Links 1/29/09

Emotional signals cross cultures BBC

Neuron breakthrough offers hope on Alzheimer’s and Parkinson’s Times Online

EU signals last-resort backing for Greece Financial Times (hat tip Swedish Lex)

Bank Sues Victim To Avoid Replacing $200k In Stolen Funds Consumerist

Soros: ‘bleak outlook for UK’ Robert Peston (hat tip reader Tim C)

Bailout time Eurointelligence

A limited speech by a constrained president James Pethokoukis

Swiss halt deal with U.S. that IDs Americans with secret UBS bank accounts Washington Post (hat tip reader John D)

Radical Inequality Is Literally Killing Us Alternet (hat tip reader John D). It’s actually income inequality, and we posted about it in 2007, the FT was talking about this in 2002.

UK banks downgraded by credit rating agency Guardian

State of the (Cardboard) Box Outside the (Cardboard) Box

U.S. may exempt Treasuries from new bank tax -sources Reuters

March of the Peacocks Paul Krugman, New York Times

In the Packaging of Loans, a Bust With Precedent Floyd Norris, New York Times. This is intriguing.

Antidote du jour (FYI, I lived in the Upper Peninsula for three years when I was growing up). John Bougearel writes:

Look at this Moose!

By the length of his beard and the grey legs, I figure he must be over 10 years old. He looks to be well over 8 feet at the top of the shoulder hump, and with his head up the height to the top of his antler must be about 12 feet. This guy is king of the forest, no bear or pack of wolves would dare come after him when he has this rack……Considering that a dirt road can fit 1 1/2 cars across … this fellow is HUGE …THIS IS ONE BIG BOY!

The picture was taken in Elliot Lake, which is near Sault Ste. Marie in Michigan ‘s Upper Peninsula.

Yes it is a regular size dirt road.



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    1. EmilianoZ

      Come on, it’s not the moose that’s big, it’s the road and trees that are small. It’s a classic trick. You guys have never seen “Cats”.

    2. jm

      Looks to me like most of the light on the road is coming from reflection off the trees on the right-hand side and so is highly diffused, so the lack of shadow from the moose is not surprising, and not an indication the photo is faked.

  1. attempter


    Now, with the securitization market nearly dead, getting that market going again is vital to providing Americans with mortgage loans. Securitization may need to be reformed a little, but it remains critically important to a well-functioning economy.

    That is the conventional wisdom now, at least among many bankers and economists.

    I don’t see how America’s going to restore millions of small farmers and reclaim the land of doomed suburbia that way.

    Very few people get it: The first thing to understand is what is structually necessary, and what we need to do, no matter how “impossible” it seems at the moment.

    What difference does that make? It has to be done, and it will be done, one way or another. There’s the hard way or, prehaps, the not-as-hard way. (There’s definitely no easy way.)

    Only once we first acknowledge reality and what has to be done might we then have some slight wiggle room to debate “options.”

    Those moose pictures look bogus.

    1. fresno dan

      “Professor Goetzmann, who teaches both real estate finance and financial history, said he grew interested in the subject after coming across old real estate bonds and wondering what the story was behind them.

      The story, it turns out, is one intrinsic to the New York skyline. From 1929 through 1931, according to data compiled by Mr. Newman, 128 buildings that were 70 or more meters in height, or about 230 feet, were completed in New York City. That was the most ever.

      Over the last three years, 2007 through 2009, the figure was 87. That was the highest number in nearly 30 years.”

      Well, I’ve read every bust begins with an easy credit boom, and it sure seems true.

      1. aet

        Or to put it another way: they begin when too many fools have too much money.
        The lenders, that is: they are the ones who decide to make the loans.

    2. DownSouth

      As Norris says:

      It turns out that real estate securities constituted a major market, and began to falter before stocks did.

      “The breakdown in their valuation, through the mechanism of the collateral cycle, may have led to the subsequent stock market crash of 1929-30,” they wrote.

      If Ben Bernanke had been thinking of that, do you think he might have been more hesitant to say that the subprime mortgage crisis had been “contained” in 2007?


      If economists and regulators had recalled the securitizations of the 1920s, they might have realized that the recent boom in real estate securitizations was not what they took it to be: a result of American financial ingenuity that created ways to spread risk to those who could best afford to bear it and in the process made financing more available and less expensive.

      It was, instead, the same old speculative enthusiasm, even if it was wearing fancy new clothes. Investors who had seen real estate prices rise thought that trend could not end. Wall Street sharpies thought they had found a way to make lots of money while not bearing the ultimate risk if the game suddenly ended.

      As it turned out, the sharpies were wrong. They too got swept up in the carnage — just as their predecessors had in the 1930s.

      Surprise! Surprise! The roots of the Great Depression lie not in government intervention, but in private finance. It’s becoming quite obvious that Bernanke received his hallowed “expertise” of the Great Depression at the Mises Institute, best known for its great feats in taking history and turning it on its head.

      The 1920s real estate boom was hardly unique to New York. Norris really gives a blinkered view here. Frederick Lewis Allen wrote extensively about the 1920s real estate boom and its national scope in Only Yesterday:



      The abounding confidence engendered by Coolidge Prosperity, which persuaded the four-thousand-dollar-a-year salesman that in some magical way he too might tomorrow be able to buy a fine house and all the good things of earth.


      Speculation was easy-and quick. No long delays while titles were being investigated and deeds recorded; such tiresome formalities were postponed. The prevalent method of sale was thus described by Walter C. Hill of the Retail Credit Company of Atlanta in the Inspection Report issued by his concern: “Lots are bought from blueprints. They look better that way …. Around Miami, subdivisions, except the very large ones, are often sold out the first day of sale. Advertisements appear describing the location, extent, special features, and approximate price of the lots. Reservations are accepted. This requires a check for 10 per cent of the price of the lot the buyer expects to select. On the first day of sale, at the promoter’s office in town, the reservations are called out in order, and the buyer steps up and, from a beautifully drawn blueprint, with lots and dimensions and prices clearly shown, selects a lot or lots, gets a receipt in the form of a `binder’ describing it, and has the thrill of seeing `Sold’ stamped in the blue-lined square which represents his lot, a space usually fifty by a hundred feet of Florida soil or swamp. There are instances where these first-day sales have gone into several millions of dollars. And the prices! … Inside lots from $8,000 to $20,000. Water-front lots from $15,000 to $25,000. Seashore lots from $20,000 to $75,000. And these are not in Miami. They are miles out-ten miles out, fifteen miles out, and thirty miles out.”
      The binder, of course, did not complete the transaction. But few people worried much about the further payments which were to come. Nine buyers out of ten bought their lots with only one idea, to resell, and hoped to pass along their binders to other people at a neat profit before even the first payment fell due at the end of thirty days. There was an immense traffic in binders-immense and profitable.


      The Florida boom, in fact, was only one-and by all odds the most spectacular-of a series of land and building booms during the Post- war Decade, each of which had its marked effect upon the national economy and the national life.
      At the very outset of the decade there had been a sensational market in farm lands, caused by the phenomenal prices brought by wheat and other crops during and immediately after the war. Prices of farm property leaped, thousands of mortgages and loans were based upon these exaggerated values, and when the bottom dropped out of the agricultural markets in 1920-21, the distress of the farmers was intensified by the fact that in innumerable cases they could not get money enough from their crops to cover the interest due at the bank or to pay the taxes which were now levied on the increased valuation.


      Again, all through the decade, but especially during its middle years, there was a boom in suburban lands outside virtually every American city.


      On the immediate outskirts of great cities such as New York, Chicago, Los Angeles, and Detroit huge tracts were less luxuriously developed.


      For a time the Florida boom had a picturesque influence on suburban developments. Many of them went Venetian. There was, for example, American Venice, thirty-four miles from New York on Long Island, where the first bridge to be built was “a replica of the famous Della Paglia Bridge at Venice,” and the whole scene, according to the promoters, “recalls the famous city of the Doges, only more charming-and more homelike.” “To live at American Venice,” chanted one of the advertisements of this proposed retreat for stockbrokers and insurance salesmen, “is to quaff the very Wine of Life …. A turquoise lagoon under an aquamarine sky! Lazy gondolas! Beautiful Italian gardens! . . . And, ever present, the waters of the Great South Bay lapping lazily all day upon a beach as white and fine as the soul of a little child.


      The final phase of the real-estate boom of the nineteen-twenties centered in the cities themselves. To picture what happened to the American skyline during those years, compare a 1920 airplane view of almost any large city with one taken in 1930. There is scarcely a city which does not show a bright new cluster of skyscrapers at its center. The tower building mania reached its climax in New York-since towers in the metropolis are a potent advertisement-and particularly in the Grand Central district of New York. Here the building boom attained immense proportions, coming to its peak of intensity in 1928.


      After the Florida hurricane, real-estate speculation lost most of its interest for the ordinary man and woman. Few of them were much concerned, except as householders or as spectators, with the building of suburban developments or of forty-story experiments in modernist architecture. Yet the national speculative fever which had turned their eyes and their cash to the Florida Gold Coast in 1925 was not chilled; it was merely checked. Florida house-lots were a bad bet? Very well, then, said a public still enthralled by the radiant possibilities of Coolidge Prosperity: what else was there to bet on? Before long a new wave of popular speculation was accumulating momentum. Not in real-estate this time; in something quite different. The focus of speculative infection shifted from Flagler Street, Miami, to Broad and Wall Streets, New York. The Big Bull Market was getting under way.

      1. attempter

        Yup, they keep performing the same scam. Of course back then the oil production curve was on the upswing and its cost was heading down. Today the opposite, which dooms it all.

        Downsouth, have you read Bernard Bailyn’s The Ideological Origins of the American Revolution yet?

        It seems like a book right up your alley.

        I find it suggestive toward my own goal of trying to figure out how to redeem American values and the American spirit.

        1. DownSouth

          I too believe that the end of plentiful and cheap oil is what is going to bring the entire castle made of sand tumbling down.

          The Spanish built their empire on slave (mostly Indian) power.

          The Dutch built their empire on wind power.

          The English built their empire on coal power.

          And the Americans built their empire on petroleum power.

          But the petroleum gig is almost up. So what now?

          1. Anonymous Jones

            This is a really important point. Empire building is very much about comparative access to cheap power. I’ve mentioned before on this site the tale of abundant excess hydroelectric power in the Pacific Northwest and the enormous advantage that cheap power provided the US in ramping up the war machine in WWII (aluminum smelting, etc.). And everyone already knows the Japanese basically ran out of gas (literally) in that conflict when the US Navy determined to cut the supply lines.

            I have no idea what it means to the future or what the US will do, but the access to, and efficient exploitation of, cheap energy sources will definitely be key.

          2. DownSouth


            The oil thing can bring it all tumbling down. As Allen pointed out, much of the 1920s real estate boom was predicated on the automobile:

            Again, all through the decade, but especially during its middle years, there was a boom in suburban lands outside virtually every American city… Here again the automobile played its part in changing the conditions of American life, by bringing within easy range of the suburban railroad station, and thus of the big city, great stretches of woodland and field which a few years before had seemed remote and inaccessible.

            Without cheap gasoline to run those automobiles, where does that leave the suburbs?

          3. attempter

            I have no idea what it means to the future or what the US will do, but the access to, and efficient exploitation of, cheap energy sources will definitely be key.

            Yup, except that we’ve seen the last of cheap energy sources. That’s what Peak Oil’s all about.

  2. jbmoore

    With UBS reneging from the deal, most tax cheats will go free. This makes the UBS whistleblower’s being sent to prison even more of a travesty of justice. What message does it send when the morally responsible person who tells the authorities of a crime goes to jail, and the offenders get away with the crime anyway? When will we grow up as a species, as a people?

    1. aet

      I think that the ends of justice would best be served if some of these tax cheats had actual names attached to them…why are they anonymous? Are they children? Or victims?

  3. Skippy

    America is fast becoming a country not of the brave but of the prostitute, ready to sell her self for short term gain ie: illusionary capital (miss-allocation of resources to few) gain ie: stuff, yet this is not a wedding of a republic slash democratic or other wise society, it is a pot of malcontents of wealth, haves or have not’s and the feast of bones.

    Generational fratricide in an idealogical construct with out reasonable debate is dearth for all.

    Skippy…get off my leg!

  4. DownSouth

    I think Krugman lives in some defactualized universe, divorced from reality.

    CNN Poll: 3 of 4 Americans say much of stimulus money wasted

    Nearly three out of four Americans think that at least half of the money spent in the federal stimulus plan has been wasted, according to a new national poll.

    A CNN/Opinion Research Corporation survey released Monday morning also indicates that 63 percent of the public thinks that projects in the plan were included for purely political reasons and will have no economic benefit…

  5. DownSouth

    ► “Bank Sues Victim To Avoid Replacing $200k In Stolen Funds” Consumerist

    Well at least in the United States there is some legal protection in place for bank customers.

    Similar things have happened here in Mexico, but bank customers have little legal recourse. One widely publicized case involved an incident where the bank’s own employees conspired to loot their customers’ accounts of their contents. But it didn’t matter, the bank refused to make good on the stolen funds, and in this libertarians’ wet dream, there are no laws or regulations to force the banks to replace the money their employees stole.

  6. dlr

    Hey, look at that. Now we can say something nice about Obama. The EU is buckling and getting ready to bail out Greece (to start). At least Obama isn’t taking money from responsible states like Texas, and rewarding profligate irresponsible states like California and Michigan. Yet, anyway.

  7. Maggie Knowles

    Brilliant speech on the future of journalism (paywalls, open vs closed systems) by Guardian Editor Alan Rusbridger (found at –
    “In an industry in which we get used to every trend line pointing to the floor, the growth of newspapers’ digital audience should be a beacon of hope. During the last three months of 2009 the Guardian was being read by 40% more people than during the same period in 2008. That’s right, a mainstream media company – you know, the ones that should admit the game’s up because they are so irrelevant and don’t know what they are doing in this new media landscape – has grown its audience by 40% in a year. More Americans are now reading the Guardian than read the Los Angeles Times. This readership has found us, rather than the other way round. Our total marketing spend in America in the past 10 years has been $34,000.

    Nor is all this being bought by tricks or by setting chain-gangs of reporters early in the morning to re-write stories about Lady GaGa or Katie Price. In that same period last year, our biggest growth areas were environment (up 137%), technology (up 125%) and art and design (up 84%). Science was up 81%; politics 39% and Comment is Free 38%.

    This is the opposite of newspaper decline-ism, the doctrine which compels us to keep telling the world the editorial proposition and tradition we represent are in desperate trouble. When I think of the Guardian’s journey and its path of growth and reach and influence my instincts at the moment – at this stage of the revolution – are to celebrate this trend and seek to accelerate it rather than cut it off. The more we can spread the Guardian, embed it in the way the world talks to each other, the better.”

  8. Ed

    The Rusbridger speech linked to above is long, but fascinating reading. And being posted on the web, there are links to other sites of interest!

    I’m an American, but in the morning I read quickly through the four “quality” British newspapers (the Times, Guardian, Telegraph, and Independent). I also check the Sydney Morning Herald from Australia, and sometimes the Financial Times. The reasons is that US based print media, even the highbrow stuff, has just become bad, filled with boring, error filled stories. So I basically go outside the US, to other English speaking countries to get my news. None of these outlets without flaws, but their is enough diversity in news sources outside the US that the biases balance out somewhat. Hence the growth of the Guardian’s American readership.

    Second, it seems obvious to me that if print newspapers typically made their money off of advertising instead of newstand sales, and were willing to cut the prices of the papers to nominal amounts to boost newstand sales (though interesting, they always had to charge something, however small, to be taken seriously), the same principles carry over to the internet.

    But micropayments, once they become technically feasible, might bail out the industry. I actually think most people will be willing to pay for online content as long as the amounts are trivial, like one cent an article, and easy to do. But I’m not sure what the point of such a system would be.

  9. Ed

    One more thing that will affect news media is that governments put much of the information they collect online, as do some non-profits.

    For example, if I’m curious about the world’s oil supply I will see little in the mainstream US press, and what little I see will be misleading, but I can go straight to the EIA and read their reports, and make my own conclusions. When the census 2010 results come out I will get direct access to the census data from the census website, and don’t have to get it filtered through an often innumerate reporter’s article.

    Unless the news moguls can somehow gag the government, and I’m sure they will try, this also changes the dynamic of the feasibility of paid online media.

  10. gordon

    Here are some extracts from a summary of the Afghanistan conference in London. The echoes of Vietnam are loud, and the entire lack of principle behind the whole adventure is obvious. That said, some kind of negotiated settlement is better than endless war.

    “There is to be a concerted effort to incorporate various Afghan warlords presently associated with the Taliban insurgency into a power-sharing government with Karzai and split off upwards of 12,000 Afghan fighters, using a slush fund of over $650 million provided by the US, Japan, Britain, Germany and others. (Only $147 million of this has been pledged.) There will be a major military offensive to “convince” the Taliban that resistance is not an option.

    “The main thrust of the policy is directed to various warlords, who will be offered roles in government. The cynicism involved in this plan is extraordinary, given that the war against Afghanistan was launched in 2001 on the pretext that the Taliban regime had to be overthrown because it sheltered Osama Bin Laden and had ties to Al Qaeda.

    “Bin Laden is now barely ever mentioned, while the US has been in direct negotiations with representatives of Taliban leader Mullah Mohammad Omar and others—forces whom US Defence Secretary Robert Gates now describes as part of the “political fabric” of Afghanistan.

    “Five former senior Taliban officials have already been removed from a United Nations sanctions list to facilitate these manoeuvres”.

  11. William

    Well my 23 years born and raised in the UP trumps his 3. But it doesn’t take a bona fide yooper to tell that moose is a painfully obvious fake just by the size alone and you’re own BS detector.

    BTW, Elliot Lake is in Canada.

  12. Glen

    Interesting little piece in today’s Australian Financial Review Weekend Edition via Bloomberg that the Chinese government is providing MORE subsidies to rural Chinese for the purchase consumer items such as fridges, washing machines and vehicles. One way to maintain that illusionary 10.5% growth.

  13. Elliot

    The moose pics are p-shopped. The feet don’t touch the road, and there is no shadow where the feet would touch, and cast shadows.

    Plus, A-level biology & physics would tell you why moose wouldn’t get that size. Scaling up that size would make the body too heavy for its legs to hold it up.

    Gotta love the name of the lake, however. Adding it to my collection.

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