Links 3/12/09

Amazon rainforest at risk of ecological ‘catastrophe’ Telegraph

Poached skins matched to tigers BBC

Belligerent chimp proves animals make plans Associated Press (hat tip reader John)

A sinking feeling Economist (hat tip reader Steve L)

To the victor go the spoils: who answers the phone in the US Treasury? Willem Buiter, In the middle, see the rant about Geithner and Summers.

Geithner Said to Push G-7 to Ease Criticism of China Policy Bloomberg

Madoff trumped by Swiss gigolo Diane Francis

Now is the time for a less selfish capitalism Richard Layard, Financial Times

Citigroup Executives Score $2.2 Million Betting on Own Stock Bloomberg. Per our related post this evening, tell me this isn’t market manipulation?

China’s Feb crude imports dive to 26-month low Platts (hat tip reader Michael)

Japan’s Funding Crunch Deepening, State Lender Says Bloomberg

Panics and Booms, a lesson from 1897 Rolfe Winkler. Yes, I know, he is part of the family, but this is still an interesting post.

Financial Fraud Is Focus of Attack by Prosecutors New York Times. Unfortunately, the focus is likely to be on the financial analogue to the street corner pusher:

At the low end of the mortgage transaction ladder, state prosecutors have had a relatively easy time prevailing, but recent history suggests that the government’s odds of winning drop when they go after Wall Street executives. Some high-profile convictions have been won in the last decade, but several of the Enron-related prosecutions and some cases brought by Eliot Spitzer when he was New York’s attorney general fell apart or were overturned on appeal.

Antidote du jour. From the Guardian:

Mayflower, a particularly compact pony, would like you to know the following: she is not stuck in mud, she simply has very short legs…

Anton Phillips, the animal rescue specialist for Hampshire fire service, explained that Mayflower’s distinctive physique – an apparent cross between a Shetland and New Forest pony, she has the stumpy-legged look of an equine dachshund – means that from a distance it can appear she is trapped in soft ground….

“These calls from the public are with good intent. When viewed at long range, this pony looks like it is trapped, particularly if it is standing still next to its mates which are twice its height.”

Mayflower’s owner is reportedly considering putting up a sign in the field to reassure passers-by.

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  1. fresno dan

    Panics and Booms, a lesson from 1897 Rolfe Winkler.
    I have seen the referenced article before (go to enough Austrian influenced sites).
    I think it simply, but accurately describes not only booms and busts, but the human frailities of over optimism, hubris, and short term memory.

  2. mr. ugly

    For tomorrow’s links you might consider Iain Martin’s piece in the Daily Telegraph on the magnitude of the financial and political scandal that is the Lloyds-HBOS merger, and on the strange way no one’s making much fuss about it.

  3. mft

    Re: Japan’s funding crunch.

    This goes to the heart of an issue that has been bothering me a few weeks – why is the collapse in world trade so much bigger than the so far rather small fall in global consumer spending? This is the same pattern as was seen in World Depression I, when world trade collapsed by about one third (in real terms) while even in the worst hit USA production only fell by a quarter.

    Obviously only a part of consumption is affected at all by world trade. But above all, this suggests that world trade, and not spending power, is the leading factor in depression economics. There may be many reasons for this, but chief among them is the much greater role of confidence and security in international trade – if your trading partner doesn’t pay, it is straightforward to deal with him in your own country, altogether more difficult abroad. One result is that noone wants to finance it, especially when dollars are as scarce as they are today – see the article on Japan.

    If this is so, it may mean that all the fiscal and monetary plans for dealing with the disaster going on around us are completely beside the point. None of them deal with the issue of international trade. So here is a proposal, even though I know there’s noone listening out there where it matters. The IMF sets up a special fund, backed by SDRs if you want, the sole purpose of which is to guarantee the financial security of international trading operations. All countries’ exporters would be eligible.

    If I’m way off beam, please explain.

  4. mft

    I would like to add my voice to those others urging either shorter or else fewer guest posts. I confestt to simply skipping them in their current format. I’m not out of work yet, so I just don’t have the time.

  5. Independent Accountant

    I agree, the prosecutors will go after nobodys. The whole Justice system is corrupt. No one will indict: Lloyd Blankfein, John Mack, Henry Paulson, Vikram Pandit, Robert Rubin and the rest of Captain Renault’s “usual suspects”.

  6. brushes9

    Megan McArdle sets us straight on who is smarter, English PhD candidates, or investment bankers. Megan is a neo-libertarian:

    “Yes, yes, I quite realize that many of these bankers are not nearly as smart as they think themselves. But they aren’t nearly as stupid as popular legend would have it. I’ve sat in the investment banking department (getting the lunch list) at Merrill Lynch, and found the whole thing quite ludicrous. I also grew quite amused at the confidence of vast swathes of America’s educated class that of course they could do a much better, and more socially responsible, job running banks and corporations if they weren’t much too busy finishing up their thesis on early renaissance poets. Successful bankers are really, as a class, quite bright, and also have a whole lot of skill sets, like OCD-level attention to details, that pretty much every one of the journalists and bloggers snarking at them lack. Moreover, the really stupid ones have already been fired.”

    Megan appears to be qualified in identifying “the really stupid ones” among us, thanks to her Ayn Rand loyalties and the power of her numerous Alan Greenspan tattoo around her undersides.

  7. Stephen

    Just as we have to be wary of some investors who are “talking their book”, the same wariness should be applied to researchers in global warming whose budgets depend on selling global warming.

    For example, consider the recent Economist article on the rise in sea level, referenced above. Sea levels rose at a constant rate all through the 20th century, even though the surface atmosphere was cooling from about 1940 to 1975. This should raise doubts about any connection between sea level rise and atmospheric temperature. The claim of a recent increasing rate of sea level rise is particularly puzzling, since the world average surface atmosphere temperature has not risen since about 1998, and has even been slightly cooling in recent years.

  8. mxq

    I’m sorry, but after reading the headline that “Sir” Allen Stanford pled the fifth, the first thing that came to mind was this.

    To describe the clip: “In an alternate universe, drug dealer Tron Carter switches places with a white man convicted of the same crime.”

  9. freude bud

    The Platts story on Chinese crude imports is extremely misleading, because the rate the customs office uses is metric tonnes per month, not per day.

    So, for example in January China imported 12.82 million metric tonnes, which translates to about 3.02 million barrels a day. In February China imported 11.73 million metric tonnes, which translates to about 3.06 million barrels a day. Far from a 26 month low, in b/d terms, it is a 1.3% increase in imports from the month previous.

    Of course, in terms of metric tonnes per month, yes, it is a 26 month low … Platts can write this because its readership won’t be mislead long past the headline …

  10. MyLessThanPrimeBeef

    The interesting thing about chimps is that last year, a study came that showed that chimps were smarter than college kids. So, why is it surprising that we find out they make plans?

    By the way, the scandal is they didn’t compare chimps to professors. I suspect they knew and were too afraid to confront the truth. I suspect in fact, chimps are smarter than professors too.

  11. ruetheday

    The markets are rallying strongly because the powers that be have finally discovered the real solution to the financial crises and it’s a whole hell of a lot simpler and easier than anyone imagined. Just eliminate mark to market accounting and allow banks to mark assets to whatever value they’d like, even the stratospheric values from early 2007. Instantly, the problem disappears. Whoocoodanode it’d be this easy.

  12. MyLessThanPrimeBeef

    Another easy, simple solution is to just add a few zeroes to our currency, make that $20 in my account $20 billion and voila, I will not only pay off my underwater mortgage, I will go out and take those CDO’s off the banks’ hands.

  13. DB

    completely unrelated, if there is a blog award category for financial blog with most unusual google ads (or most contrasting google ads), naked capitalism would be in the running!

  14. Anonymous

    sometimes i think humans are the dumbest creatures on earth, we do/create the most stupid things.

  15. MyLessThanPrimeBeef

    Anonymous, I belong to the Next Species Movement – right now, we have only one member, but we hope, in time, it will grow.

    We here at the Next Species Movement believe that Homo Dummies Dummies has run its course and it’s time we prepare the way for that mutation, that next lord of the Universe to arrive. Our number one goal is to try to preserve the world so that when the Next Species does arrive, it will enjoy the world as much as we used to. To that extend, we advocate doing nothing, mainly nothing destructive to the world, which we have found to be the best way to ensure the preservation of the enjoyability of the world.

  16. Richard Kline

    So mft on the plunge in international trade, there are two (at least two) important vectors at work here re: the issue you raise, that is why have int trade levels plunged far more in percentage termas than domestic production numbers in non-exporters? To begin with, large scale international exchange is a function of international finance, not the other way around. This has been true for really the last millennia of transnational commerce as presently developed. That is, because there are liquid, accepted pools of capital to deploy, exchangeable commodities and/or products draw financing. There is typically a speculative element in this, whether small or large: those supplying financing are doing it not to move the product but for the interest and fees they themselves acquire. Pools of capital of this kind are heavily dependent upon secondary debt markets; this cannot be overstressed. It is not too much to say that international trade _only_ exists because underlying credit and debt is transacted. This is far more than the issue of letters of credit, which Yves has called relevant attention to. Those are an important cog, but only one. It is more an issue of Purchaser A in a country getting credit themselves to finance the deal, and Supplier B in another country being able to borrow shorterm to fund production. And much more.

    So from this perspective, international trade is far more impacted by dysfunction in the secondary markets for credit and debt, even if the companies wishing to deal are both solvent and want the transaction. They don’t deal _with_ each other; they deal _through_ the financialy system.

    Then too, the products which are particularly exchanged internationally may be more susceptible to short term demand volatility than some of the domestic activity which has fallen less. A consumer buying a car, or a business buying a computer monitor may be able to delay that purchase a year in any given year. They can’t delay it indefinitely, perhaps, but for a timeframe under 18 mos they can delay, and even then downgrade their expenditure. There is a discretionary wobble. But some of that domestic production may be less discretionary. Food production and sale, for example, just isn’t going to drop as much in the US; we have little personal production to fall back on as a buffer, and so must buy. We may dial down that thermostat a little, but we aren’t going to turn it off (voluntarily). Utilities are only going to drop so much. Domestic auto production is being lined up against the wall and shot, financially speaking, because of that discretionary demand partial vacuum. We have much discretionary control over vacation travel, and so airlines and hotels are just being slaughtered. By the same token, movie tickets, and low end restaurants may come through swimmingly (if the restaurants aren’t killed by oil-driven cost spikes first).

    ‘Domestic production’ and ‘international trade’ do not describe equivalent activities in many instances, and so they should not be expected, and do not, move with close linkage in extreme conditions.

    And Stephen at 10:57 dissing global warming, I suspect that you are sufficiently informed and smart to grasp just how bad an argument you are making. Average temperatures mean nothing in the context of this issue. The system of global climate has multiple variables as I think you know, and as they destabilize swings will in some respects go the opposite direction of the midterm change vector. Global warming isn’t ‘happening,’ it’s already ‘happened.’ We should be solidly into a glacial maximum NOW and as of a millennia ago based upon very long range climate records and what we understand of them. The pertinant issue is, Is global warming _accelerating_ and if so how much? Moreover, why? We don’t really understant climatology well enough to generate an indisputable answer to that. A reasonable conclusion, though, is that if and when warming accelerates, or _deccelerates_ it will NOT do so in a linear fashion; that is the nub of the problem. By the time the argument is over, climate will have moved on us in ways that on the scale of our lifetimes are irreversible.

    I think the tenor of your remarks are at least naive? Sure, there are folks out there who want research dollars. They are an infinetismally small issue on the the scale of this problem. It’s not worth getting hung up about. I am not saying this because, officially, I “think we should do something to stop global warming.” Well, we probably should—but we aren’t going to. Us Human Beans are just too cussed slow to get our asses in gear. We are not going to react in time to change any substantial impact we are (or are not) having now, so we are going to get whatever deflection global climate is going to generate. I say that more from a realist than a defeatist perspective. It’s a bitch, but there it is, sez I.

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