[url=www.reuters.com/article/2012/09/02/us-china-banks-steel-idUSBRE8810AM20120902]China's steel traders expose banks' bad debts[/url]: [i](Reuters) - China's banks are coming after the country's steel traders, hauling executives into court to chase down loans that some traders said they didn't initially need and can't now repay.[/i]
[quote]The heavy push to recover the loans is another sign of strain on China's financial system at a time when the country's leaders are contemplating another round of stimulus to boost the economy, and when banks are worried about bad debts piling up.

The battle between the banks and steel traders also exposes flaws in the 4 trillion ($629 billion) stimulus round in 2008, and offers a warning to those calling for pumping more money into the system. At that time, Chinese banks threw money at the steel trade - a crucial cog in supplying the country's massive construction and infrastructure growth.

But those steel loans, after offering a quick fix, became excessive, poorly managed, or a combination of the two. [u]Government officials insisted more money was needed to prop up the industry. Steel executives said the money flow was too heavy, and they had to put the money to work in real estate and the stock market[/u].

"After the financial crisis, when the government released its stimulus, banks begged us to borrow money we didn't need," Li Huanhan, the owner of Shanghai Shunze Steel Trading, told a judge at a recent hearing. "We had nothing to do with the money, so we turned to other investments, like real estate."[/quote]
This is the reason it is good thing that while the US Fed can pump trillions of free-money loans onto banks' balance sheets, it cannot force them to lend it out. In China the central planners said "thou shalt lend", and lend they did, with reckless abandon. That lending bubble fed into a massive resource-price bubble (hello, Australia!) and helped feed a wild real-estate bubble in urban centers like Beijing and Shanghai:
[quote]By the end of last year, China's steel industry had a total debt burden of $400 billion - around the size of South Africa's economy. Some of China's leading mills alone owe 200-300 billion yuan ($32-$47 billion), according to the China Iron and Steel Association.
...
In one Shanghai courtroom, steel trading firm boss Li tries to fend off a fed-up lender. China Minsheng Bank, the country's eighth-biggest lender, is trying to recover 3 million yuan ($472,100) of loans it made to the trading firm.

When the bank recalled the loan in June, Li tried to sell two Shanghai apartments she had used as collateral. In a flat property market, she came up empty-handed.[/quote]


[url=www.nytimes.com/2012/09/03/business/economy/us-companies-prepare-in-case-greece-exits-euro.html?ref=business]U.S. Companies Brace for an Exit From the Euro by Greece[/url]: [i]Even as Greece desperately tries to avoid defaulting on its debt, American companies are preparing for what was once unthinkable: that Greece could soon be forced to leave the euro zone.[/i]
[quote] That is a striking contrast to the assurances from European politicians that the crisis is manageable and that the currency union can be held together. On Thursday, the European Central Bank will consider measures that would ease pressure on Europe’s cash-starved countries.

JPMorgan Chase, though, is taking no chances. It has already created new accounts for a handful of American giants that are reserved for a new drachma in Greece or whatever currency might succeed the euro in other countries.

Stock markets around the world have rallied this summer on hopes that European leaders will solve the Continent’s debt problems, but the quickening tempo of preparations by big business for a potential Greek exit this summer suggests that investors may be unduly optimistic. Many executives are deeply skeptical that Greece will accede to the austere fiscal policies being demanded by Europe in return for financial assistance.

Greece’s abandonment of the euro would most likely create turmoil in global markets, which have experienced periodic sell-offs whenever Europe’s debt problems have flared up over the last two and a half years. It would also increase the pressure on Italy and Spain, much larger economic powers that are struggling with debt problems of their own.

“It’s safe to say most companies are preparing,” said Paul Dennis, a program manager with Corporate Executive Board, a private advisory firm.

In a survey this summer, the firm found that 80 percent of clients polled expected Greece to leave the euro zone, and a fifth of those expected more countries to follow.

“Fifteen months ago when we started looking at this, we said it was unthinkable,” said Heiner Leisten, a partner with the Boston Consulting Group in Cologne, Germany, who heads up its global insurance practice. “It’s not impossible or unthinkable now.”

Mr. Leisten’s firm, as well as PricewaterhouseCoopers, has already considered the timing of a Greek withdrawal — for example, the news might hit on a Friday night, when global markets are closed.

A bank holiday could quickly follow, with the stock market and most local financial institutions shutting down, while new capital controls make it hard to move money in and out of the country. [/quote]

Or this?

Cheesehead,

Your reaction to critiques of McElvaine and the earlier article you linked to about "reckless spending spree" comes across to me as "No, no, no, those articles had [I]facts[/I] in them, the article and all its conclusions must be true!". I tried to show in my last post that it doesn't work this way.

McElvaine's article uses 100% true facts to show Obama doing well as a job-creator. Yet I showed a chart that is also based on 100% factual data that shows Obama is the worst jobs-creating President ever. How can two articles based on 100% factual data reach opposite conclusions? The only rational conclusion is that how facts are used and which facts are used are extremely important in creating a fair picture of reality rather than a propaganda piece. This is also where article analysis become completely subjective.

So where, in my opinion, did McElvaine mis-use facts and cherry-pick facts to paint, in my opinion, a rather one-sided pro-Obama version of reality?

McElvaine wants to portray Obama as being a good jobs creator. So he starts with a chart of how many jobs were created during their each President's time in office -- lets call these facts apples. He sticks Truman's through Bush's apples on the chart. Then he sticks Obama's apple on the chart -- "Damn that looks horrible" he says. So he looks at his data and says "if I exclude all the 2009 data my chart will look much better". So he sums up the jobs created during the President's term excluding the first 12 months -- lets call these facts oranges. He sticks Obama's orange on the apples chart. Ah, that's better.

Is this fair? Maybe, maybe not. This is where it all goes subjective. Should 12 months data be excluded -- or would 0, 3, 6, or 18 be fairer? Who knows, I suspect the author chose 12 only because it made his chart look best. But there's more. Reagan inherited a crap economy. Clinton lucked into some boom numbers at his start. Perhaps some of the other President's apples should also be turned into oranges. Does the author care? Does he even address these issues? No. Instead he posts his apples and oranges chart and moves on.

Next up in the author's defense of Obama's job creation record -- comparing Truman to Eisenhower, Carter to Reagan, etc. Irrelevant. I'm fairly certain Obama had little to do with the numbers coming out of any of those administrations. I'm also fairly certain those President's had little to do with Obama's job creation numbers.

Next up the author creates a monthly jobs gain/loss chart since 2008. It's a small point, put notice how Obama's name is carefully placed over the Nov-2010 data when consistent monthly gains began. I thought the author had just argued that only 2009 should be excluded. I guess the author felt his chart looked better if he moved Obama's name away from the negative numbers at the start of 2010.

Next up the author calculates the rate at which Obama is creating jobs. Despite previously arguing that it is fair to exclude the 2009 data, now he excludes all of 2009 and 2010. Could it be that the author chose these facts because Obama looks better by citing 2.8M jobs over 18 months (155,000/month) rather than 2.8M over 30 months (93,000/month)?

McElvaine uses his analysis to refute Ryan's statement that Obama has made a bad situation worse. Unfortunately, since the author used carefully selected data and apples-to-oranges comparisons, in my opinion he did not make a very good case. I happen to agree with the author that Ryan's statement is way out there, but the author's analysis is way too slanted for my tastes.

My conclusion: In my opinion, McElvaine has created a left-wing propaganda piece based on a select set of facts. The chart I posted would fit in perfectly in with a right-wing propaganda piece based on a different set of facts. As I said before, the reality lies somewhere in the middle.

Or this?

Lack of curiosity also led Mr Bush to suspect intellectuals in general and academic experts in particular. David Frum, who wrote speeches for Mr Bush during his first term, noted that “conspicuous intelligence seemed actively unwelcome in the Bush White House”. The Bush cabinet was “solid and reliable”, but contained no “really high-powered brains”. Karen Hughes, one of his closest advisers, “rarely read books and distrusted people who did”. Ron Suskind, a journalist, has argued that Mr Bush created a “faith-based presidency” in which decisions, precisely because they were based on faith, could not be revised subsequently.

[URL="http://www.economist.com/node/12931660"]http://www.economist.com/node/12931660[/URL]

Crosspost from the Election thread
 

Americans feel, correctly, that the way things are functioning in the US today are grossly unfair. Unfortunately, the Tea Party types seem to be attacking the wrong targets. Stiglitz in a simple yet persuasive argument:

[url]http://www.guardian.co.uk/business/economics-blog/2012/sep/03/mitt-romney-tax-avoidance-society[/url]


PS: One of the reasons Obama has been a poor job creator is that federal and state governments have been letting go like heck. Obama is actually a better private sector job creator than Shrub ever was.

[QUOTE=cheesehead;310135]In contrast to the previous case where I posted an article refuting a false assertion about Obama, this time no one has yet accused me of hyperpartisanship or "spinning", nor has anyone falsely attributed McElvaine's statements directly to me.[/QUOTE]

You sound almost disappointed to not have "again been the victim of a vicious slander campaign". Re. the "accusation" in question, there is no need for me to do so, because

[a] You have established beyond any reasonable doubt the extremely partisan nature of your political views;

[b] Unlike you, I don't find endlessly repeating myself in whiny, bickering fashion to be a discussion enhancer or worthwhile use of my time.

If I'm wrong w.r.to the first assertion above it should be the easiest thing in the world for you to prove: Show us the posts in which you express some criticism or skepticism of any Obama-administration economic or financial policy, or heck, any policy whatsoever. If you are not in fact a lopsided partisan, given your post count and voluminous portion thereof in the Soap Box, such posts should be easy to find.

------------------------------

[QUOTE=garo;310206]PS: One of the reasons Obama has been a poor job creator is that federal and state governments have been letting go like heck. Obama is actually a better private sector job creator than Shrub ever was.[/QUOTE]

The public sector didn't start with serious downsizing until at least a full year after the private-sector contraction speed had peaked. Governments are very-belatedly doing what must be done in order to stave off bankruptcy, as a result of decades of wildly profligate spending increases.

With regard to the private-jobs-creation claim, if I wanted a pro-Bush spin, I could very easily claim that "despite having inherited a very deep recession as a result of the Clinton-era dotcom bubble's bursting, compounded by the events of 9/11, Bush managed to create over 10 million private-sector jobs by the middle of his second term, at which point the completely unforeseeable events which brought the global financial system to the brink of disaster intervened."

[QUOTE=ewmayer;310217]...Bush managed to create over 10 million private-sector jobs by the middle of his second term...[/QUOTE]

Many of them related to "defense".

[QUOTE=ewmayer;310191]From the article:

It's very clear that McElvaine dates the start of the "Obama recovery" to mid 2009. [I][Edit: Or perhaps end of 2009; or maybe mid-2010, depending on which makes the numbers look best. See George's commentary on that below.][/I] You are apparently the only one around here who reads the above words and fails to see that.[/QUOTE]In contrast to you, I read ALL the words, and I study the graphs, too. If you did so, too, you'd see that what I wrote was correct.

[quote]And your getting into a frenzy about Truman - wtf?[/quote]Only your mind can transform a single mention into a "frenzy". I dare you to criticize me fairly without using exaggeration, falsity or straw men.

[quote]Richard, I realize it must be incredibly frustrating to "know 100% that you are right",[/quote]I dare you to criticize me fairly without using exaggeration, falsity or straw men.

[quote]and yet to fail repeatedly to convince others of the "indubitable correctness" of your conclusions.[/quote]I dare you to criticize me fairly without using exaggeration, falsity or straw men.

[quote]I cannot say whether all the bizarre "discussion tactics" you like to employ when you encounter contrary views,[/quote]I dare you to criticize me fairly without using exaggeration, falsity or straw men.

[quote]wild accusations of "slander" for literally months after one your patented hissy fits[/quote]I dare you to criticize me fairly without using exaggeration, falsity or straw men.

[QUOTE=cheesehead;310229]I dare you to criticize me fairly without using exaggeration, falsity or straw men.[/QUOTE]

Cheesehead... You often take things a little too seriously.

[QUOTE]I dare you…[/QUOTE][QUOTE]I dare you…[/QUOTE][QUOTE]I dare you…[/QUOTE][QUOTE]I dare you…[/QUOTE][QUOTE]I dare you…[/QUOTE]Dude, you have to "Double Dog" dare if you really want results.

[QUOTE=Prime95;310199]Cheesehead,

Your reaction to critiques of McElvaine and the earlier article you linked to about "reckless spending spree" comes across to me as "No, no, no, those articles had [I]facts[/I] in them, the article and all its conclusions must be true!".[/QUOTE]That's your distortion, not mine.

[quote]I tried to show in my last post that it doesn't work this way.[/quote]Well, of course the distortion doesn't work.

[quote]McElvaine's article uses 100% true facts to show Obama doing well as a job-creator. Yet I showed a chart that is also based on 100% factual data that shows Obama is the worst jobs-creating President ever.[/quote]Once again, you commit factual error in your very first example supporting your argument. You figure it out, or let someone else explain it to you.

(Perhaps if you didn't habitually distort what I say in these political arguments, you'd be less likely to distort what others say.)

[quote]How can two articles based on 100% factual data reach opposite conclusions?[/quote]Are you sincerely posing that question without realizing the obvious answer?

[quote]The only rational conclusion[/quote](Actually, there's a different, simpler rational conclusion than the one you pose, so "only" is wrong.)

[quote]how facts are used and which facts are used are extremely important in creating a fair picture of reality rather than a propaganda piece.[/quote]That statement would be okay on its own.

[quote]This is also where article analysis become completely subjective.[/quote]No, there's still room for objective analysis.

[quote]McElvaine wants to portray Obama as being a good jobs creator.[/quote]That's a distortion of the article's topic.

Re-read the title: "Has Obama Made the Job Situation Worse?" and the topic paragraph. McElvaine is countering a specific statement made by Paul Ryan (and by many other Republicans).

McElvaine is showing that Obama didn't make the job situation worse, not that Obama is a "good jobs creator".

George, please try practicing paraphrasing someone (whose politics are opposed to your own) else's argument without distorting it, without introducing a spin of your own.

I'll skip commenting on most of the rest because you started off going in a distorted direction. It's a shame that you wasted all that work and words on a wrong track to arrive at a conclusion based on an incorrect premise.

[QUOTE=Xyzzy;310237]Dude, you have to "Double Dog" dare if you really want results.[/QUOTE]It's an experiment to see whether Ernst pays more attention to a repetition (it's not progressively escalated like your cartoon) than to the single instances I've tried before.

Cheesehead, I give up. Despite trying to deal with you on a rational, respectful level, I get a nano-quoted, blind, hyper-partisan, moronic drivel response. You must be as dumb as a post not to see that McElvaine wants to portray Obama as being a good or even moderate jobs creator because it helps him prove his article's title.

Congratulations, you have risen to the level of cmd and others in the "useless posts" thread. As soon as I see that cheesehead is the author of a post, I know I can safely skip the details. The post will be a link to some one-sided crap that won't help anyone learn a thing or a ranting and raving that someone has mis-quoted or mis-characterized you.

I spent the afternoon working on code - what'd I miss?

[QUOTE=Prime95;310241]Cheesehead, I give up. Despite trying to deal with you on a rational, respectful level, I get a nano-quoted, blind, hyper-partisan, moronic drivel response.[/QUOTE]

Ahem ... Allow me to point out that I established trademark rights to the word "nanoquote" in post #484 - I'll see you in court, buddy, as soon as the local judge gets through with your IP-stealing pals at Samsung. Let's see if I can channel my inner cheesehead here:

"Folks, here goes George again, falsely misappropriating a slanderous accusation Ernst actually made ... I demand a detraction, or something ..."

Ack - sorry, I just can't do it ... how can anyone live that way?

Guys, guys! Can you stop please? Before other worse things be said.

I took the habit not to talk politics and religion with my relatives and most of my friends. This is why and how we can stay friends. :smile:

Math/programming/science/etc guys should not talk politics!

One friend of mine, a guy I know on a trading forum, had in his signature something like "majority means that most of the time all the fools are on the other side".

[QUOTE=Prime95;310241]McElvaine wants to portray Obama as being a good or even moderate jobs creator because it helps him prove his article's title.[/QUOTE]No, all he sets out to do is show that Obama didn't make the jobs situation worse as Republicans charge.

"Good" and "moderate" are not McElvaine's terms; they're yours. When (falsely) attributed to McElvaine, they make it easier for you to attack than if you stick to what McElvaine actually wrote.

[QUOTE]Ahem ... Allow me to point out that I established trademark rights to the word "nanoquote" in post #484 - I'll see you in court, buddy, as soon as the local judge gets through with your IP-stealing pals at Samsung.[/QUOTE]:confus:

[QUOTE=ewmayer;310217]
The public sector didn't start with serious downsizing until at least a full year after the private-sector contraction speed had peaked. Governments are very-belatedly doing what must be done in order to stave off bankruptcy, as a result of decades of wildly profligate spending increases.
[/QUOTE]

So you want the public sector to cut at the same time as the private sector? Misery loves company. Procyclical policies all the way baby. The time to cut was 2003-2007. Not after the wolf was already at the door. Then you are just making it worse.

Shiller on stimulus and public sector job cuts.
[url]http://www.nytimes.com/2012/09/02/your-money/framing-prevents-needed-stimulus-economic-view.html[/url]

[QUOTE=garo;310273]
Shiller on stimulus and public sector job cuts.
[URL]http://www.nytimes.com/2012/09/02/your-money/framing-prevents-needed-stimulus-economic-view.html[/URL][/QUOTE]Here is the earlier balanced budget multiplier theory column to which Shiller referred:

"Stimulus, Without More Debt"
[URL]http://www.nytimes.com/2010/12/26/business/26view.html[/URL]

One might think, judging by Republicans' common phrases, that they'd be open to compromise such as stimulus-without-more-debt that would benefit the economy. But they're not, because usually unspoken are Republicans' higher-priority (than national economic health) ideological goals to "starve the beast" and defeat-Obama.

[QUOTE=garo;310273]So you want the public sector to cut at the same time as the private sector? Misery loves company. Procyclical policies all the way baby. The time to cut was 2003-2007. Not after the wolf was already at the door. Then you are just making it worse.

Shiller on stimulus and public sector job cuts.
[url]http://www.nytimes.com/2012/09/02/your-money/framing-prevents-needed-stimulus-economic-view.html[/url][/QUOTE]
Since the public sector has shown itself utterly unwilling to follow the other half of Keynes' countercyclical prescription and downsize during expansions, pray tell, when do we ever get to shrink the public sector back to a historically reasonable fraction of GDP?

Shiller likes to throw around his latest pet theory, a variant of money multiplier theory. Before even discussing it, I want one of the pro-stimulus folks to answer the following question: [u]Averaged over the last 30 years, what has been the multiplier associated with debt expansion?[/u] (I know the answer, but want others to due the due diligence required to take their arguments seriously). We can start with the broadest measure - total public+private debt - and see where that takes us. When it comes to the economic clique which assured us all along that "more borrowing is good" I don't want rehashes of proven-failed theories, I want discussion of data (allegedly) underpinning said theories.

I had to laugh when I saw this snip by Shiller:
[quote]If state and local governments had not cut back so much, the broader economy would be stronger today.[/quote]
...which completely ignores the leveraging-up phase of the issue. Why do I never see quotes like this from the Keynesians?
[quote]If state and local governments had not been so wildly profligate in expanding their payrolls and making irresponsible pension and benefits agreement during recent decades, they would not be facing fiscal crisis and bankruptcy today.[/quote]

Mark my words, big-time government shrinkage is coming to a G7 country near you, soon - the only question is, will at be at least somewhat on prudently-planned terms, or following fiscal catastrophe?

Lastly, USGov has averaged nearly 10% of GDP in deficit spending for over 4 full years now, which by definition is a form of stimulus. How much would it take for you guys to say "enough"? 20%? 50%? 100%?

[QUOTE=ewmayer;310217][a] You have established beyond any reasonable doubt the extremely partisan nature of your political views;[/quote]As I've plainly said multiple times in the past, I specialize in debunking Republican/conservative mythology and falsities by presenting facts that refute those falsities and mythology.

For you to characterize my fact-presentation and myth-refutation as "extremely partisan" is revealing about your motives.

[QUOTE=Prime95;310241]I get a < snip > hyper-partisan[/QUOTE]Please calmly and logically explain what I've posted that was "hyper-partisan".

[QUOTE=cheesehead;310298]One might think, judging by Republicans' common phrases, that they'd be open to compromise such as stimulus-without-more-debt that would benefit the economy. But they're not, because usually unspoken are Republicans' higher-priority (than national economic health) ideological goals to "starve the beast" and defeat-Obama.[/QUOTE]
More blinkered partisan drivel, utterly devoid of signs of original thought - unless you count "following a link" in the piece garo listed as "original". No comment on the theoretical underpinnings of Shiller's thesis, no examination of whether history-bears-this-out, just the usual [i]"...blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah [b]evil Republicans! Bad!![/b] blah blah blah blah blah blah blah blah..."[/i]

Welcome to my ignore list, enjoy your stay, and besta luck wasting someone else's time.

------------------------------

[i]I am open to suggestion from the non-ignored readership as to how much of the latest "full of sound and fury" eruption to move to the thread set aside for such useless distractions.[/i]

------------------------------

Ahhh ... that's better:

[QUOTE=ewmayer;310326][I]I am open to suggestion from the non-ignored readership as to how much of the latest "full of sound and fury" eruption to move to the thread set aside for such useless distractions.[/I][/QUOTE]
My humble plea: please don't move any of it.
I think I understand why you suggest it, but the severely lowered tone of the discussion (for which I blame [I]no-one[/I]) is likely to sort itself out if you're now ignoring cheesehead and if one or two others choose to do the same as well.
In the meantime, I learn a lot from reading everyone's contributions here, being as I am a complete ignoramus myself on economy issues.

This is hilarious!
 

:missingteeth:

[url]http://abstrusegoose.com/491[/url]

This guy is funnier than xkcd (and has been for a while, IMO).

:cool:

[url=www.reuters.com/article/2012/09/04/us-usa-rhodeisland-centralfalls-bankrupt-idUSBRE88300220120904?feedType=RSS&feedName=domesticNews]Bankruptcy saves tiny Rhode Island city, but leaves scars[/url]: [i](Reuters) - Central Falls, in Rhode Island, is close to emerging from bankruptcy with a plan that hammers its retired municipal employees but leaves bondholders unscathed, in a contrast with other recent U.S. municipal bankruptcies.[/i]

Disagree strongly with "reassuring the credit markets" and not making bondholders take a hefty haircut. The whole point of BK should be to spread the pain equitably among those who benefited most from the "fat" years. (I use quotes because it was mostly borrowed prosperity in such cases.) In fact, I say it would be a fine thing to tell the bondholders t take a hike, because we need to break this toxic dance where banks lend money to municipalities (and state governments, and federal governments while we're at it) despite obviously dubious - if not outright ludicrous - revenue and spending projections, in the knowledge that will collect a fat free up-front and when things blow up down the road, someone else will get stuck with the bill.


Couple of Ireland-RE-bubble-and-bust-related pieces:

[url=www.nytimes.com/2012/09/04/world/europe/in-ruined-apartments-symbol-of-irelands-fall.html?_r=1&src=me&ref=world]In Ruined Apartments, Symbol of Ireland’s Fall[/url]: [i]DUBLIN — To visit Graham Usher’s dream apartment in Priory Hall, the most notorious of Ireland’s ruined ghost developments, is to see what Ireland aspired to be, and what it became instead.[/i]
[quote] The apartment, bought for $315,000 in early 2006, is now covered by a brick facade that looks as if some giant creature had raked it with its claws before getting bored and wandering off. There is a half-drunk bottle of wine in the kitchen, abandoned last October when officials abruptly declared the complex a fire hazard and gave its inhabitants — 256 people in 187 apartments — 48 hours to leave.

Those residents, unable to move back into houses they still have to pay for, have spent nearly a year in legal limbo, high-profile casualties of the corruption and recklessness of the Irish boom in the 2000s.

“Priory Hall embodies the craziness of the decade, where cheap credit led to houses and apartments being thrown up virtually overnight, often in entirely unsuitable areas and, in many cases, without regard to the quality of the housing,” said Dearbhail McDonald, legal editor of The Irish Independent and the author of “Bust: How the Courts Exposed the Rotten Heart of the Irish Economy.”

If Ireland’s rise was one of the most spectacular in Europe, its fall was one of the most precipitous, with a boom in the 1990s leading to a housing bubble in the 2000s that burst spectacularly when the banks fueling it threatened to collapse. In 2008, the government made an emergency decision to guarantee the banks’ debts, thus condemning the country to brutal austerity that has left it impoverished and weighed down by debt of its own.[/quote]


[url=http://www.ft.com/intl/cms/s/0/82c2ebfc-f391-11e1-b3a2-00144feabdc0.html#axzz25LQeghwc]US investor is Ireland’s biggest creditor[/url]
[quote]San Francisco-based Michael Hasenstab, who runs the Templeton Global Bond Fund, has emerged as Ireland's single biggest private-sector creditor after aggressively buying Irish government bonds, the Financial Times newspaper reported Sunday on its website.

Franklin Templeton funds, which is mostly managed by Mr. Hasenstab, at the end of June held Irish government debt to the value of EUR6.1 billion ($7.7 billion), the FT said, citing its own calculations.

The report said most was owned by Mr. Hasenstab's Templeton Global Bond Fund.

Mr. Hasenstab said that while the fund manager might have large positions in smaller markets, they are small compared with the fund's total assets, and that it could always quickly hedge its exposure in the credit derivatives market.[/quote]
Ah yes, the reassuring promise of "being fully hedged". Because we all know that hedge counterparties never blow up.

[QUOTE=ewmayer;310326][QUOTE=cheesehead;310298]One might think, judging by Republicans' common phrases, that they'd be open to compromise such as stimulus-without-more-debt that would benefit the economy. But they're not, because usually unspoken are Republicans' higher-priority (than national economic health) ideological goals to "starve the beast" and defeat-Obama.[/QUOTE]More blinkered partisan drivel, utterly devoid of signs of original thought[/QUOTE]Perhaps if Ernst were not so biased against me, he'd have noticed that I was explaining why there's gridlock preventing the seemingly-reasonable negotiation of political compromises that could improve the economy. But I could have been clearer.

Republicans claim to want a balanced budget and to improve the economy, but at present will never agree to a compromise such as stimulus-without-more-debt that satisfies both of those goals because of conservatives' other goals: starve-the-beast and oppose-anything-Democrats-want-in-order-to-make-Obama-look-bad.

What I'm pointing out is one of the connections between politics and the economy that prevails in the U.S. at present. That isn't duplicating Ernst's contributions to this thread.

[quote]No comment on the theoretical underpinnings of Shiller's thesis,[/quote]Shiller explains the theoretical underpinnings in his article. If Ernst wants comment on those, or disagrees with Shiller, why doesn't he just comment or explain his disagreement himself?

I didn't claim Shiller is correct; I just commented on the theoretical underpinnings of political gridlock preventing any trying-out of that Shiller idea.

[quote]no examination of whether history-bears-this-out[/quote]I'd be glad to read comments on whether history-bears-this-out from someone who has knowledge about that; I don't.

I thought Ernst viewed this thread as a means of educating the rest of us about the economics on which he is so well-educated.

Is Ernst putting me on his ignore list because, at least in part, I don't happen to share his background in economic history and the theoretical underpinnings of various economic theories? If that were so, shouldn't most other readers of this thread also be on Ernst's ignore list? But that would conflict with Ernst's education goal.

I conclude that these two criticisms (theoretical underpinnings, history) of my post are straw men rather than honest reasons. I'd like to see the honest reasons.

[quote]just the usual [I]"...blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah [B]evil Republicans! Bad!![/B] blah blah blah blah blah blah blah blah..."[/I][/quote]Well, I'm sorry that Ernst views the economic consequences of current Republican political propaganda and ideology as only "[I]blah blah blah[/I]" rather than recognizing its significance to our current American "Economic Theater". This nation's economy could be a lot better than it is now if the Republican party would return to its pre-1970s honest budget-balancing policies.

[QUOTE=cheesehead;310380]I conclude that these two criticisms (theoretical underpinnings, history) of my post are straw men rather than honest reasons. I'd like to see the honest reasons.[/QUOTE]

Cheesehead... This is sincere, and meant to be constructive criticism... You often take things way too seriously, and [B][I][U]way[/U][/I][/B] too personally. Additionally, you have a tendency to fixate on tiny little pedantic issues rather than looking at the big picture.

Now, looking at the "bigger picture"... I personally agree with you that the US of A's Republicans are using a "scorched earth" policy against the US of A's Democrats. Whether this is purely because of ideology, or simply because they want another "turn at the trough" is open for debate -- but at the end of the day it is probably not helping those they were elected to represent.

Sadly, this kind of politics is not unique to the US of A -- it's a world-wide phenomenon.

[QUOTE=chalsall;310408]Cheesehead... This is sincere, and meant to be constructive criticism...[/QUOTE]Thank you.

[quote]You often take things way too seriously, and [B][I][U]way[/U][/I][/B] too personally.[/quote]Having _my_ posts removed from this thread and banished to another _was_ personal. In the context of forum posting, it was the most serious administrative action that has ever been taken against me.

[quote]Additionally, you have a tendency to fixate on tiny little pedantic issues rather than looking at the big picture.[/quote]Okay, I'll try to be more careful.

- - -

Note you can pass on to Ernst:

If he'll post a rational, honest explanation of why he banned my posts in May, and what he actually objects to (not stuff that doesn't add up) in my current posts, I will then be able to know what to avoid posting here.

I've just had a phone conversation with Xyzzy. He answered the main questions I had recently posed to Ernst and George, and I'm satisfied with the answers. Xyzzy proposed some ways to avoid the conflicts I've recently had in this thread, and I intend to adopt them.

Schizophrenic pair of US employment reports yesterday and today; In global-econ news, nice to know that thanks to the strenuous efforts of the ECB, Europe is saved once again. Quite a relief, that.

[b]Friday Funnies:[/b]

Couple of my favorite cartoons (both from last Sunday):

o [url=http://www.dilbert.com/dyn/str_strip/000000000/00000000/0000000/100000/60000/4000/700/164765/164765.strip.sunday.gif][i]Dilbert[/i] on the next iPhone release[/url]

o [url=http://www.gocomics.com/pearlsbeforeswine/2012/09/02][i]Pearls Before Swine[/i] on memory-foam mattresses[/url]

[QUOTE=ewmayer;305787][url=http://finance.yahoo.com/q/bc?s=FXE]Whoops[/url].


This will play out the same way your Euro prediction did - lying politicians and crooked central bankers provide a few months of false hope, then reality finally asserts itself.[/QUOTE]



Will you write your "Whoops" now? Please stop insisting with your stubborn ideas about tragedy of euro (Euro was never so strong currency as it is now). Greece, as I wrote before, will not leave eurozone, it is evident now (I wrote about it when it was less evident, but still it was evident for me).
I wrote also that accepting financial aid will be disaster for Greece. Everything shows that I was right in that point too.

[QUOTE=ewmayer;310635]Schizophrenic pair of US employment reports yesterday and today; In global-econ news, nice to know that thanks to the strenuous efforts of the ECB, Europe is saved once again. Quite a relief, that.

[B]Friday Funnies:[/B]

Couple of my favorite cartoons (both from last Sunday):

o [URL="http://www.dilbert.com/dyn/str_strip/000000000/00000000/0000000/100000/60000/4000/700/164765/164765.strip.sunday.gif"][I]Dilbert[/I] on the next iPhone release[/URL]

o [URL="http://www.gocomics.com/pearlsbeforeswine/2012/09/02"][I]Pearls Before Swine[/I] on memory-foam mattresses[/URL][/QUOTE]


Good ones! I appreciate the diversion.

So, just a few days ahead of a crucial ruling by the German Bundesverfassungsgericht (Constitutional Court) in Karlsruhe on the constitutionality of the ESM (which the court is widely expected to sign off on, though with some nice-sounding "cautions" to provide a fig leaf), and the next meeting of the U.S. Fed Central Fiat Printing Council at which the counterfeiter-in-chief is widely expected to announce another round of some form of quantitative easing (likely in the form of another round of MBS purchases, a.k.a. "buying garbage from the banks and GSEs at housing-bubble-peak-based face valuation and relabeling it triple-A plusgood securities"), any guesses as to how those 2 events will play out? [There is also a parliamentary election in the Netherlands, but that will take longer to turn into any substantive course changes there, or lack thereof.]

I'm going with the now-well-established political/central-banker rule of "when in doubt, print, print, and print some more" and thus predict just as I say above: ESM will be green-lighted, and Dr. Bernankenstein will either outright announce QE4 or lead the markets to believe that it is imminent, either immediately post-elections or following the next shocking 1% "market plunge" which indicates Great Recesssion v2.0 is upon us.

Bernankenstein sounds like a country. He can be the Conductor. As long as all that printed green is hypoallergenic, I'm game because perfume can irritate the skin. Perhaps he sleeps to John Lennon's [I][URL="http://en.wikipedia.org/wiki/Imagine_(song)"]Imagine[/URL][/I] and dreams of a [URL="http://en.wikipedia.org/wiki/Nutopia"]Nutopia[/URL] benevolently steered by the Wizards of [URL="http://en.wikipedia.org/wiki/World_Economic_Forum"]Davos[/URL].

[URL="http://www.reuters.com/article/2012/09/11/us-usa-tax-birkenfeld-idUSBRE88A0TE20120911"]Whistleblower in UBS tax case gets record $104 million[/URL][QUOTE]Bradley Birkenfeld, who once confessed to smuggling diamonds in a toothpaste tube, was not present at the news conference on Tuesday where the award was announced by his lawyers. He is under home confinement in New Hampshire, they said, after being released from prison last month.

Birkenfeld spilled many secrets about UBS, his former employer. But he was jailed after the government said he withheld other information about helping wealthy Americans hide money in secret Swiss accounts.

He is set to end his home confinement in late November, said the lawyers. They would not discuss their cut of the award.

In a case that shook Swiss banking to its core, UBS in 2009 entered into a deferred prosecution agreement and paid $780 million in fines, penalties, interest and restitution to settle charges that it helped 17,000 U.S. clients hide $20 billion. U.S. authorities are still investigating other Swiss banks.[/QUOTE]

[QUOTE=only_human;311047]Bernankenstein sounds like a country.[/QUOTE]
I was aiming for the "mad monetary scientist" connotation. "With a sufficiently powerful jolt of [strike]electricity[/strike] money-printing, we *will* bring this moribund economy and these lifeless capital markets back to life! We must do so at any cost!! Igor, fetch me the lab smock I always wear when working the Ctrl+P button on this electronic fiat emitter here..."

-------------------------------

My (very easy) prediction regarding the German high court's ruling on the ESM was [url=http://globaleconomicanalysis.blogspot.com/2012/09/german-court-approves-esm-while-ruling.html]spot on[/url]. Now we just need to wait 'til tomorrow to see how much Ctrl+P'ing the above esteemed Herr Doktor announces, intimates, or broadly but noncommittally hints at. With US elections less that 2 months away, Bernanke is surely aware of the political overtones, so I'm predicting the announcement will consist mostly of market-bolstering hints rather than a formal announcement of a fresh round of large-scale "asset" (= toxic bank debt) purchases.

[QUOTE=ewmayer;311299]
blah blah blah
.... Herr Doktor ....
blah blah blah[/QUOTE]

Tsk tsk Ernst. I think you have enough Teutonic blood in you to know that it is not Herr Doktor but Herr Professor Doktor Doktor!! Bücken sie sich bitte am schnellsten (if my Deutsch is not too rusty).

So Herr Direktor Hofrat Univ. Prof. Dr. Dr. Mag. Dipl-Ing. Arch. OMedR BergR h.c. Baron von Bernankenstein did not disappoint the financial markets today - intraday DJIA chart appended to this message, see if you can guess what time today Bennie von B. started talking. (Tough one, I know.)

Between that and the ECB committing to unlimited distressed-member-states-bond-buying (yeah, I know, the German High Court made some noises about capping the amount, but if you believe that is in the remotest degree enforceable, I got a bridge in Brooklyn I want to sell you to you, even if your name is [url=http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100019976/german-constitutional-court-tightens-the-noose-yet-further/]Ambrose Evans-Pritchard[/url]), it would not surprise me to see the markets challenge their late-2007 bubble-highs by year's end.

Mish describes Bernanke's latest bout of massive monetary incontinence (in the sense that it goes beyond Ctrl-P'ing into the realm of "uncontrolled P'ing") as [url=http://globaleconomicanalysis.blogspot.com/2012/09/fed-to-increase-mbs-at-pace-of-40.html]an act of desperation[/url], but I wonder if such language is even applicable to a leverage-addicted central-banker, accountable to no one but his fellow bankers, whose power and influence are tied directly to his ability and willingness to money-print on a massive scale, and who has made clear that he views the economy entirely through the lens of the financial markets. "Desperation" connotes last-gasp efforts to avoid a very unpleasant outcome, but for folks like BB who are almost entirely insulated from the real-economic consequences of their actions and who may even be [url=http://www.latimes.com/business/money/la-fi-mo-bernanke-refinance-disclosure-20120906,0,7661977.story]benefiting from them[/url], any attendant "unpleasantness" is sufficiently remote as to not signify.

DW-TV (English edition) last night had an in-depth piece on one face of the debt crisis in Spain - here is a Spiegel piece on the story:

[url=www.spiegel.de/international/europe/spanish-mayor-on-hunger-strike-over-austerity-measures-a-850484.html]Desperation in Spain: One Mayor's Hunger Strike against Austerity[/url]: [i]Austerity measures have dealt a tough blow to Spain's economy. But one mayor of a small Spanish community has decided to fight back. For two months he has been on a hunger strike in front of the Ministry of Industry in Madrid. His protest is the product of desperation.[/i]


[b]Friday Funnies:[/b]

This is "funny" only in the Kafka-esque sense - the last paragraph is the real kicker:

[url=http://www.wired.com/threatlevel/2012/09/house-approves-spy-bill]House Approves Sweeping, Warrantless Electronic Spy Powers[/url]: [i]The House on Wednesday reauthorized for five years broad electronic eavesdropping powers that legalized and expanded the George W. Bush administration’s warrantless wiretapping program.[/i]
[quote]The FISA Amendments Act, which is expiring at year’s end, allows the government to electronically eavesdrop on Americans’ phone calls and e-mails without a probable-cause warrant so long as one of the parties to the communication is believed outside the United States. The communications may be intercepted “to acquire foreign intelligence information.”

The government has also interpreted the law to mean that as long as the real target is al-Qaida, the government can wiretap purely domestic e-mails and phone calls without getting a warrant from a judge. That’s according to David Kris, a former top anti-terrorism attorney at the Justice Department.

The government does not have to identify the target or facility to be monitored. It can begin surveillance a week before making the request, and the surveillance can continue during the appeals process if, in a rare case, the secret FISA court rejects the surveillance application. The court’s rulings are not public.

The vote was 301-118 in favor of passage, with 111 Democrats and seven Republicans voting no.

According to one former Justice Department official, the FISA Amendments Act gives the government nearly carte blanche spying powers.

[u]The National Security Agency told lawmakers that it would be a violation of Americans’ privacy to disclose how the measure is being used in practice[/u]. The NSA said the “NSA leadership agreed that an IG (Inspector General) review of the sort suggested would further violate the privacy of U.S. persons.”[/quote]
In the pantheon of Orwellian doublespeak, that's right up there with the Vietnam-era [url=en.wikipedia.org/wiki/Ben_Tre]"We had to destroy the village in order to save it"[/url].

[QUOTE=ewmayer;311634]
[B]Friday Funnies:[/B]

This is "funny" only in the Kafka-esque sense - the last paragraph is the real kicker:

[URL="http://www.wired.com/threatlevel/2012/09/house-approves-spy-bill"]House Approves Sweeping, Warrantless Electronic Spy Powers[/URL]: [I]The House on Wednesday reauthorized for five years broad electronic eavesdropping powers that legalized and expanded the George W. Bush administration’s warrantless wiretapping program.[/I]

In the pantheon of Orwellian doublespeak, that's right up there with the Vietnam-era [URL="http://en.wikipedia.org/wiki/Ben_Tre"]"We had to destroy the village in order to save it"[/URL].[/QUOTE]My nephew and the rest of his generation is growing up in a different climate than I did.

[url=www.centralbanknews.info/2012/07/rescued-banks-engaged-in-riskier.html]Rescued banks engaged in riskier lending - BIS paper[/url]
[quote]Banks that received public funds during the 2008 financial crises were involved in riskier lending than banks that did not need a government bailout, according to a working paper published by the Bank for International Settlements (BIS).
The paper, by economists Michael Brei and Blaise Gadanecz, examined the loan risk of 87 banks - 40 of which received public funds – and found that before the crisis, the rescued institutions had a significantly higher share of leveraged, and thus riskier, loans in their portfolios of syndicated loan signings than their non-rescued peers.
While the finding is hardly surprising, the authors found evidence that those banks that were rescued took on the risk mainly in their home markets, “possibly reflecting their expectation that rescues are more likely to occur at home, where they may count as more systemic or wield more market power than abroad,” the paper said.

The authors also tried to ascertain whether the public rescue operations, such as the 2008 Troubled Asset Relief Program (TARP) in the US, made the rescued banks shy away from risky lending toward safer loans.
“Although risk started diminishing across the board in 2009, [u]we fail to find significant consistent evidence that with the onset of the crisis in 2008, rescued banks have reduced their risk relatively more than non rescued banks[/u],” the paper said.
The authors said their [b]findings were consistent with current literature that says rescued banks take on higher risks because they expect to be rescued, a concept often referred to as moral hazard[/b].[/quote]

A commentator from Down Under makes a bullish "climbing a wall of worry" case for equities:

[url=www.smh.com.au/business/dont-look-a-gift-rally-in-the-mouth-20120918-2639l.html]Sydney Morning Herald | Business Day | Don't look a gift rally in the mouth[/url]

Where have I heard that line about "when the music is playing, you've got to dance" before? Oh yeah - from [url=http://dealbook.nytimes.com/2007/07/10/citi-chief-on-buyout-loans-were-still-dancing/]this fellow[/url], about 3 months before markets hit their housing-bubble highs and a year before his company's leveraged loan portfolio blew sky-high, necessitating several hundred billion dollars of government bailout money to stave off bankruptcy. (Amusing to think that back in those days of yore that actually seemed like a lot of cash).

[QUOTE=ewmayer;312109]A commentator from Down Under makes a bullish "climbing a wall of worry" case for equities:

[URL="http://www.smh.com.au/business/dont-look-a-gift-rally-in-the-mouth-20120918-2639l.html"]Sydney Morning Herald | Business Day | Don't look a gift rally in the mouth[/URL]

[/QUOTE]Hmmm...
[quote=Michael Feller]As economic prognosticators, it's our job to be the miserable permabears, not yours.[/quote]Maybe I owe you more respect, Ernst.

The effects of QE3 have to be taken into consideration carefully to understand how and where investments will be impacted.

1. Since QE3 is directly targeted toward mortgages, interest rates will be pushed lower. We might get down to 3% on a 30 year fixed vs todays @3.5%.

2. Housing prices will trend upward but only so long as the free bubble up keeps flowing.

3. Stock Markets will trend up because of the goose effect. Don't know the goose effect? If you shove money up a goose's rear, the goose will squawk and flap its wings and make a ruckus.

4. The guaranteed result over the long term will be inflation. Dollars have been created out of thin air and that effectively reduces the buying power of the dollars that were already in existence. At this time, inflation is mild to non-existent with the exception of food prices which are in a major trend upward.

5. Unemployment will remain high but may ease a tiny bit as construction workers benefit.

6. Other economic weaknesses will be magnified. This includes "the cliff" which is set for early 2013. Bush tax cuts, payroll tax cut, and alternative minimum tax are components of "the cliff". Look for major economic breath holding in January.

7. Fiscal/moral hazard will increase. This is a measure of the market risk especially in financial businesses. FiMo was at an all time high in 2007 with high levels of leverage and extremely high levels of mortgage related chicanery. The Fed's promise of a limitless supply of free bubble up will set the stage for some future bankruptcies and market interventions comparable to tarp.

8. QE3 does not in any way impact the long term fiscal outhouse we are in because the U.S. is still spending $trillions per year of borrowed money.

DarJones

[QUOTE=Fusion_power;312241]1. Since QE3 is directly targeted toward mortgages, interest rates will be pushed lower. We might get down to 3% on a 30 year fixed vs todays @3.5%.[/QUOTE]

Well, considering the [URL="http://www.fedprimerate.com/"]current US of A's Prime Rate is 3.25%[/URL], that's not too surprising.

What is in my mind interesting is that credit card companies charge their customers [URL="http://www.bankrate.com/credit-cards.aspx"]between 11% and 20.9%[/URL] on outstanding balances.

There was a time when this would be defined as "usury" -- an illegal practice.

Now it's just business as usual....

[url=www.reuters.com/article/2012/09/20/us-usa-economy-states-idUSBRE88J05720120920?feedType=RSS&feedName=domesticNews]Fewer U.S. states show income drop, Vermont's up: Census[/url]: [i](Reuters) - Median household income dropped in fewer U.S. states last year than in 2010, with 18 registering a fall and one state - Vermont - notching an increase, the Census Bureau said on Thursday.[/i]
[quote]Vermont's 4 percent rise in median household income last year was the first shown by a state since 2009, the Census Bureau said in its 2011 American Community Survey (ACS) breakdown of income, poverty and insurance.

The biggest decline in median household income was a 6 percent downturn in Nevada, one of the states hardest hit by the collapse in housing prices.

Household income had dropped in 35 states in the 2010 ACS.

Among states whose electoral votes could decide the November presidential election, four - Nevada, Ohio, North Carolina and Florida - showed declines in household income.[/quote]


[url=www.reuters.com/article/2012/09/20/us-financial-regulation-pawlenty-idUSBRE88J0LL20120920?feedType=RSS&feedName=domesticNews]Pawlenty quits Romney campaign to head bank lobby group[/url]: [i](Reuters) - Former Minnesota governor Tim Pawlenty quit his position in the campaign of Republican presidential candidate Mitt Romney on Thursday to become a leading Washington lobbyist for Wall Street banks. He said he continued to support Romney.[/i]
[quote]As a top lobbyist, Pawlenty will play a major role in the industry's efforts to make the new Dodd-Frank rules, which Congress passed in 2010 in response to the 2007-2009 financial crisis, more favorable for Wall Street as regulators implement the law.[/quote]
Contrast with what he was saying on the campaign trail:
[quote]While Pawlenty is generally regarded as a pro-business conservative, he has made comments critical of Wall Street.
[u]
"I went to Wall Street and told them to get their snouts out of the trough because they are some of the worst offenders when it comes to bailouts and carve-outs and special deals," Pawlenty said in June, 2011[/u] at a Faith and Freedom Coalition Conference in Washington DC.[/quote]
Sounds more like he asked them to clear a space at the trough for him. Bloody hypocrite.

As for the kinds of lobbying he will be doing, [url=http://www.rollingstone.com/politics/blogs/taibblog/wall-street-rolling-back-another-key-piece-of-financial-reform-20120920#ixzz272DtszYl]this recent piece by Matt Taibbi gives a pretty good preview[/url].

[QUOTE=ewmayer;312245][url=www.reuters.com/article/2012/09/20/us-usa-economy-states-idUSBRE88J05720120920?feedType=RSS&feedName=domesticNews]Fewer U.S. states show income drop, Vermont's up: Census[/url]: [i](Reuters) - Median household income dropped in fewer U.S. states last year than in 2010, with 18 registering a fall and one state - Vermont - notching an increase, the Census Bureau said on Thursday.[/i][/QUOTE]

Let us "cut to the chase", shall we?

We live in an effectively closed system. There are only so much raw resources available for us to consume. And consuming them may have repercussions.

The word "deflation" will have to be used (and meant) at some point.

And all the ramifications that word means....

[QUOTE=chalsall;312250]Let us "cut to the chase", shall we?

We live in an effectively closed system. There are only so much raw resources available for us to consume. And consuming them may have repercussions.

The word "deflation" will have to be used (and meant) at some point.

And all the ramifications that word means....[/QUOTE]
Not so sure I agree with your first premise: economic wealth is generally tied so closely to raw materials mainly in crude-goods sectors. Developed economies can produce wealth in many more ways, with much (if not most) of the value-add occurring in the processing of some original raw (or partially finished) materials. Compare the value-add which occurs in smelting to produce a ton of steel, with that which occurs in turning the steel into a fine Swiss watch. And what are the resource limitations on (say) software development?

Deflation *does* definitely need to occur to restore some semblance of balance to overindebted economies, but that has more to do with folks (and governments) having consumed beyond the aggregate productive value of their own labors, more than with input-supply constraints. Of course to a central banker - especially one affiliated with a debtor government - the inflationary phase of an economic bubble is all good (it magically shrinks the relative size of the debt and boosts tax revenues), but the deflation which is a necessary rebalancer is a malignant evil to be avoided at all costs.

[QUOTE=ewmayer;312262]And what are the resource limitations on (say) software development?[/QUOTE]Not sure whether that question was meant to be rhetorical, but here goes.

1) Educating people to the point where they are capable of producing economically useful software. Education costs, both directly and indirectly, in physical resources as well as non-physical resources.

2) Appropriate access to computational and communication resources for the software to be developed and subsequently delivered and used.

3) Protective mechanisms, both physical and non-physical, to prevent (at best) or mitigate (at least) damage which other parties may wish to cause for their own reasons.

There are doubtless many others.

[QUOTE=ewmayer;311487]So Herr Direktor Hofrat Univ. Prof. Dr. Dr. Mag. Dipl-Ing. Arch. OMedR BergR h.c. Baron von Bernankenstein did not disappoint the financial markets today - intraday DJIA chart appended to this message, see if you can guess what time today Bennie von B. started talking. (Tough one, I know.)

Between that and the ECB committing to unlimited distressed-member-states-bond-buying (yeah, I know, the German High Court made some noises about capping the amount, but if you believe that is in the remotest degree enforceable, I got a bridge in Brooklyn I want to sell you to you, even if your name is [URL="http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100019976/german-constitutional-court-tightens-the-noose-yet-further/"]Ambrose Evans-Pritchard[/URL]), it would not surprise me to see the markets challenge their late-2007 bubble-highs by year's end.

Mish describes Bernanke's latest bout of massive monetary incontinence (in the sense that it goes beyond Ctrl-P'ing into the realm of "uncontrolled P'ing") as [URL="http://globaleconomicanalysis.blogspot.com/2012/09/fed-to-increase-mbs-at-pace-of-40.html"]an act of desperation[/URL], but I wonder if such language is even applicable to a leverage-addicted central-banker, accountable to no one but his fellow bankers, whose power and influence are tied directly to his ability and willingness to money-print on a massive scale, and who has made clear that he views the economy entirely through the lens of the financial markets. "Desperation" connotes last-gasp efforts to avoid a very unpleasant outcome, but for folks like BB who are almost entirely insulated from the real-economic consequences of their actions and who may even be [URL="http://www.latimes.com/business/money/la-fi-mo-bernanke-refinance-disclosure-20120906,0,7661977.story"]benefiting from them[/URL], any attendant "unpleasantness" is sufficiently remote as to not signify.[/QUOTE]A different interpretation:

"Here’s why everyone is so excited about what the Fed did yesterday"

[URL]http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/14/heres-why-everyone-is-so-excited-about-what-the-fed-did-yesterday/[/URL]

[quote]. . .

But the other part of the plan, and this part is really important, is that Bernanke just sent a signal to businesses and investors and the market and everyone else that the Fed is going to use its powers in a big, unusual way to get the economy moving. That’s a hugely important statement to make.

Imagine a business trying to decide whether it should hire more workers. The basic question it needs to answer is whether people will be buying a lot more stuff next year than they’re buying this year. If business owners don’t see any good reason to think the economy will improve, then the answer is probably, “No, people aren’t going to be buying more stuff next year,” so there’s no need to hire more workers.

But if they think the recovery is going to come, if they think people will be buying more stuff, then they need the workers. They don’t want to be caught without enough product — then their competitors would get those sales.

The Fed is trying to influence that decision. Fed officials are saying: “We’re going to use all our power to make sure there are people out there buying your stuff. So go hire. Do it now. We’re behind you.”

Or you can think of it this way. The Federal Reserve is kind of like the economy’s tough, older brother. If the economy is having problems with some kids at school, and the tough, older brother seems distant, or uninterested, then the economy’s in trouble.

But if the tough, older brother makes it clear that he’ll be there to back up the economy, come what may, and even says that he’s going to go have a talk with some of these kids tomorrow, then the economy is going to be a lot more confident walking to school from now on. And right now, what the economy needs, more than anything, is confidence.

Now, as some of us learned when we were young, tough, older brothers aren’t invincible. And few economists believe that the Fed can solve our ongoing economic problems on its own. But it can do more to help then it’s doing now, and with the housing market beginning to come back and Europe appearing to stabilize, there’s a mounting argument that the conditions for a recovery are beginning to look pretty good. If there’s a policy dark spot here, it’s that Congress is still a mess, and there’s no clarity as to how they’ll bridge the fiscal cliff, or even if they’ll bridge the fiscal cliff. And then, of course, there’s the fundamental fact of the economy right now, which is that consumers are still digging out of debt and businesses remain skittish. Sometimes, even a big older brother isn’t enough to make you feel better.

. . .[/quote]

[QUOTE=xilman;312282]Not sure whether that question was meant to be rhetorical, but here goes.[/QUOTE]

Not at all - as you note there are indeed resource inputs of various kinds - now the key thing is to compare the resulting value-add to the cost of the inputs, especially the nonrenewable ones (or better, the not-renewable-on-human-timescales ones).

Even that value-add estimation gets to be quite interesting and nontrivial - popular video games obviously provide a net benefit to their makers, but does their production, sale and consumption actually represent net wealth creation in a broad economic sense? One could argue that legions of game addicts spending most of their waking hours toggling, clicking and zapping virtual enemies represents wealth creation capacity subtracted from the economy. OTOH, people have always demanded their entertainments, so as long as gaming does not crowd out productivity-enhancing software development and usage, the software sector as a whole should still represent a form of wealth creation.

And while raw materials are required to produce software and the equipment it is developed and run on, this is one example of long-term price deflation (as embodied by Moore's law and PC price trends) where the mere fact of the long-term price deflation is quite telling in at least 2 respects:

o It says that in tech, the long-term trend has always been "more for less";

o It says that the raw materials needed to produce a given amount of computing (either hardware or software) capability also have been steadily decreasing.

Thus, I propose that tech is a shining example of wealth creation on a large scale, and in ever-greater proportion relative to its raw materials inputs.

Let the debate rage...

----------------------------------------------------

[b]Friday Funnies:[/b]

Political catoonist Mike Luckovich of the Atlanta Journal-Constitution suggests true Wall Street Reform may finally be at hand, [url=http://blogs.ajc.com/mike-luckovich/files/2012/09/mike091412.jpg]from an unexpected quarter[/url].

[url=http://www.zerohedge.com/news/apple-creates-new-job-category-professional-line-waiters]Apple Creates New Job Category: Professional Line-Waiters[/url]

In interesting-aphorism news (I know Paul will like this one): [url=http://en.wikipedia.org/wiki/Illegitimi_non_carborundum]Illegitimi non carborundum[/url]

[QUOTE=ewmayer;312304]Deflation *does* definitely need to occur to restore some semblance of balance to overindebted economies, but that has more to do with folks (and governments) having consumed beyond the aggregate productive value of their own labors, more than with input-supply constraints. Of course to a central banker - especially one affiliated with a debtor government - the inflationary phase of an economic bubble is all good (it magically shrinks the relative size of the debt and boosts tax revenues), but the deflation which is a necessary rebalancer is a malignant evil to be avoided at all costs.[/QUOTE]

But, I would argue that the input-supply constraints cannot be ignored, even though they often are.

And I agree with you that "...the deflation which is a necessary rebalancer is a malignant evil to be avoided at all costs" is a lie perpetrated by those who don't want to be the one (or the political party) left holding the bag. Much better to fob it off on the next guy -- the truth can only be held off for a while.

[QUOTE=ewmayer;312304]Even that value-add estimation gets to be quite interesting and nontrivial - popular video games obviously provide a net benefit to their makers, but does their production, sale and consumption actually represent net wealth creation in a broad economic sense? One could argue that legions of game addicts spending most of their waking hours toggling, clicking and zapping virtual enemies represents wealth creation capacity subtracted from the economy. OTOH, people have always demanded their entertainments, so as long as gaming does not crowd out productivity-enhancing software development and usage, the software sector as a whole should still represent a form of wealth creation.[/QUOTE]

Indeed. And it goes beyond video games. Another good example is Facebook. A while back I was the outside ICT adviser for a large call center here in Barbados. We had to install specific rules on the firewall to block access to Facebook during business hours, as some employees were doing little more than checking their friends' status throughout the day.

Interestingly, some simply reverted to using their cell-phones to do the same thing. Once their performance numbers were identified as being poor, they were let go.

[QUOTE=ewmayer;312304]Let the debate rage...[/QUOTE]

Indeed. I've always appreciated the saying "There are three sides to every argument: your side, my side, and the truth."

[url=http://www.zerohedge.com/news/2012-09-25/decling-economic-freedom-united-states]The Declining Economic Freedom Of The United States[/url]
[quote]The United States, long considered the standard bearer for economic freedom among large industrial nations, has experienced a remarkable plunge in economic freedom during the past decade. From 1980 to 2000, the US was generally rated the third freest economy in the world, ranking behind only Hong Kong and Singapore. The ranking of the US has fallen precipitously; from second in 2000 to eighth in 2005 and 19th in 2010. By 2009, the United States had fallen behind Switzerland, Canada, Australia, Chile, and Mauritius, countries that chose not to follow the path of massive growth in government financed by borrowing that is now the most prominent characteristic of US fiscal policy. By 2010, the United States had also fallen behind Finland and Denmark, two European welfare states. Moreover, it now trails Bahrain, the United Arab Emirates, Estonia, Taiwan, and Qatar. The Fraser Institute's massive volume on the Economic Freedom Of The World - [u]based on the following five factors: Size of Government, Legal System & Property Rights, Sound Money, Freedom to Trade Internationally, and Regulation[/u] - covers 42 variables with the goal of quantifying the key ingredients of economic freedom.[/quote]
It is a useful exercise to ask yourself about the evolution over the past several decades and the current status of the five factors mentioned above. I find the following category clarifiers helpful:

1. Size of Government: Consider not just recent much-belated downsizing efforts, but government share of GDP since WW2;

2. Legal System & Property Rights: The 2 major watershed events here in my lifetime have been 9/11 (and the broader "war on terror") and the housing bubble and resulting global financial crisis. With regard to the latter, it is illuminating to compare levels of (documented and/or imputed) financial-sector fraud between the S&L crisis and the current (or recent, if you're a raving optimistic) one, together with stats on resulting prosecutions and criminal convictions.

3. Sound Money: That must be in the category of "historical arcana".

4. Freedom to Trade Internationally: Should multinational corporations be rewarded for effectively engaging in environmental and labor-law arbitrage? Do lower-paid overseas laborers in fact benefit from such offshoring even if they are paid woeful wages (and have woeful levels of workers' rights) by developed-nation standards? (Interestingly, some very notable economists such as [url=http://globaleconomicanalysis.blogspot.com/2012/09/fair-trade-is-unfair-in-praise-of-cheap.html]the fellow quoted here[/url] have flip-flopped on this question). Is attempting to "export" one's own labor & environmental standards a fool's errand?

5. Regulation: Make sure to distinguish between existence and effectiveness thereof. For a naturally criminogenic sector such as Big Finance, do we need lots of regulation, or a small amount of economic-interest-aligning regulation which is actually (and consistently, and visibly) enforced? To what extent should governments be willing to suffer short-term economic pain (e.g. by letting huge insolvent financial firms fail) in order to not make mock of their own laws and to not encourage moral hazard?

[QUOTE=ewmayer;312762][url=http://www.zerohedge.com/news/2012-09-25/decling-economic-freedom-united-states]The Declining Economic Freedom Of The United States[/url][/QUOTE]
I find it most remarkable that the UK is ahead of the US in the 2010 ranking. I would have guessed it to be significantly lower. There is something rotten in the state of [strike]Denmark[/strike] the Union if that ranking is indeed correct.

This one is interesting reading.

[url]http://www.zerohedge.com/contributed/2012-09-26/qe3-jobs-wall-st[/url]

It makes a nice counterpoint to post #530 above. Post #440 is also very relevant.

May I point out that QE3 is just another way to bail out the big banks sans tarp. In other words, they will sell all their marbles (trash mortgages) to the fed and then buy shiny new marbles somewhere else in the world with the proceeds. This leaves the U.S. in triple jeopardy. First because the banks will be offloading unsellable garbage to the fed, second because the money that was supposed to flow into the U.S. economy goes elsewhere, and third because the money that goes elsewhere is at risk and ultimately the U.S. will have to bail out the banks again. No wonder they call it "moral hazard".

/begin OT/
So you have a skunk, a banker, and a lawyer lying dead in the road. What is the difference between them?

There are skidmarks in front of the skunk.
/end OT/

DarJones

Anyone care to comment on the deteriorating China/Japan situation, and whether China may be deliberately fomenting anti-Japan sentiment in order to distract its populace from their own economy's Wile E. Coyote act? I remain utterly baffled that the oh-so-wise Chinese central planners thought they could in essence repeat the horrendous mistake of the Greenspan Fed - cover up one deep recession by blowing a massive credit/bad-lending bubble - and achieve a fundamentally different outcome.

Which brings me to my Chart of the Day:

[url=http://www.indexmundi.com/commodities/?commodity=iron-ore&months=60]Iron ore price, last 60 months[/url]

Note how the price or iron ore rocketed exponetially (like oil and other commodities) during the late-stage blowoff phase of the US housing and global credit bubble, but unlike (say) oil it kept right on rising throughout late 2008 and 2009, and only showed signs of "peakishness" much more recently. Folks in China and Australia are going to be watching the September price change datum very closely, to see if the August plunge is extending or not.

-------------

[i]Edit:[/i] Note thate there are at least a few non-sell-side "analysts" I respect who argue that the China-is-in-free-fall story is overdone. For example:

[url=http://www.zerohedge.com/contributed/2012-09-26/chinas-economy-really-imploding]Is China's Economy Really Imploding?[/url]

The reason I even bothered to read past the "they can just build a few more empty cities" stuff is that Chris Whalen is not just your ordinary China-Miracle-Gro-meme shill.

Do you eat bacon? Does a headline like "Global Bacon Shortage" catch your eye?

Don't believe it.

[url]http://newsfeed.time.com/2012/09/26/start-hoarding-now-a-global-bacon-shortage-is-coming/[/url]

The problem is that cost of production will increase significantly over the next few months as the short crop of corn in the U.S. hits global markets. The estimated impact is a 1.5% reduction in number of pigs that get slaughtered. What does it really mean? Well, it means that your bacon price will increase substantially. Once you get past all the gobbledygook, what this report boils down to is a pork producers group blaring inflamatory headlines in a bid to increase the price stores pay to pork farmers. Sorry folks, commodities are priced based on supply and demand. Besides, we would all be better off eating more fish and chicken. Oops, did I say chicken? Chickens eat corn too. Guess their price is headed up along with beef and pork. What about fish? Well, significant amounts of fish are farmed and most of the rest comes from the ocean. Farmed fish eat lots of protein some of which is derived from corn and soy. Ocean fish are already pushing the limits of sustainability so I guess they are not a good option. Guess this means fish will go up too.

One of the "1984" type predictions is that as food prices rise, people will have to move down the food chain to eat. Fish, chicken, mutton, beef, etc. are up the chain from soy, corn, wheat, etc. Guess this means we will have to start eating corn instead of feeding it to the pigs. This sounds kind of cheeky, but it is an all too real part of our possible future.

DarJones

[QUOTE=Fusion_power;312851]May I point out that QE3 is just another way to bail out the big banks sans tarp. In other words, they will sell all their marbles (trash mortgages) to the fed and then buy shiny new marbles somewhere else in the world with the proceeds. This leaves the U.S. in triple jeopardy. First because the banks will be offloading unsellable garbage to the fed, second because the money that was supposed to flow into the U.S. economy goes elsewhere, and third because the money that goes elsewhere is at risk and ultimately the U.S. will have to bail out the banks again. No wonder they call it "moral hazard".[/QUOTE]
TV show idea: Couple of good ole boys from moonshine country who lost their (non-moonshining day) jobs when the economy went south in 2008-2009 turn their skills to profitable use, funneling stacks of hot-off-the-presses government bailout money to the Wall Street banks, using their specially modified hot rod moonshinin'-mobile to tear up the back alleyways of Manhattan. Show is called
[b]
The Dukes of Moral Hazard
[/b]
[QUOTE]/begin OT/
So you have a skunk, a banker, and a lawyer lying dead in the road. What is the difference between them?

There are skidmarks in front of the skunk.
/end OT/[/QUOTE]
There is more to the story: The reason these 3 unlikely-to-be-found-together characters were in one place is that the skunk was suing the banker for the loss of the Skunk family nest egg via a "surefire" securitized subprime loan investment vehicle. The lawyer was just serving the banker the papers when out of nowhere comes this specially modified hot rod moonshinin'-mobile stuffed with hot-off-the-presses government bailout money, being driven at a wildly unsafe rate of speed by a couple of good ole boys...

Yee Haw, and praise cousin Bennie Bernanke and his Ctrl-P key.

[QUOTE=Fusion_power;312880]The problem is that cost of production will increase significantly over the next few months as the short crop of corn in the U.S. hits global markets. The estimated impact is a 1.5% reduction in number of pigs that get slaughtered. [/QUOTE]

Meanwhile, the US of A (read: the consumer) is [URL="http://blogs.wsj.com/economics/2012/05/25/demand-strong-for-government-program-paying-farmers-not-to-plant-crops/"]actually paying Farmers to not plant crops[/URL].

Additionally, a sizable percentage of the corn which is grown ends up being converted into ethanol instead of being used for food.

May we live in interesting times....

[QUOTE][URL="http://www.zerohedge.com/news/2012-09-25/decling-economic-freedom-united-states"]The Declining Economic Freedom Of The United States[/URL]

[/QUOTE]Let's be skeptical about accepting a particular (Frasier Institute) group's scoring method as authoritative. I'm sure there are different weightings, equally valid on their face, by which the U.S. "ranking" would fare better. Perhaps the Frasier Institute has chosen factors which further some other agenda.

Also, relative "ranking" can reflect other countries' improvements, not just a U.S. decline.

While the comments on F.I.'s scoring factors may be valid, there could be other factors, not included in the Frasier Institute's score, that paint a different picture.

[QUOTE=chalsall;312941]Meanwhile, the US of A (read: the consumer) is [URL="http://blogs.wsj.com/economics/2012/05/25/demand-strong-for-government-program-paying-farmers-not-to-plant-crops/"]actually paying Farmers to not plant crops[/URL].[/QUOTE]That's not news; the U.S. has had a variety of farm subsidies ever since the Great Depression. The particular farm subsidy (Conservation Reserve Program) that is that article's subject is almost sixty years old. ([URL]http://en.wikipedia.org/wiki/Conservation_Reserve_Program[/URL])

[quote]Additionally, a sizable percentage of the corn which is grown ends up being converted into ethanol instead of being used for food.[/quote]Now, _that_ is relatively recent.

[QUOTE=cheesehead;312948]Now, _that_ is relatively recent.[/QUOTE]That == corn (sic --- what the rest of the world calls maize) -> ethanol.

Back in the good old days it was rye or barley rather than maize.

In the good old days, it was for [STRIKE]drinking[/STRIKE] medicinal purposes, not burning in an automobile.

DarJones

[QUOTE=Fusion_power;312955]In the good old days, it was for [STRIKE]drinking[/STRIKE] medicinal purposes, not burning in an automobile.[/QUOTE]

Indeed.

Subject to correction, never before have we let people go hungry (and/or pay more for food) in order to power motor vehicles.

"China: ‘We have indeed underestimated the severity of the external economic situation.’"

[URL]http://qz.com/8637/china-under-fire/[/URL]

[quote]How hard will China land? So far, the government has tried to assuage investors with strong steps to ease the effects of slowing growth. It passed a $585 billion stimulus plan four years ago and the People’s Bank of China (PBOC) has cut interest rates three times since the end of 2012. It has also offered bank refinancing operations to inject billions of yuan in liquidity into the banking system and keep banks lending money.

Despite this activism, an advisor to China’s central bank believes that officials have [URL="http://www.reuters.com/article/2012/09/27/us-china-economy-rates-idUSBRE88Q0IY20120927"]underestimated the severity[/URL] of the slowdown. “We have indeed underestimated the severity of the external economic situation,” says Chen Yulu, an advisor to the monetary policy committee at PBOC and a professor at Renmin University in China. He added that the bank would make its future decisions based on external economic indicators. In particular, the Chinese have taken a hit from the European slowdown, as exports to the troubled region accounted for [URL="http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113366.pdf"]nearly 6%[/URL] of GDP in 2011.

. . .[/quote]

From Matt Taibbi's latest [i]Rolling Stone[/i] blog piece - the excerpt skips the opening "How is Mitt a douchebag? Let me count the ways..." stuff, and gets to the real stuff alluded to into the article title:

[url=www.rollingstone.com/politics/blogs/taibblog/this-presidential-race-should-never-have-been-this-close-20120925]This Presidential Race Should Never Have Been This Close[/url]
[quote]The fact that Barack Obama needed a Himalayan mountain range of cash and some rather extreme last-minute incompetence on Romney's part to pull safely ahead in this race is what really speaks to the brokenness of this system. [Frank] Bruni of the [New York] Times [url=http://www.nytimes.com/2012/09/25/opinion/bruni-mitts-mortification.html?ref=opinion]is right[/url] that the process scares away qualified candidates who could have given Obama a better run for all that money. But what he misses is that the brutal campaign process, with its two years of nearly constant media abuse and "gotcha" watch-dogging, serves mainly to select out any candidate who is considered anything like a threat to the corrupt political establishment – and that selection process is the only thing that has kept this race close.

Barack Obama is hardly a complete Wall Street stooge. The country's most powerful bankers seem genuinely to hate his guts, mainly because they're delusional and are sincerely offended by anyone who dares to even generally criticize them for being greedy or ethically suspect, as Obama has with his occasional broadsides against "fat cat bankers" and so on.

On the other hand, Obama's policy choices in the last four years have made it impossible for him to run aggressively against the corruption and greed and generally self-obsessed, almost cinematic douchiness that Romney represents.

With 300 million possible entrants in the race, how did we end up with two guys who would both refuse to bring a single case against a Wall Street bank during a period of epic corruption? How did we end up with two guys who refuse to repeal the carried-interest tax break? How did we end with two guys who supported a vast program of bailouts with virtually no conditions attached to them? Citigroup has had so many people running policy in the Obama White House, they should open a branch in the Roosevelt Room. It's not as bad as it would be in a Romney presidency, but it comes close.

If this race had even one guy running in it who didn't take money from all the usual quarters and actually represented the economic interests of ordinary people, it wouldn't be close. It shouldn't be close. If one percent of the country controls forty percent of the country's wealth – and that trend is moving rapidly in the direction of more inequality with each successive year – what kind of split should we have, given that at least one of the candidates enthusiastically and unapologetically represents the interests of that one percent?[/quote]
But...
[i]
"Obama is hardly a complete Wall Street stooge."
[/i]
So occasional 'verbal broadsides against "fat cat bankers"' unaccompanied by any action whatsoever is enough to make one a non-stooge? Really low bar there.

[QUOTE=ewmayer;313009][quote]If this race had even one guy running in it who didn't take money from all the usual quarters and actually represented the economic interests of ordinary people, it wouldn't be close. It shouldn't be close.[/quote][/QUOTE]
Gary Johnson...

[QUOTE=Dubslow;313011]Gary Johnson...[/QUOTE]

Just because he re-branded himself a libertarian doesn't make him one. Guy is a complete fraud, as Denninger over at the [url=market-ticker.denninger.net/]Market Ticker blog[/url] has been documenting for months. Here's a handful of KD's most-recent posts on Johnson:

[url]http://market-ticker.org/akcs-www?post=212066[/url]
[url]http://market-ticker.org/akcs-www?post=212060[/url]
[url]http://market-ticker.org/akcs-www?post=211859[/url]
[url]http://market-ticker.org/akcs-www?post=211818[/url]
[url]http://market-ticker.org/akcs-www?post=211528[/url]

--------------------------------------

Mish has an interesting piece today on one of the issues which has long concerned me: With the relentless march of automation, what are the people who are not computer science PhDs going to do for a living? (And even if automation led to them being provided for without having to work, would that be a good thing for humankind?)

[url=http://globaleconomicanalysis.blogspot.com/2012/09/can-fed-fight-droids-and-win-apples.html]Managing the Transition to a Workerless Society[/url]
[quote][i]"There are 3 and a half million truck drivers and they will be impacted by this technology. .... We are going to transition into an economy that is very productive and just does not need a lot of human workers. Managing that transition is going to be the greatest challenge that our society faces" says McAfee.[/i]

In spite of that gloom for 13 minutes, McAfee concludes on a positive note, quoting Freeman Dyson: [i]"Technology is a gift of God. After the gift of life, it is perhaps the greatest of God's gifts. It is the mother of civilizations, of arts, and of sciences."[/i][/quote]

--------------------------------------

[b]Friday Financial News of the Weird:[/b]

[url=http://www.zerohedge.com/news/2012-09-28/40-deutsche-bank-employees-injured-after-inhaling-dangerous-substance-schkeuditz-ger]40 Deutsche Bank Employees Injured After Inhaling "Dangerous" Substance In Schkeuditz, Germany[/url]
[quote]It appears banker popularity is low to quite low not only in the US but virtually everywhere. According to Lepizig-Fernsehen, a toxin alert has been issued at a Deutsche Bank branch in Schkeuditz, a suburb town of Leipzig, where 40 people have been "injured" after inhaling a white powdery substance delivered hours before, and which spread via the building's air conditioning system.[/quote]
You know, back in Gordon Gekko's heyday they at least had the humility to just snort the stuff off of mirrors and glass tables...

[b]Friday Funnies:[/b]

[url=http://www.zerohedge.com/news/2012-09-28/friday-humor-dont-drink-and-trade]The Real Reason for the High Price of Oil[/url]

[QUOTE=ewmayer;313081]Just because he re-branded himself a libertarian doesn't make him one. Guy is a complete fraud, as Denninger over at the [url=market-ticker.denninger.net/]Market Ticker blog[/url] has been documenting for months. Here's a handful of KD's most-recent posts on Johnson:

[url]http://market-ticker.org/akcs-www?post=212066[/url]
[url]http://market-ticker.org/akcs-www?post=212060[/url]
[url]http://market-ticker.org/akcs-www?post=211859[/url]
[url]http://market-ticker.org/akcs-www?post=211818[/url]
[url]http://market-ticker.org/akcs-www?post=211528[/url]
[/QUOTE]
Interesting. Who's he going to vote for then? Even a write-in is better than not voting, IMO.

[QUOTE=ewmayer;313081]
[B]Friday Funnies:[/B]

[URL="http://www.zerohedge.com/news/2012-09-28/friday-humor-dont-drink-and-trade"]The Real Reason for the High Price of Oil[/URL][/QUOTE]

Sadly, while funny, this makes no less sense to me than when "something bad happens in the Middle-east" happens and there is a possibility that a two year long supply chain may still be interupted two years from now my price per gallon must go up 50 cents a gallon today.

[QUOTE=xilman;312951]Back in the good old days it was rye or barley rather than maize.[/QUOTE]

Old by American standards, it meant [URL="http://wiki.answers.com/Q/What_was_the_significance_of_the_Whiskey_Rebellion_and_the_way_the_government_responded"]maize[/URL]. Old by English standards, maize (and its native habitat) hadn't been discovered (well, exploited) yet.

[QUOTE=chappy;313087]Sadly, while funny, this makes no less sense to me than when "something bad happens in the Middle-east" happens and there is a possibility that a two year long supply chain may still be interupted two years from now my price per gallon must go up 50 cents a gallon today.[/QUOTE]

The "vagaries" of markets have several drivers. My partner used to work for a futures company. An ancient joke in that industry was that rain on LaSalle Street (Chicago) could make corn go up or down depending on the season and whether the crops needed wet or dry conditions. The point is that irrelevant perceptions make prices change. Rain in downtown Chicago does not necessarily relate to what happens in the fields.

Another reason is that those perceptions can be used in the service of greed. Like the oil supply chain mentioned, orange juice has many months of delay between the orchard and the grocery shelf. Nevertheless, a freak frost in Brazilian citrus regions can cause an almost instant price increase at the retail level.

A related cause is that many commodities are traded in markets which are dominated by huge interests which share interests, effectively controlling the market.

[QUOTE=Dubslow;313082]Interesting. Who's he going to vote for then? Even a write-in is better than not voting, IMO.[/QUOTE]

I didn't see an answer to that question within the blog posts. However, I did see an attempt to define the Libertarian base and some polling data regarding such.[B][/B][B][I][/I][/B]

Quick hits:

o In the U.S., today's monthly ISM manufacturing data came in [url=http://www.zerohedge.com/news/2012-10-01/baffle-bs-after-chicago-pmi-and-durable-goods-tumble-manufacturing-ism-soars]better than expected[/url], triggering the automatic release of finely dispersed celebratory cocaine into the ventilation systems of all the Wall Street iBanks. You didn't think the DEA and the Mexican government actually burn all those tons of seized product like they make a show of doing on TV, did you? Hell no - free coke for Wall Street is in fact a key part of U.S. economic stimulus policy.


o [url=http://www.zerohedge.com/news/2012-09-28/how-oliver-wyman-manipulated-spanish-bank-bailout-analysis]Lies, damed Lies, and Spanish-Bank Stress Test Results[/url]


o ZH's Bruce Krasting [url=http://www.zerohedge.com/contributed/2012-09-29/ss-and-beach]writes about[/url] the impact of demographic trends and the Bernanke Fed's perma-ZIRP regime on the solvency of the Social Security [strike]pile of Treasury IOUs[/strike] Trust Fund - Our Irish (or more generally, linguistically oriented) readership may enjoy the impromptu discussion of Cork-dialect etymology amongst the readers there:


o [url=http://dealbook.nytimes.com/2012/09/28/bank-of-america-to-pay-2-43-billion-to-settle-class-action-over-merrill-deal/?ref=business]Bank of America to Pay $2.43 Billion to Settle Suit Over Merrill Deal[/url]: [i]Bank of America announced on Friday that it would pay $2.43 billion to settle a class-action lawsuit related to its acquisition of Merrill Lynch.[/i]

LOL, "missteps" ... the NYT's kid-gloves approach to its hometown's major industry continues. The Dukes of Moral Hazard are probably loadin' up the General Lee-mobile out back of Uncle Bennie B's printing house as we speak, in order to cover the settlement without having to cut into all those executive comp. packages needed for BofA to retain "top talent".


In longer-hit news, Mish today features a well-written op-ed in today's [i]Telegraph[/i] which addresses the European devolvement into a bailout union:

[url=http://globaleconomicanalysis.blogspot.com/2012/09/what-if-i-am-wrong-about-europe.html]Can Politics Triumph Over Math and History?[/url]
[quote]What if the eurozone in spite of all obstacles stays intact? Daniel Hannan is a writer and journalist, and Conservative MEP for South East England since 1999 offers an interesting viewpoint for The Telegraph in [url=http://blogs.telegraph.co.uk/news/danielhannan/100183069/spain-teeters-on-the-brink/]Spain teeters on the brink[/url]:
[i]
All of a sudden, the talk is of the breakdown, not just of the single currency, but of the parliamentary system on which it rests. Commentators across Europe fret that Spain, which emerged from dictatorship less than 40 years ago, might give up on multi-party politics.

Every round of economic figures is worse than the last. The deficit is massively larger than forecast. A bailout of unprecedented size is becoming inevitable, even as the prime minister gives his countrymen a ‘one hundred per cent assurance’ that he won’t apply for one. (He said much the same thing a few days before applying for the last one.)

Hundreds of thousands of people are protesting, some violently. ....

The real tragedy of the euro is not that it will come crashing down upon the financial system, as Smaug upon Esgaroth, splintering it to sparks and gledes. The tragedy, rather, is that the monetary union will limp on, condemning hundreds of millions to gradual immiseration.

I am still trying, as gently as I can, to suggest that there is an alternative to the euro-imposed bailout racket. I did so again in our most recent parliamentary session, as you can hear in the clip above.

The trouble is that, while Spaniards recognise the folly of imposing cuts while at the same time bailing out banks, they shy away from the logical conclusion: that leaving the euro is now the least bad option.

The real threat to Spanish democracy is not internal but external; not a pronunciamiento but a Brussels-imposed civilian junta, as happened in Italy. Mario Monti, the EU’s proconsul in Rome, indicated yesterday that he ‘might seek a second term’. Oddly, I don’t remember him seeking the first.[/i][/quote]

Well whaddya know? JP Morgan got sued by NYAG for the MBS/CDO's issued by Bear Stearns in the heyday years from 2005 to 2007. Now we get to wait and see if this winds up with some huge slap on the hand or some meaningful change in the industry.

[url]http://www.bbc.co.uk/news/business-19795646[/url]

[QUOTE]This is the first action to come out of a working group created by US President Barack Obama looking into the causes of the 2008 financial crash.

The civil suit, filed by New York Attorney General (NYAG) Eric Schneiderman, accuses Bear Stearns of failing to ensure the quality of loans underlying residential mortgage-backed securities.

It claims the bank, "systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans".[/QUOTE]

I can already tell you where this will wind up. Bear Stearns had both hands in the cookie jar. Needless to say, JPMorgan rapidly backpedaled to establish a "we are ethical" argument, it was all Bear Stearns doing.

[QUOTE]However, in a statement, JPMorgan said the allegations concern actions by Bear Stearns before it bought the investment bank: "The NYAG civil action relates to Bear Stearns, which we acquired over the course of a weekend at the behest of the US Government. This complaint is entirely about historic conduct by that entity".[/QUOTE]

They were not as egregious as Lehman Brothers, but Bear Stearns had a huge exposure in the MBS/CDO market.

[url]http://en.wikipedia.org/wiki/Subprime_mortgage_crisis[/url]

DarJones

I sense a right proper "Eliot Spitzering" coming up for our dear overly zealous NYAG Schneiderman...

-------------------------------------------

o Italian "Austerity" In Action: [url=www.zerohedge.com/news/2012-10-02/italian-austerity-action-maserati-its-uk-ambassador]Maserati For Its UK Ambassador[/url]


o In today's "Whodathunkit?" moment: Bill Gross, head of the world's largest bond fund, PIMCO, after building a company and career around the US debt-pyramid Ponzi, belatedly realizes that exponential debt issuance may not be a sound long-term basis for an economy:

[url=http://www.telegraph.co.uk/finance/financialcrisis/9581682/PIMCO-America...]PIMCO's Gross: America could 'resemble Greece' before 2020[/url]


o ZeroHedge commentator Bruce Krasting's latest piece - after the opening bit about the rising nationalism [or pro-debt-repudiationism, if you prefer] in Italian politics - discusses a bit of blatant [url=www.zerohedge.com/contributed/2012-10-02/politics-italian-and-american-style]pre-election vote buying by the White House[/url].

-----------------------------------------

Followup on a 21. Sep post:

[QUOTE=ewmayer;312304]Even that value-add estimation gets to be quite interesting and nontrivial - popular video games obviously provide a net benefit to their makers, but does their production, sale and consumption actually represent net wealth creation in a broad economic sense? One could argue that legions of game addicts spending most of their waking hours toggling, clicking and zapping virtual enemies represents wealth creation capacity subtracted from the economy. OTOH, people have always demanded their entertainments, so as long as gaming does not crowd out productivity-enhancing software development and usage, the software sector as a whole should still represent a form of wealth creation.[/QUOTE]

WaPo has an interesting piece on a slightly different kind of "economics of video games":

[url=www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/28/the-economics-of-video-games/]The economics of video games[/url]

Structured-finance expert and blogger (and apparent [i]Casablanca[/i] fan, based on the "shocking" quip) Janet Tavakoli has an amusing -- except for the fact that the kind of fraud alleged is endemic on Wall Street, and costs retail investors untold billions each year -- piece in today's HuffPo, on the firm run by a fellow who the Big Picture's Barry Ritholtz hails as an investing savant, an appellation Janet indicates the appellee (not to be confused with the legal usage of the term) would agree wholeheartedly with:

[url=www.huffingtonpost.com/janet-tavakoli/steve-cohens-press-releas_b_1932265.html]Steve Cohen's Press Release on SAC's Alleged Insider Trading: I'm a Genius![/url]
[quote]I'm shocked, shocked I tell you, to learn some of my managers used insider information when trading at SAC Capital Advisors LP!

I suspected it was happening at many of my competitors' hedge funds. Why? It's because I'm a genius, and they're not! Other hedge fund managers apparently think they can achieve my consistent double digit returns when U.S. Treasuries are paying a pittance just because they are taller, or fatter, or better looking than I. But they can't, because I'm a genius! When they outperform, it's because they relied on insider information passed on from an analyst they hired from an investment bank or otherwise illegally obtained insider information. When I consistently outperform, it's because I'm a genius!

How did I not know allegedly illegally obtained insider information was used by managers at my own fund? Same reason; it's because I'm a genius. If you don't get it, it's because you're not a genius. But don't worry. I'll explain it to you later in this press release.[/quote]
BTW, if you - like the rest of us poor-schlub smart-but-subgenius folk - don't get it, allow me to recommend the following trio of fabulous books, one of which I saw an aspiring Cohen-esque genius-in-training reading at the local coffee shop several years back.

[url=http://www.amazon.com/Think-Like-Genius-Todd-Siler/dp/0553379283/ref=sr_1_4?s=books&ie=UTF8&qid=1349212483&sr=1-4&keywords=think+genius]Think Like a Genius[/url] by Todd Siler (1999) ... Only 4 copies left, so hurry! And check out these fabulous tidbits, replete with a snappy biznis-motivational-speaker-style A.C.R.O.N.Y.M. for the author's patented system:
[quote]How you already think like a genius without even knowing it--page 6
The secret formula for genius: C.R.E.A.T.E.--page 22
Ways to overcome the fear that inhibits the genius within you--page 58
How to transform the cynicism of [i]I can't do it[/i] to the confidence of [i]I can do anything[/i]--page 66 [EWM: The Little Engine will be most pleased to see this]
Breaking out of mental ruts and daily routines that block your road to genius--page 77
How to turn the obvious into a work of art, a new insight, or a multimillion-dollar creation--page 92
Getting unstuck from the quicksand of indecision and procrastination--page 106
The secret essence of every stroke of genius--page 165
And much more![/quote]

[url=http://www.amazon.com/How-Think-Like-Leonardo-Vinci/dp/0440508274/ref=sr_1_1?s=books&ie=UTF8&qid=1349212483&sr=1-1&keywords=think+genius]How to Think Like Leonardo da Vinci: Seven Steps to Genius Every Day[/url] by Michael Gelb (2000) ... Because anyone can do it if they just buy this book and follow the recipe!! (Stay tuned for the forthcoming followup [i]How to Sculpt Like Michelangelo: Seven Steps to Becoming a Master Chiseler[/i] ... I hear this will be a lavishly illustrated high-priced coffee table tome, but don't hold back just because of the naysayer who accuse the author of being a Master Chiseler, that is a typical sub-genius response to such rampant, intimidating geniality.

[url=www.amazon.com/Discover-Your-Genius-Historys-Revolutionary/dp/B0002NQ2ES/ref=sr_1_2?s=books&ie=UTF8&qid=1349212483&sr=1-2&keywords=think+genius]Discover Your Genius : How to Think Like History's Ten Most Revolutionary Minds[/url] by Michael Gelb (2003) ... The creation of a million-odd latter-day da Vincis amongst the readership of his first book apparently not having sufficed, Gelb now reveals the secrets to becoming a universal genius!!! One of the readers is kind enough to list Thomas 'the Full Monti-cello' Jefferson's ten-point plan for personal improvement, which alas left out the crucial "0 Item" which is key to enabling all the others - Here, allow me to remedy that omission:
[i]
0. Never pass up an opportunity to be born into the landed gentry, and spend your life having hundreds of slaves to further your wealth and free you from the burdens of being a wage earner.[/i]

(No disrespect to Jefferson's intellect, but it's a lot easier to "unleash the genius within" under those kinds of circumstances. Any latent genii among his slaves alas were doomed to remain so.)

methinks Ewmayer has been reading Isaac Asimov robot books. The three rules of robotics were documented early, but it was much later that he came up with the 0 rule.

DarJones

[b]Friday Humor, "It's Wednesday Evening and Ernst is Studiously Avoiding the Blatherfest Known as 2012 Presidential Debate #1" Edition:[/b]

(Would appreciate if anyone overhears snarky commentary on either candidates' delusional economic prescriptions as "jobs creationism", though.)

[url=http://www.zerohedge.com/news/2012-10-03/let-presidential-debate-drinking-games-begin]Let The Presidential Debate Drinking Games Begin[/url]: [i]Far be it from us to encourage excess consumption; but, should you feel the need to numb yourself a little during the ensuing battle-royale between Obama and Romney, we present - for your imbibing pleasure - the official drinking game of the 2012 election debates.[/i]

----------------------------------

[b]Currency Collapse in Iran Accelerates[/b]

[url=www.nytimes.com/2012/10/04/world/middleeast/clashes-reported-in-tehran-as-riot-police-target-money-changers.html?_r=1]Violence and Protest in Iran as Currency Drops in Value[/url]: [i]TEHRAN — The first outbreak of public anger over Iran’s collapsing currency and other economic maladies jolted the heart of the capital on Wednesday, with the riot police violently clamping down on black-market money changers, hundreds of citizens marching to demand relief and merchants in the sprawling bazaar closing their shops in protest.[/i]
[quote] Iran’s official news media said an unspecified number of people, including two Europeans, had been arrested in the turmoil, which was documented in news photographs, at least two verifiable videos uploaded on YouTube and witness accounts.

Economists and political analysts in Iran and abroad said the anger reflected the accumulated impact of harsh Western economic sanctions over Iran’s disputed nuclear program, as well as the government’s inability to manage an increasingly acute economic crisis.

It came a day after Iran’s president, Mahmoud Ahmadinejad, said at a televised news conference that the plunge in the value of Iran’s currency, the rial — which has fallen by 40 percent against the dollar this past week — was orchestrated by ruthless currency speculators, the United States and other unspecified internal enemies of Iran. He urged people to stop selling their rials for dollars, a currency he once characterized as “a worthless piece of paper,” and warned that speculators faced arrest and punishment.

But Mr. Ahmadinejad, whose stewardship of the economy has been increasingly challenged by other Iranian politicians in the last year of his term, offered no new solutions to arrest the slide in the rial, which is a major inflationary threat and has become the most visible barometer of Iran’s economic travails. Because of the sanctions, Iran is facing extreme difficulties in selling oil, its main export, and in repatriating dollars and other foreign currencies, because Iran has been cut off from the global banking system.

Unscripted protests in Iran are highly unusual, particularly since the political opposition in the country was crushed after Mr. Ahmadinejad’s disputed re-election in 2009. Iran experts said the outbreak on Wednesday was significant because it appeared to offer an insight into the degree of public weariness.

“It may not be widespread yet, but it demonstrates not just unhappiness with the Ahmadinejad government, but also dissatisfaction with the Islamic republic’s failure to stem the economic crisis brought about by incompetence, mismanagement and sanctions,” said Alireza Nader, a political analyst at the RAND Corporation, a research and consulting firm. He said that “the regime is going to face much greater instability in the future, especially if it loses the support of Iran’s business and merchant class.”

Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington, said in an audio commentary on the group’s Web site that the sanctions had effectively halved Iran’s oil exports, choked its ability to import essential goods and left its currency worth a fraction of its value compared with early this year. “These are hard times for ordinary and upper-class Iranian people,” he said. [/quote]

[QUOTE=ewmayer;313561]
[url=http://www.zerohedge.com/news/2012-10-03/let-presidential-debate-drinking-games-begin]Let The Presidential Debate Drinking Games Begin[/url]: [i]Far be it from us to encourage excess consumption; but, should you feel the need to numb yourself a little during the ensuing battle-royale between Obama and Romney, we present - for your imbibing pleasure - the official drinking game of the 2012 election debates.[/i][/QUOTE]

I saw the second one on Facebook, and IMO it's slightly smarter (not that I would know).

[QUOTE=Fusion_power;313558]methinks Ewmayer has been reading Isaac Asimov robot books. The three rules of robotics were documented early, but it was much later that he came up with the 0 rule.

DarJones[/QUOTE]Perhaps so. However, there are other examples of the 0 rule. The zeroth law of thermodynamics was formulated after the first three. The zeroth law of program optimization, [i]First get it right, then get it fast[/i], may have been but I'm not so sure of that one.

"First get it right, then get it fast" This is so true. I had an excel macro written by a colleague that took 10 minutes to complete on a dual processor computer with plenty of memory. I used it for 7 years before finally getting irritated at the run time. The re-written routine takes 45 seconds to generate the same exact data and uses 20 fewer lines of code.

The debate held last night was all about showmanship. Romney arguably won the war of words, but he was seriously short on facts. Obama meandered and muddled too much while Romney took potshots at his record. At this point, I would seriously question whether either one of them would get tough on wall street. I would also question whether either one will ever do anything significant about the deficit (other than increase it).

DarJones

[QUOTE] Romney arguably won the war of words, but he was seriously short on facts[/QUOTE]And yet, one of the criticisms I've seen online is that he cited too many facts. Damned if you do, damned if you don't.

But on the topic of the economy, I found the following article about housing interesting: [URL="http://www.nationalreview.com/articles/329370/obama-s-november-surprise-dan-murphy"]Housing loans on the taxpayer dime.[/URL]

Mish on last night's presidential debate #1:

[url=http://globaleconomicanalysis.blogspot.com/2012/10/romney-wins-debate-1-hands-down-not.html]Romney Wins Debate #1 Hands Down; Style Over Substance; Tweedledum vs. Tweedledee[/url]

Mish also has nice in-depth piece on the [url=http://globaleconomicanalysis.blogspot.com/2012/10/hyperinflation-hits-iran-monthly-70.html]Iranian currency crisis[/url].

-----------------------

Some more in-depth followups on the JPM/fraudclosure story:

Chris Whalen - who notes having worked for Bear Stearns in 2 separate stints - comments on the civil (since criminal law clearly does not apply to banksters) lawsuit filed against Bear acquirer JPM by the NY AG's office. Chris notes that aside from generating some loud headlines (typically followed by much less action on the actual-prosecutions side) in fact Schneiderman has been very un-Eliot-Spitzer-like in going after the TBTF banks for the epic mortgage ^ securitization fraud they perpetrated, either directly or by way of their now-wholly-owned subsidiaries. Pay special attention to the bit about "multiple pledges", and note a pair of comments and accompanying links by reader "teribuhl":

[url=www.zerohedge.com/contributed/2012-10-02/memo-jamie-dimon-you-still-think-bear-stearns-not-material]Memo to Jamie Dimon: You Still Think Bear Stearns is Not Material??[/url]
[quote]A couple of years ago, JPMorgan Chase CEO Jamie Dimon told investors that the acquisition of Bear, Stearns & Co. would not be material to investors. In the years that have followed, a tiny group of analysts and managers have watched as the Bear Stearns transaction has festered into a festival of fraud. But most supposed Sell Side analysts and Buy Side investors who pretend to follow financials still don’t seem to get the joke.

The basic problem with Bear Stearns was fraud, massive, deliberate fraud. The firm’s activities in the mortgage securities space were so sloppy and negligent as to rise the level of legend on Wall Street. And now even Eric Schneiderman, the do-nothing NY AG, has finally been forced to take action against JPM.

“The New York attorney general's office has hit JPMorgan Chase & Co. with a civil lawsuit, alleging that investment bank Bear Stearns — prior to its collapse and subsequent sale to JPMorgan in 2008 — perpetrated massive fraud in deals involving billions in residential mortgage-backed securities,” reports the Wall Street Journal.

Now this mess is amusing and troubling both. It is amusing that JPM did not seem to anticipate that the unliquidated claims against Bear Stearns from creating bad residential mortgage backed securities (RMBS) would eventually come back to haunt the bank. Dimon and his bankers thought they were so cute stuffing the New York Fed with the accumulated detritus in Bear’s mortgage conduit – what later became known as the “Maiden Lane” vehicles.

...
What is really interesting is that the legal complaint filed by Schneiderman talks about sloppy procedures for loan selection, but still does not get to the real fun, namely multiple pledges of loans for different RMBS. And you can be sure that Schneiderman does not really want to go that far because it might force him to ask the same question about the other, far larger issuers of RMBS.[/quote]

Bloomberg's Jonathan Weil comments on the NYAG's "thoroughly unimpressive lawsuit" - [url=http://www.bloomberg.com/news/2012-10-02/eric-schneiderman-will-have-to-do-better-than-this.html]"Eric Schneiderman Will Have to Do Better Than This"[/url]. Weil points out glaring errors of fact such as this:
[quote]What’s especially worrisome: One section of the complaint, about advice rendered to Bear Stearns by the accounting firm PricewaterhouseCoopers, is sloppy to the point of inaccurate. It says: “Defendants’ external auditor, PricewaterhouseCoopers, in August 2006, advised defendants to stop asserting EPD claims against sellers on securitized loans before determining whether a breach of representations and warranties of securitization agreements also existed.” The complaint then goes on to describe related advice that Pricewaterhouse provided to Bear Stearns that year.

[u]The problem with that section is Pricewaterhouse wasn’t the external auditor for Bear Stearns in 2006. Deloitte & Touche was[/u]. (Pricewaterhouse is JPMorgan’s longtime auditor. But remember, JPMorgan didn’t buy Bear Stearns until 2008.)[/quote]

[url]http://news.yahoo.com/prices-facebook-stock-since-long-awaited-ipo-212925363--finance.html[/url]

The numbers are interesting, but we wonder if you can consider this an actual news article? Journalism is a dying art! (A chart or graph would have been more appropriate, too!)

@xyzzy: W ... T ... F. Someone is in dire need of an introduction to data visualization.

-----------

Latest BLS [URL="http://www.zerohedge.com/news/2012-10-05/reason-todays-unemployment-rate-plunge-part-time-jobs-economic-reasons-surge-most-qe"]jobs numbers today[/URL] confirming my [URL="http://mersenneforum.org/showthread.php?t=16404"]start-of-year prediction[/URL] that the official unemployment rate would drop below 8% by election time, giving Obama a major boost, even though the real trend (e.g. total-employed and employment-population ratio) shows no material improvement over the 2009 bottoming-out numbers.

Here in California, the big story the past week - besides both bay area MLB teams making the playoffs - is a sharp rise in gas prices, which are now way above previous records for this time of year, and approaching the all-time highs of the oil-price-bubble summer of 2008:

[URL="http://www.mercurynews.com/bay-area-news/ci_21698813/bay-area-gas-prices-suddenly-soar-toward-record?source=inthenews"]TweetBay Area gas prices suddenly soar toward record levels[/URL]
[quote]The bruising at the pump that began earlier this week has turned into a full-fledged assault, as supply shortages pushed Bay Area gas prices up toward $4.50 a gallon and some Southern California stations threw in the towel and shut down.

Duff Criley, a general contractor from Cupertino, figures he'll spend $150 on gas this week to keep his GMC Sierra running to job sites -- 20 to 30 bucks more than a few days earlier.

"This is ridiculous," said Criley, 55, who pulled into a Valero station off Hamilton Avenue in San Jose where gas was selling for $4.61 a gallon. A station attendant told him that he had just raised the price 20 cents five minutes earlier. "It had been holding at $3.99 for a couple of weeks. Now this. You betcha this hurts."

Commuting to her job at an insurance broker in Pleasant Hill, Glenda Bray saw prices at the local Chevron station climb 10 cents at lunch on Wednesday and another six cents by the time she got home. On Thursday, the station raised the price another 30 cents.

"I was afraid to go to lunch," said Bray, a 61-year-old Fairfield resident.

...
The problem continues to be lack of supply. A major Exxon Mobil refinery in Southern California is still struggling after losing power on Monday amid sweltering temperatures, leading to production problems.

It comes as Chevron's Richmond refinery continues to produce less fuel after its Aug. 6 fire. Chemical problems forced the shutdown of a pipeline that feeds gas from the Central Valley to the Bay Area earlier this week, and Phillips 66 plants are undergoing maintenance work at both ends of the state.

It could be worse, Bay Area. Some stations in Southern California, including Costco, are reportedly shutting down pumps because the wholesale prices are so high -- sometimes more than $5 a gallon -- that they can't make a profit.[/quote][B]Friday Humor:[/B]

How to buy a $25,000 car for just $1500:

[URL="http://www.zerohedge.com/news/2012-10-04/guest-post-one-very-strange-use-silver-coins"]Guest Post: One Very Strange Use For Silver Coins[/URL]
[quote]But what can anyone do about it? Lobby the state legislature? Rock the vote? Protest… and hope we don’t get arrested, beaten, or shot by those sworn to protect and to serve? Give someone at the DMV a stern lecture about economic freedom?

Trying to change this system is a waste of resources. It’s a race that everyone will lose. Besides, you could spend your whole life lobbying to change one law, and by the time you succeed, they’ll have already passed another 10,000 new, even dumber laws.

Fact is, no one can do anything about this. Just like nobody can prevent Ben Bernanke from dropping money from helicopters. We can’t stop the price rises from monetary inflation, we can’t stop out of control spending (and theft) at all levels of government.

What we CAN do is take sensible steps to protect what’s ours… and then use their own stupid rules against them. It’s a much easier way to win.[/quote]The way the above transaction was conducted actually seems to me to be transparently fraudulent - The way to go here is to convince the seller to "do the math" and accept the coins as payment, after which he can do with them as he wishes. Even that may run afoul of "fair value" laws for transactions, designed to prevent tax evasion by way of collusive sale-at-below-fair-value prices. (Similar laws apply to barter transactions - but without a state agent to observe such transactions, they are obviously difficult to enforce.)

Anyhoo, if the seller who accepted the coins subsequently can convince some poor slob of a coin dealer to pay above face value for the coins, more power to him - although he would incur a tax liability on any proceeds. Death and taxes...

Silver coin transactions are a self-limiting device. You have to have the silver coins to begin with. Very few people today have them. I have about $400 face value of silver coins with potential market price around $8000 if I sold them. Once they are exchanged or sold, they are gone.

This chart is a bit more illustrative of FB falling off a cliff and laying on rocks at the bottom knocked out.
[url]http://finance.yahoo.com/echarts?s=FB+Interactive#symbol=fb;range=6m;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;[/url]

As for the abrupt drop in unemployment, these are funny numbers again. A better number to watch is number of employment age Americans vs number of Americans with jobs. That number looks like a car with gas tank 1/4 full in California with service stations raising prices $1 per day. Note that gas in Alabama is currently $3.40 or thereabouts.

DarJones

In the wake of yesterday's "better than expected" headline unemployment numbers (which follow similar upside surprises in key manufacturing and consumer-sentiment indices), [url=http://globaleconomicanalysis.blogspot.com/2012/10/unbelievable-numbers-says-former-ge-ceo.html]charges of pre-election gaming[/url] are flying. I prefer to stick simply to hat is undeniable, that the numbers - especially their wacky composition - are outliers relative to the trend of the past few quarters:

[url=www.zerohedge.com/news/2012-10-06/rosenberg-unemployment-rate-if-its-too-good-be-true-then-it-probably]Rosenberg On The Unemployment Rate: "If It's Too Good To Be True, Then It Probably Is"[/url]
[quote]There is no doubt that the bullish crowd is doing high-fives and the White House cheering over what the unemployment rate did in September — falling to 7.8% from 8.1% in August and 8.3% in July. That the 7.8% jobless rate takes it to the level that prevailed when the President took office in January 2009 has raised many an eyebrow. I don't believe in conspiracy theories. But I don't believe in the Household Survey, either. This notoriously volatile indicator has become even more so in recent months. It showed a 195k slide in July and a 119k decline in August, to only then reveal a massive 873k surge in September. [u]So based on Household employment, the economy was in recession in July and August and then miraculously boomed at its strongest rate since January 1983[/u] (is Obama really the new Reagan)?
[b]
If it's too good to be true, then it probably is.
[/b]
But this is why the headline unemployment plunged, and that is what is very likely to make the front pages of the Saturday newspapers. Digging beneath the veneer, [u]the quality of these so-called Household jobs is called into question, seeing as part-time work for 'economic reasons' dominated with a 582k run-up in September[/u]. And upon closer inspection of the actual amount of slack in the labour market, the more inclusive U6 unemployment rate that does a much better job at capturing underemployment, remained stubbornly stuck at 14.7%.[/quote]
(Note the alleged surge in part-time workers is behind the 0.1% rise in the labor force participation rate, which is one of the less-fudgable indicators, hence one which I follow closely.)


[b]Friday Humor, Saturday Edition:[/b]

[url=www.zerohedge.com/news/2012-10-06/saturday-humor-weeks-top-headlines]This week's Top 10 Bloomberg headlines[/url]

[b]Sunday In-Depth: Gaping Fiscal Hole Facing the UK[/b]

The German [i]Die Welt[/i] - the articles I found in the UK papers (such as [url=http://www.dailymail.co.uk/news/article-2212549/West-Coast-Main-Line-Ministers-dodge-blame-emerges-rail-line-shambles-cost-100m.html]this one[/url] with its spastic page layout) were more scattershot, perhaps due to the "too close to the issue" effect resulting on an excessive emphasis on the personalities, backbiting and infighting - has a piece on the latest in a series of financial debacles for the UK leadership, the West Coast Main Railway Line. The monetary amount taken in isolation is not colossal - U.S. Ponzi nabob Ben Bernanke lights his quantitative easing cigars with such amounts - but taken as part of the bigger picture, the UK national finances are not looking at all good. And here they thought that simply promoting City of London as the unchallenged epicenter of global financial fraud was going to solve all their budgetary problems. (Translation is mine, but thanks for the laughs, Google Translate):

[url=http://www.welt.de/wirtschaft/article109677906/Camerons-unglaubliche-Serie-von-Finanzdesastern.html]Cameron's incredible series of financial disasters[/url]: [i]At the Conservative party national conference there is real trouble in British Prime Minister David Cameron's house. His government has currently screwed up almost everything -. And is busily tearing new holes in the ailing state budget[/i]
[quote]British Prime Minister and party leader David Cameron could hardly have wished for a worse time for the Conservative Party conference. At the moment everything is going wrong for the Tories, who came to power two-and-a-half years ago with great promises.

The country is still mired in recession, debts are mounting and the failed parliamentary bills are piling up. Cameron may find it difficult to ensure a good atmosphere with his base at the conference, which runs through Wednesday.
[b]
Government has again made a shambles
[/b]
Just last week the government was hit by the latest catastrophe. "Another piece of chaotic incompetence," British Labour leader Ed Miliband opined smugly.

An abashed Transport Minister Patrick McLoughlin was forced to go before the media and admit that his government had once again made a muck of things. Inexplicable errors had occurred in the awarding of the franchise license for the West Coast Main railroad iine, the key railway line in the country connecting London with Edinburgh.

At the end of August, the government had awarded the contract for the next 13 years to the British transport company FirstGroup. Now, however, McLoughlin was forced to suspend the process. During their review of the bids, Ministry officials were found to have made errors in their calculations of passenger growth and inflation, as a result of which the British taxpayer would end up being liable for at least 40 million pounds (50 million euro).

That is the amount the government must pay the four bidders First Group, Virgin, Nederlandse Spoorwegen and the French consortium of Keolis and SNCF, which had participated in the 15-month tender process.

And the cost could rise even further if the gaffe affects the awarding of 18 still-outstanding railway licenses. McLoughlin also put three of those tenders on hold as a precautionary measure, awaiting the outcome of an investigation. "It will cost us a lot of money," admitted the minister candidly.
[b]
Predatory bids are forbidden by the rules
[/b]
The fiasco might have been avoided if the government had paid heed to Virgin founder Richard Branson. His company operated the lucrative railway line for over 15 years. FirstGroup had outbid Virgin in the recent offering by a massive 600 million pounds. Already in August Branson referred to the amount as "insanity".

According to its own tender criteria the Ministry of Transport must not accept the merely highest bid, but rather the one based on the most realistic growth forecasts. Too often it had happened in the past that railway consortia won bidding processes with unrealistic offer and subsequently could not fulfill the resulting contracts.
[b]
Losses the British state cannot afford
[/b]
According to experts, the expensive error could amount to up to 100 million pounds when all is said and done. Money which the British cannot easily afford to waste. Just at the end of September, U.S. investment bank Morgan Stanley shocked with a new study suggesting that the national deficit of the country relative to gross domestic product (GDP) next year might exceed that of Greece and Spain for the first time.

According to Morgan Stanley, in 2013 the UK will have to issue a total of 126 billion pounds of new debt. This would represent 7.8 percent of economic output. No other country in Europe has such a big hole in its accounts. For Spain, the economists at the investment bank predict a deficit of six per cent, whereas Greece is looking at a figure of 6.3 percent.[/quote]
7.8 percent of GDP - who do these guys think they are, Americans?

On the contrary, we're reasonably confident that we're Britons. There's a reasonably nasty recession on, the automatic stabilisers are applied and are not all that cheap, but while people are willing to buy 30-year bonds yielding 3% and 10-year bonds yielding 1.8%, we're more willing to sell bonds than to close hospitals.

I find the pervasive confusion between macroeconomic fundamentals and mild financial mistakes a sign of total lack of arithmetic competence among commentators, which is embarrassing to find in a corner of a maths forum; obviously you'd prefer the government not to make £100-million mistakes routinely, but that's not the direction you look in if you're talking about budget deficits.

The image I prefer contains four hospitals, three pensioners, two poor people and a soldier; each instance represents £100 million a day in spending for the UK government.

[QUOTE=Xyzzy;313733][URL]http://news.yahoo.com/prices-facebook-stock-since-long-awaited-ipo-212925363--finance.html[/URL]

The numbers are interesting, but we wonder if you can consider this an actual news article? Journalism is a dying art! (A chart or graph would have been more appropriate, too!)[/QUOTE]

[QUOTE=ewmayer;313747]@xyzzy: W ... T ... F. Someone is in dire need of an introduction to data visualization.[/QUOTE]

[QUOTE][B]Dawson[/B]: I'm glad to see the Ministry's continuing its tradition of recruiting the brightest and best, sir.
[/QUOTE]
[COLOR=lemonchiffon].[/COLOR]

[QUOTE=fivemack;313972]On the contrary, we're reasonably confident that we're Britons. There's a reasonably nasty recession on, the automatic stabilisers are applied and are not all that cheap, but while people are willing to buy 30-year bonds yielding 3% and 10-year bonds yielding 1.8%, we're more willing to sell bonds than to close hospitals.[/QUOTE]

"Automatic stabilisers" - I do so love Keynesian euphemisms for "spending money we don't have". Here in the U.S. there is a similar official smugness about the current low rates of interest, btw - before accusing others of innumeracy you might examine who is buying those bonds, and whether central bank manipulation of interest rates to near-zero [url=http://www.zerohedge.com/news/2012-10-08/zero-interest-rate-zero-retirement-how-fed-doomed-elderly-americans-endless-work]really is the free lunch[/url] its proponents make it out to be.

As I noted, the absolute size of the "accounting error" in question is tiny relative to the current-account deficit, but a couple hundred million here, another half-billion there, still manage to add up. If we were talking about an entity which were required to to actually pay its bills, the tiny accounting error featured in the article would translate roughly to one decent-sized hospital having to be closed, to use your own example.

Speaking of incidental expenses, I hear the Greeks are [url=http://www.forbes.com/sites/chrissmith/2012/10/03/greece-learns-nothing-dumps-37-million-into-formula-one-racetrack/]spending a similar amount of money they don't have[/url] to begin building a brand new Formula 1 racetrack in some obscure location in hopes of being blessed by the appearance of His Holiness Mr. Bernie Ecclestone at some future date. 'Twill be money well spent, I'm sure.

[URL="http://economywatch.nbcnews.com/_news/2012/10/08/14296144-california-voters-only-have-themselves-to-blame-for-soaring-pump-prices?lite&ocid=msnhp"]California voters only have themselves to blame for soaring pump prices[/URL]

[quote]One reason is that state regulators insist refiners produce a specific blend of gas to meet tough state air quality standards. That means refiners and wholesalers can’t make up temporary shortages with gas that can be sold elsewhere in the U.S.
And while refiners in other states have gradually expanded output over the years to keep up with demand, no California politician would dream of campaigning on a platform of building new oil refineries. The result is that gasoline supplies in California have gradually tightened as refiners have been unable to win approval to expand production, according Tom Kloza, publisher of the Oil Price Information Service.
___________________________________

The supply pipeline started to dry up after an Aug. 6 a fire shut down Chevron Corp's 245,000 barrel-per-day plant in Richmond, Calif. Then Exxon Mobil Corp's 150,000 barrel-per-day Los Angeles-area refinery in Torrance, Calif., was hit with a power failure last week. An outage at a pipeline in the Central Valley only made matters worse.
___________________________________

Prices should also start falling fall following an order from Gov. Brown on Sunday that state smog regulators allow winter-blend gasoline to be sold earlier than the usual Nov. 1 start date. The order means refiners can begin to tap stockpiles of winter fuel to ease the latest shortages.[/quote]

He's making a list, and checking it twice...
 

[url=www.nytimes.com/2012/10/09/world/europe/greek-government-at-odds-over-list-of-names.html?ref=world]Debate Over Whereabouts of a List Highlight Greek Political Divide[/url]: [i]ATHENS — Can a memory stick bring down a political order? That is the question in Greece, where a tragicomic debate over what became of a list of nearly 2,000 Greeks with Swiss bank accounts is rapidly turning into a full-blown political crisis that is imperiling Greece’s fragile coalition government at a crucial time.[/i]
[quote] When the Greek finance minister and one of his predecessors said last month that the list was missing — and another former finance minister subsequently said he had belatedly handed it over to the authorities — the story was seen as an almost laughable caper. But amid other high-profile corruption investigations that have opened in recent weeks, the story quickly assumed a darker cast. On Thursday, a former deputy interior minister — who according to the Greek news media was under investigation for corruption himself — was found dead in what appears to have been a suicide.

As the coalition government of Prime Minister Antonis Samaras struggles to agree on a package of austerity measures to secure the foreign financing the country needs to stay afloat — and ahead of the first visit to Athens by Chancellor Angela Merkel of Germany since the debt crisis began, expected on Tuesday — the corruption investigations are seen less as a belated housekeeping effort than as a gloves-off fight, with politicians breaking allegiances in a destabilizing climate of suspicion and even blackmail.

“What we see unfolding in the political system is a tragedy with elements of low comedy,” said Pantelis Boukalas, a columnist for the newspaper Kathimerini.

Today, the same people singled out in the investigations are in the parties that form the pillars of Mr. Samaras’s government — a government blessed and supported by European leaders — and it remains to be seen how much self-examination, let alone how many criminal charges, it will take before the entire structure collapses.

As the investigations gain momentum, the relationship between the Socialists and New Democracy, Mr. Samaras’s party, “is that of the scorpion and the frog,” Mr. Boukalas said.

“It’s in their nature for one to sting the other until they sink together,” he said.

“They might be forced allies now, but each other’s value is based on the devaluation of the other,” he added. “However, if the Socialists completely fall apart, there goes the government; New Democracy and Democratic Left alone cannot hold it together,” referring to a smaller third party in the coalition. [/quote]
This having all the elements of the prototypical political-farcical Greek tragicomedy, the closing of the piece is fittingly ironic:
[quote]Mr. Boukalas, the political columnist, said that Greek politicians accused of corruption used to stay out of the public eye for a time before re-emerging, wagging their fingers at others as a way to “regain their virginity.” With the old leadership in disarray, that strategy no longer worked, he said.
[b]
“There is this lake in Argos where Hera would take a swim after every copulation session with Zeus, so she would always be a virgin,” Mr. Boukalas said. “Our politicians are out of luck because this lake doesn’t exist anymore. It was dried up in a public works project.”[/b][/quote]

Angela Merkel got a [url=http://www.nytimes.com/2012/10/10/world/europe/angela-merkel-greece-visit.html?ref=business]predictably warm welcome in Athens today[/url] ... one wonders what she was hoping to accomplish with her visit. (The official story is some silliness about "showing solidarity.")

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The NYT is running [i]Me, Myself and Math[/i], a six-part series by mathematician Steven Strogatz, looking at the world and human existence through the lens of math. The latest installment examines predictions of catastrophe theory as applied to real-world phenomena such as sleep/wake cycles and the economic business cycle. Somewhat disappointingly, Strogatz fails to address whether any of the "elegant models" he discusses predicted such historic economic catastophes such as occurred in 2008. Still a nice read, though:

[url=opinionator.blogs.nytimes.com/2012/10/08/dangerous-intersection/?ref=opinion]Dangerous Intersection[/url]
[quote]I don’t know much about camels, having ridden one only once (and that was enough). But from what I’ve been told, you can usually add another piece of straw to a camel’s burden without ill effect.

Except, of course, when it’s the [i]last[/i] straw.[/quote]

------------------------

[url=http://www.smh.com.au/business/growth-the-false-god-of-economics-20121009-27a0b.html]Sydney Morning Herald | Growth: the false god of economics[/url]
[quote]From the self-development books of Oprah and Tony Robbins to the world records in the Olympic Games, the act of standing still, or of tomorrow not being better than yesterday, is the ultimate sin. From computer processing speeds, to pixels on phone cameras to waistlines queuing for the food buffet, everything must be faster, better or bigger. Achievement and victory, inculcated since school – themselves ranked against each other for parental selection – are the ultimate virtues.

Nowhere is this obsession more apparent than in finance and economics. Governments are obsessed with GDP growth, even if that means unsustainable debt, imbalances or environmental destruction. Businesses are obsessed with profit growth. Regardless of growth's long-term merits, the chief executive of any publicly-listed company will be sacked quicker than you can say "board meeting" if he says otherwise. Investors, more to the point, are obsessed with beating inflation and each other. And of course they are, they're investors.
...
Yet economics beyond growth is exactly what we need if some kind of equilibrium is to be restored in the domestic and global economy. Forgetting for the moment Malthusian arguments about resource scarcity, or indeed the science of climate change, for the insidious political economy of a highly unequal world to subside and for the backbone of democracy – a middle class where most are in the middle – to reassert, we essentially need a no-growth environment.[/quote]
I think the author makes some good points, but rather carelessly conflates the resource-consumption and value-add parts of the macroeconomic equation. Computer chips are in fact a great example of "value growth" being possible with ever-decreasing resource inputs needed per unit processing capability. The result is a persistent and powerful deflationary trend in cost for a given amount of data processing. Not all economic activities permit for that degree of value-add scaling: for instance the most basic economic activity of all, growing food, has advanced in efficiency-per-hectare in all of human history by perhaps the amount computer chips do each decade - but most economic activities do in fact permit increasing efficiencies to increase the value-add over time. Healthcare is a puzzlement to me in this regard: while in many aspects we are obtaining vastly improved care, on a per-money basis the opposite is often true. For example, a routine uncomplicated hospital-setting childbirth costs roughly 10x more than it did 50 years ago, even after accounting for inflation. Is that reflective of the fact that more-advanced technologies are available if needed and simply "having high tech on standby" adds a cost, or is it legal-malpractice-added costs and cost-inflating legal loopholes engineered by Big Pharma and the for-profit hospital industry? (In the specific case of childbirth, perhaps it's the cost of [url=http://www.imdb.com/title/tt0085959/quotes]machine that goes "ping"[/url]).

ZeroHedge [url=http://www.zerohedge.com/news/2012-10-11/cashin-remembers-germanys-hyperinflation-birthday]today has a nice piece[/url] by UBS market analyst and historian Art Cashin commemorating the 90th anniversary of the start of the terminal phase of the catastrophic German Weimar-era hyperinflation. I have some overprinted-with-many-zeros postage stamps from that era - pure insanity.

Notice the interesting dynamic - Despite the crushing burden of war reparations, so long as citizens and the bond markets had confidence that Germany would be able to both service its debts and mount an economic recovery, the government was able to issue new bonds at reasonable rates of interest. It was when that confidence finally evaporated that the tipping point was reached, and the self-reinforcing hyperinflationary currency collapse commenced. Not that any of this ancient history is of any relevance in the modern world, mind you - who needs wheelbarrows to cart around their grocery money when it's all printed electronically? And the fact that electronic Bernanke bucks (Draghi-ros, on the eastern side of the Atlantic) have no utility as heating fuel will ensure things stay in check this time around. This time is different, it's a completely new paradigm, etc.

-------------------------------

The century-old [url=http://en.wikipedia.org/wiki/First-sale_doctrine]first-sale doctrine[/url] is facing a crucial test in the U.S. Supreme Court this fall:

[url=www.marketwatch.com/story/your-right-to-resell-your-own-stuff-is-in-peril-2012-10-04?link=MW_story_popular]Your right to resell your own stuff is in peril[/url]: [i]CHICAGO (MarketWatch) — Tucked into the U.S. Supreme Court’s agenda this fall is a little-known case that could upend your ability to resell everything from your grandmother’s antique furniture to your iPhone 4.[/i]
[quote]At issue in Kirtsaeng v. John Wiley & Sons is the first-sale doctrine in copyright law, which allows you to buy and then sell things like electronics, books, artwork and furniture, as well as CDs and DVDs, without getting permission from the copyright holder of those products.

Under the doctrine, which the Supreme Court has recognized since 1908, you can resell your stuff without worry because the copyright holder only had control over the first sale.

Put simply, though Apple Inc. has the copyright on the iPhone and Mark Owen has it on the book “No Easy Day,” you can still sell your copies to whomever you please whenever you want without retribution.

That’s being challenged now for products that are made abroad, and if the Supreme Court upholds an appellate court ruling, it would mean that the copyright holders of anything you own that has been made in China, Japan or Europe, for example, would have to give you permission to sell it.

“It means that it’s harder for consumers to buy used products and harder for them to sell them,” said Jonathan Band, an adjunct professor at Georgetown University Law Center, who filed a friend-of-the-court brief on behalf of the American Library Association, the Association of College and Research Libraries and the Association for Research Libraries. “This has huge consumer impact on all consumer groups.”

Another likely result is that it would hit you financially because the copyright holder would now want a piece of that sale.

It could be your personal electronic devices or the family jewels that have been passed down from your great-grandparents who immigrated from Spain. It could be a book that was written by an American writer but printed and bound overseas, or an Italian painter’s artwork.

There are implications for a variety of wide-ranging U.S. entities, including libraries, musicians, museums and even resale juggernauts eBay Inc. and Craigslist. U.S. libraries, for example, carry some 200 million books from foreign publishers.

“It would be absurd to say anything manufactured abroad can’t be bought or sold here,” said Marvin Ammori, a First Amendment lawyer and Schwartz Fellow at the New American Foundation who specializes in technology issues.[/quote]