Links 5/31/11

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Of Codebreakers and Mechanical Giants The Epoch Times

Really Weird-Looking Bird HealthyPets (hat tip reader furzy mouse)

Food prices ‘will double by 2030’ BBC

El Salvadoran Government & Social Movements Say No to Monsanto Alternet (hat tip reader furzy mouse)

Roger Ailes’ Office Protects Him from Gay Terrorists [Paranoia] Gawker

In Japan, a Culture of Nuclear Dependency New York Times

Accusations of Treason in the Greek Parliament Covering Delta

Greek Aid Package to Be Decided by June’s End, Juncker Says Bloomberg

Amazing Satellite Images Of Spanish Ghost Towns — Abandoned Since The Housing Crash Clusterstock

Libya rebels running out of crude stocks Financial Times

A manifesto for the fund’s new supremo Jeffrey Sachs, Financial Times

Hitler and the Chinese Internet generation Asia Times (hat tip reader furzy mouse)

Welcome to Post-Legal America Tom Engelhardt

Housing Index Is Expected to Show a New Low in Prices New York Times. This statement is affirmatively not true:

“‘No one ever renovated the kitchen or redid a room for the kids in a rental,’ Mr. Yearley [CEO of Toll Brothers] said.” Sorry, there are multiple examples in my building (including yours truly). One tenant is known to have spent over $1 million on her apartment and one is in the middle of a major redo that will probably add up to that much, and I know examples in other buildings.

Antidote du jour:

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  1. Pat

    Panic Capital Flight in Greece, Depositors Yank 1.5 Billion Euros in 2 Days;in May the withdrawals were at least 4 billion, and 2 billion in April

    If I were Greek, I certainly wouldn’t leave any savings in Greek banks.
    What’s going to happen if every Euro in Greece leaves their banks?
    This might be the precipitating event for Greek withdrawal. First you have bank runs, then the banks close and re-open with capital controls, then forced conversion into drachmas, some banks go under in good bank bad bank split, good bank re-capitalization with funny-money, bad bank creditors get forced haircuts, etc etc. This is how it played out in Iceland — and a bank run started it all.

    1. rednek

      I trust the Greek banks much more than the Greek government. If anything investors should be fleeing Greek bonds.

      1. Jim

        Flaw in that statement, Rednek, is that the Greek government can one day, by decree, convert all the Euro deposits into Drachma deposits, and there’s nothing a depositor could do about it.

        That’s precisely what happened in Argentina, after the government had explicitly promised it would never happen. One morning, all Dollar deposits were converted into Peso deposits.

    2. Jim Haygood

      ‘The EU and IMF will have to put up another 30 billion euros in loans to tide Greece over next year with the rest of its 2012-2013 financing needs covered by revenue from asset sales and other measures, the Financial Times reported yesterday, citing ECB Executive Board member Lorenzo Bini Smaghi.’

      The EU and IMF are in denial. Throwing good money after bad is an immense folly. Putting up another 30 billion euros next year will only produce a bigger bang when the Euro-Titanic finally hits a financial iceberg and the boiler room explodes.

      1. ambrit

        Dear Jim;
        Who are we to throw stones. Didn’t we throw approximately US$800billion at, (or to?) demonstrably insolvent “banks?” My question is, are we leading this dance of fools, or following?

  2. mlnberger

    per the Asia Times article (on growing admiration of some Chinese for Hitler): the author sees a critical reason for this is to be found in economic angst among the young. He suggests that the “9% growth in GDP” commonly reported overstates real growth by not factoring in high inflation, which effectively cuts growth in half. I had always assumed that the government and widely reported figures of GDP growth in China were real growth, not nominal growth. Perhaps this is a minor point, but can anyone set me straight on this?

    1. Jim Haygood

      The GDP figures are real growth, calculated first as nominal GDP growth and then adjusted by a price index.

      In the U.S., for instance, nominal GDP growth is running at 3.9%, while real growth is 2.3% (see Table 3 of the GDP report).

      If inflation is underestimated, real growth will be correspondingly overstated. In China’s case, if inflation is 5 percentage points higher than reported, then real GDP growth would be not 9% but only 4%.

    2. Yves Smith Post author

      Pretty much no one believes the official Chinese statistics (we’ve mentioned that from time to time). Many foreign investors use growth in electricity production or consumption as a proxy for economic growth.

      1. Yosemite Steve

        What makes this whole article seem silly to me is the fact that Japan was in the axis. Some people are uneducated enough to believe anything. Maybe a lot, but 170k people does not seem like a large number for china. I do believe that even the youngest generation of Chinese is educated well on the Japanese aggression and occupation of China. Indeed, it’s has been very easy for the Chinese regime to stir up large anti-Japanese crowds to demonstrate vociferously in front of Japanese Consulates at the drop of a hat whenever Sino-Japanese political tension occurs. I would guess all the chinese “hitler youth” would need to have pointed out is the fact that the axis was an alliance between Germany, Italy and Japan, i.e. that Hitler was allied with the country which raped China. It’s a bit hard to believe that fact is not covered in grade school world history class in China.

  3. LeeAnne

    ‘Amazing Satellite Images Of Spanish Ghost Towns — Abandoned Since The Housing Crash’ Clusterstock

    Sometimes a-few-words says volumes more than a multitude of expensive flashy photos.

    In this case, the photos don’t tell the story at all. Clusterstock specializes in such non-journalism. They are such a waste of time, I don’t even have them on my links anymore.

  4. financial matters

    I thought this was an interesting link also. Reminds me of control fraud in other areas as well…

    In shift, feds target top execs for health fraud

    May 31, 2011

    It’s getting personal now. In a shift still evolving, federal enforcers are targeting individual executives in health care fraud cases that used to be aimed at impersonal corporations.

    The new tactic is raising the anxiety level, and risks, for corporate honchos at drug companies, medical device manufacturers, nursing home chains and other major health care enterprises that deal with Medicare and Medicaid.

    Previously, if a company got caught, its lawyers in many cases would be able to negotiate a financial settlement. The company would write the government a check for a number followed by lots of zeroes and promise not to break the rules again. Often the cost would just get passed on to customers.

    Now, on top of fines paid by a company, senior executives can face criminal charges even if they weren’t involved in the scheme but could have stopped it had they known. Furthermore, they can also be banned from doing business with government health programs, a career-ending consequence.

    Many in industry see the more aggressive strategy as government overkill, meting out radical punishment to individuals whose guilt prosecutors would be hard pressed to prove to a jury.

    The feds say they got frustrated with repeat violations and decided to start using enforcement tools that were already on the books but had been allowed to languish. By some estimates, health care fraud costs taxpayers $60 billion a year, galling when Medicare faces insolvency.

    “When you look at the history of health care enforcement, we’ve seen a number of Fortune 500 companies that have been caught not once, not twice, but sometimes three times violating the trust of the American people, submitting false claims, paying kickbacks to doctors, marketing drugs which have not been tested for safety and efficacy,” said Lewis Morris, chief counsel for the inspector general of the Health and Human Services Department.

    “To our way of thinking, the men and women in the corporate suite aren’t getting it,” Morris continued. “If writing a check for $200 million isn’t enough to have a company change its ways, then maybe we have got to have the individuals who are responsible for this held accountable. The behavior of a company starts at the top.”

    1. Francois T

      “Many in industry see the more aggressive strategy as government overkill, meting out radical punishment to individuals whose guilt prosecutors would be hard pressed to prove to a jury.”

      I wrote a post about on this topic a while ago on this very site.

      From experience, I can tell you many in industry are full of it up to their noses. These are the same people who, while discussing the price of drugs, will tell you in all seriousness that “countries other than the US “don’t pay their fair share”.

      Yeah right! Like taxpayers in other countries who just do not want to be taken to the cleaners like the US taxpayers were kind of amoral.

      Well…guess what? They ARE; it’s business, bitchez! You wanna do business here? These are the conditions and you are free to accept them or not.

      What Big US Pharma doesn’t like is the fact they can’t lobby as easily elsewhere in the developed world than here.

    1. LeeAnne

      Thanks for the link. I had no idea that this was happening. American courts cooperating in the plunder of the American people fits the story of Argentina’s collapse. You can see it linked on Max Kaiser’s site. Argentina’s Economic Collapse

      It is the manifestation and story of the thinking now being applied in the US and all countries in the web of IMF/BMI bank loan sharking and PRIVATIZATION PLUNDER; the criminality and genocide easily projected to foresee the fate of people here if we do not act to change it.

      If not now, when? Now that we have some control over Internet technology. When that ends, it will be the long night of the knives and the beginning of the another dark age.

      The people, politics and policies that have left scores of people living worse than animals in Argentina is the clear manifestation of the kind of thinking current by the powerful but brutal and ignorant in the US. (see George W. Bush).

      A friend of mine with a Columbia PhD in education just became a 99er; dropped from unemployment insurance payments, and no longer counted as among the unemployed as he struggles to find enough scarce technology teaching work to survive -just barely survive.

      Who’s keeping track of suicides among US 50 year olds as the screws tighten on civil rights and freedom to travel. The hoops and expense now involved in getting a drivers’ license and/or passport can be prohibitively expensive. Nothing is written about that.

      Let’s get Jeffrey Sachs on the case.

      1. LeeAnne

        that should be BIS (Bank of International Settlements), the central bank of central banks where you’re $Trillions were distributed so neatly with the help of our proxy with the whiskers.

  5. LeeAnne

    And, whlie I’m on the subject of ‘waste of time,’ the Jeffrey Sachs article is more of the same.

    From Sachs’ FT article on IMF leadership, “… and a ludicrous breakdown of policymaking in the US – where politicians now spend 90 per cent of their time fundraising and campaigning and only 10 per cent of it governing.

    The IMF is not responsible for this mess, but it has not been effective in fixing it either.”

    And, pray tell, what does the IMF have to do with US political campaign fundraising? He doesn’t say. Volumes could be written on that subject, but Mr. Sachs prefers to scold and pontificate; otherwise he could be held accountable for his claims to ‘know.’

    As a scold he has managed to promote himself as an expert by pandering to the public on headline issues without necessarily having anything useful to say.

    If anything, Sachs represents the vacuousness, if not the corruption of economics in academia; using it as an umbrella under which to comment on anything whatsoever, and the ivy league imprimatur for FT to publish it.

    1. Paul Tioxon

      IN RE US Politicians spending only 10% of their time governing. The budget gets passed, usually, every year and that is most of the governing they are charged with. Since we are the land of the free and the home of brave, we don’t need what to do on a told on a regular basis. But the congress has for most of the duration of the reactionary past 3 decades passed pitifully few laws of a monumental nature. But now, of course, things have changed. And as Franz Neumann points out in “BEHEMOTH” his landmark study of the NAZI State, it is only when there is a chance that a democratic majority that has taken hold of a parliament will begin to make structural changes to the power sharing equation that the it ceases to be a social club. Yes, there is a lot of campaigning going on, we who are dominated are forced to organize, and not sit back AND take our liquidation and dispossession with a civil resignation to agree to disagree.

      1. LeeAnne

        aah, just the mention of NAZI gets my attention. Never more relevant than today. And, its aftermath; a passivist Germany, model of efficiency and thoughtful domestic policy. I’ll check out the book and thank you for the -recommendation? There’s so much to admire. YES, YES, YES -down with nuclear technology. In the hands of humans, nuclear power is like putting children in charge of fire.

  6. Steve Roberts

    Food prices will double in 19 years? That’s a 3.7% rate of inflation. Not as shocking of a headline.

  7. Valissa

    re: Really Weird-Looking Bird

    The pop-up ad on the video was for Angry Birds. Targeted advertising and branding processes contentedly chirping along, while citizenry safely transfers anger about larger systemic issues into a mindless little game.

  8. Cynthia

    Re: El Salvadoran Government & Social Movements Say No to Monsanto…

    No third-world country is allowed to resist being robbed and exploited by Corporate America. So look to see the CIA-backed jackals orchestrate a military coup to overthrow El Salvador’s democratically-elected government and replace it with a dictatorial regime that serves as a yes-man puppet to Monsanto and other American corporations. But hopefully the people of El Salvador will escape from being robbed and exploited by the plutocratic sociopaths at Monsanto, simply because the CIA and its jackals are stretched to the limit conducting Obama’s secret wars and his astro-turf rebellions in Libya and other countries throughout the Muslim World, making it a cakewalk for Corporate America, led by its biggest banks, to turn the Muslim people into debt slave, exploit them for cheap labor, and rob them of their natural resources.

    1. Valissa

      The US has been behaving like this in Central America for just over 100 years. Now it is Monsanto… back then it was United Fruit (and it’s corp ‘ancestors’ and ‘cousins’ in Big AG). Same corporate rapaciousness, same gov’t support of that via the corporations ‘investing’ in political candidates in both the US and the targeted country.

      Recommended reading on this… Kinzer gives 14 examples of various forms of major US interference in other countries, generally due to corporate influences.

      Overthrow: America’s Century of Regime Change from Hawaii to Iraq, by Stephen Kinzer

  9. DragQueen Capitalism

    “‘No one ever renovated the kitchen or redid a room for the kids in a rental,’ Mr. Yearley [CEO of Toll Brothers] said.”

    I would like to object to that statement, not only for its factual inaccuracy, but for the implication it’s trying to make, ie, that renters don’t care to put money into their residencies with an, admittedly anecdotal, example.

    A couple I knew in the eighties spent thousand making a dump habitable. I trembled for them, as there was no rent control, and sure enough, they were evicted and the apartment rented for a much higher price once they were ousted.

    This is the reason renters don’t DARE put money into their flats, because doing so puts not only their money, but the very roof over their heads, at risk. Any increase in value that is unsecured will be monetized at the renters’ expense and to the owner’s advantage.

    1. MyLessThanPrimeBeef

      Maybe not co-ops, but the apartment owner would an amateur capitalist if he didn’t somehow fail to renew the lease or rental after a tenant spent $1 million in improvement out of his own pocket.

      1. Yves Smith Post author

        Nah, you never want to get rid of a deep pockets tenant. And the next tenant might not like the improvements the earlier one made.

        The bigger risk is the landlord jacks up the rent big time. In the 1980s, when $100 million was a ton of dough, the then Chemical Bank spent $100 million installing a modern dealing room in its New York offices. The rent went up big time upon lease renewal.

        Now that I think of it, there are a ton of examples of tenants fixing up apartments in New York. All of Soho “artist in residence” lofts were pretty close to raw space that had kitchens and bathrooms put in when that area of town first got inhabited (it’s hard to imagine how empty Soho was in the early 1980s if you see it now).

        In NYC, tenants are better protected legally than in other areas of the country so their stronger rights are a big reason they are more willing to invest.

        Re the deposit, as long as you write the landlord and he OK’s your work, he can’t ding your deposit.

    2. Stephanie

      Another reason renter’s don’t invest in upkeep is that it may be used as a reason to deny them their deposits. Just happened to me when I moved in April spring. At Yves’ end of the market that may not matter; for myself, I was really counting on getting that $800 to pay off some bills.

    3. Anonymous Jones

      Rent control affects this calculus greatly. For many years, I lived in a rent-controlled house and spent quite bit of money on upgrading and maintaining it.

      Further, many people continue to fail to understand what purpose renovations serve. The idea that renovations are 100% investment and 0% consumption is bizarre and ludicrous (though not as bizarre and ludicrous as the idea’s ubiquity).

      When a residential unit is “owned”, some part of renovations is consumption and some part is investment.

      When the unit is rented, the entire part of the renovations is consumption (short term or long term consumption depending on rent control and/or good landlord), but that doesn’t make such consumption any less than unusual than deciding to eat steak instead of chicken. Consumption preferences depend upon the individual. If some people want to spend their disposable income to upgrade their rental so that they better enjoy the place they spend a huge part of their time in, how does that not make sense?

      1. Yves Smith Post author

        Exactly, I looked at my NYC rental (after having had two coops and a psychotic board in the second, this was before you could find many condos in NYC) and did a break even on fixing it up (it was great space but needed some sprucing up) versus what space that was in turnkey condition would be, and I figured it would take me five years to recoup the difference if I invested (and yes I included cost of money). I’ve lived here a lot longer than five years.

  10. john

    So the Fed reports this as “exhaustion of benefits drives workers back into jobs” and the NYT reports as much. A cursory glance at the Fed paper shows that the vast majority of “exhausters” exit the workforce. For those inside the bubble these people either forced into penury or black market jobs where they can now be treated as criminals rather than the working poor, simply, cease to exist.

  11. Moopheus

    “This statement is affirmatively not true:

    “‘No one ever renovated the kitchen or redid a room for the kids in a rental,’ Mr. Yearley [CEO of Toll Brothers] said.”

    Surely, Yves, you are not suggesting that an executive at Toll Bros. would be shoveling self-serving horsepoop at a credulous reporter who would then pass it on to readers uncritically? I mean, it’s not 2006!

    1. ScottS

      I’m sure the CEO of Toll Bros. knows what it’s like to be forced to rent and to make tough financial decisions. He’s a MOTU.

  12. ScottS

    Roger is right to be worried. Newt Gingrich was the victim of a glitter bomb thrown by a gay terrorist a few weeks ago.

  13. scraping_by

    When I glanced at the “Post Legal America” phrase, I first thought it was about the mortgage fraud crisis. Issuing mortgages on fraudulent terms, avoiding the required county registration, paying for AAA ratings for dreck, lying to investors and betting against them, then paying off politicians to clean up the mess, apparently law’s just an opinion and some optics. Maybe a few more payoffs, but it’s nothing that can’t be settled. If somebody’s making book, I’ll lay money the current legal kubuki with GS will end with empty apologies and a low percentage giveback.

    Then I thought about the union contract busting going on in state governments, and deciding that given word can be taken back, with the right grandstanding.

    Draconic punishment for the lower order’s entertainments while ignoring the elite’s helping themselves. The legal, written individual ownership of property giving way to corporate fiat, the way it replaced traditional, communal land ownership. More and more felonies being beneath the notice of the police. Sexual assault by government agents, and terror incidents fabricated for young Muslims to fall into.

    “Post-Legal America”. Yeah, I’ll go with that.

  14. Glenn Condell

    ‘Housing Index Is Expected to Show a New Low in Prices’

    Same in Oz. The predicted deflation of the Aussie housing bubble has begun in earnest, that’s not news, but the fact that the Sydney Morning Herald’s senior business columnist has seen fit to express her concerns in print probably is. This is a paper which until recently has hewed to the ‘it’s different here’ meme, even scoffing at the prognostications of Steve Keen among others.

    But now the establishment has taken some of Keen’s analysis on board (without attribution): ‘What is particularly interesting is that this more troubled crop of loans (or vintage, as it’s called in the industry) was written in 2008 and 2009 – and largely coincided with the government’s stimulus package and the various incentives given by way of the first home owners’ grant and stamp duty concessions.’

    It finishes though with what seems to me a fairly nervy sort of confidence:

    ‘Hedge funds, from the US in particular, have been visiting our shores lately with an eye to shorting Australian bank shares. At this point, such a move is probably not a great bet – the level of delinquencies does not suggest there is a major problem.’

    1. skippy

      Did you also see *The Australian Financial Review* today (sorry fire wall/linkage). On that note I just got back from a week up in Noosa, and man can I tell you….the housing prices are going down…Mil+ is now 750ish…750ish is 450/500ish, 400k for 4/3 bdr, 2 bth, 2 car, ocean views/canal/boat-age, etc…sheeezzzzzz.

      Skippy…selling point on prime acreage (less than 5 years old w/all the mod/cons) in local prime real estate rag…can grow own food!!!!!!

      1. Glenn Condell

        My parents recently retired, early 70s, big house for us five boys, took them up til 10 or 15 yrs ago to finish paying for it, was worth high 700s at least not so long ago. Nice place but big to maintain and too many stairs with a bit of arthritis and sciatica setting in. I said to them a while ago year they want to get cracking if they’re going to sell because this baby is gonna blow. But I have 3 brothers in CRE, and they have been making soothing noises, so no rush.

        The agents are trying to get them to drop to a half mill and change; they’re indignant and it’s ‘bugger it, we’ll stay here’. Thing is, to get anything even half decent instead is likely to leave them five eighths of you know what. So it goes.

        I am now telling them not to feel too complacent about paper assets in Colonial or whatever they’re in, maybe buy some physical silver, but that train may have left too.

        Things are crook in Tullarook.

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