Bird on the beach at East Grand Terre Island along the Louisiana coast
Ilargi: Bureau of Labor Statistics today reports 431,000 added jobs, 411,000 of which are temporary census jobs. How temporary? John Crudele in the New York Post has stories of people who get hired and fired multiple times, which of course will go down as multiple job creation. Even without that deep black game playing, we’d be left with 20,000 jobs created, you would think.
But not so fast. The completely random, senseless and opaque birth/death model reports that the BLS added 215,000 jobs out of nowhere in May 2010. Hence, for all we know (the BLS refuses to divulge the criteria it uses for the birth/death numbers -which it changes all the time as well anyway-), 195,000 or more real actual jobs were lost in the US in May.
Which is why the euro, gold, oil, European stock exchanges and Wall Street are all set to lead us into a very dark weekend.
Here’s my main man VK on the US job numbers:
VK: The US jobs report showed what appears to be the largest increase in jobs in the last decade, coming in at 431,000 jobs gained for the month of May. Now before we bring out the champagne and rose tinted glasses, we must look closer into the report to show just how dire and full of propaganda it is..
Of the 431,000 jobs added, 411,000 were as a result of temporary census hiring. While another 31,000 jobs were added as a result of temporary help services, and another 215,000 jobs were added as a result of the horribly skewed birth/ death model. So where does that leave us? With a net jobs loss of around 226,000 jobs!
Yes, the real economy contracted by 226,000 jobs. The number of people employed actually declined by 35,000 month on month resulting in a figure of 139.42 million workforce. Those in the civilian labor force declined by 322,000 as these people simply gave up looking for jobs in this shambolic economy. While those "Not in labor force" increased by 493,000. Both figures are Month on Month. While the YoY figures for both metrics show that the Civilian labor force has declined by 1 Million people and that those NOT in the labor force have increased by about 2.5 Million people.
Ilargi: So, all’s fair that ends fair, or something. Except that markets all over bought none of it. Despite this priceless ditty:
Obama Hails Jobs Numbers Amid GOP CriticismPresident Obama says the addition of 431,000 jobs in May proves "the economy is getting stronger by the day."
Yeah well, the economy lost 226,000 jobs, while 493,000 people gave up even looking for a job. How does anyone, let alone the president, have the audacity to tell a nation its economy is getting stronger by the day while jobs are lost left, right and center? That takes an accomplshed liar, if you ask me. The US has less jobs today, not more, and that is clear to anyone willing to see it.
And the stock markets are clear enough in their answer too, As I write this, markets are down a whopping wobbling 3% or more. For all I know, it'll all rise again at the end of the day due to interference of one kind or another (check: it didn't) , but the game is on. And with a US president telling blatant lies, there’s no reason to believe there’ll be any trading calm any time soon.
Back in the real world, BP goes for a $10 billion dividend shareholder payout, while an entire ecosystem, which until recently included millions of Americans, has died, even if they don't want to admit to it yet. And "the economy is getting stronger by the day", Mr. President? Really? Like, really?
Who says that getting elected to a post means you're free to lie to your voters for 4+ years? Who invented that one? Don’t please get me wrong, I don’t want any republican in that seat either, that would just lead to more and/or worse lies, but let's be honest, this is getting ridiculous.
A 20-odd year-old kid in Nairobi, Kenya can figure out what the US government BLS employment numbers really mean (hundreds of thousands of net job losses), and the US president goes on record saying "the economy is getting stronger by the day."?! Didn’t the man screw up Deepwater Horizon bad enough yet? Do we need more of the same incompetent lies on employment, on "the economy getting stronger" while in actual fact it’s tanking? What’s going on here? Who are we?
As I was writing and having dinner just now, US stock markets closed down over 3%, with financials hit especially hard, and the euro below $1.20 for the first time in a long time. But not to worry, your leader says the marketsh ave no idea what they're doing: "the economy is getting stronger by the day.".
Alright, I’ll stop for now. It’s just that I have no patience for lies, nor for the people who tell them. The US economy today took a big leap towards its inevitable demise. Watch your step, please. And no, it's not that the US is any worse off than anyone else. Europe is crumbling, so is China, Japan; again, you just name them. It’s only a matter of when the whip comes down.
Life as it was for hundreds of years in Louisiana and Alabama is over, and it won’t return in the lifetime of those who one knew it. Many more along the Atlantic will share their faith:
The cherry on your weekend cake: British home prices are back up to nearly their peak levels. Me, I’m just thinking: what's wrong with those people?
Be careful, dear people, don't end up like the birds in today’s photos.
And looking at those, I’ll ax of you one more time:
Who on earth are we?
Why are we as a species too stupid to understand even how not to annihilate ourselves, but then we turn around and still tell each other we’re geniuses? Why is that?
And why would we presume we can inflict this kind of mindless suffering without having it inflicted upon ourselves in return?Charlie Riedel: A bird covered in oil flails in the surf at East Grand Terre Island along the Louisiana coast on Thursday, June 3, 2010
Lessons to be learnt from Kazakhstan
by Gillian TettEver since the film Borat was released, the word “Kazakh” has tended to provoke sneers on western bank trading floors. Right now, however, it merits more respect – at least as far as the issue of financial restructuring is concerned. A few days ago, Kazakhstan announced that it had completed the restructuring of BTA, one of the largest Kazakh banks, by imposing severe haircuts on investors holding BTA bonds and loans. These creditors, which include ABN Amro, Commerzbank, Standard Chartered, ING, KfW, and funds DE Shaw and Fortis Investment Management, have effectively had to swallow some $6.8bn of write-downs to enable the bank to cuts its debt burden from $12.2bn to $4.4bn.
The news has attracted little outside interest. After all, with the eurozone in turmoil and American politicians fighting over financial reform, traders and policy makers have had plenty else on their mind. But what has just occurred on the Kazakh steppes is looking surprisingly relevant to this hand-wringing about European banks and US reform. Until recently it was generally assumed in the emerging market world that when a bank ran into problems it would either be bailed out by the government (or, more likely, the International Monetary Fund) or go spectacularly bust and close its doors. And indeed, when BTA, along with several other Kazakh banks, first started to collapse almost two years ago, that was what most western investors assumed would occur.
Hence, some of the powerful western creditors who held the debt of BTA and other banks started pushing for a furtive state rescue, of sorts – and warned that if this did not occur Kazakh-style financial Armageddon would occur. However, to its credit, the Kazakh government faced down some of the more aggressive western banks by insisting on something rarely seen anywhere in the world: an orderly restructuring, with creditor haircuts, of a still-functioning bank. Now, it would be naive to think that this process could be easily transposed on to the west. Kazakh banks are much smaller than American or European banks and their operations do not straddle numerous different borders or bankruptcy regimes.
Nevertheless, the core principle of the BTA story is thought provoking. By a happy coincidence a couple of days before the Kazakh news Michel Barnier, Europe’s financial services commissioner, announced plans to create a new European resolution fund to deal with failing banks, funded by a bank levy. In some respects this is encouraging news, since the sooner that Europe starts thinking about this problem, the better. But in other respects, Mr Barnier’s proposal is riddled with problems. For even if the Commission could persuade all the European governments to impose a bank levy for such a fund, it is unlikely to become big enough in size, fast enough, to absorb all the potential losses if a big bank went down.
However, another option, as demonstrated in Kazakhstan, is to demand that creditors absorb all, or part, of the losses, even as the bank remains a going concern. And indeed, this is precisely the idea that is now starting to gain traction in some regulatory quarters. In Europe, for example, Paul Tucker, deputy governor of the Bank of England, is one of those who is now championing this idea of creditor haircuts as a way to deal with the “too big to fail” issue. In America, there is every chance that the future financial reform bill will contain some features that would impose creditor losses in the future (though it remains a point of fierce dispute whether this would be imposed by a central, third-party body or the law courts.)
Unsurprisingly, the concept remains very controversial. Many investment groups hate the concept, since bond holders have generally been protected from losses until now. Many European bankers are also opposed, since they fear it could raise funding costs. Some international lawyers are also wary, since it would be challenging to thrash out any deal with creditors operating in different bankruptcy regimes. But, notwithstanding those (big) drawbacks, to my mind this seems the least bad option. After all, the concept has one big merit: namely it spares taxpayers.
There is another: the prospect of haircuts could prod creditors to exercise more badly-needed oversight in the future. After all, it is evident from the last bubble that equity investors are lousy at this, partly because they are incentivised to cheer revenue growth. But if bondholders thought they might face haircuts in the future, they would have a real incentive to impose discipline on banks – and perhaps make them more transparent in the future. This would be better than the alternative: building a system based on ever tighter bank rules and implicit taxpayer bail-outs. Which, unfortunately, is where Europe is heading.
China: like a cocktail party without the cocktails
by Hugh Hendry - Financial TimesForty years ago, just before a performance at Amsterdam’s renowned orchestral venue, the Concertgebouw, a group of radical young musicians began making noises with nutcrackers and bicycle horns. Their “Nutcracker Action” denounced the orchestra as a status symbol of the ruling elite, claiming that it was guilty of “maintaining an undemocratic artistic environment”.
Persuaded by the immediate dangers of deflation, I feel much the same antagonism towards most investment matters today, especially the Asian business model and the investment community’s bullishness regarding China. From the phenomenon that was Japan in the 1970s-80s to the Asian Tiger movement in the 1990s to our present obsession with China’s economic might and its future prospects, Asia has won the hearts and minds of the financial world’s most demanding investors.
Witness Fidelity’s legendary British fund manager Anthony Bolton’s explanation for his decision to come out of retirement and launch a new career at the helm of a China fund: “Only a remarkable opportunity could have tempted me ... This may be the biggest economic and investment story of our generation.”
In the spirit of the nutcracker revolutionaries, I would like to warn you that I think the Asian business development model is flawed. I think our elites have it wrong. It is my contention that China produces gross domestic product growth without per capita wealth creation. It is analogous to a cocktail party without the cocktails; what is the point?
Furthermore, I fear that, should China suffer an economic reversal, it might have especially ominous implications for Japan. I am concerned about the lopsided nature of Japan’s finances, with its domestic liabilities – pension and insurance schemes – being supported by the country’s substantial overseas dollar hoard. Japan is in effect shorting its own currency and, to aggravate matters further, so is the international hedge fund community.
Think about it. Do you know of any wealthy acquaintance that has yen-denominated cash deposits? Dollars, euros, pounds, Swiss francs, even Singapore dollars, yes; but no one holds the currency of the world’s second-largest economy. This arrangement is not viable in the longer term. To quote J.K. Galbraith, the Canadian-American Keynesian economist: “The enemy of the conventional wisdom is not ideas but the march of events.”
Sure, the yen is not cheap on a purchasing power parity basis and its domestic exporters struggle to remain competitive with a yen-denominated cost base. But an unforeseen event, such as a slump in Chinese economic growth, has the potential for torschlusspanik, or flight to the exits, in the currency markets, which could in turn precipitate a much higher value of the yen.
We worked this out when Lehman Brothers failed. In a world still dominated by hugely leveraged financial institutions’ portfolios, if a yen asset, say a corporate loan note financed in yen, falls substantially (20 per cent or more), it adds to the demand for the yen because the borrower now has to borrow even more yen (or sell more of its foreign-denominated assets to buy yen) to cover the loss.
I am willing to wager this action would invoke a vicious cycle as the country’s export base would be jeopardised further by the appreciating currency. Already jittery stock markets would unravel further, initiating even more selling of dollar assets to buy more yen to make good the losses or shortfall vis-à-vis domestic institutions’ yen liabilities.
Japan is the most leveraged industrial nation to the ebb and flow of the Chinese economy. It is perhaps interesting therefore that when I visited Tokyo in March the local businessmen pronounced the notion of negative Chinese GDP growth as a near impossibility. Maybe such confidence explains their asset-liability mismatch. I really do like their use of the world impossible. I remember how it was used so often by Wall Street banking analysts to describe the plausibility of a nationwide housing slump in America. Yes, impossible indeed!
China's Property Market Freezes Up
by Andrew BatsonGovernment policy changes have thrown China's booming property market into a period of paralysis that some industry executives say will last for several months, weighing on global growth prospects already battered by the turmoil in Europe. A rebound in China's property market has been central to the nation's rapid recovery from the financial crisis, but surging housing prices had led to increasingly open discontent from middle-class families in major cities. After months of indecision, Beijing in mid-April announced a package of policies intended to blow the froth out of the market by restricting speculative purchases.
Officials may have gotten more than they bargained for. Though still too recent for their effect to show up in official economic statistics, early indications are that the new measures have sharply cooled the property market. Arriving around the same time as the debt crisis in Greece, China's new restrictions caused many investors and businesses to question the strength of the global recovery. Domestic steel prices are down 7.4% since the April measures, and as of Thursday China's main stock market index is down 19.4%.The housing market in many—though not all—Chinese cities seems to have nearly ground to a halt after the government moves. On average, the number of residential property transactions in the four weeks after the restrictions were announced is down 40% compared with the four weeks before the measures, according to figures covering 24 major cities from real-estate consultancy Soufun.com. China's economic growth was already widely expected to slow in coming months, as the impact of last year's stimulus policies fade. Some forecasters, seeing weaker prospects in a key industry, are now further marking down their numbers for this year. China International Capital Corp. now expects the economy to expand 9.5% in 2010 as a whole, rather than the 10.5% it previously forecast.
But the key variable for how things unfold in coming months is difficult to forecast: What the government will do next. Analysts are divided about whether the government is more likely to take additional measures to push down prices, or start to reverse itself to restore confidence in the market. Investors are focused on whether the government will impose new taxes on residential property, a move that is being discussed by big cities including Shanghai and Chongqing. On Monday, China's State Council signaled support for such changes, approving a set of economic-reform priorities including "gradually advancing reform of real-estate taxation." Even though no specific plans have been announced, the issue is weighing on markets since higher taxes would push down the value of properties.
"The government has been very ambiguous about the property market," said Li-Gang Liu, China economist for Australia & New Zealand Banking Group. Officials are afraid both of letting a bubble get out of hand, and of cracking down too hard and endangering growth, as happened in early 2008, he said. The prospect that the rules of the real-estate market may be rewritten have created uncertainties for both buyers and sellers, who are trying to figure out what the government's new attitude means for the market. The April rules raised downpayment requirements and restricted purchases of multiple homes, and were supplemented by other measures that differ from city to city. Yet the subsequent slowdown seems to be greater than can be explained by the number of people directly affected by the changed rules.
"What's really dampened the market is the uncertainty. That overhang is what's driving everyone to wait," said Kevin Yung, executive vice president of IFM Investments Ltd., which runs the Century 21 real-estate agency franchise in China. "We think this could last another three to six months," he said, a rough forecast shared by other industry executives. Mr. Yung reports that his business is seeing plenty of traffic: People are still looking at apartments and asking about prices. But many are holding off final decisions, and will likely need prices to come down before they take the plunge into home-ownership. "We think prices are going to come down, probably by about 20%, but it will happen over time because this adjustment is driven more by policy than demand," he said.
Quincy Zhao, who works at a consulting firm in Shanghai, is waiting to see if the government's measures really will make a dent in the city's steep prices. Ms. Zhao, 26, now rents an apartment with three friends, but has her eye on a place of her own in the Pudong district that would at current prices cost her 3 million yuan, or about $440,000. "I have to be super-cautious given that the situation is not so clear at the moment. I am afraid that getting into the market now will lead to a loss if the property price really goes down," Ms. Zhao said. "Personally, I do hope that these policies will work."
China’s Stocks Fall to 13-Month Low
by Zhang Shidong - Bloomberg Business WeekChina’s stocks dropped, sending the benchmark index to a 13-month low, on concern banks’ fundraising and government efforts to cool the property market will hurt shareholders’ stakes and dent demand for resources. Bank of China Ltd. and Industrial Bank Co. fell for a second day after raising capital. Poly Real Estate Co. slid 2.9 percent on speculation China is close to imposing a real-estate tax. Yanzhou Coal Mining Co. led declines for energy producers after an official said coal demand will slow in the second half of the year. China National Software & Service Co. surged 10 percent on government plans to boost the software business.
“Fundraising pressure from the banking sector may prompt big investors to cut their positions in financial stocks, which have a large weighting,” said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. The Shanghai Composite Index lost 18.77, or 0.7 percent, to close at 2,552.66, the lowest since April 30, 2009, and erasing an earlier 1 percent gain. The CSI 300 Index slid 0.8 percent to 2,736.08.
The Shanghai index has slumped 22 percent this year on concern growth at the world’s third-largest economy will slow as the housing market cools and Europe’s debt crisis threatens China’s exports. The slump has cut the average price of stocks on the gauge to 19.4 times earnings, near the lowest level since February 2009. Bank of China, the nation’s third-largest, slid 1.3 percent to 3.84 yuan, adding to yesterday’s 5.1 percent plunge. The bank is selling 40 billion yuan ($5.86 billion) of convertible bonds to replenish capital drained by record credit growth last year.
Lending Binge
Industrial Bank, part-owned by a unit of HSBC Holdings Plc, fell 1.3 percent to 24.53 yuan after sliding 5.8 percent yesterday. The bank raised 17.86 billion yuan in a rights offer to ensure it has enough capital to meet loan demand. Chinese policy makers are trimming stimulus this year after a $1.4 trillion lending binge in 2009 revived growth and sent property prices surging. Officials are targeting a 22 percent reduction in new loans and have sold bills and raised banks’ reserve requirements to suck money out of the financial system.
To restrain inflation expectations and keep housing affordable, the government has also reined in loans for purchases of multiple homes, increased mortgage rates and raised down payment requirements. Property price gains have yet to slow, with prices jumping a record 12.8 percent in April from a year earlier.
Tax Report
Poly Real Estate, the second-largest developer by market value, slumped 2.9 percent to 10.72 yuan, capping a 38 percent loss this year. Gemdale Corp. retreated 3 percent to 6.45 yuan. China’s National Development and Reform Commission supports the ability of local governments to impose property taxes on a trial basis, Caixin Online said on its website, citing Lian Qihua, an official at the planning agency. China’s move to reduce its dependence on fixed-asset investment and promotion of domestic consumption will hurt demand for bulk commodities, according to JPMorgan Chase & Co.’s Adrian Mowat.
“We’re going to get a further correction,” Mowat, chief Asian strategist at JPMorgan, said in a Bloomberg Television interview today. “What we expect to happen is bulk commodity demand is going to weaken as China rebalances away from building lots of infrastructure and real estate towards consumption.” China’s second-half coal demand may slow on property market curbs and the government’s efforts to cut energy use per unit of economic output, Wu Chenghou, senior advisor to the China Coal Transport & Distribution Association, said today.
Coal Producers
Yanzhou Coal, the listed unit of China’s fourth-biggest coal miner, slid 2.4 percent to 18.66 yuan. China Coal Energy Co., the nation’s second-largest coal producer, retreated 1.6 percent to 9.48 yuan. Datong Coal Industry Co., the third- largest, dropped 1.7 percent to 33.16 yuan. Wuhan Iron & Steel Group, the nation’s third-biggest steelmaker, said May 26 that demand for steel is declining, partly because of curbs on property loans. The stock slid 1 percent to 4.78 yuan today.
China National Software rallied 10 percent to 19.43 yuan. UFIDA Software Co. jumped 6.4 percent to 21.29 yuan, the biggest gain since April 20. China will promote the nation’s software industry development, Li Yizhong, the head of the Ministry of Industry and Information Technology said in a speech posted on the ministry’s website today.
Separately, the top economic planning agency may submit to the State Council a plan to develop the bio-technology industry, the China Securities Journal reported today, citing Jiang Zehui, vice chairman of the National Committee of Population, Resources and Environment. Hualan Biological Engineering Inc., which makes swine flu vaccines and human serum albumin, rose 3.1 percent to 49.20 yuan. The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.
Home appliance makers: Qingdao Haier Co. (600690 CH), the air-conditioner and refrigerator unit of China’s biggest appliance maker, gained 2.4 percent to 19.30 yuan. Hisense Electric Co. (600060 CH), a manufacturer of flat-panel televisions, added 1.1 percent to 14.72 yuan. China will extend its home-appliance trade-in program until the end of 2011, the Ministry of Commerce said in a statement today. The program will be gradually extended nationwide from the nine provinces and cities currently offering subsidies from June 1, it said.
Obama Hails Jobs Numbers Amid GOP Criticism
by Peter Maer - CBS NewsPresident Obama says the addition of 431,000 jobs in May proves "the economy is getting stronger by the day." Mr. Obama used a quick appearance at a suburban Maryland truck company to discuss the Labor Department report showing unemployment dipped to 9.7 percent last month. He acknowledged that a surge in Census Bureau hiring helped improve the monthly jobs snapshot, a fact that Republicans have used to cast the jobs figures as less positive than they otherwise appear.
"Positive job growth in May is an encouraging sign, but it is disappointing that nearly all of those gains are temporary, taxpayer-funded government jobs through the U.S. Census," House Republican Leader John Boehner said in a statement. Added Senate Republican Leader Mitch McConnell: "Although Americans appreciate a job of any kind these days, temporary government Census jobs are not the kind of employment that will help kick-start and sustain our economy."
Mr. Obama warned in his comments that the recovery is still in the "early stages," but he said businesses are starting to hire again. The Labor Department report showed private sector hiring slowed dramatically last month as businesses added just 41,000 jobs, the fewest since January. "This economy hasn't returned to prosperity yet but we're heading in the right direction," the president said. He warned that there will still be some economic "ups and downs." Mr. Obama also went into midterm campaign mode during the economic event. He told truck plant workers the nation could "return to the failed economic policies of the past" or "we can decide if we want to move forward."
The economic report gave the president a momentary break from the oil crisis just hours before his third trip to the Gulf region. But he still alluded to the crisis with another slap at the previous administration's policies. "We already tried stripping away rules and regulations that kept Wall Street, banks and oil companies in bounds," Mr. Obama told the Maryland audience. "We let them play by their own rules instead and it didn't work." In a written statement, Republican National Committee Chairman Michael Steele said "the underlying fact is that 9.7 percent unemployment is unacceptable by any standard."
Steele described the president's economic policies as "a colossal failure." On the White House website, Christina Romer, Chair of the Council of Economic Advisers, stressed that "it is important not to read too much into any one monthly report, positive or negative." "The monthly employment and unemployment numbers are volatile and subject to substantial revision," she wrote. "Emphasis should be placed on persistent trends rather than month-to-month fluctuations."
Two more Census workers blow the whistle
by John Crudele - New York PostYou know the old saying: "Everyone loves a charade." Well, it seems that the Census Bureau may be playing games. Last week, one of the millions of workers hired by Census 2010 to parade around the country counting Americans blew the whistle on some statistical tricks. The worker, Naomi Cohn, told The Post that she was hired and fired a number of times by Census. Each time she was hired back, it seems, Census was able to report the creation of a new job to the Labor Department.
Below, I have a couple more readers who worked for Census 2010 and have tales to tell. But first, this much we know. Each month Census gives Labor a figure on the number of workers it has hired. That figure goes into the closely followed monthly employment report Labor provides. For the past two months the hiring by Census has made up a good portion of the new jobs. Labor doesn't check the Census hiring figure or whether the jobs are actually new or recycled. It considers a new job to have been created if someone is hired to work at least one hour a month. One hour! A month! So, if a worker is terminated after only one hour and another is hired in her place, then a second new job can apparently be reported to Labor . (I've been unable to get Census to explain this to me.) Here's a note from a Census worker -- this one from Manhattan:
"John: I am on my fourth rehire with the 2010 Census. "I have been hired, trained for a week, given a few hours of work, then laid off. So my unemployed self now counts for four new jobs. "I have been paid more to train all four times than I have been paid to actually produce results. These are my tax dollars and your tax dollars at work. "A few months ago I was trained for three days and offered five hours of work counting the homeless. Now, I am knocking (on) doors trying to find the people that have not returned their Census forms. I worked the 2000 Census. It was a far more organized venture. "Have to run and meet my crew leader, even though with this rain I did not work today. So I can put in a pay sheet for the hour or hour and a half this meeting will take. Sincerely, C.M."
And here's another:
"John: I worked for (Census) and I was paid $18.75 (an hour) just like Ms. Naomi Cohn from your article. "I worked for about six weeks or so and I picked the hours I wanted to work. I was checking the work of others. While I was classifying addresses, another junior supervisor was checking my work. "In short, we had a "checkers checking checkers" quality control. I was eventually let go and was told all the work was finished when, in fact, other people were being trained for the same assignment(s). "I was re-hired about eight months later and was informed that I would have to go through one week of additional training.
"On the third day of training, I got sick and visited my doctor. I called my supervisor and asked how I can make up the class. She informed me that I was 'terminated.' She elaborated that she had to terminate three other people for being five minutes late to class. "I did get two days' pay and I am sure the 'late people' got paid also. I think you would concur that this is an expensive way to attempt to control sickness plus lateness. I am totally convinced that the Census work could be very easily done by the US Postal Service.
"When I was trying to look for an address or had a question about a building, I would ask the postman on the beat. They knew the history of the route and can expand in detail who moved in or out etc. I have found it interesting that if someone works one hour, they are included in the labor statistics as a new job being full. "I am not surprised that you can't get any answers from Census staff; I found there were very few people who knew the big picture. M.G."
When I received my Census form in the mail, I filled it out. Nobody had to knock on my door. I answered truthfully about the number of people living in my household. But I could have just as easily dou bled the number. Why not? Didn't Census ad vertisements imply that my community would get more federal money if the popula tion were larger? I'm glad people are finding work with the Census. For some it's the only work they have had this year and the chump change they are making for a few hours' work is a godsend. But wasting taxpayers' money on busywork isn't going to do much for the economy.
Buffett Expects 'Terrible Problem' for Municipal Debt
by Andrew Frye and William Selway - BloombergWarren Buffett, whose Berkshire Hathaway Inc. has been trimming its investment in municipal debt, predicted a "terrible problem" for the bonds in coming years. "There will be a terrible problem and then the question becomes will the federal government help," Buffett, 79, said today at a hearing of the U.S. Financial Crisis Inquiry Commission in New York. "I don't know how I would rate them myself. It's a bet on how the federal government will act over time." Berkshire's investment portfolio included municipal bonds valued at less than $3.9 billion as of March 31, down from more than $4.7 billion at the end of 2008. The company had a maximum of $16 billion at risk in derivatives tied to such debt, according to the company's annual report for 2009.
Buffett, Berkshire's chairman and chief executive, has previously warned about the risks of insuring municipal bonds. In his annual letter to shareholders in 2009, he said public officials may be tempted to default on bonds whose payments are guaranteed by insurance companies rather than push through needed tax increases. He said guaranteeing municipal bonds against default "has the look today of a dangerous business." Local governments rely on the $2.8 trillion municipal bond market to raise money for construction projects and fund other budget items. The financial crisis and recession battered governments across the U.S. by cutting into tax collections and causing pension-fund losses. Some governments failed to set aside enough money to cover retirement benefits promised to employees, which may place increasing strain on public finance.
Rescue for Governments?
Buffett said last month that the U.S. may feel compelled to rescue a state facing default after the government committed $700 billion to bail out financial firms and automakers. "It would be hard in the end for the federal government to turn away a state having extreme financial difficulty when they've gone to General Motors and other entities and saved them," Buffett told shareholders in Omaha, Nebraska, at Berkshire's May 1 annual meeting. "I don't know how you would tell a state you're going to stiff-arm them with all the bailouts of corporations." A report by the Pew Center on the States in February estimated that by the end of the 2008 budget years, states had $1 trillion less than needed to pay for future pensions and medical benefits, a gap the center said was likely compounded by losses suffered in the second half of 2008.
Defaults
About $14.5 billion of municipal bonds defaulted in 2008 and 2009, according to Income Securities Advisor Inc., a Miami Lakes, Florida-based company that publishes a newsletter tracking distressed debt. Many those were securities backed by revenue from nursing homes, property developments and other projects without claim to government tax revenue. Defaults by local governments with the power to raise taxes are less common. Jefferson County, Alabama, defaulted on more than $3 billion of bonds backed by sewer fees after the deals grew more costly in the wake of the credit crisis in 2008.
Vallejo, California, filed for bankruptcy in 2008 after its tax revenue tumbled. Buffett set up a municipal bond insurance company in December 2007 as competitors, including Ambac Financial Group Inc. and MBIA Inc., struggled to maintain top ratings. Berkshire has scaled back sales as Buffett said the rates that bondholders are willing to pay don't match the risk.
Housing Double Dip a Done Deal
by Diana Olick - CNBCEverybody take a nice long look at today's Pending Home Sales Index from the National Association of Realtors, because it's just about the last positive picture we're going to see for a while. Yes, the index rose even more than expected, as buyers rushed in to take advantage of the home buyer tax credit. And yes, those numbers will show up in Existing Home Sales in May and June, but then look out.
This index is based on contracts signed in August, and that's how the credit was set up; you had to sign your contract by April 30th and close by June 30th in order to get your $8000 if you're a first time buyer and $6500 if you're a move up buyer. And then came May, traditionally the height of the spring housing season. Mortgage applications to purchase a home began to sink. Now, four weeks later, mortgage purchase applications are down nearly 40 percent from a month ago to their lowest level since April of 1997. Yes, you can argue that a larger-than normal share of buyers today are all cash, but those are largely investors.
That means real organic buyers are exiting in droves.
"With another week of historically low mortgage rates, the trend from the prior three weeks continued, as refinance applications increased while purchase applications dropped. Purchase applications are now almost 40 percent below their level four weeks ago, while the refinance share, at 74 percent, is at its highest level since December," said Michael Fratantoni, MBA's Vice President of Research and Economics.
And then the Realtors' chief economist, Lawrence Yun, after touting the numbers and telling all of us how much home equity was "preserved" by the tax credit stabilizing prices ($900 billion), throws water on his own numbers: “A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract signing to settlement date,” Yun said.
“However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues. There could be a sizable number of homebuyers who responded to tax credit incentives, but may encounter problems meeting the settlement deadline by June 30.” So now the NAR is asking Congress to provide flexibility on the deadline for closing. Let's see how that goes over, as the government continues to try to find the back door out of the housing market.
Congress pulls back state aid package, leaving a $2-billion hole in California budget
by Richard Simon and Evan Halper, Los Angeles TimesHouse Democrats kill a $24-billion fund to help cash-strapped states cover costs. States are lobbying hard to have it restored, warning of further devastating cuts to healthcare and social services.
With the federal deficit a growing political liability, lawmakers in Congress are backing off plans to send more aid to financially strapped states, putting in jeopardy billions of dollars that California and others were counting on to balance their budgets. The potential loss of funds is a significant setback for Gov. Arnold Schwarzenegger and state lawmakers, who may not see nearly $2 billion in federal assistance that they intended to use to help bring California out of the red. The money was to be California's share of $24 billion in proposed assistance, mostly to cover healthcare spending, spread among all states. Budget experts say that is enough to wipe out about one-fourth of the combined state budget shortfalls.
In California and elsewhere, officials thought the funds were a sure thing. The money was one of the few elements of Schwarzenegger's budget plan on which there was bipartisan agreement. But House Democratic leaders last week stripped the money out of legislation amid election-season jitters. "This is a serious problem," said Jean Ross, executive director of the California Budget Project, a Sacramento-based nonprofit. "The fear of deficits seems to be overtaking Washington. They are not realizing the bigger threat is the economy could slide back into recession as a result of state and local budget cuts."
In California, the governor has already proposed eliminating the state's welfare program, cancelling state-subsidized day care for hundreds of thousands of low-income children, freezing school spending and making a number of other deep cuts to close a $19.1-billion budget gap. Failure to get the federal money would surely force more drastic proposals. But even if the state eliminated its entire home healthcare program, which serves 440,000 elderly and disabled Californians, it wouldn't make up for the $1.9 billion the state is now scrambling to secure.
The states have launched a frantic lobbying effort to persuade the U.S. Senate to provide the assistance. "You've got virtually every governor in the country calling on Congress to do this," said H.D. Palmer, deputy director of the California Department of Finance. "This is not just a California issue. It is a national issue." The states' efforts come as the Democrats who control Congress face resistance to increased spending from fiscally conservative members of their own caucus, many of whom face tough reelection campaigns in districts where they campaigned on pledges of fiscal discipline. Republicans, meanwhile, have highlighted the federal budget deficit, which could reach $1.5 trillion, in this year's mid-term election campaigns.
Michael Bird, federal affairs counsel for the National Conference of State Legislatures, said securing the funds would be a challenge. "We've got our work cut out for us," he said. Thirty states have been counting on the additional Medicaid money in their budgets, according to the conference. The money was originally provided in last year's economic stimulus bill — but only through the end of this year. With unemployment still high, a bipartisan group of governors, with President Obama's support, has sought to extend the funding through mid-2011.
The $24 billion was stripped from a package of unemployment aid and tax breaks by House Democratic leaders in response to the demands of fiscally conservative members of their party to reduce the bill's overall cost. The bill was approved by the House last week and is awaiting action in the Senate. A spokesman for Rep. Chellie Pingree (D- Maine), a leader in pushing for extension of the Medicaid funding, said that the congresswoman has been assured by Democratic leadership that the issue will come back before the House.
Schwarzenegger has aggressively pushed the California congressional delegation to extend the federal aid to states. He expressed confidence in January that Washington would step forward with as much as $7 billion in new federal assistance, which could be used to close more than a third of California's budget gap. By May, he acknowledged that was unlikely but suggested the state could safely assume it would receive half that amount. Now the state is facing the prospect of getting barely more than $1 billion.
Among those resisting the governor's push for more assistance are his fellow Republicans in the state's Congressional delegation, who say Washington has its own budget problems. While the loss of Medicaid funds would hit California hard, the House bill does include provisions that would benefit the state. Among them is an extension of the Build America Bond program that has been used in California to fund infrastructure projects. There is also $400 million in increased Medicare payments to doctors in a wide swath of the state to address longstanding complaints that low reimbursement rates have discouraged them from taking on new patients.
New York nearly goes broke again
by Joan Gralla - ReutersNew York state delayed paying $2.5 billion of bills as a short-term way of staying solvent but its cash crunch could get even worse in August and September, Budget Director Robert Megna said on Tuesday."Had we not done that, I think we would have been close to broke," Megna told reporters in Albany. This is the third time since December the cash-poor state has withheld funds. This time, the state's general fund, which counts everything but federal aid and some specific revenues, ran in the red by about $500 million to $600 million, Megna told reporters.
The state was able, however, to borrow from other funds, including the short-term investment fund. About $1.5 billion of the withheld funds must be paid to schools in June. The rest of the total could be paid in July. "The next big bottleneck is in August and September," Megna said, adding that tax revenues have recently improved slightly, which is a slight bright spot. Democratic Governor David Paterson's $135 billion budget has not been enacted by the legislature though it was due on April 1. Megna said that the longer the budget battle grinds on, the less time there is to wring out savings.
Paterson and the Democratic-led legislature must close a $9.2 billion deficit. They are feuding over how deeply to slash health and education programs. The legislature has enacted several short-term spending measures to avoid a shutdown. Paterson, who is not running for re-election in November, is now mulling whether to lay off state workers. He expects to leave the final decision to his successor. Megna said layoff plans cannot be finalized until the state sees how many of its workers opt for early retirement under a new incentive plan.
About 4,000 to 5,000 employees took the last early retirement plan, he said. "We have to do at least as well as we did the last time," Megna said. Paterson's budget relies on getting $250 million of savings from the public workforce. Megna did not completely reject a Senate Democratic plan to refinance tobacco bonds by replacing them with personal income tax debt, which likely would have lower interest rates. "At this point, we're still listening," he said, adding that one advantage of tobacco bonds is that they are not state debt. Further, Paterson has made it clear he does not want to borrow any money and "That's our starting point," Megna said.
Rating Firms to Hold Off on Any Downgrades of Big US Banks
by Mark Gongloff - Wall Street JournalCredit-ratings firms say they plan to delay issuing any credit-rating downgrades to the largest U.S. banks as a result of new financial regulation. Moody's Investors Service analysts on Thursday said that, under the overhaul bill passed by the Senate last month, the government still has some room to bail out the biggest banks, at least in the short term—an option it will likely choose as long as the economy and markets are unsettled.
"Consequently, we expect that the senior debt and deposit ratings of systemically important banks in the U.S. will continue to benefit from unusual levels of support," Moody's analysts wrote in a report, "until the economic recovery is sustained, financial market health is restored, and the risks of attempting to unwind an interconnected institution are reduced." Moody's didn't specify which banks it considers systemically important, but the short list likely includes Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley.
The Moody's Corp. unit and McGraw-Hill Cos.' Standard & Poor's in the past have warned that the government's implied support of banks considered to big to fail means they get higher credit ratings than they otherwise would, usually between one and five notches. The ratings companies have said that any overhaul bill undercutting that support could result in downgrades. Even a one-notch downgrade could add billions of dollars to banks' borrowing costs, the banks and analysts have said. It could even hamper some banks' ability to borrow in short-term debt markets. Worries about potential bank downgrades have weighed on bank stock and bond prices in recent months.
Both rating companies, under fire for their performance before and during the credit crisis, have updated their assessments of bank ratings following Senate passage of its version of financial-overhaul legislation last month. That bill must be reconciled with a less-aggressive House bill passed in December, a process that could take weeks. S&P last month said its review of any final bill's impact on ratings could take several months, giving banks a ratings reprieve that could last into early 2011.
Moody's analysts on Thursday seemed to go a step further, suggesting that support-related downgrades might depend on a shift in market conditions that could be a long time in coming and difficult to define. The problem of interconnectedness could be addressed by aspects of financial overhaul that reduce counter-party risk, Moody's analysts said. But it may be more difficult to achieve or define an economic and market environment in which the government can safely unwind a major bank.
At the same time, Moody's said that the stand-alone ratings of banks may never return to their levels before the financial crisis and that financial overhaul could hurt bank profits, which implies that bank ratings should be lower, particularly with government support dwindling over time. "Inevitably, that's why we still see overall more negative pressures than not," Moody's senior vice president David Fanger said in an interview.
Several other banks have also benefited from short-term government support but mightn't be considered too big to fail and thus might be nearer the risk of a downgrade. Moody's has in the past identified a list of 11 smaller banks, including U.S. Bancorp, Bank of New York Mellon Corp. and PNC Financial Services Group Inc., that it said received one- or two-notch rating uplifts from implied government support. Moody's said it would next address the issue of bank ratings after passage of a final bill.
Senate Financial Reform Bill DOESN'T End Too Big To Fail, Moody's Says
by Shahien Nasiripour - Huffington PostSo much for ending Too Big To Fail. The financial reform bill championed by the Obama administration and Senate Democrats as permanently ending the idea that large, interconnected financial institutions are too big to fail does no such thing, analysts at Moody's Investors Service cautioned today in a new report. "[A] key issue that challenges the feasibility of the proposed legislation is that it would not fully eliminate the issue of interconnectedness, nor is it likely that resolution authority could fully eliminate the systemic implications of allowing a large and/or highly interconnected firm to default, especially with respect to large international groups, and it certainly would not eliminate the risk of contagion," the team of analysts led by Robert Young wrote.
"[T]he interconnectedness and contagion risks would not be completely eliminated, nor would the incentives and tools for regulators and the government to provide support via emergency liquidity or other programs that would continue to be part of the framework," they noted. Some leading researchers, analysts and commentators have argued that the whole point of reforming the nation's financial system and the way it's regulated -- essentially the reason to even pass a reform bill -- is to end the idea that taxpayers would ultimately bail out megabanks and their smaller brethren the next these firms couldn't shoulder the consequences of excessive risk-taking.
That's exactly what happened in the fall of 2008 as taxpayers rode to Wall Street's rescue to save the very firms from collapse that ultimately caused the worst financial crisis and subsequent economic downturn since the Great Depression. The hundreds of billions of taxpayer dollars that were pumped into these firms -- and the trillions they received in the form of implicit and explicit government guarantees -- to stave off an apocalyptic depression largely provided the impetus for Congressional action.
"The only way to avoid a crisis of this magnitude is to ensure that large firms can't take risks that threaten our entire financial system, and to make sure that they have the resources to weather even the worst of economic storms," President Barack Obama told top financial executives during a 2009 speech on Wall Street to mark the one-year anniversary of the collapse of Lehman Brothers. "Even as we've proposed safeguards to make the failure of large and interconnected firms less likely, we've also created -- proposed creating what's called 'resolution authority' in the event that such a failure happens and poses a threat to the stability of the financial system.
"This is intended to put an end to the idea that some firms are 'too big to fail,'" he warned. "For a market to function, those who invest and lend in that market must believe that their money is actually at risk. And the system as a whole isn't safe until it is safe from the failure of any individual institution." Though Moody's noted that the Senate bill makes them expect that government support will be less forthcoming, "there remains considerable uncertainty as to whether resolution powers could effectively allow for the failure of a large institution without adversely affecting other institutions," Young's team wrote.
"Never again will the American taxpayer be held hostage by a bank that is 'too big to fail,'" Obama said on Jan. 21. A few hours before the Senate passed the bill authored by Banking Committee Chairman Christopher Dodd (D-Conn.), Obama delivered an eight-minute speech in the White House Rose Garden promising the end of taxpayer bailouts. "Because of financial reform, the American people will never again be asked to foot the bill for Wall Street's mistakes," he said. "There will be no more taxpayer-funded bailouts -- period. If a large financial institution should ever fail, we will have the tools to wind it down without endangering the broader economy."
But the Moody's report isn't the first time experts have questioned whether the administration's plan, largely adopted by the Senate, will end Too Big To Fail. Some, like Simon Johnson, former chief economist of the International Monetary Fund who now teaches at the MIT Sloan School of Management and contributes to the Huffington Post, have said that the mere complexity, size and international reach of financial behemoths like Citigroup and JPMorgan Chase makes it impossible for the government to safely resolve these firms.
In addition to Johnson, others have gone further, arguing that the best -- if not the only -- way to end Too Big To Fail is to shrink financial monstrosities down to a more manageable size. Federal Reserve Bank of Dallas President and CEO Richard W. Fisher, quoting Andrew Haldane, executive director for financial stability at the Bank of England, has suggested $100 billion in assets as one such threshold. There are 23 U.S.-based bank holding companies that exceed that threshold, Federal Reserve data show. Four -- Bank of America, JPMorgan Chase, Citigroup and Wells Fargo -- hold more than $1 trillion assets. Three of those four hold more than $2 trillion.
James Bullard and Thomas Hoenig, heads of the St. Louis Fed and Kansas City Fed, respectively, also have advocated breaking up the nation's megabanks. Democratic Senators Sherrod Brown of Ohio and Ted Kaufman of Delaware pushed an amendment to the Senate bill that would have forced roughly ten of the nation's largest banks to break up. Though three Republicans voted for it, the provision ultimately failed by a vote of 61 to 33. Dodd voted against it. The Obama administration opposed it, led by Obama's top economic adviser, Larry Summers, as well as Treasury Secretary Timothy Geithner.
"I believe this idea was sound policy -- and I further believe that a mainstream consensus will continue to grow that these megabanks are too large, too complex and too internally conflicted to regulate successfully," Kaufman said after his provision was defeated, echoing a position voiced by regional Fed presidents, former top Fed officials, and former top bankers on Wall Street. In January, Summers outlined just how important ending Too Big To Fail is:
"Too big to fail is in many ways the central challenge here," he said. "Because when institutions are too big to fail, they gain a competitive advantage from the sense of government support. And so -- and that gives them an unfair competitive advantage. "They are then able to take risks without market discipline, and when they take those risks, then they fail," he continued. "And if they're too big to fail, taxpayers are on the hook and the rest of the economy suffers, as we've seen."
The nation's four biggest megabanks collectively hold about $7.7 trillion in assets, according to their most recent regulatory filings with the Federal Reserve. That's about a $300 billion increase from the end of 2009, Fed stats show. It's also more than half of the nation's estimated total output last year.
Hedge Funds Post Biggest Monthly Losses Since Lehman Aftershock
by Katherine Burton and Saijel Kishan - Bloomberg
John Paulson, Louis Bacon and Andreas Halvorsen navigated the global market turmoil of 2008 with little or no damage. They weren't as successful last month as the Dow Jones Industrial average had its worst May since 1940. Hedge funds lost an average of 2.7 percent through May 27, according to the HFRX Global Hedge Fund Index, as the sovereign debt crisis in Europe triggered declines in stocks, the euro and commodities, and the gap in yields between U.S. short-term and long-term debt narrowed. It was the biggest decline since November 2008, when hedge funds lost 3 percent in the wake of Lehman Brothers Holdings Inc.'s bankruptcy two months earlier.
Almost every strategy lost money in May, according to Hedge Fund Research Inc. in Chicago, as the Dow index of 30 big stocks sank 7.6 percent including dividends amid speculation that Greece's debt problems would spread to nations such as Spain and Portugal. Some of the best-known funds saw their gains for this year erased.
"Attempting to manage risk in an environment where everything that could go wrong does go wrong seems like a fruitless endeavor," said Brad Balter, who runs Balter Capital Management LLC, a Boston firm that invests in hedge funds for clients. "The only defense that seems to work in months like these is being in cash." Paulson's Advantage fund dropped 6.9 percent through May 21, dragging it to a year-to-date loss of 3.3 percent, according to investors with knowledge of the results, who asked not to be named because the information is private. Halvorsen's Viking Global fund fell 3.4 percent in the same span and 2.9 percent for the year. Bacon's Moore Global declined 7.7 percent as of May 20 and 4.8 percent in 2010, investors said.
2008 Performance
Representatives of Paulson & Co., Viking Global Investors LP and Moore Capital Management LLC, the New York-based firms that oversee the funds, declined to comment. Paulson, Halvorsen and Bacon have among the best long-term returns in the industry, each with average gains of 20 percent or more since they started. Paulson Advantage fund climbed 25 percent in 2008 while the S&P 500 slumped 37 percent including dividends, its largest setback since the Great Depression. Viking rose 0.1 percent that year and Moore Global slid 4.6 percent, offering investors the type of bear-market shelter they look for in hedge funds.
Many of the wagers that hedge funds put on to protect against falling markets didn't work, Balter said. Their bets on falling stocks didn't make enough money to counter losses in shares the managers expected to climb. Commodities retreated 8.2 percent in May, as measured by the UBS Bloomberg CMCI Index. Traders who positioned themselves for the U.S. yield curve to steepen, a sign of expected economic growth, suffered losses when the difference between payouts on two-year and 10-year Treasury notes narrowed instead. The spread shrank from 269 basis points at the end of April to 252 on May 28. A basis point is one-hundredth of a percent.
SAC Capital Advisors LLC, the hedge-fund firm run by Steven Cohen in Stamford, Connecticut, with about $12 billion under management, lost 2.9 percent last month through May 21 with its SAC Capital International fund, trimming this year's gain to about 4 percent, according to people familiar with the firm. Citadel Investment Group LLC, the $12 billion hedge-fund firm run by Ken Griffin, lost about 2 percent with its biggest funds last month through May 21, said people familiar with the Chicago firm. The funds soared as much as 62 percent last year as markets rebounded after losing as much as 55 percent in 2008. Brevan Howard Asset Management LLP in London, Europe's largest hedge-fund firm, lost 0.1 percent for the month through May 21 with its Brevan Howard Fund Ltd., leaving it with a decline of 0.3 percent this year, according to an investor.
Some funds made money last month. Caxton Associates LLC, the New York-based firm founded by Bruce Kovner, rose 1 percent through May 21 with its largest fund as currency trades paid off, an investor said. The fund is up 4.5 percent for the year. Autonomy Capital Research LLP, based in London, climbed 0.7 percent through May 21 and about 12.5 percent for the year, according to people with knowledge of the fund. Robert Gibbins, manager for the $1.5 billion firm, said his trades were based on the forecast that global economies won't improve until currencies are better aligned, and in particular Chinese officials agree to let the yuan strengthen, he said. "That people were looking for new highs on equities didn't make sense to us," Gibbins said in a telephone interview. Before last month, the S&P 500 had soared 80 percent from its 12-year low in March 2009, including dividends.
Volatility Surge
Gibbins said his profitable trades included wagers that the S&P 500 would fall and that interest rates in a number of countries would slide. BAM Capital LLC, a $300 million hedge-fund firm in New York that bets on price volatility, returned 7.7 percent last month through May 21 with its main BAM Opportunity Fund LP, bringing its gain for the year to 8.2 percent, according to an investor. The VIX, an index measuring volatility, jumped about 45 percent last month. Spokesmen for SAC, Citadel, Brevan Howard, Caxton and BAM Capital declined to comment. The price swings in May haven't changed managers' views on whether global economies are rebounding or shrinking. "Managers who are positive are still positive, and negative managers are still negative," said Charles Krusen, head of Krusen Capital Management LLC, a New York-based firm that invests in hedge funds for clients.
Covered Bond Sales Jump Amid Concern Over Creditworthiness
by Sonja Cheung and Caroline Hyde - BloombergSales of covered bonds are accelerating as investors seek debt backed by collateral amid concern about the creditworthiness of governments and banks. About $7.7 billion of the securities have been sold or are being marketed this week worldwide, more than double last week’s total, according to data compiled by Bloomberg. Bank of Montreal, Canada’s fourth-largest bank, sold $2 billion of the bonds due in 2015.
Demand for securities backed by mortgages and public-sector loans with top ratings is rising as European governments from Greece to Spain struggle to cut record budget deficits, threatening the region’s banks. Covered bonds returned 0.25 percent in May, compared with a 0.4 percent loss on global investment-grade company debt, Bank of America Merrill Lynch index data show. “In this new world where volatility is high,” it’s “certainly an advantage to be holding bonds that have collateral backing,” said Georg Grodzki, head of credit research at Legal & General Investment Management in London. The company, which oversees almost 300 billion pounds ($439 billion), is a “selective buyer” of covered bonds, favoring notes sold by northern European issuers, he said.
Yields have risen at a slower pace relative to government securities than corporate debt. Spreads on euro-denominated covered bonds have widened 9 basis points to 153 basis points since May 6, compared with an increase of 28 basis points to 196 for company debt, Bank of America Merrill Lynch indexes show. The increase in covered bond sales contrasts with a decline in corporate debt issuance to $70 billion last month, less than half April’s tally and the least since 2003, according to data compiled by Bloomberg.
Elsewhere in credit markets, BP Plc bonds rose the most since March 2009, rebounding from a record low, as investors assessed liabilities stemming from the worst oil spill in U.S. history. The 4.75 percent notes due in 2019, issued by the company’s finance unit, increased 2.7 cents to 92.9 cents on the dollar as of 12:28 p.m. in New York, according to Trace, the bond price reporting system of the Financial Industry regulatory Authority. The debt fell to 90.1 cents yesterday, the lowest ever.
BP bonds had fallen as the London-based company’s efforts to plug its gushing well failed and the U.S. Justice Department said it’s investigating whether any criminal or civil laws were violated. The leak began after an April 20 explosion aboard the Deepwater Horizon rig, which BP leased from Vernier, Switzerland-based Transocean Ltd.
BP Rating Cut
“Investors are starting to get their hands around the potential exposures the spill companies may have,” said Joel Levington, managing director of corporate credit at Brookfield Investment Management Inc. in New York. BP’s credit ranking was cut one step to Aa2 by Moody’s Investors Service and is on review another possible downgrade, the New York-based rating company said today in a statement. Fitch Ratings cut BP’s ranking one notch to AA from AA+.
A gauge of U.S. corporate credit risk fell for a second day as factory orders rose and the service industry expanded in May for a fifth straight month. The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, dropped 0.3 basis point to a mid-price of 117.1 basis points as of 12:01 p.m. in New York, according to Markit Group Ltd. The index typically falls as investor confidence improves and rises as it deteriorates.
European Risk Falls
The cost of insuring against non-payment on European corporate bonds fell the most in a week today, according to traders of credit-default swaps, while indexes in Asia also declined. The rally in credit coincided with gains in Europe and Asia stock markets, with the DJ Stoxx 600 Europe index rising 1.4 percent. Default swaps on the Markit iTraxx Crossover Index of 50 mostly high-yield European companies fell 24.4 basis points to a two-week low of 558.8, according to Markit data. The decline signals an improvement in investor perceptions of credit quality.
Credit-default swaps on European sovereign notes snapped three days of increases, with contracts tied to Italy dropping 10 basis points to 223, declining from a record, according to CMA DataVision. Default swaps linked to Greece’s government bonds fell 21 basis points to 717, Spain dropped 12 basis points to 238 and Portugal was 15 basis points lower at 330, CMA prices show. The Markit iTraxx SovX Western Europe Index of credit- default swaps linked to debt of 15 governments fell to 147 basis points, from yesterday’s all-time high closing price of 154.5, according to CMA. Credit-default swaps on BP’s debt were 13 basis points lower at 246.
In emerging markets, spreads narrowed 7 basis points on average to 307, according to JPMorgan Chase & Co.’s Emerging Market Bond index. Argentina’s new 2017 bonds sank in their first day of trading as the government began turning over the securities to investors as part of its restructuring of $18.3 billion of defaulted debt kept out of a 2005 settlement. The 8.75 percent notes tumbled to 80.85 cents on the dollar from their issue price of 90.11, Stone Harbor Investment Partners said. Argentina began issuing $738 million of the bonds yesterday to institutional investors who participated in an early tender period. The government is distributing the securities as compensation for past due interest.
“Argentina came up with an issuance price which isn’t really in line with reality,” said Jim Craige, who helps manage $12 billion of emerging-market debt, including defaulted Argentine bonds, at Stone Harbor in New York.
Covered Bond Sales
Bank of Montreal yesterday sold U.S. dollar-denominated covered bonds in the first transaction in the currency in more than a month. BNP Paribas Home Loan Covered Bond SA, a unit of France’s largest bank, sold 1.5 billion euros ($1.8 billion) of five-year notes that yielded 42 basis points more than the swap rate, Bloomberg data show. Dexia SA in Brussels sold 500 million euros of 10-year bonds with a 15 basis-point spread. Bank of New Zealand, a unit of National Australia Bank Ltd., is meeting with investors this week before a possible sale of covered bonds, according to a person familiar with the plan. The lender has completed the documentation it needs to sell the covered notes, the person said, asking not to be named as the plans are private. A sale would be the first issue of such securities in New Zealand.
‘Flight to Safety’
“Investors are buying covered bonds rather than unsecured notes as a flight to safety,” said Florian Hillenbrand, a Munich-based senior analyst at UniCredit SpA, Italy’s biggest bank. Banks are “tapping the market now because it’s a nice window of opportunity and investors have money to put to work,” said Hillenbrand, who recommends buying German, French and Scandinavian covered bonds. Jose Sarafana, the Paris-based head of covered bond strategy at Societe Generale SA, said he expects another 60 billion euros of sales this year. “Covered bonds offer safer, more liquid assets than senior unsecured notes and therefore we’re seeing plenty of demand for new issues,” he said.
Issues in the $2.9 trillion covered bond market get higher ratings than regular notes because they are backed by a pool of assets that can be sold in a default. The extra security typically allows lenders to pay less interest. Covered bonds, which date back to the 18th century, are mostly sold by banks and tend to originate from Europe. Lenders in the region are facing 195 billion euros of bad debts by the end of 2011 as governments cut spending to reduce budget deficits, the European Central Bank estimates.
“Bond issuance was very low in May, so we’re now seeing banks looking to covered bonds to meet their growing refinancing needs,” said SocGen’s Sarafana. Borrowers are rushing to sell debt before the ECB’s year- long purchase program ends on June 30. The Frankfurt-based ECB said yesterday it has spent 55.1 billion euros of the 60 billion it set aside a year ago to support credit markets by buying covered bonds.
Eurozone retail trade suffers sharp fall
by Stanley Pignal - FTRetail trade in the eurozone fell at its sharpest level for 18 months in April, raising fears that the bloc’s economic recovery is being hampered by anaemic high-street spending. Seasonally-adjusted retail trade was down 1.2 per cent compared to March, according to Eurostat, the European Commission’s statistical arm. Economists had expected a modest rise. The fall was partly offset by an upward revision to the March data, from 0 to 0.5 per cent growth.
The fall chimes with repeated surveys of consumers, which show that confidence is still at low levels and falling. That has filtered through to stagnant retail spending, with consequences for the broader economy. Nick Kounis, economist at Fortis Bank, said: "A sluggish labour market, tighter fiscal policy and rising uncertainty about the economic outlook point to ongoing consumer weakness in the coming months.” As with much recent eurozone economic data, the so-called “peripheral” economies are faring notably worse than the “core” countries like France and Germany.
Retail sales in Spain fell 2.1 per cent, and remain far below the country’s long-term average. Portugal was up modestly after two months of heavy losses; Greece, Italy and Ireland do not submit monthly data. Germany by contrast was among the biggest risers, up 1 per cent, while France was up 0.2 per cent. “The disappointing retail sales figures clearly demonstrate that the Eurozone’s export-led recovery has still not spread to the consumer sector,” said Martin van Vliet, economist at ING.
“However, consumer worries have shifted,” he added. “Previously, consumer caution was mainly driven by unemployment concerns. Now, it is mainly concern about the income implications of fiscal austerity measures that is acting as a brake on consumer spending, especially in the peripheral countries.” The fall in retail trade contrasts with the relative health of the manufacturing sector, the one bright spot in the eurozone economy, partly because it is benefiting from the falling value of the euro. But economists have warned that exports alone will not be able to sustain the bloc’s recovery, much less deliver the long-term growth that is required to create jobs.
Spain's $38 Billion Maturing Debt Fuels Sovereign Swaps Surge by Kate Haywood and Esteban Duarte - Bloomberg <
blockquote>Credit-default swaps on European sovereign debt rose for the third day as speculation Spain will struggle to refinance $38 billion of debt next month stoked concern the region's deficit crisis may worsen.Swaps on Spanish government debt jumped 17 basis points to 270, according to CMA DataVision, nearing the record 274 basis points set two days before the European Union pledged $1 trillion on May 10 to ease the region's budget troubles. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments rose 8 basis points to 156.5, approaching the all- time high of 161 on May 25.
Spain, which lost its top grade from Fitch Ratings last week, has to refinance more than 48 billion euros ($59 billion) of debt between June and September, with the majority due next month, according to Bank of America Corp. data. The extra yield investors demand to hold the nation's 10-year bonds rather than German bunds jumped 20 basis points since the downgrade to a record 173.5, the highest since 1996.
"Worries over the amount of debt maturing over the next three months is casting a shadow over the market and clouding investor sentiment," said Gary Jenkins, head of credit research at Evolution Securities Ltd. in London.Spain is struggling to cut the euro region's third-largest budget gap as the economy, still reeling from the collapse of a debt-fueled construction boom, is forecast to contract for a second full year. Prime Minister Jose Luis Rodriguez Zapatero has angered traditional allies by cutting public wages and freezing pensions, triggering a record drop in consumer confidence in May.
Portugal Costs
In neighboring Portugal, borrowing costs rose today at an auction of 560 million euros of bills maturing in September. The securities were issued at an average yield of 1.861 percent, the country's debt management agency said, compared with an average yield of 0.739 percent at an auction of similar debt March 3. Credit-default swaps on Portugal rose 18 basis points to 364, according to CMA. Contracts on Greece jumped 44.5 basis points to 766 while Ireland was up 22 at 283 and Italian swaps climbed 17 basis points to an all-time high of 249.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A basis point on a contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year. The cost of insuring against losses on company debt also rose with the Markit iTraxx Crossover Index of swaps linked to 50 companies with mostly high-yield credit ratings climbing 11 basis points to 586.5, according to JPMorgan Chase & Co.
Hungary in ‘Grave’ State
by Edith Balazs and Zoltan Simon - Bloomberg
Hungary’s economy is in a “very grave situation,” a government official said, adding to concern about Europe’s sovereign debt crisis, hurting U.S. stock futures and sending to forint to a 12-month low. “It’s clear that the economy is in a very grave situation,” Peter Szijjarto, spokesman for Prime Minister Viktor Orban, said today in Budapest. “I don’t think it’s an exaggeration at all to talk about a default.”
Former Finance Minister Peter Oszko said Hungary is “in no way near default.” Public debt equaled 78 percent of gross domestic product last year, compared with an average of 74 percent for the European Union. The new government’s communication is “part of short-term political tactics,” and loosening fiscal policy after elections “would escalate panic” among investors, Oszko said in an interview today. Orban, who took office May 29 after winning elections with pledges to cut taxes and stimulate the economy, yesterday failed to get European Union approval to widen the budget deficit.
“I’m staggered by these comments,” said Tim Ash, global head of emerging-market research and strategy at Royal Bank of Scotland Group Plc, referring to Szijjarto’s statements. “It’s ridiculous, remarkable and extremely dangerous. What message does this send to foreign bondholders? You will look to protect your investments.”
Forint Falls
The forint fell 2.1 percent to 287.58 per euro as of 2:03 p.m. in Budapest. The currency dropped 2.5 percent yesterday after Lajos Kosa, a deputy chairman of Orban’s Fidesz party, said Hungary had a “very slim” chance to avoid a Greece-like situation. The benchmark BUX stock index fell 3.5 percent, and credit-default swaps on Hungarian government debt rose 69 basis points to 391.5, according to CMA DataVision.
Societe Generale SA, Unicredit SpA and Raiffeisen International Bank Holding AG led European banks lower on concern the sovereign-debt crisis may spread to Hungary and other central and eastern European countries. Societe Generale fell as much as 9.1 percent and traded down 7.7 percent at 31.54 euros by 2:53 p.m. in Paris. Raiffeisen dropped 6.1 percent to 31.9 euros in Vienna, and Unicredit declined 5.5 percent to 1.56 euros in Milan. The previous government, which pledged to narrow the budget gap to 3.8 percent of gross domestic product this year, “manipulated” figures and “lied” about the state of the economy, Szijjarto said.
A fact-finding panel appointed by Orban’s government will probably present preliminary figures on the state of the economy this weekend, Szijjarto said. The government will publish an action plan within 72 hours after the committee reports its findings, he said.
‘Clean Slate’
“We need a clean slate to formulate our economic action plan, and the fact-finding committee will provide just that.” Hungary, which needed a bailout to avert a default in 2008, is in its fifth year of cost cutting and reduced the deficit to 4 percent of GDP last year from 9.3 percent in 2006, the EU’s widest at the time. Orban vowed to end austerity and cut taxes to accelerate economic growth after the worst recession in 18 years.
Hungary’s debt level may reach 79 percent of GDP this year, on par with Germany and making it the most indebted eastern EU member, according to the European Commission. The debt level is less than the 125 percent of GDP for Greece, 118 percent for Italy, and 86 percent for Portugal. “Investors are losing their patience,” Gyorgy Barta, a Budapest-based economist at Intesa Sanpaolo SpA, said in a phone interview. “This is part of a communications strategy that wants to tell voters one thing and the markets another. It’s getting too complicated, and the government now needs to come clean and present a convincing plan of fiscal consolidation.”
Szijjarto said Hungary will seek to improve the fiscal balance and boost the economy’s competitiveness at the same time. The government won’t give up plans to lower taxes, even if the budget deficit is about 7 percent of gross domestic product, as State Secretary Mihaly Varga indicated earlier. “The directions are clear: tax cuts, simplifying the tax system, supporting economic growth and boosting competitiveness,” Szijjarto said.
'The Euro Zone Has Failed'
by Václav Klaus, President of the Czech republic - Wall Street Journal
After the fall of communism in 1989, the Czech Republic wanted to be a normal European country again as soon as possible, after being excluded from participating in the post-World War II European integration process for 41 years. The only way to achieve this was to become a member country of the European Union. We had no other choice, but the communist experience was still too "fresh." We wanted to be free and didn't want to lose our freedom and our finally regained sovereignty.
Many of us were therefore in favor of a looser form of European integration, against the so-called deepening of the EU and against the creation of political union in Europe. People like me understood very early that the idea of a European single currency is a dangerous project which will either bring big problems or lead to the undemocratic centralization of Europe. My position was clear: With all my reservations, we had to apply for EU membership, but at the same time we had to fight against projects such as the euro.
As a long-standing critic of the idea of a European single currency, I have not rejoiced at the current problems in the euro zone because their consequences could be serious for all of us in Europe—for members and non-members of the euro zone, for its supporters and opponents. Even the enthusiastic propagandists of the euro suddenly speak about the potential collapse of the whole project now, and it is us critics who say we have to look at it in a more structured way.
The term "collapse" has at least two meanings. The first is that the euro-zone project has not succeeded in delivering the positive effects that had been rightly or wrongly expected from it. It was mistakenly and irresponsibly presented as an indisputable economic benefit to all the countries willing to give up their own long-treasured currencies. Extensive studies published prior to the launch of the European single currency promised that the euro would help to accelerate economic growth and reduce inflation and stressed, in particular, that the member states of the euro zone would be protected against all kinds of external economic disruptions (the so-called exogenous shocks).
This has not happened. After the establishment of the euro zone, the economic growth of its member states has slowed down compared to previous decades, increasing the gap between the rate of growth in the euro-zone countries and that in other major economies—such as the United States and China, smaller economies in Southeast Asia and other parts of the developing world, as well as Central and Eastern European countries that are not members of the euro zone.
Economic growth in Europe has been slowing down since the 1960s, thanks to the increasingly damaging economic and social system which started dominating Europe at that time. The European "soziale Marktwirtschaft" is an unproductive variant of a welfare state, of state paternalism, of "leisure" society, of high taxes and low motivation to work. The existence of the euro has not reversed that trend. According to the European Central Bank, the average annual rate of growth in the euro-zone countries was 3.4% in the 1970s, 2.4% in the 1980s, 2.2% in the 1990s and only 1.1% from 2001 to 2009 (the decade of the euro). A similar slowdown has not occurred anywhere else in the world (speaking about "normal" countries, e.g. countries without wars or revolutions).
Not even the expected convergence of inflation rates has taken place. Two distinct groups have formed within the euro zone—one (including most of the countries of western and northern Europe) with a low inflation rate and one (including Greece, Spain, Portugal and Ireland) with a higher inflation rate. We have also seen an increase in long-term trade imbalances. There are countries where exports exceed imports and countries that lastingly import more than they export. It is no coincidence that the latter countries also have higher inflation. It has no connection with the world-wide crisis. This crisis "only" escalated and exposed longtime hidden economic problems; it did not cause them.
During its first 10 years, the euro zone has not led to any measurable homogenization of its member states' economies. The euro zone, which comprises 16 European countries, is not an "optimum currency area" as defined by the economic theory. Even Otmar Issing, the former member of the Executive Board and chief economist of the European Central Bank, has repeatedly pointed out (most recently in a speech in Prague in December 2009) that the establishment of the euro zone was primarily a political, not an economic, decision. In such a situation, it is inevitable that the costs of establishing and maintaining it exceed its benefits.
My choice of the words "establishing" and "maintaining" is not accidental. Most economic commentators were satisfied by the ease and apparent inexpensiveness of the first step (the establishment of the common monetary area). This helped to form the impression that everything was fine with this project.
The exchange rates of the countries joining the euro zone probably more or less reflected the economic reality at the time when the euro was born. However, over the last decade, the economic performance of euro-zone countries diverged and the negative effects of the "straight-jacket" of a single currency have become more and more visible. When "good weather" (in the economic sense of the word) prevailed, no visible problems arose. Once the crisis (or "bad weather") arrived, the lack of homogeneity manifested itself very clearly. In that sense, I dare say that—as a project that promised to be of considerable economic benefit to its members—the euro zone has failed.
The second meaning of the term collapse is the possible collapse of the euro zone as an institution, the demise of the euro. To that question, my answer is no, it will not collapse. So much political capital had been invested in its existence and in its role as a "cement" that binds the EU on its way to supra-nationality that in the foreseeable future the euro will surely not be abandoned. It will continue, but at a very high price—low economic growth. It will bring economic losses even to non-members of the euro zone, like the Czech Republic.
The huge amount of money that Greece will receive can be divided by the number of the euro-zone inhabitants, and each person can calculate his or her own "contribution." However, the "opportunity" costs arising from the loss of a potentially higher growth rate, which is much more difficult for a non-economist to imagine, will be far more painful. I do not doubt that for political reasons this price will be paid and that the euro-zone inhabitants will never find out just how much the euro truly cost them.
The mechanism that will save the European monetary union is the increasing volume of financial transfers that will have to be sent to euro-zone countries suffering from the biggest economic and financial problems. Yet everyone knows that sending massive financial transfers is possible only in a state, and the EU, or the euro zone, is not a state. Only in a state there is a sufficient feeling of solidarity among its citizens. Only in a state—and unified Germany in the 1990s is an excellent example—can massive financial transfers be justified and made politically viable. (By the way, the inter-German financial transfers in that era annually equaled the whole sum potentially needed for Greece to survive). Twenty years ago, I happened to be the minister of finance in a dissolving political—and monetary—union called Czechoslovakia. I have to confess that the country broke up because of the lack of mutual solidarity.
That is why Europe will have to decide whether to centralize itself politically as well. Europeans don't want that because they know (or at least feel) that it would be to the detriment of liberty and prosperity. There is, however, a real danger that the politicians will do it anyway—behind the backs of those who elected them. And this is what bothers me most. The recent dealings in EU headquarters in Brussels—literally behind closed doors—about the aid package for Greece demonstrated that there is no democracy there. The German-French tandem made the decision on behalf of the rest of the euro-zone countries, and I am afraid this will continue.
It is evident that the euro—the European single currency—and the currently proposed measures to save the euro do not represent any "salvation" for the European economy. In the long run, it can be saved only by a radical restructuring of the European economic and social system. My country had a velvet revolution and made a radical transformation of its political, economic and social structures. Fifteen years ago, I sometimes joked that after entering the EU we should start a velvet revolution there as well. Unfortunately, this ceases to be a joke now.
The Czech Republic has not made a mistake by avoiding the membership in the euro zone. I am glad we are not the only country taking that view. In April, the Financial Times published an article by the late governor of the Polish central bank, Slawomir Skrzypek. He wrote it shortly before his tragic death in an airplane crash near Smolensk, Russia. In that article, Mr. Skrzypek wrote, "As a non-member of the euro, Poland has been able to profit from flexibility of the zloty exchange rate in a way that has helped growth and lowered the current account deficit without importing inflation." He added that "the decade-long story of peripheral euro members drastically losing competitiveness has been a salutary lesson." There is no need to add anything to that.
Václav Klaus has served as president of the Czech Republic since 2003.
Our Leaders Are Responsible for Europe's Crisis
by Hans-Jürgen Schlamp - Spiegel
It was neither tax evaders in Greece nor hedge funds that caused Europe's existential crisis -- political leaders in the euro zone share a great deal of the responsibility. They have been either unwilling or incapable of doing their jobs. When the financial institutions of the Western capitalist world began to wobble in the autumn of 2008 -- with some collapsing and taking others with them -- fear swept through the corridors of power. What could be done to stop an economic meltdown? Finance ministers and world leaders gathered at hectically planned crisis summits, where they applied Band-Aids to a severely wounded financial sector using billions of dollars and euros of taxpayers' money and promised to stabilize the fragile system for all eternity.
More than a year has passed since then, but not much of substance has been done. When the first states found themselves on the brink of bankruptcy -- Latvia, Estonia, Hungary and then Greece -- the leaders donated more and more billions of taxpayers' money and prescribed drastic remedies in the form of stringent austerity measures -- including for themselves. "We did what was necessary," a confident German Chancellor Angela Merkel said at each stage of the crisis. Her colleagues nodded in satisfaction. At the same time, most of them don't even have a clue as to whether their activities have been helpful or counterproductive, or if they are even having any effect at all. "It worries me that many politicians believe that things will be the same after the crisis as they were before the crisis, when the world was still in order," Carsten Pillath, the director general in the European Council responsible for finance policy, told a small group of co-workers.
But Pillath, like many other economists, believes that is a big mistake. "In the longer term, we will have slow growth rates, while having to clean up over-indebted budgets at the same time," he said. If Europe is to succeed in doing that, however, it needs a "macroeconomic model" -- in other words, a target which can provide the basis for economic policy decisions. The fact is, however, that politicians aren't even thinking about this. The men and women elected to higher office are mainly interested in one thing: getting re-elected and retaining their power. Anything else is secondary.
Provincial Bafoonery and Political Denial
If you look at the European political landscape these days, the image you get is largely a desolate one.
- The political parties in Belgium, Luxembourg and the Netherlands, core countries of the original European project, are locked in endless battles, government crises and provincial buffoonery.
- In Eastern Europe -- Hungary and Slovakia, for example -- nationalist parties are stoking the fires of anger in their own countries.
- In Greece, the current government is struggling to deal with a legacy it has inherited from its predecessors. For decades, three families have taken turns to govern the country, with only a few short breaks here and there. The Papandreou clan of the current prime minister is one of them. The corrupt dealings of his grandfather, who once led the country, are the stuff of legend. And the people of Greece, whether passively or actively, adapted to the system.
- The situation is no different in Italy: The country, one of the founding members of the European Union, has been in a state of political denial for years. The people of Italy doze in front of the television programs of media czar and Prime Minister Silvio Berlusconi, who himself has made a fulltime job of protecting his supporters in parliament with more and more new laws that will save them from prosecution. Meanwhile, opposition politicians are devouring each other over trivialities.
A Hyperactive Sarkozy and a Hesitant Merkel
For a long time, the German-French double act ensured at least a minimal amount of leadership and orientation in Europe. But those days are over, too. Take, for example, the following questions: Do we need European economic governance? Should we ban hedge funds? How massive should the austerity measures being put in place be? Does Europe's economy need stimulating? The governments of Germany and France are currently providing contradictory answers to most of these questions -- or worse, no answers at all. Almost worse is the fact that the countries' leaders aren't only far apart when it comes to goals. They also differ radically in their style of doing things: Nicolas Sarkozy is a hyperactive egomaniac, while Angela Merkel is a grouchy ditherer.
It makes no sense to try to "hide the fact that there is tension between France and Germany," Jean Bizet, the chairman of the European Affairs Committee in the French Senate, wrote in a recent essay for Le Monde -- and it is unlikely he put pen to paper in such a controversial way without discussing it first with Sarkozy, a close political ally. Berlin regularly riles back, mostly under the cover of aides to the chancellor who can not be quoted. After reaching a €750 billion deal to shore up the faltering euro in early May, Sarkozy boasted to reporters that he had succeeded in pushing through "95 percent" of his ideas, including a "European economic government." A confidant of Merkel sneered back: "I will not deny that that was hot air."
The Results of Political Failure
Europe's crisis is not an accident caused by the globalized economy -- it is the result of political failure.
- Who was responsible for liberalizing the financial markets, and celebrating that fact, until practically no controls were still possible? Wasn't that the politicians -- the conservatives here, the leftists there and the market liberals everywhere?
- And was it not the politicians who accepted the fact that the economies within the euro zone were drifting apart -- all the while telling the people that that wasn't a bad thing?
- And who was it that racked up the gigantic mountains of debt, because it was so convenient and because it saved them from having to make demands of the electorate? Was it not those same politicians who are today calling this debt the root of all evil and who are heroically trying to clear them away?
- And is the return to national interests and the turning away from European solidarity, just to keep nationalist- and populist-minded voters happy, really the way to solve Europe's problems?
This ailing continent needs newer and better politicians. But where could we find them? There is no sign of a European Obama or anything remotely like him.
'A Leadership Vacuum in Its Hour of Crisis'
People are being fooled by "renationalization tendencies" and politics that are increasingly provincial, argues Manfred Weber, a member of the conservative Christian Social Union -- the Bavarian sister party to Merkel's CDU -- who is the deputy head of the European People's Party group in the European Parliament. "People think they can solve the problems best on their own, in their own country." But Weber argues that way of thinking is incorrect: "It just reinforces prejudices." His conclusion? "There aren't enough true Europeans involved in politics."
Europe is "suffering from a leadership vacuum in its hour of crisis," claims Markus Ferber, the head of the Christian Social Union group in the European Parliament. That is especially apparent in Brussels, the European Union's control center. It's the place where, ideally, proposals for dealing with the crisis would come quickly and decisively, would be packaged to meet the interests of the 27 member states, and compromises would be prepared in advance that would make it possible for all countries to swiftly make decisions together. But at the time of the most threatening crisis since the bloc was founded, the people at the helm in Brussels are pale, weak figures.
A Complete Failure in Brussels
The European Commission, which likes to proudly present itself as keeper of the Holy Grail, in the form of the European treaties, and which sees itself as the core of the political project of the century, has been completely out of commission when it comes to crisis management. First, it remained silent in order not to endanger the re-election of its president, Jose Manuel Barroso. And once he was confirmed in office after a protracted stalemate, he had suffered so many indignities that leaders in the important European capitals no longer took him seriously.
In addition, the ratification of the Lisbon Treaty, the successor document to the failed European constitution, put the European Parliament -- previously a talking shop without much power -- onto a largely equal footing with the Commission. The parliament and the European Council, which comprises the heads of state or government of the 27 EU members, have suddenly become the poles of power in Brussels, says Professor Jörg Monar of the College of Europe, a university known for grooming future eurocrats. The European Commission, he says, "is getting increasingly crushed" between the two.
Breakfast on Mondays
Former Belgian Prime Minister Herman Van Rompuy so far hasn't done anything to change the state of malaise in Brussels. He was chosen as the first permanent president of the European Council and was supposed to lend more European solidarity to the summits of national EU leaders. That effort went pretty much awry. "Van Rompuy was travelling in Asia as the crisis summit was being held in Brussels," scoffed the CSU's Ferber, adding that European Commission President Barroso was "busy with the EU-Latin American summit."
Now the impotent want to regroup. Van Rompuy has announced the creation of "some crisis cabinet" that would quickly bring together "the main players and the main institutions." It would include Jean-Claude Trichet, the president of the European Central Bank, European Commission President Barroso and, naturally, Van Rompuy himself. "That's hilarious," one government adviser in Berlin said in response to the proposal. And inside the Elysee Palace, Sarkozy's official residence, people were "laughing out loud," according to insiders. Barroso and Van Rompuy have since scaled back their ambitious plan a bit. They are now meeting for breakfast every Monday.
'Banks' allow members to pay with time, not cash
by Michael Rubinkam, Associated Press
No money? No problem! Pay with time, instead. That's what Maria Villacreses did when the economy put a hitch in her wedding plans: She used "time dollars" on everything from a wedding-day makeover to an elaborate seven-layer cake. In a modern twist on the ancient practice of barter, people like Villacreses are joining time banks to help them get the things they need or want without having to spend cash.
In a time bank, members get credit for services they provide to other members, from cooking to housekeeping to car rides to home repair. For each hour of work, one time dollar is deposited into a member's account, good for services offered by other members. Scores of time banks are being started in hard-hit communities around the nation — and thousands of devotees are helping each other survive tough financial times. "Even though we were planning to do something small and simple, it takes a lot of money, time and effort. Through time banking, I got a lot of help," said Villacreses, who belongs to Community Exchange, a 10-year-old time bank in Allentown, where 500 members offer everything from electrical work to tai chi.
As the economy recovers amid stubbornly high unemployment, newer banks with names like "Back On Track" have joined Community Exchange in offering an alternative to cash. Time Banks USA, an advocacy group in Washington, says interest in time banking has surged: About 115 now operate nationwide, with 100 more in early stages of development. Membership fluctuates but is believed to total more than 15,000. "People see time banking as a way to deal with the economic pressures they are feeling," especially in places hit hardest by the recession, said Jen Moore, membership and outreach coordinator for Time Banks USA.
In Maine, where paper mills and shoe manufacturers have closed, time dollars buy everything from guitar lessons to yard work — even prayer. In California, they buy haircuts, tax help and aromatherapy. In Michigan, child care, plumbing and yoga. In South Carolina, Back on Track Charleston was launched recently to help down-on-their-luck residents get, well, back on track. It's already got 80 members. Winborne Evans relies on Back on Track to supply her with baby-sitting while she picks up extra shifts as a waitress. She's also using time dollars, which she earns by sitting for other members' kids, to help get her fledgling beekeeping business off the ground.
"Becoming a single mom recently ... I truly can't imagine where I would be without it, mostly because I can't afford a baby-sitter, and I can't afford to pay people to help me with my bees," said Evans, 29.
Unlike bartering, transactions in time banking are not usually reciprocal. Instead, Jane baby-sits for John, John fixes Mary's leaky faucet, Mary drives Tom to the doctor's office, and so on, all of them earning and spending time dollars. Their labor is valued equally: One hour is always worth one time dollar. (Time dollars are not taxable, according to Time Banks USA.) People often join for economic reasons but wind up getting more out of it. Among the benefits: networking, getting to know neighbors, building a sense of community and keeping skills sharp.
"Part of it is very practical," said Judith Lasker, a professor at Lehigh University in Bethlehem who is co-writing a book on time banking. "There's another part of it that's very ideological. People believe the best way to survive in this crazy, unpredictable world is to forge local ties, support local economies ... and support local people in a variety of ways." Services provided by Allentown's Community Exchange — including gardening, cleaning, cooking and transportation — have allowed 79-year-old Joan Stevenson to stay in her home and out of assisted living.
"I'm enriched by it, not only from the services I receive but by being able to contribute," said Stevenson, who earns time dollars by writing for the Community Exchange newsletter, hosting Community Exchange meetings at her house and helping other members with their resumes and job searches. Time banks are labor intensive and can be difficult to keep going. Most of the successful ones eventually get a paid staff, either by raising grant money or affiliating with a larger organization. Lehigh Valley Hospital & Health Network, the Allentown region's largest employer, pays the small staff of Community Exchange.
Manager Laura Gutierrez said time banks are worth the effort. "Since the economy has been poor, people need to be a little more creative about using resources within a community that might not have been considered resources in the past," she said. Which is exactly what Villacreses did to salvage her wedding plans. The 28-year-old, who is fluent in English and Spanish and earns time dollars as a medical interpreter and by offering rides and pet-sitting, thought she would have to scale back when her fiance's hours at work were cut in half. Then fellow Community Exchange members suggested she use time dollars to pay for services that would typically cost hundreds of dollars.
On the big day, the bride sat at her dining room table while a complete stranger, Marilyn Shive, did her makeup. "Show me which colors you tend to like," said Shive, a Community Exchange member who sells beauty products. As Shive applied foundation and eyeliner, another member of Community Exchange delivered the cake. Others brought food and decorated the sanctuary and reception hall. During the service, time bankers took photos and played the organ. In all, the wedding cost about 200 time dollars. By spending her time wisely, Villacreses figures she saved about $2,000.
BP to go ahead with $10 billion shareholder payout
by Terry Macalister and Tim Webb - Guardian
Tony Hayward, BP's embattled chief executive, will risk incurring further wrath in the US over the Gulf oil spill tomorrow by defying calls from politicians to halt more than $10bn (£6.8bn) worth of payouts due to shareholders this year. He will hope to appease City investors by promising in a conference call with analysts to stick with BP's dividend policy amid mounting concern about a plunging share price.
BP declined to comment on its strategy tonight but it is understood that Hayward will say he is confident the company can pay for liabilities resulting from the Deepwater Horizon rig explosion – now estimated by analysts at $20bn to $60bn – as well as rewarding investors. The move follows demands from senators Charles Schumer and Ron Wyden in a letter to Hayward all dividends be halted until the cost of the clean-up is known.
Analysts warned that committing to the dividend risked further political opprobrium in the US, with Alex Stewart from Evolution Securities fearing it could force Hayward to make a U-turn next month. BP reports its results on 27 July, when it will announce the size of its next quarterly payout, but it is expected to spend more than $10bn in total dividends this year. "The problem they have is that the oil is likely to be still flowing by the time they announce results," said Stewart. "It's not going to look good paying about $3bn in [quarterly] dividends to shareholders if at the same time local fishermen are having their livelihoods destroyed in the Gulf."
However, BP's dividend is of crucial importance to the City and to the pensions of millions who depend on payouts from profitable companies to boost their retirement funds. Together with rival Shell, BP accounted for 25% of the total dividends of £50bn paid in the UK market last year. Any cut in the dividend could result in investors selling BP shares, further weakening the company, which has lost nearly 30% of its value since the disaster began.
Crude oil has been leaking from a well at the bottom of the sea since 20 April and BP has been unable to stem the flow despite various attempts to halt it, including the "top kill" method of pumping mud and debris into the hole. Hayward's handling of the crisis has been called into question, and he chose Facebook to apologise for his latest gaffe: saying he wanted his life back. His position has become more troubled since he said in an interview with the FT today that it was "entirely fair criticism" that BP was not fully prepared for the oil leak.
Analysts were today openly questioning the future of Hayward as chief executive, and whether his company could be taken over and broken up. Bookmaker Paddy Power is now offering even odds that Hayward will be forced to leave his post by the end of this year, meaning two successive chief executives would have left earlier than originally intended. Hayward's predecessor John Browne departed following the Texas City fire which claimed 15 lives.
Oil Could Reach Atlantic Coasts
by Andrew C. Revkin - New York Times
For weeks there have been discussions about the potential for the spreading Gulf of Mexico oil slick to slip around Florida and flow up the East Coast. Now a suite of simulations, run by an international team of ocean and climate scientists, shows this is a likely outcome should the flow remain unabated this summer. The researchers stress there are caveats and uncertainties, most notably related to the state of the gulf’s highly variable loop current in coming weeks. (The Department of Energy put out its own fact sheet stressing that the simulations are highly uncertain.)
But nearly all of the simulations end up with oil flowing east and north. There’s even a small chance some of the oil could cross the Atlantic Ocean and reach Europe, although Martin Visbeck, a German oceanographer involved with the work, noted that it would most likely be extremely diluted and degraded by then.
If some of the gulf oil starts coating beaches in the Hamptons while media and political power players relax there this summer, will President Obama’s call for a new American energy revolution get more momentum?
I doubt it, given that the coastal states are already relatively engaged on the issue. Overall, it still seems to take a shock to the wallet to have a deeper impact.
Here’s some more background on the modeling effort, sent to me by Visbeck, the head of the physical oceanography unit at the Leibniz Institute of Marine Sciences at Kiel University in Germany. In mid-May, he was in Boulder, Colo., to attend a research meeting at the National Center for Atmospheric Research. I’ll provide links to clarify the acronyms a bit later today.
Martin Visbeck:
During that meeting the first news of some amounts of the oil reaching the loop current broke and several news agencies contacted IFM-GEOMAR to get a perspective of the risk of the oil reaching the European shore lines. I have made some very rough and ready forecasts based on my general knowledge of the ocean circulation. That same day I met Synte Peacock, a former Ph.D. student of mine, in the cafeteria and we decided to use the NCAR-LANL high resolution model to perform some dye release studies. A few days later, Mathew Maltrud from Los Alamos National Lab had secured some computing time and the first dye release experiments could start.
Synte and Mat scanned through 100 years of control simulations of the model to find a situation in the Gulf of Mexico that somewhat resembles the current state of the Loop Current. Two days later the first results were available and we all were surprised how quickly the dye was spreading into the Florida Current and Gulf Stream system.
Within three months significant concentrations were present along the U.S. South Atlantic Bight. Since the we have performed many more simulations to explore how typical the first run was. Several robust feature became apparent.
We were still hoping that our simulations would be a purely academic exercise and that the oil leak would have been stopped by now. However, we also performed some simulations with a dye injection of four months’ duration.
There are several caveats with the current simulation. First we are using climatological wind forcing and can not take into account the real weather situations. Second the evolution of the Loop Current system is a very critical factor in influencing how much of the the dye (a proxy for the oil) remains in the Gulf of Mexico and what fraction can reach the Florida Current.
The oil will begin to disintegrate to a wide range of chemical reactions that depend on the biological activity. We have made no attempt to include that into our calculations.
We cannot be sure that this model is very realistic. With a grid cell size of slightly less than 10 square kilometers the model can not resolve near shore processes and might underestimate the lateral exchange in the Gulf Stream system. On the other hand, models of this type have also been criticized to have still to slow currents and to much numerical diffusion. More scientific work needs to be done to have a better idea of the fate of the spilled oil.
Caught in the oil
by Alan Taylor - Boston Globe
A short entry - AP Photographer Charlie Riedel just filed the following images of seabirds caught in the oil slick on a beach on Louisiana's East Grand Terre Island. As BP engineers continue their efforts to cap the underwater flow of oil, landfall is becoming more frequent, and the effects more evident. (8 photos total)A bird is mired in oil on the beach at East Grand Terre Island along the Louisiana coast on Thursday, June 3, 2010. (AP Photo/Charlie Riedel)
83 comments:
Well, who knew!? Kazakhstan is teaching the US and Europe about prudence and common sense in reference to the Gillian Tett article.
The jobs report was quite horrible, the private sector job gains we saw earlier in the year were washed away, private sector was really, really weak. The Euro broke down below a key psychological level, below 1.2 and we have bad news pouring in from Europe.
All in all, the bears are growling louder. I expect the turmoil to grow worse in the next few weeks.
I like to keep track of this site as well, provides a daily updated chart on the state of the economy. Will be interesting to follow this site as the year progresses.
http://www.consumerindexes.com/index.html
To whom it may (or may not) concern:
To the best of my knowledge, I am alive and well in Argentina, in a largish town about 100 km west of the city of Cordoba. I hope to have fairly decent broadband in my rental cabin within a week and hope to be back to my old obnoxious ways on this blog soon. I am in the antipodes and the nights are really cold, and I am heating with wood (and good quality goose down) as the cabin has a fireplace. Yeah - really inefficient. People are poor but amazingly human here - it's very strange. They really seem to feel your pain (not just come on your dress). My novia tells me that I must deprogram 63 years of Usaco sludge if I am to have friends here. She is giving me amable lessons. Too much empathy might dull my cutting edge.
I want all responsible to die a death as horrible as the screaming pelican.
But that would be all of us who use the oil wouldn't it?
I am not a religious person, but these photos are of pure, selfish, evil.
I no longer care about the crash, the coming depression, stashing gold, or living off the land.
God will refuse to hold our hands.
"The US has less jobs today, not more, and that is clear to anyone willing to see it."
Fewer jobs, not "less jobs".
I pointed out the difference between using the words (fewer versus less) just a month ago or so.
I think of all the posts and appropriate pictures you have posted in your 2 plus years of The automatic Earth, Ilargi, the pictures you have posted today are by far the most moving, horrifying and reach into some depth of my soul.
When I saw the first photo and the caption underneath, I looked away and got up and left the computer for some time.
It's good that someone took these photos and you show them to the world to see what has happened, but it is a terrible terrible thing to see them.
It's not that i don't feel for the humans who have to live with tragedies, such as Haiti, but seeing animals and birds like this just sears my spirit.
peace to all, shanba
Re.: Aid to Gaza
Maybe I didn’t use enough words to get all the details.
Sooo see ...
http://www.huffingtonpost.com/2010/06/03/israeli-flotilla-raid-det_n_598699.html
Israeli Flotilla Raid: Details Emerge Of Bloodshed Aboard Gaza-Bound Ship
MATTI FRIEDMAN
@ApleAnee & Shamba.
Agree with you both, That creature looks tortured and demonized. horrific.
I'm afraid there is no longer a justifiable argument about the fact it would be better if we just weren't here.
I use oil and all of it's spin offs as much as the next parasite so that Pelican is just a mirror image of me.
Z.
@LonerPhrique...always appreciate grammar...What is the rule around less and fewer? Is it the countable factor? Is it the same issue with " amount " and " total"?
This retired admiral Thad Allen is the unchallenged head doofus in the BP spill case. Literally during every single -eventually doomed- rescue attempt he's been cheerleading BP and saying how well things were going. No idea what he's still doing there. Don't people notice such things?
Oil pours from cap over Gulf gusher, some captured, Florida beaches hit
Oil poured out of a cap that robots adjusted over the gusher in the Gulf, though some was being collected, as the slow-motion catastrophe spread deeper into the marshes and beaches of four states along the coast. The spreading slick arrived with the tide on the Florida Panhandle's white sands Friday as BP continued its desperate and untested bid to arrest what is already the biggest oil spill in U.S. history.
"Progress is being made, but we need to caution against overoptimism," said Coast Guard Adm. Thad Allen, the government's point man for the crisis. Early Friday, he guessed that the cap was collecting 42,000 gallons a day — less than one-tenth of the amount leaking from the well. Later, BP said in a tweet that since it was installed Thursday night, it had collected about 76,000 gallons.
The widening scope of the slow-motion disaster deepened the anger and despair just as President Barack Obama arrived for his third visit to the stricken Gulf Coast. "This has been a disaster for this region, and people are understandably frightened and concerned about what the next few months and the next few years may hold," Obama said after a briefing with the Coast Guard's Allen and the governors of Louisiana, Florida and Alabama.
On his trip to the Grand Isle on the Louisiana coast, his motorcade passed a building that had been adorned with his portrait reminiscent of posters of him during his presidential campaign. Instead of "hope" or "change," the words "what now?" were on his forehead.
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"scandia said...
@LonerPhrique...always appreciate grammar...What is the rule around less and fewer? Is it the countable factor? Is it the same issue with " amount " and " total"?"
Sorry, guys, I don't do language purity. Languages are alive and what people make them, not what some book says they should be. If English were only the Queen's English, it would have gone the way of Latin and the dodo eons ago. There's no doubt that the Jamaicans of the 1970s and '80s, and the rappers of the '90s and '10s sinned against many a rulebook, but they are the ones who've kept the language vibrant, not the Queen.
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Let's set our clock here. How long will it be, after you woke up this morning to the pictures of horror from the gulf disaster, before we forget it all enough to go back to our suicidal lifestyles?
How long before we shed that pelican's silent death scream? How long before we wash off (metaphorically) the hideous toxic crude and get back to our "lives"?
Each of has his own clock for such things and I want to suggest it is a measure of our integrity as beings here, on the sole planet we inhabit, how we deal with this calamity.
That scream is ours, but will it change us?
Fellow TAE's
http://www.ted.com/talks/lang/eng/dan_ariely_on_our_buggy_moral_code.html
A short talk you may find interesting on cheating and how it works applied to economics
Enjoy
HappySurfer.
Hear, hear, Ilargi, on the wild nature of language. While standardization is useful, the language purist's insistence on uniformity is equivalent to mono-culture farming. Inevitably, the ground that feeds the vine becomes devoid of life.
Wait. Is it "Here, Here..."? Dunno. I'm sure I'll be told.
@ jal:
Israeli flotilla
Figured if I were gonna type it it the browser box, I might as well type it here.
"Shamba said...
I think of all the posts and appropriate pictures you have posted in your 2 plus years of The automatic Earth, Ilargi, the pictures you have posted today are by far the most moving, horrifying and reach into some depth of my soul. "
Shamba, get ready for much more of the same. Perhaps not like the oil literally oozing out of a dolphin - that image will never leave me no more-, since it will be more diluted creeping up the east coast, but still damaging enough to kill more wildlife than we ever would have wanted to assume was possible, plus the demise of tourist and fishing industries that are hundreds of years old, and indeed ways of life, communities, you name it. Who'll be left along the Atlantic coast once these industries no longer exist. It's starting to make me think of Cormac McCarthy's "The Road". And I'm sure many people will think that's all overdone, but then again they did the same 40 days ago when I first said I didn't like the prospects of this. There's a huge hole under huge pressure (5000 feet), and nobody with more than a faint clue what to do about it. Which is why I've been emphasizing Obama's initial non-reaction. It's not like "no-one could have foreseen this". Which takes us right back to the financial crisis, but we'll leave that for another day.
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@ Linda
Yep! You got one more achievement under your belt.
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I hope that PEOPLE have sold in May, taken profits, taken money off the table, and will use their gambling money wisely. Blow it on summer vacations ;-)
Canadians have now reached their "tax free day". Its much later than USA, and we still have a better functioning economy.
jal
Ciao Ilargi,
I was in Nassau last week and talking to a fisherman who said that he expected the oil from the Deep Horizon to circle around the tip of Florida. Most of the Bahamas probably won't get hit, but some Islands like Bimini (a fisherman's paradise) are in the danger zone, being in fact in the Gulf Stream.
I was born and raised in Miami and when I think of what could happen to that area it breaks my heart.
A friend said of the Gulf oil volcano and the futile attempts to stop it that we are witnessing Peak Technology.
The complete impotence of complex technological 'solutions' is on display here for all the world to see.
The might and splendor and invincibility of ever more complex societies that techno narcissists trumpet as the answer to each and every human problem lies dying in a puddle of oil.
That poor creature is a mirror of what awaits the whole human species.
If BP executives were stripped naked and dropped into this oil hell and photographed in the same pose as the pelican, would the public react that doing that to them was an act of 'terrorism'?
What if it was done to the families of the BP executive too and we saw a family potrait covered in oil?
An act of terrorism?
If 'Al-Qaeda'(who ever that is) had
announced it had done this on purpose to destroy the U.S., would the assclowns of Fatherland Security have sprung into action in all their unconstitutional jingoistic despotic incompetence?
Would the corporate/military/prison complex have pumped up the MSM propaganda machine to showcase their shock&awe quick response teams?
Would a private freemarket assclown corporation like BP have been relieved from the command chain day one?
We will never know.
Even if this oil rupture had been stopped on day one with a functioning BOP valve, it would have merely delayed the inevitable re-occurrence of a similar accident as the envelope was pushed even further in pursuit of more oil heroin. Junkies never stop til they're dead.
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The God of modern industrial humans is Evermore Technological Complexity.
That is dead.
It died with the 'topkill' and the 'junkshot'.
The news of this arrives with the photos from the Gulf of the slaughter of the innocences.
"God is dead. God remains dead. And we have killed him. How shall we comfort ourselves, the murderers of all murderers? What was holiest and mightiest of all that the world has yet owned has bled to death under our knives: who will wipe this blood off us? What water is there for us to clean ourselves? What festivals of atonement, what sacred games shall we have to invent? Is not the greatness of this deed too great for us? Must we ourselves not become gods simply to appear worthy of it?
—Nietzsche
‘When I use a word,’ Humpty Dumpty said, in a rather scornful tone,’ it means just what I choose it to mean, neither more nor less.’
I'm not sure where the destination is if we all followed Humpty's lead.
The point about the Queen's English is that it serves as a stable and consistent lanuguage from which to develop local spin-offs. Without this stable and consistent grammar English would have disappeared a very long time ago.
The parallel between Obama and the economy and the oil spill would be funny if it weren't so sad. BP won't admit they've fucked the Gulf because if thet did it would set off a panic and probably some pitchforks too. So they slowly drift (pun intended) towards admitting that they killed the Gulf in drips and drabs.
Obama too, can't tell the truth about the economy because if he did, it would send us with certainty into a depression . His game plan seems to be stretch out the fall as long as possible in the hopes something will come along to fix it.
Maybe this thing in the Gulf will be that thing. Maybe people will realize we have to start solving the world's problems instead of making a few select people uselessly wealthy.
Naah. Must be the weed.
Just a little FDIC stat.
81 banks closed, to date, HOWEVER, that is really 690 branches.
If we were to try to compare to the depression, I would use the branches number. The best of the 3 failure for the week end was TierOne bank, 69 branches $2.8 billion in total assets and and $2.2 billion in total deposits, premium of 1.5 percent loss-share transaction on $1.9 billion, COST $297.8 million.
Gee! Isn’t nice that loan officers, etc. cannot go to jail for making bad business decisions that leave you broke.
Naw! You did not go broke, your deposits were insured so the bad guys can be rehired by the new management team of that failed bank.
There is no choice. Where can you find untainted staff to run those loan portfollios.
jal
On the Virtues of Laziness and putting no effort into anything in general.
1) The resources on the planet are finite - oil, water, credit, land etc.
2) Successful people use more resources as they consume a lot more. (Measuring success by the conventional, who has the most toys wins!)
3) Lots of successful people use up all the resources.
4) They work long hours and get tired and have to give lots of exams. Think Investment banker here and their damage to society as a whole.
5) In the long run, lots of successful people, lead to planetary failure - peak oil, climate change, credit collapse etc.
6) Lazy people are Virtuous.
7) They use far less of the planet's resources and they get more rest and relaxation.
8) Society disrespects laziness, considers it an aberration.
9) Hence we can conclude that society rewards failure by putting successful people, degrees and hardwork on a pedestal.
10) Society = flawed, stupid, pointless as it misallocates scarce resources by wide margins.
If no one could have foreseen this, then why does the oil industry have blowout preventers? They could just stab a drill in the mud and start twisting.
Actually I'm not as inclined to boycott my local BP station as most folks here, nor to blame the oil industry for being the oil industry. But we've had, let's see, at least four decades of really poor (or non) leadership on the part of our political leaders. Between the wanton destruction from the Republicans and the not-so-benign neglect of the Democrats, we are here now.
That said, BP has the worst, by far, safety record in the industry, and they could have paid a little bit of attention to those safety devices. TOD documented several instances we -didn't- hear about on the news over the last decade, where the BOP or EDS actually worked and saved a project (and a company) from exactly this sort of disaster.
"without this stable and consistent grammar English would have disappeared a very long time ago."
You mean like Latin? Pretty stable, but dead as a doornail. Take your pick.
I am guilty of using oil.
“The US does precisely zero to transition away from automobile and highway transport, and quantifiably, undertakes nothing but token investment in other means of conveyance. Meanwhile, we continue to plan for massive, new investment in our highways. It’s legitimate to be aggrieved that the global, and US, oil and gas industry no doubt spends hundreds of millions of dollars each year to restrain regulation over extraction. There’s no argument that this is the case, but this skews more towards environmental policy–not overall energy policy–which governs the most important factor of all: demand. Your President, your Congress, and your Governors are doing everything they possibly can to make sure that the demand for oil here in the US, and dependency on oil here in the US, rolls onward.”
Visualizing US Energy Policy
Ilargi people need to see it. It is no damn different than the coffins at Dover Air Force Base the last guy wanted to hide.
Semantic hair-splitting between “fewer” and “less” hardly qualifies as a device of “otstranenie”.
Additionally, to “make strange” in order to shed new light and vitality on the everyday and overly familiar was not just an aesthetic device implemented by twentieth-century movements such as Dada, Opoyaz, zuam poets and rap musicians. A Chardin still-life composed of the most routine objects almost always demands a second look, evoking a quotidian paradox of sorts in order to fully contemplate the essential that is normally overlooked due to the demands of day-to-day existence. Michelangelo seems to have been a proponent of “de-skilling” in order to arrive on less sure technical footing. Purposefully seeking to avoid performing “in their sleep” land, Michelangelo sought out the de-familiar and risky in order to access the totality of a fully engaged mind, body and spirit. A totality of being that flies far beyond technical acumen into the arena of artistic survival, where aesthetic residue provides evidence of the graphic and musical battle that now grips the soul of those who look and listen.
Just my opinion, but Ilargi seems more in tune with Chardin than Dada shock. The daily photos of the everyday, and the horrifying nature of the assertions and predictions themselves need no other help.
soundOfSilence said...
Ilargi people need to see it. It is no damn different than the coffins at Dover Air Force Base the last guy wanted to hide.
------------------
They need to see it on television immediately following the Hayward Creep and his phony PR apology. They need to see it over and over again, with sound.
VK my handsome and extremely bright grandson,
Your 10 points regarding the virtue of laziness reminded me of this beatitude by Matthew and originally from Psalm 37.
"Blessed are the meek, for they shall inherit the earth."
Wikipedia contains this comment about what it may have meant.
Investigating the original Greek source, however, Maurice Nicoll (The Mark, The New Man) discovered that the word "praos", translated as "meek", originally meant "becoming tamed, as a wild animal is tamed", suggesting "a capacity for going against all natural resentfulness and passion and anger." Read this way, far from fostering a slave-like mentality, the Sermon on the Mount recommends developing the inner strength to manage one's automatic reactions and aversions to reach a level in oneself called the Kingdom of Heaven (Pogson, Maurice Nicoll: A Portrait, 200).
Is not a tamed animal "lazy" compared to its wild relatives? You are indeed wise way beyond you years.
What the ancient philosophers could not have foreseen was how remarkably successful the ambitious would become. They are well on their way to making sure that there will be nothing for the lazy to inherit.
I read TAE everyday. The writing is exceptional.
But "less jobs" does sound jarring. I see it everywhere on the internet so it is not just here, of course. You can always find it at the grocery checkout line: "9 items or less". But then, "9 items or fewer" would also be uncomfortable. So maybe it depends on context.
"A man may take to drink because he feels himself to be a failure, and then fail all the more completely because he drinks. It is rather the same thing that is happening to the English language. It becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts." -George Orwell
English language purist or not, Ilargi does not suffer from foolish thoughts. Now, about that drinking . . .
You mean like Latin? Pretty stable, but dead as a doornail. Take your pick.
Far from dead as a door nail. It lives on Spanish, French, Italian, Portuguese, Catalan, Romanian, etc.
But it lives on because the vernacular usage was alive and adaptable. So, point Ilargi.
A moment of whimsey-
I. M. Nobody said...
"VK my handsome and extremely bright grandson,
Your 10 points regarding the virtue of laziness reminded me of this beatitude by Matthew and originally from Psalm 37.
"Blessed are the meek, for they shall inherit the earth."
Do you remember in High School, in the old innocent days, they used to have Senior Wills? You know, where the quarterback would symbolically leave his shoes and pants to some freshman? Along with the comment "See if you can fill those, BillyBob!"
It occurred to me long ago, that if the meek were to inherit, somebody ought to do something about it. Being even then of an activist bent, I did.
"I hereby bequeath the Earth, to the Meek." is what my senior will said. True, not kidding.
So, you see, that's already taken care of.
I guess this is all my fault, then. The Meek have been doing a really lousy job of it all, these last decades.
:-)
Dunno about the US. or ROTW. but BBC seem to have been sold a dummy over here stating significant progress is being made re. oil disaster. "up to 1000 BPD are being captured from ruptured oil well"
Oh good, thats that sorted then.
Z.
Oil, oil, everywhere.
http://www.guardian.co.uk/world/2010/may/30/oil-spills-nigeria-niger-delta-shell
g
Ilargi -"No idea what he's still doing there"
yeah, I've wondered too. My actual guess- he knows where some very very stinky bodies are buried, and NOBODY wants to dig them up. So; on he goes.
Best explanation I can come up with; since his blatant toadying for British Putrescence would certainly piss off a bunch of Senators otherwise.
Tero said...
"All of this because we never realized that we might need to have a go at cracking the secret of soil capital."
Yep, and some societies probably have done – I don't know if you have seen the doco on the secrets of El Dorado, but it seems that may be an example. Most have not. Another pit fall that our technophilic society messed up.
Ilargi said...
"without this stable and consistent grammar English would have disappeared a very long time ago."
"You mean like Latin? Pretty stable, but dead as a doornail. Take your pick."
There is a difference between a changing and dynamic language, being creative with language – using language in new ways, mixing in elements from other languages, etc., and just being lazy or sloppy. Orwell wrote a good essay on the dangers of being sloppy with language... here
The return of the phantom of deflation. (Commentary: The sequel is scarier than the original)
HappySurfer said...
"A short talk you may find interesting on cheating and how it works applied to economics"
Good stuff. That whole removal from the source of cheating cuts across most things in modern society... most city dwellers are a couple of steps removed from many natural resources and the impacts of our actions on the environment, and therefore we think little of polluting, over consumption, etc. It takes something as big as Deepwater Horizon to wake us up for the briefest of moments.
Question for the board:
Fresh off my success at call options for UUP, and given Stoneleigh's expressing support for the strengthening of the yen (I believe the phrase was "going through the roof"), is now a good time to place a bet on the said strengthening? (I recognize Stoneleigh meant "over the longer term").
Re: the horrific pictures of the effects of the oil geyser
Relax, folks, the entitled US public cannot imagine that such a peace-loving, law-abiding, god-fearing, environment-caring, SUV-driving, people are in any way responsible for such heinous acts committed in their name. They just can't. End of story. Katrina didn't wake anybody up, and this won't either.
Get in your lifeboat and get ready to paddle...
Sir Summery- Tom and I are both honored. :-)
"Rise in Middle Aged Suicides Continuing."
http://www.nytimes.com/2010/06/06/us/06suicide.html
“It’s such a startling rise,” said Dr. Paula Clayton, the medical director of the American Foundation for Suicide Prevention.
Researchers are puzzled by the increase.."
There is considerable hope among researchers, however, that they will be better able to comprehend the rise in suicides, when they are able to pull their heads out of their own asses; where currently they are firmly lodged. "We hope to start thinking about how to work on that in only 2-3 years.", Dr. Clayton chirped. "Meanwhile, we feel these statistics are some of the most exciting figures we've seen in a long time. Our models are really being tested; which we feel sure will result in even better statistics in the future."
The Gulf Coast is home to a large number of chemical plants (14 in NO alone)oil and oil service operations combined with the already 8800 mile dead zone created by industrial waste flowing in the GOM. While the pictures of various birds covered with oil is disgusting ask yourself why the small number of birds have been found? Very few pictures of widespread fish kill and dead sea life? Considering the large marsh areas,tide lands, islands and other habit available which should be generating hundreds of thousands of birds and sea life,these numbers seem almost impossibly small. Want to probe further, well my guess is that this area is basically a visual front, white beaches, sport fishing grounds and very large commercial prawn operations but beneath this veneer is an industrial cesspool that has culled wildlife down to mim levels.
The coast fishery alone produces over 500,000 lbs of prawns a day what do you think was here before this large prawn industry? How many birds and sea life has starved to death in order to feed this industry. Too be fair various local websites have reported the death of larger number of birds and sea life but they also report that they show no outward signs of oil on their bodies as if their is a daily toll that cannot be pinned directly on the oil spill. I suspect that the GOM is basically a Disney postcard but for the wildlife its a very real struggle to survive with or without this recent spill.
If I am wrong please let me know!
@Ilargi...about language...
I love your style, the use of vernacular language.
I also love form and am thrilled when I listen to a speaker with mastery of a language. I often can't complete a sentence but admire a person who can speak using them. I think that their idea is more complete as a result. I know nothing about linquistics and the neuroscience of language but I did read that babies are born with language logic, with grammar.A word carries meaning/information. Less is not the same as fewer. Less can definitely be more but fewer cannot.
Ilargi,
The purpose of language is to communicate, this is an international blog so communication is in English. Good communication is to allow no room for misunderstanding.
So, when you say:
"without this stable and consistent grammar English would have disappeared a very long time ago."
You mean like Latin? Pretty stable, but dead as a doornail. Take your pick.
That is just a straw man argument, and that seems to be a consistent theme with you Iilargi, you just cannot stomach being wrong.
You have been caught out using poor grammar, so why don't use just hold your hands up and admit it, it's not the end of the world you know, admitting to being wrong.
English is English because it has definition and grammar and it therefore it is understood by ALL nationalities.
American English isn't English, just as Australian English isn't English.
So perhaps you would be so kind as to use English, as defined by the Oxford English dictionary, so we can all understand what you mean.
Now, you may say I'm being pedantic, but you are the one who decided that proper English grammar isn't good enough.
Thanks in advance.
VK -
I follow your basic premise regarding the negative aspects of ambition, but the word "laziness" covers a lot of territory. I have decades of experience with someone who considers "laziness" a virtue. I don't believe someone who has to leave lights on constantly because it is too much trouble to turn them off is going to save the world. I don't believe someone who eats processed junk because food preparation is too much trouble makes the earth a better place. I don't believe becoming heavily dependent on resource intensive medicine from eating junk and being too lazy to exercise is a virtue. I don't think there is anything noble or good about someone who often leaves a trail of trash around the house and who has to purchase necessary items repeatedly because they can't be found in the clutter. I don't see virtue in buying hothouse grown plants encased in plastic because planting a seed is too much effort. I don't see the good in someone who mocks those who provide the daily necessities of life as intellectually inferior to those who do nothing, give nothing. This person is on some level aware of the environmental damage caused by this lifestyle. This is also "laziness", and it is common in the US, and it is destroying us.
OT: Thought some of you might like this on bond bubble.
http://www.tradingday.com/c/afterhourstrading/fah.html?http://cbs.marketwatch.com/news/story.asp?column=Indications&siteid=mktw
Mish on firing/rehiring's effect:
I cannot address whether or not the hiring and firing of the same employee multiple times is taking place.
However, I can state that it will not do a damn thing for the unemployment stats. The unemployment numbers come from a phone survey not from repetitive hirings and firings.
Even the headline jobs number would not be affected. That number comes from the establishment survey. One is either on the payroll or not.
Anyone who can write as prolifically and as well in their third language as Ilargi does in his may have more of a leg to stand on with grammar critique. There are many native english speakers who have less of a grasp of their own language than Ilargi has. I appreciate fluid style and creativity, whether it follows the book or not.
@ Scholastica
Re: Laziness
If you substitute the word "still" for lazy in VK's post, the basic idea is valid.
It is the still ones (calm, quiet rational, reasonable, aware) who are virtuous as opposed to the manipulators and scheemers that wish to bend all human will to thier ends and control all. If one wishes to "suceed" in our world today (as it has been defined by the manipulators) you have to become one of them unfortunately. It takes a very independent, rebellious and disrepectful mind (all good things IMO) to eschew this popular path. And the lazy person you described in your post demonstrates none of those mental attributes. He is a sheep being led to the slaughter and good for nothing.
I am in England now, after spending a few days in France and making a first attempt at doing one of my talks in French (while fervently wishing I was half the linguist Ilargi is). I have some serious practice to do before I attempt that again. Fortunately I have a couple of weeks of learning curve time. I was quite fluent once, but it's been a long time and I never had this specialist vocabulary. At least I didn't have to read it off a prepared text. That would have sounded wooden.
I am enjoying being back in Ye Olde Country after a 10 year absence. I have very little internet access though, and very little battery power in my computer since I have yet to find an appropriate adaptor for a 3-pin North American plug. Questions for me may have to wait a long time for an answer. I am on the road a lot and speaking with my various hosts much of the rest of the time. I will try to keep up with things here to the extent that I can.
Right now I'm at an internet cafe in Bournemouth for a couple of hours, but will have to disappear again in a few minutes for the long bus ride back to my relatives home.
The emotional impact of todays headline photo is indeed striking. Who could fail to be moved by such a tragic sight?
Chevre- "Good communication is to allow no room for misunderstanding."
You lead a very sheltered life.
So tell me; do you always write material which has been totally understood; no misunderstandings anywhere? Have you even once written anything that was universally exactly understood?
You missed something that day in communications class; or maybe you were sick that day.
To decrease misunderstandings is a goal of good grammar. To eliminate it- is a patent impossibility.
Believing (and it's a matter of faith) that you have communicated with absolute clarity will always lead to far more miscommunication that knowing there is ALWAYS some incomprehension.
Using the vernacular is one of the most powerful tools available for decreasing miscommunication. It allows one to perceive the personality of the writer/speaker; whereby solid insights into their meaning can be gained.
Pretending that writers have no personalities is one of the most disastrous policies ever foisted on the scholarly community; it only obscures; it does not illuminate.
And who foisted it? The sub-mediocrities who wind up teaching so many introductory courses; who must use their secret knowledge of arcane wisdom to inflate their worth in the eyes of sophomores.
You, sire, are foist on your own retard.
Hello,
Chevre wrote:
"… this is an international blog so communication is in English"
That is a very sad comment. Do you really think that "international" and "English" equate?
Chevre:
"English is English because it has definition and grammar and it therefore it is understood by ALL nationalities."
All languages have definition and grammar so all languages can be understood by all nationalities.
Expanding a bit on the topic of language usage as discussed here recently, I would like to point out that there is a vast spectrum of possible (and effective) uses of language. We are not limited to a binary choice between stultifying purity and liberating sloppiness.
Personally, I think the distinction between "less" and "fewer" is useful, but I would never criticise misuse for a number of reasons, notably an effort to remain civil, but primarily because most English-speaking people are not interested in language.
I will mention one argument against excessive inventiveness and freedom with language because most people are not aware of it. It is that over time, perhaps as short as one century, people will no longer be able to understand older texts. This is a serious threat to English. It is evolving so fast that it is losing its past.
Other languages, though certainly alive and kicking, show more concern for continuity and consistency. They may, over time, be perceived as more useful.
Ciao,
FB
That is a very sad comment. Do you really think that "international" and "English" equate?
FB, that is clearly not what Chevre meant. What were you saying about civility?
To answer your question, when it comes to international communication and English, the answer is an unequivocal, "Yes." That is why I used to get paid to teach it.
One of the practical reasons this is so has to do with the precision one can have in English. The structure of the language allows for great nuance and detail. (This not my opinion originally, but that of scientists and academics who find it to be true in practice.) I have two theories as to why this might be true, if, indeed, it is: First, English is more of a naturally-occurring Esperanto than a language all its own. It has mixes of all the old European languages and developed long after those other languages; Second, and this is truly my own concept here, so probably a pile of poo, but I noticed while trying to pick up Korean that that language was quite literal. For example, we say sidewalk, which describes the action of walking to the side more so than the descriptive sense of a walk that is to the side of the street. In either case, neither is a clearly descriptive of the function the object has as the Korean which literally translates as "people street."
I also used to test the flexibility of English vs. Korean by seeing how long a list of alternative ways of saying something there were in the two languages. English always offered more options.
Not scientific, just some personal observations and anecdotal evidence gleaned from experience.
Anywho, getting your knickers in a twist becuase someone points out that, in fact, English is the default language for international communication is a bit overmuch.
PS. Anyone ever noticed how sung English, by native speakers, so often sounds North American? I have absolutely no explanation for that.
PSS Ilargi, I knew you were not a native speaker, but hadn't really thought about it. Kudos on the use of the language given that. Unless, of course, you came across the pond at a young age, in which case you're just typical. ;)
PSSS Don't know why my handle has changed to the organization name. I am the poster formerly known as ccpo.
Hello,
CCPO, you write:
"… that is clearly not what Chevre meant."
OK, then what did Chevre mean?
I read it to mean that because this is an international blog, communication is in English. What other meaning do you see?
At any rate, I do not see how you can criticise my question and then answer it with an unequivocal yes. I too think Chevre would answer with a "Yes".
The point here is that English, similar to the dollar, is simply a feature of the current dominant power, similar to many languages in the past. Its status has precious little to do with greater precision, nuance or detail, and much to do with hard and soft power. Dominant languages have, of course, always found people to glorify their "superior qualities".
I am not criticising English, it is a great and fun language. But I am critical of how it is used in international relations. My hope is that when the U.S. fails and English ceases to be the "default", the world can move on to a more equitable linguistic system, not so severely skewed by power politics.
Ciao,
FB
I trust the hilarity of argument over the meaning of Chevre's comment is not lost on anyone else...
Pretending that writers have no personalities is one of the most disastrous policies ever foisted on the scholarly community; it only obscures; it does not illuminate.
I got a degree in engineering and worked in very technical design environments for a number of years. I agree ... the 'impartial observer' voice that we are trained to write in allows you to state your objection or support for something WITHOUT being required to personally take a stance on the subject in question.
With the best of intentions this can lead to misunderstandings. In reality it makes it incredibly easy to bury negative outcomes or consequences in a statement.
For example:
"Burning half the world's store of fossil fuels over a hundred year period risks the very planet we live on. This global experiment has no parallel for comparison, and we do not really understand the possible outcomes."
Finished with:
"To the best of my knowledge and based on the evidence available there is no definitive link between global warming and the release of carbon due to fossil fuels."
Or ...
"We do believe that we are altering the climate, and who knows if we can put it back the way it was before if it changes dramatically. This actually terrifies me as our comfortable lives depend on a pretty narrow range of livable climates."
We are trained to respond with the first answer. Worse ... if we venture into the second response we run the risk of censure from our peers and professional associations.
It drives me insane! And don't get me started on the poor writing and communication skills many engineers suffer from ...
Ilargi, you can write my next report whenever you are want to ... I know you are dying to!
The photos are ghastly.They need to be on every time a word comes from any B.P mouthpiece.
I have a bet with my brother they will see oil in New York by Christmas.
As a gift to the nation from the oil industry,free petrol-products delivered to your beach-side home,complete with toxic detergent waste for cleanup..
My god,what a disaster for those making a living on gulf.The fishermen,crabbers,shrimpers,
beach-bums,and just those who go to the beach to listen to the waves and smell the sea.Turned into a toxic cesspit,by a international corporation.
If this catastrophe does not result in a corporate death sentence,clawback of every nickle of that ten-billion,and some very heavy chains put on corporate action,its over...we live in a fascist state,and we had better get used to this kind of occurance.I expect more stuff like this to come down the pike as the gutting of the fed regulatory agency's was completed by Bush the lesser...His cut-and-gut actions by the direction of conservative "Business-minded" ideologues who went to their work with glee,destroyed the very information databases that would be used now to react to this travesty .
The only slight joy I have is knowing that the most expensive,high-end homes,on the careful crafted waterways,and by-ways,the 5 to 20 million hideouts behind the gates and barbed wire will be just as smeared as the little fishermans cottage with the black-shit gushing out of the bottom of the sea.
Many of the The wealthiest folks ,The Haves,and Have mores....Bubba-Bushs Base....will have their winter abodes destroyed by the actions,the de-regulation done by the man they put in office.
There is a certain irony here that"The State" that put Bush in office is now in the center of the worst environmental disaster in history.
I know,I know,Many hundreds of thousands "innocents" are being punished ...but that seems to be the way of things,the innocent and the evil are both lashed by the same winds of fate.
I can only pray that this will be ended as soon as possible,and "something"works.
Back to my pile of work...
Bee Good or
Bee careful
snuffy
you guys are arguing about proper English? seriously?
J wrote:
"you guys are arguing about proper English?"
No.
FB
I always marvel at the unexpected twist and turns of the posts here at TAE. I thought the photos of the environmental holocaust unfolding in the Gulf would dominate the tone for "Who on earth are we?" but the language firefight about word usage and how many angels can dance on the head of an adjective got the upper hand.
Is this herd behavior raising it's pointed little head?
@ Ilargi...I want to set the record straight. My request to LonerPhrigue for the grammatical rule relating to less and fewer was for my own learning. There had been no intention to criticize anyone else's expression.
I love words the way some people love numbers.
The pictures are indeed sad. However sadness is and has always been a part of nature. Read The Greatest Show on Earth by Richard Dawkins, my favorite scientific book of the 21st Century. In the chapter Arms Races and Evolutionary Theodicy Dawkins quotes Darwin: "Nature is neither kind or unkind. She is neither against suffering or for it..."
and "...The total amount of suffering per year is beyond all decent contemplation. During the minute that it takes me to compose this sentence, thousands of animals are being eaten alive, others are running for their lives, whimpering with fear, others are being slowly devoured from within by rasping parasites, thousands of all kinds are dying of starvation, thirst and disease..." and
"If there is ever a time of plenty this very fact will lead to an increase in population until the natural state of starvation and misery is restored." R.Wilson
Top Cat: " but the language firefight about word usage and how many angels can dance on the head of an adjective got the upper hand."
Hilarious, huh? :-)
And EXTREMELY educational. Yes, indeedy, even us wizzes here at TAE are human animals.
This is what is known in Ethology as "displacement behavior". It's what happens when a big, cranky black bear is growling around, and suddenly comes nose to nose with a far bigger, far crankier grizzly bear.
The black bear will suddenly become extremely interested in those flowers, over there- they really need investigating, in detail...
We none of us can face those birds. We want to talk about anything else.
Irregardless of language usage, I just wish there is fewer oil.
Language is a powerful cultural construct. It can shackle and liberate, note the existential angst in the US around the use of the word socialist. It's taken a life of it's own to imply all that is evil and bad all the while it's real meaning is lost.
Language allows for broad communication of information but also the ability to divide and captivate. Sometimes two people want the same thing but they use a totally different language narrative and get totally lost.
@ the last Scandia and VK comments...+1.
I don't care about Ilargi's fluidity for all the same reasons he doesn't care. However, I love the history and meaning embodied in language, not to mention the achievement of 'proper' use. Every language is covered in carbuncles and gnarled like an old root. To master the twists and turns shows a dedication just like mastering hand tools or sharpshooting.
I love my etymological dictionary above all, for it shows the tortured path that grew the carbuncle--twists through many empires and eras. So, for me, that is the beauty of less and fewer.
wampum said...
"Irregardless of language usage, I just wish there is fewer oil."
:-)
I prefer "undisirregardless", myself.
EBrown said...
I trust the hilarity of argument over the meaning of Chevre's comment is not lost on anyone else...
I say potato, you say potahto, I say tomato, you say tomahto.
So the pelican is not screaming for God's hand in proper English?
ApleAnee et al,
Here the lyrics and a video that the words come from, a line that's engraved in my brain, in the face of tragedy, for some reason:
Heart Like A Wheel
Some say a heart is just like a wheel
When you bend it, you can't mend it
And my love for you is like a sinking ship
And my heart is like that ship out in mid ocean
They say that death is a tragedy
It comes once and it's over
But my only wish is for that deep dark abyss
'Cause what's the use of living with no true lover
And it's only love, and it's only love
That can wreck a human being and turn him inside out
That can wreck a human being and turn him inside out
When harm is done no love can be won
I know this happens frequently
What I can't understand
Oh please God hold my hand
Is why it should have happened to me
And it's only love and it's only love
And it's only love and it's only love
Only love, only love
Only love, only love
.
Greenpa,
Undisirregardless of what you prefer I think you should have at least responded to wampum's stated wish that there be fewer oil. Doubtless (should that be doubtfewer?) fewer oil will grease our future in I disunfear less years than we may disunwish.
And in disunregard to your whimsicalidocious tale of bequeathing the earth to the meek, I selfishlessly share less than three disunobservations.
First, the entire earth was not yours to bequeath as my chunk was still at that time legally disunentangled.
More than first and less than third, as I explicated to unhomely and disignorant VK, it was supposed to be the lazy not the meek. You gave it to the wrong people, you disunfool. The meek immediately handed it over to the ambitious. The lazy could never have been bothered to sign the papers.
So, disunconclusively it can be said disequivocationally that it is indeed your faultiness that has brought us to this fewer happy state.
:)
Polka Dot Gallows:
http://www.nytimes.com/2010/06/06/education/06pets.html
Somehow, this just seems to me to epitomize our increasing distance from anything one might call "the real world".
"Heart Like a Wheel" is also a great film about Shirley "Cha Cha" Muldowney.
I wish I could get some real "facts" on the oil spill. Some say the oil will round Florida and go up the East coast. others say it will just sit in the Louisiana area which already seems incorrect. Is it on purpose that a realistic report cannot be found anywhere?
Dear Ilargi,
After many years of living on the Florida beach, I have been screamed at by many pelicans after removing the Cheetos from view. They are very vocal and very, very intelligent (not semantically, of course).
There was never a more fitting caption to a photo than this pelican in agony, screaming, Please God Hold My Hand.
I am dreaming about it.
@ Greenpa
Somehow, this just seems to me to epitomize our increasing distance from anything one might call "the real world".
I read an article the other day that said we have become so enamored and addicted to the various gadgets we use all day long that we are just not capable of experiencing a reality outside of them. (Borg like)
This is going to change rapidly, along with everything else that Stoneleigh keeps trying to prepare us for.
Ilargi asks "Who on earth are we?"
If you feel the need to ignore the photos, and change the subject to something a little less intense, than you know who you are.
getchosef: " Is it on purpose that a realistic report cannot be found anywhere?"
Yes.
Greenpa said...
getchosef: " Is it on purpose that a realistic report cannot be found anywhere?"
Yes.
Greenpa, your devotion to brevity is truly disuncommendable. :)
As we are today happily engaged in pretending to be Noam Chomsky, I will try to show that GYSC's question contained its own answer. Not being an actual linguistics expert or even allowed to play one, I must rely on the google for help. What I find is that purpose and ambition are essentially synonymous. Since, by definition, the ambitious are totally in control of information about the oil volcano and its greasy effluvia, it can inferred that everything in or not in reports about it is purposeful.
One could do worse than to apply this rule to all activities of the ambitious, which covers just about all the important ones. The lazy are prone to tell the truth, as they know it, unless a lie seems more likely to be believed or will take a lot less time to tell. :)
Greenpa,
I have a gut feeling no-one really wants to see what they know is on the way...a crippling blow to the USA from this festering oozing oil pustule that will infect a whole nations conscience[I hope].This may/will me the pin that pops any hope of "Recovery".This has the potential of destroying a good chunk of the wealth of 6-8 states.I see no end,and no chance of putting a cork in it..
I look at escape to sea as on viable option.I would like a bigger boat.,but this one will do for the sailing practice,as well as a camper on the water in worse case...seeing the sea being turned into a cesspit of industrial chemicals is one fate I had not thought of...Keep the west pacific clean please...
Bee Good or
Bee Careful
snuffy
New post up.
Go long the Euro at this point in time? Not me!
.
Karl Denninger's nervous break.
http://anythingexceptthetruth.blogspot.com/2010/06/karls-nervous-breakdown.html
I find it somewhat amusing that the U.S. Government and Federal Reserve are committing the same crime as Bernie Madoff and getting away with it... so far. Remove the full faith and credit clause and what are they left with? Zip, nada, null. Wendy's Macht Fries indeed.
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