Links Inauguration Day

Ancient Persians ‘gassed Romans’ BBC

No More Pardons? Hilzoy. I think it important to give departing President Bush the little credit he is due. He is to be commended for not engaging in a rash of last-minute pardons.

Cheney Injures Back While Moving New York Times. A small bit of justice.

Treasury Demands Banks With TARP Funds Report Lending Activity Bloomberg

Fed Grapples With a New Risk Reality Wall Street Journal. The Journal takes note of the Fed’s crappy balance sheet.

Fiat Nearing a Deal for Chrysler Stake New York Times

Insolvent Banks: Why a Debt-for-Equity Swap Won’t Work Felix Salmon

Weird Housing Tales, Part 15 Boom2Bust. Weirder than usual, trust me.

GM Using Bail Out Money to Invest in Brazil! The Economic Populist

U.S. stimulus not enough, TARP bailout misused: Soros Reuters

Zero returns on pensions and endowments Times Online

Biblical debt jubilee may be the only answer Ambrose Evans-Pritchard. First Niall Ferguson, now Evans-Pritchard?

The Choice of Herakles The Epicurean Dealmaker. Sounds a bit Stoic, if you ask me.

US and UK on brink of debt disaster The Economic Times (hat tip Jesse). One of our pet topics: that debt to GDP has reached unsustainable levels (and that is before you factor in hedonic adjustments to US GDP, which started in 1987) and the implications.

Yes, I should probably say something about the desperate terms at which the New York Times is raising $250 million from Carlos Slm, or the horrific losses at RBS (which not long ago was widely regarded as a savvy acquirer). But they strike me as speaking for themselves.

Antidote du jour (the photo from the Pasadena Doo Dah parade, courtesy reader Carlos; video hat tip reader Marshall):

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  1. Glen

    From Planet Wall St;

    “I think after an initial sell off as the futures remain negative all night and into the open we shall see a major market reversal around 11:00 A.M. Eastern Time. I do not put it past the Treasury to pump the markets with more buying of stock tomorrow going into mid day.
    It’s just my take on tomorrow and if the pump is primed tomorrow from Treasury it could bring in more buying and short covering could form a huge reversal where none was expected.
    I see this as a possible strong outcome tomorrow. Why? It has everything to do with establishing a positive state of mind from day one. Expect the totally unexpected as the talking heads on CNBC go crazy giddy with the buying strength.
    The BULL will run tomorrow and people will be astounded and surprised. It will be jaw dropping theatrical history making stuff for the history books.
    May the God’s of Luck shine bright tomorrow.

    Not much into conspiracy theories but is a logical proposition. Let’s see if it comes off.

  2. Tim

    Today’s headline: “Zero return on pensions and endowments.”

    Tomorrow’s headline: “Zero return of pensions and endowments.”

  3. 212213

    ambrose pritchard: “In the end, the only way out of all this global debt may prove to be a Biblical debt Jubilee. Creditors are not going to like that.”

    If countries start doing that, it could help the US, which has a little thing called the Constitution that prevents the government from seizing/destroying property without FMV compensation. Of course, this doesn’t protect against inflation or bankruptcy, but it’s better than the protection many countries offer.

  4. Woland

    One feature of the jubilee is the return of property to the original owners, or their heirs. This could work out well for native americans.

  5. Bob_in_MA

    “Dick Cheney pulled a muscle in his back while moving boxes and will be in a wheelchair for Tuesday’s inauguration ceremony.”

    Kind of give it the feel of Dr. Strangelove, won’t it? I hope he can keep the sneer on his face for the entire ceremony.

  6. Chris

    Nominalizing Constant GDP numbers.

    I’m sure you’ll forgive this, and hope you do, but using constant gdp (nominal dollars or any other dollars) over the longer term is very problematic to the point of being named absolute incompetence.

    Consider how GDP is produced. It is the net of sales of goods and services in the economy. Compare how those goods and services which are sold have changed, from bank services and personal ones like nail trimmers to the steel industry, space program and defense industries. In the 70’s the US was pretty much self sufficient except for fuel supplies. There were industries and farmers producing things to be sold and consumed. There was a composition of the employed work-force which reflected that activity and tax income for a more or less balanced government budget. All these features have dramatically gone down the tubes while GDP has increased in nominal constant or any other terms. What has increased with GDP is financial and speculative activity, as approximate self-sufficiency has been undermined by outsourcing and shifting the composition and function of employment.

    Considering nominal or constant or adjusted GDP numbers to represent growth is to consider the growth of diseased tissue to be beneficial to the sickened body. No wonder US health care lags constantly so far behind other nominally advanced countries in the breadth and depth of services provided, while the nominal dollar share of health care transactions in the GDP numbers have gone through the roof.

    Such considerations might be thought to show an absolute confusion among the ranks of professionals who do not even seem to consider that part of any investigation is to determine what is the same and what different and what is like and unlike. Anyone who thinks the US economy has grown over the past 30 to 40 years, and considers nominal, constant or adjusted GDP to reflect such growth should probably be considered to be in constant need of adjustment themselves, nominally speaking of course. To accept the garbage put out as data series as input for calculation and analysis without considering what the data represents is just to repackage garbage. This is pretty much the same kind of transaction as has come to be represented by the growth of GDP. We sell packaging to each other. Throw it away and reprocess the waste into packaging. It’s the real thing, in nominal terms, that is. Coke does things to the system too, nominally and constantly.

    I’m sure this could be put less forcefully, but I think that anyone who can think about the issue even in a dispassionately forceful way, would have to agree that such a statement of the problem is more truthful than the view of the economy represented by those who repackage or manipulate nominal constant or adjusted GDP numbers.

    Self-sufficiency in this context does not mean abandoning trade. It is outrageous that the US can no longer feed itself, because its agriculture has been corporatized, and shamelessly feels free to take the food out of the mouths of others world wide. It is outrageous that the US does not produce the equipment which could enable others to solve problems like sanitation water, food supply, housing and other construction, on their own which reflect the degradation of our lives and the environment. Someone said, You can give a hungry man a fish, or you can show him how to use a line and hook. We should be providing lines and hooks not taking other peoples’ fish. But they should be really lines and hooks, and not just invoices for non-existent transactions that have made off with the wealth of the country in the name of growth because people are no longer able to understand what they think they are looking at.

    Thank you for your patience, and sympathy with the concerns which motivate this, and probably other, statements of the case against those who constantly insist on using such numbers in a nominally uncritical way. Hopefully they will understand just what a vulgar kind of activity it is to pass on the digested output of a process and try to pass it off as health-some food.

  7. curious

    jubilee: Your accrued salary since your last paycheck vaporizes, your bank CD disappears, your MM mutual-fund balance goes to zero as all of the fund’s holdings are zeroed, the guaranteed investment contract in your retirement plan is gone.

    Yep, the average guy can hardly wait for that jubilee. It’d be just so great to live in a medieval agrarian society again, after all. With luck we could evolve a healthy feudalism!

  8. Independent Accountant

    I read the debt jubilee article. Anyone who thinks Uncle Sam’s paper is the “riskless” asset is crazy. 5,000 years of history say sovereign lending is a loser’s game. The sovereign either repudiates the debt, or inflates it out of existence. The concept of the “riskless” asset is part of the Capital Asset Pricing Model (CAPM). The concept is nonsense. There is a “least risky asset”. It’s called gold. Got gold? Get more. Got bonds? You fool!

  9. Keenan

    RE: Jubilee

    Since cybermoney, bank credit, etc. are fundamentally debt, the only remaining “money” would be the paper currency bills themselves. Makes a good case for the mattress bank and of course unencumbered assets of an historically monetary character.

  10. lineup32

    “If they are successful…the deflationary pressures will be replaced by the specter of inflation and the authorities will have to drain the excess money from the economy almost as quickly as they pumped it in. Of the two operations the second one is going to be, politically, even more difficult than the first,” he said.

    Impossible for the gov’t to pull off any such financial hip hop moves. The reality will be a economy driven by gov’t spending along with commerical credit creation. It woun’t take long for special interest to become to big to fail.

  11. lineup32

    “From the 1970s onward, however, the economy has undergone two profound structural shifts. First, the economy as a whole has become much more indebted. Output rose eight times between 1975 and 2007. But the total volume of debt rose a staggering 20 times, more than twice as fast. The total debt-to-GDP ratio surged from 155 percent to 355 percent.”

    The bulk housing,auto,CC debt! reflects the urban growth model as the rural landscape has become infected with 3 bedroom 2 bath homes,shopping centers and long distance work commute.

  12. Waldo

    It was a beautiful inauguration day. The last speaker (black reverend) did a fantastic job.

    This is a new beginning!

    Black Knight

    Forged in the medieval history of the Roman.
    This fierce soldier of steal; courageous and glistening
    Conquered great civilizations of the aboriginal human.
    With rank cavalry and horseman teaming
    Marcus Aurelius led his historic army
    To the Germanic forest – dark, forbidden, dewy.

    A battle of republic genius to conquer a lesser foe.
    Through ramparts designed to snarl the king
    Beasts of cunning fare to Roman death did sow.
    Darkness in daylight the forest did bring.
    This chapter in German history of warring might
    Created a legend – the beloved black knight!

    The German ameliorated to work, rank, and wife.
    Created the gentleman they bring to us today
    Beauty clothed by engineering and strong life.
    With powerful production and economic might to display.
    This character in literature passed over by America’s scholar
    The intellectual giant von Goethe – a man of power!

    A symbol seen in the second war of hell.
    Again brought by greed, confusion, and a tyrant.
    The war of today ringing, ringing the torrid bell.
    Harks back to America’s civil war of the African lament.
    A cycle of childish needs and evil firmament
    Realized in men of greed and forcing human enslavement.

    From legislated welfare a black knight
    Did transcend to a place of engineering and strong life.
    Fought in the dark forest of the ghetto night
    And ameliorated to work, rank, and wife.
    A quality so rare because of this massive welfare
    A torch of Liberty to respect and to conquer despair.

    These sons of Africa did battle on sandy seas
    At the second war of hell between freedom and tyranny
    Clothed a humble black knight; a gentleman on his knees.
    This man demonstrated strong thought, stealth, cunning, and chivalry.
    An animal of rude strength and disciplined stride – an ox!
    A black knight of Roman heritage – the beloved desert fox.

  13. Anonymous

    No, the government could have made a writedown a condition of acceptance of the bailout money. You want the people’s money? Then you give the people a writedown.

  14. Anonymous

    Bank of New York Mellon moves up quarterly earnings release

    By Sue Chang
    Last update: 1:31 p.m. EST Jan. 20, 2009
    SAN FRANCISCO (MarketWatch) — Bank of New York Mellon said it moved up its fourth-quarter earnings release to Tuesday afternoon from Thursday. The bank also said it expects its Tier 1 capital ratio to be 13.1%, up from 9.3% at the end of September and its tangible capital equity ratio to be 3.8%, compared to 3.9%

  15. bg

    “Cheney Injures Back While Moving New York Times. A small bit of justice.”

    How can one be against torture, yet applaud pain?

  16. Dave Raithel

    RE Curious of 8:45am –

    It does sound absurd, doesn’t it? But then again, I see nothing but accumulating arguments that nothing in particular will work. Everything anybody proposes implies some particular interest group or variety of capital or investment takes the hit – perhaps even bankrupting the sovereign. So it seems that either somebody in particular gets gutted, or everybody starts again from zero. Starting from zero is an intriguing notion, as I try to imagine it as the closest thing in reality approximating those idealized “state of nature” initial bargaining positions in which rules of distributive justice are constructed (or chosen) by agreement. If we cannot agree as to who, in fairness, ought to pony up to fix the mess, then in fairness, we all reset to zero and start again. Or learn to eat gold, I guess….

  17. Anonymous

    I am very surprised that Fiat which was noted for its astute management is getting entangled with Chrysler.

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