[QUOTE=ewmayer;313347]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]
The MEP (Birmingham) Daniel Hannan featured in the above gave an interview yesterday on RT.com. Good stuff. I have been unable to find a video clip of yesterday's interview, but [url=http://rt.com/news/euro-project-bureaucrats-hannan-423/]here is one he gave the same channel in December 2011[/url], which covers most of the same themes.

(I find it interesting that despite the obvious anti-west bias of [i]Russia Today[/i], their financial/economic reporting is quite good, likely because in that arena, skepticism of politicians, bankers and their lapdog media is highly warranted).

Hannan's scathing indictment of the ever-worsening anti-democratic tendencies of the EU and the Big-Financial cabal it represents leads us to this week's

[b]Friday Humor:[/b]

[url=http://www.nytimes.com/2012/10/13/world/nobel-peace-prize.html?ref=world]2012 Nobel Peace Prize Award to European Union[/url] - That's an even bigger joke than when the Norskies awarded the 2008 prize to then-candidate and "I have 0 background as a peace activist, but I will prove to be a pretty good neocon" Obama. Apparently this year's decision [url=http://www.nytimes.com/2012/10/13/world/europe/some-norwegians-dismayed-over-nobel-prize-for-european-union.html?ref=world]even has some Norskies upset[/url].

(Hannan makes much the same "this could not have been funnier if it had been meant as joke" point today at his [url=http://blogs.telegraph.co.uk/news/author/danielhannan/]blog on the [i]Telegraph[/i] website[/url]).

[QUOTE=ewmayer;314450][b]Friday Humor:[/b]

[url=http://www.nytimes.com/2012/10/13/world/nobel-peace-prize.html?ref=world]2012 Nobel Peace Prize Award to European Union[/url] - That's an even bigger joke than when the Norskies awarded the 2008 prize to then-candidate and "I have 0 background as a peace activist, but I will prove to be a pretty good neocon" Obama. Apparently this year's decision [url=http://www.nytimes.com/2012/10/13/world/europe/some-norwegians-dismayed-over-nobel-prize-for-european-union.html?ref=world]even has some Norskies upset[/url].

(Hannan makes much the same "this could not have been funnier if it had been meant as joke" point today at his [url=http://blogs.telegraph.co.uk/news/author/danielhannan/]blog on the [i]Telegraph[/i] website[/url]).[/QUOTE]Each of these still have a long way to go before they beat Henry Kissinger's prize. See Tom Lehrer for the definitive reaction to that one.

The current actuality of the EU may be a mess, but since the goal
of unified peace is a noble one, perhaps the Nobel "in advance of
being earned" is not such a bad idea.

Besides, they could use the money.

[QUOTE]Each of these still have a long way to go before they beat Henry Kissinger's prize.[/QUOTE][url]http://www.imdb.com/title/tt0326306/[/url]

[url=http://globaleconomicanalysis.blogspot.com/2012/10/imf-admits-it-prescribed-wrong-medicine.html]IMF Admits the Maths Underlying its Austerity Prescriptions Were Wildly Wrong[/url]

[QUOTE=ewmayer;314450]

[URL="http://www.nytimes.com/2012/10/13/world/nobel-peace-prize.html?ref=world"]2012 Nobel Peace Prize Award to European Union[/URL] - That's an even bigger joke than when the Norskies awarded the 2008 prize to then-candidate and "I have 0 background as a peace activist, but I will prove to be a pretty good neocon" Obama. Apparently this year's decision [URL="http://www.nytimes.com/2012/10/13/world/europe/some-norwegians-dismayed-over-nobel-prize-for-european-union.html?ref=world"]even has some Norskies upset[/URL].

(Hannan makes much the same "this could not have been funnier if it had been meant as joke" point today at his [URL="http://blogs.telegraph.co.uk/news/author/danielhannan/"]blog on the [I]Telegraph[/I] website[/URL]).[/QUOTE]

All very well except that he was awarded the 2009 prize after he had been president for 9 months.

Hannan by the way is a bit of a loony. Doesn't let facts get in the way of a good ideologically driven rant. Which is not to say that he doesn't make sense once in a while. A bit like ZeroHedge.

[QUOTE=garo;314654]All very well except that he was awarded the 2009 prize after he had been president for 9 months.[/QUOTE]

I stand corrected - on the precise timing of the undeserved laurels, not their [url=en.wikipedia.org/wiki/Nobel_Peace_Prize]undeservedness[/url]:
[quote]Since 1901, [the Nobel Peace Prize] has been awarded annually (with some exceptions) to those who have "done the most or the best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses."[1][/quote]
The bit about Nobel being influenced by his close friend Bertha von Suttner is interesting - her portrait was one of the ones which adorned the old Austrian 1000 Schilling note.

And yeah, Kissinger is certainly in the short list of all-time most heinous awardees. But 2 wrongs don't make a right, especially in light of some of the names in the above page's Notable Omissions section. To his credit, Kissinger's co-awardee showed much more integrity than did either Kissinger or the Committee of Idiots which made that year's selection:
[quote]The awards given to Lê Ðức Thọ and Henry Kissinger prompted two dissenting Committee members to resign.[19] Thọ refused to accept the prize, on the grounds that peace had not actually been achieved in Vietnam.[/quote]

[QUOTE]But 2 wrongs don't make a right…[/QUOTE]Three lefts do.

:mike:

If you read through the austerity math just a bit, you will quickly see that Greece has been forced into a downward spiral with no end in sight. In other words, the more they tighten their belt, the less they can eat, therefore the less they can work which means they have to tighten their belt because there is not enough to eat....... Sound confusing?

What else is new? Oh, the Greek people seem to recognize what is being forced down their throats.

I would think a more viable fix would be to do away with the socialist "entitlements" that the Greek people are so fond of. But that is politically impossible.

DarJones

This is what I think of the award:

[url]http://www.guardian.co.uk/commentisfree/cartoon/2012/oct/12/european-union-nobel-peace-prize-cartoon[/url]

[QUOTE=garo;314867]This is what I think of the award:

[url]http://www.guardian.co.uk/commentisfree/cartoon/2012/oct/12/european-union-nobel-peace-prize-cartoon[/url][/QUOTE]
Nice - love the look on cartoon-Barroso's fat face. My favorite reader comments:

Best (despite the commenter's apparent axe-to-grind w.r.to Walesa, Gorbachev and Havel, who are not even in the same universe of prize-self-mockery as the likes of Kissinger):
[quote][i]Beckow
12 October 2012 9:00PM
[/i]
Nobel Peace Price is one of the weirdest rituals of the Western self-congratulating mushy liberals. It is not just the pathetic Kissinger. They actually had previous recipients, Perez and Arafat, who attempted to kill each other. Then we had the bizarre spectacle of Walesa, Gorbachev and Havel being celebrated in the West and intensely disliked at home - each had a popularity of 1-5% (check out the results when Gorbachev and Walesa run for President). And Obama - enough said.

So what is the Nobel Peace Price for? It is a soft tool to reward allies and try to influence more gullible public opinion. It has become a joke, I guess now all "Europeans" of the right kind can pat themselves on the back for not shooting at a neighbor for a generation or two. By that standard, why not just give it to Canada each year? Or just keep it in Norway.[/quote]

Funniest:
[quote][i]guardiansek
12 October 2012 9:03PM
[/i]
It could be worse--the Nobel committee could have given the EU the Nobel Prize for Economics :)[/quote]

I am at least somewhat sympathetic to the idea that the EU has acted as an effective damper of virulent nationalism, but I see 2 huge flaws with that argument:

1. We now see that whatever its high-flown premises, the actual modus operandi of the EU in achieving "peace through integration" was really "all will be well as long as the transnational credit card doesn't hit its limit". Now that the resulting fiscal imbalances have become unsustainably huge, nationalism is returning with a vengeance, and not just in Greece;

2. The premise that the only choices for Europe are (a) perpetual ruinous wars or (b) perpetual debt slavery (and that (b) is vastly preferable to (a)) is ludicrous.

[QUOTE=ewmayer;314892]2. The premise that the only choices for Europe are (a) perpetual ruinous wars or (b) perpetual debt slavery (and that (b) is vastly preferable to (a)) is ludicrous.[/QUOTE]

Agreed.

But Economics is called "the dismal science" for a reason.

Lots of inputs; lots of outputs...

But predictiveness very close to zero.

After all, the thing that holds the US together is transfer payments; there are states that always pay more to the Federal government than they get back, there are states that always get back more than they pay, and this is an accepted situation - it's not a matter of Mississippi building up an ever-growing debt payable to New Jersey.

That seems the most hopeful and the most likely resolution to the current slightly sub-optimal EU situation.

[url=http://dealbook.nytimes.com/2012/10/09/wall-street-pay-remains-high-even-as-jobs-shrink/?ref=business]Wall Street Pay Remains High Even as Jobs Shrink[/url]: [i]Total compensation on Wall Street rose 4 percent last year to more than $60 billion — an amount surpassed only by total pay in 2007 and 2008, according to a report.[/i]

[Related: Tale of the Tape for just-surprise-retired [url=http://www.zerohedge.com/news/2012-10-16/vikram-pandit-bottom-line-over-200-million-90-stock-drop]Citi CEO Vikram "The Bandit" Pandit[/url]. Here are Chris Whalen's [url=http://www.zerohedge.com/contributed/2012-10-16/couple-thoughts-citigroup-post-pandit]thoughts on the change[/url].]

By way of accompaniment, former Reagan budget director David Stockman has some pointed notes on Mttt Romney's self-proclaimed success as a "job creator" - the title appears to a play on "the great reformer", one of the appellations his supporters applied to Reagan. The full piece is quite long, but eminently worthwhile - truly outstanding analysis and detective work (h/t Mish):

[url=www.thedailybeast.com/newsweek/2012/10/14/david-stockman-mitt-romney-and-the-bain-drain.html]Mitt Romney: The Great Deformer[/url]
[quote] Bain Capital is a product of the Great Deformation. It has garnered fabulous winnings through leveraged speculation in financial markets that have been perverted and deformed by decades of money printing and Wall Street coddling by the Fed. So Bain’s billions of profits were not rewards for capitalist creation; they were mainly windfalls collected from gambling in markets that were rigged to rise.

The fact that Bain’s returns reputedly averaged more than 50 percent annually during this period is purportedly proof of the case—real-world validation that Romney not only was a striking business success but also has been uniquely trained and seasoned for the task of restarting the nation’s sputtering engines of capitalism.

Except Mitt Romney was not a businessman; he was a master financial speculator who bought, sold, flipped, and stripped businesses. He did not build enterprises the old-fashioned way—out of inspiration, perspiration, and a long slog in the free market fostering a new product, service, or process of production. Instead, he spent his 15 years raising debt in prodigious amounts on Wall Street so that Bain could purchase the pots and pans and castoffs of corporate America, leverage them to the hilt, gussy them up as reborn “roll-ups,” and then deliver them back to Wall Street for resale—the faster the better.

That is the modus operandi of the leveraged-buyout business, and in an honest free-market economy, there wouldn’t be much scope for it because it creates little of economic value. But we have a rigged system—a regime of crony capitalism—where the tax code heavily favors debt and capital gains, and the central bank purposefully enables rampant speculation by propping up the price of financial assets and battering down the cost of leveraged finance.[/quote]
Stockman goes on to note that w.r.to the LBO business model, he speaks from a great deal of personal experience, namely that of his post-White-House career.


[b]Odds and Ends:[/b]

Postscript to my recent parody of the "think like a genius" self-help genre, which included Thomas Jefferson's 10-point plan for self-improvement. A recent [url=http://www.zerohedge.com/news/2012-10-07/guest-post-america%E2%80%99s-hijackers-%E2%80%93-where-are-they-now]ZeroHedge piece[/url] commemorating the 4th anniversary of the passage of TARP reminds me that Jefferson was both a master wordsmith - precisely the reason his colleagues asked him to write the U.S. Declaration of Independence (interestingly, Jefferson died exactly on the fiftieth anniversary of the Declaration) - and a loather of bankers and moneylenders in a vein akin to the man who would be president a generation later (and Jefferson's temperamental opposite in just about every other way), Andrew Jackson:

Wikipedia [url=http://en.wikipedia.org/wiki/Thomas_Jefferson]explains[/url]:
[quote]Jefferson expressed a dislike and distrust for banks and bankers; he opposed borrowing from banks because he believed it created long-term debt as well as monopolies, and inclined the people to dangerous speculation, as opposed to productive labor on the farm.[138] He once argued that each generation should pay back its debt within 19 years, and not impose a long-term debt on subsequent generations. Jefferson fought against [Alexander] Hamilton's proposed Bank of the United States in 1790, but lost. Jefferson also opposed the bank loans that financed the War of 1812 fearing it would compromise the war effort and plunge the nation into serious long term debt[/quote]

Forgot to post this when it first appeared a couple weeks ago:

[url=http://www.zerohedge.com/news/2012-10-03/chart-day-americas-debt-crisis-who-really-responsible]Chart Of The Day: America's Debt Crisis - Who Really Is Responsible?[/url]
[quote]Yesterday [url=http://www.zerohedge.com/news/2012-10-02/usa-kicks-fiscal-2013-bang-and-93-billion-jump-debt-1615948701330035]we brought you the news[/url] that US debt quietly soared by $90 billion overnight to celebrate the new fiscal year end, reaching $16.2 trillion and sending [b]total US debt to GDP to 103%[/b]. Needless to say, this comes at an exciting time, with the first [strike]Wall Street muppet[/strike] presidential debate in about 12 hours, where the US debt crisis will be a front and center topic because in about 2 months, the US debt ceiling will again be breached adding to the Fiscal Cliff fiasco, resulting in a flashback to August 2011 when the market had to tumble by nearly 20% for Congress to get the hint that first and foremost its job is to make sure the money on Wall Street keeps flowing, all else secondary. And while it has become fashionable to say that US debt rose by this much under that president, the truth is that the Presidency is merely one of three institutions that are responsible for the shape of the US debt-to-GDP line (which is now going from the lower left to the upper right by default). The other two are, of course, Congress and the Senate. Luckily, to simply things substantially, we have a handy graphic from today's Bloomberg Brief which conveniently plots not only the political affiliation of the presidency, but of the House and Senate, in the chronology of the US debt crisis.[/quote]


ZH`s Bruce Krasting has an interesting whodunit out of Europe:

[url=www.zerohedge.com/contributed/2012-10-18/how-launder-money-swiss-style]How to Launder Money - Swiss Style[/url]: [i]An interesting crime story has come out in France and Switzerland. It may prove to be the nail in the coffin for bank secrecy in Switzerland.[/i]


[b]Friday Humor:[/b]

o Latest proposals by France`s government are unintentionally hilarious - Mr. Hollande appears to believe the French motto should be a 4-word one: "liberté, égalité, fraternité, stupidité":

[url=http://www.zerohedge.com/news/2012-10-19/french-great-socialist-revolution-will-be-homework-free-and-very-very-cold]The French Great Socialist Revolution Will Be Homework-Free, And Very, Very Cold | ZeroHedge[/url]


o XKCD has a problem with pre-election punditry citing [url=http://xkcd.com/1122/]electoral precedent[/url].

(E.g. "No candidate over 6' tall with wooden false teeth has ever won without winning the votes of a majority of Virginia landowners who wear wigs.")

Friday was the 25th anniversary of the market crash of '87. That crash happened on a Monday, and the wheels which set in in motion were already churning behind the scenes preceding weekend. Bruce Krasting, who was working at WS iBank powerhouse Drexel Burnham Lambert at the time, recalls the events, by way of a confession:

[url=www.zerohedge.com/contributed/2012-10-20/how-i-caused-1987-crash]How I Caused the 1987 Crash[/url]

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

Looks like Australia [url=http://www.smh.com.au/business/farmer-finds-facts-lost-in-transmission-20121021-27zeg.html]has its own Enron-style scandal[/url] ... LOL@ the retort to the comment by "boof" about the "Spanish windmills".

[QUOTE=ewmayer;315430]Friday was the 25th anniversary of the market crash of '87.[/QUOTE]

And on Sunday the Pope named 7 new saints.

Please forgive me for this, but is there the possibility there's a disconnect?

[QUOTE=ewmayer;315430]Friday was the 25th anniversary of the market crash of '87. That crash happened on a Monday, and the wheels which set in in motion were already churning behind the scenes preceding weekend. Bruce Krasting, who was working at WS iBank powerhouse Drexel Burnham Lambert at the time, recalls the events, by way of a confession:
[/QUOTE]There was a simpler and more visible trigger:

On the Friday before Black Monday, the Wall Street Journal had a front-page article comparing the then-current market situation to that of just before the crash in October 1929. It included a graph plotting the market index (DJI, IIRC) climb for a few years before October 1929 along with the same index's climb for the same number of years before October 1987 -- the parallelism of the two curves was quite striking!

I bought a WSJ copy that afternoon, after having heard some rumor about that article.

After congratulating myself for having transferred my company retirement account funds from stocks to annuities (I'd already mused upon the October 1929/1987 parallels) the previous month, I decided to transfer all my non-retirement mutual fund assets from stock funds to money market as soon as I could call the fund's transfer number Monday morning. That number was busy for a while, but I finally got through and placed my order (which, of course, didn't take effect until after the NAV calculation following market close).

One exception: I left my gold stocks fund alone, on the theory that they wouldn't crash like the rest. Well, they held up on Monday, but on Tuesday they crashed like everything else. Doh!

It seems to me that millions of other small (and big) investors must've also seen that same WSJ article and graph, on Friday financial news shows if not directly, and that our collective rush to sell on Monday surely was responsible for an appreciable part of the drop.

[QUOTE=ewmayer;315228]Forgot to post this when it first appeared a couple weeks ago:

[URL="http://www.zerohedge.com/news/2012-10-03/chart-day-americas-debt-crisis-who-really-responsible"]Chart Of The Day: America's Debt Crisis - Who Really Is Responsible?[/URL]

[/QUOTE]More instructive would have been (a) to start the chart's horizontal axis before 1980 instead of at 1995, and (b) to make the vertical axis logarithmic, so that the steepest percentage increases would be evident on the chart.

When Reagan's term started, the national debt was a little over $1 trillion, but Reagan and Bush the Elder managed to pump it up to $4 trillion when they handed it off to Clinton -- about a 300% increase in 12 years (averaging 3^(1/12) = 9.5% increase, compounded annually).

From the article's chart: in 1995 the debt was $5 trillion. So, in the 14 years from 1981 to 1995, the debt multiplied by about 4 (averaging 4^(1/14) = 10.4% increase annually).

In the 17 years from 1995 to 2012, the debt rose from $5 trillion to $16.4 trillion ((averaging 3.3^(1/17) = 7.2% increase annually).

Would the average person realize that the average annual percentage increase in the national debt for the past 17 years has been significantly lower than the corresponding average increase for the preceding 14 years? Probably not, unless shown a logarithmic graph covering 1981-2012.

But by using a linear vertical scale instead of a logarithmic one, the graph conveys the impression that the steepest increases occurred in 2007-2011 when Democrats controlled both House and Senate. Perhaps that's what the author intended, rather than making a fairer comparison of the rate of increases since the 1980 start of abandonment of fiscal responsibility by the GOP.

[QUOTE=cheesehead;315469]More instructive would have been ... to make the vertical axis logarithmic, so that the steepest percentage increases would be evident on the chart.[/QUOTE]

I disagree. A logarithmic chart would make a President/Congress that took the debt from $1 to $100 worse than one that took it from one trillion to two trillion. IMO, a better chart would use the widely-accepted standard benchmark of debt as a percentage of GDP.

[QUOTE]IMO, a better chart would use the widely-accepted standard benchmark of debt as a percentage of GDP[/QUOTE]

We are in debt approaching $200,000 per man woman and child already. I don't need to see much of a graph to understand that we have permitted politicians to put our children in a cesspool of debt.

DarJones

[QUOTE=Fusion_power;315542]We are in debt approaching $200,000 per man woman and child already. I don't need to see much of a graph to understand that we have permitted politicians to put our children in a cesspool of debt.

DarJones[/QUOTE]

This is always thrown about, but is just as misleading as anything. We are barely above the all time low (since 1929 when these stats started being kept track) of the ratio between average income and the debt. In 2010 it was below 1 for the first time in 60 years. in May of 2011 it was still .92 (if you took all income based on May 2011 annualized it would pay off 92% of the debt.) This is way down from the 70's and 80's when this ratio was below .3

Additionally this doesn't even begin to cover the other sources of income.

Debt, the deficit, and throwing around numbers in the trillions, claiming that 'printing money will lead to an economic catastrophe,' the stupid gold standard, is always politics of distraction. (people like to talk about it as if it has meaning, but most of the time it doesn't) The US could easily handle a Federal Deficit much higher (think two to three times higher) with very little impact. Remember that the only thing that big-finance was worried enough to (stupidly) lower the credit rating for was ham-stringing the ability to borrow more money--they are not concerned in the least that it won't be paid back.

Seriously if the US greenback isn't good, then every other currency is already worthless. (I'm not being Jingoistic here--it is the simple economic truth of our time. The same was true in the past of the British Pound, and the dollar could be replaced by the Euro, the Yen, or the Yuan, but it hasn't happened yet.)

[QUOTE=Fusion_power;315542]We are in debt approaching $200,000 per man woman and child already. I don't need to see much of a graph to understand that we have permitted politicians to put our children in a cesspool of debt.[/QUOTE]

Check your math. ~16 trillion debt / ~350 million people ~= $50K. Perhaps you remembered the debt-per-family-of-4 value.

Either way it is a cesspool.

[QUOTE=chappy;315551]The US could easily handle a Federal Deficit much higher (think two to three times higher) with very little impact. [/QUOTE]

You should run for office - you'll fit right in (with either party). The heck with Greece, Zimbabwe here we come!

[QUOTE=Prime95;315569]Check your math. ~16 trillion debt / ~350 million people ~= $50K. Perhaps you remembered the debt-per-family-of-4 value.

Either way it is a cesspool.[/QUOTE]

It's 312M, definitely quite a bit less than 350M, but your estimate is still about right (I get 51.3K per person).

[QUOTE=chappy;315551]This is always thrown about, but is just as misleading as anything. We are barely above the all time low (since 1929 when these stats started being kept track) of the ratio between average income and the debt. In 2010 it was below 1 for the first time in 60 years. in May of 2011 it was still .92 (if you took all income based on May 2011 annualized it would pay off 92% of the debt.) This is way down from the 70's and 80's when this ratio was below .3[/quote]
Reference, please - Without seeing where your alleged data come from, all I can say is that your claims would imply that average incomes have been rising faster than federal debt, which would imply income rising on the order of 10% per annum. Which happens to be about 10% more annual rise than incomes have actually been showing.

[quote]Additionally this doesn't even begin to cover the other sources of income.[/quote]
Such as?

[quote]Debt, the deficit, and throwing around numbers in the trillions, claiming that 'printing money will lead to an economic catastrophe,' the stupid gold standard, is always politics of distraction. (people like to talk about it as if it has meaning, but most of the time it doesn't)[/quote]
If you consider government theft of people's savings and destruction of their earnings power by way of deliberate currency debasement to be a "distraction", I would love to hear what you think are more "substantive" issues.

[quote] The US could easily handle a Federal Deficit much higher (think two to three times higher) with very little impact.[/quote]
Based on the myriads of other countries which are managing debt-to-GDP of over 200% with no impact on their economies? Please list countries doing so, and summarize their economic status.

[quote] Remember that the only thing that big-finance was worried enough to (stupidly) lower the credit rating for was ham-stringing the ability to borrow more money--they are not concerned in the least that it won't be paid back.[/quote]
If we follow your prescription, we should indeed have no such concerns, because what is now merely a concern would become a certainty.

[quote]Seriously if the US greenback isn't good, then every other currency is already worthless. (I'm not being Jingoistic here--it is the simple economic truth of our time. The same was true in the past of the British Pound, and the dollar could be replaced by the Euro, the Yen, or the Yuan, but it hasn't happened yet.)[/QUOTE]
The same "what" was true of the Pound - that it was worthless? That is news to me. Your "could be replaced" statement is gibberish. The rest of us are talking about an environment of competitive currency debasement which is steadily robbing billions of people of their savings ad earnings power. It's not a matter of being worthless, it's one of being steadily made "worth less" by criminal central banks (I say criminal because all the countries in question have stern laws against counterfeiting, which they ignore when it comes to their central banks). You seem to be trying to make some incoherent point about the global reserve currency, which is only peripherally related to the ongoing global currency race to the bottom.

I hadn't realised that US savings-accounts rates were so particularly awful - I'm getting 3.7% on UK-government-insured tax-free two-year bonds, whilst it looks quite difficult to get 1% in the US.

I suppose that's why Americans are obsessing about earnings power getting eroded in a way that sounds pretty insane to my British-calibrated ears; -1% real growth brings out the Micawber even though it's not enough to halve a lump of capital's buying power in a lifetime. American stocks also tend to pay pretty awful dividends: the best yield in the DJIA 30 is 5% from AT&T at an unsustainable 234% payout ratio; Intel at 39% pays 4.19, Microsoft at 50% pays 3.29; Aviva in the UK is 7.6% whilst managing the interesting feat of being a loss-making insurance company, RDS is 4.9% at the same payout ratio as Intel, BAE Systems is 6.1% at 52% payout ratio.

It took two world wars (the Great Depression hit the UK much less hard than it did the US) to change the pound from being the world standard of exchange to being the currency of a second-rate power on an island off the coast of the EU; even quite an enthusiastic episode of bank over-exuberance is unlikely to be enough to dislodge the dollar.

ewmayer, though I rarely agree with you completely on economic issues, I generally feel that you speak from knowledge and belief. And generally more carefully than my gut feeling tells me you read my post. Especially the last paragraph. So I will continue forward under the assumption that it was my unclear language that brought about this misunderstanding, and not your reading of it. Though fivemack seems to have caught the meaning just fine. Perhaps it is with the clear sight of Once-Was-Empire, we may get there soon enough to see with eyes unclouded.

I've been drinking so my prose may be less prolix but more understandable, and my Cardinals are losing so my will is down. But, I will endeavor to address your concerns in more or less reverse order.

Right now the world economy is tied to the dollar. Every market manipulation by countries is based upon the relation of ____[U]X[/U]___ to the dollar. For example. China has in the past tried to manipulate the international money funds such that the Yuan is worth less relative to the Dollar. I'm sure they wouldn't mind that effecting the Peso, the Euro, the Yen--but they strive to make it match the Dollar. Simply put, if the dollar fails the entire international economic system fails. And more importantly, none of the other countries in the world (and none of the major banks, economic lending institutions, or stock markets ever act as if they believe it is possible for the dollar to fail.)

As to the gibberish, I should think it is obvious (as Fivemack found it) that I was saying that the US Dollar is not eternally in this position, it is currently in this position. Go back a hundred years and the British Pound was the standard (and had been for a hundred years.) Follow the course of economic growth and two world wars, the marshall plan, the dumping of the gold standard and hard economic times for Great Britain in the 60's and you will see the trail by which the Dollar became the undisputed world currency. Even the Euro couldn't unseat it.

Now, I freely admit that this is a temporary thing. But, I agree with Fivemack that at the current time there are still no serious challengers.

B) Countries whose debt to GDP are 2.4 times the US: Japan. Economic outlook of Japan. continued 2% growth, even following the Tsunami and Nuclear problems.

But, again you (and Prime) have made a claim that you haven't proven, and that I don't agree with. Which is that debt to GDP is the most beneficial (or even a valid) way to talk about whether debt is good.

When you personally buy a home do you limit your spending by how much you can possibly make in a year? Or do you limit your spending by 1) some multiple of that number so that you can meet all your debt obligations and still have some coins to rub together. 2) assume that there is some value inherent in the debt--the home is worth more than the money spent plus interest. Since a great deal of the debt is money we pay to ourselves and money we have invested in the hope of future earnings I believe we should be talking about 1) what investment in the future the government is making with our debt-money, and 2) if that is worth it, and 3) how can we ensure that when the economy rebounds we begin to work that debt down (instead of cutting revenues by short-sightedly giving tax breaks to the rich).

[QUOTE]If you consider government theft of people's savings and destruction of their earnings power by way of deliberate currency debasement to be a "distraction", I would love to hear what you think are more "substantive" issues.[/QUOTE]

Of course none of that first sentence is even remotely true. I just don't think any of those things have been done in the US. The Fed gave low and zero interest loans of about 16 trillion dollars during the early part of the economic crises. Effectively creating an amount of money equal to the total of the National Debt in 2 years. What happened to your purchasing power in that time? What happened to value of the Dollar in the world market? Nothing. If you want proof that the world trusts the dollar, there it is.

As to substantive issues: see #3 immediately before the quote, or the rant coming later about corporate taxes. Or domestic education and job creation. Or the need to get out of the current war situations while also providing a path to helping the UN become an actual police force with teeth. Providing a path for immigrants to legally work, while at the same time paying as much into the system as well as forcing the companies that exploit them for great profits to also shoulder the social costs. (and also provide a more realistic path to citizenship.) Healthcare/medicare/social security and social safety nets in general. All of these things concern me a great deal more than OMG the DEBT, its so BIG! It's golly almost as much as it was under Reagan, less than it was during either WW. Yawn. Plus now my Cardinals need to score a touchdown and go for two to beat the Giants. :)

[QUOTE]Reference, please - Without seeing where your alleged data come from, all I can say is that your claims would imply that average incomes have been rising faster than federal debt, which would imply income rising on the order of 10% per annum. Which happens to be about 10% more annual rise than incomes have actually been showing.[/QUOTE]

Actually it doesn't imply anything of the sort (and as a maths person you should be able to spot the fallacy you just committed.)

But, first we'll get to source materials: [URL="http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1"]Personal income in billions[/URL] [URL="http://www.treasurydirect.gov/NP/BPDLogin?application=np"] various debts[/URL] [URL="http://research.stlouisfed.org/fred2/categories/104"]current population estimates[/URL] [URL="http://www.statisticbrain.com/american-family-financial-statistics/"]various fun stats on US household debts[/URL]

Finally, what other sources pay into the Governmental coffers? well the only one that matters (to me) is those sociopathic "People" created not from clay, not by any god, but by 5 douchebags in black robes. Corporations currently pay about 10 % of the federal revenue in earnings taxes. A tax rate of about 13.8% (why do all these rich "People" Robots like Romney and Legal entities like General Electric pay so little in taxes? and always complaining about 13-14%?) Anyway if they were taxed at the same level I am (single above average wage earner paying 30% into federal taxes (and another 6% in state and local taxes) the budgets would start looking pretty good.

[URL="http://www.cbpp.org/cms/index.cfm?fa=view&id=3411"]Here[/URL] is a page that hits a great deal of the high-points with regard to Corporate taxes.

[QUOTE=chappy;315551] We are barely above the all time low (since 1929 when these stats started being kept track) of the ratio between average income and the debt. In 2010 it was below 1 for the first time in 60 years. in May of 2011 it was still .92
[/QUOTE]

Don't drink and post kids. This should read "in 2010 is was [B]above[/B] 1 for the first time in 60 years. Not below. Though this mistake still doesn't make the criticisms so far valid.

Plus "started being kept track?" really? Me talk good.

anyway, the average income versus average debt ratio would still be above 1 except for the last couple years decline in real wages, and could be again if corporations started hiring more people with their record profits. Or if either capital gains or corporations were actually taxed at the same levels as personal income (since in effect capital gains and corporate profit are causally related--either one could be taxed.)

This would have the net effect of forcing corporations to invest in growth of total income (so that their smaller percentage of a larger number would be greater) which historically has been accomplished by expanding business and investing money in the business (especially helpful when credit is 1) cheap 2) freely available.)

[QUOTE=Prime95;315502]I disagree. A logarithmic chart would make a President/Congress that took the debt from $1 to $100 worse than one that took it from one trillion to two trillion.[/QUOTE]George,

Do you really think that the U.S. national debt has been $1, or $100, at any point during your lifetime?

If not, your objection is a strawman, perhaps intended to conceal Republican responsibility for pumping up the debt for three decades.

[QUOTE=cheesehead;315650]Do you really think that the U.S. national debt has been $1, or $100, at any point during your lifetime?[/quote]

Where did I say it ever was??? I merely gave an [I]example[/I] showing that a logarithmic chart isn't the best choice.

[quote]If not, your objection is a strawman, perhaps intended to conceal Republican responsibility for pumping up the debt for three decades.[/QUOTE]

Aaarrggghh - not the tired, worn-out strawman argument again. Where did I say that a %GDP chart would make Republicans look better??? Geez, chill out. I've made no attempt at creating such a chart and have no idea if it will make Republicans look better or worse than your proposed chart or the original author's chart. My only claim is that it would be a fairer chart.

<offtopic>
I like the title of [URL="http://psp.sagepub.com/content/31/11/1498.abstract"]this[/URL] article.
</offtopic>

[QUOTE]We are in debt approaching $200,000 per man woman and child already. I don't need to see much of a graph to understand that we have permitted politicians to put our children in a cesspool of debt.[/QUOTE]

George, current debt = $16.2 trillion give or take $100 billion.
Unfunded obligations = $10.5 trillion (excess spending above tax revenue per year over the next 25 years, this is CONSERVATIVE)
Open committments social security = $21 trillion (amount above current balance plus future expected revenues over 75 years)
Open committments medicare = $25 trillion (amount above current.....)

Add then divide by 400 million people. This takes into account population growth over about 25 years.

paraphrasing slightly, no matter how you count it, it is a cesspool of debt saddled on our children.

DarJones

@chappy: There are hundreds of tables and charts at the BEA site - since you're the one making the assertion, why don't just tell precisely data sets it is based one?

[QUOTE=chappy;315621]I've been drinking so my prose may be less prolix but more understandable, and my Cardinals are losing so my will is down. But, I will endeavor to address your concerns in more or less reverse order.[/quote]
Yes, you all were the most recent victims of the latest improbable comeback (first from down 0-2 in the best-of-5-game series vs Cincinnati, now from down 1-3 in the best-of-7-series vs St. Louis) by the SF Giants. I expect the Anheuser-Busch breweries are working overtime to meet local demand, first for game-day brewskies, now for drowning-sorrows ones.

[quote]Right now the world economy is tied to the dollar. Every market manipulation by countries is based upon the relation of ____[U]X[/U]___ to the dollar. For example. China has in the past tried to manipulate the international money funds such that the Yuan is worth less relative to the Dollar. I'm sure they wouldn't mind that effecting the Peso, the Euro, the Yen--but they strive to make it match the Dollar. Simply put, if the dollar fails the entire international economic system fails. And more importantly, none of the other countries in the world (and none of the major banks, economic lending institutions, or stock markets ever act as if they believe it is possible for the dollar to fail.)[/quote]
Your and Tom's notes about the UK pound would seem to indicate that such faith in fiat is misplaced. I would argue that in terms of global trade imbalances and overall debt-to-GDP, the entire international economic system already has failed - we are simply in the last-desperate-acts stage whereby those whose power and reputation is tied to the failed system are desperately trying to avoid recognition of the failure.

[quote]As to the gibberish, I should think it is obvious (as Fivemack found it) that I was saying that the US Dollar is not eternally in this position, it is currently in this position. Go back a hundred years and the British Pound was the standard (and had been for a hundred years.) Follow the course of economic growth and two world wars, the marshall plan, the dumping of the gold standard and hard economic times for Great Britain in the 60's and you will see the trail by which the Dollar became the undisputed world currency. Even the Euro couldn't unseat it.

Now, I freely admit that this is a temporary thing. But, I agree with Fivemack that at the current time there are still no serious challengers.[/quote]
In that respect one should examine what factors allowed the Dollar to unseat the Pound - besides the lender/borrower relationship between the US and UK resulting from the 2 world wars, we had the US in the unique position of emerging from WW2 as the only major industrial nation with an intact industrial sector and negligible domestic infrastructure destruction. Also note that the Bretton-Woods agreement required broad agreement among multiple nations, which agreement was tied in no small part to the perceived stability of the Dollar. That was abrogated by the U.S. in 1971 largely as a result of its Vietnam-War debt (there is an obvious common theme here -- we should discuss "central bank money printing: An aid to warmongering?" in corollary fashion), but the U.S. has effectively leveraged its global superpower position to stifle any discussion of alternatives. More insidiously, the fact that just about every other develop(ed|ing) nation has bought into the "growth through debt-financed consumption" economic paradigm means that alternatives are in scant supply. The 2 major ones post-1971 have been the Euro, whose alleged stability has now been exposed as a debt-riddled lie, and the Chinese currency, which is at least backed by some real economic productive capacity, but lacks political backing, in no small part because it is tied to a deeply anti-democratic government.

Also note the deep irony of the [url=http://en.wikipedia.org/wiki/Bretton_Woods_system]post-WW2 Bretton Woods system[/url], contrasted with the government-intervention-dominated faux capitalism and rampant central bank money-printing the world is now beset with:
[i]
The experience of the Great Depression was fresh on the minds of public officials. The planners at Bretton Woods hoped to avoid a repeat of the debacle of the 1930s, when intransigent insistence by creditor nations on the repayment of Allied war debts and reparations, combined with an inclination to isolationism, led to a breakdown of the international financial system and a worldwide economic depression.[2] [u]The so called "beggar thy neighbor" policies that emerged as the crisis continued saw some trading nations using currency devaluations in an attempt to increase their competitiveness (i.e. raise exports and lower imports), though recent research suggest this de facto inflationary policy probably offset some of the contractionary forces in world price levels (see Eichengreen "How to Prevent a Currency War"). Despite devaluation policy increasing national liquidity these national policy responses were neither deep enough nor coordinated enough to restore international trade volume.
[/i]
Which is why they're being tried again, presumably - because they were so wildly successful the last time around.

[continued]

[QUOTE=chappy;315621]B) Countries whose debt to GDP are 2.4 times the US: Japan. Economic outlook of Japan. continued 2% growth, even following the Tsunami and Nuclear problems.

But, again you (and Prime) have made a claim that you haven't proven, and that I don't agree with. Which is that debt to GDP is the most beneficial (or even a valid) way to talk about whether debt is good.[/quote]
Just as per capita income is the most valid way to talk about income trends -- duh. Ah, I see you are angling toward "carrying ost of debt" and "return on investment" - OK, that is worth talking about.

[quote]When you personally buy a home do you limit your spending by how much you can possibly make in a year? Or do you limit your spending by 1) some multiple of that number so that you can meet all your debt obligations and still have some coins to rub together. 2) assume that there is some value inherent in the debt--the home is worth more than the money spent plus interest. Since a great deal of the debt is money we pay to ourselves and money we have invested in the hope of future earnings I believe we should be talking about 1) what investment in the future the government is making with our debt-money, and 2) if that is worth it, and 3) how can we ensure that when the economy rebounds we begin to work that debt down (instead of cutting revenues by short-sightedly giving tax breaks to the rich).[/quote]
I agree that debt incurred to finance future growth which exceeds the debt incurred is OK. The problem is, that (multiplier > 1) state has been overwhelmingly absent during the last 3 decades "economic expansion", based on the Fed's own data (specifically the Z1 numbers). Even if you believe in some magic "intangible benefit" to debtorship, using your homeowner analogy, there is carrying cost to consider. The 2 key components of that latter computation are (a) amount borrowed and (b) interest rate. Sure, as long as the central bank manages to keep (b) artificially low, (a) can be large without inflicting severe damage. But you seem to assume that the CB is in full control here, and can keep rates low as it likes, for as long as it likes. And indeed Japan would seem to indicate that this is so. The question is: Is Japan the exception or the rule? Other countries have suffered debt crises long before their debt/GDP reached Japan's level, so I argue that Japan is the exception. Nonetheless it is interesting to examine *why* Japan has managed to reach debt/GDP > 200% without blowing sky-high. A key part of the answer is that they have managed to finance most or all of that debt internally, by converting what was the developed world's highest savings rate into low-yielding government debt. Can that go on forever? Also, how much hidden rot (in the form of bad debt, not yet written off) is there in the Japanese banking system, and can that remain hidden forever? (And are there costs associated with such ongoing capital impairment?)

Another key component of the Japan story is that despite their post-RE-bubble malaise, they still enjoyed the benefit of a strong export economy ... that has been persistently weakening, and now in the wake of Fukushima, with Europe in tatters, and with an escalating trade war with key trading partner China, is [url=http://www.nytimes.com/aponline/2012/10/22/business/ap-as-japan-trade.html?ref=aponline&_r=3&]absolutely getting destroyed[/url]. The problem is, an already -massively-indebted balance sheet severely limits what government can do to try and stimulate exports.

And your spinning of the "ongoing 2% GDP growth" - nice try. That would be considered anemic even if weren't being artificially boosted by government deficit spending. Absent the borrowing, Japan's GDP has been in contraction. As has the U.S.'- just not for as long.

[quote]Of course none of that first sentence is even remotely true. I just don't think any of those things have been done in the US. The Fed gave low and zero interest loans of about 16 trillion dollars during the early part of the economic crises. Effectively creating an amount of money equal to the total of the National Debt in 2 years. What happened to your purchasing power in that time? What happened to value of the Dollar in the world market? Nothing. If you want proof that the world trusts the dollar, there it is.[/quote]
All that proves is that world believes the dollar to be still the best of a bunch of other fiat-money alternatives. "Best of a bunch of bad options" does not equate to "good". And I notice you engage in the same (admittedly clever) sleight of hand Bernanke does: Argue that since the dollar has not lost purchasing power relative to (say) the Euro to "prove" that it is not actively being debased. If you and I jump out of a plane at the same time, and follow similar trajectories, does that mean we are not falling?

Regarding the associated "low inflation" claims: It depends very much on what one is buying. We live in a credit-based economy, so overall monetary inflation inevitably requires credit to be expanding or at least not contracting relative to new money issuance. This is giving Bernanke et al cover for the latter ... for the moment. But one place money printing does cause inflation in a fashion which is hard to mask is in the price of crude goods. Like oil and gasoline, for instance. (Much of whose price feeds into food prices, among other things.) Or did you believe the lie about {alleged] strong demand from the developing world being responsible for ongoing near-record oil and gas prices? That's a nice cover story, but actual global demand numbers don't support it. Another place the money-printing has caused inflation is by way of yet another equity-market valuation bubble. All fine and good, until it inevitably crashes again. These central-bank-fueled bubble-and-bust cycles are deeply damaging to the long-term prospects of the economy, by way of the attendant capital misallocations and false economic signaling they incur. Japan's markets again provide a nice illustrative example. How much sustainable organic private-sector economic growth has that 200%-of-GDP national debt binge bought?

[QUOTE=Prime95;315658]Where did I say it ever was???[/QUOTE]In post #602, your example -- "A logarithmic chart would make a President/Congress that took the debt from $1 to $100 worse than one that took it from one trillion to two trillion" -- make no sense unless you consider it possible for such a chart to actually show a $1 or $100 debt (so that such a president/Congress would look worse than the $1 trillion/$2 trillion case). Since I was proposing a chart with the [I]real[/I] figures, not absurdly small hypothetical ones, plotted against real dates, your objection has no practical purpose except to distract -- a strawman.

A debt of $1 or $100 would never appear on such a realistic-figure chart. If you were to rescale your example to, say, a jump from $10 billion to $1 trillion, then yes, that would make that slope steeper than the $1 trillion-to-$2 trillion jump, but it would appear lower on the chart! So, the steepness would be moderated by ts lower placement -- I don't think most folks would think it looked more disturbing than the $1T-to-$2T.

[quote]I merely gave an [I]example[/I] showing that a logarithmic chart isn't the best choice.[/quote]An example is more convincing, and looks more sincere, if it is at least conceivably possible.

As it is, yours distracted me so much that I forget to say that

I agree that a chart of debt as percentage of GDP would be okay, too, because that would inherently have some of the same scaling effect as a logarithmic chart.

[QUOTE=cheesehead;315728]As it is, yours distracted me s much that I forget to say that.[/QUOTE]

Cheesehead... Do you think that faster than light travel is possible without infinite energy?

[url=http://www.moneynews.com/Headline/fed-debt-Treasury/2012/03/28/id/434106]WSJ: Fed Buying 61 Percent of US Debt[/url]
[quote]The Federal Reserve is propping up the entire U.S. economy by buying 61 percent of the government debt issued by the Treasury Department, a trend that cannot last, Lawrence Goodman, a former Treasury official and current president of the Center for Financial Stability, writes in a Wall Street Journal opinion article published Wednesday.

"Last year the Fed purchased a stunning 61 percent of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis," Goodman writes.

Goodman also warns that U.S. economy and markets are “at risk for a sharp correction” if conditions aren’t “normalized.”

"This not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits."[/quote]
The friend who sent me the above link comments:
[i]
The new guideline is that the Fed will not buy more than 70% of any issue. That percentage can change with a simple memo. Two results: the buying at this rate cannot continue. When it stops there will be significant problems.
[/i]
Which brings me to my quote of the day, from a 2010 appearance by the Chairsatan [ZeroHedge`s favored term] before the House Financial Services Committee, [url=http://www.washingtontimes.com/news/2010/feb/25/bernanke-delivers-warning-on-us-debt/]Bernanke delivers blunt warning on U.S. debt[/url]:
[i]
“We’re not going to monetize the debt” -- Ben Bernanke, 2010:
[/i]
This is just the latest in a long litany of lies by the counterfeiter-in-chief. Of course he is not alone in this -- they`re [url=http://globaleconomicanalysis.blogspot.com/2012/10/draghi-defends-bond-purchases-with.html]doing it in Europe, too[/url].

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

Related to the subject of fiat currencies and their usage as a vehicle of stealth taxation, the Germans are getting exercised about the gold allegedly owned by their central bank and "held in trust" at the oh-so-trustworthy NY Fed (translation mine):

[url=www.welt.de/finanzen/article110175594/So-viel-Gold-entfaellt-auf-jeden-Deutschen.html]So much Gold for every German[/url]: [i]Germany has the world`s second-largest gold reserves, after the United States; per capita, only the Swiss have more. Economists praise the reserves as a psychological anchor. But how much is really there?[/i]
[quote]Barbarous relic - that is how revered economist John Maynard Keynes described the gold in the vaults of the central banks back in the early 1920s. Nine decades later, the yellow metal is once again acquiring a significance not held for possible. At least in Germany everything currently seems to be turning on the subject of gold.

Almost overnight the precious metal reserves of the Bundesbank, the second largest in the world, have become a hot political topic: For many years the public hardly paid any thought to it, for years no one was disturbed at the fact that most of the bars (allegedly not cataloged) reside outside of the country.
[b]
Call for a return of the gold
[/b]
A phalanx of politicians, economists and activists is now demanding that the whereabouts of the German Treasury holdings is finally verified. Quite a few even want the gold, held in custody in New York, London and Paris, to be brought home.[/quote]

[i]Update: In [url=http://www.welt.de/finanzen/article110220855/Bundesbank-lueftet-Geheimnis-um-deutschen-Goldschatz.html]this followup piece in [i]Die Welt[/i][/url], a Bundesbank official states that the bank does in fact possess a detailed gold inventory in the form of an individual-bar list. Now they just need to make sure the [url=http://en.wikipedia.org/wiki/Simon_Gruber]Gruber gang[/url] truly was caught with all the gold they robbed from the FRBNY back in '95.[/i]

[b]Friday Kafka Humor:[/b] Straight from the self-proclaimed "land of the free":

[url=www.reuters.com/article/2012/10/26/us-usa-court-surveillance-idUSBRE89P06420121026?feedType=RSS&feedName=domesticNews]Top court to hear arguments over government spying[/url]: [i](Reuters) - A debate over how freely the U.S. government can eavesdrop on international communications reaches a climax on Monday in the country's highest court.[/i][quote][u]The government argues that, because the surveillance is secret, the challengers cannot prove they have been harmed by the law[/u] and therefore do not have standing to challenge it.[/quote]

At least now we know what kinds of things have been keeping the folks at the ironically named Department of Justice too busy to go after the Wall Street fraudsters.

(If any of our U.S. readers is enjoying the new series [url=http://www.imdb.com/title/tt2191671/]Elementary[/url] as am I - although I expect it to not be renewed past a half-season or so, as is the case for most shows I enjoy - Jonny Lee Miller's character had a delicious Wall-Street-crooks rant on last night's episode.)

[url=http://www.rollingstone.com/politics/blogs/taibblog/obama-defends-his-finance-reform-record-to-rolling-stone-a-brief-response-20121026]Obama Defends His Finance Reform Record to Rolling Stone: A Response | Matt Taibbi | Rolling Stone[/url]
[quote]The sum total of all of this is that Obama didn't really do anything to alleviate the dangers of Too-Big-To-Fail. If anything, we now live in a world that is more concentrated and dangerous than it was before 2008. TBTF companies like Chase and Wells Fargo and Bank of America are even bigger and less-able-to-fail-ier than they were when he took office. This is why Obama's answer to our interview question is so disappointing. If I'm understanding the president correctly, he basically says he doesn't think Glass-Steagall should be re-instated, and beyond that, he just thinks Wall Street needs to self-regulate better.[/quote]


[url=http://globaleconomicanalysis.blogspot.com/2012/10/retail-sales-in-spain-plunge-109.html]Retail Sales in Spain Plunge 10.9%, Largest Drop on Record; All Pain, No Gain[/url]
[quote]Spanish retail sales fell at their fastest pace on record in September as already battered consumer confidence took another hit from a hike in value added tax, driving many shoppers to trade down to cheaper products.

Sales fell 10.9 percent year on year, Monday's National Statistics Institute data showed, reflecting an economy struggling through its second recession in three years and plagued by chronically high unemployment.

The drop was the biggest in calendar-adjusted terms since current records began in January 2004, and marked the 27th monthly decline in a row.[/quote]


[url=www.nytimes.com/2012/10/30/us/hurricane-sandy-churns-up-east-coast.html?ref=nyregion]Still at Sea, Storm Drenches East Coast[/url]
[quote]October 29, 2012 -- Hurricane Sandy churned relentlessly through the Atlantic Ocean on Monday on the way to carving what forecasters agreed would be a devastating path on land that is expected to paralyze life for millions of people in more than a half-dozen states, with extensive evacuations, once-in-a-generation flooding, widespread power failures and mass transit disruptions.[/quote]

An ill wind
 

Now the Huffington Post is back up again, sort of, it's possible to read this:
[quote]
Financial markets around the world aren't reacting much to the disaster in New York on Tuesday morning, either confident that the long-term economic impact will be negligible -- or because of pure shock.

...

European stocks were sharply higher at last check, with the Stoxx 50 index up a full percentage point and the U.K.'s FTSE and Germany's DAX indices each up 0.8 percent. Italy managed to sell bonds Tuesday morning at the lowest interest rates in more than a year. Commodities are trading electronically, with gold up a smidgen to $1713 an ounce
and Nymex crude-oil futures up a bit to about $86 a barrel.[/quote]

[QUOTE=xilman;316415]Financial markets around the world aren't reacting much to the disaster in New York on Tuesday morning, either confident that the long-term economic impact will be negligible -- or because of pure shock.[/QUOTE]

Or, perhaps, because the markets know that in times of disaster there's opportunity for profit?

[QUOTE=chalsall;316441]Or, perhaps, because the markets know that in times of disaster there's opportunity for profit?[/QUOTE]

Or, perhaps, because markets worldwide have become so grossly distorted by central bank machinations, government interventions and the rise of parasitic high-frequency trading that they are nigh-useless as economic signaling mechanisms?

[QUOTE].....the rise of parasitic high-frequency trading.....[/QUOTE]

Parasitic is the correct adjective. It produces nothing, but it eats the lunches of millions.

Maybe they were just hoping New York would be washed out in the ocean putting an end to some of the parasitism.

DarJones

o Hurricane Sandy provides a great illustration of the "all productivity is good" myth, by way of the [url=http://www.zerohedge.com/news/2012-10-31/guest-post-hurricanes-do-not-have-silver-lining]broken window fallacy[/url].

o [url=www.nytimes.com/2012/11/01/world/asia/wary-of-future-many-professionals-leave-china.html?ref=world]Wary of Future, Professionals Leave China in Record Numbers[/url]: [i]Although China’s economic boom has created millions of well-paying jobs, its skilled workers are moving elsewhere, in search of better quality of life, and religious and political freedoms.[/i]

Trio of articles from [i]Die Welt[/i] [Feed links to Google translate for a full-article auto-translation]:

[url=www.welt.de/wirtschaft/article110580012/Griechenland-Retter-luegen-sich-in-die-Tasche.html]Greece Rescuers are Kidding Themselves[/url]: [i]Calculations by Commerzbank reveal what politicians do not want to admit: The austerity requirements are pushing Greece into bankruptcy. The numbers lead to only one conclusion.[/i]


[URL=www.welt.de/wirtschaft/article110558226/Zwangsraeumungen-treiben-Spanier-in-den-Selbstmord.html]Evictions driving Spaniards to suicide[/url]: [i]In Spain, hundreds of thousands of people are losing their homes because they can not repay their loans. The wave of foreclosures has had dramatic consequences.[/i]
[quote]The evictions are the flip side of the banking crisis. In Spain instead of renting apartments it is common practice to buy them on credit and pay the borrowed money back to the lending bank in monthly installments.

Due to the high unemployment - with a rate of about 25 percent - many families can no longer pay the installments. The resuling bad loans have brought several financial institutions in financial distress.

But greater still is the plight of families who have to leave their homes. "The government wants to spend 60 billion euros to rescue the banks, but nothing for the hundreds of thousands of people who have to leave their homes," said the Socialist deputy and former Labor Minister Valeriano Gómez.[/quote]


[url=www.welt.de/finanzen/article110576658/Giftige-Repression-vernichtet-heimlich-unser-Geld.html]Toxic repression secretly destroys our money[/url]: [i]The greatest fear of German savers is inflation. But that is not the problem. Rather, they are losing their money through an underestimated danger: the insidious poison of financial repression[/i]
[quote]Hyperinflation is by definition a short-term phenomenon of a few weeks or months. The investor can literally watch as he is ruined as he trundles the wheelbarrow full of paper money bundles to the bakery. The danger posed is clear, vivid and recognizable.

Not so for financial repression. It is an insidious and slow-acting poison. Financial repression occurs when real interest rates are negative for years. Even a slightly negative rate already destroys the compounding effect.

The Weimar hyperinflation destroyed the German middle class and was a major factor in helping the NSDAP (Nazi party) to power. German investors are therefore historically calibrated to recognize inflationary dangers early. However this leads to the question whether we are looking in the euro crisis for signs of hyperinflation which does not even exist.

Apparently we underestimate the current financial repression. Or is it even being caused deliberately? Financial repression and hyperinflation are identical in the direction of their effect: they deleverage the government, expropriate wealth and cause a redistribution from savers to borrowers.

Hyperinflation and financial repression have such powerful effects on state and society because in wealth-political terms they act to level a society without anyone being held responsible.[/quote]

Mish has a nice in-depth piece on [url=http://globaleconomicanalysis.blogspot.com/2012/11/is-yuan-about-to-replace-dollar-as.html]the dubious benefits of reserve currency status[/url].


[url=takingnote.blogs.nytimes.com/2012/11/02/ideology-over-reality/?ref=opinion]Ideology Over Reality[/url]: [i]Senate Republicans seem to have pressured the Congressional Research Service to withdraw a report debunking conservative economic orthodoxy.[/i]
[quote]In a brazen example of putting ideology ahead of reality, Senate Republicans seem to have pressured the Congressional Research Service to withdraw a report debunking conservative economic orthodoxy. Cutting tax rates at the top appears “to have little or no relation to the size of the economic pie,” the report said. “However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.” So charging the rich lower tax rates doesn’t promote economic growth; it merely increases economic inequality.

The CRS is a highly respected, independent agency that prepares reports for members of Congress and routinely issues findings that disappoint or even irritate their clients, who usually just grin and bear it, or at least bear it. But Congressional Republicans seem to think that the CRS should function like Pravda.

In recent months, Republicans have been on a paranoid tear. They attacked the private and equally authoritative Tax Policy Center because it bothered to analyze Mitt Romney’s tax plan and found that it’s pretty much impossible to cut taxes by 20 percent without increasing the deficit. And they claimed there was a conspiracy at the Bureau of Labor Statistics when it reported last month that the unemployment rate had dipped below 8 percent.[/quote]
With respect to the latter point, the deeply flawed nature of the BLS headline unemployment number is widely known. The big drop in said number in the last report caused many conservative pundits and pols to cry "election-season fudging!" ... note that Mish has put together a pretty good case that it is something both more benign (in the sense that it is not a BLS conspiracy to aid Obama`s re-election) and more insidious (in terms of long-term macroeconomic implications) in the form of many employers cutting full-time workers` hours and hiring more part-timers in preparation for the implementation of the 3-hour "full time worker" definition of the [url=http://globaleconomicanalysis.blogspot.com/2012/11/obamanamics-explained.html]Obama health care act[/url]. interesting that in their zeal to score quick "TV news-sound-bite points" congressional Republicans in fact missed a more-viable talking point which fits their agenda. Such an oversight couldn`t happen to a nicer bunch of pandering liars. :)

In the wake of [strike]superstorm[/strike] [i][strike]mega-boffo-perfect-global-warming-caused-meteorological-cataclysm[/strike][/i] Hurricane Sandy, a piece on the phony U.S. "big government" debate by [i]Rolling Stone's[/i] Matt Taibbi:

[url=http://www.rollingstone.com/politics/blogs/taibblog/hurricane-sandy-and-the-myth-of-the-big-government-vs-small-government-debate-20121101]Hurricane Sandy and the myth of the big government vs small government debate[/url]
[quote]The almost certain reality is that we'll end up with a big (and perhaps even a rapidly-expanding) government no matter who gets elected. People seem to forget that this time four years ago, George W. Bush was winding down one of the most activist, expensive, intrusive presidencies in history, an eight-year period that saw a massive expansion in the size of the federal government. Almost exactly four years ago, this is what the conservative [i]Washington Times[/i] wrote about the outgoing president:
[i]
George W. Bush rode into Washington almost eight years ago astride the horse of smaller government. He will leave it this winter having overseen the biggest federal budget expansion since Franklin Delano Roosevelt seven decades ago.
[/i]
Bush, it is true, consistently expanded the size of the federal bureaucracies almost across the board during his eight years in office, greatly increasing the size of government just in terms of sheer numbers and volume of spending, but that wasn't all he did.

People forget that he also took a major [i]qualitative[/i] step forward in expanding the role of government, when in 2008 his Treasury Secretary, Hank Paulson, teamed up with then-Fed official and Paulson's future counterpart in the Obama administration, Tim Geithner, to design a series of financial bailouts and state-aided mergers. The bailout program that began under Bush cost trillions of dollars and left the state hopelessly and irrevocably involved in the insurance, banking and auto industries, among other things.

But within a few years, that was forgotten. Forget about the myth that the Republican Party is sincerely interested in reducing the size of government: the real myth is that the American people are in favor of reducing the size of government. And that myth was alive and well again by the summer of 2010, in the runup to midterm elections. Back then, [i]Slate[/i] columnist Anne Applebaum [url=http://www.slate.com/articles/news_and_politics/politics/2010/08/americas_peculiar_amnesia.html]described the national self-deception[/url] this way:
[i]
Americans on both the left and the right have, for the last decade, consistently voted for high-spending members of Congress and consistently supported ever-higher levels of government intervention and regulation at all levels of public life. As a result, the federal government expanded under George W. Bush's administration at a rate that was, at least until President Barack Obama came along, totally unprecedented in U.S. history.
[/i]
In the abstract, most Americans want a smaller and less intrusive government. In reality, what Americans really want is a government that spends less money on other people.

Hurricane Sandy is a perfect, microcosmic example of America's attitude toward government. We have millions of people who, most of the year, are ready to bash anyone who accepts government aid as a parasitic welfare queen, but the instant the water level rises a few feet too high in their own neighborhoods, those same folks transform into little Roosevelts, full of plaudits for the benefits of a strong state.[/quote]
I would like to point out that we can have a very robust national emergency response capability without running annual trillion-dollar deficits - even the worst-case cost estimates for Hurricane Sandy come in well under the cost of bailing out that overleveraged-hedge-fund-disguised-as-global-insurance-giant AIG back in 2008, and are absolutely dwarfed by the increases in annual spending on defense and Medicare over the past decade.

[QUOTE=ewmayer;317472]
I would like to point out that we can have a very robust national emergency response capability without running annual trillion-dollar deficits - even the worst-case cost estimates for Hurricane Sandy come in well under the cost of bailing out that overleveraged-hedge-fund-disguised-as-global-insurance-giant AIG back in 2008, and are absolutely dwarfed by the increases in annual spending on defense and Medicare over the past decade.[/QUOTE]

agreed. although AIG did pay back the entire amount of their bailout. (in fact 83% of the bank bailout has been repaid by various institutions, and the Government still owns quite a bit of AIG et al which may be counted as profit on the whole venture.)

I won't argue about defense spending, although I'd defend it more if we engaged in smart defense spending instead of building large ships and stealth planes. But, Medicare isn't a wholly losing venture by the Government. It has risen faster than inflation for sure, but that includes the bulk of the baby-boomers, and it has grown a great deal slower than private medical coverage during that same period. And may, in fact, provide a limiting factor against even more excessive growth. Not that we don't need to worry about it.

The Obamacare laws push the unfunded portion down, but don't eliminate it. That is a worry. But, likely I'll be dead by then and it will be Dubslow's problem. :)

[QUOTE=chappy;317482]agreed. although AIG did pay back the entire amount of their bailout. (in fact 83% of the bank bailout has been repaid by various institutions, and the Government still owns quite a bit of AIG et al which may be counted as profit on the whole venture.)
[/QUOTE]

What? What? What? WTF are you talking about? They still have $2.6b outstanding. [URL]http://projects.propublica.org/bailout/entities/8-aig[/URL]

my [URL="http://www.minyanville.com/business-news/politics-and-regulation/articles/aig-American-International-Group-insurance/9/12/2012/id/43948?page=full"]source[/URL] from only one day later says that the debt was fully repaid, but you also seem to be right that there are still subsidiary obligations of $2.62b "Treasury has recovered a total of $65.22 billion (including proceeds from the sale of the non-TARP shares), compared to total TARP disbursements of $67.84 billion. Treasury currently holds a total of approximately 234 million AIG common shares, consisting of 154,529,686 TARP shares and 79,639,470 non-TARP shares." from yesterday's daily TARP report.

additionally [URL="http://www.thedailybeast.com/articles/2012/08/10/how-the-treasury-is-turning-a-profit-on-tarp.html"]private[/URL] and[URL="http://www.treasury.gov/initiatives/financial-stability/briefing-room/reports/105/Documents105/March%2012%20Report%20to%20Congress.pdf"] public[/URL] (see page 20) sources indicate that the Government was way ahead on its AIG investment way back in March, not even counting the preferred stock interest.

and apparently I was also mistaken [URL="http://www.treasury.gov/initiatives/financial-stability/about-tarp/Pages/default.aspx"] 88% of Tarp has been repaid[/URL], not 83%

[QUOTE=garo;317545]What? What? What? WTF are you talking about? They still have $2.6b outstanding. [URL]http://projects.propublica.org/bailout/entities/8-aig[/URL][/QUOTE]

Let's also not forgot that TARP, being by far the most-visible of the government bailout programs (and having the most strings attached related to executive compensation) was the one the recipients rushed to repay by any means necessary, especially once it became clear that even-more-generous backdoor funding would be available on less onerous terms. (Many of the firms in fact simply used the other lines of funding such as cut-rate Fed loans to repay their TARP loans, freeing themselves to resume lavish exec comp and bonuses.) There have been multiple trillions of dollars pumped into the financial sector by he Fed in the way of its alphabet soup of cheap-lending facilities, coupled with a huge balance sheet expansion, much of which is due to the Fed deliberately overpaying to take mortgage-backed loans off the TBTF banks' books, which has helped buoy the share prices of the beneficiary banks and entities like AIG, which was heavily leveraged in [URL="http://en.wikipedia.org/wiki/American_International_Group"]MBS-related insurance[/URL]:
[quote]The AIG Financial Products division headed by Joseph Cassano, in London, had entered into credit default swaps to insure $441 billion worth of securities originally rated AAA. Of those securities, $57.8 billion were structured debt securities backed by subprime loans.[/quote]The costs of all these "confidence restoring" initiatives have been borne by the general populace by way of decimated interest rates on savings accounts (and another "risky investments bubble" from the resulting yield-chasing by investors) and currency debasement showing up by way of price inflation in "things you have to buy" such as food and fuel. And, the Fed's resulting bloated balance sheet remains to be dealt with - it is set to expand by another $1 trillion per year on a now-open-ended basis, now that the fed has embarked on yet another round of money-printing via its QE3 program.

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

[URL="http://www.reuters.com/article/2012/11/08/us-storm-sandy-autos-idUSBRE8A706B20121108?feedType=RSS&feedName=domesticNews"]Sandy might send more than 250,000 cars to scrap heap[/URL]: [I]Superstorm Sandy may consign as many as a quarter of a million new and used cars and trucks to the scrap heap, a loss that could eventually lead to a spike in new auto sales, automakers and dealers said.[/I]
Mish has "uncovered" another problem related to ongoing jobs-market deterioration going on behind the cheery "uneployment rate drops!" headlines:

[URL="http://globaleconomicanalysis.blogspot.com/2012/11/explosion-in-uncovered-employment.html"]Explosion in Uncovered Employment During the Recovery[/URL]
[quote]Covered employment is the set of working employees that have unemployment benefits.

Self-employed persons such as myself have to pay into state unemployment insurance programs but we are ineligible to receive benefits (we are not covered).

Similarly, people selling trinkets on Ebay as well as those involved in multi-level marketing schemes and calling it their only job are not covered either.

Covered employment was one of the topics that came up in my November 2 interview on Capital Account with Lauren Lyster.

In the interview I noted that covered employment has crashed and reader Tim Wallace frequently sends me charts to prove it. Here are the latest charts from Tim.

I added data points to Tim's chart. Let's do the math.

According to the BLS, the economy added 4,951,000 since January 2009. In the same timeframe, uncovered employment rose by 6,573,468! The difference is 1,622,468.

Got that?

133% of the jobs created since January 2009 are not covered. Employment rose by less than 5 million while uncovered employment rose by over 6.5 million.[/quote]NB: [I]Capital Account[/I] is a weekday-nightly financial-news show on [URL="http://en.wikipedia.org/wiki/RT_%28TV_network%29"]RT[/URL], which is a Russian-state-funded multilingual TV network.

RT is interesting - while a lot of their hyper-skepticism of Western "corporate controlled news media" is conspiracy-theory hokum and while one might wish they were as skeptical of the Russian government as the US, the fact is that on matters financial and economic, especially since the onset of the 2008 crisis the Western media and governments have been akin to pathological liars (as reflected in the now-(in)famous [URL="http://www.zerohedge.com/article/head-eurogroup-admits-lying-about-secret-greek-meeting-out-fears-market-collapse"]quote by Eurogroup head Jean-Claude Juncker[/URL]: "When it becomes serious, you have to lie"), so on the financial/economic front, I find RT's coverage very refreshing, both for its skepticism of officialdom and for giving a voice to folks like Mish and the acerbic Max Keiser, who the mainstream media would not touch with a 10-foot pole.

Back to the topic at hand: So on the jobs front the so-called "recovery" has consisted of a dismal mix:

1. Extremely low numbers of jobs created - barely keeping pace with population growth, to say nothing of making a dent in the massive numbers of jobs shed during 2008-2009;

2. Extremely low-quality jobs created, relative to those which were lost;

3. There is an ongoing shift to uncovered jobs which exceeds the rate of new jobs created, i.e. is occurring within the ranks of existing jobs as well. That points to a degradation in quality of not just new jobs, but also existing ones. (Note the latter term may be in-apt, since we may be talking here of folks who never went onto the official unemployment rolls, but who lost a covered jo and replaced it with an uncovered one).

[QUOTE=ewmayer;317603]
[URL="http://www.reuters.com/article/2012/11/08/us-storm-sandy-autos-idUSBRE8A706B20121108?feedType=RSS&feedName=domesticNews"]Sandy might send more than 250,000 cars to scrap heap[/URL]: [I]Superstorm Sandy may consign as many as a quarter of a million new and used cars and trucks to the scrap heap, a loss that could eventually lead to a spike in new auto sales, automakers and dealers said.[/I]

[/QUOTE]

That's good right? A boost to GDP! Yaay!

[QUOTE=garo;317689]That's good right? A boost to GDP! Yaay![/QUOTE]

The article certainly appears to be intimating such, but perhaps the author was waiting for a Paul Krugman op-ed in the NYT to the effect that "while superstorm Sandy was a good start, it really needed to be much bigger and more sustained" in order to have political cover.

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

One election result I especially savored was in the Massachusetts Senate race, where financial reformer Elizabeth Warren defeated "liberal Republican" and phony-fiscal-hawk Senator Scott Brown, who had gained the seat via the special election to fill the vacancy left by the death of Ted Kennedyin early 2010:

[URL="http://www.businessweek.com/articles/2012-11-06/elizabeth-warrens-inadvertent-best-friends-wall-street-and-republicans#r=shared"]Elizabeth Warren's Inadvertent Best Friends: Wall Street and Republicans[/URL]
[quote]The Massachusetts Senate race was close right up until the end, with three major polls showing Elizabeth Warren pulling ahead and two newspaper polls showing close to a tie. Now that Warren has defeated Republican Senator Scott Brown, who was once seen as an easy bet for reelection, it’s likely to trigger one of the strongest cases of political regret in recent memory.

Congressional Republicans, Wall Street bankers, and business lobbyists now face the possibility that by driving Warren out of the Consumer Financial Protection Bureau (CFPB), which she helped establish, and which they agitated to keep her from heading, they created a far bigger and more threatening animal: a hugely ambitious senator with national star power, command of financial affairs, and the stature to influence President Obama.
...
Warren, a Harvard law professor and scholar of bankruptcy and the middle class, first suggested the idea of an agency that would protect consumers from exploitation by financial institutions in a 2007 article in the journal Democracy. She was recruited to head the Congressional Oversight Panel monitoring the government rescue of the financial system in 2008, and she pushed for the creation of the bureau.

Four years later, the Dodd-Frank financial reform bill made the CFPB a reality, and Warren spent the next year working to staff it, meeting with community bankers across the country, big-bank CEOs, and policymakers in Washington. Although she was seen as the obvious candidate to ultimately lead the agency, Senate Republicans, intent on weakening its power, indicated they would fight any attempt by President Obama to appoint Warren to the job. The idea of pursuing a Senate seat in Massachusetts was dangled in front of her like a shiny jewel, almost as a way to deflect her attention and get her out of Washington without an ugly partisan battle.[/quote]So now the battle shifts to trying to keep her off the key committees. I shall be following developments with interest. I initially liked a lot of what Brown had to say, but [URL="http://en.wikipedia.org/wiki/Scott_Brown"]he quickly turned out[/URL] to be another piece of bank-owned real estate:
[quote]On December 12, 2010, the Boston Globe reported that "[c]ampaign contributions to [Brown] from the financial industry spiked sharply during a critical three-week period last summer as the fate of the Wall Street regulatory overhaul hung in the balance and Brown used the leverage of his swing vote to win key concessions sought by firms."[77] Brown received more than ten times the amount of contributions from the financial services industry as House Financial Services Committee chairman (and author of the legislation) Barney Frank during the same period.[77] According to the Globe:
[I]
Brown’s efforts benefited large Massachusetts companies such as MassMutual Financial Group, Liberty Mutual Insurance, Fidelity Investments, and State Street Corp., whose executives and political action committees contributed $29,000 to Brown during the three-week period he was extracting the concessions from Democrats. They also benefited major out-of-state institutions such as Goldman Sachs, UBS, and JPMorgan Chase. Those and other out-of-state financial interests gave Brown a total of $50,000 during the period.[77][/I][/quote]In other post-election commentary, interesting how the markets reacted the past few days to the resumption of all the bad news out of Europe and elsewhere which had been suppressed in the run-up to the election. What, you mean Apple didn't use its huge pile of cash to secretly bail out Greece? Too bad, because it's gonna cost them more a lot more share-equivalents than it would have a few weeks ago.

[QUOTE=garo;302704]Niall Ferguson is a dickhead. End of![/QUOTE]

Sooo... Reviving an old theme on this thread. Niall Ferguson had a partisan screed in the Newsweek [url]http://www.thedailybeast.com/newsweek/2012/08/19/niall-ferguson-on-why-barack-obama-needs-to-go.print.html[/url]

Obligatory skewering:
[url]http://krugman.blogs.nytimes.com/2012/08/19/unethical-commentary-newsweek-edition/[/url]
[url]http://delong.typepad.com/sdj/2012/08/more-lies-from-niall-ferguson.html[/url]
and the best:
[url]http://www.theatlantic.com/business/archive/2012/08/a-full-fact-check-of-niall-fergusons-very-bad-argument-against-obama/261306/[/url]

[QUOTE]"Certainly, the stock market is well up (by 74 percent) relative to the close on Inauguration Day 2009. But the total number of private-sector jobs is still 4.3 million below the January 2008 peak."[/QUOTE]
Notice the switcheroo?




I stand by my ad hominem.

[QUOTE=garo;318079]Sooo... Reviving an old theme on this thread. Niall Ferguson had a partisan screed in the Newsweek [url]http://www.thedailybeast.com/newsweek/2012/08/19/niall-ferguson-on-why-barack-obama-needs-to-go.print.html[/url]

Obligatory skewering:
[url]http://krugman.blogs.nytimes.com/2012/08/19/unethical-commentary-newsweek-edition/[/url]
[url]http://delong.typepad.com/sdj/2012/08/more-lies-from-niall-ferguson.html[/url]
and the best:
[url]http://www.theatlantic.com/business/archive/2012/08/a-full-fact-check-of-niall-fergusons-very-bad-argument-against-obama/261306/[/url]


Notice the switcheroo?[/QUOTE]
Yeah, that kind of shifting-baselines faux-comparison - in Ferguson`s case, ascribing the massive wave of job losses in 2008 and 2009 to Obama, despite the fact that that was clearly inherited - is stock-in-trade of poltical demagogues on both sides. On the left, the common ruse is to set the baseline to the depths of the 2009 employment malaise and then ascribe all the subsequent jobs-created to "Obama stimulus", and conveniently ignore both the dismal average quality of the jobs-created and the expected number of jobs-created simply due to population growth in the same time period. Let`s face it: By any reasonable historic standard of "jobs creation during economic recoveries", the quality and quantity of jobs created during the current so-called recovery have been abysmal.

No, what I find most telling is Ferguson`s disclosure of having been an economic adviser to John McCain - that puts him right there with Kevin "Dow 36,000" Hassett as far as objectivity and credibility are concerned.

Interestingly, though, Ferguson`s note about the rising cost of healthcare strikes me as downright optimistic:
[i]
"Obama`s much-vaunted health-care reform will not prevent spending on health programs growing from more than 5 percent of GDP today to almost 10 percent in 2037."
[/i]
I look at [url=http://market-ticker.org/akcs-www?get_gallerynr=3695]this chart here[/url] - which makes less-rosy assumptions about healthcare spending, in that it simply extrapolates the last 30 years` spending trends - and reach rather more-dire conclusions, namely that without truly radical, unprecedented downward-bending of the cost curve, we are going to cost-double in under a decade. Of course once you get to fractions of 10% and more of GDP the sheer untenability of the trend will show, but *that* resulting cost-attenuation will be of the involuntary, and hence immensely painful variety.

Among the ripostes, [i]The Atlantic's[/i] O'Brien makes this pathetic attempt at a "counter" regarding real incomes:
[quote][quoting Ferguson] [b]"Meanwhile real median annual household income has dropped more than 5 percent since June 2009."[/b]

I can't replicate this result. It's difficult, because Ferguson does not cite his source. The Census Bureau only has data on real median household incomes through 2010 -- and it shows them falling 2.28 percent from 2009. The Bureau of Labor Statistics has numbers on real median weekly earnings that go through 2012, but those only show a 3.7 percent decrease from June 2009.[/quote]
Ah, so if you accept the government's typically-understated estimates of price inflation (which long-term comparisons show to be around 1% annually here in the US), incomes have "only" dropped somewhere around 3 percent since mid-2009 - awesome, that paints an entirely different trend than Mr. "hega-downer" Ferguson and his overly pesssimistic -5%, don't it?

[url]http://2.bp.blogspot.com/-NHXFCrOgfS0/UBvGWEvgDAI/AAAAAAAAOrU/UOLrtOQieR8/s1600/EmployRecJuly2012.jpg[/url]

suggests that the recovery rate is just about the same as after the 2001 recession - that is, it's possible that the economy is in a large-scale state such that this is as good as it gets. I'd be ready to believe that there was a difference in kind between the Cold War and the globalised planetary economy.

Another one of O'Brien's retorts from [I]The Atlantic[/I] article:

[quote][B]"By the end of this year, according to the Congressional Budget Office (CBO), [debt-to-GDP ratio] will reach 70 percent of GDP. These figures significantly understate the debt problem, however. The ratio that matters is debt to revenue. That number has leapt upward from 165 percent in 2008 to 262 percent this year, according to figures from the International Monetary Fund."[/B]

This is incorrect. Ferguson had it right the first time -- the number that matters is debt-to-GDP, not debt-to-revenue. The former reflects our capacity to pay; the latter our willingness to pay right now. Moving on.[/quote]Not so fast - even if we accept debt-to-GDP as the main measure, we must similarly include debt of *all* kinds, not the phony-baloney "two sets of ledgers" accounting represented by the division of government borrowings into "public debt" and "intragovernmental borrowings", a.k.a. "raiding the social security and mediare trust funds". Add those together and the total debt to GDP passed 100% this year, and we are piling on 7-8% a year. And were we to not count each year's borrowed monies as contributing to that year`s GDP, i.e. were we to use "nonborrowed GDP" for the denominator, things would look proportionally worse.

[quote][B]"Not only did the initial fiscal stimulus fade after the sugar rush of 2009, but the president has done absolutely nothing to close the long-term gap between spending and revenue."[/B]

Ferguson wasn't always a critic of the stimulus. Back in August 2009, he wrote that "the stimulus clearly made a significant contribution to stabilizing the U.S. economy." Perhaps he thinks the stimulus should have been bigger so the "sugar rush" would last lasted longer? It's not clear. What is clear is that Obama has tried to close long-term deficits -- several times! And the sequester scheduled for next January is his deal with Republicans to rein in spending. More on that in a bit.[/quote]On the "has tried" front, let's simply look at the actual current-account-balance numbers for added total debt in the past 4 years (Using the current 10-month run rate to extrapolate a full-year estimate for 2012):

2009: $-1.647 trillion
2010: $-1.852 trillion
2011: $-1.225 trillion
2012: $-1.246 trillion

I see no serious attempt "to close long-term deficits" there: Rather, I see a one-time stimulus spending program spread over 2009-2010 superimposed on "new normal" structural deficits of around 8% of GDP. Also, I have to laugh at O'Brien's overly optimistic "the sequester scheduled for next January is his deal with Republicans to rein in spending" - I predict any "compromise reached" will be of the DC big-spender variety where both sides throw out any of their proposals which would have closed the deficit, and "compromise" to kick the can down the road yet again.

Heck, the choice of the [URL="http://globaleconomicanalysis.blogspot.com/2012/11/misdiagnosing-fiscal-cliff-shrill.html"]fiscal cliff[/URL] wording - which IIRC was due to the counterfeiter-in-chief, Herr Bernanke - shows the mind-set. In terms of "closing long-term deficits" the very best thing would be to do nothing, i.e. allow both the Bush tax cuts for the rich and the Obama "temporary" cuts to SS payroll deductions to expire. Instead that dual expiry gets tagged with a mame implying horrific results, and the media dutifully propagate the meme.

The rest of it is mostly O'Brien and Krugman echo-chambering each other: Spinning "...but today we can borrow at near 0% interest rates" as a sign of how much faith the rest of the world has in the U.S.' ability to make good on all those IOUs rather than "every other non-banana-republic debt issuer looks even more debt-screwed than Uncle Sam, so I`ll take +0.something over -0.something, even if I have no confidence in the stability of the underlying currencies being such as to make nominal interest rates meaningful to begin with." Recall that Greece was able to borrow at "historically low interest rates" not very long ago, too. To be fair, on the flip, side, Japan still is. All we can safely conclude is that low-interest borrowing is a privilege, not a right, and thus that one should be careful not to abuse it. For Japan is it now in fact an absolute necessity, since should interest rates rise even 1%, Japan's budget blows up instantly.

[QUOTE=ewmayer;318197]
Add those together and the total debt to GDP passed 100% this year, and we are piling on 7-8% a year.[/QUOTE]

1-(1/1.08) = 1/13.5 so it looks as though $1/($13.5 debt) has to be paid before interest to just stay even. which means about 7.5% GDP if debt=GDP, I think I read somewhere it may be 102% GDP = debt in which case to stay even it goes closer to 7.6% GDP to break even once interest is added.

In the U.S., retailers as usual are pushing the "official" kickoff of the holiday shopping season ever closer toward what appears to be their ultimate target of merging it with the July 4th Independence Day festivities:

[url=www.mercurynews.com/business/ci_21981015/target-has-earlier-start-holiday-shopping-kickoff]Target has earlier start for holiday shopping kickoff[/url]
[quote]NEW YORK (AP) -- Target will open its doors at 9 p.m. on Thanksgiving, three hours earlier than a year ago, to kick off the holiday shopping season.

The discounter joins several other major retailers, including Wal-Mart Stores, that are opening earlier in the evening on the holiday and staggering deals over the two-day period. Over the years, stores have been expanding their hours on Black Friday to get ahead of the competition, but the kickoff is increasingly happening right after shoppers finish their turkey feast.

"We thought long and hard about when the right opening time would be," said Kathee Tesija, Target's executive vice president of merchandising. She said that 9 p.m. struck "a perfect balance" for its customers.

Target, based in Minneapolis, plans to offer deals that include an Apex 32-inch LCD TV for $147 and a Nikon digital camera for $99.99 for the earlier opening. From 4 a.m. to noon, the next day, customers who spend $50 or more on clothing, accessories or home products will earn a $10 Target gift card to use toward a future purchase. Target is also preparing additional early morning specials, including Leapfrog Explorer software for $15.

Wal-Mart said last week it will begin its holiday sale at 8 p.m. on Thanksgiving, two hours earlier than last year. It then will have two more rounds of sales events including a 10 p.m. sale on electronics and another sale at 5 a.m. the next day. [/quote]

It pays to track prices for big-ticket items one is interested in throughout the year, as many of those alleged Black Friday "bargains" turn out to be of the "not so much" variety. Back in mid-October, the WSJ [url=http://www.zerohedge.com/news/2012-10-10/popping-black-friday-myth]exploded many Black Friday myths[/url]:
[quote]After crunching two to six years' worth of pricing data for a number of typical holiday gifts, The Wall Street Journal has turned up the best times to go deal hunting — and they almost never involve standing in the freezing cold all night.

It turns out that gifts from Barbie dolls to watches to blenders are often priced below Black Friday levels at various times throughout the year, even during the holiday season, and their prices follow different trajectories as the remaining shopping days tick down.

Watches and jewelry, typical last-minute quarry for well-heeled shoppers, get more expensive as the season progresses, according to Decide Inc., the consumer-price research firm that gathered and analyzed the data for this article. Blenders, which might sit around for months if they aren't bought in the holiday window, get much cheaper at the end.[/quote]

[QUOTE=ewmayer;318197]On the "has tried" front, let's simply look at the actual current-account-balance numbers for added total debt in the past 4 years (Using the current 10-month run rate to extrapolate a full-year estimate for 2012):

2009: $-1.647 trillion
2010: $-1.852 trillion
2011: $-1.225 trillion
2012: $-1.246 trillion[/QUOTE]

Meanwhile, north of the border, in the "great white north" (read: Canada)...

[URL="http://www.calgaryherald.com/business/economy/Canada+deficit+soars+billion+falling+commodity+prices/7540615/story.html"]The Harper government has pushed back its target date for eliminating the deficit by one year, leaving open the possibility it won't be able to fulfil two key election promises on income splitting and doubling tax-free saving accounts.[/URL]

It is important to note that Harper, and the Conservative Party, finally won a majority based on these promises.

Did they lie? Or were they ignorant of the situation?

[QUOTE=ewmayer;318197]
On the "has tried" front, let's simply look at the actual current-account-balance numbers for added total debt in the past 4 years (Using the current 10-month run rate to extrapolate a full-year estimate for 2012):

2009: $-1.647 trillion
2010: $-1.852 trillion
2011: $-1.225 trillion
2012: $-1.246 trillion

The rest of it is mostly O'Brien and Krugman echo-chambering each other: Spinning "...but today we can borrow at near 0% interest rates" as a sign of how much faith the rest of the world has in the U.S.' ability to make good on all those IOUs rather than "every other non-banana-republic debt issuer looks even more debt-screwed than Uncle Sam, so I`ll take +0.something over -0.something, even if I have no confidence in the stability of the underlying currencies being such as to make nominal interest rates meaningful to begin with." Recall that Greece was able to borrow at "historically low interest rates" not very long ago, too. To be fair, on the flip, side, Japan still is. All we can safely conclude is that low-interest borrowing is a privilege, not a right, and thus that one should be careful not to abuse it. For Japan is it now in fact an absolute necessity, since should interest rates rise even 1%, Japan's budget blows up instantly.[/QUOTE]

Oh come on Ernst. I find it telling that you reserve most of your comments for O'Brien rather than Ferguson. Are you guilty of confirmation bias?

BTW, people need to understand that this time is different. Or rather last time was different. The 2001 recession was different in that job growth was slower than it had been in any recession since WWII. Perhaps the period from 1946 to 2000 was the outlier and we need to get used to 1-2% growth rates foreva!

[QUOTE=garo;318420]Oh come on Ernst. I find it telling that you reserve most of your comments for O'Brien rather than Ferguson. Are you guilty of confirmation bias?

BTW, people need to understand that this time is different. Or rather last time was different. The 2001 recession was different in that job growth was slower than it had been in any recession since WWII. Perhaps the period from 1946 to 2000 was the outlier and we need to get used to 1-2% growth rates foreva![/QUOTE]

I see a way to get job growth up based on perceptions of big business and government. Make a tax break for expansion using true Americans and base it on unemployment as unemployment grew it would become more taxing, if it fell then so would the percentage taxes they had to pay the extra people pay the government taxes boosting government income if it's set up correctly, the business gets a tax break boosting it's revenue if even a few of the new employees make them revenue, and unemployment falls the problems with this are things like less competition, etc.

[QUOTE]I see a way to get job growth up based on perceptions of big business and government. Make a tax break for expansion using true Americans and base it on unemployment as unemployment grew it would become more taxing, if it fell then so would the percentage taxes they had to pay the extra people pay the government taxes boosting government income if it's set up correctly, the business gets a tax break boosting it's revenue if even a few of the new employees make them revenue, and unemployment falls the problems with this are things like less competition, etc.[/QUOTE]

Another pie in the sky prognosticator?


Realistically, does anyone here actually expect the politicians to DO something about the debt? This will be another magicians trick. A loud boom, a blinding flash, and then voila, we will still be in debt over our ears.

I found the most refreshing Veterans Day verbiage this past Sunday to be this 2007 quote by a recent longshot presidential candidate:
[i]
"Cliches about supporting the troops are designed to distract from failed policies, policies promoted by powerful special interests that benefit from war, anything to steer the discussion away from the real reasons the war in Iraq will not end anytime soon."[/i] -- Ron Paul

Mish has a link today to [url=http://globaleconomicanalysis.blogspot.com/2012/11/ron-paul-american-hero-his-farewell.html]Paul's farewell speech[/url] to the U.S. House of Representatives, from which he is retiring after 30 years of service. Good stuf in there.

Continuing in the vein of economic and personal liberty, Paul also had some interesting and non-pandering things to say about allegations about post-Hurricane-Sandy gasoline price gouging in the Northeast:

[url=http://www.ronpaul.com/2012-11-12/ron-paul-abolish-all-price-controls-let-the-free-market-function/]Ron Paul says post-Sandy “price gouging” would’ve helped solve the gas shortage[/url]
[quote]In the wake of Hurricane Sandy, the supply of gasoline was greatly disrupted. Many gas stations were unable to pump gas due to a lack of electricity, thus greatly reducing the supply. At the same time demand for gasoline spiked due to the widespread use of generators. Because gas stations were forbidden from raising their prices to meet the increased demand, miles-long lines developed and stations were forced to start limiting the amount of gasoline that individuals could purchase. New Jersey gas stations began to look like Soviet grocery stores.

Had gas stations been allowed to raise their prices to reflect the increased demand for gasoline, only those most in need of gasoline would have purchased gas, while everyone would have economized on their existing supply. But because prices remained lower than they should have been, no one sought to conserve gas. Low prices signaled that gas was in abundant supply, while reality was exactly the opposite, and only those fortunate enough to be at the front of gas lines were able to purchase gas before it sold out. Not surprisingly, a thriving black market developed, with gas offered for up to $20 per gallon.

With price controls in effect, supply shortages were exacerbated. If prices had been allowed to increase to market levels, the profit opportunity would have brought in new supplies from outside the region. As supplies increased, prices gradually would have decreased as supply and demand returned to equilibrium. But with price controls in effect, what company would want to deal with the hassle of shipping gas to a disaster-stricken area with downed power lines and flooded highways when the same profit could be made elsewhere? So instead of gas shipments flooding into the disaster zones, what little gas supply is left is rapidly sold and consumed.

Governments fail to understand that prices are not just random numbers. Prices perform an important role in providing information, coordinating supply and demand, and enabling economic calculation. When government interferes with the price mechanism, economic calamity ensues. Price controls on gasoline led to the infamous gas lines of the 1970s, yet politicians today repeat those same failed mistakes. Instituting price caps at a below-market price will always lead to shortages. No act of any legislature can reverse the laws of supply and demand.[/quote]


[b]Friday Humor:[/b]

ZeroHedge has a handy-dandy surefire recipe for [url=http://www.zerohedge.com/news/2012-11-16/guest-post-start-your-own-financial-media-channel-template]starting your own financial-media empire[/url], which reduces creation of sizzling MSFM "economic analysis" pieces to simple quasi-randomized lookups in small precomputed "tag lists", such as
[quote]TAG_010
(a) Quantitative easing, (b) Unindicted counterfeiting, (c) Debt-based prosperity, (d) Self-medication

TAG_011
(a) New unemployment claims, (b) The CPI, (c) Manufacturing inventories, (d) Imported plastic gew-gaws

TAG_012
(a) M2, (b) Rate of growth in M2, (c) False-flag operations, (d) Rate of growth in false-flag operations, (e) "Hello Kitty" futures contracts [/quote]

Fun with mixed metaphors, NYT blowhard Middle-East op-ed style:

[url=http://www.rollingstone.com/politics/blogs/taibblog/rewrite-thomas-friedmans-syria-column-win-a-free-hand-grenade-20121114]Rewrite Thomas Friedman's Syria Column, Win a Free Hand Grenade | Matt Taibbi | Rolling Stone[/url]

My belated entry:
[i]
To paraphrase a famed tennis player whose temper was volatile as that of a fractured ethnic-factional hand grenade whose pin has been ripped out by the iron fist of a bad call by a linesperson, "you cannot be Syrious!"
[/i]
The winners of the above impromptu contest are enlaureled by Taibbi in his followup blog piece [url=http://www.rollingstone.com/politics/blogs/taibblog/the-grenade-of-understanding-winners-of-the-write-like-friedman-challenge-20121115]here[/url].


[url=www.mercurynews.com/weird-news/ci_21988207/woman-who-drove-sidewalk-avoid-school-bus-forced]Woman who drove on sidewalk to avoid school bus forced to hold 'idiot' sign[/url]
[quote]CLEVELAND -- A woman caught on camera driving on a sidewalk to pass a Cleveland school bus that was unloading children stood in the cold Tuesday at an intersection holding a sign warning people about idiots.

The sign read: "Only an idiot would drive on the sidewalk to avoid a school bus."

A Cleveland Municipal Court judge ordered 32-year-old Shena Hardin to serve the highly public sentence for one hour Tuesday and Wednesday for the Sept. 11 citation.

She arrived bundled up against the 34-degree cold, puffing a cigarette, wearing head phones and avoiding comment as passing vehicles honked.

Satellite TV trucks were on hand to stream the event live near downtown Cleveland. [/quote]

[QUOTE=ewmayer;318605]

Continuing in the vein of economic and personal liberty, Paul also had some interesting and non-pandering things to say about allegations about post-Hurricane-Sandy gasoline price gouging in the Northeast:

[url=http://www.ronpaul.com/2012-11-12/ron-paul-abolish-all-price-controls-let-the-free-market-function/]Ron Paul says post-Sandy “price gouging” would’ve helped solve the gas shortage[/url]
[/QUOTE]

This stupidity is precisely the reason why I never supported Paul. America is a democracy. Do you think it fair to deprive people of the necessities of life due to a hurricane simply because they cannot afford extortionate prices? Barry ad an excellent post about this.

[url]http://www.ritholtz.com/blog/2012/11/why-does-odd-evengas-rationing-work/[/url]

[QUOTE]There is a contra argument that Markets were not allowed to work — that prices were not allowed to rise in response to supply shortages.

This is a fair argument, but it ignores a key concept that many free market absolutists seemingly miss. The contra argument is that we have decided, as a Democracy, that we do not want to see people priced out of the most basic necessities of life due to emergencies. Certainly, we can allow free markets to raise the price of food and fuel to rise in response to severe shortages; perhaps prices rise so much that only the well off can afford them. But the results of this would very likely be civil unrest, riots and even violence. This is not a very desirable outcome in an ostensibly civilized society.[/QUOTE]

[QUOTE=garo;318630]This stupidity is precisely the reason why I never supported Paul. America is a democracy. Do you think it fair to deprive people of the necessities of life due to a hurricane simply because they cannot afford extortionate prices? Barry ad an excellent post about this.

[url]http://www.ritholtz.com/blog/2012/11/why-does-odd-evengas-rationing-work/[/url][/QUOTE]

Paul's point was that even though everyone could afford the price (mostly), there was hardly any gas to sell at that price, so the end result was the same -- almost no one had gas, unless you paid $20/gallon on the "black market". Not fixing the price would have made the shortage last shorter (as it were), or so the argument goes. (Edit: The difference was that the average person had [i]hope[/i] to buy gas -- even though in the long run they were worse off. The hope, OTOH, prevented mass rioting.)

[QUOTE=garo;318630]This stupidity is precisely the reason why I never supported Paul. America is a democracy. Do you think it fair to deprive people of the necessities of life due to a hurricane simply because they cannot afford extortionate prices? Barry ad an excellent post about this.

[url]http://www.ritholtz.com/blog/2012/11/why-does-odd-evengas-rationing-work/[/url][/QUOTE]

You seem to be confused about the nature of both democracy and free markets, and it's clear you didn't read past the headline. We are not talking about a commodity in which a single entity has an effective market monopoly. Despite the short-term supply interruption caused by the hurricane, there was plenty of gasoline for true necessities, and many places still selling gas, just with a no-longer effectively unlimited supply. If seller X decides he wants to charge $20 per gallon, seller Y is free to undercut him.

Also note, pricing collusion to form an effective monopoly has long been illegal. So assuming those existing laws are being enforced, what business does government have to tell a private seller what he can charge? Especially since operating a gas station - as with many other businesses - may have been a very challenging thing to do in the aftermath of the storm. If I own a gas station and I and my employees have to risk our necks to drive through flooded areas to get to work, you're damn right I'm going to want to be able to charge more than usual.

As to Barry's piece, in every single analogy he uses - banking, mortgage markets, healthcare - government intervention and the resulting price distortions, "unanticipated" consequences and moral hazard are fully at work. (In each case, I shall also offer at least one free-market-compatible alternative):

o Banking: Overly generous FDIC backstops encourage banks to take excessive risks with deposited capital and then to stick the taxpayer with the bill if things blow up. An alternative is actual rigorous enforcement of bank capitalization standards and less-than-infinite leverage limits.

o Mortgages: Government policy to "spur the ownership society" led to ridiculous subsidies for homebuyers and encouraged speculative price bubbles, at the same time that govt allowed insane levels of full-frontal mortgage issuance and securitization fraud to corrupt the entire system, and entities such as RBS and the other TBTF banks to grow to systemically-dangerous-behemoth size. An alternative is to return to private mortgage financing without government backstops, no special tax breaks for home-owers vs renters, and actual rigorous enforcement of bank capitalization standards and less-than-infinite leverage limits for the institutions engaged in financing.

o Healthcare: Government distortions aplenty here. The desire to proved "Healthcare access for all" but to piggyback it atop private medical industry leads to laws like EMTALA, which then requires special government exemptions to allow hospitals to engage in the resulting cost-shifting. Once cost of care thus gets divorced from any semblance of a market-based pricing system, costs shoot through the roof. At the same time, laws are written to benefit the Big Insurance, Sickcare-for-profit and Big Pharma lobbies whose influence on the legislative process continues to go unchecked. Do you think it is an accident of history that the cost of simple procedures such as uncomplicated hospital childbirth has risen tenfold (in inflation-adjusted terms, no less) in the past 50 years? Alternatives: Government-run clinics provide a minimal standard of care - but far from Cadillac care - for all. No special tax breaks or for for-profit medicine, pricing must be transparent (i.e. cost-shifting again made illegal for healthcare, as it is for any other non-specially-designated business). USPTO stops granting "bullshit patents" for non-novel tweaks of the kind which Big Pharma loves to use to extend patent coverage of existing drugs. Buyers are free to go anywhere - including across the border - to buy FDA-approved medicines, if the cost is lower there. Overpricing due to rampant abuse of the tort law system are curtailed, via overhaul of malpractice statutes. Government spurs a massive shift in medical-system emphasis from sickcare to preventive care. The latter includes a reconnection of people with the costs of their medical care, at all levels. If you are morbidly obese, those government clinics will provide emergency gastric-bypass surgery, but that will be accompanied by mandated eating-disorder counseling. Food stamps will only be allowed to be used for specially labeled nutritionally sound staples - no more government-provided Twinkies.

Again, I'm not talking about *unregulated* markets - anti-monopoly and anti-price-collusion laws are the kind of long-term-proven common-sense market regulation I fully support, as long as they are consistently and fairly enforced - I'm talking about this kind of "temporary emergency" (New York financial professionals not being able to has up their SUVs, oh my) interventions which invariably lead to the definition of "emergency" gradually being broadened so as to make incessant government intrusion a "normal" thing.

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

p.s.: I should add that I am not against anti-hoarding restrictions (especially in times of emergency) - those are the kind of non-onerous "free and fair market compatible" regulations which do not discourage sellers from engaging in their business.

Also, based on his rosy take, I wonder if Barry has actually made much use of cellular and internet service outside the U.S. Although I hear China has a really user-friendly internet firewall. No more worries about nasty internet malware there.

[b]How the Twinkie crumbles:[/b]

[Being made of space-age indestructible polymer-based materials, it's unlikely they crumble at all, but poetic license and all that]

ZeroHedge has some interesting notes about the just-announced (after the bakery workers union rejected a proposed "austerity contract"~-- several $billions in unfunded pension liabilities apparently proved an insurmountable hurdle) [url=http://www.zerohedge.com/news/2012-11-16/hostess-liquidation-curious-cast-characters-twinkie-tumbles]liquidation bankruptcy of Hostess Brands[/url].

My personal opinion is that Hostess Brands is the kind of CrapFood-spewing company the world can [url=http://www.bloomberg.com/news/2012-11-15/diabetes-rates-soar-as-18-states-see-diagnosed-cases-double.html]eminently do without[/url]. (The diabetes stats in that latter article are jaw-dropping).

[b]FHA Hemorrhaging Capital:[/b]

Continuing the theme of government intervention in markets, since 2008 no market has more of this than housing. Which trend now has the government-mortgage-backstopper of last resort, the FHA, [url=http://www.zerohedge.com/news/2012-11-15/guest-post-fha-blowing-bad-news-housing-market]on the brink of insolvency[/url]:
[quote]The Federal Housing Administration is expected to report this week it could exhaust its reserves because of rising mortgage delinquencies, according to people familiar with the agency’s finances, a development that could result in the agency needing to draw on taxpayer funding for the first time in its 78-year history.

Together with Fannie and Freddie, federal agencies are backing nearly nine in 10 new mortgages.

The FHA accounted for one third of loans used to purchase homes last year among owner occupants.

Though the agency guarantees fewer mortgages than either Fannie or Freddie, it now has more seriously delinquent loans than either of the mortgage-finance giants. Overall, the FHA insured nearly 739,000 loans that were 90 days or more past due or in foreclosure at the end of September, an increase of more than 100,000 loans from a year ago. That represents about 9.6% of its $1.08 trillion in mortgages guaranteed.[/quote]

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

o [url=http://www.zerohedge.com/news/2012-11-16/anonymous-hacks-greek-finance-ministry-finds-123456-password-37-all-user-accounts]Anonymous Hacks Greek Finance Ministry, Finds "123456" Is Password For 37% Of All User Accounts[/url]

o [url=http://www.zerohedge.com/news/2012-11-07/greek-brothel-sponsor-broke-elementary-school]Greek Brothel To Sponsor Broke Elementary School[/url]

o Moving the country forward, rich-blowhard-insult-tweet-war style: This week's featured pair of twit-pugilists: [url=http://www.zerohedge.com/news/2012-11-05/comic-interlude-mark-cuban-vs-donald-trump]Mark "Maverick" Cuban vs. Donald "Hairpiece" Trump[/url]

Let us just stay on topic here. Odd/Even rationing worked. Why do we have a problem with that?

PS: If you had read much of Barry's blog you would know that he is extremely critical of the state of US infrastructure. And you know what? I have travelled widely enough to know that he is right. Airports and cell phone service and broadband is much better in many countries outside the US.

[url]http://www.chicagotribune.com/business/breaking/chi-judge-hostess-union-agree-to-mediation-20121119,0,2355592.story[/url]


It's not final yet. :) Of course I'm a Little Debbie guy myself. But, I will still be happy if these workers get a reprieve (though I'd be looking for another job if I were them.

Mediation talks between Venture Capital interests and the Baker's Union fell apart already. Perhaps they were unable to reach an agreement on which snack cakes to serve. The Union apparently wanted to eat cake and bake it too, while the Hostess Execs just wanted more bread.

I suspect the union thought the execs were bluffing and tried to call the bluff. Unfortunately, even a blind man could see that this was not a bluff.

The only real hope of a resolution at this point would be for someone to buy the business. If they do, the one guaranteed requirement will be that every employee be terminated and then the company would re-hire whomever they choose.

DarJones

[QUOTE=ewmayer;318650][B]Friday Humor, Saturday Edition:[/B]
...
o [URL="http://www.zerohedge.com/news/2012-11-07/greek-brothel-sponsor-broke-elementary-school"]Greek Brothel To Sponsor Broke Elementary School[/URL]
[/QUOTE]
Wait! how is that even remotely funny when the same line of charity is [URL="http://www.huffingtonpost.com/2012/11/19/lance-gilman_n_2157943.html"]working fine for Nevada government[/URL]?

Latest big news here in Silicon Valley is that which led HP's stock price to plunge to new multiyear lows this week:

[url=www.bloomberg.com/news/2012-11-21/fbi-said-to-be-looking-into-hp-s-allegations-on-autonomy.html]FBI Said to Be Looking Into HP’s Allegations on Autonomy[/url]

If you're wondering "why FBI? Where is the SEC in all this?" - [i]Rolling Stone's[/i] Matt Taibbi has a possible explanation:

[url=www.rollingstone.com/politics/blogs/taibblog/sec-rocked-by-lurid-sex-and-corruption-lawsuit-20121119]SEC Rocked By Lurid Sex-and-Corruption Lawsuit[/url]

And ZH offers an interesting backstory on another legendary SiVal firm which was presented with, and wisely decided to pass on, Autonomy's "value proposition". This one features another legendary (some would unkindly say "notorious") SiVal character, [url=http://en.wikipedia.org/wiki/Frank_Quattrone]Frank Quattrone[/url], who might as well be the poster boy for the DotCom boom&bust funny-money mania:

[url]http://www.zerohedge.com/news/2012-11-21/frank-quattrones-autonomy-pitchbook[/url]

Happy Thanksgiving to our US readers.

[QUOTE=ewmayer;319244]Happy Thanksgiving to our US readers.[/QUOTE]Ah yes, thanks for reminding me.

I believe it's traditional to consume Wild Turkey at Thanksgiving. I must go out and get some.


Paul

[QUOTE=ewmayer;319244]Latest big news here in Silicon Valley is that which led HP's stock price to plunge to new multiyear lows this week:

[URL="http://www.bloomberg.com/news/2012-11-21/fbi-said-to-be-looking-into-hp-s-allegations-on-autonomy.html"]FBI Said to Be Looking Into HP’s Allegations on Autonomy[/URL]

[/QUOTE]

This isn't exactly the first crappy acquisition HP has made. They overpaid. Their auditors didn't do the job. Suck it up and cope! Oh I wish BH had a stake in HP.

[QUOTE=garo;318917]Let us just stay on topic here. Odd/Even rationing worked. Why do we have a problem with that?[/QUOTE]

I never said I had a problem with that - nor did Ron Paul's post, for that matter. As with reasonable per-sale restrictions to prevent hoarding, I have no issue with reasonable emergency measures which are known to be effective at preventing panics. OTOH, a spot-check of supply at a sampling of local gas stations, followed by a suitable per-sale restriction (based on vehicle class - a big rig obviously needs more for the same mileage than a car ... but IMO there should be no special breaks for gas-guzzling passenger vehicles) and most importantly, a public announcement to the effect of "with these measures, most stations will have ample supply for at least X days" might have been just as effective at preventing panic buying, without punishing those who happened to get caught low-fueled on the wrong end of the odd/even day coin flip.

As I stated, my objection is to governments mandating what sellers may charge, in a market where even in such emergencies there is ample room for competition amongst independent sellers.

(If I were cheesehead, I'd be raving about "straw man arguments" by now, and demanding an apology ;).

But talking about government mandated pricing is a strawman and I demand you apologise! Now pretend the empty space below is filled with your entire previous post quoted one line at a time with a one para rejoinder attached to each quote. (Sorry Richard!)






















.

[QUOTE=ewmayer;319354]
(If I were cheesehead, I'd be raving about "straw man arguments" by now, and demanding an apology ;).[/QUOTE]I don't see any straw man argument in what you've posted.

Perhaps your comment is intended to discredit me when I actually do complain about straw man arguments? :-)

[QUOTE=cheesehead;319426]I don't see any straw man argument in what you've posted.

Perhaps your comment is intended to discredit me when I actually do complain about straw man arguments? :-)[/QUOTE]
They're trying their hand at caricature, I think. Caricature is (1) a gross misrepresentation, (2) meant in fun, and (3) a huge compliment to the subject if he or she chooses to see it as such.

Maybe we should start a soapbox thread where we all try to write caricatures of each other. Let's see the sparks fly.:smile:

Okay.

[QUOTE=cheesehead;319433][QUOTE=Brian-E;319428][QUOTE=cheesehead;319426][QUOTE=ewmayer;319354]
(If I were cheesehead, I'd be raving about "straw man arguments" by now, and demanding an apology ;).[/QUOTE]I don't see any straw man argument in what you've posted.

Perhaps your comment is intended to discredit me when I actually do complain about straw man arguments? :-)[/QUOTE]
They're trying their hand at caricature, I think. Caricature is (1) a gross misrepresentation, (2) meant in fun, and (3) a huge compliment to the subject if he or she chooses to see it as such.

Maybe we should start a soapbox thread where we all try to write caricatures of each other. Let's see the sparks fly.:smile:[/QUOTE]

Okay.[/QUOTE]

Well, alright then.

Ah, the bliss of being miles away from the nearest shopping mall on this Most Insane Merchant-Promoted Shopping Day of the year in the U.S. Did I miss any good door-buster riots or mass tramplings? Oh, shoot, looks like [url=http://www.zerohedge.com/news/2012-11-23/phones-sale-stampede-begins]I did indeed miss out on some real fun[/url].

In Europe, France had its debt rating cut last week, and the EU budget talks went as well as could be expected ... meaning they collapsed in acrimony and discord, which dross was spun into PR fool's gold by paid liars like that Van RompyPompy fellow, who subsequently emitted gems of tortured verbiage like this:
[quote]The bilateral talks yesterday and the constructive discussion within the European Council show a sufficient degree of potential convergence to make an agreement possible in the beginning of next year.[/quote]
Vaporous hopium smoke like the above does seem to be quite effective when blown up the arses of the ever-hopeful equity markets, though, as Europe rallied 5% on the week on the news of all this fabulous progress on the "sufficient degree of potential convergence" issue.


ZH has a nice guest post on the rapidly-growing business of [url=http://www.zerohedge.com/news/2012-11-17/guest-post-there-wisdom-crowd]crowdfunding[/url].

Aother ZH post has an interesting commentary on government spending priorities ... I was not aware of the high level of risk for such "solar flare EMP" events: [url=www.zerohedge.com/contributed/2012-11-23/preventing-armageddon-would-cost-only-100-million-…-congress-too-thick-approv]Preventing Armageddon Would Cost Only $100 Million … But Congress Is Too Thick to Approve the Fix[/url]

[url=www.nytimes.com/2012/11/18/world/asia/fraud-trial-begins-in-kabul-bank-scandal.html?ref=world&_r=0]Fraud Trial Begins in Multimillion-Dollar Afghan Bank Scandal[/url]: [i]A major step toward resolving the loss of hundreds of millions of dollars from Kabul Bank began last week with the trial of nearly two dozen people, including the bank’s former chairman and former chief executive, who are accused of being the main architects of a colossal fraud[/i]
[quote] The scandal at Kabul Bank, Afghanistan’s largest private financial institution, has laid bare the crony capitalism and corruption that has thrived here in the past decade. The bank was forced into receivership in 2010 under the weight of nearly $900 million in bad loans and missing funds. With this long-stalled trial, the government is trying to demonstrate to Afghans and international donors that it is able to hold powerful people accountable in corruption cases.

[u]International donors, including the United States, the European Union and others, had demanded that the Afghan government take a series of steps to combat corruption in the aftermath of the collapse of Kabul Bank. One of the most important was to prosecute those who had perpetrated the fraud[/u]. For a year, the International Monetary Fund suspended Afghanistan’s program largely because of the government’s lack of progress in bringing to justice the people behind the bank debacle.[/quote]
Ah, the irony...

[QUOTE=ewmayer;319244]Latest big news here in Silicon Valley is that which led HP's stock price to plunge to new multiyear lows this week:

[URL="http://www.bloomberg.com/news/2012-11-21/fbi-said-to-be-looking-into-hp-s-allegations-on-autonomy.html"]FBI Said to Be Looking Into HP’s Allegations on Autonomy[/URL]
...[/QUOTE]
HPQ stock price instead seems to be recovering instead. Weird news that make you go wtf.

[QUOTE=Batalov;319666]HPQ stock price instead seems to be recovering instead. Weird news that make you go wtf.[/QUOTE]

Nah, that's a typical "dips buying the dips" kind of short-term-oversold bounce, and a very mild one at that. You want to see some real rip-roaring examples of bounces off near-term lows in the tech sector, check out Apple and [strike]Fece[/strike]FaceBook in the past couple of weeks.

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

I trust none of our US readers perished in any unfortunate turkey-deep-frying incidents over the Thanksgiving holiday. My overnight slow-roasting of a 22lb (10kg) bird was a spectacular success, and I have many meals' worth of leftovers (finished divvying up and packing those, most for the freezer, yesterday) as a reward for the effort. The last couple evenings I've been enjoying the giblets in the form of a robust and tasty vegetable-laden turkey stock - had about a gallon of that left as a result of the slow roasting. Good personal-economic value, in other words.

Interesting stat of the day involves [url]http://www.zerohedge.com/news/2012-11-24/its-fat-fat-world-after-all-and-what-means-rest-us#comments]rather less-healthy food choices[/url]:
[quote]Sugar intake from sugar-sweetened drinks is thought to be the largest single caloric food source in the US, approaching 15% of the daily calorific intake in several population groups.[/quote]

Now, it struck me as a tad hypocritical that ZH ran this, because they've been railing against "anti-economic-freedom" measures to ban sugary drinks, such as the one enacted a few months ago by NYC mayor Michael Bloomberg. Indeed, the ZH writers continue with
[quote]Another, even more dramatic health-related recent intervention was that on behalf of Mike Bloomberg and the city of New York banning sugary drinks in 16 oz containers or more.

The problem with government intervention in individual and social level consumption, is that it never works without a proper incentive system. If instead of using negative reinforcement, the government were to use positive reinforcement techniques, and for example offer each American $100/year for every pound kept below the overweight threshold every year, the results would be far more encouraging, and the costs saved in the long run would more than offset initial outlays.

Of course, this being the government, it is absolutely certain that corruption and "unintended side-effects" will intervene, that incentives will be perverted by special interests and lobby groups, and the final outcome would be a far worse one than the base case. [/quote]
I suggest that "banning" can be a highly effective (dis)incentive system, if the ban is difficult to circumvent. I think ZH are tilting at windmills here - sucking down calorie-laden sugar sodas is of no economic benefit to anyone but the companies peddling this stuff, and is likely a net economic negative to the overall economy due to the health problems it contributes to. In other words, this is a case where "economic freedom" runs into public health considerations, and as with smoking (which is also banned in schools and an increasing numbers of public and even private-but-shared places), this means the alleged "freedom" is far from absolute. And unless the alleged "unintended side-effects" include large-scale rioting or switching to hard drugs by the now-sugar-deprived youngsters, I'm having a hard time seeing how any unintended consequences of this particular action could be worse than the original problem.

W.r.to yesterday's note about sugar sodas, I should add that I am OK with diet sodas, although believe there should be limits on amounts of caffeine these contain, especially when sold/served to kids.

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

Todays jaw-dropping stat is [url=http://online.wsj.com/article/SB10001424127887323353204578127374039087636.html?mod=hp_opinion]courtesy of the WSJ[/url]:
[quote]The actual liabilities of the federal government—including Social Security, Medicare, and federal employees' future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. [u]For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure[/u].[/quote]


Reuters has a nice followup on Hurricane Sandy's disruption of NE fuel supplies:

[url=www.reuters.com/article/2012/11/27/us-storm-sandy-harbor-oil-idUSBRE8AQ0FP20121127?feedType=RSS&feedName=domesticNews]Reuters Insight: Sandy gives New York oil supply lesson[/url]
[quote]At 4 p.m. on October 29, as heavy winds battered the East Coast ahead of Superstorm Sandy's landfall, the Coast Guard's regional command center on Staten Island lost power and its hulking backup generators hummed into action.

Commander Linda Sturgis, who oversees emergency prevention at the Port of New York, was buzzed through two thick security doors into the Port's hive-like vessel traffic center, the maritime equivalent of an air traffic control tower. The Port had been bracing for Sandy for days, and a few hours earlier, its Captain had halted all commercial vessel traffic, an emergency lockdown known as Condition Zulu.

Shipping delays during storms are common. What few people could foresee was how Sandy's 16-hour assault on a major oil hub would result in the worst regional fuel supply collapse in decades, delaying disaster relief, triggering panic-buying, and raising questions about energy security in the country's most densely populated area.

The storm's destructive powers were bad enough - knocking out equipment and power at oil terminals and other energy infrastructure, while disrupting shipping for days because of debris in the harbor. But a series of decisions over recent years had also made the region much more vulnerable. The shuttering of regional oil refineries, decisions by companies to keep fuel low stocks because holding extra supply has become expensive or unprofitable, a recent government downsizing of emergency reserves, and the heavy reliance of fuel terminals on a vulnerable electric grid all played into the supply squeeze.[/quote]
Gee, whodathunk low-lying harbor refineries might be vulnerable to storm surges? What a novel idea! Love how the pols are all covering their asses by blaming "climate change", rather than the decades of simple human greed, shortsightedness and stupidity the article describes.

Regarding the post -storm retail situation:
[quote]Three days after Sandy, more than 70 percent of filling stations in New York and New Jersey had no gas for sale, according to Travel group AAA. As temperatures dropped to near freezing, the supply of heating oil was also strained.

"Idle harbor terminals were a main bottleneck," said AAA's Michael Green. "Many had fuel, but it was stuck in storage."

Thousands of fuel truckers were forced to improvise. One national shipper, Mansfield Logistics, diverted trucks for hundreds of miles in every direction, bringing fuel from as far as North Carolina to northeastern customers, some located just a few miles from the harbor's tanks.

The crunch was worsened because many regional filling stations lacked generators and couldn't dispense gasoline.[/quote]
This is precisely what Ron Paul was talking about - for the right price, many companies would be willing to go the extra mile (or extra several hundred) to deliver fuel to hard-hit areas. And it is not infeasible to specially rig fuel trucks - again if there is a monetary incentive to do so - to dispense fuel on-the spot, if needed right on the site of disabled filling stations.

Reader Mathew asks, regarding sugared drinks:

[QUOTE=Mathew]ewmayer ;

Should natural juices count as well? All I see is the soda and a sweetened beverage. Juices are naturally sweet.

Sugars (using 12 fl oz. equivalency)

coke-39g
orange juice- 33g
pineapple juice- 44g

Is there a biological difference between sugar derived from cane/corn syrup and sugars from fruits?

I also note [URL="http://www.cbsnews.com/8301-504763_162-57512246-10391704/sugary-drinks-over-16-ounces-banned-in-new-york-city-board-of-health-votes/"]milkshakes[/URL] are not included in the ban, which I prefer over a soda anyways.[/QUOTE]
Good question - gram-for-gram natural sugars have identical calories to 'artificial' ones such as corn syrup, but my feeling is that carbonated sodas are in a sense designed to disguise the sweetness of the sugar they contain via the dissolved CO2 (= carbonic acid) and added phosphoric acid. In other words, drinking equal volumes of juice and soda, the juice will send a more reliable signal of "sweet intake" via the taste buds to the brain. Natural juices are also 'whole foods' of the kind humanity co-evolved with, which is generally preferable nutritionally: natural balance of micro-nutrients and all that.

Milkshakes ... I expect a real ice cream-based shake is loaded with fat and sugar, and imitations like those sold by fast food chains are likely even worse, but since they don't disguise the calories as sodas do, I expect it's rare for people to drink many in a day. (Even 1 per day on average would pack quite a caloric wallop, however.)

But rather than just give my opinion on the matter, I would be interested to hear others' comments on the issue.

Personally, I should note that sugary drinks are not an issue for me since I get most sweet fruit juice from eating the raw fruits which tends to be self-limiting, only drink diet sodas on the rare occasions that I drink soda, and aside from coffee (lightly sweetened with skim milk) and tea, the only contact I have with sugary beverages is with ones where man's true best friend, hard-working saccharomyces yeasts, have disposed of the sugar in a fashion true to their name.

o Chart of the day (courtesy of ZeroHedge): [url=http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/11-2/Student%20Loan%20Delinquencies.jpg]student loan delinquencies[/url]. Mish has a [url=http://globaleconomicanalysis.blogspot.com/2012/11/student-loan-delinquencies-surpass.html]perspective on these trends[/url].


o [url=www.reuters.com/article/2012/11/28/us-harrisburg-bankruptcy-option-idUSBRE8AR0IN20121128?feedType=RSS&feedName=domesticNews]Harrisburg, Pennsylvania may soon renew bankruptcy threat as ban ends[/url]: [i](Reuters) - Pennsylvania's capital city Harrisburg, neck-deep in more than $340 million debt, is on the verge of getting a powerful negotiating tool with creditors: the threat of bankruptcy.[/i]
[quote]A state ban that prevented Harrisburg from filing for municipal bankruptcy protection is set to expire after November 30.

A year has passed since Harrisburg first tried filing for bankruptcy in October 2011. The city is now deeper in debt and there is no guarantee that it will not seek court protection once again.

"They're still having a problem bridging the revenues and the liabilities they have to pay," said Emanuel Grillo, chair of the financial restructuring group at the law firm Goodwin Procter.

"They haven't gotten bondholders or other constituencies to take a big enough hit," he said. "Waiving the bankruptcy option out there is really an important tool, even if never uses it."[/quote]
Uh, I think you meant "waving", not "waiving". (I do so love these kinds of semi-literates-overrelying-on-spellcheckers fubars ... does that make me a bad person?)

The politics of why the PA legislature voted to ban such muni bankruptcies to begin with is convoluted - article has more on that. Alas, no discussion of the kinds of crooked Jefferson-county-style bond deals that put the city into its current situation. These things don't happen by accident, despite the typical hue and cry about "unforeseen occurrences".

[QUOTE=ewmayer;319768]

This is precisely what Ron Paul was talking about - for the right price, many companies would be willing to go the extra mile (or extra several hundred) to deliver fuel to hard-hit areas. And it is not infeasible to specially rig fuel trucks - again if there is a monetary incentive to do so - to dispense fuel on-the spot, if needed right on the site of disabled filling stations.[/QUOTE]

No doubt that would have had ZH (and you) railing at the government for allowing $10 gas. I mean it's not like you don't complain about the price of gas in the valley.

[I]Edit: Oh and that WSJ article is written by Christopher Cox who was SEC chairman under Bush from 2005 to 2009. Not only did he do a great job getting Bush to restrain spending he also made sure that the securities industry was well regulated and there was no sign of fraud! Uptick rule, short-selling ban etc. etc.

PS: Oh and the largest contributor to that actuarial deficit is Medicare D which was passed under guess who? You got that right, Bush II!
[/I]

[QUOTE=garo;319936]No doubt that would have had ZH (and you) railing at the government for allowing $10 gas. I mean it's not like you don't complain about the price of gas in the valley.[/QUOTE]
I overwhelmingly use public transportation, so the price of gas isn't particularly hitting my pocketbook. Rather, I have a problem with all forms of market-price distortions by central-planner idiots, whether it be skyrocketing [url=http://www.reuters.com/article/2012/11/28/us-usa-farmland-idUSBRE8AR04120121128?feedType=RSS&feedName=domesticNews]prices of crude goods[/url] (despite persistently weak global demand in the case of oil and gasoline) caused by a global race to debase their respective currencies by the world's central banks, or some pandering pol in the US Northeast trying to score cheap populist talking points by railing against "price gouging" in the wake of hurricane Sandy.

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

And speaking of both economic idiocy and pandering pols, France's socialist PM is doing exactly the kind of recession-enhancing stupid stuff he promised to do during his election campaign (the quoted snip is by Mish's blogger-colleague Peter Tenebrarum):

[url=http://globaleconomicanalysis.blogspot.com/2012/11/french-unemployment-highest-in-14-years.html]Hollande Threatens to Nationalize Steel Plants Over Layoffs[/url]: [i]French President Francois Hollande has met the owner of steel giant Arcelor Mittal, after saying he would discuss nationalising one of its plants.[/i]
[quote][i][French minister of economic recovery, happy children, world peace and lots of other good stuff Arnaud][/i] Montebourg makes it sound as though Arcelor-Mittal, a private company, were deputized to the French government to help it fulfill whatever political aims it pursues – as though the government could simply draft private companies to aid it in attaining its socialist goals.

This case is going to have repercussions that go far beyond the fate of the loss-making furnaces and Mittal's continued presence in France. By threatening the company with nationalization if it doesn't comply with the government's wishes, Montebourg is signaling that his government has absolutely no respect for property rights.

If Mittal closes the two furnaces (which as noted above have been idled for many months already), then the people employed there will lose their jobs which is of course unfortunate. However, this is a typical case of the road to hell being paved with good intentions: by threatening the expropriation of Mittal, Montebourg ultimately risks far more jobs than merely those at the two furnaces.

There is a lesson that Mr. Montebourg has yet to absorb: No government can dispense with the laws of economics by decree. It might as well attempt to order the sun not to shine or issue an edict that gravity be abolished.[/quote]

[QUOTE]spellcheckers fubars ... does that make me a bad person?[/QUOTE]

Yes, Ewmayer, you are a BAD person. :)

The sugars in fruit are indeed different from the sugars in most soda. Fruit sugars are made up of varying amounts of fructose and glucose with the usual proportions of 1:1, 3:4, and 3:2 for the two types of sugars. There may also be some amount of sucrose though usually it is broken down in the fruit to the simple sugars. The human body metabolizes glucose directly, it is one of the basic power sources of our cells.

Soda is mostly made with HFCS which is nearly pure fructose. The problem is that we can't metabolize fructose directly, it has to pass through the liver and be converted into a form that the body can use. That conversion has a very simple byproduct, fat. Roughly 1/3 of the fructose we consume is directly metabolized into fat in the liver. This is NOT an option, if you consume fructose, @1/3 of it winds up as fat.

Now if you are looking closely, you will see that fruit also contains fructose, but this is balanced by glucose. The net effect of "tasting" sweet is achieved in fruit by having both sugar forms. This means that for a given amount of "sweetening" we normally get 1/2 as much metabolized fat from eating fruit. Plus, fruit tends to be self-limiting, we can only eat a certain amount before feeling full. Soda on the other hand is deliberately spiked with salt.... which has only one intended effect, it makes us crave more liquids and guess what we have to hand, we have more soda so we drink more. This is why drinking soda is so bad for us. We can consume a huge amount of calories without feeling full, the calories are all from a single form of sugar which just happens to metabolize to @1/3 fat. And guess what, fructose does NOT suppress the appetite which glucose does.

You can all benefit from reviewing this video. At 43 minutes is the part about fructose and at 56:30 is the detail of how much winds up as fat. Don't skip through though, all of it is worth watching.
[url]http://www.youtube.com/watch?v=dBnniua6-oM[/url]

DarJones

I've been reading [i]Uncertainty[/i], David Cassidy's 1992 biography of Werner Heisenberg, which has a section describing the struggles of German scientists during the post-WW1 Weimar-era hyperinflationary collapse of the German Mark. It is interesting to note both the disparities in who bore the brunt of the currency collapse (captains of industry in fact appear to have been greatly enriched by it) and the help which came from various quarters, including none other than American financier Henry Goldman, cofounder of Goldman Sachs:
[quote]...To cover demands for more money, the central Reichsbank merely cranked up the printing presses. Inflation brought windfall profits to German industries, and the politically powerful working class was temporarily content with commensurate wage increases. The less influential middle classes maintained appearances of prosperity as their savings evaporated.

Support for the mark faltered further in January 1923 when the bellicose French, demanding reparations, occupied the Ruhr Valley, the heartland of German industry. With Germany again humiliated and its economy deprived of heavy industry, the mark deflated to practically nothing. By November 15, 1923, the first day of the stabilized Rentenmark (RM), the mark had shriveled to an astonishing one-trillionth of its prewar value. The German people, already traumatized by recent political events, approached panic.
...
[Heisenberg] and his lower echelon academic and postdoctoral colleagues did not fare so well as the older academic generation [ewm: whose already-generous wages were indexed to inflation]. While professorial salaries regularly increased, government funding for apparatus, literature and assistants nearly dried up. Young scientists managed to survive the inflation and the difficult years ahead only because of family support and prompt measures taken by established scientists. Many science professors astutely gathered private funds from embarrassingly rich German industrialists. They also befriended philanthropic foreigners, mainly Americans. Munich chemist Richard Willstätter found financial support through a New York brewer. [Heisenberg mentor Arnold] Sommerfeld could count on the generosity of a Berlin industrialist, and Max Born tapped every source he could find "to feed my students." Fortunately, Felix Klein had already established good relations with German industrialists, one of whom, Carl Still, funneled funds into Born's institute. When one of Born's friends left for the United States after the war to marry an American woman, Born asked him, half in jest, to find a rich American wiling to provide research dollars. Shortly thereafter, Born made contact with New York financier Henry Goldman. Disturbed by the postwar mistreatment of Germany, Goldman, cofounder of Goldman, Sachs and Co., generously contributed to Born's institute. Born paid his private assistants -- Brody, Pauli, and now Heisenberg -- with these funds.[/quote]
That makes Mr. Goldman sound like a pretty righteous fellow - I can't help but wonder what he would have thought of the latter-day purely parasitical incarnation of the firm he founded.

I commented previously [url=http://mersenneforum.org/showpost.php?p=254115&postcount=99]in the 2011 edition of this thread[/url] on the revolving door between financial regulatory agencies and the industry they are supposed to police, by way of posting an article snippet noting that the then-new head of the SEC's enforcement arm, Robert Khuzami, had previously served as general counsel to Deutsche Bank. (Before becoming aware of the DB background I was initially more-hopeful about RK, in part based on misleadingly optimistic comments about him -- which omitted mention of the inherent-conflict-of-interest angle -- [url=http://mersenneforum.org/showpost.php?p=212975&postcount=211]by Barry Ritholtz[/url]). That connection just got a whole lot more actively interesting, as the FT (here by way of ZH) explains:

[url=www.zerohedge.com/news/2012-12-05/bombshell-deutsche-bank-hid-12-billion-losses-avoid-government-bail-out]FT: Deutsche Bank Hid $12 Billion In Losses During Financial Crisis To Avoid A Government Bail-Out[/url]

Yes I had an impression similar to yours. But events over the past couple of years caused me to revise my opinion.

[url=http://www.macrumors.com/2012/12/07/u-s-patent-office-preliminarily-invalidates-apples-steve-jobs-patent-on-the-iphone/]U.S. Patent Office Preliminarily Invalidates Apple's 'Steve Jobs Patent' on the iPhone - Mac Rumors[/url]

Anyone care to make predictions re. AAPL share price come Monday? I predict the usual bad-news-is-good-news schizophrenia we've seen over and over in the "tech darling" names during the past several years: early selloff followed by a wave of dip buying which takes the stock back close to unchanged or even above today's close. Based on the post-iPhone-5 multiweek selldown, though, if the later sale-shopper spree fails to materialize, the shares could go below 500, forcing the NYFED trading desk to step in - since after all, nothing less than the future of democracy is at stake. (And even more importantly, EOY bonuses for the hundreds of hedge funds which have been surfing the AAPL momentum wave in the past 3 years).


[b]Friday Humor:[/b]

Two Greece-related pieces to give us mirth this Friday. Bloomberg has our "you simply cannot make stuff like this up" headline of the week:

[url=www.bloomberg.com/video/greece-to-buy-debt-it-already-owns-to-reach-target-V7kW5hO_SL2ycJQL15g4Tg.html]Greece to Buy Debt It Already Owns to Reach Target[/url]

And based on recent allegations, Greece appears to have a really generous benefits program for the mothers of its top officeholders - probably result of an entirely laudable "family values" attitude on the part of the government:

[url=http://www.zerohedge.com/news/2012-12-03/former-greek-pm-g-paps-89-year-old-mother-said-have-700-million-swiss-bank-account]Former Greek PM G-Pap's 89 Year Old Mother Said To Have $700 Million In Swiss Bank Account[/url]
[quote]There was a time when Swiss bank secrecy was the passion of every tax-challenged oligarch in the world. Then things changed, Obama made it s badge of honor to rat out anyone you know who has a bank account in Zurich or Geneva, lists of previously ultra-secret account holders started "leaking" and from an asset, Swiss bank accounts promptly became a liability to everyone involved. Such as the matriarch of the legendary Papandreou family, former Pasok Greek PM G-Pap's mother, Margaret, also wife of former PM Andreas, who according to The Telegraph has been revealed as having a €550 million ($700 million) Swiss bank account (she will hardly be happy to learn that [url=http://www.zerohedge.com/news/2012-12-03/how-credit-suisse-informs-clients-their-cash-no-longer-welcome]Credit Suisse just instituted a negative interest on CHF deposits[/url]) in the Geneva branch of HSBC. Obviously lots of hard work by M-Pap went into building up that particular nest egg.[/quote]