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Links 10/24/11

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Population growth: the baby bomb Guardian (hat tip reader 1SK)

Durban May Be Last Chance to Stabilise Climate Under Two Degrees IPSNews (hat tip reader Aquifer)

Los Angeles police “embarrassed” after gun cache stolen Reuters

Rupert Murdoch: News Corp’s great dictator on the brink Guardian (hat tip reader 1SK)

European Debt: The Big Picture Simon Johnson

Pressure on Italy in eurozone struggle Financial Times. Now Italy is supposed to wear the austerity hairshirt

PORTUGAL: Crisis Pushes Women into Prostitution IPSNews (hat tip reader 1SK)

China’s property conflict MacroBusiness

‘Obama doctrine’ begins to take shape Financial Times. The fawning tone is hard to stomach.

Tax law could hinder quick Supreme Court decision on healthcare mandate The Hill (hat tip reader Aquifer)

The Laffer Curve and the Kimel Curve Angry Bear (hat tip reader Aquifer)

Nurses Condemn Chicago Mayor Emanuel for Arrest Of Nurses, Medical Volunteers at Occupy Chicago National Nurses Union (hat tip reader Aquifer). Call Rahmbo at 312-744-5000 and object.

Why Not Occupy Newsrooms? New York Times

Why Credit Unions? (#OWS) (part 1) Mathbabe

Just A Little Bit Subversive CommonDreams (hat tip reader Aquifer). Otpor sensibilities in action.

Margin Call–”Mama there’s wolves in the house” Perry Mehrling

The Epileptic Economy: Why the Financial System Suffers from a Mental Illness Big Think (hat tip reader Aquifer)

Homeless in America Barbara Ehrenreich, TomDispatch

Home Lending Revamp Planned Wall Street Journal. Another at best bandaid. I hope to post on this later today

Antidote du jour (hat tip reader Thomas R). I trained two cats to go out on a leash in NYC. As soon as it got cold and I quit taking them out. They lost the hang of it and got freaked out by the street noise when I tried again when the weather got decent. The hustling is a bit tacky but he does it in such an unabashed New Yorkerish way that I wasn’t bothered.

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47 comments

    1. skippy

      Long story short. Transformers…BIG ONES…take time to build 1 to 3 years from inception, zero inventory. How many blow and what is prioritized?

      Any way its nature, we just get in the way. BTW Southern Oscillation Index doubled in a fortnight, looks like we might get wet again…whats a body to do…lol and get on with it…eh.

      Skippy…only thing that worry’s me is nasty plants ie nuke, chemical, production, weapons et al, lots of stored potential out there.

    2. Typing Mnkey

      I need a reply

      1. Other than very, very specialized ones (so-called “converters”), most transformers take about three months to design, build, test, and ship once they are actually ordered. The longer time is in the paper work from the utilities end (to actually issue and RFQ and then select a bid). The three year lag used to be due to a backlog of orders, which has since dwindled to basically nothing.

      As a side note, “big transformers” are normally easier to build than some of the smaller ones because they are simple (two or three windings and not reconnectable), and normally use standard voltages (the point of them is normally to “step up” the voltage from a generator to a transmission line, and most generators and HV t-lines use standard voltages)

      2. GIC (Geomagnetically induced currents) are mostly a problem on long lines up north running east-west instead of north-south. A lot (far from all) of these long lines run using HVDC, instead of HV AC.

      3. GIC is not a problem for HVDC lines (as opposed to AC lines). Since HVDC (“converter”) transformers are the transformers that take a very long time to design, the long lag is a little meaningless.

      4. Nothing “blows up” if GIC is induced–rather, there is something called line protection which kicks in and disconnects the transmission line from the system. The problems you would see would be a lack of power, but not much else.

      5. If for whatever reason the primary protection doesn’t work, there is a secondary, and–for very important lines–often tertiary protection. On top of that, there is protection on the generators (offhand, I’d say that there are something like thirty or so different types of generator protection)

      I can add more if you like, but I think this addresses part of your concerns.

      1. Skippy

        Typing Monkey,

        I’ve built a few, last one was for the Sydney Olympics. There was no spare and the significance of the event necessitated the capital expenditure, would be very embarrassing in front of the world…eh…dark Olympics. So I have hands on experience, from nesting materials, all phases of manufacture, transport, installation, etc, required to build big stuff.

        Any way, what you describe_is an *on paper* out look_ or the culmination of lab (I thunkit), isolated fails and such what all. This in my book is a poor determination of effects never experience aka faith, too events never before experienced…world wide.

        Skippy…in less than a year we have Fookmeshima, our dam in Brisbane a few centimeters from uncontrollable mitigation release and now the Thailand inundation (internationally important electrical manufactures). All had safety studies and plans, what happened? Look all safety considerations_come second to economic considerations_been there done that_nuff said.

  1. Diego Méndez

    Yves, regarding yesterday’s Argentina post, I think I wasn’t able to get my point across. Let’s try again.

    You are right that GDP components driving Argentina’s growth on paper were internal demand (private consumption and investment). We agree on this.

    IMHO, the underlying cause for the boom in internal demand is a commodities bubble. You surely disagree, but let me explain why I think so.

    Food prices grew exponentially. E.g. the international price of soy jumped from less than $120 a ton in 2001 to more than $500 a ton by the late 2000s. Since food and other commodities make up over 60% of Argentina’s exports, the commodities bubble may account for 8% GDP in additional external financing.

    This means: if there had been no commodities bubble and Argentina had the same level of internal demand growth, its slight trade surplus would turn into a large trade deficit. This would either result in another large devaluation and hyperinflation again, or a large reduction in consumption and investment (also called depression).

    Even if you think Argentina did the right thing as they expected (and still expect) food prices to grow undefinitely, it’s not clear this model can be used in Southern Europe, since it doesn’t export any bubbly commodities.

    1. Jim Haygood

      If there had been no commodities bubble and Argentina had the same level of internal demand growth, its slight trade surplus would turn into a large trade deficit.

      Quite so. Weisbrot et al assert that ‘exports as a percent of GDP, as measured by dollar value, actually decreased during the recovery.’

      An important reason for this phenomenon was the strengthening of Argentina’s currency in real terms. As the chart linked below shows, the peso-USD exchange rate was essentially unchanged from early 2003 to late 2008, remaining at or below 3.2 pesos per dollar. Yet there was very substantial cumulative peso-based inflation during this period, on the order of 75% to 100%.

      http://www.indexmundi.com/blog/wp-content/uploads/2009/07/image2.png

      A real-world example: a prix fixe luncheon which cost 10 pesos (US$ 3.12) in 2003 was up to 18 pesos (US $5.62) by late 2008 — an 80% increase in US dollar terms, at the unchanged exchange rate. (I am speaking from personal experience.)

      By last summer, the Argentine peso had climbed to second place in the world on the Economist’s Big Mac index as an overvalued currency, when adjusted for GDP per person.

      http://www.economist.com/blogs/dailychart/2011/07/big-mac-index

      Under these circumstances of escalating domestic costs (viewed in USD terms), it was only the major runup in global commodity prices which enabled Argentina’s agricultural exports to hold up as well as they did against the rising exchange rate drag.

      In an attempt to hold down domestic inflation, the Kirchner administration hiked export taxes in 2009, forcing beef producers to sell more of their carcasses domestically instead of exporting them.

      And as for Argentina’s manufactured exports, it was the even sharper appreciation in the Brazilian real which helped maintain them.

      Weisbrot et al discuss Argentina’s real effective exchange rate … but their source is ‘Frenkel (forthcoming).’ So it’s impossible to review the assumptions behind their chart, which does not accord at all with my observations.

      As shown in the exchange rate chart linked above, Argentina let the peso weaken in 2009 when GDP growth faltered. Should growth falter again in 2012, the same phenomenon can be expected to occur. Chatter at Buenos Aires cocktail parties has the currency sliding to 6 pesos per dollar within a year or two, to relieve the pressure on export competitiveness caused by rising peso-based costs.

    1. Yves Smith Post author

      I started watching Marat/Sade and never had time to finish. Just being too busy, but also wanting to stop and write down some of the speeches by Marat, they were (obviously) extreme but nevertheless awfully fitting. The movie is fantastic, and I’m pissed I have not have the time to watch it all the way through.

    2. SidFinster

      My Olechka has commented that one of the things that needs to be is for the rich to all be sent to the uranium mines.

  2. Timmy

    Regarding homeless people. Many Formerly Middle Class folks are waiting for years in poverty for studio apartments where they have to pay about one third of their income, usually only social security.

    Problem is, these units are in California are controlled by non-profits who give them out with their own waiting lists that they control. These are usually units that are
    mandated alongside or inside developments sold at
    market rates.

    In our area, Catholic Charities gets to give away the scrce units. Americans who have been on the streets for almost a decade see that Mexican “immigrants” who have been here for less than a year are handed the keys to brand new apartments. It’s the law. You cannot discriminate on
    the basis of national origin, or ‘immigration status’ in these units because private monies went into their construction. In addition, ‘refugees’ from Somalia
    given units ahead of Americans whose parents have paid taxes, died in wars and built the country.

    1. lassie

      People are getting forced out of houses but to you, that’s not the problem? The problem is foreigners are not kept out of houses? Interesting example, though, Catholic Charities. Catholic Charities has to conform to Vatican doctrine, which includes the CESCR (the Papist term for it is “the means of life.”) It’s faith-based! Tricky thing about faith-based initiatives is that sometimes, faiths that aren’t parochial and bigoted enough might introduce un-American values from the civilized world.

    2. Anonymous Jones

      I wish I could just disregard this as some kind of poorly told joke. Obviously, it’s no joke.

      Why would I give a f*ck what someone’s parents did?

      I don’t give a f*ck where you were born, what your parents did, whether you’re Mexican, Somali, brown, white, or whether your great-grandfather was the Kaiser.

      It’s such a “coincidence” that these “moral” justifications of who should get housing just happen to coincide with what’s in your best interest. Hmmmm…interesting…or not.

      I’ve spent years in the affordable housing non-profits in Southern California (FD: I’m white and was born here in the 60s). We provide low income individuals and families with housing because they need affordable housing, not because of their country of origin or what their parents did. I would never have it any other way, no matter how many delusional, entitled, racist, nativist f*cks try to stop it.

      1. avgJohn

        mr/ms jones

        I just want a little clarification. Are you saying you live in this subsidized housing or are you saying you profit or make a living from it?

        I lived in Denver, CO a few years back, in a moderately priced apartment complex. Over a period of 5 years I experienced a doubling of my rental rates. I saw more than one working-poor individual, driven out of the apartments because they could no longer afford the rent.

        At the same time, the state was placing “illegal” immigrants (I had been told “illegal”, but did not personally have evidence they were illegal) in these units, because they had exhausted their inventory of public housing units that were available to the poor.

        What was happening was the apartment complex owners knew that the state, with a seemingly inexhaustible money supply, was willing to pay a premium to place these immigrants, so the apartment complex owners continued to jack up their rates, making a handsome profit off the demand created by both population growth in the area and the influx of illegal immigrants.

        I always felt that part of the reason the state was so aggressive in placing the illegals (assumed) immigrants was because it was so profitable to certain parties in the real estate industry. That is to use your quote above, “who should get housing just happen to coincide with what’s in your best interest. Hmmmm…interesting…or not”.

        Now I have nothing against my brothers and sisters from Mexico, so please don’t play the race card with me. Like every other group of people there are good ones and bad ones. But if you have ever lived on or close to the streets, you know there are plenty of bad ones, bringing in drugs and making plenty of money selling dope on the side, and you know that there are plenty of them that will stab you in the face and hands, knock you in the head and roll you for a few bucks. That’s not a racist statement, it is a statement of fact. If you live close to the streets you know that there are good and bad(really bad) people out there of every race, and if you can’t read the people and the situations on the street, you can find yourself in big trouble in a hurry. That’s not to say there aren’t plenty of good family people that come to America illegally in search for a better life, certainly there are.

        Which brings me to my last point. You do realize that many illegal immigrants come to this country, find jobs paying on the low end of the middle class wage scale, rent a home (paying a premium to the rental owner, of course) with maybe 10 to 12 people sharing rent, and are able to send a considerable portion of their pay back to their families in S. and central America, and provide a relatively comfortable life style for their loved ones. Some are able, over a 5 -10 year period working in the U.S., to buy a home back in Mexico, and help finance a family business or otherwise realize a dream and experience the pride and self-satisfaction for being something of a hero to their families back home.

        On the other hand, the American working-poor that are competing for these same jobs with their illegal counterparts, are faced with the bleak prospect of laboring for sub-standard wages for a large parts of their life, with ever diminishing possibilities for upward mobility, and the anguish of dealing with emotional and self esteem issues, not only for themselves but for their children as well. I’m sure that there are many working class poor, if presented with an opportunity in, say Canada, to illegally immigrate for a job paying upwards of a $150,000 a year, would jump at the chance. Many, of the hypothetical US. illegals, would probably live lifestyles similar to their central American counterparts, and would relish the opportunity to provide for a new life for themselves and their family (and of course, some would gamble and drink the windfall away, and probably live a life of crime).

        There is quite a different set of expectations, cultural experiences, and sense of self worth for the working poor who happens to be an American, than for those who are illegal, working these same positions, living in a community with an entirely different perspective on such stations these jobs convey.

        The working poor have a lot at stake when it comes to illegal immigration. I don’t want the law ignored for benefit of the banking industry, and I don’t want the laws regulating acceptable levels of immigration broken at the expense of the working poor. Either, pass legislation that deals with these issues or enforce the existing law on immigration.

        1. Barb

          @ avgJohn

          Excellent, thoughtful comment.

          The following quotes might help to shed some light on the self-righteous hypocrisy of commenters such as Anonymous Jones:

          “What I have to face is that ‘Barb,’ the name on my ID tag, is not exactly the same person as Barbara. ‘Barb’ is what I was called as a child, and still am by my siblings, and I sense that at some level I’m regressing. Take away the career and the higher education, and maybe what you’re left with is this original Barb, the one who might have ended up working at Wal-Mart for real if her father hadn’t managed to climb out of the mines. So it’s interesting, and more than a little disturbing, to see how Barb turned out — that she’s meaner and slyer than I am, more cherishing of grudges, and not quite as smart as I’d hoped.”

          - Barbara Ehrenreich, Nickel and Dimed: On (Not) Getting By in America

          “Most educated American liberals…… believe simply being progressive makes them, by default, the nation’s saviors – morally and intellectually right in all things. As proof, they read more and, allegedly, are more open minded than most conservatives….They are certainly among the educated class in a country known for its lousy schools and a dull, sated and unquestioning public. Education and access to education are now our fundamental class delineators. Higher education is now for the privileged.

          So when educated liberals look up ……They feel that something has gone terribly wrong with America….

          Immediately they conclude that it is the American people’s fault through their backwardness, incomprehension and misdirected anger, and that maybe it serves them right for not rallying behind the flying progressive standard. (I’ve been plenty guilty of this myself over the years, and am now a recovering American liberal, well on my way not to conservatism, but toward a strumpetocracy, government by strumpets. It’s a real word, Google it.) Not that the progressive flag was actually flying; American liberals threw down their standard 40 years ago in the rush for comfortable technical, teaching and administrative jobs in government, universities and non-profits. “Ah yes,” they wailed, the people have let us down. They are absolutely disgusting!” liberals agreed. And they still agree. Read the comments on Huffington Post or Daily Kos.”

          Joe Bageant, “Understanding America’s Class System”

    3. Timmy

      What makes you think I’m not aware of and am outraged by Wall Street? You are just a left wing knee jerk
      reactionary. As soon as some one utters an opinion that doesn’t fit into your little mental box, you can tar
      them with whatever brush your masters have handed you.

      I think it’s outrageous that foreigners and not even citizens are get housing ahead of poor Americans.
      If you think that’s fine, go ahead and make your case instead of propping up some strawman.

      To the other genius that
      brings up the rainbow hue humanity business, I guess
      you wouldn’t mind giving up whatever you have to some
      poor third world person? Feel free to get out the
      checkbook or even to hand your house over to a nice
      big family from Central America.

      1. Foppe

        Oh FFS; the fact that immigrants get them ahead of “real” (immigrant) Americans is irrelevant given that the entire system is shit. Because if it wasn’t broken in the first place, you wouldn’t be worrying about ‘pocket change’ like the question whether or not a few somali refugees are as “deserving” of not being homeless as other Americans. Learn to pick your enemies.

      2. lassie

        You think you understand the law? Read the UDHR, chump. Binding on the US as customary international law. No discrimination. Your US citizenship is just a sad
        misfortune that deprives you of security, health and other things taken for granted in the civilized world. And if you’re stupid enough to get your parts blown off in some pointless American war, you get the extra bonus of sleeping on the street with your Veteran’s benefits cut. So enjoy your PTSD, sucker.

  3. MyLessThanPrimeBef

    Fill in the blank.

    Crisis pushes men into __________________.

    1) drug dealing?
    2) pimping?
    3) prostitution?
    4) doing nothing…as usual?
    5) stay at home dads?
    6) street protests?

    1. propertius

      You forgot:

      7) Drug and alcohol abuse
      8) Domestic violence
      9) Petty crime
      10) All of the above

  4. MyLessThanPrimeBef

    So, which one is scarier – Big Foot or Big Mouth?

    For me, it’s Small Mind with its small-mindedness.

    Small Mind >>>> Big Mouth >>> Big Foot.

  5. Susan the other

    I doubt anything will be accomplished at Durban. They’ve been setting dates and degrees centigrade as the point of no return for decades (Jim Hansen anyway). The date comes and goes, the CO2 in the atmosphere doubles. They set another date. I have yet to hear anyone say the obvious: if we stopped using automobiles we could turn it around pretty fast. Just start with eliminating cars. We’re still going to need delivery trucks and shuttles for a while. Can you imagine how clean the air in Los Angeles would be? There would be good spin-offs too for the recycling industry. All those cars … wouldn’t have to smelt much new steel for a while.

    1. ambrit

      Dear STO;
      The end of automobiles idea has been around for a while. Just see “Who Killed the Electric Car.” America had a robust and economical electric street transport system till the end of the Second World War. Then another kind of evil ‘Troika” set out to dismantle it to further their own corrupt ends. Today, America is literally built on the automobile system. Any meaningful change wil entail massive dislocations. We’re not talking garden variety ‘national crisis’ here. It’s similar to wishing for ZPG, and getting a new Black Plague. There are convincing arguements against the ‘Peak Oil’ cult view. The real driver will be how much society is willing to pay for any commodity.

    2. Jim

      Unless China is part of a comprehensive agreement to cut aggregate CO2 emissions by the same percentage as in the US, I hope that nothing gets done. And why any advocate of the working and middle-class would want US to unilaterally cut CO2 emissions is beyond me.

      1. Barbyrah

        Dear Jim,

        1. It’s called taking the high road;
        2. It’s called taking care of the planet (which, if not done VERY soon, is going to lead us to a point of no return. We are fast approaching a no return scenario. which for me is a pretty good reason to stop with the finger pointing – and just do it, whether China dives in with us or not).

  6. Markar

    Yves,

    It seems the most overlooked story last week was BofA moving over $50 trillion in derivatives exposure from Merrill to the depository bank, with, of course, the Fed’s blessing, putting the FDIC and taxpayers on the hook. Is this a precursor to another TARP? Will you be commenting on the implications of this?

  7. Ron

    “Oil prices on Monday climbed to the highest level in more than a month on signs of economic growth in the U.S. and Asia.”

    The bubble machine the only play they know!

  8. barrisj

    “Obama Doctrine”:
    - Lead from behind – if it all goes pear-shaped, blame Nato
    - Send in the drones
    - State-sponsored assassination teams…no one can feel safe, anywhere
    - Occupation? I don’t need no stinkin’ occupation (see above)

  9. Cap'n Magic

    Today’s WTF: Former member of the audit commitee of WAMU’s board on OWS: ““The Occupy Wall Street crowd represents the same flawed values that got our country into this economic mess,” Tom Leppert’s “EndOccupy.com” claims. “They possess a false sense of entitlement and think they should be receiving government handouts and run up the debt on an imaginary credit card by making hard-working Americans and future generations pay for the bill.”

    http://www.rawstory.com/rs/2011/10/17/failed-banker-turned-senate-candidate-funds-end-the-occupation-website/

  10. KFritz

    Looks like there are a couple of Republi-Trolls planting ad-hominem anti-Obama items in the Comments. This is not a BHO endorsement.

  11. KFritz

    Re: Antidote

    My onetime vets Karl & Marliss always told me that black & white cats, like my Yasmine, were the best tempered cats.

      1. KFritz

        Ahem…Clarification.

        I liked all 3 of my cats. No reflections on non b&w’s. Just can’t find an ill-tempered black & white.

  12. Sundog

    Big cheers to Vanda Felbab-Brown who is brave enough to hang with dodgy characters both inside & outside, and maintains integrity.

    Cheers too, to whoever invited this testimony before the “U.S. House of Representatives Subcommittee on Terrorism, Nonproliferation and Trade” (ain’t that a mouthful).

    IMHO this pretty much sums up the latest American adventures in Asia. Consider how it will play out in your own neighborhood.

    The more the state is absent or deficient in the provision of public goods – starting with public safety and suppression of street crime and including the provision of dispute-resolution mechanisms and access to justice, enforcement of contracts, and the provision of socioeconomic public goods, such as infrastructure, access to health care, education, and legal employment – the more communities are susceptible to becoming dependent on and supporters of criminal entities and belligerent actors who sponsor the drug trade and other illegal economies.

    http://www.brookings.edu/testimony/2011/1012_terrorism_drugs_felbabbrown.aspx

  13. Paul Tioxon

    Credit unions and cooperatives are the answer to people who want to build alternative institutions to the for profit endless pursuit of capital, share holder value and ROI. The have institutionalized limited equity constraints which means they are business that provide the goods and services that we need, and they operate efficiently and their economic purpose ends just about there. Not going further in the endless pursuit of profits. Coops have a long history, but a more recent story, from when Reagan came in and killed the emerging solar energy industry, ripping the Carter solar collectors off the WH roof. Reagan also destroyed the National Consumer Cooperative Bank and the Office of Self-Help officially open for business on March 21, 1980, soon after it opened for business. It survives today, but a shadow of what it could have been.It has served to transmit capital for Community Development Corporations and cooperatives that could have up an economy built in employment and useful goods and services that most people need and want.

    OCTOBER IS NATIONAL COOP MONTH

    http://www.uwcc.wisc.edu/info/stats/uscoopbus05.pdf

    We have a blue print for nation cooperative developments, as formulated in the 1979 Austin Texas meeting attended by coops from across the country. Of course, that effort was smashed by the right wing turn of events. Today, some coops have survived and flourished, but much more can be done to stabilize peoples lives, providing them with jobs with a living wage and a source of political power to operate from. Of course, Credit Unions are attacked by bankers as having an unfair competitive advantage, they are non profit. The bankers can’t stand that their competition does not have to pay the same kind of taxes as they do. But of course, credit unions do not operate from yachting clubs in Monaco or lodges in Jackson Hole.

    http://www.nccb.coop/impact-history.html

  14. Earl Killian

    Concerning Durban May Be Last Chance to Stabilise Climate Under Two Degrees:

    Read On avoiding dangerous anthropogenic interference with the climate system: Formidable challenges ahead, by Ramanathan and Feng. We passed two degrees a long time ago, once you realize that the current temperature is the result of both heating by greenhouse gases and cooling by aerosols. Eliminate the greenhouse gas emissions, e.g. from coal power plants, and you eliminate the cooling aerosols. The aerosols leave the atmosphere quickly, but the CO2 remains for centuries. Thus as you start to solve the long-term problem, you have a short-term one that leaves you much worse off than two degrees C. You have to shut down the coal plants, but it gets really ugly without doing geoengineering at the same time.

Comments are closed.