Links 7/14/09

Sound effect: how cats exploit the human need to nurture Guardian

Sudden deaths of girl, 6, and GP raise fears over swine flu Times Online. Everyone is very nervous re swine flu, so this may be a false positive.

The Next Hacking Frontier: Your Brain? Wired

Molecule’s constant efforts keep our memories intact ScienceBlogs

How McNamara Lost World War II Greg Palast

U.S. mulling mortgage aid for unemployed Reuters. Another trial balloon.

Japan’s Robots Join Ranks Of Unemployed Michael Shedlock

Consumer Protection Elitists? Hardly Mark Thoma

Partial recovery will mean new lows for stocks Ed Harrison

Will Geithner Chicken Out On His Chance To Show Us His Bailouts Worked? Clusterstock. Notice how the ONLY concern here is the impact on financial players, not the real economy? We’ve had this backwards for a long time. Not that a bailout is the right or wrong remedy, but the priorities and metrics are stuffed up. Oooh, are we collectively screwed.

Shadow Banking: What It Is, How it Broke, and How to Fix It Atlantic

Insight: This crisis is not over Tim Lee, Financial Times

Book Review: The Myth of the Rational Market David Merkel

U.S. in Talks to Rescue CIT Wall Street Journal

Keeping Up Appearances: London Turns Eye to Empty Mansions Wall Street Journal

California Currency? A taste of things to come unless Percora II helps us leave discredited economic dogma behind Marshall Auerback, New Deal 2.0

SEC to create group to check rating agencies Financial Times

The Economy Is Even Worse Than You Think Mortimer Zuckerman, Wall Street Journal

Antidote du jour:

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  1. attempter

    I read the cat article earlier, and it made me laugh. I'm very familiar with that whiny purr.

    Although I don't find it annoying the way the article does, but rather comical.

  2. Brick

    Just a quick note on swine flu, since a member of my family has had it and I know a number of young children who have had it. The family member concerned is in their early twenties and an active sports woman and described having swine flu as the being the most ill that she has ever been. She was unable to get out of bed unaided even to go to the toilet. She did eventually get tamiflu which seemed to work, but there are already reports from the Netherlands that swine flu is no longer responding to it. In addition to reports about the effects on the lungs there are also some reports of the kidneys being affected. Whether there are different strains in different countries I am not sure about, but it sounds rather more serious than a mild dose of flu and at best I know I will be exposed to it soon.

  3. RTD

    Re: CIT and Goldman, this Bloomberg article NAILS it:

    First paragraph:

    "Goldman Sachs Group Inc., which provided a $3 billion credit facility to CIT Group Inc. more than a year ago, said today that it has offset any exposure to the company with collateral and hedges."

    Last paragraph:

    "Goldman Sachs’s comments on its vulnerability to CIT Group echo comments made last year about exposure to American International Group Inc., the New York-based insurer that was bailed out by the Federal Reserve. Goldman Sachs, which also said it had no material exposure to AIG because of collateral and hedges, got $12.9 billion from the firm between the government rescue of the insurer in September and the end of 2008."

    Spot on!

    We are ultimately going to bail out CIT. Not because of concern (legitimate) over the impact a failed CIT will have on small businesses, but because Goldman will always be protected regardless of the political regime in power or the cost to the taxpayer.

  4. Richard Kline

    I seldom expect to find anything of use or sense in the WSJ, but the grim picture painted by Mort Zuckerman is all to accurate. There is no overreach or ax-grinding, just cold, hard, evidenced facts. And show me how that picture doesn't add up to increasing economic contraction without even discussing the major unresolved problems in the financial system.

    . . . But Mort wants more stimulus, too. And yes, in principle it's the right idea. But I'm with Buiter, as I tried more or less to say in comments elsewhere today. Given how much stimulus would leak out of the real economy even supposing it reached there—a weak read of a supposition as Zuckerman illustrates—the size of stimulus it would take to bludgeon the real economy into a semblance of forward motion is impossible to secure. Hence we will not get sufficient bang from any stimulus to materially change our problem set; that's the rub. We need stimulus _and REFORM_, but to get that we need to elect some reformers. To paraphrase Zuckerman, it's a pity we didn't do that with the first attempt.

  5. Richard Kline

    Regarding Goldman Sachs' upper echelon, my personal position, aside from complete refulsion, is, "Let them steal but just keep the film rolling." They remind me of the Prussian Junkers in 1913, striding with well-deserved confidence straight toward the obsolesence and/or liquidation of their way of life. Just keep the film rolling.

  6. Anonymous

    "How McNamara lost WWII" was an interesting piece. As a Japanese, I think the view is so naive.

    America may have lost WWII. Following is a reason.

    Vietnam was a French colony. Japan's war object had always been to liberate Asia from Western colonialism and communism. We took Vietnam from French just as we took Philippines from Americans, and Indonesia from Dutch, Burma from UK, and so on. My great uncle's army was heading to India to liberate her from British colonialism. Mr. Chandra Bose was one of Imperial Japan's allies. From a Japanese viewpoint, the tyranny is the word should be reserved for FDR, since he started the war against Japan long before it fought back at Pearl Harbor. America's Flying Tiger was an act of war, and oil embargo was the last straw to the islands nation. There were lots of provocations against Imperial Japan, because FDR desperately needed an event to push America into WWII. It was not until Korean war that MacArthur realized what Imperial Japan was doing. America took over Imperial Japan's a bit dirty war against communism in Asia, which were Korean war and Vietnam war. It was sad for Imperial Japan to see China falling into communists' hands. I think Imperial Japan, however, won WWII, because western colonialism was wiped out from Asia and Africa "as a result of the war". Go to Indonesia's Kalibata national heroes cemetery, and find 26 Japanese soldiers' names, and think why they were buried over there.

  7. Richard Kline

    I agree with much of what Marshall Auerback has written, and find interesting many points there of which I'm insufficiently convinced. Regretably rather than highlight those points—check him out—I'll mention one issue where I disagree. He makes an interesting argument regarding the relationship of tax revenue to currency or 'currency' issue in a fiat regime: none. That is not the case. The relationship betweent he medium for exchange and any underlying source of value is a fuzzy one; they are loosely coupled rather than rigidly so. However, with no underlying source of value either confidence in the viability and stability fo the medium collapses, the issuance of the medium loses any engagement with demand, or both. (See Zimbabwe, 2009). Their is a coupling; the key is how the relationship is managed. Furthermore, the context in which a currency is issued matters a great deal. Big issuers get different treatment than small issuers for instance. Issuers when employment is stable are treated differently than when employment is unstable. It's a complex relationship, with loose-coupling and a variable degree of context-dependence, so it's a mistake to consider 'currency' issue as, in effect, context-independent.

    California issuing 'currency' when it doesn't have real values flowing in comensurable to that will create an unstable medium of exchange which destroys institutions that become clogged with it. Those Thirteen colonies issuing their own money were desperately impoverished; their currency was disliked by their own citizenry; their currency was often shunned in neighboring jurisdictions. Issuing a _stable_ currency is the key, and for that one needs a credible coupling to a source of real value. California's warrants have an incredible coupling, and when last seen were being dishonored by much of the banking system.

    And following a point of agreement with Auerback, as soon as the idjits in Washington realize that they just put California in the sovereing currency business, they'll reverse themselves on the hurry-up and issue cease and desist. Unless they really go long dumb.

  8. Ryan

    Japan's war object had always been to liberate Asia from Western colonialism and communism.

    Bullsh*t. So they were going to liberate Southeast Asia from Western colonialism in order to impose Japanese colonialism? Yeah, the Japanese thought "we will be greeted as liberators". Is that why all of China and Southeast Asia hate the Japanese even today?

    My grandfather fought the Japanese at Guadalcanal, Midway, and one other fight I can't remember. He saw how they treated prisoners and the locals in the war. Needless to say, he wasn't much a fan of them and their "liberation tactics".

  9. kjmclark

    There were quite a few announcements on swine flu yesterday:
    – Vaccine production is going poorly; yield of virus is only 25%-50% of the normal yield for seasonal flu.

    – Therefore unlikely to be able to produce vaccines in the quantity/timeframe called for.

    – Animal studies find that the virus has an unusual ability to directly infect the lungs, instead of the more common upper respiratory tract.

    – Blood samples from 1918 flu survivors show that they have positive reactions, indicating this flu virus is closely related to the 1918 bug.

    Recall that the 1918 flu is considered one of the worst pandemics in human history. 40-100 million of the then 1.8 billion people in the world died. That flu was considered a mild illness until late summer. By the middle of the next summer it had largely run its course, so most of the deaths were in one northern-hemisphere winter.

    As John Barry puts it in "The Great Influenza", "One cannot know with certainty, but if the upper estimate of the death toll is true as many as 8 to 10 percent of all young adults then living may have been killed by the virus.

    "And they died with extraordinary ferocity and speed. Although the influenza pandemic stretched over two years, perhaps two-thirds of the deaths occurred in a period of twenty-four weeks, and more than half of those deaths occurred in even less time, from mid-September to early December 1918. Influenza killed more people in a year than the Black Death of the Middle Ages killed in a century; it killed more people in twenty-four weeks than AIDS has killed in twenty-four years."

  10. Anonymous

    Compare Japan with US on the following page.
    And, please think why.

    BTW, what are you expecting from Chinese communist party's brainwashing of its own people? For communist party's legitimacy, they need such a legend that communist party won the empire of Japan, which is a total fantasy, because Kuomintang was the dominant power in the Chinese continent throughout and at the end of WWII. Fragile regime always needs foreign enemy.

    At WWII, Churchill and FDR were official allies of Stalin, who was public enemy No. 1 in the empire of Japan. I am not saying your grandfather was an ally of Stalin, but that was the background situation.

  11. Ryan

    Compare Japan with US on the following page.

    I'm not going to. You know why? Because your country has been sucking off our country's tit for the past 50 years. I'm a military brat, I know plenty of people from Okinawa and I know how your country thanks them. If you think we're so bad, than when China comes to attack and annex you don't come ask for our help, enjoy becoming a vassal state to the Chinese Communist Party.

    BTW, what are you expecting from Chinese communist party's brainwashing of its own people?

    It's not just the Chinese. The Chinese hate you, the Taiwanese, the Koreans, the Filipinos, the various Southeast Asian states. I'm reading a grand book on the war right now, The Second World War by John Keegan, the British royal military academy historian and is as good a source as you'll find on the subject, and everything you stated was absolute insane rhetoric on your part. If you honestly believe that crap, please by all means go say it in a public forum and post your name to it.

    And if we rotate the globe, voila!: the Asian theatre also turns out to be a classic battle of fascism vs…more fascism. The Imperial Japanese military caste was beyond fascist. Seriously, they were so hardcore that it was taboo even to suggest the possibility of anything going wrong with the grand plan for total victory, which is why nobody dared to develop anything resembling a strategic plan. That was a good way to get yourself hacked into Kobe beef. The Japanese brass responded like Travis Bickle to questions like that: "You talkin' to us? You askin' us that question? Cuz we don't see any other Japanese brass around here…" Cut to: arterial sprays where the insolent questioner used to be.

    And in the opposite corner: Chiang Kai Shek, the Asian Churchill: a totally incompetent military leader and lifelong fascist who saw how the wind was blowing and repackaged himself as a crusader for democracy in order to get aid from the gullible Americans. Chiang only valued one thing: obedience. And he only trusted one guy: himself. That's why he personally held 82 official positions in China, including head of all the armed services. He picked his generals for their incompetence, because he suspected that talented men might turn against him. Any sign of independent thinking, never mind criticism, meant the chop, and I mean that literally. Chiang even had himself declared the head of the Chinese Boy Scouts, that breeding ground of coups. That was the Good Guy of the Asian theatre. Oh wait, I'm forgetting Mao, another champion of human rights.

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