Links 2/12/10

Regulators Hired by Toyota Helped Halt Investigations Bloomberg and Bursting Pipes Lead to a Legal Battle New York Times. Faulty financial products, faulty cars, faulty pipes….what next?

IMF Tells Bankers to Rethink Inflation Wall Street Journal (hat tip reader Don B)

The Myth of Efficiency James Kwak

Welcome to boarded-up Britain: One in eight shops now stand empty as recession hits high streets Daily Mail (hat tip reader Steve L)

Is The FDIC Killing Short Sales? ActiveRain (hat tip reader Scott)

The danger of bearing gifts to the Greeks Ambrose Evans-Pritchard, Telegraph, Swedish Lex adds:

Ambrose’s assessment of the EU declaration of yesterday is pretty accurate although a couple of important pieces are missing in order to make the puzzle more complete. A lot is captured in the opening sentences of the column:

“The Greek rescue plan agreed by EU leaders after a week of leaks is strangely thin, raising suspicions that Germany, Holland and the creditor states of Northern Europe still cannot agree on the terms of any bail-out.

The euro tumbled 1pc to a nine-month low of $1.36 against the dollar and Club Med debt yields jumped as investors read the summit text, searching in vain for details of debt guarantees or bilateral loans, or guidance on an EU eurobond. All they found was an expression of “political will”.”

It is true that the EU and the Member States have not had time to agree on a master plan and that, for instance, Germany has quite a bit of internal cuisine to attend to before a more comprehensive program will begin to emerge. So in a way it is right to say that the EU is buying time, a commodity of which there is little in stock.

However, the message of the EU leaders of yesterday is clear in some regards. For instance, the euro states will do what it takes to avoid another George Soros/ERM moment, allowing a speculator or a wolf pack of speculators to steal the show. Whoever it is that is taking positions in order to achieve George Soros fortune and fame this time, by hitting the euro where it hurts most, will now face the full attention of the ECB, Germany and France. Their calculation is, it seems, that the euro can remain imbalanced and incomplete, with their ad hoc support, longer than the speculators can remain solvent.
The other factor that Ambrose did not mention is that Merkel and France yesterday again reiterated their commitment to developing and making proposals for global economic governance. The current euro crisis could be the perfect catalyst for speeding up that process.

It seems that Merkel is assuming the role or the bad cop, with her insistence yesterday that Greece will have to produce monthly reports as regards the austerity program imposed by the EU Commission. If there previously was any doubt in Greece that any future support from the other euro states, should it become necessary, will come with a lot of strings attached, that doubt should have vanished by now.

Steering Out of a Smash-Up No One Wants Andy Xie

Antidote du jour (hat tip reader Kevin):

Fw Great Wildlife Photos!! Please Share them....... extremely rare photography (1)

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  1. Ken

    Hi. This is my first post. First of, thanks to Yves for this fantastic blog. I read it everyday.

    My comment is in relation to “IMF Tells Bankers to Rethink Inflation” (Wall Street Journal) urging central bankers to target a higher inflation rate so that there is more room for monetary policy before the 0% interest rate lower bound is hit. Why is 0% the lower bound? Only because we have cash — notes which yield zero at all times which people would hoard if interest rates were negative. But… what if cash were removed from the system? How much do we really need cash these days with debit/credit cards and electronic payment services. Perhaps cash could be made available and used for only very small transactions and then eventually fully withdrawn. Without cash interest rates could easily be negative (as there is no longer a 0% alternative). Negative rates would encourage spending or investment just as desired. Isn’t this a better option than encouraging inflation?

    1. eric anderson


      Think this through. What do you think the reaction of the man on the street would be to your plan? My guess would be a feeling of murderous rage. YMMV.

      You certainly do make a great argument for holding physical precious metals, though. Clearly, the powers that be want more looting to occur. And they will attempt to accomplish it by devaluing the dollar, one way or another.

      You’re right, Ken. This is a great blog. You probably need to also read Mish’s blog (Global Economic Trend Analysis) or Zero Hedge for balance, though. The solutions offered here tend to be of the technocratic and statist type, rather than the freedom-oriented thinking (i.e. more libertarian) at the alternatives mentioned.

      1. Ken

        Thanks for your reply. You write: “Think this through. What do you think the reaction of the man on the street would be to your plan?”

        But I found this article related and amusing:
        “From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards.”

        So, perhaps not so unreasonable…but a period of murderous rage (or at least protests and strikes) likely to occur first.

    2. charles

      Yes, having negative real credit-risk free rate is a reasonable proposition. With the enormous mass of retirees coming in the developed world that will all cease activity at the same time (first in Germany and Japan, but every country will follow) AND the depletion of natural resources, the achievable overall real return on investment could be very low, or even negative : essentially, one has to invest A LOT of money NOW (say, robots, or power plants with heavy front loaded cash outlay) to get wealth, not at a supercharged real return, but with assets that can be operated by an weak/old boy or girl or entirely automatically. In a sense, this is what China has done for quite a while and they have to as they will face the steepest demographics shock of all countries.

      This being said, if this “realistic” return rate (that could be negative), is way below the “expected” return rate by most of the investing population, you inevitably get bubbles (like in China today), because people will try to grab the opportunity of “cheap money” compared to their – delusional – high return rate.
      If the investments that are built are the one that would have been chosen with reasonable return expectation , it is not so much a big deal : 20 years from now, you end up with the right mix of real assets, it is just the equity that goes to zero and bonds that are x% of the par. The economy just keeps on working. I am sure this is what the Bernanke/Summers etc… crowd think/hope.

      However, if the only investments that appear good are bad in real terms (such as building houses where nobody will live, or cars nobody will drive), it is pure malinvestment, and one can’t make up for it. Again, China is a case in point : yes they are building railways and powerplants that will efficiently transfer wealth into future consumption, but they are also building too much cement factories, aluminium smelters and luxury real estate.

      It is not easy to find the optimum, maybe it is even impossible because the future is too unpredictable. This is why some people (especially the readers of this blog) focus more on robustness and fairness than on optimum.

  2. DownSouth

    I disagree with Andy Xie’s take on the US political system. He writes:

    Obama’s dilemma is that Washington’s political structure won’t allow substantive measures. The Senate voting system implies the opposition must support whatever the ruling party wants. As the opposition has no interest in helping the ruling party succeed, it’s only willing to support what it champions. Hence, the ruling party must adopt the opposition’s agenda to get anything done.

    The Clinton administration passed a few measures the Republicans championed. The Bush administration did the same for the Democrats. This means, overall, nothing radical can be accomplished….

    When the government’s hands are tied, the Federal Reserve gets called upon to shoulder the economic burden. But its only tool is the currency printing press.

    What Xie is missing is that Obama and his putative opposition in the Republican Party are all on the same payroll. This is political theater, pure and simple, carefully choreographed to give the impression that there is a substantive debate taking place when in reality there is none.

    It’s like professional wrestling: great entertainment, but one shouldn’t mistake it for a true contest.

    1. MyLessThanPrimeBeef

      I am surprised his editor didn’t catch the typo.

      It should be Obama’s ‘unilemma’ and not ‘dilemma’ in Washington.

    2. Sundog

      DS, up to 2000, yeah I’ll go with same-same. But I think Shrub/Rove/Cheney was a game changer in terms of what they promised the base (perpetual domination), the magnitude of the disasters and incompetence that occurred on their watch, and the way the consequences are playing out.

      Andy Xie is a buffoon and I hardly know where to start taking that silliness apart. A victory margin of 100,000 out of 2,200,000 votes cast is a landslide? An off-year election in Massachusetts, of all places, is representative of the entire US polity? I could go on graph by graph….

      Andy says, throw a few bones to finance, the auto unions and big ag, it’ll all be right. Japan and South Korea could get by with this sort of thing once upon a time. Not China, not today. This is a recipe for further rising imbalances; better to bust it sooner than later, unless destabilization is the goal.

      To anyone who thinks China’s advantage is in cost of capital (WTF???), you don’t need to have lunch with Chris (cheers Yves for hanging with another of my faves!) just look at the gross lending flows and NPL problems that have come up in the past. Check in with Michael Pettis’s blog once in a while. Who does Andy think he’s talking to, I wonder.

      Yves wasn’t so happy that Geithner called out China during his confirmation hearing but I was, and am, in favor of frank talk. And more if necessary.

      1. Yves Smith Post author

        Sorry, I feel compelled to correct the record. I was surprised that Geithner called China a currency manipulator but was most decidedly NOT opposed, in fact criticized him when he (predictably) backed down.

  3. But What do I Know?

    Re: the IMF post. As I’ve said before, we’re getting to the point when the politicians will decide per Clemenceau, that money creation is too important to be left to the bankers.

  4. Bas

    No, the European “summit” didn’t yield any new guarantees or “master plans”. That’s because the Greek debt problem HAD ALREADY BEEN DEALT WITH earlier this year. The Greeks were caught cooking their books, assisted by Goldman, which of course made some proprietary sidebets of its own during this process. For this, the Greeks were grilled by eurozone leaders and bureaucrats, upon which the governement started to enact large spending cuts – seen any striking Greek stateworkers lately?

    Goldman followed a familiar pattern throughout the Greek Debt Hoax: helping the Greeks cheat us Europeans with dodgy debt instruments, and at the same time betting against them in case it all came out. This prepared Debt Bomb was quickly defused by eurozone leaders in january. So Goldman and other speculators tried creating the needed debt crisis in another way: by using the anglophone media that dominate financial information in the West.

    Didn’t work. The Germans and French had to be on board for this crisis, and there’s just not enough of them that read the FT, WSJ, Times, Telegraph etc. Well, anglofinance did manage to piss off Eurozone leaders, forcing them into a humiliating farce of a summit where they had to be seen happily repeating all earlier pledges and conditions to the Greeks.

    A humiliating experience for them, and a sharp reminder to Europeans of the financial and informational power of the anglophone world. But it if I were a British or American citizen, I would be even more worried by the way my own media have been captured by these powerful interests, without as much as a single dissident voice to be heard. Including, to my great dismay, here on NC.

    1. DownSouth


      You ask: “seen any striking Greek stateworkers lately?”

      Well yes, here’s a news report from just a couple of days ago:

      Greeks Strike Amid Financial Crisis
      Civil servants in Greece strike and protesters gather outside the national parliament as country’s financial crisis deepens.

      A much bigger strike is planned for Feb. 24.

      1. charcad

        A much bigger strike is planned for Feb. 24.

        Repeat, there are no reliable mechanisms in this area to keep things from escalating out of control. Bosnia’s journey to Golgotha began in late 1988 with a fairly small demonstration outside a meeting being attended by Milosevic and other local politicians. And generally speaking the discontent was rooted in economics.

        I’m not being far-fetched, Lex. This is how it started before. And the Euro-Pretenders in Brussels have returned to playing with matches and open pails of gasoline.

        Been there, done that, didn’t even get a t-shirt. (Two years earlier they had t-shirts on sale in Riyadh during the Desert Shield phase).

        1. Anonymous Jones

          In no way do I want to convey that the “spiraling out-of-control” scenario is far-fetched, but please, let’s be somewhat restrained with the analogies.

          It is difficult to make any good analogies when dealing with countries in different times and different places with different populations and different cultures.

          In particular, I think that using any country of the former Yugoslavia as a benchmark for comparison is going to yield results that are highly doubtful at best. I spent a fair amount of time there and the deep seated hatred across the ethnic lines (that had been mostly bottled up under Tito) was relatively extreme. And this is coming from someone who believes almost everything is about economics at its base. Lots of things are flammable, but some things are far, far more flammable than others.

  5. gigi

    Re: speculative attack on the euro

    I thought that the recent strength of the Euro was at least partly because of the dollar carry trade. And the recent weakness because of the unwind caused by the realization that Euro-land has the same problems as dollar-land. Plus Euro around $1.5 seems expensive to me but I don’t have any numbers that would support this feeling so maybe $1.5 is fairly valued?

    How can France and Germany avoid a speculative attack against the Euro when (a) the Euro is a bit overvalued (b) there are hordes of carry traders who will run out of the Euro forced by margin-calls (c) there may have been no speculative attack against the Euro and it is just the carry unwind.

    Or are they building confidence because they are afraid Euro will crash, say around parity with the dollar? Jawboning recently has been one of the most used weapons in the financial markets.

  6. charcad

    r.e. Ambrose-Evans Pritchard’s article on the EU leaders’ meeting:

    “Euro area member states will take determined and co-ordinated action, if needed, to safeguard financial stability in the euro area as a whole.”

    This was Van Rompuy’s announcement of Brussel’s standing offer to rule supreme after other people’s money (and at a minimum other people’s riot police) do the heavy lifting.

    The 27 leaders never even discussed how they might shore up Greece or the rest of Club Med. German Chancellor Angela Merkel said she was not willing to broach the subject at all.

    If Merkel had been “willing to broach the subject” the best outcome would have been a new German chancellor appearing at the next meeting saying that he also is not willing to broach the subject.

    Cool off, EU-philes. imo Merkel did you a favor by not further exposing just how superficial “European Unity” is after all the expense, effort and subterfuge.

    The “Chancellor of Germany” has the very same power to fund bail outs of Greece that the Governor of Ohio has to fund New Jersey’s state budget deficit. On a scale of 1 to 10 this is 0.0.

    Greek banks have been shut out of Europe’s inter-dealer markets, forcing them to raise money at killer rates. They are suffering an erosion of deposits as rich Greeks shift money abroad. This could come to a head long before April.

    In Germany “rich Greeks” are quickly becoming a synonym for “bankster”. Average Germans aren’t trying to screw Greek dock workers. What they fear is they’ll be screwed to bail out the Onassis estate and his shipping tycoon colleagues.

    Ignore all these trans-Euro noises. The graveyards in Bosnia are full of people who believed these trans-Euro blowhards’ predecessors would take action soon, or at some point, and finally that their consciences would ultimately shock them into action. All were wrong. Dead wrong, sad to say.

    Jawboning recently has been one of the most used weapons in the financial markets.

    This is “Euro” leaders’ all purpose weapon system. They rolled it out in late 1991, too. The moment any European steps beyond saying they’re the President of France or Chancellor of Germany they assume an office identical to the old hobo office of “Emperor of the North Pole”.

    1. Swedish Lex

      You are wrong in that euro States (as opposed to the EU) cannot bailout other euro states. They can, but their national legislation must however permit them to do so, which I think it will in most cases provided that granted aid is backed by guarantees from the recipients.

      Invoking Bosnia as a factor relevant to assess the current situation regarding the euro seems a bit farfetched.

      1. charcad

        They can, but their national legislation must however permit them to do so

        And Constitutionally I know of nothing that would prevent the Governor of Ohio from asking his state legislature for an appropriation to help fund New Jersey’s state budget deficit. Other than the absolute certainty of political extinction. This is an effective deterrent for both Strickland and Merkel.

        Let’s take some large size examples, Lex. As sovereign states the USA, China, Brazil and Russia all have some common features.

        1. They all have central banks that issue money and control monetary policy. Just like the ECB in Frankfurt.

        2. They have central government treasuries with sovereign taxation powers that work hand in glove with their central banks. These taxes are set at uniform rates by sovereign legislatures and parliaments. Except for the Beijing dictatorship which does this by administrative diktat.

        3. They have nationwide labor markets with relatively free movement of labor from economically depressed areas to places with more job opportunities.

        4. And I will add they also all maintain reasonable civil peace within their borders by relying exclusively on their own police and troops. And when violence breaks out to the point of little kids being blown away wholesale they take decisive action to restore order. And without waiting for troops from other continents to take the lead while issuing vacuous politically correct statements du jour from 1,000 miles away*.

        The EU – euro ponzi scam is lacking features 2-4. As an economic entity it has more in common with the old Hanseatic League than with a real sovereign state.

        * (I admit my bitterness here is personal. And magnitudes greater than whatever grudge Yves thinks she has against Goldman Sachs. I did however learn why my old Army JROTC instructor in h.s. had such a gutter opinion of all European politicians. Tibor was a retired Special Forces officer and 1956 Hungarian refugee. When he tried to tell me how corrupt and gutless they were I refused to believe it. He was right and I was wrong. Some things have to be learned in person.)

        1. Swedish Lex

          I had to Google JROTC, I must admit.

          Yves has her past Goldman issues and you seem to have earned yours while wearing a uniform. Of course the European response to the Bosnian conflits was dismal. I thought at the time that European forces should have gone in massively but too many Europeans thought that it would result in an unwinnable Wehrmacht – Tito situation. My view is, still, that Thatcher been around (hardly an EU-fan, by the way), then she would have taken charge and the outcome would have been completely different.

          To your points:

          2. You are largely right. The EU however has competence on VAT, for instance, that can come handy. The absence of an EU fiscal resource could however change fast if there is agreement on the EU States to raise common taxes. This would NOT result in a fullblown EU Government, bout resources could be raised. The more aggressive “speculators” are perceived as being, the more likely targets for such taxation are they becoming. A bit of speculation on my behalf, I know, but I would not underestimate the potential resolve of the EU States in the coming monhts. A more simple solution would be to organise bi-lateral support.

          3. Correct. But there are (expensive) unemployment schemes in place, so it is, for the medium term at least, a matter of cash.

          4. Not sure whether you are advocating a European Army here (as the German Minister of Defence did in a speech earlier this week) or not. But as regards the euro, I believe that a new clause has to be introduced into the Treaty that would allow euro states to swap back to their old currencies while remaining members of the EU (at a huge “transaction cost”). If, for instance, the Greeks can not take austerity like the Finns did in the 90s, I believe that the Greek people should have the right to vote, leave the euro and manage their economy as best they can.

        2. Yves Smith Post author

          For the record, it isn’t so much Goldman issues as “investment banking/capital markets firm” issues, but Goldman has made itself the poster child by asking for it, particularly Blankfein’s statement re doing the Lord’s work.

          John Mack took no bonus for the last three years running. JPM was no where near as solid during the crisis as they are generally perceived to have been, but Dimon also has the sense to not make as ridiculous pronouncements as the GS crowd has. Ken Lewis and Thain got their comeuppance, Pandit is being forced to partially dismantle Citi.

          So my focus with Goldman isn’t simply its conduct (the whole industry has set out to feather its nest, please) but the fact that it is so convinced of its superiority and deservingness (not a word, but you get what I mean) that its intransigence manages to be worse than the rest of the industry. They so clearly and visibly don’t get it that they demand to be whacked.

        3. IF

          I keep seeing that 3) does not exist, but it simply is not true. Even in the 90’s Greek and Portuguese construction workers were employed en mass in Germany. Later Bulgarians were working in Spain. Similarly prostitution in central Europe is dominated by Romanian and Bulgarian workers. Finally, we shall not forget the “Gastarbeiters”, starting with the Polish in the 1800s in the coal mines of the Ruhrgebiet, to the Yugoslavians and Italians in the 1950s, Turks in the 1960s (and Vietnamese in East Germany). Even now many educated leave the Balkans for western Europe and the US. People move around the EU for economic reasons. Maybe not as freely as in the US (sold a house lately to accept a job on the other coast?), but they do.

    2. bob goodwin

      You can bet the Germans will come to the table and bail out the Greeks soon. This is not my analysis, but from Ambrose Evans-Pritchard about a month ago. There is too much at stake in EU land, and with a gun to their head, any politician will choose to “have prevented another great depression.”

      It was his next prediction which really got my attention. After the Greek blowup there would be run on other sovereigns, and nobody will come to the aid of Japan.

      To blame all this on anglophones sounds right to me. But since English is my only language I love that we have Goldman to kick around.

  7. DL

    I read that article about the FDIC policy and wrote letters to all my legislators asking them to please stop this policy that allows for the looting of taxpayers. Hmmm… wonder if anything will change… worth a try.

    1. DownSouth

      When I read stuff like that I’m just dumbfounded.

      Is there nothing our government won’t stoop to in order to hand out free money to well-connected bankers?

      1. Doug T

        For a time, market predators had been kept in some sort of check, but they inexorably consolidated their coup and captured government. I believe they will not change any more than a scorpion can resist stinging its own kind, at times even itself, to death. It appears they are in the process of doing so now and taking all of us with them. The merciful alternative is a heavy boot heel, but how?

    2. dlr

      I wish I believed it would make the slightest bit of difference. Our lawmakers are as corrupt as the FDIC, the FED, and the Treasury Dept. Their common goal, as far as I can see is to shovel as much money as possible from taxpayers to the big banks, aka – their major campaign contributors, future employers, and co-conspiritor’s.

      At this point I am convinced the only thing we can do is vote them all out of office, 100%, and start again from scratch. Our entire political process has been completely corrupted by these scum.

  8. Swedish Lex

    High quality non Anglo-saxon, for those who prefer that brand, assessment of yesterday’s summit and its macro implications.

  9. rickstersherpa

    From today NY times comes the information that Euro zone Europe experienced zero growth last quarter and the Chinese have raised reserve requirements to fight growing property bubbles (a bubble brought on in part by their over valued exchange rate with the dollar and the Euro). That sounds to me that as Chinese growth slows, and Europe perhaps goes back into recession, the odds that the U.S. will also fall back into recession. The central banks and creditor classes continue to feed their inflation hysteria, as the specter of debt deflation continues to haunt the world.

  10. Bas

    @Swedish Lex,
    How is that a high quality assessment? It’s simply an explanantion of what happened at this summit (i.e., a reluctant rebuff of a speculative attack on a nation that had already been chastized weeks before), by EU elite arrogance personified, Mr. Juncker.

    Mind you, I do not like or prefer non-anglosaxon versions of events. Pathetic as eurobashers like Charcad may be, I don’t care much myself for the way European integration has been shoved down the throat of the public.

    And I used to appreciate anglophone journalism. But this week I saw it follow the financial and political system in this quagmire of corruption, Not a pretty sight.

    1. Swedish Lex

      I got a wealth of information out of that piece that the columnist managed to publish right after the summit with direct input from one of the main actors. We disagree.

      1. Kevin de Bruxelles

        I thought it was informative as well, but I would have liked the columnist to ask M. Juncker, who stressed that any help was conditional on Greek cooperation, what happens if Greece does not live up to its promises?

        1. Anonymous Jones

          Isn’t that always the question! I’ve drafted a lot of contracts in my day, and the real trick isn’t getting people to make covenants, it’s designing methods to enforce those covenants. The naive just think, oh, well, we’ll sue!

          Of course, there’s time, expense and risk involved in litigation. And being involved in litigation stains your reputation. But even more importantly, insisting someone live up to his covenant when he doesn’t want to can *ruin* a relationship, and often the relationship is worth more than the performance of the covenant in question. I can’t tell you how many times a hard fought contractual provision was defaulted on and no one did anything because the aggrieved party couldn’t risk the overall relationship (They needed the eggs!).

          The best methods of enforcement are usually having structures that keep incentives aligned, like bonuses, holdbacks, etc.

          Eventually, however, on big issues, enforcement comes down to violence — the sheriff forcibly takes someone’s property and gives it to someone else. [I could really tell you some stories when there’s no reliable “sheriff.” How about invading land in Quintana Roo with an “army” of 50 Mayans in order to enforce a default by a lessee? Rocks and machetes…more important than covenants!]

          Will the EU really use force if it comes to that? Will they inflict economic damage instead and risk that the Greeks just start blowing shit up? Heady questions.

          1. Kevin de Bruxelles


            No, I don’t at all think the EU will use force. The EU doesn’t really have any forces to deploy! And Greece is a NATO country so that would get pretty interesting.

            But from the article Swedish Lex linked to, Juncker’s attitude towards Greece (and I may be projecting here) reminded me of an uncle discussing his credit-crackhead nephew. “We are there to support him but he has to help himself”. The unspoken message that I took away (and again, this may just be me) was that Greece would be left to the bond market wolves if they didn’t get with the program and get with it quick.

            Now of course Greece has cards to play too; a default would hurt many of the other EU countries. But one positive result of the EU’s cumbersome institutions is that they are difficult to blackmail, since it would be so difficult for them to get everyone to agree to pay the ransom. So I imagine that the EU are now putting more energy into figuring out what to do in case Greece refuses to stop hanging out with their credit-crack dealers like GS.

          2. MarcoPolo

            I’m not close enough to be sure I can form an accurate impression, but from the outside it looks a lot to me like IMF vs. Argentina. Argentina says give me the money or I’ll default, IMF says there will be no contagion these are the (impossible) terms, Argentina defaults. But the real loser was IMF who inscribed their tombstone that day as an irrelevant red-headed step-child of a defunct Washington consensus. 

            OTOH, Bas upthread, if i understood correctly, implies the EC is choosing its fights sacrificing its GR pawn to set up it’s next move on the Soros bond vigilanties.

    1. MarcoPolo

      and as Yves aboves refers to feathered nests…. Well never mind. I guess we’re all just pipefitters here :(

  11. Maggie Knowles

    Interview With A Scammer (three parts)
    Scam-Detective: How much money did you earn from scamming people?
    John: In the year before I was arrested I earned about $75,000 (£46,000) for my family. I bought my family a better house and drove a BMW. I had mobile phones and laptops and everything that comes with having lots of money. I lost it all when I was arrested and my family had to move away from Lagos because I gave the names of my bosses to the police to get a lighter sentence. My family were in great danger because of me and I am very ashamed of that. I am very ashamed of the type of person I became, and I know now that I should have got a proper, honest job instead of stealing from good people.

  12. bob

    PVC pipe is sold as a cheaper alternative to Ductile iron pipe.

    The cost savings is not that substantial, in the larger scheme of a project. The majority of the cost of running or replacing pipes is in digging the hole.

    PVC also has the disadvantage of being very sunlight sensitive. The green dye in the pipe is supposed to signal when it has seen too much sunlight, and should not be used.

    Housing developers love it because it is lighter and requires less trucking costs. It also requires less people to install. One person can muscle an 8″ PVC pipe into a hole.

    In certain circumstances it does make sense. Seaside areas where there is significant chance of salt water corrosion.

    Most other areas should stick with what has been proven to work over the 100+ years. Ductile iron or reinforced concrete pipe.

    The pipe manufactures in this country have a near complete monopoly on manufacture and distribution.

    The cost of this problem will never be fully known.

    1. Doug Terpstra

      I saw the article also, but the picture showed what looked like polybutylene, a notoriously bad product, akin to financial derivatives I guess. PVC is generally white or UV-resistant brown. It saves a ton of money, mostly in labor costs, and doesn’t rust, unlike ductile iron. It’s the first time I’ve read of catastrophic failures.

      1. bob

        The underground PVC is usually green(or blue green), on the east coast anyway. I’ve seen lots of it.

        If you have to dig up 10 feet out of 2000 feet, you have lost all cost advantage.

        The cost advantages I have seen are usually demonstrated over a 30 year life of pipe. The majority of the east coast has pipe a lot older than that.

        Does that mean that the pipe is useless?

      2. bob

        Another note-

        Some of the biggest, oldest municipalities will not touch PVC.

        I saw it used in lots of municipalities where it seemed they were walking past a dollar to save a nickel. Not much institutional memory.

        There is also the problem with services, and tapping the pipes for them. You are not supposed to tap the pipe on the same radian when the taps are close to each other.

        When someone comes in 10 years later to tap a pipe, are they going to dig up the other services to find out where the other taps are?

        Never liked PVC for underground applications. Even in salt water areas you could get epoxy coated DI. Very expensive, but in the long run, the pipe cost is not a big part of the cost of a water system.

  13. MyLessThanPrimeBeef

    Why is it that car manufacturers are all of the sudden recalling their cars?

    Toyota, Honda and now VW cars in Brazil.

    I hope they recall GMO food.

  14. john bougearel

    And not one of you commented on that stunningly beautiful photo! Hmmm, don’t forget to breathe everyone!

    1. john c. halasz

      I don’t know what Yves was thinking, but the coloration “rhymes” with the reconstructed dinosaur feathers story of just the other day.

  15. dearieme

    From yesterday’s Telegraph:
    “Mr Sarkozy hinted that the eurozone might act if Greece came under sustained market pressure. “We are sending a very clear signal. If there were to be other events then we would have to call another press conference,” he said.”

  16. gordon

    “The Myth of Efficiency” rang a bell with me, not because of James Kwak’s examples but because it reminded me so much of all the examples of expensive waste of environmental resources documented in “Natural Capitalism”. Discussions of efficiency in business are seldom serious; they are generally a way of disguising the rip-off of somebody else.

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