
AMEX Composite -37.64 -2.82% 1,295.85
Morningstar Index -45.85 -2.41% 1,838.53
Everytime he opens his mouth the market drops.
ReplyDeleteSee now the market is making Drudge.
ReplyDeleteGo long on days you know Obama doesn't have any speaking engagements.
Dang, nearing closing and it's pulling up a bit.
ReplyDeleteThat's not throwing darts, bob. That's an analytical program.
ReplyDeletePurposeful Joint Lie by the Treasury, Fed, FDIC
ReplyDeletefrom Mish's Global Economic Trend Analysis by Michael Shedlock
A magic bailout of Citigroup and Bank of America is underway. Supposedly this bailout will not require any new capital. Details can be found in a Joint Statement by the Treasury, FDIC, OCC, OTS and the Federal Reserve on the economy.
A strong, resilient financial system is necessary to facilitate a broad and sustainable economic recovery. The U.S. government stands firmly behind the banking system during this period of financial strain to ensure it will be able to perform its key function of providing credit to households and businesses. The government will ensure that banks have the capital and liquidity they need to provide the credit necessary to restore economic growth. Moreover, we reiterate our determination to preserve the viability of systemically important financial institutions so that they are able to meet their commitments.
My Comment: Clearly, the US Government will continue to bail out insolvent banks no matter what it costs taxpayers.
"We announced on February 10, 2009, a Capital Assistance Program to ensure that our banking institutions are appropriately capitalized, with high-quality capital. Under this program, which will be initiated on February 25, the capital needs of the major U.S. banking institutions will be evaluated under a more challenging economic environment. Should that assessment indicate that an additional capital buffer is warranted, institutions will have an opportunity to turn first to private sources of capital. Otherwise, the temporary capital buffer will be made available from the government. This additional capital does not imply a new capital standard and it is not expected to be maintained on an ongoing basis.
My Translation: "This new capital will not cost anyone anything. It will be dispensed by magic fairies and recovered at a later date. We cannot share exactly how this magic works because under the rules of the magic ministry, we would be stripped of our magic hats and lose the rights to dispense magic if we did. Trust us. This is the proverbial free lunch that everyone says does not exist. However, like magic pixie dust, it does exist, it really does."
Any government capital will be in the form of mandatory convertible preferred shares, which would be converted into common equity shares only as needed over time to keep banks in a well-capitalized position and can be retired under improved financial conditions before the conversion becomes mandatory. Previous capital injections under the Troubled Asset Relief Program will also be eligible to be exchanged for the mandatory convertible preferred shares. The conversion feature will enable institutions to maintain or enhance the quality of their capital.
My Comment: The market cap of Citigroup is $11.5 billion. The market cap of Bank of America is $20.3 billion. How does a Government guarantee $400 billion of Citigroup and Bank of America debt and inject another $75 billion in preferred convertible shares without costing anyone a dime and without requiring any new capital? Why, magic pixie dust of course.
"Currently, the major U.S. banking institutions have capital in excess of the amounts required to be considered well capitalized. This program is designed to ensure that these major banking institutions have sufficient capital to perform their critical role in our financial system on an ongoing basis and can support economic recovery, even under an economic environment that is more challenging than is currently anticipated. The customers and the providers of capital and funding can be assured that as a result of this program participating banks will be able to move forward to provide the credit necessary for the stabilization and recovery of the U.S. economy. Because our economy functions better when financial institutions are well managed in the private sector, the strong presumption of the Capital Assistance Program is that banks should remain in private hands."
Anyone who believes the joint statements by the Treasury, FDIC, OCC, OTS and the Federal Reserve may as well believe in magic pixie dust. I believe the statements to a purposeful joint lie.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
That's more like it, dropping like a lead pipe now, but will it 7,000?
ReplyDeleteoweiie, an uptick
ReplyDeleteYou're right there is a conflict between the open mouth and pure darting.
ReplyDeleteThat's more like it, dropping like a lead pipe now, but will it 7,000?
ReplyDelete==
David Faber reporting that AIG has retained Weil Gotshal ahead of a possible bankruptcy filing this weekend. The reason is that the company will allegedly post a $60 billion loss, which will result in the usual cycle of credit downgrades, collateral postings, more capital needed to survive, and yet another mega systemic if not shock then question mark.
http://zerohedge.blogspot.com/2009/02/bombshell-aig-preparing-for-possible.html
http://snipurl.com/ci9ki
"People left and right are throwing in the towel," said Keith Springer, president of Capital Financial Advisory Services.
ReplyDelete"The biggest thing I see here is the incredible pessimism," Springer said. "The government is doing a lousy job of alleviating fears."
"There's no where to hide anymore," said Jim Herrick, director of equity trading at Baird & Co.
"It's only a very partial picture of what we may get," said Quincy Krosby, chief investment strategist at The Hartford. "This proverbial lack of clarity is damaging market psychology."
shop talk
7,114.78
-250.89 (-3.41%)
Even William Tell misses the apple sometimes, but we made a good run for that 7,000.
Tomorrow: another day!
Italy countercyclical fact of the day
ReplyDeleteTyler Cowen
Here is another good one from John De Palma:
Revenue raked in by Italy’s mob surged 40 percent last year, turning crime into the nation’s No. 1 business, Eurispes said in its annual report.
Income increased to 130 billion euros ($167 billion), up from about 90 billion euros in 2007, according to figures supplied by Eurispes and SOS Impresa, an association of businessmen to protest against extortion. Drug trafficking remains the primary source of revenue, bringing in about 59 billion euros, and the mob earned 5.8 billion euros from selling arms, the Rome-based Eurispes research group said today.
February 23, 2009 at 01:25 PM
AIG Seeks More Aid, May Lose $60 Billion, CNBC Says
ReplyDelete(Update1)
Email | Print | A A A
By Hugh Son and Vivek Shankar
Feb. 23 (Bloomberg) -- American International Group Inc., the insurer rescued by the government, is in talks with the U.S. for more funding as it prepares to report the biggest corporate loss in American history, CNBC reported, citing unidentified people familiar with the situation.
AIG may report a loss of as much as $60 billion, CNBC's David Faber said. The company is also exploring bankruptcy, which is an unlikely outcome, Faber said.
A loss may cast doubt on the New York-based insurer's ability to repay the government, which controls 80 percent of the shares. AIG's rescue package was expanded to about $150 billion in November as regulators tried to reduce losses at firms that did business with the company. The insurer posted more than $60 billion in writedowns and unrealized losses in two years through Sept. 30, 2008.
Fourth-quarter results, which may be announced next week, will probably include writedowns on assets including securities tied to commercial mortgages, CNBC said today. The company's board will meet this weekend to discuss another expansion of the rescue, the network reported. AIG spokeswoman Christina Pretto didn't immediately return a call from Bloomberg seeking comment.
The insurer slipped 4 cents to 50 cents at 2:59 p.m. in New York Stock Exchange composite trading, and has plunged 99 percent in the past 12 months.
To contact the reporters on this story: Hugh Son in New York at hson1@bloomberg.net; Vivek Shankar at vshankar3@bloomberg.net
Last Updated: February 23, 2009 15:09 EST
http://www.bloomberg.com/apps/news?pid=20670001&refer=home&sid=aoKti29TR4tE
http://snipurl.com/ciamv
==
"A loss may cast doubt on the New York-based insurer's ability to repay the government, which controls 80 percent of the shares. "
LOL. Yeah, so what's new.
"Tomorrow is another day."
ReplyDeleteGod, I love that movie.
Speaking of which, I was taking a look at NR's list of the 25 best conservative movies.
Judging from the list, we only began making them in 1984.
What a bunch of rot.
ReplyDeleteItaly's mob surged 40 percent last year
ReplyDelete==
Renewables, princes.
Green renewables.
They is big business.
Princessa
ReplyDelete(Auto spell misbehaving)
ReplyDelete.
ReplyDelete.
Every mom knows that pregnancy and birth really sap your energy. To get some back, many rattlesnake mothers will eat some of their non-surviving offspring, a new study finds.
This postpartum cannibalism helps the mother regain strength for her next reproductive effort, researchers report.
A lack of information on cannibalism in rattlesnakes prompted a group of Spanish, American and Mexican researchers to begin a study in 2004 that monitored cannibalistic behavior in 190 female pitvipers (Crotalus polystictus ) found in central Mexico, where the species is endemic. The snakes had a combined total of 239 clutches of eggs over the study period.
Story continues below ↓advertisement | your ad here
The researchers found that on average, the mother snakes ate about 11 percent of their postpartum mass — particularly eggs and dead offspring — to regain energy.
"A cannibal rattlesnake female can recover lost energy for reproduction without having to hunt for food, a dangerous activity that requires time and expends a great deal of energy," said Estrella Mociño and Kirk Setser, lead authors of the study and researchers at the University of Granada in Spain.
A wide variety of animals have been found to eat their offspring , including polar bears, burying beetles, hamsters, wolf spiders and a range of fish species. Scientists have looked for reasons why species might devour their genetic progeny.
.
.
http://www.msnbc.msn.com/id/29352542/
http://snipurl.com/cidn9
As for the albatross, we would like to remind you that freedom isn't free. In fact, it's priceless. So I think we're still within our budget.
ReplyDeleteWe should double military spending.
We should double military spending.
ReplyDeleteI agree. Beats wasting money on what we are up to now. Barney ranks, who did yeoman's work to get us in this fix, wants to cut it 25%.
We're going to pay for all this, big time.
Over a month since the United States launched its own counter-piracy effort, details of the operations are emerging. The U.S. coalition is deploying technological and legal creativity to get the job done.
ReplyDeleteSmoke and mirrors.
No one is serious about the pirates, or they would be a non-issue.
This morning at about 1130 the HMS Northumberland arrived in the port of Djibouti.
ReplyDelete...
Several people have emailed to ask why the taskforce is not mandated to retake captured ships. There are several reasons.
First, it is an operational one - the Northumberland's captain Martin Simpson was at pains to stress that he would need a much more robust force - including two helicopters - to ensure that his crew were not at risk. Boosting the force would increase the costs - and yet still in such a large area it would be impossible to ensure everyone was protected.
Day 5
While Rome Burns
ReplyDeletePosted by Edward Harrison on Saturday, 21 February 2009
The Risk in Europe
I mentioned last week that European banks are at significant risk. I want to follow up on that point, as it is very important. Eastern Europe has borrowed an estimated $1.7 trillion, primarily from Western European banks. And much of Eastern Europe is already in a deep recession bordering on depression. A great deal of that $1.7 trillion is at risk, especially the portion that is in Swiss francs. It is a story that could easily be as big as the US subprime problem.
In Poland, as an example, 60% of mortgages are in Swiss francs. When times are good and currencies are stable, it is nice to have a low-interest Swiss mortgage. And as a requirement for joining the euro currency union, Poland has been required to keep its currency stable against the euro. This gave borrowers comfort that they could borrow at low interest in francs or euros, rather than at much higher local rates.
But in an echo of teaser-rate subprimes here in the US, there is a problem. Along came the synchronized global recession and large Polish current-account trade deficits, which were three times those of the US in terms of GDP, just to give us some perspective. Of course, if you are not a reserve currency this is going to bring some pressure to bear. And it did. The Polish zloty has basically dropped in half compared to the Swiss franc. That means if you are a mortgage holder, your house payment just doubled. That same story is repeated all over the Baltics and Eastern Europe.
Austrian banks have lent $289 billion (230 billion euros) to Eastern Europe. That is 70% of Austrian GDP. Much of it is in Swiss francs they borrowed from Swiss banks. Even a 10% impairment (highly optimistic) would bankrupt the Austrian financial system, says the Austrian finance minister, Joseph Proll. In the US we speak of banks that are too big to be allowed to fail. But the reality is that we could nationalize them if we needed to do so. (And for the record, I favor nationalization and swift privatization. We cannot afford a repeat of Japan's zombie banks.)
The problem is that in Europe there are many banks that are simply too big to save. The size of the banks in terms of the GDP of the country in which they are domiciled is all out of proportion. For my American readers, it would be as if the bank bailout package were in excess of $14 trillion (give or take a few trillion). In essence, there are small countries which have very large banks (relatively speaking) that have gone outside their own borders to make loans and have done so at levels of leverage which are far in excess of the most leveraged US banks. The ability of the "host" countries to nationalize their banks is simply not there. They are going to have to have help from larger countries. But as we will see below, that help is problematical.
Western European banks have been very aggressive in lending to emerging market countries worldwide. Almost 75% of an estimated $4.9 trillion of loans outstanding are to countries that are in deep recessions. Plus, according to the IMF, they are 50% more leveraged than US banks.
Today the euro rallied back to $1.26 based upon statements from German authorities that were interpreted as a potential willingness to help out non-German (in particular, Austrian) banks.
However, this more sobering note from Strategic Energy was sent to me by a reader. It nicely sums up my concerns:
"It is East Europe that is blowing up right now. Erik Berglof, EBRD's chief economist, told me the region may need e400bn in help to cover loans and prop up the credit system. Europe's governments are making matters worse. Some are pressuring their banks to pull back, undercutting subsidiaries in East Europe. Athens has ordered Greek banks to pull out of the Balkans.
"The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan — and Turkey next — and is fast exhausting its own $200bn (e155bn) reserve. We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights. Its $16bn rescue of Ukraine has unravelled. The country — facing a 12% contraction in GDP after the collapse of steel prices — is hurtling towards default, leaving Unicredit, Raffeisen and ING in the lurch. Pakistan wants another $7.6bn. Latvia's central bank governor has declared his economy "clinically dead" after it shrank 10.5% in the fourth quarter. Protesters have smashed the treasury and stormed parliament.
"'This is much worse than the East Asia crisis in the 1990s,' said Lars Christensen, at Danske Bank. 'There are accidents waiting to happen across the region, but the EU institutions don't have any framework for dealing with this. The day they decide not to save one of these one countries will be the trigger for a massive crisis with contagion spreading into the EU.' Europe is already in deeper trouble than the ECB or EU leaders ever expected. Germany contracted at an annual rate of 8.4% in the fourth quarter. If Deutsche Bank is correct, the economy will have shrunk by nearly 9% before the end of this year. This is the sort of level that stokes popular revolt.
"The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU "union bonds" should the debt markets take fright at the rocketing trajectory of Italy's public debt (hitting 112pc of GDP next year, just revised up from 101pc — big change), or rescue Austria from its Habsburg adventurism. So we watch and wait as the lethal brush fires move closer. If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?"
.
.
http://www.creditwritedowns.com/2009/02/while-rome-burns.html
http://snipurl.com/cijdx
We should double military spending.
ReplyDelete==
And the reason for this is?
The International Monetary Fund has organized financial support for Ukraine, Latvia, Hungary and Serbia - countries that were in danger of not being able to service their foreign loans. Marek Belka, the head of the International Monetary Fund's Europe Department, says many East European nations experienced a real estate bubble that has now burst.
ReplyDeleteHe suggests that West European banks irresponsibly boosted their lending to the East, fueling the property price boom in the Baltic States.
"Everybody [foreign banks] was fighting for market share, basically disregarding any kind of risk," said Marek Belka.
Eastern Europe
I agree. Beats wasting money on what we are up to now.
ReplyDelete==
I don't. Increasing non-productive production and assets does nothing for the economy but harm it.
And the reason for this is?
ReplyDeleteStimulus.
Increasing non-productive production and assets does nothing for the economy but harm it.
ReplyDeleteI agree.
Shitcan all public subsidy of any kind for energy development. All of it.
See how many wind farms are erected with no place to market the power.
See how many wind farms are erected without corresponding grid expansion to convey their power.
And the reason for this is?
ReplyDeleteShock and awe.
Stimulus.
ReplyDelete==
That's asinine thinking. All you're doing is increasing indebtedness to produce useless assets that are of little economic benefit.
Shock and awe.
ReplyDelete==
That might impress your homely girlfriend, but it does little for you here.
In 2007, a remote-controlled submarine arm planted a Russian flag to the ocean floor at the North Pole and now the man behind the stunt, a parliamentarian called Artur Chilingarov, says he is going present evidence to the United Nations that the North Pole belongs to the Russians.
ReplyDeleteThe drive to extend Russia’s border north by nearly 250 kilometres is designed to add about 20% to Russian oil and gas reserves and has become something of a cause célebre, with one well-known intellectual claiming: “The [continental] shelf belongs to us. Polar bears live there, Russian polar bears.
And penguins live there, Russian penguins.”
The Arctic
I imagine we can agree the place not to spend some is Gaza
ReplyDelete$900 million for no result at all, a less than positive investment.
$900 million would build a great medical school in Boise. We might not have to 'ration' medicine, and begin bumping the old folks off, like Ash recommends--rationing medicine.
How many votes for a medical school in Boise, vs. $900 million to the Gazans?
A Case For Shock And Awe
ReplyDeleteImagining a world in which we did not remove Saddam. Just hypothetical thinking here. Hard questions, not easily answered.
Imagining a world in which we did not remove Saddam.
ReplyDelete==
And a tactical nuke was insufficient, because a trillion dollars in military welfare spending was needed to achieve the same results.
We've got this thing about nukes, Mat, we're trying not to use them. Just the way it is.
ReplyDeleteAnd a nuke doesn't try to set up, against the odds perhaps, a parliament, and try to make it work.
We should double military spending.
ReplyDeleteMon Feb 23, 05:17:00 PM EST
Does that come with a doubling of commitments? Because I'm feeling overstretched today.
And a nuke doesn't try to set up, against the odds perhaps, a parliament, and try to make it work.
ReplyDelete==
I understand, Bob. And even though from the very beginning I said this is a mistake, I also said that as long as you believe in this noble project, I will support you. (Though I still think you should have nuked 2/3 of the country first).
Well, it would have easier to just work with a Kurdish republic :)
ReplyDelete:)
ReplyDeleteLong Article About Today's Bloodletting In All The Markets
ReplyDeleteAcross the board, large firms, small firms, all took a hit.
My darts have the evening off.
Investors unable to extinguish their worries about a recession that has no end in sight dumped stocks again Monday. The Dow Jones industrial average tumbled 251 points to its lowest close since May 7, 1997, while the Standard & Poor’s 500 index logged its lowest finish since April 11, 1997. It’s as if the decade’s dot-com surge, collapse and subsequent recovery never occurred.
ReplyDeleteThe Dow is just over 100 points from 7,000. Both indexes have lost about half their value since hitting record highs in October 2007.
Story continues below ↓advertisement | your ad here
“People left and right are throwing in the towel,” said Keith Springer, president of Capital Financial Advisory Services.
==
Only, it's not as it seems.
The TRIN was bellow 1. Looks to me as a fake out.
below
ReplyDeleteDon't confuse poor ol' bob, Mat. I've never heard of this TRIN or Arms index. Can only take so much:)
ReplyDeleteAdditionally, over the past two quarters, TheMarkets.com has been forming contribution relationships directly with brokers worldwide. In that time, over 100 EMEA- and Asia-based brokers have begun to use TheMarkets.com as a distribution platform to reach the Company's global buy-side client base.
ReplyDeleteMajor brokers recently joining TheMarkets.com's research community include: ABN AMRO, a subsidiary undertaking of RBS; Daiwa Securities; Exane BNP Paribas; ING; Kepler Capital Markets; and UniCredit.
"TheMarkets.com has been, and continues to be, one of the most exciting growth stories in our industry," said David Eisner, CEO and President of TheMarkets.com. "In just eight years, we have become a global distribution network serving up broker research, estimates, and other valuable services to a leading buy-side client base.
Expands Footprint
:)
ReplyDeleteInvestopedia explains:
Arms Index - TRIN
A ratio of 1 means the market is in balance; above 1 indicates that more volume is moving into declining stocks; and below 1 indicates that more volume is moving into advancing stocks.
==
It means that what we've seen today was price manipulation. Volume was going elsewhere.
Does that come with a doubling of commitments?
ReplyDeleteNah. Just cover what we've already taken on.
Spread the pain.
Though I still think you should have nuked 2/3 of the country first...
ReplyDeleteThat might impress your homely girlfriend, but it does little for you here.
That might impress your homely girlfriend, but it does little for you here.
ReplyDelete==
Heheh. Touche.
ReplyDelete;)
When did you meet my girlfriend?
Heheh. I was going to say the same. :)
ReplyDeleteU.S. plans "substantial" pledge at Gaza meeting
ReplyDeleteThe money, which needs U.S. congressional approval, will be distributed through U.N. and other bodies and not via the militant group Hamas, which rules Gaza, said one official.
So much better than spending money on defense appropriations.
A paltry $900 billion.
ReplyDeleteFor greenhouses.
Rebar and cement for tunnel repairs.
BOOST FOR ABBAS
ReplyDeletePart of the goal of the new funding is to boost the Palestinian Authority of President Mahmoud Abbas, which controls the occupied West Bank.
And we never tire of watching The Never Ending Story.
Any guesses who'll pay to rearm the police? They surely did not come out unscathed. Or, at least I'd expect such a case will be made.
Any guesses who'll pay to rearm the police?
ReplyDelete==
Think of it as a stimulus to the economy. :)
The Formula That Killed Wall Street
ReplyDeletehttp://www.wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=all
http://snipurl.com/civmv
The idea of nationalizing banks has gained traction in recent weeks, in spite of repeated insistence by the White House that private ownership is the way to go.
ReplyDeleteA growing list of prominent experts say at least partial and temporary nationalization may be necessary, including former Fed chief Alan Greenspan, Nobel Prize-winning economists Joseph Stiglitz and Paul Krugman, and former Fed vice-chair Alan Blinder.
Senate banking committee chairman Chris Dodd has also acknowledged a seizure of one or more banks may be unavoidable.
Fears Hit Banks
Spread the pain.
ReplyDeleteMon Feb 23, 07:49:00 PM EST
To whom?
AIG: Inquiring Minds Want To Know
ReplyDeletehttp://market-ticker.denninger.net/archives/824-AIG-Inquiring-Minds-Want-To-Know.html
http://snipurl.com/cixyf
I'm smelling too many Chinese rats.
ReplyDeleteCult Leaders Make Lousy Presidents
ReplyDeleteMy wife actually MADE money in her 401 last month!
ReplyDelete...I give no advice, not wanting to fuck with a miracle.
Mat,
ReplyDeleteHelp me out here.
Wikipedia says TRIN < 1 is bearish.
Investopedia says TRIN < 1 volume moving into advancing stocks.
?
A value below 1 usually indicates bullish sentiment, and a value above 1 – bearish.
ReplyDeletehttp://en.wikipedia.org/wiki/TRIN_(finance)
http://snipurl.com/cizix
==
Same as Investopedia, Sam.
Here's pretty good article, an indictment of Obama--and US voters. Not that we haven't heard it before, but, good article.
ReplyDeleteCult Leaders Make Lousy Presidents
I still can't believe we elected this turkey.
If we have a value 'Mat greater than 1', watch out. My reading indicates an explosion is imminent.:)
ReplyDeleteThis value usually occurs in the morning after coffee, in my experience. :)
If we have a value 'Mat greater than 1', watch out. My reading indicates an explosion is imminent.:)
ReplyDeleteThis value usually occurs in the morning after coffee, in my experience. :)
Right, thanks. Everything reads upside-down down here.
ReplyDelete:)
Gary Lock has been chosen for the Cabinet. This may not be such a bad choice. Seems I remember him as a not so bad governor of Washington state.
ReplyDeleteIs that the Snake, Bob?
ReplyDeleteWas reading an article on tea, today. If you are a tea drinker, get the type from Camellia sinensis, black or green. This has been found recently to have some very definite anti-stroke benefits, among other things. Article said you need it from Camellia sinensis to get the benefit. Was from legit medical studies, not advertisement. Safeway usually has a good selection of teas of this type.
ReplyDeleteSame Grand Rhonde, seen from the top of a grade. The Snake isn't far away though, maybe 10 or 12 river miles downstream, where they meet. Taken from the top of what is know locally as Rattlesnake Grade.
ReplyDeleteI'm running out of different pictures to post.
ReplyDeleteI gotcher cult right here:
ReplyDeleteThe Cult of the Presidency
Who can we blame for the radical expansion of executive power? Look no further than you and me.
Gene Healy | June 2008 Print Edition
“I ain’t running for preacher,” Republican presidential candidate Phil Gramm snarled to religious right activists in 1995 when they urged him to run a campaign stressing moral themes. Several months later, despite Gramm’s fund raising prowess, the Texas conservative finished a desultory fifth place in the Iowa caucuses and quickly dropped out of the race. Since then, few candidates have made Gramm’s mistake. Serious contenders for the office recognize that the role and scope of the modern presidency cannot be so narrowly confined. Today’s candidates are running enthusiastically for national preacher—and much else besides.
In the revival tent atmosphere of Barack Obama’s campaign, the preferred hosanna of hope is “Yes we can!” We can, the Democratic front-runner promises, not only create “a new kind of politics” but “transform this country,” “change the world,” and even “create a Kingdom right here on earth.” With the presidency, all things are possible.
Even though Republican nominee John McCain tends to eschew rainbows and uplift in favor of the grim satisfaction that comes from serving a “cause greater than self-interest,” he too sees the presidency as a font of miracles and the wellspring of national redemption. A president who wants to achieve greatness, McCain suggests, should emulate Teddy Roosevelt, who “liberally interpreted the constitutional authority of the office” and “nourished the soul of a great nation.” President George W. Bush, when passing the GOP torch to his former rival in March, declared that the Arizona senator “will bring determination to defeat an enemy and a heart big enough to love those who hurt.” Hillary Clinton, meanwhile, suggests she is “ready on Day 1 to be commander in chief of our economy.”
The chief executive of the United States is no longer a mere constitutional officer charged with faithful execution of the laws. He is a soul nourisher, a hope giver, a living American talisman against hurricanes, terrorism, economic downturns, and spiritual malaise. He—or she—is the one who answers the phone at 3 a.m. to keep our children safe from harm. The modern president is America’s shrink, a social worker, our very own national talk show host. He’s also the Supreme Warlord of the Earth.
This messianic campaign rhetoric merely reflects what the office has evolved into after decades of public clamoring. The vision of the president as national guardian and spiritual redeemer is so ubiquitous it goes virtually unnoticed. Americans, left, right, and other, think of the “commander in chief” as a superhero, responsible for swooping to the rescue when danger strikes. And with great responsibility comes great power.
It’s difficult for 21st-century Americans to imagine things any other way. The United States appears stuck with an imperial presidency, an office that concentrates enormous power in the hands of whichever professional politician manages to claw his way to the top. Americans appear deeply ambivalent about the results, alternately cursing the king and pining for Camelot. But executive power will continue to grow, and threats to civil liberties increase, until citizens reconsider the incentives we have given to a post that started out so humble.
Minimum Leader
It wasn’t supposed to be this way.
[...]
http://www.reason.com/news/printer/126020.html
Supreme Warlord of the Earth.
Cue Imperial March from Star Wars.
Admit it, we love it. Love it, love it, love it - and would never part with it.
Rattlesnake Grade
ReplyDeleteIt's a bugger. Just a couple years ago some guard rails were finally put in. You could have gone over the edge, no one would find you for the next 10 years.
And can I get a very low B1 flyover with that?
ReplyDeleteFollowed by an Apache swarm?
Mat,
ReplyDeletePlease shoot me a link where I can follow the TRIN. Can't seem to find one anywhere.
No we don't. If we did, Japan and Germany wouldn't have been rebuilt. Etc etc etc and etc and many other examples. We would have waltzed into many a place, made beach hotels for our masses. Owned whole countries. Instead Castro is still snubbing his nose at us. Lately in our hemisphere we've invaded--Grenada.
ReplyDeleteWe had a brief period of colonialism after the Spanish and that's about it.
ReplyDeleteSam,
ReplyDeletehttp://ca.quote.com/us/stocks/chart.action?s=$TRIN
Thanks.
ReplyDeleteIf we have a value 'Mat greater than 1', watch out. My reading indicates an explosion is imminent.:)
ReplyDelete==
That's very prescient, Bob. That's me and me cockroach in me head. :)
Glad to help, Sam. You need to use the dollar sign when charting indexes.
ReplyDeleteNo we don't. If we did, Japan and Germany wouldn't have been rebuilt. Etc etc etc and etc and many other examples. We would have waltzed into many a place, made beach hotels for our masses. Owned whole countries. Instead Castro is still snubbing his nose at us. Lately in our hemisphere we've invaded--Grenada.
ReplyDeleteMon Feb 23, 10:22:00 PM EST
Apparently our own hemisphere isn't a particularly compelling destination. Though there was Operation Just Cuz. And that little affair in the Hondo, among other extracurriculars for which there are no nifty t-shirts.
Additionally, rebuilding and supreme warlording are not mutually exclusive activities.
But...your protest proves Healy's point.
roger
ReplyDeleteAbout the $.
ReplyDeleteThe Abyss Stares Back
ReplyDeletefrom Clusterfuck Nation by james howard kunstler
The public perception of the ongoing fiasco in governance has moved from sheer, mute incomprehension to goggle-eyed panic as the scrims of unreality peel away revealing something like a national death-watch scene in history's intensive care unit. Is the USA in recession, depression, or collapse? People are at least beginning to ask. Nature's way of hinting that something truly creepy may be up is when both Paul Volcker and George Soros both declare on the same day that the economic landscape is looking darker than the Great Depression.
Those tuned into the media-waves were enchanted, in a related instance, by Rick Santelli's grand moment of theater in the Chicago trader's pit last week when he seemed to ignite the first spark of revolution by demonstrating that bail-out fatigue had morphed into high emotion -- and that the emotion could be marshaled against public policy. The traders in the pit on-screen seemed to color up and buzz loudly, like ordinary grasshoppers turning into angry locusts preparing to ravage a waiting valley. "Are you listening, President Obama?" Mr. Santelli asked portentously.
In the broad blogging margins of the web that orbit the mainstream media like the rings of Saturn, an awful lot of reasonable people have begun to ask whether President Obama is a stooge of whatever remains of Wall Street, with Citigroup and Goldman Sachs's puppeteer, Robert Rubin, pulling strings behind an arras in the Oval Office. Personally, I doubt it, but it is still a little hard to understand what the President is up to. For one thing, the stimulus package, so-called, looks more and more like national sub-prime mortgage itself, a bad bargain made under less-than-realistic terms, with future obligations fobbed onto whoever inhabits this corner of the world for the next seven hundred years -- and all to pay for a bunch of granite counter-tops and flat-screen TVs.
I suppose Mr. Obama is burdened with the knowledge that the economic truth is so much worse than he imagined back in November that there is simply nothing to do at this point except pretend to serve up a "tasting menu" of rescue plans in the hope that markets and mechanisms might be conned back into compliance with our wish keep getting something-for-nothing forever. FDR already used the fear of fear itself trope, so Mr. O is left with little more than displaying pluck and confidence in the face of overwhelming bad news.
The sad truth is that banking has become a Chinese fire drill -- a frantic act of futility -- as insolvent companies persist in covering up their losses in order to avoid the counter-party hell of credit default swaps that would ring the world's "game over" bell. This can only go on so long. All the chatter about "nationalizing" the banks really boils down to what kind of bankruptcy work-out will they be put through, how destructive will the process be, and how much of the pain can be shoved forward in time to people now in diapers and their descendants.
Among the questions that disturb the sleep of many casual observers is how come Mr. O doesn't get that the conventional process of economic growth -- based, as it was, on industrial expansion via revolving credit in a cheap-energy-resource era -- is over, and why does he keep invoking it at the podium? Dear Mr. President, you are presiding over an epochal contraction, not a pause in the growth epic. Your assignment is to manage that contraction in a way that does not lead to world war, civil disorder or both. Among other things, contraction means that all the activities of everyday life need to be downscaled including standards of living, ranges of commerce, and levels of governance. "Consumerism" is dead. Revolving credit is dead -- at least at the scale that became normal the last thirty years. The wealth of several future generations has already been spent and there is no equity left there to re-finance.
If contraction and downscaling are indeed the case, then the better question is: why don't we get started on it right away instead of flogging rescue plans to restart something that is DOA? Downscaling the price of over-priced houses would be a good place to start. This gets to the heart of Rick Santelli's crowd-stirring moment. Let the chumps and weasels who over-reached take their lumps and move into rentals. Let the bankers who parlayed these fraudulent mortgages into investment swindles lose their jobs, surrender their perqs, and maybe even go to jail (if attorney general Eric Holder can be induced to investigate their deeds). No good will come of propping up the false values of mis-priced things.
No good, in fact, will come of a campaign to sustain the unsustainable, which is exactly what the Obama program is starting to look like. In the folder marked "unsustainable" you can file most of the artifacts, usufructs, habits, and expectations of recent American life: suburban living, credit-card spending, Happy Motoring, vacations in Las Vegas, college education for the masses, and cheap food among them. All these things are over. The public may suspect as much, but they can't admit it to themselves, and political leadership has so far declined to speak the truth about it for them -- in short, to form a useful consensus that will allow us to move forward effectively. One of the sad paradoxes of politics is that democracies do not seem very good at disciplining their citizens' behavior. The wish to please voters and the influence of campaign money overwhelm even leaders with mature instincts. In America's case, this could lead to what I like to call corn-pone Naziism a few years down the road. Someone will design snazzy uniforms and get us all marching around to "God Bless America." At the point of a gun.
It's not too late for President Obama to start uttering these truths so that we can avoid a turn to fascism and get on with the real business of America's next phase of history -- living locally, working hard at things that matter, and preserving civilized culture. What a lot of us can see now staring out of the abyss is a new dark age. I don't think it's necessarily our destiny to end up that way, but these days we're not doing much to avoid it.
==
Because it's Monday!
Hey, Great find on that cult article!
ReplyDelete(shakes head, wonders if al-bob's gone into alz-heimer vilLe PERMANENTLY)
The real cause of the financial crisis, and the real solution
ReplyDelete-- An MIT Blackjack Team perspective
The mathematics of probability that govern the trade-offs of risk and reward are fundamentally counter-intuitive.
The reason that societies ban pyramid schemes outright, instead of relying on the market to make them unprofitable, is that most people trust their intuition, and their intuition leads them astray. If you were to wait for the market to run its course on a pyramid scheme, the losses could devastate a whole country, as Albanians found out a few years ago.
In our days of outwitting casinos around the world, we have come across many people who thought that they also had a great system, but were in fact compulsive gamblers who eventually lost everything. Among the false systems that intuitively feel right, there is none as insidious and deadly as the Martingale, where a player doubles his bet after every loss.
The Martingale system works as follows: suppose you need an extra $100. You go down to your nearest casino, and bet $100 on a hand of blackjack, or on any other almost 50/50 proposition. Should you win right away, you have reached your goal and gotten your money. Now if you lose, you bet $200. If you win the second bet, you're up $100 over all and once again successful. But a little more than one out of four times you'll lose both, and end up down $300. In that event you simply bet $400. If you lose again you bet $800, and you just keep doubling your bet until you win once. Clearly you have to win at least once eventually, and with this system you end up with your $100 profit even if you start out losing for a while. If you're willing to bet up to ten times for instance, your chance of losing all ten bets is close to one in a thousand. That means that with a probability of almost 99.9%, you will win one of those ten bets, and therefore walk away with your $100.
Of course there's a catch that few people notice. When the unlikely one in a thousand event happens and you do lose ten in a row, the actual amount that you've lost is over $100,000, all risked to win a mere hundred bucks. You might not have any way of doubling up again. You might even need some sort of bailout.
In the world of investments, there are many ways more subtle than the Martingale to guarantee a better return over a period of months, years, and even decades, at the cost of certain ruin way down the road. Let's say for instance that you're managing a hedge fund which invests in stocks. Your strategy of sound fundamental analysis is fairly well understood. You have found that you can generate an average return of 6% per year, and so can most of your equally qualified competitors who have access to the same talent pool and knowledge base as you do. But then one of your competitors realizes that he can automatically increase his return to 9% by selling something called "out of the money puts" on the market. This means that the competitor's fund essentially sells insurance against the market crashing dramatically. In normal times his fund will gain the premium from selling this insurance which boosts his returns. However, in the rare event of an extreme market crash his investors will lose everything. This form of Martingale can be easily tuned to work for various time periods with various chances of collapse.
When investors see a fund manager generate a higher return that his competitors, they will move their money into that fund and out of the other ones. And money managers are rewarded based on the size of their fund, or the level of returns. The managers do not risk their own money. If they can provide a bigger gain for a few years, they win everything. They might even be lucky enough to be retired by the time their investors are paying the piper. The managers who have the discipline to understand and avoid the Martingale tricks will not be able to compete on the basis of their returns over a few years, and will eventually lose their funds and their jobs.
But many people managing large funds are men and women of integrity. They will not willingly expose their investors to total loss in order to line their own pockets with cash. Yet the system as it presently works does not allow them to compete without some kind of trade-off of long term risk versus short term reward. The solution that they usually flock to is to create such a complex Martingale system that they themselves cannot understand the longer term risk implications. As long as the mathematical analysis of the risk of ruin lies beyond the understanding of the CEOs, the money managing organizations can stay competitive by employing their latest version of a return-boosting Martingale, without admitting to themselves or to others that they have been peer-pressured into the financial equivalent of selling their soul to the Devil.
In the 80's the emerging Martingales were called junk bonds and LBO's. In more recent times they are known as mortgage backed securities and
credit default swaps. You can regulate mortgages half to death and try to control what kind of risks various kinds of investment organizations are legally allowed to take. You can even forbid short selling and ban golden parachutes. But as long as managers are paid a percentage for managing other people's money, they will compete with each other based on the returns they appear to generate. The pressure to create out-sized returns will eventually force them to invent the latest complex scheme which will have the same effect: eventually the investors lose it all. Complex financial structures will once again emerge that even the best professional investors cannot fully understand. People will always move their money into the places that give the best return over a few years, no matter how many times they are warned with the disclaimer that "past performance is no indication of future returns." And eventually the crisis that results will reach global dimensions beyond the means of a government bailout, especially if part of the risk managing strategy becomes counting on bailouts happening every decade or so.
The only solution is to forbid money management as we know it. We could certainly have people like Warren Buffet manage investors' money
alongside their own, with no additional percent-based compensation beyond their own investment gains. But we must remove the incentive to create Martingales, and protect people from their own intuitive desire to move their money into the funds which generate out-sized returns, without understanding the long term risks which create them.
In our globalized free market world, almost everyone is ultimately an investor, whether by owning a house or merely holding a job in a company which depends on access to capital. The scope of the current bailout has reached the point of real danger. We must fix the underlying problem before doubling down again as a society, or risk going the way of Albania.
http://semyondukach.blogspot.com/2009/01/real-cause-of-financial-crisis.html
http://snipurl.com/cjdhv
Soldier Says Obama Is A Fraud, Refuses Orders
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteLife In Hawaii Permanently Damages Residents, New Study Says
ReplyDeleteAP--2/21/2009--A new study by an international group of scientists, Scientists For Physical and Geophysical Responsibility, finds island life leads to malaise and a decline in initiative.
The scientists studied seven groups of islanders from around the world and compared them to a control group of mainlanders.
The groups were tracked for initiative, originality, perseverance and a number of other traits....
"Basically, what we found was these islanders get so they just want to sit around and pound drums and eat fruit, and have sex", the report concluded. "Some take up blogging. We suspect diet has a large influence, but have yet to establish a direct cause and effect relationship there. We do know the overall outline of our findings are sound". He added, "Australians seem immune to these phenomenon, presumably because of the size of the place. Australians do have a lot of sex, though."
from New Century Scientist
The State of Hawaii does not maintain "vault copies" of birth certificates. They keep all the data in bytes, and pieces.
ReplyDeleteEvery copy they print is a little bit different than the last, it seems.
This comment has been removed by the author.
ReplyDeleteDouble Defense spending so that President Obama can follow the SOP and impose the Conflict Resolution Standard upon the Israeli?
ReplyDeleteThe bricks are being laid, one by one, and the solution for the Bar patrons is to call me an anti-semite, when I love the sound of Arabic, along with all the other semitic languages.
Done in by a 19th century German propagandist, the Jewish folks let their enemies define the terms of the debate. Actually embrace the propaganda of their enemies.
In any case, there has been a sea change in US policy, as predicted.
The Obama Administration Sacrifices Israel
by Anne Bayefsky
... inserting a new paragraph under the heading "Identification of further concrete measures and initiatives ... for combating and eliminating all manifestations of racism, racial discrimination, xenophobia and related intolerance..." with the subtitle "General provisions on victims ... of discrimination." The paragraph includes: "Calls for ... the international protection of the Palestinian people throughout the occupied Palestinian territory." In other words, it claims that the Palestinian people are victims of Israeli racism and demands that all U.N. states provide protection from the affronts of the racist Jewish state.
RCP
ReplyDeleteNew National Polls
President Obama Job Approval: ABC/WP at 68%,
CBS/NYT at 63%
China’s dollar dilemma
ReplyDeleteBy Geoff Dyer in Beijing
China’s near $2,000bn (£1,380bn, €1,560bn) in reserves, the world’s largest, are often viewed outside the country as a great strength – an insurance policy against economic turbulence. But within China, they are increasingly seen by the public and even some policymakers as something of an albatross – a huge pool of resources not being used at home that will plunge in value if the US dollar collapses. Why, people ask, should such a relatively poor country bankroll such a rich one?
Even at the elite level, the sense of frustration occasionally bubbles over. “We hate you guys,” Luo Ping, a director-general at the China Banking Regulatory Commission (CBRC), complained last week on a visit to New York. “Once you start issuing $1-$2 trillion ... we know the dollar is going to depreciate, so we hate you guys, but there is nothing much we can do.”
As China’s economy slows sharply, the debate on how to manage its reserves is intensifying. Some propose spending the money at home; others want more diversification of investments. But the consensus behind recycling foreign currency into US government securities is coming under attack
Seems others had noticed the US policy shift, as well ...
ReplyDeleteObama's Durban Gambit
By Caroline Glick
the Palestinian delegation proposed that a paragraph be added to the conference's agenda. Their draft "calls for implementation of... the advisory opinion of the ICJ [International Court of Justice] on the wall, [i.e., Israel's security fence], and the international protection of Palestinian people throughout the occupied Palestinian territory."
The American delegation raised no objection to the Palestinian draft.
Issued in 2004, the ICJ's advisory opinion on the security fence claimed that Israel has no right to self-defense against Palestinian terrorism. At the time, both the US and Israel rejected the ICJ's authority to issue an opinion on the subject.
On Thursday, by not objecting to this Palestinian draft, not only did the US effectively accept the ICJ's authority ...
"The bricks are being laid, one by one, and the solution for the Bar patrons is to call me an anti-semite, when I love the sound of Arabic, along with all the other semitic languages".
ReplyDeleteoh, wah, dr. this sounds pathetic. so you share the opinion of O that the arabic is beautiful sounding, definately nothing to brag about. you've been part of laying the mortar. I do agree with you that if O does not fix the economy than the 70% of the american jews that voted for him to do this will have made the greatest mistake in thier history in this country.
All those semitic languages are music to the ears, slim.
ReplyDeleteArabic, Hebrew, all semitics.
The majority of US voters followed Mr Crowns' advice and voted for Obama. The Muslims and the Jews, in the US, agreeing that Obama provided the "best way forward".
The legacy of Team43.
An electorate that was united resulting in a government that can be partisan.
I foresee international peacekeepers across the Levant, due to the failure of the locals to reach any sort of mutual accomedation to each other.
It is the SOP, for US.