RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve

Ambrose Evans-Pritchard:

As recovery starts to stall in the US and Europe with echoes of mid-1931, bond experts are once again dusting off a speech by Ben Bernanke given eight years ago as a freshman governor at the Federal Reserve.

Entitled "Deflation: Making Sure It Doesn’t Happen Here", it is a warfare manual for defeating economic slumps by use of extreme monetary stimulus once interest rates have dropped to zero, and implicitly once governments have spent themselves to near bankruptcy. The speech is best known for its irreverent one-liner: "The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost."

Bernanke began putting the script into action after the credit system seized up in 2008, purchasing $1.75 trillion of Treasuries, mortgage securities, and agency bonds to shore up the US credit system. He stopped far short of the $5 trillion balance sheet quietly pencilled in by the Fed Board as the upper limit for quantitative easing (QE).

Investors basking in Wall Street's V-shaped rally had assumed that this bizarre episode was over. So did the Fed, which has been shutting liquidity spigots one by one. But the latest batch of data is disturbing.

God's Glory: A Gorgeous Sunset

Shot with the fairly impressive iPhone 4 camera.

Three privacy initiatives from the Office of Management and Budget The U.S. government has a new take on federated identity, storage and social networks.

Andy Oram:

Last Friday was a scramble for government security personnel and independent privacy advocates, and should also have stood out to anyone concerned with the growth of online commerce, civic action, and social networking. The U.S. government's Office of Management and Budget, which is the locus of President Obama's drive toward transparency and open government, popped out three major initiatives that combine to potentially change the landscape for online identity and privacy, not only within government but across the Internet.

In this blog I'll summarize the impacts of all three documents, as well as the next steps that I see necessary in these areas. The documents (all distributed as PDFs, which is not the easiest format to draw commentary) are:

• A discussion draft of the National Strategy for Trusted Identities in Cyberspace. Comments can be viewed and entered on a feedback site.
• An OMB Memorandum on Guidance for Online Use of Web Measurement and Customization Technologies.
• An OMB Memorandum on Guidance for Agency Use of Third-Party Websites and Applications.

These documents are not long, but the complexity of the policy areas they address ensure that no blog could cover everything of importance, nor could a single commentator like me provide a well-rounded view. I'll focus on the changes they make to policies that are known to require change, with a "job well done" pat on the back. In highlighting gaps and omissions, I'll deliberately swim around the shoals that others have loudly pointed to already, focusing instead on problems that I believe deserve more attention.

Vintage Trek Bike

Madison Saturday Zeitgeist....

"Forgotten Places" - Native American Mounds at Madison's Elmside Park

iPhone / iPad and iPod users click here.

Worldwide Panorama is collecting panoramic scenes with the theme "Forgotten Places". Nancy suggested Madison's Elmside Park. Here it is.

From Native American Mounds in Madison and Dane County (A Madison Heritage Publication):

At the corner of Lakeland Avenue and Maple Avenue overlooking Lake Monona are two well-preserved Late Woodland animal effigies now referred to as a lynx and a bear. These mounds were originally part of a dense and extensive cluster of mounds that extended along the north shore of Lake Monona. Once part of the Simeon Mills farm, this site was still a favored Winnebago campground as late as the late 19th century. Most of the mound cluster, which included a bird effigy with a reported wingspan of 568 feet, was destroyed by turn-of-the-century residential development. Nearby, the beautiful sculpture, entitled "Let the Great Spirits Soar," was carved by Harry Whitehorse, a Winnebago whose ancestors have lived in the Four Lakes area for hundreds of years. The sculpture was carved from a storm-damaged hackberry tree and honors his Indian ancestors and the effigy mound builders.

Sunset, Clearing Storm: Fitchburg, WI via iPhone 4 Camera

I've never been a fan of cell phone cameras. However, the iPhone 4 camera offers decent quality and some flexibility for the photographer.... Of course, a glorious sunset during a clearing storm helps.

Water, Water: Fitchburg's Dunn's Marsh after the Storms

"The Time We Have is Growing Short"

Paul Volcker:

If we need any further illustration of the potential threats to our own economy from uncontrolled borrowing, we have only to look to the struggle to maintain the common European currency, to rebalance the European economy, and to sustain the political cohesion of Europe. Amounts approaching a trillion dollars have been marshaled from national and international resources to deal with those challenges. Financing can buy time, but not indefinite time. The underlying hard fiscal and economic adjustments are necessary.

As we look to that European experience, let’s consider our own situation. We are not a small country highly vulnerable to speculative attack. In an uncertain world, our currency and credit are well established. But there are serious questions, most immediately about the sustainability of our commitment to growing entitlement programs. Looking only a little further ahead, there are even larger questions of critical importance for those of less advanced age than I. The need to achieve a consensus for effective action against global warming, for energy independence, and for protecting the environment is not going to go away. Are we really prepared to meet those problems, and the related fiscal implications? If not, today’s concerns may soon become tomorrow’s existential crises.

I referred at the start of these remarks to my sense five years ago of intractable problems, resisting solutions. Little has happened to allay my concerns. But, of course, it is not true that our economic problems are intractable beyond our ability to react, to make the necessary adjustments to more fully realize the enormous potential for improving our well-being. Permit me a note of optimism.

A few days ago, I spent a little time in Ireland. It’s a small country, with few resources and, to put it mildly, a troubled history. In the last twenty years, it took a great leap forward, escaping from its economic lethargy and its internal conflicts. Responding to the potential of free and open markets and the stable European currency, standards of living have bounded higher, close to the general European level. Instead of emigration, there has been an influx of workers from abroad.

Strolling Through 19th Century London Today

Brian Barrett:

Augmented reality might be the future, but my favorite application of it yet transports you far into past. StreetMuseum—an iPhone app from the Museum of London—overlays four hundred years of historic images on today's city streets.

StreetMuseum makes creative use of Google Maps and geo-tagging to show users how London used to look. You can use it to check out pictures and info about nearby historic locations, which is has more of a straightforward walking tour feel. But the fun starts when you're actually standing in front of a location in the database. That's when the AR "3D view" kicks in, with views that may look something like this:

Happy Father's Day! Brunch at Lake Mills' Water House Foods

My father has been a fabulous mentor, friend and inspiration. Life is far from linear and he has always provided sage advice and offered me any number of useful opportunities over the years. I am thankful!

Isthmus recently reviewed Lake Mills' Water House Foods. Today's brunch was interesting, good and just right. It was also priced very attractively. Highly recommended.

Holland Tunnel

Madison Farmer's Market Bounty

A beautiful day after a rainy/stormy week. Much to be thankful for.

Incapable of Rational Thought

Ed Wallace:

It started with an email sent to the Chevrolet employees at their Detroit headquarters and warned them not to use the word Chevy in lieu of the far more formal Chevrolet. GM PR people added that there was a plastic jar put into the hallway there so that each time someone heard another use the now "forbidden" word, they would deposit money as a personal penance. This decision, they said, was simply protecting the brand image of Chevrolet, much the way Coke or Apple protected its image. The memo was signed by the President of Chevrolet and GM's Vice President for Marketing.

Apparently at Ed Whitacre's new GM, morons have retaken the institution.

Are they not aware that "Chevy" has been an affectionate nickname for Chevrolet for at least 80 years and is not likely to go away? Did these executives not know that "Coke" is to "Coca-Cola" what "Chevy" is to "Chevrolet"?

People don't call their computers "Apple" -- "Mac" being to "Macintosh" what "Chevy" is to "Chevrolet" -- and certainly nobody calls anything "my Apple iPod."

THE VELLUVIAL MATRIX

Atul Gawande:

Half a century ago, medicine was neither costly nor effective. Since then, however, science has combatted our ignorance. It has enumerated and identified, according to the international disease-classification system, more than 13,600 diagnoses—13,600 different ways our bodies can fail. And for each one we’ve discovered beneficial remedies—remedies that can reduce suffering, extend lives, and sometimes stop a disease altogether. But those remedies now include more than six thousand drugs and four thousand medical and surgical procedures. Our job in medicine is to make sure that all of this capability is deployed, town by town, in the right way at the right time, without harm or waste of resources, for every person alive. And we’re struggling. There is no industry in the world with 13,600 different service lines to deliver.

It should be no wonder that you have not mastered the understanding of them all. No one ever will. That’s why we as doctors and scientists have become ever more finely specialized. If I can’t handle 13,600 diagnoses, well, maybe there are fifty that I can handle—or just one that I might focus on in my research. The result, however, is that we find ourselves to be specialists, worried almost exclusively about our particular niche, and not the larger question of whether we as a group are making the whole system of care better for people. I think we were fooled by penicillin. When penicillin was discovered, in 1929, it suggested that treatment of disease could be simple—an injection that could miraculously cure a breathtaking range of infectious diseases. Maybe there’d be an injection for cancer and another one for heart disease. It made us believe that discovery was the only hard part. Execution would be easy.

America’s Car-Mart: Bentonville’s Secret Sauce Makers

The Financial Investigator: Most every day at 802 Southeast Plaza Avenue in Bentonville, Arkansas appears to be a pretty good one.

That’s because that address houses the headquarters of Americas Car-Mart, an auto retailer that has found the sweet spot, the intersection where a corporation’s business model meets consumer demand and the net income flows like cool, clear water.

Focusing exclusively on the sub-prime auto-buyer, their clean and efficiently-organized used-car lots throughout the south-central and southwest regions offer a stark contrast to the traditionally dodgy experience of buying a used-car; no one at any Americas Car-Mart locale is likely to be mistaken for the Kurt Russell character in Used Cars. The staff is friendly and well-turned out, there is a wide variety of cars, trucks and vans to choose from, the business offices are clean and air-conditioned and, perhaps best of all, the word “no” just doesn’t appear to be used all that often.

From an analytical standpoint, the business model appears to be simplicity itself.

Madison Farmer's Market Photos

Wall Street's War

Matt Taibbi:

Congress looked serious about finance reform – until America's biggest banks unleashed an army of 2,000 paid lobbyists.

t's early May in Washington, and something very weird is in the air. As Chris Dodd, Harry Reid and the rest of the compulsive dealmakers in the Senate barrel toward the finish line of the Restoring American Financial Stability Act – the massive, year-in-the-making effort to clean up the Wall Street crime swamp – word starts to spread on Capitol Hill that somebody forgot to kill the important reforms in the bill. As of the first week in May, the legislation still contains aggressive measures that could cost once- indomitable behemoths like Goldman Sachs and JP Morgan Chase tens of billions of dollars. Somehow, the bill has escaped the usual Senate-whorehouse orgy of mutual back-scratching, fine-print compromises and freeway-wide loopholes that screw any chance of meaningful change.

The real shocker is a thing known among Senate insiders as "716." This section of an amendment would force America's banking giants to either forgo their access to the public teat they receive through the Federal Reserve's discount window, or give up the insanely risky, casino-style bets they've been making on derivatives. That means no more pawning off predatory interest-rate swaps on suckers in Greece, no more gathering balls of subprime shit into incomprehensible debt deals, no more getting idiot bookies like AIG to wrap the crappy mortgages in phony insurance. In short, 716 would take a chain saw to one of Wall Street's most lucrative profit centers: Five of America's biggest banks (Goldman, JP Morgan, Bank of America, Morgan Stanley and Citigroup) raked in some $30 billion in over-the-counter derivatives last year. By some estimates, more than half of JP Morgan's trading revenue between 2006 and 2008 came from such derivatives. If 716 goes through, it would be a veritable Hiroshima to the era of greed.

Vintage VW Bus Signage

Delicious Industries:

Group cites study in push for Google antitrust case

Bloomberg:

Consumer Watchdog continues to push its case that Google Inc.'s behavior necessitates antitrust scrutiny, releasing a report that alleges that the company is abusing its dominance in online search to direct users to its own services.

The study cites online traffic data that the Santa Monica group claims show the Mountain View Internet giant seized large portions of market share in areas like online maps, video and comparison shopping after its search engine began highlighting links to its products in results.

Google called the report's methodology and premise flawed and said its practices are designed to benefit users.

Ukraine Agriculture: Investment climate will determine yield

:

Amid all the doom and gloom, one sector in the country’s economy has a bright future and promises high yields.

Despite a deep recession that sent gross domestic product plunging 15 per cent last year, some budding domestic agribusinesses reported double-digit growth.

Agriculture was one of the few economic sectors to grow, albeit a small 0.2 per cent rise.

But to see the real potential, one must look further ahead. Global demand for food is expected to surge in coming decades. And Ukraine is well positioned to benefit.

With its rich black soil, favourable climate and proximity to markets, experts say the country could go far beyond regaining its position as the breadbasket of Europe.

“Ukraine is already among the top five grain exporters in the world,” says Andriy Yarmak, an agribusiness expert. “With investment, it could double its recent annual harvests and “become one of the top exporters of meat in about 10-15 years”.