Links 2/2/10

Sorry for comparatively few posts. Did not find much that seemed worthy of long-form comment. And per below, I did look!

Obama’s Wild Weekend: A Worldwide Surge in Warmongering Chris Floyd

Mortgage approvals suffer surprise dip Independent

How to fall six miles and survive Tyler Cowen

Do employers discriminate in female-dominated occupations?Alison Booth, Andrew Leigh, VoxEU

Tom Hoenig For Treasury Simon Johnson. The most interesting part is his name is being floated officially.

Amazon shares slip; Macmillan titles still missing PhysOrg

McKinsey Says Deleveraging Will Exert Drag on GDP Growth Prudent Investor. Conventional wisdom watch.

Report: SarahPAC spent thousands buying copies of Palin’s ‘Going Rogue’ Raw Story

Repo market to escape planned US bank levy Financial Times. Notice while the concern was (supposedly) Treasuries, the exemption includes ALL securities used for repo? Lovely. In a bull market for credit, dealer will lend against all sorts of supposedly safe paper. In the crisis just past, that included AAA-rated CDOs, many of which are now worth zero.

The best course for Greece is to call in the Fund Jean Pisani-Ferry and André Sapir, Financial Times. Reader Swedish Lex points out, “I am surprised that the authors would prefer the IMF – they are both EU enthusiasts. Should probably be read as in effect saying that the EU – for the time being – is not able to sort out its own problems through its own institutions. ”

Cat predicts 50 deaths in RI nursing home Telegraph

Goldman Sachs denies $100m pay deal for Lloyd Blankfein Times Online

Dem. senators spent weekend with bank, energy, tobacco lobbyists Ben Smith, Politico (hat tip DoctoRx)

NYT Talks Global Power Without a Clue Dean Baker

What’s a Degree Really Worth? Wall Street Journal

Google Documents and Groups Open in China! ChinaYouren (hat tip reader Michael T)

Rising FHA default rate foreshadows a crush of foreclosures Washington Post

CIA moonlights in corporate world Politico (hat tip reader Tom S)

Demand of corporate loans in US falls Financial Times

Why bipartisanship can’t work: the expert view James Fallows, Atlantic (hat tip reader Scott)

Health Care: Who Knows ‘Best’? Jerome Groopman New York Review of Books

Antidote du jour:

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  1. Richard Smith

    Immaculate timing for the Amazon vs MacMillan thing. I suppose you had better put a link in to Barnes & Noble as well.

    1. Yves Smith Post author

      Sigh, yes. My pre-order button is still intact at Amazon, but their price fight does not seem to be resolved.

  2. gordon

    I enjoyed the “Obama’s Wild Weekend” story, but the author forgot two relevant episodes.

    First, the Afghanistan conference in London, which finished 28 Jan. I have linked to a report on this before:

    Briefly, the conference decided to begin bringing the Taliban (or some of its key supporters) in from the cold and negotiate. Could be the beginning of the end of US involvement there.

    Second, I was surprised not to see any mention of US missile deployment in Poland; see here:

  3. charles

    “I am surprised that the authors would prefer the IMF – they are both EU enthusiasts. Should probably be read as in effect saying that the EU – for the time being – is not able to sort out its own problems through its own institutions. ”

    I am surprised that people are surprised. The IMF sole purpose is to adress Balance of Payments problems, it is where their expertise is. It is like going to see the specialist once the disease has been identified by the family doctor.

    The EU vs IMF debate sprang because the IMF wanted a devaluation in Latvia (which has a hard peg on the Lat), and the EU didn’t want, through contagion, to jeopardize the entry of some countries (Estonia for instance) in the Euro at the end of 2010. I am not sure it is a good idea, but the different Baltic Governments seem to be quite attached to the idea.

    In the case of Greece, there is no such issue because they are already in the eurozone, and the IMF doesn’t even think about a devaluation.

    1. charcad

      Should probably be read as in effect saying that the EU –for the time being – is not able to sort out its own problems through its own institutions.”

      Anyone who had the least contact with European crisis response in the Balkans in the 1990s is not surprised. A foundational premise of the jury-rigged euro was that a big enough crisis would lead to ever-larger powers being granted to Brussels to cope with said crisis.

      Question. Are events far larger than the breakup of 1990s Yugoslavia on offer in Greece? i.e. civil war and body counts by the 10,000 in Bosnia and Kosovo?

      Observe…Even this scale of events was insufficient stimulus to mobilize the so-called “European Community” into decisive action back then. It required NATO (translate: USA leading the way) to elevate affairs to decisive action.

      Never underestimate “Europe’s” capacity for institutional intransigence. It works the same as the “Equator’s” ability to resist enforcing any unified political policy.

  4. IdahoSpud

    “What’s a degree really worth” is a good read.

    The problem is even worse than the article suggests.

    A PhD (physicist for a major defense contractor) friend pointed out that I (with only a high school education) am financially well ahead of him because of:

    a) student debt and
    b) the student years that delayed him from entering the work force.

    As it turns out, his pay is not commensurate with his education, and at this point (50 yrs of age) I strongly suspect that he will never overcome the wealth gap.

    I still intend to put my daughter through school if she is inclined to do so, however. There is far more to life and being a good citizen than net worth. Someone please tell Wall Street!

    1. Andrew Foland

      I am also a PhD physicist, and believe me, all of us, sometime near the end of our graduate career, calculated just what the journey had cost us.

      For most of us, the opportunity cost of getting the PhD was something in the neighborhood of $150k-$200k. For a position in the defense industry, the pay scale between a PhD physicist (qua physicist) and non-PhD is large; minimum $20k and probably averages closer to twice that. It’s a little hard to quantify because students with only an undergraduate degree in physics are essentially never hired to do physics work (which would enter as an option value of the PhD that I have not quantified.) At any reasonable discounting to present rate, the $150-200k is more than made up for over time. However, if the physicist is acting in a non-technical role (i.e. as a project manager), the pay difference probably does start to melt away.

      From a financial perspective, getting a PhD almost never pays off; physical sciences are probably the only field where you can make a colorable case that they do. Even so, they on average don’t pay off the way that, say, med school might.

      The reference to student debt is puzzling–I don’t know of anywhere that actually charges tuition to their physics graduate students; essentially all physics students in the US are supported either on teaching stipends or on grants that pay for the tuition. That would have been the case going back to the time of anyone in their 50’s, as well.

      1. BDBlue

        That confused me as well. I had a ton of debt when I graduated from law school (more than $50,000 and that was almost 20 years ago). The PhDs I know in physics, math and social science had virtually none.

        1. IdahoSpud

          I am late to respond, but thought that I would, just to clarify. My friend’s debt (I believe) was for his four-year degree, and was owed to his parents.

          He was particularly distressed about his lack of retirement savings in middle-age, pointing out that I had 8-9 years of saving and compounding that he did not.

          In fact, in this particular case, it is worse than it would seem on the surface. I have had steady 6-figure employment at a Utility for many years. My PhD friend bounced from a low-paid government position, underpaid researcher at a failed (followed by unemployment), before he finally found a niche at the defense contractor.

          I find it very difficult to believe there is much of an “education premium” vis-a-vis financial gain. I tend to think of the expense of college as more of a means to achieving personal growth and making connections than a ticket to financial wealth.

      2. Anonymous Jones

        IdahoSpud was probably referring to student debt his friend accumulated in college (Spud notes he himself stopped after high school).

        I know we are only talking about ‘financial perspective’ and ‘degrees,’ but it gets a little silly to talk about the financial opportunity costs of an education and not talk about the non-financial benefits. I love reading and learning (though not necessarily in pursuit of a degree); I’m sure if I spent more of my time at wage-earning instead of reading, I’d have more money, but I’d be ‘poorer’ for it!

      3. EmilianoZ

        To work as a quant in the financial industry, a PhD in Maths or Physics is often required. Wall Street could’ve helped IdahoSpud’s friend. Physicists need to think outside the box. Why go in the defense industry and help kill human beings?

        Young physicists, head for the financial industry and help create prosperity for your country!

  5. joebek

    If the EU doesn’t want to call in the IMF to deal with Greece why not call in China or even Japan. They console themselves with the idea that this would inaugurate the century of Eurasia.

  6. i on the ball patriot

    Re: Chris Floyd’s, “Obama’s Wild Weekend” …

    Every time I read one of Chris Floyd’s excellent accounts of death dealing destruction and exploitation of foreign populations by scamerica’s tax funded welfare queen war mongering corporations, I can’t help but think that there is an equal (but far less obvious and better disguised), death dealing destruction and exploitation of the scamerican domestic population by similarly tax funded (read privatized) welfare queen
    corporations in the ‘homeland’.

    Obama is not only pumping up the volume of foreign exploitation to benefit war mongering welfare queen corporations, but he is also pumping up the volume on the domestic front by turning over government programs to domestic corporations. Again; read tax funded corporate welfare where the citizens lose control of the programs and at the same time take it up the ass in the wage and benefit arena.


    “In a startling break with the past, the Obama administration ordered NASA to focus on a new initiative that would effectively outsource manned flight, turning to private industry to design and develop the rockets and spacecraft needed to carry U.S. astronauts to and from the space station.”

    More here …


    The Line of Puppets

    Posing as a Lincoln,
    Racist Indian killing scum,
    Obama is just like him,
    Just another puppet bum,

    He lied throughout his campaign,
    When he sang that democratic tune,
    And now the lying scum bag,
    Has gone and privatized the moon …

    Deception is the strongest political force on the planet.

    1. kevin de bruxelles

      i on the ball,

      What you are describing with the outsourcing of NASA is the corporate idea of “hollow corporations” which has been taken up by our government. Naomi Klein wrote about this a couple weeks ago before this NASA hollowing out was announced:

      I decided to write No Logo when I realised these seemingly disparate trends were connected by a single idea – that corporations should produce brands, not products. This was the era when corporate epiphanies were striking CEOs like lightning bolts from the heavens: Nike isn’t a running shoe company, it is about the idea of transcendence through sports, Starbucks isn’t a coffee shop chain, it’s about the idea of community. Down on earth these epiphanies meant that many companies that had manufactured their products in their own factories, and had maintained large, stable workforces, embraced the now ubiquitous Nike model: close your factories, produce your products through an intricate web of contractors and subcontractors and pour your resources into the design and marketing required to project your big idea. Or they went for the Microsoft model: maintain a tight control centre of shareholder/employees who perform the company’s “core competency” and outsource everything else to temps, from running the mailroom to writing code. Some called these restructured companies “hollow corporations” because their goal seemed to be to transcend the corporeal world of things so they could be an utterly unencumbered brand. As corporate guru Tom Peters put it: “You’re a damn fool if you own it!”


      There are many acts of destruction for which the Bush years are rightly reviled – the illegal invasions, the defiant defences of torture, the tanking of the global economy. But the administration’s most lasting legacy may well be the way it systematically did to the US government what branding-mad CEOs did to their companies a decade earlier: it hollowed it out, handing over to the private sector many of the most essential functions of government, from protecting borders to responding to disasters to collecting intelligence. This hollowing out was not a side project of the Bush years, it was a central mission, reaching into every field of governance. And though the Bush clan was often ridiculed for its incompetence, the process of auctioning off the state, leaving behind only a shell – or a brand – was approached with tremendous focus and precision.

      One company that took over many services was Lockheed Martin, the world’s largest defence contractor. “Lockheed Martin doesn’t run the United Slates,” observed a 2004 New York Times exposé. “But it does help run a breathtakingly big part of it . . . It sorts your mail and totals your taxes. It cuts Social Security cheques and counts the United States census. It runs space flights and monitors air traffic. To make all that happen, Lockheed writes more computer code than Microsoft.”

      No one approached the task of auctioning off the state with more zeal than Bush’s much-maligned defence secretary, Donald Rumsfeld. Having spent 20-odd years in the private sector, Rumsfeld was steeped in the corporate culture of branding and outsourcing. His department’s brand identity was clear: global dominance. The core competency was combat. For everything else, he said (sounding very much like Bill Gates), “We should seek suppliers who can provide these non-core activities efficiently and ¬effectively.”

      1. charcad

        In this case there is no “hollowing out”. NASA is already “hollowed out”.

        NASA already contracts out all creative and productive functions. Now even further decision-making about design is being “outsourced”. This is a positive development.

        A far more cost-effective lunar and space program could be had if Congress simply offered an “X-Prize” for results. Say $50 billion for the first USA based team to establish a moon base for whatever number of continuous days occupation is desired.

        This would entirely by-pass the bloated and incorrigible NASA bureaucracy. NASA didn’t build the Shuttle to go anywhere. NASA primarily built Shuttle to guarantee continuing employment for 30,000 NASA bureaucrats after Apollo and Skylab. Shuttle succeeded wonderfully at this.

        1. Kevin de Bruxelles

          You make a good point. I can believe that NASA has become institutionalized and is therefore more interested in funding levels than in creativity. It is a similar problem in defence contracting. While NASA probably have some valuable old-timer knowledge; the design ingenuity will most certainly be in the private sector. I’m an architect and we often work with the public sector — and we do get those jobs through competitions. The ideal situation is where the public sector guys are project managing and performing quality control. They have the time to do that stuff; the private sector people tend to be youngish, very talented, but understaffed and can let some details slide in the crunch to produce massive amounts of innovative work (not that we have ever done that!). Its good to have some calm knowledgeable bureaucrats looking over the designs with a fine tooth comb.

          But I would tone down your one-off, winner take all, super expensive competition and make it staged with some fees paid. Which private company could afford to risk financing such a competition that would take such huge investments of time and capital? Doing it in stages and paying at least some token fees would enable more firms to take part.

          1. i on the ball patriot

            “The ideal situation is where the public sector guys are project managing and performing quality control. They have the time to do that stuff; the private sector people tend to be youngish, very talented, but understaffed and can let some details slide in the crunch to produce massive amounts of innovative work (not that we have ever done that!).”

            Yes, the ideal is a balance. But the present trend is for the government to be hijacked and controlled by deep pocket corporations, who are not hollowed out at all but act themselves as mini independent nation states who buy their regulators. The net effect is for the corporate profit motive to be dominant and all negative social consequences are just another budget item that is dealt with by allocating bucks to the legal department.

            Worse, the decisions as to who, what, when, where, and how to expend resources, is centered in the hands of a corporate few.

            Scum bag Obama continues the scum bag Bush bargain basement sell off.

            Deception is the strongest political force on the planet.

    2. craazyman

      the last line of the first stanza would be better without the “Just” and the last of the second without the “gone and”. Just humm the syllables to yourself like a song and you’ll feel the speed bumps. You want it smooth like a rhapsody . . . :)

      1. i on the ball patriot

        Thanks craazyman … here’s your rhapsody …

        Posing as a Lincoln,
        Racist Indian killing scum,
        Obama is just like him,
        Another puppet bum,

        He lied throughout his campaign,
        When he sang that democratic tune,
        And now the lying scum bag,
        Has privatized the moon …

        I kinda like em a little chaotic … when you stumble a bit you focus more on the meaning …


        All I want,
        To do,
        Is trade,
        And innovate,
        And speculate,
        And swim in private pools,
        Of capital,
        And think about,
        Non existent enemies,
        And false political realities,
        As constraints to my integrity,
        And how for sure,
        My collateral is my will,
        When I walk through the valley,
        Of the shadow of finance,
        I will fear no deceptions,
        For you are with me,
        Your big rod,
        And your big staff,
        They comfort me,
        For you are the equity that they missed,
        You are the equity in my fist!
        You put the rhapsody in my soul …

  7. Ina Pickle

    As ready as I am to think ill of Sarah Palin, is it possible that the books were being remaindered? IF so, then it would make perfect sense for her to have the PAC buy them, and the PAC might still recoup some of the funds.

    If not, well then, that’s a fine howdy-doo.

    1. eric anderson

      Likely the PAC will give them as premiums to donors. Seems a reasonable thing to do.

      I’m looking forward to reading the book. Here’s how one of the NYTimes’ bloggers described it:

      “The questions to ask then are (1) Does Palin succeed in conveying to her readers the kind of person she is? and (2) Does she do it in a satisfying and artful way? In short, is the book a good autobiographical read? I would answer “yes” to both.”

      I’ve heard so much about Palin, mostly from haters. I would at least like to hear her side. I put in my reserve for Going Rogue at the library.

      I don’t agree with Obama politically, but I read his Dreams From My Father. People need to “cross the aisle” and at least give a fair hearing to those they disagree with. Obama’s book perfectly cemented for me who he was, and why I would never vote for him. At least it was an informed decision.

      1. Skippy

        Sarah Palin equals infomercial trollop, full of winks, smiles, legs/cleavage shots, clothes horse and info spam-age, to which your pocket is the object.

        Skippy…if she ever got into the white house and I was flipping channels only to come across that imagery, I would imediately think the shopping channel had move in ha ha ha!!!

  8. Valissa

    The health care debate moves to the states… this should prove very interesting.

    Va. Senate bans health insurance mandate
    A groundswell of opposition to the federal effort is emerging in statehouses around the country, The Associated Press reported today. Bills similar to the legislation cleared by the Virginia Senate are being considered in 35 states, with some lawmakers seeking constitutional amendments to prohibit mandatory health insurance. An Idaho legislative committee has approved a bill similar to Virginia’s, and in Missouri, an overflow crowd showed up at a hearing room when that state’s constitutional amendment was being debated, the AP reported. What is notable about Monday’s action in the Virginia Senate, however, is that Democrats joined the effort, which has been led by conservatives in most states. Five Democrats joined all 18 Republicans in opposition to a health care mandate. The votes “suggest that Democrats on the state level fear that supporting health care reform could be politically damaging,” The Post said.

    1. i on the ball patriot

      That’s the conclusion.
      The story disappeared.

      Deception is the strongest political force on the planet.

  9. Claire

    Sorry to chime in with a completely irrelevent question, but do any of you whom follow the markets closely know how the story with the $130bn in US bonds in Ponte Chiasso?

    There was a debate as to whether or not those bonds were genuine, but then the entire story just seemed to disapper. Did anybody read about the conclusion?

    1. i on the ball patriot

      That’s the conclusion.
      The story disappeared.

      Deception is the strongest political force on the planet.

  10. Hugh

    Re Hoenig for Treasury Secretary by Simon Johnson, we so don’t need another Establishment choice for this, someone’s whose main claim to competence is that they are only a little less out of touch than Geithner and Bernanke.

    Dean Baker seems to miss the point of the NYT story. This is another in a series the media are doing to scare us rubes about deficits and to set us for cuts in programs we like so that Congress and the President can continue to waste money on the Pentagon and fight their senseless wars.

    Re Palin, that’s been a long established practice on the wingnut right for various groups and think tanks and such to buy up copies of wingnut authors. It pushes their sales numbers up and gets the authors and their points of view more exposure in the media. It also makes these views seem more popular than they are. The groups then turn around and give their copies away or use them for compost.

  11. kevinearick


    Ya gotta be smarter than the computer.

    And, oh by the way, it’s not just Toyota, and it’s not just cars, and it’s not just airplanes, and it’s not just ….

    1. Sundog

      “The new concept of weapons will cause ordinary people and military men alike to be greatly astonished at the fact that commonplace things that are close to them can also become weapons with which to engage in war. We believe that some morning people will awake to discover with surprise that quite a few gentle and kind things have begun to have offensive and lethal characteristics.”

      JG Ballard? Not exactly, rather two colonels of the People’s Liberation Army: Qiao Liang (乔良) and Wang Xiangsui (王湘穗) in their 1999 paper “Unrestricted Warfare”.

      Can one person wage war on the world? Soon. Can we distinguish corporate malfeasance, engineering failure, poor QC, media hysteria, kids fucking around, protection rackets? Unlikely.

      “Every year it’s fewer daffy teens and hippies, and more and more crooks and spooks. Darkside hacking has finally hit the top of the food chain: presidents, moguls, Google, diplomats, political advisors, nobody’s safe any more. china china china hack hack hack”

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