Links 11/6/08

Climate pushing lemmings to cliff BBC

Paddy Power offers odds of 4-1 that God exists Telegraph

The Treatment of Bush Has Been a Disgrace: What must our enemies be thinking? Jeffrey Scott Shapiro, Wall Street Journal. This is the biggest piece of crap I have seen in a very very long time. This is a man who, among many other things, sanctioned TORTURE, and someone is upset that is being “disrespected” as they say in some circles? The article also has the temerity to draw analogies to Harry Truman, a President who took a lot of criticism, said, “If you can’t take the heat, stay out of the kitchen.”

WSJ Doesn’t Like President Obama’s Agenda Dean Baker. Am I the only one bothered by the fact that everyone is calling him President Obama, rather than President Elect Obama? Guess people really do wish Bush were out now…

Oil ‘to shoot back through $100’ Guardian

VIX Slips Below 50 Barry Ritholtz

Credit Card Bond Sales at Zero, First Time Since 1993 Bloomberg

Main Street Recession Watch: ADP Report on Employment Menzie Chinn, Econbrowser

Policy tribes need to show modesty and restraint John Dizard, Financial Times. A very good piece, including a short but useful discussion of why halting foreclosures isn’t such a hot idea.

His Job at Bear Gone, Mr. Fox Chose Suicide Wall Street Journal For every story like this, there will probably be lots that don’t get covered, often because the next of kin successfully keep the press away, but also a lot of suicides are made to look like accidents.

What Happens when Countries Go Bankrupt? Der Spiegel (hat tip reader Vijay) A must read.

Antidote du jour:

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  1. Richard Kline

    Fido: “It’s a dog’s life alright, but it beats the pants off cold call phone sales; try ’em both if yah don’t buleeve me.”

  2. Richard Kline

    Thoughts on the Der Speigel article:

    Hungary, Ukraine, California: countries that borrow big while the sun shines rather than tax to scale end up sucking vacuum in the dark when the cycle runs round.

    If I read it right, Ukraine borrowed in excess of $60B in 2007. There are only two words for that, ‘cra’ and ‘zy.’ Economically, they aren’t even a hole in the ground, their a mile deep mineshaft filled with toxic wastewater. I like the Ukrainians, but their biggest export for the next generationis likely to be people. Too sad. —And that’s if the _don’t_ get themselves a civil war over that time, a nonzero possibility.

    And speaking of ugly dissolutions, I can’t come up with any good scenario for Pakistan. The complete collapse of this country has been a concern of mine for a long time. The issue of their nuclear arms is, really, a minor one compared to the scale of human misery which this would involve should it occur. Someone tell me how this ends; I can’t put the pieces together to get a good outcome. No IMF plan will be more than a candy bar on the raft of the Medusa.

  3. Anonymous

    Why is this country in such a mess? It is because, for
    a thoughtful analysis of current real world problems,
    we must rely on blogs like Naked Capitalism, and
    translations of excellent articles such as the Der Spiegel piece. As Brad DeLong pines, “Why oh why can’t we have a better press corps?”

  4. River

    Here is a link to a MSNBC/YouTube video of Peter Schiff discussing why Obama nor McCain were good choices for president.

    The conversation, near the end, tends to ‘why gold is better to hold than fiat currencies’.

    Yves, I am not promoting the blogs of others. Your blog is wonderful, thanks for providing a space for discourse that is not extreme left or right.

    Peter Schiff on Squawk Box: Economic Impact Of Obama Victory…

  5. River

    Great article by Der Speigel…

    Pakistan is being held together by a very powerfull military and the ISI. A military dictator would probably return to power if a collapse of the economy/government occurs in Pakistan. We should not forget that the ISI, with the help of CIA funding and weapons, created the Taliban and supported it…with significant help from the Saudi Princes that bankrolled the madrassas. The madrassas ensure a continuing supply of recruits for the Muslim fundamentalist cause. Since every country in the world seems to have a finger in the pie of Pakistan I see no solution for the people caught in the malestrom to come.

    The people of Hungary and the Ukraine seem to have been caught up in consumerist pursuit. How clever must one be to finance a home in a foreign currency? In addition, these countries and Argentina have endless political struggles, with accompanying subterfuge, that is detremental to creating strong economies.

    No country in the world is immune to the economic melt downs that are coming and governments will fall. How much of the problems of the Ukraine and Georgia can be attributed to the ‘colored revolutions’ that were fostered by the US? How much of the strife in Pakistan is being caused by US military intervention in that country?

    Someday the rest of the world will grow weary of US foreign policy.

  6. Anonymous

    The world is already weary of the US foreign policy because they know that we can no longer afford to finance the whole world. As much as we would like to we can no longer try to feed all the hungry house all the homeless and save all of those stuck in a dictator type life. Even though we try to do good it is not always seen as such.

  7. River

    Anon at 8:53 AM…

    ‘Even though we try to do good it is not always seen as such.’

    Perhaps you could point out some instances where ‘we have tried to do good’?

  8. Matt Dubuque

    Re: the “When Countries Go Bankrupt” article, which was quite good, I have stated over the last few months that this catastrophe will directly cause TENS of thousands of excess deaths worldwide over the next ten years.

    This is not in dispute among competent epidemiologists.

    Come February, it is highly likely I will have to revise that figure SUBSTANTIALLY upwards.

    Matt Dubuque

  9. fajensen

    @Richard Kline:

    Ukraine has a very significant arms industry and agriculture. Guns and Food – both will see much demand in the next decade or two.

    All the Ukrainians have to do is to get the funds from IMF, default, make friends with Putin and they are set for the future.

  10. SlimCarlos

    From the Der Spiegel article (slightly revised…):

    “The Americans have always been considered shopaholics. Hundreds of thousands bought themselves big cars and went on shopping sprees in the chic boutiques on 5th Aevenue in NYC — all on credit. The real estate market boomed. But that practice has taken its toll. It was primarily this dependency on other countries that has fueled the crisis in America. Ironically, Washington was once seen as a role model for other countries. But instead of structural reforms, the Americans kept growing their national debt.”

  11. moopheus

    “The Americans have always been considered shopaholics. Hundreds of thousands bought themselves big cars and went on shopping sprees in the chic boutiques on 5th Aevenue in NYC — all on credit.”

    Indeed–the only difference is that our debts are mostly in dollars. The Hungarians have to pay back in other countries’ currencies, which they don’t have.

    Thanks for that link to the Dizard article. I believe that trying to “stabilize the housing market” is actually counterproductive and will only add to the cost and misery of the eventual outcome. Just another reason to think so.

  12. Uncle Billy, Canis Desidiosus

    BBC, thank you once again: “Subnivean”

    “This results in a less stable subnivean space (the space between the ground and the snow layer above)”

    We too live in the subnivean space between earth and the snow job above.

    Now, why do you have a photo of my dog on your blog?

  13. SlimCarlos

    >> Indeed–the only difference is that our debts are mostly in dollars. The Hungarians have to pay back in other countries' currencies, which they don't have.

    And Americans must continue to convince people to lend them money, ad infinitum. As the editor of recently said: "Why should China help the US issue debt without limit in the belief that the national credit of the US can expand without limit?"

    As a wise man once said: if something cannot last forever, it will one day stop.

  14. doc holiday

    Is there a difference between lap dogs and mop dogs? This could be a lengthy dissertation on dog rights, but I just can’t get motivated and obviously, as much as denial feels comfortable, one of the very first wake up calls for LHC syndrome is to be lazy … oh crap, I thought the odds were against me getting that!

  15. Uncle Billy, Lap Dog

    The large hadron collider makes me feel lazy too. Or do you mean Bloom’s Syndrome? Tphoo Tphoo Tphoo.

    In Hebrew, Sh’itzu means “they should go out,” as in “lazy dogs should get out more often.”

  16. doc holiday

    Ok, I’ll bite.

    That dog don’t hunt — and with that in mind, this mop-like visual metaphor reminded me of this here horror story:

    In the early years of the 20th century, Hans Spemann, an embryologist at Freiburg University in Germany, performed microsurgical manipulations which resulted in the duplication of the anterior structures of salamander embryos. Spemann used 2-cell-stage embryos; that is, fertilized eggs which had just undergone their first cell division. He used tweezers to tie strands of his baby daughter’s hair around the embryos, thus constricting them without separating the two cells. In many cases, the constriction resulted in a single embryo with a strange “belly piece” attached to it. In some cases, constriction resulted in the development of twin embryos. Both embryos, although smaller than normal, were otherwise normal. In a few cases, the result was an embryo with two heads, the behaviour of which he ponders in this passage….

    We may have inherited our brain from an ancient worm

    Off topic… not a chance! Uncle billy, WTF are you doing here?

  17. Uncle Billy, Gadfly

    Doc: trying to escape from death by a thousand numbing tropes on CR. Plus I want to hang out long enough to find out if Yves has a relationship with Council on Foreign Relations, Pete Petropoulos Institute, or Schwartz’s Open Society Institute (or any council, institute, or think tank at all).

  18. doc holiday


    That might be a long wait!

    I’m off on to a post on 3 year treasuries. I may have to actually go do a few things to do … how depressing – but perhaps we can find a way to prod her on this thing you speak of?

  19. market folly

    didn’t see a contact form anywhere so i’ll just put this here in hopes you all see it.

    Just wondered if you would be interested in a link exchange between yourself and my blog,

    Some of your articles have been showing up on the wiki-invest wire on my site and it looks like some of mine have been showing up under your posts here as well.

    Would love to do a link exchange with you guys if you’re interested. My blog covers market commentary, hedge fund tracking, and some economic data occasionally. Feel free to leave a comment on my blog ( to get in touch with me or e-mail me: marketfolly [at] gmail [dot] com

    Thanks and keep up the great work!

  20. bg

    re market crash suicide.

    I don’t have a link to share, but read somewhere that the link between suicide and the the 1929 market crash was an urban legend (which if I am correct means that it is presumed true due to repetition). There was someone who did a study of suicides in Manhattan during the 1920’s.

    You can argue that crash suicides will be underreported, but I think you can equally argue that non crash suicides are equally underreported.

    Suicide, it is believed now, is less about trauma and more about long term/chronic depression.

    That being said, I do not believe that trauma is good.

  21. Anonymous

    Some people like horror movies. I love your blog :) but aside of jokes this is a bit scarry stuff when you think about the social, political and other implications. It is one think to sit and read the FT and quite another to sit in Budapest and hear stories how your friends mortgage is in Swiss francs and by the Hungarian currency s recent drop their loan suddenly increased dramaticaly. I was told that banks did not give mortgages in the local currency or the monthly payments would have been 60-80 percent larger if the loan was in forints.

  22. Jmd

    Hmmm, the U.S. trying to do the right thing and not getting credit for it? Let me count the ways; the op-ed in the Wsj was a bit soppy but I agree in principle. Guantanamo has nothing to do with it. Yves, would you want most [any] of those guys living next door to you in your Park Avenue [or equivalent] apartment? Doubt it. Wouldn’t even want them down the road. If you read to the end the guy was a former intern somewhere, probably in his 20s. I don’t disagree with most of his points.

    Really, globalization is not all that it is cracked up to be. Self-sufficient countries will be much better off in the coming rout. At least Iceland can live off cod…as it did for millenia before the early 21st century. Can we say the same for most of the world, which has been so busy producing for export? It’s a terrible situation.

  23. BossPlaya

    There is absolutely nothing wrong with torture when used in the interest of your country. When dealing with terrorists, torture is fine.

  24. Anonymous

    And how do you know someone is a terrorist? The US has hardly any one who speaks the relevant languages. After 9/11, they went to mosques and asked for help, and found just about everyone named as a terrorist was a victim of a personal grudge. Rounding up innocents without proper procedures does wonders for our image with Muslims who might otherwise sit on the sidelines. Start torturing them and you radicalize the neutrals. In Palestine ten years ago, international surveys found that over 70% of the people were opposed to suicide bombers, The last survey I saw found that that number dropped to 20%. Oppression and torture are the best recruiting tools possible for terrorists.

    Torture also means we encourage torture of our troops and anyone who might be accused of being a US spy. Oh, but you don’t care about our troops, do you?

    And torture has repeatedly been shown to produce completely unreliable information in interrogations. So what is the point, then? Sadism?

    And as for Gitmo. you are seriously trying to defend it? It still exist only because the Bushies are unable to admit that it was an abject failure. Many of the people there were not terrorists (the UK has protested the ones held), and those that arguably were were very low level guys, not worthy of the expense and cost to US reputation of handling them outside any recognized international procedure.

  25. Stewart

    re market crash suicide.

    I don’t have a link to share, but read somewhere that the link between suicide and the the 1929 market crash was an urban legend (which if I am correct means that it is presumed true due to repetition). There was someone who did a study of suicides in Manhattan during the 1920’s.


    There may be a better study elsewhere, but Galbraith includes a table in his book The Great Crash to deunk this myth on page 127. Here it is in full:

    Number of suicides per 100,000 of Population 1925-1934

    Year For Registration Area* For New York City
    1925 12.1 14.4
    1926 12.8 13.7
    1927 13.3 15.7
    1928 13.6 15.7
    1929 14 17
    1930 15.7 18.7
    1931 16.8 19.7
    1932 17.4 21.3
    1933 15.9 18.5
    1934 14.9 17

    “The Registration Area is the part of the country – most of it – wherein causes of death are duly reported. Data are from Vital Statistics: Special Reports, 1-45, 1935 (Washington: Department of Commerce, Bureau of the Census, 1937).”

    I’ve previewed this a few times and can’t quite get the formatting straight, apologies.

    Incidentally, if someone could recommend a good book on the economics of the Great Depression I’d appreciate it.

  26. Anonymous

    In regards to the earlier comments on Pakistan. The word on the ground over their is after the Taliban having received the cultural hospitality of the Phastuns. Have now systematically started killing off the tribal elders and taking their place, forced marriages to important families and imposing their strict law upon the region. Their efforts to utilize the youth in the region to cement a generational shift in ideology to their doctrine has also succeed . All their modes of operation “public in all cases” torture, rape of both sexes, executions make them a force unchallenged. In fact they are Pakistan’s military/intelligence trump card against India as Afghanistan is their buffer zone/DMZ. With that as the case Pakistan is combat ineffective against them and efforts to leverage Pakistan into Heavy operations from their side will further destabilize their country position. In fact Pakistan’s Armed forces use large massed formations doctrine aka WWII style warfare, which is useless against Guerrilla warfare. The terrain in this region has successfully repelled all occupiers back to Alexander the Great to the British. With little or no heavy assets to use against the occupiers. The jungles of Vietnam are a playground in every comparison and would require every town, village and ridge top be swept by infantry just to clear the Afghanistan side then you would have to invade the Pashtun side of the boarder and take on the hole population. My greatest fear is this is a more of a anti gang war than political/idealogical war. Look at the parallels between the central American gangs that got their start after moving to America in the 70s/80s as refuges only to form street gangs for protection and end up in prison then be expelled back to Guatemala to gain strength and return to America more power full than ever. The taliban has no real regional roots other than disenchanted idealogical misfits that have moved around from one host another till they landed in a forgotten land and set up house. They have now forcefully integrated them selves into a tribal dichotomy that does not suffer out side influence or pressure. This could end up as another Korea DMZ scenario.


  27. matt Dubuque

    One thing the Der Spiegel article did NOT mention w/respect to junk sovereigns is that the “emerging” sovereigns will have to roll over 240 billion of debt within the next 15 months.

    That means they will need to pay MUCH higher interest rates to place all that debt.

    The Fed will NOT buy it.

    Stay away from gold.

    Matt Dubuque

  28. Anonymous


    I apologize if you’ve mentioned an alternative to Gold, but what would you suggest? Since you seem to be so turned off by Gold…

  29. Matt Dubuque

    Hello, I have mentioned alternatives to gold on several occasions here.

    Gold is a hedge against inflation. I don’t think you can legitimately claim that we are facing an inflationary environment, what with massive debt deflation, a soaring cost of credit and a worldwide COLLAPSE in consumer demand, coupled with many other factors. I could list 12 other factors every bit as decisive in this forecast.

    Gold CANNOT be both a hedge against inflation and deflation at the same time, despite what the snake oil salesmen will try to tell you.

    In a deflationary environment, ESPECIALLY one in which we face a dangerous risk of a deflationary BURST, the highest quality bonds are the safest hedge.

    EVERYONE is desperate for a RELIABLE cash flow.

    Note the decisive rally in Treasuries. That’s where the smart money is going. German bonds. Japanese bonds if you can get them. US government bonds, etc.

    Matt Dubuque

  30. Yves Smith


    I told you not to give investment advice, particularly when you do not know what you are talking about. Treasuries are in a massive bubble right now due to massive purchases of the dollar to unwind dollar based borrowings and the technical operation of the Fed’s new facilities.

    Second, you are clueless about gold. Too many people buy it for the wrong reasons, and it is a story of value rather than an investment per se, but if you are going to diss it, do so in an informed fashion. What you have written is utter rubbish.

    Any examination of history will prove you wrong. Gold is not an inflation hedge. You buy gold because you think the markets will remonetise the metal as a consequence of a loss of faith in fiat currencies.

    Some look at gold as a sign of inflation, some as an inflation hedge. The reality is that it is neither, except perhaps in the extreme long term. There was positive inflation from 1980 to 2000 yet gold fell from 800 to 250. As an inflation hedge, it would have been hard to pick a worse one! And if gold is rising because of inflation now, why was it falling for 20 years when there clearly was inflation all the way?

    Historically, gold does well hyperinflation and deflationary. Gold does poorly under more normal conditions, and gets hammered in disinflationary conditions, a falling but positive rate of inflation.

    Gold rose in the great depression. Gold is very consistent with deflationary theory about the destruction of credit. Gold, unlike fiat, is no one else’s liability. Money with that attribute (and gold is money), should rise under these conditions.

  31. Anonymous

    Dudly, the Central American gangs you refer to had their origins not only in the poverty of the region but many decades of political, military, monetary aid to dictatorial, very violently anti-Communist regimes and their torture-loving paramilitary appendages.

    Depending upon country (and often ethnicity) popular resistance and associated guerrilla orgs became more or less matter of necessity.

    Stand-downs and disbanding during the 1990s left veterans of both sides with little, and a few turned to trafficking.

  32. Yves Smith


    Galbraith may happen to be correct, but figures like that are rubbish. Suicides are rarely reported as such. so any official stats are meaningless.

    Good studies I have seen on suicides (on the issue of copycat suicides, that is, whether news stories of suicides encouraged others to kill themselves) looked at attempted suicides (note those are seldom reported accurately either), death by accidents, and reported suicides. It found a persistent, pronounced spike in people demographically similar to the person who died in the reporting area (the study focused only on suicides well reported in local media in their reporting region) dying of accident + suicide in the two weeks following. And the response was not overnight, the increase started a few days out and peaked (if I recall right) around day 10. They sampled some of the accidents and they looked indeed as if many were probable suicides (eg, driving into abutments at high rates of speed on roads the driver knew well when there was no other traffic and no alcohol in the driver’s system).

    Looking at suicides alone showed no clear cut pattern.

  33. Richard Kline

    So fajensen, it would be much in Ukraine’s interest to accomplish a rapprochement with Russia; this is not going to happen, however. The Urkainian speakers in the western 60% of the country are extremely alienated from the Russians, and their greivences have real substance, both historically and currently. They are not going to look at their position in a realpolitikal perspective, and chose well; that is their choice, but it comes with extreme costs. The hope that ‘the US or the EU will back them’ is dangerous and almost certainly misconceived.

    Ukrainian agriculture dependes upon fertlizer, farm equipment, and transport, all of which require capital, of which they will have little if their currency goes *poof*. To function as an agricultural exporter, except under large-scale barter conditions, one needs a well-geared financial system, including futures. Ukraine just destroyed their incipient market economy, and will have to rebuild very nearly from scratch. You are right to point out that I overlooked the substantial Ukrainian arms industry in my comment. Of course, the great bulk of it is located in the eastern and Russian speaking part of the country . . . .

    So Yves, I completely agree with your methodological reading regarding reporting suicide. The studies which count don’t just look at ‘confirmed suicides’ but at related actions and outcomes with similarity. Epidemologists have gotten quite saavy about these issues; their work is more enjoyable to peruse than that of many statistically based researchers in consequence, to me.

    BossPlaya, you know nothing regarding what you are saying. You get your ideas from a bigoted television program as far as one could tell. Leaving the moral issues aside, torture is functionally ineffectual in doing intelligence work. The Gestapo in France and elsewhere, and the French in Algeria used torture institutionally, and with professional expertise. The results of their work were subsequently analyzed, and found to be counterproductive: the tortured told the tortures whatever they wanted to hear, and in consequence good intel was diluted and polluted with fabulation and desired lies. Good intel involves cultivating sources and flipping detainees. The Russians understand this, for example, from their extensive experience of institutionalized torture: they got better results with velvet and money then electrodes and truncheons.

    What torture does is force limited compliance through fear from subject populations: that is its _real_ goal. Conquerors, occupiers, and colonialists force a measure of compliance from unarmed and helpless populations by pain, maiming and death. So what you advocate, though you do not own it, is that we torture wogs to force compliance with our rule. Functionally, that has limited utility. In the long run, not so much. Morally of course, that is a despicable policy objective, and should and will be resisted by all who have power to do so, whether they were friends or enemies beforehand to any who apply such policy.

    I am fully content to hand over to our real, putative, or situational enemies any of our own number who advocate torture, immediately, to explain the morality and utility of their program in person. We don’t need them, or the mental cancer they advocate.

  34. Dave Raithel

    RE Paddy: Good God Almighty, everybody knows the sure bet is that Satan will eternally torment anyone who believes there is a god …

  35. Dave Raithel

    RE Policy Tribes: I am down with dissing the “political class” and their “over educated” (too much education? reminds me of something Reagan said, but I digress …) bell boys, in general, but speaking as a barbarian I found this of interest:

    “…the next administration would do better to let house prices decline to truly affordable levels and let people with unstable incomes or lives go back to renting.”

    Renting from whom? is the matter (and I don’t concur in conflating “unstable incomes” with “unstable lives”). I am awestruck how complexified the property relations have become (those going-bankrupt servicers and all) such that things cannot be fixed – unless one gets clear the interests for which the Tribes throw down…

  36. Anonymous

    @Mr Kline3:12AM

    As ex-military I fully support your statements with torture. I have summited my self to it, (prolonged positions, sleep deprivation, damage to body tissue and water boarding) in training and from a personal level understand the mental vagary’s this process achieves. This position on Intel gathering only serves to placate hard ass types. That feel the need to seek revenge and fill out reports to satisfy their masters on time. Its a eye for eye -ology that existed in medieval times and has no place in this in the now.

    Feel for Thomlison

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