Links 3/15/09

Caravaggio was early ‘photographer’ BBC

Pentagon plans blimp to spy from new heights Los Angeles Times. I was always fond of blimps, one of my great uncles headed manufacturing at Goodyear a long time ago. Now I will have to rethink blimps. Darn.

New Type of Superconductivity Spotted Science Now

Blame the Economists, Not Economics Dani Rodrik, Project Syndicate

China’s Way Forward James Fallows (hat tip readers Carrck and Corrine). Excerpt:

Pettis wrote recently that China’s worldwide trade surplus, “the cleanest measure of overcapacity”—factories that are running and workers who are employed only because of foreign customers—is by one measure at least as large as America’s was in 1929. China today, like America then, has a trade surplus equal to about 0.5 percent of global economic output. But as a proportion of its own economic output, China’s trade surplus is much bigger than America’s was. In proportional terms, today’s China is five times as reliant on foreign customers to create domestic jobs as America was in 1929. So unless China can find a way to keep selling when its customers have stopped buying, it will face a proportionately greater employment shock.

Don’t touch the unsecured creditors! Clobber the tax payer instead Willem Buiter

Reflections on the latest dead cat bounce or bear market sucker’s rally Nouriel Roubini (hat tip reader Dwight)

Pseudonymous Blogger Prompts Financial Firm To Freak Out Joe Wiesenthal, Clusterstock. Yea! Maybe the convention of referring to bloggers merely as “bloggers” (which is barely one step above “rumor mongerers”) is eroding.

Is It Time to Retrain B-Schools? New York Times. There was a similar brief spell of navel gazing and self-recrimination in the wake of the LBO implosions and S&L crisis in the early 1990s. Harvard Business School did a study and concluded you couldn’t teach ethics, by the time students arrive at HBS, their moral code is baked in. The conclusion was that they needed to select students differently. Events reveal how much they embraced that idea.

Antidote du jour There is a also a nice story with a video from reader Peter which (as of this hour) had broken embed code.

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  1. Carrick

    New Lithium Battery Could Take Charge in Seconds,2817,2342982,00.asp

    Just uses an altered manuf process, and existing, familiar abundant materials (already used in lithium battery production.)

    Side note, for all the talk (disinformation) you regularly hear about Tibet, it is not a perpetual welfare operation. Tibet has the world’s largest lithium deposit.

  2. Carrick

    p.s. – If it wasn’t obvious, the lithium news is huge for hybrid/electric cars. As the hone the battery weight, lifespan and cost.. the inconvenience of waiting to charge will disappear.

    I forgot to mention that the new lithium battery design isn’t a big change for manufacturers, and is expected to be in production in 3-4 years.

    Coupled with some superconductor advances (AFS Trinity), the unattractive lifespan and charge-time concerns of EV ownership are evaporating.

  3. IF

    Anybody with access to Soviet military technology from the ’60s should not be afraid of the blimp. Can you say “U2”?

    They don’t write anything about the radar. I hope it is passive. Otherwise it will be more than detectable.

  4. Jojo

    On blimps: Do you think China, Russia or the USA would allow a blimp from another country to hover anywhere near their air space? I don’t think so.

  5. Jojo

    Double Amputee Becomes Mermaid
    Special Effects Company Designs Possibly World’s First Fully Functional Mermaid’s Tail


  6. Anonymous

    Pretty succinct from Rodrik:

    “Macroeconomics may be the only applied field within economics in which more training puts greater distance between the specialist and the real world, owing to its reliance on highly unrealistic models that sacrifice relevance to technical rigor. Sadly, in view of today’s needs, macroeconomists have made little progress on policy since John Maynard Keynes explained how economies could get stuck in unemployment due to deficient aggregate demand. Some, like Brad DeLong and Paul Krugman, would say that the field has actually regressed”

    In many cases, it seems to be as simple as one side of the equation needs to equal the other side. You know, equilibrium. “deficient aggregate demand” trumps supply side economics and globalization.

  7. David

    The over-capacity in China is the elephant in the room that most people don’t see. There has been so much garbage about how China will weather the storm better than most due to its higher savings etc. They simply don’t have enough demand to replace the American over-consumer.

  8. Anonymous

    New post by London Banker at RGE – because it requires registration I have posted the text here:
    By London Banker on 2009-03-15

    Deja vu all over again. I wrote the following 15 months ago. It looks like this dead cat bounce is yet another set up, but I suspect the next listing of this wreck will flood steerage. The last lifeboats, well stocked with comforts for the few passengers invited, are quietly loosing themselves and rowing for safety.

    If there is a difference now, it is that I no longer attribute to “cock up” what is transparently a “conspiracy”. The looting of the Federal Reserve, the US Treasury and the assets held in custody for the investors in the rest of the world are too well organised and too well orchestrated to be anything else. Lehman Brothers, the Reichstag Fire that secured the Paulson Plan’s $700 billion largesse and the unreviewable powers of the Federal Reserve, opened my eyes to what I would rather not see or believe.

    By London Banker on 2007-12-12

    The Fed – and the other central banks that went along with this scheme – have just made the most monumental cock up in central banking’s brief history. They have launched one lifeboat too many, with the others (SuperSIV, No-HOPE) still bouncing around on the waves nearby as the ship lists and settles deeper. By throwing the life boats into the surf before telling the passengers the scale of the threat, they have ensured that most of the passengers stayed listening to the band too long. Now the passengers are confused, distrustful and doubtful that the brass is determined to save the ship rather than their own skins.

    Luring in the shorts yesterday just to ramp the market today must have seemed real cute to Ben and Hank. They probably still giggle about how much fun they had watching the shorts get hammered on August 17th when they “surprised” the market (with the exception of a few close friends) with the 50bps discount cut. Playing that game again with the bait and switch of yesterday’s 25bps cut and today’s announcement of the liquidity auction (selectively leaked again) will convince anyone previously giving them benefit of the doubt that the game is rigged. The secret, anonymous nature of the auction proposal must further undermine any trust in fair outcomes.

    I fear that today with this scheme they have damaged all credibility and all authority we might have vested in them. We will no longer queue patiently and listen for instructions because we no longer trust them to ensure we are all in the lifeboats in the order expected, women and children first. We can see first class passengers are getting a whisper here and a wink there and a guiding hand up to the boats with their jewelry boxes in hand. Pensioners, steerage and crew are being invited to wait in the lounge where the curtains are drawn, the drinks are free and the band keeps playing.

    Monday will tell. Will we all sit placidly waiting to see if a secret auction to plug secret holes of secret magnitude at secret banks will right the ship? Or will we rush en masse for the few remaining places in the lifeboats?

    I have a very bad feeling about this. It isn’t how central bankers are supposed to behave.

    By London Banker on 2007-12-18

    I still think negative real interest rates create unpleasant side effects of sustaining uneconomic business models that drain the future productivity and savings capacity of a country, continually impoverishing it over time to benefit the elite who created the imbalances and unprofitable businesses (financial engineering, real estate boom, etc).

    That said, it doesn’t really matter much what the central banks do because at base the problem is one of corruption in accounting standards, government expenditure on unprofitable military adventures, skewed taxation which has reduced taxes on corporations and the wealthy while massively increasing government revenues from the middle class and poor (from taxes and stealth taxes like fees, fines and excise duties), executive incentives which reward destroying jobs, and other excesses of the past 25 years of Anglo-Saxon corporatist thinking.

    The monetary antics we are observing are worse than rearranging the deck chairs on the Titanic. They are refolding and relaying the lap blankets on the deckchairs for the comfort of first class, while the engine rooms and steerage compartments steadily immerse in the cold, dark waves of credit implosion and housing collapse/unemployment reality.

    The central bankers are racing each other to see who can lay the most blankets, tucking them securely around the knees of their lard-assed bloated banks to keep them comfortable. Meanwhile the waters are inexorably rising, and the blankets will not provide lasting security when the decks flood.

    Regulatory and fiscal measures are going to be needed before this disaster finishes playing out. The sooner politicians and regulators start focusing their attention below decks on the pumps, repairs and evacuations that could actually save the economic ship and many more of its passengers, the better for us all.

    Monetary measures cannot fix a non-monetary problem. They can only delay adjustment. Monetary laxity will prove harmful if other, needed measures are not pursued because the banks, politicians and others assume the central banks have things under control so that they can carry on “business as usual”.

  9. Anonymous

    From Blame the Economists, Not Economics “… The textbooks at least those used in advanced courses – are fine.”

    The textbooks are not fine. The textbooks teach that the CFO’s responsibility is to the shareholders, and by implication, that shareholders take precedence over product and employee interests.

    Otherwise its a fine article. I particularly liked “It was economists who legitimized and popularized the view that unfettered finance was a boon to society. They spoke with near unanimity when it came to the “dangers of government over-regulation.” …”Very few among them (notable exceptions including Nouriel Roubini and Robert Shiller) raised alarm bells about the crisis to come.”

    I like to see Roubini acknowledged for the fine work he has been doing and object to referring to him as Dr.Doom. It trivializes Roubini and his work and perpetuates the MSM criminal enterprise that slimes anyone unlike the Cramers and Kudlows and nitwits on CNBC who do not conform to the corporation line.

    Continuing to use the Dr, Doom handle is to be captive to a malicious meme.


  10. lineup32

    re:Buiter: The beginning and end of systemic risk is about political corruption and its ability or illusion of ability to pin financial sector losses on future generations. Buiter does an excellent job of saying it in modern prose that the system is run by crooks.

  11. lineup32

    “The over-capacity in China is the elephant in the room that most people don’t see.”

    Manufacturing automation makes this a world wide problem and it ties directly to creating cheap available credit to drive consumption.

  12. ruetheday

    My two favorite stories of the day:

    Larry Summers calls AIG bonuses outrageous.

    Barney Frank wants an ivestigation to determine whether they can be clawed back.

    Someone needs to tell these two guys that the US Government owns 79.9% of AIG. There’s no need to try and stir public outrage or to call for investigations guys, the government OWNS AIG. Call up the payroll department and start canceling bonuses. When you own a company you are allowed to make these sorts of decisions, hell you have a fiduciary duty to make them.

  13. MyLessThanPrimeBeef

    Regarding Harvard students arriving already baked, here is a question along the line of ‘which came first, the chicken or the egg?’

    Is Harvard a smart school because it takes some of the smartest students in the world or does the students become smart because they go Harvard?

    Can Harvard admit 100% the worst high school students and turn them all into AIG-level investment bankers?

    It would seem to me that is the only way to demostrate your greatness.

  14. notevenwrong

    To understand what is happening in New York these days, see this article from the Sunday NYT

    especially the final paragraph:

    “A 29-year-old man who works for a large investment management firm and was at Bagatelle’s brunch one recent Saturday and at Merkato 55’s the next, put it another way: “If you’d asked me in October, I’d say it’d be a different situation, and I don’t think I’d be here. Then the government gave us $10 billion.”

  15. purple

    The world’s largest lithium deposits are in Bolivia, but Tibet is up there too. Alas, U.S. companies are hated in Bolivia. They will have little access there as long as someone, anyone, else is interested. Our “dependency on foreign oil” is poised to become a dependency on foreign lithium.

  16. purple

    Is Harvard a smart school because it takes some of the smartest students in the world or does the students become smart because they go Harvard?

    Can Harvard admit 100% the worst high school students and turn them all into AIG-level investment bankers?

    It would seem to me that is the only way to demonstrate your greatness.

    One could argue the same thing about many much-vaunted K-12 magnet schools, who select, or get a self-selection of students that result in higher test scores.

  17. Anonymous

    I think the spy blimps are a great idea… They could be outfitted with mini rockets and used to blow people out of the water up in Maine who do not have the currently being proposed canoe and kayak operators license. This will help to keep those scum bag kayakers and canoeists from transporting the invasive milfoil plant from one lake or pond to another. We need lots more regulation like this and swifter punishment for the evil doers!


    Bill would mandate canoe, kayak licenses
    By Kevin Miller
    BDN Staff
    AUGUSTA, Maine — Like many Mainers, Marion Dunham relishes the chance to enjoy the peace and beauty of the region’s lakes from her kayak.

    Dunham said she would even be willing to donate a few dollars more to help support the services provided by the Department of Inland Fisheries and Wildlife. But change that voluntary donation into a mandatory canoe or kayak license and lawmakers have lost the Readfield resident’s support.

    “I’m sorry, it’s a tax,” Dunham told state lawmakers on Tuesday.

    For years, policymakers have struggled to find a way to generate more revenues from the significant portion of Mainers — not to mention tourists — who recreate outdoors but do not buy the licenses that provide the majority of DIF&W’s budget.

    On Tuesday, a legislative committee held public hearings on several measures to tap into such so-called “nonconsumptive users” to help cover the costs of biologists, game wardens and other programs used by the public.

    One bill, LD 626, would require operators of canoes and kayaks who are over age 16 and who do not carry another DIF&W license to purchase a $19 annual boating license. Another measure, LD 510, would require DIF&W to bill for search and rescue costs unless the subject held either a DIF&W-issued license or a new $20 “Maine Rescue Card.”

    More than 60 percent of DIF&W’s $34 million annual budget is financed by revenues from licenses and registrations while the federal government chips in more than 20 percent. Less than 10 percent comes from the General Fund, and that was before the current round of budget cuts.

    Rep. Jane Eberle, D-South Portland, said she enjoys seeing loons, eagles and other wildlife while canoeing, kayaking or rowing. Eberle said she believes many people who don’t hold hunting, fishing or trapping licenses are willing to help pay for wildlife and habitat protection programs run by the state.

    “Why wouldn’t every single one of us want to have a part in protecting these magnificent creatures … and the things that make Maine special?” asked Eberle, the primary sponsor of LD 626.

    More, and a poll …

    Deception is the strongest political force on the planet.

    i on the ball patriot

  18. Anonymous

    Re: London Banker

    “The looting of the Federal Reserve, the US Treasury and the assets held in custody for the investors in the rest of the world are too well organised and too well orchestrated to be anything else.”

    It is one Giant Ongoing Crime Scene with the Criminals supervising the Looting.

  19. rd

    Here is an example of the baking in of moral codes. Because this event came to light, a couple of the students who were attending prestigous universities had to leave.

    My kids were kind of wondering what the big deal was. I explained that these kids were some of the brightest in the high school. They were in or headed towards good universities with a high probability of ending up in positions of importance. This example of their morality would indicate that this would probably not be a good outcome for society unless they understand that what they did was wrong. In an investment banking position, they could be prone to gaming the books. In politics, they could end up taking bribes or being swayed by a lobbyists money.

  20. Anonymous

    Where did rule of law go?

    Will it ever come back? In what form?

    What does the ABA say about what is going on? Should they have an opinion?

    What are the new “rules” going forward?

    Has law become irrelevant?

    Just asking…..think of it as textual white noise.


  21. AlanM

    Cheers to notevenwrong for pointing to Katherine Bindley’s NYT article.

    Bindley: “As for another set of partyers, the New York investment bankers whose once-hefty bonuses may have significantly diminished in recent months, ‘instead of having the $10,000 to $15,000 to spend on a Saturday afternoon, they might spend $2,000 to $3,000,’ [a guy who provides people with too much money a chance to spend it on ephemerals consumed more conspicuously than cocaine and hookers] said.”

    Hard times indeed. Let’s all push for more socializing of the losses, lest our banksters miss out on other goodies such as sex. mystery. royalty.

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