Links 7/30/09

Jellyfish help to stir the ocean BBC

Did an ice age boost human brain size? New Scientist (hat tip reader John D)

The Day the President Turned Black (But has he turned back?) Greg Palast

The Health Care Bill Dies? Matt Taibbi (hat tip reader John D)

Flipping Out David Adler, The Big Money. Statistics books need to be rewritten.

Hurrying Into the Next Panic? Paul Wilmott, New York Times

75% Favor Auditing The Fed Michael Shedlock

US 5yr Bond Auction Effectively FAILS Karl Denninger (hat tip reader Scott). Not certain he has this right. BTW.

Should Fed chairmen go around kissing babies? Willem Buiter

Lucrative Fees May Deter Efforts to Alter Troubled Loans New York Times. This is useful, but why has it taken the MSM this long to drill into what the fee and incentives are? The reluctance to do mods has been a political issue for at least a year.

Smaller banks will not make us safer Josef Ackerman, Financial Times. Quelle surprise! The head of a very big bank, Deutsche Bank, defends big banking! I wish I had time to shred this. He has some valid observations, particularly his headline point about interconnectedness, but a fair bit of the rest was spurious.

Washington risks taking China too seriously David Pilling, Financial Times

GFC Cures – Placebo Effects Satyajit Das, RGE Monitor. A colorful and thorough overview.

Squeezing out the exporters Michael Pettis. Important.

Antidote du jour:

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  1. attempter

    Re the Pettis piece: It sure is rich seeing the EU and America whine about China's protected industries after the way the West has engaged in decades of agricultural dumping all over the global South, ravaging local agriculture and crop diversity everywhere, leaving scorched earth to be taken over by western GMOs and agrofuel production.

    All of this won't matter much longer. Peak Oil is rolling back globalism. These trade and consumption/savings imbalances will be forcibly rectified by energy fundamentals.

    So for the time being protectionism, just as a stop-gap measure, may make the most sense, since the world is once again going to be round and big anyway.

    What's imperative is to rebuild domestic industries for domestic markets, and delusions about the perpetuity of globalism aren't going to serve that goal.

    As for Obama, how typical that even as he continues with a policy which is, across the board, anti-public interest, anti-worker, anti-poor, pro-police state, and in all these ways assaulting poor blacks along with everyone else, that he suddenly finds himself as an angry activist to deplore the treatment of one of his fellow rich blacks.

    That's your limousine liberal in action. Where's all his speeches about rampant police abuse of the poor, black or white? In the same place as his general concern for the poor – nowhere. Nonexistent.

  2. Peripheral Visionary

    Re: the Pettis piece, he is far too easy on the Chinese. For all the failings of the West, the Chinese are every bit as much to blame for the current situation. Their current policies, while not overtly protectionist, are clearly designed to give their domestic industries an unfair advantage, through weakening the currency, suppressing organized labor, lending at artificially low rates, and quietly burying bad debt in the opaque books of the state-run banks. The end result is an economy with ultra-cheap labor where repayment of loans is optional; what free market economy can compete with that?

    The characterization of the Chinese economic approach as mercantilism is spot-on, even if, again, they aren't as blatantly protectionist. A fiat currency, however, will let them continue the mercantilist games for longer than would have been possible under a hard currency. As such, I think some measure of protectionism in the West is a necessary, if not pleasant, response until trade is rebalanced.

    The "coordinated response" is a pipe dream. Any response to the current crisis will necessarily benefit the countries with contracting economies (the U.S. and Europe) at the expanse of countries with expanding economies (China.) As such, China will never agree to any sensible set of policies, and so they will necessarily have to be forced upon them by unilateral moves that will hurt everyone–but will hurt the Chinese much more, and will give the West a chance to get back on its feet.

  3. fresno dan

    Keenan: I thought I was the only one who read Charles Hugh Smith and Naked Capitalism (although I don't think that in some fundamental respects they are that far apart).
    It is an idea that I have had for a long time – that insurance is for rare, but catastrophic events. Using insurance for health maintenace is like using home insurance for home mainteance "the standard of home mainteance care demands granite countertops!"

  4. Al Gore

    From the 'bigger brains' article:
    "…2 or 3 million years ago when temperatures were a few degrees warmer than today…"

    There you have it, global warming sheeple.

  5. Keenan

    fresno dan:

    If I read him correctly I believe Charles Hugh Smith's position is that that the very premiss of medical insurance is wrongheaded. Claims = cost and all such contingent pay schemes have the underwriters looking for reasons to avoid payments just as we've seen property/casualty insurers with legalese tightroping contortions to avoid claims for hurricane and wildfire damages.

    If you do not already read it, you might perhaps also appreciate Dimitri Orlov's "Club Orlov"



  6. attempter

    C H Smith's argument is that without all this "free money" sloshing around on account of the FIRE economy, medical care would be priced according to real economy measures.

    That brochure from the 50s (not that long ago, really) is quite a reality check, on how insane things have gotten since the financialization of the economy.

    Keenan, it's apropos that you mention Orlov. While I was reading Smith's piece I was thinking, Peak Oil is sending us all back to reality regardless of what we will.

    From that point of view, sometimes I have to remind myself that advocacy of e.g. single-payer or a rigorous public plan, as I do advocate, is really just trying to render the Orlovian boondoggles less painful for the weakest as we enter energy descent.

  7. Anonymous

    The post regarding the 5yr Treasury auction appears to be horribly misleading. We ran the numbers and the average BTC for primary dealers since 2003 was 1.501 with a standard deviation of .29, making this last result about 1.25 SDs better than average.

  8. Hugh

    The Das article is a good overview of the current economic and financial situation.

    I found Buiter incoherent in his rant against Larry Summers (justified), his qualified praise but ultimate dismissal of Bernanke, and his strong support of Yellen on the basis of crib notes she wrote as a graduate teaching assistant. It wasn't just Helicopter Ben who missed the boat on the housing bubble and the financial meltdown so did Yellen. I find all 3 of these candidates for Chair of the Fed hopelessly compromised.

    Buiter wants a monetarist and a macroeconomist. Well monetarism is what the Fed is supposed to do but it was Fed monetary policy which set the stage for this mess. So it is a little bizarre that Buiter castigates Summers for his role in deregulation but doesn't slam Yellen and Bernanke for their easy credit policies. I don't see any of the 3 as good macroeconomists. Doesn't missing the two defining financial events
    of our times preclude this? Or is macroeconomics code here for the Fed's new and dubious ventures in fiscal policy?

    So far we have Roubini going with Bernanke and Buiter with Yellen. My question is what causes intelligent economists to go all goofy when it comes to the Chairmanship of the Fed?

    Re Charles Hugh Smith's on healthcare, aside from making no economic sense, it makes no economic sense.

  9. skippy

    @Hugh said… Re Charles Hugh Smith's on healthcare, aside from making no economic sense, it makes no economic sense.

    Concur, Thats why we have trafficking in human organs, now that (trafficking) makes economic sense, 3,000% mark up, get me sum of that.

    skippy…pig parts are for the economically bereft or the Big G got some QC/OEM warranty problems. Good thing I'm not doing the Mgf warranty nightmare on that biz, shudder, BTDT.

    verification is summi

  10. Anonymous

    This line from the FT article:

    In 2005, according to the Stockholm International Peace Research Institute, China accounted for just 4 per cent of global military spending, a tad short of the UK and France

    is typical of the breath-taking ignorance and sheer incompetence presented as informed reporting by London-NYC "elite" media.

    I do thank Yves for highlighting this article. Henceforth I'll ignore the FT as studiously as I ignore the National Enquirer and Weekly World News.

  11. to much crap

    Keep on bloggin', I'm out.

    A. Finding sthg reely intst'g = wstd hrs.

    B. No fdbck, no crdts 4 stlng idas

    C. Same goes for google, impsble to go strit to rlvt lnk

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