Links 3/5/10

Falluja doctors report rise in birth defects BBC

Study Says Undersea Release of Methane Is Under Way New York Times. This is seriously not good.

“Greek crisis over” – Our ability to delude ourselves has reached the next level Eurointelligence

U.S. lawmakers launch push to repeal NAFTA Reuters (hat tip reader John D)

German MPs suggest cash-strapped Greece should sell islands The Local (hat tip reader John D)

Arrest Warrant Issued For JPMorgan Chase CEO Jamie Dimon Consumerist

Adam Smith and the Role of Government Mark Thoma

Clash Over ‘Too Big to Fail’ Wall Street Journal

Not till they’ve nothing left to lose? Rolfe Winkler

Wen Warns of Bank Risks, Pledges Property Crackdown Bloomberg

Obama’s No F.D.R. — Nor Does He Have F.D.R.’s Majority FiveThirtyEight

Senator Bunning’s Universe Paul Krugman New York Times

Let Markets Be Markets Roosevelt Institute. Presentations by Simon Johnson, Elizabeth Warren, Raj Date, Michael Konczai, Josh Rosner, Michael Greenberger, Frank Partnoy, Richard Carnell, and Rob Johnson.

Fed Vice-Chairman Kohn to Retire Jesse. A bit late to this, interesting discussion of possible replacements.

William White presentation to the Reserve Bank of India (hat tip Richard Alford). William White is my new hero. Can we have him at the Fed?

Antidote du jour:

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  1. dearieme

    Alternatively, I can think of a British Dutchman who might do, and who has (I think) taken American citizenship too, presumably in anticipation of an invitation.

  2. DownSouth

    ► “Greek crisis over” – Our ability to delude ourselves has reached the next level Eurointelligence

    Athens sold €5bn in 10-year bonds and received orders for three times that amount. However, the interest rate the country has been forced to pay to attract investors is 6.25%, 2 pp more than Portugal and one of the highest since Greece joined the euro in 2001. Currency strategists said such punitive rates were not sustainable.

    It sounds like Greece may be on the same trajectory as Argentina:

    [In 2001 Domingo Cavallo was] called upon to ‘save’ Argentina from the impending crisis and adopted new adjustments and schemes trying to generate ‘confidence’ in international financial organizations… Cavallo’s ‘expertise’ this time failed lamentably. Despite the great powers that were given to him by Congress (April 2001), and his megacanje de deuda (mega debt swap, June 2001) supported by his friend David Mulford of Credit Suisse and J.P. Morgan- Chase that implied restructuring foreign debt to the tune of US$30 billion, the crisis could not be controlled. In this debt restructuring process 65 different types of bonds, most of them denominated in dollars, for a total of US$28 billion were rescued. They were exchanged for five new types of bonds for a value of US$30 billion, but with future interest rates that amounted to US$85 billion, and of course an enormous commission paid to Cavallo’s banking friends. Argentina was to pay a yearly interest of 18 percent, 13 percent higher than interest on US treasury bills. Thus Argentina’s overall foreign debt increased to the tune of US$115 billion.

    That was in June 2001. Brutal police repression, which caused the deaths of at least 40 people, could not control the protests. Cavallo and president De la Rua escaped in a helicopter in the wee hours of December 20, 2001.

    Argentina defaulted on its debt, which it finally ended up settling for 25 to 35 cents on the dollar. After this its economy recovered quite nicely.

    1. MarcoPolo

      Re: on the same trajectory as Argentina.

      I’ve been saying that. Dolarizing didn’t do anything for Argentina. OTOH Greek default shouldn’t bring down the euro but Angela will have to bail out her banks.

      1. DownSouth

        Yep. It’s just a slow death now. And the Greek government is doing everything wrong.

        It’s quite clear that the local branch of the international criminal banking cartel is very much in control of the Greek government. Here’s what the plan to cut the deficit includes:

        • raise the value-added tax to 21% from 19%
        • Sales tax on food and medicine will rise to 10% from 9%
        • cut civil service workers’ entitlements by 12%
        • civil service pensions will be frozen for the year
        • Taxes on gasoline prices will be hiked by €0.08 per liter

        When the Greek government talks “austerity,” it’s quite clear this means stale bread for the poor and Karythopita for the rich. Sales and VAT taxes are consumer taxes that fall disproportionately on the lower classes.

        The common man in Greece should avoid getting caught up in all the nationalistic finger pointing. It’s quite clear that, if he’s going to have a fighting chance, he’s got to get his own house in order first.

        1. craazyman

          Greek civil servants are way overpaid as it is. Their salaries should be cut by 30%, at least, so Propreitary Traders can make $15 million per year instead of only $7 million. Who can live on only $7 million? My dog lives on $1 million. This way, more wealth will be created for everybody, including the civil servants, even though their salaries are cut. This makes sense to me. Can’t understand why they are rioting over there.

          – J. B. Chains, President
          Lutem & Bondage
          Bankers to the Upper Classes

        2. MarcoPolo

          I may have had a little different take. The local (Greek govt.) branch of the criminal cartel has no more incentive to negotiate with the northern branch of the family than Argentina had with the IMF. And for the same reason. Remember that in Argentina women had taken the streets carrying frying pans and threatened a coup and the IMF demanded terms that were a threat to democracy itself.  Result, IMF sees no contagion & OK’s default.  The real cost was to IMF who had already lost credibility in Asia and thereby became totally irrelevant.  

          Greek govt. branch’s only incentive is to maintain cash flow. As long as they have prospect of that they stay at the table offering anything they can claim the Greek working class will pay for.  So, if the northern branch of the family buys into the Greek working class paying the bill they all maintain the illusion. But the minute the cash stops, default.  Merkel’s coalition dosen’t seem to see contagion either.  I’m guessing (as did IMF) they are right.  So, if the deal falls through Merkel has to pick up the banks.  And the banking branch of the family knows they will be bailed out by somebody.  Standoff.  Left out is the working class who are to be asked to bail out all of the above.  We’ll see how that goes and whether the euro becomes irrelevant (not probably IMO).    

  3. attempter

    Looks like I get a twofer in retorting to corporate flunkeyboys and Party hacks Krugman and Silver:

    No matter what kind of exculpatory scam you try to run, the fact remains that Obama and the Dems to this day can pass any legislation they want to pass. Therefore they have all along passed exactly the legislation they wanted to pass.

    I’d love to see the NAFTA counterattack get some traction. But if it ever did, then we’d see how its ardent neoliberal worshippers Obama and Emanuel can fight when they really want to fight. Emanuel already happily faciliated the 1994 Republican Revolution, a sacrifice he was willing to make on behalf of of NAFTA, just as he spent 2009 trying to facilitate a 2010 Rep resurgence, a sacrifice he’s willing to make on behalf of Wall Street and the health insurance rackets.

    BTW, great coverage from Reuters. They mention Obama’s campaign skepticism regarding NAFTA, but intentionally leave out how he was caught in his lie immediately, as word leaked out that even as he was publicly lying, the campaign was reassuring its corporate counterparts in Canada that it was just a scam, and the NAFTA looting would continue.

    As for Dimon’s slumlord warrant, of course it was going to be quashed. But someday someone’s going to have to have the guts to issue such a warrant and stand by it. The Pinochets can’t keep waltzing around everywhere free like this forever.

  4. charles

    To Yves: William White had a great op-ed in the FT this week

    For those not familiar with him, the Spiegel intl produced
    a great and extensive piece about him a few months ago: “The man nobody wanted to hear”,1518,635051,00.html
    If he can’t join the FED, he should be the head of the
    Financial Stability Board and get the needed reforms running
    with his hatchet..

    1. craazyman

      thanks for the link

      I read the whole story. Very, very well done. Two thumbs up to Spiegel and to the translator. Wonderfully straightforward, direct, well crafted declarative narrative structure and good sentences too. It’s incredible how collective social insanity is so simple.

      This just redoubles my flights of imagination into the notion of a form of currency issued by states and/or cities to low income people who can use it to pay taxes (thereby making it a currency exchangeable for goods). Sort of like an equity offering. The trick with an equity offering is that the dilution of existing shareholders must be justified by the promise of growth in retained earnings to an extent that overcomes the dilution. The principle with municipal money, or “community currency” (ie. “Commies” for short) would be the same. However, to prevent usury and bankster looting, the currency would be non-lendable (i.e. unusable for reserves or capital ratios).

  5. Richard Kline

    That brief Bloomberg piece on Wen Jiabao’s economic policy guidance contains highly important objectives if there is follow through. The talk for two years has been that China needed to stimulate domestic consumption as a means of rebalancing growth. Not necessarily radically stimulate consumption, but with the great mass of the population so poor it doesn’t take much in the way of gains to stimulate because all of the little bits gained will enter the real economy. To this point, their stimulus was top-down, with banks pushing money to wealthy speculators. A very inefficient way to stimulate demand, and one likely to have ancilliary unbalanced, or even graft-ridden, investments. The light may finally have gone on in China.

    Then again, all the noise there about, ‘auditing speculators’ and ‘increasing health spending’ may be as phoney as the crap we’re getting in the ol’ US of A. So Congress is feeling the heat on unemployment and so proposes a _$15 billion_ program to stimulated hiring. Question: Why would employers hire when demand continues to decline? A pittance. An insult, really. And it’s all in in tax breaks for new hires, so Congress doesn’t even have to raise revenue for the ‘improved visuals.’ Let’s see: $8 trillion in guarantees to the financial industry, plus hundreds of billions of direct spending, while most of the ‘stimulus bill’ money hasn’t even been spent, and this new, “We’re trying realllllly hard, folks” head fake in the House just adds rectal gas to the incessant marsh fog wafting from the Beltway in the public’s face. . . . If the American public puts up with this rot, we’re even stupider than we look at present.

  6. Ina Pickle

    I find it odd that Mr. Winkler considers the advocates of change to be blind to the costs. On what basis would he make an assumption like that? The fact of the matter is, there are costs to inaction that vastly exceed those of action — including to the average, middle-class Joe. The thing is, people don’t understand the risks and uncertainty that are inherent in the system as currently configured, and do not understand their roll in it. Frankly, the whole country rose up and told Congress to vote no on the bailout — and we all know how that worked out. We tried to express an interest in change by voting out incumbents and voting new people into power. No change. We are slowly seeing life unravel, the Democracy (what was left of it) unravel – people don’t know what they are supposed to do, and feel like they can’t win. It isn’t that they are afraid of the costs of reform, I believe: I don’t think that most people are aware of the costs, but I do believe that those who advocate for it at the top are.

    The American populace is badly educated, horrifically informed by corporate clowns masquerading as journalists, and demoralized. But one thing that they are NOT is unwilling to take pain to correct what everyone sees as serious problems with society, and unable to understand the trade offs if they are honestly informed of the risks and rewards. I must respectfully disagree with Mr. Winkler’s assessment.

    1. DownSouth

      Winkler’s post falls under the rubric of “give them bread and circuses,” or what’s known here in Mexico as pan y toros (bread and bullfights).

      As Wikipedia explains:

      “Bread and circuses” (or bread and games) (from Latin: panem et circenses) is a metaphor for handouts and petty amusements that politicians use to gain popular support, instead of gaining it through sound public policy. The phrase is invoked not only to criticize politicians, but also to criticize their supporters for giving up their civic duty.

      In modern usage, the phrase has become an adjective to deride an infantilized populace so defined by entertainment, instant self gratification, and personal pleasures that they no longer value civic virtues and the public life (not necessarily accomplished through deliberate pacification by politicians but through the popular culture itself). To many across the political spectrum, left and right, it connotes the wanton decadence and hedonism that defined the Roman Empire prior to its decline and that may similarly contribute to the decline of modern society.

      This phrase originates from Rome in Satire X of the Roman poet Juvenal (circa 100 AD ). In context, the Latin phrase panis et circenses (bread and circuses) is given as the only remaining cares of a Roman populace which has given up its birthright of political involvement. Here Juvenal displays his contempt for the declining heroism of his contemporary Romans. Roman politicians devised a plan in 140 B.C. to win the votes of the poor; By giving out cheap food and entertaintainment, politicians decided that this policy of “bread and circuses” would be the most effective way to rise to power.

      Of course the era of bread and circuses came about 600 years before Rome’s fall, so it had nothing to do with Rome’s decline. It’s amazing how adept people are at rewriting history so that it fits their ideology.

      I find the context in which the concept of bread and circuses originated to be most interesting, and maybe even instructive to our current dilemma:

      During the third and second centuries before Christ a Roman oligarchy organized a foreign policy and a disciplined army, and conquered and exploited the Mediterranean world. The wealth so won was absorbed by the patricians, and the commerce so developed raised to luxurious opulence the upper middle class. Conquered Greeks, Orientals, and Africans were brought to Italy to serve as slaves on the latifundia; the native farmers, displaced from the soil, joined the restless, breeding proletariat in the cities, to enjoy the monthly dole of grain that Caius Gracchus had secured for the poor in 123 B.C. Generals and proconsuls returned from the provinces loaded with spoils for themselves and the ruling class; millionaires multiplied; mobile money replaced land as the source or instrument of political power; rival factions competed in the wholesale purchase of candidates and votes; in 53 B.C. one group of voters received ten million sesterces for its support. When money failed, murder was available: citizens who had voted the wrong way were in some instances beaten close to death and their houses were set on fire. Antiquity had never know so rich, so powerful, and so corrupt a government. The aristocrats engaged Pompey (read Reagan-Bush I-Clinton-Bush II-Obama) to maintain their ascendency; the commoners cast in their lot with Caesar; ordeal of battle replaced the auctioning of victory; Caesar won, and established a popular dictatorship. Aristocrats killed him, but ended by accepting the dictatorship of his grandnephew and stepson Augustus (27 B.C.). Democracy ended, monarchy was restored; the Platonic wheel had come full turn.
      –Will & Ariel Durant, The Lessons of History

  7. MyLessThanPrimeBeef

    Just be the first Obama, good or bad, and not the second FDR. That’s the best course for him.

  8. Jack the water guy

    Just a little comment on the global warming link regarding warming oceans and methane release…
    It is not straightforward to claim that oceans warm up due to global warming. Ultraviolet light penetrates a few millimeters of water depth. Radiant sulight declines to about 3% of surface concentration by 100 meters deep. The overwhelmingly VAST quantity of of ocean water is well below 100 meters deep. The other problem is that warm water rises and cold water sinks (as any fisherman who exploits the annual “turnover” of the lake each fall knows). Therefore, surface water temp warming will not, by itself, warm the deeper part of the ocean. Warm water provides a “blanket” effect, and the deeper cool water remains cool. Therefore, claims that global warming leads to warming oceans leads to methane release which leads to global warming is just to simplistic to claim. I understand that the reported depth in the story was 50 meters, but I think that the majority of the methane hydrates are at depths below this level. The more knee-jerk global warming attributions that people make, the more polarizing the debate becomes.
    Here’s a link for those so interested

    1. Valissa

      Thanks for the link…. I prefer articles by scientists to NY Times neoliberal propaganda.

    2. Ina Pickle

      Thank you for some interjecting some science into the issue — it isn’t like we can count on journalism to explain the problem correctly, especially if it is a complex one.

      In general, I tend to associate methane releases with a pollution source – either causing overbloom of a population, or causing a mass die off in some population. But that is just me.

      I am curious what you think about climate change and the ENSO effect: aren’t they assuming that the ENSO will be more prevalent and stronger due to all the excess energy in the system? And isn’t the ENSO based on a small increase in surface temperature in a specific part of the ocean?

      I’m behind on the science there, and I’d love to hear your take.

    3. Yves Smith Post author

      I know that is not what the article addressed, but we are also seeing unprecedented levels of methane release from permafrost.

      And the Permian mass extinction did feature surface warming of 5 degrees leading to ocean warming, which then led to ocean floor methane release, which led to another 5 degree temp increase. This took some time to play out…..much longer than human timeframes….

      1. Ina Pickle

        Absolutely — methane release from the permafrost makes nothing but sense from the point of view of climate change. But methane release from the oceans is much more complicated than that. Remember also that methane is a more effective greenhouse gas than carbon dioxide.

        Of course, the increase in surface temperature is what drives (or at least characterizes) ENSO (El Nino – I should have used the better-known name). The science of understanding ENSO’s role in climate, methane release, currents, storm formation, etc. is still definitely a moving target. We’ve only been collecting comprehensive data for about 15 years.

    4. DownSouth

      Stevenson (1921-2001) was a signatory to the Leipzig Declaration, which states:

      There does not exist today a general scientific consensus about the importance of greenhouse warming from rising levels of carbon dioxide. On the contrary, most scientists now accept the fact that actual observations from earth satellites show no climate warming whatsoever.

      The declaration also criticised the United Nations Framework Convention on Climate Change, saying:

      Energy is essential for all economic growth, and fossil fuels provide today’s principal global energy source. In a world in which poverty is the greatest social pollutant, any restriction on energy use that inhibits economic growth should be viewed with caution. For this reason, we consider ‘carbon taxes’ and other drastic control policies … to be ill-advised, premature, wrought with economic danger, and likely to be counterproductive.

      The statement regarding observations from earth satellites “was broadly accurate at the time, but with additional data and correction of errors, all analyses of satellite temperature measurements now show statistically-significant warming.”

    5. MyLessThanPrimeBeef

      (Note: my comment should be there. Sorry for the double post.)

      Jack the water guy, interesting point.

      What about the ocean conveyor belt? The North Atlantic Deep Water is 2000 to 4000 meters deep. With all the moving around, sinking and rising, doesn’t the thermohaline circulation spread heat from the top 100M everywhere, making deeper water warmer than otherwise?

      1. Jack Parsons

        About the thermohaline current: I have no idea whether ambient temps will increase belowdecks.

        The scary part about the thermohaline current is that in the North Atlantic, the shallow current dumps therms into the cold Arctic air and sinks, becoming the southbound deeper current. If the Arctic air is not cold, the top of the sink may not dump as much heat, making it not as heavy, and… what happens then?

        Disrupting the thermohaline current is much scarier than the oceans rising. If the shallow current stops delivering heat to the Arctic, it’s a phase change, not a gradual turn of the knob. It’s possible that would trigger a new Ice Age.

    1. eric anderson

      The webcast was not dead for me. Just watched this AM at 11.36. It took about a minute to load, though. Give it a chance.

      When William White said, “I agree with Steve… I agree with him…” who is Steve? Steve Keen? From the context I thought perhaps it was that Steve.

  9. MyLessThanPrimeBeef

    Jack the water guy, interesting point.

    What about the ocean conveyor belt? The North Atlantic Deep Water is 2000 to 4000 meters deep. With all the moving around, sinking and rising, doesn’t the thermohaline circulation spread heat from the top 100M everywhere, making deeper water warmer than otherwise?

  10. michel

    Really, methane! Its seems like it could be happening, but its too early to say for sure.

    Am I supposed to take any of this stuff seriously any more? Are we now ‘mvoving on’ to methane, from CO2? Its over! What remains is cleaning up the mess. It is not warming. Its fluctuating like it always has, and methane is not going to be released any more now than it was in the equally warm Middle Ages, and even if it were, negative feedback to warmings will ensure that even if it were released, and even if it did apply some warming forcing, the result would be a negligible warming of the climate followed by reversion to the mean.

    No, this is not a tipping point.

    This is just more hysteria, but its ok, the epidemic of hysteria about this is now dying down. We may not be so pleased when the next epidemic of hysteria takes hold, however. But at least it will be a change.

    In the 1900’s as Freud documented, hysteria was about sex. In the 1930’s it was about socialism. In the 1960’s it was about food. In the 1890’s it was about climate. What will it be about next? Who knows, but whatever it is about, it will take place on a cooler planet.

  11. KFritz

    “Not til they have nothing left to lose”

    More bluntness. What’s needed is a reduced total material ‘standard of living.’ It’s already happening in very unegalitarian, disorderly fashion, likely to become more disorderly. For all of us various individuals and our various, competing interests to downsize in egalitarian, orderly fashion would be a miracle.

    Anyone who repeats this at a public gathering of any size had better wear body armor from head to toe.

  12. WHarris

    “Not til they have nothing left to lose”

    What a depressing article. This had had more impact than anything I’ve read in quite a while. If what he says is true, & comes to pass, & what he is in total denial about, we’re TOAST! Sad he can’t just come out & say it. But he must need to talk about hedging another day.

    DENIAL & RATIONALIZATION: Link to this as a primer.

    A status quo hedgie trained in the heartland of the homeland.

    Even the comments, well, most of them…

    Thanks Yves! What a Wake Up Call!

  13. kevinearick

    Constitutional Law, Part II


    capital employs labor

    government enacts laws


    the laws of physics apply everywhere in the universe, in all cases, at all times, including human psychology & sociology.

    man-made law reflects society; it does not make society. the original US Constitution reflected society at the time of its origination.

    a constitution is an at-will agreement, in which the people grant capital government. to the extent capital employs government, capital pays for the privelege, and, obviously, capital no longer wishes to employ government at its own expense. there is no law of physics requiring investment in a particular economy, or preventing investment in the creation of a new economy; economic churn is part of the process.

    it’s in everyone’s interest to play along with the mythology, so long as they understand it’s just a temporary bridge granting access to the future. but, if push comes to shove, the grant can and will be withdrawn, at-will.

    natural operation:

    Ho capital: unprotected labor does not require 50.1% of the economy.

    Ho government: government is not contracted to capital.

    the difference between reality and reflection is the looking glass.

    an economy reflects the will of the people, like it or not. in the current case, significant numbers have abandoned the old economy to make investments elsewhere, while a substantial population “holds” the bridge, which was never designed for permanent occupation.

    from time to time, the will of a people gets worn down, from racing against evolution, instead of adapting to it. for every force, there is an equal and opposing force.

    let the force be with you.

    1. kevinearick

      the Internet was designed for disclosure, not implementation of change.

      identifying the abutment location is one thing; building the required bridge is another.

      1. kevinearick

        to implement change, you have to begin at the end of the process, not the beginning or the middle. you have to recycle the accumulatined vestiges, so work may proceed; the devil is hiding in the trash.

  14. RC

    Study Says Undersea Release of Methane Is Under Way

    Maybe we should use “Cap and Trade” to include Cows Emissions.

    How far will the Climateers go wlth this farce?

  15. Cynthia

    Sounds like the frozen remnants of a humongous hog farm got buried under a thick coat of permafrost millions of years ago, and now it’s heating up, unleashing gobs of methane gas from prehistoric pig guts.;~)

    Jokes aside, methane traps some 20 times more heat than CO2, making it, pound-for-pound, far more potent as a greenhouse gas than carbon dioxide. But unlike CO2, methane hangs around in the atmosphere for only a decade or so. So the good thing about methane-induced global warming is that it should reverse itself within a decade or so. But if it amplifies the effects of CO2, then this isn’t such a good thing afterall.

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