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Like PIIGS to the slaughter
Just about every article in this morning’s Financial Times seems to include a paragraph or two about how governments need to “deliver” debt reduction, to satisfy the markets, investor expectations etc. They then typically note that said investors are anxious about whether democratic politicians can “deliver” the austerity measures that the markets “require”. So here’s the question: how long before the Economist, the Murdoch press and similar give up on democracy on the grounds of its incapacity to “deliver” firm government? We’ve been here before, of course, in the 1970s, when the Economist and the Times backed the Pinochet coup in Chile. Of the PIIGS, only Ireland has escaped dictatorship in living memory and some of the southern European countries still contain contain authoritarian rumps (with special strength in the armed forces and law enforcement). My guess is that we’ll be reading op-eds pretty soon that raise the spectre of “ungovernability” and espouse “temporary” authoritarian solutions. Maybe such columns are already being written? Feel free to provide examples in comments.
Via Crooked Timber
Random Picture: German Idealism Summer
Filed under: Philosophy Tagged: Fichte, German Idealism, Hegel
Auerback: Yes, Virginia. There is a Difference Between Greece and the US
By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0.
Many market analysts, commentators and economists claim to be having a hard time finding a metric in which the US is in better financial shape than Greece. Ken Rogoff, for example, recently warned that a Greek default would usher in a series of sovereign defaults, and suggested recently on NPR that the crisis also had implications for the US. The historian Niall Ferguson made a similar claim a few months ago in the Financial Times. The cries of the deficit hawks grow louder: Repent all ye fiscal profligates, before the “day of reckoning” comes.
Let’s dial down the Biblical hysteria a wee bit while there’s still time for rational debate. The market’s recent response to the intensifying pressures in the euro zone suggests that investors are beginning to differentiate between countries that are sovereign issuers of currency, such as the US or Japan, and non-sovereign issuers, such as Greece or any other nations in the euro zone. The US dollar is rising in value, notwithstanding the federal deficit, while debt distress in the so-called “PIIGS” countries, especially Greece, are intensifying, thereby driving down the euro to fresh 12 month lows against the dollar.
The relative performance of various currencies against the US dollar is highly instructive in this regard. Over the past 3 months, the Australian, New Zealand and Canadian dollars have all registered gains of some 4% against the…
Via naked capitalism
How a market crashes
How can the market go, on a random Thursday afternoon, completely insane? The story which is emerging centers on old, boring Procter & Gamble, as can be seen in the PG chart from this afternoon.
Look at the volume chart: what you see here is a big block of shares trading in P&G at around 2:30, followed by another huge block right before the market crashed. And then, nothing. The two big blocks were probably sell orders, which were big enough to blow through all the bids in the market. As Henry Blodget says, “for a few minutes, buyers just disappeared”.
It’s worth noting here that none of this data is particularly reliable: the Nasdaq is reportedly confirming that there were technical problems with the P&G quote, and there are persistent rumors of a “fat finger” trade as well, which I’m not sure that I believe.
If the market were rational, it could cope without difficulty with such things. There’s no bid on P&G right now? Fine, wait five minutes and see if you can get a bid then. But there were stop-loss orders on P&G, which meant forced selling into a no-bid market, and if these trades really happened, then a couple of people who are surely going to celebrate tonight were in the right place at the right time and bought up a small amount of the stock in the high 40s.
In any case, whether the trades actually happened or not, they were reported to…
Via Felix Salmon
The Right and Journalism
Laura McGann has an interesting story in The Washington Monthly about conservative efforts to get into the reporting game:
But with Democrats back in power and the fourth estate in shambles, conservatives are starting to discover the virtues of shoe-leather reporting, and are throwing their organizational savvy and financial clout behind sustained investigative ventures. The Franklin Center, which is run by a Republican political consultant with no journalism background, supports ten state-level investigative news sites under the moniker Watchdog.org. Meanwhile, free-market state-based think tanks have begun hiring reporters to work in-house, focusing on local and state spending—in the last six months alone, they have brought at least eighteen reporters on board.
To ruin the punchline, though, the subhead asks of these new outlets “can their reporting survive their politics?” and the answer seems to be “no, it can’t.” Or, rather, what’s going on is basically continuous with the idea of opposition research as practiced by political campaigns rather than journalism as practiced by good reporters. Opposition research activities can bring actual new factual information to light, and thus have some real value, but the problem with them is that since the conclusion (”my opponent is a bad person”) comes before the reporting, there are large incentives to present facts in a misleading rather than informative way.
That said, unlike most liberals who write about politics for a living, I don’t have any particular investment in the alleged high ideals of “real” journalism and “real” reporting and whatnot.…
Via Matthew Yglesias
How Not To Build A Car Bomb - car bombs - Jalopnik
Step 1: When building a car bomb, use a real detonator. Do not use M-88 firecrackers in a steel drum in the trunk of your 1993 Nissan Pathfinder. Step 2: Do not fail at Step 1. [via FBI]
Via jalopnik.com
Dred Scott Died for Your Sins
There was a damnable moment in which Lieberman and McCain were seen to be centrists, a moment which I hope is passed; one silver lining to the Republican party’s recent descent into insanity is that there isn’t even a rhetorical centrist middle that conservatives like these people can occupy, and so they’ve both had that bridge burned beneath them. Good riddance. But along with the bullshit in Arizona, a confluence of events nicely illustrates the extent to which what once passed for a kind of reasonable American centrism is essentially based on the American state religion of unrestricted state power against people who aren’t like us.
Item the first: John McCain made the moronic point the other day that it would be a “serious mistake” to “mirandize” Faisal Shahyad (the pathetically hapless would-be Times Square car bomber): “at least until we find out as much information we have…Don’t give this guy his Miranda rights until we find out what it’s all about.”
Now this is ignorant for a bunch of different ways, but the main one is that — as Dana pointed out — reading a suspect his or her “Miranda rights” is not a magical incantation that endows its subjects with rights but a mandatory part of criminal interrogation. All criminal suspects already have rights (5th amendment says you don’t have to incriminate yourself, 6th amendment says right to an attorney), and as the supreme court ruled in Miranda v. Arizona, unless the suspect understands those rights,…
Via zunguzungu
Thoughts on the SEC, 1977 Edition.
Thomas Frank on Porn and the SEC (my bold):
Now, if you’re looking for reasons why the SEC failed in the past they aren’t hard to come by. Start with political leaders who clearly didn’t believe in the mission; proceed to the agency’s grotesquely underfunded workplace where lawyers had to do their own filing, mail-sorting and photocopying; and arrive, finally, at the revolving door, which sometimes transformed SEC jobs into stations on the Wall Street career path and worked fairly predictable effects on enforcement.
This was an agency whose mandate, essentially, was to crawl out on an ice floe and die…What all of this overlooks is the highly advanced concept known as “change.” The purpose of federal agencies can be redefined and their personnel changed. Once upon a time, the SEC performed well; then it performed poorly.
And now that it threatens to perform well again, we are told it can only fail, that no federal operation can ever overcome the unalterable depravity of its employees.
I bring it up because I’ve been reading a lot about financial reform from the late 1970s. And it’s still a point right before the financial industry went big, and right before the efficient markets hypothesis took over, where people could still argue for the need for financial regulation over conflicts of interests, transparency and honesty without having an overwhelming burden of proof work against them.
I’m reading the 1977 version of The Transformation of Wall Street, Joel Seligman’s definitive history of…
Via Rortybomb
The Gnosticism of Everyday Life
One of the most familiar types of “clever” remarks is to pretend to take it literally when someone says, “I’m sorry” in response to some tale of woe, responding, “It’s not your fault.” Indeed, so typical has this “joke” become among males my age that I am increasingly reluctant to express basic human sympathy out of fear of providing the set-up for some hackneyed joke.
Today, however, I came up with a solution that allows me to signal my empathy while gaining the upper hand in the increasingly competitive market for quips. Instead of simply saying, “I’m sorry,” one can respond to accounts of unfortunate events in which one had no hand as follows: “I apologize on behalf of God, who has so poorly fashioned the world.”
This quip works particularly well when dealing with people suffering from seasonal allergies or problematic wisdom teeth, which help to lend some credence to the Gnostic notion of Incompetent Design.
Filed under: Gnosticism, How's that working out for you — being clever?, Rhetoric
Via An und für sich
Real America: Go On, Move Here Then
Last week an Awl contributor opined that a boycott was not the answer for Arizona's recent immigration law. The essay posited that the best thing for Arizona's backwardness was for you, the enlightened, liberal person, to visit there, spend your money to boost the economy and engender in its people "new ways of thinking." It added, in conclusion, "if you really want to change Arizona, move there." I will preface my criticism of this idea by saying that, in the larger picture, we're on the same team. But I wholeheartedly disagree with the logic, or lack thereof, behind some of this argument. And I find the tone of so much of this kind of creative-class liberal hand-wringing condescending and dismissive of the great many activities and cultures these communities have. I say this as somebody who did "move there."
For starters, the idea that occasionally interacting with bigots will change their minds is wildly naive. The sociopolitical divisiveness that exists in these hotbeds of reactionary thought can reason its way around anything. When Wisconsin Public Radio's Ben Meren's "At Issue" program covered the recent Gulf oil disaster, one caller posited that it was very possible that environmental activists on the left had dismantled the blow out valve on the well in order to cause an disaster that would force politicians to vote against more off-shore drilling. (That call was days before Limbaugh himself echoed the theory.) Just what kind of mental space does a man need…
Via The Awl
MMT: Fear of Hyperinflation
An article by Edward Harrison originally posted at Credit Writedowns.
I am 100% sure that the U.S. will go into hyperinflation. Not tomorrow, but the problem with the government debt growing so much is that when the time will come and the Fed should increase interest rates, they’ll be very reluctant to do so and so inflation will start to accelerate.
-Marc Faber, Bloomberg, May 2009
During the world’s last inflationary period in the 1970s, the West witnessed social unrest of the most acute kind, bordering at times on anarchy. If stagflation can lead to anarchy, hyperinflation can lead to and has led to much worse. Hyperinflation is the economic apocalypse many doomsdayers pose as the logical end to the world’s experiment with fiat money.
In a letter to clients last June, Rob Parenteau of the Richebacher Letter wrote about Weimar, one of the worst episodes of hyperinflation:
"The Weimar Republic, born of a revolution in 1918, played host to a hyperinflationary breakdown of the German monetary system by 1923. Austria faced a similar episode of hyperinflation in 1921–2, and no doubt, the searing scars of these experiences deeply informed the thinking of Mises, Hayek, Haberler, Machlup and other leading contributors to the Austrian School in the 20th century.
"Hyperinflation episodes are characterized by rapidly accelerating inflation, a collapsing foreign exchange rate and, eventually, a widespread disorientation and disruption of productive activity. Keynes, writing in 1919, well before the terminal stages of the Weimar hyperinflation…
Via naked capitalism
Some quick initial thoughts on BP
This is not investment advice, and I have no position in BP or energy. I can’t confirm the date, but I want to pass along what the telegraph mentioned (my bold):
The decision by Tony Hayward, BP’s chief executive, to slash costs earlier in the cycle than some of its rivals has borne fruit, although costs were only slightly lower in the first quarter because of currency effects. However, the $4bn in cash costs removed from the business in 2009 is helping operational performance….
This is below the 20pc to 30pc gearing range the company has targeted and investors can be confident that the dividend is secure. This means the shares are yielding almost 6pc, which is well worth having.
The first-quarter dividend of 14 cents will be paid on June 21. The corresponding amount in sterling will be announced on June 8, calculated from the average of the market exchange rates for the four dealing days prior to that.
New investors have until May 5 to buy the shares and qualify for the payment, and this is the eighth successive quarter that the dividend has been maintained at the same level.
It’s May 4th, so according to the article you have one more day to lock in new shares of BP stock to qualify for their fat, juicy June 21st dividend. If catastrophe capitalism of the 21st century is going to involve a lot of privatizing the gains of massive environmental degradation through big dividends while socializing…
Via Rortybomb
about the author
Bryan likes to read and study things relating to intellectual history, psychoanalysis, and German Idealism. He has spent the last few years writing for the Velvet Howler, but still has no reason why.