If you want to understand what happened in Iceland — the whole story of the crash, the banks failing, the recent signs of recovery — start at the prime minister’s office in downtown Reykjavik and continue east for a bit until you ascend a steep bluff overlooking the icy waters of Faxafloi Bay. There you will arrive at a used-car lot. Ask for the owner of this establishment, who is a short, 61-year-old man with extremely thick glasses named Gudfinnur S. Halldorsson — he goes by the name Guffi (pronounced Goofy) — and have him to tell you the story of the Porsche that kept on giving.
During Iceland’s boom years, which lasted from 2003 until 2008, a customer showed up at Guffi’s dealership wanting to buy a Porsche on credit, no money down. Guffi didn’t inquire about the man’s line of work; in fact, he didn’t care if the man paid back the loan — that was the bank’s problem, not his. Guffi sold the Porsche, and the customer drove it for a month or so until the first payment was due. The man had no interest in making the payment, and so Guffi, who always aimed to please, helped the man resell the vehicle for a profit. Guffi did the same thing a month later, and again a month after that; all told, Guffi sold the same car five times in six months, amazingly charging a higher price on each successive sale.
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How Dangerous Is Finland to the Euro?
Will the election of right-wing populists in Finland derail the euro rescue package? A Helsinki veto would indeed be expensive for the rest of the euro zone, particularly for Germany. Experts are also warning that other European countries may follow suit if Finland decides to pull out of the euro bailout.
Across the 17-member euro zone, government heads had a hunch April 17 might not be a very good day for the future of Europe. The strong ballot box performance of the euroskeptic True Finns means it is very likely the party will be part of the next government. It appears that a country long seen as an EU anchor may soon become a source of irritation for Brussels and in capitals across the bloc.
During the election campaign, True Finn party head Timo Soini lashed out repeatedly against the European Union and bailout plans for debt-ridden euro-zone members. Bolstered by an election that saw the party more than quadruple its standing, with 19 percent of the vote, an emboldened Soini remained vocal on Monday, saying it was unacceptable that Finland “must pay for the mistakes of others.” And that “the content of politics must change. We have been too soft on Europe.”
Global capitalism isn’t working for the American middle class. That isn’t a headline from the left-leaning Huffington Post, or a comment on Glenn Beck’s right-wing populist blackboard. It is, instead, the conclusion of a rigorous analysis bearing the imprimatur of the U.S. establishment: the paper’s lead author is Michael Spence, recipient of the Nobel Prize in economic sciences, and it was published by the Council on Foreign Relations.
Spence and his co-author, Sandile Hlatshwayo, examined the changes in the structure of the U.S. economy, particularly employment trends, over the past 20 years. They found that value added per U.S. worker increased sharply during that period – 21 per cent for the economy as a whole, and 44 per cent in the “tradable” sector, which is geek-speak for those businesses integrated into the global economy. But even as productivity soared, wages and job opportunities stagnated.
The take-away is this: Globalization is making U.S. companies more productive, but the benefits are mostly being enjoyed by the C-suite. The middle class, meanwhile, is struggling to find work, and many of the jobs available are poorly paid.
Pro crony-capitalism is different than than pro market.
What I Learned About Natural Gas from Boone Pickens
Here is what Pickens said:
– Global demand for oil is 86-88 million barrels per day. It will be 90 million by the end of the year, due to global growth.
– Global production is 84 million barrels per day. Since production falls short of demand, prices have risen.
– America consumes 20 million barrels of oil per day. We produce 7 million barrels domestically and import the other 13 million barrels. Of the 13 million barrels of imported oil, 5 million come from OPEC – “nations that hate us,” says Pickens.
– The true cost of Middle Eastern oil is over $300 a barrel if you account for U.S. military presence in the Middle East, according to Pickens.
– “Drill baby, drill” – the conservative mantra to drill more oil from the Gulf of Mexico, off the East and West Coast shelves, and the Alaska Natural Wildlife Refuge (ANWR) would produce an extra 2 million barrels a day at best, says Pickens. The would raise America’s domestic production from 7 million to 9 million barrels but still leave America 11 million barrels short each day.
– In ANWR, the bottleneck is the pipeline from Alaska’s north shore. “It would take 30 years to build another pipeline,” says Pickens.
Well worth reading.
Tracking Inflation: The Billion Prices Project
Data collection: our data are collected every day from online retailers using a software that scans the underlying code in public webpages and stores the relevant price information in a database. The resulting dataset contains daily prices on the full array of products sold by these retailers. Our data include information on product descriptions, package sizes, brands, special characteristics (e.g. “organic”), and whether the item is on sale or price control.
Daily Online Price Index Computation: The daily online index is an average of individual price changes across multiple categories and retailers. The index uses a basket of goods that changes over time as products appear and disappear from a retailer’s webpage. It is updated on a daily basis and leveraged to estimate annual and monthly inflation. This index is not designed to forecast official inflation announcements, but to provide real-time information on major inflation trends.
Monthly Inflation: The monthly inflation rate is the percentage change between the average of the daily online price index of the last 30 days and the average of the previous month. For example, on the last day of September 2010, we compared the average of the daily index between September 1st and September 30th to the average of the daily index between August 1st and August 31st. On the last day of each month, the value of our monthly inflation is equivalent to the monthly statistic reported by official offices.
The Constitution, President Obama and Libya
“He’s been more bold than any other president,” said Fein, who said Obama has failed to secure congressional approval for his military action in a much more brazen way than previous administrations.
“If he can wipe out the war powers authorization, why can’t he wipe out Congress’s authority to spend?” asked Fein. ” If we’re going to be a government of laws, and not descend into empire, this is Caesar crossing the Rubicon.”
Fein said a number of Congressional offices have expressed interest in his proposal.
“They actually need to defend constitutional prerogatives,” said Fein. “There’s definitely been interest on the Hill. There’s at least two dozen who have been open to the idea that this is a serious constitutional crisis.”
Lufthansa Flight Attendents Busted for Smuggling 63,000lbs of Euros into Germany
Six Lufthansa employees, including four flight attendants, have been arrested after sneaking in more than 63,000 pounds of out-of-circulation, €1 and €2 coins from China back to Germany over the last four years.
Euro coins have two color tones, gold and silver, and when the German Central Bank takes the coins out of circulation, the two colors (see picture to the left) are separated then sent to China to be melted down into scrap metal.
A wily group in China reassembled the coins rather melting them, then sent them back to Germany with four LH flight attendants serving as “mules.” Because FA’s don’t have baggage weight limits and can typically carry-on their bags and breeze through customs, they became the ideal method of transporting this discarded money. The FAs would then take the coins to the Bundesbank (only the central bank in Germany accepts damaged coins) and turn them in for bills. The bank typically does not count coin deposits under €1000 but will instead weigh the money bags without inspecting the coins. The scheme went off without a hitch for over four years.
Twitter’s Tax Break Lobbying
Twitter is well on its way to getting a tax break in San Francisco after threatening to leave the city for the suburbs.
San Francisco’s Board of Supervisors on Tuesday voted 8 to 3 to preliminarily approve a tax break that could allow Twitter to avoid tens of millions of dollars in taxes. A second vote expected next week would make the legislation official.
As I recounted in an article Monday in the Times, Twitter had said it planned to move out of San Francisco, where it is based, because of the high cost of doing business.
Amazing that Twitter, of all people, get a tax break. much more on tax break lobbying, here.
On Medicare Reform
Eugene Steuerle, a former Treasury official in both Democratic and Republican administrations, says simply, “We have a budget for a declining nation.”
Mr. Steuerle — along with his Urban Institute colleague Stephanie Rennane — has done some of the most careful work comparing Medicare taxes and benefits. They added up all the taxes people at different points on the income spectrum would pay over their working lives and then translated these amounts into a single sum, expressed in today’s dollars. Mr. Steuerle and Ms. Rennane likewise added up the value of Medicare benefits (net of premiums) that men and women could expect to receive.
Their results show that no cohort of Americans, with the possible exception of the very affluent, pays enough Medicare taxes and premiums to cover their costs. The gap is growing over time, too.
Tiësto: Electronic Music’s Superstar
If we needed evidence that electronic dance music is a force in pop culture, last weekend’s Ultra Music Festival held downtown here provided it. Some 150,000 tickets were sold to the three-day event–about equal to the total for last year’s Coachella Music & Arts Festival in the desert town of Indio, Calif., and about twice the number for June’s Bonnaroo Music & Arts Festival in Manchester, Tenn.
Whereas Coachella 2011, next month, will feature Arcade Fire, Kanye West, Kings of Leon and the Strokes as its rock and pop headliners, and Bonnaroo will offer Eminem, Robert Plant & Band of Joy and a reunited Buffalo Springfield (as well as Arcade Fire and the Strokes), the biggest name at Ultra Music–at least to a mainstream audience–was Duran Duran, which was here to promote its new album. But traditional measurements for rock-and-pop success are irrelevant in the electronic-dance culture. Witness Tiësto, the stage name of the Dutch disc jockey, producer and composer Tijs Michiel Verwest, the headliner on Friday, Ultra’s opening night. Though he’s never had a crossover radio hit and his solo albums sell modestly, Tiësto is a major international star, as confirmed by one familiar evaluation: His annual income apparently exceeds $20 million.