The taxi driver to Beirut airport tells me that yom al-qiyama (the day of judgment) is approaching. There will be a big explosion soon -- a very big explosion. The revolutions sweeping the Arab World are not good. Islamic parties will come to power everywhere. There will be no more Christians left in the Middle East. Believe me, believe me, he insists. In anticipation, he will make the Hajj to Mecca this year, inshallah. I tell him that I am traveling to Iraq as a tourist. The look he gives me in the rear view mirror says it all: He thinks I am crazy.I am heading back to Iraq nine months after I left my job as Political Advisor to the Commanding General of U.S. Forces Iraq. Earlier this year, a Sheikh emailed me from his iPad, "Miss Emma we miss you. You must come visit us as a guest. You will stay with me. And you will have no power!" I am excited and nervous. The plane is about a third full. I am the only foreigner. I look around at my fellow passengers. I wonder who they are and whether they bear a grudge for something we might have done.
The flight is one and a half hours long. I read and doze. As we approach Iraq, I look out of the window. The sky is full of sand and visibility is poor. But I can make out the Euphrates below. Land of the two rivers, I am coming back.
I do not have an Iraqi visa. Visas issued in Iraqi Embassies abroad are not recognized by Baghdad airport. I have a letter from an Iraqi General in the Ministry of Interior, complete with a signature and stamp. In the airport, I present my passport and letter, fill out a form, pay $80, and receive a visa within 15 minutes. I collect my bag. I am through. I want to reach down and touch the ground, this land that has soaked up so much blood over the years -- ours and theirs.
Doctors treating the poor in the US are braced for significant reductions to their services amid increased pressure from both the Obama administration and Republicans for deep cuts in health spending.Twenty-nine Republican governors have called for greater flexibility in how states administer Medicaid programmes for the poor, a move which coincides with the Obama administration's withdrawal of stimulus funds used to pay for treatment.
Nearly 49m people in the US, or one in six Americans, were covered by Medicaid in 2009. The figure is thought to be higher today.
The federal government increased its subsidies to the states under the stimulus programme, spending $2.68 for every dollar a state spent on Medicaid, nearly twice as much as before the stimulus.
All historians encounter them, at some point in their careers: Vast troves of data that are undeniably useful to history--but too complex to make narratively interesting. For Stanford's Richard White, an American historian, these were railroad freight tables. The reams of paper held a story about America, he knew. It just seemed impossible to tell it.Impossible to tell in a traditional way, that is. White is the director of the Stanford University Spatial History Project, an interdisciplinary lab at the university that produces "creative visual analysis to further research in the field of history." (The images in this post are taken from the project's many visualizations.) Recent announcements on the project site announce "source data now available" (openness is one of the project's tenets) on such topics as "Mapping Rio," "Land Speculation in Fresno County: 1860-1891," and "When the Loss of a Finger is Considered a 'Minor' Injury."
This is usually a slow time of the year for farm sales. It's past prime planting season. Yet, Sam Kain, Des Moines area manager for land sales at Farmers National, is busy. He has 3 auctions this week. Most of the 30 or so bidders who show up will be farmers. But an increasing number of people buying land these days have no intention of planting seeds, at least not themselves. They are investors and a growing number of them are getting interested in farmland.Just how hot is American farmland? By some accounts the value of farmland is up 20% this year alone. That's better than stocks or gold. During the past two decades, owning farmland would have produced an annual return of nearly 11%, according to Hancock Agricultural Investment Group. And that covers a time period when tech stocks boomed and crashed, and housing boomed and crashed. So at a time when investors are still looking for safety, farmland is becoming the "it" investment.
If there is one most frightening thing that war always exposes, even if one is on the winning side, it's weakness in the supply logistics. While most never consider it, official policy often changes during a war because supplies that are critical to the war effort seem in danger of being disrupted. Such jeopardy, moreover, forces the accountants, economists and politicians waging the conflict to start thinking about how the world will be changed once the fighting has ended.Few today appreciate the fact that our foreign policy, particularly as it is tied to the Middle East, came about because of just such concerns in the first years of the Second World War. As one might expect, that official policy was based on real fears that America would one day run out of oil.
"The European War"
It was the summer of 1941 and the State Department had requested that the White House include Saudi Arabia in our Lend Lease program. It wasn't because the Saudis were going to become a direct ally against the European Axis Powers, but because we were about to embargo U.S. oil shipments to Japan. Many believed - correctly, as it turned out - that this would probably lead to hostilities with Japan that would draw us into the war.Standard Oil of California, which had been drilling for oil in Bahrain for over a decade, now had oil concessions granted by King ibn Saudi. The first six wells Standard drilled into the Arabian desert were nothing to write home about, but when Well No. 7 came in on March 4, 1938, the engineers and wildcatters all knew that Saudi Arabia was going to be an oil bonanza.
Yet on July 18, 1941, Roosevelt refused the request for Lend Lease for Saudi Arabia. He saw no immediate benefit to diverting U.S. dollars overseas simply because Standard had oil concessions there. In any case, the outbreak of the European War in 1939 had reduced oil production in the Kingdom to an insignificant volume -- a trickle, considering that American oil amounted to 60 percent of the world's crude at the time. Instead Roosevelt asked Federal Loan Administrator Jesse Jones to look into the possibility of having England deal with the Saudi King's pressing needs.
A reader asked me to write tonight about the Health Information Technology for Economic and Clinical Health Act, which is about as far from something I would like to write about as I can imagine, but this is a full service blog so what the heck. The idea behind the law is laudable -- standardized and accessible electronic health records to allow any doctor to know what they need to know in order to treat you. There's even money to pay for it -- $30 billion from the 2009 economic stimulus that you'd think would have been spent back in 2009, right? Silly us. Now here's the problem: we're going to go through that $30 billion and end up with nothing useful. There has to be a better way. And I'm going to tell you what it is.
But first a word from my reader:
The lowest point of the US occupation of Iraq was about five years ago. American forces had no effective strategy in the face of a street-level civil war and a particularly vicious insurgent group, al-Qaeda in Iraq. At Haditha, frightened and frustrated marines had killed 24 civilians. At Samarra, the Golden Dome mosque had been destroyed - a potent symbol of conflict between Shia and Sunni Muslims. Donald Rumsfeld, then defence secretary, appeared to be in an advanced state of denial, breezily waving away good advice, and in a notorious press conference shortly after the atrocity at Haditha, refusing to use the word "insurgent", or to let the chairman of the Joint Chiefs of Staff use it either. The US strategy was failing and its leadership was determined not to change direction. It was a case study in organisational dysfunction.Yet by 2008, the situation in Iraq had improved radically. Al-Qaeda in Iraq was in retreat, and the number of attacks, American and Iraqi deaths had fallen dramatically. Although the success remains fragile and there were other factors involved, a complete transformation of US military strategy deserves much credit.
How did it happen and what are the lessons for other organisations that need to turn around? The easy answer is that the solution was a change of leadership. Thanks to behind-the-scenes campaigning and a drubbing in the midterm elections for President George W. Bush, Mr Rumsfeld was replaced, and General David Petraeus was put in charge of the war in Iraq.
Source: Grant's Interest Rate Observer, 5/20/2011 edition. Worth considering for financial & risk planning.
Related: Britannica: Central Banks and currency.
Basell III details: Clusty.com and Blekko.
The former vice-chairman of the Federal Reserve has said he "deeply regretted" the pain caused to millions of people around the world from the financial crisis, admitting that "the cops weren't on the beat".Don Kohn's apology for the actions of Federal Reserve in the run-up to the financial and economic crisis goes significantly further than the limited responsibility taken by his former boss, Alan Greenspan.
Speaking to British MPs at a confirmation hearing on Tuesday, Mr Kohn nevertheless said his experience would be valuable for the Bank of England, where he has been appointed to a new committee with powers to guide UK financial stability.
"I believe I will not make the same mistake twice," he said.
Mr Kohn has been appointed to the Bank's new Financial Policy Committee, which will soon have powers to change system-wide UK financial regulations and even limit borrowing by households and companies if it thinks there are threats to financial stability.
Having been a strong advocate of the Greenspan doctrine not to burst asset bubbles but to mop up any mess after a crash, Mr Kohn recanted much of his previous view in front of MPs. He said he had "learnt quite a few lessons - unfortunately" from the financial crisis, including that people in markets can get excessively relaxed about risk, that risks are not distributed evenly throughout the financial system, that incentives matter even more than he thought and transparency is more important than he thought.
A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges.They weren't murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.
Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial.
This article appears in the May 26, 2011 issue of Rolling Stone. The issue is available now on newsstands and will appear in the online archive May 13.
The great and powerful Oz of Wall Street was not the only target of Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, the 650-page report just released by the Senate Subcommittee on Investigations, chaired by Democrat Carl Levin of Michigan, alongside Republican Tom Coburn of Oklahoma. Their unusually scathing bipartisan report also includes case studies of Washington Mutual and Deutsche Bank, providing a panoramic portrait of a bubble era that produced the most destructive crime spree in our history -- "a million fraud cases a year" is how one former regulator puts it. But the mountain of evidence collected against Goldman by Levin's small, 15-desk office of investigators -- details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department -- stands as the most important symbol of Wall Street's aristocratic impunity and prosecutorial immunity produced since the crash of 2008.
"What is so great about our bloated federal government that when a libertarian threatens to become a senator, otherwise rational and mostly liberal pundits start frothing at the mouth?" the old New Left columnist Robert Scheer wrote at Truthdig. "What Rand Paul thinks about the Civil Rights Act, passed 46 years ago, hardly seems the most pressing issue of social justice before us. It's a done deal that he clearly accepts. Yet Paul's questioning the wisdom of a banking bailout that rewards those who shamelessly exploited the poor and vulnerable, many of them racial minorities, is right on target. So too questioning the enormous cost of wars that as he dared point out are conducted in violation of our Constitution and that, I would add, though he doesn't, prevent us from adequately funding needed social programs."The dead-enders of the Beltway left, however, continued to treat Paul like a mental patient. "By nominating a lunatic," Center for American Politics blogger Matthew Yglesias wrote after Paul's primary victory, "Republicans have suddenly taken what should be a hopeless Senate race and turned it into something Democrats can win. At the same time, by nominating a lunatic, Republicans have suddenly raised the odds that a lunatic will represent Kentucky in the United States Senate." Nor was this sentiment confined to the left. "Rand Paul's victory in the Kentucky Republican primary is obviously a depressing event for those who support strong national defense and rational conservative politics," former George W. Bush speechwriter David Frum wrote at the time. "How is it that the GOP has lost its antibodies against a candidate like Rand Paul?"
Paul parries these attacks with a bemused but direct engagement; you can see he thinks he's going to win a long-overdue David vs. Goliath argument. A good portion of his book is spent examining and decrying how the Republican Party became "tainted by neoconservative ideology," mistaking "national greatness" for a willingness to intervene willy-nilly into the affairs of foreign countries, while tolerating big spending projects at home. "The Tea Party," Paul claims, "is now a threat to the old Republican guard precisely because its stated principles prevent it from being brought into the neoconservative fold."
Despite awaiting extradition to Sweden on sexual assault charges, Wikileaks founder Julian Assange is still the subject of much media interest.Russia Today (RT) interviewed Assange, getting his viewpoint on political unrest in Egypt and Libya, particularly probing what the Wikileaks founder makes of social media's roles in the recent revolutions in both countries. In his interview, Assange focuses particularly on Facebook calling it the "most appalling spy machine that has ever been invented".
Until this week, only one topic was off-limits for questions to Warren Buffett at Saturday's annual gathering of Berkshire Hathaway shareholders in Omaha: how serious is the Dave Sokol affair?On Wednesday, however, the company issued an 18-page report from its audit committee about the former star executive's trading in shares in Lubrizol, a chemicals group later bought by Berkshire, and declared open season for all questions to Mr Buffett.
Here are my seven:
1. How serious is the Dave Sokol affair?
You are the world's most famous long-term investor. Recently, Berkshire's shares have lagged behind the S&P 500, but your record of outperformance over more than four decades speaks for itself. Even big, conservative bets, such as the 2009 investment in Burlington Northern Santa Fe railway, have been well timed. But Mr Sokol was a frontrunner to succeed you as chief executive. You lauded him regularly in your annual letter to shareholders. His abrupt resignation and the circumstances surrounding it seem to suggest that this is more than just a blip.
2. Do you love some of your managers too much?
IPlease respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/2fb4e250-6bc8-11e0-93f8-00144feab49a.html#ixzz1KJNrz2L0f you were going to spend $2bn to improve the world, where would you put it? Forty-odd years ago, Ewing Marion Kauffman, a self-made billionaire from Missouri, was faced with just that choice. He took a rather unusual decision. Instead of using his self-made billions to battle homelessness or help the poor, he decided to chase the Great American dream. More specifically, he founded an institute, which takes his name, in Kansas City, to promote entrepreneurs and the entrepreneurial ideal. These days the Kauffman Foundation is one of the largest private foundations in America, topped only by groups such as the Ford Foundation or the giant Bill and Melinda Gates charity.
When I first encountered the Kauffman Foundation - which is barely known outside the US - I must admit I found the whole endeavour a little odd, if not ironic. After all, the usual image of entrepreneurs is that they go forth and boldly strike out on their own, without any paternalistic aid. And America, perhaps more than anywhere else, is supposed to epitomise the entrepreneurial dream; indeed, it is one thing that makes it so attractive.
No matter how many of his Fed presidents claim they are not to blame for the high price of oil, the real problem starts with Ben Bernanke. The fact is that when you flood the market with far too much liquidity and at virtually no interest, funny things happen in commodities and equities. It was true in the 1920s, it was true in the last decade, and it's still true today.Richard Fisher, president of the Dallas Federal Reserve, spoke in Germany in late March. Reuters quoted him as saying, "We are seeing speculative activity that may be exacerbating price rises in commodities such as oil." He added that he was seeing the signs of the same speculative trading that fueled the first financial meltdown reappearing.
Here Fisher is in good company. Kansas City Fed President Thomas Hoening, who has been a vocal critic of the current Fed policy of zero interest and high liquidity, has suggested that markets don't function correctly under those circumstances. And David Stockman, Ronald Reagan's Budget Director, recently wrote a scathing article for MarketWatch, titled "Federal Reserve's Path of Destruction," in which he criticizes current Fed policy even more pointedly. Stockman wrote, "This destruction is, namely, the exploitation of middle class savers; the current severe food and energy squeeze on lower income households ... and the next round of bursting bubbles building up among the risk asset classes."
Are you ashamed that you find Facebook boring? Are you angst-ridden by your weak social-networking skills? Do you look with envy on those whose friend-count dwarfs your own? Buck up, my friend. The traits you consider signs of failure may actually be marks of intellectual vigor, according to a new study appearing in the May issue of Computers in Human Behavior.The study, by Bu Zhong and Marie Hardin at Penn State and Tao Sun at the University of Vermont, is one of the first to examine the personalities of social networkers. The researchers looked in particular at connections between social-network use and the personality trait that psychologists refer to as "need for cognition," or NFC. NFC, as Professor Zhong explained in an email to me, "is a recognized indicator for deep or shallow thinking." People who like to challenge their minds have high NFC, while those who avoid deep thinking have low NFC. Whereas, according to the authors, "high NFC individuals possess an intrinsic motivation to think, having a natural motivation to seek knowledge," those with low NFC don't like to grapple with complexity and tend to content themselves with superficial assessments, particularly when faced with difficult intellectual challenges.
The researchers surveyed 436 college students during 2010. Each participant completed a standard psychological assessment measuring NFC as well as a questionnaire measuring social network use. (Given what we know about college students' social networking in 2010, it can be assumed that the bulk of the activity consisted of Facebook use.) The study revealed a significant negative correlation between social network site (SNS) activity and NFC scores. "The key finding," the authors write, "is that NFC played an important role in SNS use. Specifically, high NFC individuals tended to use SNS less often than low NFC people, suggesting that effortful thinking may be associated with less social networking among young people." Moreover, "high NFC participants were significantly less likely to add new friends to their SNS accounts than low or medium NFC individuals."
To put it in layman's terms, the study suggests that if you want to be a big success on Facebook, it helps to be a dullard.
Al Jazeera's aggressive expansion into cyberspace hopes to empower a new generation of newsmakers, impact the American news market, and capture the attention of young cable cutters.Fresh off the wild success of Internet-fueled Middle-East revolution stories, Al Jazeera English today is launching the online component to its forthcoming social media-centered news program, The Stream. It's the most aggressive integration of social media into a live news program to date. And Al Jazeera says it wants to capture a new generation of cable "cord cutters," push the limits of so-called "citizen journalism," and inch into American media territory.
A social storytelling service powers the editorially curated content, which is complimented by community commenting before, during, and after the anchored news show. It's scheduled to start airing May 2nd.
America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we're broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year's retirees from the IRS, the SEC and the Department of Energy.Why Isn't Wall Street in Jail?
Most Americans know about that budget. What they don't know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the "official" budget in size -- a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.
Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the "other" budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."
Obama adds fuel to confusion but no resolution, Mohamed El-Erian:
A friend and former colleague of mine, Paul McCulley, once made the distinction between those who were "responsibly irresponsible" and those who were "irresponsibly irresponsible". The two notions explain why more unsatisfactory last-minute policy compromises are now likely, despite President Barack Obama's impressive speech on how America must move forward to tackle its debt ceiling, and its wider problem of budgetary reform.The radical right and the US state by Martin Wolf:Mr Obama proposed cutting $4,000bn from deficits over the next 12 years, reducing government outlays to Medicare and Medicaid healthcare programmes, and even considered tax increases. His speech therefore provides an important opportunity to advance this debate, but a much broader context is still needed if it is to succeed in overcoming both domestic political stalemates and growing concerns abroad.
Back in the final quarter of 2008 and the beginning of 2009, it was right for the US to behave responsibly irresponsible. At that moment every available part of the public sector balance sheet, from the Federal Reserve's to the Federal budget, had to be used to avoid an economic depression. And it worked.
What does the rise of libertarianism portend for the future of the US? This is not a question of interest to Americans alone. It matters almost as much to the rest of the world. A part of the answer came with the publication of a fiscal plan, entitled "Path to Prosperity", by Paul Ryan, Republican chairman of the house budget committee. The conclusion I draw is the opposite of its author's: a higher tax burden is coming. But that leads to another conclusion: much conflict lies ahead, with huge implications for politics, federal finance and the US ability to play its historic role.An analysis of the Ryan plan by the Congressional Budget Office makes the point. Its "extended-baseline scenario" assumes that current law remains unchanged. Under that assumption, revenue would rise from 15 per cent of gross domestic product to 21 per cent in 2022 and on to 26 per cent in 2050. Spending would rise substantially, too, from 23¾ per cent of GDP in 2010 to 30¼ per cent in 2050. As a result, the deficit would fall from today's levels while debt held by the public would rise to 90 per cent of GDP in 2050.
As the CBO makes plain, this is an optimistic scenario. Current law includes, most notably, the assumption that the 2001 and 2003 tax cuts will expire, as legislated. Together with the impact of fiscal drag from economic growth and inflation, this generates the rising share of revenue in GDP. On the side of spending, the share of social security in GDP rises modestly, from 4¾ per cent of GDP in 2010 to 6 per cent in 2050. The share of all other spending (including defence), apart from that on health, is assumed to fall to close to its long-run average of 8 per cent of GDP. But health spending explodes, from 5½ per cent of GDP in 2010 to 12¼ in 2050.
Newspaper chain Lee Enterprises Inc. is on the verge of saving itself from bankruptcy--and many of its debt holders are livid.Lee owns half of Capital Newspapers, publisher of the Wisconsin State Journal.Lee, weighed down by about $1 billion of debt, has long been high on the list of potential bankruptcies. But thanks to the roaring market for debt of risky companies, Lee is preparing to sell junk bonds that would enable it to pay off its obligations and give it a new shot at survival.
But what is good news for the company has thwarted the plans of a flock of "vulture" investors--Monarch Alternative Capital, Alden Global Capital, Marblegate Asset Management and a unit of Goldman Sachs Group Inc.--which have been buying Lee's loans. The group had been betting the company would default, and that they could turn their holdings into an ownership stake, giving them access to the company's assets, which include St. Louis Post Dispatch and the Arizona Daily Star newspapers.
.....
Lee incurred much of its debt in 2005 when it paid top-dollar to buy Pulitzer Inc., a chain of 14 newspapers including the St. Louis Post-Dispatch. The combined company would have been a particularly valued prize because, unlike many of the other publishers that went bankrupt in recent years, the company generates over $100 million of free cash flow despite its debt load. The publisher's focus--running small and midsize papers and keeping a rein on costs--has insulated it from the worst of the decline in subscriptions and advertising affecting newspapers in metropolitan markets.
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.
Food riots, deposed Middle Eastern despots and now this? Last week, a Texas man brandishing an assault rifle was involved in a three-hour shoot-out with police and had to be subdued with tear gas after ordering seven Beefy Crunch Burritos at a Taco Bell drive-through and being informed that their price had risen from 99 cents to $1.49.Late night comedians and serious pundits alike had a field day with the story, opining on issues like fast-food culture, obesity (the seven burritos contain 3,600 calories, double the recommended daily intake) and gun control.
With his petty gripe, the gunman, Ricardo Jones, is no Muhammad al Bouazizi, the self-immolating Tunisian fruit seller who inspired millions across the region to throw off the yoke of tyranny, but 50 per cent is 50 per cent in San'a or San Antonio. Food inflation is a global phenomenon.
For the past week, I've been complaining that journalists covering possible radiation dangers from Fukushima plant have abandoned the old convention of putting radiation exposures in context (usually by comparing them to chest x-rays). The result is that all "radiation" sounds equally dangerous, and people in Plano, Texas, start stocking up on potassium iodine.
Both Matt and myself have been covering the tragic events surrounding the Tsunami in Japan. I have left Japan now but Matt is still there and headed back into the disaster zone to do more reports. I'm sure both of us will talk more about what it was like later on, but for now the story is the priority.
At the end of June, the Federal Reserve will no longer be the biggest buyer of US Treasuries. But one notable investor has already said Hasta la vista.Pimco's flagship $237bn total return fund, managed by Bill Gross, whose status as bond king has been synonymous with the 25-year bull market in Treasury debt, pulled the plug on holding US government related securities in February, it emerged this week. Last month his fund eschewed holding US government related debt, having had 12 per cent of the fund's portfolio in Treasuries in January.
Given the record of Mr Gross, one cannot ignore the decision. Since the total return fund began in 1987, it has generated an average annual return of 8.42 per cent versus the 7.27 per cent gain in its benchmark, the Barclays Capital US Aggregate index.
The move is a bold one. Given that the Barclays Aggregate has a Treasury weighting of 40 per cent, the decision by Mr Gross to exclude government holdings means he is seriously underweight his benchmark, or "bogey".
Long seen as a place of safety in times of turmoil, the dollar may be losing its haven appeal.Soaring oil prices, driven by upheaval in the Middle East, falling equities and elevated volatility have all made investors uneasy. A flight to the dollar usually accompanies increased risk aversion.
This time, though, while the traditional havens of the Swiss franc and the yen have benefited, the US currency has suffered.
"It seems the dollar's haven status has vanished," says Steve Barrow at Standard Bank. "And, even for long-term dollar bears like ourselves, this is a worry."
The main reason for the dollar's underperformance, say analysts, is concern about the effect of rising oil prices.
The dollar has dropped to a record low against the Swiss franc and fallen 2 per cent to Y81.82 against the yen in the past two weeks, just shy of the all-time low of Y79.7 it hit against the Japanese currency in 1995. It has also lost ground against the euro and sterling.
The fear is that higher oil prices will lead to a transfer of funds from oil-importing countries to the sovereign wealth funds of oil-exporting nations.
Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer."Everything's _______ up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."
I put down my notebook. "Just that?"
"That's right," he said, signaling to the waitress for the check. "Everything's ______ up, and nobody goes to jail. You can end the piece right there."
Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth -- and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.
Panoramas and photos from Saturday's Pro-union & Tea Party rallies at the Capitol can be seen here.
Getting America off imported oil is always urged in the context of national security. No matter how often that refrain is repeated, however, it always points toward how much imported oil American motorists use.It's never about the amount of oil imported into the United States, refined into numerous products and shipped back out of the country. Nor are people arguing that we need to quit using imported oil for manufacturing concerns - like making fertilizers to grow corn, to make into ethanol to put into our gas, so we can quit importing oil. (That's the most comical circular argument currently making the rounds.) But we also use oil for things like asphalt for our roads, and in the plastics industry, and even the most ardent "get America off imported oil" advocates don't talk about constraining those industries.
In reality, the country from which we import the most oil is Canada. And I'm fairly certain that we aren't too worried about the national security aspect of bringing that oil into America, now or in the future. Yet we're still hearing the constant mantra that this is a national security issue, and that's what troubles me most. And, if you own one of the nation's 240 million vehicles, the "national insecurity of imported oil" refrain should trouble you, too.
Did the financial crisis change very much? That was my question as I went to the annual meeting of the World Economic Forum in Davos last week. The answer is: yes. Above all, it has accelerated the arrival of our future. Even for the winners, this is quite a shock.It is three and a half years since the financial crisis began and a little more than two years since it reached its worst. Bob Diamond, chief executive of Barclays, gave the financial sector's thanks to governments for the rescue. Now the mood is one of wary optimism. According to the International Monetary Fund's World Economic Outlook update, global output grew in 2010 by 5 per cent, at purchasing power parity, and 3.9 per cent, at market exchange rates. This contrasts with declines of 0.6 per cent and 2.1 per cent, respectively, in 2009. The IMF expects growth to slow only slightly to 4.4 per cent at PPP and 3.5 per cent at market exchange rates, in 2011. Optimism continues to reign.
With the crisis fading into memory, how will historians assess its legacy? Journalists do not have the luxury of distance. So here are my guesses. I will start with possible turnrounds.
The crisis was neither the beginning of a depression nor the end of capitalism. But it has caused a tightening of financial regulation, particularly of banks, though this has occurred within the pre-existing intellectual and institutional framework. After three decades of deregulation, movement is in the opposite direction, though not without resistance.
The night before I am due to meet Aung San Suu Kyi, I take a battered taxi to the ancient Shwedagon Pagoda where it all began. It was here on an August morning in 1988 that the daughter of General Aung San, Burma's independence hero, gave her first big speech, an address that was to plunge her into the cauldron of Burmese politics.Although she was naturally reserved and the crowd was extraordinarily large - anything between 300,000 and 1m people - she spoke without apparent fear. Behind her was a portrait of her father, the Bogyoke, or "big leader", assassinated at the age of 32, only months before his dream of Burmese independence was realised.
"Reverend monks and people," Suu Kyi, then 43, began, asking for a minute's silence for the 3,000 democracy protesters gunned down or hacked to death in that momentous month of revolution and suppression. "I could not, as my father's daughter, remain indifferent to all that is going on," she said, launching what she called "the second struggle for national independence". Although she sought reconciliation over conflict, the underlying message was clear. Her father had liberated Burma from the British. She would help liberate it from Burma's own generals.
In the 1990s, attorney Gary Reback helped goad the Department of Justice into launching the landmark antitrust lawsuit against Microsoft Corp. by hauling willing witnesses and damning information before any government body that would listen.Reback, of Menlo Park law firm Carr & Ferrell LLP, is now waging a similarly relentless campaign against a technology giant of this era, Google Inc.
In an extensive interview with The Chronicle, he argued the Mountain View search company is engaging in a host of anti-competitive behaviors that are no less egregious than the earlier actions of Microsoft.
He also claims the Federal Trade Commission recently backed off an inquiry into certain of Google's practices at the behest of the DOJ. It's known to be conducting a separate investigation into, and possibly preparing to block, the company's proposed acquisition of travel data company ITA Software. (Read on for his take on what that means.)
David Hockney may be pretty isolated here in Yorkshire, some four hours by train from London, but that's the way he likes it. Ensconced near the quiet rural landscape he's immortalized in paintings and watercolors, he has more time not only to draw but to experiment with new ways of making art."We think we're way ahead here," he confides. "We need this little remote place to be observant about the medium."
The art-making medium he's using most often these days is the iPad, brother to the iPhone, which he took up earlier. Whether he's lying in bed or driving through snow-covered woods, his ever-ready iPhone and iPad are instant drawing pads, always by his side. The electronic duo keeps him in touch with not only his craft but a small group of friends and colleagues who regularly receive his colorful missives of landscapes, flowers, cap or ashtray.
America's exceptionalism finds it natural to condition its conduct toward other societies on their acceptance of American values. Most Chinese see their country's rise not as a challenge to America but as heralding a return to the normal state of affairs when China was preeminent. In the Chinese view, it is the past 200 years of relative weakness - not China's current resurgence - that represent an abnormality.America historically has acted as if it could participate in or withdraw from international affairs at will. In the Chinese perception of itself as the Middle Kingdom, the idea of the sovereign equality of states was unknown. Until the end of the 19th century, China treated foreign countries as various categories of vassals. China never encountered a country of comparable magnitude until European armies imposed an end to its seclusion. A foreign ministry was not established until 1861, and then primarily for dealing with colonialist invaders.
America has found most problems it recognized as soluble. China, in its history of millennia, came to believe that few problems have ultimate solutions. America has a problem-solving approach; China is comfortable managing contradictions without assuming they are resolvable.
American diplomacy pursues specific outcomes with single-minded determination. Chinese negotiators are more likely to view the process as combining political, economic and strategic elements and to seek outcomes via an extended process. American negotiators become restless and impatient with deadlocks; Chinese negotiators consider them the inevitable mechanism of negotiation. American negotiators represent a society that has never suffered national catastrophe - except the Civil War, which is not viewed as an international experience. Chinese negotiators cannot forget the century of humiliation when foreign armies exacted tribute from a prostrate China. Chinese leaders are extremely sensitive to the slightest implication of condescension and are apt to translate American insistence as lack of respect.
For sheer, toe-curling embarrassment, it's hard to choose between last year's populist attack on Goldman Sachs by the US Securities and Exchange Commission and this week's cringe-worthy response from the investment bank.Last April, when the SEC filed suit against Goldman, the bank could have fought back. The suit complained it had sold fancy mortgage securities without disclosing that a hedge-fund manager, John Paulson, was betting that those same securities would blow up. To which Goldman could have answered: so what? Any time an investment bank sells any derivative, it should be obvious to the buyer that somebody somewhere must be taking the other side. The SEC's assertion that Goldman had misled customers about the nature of Paulson's involvement was potentially more damaging, except that the SEC produced no evidence to make this charge stick.
It was surely not beyond the wit of Goldman's publicists to communicate these simple points. Banks cannot be held responsible for the profits or losses of their clients, since middle-men necessarily have customers who lose as others win. But after one vain attempt to explain market making at a belligerent Senate hearing, Goldman's boss, Lloyd Blankfein, gave up. He settled with the SEC, even though most lawyers think he could have beaten the charges. Then he ordered up an elaborate cleansing ritual to relaunch the firm of Goldman Sachs.
Several months later, the fruits of Goldman's sun salutations are out. A 67-page manifesto of self-purification proclaims that "our clients' interests always come first," and that "if we serve our clients, our own success will follow." But these pieties misrepresent the true nature of an investment bank just as surely as the SEC did.
Joy To the World from Jim Zellmer
Recorded Christmas Day, 2010 in Parma, Italy
Ebenezer Scrooge came into the room slowly. He was, to my surprise, much as Charles Dickens had described him. How, I wondered, could he have changed so little over 170 years? It must be the benefit of being a literary character, I decided."Good morning, Mr Scrooge," I remarked politely. "I have come to interview you about your best-selling new book Scroogenomics - or How to Do Well out of Doing Good."
Scrooge smiled. "Yes," he responded, "I had to show that Joel Waldfogel's Scroogenomics, cleverly reviewed by your John Kay, merely portrayed my unenlightened self. But Dickens, albeit a talented writer, was just a sentimental fool. He never understood what my change over that Christmas was about. I learnt, above all, to appear benevolent. That, with my business acumen, turned Marley & Scrooge into a global enterprise. Fortunately, that philanthropy has become less painful, since my charities are tax deductible. What can be less painful for a miser than state-subsidised charity?"
I was shocked by his candour. He must have drunk too much at the book party earlier. After the abstinence described by Dickens, one drink would have a big effect.
When Saul of Tarsus set out on his journey to Damascus the whole of the known world lay in bondage. There was one state, and it was Rome. There was one master for it all, and he was Tiberius Caesar.Everywhere there was civil order, for the arm of the Roman law was long. Everywhere there was stability, in government and in society, for the centurions saw that it was so.
But everywhere there was something else, too. There was oppression--for those who were not the friends of Tiberius Caesar. There was the tax gatherer to take the grain from the fields and the flax from the spindle to feed the legions or to fill the hungry treasury from which divine Caesar gave largess to the people. There was the impressor to find recruits for the circuses. There were executioners to quiet those whom the Emperor proscribed. What was a man for but to serve Caesar?
There was the persecution of men who dared think differently, who heard strange voices or read strange manuscripts. There was enslavement of men whose tribes came not from Rome, disdain for those who did not have the familiar visage. And most of all, there was everywhere a contempt for human life. What, to the strong, was one man more or less in a crowded world?
Fred Hargesheimer, a World War II Army pilot whose rescue by Pacific islanders led to a life of giving back as a builder of schools and teacher of children, died on Thursday morning. He was 94.With Christmas upon us, I've been reflecting on two things Jesus said here:Richard Hargesheimer said his father had been in poor health and passed away in Lincoln, Nebraska.
On June 5, 1943, Hargesheimer, a P-38 pilot with the 8th Photographic Reconnaissance Squadron, was shot down by a Japanese fighter while on a mission over the Japanese-held island of New Britain in the southwest Pacific. He parachuted into the trackless jungle, where he barely survived for 31 days until found by local hunters.
They took him to their coastal village and for seven months hid him from Japanese patrols, fed him and nursed him back to health from two illnesses. In February 1944, with the help of Australian commandos working behind Japanese lines, he was picked up by a U.S. submarine off a New Britain beach.
"'Love the Lord your God with all your heart and with all your soul and with all your mind.'[a] 38 This is the first and greatest commandment. 39 And the second is like it: 'Love your neighbor as yourself.'[b] 40 All the Law and the Prophets hang on these two commandments."I have been frequently amazed at people who exhibit such selflessness, as exhibited by Fred Hargesheimer.
Scott Cleland is one tough Google (GOOG) critic.From his office in McLean, Va., as founder and president of research firm Precursor, Cleland routinely fires off pages of analysis whenever news on Google's market dominance hits the media.
Cleland's words have irked Google, which is engaging in an unusual behind-the-scenes effort to counter Cleland's views. The case is spotlighting the issue of how companies should deal with critics on the public stage.
Diesel and jet fuel are usually made from crude oil. But with oil prices rising even as a glut of natural gas keeps prices for that fuel extraordinarily cheap, a bit of expensive alchemy is suddenly starting to look financially appealing: turning natural gas into liquid fuels.A South African firm, Sasol, announced Monday that it would spend just over 1 billion Canadian dollars to buy a half-interest in a Canadian shale gas field, so it can explore turning natural gas into diesel and other liquids. Sasol's proprietary conversion technology was developed decades ago to help the apartheid government of South Africa survive an international oil embargo, and it is a refinement of the ones used by the Germans to make fuel for the Wehrmacht during World War II.
The technology takes "a lot of money and a lot of effort," said Michael E. Webber, associate director of the Center for International Energy Environmental Policy at the University of Texas, Austin. "You wouldn't do this if you could find easy oil," he said.
To whom it may concern:I have always loved humor and laughter. As a young engineer I got an impulse to start a Dial-a-Joke in the San Jose/San Francisco area. I was aware of such humor services in other countries, such as Australia. This idea came from my belief in laughter. I could scarcely believe that I was the first person to create such a simple service in my region. Why was I the first? This was 1972 and it was illegal in the U.S. to use your own telephone. It was illegal in the U.S. to use your own answering machine. Hence it also virtually impossible to buy or own such devices. We had a monopoly phone system in our country then.
The major expense for a young engineer is the rent of an apartment. The only answering machine I could legally use, by leasing (not purchasing) it from our phone company, the Codaphone 700, was designed for businesses like theaters. It was out of the price range of creative individuals wanting to try something new like dial-a-joke. This machine leased for more than a typical car payment each month. Despite my great passion and success with Dial-a-Joke, I could not afford it and eventually had to stop after a couple of years. By then, a San Francisco radio station had also started such a service. I believe that my Dial-a-Joke was the most called single line (no extensions) number in the country at that time due to the shortness of my jokes and the high popularity of the service.
"First generation [corn] ethanol I think was a mistake. The energy conversion ratios are at best very small."- Al Gore, speaking at a Green Energy Conference on November 22, 2010
"Ethanol is not an ideal transportation fuel. The future of transportation fuels shouldn't involve ethanol."
- Secretary of Energy Steven Chu, November 29, 2010
No one knows what brought on the blast of political honesty in the last eight days of November. Having been a rabid ethanol booster for most of his political career, there was former Vice President Al Gore reversing course and apologizing for supporting ethanol. Of course Gore's reason for taking that position was perfectly understandable -- for a politician. As he told the Athens energy conference attendees, "One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers of Iowa because I was about to run for President."
Translated from politics-speak into English, pandering to farmers gets votes. But if your claimed position is to plan some sort of energy policy for everyone else, then getting farmers' votes shouldn't determine what's the right thing to do for the nation's fuel supplies.
MATTHEW CARTER, a type designer and the recipient of a MacArthur genius grant, was recently approached in the street near his home in Cambridge, Massachusetts. A woman greeted him by name. "Have we met?" Mr Carter asked. No, she said, her daughter had pointed him out when they were driving down the street a few days before. "Is your daughter a graphic designer?" he inquired. "She's in sixth grade," came the reply.Mr Carter sits near the pinnacle of an elite profession. No more than several thousand type designers ply the trade worldwide, only a few hundred earn their keep by it, and only several dozens--most of them dead--have their names on the lips of discerning aficionados. Then, there is Mr Carter. He has never sought recognition, but it found him, and his underappreciated craft, in part thanks to a "New Yorker" profile in 2005. Now, even schoolchildren (albeit discerning ones) seem to know who he is and what he does. However, the reason is probably not so much the beauty and utility of his faces, both of which are almost universally acknowledged. Rather, it is Georgia and Verdana. Mr Carter conjured up both fonts in the 1990s for Microsoft, which released them with its Internet Explorer in the late 1990s and bundled them into Windows, before disseminating them as a free download.
Primary Flight is Miami's original open air museum and street level mural installation that takes place annually throughout the Wynwood Arts District and the Miami Design District. Primary Flight is arguably the world's largest event of its kind, having featured over 250 world class artists from around the globe since its inception, the majority of whom travel to Miami during Art Basel. Artists from all walks of contemporary art headline our annual event, collaborating on high profile walls throughout Miami's urban landscape. Maps outlining the installation are circulated, providing patrons with an opportunity to view the works in progress.
The great and the good who sit on the board of San Francisco's prestigious Asian Art Museum are grappling with problems that run deeper than reviving recession-hit visitor numbers or repairing a dented endowment fund.A financial derivative gone bad is threatening to become the last straw that tips the museum into bankruptcy - unless a stand-off involving the city and two prominent US financial institutions can be resolved within the next two weeks.
The museum's problems have touched off a war of words in recent days. Dennis Herrera, San Francisco's city attorney, fired off letters last week to JPMorgan Chase and bond insurer MBIA, accusing them of taking millions of dollars in fees from the city while washing their hands of the problems to which they have contributed.
"The city's involvement is not just for the city attorney to write a letter and say it's everyone else's problem," retorted Mitchell Sonkin, chief portfolio officer at MBIA. The city itself had short-changed the museum in recent years, forcing it to draw more heavily on its endowment, and should take part in a rescue.
Food prices are back on the march, and the powerful U.S. farm lobby faces a day of reckoning on Wednesday as the Obama administration wraps up a yearlong study into competition and consolidation in the agricultural sector.The Departments of Justice and Agriculture are holding their fifth and final workshop to review the competitive landscape in food production and livestock rearing after a unique collaboration that has left some of the industry's largest players looking nervously over their shoulders.
Monsanto Co. is already embroiled in a Justice Department investigation into alleged anticompetitive practices linked to the sale and distribution of genetically modified seeds that dominate U.S. farming. Dean Foods Inc., the country's largest milk producer, has also seen antitrust officials move to block a small acquisition.
Lawmakers already have had to wrestle with external forces on the sector, such as the rise of speculative funds that critics contend have inflated prices. The latest run-up in commodity prices has also reawakened the long-running food-versus-fuel debate as Congress decides whether to renew subsidies to the ethanol industry.
Sunshine doesn't hurt after all. Bank shares leapt Wednesday despite the Federal Reserve's detailed disclosure of who got $3.3 trillion of emergency lending during the crisis. That is hardly what investors might have envisaged, given dark warnings from the Fed that such disclosure could endanger financial institutions. The central bank released the data only because of a provision in the Dodd-Frank financial-overhaul bill.True, it will take time for investors to comb through all the gory details of about 21,000 transactions by multiple emergency Fed lending facilities. And some details may leave firms with egg on their face: Goldman Sachs, which insisted it would have survived the crisis without government assistance, tapped one special Fed facility 84 times to borrow nearly $600 billion in overnight money. Morgan Stanley tapped the facilities more than 200 times.
Even if individual details of the programs aren't that surprising, the breadth of companies that accessed them is notable. The disclosure shows how far the Fed went in attempting to prop up just about every part of the financial markets, with users ranging from the biggest U.S. and international banks to small firms that peddled complex and often toxic securities, as well as industrial companies such as General Electric, Harley-Davidson and Verizon.
We are fortunate to have Southwest serving Milwaukee. Madison service would be that much better, of course.
Despite a stubbornly sour national economy congressional members' personal wealth collectively increased by more than 16 percent between 2008 and 2009, according to a new study by the Center for Responsive Politics of federal financial disclosures released earlier this year.And while some members' financial portfolios lost value, no need to bemoan most lawmakers' financial lot: Nearly half of them -- 261 -- are millionaires, a slight increase from the previous year, the Center's study finds. That compares to about 1 percent of Americans who lay claim to the same lofty fiscal status.
And of these congressional millionaires, 55 have an average calculated wealth in 2009 of $10 million or more, with eight in the $100 million-plus range.
German officials, concerned that Washington could be pushing the global economy into a downward spiral, have launched an unusually open critique of U.S. economic policy and vowed to make their frustration known at this week's Group of 20 summit.Leading the attack is Finance Minister Wolfgang Schäuble, who said the U.S. Federal Reserve's decision last week to pump an additional $600 billion into government securities won't help the U.S. economy or its global partners.
The Fed's decisions are "undermining the credibility of U.S. financial policy," Mr. Schäuble said in an interview with Der Spiegel magazine published over the weekend, referring to the Fed's move, known as "quantitative easing" and designed to spur demand and keep interest rates low. "It doesn't add up when the Americans accuse the Chinese of currency manipulation and then, with the help of their central bank's printing presses, artificially lower the value of the dollar."
At an economics conference in Berlin Friday, Mr. Schäuble said the Fed's action shows U.S. policy makers are "at a loss about what to do."
Mr. Schäuble hit back at critics in the Der Spiegel interview. "Germany's exporting success is based on the increased competitiveness of our companies, not on some sort of currency sleight-of-hand. The American growth model, by comparison, is stuck in a deep crisis," he said. "The USA lived off credit for too long, inflated its financial sector massively and neglected its industrial base. There are many reasons for America's problems--German export surpluses aren't one of them."
Douglas Belkin & Neil King, Jr.
Last week's election rout did more than put Republicans in charge of the U.S. House of Representatives. It upended the electoral map that propelled President Barack Obama to the White House.Mr. Obama bagged traditionally liberal Wisconsin and its ten electoral votes two years ago, part of a sweep that also included states that hadn't tilted Democratic for decades. That went into reverse Tuesday. The party suffered heavy losses in Ohio and Pennsylvania, two big states that had backed Mr. Obama in 2008, as independent voters swung to the right. Other presidential territory--Virginia, Indiana and North Carolina--swung back to the GOP.
The depth of the party's losses outside Washington, in state-level-contests, can be seen in this working-class city. The president won handily here in 2008 along with surrounding Brown County. Last week, Republicans carried all 18 races on the county's ballots, right down to the clerk of the court. The GOP took control of the governor's office, the state assembly and the state senate--the first time the state has reverted so abruptly to one side since 1938.
A few photos taken at Ela Orchard's space. Their apples are, of course fabulous.
John Paul Rathbone & Jonathan Wheatley
Brazil, the country that fired the gun on the so-called "currency wars", is girding itself for further battle.Brazilian officials from the president down have slammed the Federal Reserve's decision to depress US interest rates by buying billions of dollars of government bonds, warning that it could lead to retaliatory measures.
"It's no use throwing dollars out of a helicopter," Guido Mantega, the finance minister, said on Thursday. "The only result is to devalue the dollar to achieve greater competitiveness on international markets."
At a joint press conference with president-elect Dilma Rousseff, outgoing president Luiz Inácio Lula da Silva said on Wednesday he would travel to the G20 summit in Seoul with Ms Rousseff, ready to take "all the necessary measures to not allow our currency to become overvalued" and to "fight for Brazil's interests". "They'll have to face two of us this time!" he said.
At the end of last week's letter on the whole mortgage foreclosure mess, I wrote:
"All those subprime and Alt-A mortgages written in the middle of the last decade? They were packaged and sold in securities. They have had huge losses. But those securities had representations and warranties about what was in them. And guess what, the investment banks may have stretched credibility about those warranties. There is the real probability that the investment banks that sold them are going to have to buy them back. We are talking the potential for multiple hundreds of billions of dollars in losses that will have to be eaten by the large investment banks. We will get into details, but it could create the potential for some banks to have real problems."
Real problems indeed. Seems the Fed, PIMCO, and others are suing Countrywide over this very topic. We will go into detail later in this week's letter, covering the massive fraud involved in the sale of mortgage-backed securities. Frankly, this is scandalous. It is almost too much to contemplate, but I will make an effort.
As my reference to the Japanese yen might suggest, I am pretty skeptical about the likelihood of this happening, at least with some of the more excited predictions. So, by the way, is the ADB, whose recent report (“The Future Global Reserve System — An Asian Perspective”), suggests that by 2035, the RMB may comprise about 3 to 12 per cent of international reserves. This is a pretty reasonable prediction, in my opinion, and far from the more feverish claims we see reported almost daily.
If the renminbi ever becomes a major trading or reserve currency, it is going to take a long time for this to happen and will require a radical transformation of the Chinese economy and the role of the government. This may seem like a surprising statement. After all nearly every week we see reports about a new breakthrough for the renminbi, and almost every day someone important somewhere speculates publicly about what the world will be like when (never if) the renminbi displaces the dollar.
But away from all “qualitative” arguments about why this is unlikely, and there are many, I think there is a problem with the arithmetic of reserve currency accumulation. If the rest of the world is going to use the renminbi as a reserve or trading currency, clearly it needs a mechanism by which to accumulate renminbi. This is something on which a surprisingly large share of people who talk about the future of reserve currencies don’t seem to focus.
The US is going to win this war, one way or the other: it will either inflate the rest of the world or force their nominal exchange rates up against the dollar. Unfortunately, the impact will also be higgledy piggledy, with the less protected economies (such as Brazil or South Africa) forced to adjust and others, protected by exchange controls (such as China), able to manage the adjustment better.Moahmed El-Erian has more.
It would be far better for everybody to seek a co-operative outcome. Maybe the leaders of the group of 20 will even be able to use their “mutual assessment process” to achieve just that. Their November summit in Seoul is the opportunity. Of the need there can be no doubt. Of the will, the doubts are many. In the worst of the crisis, leaders hung together. Now, the Fed is about to hang them all separately.
If the world is on the brink of an out-and-out currency war, a variety of battalions has been out on manoeuvres in the past few weeks. The Bank of Japan, after six years off the battlefield, has launched a fusillade of intervention to hold down the yen in foreign exchange markets. Brazil used the guerrilla tactic of doubling taxes on capital inflows to stop the real surging. India and Thailand warned that they too might bring heavy ordnance into play.
The main combatants, the US and China, continued to exchange rhetorical salvos. Washington (and Brussels) identified undervalued currencies such as the renminbi as a prime cause of global macroeconomic imbalances. Beijing retorted that such aggression risked bringing mutual destruction upon the great economic powers.
On Monday Dominique Strauss-Kahn, managing director of the International Monetary Fund, voiced his concern. “There is clearly the idea beginning to circulate that currencies can be used as a policy weapon,” he said. “Translated into action, such an idea would represent a very serious risk to the global recovery.”
In a SPIEGEL interview, former United States Secretary of State Condoleezza Rice discusses America's fight for German reunification, Soviet leader Mikhail Gorbachev's woes at the time, Chancellor Helmut Kohl's merits and the later mistakes of his successor, Gerhard Schröder.
SPIEGEL: Madame Secretary, when the Berlin Wall fell in 1989, European nations like Great Britain and France were very worried about the prospect of German unification. America was the only country that didn't appear to be concerned. Why not?
Condoleezza Rice: The United States -- and President George H.W. Bush -- recognized that Germany had gone through a long democratic transition. It had been a good friend, it was a member of NATO. Any issues that had existed in 1945, it seemed perfectly reasonable to lay them to rest. For us, the question wasn't should Germany unify? It was how and under what circumstances? We had no concern about a resurgent Germany, unlike the British or French.
SPIEGEL: Because a unified German was in America's strategic interest?
Rice: If you were going to have a Europe that was whole and free, you couldn't have a Germany that was divided. So, with the possibility that Soviet power was going to be receding from Europe, it made perfectly good sense to try to achieve reunification on terms that nobody would have thought thinkable, even four or five years before.
Fundamentally, without major government commitments to high-speed rail, America simply will not have a high-speed passenger rail network. This should probably be discomfiting, since every other economic superpower (the EU, Japan and China) does have a high-speed rail network. That makes America look a bit backward. The time horizon for building such a network is several decades, and it's interesting to think about what will happen in the middle decades of this century if air transport becomes unaffordable due to high fuel costs and America doesn't have an electric alternative for high-speed intercity transit.
Politically, I would describe what's going on here as a loss of confidence in the principle of government investment and planning, in the face of the demonstrated incapacity of the contemporary American government to do an adequate job of investment and planning. That incapacity is largely due to conservative political opposition to government intervention in the economy, either for ideological reasons or because it entails higher taxes or because it treads on the toes of vested business interests. But the fact that the American government can't get its act together to create a decent modern passenger rail network doesn't mean that governments in general are incapable of doing so, or that it isn't a good idea. Europe, Japan, and China seem perfectly capable of doing this job. A more narrow response to the rail problem, specifically, would be to encourage a BOT deal in which the government uses eminent domain to create the rail corridor and turns to the private sector to raise the capital, build it and perhaps run it. But, again, this doesn't question the need for the government to plan national infrastructure, which seems to me to be pretty hard to gainsay.
“We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness.” This complaint by Guido Mantega, Brazil’s finance minister, is entirely understandable. In an era of deficient demand, issuers of reserve currencies adopt monetary expansion and non-issuers respond with currency intervention. Those, like Brazil, who are not among the former and prefer not to copy the latter, find their currencies soaring. They fear the results.
This is not the first time for such currency conflicts. In September 1985, now 25 years ago, the governments of France, West Germany, Japan, the US and the UK met at the Plaza Hotel in New York and agreed to push for depreciation of the US dollar. Earlier still, in August 1971, the US president Richard Nixon imposed the “Nixon shock”, levying a 10 per cent import surcharge and ending dollar convertibility into gold. Both events reflected the US desire to depreciate the dollar. It has the same desire today. But this time is different: the focus of attention is not a compliant ally, such as Japan, but the world’s next superpower: China. When such elephants fight, bystanders are likely to be trampled.
Here there are three facts, relevant to today’s currency wars.
COURAGE rarely failed Bärbel Bohley. Others quailed at the hands of the East German secret police, the Stasi. Frail but steely, she mocked them: an eye for the absurd, she said, helped to keep her mental distance from those “brutal, cold, murderous, contemptuous people”. “I will get out of here; you won’t,” she once snapped at an interrogator.
She was right. Born in the ruins of Berlin in 1945, her early life was shaped by the post-war division of her country into western (soon West) Germany, and a Soviet-occupied zone that claimed to be the “German Democratic Republic”. But in the end it was not the bullying communists who shaped the wiry little painter. It was she who shaped them—and their downfall.
Her life as an artist started in her 30s, after unhappy early stints in industry and teaching. Her métier was brightly coloured pictures with dark angry lines, part abstract, part-figurative. Her inspiration, she said, came from Käthe Kollwitz, the great radical pacifist painter and print-maker of the Weimar years, venerated in post-war East Germany. The regime liked that, and her work: she won prizes, including a trip to the Soviet Union. But the promised Utopia turned out to be shockingly grim and grey. In 1980 the idealistic socialist convictions of her youth, long undermined by the regime’s hypocrisy, finally crystallised into ardent opposition.
The nice people of Rupert's world sat down with Google head man - Eric Schmidt. The Wall Street Journal team peppered Eric with lots of interesting questions. Some of his answers would make the usual PRHHM (Public Relations hacks handlers and minders) squirm.
In the Googlesphere it has become clear that all information should be held sacred as long as Google has a copy and is in charge of what gets shown and not shown. As Schmidt noted in the Techonomy conference on August 4, 2010 , all information should be subject to "much greater transparency and no anonymity." ... because he assumes that (Google) technology is ultimately good (as opposed to evil). I think that makes me very nervous. And thank you, I vote for my Government which I think is called a democracy. Going back to the WSJ article, Schmidt continues - "Most people..... They want Google to tell them what they should be doing next."
In general I believe that personalization is part of the mix. My view is that 'context' is better term than 'personalization'. I don't think that everything needs to be/should be uniquely or personalized. That is not how we are in our work and personal lives. To assume that this is the case is blatantly arrogant in my view. What happens if you get this wrong? And yes people who should know better do get these sort of things wrong - frequently. Just look at credit reports. But Google doesn't seem to want to think about that because.... Mr. Schmidt is a believer in targeted advertising because, simply, he's a believer in targeted everything: "The power of individual targeting—the technology will be so good it will be very hard for people to watch or consume something that has not in some sense been tailored for them." ....This is a direct quote from the WSJ. Too bad that Big Brother Google will be the arbiter or this and thence directly or indirectly control and influence our tastes.
So we’re at that stage of life that many would, and have, described as “dying.” True enough, we’re noticing some of the icky stuff – creeping paralysis and numbness on the left side, and the weakness and reduced mobility that go with it. We have less stamina, particularly late in the day and there’s creeping fatigue – I’m napping and sleeping more. Things I used to do relatively easily are getting harder – dressing, getting in and out of cars, walking, especially late in the day.
That I’m able to do these things at all at this point in the progression of my disease has a lot to do with my “Heidi muscles,” the legacy of three years with trainer and rehab specialist Heidi Engel. She’ll be the topic of a post in the very near future, complete with her exercise regimen for dying people (yes, it makes sense!).
In his view (and in ours, too), way too many people hear about the huge reported reserves of Saudi Arabia and other Middle Eastern countries, and assume that this oil is really available for extraction. Matt makes the point that these reserves, and many others around the world, have not been audited. In fact, they seem to be political numbers, so we cannot depend on them. He also points out that we also do not have detail data with respect to historical oil extraction from individual fields in the Middle East, so we really do not know how close to decline Saudi Arabia and other Middle Eastern countries really are.
In 2005, Matt Simmons wrote a book called Twilight in the Desert. In it, he summarized what he learned about Saudi Arabian oil production by reading 200 academic papers. He concluded from his analysis that the oil extraction techniques being used there were techniques that one might use if the fields were quite depleted. Because of this, he doubted that we should believe stories that Saudi oil production can be greatly expanded. Instead, he raised the possibility that in the not too distant future, Saudi oil production will suddenly decline. Matt's research underlying the book was no doubt behind his concern that oil reserves and oil production rates are not audited.
Another thing Matt is known for is his educational graphics about "what is really going on" with respect to oil extraction. For example, in his talk at the 2009 ASPO--USA conference, he shows this graphic of the amount of conventional oil discovered by decade.
I am in Tate Modern with no Baedeker. Nor Lonely Planet, Rough Guide, Time Out or any other type of guidebook. For Lucy Honeychurch, heroine of EM Forster’s Room with a View, this would be a desperate situation. Without a guidebook in Florence’s Santa Croce, she is bereft, close to tears, unsure what she should be looking at, unable to recall any of the building’s history and upset at having no one to tell her which of the sculptures and frescoes is most beautiful.
I, however, am supremely confident. I may not have a guidebook but I am equipped with “Google Goggles”, and thus have at my fingertips more information than exists in any guidebook ever written – perhaps more even than the combined wisdom of all guidebooks ever written.
Disappointingly, Google Goggles are not physical goggles, or glasses of any kind, but an app that will soon become available for iPhones and already works with Android smartphones. Put simply, whereas Google lets you search the internet using keywords, this allows you to search with an image. You use the phone’s camera to take a photo of something – a church, a monument, a painting or a sculpture – then wait a few seconds for the image-recognition software to scan it, before being offered a full range of information about it. The implications for travel are huge.
By taking a loss on the first several years of Prius production, Toyota was able to hold its price steady, and then sell the gas-sippers in huge numbers when oil prices soared. Today a Prius costs roughly the same in inflation-adjusted dollars as those 1997 models did, and it has become the best-selling Toyota in the United States after the evergreen Camry and Corolla.
Instead of following Toyota’s model, G.M. decided to make the Volt more affordable by offering a $350-a-month lease over 36 months. But that offer allows only 12,000 miles per year, or about 33 miles per day. Assuming you charged your Volt every evening, giving you 40 miles of battery power, and wanted to keep below the mileage limit, you would rarely use its expensive range-extending gas engine. No wonder the Volt’s main competition, the Nissan Leaf, forgoes the additional combustion engine — and ends up costing $8,000 less as a result.
In the industry, some suspect that G.M. and the Obama administration decided against selling the Volt at a loss because they want the company to appear profitable before its long-awaited initial stock offering, which is likely to take place next month. For taxpayers, that approach might have made sense if the government planned on selling its entire 61 percent stake in G.M. But the administration has said it will sell only enough equity in the public offering to relinquish its controlling stake in G.M. Thus the government will remain exposed to the company’s (and the Volt’s) long-term fate.
Modern medicine is good at staving off death with aggressive interventions—and bad at knowing when to focus, instead, on improving the days that terminal patients have left.
Sara Thomas Monopoli was pregnant with her first child when her doctors learned that she was going to die. It started with a cough and a pain in her back. Then a chest X-ray showed that her left lung had collapsed, and her chest was filled with fluid. A sample of the fluid was drawn off with a long needle and sent for testing. Instead of an infection, as everyone had expected, it was lung cancer, and it had already spread to the lining of her chest. Her pregnancy was thirty-nine weeks along, and the obstetrician who had ordered the test broke the news to her as she sat with her husband and her parents. The obstetrician didn’t get into the prognosis—she would bring in an oncologist for that—but Sara was stunned. Her mother, who had lost her best friend to lung cancer, began crying.
The doctors wanted to start treatment right away, and that meant inducing labor to get the baby out. For the moment, though, Sara and her husband, Rich, sat by themselves on a quiet terrace off the labor floor. It was a warm Monday in June, 2007. She took Rich’s hands, and they tried to absorb what they had heard. Monopoli was thirty-four. She had never smoked, or lived with anyone who had. She exercised. She ate well. The diagnosis was bewildering. “This is going to be O.K.,” Rich told her. “We’re going to work through this. It’s going to be hard, yes. But we’ll figure it out. We can find the right treatment.” For the moment, though, they had a baby to think about.
A brief clip from Jeff Mayer's introductory Q & A with Senate Candidate Ron Johnson. from Jim Zellmer on Vimeo.
Johnson faces Dave Westlake in the September Republican primary. The winner will take on 18 year incumbent Democrat Senator Russ Feingold.
In my humble opinion, should the November election turn on economic issues, the Republicans will win (Feingold's 30 years in the political world is a liability in this scenario). On the other hand, should the election turn on debates, Russ will be tough to beat.
I hope we have a serious competitor to Herb Kohl.....
I learned long ago the cruel but true principle: other people's travel problems are not interesting.* Corollaries: other people's traffic problems, and other people's weather ("you won't believe how hot/cold/dry/wet/windy it is here!"), also are not interesting. We feign sympathy, but as long as our own flight is on time, traffic on our highway moves along, the weather's nice where we are, we don't really care. (*Exception: unless the occasion for an otherwise-interesting travel narrative, from Paul Theroux to Atlantic site posts.)Airlines have been very successful at using information technology to slice and dice pricing and demand. Overall, fares are certainly up for most travellers....
Therefore I obviously am not "complaining" in mentioning that I got up before 5:30am today to get an 8:15am flight out of Dulles, only to find an email from the airline saying that the flight had been delayed to 10:45. The inbound flight -- from Dubai! -- is late, and there are no spare planes to go on to San Francisco. OK -- gladder to know now than before leaving the house for the airport, though ideally it would have great to know last night. Nothing to be done. But it was a serendipitous intro to the very next item in the email inbox: a report on how substantially airline capacity continues to be cut. There just are fewer flights anywhere, and more of them are full, than in yesteryear.
The winter of 1979 in southern California reminded people why they had migrated to LA over the decades. The daytime temperatures were in the mid-70s, and the LA basin's summer smog had disappeared, revealing the snowcapped San Gabriel Mountains.
At Neonex Leisure that day, we were brainstorming the recreational vehicle of the future. At the time we built America's largest RV, the Arctic Sun, a combination van/pickup truck pulling a 55-foot-long 5th-wheel trailer. Now Neonex Canada had put our California division in charge of designing the company's next Class A Motorhome.
Each of the other five U.S. managers gave their impressions of the future of the recreational vehicle, disclosing visions of startling grandeur. I was more flippant: "I bet it's a Honda with a Coleman tent." Three months later the Second Energy Crisis hit. We shut down our RV plant in two days flat, and I was back in Texas in five.
My point is that, if you had asked every energy or automotive issues guru what the future would hold for automobiles just before the winter of 1978 - 79, the answer would have been completely different if you'd asked them the same thing just 12 months later. That's what an energy crisis can do.
My joke about a Honda with a Coleman tent was weirdly prophetic. But my fellow managers' visions of million-dollar motorhomes would also turn out to be spot on -- 20 years later.
My new article, Insider Trading Inside the Beltway, has been posted to SSRN. Now it just needs to find a nice law review home somewhere in the top 50.
Abstract: A 2004 study of the results of stock trading by United States Senators during the 1990s found that that Senators on average beat the market by 12% a year. In sharp contrast, U.S. households on average underperformed the market by 1.4% a year and even corporate insiders on average beat the market by only about 6% a year during that period. A reasonable inference is that some Senators had access to – and were using – material nonpublic information about the companies in whose stock they trade.
Under current law, it is unlikely that Members of Congress can be held liable for insider trading. The proposed Stop Trading on Congressional Knowledge Act addresses that problem by instructing the Securities and Exchange Commission to adopt rules intended to prohibit such trading.
In a rare extended interview, we speak to Michael Hastings, whose article in Rolling Stone magazine led to the firing of General Stanley McChrystal. Hastings’ piece quoted McChrystal and his aides making disparaging remarks about top administration officials, and exposed long-standing disagreements between civilian and military officials over the conduct of the war. The Senate confirmed General David Petraues as McChrystal’s replacement on Wednesday, one day after McChrystal announced his retirement from the military on Tuesday after a 34-year career.
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.
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.
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."
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.
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”.
Given the tragic events in Greece and the financial contamination of other eurozone peripheral countries, most people now recognize that sovereign risk matters and it matters a great deal. Unfortunately, the recognition lag has already caused significant damage, including forcing the current approach to European integration to an historical juncture.
What is less well understood at this stage is that the externalities, negative and positive, are not limited to Europe. It is only a matter of time when this issue, too, becomes a driver of policies and market valuations and correlations.
The general context is critical here, and should never be forgotten. As argued in my March 11 FT commentary, the sovereign debt explosion in industrial countries involves a regime shift with consequential long-lasting effects. And what is happening in Europe is yet another illustration how, in our highly interconnected world, previously unthinkable phenomena can become reality in a surprising and highly disruptive manner.
Rather than just observe, other countries are well advised to understand the debt dynamics at play. They should draw the appropriate policy implications given their own debt burdens, maturity profiles and funding sources.
They must also go well beyond this.
It's hard to wrap your brain around the numbers, to make sense of what they portend. Mexico, home to the world's richest man, has had more than 10,000 people killed -- often horrifically -- since January 2007, just a month after President Felipe Calderon declared a literal war on drugs in his country.I visited Juarez 26 years ago.... during a trip into Mexico. The people were wonderful to a stranger.
Calderon has flooded the country with nearly 50,000 soldiers and federal police to combat the various regional cartels -- Juarez, Sinaloa, Gulf and Zetas -- mostly in the northern and northwest parts of Mexico. The United States, through the Merida Initiative, has committed $1.4 billion to fund the effort. The results have been less than stellar.
According to the Los Angeles Times (the only major U.S. newspaper that has been extensively covering this political and social calamity), not only has the military racked up more than 3,400 alleged violations with Mexico's human rights commission, but in Juarez, the bloodiest of this war's battlefields -- if you can call a city of about 1.2 million people a battlefield -- the army's presence coincided with an increase in slayings. Since 2008, more than 4,000 people have been killed there, though Juarez was being patrolled by about 10,000 troops and federal police. In 2007, there were about 2,300 drug-related killings -- in the entire country.
800 years of financial crises - Carmen Reinhart, co-author of This Time is Different, talks about the history of financial crises and their patternsVideo.
Energy Secretary Chu gave a talk at the EIA/SAIS Energy Conference on April 6-7. I want to share a few highlights of it, and give my impression. Both the Powerpoint slides and audio can be accessed at this link.
My general view of the talk is that Chu is extremely optimistic, in terms of what he thinks can be done. He also fails to tell listeners what our real problems are.
Wow! Slide 2 indicates that Chu thinks America has the opportunity to lead the world in a new industrial revolution. How does he think that is going to be done?
The first industrial revolution was during a time of increasingly available energy, because of the new use of coal. That is very unlikely in the future, both because of peak oil, and because of hoped-for constraints on fossil fuel use because of climate change issues. Net energy available to society is likely to be going down, not up! It is hard to understand an industrial revolution under those circumstances, unless it is a retooling to a much lower level--but later slides make it clear that is not what he is thinking of.
Iceland | From the financial crisis to open data
In 2008 in Iceland the financial system imploded. "Not surprisingly, this has led to a demand for more transparency, more access to public data and more effective communication by the government. All of a sudden Open Data is seen as a high priority among various lobby groups, branches of government and in restoration planning" says Hjalmar Gislason, an open data activist and member of the Open Knowledge Foundation’s Working Group on EU Open Data. In a long and detailed post, Gislason explains how this is not just part of the "momentum" open data is gaining in Europe, but a further step in a path that started in late '90s.
The Icelandic Modern Media Initiative and the presence of Wikileaks surely have a positive impact on the whole scenario and there is no doubt they will help boosting any future open data bill. The effects will be seen soon: "In December a rare cross-party parliamentary proposal (the first step in passing new legislation) was made, proposing a “default open” strategy for any public sector data. The Prime Minister’s Office has formed a committee that is to propose changes and improvements in legislation and suggest how to define the boundaries between data that is to be open and data that shall remain closed."
Dear Mr. Zuckerberg,
I was astonished to discover that, despite the concerns of users and severe criticism from consumer activists, "Facebook" would like to relax data protection regulations on the network even further. Your current privacy policy states that in future user data is to be automatically passed on to third parties. These parties are supposed to comprise previously vetted operators of websites and applications. Anyone who does not want this to happen must take action themselves and use the opt-out function. I use the Internet every day, both professionally and privately, and am a member of several social networks, including Facebook. Social networks are an enrichment and it is difficult to imagine our lives without them. Networks such as Facebook link millions of people across national boundaries, and it is for this very reason that particular importance must be attached to protecting privacy. As you know, I, in my capacity as Federal Minister of Consumer Protection, am striving to ensure that personal data on the Internet is protected. Private information must remain private - I think that I speak for many Internet users in this respect. Unfortunately, Facebook does not respect this wish, a fact that was confirmed in the most recent study by the German consumer organisation "Stiftung Warentest". Facebook fares badly in this study. Facebook was graded as "poor" in respect of user-data policy and user rights. Facebook also refused to provide information on data security - it was awarded a "5" (= poor) in this category as well.
It is therefore all the more astounding that Facebook is not willing to eliminate the existing shortcomings regarding data protection, but is instead going even further. Decisions such as this will not engender trust in an enterprise in the long term.
“To trace something unknown back to something known is alleviating, soothing, gratifying and gives moreover a feeling of power. Danger, disquiet, anxiety attend the unknown – the first instinct is to eliminate these distressing states. First principle: any explanation is better than none… The cause-creating drive is thus conditioned and excited by the feeling of fear…” Friedrich Nietzsche
“Any explanation is better than none.” And the simpler, it seems in the investment game, the better. “The markets went up because oil went down,” we are told, except when it went up there was another reason for the movement of the markets. We all intuitively know that things are far more complicated than that. But as Nietzsche noted, dealing with the unknown can be disturbing, so we look for the simple explanation.
“Ah,” we tell ourselves, “I know why that happened.” With an explanation firmly in hand, we now feel we know something. And the behavioral psychologists note that this state actually releases chemicals in our brains that make us feel good. We become literally addicted to the simple explanation. The fact that what we “know” (the explanation for the unknowable) is irrelevant or even wrong is not important to the chemical release. And thus we look for reasons.
How does an event like a problem in Greece (or elsewhere) affect you, gentle reader? And I mean, affect you down where the rubber hits your road. Not some formula or theory about the velocity of money or the effect of taxes on GDP. That is the question I was posed this week. “I want to understand why you think this is so important,” said a friend of Tiffani. So that is what I will attempt to answer in this week’s missive, as I write a letter to my kids trying to explain the nearly inexplicable.
China's insomniac twitterati were on fire this afternoon U.S. time, powered no doubt by much caffeine and sugar in the the wee hours of the morning in China. Half an hour before Google's David Drummond posted his announcement that Google.cn is now effectively operating from Google.com.hk, Guangzhou-based open source programmer @LEMONed broke the news that google.cn was being redirected to the Hong Kong service. Reacting to the news, @wentommy quipped: "One Google, One World; One China, No Google."
As of now (still early morning in Beijing), Google.com.hk is accessible from mainland China although specific search results for sensitive terms result in a browser error - or in other words, are blocked. Same as it's always been for sensitive searches on Google.com from inside mainland China. This is network filtering and would happen automatically as part of the "great firewall" Internet filtering system.
The ball is now in the Chinese government's court in two ways:
1) Whether they will block all of google.com.hk, which until now has not been blocked. If they are smart they will just leave the situation as is and stop drawing media attention to their censorship practices. The longer this high profile fracas goes on, the greater Chinese Internet users awareness will be about the lengths to which their government goes to blinker their knowledge of the world. That may inspire more people to start learning how to use circumvention tools for getting around the censorship. Chinese censorship is only effective if a large percentage of the population isn't very conscious of what they're missing. As I like to explain it: if you're born with tunnel vision you assume it's normal until somehow you're made aware that life without tunnel vision is both possible and much better. The longer this story remains in the headlines, the more people will become conscious of their tunnel vision and think about ways to eliminate it.
A taxi pulled up to Apple's Fifth Avenue store one recent morning, and while the meter was running a pair of tourists dashed out to have their photos taken near the entrance, a glass cube of such incorporeal lightness that it seems in danger of floating away.
Had those architectural pilgrims arrived a minute later, they might have noticed a 70-ish man in a rumpled blue blazer struggling to balance an overpacked briefcase on a rolling suitcase. He was hatless, coatless, and tieless, and his shirt pocket was weighed down by a fistful of fine Japanese pencils.
It was the prizewinning Pennsylvania architect Peter Bohlin, stopping by to kick the tires on his little creation, which he first sketched for Apple chairman Steve Jobs using one of his ever-present Itoya pencils. Told that tourists had photographed it with their iPhones, Bohlin chuckled and said, "I hear that happens a lot."
Barely four years after Apple opened the store in the basement of the General Motors tower, Bohlin's ethereal one-story structure - a glorified vestibule, really - has become a must-see attraction as well as Apple's highest-grossing location. According to Cornell University scientists who analyzed 35 million Flickr images, the Cube is the fifth-most-photographed building in New York, the 28th worldwide.
Let me begin by saying that I'm tremendously honored to be here doing the welcoming keynote at SXSW. I have a huge feeling of warmth whenever I think about SXSW. Part of this is deeply personal - I met my soulmate here. I have met countless friends here. And made more professional connections than I can possibly enumerate. Walking down Red River fills me with a flash of fun memories.
What’s powerful about SXSW is first and foremost the people. From there, the content spills out beautifully. But as we think of the power of this conference to bring people together, I want to expressly call out the amazing work of Hugh Forrest, your fearless organizer. Hugh has done a phenomenal job of bringing diverse groups here to Austin to engage with one another. And for that, I’m eternally grateful.
For those of you who are old-timers, you know how special this conference is. For those of you who are new here, you're going to have a fantastic time! Just one bit of advice: beware of the tequila and, especially, of any future colleagues who may offer you tequila.
Video from the current French agricultural fair.
At 3:34 am local time, today, February 27th, a devastating magnitude 8.8 earthquake struck Chile, one of the strongest earthquakes ever recorded. According to Chilean authorities, over 400 people are now known to have been killed. The earthquake also triggered a Tsunami which is right now propagating across the Pacific Ocean, due to arrive in Hawaii in hours (around 11:00 am local time). The severity of the Tsunami is still not known, but alerts are being issued across the Pacific. (Entry updated four times, now 45 photos total)
It's hard to believe it's been two years this month since this column first revealed that speculators were running riot in the oil futures market. I pointed out that unrestrained commodities speculators were causing the oil price climb we were seeing, which would send the cost of crude to a peak of $147 a barrel by the summer of 2008. At the time most "experts" quoted in the media were saying that oil prices were skyrocketing because world supplies couldn't keep up with demand, or because we had passed the point of Peak Oil. Neither position was true, of course; just looking at tanker shipments and worldwide oil supplies on hand, those concepts were obviously invalid.
Many of the columns I wrote for BusinessWeek in the spring and summer of 2008 debunked all the excuses being given for oil prices' suddenly doubling. Today it has come to be considered common knowledge, even common sense, and that's good for my track record.
Unfortunately for the country's track record, however, knowing the truth hasn't changed a thing.
Hegel, Call Your Publicist
Last October, in a follow-up column for BusinessWeek, "How Wall Street Will Kill the Recovery," I pointed out how investment banks were again profiting from taxpayer-funded bailout benefits.
They were taking those near-zero-interest loans and, instead of using the money to restart lending (and thus, it's hoped, the economy), they were pumping much of it into equities and commodities. There they were profiting from the ever-rising paper prices caused by the huge influx of cheaply borrowed money.
"The OECD rates Canada's banks as the safest in the world - the United States comes in fortieth, two places behind Botswana."
-- From I.O.U., by John Lanchester
There's always a pile of new books near my desk; currently, most of them deal with the history of the financial crisis. When time allows I open a couple more, read them and mark key points with highlighters for easier reference. It's always gratifying to find a passage in which a well-regarded economics writer makes the same points I have in my work, but I like books even better when they teach me things I did not already know.
An example: Barry Rithholtz, a market commentator, put the total cost of the current bailout in terms that most anyone can understand. It is now more than the nation spent for "The Marshall Plan, the Louisiana Purchase, the Apollo moon landings (and all costs of NASA's space flights), the Korean War, the Vietnam War, FDR's New Deal, the Invasion of Iraq and the 1980s Savings and Loan Scandal, combined and adjusted for inflation."
That statement alone should have the public up in arms, demanding smart actions that will make sure it never happens again.
The books I've been reading lately also cover the fundamental economic theories of both John Maynard Keynes and Milton Friedman. Keynes is known for promoting government deficit spending in hard times, while Friedman believes in deregulating and privatizing everything. What I now find interesting is that nobody carrying the banner of either of these two economic giants seems to get Keynes' or Friedman's fundamental economic viewpoints entirely right.
Antitrust lawyer and Open Book Alliance leader Gary Reback has been called the “antitrust champion” and the “protector of the marketplace” by the National Law Journal, and has been at the forefront of many of the most important antitrust cases of the last three decades. He is one of the most vocal opponents of the Google Books settlement. I interviewed Reback a few months ago, and Google Books was one of the topics we discussed. In the column below, Reback discusses Google Books and its ties to Google search.
This Thursday leaders of the international publishing industry will watch with bated breath as a federal judge in New York hears arguments over whether to approve the Google Book Settlement.
More a complicated joint venture among Google and five big New York publishers than the resolution of pending litigation, the proposed settlement once promised unprecedented access to millions of out-of-print books through digital sales to consumers and online research subscriptions for libraries. But with the passage of time and the ability to examine the deal more closely, the promises proved illusory. The big publishers, as it turns out, have reserved the right to negotiate secret deals with Google for the books they claim through the settlement (pdf).
Meanwhile, torrents of outrage rained down on the New York court – from authors whose ownership rights will be appropriated through the settlement’s procedures, from librarians fearful of price exploitation by Google, from privacy advocates worried that Google will monitor the reading habits of library patrons, from libertarians incensed over the use of a legal procedure to effect the widespread appropriation of property, from digital booksellers concerned about Google’s unfair advantage in the marketplace.
The Super Bowl of Surfing lived up to its legend Saturday, and then some. The waves at Mavericks were so massive - the biggest in the history of surf contests, some said - that they caused collateral damage on the sidelines.
Long before South African Chris Bertish tamed a pair of monster swells to win the $50,000 first prize at the seventh Mavericks Surf Contest north of Half Moon Bay, a series of waves crashed into some of the thousands of fans who had flocked to the beach to try to see the action.
Just after 9 a.m. near Pillar Point, 13 people were injured and at least 40 people were knocked off their feet, officials said. Many of them had been standing on a short concrete wall and were thrown into rocks or mud by a surge of water.
A stage set up for an award ceremony toppled, while sound equipment meant for a beach broadcast was swamped.
On Tuesday, the Icelandic parliament is expected to introduce a measure aimed at making the country an international center for investigative journalism publishing, by passing the strongest combination of source protection, freedom of speech, and libel-tourism prevention laws in the world.
Supporters of the proposal say the move would make Iceland an “offshore publishing center” for free speech, analogous to the offshore financial havens that allow corporations to hide capital from authorities. Could global news organizations with a home office in Reykjavík soon be as common as Delaware corporations or Cayman Islands assets?
“This is a legislative package to create a haven for freedom of expression,” Icelandic member of parliament Birgitta Jónsdóttir confirmed to me, saying that a proposal for comprehensive media law reform will be filed in parliament on Tuesday, and that whistle-blowing specialists Wikileaks has been involved in drafting it. There have been persistent hints of an Icelandic media move in recent weeks, including tweets from Wikileaks and a cryptic message from the newly created @icelandmedia Twitter account.
The text of the proposal, called the Icelandic Modern Media Initiative, is not yet public, but the most detailed evidence comes from a video of a talk by Julian Assange and Daniel Schmitt of Wikileaks, given at the Chaos Communications Congress hacker conference in Berlin on Dec. 27:
More than a million spectators gathered before the Capitol on a frosty January afternoon to witness the inauguration of Barack Obama, who promised in his campaign to change Washington’s mercenary culture of lobbyists, special interest influence and backroom deals. But within a few months of being sworn in, the President and his top aides were sitting down with leaders from the pharmaceutical industry to hash out a deal that they thought would make health care reform possible.
Over the following months, pharmaceutical industry lobbyists and executives met with top White House aides dozens of times to hammer out a deal that would secure industry support for the administration’s health care reform agenda in exchange for the White House abandoning key elements of the president’s promises to reform the pharmaceutical industry. They flooded Congress with campaign contributions, and hired dozens of former Capitol Hill insiders to push their case. How they did it—pieced together from news accounts, disclosure forms including lobbying reports and Federal Election Commission records, White House visitor logs and the schedule Sen. Max Baucus releases voluntarily—is a testament to how ingrained the grip of special interests remains in Washington.
At first glance, McLeod’s Tyre Shop in Lucedale, Mississippi, seems an unlikely venue for a political salon. It is a large, spare room, its contents pushed to the corners as if by an invisible centrifugal force, or maybe the weak wind of the ceiling fan. To the right of the entrance, four tyres stand on tiny podiums like sculptures in an art gallery. In the far right-hand corner of the room, a large 1920s stove slumbers beneath a Mississippi State football flag, which Doug McLeod hung to taunt his rivals from Ole Miss – the University of Mississippi. And in the far left-hand corner, a long counter is crowded with well-thumbed copies of every newspaper (local, state and national) from the past two weeks – kindling for starting and settling scores.
“A Mississippi lady once asked me where I went to church. I told her Sacred Heart and she said, ‘Well, we all have to worship somewhere, don’t we?’”
We walk in at the tail end of an argument between four men, just in time for McLeod to jam his finger into one of the newspapers and say, with an air of finality, “And that’s why they should raise interest rates.” McLeod has owned this tyre shop for more than 30 years, and in that time he has established himself as a local character and the shop as a destination: a place where he and others can hold forth. The scene is both chaotic and relaxed, with high-energy McLeod spinning like a top while visitors sit or lean, idling on about all subjects but their tyres.
The men assembled here, in one of the most Republican counties in the American deep south, are conservative. In fact, the latest demographics say they – southern, white males aged over 35 – are the Republican party. Despite differences on many subjects – football, Ford trucks, fiscal policy – they all agree that their interests are not represented in Washington, not by Barack Obama and the Democrats and not even by their own party.
We should remember what it felt like one year ago, as the ability to recall it emotionally will pass and it is an emotional memory as much as anything else. It was a moment rare in a democracy's history. The feeling was palpable--to supporters and opponents alike--that something important had happened. America had elected, the young candidate promised, a transformational president. And wrapped in a campaign that had produced the biggest influx of new voters and small-dollar contributions in a generation, the claim seemed credible, almost intoxicating, and just in time."Meet the new boss, same as the old boss"....
Yet a year into the presidency of Barack Obama, it is already clear that this administration is an opportunity missed. Not because it is too conservative. Not because it is too liberal. But because it is too conventional. Obama has given up the rhetoric of his early campaign--a campaign that promised to "challenge the broken system in Washington" and to "fundamentally change the way Washington works." Indeed, "fundamental change" is no longer even a hint.
Instead, we are now seeing the consequences of a decision made at the most vulnerable point of Obama's campaign--just when it seemed that he might really have beaten the party's presumed nominee. For at that moment, Obama handed the architecture of his new administration over to a team that thought what America needed most was another Bill Clinton. A team chosen by the brother of one of DC's most powerful lobbyists, and a White House headed by the quintessential DC politician. A team that could envision nothing more than the ordinary politics of Washington--the kind of politics Obama had called "small." A team whose imagination--politically--is tiny.
These tiny minds--brilliant though they may be in the conventional game of DC--have given up what distinguished Obama's extraordinary campaign. Not the promise of healthcare reform or global warming legislation--Hillary Clinton had embraced both of those ideas, and every other substantive proposal that Obama advanced. Instead, the passion that Obama inspired grew from the recognition that something fundamental had gone wrong in the way our government functions, and his commitment to reform it.
For Obama once spoke for the anger that has now boiled over in even the blue state Massachusetts--that our government is corrupt; that fundamental change is needed. As he told us, both parties had allowed "lobbyists and campaign contributions to rig the system." And "unless we're willing to challenge [that] broken system...nothing else is going to change." "The reason" Obama said he was "running for president [was] to challenge that system." For "if we're not willing to take up that fight, then real change--change that will make a lasting difference in the lives of ordinary Americans--will keep getting blocked by the defenders of the status quo."
The world's largest Internet search company and the world's most powerful electronic surveillance organization are teaming up in the name of cybersecurity. Under an agreement that is still being finalized, the National Security Agency would help Google analyze a major corporate espionage attack that the firm said originated in China and targeted its computer networks, according to cybersecurity experts familiar with the matter. The objective is to better defend Google -- and its users -- from future attack.
Google and the NSA declined to comment on the partnership. But sources with knowledge of the arrangement, speaking on the condition of anonymity, said the alliance is being designed to allow the two organizations to share critical information without violating Google's policies or laws that protect the privacy of Americans' online communications. The sources said the deal does not mean the NSA will be viewing users' searches or e-mail accounts or that Google will be sharing proprietary data.
The partnership strikes at the core of one of the most sensitive issues for the government and private industry in the evolving world of cybersecurity: how to balance privacy and national security interests. On Tuesday, Director of National Intelligence Dennis C. Blair called the Google attacks, which the company acknowledged in January, a "wake-up call." Cyberspace cannot be protected, he said, without a "collaborative effort that incorporates both the U.S. private sector and our international partners."
In 1977, a 21-year-old Steve Jobs unveiled something the world had never seen before: a ready-to-program personal computer. After powering the machine up, proud Apple II owners were confronted with a cryptic blinking cursor, awaiting instructions.
The Apple II was a clean slate, a device built – boldly – with no specific tasks in mind. Yet, despite the cursor, you did not have to know how to write programs. Instead, with a few keystrokes you could run software acquired from anyone, anywhere. The Apple II was generative. After the launch, Apple had no clue what would happen next, which meant that what happened was not limited by Mr Jobs’ hunches. Within two years, Dan Bricklin and Bob Frankston had released VisiCalc, the first digital spreadsheet, which ran on the Apple II. Suddenly businesses around the world craved machines previously marketed only to hobbyists. Apple IIs flew off the shelves. The company had to conduct research to figure out why.
Thirty years later Apple gave us the iPhone. It was easy to use, elegant and cool – and had lots of applications right out of the box. But the company quietly dropped a fundamental feature, one signalled by the dropping of “Computer” from Apple Computer’s name: the iPhone could not be programmed by outsiders. “We define everything that is on the phone,” said Mr Jobs. “You don’t want your phone to be like a PC. The last thing you want is to have loaded three apps on your phone and then you go to make a call and it doesn’t work any more.”
The openness on which Apple had built its original empire had been completely reversed – but the spirit was still there among users. Hackers vied to “jailbreak” the iPhone, running new apps on it despite Apple’s desire to keep it closed. Apple threatened to disable any phone that had been jailbroken, but then appeared to relent: a year after the iPhone’s introduction, it launched the App Store. Now outsiders could write software for the iPhone, setting the stage for a new round of revolutionary VisiCalcs – not to mention tens of thousands of simple apps such as iPhone Harmonica or the short-lived I Am Rich, which for $999.99 displayed a picture of a gem, just to show that the iPhone owner could afford the software.
The door of a dry-cleaner-size storefront in an industrial park in Wareham, Massachusetts, an hour south of Boston, might not look like a portal to the future of American manufacturing, but it is. This is the headquarters of Local Motors, the first open source car company to reach production. Step inside and the office reveals itself as a mind-blowing example of the power of micro-factories.
In June, Local Motors will officially release the Rally Fighter, a $50,000 off-road (but street-legal) racer. The design was crowdsourced, as was the selection of mostly off-the-shelf components, and the final assembly will be done by the customers themselves in local assembly centers as part of a “build experience.” Several more designs are in the pipeline, and the company says it can take a new vehicle from sketch to market in 18 months, about the time it takes Detroit to change the specs on some door trim. Each design is released under a share-friendly Creative Commons license, and customers are encouraged to enhance the designs and produce their own components that they can sell to their peers.
The Rally Fighter was prototyped in the workshop at the back of the Wareham office, but manufacturing muscle also came from Factory Five Racing, a kit-car company and Local Motors investor located just down the road. Of course, the kit-car business has been around for decades, standing as a proof of concept for how small manufacturing can work in the car industry. Kit cars combine hand-welded steel tube chassis and fiberglass bodies with stock engines and accessories. Amateurs assemble the cars at their homes, which exempts the vehicles from many regulatory restrictions (similar to home-built experimental aircraft). Factory Five has sold about 8,000 kits to date.
Greetings. About a week ago, in Google and the Battle for the Soul of the Internet, I noted that:Even here in the U.S., one of the most common Internet-related questions that I receive is also one of the most deeply disturbing: Why can't the U.S. require an Internet "driver's license" so that there would be no way (ostensibly) to do anything anonymously on the Net?
After I patiently explain why that would be a horrendous idea, based on basic principles of free speech as applied to the reality of the Internet -- most people who approached me with the "driver's license" concept seem satisfied with my take on the topic, but the fact that the question keeps coming up so frequently shows the depth of misplaced fears driven, ironically, by disinformation and the lack of accurate information.
So when someone who really should know better starts to push this sort of incredibly dangerous concept, it's time to bump up to orange alert at a minimum, and the trigger is no less than Craig Mundie, chief research and strategy officer for Microsoft.
At the World Economic Forum in Davos two days ago, Mundie explicitly called for an "Internet Driver's License": "If you want to drive a car you have to have a license to say that you are capable of driving a car, the car has to pass a test to say it is fit to drive and you have to have insurance."
In the wake of Google's revelation last week of a concerted, sophisticated cyber attack on many corporate networks, including its own Gmail service, Eric Schmidt's recent comments about privacy become even more troubling. As you'll recall, in a December 3 CNBC interview, Schmidt said, "If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place. But if you really need that kind of privacy, the reality is that search engines - including Google - do retain this information for some time and it's important, for example, that we are all subject in the United States to the Patriot Act and it is possible that all that information could be made available to the authorities."
For a public figure to say "If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place" is, at the most practical of levels, incredibly rash. You're essentially extending an open invitation to reporters to publish anything about your life that they can uncover. (Ask Gary Hart.) The statement also paints Schmidt as a hypocrite. In 2005, he threw a legendary hissy fit when CNET's Elinor Mills, in an article about privacy, published some details about his residence, his finances, and his politics that she had uncovered through Google searches. Google infamously cut off all contact with CNET for a couple of months. Schmidt didn't seem so casual about the value of privacy when his own was at stake.
”Whoever you are, I have always depended on the kindness of strangers”. The last line of Tennessee Williams’ A Streetcar Named Desire – uttered by its desperate heroine to the doctor taking her to a mental asylum – is an apt summary of the US financial sector in 2009.
As the crisis abated, banks took maximum advantage of the kindness of taxpayers and regulators to return to their core business: making money for shareholders and employees.
Ultra-low interest rates, dwindling competition and pent-up demand for their services sparked a renaissance in profits and share prices of the financial institutions that emerged from the turmoil in reasonable shape.
The question is whether history will repeat itself, or even just rhyme, this year. Here are my ten, utterly personal and non-exhaustive, predictions for the year ahead in US finance.
1) Strangers will be a lot less kind. With banks boasting about their new-found health, regulators will pull the plug on most of the measures they introduced to drag the financial industry back from the brink. A host of acronyms (Tarp, Talf, PPIP, TLGP) will be forgotten but not missed.
Under other circumstances, this would have been a year to savour in the long, rapid ascent of Lloyd Blankfein. Goldman Sachs, the investment bank he has led for three years, not only navigated the 2008 global financial crisis better than others on Wall Street but is set to make record profits, and pay up to $23bn (€16bn, £14bn) in bonuses to its 31,700 staff.
For Mr Blankfein, a scholarship boy from the Bronx whose first financial job at Goldman was selling gold coins in its commodities trading arm, has prospered to an extent that was implausible even 10 years ago, when it became a public company. Its influence has spread throughout the world, from New York and London to Shanghai and São Paulo.
A good slice of its success is attributable to Mr Blankfein, a tough, bright, funny (everyone remarks upon his unpretentious, wisecracking manner) financier who reoriented Goldman. Under his leadership, trading and risk-taking have pushed to the fore, reducing the influence of its investment banking advisers.
In 2009, however, Wall Street faced a wave of public anger at how banks that survived only with the assistance of taxpayers seemed unchanged and unrepentant. Goldman’s profitability, and suspicions that its deep links with governments around the world give it unfair advantages, made it a symbol of Wall Street greed and excess. It was described by the Rolling Stone writer Matt Taibbi as “a great vampire squid wrapped around the face of humanity”.
Perhaps that’s not the most polite way of putting it, but fact checking continues to emerge as a favorite practice of the public and certain elements of the press. (Though most of us in the press spend more time calling bullshit on each other than checking our own work.) In a recent column for Columbia Journalism Review, I stated that fact checking “is becoming one of the great American pastimes of the Internet age.”
Everybody loves to call bullshit. Thanks to the Internet, it’s easier than ever before.
The irony is that this trend emerges at a time when professional fact checkers, who traditionally worked at magazines, are being laid off. As a result, it appears as though the future of fact checking is in open, public and participatory systems and organizations, rather than the closed, professional systems traditionally used by large magazines. The Internet has made this shift possible.
Here’s a selection of fact checking-related news from the past year:
The expenses racked up by U.S. lawmakers traveling here for a conference last month included one for the "control room."
Besides rooms for sleeping, the 12 members of the House of Representatives rented their hotel's fireplace-equipped presidential suite and two adjacent rooms. The hotel cleared out the beds and in their place set up a bar, a snack room and office space. The three extra rooms -- stocked with liquor, Coors beer, chips and salsa, sandwiches, Mrs. Fields cookies and York Peppermint Patties -- cost a total of about $1,500 a night. They were rented for five nights.
While in Scotland, the House members toured historic buildings. Some shopped for Scotch whisky and visited the hotel spa. They capped the trip with a dinner at one of the region's finest restaurants, paid for by the legislators, who got $118 daily stipends for meals and incidentals.
Eleven of the 12 legislators then left the five-day conference two days early.
The tour provides a glimpse of the mixture of business and pleasure involved in legislators' overseas trips, which are growing in number and mostly financed by the taxpayer. Lawmakers travel with military liaisons who carry luggage, help them through customs, escort them on sightseeing trips and stock their hotel rooms with food and liquor. Typically, spouses come along, flying free on jets operated by the Air Force. Legislative aides come too. On the ground, all travel in chauffeured vehicles.
Cast your mind back to that SigTarp report, published last month.
Readers will recall there’s been a persistent stink over whether the efforts of the Federal Reserve and the US Treasury to prop up AIG had the effect of bailing out Goldman Sachs — its largest trading partner. Goldman Sachs always denied that idea, saying its exposure to AIG was collateralised and hedged against the mega-insurers’ fall. Others, were not so sure.
Last week the Wall Street Journal continued that particular line of thought with an article titled “Goldman fueled AIG gambles“, which examined GS’s role in acting as a middleman between the insurer and other banks. In short, Goldman offered banks protection on some of their investments (for instance on CDOs of home loans), which it in turn hedged with AIG in the form of CDS.
Twenty years after it was toppled, the area around the Berlin Wall is becoming a battleground again. In the streets neighbouring Berlin’s Todesstreifen – the once heavily guarded “death strip” on the east side – a new conflict is brewing. This time, it is between wealthy newcomers to the German capital’s regenerated core, and less monied residents, who fear being displaced.
Silvia Kollitz, an anti-development activist, is a resident of Prenzlauer Berg, a once dilapidated but now chic district of east Berlin. She feels her local area, with its pretty, tree-lined streets and sleek cafés, is being turned into a refuge for the rich. “The new buildings being put up are just for people with lots of money – who don’t use state schools and look at the rest of us as ‘local colour’ from behind their locked gates and high walls,” she says.
While Kollitz and fellow activists are seeking to halt these changes, they are fighting a strong tide. For the first time since the second world war, Berlin is attracting the international wealthy. Shaking off its gloomy cold war past, the city’s rebuilt centre is now packed with designer emporia, five-star hotels – Berlin has more than New York – and restaurants, sandwiched between Prussian palaces and new ministry buildings.
Computerworld reports on an extensive new Harvard Medical School study, appearing in the American Journal of Medicine, that paints a stark and troubling picture of the essential worthlessness of many of the computer systems that hospitals have invested in over the last few years. The researchers, led by Harvard's David Himmelstein, begin their report by sketching out the hype that now surrounds health care automation:Enthusiasm for health information technology spans the political spectrum, from Barack Obama to Newt Gingrich. Congress is pouring $19 billion into it. Health reformers of many stripes see computerization as a painless solution to the most vexing health policy problems, allowing simultaneous quality improvement and cost reduction ...
In 2005, one team of analysts projected annual savings of $77.8 billion, whereas another foresaw more than $81 billion in savings plus substantial health gains from the nationwide adoption of optimal computerization. Today, the federal government’s health information technology website states (without reference) that “Broad use of health IT will: improve health care quality; prevent medical errors; reduce health care costs; increase administrative efficiencies; decrease paperwork; and expand access to affordable care.
More here.Asking to delay repayment on your debt - or defaulting, as the world’s press is carefully not calling it - has turned out not to be a good way for Dubai’s Sheikh Makhtoum to win friends and influence lenders to Nakheel, the property arm of the state-owned conglomerate Dubai World. Markets have tumbled worldwide; investors, reminded that governments can be subprime too, have dumped the debt of other dodgy-looking economies (including Greece); and in Dubai… everyone is on holiday.
What is surprising here is not that Dubai is on the verge of default. It is that anyone was willing to lend them ludicrous sums of money in the first place. Calculated Risk points out that Sir Win Bischoff, then at the (US) state-controlled Citi and now, appropriately enough, at the (British) state-controlled Lloyds Banking Group, was raving about raising $8bn of loans for Dubai last year and as recently as December chose to go public with a “positive outlook on Dubai”. Another non-surprise: state-controlled Royal Bank of Scotland was Dubai World’s biggest loan arranger. In the UK, Dubai World has been buying up a long list of property, according to Anita Likus at The Source; the assumption is it will shortly be selling.
Now to the regional takeaway from our trip
We believe that few trust the United States. This is obvious in private conversation. And it is clear to all that confidence in the dollar is low. This is mostly mentioned only in private.
In public there is quiet response when the Treasury Secretary of the United States utters words about a strong dollar. Asians have heard that for years and with the many different accents of the various Treasury Secretaries. Geithner would serve the country better by ceasing to mouth the same words that his predecessor Snow and others used. He is not believed. Frankly, in some circles he is actually seen as an incompetent political hack. He is blamed by some for the insufficiency of the New York Fed under his presidency to supervise the primary dealers that failed – Countrywide, Bear Stearns, and Lehman. And the ethics issues surrounding the NY Fed under his tenure are viewed as appalling; this continues to surface in private conversations. Some folks are puzzled about why Obama maintains his support for Geithner. Some just attribute it to the President’s inexperience as a leader.
My takeaway is that our present Secretary of the Treasury is seriously and sustainably injuring the image of the United States. He has lost credibility. His actions are real and they impact markets. My conversations with those who are attempting to market GSE securities to Asians and getting rebuffed are validation enough for me on this point. When the Fed stops buying GSE mortgage backed securities, this reality will hit the markets in a re-pricing of that asset class. Spreads are going to widen.
The American federal budget deficits are worrisome everywhere. Policy promises from Washington to reduce them are greeted with great skepticism. Often they are privately described as American arrogance. Publicly, Asians are very polite and do not often subject their guests to embarrassing criticism. Privately they are quite candid. In my view they are correct: America is arrogant and seems to pretend that it is still the best and most trustworthy financial and capital market in the world. There is no basis for the US to have such a view of itself. We have squandered our reputational capital as a financial center leader.
A friend sends along the following chart. It examines the prior private sector experience of the cabinet officials since 1900 that one might expect a president to turn to in seeking advice about helping the economy. It includes Secretaries of State; Commerce; Treasury; Agriculture; Interior; Labor; Transportation; Energy; and Housing & Urban Development and excludes Postmaster General; Navy; War; Health, Education & Welfare; Veterans Affairs; and Homeland Security — 432 cabinet members in all.
What is so important about H.R. 1207: the Federal Reserve Transparency Act of 2009 aka the ‘Audit the Fed’ bill? This bill “To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.” may not sound terribly exciting, but in addition to making the Fed accountable for its quasi-fiscal activities, it could well set an important precedent for the enhanced accountability of operationally independent central banks everywhere.
The Finance Committee of the US House of Representatives has just passed this bill, which is an amendment sponsored by Representatives Ron Paul (Republican) and Alan Grayson (Democrat) to Representative Barney Frank’s HR 3996, the “Financial Stability Improvement Act of 2009″. The amendment allows the US Government Accountability Office to conduct a wide-ranging audit of the financial activities of the Federal Reserve Board. Specifically (and quoting from the RonPaul.com website):
The Paul/Grayson amendment:
Chef Dominique Crenn was raised in Versailles, France. She now makes an incredible Thanksgiving dinner, but when she first came to the U.S., the entire holiday threw her off.
She sat down with NPR's Steve Inskeep to discuss how she cooks for Thanksgiving.
"I was a little bit lost when I came here," she told Inskeep. "I had no idea what Thanksgiving was about."
In France, turkey is eaten at Christmas. So the American phenomenon of Thanksgiving turkey and dressing mystified her.
"Oh, a month before Christmas, we're gonna eat Turkey?"
But now, she's hooked. Crenn has been celebrating Thanksgiving for about 20 years. "This is a pretty cool holiday," she said.
As US President Barack Obama glided through China, a chorus erupted in New York and Washington: the problem with the global economy is China's exchange-rate policy, and Obama's No 1 job is to slay it. It's sad that these people actually believe what they are saying: the same "logic" got the world into the current mess. In the feverish hallucination of salvation, they think that moving China's currency policy would right all wrongs.
The US Federal Reserve is the biggest currency manipulator in the world. Not only does it keep the short-term interest rate at zero through its vast purchase programme for mortgage-backed securities, it also keeps credit spreads and bond yields artificially low. Its manipulation stops money, bond and credit markets from pricing either the Fed's policy or the US economic plight. All the firepower is packed into the currency market, giving speculators a sure bet on a weaker dollar and everything else rising. Here comes the biggest carry trade ever: the Fed is promising no downside for shorting the dollar.
The US Treasury writes an annual report, judging if other countries are manipulating their exchange rates. It should look in the mirror. Even though the Fed is not directly intervening in the currency market per se, its manipulation is equivalent to pushing down the dollar by non-market means.
As US President Barack Obama glided through China, a chorus erupted in New York and Washington: the problem with the global economy is China's exchange-rate policy, and Obama's No 1 job is to slay it. It's sad that these people actually believe what they are saying: the same "logic" got the world into the current mess. In the feverish hallucination of salvation, they think that moving China's currency policy would right all wrongs.
The US Federal Reserve is the biggest currency manipulator in the world. Not only does it keep the short-term interest rate at zero through its vast purchase programme for mortgage-backed securities, it also keeps credit spreads and bond yields artificially low. Its manipulation stops money, bond and credit markets from pricing either the Fed's policy or the US economic plight. All the firepower is packed into the currency market, giving speculators a sure bet on a weaker dollar and everything else rising. Here comes the biggest carry trade ever: the Fed is promising no downside for shorting the dollar.
The US Treasury writes an annual report, judging if other countries are manipulating their exchange rates. It should look in the mirror. Even though the Fed is not directly intervening in the currency market per se, its manipulation is equivalent to pushing down the dollar by non-market means.
Goldman Sachs apologised for its role in the financial crisis on Tuesday and pledged $500m over five years – or about 2.3 per cent of its estimated bonus and salary pool for 2009 – to help 10,000 US small businesses recover from the recession. The moves come as the bank tries to defuse a political and public backlash over its plans to share billions of dollars among top dealmakers after rebounding sharply from the turmoil and earning record profits in the first nine months of the year.
Lloyd Blankfein, Goldman’s chief executive, told a corporate conference in New York that the bank regretted taking part in the cheap credit boom that had fuelled the pre-crisis bubble. “We participated in things that were clearly wrong and have reason to regret,” said Mr Blankfein. “We apologise.”
Mr Blankfein also told the conference he wished he had not told the UK’s Sunday Times newspaper that Goldman did “God’s work” – a remark that was seized upon by the bank’s critics – and said it had been meant as a joke.
Mr Blankfein spoke hours before Goldman revealed plans to invest $500m over five years in business education, technical assistance and venture capital to help 10,000 small businesses across the US. The yearly amount of about $100m to be spent on the initiative – which will be overseen by a panel co-chaired by Warren Buffett, a Goldman investor – is equivalent to a good trading day at Goldman. In the third quarter, the bank had 36 days in which traders made more than $100m.
Mr Buffett told the Financial Times that the small business programme was not a response by the bank to recent criticism. “This is a big initiative,” he said. “This is not a one-day or one-year wonder. It’s a continuous programme.”
The financial crisis hasn't been kind to General Electric Co. Its stock has lost almost half its value, the government has stepped in to prop up its enormous financial arm, and sales have slumped in core industrial businesses.
But Chief Executive Jeffrey Immelt now has his eye on a huge new pool of potential revenue: Uncle Sam's stimulus dollars. Mr. Immelt, a registered Republican, quips about the shift in thinking in the nation's corner offices: "We're all Democrats now."
GE has high hopes for the strategy. It says that over the next three years or so it could bring in as much as $192 billion from projects funded by governments around the globe, such as electric-grid modernization, renewable-energy generation and health-care technology upgrades.
The company is just starting to see a payoff. Last month, for example, President Barack Obama announced $3.4 billion in government-stimulus grants for power-grid projects. About one-third of the recipients are GE customers. GE expects them to use a good chunk of that money to buy its equipment.
The government has taken on a giant role in the U.S. economy over the past year, penetrating further into the private sector than anytime since the 1930s. Some companies are treating the government's growing reach -- and ample purse -- as a giant opportunity, and are tailoring their strategies accordingly. For GE, once a symbol of boom-time capitalism, the changed landscape has left it trawling for government dollars on four continents.
When I was 14, Warren Buffett wrote me a letter.
It was a response to one I’d sent him, pitching an investment idea. For a kid interested in learning stocks, Buffett was a great role model. His investing style — diligent security analysis, finding competent management, patience — was immediately appealing.
Buffett was kind enough to respond to my letter, thanking me for it and inviting me to his company’s annual meeting. I was hooked. Today, Buffett remains famous for investing The Right Way. He even has a television cartoon in the works, which will groom the next generation of acolytes.
But it turns out much of the story is fiction. A good chunk of his fortune is dependent on taxpayer largess. Were it not for government bailouts, for which Buffett lobbied hard, many of his company’s stock holdings would have been wiped out.
Berkshire Hathaway, in which Buffett owns 27 percent, according to a recent proxy filing, has more than $26 billion invested in eight financial companies that have received bailout money. The TARP at one point had nearly $100 billion invested in these companies and, according to new data released by Thomson Reuters, FDIC backs more than $130 billion of their debt.
To put that in perspective, 75 percent of the debt these companies have issued since late November has come with a federal guarantee. (Click chart to enlarge in new window)
East German documents provide a crucial piece of history, supporters of the project say, but putting them back together could take hundreds of years. A computerized system would help, but it's costly.Reporting from Berlin and Zirndorf, Germany, - Martina Metzler peers at the piles of paper strips spread across four desks in her office. Seeing two jagged edges that match, her eyes light up and she tapes them together.
"Another join, another small success," she says with a wry smile -- even though at least two-thirds of the sheet is still missing.
Metzler, 45, is a "puzzler," one of a team of eight government workers that has attempted for the last 14 years to manually restore documents hurriedly shredded by East Germany's secret police, or Stasi, in the dying days of one of the Soviet bloc's most repressive regimes.
Two decades after the heady days when crowds danced atop the Berlin Wall, Germany has reunited and many of its people have moved on. But historians say it is important to establish the truth of the Communist era, and the work of the puzzlers has unmasked prominent figures in the former East Germany as Stasi agents. In addition, about 100,000 people annually apply to see their own files.
Wal-Mart was the victim of a serious security breach in 2005 and 2006 in which hackers targeted the development team in charge of the chain’s point-of-sale system and siphoned source code and other sensitive data to a computer in Eastern Europe, Wired.com has learned.
Internal documents reveal for the first time that the nation’s largest retailer was among the earliest targets of a wave of cyberattacks that went after the bank-card processing systems of brick-and-mortar stores around the United States beginning in 2005. The details of the breach, and the company’s challenges in reconstructing what happened, shed new light on the vulnerable state of retail security at the time, despite card-processing security standards that had been in place since 2001.
In response to inquiries from Wired.com, the company acknowledged the hack attack, which it calls an “internal issue.” Because no sensitive customer data was stolen, Wal-Mart had no obligation to disclose the breach publicly.
Wal-Mart had a number of security vulnerabilities at the time of the attack, according to internal security assessments seen by Wired.com, and acknowledged as genuine by Wal-Mart. For example, at least four years’ worth of customer purchasing data, including names, card numbers and expiration dates, were housed on company networks in unencrypted form. Wal-Mart says it was in the process of dramatically improving the security of its transaction data, and in 2006 began encrypting the credit card numbers and other customer information, and making other important security changes.
“Wal-Mart … really made every effort to segregate the data, to make separate networks, to encrypt it fully from start to finish through the transmission, ” says Wal-Mart’s Chief Privacy Officer Zoe Strickland. “And not just in one area but across the different uses of credit card systems.”
Wal-Mart uncovered the breach in November 2006, after a fortuitous server crash led administrators to a password-cracking tool that had been surreptitiously installed on one of its servers. Wal-Mart’s initial probe traced the intrusion to a compromised VPN account, and from there to a computer in Minsk, Belarus.
White-knuckle airline passengers who are already shaken by news that two Northwest Airlines pilots are under investigation for overshooting a Minneapolis airport after possibly nodding off won't want to hear this: Some pilots say cockpit catnaps happen.Flying from the west coast last year, I sat next to an international pilot flying home. This pilot pounded coffee (POUNDED!) during our four hour flight. He mentioned the long Asia routes and the typical 36 hour turnarounds. I asked how they stay alert on 12 to 16 hour flights? He responded that cockpit etiquette is set by the captain. If he/she starts to read a book, then the others can do so. We never discussed falling asleep, though, based on the coffee intake, it would seem to be a natural outcome of these trips."Pilots on occasion do take controlled naps," said Barry Schiff, an aviation safety consultant and retired TWA pilot. "So this is not without precedent."
Although the Federal Aviation Administration prohibits pilots from catching a few z's in the cockpit, several airline pilots say they are surprised that napping mishaps haven't happened more often, considering longer work schedules for pilots and advances in aviation that make planes easier to fly.
The issue of cockpit siestas came under scrutiny this week after the FAA and the National Transportation Safety Board announced they were looking into why Northwest Flight 188, from San Diego to Minneapolis, overshot its airport by 150 miles before turning around.
It will be business as usual for Goldman Sachs this morning. The bank will annoy a lot of people.
Goldman, the institution that came through last year’s financial crisis best – arguably the only pure investment bank left standing – will say how much money it made in the third quarter (a lot) and how many billions it has stored for bonuses (about $5.5bn towards a likely 2009 bonus pool of $23bn).
For believers in Goldman’s ethical standards and way of doing business, these are difficult times. Although it avoided the mistakes that brought down Bear Stearns and Lehman Brothers, forced Merrill Lynch into Bank of America’s arms, and prodded Morgan Stanley further into lower-risk retail broking, Goldman has become a whipping boy.
There is outrage that, having taken government money to survive the crash, Goldman is in such rude health that it will hand out billions in bonuses. Matt Taibbi, a Rolling Stone writer, caught the mood memorably by describing Goldman as “a giant vampire squid wrapped around the face of humanity”.
Such is Goldman’s importance to Wall Street and regulation that I am devoting a pair of columns to it. Today, I will discuss the Goldman problem (different and less egregious to what Mr Taibbi believes, but still a problem). Next week, I will suggest what should be done about it by regulators and the bank itself.
Goldman executives were wounded by how seriously Mr Taibbi’s piece was taken despite their riposte that vampire squids are small creatures that present no danger to humanity. He accused it of profiting from bubbles such as the US internet and housing booms, and of repeatedly “selling investments they know are crap” to retail investors.
An earthquake that began beneath an obscure mountain in Santa Cruz County called Loma Prieta struck terror into Northern California 20 years ago this week on a beautiful fall afternoon, just as a World Series game was about to begin in San Francisco.More notes and links on Loma Prieta, including my recollection(s) and that of Brian Zimdars.
The quake lasted only 15 seconds, but it killed 67 people, smashed downtown Santa Cruz, wrecked San Francisco's Marina district, broke the Bay Bridge - and changed much of the Bay Area.
Loma Prieta was one of those watershed events; in some ways, the disaster was a blessing in disguise. Out of it came a brand new San Francisco waterfront, the revival of a rundown neighborhood in Hayes Valley, major upgrades of classic buildings in downtown Oakland, and new laws on unreinforced old buildings. One of these years, a new eastern half of the Bay Bridge will open.
This, they toss off with the certainty of wine-fuelled genius, also explains the rise in the gold price.Bank spreads are at record levels. Their cost of funds is nearly 0, while they lend it out at 4.99% or (much) greater. Plus, the fees.
Actually, I do not think that is how the bank risk paradox will play out.
There are going to be much larger write-offs and reserves taken at all the big banks, with the peak in reported bad news probably coming next year. However, the taxpayer will not be asked for more capital, and the Federal Reserve and Treasury will gradually dismantle the temporary support structures, just as they say.
How is this possible? Because the public will pay through usury, not taxation. There is a big difference, of course. Usury is less visible, and you cannot effectively vote against it.
Blood will flow, but it will do so not as a catastrophic bath for the banks, but as a gradual transfusion to them from their customers.
There will be headline risk for the banks' management and public securities, which is why I think that their CDS protection is too cheap at the moment.
One source of headline risk is the spectre of Federal Government reform of the financial system. God knows there is a good case to be made for de-cartelising the industry, but that is not going to happen.
"By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn’t put money directly into the stock market, but he didn’t have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. The dollars he cranked out didn’t go into the hard economy, but instead into tradable assets."
— "The Bernanke Market," Wall Street Journal, July 15, 2009
"In the last week alone, the European Central Bank allocated the record sum of $619 billion to 1,1,00 financial institutions – at a paltry 1 percent interest rate. And yet the money is not going where the central banks want it to go, namely into the pockets of businesses and consumers – at least not at reasonable interest rates."
— "How German Banks are Cashing In on the Financial Crisis," Der Spiegel, July 1, 2009
Two weeks ago, in meetings with their North Texas dealers, both Toyota and Honda voiced concern about how the economic recovery was going to hold up over the next few quarters. It wasn’t public news yet in the States, but Japanese executives already knew that their imports and exports had fallen sharply through the summer. And, while our business media were cheerleading because the Dow Jones was once again flirting with 10,000, in Japan their exports had just fallen 36 percent; metal shipments to the U.S. were down by more than 80 percent, automobile shipments by 50 percent. This was a problem here, too: In August America’s dealers seriously needed Japanese vehicles to restock their depleted inventories.
Toyota and Honda took different tacks for the fourth quarter. Toyota said it will spend $1 billion in advertising to move the retail market. Honda, always more cautious in difficult times, said it would spend nothing during the same period. Honda added that it will keep dealer inventories at a 30-day supply of unsold vehicles, half the inventory considered normal.
hy is a soon-to-be success story gathering dust at TATA dealers across India? Much like the initial growing pains of the Ford Model T, the $2000 Nano currently lies on waiting list. Given the lopsided supply/demand and construction conflagrations with the government, I reckon enterprising Indians are flipping the Nanos living in parking lot limbo for profit. Still, my precious few moments sitting in somebody’s dusty Nano left me impressed. Not because it was a perfect machine: I saw automotive history in the making.
Rarely in America is a car designed around a vision: witness the overweight performance icons clawing for yesteryear’s glory, car based trucks and globally designed, badge engineered atrocities. Not with the TATA Nano: behold the homegrown hero.
The Nano is born from an undying need for affordable transportation in a country with a growing but repressed middle class. This group needs a family vehicle superior to tube frame rickshaws and 150cc motorcycles carrying four or more people. Yes, really: I saw a family of four riding a motorcycle through the congested, fast paced, life threatening streets of Bangalore. Make no mistake: a car at this price and size is the automotive embodiment of “If you Build It, They Will Come.”
It’s all about the lakhs; the Nano is designed around a price befitting the Indian working class. One look around the beast shows the good, bad and ugly of the situation.
Exterior fit and finish is respectable, until you spot the unfinished rear hatchback seams, hurriedly painted over. That stylish rear hatch is glued shut, so cargo is only accessible from the rear seat. And the list of price-conscious ideas doesn’t stop: three-lug wheels, single arm wiper blade and an adorable looking center exit exhaust.
The Sept. 14th Newsweek cover line — “Is Your Baby Racist?” — should have included a sub-head, “Is Dick Cheney a Butcher?”
Featured inside the magazine was a full-page, stand-alone picture of former Vice President Dick Cheney, knife in hand, leaning over a bloody carving board. Newsweek used it to illustrate a quote that he made about C.I.A. interrogators. By linking that photo with Mr. Cheney’s comment and giving it such prominence, they implied something sinister, macabre, or even evil was going on there.
I took that photograph at his daughter Liz’s home during a two-day assignment, and was shocked by its usage. The meat on the cutting board wasn’t the only thing butchered. In fact, Newsweek chose to crop out two-thirds of the original photograph, which showed Mrs. Cheney, both of their daughters, and one of their grandchildren, who were also in the kitchen, getting ready for a simple family dinner.
However, Newsweek’s objective in running the cropped version was to illustrate its editorial point of view, which could only have been done by shifting the content of the image so that readers just saw what the editors wanted them to see. This radical alteration is photo fakery. Newsweek’s choice to run my picture as a political cartoon not only embarrassed and humiliated me and ridiculed the subject of the picture, but it ultimately denigrated my profession.
The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination - and is why your Christmas stocking may be on the light side this year.The tropical waters that lap the jungle shores of southern Malaysia could not be described as a paradisical shimmering turquoise. They are more of a dark, soupy green. They also carry a suspicious smell. Not that this is of any concern to the lone Indian face that has just peeped anxiously down at me from the rusting deck of a towering container ship; he is more disturbed by the fact that I may be a pirate, which, right now, on top of everything else, is the last thing he needs.
His appearance, in a peaked cap and uniform, seems rather odd; an o fficer without a crew. But there is something slightly odder about the vast distance between my jolly boat and his lofty position, which I can't immediately put my finger on.
Then I have it - his 750ft-long merchant vessel is standing absurdly high in the water. The low waves don't even bother the lowest mark on its Plimsoll line. It's the same with all the ships parked here, and there are a lot of them. Close to 500. An armada of freighters with no cargo, no crew, and without a destination between them.
The tensions that rocked the British government following the collapse of the Berlin Wall in 1989 are revealed in a series of Whitehall documents published today.
The papers throw fresh light on the struggle between Margaret Thatcher, prime minister at the time, and senior Foreign Office figures over German reunification.
As the Financial Times revealed yesterday, the documents show that Mrs (now Lady) Thatcher and François Mitterrand, the late French president, harboured fears that a united Germany would threaten Europe. They display the degree to which Mrs Thatcher clashed with Douglas Hurd, then foreign secretary, and Sir Christopher Mallaby, then ambassador to Bonn, who felt reunification was inevitable.
After Helmut Kohl, the West German chancellor, announced a 10-point plan for reunification on November 28, 1989, Mrs Thatcher expressed her opposition.
She told Mr Mitterrand in talks on December 8 that Mr Kohl had "no conception of the sensitivities of others in Europe, and seemed to have forgotten that the division of Germany was the result of a war which Germany had started".
A separate memorandum by Charles Powell, her foreign policy adviser, underscores her opposition. "We do not want to wake up one morning and find that. . . German reunification is to all intents and purposes on us," he wrote.
A growing number of U.S. insurers are paying for patients to have medical procedures performed more cheaply overseas. And that's raising the profile of a few companies you've probably never heard of. Video: Bangkok Bypass Surgery
IN THE PAST THREE MONTHS, THE CREAKY Barron's staff has replaced a hip, two knees and undergone various nips and tucks. Based on average prices, these cost a total of at least $100,000. But abroad, say in Singapore, the tab would have been about $50,000, including stays in a private room, airfare and a vacation for the patients and their companions. Elsewhere in Asia, medical care is even cheaper. That's why more U.S. insurers are considering financing treatment for Americans willing to travel abroad. In fact, "medical tourism" could help rein in the health-care costs that devour 16% of America's gross domestic product.
That possibility is raising the profile of a few publicly traded companies you've probably never heard of: Thailand's Bumrungrad Hospital (ticker: BH.Thailand) and Bangkok Dusit Medical Services (BGH.Thailand), Singapore's Parkway Holdings (PWAY.Singapore) and Raffles Medical (RFMD.Singapore), and India's Apollo Hospitals (APHS.India). Says Prathap Reddy, the U.S.-trained cardiologist who founded Apollo in 1983 and is its chairman: "We bring excellent care at a cost benefit. If the U.S. were to cover all its people, there would be a demand/supply gap. India can step in with equivalent care at one-fifth the cost."
EARLIER this year Andrew Grove taught a class at Stanford Business School. As a living legend in Silicon Valley and a former boss of Intel, the world’s leading chipmaker, Dr Grove could have simply used the opportunity to blow his own trumpet. Instead he started by displaying a headline from the Wall Street Journal heralding the recent takeover of General Motors by the American government as the start of “a new era”. He gave a potted history of his own industry’s spectacular rise, pointing out that plenty of venerable firms—with names like Digital, Wang and IBM—were nearly or completely wiped out along the way.
Then, to put a sting in his Schumpeterian tale, he displayed a fabricated headline from that same newspaper, this one supposedly drawn from a couple of decades ago: “Presidential Action Saves Computer Industry”. A fake article beneath it describes government intervention to prop up the ailing mainframe industry. It sounds ridiculous, of course. Computer firms come and go all the time, such is the pace of innovation in the industry. Yet for some reason this healthy attitude towards creative destruction is not shared by other industries. This is just one of the ways in which Dr Grove believes that his business can teach other industries a thing or two. He thinks fields such as energy and health care could be transformed if they were run more like the computer industry—and made greater use of its products.
Dr Grove may be 73 and coping with Parkinson’s disease, but his wit is still barbed and his desire to provoke remains as strong as ever. Rather than slipping off to a gilded retirement of golf or gallivanting, as many other accomplished men of his age do, he is still spoiling for a fight.
Eirik Johnson’s quietly theatrical photographs carry the sense of a way of life and work that is on the cusp of slipping away. For four years, Seattle-born Johnson travelled through Oregon, Washington and northern California, around the former boomtowns that were built on the now-declining salmon and timber industries.
He describes the resulting series, published as Sawdust Mountain, as “a melancholy love letter of sorts, my own personal ramblings”. Many of Johnson’s works are informed by the epic, picturesque 19th-century landscapes of Carleton Watkins, who took some of the earliest known images of the region. In others, his use of space and colour pays homage to several living photographers.
Johnson’s images are rendered all the more intense by his palette, through which he uses the region’s faded light to emphasise the down-at-heel tones of the man-made environment. His muted colours are a counterpoint to William Eggleston’s photographs of the American south, whose “harsh bright light and colours … seemed like the mirror opposite of what I saw present in the northwest,” says Johnson.
For many investors, the ultimate value of Sears resides in its liquidation value rather than the cash flow it can generate as a going concern. Much hidden value is seen in its valuable brands, like Kenmore, Land's End, Craftsman and DieHard, and the 73% interest in Sears Canada. A major holder "conservatively" estimates the retailer's breakup value at about $75 to $100 a share. (A confession: In an Oct. 22, 2007, article in Barron's, I surmised that there might be more than $300 a share in hidden value in Sears stock.)
Given the recent performance of the company and the agonies of the U.S. consumer and credit markets, these sum-of-the-parts estimates have plummeted. In a May report, Morgan Stanley's Greg Melich came up with a value of $33 a share. Last week, he said that the new value would be somewhat but not dramatically higher when he releases his latest calculations in the next few weeks.
Nonetheless, the entire exercise is somewhat academic, according to Melich. Sears, for example, couldn't dump all its 250 million square feet of retail space without destroying the values of retailing properties for years to come. Likewise, who knows when shell-shocked mall-owning real-estate investment trusts and once-expansion-minded rivals like Target, Kohl's and Lowe's will be buying again, particularly with the current glut of space on the market and the drying up of mortgage financing. And the Kenmore, DieHard and Craftsman brands (but not Land's End) are so closely identified with Sears that it's difficult to ascribe much value to them if they are offered independent of Sears.
One thing I’ve learned over the years is this - screwing over your users while yelling “the lawyers made me do it!” rarely ends well. Particularly when the lawyers are just being lazy, and free speech rights are at stake.
Flickr really stepped in it this time. And they’ve sparked a free speech and copyright fascism debate that is unlikely to cool down any time soon.
Sometime last week they took down a photoshopped image of President Obama that makes him look like the Heath Ledger (Joker) character from The Dark Knight. The image was created and uploaded to Flickr by 20 year old college student Firas Alkhateeb while “bored over winter school break.” It was also later altered yet again by someone else and used to create anti-obama posters that went up in Los Angeles.
Thomas Hawk has a good overview of some of the other details, but the short version is the image was removed by Flickr sometime last week due to “due to copyright-infringement concerns.”
People are angry over the takedown. There are lots of pictures mocking President Bush on a Time Magazine cover on Flickr that haven’t been removed. And of the Heath Ledger Joker character.
Over the next decade, systems which create and store digital records of people's movements through public space will be woven inextricably into the fabric of everyday life. We are already starting to see such systems now, and there will be many more in the near future.
Here are some examples you might already have used or read about:These systems are marvellously innovative, and they promise benefits ranging from increased convenience to transformative new kinds of social interaction.
- Monthly transit swipe-cards
- Electronic tolling devices (FastTrak, EZpass, congestion pricing)
- Cellphones
- Services telling you when your friends are nearby
- Searches on your PDA for services and businesses near your current location
- Free Wi-Fi with ads for businesses near the network access point you're using
- Electronic swipe cards for doors
- Parking meters you can call to add money to, and which send you a text message when your time is running out
Unfortunately, these systems pose a dramatic threat to locational privacy.
President Barack Obama reminds me of Felix the Cat. One of the best-loved cartoon characters of the 1920s, Felix was not only black. He was also very, very lucky. And that pretty much sums up the 44th president of the US as he takes a well-earned summer break after just over six months in the world’s biggest and toughest job.
His stimulus bill has clearly made a significant contribution to stabilising the US economy since its passage in February. His cap-and-trade bill to reduce carbon dioxide emissions passed the House of Representatives in June. He has set in motion significant overhauls of financial regulation and healthcare. Considering the magnitude of the economic crisis he inherited, his popularity is holding up well. His current 56 per cent approval rating is significantly better than Bill Clinton’s (44 per cent) at the same stage in his first term and about the same as George W. Bush’s.
Consider the evidence that the economy has passed the nadir of the “great recession”. Second-quarter gross domestic product declined by only 1 per cent, compared with a drop of 6.4 per cent in the first quarter. House prices have stopped falling and in some cities are rising; sales of new single-family homes jumped 11 per cent from May to June. Credit spreads have narrowed significantly and the big banks are recovering, some even making enough money to pay back Tarp bail-out funds. The S&P 500 index is up nearly 48 per cent from its low in early March. Best of all, the economy lost fewer jobs in July than most pundits were expecting. Non-farm payrolls declined by just 247,000, half the number that were disappearing each month in the spring. The unemployment rate has actually declined slightly to 9.4 per cent.
I was thinking we should do questions first and chat later,” says Rory Stewart, 36 and director of the Carr Centre for Human Rights at Harvard’s Kennedy School. I ask if the distinction is absolutely necessary; we are, after all, settling down for lunch, not preparing for a seminar.
“There might”, he says, “be a holistic theory that there’s no real distinction between interview and personal chat, just like there’s a theory that there’s no distinction between development, state-building and counter-insurgency, but I like to see things in categories.” He pauses to gauge whether I’m still following: “It’s like my belief that counter-terrorism is completely different from development.”
It is perhaps not surprising Stewart has no time for small talk. He has walked 6,000 miles across Asia; written a bestselling travel book at 28, and last year was chosen as one of Esquire magazine’s 75 most influential people of the 21st century.
Upon accepting the position at Harvard, he bought a huge house in Cambridge, where he now lives alone, filling it with furniture from his family home in the Scottish Highlands – evidence, perhaps, that he had renounced the life of an adventurer and charity director in Asia to settle down.
The restaurant where we meet is certainly sedate. Harvest specialises in New England cuisine (stews and seafood). Jazz plays in the background, and the napkins are shaped into concertinas. Stewart greets me with a toothy smile, sits down and, after a brief tutorial on the difference between counter-terrorism and development, opens a menu. He has, he says, had clam chowder for breakfast, and, undaunted by the prospect of yet more soupy seafood, orders mussels, followed by bouillabaisse. “Oh yes, I’m very New England,” he says.
Stewart has a detached way of speaking, in perfect paragraphs, without hesitation. He once told a former colleague that he added “um”s and “er”s to his speech at school because he was scaring the other children. You can tell when he is excited by a topic because his speech seems less scripted, and he surprises me by becoming more animated when I ask him about whether he feels at home in Cambridge – even though he answers my question by talking about Afghanistan: “There, I wake up looking at a mud courtyard with peacocks prancing on the grass; I go down to the old city…”
Since arriving at Harvard in June last year, he has been consultant to several members of Barack Obama’s administration, including Hillary Clinton, and is a member of Richard Holbrooke’s special committee for Afghanistan and Pakistan policy. “I do a lot of work with policymakers, but how much effect am I having?” he asks, pronging a mussel out of its shell.
“It’s like they’re coming in and saying to you, ‘I’m going to drive my car off a cliff. Should I or should I not wear a seatbelt?’ And you say, ‘I don’t think you should drive your car off the cliff.’ And they say, ‘No, no, that bit’s already been decided – the question is whether to wear a seatbelt.’ And you say, ‘Well, you might as well wear a seatbelt.’ And then they say, ‘We’ve consulted with policy expert Rory Stewart and he says ...’”
The only way these big developments have been able to get planning permission is for a local authority to parcel together a big tract of land (usually formerly industrial or railway land, often formerly publicly owned) and to give over the whole thing to a developer who is charged with driving the “regeneration” that the public sector has largely lost the ability to conceive. Consequently, rather than the network of public streets interspersed with public spaces, private blocks and semi-private but accessible courtyards that forms the fabric of the traditionally complex city centre, we get the pseudo-civic space of the mall without walls. Protest in these spaces is banned, as is public gathering, distribution of leaflets, drinking, sleeping and, of course, photography. Yet there has been no outcry.
Particularly in the UK, we have become so inured to the smooth transition of public assets into private ownership that even the loss of our public spaces seems to us quite natural. I have been asked to stop taking photos of new office buildings from the public street outside, I have been stopped in malls, in piazzas and by canals. I have even been asked to stop taking notes. What Debord was calling for was a city in which what was important was not the way it looked or how many new shops it had but the multiplicity of ways in which it could be used. His way of subverting the structure of a Paris that had been conceived by Baron Haussmann, with wide avenues to enable an army swiftly to quell a revolution, was to walk across it on an aimless walk – the famous dérive – in which the flâneur concentrates on the mundane and the banal and does not allow his gaze to be directed to the formal or the ceremonial.
. . .
The Guatamalan architect Teddy Cruz, who works in the strange hinterlands between the wealth of San Diego and the poverty of Tijuana just across the border in Mexico, has called for a new system of measuring the success of a city – one based not on density of population or on the value of turnover and rent but on the frequency of social transactions. It represents a radical departure. The idea of regeneration that has emerged over the past couple of decades has been based solely on the generation of money. Big, retail-led and commercial schemes are encouraged, even subsidised, planning controls are loosened to accommodate them and civic democracy and local objections are overridden as the objectives of rising property prices, increased local taxes and the presence of “flagship” and “anchor” stores and brands becomes a planning Xanadu.
William White predicted the approaching financial crisis years before 2007's subprime meltdown. But central bankers preferred to listen to his great rival Alan Greenspan instead, with devastating consequences for the global economy.
William White had a pretty clear idea of what he wanted to do with his life after shedding his pinstriped suit and entering retirement.
White, a Canadian, worked for various central banks for 39 years, most recently serving as chief economist for the central bank for all central bankers, the Bank for International Settlements (BIS), headquartered in Basel, Switzerland.
Then, after 15 years in the world's most secretive gentlemen's club, White decided it was time to step down. The 66-year-old approached retirement in his adopted country the way a true Swiss national would. He took his money to the local bank, bought a piece of property in the Bernese Highlands and began building a chalet. There, in the mountains between cow pastures and ski resorts, he and his wife planned to relax and enjoy their retirement, and to live a peaceful existence punctuated only by the occasional vacation trip. That was the plan in June 2008.
Summary: One indicator of the massive changes sweeping America is the destruction of longtime solid business models. This post discussed colleges; today we look at the news media. Tons of ink have been spilled on this, but IMO ignoring some likely outcomes.
The major news media are on a treadmill. Loss of credibility shrinks their audience, hence less revenue, hence reduced funding. Which reduces the quality of their product, hence even less audience. Worse is the loss of advertisers to new media (e.g., Craigslist and Google), which means less revenue, less funding for news collection, and smaller audiences.
This posts speculates about the future, what new models might emerge from this turmoil. Here are some guesses.
I don’t mean to slight Michael Jackson’s once-formidable talent, nor do I dismiss his troubled personal life. But have we become so frivolous as a nation that any entertainer’s tragic and untimely death warranted more news coverage — day after day after day — than the real issues that will confront each of us now and in the all-too-near future? Apparently so. Most of us know more about the last two days of Jackson’s life than we know about the negotiations in which Washington forced GM and Chrysler into bankruptcy. You certainly know more about Jackson’s death that the names on the list of the 25 individuals who destroyed the world’s financial system. Of course, none of the 25 has died; they still work at the same jobs.
Let Them Eat Cowboys?
Not to be overly dramatic, but this should remind any thinking person of the declining days of the Roman Empire. Its citizens refused to deal with the decay and legitimate problems of their cities and empire, instead demanding more and more coliseums be built for their personal entertainment.
Well, we do have a new billion-dollar stadium for the Cowboys. And it has certainly received far more press coverage than the recently passed House Bill that proponents claim will save the planet from global warming. Yes, forces are gathering to reverse our 100-year history of citizens’ free travel to work and for leisure – and of that freedom’s benefits to our economy.
For $25,000 to $250,000, The Washington Post is offering lobbyists and association executives off-the-record, nonconfrontational access to "those powerful few" — Obama administration officials, members of Congress, and the paper’s own reporters and editors.Related: Helen Thomas.
The astonishing offer is detailed in a flier circulated Wednesday to a health care lobbyist, who provided it to a reporter because the lobbyist said he feels it’s a conflict for the paper to charge for access to, as the flier says, its “health care reporting and editorial staff."
The offer — which essentially turns a news organization into a facilitator for private lobbyist-official encounters — is a new sign of the lengths to which news organizations will go to find revenue at a time when most newspapers are struggling for survival.
And it's a turn of the times that a lobbyist is scolding The Washington Post for its ethical practices.
"Underwriting Opportunity: An evening with the right people can alter the debate," says the one-page flier. "Underwrite and participate in this intimate and exclusive Washington Post Salon, an off-the-record dinner and discussion at the home of CEO and Publisher Katharine Weymouth. ... Bring your organization’s CEO or executive director literally to the table. Interact with key Obama administration and congressional leaders …
“Spirited? Yes. Confrontational? No. The relaxed setting in the home of Katharine Weymouth assures it. What is guaranteed is a collegial evening, with Obama administration officials, Congress members, business leaders, advocacy leaders and other select minds typically on the guest list of 20 or less. …
Read more: http://www.politico.com/news/stories/0709/24441.html#ixzz0K6yNKyHp&C
Framed by a circle of clouds, this is a stunning illustration of Nature's powerful force. A plume of smoke, ash and steam soars five miles into the sky from an erupting volcano. The extraordinary image was captured by the crew of the International Space Station 220 miles above a remote Russian island in the North Pacific.
WN will enter MKE on 10/31/09.This will certainly affect the Madison airport's traffic.
MKE will have nonstop service to:
BWI: 3
MCI: 3
LAS: 2
MCO: 2
PHX: 1
TPA: 1
When I was starting up in China, many experts cautioned me on what I would encounter. “It’s not a free market and there’s no rule of law, they told me. “The government controls the courts, the companies and the banks. Central planners in Beijing, not the marketplace, decide what goods to produce and which companies should produce them.”
“Decisions are made for political, not economic reasons,” they went on to explain. “The heads of China’s state-owned enterprises serve at the pleasure of the Party, the banks are told what loans to make, and making a profit is secondary to ensuring employment. That’s the reason why China’s banks are a mess and full of non-performing loans.”
Occasionally, I would push back, noting the economic progress that China had made since Deng Xiaoping opened the economy in 1978. “You don’t believe the government’s numbers, do you?” they would ask incredulously. “Everyone knows they’re manufactured to convey whatever message the government wants. And, when it comes to financial statements, forget it. Chinese companies have at least three sets of books, and you can’t believe any of them.”
The news came to us at HBR just after our newest issue went to the printer; that issue contains, sadly, the last article he wrote for our pages. Because it is the July-August issue, and will arrive on newsstands two weeks hence, it will seem strange to many readers that the byline makes no note of his passing -- and worse, that the editor's letter is mute on the many accomplishments of his rich and long life. Such are the perils of print publishing, and for that we apologize.
But here let it be said that, when work began last January on envisioning the July-August issue -- a special, double-sized issue devoted wholly to exploring how the business landscape would be transformed by the financial crisis and recession -- Peter Bernstein's voice was the first we sought to include. He was the master at explaining issues of financial risk, and there has scarcely been a time when the world needed his kind of clear analysis more.
In response to a vaguely worded invitation from us (deliberately so, in the interests of giving Peter full license to address what he felt needed to be addressed), he came back with a tightly crafted essay called "The Moral Hazard Economy."
The phrase "bankrupt General Motors," which we expect to hear uttered on Monday, leaves Americans my age in economic shock. The words are as melodramatic as "Mom's nude photos." And, indeed, if we want to understand what doomed the American automobile, we should give up on economics and turn to melodrama.Politicians, journalists, financial analysts and other purveyors of banality have been looking at cars as if a convertible were a business. Fire the MBAs and hire a poet. The fate of Detroit isn't a matter of financial crisis, foreign competition, corporate greed, union intransigence, energy costs or measuring the shoe size of the footprints in the carbon. It's a tragic romance--unleashed passions, titanic clashes, lost love and wild horses.
Foremost are the horses. Cars can't be comprehended without them. A hundred and some years ago Rudyard Kipling wrote "The Ballad of the King's Jest," in which an Afghan tribesman avers: Four things greater than all things are,--Women and Horses and Power and War.
It was called “the shot that changed the republic.”
The killing in 1967 of an unarmed demonstrator by a police officer in West Berlin set off a left-wing protest movement and put conservative West Germany on course to evolve into the progressive country it has become today.
Now a discovery in the archives of the East German secret police, known as the Stasi, has upended Germany’s perception of its postwar history. The killer, Karl-Heinz Kurras, though working for the West Berlin police, was at the time also acting as a Stasi spy for East Germany.
HE recent scandals about poisoned baby milk, contaminated pet food and dangerous toys from China have raised questions about manufacturing standards in the country that has become factory to the world. In China’s defence, it was probably inevitable that as production grew so would the problems associated with it, at least in the short term. Similarly, it could be argued that China is going through the same quality cycle that occurred during Japan’s post-war development or America’s manufacturing boom in the late 19th century—but in an environment with infinitely more scrutiny.
A response to both these observations can be found in “Poorly Made in China” by Paul Midler, a fluent Chinese speaker who in 2001 moved to China to work as a consultant to the growing numbers of Western companies now replacing factories in Europe and America with subcontracting relationships in the emerging industrial zone surrounding Guangzhou. It was the perfect period to arrive. The normal problems of starting a business, such as getting clients or providing a value proposition, do not hinder Mr Midler, who had the benefit of being in the right place at the right time.
My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.
We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood.
We are financially strong with great respect in the market place and community. We have strong local presence and stability. I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.
On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them.
Today, Southwest gave the residents of Wisconsin something to talk about around the bubbler.Likely not so hot for Madison's airport traffic....
We’re adding Milwaukee and General Mitchell International Airport to our network!!! Starting late this year, the home of the Cunninghams, the Fonz, Laverne and Shirley, the Bucks, the Brewers, and the Packers will become the 68th airport on the Southwest Airlines route map. (Yeah, I realize the Packers are technically based in Green Bay, but they're the professional football team for the whole state of Wisconsin, so I'll include them here!)
We know many of you in the Milwaukee area are already familiar with Southwest (low fares and GREAT Customer Service!)—but for our Customers that aren’t familiar with Milwaukee, you’ve got a treat in store for you. Besides having a vibrant business base, Milwaukee is just a lot of fun. Amazing food (please, PLEASE visit Mader’s for German food!), the arts (the Milwaukee Art Museum has masterpiece buildings designed by both Saarinen and Calatrava!), the home of Harley-Davidson (don’t miss their museum!), sausage, cheese, beer, sports, the lake….and of course, the people. Good people. Just don’t plan anything other than watching football on a Sunday afternoon when the Packers are playing. You could be very lonely…. *grin*
Milwaukee is going to be a GREAT addition to our network. Wisconsin’s legendary work ethic, which mirrors Southwest’s exceptionally productive Culture, is going to make us a great fit in the land of the Cheesehead.
They say you don’t recognize history while you’re living through it, but it won’t be long before there’s no doubt about the historic character of what’s happening now. In the not too distant future, everyone will look back on this period and shake their heads, at both the disruption to our economy and many of our solutions to it. And when that day comes and today’s events can be seen with real clarity, we will all turn to each other and ask, "What were we thinking?"
Oh, well. There is at least one man today whose mind is already focused on where he will be standing many years from now. He has coolly witnessed the turmoil inflicted on our financial system and is dispassionately observing the panic that has overtaken us all in its wake. And, knowing that foolish decisions almost always follow emotional trauma, he alone is standing out front, gladly waiting to receive the fruits of the outrageous decisions we seem ready to make. He is Sergio Marchionne, the CEO of Fiat, and he is undoubtedly a genius without peer.
Encouraging Words
Consider if you will what is happening in the automobile industry today: A near catastrophic collapse in new car sales in most countries of the world. One might think that this signals consumers’ inability to purchase new cars, either for lack of a job or — as we have been told since last September — because they can’t get a loan for their transportation needs. But those issues are not really the problem. Many of the jobs lost were low paying jobs and therefore not new car buyers, for the rest, loans are readily available.
When President Obama won approval for his $787 billion stimulus package in February, large sections of the 407-page bill focused on a push for new technology that would not stimulate the economy for years.Automation certainly makes sense, but we taxpayers should not be subsidizing it....
The inclusion of as much as $36.5 billion in spending to create a nationwide network of electronic health records fulfilled one of Obama's key campaign promises -- to launch the reform of America's costly health-care system.
But it was more than a political victory for the new administration. It also represented a triumph for an influential trade group whose members now stand to gain billions in taxpayer dollars.
A Washington Post review found that the trade group, the Healthcare Information and Management Systems Society, had worked closely with technology vendors, researchers and other allies in a sophisticated, decade-long campaign to shape public opinion and win over Washington's political machinery.
Only image ever taken of a transit of a space shuttle (Atlantis) and the Hubble Space Telescope (HST) in front of the Sun, during the last repair mission of Hubble, obtained from Florida at 100 km south of the Kennedy Space Center on May 13th 2009 12:17 local time, several minutes before grapple of Hubble by Atlantis.
Long before the current financial crisis, nearly two years ago, a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us.
That warning from Moody’s focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we’re in even worse shape now, and there are signs that confidence in America’s ability to control its finances is eroding.
Prices have risen on credit default insurance on US government bonds, meaning it costs investors more to protect their investment in Treasury bonds against default than before the crisis hit. It even, briefly, cost more to buy protection on US government debt than on debt issued by McDonald’s. Another warning sign has come from across the Pacific, where the Chinese premier and the head of the People’s Bank of China have expressed concern about America’s longer-term credit worthiness and the value of the dollar.
The US, despite the downturn, has the resources, expertise and resilience to restore its economy and meet its obligations. Moreover, many of the trillions of dollars recently funnelled into the financial system will hopefully rescue it and stimulate our economy.
EC (13:40): In the past 90 days we have seen something like a billion dollars being put into solar investments - whether in the form of equity or debt. Is that stupid money?
VK: The people who are putting in gobs of money, behind people chasing First Solar at billion dollar valuations - I won't say it's stupid but it's not something I would do with my money. (EC: That pretty much counts as stupid). A diversity of opinion is good. I am often wrong. (EC: Sometimes you are). You only need to be correct once in a while because in our business you only lose one time your money but you can make 100 times quite easily. I don't have to be very right.
(RR: I would like to hear that during his next congressional testimony where he is trying to drive the direction of energy policy: "I am often wrong." But this also gets to the heart of why I often object to what he is saying. If he uses his high level of influence to help put us down the wrong path on energy policy, then what are the consequences of being wrong? They could be severe.)
EC (14:38): How many companies do you currently have in your portfolio?
VK: Our clean tech portfolio has probably about 50 companies.
EC (15:48): Which was the biggest disappointment?
VK: We have not had any large cut-offs - I am trying to think - in our clean tech portfolio. When we have invested a lot of money, there's one or two places - well one we wrote off; one called Altra. (RR: Altra is a corn ethanol producer that is on the ropes). There's one place we actually decided to change the plan - Cilion - and made it capital neutral, so they don't need a lot of cash. Got rid of the debt; the company is going fine, but sort of on the slow boat.
Ron Grassi says he thought he had retired five years ago after a 35-year career as a trial lawyer.I noticed this Wachovia building recently and thought the sunset scene was, perhaps appropriate.
Now Grassi, 68, has set up a war room in his Tahoe City, California, home to single-handedly take on Standard & Poor’s, Moody’s Investors Service and Fitch Ratings. He’s sued the three credit rating firms for negligence, fraud and deceit.
Grassi says the companies’ faulty debt analyses have been at the core of the global financial meltdown and the firms should be held accountable. Exhibit One is his own investment. He and his wife, Sally, held $40,000 in Lehman Brothers Holdings Inc. bonds because all three credit raters gave them at least an A rating -- meaning they were a safe investment -- right until Sept. 15, the day Lehman filed for bankruptcy.
“They’re supposed to spot time bombs,” Grassi says. “The bombs exploded before the credit companies acted.”
As the U.S. and other economic powers devise ways to overhaul financial regulations, they have yet to come up with plans to address one issue at the heart of the crisis: the role of the rating firms.
That is why it was all the more bewildering to have Sen. Dodd come to the gymnasium of the Cornwall Consolidated School on a beautiful spring afternoon for two hours and somehow manage not to utter a single word about the controversies surrounding his role as chairman of the Senate Banking Committee.
These are not exactly state secrets. There was the widely reported sweetheart or VIP mortgage loan from Countrywide Financial to the senator as well as the six-figure campaign contributions from the American Insurance Group whose executives, according to language Sen. Dodd wrote into a bailout bill, were entitled to large bonuses paid for with our tax dollars.
The organizer and moderator of Saturday's forum, Harriet Dorsen, a member of the local Democratic Party committee, told the Lakeville Journal newspaper last week, "I think there are going to be a lot of tough questions."
There weren't. They were all softballs. Instead of the usual give and take, with citizens speaking their minds, all the questions had to be written out in advance on index cards and then submitted to the moderators. A contingent from the Lakeville Journal (including my wife, Cynthia, who is the newspaper's executive editor) was on hand, armed with probing questions.
An Indian mother is set for an entry into the Guinness World Records after eating 51 of the world's hottest chilli in two minutes.
Anandita Dutta Tamuly, 26, gobbled up the "ghost chillis" in front of visiting British chef Gordon Ramsay in the north-eastern state of Assam.
Ms Tamuly told Associated Press she "felt terrible" - because she had managed 60 in an earlier local event.
Mr Ramsay tried a chilli but said "it's too much" and pleaded for water. He is in Assam for a television shoot of a global food series.
His performance in Vietnam was particularly intriguing. He knows the country well and is treated almost as a celebrity - a reflection of both the quirks of history, and his moral and political courage, qualities that helped propel his White House run.
Senator McCain spent five years as a prisoner of war in Hanoi at the height of the Vietnam conflict, having been shot down and crashing his jet fighter into a lake on the edge of the capital. His vivid descriptions of being tortured - he refused offers of early release as the son of a leading admiral - did not stop his efforts years later. He not only returned to enemy territory but, as a prominent and hawkish Republican, played a key role through the late 1980s and 1990s in America's long delayed reconciliation and normalisation with its victorious opponent.
In his political twilight, Senator McCain could be forgiven for resting easy during his first return to the Vietnamese capital in five years. Despite political and social differences, the two countries are open to trade and investment, and have taken the first steps to a military relationship - a pipe dream just a decade ago.
He remains restless, however. In a speech to the country's diplomatic academy, he passionately urged both nations to get even closer. "Today, the hardest work of normalisation is behind us. The time has come, I believe, for us to move from the normalisation of our ties commensurate with Vietnam's rising status in the region and the world. We should not simply rest on our laurels and allow the relationship to plateau. It is time to take the next step."
“It was the sixth such attack this week and one of 66 this year by Somali pirates, a collection of shrewd businessmen and daring opportunists who have pulled off a series of spectacular seizures using high- and low-tech gear, from satellite phones and rocket-propelled grenades to battered wooden skiffs and rickety ladders,” the Washington Post reported today about the attack on a U.S.-operated container ship. “In the past year, their booty has included the MV Faina, a Ukrainian ship loaded with tanks and antiaircraft guns, and the MV Sirius Star, a 300,000-ton, 1,000-foot-long Saudi oil tanker that is the largest ship to be seized in history.”
For months, a former senior CIA officer has been telling me that pirate activity off Somalia was a problem that needed to be aggressively dealt with. By chance, I had a meeting with him yesterday as the Maersk Alabama hijacking was unfolding. Here’s what he had to say (he updated his remarks today):
The American response to date has been incredibly naïve and woefully ineffective. Now, predictably, you have an American taken hostage. All of which should have been prevented. You’ve got a failed state in Somalia and pirates operating in an area of ocean that is larger than the state of Texas but we’ve been trying to deal with this from the ocean side, by sending the navy and with a limited application of technology, such as satellites and drones. We can’t afford to patrol that big a piece of the ocean; it’s too expensive to leave a naval task force out there.
This stunning accommodation offers deluxe living in the heart of England's capital city. A gated property with secure parking and armed guards, this is the perfect property to relax in complete luxury. Exquisitely furnished with many priceless antiques, royal collections and rare artefacts. 400 people work at the Palace to cater to your every need, including domestic servants, chefs, footmen, cleaners, plumbers, gardeners, chauffeurs, electricians, and two people who look after the 300 clocks.More: The 10 Best April Fools' Jokes and Econoland.
The palace consists of 19 state rooms, 600 bedrooms and 78 bathrooms. There is an adequate sized banquet hall to entertain your guests in the evening and a throne room which is an unusual but popular additional feature.
The owners do reside in the property but are discreet and are available should you require any assistance. They also own other properties throughout the United Kingdom. Please contact them for further details.
One unhappy hallmark of the Great Recession is a dramatic spike in financial distress. Moody's predicts that the default rate on corporate debt--which helps foretell bankruptcies--will be three times higher this year than in 2008. Home foreclosures are already at record highs, and going higher. Defaults on credit cards and other consumer debt will crest right behind mortgages.
The Obama administration is on the case, bailing out banks and homeowners and aiding dozens of industries either directly, through a financial-rescue scheme that could top $2 trillion, or indirectly, through the $787 billion stimulus bill. Automakers, furniture companies, real estate developers, and even porn magnates have their hands out.
[See a tally of the bailout efforts so far.]
Those efforts ought to help soften a sharp recession. But the unprecedented aid to the private sector may also unleash new problems, the way antibiotics have generated stronger strains of bacteria. "There's something fundamental about the need for failure," says Syd Finkelstein, a professor at Dartmouth's Tuck School of Business and author of Think Again: Why Good Leaders Make Bad Decisions and How to Keep It From Happening to You. "We're tinkering with the genetic DNA of a capitalist society."
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF's staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we're running out of time.
Brief remark - from early reports regarding the toxic assets plan, it appears that the Treasury envisions allowing private investors to bid for toxic mortgage securities, but only to put up about 7% of the purchase price, with the TARP matching that amount - the remainder being "non-recourse" financing from the Fed and FDIC. This essentially implies that the government would grant bidders a put option against 86% of whatever price is bid. This is not only an invitation for rampant moral hazard, as it would allow the financing of largely speculative and inefficently priced bids with the public bearing the cost of losses, but of much greater concern, it is a likely recipe for the insolvency of the Federal Deposit Insurance Corporation, and represents a major end-run around Congress by unelected bureaucrats.
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Last week, the Federal Reserve announced its intention to purchase a trillion dollars worth of Treasury debt by creating the little pieces of paper in your pocket that have “Federal Reserve Note” inscribed at the top. In effect, the Fed intends to monetize the Treasury debt in an amount that exceeds the entire pre-2008 monetary base of the United States.
Apparently, the Fed believes that absorbing part of the massively expanding government debt and maybe lowering long-term rates by a fraction of a percentage point will increase the capacity and incentive of the markets to purchase risky and toxic debt. Bernanke evidently believes that the choice between a default-free investment and one that is entirely open to principal loss comes down to a few basis points in interest. Even now, the expansion of federal spending as a fraction of GDP has clear inflationary implications looking a few years out, so any expectation that long-term Treasury yields will fall in response to the Fed's buying must be coupled with the belief that investors will ignore those inflation risks.
Oh-oh, looks like more tax troubles for another Democrat in Washington.
California's Rep. Pete Stark, a senior House Democrat who helps write the nation's tax laws, has been claiming a $1.7 million Maryland home as his principal residence in recent years, although he represents the Golden State's 13th District on the east side of San Francisco Bay.
The 77-year-old Stark has saved himself nearly $3,900 in state and county taxes by claiming the six-acre waterfront estate as his principal residence, according to an investigation by Bloomberg News.
Maryland law allows the tax break only to those residences used "for the legal purposes of voting, obtaining a driver's license, and filing income tax returns."
Notified of the discovery, a state official said an investigation would be launched.
This is a book report on The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities, by Mancur Olson. There isn’t a whole lot about how nations pulled themselves out of their medieval stagnation (see A Farewell to Alms for that), so a better title for this still-in-print book from 1982 would be “How Rich Countries Die.”
Table 1.1 shows annual rates of growth in per-capita GDP for each of three decades, the 1950s, 60s, and 70s, in a range of rich countries. Contrary to our perception of the U.S. as a growth dynamo and the Europeans as sclerotic, France and Germany tremendously outperformed the U.S., as did most of the other countries. If we have grown larger it is because our population has expanded much faster than the European countries.
Chapter 2 summarizes Olson’s groundbreaking work on how interest groups work to reduce a society’s efficiency and GDP. Some of this work seems obvious in retrospect and indeed Adam Smith noted that businessmen rarely met without conspiring against the public interest. There are a handful of automobile producers and millions of automobile consumers. It makes sense for an automobile company, acting individually, to lobby Congress for tariffs. The company will reap 20-40 percent of the benefits of the tariff. It doesn’t make sense for an individual consumer, however, to lobby Congress. It will cost him millions of dollars to lobby against Congress and preventing the tariff will save him only a few thousand dollars on his next car purchase. The economy suffers because some resources that would have been put to productive use are instead hanging around Washington and because cars are more expensive than they should be.
John Thain is giving us a tour of what is soon to become America’s most infamous office, with its $87,000 rug, $68,000 sideboard, $28,000 curtains – all part of a $1.2m redecoration scheme. This was early December, a little under two months before Thain would be fired in the same room by his new boss, Ken Lewis, chief executive of Bank of America.
For now, before a price tag had been placed on every item in his office, the 53-year-old chief executive of Merrill Lynch was in high spirits. The worst year on Wall Street in nearly a century was coming to an end, and Thain could rightfully claim to have saved his bank from ruin. Over a weekend in mid-September, as Lehman Brothers collapsed into bankruptcy, Thain pulled off a coup: he persuaded BofA, one of the few financial giants in the US that didn’t need government money to survive, to pay $29 per share for his own firm, even though Merrill was days away from following Lehman into bankruptcy.
Thain had taken over as Merrill chief executive nine months before that weekend deal. Now, he appeared to be one of the few Wall Street leaders who grasped the enormity of the credit crisis. Thanks to his analytical approach to the marketplace, it seemed, Merrill shareholders could look forward to a stake in Bank of America. “I have received thousands of e-mails saying, ‘Thank you for saving our company’,” Thain told us that day. And yet he admitted that the decision to sell Merrill Lynch – a 94-year-old institution that was always “bullish on America” – had been painful. “This was a great job. This was a great franchise. Emotionally, it was a huge responsibility.”
BUFFETT: ...And, Joe, it--if you're in a war, and we really are on an economic war, there's a obligation to the majority to behave in ways that don't go around inflaming the minority. If on December 8th when--maybe it's December 7th, when Roosevelt convened Congress to have a vote on the war, he didn't say, `I'm throwing in about 10 of my pet projects ... [snip] ... JOE: Yeah, but you might--might not have fixed...More from Shailagh Murray.
BUFFETT: But I say...
JOE: You might not--you might not have fixed global warming the day after--the day after D-Day, Warren.
BUFFETT: Absolutely. And I think that the--I think that the Republicans have an obligation to regard this as an economic war and to realize you need one leader and, in general, support of that. But I think that the--I think that the Democrats--and I voted for Obama and I strongly support him, and I think he's the right guy--but I think they should not use this--when they're calling for unity on a question this important, they should not use it to roll the Republicans all.
The reports on the evidence given by the Vice Chairman of the Federal Reserve Board, Don Kohn, to the Senate Banking Committee about the Fed's role in the government's rescue of AIG, have left me speechless and weak with rage. AIG wrote CDS, that is, it sold credit default swaps that provided the buyer of the CDS (including some of the world's largest banks) with insurance against default on bonds and other credit instruments they held. Of course the insurance was only as good as the creditworthiness of the party writing the CDS. When it was uncovered during the late summer of 2008, that AIG had nurtured a little rogue, unregulated investment banking unit in its bosom, and that the level of the credit risk it had insured was well beyond its means, the AIG counterparties, that is, the buyers of the CDS, were caught with their pants down.
Instead of saying, "how sad, too bad" to these counterparties, the Fed decided (in the words of the Wall Street Journal), to unwind ".. some AIG contracts that were weighing down the insurance giant by paying off the trading partners at the full value they expected to realize in the long term, even though short-term values had tumbled."
An LSE colleague has shown me an earlier report in the Wall Street Journal (in December 2008), citing a confidential document and people familiar with the matter, which estimated that about $19 billion of the payouts went to two dozen counterparties between the government bailout of AIG in mid-September and early November 2008. According to this Wall Street Journal report, nearly three-quarters was reported to have gone to a group of banks, including Société Générale SA ($4.8 billion), Goldman Sachs Group ($2.9 billion), Deutsche Bank AG ($2.9 billion), Credit Agricole SA's Calyon investment-banking unit ($1.8 billion), and Merrill Lynch & Co. ($1.3 billion). With the US government (Fed, FDIC and Treasury) now at risk for about $160 bn in AIG, a mere $19 bn may seem like small beer. But it is outrageous. It is unfair, deeply distortionary and unnecessary for the maintenance of financial stability.
Don Kohn ackowledged that the aid contributed to "moral hazard" - incentives for future reckless lending by AIG's counterparties - it "will reduce their incentive to be careful in the future." But, here as in all instances were the weak-kneed guardians of the common wealth (or what's left of it) cave in to the special pleadings of the captains of finance, this bail-out of the undeserving was painted as the unavoidable price of maintaining, defending or restoring financial stability. What would have happened if the Fed had decided to leave the AIG counterparties with their near-worthless CDS protection?
The organised lobbying bulldozer of Wall Street sweeps the floor with the US tax payer anytime. The modalities of the bailout by the Fed of the AIG counterparties is a textbook example of the logic of collective action at work. It is scandalous: unfair, inefficient, expensive and unnecessary.
celand’s de facto bankruptcy—its currency (the krona) is kaput, its debt is 850 percent of G.D.P., its people are hoarding food and cash and blowing up their new Range Rovers for the insurance—resulted from a stunning collective madness. What led a tiny fishing nation, population 300,000, to decide, around 2003, to re-invent itself as a global financial power? In Reykjavík, where men are men, and the women seem to have completely given up on them, the author follows the peculiarly Icelandic logic behind the meltdown. by MICHAEL LEWIS April 2009
Just after October 6, 2008, when Iceland effectively went bust, I spoke to a man at the International Monetary Fund who had been flown in to Reykjavík to determine if money might responsibly be lent to such a spectacularly bankrupt nation. He’d never been to Iceland, knew nothing about the place, and said he needed a map to find it. He has spent his life dealing with famously distressed countries, usually in Africa, perpetually in one kind of financial trouble or another. Iceland was entirely new to his experience: a nation of extremely well-to-do (No. 1 in the United Nations’ 2008 Human Development Index), well-educated, historically rational human beings who had organized themselves to commit one of the single greatest acts of madness in financial history. “You have to understand,” he told me, “Iceland is no longer a country. It is a hedge fund.”
My friend professor Uwe E. Reinhardt of Princeton University presented ECONOMIC TRENDS IN U.S HEALTH CARE: Implications for Investors, at J.P. Morgan's annual healthcare conference on Tuesday, January 13 2009. The first half of the presentation (46 slides!) deals with macroeconomic and financial issues in Uwe's inimitable style - equal portions of wit and insight. The second half deals with the embarrassing mess known as health care in the US.
The tour guide’s voice dropped to a whisper as he pointed out the left side of his open-air taxi and said conspiratorially: “See that house? It belongs to Chapo.”I visited Mazatlan many years ago, during college.
At the spot, where Mr. Félix's brother Ramón was killed in 2002, in an infamous murder.
The State Department warns tourists about the drug wars. The guide recovered his normal tone around the corner, well out of earshot of anyone who might be inside what he claimed was one of the beachfront hideaways of Mexico’s most wanted drug trafficker, Joaquín Guzmán Loera, who is known universally by the nickname El Chapo, or Shorty.
Although Mazatlán markets itself as a seaside paradise in which the roughest things one might encounter are ocean swells, it is a beach resort with a dark side — one that many enterprising taxi drivers are exploiting with unauthorized “narco-tours.”
Mexicans are fed up with their country’s unprecedented level of bloodshed as rival drug cartels clash with the authorities and among themselves. But the outrage is tinged by a fascination with the colorful lives of the outlaws.
Here is some simple background:More from the Economist.If we let A.I.G. fail, said Seamus P. McMahon, a banking expert at Booz & Company, other institutions, including pension funds and American and European banks “will face their own capital and liquidity crisis, and we could have a domino effect.” A bailout of A.I.G. is really a bailout of its trading partners — which essentially constitutes the entire Western banking system.No one wants to say it, but essentially the Fed has been bailing out European banks.
The inflation-adjusted cost of the Marshall plan has been estimated at about $115 billion in current dollars. If we end up spending $250 billion on AIG, how much of that sum will go to European financial institutions and might it someday exceed the scope of the Marshall plan? (I do not, by the way, think that central banks ought to treat foreign creditors differently.)
For his maiden congressional address, Obama cleaned President Bush's clock in terms of TV viewers willing to watch him speak to a bunch of stuffed congressional suits in the House chamber. Which isn't saying much. But it is something for a new president to cling to, especially when you're otherwise up against the sleuths of "NCIS."
Obama got 52.4 million viewers last night (rounded off for those visiting the bathroom) in 37.2 million homes for a 49 share and 32.5 rating. In his last joint address in 2008 GWB got 37.5 million in 27.7 million homes for a 38 share and 24.7 rating. Bush did top Obama in 2003 with 62 million and a 56 share and we didn't even have the Iraq reality show going then. (But it was coming.)
Bush's first joint session appearance drew nearly 39.8 million and a 42 share.
However, Obama still lags the audience-drawing power of one President Bill Clinton. Sixteen years ago this week, when there were millions fewer Americans, Big Bill drew nearly 15 million more viewers -- 66.9 million for his first congressional speech in 44.2 million homes for a 44.3 rating.
“As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices.
“But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it.”
President has signed The American Recovery and Reinvestment Act of 2009, which includes $7.2 billion for broadband access. You can see a brief summary of the bill here.
As we have seen, the Obama administration hopes to use the Internet for transparent, two-way communication with the public. To this end, they have launched the Recovery.gov Web site, which will be continuously updated, telling us "how, when and where" the recovery funds are spent.
As of today, Recovery.gov is definitely a Web 1.0 site -- it summarizes the Recovery Act, requests comments using an email form, and asks us to check back frequently for data on spending. They don't even have RSS feeds.
Contrast that with Stimuluswatch.org, a Web 2.0 site. Stimuluswatch began by importing a database of "shovel ready" projects that was posted by the US Conference of Mayors. Users can search the database by city, keyword and project type, and view the project descriptions and estimated cost and number of jobs created.
Top 5 ContractorsTop 5 contractors: State of Wisconsin:
Wisconsin Physicians Service Insurance Corporation $161,241,933
Didion Milling, Inc. $28,254,732
University of Wisconsin System $21,021,695
Facility Leaders In Architectural/Engineering Design, P.C. $20,405,886
Metastar Inc $19,600,777
Complete list of 2nd Congressional District contractors.
Top 5 Contractors
Oshkosh Corporation $1,481,203,487
General Electric Company $248,269,326
The Manitowoc Company Inc $178,329,866
Wisconsin Physicians Service Insurance Corporation $161,241,933
National Presto Industries, Inc. $125,773,563
Complete list of 2008 Wisconsin contractors.
They won't be racing but BMW's famous Art Cars will be back on display. The Los Angeles County Museum of Art will feature four of BMW's 16 art cars until Feb. 24.
Among the four are some of our favorites:
-- Roy Lichtenstein's 1977 Group 5 320i with its wild wing and body work.
-- Frank Stella's graph-paper 3.0 CSL.
-- The 1979 Group 4 M1 that Andy Warhol painted with a brush.
All three cars raced at Le Mans with their new paint jobs.
Robert Rauschenberg's 1986 6-series was not a race car and, with its more conventional bodywork, seems far more restrained than the rest.
One of the concrete benefits of open government data is that third parties can use the data to do something useful that no one in government has the mandate, resources, or insight to do. If you think what I am about to tell you below is cool, and helpful, then you are a supporter of open government data.
On my site GovTrack, you can now find comparisons of the text of H.R. 1, the stimulus bill, at different stages in its legislative life --- including the House version (as passed) and the current Senate version (amendment 570).
The main page on GovTrack for HR 1 is: http://www.govtrack.us/congress/bill.xpd?bill=h111-1 Here's a direct link to the comparison: http://www.govtrack.us/congress/billtext.xpd?bill=h111-1&version=as2&compareto=eh&view=side:
Comparisons are possible between any two versions of the bill posted by GPO. Comparisons are available for any bill.
If you find this useful, please take a moment to consider that something like this is possible only when Congress takes data openness seriously. When GPO went online and THOMAS was created in the early 90s, they chose good data formats and access policies (mostly). But the work on open government data didn't end 15 years ago. As "what's hot" shifts to video and Twitter, the choices made today are going to impact whether or not these sources of data empower us in the future, whether or not we miss exciting opportunities such as having tools like the one above.
(Thanks to John Wonderlich and Peggy Garvin for some side discussion about this before my post. GovTrack wasn't initially picking up the latest Senate versions because GPO seems to have gone out of its way to accommodate posting the latest versions before they were passed by the Senate, which is great, but caught GovTrack by surprise.)
Josh Tauberer
When it comes time to chart designer Chris Bangle's contribution to the BMW brand's aesthetic, few pundits will praise his pulchritudinous perversion of pistonhead passion, or thank him for the aesthetic affectations for which BMW is now known. In other words, the "Bangle Butt" will be Chris' lasting legacy. Of course, this is also the man who removed the words "flame surfacing" from art school and placed them on the tip of his detractors' tongues. That and Axis of White Power. (Oh! How we laughed!) Equally improbably, the Buckeye State native helped the expression "Dame Edna glasses" cross into the automotive lexicon. Yup. It's been a wild ride. Literally.CAR:
BMW design boss Chris Bangle is to leave the car industry, it was announced today. In a statement, BMW said Bangle was quitting 'to pursue his own design-related endeavors beyond the auto industry.'Bangle grew up in Wausau, WI.
Bangle, 52, was the architect of the often controversial flame surfacing look that transformed BMW design from the Russian doll mentality of the 1990s to the edgy – some would say radical and divisive – styling of today.
The cars Bangle spannered
The outgoing design chief has overseen the launch of the current 1-, 3-, 5- and 7-series saloons and hatchbacks, as well as the raft of niche models that have seen BMW's model range explode in recent years: the Z3, Z4, Z8, X3, X5, X6 and 6-series were all conceived on his watch.
In unveiling its bank-share purchase program, the Treasury Department required nine of the nation's largest financial-services companies to sell a total of $125 billion in preferred stock to the government, and said an additional $125 billion in stock could be bought from other firms on a voluntary basis. Below, see a list of participating companies.
Even as Madison, Wis., suffers arctic-like temperatures, there is a warm ray of hope for the commercial real-estate industry.
The city's academic sector is seeing a building boomlet while developers in other parts of the country slam the brakes on new office buildings, stores and shopping centers.
A student-services hub at the University of Wisconsin-Madison is part of a larger mixed-use project called University Square. About $600 million of new building projects are under construction on the University of Wisconsin-Madison campus and more than $450 million of additional projects are in the planning stage, said Alan Fish, associate vice chancellor of facilities planning and management at the university.
A student-services center will officially open to students this week in a larger mixed-use development called University Square. The 1.1-million-square-foot project developed by Executive Management Inc., of Madison, also includes a rooftop garden, rental housing and about 125,000 square feet of retail space that is about 55% leased. The project, on the edge of the campus, is on land previously occupied by a one-story retail property, Mr. Fish said. Also under construction is the $150 million Wisconsin Institutes for Discovery, an interdisciplinary research complex scheduled to open in 2010.
The construction, part of a continuing effort to update the campus's facilities since the 1990s, isn't just changing the face of secluded ivory towers. "We're smack dab in the middle of Madison," Mr. Fish said. "Clearly the dynamism the campus has exhibited in the last five years has had a big ripple effect."
For the wealthy, Tuesday's inauguration is the dream party: a chance to rub elbows with the similarly rich and powerful, to become part of a historic moment, and (most importantly), to get access to the man of the moment.
It also is a chance to drown their financial sorrows in an emotional wave of optimism.
Yet it may come as a surprise that at a time of financial crisis and Green correctness, many of the wealthy are choosing to arrive by private jet.
According to an article in Bloomberg, as many as 600 private jets were expected to touch down in D.C. for the inauguration. The runway at Washington Dulles was closed Saturday to allow as many as 100 small planes to park. And the Metropolitan Washington Airports Authority said it expected a total of 500 small jets to land from Jan. 16 through Jan 21.
"That would set a record, topping the 300 the airport accommodated for President George W. Bush's 2004 inaugural," an Airports Authority says in the article.
Barry Fox is in big demand. The UW infectious disease specialist had lucrative side jobs working for seven different drug companies in just one year, including one that paid an undisclosed sum of $20,000 or more, records show.
Fox is one of dozens of University of Wisconsin-Madison physicians who also work for drug companies. Some sit on advisory boards; others do promotional or educational work. Fox, for example, did promotional work involving an antibiotic for one company in 2007, working five days for what appears to be at least $2,000 a day, his disclosure form says.
Doctors' moonlighting for drug companies - though legal - is coming under increased scrutiny, both at UW and across the country. This month, the trade group Pharmaceutical Research and Manufacturers of America enacted a voluntary ban on company gifts of branded pens, sticky notes and other items and dinners for doctors. Also of special concern are university physicians who are sought by drug companies because of the influence and respect they wield with colleagues practicing in communities.
Most patients have no knowledge of the side work. Even the university is not aware of exactly how much its doctors earn from drug and medical device companies; they are required to disclose only ranges of income received, and no range beyond $20,000.
More than 30 UW physicians exceeded the $20,000 threshold in 2006 and 2007, records show. At least one of those doctors made at least 20 times that amount in previous years - more than $400,000, paid by a maker of orthopedic implants. But that became known in 2006 only because of records filed in a lawsuit.
Last week, for the first time, signs went up in a handful of UW Health clinics alerting patients about doctors' drug company ties. In addition, the dean of the medical school said the university's policies need to be shored up. Among other things, the medical school might begin requiring doctors to specify how much they are paid, said Robert Golden, head of the UW School of Medicine and Public Health.
Further, U.S. Sens. Herb Kohl (D-Wis.) and Chuck Grassley (R-Iowa) have introduced a bill that would require drug and medical device companies to disclose payments made to physicians. Kohl said it would be best to ban the practice, noting that the medical industry spends $20 billion a year in payments and gifts to doctors.
"The relationship between the doctor and patient is frayed," Kohl said.
The rules ban any posts that undermine national security, incite violence or crime, disclose state secrets, or include inaccurate information that could damage the reputation of individuals and organizations, according to a copy of the regulations obtained Wednesday by The Associated Press.
The rules, which were approved Dec. 18, attempt to rein in Vietnam's booming blogosphere. It has become an alternative source of news for many in the communist country, where the media is state-controlled.
The new rules require Internet companies that provide blogging platforms to report to the government every six months and provide information about bloggers on request.
The companies are also required to prevent and remove content the government deems harmful.
Economic policy is based on a collection of half-truths. The nature of these half-truths changes occasionally. Economics as a scholarly discipline consists in the periodic rediscovery and refinement of old half-truths. Little progress has been made in the past century or so towards understanding how economic policy, rules, legislation and regulation influence economic fluctuations, financial stability, growth, poverty or inequality. We know that a few extreme approaches that have been tried yield lousy results - central planning, self-regulating financial markets - but we don't know much that is constructive beyond that.Via Yves Smith.
The main uses of economics as a scholarly discipline are therefore negative or destructive - pointing out that certain things don't make sense and won't deliver the promised results. This blog post falls into that category.
Much bad policy advice derives from a misunderstanding of the short-run and long-run impacts of events and policies. Too often for comfort I hear variations on the following statements: "The long run is just a sequence of short runs, so if we make sure things always make sense in the short run, the long run will take care of itself." This fallacy, which I shall, unfairly, label the Keynesian fallacy, compounds three errors.
IN THE early 1990s America’s opinion-makers competed to outdo each other in triumphalism. Economists argued that the “Washington consensus” would spread peace and prosperity around the world. Politicians debated whether the “peace dividend” should be used to create universal health care or be allowed to fructify in the pockets of the people or quite possibly both. Francis Fukuyama took the optimists’ garland by declaring, in 1992, “the end of history” and the universal triumph of Western liberalism.
Samuel Huntington thought that all this was bunk. In “The Clash of Civilisations?” he presented a darker view. He argued that the old ideological divisions of the Cold War would be replaced not by universal harmony but by even older cultural divisions. The world was deeply divided between different civilisations. And far from being drawn together by globalisation, these different cultures were being drawn into conflict.
Huntington added another barb to his argument by suggesting that Western civilisation was in relative decline: the American power-mongers who thought that they were the architects of a new world order were more likely to find themselves the victims of cultural forces that they did not even know existed. The future was being forged in the mosques of Tehran and the planning commissions of Beijing rather than the cafés of Harvard Square. His original 1993 article, in Foreign Affairs, was translated into 26 languages and expanded into a best-selling book.
It is a sorry place at which we Americans find ourselves this none-too-festive holiday season. The biggest names on Wall Street have gone to their rewards or into partnership with the U.S. Treasury. Foreigners stare wide-eyed from across the waters. A $50 billion Ponzi scheme (baited with, of all things in this age of excess, the promise of low, spuriously predictable returns)? Interest rates over which tiny Japanese rates fairly tower? Regulatory policy seemingly set by a weather vane? A Federal Reserve that can't make up its mind: Is it in the business of central banking or of central planning? And to think -- our disappointed foreign friends mutter -- all of these enormities taking place under a Republican administration.
Trust itself entered a bear market in 2008, complementing and perhaps surpassing the selloffs in stocks, mortgages and commodities. Never to be confused with angels, we humans seem to outdo ourselves when money is on the line. So it is that Bernard Madoff, supposed pillar of the community, stands accused of perpetrating one of the greatest hoaxes since John Law discovered the inflationary possibilities of paper money in the early 18th cent
Party of the year: The $86,000 partridge-hunting trip funded by AIG, a government-rescued insurance firm, for some top clients. They had fun, but the public outcry was such that lots of other firms cancelled their holiday parties lest they be accused of wasting money in tough times. Cheers!
Badly-timed nickname: Awarded jointly to Whole Foods Market and Starbucks. Being known, respectively, as Whole Paycheck and Fourbucks is fine when the going is good, but not when consumers are obsessed with value for money. Both of these pricey retailers have had a miserable year. Whole Foods’ shares are down by 75% so far in 2008, and shares in Starbucks are down by over half.
In memoriam: A posthumous award for this year’s notable departures. Contenders include Alan Greenspan’s reputation as a great central banker; investment banks; the newspaper industry; sport-utility vehicles; fiscal prudence; the inexorable rise of BRIC economies and the theory that BRICs had “decoupled” from rich world economies; pay increases; and capitalism. But the winner is economic growth—gone, though one hopes not forever.
HOUSE MEMBERS VOTING 'YES' ON AUTO INDUSTRY BAILOUT RECEIVED, ON AVERAGE, 65% MORE FROM AUTO INDUSTRY INTERESTS THAN THOSE VOTING 'NO'Related: Lessig is moving back to Harvard:
BERKELEY, CA, Dec. 11 —Members of the U.S. House of Representatives voted to pass the Auto Industry Financing and Restructuring Act last night. MAPLight.org's research department revealed that over the past five years (January 2003 - October 2008), auto manufacturers, auto dealers and labor unions gave an average of $74,100 in campaign contributions to each Representative voting in favor of the auto bailout, compared with an average of $45,015 to each Representative voting against the bailout--65% more money, on average, given to those who voted Yes. The final vote: 237 Representatives voted Yes and 170 voted No, with 26 Not Voting and 1 voting “Present.”
MAPLight.org's analysis included contributions from auto manufacturers, auto dealers, auto-related industries and labor unions, groups that have expressed support for this bill's passage.
As faculty director of the Center, Lessig will expand on the center’s work to encourage teaching and research about ethical issues in public and professional life. He will also launch a major five-year project examining what happens when public institutions depend on money from sources that may be affected by the work of those institutions — for example, medical research programs that receive funding from pharmaceutical companies whose drugs they review, or academics whose policy analyses are underwritten by special interest groups.
Sir Gulam Noon did not duck when he heard the first sounds of gunfire in his suite on the third floor of the Taj Mahal Hotel.
Britain’s most high profile Asian businessman had booked a table at the restaurant but at the last minute he felt slightly ill so changed his mind and decided to have dinner in his room with his brother and two business associates. “It probably saved my life, the restaurant was the first place the terrorists went.”
Sir Gulam – who is known as the “Curry King”, selling 1.5 million ready made Indian meals a week in Britain – was born in Bombay and started his career running a sweet stall in the city.
At first he says, “we thought we were hearing wedding fireworks, it sounded as though crackers were being let off in the lobby”. He and his brother looked out of the window expecting a fireworks display but instead “we saw men rushing into the building and people fleeing”.
The brilliant mind of Kevin Kelly wrote about the origins of science a few weeks ago (The Origins of Progress, Anachronistic Science). If you want to expand your mind, read Kevin Kelly, for his is one of the most significant voices of contemporary culture. But Kelly uses science to try and answer a question about science that perplexes him: Why was science “discovered” in Western Civilization and not before? It’s a fascinating question, and one that is terribly important for us today, because we’re at the beginning of the post-modern, post-colonial era in the West.
I’ve been studying and writing about postmodernism for over ten years, and I see the conflicts of a culture in change everywhere. I actually prefer the term “postcolonial,” because, from a practical perspective, it fits better. Colonialism is a top-down, “teach a man to fish” philosophy ideally suited to the application of logic, reason and science. Where it runs into problems is when the top wants to maintain its position on top, but I digress.
The thing that Kelly refuses to acknowledge — as do most people of science — is the role of faith in the origins of science, and that brings me back to Thanksgiving 2008.
We’re in the midst of a second Gutenberg moment, in which knowledge (The Jewel of the Elites) is spreading throughout the globe like a giant mushroom cloud, and I would argue that this significantly will alter any future projections, just as the first Gutenberg moment did centuries ago.
Anti-government demonstrators swarmed Bangkok's international airport late Tuesday -- halting departing flights -- as opponents and supporters of Thailand's government fought running battles in the streets of the city.
Minutes after outbound flights at Suvarnabhumi International Airport were suspended, hundreds of demonstrators -- some masked and armed with metal rods -- broke through police lines and spilled into the passenger terminal.
Seven of the top ten debtor nations are included in the world’s top ten economies. Not surprising. This is largely a result of widespread availability of affordable credit, and relatively large middle classes in these countries, and consequently a large ratio of home/property owners. Most popular rhetoric on the topic would claim that wealthy countries have grown accustomed to being wealthy and they are enthralled by consumerism – it could be argued that this high level of debt could be a result of a culture that is used to and willing to buy now, and pay later…even if it means with interest.
According to our data, Japan has the highest positive income (in gross terms) at US $2,892 Billion. Similarly, the US economy is $1,594 Billion. At the other side of the spectrum, Great Britain’s income to debt ratio is a US -$7,677 Billion, and that of France is -$1,890 Billion. But what do these statistics mean on an individual level? Well, if you were to boil down what each person in this country contributed to the nation’s income vs. debt ratio, the results would be startling. We would have to take into consideration the nation’s population to better understand this. And some may be surprised to see that the US does not fare quite as bad as imagined, comparatively:
A statewide public records audit found that one in 10 requests for basic documents were denied or ignored by local governments.
Another two in 10 requests were fulfilled only after records custodians required the requesters to identify themselves or explain why they wanted the documents, in violation of state law.
The audit, conducted by the Wisconsin Freedom of Information Council and the University of Wisconsin-Madison School of Journalism and Mass Communication, involved 318 public records requests filed in 65 counties.
“We were not trying to trick anyone," says Bill Lueders, the Council's elected president and news editor of Isthmus newspaper. "We asked for basic information that no one should have any problems getting. And yet there were problems."
The Fed's highly leveraged balance sheet will make it hard to fight inflation.
IF THE FEDERAL RESERVE BANK WERE A COMMERCIAL LENDER, it would be a candidate for receivership, based on its capital ratios. Bank examiners generally view any lender with a ratio below 2% to be dangerously undercapitalized. The Fed's current capital ratio, or capital as a percentage of assets, is 1.9%.
The Fed has provided so many loans and emergency credits -- to banks, brokers, money funds and foreign countries -- that its balance sheet, viewed one way, is as leveraged as any hedge fund's: Its consolidated assets amount to 53 times capital. Only 11 months ago, its leverage on this basis was a more modest 25 times, and its capital ratio 4%. A caveat: Many of the loans are self-liquidating facilities that will disappear in a few months if the financial crisis eases.
Although the Fed's role as a central bank is much different from the role of a private-sector operation, the drastic changes in the size and shape of its balance sheet worry even some long-time Fed officials. Its consolidated assets have swelled to $2.2 trillion from $915 billion in about 11 months, and contain at least a half-dozen items that weren't there before. Some, like a loan to backstop the purchase of a brokerage, Bear Stearns, are unprecedented. (See table for highlights.)
Someone once said there are certain things that cannot be adequately explained to a virgin, either by words or pictures. It is therefore with some trepidation that I attempt to outline our investment policy. We are bullish on agriculture and bearish on the financial community. For 10 years we have contended that equity markets can, and do, stagnate for periods as long as a quarter of a century. Accordingly, we have refused to follow the market, choosing instead to invest in unleveraged sectors which have endured long bear markets.
However, there are complicating cycle considerations. A process of debt liquidation is under way that resembles a turning point heralding weaker global growth. This undermines almost all risk taking, including agriculture, and for this reason we presently favour only government bonds.
According to Prada: "There is a rejection of fakeness - the fake avant-garde." And the inflation scare that took the price of oil to almost $150 per barrel, and created a hawkish central banking community, was perhaps the biggest head-fake of all. Certainly, the market for 10-year government bonds is beginning to think so. It is trading near a record high.
And today, even those regional Fed governors and hawkish European central bankers seem to see it as well. As I say, this is the time to own government bonds. But we are aware of just how out of sync we are with our heroes. Can the combined intellectual weight of Mark Faber, George Soros and James Grant all be wrong? Why do they insist on shorting Treasuries during the worst financial crisis since the Depression? I blame the Romans.
A former chief executive officer of Goldman Sachs Group Inc. does not mingle with boat dealers; he mingles with investment bankers; and the first rule, before handing out taxpayer money, is to have mingled with the people you want to hand it to.(That way they know whom they owe). I admire your ability to recognize your “circle of competence” and live within it.
Still, I do feel that in me, and my little literary business, there is opportunity for you, and your $700 billion. Allow me to explain why.
Be Fair
1) By giving the money to me, instead of someone less deserving, you will make the world a fairer place.
As much as I admire all of your decisions I can’t help but notice that the main qualification of the bankers to whom you have been giving money, so that they might make smart loans, is that they have gone almost bankrupt by making stupid loans.
As your mind is subtle, I can only assume that you secretly believe that the American economy right now needs not smart loans, but more stupid ones -- and thus that you have targeted the bankers who have proven they can make them.
I, unfortunately, have not flirted with bankruptcy, or made any stupid loans. But here’s my point: I haven’t been given the chance! Allow me to prove my financial ineptitude to you. I swear to you that when I return for my second round of assistance I will have proven myself fully qualified to receive it.
WHEN the Germans launched, five months ago, that terrific onslaught on Verdun, which has been sustained by the French with such incomparable heroism, the enemy's offensive was welcomed by our Press, as certain to cost him sacrifices in men greater than his gain in territory. Nevertheless, the same newspapers which have called for, and now enthusiastically welcome, the Franco-British offensive, seem hardly to have realised what that advance has already meant to thousands of their readers and to many more thousands of stricken heroes in terms of human suffering. Let us neither minimise nor exaggerate the success so far gained. Everyone is discussing it, now that a halt is called. Intense pride we must all feel in the superb courage shown by our officers and men under this ordeal; but that pride should not blind us to the cost. We do not know what are the casualties incurred in the week's fighting that started last Saturday morning; but we do know that heavy sacrifices of life and limb must be made at every "push," and that a town must be depopulated of its young men for every village gained. That is the experience of this war; for every previous attempt at an advance, whether on our own part or on that of the Germans, during the general deadlock of the last 18 months, has only served to prove, the truth of the contention of M. de Bloch, set out in the Economist of January 1st. The Polish writer foretold what trench warfare would mean between conscript armies. “Battles,” he says, “will last for days, and at the end it is very doubtful whether any decisive victory can be gained.” The decision, he predicted, supposing diplomacy to be excluded, would come through famine, not through fighting.
Nissan’s announcement last week that it would offer a stripped-down version of its Versa model for under $10,000 -– a Sub-Versa, if you will -– occasioned a lot of media attention and interest, as if there was something to celebrate. To me it sounds like 1.6 liters of boredom, a mouthful of sand to thirsty car-buyers. Please. Ten grand? I can put you in automotive paradise for $10,000. Walk this way.
Go to www.motors.ebay.com and follow the link to “Cars & Trucks.” Don’t specify a make or model but simply order the 50,000 or so listings by price, and use the advanced search function to specify items with a “Buy It Now” price. What you’ll discover is an Elysian field of depreciation as the awesome rides of yesteryear -– in some cases cars that dominated automotive buff book covers just a couple of years ago –- are dispensed with for a fraction of their original sticker. With the recent spike in gas prices and the downturn in the economy, people are eating their cars -– “literally!” as Joe Biden would say.
Yes, these cars are a little older, but if you were to compare, wheel-to-wheel, the new Versa with, say, a 1991 BMW 850i –- a 12-cylinder supercoupe on 18-inch Hamann wheels and with only 47,120 miles on the clock –- well, your head would explode. The Bimmer has more technology in its ashtray.
For writers who seek to influence public affairs, timing plays a paramount role. And few writers have had better timing than Adolf Augustus Berle.Fascinating.
In the summer of 1932, with America trapped in the greatest financial crisis in its history, Berle published “The Modern Corporation and Private Property,” a scholarly yet readable analysis of America’s largest companies and their managers. Berle is largely forgotten today, yet with that book he succeeded in persuading Americans to see their economic system in a new way — and helped set the stage for the most fundamental realignment of power since abolition.
The stock market had plunged vertiginously three years earlier, and by 1932 Americans were desperate to reverse the much wider collapse that had ensued — and to make sure it wouldn’t happen again. The New Republic was soon hailing “The Modern Corporation” as the book of the year, while The New York Herald Tribune pronounced it “the most important work bearing on American statecraft” since the Federalist Papers. Louis Brandeis would cite its arguments in a major Supreme Court ruling on corporate power. Running for president, Franklin Delano Roosevelt recruited Berle — a Republican Wall Street lawyer who had supported Hoover — to join his “brain trust,” and that fall entrusted him with drafting what became the most important speech of the campaign. After the election, Berle remained in New York, yet his connection to the president he audaciously addressed as “Dear Caesar” was such that Time would characterize “The Modern Corporation” as “the economic bible of the Roosevelt administration.”
Daniel Ariens's biggest concern right now isn't the financial crisis. It's getting his hands on snowblower engines.Dan Neil channels Karl Marx & Leon Trotsky while tooling around in the latest BMW 750Li near Chemnitz:
The chief executive of Ariens Co., a maker of mowers and snowblowers, got a curt email last month from the company that for decades supplied engines for his line of snow machines, telling him they're halting production in 60 days -- essentially cutting off motors at the peak of his season. A host of problems hobbled that supplier, including the loss of a huge customer and problems obtaining crucial parts, such as starters, from the engine maker's own supply base.
"I'm quite sure we have other suppliers that won't make it through this cycle," says the 50-year-old Mr. Ariens.
This highlights a grim reality now dawning across the U.S. economy. Deep problems existed long before the meltdown on Wall Street and won't be fixed by the government's injection of taxpayer money into the nation's banks. Even if the credit crunch eases, as now appears to be happening, companies such as Ariens are bracing for a painful recession and taking steps to survive it.
Car sales and industrial production have plunged, consumer confidence has wilted, and companies have accelerated layoffs. Manufacturing, particularly autos and machinery, is leading the way down. Exports can't be expected to cushion the impact because the slowdown is global.
My driving partner and I were in the vicinity of Chemnitz, a somewhat dire little city in the former East Germany known for its alcoholism and an enormous monument to Karl Marx. Naturally, we had to see it.I have an Ariens snowblower.
"Bitte, kennen Sie, wo ist der grossen Kopf vom Karl Marx?" we asked passersby.
The former East Germans, standing in chilly drizzle, were delighted to help the capitalist running dogs in their gigantic limousine, a 2009 BMW 750Li. They pointed us down one of the main streets -- Lumpenprolitariatstrasse, maybe? -- and there it was: A huge, glowering stone bust of the German political philosopher, about the size of a FEMA trailer. Now there, there's a redistributionist.
A Summary of Remarks by Former CIA Director Jim Woolsey at the GEOINT Symposium
At the GEOINT Symposium in Nashville, Tennessee, former director of the Central Intelligence Agency (CIA) Jim Woolsey gave a chilling account of the implications for national security related to the United States' dependence on foreign oil. He described the vulnerabilities of a resource located far from our shores, highlighting how consumer habits could have dramatic geopolitical consequences. He then offered a solution to the crisis by suggesting a way to remove oil as a strategic commodity.
Woolsey's assessment of the problem is similar to what we have heard from T. Boone Pickens, the oil businessman-turned wind power advocate. We spend in the range of $350 - $700 billion per year for oil, depending on the price per barrel. The reality is that the U.S. and other oil importers like China and India are engaging in the biggest transfer of wealth in history. The result is that the U.S. is either directly or indirectly providing funds to support countries that may not have our best interests at heart. "Oil tends to be produced by countries that are either run by autocrats or dictators. (One exception: Norway). So, one of the things we are doing with this money is contributing to the support of dictators. Putin [Russia] and Chavez [Venezuela] are a bit quieter with oil at $65 per barrel," said Woolsey. "[However], a national energy policy that depends on oil is probably one of the stupider policies ever done. Even at $65 per barrel, we still have one of the biggest transfers of wealth the world has ever seen."
Tempelhof is justifiably regarded as the cradle of aviation. The name Tempelhof is closely connected to the beginning of engine-powered aviation. On 4 September 1909, an engine-powered flight took off for a few minutes for the first time in Germany. With his plane, American Orville Wright ushered in the age of engine-powered aviation in Germany on the Tempelhof airfield. Aeronautical engineering continued to develop at a rapid pace: on 8 October 1923, Tempelhof was granted the status of "Berlin Airport". The central airport Tempelhof developed into the biggest hub in Europe. Tempelhof became the home of Deutsche Lufthansa AG, which was founded on 6 January 1926 in Berlin. 1936 saw the start of construction of a completely new airport of epic proportions. The construction of the largest airport building in the world catered for both Hitler's penchant for monumental constructions and the expected 6 million passengers. During World War II, civilian air traffic increasingly dwindled. After a brief occupation by the Soviet army, the Americans took over the airport in July 1945.
The Badgers topped Illinois 27-17.
Edward Niedermeyer: With GM's resale values and stock price hovering at record lows, two Texas dealers have come up with one hell of a sales gimmick. Buy a GM vehicle at Frank Kent Motor Co. in Fort Worth, Texas by the end of the month and the owners will give you 50 shares in General Motors. The scheme is advertised as a celebration of GM's 100th anniversary, but when asked by Automotive News [sub], Frank Kent Motors owners admit that the promotion was actually inspired by the depths to which GM stock had sunk. And while "50 shares of General Motors" sounds better than "$327″ (based on GM's $6.54/share price at the time of writing), the dealers see the stock as (get this) a hedge against depreciation.
Enter Akin Gump partner Tommy Thompson — the former Wisconsin governor, former secretary of Health and Human Services and former presidential hopeful. Yesterday, Thompson was officially named independent counsel for the National Thoroughbred Racing Association’s newly created Safety and Integrity Alliance. According to a press release, Thompson will lead a team that will monitor the reform program and provide annual progress reports.Horse racing....
The Law Blog recently spoke to the 66 year-old Thompson to talk about politics, ponies and his new gig.
Why were you the man for the job?
I was the secretary of Health and Human Services, and was there when 9/11 and all those other things had to be taken care of. I was responsible for the FDA. I was governor for 15 years. I’m a farmer. I had an interest in Flashy Bull. I’ve been passionate about horse racing. Plus, My law firm, Akin Gump, does this kind of work. We’ve done it for the NFL in the past, and for all kinds of investigations into government.
Smiles could only be found on Penn State fans' faces during Saturday evening's 48-7 victory over Wisconsin at Camp Randall.
A fan was tasered nearby.
When the 12,000 person city of Monticello, Minnesota voted overwhelmingly to put in a city-owned and -operated fiber-optic network that would link up all homes and business to a fast Internet pipe, the local telco sued to stop them. Wednesday, District Court Judge Jonathan Jasper dismissed the suit with prejudice after finding that the city was well within its rights to build the network by issuing municipal bonds. In this case, however, a total loss for the telco might actually turn out to be a perverse sort of victory.More here.The judge's ruling, a copy of which was seen by Ars Technica, is noteworthy for two things: (1) the judge's complete dismissal of Bridgewater Telephone Company's complaint and (2) his obvious anger at the underfunding of Minnesota's state courts. Indeed, the longest footnote in the opinion is an extended jeremiad about how much work judges are under and why it took so long to decide this case, even going so far as to cite approvingly a newspaper editorial backing more funds for the court.
Bridgewater's basic complaint was that cities in Minnesota are not allowed to use bonds in order to offer data services to residents, because they lack the necessary authority. State statute says that such bonds may be issued for a host of projects (sewers, stadia, playgrounds, and "homes for aged," among others), and they can more generally be used to fund "other public conveniences." But is Internet access a "public convenience"?
Thank you for contacting me to share your thoughts on the administration's proposal to purchase up to $700 billion of bad mortgage debt. I very much appreciated hearing from you.Much more on the splurge, here.I opposed the bailout plan passed by Congress, because though well intentioned, and certainly much improved over the administration's original proposal, it remained deeply flawed. It failed to offset the cost of the plan, leaving taxpayers to bear the burden of serious lapses of judgment by private financial institutions, their regulators, and the enablers in Washington who paved the way for this catastrophe by removing the safeguards that had protected consumers and the economy since the great depression. Second, this bill did not include meaningful provisions to help families facing foreclosure. This is more than just a matter of fairness - the housing crisis is the root cause of the credit market collapse, and unless we address it, any rescue package is far less likely to work. Finally, the measure failed to address the deeply flawed regulatory structure that paved the way for this crisis. Taxpayers deserve a plan that puts their concerns ahead of those who got us into this mess.
Again, thank you for contacting me. Please feel free to do so again in the future.
Appeared recently in the New York Times print edition. More here.
Declan McCullagh notes the large amount of pork in the bill that passed Friday.
The proposed legislation would authorize Treasury Secretary Henry M. Paulson Jr. to initiate what is likely to become the biggest government bailout in U.S. history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates.The plan would give Paulson broad latitude to purchase any assets from any firms at any price and to assemble a team of individuals and institutions to manage them. In wielding those powers, Paulson and others hope to contain a crisis that already has caused the failure or forced the rescue of a half-dozen major Wall Street firms and unnerved markets around the world.
Congressional negotiators have now completed action on a $700bn authorisation for the bail-out of the financial sector. This step was as necessary as the need for it was regrettable. There are hugely important tactical issues regarding the deployment of these funds that the authorities will need to consider in the weeks and months ahead if the chance of containing the damage is to be maximised. I expect to return to these issues once the legislation is passed.In the meantime, it is necessary to consider the impact of the bail-out and the conditions necessitating it on federal budget policy. The idea seems to have taken hold in recent days that because of the unfortunate need to bail out the financial sector, the nation will have to scale back its aspirations in other areas such as healthcare, energy, education and tax relief. This is more wrong than right. We have here the unusual case where economic analysis actually suggests that dismal conclusions are unwarranted and the events of the last weeks suggest that for the near term, government should do more, not less.
My email to Wisconsin Senators Russ Feingold and Herb Kohl. I also sent this to Congresswoman Tammy Baldwin:
Dear Senator Feingold:
I am writing to express my opposition to the proposed $700,000,000,000 toxic debt instrument bailout.
I believe it is wrong for us to continue the practice of spending beyond our means and simply passing more debt to our children and grandchildren. It is also wrong to stoke the fires of inflation.
If you believe these funds are necessary, then I suggest the following:
Best wishes,
Jim
Related:
Anyone who caught even a sliver of yesterday's hearings in the U.S. Senate on the proposed Treasury bailout of the mortgage-backed securities market knows that the current financial crisis is far from over. Suddenly all sorts of previously unthinkable catastrophes seem possible.The total collapse of the global financial system is one thing -- everyone at Davos in January saw that coming. But the shrinkage of the Goldman Sachs Group Inc. bonus pool is another. Whatever else the Treasury achieves it must know that if the employees of Goldman suffer any sort of pay cut, it will be judged to have failed. And our country may never recover.
Last year Goldman paid its employees $20 billion, 44 percent of the firm's revenue. Chief Executive Officer Lloyd Blankfein took home $68.5 million, and many otherwise ordinary human beings took home $10 million or mor
From Paulson to You | 11:41 a.m. In response to a question, Secretary Paulson sought to clear the air about who the bailout was supposed to help. "This is all about the American taxpayer," he said. "That's all we care about." He continued:Related: Public Markup of the Dodd bailout proposal.Any banking operation in the United states that is doing business with the American public is important. The American public in dealing with the financial system doesn't know who owns that bank.
Later, he added, "You ask me about taxpayers being on the hook? Guess what, they are already on the hook."
A few years ago, I had an opportunity to hear "her deepness" Sylvia Earle speak. She included this short video in her presentation - "the Power of One".
Earle emphasized the opportunities we all have to change the world. I recalled her talk while visiting with Hal Herron recently. Herron, of Riverton, Wyoming has been adding outdoor art to his home town in an interesting way.
Museums often create large banners to promote an exhibit. Herron sought out these banners after a showing is complete. He pays for shipping to Riverton and places them around the community for all to enjoy. Fascinating. He forwarded two photos, seen below:
Bill Perkin's full page New York Times ad in today's paper is another illustration of the "Power of One". 
Perkins approach requires a certain size checkbook, of course :)
All of which reminds me of the "two greatest commandments".
A few years ago, senior officials at the Bank for International Settlements started ringing alarm bells about the scale of leverage that was quietly building up in the financial system. Back then, though, it was fantastically hard to get American policymakers - let alone bankers - to listen.In the go-go days of the credit bubble, Washington policymakers blithely assumed that the Western financial system had plenty of capital to cope with any potential risks. Consequently, as one former BIS official admits: "Worrying about leverage wasn't fashionable at all - no one wanted to hear."
Fast-forward a couple of years and, my, how those Western financiers are having to eat humble pie (even to the point of accepting a helping hand from the once-ailing Japanese). After all, the events of the past year have now made it patently - horrifically - obvious that the Western banking system has become dangerously undercapitalised in recent years, to the point where even the Federal Reserve is having to shore up its defences.
Moreover, it is now also clear that Western policymakers are belatedly trying to correct this state of affairs. The days when high leverage, mega bonuses and wacky instruments were equated with financial virility have gone; instead a more humble, back-to-basics and slim-line approach is what investors are demanding. Thus, deleveraging is now all the rage - in whatever form it might take.
One of life's rules is that there's bad in good and good in bad. The total collapse of the U.S. financial system is no exception. Even in the midst of the current financial despair we can look around and identify many collateral benefits.A lot of attractive office space seems to be opening up in midtown Manhattan, for instance, and the U.S. government is now getting paid to borrow money. (And with T-bills yielding 0 percent, they really ought to borrow a lot more of it, and quickly.)
And so as Morgan Stanley Chief Executive Officer John Mack blasts short sellers for his problems, and Goldman Sachs CEO Lloyd Blankfein swans around pretending to be above this little panic, we ought to step back and enjoy the positives.
Thanks to Pete for emailing Vincent LaForet's very nice scene, not that I'm a Yankee fan.
TAMMY WYNEN stands near the back of a crowd outside a paper mill in Kimberly, Wisconsin. At a bank of microphones, speakers rail against Adam Smith; one, from the United Steel Workers, literally blames "The Wealth of Nations" for the mill's impending closure. Many also hint that the soon-to-be unemployed mill workers should vote for Barack Obama in November.But Mrs Wynen, a 27-year veteran of the paper mill, is not so sure. She cannot remember the last time she saw Mr Obama recite the pledge of allegiance. And her family loves Sarah Palin, John McCain's new running-mate. Her children have lines from Mrs Palin's convention speech off pat. Still, Mrs Wynen says she doesn't know who she will vote for. The candidates look poised to spend a lot of time and money in Wisconsin wooing her.
It's too early for civilians. As dawn's first light falls on the jagged peaks, creeps down the dwindling glaciers and glides across glass-faced Swiftcurrent Lake, most of the tourists in the Many Glacier Hotel are still snoozing.Related: Yellowstone Sunrise VR Scene and Waterton Lakes National ParkBut down at water's edge, three early risers huddle around a camera. One of the guys, leaning on a tripod and waiting for the clouds to arrange themselves over the jagged peaks, has a Beatles haircut, the build of a shortstop and a face you've seen before somewhere.
Perhaps during pledge week.
"I want more of the color," he says, peering through a viewfinder. "OK, I'm doing it." And the film rolls.
Yes, it's Ken Burns, solemn PBS documentarian of the Civil War, jazz, baseball, Frank Lloyd Wright, Mark Twain, Congress, the Brooklyn Bridge, and more than a few other American characters and institutions. Beside him stand cinematographer Buddy Squires and writer Dayton Duncan. Upstairs in the hotel, Burns' wife and 3-year-old are sleeping.
The Economist. Democrat convention illustrations can be found here.
Great stuff.
Driving the speed limit early this morning, a dark blue car with flags zoomed past. A blur on my left. The nearby stop light provided an opportunity to take this photo.
Obama 12? Does it imply there are numbers 1 to 11 driving around? Or, is it a play on Adam 12? One needs to be of a certain age to recall the TV series Adam 12.
Finally, the car is a new Chevy Malibu. It's interesting that there is no mention of Joe Biden on the flags, stickers or plate, which is perhaps, for the best.
The Economist: Every day this week, our cartoonist is sending his sketches from the Democratic convention in Denver, Colorado. Sketches from previous days can be found here. You can find up-to-the-minute coverage on our American politics blog.
About ten hours after the end of last night's closing ceremony, I headed to the Olympic Green, completely unsure of what I'd find when I got there. I hadn't heard much about when the Green will open to the ticketless public, or if it would stay open until the Paralympics -- so I knew it would either be packed to the brim, or completely deserted. I arrived to find the latter.When I approached the Olympic subway line, the streets packed with tourists and scalpers just yesterday were now empty, and only one of dozens of security checkpoints to access the subway was open -- and there wasn't even anyone in line. Unsure if my accreditation card would still be valid, I approached the checkpoint to find a guard waving me through. Two of the guards were even taking a nap -- it was obvious that I was their first customer for quite some time.
A beautiful vr scene from the diving platform in Beijing, host of the 2008 Olympic Games.
In 1989, the Berlin Wall fell, democracy was on the march and we declared the End of History. Nearly two decades later, a neo-imperialist Russia is at war with Georgia, Communist China is proudly hosting the Olympics, and we find that, instead, we have entered the Age of Authoritarianism.It is worth recalling how different we thought the future would be in the immediate, happy aftermath of the end of the cold war. Remember Francis Fukuyama's ringing assertion: "The triumph of the west, of the western idea, is evident first of all in the total exhaustion of viable systematic alternatives to western liberalism."
Even in the heady days of 1989, that declaration of universal - and possibly eternal - ideological victory seemed a little hubristic to Professor Fukuyama's many critics. Yet his essay made such an impact because it captured the scale, and the enormous benefits, of the change sweeping through the world. Not only was the stifling Soviet - which was really the Russian - suzerainty over central and eastern Europe and central Asia coming to an end but, even more importantly, the very idea of a one-party state, ruthlessly presiding over a centrally planned economy, seemed to be discredited, if not forever, then surely for our lifetimes.
BRODY MULLINS and ELIZABETH WILLIAMSON:
When the Democratic Party holds its convention the week after next, members of Congress will be able to hear singer Kanye West at an all-expenses paid party sponsored by the recording industry.They can play in a poker tournament with Ben Affleck, courtesy of the poker industry. They can try to hit a home run at Coors Field, home of the Colorado Rockies, thanks to AT&T Corp. Free drinks and cigars will be on offer at a bash thrown by the liquor industry.
The corporate largesse is on tap despite new ethics laws and rules that both chambers of Congress adopted in 2007, aimed at weakening the links between lawmakers and lobbyists. Spearheaded by the Democratic Party, the ethics effort included an attempt to ban corporations and lobbyists from throwing lavish parties for members at the national political conventions.
But in the months since the new rules took effect, lawmakers have watered down the guidelines, and Capitol Hill and K Street have teamed up to find ways around the guidelines as written. Politicians and lobbyists are now preparing about 400 of the biggest parties -- both at the Democratic gathering in Colorado and when Republicans convene the following week in St. Paul -- that conventioneers have ever seen.
For all that has been written and said about Hillary Clinton’s epic collapse in the Democratic primaries, one issue still nags. Everybody knows what happened. But we still don’t have a clear picture of how it happened, or why.More from James Fallows.The after-battle assessments in the major newspapers and newsweeklies generally agreed on the big picture: the campaign was not prepared for a lengthy fight; it had an insufficient delegate operation; it squandered vast sums of money; and the candidate herself evinced a paralyzing schizophrenia—one day a shots-’n’-beers brawler, the next a Hallmark Channel mom. Through it all, her staff feuded and bickered, while her husband distracted. But as a journalistic exercise, the “campaign obit” is inherently flawed, reflecting the viewpoints of those closest to the press rather than empirical truth.
This is one of those moments when a camera in hand meets a scene waiting to be photographed: a beleaguered traveller resorting to solitaire on his PC while waiting for the promised next flight. The blue sky ignores the chaos below. Air travel is certainly, as a fellow passenger lamented, "not what it once was".
I have no idea what these "mimes" were publicizing at the corner of Oakland Avenue and Monroe on a Sunday evening.
I had to sigh when I read this article in the Milwaukee Journal-Sentinel on the draconian pay cuts Midwest Airlines is asking its employees to take in order to survive. Having worked at two airlines during turbulent times, I too faced the decision on what to do when management imposed pay cuts.I suspect the days of Midwest's extraordinary service are over.In the first case, I took a temporary cut at Mesa Air Group after the horror of 9/11, when airlines didn't know how long it would take to recover from the week-long shutdown of the air system and travelers deciding to fly again. The second time found me swallowing hard as I took a pay cut at Delta Air Lines after the carrier filed for Ch. 11.
But these cuts were nothing compared to what Midwest is asking of its employees -- pay cuts of up to 65% for union pilots and flight attendants to avoid filing for bankruptcy. And this is on top of grounding its MD80s -- almost half the fleet -- and laying off hundreds of workers.
Walking around Chicago this weekend, I observed no shortage of White Sox and Cubs paraphernalia (the two teams played one another at Wrigley Field). This couple certainly expressed the spirit of the weekend.
Communist Vietnam is set to become the latest country in Asia to embrace Las Vegas-style casinos, with a Canadian property developer planning to break ground Saturday on the first phase of a $4.5 billion casino-resort project on the nation's southern coast.Susan Spano offers another perspective after a recent visit.The project, called Ho Tram, will be the biggest foreign investment to date in Vietnam, said Michael Aymong, chairman of Toronto-based Asian Coast Development Ltd., the project's lead investor, with a 30% stake. Its main partner in the project is New York hedge fund Harbinger Capital LLC, which has a 25% share.
The initial phase will cost $1.3 billion and consist of two five-star hotels with a combined 2,300 rooms and a casino with approximately 90 gambling tables, 500 slot machines and an area for VIP customers. When completed in 2015, the resort will comprise five hotels with 9,000 rooms and a second casino, Mr. Aymong said.
Ho Tram also will target vacationing families, with features including an 18-hole golf course designed by Greg Norman, a Cirque du Soleil theater, and a site for guests to swim with dolphins.
"It's a needed project in Vietnam" that, in spite of the country's poor infrastructure, will be able to "effectively compete" with integrated resorts in neighboring China, Malaysia and Singapore, Mr. Aymong said
The photo was taken on Highway 1 several hundred kilometers northeast of Ho Chi Minh City (Saigon).
But I reserve particular ire for the burgeoning scooter movement that’s being written about on an alarmingly frequent basis in the media with every new report of another record price for a barrel of oil. Now, don’t get me wrong, because I have nothing against scooters. I like them, as a matter of fact. They can be fun, efficient and even cool in the right circumstances. But presenting scooters as a viable transportation option for the masses in this country is flat-out irresponsible.Let me backup here for a second and repeat that sentence: “...can be fun, efficient and even cool in the right circumstances.” Guess what, folks - riding your Vespa down Woodward Avenue, Michigan Avenue or Fifth Avenue does not constitute “the right circumstances.” Americans clearly watched too many Italian movies from the 60s and became enamored with the whole "sweater tied around the neck/sunglasses on top of your head/voluptuous girl hanging on the back of the scooter" thing, and this latest gas frenzy has started to warp their thinking, big time.
Jason Shepard, speaking on UW-Madison graduate Greta Van Susteren's program mentioned that a "crisis of confidence exists in Dane County and Madison Leadership". Jason discussed the growing controversy over murder victim Brittanny Zimmerman's botched 911 call.
Fox News link (will disappear at some point)
40MB MPEG4 download for ipod/iphone/playstion and others. CTRL Click here.
The Roman Catholic priest who took flight by tying himself to a chair with hundreds of helium balloons has gone missing off the coast of Brazil.He was trying to to break a 19-hour balloon flying record to raise money for a spiritual rest stop for truckers in Paranagua according to a news report.
The Guild Inc., a Madison, Wis.-based online art retailer, has raised $2.5 million in Series C funding, according to a regulatory filing. Shareholders include Dolphin Equity PartnersThe Guild, a company with many lives, must be north of $50,000,000 (!) in funds raised over the years.
Related: A Pravda View of Guild and 1/11/2006: Guild Raises another $6M.
Fascinating.
OK, so maybe you’re working today instead of surfing around the Web for April Fool’s jokes. Fear not: Buzzwatch is here to help with a roundup of April Foolery online.At Google, where April 1 is celebrated annually with jokes throughout the company’s sites, the main offering this year is a chance to join “Project Virgle” and become a Mars colonist.
Google’s Gmail has its own prank. Users today are informed of a new “Custom Time” feature that promises to predate emails so they appear to have been sent in the past. “Worry less,” Gmail says. “Forget your finance reports. Forget your anniversary. We’ll make it look like you remembered.”
If you’re looking to stage your own joke on a coworker today, Lifehacker has an excellent list of suggestions. One example: replace someone’s Windows desktop with an image of the desktop and watch the victim try to click on the unclickable icons. Ah, sometimes it’s the simple things.
Even NASA can’t resist joining the foolery. From the space agency’s popular Astronomy Picture of the Day site comes news that the new space station robot is demanding that humans call it by the name “Dextre the Magnificent.”
Cable is not a monopoly. You can choose from any cable company you want in America, just by moving your house.@ Freedom to Connect.
THIS was going to be a simple artist-at-work article about Al Jaffee, a man who could lay claim to being the world’s oldest adolescent and who just now is enjoying a fresh burst of public and professional recognition. The idea was to look in on him as he created the latest installment of a feature he has been drawing for Mad magazine since, incredibly, 1964.But because that feature is the Mad Fold-In, which embeds a hidden joke within a seemingly straightforward illustration, it should come as no surprise that the simple article ended up being not so simple after all. There were times when Mr. Jaffee, who faced a serious health scare over the last few weeks, thought it might be something closer to a eulogy.
If you were young at any time in the last 44 years, you know the fold-in: the feature on the inside of Mad’s back cover that poses a question whose answer is found by folding the page in thirds. September 1978: “What colorful fantastic creature is still being exploited even after it has wiggled and died?” A picture of a garish butterfly, folded, becomes an equally garish Elvis.
Via email:
Colorado Congressman Wayne Allard has taken over $45,900 from ConAgraLearn more here.
Food Corporation and over $405,000 from the oil and gas industry. His campaign is fueled by over $3.6 million in PAC contributions. He is just one example of a problem that affects members of both parties. And just one example of why the system in Washington D.C. puts special interests before the American people.That system will not change on its own. It will only change if people like you and me stand up and fight for it.
A month ago I considered running for Congress to help bring about this change from the inside. Many of you supported the idea and urged me to run. After thinking very hard about whether such a campaign
could win, I decided against it. And instead I am asking you to join me in a new grassroots effort to Change Congress.
THE Chinese authorities had been fearing trouble, but nothing on this scale. An orgy of anti-Chinese rioting convulsed the Tibetan capital, Lhasa, on Friday March 14th, leaving security forces uncertain how to respond. For many hours mobs controlled the streets, burning and looting as they pleased.The approach of Beijing’s Olympic games in August is seen by many of Lhasa’s residents as an opportunity to put their contempt for Chinese rule on display to the outside world. China’s desire to ensure the games are not marred by calls for boycotts is tying its hands as it considers how to respond.
Your correspondent, the only foreign journalist with official permission to be in Lhasa when the violence erupted, saw crowds hurling chunks of concrete at the numerous small shops run by ethnic Chinese lining the streets of the city’s old Tibetan quarter. They threw them too at those Chinese caught on the streets—a boy on a bicycle, taxis (whose drivers are often Chinese) and even a bus. Most Chinese fled the area as quickly as they could, leaving their shops shuttered.
Apparently, Britney has some shaky assets on her balance sheets. Well, don’t worry Britney. You’re not the only one.A Bailout, for Everyone by Steven Pearlstein:In an announcement that has sent produced a large and varied reaction, the FED has announced that they will attempt to bail out banks by letting them use mortgage-backed securities as collateral for loans. This move is unprecedented in the Fed’s history. For the first time, they are entering the mortgage business. Since its inception, the Fed has used open market operations (the buying and selling of treasury bonds) to expand or contract the monetary policy. A good detailed discussion is here, at interfluidity. Simplistically, the Fed’s balance sheet looks like:
Last week, it was a $200 billion cash-for-bond swap for the banks.This week, it was a $200 billion bond-for-bond swap for the big investment houses.
If they keep this up, pretty soon you'll be able to walk into any Federal Reserve bank and hock that diamond brooch you inherited from Aunt Mildred.
Forget all that nonsense about the Bernanke Fed being too timid or behind the curve. In the face of what is turning into the most serious financial market crisis since the Great Depression, the Fed has been more aggressive and more creative in using its limitless balance sheet -- in effect, its ability to print money -- than at any time in history.
We can argue till the cows come home about whether this is a bailout for Wall Street. It is -- but only to the extent that it is also a bailout for all of us, meant to prevent a financial and economic meltdown that drags everyone down with it. In broad strokes, we're going through a massive "de-leveraging" of the economy, wringing out trillions of dollars of debt that had artificially driven up the price of real estate and financial assets, and, more generally, allowed Americans to live beyond their means. The Fed's goal has not been to impede that process, simply to make sure that it proceeds in an orderly fashion. But even that has required central bank intervention that is unprecedented in scale and scope. And despite yesterday's huge rally in the stock market, Fed officials warn that this de-leveraging is nowhere near finished.
Doug Parker had a vision. His successful America West had completed a merger agreement with bankrupt US Airways Group on May 19, 2005. With this deal he planned to become the dominant low cost carrier in the country as the new US Airways (NYSE: LCC). And he would be its CEO. The next day CNN reported that "Parker thinks he can buck history and make a success out of merging his more successful airline with one in bankruptcy." The company's press release said:Northwest is Madison's largest carrier. This proposed merger, combined with high oil prices that will dramatically reduce the number of small jets servicing airports like ours may require rethinking local air service.Building upon two complementary networks with similar fleets, closely- aligned labor contracts and two outstanding teams of people, this merger creates the first nationwide full service low-cost airline.On September 29, 2005 trading began for Mr. Parker's new carrier. On that day its stock closed a little above $20. Then in a remarkable run-up to November 24, 2006 it was trading at around $63. Doug Parker seemed close to realizing his vision. Close, but no cigar. The run-up was followed by a steady erosion in shareholder value that on Friday March 7, 2008 saw his stock close at just under $11. That represented an 82% loss in value from its peak and a 46% loss from its initial price. What went wrong?
Five years ago, Congress killed an experimental Pentagon antiterrorism program meant to vacuum up electronic data about people in the U.S. to search for suspicious patterns. Opponents called it too broad an intrusion on Americans' privacy, even after the Sept. 11 terrorist attacks.But the data-sifting effort didn't disappear. The National Security Agency, once confined to foreign surveillance, has been building essentially the same system.
The central role the NSA has come to occupy in domestic intelligence gathering has never been publicly disclosed. But an inquiry reveals that its efforts have evolved to reach more broadly into data about people's communications, travel and finances in the U.S. than the domestic surveillance programs brought to light since the 2001 terrorist attacks.
The deal is, we've been told, that CEO pay is so high because demand for the 9-sigma talent of these Water Walking Wonders, so very beyond your and my shriveled imaginations, wildly exceeds supply when it comes to the 500 jobs as Fortune 500 CEOs. I contend that there are exactly 500 Guys (almost all guys, hence I can safely use the term) who believe that line of reasoning—namely the 500 CEOs of the F500 companies. (I guess I could also throw in the heads of the biggest search firms, who unearthed many of these so-far-beyond-the-pale dudes, which perhaps puts the total at 505 True Believers.)The Inspiring Invincibles! Chuck Prince (Citigroup, formerly head of)! Stan O'Neal (Merrill Lynch, formerly head of)! Angelo Mozilo (Countrywide, formerly head of)! Tough cookies, each one. And yet, somehow, on their watches, The Three Geniuses allowed their firms, through grotesque negligence—maybe silliness or Theaters of the Absurd would be better words if the stakes weren't so high—to get into positions in which tens upon tens of BILLIONS of greenbacks had to be written off from their books of account. Dodger, my 5-year-old Aussie, could have done a better job. (He could have bitten anybody who tried to make a $500K loan to someone who had never had a job or paid a bill and signed his name with an "X"; and peed on the pants of any 22-year-old University of Chicago PhD who said, "With my clever algorithm I've designed what's called a 'derivative'—it'll make risk a thing of the past." Yes, had Dodger bitten and peed on schedule, the likes of Citigroup would be ten or twenty billion ahead of their current position.) But, since the demand is so strong for the 500 different-from-mere-vice-presidents-Monumental-Management-Marvels, and the supply is so short, The Three Geniuses, on the basis of "Upside Potential," were able to chalk up about a half BILLION buckaroos on their pay stubs over the last five years, while busily installing the tools necessary for Global Economic Meltdown. Well, I guess that means they're "excellent" at something. Isn't there some line about wool & eyes & pulling? (In most cases, their pay deals, especially the parts about "if you turn out to be an idiot, we'll pay you a king's ransom to clean out your desk," were effectively set before they set foot in the executive suite. Wow, I wanna piece of that action!)
The Coronado Club, in downtown Houston, is an unlikely place to contemplate the end of life as we know it. Plush and hushed, with solemn black waiters in crisp black jackets, the private enclave practically exudes wealth and stability. Captains of local industry enter and exit purposefully, commanding their usual tables, wearing the best suits. Everybody knows everybody else. The light is flattering. The wine room is nicely stocked.But here is Matthew R. Simmons, the head of one of the largest investment banking firms in the world, stabbing at his salad greens and heatedly discussing the chaos to come when, as he has long predicted, global oil production peaks and for the rest of our time on earth we struggle and suffer and barely endure under a diminishing supply of fuel until it disappears entirely. This idea is known as “peak oil,” and Simmons is its most fervent, and fearsome, apostle. As he puts it, “I don’t see why people are so worried about global warming destroying the planet—peak oil will take care of that.”
Slashing through his entrée, barely stopping for breath, he describes a bleak future, in which demand for oil will always surpass supply, the price will continue to rise—“so fast your head will spin”—and all sorts of problems in our carbon-dependent world will ensue. As fuel shortfalls complicate global delivery routes and leave farmers unable to run their tractors, we will face massive food shortages. Products made with petroleum, from asphalt and plastic to fabrics and computer chips, will also become scarcer and scarcer. Standards of living will fall, and people will not be able to pay their debts. Lending will tighten, and eventually there will be major defaults. Growth will cease, and hoarding will set in as oil becomes increasingly rare. Then, according to Simmons, the wars will begin. That is the peak oil scenario.
Unless you’ve been avoiding television, newspapers, and all other forms of mass media for the past few months, you’ve probably seen Democratic presidential candidate Barack Obama’s “Change We Can Believe In” and “Stand for Change” banners. The typophiles among you have realized that the “change” font Obama’s campaign uses is Gotham, designed by Hoefler & Frere-Jones, originally as a commission for GQ Magazine.The film Helvetica is well worth watching.
James Fallows, viewing events from Beijing:
I have known and liked Chuck Spinney for a very long time, since I wrote about him and his original "defense reform" colleagues, notably John Boyd and Pierre Sprey, in the Atlantic and in National Defense in the early 1980s. Boyd of course originated the concept of the "OODA Loop." This was the idea, derived from Boyd's "Patterns of Conflict" briefing, that the victor in any conflict would not necessarily be the stronger or better-prepared party. Rather it would be the one who recognized changing realities, and chose and implemented the right new course of action, faster than the opponent. Boyd came up with the theory by analyzing aerial combat among fighter planes, but in his view it could be applied to every sort of human contest, from sports to business to armed conflict.Interesting and useful read.(OODA stands for Observe, Orient, Decide, and Act. To react to changing reality faster than the opponent can, or to interfere with the opponent's ability to perceive realistically what is happening to him, is to "get inside his OODA loop." Everything anyone would ever want to know about Boyd, Spinney, Sprey; about their contemporary colleagues like Chet Richards, Donald Vandergriff, WIlliam Lind, GI Wilson, etc; and about OODA loops and the related concept of 4GW, or Fourth Generation Warfare, can be found at two excellent, related "Defense and the National Interest" sites, here and here.)
And the theory also applies to politics, as Spinney has argued in a recent item about the contest for the Democratic nomination. His analysis, "Is Obama inside Hillary's OODA loop?" comes after the jump. The incidents he mentions are all familiar; what's at least a little new is his combination of them in Boyd-style perspective -- in particular Bill Clinton losing his sense for how the battle is shifting. I am posting this before the Wisconsin results are known, and before the (in my view bogus) "plagiarism" flap has died down, so that Spinney's observation can be tested against those results.
A beautiful, yet cold morning for Wisconsin's spring primary election. While the endless winter continues, it is great to see the sun. Note the large icycles on these homes. Inevitably, spring will arrive.
I phoned Senator Kohl's Washington office [(202) 224-5653] regarding his vote against the Dodd/Feingold telco immunity amendment yesterday. The telephone operator said that Senator Kohl supported an amendment that would have the government (we taxpayers) defend the telcos in court and that these cases should be heard in a court where intelligence information could be shared. John McCain voted with Senator Kohl, while Barack Obama voted with Russ Feingold and Hillary Clinton did not vote. David Isenberg has more as does Dave Farber. The Electronic Frontier Foundation posted a summery here.
A few photos from a late arriving visitor to the University of Wisconsin's Kohl Center.
While I did not arrive early enough to catch the speech inside the Kohl Center, I always find it interesting to note the political opportunism during these events. Governor Doyle, Milwaukee Mayor Tom Barrett and local Mayor Dave Cieslewicz all rated a nod from Obama. John Kerry's 2004 appearance with Bruce Springsteen included a number of local politicians, including Elizabeth Burmaster, Wisconsin Department of Public Instruction Superintendent (a nonpartisan position).
Finally, a few Ron Paul supporters promoted their candidate in front of the proceedings.
It's the metaphors and similes that get me. It's a shotgun marriage, declared one commentator, 'with Google holding the gun'. Putting Microsoft and Yahoo together, said another, was like trying to produce an eagle from an alliance of two turkeys.T his is unfair. Microsoft isn't a turkey, but a profitable, boring mastodon that entertains fantasies about being able to fly. Yahoo, for its part, is an ageing hippy who invented hang- gliding but aspired to fly 747s and then discovered that he wasn't very good at it. The mastodon hopes that by employing the hippy it will learn to hang-glide. The hippy's feelings about the whole deal are plain for all to see.
Microsoft's $44.6bn offer of cash plus shares for Yahoo has got everyone in a spin, partly because of its sheer size but mostly because they fondly imagine it heralds an exciting future. At last, they think - something that might stop the inexorable advance of Google toward world domination! If that's what they're hoping for, then this ain't it, alas. This isn't the opening of a new chapter in the history of the computing business, but - as John Markoff observed in the New York Times - 'the final shot of yesterday's war'. And even if the merger does take place in a reasonable timescale - and if it can be made to work - it won't make much of a dent in Google.
After pondering summer with a few photos, we're back to reality blowing snow this morning. I think this photo captures our existence rather well, at the moment. Note the snow depth next to my snowblower's intake. 13.3" according to Channel3000.
The streets I drove were in good shape early today.
NATE HAGENS is an editor of The Oil Drum, an online community that seeks to raise awareness about energy issues. A Ph.D. candidate in Natural Resources at the University of Vermont, Hagens’s particular areas of interest are the principles of net energy and the bio-physiological factors that drive our energy demand.MATT SAVINAR is the editor and writer of Life After the Oil Crash, a blog which paints a bleak picture of what life on earth will look like when natural oil supplies run out. Savinar recently received his J.D. from the University of California at Hastings College of the Law, and his work is quoted extensively on the floor of the United States Congress.
One article in this month’s issue of Texas Monthly centers on Matthew Simmons, a Houston investment banker described as the most fervent apostle behind the idea of peak oil. How does the apocalyptic world that Simmons and other energy pessimists foresee in the near future—massive food shortages, a falling standard of living, wars—compare to your own predictions? What does the world look like with less oil?
Energy demand is expected to grow in coming decades. Jeroen van der Veer, 60, Royal Dutch Shell’s chief executive, recently offered his views on the energy challenge facing the world and the challenge posed by global warming. He spoke of the need for governments to set limits on carbon emissions. He also lifted the veil on Shell’s latest long-term energy scenarios, titled Scramble and Blueprints, which he will make public next week at the World Economic Forum in Davos, Switzerland. Following are excerpts from the interview:Q. What are the main findings of Shell’s two scenarios?
A. Scramble is where key actors, like governments, make it their primary focus to do a good job for their own country. So they look after their self-interest and try to optimize within their own boundaries what they try to do. Blueprints is basically all the international initiatives, like Kyoto, like Bali, or like a future Copenhagen. They start very slowly but before not too long they become relatively successful. This is a model of international cooperation.
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This photo was snapped at an early morning swim meet this weekend.
All you need to know about Green Bay is that Lambeau Field is on Lombardi Avenue.Even the numerals in the Packers’ address, 1265 Lombardi Avenue, are significant — 12 for the franchise’s record number of N.F.L. championships, 6 when Curly Lambeau was the coach, 5 when Vince Lombardi was the coach. The 1996 team won the other title in Super Bowl XXXI with Mike Holmgren as the coach (he later defected to Seattle) and Brett Favre at quarterback (he is still the face of the franchise). But Lambeau and Lombardi remain its cornerstones.
Lambeau, a star tailback at Green Bay East High School who left Notre Dame after a year, organized the original Packers team at a meeting in the dingy Press-Gazette newspaper offices in 1919 when a local meatpacking company put up $500 for uniforms and pro football was a small-town sport.
Lombardi, a New Yorker originally out of Sheepshead Bay, St. Francis Prep and Fordham before coaching at St. Cecilia’s in Englewood, N.J., at Army under Red Blaik and the Giants’ offense for five seasons (including the 1956 championship team), gilded Green Bay with a major league mystique.
In early January accident, a California computer technician turned his rental car onto some train tracks in New York per the directions of his sat nav system. The car became stuck and he had to abandon it before an oncoming train hit it. There were no injuries, but there were significant delays in travel. "The rental car driver was issued a summons and is being held liable for the damage to the train and track."That leads a real live lawyer, Eric J. Sinrod, writing at c|net to examine the potential of a driver to point to the GPS manufacturer as being at fault. The article points out:
Sears Holdings Corp., the storied retailer that helped civilize the American frontier with its catalog sales and later defined the modern department store, is searching for a new compass.Lands End is based in nearby Dodgeville. The post Sears acquisition of Lands End is a story waiting to be told.The retailer yesterday warned results for its fiscal fourth quarter and year would fall well below its expectations, continuing a sharp slide in sales and profit. Even during the best two months of the year, sales at stores open at least a year fell 3.5% compared with a year ago, the company said. Shares tumbled 5% to a more than two-year low, down $4.79 to $91.38 on the Nasdaq. The stock is off 49% in the past year.
But its record in acquisitions has been dismal. In 2002, it paid $3 billion for mail-order firm Lands' End, a business that has declined since the deal.
Hans Nyberg has compiled a great set of New Year's Eve 2008 Panoramas, including one I shot in Quebec City. Thanks much to Hans for a great site and for rendering my scene.
Quebec City celebrated the beginning of their 400th anniversary celebrations that evening. Learn more, here. 2008 is the 400th anniversary of Champlain's landing in Quebec.
The digitized specter of cyberwar is haunting the boardrooms, barracks, and law offices of America. China’s audacious September 2007 infiltration of secure Pentagon networks and government servers in several other nations has powerfully demonstrated that cyberwar’s moment has arrived. Cybersecurity analysts have estimated that 120 different nations are working to evolve cyberwar capabilities. Most of today’s current cyberwar operations involve hackers probing civilian and military networks for vulnerabilities and restricted information, operations that focus less on disruption than recon and surveillance.
I saw a young man wearing a classic Brewers baseball cap earlier today. It occurred to me that this is the "pre steriod era" logo.
“Down the drain, off the brain” is how most people think about it, but human waste—or effluent, as the professionals call it—has a lot to tell us about how we live, what we eat, and who we are.Excellent Article.They say that shit runs downhill. This is commonly understood to mean that the world is an unfair place, except among those few people who actually work with the substance, for whom it is considered something of an article of faith. This is because municipal sewerage systems are powered almost entirely by gravity, which means that when working properly, they move millions of gallons of sewage a day across considerable distances with only a minimum expenditure of energy, a feat of efficiency virtually unparalleled in the annals of engineering. When sewage stops running downhill, as it inevitably does from time to time, very bad things indeed can happen, as they did on Pecan Springs Road, in the Austin neighborhood known as Windsor Park, one morning last September.
I was spending the day with an Austin Water Utility emergency-response crew when dispatch got a call from a woman reporting that two rooms of her house were flooded with sewage. Our crew consisted of a TV truck, piloted by a twenty-year line-maintenance veteran named David Eller, and a flusher truck, driven by another longtime utility employee, named Dale Crocker. At the house, Eller, who wears wraparound sunglasses and looks a little like the country singer Dwight Yoakam, unspooled a thick red cable from the back of his truck. On the end of the cable was a camera about the size of a roll of quarters, which Crocker shoved down into a PVC clean-out pipe near the curb in the front yard. The woman leaned on a walker in her driveway, looking worried.
I've manually moved snow for the past 14 years - my entire post UW time in Madison. Always thinking that the act was a bit of exercise until a neighbor mentioned his back difficulties and said "it's not worth it".
Last spring's deluge, a particularly wet and heavy snowstorm, was the impetus to turn over the shovel, fire up my browser and shop for a snowblower.
My first stop was Ariens' website. Ariens is a classic family owned Wisconsin based firm that manufactures snowblowers and lawn mowers.
Most serious snowblowers, defined as two stage models from the likes of Ariens, John Deere, Honda and Toro among many others are at least 24" wide (Toro has a 22" model). That width is a problem for small garages like mine.
Ariens offered a useful 20" model that featured a multiple speed transmission - perfect for a variety of snow conditions and available at a reasonable price. Conveniently, their website offers online ordering which made it simple for me to enter a bit of information and a few days later the snowblower arrived at my home. Ariens customer service was great, as was their local dealer - Middleton Power Center.
About the snowblower zeitgeist. The owner of a working, somewhat powerful snowblower on a day like today (crunchy, heavy snow) quickly has the opportunity to converse with the neighbors. Typical conversations include:
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