"REO Mountaineer, New York to San Francisco and back." Percy Megargel and David Fassett pass Huber's Hotel on 162nd Street in the Bronx at the end of their 10-month, 11,000-mile trip in a 16-horsepower touring car.
Ilargi: As we remember the 25th anniversary of Chernobyl, it's getting clearer by the day that the level of secrecy exercised by Tepco, the Japanese government, and its international allies, rivals that of the Russian government 25 years ago. And the way things are going, Fukushima may soon surpass Chernobyl in the "secrecy files". When it became clear that Chernobyl had spewed its radioactive clouds up to thousands of miles away, for instance to Scandinavia, at least the Russians went in with all they could muster, deploying the full force of the army plus tens of thousands of "volunteers".
Japan today, on the other hand, is still mired in the denial phase. Which is becoming increasingly dangerous. There are increasingly reports coming out that claim that at least one of the explosions witnessed at Fukushima was not a hydrogen blast, but a nuclear explosion -in a spent fuel pool-. And while there won't be an instant runaway reaction like the one at Chernobyl, simply because the reactor design doesn't lend itself to it, this should be reason enough for grave concern (as well as transparency, of course, but don’t hold your breath on that one). And there are other twist emerging.
Professor Chris Busby, scientific secretary for the European Committee for Radiation Risks, states that a major difference between the two disasters lies in the amount of people living close to the blast site. So while the radioactive parts spread over a far smaller area, the immediate surroundings of Fukushima contain far more people. And Tokyo must by now even be greatly concerned about, well, Tokyo. Which may well be a major reason for the ongoing "policy" of continued opacity as executed by Japan.
Prof. Busby points to yet another issue that Tokyo is running up against: in his view, because there's still nuclear fissioning taking place at Fukushima, placing a sarcophagus over the reactor sites has no use, since -highly- radioactive material will then simply leak out into the ground and flow out to sea. Japan's answer? An underground wall is being considered. They'd do much better to come clean on what’s actually happening -and what already has-, send in their army with all it's got, and get the smartest minds in the world together to try and find the best way forward.
But since Japan has always been a highly secretive society, and the international nuclear industry is as powerful as it is rich, it's far more likely that they will continue to play down the impact, until they can't anymore, and the situation gets completely out of hand, so much so that Fukushima will indeed stand a chance for competing with Chernobyl as the worst nuclear incident ever.
To be continued indeed.
Now, don't get me wrong. I’m not trying to say that the level of secrecy at Fukushima has anything on the one in the world of finance. The race to the bottom, in which currencies are brought down to pay off debt and boost exports, is entering its next phase. I would see it as the first round of the playoffs. And Greece looks set to become the first case in point, as well as in all likelihood the main catalyst.
Paul Anastasi and Louise Armitstead write in the Telegraph:
EU poised for Greece crisis talksA delegation of leading European and international monetary officials are planning a crisis summit in Athens in May amid growing fears that Greece may default on its sovereign debt.
Senior officials from the European Union, the European Central Bank and the International Monetary Fund are expected to make a "lightning visit" for two days to ensure Greece can meet plans to cut its deficit by €24bn (£21bn). The trip is being planned for May 9, although insiders said this could be brought forward to May 5.
George Papandreou, the Greek prime minister, and other Greek officials have this weekend strongly denied rumours that Greece may be forced to restructure its debt imminently [..] Greek government spokesman George Petalotis denied "the persisting international reports about a restructuring of the debt". George Papaconstantinou, the Greek finance minister, said that a restructuring or an extension of any of the €340 billion national debt, which is set to hit 160% of GDP by next year, was out of the question.[..]
European officials are determined to avoid the need for Greece to change the terms of its debt repayments. On Saturday Jurgen Stark, an executive board member of the ECB, warned that a restructuring of debt in any of the troubled eurozone countries could trigger a banking crisis even worse than that of 2008. "A restructuring would be short-sighted and bring considerable drawbacks," he told ZDF, the German broadcaster. "In the worst case, the restructuring of a member state could overshadow the effects of the Lehman bankruptcy."
Ilargi: Sounds nice and all, but very few serious voices think that Greece can down the line avoid restructuring its debt. The problem is that the problem is -potentially- so big. Dina Kyriakidou and George Georgiopoulous for Reuters:
Funds, banks exposed to any Greek restructuringIf Greece restructures its debt, it may choose to extend bond maturities rather than take the harsher step of cutting the amount of principal it repays. But the softer option might hurt Greek banks and state pension funds without doing enough to solve the country's debt problem.[..]
Although the government strongly denies any restructuring is on the cards, many bankers and analysts believe Greece may have to choose one or more of several options sometime in the next couple of years: extending maturities, lowering interest rates, and cutting capital. [..]
But merely extending maturities would be "a trick playing for time," said Jens-Oliver Niklasch, bond strategist at LBBW, who believes Greece will probably have to extend maturities and also make a haircut of 30-50 percent. "It is not enough."[..]
A simple maturity extension would have negative effects on Greek banks and state pension funds because they are sitting on big piles of Greek government bonds. Greek banks are estimated to hold close to 20 percent of the country's estimated €327 billion sovereign debt, or nearly €60 billion. National Bank has the biggest share at €12.8 billion; the second biggest bank, EFG Eurobank, has about €7.4 billion, according to sources at the banks.
Greek social security funds hold slightly over €8 billion, according to the Finance Ministry. But their relative exposure is huge, as their liquid assets total €11.68 billion. IKA, the biggest fund, has almost two thirds of its liquid assets in Greek bonds and Treasury bills. If they are unable to pay health and pension benefits, the state will be forced to help, which would further hurt its fiscal position as the government defies public opposition to impose waves of tough austerity measures.
Some analysts therefore think the Greek politicians who are urging debt rescheduling may not fully understand what it would entail. "Maturity extension could be costly. Banks could be forced to make mark-to-market adjustments on their total Greek bond positions, not just the affected bonds," Deutsche Bank said in a recent report.
Ilargi: And therein lies the danger. Not just for Greece, but for the entire international finance world. Once Greece begins its default, which is what debt restructuring is, the effects could well ripple away into cascading consequences that, while they may be very hard to oversee, would almost certainly make a substantial amount of victims among banks and funds.
Even "default-lite", maturity extension (where investors are promised their money, but later), can force mark-to-market measures on the table. A downright "haircut", which seems inevitable at some point in the future, would of course be far worse. So how bad would it be? Tyler Durden at Zero Hedge comments on a Citi report:
Citi Expects A 76% Haircut On Greek Debt (And 95% If Country Waits 4 Years) For Debt/GDP Ratio Back Down To 60%[..] Greece is once again scapegoating unrelated third parties for its problems.
In this particular case Citi London trader Paul Moss, who is being interrogated by Interpol because of a recap email indicating Greece may, gasp, restructure (or, as it is known in enlightened circles, conduct a "liability management exercise"). Yet when Greece reads the following note by Citi's Stefan Nedialkov, it will most likely issue a cease and desist order in perpetuity against Vikram Pandit's bank. Nedialkov's summary (released one day after Moss' April 20 note): "If a 42% haircut is taken in addition to these measures, we estimate Debt/GDP falls to below 90% in 2013 and below 60% in 2020."
The problem is that the market will likely give Greece at most a few months of breathing room in exchange for just a 90% debt/GDP reduction. If truly engaging in a liability exercise of some nature, Greece will likely pursue a permanently viable option. And as Nedialkov indicates, in order to achieve a far more credible 60% debt/GDP ratio, the country would need to take a 76% haircut now, or do nothing for five years, and eliminate a whopping 94% of its debt in 2015.
Since the market is already expecting roughly a 50% haircut it remains to be seen just how much further bond prices will plummet, and how much bigger the ultimate impairment on Citi debt, and European banks, Greek pension funds and local bond investors, will ultimately be. One thing is certain: with Greek 2012 debt/GDP expected to peak at 159.4%, the country will restructure, and a a vast swath of insolvent European banks are about to see the tide go out.
Ilargi: There are vast differences of opinion among experts, analysts and pundits on the timing of the restructuring. Bloomberg's Matthew Lynn says it needs to happen as soon as possible, in order to minimize losses:
Greece Haircut for Bondholders Already Overdue[..] The sooner Greece imposes a haircut, to use the financial market’s term for losses incurred in a default, the better it will be for everyone. Delay leads to bigger haircuts, and economic research suggests the bigger the haircut, the worse the pain that follows. The damage being inflicted on the Greek economy is too great. And once defaults within the euro area are accepted, a sensible conversation about how to fix the single currency can begin.
Over the last week, the prices in the market make it clear that most traders have already concluded that a Greek default is a done deal. The yield on two-year Greek debt rose higher than 22 percent at the end of last week. Only the most sharkish credit company charges those kinds of rates. Ten-year bond yields are now close to 15 percent. The cost of insuring Greek sovereign debt jumped to a record, with the prices of credit- default swaps now suggesting there is a 67 percent chance of default.
In reality, there isn’t much point in buying the protection. It’s like insuring yourself against the possibility it might rain in London in the next year. It’s going to happen; it’s just a question of when.
[..] ... the worse the losses inflicted on the bondholders, the more the markets will punish you later on, and the longer it will be before you can access the capital markets again. Greece’s debt position is worsening. Delay isn’t an option. It would be better to impose a 40 percent or 50 percent loss on bondholders this year than a 70 percent or 80 percent loss in 2013.
[..] ... once Greece has defaulted, a serious conversation can begin about how to reassemble the euro area. Plan A was to rescue Greece, arrange a bailout, get the country back on track and stop the contagion. It’s as clear as day that it hasn’t worked. Greece isn’t showing signs of recovery, and both Ireland and Portugal have had to apply for bailouts as well. If that doesn’t persuade people to switch to Plan B, it’s hard to know what will.
Ilargi: Not everyone agrees with Mr. Lynn. Dan Crawford at Angry Bear/Benzinga thinks the restructuring will be pushed forward into the future, in order of the EU to shore up its defense and preparations.
Greece will not be 'allowed' to default until policy shores up the Irish bond market[..] (2) The banking system's not ready. Unless the Germans want to instantly recapitalize the Landesbanks this year, I'd argue that the Euro banking system remains overly exposed to mark-to-market accounting (i.e. holding the assets at fair value not wishful thinking) for all of the crappy debt that it holds on balance.
In fact, the German banks purchased 11bn euro in Greek sovereign bonds in January. That's the most current data available; but I bet they're simply moving debt out of the Greek banks and corporates and into the sovereign as the probability of default rises.[..]
(3) This one's critical: policy makers must shore up Ireland and Portugal in order to avoid a quick contagion across the European banking system. They haven't done that yet. In fact, the Finnish election results exposed the tenuous negotiation process overall.
Ilargi: While Wolfgang Münchau in the Financial Times even thinks there is no immediate need for a restructuring:
The eurozone’s quack solutions will be no cureWhat is less forgivable is the serial incompetence of the eurozone’s decision-makers [..]. Their ignorance is an ideal breeding ground for quack solutions. One such is immediate default. German Christian Democrats and Finnish isolationists spent the last week trying to convince themselves that a Greek debt-restructuring would save them a lot of money.
That belief is premised on two false assumptions. The first is that a voluntary restructuring could solve the Greek debt problem. It can work in limited cases, but not when countries are insolvent. Greece, however, faces no short-term liquidity squeeze, because it is supported by the European Union and the International Monetary Fund. There is no need for any restructuring, voluntary or involuntary, right now. But Greece may need to impose a "haircut" in the future to ensure debt-sustainability. The ideal moment would be when the country achieves a primary surplus, probably in 2013.
The second wrong assumption is that the Greek banking sector would survive a restructuring unscathed. This is a conditional error. If you believe that a voluntary restructuring would be sufficient, then the Greek banking sector would indeed survive. But it would surely not survive a large and involuntary haircut. The European Central Bank would face a haircut on its direct investments of Greek government bonds, and, more importantly, much of the collateral posted by Greek banks would vanish. On my calculation, the cost of a Greek default to the German taxpayer alone would be at least €40bn ($58bn), including recapitalisation of the ECB. A bail-out would be cheaper.
Ilargi: It certainly looks a lot like a tangled web inside a deep hole. And the above still doesn't cover near all the angles.
What we can take away from the Citi report and other sources is that, no matter how much Athens denies even the possibility, a minimum 50% outright haircut is a probable way forward, if Greece is to regain its status as a viable economy. Still, a haircut like that would have such devastating consequences for banks all over Europe that it's not hard to imagine why nobody wants to go there. Looking through various graphs, it’s hard not to get confused on exact amounts, but the overall picture still is clear:
Obviously, the numbers don’t quite add up. Indeed, the numbers in the left hand side graph are about double those of the right hand side one. This is partly because the right hand side graph is a year old, partly because of exchange rates, and partly because of different sources from which numbers are derived. Still, the main idea stands out in shining armor: Greek sovereign debt for 2010 stood at well over €300 billion, or $450 billion at today’s rates. Greek banks and funds hold about 20% of that, some €60 billion. The ECB holds an unknown percentage. French and German banks together hold about 50% of what's left, still easily over €100 billion, or $150 billion.
Now apply that 50% haircut. Greek banks would simply disappear, as would their pension funds, unless some sort of miracle happens. French and German banks would need huge amounts in relief money. So it's not that strange to argue that Greece won't be "allowed" to default until Berlin and Paris come up with a rescue plan for their own banks. Questions then are: can they? And do they want to?
Whether they can is up for debate. Rescuing your own banks is less controversial than bail-outs for foreign countries and institutions. But where would France and Germany get the money? Wherever that is, it would certainly impair any subsequent Eurozone bailouts. Which are increasingly unpopular to begin with. Thing is, they are also increasingly inevitable. Here's a graph of foreign bank exposure to Greece, Spain and Portugal (note: this does not include Ireland, Italy, Belgium, Baltics etc.).This graph, too, is about a year old. The numbers have since risen substantially, even if they were already some $1.7 trillion then. Berlin and Paris may wish to keep the Eurozone alive, and they may want to sweep Greece under the carpet in order to do so. But their governments are not only filled with doofuses. These guys and gals see the numbers too. There is no graceful way out of this. The debts have quite simply piled up way too high for that, and in too many different places. The richer parts of Europe can choose to try and save their own financial institutions, or they can attempt to save the periphery. But chances are, they have understood by now that neither option is credible. All that's left for them is pushing the snowball-can ahead downhill the road a bit further.
Whichever default option comes out of the hat, it will place severe strains on mark-to-fantasy accounting. And that’s how the US, Japan, China et al., who have relatively minor direct exposure to Europe, will be sucked into the downward spiralling maelstrom along with everyone else.
One last bit: Greece has gotten quite a bit of relief from the extreme highs of the Euro vs the US dollar so far this year. However, those highs are very damaging to the German and French economies, and the Euro therefore must fall, no matter how successful Washington has been in racing to the bottom. Europe has left its powder dry in that race, but it can't afford to do so much longer. And as the Euro starts to fall, Greece, Spain, Portugal and Ireland will see their import budgets skyrocket over the summer.
The race to the bottom has entered the playoffs. I was thinking of the NBA and NHL playoffs, but that doesn't mean that this won't continue to play out until the boys of summer become the boys of October. It looks, after all, as if we're going to be witness to the financial World Series.
Busby: 'Can't seal Fukushima like Chernobyl - it all goes into sea'
by RT
Greek Deficit Tops Forecasts as Merkel Aide Says Debt Must Be Restructured
by James G. Neuger and Marcus Bensasson - Bloomberg
Greece’s budget deficit exceeded goverment estimates and the euro area’s overall debt reached a record, narrowing Europe’s options for putting an end to the fiscal crisis.
Greece’s shortfall was 10.5 percent of gross domestic product in 2010, higher than a 9.4 percent estimate made by the Greek government in February, official European Union figures showed [Tuesday]. Greek bond yields surged, rekindling speculation that a debt write-off or extension of the country’s repayment timelines will be the only way out of the fiscal trap.
"I don’t think that Greece will succeed in this consolidation strategy without any restructuring in the future, or perhaps also in the near future," Lars Feld, a member of the German government’s council of economic advisers, told Bloomberg Television’s Nicole Itano in Frankfurt. "Greece should restructure sooner than later." Two-year Greek yields rose as much as 64 basis points to 23.65 percent, before slipping back to 23.41 percent as of 11:13 a.m. in London. Ten-year yields reached 15.26 percent. Portugal’s two-year note yields touched 11.62 percent, before easing to 11.53 percent. All of the yields reached records.
Default Risk
The cost of insuring debt sold by Greece and Portugal rose to records, according to traders of credit-default swaps. Contracts on Greece jumped 13 basis points from April 21 to 1,345 basis points, signaling a 66 percent chance of default within five years, according to CMA. Portuguese swaps climbed six basis points to 666. Greek Prime Minister George Papandreou’s government has ruled out a restructuring, saying it would devastate domestic banks and hammer an economy that shrank 4.5 percent last year.
Today’s data brought the debt crisis back to where it started. Greece last year obtained a 110 billion-euro lifeline from European governments and the International Monetary Fund. Ireland followed with a 67.5 billion-euro package and Portugal is now negotiating for 80 billion euros in aid. A buildup of debt is making it harder for wealthier countries to aid the fiscally weaker states along Europe’s periphery. Debt rose in all 16 countries using the euro last year to 85.1 percent of GDP from 79.3 percent in 2009, today’s Eurostat report showed.
European Debt
Aggregate euro-area debt moved closer to the 90 percent level that economists Kenneth Rogoff and Carmen Reinhart say can weigh on long-term growth prospects. A political backlash is already under way in AAA rated countries such as Finland, where an anti-euro party is set to enter government after finishing third in elections this month. German Chancellor Angela Merkel’s poll ratings have also suffered as the bill for bailing out deficit-hit states mounts.
Greece’s debt ballooned to 142.8 percent of GDP, the highest in the euro’s 12-year history, the EU figures showed. Ireland’s debt surged the most, by 30.6 percentage points to 96.2 percent of GDP. Greek bond yields have soared since April 14, when German Finance Minister Wolfgang Schaeuble was quoted as saying Greece may need to restructure its debt, breaking with the official stance of European governments and the European Central Bank.
A debt restructuring by a euro country risks triggering a banking crisis that in a "worst case" scenario could do more damage than the failure of Lehman Brothers Holdings Inc., ECB Chief Economist Juergen Stark told ZDF German television on April 23.
Greece said the worse-than-expected recession was responsible for the wider deficit, while noting that it cut the deficit by 4.9 percentage points, more than any other euro country.
A deterioration of tax revenue and worsening finances at local governments, social-security funds and public hospitals also contributed to the wider deficit, the Greek Finance Ministry said in an e-mailed statement.
Feld, the German government adviser, said there is a consensus among most economists that a Greek restructuring is inevitable. Germany "is currently not willing to support a Greek restructuring and when you look at the ECB and also the German representatives in the ECB, they’re not supporting a Greek restructuring as well," Feld said.
Under pressure from Germany to tighten the screws on budgets, euro-area countries pared their overall deficit to 6.0 percent of GDP in 2010 from 6.3 percent. Germany wasn’t among the 12 countries with lower deficits. The German shortfall widened to 3.3 percent from 3.0 percent, edging back over the limit for euro users.
EU poised for Greece crisis talks
by Paul Anastasi and Louise Armitstead - Telegraph
A delegation of leading European and international monetary officials are planning a crisis summit in Athens in May amid growing fears that Greece may default on its sovereign debt.
Senior officials from the European Union, the European Central Bank and the International Monetary Fund are expected to make a "lightning visit" for two days to ensure Greece can meet plans to cut its deficit by €24bn (£21bn). The trip is being planned for May 9, although insiders said this could be brought forward to May 5.
George Papandreou, the Greek prime minister, and other Greek officials have this weekend strongly denied rumours that Greece may be forced to restructure its debt imminently – possibly as early as this weekend. A year after Greece was forced to accept €110bn (£97bn) of financial aid from the EU and IMF, Greek government spokesman George Petalotis denied "the persisting international reports about a restructuring of the debt". George Papaconstantinou, the Greek finance minister, said that a restructuring or an extension of any of the €340bn national debt, which is set to hit 160pc of GDP by next year, was out of the question.
However, Greek news channels have continued to broadcast the rumours. The biggest network, Mega TV, on Saturday reported a government official saying that "in the worst of cases, a rearrangement rather than a restructuring will take place in the future, featuring an extension of the repayment period for the loan, as has been granted for other countries". The influential newspaper To Vima reported that, in addition to the lengthening of deadlines for repayment instalments, Greece might seek a 30pc reduction in the debt itself. But it said such a decision might take "up to six months".
European officials are determined to avoid the need for Greece to change the terms of its debt repayments. On Saturday Jurgen Stark, an executive board member of the ECB, warned that a restructuring of debt in any of the troubled eurozone countries could trigger a banking crisis even worse than that of 2008. "A restructuring would be short-sighted and bring considerable drawbacks," he told ZDF, the German broadcaster. "In the worst case, the restructuring of a member state could overshadow the effects of the Lehman bankruptcy."
Fears among the international community have been met with increasing anger in Greece. On Friday, Mr Papandreou lashed out at the credit rating agencies. In a piece posted on a Greek government website, the prime minister said the agencies were "seeking to shape our destiny and determine the future of our children".
Meanwhile, Greece's finance ministry has asked the local prosecutor to launch an investigation after a banker at Citigroup warned clients of the potential need for a debt-restructuring. In an email the Citi employee said: "There seems to be some increased noise over Gr[eek] debt restructuring as early as this Easter weekend." Citigroup said: "We are co–operating with the authorities and do not consider there to have been any wrongdoing by Citi or its employees."
When the markets closed before the Easter weekend, Greek credit default swaps hit a record high of 1,335 basis points, up 53 points, pushing the annual cost of insuring £10m of the government's debt to more than £1.3m. Last week the Greek government unveiled plans to raise €50bn over the next two years from a sale of national assets including palaces, marinas and beaches.
Athens has said it will also implement fiscal measures worth €26bn in an attempt to reduce the budget deficit to 1pc of GDP by 2015. The plans have sparked a fresh wave of anger in Greece and more threats of strikes and marches from trade unions.
Funds, banks exposed to any Greek restructuring
by Dina Kyriakidou and George Georgiopoulous - Reuters
If Greece restructures its debt, it may choose to extend bond maturities rather than take the harsher step of cutting the amount of principal it repays. But the softer option might hurt Greek banks and state pension funds without doing enough to solve the country's debt problem. A growing number of Greek politicians, including some from the ruling socialist party, is urging the government to bite the bullet and go for a "soft restructuring" as markets remain sceptical about fiscal and economic reforms.
Although the government strongly denies any restructuring is on the cards, many bankers and analysts believe Greece may have to choose one or more of several options sometime in the next couple of years: extending maturities, lowering interest rates, and cutting capital. Of those, extending maturities seems the most likely; in a Reuters poll of 55 analysts this week, 38 said Greece would most likely use that method. Nineteen picked cutting the principal, known as a "haircut".
But merely extending maturities would be "a trick playing for time," said Jens-Oliver Niklasch, bond strategist at LBBW, who believes Greece will probably have to extend maturities and also make a haircut of 30-50 percent. "It is not enough."
Maturities
A simple maturity extension would have negative effects on Greek banks and state pension funds because they are sitting on big piles of Greek government bonds. Greek banks are estimated to hold close to 20 percent of the country's estimated 327 billion euro sovereign debt, or nearly 60 billion euros. National Bank has the biggest share at 12.8 billion euros; the second biggest bank, EFG Eurobank, has about 7.4 billion euros, according to sources at the banks.
Greek social security funds hold slightly over 8 billion euros, according to the Finance Ministry. But their relative exposure is huge, as their liquid assets total 11.68 billion euros. IKA, the biggest fund, has almost two thirds of its liquid assets in Greek bonds and Treasury bills. If they are unable to pay health and pension benefits, the state will be forced to help, which would further hurt its fiscal position as the government defies public opposition to impose waves of tough austerity measures.
Some analysts therefore think the Greek politicians who are urging debt rescheduling may not fully understand what it would entail. "Maturity extension could be costly. Banks could be forced to make mark-to-market adjustments on their total Greek bond positions, not just the affected bonds," Deutsche Bank said in a recent report.
For example, a five-year Greek government bond with a coupon of 6.5 percent currently yields about 19 percent in the secondary market with its price at 61.8. If its maturity were extended to 10 years, its price could be expected to fall to 45.8, based on a drop of 26 percent in net present value, according to a calculation by an analyst at a Greek bank. The impact of this would be limited by the fact that banks and pension funds hold the bulk of their bonds to maturity in their banking books, meaning -- depending on their accounting approaches -- that they would not have to take trading losses on those bonds.
"If repayment is extended on the bonds without an increase in the coupon, there will be a mark-to-market impact for bonds held in banks' trading books, but no direct impact on those held to maturity in their banking books," said Natixis Securities analyst Antoine Burgard. But a pure extension of maturities would not actually cut Greece's debt burden, but simply shift part of it further into the future. So while it would help Greece's liquidity in the near term, it would not address its underlying problem.
For that reason Greece might also have to cut the interest paid on some of its outstanding debt, an option expected by 24 of the analysts in the Reuters poll. This would start to become painful for the banks and pension funds by reducing the income they received.
Haircut
And if Greece resorted to a haircut, a debt restructuring could have a very substantial impact on banks' capital adequacy levels and on pension funds. For banks, a 30 percent haircut might cost them over 12 billion euros, and a 50 percent haircut, more than 24 billion euros, analysts estimated. In the harsher 50-percent haircut scenario, all Greek banks would experience a capital shortfall and would need to recapitalise. This might force them to turn to Greece's 10 billion euro Financial Stability Fund (FSF).
Mediobanca Securities estimates that if there is a 43 percent haircut, the erosion of the core Tier 1 capital ratio of Greek banks would range from 2.07 percentage points for Alpha Bank to 7.68 percentage points for National Bank. If one assumed banks had a core Tier 1 capital target of 9.5 percent of risk-weighted assets, this would mean Alpha Bank needed to raise additional capital of about 40 percent of its market value, now at 2.04 billion euros, Mediobanca estimated.
"A less severe assumption of a 20 percent haircut could be digested without additional capital pressure, with National Bank still enjoying a 10.3 percent Tier 1 ratio," analyst Alex Tsirigotis said in a recent report. For troubled social security funds, any haircut could be catastrophic. Already facing the effects of an ageing population and a shrinking of the labour market, they were given a lifeline through recent reforms but their position is hardly secure. They would be dependent on a state that lacked the resources to support them.
"Greece has lived beyond its means for some time and I think they will pay the price," Niklasch said. "This will last a decade or even longer."
Citi Expects A 76% Haircut On Greek Debt (And 95% If Country Waits 4 Years) For Debt/GDP Ratio Back Down To 60%
by Tyler Durden - Zero Hedge
Yesterday we learned that in borrowing a page right out of 2010, when the Greek government was mounting a full frontal assault against CDS traders everywhere (only for Eurostat to tell us that CDS traders had absolutely no impact on Greek solvency), Greece is once again scapegoating unrelated third parties for its problems.
In this particular case Citi London trader Paul Moss, who is being interrogated by Interpol because of a recap email indicating Greece may, gasp, restructure (or, as it isknown in enlightened circles, conduct a "liability management exercise"). Yet when Greece reads the following note by Citi's Stefan Nedialkov, it will most likely issue a cease and desist order in perpetuity against Vikram Pandit's bank. Nedialkov's summary (released one day after Moss' April 20 note): "If a 42% haircut is taken in addition to these measures, we estimate Debt/GDP falls to below 90% in 2013 and below 60% in 2020."
The problem is that the market will likely give Greece at most a few months of breathing room in exchange for just a 90% debt/GDP reduction. If truly engaging in a liability exercise of some nature, Greece will likely pursue a permanently viable option. And as Nedialkov indicates, in order to achieve a far more credible 60% debt/GDP ratio, the country would need to take a 76% haircut now, or do nothing for five years, and eliminate a whopping 94% of its debt in 2015.
Since the market is already expecting roughly a 50% haircut it remains to be seen just how much further bond prices will plummet, and how much bigger the ultimate impairment on Citi debt, and European banks, Greek pension funds and local bond investors, will ultimately be. One thing is certain: with Greek 2012 debt/GDP expected to peak at 159.4%, the country will restructure, and a a vast swath of insolvent European banks are about to see the tide go out.Some more color from Citi, which is sure to get the Greek inquisition on the heels of Nedyalkov: "Citigroup said that no country with a debt-to-GDP ratio of over 150 percent has “ever avoided a default.” Greece’s austerity measures aren’t achieving the “desired results as quickly as hoped,” it said."
And some more:
In Figure 11, we illustrate the path of Debt/GDP under some of the above scenarios. Privatisation appears to be the most effective solution on its own, with the Debt/GDP ratio at c.150% in 2020 vs. 175% in the base-case scenario, according to our estimates. Better yet, all options (short of haircut) taken together would bring the ratio down to c.110% in 2020. And if a 42% haircut is taken in addition to these measures, we estimate Debt/GDP falls to below 90% in 2013 and below 60% in 2020.
Most disturbing is Citi's sensitivity on the type of haircut needed in order to bring total debt down even more: Cut 76% of the debt now (to get Debt/GDP to a healthy 60%), or wait until 2014... and impose a 95% haircut.
As for the debtholders, we believe that most have come to the conclusion that some sort of haircut is needed, especially as the austerity measures are not bringing in the desired results as quickly as hoped. At this point, debtholders would rationally want to minimise the amount of haircut taken. In Figure 13, we calculate the “incremental” haircuts debtholders would suffer if they were to wait a certain number of years from today.
For example, to bring the Debt/GDP ratio down to 90% in 2011 would mean a 52% haircut, 63% haircut in 2012, 68% in 2013, 70% in 2014 and 70% in 2015. Hence, the marginal haircut (“damage”) from waiting longer diminishes quickly — this is in-line with the expected recovery in the primary government balance and the return of real GDP growth. Therefore, we see two rational strategies for debtholders:
Option 1 — “Act Now”: Insist on restructuring as soon as possible in order to avoid more haircutting in later years. The market (see Figure 14) seems to be voting for “Act Now”, or rather act within the next two to three years. The yield on the 3Y GGB is 21.1% compared to the 30Y yield of 9.6%.
Option 2 — “Pretend and Forget”: as the “haircut curve” starts to flatten out beyond year 2015, debtholders could close their eyes, help refinance maturing Greek debt, and hope that Greece slowly finds its way out. But this could be a long wait and may require concessions such as extending maturities. In addition, no country with Debt/GDP ratio of more than 150% has ever avoided a default anyways. Why would Greece be different?
As for the analysis of which European banks will suffer the biggest capital income in case of a 50-60% haircut, not surprisingly the list is topped off by France, Germany, Austria and Belgium. Here's to hoping (as the EU is currently doing) that these banks can easily digest the capitaliaztion hit should "assets" have to be written down post a restructuring.
Greece will not be 'allowed' to default until policy shores up the Irish bond market
by Dan Crawford - Angry Bear
Just look at Tracy Alloway's imagery at FT Alphaville, and you'll know what's expected: an imminent Greek default. I still argue no, although European policy tactics are quite enigmatic and their next move is really anyone's guess. Alas, here's mine.Assuming that Greece does not secede from the Euro area, I give you three reasons why Greece will not be allowed to default soon (at least the next 12 months, given current market conditions). I say 'allowed' because true to the IMF legacy, EU/Euro area officials very likely see restructuring as a 'gift' for good fiscal behavior.
(1) Moral hazard is an important issue in Europe, and Greece has only begun its austerity program. We'll need confirmation that they are not on track in order to assess the timing of default, in my view.
Ironically, the EU/IMF/Euro area are sticking to the 'exports will grow the Greek economy' story. I say ironically because Greece was exporting a larger share of GDP before the recession, average 22.6% spanning 2005-2007, than it is now, 19.8% in 2010 (average Q1-Q3).
(2) The banking system's not ready. Unless the Germans want to instantly recapitalize the Landesbanks this year, I'd argue that the Euro banking system remains overly exposed to mark-to-market accounting (i.e. holding the assets at fair value not wishful thinking) for all of the crappy debt that it holds on balance.
In fact, the German banks purchased 11bn euro in Greek sovereign bonds in January. That's the most current data available; but I bet they're simply moving debt out of the Greek banks and corporates and into the sovereign as the probability of default rises (see chart below).
(3) This one's critical: policy makers must shore up Ireland and Portugal in order to avoid a quick contagion across the European banking system. They haven't done that yet. In fact, the Finnish election results exposed the tenuous negotiation process overall.
See, the Greek yield curve is inverted - so are the Portuguese and Irish yield curves, albeit to a much lesser degree. The point is, that Portugal and Ireland are very close to the Greek brink.
Inversion matters. Currently a Greek 10yr bond yields 14.5% with a euro price of 59, while a 2-yr bond yields 21.4% with a euro price of 73. Bond investors are going for the cheapest bond not the highest yield (at the end of the yield curve) as a bet on a binary situation: haircut or no haircut. When a curve is inverted, it's all about price not yield.Portugal and Ireland are already inverted and close to the Greek brink. If Greece were to restructure without a full-fledged backstop from the Euro area governments, the Portuguese and Irish curves would swiftly turn over. And if European policy makers could stop the contagion there, then that would be a true feat....
Spain, the economic 'line in the sand', would be next. We saw last week how markets view the Spanish sovereign, still risky. Bond yields on the Spanish 10yr broke out of a 4-month trading band, hitting 5.55% on April 18 (latest number is 5.47%).
More on Ireland
I assure you, that it's too early to deem the Irish sovereign as impervious to the Irish banking system's fake asset base. The banking system is living on emergency liquidity assistance (ELA) and the ECB's marginal refinancing operations (currently Irish banks can borrow as much as they want on a short-term basis from the ECB at the current rate, 1.25%).By my calculations, the Central Bank of Ireland (via the ELA) and the ECB are subsidizing - I say subsidizing because market funding costs are proxied by the sovereign borrowing costs of 10% - 16% of the Irish banking system's balance sheet. As such, profit margins are thin, and mortgage rates are running low at 3-4%. (see CBI website for plenty of data.) These funding costs are not sustainable - not to mention the Irish stress tests assume that they remain fixed at Q4 2010 levels (see exhibit 2 in Appendix C of the stress test documentation). Nonperforming loans will rise.
I leave you with this illustration of possible non-performing loans when mortgage rates rise on the following:
(A) ECB rate hikes - mortgages are tied to 12-month euribor and most Irish mortgages are variable.
(B) the dissipation of record-low bank borrowing costs (this also is another post, but the ECB has yet to release its medium-term funding program for Ireland).
Note: if/when they do default, Kash at the Street Light blog provides an overview of some technical considerations.
Can Greece Default and Keep the Euro?
by Kash - The Street Light
Felix Salmon notes the following:Greece is going to restructure its debts — and it’s going to do so before mid-2013. That’s the clear message sent by the latest Reuters poll of 55 economists from across Europe: 46 of them saw a restructuring in the next two years, with four saying it would happen in the next three months.
This is a major development. The markets haven’t believed Greece for a while — but now they don’t believe the European Union, either.
Count me with the majority of the economists surveyed here; I've been suggesting for quite a while that default is going to prove to be the least bad option for Greece. (For a cogent counter-argument, however, see this post by Rebecca Wilder.)The reason that default seems increasingly likely is summed up in this picture from Deutsche Bank. It illustrates that the Greek government will have to run a primary budget surplus of more than 10% of GDP in order to simply stabilize its level of debt. How likely do you think that is? To me it seems frankly impossible. The only alternative is for German and French taxpayers to send Greece additional and ongoing chunks of money to make up that shortfall, and we seem to have reached the end of their willingness to do that.
But if default (I suppose we can use the polite term, "restructuring") happens, there are some interesting technical issues that bear thinking through. The most interesting of them, to me, is what this means for Greece's continued use of the euro as its currency. Does default mean that Greece must necessarily drop the euro?
I think the answer is that Greece won't necessarily have to drop the euro... but that the pressures to create a local Greek currency will be tremendous, and that it will probably turn out to be the least bad option.
The problem is the banking system. As debt restructuring seems increasingly likely, and certainly if and when restructuring actually happens, depositors in Greek banks will rush to withdraw their savings in order to place them in non-Greek banks. To some degree, this process has already started, but this will become a full-fledged bank run once debt restructuring becomes imminent. (Oh, but wait: bank runs are supposed to be forestalled by deposit insurance, and deposits in Greece are guaranteed... by the Greek government. Oops.)
I don't think there's much uncertainty about this part of the story. But now the Greek government has a choice. Do they:My guess is that they will choose option 2. As I've noted before, my preferred analogy to this situation is Argentina in 2001, and this is exactly what Argentina did by establishing the corralito in late 2001. I suppose in this case we could call the freeze on Greek bank deposits the mantríto (from what I believe is the Greek word for corral).
- Simply allow the bank run to happen, let banks in Greece collapse, and let Greek depositors lose all their savings; or
- Freeze bank assets and forbid people from withdrawing their savings, at least for the time being, thereby preserving the amount of their deposits.
Okay, so now we have an incipient bank run prevented by a freeze on bank deposits, a Greek government that has defaulted and can not borrow externally (though they may be receiving some hand-outs from the EU or IMF), and a financial sector that has completely seized up, with no borrowing or lending in Greece. What next?
The problem the Greek government now faces is how to create a financial sector again - how to get borrowing and lending to recommence, so that the economy can start to get moving. And this is where a new, local currency would be very, very welcome.
The Greek government will therefore face a second choice. Do they:My guess is that they will pick either option 2 or option 3. (For reference, Argentina picked option 3 in 2001-02.) Note that the euro wouldn't have to be completely abandoned -- it's easy to imagine two currencies operating side-by-side, at least for a while. (There are many examples of countries operating with parallel or complementary currencies.) But if they create a new currency (which will rapidly depreciate against the euro), then in addition to unfreezing the banking sector it would have the huge added benefit of quickly improving Greece's competitive position, and putting the country in a position to resume economic growth.
- Continue to rely only on the euro as a currency, but keep the mantríto in place to preserve depositors' bank balances while rendering them untouchable, with the result that the banking sector is effectively frozen and Greece becomes a cash-only economy;
- Start issuing New Drachmas (as well as accepting them as a legitimate form of payment for tax liabilities), provide banks with a tranche of start-up capital in New Drachmas in exchange for Greek government bonds so they can start lending and creating the new money, allow people to retain their euro savings, but keep the mantríto to prevent massive capital flight; or
- Start issuing New Drachmas but also forcibly convert depositors' savings in Greek banks from euros into New Drachmas, thereby effectively shrinking the Greek public's savings balances significantly, and then allow the mantríto to gradually wind down as the danger of bank runs disappears.
This is all very speculative, of course, and there are various decision points in the story I've outlined here where things could go the other way. But this story makes sense to me, and seems likelier than the alternatives. So my short answer to the central question posed here is: yes, Greece can keep the euro if it defaults, but it won't.
Greek woes getting worse
by Ora Morison, Postmedia News
Restructuring considered a certainty as economic outlook remains dire
For Greek sovereign debt, it is no longer a question of if restructuring will occur, but a matter of when. A TD Economics report says the European sovereign debt crisis has entered a new stage this week where restructuring of Greek debt is virtually assured.
Talk of maturity extension for Greek sovereign debt at the most recent meeting of European finance ministers sent the yield on 10-year government bonds to 14.55 per cent. The outlook for the Greek economy remains dire. The economy is still expected to contract after debt restructuring, and the fiscal policy and monetary conditions will remain tight.
According to an International Monetary Fund review completed mid-March, Greek fiscal revenues were weaker than expected in 2010. They grew 5.6 per cent instead of the planned 13.7 per cent, despite a policy of stringent fiscal tightening in the country.
A number of Greek subnational entities, including state-run companies, are operating with expense overruns. At the end of November, the Greek general government was about 4 billion euros in arrears. Craig Alexander, chief economist for TD and the report's author, said restructuring will happen in the near future, although probably not before June because of Greek debt rollovers and scheduled IMF and European Union revisions.
Passing the IMF reviews will be important for Greece to secure loan disbursement from the IMF and European Union. The two entities are expected to release payments of 4.1 billion euros and 10.9 billion euros, respectively, at the end of May. If Greece doesn't meet review targets it faces a delay in receiving disbursements and a lack of cash to meet payments. Bloomberg data shows Greece faces redemption payments of 9.6 billion euros in May and 9.6 billion euros in July.
Disbursements must be unanimously approved by the EU, and recent elections in Finland saw 20 per cent of votes go to two opposition parties that are against financial assistance to neighbouring countries. "Social appetite for bailouts and adjustments programs will run very thin, both in countries besieged by the sovereign debt crisis and in the fiscally stronger neighbours," he said. "This will further exacerbate the challenges of managing the political dimension of the crisis resolution."
Greece Haircut for Bondholders Already Overdue
by Matthew Lynn - Bloomberg
No cakes, party games or music. As Greece last weekend marked the passing of the first year since it was forced to seek a bailout from its fellow euro members, the mood could hardly have been more somber. Bond yields soared to fresh highs. The cost of insuring against a Greek default rose to a record. The finance ministry started a criminal investigation into bank employees spreading rumors of an imminent restructuring.
In fact, Greece should have celebrated the anniversary of the rescue package in a different way -- by announcing it was repudiating some of its debts. The sooner Greece imposes a haircut, to use the financial market’s term for losses incurred in a default, the better it will be for everyone. Delay leads to bigger haircuts, and economic research suggests the bigger the haircut, the worse the pain that follows. The damage being inflicted on the Greek economy is too great. And once defaults within the euro area are accepted, a sensible conversation about how to fix the single currency can begin.
Over the last week, the prices in the market make it clear that most traders have already concluded that a Greek default is a done deal. The yield on two-year Greek debt rose higher than 22 percent at the end of last week. Only the most sharkish credit company charges those kinds of rates. Ten-year bond yields are now close to 15 percent. The cost of insuring Greek sovereign debt jumped to a record, with the prices of credit- default swaps now suggesting there is a 67 percent chance of default.
In reality, there isn’t much point in buying the protection. It’s like insuring yourself against the possibility it might rain in London in the next year. It’s going to happen; it’s just a question of when. Officials in Athens and Brussels are still insisting that default isn’t an option. They should quit pretending. Here’s why.
The markets portray defaults as catastrophic, mainly because the bankers and fund managers who provide most of the commentary stand to lose a lot of money. In fact, countries fail to pay back their debts all the time. What does make a difference, however, is the size of the haircut.
Future Punishment
A paper presented at the Royal Economic Society conference in London this month by Juan Cruces and Christoph Trebesch studied all the debt restructurings between countries and foreign banks and bondholders since 1970 -- a total of 202 cases in 68 nations. It found that "restructurings involving higher haircuts (lower recovery rates) are associated with significantly higher subsequent spreads (borrowing cost) and longer periods of capital market exclusion."
In other words, the worse the losses inflicted on the bondholders, the more the markets will punish you later on, and the longer it will be before you can access the capital markets again. Greece’s debt position is worsening. Delay isn’t an option. It would be better to impose a 40 percent or 50 percent loss on bondholders this year than a 70 percent or 80 percent loss in 2013.
Next, the damage being inflicted on the Greek economy right now is catastrophic. Unemployment is set to rise above 15 percent this year. The central bank estimates the economy will shrink by another 3 percent in 2011, even though the rest of the global economy is experiencing a sustained if modest recovery.
The government is still reducing spending -- another 22 billion euros ($32 billion) of cuts were announced this month -- which will only depress the economy further. There is very little sign yet that exports can make up for the fall in domestic demand. You can’t just cut your way out of this crisis. At some point, the Greek economy needs to start growing again. So far, no one has explained how that is going to happen.
Lastly, once Greece has defaulted, a serious conversation can begin about how to reassemble the euro area. Plan A was to rescue Greece, arrange a bailout, get the country back on track and stop the contagion. It’s as clear as day that it hasn’t worked. Greece isn’t showing signs of recovery, and both Ireland and Portugal have had to apply for bailouts as well. If that doesn’t persuade people to switch to Plan B, it’s hard to know what will.
Greece should bow to the inevitable, announce a 50 percent haircut on its debt and impose a three-year suspension of interest payments on what remains outstanding. Bondholders could be offered further payments, linked to economic growth, so that as Greece recovers, they get a bit more of their money back.
With the money saved on debt repayment, Greece could start restructuring its economy, putting demand back into the system, and focusing on creating the competitive export industries that are the only thing that will enable it to survive within the euro. The rest of Europe could stop fighting a losing battle to rescue Greece from default, and start concentrating instead on how to make the euro area work better.
There is no point in drawing out the agony any longer --and certainly not until the second birthday of the bailout package. It should be done by the end of May, and then everyone can move on.
The eurozone’s quack solutions will be no cure
by Wolfgang Münchau - Financial Times
I was uncharacteristically optimistic last week, and had planned to end my informal series on eurozone crisis resolution with a benign scenario. The eurozone would survive in one piece; there would be no blood on the streets, just a once-and-for-all, albeit reluctant, bail-out, accompanied by a limited fiscal union. But as several readers have pointed out, my scenario is prone to a very large accident. I accept that point. Last week, we caught a glimpse of how such an accident may come about. My benign scenario looks a lot less certain today than it did a week ago.
The week began with the strong showing of two parties in the Finnish election, which are advocating a partial Portuguese debt default as a condition for a rescue package. The results triggered a renewed outbreak of the financial crisis, as eurozone spreads rose to near record levels once again.
The most disturbing news, however, was a revolt within Angela Merkel’s increasingly fragile coalition. It looks as though the German chancellor is on the verge of losing her majority over the domestic legislation of the European Stability Mechanism (ESM), the long-term financial umbrella for the eurozone. She may have to rely on the opposition to ratify the ESM, which may come at a heavy political cost. The Bundestag already postponed the vote on the ESM until the autumn, hoping to keep it clear from the controversial decision to pass the Portuguese rescue programme in May.
As opposition to the ESM mounted, German officials fell over themselves to be quoted by various newspapers pronouncing that a Greek restructuring was inevitable. Even Wolfgang Schäuble, finance minister, talked about the possibility of default. Some wily speculators unleashed the rumour that Greece would spring a surprise debt restructuring. The rumours prompted a criminal investigation. Another week in the eurozone’s debt crisis!
A monetary union is at a natural disadvantage when it comes to the handling of crises. There is no central government that takes decisions, which makes communications hard to control. What is less forgivable is the serial incompetence of the eurozone’s decision-makers, as exemplified by the perpetual eagerness to declare the crisis over the very second financial market pressure subsides. Not only do they know little about financial markets, they have surrounded themselves with policy advisers who know little too. Their ignorance is an ideal breeding ground for quack solutions. One such is immediate default. German Christian Democrats and Finnish isolationists spent the last week trying to convince themselves that a Greek debt-restructuring would save them a lot of money.
That belief is premised on two false assumptions. The first is that a voluntary restructuring could solve the Greek debt problem. It can work in limited cases, but not when countries are insolvent. Greece, however, faces no short-term liquidity squeeze, because it is supported by the European Union and the International Monetary Fund. There is no need for any restructuring, voluntary or involuntary, right now. But Greece may need to impose a "haircut" in the future to ensure debt-sustainability. The ideal moment would be when the country achieves a primary surplus, probably in 2013.
The second wrong assumption is that the Greek banking sector would survive a restructuring unscathed. This is a conditional error. If you believe that a voluntary restructuring would be sufficient, then the Greek banking sector would indeed survive. But it would surely not survive a large and involuntary haircut. The European Central Bank would face a haircut on its direct investments of Greek government bonds, and, more importantly, much of the collateral posted by Greek banks would vanish. On my calculation, the cost of a Greek default to the German taxpayer alone would be at least €40bn ($58bn), including recapitalisation of the ECB. A bail-out would be cheaper.
A premature Greek default would change everything. As would the failure by the EU and Portugal to agree a rescue package in time; or an escalation in the EU’s dispute with Ireland over corporate taxes; or a ratification failure of the ESM in the German, Finnish or Dutch parliaments; or a German veto for a top-up loan for Greece in 2012; or the refusal by the Greek parliament to accept the new austerity measures; or a realisation that the Spanish cajas are in much worse shape than recognised, and that Spain cannot raise sufficient capital.
Then there is the downgrade threat for French sovereign bonds. I recall asking a French official about this, and getting the smug answer that the rating agencies could hardly downgrade France if they maintained a triple A rating for the US. That was before last week. By extension, France must also now be in danger. A downgrade would destroy the logic of the European financial stability facility. It is built on guarantees by the triple-A countries. Without France, the lending ceiling of the EFSF would melt down further.
The list of potential accidents is long, but they share a joint theme – serial political crisis mismanagement. We saw another glimpse of that last week. If we go down the route of premature default, and allow the True Finns and the true Germans to run the show, the eurozone as we know it will be finished.
None Dare Call It Default
by Wall Street Journal
Better an orderly restructuring in Greece than a Lehman re-run.
For nearly a year, Europe's official refusal to acknowledge even the possibility of a Greek debt default has bordered on the comical. But with Greek two-year bonds yielding 20% and credit-default swaps priced as if a default is more likely than not, EU denial has gone from amusing to dangerous.
Media reports this week have cited Greek, German, EU and IMF officials anonymously admitting the obvious: Even if Greece meets the targets agreed in its bailout package, it will be saddled with a debt burden that is unsustainable, which makes a restructuring of those debts, now approaching 150% of GDP, inevitable. All these reports have so far been met with strenuous denials from spokesmen and other officials.
Behind these official denials lies a more sophisticated narrative that says a default or restructuring would hurt so many institutions that might need their own bailouts that relieving Greece of some of its burden will do more harm than good. According to this argument, it would be better for Greece to continue to muddle through for now on EU and IMF life support than to expose creditors, including Greek and other European banks, to potential losses on Greek debt. We could add a third argument, which is that openly discussing debt restructuring might make it inevitable, leading to capital flight.
None of this is persuasive. With debt yields on Greek bonds at record highs, the market has already priced in the likelihood that Athens will never make good on its obligations on time and in full. At this stage, it makes more sense to inform taxpayers, investors and governments about where the exposure and risks lie, which is why it's vital that Europe's current stress tests look carefully at sovereign-default scenarios. If Greece must restructure its debt—and that seems very likely—better that it do so in an orderly fashion than to wait until its hand is forced.
The conventional wisdom about the collapse of Lehman Brothers is that the worst of the financial panic could have been averted if only Lehman had been saved from going under. That wisdom is wrong. Lehman's collapse triggered a full-blown crisis in no small part because investors had little clarity about who was solvent and who wasn't, and who would be saved and who would be left to fail.
The way to prevent Greece from becoming Europe's sovereign-debt Lehman isn't to pretend that a restructuring can't happen, but to start explaining how such an event could be handled, together with much greater disclosure of who could be hurt and how. Banks that are vulnerable can then get their houses in order before it's too late. One lesson from September 2008 is that pretending that the all-but-inevitable is inconceivable doesn't make it impossible. But it will make a crisis that much more acute when it arrives.
US economy just a notch above Greece
by Sam Fleming - The Times
US finances are in almost as troubled a state as the worst-hit members of the euro zone, economists say, underscoring the pressing need for Washington to reach agreement on how to reduce the deficit.
A gauge of "sovereign risk" from economists at Deutsche Bank placed the United States just behind Greece, Ireland and Portugal among 14 advanced economies. The report, from economists led by Peter Hooper, warned that a failure to make substantial political progress on deficit reduction "would substantially raise the risk of a bond market crisis".
The warning comes days after Standard & Poor's said that it may lower its AAA assessment of the US, amid a political log jam over debt reduction in Washington, and will intensify market concerns about Western governments' debts. Last night George Papandreou, the Greek Prime Minister, strongly criticised credit rating agencies, saying that they were "seeking to shape our destiny and determine the future of our children".
The Finance Ministry in Athens has asked prosecutors to look into an e-mail sent by a London-based Citigroup trader that referred to market rumours of a restructuring of Greek debt as soon as this weekend. Citigroup has denied any wrongdoing.
Insurance contracts linked to Greek bond swaps suggest that the country has a 67 per cent chance of defaulting within five years, even after accepting a 110 billion euros ($149bn) emergency loan. This week the implied cost of borrowing on its ten-year bonds rose to 15 per cent, while yields on Irish ten-year government bonds hit 9.8 per cent and yields on their Portuguese equivalents rose to 9.22 per cent.
Greece is one small element of wider sovereign debt concerns that have begun to encompass the US, the world's biggest economy. Capitol Hill has been consumed with political wrangling over whether to increase a $US14.3 trillion ($13.3 trillion) debt ceiling that is due to be breached next month. If the US national debt hits that level, it would trigger a default.
Deutsche Bank's analysis acknowledged that the risk attached by financial markets to US debt remained very low, as demonstrated by the country's modest borrowing rates. That was in part due to the US dollar remaining the premier reserve currency for world governments. However, the report noted: "Reputation and reserve currency status can be lost, and failure to move US fiscal policy off its currently unsustainable path would certainly increase the risk."
For the time being, though, Democrats and Republicans have been mired in mudslinging over the debt ceiling. The White House yesterday accused Republican congressmen of risking a global recession by refusing to agree to raise the debt ceiling unless the move was paired with deep spending cuts.
Even if a deal is struck on time, that will not eradicate the risk of political deadlock over longer-term fiscal problems, such as spiralling healthcare spending. Projections from the Congressional Budget Office suggest that the national debt could rise from 62 per cent of GDP to 100 per cent in 2025 and 200 per cent by 2040, compared with its 1946 high of 122 per cent.
Bill Black: There’s Another Crisis Coming as Long as Banks Remain Above the Law
by Peter Gorenstein - Daily Ticker
A federal jury convicted Lee Farkas, the former Chairman of Taylor, Bean & Whitaker Mortgage Corp., Tuesday for his role in a $2.9 billion fraud that led to the fall of his company and that of former Top 50 bank Colonial Bank. Farkas was found guilty on all 14 counts of conspiracy and bank, wire and securities fraud. He now faces life in prison.
More than two years after the financial crisis, Farkas is arguably the only major player in the mortgage industry to face criminal charges. William Black, professor of economics and law at the University of Missouri-Kansas City School of Law, calls the lack of prosecutions a disgrace, and he blames policymakers.
It's a matter of "unofficial" policy, he claims. "The de facto policy right now is elite frauds go free if they're in banking because the whole sector is too fragile. That is significantly insane. It will produce the next crisis." Essentially he's saying officials think it's more important for the banking sector to make money than it is for them to follow the law.
In the accompanying interview with Aaron Task, he notes that Treasury or White House officials are fully aware of the fraud, citing FBI testimony as far back as 2004 about rampant fraud in the mortgage market. In fact, Black says the problems banks are now facing with foreclosure paperwork are simply a result of the foreclosure frauds that were never addressed. "Every time you fail to root out the frauds, the fraud simply migrates. It migrates from the lending process to the foreclosure and servicing process."
IMF bombshell: Age of America nears end
by Brett Arends - MarketWatch
The International Monetary Fund has just dropped a bombshell, and nobody noticed. For the first time, the international organization has set a date for the moment when the "Age of America" will end and the U.S. economy will be overtaken by that of China.
And it’s a lot closer than you may think. According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now. Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington, D.C., right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.
According to the IMF forecast, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy. Most people aren’t prepared for this. They aren’t even aware it’s that close. Listen to experts of various stripes and they will tell you this moment is decades away. The most bearish will put the figure in the mid-2020s.
But they’re miscounting. They’re only comparing the gross domestic products of the two countries using current exchange rates. That’s a largely meaningless comparison in real terms. Exchange rates change quickly. And China’s exchange rates are phony. China artificially undervalues its currency, the renminbi, through massive intervention in the markets.
The comparison that really matters
The IMF in its analysis looks beyond exchange rates to the true, real terms picture of the economies using "purchasing power parities." That compares what people earn and spend in real terms in their domestic economies. Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and is rising. Just 10 years ago, the U.S. economy was three times the size of China’s.
Naturally, all forecasts are fallible. Time and chance happen to them all. The actual date when China surpasses the U.S. might come even earlier than the IMF predicts, or somewhat later. If the great Chinese juggernaut blows a tire, as a growing number fear it might, it could even delay things by several years. But the outcome is scarcely in doubt.
This is more than a statistical story. It is the end of the Age of America. As a bond strategist in Europe told me two weeks ago, "We are witnessing the end of America’s economic hegemony." We have lived in a world dominated by the U.S. for so long that there is no longer anyone alive who remembers anything else. America overtook Great Britain as the world’s leading economic power in the 1890s and never looked back. And both those countries live under very similar rules of constitutional government, respect for civil liberties and the rights of property. China has none of those. The Age of China will feel very different.
Victor Cha, senior advisor on Asian affairs at Washington’s Center for Strategic and International Studies, told me China’s neighbors in Asia are already waking up to the dangers. "The region is overwhelmingly looking to the U.S. in a way that it hasn’t done in the past," he said. "They see the U.S. as a counterweight to China. They also see American hegemony over the last half century as fairly benign. In China they see the rise of an economic power that is not benevolent, that can be predatory. They don’t see it as a benign hegemony."
The rise of China, and the relative decline of America, is the biggest story of our time. You can see its implications everywhere, from shuttered factories in the Midwest to soaring costs of oil and other commodities. Last fall, when I attended a conference in London about agricultural investment, I was struck by the number of people there who told stories about Chinese interests snapping up farmland and food stuff supplies — from South America to China and elsewhere.
This is the result of decades during which China has successfully pursued economic policies aimed at national expansion and power, while the U.S. has embraced either free trade or, for want of a better term, economic appeasement.
"There are two systems in collision," said Ralph Gomory, research professor at NYU’s Stern business school. "They have a state-guided form of capitalism, and we have a much freer former of capitalism." What we have seen, he said, is "a massive shift in capability from the U.S. to China. What we have done is traded jobs for profit. The jobs have moved to China. The capability erodes in the US and grows in China. That’s very destructive. That is a big reason why the U.S. is becoming more and more polarized between a small, very rich class and an eroding middle class. The people who get the profits are very different from the people who lost the wages."
The next chapter of the story is just beginning.
U.S. spending spree won’t work
What the rise of China means for defense, and international affairs, has barely been touched on. The U.S. is now spending gigantic sums — from a beleaguered economy — to try to maintain its place in the sun. It’s a lesson we could learn more cheaply from the sad story of the British, Spanish and other empires. It doesn’t work. You can’t stay on top if your economy doesn’t.
Equally to the point here is what this means economically, and for investors. Some years ago I was having lunch with the smartest investor I know, London-based hedge fund manager Crispin Odey. He made the argument that markets are reasonably efficient, most of the time, at setting prices. Where they are most likely to fail, though, is in correctly anticipating and pricing big, revolutionary, "paradigm" shifts — whether that be the rise of disruptive technologies or revolutionary changes in geopolitics. We are living through one now.
The U.S. Treasury market continues to operate on the assumption that it will always remain the global benchmark of money. Business schools still teach students, for example, that the interest rate on the 10 Year Treasury bond is the "risk-free rate" on money. And so it has been for more than a century. But that’s all based on the Age of America. No wonder so many have been buying gold. If the U.S. dollar ceases to be the world’s sole reserve currency, what will be? The euro would be fine if it acts like the old Deutschemark. If it’s just the Greek drachma in drag ... not so much.
The last time the world’s dominant hegemon lost its ability to run things single-handed was early in the past century. That’s when the U.S. and Germany surpassed Great Britain. It didn’t turn out well.
US states face $1.26 trillion shortfall in funds to pay retiree benefits
by Michael A. Fletcher - Washington Post
The state funds that pay pension and health-care benefits to retired teachers, corrections officers and millions of other public workers faced a cumulative shortfall of at least $1.26 trillion at the end of fiscal 2009, according to a new report.
The study, to be released Tuesday by the Pew Center on the States, found that the pension and health-care funding gap increased by 26 percent over the previous year. Pew officials said the growing shortfall was driven by inadequate state contributions, an aging population and market losses that accompanied the recession.
Although investment markets have recovered substantially since the period covered by the report, its authors warn that states still face an increasing burden from retiree costs that are beginning to crowd out critical services. "In many states, the bill for public-sector retirement benefits already threatens strained budgets and is competing for resources with other critical needs, including education, infrastructure and health care," said Susan Urahn, managing director of the Pew Center on the States.
The report, which is based on state financial reports, found that states faced a $660 billion pension funding gap. Meanwhile, retiree health-care liabilities — which most states handle on a pay-as-you-go basis — totaled $604 billion, the report said. Even as they face increasing liabilities, the report said, many states are not making pension contributions in amounts recommended by their actuaries as they juggle retiree and other costs against a backdrop of weak revenue.
In making its calculations, Pew used the states’ assumptions for what their pension funds would earn in annual investment returns, typically 8 percent — a figure that states have mostly met in recent decades but that some analysts think is now overly optimistic. If states calculated their investment returns the same way that private firms are required to for their pensions, their obligations would balloon to $1.8 trillion, the report said. If states pegged their returns to 30-year Treasury bonds, an even more conservative standard, the liability would be $2.4 trillion.
Concern about underfunded pensions has prompted at least 29 states to either reduce pension promises to new employees or require workers to contribute more toward their retirement benefits, according to a separate report by Pew.
Three states — South Dakota, Minnesota and Colorado — have moved to reduce cost-of-living increases for current retirees, but those moves are facing court challenges. The cost of pension plans and the benefits earned by the approximately 17 million state and local government workers have come under heightened scrutiny in recent years, as private-sector pensions grow increasingly rare and governors struggle to contain costs and, in many instances, reduce taxes.
Government employee union leaders, meanwhile, say the problems plaguing public pension plans are largely overstated. "While individual investors are still struggling to grow their retirement portfolios to sufficient levels, pension funds have shown remarkable resilience," said Gerald W. McEntee, president of the American Federation of State, County and Municipal Employees. "These funds are not only persevering but are well on their way to full recovery."
McEntee added that retirees who were AFSCME members earn average pensions of approximately $19,000 per year, of which member contributions and investment returns cover 70 to 80 percent. "They earn modest benefits after a career of service," he said.
Bill Gross Battles Dealers on Outlook as Treasuries Gain
by Daniel Kruger and Wes Goodman - Bloomberg
The world’s biggest bond dealers dispute Bill Gross’s assertion that the $9.13 trillion market for U.S. Treasuries offers little value. While Gross, who runs Pacific Investment Management Co.’s $236 billion Total Return Fund, is betting against government debt, the 20 firms that trade with the Federal Reserve predict yields on the benchmark 10-year Treasury note will hold below 4 percent for a third straight year for the balance of 2011.
"I could join the dealers and say the 10-year’s not going to go to 4 percent, so what am I left with?" Gross said in a telephone interview April 20. "I’m left with an under-yielding, less-than-inflation security. I have better choices. As a firm we’re not going to put up with it."
So far, Goldman Sachs Group Inc., Credit Suisse Group AG and the rest of the primary dealers are proving right. U.S. bonds of all maturities are generating their best returns since August, gaining 0.49 percent this month. Optimism Congress will cut spending, slower growth and rising demand from banks meeting tighter risk standards governing the capital they must hold to cushion against losses are supporting bond prices.
Yields on 10-year notes ended last week at 3.39 percent, down from this year’s high of 3.77 percent on Feb. 9, even as Standard & Poor’s cut its outlook for the U.S.’s top AAA credit rating to "negative" from "stable." S&P said the move indicates a one-in-three chance of a downgrade.
‘Significant Demand’
"What’s telling is the significant volume of buying when 10-year yields were above 3.50 percent and 30-year bond yields were around 4.65 percent," said William O’Donnell, head U.S. government bond strategist at RBS Securities Inc. in Stamford, Connecticut, a primary dealer. "There’s still significant demand for long-end Treasury paper at those levels and I don’t think Bill Gross is going to make that demand disappear."
Demand at Treasury auctions has risen to record levels this year, with investors submitting $3 in orders for every $1 of debt offered, data compiled by Bloomberg show. At this month’s auctions of three-, 10- and 30-year bonds, the so-called bid-to- cover ratio exceeded the average of the previous 10 sales. RBS forecasts yields will fall to 3.25 percent by June 30, before ending the year at 3.6 percent. Goldman Sachs, the most accurate bond forecaster in the 13 quarters ended March 31 based on data compiled by Bloomberg, sees them at 3.5 percent in June and 3.75 percent in December.
"Increased downgrade risk doesn’t necessarily imply increased Treasury yields," Goldman Sachs economists led by Jan Hatzius in New York wrote in an April 19 report. "A significant push toward fiscal austerity would lead to lower growth and lower growth would lead to easier monetary policy for longer."
Fed policy makers, who meet this week, will likely keep their target interest rate for overnight loans between banks in a record low range of zero to 0.25 percent through year-end, according to the median estimate of more than 75 economists surveyed by Bloomberg. A separate poll show the economists reduced their 2011 growth estimates to 2.9 percent from 3.2 percent in February.
Ten-year yields fell almost two basis points, or 0.02 percentage point, last week, according to Bloomberg Bond Trader prices. The 3.625 percent security due February 2021 rose 3/32, or 94 cents per $1,000 face amount, to 101 28/32. The yield fell one basis point to 3.39 percent today at 7:43 a.m. in New York.
Competing Proposals
The split between Gross and the dealers comes as President Barack Obama and Republicans in Congress debate competing proposals to reduce the $1.4 trillion budget deficit. Obama has proposed $4 trillion in spending cuts within 12 years through a combination of reduced expenditures and tax increases. The Republican-controlled House passed a budget April 15 that would trim spending by more than $6 trillion over a decade and slash government support of Medicare and Medicaid.
With the supply of marketable Treasuries outstanding having more than doubled to $9.1 trillion since the start of the financial crisis in August 2007, the political moves are so far insufficient for Gross. "This no Treasury thing is simply a demonstration of vigilance on the part of Pimco that says these bonds aren’t worth what others appear to think they’re worth, and we prefer another menu, that’s all," Gross said.
Gross eliminated Treasuries from his fund in February and then, in March, bet that the debt will lose value, according to the firm’s holdings statement released April 11. The Total Return Fund has averaged an 8.65 percent gain the past five years, beating 99 percent of its peers, Bloomberg data show. While Pimco’s $1.24 trillion in assets under management commands the attention of investors, foreign central banks and sovereign wealth funds exert a bigger day-to-day pull on Treasury yields, said John Fath, who manages $2.5 billion at BTG Pactual in New York.
"Gross’s point is well-taken and ultimately I think he will be right," said Fath, former head of Treasury trading at primary dealer UBS AG. Even so, "if these guys are willing to hold these securities at these levels, it’s going to be hard to see rates go up," he said in reference to overseas investors. Foreign holdings of Treasuries jumped $36.4 billion to $4.47 trillion in the first two months of the year, according to the Treasury. U.S. financial markets should be stable over the long term, even after S&P’s warning, Xia Bin, an adviser to the Chinese central bank, said last week.
Increasing Holdings
Banks have increased their holdings of Treasuries and agency securities by $49.1 billion to $1.67 trillion since the end of last year, according to Fed data. The Basel Committee on Banking Supervision, appointed by the Swiss government, proposed rules in October requiring banks to increase available capital under the so-called Basel III rules. While commercial and industrial loans rose to $1.25 trillion this month from $1.21 trillion in September, they remain below the peak of $1.62 trillion in October 2008, Fed data show.
Banks may boost their purchases as they reinvest the proceeds of maturing loans and non-government bonds, according to Laurence Fink, chairman and chief executive officer of New York-based BlackRock Inc., which manages $3.65 trillion. "Banks are going to have their C&I loans and their structured bonds rolling off to the tune of $2 trillion," Fink said April 19 on Bloomberg Television’s InsideTrack with Erik Schatzker. "Banks may be a big buyer of Treasuries."
End of QE2
The end of the Fed’s second-round of so-called quantitative easing may not be enough to spark a sell-off. The $600 billion bond-purchase program wraps up in June, and the Fed is likely to signal at the conclusion of this week’s meeting it will continue to reinvest the proceeds of maturing mortgage securities in Treasuries, said Neal Soss, chief economist at Credit Suisse. "We do not view the end of QE2 as a reason for rates to spike," Nomura strategists led by George Goncalves wrote in a report published April 19. "If the markets behave according to prior QE experience, we should see the curve flatten and rates stay in check."
A flatter yield curve would mean a smaller difference between short- and long-term bond rates. Ten-year notes yield 2.73 percentage points more than two-year securities, compared with the mean of 1.16 percentage points since 1991. In its first round of bond purchases the Fed bought $1.7 trillion of mortgage and Treasury securities in 2009 and the first quarter of 2010. Within three months of that program ending, 10-year yields fell to 2.93 percent from 3.83 percent.
HSBC Holdings Plc has the most bullish year-end yield forecast among the primary dealers at 3.4 percent, followed by Societe Generale at 3.5 percent, according to a survey by Bloomberg News. Jefferies Group Inc. has the most bearish call at 5 percent, followed by BNP Paribas’ 4.25 percent.
Bumbling Gordon Brown does the world a favor
by David Marsh - MarketWatch
Europe’s time to lead the IMF is over
Timing is everything. Gordon Brown, the former British Labour Party leader, chancellor of the exchequer and prime minister, is pondering ruefully this essential fact as he surveys the wreckage of his attempt to become managing director of the International Monetary Fund.
The incumbent, French politician-turned-monetary-superstar Dominique Strauss-Kahn, will probably give up the post this summer a year ahead of expiry of his five-year term to oppose Nicolas Sarkozy in the forthcoming French presidential election. Not only Strauss-Kahn’s vaunting ambition to rule from the Elysée Palace rather than from the Potomac, but also the painful prospect of a Greek debt restructuring on his watch are probably prompting Strauss-Kahn to return to the Seine.
If Brown had been capable of winning bipartisan support, the job would have been his for the asking — even though he is arguably not the best candidate. He gets on well with Sarkozy and German Chancellor Angela Merkel. President Barack Obama would probably not have turned down a British overture. The Brits have never had the IMF job in 65 years. However, the Brown bid was dead in the water as a result of long-standing enmity between him and David Cameron, his successor.
Last week in a BBC radio interview, Cameron unceremoniously bundled the Brown candidature off the agenda by saying any new IMF leader had to be "extraordinarily competent and capable." His predecessor comprehensively was not that person. "If you have someone who didn’t think we had a debt problem in the U.K. when we self-evidently do have a debt problem, then they might not be the most appropriate person to work out whether other countries around the world have debt and deficit problems." Fairly clear, then.
In the poisoned political world of today, British pragmatism and bipartisanship when it comes to occupying top international financial jobs are clearly not on show. In this case, that’s good for the U.K. and for the rest of the world. With his disastrous three-year prime ministership under his belt, Brown was evidently thirsting for fresh triumphs. He is now too old and too insecure to make a success of the IMF post. Far better to give it to a candidate from the up and coming developing counties, breaking with the long tradition that the managing directorship should go to a European.
An earlier indication of the efforts the Europeans make to get the top job came in 1999 with the nomination of Germany’s Horst Köhler — although he too left early, in 2004, to become federal president in Berlin, a task that ended in a shambles when he stood down last year. The then-Chancellor Gerhard Schröder pushed through a German candidate in 1999 against initial American resistance. The first German proposed by Schröder was Caio Koch-Weser, a German official with considerable international experience, but the United States didn’t like him and said, "no."
The second candidate was a surprise. Hans Tietmeyer, up to August 1999 president of the Deutsche Bundesbank, who was offered the job in a discreet intervention by former Chancellor Helmut Schmidt. Tietmeyer thought about it for 24 hours, then turned it down because, at 68, he was too old. The third attempt with Köhler (then at the East European development bank) was accepted — with the results that we know now.
Don’t feel sorry for Brown. His big chance was in 2007 when, as the then all-powerful British chancellor of the exchequer, he could have walked into the IMF job to take over from Köhler’s successor, Spain’s Rodrigo de Rato. But Brown decided instead to stay in London and become prime minister when Tony Blair gave up the job. A huge political and personal miscalculation.
Timing is everything. Brown was inept in not checking his IMF scheme with Cameron, who could have told him not to bother. But bumbling Brown has done something for humanity by conceivably paving the way for the developing countries to take over IMF leadership — if they can find the right candidate.
Builders of New Homes Seeing No Sign of Recovery
by David Streitfeld - New York Times
In this distant Chicago suburb, a builder has finally found a way to persuade people to buy a new house: he throws in a car.
Kim Meier’s spring promotion, which includes a $17,000 credit at a nearby General Motors dealer, has produced seven sales since the beginning of March, a veritable windfall of business for a builder who sold only 20 houses last year. "We needed to do something dramatic," said Mr. Meier. "The market’s been soft."
That is one way of putting it. The recession hurt a lot of industries, but it knocked the residential construction market to the mat and has kept it there, even as the broader economy has started to fitfully recover. Sales of new single-family homes in February were down more than 80 percent from the 2005 peak, far exceeding the 28 percent drop in existing home sales. New single-family sales are now lower than at any point since the data was first collected in 1963, when the nation had 120 million fewer residents.
Builders and analysts say a long-term shift in behavior seems to be under way. Instead of wanting the biggest and the newest, even if it requires a long commute, buyers now demand something smaller, cheaper and, thanks to $4-a-gallon gas, as close to their jobs as possible. That often means buying a home out of foreclosure from a bank.
Four out of 10 sales of existing homes are foreclosures or otherwise distressed properties. Builders like Mr. Meier who specialize in putting up entire neighborhoods on a city’s outskirts — Richmond is some 50 miles northwest of downtown Chicago — cannot compete despite chopping prices.
Chicago was not an epicenter of the housing boom with the sort of overbuilding found in Arizona or Florida, but new-home sales in the metro area are down 90 percent. There are about 65 sales a week for a region of 10 million people. Several factors have combined to make the Chicago market so weak. There were more subprime loans here, which meant more defaults, which in turn left more distressed homes for buyers to choose from.
Most of the construction here was done by private builders. Unlike the national firms, they did not have the resources to survive a prolonged downturn. "Some of the private builders just evaporated, and some said the hell with it," said Tracy Cross, a consultant who tracks the local market. Only a few remain, including Mr. Meier’s KLM Builders.
Construction of new single-family homes usually surges after a recession because of lower rates and pent-up demand. But the Census Bureau said this week that while multi-unit construction had picked up strongly in the last year, single-family home construction fell 21 percent to an annual rate of 422,000. One consequence of the anemic pace: more than 1.4 million residential construction jobs have been lost in the last five years.
Robert Barycki is one of a handful of buyers keeping the market from drying up completely. He’s 30, a partner in a hardware store, and currently living with his parents. He was drawn by the new-car offer to the biggest of KLM’s four active developments, called Sunset Ridge Estates. "My money was in the bank, collecting very little interest, so I thought I might as well take a little gamble," said Mr. Barycki, who is paying $182,000 for a three-bedroom. "Eventually, home-owning will come back."
Eventually, no doubt. But in the meantime, sentiment might still be souring. Executives at Equity LifeStyle Properties, a Chicago firm that sells properties in resort communities, said this week they were seeing "a psychological change": potential customers wanted to preserve their capital rather than risk it in real estate.
Bill McBride, who runs the popular financial blog Calculated Risk, said this might be the moment when people decisively started to turn on home ownership. "I’m starting to feel the hate," he wrote.
In such an atmosphere, every new home built and sold represents a victory. One of the few segments of the market that has shown signs of life is urban townhomes. Lennar, a national builder, has one of these developments under way in the upscale community of Arlington Heights, about 20 miles from downtown Chicago. Then Pulte, another national builder, started construction on its own townhouse community a few miles away, even as it was recording a 2010 third-quarter loss of a billion dollars. In the meantime, Lennar cut its prices by another 10 percent, but sales in the fourth quarter barely budged.
Lennar says its sales have picked up and it is drawing customers from people who looked at Pulte’s project and passed. Pulte says the same thing about Lennar. "It’s brutal out there," said Mr. Cross, the consultant. "You have to put on your boxing gloves."
Some victories may be brief. Builders say buyers have been acting ahead of a small rise in mortgage insurance premiums from the Federal Housing Administration, which backs many purchases. That mini-rush to lock in a deal might lift March sales figures for new homes, which are due out Monday, analysts say. Mr. Meier, who has been building in this stretch near the Wisconsin border for 25 years, hopes the car promotion will put a floor under his market. In flush times, he would sell about 100 houses a year to a diverse group of buyers, from empty nesters to commuters.
Richmond bills itself as a "Village of Yesteryear," which has come true in another way as house prices roll back to the mid-1990s. But some KLM buyers look for more, choosing to skip the car and put the $17,000 into the house instead.
That is what Wayne and Doris Powrozek, who are paying $193,000 for a three-bedroom, did. "If it’s free, it’s for me," said Mr. Powrozek, who recently retired from AT&T. The Powrozeks bought because they were worried prices were going up. Mr. Meier says he thinks they must — the cost of raw materials is rising. But with the price of existing homes continuing to fall, and the prospect of more foreclosures, he could again price himself out of the market.
Like nearly all those in real estate, Mr. Meier is determinedly optimistic. "Everybody wants in at the top, no one wants in at the bottom," he said. "People are paralyzed by their fear."
Last year, KLM told buyers it would match the government’s $8,000 tax credit. The car promotion more than doubles that. If the market still does not turn around, what could be their next promotion? "Buy one, get one free," his wife, Sally, suggested. They had a good laugh over that.
Stimulus by Fed Is Disappointing, Economists Say
by Binyamin Appelbaum - New York Times
The Federal Reserve’s experimental effort to spur a recovery by purchasing vast quantities of federal debt has pumped up the stock market, reduced the cost of American exports and allowed companies to borrow money at lower interest rates.
But most Americans are not feeling the difference, in part because those benefits have been surprisingly small. The latest estimates from economists, in fact, suggest that the pace of recovery from the global financial crisis has flagged since November, when the Fed started buying $600 billion in Treasury securities to push private dollars into investments that create jobs.
As the Fed’s policy-making board prepares to meet Tuesday and Wednesday — after which the Fed chairman, Ben S. Bernanke, will hold a news conference for the first time to explain its decisions to the public — a broad range of economists say that the disappointing results show the limits of the central bank’s ability to lift the nation from its economic malaise. "It’s good for stopping the fall, but for actually turning things around and driving the recovery, I just don’t think monetary policy has that power," said Mark Thoma, a professor of economics at the University of Oregon, referring specifically to the bond-buying program.
Mr. Bernanke and his supporters say that the purchases have improved economic conditions, all but erasing fears of deflation, a pattern of falling prices that can delay purchases and stall growth. Inflation, which is beneficial in moderation, has climbed closer to healthy levels since the Fed started buying bonds. "These actions had the expected effects on markets and are thereby providing significant support to job creation and the economy," Mr. Bernanke said in a February speech, an argument he has repeated frequently.
But growth remains slow, jobs remain scarce, and with the debt purchases scheduled to end in June, the Fed must now decide what comes next. The Fed generally encourages growth by pushing down interest rates. In normal times, it reduces short-term interest rates, and the effects spread to other kinds of borrowing like corporate bonds and mortgage loans. But with short-term rates hovering near zero since December 2008, the Fed has tried to attack long-term rates directly by entering the market and offering to accept lower returns.
The Fed limited the program to $600 billion under considerable political pressure. While that sounds like a lot of money, the purchases have not even kept pace with the government’s issuance of new debt, so in a sense the effort has amounted to treading water. And a growing body of research suggests that the Fed could have had a larger impact by spending more money on a broader range of debt, like mortgage bonds, as it did initially.
A vocal group of critics, meanwhile, argues that the Fed has already done far too much, amassing a portfolio of more than $2 trillion that may impede the central bank’s ability to raise interest rates to curb inflation. Some of these critics view the rising price of oil and other commodities as harbingers of broader price increases. "I wasn’t a big fan of it in the first place," said Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia and one of the 10 members of the Fed’s policy-making board. "I didn’t think it was going to have much of an impact, and it complicated the exit strategy. And what we’ve seen has not changed my mind."
The Fed’s decision to buy bonds, known as quantitative easing, emulated Japan’s central bank, which started buying bonds in 2001 to break a deflationary cycle. The American version worked well at first. From November 2008 to March 2010, the Fed bought more than $1.7 trillion in mortgage and Treasury bonds, holding down mortgage rates and reducing borrowing costs for well-regarded companies by about half a percentage point, according to several studies. That is an annual savings of $5 million on every $1 billion borrowed.
As the economy sputtered last summer, Mr. Bernanke indicated in an August speech that the Fed would start a second round of quantitative easing, soon nicknamed QE 2. The initial response was the same: Asset prices rose, interest rates fell, and the dollar declined in value.
But in addition to being smaller, and solely focused on Treasuries, there also was a problem of diminishing returns. The first round of purchases reduced the cost of borrowing by persuading skittish investors to accept lower risk premiums. With markets closer to normalcy, Mr. Bernanke warned in his August speech that it was not clear that the Fed would have comparable success in persuading investors to accept even lower rates of return. "Such purchases seem likely to have their largest effects during periods of economic and financial stress," he said.
The Fed says that its expectations were tempered by these realities, but that the program nonetheless has lowered yields on long-term Treasury bonds by about 0.2 percentage point relative to the rates investors would have demanded in the Fed’s absence. That is about the same impact the central bank might have achieved by lowering its benchmark rate 0.75 percentage point, which in normal times would be an aggressive move.
But some economists say the new program has had a more limited impact on the broader economy than would a traditional cut in short-term interest rates. The Fed predicted that investors would be forced to buy other kinds of debt, reducing rates for other borrowers. But the supply of Treasuries available to investors has grown since November, as issuance of new government debt outpaced the Fed’s purchases.
A study published in February found that interest rates decreased, but only for companies with top credit ratings. "Rates that are highly relevant for households and many corporations — mortgage rates and rates on lower-grade corporate bonds — were largely unaffected by the policy," wrote Arvind Krishnamurthy and Annette Vissing-Jorgensen, both finance professors at Northwestern University.
Another indication of its limited success: Borrowing has not grown significantly, suggesting that corporations — which are sitting on record piles of cash — are not yet seeing opportunities for new investments. Until they do, some economists argue that the Fed is pushing on a string. "What has it done? It has eased credit conditions, it has pumped up the stock market, it has suppressed the dollar," said Mickey Levy, Bank of America’s chief economist. "But does the Fed think that buying Treasuries and bloating its balance sheet is really going to create permanent job increases?"
Our Debt Binge Is Ending — And The Middle Class Will Get Clobbered
by Henry Blodget - Daily Ticker
The world is coming to the end of a 50-year debt supercycle, John Mauldin says, and the austerity required to put us back on solid financial footing will hammer ordinary Americans. Mauldin, a financial analyst and the author of ENDGAME: The End Of The Debt Supercycle And How It Changes Everything, thinks that the the US will soon be forced to confront the fact that it has borrowed way too much in the past few decades and must severely cut back.
The US's $1.6 trillion-a-year deficit, Mauldin believes, must quickly be cut to about $300 billion a year, or the US will face a debt crisis. And given that our current government can barely find ways to chop $30 billion of spending from the 2011 budget, these cuts are going to be painful.
What will the forced austerity mean for ordinary Americans? Higher taxes and significantly reduced Medicare and Medicaid spending, for starters, Mauldin says. And then cuts to almost everything else in the budget, including military spending and education. In other words, as has so often been the case in the past couple of decades, the middle class will bear the brunt of the impact.
A Crack in Wall Street’s Defenses
by Gretchen Morgenson - New York Times
Two individual investors just scored a remarkable win against Citigroup.
A few weeks ago, the pair was awarded a total of $54.1 million in a securities arbitration case against the Smith Barney unit of the company — the largest amount ever awarded to individuals in such a case, according to the Financial Industry Regulatory Authority.
This legal dust-up involved supposedly conservative municipal bond investments that Smith Barney had peddled to its wealthiest clients. The investments, which were big money-makers for Smith Barney, turned out to be anything but safe for the firm’s clients: various portfolios lost between half and three-quarters of their value during the financial crisis.
Arbitrators rarely, if ever, discuss such cases, and the materials turned over by both sides are kept under wraps. But the outsize award, which included $17 million in punitive damages, is not the only thing that is noteworthy. The arbitrators appeared to reject — resoundingly — three defenses that Wall Street often employs when clients sue:
No. 1: We didn’t blow up your portfolio. The financial crisis did.
No. 2: If you’re wealthy and sophisticated, you should have understood the risks.
And, No. 3, the most common defense of all: The prospectus warned that you could lose your shirt, so don’t come crying to us if you do.
The investors who prevailed here are Gerald D. Hosier, 69, a wildly successful intellectual-property lawyer, and Jerry Murdock Jr., 52, a prosperous venture capitalist. Mr. Hosier and a trust he set up for his adult children received $48 million. Mr. Murdock got about $6 million.
The men, neighbors in Aspen, Colo., suffered $27 million in out-of-pocket losses on their investments. The big clunker was a municipal bond arbitrage strategy that their Smith Barney broker had characterized as safe, according to the men’s complaint. The deal was supposedly designed to eke out more income than a simple portfolio of bonds would generate.
Not only did the men recover all their losses in the award, they also received damages. Mr. Hosier was awarded $15 million in punitive damages and $6.3 million in market-adjusted damages. The arbitrators also awarded $3 million for the men’s legal fees.
Alexander Samuelson, a Citigroup spokesman, said: "We are disappointed with the decision, which we believe is not supported by the facts or law." He noted that the bank had won a number of arbitrations involving such leveraged municipal bond strategies and said that the bank was considering its legal options in this case.
Mr. Hosier invested in the bank’s municipal arbitrage strategy from 2002 through 2007. Requiring a minimum investment of $500,000, the deals employed the wonders of leverage, borrowing 8 to 10 times the value of the municipal bonds in an underlying portfolio to generate higher income. Calling the strategy conservative and ideal for investors’ safe money, Smith Barney sold the trusts to wealthy investors.
But Smith Barney and its brokers were the prime beneficiaries of the strategy, which generated fees not only on the money that had been borrowed to juice the returns but also through the life of the investment. Clients paid 0.35 percent annually on the portfolios, plus a fee of 20 percent of all income earned by the investors above a 5.5 percent threshold each year.
Smith Barney’s sales representatives kept 40 percent of the total fees paid by their investors, far exceeding what they would have earned selling ordinary municipal bonds. This arrangement encouraged Smith Barney to lever up the portfolios, Mr. Hosier’s lawyers argued, putting the interests of their clients and those of Smith Barney at odds.
Investors who bought these deals agreed to lock up their money for two years and had to pay a substantial fee if they redeemed their holdings during the next three years. Mr. Hosier was the single biggest buyer of Smith Barney’s municipal arbitrage deals, with $26 million invested over time. But four different portfolios in which he invested raised almost $2 billion from all investors. All of the portfolios performed badly.
"Citigroup mismarketed this product to high-net-worth investors as an alternative to municipal bonds with a slightly higher return," said Philip M. Aidikoff, a lawyer at Aidikoff, Uhl & Bakhtiari in Beverly Hills, Calif., who represented Mr. Hosier and Mr. Murdock. "Our clients never knowingly agreed to risk a significant loss of principal for a few extra points of interest."
As for Citigroup’s three defenses, Mr. Aidikoff, along with the co-counsel Steven B. Caruso, at Maddox, Hargett & Caruso in New York, demonstrated that municipal bonds did not suffer catastrophic losses during the period. This squelched the bank’s argument that the financial crisis did in the strategy. Regarding their clients’ sophistication and wealth, the lawyers agreed that both men were comfortable taking risks in certain circumstances, but not with the money they had given to the bank. "Citigroup misled their wealthiest clients and then tried to blame them for relying on what they were told," Mr. Caruso said.
Arguing that the risks were laid out in the prospectus also seems to have run into a stone wall. Mr. Hosier’s lawyers produced seven different notices on the topic published by Finra and its predecessor regulator since 1994, including a notice from 2009 that states: "Providing risk disclosure in a prospectus or product description does not cure otherwise deficient disclosure in sales material, even if such sales material is accompanied or preceded by the prospectus."
Mr. Hosier’s victory is particularly noteworthy, given the nominal amounts typically extracted by regulators in cases against major banks. The punitive damages awarded to Mr. Hosier, for example, are more than triple the $4.45 million penalty levied against Wachovia Securities by the Securities and Exchange Commission this month in a suit that the S.E.C. settled with the bank. The S.E.C. accused the bank of selling about $10 million of mortgage-related securities to investors at above-market prices and at excessive markups. Wachovia, now part of Wells Fargo, neither admitted nor denied wrongdoing in the settlement.
The arbitrators in Mr. Hosier’s case seemed keen to hold Wall Street accountable. And his win against Citigroup does not appear to be an anomaly. Since April 2010, his lawyer, Mr. Aidikoff, has argued 16 other arbitrations involving the same type of investment. Mr. Aidikoff and the lawyers who assist him have won every one.
In an interview, Mr. Hosier said the experience had opened his eyes to the disturbing ways of Wall Street. "Instead of the financial world being the lubricant for business, they are out there manufacturing products with no utility whatsoever except for generating fees," he said. "Somebody’s got to do something about Wall Street. It is destroying the country."
Citigroup considers plea to stop funding TransCanada pipeline
by Meagan O'Toole-Pitts - Jacksonville Daily Progress
After a meeting with Citigroup officials in New York City Thursday, Winnsboro landowner David Daniel said he’s hopeful that the conglomerate will stop funding TransCanada.
"It’s one of the world’s largest banks and I really didn’t know what to expect but when I was done speaking the shareholders showed their support through a round of applause and in support of the concerns," said Daniel, founder of STOP (Stop Tarsands Oil Pipelines). "I was really taken back by that."
Daniel was accompanied at Citigroup’s annual stockholders meeting by Brant Olson, campaign director of the Rainforest Action Net-work, and Alex Moore, dirty fuels campaigner at Friends of the Earth. The Rainforest Action Network is a Citigroup stockholder, Daniel said, which allowed him to speak at the meeting. "I was able to give examples of eminent domain abuse and our safety concerns," he said. Daniel said Trans-Canada pushed him into signing a contract for a temporary easement of his land.
TransCanada has ac-quired land throughout East Texas and Okla-homa to build its Key-stone XL pipeline, an extension that will en-able oil producers in Alberta, Canada to ship to refineries in Texas’ Gulf Coast. "I didn’t know anything about the project until my neighbor called me and said someone was trespassing," Daniel said. "Then a month later I got a letter asking to survey my land. I didn’t write back or grant permission to survey. Then I got a letter from a Houston attorney threatening to apply eminent domain."
TransCanada has not yet received a presidential permit from the U.S. Department of State to begin construction. Landowners along the proposed 1,700-mile pipeline have filed suit against TransCanada for using deceptive trade practices. "They’ve told land-owners they have all the permits they need when they don’t, so they’re really opening up doors for themselves in terms of litigation," said STOP Coordinator Brittany Dawn McAllister.
Citigroup has raised more than $5.8 billion for TransCanada and its related companies since 2007. In September 2010, Citigroup managed a $1 billion bond for Trans-Canada, purchasing $295 million of notes issued.
After meeting with Valerie Smith, Citi-group’s vice president of corporate sustainability, for two hours after Thursday’s meeting, Daniel said Citigroup took his concerns seriously. "I asked the chairman and the CEO and the shareholders if they would look into this and their response was ‘We will look into it’ and they wanted me to talk to their attorneys and provide information to their attorneys so we’re in the beginning stages," Daniel said. "Hopefully they’ll be able to make a better, well-informed decision. They haven’t made a decision yet."
Daniel said it’s important that Citigroup is made aware of Trans-Canada’s bad business practices. "We were letting them know why we think they should question the integrity of this company that they’re be financing," he said. "It’s a financial hazard to them and we wanted to ex-press those concerns." Citigroup officials will continue to talk to Daniel about the issues, he said.
TransCanada representative Shawn Howard said he didn’t know how TransCanada would be impacted if Citigroup stopped funding the corporation. "There could be any number of groups that provide money to us at any given time," he said. "It just depends on what deals are going on."
China broadens stress tests for banks
by Jamil Anderlini - Financial Times
China has ordered its banks to conduct stress tests to see how they would be affected if property prices fell by up to 50%, in a sign of growing official unease about the overheated real estate market. The tests are more stringent and factor in a larger drop in prices than earlier ones conducted in the past two years. This comes after predictions from prominent Chinese analysts of 20-30 per cent property price declines this year.
Analysts said previous tests looked only at the effect of housing price declines on loans to developers and mortgage borrowers, and disregarded the effect on loans collateralised by land and real estate. This resulted in an overly optimistic assessment of their exposure to a serious property market correction. "If property prices drop 50 per cent we would be in big trouble; it would mean a hard landing for the economy," according to Wang Tao, chief China economist at UBS Securities.
UBS recently described the Chinese property market as the single most important sector in the entire global economy because of the overwhelming importance of real estate construction to China’s growth model and, by extension, global commodity demand. Ms Wang said a crash in the real estate market could have a huge effect on developers, cement companies, steel producers and consumer purchases of items such as cars and appliances, which are closely correlated to property sales.
For now, prices are still rising in China despite more than a year of government policies to cool the sector and bring down prices that are well out of reach of most of the population. Property transaction volume across the whole country increased in the first quarter of the year from the same period a year earlier but a closer look at data shows a steep decline in March in the 10 largest cities, which often lead the rest of the country.
Transaction volume collapsed 40 per cent from a year earlier in China’s 10 largest cities in March following a 33 per cent increase in the first two months, according to Du Jinsong, a real estate analyst at Credit Suisse. Mr Du forecasts a 5-10 per cent decline in real estate prices in China this year, accompanied by a 15 per cent fall in transaction volume but he said most Chinese analysts were predicting a 20-30 per cent decline in prices this year.
Officials say about 20 per cent of all Chinese bank lending has gone directly to mortgage borrowers or property developers but a huge proportion of loans to other borrowers are backed by land as collateral. China’s banking regulator said it had asked banks to test the effect of 50 per cent price drops in cities with the fastest price increases, but in cities where prices had not risen as much banks were required to test for price drops of 40 per cent, 30 per cent or less.
Officials were quick to point out the stress tests were not a prediction by the regulator or an indication of the government’s expectations. Beijing has introduced a series of measures since last year to slow soaring prices, including raising interest rates, raising down-payment requirements, directly restricting home purchases, imposing price control targets and levying a trial real estate tax in Shanghai and Chongqing, two of China’s biggest cities.
Quake Hits Toyota, Nissan, Honda Domestic Output
by Yoshio Takahashi - Wall Street Journal
A disruption to parts supply chains following the earthquake and tsunami in Japan last month resulted in domestic production at Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. plummeting by more than half in March.
Although March is usually the biggest production month—as book closing usually prompts dealerships to make a last-ditch effort to sell as many vehicles as possible—this didn't prevent a sharp fall in output. According to figures released Monday, Toyota's domestic output fell by 63% from a year earlier, Nissan's production dropped 52%, and Honda's fell 63%.
The problems with procuring parts also saw a reduction in exports from Japan. This, combined with the inability of overseas factories to maintain output because of the parts shortage, raised concerns about whether the car giants would be able to sustain vehicle supplies to dealerships abroad.
Although the car companies restarted all of their domestic plants by mid-April in the immediate aftermath of the disaster, the expectation is that output won't be restored to normal any time soon as some parts suppliers are still struggling to restore production. In addition, the government has warned of a likely power shortage this summer in eastern Japan, where some auto factories are located and more than 500 parts makers operate plants.
Japan's top three car manufacturers are currently operating their domestic factories at half of planned or normal production rates. The ongoing difficulties with parts supplies means it's hard for them to make any certain long-term predictions about when the situation will improve.
Honda, Japan's third-biggest car maker by volume, said Monday its plants in Japan will remain at 50% of its pre-quake production plan until the end of June, and output levels after July are uncertain.
The car maker only said it expects its production at home to return to its initially planned level by the end of the year. That follows the outlook outlined by Toyota last Friday that its output won't be back to normal at least until November.
"We are restoring operations. But continuing aftershocks sometimes undo our work. We are repeating this over and over again. That makes it hard to foresee" accurately when operations will return to pre-quake levels, Toyota President Akio Toyoda said at a press conference last Friday. Toyota is still unable to source 150 types of parts from quake-hit plants more than a month after the quake hit March 11.
The protracted output disruption threatens Toyota's status as the world's biggest car maker, which it could lose to General Motors Co. It may even fall behind Volkswagen AG, according to Mamoru Kato, an analyst at Tokai Tokyo Research Center. The reduced vehicle production in Japan dented the industry's March sales, which fell by 37% from a year earlier, the largest fall since May 1974, the Japan Automobile Dealers Association said earlier this month. Credit Suisse estimates that Japanese auto makers' global production could drop 37% in the first half through September from a year earlier and 19% for the full fiscal year.
The latest announcement about the country's auto industry comes a few days before Japanese car makers start reporting their latest earnings, in which they are expected to provide grim forecasts for the current fiscal year that started this month. Toyota said its domestic production tumbled 63% in March from the same month last year to 129,491 vehicles and exports dropped 33% to 107,751 vehicles in the month.
Nissan, Japan's second-biggest car maker by volume, said its output in Japan sank 52% to 47,590 vehicles and exports dropped 13% to 41,746 vehicles while Honda said its output at home sagged 63% to 34,754 vehicles and exports were down 26% at 20,699 vehicles. Among smaller Japanese car makers, Suzuki Motor Corp. said its production tanked 60.2% to 41,790 vehicles, Mazda Motor Corp.'s output slipped 53.6% to 39,887 vehicles and Mitsubishi Motors Corp.'s had a 25.7% drop in production to 49,434 in March.
Japanese government considers underground wall to contain Fukushima radiation
by The Yomiuri Shimbun
The Japanese government is considering building an underground barrier near the Fukushima No. 1 nuclear power plant to prevent radioactive material from spreading far from the plant via soil and groundwater, a senior government official said. Sumio Mabuchi, a special adviser to the prime minister, revealed the plan Friday at the Japan National Press Club building in Tokyo. The plan is the first attempt to address the risk of contaminated water spreading far from the plant through soil.
According to Mabuchi, the barrier would extend so far underground that it would reach a layer that does not absorb water. The wall would entirely surround the land on which reactors No. 1, 2, 3 and 4 stand. Mabuchi is a member of the unified command headquarters set up by the government and Tokyo Electric Power Co. to deal with the nuclear crisis. He serves as the head of government representatives on a team dealing with medium- and long-term issues, including how to contain the spread of radioactive materials from the plant.
The process of filling the containment vessel of the Fukushima power plant's No. 1 reactor with water is progressing steadily, according to Tepco. Tepco plans to continue injecting water into the containment vessel until the fuel rods inside are fully submerged in what the power company has called a "water coffin."
At a press conference held Friday, Tepco said it believed pressure suppression pools at the bottom of the No. 1 reactor's containment vessel were full of water, and that the top section of the containment vessel was about half full. Under normal circumstances, the pressure suppression pools are about 50 percent full with water. The pressure suppression pools help control the air pressure inside the reactor's pressure vessel. Operators can open valves to release steam from the vessel into the suppression pools, where it is cooled and condensed to water.
According to Tepco, it has poured about 7,000 tons of water into the No. 1 reactor's pressure vessel. The company said it believes almost all of that water is still inside the pressure vessel and the containment vessel. However, the firm said it has injected about 14,000 tons of water into the No. 2 reactor and 9,600 tons of water into the No. 3 reactor since cooling operations began. In both cases, the amount injected exceeds the about-7,000-ton capacity of the reactors' containment vessels.
Tepco believes considerable amounts of water leaked from those reactors' containment vessels into their turbine buildings through cracks in pressure suppression pools and other routes. Meanwhile, at the No. 4 reactor, Tepco has attached cameras and other equipment to a concrete pump used to inject water into the pool containing spent nuclear fuel rods to monitor the water and radiation levels around the clock.
According to the company, water in the pool was 91 C (196 F) on Friday, and the water level was about 2 meters (about 6.5 feet) above the spent fuel rods. Those readings were about the same as those taken by the company on April 12, Tepco said.
Fukushima 50 criticise 'inconsistent' information
by Danielle Demetriou - Telegraph
The Fukushima 50, emergency nuclear plant workers in Japan, have accused the government of inconsistent handling of data in relation to radiation exposure. Workers at Fukushima Daiichi nuclear plant claim to have been risking their health to battle around the clock in order to regain control following severe damage caused by the March 11 earthquake and tsunami.
However, concerns have been raised over the fact that the Japanese government took a "special measure" to raise radiation exposure levels from the normal total of 100 millisieverts up to 250 millisieverts in order to deal with the current crisis. There were further claims that some workers were not being required to register their radiation exposure, which they feared could create future issues if health problems arose. "In the end, we are the workers who are exposed," one emergency worker told the Mainichi newspaper.
Another nuclear industry source added: "If the radiation data is handled vaguely, workers may not be able to have proof of their exposure to radiation if they need to fight court battles." Patience among residents of northeast Japan who have been evacuated from their homes as a result of the nuclear crisis was also running increasingly thin this week.
On Friday, families criticised Masataka Shimizu, the head of Tokyo Electric Power Co (TEPCO), the plant operators, as he visited an evacuation centre 30 miles from Fukushima Daiichi. As he bowed deeply in apology to the displaced families, a growing number of evacuees expressed their growing frustration by questioning the actions of the company. Among them was an elderly woman who asked him: "TEPCO has always said 'It's all right, it's all right'." Another demanded: "You've got to bring this back to normal as soon as possible."
218 comments:
1 – 200 of 218 Newer› Newest»Greek bonds are green. Supergreen!.
Then there's even more good news.
And a warning:The sooner a bond haircut for Greece, the better. Well, that would have been true before the first good money went after the bad money. Now "better" has a completely different meaning.
Let me share a little something with you all from the literature of the occult;
"Those that misuse that which they have built shall see it fall from forces within Itself"
(Paraphrasing Alice A Bailey)
Never have truer words been uttered.
Big fiddles with the precious markets over a thin holiday options expiration period, most amusing.
The shorts should understand this, we that hold physical have strong hands.
I won't get into the source but early in the Fukishima incident, nuclear facilities all along the west coast of the US were monitoring for radionuclides because in order to maintain a relatively safe work environment within the various nuclear facilities, they could not afford to have contamination from outside sources screw up their in house baseline radiation numbers.
They would not be able to tell if elevated radiation readings were coming from a new leak inside their own facility or from outside. From what a gather, they were picking up uranium and plutonium radionuclides readings quite early on. Not really high or dangerous but the mere fact they were there meant that one or more of the reactors had broken it's containment.
So of course they lied and kept this from the Sheeple, both in Japan and the U.S.
Big Surprise, aye.
It's just a repeat of the Gulf of Mexico incident, which by the way has almost completely fallen off the radar of most US sheeple. Gee, I guess 'they' must have miraculously cleaned up the bizillions of gallons of crude from the GOM floor. Another triumph for Freedom and Democracy and good old American ingenuity.
Case closed, Mission Accomplished
The Ministry of Propaganda shoots and scores!
They are employing the same kitbag with Fukishima, works like a charm every time.
The chimps & chumps lap it up.
Barf-ilicious.
_
I gotta say I love the photo for today and this part of the caption;
"..at the end of their 10-month, 11,000-mile trip in a 16-horsepower touring car."
This is very inspiring. It means that after the 'flationary collapse we can all still travel around the country on vacation and stay in touch with our 16hp John Deere riding mowers. Could even pick up some 'pin money' cutting lawns along the way.
I'll bet that 16hp just sips fossil fuel compared to the old tricked out Shelby Mustang in the garage. Finally a practical solution to 'peak oil'.
I'll have to share the news with the Oil Drum crowd, they're always brainstorming for clever high tech ways to beat the Oil Reaper.
John Deere just screams 'high tech'.
_
Re. Fukushima, some recent thoughts from Helen Caldicott:
http://www.youtube.com/watch?v=4ITrXVJMKeQ
(from previous thread re: preps for HI vs. deflation) "If I'm all wrong here, I'd appreciate someone pointing that out."
You're right that a lot of the physical preps should be done either way, but you forgot about the debt issue. If you expect HI soon, its better for you to hold off on paying your debts as they will quickly eroded away when the dollar's value gets crushed. In fact, some people would say you should take out more debt and leverage that into gold and hard assets.
Of course, if a severe deflation is on the horizon, then you most definitely do not want to take on more debt and want to pay off the debt you owe now as fast as possible. You would also want to sell equities, commodities and most bonds, and consider selling other physical property that you don't necessarily need (real estate, cars, electronics, etc.), or aren't generating any decent revenue from.
The closer you get to a person's individual situation, the less you can really generalize for either scenario. So if you have specific questions about your situation, I recommend you ask, since there are people here with a lot of knowledge who can help out. But it would obviously be a mistake to assume there is not much practical difference between HI and severe deflation in the near-term.
here's how i see it going down - and the rewards for the Big Capital Dr. Evil types are probably 100-fold what FOFOA suggests.
1. inflate until debt private sector debt saturation - profit all the way up.
2. reinflate until public sector debt saturation - of course, "cash advance" money goes to the insiders and the debt to society.
3. during the public sector reflation, transfer toxic trash to society, get society guarantees between $23 and $48 trillion, get labeled TBTF and establish legalized insider mark to myth rules. oh, and get everyone all excited about inflation and hyperinflation so the next step is all the more effective.
4. once public debt saturation hits, implode the economy. of course, they'll make sure they have a plausible scape goat.
5. asset prices get taken out back and shot. the uber banks cash in their societal guarantees while social promises evaporate. Big Capital is sitting on $10s of trillions in cash. they then take all that cash and buy up the busted societal debtors they created by breaking section 2a of the federal reserve act.
cont'd
Ash
You beat me to the draw. Just let me emphasize the entire rent / purchase question. If you believe in HI and that you can pay off that McMansion mortgage with a wheelbarrow full of excess Franklins that you don't need for TP or to start your kindling, then go for it. Time to buy that dream house. This question is not restricted to the upper middle class. Even Joe Bageant's redneck kin were always struggling with whether to rent or go into debt for that double wide.
Re gasoline consumption
So far, since I retired my basic rule has been not to buy anything with more than one cylinder, two wheels, and that weighs much more than I do. Right now the price of gasoline is considerably lower in Mexico than the USA and Mexico has recently discovered debt slavery, with rather poor people driving shiny new 4X4 pick-ups or huge SUV's. Maybe the CIA drug money is trickling down.
BTW, a 125cc Yamaha YBR puts out 7.5 hp at the red line.
The Greeks used Goldman Sachs for a couple Decades as a primary architect and advisor in the run up to their debt situation and continued to use Goldman Sachs as an advisor even during the initial phases of crisis.
How phuckingstupid is that and should I be sympathetic to a country that lame?
No, I should not.
Sure the Banking Cabal are ruthless reptiles but that's been clear for years to anyone willing to pay attention. Where's even a scrap of common sense from the Greeks?
They're most probably still using Goldman Sachs to give them advise in the 11th hour?
Which is what? Stretch it out, stretch it out, for the love of god stretch it out.
The pattern by now is stall at all costs.
The FED has shown it can' kick the kan' much much farther down the alley than everyone ever imagined.
The FED is the backstop for European Banks. Just remember and look at the bailout roster, European banks were way up the list getting huge blobs of Faux FED credit/debt.
The US sheeple had no reaction to the FED providing HUGE bailouts to foreign banks (i.e. European Banks).
They're sheeple, why should they react, bend over. baaa baaa
European banks will look to Faux Father FED once again.
With all that 'flight to safety' money about to flood into the US, why not?
How deliciously ironic, the European Asset Klass panics, puts their own money into a massive 'flight to safety' to the U.S. only to get bailed out back home with their own laundered savings PLUS having to pay a hefty interest payment back to the FED.
Sweet
Those 'elite' cultured intellectuals of Continental Europe, you gotta love them.
Thanks in advance for your 'flight to safety' assets, just blow them an affected air kiss good bye....oxoxox
Sweet Dreams
_
cont'd...
6. FOFOA is right - the banks are busted in this deflation. about 1000% insolvent. that's why they mark to myth. but their competition won't be able to. they'll have to shut their doors - oh so sad! nobody saw it coming... this is the "in your face" asset stripping game. this is one major reason why the police state is being set up now. the TBTF don't care about insolvent because they legalized securities fraud for themselves.
7. trade in their "worthless" paper for probably 50-80% of society's bankrupted, BY DESIGN!, assets.
8. now that they own most of the real stuff, the next step is to become solvent. HI away - they own the real world and HI benefits them as they can adjust the price of their assets into positive territory and begin to lecture on the necessity of mark to market with an AUTHORITARIAN tone.
cont'd...
cont'd...
let's recap:
1. Big Capital asset strips society out of 50-85% of our indebted assets.
2. Big Capital eliminates its competition and consolidates the market to themselves.
3. Big Capital not only avoids being burned by hyperinflation, but they benefit from it - it is a tool to balance their books.
4. the POWER differential between the nation and the robber baron financiers will be astounding.
FOFOA's vision is for chumps.
in fact, if the financial robber barons don't do this, i will file a formal request to TPTB and ask to revoke their dr. evil decoder ring - they won't deserve it.
P.S.
Dmitry Orlov discovered how non-Americans lower their gasoline per capita ratio - put 15 people in the back of a pick-up. Does wonders in this regard. Be fun to see Usakistani executives in tailored suits commuting in this fashion. Or maybe the Big 3 auto CEO's after they took flack for going from Detroit to Washington in corporate jets.
It wasn't the spent fuel pool that blew in unit 3, it was the reactor itself.
Proof positive:
http://tinyurl.com/627o5n7
Interesting story posted by a commenter on boingboing last evening, regarding the cleanup effort at Tepco:
http://www.slate.com/id/2288886/pagenum/all/
It seems France has this fleet of rad-hard robots. Why isn't Japan doing whatever it takes to get these things on duty?
I suspect John Mauldin is correct in "our" need to reduce deficits back to 300 billion per year, but without a near Mad Max scenerio taking place in the financial markets I just don't see Congress critters using such a large machette to do it. John
Skilo
Good analysis. The major question is how long the Oligarchs can maintain control after the detonation through the imposition of a total police state. (Hey, the trolls criticize Stoneleigh for being premature by 18 months. Maybe they should focus on George Orwell, who should rename his book from the grave 2012. I think Orwell had it right. Rather than another reaaaaly big event, just send a cruise missile onto prolesville a few times a week). Many of us who are disgusted with Usakistani apathy would argue indefinitely, but that may be an emotional conclusion.
"The FED is the backstop for European Banks. Just remember and look at the bailout roster, European banks were way up the list getting huge blobs of Faux FED credit/debt."
I can see this happening for German or French banks, but I imagine a lot of banks in the periphery, and perhaps the countries' governments themselves, will be cut off in the near future.
As Ilargi pointed out today, once the major European banks are fully backstopped and insulated from "contagion", there isn't much need for them or the central banks to keep piling up soon-to-be worthless Greek bonds on their balance sheets. The same may go for Portugal, Ireland and Italy further down the line.
Eventually, the entire EMU can be allowed to dissolve as long as certain central players have all of their ducks in a row. It amazes me that some people still think the EU and euro are still viable "threats" to replace dollar-based hegemony. Perhaps there are a few decent arguments for that, from the perspective of financial elites, but not many IMO.
Greg L said...
“Most Americans have little savings or resources to hedge against inflation by buying PM. For them, whether it's inflation or deflation, they have either eroded purchasing power or just simply no money.”
Kate said...
“When ... you're ready to start doing rather than debating what version of doom approaches, ...”
---
I would add, if by reading here and other blogs, you now KNOW that there are changes happening and that you must accept those changes.
Any analyst that uses “GROWTH” as part of their forecasts are lying and your evaluation of their opinions should take that into consideration.
By now, you must have realized, that if you keep playing in the traffic, the odds are, that something bad is going to happen that will change your lifestyle.
You might have been living in a bubble and not affected by the changes happening around the world YET... you’re still lucky
... Not affected by Austerities being imposed in many countries
... Not affected by the rebellions of the hungry and desperate people of N. Africa
... Not affected by the financial and economic tsunami meltdown
... Not affected by people glowing in the dark
... Not affected by runaway price increases of daily life because you can’t afford to drive a car
Finally, admit and recognize that even predators must learn to survive the battles with older and wiser predators.
If you were raised outside that predatory environment then recognize the survival skills that you do possess, (you are known as a prey,) and improve those survival skills.
Learn by paying attention to what every one is doing to survive in countries that are now feeling the hardships of the changes/reset.
peace,
jal
@ Board. My rant about the mega open pit guarry proposed in my back yard was eaten by the blogger meister. You must be wondering why I posted info about the hedge fund Baupost.
Here is further explanation:
http://www.gurufocus.com/news/129627/seth-klarman-buys-land-worth-120- billion-for-80-million.
The purest water in the province is about to become an income stream of waste water for some private investors. Some of the best soil on the planet is about to be destroyed for a group of economic hit men. The broken electrical grid in Ontario will now have to keep a pump running into eternity.( they will be blasting under the water table)
Trucks loaded with limstone will be running the highways 24/7. The highlands is a beautiful region about to experience toxic blasting. Has the Gov. of Ontario lost their collective minds!
I couldn't sleep all night what with a prospect of the darkest science fiction imaginable about to happen so investors can make 20%on their investments via a Boston hedge fund.
Anyone looking for an example of insanity this is it. Oh well, Canada has achieved a balance. Eco- disaster in the west-the tar sand, a planned eco-disaster in the east- this proposed mega quarry.
I must say I am quite surprised when I still see euro rallying a dollar falling despite the news. Does it mean that the financial markets act completely independent of the real world? Or is the possible outcome (the bankruptcy of Greece) a non-event for the big financial bosses?
Scandia said...
@ Board. My rant about the mega open pit guarry proposed in my back yard was eaten by the blogger meister.
Google blogspot is buggy. One should write their posts in a WP and copy and paste it into blogspot, or at the least, save it into an independent dynamic RAM clipboard.
Lukas said...
I must say I am quite surprised when I still see euro rallying a dollar falling despite the news. Does it mean that the financial markets act completely independent of the real world? Or is the possible outcome (the bankruptcy of Greece) a non-event for the big financial bosses?
==========
The forex, equities, and commodities markets are manipulated by the central banks, TBTF, giant hedgies like Blackrock and Soros, and high frequency traders. There is talk of passing a new rule that bids must be posted for a minimum of one second :-) Applying any previous rules that rely on fundamentals or even technical analysis are fruitless until overwhelming market forces wrest control from them.
Re: CHS' latest article about gold as a hedge (which also references FOFOA's latest HI post as a "persuasive" argument)
I think his fundamental premise that gold can be used as a hedge to holding debt assets (specifically dollar-based ones) and preserving long-term wealth is a solid one (nothing new to the deflationary crowd). However, he seems to also imply that, in the event of HI, $140T in global financial wealth will simply have its value replaced by gold, which would skyrocket to $25k-30k.
That part of the argument seems quite ridiculous to me, as gold is a) not the only other monetary asset that exists in the world, b) not nearly as liquid as fiat currencies (since significant portions are incorporated into other products) and c) not in any way a means of mitigating the productive wealth destruction that will result from financial collapse. Even though it's hard to believe, there is still some paper financial wealth that is based on underlying productive capacity.
And of course none of this factoring in sociopolitical upheaval, peak oil/resources or climate change.
New factoid from NHK:
"The utility is currently pumping 6 tons of water per hour into the No.1 reactor. Some of that water is turning into steam, then turning back into water and pooling inside the containment vessel.
"The water is now believed to be about 6 meters deep.
"In order to submerge the fuel rods, TEPCO must pump more water into the vessel and make the pool about 18 meters deep."
Ok; so; that means 10-12 meters of the fuel rods' length is STILL exposed; not under water (they're supposed to be).
Any length of exposed fuel rods, early on in the disaster, were cause for "OH MY GOD WE'RE ALL GOING TO DIE!!" panic in the press.
Here we are, all relaxed and quiet about the fact that the MOST of the rod length is not under water. They're being cooled; slightly; by constant contact with dense, very hot, steam. So, maybe they can't quite get hot enough for further melting into corium; right this minute. But it's hellaciously precarious.
La-di-da.
@Scandia, I'm not claiming your situation is in any way good. Noise, rock dust and traffic are all bad things.
However, if it really is a limestone quarry, the worst post abandonment danger will be teenagers diving off the cliffs and breaking their necks on rocks they didn't know about. We lose a couple every decade around here, 15-22 year olds, then the kids are careful until there's a new batch that doesn't remember.
Beyond that, you get a new sterile lake that will take 100 years to develop an ecosystem because it's starting from bare rock.
Forgot the primary URL there:
http://www3.nhk.or.jp/daily/english/26_31.html
That bit also contains this gem of public-relations evasion;
"On Tuesday, the utility sent remote-controlled robots inside the reactor building to check for leaks and other damage. No major problems were found."
I'll add my own next sentence; the truth; "The robots, of course, were only able to inspect something less than 5% of potential damage sites."
Link to CHS article:
http://www.oftwominds.com/blogapril11/gold-as-hedge4-11.html
Kate said...
“When ... you're ready to start doing rather than debating what version of doom approaches, ...”
I think this reflects a lot of people's thoughts about many of the things written in the blogosphere, and increasingly so as the "end game" draws closer.
In response, I also think it is important to realize that pieces/posts/comments written about deflation, HI, technical financial dynamics, etc. are not just another way for academics and philosophers to debate the fundamental "meaning of life" while it is painfully clear that all life will eventually end.
The intricate and exposed details of our system and our situation affect every single decision we make, either subconsciously or consciously. I don't think anyone would bother to write about these things unless we thought the written words would significantly influence the thinking and behavior of others, while also keeping the critical thinking skills of ourselves and others fresh.
Of course, there are also the added benefits of getting things off your chest, emotional release, having your ideas validated or proven to be in need of revision, and other personal and/or selfish things like that.
That's just my 2 cents on this subject.
RE the Gretchen Morgenson article on Citi's Smith Barney unit...
Back in the day wasn't Smith Barney the one that ran those commercials with the tag line "...we earn money the old fashioned way ... we earn it..."
Old fashioned indeed.
From yesterday:
"If you don't participate in this gold and silver bull market, you will regret it sometime down the line.
"Very few people buying precious metals think they will go up forever. ...
"Personally I would start to get nervous around $2500 gold, but there would be other signs as well. Everybody and the media would be talking about gold to no end. That's when you know the top might be just around the corner."
Yes, it would be nice if the world worked that way, wouldn't it?
I have nothing against gambling by purchasing PMs, but if anybody thinks that it's a no-lose decision then they're delusional - "gold fever", as they used to say.
Here are a few points to consider:
The claim that "if you don't participate, you will regret it" was very widespread during the recent housing bubble, for instance. How'd that work out, eh?
The RE bubble also provides recent, real-world examples of whether people can successfully call a market top en masse: THEY CAN'T.
Residential real estate topped in the U.S. in 2006; did we see, say, 80% of homeowners putting their properties on the market in 2005, 2006, 2007 in hopes of cashing out at or near the top?
Nope.
Nobody knew that it was the top except in hindsight.
So to assert that "most people buying PMs know that they won't go up forever, but there will be signs to let you know when the top might be just around the corner" strikes me as misleading. Without question there will be signs, but if history is any guide, (and it is), MOST PEOPLE WON'T HEED THEM.
Also:
The Anonymous said...
"Here is a good mental exercise for those who are convinced that with just more time, they will be proven right:
"At what point, if ever, do you decide, 'gee maybe I am wrong about this'? 6 months?
2 years? 2 decades??? "
It could be two years, or equally it could be two decades.
It's not really a question of length of time, it's a matter of completing cycles. Once one is past the peak or nadir, then one can determine whether one's strategies and tactics held up or not. Otherwise, all one has are projections and hope, nothing definitive. For instance, in 1942 things were looking good for the Axis powers; for a couple of weeks in Dec. '44, the German offensive during the Battle of the Bulge looked unstoppable.
But that's not how things ended up, after the shouting was over.
If one is the type of person with a steel gut, who can act in one way but always with an eye towards doing an immediate 180 and acting in a completely different manner, and if one can actually pull the trigger on such a decision, then it makes perfect sense to stay in the rat race for as long as it's raining soup.
But one of the major assumptions of this blog is that most people aren't that type of person. Thus the advice to play defense.
TAE are optimists according to Guy McPherson:
http://www.countercurrents.org/McPherson260411.htm
Things definitely seem to be taking on a frantic edge.
Nicole, I noticed that the Dow hit Prechter's mark of 12,600 today. Do you know if he's changed his prediction of that being the top?
@Frank, It is madness to me to blast at the headwaters of 3 rivers that provide high quality drinking water for millions south of the site. It is madness to destroy fertile soil in a time of world hunger. All so some investors in a hedge fund can make 20% on their money.
The predators are amongst us...
Something that seems to have been neglected in the Greece articles is credit default swaps.. both on Greek Gov't Bonds and banks as well. If the Greek Gov't even hinted at default, there would likely be a run on Greek banks (who would likely limit withdrawals to $200/day). I remember reading that there are something like $90bln in CDS's written on Greek debt alone, which would be triggered by any form the "restructuring" took. Greece also holds the option of pulling an Iceland and simply refusing to backstop their banks. In the meantime, the Greek economy continues to deteriorate, a dangerous prospect for a country prone to violent riots and strikes. This will end very badly and very suddenly.
Hi doomers,
you are all optimistic hypocrites, or so would I understand from the latest of Guy McPherson
Partial understanding on planet Easter Island,
starring Nicole Foss, Ilargi, Martenson, Tyler Durden, JHK, JMG...
read for yourselves and enjoy...
cheers,
Alex
"you are all optimistic hypocrites, or so would I understand from the latest of Guy McPherson"
Guy blatantly misrepresents the views of I&S, as I'm sure most here are aware.
Chris Martenson may charge a significant fee for talks and some of his content, but he also provides a ton of free content and a great forum for people to discuss these issues.
Tyler Durden writes dozens of posts every day, including a decent amount over the weekend, and exposes financial details that we would otherwise never know, and it's all free...
Apparently he thinks Kunstler doesn't care about the environment, but I've always gotten the opposite impression.
And well, Ruppert is Ruppert, and he has been speaking his mind about this stuff for years...
I would imagine "Benny Bucks" would revel in Guy's latest post, because it supports the age old tactic of those in the financial elite class of our global society... divide & conquer.
Would recommend the follow:
http://www.vanguard.com/bogle_site/sp20060208.htm
The Battle for the Soul of Capitalism
http://www.vanguard.com/bogle_ site/sp20030611.html
Owners Capitalism vs. Managers Capitalism
http://www.lrb.co.uk/v33/n08/david-runciman/didnt-they-notice
Didn’t they notice?
Would recommend for reading:
http://www.vanguard.com/bogle_ site/sp20030611.html
Owners Capitalism vs. Managers Capitalism
http://www.vanguard.com/bogle_site/sp20060208.htm
The Battle for the Soul of Capitalism
http://www.vanguard.com/bogle_site/sp20090513.html
The Culture That Gave Rise To The Current Financial Crisis
http://www.lrb.co.uk/v33/n08/david-runciman/didnt-they-notice
Didn’t they notice?
Note:
There is one inaccuracy in the article where it attributes Sarah Palin to the Alaska Fund. The Fund was established in the 1970s under a different Governor!
A nice resource for nukophiles-
http://www.bbc.co.uk/news/world-13159407
So thinking about the future reality for those hundreds of operating nuclear plants...
What would you bet that they are ALL going to be carefully maintained? All going to be free of tectonic insults? All going to be carefully shut down when it is time, and the contaminated materials put out of harms way?
Given what we know of bureaucracies and human greed, I have to state flatly that there is zero chance all of them will be handled perfectly. Then the only question is; so how many will be mishandled, with radiation releases?
If you needed anything scary to mull; there's a bit.
Personally; I have to guess the number of waiting disasters and dead-forever surrounds is likely to be upwards of 20. At best. Probably after #5, a lot of folks will get religion, and start really trying to shut them down safely; but -
Mayraj,
I found this title of yours especially endearing - in view of my recent excerpt from the original "Treasure Island"
Treasure Islands: Tax Havens and the Men who Stole the World by Nicholas Shaxson
scandia,
I sent a letter to McGuinty regarding your mega limestone mine. What a story.
So now I'm an optimist,eh. Must let my family know of my conversion:) They'll be relieved.
McPherson fails to notice that many of us can't just pick up and move back to the land.
I wish him luck, though, in his choices.
I guess that McPherson thinks that blathering inaccuracies will fix the ecology of the world single handedly.
What I found most amusing was:
ªMeanwhile, on the all-important oil front, Saudi Arabia cuts output, claiming the market is well supplied. I guess the price of oil pushing industrial economies into the abyss indicates adequate supply. Or maybe the kingdom is lying, and their fields are in precipitous decline.ª
He hasn't figured out that the Saudis cut back because they don't have any more storage capacity. And why is that? He's really a dumb f*ck.
>>If you were raised outside that predatory environment then recognize the survival skills that you do possess, (you are known as a prey,) and improve those survival skills.
Learn by paying attention to what every one is doing to survive in countries that are now feeling the hardships of the changes/reset.<<
Sage advice and you've captured the essential challenge that many in the developed world face. In many ways, the steepness of the descent into barbarism and chaos is a function of how "developed" one is (or how far one has to fall). The unfortunate fact is that most have no idea about what's going to befall us.
Blogger Tom UK said...
"Re. Fukushima, some recent thoughts from Helen Caldicott:
http://www.youtube.com/watch?v=4ITrXVJMKeQ"
Thanks for that Tom. Now I feel like a character in Nevil Shute's - On The Beach. Won't be long now. And just when my salad greens are coming up in my garden too.
@Sumacarol...thanks for writing to McGinty!!!!
>>Of course, if a severe deflation is on the horizon, then you most definitely do not want to take on more debt and want to pay off the debt you owe now as fast as possible. You would also want to sell equities, commodities and most bonds, and consider selling other physical property that you don't necessarily need (real estate, cars, electronics, etc.), or aren't generating any decent revenue from.<<
Thanks for your thoughtful responses Ash (also you el gallinazo). I don't disagree with your statement above, however, I suspect that the vast majority of people don't have these options available. Someone who's unemployed has probably sold off his luxuries merely as a way to survive already. Similarly, an individual in this situation is really not in a position to leverage up and buy hard assets or pay down debt. Most don't have any equities or commodities to speak of to even sell off. The vast majority of people are going to be stuck no matter what occurs and many don't even have an appreciation of what's about to hit them.
Their best hedge is to learn how to operate totally outside of the system by building, growing or making what they need. Back in the Great Depression, folks at least could go back to the farm. Clearly that option doesn't exist to the same extent now, but a more basic existence outside of the monetary system will be the only real option for most.
By the time this thing is done, most people will lose faith and trust in the economic and monetary systems and that will unravel the entire thing ultimately. This is beginning to occur already as measured by the loss of faith folks have in major societal institutions per a Gallup poll I saw last year.
Greg L said...
Yes, I don't know if it is a majority at this exact point in time, but a lot of Americans are trapped, and cannot take advantage of Stoneleigh's nine fold way. Many of them are Joe Bageant rednecks and other ethnic groups trapped in low paying jobs who didn't stand a chance from the day they were born, but many of these people still have a lot of subsistence skills like farming, animal husbandry, carpentry, and various mechanical skills. Then there are (were when TAE started anyway) a lot of households making $50-100k a year thinking everyday is Christmas, and going into debt, just pissing their money away. For these people, the message of TAE can be invaluable. Everybody's milage will vary. A young, strong, healthy and single person in their early 20's with no financial assets is going to have a very different optimized path than a 65 year with physical problems and a few bucks tucked away. Everybody has got to stay informed and keep those gray cells talking to each other.
@ Walk in Woods
>>should I be sympathetic to a country that lame?<<
yes, you should. and here is why.
the greeks didn't do this. corrupt government officials did this. they knew GS was corrupt and looting the system, but they were paid well to keep quiet.
the chit goes down in the US. america isn't using al qaeda to attack libya, international Big Capital is and sending america the blood and treasure bill.
now, i'm as frustrated as the next guy/gal about the near complete brain dead apathy that exists in the american "consumer," as opposed to "citizen," but they have been strategically dumbed down.
they aren't themselves. they don't how it works. they are sold illusions by every major establishment organization.
so, yeah, they deserve some sympathy for being railroaded by international Big Capital, just like the typical american does.
but at some point, citizens need to emerge from their consumer shell AND RESIST THE TYRANNY.
resistance *is* victory.
Jeebus H Christmas, this is what passes as insightful journalism?
Largest Banks Likely Profited By Borrowing From Federal Reserve, Lending To Federal Government.
Duh, it's only LIKELY? Shame on you Shahien.
fla47
The Huffington Post is only America's Second Finest News Source. (The first, of course, is the Onion.)
@Scandia
I have long appreciated your posts, especially with respect to the workings (condescension?) of your government. You take the time to inform yourself and you are passionate about your desires. I like that a lot.
Similarly, I have a deep appreciation of Ian Welsh's observations and opinions. His latest essay, On the NDP Surge in Canada may give you some comfort in the storm, so to speak. For sure, relegating the "conservative movement" (read: neoliberalism) and any of it's political factions to "minority" status would be a welcome intermediate accomplishment.
Probably won't change the ultimate outcome all that much but it would certainly be a pleasure to kick those disgusting SOB's a little, don't you think?
@El G,
I will always cut some slack for guys like Robert Stone and Joe Bageant. They wrote shit because they needed to live and support a family. But what is Shahien's motivation?
To be fair though, it is not just Shahien Nasiripour. Simon Johnson, Paul Krugman, and so, so many others who have generally high credibility, have shown way too much deference to the "high holy ones", like the Bernank, Timmy Twolips, Obummer, etc. etc. It's not like these are full time, mainstream media commentators either. They mostly extol their positions via the internet and so are easily outed by us observers.
So, I have long wondered why they tone down their criticisms, trying to stay "polite". Tomorrow, the Bernank will hold the first ever press conference by the FED chairman (his high holiness evil one). IMO, the only relevant questions to be asked are along the lines of how he can look at himself in the mirror. Are his parents (from small town South Carolina) ashamed of him? Are his kids (does he have any?) ashamed of him? How about his wife and friends? Does he see the blood and guts of millions of fucked over Americans on his hands because of his policies?
It is high time these psychopaths be treated with the contempt they so richly deserve. They need to be recognized and characterized as the pariahs that they are. They deserve no dignity whatsoever and that is what is wrong with Nasiripour's article and so many other similar articles I have read over the past months and years. They are simply criminals and the sooner they are so characterized, the better.
Better crash soon,
Otherwise wifey will demand that I supply my 23 DNA spaghetti for the completion of biological imperatives.
Offspring?
Who in there right mind would have children in the world bearing down on us?
France and Cote D'Ivoire.
Didn't we just witness a Macro-scale foreclosure eviction?
How many loans for those moldering skyscrapers in downtown Abidjan are still sitting on the balance sheet of BNP Paribas?
Ash,
I agree. Nicole reacted to that post - also pointing to misrepresenting (and over-simplifying) her views. Guy reacted with clarifying what she means, so he can correct.
Nobody is perfect and I think "our" community is much, much closer to describing the reality than everybody else, so this would be only minor quibble :-)
take care,
Alex
My brother-in-law lost his cheque book (that's a check book to some of you). The bank charges $15 to cancel a cheque, normally. Pretty steep for one cheque, but get this: because the book had 40-odd blank cheques left in it they wanted to charge him $15 for every single one. He didn't let them get away with it - but it's amazing what they try to pull to make a buck!
Should we really be surprise though, considering the millions (billions, when you include the whole industry) of people they are happy to defraud?
A Walk in the Woods said...
It's just a repeat of the Gulf of Mexico incident, which by the way has almost completely fallen off the radar of most US sheeple.
Yep, it is incredible how fast people forget and think such things must have been "taken care of" by the "they" in government who have the best interests of the people at heart, 'cos you know, they wouldn't stay in power if they fcuked everyone over, and most people are generally good . . . barf!
I am wondering how to get my 16-year-old nephew interested in things that lie outside mainstream teenage entertainment and infotainment. What approach to take? It saddens me to think he may end up another adultlescent who is happy to live in safe (until it isn't) la la land.
This will be busy season for US weather extremes, se Jeff Masters
Tornadoes, floods, and fires assault the nation
and, surprise:
Americans depend more on federal aid than ever – Wages at historic low
cheers,
Alex
@Fla47...I have yet to decide how I will vote. We have an excellent Green candidate. I like the many Green supporters.My kind of people. Alas a Green vote won't take the prize from Harper. Medicare matters.I'd be dead without it! The issue that disturbs me most is the Harper gov'ts secret efforts to integrate with the US,the PPP( prosperity/protection perimeter). It is the deciding issue for me.I have never voted NDP but I may this time.Can one assume the NDP will be less corrupt as they haven't held power?
Ignatief's history at Harvard troubles me a lot. We all know about the revolving door between Harvard and the US administration.
After years,he suddenly remembered his love for Canada:)
I'll be calling all the campaign offices re PPP before election day.
So McPherson's $hit does not smell anymore, now that he's taken his big @$$ part of resources and gone off-grid.
Well, that, or someone spiked his drink too.
Oh well...I expect more smelly $hit to be detected by increasingly sensitive nostrils from now on.
@ scandia
They say that power corrupts. That is of course nonsense. Money does the corrupting. People with power are the only ones it makes any sense to corrupt. That explains why more than one party wants the job.
Corruption is the system.
-- Nicole Foss
"And as the Euro starts to fall, Greece, Spain, Portugal and Ireland will see their import budgets skyrocket over the summer."
Wait a minute. I've been reading all the time Greece needs to devalue its currency to boost exports, but can't because Greece is in the euro, and the euro remains pretty high.
And suddenly you're saying a drop in the euro would be bad for Greece, as their imports would skyrocket?
Sorry about missing out on the last few days of commentary.
Been busy trying to keep the Mississippi River from reclaiming its property ( e.g. my house and garden in Hamburg, Illinois. )
Anyone interested in acquiring some lovely riverfront/riverbed property ? Highly motivated seller.
On the positive side, the soil here is miraculous. We have been feasting from the garden since early April. On the other hand, every few years floods like this one make me think we may have to switch from veggies to rice.
Johnny Turquoise: "Who in there right mind would have children in the world bearing down on us?"
As an evolutionary ecologist, I'd have to say "those who want to contribute to the future of the species."
You're going to wait for improvement? Children should only be generated if they can live in 1950's TV land? Beaver World? :-)
We're entering an evolutionary bottleneck for Homo. The "wait" option takes you permanently out of the game.
An aphorism I'm probably mangling:
"Those who must wait for the gods to improve the world before they can be happy, are already living in Hell."
I grant you, there is considerable probability that we ARE already living in Hell; but- examine your alternatives closely.
:-)
IM : "Corruption is the system.
-- Nicole Foss"
Somewhere way back there I attempted to call the entire concept of "corruption" into question.
There is a biological drive towards, and expectation of "fairness"; across species. Recent experiments have shown that dogs perceive unequal treatment among themselves, and actively resent it. We primates seem to be similar.
Simultaneously, the practice of "you scratch my back and I'll scratch yours" is historically universal. Find me, please, any government/society that has ever existed without it.
The word "corruption" is most commonly applied when there is a cultural conflict; the Brits in India were appalled at the way those dirty natives took money and twisted rules to serve themselves. The Brits!! The people owned by the East India Company!
Since the accepted, private, modes of scratching in Britain was not identical to the accepted private scratching practices in India; they were "corrupt"; ie, not playing by the rules.
The current best example is the USA and China. Tons of USA people think "China" is a corrupt system. The USA!! I do find this hilarious.
Partly it's that the Chinese are older, and culturally slightly more able to face the scratching. They have a word for it, which per se is not pejorative; it's simply understood to be the way things work: guanxi.
Usually translated as "connections". So- what DOESN'T work by personal connections?? Anywhere??
I don't mean to say there is no such thing as really criminal corruption; sure, there is. And sometimes it's more pervasive than others. Like, probably, now.
But overall, I'd modify Nicole's statement to "Guanxi is the System."
Hey, look, us humans are scummy enough already, without making us any worse than we are.
March 15 2011 “Stoneleigh: The Fukushima Fallout Files “
“It is important to note that the distribution and level of radioactive contamination from the Fukushima disaster is likely to be very much less than at Chernobyl, as boiling water reactors (BWRs) like those at Fukushima do not have the potential for the same failure mode as occurred at the Chernobyl RBMK plant. Chernobyl suffered a nuclear explosion on an abrupt power surge aggravated by a moderator fire.”
Essentially Fukishima will not be like Chernobyl.
April 12 2011
“Yes, Fukushima has been lifted to Level 7 on the International Nuclear Event Scale. The promotion, long overdue, places it in a class where until now only Chernobyl resided. But that does not mean, though I'm sure we'll get to hear that a lot, that Stoneleigh was wrong when she said Fukushima is no Chernobyl. “
Can Stoneleigh help out in this matter?
April 26 2011: Tom UK posted a film by Dr Helen Caldicott at 0.55 she states that Fukishima will be orders of magnitude worse than Chernobyl.
Now when experts discuss, it becomes difficult for the lay to compare “apples with apples”. One understands the two mechanisms of accident are different but when it comes to a world problem is Fukishima going to be worse than Chernobyl, as implied in this video, or now that more evidence has been forthcoming is there room to have a change of thought.
This seems to be brought about by the destruction of the spent fuel holding tanks.
Thanks
Happy.
I agree Greenpa. My genes are so terrific, that I owe to the future of the species to keep them rolling onward.
I think what Guy MacPherson wrote was very mean-spirited. I object to my work being over-simplified, mischaracterized and misrepresented, especially by someone who is ostensibly working towards the same goals that I am. What purpose is served by denigrating others?
He asked me to clarify, but I do not intend to do so, at least not on his site. I am not going to invest my very scarce time explaining my position from first principles (again) for the benefit of someone who obviously has so little regard for the work of others.
Mr MacPherson dismisses out of hand the role of finance in determining how many aspects of the real economy will play out in practice, and he does so in a particularly contemptuous manner. I think this is a blindspot that many people have. They assume that, as a human invention, finance cannot matter in the real world, and so can be ignored. Doing so is very dangerous, as it amounts to disregarding the interface between humanity and the resource context in which it exists.
Noting the practical importance of that context does not amount to worshiping money, materialism and privilege, nor trying to preserve modernity at any cost to the natural world. It is simply a matter of trying to minimize suffering while navigating a very uncomfortable transition away from a world full of structural dependencies on cheap energy and cheap credit. As I have said many times, a focus on finance reflects the timeframe involved. It does not imply indifference to the natural world at all.
My recent FSN interview with Jim Puplava is probably the best source for anyone who would like to explore my position on the impact of finance on energy supply and demand in more detail.
@Johnny Turquoise, re having children, all I can say is that being alive is a trip I wouldn't want to have missed. I was illegitimate, neglected, badly fed, poorly educated as a child. That said I've managed somehow or other to raise myself, learn/adapt on my own etc....oh the mystery of it all!
@IMN and Greenpa, about corruption I am thinking about a rigged game/fraud as opposed to networks and connections. The message writers have become so skilled at their craft that I am challenged to know what is true and what is not.
There is no escape from " the matrix " until death. Shakes me up sometimes to realize I create the matrix as much as TPTB.
"Legendary Armor Rōnin said...
It could be two years, or equally it could be two decades.
It's not really a question of length of time, it's a matter of completing cycles. Once one is past the peak or nadir, then one can determine whether one's strategies and tactics held up or not. Otherwise, all one has are projections and hope, nothing definitive."
By whose definition is a cycle "complete"? While most believe that the 1981, 82 double dip recession cycle has completed, there are some permatypes who have held their positions for over 30 years.
Thus, despite the fact that all "peaks and nadir(s)" have long since been surpassed, the permabears (who made up their minds back then) remain resolute, insisting that any continuation of a trend contrary to what they believe is going to happen merely a result of "unsustainable, kicking the can down the road" and that eventually, they will be "right".
In theory, they will be right, eventually. Give me an unlimited time horizon and I can correctly predict the Dow will hit 50,000 (perhaps when we colonize Mars), and Zero (the day the sun goes supernova). I would not be surprised if some Permabull leaves instructions in his will for their 8th, 9th, 10th generation descendants to (upon the happening of Dow 50,000) open up a letter that triumphantly says "See! I told you so!!!"
Unfortunately, we humans have finite lifespans of usually 80 years or so. The first 20 are usually dedicated to education, and the last 20 to (hopefully) sitting back with a bag of popcorn watching it all unfold. For most of us, that means we have 40 years of earnings & trying to do whats best to protect them. 40 trips around the sun to get it right.
Thus, if you think something is going to happen "soon" and it doesnt, how much longer are you willing to stick with your original prediction before you decide "maybe I got it wrong" and revise accordingly? Permatypes are unable to answer this question.
@ Greenpa
Guanxi sounds a lot like nepotism to me. A congress critter hiring his wife at a magnificent salary to do essentially nothing is nepotism.
When a lobbyist from Big-MIC-Prime-Contractor reminds said critter that failure to support procurement of his company's unneeded weapon will result in a subcontractor in his district never getting any more biz from us, and no more PAC money for you, that is corruption. Both nepotism and corruption happen everywhere and all the time. We are not robots.
Apologies for my absence recently. I have been indisposed for health reasons for the last several days, and have only just got properly back to my computer. I haven't been able to keep up with the comments recently. I'll try to catch up, but first I need to do some major planning for the west coast trip.
TAE readers should be sure to watch this latest piece from Arnie Gundersen.
The spent fuel is by far the biggest issue at Fukushima. The amount of it, its vulnerability to lack of cooling and its lack of containment are major factors. If spent fuel is indeed spread around the site and beyond, as the evidence suggests, then there should be far greater efforts to remove people from the vicinity of the plant - probably within at least 50km and ultimately further. As I have said before, I think the health impacts of this accident for those close to the plant is being considerably underestimated.
The official disinformation on the health impacts of Chernobyl is likely the reason for this complacency. How anyone, especially someone like George Monbiot, can possibly believe the official casualty numbers for Chernobyl is beyond me. The lives and health of many Japanese are put at risk by turning a blind eye to what happened to Ukrainians, Belorussians and others.
I plan to write a new post on Fukushima when I get a chance, but it will likely take a few days.
Arnie Gundersen's latest video discusses what May Have Been Prompt Criticality in Fuel Pool of unit 3 at Fukushima. He reports that uranium, plutonium and americium have all been detected in Usanistan. According to Steve from Virginia's latest post on his blog, we had one of these happen in a reactor in Idaho about 50 years ago.
Nothing can go wrong, go wrong, go wrong, go wrong...
Stoneleigh said...
I am not going to invest my very scarce time explaining my position from first principles (again) for the benefit of someone who obviously has so little regard for the work of others.
Hey, "the guy" has his doomstead, now he has a year of production/?skills?, so the civ. and everyone else can go to Olduvai for all he cares.
Another "Carl Jr., fsck you, I'm eating" mentality; now Greenwashed and improved! Because we care about "Ze Planet"; Bummer (or is it spelled boomer?).
Good to know you're not wasting your time with this one "guy".
Re: Gundersen: holy shit; and thank god for this guy.
Pieces of fuel rods two miles away???????
yeah, that's just a tad bigger and more dangerous than they're telling us, still.
Happy Surfer,
I intend to write about the Monbiot/Caldicott debate in my next article. I don't entirely agree with either of them. Monbiot is being wilfully blind to a mountain of evidence IMO and Caldicott exaggerates her claims. For her to say that one should not eat European food is simply ridiculous. For him to support the official line is inexcusable. I spent a long time studying the tragic health impacts of Chernobyl, and it incenses me that the terrible plight of so many people has been swept under the rug.
The Chernobyl accident scenario had greater potential to spread contamination very widely, as there was no containment to breach, and the moderator fire propelled a huge amount of material high into the atmosphere for days. A pure reactor accident in a BWR does not have this potential, as there is no flammable moderator and the containment can withstand a great deal of force.
At Fukushima, however, we are dealing with a large amount of uncontained spent fuel, and that is the heart of the problem. There is far more radioactive material, but less ability to spread it around widely, despite the explosions so far. Of course there will be dispersal in both air and sea, but I still expect there to be less of a health impact far from the plant than we saw at Chernobyl. Deposition is patchy though (depending on wind, rainfall etc), and there may be places further from the plant where fallout is concentrated for one reason or another.
We will have to see what happens as the accident continues to unfold. It will be a very long time before we see what the worst case scenario really is, because this accident will go on for months at least, and the impacts will unfold for years and generations thereafter.
Just to be clear, I am not a fan of nuclear power by any stretch of the imagination. I would oppose building any new reactors anywhere, and I would close many existing plants tomorrow if it were up to me (more if there were more existing alternatives for gearing down to a lower energy lifestyle). Nuclear power is not compatible with socioeconomic upheaval and more than it is with natural upheaval. The risks are unacceptable.
@ scandia & Greenpa
Fred, that keen observer of human nature, had this to say before the '08 election. There is something uncanny, scary even, about how the next Fred column I read turns out to be pertinent to the thread at hand.
Democracy is a bad idea, I tell you. Granted, we’ve never really tried it. From Jefferson to our current bumbling mutant, the trick has been to let people think they have power without really trusting them with it. For a long time we had rule by a high-WASP elite that actually had some sense of noblesse oblige, tempered by sufficient corruption to keep them in gravy. The Roosevelts for example. You can disagree with their policies, but they weren’t penny-ante pickpocket proles with learning disabilities.
Today we get grasping zeros who would embarrass a trailer park in Arkansas. Ah, but they are of the people, and don’t make anyone feel inadequate. In everything that counts, which means involving money, we have rule by corporations, through legalized corruption far more lucrative than Latin America could dream of.
Reflections on an Opera Bouffe Election
Stoneleigh,
Hope you are feeling a lot better now!
So my parents are planning a trip to Hawaii in about two weeks (to stay for a week), and I have been telling them that they should perhaps consider canceling, or at least be ready to cancel if the Japanese nuclear situation continues to deteriorate. My mother is afraid of flying on a plane, but apparently the threat of radiation poisoning doesn't phase her.
However, I know you have said that the dispersion radius will be significantly smaller than that of Chernobyl, so perhaps I'm overestimating the threat? Any thoughts on this?
Ash-I'll give you my guess on Stoneleigh's opinion re: travel to Hawaii; which would also be my own opinion.
You're probably as safe from Fukushima contamination in Hawaii as you would be in California.
Basically, if they're picking up Americium in New England; the stuff is everywhere right now- but erratic and totally unguessable re spotty distribution. In any case, the probability of harm in Hawaii is about as low as it is anywhere right now.
IM: "Today we get grasping zeros who would embarrass a trailer park in Arkansas"
NIcely put. Now why does that immediately bring me an image of The Donald with his mouth wide open?
I have this fantasy for a "counter Donald" demonstration, outside one of his upcoming whoop-ups in New Hampshire:
You need about 200 people, or more, for this to be really effective. The leader guy with the bullhorn reads off a Trumpism for the delectation of the crowd. The entire crowd responds by- going into gasping paroxysms of howling laughter, literally rolling on the ground, hugging and pounding each other. After a minute of howling, the leader reads another; and the rolling hysterics take off again.
Then you keep that up for an hour or two; for the TV cameras of course. I have a suspicion the Donald would be seriously miffed. But the critics would have to acknowledge; the howling shrieks are easily as intelligent as anything Trump has ever, ever, said.
Howling laughter is highly contagious; and is a desperately underused weapon. Please, please, please, somebody -you HAVE to do this.
What do ya'll think about the Fed announcement today?
Nicole,
I tried to defend your work at Guy McPherson since he is ecologist as I am (and yes, most of the time he writes great), but probably without any effect,
continue doing great job!
Cheers,
Alex
Greenpa,
Thanks, that certainly makes sense.
I'm the guy who was telling people not to eat any seafood in Virginia right after Deepwater Horizon, because I assume things can get much worse, much faster than anyone on CNN says they can.
And I tend to stick to the "better safe than sorry" principle. But I guess the downside risk to spending the money for a trip to Hawaii is probably greater than the risk to being closer to Fukushima.
@ Chas
As the Fed has not given the slightest indication that it cares about what I think, I feel an obligation to practice reciprocity. :-)
A pretty substantial bit of business news I have not seen anywhere else on the web so far, and Iooked:
http://www3.nhk.or.jp/daily/english/27_25.html
"On Wednesday, S&P cut its outlook for Japan's long-term sovereign debt from "stable" to "negative."
@Alexander Ac
An ecologist should have realized by now that there are certain laws of Nature that will allow a population to increase as long as there's energy available to fuel the growth. It applies to viruses, yeast, and humans too...then there's the die-off. Inevitably, massive die-off.
So instead of bitching about people who try to save as many (potentially worthy) @$$es as possible, Guy seems to think only about his (now mildly covered) @$$.
Any ecologist should see the inevitability of the die-off and quit bitching about it. The time to change something was 10000 years ago. Or in the '60s...
Or maybe it was inevitable that one species or another would consume all the energy it can consume(this is certainly supported by all observations). And reading Ismael did not convince me otherwise ( centering the Universe around the "community of life" instead of centering it on humans).
Yes, sometimes I wonder too how I can sleep at night :)
But the big electron does not care, really.
I don't get tone with Gunderson's explanation.
Looking at the hires photos, which seems like a better idea than pontificating, it sure looks like the top of the reactor blew leaving a smoking hole with the top of the reactor making a hole when it landed. - see the fourth hires photo
http://tinyurl.com/3v774z4
" el gallinazo said...
I agree Greenpa. My genes are so terrific, that I owe to the future of the species to keep them rolling onward."
Yeah?? so?? Whaddya DOING about it?
MY money is where my mouth is; I've got a brand new granddaughter, my first.
:-)
@ p01
Carlin was a very wise man. IMHO, the situation cannot be stated any more clearly or succinctly than he did it in that clip. The naked ape's name was on the to-do list already, I think we probably encouraged Gaia to nudge it up the list by a few millennia.
Thanks
Are all the articles mentioned from 26 April 2011? Am wondering why they are not dated. Thanks for the good information.
I don't get tone with Gunderson's explanation.
Brunswickian,
Me too. Here are the photos with a scale/ladder to help one make up one's own mind on the matter.
Fukushima Unit 3 Al Fresco, journalists don’t see it, Officials downplay it
I. M. Nobody said...
"Carlin was a very wise man."
Well; I don't know. He was a very SMART man; and saw far more clearly than most. But he also struck me as basically angry and bitter (not that I knew him.)
Generally our ill-defined comprehension of wisdom tends to assume that the wise person has found a way to make some peace with reality. Yes? I'm not sure Carlin did.
@ Brunswickian
Arnie's April 18th video has graphs showing a small pressure in the Unit 3 reactor and containment vessel and boiling point temperature in the reactor. If the mini mushroom cloud from the explosion originated in the reactor, the containment would be rubble. Unit 2 is the one that seems to have lost all containment.
"I don't get tone with Gunderson's explanation."
Assuming you mean "of", not "with" - and are referring to his reticence to state things flatly; I think I DO get it.
He's from the inside, with professional credentials. What he's saying is counter (enough) to current reports.
He sounds to me like a slightly intimidated academic; who is being excruciatingly careful not to say ANYTHING that can allow the opposition to just dismiss him as a whacko.
And I'll have to add; having watched many intimidated academics do this dance; they were often quite right to be intimidated. There ARE nasty people gunning for them.
I DID have the same gut reaction; that what he was propounding was less than the evidence calls for.
@ Greenpa
So you're saying that the last angry man will, by definition, not possess wisdom. I do not expect to ever be in the presence of the last angry man, but I guess that is worth passing along to whomever might have that experience.
However, I have made a cursory search online and the almost all-knowing internet has so far failed to identify anger as being an antonym for wise or wisdom. I will take a little more convincing that the two cannot be found together. I will agree that Carlin was smart. That hardly makes him special. There is at least inferential evidence that Blythe Masters is smart. Much to the detriment of humankind. Me and Satan will be fighting tooth and nail over the last woolen garment before I'll grant that she possesses any wisdom.
Oh, and congratulations on Greenpa morphing into Grandpa!
@IM "However, I have made a cursory search online and the almost all-knowing internet has so far failed to identify anger as being an antonym for wise or wisdom."
Personally, I like this quote from Dr. Viktor Frankl, the psychiatrist and Holocaust survivor:
"The last human freedom is to be able to choose one's attitude to a given set of circumstances."
That's some wisdom right there. Notice it doesn't necessarily tell you what attitude to choose (anger vs. happiness), just that the choice is our last freedom, which seems to be an especially important thing to consider in the days of absolute debt slavery.
Ash,
Works for me.
IM: " so far failed to identify anger as being an antonym for wise or wisdom. I will take a little more convincing that the two cannot be found together."
tsk! But I made no such claim. :-) I have no trouble allowing wisdom and anger, and bitterness for that matter, to coexist.
What I suggested was incompatible with the appellation "wise man" was the lack of any ability to make peace with reality- which is what I think Carlin did lack.
He was certainly a complex character; with huge empathy and heart for - "people" and "each other" - but only under his definitions, and with total, often vicious, lack of regard for anything else.
Sad, really. He was so smart, and so tender hearted, it really makes me want to grab him and smack him upside the head until he got some better sense.
But, he's dead, so it's probably not a practical wish. Ah, well. :-)
Back to the serious side:
http://tinyurl.com/4y8cko5
Walmart reports a new economic metric; which bodes ill.
"Purchases are really dropping off by the end of the month even more than last year," Duke said. "This end-of-month [purchases] cycle is growing to be a concern."
My comments, quoted by a few here, on the previous post were in no way meant as a criticism of the kind of discussion that goes on here and on other boards. It was a reflection of my own limited grasp of these topics, and my need to disengage from the strain of comprehension in favor of getting outside to my garden and livestock. There is certainly value, up to a point, in educating oneself and debating what the future holds. For my part, once I was convinced that my life was going to change whether I did anything to prepare or not, that preparation took precedence over further screentime education and debate. I don't know whether we're facing deflation, inflation, or something else entirely. But I'm sure that (for starters) producing as much food as I can in my backyard is going to be damn important in any case.
* The FED can kick the can down the road farther than expected; Propaganda can score from anywhere on the court; A 16hp riding mower can get you there and bring you straight back; This passes for news at the Oil Drum
* If you believe in HyperInflation don't pay your debts; If you believe in deflation sell everything and sit on your cash; Ask for specifics since generalities fail close up
* Greek bonds are barfilicious; The Greeks slept with Lloyd and have it coming; Don't cry for me Kallithea; Once the German ducks are in a row the Greeks will be cut loose; Greek bankruptcy is already baked in to the koulourakia
* Growth is a lie; Playing in the street increases your chance of getting hit by a car; There's always a bigger fish; Learn from the hardships of others
* Earning money is old fashioned; Don't piss your money away; Drug money trickles down
* The half life of gulf spill interest has been decimated by Fukushima; Exposing your fuel rod in public freaks some people out so cool it down with steam; Nukophobes unite - All you have to lose is your chain reactions; Not all nuke plants can be de-commissioned safely; We are all going to die; La-di-da
* Inflation and deflation are the meaning of life and affect every decision you make; Precious metals are not a no-lose situation; Claims that you must participate or regret it are made by charlatans and boy friends; Gold investment requires a steel gut; Shorters have weak hands; Gold may be too heavy to fly to the moon;
* TAEers are optimists; The DOW is at prechter's top; After charging you $500 for a chat Chris Martenson will say hi to your best friend for free; Tyler Durden is the Mother Theresa of Doomsday Blogs
* Destroying water and soil are madness; Injured teenagers are the worst effect of quarries; Not everyone can move back to the land
* Wages are at an historic low; Extreme weather is at an historic high; Loss of faith in banks will push us over the edge; The descent into barbarism will be steep; Psycopaths deserve contempt; Misuse will wreck your I-beams; So will thermite
* Today's Aphorisms:
- Mileage may vary
- Resistance is victory
- Make love, not kids
- Nobody is perfect
- Laughter is contagious
- The FED helps banks
- Welcome to Hell (Note: this is not actually an aphorism but more like a greeting)
TAE Summary said...
- Nobody is perfect
Clearly this is not so. We have it on the authority of a smart and for all I know a wise man that Nobody cannot recognize wise men. What luck that he was not the Night Watchman for the Bethlehem Manger.
@ Kate
I would say that you are a wise woman, but obviously you should not take that opinion too seriously. Are you willing to take a reality test?
Revisiting FOFOA's hyped up hyper-inflationary argument:
After reading it twice and reflecting for a bit, this is the somewhat unique argument that I could distill from his lengthy, circular and repetitive post. Despite its numerous flaws, it is still an interesting approach to the HI argument and worthy of some reflection (in my words):
Monetary dynamics in any economy are fundamentally driven my political decisions (which includes central bank policy), just as we saw in Zimbabwe recently, and the massive dollar-based financial system is no different. The financial and political elite class, which is not necessarily unified, will take either a) high inflation or b) hyperinflation (distinctly separate events) over wide-scale deflation every time. The reason is because most of them will get first dibs on spending the cash after they dump debt-assets onto the Fed's balance sheet, and so they can effectively outrun the devaluation of the dollar by purchasing "hard assets" before the HI tipping point has been reached.
That latter argument is based on a key and insightful observation - in periods of true HI, there is actually always a shortage of cash needed to purchase real goods/services from the perspective of those within the economy. This is why governments/central banks will print larger and larger denominations of bills in their futile attempts to catch up with price inflation. The hard money with intrinsic value, gold, will be the best means of preserving your wealth through this time (much much more so than RE), because there will be a severe deflation (falling prices) of all assets and goods when priced in gold.
If anyone has a different interpretation of his argument, I'd love to hear where I went wrong.
Prompt criticality is a special case of supercriticality.
~wiki~
Going to that link:
"If two pieces of subcritical material are not brought together fast enough (to produce a nuclear weapon type detonation), nuclear predetonation (fizzle) can occur, whereby a very small explosion will blow the bulk of the material apart."
Is Arnie using the term "prompt criticality" to theorize that a hydrogen explosion blew the fuel rods together for a nuclear predetonation (fizzle) which then blew the fuels rods 2 miles away?
_
@ IMN What would constitute said reality test?
AWitW,
I believe that is exactly what he was trying to express. And now we regular folk know a little more that may apply to the science of dirty bombs. A lucky bomber might be able to dirty up quite a large area.
Kate,
I think we must direct that question to Grandpa. Be forewarned that if you fail he might try to smack you upside the head.
I would like to take this opportunity to apologize for comments I have undoubtedly written that may have left you wondering just what kind of person takes gibberish as a second language. It seems to me that people like you are going to be the ones that matter after the gods finally settle this whole flationary issue. I'm not entirely convinced that you will not be better off ignoring it.
"Revisiting FOFOA's hyped up hyper-inflationary argument"
First, there is no political or financial elite, all decisions regarding global assets are made at the highest level of the global Criminal Classes (i.e. the top .01% of the world's total wealth) not at the level of national 'political or financial elite' kitchen help.
The so called 'political or financial elite' are water boys (or butt boys) for the truly wealthy.
They execute orders dictated to them, they do not originate them. They obey their Betters.
Attributing any real relevant input from ass-clowns like Obummer,The Bernanke or Congress critters shows true naiveté and cluelessness.
Big mistake for a beginning assumption and a sure sign of shoddy thinking.
A huge deflation has already started and will not be stopped by anyone.
In the spirit of nuclear metaphors, it has not obtained critical mass yet but it will.
Ilargi is right in saying that by the time it's run it's course, not much will really matter in the aftermath.
There won't be any 'hard assets' worth purchasing after massive deflation if the entire energy and credit delivery infrastructure systems have been detonated to rubble.
So what, you own farmland?
No energy delivery to cultivate, till, plant, fumigate, harvest, process or deliver the results. Just like Soviet agriculture growing stuff only to see it rot in the fields, far from population centers. Just look at the federal government's nimble handling of Katrina and Deep Water Horizon and ask yourself if food will be delivered to a starving mass audience.
So what, you own 'industrial capacity".
Who will have money/credit to by any of it? They'll all die of starvation before they can ever afford industrial products ever again.
The Real Elite are Reptiles. They think like reptiles. They have sex like reptiles, they lay some eggs afterwards and then abandon their own progeny to the Fates just like reptiles, just like they'll do to whole the of humanity.
_
I am going to go WAY out on a limb and say anger is energy. A wise man knows how to utilize that energy, a fool does not. There seems to be a meme that anger is a bad emotion, one a " good " person does not feel. I call them folks zombies.
After getting a response to my email from FOFOA, it seems I left out a few critical things (in the summary posted above):
1) Financial and political elite decisions are the supply side of the monetary system, while consumers/debtors are the demand side. (I don't think this is much different from the deflationary perspective)
2) F&PEs will be forced by the demand side to dump their increasingly worthless debt assets onto the taxpayers, in return for cash, since holding on them to means committing crashing the entire financial system (not too much different from my deflationary perspective)
3) The elites will be forced to spend the full value of the cash received into hard assets, because otherwise they will be stuck with worthless cash once a tipping point in confidence is reached for the dollar (this is the logic that I don't get)
Re: #3 - Why not just hold onto most of the cash, and treasuries to keep that market stable, while allowing asset prices to collapse. Whatever loans that default when they are still on your books can be foreclosed upon to get the secured collateral, or even unsecured property in some situations (ex. recourse states for mortgage defaults). Or, the losses can be socialized after the fact, as they were in 2008. Banks and funds that are forced to file for bankruptcy can be soaked up by the larger institutions for a fraction of what they were worth. Hard assets can be bought up once their prices significantly come down. Shortfalls in federal tax revenues can be offset by cutting entitlement benefits and other aid programs.
No doubt it will eventually become an extremely delicate and dangerous situation for them to manage, but they could at least keep it going for a few years while they make plans for the next phase, if there is a next phase.
AWitW,
I would accuse you of being wise, but it seems that might not be to your advantage. I'll just say that either we have both gotten a similar glimpse of the dark side of reality, or a darned impressive mirage.
I would only amend your description of the Reptilians to point out that some of their kind are not necessarily very rich. That does not make them any less awful. It just means they are not quite as small a minority as we might like to think.
@ D. Benton Smith....just watching some of the storm videos and thinking of you and your family. Hope the worst passed you by?
You folks have been quite prolific of late. I feel quite drenched by wisdom and good thinking - well, splashed as well by a little of the crud that also tends to show up here. Some thoughts on it all...
First, congratulations, Greenpa/Grandpa. I think you’ll enjoy the new role and be a good one. btw....I’ll be driving to your place in the next month or two (my third trip). Maybe if you’re there, I can say hey.
Lori Tompkins – if you click on the title of each article, it will take you to where it first appeared – most generally dates are included.
A Walk in the Woods/ skilo re: sympathy for the Greek sheeple
skilo said: “now, i'm as frustrated as the next guy/gal about the near complete brain dead apathy that exists in the american "consumer," as opposed to "citizen," but they have been strategically dumbed down.”
Two examples just in the last couple of days how pervasive this effort is. I’ve been noticing how many places have TVs going non-stop. I’ve come to expect it in the fast-food restaurants, but I just went into my bank, and there were two sitting areas, one with CNN, and the other with (Saturday morning) cartoons. Juxtaposed against the elegant art deco luxury, it kinda caught my attention. And then today I had an appointment at the dentist and was bombarded by CNN throughout the entire process. There was quite a bit of coverage of the upcoming royal wedding, a spot on travel by Gabby Giffords to see her husband off into space, and then two financial features. The first was coverage of Bernanke’s press conference. CNN covered it live for less than 5 minutes and then a reporter broke in to tell us just what Bernanke was saying, and what she would ask if she were among the journalists in the room, and what she expected those journalists to ask. We never went back to live coverage of the press conference. The next financial segment was talking about how many jobs had been lost last month and then a shift to one guy who had been pink-slipped and who came home and immediately started his own business – something to do with re-furbishing motorcycles but there was also something about making lamps out of motorcycle parts (missed a bit as the dental hygienist had me turn my head away from the screen). He said the layoff had turned out to be a very good thing for him.
sigh. how can most of us average joeblows (or Josephineblows, as the case may be) withstand the onslaught.
aftcfc – “Can you see how talk of preserving wealth can be disingenuous to the younger generations who have no or even negative wealth?”
I’ve noted several excellent comments you’ve made, including some regarding the different perspectives of young’uns and oldsters. I can’t speak for others in my age group (I’m 54), but I am pretty damn sure that no matter how well I prepare, there’s no way I can physically handle the life I’m pretty sure I'm going to be facing. In conversations with my sister, who has two healthy twenty-something sons, when I talk about what I’m putting together as far as a homestead, she keeps saying that she can’t afford to contribute to the supplies or the land or whatever, and I keep saying, are you kidding? What her family can offer in the way of labor is invaluable to this fit-but-still-pretty-wimpy mature woman.
I’ve been wondering how you – and other young ones – could make connections with some oldsters with resources who are maybe actually a whole lot more scared than they are greedy. I could be wrong on this, of course. But, surely there are ways to connect us across generations?
DBS
Wishing you good luck with the flood.
AWITW
You disparage reptiles. Some of them, alligators and crocodiles actually care for and protect their young. Also, when most people refer to the "elites" controlling things, they realize that that the criminal CEO's like Benny Boy, Lord Blankfein, and Jamie are just gears in the transmission.
Ash
I stopped taking notes on the FOFOA thing but started again when Ackerman recanted and ZH published his mea culpa and deposition. David Rosenburg also recanted today and has become a bull. When Stoneleigh recants, I am going to short the universe, the end will be nigh :-) Back to FOFOA, it reads like a short story that Достоевский would have written on acid. But I may voice an opinion eventually.
@Scandia re: angry energy
"Anger is more productive than despair" is a quote from that noted wise man, Terminator 3.
I preparation for my next tattoo, I have had a scholar translate it into Latin, which becomes IRA UTILIOR DESPERATIO.
Haven't watched this yet, but it seemed like something some may be interested in.
YouTube - The True Battle of Chernobyl Uncensored (Full)
Nassim
Yup, I'm even more convinced than I was.
It is quite apparent from the photo that the blast came upwards from the smoking hole as the remnants of the roof angle in towards it from either side.
http://cryptome.org/eyeball/daiichi-npp/daiichi-photos.htm
http://tinyurl.com/6xz68mx
Fourth photo.
A musing about the Reptiles masquerading as H. s. sapiens among us.
IMNB, you are very perceptive to point out to our studio audience that all Reptiles masquerading as humans (RMH) are not rich.
One was waiting on me the other day in a coffee shop and was catching flys with her tongue. Impressive. Fabulous tongue-to-eye coordination.
All cultures since the dawn of time have had to deal with RMHs. The tribe elders usually spotted the complete lack of conscience and empathy early on and tried to isolate and channel said lack of human emotions into appropriate venues.
Daring them to do very dangerous and difficult things when young often resulted in premature death, solving the problem of them going on to take over leadership roles in the tribe and enslaving everyone else to their massive Reptilian compassionless appetites.
Wise Elders throughout time have been able to spot those among them whose Limbic system either never developed or were shut down for what ever reason.
The percentage of Reptilian sociopaths (and more advanced forms: psychopaths) that naturally occur in every H. s. sapien society were easier to spot in smaller tribal settings than in cities and large population centers.
Places like Rome were where they were truly overlooked and actually encouraged to multiply and obtain high rank and social acceptance, even veneration.
The filtering mechanism for identifying and neutralizing Reptiles masquerading as humans in our sub-species fell apart above the small village level.
RMHs have now completely taken over the planet.
They are not and never were 'herd animals'.
They are alpha predators selecting from the vast number of individuals in the herd who will be appetizers, who will be small plates, main courses and desserts using their forked tongues to measure air temperature and Shear Fear among the Proles.
Some are wealthy, the other RMHs serve the wealthy ones as Souless Toadies in one function or another.
We've all met them at some point in Life.
They are the Riders on the Storm.
Don't give them a free ride.
_
_
Japanese factory output suffered a record decline in March as the devastating tsunami crippled supply chains across the world’s third-largest economy.
The government said production plummeted 15.3 per cent in March from February, the biggest decline since records began in 1953, and worse than analysts had expected. Household spending dropped 8.5 per cent from a year earlier.
Japanese production suffers record fall
@ TAE Summary, thanks for the laughter! " Exposing your fuel rod in public freaks some people out "
offers new meaning to " indecent exposure " :)
Re the storm destruction in several US states I'm wondering how many states have a rainy day fund? How many people carried insurance policies? Will the federal gov't borrow more money for restoration or will there be a " Katrina " response?
I can't find the article this morning but I was reading about a tough decision to make- destroy the levee to save the town thereby flooding thousands of acres of crop or maintain the levee and abandon the town. The decision was sent to the courts to decide. This will require the wisdom of Solomon! Hope I can find the story again to know the judge's decision.Is there precedence in law for such decisions? If anyone else finds it please post....
re: Rosenberg becomes a bull. Amazing. What will the next headline be?
"Prechter tosses Elliot wave analysis for Birinyi methods"
"Gary Shilling advises shorting treasuries"
"Chanos buying up billions in Chinese property"
But seriously, this leaves me scratching my head. I read Rosie’s newsletter daily when there was no charge. I thought he gave excellent analysis. I did think he was a little light on the international stuff and heavy on North America. He seemed indifferent about the property bubble in China as if he thought it might result in a soft landing.
@TAE summary
"Is that a nuclear fuel rod in your pocket or are you just happy to see me?"
_
I recommend the Wikipedia article called "Prompt Critical." It explains a lot of essential theoretical stuff as to how nuclear plants can run sustained chain reactions while only occasionally exploding, and why these explosions are not of the huge, weapons variety, but rather fizzle.
Hey Baby, you're so hot you hydrolyzed my cladding!
A quick Google search of "demon core" will provide even more insights on how highly trained monkeys use a screwdriver or some metal bricks (neutron reflector) to screw-up to a criticality. Twice. Bzzzz...Zap! (rinse, repeat)
A Walk in the Woods said...
The filtering mechanism for identifying and neutralizing Reptiles masquerading as humans in our sub-species fell apart above the small village level.
Talk about seeing the same mirage...
I was just days ago discussing with my wife about the same natural mechanism of isolation of sociopaths in the small villages of our country. It worked without (much) violence. There were exceptions when things got out of hand, but in general isolation was enough to keep the anomalies from expanding.
Walk in the Woods:
It's a fuel rod, but alas, it's spent.
@Scandia
The following URL covers the levee breaching issue pretty well:
http://www.semissourian.com/story/1722597.html
Alternately you can go to Google News and search the words 'Birds Point Levee" Army Corps of Engineers and southeast Missouri flooding of Mississippi River.
Basically, the story is that the Army Corps of Engineers manages the Mississippi River ( how about THAT for hubris ! ) and to prevent flooding of several towns they are considering deliberately breaching a levee under their jurisdiction.... which will flood several smaller towns and a lot of farms.
Back in 1930 the folks on the dry side of that levee agreed that the Corps had that unilateral authority, and that people choosing to live and farm in the protected lowlands were taking their own chances.
That was 80 years and two or three generations ago. The physical infrastructure has changed a LOT since then.
I live within flooding distance of the Mississippi River about 150 miles north of there. In 2008 one of my houses got wiped out by the flood & I found myself in the incredible position of sand bagging a levee that saved one of my houses, and deliberately sacrificed my other house right next door less than 10 feet away !
I sympathize with the folks of Birds Point... but in this sort of situation there are no easy answers, and absolutely no win-win outcome possible. A lot of people are going to lose all or most of their stuff.
El G,
I've been going back and forth with some of FOFOA's devout Freegold minions in the comment section under that article, and if their logic reflects anything similar to FOFOA's, then I am utterly confused about the deflationist reversals.
I do think that he is probably a lot more in touch with reality than those who claim to represent his views, though. It all basically boils down to this concept of "Freegold", which has the elegant simplicity of "free speech", but probably describes reality just as badly. If that can be clearly debunked, then his whole HI argument falls apart.
Nassim: along with the drop in Japanese factory production:
http://www3.nhk.or.jp/daily/english/28_30.html
"The Internal Affairs Ministry says households of 2 or more people spent an average of 293,181 yen, or about 3,600 dollars, in March. That's down 8.5 percent year-on-year in real terms.
"There were drops in spending on a wide range of items including vehicles, clothes, travel and dining out.
"But spending rose on rice, instant noodles, canned food and masks,"
@scandia, El G and all
Thankyou for the good wishes, must have worked. The river crested at a level that captured everyone's rapt attention ... but still 2 feet below the level where serious damage occurs.
According to the US Army Corps of Engineers and US Weather Service we have officially dodged the bullet for Round #1 of our annual bout with the Mighty Mississip.
According to their math we now stand a 50/50 chance of being okay for the rest of flood season ( which ends in August, approximately. )
By the way, and I have no idea why it seems fitting to say so, but were you aware that floods can be extraordinarily beautiful?
Maybe it is because, in the end, the river always prevails. The dependable permanence of what we call 'Nature' is reassuring at a primal level of my psyche.
Martenson on Keiser Report (yea, I know...):
The problem is too much debt.
But the dollar is everywhere, there's literally trillions of them parked all over the world (banks and matresses included).
Once those with too much debt lose faith in their matress dollars, we're going to have a dollar accident.
Hmmm...You have to do better than that, Chris, because people who are in too much debt generally don't have matresses stuffed with dollars, and the banks are insolvent by definition.
What can the +60% of the people who do not have saving, who are not in the stock market, who do not own any precious metals, who have debts, do to take advantage of the inflation of the cost of goods that the US is causing by their QE, (printing money) or do to take advantage of deflation?
Not much. They are not reading this blog.
If we look at the $C vs the $US being +$1.05 then it appears that a trip across the border would be beneficial and advantageous for those close to the border.
But then, the price of gas is going up because the price of oil is set in $US which are being devalued by the printing press, QE2. Geee, it would take a comparison chart of price of oil vs. $C to be able to time when canadians are getting ahead in this inflation game.
Another chart would also be needed to see when those cheap US imported goods when the input costs, (oil), start moving up the wholesale cost. This would be especially useful for those Cal. crops that make up the canadian food basket vs. the rise of the $C.
Then of course, by watching the charts over time, you would be able to see that when “flight to the safety of the $US” occurs and how that would impact the $C, (which would go down), and all the advantages of buying those cheap US product would be wiped out with a vengeance. It would be nice to see how it would, especially, impact the food basket.
In many country, the cost of food uses 50 - 70% of their income and they still manage to survive, but it is dirt poor poverty.
However, at 50% of our income, canadians would perish because of the cost of ... transport, housing, clothing, etc.
Those +60% of the people who do not have saving, who are not in the stock market, who have debts, WILL NOT GET pay raises to keep up with the resulting inflation.
There will be pain and suffering coming down the pipeline for the majority of the people.
I’ll let someone else figure out if or how those in the stock market will also be able to avoid the pain and suffering.
Now, for some fact on the ground.
http://www.zerohedge.com/article/wal-mart-ceo-shoppers-are-running-out-money-there-no-sign-recovery
Wal Mart CEO: "Shoppers Are Running Out Of Money"; There Is "No Sign Of A Recovery"
jal
Ash
RE FOFOA
I think he is very bright and as in touch with reality as most of us (whatever that means). I was commenting more on his meandering, chatty, in confidence style which, whether deliberate or not, makes it hard to analyze his seemingly persuasive arguments. I am going to make another go at abstracting them later today.
He says he came to the question with an open mind less than three years ago, but he is obviously a hard core libertarian, and the only deflationist I know of among that group is Mish (vs. a score in the HI camp).
OTOH, one need not be an Ayn Rand dead foot kissing, greed is good, libertarian to be a hyperinflationista. Charlie McGrath interviewed Michael Ruppert last night, and he thinks we are going into total HI this year. Ruppert was also a long time physical gold advocate. He certainly is not a libertarian. But for what it's worth, some of my best friends are hyperinflationistas :-)
p01 said...
Once those with too much debt lose faith in their matress dollars, we're going to have a dollar accident.
=============
Hmmmm. A dollar accident? Go long on gold and fill your garage with adult Depends?
El G,
I'm not sure I would go as far as to say he is as "in touch with reality" as the rest of us. He completely leaves issues like peak oil, climate change, water scarcity, etc. out of the financial discussion. Those things actually support the argument for long-term HI of fiat currencies in many ways, but my issue is with the fact that he acts like they don't exist.
With regards to his writing style, I agree with you that it is structured in a way that makes it inherently difficult to discern and respond to the underlying argument, but, on top of that, I believe he logically contradicts himself in certain areas and also uses a lot of circular logic. We all do that sometimes, but the Freegold concept seems to almost rely on that circular chain of logic (gold is intrinsically valuable and used as a reference point, therefore the financial system is based on the flow of gold, therefore fiat currencies not linked to gold will hyper-inflate, and therefore gold will become the preferred medium of exchange and skyrocket in value).
So therefore, buy gold and nothing else! He also says that HI will lead to a couple months of panic, but no severe or permanent damage, and after that the structures of power will keep functioning like nothing happened, just like in Zimbabwe... this also reeks of being out of touch with reality.
The comment section, however, is infinitely worse than the actual article itself (at least the comments/responses that I have read so far).
Bernanke's Press Conference, August 1, 2012
http://www.oftwominds.com/blogapril11/bernanke-2012-4-11.html
@Ash, You're a better man than I am. I made two sincere attempts to figure out what FOFOA is trying to say. I failed.
Part of the problem is that he is using English words with a German(?) sentence structure, but even deliberately parsing the language usually did not return sense.
Excellent Greek Analysis, Ilargi
Thanks for stringing everything from Japan Chernobyl to the ins and outs of the Greek Pickle together in a very coherent and readable fashion.
One question: Any idea how much hedging by Euro-Trash and US Wall Street TBTF banks with Credit Default Swaps and other derivatives on a Greek default?
In other words, do any of the Zombie banks stand to win by Greece losing even if they are holding substantial Greek bonds?
@D.Benton Smith...Thanks for the link to the Bird's Point article!
" Fighting for inches " gets to me for some reason...
Your attitude throughout the flooding is admirable especially your ability to see beauty in chaos. I applaud you!
Have been reading that a couple of nuclear plants have been in the path of the storms and that emergency generators have operated successfully. Can't help thinking about the future, about what can happen when the diesel is gone. What power source then will kick in to maintain the safety of nuclear sites. Will be interesting to hear the nuclear industry spin on that future problem.
Frank,
You should take a look at this post by FOFOA written a few weeks ago:
http://fofoa.blogspot.com/2011/04/big-gap-in-understanding-weakens.html
It's much shorter, structured much better, uses a decent "tug of war" analogy and it is actually logically consistent!
And that's the key - it reveals much more clearly where he is making faulty assumptions, mainly about how peoples' fear of deflation can turn into fear of HI in an instant without any significant change in underlying financial circumstances.
Wrong rates sink states.
Thanks @Ash, that FOFOA post was indeed far more comprehensible than anything I'd seen previously.
I agree. There is no explanation of why people who have been hoarding dollars to pay their electric bill will suddenly decide to hoard toilet paper instead.
TAE Sumerian- nice. much appreciated. We miss you when you're not around. :-)
scandia said...
"I am going to go WAY out on a limb and say anger is energy. A wise man knows how to utilize that energy, a fool does not."
I like it, quite a lot. :-)
@Ash and others
I tried wrapping my mind around FOFOA, not very successfully. What do you think about his notion that the banks/Fed will take the easier route of socializing bad debt losses, i.e. the Fed will buy up every bad debt to ease the pain? Isn't it possible to see a loss of faith in the dollar sooner rather than later if that happens?
I don't really know why I bother to weigh in on the *flationary quagmire. I guess the devil makes me do it. A little memorial to comedian Flip Wilson there.
The comments here regarding the FOFOA post confirm my suspicion that the link wasn't worth following. You know what they say, time is money. If only that were true.
Given falling productive output and irredeemable currencies, hyperinflation (HI) does appear to be possible. And the RMH are just the kind of cold blooded critter that would start that fire and then feed it. I do believe there are still effective constraints. I do not for instance see how it works in a credit card based economy. Maybe that just shows the limits of my imagination.
It's worth remembering that the RMH can also work the deflation levers. The main thing I have concluded about HI and deflation is that both paths take the majority of people to the same place. And that place is called Bartertown. The main difference is in how often you go shopping. On the HI path it is at least once a payday. On the other path shopping may happen slightly more often than birthdays.
Once you have been run out of Bartertown, the only places left are Beggarburgh and Boot Hill.
Let us hope the RMH accidentally make the least worst choice. It is worth keeping in mind that one of the largest gatherings of RMH is in a huge nest I call Pentagonia. I do not believe their interests completely intersect with the Civil Criminal Class Reptilians. Who knows what the devil might make them do?
As usual, my goto guy, Fred, has written a column that describes their interests, heretofore, far better than I ever could.
Understanding America's Military
"I am going to go WAY out on a limb and say anger is energy. A wise man knows how to utilize that energy, a fool does not."
Scandia,
And how about a wise woman ? :)
We need a SONG WRITER.
HI and deflation is that both paths take the majority of people to the same place. And that place is called Bartertown.
Once you have been run out of Bartertown, the only places left are Beggarburgh and Boot Hill.
gatherings of RMH is in a huge nest I call Pentagonia
@ jal
Maybe this song will do until you find that writer.
We don't Need Another Hero
Franny,
"What do you think about his notion that the banks/Fed will take the easier route of socializing bad debt losses, i.e. the Fed will buy up every bad debt to ease the pain?"
No doubt they have been buying a good amount of bad debt. But there are a number of different factors that make it likely they won't continue to do so until ALL the bad debt is bought, or even to the extent that it would be likely to cause HI within the next few years.
This includes the discipline of the bond market (Treasury rates and public debt servicing costs), social unrest, potential political opposition (I believe this factor may be overestimated though) and the hoarding of cash by elites (so there is no significant increase of money velocity in the real economy).
The last factor also relates to another important one - the will of the elite class (maintaining certain levels of private debt and a deflationary environment gives them leverage to extract further wealth from the productive economy; the disincentives from high inflation, sociopolitical unrest and HI that would wipe out the dollar's value).
Think about it, what's the point of the Fed monetizing residential/ commercial RE loans held by community banks, or muni bonds held by relatively small investment funds? Many of these institutions can fail without threatening the power of bigger players, at least from their perspective.
@ Umaperegrina...
Good Day. :)
My hope too, is that the bridge between old and young is built. With such indebtedness, (Economic and Ecological) of future generations, some intergenerational equalization would be a great shift in thinking; a true paradigm shift. No doubt many readers of TAE are doing just that. :)
It is difficult, I admit when ones parents are completely out of the loop, even after profound attempts to stir them from their sleep. Beyond one's family, the link to real assets for young people becomes limited.
I currently work on a 500+ acre estate on a lake in BC. There are 5 fulltime carpenters, 6 fulltime landscapers/gardeners, 2 fulltime maintenance workers. It is the finest property in the Okanogan, hands down. I have a older mentor who is the property manager/landscape artist/philosopher/wise elder and we have developed a great relationship over the years. The owners are great too.
My only hope is that the young people simply do not become employed to the old as caregivers in an unbalanced manner and that cooperative relationships develop beyond just their necessity.
Cheers
@ Kate & el G...
I am all about new sources of info:
(Sharron Astyk's)
Thanks & Cheers :)
@ Kate...
I have been a busy bee over the last 4 years. Lots of Doing ;) TAE blog is a great place to have elevated conversation. Many times just reading others comments is informative and enjoyable. I was not smashing debate itself, but attempting to show some readers a younger perspective. To the older readers this may be very valuable.
Cheers
@ Board...
This was at the end of the last post, but I think it is very important to reiterate and for you to contemplate. It was a response to el G who was asking about the" specifics of my pragmatic preparations" :
One cannot be too pragmatic in their preparations; especially of death. My most important preparation is to be at terms with my own impermanence.
"The birth of a man is the birth of his sorrow. The longer he lives, the more stupid he becomes, because his anxiety to avoid unavoidable death becomes more and more acute. What bitterness! He lives for what is always out of reach! His thirst for survival in the future makes him incapable of living in the present."
(Chuang Tzu)
"To begin depriving death of its greatest advantage over us, let us adopt a way clean contrary to that common one; let us deprive death of its strangeness, let us frequent it, let us get used to it; let us have nothing more often in mind than death... We do not know where death awaits us: so let us wait for it everywhere. ...To practice death is to practice freedom. A man who has learned how to die has unlearned how to be a slave."
(Michel de Montaigne)
_________________
Cheers
Jal,
First we need a CHORUS, you know a sing along set of lines, uncomplicated and laced with a dash of pathos/infantility.
How's this straight off the top of my head. If we can get a set of lyrics together I'll do the music and we can have a TAE HI/DE song.
"It's either
Money worth nothing
and plenty for all
that won't buy a morsel
So everyone falls
Or no money nowhere
and nothing to buy
We're starving and hungry
And everyone dies"
Hmmm, maybe a bit dire.
Now we need some VERSES to fill in the body of the story, rhyming scheme don't matter too much.
Copyright "TAE songwriters collective" April 2011 of course.
@ Nassim...and why not a wise woman? A lifetime in a patriarchal system has formed my internal images/language.
I'm working on it though:)
Appreciate deeply that you pointed that out.
>>The main thing I have concluded about HI and deflation is that both paths take the majority of people to the same place. And that place is called Bartertown. <<<
Yes. This is precisely my argument. For most people, either event puts them in the same place. Their only path out of this mess is to operate as much as possible outside of the existing economic and monetary systems. The unfortunate thing is that any success at doing so undermines the system and that's why nations who choose that route are quickly brought to heel. That sort of makes one wonder what would happen if Bartertown was successful.
Glennjeff,
Hmmm, maybe a bit dire.
Dire, sure, and will it not be if those times come?
I'm thinking that maybe Dire Straits wouldn't have turned it down.
I wish I had the talent to contribute a little. I think you've got a great start there.
Greg L,
I have read that just about every town in Wiemar, Germany was Bartertown. Money lost value so fast you had to buy what you could lay your hands on quickly, even if you had no use for it. Then you looked for someone that wanted it and had something to trade. Maybe you didn't need that either, so you kept trading until you got something you needed.
One anecdote told of a man who went to a cafe with just enough money for coffee and a pastry. When he finished it and asked for his check, he no longer had enough to pay for it.
Blogger Ash said...
"What do you think about his notion that the banks/Fed will take the easier route of socializing bad debt losses, i.e. the Fed will buy up every bad debt to ease the pain?"
No doubt they have been buying a good amount of bad debt."
Why should the common man/woman have to assume the bad debts of the financial elites/moneychangers/planet killers? The system isn't worth saving in my humble opinion.
@ agtefc
Thanks for the response. First, an apology...I am pretty sure that your nom de plume is not based on “all fkng things come from chaos” :) - sometimes I write from a stream of consciousness with the intention of returning to fill in the holes...and then forget to do it!
One of our biggest challenges as we weave our way through the relational minefields that lie in front of us is to find that no man’s land between predator and prey. As an (almost?) oldster, I want to avoid being scammed...and at the same time I do not want to prey on any youngers that I think might cushion the blow of collapse for me personally. You talk about parents being out of the loop. I have the feeling that most of us here at TAE are dealing with an ache of concern for parents or children or siblings or significant others who are out of the loop. It appears we will have to rethink the definition of family, tribe, and community....but there will be loss and grief that accompanies that redefinition.
I second your hope that “cooperative relationships develop beyond just their necessity.”
IMN
Need to break the story down into about 4 simple explanatory stages, 4 chapters each about 20-40 words long. Even 4 simple sentances would be a start. Eg,
1. We use money to facilitate ease of commerce
2. The financial system has gone crazy creating too many forms of complex paper money. It has also mega-overdosed on fraud and deception in the above process
3. As that deception leads to multiple claims on assets and resouces start to dwindle this money system breaks down
4. Total collapse of society ensues.
I don't actually know if that is the story though, economics and finance have always mystified me.
So any suggestions as to a simplified breakdown of what we are talking about would be great.
Also we have a BRIDGE part of the song, repeated once or twice, maybe;
"Now we're all on the same road
We walk heads bowed down
We travel together
To Bartertown"
Paraphrasing jal's contribution to the song. (That perhaps could be phrased positively - "we walk heads held proud" - why - knowing we had overcome the excesses of the unsustainable ways of the past maybe. Would then need to incorporate a verse to explain bartertown.
Feed me the story, I've already got a A5/9 - C major - E minor guitar pick for the chourus (or bridge)
IMN
Thanks for turning us on to Fred Reed. Reading Uncle Fred's Mexico now. Great tips and perspective.
Umaperegrina
Glad to see you back posting again. Always a great pleasure to read your comments. Sorry I missed you down under. My loss.
agtefc
Sounds like you are in a better position than most to handle the coming collapse. The young and most of the old will soon be in the same boat and none will own anything. I think you missed my intention when I wrote about pulling up a chair and a sixpack and watching the show, if you thought it was complacency. It is simply that I do not have the ambition to prepare a doomstead at this point. Like Sisyphus my stone just rolled down the hill again :-) I am just watching now and writing observations. I help at a local level where I can. I expect to be one of the early ones to die from violence, hunger, or hyperthermia. If you find that "complacency" offensive, so be it.
@ umaperegrina...
You said:
"I have the feeling that most of us here at TAE are dealing with an ache of concern for parents or children or siblings or significant others who are out of the loop. It appears we will have to rethink the definition of family, tribe, and community....but there will be loss and grief that accompanies that redefinition."
-------------
Indeed. Well said.
Our cosmic-karma families need not require biological relations. :)
Cheers
el g,
Fred is a treasure. Too bad Bageant had to die for me to discover him. :-(
Glenjeff,
How's this for a deflationary verse:
"You've got debts on your homes,
And debts for your schools.
Even debts for your iPad,
If you're really such a fool.
The boss ain't payin' you,
any more than minimum wage.
And the government refuses pension,
even though you've reached the age."
@ el G...
I did not mean to come across as confrontational. :)
Under the universal law of cause and effect, small actions now can lead to vastly different outcomes, in this experience or the next. The "feeble" intentions of an elder can be like the butterflies lifting off to cause a hurricane at a distant place and time.
Cheers
I know a few people in the performing art. I’ll see if I can get some more ideas.
What will survive, beyond us, through the reset, will be the message that can be transmitted through song, dance and games.
My circle of life will need an uplifting message of survival of Bartertown, Beggarburgh, before ending in Boot Hill.
A simple chorus
Circle of life, Bartertown, Beggarburgh, Boot Hill
OR
Maybe Limericks -
The History Variants of the form of poetry referred to as Limerick poems can be traced back to the fourteenth century English history. Limericks were used in Nursery Rhymes and other poems for children. But as limericks were short, relatively easy to compose and bawdy or sexual in nature they were often repeated by beggars or the working classes in the British pubs and taverns of the fifteenth, sixteenth and seventh centuries. The poets who created these limericks were therefore often drunkards! Limericks were also referred to as dirty.
Limericks - The form Limericks consist of five anapaestic lines. Lines 1, 2, and 5 of Limericks have seven to ten syllables and rhyme with one another. Lines 3 and 4 of Limericks have five to seven syllables and also rhyme with each other.
Samples
Limericks by Edward Lear
There was an Old Man of Peru,
Who never knew what he should do;
So he tore off his hair,
And behaved like a bear,
That intrinsic Old Man of Peru.
----
Archimedes, the well known truth-seeker,
Jumping out of his bath, cried "Eureka!"
He ran half a mile,
Wearing only a smile,
And became the very first streaker.
It is simply that I do not have the ambition to prepare a doomstead at this point. Like Sisyphus my stone just rolled down the hill again :-)
My wife said something the other day that struck me even more than usual. She said she wasn't so much interested in building a doomstead as an "ark" for those around her. We help those we can, today and tomorrow. But for ourselves? That's really beside the point isn't it? This seems to me the only way I know to face reality. It's action without action or expectation of result, but we do the best we can and that's enough. If there's a next generation, that's what they'll need from us. FWIW, here's a paragraph in my current book about our facing biological die-off:
We may experience infinities of divine energy in prayer, but we also know all exalted
spiritual experiences and transcendent states-of-consciousness are not God-In-Himself. As we suffer the decline of our civilization, we know it is not our destiny to fill the universe with some marvelous image of ourselves. Rather, the decline of our civilization and the subsequent die-off of our exponentially growing population is God urging us through a Night of Humanity that up until now only the most advanced contemplatives have endured. The Night of Humanity is not a Night of Senses or a Night of Spirit, but a Night of Self for a species encountering population die-off. Humanity is taking one more step facing what and why we are—and the truth is we are not what we think we are, and we are not made for ourselves, but for God. The final destiny of homo sapiens is not infinite energy; but a new, transcendent form of God. Our future is the Truth of God-In-Himself. The story of the human race is the story of the transformation of created form into the uncreated form of God. These are the issues that face us as we approach checks to growth and the end of our time.
Glennjeff,
Would this serve as a verse?
Vipers slither round a bank note press.
Lizards finger a stamp, Loan Rejected.
Which will they use?
Who wins, who loses?
Too much cash or too little, who gets to choose?
agtefc said...
The "feeble" intentions of an elder can be like the butterflies lifting off to cause a hurricane at a distant place and time.
================
Yes, butterflies should be exterminated. They present a clear and present danger. (Maybe geezers as well).
Maybe of some interest to those here (or already known): Companies who dodge taxes . . . and I say "who" because they have more legal rights than real persons (see below).
Class actions against big corporates no longer possible?
The critical thing to know about my rod is that it is prompt, not super.
Ash
Good one. Strong rhyme,
looks like we're going in a very ballad direction, which suits a guitar pick framework.
INTRO BRIDGE
(spacious / ethereal keys - light percussion)
We are all on the same road
We walk heads held proud
We travel together
To Bartertown
(Tacet - then drop in drums, guitar pick)
You've got debts on your homes,
And debts for your schools.
Even debts for your iPad,
If you're really such a fool.
The boss ain't payin' you,
any more than minimum wage.
And the government refuses pension,
even though you've reached the age
(Short Guitar riff
drop in bass
up drum pattern, big white, red, brown & yellow girls going ooooh ooh ooh harmonies)
It's either
Money worth nothing
and plenty for all
that won't buy a morsel
So everyone falls
Or no money nowhere
and nothing to buy
We're starving and hungry
And everyone cries
VERSE 2
CHORUS
(same arrangement)
(All together now with crescendo)
BRIDGE
(Drop out instruments to variant on INTRO for ....)
VERSE 3
(Drop in most instruments again for .....
CHORUS
VERSE 4
CHORUS
FADEOUT WITH BRIDGE FOUR TIMES
agtefc,
Like our friendly buzzard, I too am resigned to watching the show. That doesn't mean I do nothing at all. El Gallinazo and I, each in our way, fan the air a little hoping to keep too much smoke from filling the eyes of those with years still to use.
You said awhile back that us geezers may not be closer to death than anyone else. That is, of course, true. What we definitely are is further from birth. We did what we did. It wasn't always right and it wasn't enough. Well, really I think we maybe did too much.
As Carlin said, the planet will be fine. Us, not so much. The best I can advise is to not fret much over ownership. The wiser people that preceded us on this continent seem not to have found it terribly important. If some of our kind survive, I think they might get there.
Scandia,
I suspect that in previous times, in Europe, many wise women were branded as witches and burnt.
http://en.wikipedia.org/wiki/Witchcraft
Gosh, such enthusiasm, SUPER.
IMN,
Like this, who says you aint got talent. Looks like a contender for V4.
Small change for easier vocal meter. Matches the ambiguity of HI/DE arguments.
Vipers slither round a bank note press.
Lizards finger a stamp, Loan Rejected.
Which will they use?
Who wins, who will lose?
Too much cash or too little, who gets to choose?
I was poking around with the printing idea for HI here, may have to rethink first line to avoid repetition.
While the bamkers keep printing and telling you lies
Talking heads pumping and making us high
Suddenly everywhere cash to be found
But we need a wheelbarrow
To buy a rice pound.
(Can someone fix that last line for me, it's clumsy)
Nassim,
Maybe they was burned, but we ain't gonna let that happen to Scandia. Let that wisdom shine.
... Feed me the story
try some verses highlighting peak oil, peak water, peak credit, peak energy
before getting to Bartertown, Beggarburgh
and completing with Gaia taking care of those in Boot Hill completing the circle of life
jal
Glennjeff,
While the bamkers keep printing and telling you lies
Talking heads pumping and making us high
Suddenly everywhere cash to be found
With a cart full of cash and fleetness of foot
Maybe we'll score some rice, perhaps a half pound
jal & Glennjeff,
OK, I guess jal is right. I will focus on writing a story on which to build our song. You guys are sooo enthusiastic. It's getting late here, so depending on the muse's whims, it might be ready sometime tomorrow.
It's either
Money worth nothing
and plenty for all
that won't buy a morsel
So everyone falls
Sell those stocks
Sell that gold
Buy those garden tools
No time to get old
Vipers slither round
A bank debt note press
Lizards finger a stamp
Loan Rejected, prole
Which will they use?
Who wins, who loses?
Too much cash or too little
Who gets to choose?
Look left, look right
Up and down, all around
Silver to the moon
Hyperinflation is here
Ass Zerohedgers did croon
From where comes that sound?
Even Max, Max the Keiser
Did count his chickens
Before money aggregates hatched
I am the man who pierced the organ
Of that repticle den, JP Morgan
cont'd...
... Feed me the story
As recounted in THE AUTOMATIC EARTH
cont'd...
Or no money nowhere
and nothing to buy
We're starving and hungry
And everyone dies
You're not dead yet
You've got mortgaged homes and debts
And debts for your schools
Even debts for your iPad
If you're really such a fool
The boss ain't payin' you,
any more than minimum wage.
And the government refuses pension,
even though you've reached the age.
What's it all for?
Why put it on the line?
Good lasts forever
Everything else
Dearest son and daughter
Is an eternal waste of time
Jal
We can just have a bit of fun with the immediate situation for the purpose of writing a song, and propagating some thoughts on this situation. As in a folk song of the times.
Your following thoughts certainly bear close consideration.
What will survive, beyond us, through the reset, will be the message that can be transmitted through song, dance and games.>
Yes, the ancient, tried and true oral tradition.
My circle of life will need an uplifting message of survival of Bartertown, Beggarburgh, before ending in Boot Hill.
I think you just changed the task parameters. Song 2, which will require a lot more thought and knowledge.
Could you write a short comment/essay on these near future townships so I can understand what you mean. Uplifting and Bartertown could go well together. Beggerburg, well not so much. Boot Hill, that is a reference to "the cemetery" in my understanding and it's relationship with "uplifting" depends upon ones "belief system".
@IMNobody,
My boss is from the former Yugoslavia, and, in addition to war stories, has many amusing tales of hyperinflation. He said the shops would reprice in morning, then close at noon to reprice again. So, if you didn't buy on your way to work you couldn't afford it on your way home.
He also told of not bothering to cash his paycheque because the cash would have filled two suitcases and he couldn't have bought anything with it anyway.
jal & Glennjeff,
The muse comes at the darnest times. I'm pretty sure this isn't quite what you guys had in mind. The muse has a mind of her own. It's not a song and I'm not sure anyone will call it a story. It is what it is.
By the Tigris men once stored their grain in priestly shelters.
Scribles on mud received in return.
Scribed mud or grain, it was all the same.
One was equal to the other.
Wood was fuel and bronze was precious metal.
Time did pass and paper replaced mud for records.
Iron did some of bronze's work and oils found use.
Empires rose and fell even elephants fought.
After a lengthy stagnation, ingenuity broke free.
Coal gave wood a hand and soon was crowned King.
Steam was harnessed and gunpowder tamed.
Money, once little used, seemed to fall from trees.
Cash was King, Gold was precious, Silver might save the sodbusters.
Oil squirted out of the ground and man commanded energy slaves.
The armies of industry poured out the goods and golden was the age.
Men waxed disputatious over who should be entrusted to create money and on what terms.
The bankers won out, but threw government a bone.
If you don't tax enough, we'll write you a loan.
Boom and bust the economy rode the waves.
The empires warred themselves to exhaustion.
Germany went hyper with cash in the trillions.
Then the world deflated with a terrible crash.
Franklin listened to Keynes, Germany to Hitler.
Another big war and when it was over, America said never again, will we be at peace.
For military spending did stir the economic pot and Generals need jobs too.
More wars, more loans then credit cards too.
Debts piled to the moon, which we visited too.
Ronnie listened to Laffer and Lucas.
Starwars and battleships and deficits galore.
Homes on spec and traders on drugs, a good time had by all.
continued...
continued...
Peaks appeared where they'd not been seen before.
What had only ever gone up, started going down.
Black Gold, Texas Tea, Petroleum production declined.
Caused some to worry and others to shrug.
Metals started to peak as well and natural gas looked uncertain.
King coal too was certain to peak.
The Princes of Finance bought governing bodies and scoffed at law.
A Princess named Blythe, a derivative Queen, invented weapons of mass wealth destruction.
Layed them she did at the feet of a Criminal Class, possessed as they are of reptilian brains.
Soon dominoes fell and rules became suggestions.
Finance suddenly seemed to follow Heisenberg's rules.
Nothing was certain and trust was busted.
The system wobbled and shook.
Scribblers wrote blogs and op ed columns.
Forecasting and analyzing and raising alarms.
Gold bugs and silver liberators blotted out the sun.
From all sides the question arose, would Benny cause hyperinflation.
If he does not then massive deflation from mortgages unpayable and jobs unavailable.
Either way, just staying alive will be challenge enough.
Got things you don't need that someone might.
Find your way to Bartertown and do some trades.
With nothing to barter you can shake a cup in Beggartown.
When you finally run dry, they'll find a place for you on Boot Hill, where your rest is peaceful and eternal.
IMN
You seem to be enjoying the bard / storyteller side of yourself tonight. I'm cutting and pasting everything folks come up with and we'll see what settles out when the crucible cools.
Dying for TEPCO
@agtefc....like your quotes from Chuang Tzu and de Montaigne. Brings to mind the Tibetan Book of the Dead.
@Glennjeff, re the song I'd like the choices to offer " Love Over Gold " as expressed by " Supertramp" long ago.Seems so quaint a concept in " dire straits ":)
@Ric , seems the hierarchal system has infected your languaging as well as in " God in Himself ".
I was up early with my neighbours to watch the royal wedding. In the service it was asked if " any man " had cause to object to the marriage. Any woman's objection doesn't count? Also " Let no man " render asunder or something like that. Sigh, the filtering and rewrite in my brain is f'n exhausting!
Dry gas pumps in world’s largest oil producing country.
Age of cheap oil is over (unless we use less, which we will, in the painful way, of course).
Fatih Birol said also that we have hit peak oil in 2006 (see Oil Crunch video).
Prepare for much lower gas prices once the economy inevitably goes down the drain; much lower, but much more unaffordable also.
Where did I hear that first? ;)
Since we are waxing poetic here's a Limerick.
A trader of Silver and Gold
Became wise but by then he was old
" There is no precious metal
That can do much to settle
A Center that none can make hold. "
@ DBS
I like it.
@ogardener
"Why should the common man/woman have to assume the bad debts of the financial elites/moneychangers/planet killers? The system isn't worth saving in my humble opinion."
We shouldn't, maybe we won't (for much longer) and, I agree, it isn't.
Limerick:
"The past was all spent,
and the future we must rent,
for the sake of shotgun and shell,
oh the auspicious tales we tell,
in the nuclear winter of our discontent."
Re.: TAE creations
Its definitely looking like there will be the births of guiding memories that will attempt to reach the future.
It can be "tagged" to a starting point in history. Its not the birth of christ but the marriage of Kate & Will.
I'm also doing a cut and past of the process because My mind is not what it used to be.
There will not be only one final creation that survive our attempt to communicate with the future.
Hopefully, more than one attempt will survive long past our decrepit hulls.
To one and all ... seek and copy, with relish, the styles that have survived to reach you. They are all around you. Adapt your work to those proven hooks.
Start investigating, from the oldest style that served as "tags" or memory reminders for the ancient story tellers, to the playground of children.
The Vedic style, which you can search, was one that probably lasted thousand of years of use.
Another style is found in many religious "books".
Keep in mind " If you don't use it you will lose it".
This means that the crafting of your ideas will survive on their ease of it being passed on while people take a moment of rest, from their labour, around an evening fire, a moment of rest from their labour.
It must be easy to memorize, it must be uplifting, it must be entertaining. It must be like a jingle that you cant get out of your mind. It must "suuth de sole".
The styles and forms can be story telling, poetry, songs, games, and acting. Those "hooks" have survived and will continue to survive.
scandia said...
@ Nassim...and why not a wise woman? A lifetime in a patriarchal system has formed my internal images/language.
I'm working on it though:)
Appreciate deeply that you pointed that out."
Well; or. I almost commented on Nassim's comment, but then didn't- on the sleeping dogs theory.
What I was thinking; and HOPING, was that without much contemplation Scandia had reached the same place they're at in the Star Trek movies.
"Sir" is an honorific for an officer, and has no gender.
I like that, personally; as long as everyone is on the same page, why the heck not?
Likewise, there IS an ancient usage where "man" is used in an all-encompassing and likewise gender-free sense.
My god; think of the endless bickering and bs we could avoid, if we'd all be able to just happily go back to that.
I would think the enlightened crones of the world might be on board. :-)
@jal
Yes. The Creation and Value myths of the future are being written today. Who are these great Bards? Bob Dylan, Pablo Naruda? Doris Lessing? I wonder.
I don't want to live forever, but I'm really really curious about the next chapter of the human saga.
Come to think of it, maybe I DO want to live forever... if only to see what happens next.
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