Links 8/3/11

Central Park Zoo Peacock Flies the Coop New York Times (hat tip Buzz P)

Video: A Robot That Can Figure Out New Tasks Based On the Ones It Knows Popular Science (hat tip reader Robert M)

Why diets don’t work? Starved brain cells eat themselves e!ScienceNews (hat tip Robert M). As someone who has more experience with diets than most people (I was a seriously fat kid) I don’t buy this. This reads as setting the groundwork for yet another drug.

NOTW boss ‘who signed off Mulcaire’s fees’ is latest to be arrested Independent (hat tip Buzz Potamkin)

Italy, Spain 10-Year Bond Spreads Reach Euro-Era Record on Growth Concern Bloomberg (hat tip reader Jim H)

America is merely wounded, Europe risks death Ambrose Evans-Pritchard, Telegraph. I agree with him on Europe, but he does not recognize the damage done to the US by the debt deal, but the effects will take longer to play out.

Mubarak trial set to begin in Cairo Financial Times

Senate Panel Keeps ‘Secret Patriot Act’ Under Wraps Wired (hat tip reader Robert M)

The eternal pivot Politico

CNN/ORC Poll: Most Americans dislike debt deal, think lawmakers acted like ‘spoiled children‘ Political Tracker

Arizona’s State-Owned Mexico Border Fence Attracts Donors From Across U.S. Bloomberg (hat tip Buzz Potamkin)

Debt Ceiling Deal: All cuts, no taxes Ed Harrison

Relief at an agreement will give way to alarm Larry Summers, Financial Times. As I’ve said, you know it’s bad when Summers sounds comparatively sensible (of course, he does manage to forget that he played a leading role in causing this mess).

Is a Balanced Budget Amendment a Good Idea? Simon Johnson, New York Times

Now, Back to the Economy Robert Kuttner, American Prospect

Americans choose to save, not spend, in June CNN Money

IS LAWSON ABOUT TO BE THROWN UNDER THE BUS? | BONDI TROUBLED BY LACK OF DOCUMENTATION IN PERSONNEL FILES OF CLARSON AND EDWARDS, CALLS FOR OUTSIDE INVESTIGATION 4ClosureFraud

New York’s Top Cop Jumps Into Fray Wall Street Journal. Go Schneiderman!

Container-Ship Plunge Signals U.S. Slowdown Bloomberg (hat tip reader furzy mouse). Note this was before the debt ceiling hysteria would have had an impact on orders.

Gold’s Ludicrous Rally Continues Overnight Clusterstock

A few quick macro thoughts on the debt deal JP Morgan (hat tip MBH). Bottom line: 1.5% lower GDP growth in 2012. Welcome Japan style near deflation. Oh, and who benefits from deflation? Bondholders.

Antidote du jour:

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81 comments

  1. RebelEconomist

    It is interesting to read that Italian and Spanish bond yields are only now reaching euro-era highs. That suggests that those countries were prepared to pay such yields before EMU, and that the fact that they are apparently struggling to do so now suggests that they are inclined to use any slack to take on larger commitments. If I were German, Dutch or Finnish etc, I would want my government to insist on some strict conditionality with frequent reviews of compliance before helping Italy and Spain in installments. If Italy or Spain cannot pay their debts, they must either accept being told how to run their economic affairs or default/restructure.

    1. YankeeFrank

      So “Rebel”, according to you the banks don’t face any consequences for their lack of judgment making loans? The only reason banks are chartered and given the huge responsibility and huge windfall of being solely allowed to create money from nothing is that they are good at allocating money to safe investments. So, now that they have proven incapable of doing just that what is your answer to how they should be punished for their failure?

      1. RebelEconomist

        Like I said, I would set demanding terms for a bailout of Italy and Spain, and if they still will not or cannot pay their debts, then they should default. In that event, any banks that hold their debt would be big losers. And then I would argue that, if as a result of their losses, in turn those banks default, they should be nationalised and their shareholders written down to zero. Does that meet with your approval?

        And by the way, deposit money is a bank liability, not an asset, so why would a bank want to create a liability for itself out of nothing? That would be stupid!

          1. RebelEconomist

            Aha! So banks cannot, and would not want to, create money out of nothing. They lend money to a borrower who presumably wants to spend it, and when that borrower does spend it, the bank has to find some central bank money to transfer to settle the borrower’s payment. So banking is not so easy after all.

          2. Cedric Regula

            Let me remind everyone, for the upteenth time, that banks make loans first, then borrow deposits, repos or reserves later(by close of business day, and failing that, by closure by the FDIC). That is just soooo important that I don’t know why we say it all the time.

          3. F. Beard

            Aha! So banks cannot, and would not want to, create money out of nothing. Reactionary Economist

            The so-called balancing “asset” is often just a promise to repay the loan PLUS interest that does not even exist in aggregate.

            Banks are counterfeiters, pure and simple, except they lend out their “money” rather than just spend it into circulation. Their only difficulty is competing banks which limits how much counterfeiting they dare.

        1. YankeeFrank

          Okay, so default it is, as there is no chance these ridiculous debts can actually be paid… and yes, I blame the politicians who took on these debts as well, but not the people, who frankly, have no real choice in who they elect — a fraudulent socialist party or a fraudulent conservative party that are not-so-secretly (now anyway) all playing the same neo-feudal game with the people’s finances.

          And banks do conjure money out of thin air, its called fractional reserve lending, not reserve lending. If I could fractionally reserve lend myself money at the 30-40x leverage rate the banks do nowadays, especially in Europe, I would never have to work again, and when I don’t pay myself back the government can bail me out because we know how its never the bank’s fault at all.

          1. RebelEconomist

            It would be better to say that banks create deposit money out of debt – they lend a customer the money and simultaneously borrow it back from them, until the customer spends it.

            In order to lend yourself money as you describe, you would have to own the required fraction of reserves to start with. So I suppose you could spend that much without going to jail (although your bank would soon get closed for failing to meet reserve requirements). If you spent more than your initial holding of reserves, your payments would not clear and you would end up in jail. But don’t take my word for it; if you think banking is so easy, why not try it?

          2. No Know

            If, If, If ….. you would end up in jail. What country are you talking about? Bankers going to jail? I guess it’s theoretically possible. Maybe, like black swans, we’ll actually see one some day.

          3. F. Beard

            If you spent more than your initial holding of reserves, your payments would not clear and you would end up in jail. But don’t take my word for it; if you think banking is so easy, why not try it? Reactionary Economist

            You forget interbank lending and the counterfeiter of last resort, the Fed, as a source of needed reserves.

          4. RebelEconomist

            Considering that you would have to borrow to acquire the reserves to cover every payment you made, there would be no point in setting yourself up as a bank in the first place. You might as well just borrow from someone else’s bank and not repay. The bottom line is that being a bank does not allow you to create something of value out of nothing. There is no counterfeiting in banking per se, just lots of opportunity for greed and cynicism by the managers, and demanding negligence by the owners, which is deplorable but not illegal.

          5. F. Beard

            Considering that you would have to borrow to acquire the reserves to cover every payment you made, there would be no point in setting yourself up as a bank in the first place. RE

            Of course there is. If a bank can borrow reserves at 1% and lend out 10 times that amount at 6% then that is an enormous profit.

          6. YankeeFrank

            Rebel, I’m replying here because there is no reply on your last comment. You have not replied to the point that fractional reserve lending IS creating money from nothing. If I have savings of $100,000, with 30x leverage I can create an additional $2,900,000. You are telling me that isn’t creating money out of nothing? Are you telling me that because I need to go through the step of borrowing $2.9 million from the Fed at .25% interest (money the Fed created to loan me) that the money wasn’t created out of nothing?

            And I know, its hard being a banker… I guess that’s why the term “bankers hours” came to be. I worked for an investment bank for a time as a software developer, and I worked more hours than their traders ever did, tho they earned probably 20x what I earned. I’ve heard that investment bankers work long hours. Its so hard working long hours in an air-conditioned office sitting in a cushy chair all day. Talk to the people who work 2 full time jobs, 16 hours a day, for a pittance just to pay the rent whether they think banking is hard work. Banking is easy work, especially if you don’t care whether your customers are ever going to pay you back — hell, then you don’t even have to perform due diligence.

          7. RebelEconomist

            Basic mistake, F.Beard. Most likely, the 6% is for an unsecured loan to a business or individual for, say a couple of years, in a shaky economy, whereas, assuming that you are borrowing from the central bank, the 1% is for an overnight, collateralised loan. If you had been a banker, we might have had a much worse financial crisis! In normal times, a central bank would not let you fund yourself exclusively by borrowing from them anyway. Better learn something about banking before you repeatedly express strong opinions about it.

          8. RebelEconomist

            Yes, Frank, I am telling you that you cannot make money out of nothing – there has to be a loan involved (not to mention, in practice some reserves and capital too). As I explained, the proof of that is that you cannot just go out and spend the money that you have created. Sorry if this news disappoints you!

          9. No Know

            Terms are used so imprecisely here that it is almost impossible to translate what people are saying. Reb — I thought you meant to say that BANKS can’t make money out of nothing. At the risk of contradicting my own comment and being imprecise, let me just say that there is some agency in the federal government that can literally print (like in applying ink to paper and then cutting it into little pieces) money. That process does create money out of think air. (That little guy behind the curtain can also mint coins at will but that would be making money out of slightly more than thin air).

          10. F. Beard

            Better learn something about banking before you repeatedly express strong opinions about it. RE

            I know enough; 50-86 million killed in WW II alone due to bankers. And truly banking is so convoluted and dishonest that it boggles honest minds.

          11. F. Beard

            Better learn something about banking before you repeatedly express strong opinions about it. RE

            I imagine a lot of people will learn about banking now that they are unemployed because of it. Most of them will be shocked and indignant, I’d bet.

          12. RebelEconomist

            Yes, banks, No Know. I say “you” because I was following YankeeFrank’s idea of setting himself up as a bank so that he could create money that he could spend. Actually, even the Fed does not make money out of thin air. They too always create and distribute money by buying some asset, including lending to a bank (which is like buying bank debt). However, unlike a private sector bank, a central bank is near certain to make a profit, because as a monopoly supplier of central bank money, they can get away with paying almost no interest (or, equivalently, providing no services) on their money, most of which is banknotes, in normal times at least.

          13. F. Beard

            Actually, even the Fed does not make money out of thin air. RE

            Wrong. The Fed does create money from nothing when it buys US Treasuries and other assets.

            They too always create and distribute money by buying some asset, including lending to a bank (which is like buying bank debt). RE

            And now you have contradicted yourself. You are saying that since a counterfeiter, the Fed, buys something with its money that it’s not a counterfeiter! What else would a counterfeiter do with his “money”?

          14. RebelEconomist

            Considering that the Fed undertakes to hold the value of the money that it feeds to its dupes to a predictable value, and does not consume any of the proceeds of its counterfeiting so that it can live up to this commitment, the Fed must be one of the nicest counterfeiters ever.

          15. F. Beard

            the Fed must be one of the nicest counterfeiters ever. RE

            I imagine a relatively low paying job at the Fed, such as BB’s, is a ticket to a much higher paying job at JPM or GS after he retires.

            As for the Fed being nice, it is directly responsible for the Great Depression and by extension for WW II which killed 50-86 million people.

          16. Toby

            @RebelEconomist

            You wrote:

            Yes, Frank, I am telling you that you cannot make money out of nothing – there has to be a loan involved (not to mention, in practice some reserves and capital too). As I explained, the proof of that is that you cannot just go out and spend the money that you have created. Sorry if this news disappoints you!

            Money ‘created’ as an entry in a ledger balanced by a debt on the asset side, an asset owed to the ‘creator’ of that money, is money ‘created’ out of nothing, even though there is an agreement that that ‘money’ be ‘returned’ to the ‘creator’ whereupon it is then expunged. No note or coin need ever be a part of the process. The so-called reserves, which may indeed be zero (as in Canada and as proposed by Bernanke some short time ago) are themselves the bank’s debts to its customers, and need never take the form of notes or coins either, where notes are merely promises to pay the amount denoted by them.

            Money is nothing more than an agreement anyway, and beyond that is nothing more than a claim on goods and services. Soddy refers to money as virtual wealth, a term I quite like. He also defines money as “the NOTHING we get for SOMETHING before we can get ANYTHING.” One can go on and on about this, but what I think must be unmistakable to all who take the time to look into this most fascinating human concoction, is how riddled with subterfuge and (what Marshall Sahlins calls) “negative reciprocity” it is. Money is, in its current form, society’s addiction to the suicidal Perpetual Growth which is destroying the environment which enables civilization in the first place, as well as its guarantor of elitism, class divisions, and obscene rich-poor divides. That you appear to be one of its loyal supporters shows yet again what a deceitful moniker you chose for yourself.

          17. RebelEconomist

            If it makes people happy, I agree that money is created out of nothing as long as the bank simultaneously creates debt (or acquires some other asset) – it’s a bit like matter and antimatter I suppose. But the key point is that this is, in itself, of no advantage to the bank – that depends on whether the asset involved earns more for the bank than the money costs.

            Toby, I think you may have the wrong idea about reserves, depending on which bank you mean when you write “bank’s debts”. Reserves are a commercial bank’s asset, and represent debt owed to the bank by its central bank. And in most monetary areas, banknotes in bank vaults can count towards required reserves.

            I would urge you and F.Beard to seek an objective understanding of the economy before coming to conclusions about the politics. For what it is worth, I voted for the Green Party at the most recent UK elections.

          18. Toby

            I made no assumptions about your politics, only an inference about your defense of a money system I believe is instrumental in forcing society’s addiction to Perpetual Growth. That said, I do not believe one can be ‘green’ and support a system which yokes us to ever expanding economic activity.

            Rebeleconomist, you wrote:

            Reserves are a commercial bank’s asset, and represent debt owed to the bank by its central bank. And in most monetary areas, banknotes in bank vaults can count towards required reserves.

            Yes, bank notes, which are promises to pay the amount printed on them and hence a form of debt, can be reserves. They are what ‘must’ be paid to bank customers withdrawing their money e.g., in a bank run, and considering we are discussing fractional reserve banking, banks do not have enough money in their ‘vaults’ to cover their debts, so the term ‘reserve’ is moot. Notes (and coins) are also only about 3 to 5% of all ‘money’ out there. A reserve which is debt in some other form (say owed by the CB) is of course also a debt, albeit this time more explicitly in the system generally, a system based on debt anyway. The ‘asset’ backing the freshly loaned money (per double entry bookkeeping) is the debt owed the bank by the borrower, a virtual ‘hole’ to be filled, which when full, disappears. (But none of this addresses the fact that loaned ‘money’ pays for something out there in the system, and is not tracked through the system as ‘money which must return to the hole whence it came’, hence circulates through the system as bona fide money; money from nothing.)

            Then comes compound interest, the snake in the nest. Were it not for interest (or some other charge) no bank would benefit from this at all. Banks are businesses profiting (benefiting) from usury applied to debt, not from the nothing money is at root. It is not money issuance which is the issue, it is the way interest is applied to its issuance, and that a commons–money–is a source of commercial profit. That’s the real issue.

            So it is usury which society should (again) confront, even though the banking system would obviously not function without it in its current form. It is also usury which forces growth on the economy, because P<P+I necessarily (where P is principal and I is interest), such that there is never enough money in the economy at any one time to cover the amount owed. That endemic, designed-in shortage is what keeps the cauldron bubbling, so to speak (all politics aside). Without economic growth, society's ability to create goods and services to 'back' that debt-money (generally, not one to one) falters, and debt balloons somewhere (on the government's books at the moment, though domestic and industry debt are of course also enormous). Then defaults, then deflation or inflation depending on CB and government reaction, hence boom and bust.

            Because nothing grows forever, because there is such a thing as maturity (implicit in the word "growth"), the interest-bearing debt-money system is wrong for the 21st century, all politics aside. (I don’t vote by the way.) For me, this is a key battle ground, though there are many others.

    2. Jim

      I’d be willing to bet that today’s Real interest rates are much higher than before. A country with a 1% inflation rate can’t continue to pay 7% interest on bonds, while one with 5% inflation can.

    1. Jim Haygood

      Would that they had done so in the last crisis! The Economist’s Buttonwood highlights the exquisite bind that policymakers have ensnared themselves (and us) in:

      Britain and America ended up with deficits of more than 10% of GDP, shortfalls that were unprecedented in peacetime. But the “shock and awe” approach to Keynesian stimulus has an unfortunate consequence. Any decline in the deficit, even to a still whopping 8% of GDP, acts as a contractionary force on the economy: either the government is spending less or taxing more.

      http://www.economist.com/node/21524886

      Thus, this week’s ominous ‘Depression signature’ of panic buying in Treasuries and gold (two safe havens in a depression), while equities are dumped wholesale.

      In hindsight, it’s clear that disgraceful pieces of schlock [fill in your own s-word] such as Bank of America, Citibank and JP Morgan should have been permitted to splat against the wall in 2008, annihilating their equity and bond holders while government acted to protect depositors.

      Protecting depositors would have entailed a surge in fiscal deficits, too. But at least we’d have gotten something for our money: a restructured financial system, cleansed of too-big-to-fail, maladapted dinosaurs.

      Now, in mid-2011, the familiar Depression psychology of 1932 (when both Hoover and Roosevelt ran on balanced budget platforms) is upon us. As fiscal stimulus recedes, the economy will wilt like a cheap suit in a steam bath.

      The larger lesson of 2008 is that economic central planning — practiced by central banks worldwide — is a fallacy and a failure. They can only postpone, not prevent, necessary restructuring. Postponed restructuring turns into a teeth-shattering trauma when it finally overflows the central planners’ puny levies (as Europe is about to demonstrate).

      In the 2012 recession, let us hope that one viable candidate proposes the obvious solution to central planners’ habitual value subtraction: abolish the Federal Reserve.

      1. No Know

        “They can only postpone”

        Note that the one theory of Keynes that no one ever, I mean like in never, disagrees with: “In the long run, we’re all dead”. If we can just put off the day of reckoning until that time….

        1. Francois T

          “If we can just put off the day of reckoning until that time….”

          You mean, act like all the enemies of humankind (read: climate change denialists) whom only motto is :”Après moi, le déluge!“?

          1. No Know

            Since we can’t question Keynes on the subject, we only have his words and they seem to condone the actions you describe. Others more schooled in his writings would have to clear up where Keynes would draw the line.

  2. Jim Haygood

    My comment about the Business Insider article, dismissing gold’s rise as ‘ludicrous,’ has disappeared into the ether.

    Here’s the short version: refer to Dr. John Hussman’s June 13th weekly column [final paragraph], in which he positioned his fund six weeks ago to benefit from rising prices of gold and gold stocks, based on factors such as weakening growth and negative real interest rates.

    http://hussmanfunds.com/wmc/wmc110613.htm

    Ludicrous? I reckon not!

    1. MyLessThanPrimeBeef

      Buying gold is like protest voting.

      It’s like voting for a third party…none of the above currencies.

      Might be a waste, people say about voting third party…or not.

      But they are trying keep a lid on it.

      I only wish I had enough gold to make a club out of it to crack the skull of any would-be assailant. It’s repair free and works 100% of the time, unlike a gun.

      1. Lyle

        I say the if you want to buy a commodity, platinum or iridium or osmium make sense if you want max value per unit of weight. If you want something that can be cashed as need be in the event paper proves worthless old silver dollars do the trick, since its easy to detect if they have been milled. Silver and the platinum group metals also have significantly more real uses than gold. Or if you want a lot of the stuff copper. Yes we are seeing ratios that imply compared to the period of 1789 to 1933 the dollar is worth 1/80th of what it was then, but if you take that point of view even silver let alone a lot of real things have been in a very long term deflation. A mid level model t might have been had for 40 ounces of gold in the mid 1920 (that had an electric starter). Today 40 ounces of gold would be 64k which would buy a much fancier auto definitly an upper class Lexus at least. Today the versa sedan could be had for less than 10 ounces of gold. So if you want to take a long term view in terms of gold the price of everything else has been in deflation. (in the 1970s it was 100 ounces of gold for a decent car say a plymouth). (before Nixon did his thing).

  3. Rex

    Re:
    “Relief at an agreement will give way to alarm
    By Lawrence Summers”

    ends with,

    “The writer is Charles W. Eliot university professor and president emeritus at Harvard University. He was Treasury secretary under President Bill Clinton”

    WTF, Larry?

    1. hermanas

      I’m getting a bad bad feeling, this is not an economics dispute but a “religious” one. The FAA deal in one week has cost the equivalent of the year’s cost, so that’s B.S.
      Could we be entering a second battle of the civil war to define “freedom”?
      The North’s industrial superiorty has been decimated, the military is strong in the South, the weak and infirm are the second causalities, (after truth)eliminating the medicare problem, the money on the sidelines is waiting for reconstruction bonds.

  4. attempter


    For those who still doubt the role of corporations in raising food prices through speculations

    “Reports that a company owned by Cargill and ABF bought all the available UK feed wheat last month has renewed calls for tighter regulation of commodity markets.

    Traders reportedly told the Bureau of Investigative Journalism that Frontier Agriculture bought all available May Futures contracts on the London International Financial Futures and Options Exchange (Liffe) in the period running up to the tender date in the last week of April.

    It has been described as an “unprecedented move” and an attempt to manipulate the market, which Frontier denies.

    However, the BIJ says that Frontier is believed to have taken delivery of about 225,000 tonnes of feed wheat now worth about £40m.”

    http://landandpeople.blogspot.com/2011/08/for-those-who-still-doubt-role-of.html

    1. Anonymous Jones

      To assert that corporations play no role in raising food prices and do not engage in speculation would be incredibly stupid, indeed.

      Of course they do.

      1. Everyone speculates on the future. That is part of existence.
      2. It is clearly in the (at least short-term) best interest of the corporations to speculate in such a manner as they make more money.

      The more important question, it seems to me, is how much does this activity affect the market. I’m not sure this post does much to answer that question or put it in a reliable context.

      Yes, this sounds like a lot of food and futures.

      Yes, it may in fact be an attempt to manipulate the market.

      Is it really a lot? I’d like some independent evidence on this.

      Will the attempt work? I know for a fact that lots of plans to corner and manipulate markets fail miserably. Is this one different?

      These are important questions. I’d like them answered. Painting a false dichotomy that either:

      (1) one believes that all food price issues are a result of speculation or
      (2) one idiotically believes that corporations are benign and engage in no speculation that might (or is designed to) raise food prices and drive people to starvation;

      is not a terribly effective or productive way to frame this important issue.

      1. attempter

        (1) one believes that all food price issues are a result of speculation

        Who said that? Neither the piece nor me.

        http://attempter.wordpress.com/2011/02/10/the-revolution-of-food/

        On the contrary, that’s your characteristic false move. That “false dichotomy” exists nowhere but in your head (and your propaganda, which really wants us to come around somewhere close to but not exactly “b”, right?

        Thus we’re supposed to be softened up with these lies:

        1. Everyone speculates on the future. That is part of existence.
        2. It is clearly in the (at least short-term) best interest of the corporations to speculate in such a manner as they make more money.

        1. Speculating on the future by assaulting others is not “part of existence”. It’s a remediable crime.

        2. It may be in the “best interest of corporations” to do that. It’s not in the best interest of humanity to allow these corporations to exist. This too is remediable.

        1. YankeeFrank

          Attempter, your rock. Its shocking how many people try to assert that price manipulation, commodity speculation and the like are as natural and essential as the rotation of the earth around the sun. As if no other world is possible or even desirable. As if “corporations are self-interested” is valid cover for theft, murder, fraud and all the other crimes they commit.

          1. aet

            There has never been any demonstration made that shows speculation to be in any way beneficial to an economy or its productive capabilities.
            none.

            It’s a straight-up loss for society – but insurance it can be too for little guys, sometimes…but insurance needs regulation, always.

      2. Wawazume Life & Non-Life

        Anonymous Jones: “Everyone speculates on the future. That is part of existence….”

        Yawn.

      3. Foppe

        Shame on you for attacking a straw man, AJ.

        In any case: Futures markets are long-only. Therefore, all money entering a market cause price inflation (assuming there is no concomitant rise in supply, which there hasn’t been).
        To quote Matt Taibbi’s Griftopia

        Anyway, from 2003 to July 2008, that moment when Priscilla started living in her car, the amount of money invested in commodity indices rose from $13 billion to $317 billion—a factor of twenty-five in a space of a little less than five years.
        By an amazing coincidence, the prices of all twenty-five commodities listed on the S&P GSCI and the Dow-AIG indices rose sharply during that time. Not some of them, not all of them on the aggregate, but all of them individually and in total as well.
        The average price increase was 200 percent. Not one of these commodities saw a price decrease. What an extraordinarily lucky time for investors!
        In and around Wall Street, there was no doubt what was going on. Everyone knew that the reason the price of commodities was rising had to do with all the new investor flows into the market. Citigroup in April 2008 called it a “Tidal Wave of Fund Flow.” Greenwich Associates a month later wrote: “The entry of new financial or speculative investors into global commodities markets is fueling the dramatic run-up in prices.” And the top oil analyst at Goldman Sachs quietly conceded, in May 2008, that “without question the increased fund flow into commodities has boosted prices.”

  5. Tony

    Good article describing where the cuts actually are:

    http://motherjones.com/politics/2011/08/united-states-of-austerity

    There are $917 billion in total cuts over ten years, but $570 billion come from ‘nondefense discretionary spending’ (education, job training, air traffic control, health research, border security, physical infrasctructure, environmental and consumer protection, child care, nutrition, law enforcement, etc.). Nondefense discretionary spending (NDS) will drop from 3.3% of GDP to 1.7% — almost a 50% reduction.

    We can all look forward to more polluted air and water, higher cancer rates and more sickness in general, more usurious lending by the banks, higher unemployment, a dumber populace overall, and planes falling out of the sky. I read in another article that the FAA’s 40 airplane inspectors are currently not being paid and are expected to pick up travel expenses themselves. It’s a Libertarian’s dream world!

    Notably, $30 billion in oil and gas company subsidies is not being cut. Additionally, federal unemployment benefits were not extended.

    The only bright spot is the robot article. I for one look forward to Skynet and welcome our new robot overlords. It can’t be any more inhumane that what we have now.

    1. Externality

      The “austerity” plan may actually increase defense spending by $50B over the Obama’s April 2011 budget. Instead of actually cutting defense spending, the “austerity” budget slows the rate at which it increases.

      Rather than cutting $400 billion in defense spending through 2023, as President Barack Obama had proposed in April, the current debt proposal trims $350 billion through 2024, effectively giving the Pentagon $50 billion more than it had been expecting over the next decade.

      With the wars in Iraq and Afghanistan winding down, experts said, the overall change in defense spending practices could be minimal: Instead of cuts, the Pentagon merely could face slower growth.

      http://www.mcclatchydc.com/2011/08/01/119061/who-gains-from-debt-deal-the-pentagon.html

      http://www.rawstory.com/rs/2011/08/02/pentagon-lands-extra-50-billion-out-of-debt-deal/

    2. No Know

      Unfortunately (for anyone who really would like to shrink the deficit) the so-called cuts are nothing more than threats. They will never happen. What would you threaten to cut in the future? Programs that everyone would agree to cut. That would lead to actual cuts. The problem is the process and the solution is intractable. Get over it. Bring on the next crisis…sorry, I mean opportunity.

      1. aet

        Time to shrink the military, as the second world war ended many years ago. Or are you planning to attack somebody?

        1. No Know

          aet — I think you forgot to begin your comment with Dear Barack. I’m not sure I could attack anyone with our military even if I wanted to (although our son, an AF pilot, once threatened to knock the shit out of some asshole who was impolite to his mother).

        2. No Know

          aet – what does shrinking the military have to do with me planning to attack someone? Your question should be addressed to one of our political leaders which I am not. BTW, I have no plans to attack anyone and doubt if the military would assist me in any case.

          1. No Know

            aet – my first comment got temporarily lost in cyberland and I couldn’t remember what I wrote. Please chose which one you want to ignore.

  6. voislav

    Re:Why diets don’t work? Starved brain cells eat themselves

    I hate when “science” media takes a reasonable biochemical paper and makes it about dieting. First, it’s a review paper, so nothing original there. Second, there is not much about dieting in there, it’s about starvation and defense mechanism the cell uses to survive, like preferentially eating away at the less critical parts of the cell in order to maintain the core functions. So no magical pill here, just journalistic hackery.

    1. MyLessThanPrimeBeef

      The bad guys would surely take this bit of information and ‘diet’ their victims into permanent reductions of braincells.

      It’s irresponsible to look into these kind of things, much less put it in a review paper.

  7. Jesse

    “Change is occurring. And it does not matter whether you accept it or not. It is unfolding even as we speak.”

      1. No Know

        Don’t fret about the stock market. The Fed has that under control. QE(n) is waiting to be called up at the right time. After all, it’s a leading indicator, and all we need to do is keep those leading indicators indicating until we reach…..our demise.

          1. MyLessThanPrimeBeef

            What don’t we try this: Let the Fed print money for the Treasury to refund each taxpayer $1 million?

            We will do this repeatedly until the economy is sufficiently stimulated.

            This will teach those recalcitrant taxpayers who prefer to save.

          2. MyLessThanPrimeBeef

            I know if the government keeps intimidating every helpless taxpayer with million dollar refunds repeatedly, he or she will eventually have to give in (for me, maybe after the first $20 or $30 million) and start spending to do his or her duty to stimulate the economy.

            Yes, yes, I can hear the critics scream, ‘You Keynesian clown! It will never work!’ Tune him out. Sorry, make that, tune them out. This time is different. We are actually attacking the offending perpetrators, the underspending taxpayers, instead of attacking innocent victims like cement//asphalt makers and grant-issuing government bureaucrats.

        1. No Know

          Actually I wouldn’t mind if they printed $1,000,000, gave it to me and then demanded it back in taxes — as long as they promised to leave me alone for a year or so. It should help with the debt/deficit problem and I don’t see what I have to lose. What do you think?

          1. MyLessThanPrimeBeef

            They need proven profligators, someone who can take the million and use it as collateral to borrow a few more million dollars and then spent it all on their backyard infrastructure, little walking pathways going nowhere or bike lanes for your garden. If you still have $ left, you can always give work to those hanging around your local Home Depot, to dig and fill holes in your frontyard…whatever you desire.

            The key is that YOU, the sovereign of a democracy, get to spend it, not some government bureaucrats.

          2. MyLessThanPrimeBeef

            People will say the private sector is not doing its job and the public sector needs to step up.

            I wonder if there is any conflict of interest for those saying that.

            I do not believe if you keep shoving money, free money, to those stubborn taxpayers, that they will not eventually surrounder to your wish for them to spend.

            Instead, we have people with government ties insist we keep shoving money into the public sector.

  8. c.

    Sorry so OT. I turned the computer for my husband to see the “antidote” pic. His response:

    “mmmnnn, nuggets”

    I couldn’t help but laugh and share. :D

  9. Externality

    More on the hazards of anti-depressants from the (UK) Independent:

    Newer antidepressants may increase the risk of serious health problems in older people compared to older pills, researchers say.

    Selective serotonin reuptake inhibitors (SSRIs) are more likely to cause death and issues such as heart attack, stroke, falls and seizures than older tricyclic antidepressants (TCAs), according to a study published in the British Medical Journal (BMJ).

    http://www.independent.co.uk/life-style/health-and-families/health-news/warning-over-newer-antidepressants-pills-2331030.html

  10. Eureka Springs

    A couple things occurred to me in the aftermath of this latest shock doctrine. It’s funny how many false, alarming deadlines we experienced, but vacation was the real congressional deadline.

    Also a question to those in the know… How does a citizen monitor Treasury… and when or whether or not it reimburses fed pension funds which were drained over the last couple of months?

  11. Valissa

    The Economist’s Charlemagne… How much closer a union? http://www.economist.com/node/21524818?fsrc=nlw|pub|08-03-2011|publishers

    Euro-zone leaders find themselves buffeted by a crisis they cannot control. How much more fiscal and political integration does the euro need? Nobody knows. Are citizens ready to give up more sovereignty to save the euro? Nobody has asked them. The more leaders try to fix the euro’s flaws the more they risk exposing a flaw in the European Union itself: a project of European integration that lacks a strong democratic mandate.

    Yeah, the issue of lacking a strong democratic mandate is a problem. Wonder what will happen when they finally start putting these type of questions to voters in the various countries. At some point they’re going to have to.

    1. aet

      They have repeatedly done so. Are you implying that Europe is not democratic? Please, enough of the bigotry.
      Europeans support closer integration: they remember their world wars, even if the US and UK doesn’t.

      1. Jim

        UK, which doesn’t even use the Euro, is ready to leave the EuroZone.

        ————————-

        http://www.thenewamerican.com/world-mainmenu-26/europe-mainmenu-35/8229-poll-british-people-overwhelmingly-ready-to-leave-eu

        A poll released to the Daily Mail shows the public would vote by 50 to 33 per cent to abandon Brussels if a referendum were held tomorrow, a huge lead of 17 points.

        The poll shows the euro crisis has turned conventional political wisdom on its head and will fuel demands for David Cameron to renegotiate Britain’s relationship with Brussels. …
        The poll was conducted by YouGov@Cambridge for political news website Dods PoliticsHome.

        It found that the majority in favour of withdrawing from the EU among the over 60s — the age group most likely to vote — is 61 per cent to 29 per cent, a margin of more than two to one.

        —————————-

        In Germany, most also oppose further integration.

        You argue that Europeans support closer integration. Can you cite polls that support your statement?

      2. Valissa

        No I am not implying that Europe is not democratic. Have you been paying attention to the recent conversations about the EU and the issue of national sovereignty versus giving up sovereignty in order to give the EU more power? If you have a sensible comment to make, I will address it.

      3. attempter

        they remember their world wars

        They do? Then why did they let capitalism run wild again, just as much as in the US and UK? Capitalism always means war. It couldn’t exist without it, as history’s unbroken recond proves.

      1. No Know

        A timely jest. One of those laughing to keep from crying cartoons. I keep having visions of Bernanke being carried away in a straight jacket by a couple of men in white coats while mumbling incoherently, “Tell them Milton, tell them you were right, we know you were right”. As an aside, I think Anna has already told him indirectly that he’s losing it!

  12. rps

    National ‘poverty tour’ will highlight hardships in Obama’s backyard
    Talk show host, professor teaming up to advocate for ‘more and more invisible’ poor
    http://www.chicagotribune.com/news/local/ct-met-poverty-tour-20110804,0,1048655.story

    Tavis Smiley, the syndicated talk show host who has been a vocal critic of President Barack Obama’s policies……..

    “I don’t understand how the president could agree to a deal that does not extend unemployment benefits, does not close a single corporate loophole and doesn’t raise the taxes on the rich,” said Smiley. “The poor are being rendered more and more invisible in this country. Nobody, not the president, not the Republicans in Congress, is speaking to the truth of the suffering of everyday people.” Tavis Smiley

  13. Sock Puppet

    Speaking of poverty, another month, another food stamp record. 45,753,078 Americans on food stamps in May, a jump of over 1.1 million from April. It’s more than one in 7 (including about 1 in 4 children). Imagine if we still had bread lines? Program cost over 6 billion a month for the first time.
    http://www.fns.usda.gov/pd/34SNAPmonthly.htm

  14. proximity1

    RE : “Video: A Robot That Can Figure Out New Tasks Based On the Ones It Knows”

    I think this story deserves more in critical comment and so, I’ve come back 8 days after the fact to post this on it because I believe that unless the mistaken views implied in seeing this story as an example of “learning” are very dangerous ones which will lead to very serious harms later if not checked by better reasoning.

    I contend that this report does not show us anything that has any valid claim to be called “learning”–not even in the most far-fetched, figurative sense. And, again, unless we recognize why that is, we are leaving ourselves open for much, much greater mistakes and the harm that flows from them.

    In brief, the robot never did anything other than follow its prescribed instruction set; at no time did it generate anything beyond or better than that instruction set–its program code. Moreover, it never once committed any act of volition and this (among other things) is paramount in any discrete act of learning. But there’s more, much more, of equal importance in assessing a claim of learning.

    We should recognize (but don’t) that the robot lacks these other essentials of learning–awareness. It has none. Zero. In no sense can it be shown that the robot (any robot) has any awareness at all–no awareness of itself and none of any external world. Thus, it should be obvious that this robot is in no way “communicating” with its scientific programmers. The most that is happening is that a digital data processor is operating on code-instructions. But that doesn’t mean that the processor is aware of itself, the code, or anything else–any more than your pocket calculator is aware of “mathematics” or of you or of any “request” to calculate or produce a response output. But people are now so habituated to their digital devices that they now easily slip into an unconscious anthropomorohization of them.

    The computer does not “know” even that it is “on”, that there is “power” coursing through its circuits; it has no conception of anything, not its circuits, nor the data, nor the calculative operations it seems to perform. The word perform is merely a loose expression to describe an imput-output process. Nothing even resembling thinking, much less learning, has occurred.

    When the robot supposedly “searches” data on the term “ice”, unlike you, me, or even a very young child, the robot does not reason at all. It has no conception of a ‘term’ or of ‘ice’ nor of any other existing referents in the external world who may “supply” it with “information” about “ice”. Instead, what it does when it seems to “look up” information on “ice” is follow a set of pre-existing instructions–very elaborately written in computer code– which instruct numerous “if… then…” loops. “If (term) returns “null”, then (search; “grep”) (term) …etc.” to put things very crudely—I’m not a programmer so I can’t offer you the sample code. Suffice it to say that the robot follows instructions in what appears to us as a spontaneous “search” for definitional data about “ice”.

    Constrast this with real learning and you quickly see that the differences are simply beyond comparison. A normal infant is immediately aware of itself and of its physical surroundings–without any prior or other prompts or instructions. It will spontaneously receive and analyse sensory data from its surroundings; it will search, explore, test, and listen and recall without prompts or intstructions from any other person. In short, even when not in direct immediate interaction but merely in the presence of others (or, by the way, alone!) an infant will learn about its environment. Without instructions, an infant will express needs, interests, will spontaneously mimic sounds it hears and practice them for better effect. It will learn a language–or several–merely by being in the presence of the language(s) in use.

    No maching can do any of these nor even remotely simulate them. No machine has any “awareness”. And, without that, it cannot “learn” anything.

    We’ve undertaken very dangerous misconceptions whenever we speak–except in a strictly figurative and metaphorical sense–of any machine “thinking” or of it “learning”. In order to learn, a body must first be “alive” and a machine is not and cannot be. The electricity coursing through it no more gives it animating consciousness than does wind, through a corridor, create an awareness on the part of the corridor.

    We must do better in analysing what is entailed in thinking and in learning or we are in for lots and lots more very serious trouble ahead.

    “proximity1″ — a pseudnym but not a robot.

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