Links 12/10/10

Stork that ate babies, rather than delivering them Independent (hat tip reader May S)

Doctors don’t need to fear red heads PhysOrg

Italian Financial Crisis: A.D. 33 Bill Conerly

WikiLeaks cables: Pfizer used dirty tricks to avoid clinical trial payout Guardian

Hacker toolkits attracting volunteers to defend WikiLeaks naked security (hat tip reader furzy mouse). Good detail for hard core techies.

Hidden charges in iTunes game snares kids, Smurf backlash ensues Globe and Mail (hat tip reader Buzz Potamkin)

Major Dem Donors Plan To Withhold Funds Over Obama Tax-Cut Deal Los Angeles Times

Obama’s Hostage Deal Paul Krugman

DeLong Smackdown Watch: Paul Rosenberg Sings Talking Heads’ “Once in a Lifetime” Department Brad DeLong and This is not a smackdown Paul Rosenberg, OpenLeft

An Open Letter from El Diario Foreign Policy (hat tip reader May S)

Tuition fees protesters attack car carrying Prince Charles and the Duchess of Cornwall Telegraph

No-Shows for Nobel Peace Prize Reveal China Influence Bloomberg

Who gains from a renminbi revaluation? Uri Dadush, VoxEU. The Chinese don’t seem to see it this way.

Gold jewellery loses glister as prices surge Financial Times

What does the “Take this Job and Shove-It Indicator” say about the Economy? Michael Shedlock

BofA sues ex-employees over ‘trade secrets’ Financial Times. BofA completely botched the US Trust acquisition. This is merely the latest chapter in that tale.

Companies Cling to Cash Wall Street Journal. As one savvy investor said, “Why should I invest in a company if it’s not willing to invest in its own business?”

Court fight over ‘robo-signer’ depositions Sarasota HeraldTribune (hat tip Lisa Epstein)

A Decline in Self-Employment Economix. Um, no mention of lack of credit, which every small business survey cites as a significant issue

Bankers’ bonuses squeezed, salaries up Robert Peston

What Is Wrong With Cutting Taxes? Simon Johnson

On Social Security Payroll Tax Cut as a Hidden Threat to Social Security Mike Konczal

Antidote du jour:

Screen shot 2010-12-10 at 4.45.57 AM

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  1. attempter

    Re Delong/Rosenberg:

    It’s sometimes cute watching a squabble among liberals. In this case I’m afraid the winner is clear.

    Delong denies the banks are dictating policy:

    So right now we have Austerians–our Pointless Pain Caucus–without there being any politically-powerful investor group that benefits from austerity.

    I see. So austerity is just a kind of immaculate political conception, driven by no one in particular.

    Ah, but that “Pointless Pain Caucus” crack sounds familiar. Of course! It’s plagiarized from the fatuous psychoanalytical babblings of Delong’s twin brother Krugman.

    For example in this piece:

    And why do Krugman and Delong have so much trouble figuring out these people, who are simply organized criminals, as is clear to everyone else on earth?

    Because at the core of their project is to astroturf the liberals with lies like this:

    “What’s going on here? I don’t think you can resort to class war arguments.” (Krugman from the link above.)

    Of course the moment one does so resort, everything becomes crystal clear. So they don’t want us to resort.

    Re self-employment:

    It sure is hide-the-class-war day with these links. The whole piece presents every aspect of the economy as a mystery. Why are there so few jobs? Why is demand low? Nobody knows, and there’s sure no reason to ask about those banks we bailed out in order to get them lending again. There’s no such thing as a credit issue. What’s “credit”?

    She does seem to vaguely sense that whatever the problem is, it must have to do with regulations and that wages are too high. I guess I’m impressed that she didn’t wonder if the reason is that people don’t want to be self-employed and would rather be wage slaves or unemployed. I’ve heard that one enough times.

    1. Paul Repstock

      Well, there are a lot of things playing in reducing self employment. All of them are extemely damaging to the economy. Small business has always been the main driver for innovation and therefore for real job creation.

      The article does mention a fact I’ve always found to be very important, namely a regulatory burden. Paperwork and compliance can kill small businesses, where larger entities have people on staff paid to deal with them. This is one of the few proven examples of economies of scale. Whether this occurs by design is sort of irrelevant, it is merely another symptom of “Big Government”.

      As for the problem borrowing money for small business, this is not new and will never change. Years ago I had a small busness loan request denied. The following week, the same bank sent me an offer for a “consumer line of credit” for twice the amount I had requested for my business..?? I spoke with the consumer credit person, and was told, “everything was in order and my credit was fine’.??

      Another part of the current problem is that many new businesses are at the low tech end of the scale. Since these businesses are not protected by international deal making, they are prone to imports from places like China and India. I was once in the ornamental Iron business. I quit when local retail outlets could sell goods cheaper than I could buy the raw materials.

      1. attempter

        Paperwork and compliance can kill small businesses, where larger entities have people on staff paid to deal with them.

        That seems to be the major purpose of the “traceability” provision of the Food Tyranny bill. The HACCP (Hazard Analysis Critical Control Points) plan has already been observed to have that effect among meat producers since instituted in the 90s. This bill will extend it to produce.

        Whatever the bill’s intended to be about, it’s demonstrably not intended to improve food safety, the way the government fraudulently claims.

  2. vlade

    re companies keeping cash. If that could be recycled into economy – say by *gasp* rising salaries – there would be much less need for any financial stimuli or whatever.
    Of course, companies need to keep some cash, but not x years of working/investment capital… (especially when you don’t invest).

    The idiocy of running companies super-cash-lean in good years (so you can’t cope with shocks) and sitting on cash in bad years (so that you effectively drain money from economy) never ceases to amaze me.

  3. Richard Kline

    The only thing I can conclude from Paul Krugman’s piece is that he looks much better with a beard, but doesn’t think any better about politics. As soon as the word ‘stimulus’ enters the discussion, his critical reasoning, such as it is, goes out the window in pieces. Michael Hudson did a much better job hacking the Democratic ‘exploit’ days ago. Not coincidentally, Hudson doesn’t shill for that particular political party.

    And re: the beard, as someone who’s had a beard for twenty years, I’m glad the stylistic tide is finally coming in to me, hey!

  4. dearieme

    “So austerity is just a kind of immaculate political conception, driven by no one in particular.” It’s on a poar with “War with Mexico broke out”.

  5. craazyman

    @ Self Employment Article

    Did youze guys even read the article? ;-{

    It says:

    ” . . . and credit is reportedly still hard to come by for small businesses. According to Robert W. Fairlie, a professor at the University of California, Santa Cruz, who has written extensively about the self-employed and entrepreneurship, the availability of credit is the “most important determinant” for the success of a small business.”

    @Pfizer — The Pfizer vs. Nigerian Businessman bout is like two con-men trying to fleece each other.

    @Krugman — Economics is 16 equations and 19 unknowns. But if you can get paid tens of thousands of dollars to make speeches about ways you can solve the equations, I’d say you’re doing allright!

    Attack on Prince Charles — Holy Shit. I’d expect that from the French but not the English. This must mean the latent anger across the western world’s middle and lower-middle class is really, really boiling. But the true poor are too exhausted from surviving to have the energy to be angry.

    Companies Cling to Cash — Cut your stupid top exec pay and pay it to your employees, you dumb shits. Maybe you’d have a stronger market for your dog food.

    @Simon Johnson and taxes — same comment as Krugman. Must be nice to be a pundit and talk for a very lucrative living. :) Little do they know that money = property like wave = particle; and tribal consciousness = money spirit, where money = individual awareness and collective group psychology = reciprocal opposities along a continuum in more than 3 dimensions, which makes it hard to put on a Cartesian graph, unless the pay is good. And where excess cash hoarding = hoarding of collective spirit = banishment. I doubt I’d get very far in the economics profession. ha ha ha.

    1. Skippy

      Ha…the Diana psyops gone wrong, will echo, in the chips and bangers mob till they are all laid to rest. He should have really forgone the crown like his predecessor.

      Skippy…rule #1 don’t get in between the crowd and Camilla.

      PS. economists are cooks that need exact volumes and weights…can’t cook to taste…to save their lives.

    2. Yves Smith Post author

      The credit issue is treated as an aside rather than a major driver. There have been a LOT of stories about small businesses shutting or cutting back due to lack of/cutbacks in credit, particularly seasonal businesses (a lot load up on inventory for Christmas orders, its’ a short term, not terribly risky use of credit).

      1. Paul Repstock

        LOL. As I posted above Yves, this is not a new development, although perhaps it is worse now.

        However, the banks are a perfect reflection of their depositors in this. Depositors will whine till the cows come home about low interest rates. Yet these same people won’t consider lending money to a local business at a good interest rate, they would rather let the banks have it at 1% or gamble it on the OTC markets.

  6. Jim Haygood

    ‘And by stringing things along, the extension increases the chances that the Bush tax cuts will be made permanent, with devastating effects on the budget and the long-term prospects for Social Security and Medicare.’ — Blurbman Kurgman

    What, exactly, is this man babbling about? As he well knows (well, maybe not — he’s hardly the sharpest pencil in the box), Soc Sec and Medicare are financed by payroll taxes. Other than a temporary 2 percentage point FICA holiday, those taxes are unaffected by the budget deal. And while I haven’t seen the details, it’s possible that the FICA holiday will be reimbursed from general funds for accounting purposes.

    Of course, we all know what Kurgman’s getting at — Soc Sec and Medicare are insolvent, in the tens of trillions. But to make this up from general funds would require future tax rates over 100% — a magnitude which completely swamps minor tinkering with marginal rates. Soc Sec and Medicare are NOT going to be bailed out by ‘repealing tax cuts for the wealthy’ — they are still flat broke, no matter how much ‘the rich’ pay.

    Woody Warmonger Wilson, who ushered in this hateful regime of oppression, promised that income tax would only ever apply to the superrich, never touching wage earners. But Woody lied a lot, you know:

    ‘In the wake of this “war to end all wars”, Edward Bernays, a confidante of President Woodrow Wilson, coined the term “public relations” as a euphemism for propaganda “which was given a bad name in the war”. In his book, Propaganda (1928), Bernays described PR as “an invisible government which is the true ruling power in our country” thanks to “the intelligent manipulation of the masses”. This was achieved by “false realities” and their adoption by the media. (One of Bernays’s early successes was persuading women to smoke in public. By associating smoking with women’s liberation, he achieved headlines that lauded cigarettes as “torches of freedom”.)

    Bwa ha ha ha! Let’s strike up our ‘torches of freedom,’ with shiny Ayn Randian dollar signs inscribed on them! Even that’s politically incorrect now, and confiscatorially taxed. But promoting smoking would definitely help Social Security, as it shortened lives. Soylent Obamacare is people!

  7. McPhilip

    Yves, I couldn’t find an email address for tips, but I wanted to bring a new documentary to your attention that’s available to watch online for free for a limited time:

    As important as it is to understand the legal and financial issues surrounding the foreclosure crisis, the main street impact also needs attention. This documentary does an admirable job, focusing on Lehigh Acres, Florida.

  8. LearningMacro


    Could somebody please point me to a reference (book/website/whatever) that explains how to analyze a country’s financial wellbeing. I don’t even know the terms I should be searching for (international finance?).

    For example, I’m trying to learn how to analyze the z1 flow of funds, or balance of trade figures, etc.

    Thank you

    1. Jim Haygood

      Rogoff and Reinhardt’s book This Time is Different does a good job of putting debt crises into both international and historical perspective.

      The Z.1 flow of funds report discusses household, business and government debt. Reinhardt and Rogoff point out that different countries have different levels of tolerance for debt. Japanm, for instance, carries a level of debt that already would have sunk any developing nation.

      1. LearningMacro

        Thank you for the suggestion–I just ordered the book (and Petits’ as well).

        Do you have any other suggestions?

        Having spent the last few months learning how to really analyze a company’s financial statements, I’m trying to find some references that allow me to be able to do the same thing for states/provinces and entire nations. I don’t even know what search terms to use to find such a reference, though.

        Have a good weekend.

        1. craazyman

          seriously, I think Fred Mishkin wrote a terrific macro textbook: “The Economics of Money, Banking and the Financial Markets”

          I bought a used 1995 edition at a book sale for $5 several years ago, and read nearly all of it last year. I think he does a very good job laying out the basic ideas and he shows how the Fed works and how financial balances work. And he made many cautionary and forewarning observations about the dangers of moral hazard in markets.

          I guess he kind of got hammered in Charles Ferguson’s movie, which I haven’t seen. And he (Mishkin) muffed Iceland big time. But oddly enough, he wrote a good textbook. I have to give him credit (no pun intended) — he did a good job with the book.

    2. Yves Smith Post author

      Wellbeing is a completely different axis. You need to read The Spirit Level by Kate Pickett, has a series of analyses of wellbeing indicators.

  9. xtc,00.shtml

    WikiRebels: Rough Cut
    STOCKHOLM (Rixstep — Swedish national television SVT will air a new hour-long documentary on WikiLeaks in their ‘Dokument Inifrån’ series on Sunday evening at 20:00 local time.

    You can view the rough cut here now.

    Six Months in the Making
    From the summer of 2010 until now, SVT have been following the elusive WikiLeaks and their enigmatic founder Julian Assange.
    57 minutes 25 seconds, in English.

    1. EmilianoZ

      Thanks for posting that documentary. That was very interesting and balanced as well. It’s neither a hagiography nor an attack on Wikileaks.

      I’m glad those hackers exist. I have the greatest admiration for their technical abilities and their willingness to put them to use for an important cause.

  10. Jim the Skeptic

    From “Court fight over ‘robo-signer’ depositions”:

    “The ACLU of Florida filed a motion today appealing Sarasota Judge Rick DeFuria’s decision not to allow a law firm to put depositions of so-called “foreclusure robo-signers” on its web site.”

    “NTC obtained a temporary injunction, without the presence of Forrest or his clients that orderd Forrest to remove the videotaped depositions from Youtube.”

    This is plainly prior restraint. Worse, the cat is out of the bag, rendering the order meaningless, except to provide additional evidence that the courts are not to be trusted.

  11. Phil Perspective

    Yesterday evening, I tweeted the link to the Geithner/HAMP story and suggested Face the Nation ask Geithner about it. I came back to my computer about 5 minutes ago and saw a reply Tweet that thanked me for the suggestion. We’ll see if they actually ask him about it. At least they replied.

  12. Doug T

    Encouraging news from the LA Times on disgruntled Obama donors:

    “‘I would not financially support his candidacy again,’ said Guy Saperstein, an environmental activist and former trial lawyer in Piedmont, Calif.”

    “Saperstein was an early Obama supporter in 2008, but he said he had lost so much confidence in him that he would consider backing a viable primary challenger to run against the president. ‘I think what he’s shown is incredible weakness, which I don’t think many people would have predicted,’ he said.”

    Echoes another article, “Nader: I am Looking for Someone to Challenge Obama in 2012” — “‘There will be a primary,’ Nader said. ‘Just a question of how prominent a person [will run against Obama]. This deal is the last straw.'”

    “‘He [Obama] keeps one step away from the liberal progressive grasp,’ Nader said, describing the mood among on the left. ‘He’s always just one step ahead from them grabbing his neck.'”

    “He’s a con man. I have no use for him,” Nader said.

    Some weeks ago George Soros hinted at the same. He must be seething today.

    Let’s hope this snowballs massively. Time for the hook to yank this guy off the stage.

  13. Ina Deaver

    Woman, that is ONE CUTE duckie. Yes, it’s frustrating news and we’re up a terrible creek as a nation – but look, I’m ok if the creek has enough of these little sweeties floating down it.

    Perhaps its the end of the week and I’m overtired.

    1. MyLessThanPrimeBeef

      Was that photo taken outside that restaurant in Beijing famous for its Peking Duck?

      Just asking.

  14. Anonymous Jones

    If anyone is interested in more discussion of financial crises after reading the link about the Roman financial crisis of 33AD, you should read Michael Pettis’ book, The Volatility Machine. Just an amazing analysis (he discusses the Roman crisis in the book as well). I could not recommend his book more highly.

  15. emca

    Access to credit may be a factor in entrepreneurial startups as typified by the Silicon valley ventures, but for the really small businesses, the mom-n-pop stores selling goods or services, the availability of borrowing more money is not a solution to small business woes. (one would assume Robert W. Fairlie being from Santa Cruz is referring to just those type larger/small entrepreneurial organizations in his statement).

    As one poster stated, what kills your small, small business is lack of revenue. Shifting debts from one creditor to another is no solution. You need to have a continuous, steady flow of income or the game is over.

    Tough in all circumstance, harder in a deflating economy.

    I might add the rate of self-employment to employment has always been around 10%, as long as I can remember. The most recent spike is people losing regular jobs, turning to self-employment, failing or if not failing en masse, skewing the statistic otherwise by not showing the full effect of economic conditions.

    As to taxes; ha! If could see a proportional raise in income through increase in taxes, I’d gladly take it; but its not going to happen spending money on blowing up people in Pakistan or Yemen or saving big finance from their undisciplined, unethical, unpunished bouts of speculative excess (Jeez, even an alcoholic has to endure their hangover!).

    1. Paul Repstock

      emca, I agree about the importance of revenue. But, the Mom and Pop stores, self employed handypersons and service people are not the ones who require the functioning credit market. They also create few jobs and do not have a net benifit to the economy.

      Credit facilities are needed to launch industries and growth. Most small business is started from savings which are now reduced. But, for a business to reach the next level and become significant, employing people and paying taxes, there must be financing. Without the production there is no revenue in even the best economy. If you cannot buy the equipment you cannot produce.

      This is where we come to the possible ‘grand conspiracy’ sector. Is there some concious connection between a denial of credit and the entrenched corporate structure?

      Does anyone have a link to Mr. Bush’s law reguarding the imperative to take possesion of Intelectual Property? As I remember, it stated that if a patent was under utilized, it could be seized after two years. Now it appears to me that if someone with a great patent cannot get financing, then that patent would soon be available????…or you sell it for whatever you can get….

      1. emca

        (are drug dealers part of self-employed statistics?)

        Your exception is taken…if mom-n-pop don’t do much hiring.

        Also in like vain the article fails to distinguish between self-employment and small business. The correlation between the two (if any?) is not explored.

        The historic low percentage of self-employment and further lack of correlation to enterprise would suggest this is not a particularly relevant figure to look at in the first place – if one wants to understand what is happening with small business.

        As to lack of credit (or uncertainty with taxes or health care costs) choking small business, don’t know, but I see little in the article to support those contentions.

  16. MyLessThanPrimeBeef

    Being a communist country, the red Chinese are probably more interested in red pandas…that’s my guess.

Comments are closed.