Links 12/11/12

Please amuse yourself in comments. Apologies for thin links. Am still under the weather and have meetings.

Where the elephants roam, family means everything Bangkok Post (Lambert). From the summer, still worthy.

Tough internet regulation plan dropped Financial Times

Berlusconi cliff? MacroBusiness

Mixing bankruptcy, sex and extortion El Pais

Morsi’s Opponents Describe Abuse by President’s Allies New York Times

The Guardian Names Bradley Manning Its 2012 ‘Person of the Year’ Truthdig (furzy mouse)

GLOBAL TRENDS 2030 National Intelligence Council (hat tip Financial Times). Foresees Pax Americana in retreat.

NDAA Nullification Bill Passes Michigan House, 107-0 Tenth Amendment Center

Obamacare Pre-Existing Condition Fee To Cost Companies $63 Per Person Huffington Post (Carol B). The business nay-sayers are looking less crazy.

Washington Doesn’t Have a Spending Problem. It Has a Healthcare Problem. Period. Kevin Drum

Hostess took workers’ pension money to fund itself Daily Kos (Carol B)

The Onion’s Plan For Solving The Fiscal Cliff Crisis

Pittsburgh inspired Colo. town’s fracking ban Post Gazette

Texas Regulators Prepare Major Drilling Rule Changes Texas Tribune

King Sees Risk of More Currency Management on Imbalances Bloomberg

Antidote du jour:

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  1. rjs

    Kevin Drum also posted on Our Bedpan and Canasta Future; the boomers age, technology automates all current jobs out of existence, and we head to a future where all the indentured college graduates spend their lives working off their student debt by emptying the bedpans of us old codgers…

    1. PublicPersona

      Sounds about right.
      I’m thinking many of the new US manufacturing plants will be mostly robotic. A responce to wage increases in other countries. The PR sounds good, the jobs will be few.

      1. ambrit

        Sounds like the fine print at the bottom of the “You Can Be A Winner!” ad: “Many will apply, few will be chosen.”

      2. alex

        new US manufacturing plants will be mostly robotic

        Another problem is those automated looms and spinning machines.

        1. EconCCX

          Another problem is those automated looms and spinning machines. @alex

          The first glass of water slakes thirst. The nth one causes drowning. Nor did PP argue that robot factories are a problem, only that they’re not an employment engine.

          1. alex

            The first glass of water slakes thirst. The nth one causes drowning.

            What’s the value of N? Should we keep the automated weaving and spinning, but get rid of the sewing machines? Or the powered hammers that put John Henry out of work? Or those Westinghouse air brakes that put railroad brakemen out of work? Or the automated switchboards that put phone operators out of work? Or the numerically controlled machine tools of the 1950’s that put machine operators out of work? And don’t even get me started on these computer things.

            Or is it that every one of those developments served to slake our thirst, but it’s now that unique point in history when any further productivity improvements would drown us?

            Nor did PP argue that robot factories are a problem …

            PP can correct me if I read too far between the lines, but when somebody mentions PR as the only good point, it sure sounds to me like they think it’s a problem.

          2. aletheia33

            will anyone else find this little talk as sickening as i do,
            or is it just that i’m an *information worker* (editor) who persists in believing that the work she produces, even if in only a small way, owes something to her particular sensibility and is unwilling to let that go?

            thomas malone (of MIT), “the rise of the micro”:


            amazon is the great pioneer. malone mentions there are people employed there now whose work consists of micro tasks like looking at one picture after another and indicating whether each picture has a dog in it.

            but surely this is a job available just until a computer can do that? … so we’re to be grateful we’re still employed as we sort the smaller and smaller bits we are given to sort every year.

            and it’s ecological. nature does everything in bits! so cool. we are all part of one great Mind benignly at work for our highest good, and we should be grateful if we are allowed to play our micro parts in the advancing project.

          3. Aquifer

            Al 33 –

            The image that came immediately to mind was The Borg ..

            “Knowledge hperspecialization” – the 9 blind men describing the elephant …

          4. Aquifer

            Al 33 –

            Wanted to write more – but my “hperspecialized” machine decided to divide up the comment into component parts, whether I wanted to or not ….

            No room for a Newton, or a DaVinci in this scenario – Rx for absolute soul destroying boredom – a real boon for the pharmaceutical industry …

            It’s interesting that he brought up medicine – that is one field that is suffering because of hyper specialization, IMO – who gives a hoot about the whole patient?

            Kirkpatrick Sale – “Rebels Against the Future” – the Luddites had a point ….

          5. aletheia33

            yes aqui, thanks for that, the 9 blind men,
            its just common sense.
            and this guy is at MIT?
            do these bit people actually have any idea
            what in human life has value?
            are they really already robots themselves?
            what colorless dead place did they crawl out from?
            i think they grew up next to old nuclear weapons yards
            and ate the grass.

        2. MyLessThanPrimeBeef

          An interesting problem is whether it’s possible that robots can form their own independent, sustainable economy where they produce solely for themselves to consume…maybe on another planet, Mars, for example.

          1. optimader

            All roads lead to fuel source/energy density…
            ..which begs the question, what will the robots excrete and how will that be processed?

  2. DP

    The linked Drum piece is intellectually dishonest garbage. He cuts the chart off at 2008 because after all this is just a regular recession and things will go back to normal soon. That’s complete nonsense. And he says we don’t have an interest expense problem, which ignores the $5 trillion or so added in debt since 2008 and the fact that with short term rates pushed down to virtually zero and a significant portion of the federal debt at maturities of 2 years and under (about 40% of the debt the last time I saw a chart on it), we’re basically getting a free ride. Is it reasonable to assume that will last indefinitely, particularly with the assumption that the economy will pick back up? That’s what Drum is doing. What does interest expense look like if you move rates up 2-3% across the yield curve?

      1. MyLessThanPrimeBeef

        Keeping mortgage interest rates low by buying all the home loans favors those have jobs and assets.

        Why don’t we take all those trillions and give to the jobless instead?

        How much better it would be if instead of knocking $100 off a empllyed homebuyer’s mortgage by buying a $200,000 loan, Fannie or Freddie uses that $200,000 on the jobless?

    1. b.

      Read Hussman. If the interest rates rise, the Fed is insolvent. They’d have to roll back QEx, which they cannot do. If interest rates go up, it’s game over long before we have to worry about debt service. So interest rates won’t go up. Of course, what cannot go on forever won’t, so something else will give, and spectacularly so. Japan on fast forward – if we get really unlucky, we might overtake them along the trajectory and won’t even have their example to point at. We can do the lost decades in a year!

      That isn’t to say that I agree with Drum, (it is usually a worrying sign when one does, unless one arrived at similar conclusions by different reasoning).

        1. Jim Haygood

          Currently the Fed has $68 billion in capital supporting $2904 billion in assets, for a capital ratio of 2.3 percent:

          As its balance sheet shows, $1572 billion of those assets are nominal notes and bonds with multi-year maturities.

          A sustained rise in interest rates could easily reduce the principal value of those longer-term assets by 2.3%, leaving the Fed insolvent though not illiquid.

          The Fed addresses this risk by simply reporting its assets at cost rather than market (nice when you can just make up your own accounting rules!).

          Distorted accounting doesn’t change the underlying reality that like Fannie Mae and Freddie Mac, the Federal Reserve is thinly capitalized and hugely exposed to interest rate risk.

          Also resembling the bankrupted GSEs is the Fed’s notion that thanks to the imprimatur of government sponsorship, it can just keep kiting its assets and leverage without limit.

          Wiser members of the FOMC know that what they’re doing is unsustainable, and secretly hope that someone responsible will intervene before their colleagues blow up the global economy with their reckless check-kiting scheme.

          1. Yves Smith Post author

            See former central banker Willem Buiter on this.

            A central bank can’t go bankrupt, since it can always print to pay its obligations. It can create too much inflation. Which is the reasons it might need an explicit bailout, that it can’t print enough w/o violating its price stability mandate.

          2. Chris of Stumptown

            “Currently the Fed has… $2904 billion in assets…
            A sustained rise in interest rates could easily reduce the principal value of those longer-term assets by 2.3%, leaving the Fed insolvent though not illiquid.”

            These assets produce income. Probably more than the Fed’s capitalization annually. Also, the Fed carries its large gold holdings at far less than market value.

          3. Hypothetical_Taxpayer

            “See former central banker Willem Buiter on this.”

            Love to, but he doesn’t answer my calls.

            They printed the money already to buy the long term bonds. They need to sell the bonds at par to “withdraw liquidity” whenever necessary to satisfy their inflation mandate. They don’t get all the money back if they can’t sell at par – which they won’t be able to – just a matter of how much.

            The only way to reduce excess liquidity at this point is for the Treasury to increase taxes and throw the tax money in the incinerator (net reduction in spending). I think there is an MMT mantra for that – but we aern’t gonna like doing it.

      1. rjs

        a logical endgame would be for the Fed to just retire the Treasury debt that they own, just as some at the BofE and the BofJ are contemplating…

      2. EconCCX

        a logical endgame would be for the Fed to just retire the Treasury debt that they own, just as some at the BofE and the BofJ are contemplating… @rjs

        To quote one of our MMT friends, responding to that very proposal:

        The Treasury Bonds held by the Federal Reserve are not owned by the Board of Governors or the Federal Open Market Committee. They are owned by the regional Fed banks. Those banks are privately owned and the bonds are among their assets. Privately owned companies will not sacrifice their assets forgiving the Government’s debts. Nor should they! The Government is obligated to pay those debts by the Constitution!

        Joe Firestone, commenting at AEIdeas

        1. Hypothetical_Taxpayer

          I have some idea the market reaction will be bad if they try to unwind QE the normal way they claim right now. That gets us some kind of interest rate increase – how much depends on how much the bond market panics (there goes monetary policy as a stabilizing influence on the world – haha). And it isn’t really panic – you would have to knowingly buy into negative real returns for many years – wafo?

          So the Fed will take losses on long term treasuries that will trade below par if sold before maturity in a rising interest(or inflation) rate environment. Might be a half trillion, might be much more. (but the SS trust fund is always good for backstopping things) Then, depending on how disorderly it all becomes, maybe interest get out of hand and push us into another recession – and the Fed will have to…never mind.

          Then there is the legal issue of who really owns the bonds Ben is buying. You could make the case that since the Board of Governors is made up of representatives of the regional banks that are all voting for FOMC actions and QE are then savvy private investors and their decision to do QE was a bad investment and they can take the loss.

          They will disagree and say the Treasury needs to re capitalize the Fed. (meaning the Treasury must tax or sell bonds to come up with the money) If they win this argument, then this is the ultimate in privatizing gains and socializing losses.

          Which is why I think QE MUST be made illegal!

        2. LucyLulu

          And the bonds in the SS trust fund are owned by the trust’s beneficiaries, citizen pensioners. However, calls are being made to retire those bonds as taxes are required to pay them off at maturity.

          Logic dictates that only those bonds held by the elite must be paid. And the debt ceiling will be held hostage if necessary to enforce this logic.

    2. curlydan

      DP: Totally agree. Cutting off that chart at 2008 and then hand-waving it off was bogus.

      The U.S. has more than a health care problem. A big part of “the problem” is the U.S.’s tax receipts as a % of GDP. Put that on a chart KevDrum and see the nasty trend. We don’t collect enough, giving away low marginal tax rates at the top and sweet deals with cap gains and dividends. 39.6% tax rate at the top would go a long way to helping the problem.

      1. MyLessThanPrimeBeef

        A progessive wealth tax has the advantage of addressing past, present and future income inequality, whereas a progressive income tax only relates to future earnings.

        Those who have already amassed quite a bit (billions) will always concede, when necessary, to progressive income tax hoping we will be distracted from discussing any progressive wealthy tax scheme.

  3. Joshua Ellinger

    Oh come on — it is $63 per year – i.e. one visit to Starbuck’s per month. And it declines over time.

    It costs me over $1,000 each time one of my employees get sick. If a single one of my 5 employees avoids getting sick because some fast food worker has better health care any time in the next 10 years, I come out ahead.

    But independent of that, what a bunch of cherry-picking whiners. I wish we were doing medicare-for-all but this is such a drop in the bucket it is hard to take the complaint as anything more than nitpicking.


    1. Lambert Strether

      I agree $1000 is nutso. But then, it can’t be all that significant, because otherwise we would have seen all those “Small Business for Single Payer” rallies, wouldn’t we, when the Dems were foisting the ObamaCare boondoggle on us?

      1. alex

        we would have seen all those “Small Business for Single Payer” rallies

        Why, because all small business owners are of a like mind?

        1. rjs

          marketwatch seems to think they are:

          Small businesses: Obama worse than Lehman collapse – Do small-business owners really fear that the re-election of President Barack Obama is worse for their businesses than the collapse of Lehman Brothers? A survey released Tuesday by the National Federation of Independent Business suggested as much. Not only did small-business sentiment plunge, but the net percentage of owners expecting better business conditions in six months fell 37 points. . To put that in perspective, the drop in expected business conditions fell only 18 points between September and October 2008 — as Lehman Brothers collapsed.

        2. Lambert Strether

          I would expect the economics to be shared across a significant number of them, yes. Assuming the commenter to be representative and not just some outlying purveyor of anecdote.

          1. LucyLulu

            And assuming small business owners haven’t fallen prey to propaganda. If a small business can now get a tax credit of up to 35% of their contribution towards employee health insurance, increasing to up to 50% in 2014, how is this a burden?

  4. Aquifer

    There is an interesting little slide show under the HP article on health care – off course now that O has been safely re-elected HP can point out how bad his admin has been …

    The one that struck me the most was #12 – claiming that median household income has dropped MORE during this “recovery” than during the “recession” …

  5. Klassy!

    Although I am something of a bird expert (I can recognize sparrows, cardinals, blue jays, and a few of the finches) I do not know what that bird is. Can anyone tell me?
    I know the white creature is a cat, so I don’t need any help there.

    1. BigBird

      Looks like a Song Thrush to me or maybe some other thrush, some of them look quite similar. It looks too small and the colouring too warm to be a Mistle Thrush.

  6. MrColdWaterOfRealityMan

    The “National Intelligence Council” is so inaccurate regarding the USA’s energy picture that it calls all of its remaining claims into question. The report seems designed to mollify gullible politicians and the business community. Other than that, it appears to be both innumerate and fact free.

  7. Brindle

    Michael Tomasky has a good piece on propaganda and “Zero Dark Thirty”.

    —“Do American movie-going audiences in 2012 really need to be spoon-fed a justification for the killing of Osama bin Laden?
    I suppose the filmmakers think they do. Politically, that’s a dubious proposition.
    Aesthetically, it’s a cheap one. It makes it a propaganda film.
    Only propaganda films feel the need to bang audiences over the head with the backstory on why our heroes’ actions are justified, whether the heroes in question are Seal Team Six or the Wehrmacht marching into Poland.”—

    1. b.

      Greenwald links here, which I think makes the point he misses:

      The idiocy of arguments like “torture does not work” and “torture did not help get bin Laden” is exposing both defenders and critics of “Thirty Dark Zeroes” as strenuously avoiding the question as to whether you torture, or not. Because, among a civilized people. It Is Not Done. Who gives a shit whether it works? The principle of the thing is that, if you claim to stand for life, liberty, justice and equality for all, It Is Not Done. Hostis humani generis. The torturer is the enemy of mankind.

      At the risk of going all LeGuin or Jackson on this topic, let us replace the beloved “ticking bomb” with the “living body”: say we got our hands on a child or nephew of bin Ladens, back in the heyday of wholesale slaughter to distract us from some hard truths, and we would *know* he would come out to be killed if we start mutilating the child on TV.

      Too obvious? How about we mutilate on TV his followers – all those guys in Gitmo and Bagram we *know* to be guilty? Because we *know* it will make him martyr himself in a fashion more expedient to us – less effective – then what he and others have been doing.

      No? Yeah right – we mutilate, and even record it, but then we don’t show it. We destroy the tapes. *Then* we hire actors, and we mutilate – no human beings harmed in the making of *this* movie – and then we show it on TV, and the big screen, and wherever else we can. That we, can go right on and end our torture, and keep it, too.

      Try a principle for size. The utilitarian posture struck by the “loyal opposition” is nauseating.

      1. Brindle

        b. From your link I like this section that mentions Spencer Ackerman. I have found SA to be mostly a cheerleader for The War On Terruh, he has too much an adolescent/boy veneration of soldiers & spies.

        —“It’s not that I think liberals support torture. No, I think liberals want to be forced to support torture.

        What liberals want is ultimately to do what conservative hawks want to do, but only after experts and leaders assure them that they have no choice. They want extreme events to make the choice for them.
        That’s why every discussion of torture always descends into some absurd hypothetical where you know that there’s a ticking time bomb and you know that a terrorist in your custody has info and you know that you can get that info and stop that bomb if you torture him. They devise these incredibly complex scenarios because they need them to take away their personal choice.
        That’s why writers like Spencer Ackerman exist, to present the proper level of squeamishness and showy moral grappling– to say that these scenes “can make a viewer ashamed to be American, in the context of a movie whose ending scene makes viewers very, very proud to be American”– before the torture happens anyway.

        The key is to go through the moral indigestion but to eventually get to the all-American pride. There’s a whole cottage industry, like that, for fretting liberals who want to get to the tough guy routine in the end.”—


        1. LeonovaBalletRusse

          like an altar boy saying: “Father Michael, make me believe that the sodomy you perform on me is a sacred act.”

    1. LeonovaBalletRusse

      Klassy, thanks for the link. The write:
      //Sorkin’s official bio at The Times says he started DealBook in 2001 and is “an assistant editor of business and finance news, helping guide and shape the paper’s coverage.”//
      Does this mean that the NYT is officially “Doing God’s work?” The World According to Zvi?

  8. MyLessThanPrimeBeef

    I am curious where that billion dollar fine on HSBC will go.

    If the complaint says ‘people vs. HSBC,’ and not ‘the government vs. HSBC,’ I believe the money should go to we the people, and not for the government to buy another aircraft carrier.

    1. MyLessThanPrimeBeef

      To have the prosecuting agency take all the money would be like your lawyer, instead of you, the plaintiff, receiving all that money.

    2. dolleymadison

      Not sure where it will go but I know where part of it will come from – from the liqidation of housing “pledged” to the defunct trusts HSBC served as “Trustee” for – they are teaming with Ocwen to foreclose on thousands of homeowners – whether they are in default or not. So essentially U.S. citizens will pay the fine to the government who should be protecting them from this lawlessness. Go America.

    3. LucyLulu

      I don’t know if there was a case filed, or how it was filed, IF in fact a case was filed. Typically cases are filed as U.S. v. defendant, however. Government/people isn’t specified.

      The Financial Crimes Network at Treasury was overseeing the investigation at the time of the Senate hearings last summer.
      While I assume your question was rhetorical/tongue-in-cheek, it would be great if fines WERE distributed to the people. At least a bit of the sting from the unequal application of the law might be relieved.

      1. MyLessThanPrimeBeef

        Thanks, LucyLulu.

        I thought it was ‘people vs. xxx,’ but I am not familiar with that, so that’s something I learned just now.

        Yes, it would be great that the money is distritubed to the people, be it fines or parking meter tickets.

  9. Cynthia

    I’ve come to believe that even the depraved, brainless, amoral, co-opted and compromised sociopaths who are prosecuting Bradley Manning realize that they aren’t even fit to lick the dirty soles of his shoes. This is why they are going all-out to ensure his demise.

  10. ChrisPacific

    The Onion clearly enjoyed being taken seriously by the Chinese media. It looks like they are trying to bait a repeat performance.

  11. compassionate release 2030

    “The themes of equality and fairness are likely to have an impact in the international arena as well. For some time, the emerging powers have called for a more democratic process for international relations whereby the established powers are seen as setting the rules. Elites and publics in the emerging power countries [!] believe the Post-World War II international system has been skewed to favor the West, disputing Western perceptions of an open, liberal order which has allowed emerging powers to prosper and rise. On the contrary, the impression [!] of many of our interlocutors was that, “America’s liberalism is selective and often in short supply.” Examples cited include Western support for authoritarian regimes, a double standard toward states that acquire nuclear weapons, or actions that are perceived [!] to undermine international law and human rights, particularly in the Middle East. Equality openness, and fairness are not just values to be applied to domestic setups, but also pertain to the broader international order.”

    I guess, in a barbaric pariah state that is the predominant perpetrator of crimes of concern to the international community, this is as close as you can come to the problem without getting honey-trapped into oblivion.

    Note the touchy-feely fixation on subjectivity in an international legal environment which judges guilt not on belief but on the facts of the case. In this way we can reduce extensive photographic and documentary evidence of torture and even torture convictions to “perceptions.” UN special procedures on the US government’s extrajudicial drone killings? ICJ rejection of unlawful US invocation of self-defense against Iran? Use of force without UN authorization in Afghanistan, Iraq, Pakistan, and Somalia? The legal force of concluding observations by The Human Rights Committee and the Committee Against Torture under binding treaty law? Feelings, ♫ nothing more than feelings, ♫… The problem is perception, not US government crime. The solution is equality, openness, and fairness, not complying with the fucking law.

    JFK was right. You have to pulverize it and scatter it to the winds. And fly a C-130 full of CIA scumbags to the Hague.

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