Links 10/31/08

Polar warming ’caused by humans’ BBC

Calif. to cut water deliveries to cities, farms AP

Drinking alcohol occasionally when pregnant ‘does no harm’ Times Online.

Euro wines carry dangerous amounts of heavy metals Wine Economics

Sherlock of rock Dalhousie University News

Blame the party, not the campaign James Carville, Financial Times. Comes perilously close to being a post mortem, but worthwhile nevertheless.

Closing the Gates of Hedge Hell Pension Pulse

DC Metro, Other Transit Agencies Could Soon Find Themselves in Default Tax Foundation

Fed Watch: More Easing Expected Tim Duy

Major Tax Incentive For Bank Purchases: IRS Eliminates the Limitation on Banks’ Built-In Losses Post-Purchase Jones Day (hat tip reader Richard). Estimates cost of this little change at $140 billion. Oh, and Treasury doesn’t have the authority to change the tax code, not that that is stopping them.

Wikipedia founder Jimmy Wales expects internet downturn but no ‘bloodbath’ Telegraph

Some Additional Observations on the 2008Q3 Advance GDP Release Menzie Chinn, Econbrowser. Takes a hard look at the GDP release and does not like what he sees.

And look at where we are in Technorati! I am surprised and pleased. Thanks to all of you who link to our articles!

Antidote du jour:

Five-Foot Bat, African Delicacy, Is Out in Force for Halloween Bloomberg

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  1. russell1200

    Hmm, its like one of those: “which one doesn’t fit games”.

    Alcohol while pregnant? Are you trying to hint at something, or are you just in an advice giving mood.

  2. Yves Smith


    More like weird synchronicity. I thought the health warning article was odd on that particular blog. Then I saw the other one, which confirms a pet peeve of mine. I had a college friend, married to a doctor, who would have one glass of wine a week while pregnant, which ironically is what the article says is OK.

    She would usually do it when going out with her husband and/or friends. Quite often, the waiter/waitress would take it upon themselves to harass her, and one place even tried to refuse to serve her! So this is to do my little bit to forestall future hectoring of responsible pregnant drinkers. Yes, an odd sort of public service announcement.

  3. Independent Accountant

    I was aware of the Treasury supposedly suspending the “consolidated return change of ownership” rules for banks. Robert Willens, a top NY tax analyst has commented on it. I decline to post on this so far because I don’t think the Treasury can do this. I’m following the situation.

  4. Anonymous

    Yves, your idol Roubini was on Bloomberg TV basically saying that the world is not ending. He says we will have a longer- and deeper-than usual recession that will be behind us 2 yrs from now. It will be painful but he plainly says “we are not going to have a great depression”.

  5. Don

    “Jim Beck, general manager of the Kern County Water Agency, noted that fewer plantings would yield fewer crops and a decrease in the number of farm hands hired.”

    This is a huge story. Thanks for flagging it. I’m from the Central Valley, and this problem has been coming for some time. What will the trade-off be between Agribusiness and Cities concerning water?

    Also, the Central Valley is very GOP. This could effect politics in California.

    In any case, the Central Valley’s farming production is a very important issue. Danger ahead.

    Don the libertarian Democrat

  6. Yves Smith

    Anon of 10:6 Am,

    Thanks. Roubini has been waffling of late. After the mid-October measures, he said the risk of a systemic meltdown was averted and we’d just have a really bad recession, then just before the next meltdown, he went on what a reader called Defcon One, about as alarmed as he has ever been, and then backed off again. Wonder why the shifting back and forth (or maybe, since the latest drops down happened around the time of his hyper alert, he decided he’d better tone it down a tad?).

    Of course, we were having a run on emerging market economies and the Fed and IMF did implement new programs in the last couple of days….

  7. doc holiday

    Roubini is confused, because of Halloween and the excitement of seeing many of his old friends come back to life after having been shut in for so long.

    There are other theories as well…

  8. Anonymous

    Yves, You deserve to be even higher. This is the best blog I’ve found to follow the crisis.

    Even Roubini must realize all this helicopter money will have it’s day.

  9. Anonymous

    I have an explanation for why he is waffling: because he is full of crap and always has been, and because his primary interest is in marketing himself on the basis of "I told you so".

    If you have a million monkeys making predictions about what will happen in the future, one will say the world is going to end. Then when things get scary everyone will think that monkey was a genius. But soon it will become apparent that he was a monkey. Elaine Garzarelli was the monkey of 1987. Roubini is trying to avoid for as long as possible being revealed as the monkey of 2008. He is counting on the fact that in a few months he will be able to say "I told you so" by pointing to one version of his predictions, while the other version will be forgotten.

    There is an anecdote about a guy who put out an investment newsletter. I don't remember the specifics but say he sent out 100,000 free copies with a prediction about which way the market would go, and 100,000 copies with the opposite prediction. A month goes by and one of his two initial batches is proven correct. He drops the other batch from his mailing list, divides the remaining people into two piles, and sends half of them one prediction and half the opposite. You see where this goes. After a few iterations, some subset of people somewhere have seen a series of 100% accurate predictions and they conclude the con artist is a genius.

    That's Roubini now. Relying on the fact that 3 months from now his incorrect predictions will be forgotten or that he can continue to cover for them by saying give it more time or that he can point to enough hedging words in his language: "I never said the S&P WOULD go to 600, I said it COULD, and it still might (or might not)". He will be especially fortunate if there is more bad news because negative predictions will stick in people's memories right now better than others.

    He's a charlatan.

  10. Anonymous

    BTW, shouldn’t the all-knowing, all-seeing Roubini have taken into account that the Fed and IMF would not sit around doing nothing? If he read your blog he’d know they were contemplating something other than inaction!

  11. russell1200

    Not sure where to stick this one, but it goes along with a number of earlier discussions on other threads here.

    I hope these links work. You can find them easy enough by googling RDU airport interest rate swaps if they don’t.

    My local airport’s before and after on an interest rate swap with Lehman. Not a meltdown because the swaps were underwater, but an interesting illustration of the situation visa vi the interest rate swap market versus the default swap market.

    This same airport got hammered by the auction rate bond implosion. They didn’t mention it, but I suspect their 2004 hedging didn’t work very well (basis risk).

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