Is There Life After Debt?

Sudden Debt:

Fact: The debt crisis is global – and, yes, this includes the so-called creditor nations, such as China. After all, in our fiat currency world it takes a debit in order to create a credit.



The way we got into this mess is well known: the West foolishly (even criminally, if you ask me) gave up its industrial/manufacturing base and the high earned-income jobs it generated, replacing them with services and low value-added jobs. However, it didn’t lower its consuming and spending habits to balance the losses, instead it piled on debt from vendor nations, and constructed Rube Goldberg asset bubble contraptions that attempted to generate “wealth” out of thin air (e.g. real estate, derivative-based bonds, etc.).

History and Evaluation of the Policy Response to the Great Recession: Summers BGP-266M Crisis Economics Syllabus

Larry Summers @ Harvard

Course Overview: This course will examine the American policy response to the recent financial crisis
and associated Great Recession. The objective is to illuminate (i) the changes in macroeconomic thinking necessitated by recent events (ii) the relationship between analytical macroeconomics, finance and policymaking in a political context (iii) lessons of recent experience for public policies directed at preventing crises in the future and responding to them when they come. The lectures will draw on the professional economic literature to the minimum extent necessary to facilitate understanding of the issues involved. The primary focus will be on the process of policy choice and the factors entering into actual policy decisions. Each lecture after the first introductory lecture will cover a different aspect of the policy response to the crisis. Sections will take up relevant analytical economic aspects.

Finally, a Judge Stands up to Wall Street

Matt Taibbi:

Federal judge Jed Rakoff, a former prosecutor with the U.S. Attorney’s office here in New York, is fast becoming a sort of legal hero of our time. He showed that again yesterday when he shat all over the SEC’s latest dirty settlement with serial fraud offender Citigroup, refusing to let the captured regulatory agency sweep yet another case of high-level criminal malfeasance under the rug.

The SEC had brought an action against Citigroup for misleading investors about the way a certain package of mortgage-backed assets had been chosen. The case is very similar to the notorious Abacus case involving Goldman Sachs, in which Goldman allowed short-selling billionaire John Paulson (who was betting against the package) to pick the assets, then told a pair of European banks that the “designed to fail” package they were buying had been put together independently.

This case was similar, but worse. Here, Citi similarly told investors a package of mortgages had been chosen independently, when in fact Citi itself had chosen the stuff and was betting against the whole pile.



This whole transaction actually combined a number of Goldman-style misdeeds, since the bank both lied to investors and also bet against its own product and its own customers. In the deal, Citi made a $160 million profit, while its customers lost $700 million

World power swings back to America

Ambrose Evans-Pritchard:

The American phoenix is slowly rising again. Within five years or so, the US will be well on its way to self-sufficiency in fuel and energy. Manufacturing will have closed the labour gap with China in a clutch of key industries. The current account might even be in surplus.

Assumptions that the Great Republic must inevitably spiral into economic and strategic decline – so like the chatter of the late 1980s, when Japan was in vogue – will seem wildly off the mark by then.
Telegraph readers already know about the “shale gas revolution” that has turned America into the world’s number one producer of natural gas, ahead of Russia.

Less known is that the technology of hydraulic fracturing – breaking rocks with jets of water – will also bring a quantum leap in shale oil supply, mostly from the Bakken fields in North Dakota, Eagle Ford in Texas, and other reserves across the Mid-West.

Let’s gaze upon the corpse of the Fourth Amendment

Fabius Maximus:

Summary: Most of the Bill of Rights has been de facto voided, as Courts sometimes — or often — rely on specious logic to ignore the word’s plain meaning. A few phrases retain their force, giving us the illusion of liberty (eg, we are well-armed sheep). Over time the dead area probably will continue to expand, the arrival of the inevitable again surprising us. Here we look at the corpse of the fourth amendment.
Look, in this place ran Cassius’ dagger through:
See what a rent the envious Casca made:
Through this the well-beloved Brutus stabb’d;
And as he pluck’d his cursed steel away …

Good friends, sweet friends, let me not stir you up
To such a sudden flood of mutiny.
They that have done this deed are honourable:
What private griefs they have, alas, I know not,
That made them do it: they are wise and honourable,
And will, no doubt, with reasons answer you.

On the historic context of institutionalized gathering of personal data

Tom O’Doherty:

As Dediu acknowledges, this in itself is not a new insight — there has been plenty of coverage of privacy controversies at Facebook, Google and other companies. What was interesting, however, was that he linked this to a larger historical context, referring to the process of institutions (state and private) gathering information about individuals over the last few centuries. This reminded me of an interview that Cabinet Magazine conducted with Valentin Groebner in 2006, about the medieval and pre-modern tracking of individuals.

Groebner,? Professor of History at the University of Lucerne, Switzerland, is the author of Who Are You?: Identification, Deception, and Surveillance in Early Modern Europe, and his interview with David Serlin talks about the history of passports, in the context of larger historical surrenderings of privacy in the last two hundred years.

It is possible that the current wave of institutional data-hoarding may in effect be the last. The companies who are leading it are far more efficient than previous authorities — historically, state and church authorities. They are taking the data from people who are apparently far more willing to give it than in previous eras. And they are going to be able to analyse and process personal data far more finely than anyone else ever has. This is not really an alarmist conclusion — although the situation itself is alarming — but simply an acknowledgement of existing reality. Dediu’s comment that “this will become a political question” and that “these things are doomsday issues for some” is interesting in the context of the recent successes of the privacy-advocating Piratenpartei (Pirate Party) in the 2011 Berlin state elections.

Holders of Sovereign Debt



macromon:

Here’s a great chart just released by the International Monetary Fund. Note that almost half — 47 percent – of the US$14.7 trillion U.S. federal government debt is held by the Federal Reserve and the government itself, such as the Social Security trust fund. Add to that the 22 percent foreign official holdings (mainly central banks) and almost 70 percent of the debt of the U.S. government is held by non-market/non-profit oriented investors. Stunning!