Links 4/3/10

Dog Playing Basketball Shows Serious Skills (VIDEO) Huffington Post

Leonardo: An early Dr Strangelove? BBC

Drug That Extends Life Span Prevents Alzheimer’s Deficits Science Daily (hat tip reader John M)

Prostitutes sign confuses motorists Telegraph (hat tip reader John M)

Along the Silk Road at 220mph: China’s high-speed rail revolution Independent (hat tip reader John D)

US urges removal of Chinese drywall from homes Raw Story. Reader John D notes, “One way to get the construction industry back to work.”

Outrage at anti-Semitism comparison by Pope preacher BBC and The Vatican: A cross to bear Financial Times

The Fed in Hot Water Robert Reich (hat tip reader John M)

Summers sees ongoing job creation Financial Times. Given what his forecasting abilities did for the Harvard endowment, this remark is arguably a negative indicator.

Europe laments craftsmen’s demise Financial Times

U.S. Probes Foreclosure-Data Provider Wall Street Journal

Growth of Unpaid Internships May Be Illegal, Officials Say New York Times

Mandelson attacks Barclays president over pay Times Online

‘Forced’ Part-Time Employment Increases John Loundsbury, Seeking Alpha

The Volatility of Household Income Mark Thoma

Reporting Matchmaker: Setting Up Home Loan Modification Applicants With Local Journalists ProPublica (hat tip reader Doug S)

We’ve been closely covering Making Home Affordable, the government’s foreclosure prevention program. Here’s a backgrounder for more info.
Reporting Matchmaker: Setting Up Home Loan Modification Applicants With Local Journalists

We’ve been closely covering Making Home Affordable, the government’s foreclosure prevention program. Here’s a backgrounder for more info.
Reporting Matchmaker: Setting Up Home Loan Modification Applicants With Local Journalists

We’ve been closely covering Making Home Affordable, the government’s foreclosure prevention program. Here’s a backgrounder for more info.
Reporting Matchmaker: Setting Up Home Loan Modification Applicants With Local Journalists

Put Down Trade Spats, Pick Up a Mirror Andy Xie (hat tip reader Francois T). Written before apparent agreement not to disagree just yet between the US and China.

How will US savings rate rise if you don’t penalize consumption? Michael Pettis (hat tip reader Don B). Um, deleveraging is tantamount to saving…and we’d see a lot more deleveraging if the Fed and Treasury weren’t fighting tooth and nail to prevent it.

Is Canada Better Regulated? Michael Schussele. This post rebuts Peter Boone and Simon Johnson on Canadian banking in considerable detail

The IMF should impose default on Greece to end the charade Telegraph

Top Fed Official Wants To Break Up Megabanks, Stop The Fed From Guaranteeing Wall Street’s Profits Shahien Nasiripour, Huffington Post. So not everyone at the Fed has drunk the Kool Aid.

Antidote du jour:


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  1. attempter

    When I saw a headline about the drywall story at the NYT I knew instantly that no matter what, the builders’ racket wasn’t going to be made to pay for its crimes here.

    Sure enough, it’s a federal advisory, with homeowners having to front the extreme costs themselves, and the prospect that maybe they’ll then be reimbursed by the taxpayer.

    (There was also some of the ever-more-common China-bashing thrown in for good measure.)

  2. GoinSouth

    Don’t get too excited about Hoenig. He’s just carrying water for the Kempers who have owned Kansas City for a couple of generations. (Commerce Bancshares)

  3. anonymous_scientist

    Even though I’m a scientist, I read your blog every day. I wanted to make a quick comment about the Leonardo as Dr. Strangelove article. I knew this information about Leonardo long ago, but came to a different conclusion. Even today’s Leonardo would have a hard time peddling futuristic flight machines to potential employers. When you look at the body of his work the bulk of it was not spent designing war machines.

    Just wanted to throw some doubt into this story. I have seem similar attacks leveled at Einstein. People jump to the conclusion that because he was connected to the Manhattan Project his entire life’s work was dedicated to the destruction of humanity.

    A much better article might have been the reluctant role science has played in humanity’s militaristic endeavors.

    1. craazyman

      Take a look at his sketchbooks and his understandable zeal for employment and fame. The article is fair. But we can’t judge this stuff by our “humanist” standards today. He was a man of his time and probably, like most great artists, more narcissist than moralist.

      1. Anonymous-scientist

        I have looked at his sketchbooks quite a bit. That’s why I’m posting. You do know he questioned eating animals right? You can take any artist and demonize him. John Lennon was an angry drunk and also spent his youth squarely in the pursuit of fame… Those types of abstractions however, lead to a jaded view of humanity.

        1. craazyman

          No doubt he was a complex person, but I’d question the notion that this stuff is “demonization”. Personally, I don’t see it that way, just historical biographical analysis. But to each their own.

          You gott admit though. Those tanks he drew with revolving blades on their wheels look painful. Very very painful. He also apparently was able to sketch condemned criminals hung in execution without the slightest compunction. Like Isaac Newton taking glee in hanging counterfieters when he ran the British mint.

          I think it’s tempting for intellectually oriented people these days to sort of think these giants of history were kind philosopher types. I’m not sure that’s reality though.

          1. anonymous_scientist

            Sure, but that was his big break, working for the Duke of Milan. Obviously he sold himself as someone who could design those types of things… But, again… He felt stifled as ‘just a painter’… take the volume of his work… divide it by your ‘evil genius’ argument… and that’s kind of like saying Obama only wanted to get into office to bomb innocent civilians. Calling him Dr. Strangelove is a fairly heavy label for those familiar with the movie. Oh well, I guess these days that type of reductionist mentality abounds.

          2. craazyman

            “dr. strangelove” is over the top, to be sure. I don’t think he was an evil genius at all. Just a man of his time and place. Nobody’s claiming he was Caravaggio for Christsake . . .

            on to another topic :)

  4. Swedish Lex

    On the the new Chinese wall/train project.

    It does not makes sense to make the invesment in infrasctructure only to ship passengers. The countries through which the trains would pass will require that trains stop there, slowing the journey down a lot.

    On the other hand, a modern railroad for freight would be cool. 24/7 bullet traffic both directions in a CO2 smart(er) way. When (probably never) CO2 is properly priced globally, such an investment could perhaps beging to make sense (provided its freight).

    1. dbt

      It makes perfect sense if your goal is to facilitate the movement of ethnic Han to areas which are primarily Tibetan or Uyghur.

    2. charles

      Trains for fret only make sense if you want to send products along the line. For a China-Europe trip, ships will always be unbeatable in terms of energy efficiency. There is a reason why landlocked areas are less developed than coastal areas. Just have a look at the distribution of population in the US, a free-market economy where infrastructures mostly have to pay for themselves (some exceptions like in Alaska…).
      Even for France, a high income compact country who is a pioneer in high-speed train, the only profitable lines are the first ones. I believe the same applies for China. Beijing-Shanghai may turn out to be profitable (it is not now because tickets are ridiculously cheap, Chinese upper middle class is not paid enough to pay the real price), but I have strong doubts on the other lines.
      This story is another hint of the massive malinvestment bubble in China, caused by the purely political criteria for investment decisions. Unless they decide to burn their own money in the kazakhstan-Russia-Europe section, this grand project will not happen.

      1. Swedish Lex

        When judging “energy efficiency” of rail vs. maritime, have you included the cost of CO2, or what the cost could be in 15-20 years time when the railroad would be ready? Plus the cost of the fossil fuel needed to drive ships in 15-20 years.

        By tweaking those variables back and forth, I guess that the assessments would vary quite a bit and hence, perhaps, make the case less clear.

        In 20 years, China may have cought up to European levels of production cost, making it worth wile to send products in both directions………

  5. alex

    Re: The Fed in Hot Water, by Robert Reich

    Good article on the Fed’s bailouts. This puts the lie to the oft parroted line that “the bailout has mostly been paid back”. Unfortunately debunking this absurd claim doesn’t get more widespread coverage. How outraged are people going to be if they accept the standard propaganda?

    BTW, here’s a link to the Bloomberg article on what Reich wrote about – the Fed overpaying for bad Bear-Stearns assets so JPM would more happily buy it.

    Not only did the Fed blatantly indulge in fiscal policy, it did everything it could to keep it secret (congrats to Bloomberg for using the courts to force the Fed to divulge what it did).

    Here’s hoping Yves, et al, do some follow up on this.

    1. Yves Smith Post author

      With all due respect, where have you been? I’ve been writing about these bailout vehicles being a circumvention of normal budgetary processes and possibly unconstitutional from the get go. It’s even in my book, which went to press in late September (you’d be amazed how long proofreading, layout and production take, DO NOT go there). So I write about this at length for a long period of time, and then you ask me to “follow up” when Reich wakes up to the issue?

      1. alex


        Stop being so defensive. When I said it needed more exposure I meant the fabled MSM (I saw nothing about this latest disclosure in the NYT or even McClatchy). When I said I hoped that you followed up, I meant that I hoped that you might do a post specifically on the Fed’s latest disclosure of its Bear-Stearns games (which as I understand it were only disclosed in the last few days, and only in response to a Bloomberg suit). I’m well aware of your past postings on Maiden Lane X and other Fed games. If it were up to me, you’d get lots of exposure in the MSM.

        As to the time required for book proofreading and revisions, not only am I not complaining, I don’t even work for your publisher!

        1. Yves Smith Post author

          This to me illustrates the futility of blogging. I have been writing for a long time re what the Fed has been up to with Maiden Lane. It was a virtual certainty (as stated here) that the crap dumped in ML I was a money loser (why would JP Morgan put good assets in there? This was CHOSEN to be the worst dreck the Fed had). This blog also discussed how the ongoing valuations were suspect.

          The Fed finally releases more transaction detail, in a deliberately difficult to interpret format to get critics off its back (trust me, it gets more useful summaries from BlackRock). There is less new here than meets the eye. Yet suddenly this is treated as if this is some sort of stunning revelation.

          1. alex

            FWIW, I don’t think the blogging is futile. While you and other bloggers obviously don’t get the readership of the NYT or WaPo, without your samizdat we’d all be ignorant.

            Another interesting example of “suppressed” opinion is Dean Baker. Ever notice that he gets published frequently in the UK, but rarely in the US? He often gets published in the Guardian and I think even the Telegraph. Similarly I think your most extensive interviews were on Canadian TV. I recall Baker once expressing his frustration at not being able to get published in American papers. Yet idiots without half the insight of you or Baker regularly get published there. Who needs government suppression when private enterprise will do it for you?

            Yves: “There is less new here than meets the eye. Yet suddenly this is treated as if this is some sort of stunning revelation.”

            While I appreciate your long standing insight into this mess, and certainly can’t blame you for saying “I told you so”, there is value in an actual black-and-white disclosure. It takes things from informed (and ultimately vindicated) inference to a confession. It also highlights the secrecy of the Fed. While I’m not of the Fed-is-unconstitutional camp, they are exercising a power that the Constitution specifically delegates to congress. Hence secrecy is no more tolerable than in any other aspect of public finances. What would the outrage be if the US government didn’t publish its budget?

          2. Tim

            Your blogging is not futile!

            I have some theories on how to get the info from this blog and others like in front of more people. They sound crazy, but brainstorm amongst yourselves with your favorite adult beverages as you ponder them.

            1. follow the FCIC – not only their RSS feed, but in FB & Twitter.
            2. “we” start a type coordinated “campaign” to spell out to the masses in clear simplistic form the whys/whos/whats – essentially – “we” write the reform and get the people to raise hell for it.
            3. enlist the Transparency orgs like Sunlight Foundation to post every damn thing possible – and allow econ-geeks explain it for the masses.

            Those are my top 3 ideas.

            But none on that can happen without great folks like Yves and Naked Capitalism and every one in here.

          3. lambert strether

            I don’t agree that blogging is futile. Unfortunately, ideas are far more difficult to creatively destroy than bricks and mortar. The only way to accomplish this is to change the discourse. That is what blogging is for — and can do.

          4. EmilianoZ

            Yeah, blogging is futile.

            But then I remember what William K. Black said at the end of his interview with Bill Moyers: “You don’t need to hope to persevere.”

            And I remember Chris Hedges and Albert Camus and I remember what Neo said to Agent Smith in The Matrix.

            We can fight without hope if we have to, just for the hell of it, just to regain our dignity. And when the Palin militia comes for us, we won’t go quietly.

        2. Yves Smith Post author

          I’m sorry for kvetching, but I don’t have bandwidth to do more than I am doing, so suggestions that are meant as helpful often seem like demands on the receiving end.

          EmilianoZ, it turns out some of my correspondents (and these are mainly money managers, not bloggers or political types) have decided our collective motto is “Il faut imaginer Sisyphe heureux.” One of them also forwarded your comment to Felix re Taleb and me on economists…which he found highly amusing.

          1. Skippy

            May I humbly add:

            O light! This is the cry of all the characters of ancient drama brought face to face with their fate. This last resort was ours, too, and I knew it now. In the middle of winter I at last discovered that there was in me an invincible summer.

            Skippy…thank you.

  6. Cynthia

    First, a defender of the Catholic Church uses the excuse that the 60’s sexual revolution caused their priests to commit sexual crimes against children:

    Then another defender of the Catholic Church comes along and uses the excuse that because the kids were post- rather than pre- pubescent, their priestly molesters were committing homosexuality, not pedophilia:

    Now the Pope’s Preacher is trying to use the excuse that critics of the Catholic Church are being Catholic haters. But this excuse only works if Catholics were also victims of the Holocaust. After all, Caltholics know as well as anyone that anytime someone mentions that “our special relationship” with Israel is doing more harm than good to the US or mentions that Israel is committing apartheid against the Palestinian people, they are accused of being Jew haters and then all criticism of Israel is censored from the airwaves. It goes without saying that being a victim of the Holocaust, as “Jews for a greater Israel” have proven time and time again, will get you off the hook for all sorts of crimes against humanity.

  7. Claire

    I’m not sure I understand why the Fed is in “hot water,” as Reich says. The Fed finally admitted to doing something that was fairly well known by now. Bernanke has been re-appointed. Geithner got promoted. The Fed has not been (and very likely will not be) audited or subject to any more constraints now than before.

    So where’s the hot water?

    1. attempter

      Probably wishful thinking. Simon Johnson does it all the time.

      Heck, even I do it sometimes.

      But it’s clear nothing’s going to change for the better until after total catastrophic collapse.

    2. alex

      “So where’s the hot water?”

      Where’s the outrage that’s needed to boil the water? (am I getting carried away with the metaphor?)

      Most of the public is oblivious to what’s happened, in large part because the MSM has barely covered it. Admittedly it’s a little harder to explain than a something like straightforward theft or embezzlement, but not that much harder. The analogy I’d use is the Fed offering to buy your house at the peak bubble price, even though everybody has recently noticed that the roof has caved in. Sounds great – but why do only banks get that deal? Why can’t you or I?

      Worse I think that most people suspect that something is rotten, but the MSM seems determined not to explain what’s rotten. Instead people hear the “most bailout money has been repaid” line from the MSM, and perhaps doubt their suspicion that something is rotten. Hey, none of the “experts” in the paper or on TV say that, so maybe they’re just being conspiracy theorists. Right?

      The most accessible information on this swindle is in “semi-specialist” blogs like this one. By “semi-specialist” I mean blogs that are most accessible to people with either prior knowledge of the field or who take a special interest in digging into this area. But most people lack the time or inclination to dig into it that much. Nor do I blame them. Most people only have the time to dig into at most one or two issues that aren’t in their immediate field of expertise.

  8. dearieme

    “there is value in an actual black-and-white disclosure. It takes things from informed (and ultimately vindicated) inference to a confession: rather like Climategate. But on that business, Yves sides with the gullibles, not the sceptics.

    1. Yves Smith Post author

      I suggest you read this along with the book Agnotology.

      Take note in particular of this:

      No scientific body of national or international standing has maintained a dissenting opinion since the American Association of Petroleum Geologists adopted its current position in 2007.

      I side with the people who have actually done scientific work in that realm, along with the people in the Explorers’ Club, who see dramatic changes in the Arctic and Antarctic. I also note that Exxon has for some time been paying scientists to write articles casting doubt on the role of human activity in global warming. The effort to muddy debate is straight out of the playbook used by Big Tobacco on the dangers of smoking.

      1. attempter

        You know, Joe Romm at Climate Progress has written quite a bit about that study on “memories” of Saddam-9/11 linkages you mentioned in the other post. That’s where I first heard of it. So if you’re interested in reading about that study and what Romm thinks it means for climate change argumentation you can look for that there. (I haven’t hung around there in awhile, or I’d try to find the link myself.)

  9. kevinearick

    OK, so the digital, single amplitude, single frequency, credit economy hit the iceburg, and is sinking. The Fed has put a bunch of zeroes in the government, corporate, and cartel accounts, “pent-up supply”, to prime the pump. To the extent it floods the old closed-loop credit channels, the Titanic sinks faster.

    The analog folks have to operate in two economies simultaneously, the digital and the analog. The Fed can dump the pump one more time, into the old credit distribution system, and nosedive, or it can print money to the pent-up real economy, which it cannot see. Take that “money” out of the banks, put it into productive community assets just beyond the scope of the current system, minimize return to the digital distribution channels, and reduce number of hours worked in the digital economy to 20.

    The Fed can print, or chase its tail into a smaller and smaller closed-loop circle. If it prints, it can accept the new source of induction, or trigger hyperinflation by limiting it to temporary, government-related employment. When the falsework, the embedded psychological and social hueristics underpinning the demographic acceleration assumptions, collapses, the electrons must catch the nucleus, or that will be that. The electrons must be self-governing to obtain the required orbit. A mob shorts the magnetic field. Pairing up opposite spin, to effectively teach and learn, works the best.

    In a Garden

    tending a garden
    year after year
    at an intersection of intersections;

    echoing ideas
    bouncing off of ideas
    never knowing where they will land;

    while my body flies
    here and there
    and most everywhere;

    why the Yves of the world
    put up with such nonsense
    I surely cannot say;

    but there I am
    and there I shall stay
    until my dying day;

    in a garden,
    because life is more than money
    and balance is the key.

    liberty is a function of neither government nor capital.

  10. Bali

    Just a few comments on Canadian banking and Canada’s own housing bubble…

    Canada may not have had the same extent of sub prime mortgages before the financial crisis, but we may have caught up to the US since then. CMHC (Canada Mortgage and Housing Corp.), the government backed insurer of mortgages has increased it holdings of MBS (which are guaranteed by the federal government) from $127B in 2007 to $290B as of Q2 2009. It was on target to reach $340B by the end of 2009 and $500B by the end of 2010. During the same period, the private banking sector’s mortgage holdings remained virtually flat.

    At the same time the government forced CMHC to support the housing market with these purchases of MBS, the feds also enabled for the first time 0% down mortgages with amortizations up to 40 years (this was done in 2007). Worried about the apparent housing bubble he was helping to create, the Finance Minister, Flaherty, recently (in March 2010) ratcheted back these terms to 5% down and 35 year amort.

    Our regulators are not necessarily geniuses. The Canadian economy’s performance often follows that of the US with a lag – The US crashed and interest rates came down….the housing market did begin to fall here…in late 2008/2009 they came down 10%-20% in a matter of months….but record low interest rates combined with the opening of our own sub prime market resulted in an influx of new buyers.

    Minister Flaherty and the governor of the central bank, Mark Carney, are probably deathly afraid of the bubble popping, but they are now stuck….having created the conditions to enable the bubble to reinflate and at the same time allowing the CMHC (and, by guarantee) the federal government to take on $500B in MBS exposure. That $500B is 33% of GDP.

    There’s an insightful report done by an Alexandre Pestov “The Elusive Canadian Housing Bubble” (Feb 2010). He does a good job reviewing Canadian housing prices, debt and the mortgage market structure, as well as providing comparisons to US and many other markets. Link is below.

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