Author Archives: Yves Smith

Mathew D. Rose: Merkel’s Götterdämmerung, Victory in Ukraine and Draghi’s Old Trick

Yves here. Mathew’s post describes the political and ideological dynamics that continue to drive failed austerity policies in Europe. But even more important, it also explains why Europe, and German leaders in particular, have fallen in line with the US and are escalating the conflict with Russia over Ukraine. As we’ve discussed, they’ve convinced themselves that Russia will suffer from the economic sanctions imposed by the US and EU before Russia can play its energy card. And some analysts further believe that Russia would not dare restrict gas supplies to Europe, that it cannot afford to lose the income.

Hidden Bomb in Single-Family Rental Securitizations: Trigger Risk

Yield-hungry investors have been snapping up single family rental securitizations, with recent deals heavily oversubscribed. Buyers have been comforted by raging agency reviews that give the top tranches AAA grades, based on loss cushions that these scorekeepers treat as generous (a dissenting view comes from Standard & Poors, which stated that the “operational infancy” of these rental securitizations made them ineligible for a triple A rating).

However, investors appear to be overlooking a risk component that can deliver large-scale losses. We’ll call it trigger risk.

Don Quijones: Judge Turns Monsanto’s Mexican GMO Dream Into Legal Nightmare

Yves here. The success of seed companies in extracting rents from farmers, particularly in countries where subsistence farming is widespread, is yet another example of how corporations like Monsanto abuse intellectual property laws and monopoly/oligopoly power. For the most part, governments have by their inaction backed this scheme. And that’s before you get to the fact that GMO crops, as a former NIH biomedical researcher stressed to me, is a massive experiment being conducted on the public at large without consent or controls.

Don Quijones reports on a ruling in Mexico that has, at least for the moment, thrown a spanner in the seed companies’ plans by barring field trials of GMO crops due to environmental risks.

Gillian Tett’s Astonishing Defense of Bank Misconduct

I don’t know what became of the Gillian Tett who provided prescient coverage of the financial markets, and in particular the importance and danger of CDOs, from 2005 through 2008. But since she was promoted to assistant editor, the present incarnation of Gillian Tett bears perilous little resemblance to her pre-crisis version. Tett has increasingly used her hard-won brand equity to defend noxious causes, like austerity and special pleadings of the banking elite.

Today’s column, “Regulatory revenge risks scaring investors away,” is a vivid example of Tett’s professional devolution.

Ilargi: EU Gas Supply Is In Real And Imminent Danger

Yves here. This post, while informative, omits a critical piece of the calculus made by the West (or at least the US, in pushing Europe to fall into line) in its escalation of the conflict in Ukraine.

Gail Tverberg: US Energy Sources and Uses Show Limits of Renewable Energy Strategies

Yves here. In this post, Tverberg contends that renewable energy sources are not the remedy for global warming that its proponents hope they will be. Too often, “clean” energy sources have not been properly costed out in resource, and sometimes even in carbon terms.

Yves Talks With Zephyr Teachout, Challenger to Cuomo in New York Democratic Primary

Zephyr Teachout, with her running mate Tim Wu, are running against Democratic party fixture, the State governor Andrew Cuomo, and his lieutenant governor nominee Kathy Hochul.

Link 8/22/14

Philip Pilkington: Economists – An Anthropological View

Yves here. While Pilkington is a bit leisurely in setting the stage for his anthropological take on the economics tribe, rest assured that the post is both amusing and instructive.

How Significant is the BRICS New Development Bank?

Yves here. Quite a few readers have contended that the commitment by the BRICS countries to create a developing country challenger to the World Bank represents a serious blow to the dollar hegemony.

While rising anger against the US use of its currency/banking system dominance to further geopolitical ends is well warranted, translating that into effective counter-measures is something else completely.

Patrick Cockburn: Why Washington’s War on Terror Failed – The Underrated Saudi Connection

Yves here. While this is an informative piece, quite a few readers are likely to take issue with the notion that the war on terror is as failure. US foreign policy appears to be run by Saudi Prince Bandar and the military-survelllance complex, and the war on terror caper looks to be working out just fine for them. And the super wealthy and the domestic policy elites get the added bennies of having a political justification for full-spectrum-coverage of ordinary citizens’ activities and authoritarian policing.

Links 8/21/14