Links 9/4/08

Can’t afford a home? Buy one in Sicily for a single euro BBC

4,500-year-old ice shelf breaks away CNN

Beijing air measures ‘must stay‘ BBC

Google – the evil identity theft company John Hempton

If Sarah were Steve Palin…Mercurius, Larvatus Prodeo

Live-Blogging Palin Andrew Sullivan. His 10:50 PM comment sums it up nicely (gluttons for punishment, see his The Right And Anti-Semitism for more Palin-antics).

Merrill May Fail to Sell Bad Loans to Korea Asset Bloomberg

Where Was the Safe Place for Savings from 1929-1933? Jesse’s Café Américain (hat tip Michael Panzner)

Lehman Brothers: So Popular Nobody Wants It 1440 Wall Street. The rumors of buyer interest are heating up and becoming simultaneously less credible. Mitsubishi UFJ was denied within hours. This is beginning to smell funny….

Private Equity Tumbles in ‘New Establishment’ Andrew Ross Sorkin, New York Times

Antidote du jour:

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  1. Dave Raithel

    Re Sullivan: I mostly dumped him over his defense of the “War on People Who Had Nothing To Do With Blowing Up The Twin Towers”, and his need to be loved by some god, etc., but I took a look and he caught, for the most part, what I caught. Beautiful kids. My mother was only 17. I can relate. Too bad Sarah’s politics are so fucking proto-fascist…

  2. Yves Smith

    Sullivan is most assuredly very smart, provocative, and erratic. I don’t read him often, but the little I’ve seen recently (all in the last week) has been pitch perfect.

  3. dh

    The link to: Where Was the Safe Place for Savings from 1929-1933? Jesse’s Café Américain (hat tip Michael Panzner)

    FREAKED ME OUT!! NOw I have to look at bond behavior in 1929……..oh great!


    Dexia Kommunalbank Deutschland AG, a unit of the world’s largest lender to local governments, canceled a 1 billion-euro ($1.5 billion) sale of covered bonds, three people with knowledge of the transaction said.

    The cancellation is due to “unfavorable market conditions,” according to an e-mailed statement from UniCredit SpA, one of the banks working on the sale. The Berlin-based unit of France’s Dexia SA planned to sell five-year debt, said the people, who declined to be named because the details of the issue are private.

    Sales of the notes, which are backed by loans to public sector institutions or mortgages, have slowed amid the fallout from the credit crisis as investors demand higher rewards to buy the securities. Treasury Secretary Henry Paulson is looking to create a version of the European bond market to help revive the U.S. mortgage-bond market.

    “This is a sign that the market is in a critical condition,” said Ralf Burmeister, head of covered bond and financial research at Landesbank Baden-Wuerttemberg in Stuttgart.

  4. Dave Raithel

    Re “Where was the safe place…?: This is exactly the kind of stuff that provokes an argument between me and my wife about how many bottles of water we should store in the basement and how many guns do we really need? Get my drift? So between shooting strangers breaking into my house to get what they need to live, and telling some rich strangers in New York City (New York City? Get a rope….) they just can’t live off the rest of us anymore (and we’ve already got the guns, and the water, and the propane, and the canned goods….) Well, what’s to choose?

  5. dh

    Some FYI History:

    However, there was a worldwide adverse shift in the credit markets that more than overcame the beneficial impacts of sharply lower interest rates. A constantly increasing number of political and business entities with suspect credit were frozen out of the bond markets and thus faced substantially more difficulty in borrowing money. In November, 1930, several large Italian banks closed.

    On May 7, 1931, the Federal Reserve Bank cut its discount rate to the all time record low of 1 1/2%. This caused a slight flurry in the securities markets, and then the decline resumed. After all, ALL business indices were DOWN.
    Commodity prices were slipping steadily lower. Low interest rates stimulated nothing but savings accounts. These were still paying 4% to 4 1/2% interest, and constituted excellent “investments” under current conditions. However, since the banks were now getting less than this on government bonds and other high grade loans, this interest rate was expected to come down, too.

    High grade bonds were still strong, but the decline in stock prices continued. Very light trading indicated that a drastic lack of buying interest, rather than desperate selling pressure, was dragging prices down.

    Railroad car loadings – which normally ran over one million per week – were 747,732 in the middle of May, bringing railroad activity to a Depression low. Steel production fell sharply to 42% of capacity. Desperate for business, the smaller mills were actively undercutting list prices.

    … holiday sales had been disappointing, and by January, 1932, wholesale and department store sales were declining sharply.

    1 1/2 million railroad workers finally accepted the 10% wage cut. This was far less than the decline in the cost of living, so they were still doing very well. N.Y. City quickly floated $100 million in short term bonds at 6% – the highest interest rate that the city had had to pay since WW I – to cover its budgetary problems. Low interest rates don’t necessarily translate into easier monetary conditions. Additional borrowing was predicted, and the banks provided a $150 million short term credit line.

    April 1932:

    1 1/2 million railroad workers finally accepted the 10% wage cut. This was far less than the decline in the cost of living, so they were still doing very well. N.Y. City quickly floated $100 million in short term bonds at 6% – the highest interest rate that the city had had to pay since WW I – to cover its budgetary problems. Low interest rates don’t necessarily translate into easier monetary conditions. Additional borrowing was predicted, and the banks provided a $150 million short term credit line.

    Auto production rose sharply towards the end of April, but auto registrations were still 50% below 1931 levels and auto and truck exports were practically nil. U.S. exports and imports for the first quarter of 1932 plummeted 20% below the last quarter of 1931 – and 33% below the first quarter of 1931. In April, trade was 36% below April 1931 – less than 14% was accounted for by falling prices. World trade was grinding to a halt.
    U.S. Steel wages were slashed 15% for 200,000 workers as the giant corporation’s losses mounted. Federal salaries were cut 10%. Nevertheless, for these workers – who still had full time jobs – the declining cost of living still easily outstripped their wage cuts.

    Nasty… !!

  6. dh

    One last depression tidbit:

    FDR presented his “mature economy” concepts in a campaign address at the San Francisco Commonwealth Club later in 1932. There was no more room for growth. The frontier is long gone. Capitalism had simply become over productive. Productivity gains were a threat that would just cause greater unemployment (the “automation” myth). The task now was thus not to stimulate further growth, but to manage the economy to more equitably distribute its products.

    Thus, the New Deal wouldn’t “fail” to end the Great Depression and restore economic growth. It would never really try. It’s primary thrust would be to arrange for the equitable distribution of material necessities, and the broad provision of security (“freedom from fear”).

    The Lausanne conferees agreed to cut German reparations from $31.68 billion to just $714 million, payable after 3 years, but contingent upon U.S. granting relief from war debts. The U.S. was owed $7 1/4 billion. Hoover opposed cancellation, and warned the conferees that the U.S. had no intention of canceling the war debts. But it didn’t matter. These debts were clearly not collectible, and almost all payments would soon end.'32.html

  7. Richard Kline

    Just when you thought it was safe to go back in the water . . . !

    This is the perfect visual metaphor for the proposition that perfectly defined and weighted _contextual_ arguments can be wholly undone by discontinuous conditions. Investors may have the problem of ‘sharks in the pool’ sussed, but they’ll come to bloody pieces anyway when the swimming tigers get ’em.

  8. Chris

    A somewhat strange summary of the Commonwealth Club speech I thought.

    Slightly below the paragraph you summarize is this passage which quite well profiles what he was about to do.

    “Every man has a right to life; and this means that he has also a right to make a comfortable living. He may by sloth or crime decline to exercise that right; but it may not be denied him. We have no actual famine or dearth; our industrial and agricultural mechanism can produce enough and to spare. Our government formal and informal, political and economic, owes to every one an avenue to possess himself of a portion of that plenty sufficient for his needs, through his own work.

    Every man has a right to his own property, which means a right to be assured, to the fullest extent attainable, in the safety of his savings. By no other means can men carry the burdens of those parts of life which, in the nature of things, afford no chance of labor; childhood, sickness, old age. In all thought of property, this right is paramount; all other property rights must yield to it. If, in accord with this principle, we must restrict the operations of the speculator, the manipulator, even the financier, I believe we must accept the restriction as needful, not to hamper individualism but to protect it.

    These two requirements must be satisfied, in the main, by the individuals who claim and hold control of the great industrial and financial combinations, which dominate so large a part of our industrial life. They have undertaken to be not businessmen, but princes —— princes of property. I am not prepared to say that the system which produces them is wrong. I am very clear that they must fearlessly and competently assume the responsibility which goes with the power. So many enlightened businessmen know this that the statement would be little more than a platitude, were it not for an added implication.

    This implication is, briefly, that the responsible heads of finance and industry instead of acting each for himself, must work together to achieve the common end. They must, where necessary, sacrifice this or that private advantage; and in reciprocal self—denial must seek a general advantage. It is here that formal government —— political government, if you choose, comes in. Whenever in the pursuit of this objective the lone wolf, the unethical competitor, the reckless promoter, the Ishmael or Insull whose hand is against every man’s, declines to join in achieving an end recognized as being for the public welfare, and threatens to drag the industry back to a state of anarchy, the government may properly be asked to apply restraint. Likewise, should the group ever use its collective power contrary to the public welfare, the government must be swift to enter and protect the public interest.”

    Most of it is quite relevant to today, though times have changed and the world is different, but the matter of public welfare vs private interest will not be denied its place. Especially as it becomes clear how much we the public are expected to provide in welfare for today’s private princes who have treated the republic as their own model of the Titanic.

    A convenient link to the speech can be found here

  9. doc holiday


    Thanks for that! I just skimmed over a few things there, looking for a few connections to general bond activity, but the part you broke out, is worth pondering!

    Is that my DNA that I see there?

  10. Anonymous

    Re: Palin baby

    He seemed to sleep through the whole thing.Especially the loud noises chants etc.
    My wife wondered if this was because he is a Downs baby. Even at that age ours wouldn’t have slept so well

  11. Juan



    I read that as ‘saving capitalism from itself’ through creation of a vertically organized partnering of capital, govt, and labor, i.e. corporatism (which, as I expect you know, took a wide variety of forms and was implemented in quite a few nations during the interwar period, partic post 1928).

    Any opinions re. this time around?

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