Links 5/26/10

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Infections link to bees decline BBC

The privacy Machiavellis SFGate

Prostitutes blamed for property bulge Asia Times (hat tip reader John D)

Obama Is From Mars, Wall Street Is From Venus New York Magazine. OK, even though I dissed this article yesterday, reader UN Staffer pointed out this priceless tidbit:

Indeed, the president’s support for his Treasury secretary has been unwavering. (Axelrod would laugh at rumors that Geithner was about to get the boot: “Don’t these people realize they have a man-crush on each other?”)

Vienna tops Mercer survey’s most-livable cities MarketWatch

GOP: U.S. can’t afford to fund health ‘entitlement program’ for 9/11 rescue workers New York Daily News (hat tip reader John D)

on growth and democracy Joe Costello

Cousteau Jr.: ‘This Is a Nightmare… a Nightmare’ ABC (hat tip reader Frank A)

U.S. oil drilling regulator ignored experts’ red flags on environmental risks Washington Post (hat tip reader Robert M)

U.S. Economy on Continued Life Support EconomPic Data

Atomic Steve Lubben, Credit Slips

Cost of swapping euros for dollars soars Financial Times

Oil FAIL: BP to shut down live cam during “top kill” attempt lambert strether

We are mostly wards of the State Gumbat Stew

Large San Francisco Apartment Complex in Default Calculated Risk. We New Yorkers make the mistake of thinking everything pales next to StyTown

Doubts on European Central Bank Amid Crisis New York Times and Bernanke Says Central Banks Must Be Free of Pressure Bloomberg. Similar throughline in both stories, and very much the view of the Fed, “central banks should be free from political pressure as they bolster regulation and try to prevent future financial crises.”. As we have pointed out repeatedly, you can’t play an openly political role (as the Fed has done starting in the Greenspan era) and pretend to be above politics.

Double-dip fears over worldwide credit stress Ambrose Evans-Pritchard, Telegraph (hat tip reader Swedish Lex). See the final paragraph.

The grasshoppers and the ants – a modern fable Martin Wolf

Antidote du jour:

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  1. attempter

    Re “growth and democracy”:

    That’s exactly right. Growth was a feature of the age of cheap oil. If it ever served a progressive purpose, that function was only situational and temporary, and today the situation no longer applies. The drive to prop up the simulacrum of “growth”, which via exponential debt became desperate even before Peak Oil, is by now decadent and indeed malevolent, in every way, and especially for democracy. It’s a primary reason why we no longer have democracy but kleptocracy. “Soft fascism”, or “inverted totalitarianism, in Wolin’s term. And soon they’ll be trying to become hard fascists and to remove the inversion.

    Restoring democracy is contingent upon transforming to a rational, sustainable economy. That means, among other things, the end of the pursuit of “growth” (growth in itself is already dead, and has been just a fraud for many years now, as the crash laid bare) and the building of a steady-state economy.

  2. attempter

    Re Privacy Machiavellis:

    The way we view secrecy and “privacy” is exactly 180 degrees wrong.

    Policy tends to enshrine the lies that the pwoer structure, governments and corporations, have a “right” to secrets, while individuals do not. Indeed, individual information is increasingly treated as one of those “free gift” resources which corporations actually have a right to mine.

    But this is exactly upside down.

    If I may quote from Monday’s blog post:

    Here’s another point about secrecy. The government has been oh so solicitous about the “proprietary information” of the likes of BP, or the control of the banks’ reputational information which would be so adversely affected if we knew how much taxpayer money the Fed had shoveled out via its “facilities”, and to whom. But this is all a lie.

    Again, Peak Oil renders moot most economic information about the exponential debt tower. But even without Peak Oil, most if not all sectors are mature by now. Finance and fossil fuels definitely are. There is no longer any ”innovation” among these rackets such that we need this kind of secrecy regime. In these sectors there’s no reason for private enterprise to exist other than perhaps as a hired contractor, but never as a patent/information rentier. Indeed, their own neoclassical economic ideology says there should be full market information, and in a mature sector there’s no information which doesn’t belong in the public domain. This information does “want to be free”. It’s true that those who first promulgated that ideology were mostly thieves and totalitarians who really wanted to empower corporate information monopolies (just as the hacks of the “Efficient Market Hypothesis” could always find exceptions to justify every corporate patent or secret.)

    But the idea is true if you turn it upside down. Bottom-up information – that of our individual private lives, as well as bona fide innovations thought up by truly independent creators and entrepreneurs – is of course private property.

    But by definition all top-down information, all information generated out of a corporate-government nexus which is completely dependent upon the wealth and power generated by the people themselves, which is rightfully nothing but an ornament or appendage of the people’s sovereignty, all of this information belongs to the public. It came from the bottom up in the first place and is now only being recycled.

    1. aet

      Too bad that “peak oil” is as much od=f a myth as “peak coal”.
      Needs more rigor, more observation, and much less predictions of the unpredictable.
      I base my actions and thoughts upon what I have seen and experienced in the past: but these “peak oilers” can apparently see the future.
      only I do not believe them.
      For the price of oil was at ten dollars the barrel – and the sanctions were still on Iraq and Iran.
      And then, GW Bush went to war. “Peak oil”?
      How about ending the wars started upon the largest and cheapest supplies of oil in existence?
      Maybe that had something to do with the price of oil, rather than theories about the future?

      1. aet

        And none of our industries are mature.
        Not too long from now – a century ,or two -who’s to say that what we have today is not primitive, and stupid?

  3. alex black

    Gotta love the Asia Times article about the Chinese government’s new program to try to lower Beijing housing prices by running its 200,000 prostitutes out of town, in order to lower housing demand and free up supply.

    Right now Bernanke is sitting somewhere thinking “Hmmmm, if we can get them to all move to Las Vegas, the Imperial Valley, Phoenix…. maybe the value of all these MBS on my balance sheet might come back a little….”

    1. craazyman

      Send them to New York and put them on eHarmony!

      They’d go quick.

      Booowaaahahahah ahahaha hahahahah

  4. alex black

    Yves, great catch on the Ambrose Evans-Pritchard piece, especially that last paragraph, in which Germany inserted weasel clauses for most everyone to avoid paying for any bailouts.

    BUT, for a great laugh, I highly recommend that people head into the comment section for one by Dr. Jonathan Wilson, in which he has reports on the interactions of the EU countries as one would report soccer matches in progress.

    “Greece – Power workers have agreed to suspend rolling 48 hour strikes after Greek government agrees to drop commitment to Germany to cut pension benefits by 10%. Greek score came from an early upfield chase by Papandreou who put the ball into the back of the German net and walked away with the early prize money….”

    Or my favorite:

    “The French players are in the dressing room going their normal head-bashing, self-doubt, existentialist warm up routine, getting conflicting messages from their manager, the mercurial Sarkozy, as to whether they should be playing for or against the German team….”

    I love the Brits.

  5. Bates

    RE: ‘Double Dip Fears Over Worldwide Credit Stress’

    Yves, here is the last paragraph you mentioned.

    ‘The second clause said that if any country finds it cannot raise funding for the rescue at interest rates below the 5pc charge agreed for Greece, it may opt out of the bail-out. BNP Paribas said this would escalate quickly into a systemic crisis if Spain were in such a position, because the other countries cannot carry an ever-rising burden. The bank warned the euro project itself may start to disintegrate rapidly if these rescue provisions are ever seriously put to the test.’

    …and here is the take away provided by Tyler Durden at Zero Hedge, and, I agree totally that the US will be the source of bail out funds for the PIIGS via the IMF.

    ‘The bottom line is that all of Europe is now incentivized to blow itself up, and it doesn’t even have to put too much effort into it. All the borderline European countries have to do is raise their funding costs to above 5%: this is mere basis points away from where most are trading already. After all the US has no option but to bail them out: Bernanke has made it clear that his Wall Street bosses will not allow their European colleagues to be dragged down by something as trivial as total insolvency, which in turn would uncover just how bankrupt our own financial system is. These are the perverse incentives in what is now officially known as farcist capitalism.’

    I suggest that new economic history texts incorporate at minimum 3 new chapters; ‘Maintaining Fed Secrecy’, ‘Minor Can Kicking’ and ‘Major Can Kicking’. Perhaps a US bailout of Europe via the IMF should be included in the ‘Major Can Kicking’ chapter?

      1. Bates

        ““The Revenge of the Cans.””…Definitely! Great idea!

        Options and CDOs on ‘sustainability of can kicking’ could replace the current equties markets… which are already simply measuring can kicking, and have priced in a world economic recovery in the bargain…Oh wait, that was last week.

    1. Francois

      After all the US has no option but to bail them out: Bernanke has made it clear that his Wall Street bosses will not allow their European colleagues to be dragged down by something as trivial as total insolvency, which in turn would uncover just how bankrupt our own financial system is.

      After the Marshall Plan, the Bernanke Plan?

      Oh man!

  6. a

    Martin Wolf’s “don’t lend to grasshoppers”. Well, ants shouldn’t lend to grasshoppers when the ants aren’t able to take things by force. But it’s an assumption to think that, just because China isn’t today able to send ships to claim Hawaii, that it will be like that in 20 years. This is one of the big risks that American politicians are running: by continuing to run up the debts rather than pay them off, the military situation might change by the time America finally decides to default.

    1. Bates

      Very soon US expenditures on defense will be surpassed by US expenditures on debt service, as a % of GDP.

      In every country where that event has occured in the past, going back to Spain in the 1700s, that unfortunate country has entered terminal economic and military decline.

    2. Zephyrum

      If China ever claimed Hawaii, they wouldn’t hold it long. You’re failing to take into account the power of America’s metal-backed currency. Unfortunately the metal, you see, is plutonium.

      1. Bates

        ‘If China ever claimed Hawaii, they wouldn’t hold it long. You’re failing to take into account the power of America’s metal-backed currency. Unfortunately the metal, you see, is plutonium.’

        I lived in the South East Asia for over 4 years and came to appreciate the patience of the Chinese. Do not underestimate them or their patience. Formosa (Tiawan) is a province of China but is not currently under Mainland Chinese rule…but, it will be eventually. When US world hegemony declines Formosa will be glad to accept the protection and rule of Mainland China…for the alternatives will be worse.

        BTW, China has lots of nuclear weapons but will not use them while they are winning a prolonged, patient, economic war against the US. The US would have to launch a preemptive nuclear attack before China would respond in kind, imo.

        Think about this: How long do you think S Korea would last as an independent country if the US withdrew forces currently stationed there?

    3. MyLessThanPrimeBeef

      Where are the squirrels? I know one squirrel who has a lot of autogrpahed pine needles from his squirrel leader.

  7. lambert strether

    Yves, thanks for the link. Word now is that BP will leave the live cam going (which doesn’t address the many other issues with the live cam, like the lack of time-stamping and the non-existence or at least lack of availability of archival footage). So, if you want to take the link down, fine. On the other hand, keeping public outrage on the boil is what keeps the live cam on, I would think.

  8. Independent Accountant

    I’ve said things like Martin Wolf for 30 years! Ultimately the world will find out: government debt, no matter from which government, is worthless. The capital markets line makes no sense. Why? The “riskless asset” isn’t.

  9. EmilianoZ

    Re: “Obama is from Mars ….”

    Although it’s a piece of propaganda, it’s indeed full of interesting tidbits.

    This one caught my eye:

    “Beyond the reflexive, ridiculous howling in certain quarters of the blogosphere—the J’accuses that Rubin is still working his will through a network of slavish moles within the administration for example—there is a credible argument advanced by serious critics such as Johnson and economist Nouriel Roubini that the Obamans have now missed two once-a-century opportunities for a root-and-branch reformation of a financial system that remains as dangerously unstable as ever. Calling the Dodd bill’s fixes “cosmetic,” Roubini said the other day, “There is a risk of ending up in another crisis, as the world found itself in the Depression in 1933.””

    First, I wonder if “ridiculous howling in certain quarters of the blogosphere” includes NC. Second, there is an implicit admission here that opposition to the bill comes mainly from blogs. All the mainstream media march in lockstep, painting the bill as tough on banks.

  10. EmilianoZ

    Re: “Obama is from Mars ….”

    James Kwak has the best commentary on the Heileman piece in this one sentence:

    “the administration is happy with the financial reform bill roughly as it turned out, and it got there by taking up an anti-Wall Street tone (e.g., the Volcker Rule), riding a wave of populist anger to the point where the bill was sure of passing, and then quietly pruning back its most far-reaching components. If anything, that’s a testament to the political skill of the White House and, yes, Tim Geithner as well”

    Very clever indeed. We’ve been played. I think we underestimated the cunning of Obama and Geithner.

  11. Evelyn

    I knew the next big bump in the road was going to be commercial real estate, as their loans are ticking time bombs set to go off over then next year or two.

    I had no idea that the FDIC has decided to make it all come true in a much more urgent, bloody fashion, sooner rather than later:
    Title: Out of Darkness
    Author: James Howard Kunstler
    Date: 2010-MAY-24


    “A New Urbanist developer had gotten a small project going
    for a traditional neighborhood. Despite the global financial
    clusterfuck, the developer was able to meet the payments of
    his commercial loan. But the FDIC sent bank examiners around
    America and they told the small regional banks that if they
    had more than twenty percent of their loans in commercial real
    estate (CRE) they would be put out of business. The banks were
    ordered to reduce their loads of CRE by calling in the loans
    and liquidating the assets. *Ironically, the banks only called
    in their “performing” loans, the ones that were being regularly
    paid off, because they were ignoring and even concealing the
    ones that weren’t being paid.

    “The developer in question had his loan called in when the FDIC
    descended on his bank. He couldn’t pay off the $3 million in one
    lump, of course. The FDIC’s agents are going to seize and sell
    off his project if he can’t get it refinanced in short order.
    He can’t get it refinanced because there is now such a shortage
    of capital in the banking system that no one can get a loan
    for anything. Also, since it is now well-known that the bank
    failed, the vultures are circling above his project hoping
    to buy it for a discount, so even the few private investors
    who have money won’t throw him a lifeline. By the way, the
    FDIC agents told him they are doing this because they now
    expect that virtually all commercial real estate loans in the
    USA will fail in the months ahead.”

    1. MyLessThanPrimeBeef

      Sometimes, you have wonder when you open the skull of a Homo Not-So-Sapiens Not-So-Sapiens if its brain doesn’t look like the Sharpei in today’s antidote du jour.

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