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Links 1/28/2013

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Readers, Yves labored mightily to have the third installment of reporting on “Bank of America Foreclosure Reviews” up this afternoon (Part I; Part II). However, her kitchen cabinet sent her back to revise more. The document is currently leaning a bit too much towards being a legal brief (with sexy stuff like insider documents to leaven it) and needs more work on narrative and structural signposts to make it more accessible. Yves is mundo unhappy, she wanted this up today. It still might go live today, check back mid-late PM. Otherwise, Tuesday.–lambert

Extinction Rates Not as Bad as Feared … for Now: Scientists Challenge Common Belief Science Daily

Egypt’s Morsi declares ‘state of emergency’  Al Jazeera

Egypt: The Rule of the Brotherhood NYRB

The Mirage of the Arab Spring Foreign Affairs

The Revolution Continues Foreign Policy

Mali journalists despair over ‘invisible war’ Al Jazeera

Insight: Poland’s investigation into secret CIA prisons loses steam Reuters

Berlusconi defends ‘good’ Mussolini  Al Jazeera (NT)

Eurovision voting shows strain of economic crisis Nature

With New Constitution, Post-Collapse Iceland Inches Toward Direct Democracy Truthout

Analysis: In Davos, world seeks U.S. engagement Reuters

US faces fresh financial shock FT. Sequestration. Groundhog Day.

A New Housing Boom? Don’t Count on It Robert Shiller, Times. 

The Rise of the Permanent Temp Economy Times

In Hard Times, an Instinct to Pack on Pounds WSJ

Marsha Godard, Chicago Mother, Fined Over $3,000 For Son’s Behavior At Noble Network Charter School  HuffPo (Inverness)

Delays by Congress hasten risk that USPS mail delivery could stop Pittsburgh Post-Gazette

US unions’ continued decline masks new forms of worker activism Guardian

Kiriakou and Stuxnet: the danger of the still-escalating Obama whistleblower war Guardian

Making Them Pay (and Confess) Gretchen Morgenson, Times

Just who should we be blaming anyway?  The Economist

Wrangles continue over bank failure plans FT

Financial Market Outlook for 2013 Economic Populist 

Bad pharma: Drug research riddled with half truths, omissions, lies Salon

Battery Charger Aboard 787 Cleared in Fire Investigation Bloomberg

What Nate Silver Gets Wrong New Yorker

In Asia’s trend-setting cities, iPhone fatigue sets in Reuters

PROMETHEUS TRAP (1): U.S. frustrated with Japan’s initial response to Fukushima Asahi Shimbun

Pennsylvania Fracking Wastewater Likely to Overwhelm Ohio Injection Wells Ecowatch

20130120 – Ethereal Islands and Ever-present Oil  On Wings of Care. Macondo from the air.

Antidote du jour:

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92 comments

  1. from Mexico

    @ “A New Housing Boom? Don’t Count on It”

    Robert Schiller said:

    The bottom line for potential home buyers or sellers is probably this: Don’t do anything dramatic or difficult. There is too much uncertainty to justify any aggressive speculative moves right now.

    What a profound insight into America, a strange place where what used to be called “home” — a place to put down roots, raise a family and enjoy life — has been transformed into a crass vehicle for financial speculation.

      1. from Mexico

        One has to ask why outfits like the Blackstone Group have access to the unlimited supply of interest-free money the Fed is creating, and aspiring homeowners do not. Surely people know by now that Blackstone, and all other big banks and financial institutions, would have been swept from the face of the earth had it not been for either direct bailouts by the US governemnt, or indirect bailouts via their counter-parties.

        So you get this horrible double standard. The Blackstones of the world, which certainly did not do any better job at managing risk than many a foreclosed household did, and would have wiped out the same as many a household save for the magnificence of the federal governemnt, have escaped having stains on their credit histories. And they are given access to all but unlimited capital at almost zero interest rates. If that prescription is good for Blackstone, why is it not good for the average American household?

        I read an article the other day that argued the current “boom” in residential real estate is being driven not by individual owner-occupied homeowners, but by speculators like Blackstone, who have entered the market in a big way. If one looks at the way American households are still shedding mortgage debt, this explanation is even more plausible. If one looks at Fig 39 in this series of graphs, one can see that households are shedding mortgage debt just as fast now as they were back in 2009. So unless households are paying cash for the houses they buy, which I find highly doubtful, then the buyers driving the current “boom” must not be households.

    1. direction

      Back when the housing crisis was in full swing, Planet Money (yes, I know, “Adam Davidson? boo hiss,” but they did do some decent investigative reporting at the time) tried to phone all the homeowners in the tranche of the toxic asset they purchased for the show. It did seem that most of the people they reached were speculators, which begs the question: “Why couldn’t lawmakers have passed something simple that shielded single homeowners, so that foreclosures wouldn’t dehouse people?” Or at least something to put single homeowners on the back shelf.

      I have always wondered this. Any thoughts?

      1. YankeeFrank

        Ummm, because Geithner, Obama & Co. just didn’t care. They were only interested in saving their cronies at the banks, and care nothing for the regular people chewed up by the system. There is no other justification for their lack of responsiveness. In fact, what they did do only managed to make things worse for homeowners, as any regular reader of this blog will know: “foaming the runway” and all that.

        There are a lot of things the Obama government could’ve done to help regular people caught up in this monstrous crime through no fault of their own, and what they did only hurt those people. Obama has no sense of justice or care for the people, only those in power who he envies/admires, whatever.

        My advice, don’t listen to anything Obama says. He lies all the time. In fact, I daresay he is a more deceptive person than W ever was. Look at what he actually achieves: the neoliberal, WTO, IMF program he supports wholeheartedly. That and authoritarian total government surveillance, secrecy and control are his “achievements”. I’m no republican, I despise them even more, but Obama is a wolf in sheep’s clothing.

      2. from Mexico

        direction asks:

        “Why couldn’t lawmakers have passed something simple that shielded single homeowners, so that foreclosures wouldn’t dehouse people?”

        My favorite theory is that put forth by Naomi Klein in The Shock Doctrine, and that is that these crises are intentionally fabricated for the very purpose of dispossesing everyday folks of their property. It is a pattern well established in Latin America. Call it serial neoliberalism, where each crisis is used as an excuse to usher in the next, higher level of neoliberalism.

        In War and Peace and War Peter Turchin speaks of “the Matthew Principle,” which is an immutable trend, discerned since biblical times, by which the rich, over the course of generations, get richer and the poor get poorer. He analizes the specific mechanisms by which it operates and goes so far as to build a mathematical model of it. As Turchin explains:

        What actually happened in most historical societies was that the poor did not sell their land outright, but used it as a collateral for loans to tide over a bad patch (a year of poor harvest, or temporary inability to obtain extra work). In the end, however, the land was still lost, when the debtors found themselves unable to repay the loans.

        You might call our current outbreak of neoliberalism the Matthew Principle on steroids, using public policy to artificially boost the historical process along as quickly as possible.

        Turchin goes on to assert that “the only way to stop this process constantly breeding inequality is by either abolishing private property altogether or by abolishing the right to inherit it. A milder form of keeping inequality in check is a steeply progressive tax on inheritance. In other words, some sort of redistributive scheme could be used.”

        I’m certainly no fan of the Marxist “solution” — abolishing private property. As Reinhold Niebuhr observed:

        Property is the isntrument of justice in the creed of the bourgeois world; and the source of all evil in the Marxist interpretation. Both creeds miss the truth about property. Since property is a form of power, it cannot be unambiguously a source of social peace and justice. For every form of power, when inordinate or irresponsible, can be a tool of aggression and injustice. However, since property is not the only type of power in society (not even of all economic power), it cannot be the sole source of injustice. Since some forms of property represent security of the home, and others protect against the hazards of the future and still others are instruments for the proper performance of our social function, some forms of property are obviously isntruments of social justice and peace.

        However, I’m very much in favor of highly progressive inheritance taxes, sort of a compromise between the bourgeoisie and Marxist approaches. I’m for merit and not inherited privilege. I wouldn’t at all be adverse to an inheritance tax that sets the limit to what someone can inherit at $100,000.

        Oddly enough, early feudal society (and we’re talking about the one that defeated the Roman Empire) was based upon merit. As William Manchester explains in A World Lit Only By Fire:

        Because the first medieval rulers had been barbarians, most of what followed derived from their customs. Chieftains like Ermanaric, Alaric, Attila, and Clovis rose as successful battlefield leaders whose fighting skills promised still more triumphs to come… Lesser tribesmen were grateful to him for the spoils of victory, though his claim on their allegiance also ha supernatural roots…

        But the chieftains had been chose for merit, and early kings wore crowns only ad vitam aut culpam — for life or until removed for fault.

        Slowly though, the supernatural claims came to outweigh the merit claims and by 1356 hereditary monarchy and nobility ruled unchallenged. Only Holy Roman emperors were elected (by seven carefully designated electors).

        1. from Mexico

          The neoliberals are of course the ones always invoking terms like meritocracy and wealth creation.

          One could test their commitment to this concept, however, by proposing a 100% inheritance tax. If they are such committed proponents of merit — as they so loudly self-proclaim to be — then they shouldn’s have any problem whatsoever with 100% inheritance taxes.

          1. direction

            It would work if medical and university were free. Lots of interesting thoughts, thanks. I think I should have more carefully phrased my query. I’m not at all surprised that nothing was done to forestall the fate of the disposessed. (and no, I am not an obama supporter). What I meant to ask was why the progressives were not clamboring for foreclosures on single home owners to be tabled until after the speculators had been dealt with. It’s not something I heard being offerred as a solution even from the fringe, and I’m not sure why.

        2. jsmith

          I’ve been busy lately to respond to some of the earlier points you brought up in the threads a few days ago and don’t have much time now but are we really going to use Niebuhr’s Christian Realism – an ideology that has formed the basis of much of the “liberal” wing of today’s neoliberal fascist and other assorted war criminals (Obama, Clinton, Albright etc) – and which is even MORE fanciful than that the supposed “religion” of Marx to rebut the need to address maybe not the root of ALL power and its manifestations but the source of VERY MUCH of the ills that plague mankind in a capitalist society i.e., private property?

          From Wikipedia:

          http://en.wikipedia.org/wiki/Reinhold_Niebuhr#cite_note-Hussain-43

          Niebuhr attributed the injustices of society to human pride and self-love and believed that this innate propensity for evil could not be controlled by humanity. But, he believed that a representative democracy could improve society’s ills. Like Edmund Burke, Niebuhr endorsed natural evolution over imposed change and emphasized experience over theory. Niebuhr’s Burkean ideology, however, often conflicted with his liberal principles, particularly regarding his perspective on racial justice. Though vehemently opposed to racial inequality, Niebuhr adopted a conservative position on segregation.[59]

          While after World War II most liberals endorsed integration, Niebuhr focused on achieving equal opportunity. He warned against imposing changes that could result in violence. The violence that followed peaceful demonstrations in the 1960s forced Niebuhr to reverse his position against imposed equality; witnessing the problems of the Northern ghettos later caused him to doubt that equality was attainable.[59]

          snip

          As a preacher, writer, leader, and adviser to political figures, Niebuhr supported Z*onism and the development of Israel. His solution to anti-Semitism was a combination of a Jewish homeland, greater tolerance, and assimilation in other countries. As early as 1942, he advocated the expulsion of Arabs from Palestine and their resettlement in other Arab countries. His position may have related to his religious conviction that life on earth is imperfect, and his concern about German anti-Semitism.[67]”

          So, at first an avowed Socialist, Niebuhr then “sees the light” and comes to believe that Marxism was too much like a religion and therefore incapable of addressing man’s ills so he turned to Christianity(!) to address the religiosity of Marxism but a “realist” version of Christianity that – gee, shucks – could be used to sell the worst of Western atrocities and illegalities as necessary “interventions” in a world in which evil just can’t never really be subdued just battled against for ever, huh?

          Hmmm, that sure sounds like…what’s that phrase again?…oh yeah…THE GLOBAL WAR ON TERROR.

          See the problem there?

          I’m not saying the man didn’t have some interesting ideas but just that I don’t think Niebuhr is a very good choice of a person when it comes to a rebuttal of Marx’s views.

          Gee, as an ardent Z*onist who advocated for the forcible removal of Arabs from Palestine, Neibuhr sure seemed to understand the power of property concerning the Jews, huh?

          Anyways, the advocacy of the abolition of private property does contain potential pitfalls but – going back to the thread the other day – I’d MUCH rather have a majority of the populace thinking that the resources of our planet belong to ALL OF US rather than being a “realist” and maintaining a power structure that is very much based upon the ownership of property by a very very small minority of people.

          If we’ve learned anything from the neoliberal fascists over the last few decades is that you start negotiations from an extreme viewpoint and THEN work your way to the middle.

          Let’s start advocating for the abolition of private property because then maybe the compromise will be public utilities, public banks, etc whereas if we start negotiating from a position of maybe a slightly more progressive version of the tax structure we are going to get basically nothing that would improve the lives of the vast majority of society.

          Lastly, historically, one could say that Niebuhr’s ideas won the day and Marxism lost.

          See any problems with this “victory”?

          Basically, we have a fascist society that has so imbued itself with the “righteous” belief that we are a “realist” force of good on the planet that our worst crimes and inequalities go unaddressed or mentioned and – due to the loss of Marxism – have utterly no concept/vocabulary for working our way back to a a necessarily more collectivist view of mankind.

          Don’t get violent, man, and if sh!t gets violent well then maybe we were pushing too hard.

          I’m going to be our for much of the day if you want to comment.

          1. from Mexico

            @ jsmith

            I’ve never been much of a fan of playing the man and not the ball, and don’t want to get sidetracked into doing so as it just gets us farther and farther away from the subject at hand, which is whether the elimination of the institution of property is a good idea or not. But your allegation that Niebuhr’s philosophy “has formed the basis of much of the ‘liberal’ wing of today’s neoliberal fascist and other assorted war criminals” is nothing short of fiction. Wikipedia’s take on Niebuhr’s civil rights stand is also quite the departure from reality. Compare the passages you cite, for instance, to what James Melvin Washington had to say about Niebuhr in his introduction to A Testament of Hope:

            [R]acists destroyed black properties while espousing platitudes about justice and freedom for all. In fact, while this tragic drama was in process, most white moderates — with the exception of those such as Reinhold Niebuhr, who early encouraged blacks to embrace nonviolent resistance — had the audacity to insist that black Christians should be paragons of the faith. The later “black power” disdain for hypocritical white liberalism was not without some ethical justification.

            We might also want to take a look at what Martin Luther King had to say about the man.

            King, just like Niebuhr, was as great a critic of liberalism as he was of Marxism. And it should go without saying that what both men admired about Marx was his morality regarding socialism, which was very similar to Christian morality.

            But when it came to the use of violence, it wouldn’t be possible to get any further from Marx’s “violence is the midwife of History” than King’s nonviolent philosophy. Niebuhr, as King explains in “My Pilgrimage to Nonviolence,” fell somewhere in between. Here’s King:

            [Niebuhr's] full statement of his criticism of pacifism was in Moral Man and Immoral Society. Here he argued that there was no intrinsic moral difference between violent and nonviolent resistance. The social consequences of the two methods were different, he contended, but the differences were in degree rather than kind. Later Niebuhr began emphasizing the irresponsibility of relying on nonviolent resistance when there was no ground for believing that it would be successful in preventing the spread of totalitarian tyranny. It could only be successful, he argued, if the groups against whom the resistance was taking place had some degree of moral conscience, as was the case in Gandhi’s struggle against the British…

            At first, Niebuhr’s critique of pacifism left me in a state of confusion. As I continued to read, however, I came to see more and more the shortcomings of his position. For instance, many of his statements revealed that he interpreted pacifism as a sort of passive nonresistance to evil expressing naive trust in the power of love. But this was a serious distortion. My study of Gandhi convinced me that true pacifism is not nonresistance to evil, but nonviolent resistance to evil. Between the two positions, there is a world of difference. Gandhi resisted evil with as much vigor and power as the violent resister, but he resisted with love instead of hate. True pacifism is not unrealistic submission to evil power, as Niebuhr contends. It is rather a courageous confrontation of evil by the power of love, in the faith that it is better to be the recipient of violence than the inflicter of it, since the latter only multiplies the existence of violence and bitterness in the universe, while the former may develop a sense of shame in the opponent, and thereby bring about a transformation and change of heart.
            http://mlk-kpp01.stanford.edu/primarydocuments/Vol4/1-Sept-1958_MyPilgrimageToNonviolence.pdf

            When it came to liberalism, King and Niebuhr were very much on the same page. Here’s King again:

            Niebuhr’s great contribution to contemporary theology is that he has refuted the false optimism characteristic of a great segment of Protestant liberalism, without falling into the anti-rationalism of the continental theologian Karl Barth, or the semi-fundamentalism of other dialectical theologians.

            And speaking of Marx, where King and Niebuhr were both very much in sync, it wouldn’t be possible to get any more unambiguous than this in rebutting Marx’s belief in the apotheosis of man, as King continues:

            Moreover, Niebuhr has extraordinary insight into human nature, especially the behavior of nations and social groups. He is keenly aware of the complexity of human motives and of the relation between morality and power. His theology is a persistent reminder of the reality of sin on every level of man’s existence. These elements in Niebuhr’s thinking helped me to recognize the illusions of a superficial optimism concerning human nature and the dangers of a false idealism. While I still believed in man’s potential for good, Niebuhr made me realize his potential for evil as well. Moreover, Niebuhr helped me to recognize the complexity of man’s social involvement and the glaring reality of collective evil.

            Phew! So after that long digression, maybe I can get back to talking about property again.

          2. jsmith

            I understand but the problem being when people discuss Marx there’s always the question as to whether we are really talking about Marx or the later Marxists who took Marxism and ran with it especially those like Lenin, et al, who narrowed the ideology and made it the vehicle by which party politics could manifest itself in the Soviet Union and elsewhere in the 20th century.

            This has always been the problem with Marxism in general in that the original Marxism – ie. in his own words – was a theoretical system that straddled the line between philosophy and revolutionary ideology: Marx started out to determine inalienable economic laws by which society ran, discovered those laws and then took the decidedly non-philosophical stance in that he said that he decided that the “laws” he had discovered were reason to destroy the very system he had originally set out to describe.

            Thus, the inalterable laws of society – ie. captial v. labor etc etc – could and should be altered through revolution.

            Marxism – like all philosophies – is incomplete and I share the revulsion of many of the philosophical “children” of original Marxism and the people who promulgated them, however, the same can be said for many of the 20th century thinkers whose ideas and actions also belied either radical reinterpretations or changes of heart by the thinkers themselves.

            That is why I’ve gone looking at the people who espouse certain things during these discussions because equating Marx with Stalin is in many ways equating Niebuhr with the Madelaine Albright but in the latter case Niebuhr – unlike Marx – lived to see some of the terrible applications of his ideas to the world in which he lived.

            The work of Michal Kalecki is a great example of the thinker who came out of the Marxist tradition but who was never really part of the official Marxist political/ideological apparatus of his time period. Instead of going the route of attempting to continue the doctrinaire and shaky work of later Marxists Kalecki and others concentrated on trying to flesh out that which Marx had not rigorously defined in an economic sense.

            It is this tradition of Marxist inquiry which I subscribe to and which makes me invariably get knee-jerk when confronted with this mixing of Marx up with this followers who viewed this theories as nothing more than a vehicle by which to attain localized power over subject populations.

            Your comments are always interesting and I’m really not trying to be an ahole – most of the time – it’s just that I don’t have too much time to post and much of it is really slapdash and out of my head onto the keyboard.

          3. Andrew Watts

            jsmith:

            The American socialist party was an odd collection of war pacifists, christian evangelicals, and other more traditional leftists that included libertarians of the time. It was the unwillingness to renounce pacifism in the face of the rising tide of fascism that caused Niebuhr to abandon the socialist party. It was this fundamental embrace of powerlessness in the face of evil that Niebuhr rejected.

            In later writings he included Marxists among his Children of Light due to the fact they served a cause greater then self-interest. It’s for those reasons that I do not see Niebuhr as being diametrically opposed to Marx or even Marxism in general. Though he was definitely not a fan of how the Soviet Union enacted some of those ideas.

      3. Yves Smith

        If this is how Davidson reported it (homeowners in toxic tranche) it was already bad reporting. There is NO SUCH THING as homeowners in a particular tranche. All 4000 to 5000 mortgages in a RMBS were all together. What the investors got were cashflows from ALL those mortgages. The “toxic” tranches were low in priority. The multiple Triple A tranches, the AA and the A tranche got paid before them. So if enough borrowers defaulted, there was no $ left to pay the lower tranche investors (BBB).

        Another part of the crisis that is not well reported is that 40% of the homes built in the runup to the crisis were second homes.

        Now there unquestionably were speculators too. But the evidence is most of the borrowers who hit the wall early were either chumps who were encouraged to buy too much house (I can’t stress that point enough, in 2009 and 2010, pretty much every cabbie I met outside NYC told a story of looking to buy a home and having the bank tell him he qualified to buy a pricier house, why didn’t he go back and look at bigger houses?) OR people who basically didn’t have long term loans who couldn’t do a refi (the two year ARMs were a vehicle for bank churn, on every refi they got more up front fees, and most of the borrowers HAD to have a refi, no way could they make payments at the reset amount).

        So I can’t fathom how Davidson found only speculators given all the analysis of who the subprime borrowers were.

        1. direction

          I seem to recall there were 2 of the planet money team making those phone calls, not sure if it was Davidson. Some of the people they spoke to were second home owners, and I lumped those folks in with “speculators” in my post, in the interest of brevity, since it’s impossible to separate who was flipping from who intended to keep their second home.

          It’s good to hear your perspective. thanks for replying. You are an intense worker, keeping up with this blog and all the other things you do. best of luck to you. I’m so happy to have found NC. Resources like this are so rare. Take care of yourself.

  2. Mark P.

    Thanks for ‘Prometheus Trap: U.S. frustrated with Japan’s initial response to Fukushima’

    Nice to have some details from Japan, though of course the U.S. would have had to be disturbed. Watching the Japanese dysfunctionally sleepwalk towards possible nuclear disaster was upsetting and maddening.

    1. LucyLulu

      I so wished I had saved my links and perhaps more will come out later in this series, but saying that the US was “frustrated” is an understatement. Relations between the U.S. and Japan became very strained during the initial weeks after the disaster, for multiple reasons, to the point they almost broke off altogether. Most critically, the Japanese were upset when the U.S. military issued an evacuation order for our troops that extended the radius to 50 km while the official Japanese evacuation radius was 20 km. When our ambassador was scheduled to meet with their top officials, he was ushered to a small room and met by low-ranking officials, a real snub. Ultimately, about 5 weeks post accident, amends were made.

      It’s true that the Japanese initially left Tepco to deal with the disaster. Their attitude was that it was Tepco’s facility, Tepco was a multi-billion dollar corporation, they could deal with it. Though the government was rather overwhelmed dealing with other aspects of the earthquake and tsunami, clearly they underestimated the magnitude of the Fukushima disaster. They turned down multiple offers of foreign assistance, partially out of a cultural pride that makes them reluctant to accept outside help. For example, not only did the world’s top experts fly in to offer their expertise only to be sent home (while some news agencies reported “Obama refuses to help”, absolutely untrue), France sent them robots. They returned them unopened. Later, they would use robots sent by the US, from the company that makes the Roomba, to inspect areas that humans couldn’t access due to high radiation levels. U.S. military drones also got the first good photos and videos, at the time which were kept top secret. The Japanese feared, with good reason, radiation might reach Tokyo, and cause panic there. They were trying to downplay the accident and felt the US was being counterproductive. You can imagine what a mass evacuation of Tokyo would look like. I imagine our government would react the same if it were a reactor in the vicinity of NYC or LA, or any other, for that matter. Ultimately, choppers were used to drop water on #4 and it was ineffective. Fire hoses and then concrete pumps from the US were used to keep spent fuel pools filled. Unfortunately, initially sea water had to be used to cool the reactors themselves, fresh water supply having been cut off, which would later lead to degradation of physical structures and unknown results on fuel.

      A few months ago I got grief for posting that the workers deserved considerable credit for containing the disaster as well as they did. I meant this considering the lack of resources and expertise available, and their belief that their lives would be most likely sacrificed. They were cut off from the outside world. Roads destroyed by the quake/tsunami prevented bringing in more generators, and the weight of generators prevented use of choppers. Never before had there been an accident involving four reactors simultaneously. Most of the workers were temps. They were attaching cables to car batteries to run critical monitors, only to have the bad luck of another piece of structure collapse and destroy the cabling. Fortunately, winds blowing out to sea at strategic times significantly reduced the ultimate radiation contamination of the Honshu residents. I’ll have to see if I can find the anecdotal stories of the first couple of days post tsunami. It’s very enlightening of what is was like on the ground there. Murphy’s Law ruled the day. It’s a miracle there were no acute radiation related deaths.

  3. ignim Brites

    Interesting post from FT on sequestration. Looks like Reps are poised to become the party of defense spending cuts. Look now for a race to propose ever deeper cuts. The end of the empire is at hand. Long term negative for the dollar I suppose.

  4. fresno dan

    Just who should we be blaming anyway? The Economist

    Well, I would agree that besides banksters, the rating agencies, captured regulators, and a whole slew of others in the FIRE fraud complex were milking the system for all it was worth.
    But really, when you have “robosigning” which is nothing more than forgery on a gigantic scale, what it says is that some are simply unable to face how fraudulent and corrupt our financial sector has become.
    The problem isn’t that what happened is too complex to figure out – its that its not in the interest of those getting the ill gotten bonuses to let it be figured out…

  5. Inverness (@Inverness)

    Berlusconi is feeling nostalgia for the days of Mussolini…surprise, surprise. Yesterday From Mexico mentioned how one failing faith system can lead to the return to more primal, xenophobic beliefs. Europe is getting scarier by the minute…I am not claiming that Berlusconi necessarily reflects the average Italian, but the fact he feels comfortable supporting old Benito, and of on all days…

  6. Diego Schiavon

    I believe some links to the SNS-Reaal story in the Netherlands would be in order.

    SNS is the fourth Dutch lender and is bankrupt. The Dutch government is in talks to bail it out, but there are no details on how that is going to happen.

    The Dutch feel bound to the 3% deficit rule, so direct government intervention is not guaranteed. However, no bank is healthy enough to take over SNS except for Rabobank. But an indirect bail-out from Rabo would come at a political price (Rabo is traditionally Christian-democrat, and the government is liberal-socialist).

    Not to mention the fact that Rabo’s legendarily strong balance sheet cannot take many more acquisitions.

    So if the government bails out SNS, it will suffer the wrath of the market gods. If Rabo does, that could endanger the whole Dutch banking system.

    And that in the second-largest “core” country.

    http://www.bloomberg.com/news/2013-01-28/sns-junior-bonds-stem-decline-on-speculation-it-will-sell-stake.html

  7. wunsacon

    >> The Mirage of the Arab Spring Foreign Affairs

    Wonder whether future historians will look back and learn who’s playing the role of “new Shah” right now. Oh, what the future holds!

  8. Klassy!

    Great links! Sorry if this is not related.
    The recent Hugo Chavez article in the New Yorker was quite the hit piece. It managed to retain the rather colorless and dispassionate writing style of the magazine while dispensing with their usual show, don’t tell method of reportage.
    You do not have to really have any prior knowledge of Venezuala to sense that something doesn’t quite add up in the article.
    I was glad to see FAIR posted a crtique at their blog:
    http://www.fair.org/blog/2013/01/25/why-do-poor-people-living-in-an-abandoned-skyscraper-so-outrage-the-new-yorker/

    1. Inverness (@Inverness)

      Thank you, Klassy, for the excellent Fair blog article. Actually, the New Yorker has done other hatchet pieces on both Chavez and Morales’ Bolivia. My take on the New Yorker is that it’s about as welcoming to leftist ideas as Bloomberg: you know, friendly to gays but supportive of neo-liberal ideas. Just my take, perhaps informed by too many articles by Malcolm Gladwell.

      How anyone could diminish the reduction of poverty under both Morales and Chavez is bizarre. Of course, Chavez was not only reelected several times, but was a near-victim of a USA-assisted coup.

      1. Klassy!

        I think your take is correct. The magazine is always anti populist, so I guess the anti Morales and anti Chavez slant is to be expected.
        I wonder what they have to say about Venezuala’s neighbor to the west?

    2. Ms G

      Thanks for the heads up. I can’t read the NYorker anymore, but I’ll check out the FAIR critique.

      I acquired great respect for Hugo Chavez back during Bush II’s administration when he offered to sell oil at a huge discount to the manipulated US (sky high) price, to any city, county or state (especially in distressed areas).

      Among other things, I thought: “Huh, there’s something to this global trade thing after all.” I don’t think Hugo’s offers were allowed to be accepted … erm.

      1. Klassy!

        Well, if you don’t read the NYer you are missing a truly fine piece in the best tradition of “American goes abroad and opines on all that is wrong with your country.”.

        paging Graham Greene…

    3. Lambert Strether Post author

      I stopped reading the New Yorker regularly in 2008 when Hendryk Herzberg drank the Kool-Aid and went all in for Obama hagiography. This was actually painful for me, as I’d been reading the New Yorker regularly since I was a child, loved James Thurber, my mother put the covers in frames and hung them on the wall for art, etc. But it’s become a ghostly and transparent image of a class that cannot renew its legitimacy and doesn’t even have the self-awareness to understand this:

      1. Klassy!

        Shouts and Murmurs is no substitute for Thurber.
        Paraphrasing Homer Simpson, “Stupid magazine. Be more funny!”.

          1. Ms G

            Oh, and Shousts/Murmurs is lame beyond belief. Pathetic, actually. Never read past the second line of my first one and never looked back (until I stopped reading entirely).

            Though I too will happily check out this rare bit of journalism that the’ve apparently published on MBS! Thank you.

      2. Ed

        The New Yorker took a big step downward during the Tina Brown editorship, recovered somewhat after she left (and not everything she did was bad), but now is sort of drifting into conventional wisdom irrelevance.

    4. from Mexico

      For those who speak Spanish, an article from La Jornada, one of Mexico City’s dailies:

      “The stategic alliance Brazil-Venezuela”
      http://www.jornada.unam.mx/2012/07/13/opinion/027a2pol

      It shows just how disconnected Naureckas, the New Yorker writer, is from reality. “If you win we win,” Brazil’s ex president Luiz Inacio Lula da Silva told Hugo Chávez. Make no doubt about it, the US, with its incessant propaganda, sabre rattling, and covert and not so covert military interventions, is attempting to reassert neoliberal hegemony in the southern cone region. The countries in this region are united in their effort to prevent this from happening.

      The situation Chavez inherited was described by Carlos Fuentes as follows:

      In the phase immediately after independence, Britain managed Latin America’s foreign trade; in the latter part of the nineteenth century, the United States came to be the principal partner. However, they employed the same instruments of economic power, namely favorable agreements for their merchants, loans and credits, investment, and the handling of the export economy of minerals, agriculatural produce, and natural products required by Anglo-American expansion. A highly privileged local minority served as intermediaries…

      Large haciendas, intensive exploitation of minerals, and cheap labor forces proliferated. Was this what independence was all about — land and mine owners profiting handsomely while the majority remained impoverished?

      – CARLOS FUENTES, The Buried Mirror

        1. from Mexico

          I don’t know of any that deal with current events.

          Peter Dale Scott does some good stuff on Latin America, and you see him quoted in the press here, but his outlook is global and he doesn’t specifically zero in on Latin America.

    5. dale pues

      Thanks for the link. I give the NYer as a Xmas gift every year but never read it myself. The discussion in the Fair piece is interestng because it includes comments from actual Venezuelans. JH’s comment describes current conditions with some history thrown in for good measure. Worthwhile.

  9. DP

    The story on Apple losing I-phone market share in Asia because so many people have one that it’s no longer cool reminds me of an observation about a restaurant in New York from the great philosopher Yogi Berra: “It’s so crowded nobody goes there anymore.”

  10. fresno dan

    Bad pharma: Drug research riddled with half truths, omissions, lies Salon

    There is such an incentive in humans to “do something” that there is an unstoppable force to try and fix things that we do not have the power to fix. It is a rare leader who can be a Russian general and let winter defeat Napoleon…

    FDA publishes and heralds all its approvals every year – even though these publication failings and biases are well known. Looking at the published data that gets out is shocking when one realizes how marginal and contrived it usually is.

    1. Brindle

      So Lew comes off as a puppet of Rubin in this description from the WSJ link, nothing surprising, in fact expected:

      —”A former colleague of Mr. Lew’s argues that since he had no role in sales, marketing or managing investments, this one isn’t his fault either. But that raises the question of whether Mr. Lew was merely holding down a non-job reserved for those with political juice. He was brought into Citi by his patron and Clinton Administration colleague, Robert Rubin.”—

      1. Brindle

        Revealing puff piece on “earnest Eagle Scout flexing his muscles”–Robert Rubin, from July 1993, first year of the Clinton administration.

        —”I believe we are at a historical crossroads,” he said. “Until Bill Clinton came along, I felt there was a high probability that the United States would continue on a trail in which we underperformed the rest of the industrialized world.”

        With the earnestness of an Eagle Scout, he added, “If we can accomplish a substantial part of the things we hope to do, I think it will have a historic impact on putting the economy back on the right track.”

        Increasingly in recent weeks, Mr. Rubin has flexed his muscles by saying what he thinks, often asserting that what’s best for the economy is usually the best politics.”—

        http://www.nytimes.com/1993/07/25/business/when-robert-rubin-talks.html?pagewanted=all&src=pm

        1. Ms G

          Cough, the more we learn, the more we realize how little we knew when Bobby Eagle Scout Rubin was trashing our democracy. I especially like the first quote you posted where Robert Eagle Scout Rudin reveals that his main concern about America is “underperforming” globally. Number One, what a tell (too bad we didn’t know more in the 1990s), Number Two: lovely, just lovely. The guy sounds like he’s got as much humanity in him as an toppled telephone pole.

    1. Lambert Strether Post author

      Ha, hoist by my own petard; slagging the New Yorker, and then an NCer comes up with a good link from it, and all about the ruination of American engineering by accountants and MBAs.

      What I wonder about, though, is union busting. If I have it right, part of the 787 saga was setting up a new plant in South Carolina that would be union-frei. As if the workers were just another input. Nobody seems to be mentioning that part of the story, though.

      Would be nice to have a whistleblower or two on this topic as well…

      1. Klassy!

        Well, speaking of whistleblowers they have covered that topic fairly well.
        And, in the same issue there was a nice rundown of the transformation of the department of war into the department of defense.
        Still, I wouldn’t pay for the thing.

        1. Klassy!

          Oh– the really good thing about the defense budget article is that the author did in so many words state that protesters sitting in hearings of the House Armed Services Committee could make a difference.
          I still had residual anger from the Chavez article to fully appreciate it though.

      2. Bill Clay

        @Lambert (and others following the 787 exploding battery story): you may be interested to read the US Dept. of Labor/OSHA Administrative Law Judge’s Report and Order that describes the 3-alarm fire and management churn at Securaplane, the company to which Boeing outsourced development of the battery/charger assembly.

        Given what the Labor Dept. knew — and notwithstanding their finding that the firing in question was justified, one wonders if the FAA, Boeing (the new post-MD-merger company, not the original Boeing with a long-established reputation for careful engineering), and Securaplane tacitly collaborated to willfully ignore inconvenient facts in order to get a US industrial champion’s product launched sooner.

        See the first several pages of the PDF of the ALJ’s Report and Order.

  11. Susan the other

    Economic Populist. Financial Outlook 2013. What’s with this hack? This exact drivel has been published and republished for a decade. The only thing added here is that Bernanke is walking a zirp tightrope and the bond vigilantes are closing in. What nonsense. Let the bond vigil move to China or Japan or those clever guys at the ECB (the world’s weirdest central bank). Let the brave bond buyers buy some African debt. I couldn’t believe this article was warning us fat, lazy, rich Americans that we were going to have to compete on a level labor field and our lifestyle was gonna crash so we might as well face it. (Even tho’ he says in the preceding paragraph that globalization is a disaster.) The only thing missing from this piece was an ad for gold.

    If we own our own debt we can have the flexibility to grow our way out of this imbalance. MMT.

    1. Nobody

      There are side effects of zirp. The most worrying is the fact that the greedy rich folks (not to mention pension funds) are obsessed with finding a return. If they can’t get it from safe investments like government securities they will turn to markets and gamble. So all this capital, instead of sitting on the sidelines in a nice safe government security, is “forced” to go-a-speculating (on real estate, equities, whatever can provide a return, guaranteed or not, because they just gotta have that higher return). This can lead to warped and unstable markets (bubbles) which increases the financial system’s instability. The author does have some valid points among the dross. The reality is not as simple as MMT aficianados see it. Don’t get me wrong, I think MMT is great, just that a surface understanding makes things appear simpler than they are.

      Economic policy is all about trade-offs and focusing on one effect of a policy while ignoring other effects invariably leads to “unforeseen” problems simply because the blind refuse to open their eyes. On the financial side, we need a cap on wealth and socialized finance so the “greed factor” can be mitigated. On the real side, well, with fossil fuels becoming scarcer and the environmental destruction required to keep supplies of it up, we are largely screwed unless we greatly change our energy use habits (or find another source of high-exergy energy to exploit or adapt to low-exergy energy use which means the end of a lot of our economy as it exists). E.F. Schumacher will be quite relevant before too terribly long. That’s how I see it, YMMV.

  12. Jim Haygood

    From the Times-Titanic:

    A brand new conservative group calling itself Americans for a Strong Defense and financed by anonymous donors is running advertisements urging Democratic senators in five states to vote against Chuck Hagel, President Obama’s nominee to be secretary of defense.

    Groups like this would have been able to operate freely against Mr. Hagel even before Citizens United. But the ruling has served to erase what had been traditional fears among donors that their involvement in the fight of the day would lead to legal trouble or, for those who prefer to stay anonymous, unwanted public exposure.

    “This is the first big cabinet fight since Bolton,” said Michael Goldfarb, a strategist for a conservative group opposed to Mr. Hagel called the Emergency Committee for Israel and a founder of a conservative Web site called The Washington Free Beacon, which is running a steady stream of anti-Hagel news articles.

    http://www.nytimes.com/2013/01/27/us/politics/secret-donors-finance-fight-against-hagel.html?pagewanted=all&_r=0

    Awfully sloppy [and surely deliberate] use of language by the Old Grey Meretrix, repeatedly invoking the word ‘conservative’ to identify what are obviously neocons.

    When front groups for a foreign power hide behind the shield of anonymity, the appropriate legal lever to pry the lid off the cesspool is FARA — the Foreign Agents Registration Act:

    http://www.fara.gov/

    But the sold-out U.S. Justice Department makes no effort to counter open manipulation of the U.S. political system by a hostile foreign power.

    USA: PWNed!

    1. different clue

      In the meantime, people could write/call/email the offices (both Washington and state-specific) of those 5 Democratic Senators to say they support Hagel for SecDef.

  13. The Black Swan

    Beauty in disaster.

    (re)volution

    i have seen the good intentions that pave our
    road to hell.
    stood by its side
    weary, downtrodden
    caught
    between the siren pull of the forest
    and the brimstone path to the abattoir.
    Though I wish to hide
    deep in the belly of the earth
    I can not turn my back
    on the pavers
    the travelers
    the caravans of tired, lonely people.
    I can not be complicit in the slaughter
    and so I drag reluctant feet
    ever onwards
    as black smoke builds on the horizon.

  14. Fíréan

    Re: “Bank of America Foreclosure Reviews” . After posting here, why not make it a book, put everything in and assuming there is enough, publish and be damned, the media will cover it . . . we’ll buy it. While blog entries disappear into the archives, a full publications stays at the forefront.

    I bought your previous book, Econned, and was well worth the cost and the read. Is this not a good time, and subject matter, for a follow up ?

      1. Fíréan

        I trust the author to make the appropriate choices for her own written works and that of a good title, I could not better her on any level. “Bank of America Foreclosure Reviews” is her choice for the blog publication .

      2. Ms G

        How about

        “Domestic Terrorism: How the American Job Creators [names of the CEOs of all the fed and non-fed outfits that originated/sold and who packaged/sold]have Stolen American Homes and Trashed the American Dream.”

      1. different clue

        I thought I had read that Professor “Skip” Gates of Harvard University had been involved with a project to do that very thing, or at least start to.

  15. AbyNormal

    Father of Newtown victim heckled at hearing

    HARTFORD — A false fire alarm, 45-minute waits to get into the Capitol complex, even the heckling of a bereaved parent of a Newtown shooting victim marked Monday’s day-long legislative hearing on gun control.

    “The Second Amendment!” was shouted by several gun enthusiasts in the meeting room as Neil Heslin, holding a photo of his 6-year-old son, Jesse Lewis, asked why Bushmaster assault-style weapons are allowed to be sold in the state.

    ***

    “I don’t believe it’s so complex,” said Mark Mattioli, whose son, James, was among the first-graders slaughtered on Dec.14.
    “We need civility across our nation,” said Mattioli, who appeared with his wife, Cindy, before the legislative panel. “The problem is not gun laws. It’s a lack of civility.”

    http://www.ctpost.com/local/article/Newtown-dad-to-lawmakers-Change-gun-laws-4228992.php

    heart wrenching

  16. ScottS

    My antidote, Sperm whales adopt deformed dolphin:

    “Foraging’s also unlikely, because sperm whales feed on squid 800 metres below the surface, whereas dolphins tend to feed on fish near the surface.”

    The most likely explanation, in his scientific opinion? They’re friends.

    “Really, it seems that, somehow, either one or both parties derive some social benefit, whether it be social play, or just some way to relax and interact with another cetacean.”

    http://www.thestar.com/news/gta/article/1319845–photos-sperm-whales-adopt-deformed-dolphin

  17. Miller-Modiggler

    “In Asia’s trend-setting cities, iPhone fatigue sets in”

    -I wish you would examine the articles a little more carefully before linking them.

    1) The sources listed are highly questionable. There’s Tom Clayton, the western CEO of a Singapore-based “popular regional” social networking site. Click through to Bubble Motion and you see a cookie cutter corporate website. Would you really trust this guy’s opinions on Asian tastes?

    2) Distribution models probably explain the wide disparities between US and the rest of the world in smartphone marketshare. Besides the peculiar 2 year contract subsidy, it’s harder to break into the US market and introduce innovations.

    Yes, there’s alot of sweet gadgetry constantly being introduced nowadays, but I’d rather be in Apple’s position of being able to charge premiums, with the widening income disparities between the haves and have-nots.

  18. Hugh

    The Mirage of the Arab Spring by Seth Jones of RAND is a strange read. He just glibly assumes that the US naturally backs democracy in the area despite long standing US policy of allying with the regions dictators. He then unsurprisingly concludes that we should continue backing friendly dictators in the region. He mentions with no exploration into its causes that approval of the US in the Arab world is abysmally low. All in all a fine example of Washington group think.

    As for the Boeing 787, MBAs can’t design and produce a new airliner? Who knew? With what Boeing has become, it could not have happened to a bunch of more deserving guys.

  19. Gerard Pierce

    The Ecopnomist article was mostly useless, but it did contain one important question:

    “Of course, we will never be finished assigning responsibility for the boom and bust until we figure out why so many investors were so desperate to get those few extra basis points of yield in the first place.”

    The Economist raised the question as something that should be asked, and then made no attempt to come up with even a set of guesses.

    So – does anyone here have a clue?

Comments are closed.