Weekend Economists' Nights in White Satin January 6-8, 2012

[Demeter]

Well, 2011 is one for the history books, finally. No sign that 2012 will be any better...yet. Let's give it until August before we give up in despair, okay?

To sublimate those depressive feelings, Moody Blues, the British rock, blues, whatever band, is an excellent catharsis. The band was expert at creating a classic piece of theater with every song...the principles of drama first described by Aristotle.

It is Aristotle, the great philosopher, who is our featured guest this weekend. I hope he would have liked the band.

Moody Blues - Nights in White Satin (extended version)

[Demeter]

1. Aristotle, Classic Technique, and Greek Drama By MARTHA FLETCHER BELLINGER

http://www.imagi-nation.com/moonstruck/spectop007.html

This article was originally published in A Short History of the Drama. Martha Fletcher Bellinger. New York: Henry Holt and Company, 1927. pp. 61-67.

IT is to the Greeks that we owe not only the first great plays, but also the first principles of criticism and of dramatic construction. Not every Athenian was a good critic, as some would have us think; but we know that the comic poets took it upon themselves to deliver judgments, to compare one writer with another, and in some measure, to lay down the laws of drama. It fell, however, to Aristotle, a philosopher and teacher born in the first quarter of the fourth century, to become not only the most important mouthpiece of Greek dramatic criticism, but also one of the most important influences in all the history of literature. He analyzed the plays of the fifth century as well as those of his own time, classified the kinds of drama, and laid down rules for the construction of tragedy.

Aristotle had the very human characteristic of harking back to the good old days, and thinking them much better than the days in which he lived. Taking scant account of Aeschylus, he regarded Sophocles and Euripides as models in tragedy. His chief complaints were that the poets of his own time spoiled their work by rhetorical display; that the actor was often of more importance than the play; and that the poets tampered with the plot in order to give a favorite actor an opportunity of displaying his special talent. He said that the poets were deficient in the power of portraying character, and that it was not even fair to compare them with the giants of the former era; that the drama was greatly in need of fresh topics, new treatment, and original ideas; that it was polished in diction, but lacking in force and vitality. The playwrights too frequently made use of the god-from-the-machine for the purpose of extricating characters from their troubles. Such was the tenor of Aristotle's "reviews" and criticisms.

THE GENERAL PRINCIPLES OF ARISTOTLE

The greatest tragedy, in the opinion of Aristotle, was "Oedipus the King" by Sophocles. The reasons for its supremacy lay in the excellent management of plot and chorus, in the beauty of the language, in the irony of the situations, and in the general nobility of conception. Aristotle cited also the "Helena" of Euripides as a model of its kind, and lauded the author for the skill with which he had set forth the complicated plot. Euripides was to him the most tragic of the poets. At the same time, he found much in Euripides to censure. Only in Sophocles, the perfect writer, were united ideal beauty, clearness of construction and religious inspiration--the three qualities which alone make tragedy great.

The subjects of tragic drama, Aristotle said, were rightly drawn from ancient mythology, because coming from that source they must be true. If man had invented such strange incidents, they would have appeared impossible. The chief characters of a tragic action should be persons of consequence, of exalted station. The leading personage should not be a man characterized by great virtue or great vice, but of a mixed nature, partly good and partly bad. His errors and weaknesses lead him into misfortune. Such a mixture of good and evil makes him seem like ourselves, thus more quickly arousing our sympathy. The course of the tragic action should be such as to saturate the spectator with feelings of compassion, drive out his petty personal emotions, and so "purge" the soul through pity and terror (Catharsis). The crimes suitable for tragic treatment may be committed either in ignorance, or intentionally, and are commonly against friends or relatives. Crimes committed intentionally are generally the more dramatic and impressive.

YOU MAY DRAW ANY PARALLELS TO PRESENT-DAY PERSONS OF CONSEQUENCE THAT YOU SEE FIT TO DRAW. I HADN'T INTENDED TO GO THERE, BUT I FOLLOW THE PATH BEFORE ME....RATHER LIKE THE BLIND SEER, THE MYTHIC TIRESIAS.

[hay rick]

6. First rec and present-day persons.

From Wikipedia: "Aristotle differentiates between tragedy and comedy throughout the work by distinguishing between the nature of the human characters that populate either form. Aristotle finds that tragedy treats of serious, important, and virtuous people. Comedy, on the other hand, treats of people who are less virtuous, who are unimportant, undignified, laughable."

The present day tragedy/comedy to which we bear involuntary witness is the destruction of our democracy and the relentless erosion of the wealth and well-being of the citizenry. The main characters (banksters, plutocrats, media moguls, and their political toadies) wield great power and would be fit subjects for tragedy were it not for their utter lack of virtue.

If Aristotle had been around for the advent of the slasher film, he might have come up with a category of drama fit to include our current story.

[Demeter]

11. Aristotle didn't' say it, but I bet he was thinking about it

"The road to Hell is paved with good intentions."

I think there was originally a good intention, somewhere before 2008 began....because God knows, the man can't act for shit.

[hay rick]

13. The man can't act but the makeup job is perfect.

The script, not so much.

[Demeter]

2. NO BANKS FAILED...YET

Last edited Sat Jan 7, 2012, 12:38 AM - Edit history (1)

Life is either a Greek tragedy or a French farce....or some weird combination of the two....check back later for updates.

NOPE, NO BANKS GOING DOWN THIS WEEKEND....AND YOU KNOW IT'S NOT FOR LACK OF FAILURES.

[Demeter]

5. What Happened to Regulating the Banks? Gerry Epstein VIDEO

http://therealnews.com/t2/index.php?option=com_content&task=view&id=767&Itemid=74&jumival=7627

[Demeter]

7. JPMorgan Chase Sued For $95 Million Over Allegedly Misrepresenting Mortgage Loans

MERE POCKET CHANGE, PEANUTS, A TRIFLE...A PIFFLE!

http://www.huffingtonpost.com/2012/01/03/jpmorgan-lawsuit_n_1181211.html

JPMorgan Chase & Co has been sued for $95 million by the trustee for securities marketed in 2005 by the former Bear Stearns Cos over alleged misrepresentations regarding the underlying mortgage loans. US Bank NA wants to force JPMorgan to buy back the mortgage loans because of alleged breaches of representations and warranties regarding the Bear Stearns Asset Backed Securities Trust 2005-4, for which it serves as trustee. It also said JPMorgan has refused to provide the underlying loan, as the trust documents require, so it can investigate the extent of the alleged breaches. The unit of US Bancorp said it made its request at the direction of a majority certificate holder in the trust. US Bank also sued Bear Stearns and its former EMC Mortgage Corp unit. JPMorgan bought Bear Stearns in 2008.

A JPMorgan spokeswoman did not immediately respond to requests for comment. The lawsuit was filed on Friday in the New York State Supreme Court in Manhattan, and publicly docketed on Tuesday. It is one of many lawsuits seeking to hold banks responsible for investor losses over mortgages that may have been toxic, defective or improperly underwritten.

The case is Bear Stearns Asset Backed Securities Trust 2005-4 v. EMC Mortgage Corp et al, New York State Supreme Court, New York County, No. 650003/2012.

[Demeter]

8. Inside a Banker's Mind by Jeff Sovern (INTERNAL DIALOG, OR MONOLOGUE)

http://pubcit.typepad.com/clpblog/2012/01/inside-a-bankers-mind.html

Isn’t it great that Occupy Wall Street is pretty much over? Though the truth is in some ways, they did us a favor. You know how a magician will gesture wildly with his left hand so you ignore what he’s doing with his right? Well, Occupy was like the magician’s left hand. We need people to ignore what’s happening in Washington—the magician’s right hand--and because people are more interested in demonstrations than the details of government, they’re overlooked what really counts. And, unlike the magician, we didn’t even have to do anything to make it happen. It’s as if the audience distracted itself. Plus, the occasional bad behavior of the Occupy folks and second-guessing the authorities shifted attention from us too.

What matters, of course, is that we pull the fangs of the Dodd-Frank Act. Take the Consumer Financial Protection Bureau. If it makes good on the goal of protecting consumers—from us--it may reduce our profits. So far, though, the strategy that we and Congressional Republicans are pursuing to cripple it is working beautifully, and most people haven’t even noticed. I particularly like what we’re calling commonsense proposals to increase accountability. Congress originally arranged for the Bureau’s funding to be independent of the annual appropriations cycle, just other bank regulators. So we’re arguing for accountability by saying the Bureau ought to get funding from congressional appropriations. That way, we can lobby every year to have its budget cut unless it does what we want. It’s the same strategy Fannie Mae used to get power over its regulator. Sure, Fannie and Freddie Mac ended up being so poorly regulated they needed a bailout of $160 billion or so, but in the meantime, they made tons of money for the people running them.

We’re also saying we can increase accountability by changing the Bureau’s leadership from a single director to a five-member commission. Don’t you love the idea of increasing accountability by having decisions made by a three-member majority instead of one person? As if three people represent the public so much better than one. The bill the Republican-controlled House passed says no more than two commissioners can be from the same party, and one commissioner has to be from the Federal Reserve. That would be the same Fed that got the power to stop predatory lending in 1994, but didn’t use it until after the subprime crisis hit. I don’t think we have to worry about them stopping us from making profits. The House bill provides for accountability, all right; accountability to us. Definitely not to the 99%. It gives us a pretty good shot at either capturing the Bureau, or paralyzing it. Either way, the Bureau doesn’t hurt our profits.

The beauty part is that the Democrats will never agree to this. So we’ve disarmed the Bureau. The Bureau has only limited powers until a director is confirmed, and we’re using the Democrats’ refusal to agree to our “commonsense proposals to increase accountability” to justify blocking confirmation of a director. They didn’t have the votes to defeat a filibuster on the director the other day in the vote nobody noticed, and they can’t compromise without undermining the Bureau. Too bad, so sad. Life is full of pain...And the long run is even brighter. Next time there’s a big consumer protection problem or bailout, we’ll be able to say we tried more regulation, and it didn’t work, so now let’s go for less regulation. Maybe we’ll be able to get rid of the Bureau. We have only two things to worry about. One is that the president makes a recess appointment of Cordray and it sticks. The other is that the Occupy guys start paying attention to what’s going on in Washington and protest against that. It would be as if the magician’s left hand pointed to his right. But especially now that Occupy is just about done, that will never happen.

[Demeter]

15. Win for MBIA in Ruling Against Countrywide (Updated: Maybe Not Really)

http://www.nakedcapitalism.com/2012/01/big-win-for-mbia-in-ruling-against-countrywide.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Bloomberg reports that Countrywide took a major setback in a suit against it by bond insurer MBIA. MBIA has alleged (quelle surprise!) that Country misrepresented the quality of loans it had MBIA guarantee. From Bloomberg:

Bank of America Corp. (BAC) lost a court fight against MBIA Inc. (MBI) over the hurdles the bond insurer will have to clear in a lawsuit seeking to force the bank to buy back faulty home loans made by its Countrywide Financial unit.

MBIA, which says it was duped into guaranteeing payment on Countrywide mortgage bonds, need only show the lender made misrepresentations about the loans backing the bonds, instead of having to prove they caused the losses the insurer is seeking to recover, New York state Judge Eileen Bransten said in a decision.

“No basis in law exists to mandate that MBIA establish a direct causal link between the misrepresentations allegedly made by Countrywide and claims made under the policy,” she wrote.

I’m no lawyer, but I find this ruling puzzling, and I expect Bank of America to appeal it. If you are suing someone, you not only have to establish that you (HE?) did something wrong, but you also need to establish that you were damaged and come up with some sort of basis for arguing how badly you were damaged. If your dry cleaner destroyed a suit, you can’t assert, “This was a custom made Saville Row suit that cost me $5000 and would now cost $7500 to replace,” you need to produce some evidence that you really were damaged to that degree. How otherwise do you have a basis for determining damages? Perhaps this MBIA agreement has some language that provides for specified damages in the event of rep and warranty breaches, but if so, you’d think the matter would not take a judicial ruling.

Our colleague and former monoline executive Tom Adams drafted the claim for one of the very early rep and warranty suits (he sees his language picked up in most of the current suits) and has deemed the need to prove that the rep breach actually led to a loss to be a major hurdle (as it imposed very serious costs on the party suing to prove that the losses resulted from the loan being less than it was promised to be, as opposed to normal underwriting losses, such as the borrower losing his job). The judge may be trying to reduce that burden, but I am not sure this approach would withstand an appeal. And the language of her ruling also implies that her logic applies only to monolines, and may not be generalizable to rep and warranty suits brought by investors. But if my doubts prove to be ill informed, that means the so-called Bank of America settlement, in which investors were to get $8.5 billion to settle claims against 530 Countrywide trusts, looks even more wildly underpriced that we said it was when it was announced.

And this illustrates, yet again, that the legal liabilities facing Bank of America are putting in on a terminal path, unless it can successfully put Countrywide into bankruptcy. We’ve heard some pretty persuasive arguments as to why it probably can’t (the AIG objection to the $8.5 billion settlement makes a very persuasive case). And given how the liability is weighing on the stock, we imagine BofA would have put Countrywide in bankruptcy by now if it thought that was a workable solution.
============================================================================================

Update: I will be getting more information when I get my hands on the decision, but an opposite ruling was issued today on a Countrywide case in New York on a case filed by another bond insurer, Syncora, that the claimant (Syncora) has not established as a matter of law that there does not have to be a direct causal link between a rep breach and a loss. So this MBIA ruling may not be as significant as the initial media reactions suggest....MBS Guy also tells me that the language of the monoline agreements is clear, that the language of the monoline contracts is that the breach has to be material and adverse. He wonders if the breach did not lead to the loss, then how is the breach material?

===========================================================================================
Update 6:40 PM: Reader MBS Guy has read both rulings, and I will turn the mike over to him:

Have read this through finally, and I would conclude it is not the victory it is made out to be. Unfortunately, I can’t cut and paste language from the decision because the pdf is locked. However, here’s how I see it:

with respect to MBIA’s common law and NY State Insurance Law fraud claims, the judge rules that MBIA does not need to prove that a direct causal link between the alleged misrepresentations and the loss MBIA suffered. However, the judge notes that MBIA’s burden remains quite high: (1) MBIA must prove that the misrepresentations were material to MBIA’s decision to enter the policies (and that the misrepresentations occurred), (2) that MBIA relied on the information misrepresented, (3) that it would not have issued the policy if not for the alleged misrepresentations, (4) that the alleged misrepresentations materially increased MBIA’s risk, and (5) that MBIA was damaged as a direct result of the material misrepresentations. Then MBIA must prove the amount of its damages.

Here’s a quote from this part of the decision:


"MBIA must then prove that it was damaged as a direct result of the material misrepresentations. As has been aptly pointed out by Countrywide, this will not be an easy task.”

To some degree, this seems like a rather fine parsing of distinctions: MBIA doesn’t have to prove a direct causal link between misrepresentations and loss incurred, but must still prove that it was damaged by misrepresentations that were material.

The court did lower the standard from what Countrywide wanted for the proof of damages – but not in any way that I think is important.

With respect to breach of reps and warrants portion of MBIA’s motion, the court denied MBIA’s motion. This means the court denied MBIA’s motion that (1) it does not have to prove that the alleged breach of reps and warrants caused the non-performance of the loans and (2) that it is not limited to non-performing loans.

Put another way, the court did not agree that, as a matter of law, MBIA had proved its case on these issues. This is, I think, the real causation issue that people were concerned about: Do allegations of breaches of reps and warrants have have to prove that the breach caused the loss?

Countrywide argued that the plain language of the contracts states that no breach occurs unless the breach materially and adversely affects the interest of the insurer. MBIA disagreed. The court ruled that MBIA was not entitled to a summary judgment on this issue. Therefore, MBIA has the burden of proof to show that this is the case in arguments down the road, including issues of interpretation of what the contract means.

The Syncora decision argues basically the same thing, but in a different order. In this decision, the judge holds on the rep and warrant issue first, and denies Syncora’s motion for summary judgment.

On the rep and warrant issue, Syncora sought to prove that it only needed to prove that a rep breach was material and adverse, but it did not need to prove that the loan was non-performing or the cause of the loan’s non-performance.

The court denied Syncora’s motion because it said that the contract was open to different interpretations. The court noted that it was not holding that Syncora must show that a breach caused the loss or must be for a loan that defaulted. Rather, the court was only holding that Syncora had the burden of proof to make this argument more fully, based on the facts and terms of the contracts (i.e. it is not a “matter of law” issue when there are facts or terms open to interpretation).

With respect to Syncora’s fraud claims (that, under NY State Insurance Law and common law, Syncora was fraudulently induced to enter the insurance policies based on misrepresentations by Countrywide), the court basically reaches the same conclusion as in the MBIA case – Syncora does not have to prove a direct causal link between the alleged misrepresentation and the loss, but it still has a high burden of proof to prove the misrepresentation occurred, that it relied on the misrepresentation, and that it was damaged as a result.

Note – it was the same judge on both cases.

[Demeter]

3. The Year in Crazy MARK FIORE

http://therealnews.com/t2/component/hwdvideoshare/?task=viewvideo&video_id=72706

OR

&feature=player_embedded

[Demeter]

4. Dissent is the Highest form of Patriotism 3 VIDEOS ON WHISTLEBLOWER PERSECUTIONS

http://therealnews.com/t2/index.php?option=com_content&task=view&id=832&Itemid=74&jumival=819

http://therealnews.com/t2/index.php?option=com_content&task=view&id=767&Itemid=74&jumival=7751

http://therealnews.com/t2/index.php?option=com_content&task=view&id=767&Itemid=74&jumival=7755

http://therealnews.com/t2/index.php?option=com_content&task=view&id=767&Itemid=74&jumival=7753

[Demeter]

9. Goldman's Latest Boiler-Room Stock: America MATT TAIBBI

http://www.rollingstone.com/politics/blogs/taibblog/goldmans-latest-boiler-room-stock-america-20120102

It seems Jim O'Neill, the head of Goldman's Asset Management department, is predicting that the United States stock market may go up "15 to 20 percent." O'Neill apparently believes Ben Bernanke and the Federal Reserve will resort to another round of money-printing, and finally green-light the long-awaited "Qe3," or third round of "Quantitative Easing."

The QE programs involve the Fed printing hundreds of billions of dollars and pumping them into the marketplace, where they ostensibly stimulate the economy (although recent experience tells us that the money mostly ends up being swallowed by the financial services industry – but that's another subject for another time). Anyway, Bernanke declined to go ahead with a third QE program in late 2011, but O'Neill apparently thinks we'll get it in 2012. From Bloomberg:

"If QE2 doesn’t work, then we’ll get QE3," said O’Neill, who was named chairman of the money manager in September after working as the co-head of global economics research and chief currency economist at New York-based Goldman Sachs Group Inc. since 1995. There’s a "good chance" the S&P 500 will rise 15 percent to 20 percent in the next 12 months, he said.

O'Neill added that he thought a 20 percent bump would be "relatively straightforward" for the U.S. S&P.



Goldman is building an impressive resume of sweepingly bullish predictions that later on, in retrospect, look more like signals to investors that they should run screaming in the opposite direction....





Read more: http://www.rollingstone.com/politics/blogs/taibblog/goldmans-latest-boiler-room-stock-america-20120102#ixzz1ijHgqnl3

[Po_d Mainiac]

28. If O'Neill was a pitcher

with a 105mph fast ball and threw with the same accuracy as his predictions, he'd woodn't make the cut on a high school team. Even if only 8 players were on the roster.

[Demeter]

10. Tuesday Afternoon-The Moody Blues-(Long Extended Version)

&feature=related

[Tuesday Afternoon]

32. you rang?

love the thread

[Demeter]

33. OMG!

This is the first celebrity ever to visit a thread, outside of Alan Grayson, who's never been to WEE or SMW! Welcome, Tuesday!

[Tuesday Afternoon]

34. I am in good company then

I subscribe to this group but, I rarely post. I rec a lot of threads from here and read to learn. You guys do a great job!

[DemReadingDU]

35. Welcome to the Weekend!

[Tuesday Afternoon]

39. thanks. good to be seen!

[dixiegrrrrl]

38. That has always been my favorite Moody Blues song...

ahhhhhh..memories

[Demeter]

12. GREEK DRAMA MORE CONCERNED WITH PLOT THAN WITH CHARACTER

http://www.imagi-nation.com/moonstruck/spectop007.html


Aristotle conceived the action, or plot, of a play as of far greater importance than the characters. This conception he gained from the plays of the fifth century, which, in general, centered around a personified passion rather than around a character. The action was "the vital principle and very soul of drama." Again he says, "Tragedy is an imitation, not of men, but of actions." Second in importance was characterization; and third were the sentiments aroused by the action. He insisted very clearly that in tragedy the plot does not rise out of the characters, but on the contrary the plot tests the characters through the working-out of destiny -- "blind fate." The main duty of the dramatist was to organize first the action, then display the moral character of his people under the blows of fate. "The incidents of the action, and the structural ordering of these incidents, constitute the end and purpose of tragedy." Finally, and perhaps most important of all, was Aristotle's belief that although tragedy should purge the emotions through pity and terror, yet all drama was meant to entertain: tragedy through the sympathies, comedy through mirth.

PERVERSION OF ARISTOTLE'S PRINCIPLES
In this manner was begun the formulated technique of the drama. The principles enunciated by Aristotle were deduced from a study of the plays which were effective in his time, and under the conditions of the Athenian stage; but as time went on, critics and playwrights often studied Aristotle instead of plays, and left out of consideration differing circumstances and conditions. In this way, rules, created for the open-air Athenian production, were applied indiscriminately to all sorts of stages, whether indoors or out. Many writers failed to recognize the new life in their own art, and missed seeing the truth that a first-hand observation of life is always of more value than rules of any sort. Therefore an immemorial war has been waged between the sticklers for old laws, on the one side, and, on the other, the genuinely creative writers. In no art has this war been more apparent than in the drama; and in no art have rigid rules been more oppressive. There have been long periods when the dominance of technical rules, wholly or partially outgrown, has sterilized and all but killed the theater.

I THINK ARISTOTLE WOULD HAVE APPRECIATED THE OCCUPATION. THEY SET OUT TO BREAK ALL THE RULES.

[Demeter]

14. The Peltzman Effect: Why Economic Growth Has Slowed in the US Over Time by Mike Kimel

http://www.angrybearblog.com/2012/01/peltzman-effect-why-economic-growth-has.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+blogspot/Hzoh+%28Angry+Bear%29

In recent years, there have been a number of studies showing that generational income mobility is particularly low in the US. To quote this 2006 study by Tom Hertz:

By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States.

Hertz provides this handy chart:




Most of the "big government" countries that compare favorably with the US on intergenerational mobility also do pretty well on measures of entrepreneurship. The following snapshot comes from this paper by Acs and Szerb:




(GEDI = Global Entrepreneurship and Development Index)


While studies are, no doubt, imperfect, I've seen similar results before and they seem credible to me.


The studies note, essentially, that the US is not, for many, the land of opportunity it is touted to be, and is now being beaten out by countries like Denmark and Canada. Big government countries, countries where Americans seem to believe people aren't motivated to get off their duff, are actually quite entrepreneurial and offer offer their citizens a lot of opportunity.

Meanwhile, one other thing to note... growth, real economic growth, has been slowing for decades in the US. George W Bush's term, even prior to the start of the Great Recession, compares unfavorably with the 1970s. The highly touted Reagan years, for instance, saw much slower growth than, say, the big government LBJ administration or the even bigger government New Deal years.

What is going on here? Is it really the catch-up effect, whereby wealthy countries like the US necessarily grow more slowly than other countries? Or is there a Great Stagnation going on? And if so, why? I think one explanation for this is the Peltzman effect. Sam Peltzman once noted that, in response to some types of regulation, people can have a tendency to change their behavior in ways that counteracts the intended purpose of the regulation. For instance, some bicycle and motorcycle riders will take greater risks when forced to wear helmets, assuming that the helmets make them safer and more impervious to accidents. Now, economic advance depends on creative destruction, and creative destruction requires people to take risks. Come up with a great idea for a super duper new widget and it has zero effect on anything if you don't go out and try to market the thing. But take two people, both of whom independently came up with the same idea for that super duper new widget. One lives in the US, the other in Denmark. Which one gives up his/her job to start a new company? The American or the Dane? My guess is the Dane will, precisely because the Dane, unlike the American, retains a safety net. The Dane doesn't give up health insurance for herself or her family, and has more social programs she can rely on if the new business fails. My guess is that isn't just true for Danes and Canadians, but also for people in a whole host of countries with a stronger safety net than the US. If the US still scores higher than on entrepreneurship than these countries, it is for historical reasons. Attitude is part of the ranking, after all, and Horatio Alger stories are still in our DNA.

[Demeter]

16. Moody Blues: The Voice

&feature=related

[Tansy_Gold]

17. You know, of course, that Ayn Rand revered Aristotle

And both of them believed logic was everything, and had no use for observed truth.

[Demeter]

26. Aristotle is a victim of translation

Translation through time, space, a dead language, and great change. We today really have small chance of knowing what Aristotle thought about anything, other than the few specific scraps that have survived, most of them likely inaccurately and out of context, especially if the Catholic Church laid paw on them.

As for Ayn Rand... nobody EVER accused her of thinking about anything.

[Demeter]

18. A COUPLE OF REALLY IRONIC QUOTES courtesy Tom Feeley of ICH

"The very word "secrecy" is repugnant in a free and open society; and we are as
a people inherently and historically opposed to secret societies, to secret oaths
and to secret proceedings. We decided long ago that the dangers of excessive and
unwarranted concealment of pertinent facts far outweighed the dangers which are
cited to justify it.

Even today, there is little value in opposing the threat of a closed society by
imitating its arbitrary restrictions.

Even today, there is little value in insuring the survival of our nation if our
traditions do not survive with it.

And there is very grave danger that an announced need for increased security will
be seized upon by those anxious to expand its meaning to the very limits of official
censorship and concealment."

President John F. Kennedy - Address before the American Newspaper Publishers Association,
April 27, 1961 -

http://bit.ly/fkAHg6 [http://r20.rs6.net/tn.jsp?llr=iqnuv6bab&et=1109052901441&s=62166&e=001fiG6J7Q074xFjEETJcS-GKoc1Y0oWMc690vctEVc7YL5ZiTDPaCCu17yOmT9dVBrrMec4skc1E_fs9uUqPmDMK47PMrpTXyZAokvo7VAUEA=]



"I will always be on the side of those who have nothing and who are not even allowed
to enjoy the nothing they have in peace." Frederico Garcia Lorca, Spanish poet and martyr

On August 18, 1936, a 38-year-old Spanish poet named Federico García Lorca was taken from a jail cell in the city of Granada, escorted to a courtyard in the hills outside the city, and executed, along with a teacher and two anarchist bullfighters who had fought in the city’s defense against Francisco Franco‘s rebellion.

His killers were Fascist militiamen whose leaders had long before targeted the poet for murder, for it was clear where his sympathies lay; he once said, after all, “I will always be on the side of those who have nothing and who are not even allowed to enjoy the nothing they have in peace.”

His killers, however, apparently believed that he was being killed simply because he was homosexual, and one later bragged of having fired two bullets into the poet “for being queer.”

García Lorca was only beginning to attain widespread fame outside Spain at the time of his death, although he had been well known within the country for a decade, ever since the publication of his Gypsy Ballads and plays that included Blood Wedding, all of which spoke to the innermost recesses of the Andalusian soul through the cante jondo, the “deep song.” It may have been that the unreflective Franco disliked the soul-searching capability of García Lorca’s verse; certainly he despised gypsies, and so philistine were his tastes and retrograde his views that even Adolf Hitler was moved to remark of Franco’s rebellion, “Had I known the true state of affairs I would not have used our aircraft to return to the Spanish aristocracy and the Catholic Church their medieval rights.”

http://www.britannica.com/blogs/2009/08/the-death-and-strange-afterlife-of-federico-garcia-lorca/

[Demeter]

19. Americans make up half of the world's richest 1% OH, GOODY

THAT'S ALL RIGHT THEN--WITH NDAA, IT WILL BE THAT MUCH EASIER TO ROUND THEM UP FOR "ECONOMIC TERRORISM"

http://money.cnn.com/2012/01/04/news/economy/world_richest/index.htm



The United States holds a disproportionate amount of the world's rich people.
It only takes $34,000 a year, after taxes, to be among the richest 1% in the world. That's for each person living under the same roof, including children. (So a family of four, for example, needs to make $136,000.)....

...In the grand scheme of things, even the poorest 5% of Americans are better off financially than two thirds of the entire world.

SO THERE! THIS IS SO WRONG, I DON'T KNOW WHERE TO START. WHAT ABOUT THE COST OF LIVING DIFFERENTIALS?

[Demeter]

20. On Eve of $41 Billion MF Global Bankruptcy Filing, Jon Corzine Was Château Shopping in France

http://www.vanityfair.com/online/daily/2012/01/february-magazine-jon-corzine-mf-global-chateau-goldman-sachs

[Demeter]

21. Tea Party House Members Even Wealthier Than Other GOP Lawmakers

http://www.opensecrets.org/news/2012/01/tea-party-house-members-wealthy-gop.html

Their politics may differ. But both the Tea Party and the Occupy movement have laid claim to representing the interests of the middle class, whose economic frustrations helped spur the groups' establishment and growth. So which side's congressional lawmakers come closest to embodying that wide swath of the U.S. population? Or, in Occupy terms, which side is closer to the 99 percent?

Neither the members of the House Tea Party Caucus nor those of the House Progressive Caucus -- whose views most closely align with the Occupy Wall Street movement -- are remotely middle class, according to an analysis by the Center for Responsive Politics of congressional personal financial disclosure forms covering 2010, the most recently available data.

The members of the House Tea Party Caucus are especially wealthy, the Center's research shows. The median average net worth of a member of the House Tea Party Caucus was $1.8 million in 2010. (Financial disclosure forms require lawmakers to value their assets and liabilities only in ranges, so it's impossible to know exactly how wealthy a particular elected official is. However, it's possible to calculate an average net worth for each member of Congress.) That's significantly higher than the comparable number for the median House member: $755,000. It's also more than 130 percent above the $774,280 average net worth of the median, non-Tea Party Caucus House Republican. Furthermore, the caucus, a group of 60 House members founded by Rep. Michele Bachmann (R-Minn.), includes 33 millionaires and six members worth more than $20 million, according to the Center's research. That means a member of the group is more likely to be a millionaire than the average Republican who isn't in the caucus.

[Demeter]

22. America's Skimpy Minimum Wage

Had the federal minimum wage risen at the same pace as the earnings of the highest-paid Americans, it would now be $26.96 an hour....

http://www.ips-dc.org/blog/americas_skimpy_minimum_wage

In 2012, the 63 million Americans who depend on Social Security are getting their first cost-of-living adjustment (COLA) in three years: a 3.6 percent increase in benefits. In other words, one in five Americans are getting a raise. For the average beneficiary, this amounts to an extra $38.95 a month.

That's not much, but it's something.


The federal minimum wage is staying put in 2012. For workers earning the federal minimum wage, the COLA for 2012 is…zero. Washington raised the minimum wage to $7.25 on July 24, 2009, and there it stands. There's no regular COLA for the federal minimum wage. (Eight states, which set their own minimum wages slightly higher than the federal level, are raising them in 2012.)

[hay rick]

29. From comments by Dcoronata...

"There is a serious methodology problem with this. They fail to take into account what your tax dollars pay for. So their mythological $34K/year after tax now has to pay (in the US) health insurance, various local taxes and fees, and in many cases property taxes. But most people in the EU, Canada, Japan, and some of the better off Latin American countries receive health insurance for their taxes, and pay marginal if any property or other taxes (other than VATs.)

Since the median income of most EU nations is approaching our median incomes, there would be about as many people in the EU earning as much as our above-median income Americans.

So how can we be 50%, if they are at parity with us, and then you have to add tens of millions of Japanese, Indians, Chinese, Canadians, Brazilians, Argentinians, Chileans, British..."

-----

The statistics cited are from 2005 and probably seriously under-represent China and India.

The assertion that "Milanovic's numbers are adjusted to account for different costs of living across the globe" doesn't tell us if he is using purchasing power parity adjustments, exchange rates, or a ouija board.

The self-congratulatory and convenient conclusion that "even the poorest 5% of Americans are better off financially than two thirds of the entire world" offers succor to the uber-comfortable who would shred what remains of our paltry safety net programs.

[Tuesday Afternoon]

41. no Russians in that group?

why did I expect to see some Russians?

[Demeter]

23. The Moody Blues - Voices in the Sky

&feature=related

[Demeter]

24. The US-Iran Economic War By Pepe Escobar

http://atimes.com/atimes/Middle_East/NA07Ak01.html

Here's a crash course on how to further wreck the global economy.

A key amendment to the National Defense Authorization Act signed by United States President Barack Obama on the last day of 2011 - when no one was paying attention - imposes sanctions on any countries or companies that buy Iranian oil and pay for it through Iran's central bank. Starting this summer, anybody who does it is prevented from doing business with the US. This amendment - for all practical purposes a declaration of economic war - was brought to you by the American Israel Public Affairs Committee (AIPAC), on direct orders of the Israeli Torrents of spin have tried to rationalize it as the Obama administration's plan B as opposed to letting the Israeli dogs of war conduct an unilateral attack on Iran over its supposed nuclear weapons program. Yet the original Israeli strategy was in fact even more hysterical - as in effectively preventing any country or company from paying for imported Iranian oil, with the possible exceptions of China and India. On top of it, American Israel-firsters were trying to convince anyone this would not result in relentless oil price hikes...Once again displaying a matchless capacity to shoot themselves in their Ferragamo-clad feet, governments in the European Union (EU) are debating whether or not to buy oil from Iran anymore. The existential doubt is should we start now or wait for a few months. Inevitably, like death and taxes, the result has been - what else - oil prices soaring. Brent crude is now hovering around $114, and the only way is up.

Get me to the crude on time

Iran is the second-largest Organization for Petroleum Exporting Countries (OPEC) producer, exporting up to 2.5 million barrels of oil a day. Around 450,000 of these barrels go to the European Union - the second-largest market for Iran after China. The requisite faceless bureaucrat, EU Energy Commissioner Gunther Ottinger, has been spinning that the EU can count on Saudi Arabia to make up the shortfall from Iran. Any self-respecting oil analyst knows Saudi Arabia does not have all the necessary extra spare capacity. Moreover, and crucially, Saudi Arabia needs to make a lot of money out of expensive oil. After all, the counter-revolutionary House of Saud badly needs these funds to bribe its subjects into dismissing any possibility of an indigenous Arab Spring. Add to it Tehran's threat to block the Strait of Hormuz, thus preventing one-sixth of the world's oil and 70% of OPEC's exports from reaching the market; no wonder oil traders are falling over themselves to lock up as much crude as they can.

Forget about oil at an accessible $50 or even $75 a barrel. The price of oil may be destined to soon reach $120 a barrel and even $150 a barrel by summer, just as in crisis-hit 2008. OPEC, by the way, is pumping more oil than at any time since late 2008. So what started as an Israeli-concocted roadside improvised explosive device has now developed into a multiple economic suicide bombing targeting whole sections of the global economy. No wonder the chairman of the Iranian parliament's national security and foreign policy commission, Ala'eddin Broujerdi, has warned that the West may be committing a "strategic blunder" with these oil sanctions. Translation: as it goes, the name of the game for 2012 is deep global recession.

Obama rolls the dice

First Washington leaked that sanctions on Iran's central bank were "not on the table". After all, the Obama administration itself knew this would translate into an oil price hike and a certified one-way ticket for more global recession. The Iranian regime, on top of it, would be making more money out if its oil exports. Still, the Bibi-AIPAC combo had no trouble forcing the amendment through those Israel-firster Meccas, the US Senate and Congress - even with US Secretary of the Treasury Tim Geithner expressly against it. The amendment just passed may not represent the "crippling sanctions" vociferously demanded by the Israeli government. Tehran will feel the squeeze - but not to an intolerable level. Yet only those irresponsible people at the US Congress - despised by the overwhelming majority of Americans, according to any number of polls - could possibly believe they can take Iran's 2.5 million barrels of oil a day in exports off the global market with no drastic consequences for the global economy. Asia increasingly will need more oil - and will continue to buy oil from Iran. And oil prices will keep flirting with the stratosphere. So why did Obama sign it? For the Obama administration, everything now is about electoral calculus. Those terminal wackos in the Republican presidential circus - with the honorable exception of Ron Paul - are peddling war on Iran the moment they're elected, and substantial swathes of the American electorate are clueless enough to buy it. No one, though, is doing some basic math to conclude the American and European economies certainly don't need oil flirting with the $120 level if some minimal recovery is in the cards.... Apart from that self-defeating, terminally in crisis euro/North Atlantic Treaty Organization bunch, everyone and his neighbor will be bypassing this Israeli-American declaration of economic war:

- Russia already said it will circumvent it.
- India is already paying for Iranian oil via Halkbank in Turkey.
- Iran is actively negotiating to sell more oil to China. Iran is China's second-largest supplier, only behind Saudi Arabia. China pays in euros, and soon may be paying in yuan. By March they both will have sealed an agreement about new pricing.
- Venezuela controls a bi-national bank with Iran since 2009; that's how Iran gets paid for business in Latin America.
- Even traditional US allies want out. Turkey - which imports around 30% of its oil from Iran, will seek a waiver exempting Turkish oil importer Tupras from US sanctions.
- And South Korea will also seek a waiver, to buy around 200,000 barrels a day - 10% of its oil - from Iran in 2012.

China, India, South Korea, they all have complex two-way trade ties with Iran (China-Iran trade, for instance, is $30 billion a year, and growing). None of this will be extinguished because the Washington/Tel Aviv axis says so. So one should expect a rash of new private banks set up all across the developing world for the purpose of buying Iranian oil....

THEY ARE ALL CERTIFIABLY INSANE, EVERY LAST ONE OF THEM.

***************************************************************************

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).

[Demeter]

25. ON SECOND THOUGHT, I'M NOT WAITING UNTIL AUGUST

I have no hope, I see no future that doesn't end with mass murder--and I hope to God it's the 1%. The REAL 1%, not that ridiculous construction posted up thread...

[Demeter]

27. My resolution for 2012 is to be naïve -- dangerously naïve. Bill McKibben

http://www.informationclearinghouse.info/article30169.htm

I’m aware that the usual recipe for political effectiveness is just the opposite: to be cynical, calculating, an insider. But if you think, as I do, that we need deep change in this country, then cynicism is a sucker’s bet. Try as hard as you can, you’re never going to be as cynical as the corporations and the harem of politicians they pay for. It’s like trying to outchant a Buddhist monastery.

Here’s my case in point, one of a thousand stories people working for social change could tell: All last fall, most of the environmental movement, including 350.org, the group I helped found, waged a fight against the planned Keystone XL pipeline that would bring some of the dirtiest energy on the planet from Canada through the U.S. to the Gulf Coast. We waged our struggle against building it out in the open, presenting scientific argument, holding demonstrations, and attending hearings. We sent 1,253 people to jail in the largest civil disobedience action in a generation. Meanwhile, more than half a million Americans offered public comments against the pipeline, the most on any energy project in the nation’s history. And what do you know? We won a small victory in November, when President Obama agreed that, before he could give the project a thumbs-up or -down, it needed another year of careful review. (The previous version of that review, as overseen by the State Department, had been little short of a crony capitalist farce.) Given that James Hansen, the government’s premier climate scientist, had said that tapping Canada’s tar sands for that pipeline would, in the end, essentially mean “game over for the climate,” that seemed an eminently reasonable course to follow, even if it was also eminently political...A few weeks later, however, Congress decided it wanted to take up the question. In the process, the issue went from out in the open to behind closed doors in money-filled rooms. Within days, and after only a couple of hours of hearings that barely mentioned the key scientific questions or the dangers involved, the House of Representatives voted 234-194 to force a quicker review of the pipeline. Later, the House attached its demand to the must-pass payroll tax cut.

That was an obvious pre-election year attempt to put the president on the spot. Environmentalists are at least hopeful that the White House will now reject the permit. After all, its communications director said that the rider, by hurrying the decision, “virtually guarantees that the pipeline will not be approved.” As important as the vote total in the House, however, was another number: within minutes of the vote, Oil Change International had calculated that the 234 Congressional representatives who voted aye had received $42 million in campaign contributions from the fossil-fuel industry; the 193 nays, $8 million. I know that cynics -- call them realists, if you prefer -- will be completely unsurprised by that. Which is precisely the problem.

We’ve reached the point where we’re unfazed by things that should shake us to the core. So, just for a moment, be naïve and consider what really happened in that vote: the people’s representatives who happen to have taken the bulk of the money from those energy companies promptly voted on behalf of their interests. They weren’t weighing science or the national interest; they weren’t balancing present benefits against future costs. Instead of doing the work of legislators, that is, they were acting like employees. Forget the idea that they’re public servants; the truth is that, in every way that matters, they work for Exxon and its kin. They should, by rights, wear logos on their lapels like NASCAR drivers. MORE

********************************************************************************

Bill McKibben is Schumann Distinguished Scholar at Middlebury College, founder of the global climate campaign 350.org, a TomDispatch regular, and the author, most recently, of Eaarth: Making a Life on a Tough New Planet.

[dixiegrrrrl]

42. "We’ve reached the point where we’re unfazed by things that should shake us to the core. "

THAT is going to be my sig line now.

It is so reminiscent of what Milton Meyer found in his book "They Thought They Were Free", where he traced the thought process of the average person during the rise of Fascism in Germany.
and one of the things he heard, often, was :

"What happened here was the gradual habituation of the people, little by little, to being governed by surprise;
to receiving decisions deliberated in secret; to believing that the situation was so complicated that the government had to act on information which the people could not understand, or so dangerous that, even if the people could not understand it,
it could not be released because of national security.
And their sense of identification with (Hitler) ( insert any name here )
their trust in him, made it easier to widen this gap and reassured those who would otherwise have worried about it.

"This separation of government from people, this widening of the gap, took place so gradually and so insensibly,
each step disguised (perhaps not even intentionally) as a temporary emergency measure,
or associated with true patriotic allegiance or with real social purposes.
And all the crises and reforms (real reforms, too) so occupied the people that they did not see the slow motion underneath,
of the whole process of government growing remoter and remoter."

[Loge23]

66. Late lament, credit Moody Blues

"Breathe deep the gathering gloom,
Watch lights fade from every room.
Bedsitter people look back and lament,
Another day's useless energy spent.
Impassioned lovers wrestle as one,
Lonely man cries for love and has none.
New mother picks up and suckles her son,
Senior citizens wish they were young.
Cold hearted orb that rules the night,
Removes the colours from our sight.
Red is grey and yellow white.
But we decide which is right.
And which is an illusion?"

Nice job, Demeter!

[Mira]

30. To me - this is one of the meatiest - most valuable and rich - most appreciated threads ever.

Thank you Demeter.
I plan to, and look forward to it, delve into it more tomorrow.
And while I maybe have your attention:
Thank you for all you do, I read your comments often in the Stock Market Report.

[Demeter]

31. Thank you, Mira.

This one's for you:

Melancholy Man-The Moody Blues

[DemReadingDU]

36. Where did all the money go?

1/6/12 Where did all the money go?
The recently deceased Chalmers Johnson called it "Military Keynesianism". For those who don't follow arcane economics lingo, Keynes was a British economist who said that in a period of slow or declining economic growth (recession or depression), that government spending was needed to "prime the pump" of the economy. The US recovery from the Great Depression with help from WWII military spending gave credence to this analysis. Except now we have permanent Military Keynesianism.

Consider that the US military is now spending over $1 trillion per year including all black and related expenses, which is more than the entire rest of the world combined. The next biggest spender is China at $91.5 billion according to Chinese figures. Johnson summarizes, “Devotion to military Keynesianism is, in fact, a form of slow economic suicide."

Back in the 1980’s Gorbachev cut Soviet military spending, and predicted that the US would continue to spend itself into oblivion. Who will stop the madness of military Keynesianism?

Johnson concludes, "Our short tenure as the world's "lone superpower" has come to an end." All that's left is for the fat lady to sing, when the US goes broke. It won't be long now.

All quotes from Dismantling the Empire, by Chalmers Johnson, Metropolitan Books/Henry Holt and Co. 2010
more...
http://cluborlov.blogspot.com/2012/01/where-did-money-go.html

[DemReadingDU]

37. Eisenhower warns us of the military industrial complex

Dwight D. Eisenhower exit speech on Jan.17,1961.
Warning us of the military industrial complex.

[Demeter]

40. long time passing...

[Demeter]

43. Who Was Aristotle, Anyway?

Aristotle was a Greek philosopher and polymath, a student of Plato and teacher of Alexander the Great. His writings cover many subjects, including physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology. Together with Plato and Socrates (Plato's teacher), Aristotle is one of the most important founding figures in Western philosophy. Aristotle's writings were the first to create a comprehensive system of Western philosophy, encompassing morality and aesthetics, logic and science, politics and metaphysics.

Aristotle's views on the physical sciences profoundly shaped medieval scholarship, and their influence extended well into the Renaissance, although they were ultimately replaced by Newtonian physics. In the zoological sciences, some of his observations were confirmed to be accurate only in the 19th century. His works contain the earliest known formal study of logic, which was incorporated in the late 19th century into modern formal logic. In metaphysics, Aristotelianism had a profound influence on philosophical and theological thinking in the Islamic and Jewish traditions in the Middle Ages, and it continues to influence Christian theology, especially the scholastic tradition of the Catholic Church. His ethics, though always influential, gained renewed interest with the modern advent of virtue ethics. All aspects of Aristotle's philosophy continue to be the object of active academic study today. Though Aristotle wrote many elegant treatises and dialogues (Cicero described his literary style as "a river of gold&quot , it is thought that the majority of his writings are now lost and only about one-third of the original works have survived.

Marble bust of Aristotle. Roman copy after a Greek bronze original by Lysippus c. 330 BC. The alabaster mantle is modern.

Full name Ἀριστοτέλης, Aristotélēs
Born 384 BC in Stageira, Chalcidice
Died 322 BC (age 61 or 62) in Euboea

Main interests Physics, Metaphysics, Poetry, Theatre, Music, Rhetoric, Politics, Government, Ethics, Biology, Zoology
Notable ideas Golden mean, Reason, Logic, Syllogism, Passion

Influenced: Virtually all Western philosophy that came after his works; Alexander the Great, Avicenna, Averroes, Maimonides, Albertus Magnus, Thomas Aquinas, Duns Scotus, Ptolemy, Copernicus, Galileo, and most of Islamic philosophy, Jewish philosophy, Christian philosophy, science and more....

[Demeter]

44. European Bond Supply and Greece’s Trojan Horse Marc Chandler

http://www.creditwritedowns.com/2012/01/european-bond-supply-and-greeces-trojan-horse.html#utm_source%3drss%26utm_medium%3drss%26utm_campaign%3deuropean-bond-supply-and-greeces-trojan-horse

European sovereigns return to the capital markets more substantially next week as 2012 issuance gets under way. Between bills and bonds, around 35-40 bln euros will be sold. Maturing issues and coupon payments will cover about three-quarters of the bond issuance. The market’s focus is on the Spanish and Italian bond offerings in the second half of the week. Not to be overlooked though is the Austrian bond sales on Tuesday. Austria has come under pressure in recent days in good part due to its linkages with Hungary. After Greece and Spain, Austrian 10-year yields have risen the most this week, rising 55 bp. And even today, with some relief in Hungary, given the change in tone and tactics of the Orban government, the Austrian 10-year yield is up 9 bp at pixel time, the most in Europe today. Its saving grace next week may be that it may seek to raise only around a modest 1.3 bln euros. Spain, Italy and France will be issuing bills, and outside of Hungary, bill auctions have generally been well received. We suspect that in some countries, such as Italy, the concerns about the banks, encourages bill buying by retail accounts. Greece also issues bills next week.

There are two key issues facing Greece presently. The first is the final 2011 fiscal position. The target was 9% of GDP after 10.6% in 2010. Between implementation challenges and slower than expected growth (IMF says the economy contracted around 6%), the deficit is likely to have overshot. It is difficult at this juncture to fine tune the size, but estimates range from 9.5% to 10.7%. PM Papademos is reportedly preparing a response that could include curtailing auxiliary pensions, defense cuts, welfare cuts (including drug and medical benefits) and closing more government entities. Reports indicate that Papademos is becoming increasing frustrated at cabinet meetings. However, apparently not sufficiently frustrated to accept the earlier election time frame (late March) that the New Democracy (leading opposition party) is pushing.

Part of the reason for wanting a later election date has to do with the second issue facing Greece and that is the private sector involvement(PSI). It is proving more difficult than many policy makers appear to have anticipated. For example, in an FT op-ed piece today the president of the Cyprus central bank suggests that the entire idea of private sector burden sharing should be scrapped. This, he argues, will help restore confidence in the euro zone and help lower the borrowing costs for others. To meet Greece’s financial needs, other countries should provide 30-year loans at low interest rates...Recall that it was Germany and some other creditor nations that had pushed for the PSI in the first place. The ECB itself was not an early advocate or supporter. Sarkozy too was opposed and wanted to limit the damage by pushing and eventually getting Germany to agree that Greece was a unique case.

Yet the current PSI does seem most likely to go forward. As we have noted previously, the 50% debt forgiveness by private sector holders can turn into more than a 50% haircut on a net present value (NPV) basis based on the coupon of the new bonds that are given in exchange. A 4% coupon, which would be near the rate France pays on 30-year borrowing, would see the haircut on an NPV basis rise toward 70%. The PSI agreement appears now likely to be in two steps. The first is a memo of understanding and the second is the specifics. In official circles there seems to be some hope of the former by late January and the latter by mid-March. This mid-March time frame is important. The next tranche of aid under the first aid package was due at the end of January, but has been postponed into March because of the ongoing talks about the second aid package of which the PSI is a key component. On March 20, Greece has a 14.4 bln bond maturing and needs the aid to cover the redemption...Assuming that the PSI moves forward and the aid tranche is made, an election is likely in April and therein lies potentially a significant hurdle for investors. The odds-on favorite to win the election is the New Democracy Party. While the former Socialist government and the current technocrat government appears willing to continue to pursue austerity, the New Democracy, at least in opposition, resists. It is opposed, for example, to any more wage cut or tax increases. Could that not be a Trojan Horse?

[Demeter]

45. UK's bailed-out banks face new £30bn hit

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8998723/UKs-bailed-out-banks-face-new-30bn-hit.html

Concerns over the outlook for the banking industry have intensified as analysts have warned Britain's state-backed banks face more than £30bn of new losses over the next three years...Lloyds Banking Group and Royal Bank of Scotland could be hit by a further £33bn of write downs related to mortgages, consumer loans and corporate debt, according to analysts at Barclays Capital.

The two lenders have already taken £100bn in impairments since being bailed out by the taxpayer in 2008, but Barclays warned that new write downs were likely as the UK economy continues to struggle.

Lloyds is facing having to take a further £20bn of impairments against its credit portfolios, an amount equal to half of its core capital buffer, while RBS could be hit by new write downs totalling £13bn in the coming years.

"Mortgages are the key area of concern, where we estimate that a further £5bn of provisions at Lloyds but less than £1bn for RBS. However, we expect the stress to be more widespread, affecting weakened corporates, particularly smaller ones, and consumer credit," said Barclays.

[Demeter]

46. Pollution rise 'worsens' South Asia's winter smog By Navin Singh Khadka

http://www.bbc.co.uk/news/science-environment-16438071

A rapid rise in air pollution from fossil fuels and biomass burning has worsened winter smog and extended its duration in many parts of South Asia, scientists and officials have said. In Bangladesh, India and Nepal the temperature has plummeted and clouds of fog and smoke hang in the sky blocking sunlight for several days. Normal lives have been affected with many flights diverted and suspended and trains delayed because of low visibility.

Experts say they have noticed that the intensity of smog has grown in the Indo-Gangetic plains in the last few years, leading to increased impacts. "Since 1990 onwards, there has been increase in the number of [smog-affected] days in northern India," says BP Yadav, director of the Indian Meteorological Department. "It is not a linear trend showing an increase every year. There are, of course, year-to-year fluctuations. But there are more years that have seen dense fogs."

Nepal's Department of Hydrology and Meteorology director-general Keshav Prasad Sharma agrees the issue of smog is becoming increasingly serious in the plains in southern Nepal bordering India. "Until 10 years ago, we did not have such dense fog for long durations like we have these days," he says. "Although the 10-year period is too short for statistical trends, it is indeed being seen as a major issue now."

..."But it is not just about people's health in our country," says Iqbal Habib of the Bangladesh Environment Movement (BAPA). "At times, all means of transport come to a complete halt because of zero visibility and all walks of lives are affected. "The working hours come down to as little as four hours a day."

MORE AT LINK

[Demeter]

57. Chinese Government Plans to Cause Ten Percent More Rain By 2015

http://www.popsci.com/science/article/2011-12/china-aims-modify-weather-producing-more-rain-produce-more-crops

China is already doing plenty of things to the atmosphere above it, but most changes are byproducts of the country’s marathon industrial revolution. Now China plans to make some purposeful atmospheric changes — namely making it rain, for the purpose of growing crops. China is starting four regional programs to artificially increase precipitation across the country by 10 percent before 2015, under a newly released 12th Five-Year Plan (2011-2015), according to the state-run China Daily. “Weather intervention” could bring an additional 230 billion cubic meters of precipitation per year — that’s on top of the 50 billion China already artificially creates annually, China Daily says.

“Because clouds are boundless, weather control is boundless. The five regional weather control programs will coordinate the ground resources, such as the cloud seeding rockets and planes, across provinces to increase potential rain or snow,” said Zheng Jiangping, deputy director of the China Meteorological Administration’s department of emergency response.
Cloud seeding, involving the injection of silver iodide particles into the atmosphere, helped clear some of the pollution from Beijing before the 2008 Olympics. But it does not always go so well. This time, cloud seeding is necessary to make actual rain, authorities said.

China already broke records this year for a massive harvest of 571 million tons of grain, but natural weather events can wreak havoc on the nation’s wheat crop. Last fall, a major drought in central and eastern China sparked an artificial precipitation effort that China Daily said was able to increase rainfall by 17 percent.

China’s techniques may be high-tech, but the desire for more rain is as old as society. The Wall Street Journal notes that one of Beijing’s most famous landmarks, the Temple of Heaven, was built so Qing Dynasty emperors could appeal to higher powers for plentiful rain and good harvests. This new program is expected to cost roughly 1 billion yuan ($157 million).

[Demeter]

47. M.I.T. Game-Changer: Free Online Education For All

http://www.forbes.com/sites/jamesmarshallcrotty/2011/12/21/m-i-t-game-changer-free-online-education-for-all/

For Wall Street Occupiers or other decriers of the “social injustice” of college tuition, here’s a curveball bound to scramble your worldview: a totally free college education regardless of your academic performance or background. The Massachusetts Institute of Technology (M.I.T.) will announce on Monday that they intend to launch an online learning initiative called M.I.T.x,which will offer the online teaching of M.I.T. courses free of charge to anyone in the world.

The program will not allow students to earn an M.I.T. degree. Instead, those who are able to exhibit a mastery of the subjects taught on the platform will receive an official certificate of completion. The certificate will obviously not carry the weight of a traditional M.I.T. diploma, but it will provide an incentive to finish the online material. According to the New York Times, in order to prevent confusion, the certificate will be a credential bearing the distinct name of a new not-for-profit body that will be created within M.I.T.

The new online platform will look to build upon the decade-long success of the university’s original free online platform, OpenCourseWare (OCW), which has been used by over 100 million students and contains course material for roughly 2,100 classes. The new M.I.T.x online program will not compete with OCW in the number of courses that it offers. However, the program will offer students a greater interactive experience.

...According to the New York Times, access to the software will be free. However, there will most likely be an “affordable” charge, not yet determined, for a credential. The program will also save individuals from the rigors of the cutthroat M.I.T. admissions process, as online-only students will not have to be enrolled in the prestigious, yet expensive, university to access its online teaching resources....

[Demeter]

48. I Smell FEAR

and it's a good smell.

[Hotler]

49. Another well done WEE. Thank you, thank you

Good music and good educational material. I always learn here. Even though I have no hope and see no future music is one of the things that helps sustain me. I always have the stereo on even when I'm not at home (helps keep that bad juju away). I like all music. Jazz and R&B is what I listen to the most. In these times when I don't know whether to laugh, cry or shake my head WEE is my safe zone. Peace to all of you.

[Demeter]

51. We Are Here For Just That Purpose

Building a community of support in all things worthy of community support. Like people. And truth, justice, and the American Constitution.

[Demeter]

50. Life of Aristotle

Aristotle was born in Stageira, Chalcidice, in 384 BC, about 55 km (34 mi) east of modern-day Thessaloniki. His father Nicomachus was the personal physician to King Amyntas of Macedon. Aristotle was trained and educated as a member of the aristocracy. At about the age of eighteen, he went to Athens to continue his education at Plato's Academy. Aristotle remained at the academy for nearly twenty years before quitting Athens in 348/47 BC. The traditional story about his departure reports that he was disappointed with the direction the academy took after control passed to Plato's nephew Speusippus upon his death, although it is possible that he feared anti-Macedonian sentiments and left before Plato had died. He then traveled with Xenocrates to the court of his friend Hermias of Atarneus in Asia Minor. While in Asia, Aristotle traveled with Theophrastus to the island of Lesbos, where together they researched the botany and zoology of the island. Aristotle married Hermias's adoptive daughter (or niece) Pythias. She bore him a daughter, whom they named Pythias. Soon after Hermias' death, Aristotle was invited by Philip II of Macedon to become the tutor to his son Alexander the Great in 343 BC.

Aristotle was appointed as the head of the royal academy of Macedon. During that time he gave lessons not only to Alexander, but also to two other future kings: Ptolemy and Cassander. In his Politics, Aristotle states that only one thing could justify monarchy, and that was if the virtue of the king and his family were greater than the virtue of the rest of the citizens put together. Tactfully, he included the young prince and his father in that category. Aristotle encouraged Alexander toward eastern conquest, and his attitude towards Persia was unabashedly ethnocentric. In one famous example, he counsels Alexander to be 'a leader to the Greeks and a despot to the barbarians, to look after the former as after friends and relatives, and to deal with the latter as with beasts or plants'.

By 335 BC he had returned to Athens, establishing his own school there known as the Lyceum. Aristotle conducted courses at the school for the next twelve years. While in Athens, his wife Pythias died and Aristotle became involved with Herpyllis of Stageira, who bore him a son whom he named after his father, Nicomachus. According to the Suda, he also had an eromenos (an adolescent boy who was courted by an older man, or was in an erotic relationship with him), Palaephatus of Abydus.

It is during this period in Athens from 335 to 323 BC when Aristotle is believed to have composed many of his works. Aristotle wrote many dialogues, only fragments of which survived. The works that have survived are in treatise form and were not, for the most part, intended for widespread publication, as they are generally thought to be lecture aids for his students. His most important treatises include Physics, Metaphysics, Nicomachean Ethics, Politics, De Anima (On the Soul) and Poetics.

Aristotle not only studied almost every subject possible at the time, but made significant contributions to most of them. In physical science, Aristotle studied anatomy, astronomy, embryology, geography, geology, meteorology, physics and zoology. In philosophy, he wrote on aesthetics, ethics, government, metaphysics, politics, economics, psychology, rhetoric and theology. He also studied education, foreign customs, literature and poetry. His combined works constitute a virtual encyclopedia of Greek knowledge. It has been suggested that Aristotle was probably the last person to know everything there was to be known in his own time.

Near the end of Alexander's life, Alexander began to suspect plots against himself, and threatened Aristotle in letters. Aristotle had made no secret of his contempt for Alexander's pretense of divinity, and the king had executed Aristotle's grandnephew Callisthenes as a traitor. A widespread tradition in antiquity suspected Aristotle of playing a role in Alexander's death, but there is little evidence for this.

Upon Alexander's death, anti-Macedonian sentiment in Athens once again flared. Eurymedon the hierophant denounced Aristotle for not holding the gods in honor. Aristotle fled the city to his mother's family estate in Chalcis, explaining, "I will not allow the Athenians to sin twice against philosophy," a reference to Athens's prior trial and execution of Socrates. He died in Euboea of natural causes within the year (in 322 BC). Aristotle named chief executor his student Antipater and left a will in which he asked to be buried next to his wife.

[Demeter]

52. Supreme Court to rule on whether drug-sniffing dogs violate 4th Amendment

MAYBE THE "CRUEL AND UNUSUAL PUNISHMENT" CLAUSE? BUT THAT'S 8TH AMENDMENT

http://www.rawstory.com/rs/2012/01/06/supreme-court-to-rule-on-whether-drug-sniffing-dogs-violate-4th-amendment/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheRawStory+%28The+Raw+Story%29


The US Supreme Court agreed Friday to hear a case to determine whether the use of police dogs sniffing for drugs outside homes is a violation of the constitutional rights of the residents. The case involves a Miami homeowner accused of growing marijuana in his house, who contends the dog’s sniffing on his porch was the same as an illegal “search” of his home.

The Fourth Amendment requires police to present evidence to a judge that a crime has occurred, then obtain a warrant before they can search a home. Miami-Dade police had no search warrant before Franky the dog signaled to his handler that he detected marijuana at the home of Joelis Jardines in December 2006. Instead, they used Franky’s signal of sitting down as the primary evidence to obtain a warrant. A subsequent police search found 179 marijuana plants in a hydroponic lab in the house. Jardines was arrested as he tried to flee out the back door.

The trial judge dismissed the evidence against Jardines, saying it was obtained through illegal search and seizure. A state appeals court reversed the ruling and reinstated marijuana charges against Jardines. The Florida Supreme Court threw out the case again last April, saying lax restrictions on use of police dogs could lead to widespread abuse of homeowners’ privacy. “There is simply nothing to prevent (police) agents from applying the procedure in an arbitrary or discriminatory manner, or based on whim and fancy, at the home of any citizen,” the Florida Supreme Court majority opinion said.


Florida Attorney General Pam Bondi appealed to the US Supreme Court. Bondi argues in her legal filings that a dog breathing air outside a home is not the same as a search. She also says a ruling that deprives police of using drug-sniffing dogs to gather evidence would seriously interfere with law enforcement. “And most importantly, the Florida Supreme Court’s decision strips law enforcement of an irreplaceable tool in detecting those who grow marijuana in their living rooms; construct meth labs in their kitchens; hide bodies in their basements; or make bombs in their garages,” Bondi’s petition says. “Dogs can detect all these activities by the simple act of breathing.” Eighteen states and the territory of Guam filed briefs to support Bondi’s petition. The Supreme Court has traditionally held that homes are entitled to greater privacy rights than public spaces or automobiles when police use dogs to search for illegal activity. The justices are likely to issue a ruling by June.

I DON'T THINK FLORIDA HAS 4 LEGS TO STAND ON...

[Loge23]

67. Drug test that dog!

Ridiculous of course, but we do ridiculous down here in Florida like no other place - with the possible exception of Alaska.

The bigger issue is the continued absurdity of the "war on drugs" and the insane amount of resources that are poured into this nonsense.

Jeez, I can walk past the governor's mansion and detect higher crimes than this!

[Demeter]

53. The case of the missing gas mileage

http://web.mit.edu/newsoffice/2011/cars-on-steroids-0104.html

Automakers have made great strides in fuel efficiency in recent decades — but the mileage numbers of individual vehicles have barely increased. An MIT economist explains the conundrum...

Contrary to common perception, the major automakers have produced large increases in fuel efficiency through better technology in recent decades. There’s just one catch: All those advances have barely increased the mileage per gallon that autos actually achieve on the road.

Sound perplexing? This situation is the result of a trend newly quantified by MIT economist Christopher Knittel: Because automobiles are bigger and more powerful than they were three decades ago, major innovations in fuel efficiency have only produced minor gains in gas mileage.

Specifically, between 1980 and 2006, the average gas mileage of vehicles sold in the United States increased by slightly more than 15 percent — a relatively modest improvement. But during that time, Knittel has found, the average curb weight of those vehicles increased 26 percent, while their horsepower rose 107 percent. All factors being equal, fuel economy actually increased by 60 percent between 1980 and 2006, as Knittel shows in a new research paper, “Automobiles on Steroids,” just published in the American Economic Review...

[Demeter]

54. Ron Paul And The Banks By Simon Johnson

http://baselinescenario.com/2012/01/05/ron-paul-and-the-banks/


We should take Ron Paul seriously. The Texas Congressman had an impressive showing in the Iowa caucuses on Tuesday and his poll numbers elsewhere are resilient – he is running a strong third nationally, but looks like to come in second in New Hampshire. He may well become the Republican politician with populist momentum and energy in the weeks ahead.

Mr. Paul also has a clearly articulated view on the American banking system, laid out forcefully in his 2009 book, End the Fed. This book and its bottom line recommendation that we should return to the gold standard – and abolish the Federal Reserve system – tends to be dismissed out of hand by many. That’s a mistake, because Mr. Paul makes many sensible and well-informed points. But there is a curious disconnect between his diagnosis and his proposed cure. This disconnect tells us a great deal about why this version of populism from the right is unlikely to make much progress in its current form.

There is much that is thoughtful in Mr. Paul’s book, including statements like this (p. 18):

“Just so that we are clear: the modern system of money and banking is not a free-market system. It is a system that is half socialized – propped up by the government – and one that could never be sustained as it is in a clean market environment.”

Mr. Paul is also broadly correct that the Federal Reserve has become, in part, a key mechanism through which large banks are rescued from their own folly – so that their management gets the upside when things go well and the realization of any downside risks gets shoved onto other people...Mr. Paul represents an important strand of American libertarian thinking, seeing the root of all financial evil in the role of the government – and tracing this back to what he sees as deviations from the U.S. Constitution, made possible by the Supreme Court (beginning with McCulloch v. Maryland in 1819; I recommend Aggressive Nationalism: McCulloch v. Maryland and the Foundation of Federal Authority in the Young Republic, by Richard E. Ellis, if you’d like to read more on that key episode). Mr. Paul’s argument goes too far in this direction, however, including with statements like “The Supreme Court has never been a friend of sound money and has rarely been a protector of the Constitution,” (p.168). His book would also be more convincing if it relied a little less exclusively on sources produced by a single publisher, the Ludwig von Mises Institute....There is nothing on Mr. Paul’s campaign website about breaking the size and power of the big banks that now predominate (http://www.ronpaul2012.com/the-issues/end-the-fed/). End the Fed is also frustratingly evasive on this issue. Mr. Paul should address this issue head-on, for example by confronting the very specific and credible proposals made by Jon Huntsman – who would force the biggest banks to break themselves up. The only way to restore the market is to compel the most powerful players to become smaller. Ending the Fed – even if that were possible or desirable – would not end the problem of Too Big To Fail banks. There are still many ways in which they could be saved...

[Demeter]

55. A Historical Cycle Bodes Ill for the Markets By FLOYD NORRIS

http://www.nytimes.com/2012/01/07/business/economy/a-historical-cycle-bodes-ill-for-the-markets.html?_r=1&ref=business

[Demeter]

56. Here Are Some Rich New Yorkers Whining About Feeling Poor

http://gawker.com/5873793/rich-people-are-funny-when-they-whine-about-feeling-poor

[Hotler]

58. My heart really bleeds for those poor fuckers.

Why don't they give Lloyd Blankfein a call and tell their woe to him.

[hamerfan]

59. K&R!

Great theme for this weekend! Thanks,
hamerfan

[hamerfan]

60. Musical Interlude

Moody Blues, Your Wildest Dreams:

[Demeter]

61. I think I'm fighting the Kid's germs--I'm exhausted

The spirit would like to post, but the body says: "Are you crazy? Get some rest." And so, we'll aim for tomorrow....

[xchrom]

62. wonderful thread!! well done. --- crazy weekend but the post roast

was so very, very good. served w/ mashed motatoes w/ roasted garlic. -- and roasted brussel sprouts.

served w/ wild horse pinot noir{more than on bottle} and also a couple of cotes du rhone.

[Demeter]

69. I was going to do belated Xmas dinner, but I've decided to keep the germs to myself

[xchrom]

72. this is for you

http://www.goodreads.com/author/quotes/24956.Dorothy_Parker

Dorothy Parker quotes (showing 1-50 of 167)
“The cure for boredom is curiosity.
There is no cure for curiosity.”
― Dorothy Parker

“Beauty is only skin deep, but ugly goes clean to the bone.”
― Dorothy Parker

“The first thing I do in the morning is brush my teeth and sharpen my tongue.”
― Dorothy Parker

“If you want to know what God thinks of money, just look at the people he gave it to.”

“This is not a novel to be tossed aside lightly. It should be thrown with great force.”

“I don't know much about being a millionaire, but I'll bet I'd be darling at it.”

“Don't look at me in that tone of voice.”

“Heterosexuality is not normal, it's just common.”



*** as the best of all compliments -- you really do remind me of her.

[Demeter]

79. I'm Flattered, I Think

[xchrom]

80. i hope so -- one The Great American Wits.

one of the best and wicked, wicked funny.

[Demeter]

85. Well, half a wit is better than none

and believe, me, with this stuffed head, that's a very generous estimate...

[xchrom]

87. ...

-- cold or no cold -- you are still sharp!

[xchrom]

63. ECB policymaker wants banks off Greece bailout hook

http://uk.reuters.com/article/2012/01/07/uk-eurozone-idUKTRE8060MK20120107

(Reuters) - European Central Bank policymaker Athanasios Orphanides called for euro zone leaders to abandon plans to make private sector investors help reduce Greece's debts, but his push showed no sign of gaining any traction in Europe's capitals on Friday.

Orphanides, who is also the central bank governor of Cyprus, said in a newspaper column that dropping plans to force losses on private sector holders of Greek debt would "help restore trust" in the euro zone and lower the borrowing costs of other governments in the currency union.

The involvement of the private sector in the Greek bailout has eroded investor confidence in euro zone sovereign debt and raised pressure on borrowing costs, despite policymakers' efforts to reassure markets that Greece is an isolated case.

"Reversing the Greek private sector involvement decision would also raise the financing costs on the Greek government, but by restoring trust in the euro zone it would reduce the financing costs of other euro zone governments," Orphanides wrote in the Financial Times.

[xchrom]

64. Bank capital fears to grow in week ahead

http://uk.reuters.com/article/2012/01/08/uk-markets-global-weekahead-idUKTRE8050YV20120108

(Reuters) - Fears a capital black hole is spreading over the euro zone's banking sector threatens to overshadow the first meeting in 2012 of German Chancellor Angela Merkel and French President Nicolas Sarkozy next week to discuss the region's debt crisis.

European banks technically have until January 20 to say how they will raise the estimated 115 billion euro (94.9 billion pounds) of capital needed by the end of June to repair balance sheets devastated by the euro zone's sovereign debt crisis.

But investors' nerves have become frayed after seeing Italian bank UniCredit (CRDI.MI) forced to deeply discount a planned one-for-one equity rights issue, and calls for more details on how others plan to raise funds are set to grow.

"The banks have to show their cards," said money manager Jeffrey Sica, president and chief investment officer of SICA Wealth Management, who adds the lack transparency about the capital raising plans is driving fund flows away from Europe.

[xchrom]

65. Greece’s Least Bad Option Looks to Be Internal Devaluation: View

http://www.bloomberg.com/news/2012-01-04/greece-s-least-bad-recovery-option-looks-to-be-internal-devaluation-view.html

Greece and some other euro-area economies face years of financial struggle even if they manage to restructure their debts. Their prospects are so bleak that, according to one school of thought, they would be better off outside the euro system, despite the immediate costs of leaving.

We disagree, and not just because the immediate costs of an exit would be enormous. Even after that penalty was paid, resurrecting national currencies and regaining control of monetary policy would create as many problems as they solved.

The euro secessionists’ reasoning goes like this: Suppose Greece somehow resolves its short-term debt problems through default or other means and brings its budget deficits back under control. It will still have to deal with a crippling lack of competitiveness.

Labor costs in Greece have risen much faster in recent years than in Germany and the rest of the euro core, making its exports expensive and imports cheap. The result is chronic trade deficits, which must be financed through continued borrowing.




*** i see 'the people' make too much money.

[Demeter]

78. Greek VoluntaryInvolutary DealNoDealDeal: Convolution Eupdate

http://www.creditslips.org/creditslips/2012/01/greek-voluntaryinvolutary-dealnodealdeal-convolution-eupdate.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+creditslips%2Ffeed+%28Credit+Slips%29

Will Greece reach a voluntary deal with its creditors to write down its debt by 50% in the coming weeks? Will it default? ... or will its official patrons blink, pay up, and let the creditors off the hook? I hear at least two uber-expert Euro-watchers have taken opposite sides of the bet on that one. I bet nobody wins.

This Wall Street Journal article is rather optimistic, and somewhat incoherent on the trade-offs. Apparently private creditors are willing to take a lower interest rate in exchange for a change in governing law from Greek to English (and presumably the ability to sue in London/submission to jurisdiction) in the exit instruments--which makes some sense. But the piece then proceeds to equate English law with available collateral, which comes right out of nowhere. Emerging market sovereigns routinely submit to foreign law, but virtually no one puts up collateral. As a result, all can sue, but none can levy. Just ask Argentina's creditors, who just celebrated the tenth anniversary of the sovereign asset chase under New York, English, and all manner of other foreign laws. But if all it takes is a switch to English law, we have a deal. I doubt it is that simple...The article is also muddled on the now-notorious business of collective action clauses and their implications for Greek Credit Default Swaps. Although the vast majority of Greece's debt contracts are under Greek law and have no amendment provisions, and although Greece could try to amend these by legislative fiat (risking lawsuits at home and in Europe), the dominant scenario appears to meld contract and legislation: pass a law that allows a super majority of creditors to bind the dissenting minority. The effect of such a law would be to retrofit majority amendment clauses across the Greek debt stock. If the majority binds the minority, the deal goes forward. (The treatment of Greek debt in official hands would be crucial here).

Such a move almost certainly triggers a credit event under Greek CDS contracts: the new terms would be "binding on all" creditors, which is the litmus test under ISDA documentation. Until now, avoiding CDS triggers has been the line in the sand for key official and private players in this drama. Hence the obsession with characterizing the deal as "voluntary." But if coersion is now on the table, why mess around with the inadequate 50% and contract-legislation hybrids? (I suspect the answer is Euro politics.) As an aside, the article suggests that major banks are lobbying against a credit event--does this mean that they are not hedged? ... that they sold CDS? ... to whom? One split-the-baby scenario might be to pass the law grafting collective action clauses onto Greek bonds, but then to refrain from using the clauses to coerce creditors into the deal. Plenty of debtors who had collective acion clauses in their contracts did not use them for various reasons; however, the fact that the option was available might have helped creditors make up their minds. I think this route would be too cute to be seriously considered, but you never know.

Mitu Gulati and Jeromin Zettelmeyer have the only sensible take I have seen on the voluntary/involuntary dance: creditors will take a deep haircut voluntarily if they think the alternative is worse. The alternative could be a default, or another restructuring soon, and on nastier terms. Most sovereign restructurings until now have taken place in the shadow of default. In Greece, default was formally taken off the table at the outset for political reasons. But no one can eliminate the possibility of another restructuring--whether that one is voluntary or involuntary need not be decided today. All you need to know is that the next deal would be worse than the deal now on offer. Under the circumstances, the proposition seems like a no-brainer. Can it last?

[xchrom]

82. the whole thing is tortured at this point.

they should have defaulted at the outset.

[Demeter]

86. And put us all out of this misery

Can't recover when the germs are running riot.

[hamerfan]

68. Musical Interlude

Not the Moody Blues at all. I apologize in advance, but I couldn't help myself.
Wal-Martians:

http://www.youtube.com/v/6RzcvFLPg1A

[Demeter]

70. Art market beats equities for second successive year

The art market defied the economic gloom to return 11 per cent to investors in 2011, outpacing stock market returns for a second consecutive year

Read more >>
http://link.ft.com/r/5F39HH/DWFV98/204L2/ORUVMB/VLAH4K/YT/t?a1=2012&a2=1&a3=8

----------

[xchrom]

83. interesting. nt

[Demeter]

71. SEC: Yes, Banks WILL Still Be Able To 'Neither Confirm Nor Deny' Wrongdoing

The SEC issued a statement today that's been jumped on by some outlets as a major policy change in how the agency settles complaints.
Turns out, it's mostly semantics.
In the statement, SEC enforcement director Robert Khuzami said the SEC's new policy will be to drop "neither confirm nor deny" language only when a defendant has already admitted guilt in a criminal case. NCND will remain in use for settlements involving civil liability.
"This policy change does not affect our traditional 'neither admit nor deny' approach in settlements that do not involve criminal convictions or admissions of criminal law violations," he said.
The goal of the change is to eliminate confusion about the language applying to cases involving parallel criminal and civil complaints. Khuzami says it will apply only to a minority of cases, and will not affect the agency's appeal of Judge Jed Rakoff's November Citigroup decision.


Read more: http://www.businessinsider.com/yes-banks-will-still-be-able-to-neither-confirm-nor-deny-2012-1?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29#ixzz1itsN9TfF

[Demeter]

73. Yes, Virginia, Brokerage Firms Keep Client Ripoff Provisions in Customer Agreements Despite MFGlobal

http://www.nakedcapitalism.com/2012/01/yes-virginia-brokerage-firms-keeping-client-ripoff-provisions-in-customer-agreements-in-the-wake-of-mf-global.html

In the wake of the collapse of MF Global, and the evaporation of funds in customer accounts, even ones with no margin lending, investors big and small have become duly concerned about the safety of their funds. For those of you who are not brokerage customers, one of the big achievements of the 1930s security law reforms was their success, up until now, in putting rules in place that protected customer assets. Numerous broker/dealers have failed but their clients’ funds were recovered.

Needless to say, old market hands like Jesse have reacted with alarm:

One would think that the customers should be paid first out of all MF Global creditors. But I suspect that where it is possible, their loss will be subordinated to the unsecured creditors like JPM who have a powerful influence with this Trustee and the courts. The customers of consequence, like the Koch brothers, appear to have been tipped off weeks in advance.

This is the perversity of law without justice.

If that happens, then nothing is safe. If a customer in cash and Treasuries can be robbed, and then be made to stand in line with unsecured creditors, then your 401(k)s are not savings but loans to the custodians of your plans.

Now may be the time to exit all arrangements not specifically guaranteed directly by the government, and bring your money home. And better yet if no guarantees are required, and no parties standing between you and your wealth.

If they steal from one unpunished, they can steal from any and all almost at will. You are not an insider, and there is no honor among thieves. You are prey.

And what are a few customers, and the stewardship of funds, to a group of financiers intent on taking down whole nations and their Treasuries?

But it is always easier to steal with a pen than via more complex means. In support of our consumer protection efforts, reader Don H has sent evidence that the banks are keeping their rights to misuse customers firmly in place in the wake of MF Global:

Just got a 20 page ‘client agreement’ from from Wells Fargo for a security account which contains some amazing (to me) stuff.

It starts:
“This is your Client Agreement. It includes the terms and conditions and is the contract that controls your securities accounts.”

Later:
“Each account opened by you is a margin brokerage securities account, unless otherwise prohibited by applicable law or…” (so one can opt out but has to make a special request to set up a cash account. I wonder how many people who never deal in futures or short selling will realize they have a margin account?)

Later:
“We may, at our sole discretion and without prior notice to you, prohibit or restrict your ability to trade securities and/or other property.” (They can shut you out of the market at their whim)

Later:
“We may at any time and without giving you prior notice, use and/or transfer any or all securities and/or other property in any Account in which you have an interest, without regard to us having made any advances in connection with such securities and/or other property” (They can “MF Global” account holders without any further ado.)

You can see the relevant sections for yourself: ANNOTATED CONTRACT AT LINK

[Demeter]

74. MF Global Inquiry Turns to Its Primary Regulator

http://dealbook.nytimes.com/2012/01/05/mf-global-inquiry-turns-to-its-primary-regulator/?ref=business

Federal authorities investigating the collapse of MF Global have expanded their inquiry to include the actions of the CME Group, the operator of the main exchange where the commodities brokerage firm conducted business, according to people briefed on the matter. CME, which also served as MF Global’s primary regulator, has come under heavy criticism after $1.2 billion in customer money disappeared from MF Global. The Commodity Futures Trading Commission, the government agency leading the case, is scrutinizing CME’s conduct in the days before MF Global filed for bankruptcy on Oct. 31. In particular, the commission is reviewing whether CME’s efforts to verify the safety of customer money were sufficient, the people said.
CME, for its part, has said that MF Global may have intentionally produced inaccurate documents related to customer accounts.

As the owner of the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, the CME Group is a major force in commodities and futures. It is the dominant United States exchange operator for billions of dollars in trades, affecting food prices and Wall Street profits. A censure of any kind would be a powerful, if merely symbolic, critique of the behemoth. ANOTHER TOO-BIG-TO-FAIL?

If the federal regulator finds that CME did not meet the standards of so-called self-regulatory organizations, it could fine or sanction the exchange. The commission could also revoke CME’s status as a self-regulator, though that is unlikely. Experts say it is rare for the government to hand down any manner of sanction against a self-regulatory body. CME has not been accused of any wrongdoing, and the review of its actions may not produce any findings....Regulators, chastened that the debacle occurred on their watch, are searching for the money while also trying to prevent the next MF Global from happening. As part of that effort, the C.F.T.C. is close to finishing “limited reviews” of customer accounts at the 14 largest futures brokers. The results of these cursory reviews, which include divisions at Goldman Sachs and JPMorgan Chase, are expected to be released in the next few weeks, according to one of the people briefed on the matter.

But there are roughly 100 futures brokers, so the government has called on financial industry self-regulators to assist with the spot checks, including the National Futures Association, which recently finished looking at 19 institutions and found no problems, according to a person with direct knowledge of the matter. The government has also called on CME to assist. Notwithstanding the government’s scrutiny of its actions, CME agreed to review 33 futures firms. So far, the profit-making exchange has completed 31 of them....The first inkling that something was amiss between the exchange and the government came about three weeks ago. At a Congressional hearing in December about MF Global, Terrence Duffy, the executive chairman of the CME Group, told lawmakers that his exchange was asked to back away from the investigation into missing customer money at the brokerage firm. Asked for an explanation by members of the House Financial Services Committee, Mr. Duffy said: “I guess you’d have to ask the C.F.T.C. why. I don’t know.” But the agency was concerned that a separate inquiry by CME would complicate efforts to discover wrongdoing at MF Global. Many government agencies, including the Federal Bureau of Investigation, are already investigating the case. David Meister, the chief of the C.F.T.C.’s enforcement division, asked CME to step aside from the investigation during a conference call with the exchange’s lawyers, said people briefed on the phone call. It is not clear whether Mr. Meister indicated that his division was also scrutinizing CME.

MORE AT LINK

[Demeter]

75. Trustee Tussles With Regulators

http://online.wsj.com/article/SB10001424052970204331304577143133017776526.html?mod=WSJ_hp_LEFTTopStories

Louis Freeh, the former Federal Bureau of Investigation director who was appointed bankruptcy trustee of MF Global Holdings Ltd., has declined to turn over some documents to investigators trying to determine what happened to an estimated $1.2 billion in missing customer funds.

Mr. Freeh, who is representing the parent company, has asserted attorney-client privilege in deciding not to release certain documents to the Commodity Futures Trading Commission, according to his office and other people familiar with the matter. The CFTC, one of the failed firm's regulators, is aiding the investigation into what became of the missing MF Global customer funds...

[Demeter]

76. Bill McKibben: Buying Congress in 2012

http://www.tomdispatch.com/post/175485/tomgram%3a_bill_mckibben%2c_buying_congress_in_2012/

Startling numbers of Americans are “underwater” -- homeowners and students alike -- and so, for that matter, is Congress, even if in quite a different way. In these last years, it’s been flooded with money. Millionaires, including at least 10 centimillionaires, now make up nearly half of our representatives there, and as a group, they have been growing ever richer as Americans grow ever poorer. Bad times? Never heard of them. Congress’s median net worth rose by 15% between 2004 and 2010 -- and this news, in a recent front-page New York Times piece, hardly caused a stir.

Of course, everything is relative. Compared to the giant energy companies, ours is a Congress of paupers. After all, the Big Five oil outfits (BP, Chevron, ConocoPhillips, ExxonMobil, and Royal Dutch Shell) announced a combined $36 billion in profits in the second quarter of 2011. Exxon alone pulled in $10.7 billion (and spent more than half of those profits simply to buy back its own stock). In the third quarter, the same five companies returned for an encore. They made another $32.6 billion in profits, with Exxon at $10.3 billion (about half of which it again spent on stock buybacks).

Out of a deep sense of civic-mindedness, they and other oil and gas companies have, in turn, showered Congress with their pocket change. From 1989 through 2010, according to the Center for Responsive Politics’ invaluable OpenSecrets.org website, oil and gas companies gave Republicans in Congress $126 million and Democrats $42 million. Throw in a few hundred thousand dollars for the odd “independent,” and you’ve got $169 million dollars of pure oil and gas generosity over that period, which for them, as Jackie Gleason might once have said, is a “mere bag of shells.”

In case you’re interested, you, the American taxpayer, through Congressional subsidies for the oil and gas industry, reach deep into your own pockets and pony up billions every year to support those poor dears. And they turn around and pour what is, in essence, your money into the American electoral process to achieve the usual noble oil-and-gas ends. And just how well does all of that work? Here’s a little surprise: oil company political action committees (PACs) handed out $1.2 million to members of the House of Representatives in the first six months of 2011 and let’s not say “in return,” but -- consider it an unrelated fact -- 94% of the House members who received such funds voted to keep those industry subsidies flowing.Then, of course, there’s the presidential race where, thus far, Rick Perry has raised $1.2 million from the energy sector, Mitt Romney $532,000, and Barack Obama $395,000...

[Demeter]

81. Speculation About Oil

http://www.angrybearblog.com/2012/01/speculation-about-oil.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+blogspot/Hzoh+%28Angry+Bear%29

Last Spring, some Democrats and liberals (Ed Schultz and Bernie Sanders spring readily to mind) who have somehow resisted the enlightenment of unfettered free markets suggested that high oil prices are due to speculation.

Noah Smith took this subject on, asking the question: "Do speculators cause oil and/or gas prices to rise above their "natural" or fundamental level?" Noah's take is that speculation is innocent, and he cites some corroborating experimental evidence. I'm a big fan, but this time I think Noah missed the point. First, I'll state right up front that futures markets play a vital role in allowing the producers and first-line purchasers of various commodities to be able to stabilize their cash flows and construct realistic business plans. So - yes, futures markets are a good thing....On the other hand, when quizzed by Senator Cantwell on why big, trans-national oil companies should continue to receive multiple billions of dollars in tax breaks, Exxon CEO Rex Tillerson admitted that a good estimate of a supply-demand determined price (considering the price of the next marginal barrel) for crude is in the range of $60 to $70 per barrel.

&feature=player_embedded

http://1.bp.blogspot.com/-zVm_T-xqucM/TwM2HrlWUdI/AAAAAAAABu8/gD1bBEKfj_A/s400/Brent+-+through+2011.JPG


At the depth of the global recession, on Boxing Day 2008, when the world was coming to an end, the price dipped below $34. Be that as it may, with recent prices back over $100, we're looking at premiums over a rational value estimate of from 60 to 85%. Let's just call it 75% for convenience.

Now, back to the point that Noah misses, and that Senator Cantwell suggested. What is the effect of unregulated speculation on the price of oil? The Senator estimates 30% activity by concerned stake-holders, and 70% by profit-seeking (in my view rent-seeking) speculators who are playing the market for a profit. The graph on Pg 5 of this study (18 Pg. pdf) suggests a ratio closer to 45% commercial and 55% non-commercial interest. Also it looks like open interest, which had been relatively flat for years, increased by a factor of 6 or 7. This financial tail chasing, aided and abetted by deregulation, is a direct manifestation of the asset misallocation that, in my view, is the real cause of The Great Stagnation.

A look at the oil price chart shows 10 to 15 years of more-or-less flat line in the range of $20, followed by a classic bubble and post-bubble bounce. As an aside, this is typical Elliott wave behavior. I can easily trace a five wave rise to the peak, and what looks like the recent end of a counter-current B-wave since the Dec. '08 bottom. If this is anywhere near correct, the price of crude a decade from now will be eye-poppingly low, and fundamentals be damned...MORE AT LINK

[Demeter]

77. Lawrence Summers: We need smart reinvention not destruction

Lawrence Summers opens an FT series on the crisis in capitalism, its failings, challenges, weaknesses and the prospects for reform.

It is not so much the most capitalist parts of the contemporary economy but the least – those concerned with health, education and social protection – that are in most need of reinvention, he says.

Read more >>
http://link.ft.com/r/H60H77/ZG53ML/T10SH/NJPC7B/R30U7A/9A/t?a1=2012&a2=1&a3=8

IT'S A LITTLE LATE FOR THAT, ISN'T IT, LARRY? DID YOU COME UP WITH THIS YOURSELF, OR DID MOE AND CURLY CONTRIBUTE?

[xchrom]

84. The Fall of Ireland’s Mighty Quinn

http://www.nytimes.com/2012/01/08/business/sean-quinn-and-irelands-boom-and-bust.html?_r=1&ref=global-home

IN the green borderlands of County Fermanagh, there was nothing like the Mighty Quinn.

That is what they called Sean Quinn — canny conglomerateur to his friends, wily rogue to his enemies and, until recently, the richest man in Ireland.

Even now, with times so hard in this country, his up-by-the-bootstraps story is the stuff of legend, a Celtic fairy tale for strivers and climbers. This, after all, is the farmer’s son who became a quarry man and then, with gravel and grit and yes, a bit of old-fashioned greed, became a billionaire.

Until, that is, it all came crashing down.

Mr. Quinn, 65, contends he lost nearly everything when the bottom fell out of the Irish economy. His business empire, his concrete factories, his wind farms and hotels, the helicopter and the Falcon jet — all gone. Last November, after apparently gambling away his fortune on disastrous investments, he was declared bankrupt by a court in Belfast. During the proceedings, he said he was down to his last 11,000 euros, and an aging Mercedes and 166 acres of land.

That, anyway, is what Mr. Quinn says. Here in Dublin, at the financial institution formerly known as the Anglo Irish Bank, Mr. Quinn’s skeptical bankers say his assertions are, well, blarney. They suspect that he and his family still secretly control valuable assets as varied as a shopping tower in Ukraine and real estate in Hyderabad, India’s Silicon Valley.

[Demeter]

88. So he'll go ex-pat.

[Demeter]

89. Bankruptcy Filings Down 11.7% in 2011 AND YOU THOUGHT THERE WAS NO GOOD NEWS

http://www.creditslips.org/creditslips/2012/01/bankruptcy-filings-down-117-in-2011.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+creditslips%2Ffeed+%28Credit+Slips%29

The year-end bankruptcy statistics from Epiq Systems have arrived. There were just over 1,379,000 U.S. bankruptcy filings in 2011, a decline of 11.7% from the previous year.

On a monthly basis, December kept with the theme of the past year. The daily bankruptcy filing rate in December 2011 was 4,584, a decline of 12.1% on a year-over-year basis. The past seven months have seen year-over-year declines in the 10-15% rate range. What makes December 2011 different is that December 2010 itself had a year-over-year decline. In words, the declines are building on previous declines.

The question for the moment is whether bankruptcy filings will level off at around their current level or continue to decline. I'm inclined to think we'll see a further decline in 2012, although that assessment is more instinct than analysis. I'll try to post a more formal analysis about projected bankruptcy filings for 2012. Bankruptcy filings may not be a great economic indicator, but their levels are important for the bankruptcy system.

*************************************************************

Comments

I would expect to see a recurrence of the beginning of year bump we've prevalently seen the past two years.

It's interesting to note that volumes of consumers seeking help from debt relief groups outside of bankruptcy is dropping at much faster rates.

I've been forecasting a continued decline in overall debt relief demand until the credit pipeline begins to be filled again. I don't see that happening in the next 12-24 months.

I don't think the declines are an aversion to intervention or that people are doing better. Without refilling the credit pipeline, the more time that passes simply leaves a shrinking population with lingering unmanageable debt.

Posted by: Steve Rhode | January 05, 2012 at 02:12 PM

Most debtors default before filing bk. Many of them have already filed or are waiting or the oct 2013 date to refile. What I'm seeing these days are debtors who are debt zombies, and are just sick of the monthly payments, so they file bk to make the nightmare go away. The banks don't have that figured into their algorithm.

Posted by: serfin ceorl | January 06, 2012 at 07:58 AM

[Demeter]

90. UK leaves door open for cash to IMF

David Cameron has left open the door to Britain giving billions of pounds of new support to the International Monetary Fund – and indirectly to ailing members of the eurozone – in a move likely to infuriate eurosceptic MPs in his own Conservative party

Read more >>
http://link.ft.com/r/A1TNOO/II1MGY/IEP5S/SPHMPB/KQTS0P/28/t?a1=2012&a2=1&a3=8

[Demeter]

91. Bank charge of the day, mortgage-payment edition Felix Salmon

http://blogs.reuters.com/felix-salmon/2012/01/05/bank-charge-of-the-day-mortgage-payment-edition/

It makes sense, for lots of reasons, to make your mortgage payment on the day you get paid. Most salaried Americans, however, get paid every two weeks. Which means, to all intents and purposes, that you need to be able to make one mortgage payments out of every two paychecks. And that in turn raises an intriguing possibility: if you take half of your mortgage payment out of every paycheck, you’re going to end up making 13 mortgage payments a year. Which will pay down your mortgage faster, and could save you thousands of dollars....Enter the ever-helpful Citibank, with a product which does just that. It’s called The BiWeekly Advantage Plan®, and it’s essentially an automated mortgage payment, of half your monthly mortgage payment, which comes out of your account every two weeks. Easy. There’s even a Savings Calculator to see how much less money you might be able to end up paying.

And then, of course, there’s this: There is a one-time non-refundable enrollment fee of $375 and a transaction fee of $1.50 for each draft. That’s an up-front fee of $375, plus another $39 a year, just for the privilege of making your mortgage payments every two weeks rather than every month.

I asked Citi about this, and got a statement back from spokesman Mark Rodgers:

The BiWeekly Advantage program is completely optional. Borrowers may make additional payments on their principal balance independently anytime they like. Some customers, however, prefer the convenience of a disciplined payment plan that is administered for them. The one-time enrollment fee is reasonable and competitive for a service that requires processing more than double the number of standard payments and can save the customer many thousands of dollars over the life of the loan. We find high customer satisfaction rates among those enrolled in the program, demonstrating that these borrowers appreciate the value proposition of the service.

And it turns out that simply setting up Citi’s own online banking to make the same payments would not do the same thing after all. The reason is that CitiMortgage has a rule that it will only accept a full payment once per month. If you want to pay every two weeks, well, you can’t.

Which helps to reveal another fact: it turns out that Citi is making significantly more than $375 plus $39 per year for this service. Here’s the FAQ:

• Payments are remitted to your mortgage company monthly.
  
  
• The payments are made in arrears, of course. You make your half-payment, and then wait two weeks, and you make your second half-payment, and then the two are bundled up and sent off to the mortgage company (which in nearly all cases is CitiMortgage itself) as a single monthly payment.
  
  
• Which means that for roughly half the year, Citibank is sitting on an amount of money equal to half your mortgage payment. That money has left your account: it’s not yours any more, and Citi can do with it as it pleases. And Citi gets the float from all that money until it gets around to sending it off to pay off the mortgage.

Basically, Citi is getting a big advantage from you making half your mortgage payment two weeks early — and then it has the chutzpah to charge you hundreds of dollars for the privilege. They even charge you $1.50 per extra transaction, as though that costs them any money at all. (It doesn’t.) I can still see why people might want to sign up for this service: Citi basically makes it impossible to replicate it on your own, without going through an enormous amount of hassle. But the price is eye-watering, especially given that the service would make Citi money even if it were free. Think for a minute about all the things you can buy with $375. Then ask yourself how Citibank can possibly justify charging that much for this very small, if handy, service. It defeats me.

[Demeter]

92. December Payroll Jobs Report By Paul Craig Roberts

http://www.informationclearinghouse.info/article30186.htm

The following report is based on the work of statistician John Williams of shadowstats.com.

Today’s (Friday, January 6) payroll jobs report of 200,000 new jobs in December is overstated by at least 82,000 jobs. As approximately 130,000 new jobs are needed each month to stay even with population growth, the December job figures actually indicate that the US economy fell another 12,000 jobs behind.

Forty-two thousand of the reported jobs are the result of a glitch in the BLS seasonal adjustment model that produces a false jump in December “couriers and messengers” jobs. Forty thousand of the jobs result from the “birth/death” model that BLS uses to estimate the net effect of unreported jobs lost from business closures and jobs gained from new start-ups. The model is structured to represent normal times. During the bottom bouncing of this protracted downturn, the model over-estimates new jobs from start-ups and under-estimates job losses from business failures.

The official unemployment rates (U3 and U6) no longer measure all of the unemployed. The Clinton administration ceased counting as unemployed workers who had given up looking for a job for one year or longer. No discouraged workers are included in the widely reported U3 measure. The U6 measure includes workers who have been discouraged for less than one year. In other words, the longer an economy is in the doldrums, the less the official unemployment rates are reliable measures of the extent of unemployment. The unemployment rate in December as measured by U3 is 8.5%; as measured by U6 which includes short-term discouraged workers (less than one year) is 15.2%. John Williams’ measure which includes the long-term unemployed is 22.4%. In other words, the real unemployment rate is 2.6 times the widely reported U3 rate, which is the rate emphasized by policymakers and the financial press.

*************************************************************************************

Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His Internet columns have attracted a worldwide following. Visit his website www.paulcraigroberts.org

[Demeter]

96. There Are 5,000 Janitors in the U.S. with PhDs

http://gizmodo.com/5671062/there-are-5000-janitors-in-the-us-with-phds

There are 18,000 parking lot attendants in the U.S. with college degrees. There are 5,000 janitors in the U.S. with PhDs. In all, some 17 million college-educated Americans have jobs that don't require their level of education. Why?

The data comes from a the Bureau of Labor Statistics, and can be seen here in handy, depressing chart form:



At the Chronicle, where the above chart was posted, Richard Vedder argues that maybe we place too much importance on higher education, citing a new study by the National Bureau of Economic Research:

This week an extraordinarily interesting new study was posted on the Web site of America's most prestigious economic-research organization, the National Bureau of Economic Research. Three highly regarded economists (one of whom has won the Nobel Prize in Economic Science) have produced "Estimating Marginal Returns in Education," Working Paper 16474 of the NBER. After very sophisticated and elaborate analysis, the authors conclude "In general, marginal and average returns to college are not the same." (p. 28)

In other words, even if on average, an investment in higher education yields a good, say 10 percent, rate of return, it does not follow that adding to existing investments will yield that return, partly for reasons outlined above.

Whatever some eggheads work out "college" to mean for people on paper can't really take into account the experience of going to college, but the numbers are pretty surprising nonetheless. So next time you see a custodian scribbling the proof to some unsolvable math problem on a chalkboard after hours, well, you know.

THE SOURCE MATERIAL IS EVEN MORE DEPRESSING, AND INSULTING, TO BOOT.

Why Did 17 Million Students Go to College? By Richard Vedder FROM OCTOBER, 2010

http://chronicle.com/blogs/innovations/why-did-17-million-students-go-to-college/27634

Two sets of information were presented to me in the last 24 hours that have dramatically reinforced my feeling that diminishing returns have set in to investments in higher education, with increasing evidence suggesting that we are in one respect “overinvesting” in the field. First, following up on information provided by former student Douglas Himes at the Bureau of Labor Statistics (BLS), my sidekick Chris Matgouranis showed me the table reproduced below (And for more see this).

Over 317,000 waiters and waitresses have college degrees (over 8,000 of them have doctoral or professional degrees), along with over 80,000 bartenders, and over 18,000 parking lot attendants. All told, some 17,000,000 Americans with college degrees are doing jobs that the BLS says require less than the skill levels associated with a bachelor’s degree.

I have long been a proponent of Charles Murray’s thesis that an increasing number of people attending college do not have the cognitive abilities or other attributes usually necessary for success at higher levels of learning. As more and more try to attend colleges, either college degrees will be watered down (something already happening I suspect) or drop-out rates will rise.

The relentless claims of the Obama administration and others that having more college graduates is necessary for continued economic leadership is incompatible with this view. Putting issues of student abilities aside, the growing disconnect between labor market realities and the propaganda of higher-education apologists is causing more and more people to graduate and take menial jobs or no job at all. This is even true at the doctoral and professional level—there are 5,057 janitors in the U.S. with Ph.D.’s, other doctorates, or professional degrees.

This week an extraordinarily interesting new study was posted on the Web site of America’s most prestigious economic-research organization, the National Bureau of Economic Research. Three highly regarded economists (one of whom has won the Nobel Prize in Economic Science) have produced “Estimating Marginal Returns to Education,” Working Paper 16474 of the NBER. After very sophisticated and elaborate analysis, the authors conclude “In general, marginal and average returns to college are not the same.” (p. 28)

In other words, even if on average, an investment in higher education yields a good, say 10 percent, rate of return, it does not follow that adding to existing investments will yield that return, partly for reasons outlined above. The authors (Pedro Carneiro, James Heckman, and Edward Vytlacil) make that point explicitly, stating “Some marginal expansions of schooling produce gains that are well below average returns, in general agreement with the analysis of Charles Murray.” (p.29)

Now it is true that college has a consumption as well as investment function. People often enjoy going to classes, just as they enjoy watching movies or taking trips. They love the socialization dimensions of schooling—particularly in this age of the country-clubization of American universities. They may improve their self-esteem by earning a college degree. Yet, at a time when resources are scarce, when American governments are running $1.3-trillion deficits, when we face huge unfunded liabilities associated with commitments made to our growing elderly population, should we be subsidizing increasingly problematic educational programs for students whose prior academic record would suggest little likelihood of academic, much less vocational, success?

I think the American people understand, albeit dimly, the logic above. Increasingly, state governments are cutting back higher-education funding, thinking it is an activity that largely confers private benefits. The pleas of university leaders and governmental officials for more and more college attendance appear to be increasingly costly and unproductive forms of special pleading by a sector that abhors transparency and performance measures.

Higher education is on the brink of big change, like it or not.

NOW, IS THAT A 1% ATTITUDE, OR WHAT?

[Demeter]

93. GOP nightmare: Obama fixes the economy (SOUNDS MORE LIKE DRUG HALLUCINATION)

http://www.salon.com/2012/01/06/gop_nightmare_obama_fixes_the_economy/

...fears of a "January surprise" surface in conservative circles...Here’s the nightmare scenario: What if Obama runs totally wild and uses his executive powers to fix the economy? He might, gasp, win reelection!

Sounds crazy, I know. But that’s exactly the sense of panic that emerges from American Enterprise Institute blogger James Pethokoukis’ excited-to-the-point-of-stark-terror post “January Surprise: Is Obama preparing a trillion-dollar, mass refinancing of mortgages?” http://blog.american.com/2012/01/january-surprise-is-obama-preparing-a-trillion-dollar-mass-refinancing-of-mortgages/

IT WOULD TAKE A LOT MORE THAN PAPERING OVER THE MORTGAGE MESS TO FIX THIS ECONOMY, BUT IF THE GOP LOSES SLEEP, IT'S ALL GOOD...

...If only. As a Federal Reserve white paper analyzing problems in the housing sector and reviewing potential solutions noted on Wednesday, 12 million U.S. homeowners are currently underwater on their mortgages. The steady flood of newly foreclosed properties hitting the market — expected to be a million per year in both 2012 and 2013 — exerts a relentless downward pressure on home prices. There are few things the Obama administration could do that would have a bigger positive effect on the overall economy than a really large-scale program of homeowner relief....

TWADDLE!

...Senate Republicans have routinely blocked Obama’s executive branch appointments, not because they have any particular problem with the quality of the people being proposed for the jobs, but because they want to block Obama’s reform agenda. It’s a travesty of government — and a made-to-order campaign platform. Want to know why the economy sucks? Because Republicans won’t let Obama appoint the people necessary to take direct action — whether that be at the Federal Reserve, or the FHFA, or anywhere else...

AND WHAT ABOUT OUR DEAD ATTORNEY GENERAL, ERIC HOLDER? IS HE INHIBITED BY THE GOP? I THINK NOT.

REWRITING A MORTGAGE WILL NOT GET THE HOMEOWNER A JOB TO PAY IT OFF, EITHER.

[Demeter]

94. Work, Reimagined: Detroit Gets Creative By Zak Rosen

http://www.nationofchange.org/work-reimagined-detroit-gets-creative-1325863575


For nearly a decade, Gloria Lowe was a final-line inspector for Ford Motor Company, checking new Mustangs as they rolled off an assembly line in Dearborn, Michigan. She worked at the River Rouge Complex, a hulking, mile-long structure that, back in the 1930s, employed as many as 100,000 people. By the time Gloria started working there, just a fraction of the workers remained. (Since the year 2000, metropolitan Detroit has lost about 200,000 manufacturing jobs, despite experiencing a slight gain since 2009.) Then one day, in 1999, Gloria was on her way back into the plant after parking yet another Mustang when an automated, two-thousand pound metal door came loose and crashed down on her head. She was diagnosed with left-side nerve damage from the top of her brain down through her feet, and later, with PTSD, post-traumatic stress disorder. “I was told by my doctors that I would never work again. I was only 50 years old. I didn’t know what it meant not to work,” Gloria recalls.

She was able to find a part-time job at a law-firm, helping military veterans apply for aid and benefits. During those consultations, she listened to the stories of dozens of veterans, most of them men, who “were lost and didn’t know what to do,” says Gloria. So she started asking herself what she could do to help. Over and over, Gloria asked them, “what kinds of skills do you have?” More often than not, they’d tell her they used to be carpenters in their former lives, or woodworkers, roofers, plumbers, electricians. When she heard this, Gloria began looking at Detroit with new eyes. These men, she thought, were like the more than 33,000 vacant, sometimes blighted, homes in her city. They have good foundations; they just needed some fixing up. And maybe they could help each other.

And so began We Want Green Too, a nonprofit organization whose mission is to “re-educate, re-train and re-build a 21st-century, sustainable Detroit.” Gloria is working to assemble various teams with all the basic skills to make crumbling homes liveable: dry walling, painting, floor repair, and so on. In addition to veterans, she’s finding craftsmen among former prison inmates, recovering addicts, and other un- or underemployed Detroiters. “You have people who are challenged, they don’t have jobs. Why not make their jobs re-structuring their own communities?” says Gloria.

“Hey, It’s Not Over.” (MORE EXAMPLES OF SUCH INNOVATION AT LINK)

We Want Green Too is just one of many ways that Detroiters are working to take their city’s future into their own hands—to create livelihoods more sustainable than those that have disappeared. As Gloria continues to work on the housing end, her friends and neighbors are busy growing a local, sustainable food system (there are now over 1,600 farms and gardens in Detroit, producing over 3 tons of food annually, nurturing a new education paradigm, and creating social enterprises that build community and capital. When pieced together, these projects aren’t merely aimed at figuring out ways for people to make a living; they’re about neighbors helping neighbors to build new lives. The city is becoming a place, in certain pockets, where citizenship isn’t defined by voting and paying taxes. It’s thought of more broadly—creative collaboration to create new ways of living out of necessity....And therein lies the possible future for Detroit, a place where people are undergoing, slowly but deliberately, a revolution of values: reimagining the meanings of work, of wealth, of community. It’s cultural evolution—or, as Boggs titles it in her most recent book, the next American revolution.

Zak Rosen wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Zak is an independent public radio producer. This story was based on his recent documentary, Work in Progress.

[Demeter]

97. The Cost of Trickle-Down Government Job Creation: $1.5 Million Per Worker RAVI BATRA

http://www.truth-out.org/cost-government-job-creation-15-million-worker/1325800265


Suppose I were to tell you that for the past two years the federal government has been spending nearly $1.5 million to create one job, what would your reaction be? Would it be one of disbelief and bewilderment? But suppose I were to prove my statement by citing official data, then how would you react? Well, you make up your own mind, but my response is that the administration's advisers should rethink their approach. Does it make sense to spend so much money to generate one job when the average wage is less than $50,000 per year? In fact, this policy is so foolish that it might even be better just to hand over the average salary to the unemployed so they stay calm, make both ends meet and create consumer demand.

Let me prove my point. The administration's tack is that we should keep spending money at the current rate to preserve jobs, even though the annual federal budget deficit has been around $1.4 trillion over the past two years. In fact, the government even plans to increase its shortfall by raising the size of the payroll tax cut. It seems apparent that the main purpose of excessive federal spending is to preserve or generate jobs. This is a point emphasized by every American president since 1976, and especially since 1981 when the federal deficit began to soar. This is also how most experts defend the deficit nowadays.

In 2010, according to the Economic Report of the President, as many as 800,000 jobs were created, and the government's excess spending was $1.4 trillion, which when divided by 800,000 yields 1.7 million. In other words, our government spent $1.7 million to generate a single job. The economy has improved this year, providing work to 1.1 million people for the same expense. So, dividing 1.4 trillion by the new figure yields $1.3 million, which is now the cost of creating one job. Thus, the average federal deficit or cost per job over the past two years has been $1.5 million.

To be sure, a part of the red ink arose from financing the wars in Iraq and Afghanistan. Their expense each year was about $100 billion. This reduces the government cost of job creation somewhat, but then we should add the trillions that the Federal Reserve has spent since 2008, presumably to stabilize the financial system and preserve employment. In 2011, the Fed spent at least $600 billion in a program known as QE3 (Quantitative Easing 3) in order to stimulate the economy and revive the job market. If you do the math, the federal job creation cost is a minimum $1.5 million per worker. So, a trillion here, a trillion there, and pretty soon you're talking real money. Is it prudent to be wasting our precious resources like this? I don't think so.

The trillion dollar question is this: where is it all going, when the annual average wage is no higher than $50,000? Obviously, it must be going to the so-called 1 percent group or what the Republican Party calls the job creators, i.e., the mostly male CEOs and other executives of large corporations. See how generous these people are; they only want and get chump change from the government so as to offer work to the unemployed. Nearly the entire federal deficit goes to enrich the Big-Business-Big-Bonus CEO, yet he claims to do us all a favor by providing jobs, and demands all sorts of tax breaks.

Let us see how the main culprit for the mushrooming incomes of business magnates is our own government. This is how the process works and has been working since 1981. The CEO forces his employees to work very hard while paying them low wages; this hard work sharply raises production or supply of goods and services, but with stagnant wages, consumer demand falls short of growing supply. This then leads to overproduction and threatens layoffs, which in turn threatens the re-election chances of politicians. They then respond with a massive rise in government spending or huge tax cuts, so that total demand for goods and services rises to the level of increased supply. As a result, either those layoffs are averted or the unemployed are gradually called back to work. This way, the CEO is able to sell his entire output and reap giant profits in the process, because wages are dwindling or stagnant even as business revenue soars. In the absence of excess government spending, companies would be stuck with unsold goods and could even suffer losses. In other words, almost the entire federal deficit ends up in the pockets of business executives.

How does government spending generate demand for goods and services? Many administrative departments, such as defense, directly buy goods from the private sector. The government also pays employee salaries, Social Security pensions, unemployment benefits, among other things. Here, the generation of demand is indirect, as the recipients of such money also add to total spending. Both the direct and indirect government spending generate demand in the economy, absorb unsold goods and thus add to business revenues.

So, CEOs are very, very happy, and when they are happy, politicians of all persuasions are happy. After all, corporate America is ultra generous to the political class. No wonder, both Republicans and Democrats alike have been busy adding to the federal deficit in the name of creating jobs. We all need to understand the process through which our system works for the 1 percent clique, and how mega deficits are mainly responsible for enriching the rich.

We don't need higher government spending or tax cuts. We need fundamental economic reforms so that wages rise proportionately with ever-growing labor productivity. This is what used to happen in the United States until 1980, when consumer demand equaled supply without much government debt. But at that time. we did not have trade deficits, outsourcing and merger manias. Back then, the minimum wage was allowed to catch up with rising prices. However, ever since 1981, the official economic policy has been designed to keep wages stagnant even as people work hard and students take large loans to educate themselves to hone their skills. Consequently, almost the entire fruit of soaring productivity has gone to the 1 percent group, while millions of students are stuck with college loans.

From 1940 to 1980, there was little change in income and wealth disparity in the United States. However, ever since then, inequality has been soaring, leading to a shrinking middle class. The culprits: huge federal deficits and faulty official policies. And how are we financing these deficits? We are borrowing money from China and other countries, which in effect means that the wealthy prosper as never before, while the nation becomes a beggar to the world. Unfortunately, this system will continue unless the masses, the 99 percenters, revolt and demand fundamental economic reforms. The Occupy Wall Street movement opposes the interest of the Big-Business-Big-Bonus CEO, and in its success lies the revival of America and the middle class.

All the economic policies adopted by various administrations since 1981 have to be abandoned to fix our comatose economy. The system needs an overhaul, not bigger government. We need free markets, not monopoly capitalism. We need to break up business conglomerates and generate competition among companies, especially in the oil and health care industries, in order to bring down the cost of their products. We need to get rid of the trade deficit and outsourcing and link the minimum wage with the cost of living. Hats off to the Occupy Wall Street movement.

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This work by Truthout is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.

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Ravi Batra is a professor of economics at Southern Methodist University, Dallas. This article is based on his two books, "The New Golden Age" and "Greenspan's Fraud." His web site is ravibatra.com.

[Demeter]

95. Eurozone unemployment level remains high

http://www.aljazeera.com/news/europe/2012/01/20121611472120289.html

Unemployment level in the eurozone, the 17-nation European monetary union, has remained at an all-time record high at 10.3 per cent for the second month running in November, official figures show. The Eurostat data agency estimated that more than 16.3 million adults were out of work in the eurozone in November after the ranks of the unemployed rose by 587,000 compared with November the previous year, according to the data released on Friday. The ranks of the unemployed has stayed above 10 per cent for seven consecutive months across the bloc as the monetary union struggles to create more jobs amid mounting debt crisis.

The highest unemployment rate was registered once again in Spain, the biggest in the 27-nation European Union [EU], where it rose to 22.9 per cent, while 18.8 per cent of Greeks were without a job. By comparison, Austria had the lowest rate at 4.0 per cent, followed by Luxembourg and the Netherlands at 4.9 percent each. The jobless rate across the wider EU also remained unchanged at 9.8 per cent. More than 23.6 million people were unemployed in the EU in October, an increase of 55,000 from October 2010.

Youth joblessness - people under 25 - increased to more than 5.5 million across the EU, or 22.3 per cent, and to more than 3.3 million in the eurozone, or 21.7 per cent. A year earlier youth unemployment stood at 21 per cent in the EU and 20.6 per cent in the eurozone.

The eurozone, which accounts for about 16 per cent of the world economy, will struggle to grow in 2012 and could contract by as much as 1 per cent, with its impact reverberating to the US and Asia.

[DemReadingDU]

98. I'm always amazed how you find so many interesting articles

Thanks for another great weekend of reading!