Links 12/5/10

Down Pompeii? The ruin of Italy’s cultural heritage Independent (hat tip reader May S). Pompeii may not be the best example. Most of the artwork and artifacts have been stripped and are at a museum in Naples. The site is pretty barren and not as interesting as one might hope, although it is instructive to see the scale and layout of a Roman city and the various establishments (houses, various merchants, even the brothels).

Giant panda breeding breakthrough BBC

People with a university degree fear death less than those at a lower literacy level Medical Daily. Hhm, strikes me as sus. Study methods not clear, but surveys and even interviews are not exactly a great way to get an accurate reading on primal emotions like fear (and how do you keep out researcher bias if you are interviewing?). Probably has to do with illusions of greater control in life generally extending to sentiments about death. Or it could also be that people of lower literacy levels are more willing to cop to negative feelings than more educated people.

Government agencies restrict employee access to WikiLeaks Raw Story. This is surreal.

Shutting Down the Internet, One Seizure at a Time danps, FireDogLake

All the President’s Captors Frank Rich, New York Times. Directionally correct, but still far too kind to Obama. I met a law school classmate of Obama’s last week, and heard the long form version of reports on his conduct then: he’d get up and consistently make completely pedestrian, middle of the road comments (his classmate put them on the order of “rain is wet”).

United Nations Silent as NATO Destroys Potentially Thousands of Afghan Homes Kabul Press (hat tip reader May S)

The roof falls in on Ireland’s Millionaires Row Guardian (hat tip reader Swedish Lex)

Shane Ross: Bankers who peddled the poison Independent (Ireland, hat tip Swedish Lex). Wow, a long form rant, and well done at that.

Record levels of poverty among families with wages Independent (hat tip reader May S)

Running Backwards in the US Economy Gregor Macdonald (hat tip reader Crocodile Chuck)

FRBSF: Disinflation – It’s Not Just Housing Mark Thoma

Today’s Jobs Numbers: Proof Against Structural Unemployment MIke Konczal

Uncertainty Over Bush Tax Cuts is Not Hindering Economy Christine Romer, New York Times.

It’s Ugly Out There’ Michael Panzner

Mounting State Debts Stoke Fears of a Looming Crisis New York Times. Note this is at odds with the optimistic take, that the fact that state tax receipts and spending are up 5% means things are getting better.

Taking Sides in a Divorce, Chasing Profit New York Times. A symptom of growing income disparity. This sort of thing makes sense only if the amount at issue is large.

Wells Fargo to submit affidavits: Reviewing 55,000 pending foreclosures seems to be taking longer than planned Charlotte Observer (hat tip April Charney)

What Jamie Dimon Won’t Tell You: His Big Bank Would Be Dangerously Leveraged Anat Admati, Baseline Scenario

Antidote du jour:

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  1. attempter

    Re NYT on state debts:

    It must be hard for the NYT juggling the mutually exclusive lies: The Bailout is working (or even “has worked”), but we’re doomed if we don’t undergo austerity.

    Re Ireland:

    This quote is exactly right:

    “What’s the point of having a constitution if we’re not economically sovereign?” asked Paul O’Sullivan, an urban planner from Cork, who was protesting outside the capital’s parliament building with a sign declaring: “Bailed out, slopping out, the jury’s out.”

    The answer is you don’t have a constitution. Or a legitimate government, by definition. Even globalizer cadre Dani Rodrik admitted as much with his “trilemma”: Globalization and financialization are in a direct zero-sum conflict with sovereignty and democracy.

    You can have one or the other, not both. The Bailout and “austerity” are radical steps in the anti-sovereign, anti-democracy direction of one world corporate rule.

    (That’s “rule”, domination, not even “government”. A good parallel for corporate rule is something like the Nazi administrative zone in the General Government of Poland. It was intentionally set up to have no law or civil society whatsoever, only direct bureaucratic process. The WTO seeks the same kind of rule everywhere its purview extends. Same for the EU/IMF nexus.)

  2. craazyman

    I admit my peanut-sized brain doesn’t understand exactly how the global bankster loot machine works. There’s a lot of moving parts, and a lot of parts that don’t move too. All those parts seem to have one purpose — moving money from responsible savers’ wallets to bankster bonuses.

    To me, it’s like a TV. I don’t know exactly how it works. Somebody turns it on, and it just goes. And people just stare it at.

    So to me, I can’t figure out why senior bondholders can’t take hits in these bailouts. There’s so much cash in the world looking for yield. Say Ireland defaulted. Well, that means they’d be much better credit risks than they are now.

    So why wouldn’t there be a long line of excited creditors — sovereign wealth funds, bond funds, hedge funds, private savers, etc. etc. — ready to lend to the newly-solvent-Irish and to take advantage of previous creditors’ bad risk analysis? There is no memory in financial markets. There is only greed.

    OK, the critics say, then the whole European banking system would crumble in a domino of loan write downs, and all hell would break loose. I don’t know about that theory. It seems that all hell has already broken loose, and it’s just a matter of who gets toasted on the fire. It seems to me some bondholders should get toasted, rather than a generation of young people in Ireland and other places.

    All the cash around the world now “chasing yield” could recapitalize banks on reasonable terms. The bankster bonuses would have to be less, and that money would have to got into the recaps.

    But so what. Gobal wealth creation could re-start on a solid foundation, and the broader diversified portfolios held by the current senior bondholding institutions would see stronger long-term returns, probably enough to easily outweigh the near-term hit from write-downs over any reasonable investment horizon.

    All of this seems to me like getting a cigarette smoking slug to stop watching TV and eating donuts, and get out and exercise. It’s hard, yes. And it hurts, for a while. But it’s healthy. Or maybe its more complicated. Maybe it’s like getting a psychopathic criminal to stop stealing. I don’t know. My peanut brain just can’t make sense of it. I’m glad we have political leaders who can. ha ha ahaha ahhaha hahaha haahah! Sorry.

    1. Anonymous Jones

      “So why wouldn’t there be a long line of excited creditors…”

      You’re absolutely right. There will be a *very* long line of potential creditors. There almost always is after a well-planned sovereign default.

      Again, you’re right that for most of us, there is no good reason for saving the current creditors. A few benefit from trying to save the sunk costs no matter what the result. Many will suffer. The problem is that the few are in charge and the many don’t understand, don’t care, or are actively helping the cause in a kind of Stockholm Syndrome phenomenon.

      1. Soryang

        I don’t know for sure, but my guess is that the creditors have to be bailed out because other major players, who may or may not have an interest in the underlying principal, are short or long on credit default swaps that would multiply the collapse way beyond the borders of the crisis du jour nation. This is the problem with the unregulated derivatives market which multiplies the impact of a collapse till it reverberates around the globe. That’s why too big to fail is too fail. Derivatives which go beyond a legitimately insurable interest need to be banned. Also, those who issue such derivatives need to be regulated and forced to set aside a reasonable reserve, which companies like AIG never did.

    2. Cedric Regula

      That is the way it worked after the 1997 Asian Crisis. I’m not sure how long it took to line up new creditors, but in the early 2000s I bought into a global bond fund that had a significant piece of the portfolio in Indonesia, Korea, and Thailand.

      Paid 11%-12% on their new bonds too! I think this is part of the reason countries don’t like to default, because when they have to go to the well again, it’s not cheap.

      The problem today is global in size. The meltdown scenario may very well be real.

  3. Jack Hammersmiller

    That New York Times, HA! Of course states are borrowing unsustainably from their pension funds! Who do you think was going to have to take a haircut? Banks? No! Pensioners of course! I thought we all knew that.

  4. Ignim Brites

    “The US needs to create at least 150K jobs per month just to soak up population growth.” (Running Backwards in the US Economy Gregor Macdonald). Why do people continue to say this? US population growth is a function of immigration. With the bulk of the construction workforce being provided by immigrants, it is hard to believe that the US continues to have much immigration growth. If anything it is probable that that the US is losing population.

  5. Jim Haygood

    From the NYT article ‘Mounting State Debts …’:

    States and municipalities often understate their pension liabilities, in part by using accounting methods that would not be allowed in the private sector. Joshua D. Rauh, an associate professor of finance at Northwestern University, and Robert Novy-Marx, an assistant professor of finance at the University of Rochester, calculated that the true unfunded liability for state and local pension plans is roughly $3.5 trillion.

    Yeppers. And that horrifying sum is just for states and localities. Last time I checked, Social Security’s negative net worth was $7.677 trillion, while Medicare’s was in the tens of trillions.

    In 1974, the federal ERISA act obliged private pensions to set aside adequate reserves on a current basis to meet projected future obligations. Pension trustees were assigned a fiduciary responsibility to the beneficiaries to follow these rules.

    Scandalously, governments at all levels were exempted from ERISA’s framework of prudent behavior. And guess what? As the NYT describes, states such as New Jersey and Illinois made leveraged bets on stocks and lost money doing so, instead of setting aside the cash they should have.

    Postponed or inadequate current contributions, leaving benefit plans underfunded, are an absolutely characteristic feature of state and federal schemes. Where’s the fiduciary responsibility to the beneficiaries? The only response is: ‘We’re answerable at the ballot box.’

    Bwa ha ha ha — vote for the Depublicrat defalcator of your choice. [Sucker!]

    Governments make the arrogant assumption that ‘we don’t need no stinkin’ prudential rules.’ Having granted themselves absolute discretion, they produce the same results which used to occur in the private sector in the bad old pre-ERISA days: companies would loot the pension plan, then blow out of existence, leaving retirees penniless.

    In the official sector, the exit strategy appears to be the same. Sure, they may ‘print’ instead of just cutting off the checks. But in that case, beneficiaries will still pay via theft of purchasing power. Absence of regulation and perverse incentives have busted the system.

    1. Ignim Brites

      “Sure, they may ‘print’ instead of just cutting off the checks.” This really isn’t an option for cities and states (unless of course they are willing to secede). It is one of the reasons why CA, IL, and NY are likely to join NJ in the red state column. Older and retired civil service employees are likely to be in the vanguard of those supporting cutting government services since these activities directly compete with the fulfillment of pension obligations. This logic might not apply to CA which is probably big enough, to issue and roll its own currency, i.e. revenue anticipation notes. But even a politician as idiosyncratic as Brown is unlikely to try such a maneuver. Remember, he had solid scientific advice that the Medfly could not survive the winter in Northern California.

      1. Jim Haygood

        You’re right, of course. Implicit in my comment is the assumption that the feds would bail out the states and municipalities.

        It’s okay for me to assume this, but it’s rather outrageous for rating agencies to do so. I should think their ratings ought to be based on the states’ own resources, not the speculative notion of a potential federal bailout.

  6. Contractor


    Regarding the link, “Government agencies restrict employee access to WikiLeaks,” it’s even worse than the article states. The agency I am contracted to work for (and I work on-site, inside a federal building) blocked WikiLeaks *BEFORE* the most recent “Cable Gate” disclosure. Not only that, but the email the agency I work for sent out (almost certainly at the behest of the White House/Pentagon/OMB/whatever) advised us to not even view the leaked information on our HOME computers. If you are interested, send me an email and I will forward you the agency-wide email pertaining to WikiLeaks. If you think it is newsworthy, perhaps you can even post it on this site.

    1. Jim Haygood

      ‘the agency I work … advised us to not even view the leaked information on our HOME computers.’

      But of course. Being cognitively contaminated by this subversive material (even though it was written by your own government) could easily induce you to commit the serious offense of Thoughtcrime.

      The prohibition is for your own good. Remember that Dear Leader loves you.

    2. Fran

      I also saw (can’t remember where now) a sample of an email going out to some Ivy League Schools warning students not to go to Wikileaks because it could ruin their chances for a job with the State Department, etc.

      What strikes me as hilarious about all this is that the very people who are/will be working for the State Department, etc. will be the ONLY ones who do not know what is going on!

    3. linnen

      I’m going to lead with ‘meh’. It is more security theatre with a side order of ‘have to DO something,’ than anything else.

      Let us start with the part about blocking before the State Department leak. In case you forgot there was the helicopter video and military documents that WikiLeaks hosted. Even if the site was blocked then, I’d be willing to bet that it was because it was grouped with gossip and celebrity scandal sites.

      As for being blocked at work, there is a easy answer for that. Government IT security standards. (Start with book 3 of NIST’s rainbow series.) You do not, repeat NOT, store documents of any security level on a machine that is rated at a lower level. This is the stuff of nightmares for managers when their department is audited by the IG or security.

      As for the home computer part, I’m torn. On one hand, what is the idea behind stating that people cannot be curious about “X”. (Juror instructions aside. That really is a separate instance and has a legitimate basis.) On the other hand, is the possibility of excusing espionage on WikiLeaks voyeurism. On the gripping hand, there is the privileged idiot that thinks that they can work on classified documents on their home set-up where J. Random “Script Kiddie” can expose them to the world. (Remember Clinton’s head of CIA?) See audit nightmares above.

      I’m just an amateur paranoid. The ACLU and EFF have better lawyers to figure this out.

      1. Roger Bigod

        According to some sources, 3 million people had access to that data base. It was set up after 9/11. So it took several years before a disinterested idealist decided to download everything and hand it to Wikileaks.

        It certainly looks like interested persons, i.e. intelligence organizations must have had their way with the thing long ago. State must have allowed for this, since the significance of most of the material is fairly low.

        So all the hysteria appears to be directed at the possibility that the general public will see something scandalous. Same as with the Pentagon Papers. That led Nixon into the crimes of Watergate, but the conostitutional checks and balances have so eroded that he’d probably get away with it today.

  7. Tertium Squid


    “The site is pretty barren and not as interesting as one might hope”

    Yves, I get that we are seeing the city as it never was, but that statement is like saying the sun doesn’t shine as much as one might hope.

    About the destruction of artifacts, we should ask ourselves why previous generations didn’t labor like us to preserve every scrap of stone, pottery and parchment. Even if they’d wanted to, they couldn’t afford it. Nothing lasts forever, and we show the hubris of tide-taunting sandcastle builders to think that our petty efforts can keep the ravages of time away from these sites indefinitely. Such undertakings are enormously expensive of time and energy. Italians haven’t had the resources to even uncover all the known ruins, much less restore and maintain entire cities of the dead.

    Nowadays tourist dollars are at stake so Italians have a reason to care. But the Roman acqueducts aren’t watering anyone’s crops today or putting food on tables – whether from tourists or caretakers, surplus income will have to come from somewhere.

    And then there’s this gem. From the article: “Il Sole 24 Ore, Italy’s respected business newspaper, said the only solution for Pompeii was a private sponsor, which would be allowed to place its logos at the entrance. “Precisely because it belongs to all humanity, its management should be taken away from a state that has shown itself incapable of protecting it,””

    Deregulation fever hits antiquities too! Why the government unable to protect these sites should be capable of selling off these interests appropriately is not immediately clear.

    (Not that I think the finding and preservation of antiquities should be an exclusively governmental gig. Nations that confiscate all the treasure-hunter’s findings see mainly the clandestine destruction of their history and heritage.)

  8. Jack Rip

    Gregor Macdonald claims, with no arguments for it, that unemployment is structural. MIke Konczal claims the opposite. So does Krugman. Can we stick to what seems justifiable and intuitively obvious that the unemployment is not structural.

    1. Tertium Squid

      I think the whole discussion on structural/cyclical employment misses the point. I get the idea that:

      cyclical = do stimulus
      structural = do nothing

      Maybe I’ve grossly misread the commentaries, but if anything, cyclical arguments invite complacency. It’s all going to get better anyway, right? So instead of trillions in debt, let’s get our house in order. Structural unemployment fought with stimulus, however, is just a delayed armageddon. Much scarier to me, and much more deserving of our best efforts to combat it.

      What is cyclical about this:
      -American wages have to go down a ton.
      -We have to start producing something other than debt that the Chinese/Indians/Saudi Arabians want to buy.

      But why should we do nothing if it’s structural? We need a new “structure”. Instead we have government and business busily pushing us towards the next bubble. Lucky us.

      Buy arable land. Live closer to the things that you need to live, and you’ll be less vulnerable. If you happen to be in Arizona/Nevada, leave.

    2. psychohistorian

      Actually the US current unemployment is both structural and cyclical along with being criminal for being allowed to continue as such without make-work programs and retraining for the structural folks.

      The US unemployment rates (U3 and U6) also severely under report reality, IMO.

      It is going to get worse before there is a chance it will get better…..apathy reigns!!!!

    3. LeeAnne

      The FED (Federal Reserve System) with a shiny new palsy walsy kind of non-official looking web site with nice warm colors and pictures of friendly people here appropriate for a non-governmental organization has had as its target for some decades a minimum 6% unemployment rate for us.

      In other words, the FED cheers for unemployment.

      Should the threat God forbid arise of unemployment failing to reach the FEDs target of minimum 6% the FED has had the authority and the tendency to raise interest rates to avoid such a THREAT to their constituent corporations.

      Sounds systemic to me.

    4. LeeAnne

      I thought the missing link was my error. Trying to correct that (see below) I get the following error message.

      Error establishing a database connection

      Are there rules for linking to the FEDs web site?

      missing link to the New York Federal Reserve

  9. MyLessThanPrimeBeef

    To fear death makes one healhty.

    If getting a college degree means coming down with a fear of fearing death, that alone is reason enough to not go to college.

    1. rjs

      re: People with a university degree fear death less than those at a lower literacy level Medical Daily.

      this may put the cart before the horse…it may be that those who are subject to being overcome by primal emotions like fear are less likely to succeed in higher education…

  10. cano dontcha know

    “obama’s law school classmates” somehow seem to wind up at every american’s dinner table, every bus, every coffee shop, etc. remember, he’s your facebook friend.

  11. Tokay Lover

    DIVORCE INVESTMENT looks like a potentially risky investment. There are few, if any, legal situations with as much volatility, potential misinformation, and drastically divergent information and testimony.

    I’ve been a distant observer to such an event. One party is a bit crazy, but decent and mostly well-intentioned. The other, without any bizarre affect, is delusional, dangerous, and borderline clinically insane. The second party would make a better initial impression on most of us, I venture to say. In this case, there’s probably not enough $ on the table to interest an investor, but if there were, it’s exactly such an investor’s worst nightmare. Caveat emptor–let the investor do very due diligence.

    Note to webmaster/mistress: name change is one off, in the interest of self-preservation.

  12. Ignim Brites

    Before everyone signs on to the psychologizing tear down of the President (All the President’s Captors Frank Rich, New York Times.); it might be good to reflect on why Nancy Pelosi and Harry Reid did not delivery a bill ending the Bush tax cuts for the wealthy at the beginning of 2009 or the beginning of this year for that matter. They had the votes and both are fairly good hard ball players. Seems like that is where the failure lies; particularly on the part of Reid. What could have made him pause?

    1. attempter

      Why? Because Pelosi and Reid, and the entire Dem establishment, agree with Obama and the Republicans: None want the tax cuts for the rich to expire. Any talk to the contrary was mere lies. As you say, actions prove real intent.

      1. Ignim Brites

        I would say that at the beginning of 2009, the Dems were freaked out of their minds that the whole edifice was about to collapse. Consequently, they bought or re-affirmed the idea that you don’t raise taxes in a recession. At the beginning of 2010 they were banking on the proposition that the recovery would be well evident and robust latter in the year. Under that illusion, they were more than pleased to wait. I agree though that Obama and the Dems base in the “creative” class is generally loathe to raise their own taxes. Even raising the income tax is really just a shell game. The real action is in the dividend and capital gains taxes. No one is talking about those. And of course, no one is talking about removing the cap on payroll taxes.

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